Direct Digital Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS DIRECT DIGITAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and par value amounts) June 30, 2026 December 31, 2025 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 520 $ 728 Accounts receivable, net of provision for credit losses of $ 944 2,684 3,126 Prepaid expenses and other current assets 1,419 890 Total current assets 4,623 4,744 Property, equipment and software, net 99 166 Goodwill 6,520 6,520 Intangible assets, net 7,025 7,852 Operating lease right-of-use assets 607 702 Other long-term assets 47 172 Total assets $ 18,921 $ 20,156 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Accounts payable $ 9,587 $ 7,820 Accounts payable - related party 538 — Accrued liabilities 2,406 2,164 Accrued liabilities - related party 1,219 3,663 Liability related to tax receivable agreement, current portion — 41 Current maturities of long-term debt - related party 17,335 12,003 Deferred revenues 795 513 Operating lease liabilities, current portion 232 221 Total current liabilities 32,112 26,425 Long-term debt, net of current portion 144 146 Operating lease liabilities, net of current portion 490 608 Total liabilities 32,746 27,179 COMMITMENTS AND CONTINGENCIES (Note 9) STOCKHOLDERS’ DEFICIT Series A Convertible Preferred Stock, $ 0.001 par value per share, 10,000,000 shares authorized, 27,077 shares issued and outstanding — — Class A Common Stock, $ 0.001 par value per share, 760,000,000 shares authorized, 740,119 and 331,076 shares issued and outstanding, respectively 1 — Class B Common Stock, $ 0.001 par value per share, 20,000,000 shares authorized, 42,160 shares issued and outstanding — — Additional paid-in capital 27,899 25,812 Accumulated deficit ( 36,365 ) ( 27,720 ) Noncontrolling interest ( 5,360 ) ( 5,115 ) Total stockholders’ deficit ( 13,825 ) ( 7,023 ) Total liabilities and stockholders’ deficit $ 18,921 $ 20,156 See accompanying notes to the unaudited condensed consolidated financial statements. 3 Table of Contents DIRECT DIGITAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per-share data) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenues 7,832 10,144 $ 14,512 $ 18,301 Cost of revenues 5,169 6,583 9,587 12,347 Gross profit 2,663 3,561 4,925 5,954 Operating expenses Compensation, taxes and benefits 3,215 3,639 6,236 7,303 General and administrative 2,376 2,348 4,868 5,001 Total operating expenses 5,591 5,987 11,104 12,304 Loss from operations ( 2,928 ) ( 2,426 ) ( 6,179 ) ( 6,350 ) Other income (expense) Other income 62 19 69 47 Loss on settlement of accounts payable — — ( 1,247 ) — Loss on debt extinguishment — — ( 517 ) — Derecognition of tax receivable agreement liability 41 — 41 — Expenses for Equity Reserve Facility — — — ( 198 ) Interest expense and amortization of deferred financing cost and debt discount (premium), net ( 764 ) ( 1,789 ) ( 1,327 ) ( 3,635 ) Total other expense, net ( 661 ) ( 1,770 ) ( 2,981 ) ( 3,786 ) Loss before income taxes ( 3,589 ) ( 4,196 ) ( 9,160 ) ( 10,136 ) Income tax expense — — — — Net loss ( 3,589 ) ( 4,196 ) ( 9,160 ) ( 10,136 ) Net loss attributable to noncontrolling interest ( 194 ) ( 1,947 ) ( 515 ) ( 5,532 ) Net loss attributable to Direct Digital Holdings, Inc. $ ( 3,395 ) $ ( 2,249 ) $ ( 8,645 ) $ ( 4,604 ) Net loss per common share attributable to Direct Digital Holdings, Inc.: Basic and diluted $ ( 5.78 ) $ ( 49.79 ) $ ( 15.62 ) $ ( 121.69 ) Weighted-average number of shares of common stock outstanding: Basic and diluted 709 45 643 38 See accompanying notes to the unaudited condensed consolidated financial statements. 4 Table of Contents DIRECT DIGITAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (Unaudited) (in thousands except share data) Six Months Ended June 30, 2026 Preferred Stock Common Stock APIC Accumulated Deficit Noncontrolling Interest Stockholders’ Deficit Series A Convertible Class A Class B Units Amount Units Amount Units Amount Balance, December 31, 2025 27,077 $ — 331,076 $ — 42,160 $ — $ 25,812 $ ( 27,720 ) $ ( 5,115 ) $ ( 7,023 ) Stock-based compensation — — — — — — 267 — — 267 Issuance related to vesting of restricted stock units, net of tax withholdings — — 2,464 — — — — — — — Issuance pursuant to the Equity Reserve Facility — — 216,250 1 — — 1,118 — — 1,119 Issuance pursuant to the Committed Equity Facility — — 38,288 — — — 107 — — 107 Settlement of accounts payable through issuance of common stock — — 152,041 — — — 2,028 — — 2,028 Preferred dividends accrued — — — — — — ( 1,163 ) — — ( 1,163 ) Net loss — — — — — — — ( 8,645 ) ( 515 ) ( 9,160 ) Noncontrolling interest rebalancing — — — — — — ( 270 ) — 270 — Balance, June 30, 2026 27,077 $ — 740,119 $ 1 42,160 $ — $ 27,899 $ ( 36,365 ) $ ( 5,360 ) $ ( 13,825 ) Three Months Ended June 30, 2026 Preferred Stock Common Stock APIC Accumulated Deficit Noncontrolling Interest Stockholders’ Deficit Series A Convertible Class A Class B Units Amount Units Amount Units Amount Balance, March 31, 2026 27,077 $ — 700,759 $ 1 42,160 $ — $ 28,403 $ ( 32,970 ) $ ( 5,155 ) $ ( 9,721 ) Stock-based compensation — — — — — — 84 — — 84 Issuance related to vesting of restricted stock units, net of tax withholdings — — 1,072 — — — — — — — Issuance pursuant to the Committed Equity Facility — — 38,288 — — — 107 — — 107 Preferred dividends accrued — — — — — — ( 706 ) — — ( 706 ) Net loss — — — — — — — ( 3,395 ) ( 194 ) ( 3,589 ) Noncontrolling interest rebalancing — — — — — — 11 — ( 11 ) — Balance, June 30, 2026 27,077 $ — 740,119 $ 1 42,160 $ — $ 27,899 $ ( 36,365 ) $ ( 5,360 ) $ ( 13,825 ) Six Months Ended June 30, 2025 Common Stock APIC Accumulated Deficit Noncontrolling Interest Stockholders’ Deficit Class A Class B Units Amount Units Amount Balance, December 31, 2024 24,775 $ — 49,400 $ — $ 3,786 $ ( 8,774 ) $ ( 14,742 ) $ ( 19,730 ) Stock-based compensation — — — — 705 — — 705 Issuance related to vesting of restricted stock units, net of tax withholdings 635 — — — — — — — Issuance pursuant to the Equity Reserve Facility 27,543 — — — 4,580 — — 4,580 Conversion of Class B to Class A Common Stock 1,909 — ( 1,909 ) — ( 613 ) — 613 — Net loss — — — — — ( 4,604 ) ( 5,532 ) ( 10,136 ) Noncontrolling interest rebalancing — — — — ( 5,660 ) — 5,660 — Balance, June 30, 2025 54,862 $ — 47,491 $ — $ 2,798 $ ( 13,378 ) $ ( 14,001 ) $ ( 24,581 ) Three Months Ended June 30, 2025 Common Stock APIC Accumulated Deficit Noncontrolling Interest Stockholders’ Equity Class A Class B Units Amount Units Amount Balance, March 31, 2025 32,243 $ — 49,082 $ — $ 3,794 $ ( 11,129 ) $ ( 15,980 ) $ ( 23,315 ) Stock-based compensation — — — — 389 — — 389 Issuance related to vesting of restricted stock units, net of tax withholdings 482 — — — — — — — Issuance pursuant to the Equity Reserve Facility 20,546 — — — 2,541 — — 2,541 Conversion of Class B to Class A Common Stock 1,591 — ( 1,591 ) — ( 518 ) — 518 — Net loss — — — — — ( 2,249 ) ( 1,947 ) ( 4,196 ) Noncontrolling interest rebalancing — — — — ( 3,408 ) — 3,408 — Balance, June 30, 2025 54,862 $ — 47,491 $ — $ 2,798 $ ( 13,378 ) $ ( 14,001 ) $ ( 24,581 ) See accompanying notes to the unaudited condensed consolidated financial statements. 5 Table of Contents DIRECT DIGITAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Six Months Ended June 30, 2026 2025 Cash Flows Used In Operating Activities: Net loss $ ( 9,160 ) $ ( 10,136 ) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of deferred financing cost and debt discount (premium), net 216 2,900 Amortization of intangible assets 827 977 Reduction in carrying amount of right-of-use assets 95 90 Depreciation and amortization of property, equipment and software 67 145 Stock-based compensation 267 705 Loss on settlement of accounts payable 1,247 — Loss on debt extinguishment 517 — Derecognition of tax receivable agreement liability ( 41 ) — Interest paid in kind 1,100 — Expenses for Equity Reserve Facility — 198 Changes in operating assets and liabilities: Accounts receivable 442 1,082 Prepaid expenses and other assets ( 404 ) ( 842 ) Accounts payable 2,406 ( 1,491 ) Accrued liabilities and tax receivable agreement payable 312 962 Income taxes payable — 41 Deferred revenues 282 63 Operating lease liability ( 107 ) ( 92 ) Net cash used in operating activities ( 1,934 ) ( 5,398 ) Cash Flows Used In Investing Activities: Cash paid for capitalized software and property and equipment — ( 38 ) Net cash used in investing activities — ( 38 ) Cash Flows Provided by Financing Activities: Payment of expenses for Equity Reserve Facility — ( 198 ) Proceeds from issuance of Class A Common Stock 1,226 5,942 Payment of deferred financing cost — ( 46 ) Payments on financed insurance premiums ( 36 ) ( 114 ) Payments on loans ( 2 ) — Advances from related party 538 — Net cash provided by financing activities 1,726 5,584 Net (decrease) increase in cash and cash equivalents ( 208 ) 148 Cash and cash equivalents, beginning of the period 728 1,445 Cash and cash equivalents, end of the period $ 520 $ 1,593 Non-cash Financing Activities: Reclassification of Exit Fee from accrued liabilities to debt $ 3,608 $ — Settlement of accounts payable through issuance of common stock $ 2,028 $ — Accrued dividends $ 1,163 $ — Financed insurance premiums $ 367 $ 291 See accompanying notes to the unaudited condensed consolidated financial statements. 6 Table of Contents DIRECT DIGITAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 — Organization and Description of Business Direct Digital Holdings, Inc., incorporated as a Delaware corporation on August 23, 2021 and headquartered in Houston, Texas, together with its subsidiaries, is an end-to-end, full-service advertising and marketing platform primarily focused on providing advertising technology, data-driven campaign optimization and other solutions to help brands, agencies and middle market businesses deliver successful marketing results that drive return on investment ("ROI") across the entire digital advertising ecosystem. Direct Digital Holdings, Inc. is the holding company for Direct Digital Holdings, LLC (“DDH LLC”), the business formed by the Company's founders in 2018 through acquisitions of Colossus Media, LLC (“Colossus Media”) and Huddled Masses, LLC (“Huddled Masses ® ” or “Huddled Masses”). Colossus Media operates the Company’s proprietary programmatic platform under the trademarked banner of Colossus SSP TM (“Colossus SSP”). In September 2020, DDH LLC acquired Orange142, LLC to further bolster its overall programmatic advertising platform and to enhance its offerings across multiple industry verticals. In February 2022, Direct Digital Holdings, Inc. completed an initial public offering and certain organizational transactions which resulted in the Company's current Up-C structure. (See Note 6 — Related Party Transactions). During the first quarter of 2026, the Company shifted its focus to driving intentional digital marketing spend with current and future customers historically classified by the Company as buy-side customers as well as new enterprise customers accessing the digital advertising market through its recently launched product - Ignition+. In connection with this shift in focus, the Company reassessed its reportable segments and determined that it has one reportable segment that is managed on a consolidated basis. The new focus to streamline operations is expected to enhance the customer experience and better reflects the economics of the Company's current business where revenues reflect primarily contracts for managed advertising campaigns which may or may not access curated publisher audiences managed by the Company's sell side platform. In these consolidated financial statements, the “Company,” “Direct Digital,” “Direct Digital Holdings,” “DDH,” “we,” “us” and “our” refer to Direct Digital Holdings, Inc., and, unless otherwise stated, all of its subsidiaries, including DDH LLC and, unless otherwise stated, its subsidiaries. All of the subsidiaries are incorporated in the state of Delaware, except for DDH LLC, which was formed under the laws of the State of Texas. Direct Digital Holdings, Inc. owns 100 % of the voting interest in DDH LLC and as of June 30, 2026, it owns 94.6 % of the economic interest in DDH LLC. DDH LLC was formed on June 21, 2018 and acquired by DDH on February 15, 2022 in connection with its organizational transactions. DDH LLC’s wholly-owned subsidiaries are as follows: Subsidiary Date of Formation Date of Acquisition Colossus Media, LLC September 8, 2017 June 21, 2018 Orange142, LLC March 6, 2013 September 30, 2020 Huddled Masses, LLC November 13, 2012 June 21, 2018 The Company provides technology-enabled advertising solutions and consulting services to clients either through multiple demand side platforms (“DSPs”) or through its own programmatic advertising platform (Colossus SSP), across multiple industry verticals such as travel and tourism, higher education, energy, healthcare, financial services, consumer products and other sectors with particular emphasis on small and mid-sized businesses transitioning into digital with growing digital media budgets. In the digital advertising space, buyers, particularly small and mid-sized businesses, can potentially achieve significantly higher ROI on their advertising spend compared to traditional media advertising by leveraging data-driven over-the-top/connected TV (“OTT/CTV”), video and display, in-app, native including programmatic, search, social, influencer marketing and audio advertisements that are delivered both at scale and on a highly targeted basis. Note 2 — Basis of Presentation and Consolidation and Summary of Significant Accounting Policies Basis of presentation and consolidation The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 8-03 of Regulation S-X. Accordingly, the condensed consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The condensed consolidated balance sheet as of December 31, 2025 included herein was derived from audited financial statements but does not include all disclosures 7 Table of Contents required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying condensed consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of June 30, 2026, the results of its operations for the three and six months ended June 30, 2026 and 2025, cash flows for the six months ended June 30, 2026 and 2025, and stockholders’ deficit for the three and six months ended June 30, 2026 and 2025. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the full year. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the condensed consolidated financial statements, and the amounts of revenues and expenses reported during the period. Actual results could differ from estimates. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes for the year ended December 31, 2025. The condensed consolidated financial statements include the accounts of Direct Digital Holdings, Inc. and its wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). 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 (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. The adoption dates discussed below reflect this election. Reverse Stock Splits On January 8, 2026 and April 24, 2026, the Company filed certificates of amendment to the amended and restated certificate of incorporation, as amended, with the Secretary of State of the State of Delaware, to effect a 55-to-1 reverse stock split and a 4-to-1 reverse stock split, respectively, of all classes of our issued and outstanding common stock, without any change to par value. The 55-to-1 reverse stock split (the "January Reverse Stock Split") became effective January 12, 2026 and the 4-to-1 reverse stock split (the "April Reverse Stock Split") became effective April 27, 2026. Together, the January Reverse Stock Split and the April Reverse Stock Split are referred to as the Reverse Stock Splits. No fractional shares were issued in connection with the Reverse Stock Splits as all fractional shares were rounded down to the next whole share, and a cash payment was made in lieu of such fractional shares. The Reverse Stock Splits were intended to bring the Company into compliance with Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule"). All share and per share amounts of our common stock listed in the condensed consolidated financial statements and footnotes have been adjusted to give effect to the Reverse Stock Splits. Revenue recognition The Company recognizes revenue using the following five steps: 1) identification of a contract with a customer; 2) identification of the performance obligation(s) in the contract; 3) determination of the transaction price; 4) allocation of the transaction price to the performance obligation(s) in the contract; and 5) recognition of revenue when, or as, the performance obligation(s) are satisfied. The Company’s revenues are derived primarily from digital advertising and the Company does not disaggregate the revenue earned. T he Company maintains agreements with its customers in the form of written service agreements, which set out the terms of the relationship, including payment terms (typically 30 to 90 days). The Company generates revenue primarily from customers that enter into agreements with the Company to provide managed advertising campaigns, which include digital marketing and media services to purchase digital advertising space, data and other add-on features either through its own programmatic platform operating under the trademarked banner Colossus SSP or through third-parties such as DSPs. In connection with the Company’s analysis of principal-versus-agent considerations, the Company has evaluated the specified goods or services and considered whether the Company controls the goods or services before they are provided to the customer, including the three indicators of control. Based upon this analysis and the Company’s specific facts and circumstances, the Company concluded that it is a principal for the goods or services sold. The Company controls the specified goods or services before it is transferred to the end customer. Additionally, the Company is the primary obligor in 8 Table of Contents its agreements with customers. Therefore, the Company reports revenue on a gross basis inclusive of all supplier costs and pays suppliers for the cost of digital media, advertising inventory, data and any add-on services or features. In the advertising industry, companies commonly experience seasonal fluctuations in revenue. Historically, the second and third quarters of the year have reflected our highest levels of advertising activity and the first quarter reflects the lowest level of such activity. The Company purchases media based on the budget established by its customers with a focus on leveraging data services, customer branding, real-time market analysis and micro-location advertising. The Company offers its services on a fully managed basis, which is recognized over time using the output method when the performance obligation is fulfilled. An “impression” is delivered when an advertisement appears on pages viewed by users. 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. The Company provides digital advertising and media buying capabilities with a focus on generating measurable digital and financial life for its customers. Revenue arrangements are evidenced by a fully executed insertion order (“IO”), a master service agreement (“MSA”) and/or a statement of work ("SOW") covering the scope of work to be accomplished and could be a combination of marketing execution tactics. Generally, IOs specify the number and type of advertising metrics to be delivered over a specified time at an agreed upon price under payment models commonly referred to as CPM (cost per impression) or CPC (cost per click). The majority of the Company’s contracts are flat-rate, fee-based contracts and may include provisions for management, agency or other professional fees. Cash payments received prior to the Company’s delivery of its services are recorded to deferred revenue until the performance obligation is satisfied. The Company recorded deferred revenue (contract liabilities) to account for billings in excess of revenue recognized, primarily related to contractual minimums billed in advance and customer prepayment, of $ 0.8 million and $ 0.5 million as of June 30, 2026 and December 31, 2025, respectively. Revenue recognized during the six months ended June 30, 2026 and 2025 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. Cash payments made to customers to support integration efforts and long-term contracts are recorded to prepaid expenses or other long-term assets and amortized to revenue over the term of the contract. The Company recorded these cash payments in prepaid expenses and other current assets for $ 0.3 million as of June 30, 2026 and December 31, 2025 and in other long-term assets for $ 0 and $ 0.1 million as of June 30, 2026 and December 31, 2025, respectively. During the six months ended June 30, 2026 and 2025, other assets amortized were $ 0.1 million and $ 0 , respectively. Accounting Standards Codification ("ASC") 606 provides various optional practical expedients. The Company elected the use of the practical expedient relating to the disclosure of remaining performance obligations within a contract and will not disclose remaining performance obligations for contracts with an original expected duration of one year or less. Goodwill As of June 30, 2026 and December 31, 2025, goodwill was $ 6.5 million, including amounts related to acquisitions in 2018 and in 2020. The goodwill is deductible for tax purposes and is assessed for impairment at least annually (December 31) starting with a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in our management, strategy and primary user base. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then a quantitative goodwill impairment analysis is performed. Depending upon the results of the quantitative measurement, the recorded goodwill may be written down and an impairment expense is recorded in the condensed consolidated statements of operations when the carrying amount of the reporting unit exceeds the fair value of the reporting unit. Goodwill is reviewed annually and tested for impairment upon the occurrence of a triggering event. The carrying value of the Company was negative as of June 30, 2026. The Company determined that there was no impairment of goodwill during the six months ended June 30, 2026 and 2025. Had the Company used the enterprise premise (instead of the equity premise), the results may have differed. Intangible assets, net Intangible assets consist of customer relationships, trademarks and non-compete agreements. Intangible assets are recorded at fair value at the time of their acquisition and are stated within the condensed consolidated balance sheets net of 9 Table of Contents accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives and recorded as amortization expense within general and administrative expenses in the condensed consolidated statements of operations. The Company’s intangible assets are being amortized over their estimated useful lives using the straight-line method over 10 years. Impairment of long-lived assets The Company evaluates the recoverability of long-lived assets, including property, equipment and software costs and intangible assets if facts or circumstances indicate that any of those assets might be impaired. 