What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-14 · 233 added, 264 removed, 228 unchanged (69% of the section changed)

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

Management’s Discussion and Analysis of Financial Con dition and Results of Operations.

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2023.

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Our actual results could differ materially from those discussed below.

Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and those discussed in “Item 1A.

Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and in the section "Cautionary Statement Regarding Forward-Looking Information", those discussed in “Item 1A.

Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, and in any subsequent filing we make with the SEC.

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Limited Number of Customers .

During the six months ended June 30, 2024 and 2023, one customer represented 14.2% and 12.7% of revenue, respectively.

During the nine months ended September 30, 2024 and 2023, one customer represented 13.4% and 13.5% of revenue, respectively.

Managing Industry Dynamics .

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This trend is exemplified by two imminent developments:

(1) the anticipated erosion of Google's third-party cookies and (2) the data security measures integrated into Apple iPhones.

(1) the anticipated erosion of Google's third-party cookies and (2) the data security measures integrated into Apple iPhone.

Consequently, companies must explore innovative methods to better understand their target audiences and have the tools to effectively engage with them.

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We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.

The following is our analysis for the three and six months ended June 30, 2024 and 2023:

(in thousands) Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Revenue $ 13,003 $ 12,616 $ 25,450 $ 14,114

The following is our analysis for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

(in thousands)

Cost of revenue

Gross margin 3,422 4,208 6,558 4,736

General and administrative expenses

Impairment of goodwill and intangibles

Financing and other expense, net

(3,320) (2,151) (5,980) (3,047)

Net loss from operations

(5,208) (6,071) (9,974) (9,867)

Adjusted EBITDA (1)

$ (920) $ (1,856) $ (2,023) $ (3,942)

(1) - For a reconciliation of net loss to Adjusted EBITDA see “Use of Non-GAAP Financial Measures” below.

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• providing primary and secondary research, competitive intelligence, and expert insights to address customers' strategic issues, where revenue is primarily derived from providing a single integrated service for such research.

Revenue increased $387,000, or 3%, for the three months ended June 30, 2024, compared to the same period in 2023.

Revenue increased $11.3 million, or 80%, for the six months ended June 30, 2024, compared to the same period in 2023.

See below for a detailed analysis of revenue for the three and six months ended June 30, 2024, and 2023.

Revenue decreased $1.1 million or 7%, for the three months ended September 30, 2024, compared to the same period in 2023.

Revenue increased $10.2 million, or 35%, for the nine months ended September 30, 2024, compared to the same period in 2023.

See below for a detailed analysis of revenue for the three and nine months ended September 30, 2024, and 2023.

Cost of Revenue

Cost of revenue includes internal labor and payment to third parties for services performed to drive revenue, which includes the publisher cost paid for ad exchange on third party sites, advertising fees, personnel costs, technology and data related costs, fees paid for content creation, influencers, writers, and sales commission.

Cost of revenue increased approximately $1.2 million, or 14%, for the three months ended June 30, 2024 compared to the same period in 2023.

Cost of revenue increased approximately $9.5 million, or 101%, for the six months ended June 30, 2024 compared to the same period in 2023.

See below for a detailed analysis of cost of revenue for the three and six months ended June 30, 2024, and 2023.

Cost of revenue decreased approximately $2.1 million, or 18%, for the three months ended September 30, 2024 compared to the same period in 2023.

Cost of revenue increased approximately $6.6 million or 30%, for the nine months ended September 30, 2024 compared to the same period in 2023.

See below for a detailed analysis of cost of revenue for the three and nine months ended September 30, 2024, and 2023.

General and Administrative Expenses

General and administrative expenses consist primarily of (i) personnel and related costs for our executive, finance and accounting, human resources, and, administrative personnel, including salaries, benefits, bonuses, and stock-based

compensation;

(ii) legal, accounting, and other professional service fees;

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and (v) facility costs.

General and administrative expenses decreased approximately $2.8 million, or 35%, for the three months ended June 30, 2024 compared to the same period in 2023.

General and administrative expenses decreased approximately $1.0 million, or 9%, for the six months ended June 30, 2024 compared to the same period in 2023.

See below for a detailed analysis of general and administrative expenses for the three and six months ended June 30, 2024 and 2023.

General and administrative expenses increased approximately $300,000, or 7%, for the three months ended September 30, 2024 compared to the same period in 2023.

General and administrative expenses remained consistent for the nine months ended September 30, 2024 compared to the same period in 2023.

See below for a detailed analysis of general and administrative expenses for the three and nine months ended September 30, 2024 and 2023.

Results of Operations

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This analysis should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this Quarterly Report on Form 10-Q.

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Net loss from operations for the quarter ended June 30, 2024 was $5.2 million as compared to a net loss of $6.1 million for the same period in 2023.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Net loss from operations for the quarter ended September 30, 2024 was $27,000 as compared to a net loss of $17.0 million for the same period in 2023.

The following is our analysis for the period:

(in thousands) Three Months Ended June 30,

2024 2023 Change % Change

Revenue $ 13,003 $ 12,616 $ 387 3 % increased

Cost of revenue 9,581 8,408 1,173 14 % increased

Gross margin 3,422 4,208 (786) (19) % decreased

General and administrative expense 5,310 8,128 (2,818) (35) % decreased

Loss from operations (1,888) (3,920) 2,032 (52) % decreased

Three Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Cost of revenue

General and administrative expenses

Impairment of goodwill and intangibles

Loss from operations

Financing and other expense, net

(3,320) (2,151) (1,169) 54 % increased

Net loss from operations

$ (5,208) $ (6,071) $ 863 (14) % decreased

Gross margin % 26 % 33 % (7) % (21) % decreased

Our revenue showed an overall increase of $387,000, or 3%, for the three months ended June 30, 2024, compared to the same period in 2023.

Revenue in our digital publishing division was significantly impacted by macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns and reduction in website traffic.

