What changed in this filing

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Item 5. Other Information

2024-08-19 compared with 2024-05-15 · 40 added, 32 removed, 35 unchanged (67% of the section changed)

1 unchanged sentence

Rule 10b5 - 1 Trading Plans

During the fiscal quarter ended March 31, 2024, none of the Company's directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5 - 1 (c) or any "non-Rule 10b5 - 1 trading arrangement."

Private Placement

On May 13, 2024, the Company entered into Securities Purchase Agreements (the "Purchase Agreements") with certain accredited investors (the "Purchasers") to sell pre-funded warrants (the "Pre-Funded Warrants") to purchase up to 2,955,084 shares of the Company's common stock, at a purchase price of $3.384 per Pre-Funded Warrant.

The Pre-Funded Warrants will have an exercise price of $0.005 per share of common stock, will be immediately exercisable after stockholder approval of the Private Placement and will terminate when exercised in full.

The aggregate gross proceeds for the Private Placement were $10 million, before deducting offering expenses payable by the Company.

The exercise of the Pre-Funded Warrants is subject to stockholder approval.

The Company will be obligated to use its reasonable best efforts to obtain stockholder approval of the exercise of the Pre-Funded Warrants in accordance with the rules of the Nasdaq Stock Market at a special meeting of the Company's stockholders.

The Purchasers included, among others, three individuals who are officers and/or directors of the Company and a principal stockholder of the Company.

No underwriting discounts or commissions were paid with respect to the Private Placement.

The issuance of the Pre-Funded Warrants was made in reliance upon the exemption from registration under Section 4 (a)( 2 ) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.

The foregoing descriptions of the Purchase Agreements and Pre-Funded Warrants do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Purchase Agreements and Pre-Funded Warrants, copies of which are filed as Exhibits 10.1 and 10.2, respectively, to this Quarterly Report on Form 10 -Q and are incorporated by reference herein.

Support Agreements

In connection with the Private Placement, the Company entered into Support Agreements with certain principal stockholders of the Company on May 13, 2024 ( the "Support Agreements").

Pursuant to the Support Agreements, the stockholders party thereto agreed to vote shares of the Company's common stock beneficially owned by them in favor of certain actions subject to Stockholder Approval (as defined in the Purchase Agreements) at any meeting of stockholders of the Company and to vote against or decline to consent to any proposal or any other corporate action or agreement that would result in a breach by the Company of the Purchase Agreements or impede, delay or otherwise adversely affect the consummation of the transactions contemplated by the Purchase Agreements or any similar agreements entered into by the Company and the party stockholders in connection with the consummation of the transactions contemplated by the Purchase Agreements.

Each of the parties to the Support Agreements is also a purchaser in the Private Placement.

The foregoing description of the Support Agreements does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Support Agreements, a copy of which is filed as Exhibit 10.3 to this Quarterly Report on Form 10 -Q and is incorporated by reference herein.

SLR Credit Agreement

On April 2, 2024, Fluent, LLC, a wholly-owned subsidiary of the Company as Borrower, entered into the SLR Credit Agreement with Fluent, Inc.

and certain subsidiaries of the Borrower as guarantors, SLR, and the lenders from time to time party thereto.

For further information concerning the SLR Credit Agreement, see Part II, Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.

On May 15, 2024, the Borrower, the Company and certain subsidiaries of the Borrower as guarantors, SLR, and the lenders from time to time party thereto entered into a first amendment to SLR Credit Agreement (the "SLR Credit Agreement Amendment") pursuant to which SLR ( 1 ) waived any required prepayments on the SLR Revolver from the proceeds from the Private Placement;

( 2 ) required that the Credit Parties (as defined in the SLR Credit Agreement) retain a financial advisor;

( 3 ) increased the minimum excess availability covenant following the Private Placement;

( 4 ) amended the definition of borrowing base (as defined in the SLR Credit Agreement);

and ( 5 ) amended certain post-closing obligations.

The foregoing description of the SLR Credit Agreement Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the SLR Credit Agreement Amendment, a copy of which is filed as Exhibit 10.8 to this Quarterly Report on Form 10 -Q and is incorporated by reference herein.

During the fiscal quarter ended June 30, 2024 , none of the Company's directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5 - 1 (c) or any "non-Rule 10b5 - 1 trading arrangement."

Second Amendment to SLR Credit Agreement

On July 31, 2024, the Company and SLR entered into a letter agreement pursuant to which SLR extended the deadline for delivery of the compliance certificate required for the fiscal month ended June 30, 2024, and the related notice of event of default, to August 16, 2024.

On August 14, 2024, the parties entered into a second letter agreement pursuant to which SLR extended the deadline for delivery of the same compliance certificate and related notice of event of default to August 21, 2024.

On August 19, 2024, the Borrower, SLR, and the other parties thereto entered into the Second Amendment to Credit Agreement (the "Second Amendment"), which, among other things, required that the Company raise $2.0 million in additional capital.

To raise the capital, the Company entered into convertible subordinated notes with four individuals who are officers and/or directors of the Company and one principal stockholder of the Company.

In addition, among other things, the Second Amendment waived non-compliance with the financial covenant as of June 30, 2024 , modified the financial covenant through December 31, 2025, ended a requirement to engage a financial advisor , and increased the interest rate margin from 5.25% to 5.75%.

The Second Amendment also included a Second Amendment Subordination Agreement described below.

Sale of Convertible Notes

On August 19, 2024, the Company entered into Securities Purchase Agreements (the "Securities Purchase Agreements") with certain accredited and/or sophisticated investors (the "Purchasers") to sell convertible subordinated promissory notes (the "Convertible Notes") in aggregate principal amount of $2.1 million.

The Convertible Promissory Notes mature on April 2, 2029, bear interest at 13% per annum payable quarterly in cash (subject to payment conditions in the Subordination Agreement described below) or in kind.

Subject to the payment conditions in the Subordination Agreement described below, the Company may prepay the Convertible Notes in whole or in part at any time upon ten days’ written notice;

provided that, no prepayment will be permitted prior to the stockholder approval described below without the consent of the applicable holder.

Each holder of a Convertible Note is entitled to convert the Conversion Amount (as defined below) into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $3.01, and (ii) the greater of (A) the consolidated closing bid price of the Company’s Common Stock as reported on Nasdaq on the applicable conversion date and (B) $1.00, in each case subject to adjustments for stock splits, recapitalizations and the like.

However, the applicable conversion price will in no event be lower than the price established by clause (ii) above unless and until the Company’s stockholders have approved matters related to the issuance of common stock upon conversion of the Convertible Notes, which vote is expected to take place at the Company’s 2024 annual meeting of stockholders.

The Convertible Notes are subject to additional limits on conversion until stockholder approval is obtained, including an aggregate limit on the number of shares that may be issued upon conversion to 19.99% of the Company’s outstanding shares of common stock and provisions to prevent a change of control as defined in the rules of the Nasdaq Stock Market.

The Company has agreed to use its reasonable efforts to secure stockholder approval at such meeting, including providing a recommendation FOR approval by the Company’s board of directors.

Holders of the Convertible Notes will be permitted to vote on such stockholder approval, but may not vote any shares obtained from conversion of the Convertible Notes prior to such vote.

No underwriting discounts or commissions were paid with respect to the Convertible Notes.

The purchasers of the Convertible Notes include our Chairman of the Board and Chief Strategy Officer Ryan Schulke, our Chief Executive Officer Donald Patrick, our interim Chief Financial Officer Ryan Perfit, our Chief Customer Officer and member of the board of directors Matthew Conlin, and Dr.

Phillip Frost, a beneficial owner of approximately 22% of common stock prior to the Convertible Note transaction.

In certain cases the Convertible Notes were purchased by affiliates of such persons.

In connection with the Second Amendment and the Purchase Agreements, the Company, SLR and the purchasers of the Convertible Notes entered into a Second Amendment Subordination Agreement dated August 19, 2024 ( the "Subordination Agreement").

The Subordination Agreement confirms the subordinated nature of the Convertible Notes and restricts payments to and remedies of the holders of the Convertible Notes for so long as the SLR Credit Agreement has indebtedness outstanding.

The Subordination Agreement provides that the Company may not make any payment of principal or interest on the Convertible Notes unless the conditions set forth in either in clause (i) or clause (ii) below are satisfied:

(i) (a) no event of default under the SLR Credit Agreement exists before or immediately after giving effect to such payment, (b) the Borrower has demonstrated to the satisfaction of SLR compliance with certain financial covenants on a pro forma basis after giving effect to the payment, and (c) SLR’s receipt of the Company’s audited financial statements for the fiscal year ending December 31, 2024.

(ii) (a) no event of default under the SLR Credit Agreement exists before or immediately after giving effect to such payment, (b) the Company has raised equity capital excluding the proceeds from the sale of the Convertible Notes prior to June 30, 2025 and the payments made in respect of the Convertible Notes do not exceed an amount that equals the positive difference of the amount of such equity raise and $7,000,000, and (c) the Borrower has demonstrated to the satisfaction of SLR compliance with certain financial covenants on a pro forma basis after giving effect to the payment.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

5 unchanged sentences

Certificate of Amendment to the Certificate of Incorporation.

Certificate of Amendment to the Certificate of Incorporation of Fluent, Inc.

effective April 11, 2024.

Amended and Restated Bylaws.

Securities Purchase Agreement by and between Fluent, Inc.

and the purchasers a party thereto, dated as of May 13, 2024.

Form of Securities Purchase Agreement by and between Fluent, Inc.

and the purchasers party thereto, dated as of May 13, 2024.

Form of Pre-Funded Warrant dated May 13, 2024.

1 unchanged sentence

and the parties thereto dated as of May 13, 2024.

Second Temporary Waiver Under Credit Agreement, effective as of January 17, 2024, by and among Fluent, LLC, as Borrower, certain subsidiaries of the Borrower party thereto, the lenders party thereto, and Citizens Bank, N.A., as Administrative Agent

Third Temporary Waiver and Amendment to Credit Agreement, effective as of January 26, 2024, by and among Fluent, LLC, as Borrower, certain subsidiaries of the Borrower party thereto, the lenders party thereto, and Citizens Bank, N.A., as Administrative Agent

Amendment to Letter Agreement for Consulting Services, effective as of February 1, 2024, by and between Fluent, LLC and CRIO, LLC

Credit Agreement dated as of April 2, 2024, by and among, Fluent, LLC, Fluent, Inc., certain subsidiaries of Fluent, LLC as guarantors, Crystal Financial LLC D/B/A SLR Credit Solutions, and each other lender from time to time party thereto.

First Amendment to Credit Agreement, dated as of May 15, 2024, by and among the Company, lenders thereto, Crystal Financial LLC d/b/a SLR Credit Solutions, and Fluent, LLC.

First Amendment to Credit Agreement, dated as of May 15, 2024, by and among the Company, the lenders party thereto, Crystal Financial LLC d/b/a SLR Credit Solutions, and Fluent, LLC.

Letter Ag reement to Credit Agreement, dated as of July 31, 2024, by and among Crystal Financial LLC D/B/A SLR Credit Solutions, Crystal Financial SPV LLC and Fluent, LLC.

Second Letter Agreement to Credit Agreement, dated as of August 14, 2024, by and among Crystal Financial LLC D/B/A SLR Credit Solutions, Crystal Financial SPV LLC and Fluent, LLC.

Second Amendment to Letter Agreement for Consulting Services, effective as of August 1, 2024, by and between Fluent, LLC and CRIO, LLC.

Form of Securities Purchase Agreement, dated as of August 19, 2024, by and between Fluent, Inc.

and the purchaser party thereto.

Form of Convertible Subordinated Promissory Note, dated as of August 19, 2024.

Form of Second Amendment Subordination Agreement, dated as of August 19, 2024, by and among the Company, Crystal Financial LLC D/B/A SLR Credit Solutions, and the Subordinated Creditor party thereto.

Certification of Chief Executive Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

16 unchanged sentences

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

August 19, 2024

/s/ Ryan Perfit

2 unchanged sentences

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

What changed 10-Q

Item 5. Other Information