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, 2026 and 2025. Stock-based compensation Stock-based compensation cost for options and restricted stock units (“RSU”) awarded to employees and directors is measured at the grant date based on the calculated fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant). Contingently issued awards with a requisite service period that precedes the grant date are measured and recognized at the start of the requisite service period and remeasured each reporting period until the grant date. The Company estimates the fair value of RSUs based on the closing price of the Company’s common stock on the date of the grant. 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 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. Treasury yield curve in effect at date of grant. Other assumptions are based on historical experience and activity. The Company considers an estimated forfeiture rate for stock options based on historical experience and the anticipated forfeiture rates during the future contract life. Income taxes In February 2022, concurrent with its organizational transactions, the Company entered into a tax receivable agreement (“Tax Receivable Agreement” or “TRA”) with DDH LLC and Direct Digital Management, LLC (“DDM”). The TRA provides for certain income (loss) allocations between the Company and DDH LLC under the agreement. DDH LLC is a limited liability company, is treated as a partnership for federal income tax purposes and generally is not subject to any entity-level U.S. 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. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss under the LLC Agreement. Pursuant to the Company’s election under Section 754 of the Internal Revenue Code (the “Code”), the Company expects to obtain an increase in its share of the tax basis in the net assets of DDH LLC when LLC Units are exchanged by the members of DDH LLC. The Company made an election under Section 754 of the Code for each taxable year in which an exchange of LLC interest occurred. No shares were exchanged during the six months ended June 30, 2026. During the six months ended June 30, 2025, members of DDM exchanged 1,909 shares of Class B Common Stock into shares of Class A Common Stock. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of a valuation allowance requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. Accounts receivable, net Accounts receivable primarily consists of billed amounts for services rendered to customers under normal trade terms. The Company performs credit evaluations of its customers’ financial condition and generally does not require collateral. 10 Table of Contents Accounts receivable are stated at net realizable value. The Company insures a significant portion of its accounts receivable with unrelated third-party insurance companies in an effort to mitigate any future write-offs. Management periodically reviews outstanding accounts receivable for reasonableness. If warranted, the Company processes a claim with the third-party insurance company to recover uncollected balances, rather than writing the balances off to bad debt expense. The guaranteed recovery for the claim is approximately 90 % of the original balance, and if the full amount is collected by the insurance company, the remaining 10 % is remitted to the Company. If the insurance company is unable to collect the full amount, the Company records the remaining 10 % to bad debt expense. The Company’s provision for credit losses reflects the current expected credit loss inherent in the accounts receivable considering the Company’s aging analysis, historical collection experience, customer creditworthiness, current and future economic conditions and market conditions. Accounts receivable balances are written off against the provision when the Company believes it is probable the receivable will not be recovered. Concentrations of customers and suppliers There is an inherent concentration of credit risk associated with accounts receivable arising from revenue from major customers. For the three months ended June 30, 2026 and 2025, two customers accounted for 42 % and 31 % of revenues, respectively. For the six months ended June 30, 2026 and 2025, two and three customers accounted for 38 % and 39 % of revenues, respectively. As of June 30, 2026 and December 31, 2025, two and three customers accounted for 30 % and 43 % of accounts receivable, respectively. A s of June 30, 2026 and December 31, 2025, two and one vendors accounted for 29 % and 21 %, respectively, of accounts payable. Accrued liabilities The components of accrued liabilities on the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 are as follows (in thousands): June 30, 2026 December 31, 2025 Accrued compensation and benefits $ 530 $ 461 Accrued expenses 1,871 1,698 Accrued bank fees and interest 5 5 Total accrued liabilities $ 2,406 $ 2,164 Accrued liabilities - related party The components of accrued liabilities - related party on the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 are as follows (in thousands): June 30, 2026 December 31, 2025 Accrued dividend $ 1,219 $ 55 Exit Fee (1) — 3,608 Total accrued liabilities - related party $ 1,219 $ 3,663 (1) See Note 9 — Commitments and Contingencies for further details. Cash and cash equivalents Cash and cash equivalents consist of funds deposited with financial institutions and highly liquid instruments with original maturities of three months or less. Such deposits may, at times, exceed federally insured limits. The risk of loss attributable to any uninsured balances is mitigated by depositing funds only in high credit quality financial institutions. The Company has not experienced any losses in such amounts and believes it is not exposed to any significant credit risk to cash. 11 Table of Contents 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 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 establishes new effective interest rates based on the carrying value of the modified debt. Fair value measurements The Company employs a hierarchy which prioritizes the inputs used to measure recurring fair value into three distinct categories based on the lowest level of input that is significant to the fair value measurement. The methodology for categorizing assets and liabilities that are measured at fair value pursuant to this hierarchy gives the highest priority to unadjusted quoted prices in active markets and the lowest levels to unobservable inputs, summarized as follows: • Level 1 – Quoted prices in active markets for identical assets or liabilities. • Level 2 – Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities). • Level 3 – Significant unobservable inputs (including our own assumptions in determining fair value). We use the cost, income or market valuation approaches to estimate the fair value of our assets and liabilities when insufficient market-observable data is available to support our valuation assumptions. Fair value of financial instruments The Company considers the fair value of all financial instruments, including cash, accounts receivable and accounts payable to approximate their carrying values at year-end due to their short-term nature. The carrying value of the Company’s debt approximates fair value due to the market rates of interest and limited time to maturity. Net loss per share 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 Accounting pronouncements adopted In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses: Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under Accounting Standards Codification 606. The new standard is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods and early adoption is permitted. The Company adopted this standard effective January 1, 2026 using a prospective approach. The adoption of this ASU did not have a material impact on the Company's condensed consolidated financial statements. Accounting pronouncements not yet adopted In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires a tabular disclosure of the amounts of specified natural expense categories included in each relevant expense caption. Additionally, ASU 2024-03 requires the disclosure of the total amount of selling expenses and, in annual reporting periods, 12 Table of Contents an entity’s definition of selling expenses. The new standard, as clarified in ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adoption on the Company's condensed consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting - Narrow Scope Improvements. ASU 2025-11 improves the guidance in ASC 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and the guidance may be applied either prospectively or retrospectively to any or all prior periods presented in the condensed consolidated financial statements. The Company is currently evaluating the impact of adoption on the Company's condensed consolidated financial statements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements. Liquidity and capital resources Going Concern The Company evaluated whether relevant conditions or events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern. Substantial doubt exists when conditions and events, considered in the aggregate, indicate it is probable that a company will not be able to meet its obligations as they become due within one year after the issuance date of its financial statements. Management’s assessment is based on the relevant conditions that are known or reasonably knowable as of the date these condensed consolidated financial statements were issued or were available to be issued. As discussed in Note 9 — Commitments and Contingencies, the Company has experienced significant disruption in its business due to a series of unexpected setbacks in the past two years. During 2025, the Company worked with its partners to achieve prior volume levels of revenue but was unable to achieve historical volumes. Despite these challenges, the Company was able to reduce expenses, pay off the matured Credit Agreement with a term loan from Lafayette Square (see Note 3 — Long-Term Debt), convert existing debt of $ 35.0 million to Series A Convertible Preferred Stock and raise additional equity through the Equity Reserve Facility and the Committed Equity Facility of $ 11.7 million through June 30, 2026. Additionally, the Company (1) incurred a net loss of $ 9.2 million for the six months ended June 30, 2026 including the impact of the disruption described above, (2) reported an accumulated deficit of $ 36.4 million as of June 30, 2026, (3) reported cash and cash equivalents of $ 0.5 million and a working capital deficit of $ 27.5 million as of June 30, 2026, (4) owes its lender $ 18.8 million (combination of principal, accrued fees, interest and the preferred dividends) as of June 30, 2026, under the 2021 Credit Facility (as defined below) which matures in December 2026, (5) was notified by Nasdaq that it was not in compliance with the minimum stockholders' equity requirement for continued listing under Nasdaq Listing Rule 5550(b)(1) (the "Stockholders' Equity Rule") on April 2, 2026, and has until August 14, 2026 to demonstrate compliance with the Stockholders’ Equity Rule (a request for extension is currently under review by the Panel to extend this deadline), and (6) despite demonstrating compliance with Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule") on February 12, 2026 and May 21, 2026, remains subject to a discretionary Panel Monitor through February 12, 2027 for the Bid Price Rule. 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 Committed Equity Facility and cash generated from other potential sales of equity and/or debt securities and has taken several actions to address liquidity and performance concerns. Such plans include (1) a shift in focus to driving intentional digital marketing spend with current and future customers as well as new enterprise customers accessing the digital advertising market through its recently launched product – Ignition+ allowing for further growth and a return to profitability and (2) refinancing the 2021 Credit Facility by raising additional funds in a registered or private offering. There can be no assurance that the Company’s actions will be successful or that additional financing will be available when needed or on acceptable terms. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability 13 Table of Contents and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern. Note 3 — Long-Term Debt At June 30, 2026 and December 31, 2025, long-term debt consisted of the following (in thousands): June 30, 2026 December 31, 2025 2021 Credit Facility (1) (2) $ 14,285 $ 10,285 2021 Credit Facility - Accrued Fees (2) 1,314 1,234 2021 Credit Facility - Accrued Interests (2) 1,938 793 Economic Injury Disaster Loan 147 149 Total debt 17,684 12,461 Less: deferred financing cost (2) ( 113 ) ( 63 ) Less: debt discount (2) (3) ( 92 ) ( 249 ) Total debt, net of deferred financing cost and debt discount 17,479 12,149 Less: current portion (2) ( 17,335 ) ( 12,003 ) Total long-term debt, net of current portion $ 144 $ 146 (1) As of June 30, 2026 and December 31, 2025, amount includes $ 7.5 million and $ 3.5 million of amendment closing fees, respectively, pursuant to the Eleventh and Ninth Amendments defined below, respectively, which are due at maturity or prepayment. (2) These balances are considered related party balances. (3) The debt discount is composed of the difference between the fair value and the carrying value of the 2021 Credit Facility. The components of interest expense and related fees for long-term debt is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Interest expense – 2021 Credit Facility (1) $ 557 $ 1,125 $ 1,100 $ 2,256 Interest expense – Credit Agreement — 71 — 141 Interest expense – other 9 5 11 9 Amortization of deferred financing cost and debt discount 198 588 216 1,229 Total interest expense and amortization of deferred financing cost and debt discount (premium), net $ 764 $ 1,789 $ 1,327 $ 3,635 (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 (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 (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 related interests to these loans under the 2021 Credit Facility are based off of Term Secured Overnight Financing Rate ("Term SOFR") with a credit spread adjustment of 0.10 % per annum for interest periods of one month and 0.15 % per annum for interest periods of three months. The loans under the 2021 Credit Facility bear interest at Term SOFR plus the applicable margin minus any applicable impact discount. 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 14 Table of Contents 1.00 to 1.00 with gradual increases as the ratio increases up to 10.00 % per annum if the consolidated total leverage ratio is greater than 3.50 to 1.00. The maturity date of the 2021 Credit Facility is December 3, 2026. Quarterly installment payments on the Term Loan and the Delayed Draw Loan, due on the last day of each fiscal quarter, began March 31, 2022 with a final installment due December 3, 2026 for remaining balances outstanding under each loan. Each quarterly installment payment under the closing date term loan was $ 0.1 million from January 1, 2022 through December 31, 2023, and each quarterly installment payment thereafter until maturity is $ 0.3 million. Each quarterly installment payment under the Delayed Draw Loan was 0.625 % of the amount of the Delayed Draw Loan through December 31, 2023, and each quarterly installment payment thereafter until maturity is 1.25 % of the amount of the Delayed Draw Loan. At times, amendments to the 2021 Credit Facility have modified this payment schedule. The 2021 Credit Facility contains customary affirmative and negative covenants, including restrictions on the ability to incur indebtedness, create certain liens, make certain investments, make certain dividends and other types of distributions, and enter into or undertake certain mergers, consolidations, acquisitions and sales of certain assets and subsidiaries. Current financial covenants as of and subsequent to May 15, 2026 include (1) a minimum unrestricted cash balance of $ 0.5 million, (2) minimum quarterly consolidated EBITDA of $ 0.2 million for the fiscal quarter ended June 30, 2026, (3) maximum consolidated total leverage ratio of 3.50 to 1.00 for the quarter ended June 30, 2026 and 3.25 to 1.00 for each quarter thereafter and (4) minimum fixed charge coverage ratio of 1.25 to 1.00 for the quarter ended June 30, 2026 and 1.50 to 1.00 for each quarter thereafter. As of June 30, 2026, the Company was not in compliance with certain financial covenants under the Credit Agreement, as amended, including the minimum cash balance, minimum quarterly EBITDA, maximum consolidated total leverage ratio and minimum fixed charge coverage ratio. The Company has requested a waiver from Lafayette Square pertaining to such non-compliance and is working constructively with Lafayette Square to obtain the waiver. Prior to entering into the Fifth Amendment as defined below, the Company entered into the second, third and fourth amendments to the 2021 Credit Facility. 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) modified financial covenants. 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 “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) modified financial covenants, (2) requires Lafayette Square’s prior written consent for certain permitted dividends, including dividends to the Company’s shareholders and (3) waived certain existing events of default related to minimum EBITDA covenants. Lastly, a $ 3.0 million exit fee, which was fully earned upon execution of the Sixth Amendment and is payable directly to Lafayette Square at maturity or prepayment, was added to the term loan balance. The Sixth Amendment was accounted for as a modification. In connection with the Sixth Amendment, the $ 3.0 million exit fee was capitalized and amortized to interest expense using the straight-line method, which approximates the effective interest method, over the life of the debt, and fees paid to third parties totaling $ 0.1 million were expensed as incurred. On August 8, 2025, the Company and Lafayette Square entered into the Seventh Amendment (the “Seventh Amendment”) which among other things, (1) provided for the conversion of $ 25.0 million of outstanding term loan obligations into newly issued shares of Series A Convertible Preferred Stock, (2) required the payment of a $ 1.0 million amendment closing fee and a $ 0.1 million amendment fee and (3) modified financial covenants. The Seventh Amendment also established a $ 25.0 million exit fee due upon redemption in full of the newly issued preferred stock with reduction in the amount of the exit fee outstanding for any amounts redeemed or converted. 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. 15 Table of Contents On September 8, 2025, the Company and Lafayette Square entered into the Eighth Amendment (the “Eighth Amendment”) to the 2021 Credit Facility whereby 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 was October 30, 2025 which was extended to October 30, 2026 on November 10, 2025 and later revised to September 30, 2026 pursuant to the Eleventh Amendment (as described below). The Eighth Amendment was accounted for prospectively as a modification and no gain or loss was recognized. The Company established the new effective interest rate based on the carrying value of the modified debt. On October 14, 2025, the Company and Lafayette Square entered into the Ninth Amendment (the “Ninth Amendment”) to the 2021 Credit Facility which among other things, (1) provided for the conversion of $ 10.0 million of outstanding term loan obligations, including the $ 3.0 million exit fee established by the Sixth Amendment, into 10,000 newly issued shares of Series A Convertible Preferred Stock, (2) required the payment of a $ 3.5 million amendment closing fee at maturity, (3) modified financial covenants, (4) requires prepayments when the Company has an aggregate cash balances in excess of $ 2.5 million, (5) increases the Seventh Amendment exit fee from $ 25.0 million to $ 35.0 million and (6) waives any noncompliance with covenants as of September 30, 2025. On October 28, 2025, the Company and Lafayette Square entered into the Tenth Amendment (the "Tenth Amendment") to the 2021 Credit Facility which among other things, allows the Company to request that Lafayette Square exchange and/or convert (each, an "Exchange"), in whole or in part, shares of Series A Convertible Preferred Stock into shares of Class A Common Stock; provided, that Lafayette Square is permitted to decline any such request. The Tenth Amendment provides that the ratio for each Exchange shall be, for each share of Series A Convertible Preferred Stock so exchanged, the quotient of (1) the Accumulated Conversion Value (as defined in the Certificate of Designation for the Series A Convertible Preferred Stock) attributable to such share of Series A Convertible Preferred Stock, divided by (2) the volume-weighted average price of the Class A Common Stock for the 20-trading day trailing period immediately preceding the delivery of the notice pursuant to the procedures set forth in the Tenth Amendment, rounded down to the nearest whole share. The Company and Lafayette Square also agreed to modify the terms related to the Exit Fee such that the amount of the exit fee outstanding is also reduced for any proceeds received by Lafayette Square in connection with such exchanges pursuant to the Tenth Amendment. Finally, the Tenth Amendment removes the requirement for the Company to make a prepayment of the loans under the 2021 Credit Facility with any proceeds received from the sale of Series A Convertible Preferred Stock and provides for certain other technical amendments to the 2021 Credit Facility to permit the Exchange. The Tenth Amendment also provided for a less than $ 0.1 million amendment fee. As the Ninth Amendment and Tenth Amendment were executed shortly after one another, they were evaluated together for purposes of assessing the transactions under relevant guidance and accounted for as a debt extinguishment. As a result, the Company recognized a $ 3.8 million loss on early debt extinguishment in the fourth quarter of fiscal 2025. The Series A Convertible Preferred Stock issued in connection with the Ninth Amendment was recognized at its fair value of $ 9.7 million upon issuance (see Note 4 — Stockholders’ Deficit and Stock-Based Compensation), and the Company established the new effective interest rates for the new debt based on the fair value of the debt. On January 27, 2026, the Company and Lafayette Square entered into the Eleventh Amendment (the “Eleventh Amendment”) to the 2021 Credit Facility which among other things, (1) modified financial covenants effective December 31, 2025, (2) required the payment of a $ 4.0 million amendment closing fee at maturity, (3) modified the principal payment schedule for the outstanding loans under the Term Loan Facility, (4) clarified that the maturity date of the Eighth Amendment Term Loan is September 30, 2026 and (5) modified the denominator of the Conversion Ratio to be the price of the Class A Common Stock for one trading day prior to the Conversion Notice rather than the volume weighted average price for twenty trading days prior. On May 15, 2026, the Company and Lafayette Square entered into the Twelfth Amendment (the “Twelfth Amendment”) to the 2021 Credit Facility which among other things, (1) modified financial covenants, (2) required the payment of a $ 0.1 million amendment closing fee at maturity and (3) provided a waiver for certain noncompliance with financial covenants as of March 31, 2026. At the Company's option, the Company may at any time prepay the outstanding principal balance of the 2021 Credit Facility in whole or in part, without fee, penalty or premium other than the $ 3.5 million and $ 4.0 million amendment closing fees due at maturity or prepayment, as defined under the Ninth Amendment and the Eleventh Amendment, respectively. The obligations under the 2021 Credit Facility are secured by senior, first-priority liens on all or substantially all assets of the Company. The Eleventh Amendment was accounted for as a debt extinguishment resulting in a $ 0.5 million loss on early debt extinguishment in the first quarter of fiscal 2026, primarily related to the write-off of $ 0.1 million of deferred financing costs and the expensing of $ 0.4 million of lender fees associated with the Eleventh Amendment. Accrued and unpaid interest was $ 1.9 million and $ 0.8 million as of June 30, 2026 and December 31, 2025, 16 Table of Contents respectively. Additional deferred financing costs of less than $ 0.1 million were incurred during the six months ended June 30, 2026 and 2025. 2023 Revolving Line of Credit - East West Bank On July 7, 2023, the Company entered into a Credit Agreement (as amended, the “Credit Agreement”) with East West Bank (“EWB”), as lender. The Credit Agreement provides for a revolving credit facility in the principal amount of up to $ 10.0 million, subject to a borrowing base determined based on eligible accounts, and an up to $ 5.0 million uncommitted incremental revolving facility. Loans under the Credit Agreement originally matured on July 7, 2025 (the “Maturity Date”), unless the Credit Agreement is otherwise terminated pursuant to the terms of the Credit Agreement which was extended per amendments to August 31, 2025. Borrowings under the Credit Agreement bore interest at a rate per annum equal to the one-month Term SOFR rate, plus 0.10 %, plus 3.00 % per annum (the “Loan Rate”); with a floor of 0.50 %. On October 15, 2024, with an effective date of June 30, 2024, the Company and EWB entered into the Third Amendment to the Credit Agreement (the “Third EWB Amendment”) which, among other things, (1) provided that the Company make prepayments of the outstanding principal balance of the Credit Agreement of $ 1.0 million upon execution of the Third EWB Amendment, $ 1.0 million on or before January 15, 2025 and $ 2.0 million on or before April 15, 2025, (2) required the Company to file a registration statement with the Securities and Exchange Commission ("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 $ 0.8 million at all times and to remove the minimum EBITDA covenant; and (4) EWB waived certain existing events of default related to the prior minimum EBITDA covenant. The Fourth EWB Amendment was accounted for as a modification. In connection with the Fourth 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. In connection with the extension of the maturity date, the Company agreed to pay a $ 50,000 extension fee and agreed to pay additional interest on any loans at the existing loan rate plus 5 % per annum between July 7, 2025 and July 31, 2025. On August 5, 2025, the Company entered into that certain Sixth Amendment (the “Sixth EWB Amendment”) to the Credit Agreement, dated as of August 5, 2025 but effective as of July 31, 2025 which extended the maturity date of the Credit Agreement from July 31, 2025 to August 31, 2025 (the "revised maturity date"). 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 Company did not incur any termination penalties as a result of the repayment and termination of the Credit Agreement. 17 Table of Contents U.S. Small Business Administration Loans Economic Injury Disaster Loan In 2020, the Company applied and was approved for a loan pursuant to the Economic Injury Disaster Loan (“EIDL”), administered by the U.S. Small Business Administration (“SBA”). The Company received the loan proceeds of $ 0.2 million on June 15, 2020. The loan bears interest at a rate of 3.75 % and matures on June 15, 2050. Installment payments, including principal and interest, of less than $ 0.1 million began monthly on December 15, 2022. Each payment will first be applied to pay accrued interest, then the remaining balance will be used to reduce principal. The loan is secured by substantially all assets of DDH LLC. Overall As of June 30, 2026, future minimum payments related to long-term debt are as follows (in thousands): Remaining 2026 $ 17,539 2027 3 2028 3 2029 4 2030 4 Thereafter 131 Total 17,684 Less current portion ( 17,335 ) Less deferred financing cost ( 113 ) Less debt discount ( 92 ) Total long-term debt, net of current portion $ 144 Note 4 — Stockholders’ Deficit and Stock-Based Compensation Stockholders’ Equity Following the completion of its organizational transactions, DDH LLC’s limited liability company agreement was amended and restated to, among other things, appoint the Company as the sole managing member of DDH LLC and effectuate a recapitalization of all outstanding preferred units and common units into (i) economic nonvoting units of DDH LLC held by the Company and, through their indirect ownership of DDM, the Company's Chairman and Chief Executive Officer and President, and (ii) noneconomic voting units of DDH LLC, 100 % of which are held by the Company. During the six months ended June 30, 2025, members of DDM tendered 1,909 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, 2026, DDM held 42,160 shares of Class B Common Stock. The Company is authorized to issue 760,000,000 shares of Class A Common Stock, par value $ 0.001 per share, 20,000,000 shares of Class B Common Stock, par value $ 0.001 per share, and 10,000,000 shares of preferred stock, par value $ 0.001 per share. The number of authorized shares of Class A Common Stock increased from 160,000,000 to 760,000,000 pursuant to approval by the Company's stockholders on October 13, 2025 which became effective upon filing of a certificate of amendment to the Company’s Amended and Restated Certificate of Incorporation on November 5, 2025. In connection with the Company’s initial public offering of units (“Units”), each consisting of (i) one share (subject to adjustment for the Company's Reverse Stock Splits) of its Class A Common Stock and (ii) one warrant (subject to adjustment for the Company's Reverse Stock Splits) entitling the holder to purchase one share of its Class A Common Stock at an exercise price of $ 1,210.00 per share, the Company issued to the underwriters of the offering a unit purchase option to purchase (i) an additional 636 Units at a per Unit exercise price of $ 1,452.00 , which was equal to 120 % of the public offering price per Unit sold in the initial public offering, and (ii) underwriter warrants to purchase 95 shares of Class A Common Stock at a per warrant exercise price of $ 2.64 , which was equal to 120 % of the public offering price per warrant sold in the offering. At June 30, 2026 and December 31, 2025, 318 Units and 47 underwriter warrants were outstanding. 18 Table of Contents The underwriter warrants had a fair value of $ 0 that was calculated using the Black-Scholes option-pricing model and were equity classified. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.94 % based on the applicable U.S. Treasury bill rate, (2) expected life of 5 years, (3) expected volatility of approximately 66 % based on the trading history of similar companies, and (4) zero expected dividends. Committed Equity Facility On April 28, 2026, the Company entered into a Common Stock Purchase Agreement (the “Roth Purchase Agreement” and the facility as a whole, the "Committed Equity Facility") with Roth Principal Investments, LLC (“Roth”). Pursuant to the Roth Purchase Agreement, and subject to the satisfaction of specified conditions, the Company has the right, but not the obligation, to sell to Roth up to an aggregate of $ 50.0 million of newly issued shares of the Company’s Class A common stock, par value $ 0.001 per share (“Class A Common Stock”), from time to time over a period of up to 36 months following commencement of the Roth Purchase Agreement. The Company will have sole discretion over the timing and amount of any such sales and is under no obligation to sell any shares under the Roth Purchase Agreement. The Company’s ability to sell shares under the Roth Purchase Agreement will commence upon satisfaction of customary conditions, after which, the Company may direct Roth to purchase shares through one or more market open, intraday, pre‑market, or post‑market purchases, subject to specified pricing thresholds and volume limitations. The per‑share purchase price for shares sold under the Roth Purchase Agreement will be based on the volume‑weighted average trading price of the Class A Common Stock during the applicable valuation period, less a fixed discount of 8.0 %. There is no upper limit on the price per share that may be paid, and purchase prices are subject to customary equitable adjustments for stock splits, reverse stock splits, dividends or similar transactions. Under the Nasdaq Stock Market rules, the Company may not issue more than 19.99 % of its outstanding Class A Common Stock under the Roth Purchase Agreement unless stockholder approval is obtained or the average price paid for shares issued under the Roth Purchase Agreement equals or exceeds $ 2.45 (representing the lower of (a) the official closing price of our Class A Common Stock immediately preceding the execution of the Roth Purchase Agreement and (b) the average official closing price of our Class A Common Stock for the five consecutive trading days immediately preceding the execution of the Roth Purchase Agreement, as adjusted in accordance with applicable Nasdaq Stock Market rules). In addition, Roth may not beneficially own more than 4.99 % of the Company’s outstanding Class A Common Stock at any time. The Roth Purchase Agreement also includes a prohibition, subject to limited exceptions, on the Company entering into certain variable rate or equity line financings during the term of the agreement, and includes customary restrictions on short selling or hedging transactions by Roth. The net proceeds, if any, from sales of Class A Common Stock under the Roth Purchase Agreement will depend on market conditions and the Company’s election to sell shares from time to time. The Company currently intends to use any net proceeds for general corporate purposes, which may include reducing outstanding indebtedness and funding working capital. The Roth Purchase Agreement will terminate upon the earliest of the expiration of the 36‑month term, the sale of $ 50.0 million of shares under the agreement, certain events relating to delisting or bankruptcy, or termination by the Company upon prior written notice without penalty. The Roth Purchase Agreement contains customary representations, warranties, indemnification provisions and conditions. During the six months ended June 30, 2026, the Company sold 38,288 shares of the Company's Class A Common Stock for $ 0.1 million. Subsequent to June 30, 2026, the Company sold 20,358 shares of the Company's Class A Common Stock for less than $ 0.1 million. In connection with entering into the Roth Purchase Agreement, the Company paid Roth a structuring fee of $ 25,000 , agreed to reimburse certain legal fees and ongoing due diligence expenses of $ 75,000 , and paid $ 50,000 to Digital Offering, LLC as a qualified independent underwriter for purposes of FINRA Rule 5121, with related fees subject to reimbursement up to specified amounts. Equity Reserve Facility On October 18, 2024, the Company entered into a Share Purchase Agreement (as amended, the “Purchase Agreement” and the facility as a whole, the “Equity Reserve Facility”) with New Circle Principal Investments LLC, a Delaware limited liability company (“New Circle”), and subsequently entered into an amendment with New Circle on October 24, 2025 (the “Amendment”) pursuant to which New Circle has committed to purchase, subject to certain limitations, up to $ 100 million (the “Total Commitment”) of the Company’s Class A Common Stock, par value $ 0.001 per share (the “Class A Common Stock”). Under the applicable Nasdaq rules, the Company was not permitted to issue to New Circle under the Purchase Agreement more than 19.99 % of the shares of all classes of the Company’s common stock outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”), unless (i) the Company obtained stockholder approval to issue shares of its Class A Common Stock in excess of the Exchange Cap in accordance with applicable Nasdaq rules, or 19 Table of Contents (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, October 13, 2025 and December 30, 2025, the Company’s stockholders approved the issuance and sale of up to 38,636 , 227,272 and 454,545 shares, respectively, above the Exchange Cap to New Circle under the Purchase Agreement. As consideration for New Circle’s irrevocable commitment to purchase shares of the Company’s Class A Common Stock upon the terms of and subject to satisfaction of the conditions set forth in the Purchase Agreement, the Company paid New Circle structuring and legal fees of less than $ 0.1 million. In addition, the Company issued 285 shares of the Company’s Class A Common Stock to New Circle in October 2024, and an incremental 454 shares of the Company’s Class A Common Stock on October 24, 2025 in connection with the Amendment. The Company sold 108,451 shares of the Company's Class A Common Stock for $ 7.3 million during the year ended December 31, 2025. During the six months ended June 30, 2026, the Company sold 216,250 shares of the Company's Class A Common Stock for $ 1.1 million. During the six months ended June 30, 2026, the Company incurred incremental issuance costs, which were recorded to additional paid-in capital. On April 23, 2026, the Company and New Circle mutually agreed to terminate effective immediately the Equity Reserve Facility in order for the Company to enter into the Committed Equity Facility. The Company did not incur any prepayment fees or penalties as a result of terminating the Equity Reserve Facility. Series A Convertible Preferred Stock Pursuant to the terms of the Seventh Amendment and pursuant to authority expressly vested in the Company’s board of directors as set forth in the Company’s Amended and Restated Certificate of Incorporation, on August 8, 2025, the Board authorized and the Company filed the Certificate of Designation of Series A Convertible Preferred Stock (the “Certificate of Designation") with the Secretary of State of the State of Delaware, which established the Series A Convertible Preferred Stock in the amount of $ 25.0 million. Pursuant to the terms of the Ninth Amendment, on October 15, 2025, the Company filed the Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock (the “A&R Certificate of Designation”) with the Secretary of State of the State of Delaware, which amended and restated in its entirety the Certificate of Designation and established an additional $ 10.0 million of Series A Convertible Preferred Stock. The A&R Certificate of Designation sets forth the rights, preferences, powers, restrictions and limitations of the Series A Convertible Preferred Stock. Capitalized terms not otherwise defined in this item shall have the meanings given to such terms in the A&R Certificate of Designation. The Series A Convertible Preferred Stock is not redeemable outside of the Company’s control and is therefore classified in permanent equity as of June 30, 2026 and December 31, 2025. The following is a summary of key terms of the Series A Convertible Preferred Stock, as amended by the A&R Certificate of Designation: Designation and Amount. The number of shares initially designated as Series A Convertible Preferred Stock was 25,000 . Under the A&R Certificate of Designation, the number of shares designated as Series A Convertible Preferred Stock was increased by 10,000 to a total of 35,000 shares of Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock have a par value $ 0.001 per share and a stated value of $ 1,000 per share of Series A Convertible Preferred Stock (the “Conversion Value”), which shall be increased for any accrued and unpaid dividends. Dividends. The shares of Series A Convertible Preferred Stock carry a cumulative Dividend, compounded monthly at a dividend rate of ten percent ( 10 %) per annum. Ranking. The Series A Convertible Preferred Stock will be senior to the Company’s Class A Common Stock, Class B Common Stock and all other series or classes of stock and equity securities of the Company that do not expressly rank senior to, or that are not pari passu with, the Series A Convertible Preferred Stock, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. Voting Right and Protective Provisions. Subject to certain limitations described in the A&R Certificate of Designation, the Series A Convertible Preferred Stock is voting stock with Holders entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock basis. 20 Table of Contents In addition, the A&R Certificate of Designation provides for certain protective provisions for Holders of Series A Convertible Preferred Stock, which apply at any time when at least 12,525 shares of Series A Convertible Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Convertible Preferred Stock) are outstanding. Conversion. At the option of the Holder thereof, each share of Series A Convertible Preferred Stock shall be convertible into the number of Conversion Shares equal to the Accumulated Conversion Value divided by $ 550.00 per share of Class A Common Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization), rounded down to the nearest whole share. 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 three times ( 3.00 x) the Accumulated Conversion Value thereof with ratable distribution if assets are not sufficient to pay out at Accumulated Conversion Value. During the year ended December 31, 2025, Lafayette Square exchanged 7,923 shares of Series A Convertible Preferred Stock for 136,364 shares of Class A Common Stock pursuant to the Tenth Amendment to the 2021 Credit Facility. As of June 30, 2026, the amount of cumulative preferred dividends in arrears totaled $ 2.5 million representing $ 92.72 per preferred share of which $ 1.2 million was recorded as accrued liabilities in the condensed consolidated balance sheets. In October 2025, the terms of the initial issuance of $ 25.0 million Series A Convertible Preferred Stock were modified by the A&R Certificate of Designation, as described above, and the exchange mechanism between Lafayette Square and the Company was introduced in the Ninth and Tenth Amendments, respectively. The Company analyzed whether the change in terms constituted a modification or extinguishment, pursuant to the related authoritative guidance, and engaged an independent third-party valuation firm to assist with determining the fair value of the Series A Convertible Preferred Stock immediately before and after the change in terms. Because the increase in fair value was substantive, the Company determined the change in terms resulted in extinguishment. Accordingly, the Company recorded the resulting difference in fair value of approximately $ 3.3 million as a deemed dividend for the holders of Series A Convertible Preferred Stock. Because the Company was in an accumulated deficit position, the deemed dividend was recorded to additional paid-in capital and increased, for the purpose of the EPS calculation, the net loss allocated to Class A shareholders in the fourth quarter of fiscal 2025. This treatment does not impact net loss per share in either period presented in the condensed consolidated statements of operations. Continuation Capital Settlement Agreement On November 20, 2025, the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Continuation Capital, Inc. (“Continuation Capital”), pursuant to which we agreed to issue up to 227,272 shares of Class A Common Stock (the “Exchange Shares”) in exchange for the release of certain claims held by Continuation Capital related to third party vendor payables separately assigned to Continuation Capital in the amount of $ 3 million. The Exchange Shares will be sold to Continuation Capital at a price of 76 % of the lower of (a) the volume weighted average sale price of the Class A Common Stock on Nasdaq during the “Valuation Period,” which is the five day trading period, inclusive of the day of the share request under the Settlement Agreement, which will be extended as necessary to account for multiple tranches of issuances or (b) the average of the four lowest of the most recent five closing prices during the Valuation Period, as defined in the Settlement Agreement. Additionally, as partial consideration for the entry into the Settlement Agreement, the Company paid Continuation Capital a settlement fee of 431 shares of Class A Common Stock. The Settlement Agreement was approved on November 21, 2025 by a court following a hearing held on that same date, in which the court determined that Settlement Agreement is fair to Continuation Capital. Accordingly, the issuance of securities under the Settlement Agreement will be exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 3(a)(10) thereunder. For the six months ended June 30, 2026, $ 0.8 million has been paid to third party vendors and 152,041 shares have been issued pursuant to the Settlement Agreement. From the date the Settlement Agreement was executed through June 30, 2026, $ 1.5 million has been paid to third party vendors and 204,332 shares have been issued pursuant to the Settlement Agreement. The Company recognized a loss on settlement of accounts payable for the six months ended June 30, 2026 of $ 1.2 million for the difference between the value of the shares issued and the value of the liabilities settled. Because of the difference in stock price on the day shares were issued and the pricing mechanism based on the five trading days prior to the share request, the loss was different than the discount established under the Settlement Agreement . Noncontrolling Interest 21 Table of Contents Direct Digital Holdings, Inc. is the sole managing member of DDH LLC, and consolidates the financial results of DDH LLC but does not own all the economic interests in DDH LLC. Therefore, Direct Digital Holdings, Inc. reports a noncontrolling interest ("NCI") based on the common units of DDH LLC held by DDM. While Direct Digital Holdings, Inc. retains its controlling interest in DDH LLC, changes in its ownership interest in DDH LLC are accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC Units by DDM will result in a change in ownership and reduce or increase the amount recorded as noncontrolling interest and increase or decrease additional paid-in capital when DDH LLC has positive or negative net assets, respectively. Stock-Based Compensation Plans In connection with the initial public offering, the Company adopted the 2022 Omnibus Incentive Plan (“2022 Omnibus Plan”) to facilitate the grant of equity awards to the Company’s employees, consultants and non-employee directors. The Company’s board of directors reserved 15,909 shares of Class A Common Stock for issuance in equity awards under the 2022 Omnibus Plan. On June 9, 2025, December 30, 2025 and July 31, 2026, the Company's stockholders approved amendments to the 2022 Omnibus Plan to increase the number of shares issuable by 18,181 shares, 40,909 shares and 1,200,000 shares, respectively. Information on activity for both the stock options and RSUs is detailed below. As of June 30, 2026 and the date of this report, there were 4,698 and 1,204,698 shares, respectively, available for grant under the 2022 Omnibus Plan. During the six months ended June 30, 2026 and 2025, the Company recognized $ 0.3 million and $ 0.7 million, respectively, of total stock-based compensation expense in the condensed consolidated statements of operations in compensation, taxes and benefits. Stock Options Options to purchase shares of common stock vest annually on the grant date anniversary over vesting periods of one to three years and expire 10 years following the date of grant. The following table summarizes the stock option activity under the 2022 Omnibus Plan during the six months ended June 30, 2026: Stock Options Shares Weighted Average Exercise Price Weighted Average Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2025 4,074 $ 337.58 8.27 $ — Granted 59,938 $ 3.32 — $ — Exercised — $ — — $ — Forfeited and expired ( 432 ) $ 76.04 — $ — Outstanding at June 30, 2026 63,580 $ 24.28 9.61 $ — Vested and exercisable at June 30, 2026 2,971 $ 403.84 7.50 $ — The total fair value of options vested during the six months ended June 30, 2026 was $ 0.1 million. As of June 30, 2026, unrecognized stock-based compensation of $ 0.3 million was related to 60,609 of unvested stock options which will be recognized on a straight-line basis over a weighted-average vesting period of 2.72 years. 22 Table of Contents Restricted Stock Units RSUs generally vest annually on the grant date anniversary over vesting periods of one to three years . A summary of RSU activity during the six months ended June 30, 2026 and related information is as follows: Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value per Share Unvested - December 31, 2025 4,301 $ 247.21 Granted — $ — Vested ( 3,171 ) $ 279.13 Forfeited ( 76 ) $ 375.71 Unvested - June 30, 2026 1,054 $ 183.76 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 1,030 (including 323 sold as of June 30, 2026) and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. As of June 30, 2026, there was unrecognized stock-based compensation of $ 0.1 million related to unvested RSUs which will be recognized on a straight-line basis over a weighted average period of 1.63 years. Note 5 — Tax Receivable Agreement and Income Taxes Tax Receivable Agreement The Company's TRA with DDH LLC and DDM (together, the “TRA Holders”) provides for payment by the Company to the TRA Holders of 85 % of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that the Company actually realizes or is deemed to realize in certain circumstances. The Company retains the benefit of the remaining 15 % of these net cash savings. The TRA liability is calculated by determining the tax basis subject to the TRA (“tax basis”) and applying a blended tax rate to the basis differences and calculating the resulting impact. The blended tax rate consists of the U.S. 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 1,909 Class B shares into Class A shares. During the six months ended June 30, 2026, no shares were exchanged. The Company has recorded a liability related to the tax receivable agreement of $ 0 as of June 30, 2026 and less than $ 0.1 million as of December 31, 2025. The Company has recorded a deferred tax asset of $ 0 as of June 30, 2026 and December 31, 2025 which is net of a valuation allowance. No TRA payments were made during the six months ended June 30, 2026 and 2025. The payments under the TRA will not be conditional on holder of rights under the TRA having a continued ownership interest in either DDH LLC or the Company. The Company may elect to defer payments due under the TRA if the Company does not have available cash to satisfy its payment obligations under the TRA. Any such deferred payments under the TRA generally will accrue interest from the due date for such payment until the payment date. 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 three and six months ended June 30, 2026, less than $ 0.1 million was recognized as income due to derecognition of the TRA liability in other income (expense). 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. If the Company elects to terminate the TRA early (or it is terminated early due to changes in control), the obligations under the TRA would accelerate and the Company would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by the Company under the TRA. 23 Table of Contents Income Taxes Through the Organizational Transactions completed in February 2022, the Company formed an Up-C structure which allows DDM to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership for U.S. federal income tax purposes. Under the Up-C structure, the Company is subject to corporation income tax based on the ownership. The components of income tax expense are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Income tax expense $ — $ — $ — $ — Effective income tax rate — % — % — % — % The effective tax rates were different from the statutory rates for the six months ended June 30, 2026 and 2025 primarily due to the Company’s partnership loss that is not subject to federal and state taxes and recording a valuation allowance against deferred taxes. The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions. In the normal course of business, the Company can be examined by various tax authorities, including the Internal Revenue Service in the United States. There are currently no federal or state audits in process. The Company analyzes its tax filing positions in all of the U.S. 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 2024 and 2023 remain open as of June 30, 2026. The Company evaluates tax positions taken or expected to be taken in the course of preparing an entity’s tax returns to determine whether it is “more-likely-than-not” that each tax position will be sustained by the applicable tax authority. As of June 30, 2026 and December 31, 2025, the Company had no uncertain tax positions. Accordingly, the Company has not recognized any penalty, interest or tax impact related to uncertain tax positions. On July 4, 2025, new tax legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), was enacted effectively extending certain provisions of the 2017 Tax Cuts and Jobs Act, including adjusting a number of provisions that were subject to sunsets, phase-outs, or phase-ins. While most of the changes made by OBBBA are effective in future tax years, some of its provisions are effective in 2025 and 2026. The Company determined that OBBBA had no material impact on its condensed consolidated financial statements. Note 6 — Related Party Transactions Accounts Payable - Related Party From time to time, DDM’s members advance funds to the Company to support operating cash requirements and working capital needs. During the six months ended June 30, 2026, DDM members advanced an aggregate of $ 0.5 million to the Company and received repayments of $ 0 . As of June 30, 2026 and December 31, 2025, the outstanding balance recorded as accounts payable - related party was $ 0.5 million and $ 0 , respectively. The advances do not bear interest, are unsecured and are payable upon demand. Management has concluded that the advances represent short-term related-party financing arrangements and has classified the outstanding balance as a current liability in the accompanying condensed consolidated balance sheet. Up-C Structure In February 2022, the Company completed an initial public offering of its securities, and through its organizational transactions, formed an Up-C structure, which is often used by partnerships and limited liability companies and allows DDM, a Delaware limited liability company indirectly owned by Mark Walker and Keith Smith, to retain its equity ownership in DDH LLC and to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity, for U.S. federal income tax purposes. DDM holds economic nonvoting LLC Units in DDH LLC and holds noneconomic voting equity interests in the form of the Class B Common Stock in Direct Digital Holdings (See Note 4 — Stockholders’ Deficit and Stock-Based Compensation). One of the tax benefits to DDM associated with this structure is that future taxable income of DDH LLC that is allocated to DDM will be taxed on a pass-through basis and therefore will not be subject to corporate taxes at the entity level. Additionally, DDM may, from time to time, redeem or exchange its LLC Units for shares of the Company’s Class A Common Stock on a one -for-one basis. The Up-C structure also provides DDM with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded. 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 24 Table of Contents 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, 2026 and December 31, 2025, is as follows (in thousands): June 30, 2026 December 31, 2025 Liability related to tax receivable agreement Short term $ — $ 41 Total liability related to tax receivable agreement $ — $ 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 short-term debt to related-party short-term debt, and corresponding reclassifications were also made to the current portion of long-term debt and accrued liabilities to reflect the related party relationship. Note 7 — Segment Information During the first quarter of 2026, the Company shifted its focus to driving intentional digital marketing spend with current and future customers historically classified by the Company as buy-side customers as well as new enterprise customers accessing the digital advertising market through its recently launched product - Ignition+. In connection with this shift in focus, the Company reassessed its reportable segments and determined that it has one reportable segment that is managed on a consolidated basis - digital advertising. The new focus to streamline operations is expected to enhance the customer experience and better reflects the economics of the Company's current business where revenues reflect primarily contracts for managed advertising campaigns which may or may not access curated publisher audiences managed by the Company's sell-side platform. The Company’s CODM reviews the operating results of the Company across the entirety of its digital advertising business in order to assess performance and make decisions about resource allocation. The CODM is regularly provided with only the consolidated operating expenses and net loss at the same level of detail as noted on the face of the condensed consolidated statements of operations. Total assets are also provided as noted on the face of the condensed consolidated balance sheets. Note 8 — Net Loss Per Share 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 Series A Convertible Preferred Stock share in the earnings or losses attributable to Direct Digital Holdings, Inc. and are therefore not 25 Table of Contents participating securities. The following table sets forth the computation of the Company’s basic and diluted net loss per share (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net loss attributable to Class A shareholders and Series A preferred stockholders $ ( 3,395 ) $ ( 2,249 ) $ ( 8,645 ) $ ( 4,604 ) Less: Series A preferred stockholders cumulative dividends 706 — 1,388 — Net loss allocated to Class A shareholders $ ( 4,101 ) $ ( 2,249 ) $ ( 10,033 ) $ ( 4,604 ) Weighted average common shares outstanding - basic and diluted 709 45 643 38 Net loss per common share, basic and diluted $ ( 5.78 ) $ ( 49.79 ) $ ( 15.62 ) $ ( 121.69 ) 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 June 30, 2026 2025 2026 2025 Series A convertible preferred stock 53 — 53 — Class B Common Stock 42 49 42 49 Options to purchase common stock 64 4 36 3 Restricted stock units 2 4 2 3 Total excludable from net loss per share attributable to common stockholders - diluted 161 57 133 55 Note 9 — Commitments and Contingencies Litigation We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. As of the date hereof, except as set forth below, we are not a party to any material legal or administrative proceedings nor are there any proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. On May 10, 2024, the Company was the subject of a defamatory article / blog post. In connection with this post, one of the Company’s customers paused its connection to the Company while the allegations were investigated. This customer reconnected with the Company on May 22, 2024 and volumes had resumed but not yet at the levels experienced prior to the pause in May 2024 which has created a significant disruption in the Company's business. During 2025, the Company worked with its partners to achieve prior volume levels but was unable to achieve historical volumes for the year. In May 2024, the Company, as plaintiff, filed a lawsuit against the author of the defamatory article. On March 5, 2025, the United States District Court for the District of Maryland denied the defendant’s motion to dismiss in its entirety. On March 9, 2026, the Court granted the Company's motion to dismiss counterclaims but granted the defendant time to amend their counterclaim, which the defendant chose not to amend. The Company will continue to vigorously pursue its claims and rights and any defenses against counterclaims. The Company cannot make any predictions about the final outcome of this litigation matter or the timing thereof. On May 23, 2024, an alleged stockholder, purportedly on behalf of the persons or entities who purchased or acquired publicly traded securities of the Company between April 2023 and March 2024, filed a putative class action against the Company, certain of our officers and directors, and other defendants in the U.S. District Court for the Southern District of 26 Table of Contents Texas, alleging violations of federal securities laws related to alleged false or misleading disclosures made by the Company in its public filings. On July 9, 2024, another alleged stockholder filed a similar securities class action against the Company, certain of our officers and directors, also in the Southern District of Texas. The two actions have been consolidated. 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 filed a response brief on January 2, 2026. The lead plaintiff filed a reply brief on February 6, 2026. On August 6, 2026, the parties presented oral arguments and are now awaiting a decision from the Fifth Circuit. 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 Convertible Preferred Stock with reductions in the amount of the Exit Fee outstanding for any amounts of the Series A Convertible Preferred Stock redeemed, converted or exchanged. Since it was established, the Exit Fee has been reduced by (1) $ 4.3 million for proceeds received by Lafayette upon exchanges pursuant to the Tenth Amendment during the year ended December 31, 2025 and (2) $ 3.6 million for the loss on Exit Fee recognized during the year ended December 31, 2025 for the difference between the face value of the Series A Convertible Preferred Stock exchanged and the proceeds received by Lafayette upon the exchange. As of June 30, 2026, the maximum potential amount of the Exit Fee that could be payable is $ 27.1 million. The timing and occurrence of a full redemption are uncertain and may be indefinite. Accordingly, management has concluded that payment of the maximum potential amount of the Exit Fee as of June 30, 2026 is not probable as of the reporting date and that the ultimate amount of any such payment cannot be reasonably estimated. As a result, no additional liability has been recorded in the accompanying condensed consolidated financial statements. The Company will reassess the likelihood and amount of any Exit Fee obligation in future periods as facts and circumstances change. Continuation Capital Settlement Agreement As described in Note 4 — Stockholders’ Deficit and Stock-Based Compensation, on November 20, 2025, the Company entered into the Settlement Agreement with Continuation Capital, pursuant to which we agreed to issue the Exchange Shares in exchange for the release of certain claims held by Continuation Capital related to third party vendor payables separately assigned by the Company to Continuation Capital in the amount of $ 3 million. For the six months ended June 30, 2026, $ 0.8 million has been paid to third party vendors and 152,041 shares have been issued pursuant to the Settlement Agreement. From the date the Settlement Agreement was executed through June 30, 2026, $ 1.5 million has been paid to third party vendors and 204,332 shares have been issued pursuant to the Settlement Agreement. Operating Leases During the six months ended June 30, 2026 and 2025, the Company incurred fixed rent expense associated with operating leases for real estate of $ 0.1 million. The Company did not have any finance leases, short-term leases nor variable leases over this time period. During the three and six months ended June 30, 2026 and 2025, 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, 2026 2025 2026 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow for operating leases $ 69 $ 67 $ 138 $ 132 Non-cash changes to the operating lease ROU assets and operating lease liabilities: Additions and modifications to ROU asset obtained from new operating liabilities $ — $ — $ — $ 52 27 Table of Contents The weighted-average remaining lease term and discount rate for the Company’s operating leases is 3.2 years and 8.3 %, respectively, as of June 30, 2026. 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 future payments due under operating leases as of June 30, 2026 are as follows (in thousands): 2026 $ 141 2027 282 2028 180 2029 184 2030 31 Thereafter — Total undiscounted lease payments 818 Less effects of discounting ( 96 ) Less current lease liability ( 232 ) Total operating lease liability, net of current portion $ 490 Note 10 — Property, Equipment and Software, net Property, equipment and software, net consists of the following (in thousands): Useful Life (Years) June 30, 2026 December 31, 2025 Furniture and fixtures 5 $ 153 $ 153 Computer equipment 3 20 20 Leasehold improvements 15 66 66 Capitalized software 3 751 751 Property, equipment and software, gross 990 990 Less: accumulated depreciation and amortization ( 891 ) ( 824 ) Total property, equipment and software, net $ 99 $ 166 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, 2026 and 2025 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cost of revenues $ — $ 42 $ — $ 84 General and administrative 34 35 67 61 Total depreciation and amortization $ 34 $ 77 $ 67 $ 145 Note 11 — Intangible Assets, net 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 six months ended June 30, 2026 and 2025, amortization expense of $ 0.8 million and $ 1.0 million was recognized. As of June 30, 2026 and December 31, 2025, intangible assets net of accumulated amortization was $ 7.0 million and $ 7.9 million, respectively. 28 Table of Contents As of June 30, 2026, intangible assets and the related accumulated amortization, weighted-average remaining life and future amortization expense are as follows (in thousands): June 30, 2026 Weighted-Average Original Accumulated Net Remaining Life (Years) Amount Amortization Total Customer Lists 4.3 $ 13,028 $ ( 7,491 ) $ 5,537 Trademarks and tradenames 4.3 3,501 ( 2,013 ) 1,488 Total intangible assets, net $ 16,529 $ ( 9,504 ) $ 7,025 December 31, 2025 Weighted-Average Original Accumulated Net Remaining Life (Years) Amount Amortization Total Customer Lists 4.8 $ 13,028 $ ( 6,839 ) $ 6,189 Trademarks and tradenames 4.8 3,501 ( 1,838 ) 1,663 Total intangible assets, net $ 16,529 $ ( 8,677 ) $ 7,852 Total 2026 $ 826 2027 1,653 2028 1,653 2029 1,653 2030 1,240 Total future amortization expense $ 7,025 29 Table of Contents