This reduction was offset by an increase in our advertising technology division which was driven by our ability to leverage our resources to attract top advertisers, which in turn has allowed us to onboard premium publishers.

This led to an increase in volume, as well as rates and overall revenue.

The Company focuses on digital publishing, advertising technology, consumer insights, creative and media services.

Revenue generated by each such division is set forth below:

(in thousands) Three Months Ended June 30,

2024 2023 Change % Change

Digital publishing $ 516 $ 1,444 $ (928) (64) % decreased

Advertising technology 3,587 1,961 1,626 83 % increased

Consumer insights 6,677 6,896 (219) (3) % decreased

Creative services 1,657 1,666 (9) (1) % decreased

Media services 566 649 (83) (13) % decreased

$ 13,003 $ 12,616 $ 387 3 % increased

Gross margin percentage

Our revenue decreased $1.1 million, or 7%, for the three months ended September 30, 2024, compared to the same period in 2023.

The reduction in revenue was largely attributable to our digital publishing and consumer insihts divisions.

Changes in revenue generated by each such division are set forth below:

Three Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Digital publishing

Digital publishing revenue decreased by $928,000, or 64%, for the three months ended June 30, 2024,compared to the same period in 2023.

Approximately $516,000, or 4%, of the Company’s revenue for the three months ended June 30, 2024, was generated from our digital publishing customers, compared to $1.4 million, or 11%, for the same period in 2023.

Advertising technology

Consumer insights

Creative services

Media services

Digital Publishing

Digital publishing revenue decreased by $0.5 million, or 50%, for the three months ended September 30, 2024,compared to the same period in 2023.

Approximately $0.5 million, or 4%, of the Company’s revenue for the three months ended September 30, 2024, was generated from our digital publishing customers, compared to $1.0 million, or 7%, for the same period in 2023.

This division was significantly impacted by macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns and reduction in website traffic.

Advertising Technology

Advertising technology revenue increased by $1.6 million, or 83%, for the three months ended June 30, 2024, compared to the same period in 2023.

Approximately $3.6 million, or 28%, of the Company’s revenue for the three months ended June 30, 2024, was generated from our advertising technology customers compared to $2.0 million, or 16%, for the same period in 2023.

Advertising technology revenue increased by $1.0 million or 28%, for the three months ended September 30, 2024, compared to the same period in 2023.

Approximately $4.7 million, or 33%, of the Company’s revenue for the three months ended September 30, 2024, was generated from our advertising technology customers compared to $3.6 million, or 24%, for the same period in 2023.

This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn has allowed us to onboard premium publishers.

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Consumer Insights

Consumer insights revenue decreased by $219,000, or 3%, for the three months ended June 30, 2024, compared to the same period in 2023.

Approximately $6.7 million, or 51%, of the Company’s revenue for the three months ended June 30, 2024, was generated from our consumer insights customers compared to $6.9 million, or 55%, for the same period in 2023.

Consumer insights revenue decreased by $1.2 million or 16%, for the three months ended September 30, 2024, compared to the same period in 2023.

Approximately $6.8 million, or 48%, of the Company’s revenue for the three months ended September 30, 2024 was generated from our consumer insights customers compared to $8.0 million, or 52%, for the same period in 2023.

This decrease was primarily related to the slowdown of Altria product testing, resulting in a negative revenue impact.

Creative Services

Creative services revenue remained consistent for the three months ended June 30, 2024, compared to the same period in 2023.

Approximately $1.7 million, or 13%, of the Company’s revenue for the three months ended June 30, 2024 and 2023, was generated from our creative services customers.

Creative services revenue decreased by $185,000 or 10% for the three months ended September 30, 2024, compared to the same period in 2023.

Approximately $1.6 million, or 11%, of the Company’s revenue for the three months ended September 30, 2024, was generated from our creative services customers compared to $1.8 million, or 12% for the same period in 2023.

This decrease was primarily related to a decrease in the number of projects for smaller tier revenue customers.

Media Services

Media services revenue decreased by $83,000, or 13%, for the three months ended June 30, 2024, compared to the same period in 2023.

Approximately $566,000, or 4%, of the Company’s revenue for the three months ended June 30, 2024, was generated from our consumer insights customers compared to $649,000, or 5%, for the same period in 2023.

Media services revenue decreased by $203,000, or 26%, for the three months ended September 30, 2024, compared to the same period in 2023.

Approximately $600,000, or 4%, of the Company’s revenue for the three months ended September 30, 2024, was generated from our media services customers compared to $793,000, or 5%, for the same period in 2023.

This decrease was primarily related to the timing of customer needs and the moving of certain projects to year-end.

Cost of Revenue

(in thousands) Three Months Ended June 30,

2024 2023 Change % Change

Direct salaries and labor cost

$ 2,146 $ 2,528 $ (382) (15) % decreased

Direct project cost

3,050 2,576 474 18 % increased

Non-direct project cost 1,616 1,636 (20) (1) % decreased

Publisher cost

2,300 1,131 1,169 103 % increased

Content creation 160 307 (147) (48) % decreased

Sales commission 246 196 50 26 % increased

Other 63 34 29 85 % increased

$ 9,581 $ 8,408 $ 1,173 14 % increased

Cost of revenue increased $1.2 million, or 14%, for the three months ended June 30, 2024, compared to the same period for 2023.

Three Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Direct salaries and labor costs

Direct project costs

Non-direct project costs

Publisher costs

Content creation

Sales commissions

Cost of revenue decreased $2.1 million or 18% for the three months ended September 30, 2024, compared to the same period for 2023.

This reduction is due to the factors discussed below:

Direct Salaries and Labor Cost

Direct salaries and labor cost decreased $382,000, or 15%, for the three months ended June 30, 2024, when compared to the same period in 2023.

Approximately $2.1 million, or 22%, of the Company's cost of revenue for the three months ended June 30, 2024, was a result of direct salaries and labor cost compared to $2.5 million, or 31% the same period in 2023.

Direct salaries and labor cost decreased $1.1 million, or 18%, for the three months ended September 30, 2024, when compared to the same period in 2023.

Approximately $1.5 million, or 15%, of the Company's cost of revenue for the three months ended September 30, 2024, was a result of direct salaries and labor cost compared to $2.7 million, or 23% the same period in 2023.

These costs represent salary and labor cost of employees that work directly on customer projects for our consumer insights, creative and media services divisions.

Direct Project Cost

Direct project cost increased $474,000, or 18%, for the three months ended June 30, 2024 when compared to the same period in 2023.

Approximately $3.1 million, or 32%, of the Company's cost of revenue for the three months ended June 30, 2024, was a result of direct project cost compared to $2.6 million, or 31%, during the same period in 2023.

Direct project cost decreased $487,000, or 14%, for the three months ended September 30, 2024 when compared to the same period in 2023.

Approximately $3.0 million, or 31%, of the Company's cost of revenue for the three months ended September 30, 2024, was a result of direct project cost compared to $3.5 million, or 29%, during the same period in 2023.

These costs include payments made to third-parties that are directly attributable to the completion of projects that allow for revenue recognition for our consumer insights, creative and media services divisions.

The decrease in direct project costs is related to the decrease in revenue from our consumer insights, creative and media services divisions.

Non-Direct Project Cost

Non-direct cost was $1.6 million, or 17%, of the Company's cost of revenue for the three months ended June 30, 2024, compared to $1.6 million, or 19%, for the same period in 2023.

These costs represent overall client service costs that

are not specifically related to a particular project, but relate to services for our consumer insights, creative and media services divisions.

Non-direct cost was $1.8 million, or 18%, of the Company's cost of revenue for the three months ended September 30, 2024, compared to $2.9 million, or 24%, for the same period in 2023.

These costs represent overall client service costs that are not specifically related to a particular project, but relate to services for our consumer insights, creative and media services divisions.

The decrease in non-direct project costs is related to the decrease in revenue from our consumer insights, creative and media services divisions.

Publisher Cost

Publisher cost was $2.3 million, which represents 24% of overall cost of revenue, and $1.1 million, or 13%, of overall cost of revenue, for the three months ended June 30, 2024 and 2023, respectively.

We experienced an increase of $1.2 million, or 103%, for the three months ended June 30, 2024, compared to the same period in 2023.

Publisher cost was $3.0 million, which represents 31% of overall cost of revenue, and $2.1 million, or 18%, of overall cost of revenue, for the three months ended September 30, 2024 and 2023, respectively.

We experienced an increase of $930,000, or 45%, for the three months ended September 30, 2024, compared to the same period in 2023.

This increase is consistent with the increase noted in revenue for our advertising technology division.

These costs represent payments to media providers and website publishers.

Gross margin was $3.4 million, and $4.2 million for the three months ended June 30, 2024 and 2023, respectively.

Our gross margin decreased $786,000, or 19%, for the three months ended June 30, 2024, when compared to the same period of 2023.

Gross margin as a percentage of revenue decreased to 26% for the three months ended June 30, 2024 compared to 33% for the same period of 2023.

Gross margin was $4.4 million and $3.4 million for the three months ended September 30, 2024 and 2023, respectively.

Our gross margin increased $1.0 million, or 31%, for the three months ended September 30, 2024, when compared to the same period of 2023.

Gross margin as a percentage of revenue increased to 31% for the three months ended September 30, 2024 compared to 22% for the same period of 2023.

General and Administrative Expenses

Three Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Three Months Ended June 30,

2024 2023 Change % Change

Personnel cost $ 2,385 $ 2,771 $ (386) (14) % decreased

Legal expense 508 607 (99) (16) % decreased

Professional fees 757 2,789 (2,032) (73) % decreased

Insurance 211 272 (61) (22) % decreased

Depreciation and amortization expense 516 766 (250) (33) % decreased

Personnel costs

Professional fees

Website expenses

Data processing

296 164 132 80 % increased

Website expense 379 378 1 — % increased

Other 258 381 (123) (32) % decreased

Total $ 5,310 $ 8,128 $ (2,818) (35) % decreased

Gross margin as a percentage of general and administrative expense

General and administrative expenses decreased by $2.8 million, or 35%, for the three months ended June 30, 2024, compared to the same period in 2023.

The reduction is due to a combination of factors as discussed below.

General and administrative expenses increased by $293,000 or 7%, for the three months ended September 30, 2024, compared to the same period in 2023.

The increase is due to a combination of factors as discussed below.

Personnel Cost

Personnel cost decreased by approximately $386,000, or 14%, for the three months ended June 30, 2024, compared to the same period in 2023.

Personnel cost decreased by approximately $381,000, or 17%, for the three months ended September 30, 2024, compared to the same period in 2023.

This change is mainly driven by a decrease in the Company's head count by a net change of 47 employees, including 13 employees that were terminated as a reduction in force.

The Company incurred severance cost of approximately $75,000 in connection with this reduction.

The Company incurred severance cost of approximately $114,000 associated with a headcount reduction during the three months ended June 30, 2023.

The Company employee's headcount was 150 and 232 at June 30, 2024 and 2023, respectively.

Legal fees decreased by $99,000, or 16%, for the three months ended June 30, 2024, compared to the same period in 2023.

Approximately $359,000 of legal fees for the three months ended June 30, 2023, represented costs associated with the Big Village Acquisition.

The Company employee's headcount was 141 and 188 at September 30, 2024 and 2023, respectively.

Professional Fees

Professional fees decreased by $2.0 million, or 73%, for the three months ended June 30, 2024, compared to the same period in 2023.

Approximately $685,000 of professional fees for the three months ended June 30, 2023, represented costs associated with the Big Village Acquisition.

Professional fees increased by $1.4 million, or 224%, for the three months ended September 30, 2024, compared to the same period in 2023.

This increase is mainly driven by an increase in legal fees related to the Ladenburg litigation as discussed in Note 17 above.

Data Processing

Data processing increased by $132,000, or 80%, for the three months ended June 30, 2024, compared to the same period in 2023.

The Big Village Acquisition was completed in April 2023, and is the main driver of the increase in data processing.

Data processing increased by $38,000, or 17%, for the three months ended September 30, 2024, compared to the same period in 2023.

Impairment of Goodwill and Intangibles

During the three months ended September 30, 2023, the Company performed an assessment of its goodwill and intangible assets.

The assessment indicated that the carrying value was in excess of its implied fair value, resulting in an impairment charge of $13.7 million and $2.5 million for goodwill and intangibles, respectively.

There was no impairment recorded for the same period of 2024.

Financing and Other Expense, Net

Three Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Three Months Ended June 30,

2024 2023 Change % Change

Interest expense $ 3,372 $ 2,254 $ 1,118 50 % increased

Other expense (income) (53) (103) 50 (49) % decreased

Interest expense

Other expense (income)

Total financing and other expense, net

$ 3,319 $ 2,151 $ 1,168 54 % increased

Financing and other expense, net increased by $1.2 million, or 54%, for the three months ended June 30, 2024, compared to the same period in 2023.

This increase was largely attributable to a $1.1 million increase in interest expense related to the Centre Lane Senior Secured Credit Facility, which reflected higher principal and fees due to the Centre Lane Senior Secured Credit Facility amendments during the year ended December 31, 2023.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net loss from operations for the six months ended June 30, 2024 was $10.0 million as compared to a net loss of $9.9 million for the same period in 2023.

Financing and other expense, net increased by $480,000, or 17%, for the three months ended September 30, 2024, compared to the same period in 2023.

This increase was largely attributable to a $477,000 increase in interest expense related to the Centre Lane Senior Secured Credit Facility, which reflected higher principal and fees due to the Centre Lane Senior Secured Credit Facility amendments during the year ended December 31, 2023.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net loss from operations for the nine months ended September 30, 2024 was $4.0 million as compared to a net loss of $23.8 million for the same period in 2023.

The following is our analysis for the period.

Nine Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Six Months Ended June 30,

2024 2023 Change % Change

Revenue $ 25,450 $ 14,114 $ 11,336 80 % increased

Cost of revenue 18,892 9,378 9,514 101 % increased

Gross margin 6,558 4,736 1,822 38 % increased

General and administrative expense 10,552 11,556 (1,004) (9) % decreased

Loss from operations (3,994) (6,820) 2,826 (41) % decreased

Cost of revenue

General and administrative expenses

Impairment of goodwill and intangibles

Loss from operations

Financing and other expense, net

(5,980) (3,047) (2,933) 96 % increased

Net loss $ (9,974) $ (9,867) $ (107) 1 % increased

Gross margin % 26 % 34 % (8) % (23) % decreased

Our revenue showed an overall increase of $11.3 million, or 80%, for the six months ended June 30, 2024 compared to the same period in 2023.

For the six months ended June 30, 2024, revenue includes $18.3 million, which represents the impact of the Big Village Acquisition, which was completed in April 2023.

This compares to $9.2 million for the same

period in 2023.

As a result, the acquisition contributed to revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in revenue for the six months ended June 30, 2024.

The Company focuses on digital publishing, advertising technology, consumer insights, creative and media services.

Revenue generated by each division are set forth below:

Net loss from operations

Gross margin percentage

Our revenue increased by $10.2 million, or 35%, for the nine months ended September 30, 2024 compared to the same period in 2023.

For the nine months ended September 30, 2024, revenue includes $27.3 million, which represents the impact of the Big Village Acquisition, which was completed in April 2023.

This compares to $19.8 million for the same period in 2023.

Changes in revenue generated by each such division are set forth below:

Nine Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Six Months Ended June 30,

2024 2023 Change % Change

Digital publishing $ 950 $ 2,399 $ (1,449) (60) % decreased

Advertising technology 6,212 2,504 3,708 148 % increased

Consumer insights 13,367 6,896 6,471 94 % increased

Creative services 3,715 1,666 2,049 123 % increased

Media services 1,206 649 557 86 % increased

$ 25,450 $ 14,114 $ 11,336 80 % increased

Digital publishing

Digital publishing revenue decreased by $1.5 million, or 60%, for the six months ended June 30, 2024, compared to the same period in 2023.

Approximately $950,000, or 4%, of the Company’s revenue for the six months ended June 30, 2024, was generated from our digital publishing customers compared to $2.4 million, or 17%, for the same period in 2023.

Advertising technology

Consumer insights

Creative services

Media services

Digital Publishing

Digital publishing revenue decreased by $2.0 million, or 57%, for the nine months ended September 30, 2024, compared to the same period in 2023.

Approximately $1.5 million, or 4%, of the Company’s revenue for the nine months ended September 30, 2024, was generated from our digital publishing customers compared to $3.4 million, or 12%, for the same period in 2023.

Advertising Technology

Advertising technology revenue increased by $3.7 million, or 148%, for the six months ended June 30, 2024, compared to the same period in 2023.

Approximately $6.2 million, or 24%, of the Company’s revenue for the six months ended June 30, 2024, was generated from our advertising technology customers compared to $2.5 million, or 18%, for the same period in 2023.

Advertising technology revenue increased by $4.7 million, or 77%, for the nine months ended September 30, 2024, compared to the same period in 2023.

Approximately $10.9 million, or 28%, of the Company’s revenue for the nine months ended September 30, 2024, was generated from our advertising technology customers compared to $6.1 million, or 21%, for the same period in 2023.

This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn has allowed us to onboard premium publishers.

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Consumer Insights

Consumer insights revenue increased by $6.5 million, or 94%, for the six months ended June 30, 2024, compared to the same period in 2023.

Approximately $13.4 million, or 53%, of the Company’s revenue for the six months ended June 30, 2024 was generated from our consumer insights customers compared to $6.9 million, or 49%, for the same period in 2023.

As discussed above, the Big Village Acquisition was completed in April 2023, and contributed to revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in consumer insights revenue for the six months ended June 30, 2024.

Consumer insights revenue increased by $5.2 million, or 35%, for the nine months ended September 30, 2024, compared to the same period in 2023.

Approximately $20.1 million, or 51%, of the Company’s revenue for the nine months ended September 30, 2024 was generated from our consumer insights customers compared to $14.9 million, or 51%, for the same period in 2023.

As discussed above, the Big Village Acquisition was completed in April 2023, and is the main driver of the increase in consumer insights revenue for the nine months ended September 30, 2024.

Creative Services

Creative services revenue increased by $2.0 million, or 123%, for the six months ended June 30, 2024, compared to the same period in 2023.

Approximately $3.7 million, or 15%, of the Company’s revenue for the six months ended June 30, 2024, was generated from our creative services customers compared to $1.7 million, or 12%, for the same period in 2023.

As discussed above, the Big Village Acquisition was completed in April 2023, and contributed to revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in creative services revenue for the six months ended June 30, 2024.

Creative services revenue increased by $1.8 million or 53%, for the nine months ended September 30, 2024, compared to the same period in 2023.

Approximately $5.3 million, or 13% of the Company’s revenue for the nine months ended September 30, 2024, was generated from our creative services customers compared to $3.5 million, or 12%, for the same period in 2023.

As discussed above, the Big Village Acquisition was completed in April 2023, and is the main driver of the increase in creative services revenue for the nine months ended September 30, 2024.

Media Services

Media services revenue increased by $557,000, or 86%, for the six months ended June 30, 2024, compared to the same period in 2023.

Approximately $1.2 million, or 5%, of the Company’s revenue for the six months ended June 30, 2024, was generated from our media services customers compared to $649,000, or 5%, for the same period in 2023.

As discussed above, the Big Village Acquisition was completed in April 2023, and contributed to revenue for three months of

the prior period and for the full six months of the current period and is the main driver of the increase in media services revenue for the six months ended June 30, 2024.

Media services revenue increased by $366,000 or 26%, for the nine months ended September 30, 2024, compared to the same period in 2023.

Approximately $1.8 million, or 5%, of the Company’s revenue for the nine months ended September 30, 2024, was generated from our media services customers compared to $1.4 million, or 5%, for the same period in 2023.

As discussed above, the Big Village Acquisition was completed in April 2023, and is the main driver of the increase in media services revenue for the nine months ended September 30, 2024.

Cost of Revenue

(in thousand s )

Six Months Ended June 30,

2024 2023 Change % Change

Direct salaries and labor cost

$ 4,076 $ 2,528 $ 1,548 61 % increased

Direct project cost

6,199 2,576 3,623 141 % increased

Non-direct project cost 3,704 1,636 2,068 126 % increased

Publisher cost

4,098 1,617 2,481 153 % increased

Content creation 353 598 (245) (41) % decreased

Sales commission 347 247 100 40 % increased

Other 115 176 (61) (35) % decreased

$ 18,892 $ 9,378 $ 9,514 101 % increased

Cost of revenue increased $9.5 million, or 101%, for the six months ended June 30, 2024, compared to the same period of 2023.

For the six months ended June 30, 2024, cost of revenue includes $14.0 million, or 74% from the impact of the Big Village Acquisition, which was completed in April 2023.

Nine Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Direct salaries and labor costs

Direct project costs

Non-direct project costs

Publisher costs

Content creation

Sales commissions

Cost of revenue increased $6.6 million, or 30%, for the nine months ended September 30, 2024, compared to the same period of 2023.

For the nine months ended September 30, 2024, cost of revenue includes $20.3 million, or 71% from the impact of the Big Village Acquisition, which was completed in April 2023.

This compares to $16.5 million, or 75%, for the same period in 2023.

As a result, the acquisition contributed to cost of revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in cost of revenue for the six months ended June 30, 2024.

As a result, the Big Village Acquisition is the main driver of the increase in cost of revenue for the nine months ended September 30, 2024.

Direct Salaries and Labor Cost

Direct salaries and labor cost increased $1.5 million, or 61%, for the six months ended June 30, 2024, when compared to the same period in 2023.

Approximately $4.1 million, or 22%, of the Company's cost of revenue for the six months ended June 30, 2024 was a result of direct salaries and labor cost compared to $2.5 million, or 27%, for the same period in 2023.

As discussed above, the Big Village Acquisition, was completed in April 2023, and contributed to cost of revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in direct salaries and labor cost for the six months ended June 30, 2024.

Direct salaries and labor cost increased $415,000, or 8%, for the nine months ended September 30, 2024, when compared to the same period in 2023.

Approximately $5.1 million, or 20%, of the Company's cost of revenue for the nine months ended September 30, 2024 was a result of direct salaries and labor cost compared to $5.2 million, or 24%, for the same period in 2023.

As discussed above, the Big Village Acquisition, which was completed in April 2023, is the main driver of the increase in direct salaries and labor cost for the nine months ended September 30, 2024.

These costs represent salary and labor cost of employees that work directly on customer projects for our consumer insights, creative and media services divisions.

Direct Project Cost

Direct project cost increased $3.6 million, or 141%, for the six months ended June 30, 2024 when compared to the same period in 2023.

Approximately $6.2 million, or 33%, of the Company's cost of revenue for the six months ended June 30, 2024, was a result of direct project cost compared to $2.6 million, or 27%, for the same period in 2023.

As discussed above, the Big Village Acquisition, was completed in April 2023, and contributed to cost of revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in direct project cost for the six months ended June 30, 2024.

Direct project cost increased $3.1 million, or 52%, for the nine months ended September 30, 2024 when compared to the same period in 2023.

Approximately $9.2 million, or 32%, of the Company's cost of revenue for the nine months ended September 30, 2024, was a result of direct project cost compared to $6.1 million, or 27%, for the same period in 2023.

As discussed above, the Big Village Acquisition, which was completed in April 2023, is the main driver of the increase in direct project cost for the nine months ended September 30, 2024.

Non-Direct Project Cost

Non direct project cost increased $2.1 million, or 126%, for the six months ended June 30, 2024, when compared to the same period in 2023.

Approximately $3.7 million, or 20%, of the Company's cost of revenue for the six months ended June 30, 2024, was a result of direct project cost compared to $1.6 million, or 17%, for the same period in 2023.

direct project cost for the six months ended June 30, 2024.

Non-direct project cost increased $187,000, or 4%, for the nine months ended September 30, 2024, when compared to the same period in 2023.

Approximately $5.5 million, or 19%, of the Company's cost of revenue for the nine months ended September 30, 2024, was a result of non-direct project cost compared to $6.1 million, or 24%, for the same period in 2023.

As discussed above, the Big Village Acquisition, which was completed in April 2023, is the main driver of the increase in non-direct project cost for the nine months ended September 30, 2024.

These costs represent overall client service costs that are not specifically related to a particular project.

Publisher Cost

Publisher cost was $4.1 million, which represents 22% of overall cost of revenue, and $1.6 million, or 17%, of overall cost of revenue for the six months ended June 30, 2024 and 2023, respectively.

We experienced an increase of $2.5 million, or 153%, for the six months ended June 30, 2024 compared to the same period in 2023.

Publisher cost was $7.1 million, which represents 25% of overall cost of revenue, and $3.7 million, or 17%, of overall cost of revenue for the nine months ended September 30, 2024 and 2023, respectively.

We experienced an increase of $3.4 million, or 92%, for the nine months ended September 30, 2024 compared to the same period in 2023.

This increase is consistent with the increase noted in revenue for our advertising technology division.

These costs represent payments to media providers and website publishers which drive revenue for our advertising technology division.

Our gross margin increased $1.8 million, or 38%, for the six months ended June 30, 2024, compared to the same period for 2023.

Gross margin as a percentage of revenue decreased to 26% for the six months ended June 30, 2024, compared to 34% for the same period of 2023.

Our gross margin increased $3.6 million, or 49%, for the nine months ended September 30, 2024, compared to the same period of 2023.

Gross margin as a percentage of revenue increased to 28% for the nine months ended September 30, 2024, compared to 25% for the same period of 2023.

General and Administrative Expenses

Nine Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Six Months Ended June 30,

2024 2023 Change % Change

Personnel cost $ 4,877 $ 4,516 $ 361 8 % increased

Legal fees 788 660 128 19 % increased

Professional fees 1,602 3,574 (1,972) (55) % decreased

Insurance 414 431 (17) (4) % decreased

Depreciation and amortization 1,037 1,160 (123) (11) % decreased

Data processing 710 198 512 259 % increased

Website expense 676 687 (11) (2) % decreased

Other 448 330 118 36 % increased

Total $ 10,552 $ 11,556 $ (1,004) (9) % decreased

Gross margin as a percentage of general and administrative expense 62 % 41 % 21 % 51 % increased

General and administrative expenses decreased by $1.0 million, or 9%, for the six months ended June 30, 2024, compared to the same period in 2023.

The reduction is primarily due to a combination of factors as discussed below.

Personnel costs

Professional fees

Website expenses

Data processing

Gross margin as a percentage of general and administrative expense

General and administrative expenses increased by $43,000 for the nine months ended September 30, 2024, compared to the same period in 2023.

The increase is primarily due to a combination of factors as discussed below:

Personnel Cost

Personnel cost increased by $361,000, or 8%, for the six months ended June 30, 2024 compared to the same period in 2023.

Personnel cost increased by $734,000, or 12%, for the nine months ended September 30, 2024 compared to the same period in 2023.

The Company reduced its head count by 47 employees, including 22 employees that were terminated as a reduction in force.

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The Company incurred severance cost of approximately $322,000 associated with a head count reduction during the same period for 2023.

Legal Expense

Legal fees increased by $128,000, or 19%, for the six months ended June 30, 2024, compared to the same period in 2023.

Approximately $359,000 of legal expense for the six months ended June 30, 2023 represented costs associated with the Big Village Acquisition.

Professional Fees

Professional fees decreased by $2.0 million or 55% for the six months ended June 30, 2024, compared to the same period in 2023.

Approximately $685,000 of professional fees for the six months ended June 30, 2023 represented costs associated with the Big Village Acquisition.

Professional fees decreased by $530,000 or 18% for the nine months ended September 30, 2024, compared to the same period in 2023.

$685,000 of professional fees for the nine months ended September 30, 2023 represented costs associated with the Big Village Acquisition.

Data Processing

Data processing increased by $512,000, or 259%, for the six months ended June 30, 2024, compared to the same period of 2023.

As discussed above, the Big Village Acquisition, was completed in April 2023, and contributed to data processing for three months of the prior period and for the full six months of the current period and is the main driver of the increase in data processing for the six months ended June 30, 2024.

Data processing increased by $550,000, or 130%, for the nine months ended September 30, 2024, compared to the same period of 2023.

As discussed above, the Big Village Acquisition was completed in April 2023, and contributed to data processing for six months of the prior period and for the full nine months of the current period, and is the main driver of the increase in data processing for the nine months ended September 30, 2024.

Impairment of Goodwill and Intangibles

During the nine months ended September 30, 2023, the Company performed an assessment of its goodwill and intangible assets.

There was no impairment recorded for the same period of 2024.

Financing and Other Expense, Net

Nine Months Ended

September 30, 2024

September 30, 2023

(in thousands)

Six Months Ended June 30,

2024 2023 Change % Change

Interest expense $ 6,377 $ 3,428 $ 2,949 86 % increased

Other expense (income) (397) (381) (16) 4 % increased

Interest expense

Other expense (income)

Total financing and other expense, net

$ 5,980 $ 3,047 $ 2,933 96 % increased

Financing and other expense, net increased by $2.9 million, or 96%, for the six months ended June 30, 2024, compared to the same period during 2023.

Financing and other expense, net increased by $3.4 million, or 59%, for the nine months ended September 30, 2024, compared to the same period during 2023.

This increase was largely attributable to $3.4 million or 55%, increase in interest expense related to the Centre Lane Senior Secured Credit Facility which reflected higher principal and fees due to the Centre Lane Senior Secured Credit Facility amendments during the year ended December 31, 2023.

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A reconciliation of net loss before taxes to non-GAAP EBITDA and Adjusted EBITDA is as follows:

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

(in thousands)

Three Months Ended June 30, Six Months Ended June 30, 2024

2024 2023 2024 2023

Net loss before tax plus:

$ (5,208) $ (6,071) $ (9,974) $ (9,867)

Net loss before tax

Depreciation expense

Amortization of intangibles

Impairment of goodwill and intangibles

Amortization of debt discount

Other interest expense

Interest expense - Centre Lane Senior Secured Credit Facility and Convertible Promissory Notes - related party 2,426 1,709 4,804 2,573

(1,319) (3,047) (2,560) (5,280)

Interest expense - Centre Lane Senior Secured Credit Facility and Convertible Promissory Notes

Stock compensation expense

Non-restructuring severance expense 75 114 93 236

Non-recurring professional fees

Non-recurring legal fees

Non-recurring severance expense

Adjusted EBITDA

$ (920) $ (1,856) $ (2,023) $ (3,942)

Liquidity and Capital Resources

Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash.

The following table summarizes total current assets, total current liabilities, and net working capital (deficit) as of June 30, 2024, as compared to December 31, 2023.

The following table summarizes total current assets, total current liabilities, and net working capital (deficit) as of September 30, 2024, as compared to December 31, 2023.

September 30, 2024

December 31, 2023

(in thousands)

June 30, 2024 December 31, 2023

Total current assets

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Net working capital deficit

As of June 30, 2024, we had a cash balance of $2.7 million compared with a cash balance of $4.0 million as of December 31, 2023.

As of September 30, 2024, we had a cash balance of $2.5 million compared with a cash balance of $4.0 million as of December 31, 2023.

The Company’s liquidity needs, and a discussion of how it intends to meet those needs, is discussed below.

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Going Concern

Historically, the Company has incurred losses, which have resulted in an accumulated deficit of approximately $159.8 million as of June 30, 2024.

Cash flows used in operating activities were $385,000 and $3.6 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the Company had a working capital deficit of approximately $13.3 million, inclusive of $2.7 million in cash and cash equivalents.

Historically, the Company has incurred losses, which have resulted in an accumulated deficit of approximately $163.1 million as of September 30, 2024.

Cash flows used in operating activities were $451,000 and $5.9 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the Company had a working capital deficit of approximately $13.0 million, inclusive of $2.5 million in cash and cash equivalents.

The Company's current cash and working capital, as of the filing of this Quarterly Report on Form 10-Q, is not expected to be sufficient to fund its anticipated level of operations over the next twelve months.

As a result, such matters create a substantial doubt regarding the Company’s ability to meet its financial obligations and continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to meet its liquidity needs through a combination of factors.

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The ultimate success of these plans is not guaranteed.

As a result, such matters

create a substantial doubt regarding the Company’s ability to meet its financial obligations and continue as a going concern.

The accompanying unaudited consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about the Company’s ability to continue as a going concern.

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The Credit Agreement has been amended numerous times to change the terms, including the amounts outstanding, the interest rate, the maturity date and other payment terms.

The outstanding principal owed to Centre Lane Partners was $74.6 million and $70.2 million as of June 30, 2024 and December 31, 2023, respectively, and matures on April 20, 2026.

Of the amount outstanding at June 30, 2024, approximately $2.3 million is due by December 31, 2024 with $1.9 million due by June 30, 2025.

The balance of $70.4 million is due in 2025 or later.

The outstanding principal owed to Centre Lane Partners was $77.0 million and $70.2 million as of September 30, 2024 and December 31, 2023, respectively, and matures on April 20, 2026.

Of the amount outstanding at September 30, 2024, approximately $1.3 million is due by December 31, 2024 with $2.9 million due by September 30, 2025.

The balance of $72.9 million is due in 2026.

The amount due under the Credit Agreement bears interest at 7.0% per annum plus the Secured Overnight Financing Rate ("SOFR").

At June 30, 2024, the SOFR was 5.30%, thus the overall interest rate on this facility was 12.30% per annum at June 30, 2024.

Interest is paid in kind at 12.30% per annum on approximately $35.4 million of the amount owed under the Credit Agreement, and at 15% per annum on $32.1 million of the amount owed under the Credit Agreement.

With respect to the remaining $7.1 million owed under the facility, interest is paid in kind at 4% per annum and in cash at the SOFR plus 3.0% (for a total interest rate of 8.30% per annum at June 30, 2024).

At September 30, 2024, the SOFR was 5.30%, thus the overall interest rate on this facility was 12.33% per annum at September 30, 2024.

In connection with the Twentieth Amendment, adjustments were made to the interest rate for outstanding loans as follows:

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For a full description of the Centre Lane Senior Secured Credit Facility, see Note 10, "Centre Lane Senior Secured Credit Facility," to the consolidated financial statements.

10% Convertible Promissory Note

During November 2018, the Company issued a 10% convertible promissory note (the "Convertible Note") in the amount of $80,000 to the former Chairman of the Board, a related party.

The Convertible Note is unsecured, matured five years from issuance and was convertible at the option of the holder into shares of our common stock at any time prior to maturity at a conversion price of $0.40 per share.

The outstanding principal and interest on the Convertible Note was due and payable in November 2023.

At June 30, 2024, approximately $123,000 inclusive of principal and interest is due and payable, and the outstanding principal continues to accrue interest.

The amount was paid subsequent to the period end.

For a full description of the Convertible Note, see Note 11, "10% Convertible Promissory Note" to the consolidated financial statements.

Summary of Cash Flows

The following table summarizes cash flow activities during the six months ended June 30, 2024 and 2023:

(in thousands) Six Months Ended June 30, 2024

The following table summarizes cash flow activities during the nine months ended September 30, 2024 and 2023:

(in thousands)

Nine Months Ended September 30,

Cash flow used in operating activities

$ (385) $ (3,594)

Cash flow used in investing activities

1 unchanged sentence

Net (decrease) increase in cash and cash equivalents, net of impact of exchange rates

$ (1,340) $ 3,039

Operating Activities

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Our primary uses of our operating cash, are for cost of revenue expenses, personnel-related expenditures and other general administrative expenses.

For the six months ended June 30, 2024, used in operating activities was $385,000.

The primary factors affecting our operating cash flows during the period were our net loss of $10.0 million, adjusted for non-cash charges of $962,000 for amortization of intangible assets, $1.6 million of amortization of debt discount, $4.5 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, $135,000 for stock compensation expense, and a $2.3 million net change in operating assets and liabilities.

The primary drivers of the changes in operating assets and liabilities were a $2.6 million decrease in accounts receivable and a $1.2 million increase in deferred revenue.

partially offset by a $993,000 decrease in accounts payable, and a $613,000 decrease in other liabilities.

For the six months ended June 30, 2023, cash used in operating activities was $3.6 million.

The primary factors affecting our operating cash flows during the period were our net loss of $9.9 million, adjusted for non-cash charges of $1.1 million for amortization of intangible assets, $844,000 of amortization of debt discount, $2.4 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, $58,000 of stock-based compensation expense, and a $1.8 million net change in operating assets and liabilities.

The primary drivers of the changes in operating assets and liabilities were a $3.3 million increase in accounts receivable offset by a $2.3 million increase in accounts payable and accrued expense, an increase in other liabilities of $1.5 million, and a $627,000 increase in deferred revenue.

For the nine months ended September 30, 2024, cash used in operating activities was $451,000.

The primary factors affecting our operating cash flows during the period were our net loss of $13.2 million, adjusted for non-cash charges of $1.4 million for amortization of intangible assets, $2.2 million of amortization of debt discount, $6.9 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, $191,000 for stock compensation expense, and a $1.8 million net change in operating assets and liabilities.

The primary drivers of the changes in operating assets and liabilities were a $2.3 million increase in accounts receivable, a $543,000 decrease in accounts payable, and a $363,000 decrease in other liabilities, partially offset by a $200,000 increase in deferred revenue.

For the nine months ended September 30, 2023, cash used in operating activities was $5.9 million.

The primary factors affecting our operating cash flows during the period were our net loss of $29.6 million, adjusted for non-cash charges of $1.9 million for amortization of intangible assets, $1.4 million of amortization of debt discount, $16.3 million impairment of goodwill and intangibles, $4.5 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, $177,000 for the provision of bad debt, $115,000 for stock option compensation expense, and a $802,000 net change in operating assets and liabilities.

The primary drivers of the changes in operating assets and liabilities were a $277,000 increase in accounts receivables offset by a $2.3 million increase in accounts payable and accrued expenses, an increase in other liabilities of $2.2 million, an increase in prepaid expenses and other current assets of $573,000, and a $942,000 increase in deferred revenue.

Investing Activities

Cash used in investing activities of $85,000 and $4,000 for the six months ended June 30, 2024 and 2023, respectively, was due to $14,000 and $4,000, respectively, for the purchase of property and equipment, and $71,000 for website enhancement during the six months ended June 30, 2024 .

Cash used in investing activities of $100,000 and $14,000 for the nine months ended September 30, 2024 and 2023, respectively, was due to $14,000 and $14,000, respectively, for the purchase of property and equipment, and $86,000 for website enhancement during the nine months ended September 30, 2024.

Financing Activities

During the six months ended June 30, 2024, the Company used cash of $886,000 in financing activities, which is largely attributable to repayment of principal on the Centre Lane Senior Secured Credit Facility of $879,000.

During the six months ended June 30, 2024 and 2023, the Company raised $0 and $6.6 million of debt financing from the Centre Lane Senior Secured Credit Facility, which was used primarily to fund our working capital.

During the nine months ended September 30, 2024, the Company used cash of $892,000 in financing activities, which is largely attributable to repayment of principal on the Centre Lane Senior Secured Credit Facility of $879,000.

During the nine months ended September 30, 2023, the Company drew $8.6 million of debt financing from the Centre Lane Senior Secured Credit Facility, which was used primarily to fund our working capital.

Contractual Obligations and Commitments

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The Company has the option to renew the lease for one additional five-year term.

As of June 30, 2024, the Company entered into two sublease agreements of its Boca Raton corporate offices.

As of September 30, 2024, the Company entered into two sublease agreements of its Boca Raton corporate offices.

The subleases will continue for the remaining term on the initial lease agreement of 3 years with no option to extend.

aggregate minimum annual rental income under the subleases is approximately $137,000 with 3% escalations per annum.

The aggregate minimum annual rental income under the subleases is approximately $137,000 with 3% escalations per annum.

See Note 12, “ Leases ,” to the Company's consolidated financial statements for details regarding the Company’s lease.

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Off-Balance Sheet Arrangements

As of June 30, 2024 and December 31, 2023, there were no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.

As of September 30, 2024 and December 31, 2023, there were no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.

Critical Accounting Policies and Estimates

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We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company as defined in Rule 12b-2 of the Exchange Act, we are not required to include information otherwise required by this Item 3 to Form 10-Q.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis