What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2025-11-12 · 177 added, 252 removed, 161 unchanged (73% of the section changed)

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

You should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

You should read the following discussion together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties.

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• our ability to secure additional financing to meet our capital needs;

• our inability, due to the government shutdown or other factors, to have declared effective any registration statement for a public offering or a resale registration statement for a selling stockholder, which may impair our ability to raise capital;

• our failure to satisfy applicable listing standards of the Nasdaq Capital Market resulting in a potential delisting of our common stock;

• costs, risks and uncertainties related to the restatement of certain prior period financial statements;

• our ability to regain and maintain compliance with the listing standards of the Nasdaq Capital Market;

• our ability to realize the benefit of our strategic shift to focusing on driving digital marketing spend among historical buyers of managed advertising campaigns and new enterprise customers;

• any significant fluctuations caused by our high customer concentration;

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• any changes or developments in legislative, judicial, regulatory or cultural environments related to information collection, use and processing;

• challenges related to our buy-side clients that are destination marketing organizations (“DMOs”) and that operate as public/private partnerships;

• challenges related to our clients that are destination marketing organizations (“DMOs”) and that operate as public/private partnerships;

• any strain on our resources or diversion of our management’s attention as a result of being a public company;

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• as a holding company, we depend on distributions from Direct Digital Holdings, LLC (“DDH LLC”) to pay our taxes, expenses (including payments under the Tax Receivable Agreement) and any amount of any dividends we may pay to the holders of our common stock;

• the fact that DDH LLC is controlled by DDM, whose interest may differ from those of our public stockholders;

• any failure by us to maintain or implement effective internal controls or to detect fraud;

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Direct Digital Holdings, Inc.

and its subsidiaries (collectively the “Company,” “DDH,” “we,” “us” and “our”), headquartered in Houston, Texas, 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 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 operating under the trademarked banner of 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.

In February 2022, the Company completed an initial public offering of its securities and, together with DDH LLC, effected the Organizational Transactions whereby Direct Digital Holdings, Inc.

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

See Note 6 — Related Party Transactions to our condensed consolidated financial statements.

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

Colossus Media operates the Company’s proprietary programmatic platform under the trademarked banner of 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, the Company completed an initial public offering and certain organizational transactions which resulted in the Company's current “Up-C” structure as described in Note 6 — Related Party Transactions to our condensed consolidated financial statements.

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 – digital advertising.

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.

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, DDH owns 63.5% of the economic interest in DDH LLC.

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

DDH LLC was formed on June 21, 2018 and acquired by the Company on

February 15, 2022 in connection with the Organizational Transactions.

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 a programmatic advertising platform that automates the sale of ad inventory between advertisers and marketers leveraging proprietary technology.

Our platform reaches across a wide array of media partners to help brands, media holding companies, independent agencies or emerging businesses reach audiences, curated creators and helps 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 aligns 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 leading 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 leading demand side platforms (“DSPs”) or through its own programming 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 advertising operations coupled with our proprietary sell-side operations enables us to curate the first through the last mile in the ad tech ecosystem execution process to drive higher results.

Operating segments are components of an enterprise for which separate financial information is available and evaluated regularly by our chief operating decision maker (“CODM”) for purpose of assessing performance and allocating resources.

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Revenues and operating income (loss) are used by our CODM to assess performance of our operating segments and allocate resources.

We operate as two reportable segments:

sell-side advertising, which includes the results of Colossus Media, and buy-side advertising, which includes the results of Orange 142.

We operate in one reportable segment - digital advertising.

All our revenues are attributable to the United States.

Recent Developments

Nasdaq Rule Noncompliance.

On October 18, 2024, we received a deficiency letter (the “Letter”) from the Listing Qualifications Department (the "Staff") of The Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that it was not in compliance with the minimum stockholders’ equity requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(b)(1).

This rule requires companies listed on the Nasdaq Capital Market to maintain stockholders’ equity of at least $2.5 million (the “Stockholders’ Equity Requirement”).

The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2024 reported a stockholders’ deficit of $8.77 million.

Subsequent to the end of an extension period granted by the Staff, the Company received a letter indicating that its common stock would be delisted.

The Company then requested a hearing before the Nasdaq Hearings Panel (the “Panel”).

The hearing was held on May 29, 2025 and, by decision dated June 9, 2025, the Panel accepted the Company’s proposed plan to regain compliance with the Stockholders’ Equity Requirement, and granted the Company’s request for an extension through October 14, 2025 to do so, subject to the Company’s satisfaction of certain interim conditions.

Since June 30, 2025, the Company completed the following transactions:

• Under the Purchase Agreement with New Circle, the Company sold 3.7 million shares of the Company's Class A Common Stock for $1.3 million during the quarter ended September 30, 2025.

• On August 8, 2025, the Company entered into the Seventh Amendment (the “Seventh Amendment”) to the Term Loan and Security Agreement dated December 3, 2021 (the “Term Loan Facility”) and Lafayette

Square Loan Servicing, LLC, as administrative agent, and the other lenders (collectively "Lafayette").

Under the terms of the Seventh Amendment, the parties agreed to convert and exchange term loans with an aggregate principal amount of $25.0 million for newly authorized shares of Series A Preferred Stock, par value $0.001, of the Company (the “Series A Preferred Stock”), with an aggregate face amount of $25.0 million issued to Lafayette.

• On October 14, 2025, the Company entered into the Ninth Amendment (the “Ninth Amendment”) to the Term Loan Facility with Lafayette.

Under the terms of the Ninth Amendment, the parties agreed to convert and exchange term loans with an aggregate principal amount of $10.0 million for newly authorized shares of Series A Preferred Stock, with an aggregate face amount of $10.0 million issued to Lafayette.

On November 7, 2025, the Panel notified the Company that the Staff has determined that the Company has evidenced compliance with the Stockholders’ Equity Requirement, but that the Panel has imposed a discretionary panel monitor for a period of one year.

Should the Company fail to maintain compliance with any continued listing requirement, the Staff will issue a delist determination letter and the Company may seek a new hearing with the Panel.

Also as previously disclosed, on May 12, 2025, the Company received a second notice (the “Second Notice”) from the Staff notifying the Company that because the closing bid price of the Company’s Class A common stock was below $1.00 per share for the prior 30 consecutive business days, the Company was not in compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

The Second Notice states that the Company has 180 calendar days from the date of the Second Notice, or until November 10, 2025, to regain compliance with the Bid Price Rule.

As of November 10, 2025, the Company was not in compliance with the Bid Price Rule;

however, on November 7, 2025, the Panel granted the Company an exception until January 30, 2026, to demonstrate compliance with that rule.

If at any time before November 10, 2025, the bid price for the Company’s Class A Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days (which number of days may be extended by Nasdaq), Nasdaq will provide written notification that the Company has achieved compliance with the Bid Price Rule, and the matter will be closed.

The Company is considering all available options to resolve the deficiency and regain compliance with the applicable Nasdaq Listing Rules within the timeframes required by Nasdaq.

However, there can be no assurance that the Company will be able to complete the steps outlined in the Compliance Plan or regain compliance with the minimum bid price rule.

Nasdaq Compliance Status.

On November 7, 2025, we received a decision (the “Panel Decision”) from the Nasdaq Hearings Panel (the “Panel”) regarding our continued listing on Nasdaq.

The Panel Decision indicated that we had evidenced compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Rule”) and, as such, that matter had been closed.

However, the Panel Decision indicated that we would remain subject to a discretionary Panel Monitor pursuant to Listing Rule 5815(d)(4)(A) (the “Panel Monitor”) with respect to the Stockholders’ Equity Rule for a period of one year from the date of the Panel Decision.

The Panel Decision also indicated that the Panel had granted us an exception through January 30, 2026, to demonstrate compliance with Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

On January 12, 2026, we effected a 55-to-1 reverse stock split of all classes of our common stock, including the Class A Common Stock listed on The Nasdaq Capital Market, which was intended to bring us into compliance with the Bid Price Rule.

On February 12, 2026, we were notified by Nasdaq that we had evidenced compliance with the Bid Price Rule, due to the closing bid price for our Class A Common Stock having closed at or above $1.00 per share for over 20 consecutive business days (the “Compliance Notice”).

The Compliance Notice also indicated that we would remain subject to a Panel Monitor with respect to the Bid Price Rule for a period of one year from the date of the Compliance Notice.

Under the terms of the Panel Monitor, if Nasdaq determines that we fail any listing standard during the one-year monitoring period, then, notwithstanding Rule 5810(c)(2), we will not be permitted to provide Nasdaq with a plan of compliance with respect to any deficiency that arises during the one-year monitoring period.

In addition, Nasdaq will not be permitted to grant additional time for us to regain compliance with respect to any deficiency, nor will we be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3).

Rather, Nasdaq will promptly issue a Staff Delisting Determination Letter.

On April 2, 2026, we received a Staff Delisting Determination Letter from Nasdaq, notifying us that we were once again not in compliance with the Stockholders’ Equity Rule, nor are we in compliance with either of the alternative listing standards, market value of listed securities of at least $35 million or net income of $500,000 from continuing operations in the most recently completed fiscal year, in two of the three most recently completed fiscal years.

Our failure to comply with the Stockholders’ Equity Rule was based on the filing of our Annual Report on Form 10-K for the year ended December 31, 2025, reporting a stockholders’ deficit of ($7.0 million).

We requested a hearing before the Panel, which was

granted and was held on May 12, 2026.

The hearing request automatically stayed any suspension or delisting action at least pending the hearing and the expiration of any additional extension period that may be granted by the Panel following the hearing.

On April 23, 2026, we received an Additional Staff Delisting Determination Letter from Nasdaq, notifying us that we were not in compliance with the Bid Price Rule based on our closing bid price being lower than $1.00 per share for thirty (30) consecutive business days.

As described below, we implemented a 4-to-1 reverse stock split effective April 27, 2026, in order to regain compliance with the Bid Price Rule.

As of the date of this report, our closing bid price has exceeded $1.00 per share for more than ten (10) consecutive trading days, which we believe demonstrates compliance with the Bid Price Rule.

In order to evidence compliance with the Bid Price Rule, the Company must provide evidence of a closing bid price of at least $1.00 per share for a minimum of ten, but generally not more than twenty, consecutive trading days.

We are awaiting a formal determination from Nasdaq, which could take up to thirty days, that we have regained compliance with the Bid Price Rule as well as the Panel’s response to our request for an extension period to comply with the Stockholders’ Equity Rule.

There can be no assurance that the Panel will determine to continue the Company’s listing or that we will be able to evidence compliance with the applicable listing criteria within any extension period that may be granted by the Panel.

We intend to take all reasonable measures available to regain compliance with the Stockholders’ Equity Rule and remain listed on Nasdaq.

The Company’s noncompliance has no immediate effect on the listing or trading of the Company’s Class A Common Stock, which will continue to trade on The Nasdaq Capital Market under the symbol “DRCT.” See “Risk Factors” in Item 1A herein.

Equity Reserve Facility.

On October 18, 2024, the Company entered into a Share Purchase Agreement (as amended, the “Purchase Agreement" and together with 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.

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

The Company sold 1,580,000 shares of the Company's Class A Common Stock for $3.0 million during the year ended December 31, 2024.

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.

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.

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.

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.

Key Factors Affecting Our Performance

We believe our growth and financial performance are dependent on many factors, including those described below.

Sell-side advertising business

Increasing revenue from customers through increased advertising spend from buyers

Colossus Media operates our proprietary sell-side programmatic platform operating under the trademarked banner of Colossus SSP.

Our customers (or buyers) include ad exchanges, DSPs, agencies and individual advertisers.

We have broad exposure to the ecosystem of buyers, reaching on average approximately 183,000 advertisers per month in the nine months ended September 30, 2025, an increase of 25,000, or 16%, over the 158,000 advertisers per month in the nine months ended September 30, 2024.

As spending on programmatic advertising increasingly becomes a larger share of the overall ad spend, advertisers and agencies are seeking greater control of their digital advertising supply chains.

To take advantage of this industry shift, we have entered into Supply Path Optimization agreements directly with customers which address acceptable advertisements and data usage.

As part of these agreements, we provide advertisers and agencies with benefits ranging from custom data and workflow integrations, product features, volume-based business terms, and visibility into campaign performance data and methodology.

As a result of these direct relationships, our existing advertisers and agencies are incentivized to allocate an increasing percentage of their advertising budgets to our platform.

However, as discussed elsewhere in this Report and our public filings, including in Item 1A.

“Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, we continue to face challenges related to our return to historic levels of revenue and profitability.

We continue to strive to retain existing publishers and add new publishers.

Our proprietary Colossus SSP platform was custom developed with a view towards the specific challenges facing small and mid-sized publishers with the belief that smaller publishers often offer a more engaged, highly-valued, unique following but experience technological and budgetary constraints on the path to monetization.

Our business strategy on the sell-side also presents significant growth potential, as we believe we are well positioned to provide advertisers of all sizes with extensive market reach connecting partners with curated creators and audiences, optimizing the entire media chain to drive better results for clients.

We believe that our technology curates unique, highly optimized audiences informed by data analytics, artificial intelligence and algorithmic machine-learning technology, resulting in increased campaign performance.

Monetizing ad impressions for publishers and buyers

We curate advertisers and increase access to publishers with valuable ad impressions.

We focus on monetizing digital impressions by coordinating daily real-time auctions and bids.

Each time the publisher’s web page loads, an ad request is sent to multiple ad exchanges and, in some cases, to the demand side platform directly from Colossus SSP.

In case of real-time bidding (“RTB”) media buys, many DSPs would place bids to the impressions being offered by the publisher during the auction.

The advertiser that bids a higher amount compared to other advertisers will win the bid.

We continuously review our available inventory from existing publishers across every format (mobile, desktop, digital video, OTT, CTV, and rich media).

The factors we consider when determining which impressions we process include transparency, viewability, and whether or not the impression is human sourced.

By consistently applying these criteria, we believe the ad impressions we process will be valuable and marketable to advertisers.

Enhancing ad inventory quality

In the advertising industry, inventory quality is assessed in terms of invalid traffic (“IVT”) which can be impacted by fraud such as “fake eyeballs” generated by automated technologies set up to artificially inflate impression counts.

Through our platform design and proactive IVT mitigation efforts, including our accredited verification process, we address IVT on a number of fronts, including sophisticated technology, which detects and avoids IVT on the front end and back end, direct publisher and inventory relationships for supply path optimization and ongoing campaign and inventory performance reviews to ensure inventory quality and brand protection controls are in place.

Growing access to valuable ad impressions

Historically, our growth has been driven by a variety of factors including increased access to a variety of impressions.

Advertisers and agencies often have a large portfolio of brands requiring a variety of campaign types and support for a wide array of inventory formats and devices, including OTT/CTV, video and display, in-app, native and audio.

Our omni-channel proprietary technology platform is designed to maximize these various advertising channels, which we believe is a further driver of efficiency for our buyers.

The platform is comprised of publishers across multiple channels including OTT/CTV, display, native, in-app, online video (“OLV”), audio and digital out of home (“DOOH").

In the nine months ended September 30, 2025, we processed approximately 199 billion average monthly impressions across many unique audiences including multicultural growth audiences at scale with 89 billion, or 45% , of those impressions from growing multicultural-focused audiences.

The Colossus SSP continues to expand its capabilities to give our content providers more

avenues to distribute ad inventory such as OTT/CTV, digital audio, DOOH, etc.

and inform our publishers to enhance their ad selling needs by distributing content in various forms to meet the rising demands of the ad buying community.

Expanding and managing investments

Each impression or transaction occurs in a fraction of a second.

Given that most transactions take place in an auction/bidding format, we continue to make investments across the platform to further reduce the processing time.

In addition to the robust infrastructure supporting our platform, it is also critical that we align with key industry partners in the digital supply chain.

The Colossus SSP is agnostic to any specific demand side platform.

We automate workflow processes whenever feasible to drive predictable and value-added outcomes for our customers and increase productivity of our organization.

In the first half of 2023, we transitioned our server platform to HPE Greenlake, which provides increased capacity, faster response time, and expansion capabilities to align with growth in our business.

Managing industry dynamics

We operate in the rapidly evolving digital advertising industry.

Due to the scale and complexity of the digital advertising ecosystem, direct sales via manual, person-to-person processes are insufficient for delivering a real-time, personalized ad experience, creating the need for programmatic advertising.

In turn, advances in programmatic technologies have enabled publishers to auction their ad inventory to more buyers, simultaneously, and in real time through a process referred to as header bidding.

Header bidding has also provided advertisers with transparent access to ad impressions.

As advertisers keep pace with ongoing changes in the way that consumers view and interact with digital media we anticipate further innovation and expect that header bidding will be extended into new areas such as OTT/CTV.

We believe our focus on publishers and buyers has allowed us to understand their needs and our ongoing innovation has enabled us to quickly adapt to changes in the industry, develop new solutions and do so cost effectively.

Our performance depends on our ability to keep pace with industry changes such as header bidding and the evolving needs of our publishers and buyers while continuing our cost efficiency.

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.

We expect our sell-side revenue to continue to fluctuate based on seasonal factors that affect the advertising industry as a whole.

Buy-side advertising business

New Customer Acquisitions

On the buy-side of our business, our customers consist of purchasers of programmatic advertising inventory (ad space).

Our customers consist of purchasers of programmatic advertising inventory (ad space).

We serve the needs of about 210 small and mid-sized clients, consisting of advertising space buyers, including small and mid-sized companies, large advertising holding companies (which may manage several agencies), independent advertising agencies and mid-market advertising service organizations.

We serve a variety of customers across multiple industries including travel/tourism (including DMOs), education, energy, consumer packaged goods, healthcare, financial services and other industries.

We are focused on increasing the number of customers that use our buy-side advertising businesses as their advertising partner.

We are focused on increasing the number of customers that use our advertising businesses as their advertising partner.

Our long-term growth and results of operations will depend on our ability to attract more customers, including DMOs, educational institutions and energy companies across multiple geographies.

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We are technology and media agnostic, and we believe our clients trust us to provide the best opportunity for success of their brands and businesses.

As a result, our clients have been loyal, with approximately 91% client retention amongst the clients that represent approximately 80% of our revenue during the nine months ended September 30, 2025.

In addition, we cultivate client relationships through our pipeline of managed and

moderate serve clients that conduct campaigns through our platform.

As a result, our clients have been loyal, with approximately 80% client retention amongst the clients that represent approximately 80% of our revenue during the three months ended March 31, 2026.

In addition, we cultivate client relationships through our pipeline of managed and moderate serve clients that conduct campaigns through our platform.

The managed services delivery model allows us to combine our technology with a highly personalized offering to strategically design and manage advertising campaigns.

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Only recently have small and mid-sized businesses begun to leverage the power of digital media in meaningful ways, as emerging technologies have enabled advertising across multiple channels in a highly localized nature.

Campaign efficiencies yielding measurable results and higher advertising ROI, as well as the needs driven by global economic and supply chain challenges, have prompted these companies to begin utilizing digital advertising on an accelerated pace.

efficiencies yielding measurable results and higher advertising ROI, as well as the needs driven by global economic and supply chain challenges, have prompted these companies to begin utilizing digital advertising on an accelerated pace.

We believe this market is rapidly expanding, and that small-to-mid-sized advertisers will continue to increase their digital spend.

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

Historically, for our buy-side advertising 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.

We expect our buy-side revenue to continue to fluctuate based on seasonal factors that affect the advertising industry as a whole.

Increasing revenue from customers through increased advertising spend through our proprietary programmatic platform

Colossus Media operates our proprietary sell-side programmatic platform operating under the trademarked banner of Colossus SSP.

Our customers (or buyers) include ad exchanges, DSPs, agencies and individual advertisers as well as our programmatic advertising platform customers.

We continue to strive to retain existing publishers and add new publishers.

Our business strategy positions us to provide advertisers of all sizes with extensive market reach connecting partners with curated creators and audiences, optimizing the entire media chain to drive better results for clients.

Monetizing ad impressions for publishers and buyers

We increase access to publishers with valuable ad impressions with a focus on monetizing digital impressions.

Each time the publisher’s web page loads, an ad request is sent to multiple ad exchanges, demand side platforms directly or to our programmatic advertising platform customers from Colossus SSP.

We continuously review our available inventory from existing publishers across every format (mobile, desktop, digital video, OTT, CTV, and rich media).

The factors we consider when determining which impressions we process include transparency, viewability, and whether or not the impression is human sourced.

By consistently applying these criteria, we believe the ad impressions we process will be valuable and marketable to advertisers.

Enhancing ad inventory quality

Access to valuable ad impressions

Our omni-channel proprietary technology platform is designed to maximize these various advertising channels, which we believe is a further driver of efficiency for our buyers.

The platform is comprised of publishers across multiple channels including OTT/CTV, display, native, in-app, online video (“OLV”), audio and digital out of home (“DOOH").

In the three months ended March 31, 2026, we processed approximately 199 billion average monthly impressions across many unique audiences including multicultural growth audiences at scale with 89 billion, or 45% , of those impressions from growing multicultural-focused audiences.

The Company continues to expand its capabilities to give our content providers more avenues to distribute ad inventory such as OTT/CTV, digital audio, DOOH, etc.

and inform our publishers to enhance their ad selling needs by distributing content in various forms to meet the rising demands of the ad buying community.

Components of Our Results of Operations

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

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

We generate revenue primarily from customers that enter into agreements with us 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 our own programmatic platform operating under the trademarked banner Colossus SSP or through third parties such as DSPs.

In connection with our analysis of principal vs agent considerations, we have evaluated the specified goods or services and we considered whether we control the goods or services before they are provided to the customer including the three indicators of control.

Based upon this analysis and our specific facts and circumstances, we concluded that we are a principal for the goods or services sold through both our sell-side advertising segment and our buy-side segment because we control the specified good or service before it is transferred to the customer and we are the primary obligor in the agreement with the customer.

Based upon this analysis and our specific facts and circumstances, we concluded that we are a principal for the goods or services sold because we control the specified good or service before it is transferred to the customer and we are the primary obligor in the agreement with customers.

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

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Cost of revenues

For the sell-side advertising segment, we pay publishers a fee, which is typically a percentage of the value of the ad impressions monetized through our platform.

Cost of revenues consists primarily of publisher media fees and data center co-location costs.

Media fees include the publishing and real time bidding costs to secure advertising space.

For the buy-side advertising segment, cost of revenues consists primarily of digital media fees, third-party platform access fees, and other third-party fees associated with providing services to our customers.

Cost of revenues consists primarily of digital media fees, third-party platform access fees, and other third-party fees associated with providing services to our customers.

We also pay publishers a fee, which is typically a percentage of the value of the ad impressions monetized through our platform, and data center co-location costs including the publishing and real time bidding costs to secure advertising space.

Operating expenses

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Other income includes income associated with recovery of receivables and other miscellaneous credit card rebates.

Interest expense.

Interest expense is mainly related to our debt as further described below in “ —Liquidity and Capital Resources.

Loss on debt extinguishment .

On January 27, 2026, the Company and its lender executed an amendment to the debt agreement which was accounted for as a debt extinguishment, resulting in a loss from the write-off of unamortized deferred financing fees incurred through the date of the amendment as well as recognizing the remaining amendment closing fee of $0.4 million.

See Note 3 — Long-Term Debt to our condensed consolidated financial statements.

Loss on settlement of accounts payable.

The Company recognized a loss on settlement of liability associated with the issuance of Class A Common Stock through the Continuation Capital program that the Company initiated in 2025.

See further description in “ —Liquidity and Capital Resources .”

Interest expense and amortization of deferred financing cost and debt discount (premium), net.

Interest expense and amortization of deferred financing cost and debt discount (premium), net is mainly related to our debt as further described below in “ —Liquidity and Capital Resources.

Expenses for Equity Reserve Facility.

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Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Comparison of the Three Months Ended March 31, 2026 and 2025

The following tables set forth our condensed consolidated results of operations for the periods presented (in thousands).

The period-to-period comparison of results is not necessarily indicative of results for future periods.

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

2025 2024 Amount % 2025 2024 Amount %

Sell-side advertising $ 641 $ 2,202 $ (1,561) (71) % $ 5,153 $ 33,001 $ (27,848) (84) %

Buy-side advertising 7,343 6,873 470 7 % 21,133 20,204 929 5 %

Total revenues 7,984 9,075 (1,091) (12) % 26,286 53,205 (26,919) (51) %

Three Months Ended March 31, Change

2026 2025 Amount %

Revenues $ 6,680 $ 8,157 $ (1,477) (18) %

Cost of revenues 4,418 5,764 (1,346) (23) %

Sell-side advertising 1,457 2,654 (1,197) (45) % 6,946 30,670 (23,724) (77) %

Buy-side advertising 4,313 2,907 1,406 48 % 11,171 8,091 3,080 38 %

Total cost of revenues 5,770 5,561 209 4 % 18,117 38,761 (20,644) (53) %

Gross Profit 2,262 2,393 (131) (5) %

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Other expense, net (2,320) (2,016) (304) 15 %

(Loss) income before income taxes (5,000) 229 (5,229) (2282) % (15,136) (7,206) (7,930) 110 %

Loss before income taxes (5,571) (5,940) 369 6 %

Income tax expense — — — — %

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(1) For a definition of Adjusted EBITDA, an explanation of our management’s use of this measure, and a reconciliation of Adjusted EBITDA to net income see “ – Non-GAAP Financial Measures .”

Our revenues of $8.0 million for the three months ended September 30, 2025 decreased by $1.1 million, or 12%, from $9.1 million for the three months ended September 30, 2024.

Sell-side advertising revenue decreased $1.6 million, or 71% while buy-side revenue increased $0.5 million, or 7%, compared to the prior year period.

The decrease in sell-side advertising revenue was primarily due to a decrease in impression inventory.

Management attributes the cause of this decrease to unexpected business disruption amongst our partners, advertisers and clients caused by multiple short attacks and a market-discredited blog post against our supply-side platform, Colossus SSP, in mid May 2024.

Sell-side volumes have resumed but not yet at the levels experienced prior to the post in May 2024.

The Company continues efforts to reconstitute its prior business, target new customers and develop new products for the sell-side segment.

The Company sold approximately 154 million average monthly impressions in the third quarter of 2025, a decrease of 25% from the prior period.

The increase in buy-side revenue of $0.5 million was due to growth from new customers of $2.3 million, including $2.1 million from customers in new verticals, partially offset by a $1.8 million decrease in spending from existing customers, including a $0.7 million decrease from customers no longer actively purchasing from the Company.

Our revenues of $26.3 million for the nine months ended September 30, 2025 decreased by $26.9 million, or 51%, from $53.2 million for the nine months ended September 30, 2024.

Sell-side advertising revenue decreased $27.8 million, or 84%, while buy-side revenue increased $0.9 million, or 5%, compared to the prior year period.

The decrease in sell-side advertising revenue was primarily due to a decrease in impression inventory and the unexpected business disruption described above.

The Company sold approximately 175 million average monthly impressions in the first nine months of 2025, a decrease of 87% from the prior period.

The increase in buy-side revenue of $0.9 million was due to growth from new customers of $5.0 million, including $4.3 million from customers in new verticals, partially offset by a $4.1 million decrease in spending from existing customers, including a $3.6 million decrease from customers no longer actively purchasing from the Company.

Our revenues of $6.7 million for the three months ended March 31, 2026 decreased by $1.5 million, or 18%, from $8.2 million for the three months ended March 31, 2025.

The decrease in revenue was due primarily to a $2.0 million decrease in spending from DSP customers and a $0.1 million decrease from customers no longer actively purchasing from the Company, partially offset by net growth from new and existing customers of $0.6 million primarily due to growth from customers in new verticals added in 2025.

Cost of revenues

Cost of revenues of $5.8 million for the three months ended September 30, 2025 increased by $0.2 million, or 4% from $5.6 million for the three months ended September 30, 2024.

Sell-side advertising cost of revenues decreased $1.2 million, to $1.5 million, or 227% of sell-side revenue, for the three months ended September 30, 2025, compared to $2.7 million, or 121% of sell-side revenue, for the same period in 2024.

The decrease in costs was primarily due to the related decrease in revenue, while the 106% increase as a percentage of revenue was due to fixed costs not decreasing at the same proportionate rate as the revenue decline.

Fixed cost of sell-side revenues for the three months ended September 30, 2025 of $0.8 million decreased by $0.1 million, or 4%, from fixed cost of sell-side revenues of $0.9 million for the same period in 2024.

Buy-side advertising cost of revenues increased $1.4 million to $4.3 million, or 59% of buy-side revenue, for the three months ended September 30, 2025, compared to $2.9 million, or 42% of buy-side revenue, for the same period in 2024.

See gross profit changes described in more detail below.

Cost of revenues of $18.1 million for the nine months ended September 30, 2025 decreased by $20.6 million, or 53% from $38.8 million for the nine months ended September 30, 2024.

Sell-side advertising cost of revenues decreased $23.7 million to $6.9 million, or 135% of sell-side revenue, for the nine months ended September 30, 2025, compared to $30.7 million, or 93% of sell-side revenue, for the same period in 2024.

The decrease in costs was primarily due to the related decrease in revenue, while the 42% increase as a percentage of revenue was due to fixed costs not decreasing at the same proportionate rate as the revenue decline.

Fixed cost of sell-side revenues for the nine months ended September 30, 2025 of $2.6 million decreased by $0.9 million, or 26%, from fixed cost of sell-side revenues of $3.5 million for the same period in 2024.

Buy-side advertising cost of revenues increased $3.1 million, to $11.2 million, or 53% of buy-side revenue, for the nine months ended September 30, 2025, compared to $8.1 million, or 40% of buy-side revenue, for the same period in 2024.

See gross profit changes described in more detail below.

Gross profit was $2.2 million, or 28% of revenue, for the three months ended September 30, 2025, compared to $3.5 million, or 39% of revenue, for the same period in 2024, reflecting a decrease of $1.3 million, or 37%.

The change in gross profit margin percentage for the three months ended September 30, 2025 is attributable to lower gross profit margins for both the sell-side segment and the buy-side segment.

Sell-side advertising gross profit decreased $0.4 million for the three months ended September 30, 2025 as compared to the same period in 2024, primarily due to the decrease in revenue partially offset by lower fixed costs.

Sell-side advertising gross margin percentage was (127)% and (21)% for the three months ended September 30, 2025 and 2024, respectively.

Buy-side advertising gross profit decreased $0.9 million for the three months ended September 30, 2025, as compared to the same period in the prior year.

Buy-side advertising gross margin percentage was 41% and 58% for the

three months ended September 30, 2025 and 2024, respectively, with the decrease in gross margin percentage due to higher cost to provide services to customers and the mix of services provided.

Gross profit was $8.2 million, or 31% of revenue, for the nine months ended September 30, 2025, compared to $14.4 million, or 27% of revenue, for the same period in 2024, reflecting a decrease of $6.3 million, or 43%.

The change in gross profit margin percentage for the nine months ended September 30, 2025 is attributable to the mix in revenue between our business segments as our sell-side segment has higher cost of revenues compared to our buy-side segment, as well as the lower sell-side fixed costs related to server capacity, analytic, development and technology-related costs.

Sell-side advertising gross profit decreased $4.1 million for the nine months ended September 30, 2025 as compared to the same period in 2024, primarily due to the decrease in revenue partially offset by lower fixed costs.

Sell-side advertising gross margin percentage was (35)% and 7% for the nine months ended September 30, 2025 and 2024, respectively.

Buy-side advertising gross profit decreased $2.2 million for the nine months ended September 30, 2025, as compared to the same period in the prior year.

Buy-side advertising gross margin percentage was 47% and 60% for the nine months ended September 30, 2025 and 2024, respectively, with the decrease in gross margin percentage due to higher cost to provide services to customers and the mix of services provided.

Cost of revenues of $4.4 million (66% of revenue) for the three months ended March 31, 2026 decreased by $1.3 million, or 23% from $5.8 million (71% of revenue) for the three months ended March 31, 2025.

The decrease in costs was primarily due to the related decrease in revenue, while the 5% decrease as a percentage of revenue was due to reduction of fixed costs of revenue resulting from ongoing cost savings initiatives.

Fixed cost of revenues for the three months ended March 31, 2026 of $0.4 million decreased by $0.5 million, or 53%, from fixed cost of revenues of $0.9 million for the same period in 2025.

Gross profit was $2.3 million, or 34% of revenue, for the three months ended March 31, 2026, compared to $2.4 million, or 29% of revenue, for the same period in 2025, reflecting a decrease of $0.1 million, or 5%.

The change in gross profit margin percentage for the three months ended March 31, 2026 is attributable primarily to a reduction in fixed costs.

Operating expenses

The following table sets forth the components of operating expenses for the periods presented (in thousands):

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

2025 2024 Amount % 2025 2024 Amount %

Three Months Ended March 31, Change

2026 2025 Amount %

Compensation, taxes and benefits $ 3,021 $ 3,664 $ (643) (18) %

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Compensation, taxes and benefits

Compensation, taxes and benefits of $3.6 million increased by $0.1 million, or 3%, for the three months ended September 30, 2025 from $3.5 million for the same period in 2024.

Compensation, taxes and benefits of $10.9 million decreased by $1.3 million, or 11%, for the nine months ended September 30, 2025 from $12.2 million for the same period in 2024.

The decrease in the nine months ended September 30, 2025 compared to the prior year is primarily due to lower payroll costs resulting from a staff reduction made effective July 1, 2024 when we began to execute an internal reorganization plan that included a staff reduction, a pause on hiring and cost savings measures, which has lowered certain ongoing expenses that positively affected the current period.

Compensation, taxes and benefits of $3.0 million decreased by $0.6 million, or 18%, for the three months ended March 31, 2026 from $3.7 million for the same period in 2025.

The decrease in the three months ended March 31, 2026 compared to the prior year is primarily due to lower payroll costs due to continued cost management efforts, including workforce optimization and a pause on hiring, which have reduced recurring operating expenses in the current period.

General and administrative expense

General and administrative (“G&A”) expenses of $2.5 million for the three months ended September 30, 2025 decreased by $1.1 million from the same period in 2024.

G&A expenses as a percentage of revenue were 31% and 40% for the three months ended September 30, 2025 and 2024, respectively.

The decrease in G&A expenses was primarily due to lower professional fees including $1.1 million in 2024 in costs to regain compliance with respect to delinquent SEC filings.

G&A expenses of $7.5 million for the nine months ended September 30, 2025 decreased by $3.3 million from the same period in 2024.

G&A expenses as a percentage of revenue were 29% and 20% for the nine months ended September 30, 2025 and 2024, respectively.

The decrease in G&A expenses was primarily due to lower professional fees including $1.3 million in 2024 in costs to regain compliance with respect to delinquent SEC filings, as well as lower sales and marketing expenses, consulting costs and travel expenses due to ongoing cost savings measures.

We expect to continue to invest in and incur additional expenses associated with our operation as a public company, including professional fees, inve stment in automation, and compliance costs associated with developing the requisite infrastructure required for internal controls.

However, on July 1, 2024, we executed an internal reorganization plan that included a staff reduction, a pause on hiring and cost savings measures, which have lowered certain ongoing expenses, especially as the Company ceased incurring additional one-time expenses to regain compliance with respect to delinquent SEC filings, which were filed in the fourth quarter of 2024.

Other expense (income), net

General and administrative (“G&A”) expenses of $2.5 million for the three months ended March 31, 2026 decreased by $0.2 million from the same period in 2025.

G&A expenses as a percentage of revenue were 37% and 33% for the three months ended March 31, 2026 and 2025, respectively, primarily due to a decrease in revenues.

The overall decrease in G&A expenses was primarily due to lower sales and marketing expenses and travel expenses due to ongoing cost savings measures.

We expect to continue to invest in and incur additional expenses associated with our operation as a public company, including professional fees, investment in automation, and compliance costs associated with developing the requisite infrastructure required for internal controls.

However, on July 1, 2024, we executed an internal reorganization plan that included a staff reduction, a pause on hiring and cost savings measures, which we have maintained resulting in lower ongoing expenses.

Other expense, net

The following table sets forth the components of other expense, net for the periods presented (in thousands):

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

2025 2024 Amount % 2025 2024 Amount %

Interest expense $ (1,104) $ (1,413) $ 309 (22) % $ (4,739) j $ (4,068) j $ (671) 16 %

Expenses for Equity Reserve Facility — — $ — nm (198) j — j $ (198) nm

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

Other income 15 99 (84) (85) % 61 j 190 j (129) (68) %

Total other expense (income), net $ (1,089) $ 3,887 $ (4,976) (128) % $ (4,876) $ 1,323 $ (6,199) (469) %

Three Months Ended March 31, Change

2026 2025 Amount %

Interest expense and amortization of deferred financing cost and debt discount (premium), net $ (563) $ (1,846) $ 1,283 (70) %

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

Loss on debt extinguishment (517) — (517) nm

Expenses for Equity Reserve Facility — (198) 198 nm

Other income 7 28 (21) (75) %

Total other expense, net $ (2,320) $ (2,016) $ (304) 15 %

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Total other expense (income), net for the three months ended September 30, 2025 and 2024 primarily consists of $1.1 million and $1.4 million, respectively, of interest expense.

Interest expense decreased by $0.3 million compared to the prior period primarily due to reduction of outstanding debt resulting from the conversion of debt to preferred stock.

Total other expense (income), net for the three months ended September 30, 2024 also includes $5.2 million relating to the derecognition of tax receivable agreement liability in connection with the full valuation allowance recorded on the Company's deferred tax assets during the three months ended September 30, 2024.

Total other expense (income), net for the nine months ended September 30, 2025 and 2024 primarily consists of $4.7 million and $4.1 million, respectively, of interest expense.

Interest expense increased by $0.7 million compared to the prior period primarily due to the debt discount amortization and higher cost on line of credit converted to long term debt partially offset by a decrease in interest expense from the reduction of outstanding debt resulting from the conversion of debt to preferred stock on August 8, 2025.

Total other expense (income), net for the nine months ended September 30, 2024 also includes $5.2 million relating to the derecognition of tax receivable agreement liability in connection with the full valuation allowance recorded on the Company's deferred tax assets.

Total other expense, net for the three months ended March 31, 2026 and 2025 includes $0.6 million and $1.8 million, respectively, of interest expense.

Interest expense decreased by $1.3 million compared to the prior period primarily due to the reduction of outstanding debt resulting from the conversion of debt to preferred stock in the second half of 2025.

Total other expense, net for the three months ended March 31, 2026 also includes $1.2 million for the loss on settlement of accounts payable associated with the issuance of common stock through the Continuation Capital program that the Company initiated in 2025 and $0.5 million for loss on debt extinguishment associated with the Eleventh Amendment to the Company's long term debt agreement.

Liquidity and Capital Resources

Going Concern

As discussed in Note 9 — Commitments and Contingencies to our condensed consolidated financial statements, on May 10, 2024, the Company was the subject of a defamatory article / blog post which the Company believes was part of a coordinated misinformation campaign.

In connection with this post, 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 in our condensed consolidated financial statements, 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 (subject to the federal government resuming operations and the effectiveness of the Form S-1 resale registration statement to enable such sales) 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 were executed on July 1, 2024 with continuing cost saving 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 to our condensed consolidated financial statements) 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.

Sources of Liquidity

The following table summarizes our cash and cash equivalents, and working capital deficit on September 30, 2025 and December 31, 2024 (in thousands):

September 30, 2025 December 31, 2024

The following table summarizes our cash and cash equivalents, and working capital deficit on March 31, 2026 and December 31, 2025 (in thousands):

March 31, 2026 December 31, 2025

Cash and cash equivalents $ 796 $ 728

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The terms and conditions of the various credit facilities we entered into are further described in Note 3 — Long-Term Debt in the notes to the condensed consolidated financial statements.

Equity Reserve Facility

The terms and conditions of the Equity Reserve Facility are further described in Note 4 — Stockholders’ Deficit and Stock-Based Compensation in the notes to the condensed consolidated financial statements.

Committed Equity Facility

The terms and conditions of the Committed Equity Facility are further described in Note 4 — Stockholders’ Deficit and Stock-Based Compensation in the notes to the condensed consolidated financial statements.

Historical Cash Flows:

The following table sets forth our cash flows for the nine months ended September 30, 2025 and 2024 (in thousands):

Nine Months Ended September 30,

The following table sets forth our cash flows for the three months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended March 31,

Net cash used in operating activities $ (1,050) $ (2,708)

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

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

Our cash and cash equivalents at September 30, 2025 were held for working capital and general corporate purposes.

The decrease in cash and cash equivalents compared with December 31, 2024, primarily resulted from $7.0 million in cash flows used in operating activities partially offset by $6.5 million in cash flows provided by financing activities.

Net increase in cash and cash equivalents $ 68 $ 344

Our cash and cash equivalents at March 31, 2026 were held for working capital and general corporate purposes.

Cash and cash equivalents as of March 31, 2026 and December 31, 2025 were relatively unchanged with operating cash shortfalls offset by proceeds from issuance of shares under the Equity Reserve Facility.

Operating Activities

For the Nine Months Ended September 30, 2025 and 2024

Cash provided by operating activities has typically been generated from net income and by changes in our operating assets and liabilities, particularly in the areas of accounts receivable and accounts payable and accrued expenses, adjusted for certain non-cash and non-operating expense items such as depreciation, amortization, stock-based compensation and deferred income taxes.

For the nine months ended September 30, 2025, net cash flows used in operating activities were $7.0 million and consisted of net loss of $15.1 million, offset by $6.0 million in adjustments for non-cash and non-operating items and $2.1 million of cash inflows from working capital.

Adjustments for non-cash and non-operating items mainly consisted of

depreciation and amortization expense of $4.9 million and stock-based compensation expense of $1.1 million.

The $2.1 million increase in cash resulting from changes in working capital primarily consisted of a $1.4 million decrease in accounts receivable, a $1.0 million increase in accrued expenses such as payroll and debt restructuring expenses, and a $0.6 million increase in accounts payable, offset by a $0.9 million increase in prepaid expense.

The decrease in accounts receivable is mainly due to the continued impact from the May 2024 temporary disconnection by a significant customer as a result of the customer investigating a defamatory article / blog post against the Company.

For the nine months ended September 30, 2024, net cash flows used in operating activities were $7.1 million and consisted of net loss of $13.3 million, offset by $4.1 million in adjustments for non-cash and non-operating items and $2.1 million of cash inflows from working capital.

Adjustments for non-cash and non-operating items mainly consisted of depreciation and amortization expense of $2.3 million, stock-based compensation expense of $0.8 million and deferred tax expense of $6.1 million partially offset by $5.2 million of derecognition of tax receivable agreement liability in connection with the full valuation allowance recorded on the Company's deferred tax assets.

The $2.1 million increase in cash resulting from changes in working capital primarily consisted of a $30.9 million decrease in accounts receivable, partially offset by a $27.5 million decrease in accounts payable and a $1.5 million decrease in accrued expenses such as payroll and payroll related expenses.

The decrease in accounts payable and accounts receivable is mainly due to the May 2024 temporary disconnection by a significant customer as a result of a customer investigating a defamatory article / blog post against the Company, as well as a payment of $8.8 million to a few publishers associated with a charge recorded in 2023 related to a disputed short pay from as customer.

For the three months ended March 31, 2026, net cash flows used in operating activities were $1.1 million and consisted of net loss of $5.6 million, offset by $3.0 million in adjustments for non-cash and non-operating items and $1.5 million of cash inflows from working capital.

Adjustments for non-cash and non-operating items mainly consisted of loss on settlement of accounts payable of $1.2 million, loss on debt extinguishment of $0.5 million, depreciation and amortization expense of $0.5 million and stock-based compensation expense of $0.2 million.

The $1.5 million increase in cash resulting from changes in working capital primarily consisted of a $1.1 million increase in accounts payable, a $0.3 million decrease in accounts receivable, partially offset by a $0.3 million increase in accrued liabilities and tax receivable agreement payable.

The increase in accounts payable is mainly due to the timing of payments to vendors.

The decrease in accounts receivable is mainly due to the seasonal decrease in revenue in the first quarter of the year compared to the fourth quarter of the year.

For the three months ended March 31, 2025, net cash flows used in operating activities were $2.7 million and consisted of net loss of $5.9 million, offset by $2.9 million in adjustments for non-cash and non-operating items and $0.3 million of cash inflows from working capital.

Adjustments for non-cash and non-operating items mainly consisted of depreciation and amortization expense of $2.4 million, stock-based compensation expense of $0.3 million and expenses for the equity reserve facility of $0.2 million .

The $0.3 million increase in cash resulting from changes in working capital primarily consisted of a $0.6 million decrease in accounts receivable and a $0.3 million increase in accrued expenses such as payroll and payroll related expenses, partially offset by a $0.6 million decrease in accounts payable.

The decrease in accounts payable and accounts receivable is mainly due to the seasonal decrease in revenue in the first quarter of the year compared to the fourth quarter of the year.

Investing Activities

For the Nine Months Ended September 30, 2025 and 2024

Our investing activities to date have consisted primarily of purchases of software, office furniture and leasehold improvements.

For the nine months ended September 30, 2025 and 2024, net cash flows used in investing activities of less than $0.1 million were primarily related to office furniture and leasehold improvements.

For the three months ended March 31, 2026, there were no investing activities.

For the three months ended March 31, 2025, net cash flows used in investing activities of less than $0.1 million were primarily related to office furniture and leasehold improvements.

Financing Activities

For the Nine Months Ended September 30, 2025 and 2024

For the nine months ended September 30, 2025, net cash provided by financing activities was $6.5 million mainly resulting from $6.7 million of proceeds from issuance of Class A Common Stock under the Equity Reserve Facility and $3.8 million of proceeds from term loan partially offset by $3.7 million for payments on the line of credit and $0.2 million for payments of expenses for the Equity Reserve Facility and deferred financing costs.

For the nine months ended September 30, 2024, net cash provided by financing activities was $6.1 million mainly resulting from $6.7 million of proceeds from line of credit and $0.2 million proceeds from warrants exercised partially offset by $0.6 million for payments on shares withheld for taxes and $0.4 million paid on the term loan.

For the three months ended March 31, 2026, net cash provided by financing activities was $1.1 million mainly resulting from $1.1 million of proceeds from issuance of Class A Common Stock under the Equity Reserve Facility.

For the three months ended March 31, 2025, net cash provided by financing activities was $3.1 million mainly resulting from $3.3 million of proceeds issuance of Class A Common Stock under the Equity Reserve Facility partially offset by $0.2 million for payment of expenses for the Equity Reserve Facility.

Contractual Obligations and Future Cash Requirements

As of September 30, 2025, our principal contractual obligations expected to give rise to material cash requirements consist of the 2021 Credit Facility, the Credit Agreement and non-cancelable leases for our various facilities.

We anticipate that the future minimum payments related to our current indebtedness over the next five years will be $3.8 million in the remainder of 2025, $12.4 million in 2026, less than $0.1 million in each of 2027, 2028, and 2029, and $0.1 million thereafter, assuming we do not refinance our indebtedness or enter into a new credit facility.

The leases will require minimum payments of $0.1 million in 2025, $0.3 million in 2026, $0.3 million in 2027, $0.2 million in 2028, $0.2 million in 2029, and less than $0.1 million thereafter.

As of September 30, 2025, we had cash and cash equivalents of $0.9 million.

As of March 31, 2026, our principal contractual obligations expected to give rise to material cash requirements consist of the 2021 Credit Facility and non-cancelable leases for our various facilities.

We anticipate that the future minimum payments related to our current indebtedness over the next five years will be $16.9 million in the remainder of 2026, less than $0.1 million in each of 2027, 2028, and 2029, and $0.1 million thereafter, assuming we do not refinance our indebtedness or enter into a new credit facility.

The leases will require minimum payments of $0.2 million in the remainder of 2026, $0.3 million in 2027, $0.2 million in 2028, $0.2 million in 2029 and less than $0.1 million in 2030.

As of March 31, 2026, we had cash and cash equivalents of $0.8 million.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S.

generally accepted accounting principles (“GAAP”), including, in particular operating income, net cash provided by operating activities, and net income, we believe that earnings before interest, taxes, depreciation and amortization, as adjusted for stock-based compensation, expenses for the Equity Reserve Facility and derecognition of tax receivable agreement liability (“Adjusted EBITDA”), a non-GAAP measure, is useful in evaluating our operating performance.

generally accepted accounting principles (“GAAP”), including, in particular operating income, net cash provided by operating activities, and net income, we believe that earnings before interest, taxes, depreciation and amortization, as adjusted for stock-based compensation, expenses for the Equity Reserve Facility, loss on settlement of accounts payable and loss on debt extinguishment (“Adjusted EBITDA”), a non-GAAP measure, is useful in evaluating our operating performance.

The most directly comparable GAAP measure to Adjusted EBITDA is net income.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Net loss $ (5,571) $ (5,940)

Add back (deduct):

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

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

Loss on settlement of accounts payable 1,247 —

Loss on debt extinguishment 517 —

Amortization of intangible assets 414 488

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Expenses for Equity Reserve Facility — 198

Income tax expense — 6,606 — 6,132

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

Adjusted EBITDA $ (2,614) $ (3,024)

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We believe that this non-GAAP financial measure is useful to investors for period-to-period comparisons of our business and in understanding and evaluating our operating results for the following reasons:

• Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, provision for income taxes, stock-based compensation, and certain one-time items such as acquisition transaction costs and costs for the Equity Reserve Facility that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;

• Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, provision for income taxes, stock-based compensation, and certain one-time items such as acquisition transaction costs, losses from financing activities and costs for the Equity Reserve Facility that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;

• Our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of operating performance and the effectiveness of our business strategies and in communications with our board of directors concerning our financial performance;

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The Company bases its estimates on past experiences, market conditions, and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis.

The Company uses estimates to determine many reported amounts, including but not limited to gross vs net assessment in revenue recognition, recoverability of goodwill and long-lived assets, useful lives used in amortization of intangibles, income taxes and valuation allowances, stock-based compensation and fair values of assets and liabilities acquired in business combinations as well as preferred stock issued.

There have been no material changes to our critical accounting estimates and related policies as compared to the critical accounting estimates and related policies described in our "Management’s Discussion and Analysis of Financial Condition and Results of Operations" set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.

4 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis