What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-15 compared with 2025-11-12 · 302 added, 384 removed, 484 unchanged (59% of the section changed)

4 unchanged sentences

(in thousands, except share and par value amounts)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

CURRENT ASSETS

Cash and cash equivalents $ 796 $ 728

Accounts receivable, net of provision for credit losses of $ 944 and $ 978 , respectively

Accounts receivable, net of provision for credit losses of $ 944

Prepaid expenses and other current assets 826 890

12 unchanged sentences

Liability related to tax receivable agreement, current portion 41 41

Current maturities of long-term debt — 3,700

Current maturities of long-term debt - related party 16,548 12,003

1 unchanged sentence

Operating lease liabilities, current portion 227 221

Income taxes payable 66 —

Total current liabilities 28,285 26,425

Long-term debt, net of current portion, deferred financing cost and debt discount 150 31,603

Long-term debt, net of current portion, deferred financing cost and debt discount - related party 10,667 —

Long-term debt, net of current portion 145 146

Operating lease liabilities, net of current portion 550 608

2 unchanged sentences

STOCKHOLDERS’ DEFICIT

Series A Convertible Preferred Stock, $ 0.001 par value per share, 10,000,000 shares authorized, 25,000 and 0 shares issued and outstanding, respectively

Series A Convertible Preferred Stock, $ 0.001 par value per share, 10,000,000 shares authorized, 27,077 shares issued and outstanding

Class A Common Stock, $ 0.001 par value per share, 760,000,000 shares authorized, 700,759 and 331,076 shares issued and outstanding, respectively

Class B Common Stock, $ 0.001 par value per share, 20,000,000 shares authorized, 9,575,500 and 10,868,000 shares issued and outstanding, respectively

Class B Common Stock, $ 0.001 par value per share, 20,000,000 shares authorized, 42,160 shares issued and outstanding

Additional paid-in capital 28,403 25,812

9 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Sell-side advertising $ 641 $ 2,202 $ 5,153 $ 33,001

Buy-side advertising 7,343 6,873 21,133 20,204

Total revenues 7,984 9,075 26,286 53,205

Revenues $ 6,680 $ 8,157

Cost of revenues 4,418 5,764

Sell-side advertising 1,457 2,654 6,946 30,670

Buy-side advertising 4,313 2,907 11,171 8,091

Total cost of revenues 5,770 5,561 18,117 38,761

Gross profit 2,262 2,393

6 unchanged sentences

Other income 7 28

Loss on settlement of accounts payable ( 1,247 ) —

Loss on debt extinguishment ( 517 ) —

Expenses for Equity Reserve Facility — ( 198 )

Derecognition of tax receivable agreement liability — 5,201 — 5,201

Interest expense ( 1,104 ) ( 1,413 ) ( 4,739 ) ( 4,068 )

Total other (expense) income, net ( 1,089 ) 3,887 ( 4,876 ) 1,323

(Loss) income before income taxes ( 5,000 ) 229 ( 15,136 ) ( 7,206 )

Interest expense and amortization of deferred financing cost and debt discount (premium), net ( 563 ) ( 1,846 )

Total other expense, net ( 2,320 ) ( 2,016 )

Loss before income taxes ( 5,571 ) ( 5,940 )

Income tax expense — —

4 unchanged sentences

Net loss per common share attributable to Direct Digital Holdings, Inc.:

Basic $ ( 0.24 ) $ ( 0.71 ) $ ( 0.78 ) $ ( 1.11 )

Diluted $ ( 0.24 ) $ ( 0.71 ) $ ( 0.78 ) $ ( 1.11 )

Basic and diluted $ ( 10.32 ) $ ( 77.21 )

Weighted-average number of shares of common stock outstanding:

Basic 12,867 3,793 9,855 3,667

Diluted 12,867 3,793 9,855 3,667

Basic and diluted 575 31

See accompanying notes to the unaudited condensed consolidated financial statements.

3 unchanged sentences

(in thousands except share data)

Nine Months Ended September 30, 2025

Three Months Ended March 31, 2026

Preferred Stock Common Stock APIC Accumulated

6 unchanged sentences

Issuance pursuant to the Equity Reserve Facility — — 216,250 1 — — 1,118 — — 1,119

Conversion of Class B to Class A Common Stock — — 1,292,500 1 ( 1,292,500 ) ( 1 ) ( 1,782 ) — 1,782 —

Issuance of Series A Convertible Preferred Stock, net of issuance costs 25,000 — — — — — 21,220 — — 21,220

Net loss — — — — — — — ( 7,284 ) ( 7,852 ) ( 15,136 )

Noncontrolling interest rebalancing — — — — — — ( 15,286 ) — 15,286 —

Balance, September 30, 2025 25,000 $ — 16,675,005 $ 17 9,575,500 $ 10 $ 14,862 $ ( 16,058 ) $ ( 5,526 ) $ ( 6,695 )

Three Months Ended September 30, 2025

Preferred Stock Common Stock APIC Accumulated

Deficit Noncontrolling Interest Stockholders’

Series A Convertible Class A Class B

Units Amount Units Amount Units Amount

Balance, June 30, 2025 — $ — 12,069,388 $ 12 10,448,000 $ 11 $ 2,775 $ ( 13,378 ) $ ( 14,001 ) $ ( 24,581 )

Stock-based compensation — — — — — — 374 — — 374

Issuance related to vesting of restricted stock units, net of tax withholdings — — 33,117 — — — — — — —

Conversion of Class B to Class A Common Stock — — 872,500 1 ( 872,500 ) ( 1 ) ( 1,169 ) — 1,169 —

Issuance pursuant to the Equity Reserve Facility — — 3,700,000 4 — — 1,288 — — 1,292

Issuance of Series A Convertible Preferred Stock, net of issuance costs 25,000 — — — — — 21,220 — — 21,220

Settlement of accounts payable through issuance of common stock — — 152,041 — — — 2,028 — — 2,028

Preferred dividends accrued — — — — — — ( 457 ) — — ( 457 )

Net loss — — — — — — — ( 5,250 ) ( 321 ) ( 5,571 )

Noncontrolling interest rebalancing — — — — — — ( 281 ) — 281 —

Balance, September 30, 2025 25,000 $ — 16,675,005 $ 17 9,575,500 $ 10 $ 14,862 $ ( 16,058 ) $ ( 5,526 ) $ ( 6,695 )

Nine Months Ended September 30, 2024

Balance, March 31, 2026 27,077 $ — 700,759 $ 1 42,160 $ — $ 28,403 $ ( 32,970 ) $ ( 5,155 ) $ ( 9,721 )

Three Months Ended March 31, 2025

Common Stock APIC Accumulated

5 unchanged sentences

Issuance related to vesting of restricted stock units, net of tax withholdings 153 — — — — — — —

Warrants exercised 39,101 — — — 215 — — 215

Stock options exercised 12,557 — — — 92 — — 92

Issuance of stock in lieu of cash bonus, net of tax withholdings 69,677 — — — 912 — — 912

Net loss — — — — — ( 4,055 ) ( 9,283 ) ( 13,338 )

Noncontrolling interest rebalancing — — — — ( 1,615 ) — 1,615 —

Balance, September 30, 2024 3,795,199 $ 4 10,868,000 $ 11 $ 3,481 $ ( 6,593 ) $ ( 13,630 ) $ ( 16,727 )

Three Months Ended September 30, 2024

Common Stock APIC Accumulated

Deficit Noncontrolling Interest Stockholders’

Class A Class B

Units Amount Units Amount

Balance, June 30, 2024 3,788,446 $ 4 10,868,000 $ 11 $ 3,444 $ ( 3,903 ) $ ( 10,065 ) $ ( 10,509 )

Stock-based compensation — — — — 149 — — 149

Issuance related to vesting of restricted stock units, net of tax withholdings 2,950 — — — — — — —

Stock options exercised 3,803 — — — 10 — — 10

Issuance pursuant to the Equity Reserve Facility 6,997 — — — 2,039 — — 2,039

Conversion of Class B to Class A Common Stock 318 — ( 318 ) — ( 95 ) — 95 —

Net loss — — — — — ( 2,355 ) ( 3,585 ) ( 5,940 )

Noncontrolling interest rebalancing — — — — ( 2,252 ) — 2,252 —

Balance, September 30, 2024 3,795,199 $ 4 10,868,000 $ 11 $ 3,481 $ ( 6,593 ) $ ( 13,630 ) $ ( 16,727 )

Balance, March 31, 2025 32,243 $ — 49,082 $ — $ 3,794 $ ( 11,129 ) $ ( 15,980 ) $ ( 23,315 )

See accompanying notes to the unaudited condensed consolidated financial statements.

3 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows Used In Operating Activities:

6 unchanged sentences

Stock-based compensation 183 316

Deferred income taxes — 6,132

Derecognition of tax receivable agreement liability — ( 5,201 )

Provision for credit losses/bad debt expense 6 36

Loss on settlement of accounts payable 1,247 —

Loss on debt extinguishment 517 —

Interest paid in kind 542 —

Expenses for Equity Reserve Facility — 198

Changes in operating assets and liabilities:

11 unchanged sentences

Cash Flows Provided by Financing Activities:

Proceeds from note payable 3,804 —

Payments on term loan — ( 373 )

Proceeds from line of credit — 6,700

Payments on shares withheld for taxes — ( 551 )

Payment of expenses for Equity Reserve Facility — ( 198 )

Proceeds from issuance of Class A Common Stock 1,119 3,311

Payments on financed insurance premiums ( 114 ) —

Payments on line of credit ( 3,700 ) —

Proceeds from options exercised — 92

Proceeds from warrants exercised — 215

Payment of deferred financing cost — ( 46 )

Payments on loans ( 1 ) —

Net cash provided by financing activities 1,118 3,067

Net decrease in cash and cash equivalents ( 574 ) ( 1,029 )

Net increase in cash and cash equivalents 68 344

Cash and cash equivalents, beginning of the period 728 1,445

1 unchanged sentence

Non-cash Financing Activities:

Financed insurance premiums $ 291 $ —

Reclassification of Exit Fee from accrued liabilities to debt $ 3,608 $ —

Settlement of accounts payable through issuance of common stock $ 2,028 $ —

Accrued dividends $ 457 $ —

Common stock issued for subscription receivable $ — $ 90

Conversion of term loan into preferred stock net of premium $ 21,399 $ —

Accrued term loan amendment closing fee $ 1,000 $ —

Funding of interest reserve through debt $ 93 $ —

Non-cash funding of debt issuance costs $ 78 $ —

See accompanying notes to the unaudited condensed consolidated financial statements.

3 unchanged sentences

Note 1 — Organization and Description of Business

Direct Digital Holdings, Inc., incorporated as a Delaware corporation on August 23, 2021 and headquartered in Houston, Texas, together with its subsidiaries, is an end-to-end, full-service advertising and marketing platform primarily focused on providing advertising technology, data-driven campaign optimization and other solutions to help brands, agencies and middle market businesses deliver successful marketing results that drive return on investment ("ROI") across both the sell- and buy-side of the digital advertising ecosystem.

Direct Digital Holdings, Inc.

is the holding company for Direct Digital Holdings, LLC (“DDH LLC”), the business formed by the Company's founders in 2018 through acquisitions of Colossus Media, LLC (“Colossus Media”) and Huddled Masses, LLC (“Huddled Masses ® ” or “Huddled Masses”).

Colossus Media operates the Company’s proprietary sell-side programmatic platform ("SSP") operating under the trademarked banner of Colossus SSP TM (“Colossus SSP”).

In September 2020, DDH LLC acquired Orange142, LLC (“Orange 142”) to further bolster its overall programmatic buy-side advertising platform and to enhance its offerings across multiple industry verticals.

Colossus Media operates the Company’s proprietary programmatic platform under the trademarked banner of Colossus SSP TM (“Colossus SSP”).

In September 2020, DDH LLC acquired Orange142, LLC to further bolster its overall programmatic advertising platform and to enhance its offerings across multiple industry verticals.

In February 2022, Direct Digital Holdings, Inc.

completed an initial public offering of its securities and, together with DDH LLC, effected a series of transactions (together, the “Organizational Transactions”) whereby Direct Digital Holdings, Inc.

became the sole managing member of DDH LLC, the holder of 100 % of the voting interests of DDH LLC and the holder of 19.7 % of the economic interests of DDH LLC, commonly referred to as an “Up-C” structure.

completed an initial public offering and certain organizational transactions which resulted in the Company's current Up-C structure.

(See Note 6 — Related Party Transactions).

In October 2024, the Company announced the unification of its buy-side businesses, Orange 142 and Huddled Masses.

In these condensed consolidated financial statements, the “Company,” “Direct Digital,” “Direct Digital Holdings,” “DDH,” “we,” “us” and “our” refer to Direct Digital Holdings, Inc., and, unless otherwise stated, all of its subsidiaries, including DDH LLC and, unless otherwise stated, its subsidiaries.

During the first quarter of 2026, the Company shifted its focus to driving intentional digital marketing spend with current and future customers historically classified by the Company as buy-side customers as well as new enterprise customers accessing the digital advertising market through its recently launched product - Ignition+.

In connection with this shift in focus, the Company reassessed its reportable segments and determined that it has one reportable segment that is managed on a consolidated basis.

The new focus to streamline operations is expected to enhance the customer experience and better reflects the economics of the Company's current business where revenues reflect primarily contracts for managed advertising campaigns which may or may not access curated publisher audiences managed by the Company's sell side platform.

In these consolidated financial statements, the “Company,” “Direct Digital,” “Direct Digital Holdings,” “DDH,” “we,” “us” and “our” refer to Direct Digital Holdings, Inc., and, unless otherwise stated, all of its subsidiaries, including DDH LLC and, unless otherwise stated, its subsidiaries.

All of the subsidiaries are incorporated in the state of Delaware, except for DDH LLC, which was formed under the laws of the State of Texas.

Direct Digital Holdings, Inc.

owns 100 % of the voting interest in DDH LLC and as of September 30, 2025, it owns 63.5 % of the economic interest in DDH LLC.

See further discussion of the Up-C structure in Note 6 — Related Party Transactions.

DDH LLC was formed on June 21, 2018 and acquired by DDH on February 15, 2022 in connection with the Organizational Transactions.

owns 100 % of the voting interest in DDH LLC and as of March 31, 2026, it owns 94.3 % of the economic interest in DDH LLC.

DDH LLC was formed on June 21, 2018 and acquired by DDH on February 15, 2022 in connection with its organizational transactions.

DDH LLC’s wholly-owned subsidiaries are as follows:

Subsidiary Business

Segment Date of Formation Date of

Colossus Media, LLC Sell-side September 8, 2017 June 21, 2018

Orange142, LLC Buy-side March 6, 2013 September 30, 2020

Huddled Masses, LLC Buy-side November 13, 2012 June 21, 2018

Our sell-side advertising business, operated through Colossus Media, provides advertisers of all sizes an advertising platform that automates the sale of ad inventory between advertisers and marketers.

Our platform is intended to help brands, media holding companies, independent agencies or emerging businesses reach audiences, curated creators and publishers find the right brands for their readers, as well as drive advertising yields across all channels:

web, mobile, and connected TV ("CTV").

Our platform offers advertising inventory and creator content that is intended to align with brands, media holding companies and mid-market agencies focusing on key growth audiences.

Our buy-side advertising business, now operating as Orange 142, provides technology-enabled advertising solutions and consulting services to clients through multiple demand side platforms (“DSPs”), across multiple industry verticals such as travel and tourism, higher education, energy, healthcare, financial services, consumer products and other sectors with particular emphasis on small and mid-sized businesses transitioning into digital with growing digital media budgets.

Subsidiary Date of Formation Date of

Colossus Media, LLC September 8, 2017 June 21, 2018

Orange142, LLC March 6, 2013 September 30, 2020

Huddled Masses, LLC November 13, 2012 June 21, 2018

The Company provides technology-enabled advertising solutions and consulting services to clients either through multiple demand side platforms (“DSPs”) or through its own programmatic advertising platform (Colossus SSP), across multiple industry verticals such as travel and tourism, higher education, energy, healthcare, financial services, consumer products and other sectors with particular emphasis on small and mid-sized businesses transitioning into digital with growing digital media budgets.

In the digital advertising space, buyers, particularly small and mid-sized businesses, can potentially achieve significantly higher ROI on their advertising spend compared to traditional media advertising by leveraging data-driven over-the-top/connected TV (“OTT/CTV”), video and display, in-app, native including programmatic, search, social, influencer marketing and audio advertisements that are delivered both at scale and on a highly targeted basis.

Providing both the front-end, buy-side operations coupled with the Company’s proprietary sell-side operations is intended to enable the Company to curate the first through the last mile in the ad tech ecosystem execution process to drive higher results.

Note 2 — Basis of Presentation and Consolidation and Summary of Significant Accounting Policies

Basis of presentation and consolidation

The accompanying condensed unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 8-03 of Regulation S-X.

Accordingly, the condensed unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements.

The condensed consolidated balance sheet as of December 31, 2024 included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements.

In the opinion of the Company’s management, the accompanying condensed unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of September 30, 2025, the results of its operations for the three and nine months ended September 30, 2025 and 2024, cash flows for the nine months ended September 30, 2025 and 2024, and stockholders’ deficit for the three and nine months ended September 30, 2025 and 2024.

The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the full year.

The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 8-03 of Regulation S-X.

Accordingly, the condensed consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements.

The condensed consolidated balance sheets as of December 31, 2025 included herein was derived from audited financial statements but does not include all disclosures

required by GAAP for complete financial statements.

In the opinion of the Company’s management, the accompanying condensed consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of March 31, 2026, the results of its operations for the three months ended March 31, 2026 and 2025, cash flows for the three months ended March 31, 2026 and 2025, and stockholders’ deficit for the three months ended March 31, 2026 and 2025.

The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full year.

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the financial statements, and the amounts of revenues and expenses reported during the period.

Actual results could differ from estimates.

The accompanying condensed unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes for the year ended December 31, 2024.

The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes for the year ended December 31, 2025.

The condensed consolidated financial statements include the accounts of Direct Digital Holdings, Inc.

6 unchanged sentences

The adoption dates discussed below reflect this election.

Reverse Stock Splits

On January 8, 2026 and April 24, 2026, the Company filed certificates of amendment to the amended and restated certificate of incorporation, as amended, with the Secretary of State of the State of Delaware, to effect a 55-to-1 reverse stock split and a 4-to-1 reverse stock split, respectively, of all classes of our issued and outstanding common stock, without any change to par value.

The 55-to-1 reverse stock split (the "January Reverse Stock Split") became effective January 12, 2026 and the 4-to-1 reverse stock split (the "April Reverse Stock Split") became effective April 27, 2026.

Together, the January Reverse Stock Split and the April Reverse Stock Split are referred to as the Reverse Stock Splits.

No fractional shares were issued in connection with the Reverse Stock Splits as all fractional shares were rounded down to the next whole share, and a cash payment was made in lieu of such fractional shares.

The Reverse Stock Splits were intended to bring the Company into compliance with Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule").

All share and per share amounts of our common stock listed in the condensed consolidated financial statements and footnotes have been adjusted to give effect to the Reverse Stock Splits.

Revenue recognition

5 unchanged sentences

and 5) recognition of revenue when, or as, the performance obligation(s) are satisfied.

The Company’s revenues are derived primarily from two sources:

sell-side advertising and buy-side advertising.

Thus, the Company disaggregates the revenue earned into these two segments.

For additional segment disclosures, refer to Note 7 — Segment Information.

The Company maintains agreements with its customers in the form of written service agreements, which set out the terms of the relationship, including payment terms (typically 30 to 90 days).

For the sell-side advertising segment, the Company generates revenue by selling advertising inventory (digital ad units) that the Company purchases from publishers to advertisers through a process of monetizing ad impressions on the Company’s proprietary sell-side programmatic platform operating under the trademarked banner Colossus SSP.

For the buy-side advertising segment, the Company generates revenue from customers that enter into agreements with the Company to provide managed advertising campaigns, which include digital marketing and media services to purchase digital advertising space, data and other add-on features.

The Company’s revenues are derived primarily from digital advertising and the Company does not disaggregate the revenue earned.

T he Company maintains agreements with its customers in the form of written service agreements, which set out the terms of the relationship, including payment terms (typically 30 to 90 days).

The Company generates revenue primarily from customers that enter into agreements with the Company to provide managed advertising campaigns, which include digital marketing and media services to purchase digital advertising space, data and other add-on features either through its own programmatic platform operating under the trademarked banner Colossus SSP or through third-parties such as DSPs.

In connection with the Company’s analysis of principal-versus-agent considerations, the Company has evaluated the specified goods or services and considered whether the Company controls the goods or services before they are provided to the customer, including the three indicators of control.

Based upon this analysis and the Company’s specific facts and circumstances, the Company concluded that it is a principal for the goods or services sold through both the Company’s sell-side advertising segment and buy-side advertising segment.

On the sell-side advertising segment, the Company combines goods or services into a combined output that forms a single performance obligation to the end customer while on the buy-side advertising segment, the Company controls the specified goods or services before it is transferred to the

end customer.

Additionally, the Company is the primary obligor in the agreement with customers in both the Company’s sell-side advertising segment and buy-side advertising segment.

Based upon this analysis and the Company’s specific facts and circumstances, the Company concluded that it is a principal for the goods or services sold.

The Company controls the specified goods or services before it is transferred to the end customer.

Additionally, the Company is the primary obligor in its agreements with customers.

Therefore, the Company reports revenue on a gross basis inclusive of all supplier costs and pays suppliers for the cost of digital media, advertising inventory, data and any add-on services or features.

In the advertising industry, companies commonly experience seasonal fluctuations in revenue.

For example, in our sell-side advertising segment, many advertisers allocate the largest portion of their budgets to the fourth quarter of the calendar year in order to coincide with increased holiday purchasing while, in our buy-side segment, the second and third quarters of the year reflect our highest levels of advertising activity and the first quarter reflects the lowest level of such activity.

Sell-side advertising

The Company partners with publishers to sell advertising inventory to the Company’s Colossus Media-curated clients and the open markets (collectively referred to as “buyers”) seeking to access the general market as well as unique multi-cultural audiences.

The Company generates revenue from the delivery of targeted digital media solutions, enabling advertisers to connect intelligently with their audiences across online display, video, social and mobile mediums using its proprietary programmatic SSP.

The Company refers to its publishers, app developers, and channel partners collectively as its "publishers." The Company’s platform allows the Company to sell, in real time, ad impressions from publishers to buyers and provides automated inventory management and monetization tools to publishers across various device types and digital ad formats.

The Company recognizes revenue at a point in time when an ad is delivered or displayed in response to a winning bid request from ad buyers.

Cash payments made to customers to support integration efforts and long-term contracts are recorded to prepaid expenses or other long-term assets (contract assets) and amortized to revenue over the term of the contract.

The Company recorded contract assets in prepaid expenses and other current assets for $ 0.3 million and $ 0 and in other long-term assets for $ 0.2 million and $ 0 as of September 30, 2025 and December 31, 2024, respectively.

During the nine months ended September 30, 2025 and 2024 the Company has amortized $ 0.1 million and $ 0 , respectively.

Buy-side advertising

Historically, the second and third quarters of the year have reflected our highest levels of advertising activity and the first quarter reflects the lowest level of such activity.

The Company purchases media based on the budget established by its customers with a focus on leveraging data services, customer branding, real-time market analysis and micro-location advertising.

4 unchanged sentences

The Company provides digital advertising and media buying capabilities with a focus on generating measurable digital and financial life for its customers.

Revenue arrangements are evidenced by a fully executed insertion order (“IO”) and/or a master service agreement (“MSA”) covering a combination of marketing tactics.

Generally, IOs specify the number and type of advertising impressions to be delivered over a specified time at an agreed upon price and performance objectives for an ad campaign.

Performance objectives are generally a measure of targeting, as defined by the parties in advance, such as number of ads displayed, consumer clicks on ads or consumer actions (which may include qualified leads, registrations, downloads, inquiries or purchases).

These payment models are commonly referred to as CPM (cost per impression), CPC (cost per click) and CPA (cost per action).

The majority of the Company’s contracts are flat-rate, fee-based contracts.

Revenue arrangements are evidenced by a fully executed insertion order (“IO”), a master service agreement (“MSA”) and/or a statement of work ("SOW") covering the scope of work to be accomplished and could be a combination of marketing execution tactics.

Generally, IOs specify the number and type of advertising metrics to be delivered over a specified time at an agreed upon price under payment models commonly referred to as CPM (cost per impression) or CPC (cost per click).

The majority of the Company’s contracts are flat-rate, fee-based contracts and may include provisions for management, agency or other professional fees.

Cash payments received prior to the Company’s delivery of its services are recorded to deferred revenue until the performance obligation is satisfied.

The Company recorded deferred revenue (contract liabilities) to account for billings in excess of revenue recognized, primarily related to contractual minimums billed in advance and customer prepayment, of $ 0.5 million and $ 0.5 million as of September 30, 2025 and December 31, 2024, respectively.

Revenue recognized during the nine months ended September 30, 2025 and 2024 from amounts included within the deferred revenue balances at the beginning of each respective period amounted to $ 0.5 million and $ 0.4 million, respectively.

The Company recorded deferred revenue (contract liabilities) to account for billings in excess of revenue recognized, primarily related to contractual minimums billed in advance and customer prepayment, of $ 0.8 million and $ 0.5 million as of March 31, 2026 and December 31, 2025, respectively.

Revenue recognized during the three months ended March 31, 2026 and 2025 from amounts included within the deferred revenue balances at the beginning of each respective period amounted to $ 0.3 million and $ 0.2 million, respectively.

Cash payments made to customers to support integration efforts and long-term contracts are recorded to prepaid expenses or other long-term assets and amortized to revenue over the term of the contract.

The Company recorded these cash payments in prepaid expenses and other current assets for $ 0.3 million and in other long-term assets for $ 0.1 million as of March 31, 2026 and December 31, 2025.

During the three months ended March 31, 2026 and 2025, other assets amortized were less than $ 0.1 million and $ 0 , respectively.

Accounting Standards Codification ("ASC") 606 provides various optional practical expedients.

The Company elected the use of the practical expedient relating to the disclosure of remaining performance obligations within a contract and will not disclose remaining performance obligations for contracts with an original expected duration of one year or less.

As of September 30, 2025 and December 31, 2024, goodwill was $ 6.5 million, including amounts related to acquisitions in 2018 and in 2020.

As of March 31, 2026 and December 31, 2025, goodwill was $ 6.5 million, including amounts related to acquisitions in 2018 and in 2020.

The goodwill is deductible for tax purposes and is assessed for impairment at least annually (December 31) starting with a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value.

3 unchanged sentences

Goodwill is reviewed annually and tested for impairment upon the occurrence of a triggering event.

The carrying value of the Company's sell-side reporting unit was negative as of September 30, 2025.

Goodwill of $ 1.2 million as of September 30, 2025 is allocated to the sell-side reporting unit, which is included in the sell-side reportable segment.

The Company determined that there was no impairment of goodwill during the nine months ended September 30, 2025 and 2024.

The Company determined that there was no impairment of goodwill during the three months ended March 31, 2026 and 2025.

Intangible assets, net

2 unchanged sentences

Intangible assets are amortized on a straight-line basis over their estimated useful lives and recorded as amortization expense within general and administrative expenses in the condensed consolidated statements of operations.

The Company’s intangible assets are being amortized over their estimated useful lives, using the straight-line method with non-compete agreements over 5 years and other intangibles over 10 years.

The Company’s intangible assets are being amortized over their estimated useful lives using the straight-line method with other intangibles over 10 years.

Impairment of long-lived assets

1 unchanged sentence

ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows to determine if a write-down to fair value is necessary.

No impairment loss was recognized during the nine months ended September 30, 2025 and 2024.

No impairment loss was recognized during the three months ended March 31, 2026 and 2025.

Stock-based compensation

8 unchanged sentences

The Company considers an estimated forfeiture rate for stock options based on historical experience and the anticipated forfeiture rates during the future contract life.

In February 2022, concurrent with the Organizational Transactions, the Company entered into a tax receivable agreement (“Tax Receivable Agreement” or “TRA”) with DDH LLC and Direct Digital Management, LLC (“DDM”).

In February 2022, concurrent with its organizational transactions, the Company entered into a tax receivable agreement (“Tax Receivable Agreement” or “TRA”) with DDH LLC and Direct Digital Management, LLC (“DDM”).

The TRA provides for certain income (loss) allocations between the Company and DDH LLC under the agreement.

1 unchanged sentence

federal income tax and certain state and local income taxes.

Any taxable income or loss generated by the Company is allocated to holders of LLC units (“LLC Units”) in accordance with the Second Amended and Restated

Limited Liability Company Agreement (“LLC Agreement”), and distributions to the owners of LLC Units in an amount sufficient to fund their tax obligations.

Any taxable income or loss generated by the Company is allocated to holders of LLC units (“LLC Units”) in accordance with the Second Amended and Restated Limited Liability Company Agreement (“LLC Agreement”), and distributions to the owners of LLC Units in an amount sufficient to fund their tax obligations.

The Company is subject to U.S.

federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss under the LLC Agreement.

Pursuant to the Company’s election under Section 754 of the Internal Revenue Code (the “Code”), the Company expects to obtain an increase in its share of the tax basis in the net assets of DDH, LLC when LLC Units are redeemed or exchanged by the members of DDH, LLC.

The Company made an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC interest occurred.

During the nine months ended September 30, 2025, members of DDM exchanged 1,292,500 shares of Class B Common Stock into shares of Class A Common Stock.

No shares were exchanged or converted during the nine months ended September 30, 2024.

Pursuant to the Company’s election under Section 754 of the Internal Revenue Code (the “Code”), the Company expects to obtain an increase in its share of the tax basis in the net assets of DDH LLC when LLC Units are exchanged by the members of DDH LLC.

The Company made an election under Section 754 of the Code for each taxable year in which an exchange of LLC interest occurred.

No shares were exchanged during the three months ended March 31, 2026.

During the three months ended March 31, 2025, members of DDM exchanged 318 shares of Class B Common Stock into shares of Class A Common Stock.

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

6 unchanged sentences

Accounts receivable are stated at net realizable value.

The Company insures a significant portion of its accounts receivable with unrelated third-party insurance companies in an effort to mitigate any future write-offs and establishes provision for credit losses as deemed necessary for accounts not covered by this insurance.

The Company insures a significant portion of its accounts receivable with unrelated third-party insurance companies in an effort to mitigate any future write-offs.

Management periodically reviews outstanding accounts receivable for reasonableness.

If warranted, the Company processes a claim with the third-party insurance company to recover uncollected balances, rather than writing the balances off to bad debt expense.

The guaranteed recovery for the claim is approximately 90 % of the original balance, and if the full amount is collected by the insurance company, the remaining 10 % is remitted to the Company.

The guaranteed recovery for the claim is approximately 90 % of the original balance, and if the full amount is collected by

the insurance company, the remaining 10 % is remitted to the Company.

If the insurance company is unable to collect the full amount, the Company records the remaining 10 % to bad debt expense.

1 unchanged sentence

Accounts receivable balances are written off against the provision when the Company believes it is probable the receivable will not be recovered.

For the nine months ended September 30, 2025 and 2024, the Company's provision for credit losses net of recoveries, as reflected in the condensed consolidated statements of cash flows, was less than $ 0.1 million.

Concentrations of customers and suppliers

There is an inherent concentration of credit risk associated with accounts receivable arising from revenue from major customers on both the sell-side and buy-side of the business.

For the three months ended September 30, 2025, two customers (both buy-side) accounted for 30 % of revenues.

For the three months ended September 30, 2024, one customer of the buy-side of the business accounted for 12 % of revenues.

For the nine months ended September 30, 2025, two customers (both buy-side) accounted for 27 % of revenues.

For the nine months ended September 30, 2024, one sell-side customer represented 52 % of revenues.

As of September 30, 2025, two buy-side customers accounted for 33 % of accounts receivable.

As of December 31, 2024, three customers (two buy-side and one sell-side) accounted for 34 % of accounts receivable.

As of September 30, 2025 and December 31, 2024 , two vendors and one vendor each accounted for at least 10%, and collectively accounted for 33 % and 16 %, respectively, of accounts payable.

There is an inherent concentration of credit risk associated with accounts receivable arising from revenue from major customers.

For the three months ended March 31, 2026 and 2025, three customers accounted for 44 % and 39 % of revenues, respectively.

As of March 31, 2026 and December 31, 2025, three customers accounted for 45 % and 43 % of accounts receivable, respectively.

As of March 31, 2026 and December 31, 2025, one vendor accounted for 16 % and 21 %, respectively, of accounts payable.

Accrued liabilities

The components of accrued liabilities on the condensed consolidated balance sheet as of September 30, 2025 and December 31, 2024 are as follows (in thousands):

September 30,

The components of accrued liabilities on the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025 are as follows (in thousands):

2026 December 31,

3 unchanged sentences

Total accrued liabilities $ 1,887 $ 2,164

Accrued liabilities - related party

The components of accrued liabilities - related party on the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025 are as follows (in thousands):

2026 December 31,

Accrued dividend $ 512 $ 55

Total accrued liabilities - related party $ 512 $ 3,663

(1) See Note 9 — Commitments and Contingencies for further details.

Cash and cash equivalents

7 unchanged sentences

Unamortized deferred financing costs are netted against debt or classified as prepaid expenses and other current assets in the condensed consolidated balance sheets.

Fees that are directly associated with an equity offering are recorded to additional paid-in capital in the event the Company completes an equity issuance.

Fees that are directly associated with an equity offering are recorded to additional paid-in

capital in the event the Company completes an equity issuance.

The differences between the face amount and the proceeds upon issuance of debt are recorded as a discount or premium , including debt discount related to the interest reserve added under various amendments to the Company's credit facilities, and netted against debt in the condensed consolidated balance sheets.

Upon a modification, the Company established new effective interest rates based on the carrying value of the modified debt.

Upon a modification, the Company establishes new effective interest rates based on the carrying value of the modified debt.

Fair value measurements

7 unchanged sentences

The Company considers the fair value of all financial instruments, including cash, accounts receivable and accounts payable to approximate their carrying values at year-end due to their short-term nature.

The carrying value of the Company’s debt approximates fair value due to the market rates of interest.

The carrying value of the Company’s debt approximates fair value due to the market rates of interest and limited time to maturity.

Net loss per share

3 unchanged sentences

Accounting pronouncements adopted

In August 2023, the FASB issued ASU 2023-05, Business Combinations - Joint Ventures Formations, which requires that joint ventures, upon formation, apply a new basis of accounting by initially measuring assets and liabilities at fair value.

The amendments in ASU 2023-05 are effective for joint ventures that are formed on or after January 1, 2025.

Early adoption is permitted.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses:

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under Accounting Standards Codification 606.

The new standard is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods and early adoption is permitted.

The Company adopted this standard effective January 1, 2026 using a prospective approach.

The adoption of this ASU did not have a material impact on the Company's condensed consolidated financial statements.

During the nine months ended September 30, 2025, the Company entered into a joint venture, but no material activity has occurred to date.

Accounting pronouncements not yet adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, a final standard on improvements to income tax disclosures.

The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid.

The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes.

The new standard is effective for public entities for annual periods beginning after December 15, 2024, and early adoption is permitted.

The Company is currently evaluating the impact on the disclosures of the Company's condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires a tabular disclosure of the amounts of specified natural expense categories included in each relevant expense caption.

Additionally, ASU 2024-03 requires the disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact on the disclosures of the Company's condensed consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses:

The new standard is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods.

The new standard, as clarified in ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact on the disclosures of the Company's condensed consolidated financial statements.

The Company is currently evaluating the impact of adoption on the Company's condensed consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting - Narrow Scope Improvements.

ASU 2025-11 improves the guidance in ASC 270, Interim Reporting, by improving the navigability of the required interim disclosures

and clarifying when that guidance is applicable.

The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted and the guidance may be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently evaluating the impact of adoption on the Company's condensed consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements.

4 unchanged sentences

Management’s assessment is based on the relevant conditions that are known or reasonably knowable as of the date these condensed consolidated financial statements were issued or were available to be issued.

As discussed in Note 9 — Commitments and Contingencies, one of the Company’s sell-side customers paused its connection to the Company for a couple of weeks in May 2024, which reduced sell-side sales volumes.

As of the date of this report, sell-side volumes have resumed but not yet at the levels experienced prior to the pause in May 2024 which has created significant disruption in the Company’s sell-side business.

The Company is actively working with its partners to achieve prior volume levels.

However, there can be no assurance that the Company will be able to achieve prior volume levels with its partners or on the timing of achieving such volume levels.

Additionally, the Company (1) incurred a net loss of $ 15.1 million for the nine months ended September 30, 2025 including the impact of the sell-side disruption described above, (2) reported an accumulated deficit of $ 16.1 million as of September 30, 2025, (3) reported cash and cash equivalents of $ 0.9 million as of September 30, 2025, and (4) was notified by Nasdaq on October 18, 2024 that it was not in compliance with Nasdaq's minimum stockholders' equity requirements although it reported, on October 14, 2025, that it

believes it has satisfied the stockholders' equity requirement and awaits a formal compliance determination from Nasdaq.

As discussed in Note 9 — Commitments and Contingencies, the Company has experienced significant disruption in its business due to a series of unexpected setbacks in the past two years.

During 2025, the Company worked with its partners to achieve prior volume levels of revenue but was unable to achieve historical volumes.

Despite these challenges, the Company was able to reduce expenses, pay off the matured Credit Agreement with a term loan from Lafayette Square (see Note 3 — Long-Term Debt), convert existing debt of $ 35.0 million to Series A Convertible Preferred Stock and establish an Equity Reserve Facility raising additional equity of $ 11.6 million through March 31, 2026.

Additionally, the Company (1) incurred a net loss of $ 5.6 million for the three months ended March 31, 2026 including the impact of the disruption described above, (2) reported an accumulated deficit of $ 33.0 million as of March 31, 2026, (3) reported cash and cash equivalents of $ 0.8 million and a working capital deficit of $ 23.9 million as of March 31, 2026, (4) owes its lender $ 17.4 million (combination of principal, accrued fees, interest and the preferred dividends) as of March 31, 2026, under the 2021 Credit Facility (as defined below) which matures in December 2026 and (5) despite demonstrating compliance with the minimum stockholders' equity requirement for continued listing under Nasdaq Listing Rule 5550(b)(1) (the "Stockholders' Equity Rule") on November 7, 2025 and Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule") on February 12, 2026, remains subject to a discretionary Panel Monitor through November 7, 2026 for the Stockholders' Equity Rule and through February 12, 2027 for the Bid Price Rule.

The Company was not in compliance with the Stockholders' Equity Rule as of March 31, 2026 or the Bid Price Rule as of April 23, 2026.

These factors raise substantial doubt about the Company’s ability to continue as a going concern over the next twelve months.

The Company anticipates sources of liquidity to include cash on hand, cash flow from operations, cash generated from its sales under the Company's Equity Reserve Facility with New Circle Principal Investments LLC and cash generated from other potential sales of equity and/or debt securities and has taken several actions to address liquidity concerns.

These actions include (1) a plan to reduce expenses through a staff reduction, a pause on hiring and cost savings measures that was executed on July 1, 2024 with continuing cost savings impacts through September 30, 2025, (2) working with lenders to provide temporary various relief from debt covenants via amendments from October 2024 through October 2025 (see Note 3 — Long-Term Debt) while rebuilding sell-side volumes, (3) putting in place a program to raise capital through an Equity Reserve Facility with stock sales continuing into 2025 (see Note 4 — Stockholders’ Deficit and Stock-Based Compensation), (4) converting $ 25.0 million and $ 10.0 million of debt with Lafayette Square to convertible preferred stock on August 8, 2025 and October 14, 2025, respectively, to achieve compliance with Nasdaq's minimum stockholders' equity requirement (see Note 3 - Long-Term Debt), (5) paying off the matured Credit Agreement with a term loan from Lafayette Square (see Note 3 - Long-Term Debt) and (6) a plan to maintain compliance with Nasdaq's minimum stockholders' equity requirement by raising additional funds in a registered or private offering.

The Company anticipates sources of liquidity to include cash on hand, cash flow from operations, cash generated from its sales under the Company's new Committed Equity Facility and cash generated from other potential sales of equity and/or debt securities and has taken several actions to address liquidity and performance concerns.

Such plans include (1) a shift in focus to driving intentional digital marketing spend with current and future customers as well as new enterprise customers accessing the digital advertising market through its recently launched product – Ignition+ allowing for further growth and a return to profitability and (2) refinancing the 2021 Credit Facility by raising additional funds in a registered or private offering.

There can be no assurance that the Company’s actions will be successful or that additional financing will be available when needed or on acceptable terms.

1 unchanged sentence

Note 3 — Long-Term Debt

At September 30, 2025 and December 31, 2024, long-term debt consisted of the following (in thousands):

September 30, 2025 December 31, 2024

At March 31, 2026 and December 31, 2025, long-term debt consisted of the following (in thousands):

March 31, 2026 December 31, 2025

2021 Credit Facility (1) (2)

$ 14,285 $ 10,285

Credit Agreement — 3,700

2021 Credit Facility - Accrued Fees (2)

2021 Credit Facility - Accrued Interests (2)

Economic Injury Disaster Loan 148 149

Total long-term debt 16,316 41,212

debt premium 3,151 —

Total debt 17,002 12,461

deferred financing cost (2)

1 unchanged sentence

debt discount (2) (3)

Total long-term debt, net of deferred financing cost and debt discount 15,748 35,303

( 249 ) ( 249 )

Total debt, net of deferred financing cost and debt discount 16,693 12,149

current portion (2)

Total long-term debt, including debt premium, net of current portion, deferred financing cost and debt discount $ 10,817 $ 31,603

(1) As of September 30, 2025 and December 31, 2024, amount includes an exit fee of $ 3.0 million, which due at maturity or prepayment.

( 16,548 ) ( 12,003 )

Total long-term debt, net of current portion $ 145 $ 146

(1) As of March 31, 2026 and December 31, 2025, amount includes $ 7.5 million and $ 3.5 million of amendment closing fees, respectively, pursuant to the Eleventh and Ninth Amendments defined below, respectively, which are due at maturity or prepayment.

(2) These balances are considered related party balances.

(3) The debt discount is composed of the difference between the fair value and the carrying value of the 2021 Credit Facility.

The components of interest expense and related fees for long-term debt is as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Interest expense – 2021 Credit Facility (1)

3 unchanged sentences

Amortization of deferred financing cost and debt discount 18 641

Amortization of debt premium ( 450 ) — ( 450 ) —

Total interest expense and amortization of deferred financing cost and debt discount (premium), net $ 563 $ 1,846

(1) For the three and nine months ended September 30, 2025, a portion of the interest expense related to the 2021 Credit Facility was applied against the interest reserve, as described below, and included in amortization of deferred financing cost and debt discount (premium), net in the condensed consolidated statement of cash flows.

(1) For the three months ended March 31, 2025, a portion of the interest expense related to the 2021 Credit Facility was applied against the interest reserve, as described below, and included in amortization of deferred financing cost and debt discount (premium), net in the condensed consolidated statement of cash flows.

Lafayette Square

1 unchanged sentence

The term loan under the 2021 Credit Facility initially provided for a term loan in the principal amount of up to $ 32.0 million, consisting of a $ 22.0 million closing date term loan (the "Term Loan") and an up to $ 10.0 million delayed draw term loan (the “Delayed Draw Loan”).

The loans under the 2021 Credit Facility are calculated using Term Secured Overnight Financing Rate ("Term SOFR") with a credit spread adjustment of 0.10 % per annum for interest periods of one month and 0.15 % per annum for interest periods of three months.

The related interests to these loans under the 2021 Credit Facility are based off of Term Secured Overnight Financing Rate ("Term SOFR") with a credit spread adjustment of 0.10 % per annum for interest periods of one month and 0.15 % per annum for interest periods of three months.

The loans under the 2021 Credit Facility bear interest at Term SOFR plus the applicable margin minus any applicable impact discount.

Prior to entering into the Fifth Amendment as defined below, the applicable margin under the 2021 Credit Facility was based on the consolidated total net leverage ratio of the Company at a rate of 7.00 % per annum if the consolidated total net leverage ratio was less than or equal to 1.00 to 1.00 with gradual increases as the ratio increased up to 10.00 % per annum if the consolidated total net leverage ratio was greater than 3.50 to 1.00.

After giving effect to the Fifth Amendment, the applicable margin under the 2021 Credit Facility is based on the consolidated total leverage ratio of the Company at a rate of 7.00 % per annum if the consolidated total leverage ratio is less than or equal to 1.00 to 1.00 with

gradual increases as the ratio increases up to 10.00 % per annum if the consolidated total leverage ratio is greater than 3.50 to 1.00.

The applicable margin under the 2021 Credit Facility is based on the consolidated total leverage ratio of the Company at a rate of 7.00 % per annum if the consolidated total leverage ratio is less than or equal to 1.00 to 1.00 with gradual increases as the ratio increases up to 10.00 % per annum if the consolidated total leverage ratio is greater than 3.50 to 1.00.

The maturity date of the 2021 Credit Facility is December 3, 2026.

On July 28, 2022, the Company entered into the Second Amendment and Joinder to Term Loan and Security Agreement and received proceeds of $ 4.3 million borrowed under the Delayed Draw Loan to pay the balance owed on the common unit redemption as well as costs associated with the transaction.

Subsequently, on October 3, 2023, the Company entered into the Fourth Amendment (the “Fourth Amendment”) to the 2021 Credit Facility and received proceeds of $ 3.6 million borrowed under the Delayed Draw Loan to make payments in connection with the consummation of the 2023 warrant tender offer and fees and expenses incurred as described in Note 4 — Stockholders’ Deficit and Stock-Based Compensation.

In connection with the Fourth Amendment, the Company agreed it would not be permitted to request any additional funds under the Delayed Draw Loan, and Lafayette Square would not be obligated to fund any such requests.

Quarterly installment payments on the Term Loan and the Delayed Draw Loan, due on the last day of each fiscal quarter, began March 31, 2022 with a final installment due December 3, 2026 for remaining balances outstanding under each loan.

1 unchanged sentence

Each quarterly installment payment under the Delayed Draw Loan was 0.625 % of the amount of the Delayed Draw Loan through December 31, 2023, and each quarterly installment payment thereafter until maturity is 1.25 % of the amount of the Delayed Draw Loan.

At times, amendments to the 2021 Credit Facility have modified this payment schedule.

The 2021 Credit Facility contains customary affirmative and negative covenants, including restrictions on the ability to incur indebtedness, create certain liens, make certain investments, make certain dividends and other types of distributions, and enter into or undertake certain mergers, consolidations, acquisitions and sales of certain assets and subsidiaries.

Prior to entering into the Fifth Amendment (as defined below), the Company was required to maintain varying threshold levels by quarter for the net leverage ratio and the fixed charge coverage ratio.

On October 15, 2024, with an effective date of June 30, 2024, the Company and Lafayette Square entered into the Fifth Amendment (the “Fifth Amendment”) to the 2021 Credit Facility which among other things, (1) deferred quarterly installment payments on the Term Loan and the Delayed Draw Loan for the periods from June 30, 2024 through December 31, 2025, (2) required that the Company pay a commitment fee of 50 basis points or an amount of $ 0.1 million to Lafayette Square, (3) allowed proceeds from future equity raises by the Company, if any, to cure potential financial covenant noncompliance, (4) provided for one-month and three-month interest periods and (5) replaced the financial covenants under the 2021 Credit Facility (effective as of June 30, 2024) with varying threshold levels by quarter for minimum trailing twelve months EBITDA, minimum liquidity, maximum consolidated total leverage ratio and minimum fixed charge coverage ratio.

Current financial covenants as of and subsequent to May 15, 2026 include (1) a minimum unrestricted cash balance of $ 0.5 million, (2) minimum quarterly consolidated EBITDA of $ 0.2 million for the fiscal quarter ended June 30, 2026, (3) maximum consolidated total leverage ratio of 3.50 to 1.00 for the quarter ended June 30, 2026 and 3.25 to 1.00 for each quarter thereafter and (4) minimum fixed charge coverage ratio of 1.25 to 1.00 for the quarter ended June 30, 2026 and 1.50 to 1.00 for each quarter thereafter.

As of March 31, 2026, the Company was not in compliance with certain financial covenants under the Credit Agreement, as amended, including the minimum cash balance, minimum quarterly EBITDA and minimum quarterly sell-side revenue;

however, the Company has received a waiver from Lafayette Square pertaining to such non-compliance with the Twelfth Amendment as defined below.

Prior to entering into the Fifth Amendment as defined below, the Company entered into the second, third and fourth amendments to the 2021 Credit Facility.

The Fifth Amendment was accounted for as a modification.

3 unchanged sentences

Lafayette Square and the Company agreed to use (1) $ 4.0 million out of the Sixth Amendment Term Loan to prepay the revolving credit notes under the Credit Agreement as defined below, and (2) $ 2.0 million to fund an interest reserve under the 2021 Credit Facility.

The Sixth Amendment also (1) implemented a minimum unrestricted cash requirement of $ 750,000 at all times and removed the minimum consolidated EBITDA and minimum liquidity financial covenants, (2) requires Lafayette Square’s prior written consent for certain permitted dividends, including dividends to the Company’s shareholders and (3) waived certain existing events of default related to minimum EBITDA covenants.

Additionally, the Company is required to provide to Lafayette Square a weekly cash flow forecast, prepared on a cumulative, weekly roll forward basis through a thirteen (13) week projection period.

The Sixth Amendment also (1) modified financial covenants, (2) requires Lafayette Square’s prior written consent for certain permitted dividends, including dividends to the Company’s shareholders and (3) waived certain existing events of default related to minimum EBITDA covenants.

Lastly, a $ 3.0 million exit fee, which was fully earned upon execution of the Sixth Amendment and is payable directly to Lafayette Square at maturity or prepayment, was added to the term loan balance.

The Sixth Amendment was accounted for as a modification.

In connection with the Sixth Amendment, the $ 3.0 million exit fee was capitalized and is being amortized to interest expense using the straight-line method, which approximates the effective interest method, over the life of the debt, and fees paid to third parties totaling $ 0.1 million were expensed as incurred.

On August 8, 2025, the Company and Lafayette Square entered into the Seventh Amendment (the “Seventh Amendment”) which among other things, (1) provided for the conversion of $ 25.0 million of outstanding term loan obligations into newly issued shares of Series A Convertible Preferred Stock, (2) required the payment of a $ 1.0 million amendment closing fee, and (3) modified certain financial covenants, including a minimum unrestricted cash balance of $ 1.5 million, minimum quarterly consolidated EBITDA of $ 1.0 million for the quarters ended September 30, 2025 and

December 31, 2025 and $ 0.5 million for each quarter thereafter, maximum consolidated total leverage ratio of 3.50 to 1.00 for the quarter ended June 30, 2026 and 3.25 to 1.00 for each quarter thereafter and minimum fixed charge coverage ratio of 1.25 to 1.00 for the quarter ended June 30, 2026 and 1.50 to 1.00 for each quarter thereafter.

In connection with the Sixth Amendment, the $ 3.0 million exit fee was capitalized and amortized to interest expense using the straight-line method, which approximates the effective interest method, over the life of the debt, and fees paid to third parties totaling $ 0.1 million were expensed as incurred.

On August 8, 2025, the Company and Lafayette Square entered into the Seventh Amendment (the “Seventh Amendment”) which among other things, (1) provided for the conversion of $ 25.0 million of outstanding term loan obligations into newly issued shares of Series A Convertible Preferred Stock, (2) required the payment of a $ 1.0 million amendment closing fee and a $ 0.1 million amendment fee and (3) modified financial covenants.

The Seventh Amendment also established a $ 25.0 million exit fee due upon redemption in full of the newly issued preferred stock with reduction in the amount of the exit fee outstanding for any amounts redeemed or converted.

2 unchanged sentences

The difference between the fair value of the shares of Series A Convertible Preferred Stock and the carrying value of the existing debt converted into Series A Convertible Preferred Stock is reflected as a debt premium.

As of September 30, 2025 and December 31, 2024, $ 3.2 million and $ 0 , respectively, of debt premium are netted against debt in the condensed consolidated balance sheets.

On September 8, 2025, the Company and Lafayette Square entered into the Eighth Amendment (the “Eighth Amendment”) to the 2021 Credit Facility which among other things, Lafayette agreed to make a term loan in the principal amount equal to $ 3.8 million (the “Eighth Amendment Term Loan”) to repay in full the outstanding amounts owed under the Credit Agreement (as defined below).

The Eighth Amendment also provided for a $ 0.1 million interest reserve and a less than $ 0.1 million amendment fee.

The maturity date of the Eighth Amendment Term Loan is October 30, 2025 which was extended to October 30, 2026 on November 10, 2025.

The maturity date of the Eighth Amendment Term Loan was October 30, 2025

which was extended to October 30, 2026 on November 10, 2025 and later revised to September 30, 2026 pursuant to the Eleventh Amendment (as described below).

The Eighth Amendment was accounted for prospectively as a modification and no gain or loss was recognized.

The Company established the new effective interest rate based on the carrying value of the modified debt.

At the Company's option, the Company may at an y time prepay the outstanding principal balance of the 2021 Credit Facility in whole or in part, without fee, penalty or premium other than the $ 3.0 million exit fee due at maturity or prepayment, as defined under the Sixth Amendment.

The obligations under the 2021 Credit Facility are secured by senior, first-priority liens on all or substantially all assets of the Company.

Additional deferred financing costs of $ 1.2 million and $ 0 were incurred during the nine months ended September 30, 2025 and 2024, respectively.

Unamortized deferred financing costs as of September 30, 2025 and December 31, 2024 were $ 3.6 million and $ 4.2 million , respectively.

Unamortized debt discount related to the interest reserve pursuant to various amendments to the Company's credit facility as of September 30, 2025 and December 31, 2024 was $ 0.1 million and $ 1.7 million, respectively.

Accrued and unpaid interest was $ 0.8 million and less than $ 0.1 million as of September 30, 2025 and December 31, 2024, respectively .

Unamortized debt premium was $ 3.2 million and $ 0 as of September 30, 2025 and December 31, 2024, respectively .

Subsequent to the end of the period ended September 30, 2025, on October 14, 2025, the Company and Lafayette Square entered into the Ninth Amendment (the “Ninth Amendment”) to the 2021 Credit Facility which among other things, (1) provided for the conversion of $ 10.0 million of outstanding term loan obligations, including the $ 3.0 million exit fee established by the Sixth Amendment, into 10,000 newly issued shares of Series A Convertible Preferred Stock, (2) required the payment of a $ 3.5 million amendment closing fee at maturity, (3) modified certain financial covenants, including a minimum unrestricted cash balance of $ 0.45 million, minimum quarterly consolidated EBITDA of ($ 0.625 million) and ($ 1.921 million) for the fiscal quarters ended December 31, 2025 and March 31, 2026 and minimum quarterly sell-side revenue of $ 2.5 million, $ 2.5 million and $ 5.0 million for the fiscal quarters ended December 31, 2025, March 31, 2026 and thereafter, respectively, (4) requires prepayments when the Company has an aggregate cash balances in excess of $ 2.5 million, (5) increases the Seventh Amendment exit fee from $ 25.0 million to $ 35.0 million and (6) waives any noncompliance with covenants as of September 30, 2025.

Also subsequent to the end of the period ended September 30, 2025, on October 28, 2025, the Company and Lafayette Square entered into the Tenth Amendment (the "Tenth Amendment") to the 2021 Credit Facility which among other things, allows the Company to request that Lafayette Square exchange and/or convert (each, an "Exchange"), in whole or in part, shares of Series A Convertible Preferred Stock into shares of Class A Common Stock;

On October 14, 2025, the Company and Lafayette Square entered into the Ninth Amendment (the “Ninth Amendment”) to the 2021 Credit Facility which among other things, (1) provided for the conversion of $ 10.0 million of outstanding term loan obligations, including the $ 3.0 million exit fee established by the Sixth Amendment, into 10,000 newly issued shares of Series A Convertible Preferred Stock, (2) required the payment of a $ 3.5 million amendment closing fee at maturity, (3) modified financial covenants, (4) requires prepayments when the Company has an aggregate cash balances in excess of $ 2.5 million, (5) increases the Seventh Amendment exit fee from $ 25.0 million to $ 35.0 million and (6) waives any noncompliance with covenants as of September 30, 2025.

On October 28, 2025, the Company and Lafayette Square entered into the Tenth Amendment (the "Tenth Amendment") to the 2021 Credit Facility which among other things, allows the Company to request that Lafayette Square exchange and/or convert (each, an "Exchange"), in whole or in part, shares of Series A Convertible Preferred Stock into shares of Class A Common Stock;

provided, that Lafayette Square is permitted to decline any such request.

The Tenth Amendment provides that the ratio for each Exchange shall be, for each share of Series A Preferred Stock so exchanged, the quotient of (1) the Accumulated Conversion Value (as defined in the Certificate of Designation for the Series A Convertible Preferred Stock) attributable to such share of Series A Preferred Stock, divided by (2) the volume-weighted average price of the Class A Common Stock for the 20-trading day trailing period immediately preceding the delivery of the notice pursuant to the procedures set forth in the Tenth Amendment, rounded down to the nearest whole share.

The Company and Lafayette Square also agreed to modify the terms related to the Exit Fee such that the amount of the exit fee outstanding is also reduced for any amounts exchanged pursuant to the Tenth Amendment.

The Tenth Amendment provides that the ratio for each Exchange shall be, for each share of Series A Convertible Preferred Stock so exchanged, the quotient of (1) the Accumulated Conversion Value (as defined in the Certificate of Designation for the Series A Convertible Preferred Stock) attributable to such share of Series A Convertible Preferred Stock, divided by (2) the volume-weighted average price of the Class A Common Stock for the 20-trading day trailing period immediately preceding the delivery of the notice pursuant to the procedures set forth in the Tenth Amendment, rounded down to the nearest whole share.

The Company and Lafayette Square also agreed to modify the terms related to the Exit Fee such that the amount of the exit fee outstanding is also reduced for any proceeds received by Lafayette Square in connection with such exchanges pursuant to the Tenth Amendment.

Finally, the Tenth Amendment removes the requirement for the Company to make a prepayment of the loans under the 2021 Credit Facility with any proceeds received from the sale of Series A Convertible Preferred Stock and provides for certain other technical amendments to the 2021 Credit Facility to permit the Exchange.

The Tenth Amendment also provided for a less than $ 0.1 million amendment fee.

As the Ninth Amendment and Tenth Amendment were executed shortly after one another, they were evaluated together for purposes of assessing the transactions under relevant guidance and accounted for as a debt extinguishment.

As a result, the Company recognized a $ 3.8 million loss on early debt extinguishment in the fourth quarter of fiscal 2025.

The Series A Convertible Preferred Stock issued in connection with the Ninth Amendment was recognized at its fair value of $ 9.7 million upon issuance (see Note 4 — Stockholders’ Deficit and Stock-Based Compensation), and the Company established the new effective interest rates for the new debt based on the fair value of the debt.

On January 27, 2026, the Company and Lafayette Square entered into the Eleventh Amendment (the “Eleventh Amendment”) to the 2021 Credit Facility which among other things, (1) modified financial covenants effective December 31, 2025, (2) required the payment of a $ 4.0 million amendment closing fee at maturity, (3) modified the principal payment schedule for the outstanding loans under the Term Loan Facility, (4) clarified that the maturity date of the Eighth Amendment Term Loan is September 30, 2026 and (5) modified the denominator of the Conversion Ratio to be the price of the Class A Common Stock for one trading day prior to the Conversion Notice rather than the volume weighted average price for twenty trading days prior.

On May 15, 2026, the Company and Lafayette Square entered into the Twelfth Amendment (the “Twelfth Amendment”) to the 2021 Credit Facility which among other things, (1) modified financial covenants, (2) required the payment of a $ 0.1 million amendment closing fee at maturity and (3) provided a waiver for certain noncompliance with financial covenants as of March 31, 2026.

At the Company's option, the Company may at any time prepay the outstanding principal balance of the 2021 Credit Facility in whole or in part, without fee, penalty or premium other than the $ 3.5 million and $ 4.0 million amendment closing fees due at maturity or prepayment, as defined under the Ninth Amendment and the Eleventh Amendment, respectively.

The obligations under the 2021 Credit Facility are secured by senior, first-priority liens on all or substantially all assets of the Company.

The Eleventh Amendment was accounted for as a debt extinguishment resulting in a $ 0.5 million loss on early debt extinguishment in the first quarter of fiscal 2026, primarily related to the write-off of $ 0.1 million of deferred financing costs and the expensing of $ 0.4 million of lender fees associated with the Eleventh Amendment.

Accrued and unpaid interest was $ 1.3 million and $ 0.8 million as of March 31, 2026 and December 31, 2025, respectively.

Additional deferred financing costs of less than $ 0.1 million were incurred during the three months ended March 31, 2026 and 2025.

2023 Revolving Line of Credit - East West Bank

1 unchanged sentence

The Credit Agreement provides for a revolving credit facility in the principal amount of up to $ 10.0 million, subject to a borrowing base determined based on eligible accounts, and an up to $ 5.0 million uncommitted incremental revolving facility.

Loans under the Credit Agreement originally matured on July 7, 2025 (the “Maturity Date”), unless the Credit Agreement is otherwise terminated pursuant to the terms of the Credit Agreement.

Borrowings under the Credit Agreement bear interest at a rate per annum equal to the one-month Term SOFR rate and as determined by EWB on the first day of the applicable interest period, plus 0.10 %, plus 3.00 % per annum (the “Loan Rate”);

provided, that, in no event shall the Loan Rate be less than 0.50 % of the Loan Rate effective as of the date of the Credit Agreement nor more than the maximum rate of interest allowed under applicable law.

Upon an event of default under the Credit Agreement, the outstanding principal amounts of any advances will accrue interest at a rate per annum equal to the Loan Rate plus five percent ( 5 %), but in no event in excess of the maximum rate of interest allowed under applicable law.

At the Company’s option, the Company may at any time prepay the outstanding principal balance of the Credit Agreement in whole or in part, without fee, penalty or premium.

All accrued but unpaid interest on outstanding advances under the Credit Agreement are payable in monthly installments on the last day of each monthly interest period until the Maturity Date when the then-outstanding principal balance of the advances and all accrued but unpaid interest thereon becomes due and payable.

The obligations under the Credit Agreement are secured by all or substantially all of the borrowers’ assets.

Prior to entering into the Third EWB Amendment as defined below, the Company was required to maintain compliance at all times with financial covenants with varying threshold levels by quarter for fixed charge coverage ratio, total funded debt-to-EBITDA ratio and a liquidity covenant.

Revolving Credit Availability was defined as an amount such that the ratio of the value of eligible accounts to the aggregate amount of all outstanding advances under the credit agreement at such time is not less than 2.0 to 1.0.

Additionally, the amounts outstanding under the Credit Agreement exceeded the Company’s borrowing base as of June 30, 2024 by $ 0.5 million which was addressed in the Third EWB Amendment, requiring a $ 1.0 million principal payment on the outstanding loans under the Credit Agreement as of the date of the Third EWB Amendment.

Loans under the Credit Agreement originally matured on July 7, 2025 (the “Maturity Date”), unless the Credit Agreement is otherwise terminated pursuant to the terms of the Credit Agreement which was extended per amendments to August 31, 2025.

Borrowings under the Credit Agreement bore interest at a rate per annum equal to the one-month Term SOFR rate, plus 0.10 %, plus 3.00 % per annum (the “Loan Rate”);

with a floor of 0.50 %.

On October 15, 2024, with an effective date of June 30, 2024, the Company and EWB entered into the Third Amendment to the Credit Agreement (the “Third EWB Amendment”) which, among other things, (1) provided that the Company make prepayments of the outstanding principal balance of the Credit Agreement of $ 1.0 million upon execution of the Third EWB Amendment, $ 1.0 million on or before January 15, 2025 and $ 2.0 million on or before April 15, 2025, (2) required the Company to file a registration statement with the SEC to establish an equity line of credit offering on or before October 31, 2024 and to use commercially reasonable efforts to cause such registration statement to become effective, (3) required the net proceeds of a potential equity line of credit to be applied to the outstanding principal balance under the Credit Agreement in an amount that would cause the ratio of the value of eligible accounts to the aggregate amount of revolving credit advances to be not less than 1.00 to 1.00, (4) required the consent of EWB prior to the ability of the Company to make certain restricted payments, including cash dividends, (5) required the Company to make additional prepayments in the amount by which the outstanding loans under the Credit Agreement exceed the borrowing base between the calendar months ending November 30, 2024 and April 15, 2025 in an amount of $ 1.0 million, and (6) replaced the financial covenants under the Credit Agreement, effective as of June 30, 2024, with varying threshold levels by quarter for minimum trailing twelve months EBITDA, minimum liquid assets, maximum total funded debt to EBITDA leverage ratio, minimum fixed charge coverage ratio and revolving credit availability.

2 unchanged sentences

On December 27, 2024, the Company and EWB entered into the Waiver and Fourth Amendment (the “Fourth EWB Amendment”) to Credit Agreement.

Under the terms of the Fourth EWB Amendment, among other things, (1) the Company made prepayments on the revolving credit notes under the Credit Agreement equal to $ 5.0 million, consisting of (a) $ 4.0 million from the proceeds of the Sixth Amendment Term Loan and (b) $ 1.0 million as the Company's out-of-pocket prepayment, (2) such prepayments were used to permanently reduce the commitment under the Credit Agreement to $ 5.0 million, (3) the financial covenants under the Credit Agreement were amended to implement a minimum unrestricted cash requirement of $ 750,000 at all times and to remove the minimum EBITDA covenant;

Under the terms of the Fourth EWB Amendment, among other things, (1) the Company made prepayments on the revolving credit notes under the Credit Agreement equal to $ 5.0 million, consisting of (a) $ 4.0 million from the proceeds of the Sixth Amendment Term Loan and (b) $ 1.0 million as the Company's out-of-pocket prepayment, (2) such prepayments were used to permanently reduce the commitment under the Credit Agreement to $ 5.0 million, (3) the financial covenants under the Credit Agreement were amended to implement a minimum unrestricted cash requirement of $ 0.8 million at all times and to remove the minimum EBITDA covenant;

and (4) EWB waived certain existing events of default related to the prior minimum EBITDA covenant.

Additionally, the Company is required to provide to EWB a weekly cash flow forecast, prepared on a cumulative, weekly roll forward basis through a thirteen (13) week projection period.

The Fourth EWB Amendment was accounted for as a modification.

In connection with the EWB Amendment, fees paid to third parties totaling less than $ 0.1 million were expensed as incurred.

On July 17, 2025, the Company entered into the Fifth Amendment (the “Fifth EWB Amendment”) to the Credit Agreement, dated as of July 17, 2025 but effective as of July 7, 2025 which extended the maturity date of the Credit Agreement from July 7, 2025 to July 31, 2025 and extended the repayment date of any outstanding loans and advances, including any principal, interest or fees with respect thereto, from July 7, 2025 to July 31, 2025.

In connection with the Fourth EWB Amendment, fees paid to third parties totaling less than $ 0.1 million were expensed as incurred.

In connection with the extension of the maturity date, the Company agreed to pay a $ 50,000 extension fee and agreed to pay additional interest on any loans at the existing loan rate plus 5 % per annum between July 7, 2025 and July 31, 2025.

On August 5, 2025, the Company entered into that certain Sixth Amendment (the “Sixth EWB Amendment”) to the Credit Agreement, dated as of August 5, 2025 but effective as of July 31, 2025 which extended the maturity date of the Credit Agreement from July 31, 2025 to August 31, 2025 (the "revised maturity date") and extended the repayment date of any outstanding loans and advances, including any principal, interest or fees with respect thereto, from July 31, 2025 to the revised maturity date.

In connection with the extension of the maturity date, the Company agreed to make a principal payment in an amount equal to $ 0.2 million to reduce the outstanding loan balance by August 15, 2025.

On September 8, 2025, the Company used the proceeds of the Eighth Amendment (as defined above) to repay in full the outstanding loans, fees and other obligations of $ 3.6 million under the Credit Agreement and to terminate the Credit Agreement and release the liens in favor of EWB under the Credit Agreement.

The Credit Agreement provided for a revolving credit facility in the principal amount of up to $ 5.0 million, subject to a borrowing base determined based on eligible accounts.

At the time of termination, the $ 5.0 million principal amount revolving credit facility under the Credit Agreement was not open for advances.

The Company did not incur any termination penalties as a result of the repayment and termination of the Credit Agreement.

8 unchanged sentences

The loan is secured by substantially all assets of DDH LLC.

As of September 30, 2025, future minimum payments related to long-term debt are as follows (in thousands):

As of March 31, 2026, future minimum payments related to long-term debt are as follows (in thousands):

Remaining 2026 $ 16,856

Thereafter 132

Add debt premium 3,151

Less current portion ( 16,548 )

1 unchanged sentence

Less debt discount ( 249 )

Total long-term debt, including debt premium, net of current portion, deferred financing cost and debt discount $ 10,817

Total long-term debt, net of current portion $ 145

Note 4 — Stockholders’ Deficit and Stock-Based Compensation

Stockholders’ Equity

Following the completion of the Organizational Transactions, DDH LLC’s limited liability company agreement was amended and restated to, among other things, appoint the Company as the sole managing member of DDH LLC and effectuate a recapitalization of all outstanding preferred units and common units into (i) economic nonvoting units of DDH LLC held by the Company and, through their indirect ownership of DDM, the Company's Chairman and Chief Executive Officer and President, and (ii) noneconomic voting units of DDH LLC, 100 % of which are held by the Company.

During the nine months ended September 30, 2025, members of DDM tendered 1,292,500 of its limited liability company units to the Company in exchange for newly issued shares of Class A Common Stock of the Company on a one -for-one basis.

Following the completion of its organizational transactions, DDH LLC’s limited liability company agreement was amended and restated to, among other things, appoint the Company as the sole managing member of DDH LLC and effectuate a recapitalization of all outstanding preferred units and common units into (i) economic nonvoting units of DDH LLC held by the Company and, through their indirect ownership of DDM, the Company's Chairman and Chief Executive Officer and President, and (ii) noneconomic voting units of DDH LLC, 100 % of which are held by the Company.

During the three months ended March 31, 2025, members of DDM tendered 318 of its limited liability company units to the Company in exchange for newly issued shares of Class A Common Stock of the Company on a one -for-one basis.

In connection with these exchanges, an equivalent number of the holder’s shares of Class B Common Stock were cancelled.

As of September 30, 2025, DDM held 9,575,500 shares of Class B Common Stock.

As of March 31, 2026, DDM held 42,160 shares of Class B Common Stock.

The Company is authorized to issue 760,000,000 shares of Class A Common Stock, par value $ 0.001 per share, 20,000,000 shares of Class B Common Stock, par value $ 0.001 per share, and 10,000,000 shares of preferred stock, par value $ 0.001 per share.

Subsequent to the end of the period ended September 30, 2025, on October 13, 2025, the Company's stockholders approved an increase in the number of authorized shares of Class A Common Stock from 160,000,000 to 760,000,000 , which became effective upon filing of a certificate of amendment to the Company’s Amended and Restated Certificate of Incorporation on November 5, 2025.

In connection with the Company’s initial public offering of units (“Units”), each consisting of (i) one share of its Class A Common Stock and (ii) one public warrant entitling the holder to purchase one share of its Class A Common Stock at an exercise price of $ 5.50 per share, the Company issued to the underwriters of the offering a unit purchase option to purchase (i) an additional 140,000 Units at a per Unit exercise price of $ 6.60 , which was equal to 120 % of the public offering price per Unit sold in the initial public offering, and (ii) underwriter warrants to purchase 21,000 shares of Class A Common Stock at a per warrant exercise price of $ 0.012 , which was equal to 120 % of the public offering price per warrant sold in the offering.

A group of underwriters exercised 70,000 Units and 10,500 underwriter warrants in November 2023.

At September 30, 2025 and December 31, 2024, 70,000 Units and 10,500 underwriter warrants were outstanding while there were no public warrants outstanding as of September 30, 2025 and December 31, 2024.

The number of authorized shares of Class A Common Stock increased from 160,000,000 to 760,000,000 pursuant to approval by the Company's stockholders on October 13, 2025 which became effective upon filing of a certificate of amendment to the Company’s Amended and Restated Certificate of Incorporation on November 5, 2025.

In connection with the Company’s initial public offering of units (“Units”), each consisting of (i) one share (subject to adjustment for the Company's Reverse Stock Splits) of its Class A Common Stock and (ii) one warrant (subject to adjustment for the Company's Reverse Stock Splits) entitling the holder to purchase one share of its Class A Common Stock at an exercise price of $ 1,210.00 per share, the Company issued to the underwriters of the offering a unit purchase option to purchase (i) an additional 636 Units at a per Unit exercise price of $ 1,452.00 , which was equal to 120 % of the public offering price per Unit sold in the initial public offering, and (ii) underwriter warrants to purchase 95 shares of Class A Common Stock at a per warrant exercise price of $ 2.64 , which was equal to 120 % of the public offering price per warrant sold in the offering.

At March 31, 2026 and December 31, 2025, 318 Units and 47 underwriter warrants were outstanding.

The underwriter warrants had a fair value of $ 0 that was calculated using the Black-Scholes option-pricing model and were equity classified.

2 unchanged sentences

Treasury bill rate, (2) expected life of 5 years, (3) expected volatility of approximately 66 % based on the trading history of similar companies, and (4) zero expected dividends.

Committed Equity Facility

On April 28, 2026, the Company entered into a Common Stock Purchase Agreement (the “Roth Purchase Agreement” and the facility as a whole, the "Committed Equity Facility") with Roth Principal Investments, LLC (“Roth”).

Pursuant to the Roth Purchase Agreement, and subject to the satisfaction of specified conditions, the Company has the right, but not the obligation, to sell to Roth up to an aggregate of $ 50.0 million of newly issued shares of the Company’s Class A common stock, par value $ 0.001 per share (“Class A Common Stock”), from time to time over a period of up to 36 months following commencement of the Roth Purchase Agreement.

The Company will have sole discretion over the timing and amount of any such sales and is under no obligation to sell any shares under the Roth Purchase Agreement.

The Company’s ability to sell shares under the Roth Purchase Agreement will commence upon satisfaction of customary conditions, after which, the Company may direct Roth to purchase shares through one or more market open, intraday, pre‑market, or post‑market purchases, subject to specified pricing thresholds and volume limitations.

The per‑share purchase price for shares sold under the Roth Purchase Agreement will be based on the volume‑weighted average trading price of the Class A Common Stock during the applicable valuation period, less a fixed discount of 8.0 %.

There is no upper limit on the price per share that may be paid, and purchase prices are subject to customary equitable adjustments for stock splits, reverse stock splits, dividends or similar transactions.

Under the Nasdaq Stock Market rules, the Company may not issue more than 19.99 % of its outstanding Class A Common Stock under the Roth Purchase Agreement unless stockholder approval is obtained or the average price paid for shares issued under the Roth Purchase Agreement equals or exceeds $ 2.45 (representing the lower of (a) the official closing price of our Class A Common Stock immediately preceding the execution of the Roth Purchase Agreement and (b) the average official closing price of our Class A Common Stock for the five consecutive trading days immediately preceding the execution of the Roth Purchase Agreement, as adjusted in accordance with applicable Nasdaq Stock Market rules).

In addition, Roth may not beneficially own more than 4.99 % of the Company’s outstanding Class A Common Stock at any time.

The Roth Purchase Agreement also includes a prohibition, subject to limited exceptions, on the Company entering into certain variable rate or equity line financings during the term of the agreement, and includes customary restrictions on short selling or hedging transactions by Roth.

The net proceeds, if any, from sales of Class A Common Stock under the Roth Purchase Agreement will depend on market conditions and the Company’s election to sell shares from time to time.

The Company currently intends to use any net proceeds for general corporate purposes, which may include reducing outstanding indebtedness and funding working capital.

The Roth Purchase Agreement will terminate upon the earliest of the expiration of the 36‑month term, the sale of $ 50.0 million of shares under the agreement, certain events relating to delisting or bankruptcy, or termination by the Company upon prior written notice without penalty.

The Roth Purchase Agreement contains customary representations, warranties, indemnification provisions and conditions.

In connection with entering into the Roth Purchase Agreement, the Company paid Roth a structuring fee of $ 25,000 , agreed to reimburse certain legal fees and ongoing due diligence expenses of $ 75,000 , and paid $ 50,000 to Digital Offering, LLC as a qualified independent underwriter for purposes of FINRA Rule 5121, with related fees subject to reimbursement up to specified amounts.

Equity Reserve Facility

On October 18, 2024, the Company entered into a Share Purchase Agreement (as amended, the “Purchase Agreement” and the facility as a whole, the “Equity Reserve Facility”) with New Circle Principal Investments LLC, a Delaware limited liability company (“New Circle”), and subsequently entered into an amendment with New Circle on October 24, 2025 (the “Amendment”) pursuant to which New Circle has committed to purchase, subject to certain limitations, up to $ 100 million (the “Total Commitment”) of the Company’s Class A Common Stock, par value $ 0.001 per share (the “Class A Common Stock”).

Under the applicable Nasdaq rules, the Company was not permitted to issue to New Circle under the Purchase Agreement more than 19.99 % of the shares of all classes of the Company’s common stock outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”), unless (i) the Company obtained stockholder approval to issue shares of its Class A Common Stock in excess of the Exchange Cap in accordance with applicable Nasdaq rules, or (ii) the average purchase price per share paid by New Circle for all shares of the Company’s Class A Common Stock, if any, that the Company elected to sell to New Circle under the Purchase Agreement equaled or exceeded certain minimums permitted under the rules of the Nasdaq Stock Market.

permitted under the rules of the Nasdaq Stock Market.

The purchase price of the shares that may be sold to New Circle under the Purchase Agreement is based on an agreed upon fixed discount to the market price of our Class A Common Stock as computed under the Purchase Agreement.

On December 27, 2024 and October 13, 2025, the Company’s stockholders approved the issuance and sale of up to 8.5 million and 50 million shares, respectively, above the Exchange Cap to New Circle under the Purchase Agreement.

On December 27, 2024, October 13, 2025 and December 30, 2025, the Company’s stockholders approved the issuance and sale of up to 38,636 , 227,272 and 454,545 shares, respectively, above the Exchange Cap to New Circle under the Purchase Agreement.

As consideration for New Circle’s irrevocable commitment to purchase shares of the Company’s Class A Common Stock upon the terms of and subject to satisfaction of the conditions set forth in the Purchase Agreement, the Company paid New Circle structuring and legal fees of less than $ 0.1 million.

1 unchanged sentence

The Company sold 108,451 shares of the Company's Class A Common Stock for $ 7.3 million during the year ended December 31, 2025.

During the nine months

ended September 30, 2025, the Company sold 9,759,351 shares of the Company's Class A Common Stock for $ 5.9 million.

During the nine months ended September 30, 2025, the Company incurred incremental issuance costs, which were expensed in the condensed consolidated statements of operations, given the nature of the Equity Reserve Facility.

The Purchase Agreement will automatically terminate on the earliest of (i) the 36-month anniversary of the Purchase Agreement, (ii) the date on which New Circle shall have made payment to the Company for Class A Common Stock equal to the Total Commitment or (iii) the date any statute, rule, regulation, executive order, decree, ruling or injunction that would prohibit any of the transactions contemplated by the Purchase Agreement goes into effect.

The Company has the right to terminate the Purchase Agreement at any time, at no cost or penalty, upon five trading days’ prior written notice to New Circle so long as (a) there are no outstanding purchase notices under which our Class A Common Stock have yet to be issued and (b) the Company has paid all amounts owed to New Circle pursuant to the Purchase Agreement.

The Company and New Circle may also agree to terminate the Purchase Agreement by mutual written consent.

During the three months ended March 31, 2026, the Company sold 216,250 shares of the Company's Class A Common Stock for $ 1.2 million.

During the three months ended March 31, 2026, the Company incurred incremental issuance costs, which were recorded to additional paid-in capital.

On April 23, 2026, the Company and New Circle mutually agreed to terminate effective immediately the Equity Reserve Facility in order for the Company to enter into the Committed Equity Facility.

The Company did not incur any prepayment fees or penalties as a result of terminating the Equity Reserve Facility.

Series A Convertible Preferred Stock

Pursuant to the terms of the Seventh Amendment and pursuant to authority expressly vested in the Company’s board of directors as set forth in the Company’s Amended and Restated Certificate of Incorporation, on August 8, 2025, the Board authorized and the Company filed the Certificate of Designation of Series A Convertible Preferred Stock (the “Certificate of Designation’) with the Secretary of State of the State of Delaware, which established the Series A Convertible Preferred Stock in the amount of $ 25.0 million.

The Certificate of Designation sets forth the rights, preferences, powers, restrictions and limitations of the Series A Preferred Stock.

Capitalized terms not otherwise defined in this item shall have the meanings given to such terms in the Certificate of Designation.

The Series A Convertible Preferred Stock is not redeemable outside of the Company’s control and is therefore classified in permanent equity as of September 30, 2025.

The following is a summary of key terms of the Series A Convertible Preferred Stock:

Pursuant to the terms of the Ninth Amendment, on October 15, 2025, the Company filed the Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock (the “A&R Certificate of Designation”) with the Secretary of State of the State of Delaware, which amended and restated in its entirety the Certificate of Designation and established an additional $ 10.0 million of Series A Convertible Preferred Stock.

The A&R Certificate of Designation sets forth the rights, preferences, powers, restrictions and limitations of the Series A Convertible Preferred Stock.

Capitalized terms not otherwise defined in this item shall have the meanings given to such terms in the A&R Certificate of Designation.

The Series A Convertible Preferred Stock is not redeemable outside of the Company’s control and is therefore classified in permanent equity as of March 31, 2026 and December 31, 2025.

The following is a summary of key terms of the Series A Convertible Preferred Stock, as amended by the A&R Certificate of Designation:

Designation and Amount.

The number of shares so designated as Series A Convertible Preferred Stock is 25,000 .

The Series A Preferred Stock have a par value of $ 0.001 per share and a stated value of $ 1,000 per share of Series A Preferred Stock (the “Conversion Value”), which shall be increased for any accrued and unpaid dividends.

The shares of Series A Convertible Preferred Stock carry a cumulative dividend, compounded quarterly at a dividend rate of ten percent ( 10 %) per annum.

The Series A Preferred Stock will be senior to the Company’s Common Stock and all other series or classes of stock and equity securities of the Company that do not expressly rank senior to, or that are not pari passu with, the Series A Preferred Stock, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

The number of shares initially designated as Series A Convertible Preferred Stock was 25,000 .

Under the A&R Certificate of Designation, the number of shares designated as Series A Convertible Preferred Stock was increased by 10,000 to a total of 35,000 shares of Series A Convertible Preferred Stock.

The Series A Convertible Preferred Stock have a par value $ 0.001 per share and a stated value of $ 1,000 per share of Series A Convertible Preferred Stock (the “Conversion Value”), which shall be increased for any accrued and unpaid dividends.

The shares of Series A Convertible Preferred Stock carry a cumulative Dividend, compounded monthly at a dividend rate of ten percent ( 10 %) per annum.

The Series A Convertible Preferred Stock will be senior to the Company’s Class A Common Stock, Class B Common Stock and all other series or classes of stock and equity securities of the Company that do not expressly rank senior to, or that are not pari passu with, the Series A Convertible Preferred Stock, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

Voting Right and Protective Provisions.

Subject to certain limitations described in the Certificate of Designation, the Series A Preferred Stock is voting stock with holders entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock basis.

In addition, the Certificate of Designation provides for certain protective provisions for holders of Series A Convertible Preferred Stock, which apply at any time when at least 12,525 shares of Series A Convertible Preferred Stock are outstanding.

Such provisions include:

restrictions on modification of the rights of the Series A Convertible Preferred Stock;

restrictions on liquidation events;

or changes to the number of members of the Company's board of directors.

At the option of the holder thereof, each share of Series A Convertible Preferred Stock shall be convertible into the number of Conversion Shares equal to the Accumulated Conversion Value, as defined in the Certificate of Designation, divided by $ 2.50 per share of Class A Common Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization), rounded down to the nearest whole share.

Liquidation .

In the event of any Liquidation, the holders of shares of Series A Convertible Preferred Stock then outstanding will be entitled to be paid out ahead of lower ranked securities and at an amount per share equal to (a) if such event occurs on or prior to October 15, 2025, one and one/fourth times ( 1.25 x) the Accumulated Conversion Value thereof and (b) if such event occurs after October 15, 2025, three times ( 3.00 x) the Accumulated Conversion Value thereof with ratable distribution if assets are not sufficient to pay out at Accumulated Conversion Value.

On October 14, 2025, pursuant to the terms of the Ninth Amendment, an additional $ 10.0 million of Series A Preferred Stock was created.

On October 28, 2025, Lafayette Square exchanged 1,319 shares of Series A Convertible Preferred Stock for 3,750,607 shares of Class A Common Stock pursuant to the Tenth Amendment to the 2021 Credit Facility.

Subject to certain limitations described in the A&R Certificate of Designation, the Series A Convertible Preferred Stock is voting stock with Holders entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock basis.

In addition, the A&R Certificate of Designation provides for certain protective provisions for Holders of Series A Convertible Preferred Stock, which apply at any time when at least 12,525 shares of Series A Convertible Preferred Stock

(subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Convertible Preferred Stock) are outstanding.

At the option of the Holder thereof, each share of Series A Convertible Preferred Stock shall be convertible into the number of Conversion Shares equal to the Accumulated Conversion Value divided by $ 550.00 per share of Class A Common Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization), rounded down to the nearest whole share.

In the event of any Liquidation, the Holders of shares of Series A Convertible Preferred Stock then outstanding will be entitled to be paid out ahead of lower ranked securities and at an amount per share equal to three times ( 3.00 x) the Accumulated Conversion Value thereof with ratable distribution if assets are not sufficient to pay out at Accumulated Conversion Value.

During the year ended December 31, 2025, Lafayette Square exchanged 7,923 shares of Series A Convertible Preferred Stock for 136,364 shares of Class A Common Stock pursuant to the Tenth Amendment to the 2021 Credit Facility.

As of March 31, 2026, the amount of cumulative preferred dividends in arrears totaled $ 1.8 million representing $ 66.63 per preferred share of which $ 0.5 million was recorded as accrued liabilities in the condensed consolidated balance sheets.

In October 2025, the terms of the initial issuance of $ 25.0 million Series A Convertible Preferred Stock were modified by the A&R Certificate of Designation, as described above, and the exchange mechanism between Lafayette Square and the Company was introduced in the Ninth and Tenth Amendments, respectively.

The Company analyzed whether the change in terms constituted a modification or extinguishment, pursuant to the related authoritative guidance, and engaged an independent third-party valuation firm to assist with determining the fair value of the Series A Convertible Preferred Stock immediately before and after the change in terms.

Because the increase in fair value was substantive, the Company determined the change in terms resulted in extinguishment.

Accordingly, the Company recorded the resulting difference in fair value of approximately $ 3.3 million as a deemed dividend for the holders of Series A Convertible Preferred Stock.

Because the Company was in an accumulated deficit position, the deemed dividend was recorded to additional paid-in capital and increased, for the purpose of the EPS calculation, the net loss allocated to Class A shareholders in the fourth quarter of fiscal 2025.

This treatment does not impact net loss per share in either period presented in the condensed consolidated statements of operations.

Continuation Capital Settlement Agreement

On November 20, 2025, the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Continuation Capital, Inc.

(“Continuation Capital”), pursuant to which we agreed to issue up to 227,272 shares of Class A Common Stock (the “Exchange Shares”) in exchange for the release of certain claims held by Continuation Capital related to third party vendor payables separately assigned to Continuation Capital in the amount of $ 3 million.

The Exchange Shares will be sold to Continuation Capital at a price of 76 % of the lower of (a) the volume weighted average sale price of the Class A Common Stock on Nasdaq during the “Valuation Period,” which is the five day trading period, inclusive of the day of the share request under the Settlement Agreement, which will be extended as necessary to account for multiple tranches of issuances or (b) the average of the four lowest of the most recent five closing prices during the Valuation Period, as defined in the Settlement Agreement.

Additionally, as partial consideration for the entry into the Settlement Agreement, the Company paid Continuation Capital a settlement fee of 431 shares of Class A Common Stock.

The Settlement Agreement was approved on November 21, 2025 by a court following a hearing held on that same date, in which the court determined that Settlement Agreement is fair to Continuation Capital.

Accordingly, the issuance of securities under the Settlement Agreement will be exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 3(a)(10) thereunder.

For the three months ended March 31, 2026, $ 0.8 million has been paid to third party vendors and 152,041 shares have been issued pursuant to the Settlement Agreement.

From the date the Settlement Agreement was executed through March 31, 2026, $ 1.6 million has been paid to third party vendors and 204,332 shares have been issued pursuant to the Settlement Agreement.

The Company recognized a loss on settlement of accounts payable for the three months ended March 31, 2026 of $ 1.2 million for the difference between the value of the shares issued and the value of the liabilities settled.

Because of the difference in stock price on the day shares were issued and the pricing mechanism based on the five trading days prior to the share request, the loss was different than the discount established under the Settlement Agreement .

Noncontrolling Interest

2 unchanged sentences

Therefore, Direct Digital Holdings, Inc.

reports a noncontrolling interest ("NCI") based on the common units of DDH LLC held by DDM.

noncontrolling interest ("NCI") based on the common units of DDH LLC held by DDM.

While Direct Digital Holdings, Inc.

4 unchanged sentences

The Company’s board of directors reserved 15,909 shares of Class A Common Stock for issuance in equity awards under the 2022 Omnibus Plan.

On June 9, 2025, the Company's stockholders approved an amendment to the 2022 Omnibus Plan to increase the number of shares issuable by 4,000,000 shares.

On June 9, 2025 and December 30, 2025, the Company's stockholders approved amendments to the 2022 Omnibus Plan to increase the number of shares issuable by 18,181 shares and 40,909 shares, respectively.

Information on activity for both the stock options and RSUs is detailed below.

During the nine months ended September 30, 2025 and 2024, the Company recognized $ 1.1 million and $ 0.8 million, respectively, of total stock-based compensation expense in the condensed consolidated statement of operations in compensation, taxes and benefits.

As of March 31, 2026, there were 4,363 shares available for grant under the 2022 Omnibus Plan.

During the three months ended March 31, 2026 and 2025, the Company recognized $ 0.2 million and $ 0.3 million, respectively, of total stock-based compensation expense in the condensed consolidated statements of operations in compensation, taxes and benefits.

Stock Options

Options to purchase shares of common stock vest annually on the grant date anniversary over vesting periods of one to three years and expire 10 years following the date of grant.

The following table summarizes the stock option activity under the 2022 Omnibus Plan during the nine months ended September 30, 2025:

The following table summarizes the stock option activity under the 2022 Omnibus Plan during the three months ended March 31, 2026:

Stock Options

8 unchanged sentences

Forfeited and expired ( 73 ) $ 261.16 — $ —

Outstanding at September 30, 2025 903,057 $ 1.53 8.49 $ —

Vested and exercisable at September 30, 2025 281,398 $ 2.29 6.88 $ —

As of September 30, 2025, unrecognized stock-based compensation of $ 0.3 million was related to 621,659 of unvested stock options which will be recognized on a straight-line basis over a weighted-average vesting period of 0.92 years.

Outstanding at March 31, 2026 63,939 $ 24.29 9.86 $ —

Vested and exercisable at March 31, 2026 2,632 $ 436.89 7.55 $ —

The total fair value of options vested during the three months ended March 31, 2026 was $ 0.1 million.

As of March 31, 2026, unrecognized stock-based compensation of $ 0.3 million was related to 61,307 of unvested stock options which will be recognized on a straight-line basis over a weighted-average vesting period of 2.91 years.

Restricted Stock Units

RSUs generally vest annually on the grant date anniversary over vesting periods of one to three years .

A summary of RSU activity during the nine months ended September 30, 2025 and related information is as follows:

A summary of RSU activity during the three months ended March 31, 2026 and related information is as follows:

Restricted Stock Units

5 unchanged sentences

Forfeited ( 59 ) $ 306.75

Unvested - September 30, 2025 918,521 $ 1.18

Unvested - March 31, 2026 2,367 $ 162.40

The majority of vested RSUs were net share settled such that the Company withheld shares with a value equivalent to the employees’ obligation for the applicable income and other employment taxes.

The total shares withheld were 61,086 (including 24,469 sold as of September 30, 2025) and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price.

As of September 30, 2025, there was unrecognized stock-based compensation o f $ 0.6 million related to unvested RSUs which will be recognized on a straight-line basis over a weighted average period of 0.82 yea rs.

The total shares withheld were 504 (including 21 sold as of March 31, 2026) and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price.

As of March 31, 2026, there was unrecognized stock-based compensation o f $ 0.2 million related to unvested RSUs which will be recognized on a straight-line basis over a weighted average period of 0.68 yea rs.

Note 5 — Tax Receivable Agreement and Income Taxes

8 unchanged sentences

Pursuant to the Company’s election under Section 754 of the Code in 2022, the Company expects to obtain an increase in its share of the tax basis in the net assets of DDH LLC when LLC interests are redeemed or exchanged by the members of DDH LLC.

During the nine months ended September 30, 2025, members of DDM exchanged 1,292,500 Class B shares into Class A shares.

The Company has recorded a liability related to the tax receivable agreement of less than $0.1 million as of September 30, 2025 and December 31, 2024.

The Company has recorded a deferred tax asset of $ 0 as of September 30, 2025 and December 31, 2024 which is net of a valuation allowance.

Payments of $ 0 were made during the nine months ended September 30, 2025 and 2024.

During the three months ended March 31, 2025, members of DDM exchanged 318 Class B shares into Class A shares.

During the three months ended March 31, 2026, no shares were exchanged.

The Company has recorded a liability related to the tax receivable agreement of less than $ 0.1 million as of March 31, 2026 and December 31, 2025.

The Company has recorded a deferred tax asset of $ 0 as of March 31, 2026 and December 31, 2025 which is net of a valuation allowance.

No TRA payments were made during the three months ended March 31, 2026 and 2025.

The payments under the TRA will not be conditional on holder of rights under the TRA having a continued ownership interest in either DDH LLC or the Company.

2 unchanged sentences

The Company accounts for any amounts payable under the TRA in accordance with ASC Topic 450, Contingencies, and recognizes subsequent period changes to the measurement of the liability from the TRA in the condensed consolidated statement of operations as a component of income before taxes.

For the nine months ended September 30, 2025 and 2024, $ 0 and $ 5.2 million were recorded as income in other income (expense), net for such change.

The term of the TRA commenced upon completion of the initial public offering and will continue until all tax benefits that are subject to the TRA have been utilized or expired, unless the Company exercises its right to terminate the TRA.

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Income tax expense $ — $ —

Effective income tax rate — % — %

The effective tax rates were lower than the statutory tax rates for the three and nine months ended September 30, 2024 primarily due to recording a valuation allowance against deferred taxes.

The effective tax rates were different from the statutory rates for the nine months ended September 30, 2025 primarily due to the Company’s partnership loss that is not subject to federal and state taxes and recording a valuation allowance against deferred taxes.

The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions.

The effective tax rates were different from the statutory rates for the three months ended March 31, 2026 and 2025 primarily due to the Company’s partnership loss that is not subject to federal and state taxes and recording a valuation allowance against deferred taxes.

The Company files income tax returns in the United States federal jurisdiction and

various state jurisdictions.

In the normal course of business, the Company can be examined by various tax authorities, including the Internal Revenue Service in the United States.

2 unchanged sentences

federal, state and local tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions.

Federal and various states returns for the years ended December 2023 and 2022 remain open as of September 30, 2025.

Federal and various states returns for the years ended December 2024 and 2023 remain open as of March 31, 2026.

The Company evaluates tax positions taken or expected to be taken in the course of preparing an entity’s tax returns to determine whether it is “more-likely-than-not” that each tax position will be sustained by the applicable tax authority.

As of September 30, 2025 and December 31, 2024, the Company had no uncertain tax positions.

As of March 31, 2026 and December 31, 2025, the Company had no uncertain tax positions.

Accordingly, the Company has not recognized any penalty, interest or tax impact related to uncertain tax positions.

On July 4, 2025, new tax legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), was enacted effectively extending certain provisions of the 2017 Tax Cuts and Jobs Act, including adjusting a number of provisions that were subject to sunsets, phase-outs, or phase-ins.

While most of the changes made by OBBBA are effective in future tax years, some of its provisions are effective in the current tax year.

We are currently evaluating the impact of OBBBA on our consolidated financial statements, but do not expect them to materially affect the Company.

While most of the changes made by OBBBA are effective in future tax years, some of its provisions are effective in 2025 and 2026.

The Company determined that OBBBA had no material impact on its condensed consolidated financial statements.

Note 6 — Related Party Transactions

Up-C Structure

In February 2022, the Company completed an initial public offering of its securities, and through the Organizational Transactions, formed an Up-C structure, which is often used by partnerships and limited liability companies and allows DDM, a Delaware limited liability company indirectly owned by Mark Walker (“Walker”) and Keith Smith (“Smith”), to retain its equity ownership in DDH LLC and to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity, for U.S.

In February 2022, the Company completed an initial public offering of its securities, and through its organizational transactions, formed an Up-C structure, which is often used by partnerships and limited liability companies and allows DDM, a Delaware limited liability company indirectly owned by Mark Walker and Keith Smith, to retain its equity ownership in DDH LLC and to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity, for U.S.

federal income tax purposes.

4 unchanged sentences

If the Company ever generates sufficient taxable income to utilize the tax benefits, DDH expects to benefit from the Up-C structure because, in general, the Company expects cash tax savings in amounts equal to 15 % of certain tax benefits arising from such redemptions or exchanges of DDM's LLC Units for Class A Common Stock or cash and certain other tax benefits covered by the TRA.

The aggregate balance of tax receivable liabilities as of September 30, 2025 and December 31, 2024, is as follows (in thousands):

September 30,

The aggregate balance of tax receivable liabilities as of March 31, 2026 and December 31, 2025, is as follows (in thousands):

2026 December 31,

4 unchanged sentences

As a result of the Seventh Amendment between the Company and Lafayette Square in which debt owed to Lafayette Square was converted to Series A Convertible Preferred Stock, Lafayette Square became a related party to the Company.

The condensed consolidated financial statements have been updated to reflect the reclassification of the relevant term loans from long-term debt to related-party long-term debt, and corresponding reclassifications were also made to the current portion of long-term debt and accrued liabilities to reflect the related party relationship.

The condensed consolidated financial statements have been updated to reflect the reclassification of the relevant term loans from short-term debt to related-party short-term debt, and corresponding reclassifications were also made to the current portion of long-term debt and accrued liabilities to reflect the related party relationship.

Note 7 — Segment Information

Revenue by business segment is as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Sell-side advertising $ 641 $ 2,202 $ 5,153 $ 33,001

Buy-side advertising 7,343 6,873 21,133 20,204

Total revenues $ 7,984 $ 9,075 $ 26,286 $ 53,205

Operating (loss) income by business segment reconciled to (loss) income before income taxes is as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Sell-side advertising (1)

$ ( 1,105 ) $ ( 873 ) $ ( 2,800 ) $ 536

Buy-side advertising (2)

1,066 1,349 3,773 3,490

(Loss) income from reportable segment operations ( 39 ) 476 973 4,026

Corporate office expenses ( 4,961 ) ( 247 ) ( 16,109 ) ( 11,232 )

(Loss) income before income taxes $ ( 5,000 ) $ 229 $ ( 15,136 ) $ ( 7,206 )

(1) For the three months ended September 30, 2025, sell-side segment contained less than $ 0.1 million in depreciation and amortization of property, equipment and software, $ 0 in amortization of intangible assets and $ 0 in amortization of deferred financing cost and debt discount (premium), net.

For the three months ended September 30, 2024, sell-side segment contained less than $ 0.1 million in depreciation and amortization of property, equipment and software, $ 0 in amortization of intangible assets and $ 0 in amortization of deferred financing cost and debt discount (premium), net.

For the nine months ended September 30, 2025, sell-side segment contained $ 0.1 million in depreciation and amortization of property, equipment and software, $ 0 in amortization of intangible assets and $ 0 in amortization of deferred financing cost and debt discount (premium), net.

For the nine months ended September 30, 2024, sell-side segment contained $ 0.1 million in depreciation and amortization of property, equipment and software, $ 0 in amortization of intangible assets and $ 0 in amortization of deferred financing cost and debt discount (premium), net.

(2) For the three months ended September 30, 2025, buy-side segment contained less than $ 0.1 million in depreciation and amortization of property, equipment and software, $ 0.5 million in amortization of intangible assets and $ 0 in amortization of deferred financing cost and debt discount (premium), net.

For the three months ended September 30, 2024, buy-side segment contained less than $ 0.1 million in depreciation and amortization of

property, equipment and software, $ 0.5 million in amortization of intangible assets and $ 0 in amortization of deferred financing cost and debt discount (premium), net.

For the nine months ended September 30, 2025, buy-side segment contained less than $ 0.1 million in depreciation and amortization of property, equipment and software, $ 1.5 million in amortization of intangible assets and $ 0 in amortization of deferred financing cost and debt discount (premium), net.

For the nine months ended September 30, 2024, buy-side segment contained $ 0.1 million in depreciation and amortization of property, equipment and software, $ 1.5 million in amortization of intangible assets and $ 0 in amortization of deferred financing cost and debt discount (premium), net.

Total assets by business segment are as follows (in thousands):

September 30,

2025 December 31,

Sell-side advertising $ 2,454 $ 3,755

Buy-side advertising 17,195 18,664

Assets from reportable segment operations 19,649 22,419

Corporate office 2,886 3,587

Total assets $ 22,535 $ 26,006

In connection with this shift in focus, the Company reassessed its reportable segments and determined that it has one reportable segment that is

managed on a consolidated basis - digital advertising.

The Company’s CODM reviews the operating results of the Company across the entirety of its digital advertising business in order to assess performance and make decisions about resource allocation.

The CODM is regularly provided with only the consolidated operating expenses and net loss at the same level of detail as noted on the face of the condensed consolidated statements of operations.

Total assets are also provided as noted on the face of the condensed consolidated balance sheets.

Note 8 — Net Loss Per Share

2 unchanged sentences

In calculating the net loss attributable to Class A shareholders, the numerator for basic and diluted EPS is adjusted for the impact of the contractual amount of dividends payable to holders of Series A Convertible Preferred Stock.

Neither shares of the Company’s Class B Common Stock nor the Company's Class A Convertible Preferred Stock share in the earnings or losses attributable to Direct Digital Holdings, Inc.

Neither shares of the Company’s Class B Common Stock nor the Company's Series A Convertible Preferred Stock share in the earnings or losses attributable to Direct Digital Holdings, Inc.

and are therefore not participating securities.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Net loss attributable to Class A shareholders and Series A preferred stockholders $ ( 5,250 ) $ ( 2,355 )

net income allocated to Series A preferred stockholders 363 — 363 —

Series A preferred stockholders cumulative dividends 682 —

Net loss allocated to Class A shareholders $ ( 5,932 ) $ ( 2,355 )

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Series A convertible preferred stock 52 —

8 unchanged sentences

On May 10, 2024, the Company was the subject of a defamatory article / blog post.

In connection with this post, one of the Company’s sell-side customers paused its connection to the Company while the allegations were investigated.

This customer reconnected the Company on May 22, 2024 and sell-side volumes have resumed but not yet at the levels experienced prior to the pause in May 2024.

The Company is actively working with its partners to achieve prior volume levels.

In connection with this post, one of the Company’s customers paused its connection to the Company while the allegations were investigated.

This customer

reconnected the Company on May 22, 2024 and volumes had resumed but not yet at the levels experienced prior to the pause in May 2024 which has created a significant disruption in the Company's business.

During 2025, the Company worked with its partners to achieve prior volume levels but was unable to achieve historical volumes for the year.

In May 2024, the Company, as plaintiff, filed a lawsuit against the author of the defamatory article.

On March 5, 2025, the United States District Court for the District of Maryland denied the defendant’s motion to dismiss in its entirety.

The Company has filed a motion to dismiss counterclaims which is currently pending.

On March 9, 2026, the Court granted the Company's motion to dismiss counterclaims but granted the defendant time to amend their counterclaim, which the defendant chose not to amend.

The Company will continue to vigorously pursue its claims and rights and any defenses against counterclaims.

7 unchanged sentences

The lead plaintiff has since appealed that dismissal and has filed an opening brief which was due to the court on November 3, 2025.

The Company filed a response brief on January 2, 2026.

The lead plaintiff filed a reply brief on February 6, 2026.

The Company now awaits the Court's decision about whether to set the case for oral argument.

The Company cannot make any predictions about the final outcome of this matter or the timing thereof but believes that plaintiffs’ claims lack merit and intends to vigorously defend these lawsuits.

Contingent Liability for Exit Fee

As further described in Note 3 - Long Term Debt, the Seventh Amendment, Ninth Amendment and Tenth Amendment established an Exit Fee of up to $ 35.0 million due to Lafayette Square upon the redemption in full of the Series A Preferred Stock with reductions in the amount of the Exit Fee outstanding for any amounts of the Series A Preferred Stock redeemed, converted or exchanged.

As further described in Note 3 — Long-Term Debt, the Seventh Amendment, Ninth Amendment and Tenth Amendment established an Exit Fee of up to $ 35.0 million due to Lafayette Square upon the redemption in full of the Series A Convertible Preferred Stock with reductions in the amount of the Exit Fee outstanding for any amounts of the Series A Convertible Preferred Stock redeemed, converted or exchanged.

Since it was established, the Exit Fee has been reduced by (1) $ 4.3 million for proceeds received by Lafayette upon exchanges pursuant to the Tenth Amendment during the year ended December 31, 2025 and (2) $ 3.6 million for the loss on Exit Fee recognized during the year ended December 31, 2025 for the difference between the face value of the Series A Convertible Preferred Stock exchanged and the proceeds received by Lafayette upon the exchange.

As of March 31, 2026, the maximum potential amount of the Exit Fee that could be payable is $ 27.1 million.

The timing and occurrence of a full redemption are uncertain and may be indefinite.

Accordingly, management has concluded that payment of the Exit Fee is not probable as of the reporting date and that the ultimate amount of any such payment cannot be reasonably estimated.

As a result, no liability has been recorded in the accompanying condensed consolidated financial statements.

The maximum potential amount of the Exit Fee that could be payable is $ 35.0 million.

Accordingly, management has concluded that payment of the maximum potential amount of the Exit Fee as of March 31, 2026 is not probable as of the reporting date and that the ultimate amount of any such payment cannot be reasonably estimated.

As a result, no additional liability has been recorded in the accompanying condensed consolidated financial statements.

The Company will reassess the likelihood and amount of any Exit Fee obligation in future periods as facts and circumstances change.

Continuation Capital Settlement Agreement

As described in Note 4 — Stockholders’ Deficit and Stock-Based Compensation, on November 20, 2025, the Company entered into the Settlement Agreement with Continuation Capital, pursuant to which we agreed to issue the Exchange Shares in exchange for the release of certain claims held by Continuation Capital related to third party vendor payables separately assigned by the Company to Continuation Capital in the amount of $ 3 million.

For the three months ended March 31, 2026, $ 0.8 million has been paid to third party vendors and 152,041 shares have been issued pursuant to the Settlement Agreement.

Operating Leases

During the nine months ended September 30, 2025 and 2024, the Company incurred fixed rent expense associated with operating leases for real estate of $ 0.2 million.

During the three months ended March 31, 2026 and 2025, the Company incurred fixed rent expense associated with operating leases for real estate of $ 0.1 million.

The Company did not have any finance leases, short-term leases nor variable leases over this time period.

During the three and nine months ended September 30, 2025 and 2024, the Company had the following cash and non-cash activities associated with leases (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

During the three months ended March 31, 2026 and 2025, the Company had the following cash and non-cash activities associated with leases (in thousands):

Three Months Ended March 31,

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Additions and modifications to ROU asset obtained from new operating liabilities $ — $ 52

The weighted-average remaining lease term and discount rate for the Company’s operating leases is 3.9 years and 8.3 %, respectively, as of September 30, 2025.

The weighted-average remaining lease term and discount rate for the Company's operating leases is 4.8 years and 8.3 %, respectively, as of September 30, 2024 .

The future payments due under operating leases as of September 30, 2025 are as follows (in thousands):

Thereafter 31

The weighted-average remaining lease term and discount rate for the Company’s operating leases is 3.4 years and 8.3 %, respectively, as of March 31, 2026.

The weighted-average remaining lease term and discount rate for the Company's operating leases is 4.3 years and 8.2 %, respectively, as of March 31, 2025 .

The future payments due under operating leases as of March 31, 2026 are as follows (in thousands):

Total undiscounted lease payments 886

4 unchanged sentences

Property, equipment and software, net consists of the following (in thousands):

Useful Life (Years) September 30,

Useful Life (Years) March 31,

2026 December 31,

6 unchanged sentences

Total property, equipment and software, net $ 133 $ 166

The following table summarizes depreciation and amortization expense related to property, equipment and software by line item for the three and nine months ended September 30, 2025 and 2024 (in thousands):

The following table summarizes depreciation and amortization expense related to property, equipment and software by line item for the three months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Cost of revenue $ 41 $ 41 $ 125 $ 125

Cost of revenues $ — $ 42

General and administrative 33 26

2 unchanged sentences

The Company records amortization expense on a straight-line basis over the life of the identifiable intangible assets related to an acquisition in September 2020.

For the three months ended September 30, 2025 and 2024, amortization expense of $ 0.5 million and for the nine months ended September 30, 2025 and 2024, amortization expense of $ 1.5 million was recognized.

As of September 30, 2025 and December 31, 2024, intangible assets net of accumulated amortization was $ 8.3 million and $ 9.7 million, respectively.

As of September 30, 2025, intangible assets and the related accumulated amortization, weighted-average remaining life and future amortization expense are as follows (in thousands):

September 30, 2025

For the three months ended March 31, 2026 and 2025, amortization expense of $ 0.4 million and $ 0.5 million was recognized.

As of March 31, 2026 and December 31, 2025, intangible assets net of accumulated amortization was $ 7.4 million and $ 7.9 million, respectively.

As of March 31, 2026, intangible assets and the related accumulated amortization, weighted-average remaining life and future amortization expense are as follows (in thousands):

March 31, 2026

Weighted-Average Original Accumulated Net

2 unchanged sentences

Trademarks and tradenames 4.5 3,501 ( 1,926 ) 1,575

Non-compete agreements 0.0 1,505 ( 1,505 ) —

Total intangible assets, net $ 16,529 $ ( 9,091 ) $ 7,438

4 unchanged sentences

Trademarks and tradenames 4.8 3,501 ( 1,838 ) 1,663

Non-compete agreements 0.8 1,505 ( 1,279 ) 226

Total intangible assets, net $ 16,529 $ ( 8,677 ) $ 7,852

Thereafter 1,241

Total future amortization expense $ 7,438

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 1. Financial Statements