What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-11-12 compared with 2025-08-06 · 278 added, 183 removed, 590 unchanged (44% of the section changed)

4 unchanged sentences

(in thousands, except share and par value amounts)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

CURRENT ASSETS

13 unchanged sentences

Accrued liabilities 1,888 1,257

Accrued liabilities - related party 1,875 —

Liability related to tax receivable agreement, current portion 41 41

Current maturities of long-term debt — 3,700

Current maturities of long-term debt - related party 4,931 —

Deferred revenues 548 507

3 unchanged sentences

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

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

Operating lease liabilities, net of current portion 666 783

2 unchanged sentences

STOCKHOLDERS’ DEFICIT

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

Class A Common Stock, $ 0.001 par value per share, 160,000,000 shares authorized, 16,675,005 and 5,450,554 shares issued and outstanding, respectively

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

15 unchanged sentences

Expenses for Equity Reserve Facility — — ( 198 ) —

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

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

Total other expense, net ( 1,770 ) ( 1,350 ) ( 3,786 ) ( 2,563 )

Loss before income taxes ( 4,196 ) ( 3,415 ) ( 10,136 ) ( 7,436 )

Income tax benefit — ( 274 ) — ( 475 )

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

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

Income tax expense — 6,606 — 6,132

Net loss ( 5,000 ) ( 6,377 ) ( 15,136 ) ( 13,338 )

13 unchanged sentences

(in thousands except share data)

Six Months Ended June 30, 2025

Common Stock APIC Accumulated

Nine Months Ended September 30, 2025

Preferred Stock Common Stock APIC Accumulated

Deficit Noncontrolling Interest Stockholders’

Class A Class B

Units Amount Units Amount

Series A Convertible Class A Class B

Units Amount Units Amount Units Amount

Balance, December 31, 2024 — $ — 5,450,554 $ 6 10,868,000 $ 11 $ 3,769 $ ( 8,774 ) $ ( 14,742 ) $ ( 19,730 )

3 unchanged sentences

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

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

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

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

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

Three Months Ended June 30, 2025

Common Stock APIC Accumulated

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

Three Months Ended September 30, 2025

Preferred Stock Common Stock APIC Accumulated

Deficit Noncontrolling Interest Stockholders’

Class A Class B

Units Amount Units Amount

Balance, March 31, 2025 7,093,480 $ 7 10,798,000 $ 11 $ 3,776 $ ( 11,129 ) $ ( 15,980 ) $ ( 23,315 )

Series A Convertible Class A Class B

Units Amount Units Amount Units Amount

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

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

2 unchanged sentences

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

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

Net loss — — — — — — — ( 2,680 ) ( 2,320 ) ( 5,000 )

Noncontrolling interest rebalancing — — — — — — ( 9,626 ) — 9,626 —

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

Six Months Ended June 30, 2024

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

Nine Months Ended September 30, 2024

Common Stock APIC Accumulated

10 unchanged sentences

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

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

Three Months Ended June 30, 2024

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

Three Months Ended September 30, 2024

Common Stock APIC Accumulated

2 unchanged sentences

Units Amount Units Amount

Balance, March 31, 2024 3,684,278 $ 4 10,868,000 $ 11 $ 3,441 $ ( 3,313 ) $ ( 7,671 ) $ ( 7,528 )

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

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

3 unchanged sentences

Noncontrolling interest rebalancing — — — — ( 122 ) — 122 —

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

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

See accompanying notes to the unaudited condensed consolidated financial statements.

3 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows Used In Operating Activities:

1 unchanged sentence

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of deferred financing cost and debt discount 2,900 372

Amortization of deferred financing cost and debt discount (premium), net 3,123 558

Amortization of intangible assets 1,465 1,465

3 unchanged sentences

Deferred income taxes — 6,132

Expenses for Equity Reserve Facility 198 —

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

Provision for credit losses/bad debt expense 6 36

12 unchanged sentences

Cash Flows Provided by Financing Activities:

Proceeds from note payable 3,804 —

Payments on term loan — ( 373 )

3 unchanged sentences

Proceeds from issuance of Class A Common Stock 6,708 —

Payment of deferred financing cost ( 46 ) —

Payments on financed insurance premiums ( 114 ) —

Payments on line of credit ( 3,700 ) —

Proceeds from options exercised — 92

1 unchanged sentence

Net cash provided by financing activities 6,500 6,083

Net increase (decrease) in cash and cash equivalents 148 ( 4,047 )

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

Cash and cash equivalents, beginning of the period 1,445 5,116

2 unchanged sentences

Financed insurance premiums $ 291 $ —

Common stock issued for subscription receivable $ 525 $ —

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

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

Funding of interest reserve through debt $ 93 $ —

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

See accompanying notes to the unaudited condensed consolidated financial statements.

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Direct Digital Holdings, Inc.

owns 100 % of the voting interest in DDH LLC and as of June 30, 2025, it owns 53.6 % of the economic interest in DDH LLC.

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

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

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

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

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

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

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

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

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Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards otherwise applicable to public companies until such time as those standards apply to private companies.

The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) it affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) it is no longer an emerging growth company or (ii) it affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

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

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

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

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

end customer.

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

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

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

6 unchanged sentences

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

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

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

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

Buy-side advertising

2 unchanged sentences

An “impression” is delivered when an advertisement appears on pages viewed by users.

The performance obligation is satisfied over time as the volume of impressions are delivered up to the contractual maximum.

The performance obligation, consisting of a series of distinct services, is satisfied over time as the volume of impressions are delivered, up to the contractual maximum.

Many customers run several different campaigns throughout the year to capitalize on different seasons, special events and other happenings at their respective regions and localities.

6 unchanged sentences

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

The Company recorded deferred revenue (contract liabilities) to account for billings in excess of revenue recognized, primarily related to contractual minimums billed in advance and customer prepayment, of $ 0.6 million and $ 0.5 million as of June 30, 2025 and December 31, 2024, respectively.

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

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

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

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

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

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

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

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

3 unchanged sentences

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

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

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

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

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

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

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

Intangible assets, net

6 unchanged sentences

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

No impairment loss was recognized during the six months ended June 30, 2025 and 2024.

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

Stock-based compensation

3 unchanged sentences

The Company estimates the fair value of stock options using the Black-Scholes valuation model.

Key input assumptions used to estimate the fair value of stock options include the fair value of the Company’s common stock, as well as assumptions regarding the expected common stock price volatility over the term of the stock options, the expected term of the stock options, risk-free interest rates and the expected dividend yield.

Key input assumptions used to estimate the fair value of stock options include the Company’s stock price, as well as assumptions regarding the expected common stock price volatility over the term of the stock options, the expected term of the stock options, risk-free interest rates and the expected dividend yield.

The risk-free interest rate is derived using the U.S.

6 unchanged sentences

federal income tax and certain state and local income taxes.

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

sufficient to fund their tax obligations.

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

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

The Company is subject to U.S.

2 unchanged sentences

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

During the six months ended June 30, 2025, members of DDM exchanged 420,000 shares of Class B Common Stock into shares of Class A Common Stock.

No shares were exchanged or converted during the six months ended June 30, 2024.

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

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

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

13 unchanged sentences

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

For the six months ended June 30, 2025 and 2024, the Company's provision for credit losses net of recoveries, as reflected in the condensed consolidated statements of cash flows, was $ 0 and less than $ 0.1 million, respectively.

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

Concentrations of customers and suppliers

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

For the three months ended June 30, 2025, two customers (one sell-side and one buy-side) accounted for 31 % of revenues.

For the three months ended June 30, 2024, one customer of the sell-side of the business accounted for 58 % of revenues.

For the six months ended June 30, 2025, three customers (one sell-side and two buy-side) accounted for 39 % of revenues.

For the six months ended June 30, 2024, one sell-side customer represented 62 % of revenues.

As of June 30, 2025 , one buy-side customer accounted for 14 % of accounts receivable.

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

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

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

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

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

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

As of June 30, 2025 and December 31, 2024 , two vendors and one vendor each accounted for at least 10%, and collectively accounted for 34 % and 16 %, respectively, of accounts payable.

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

Accrued liabilities

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

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

September 30,

2025 December 31,

1 unchanged sentence

Accrued expenses 1,602 877

Accrued interest 28 50

Accrued bank fees and interest — 50

Total accrued liabilities $ 1,888 $ 1,257

4 unchanged sentences

The Company has not experienced any losses in such amounts and believes it is not exposed to any significant credit risk to cash.

Deferred offering, financing, discount and issuance costs

Deferred offering, financing, discount, issuance costs and debt premium

The Company records certain legal, accounting and other third-party fees that are directly associated with a debt financing to deferred financing costs in the event that the Company completes the debt financing.

Costs associated with debt offerings are amortized to interest expense using the straight-line method, which approximates the effective interest method, over the life of the debt.

As of June 30, 2025 and December 31, 2024, $ 3.2 million and $ 4.2 million, respectively, of unamortized deferred financing costs are netted against debt in the condensed consolidated balance sheets.

As of June 30, 2025 and December 31, 2024, $ 0 and $ 0.1 million, respectively, of unamortized deferred financing costs are classified as prepaid expenses and other current assets in the condensed consolidated balance sheets.

The Company records the differences between the face amount and the proceeds upon issuance of debt as a discount.

As of June 30, 2025 and December 31, 2024, $ 0 and $ 1.7 million, respectively, of unamortized debt discount related to the interest reserve added under the LS Amendment are netted against debt in the condensed consolidated balance sheets.

Costs associated with debt financings are amortized to interest expense using the effective interest method over the life of the debt.

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

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

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

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

Fair value measurements

9 unchanged sentences

Net loss per share

Basi c net loss per share excludes dilution and is determined by dividing net loss by the w eighted average number of common shares outstanding including participating securities during the period.

Diluted net income per share attributable to common stockholders reflects the potential dilution that could occur if securities and other contracts to issue common stock

were exercised or converted into common stock including stock options, restricted stock units and warrants using the treasury stock method.

Basic net loss per share excludes dilution and is determined by dividing net loss by the weighted average number of common shares outstanding including participating securities during the period.

Diluted net income per share attributable to common stockholders reflects the potential dilution that could occur if securities and other contracts to issue common stock were exercised or converted into common stock including stock options, restricted stock units and warrants using the treasury stock method, and Series A Convertible Preferred Stock using the if-converted method.

Recent accounting pronouncements

4 unchanged sentences

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

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

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

Accounting pronouncements not yet adopted

9 unchanged sentences

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

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

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

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

Early adoption is permitted.

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

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

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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 $ 10.1 million for the six months ended June 30, 2025 including the impact of the sell-side disruption described above, (2) reported an accumulated deficit of $ 13.4 million as of June 30, 2025, (3) reported cash and cash equivalents of $ 1.6 million as of June 30, 2025, (4) has borrowed $ 3.7 million as of June 30, 2025 under the Credit Agreement (as defined below) which matured in July 2025 and (5) was notified by Nasdaq on October 18, 2024 that it was not in compliance with Nasdaq's minimum stockholders' equity requirements and is currently subject to a delisting letter and a hearings and appeal process.

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.

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

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

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

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

1 unchanged sentence

Note 3 — Long-Term Debt

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

June 30, 2025 December 31, 2024

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

September 30, 2025 December 31, 2024

2021 Credit Facility (1)

3 unchanged sentences

Total long-term debt 16,316 41,212

debt premium 3,151 —

deferred financing cost (1)

3 unchanged sentences

current portion ( 4,931 ) ( 3,700 )

Total long-term debt, net of current portion, deferred financing cost and debt discount $ 33,510 $ 31,603

(1) As of June 30, 2025 and December 31, 2024, amount includes an exit fee of $ 3.0 million, which is non-interest bearing and due at maturity or prepayment.

(2) As of June 30, 2025 and December 31, 2024, amount includes $ 0 and $ 1.7 million, respectively, for the interest reserve, pursuant to the LS Amendment, as defined below, net of amounts amortized for interest.

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

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

4 unchanged sentences

Amortization of deferred financing cost and debt discount 699 186 1,928 558

Total interest expense and amortization of deferred financing cost and debt discount $ 1,789 $ 1,358 $ 3,635 $ 2,655

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

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

Total interest expense and amortization of deferred financing cost and debt discount (premium), net $ 1,104 $ 1,413 $ 4,739 $ 4,068

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

Lafayette Square

On December 3, 2021, the Company entered into the Term Loan and Security Agreement (the “2021 Credit Facility”) with Lafayette Square Loan Services, LLC ("Lafayette Square") as administrative agent, and the various lenders thereto.

On December 3, 2021, the Company entered into the Term Loan and Security Agreement (as amended, unless the context indicates otherwise, the “2021 Credit Facility”) with Lafayette Square Loan Services, LLC ("Lafayette Square") as administrative agent, and the various lenders thereto.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Fifth Amendment was accounted for as a modification.

In connection with the Fifth Amendment, fees paid to Lafayette Square totaling $ 0.1 million were capitalized and are being amortized to interest expense using the straight-line method, which approximates the effective interest method, over the life of the debt.

On December 27, 2024, the Company and Lafayette Square entered into the Sixth Amendment and Waiver (the “LS Amendment”) to the 2021 Credit Facility.

Under the terms of the LS Amendment, among other changes, Lafayette Square extended a term loan equal to $ 6.0 million (the “Sixth Amendment Term Loan”).

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

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

On December 27, 2024, the Company and Lafayette Square entered into the Sixth Amendment and Waiver (the “Sixth Amendment”) to the 2021 Credit Facility.

Under the terms of the Sixth Amendment, among other changes, Lafayette Square extended a term loan equal to $ 6.0 million (the “Sixth Amendment Term Loan”).

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

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

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

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

The Company was in compliance with all the financial covenants under the 2021 Credit Facility, as amended, as of June 30, 2025.

The LS Amendment was accounted for as a modification.

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

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

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

The Sixth Amendment was accounted for as a modification.

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

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

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

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

As Lafayette Square did not grant the Company a concession and the terms of the Seventh Amendment were not substantially different, the Seventh Amendment was accounted for prospectively as a modification and no gain or loss was recognized.

The shares of Series A Convertible Preferred Stock were recognized at fair value of $ 21.4 million upon issuance (see Note 4 – Stockholders’ Deficit and Stock-Based Compensation) and the Company established the new effective interest rates based on the carrying value of the modified debt.

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

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

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

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

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

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

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

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

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

Additional deferred financing costs of less than $ 0.1 million and $ 0 were incurred during the six months ended June 30, 2025 and 2024, respectively.

Unamortized deferred financing costs as of June 30, 2025 and December 31, 2024 were $ 3.2 million and $ 4.2 million , respectively.

Unamortized debt discount related to the interest reserve added under the LS Amendment as of June 30, 2025 and December 31, 2024 was $ 0 and $ 1.7 million, respectively.

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

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

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

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

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

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

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

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

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

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

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

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

2023 Revolving Line of Credit - East West Bank

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

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

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

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

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

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

The Third Amendment was accounted for as a modification.

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

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

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

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

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

The Third EWB Amendment was accounted for as a modification.

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

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

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

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

Additionally, the Company is required to

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

The Company was in compliance with all the financial covenants under the Credit Agreement, as amended, as of June 30, 2025.

The EWB Amendment was accounted for as a modification.

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

The Fourth EWB Amendment was accounted for as a modification.

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

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

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

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

In connection with the extension of the maturity date, the Company agreed to make a principal payment in an amount equal to $ 200,000 to reduce the outstanding loan balance by August 15, 2025.

The Credit Agreement contains customary representations and warranties and includes affirmative and negative covenants applicable to the borrowers and their respective subsidiaries.

The affirmative covenants include, among others, covenants requiring the Company to maintain its legal existence and governmental compliance, deliver certain financial reports and maintain insurance coverage.

The negative covenants include, among others, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions.

The Credit Agreement also includes customary events of default, including, among other things, non-payment defaults, covenant defaults, inaccuracy of representations and warranties, defaults under any of the loan documents, certain cross-defaults to other indebtedness, certain bankruptcy and insolvency events, invalidity of guarantees or grant of security interest, certain ERISA-related transactions and events, certain orders of forfeiture, change of control, certain undischarged attachments, sequestrations, or similar proceedings, and certain undischarged or non-stayed judgments, in certain cases subject to certain thresholds and grace periods.

The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement of the Company or other borrowers.

Additional deferred financing costs of less than $ 0.1 million and $ 0 were incurred during the six months ended June 30, 2025 and 2024, respectively.

The collateral securing the obligations under the 2021 Credit Facility and the Credit Agreement is subject to intercreditor agreements between Lafayette Square and EWB.

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

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

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

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

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

Small Business Administration Loans

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

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

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

Remaining 2025 $ 3,804

Thereafter 136

Add debt premium 3,151

Less current portion ( 4,931 )

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Less debt discount ( 93 )

Long-term debt, net of current portion, deferred financing cost and debt discount $ 33,510

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

Note 4 — Stockholders’ Deficit and Stock-Based Compensation

Stockholders’ Equity – Initial Public Offering

Stockholders’ Equity

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

During the six months ended June 30, 2025, members of DDM tendered 420,000 of its limited liability company units to the Company in exchange for newly issued shares of Class A Common Stock of the Company on a one -for-one basis.

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

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

As of June 30, 2025, DDM held 10,448,000 shares of Class B Common Stock.

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

The Company is authorized to issue 160,000,000 shares of Class A Common Stock, par value $ 0.001 per share, 20,000,000 shares of Class B Common Stock, par value $ 0.001 per share, and 10,000,000 shares of preferred stock, par value $ 0.001 per share.

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

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

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

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

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

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

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Equity Reserve Facility

On October 18, 2024, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with New Circle Principal Investments LLC, a Delaware limited liability company (“New Circle”), pursuant to which New Circle has committed to purchase, subject to certain limitations, up to $ 20 million (the “Total Commitment”) of the Company’s Class A Common Stock, par value $ 0.001 per share (the “Class A Common Stock”).

“Exchange Cap”), unless (i) the Company obtained stockholder approval to issue shares of its Class A Common Stock in excess of the Exchange Cap in accordance with applicable Nasdaq rules, or (ii) the average purchase price per share paid by New Circle for all shares of the Company’s Class A Common Stock, if any, that the Company elected to sell to New Circle under the Purchase Agreement equaled or exceeded certain minimums permitted under the rules of the Nasdaq Stock Market.

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

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

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

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

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

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

In addition, the Company issued 62,762 shares of the Company’s Class A Common Stock to New Circle.

In addition, the Company issued 62,762 shares of the Company’s Class A Common Stock to New Circle in October 2024, and an incremental 100,000 shares of the Company’s Class A Common Stock on October 24, 2025 in connection with the Amendment.

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 six months ended June 30, 2025, the Company sold 6,059,351 shares of the Company's Class A Common Stock for $ 4.6 million.

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

During the nine months

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

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

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

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

Series A Convertible Preferred Stock

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

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

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

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

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

Designation and Amount .

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

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

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

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

Voting Right and Protective Provisions :

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

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

Such provisions include:

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

restrictions on liquidation events;

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

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

Liquidation .

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

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

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

Noncontrolling Interest

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The Company’s board of directors reserved 3,500,000 shares of Class A Common Stock for issuance in equity awards under the 2022 Omnibus Plan.

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

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

During the six months ended June 30, 2025 and 2024, the Company recognized $ 0.7 million and $ 0.7 million, respectively, of total stock-based compensation expense in the condensed consolidated statement of operations in compensation, taxes and benefits.

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

Stock Options

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

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

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

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

Stock Options

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Forfeited and expired ( 34,226 ) $ 1.28 — $ —

Outstanding at June 30, 2025 910,518 $ 1.53 8.77 $ —

Vested and exercisable at June 30, 2025 280,014 $ 2.29 7.12 $ —

As of June 30, 2025, unrecognized stock-based compensation of $ 0.5 million was related to 630,504 of unvested stock options which will be recognized on a straight-line basis over a weighted-average vesting period o f 1.16 y ears.

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

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

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

Restricted Stock Units

RSUs generally vest annually on the grant date anniversary over a period of three years .

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

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

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

Restricted Stock Units

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Forfeited ( 51,492 ) $ 2.52

Unvested - June 30, 2025 927,364 $ 1.20

Unvested - September 30, 2025 918,521 $ 1.18

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

The total shares withheld were 50,303 (including 21,512 sold as of June 30, 2025) and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price.

As of June 30, 2025, there was unrecognized stock-based compensation o f $ 0.8 million related to unvested RSUs which will be recognized on a straight-line basis over a weighted average period of 1.00 yea rs.

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

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

Note 5 — Tax Receivable Agreement and Income Taxes

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federal income tax rate and assumed combined state and local income tax rate driven by the apportionment factors applicable to each state.

Any taxable income or loss generated by the Company will be allocated to TRA Holders in accordance with the LLC Agreement and the TRA, and distributions to the owners of LLC Units in an amount sufficient to fund their tax

obligations will be made.

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

During the six months ended June 30, 2025, members of DDM exchanged 420,000 Class B shares into Class A shares.

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

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

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

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

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

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

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

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

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

For the six months ended June 30, 2025 and 2024, no amounts were recorded as income in other income (expense) for such change.

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

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

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Income tax benefit $ — $ ( 274 ) $ — $ ( 475 )

Income tax expense $ — $ 6,606 $ — $ 6,132

Effective income tax rate — % 2884.7 % — % ( 85.1 %)

The effective tax rates were lower than the statutory tax rates for the three and six months ended June 30, 2024 primarily due to the Company’s partnership loss that is not subject to federal and state taxes.

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

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

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

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

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

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

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

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

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

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

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

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

We are currently evaluating the impact of OBBBA on our consolidated financial statements.

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

Note 6 — Related Party Transactions

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

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

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

September 30,

2025 December 31,

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Total liability related to tax receivable agreement $ 41 $ 41

Lafayette Square

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

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

Note 7 — Segment Information

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Sell-side advertising (1)

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

Buy-side advertising (2)

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

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

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

Total operating loss ( 2,426 ) ( 2,065 ) ( 6,350 ) ( 4,873 )

Corporate other expense ( 1,770 ) ( 1,350 ) ( 3,786 ) ( 2,563 )

Loss before income taxes $ ( 4,196 ) $ ( 3,415 ) $ ( 10,136 ) $ ( 7,436 )

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

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

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

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

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

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

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

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

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

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

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

September 30,

2025 December 31,

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Buy-side advertising 17,195 18,664

Assets from reportable segment operations 19,649 22,419

Corporate office 2,886 3,587

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Note 8 — Net Loss Per Share

The Company has two classes of common stock, Class A and Class B.

Shares of the Company’s Class B Common Stock do not share in the earnings or losses attributable to Direct Digital Holdings, Inc.

The Company has two classes of common stock, Class A and Class B, and one class of preferred stock, Series A Convertible Preferred Stock.

The holders of Series A Convertible Preferred Stock are contractually entitled to receive a cumulative dividend, whether or not declared.

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

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

and are therefore not participating securities.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Net loss attributable to Class A shareholders and Series A preferred stockholders $ ( 2,680 ) $ ( 2,690 ) $ ( 7,284 ) $ ( 4,055 )

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

Net loss allocated to Class A shareholders $ ( 3,043 ) $ ( 2,690 ) $ ( 7,647 ) $ ( 4,055 )

Weighted average common shares outstanding - basic 9,937 3,701 8,324 3,604

Class B Common Stock — — — —

Options to purchase common stock — — — —

Unvested restricted stock units — — — —

Weighted average common shares outstanding - diluted 9,937 3,701 8,324 3,604

Net loss per common share, basic $ ( 0.23 ) $ ( 0.16 ) $ ( 0.55 ) $ ( 0.38 )

Net loss per common share, diluted $ ( 0.23 ) $ ( 0.16 ) $ ( 0.55 ) $ ( 0.38 )

Weighted average common shares outstanding - basic and diluted 12,867 3,793 9,855 3,667

Net loss per common share, basic and diluted $ ( 0.24 ) $ ( 0.71 ) $ ( 0.78 ) $ ( 1.11 )

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Series A convertible preferred stock 5,761 — 1,941 —

Class B Common Stock 10,277 10,868 10,637 10,868

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Each of these complaints seeks unspecified damages, plus costs, fees, and attorneys’ fees.

On August 7, 2025, the district court granted the Company's motion to dismiss in full and with prejudice.

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

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

Contingent Liability for Exit Fee

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

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

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

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

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

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

Operating Leases

During the six months ended June 30, 2025 and 2024, the Company incurred fixed rent expense associated with operating leases for real estate of $ 0.1 million.

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

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

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

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

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

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

2025 2024 2025 2024

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Additions and modifications to ROU asset obtained from new operating liabilities $ — $ — $ 52 $ 200

The weighted-average remaining lease term and discount rate for the Company’s operating leases is 4.1 years and 8.3 %, respectively, as of June 30, 2025.

The weighted-average remaining lease term and discount rate for the Company's operating leases is 5.0 years and 8.4 %, respectively, as of June 30, 2024 .

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

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

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

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

Thereafter 31

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

Useful Life (Years) June 30,

Useful Life (Years) September 30,

2025 December 31,

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Total property, equipment and software, net $ 164 $ 341

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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

For the three months ended June 30, 2025 and 2024, amortization expense of $ 0.5 million and for the six months ended June 30, 2025 and 2024, amortization expense of $ 1.0 million was recognized.

As of June 30, 2025 and December 31, 2024, intangible assets net of accumulated amortization was $ 8.8 million and $ 9.7 million, respectively.

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

June 30, 2025

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

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

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

September 30, 2025

Weighted-Average Original Accumulated Net

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

What changed 10-Q

Item 1. Financial Statements