What changed in this filing

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Item 1A. Risk Factors

2026-05-15 compared with 2025-11-12 · 25 added, 30 removed, 19 unchanged (74% of the section changed)

4 unchanged sentences

The risks and uncertainties described below and in our Annual Report are not the only ones we face.

Additional risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business.

Additional risks and

uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business.

The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to accomplish our strategic objectives.

In that event, the market price of our common stock could decline and you could lose part or all of your investment.

Any shutdown of the federal government, including the one that began on October 1, 2025, can delay our ability to conduct public offerings including by filing a registration statement with the U.S.

Securities and Exchange Commission, which could have a material adverse effect on our business and operations.

Over the last several years, the U.S.

government shut down several times and certain regulatory agencies, such as the Securities and Exchange Commission (the “SEC”), had to furlough critical employees and stop critical activities.

federal government’s new fiscal year began October 1, 2025, without the passage of appropriation acts or a continuing resolution (“CR”) and the government began its shutdown procedures, to include furloughing government civilian employees.

It is unclear at this time when either a CR or appropriations act will be enacted.

Federal agencies have published guidance for identifying those functions that may continue to be carried out in the absence of available appropriations.

Certain SEC functions, like the Staff of the SEC’s Division of Corporation Finance’s review and acceleration of effectiveness of registration statements filed pursuant to the Securities Act of 1933, as amended, have been suspended.

This means that the Company may not be able to have declared effective a registration statement for a public offering or a resale registration statement for a selling stockholder on the timeline desired by the Company, or at all.

prolonged government shutdown occurs, it could significantly impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

If we fail to satisfy applicable listing standards, including compliance with the rules requiring timely filing of our periodic reports with the SEC, our Class A Common Stock may be delisted from the Nasdaq Capital Market.

On October 18, 2024, the Company received a deficiency letter (the “Letter”) from the Staff of 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 the 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 a series of transactions including the sale of Class A Common Stock under the Equity Reserve Facility and a conversion and exchange of term loans of $35.0 million into shares of Series A Preferred Stock, as described elsewhere.

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 Compliance Plan or regain compliance with the minimum bid price rule.

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.”

On November 7, 2025, the Company received a Panel Decision regarding the Company’s continued listing on Nasdaq.

The Panel Decision indicated that the Company had evidenced compliance with the Stockholders’ Equity Rule and, as such, that matter had been closed.

However, the Panel Decision indicated that the Company would remain subject to a discretionary 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 the Company an exception through January 30, 2026, to demonstrate compliance with the Bid Price Rule.

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

On February 12, 2026, the Company received a Compliance Notice from Nasdaq, notifying the Company that it 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 also indicated that the Company 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 the Company fails any listing standard during the one-year monitoring period, then, notwithstanding Rule 5810(c)(2), the Company 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, and 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, the Company received a Staff Delisting Determination Letter from Nasdaq, notifying the Company that it was once again not in compliance with the Stockholders’ Equity Rule, nor was it 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, or in two of the three most recently completed fiscal years.

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

The Company 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, the Company received an Additional Staff Delisting Determination Letter from Nasdaq, notifying the Company that it was not in compliance with the Bid Price Rule based on the Company’s closing bid price being lower than $1.00 per share for thirty (30) consecutive business days.

As described below, the Company 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, the Company’s 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.

The Company is 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 the Company’s 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 the Company will be able to evidence compliance with the applicable listing criteria within any extension period that may be granted by the Panel.

The Company is considering all available options to regain and maintain compliance with the Stockholders’ Equity Rule and the Bid Price Rule.

There can be no assurances, however, that we will be successful in regaining compliance with the continued listing requirements and maintaining the listing of our Class A Common Stock on the Nasdaq Capital Market.

Delisting from the Nasdaq could adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our Class A Common Stock.

Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.

Delisting could also have other negative results,

including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.

If our Class A Common Stock is delisted by the Nasdaq, the price of our Class A Common Stock may decline and our Class A Common Stock may be eligible to trade on the OTC Markets or other over-the-counter quotation system, where an investor may find it more difficult to dispose of their Class A Common Stock or obtain accurate quotations as to the market value of our Class A Common Stock.

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These requirements could severely limit the market liquidity of our Class A Common Stock and the ability of our stockholders to sell our Class A Common Stock in the secondary market.

In addition, holders of our Series A Preferred Stock may be impacted due to the lack of liquidity of the Class A Common Stock into which the Series A Preferred Stock is convertible.

Unregistered Sales of Equity Securities and Use of Proceeds

6 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 1A. Risk Factors