UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-40079

RUMBLE INC.

(Exact name of registrant as specified in its charter)

Delaware		85-1087461
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

444 Gulf of Mexico Dr
Longboat Key, FL 34228

(Address of Principal Executive Offices, including zip code)

(941) 210-0196

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	RUM	The Nasdaq Global Market
Warrants to purchase one share of Class A common stock	RUMBW	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	☐ Large accelerated filer	☐ Accelerated filer
	☒ Non-accelerated filer	☒ Smaller reporting company
		☒ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of May 12, 2023, the registrant had issued and outstanding (i) 111,467,743 shares of Class A common stock, par value $0.0001 per share, (ii) 167,662,211 shares of Class C common stock, par value $0.0001 per share, and (iii) 105,782,403 shares of Class D common stock, par value $0.0001 per share.

RUMBLE INC.

Quarterly Report on Form 10-Q

TABLE OF CONTENTS

		Page
PART 1 - FINANCIAL INFORMATION		1

Item 1.	Unaudited Condensed Consolidated Financial Statements	1

	Condensed Consolidated Balance Sheets	4

	Unaudited Condensed Consolidated Statements of Operations	3

	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity	5

	Unaudited Condensed Consolidated Statements of Cash Flows	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Control and Procedures	32

PART II - OTHER INFORMATION		33

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 6.	Exhibits	35

SIGNATURES		36

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements regarding, among other things, our plans, strategies and prospects, both business and financial. These statements are based on the beliefs and assumptions of our management. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot provide assurance that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Investors should read statements that contain these words carefully because they discuss future expectations, contain projects of future results of operations or financial condition; or state other “forward-looking” information. Forward-looking statements are based on information available as of the date of this Quarterly Report and may involve significant judgments and assumptions, known and unknown risks and uncertainties and other factors, many of which are outside our control. There may be events in the future that management is not able to predict accurately or over which we have no control. We do not undertake any obligation to update to otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable laws. The risk factors and cautionary language contained in this Quarterly Report provide examples of risks, uncertainties, and events that may cause actual results to differ materially from the expectations described in such forward-looking statements, including among other things:

●

our ability to recognize the anticipated benefits of the Business Combination (as defined below), which may be affected by, among other things, our ability to grow and manage growth profitably, maintain relationships with customers, compete within our industry and retain key employees;

●

the possibility that we may be adversely impacted by economic, business, and/or competitive factors;

●

our limited operating history makes it difficult to evaluate our business and prospects;

●

our inability to effectively manage future growth and achieve operational efficiencies;

●

our recent and rapid growth may not be indicative of future performance;

●

we may not continue to grow or maintain our active user base, and may not be able to achieve or maintain profitability;

●

spam activity, including inauthentic and fraudulent user activity, if undetected, may contribute, from time to time, to some amount of overstatement of our performance indicators;

●

we collect, store, and process large amounts of user video content and personal information of our users and subscribers. If our security measures are breached, our sites and applications may be perceived as not being secure, traffic and advertisers may curtail or stop viewing our content or using our services, our business and operating results could be harmed, and we could face governmental investigations and legal claims from users and subscribers;

●

we may fail to comply with applicable privacy laws;

●

we are subject to cybersecurity risks and interruptions or failures in our information technology systems and as we grow and gain recognition, we will likely need to expend additional resources to enhance our protection from such risks. Notwithstanding our efforts, a cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss;

●

we may be found to have infringed on the intellectual property of others, which could expose us to substantial losses or restrict our operations;

●

we may face liability for hosting a variety of tortious or unlawful materials uploaded by third parties, notwithstanding the liability protections of Section 230 of the Communications Decency Act of 1996;

●

we may face negative publicity for removing, or declining to remove, certain content, regardless of whether such content violated any law;

●

our traffic growth, engagement, and monetization depend upon effective operation within and compatibility with operating systems, networks, devices, web browsers and standards, including mobile operating systems, networks, and standards that we do not control;

●

our business depends on continued and unimpeded access to our content and services on the internet. If we or those who engage with our content experience disruptions in internet service, or if internet service providers are able to block, degrade or charge for access to our content and services, we could incur additional expenses and the loss of traffic and advertisers;

●

we face significant market competition, and if we are unable to compete effectively with our competitors for traffic and advertising spend, our business and operating results could be harmed;

●

changes to our existing content and services could fail to attract traffic and advertisers or fail to generate revenue;

●

we depend on third-party vendors, including internet service providers, advertising networks, and data centers, to provide core services;

●

hosting and delivery costs may increase unexpectedly;

●

we have offered and intend to continue to offer incentives, including economic incentives, to content creators to join our platform, and these arrangements often involve fixed payment obligations that are not contingent on actual revenue or performance metrics generated by the applicable content creator but rather are typically based on our modeled financial projections for that creator, which if not satisfied may adversely impact our financial performance, results of operations and liquidity;

●

we may be unable to develop or maintain effective internal controls;

●

potential diversion of management’s attention and consumption of resources as a result of acquisitions of other companies and success in integrating and otherwise achieving the benefits of recent and potential acquisitions;

●

we may fail to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows;

●

we may be adversely impacted by other economic, business, and/or competitive factors;

●

changes in tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new tax legislation, or exposure to additional tax liabilities may adversely impact our financial results;

●

compliance obligations imposed by new privacy laws, laws regulating social media platforms and online speech in the U.S. and Canada, or industry practices may adversely affect our business; and

●

other risks and uncertainties indicated in this Quarterly Report, including those under “Item 1A. Risk Factors” herein, and other filings that we have made or will make with the Securities and Exchange Commission (the “SEC”).

iii

PART I - FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Rumble Inc.
	Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	For the three months ended March 31, 2023 and 2022

	Rumble Inc.
	Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	For the three months ended March 31, 2023 and 2022

Contents

Condensed Consolidated Interim Financial Statements

Condensed Consolidated Interim Statements of Comprehensive Loss		3

Condensed Consolidated Interim Balance Sheets		4

Condensed Consolidated Interim Statements of Shareholders’ Equity (Deficit)		5

Condensed Consolidated Interim Statements of Cash Flows		6

Notes to the Condensed Consolidated Interim Financial Statements		7-18

	Rumble Inc.
	Condensed Consolidated Interim Statements of Comprehensive Loss
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31,	2023			2022

Revenues	$	17,615,375		$	4,044,765

Expenses
Cost of services (content, hosting and other)	$	26,014,365		$	3,742,570
General and administrative		6,900,545			1,540,367
Research and development		2,550,561			792,332
Sales and marketing		3,297,079			810,505
Finance costs		-			810,817
Share-based compensation		1,800,135			16,986
Foreign exchange loss		15,906			27,577
Amortization and depreciation		681,074			225,627

Total expenses		41,259,665			7,966,781

Loss from operations		(23,644,290	)		(3,922,016	)
Interest income		3,307,927			8,698
Share of profit from joint venture		-			1,124
Changes in fair value of warrant liability		(8,331,750	)		-

Loss before income taxes		(28,668,113	)		(3,912,194	)
Income tax recovery (expense)		-			-
Deferred tax recovery (expense)		-			-

Net loss and comprehensive loss	$	(28,668,113	)	$	(3,912,194	)

Loss per share:
Basic	$	(0.14	)	$	(0.02	)
Diluted	$	(0.14	)	$	(0.02	)

Weighted-average shares used to compute loss per share:
Basic		202,717,669			173,518,855
Diluted		202,717,669			173,518,855

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

	Rumble Inc.
	Condensed Consolidated Interim Balance Sheets
	(Expressed in U.S. Dollars)
	(Unaudited)

	March 31, 2023			December 31, 2022
Assets

Current assets
Cash and cash equivalents	$	325,204,642		$	337,169,279
Marketable securities		1,100,000			1,100,000
Accounts receivable, net		5,511,545			4,748,189
Prepaid expenses and other		6,997,177			9,342,691
		338,813,364			352,360,159
Prepaid expenses and other, long term		619,812			547,589
Capital assets		10,155,366			8,844,232
Right-of-use assets		1,166,903			1,356,454
Intangible assets		3,204,733			3,211,305
Goodwill		662,899			662,899
	$	354,623,077		$	366,982,638

Liabilities and Shareholders’ Equity

Current liabilities
Accounts payable and accrued liabilities	$	17,587,702		$	14,324,696
Deferred revenue		3,636,261			1,040,619
Lease liabilities		485,229			583,186
Income taxes payable		934			934
		21,710,126			15,949,435
Warrant liability		18,394,250			10,062,500
Lease liabilities, long-term		742,825			835,924
Other liability		500,000			500,000
		41,347,201			27,347,859
Commitments and contingencies

Shareholders’ equity
Common shares		768,357			768,357
Deficit		(57,450,814	)		(28,782,701	)
Additional paid-in capital		369,958,333			367,649,123
		313,275,876			339,634,779
	$	354,623,077		$	366,982,638

On behalf of the Board:

________________________

Director

_______________________

Director

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

	Rumble Inc.
	Condensed Consolidated Interim Statements of Shareholders’ Equity (Deficit)
	(Expressed in U.S. Dollars)
	(Unaudited)

	Number of Common Stock
	Legacy Rumble Class A		Legacy Rumble Class B		Class A		Class B		Class C		Class D		Legacy Rumble Class A		Legacy Rumble Class B		Class A		Class B		Class C		Class D		Additional Paid-in Capital		Deficit			Total

Balance December 31, 2021		8,119,690		135,220		-		-		-		-	$	43,223,609	$	129,761	$	-	$	-	$	-	$	-	$	4,392,666	$	(17,378,707	)	$	30,367,329
Share based payments		-		-		-		-		-		-		-		-		-		-		-		-		16,986		-			16,986
Loss for the year		-		-		-		-		-		-		-		-		-		-		-		-		-		(3,912,194	)		(3,912,194	)
Balance March 31, 2022		8,119,690		135,220		-		-		-		-	$	43,223,609	$	129,761	$	-	$	-	$	-	$	-	$	4,409,652	$	(21,290,901	)	$	26,472,121


Balance December 31, 2022		-		-		111,467,763		-		167,662,214		105,782,403	$	-	$	-	$	741,013	$	-	$	16,766	$	10,578	$	367,649,123	$	(28,782,701	)	$	339,634,779
Share based payments		-		-		-		-		-		-		-		-		-		-		-		-		2,309,210		-			2,309,210
Loss for the year		-		-		-		-		-		-		-		-		-		-		-		-		-		(28,668,113	)		(28,668,113	)
Balance March 31, 2023		-		-		111,467,763		-		167,662,214		105,782,403	$	-	$	-	$	741,013	$	-	$	16,766	$	10,578	$	369,958,333	$	(57,450,814	)	$	313,275,876

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

	Rumble Inc.
	Condensed Consolidated Interim Statements of Cash Flows
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31,	2023			2022

Cash flows provided by (used in)

Operating activities
Net loss and comprehensive loss for the period	$	(28,668,113	)	$	(3,912,194	)
Adjustments to reconcile net loss to cash flows used in operating activities:
Amortization and depreciation		681,074			229,416
Share-based compensation		2,309,210			16,986
Interest expense		7,459			7,990
Non-cash portion of operating lease costs		145,359			93,880
Repayment of lease liabilities		(154,323	)		(51,840	)
Loss on change in fair value of warrants		8,331,750			-
Share of profit from joint venture		-			(1,124	)
Changes in assets and liabilities:
Accounts receivable		(763,356	)		(506,045	)
Prepaid expenses		2,273,291			(1,139,804	)
Accounts payable and accrued liabilities		3,263,004			1,545,262
Deferred revenue		2,595,644			(306	)
		(9,979,001	)		(3,717,779	)
Investing activities
Purchase of capital assets		(1,841,205	)		(1,750,949	)
Purchase of intangible assets		(144,431	)		-
		(1,985,636	)		(1,750,949	)

Decrease in cash and cash equivalents during the period		(11,964,637	)		(5,468,728	)

Cash and cash equivalents, beginning of period		337,169,279			46,847,375
Cash and cash equivalents, end of period	$	325,204,642		$	41,378,647

Supplemental cash flow information:
Cash paid for income taxes	$	-		$	-
Cash paid for interest		-			-
Cash paid for lease liabilities		158,067			65,704

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

1.	Overview and Basis of Presentation

Nature of Operations

Rumble Inc. (“Rumble”, “the Company”, or “the Group”) is a full-service video technology provider offering customizable video players, original content videos, and a library of advertisements for use with its video players. The Company’s registered office is located at 444 Gulf of Mexico Drive, Longboat Key, Florida, 34228. The Company’s shares of Class A common stock and warrants are traded on The Nasdaq Global Market under the symbol “RUM” and “RUMBW”, respectively.

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements (the “financial statements”) are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the results of the Company and its wholly-owned subsidiaries. Any reference in these notes to applicable guidance is meant to refer to the authoritative guidance found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”). All intercompany balances and transactions have been eliminated upon consolidation. These financial statements are presented in U.S. dollars, which is the functional currency of the Company, except where otherwise indicated.

These financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2022 (“Annual Financial Statements”). These financial statements have been prepared using the same accounting policies that were described in Note 3 to the Annual Financial Statements.

The board of directors of the Company approved these condensed consolidated interim financial statements on May 12, 2023.

Use of Estimates

The preparation of these financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates the estimates used, which include but are not limited to the: evaluation of revenue recognition criteria; collectability of accounts receivable; valuation of share-based compensation awards; valuation of financial instruments measured at fair value through profit and loss; assessment and recoverability of long-lived assets; useful lives of long-lived assets, including goodwill; and the realization of tax assets, estimates of tax liabilities, and valuation of deferred taxes. These estimates, judgments, and assumptions are reviewed periodically and the impact of any revisions are reflected in the financial statements in the period in which such revisions are made. Actual results could differ materially from those estimates, judgments, or assumptions, and such differences could be material to the Company’s consolidated financial position and results of operations.

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

2.	Summary of Significant Accounting Policies

Accounting standards adopted

Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance was subsequently amended by ASU 2018-19, Codification Improvements, ASU 2019-04, Codification Improvements, ASU 2019-05, Targeted Transition Relief, ASU 2019-10, Effective Dates, and ASU 2019-11, Codification Improvements. These ASUs are effective for Smaller Reporting Companies for fiscal years beginning after December 15, 2022, including interim periods therein. The Company adopted this ASU effective January 1, 2023. The adoption did not have a material impact on the condensed consolidated interim financial statements.

3.	Revenue from Contracts with Customers

The following table presents revenues disaggregated by type:

	Three months ended March 31,
	2023		2022

Advertising	$	14,336,450	$	2,509,526
Licensing and other		3,278,925		1,535,239
Total revenues	$	17,615,375	$	4,044,765

Deferred Revenue

Deferred revenue recorded at March 31, 2023 is expected to be fully recognized by March 31, 2024. The deferred revenue balance as of March 31, 2023 was $3,636,261 (December 31, 2022 - $1,040,619).

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

4.	Cash, Cash Equivalents, and Marketable Securities

Cash and cash equivalents as of March 31, 2023 and December 31, 2022 consist of the following:

	March 31, 2023
	Contracted
	Maturity	Balance

Cash	Demand	$	8,748,662
Treasury bills and money market funds	Demand		316,455,980
		$	325,204,642


	December 31, 2022
	Contracted
	Maturity	Balance

Cash	Demand	$	3,519,674
Treasury bills and money market funds	Demand		333,649,605
		$	337,169,279

Cash and cash equivalents are carried at amortized cost, which approximates their fair market value.

Marketable securities consist of term deposits of $1,100,000 as of March 31, 2023 and December 31, 2022. The Group did not have any long-term investments as of March 31, 2023 or December 31, 2022 except for the investment in a joint venture.

As of March 31, 2023, the Group entered into a guarantee/ standby letter of credit for $1,257,500 which will be used towards the issuance of credit for running the day-to-day business operations (December 31, 2022 - $1,257,500).

5.	Capital Assets

	March 31, 2023			December 31, 2022
Computer hardware	$	9,912,871		$	8,866,157
Furniture and fixtures		100,921			100,921
Leasehold improvements		1,716,061			921,570
		11,729,853			9,888,648
Accumulated depreciation		(1,574,487	)		(1,044,416	)
Net carrying value	$	10,155,366		$	8,844,232

Depreciation expense on capital assets totaled $530,071 and $111,437 for the three months ended March 31, 2023 and 2022, respectively.

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

6.	Right-of-Use Assets and Lease Liabilities

The Group leases several facilities under non-cancelable operating leases with no right of renewal. Our leases have original lease periods expiring between 2023 and 2027. The lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

	March 31, 2023				December 31, 2022
			Accumulated				Accumulated
	Cost		Depreciation		Cost		Depreciation
Right-of-use assets	$	1,882,744	$	715,841	$	1,926,936	$	570,482
Net book value			$	1,166,903			$	1,356,454

Operating lease costs were $152,818 and $105,659 for the three months ended March 31, 2023 and 2022, respectively, and are included in general and administration expenses in the condensed consolidated interim statement of comprehensive loss.

As of March 31, 2023 the weighted-average remaining lease term and weighted-average incremental borrowing rate for the operating leases were 3.18 years and 2.24%, respectively (December 31, 2022 – 3.26 years and 2.35%).

The following table shows the undiscounted cash flows for the remaining years under the lease arrangement as at March 31, 2023.

2023	$	431,771
2024		255,064
2025		258,426
2026		261,848
2027		25,963
		1,233,072
Less: imputed interest*		5,018
		1,228,054
Current portion	$	485,229
Long-term portion	$	742,825

Imputed interest represents the difference between undiscounted cash flows and discounted cash flows

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

7.	Intangible Assets

	March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intellectual property	$	123,143	$	78,519	$	44,624
Domain name		500,448		60,996		439,452
Brand		1,284,000		184,069		1,099,931
Technology		1,475,000		422,901		1,052,099
Internal-use software		639,200		70,573		568,627
	$	4,021,791	$	817,058	$	3,204,733

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intellectual property	$	123,143	$	71,019	$	52,124
Domain name		500,448		52,656		447,792
Brand		1,284,000		151,969		1,132,031
Technology		1,475,000		349,151		1,125,849
Internal-use software		494,769		41,260		453,509
	$	3,877,360	$	666,055	$	3,211,305

Amortization expense related to intangible assets was $151,003 and $114,190 for the three months ended March 31, 2023 and 2022, respectively.

8.	Warrant Liability

Warrant liability comprises of warrants issued by the Company in public offerings, private placements, and forward purchase contracts. As of March 31, 2023, the number of warrants and weighted-average exercise price were 8,050,000 warrants and $11.50, respectively (December 31, 2022 - 8,050,000 and $11.50).

The warrants are exercisable and will expire September 16, 2027, or earlier upon redemption or liquidation.

All the Company’s warrants that are classified as liabilities are publicly traded and are classified as Level 1 in the fair value hierarchy. The change in fair value of the warrants are as follows:

Balance, December 31, 2022	$	10,062,500
Change in fair value		8,331,750
Balance, March 31, 2023	$	18,394,250

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

9.	Other Liability

The Company has received certain amounts from a third party to assist with certain operating expenditures of the Company. These amounts are to be repaid upon settlement of those expenditures, are non-interest bearing, and have been treated as a long-term liability. As of March 31, 2023, an amount of $500,000 related to these expenses was recorded in other liability (December 31, 2022 - $500,000).

10.

Shareholders’ Equity

Common and Preference Shares

Authorized

The Company is authorized to issue 1,000,000,000 shares as of March 31, 2023 and December 31, 2022, consisting of:

(i)

700,000,000 shares of Class A Common Stock with a par value of $0.0001 per share

(ii)

170,000,000 shares of Class C Common Stock with a par value of $0.0001 per share

(iii)

110,000,000 shares of Class D Common Stock with a par value of $0.0001 per share

(iv)

20,000,000 shares of preferred stock with a par value of $0.0001 per share

Issued and outstanding

The following shares of common stock are issued and outstanding at:

	March 31, 2023				December 31, 2022
	Number		Amount		Number		Amount
Class A Common Stock		111,467,763	$	741,013		111,467,763	$	741,013
Class C Common Stock		167,662,214		16,766		167,662,214		16,766
Class D Common Stock		105,782,403		10,578		105,782,403		10,578

Balance		384,912,380	$	768,357		384,912,380	$	768,357

Certain shareholders are eligible to receive up to an aggregate of 78,376,354 additional shares of the Company’s Class A Common Stock if the closing price of the Company’s Class A Common Stock is greater than or equal to $15.00 and $17.50, respectively (with 50% released at each target, or if the latter target is reached first, 100%) for a period of 20 trading days during any 30 trading-day period. The term will expire September 16, 2027. If there is a change in control prior to September 16, 2027 resulting in a per share price equal to or in excess of the $15.00 and $17.50 share price milestones not previously met, then the Company shall issue the earnout shares to these shareholders. The shares are currently being held in escrow until the contingency is met.

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

11.

Share-Based Compensation Expense

Share-based compensation expenses are summarized as follows:

	Three months ended March 31, 2023		Three months ended March 31, 2022
Restricted stock units	$	1,980,413	$	-
Stock options		328,797		16,986
	$	2,309,210	$	16,986

During the three months ended March 31, 2023, share-based compensation expense recognized in cost of services was $509,075 in the condensed consolidated interim statement of comprehensive loss (three months ended March 31, 2022 - $nil).

Restricted Stock Units

The following table reflects the continuity of restricted stock units (“RSUs”) transactions during the three months ended March 31, 2023:

	Three months ended March 31, 2023
	Number		Weighted Average Grant Date Fair Value
Outstanding, beginning of year		1,548,098	$	11.62
Granted		-		-
Forfeited		-		-
Outstanding, end of period		1,548,098	$	11.62

The total unrecognized compensation cost for the RSUs issued is $14,300,148 which is expected to be recognized over a weighted-average period of 2.15 years.

Stock Options

The following table reflects the continuity of stock option transactions during the three months ended March 31, 2023:

	Three months ended March 31, 2023
	Number			Weighted Average Exercise Price
Outstanding, beginning of year		58,607,457		$	0.22
Granted		-			-
Forfeited		(3,985	)		10.60
Outstanding, end of period		58,603,472		$	0.22

Vested and exercisable		57,818,662		$	0.09

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

11.

Share-Based Compensation Expense (Continued)

Stock Options (Continued)

Additionally, the option holders are eligible to receive up to an aggregate of 28,587,396 shares of Class A Common Stock in respect of the options they hold if the closing price of the Company’s Class A Common Stock is greater than or equal to $15.00 and $17.50, respectively (with 50% released at each target, or if the latter target is reached first, 100%) for a period of 20 trading days during any 30 trading-day period. The term will expire September 16, 2027. If there is a change in control prior to September 16, 2027 resulting in a per share price equal to or in excess of the $15.00 and $17.50 share price milestones not previously met, then the Company shall issue the earnout shares to the option holders.

The total unrecognized compensation cost for stock options issued as at March 31, 2023 is $3,864,611 (December 31, 2022 - $4,231,026) which is expected to be recognized over a weighted-average period of 1.93 years (December 31, 2022 – 2.19 years).

The weighted average fair value of the outstanding options as of March 31, 2023 was $0.80 (December 31, 2022 - $0.80). Share options outstanding at March 31, 2023 and December 31, 2022 have the following expiry dates and exercise prices:

	March 31, 2023				December 31, 2022
	Exercise		Share		Exercise		Share
Expiry	Price		Options		Price		Options

2024	$	2.50		157,000	$	2.50		157,000
2026		2.50		376,768		2.50		376,768
2031		0.27		137,904		0.27		137,904
2031		2.50		40,032		2.50		40,032
2031		10.06		332,931		10.06		332,931
2032		10.60		359,456		10.60		363,441
2032		12.49		78,634		12.49		78,634
2040		0.03		56,556,501		0.03		56,556,501
2041		2.50		564,246		2.50		564,246
Total				58,603,472				58,607,457

Weighted average remaining contractual life of options outstanding				17 years				17 years

12.

Loss per Share

Basic loss per share is computed by dividing net loss attributable to the Company by the weighted-average number of Class A and Class C Common Stock outstanding, excluding those held in escrow as these are deemed to be contingently returnable shares that must be returned if the earnout contingency is not met, in line with guidance within ASC 260-10-45, Earnings per Share – Presentation, Other Presentation Matters, during the three month period. Shares of Class D Common Stock do not share in earnings and not participating securities (i.e. non-economic shares) and therefore, have been excluded from the calculation of weighted-average number of shares outstanding.

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

12.

Loss per Share (Continued)

Diluted loss per share is computed giving effect to all potentially dilutive shares. Diluted loss per share for all periods presented is the same as basic loss per share as the inclusion of potentially issuable shares would be antidilutive.

13.

Commitments and Contingencies

Commitments

The Company has minimum contractual cash commitments of approximately $68 million as of March 31, 2023, which are primarily related to programming and content, leases, and other service arrangements. The majority of these commitments will be paid over five years commencing in 2023.

In addition to the minimum contractual cash commitments, the Company has programming and content agreements that have variable cost arrangements. These future costs are dependent upon many factors and are difficult to anticipate, however, these costs may be substantial.

Legal Proceedings

In the normal course of business, to facilitate transactions in services and products, the Company indemnifies certain parties. The Company has agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. Several of these agreements limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and its bylaws contain similar indemnification obligations to its agents.

Furthermore, many of the Company’s agreements with its customers and partners require the Company to indemnify them for certain intellectual property infringement claims against them, which would increase costs as a result of defending such claims, and may require that we pay significant damages if there were an adverse ruling in any such claims. Customers and partners may discontinue the use of the Company’s services and technologies as a result of injunctions or otherwise, which could result in loss of revenues and adversely impact the business.

It is not possible to make a reasonable estimate of the maximum potential amount under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. As of March 31, 2023 and December 31, 2022, there were no material indemnification claims that were probable or reasonably possible.

As of March 31, 2023, Rumble had received notification of several claims including (1) a lawsuit against the Company and one of its shareholders seeking a variety of relief including rescission of a share redemption sale agreement with the Company or damages alleged to be worth $419 million, (2) a patent infringement lawsuit against the Company, (3) a putative class action lawsuit alleging violations of the Video Privacy Protection Act in the United States District Court for the Middle District of Florida and (4) a litigation demand alleging the Company used voting procedures in violation of Delaware General Corporation Law Section 242(b)(2) when shareholders approved certain amendments to Rumble’s charter in connection with the Company’s de-SPAC transaction.

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

13.

Commitments and Contingencies (Continued)

The Company is defending the claims and considers that the likelihood that it will be required to make a payment to plaintiffs to be remote.

14.

Financial Instrument Risks

Credit and Concentration Risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company is exposed to credit risk resulting from the possibility that a customer or counterparty to a financial instrument defaults on their financial obligations or if there is a concentration of transactions carried out with the same counterparty. Financial instruments that potentially subject the Company to concentrations of credit risk include cash, cash equivalents, marketable securities and accounts receivable.

The Company’s cash, cash equivalents, and marketable securities are held in reputable banks in its country of domicile and management believes the risk of loss to be remote.

The Company is exposed to credit risk in the event of default by its customers. Accounts receivable are recorded at the invoiced amount, do not bear interest, and do not require collateral. For the three months ended March 31, 2023 and 2022, one customer accounted for $9,168,526 and $1,170,057 or 52% and 29% of revenue, respectively. As of March 31, 2023, one customer accounted for 58% of accounts receivable (December 31, 2022 - 66%), which has been collected in the month of April 2023.

The allowance for credit losses at March 31, 2023 was $nil (December 31, 2022 - $nil).

15.

Related Party Transactions

The Company’s related parties include directors, shareholders and key management.

During the three months ended March 31, 2023, compensation to related parties totalled $2,951,232 (three months ended March 31, 2022 - $350,145), of which the Company paid share-based compensation to related parties amounting to $1,673,431 (three months ended March 31, 2022 - $4,618).

The Company incurred related party expenses for personnel services of $564,649 and $382,780 during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, accounts payable for personnel services was $215,636 (December 31, 2022 - $174,351).

Additionally, the Company owns $390,000 (December 31, 2022 - $390,000) from related parties carrying an interest rate of 0.19% per annum, for a Company’s subsidiary’s domain name.

There were no other related party transactions during these periods.

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

16.

Segment Information

Disclosure requirements about segments of an enterprise establish standards for reporting information regarding operating segments in the condensed consolidated interim financial statements. These requirements include presenting selected information for each segment. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding how to allocate resources and assess performance. The Company’s chief decision-maker is its chief executive officer. The Company and its chief decision-maker view the Company’s operations and manage its business as one operating segment.

The following presents the revenue by geographic region:

	Three months ended March 31,
	2023		2022

United States	$	16,155,288	$	3,886,159
Canada		64,512		77,071
Other		1,395,575		81,535

	$	17,615,375	$	4,044,765

The Company tracks assets by physical location. Long-lived assets consists of capital assets, net, and are shown below:

	March 31, 2022		December 31, 2022

United States	$	9,738,185	$	8,401,351
Canada		417,181		442,881
	$	10,155,366	$	8,844,232

	Rumble Inc.
	Notes to the Condensed Consolidated Interim Financial Statements
	(Expressed in U.S. Dollars)
	(Unaudited)

For the three months ended March 31, 2023 and 2022

17.

Reclassifications of Previously Issued Financial Statements

Certain amounts for prior periods have been reclassified in the condensed consolidated interim statements to conform to the current year presentation. There has been no impact on previously reported net loss or shareholders’ equity from such reclassifications.

The following table summarizes the impact of the reclassification adjustments on the Company’s condensed consolidated interim statement of comprehensive loss for the three months ended March 31, 2022 as included in the Company’s Registration Statement on Form S-4/A filed with the SEC on August 9, 2022.

	As previously reported		Adjustments			As reclassified

Condensed consolidated interim statement of comprehensive loss for the three months ended:
March 31, 2022
Cost of revenues	$	3,495,173	$	(3,495,173	)	$	-
Cost of services (content, hosting, and other)		-		3,742,570			3,742,570
General and administrative		1,429,722		110,645			1,540,367
Sales and marketing		1,228,386

SEC Form 10-Q filed by CF Acquisition Corp. VI