What changed in this filing

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Item 1. Financial Statements

2025-05-16 compared with 2024-11-15 · 299 added, 332 removed, 482 unchanged (57% of the section changed)

2 unchanged sentences

(Amounts in thousands, except share and per share data)

September 30, 2024

March 31, 2025

December 31, 2024

4 unchanged sentences

Prepaid expenses and other current assets

Restricted cash

Total current assets

51,228 65,955

Restricted cash

Property and equipment, net

11 unchanged sentences

Current portion of long-term debt

21,801 31,609

Current portion of operating lease liability

13 unchanged sentences

Shares issued — 21,412,255 and 20,791,431 , respectively;

and Shares outstanding — 16,876,773 and 13,616,341 , respectively (Note 8)

Treasury stock, at cost — 768,595 and 768,595 Shares, respectively (Note 8)

and Shares outstanding — 20,643,660 and 20,022,836 , respectively

Treasury stock, at cost — 768,595 and 768,595 Shares, respectively

( 11,407 ) ( 11,407 )

10 unchanged sentences

(Amounts in thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Costs and expenses:

4 unchanged sentences

Depreciation and amortization

Goodwill and intangible assets impairment

Total costs and expenses

2 unchanged sentences

Fair value adjustment of Convertible Notes with related parties

Loss on early extinguishment of debt

Loss before income taxes

Income tax (expense) benefit

Basic and diluted income (loss) per share:

Income tax expense

Basic and diluted loss per share:

Weighted average number of shares outstanding:

5 unchanged sentences

Total shareholders'

Balance at June 30, 2024

Vesting of restricted stock units and issuance of stock under incentive plans

Share-based compensation

Exercise of pre-funded warrants

Balance at September 30, 2024

Balance at December 31, 2024

Vesting of restricted stock units and issuance of stock under incentive plans

Share-based compensation

Share-based compensation expense

Issuance of pre-funded warrants

Exercise of pre-funded warrants

Balance at September 30, 2024

Balance at March 31, 2025

Treasury stock

1 unchanged sentence

Total shareholders'

Balance at June 30, 2023

Vesting of restricted stock units and issuance of stock under incentive plans

Share-based compensation

Balance at September 30, 2023

Balance at December 31, 2023

Vesting of restricted stock units and issuance of restricted stock

Increase in treasury stock resulting from shares withheld to cover statutory taxes

Share-based compensation

Balance at September 30, 2023

Vesting of restricted stock units and issuance of stock under incentive plans

Share-based compensation expense

Balance at March 31, 2024

See notes to consolidated financial statements

1 unchanged sentence

(Amounts in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Non-cash loan amortization expense

Non-cash gain on contingent consideration

Non-cash loss on early extinguishment of debt

Share-based compensation expense

Fair value adjustment of Convertible Notes with related parties

Goodwill impairment

Impairment of intangible assets

Allowance for credit losses

7 unchanged sentences

Deferred revenue

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Capitalized costs included in intangible assets

Business acquisitions, net of cash acquired

Acquisition of property and equipment

Net cash used in investing activities

2 unchanged sentences

Repayments of long-term debt

Exercise of stock options

Debt financing costs

Proceeds from issuance of warrants

Proceeds from exercise of warrants

Proceeds from Convertible Notes, with related parties

Taxes paid related to net share settlement of vesting of restricted stock units

Net cash (used in) provided by financing activities

Proceeds from issuance of pre-funded warrants

Net cash used in financing activities

Net decrease in cash, cash equivalents, and restricted cash

3 unchanged sentences

Cash paid for interest

Cash paid for income taxes

Cash (refunded) paid for income taxes

Share-based compensation capitalized in intangible assets

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Contingent payments in connection with TAPP consolidation

Long-term debt issuance

Consideration for True North

See notes to consolidated financial statements

6 unchanged sentences

Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations.

The accompanying unaudited consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods ended September 30, 2024 and 2023 , respectively, but are not necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending December 31, 2024 .

The accompanying unaudited consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods ended March 31, 2025 and 2024 , but are not necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending December 31, 2025 .

From time to time, the Company may enter into relationships or investments with other entities, and, in certain instances, the entity in which the Company has a relationship or investment may qualify as a variable interest entity ("VIE").

1 unchanged sentence

The primary beneficiary is the party that has the power to direct activities that most significantly impact the operations of the VIE and has the obligation to absorb losses or the right to benefits from the VIE that could potentially be significant to the VIE.

The information included in this Quarterly Report on Form 10 -Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10 -K for the year ended December 31, 2023 (" 2023 Form 10 -K") filed with the SEC on April 2, 2024 .

The information included in this Quarterly Report on Form 10 -Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10 -K for the year ended December 31, 2024 (" 2024 Form 10 -K") filed with the SEC on March 31, 2025 .

The consolidated balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date and included in the 2024 Form 10 -K.

2 unchanged sentences

As part of this evaluation, management may consider the potential mitigating impact of its plans that have not been fully implemented as of the issuance date if (a) it is probable that management's plans will be effectively implemented on a timely basis, and (b) it is probable that the plans, when implemented, will alleviate the relevant conditions or events that raise substantial doubt about the Company's ability to continue as a going concern within one year after the issuance date.

The Company has experienced a continued decline in its operating results, driven primarily by the economic environment and continued impact of the imposed regulatory requirements on its owned and operated digital media properties (see Note 11 , Contingencies) .

On April 2, 2024, Fluent, LLC, a wholly-owned subsidiary of the Company (the "Borrower") entered into a credit agreement (as amended, the "SLR Credit Agreement") with the Company and certain subsidiaries of the Borrower as guarantors (collectively, the "Credit Parties"), Crystal Financial LLC D/B/A SLR Credit Solutions, as administrative agent, lead arranger and bookrunner ("SLR") and each other lender from time to time party thereto.

The SLR Credit Agreement requires the Credit Parties to maintain and comply with certain financial covenants.

Moreover, the borrowings under the SLR Revolver (as defined in Note 5 , Long-term debt, net under the SLR Credit Agreement are limited to a borrowing base, that fluctuates as regularly as weekly based on eligible accounts receivable, as further described in Note 5 .

As a result of the continued decline in financial performance of the Company's owned and operated digital media properties that have continued into the third quarter of 2024, accounts receivable were insufficient to support the borrowing base needed to fund operations through the end of the third quarter of 2024.

The Company therefore entered into convertible subordinated notes in August 2024 to raise funds (as defined in Note 5 ), further updated its projections to reflect the continued decline in its operating results and entered into the Second Amendment (as defined and discussed in Note 5 ) with SLR on August 19, 2024.

As of September 30, 2024 , the Credit Parties were not in compliance with their financial covenants under the SLR Credit Agreement, which the Borrower had to report by October 31, 2024, and which would have resulted in an event of default.

The Credit Parties then entered into a letter agreement on October 30, 2024 pursuant to which SLR extended the deadline for delivery of the compliance certificate required for the fiscal month ended September 30, 2024 , and the related notice of event of default, to November 19, 2024.

On November 15, 2024, the Credit Parties and SLR entered into the Third Amendment (as defined and discussed in Note 5 ) to the SLR Credit A greement, which, among other things, required that the Company raise at least $7,500 of additional capital by November 29, 2024 .

In addition, the Third Amendment waived non-compliance with the financial covenants as of September 30, 2024 , extended the duration of the call protection applicable to the loans, and modified the cash dominion provisions to remain in effect on an indefinite basis.

The Company will seek to raise additional capital through equity, equity-linked, or subordinated debt financings;

however, whether and when the Company can effect such financings and how much capital it can raise depend on a variety of factors, including, among others, market conditions, the trading price of the Company’s common stock and the Company’s determination as to the appropriate sources of funding for its operations.

There can be no assurance that additional capital will be available by November 29, 2024.

Additionally, given the continued challenges the Company has faced achieving profitability, the Company made a reduction in workforce during the second quarter of 2024 and continues to consider further cost reduction measures and focus resources on opportunities that will enable the Company to meet its projected budget and cash flow requirements.

Initial measures included divesting a non-core business unit (see Note 12 , Variable Interest Entity ), transferring another business unit (see Note 3 , Intangible assets, net ), and reviewing additional other business units to determine the impact of potential divestments.

Based on current projections, the Company expects to be in compliance with the new financial covenants for each of the quarters in the twelve months following the issuance date of this Quarterly Report on Form 10 -Q.

However, the Company has not met its projections for certain recent quarters, so there can be no assurance that the Company will meet its projections in the future.

If during any fiscal quarter, the Credit Parties do not comply with any of their financial covenants, such non-compliance would result in an event of default that would give SLR the right to accelerate maturities.

Additionally, if the Company fails to raise capital in at least the amount required under the Third Amendment by November 29, 2024, such failure would also result in an event of default.

In such case, the Company would not have sufficient funds to repay the SLR Term Loan (as defined herein) and the SLR Revolver (as defined herein).

In addition, even if the Company is able to raise additional capital as required by the Third Amendment , there is no assurance that such capital plus the available cash plus borrowing base on the SLR Revolver will be sufficient to fund operations over the next twelve months.

If needed, the Company will consider implementing other cost-saving measures, but there is no guarantee that such plans would be successfully executed or have the expected benefits.

As a result, management concluded that there is substantial doubt about the Company's ability to continue as a going concern for one year after the date of this Quarterly Report on Form 10 -Q.

The accompanying unaudited consolidated financial statements do not include any adjustments relating to the possible future effects on the recoverability and classification of recorded assets and classification of liabilities that might result should the Company be unable to continue as a going concern.

The Company has experienced a continued decline in the number of users registering on its owned and operated digital media properties ("O&O Sites") starting in 2020, following its implementation of the Traffic Quality Initiative, which eliminated a large portion of the Company's third -party affiliate traffic.

In 2023, the FTC Consent Order (as defined in Note 10 , Contingencies) imposed more rigorous standards and vetting of the Company's third -party publishers, some of whom elected not to work with the Company, which negatively impacted the Company's registration volume on its O&O Sites (see Note 10 , Contingencies ).

These issues, coupled with intermittent difficulties sourcing traffic from social media sites have resulted in declining revenue and profitability.

Borrowings under the SLR Revolver (as defined in Note 4 , Long-term debt, net ) pursuant to the SLR Credit Agreement (as defined and discussed in Note 4 , Long-term debt, net ) are limited to a borrowing base, that fluctuates weekly, based on eligible accounts receivable.

As a result of the borrowing base limit and the above performance issues, the available borrowing capacity has the potential to be insufficient to fund operations and meet the Company's needs.

Given the continued challenges the Company has faced achieving profitability, the Company has made reductions in workforce, including during the first quarter of 2025, and restructured certain long-term contracts to better align with the Company’s results and cash flow requirements.

The Company will continue to monitor the performance of its business units to determine the impact of potential divestments and consider further cost reduction measures and reallocation of resources that will enable the Company to meet its projected budget and cash flow requirements.

As of March 31, 2025 , the Company was in compliance with its financial covenants under the SLR Credit Agreement.

However, the Company’s current forecasts indicate that compliance with its financial covenants may be at risk in the next twelve months.

If, during any fiscal quarter, the Company does not comply with any of its financial covenants, such non-compliance would result in an event of default that would give SLR the right to accelerate maturities.

In such case, the Company would not have sufficient funds to repay the SLR Term Loan (as defined and discussed in Note 4 , Long-term debt, net ) under the SLR Credit Agreement and any outstanding balance on the SLR Revolver (as defined below in Note 4 , Long-term debt, net ).

On May 15, 2025, the Company entered into securities purchase agreements, pursuant to which the purchasers agreed to invest expected gross proceeds of $ 4,025 (as defined and discussed in Note 12 , Subsequent events ).

Even with the proceeds from such raise, there is no assurance that the available cash, plus availability under the borrowing base on the SLR Revolver will be sufficient to fund operations over the next twelve months, and, if needed, the Company would expect to raise additional capital.

If the Company is not able to raise sufficient capital to fund operations at their current levels, the Company will consider implementing cost-saving measures, but there is no guarantee that such plans will be successfully executed or have the expected benefits.

As a result, management has concluded that there is substantial doubt about the Company's ability to continue as a going concern for one year after the date of issuance of this Quarterly Report on Form 10 -Q.

The accompanying consolidated financial statements do not include any adjustments relating to the possible future effects on the recoverability and classification of recorded assets and classification of liabilities that might result should the Company be unable to continue as a going concern.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

Principles of consolidation

1 unchanged sentence

All significant transactions among the Company and its subsidiaries have been eliminated upon consolidation.

( b) Out of period correction

During the quarter ended June 30, 2024, the Company determined that unauthorized changes made to submitted policies by third parties related to the sale of certain health insurance policies led to higher attrition of sold policies than expected.

This determination was the result of the lower-than-expected monthly commission receipts based on the Company’s total policies written, after known constraints.

The Company corrected this error related to the three months ended March 31, 2024 and prior periods with a write-off of the total maximum impact to the accounts receivable and an associated offset to revenue of $ 1,958 , or $ 0.13 and $ 0.12 per share (basic and diluted), respectively, during the quarter ended June 30, 2024.

The Company assessed the impact of this out-of-period adjustment and concluded that it was not material to the financial statements previously issued for the interim period, and the cumulative adjustment is not expected to be material to the annual financial statements for 2024.

The out-of-period adjustment is included in the Fluent operating segment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

On April 11, 2024, the Company effected a 1 -for- 6 reverse split of the issued shares (the "Reverse Stock Split") of the Company's common stock.

All historical share amounts disclosed in this Quarterly Report on Form 10 -Q have been retroactively restated to reflect the Reverse Stock Split.

No fractional shares were issued as a result of the Reverse Stock Split, as fractional shares of Common Stock were rounded up to the nearest whole share.

See Note 8 , Equity, for additional information.

(d) Recently issued and adopted accounting standards

(b) Recently issued and adopted accounting standards

Accounting pronouncements not listed below were assessed and determined to be not applicable or are expected to have minimal impact on the Company's consolidated financial statements.

In October 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023 - 06, D isclosure Improvements:

2023 - 06, Disclosure Improvements:

Codification Amendments in Response to the SEC ’ s Disclosure Update and Simplification Initiatives , which incorporates updates to the Codification to align with SEC disclosure requirements in response to the August 2018 SEC Release No.

The amendment updates and simplifies certain SEC disclosure requirements that were duplicative, overlapping, or outdated due to changes in other SEC requirements and in U.S.

GAAP, International Financial Reporting Standards ("IFRS"), or the overall financial reporting environment.

ASU 2023 - 06 updates and simplifies certain SEC disclosure requirements that were duplicative or outdated due to changes in other SEC requirements and in U.S.

GAAP, International Financial Reporting Standards, or the overall financial reporting environment.

The new guidance is effective for each amendment only if the SEC removes the related disclosure of presentation requirements from its existing regulations by June 30, 2027.

1 unchanged sentence

The Company is currently evaluating the impact of adopting the ASU on its consolidated financial statements and disclosures.

In November 2023, the FASB issued ASU No.

2023 - 07, Segment Reporting (Topic 2 80 ):

Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and an explanation of any additional measures the CODM uses in deciding how to allocate resources.

The new guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted.

The guidance will be applied on a retrospective basis, with such disclosures to be made in regard to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No.

2023 - 09, Income Taxes (Topic 470 ):

Improvements to Income Tax Disclosures , which is designed to increase the transparency and decision-usefulness of income tax disclosures for financial statement users.

Improvements to Income Tax Disclosures , designed to increase the transparency and usefulness of income tax disclosures for financial statement users.

The ASU follows investors' indication and request for enhanced tax disclosures in order to better assess an entity’s operations, related tax risks, jurisdictional tax exposures, and increase transparency regarding tax information through improvements to tax disclosures, specifically rate reconciliation, income taxes paid, and unrecognized tax benefits and certain temporary differences.

5 unchanged sentences

Disaggregation of Income Statement Expenses , which requires additional disclosures about a public business entity’s costs and expenses on the face of the financial statements.

The ASU follows investor's requests for more detailed information and disclosures of disaggregated financial reporting information about the types of expenses in commonly presented expense captions (such as cost of sales, selling, general, and administrative, and research and development), including purchases of inventory, employee compensation, depreciation, amortization, and depletion.

The ASU follows investors' requests for more detailed information and disclosures of disaggregated financial reporting information about the types of expenses in commonly presented expense captions (such as cost of sales, selling, general, and administrative, and research and development), including purchases of inventory, employee compensation, depreciation, amortization, and depletion.

The new guidance is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027, and early adoption is permitted.

3 unchanged sentences

(Amounts in thousands, except share and per share data)

(e) Revenue recognition

Data and performance-based marketing

Data and performance-based marketing revenue

Revenue is generated when there is a transfer of control of a good or service for a consideration amount the Company is expected to be entitled to.

Revenue is recognized when a company has satisfied its performance obligations to a customer and can reasonably expect and measure the payment.

The Company's performance obligations are typically to (a) deliver data records based on predefined qualifying characteristics specified by the customer, (b) generate conversions based on predefined user actions (for example, a click, a registration, or the installation of an app) and subject to certain qualifying characteristics specified by the customer, (c) verify user interest or transfer calls to advertiser clients as a part of the contact center operation, or (d) deliver media spend as a part of the business of AdParlor, LLC ("AdParlor"), a wholly-owned subsidiary of the Company.

The Company's performance obligations are typically to (a) deliver data records based on predefined qualifying characteristics specified by the customer, (b) generate conversions based on predefined user actions (for example, a click, a registration, or the installation of an app) and subject to certain qualifying characteristics specified by the customer, (c) transfer calls with the Company's advertiser clients as a part of the call center operation, or (d) deliver media spend as a part of the business of AdParlor, LLC ("AdParlor"), a wholly-owned subsidiary of the Company.

These Company performance obligations have the customer simultaneously receiving and consuming the benefits provided.

10 unchanged sentences

If a customer pays consideration before the Company's performance obligations are satisfied, such amounts are classified as deferred revenue on the consolidated balance sheets.

September 30, 2024 ,

March 31, 2025 ,

December 31, 2024 , and

5 unchanged sentences

When there is a delay between the period in which revenue is recognized and when a customer invoice is issued, revenue is recognized, and the corresponding amounts are recorded as unbilled revenue within accounts receivable on the consolidated balance sheets.

As of September 30, 2024 , December 31, 2023 , and December 31, 2022, unbilled revenue included in the Company's accounts receivable was $ 17,299 , $ 21,488 , and $ 26,878 , respectively.

As of March 31, 2025 , December 31, 2024 , and December 31, 2023, unbilled revenue included in the Company's accounts receivable was $ 13,488 , $ 18,625 , and $ 21,488 , respectively.

In line with industry practice, the unbilled revenue balance is recorded based on the Company's internally tracked conversions, net of estimated variances between this amount and the amount tracked and subsequently confirmed by customers.

7 unchanged sentences

Commission revenue

The Company, acting as the agent, recognizes commission revenue that it expects to receive from the insurance provider from the sale of certain of its health insurance policies, which includes the assumed automatic renewals of such policies once its performance obligation is satisfied.

The Company, acting as the agent, recognizes commission revenue that it expects to receive from an insurance provider from the sale of certain of its health insurance policies, which includes the assumed automatic renewals of such policies once its performance obligation is satisfied.

The Company considers its performance obligation related to commissions for both the initial policy sale and future renewals of the policy to be satisfied upon submission by the Company of the initial policy application.

The Company applies the practical expedient to estimate the commission revenue for each insurance policy by applying the use of the portfolio approach to policies grouped together by product type and period submitted for effectuation.

The commission revenue is variable based on a policy's estimated lifetime value ("LTV"), which is the amount of time the Company expects the policy will remain effective based on past trends, industry data, expectations as to future retention rates, and commission rates.

Further, the Company considers the application of constraints to the LTV and only recognizes the amount of variable consideration believed probable to be received that will not be subject to a significant revenue reversal in the future.

Based on this, the commission revenue is recorded upon satisfaction of the performance obligation, which is typically paid monthly by the insurance provider as the consumer renews and pays the insurance provider for the policy over the duration the consumer remains on the policy.

Based on this, the commission revenue is recorded upon satisfaction of the performance obligation, with the associated payment, typically paid monthly, over time, by the insurance provider as the consumer renews and pays the insurance provider for the policy over the duration the consumer remains on the policy.

The Company reassesses the estimated LTV for the health insurance policies on a quarterly or as-needed basis.

Adjustments to the LTV may result in an increase or decrease in revenue and the corresponding asset in the period the change is made.

Due to the higher attrition of policies sold, the Company reassessed its estimated LTV for the health insurance policies by increasing the constraints applied to the amount of consideration deemed probable which led to a reduction of estimated LTV during the quarter ended June 30, 2024.

(f) Use of estimates

Revenue Disaggregation

The following table presents the Company’s disaggregated revenue by media resources along with its availability and demand for the three months ended March 31, 2025 and 2024 , based on segment reporting:

Three Months Ended March 31,

(In thousands)

Owned and Operated

$ 31,082 $ — $ 31,082 $ 44,654 $ — $ 44,654

Commerce Media Solutions

12,660 — 12,660 6,376 — 6,376

Call Solutions

10,079 — 10,079 6,931 — 6,931

— 1,397 1,397 — 2,805 2,805

All Other (1)

— ( 8 ) ( 8 ) — 5,217 5,217

Total Revenue

$ 53,821 $ 1,389 $ 55,210 $ 57,961 $ 8,022 $ 65,983

Balance is fully related for the first quarter of 2025 and partially related for the first quarter of 2024 to commission revenues.

The Owned and Operating and Commerce Media Solutions in the table above represent the Company’s data and performance-based marketing revenue.

Call Solutions mainly represents the Company’s performance-based marketing revenue.

(d) Use of estimates

The preparation of consolidated financial statements in accordance with U.S.

GAAP requires the Company’s management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

Significant items subject to such estimates and assumptions include the allowance for credit losses, useful lives of intangible assets, recoverability of the carrying amounts of goodwill and intangible assets, the portion of revenue subject to estimates for variances between internally-tracked conversions and those confirmed by the customer, the variable commission revenue based on the estimated LTV, purchase accounting, consolidation of variable interest entity, fair value of the Convertible Notes based on input assumptions, and income tax provision.

Significant items subject to such estimates and assumptions include the allowance for credit losses, useful lives of intangible assets, recoverability of the carrying amounts of intangible assets, the portion of revenue subject to estimates for variances between internally-tracked conversions and those confirmed by the customer, the variable commission revenue based on the estimated LTV, consolidation of VIE, fair value of Convertible Notes (as defined in Note 4 ) with related parties based on input assumptions, shared-based compensation and income tax provision.

These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable.

Actual results could differ from these estimates.

(g) Fair value

(e) Fair value

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

7 unchanged sentences

See Note 5 , Fair Value Measurements , for further details.

Goodwill represents the difference between the purchase price and the estimated fair value of net assets acquired when accounted for by the acquisition method of accounting.

March 31, 2025 and

December 31, 2024 , there was

no remaining goodwill.

Income (loss) per share

Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding and restricted stock units ("RSUs") that have vested but not been delivered during the period.

Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock are exercised or converted into common stock and is calculated using the treasury stock method for stock options, RSUs, restricted stock, warrants (including the Pre-Funded Warrants, as defined in Note 8 below) and deferred common stock.

Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding, restricted stock units ("RSUs"), and restricted common stock that have vested but not been delivered during the period.

Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and is calculated using the treasury stock method for stock options, RSUs, restricted stock, pre-funded warrants (see Note 7 , Equity below), direct offering (see Note 7 , Equity below), deferred common stock, and unvested shares.

Stock equivalent shares are excluded from the calculation in loss periods, as their effects would be anti-dilutive.

For the three and nine months ended September 30, 2024 and 2023 , basic and diluted income (loss) per share were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

For the three months ended March 31, 2025 and 2024 , basic and diluted loss per share were as follows:

Three Months Ended March 31,

$ ( 8,269 ) $ ( 6,276 )

8 unchanged sentences

21,211,439 13,902,165

Basic and diluted income (loss) per share:

Basic and diluted loss per share:

$ ( 0.39 ) $ ( 0.45 )

Based on exercise prices compared to the average stock prices for the three and nine months ended September 30, 2024 and 2023 , certain stock equivalents, including RSUs and stock options, have been excluded from the diluted weighted average share calculations due to their anti-dilutive nature.

Three Months Ended September 30,

Nine Months Ended September 30,

Based on exercise prices compared to the average stock prices for the three months ended March 31, 2025 and 2024 , certain stock equivalents, including RSUs and stock options, have been excluded from the diluted weighted average share calculations due to their anti-dilutive nature.

Three Months Ended March 31,

Restricted stock units

8 unchanged sentences

Intangible assets, net, other than goodwill, consist of the following:

Amortization period (in years) September 30, 2024

Amortization period (in years) March 31, 2025

December 31, 2024

8 unchanged sentences

5 - 10 31,292 31,292

Non-competition agreements

2 - 5 1,768 1,768

Total gross amount

10 unchanged sentences

( 29,469 ) ( 28,807 )

Non-competition agreements

( 1,768 ) ( 1,768 )

Total accumulated amortization

7 unchanged sentences

The gross amounts associated with software developed for internal use primarily represent capitalized costs of internally developed software.

The amounts relating to acquired proprietary technology, customer relationships, trade names, domain names, databases, and non-competition agreements primarily represent the fair values of intangible assets acquired as a result of the acquisition of Fluent, LLC, effective December 8, 2015;

the acquisition of Q Interactive, LLC, effecti ve June 8, 2016;

The amounts relating to acquired proprietary technology, customer relationships, trade names, domain names, and databases primarily represent the fair values of intangible assets acquired as a result of the acquisition of Fluent, LLC, effective December 8, 2015;

the acquisition of Q Interactive, LLC, effective June 8, 2016;

the acquisition of substantially all the assets of AdParlor Holdings, Inc.

and certain of its affiliates, effective July 1, 2019 ( the "AdParlor Acquisition");

and certain of its affiliates, effective July 1, 2019;

the acquisition of a 50 % interest in Winopoly, LLC, effective April 1, 2020;

the acquisition of a 100 % interest in True North Loyalty, LLC, (the "True North Acquisition"), effective January 1, 2022 ( see Note 12 , Variable Interest Entity );

and the consolidation of TAPP Influencers Corp.

("TAPP") effective January 9, 2023 ( see Note 12 , Variable Interest Entity ).

During the second quarter of 2024, the Company determined that the effects of the expected decline in operations due to the impact of certain client relationships constituted a triggering event for the All Other reporting unit.

The Company conducted an interim test of recoverability of its long-lived assets, which compared the projected undiscounted cash flows to the carrying value of the asset group.

The results of this approach indicated that this long-lived asset was not recoverable and required that an impairment loss related to its customer relationships be calculated.

The Company determined that based on the facts and circumstances, the remaining balance was impaired and recorded a non-cash impairment charge of its customer relationship intangible of $ 383 as of June 30, 2024 .

("TAPP"), effective January 9, 2023 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

The Company completed its quarterly triggering event assessment for the three months ended of September 30, 2024 and determined that no triggering event had occurred requiring further impairment assessment of its long-lived assets.

As of June 30, 2024 , the Company had recorded a $ 597 impairment charge on its software developed for internal use which related to an immaterial business unit under the Fluent reporting unit that was disposed of as of September 30, 2024 .

Amortization expenses of $ 2,299 and $ 2,559 for the three months ended September 30, 2024 and 2023 , respectively, and $ 7,277 and $ 7,810 for the nine months ended September 30, 2024 and 2023 , respectively, are included in depreciation and amortization expenses in the consolidated statements of operations.

As of September 30, 2024 , intangible assets with a carrying amount of $ 601 , included in the gross amount of software developed for internal use, have not commenced amortization, as they are not ready for their intended use.

As of September 30, 2024 , estimated amortization expenses related to the Company's intangible assets for the remainder of 2024 and through 2029 and thereafter are as follows:

September 30, 2024

The Company completed its quarterly triggering event assessment for the three months ended of March 31, 2025 and determined that no triggering event had occurred requiring further impairment assessment of its long-lived assets.

Amortization expenses of $ 2,391 and $ 2,483 for the three months ended March 31, 2025 and 2024 , respectively, are included in depreciation and amortization expenses in the consolidated statements of operations.

As of March 31, 2025 , intangible assets with a carrying amount of $ 768 , included in the gross amount of software developed for internal use, have not commenced amortization, as they are not ready for their intended use.

As of March 31, 2025 , estimated amortization expenses related to the Company's intangible assets for the remainder of 2025 and through 2030 and thereafter are as follows:

March 31, 2025

Remainder of 2025

2030 and thereafter

Goodwill represents the difference between the purchase price and the estimated fair value of net assets acquired, when accounted for by the acquisition method of accounting.

As of September 30, 2024 , the total balance of goodwill was $ 0 , which represented a decrease of $ 1,261 from the balance as of December 31, 2023 due to a non-cash impairment charge recorded as of June 30, 2024.

In accordance with ASC 350, Intangibles - Goodwill and Other, goodwill is to be assessed at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value.

The measurement date of the Company's annual goodwill impairment test had been set to October 1, but with no remaining goodwill for the fiscal year ended December 31, 2024 , the annual testing will not be performed.

The Company conducted an interim test of the fair value of the All Other reporting unit's goodwill for potential impairment related to the triggering event.

The Company applied solely the income approach to determine the fair value of the All Other reporting unit.

The results of this approach indicated that the carrying value exceeded its fair value by 58%.

The Company therefore concluded that the goodwill was impaired as of June 30, 2024 and recorded a non-cash impairment charge for its remaining balance of $ 1,261 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

Long-term debt, net

Long-term debt, net of unamortized discount and financing costs, related to the Citizens Credit Facility, the New Credit Facility, Note Payable, and Convertible Notes with related parties (as set forth herein) consisted of the following:

September 30, 2024

Long-term debt, net of unamortized discount and financing costs, related to the SLR Credit Facility, Note Payable (as defined herein), and Convertible Notes with related parties (as set forth herein) consisted of the following:

March 31, 2025

December 31, 2024

Citizens Credit Facility due 2025 (less unamortized discount and financing costs of $ 0 and $ 762 , respectively)

New Credit Facility due 2029 (less unamortized discount and financing costs of $ 1,154 and $ 0 , respectively)

Credit Facility due 2029 (less unamortized discount and financing costs of $ 1,216 and $ 1,186 , respectively)

$ 20,551 $ 30,359

Note Payable due 2026

6 unchanged sentences

$ 3,800 $ 3,970

Citizens Credit Facility

On April 2, 2024, the Company repaid the $ 30,000 aggregate principal amount of the term loan ("Citizens Term Loan") due on September 30, 2025, resulting in a loss due to the early extinguishment of debt of $ 1,009 , which was recognized in the second quarter of 2024.

New Credit Facility

On April 2, 2024, Fluent, LLC entered into the SLR Credit Agreement with certain of its subsidiaries and the Company, as guarantors, and SLR, as administrative agent, lead arranger and bookrunner, and each other lender from time to time party thereto.

Credit Facility

On April 2, 2024, Fluent, LLC, a wholly owned subsidiary of the Company (the "Borrower") entered into a credit agreement (as amended, the "SLR Credit Agreement") with certain of its subsidiaries and the Company (collectively, the Credit Parties"), as guarantors, and Crystal Financial LLC D/B/A SLR Credit Solutions, as administrative agent, lead arranger and bookrunner ("SLR"), and each other lender from time to time party thereto.

The SLR Credit Agreement provides for a $ 20,000 term loan (the "SLR Term Loan") and a revolving credit facility of up to $ 30,000 (the "SLR Revolver", and together with the SLR Term Loan, the "SLR Credit Facility").

As of September 30, 2024 , the SLR Credit Facility had an outstanding principal balance of $ 32,486 (of which $ 12,486 relates to the SLR Revolver) and matures on April 2, 2029.

The Borrower used a portion of the net proceeds of the SLR Credit Facility to repay the outstanding Citizens Term Loan under the credit agreement dated March 31, 2021 ( the "Citizens Credit Agreement"), by and among the Borrower, certain subsidiaries of the Borrower as guarantors, the lenders thereto, and Citizens Bank, N.A.

("Citizens Bank").

As of March 31, 2025 , the SLR Credit Facility had an outstanding principal balance of $ 21,767 (of which $ 1,767 relates to the SLR Revolver) and matures on April 2, 2029.

The Borrower used a portion of the net proceeds of the SLR Credit Facility to repay the outstanding $ 30,000 term loan due on September 30, 2025, under the credit agreement dated March 31, 2021, by and among the Borrower, certain subsidiaries of the Borrower as guarantors, the lenders thereto, and Citizens Bank, N.A..

The repayment resulted in a loss on early extinguishment of debt of $ 1,009 , which was recognized in the second quarter of 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2 unchanged sentences

Unfunded commitments will be subject to an unused facility fee, which will be payable monthly in arrears, as of the month following the closing, at a rate of 0.50 % per annum.

All amounts owed under the SLR Credit Facility are due and payable on the five -year anniversary of the closing date (the "Maturity Date"), or earlier following a change in control or an event of default, unless otherwise extended in accordance with the terms of the SLR Credit Agreement.

All amounts owed under the SLR Credit Facility are due and payable on the five -year anniversary of the closing date or earlier following a change in control or an event of default, unless otherwise extended in accordance with the terms of the SLR Credit Agreement.

Borrowings under the SLR Credit Agreement bear interest at a rate per annum equal to a 3 -month term SOFR plus 0.26161 %, subject to a 1.50 % floor, plus a margin (the "Applicable Margin") of 5.25 % which was increased to 5.75 % pursuant to the Second Amendment to the SLR Credit Agreement (the "Second Amend ment").

The Applicable Margin will be reduced to 5.0 % when the Borrower's fixed charge coverage ratio is greater than 1.10 to 1.

The opening interest rate of the SLR Credit Facility was 10.81 % (SOFR + CSA + 5.25 %), which increased to 11.03 % (SOFR + CSA+ 5.75 %) as of September 30, 2024 .

The SLR Credit Agreement contains restrictive covenants which impose limitations on the way the Credit Parties conducts business, including limitations on the amount of additional debt the Credit Parties are able to incur and their ability to make certain investments or other restricted payments.

The opening interest rate of the SLR Credit Facility was 10.81 % (SOFR + CSA + 5.25 %), which changed to 10.33 % (SOFR + CSA+ 5.75 %) as of March 31, 2025 .

The SLR Credit Agreement contains restrictive covenants that impose limitations on the way the Credit Parties conducts business, including limitations on the amount of additional debt the Credit Parties are able to incur and their ability to make certain investments or other restricted payments.

The SLR Credit Agreement is guaranteed by the Company and certain of its direct and indirect subsidiaries and is secured by substantially all of the Company's assets and those of its direct and indirect subsidiaries, including the Borrower.

The Borrower's ability to draw on the SLR Revolver depends on its weekly borrowing base, which is calculated by applying specified percentages established by SLR to the Borrower's eligible accounts receivable and cash, less reserves, subject to certain limitations.

Debt issuance costs and debt discount costs, net of accumulated amortization, related to the issuance and amendments of the SLR Revolver was $ 903 and $ 827 , respectively, as of September 30, 2024 .

The Borrower's ability to draw on the SLR Revolver depends on its borrowing base, which is calculated weekly by applying specified percentages established by SLR to the Borrower's eligible accounts receivable and cash, less reserves, subject to certain limitations.

Debt issuance costs and debt discount costs, net of accumulated amortization, related to the issuance and amendments of the SLR Revolver were $ 803 and $ 1,020 , respectively, as of March 31, 2025 .

The amounts are included in other non-current assets in the Company's consolidated balance sheets.

The Company amortizes these costs over the life of the related debt.

On May 15, 2024, the Credit Parties and SLR entered into the First Amendment to the SLR Credit Agreement (the "First Amendment"), pursuant to which SLR, among other things, ( 1 ) waived any required prepayments on the SLR Revolver from the proceeds from the Company's Private Placement, ( 2 ) required that the Credit Parties (as defined in the SLR Credit Agreement) retain a financial advisor to assist in preparing the Company's projections, ( 3 ) increased the minimum excess availability covenant following the Private Placement (as defined herein) (see Note 8 , Equity) ( 4 ) amended the definition of borrowing base (as defined in the SLR Credit Agreement), and ( 5 ) amended certain post-closing obligations.

On May 15, 2024, the Credit Parties and SLR entered into the First Amendment to the SLR Credit Agreement (the "First Amendment"), pursuant to which SLR, among other things, ( 1 ) waived any required prepayments on the SLR Revolver from the proceeds from the Company's May Private Placement (as defined herein) (see Note 7 , Equity ), ( 2 ) required that the Credit Parties (as defined in the SLR Credit Agreement) retain a financial advisor to assist in preparing the Company's projections, ( 3 ) increased the minimum excess availability covenant following the May Private Placement, ( 4 ) amended the definition of borrowing base (as defined in the SLR Credit Agreement), and ( 5 ) amended certain post-closing obligations.

On August 19, 2024, the Credit Parties and SLR entered into the Second Amendment, which, among other things, required that the Company raise $2,000 in additional capital.

To raise the capital, the Company entered into convertible subordinated notes, as described below, raising an aggregate $ 2,050 .

To raise the capital, the Company entered into convertible subordinated notes, as described below, raising an aggregate of $ 2,050 .

In addition, ( 1 ) SLR waived non-compliance with the financial covenants as of June 30, 2024, ( 2 ) modified the financial covenants through December 31, 2025, ( 3 ) ended a requirement to engage a financial advisor, ( 4 ) increased the Applicable Margin from 5.25 % to 5.75 %, and ( 5 ) waived any required prepayments from the proceeds from the convertible subordinated notes financing.

As of September 30, 2024 , the Credit Parties were not in compliance with their financial covenants under the SLR Credit Agreement, which the Borrower had to report by October 31, 2024 , and which would have resulted in an event of default;

however, on October 30, 2024 , the Credit Parties 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 September 30, 2024 , and the related notice of event of default, to November 19, 2024.

On November 15, 2024 , the Credit Parties and SLR entered into the Third Amendment to the SLR Credit Agreement, which, among other things, required that the Company raise at least $7,500 of additional capital by November 29, 2024 .

On November 14, 2024, the Credit Parties and SLR entered into the Third Amendment to the SLR Credit Agreement (the "Third Amendment"), which, among other things, required that the Company raise at least $7,500 of additional capital by November 29, 2024.

On November 27, 2024, the deadline was extended to December 3, 2024.

In addition, the Third Amendment ( 1 ) waived non-compliance with the financial covenants as of September 30, 2024, ( 2 ) extended the duration of the call protection applicable to the loans, and ( 3 ) modified the cash dominion provisions to remain in effect on an indefinite basis.

On March 10, 2025, the Credit Parties and SLR entered into the Fourth Amendment to the SLR Credit Agreement, (the "Fourth Amendment") which, among other things, required that the Company raise at least $ 5,000 of additional capital by March 20, 2025.

In addition, SLR ( 1 ) waived non-compliance with the financial covenants as of December 31, 2024, ( 2 ) extended the duration of the call protection applicable to the loans, and ( 3 ) modified the financial covenants through December 31, 2025.

As of March 31, 2025 , the Credit Parties were in compliance with their financial covenants under the SLR Credit Agreement.

However, the Company’s current forecasts indicate that compliance with its financial covenants may be at risk in the next twelve months.

In such case, the Company would not have sufficient funds to repay the SLR Term Loan under the SLR Credit Agreement and any outstanding balance on the SLR Revolver.

Because the Company believes there is risk that it will not be in compliance with its financial covenants in the next twelve months, all borrowings under the Credit Agreement have been classified as current as of March 31, 2025 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

Based on current projections, the Company expects to be in compliance with the new financial covenants during the next twelve months.

However, the Company has not met its projections for certain recent quarters, so there can be no assurance that the Company will meet its projections in the future.

I f during any fiscal quarter, the Credit Parties do not comply with any of their financial covenants, such non-compliance would result in an event of default that would give SLR the right to accelerate maturities.

Additionally, if the Company fails to raise capital in at least the amount required under the Third Amendment by November 29, 2024, such failure would also result in an event of default that would give SLR the right to accelerate maturities.

Accordingly, all borrowings under the Credit Agreement have been classified as current as of September 30, 2024 .

On March 17, 2024, Fluent, LLC entered into a junior secured promissory note (the "Note Payable") with Freedom Debt Relief, LLC ("FDR") in the principal amount of $ 2,000 in connection with the Berman Settlement Agreement (see Note 11 , Contingencies ).

The Note Payable bears interest equal to one -month CME Term SOFR (defined as the rate published by the CME Group Benchmark Administration Limited) plus 11.0 % per annum, compounded quarterly.

The opening interest rate of the Note Payable was 16.32 % (SOFR + 11 %), which decreased to 16.17 % (SOFR + 11% ) as of September 30, 2024 .

The opening interest rate of the Note Payable was 16.32 % (SOFR + 11 %), which changed to 15.52 % (SOFR + 11% ) as of March 31, 2025 .

A maximum of $ 1,000 of the borrowings under the Note Payable are secured by substantially all of the assets of Fluent, LLC.

3 unchanged sentences

Convertible Notes with related parties

On August 19, 2024, the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with certain of the Company's officers and directors and the largest stockholder (the "Purchasers") to sell convertible subordinated promissory notes (the "Convertible Notes") in aggregate principal amount of $ 2,050 .

The Convertible Notes mature on April 2, 2029, and bear interest at 13 % per annum payable quarterly in kind or may be paid in cash (subject to payment conditions in the Subordination Agreement (as defined below)) beginning December 31, 2024.

Subject to certain payment conditions in the Subordination Agreement, 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 stockholder approval without the consent of the applicable holder.

Each holder of the Convertible Notes 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.

On August 19, 2024, the Company entered into a securities purchase agreement (the "Notes Purchase Agreement") with certain of the Company's officers and directors and the largest stockholder (the "Note Purchasers") to sell convertible subordinated promissory notes (the "Convertible Notes") in aggregate principal amount of $ 2,050 .

The Convertible Notes mature on April 2, 2029, and bear interest at 13 % per annum payable.

Subject to certain payment conditions in the Subordination Agreement (as defined below), the Company may pay interest quarterly in kind or in cash beginning December 31, 2024.

and 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 stockholder approval 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.

The “Conversion Amount” is the sum of all or any portion of the outstanding principal amount of the Convertible Note, as designated by the holder upon exercise of its right of conversion, plus all accrued and unpaid interest.

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.

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

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

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

12 unchanged sentences

As a result, based on ASC 825 - 10, the Company recorded a day one unrealized loss on the Convertible Notes of $ 2,110 .

As of September 30, 2024 , the principal balance of the Convertible Notes was $ 2,050 , with a fair value of $ 4,860 .

The Company recognized an additional increase in fair value of $ 700 for the three and nine months ended September 30, 2024 , which was recognized as after current period other income (loss) from operations.

For the three and nine months ended September 30, 2024 , accrued interest was paid in kind.

As of September 30, 2024 , scheduled future maturities of the Company's debt are as follows, not reflective of the debt being accelerated as noted in Note 1 :

September 30, 2024

As of March 31, 2025 , the principal balance of the Convertible Notes was $ 2,217 , with a fair value of $ 3,800 .

The Company recognized an additional increase in fair value of $ 80 for the three months ended March 31, 2025 , which was recognized as after current period other income (loss) from operations.

For the three months ended March 31, 2025 , accrued interest was paid in kind.

As of March 31, 2025 , scheduled future maturities of the Company's debt are as follows, not reflective of the debt being accelerated as noted in Note 1 :

March 31, 2025

Remainder of 2025

2 unchanged sentences

(Amounts in thousands, except share and per share data)

Fair Value Measurement

Fair Value Measurements

The fair value of the Company's cash, cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate their carrying values because of the short-term nature of these instruments.

Restricted cash includes a separately maintained cash account, as required under the terms of a lease agreement the Company entered into on October 10, 2018 for office space in New York City.

As of September 30, 2024 , the Company regards the fair value of its long-term debt to approximate its carrying value.

The following tables present the Company’s fair value hierarchy for assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 :

September 30, 2024

As of March 31, 2025 , the Company regards the fair value of its long-term debt to approximate its carrying value.

The following tables present the Company’s fair value hierarchy for assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 :

March 31, 2025

December 31, 2024

7 unchanged sentences

— — 21 — — 988

Consideration for True North Sale (3)

— 489 — — — —

Inclusive of the credit facilities and notes payable.

Inclusive of the credit facilities and note payable.

The debt fair value does not include debt issuance costs or debt discount.

See Note 4 , Long-term debt, net.

Balance recorded in prepaid and other expenses and other non-current assets with changes to the balance as a result of adjustment of the fair value related to the initial discount rate and payments made.

Balance recorded in accrued expenses and other current liabilities with changes to the balance as a result of adjustment of the fair value related to the initial discount rate and payments made.

See Note 11 , Variable Interest Entity , for initial assumptions of the fair value.

( 3 ) Relates to the remaining net working capital and contribution margin owed based upon a discounted rate of average borrowing rates over the expected time frame to be earned.

See Note 12 , Variable Interest Entity .

Convertible Notes with related parties

The Company issued the Convertible Notes on August 19, 2024 and elected the fair value option, see Note 5 , Long-term debt, net .

The following is a reconciliation of the fair value from the issuance date of such notes to September 30, 2024 :

Fair value as of August 19, 2024

The Company issued the Convertible Notes on August 19, 2024 and elected the fair value option.

See Note 4 , Long-term debt, net .

The following is a reconciliation of the fair value from December 31, 2024 to March 31, 2025 :

Fair value as of December 31, 2024

Loss on change in fair value reported in the consolidated statement of operations

Fair value as of September 30, 2024

Fair value as of March 31, 2025

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2 unchanged sentences

Both approaches are based on the following assumptions:

September 30, 2024

March 31, 2025

Face value of principal payable

6 unchanged sentences

The Company determined that the estimated fair value of the net assets acquired, excluding the net working capital, was a Level 3 measurement, as certain inputs to determine fair value were unobservable.

See Note 12 , Variable Interest Entity .

Fair value as of December 31, 2024

Payment for annual bonus

Adjustment to compensation expense

Fair value as of September 30, 2024

Payment of compensation expense

Fair value as of March 31, 2025

The fair value of certain long-lived non-financial assets and liabilities may be required to be measured on a nonrecurring basis in certain circumstances, including when there is evidence of impairment.

As of September 30, 2024 , certain non-financial assets have been measured at fair value subsequent to their initial recognition.

As of March 31, 2025 , certain non-financial assets have been measured at fair value subsequent to their initial recognition.

The Company determined the estimated fair value to be a Level 3 measurement, as certain inputs used to determine fair value are unobservable.

See Note 4 , Goodwill.

See Note 1 (f) , Goodwill.

The Company is subject to federal and state income taxes in the United States.

1 unchanged sentence

The Company updates its estimated AETR on a quarterly basis and, if the estimate changes, a cumulative adjustment is made.

As of September 30, 2024 and December 31, 2023 , the Company recorded a full valuation allowance against net deferred tax assets and intends to continue maintaining a full valuation allowance on these net deferred tax assets until there is sufficient evidence to support the release of all or a portion of these allowances.

As of March 31, 2025 and December 31, 2024 , the Company recorded a full valuation allowance against net deferred tax assets and intends to continue maintaining a full valuation allowance on these net deferred tax assets until there is sufficient evidence to support the release of all or a portion of these valuation allowances.

Release of some or all of the valuation allowance would result in the recognition of certain deferred tax assets and an increase in deferred tax benefit for any period in which such a release may be recorded.

However, the exact timing and amount of any valuation allowance release are subject to change, depending upon the level of profitability that the Company is able to achieve and the net deferred tax assets available.

For the nine months ended September 30, 2024 , the Company's effective income tax rate of 0.4 % differed from the statutory federal income tax rate of 21 % primarily due to state and local tax expense and losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

For the nine months ended September 30, 2023 , the Company's effective income tax rate of 0.9 % primarily represents the projected federal and state cash tax expense expected to result in taxable income for full-year 2023 after the impact of a non-deductible goodwill impairment against pre-tax year-to-date losses, offset by the benefit of federal research and development credits on expected federal cash tax expense.

For the three months ended March 31, 2025 , the Company's effective income tax rate of 2.9 % differed from the statutory federal income tax rate of 21 % primarily due to state and local tax expense and losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

For the three months ended March 31, 2024 , the Company's effective income tax rate of 16.9 % primarily represents the state and local tax expense, offset by the benefit of federal research and development credits.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3 unchanged sentences

For those income tax positions where it is not more-likely-than- not that a tax benefit will be sustained, no tax benefit has been recognized in the Company's financial statements.

As of September 30, 2024 and December 31, 2023 , the balance of unrecognized tax benefits was $ 1,480 .

If the Company's tax positions are ultimately sustained, the Company's liability would be reduced by $1,480, all of which would impact the Company's tax provision.

As of September 30, 2024 , the Company has not accrued any interest or penalties with respect to its uncertain tax positions.

The Company is reasonably certain that all of its uncertain tax positions will reverse within the next twelve months due to the closing of the statute of limitations.

Effective at 6:00 p.m.

Eastern Time on April 11, 2024, the Company effected a 1 -for- 6 (the "Reverse Stock Split Ratio") reverse split of the issued shares of the Company's common stock (the "Reverse Stock Split") pursuant to a certificate of amendment to the Company's Certificate of Incorporation, as amended, filed with the Secretary of State of the State of Delaware on April 11, 2024.

As a result of the Reverse Stock Split, every six shares of common stock issued and outstanding or held by the Company in treasury stock were combined and reclassified into one share of common stock.

No fractional shares were issued as a result of the Reverse Stock Split.

Stockholders who were otherwise entitled to receive a fractional share received an additional fraction of a share of common stock to round up to the next whole share.

The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder's percentage ownership interest or any stockholder's proportionate voting power, except for immaterial adjustments that resulted from the treatment of fractional shares.

The Reverse Stock Split did not change the number of authorized shares of common stock or the par value per share of the common stock.

Eastern Time on April 11, 2024, every six shares of common stock issued and outstanding or held by the Company in treasury stock were combined and reclassified into one share of common stock (the “Reverse Stock Split”).

The Reverse Stock Split reduced the number of issued and outstanding shares of common stock from 81,571,864 shares to 13,660,598 shares and reduced the issued shares of common stock held by the Company in treasury stock from 4,611,569 shares to 768,595 shares.

The common stock began trading on a reverse split-adjusted basis at the opening of trading on The Nasdaq Capital Market on April 12, 2024, under the same symbol (FLNT) with a new CUSIP number ( 34380C 201 ).

As of the effective time of the Reverse Stock Split, the number of shares available for issuance under the Company's equity incentive plans and the number of shares issuable pursuant to each outstanding equity award immediately prior to the Reverse Stock Split were reduced proportionately at the Reverse Stock Split Ratio, and the exercise price for each outstanding stock option was increased in inverse proportion to the Reverse Stock Split Ratio.

As of September 30, 2024 and December 31, 2023 , the number of issued shares of common stock was 17,645,368 and 14,384,936 , respectively, which included shares of treasury stock of 768,595 and 768,595 , respectively.

For the nine months ended September 30, 2024 , the increase in the number of issued shares of common stock was the result of the exercise of 2,955,084 shares related to the warrants, as described below, and 305,348 shares of common stock issued upon vesting of RSUs, in which no shares of common stock were withheld to cover statutory taxes upon such vesting.

Treasury stock

As of September 30, 2024 and December 31, 2023 , the Company held shares of treasury stock of 768,595 and 768,595 , respectively, with a cost of $ 11,407 and $ 11,407 , respectively.

As of March 31, 2025 and December 31, 2024 , the number of issued shares of common stock was 21,412,255 and 20,791,431 , respectively, which included shares of treasury stock of 768,595 and 768,595 , respectively.

For the three months ended March 31, 2025 , the increase in the number of issued shares of common stock was the result of the exercise of pre-funded warrants for 620,824 shares, as described below.

Direct Offering:

November 29, 2024, the Company entered into securities purchase agreements (the "Registered Direct Purchase Agreements") with certain pre-existing institutional investors (the "Registered Direct Investors"), pursuant to which the Company agreed to sell to such investors an aggregate of

2,483,586 shares of common stock of the Company, par value

$ 0.0005 per share (the "Registered Direct Offering").

The Registered Direct Offering was made pursuant to the Company's shelf registration statement on Form S-

3, which was declared effective by the SEC

September 9, 2024.

In connection with the Registered Direct Offering, the Company entered into a placement agency agreement (the "Placement Agency Agreement") with ThinkEquity LLC, as the placement agent (the "Placement Agent"), for the sale of

1,943,676 shares of common stock to the Registered Direct Investors.

Pursuant to the Placement Agency Agreement, the Company, among other things, paid the Placement Agent a cash fee equal to

4 % of the gross proceeds raised in the Registered Direct Offering by an investor making an investment of

December 2, 2024, the Registered Direct Offering was closed and the gross proceeds totaled

$ 5,750 , before deducting offering expenses payable by the Company of

$ 562 , including the Placement Agent fee.

The Company has used the net proceeds from the Registered Direct Offering for general corporate purposes, which included capital expenditures, working capital and general and administrative expenses.

Pre-Funded Warrants

On May 13, 2024, the Company entered into securities purchase agreements (the "May Purchase Agreements") with certain accredited or sophisticated investors (the "May Purchasers"), all of whom were related parties, pursuant to which the Company sold pre-funded warrants (the "May 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 May Pre-Funded Warrant (the "May Private Placement").

The May Purchasers included three officers and/or directors and the largest stockholder of the Company.

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

The aggregate gross proceeds for the May Private Placement totaled $ 10,000 , before deducting offering expenses payable by the Company of $ 100 .

The May Pre-Funded Warrants, which terminated when exercised in full, had an exercise price of $ 0.0005 per share of common stock and became immediately exercisable upon stockholder approval.

Stockholder approval of the May Private Placement was obtained on July 2, 2024, at a special meeting of the Company's stockholders.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

On November 29, 2024, the Company entered into securities purchase agreements (the "December Purchase Agreements") with certain accredited or sophisticated investors (the "December Purchasers"), all of whom were related parties, pursuant to which the Company agreed to sell to the December Purchasers unregistered pre-funded warrants (the "December Pre-Funded Warrants") to purchase up to 1,187,802 shares of the Company’s common stock, at a purchase price of $ 2.3147 per December Pre-Funded Warrant and an exercise price of $ 0.0005 per share of common stock (the "December Private Placement").

The December Purchasers consisted of three officers and/or directors and the Company's largest stockholder of the Company.

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

On December 2, 2024, the Company closed the December Private Placement receiving aggregate gross proceeds totaled $ 2,750 from the sale of the December Pre-Funded Warrants, before deducting offering expenses payable by the Company of $ 22 .

The Company's largest stockholder exercised its warrant on December 9, 2024.

The December Pre-Funded Warrants purchased by three officers and/or directors of the Company will be immediately exercisable after stockholder approval transactions contemplated by the December Purchase Agreements and will terminate when exercised in full.

On March 19, 2025, the Company entered into securities purchase agreements (the "March Purchase Agreements") with certain accredited or sophisticated investors (the "March Purchasers"), all of whom were related parties, pursuant to which the Company sold to the March Purchasers unregistered pre-funded warrants (the "March Pre-Funded Warrants") to purchase up to 2,332,104 shares of the Company's common stock, at a purchase price of $ 2.174 per March Pre-Funded Warrant and an exercise price of $ 0.0005 per share of common stock (the "March Private Placement").

The March Pre-Funded Warrants will be immediately exercisable after stockholder approval and terminate when exercised in full.

The March Purchasers consisted of three officers and/or directors of the Company, the Company's largest stockholder, and an institutional investor.

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

The aggregate gross proceeds totaled $ 5,070 , before deducting offering expenses payable by the Company of $ 70 .

The Company's largest stockholder and an institutional investor exercised their March Pre-Funded Warrants on March 20, 2025.

The March Pre-Funded Warrants purchased by the three officers and/or directors of the Company will be immediately exercisable after stockholder approval of the transactions contemplated by the March Purchase Agreements and will terminate when exercised in full.

The Company is obligated to use its reasonable best efforts to obtain such stockholder approval of the exercise of the officers' and/or directors' December Pre-Funded Warrants and March Pre-Funded Warrants at the 2025 annual meeting of stockholders.

The Company entered into Support Agreements (as amended, the "Support Agreements") with the Registered Direct Investors and the December Purchasers.

In addition, the Company entered into a First Amendment to Support Agreement (the "First Amendment to Support Agreement") with each of the March Purchasers, December Purchasers, and certain of the Registered Direct Investors.

Pursuant to the Support Agreements, the Registered Direct Investors, the December Purchasers, and the March Purchasers agreed to vote their shares of the Company's common stock beneficially owned by them in favor of certain actions subject to Stockholder Approval (as defined in the Support Agreements) at any meeting of stockholders of the Company.

As of March 31, 2025 , 620,824 of the March Pre-Funded Warrants had been exercised.

In addition, as of December 31, 2024 , all of the May Pre-Funded Warrants and 647,892 of the December Pre-Funded Warrants had been exercised.

The issuance of the shares upon exercise of the pre-funded warrants was made in reliance upon the exemption from registration under Section 4 (a)( 2 ) of the Securities Act of 1933, as amended.

The issuance of the March Pre-Funded Warrants was reflected in the Company's stockholder's equity within common stock and additional paid-in-capital as of March 31, 2025 .

In accordance with ASC 815 - 40, Derivatives and Hedging, a contract is classified as an equity agreement if it is both indexed to its own stock and classified in stockholder's equity in its financial position.

The May Pre-Funded Warrants, December Pre-Funded Warrants, and March Pre-Funded Warrants met the requirements of being classified as equity because (i) they had a fixed share limit and the Company had sufficient authorized and unissued shares, (ii) they required physical or net share settlement, and (iii) no cash payments or settlement top-off was required by the Company.

Treasury stock

As of March 31, 2025 and December 31, 2024 , the Company held shares of treasury stock of 768,595 and 768,595 , respectively, with a cost of $ 11,407 and $ 11,407 , respectively.

The Company's share-based incentive plans allow employees the option to either make a cash payment or forfeit shares of common stock upon vesting to satisfy federal and state statutory tax withholding obligations associated with equity awards.

The forfeited shares of common stock may be taken into treasury stock by the Company or sold on the open market.

For the nine months ended September 30, 2024 , no shares of common stock were withheld to cover statutory taxes owed by certain employees for this purpose.

For the three months ended March 31, 2025 , no shares of common stock were withheld to cover statutory taxes owed by certain employees for this purpose.

See Note 8 , Share-based compensation .

On May 13, 2024, the Company entered into Securities Purchase Agreements (the "Purchase Agreements") with certain accredited investors (the "Purchasers"), pursuant to which the Company sold 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 "Private Placement").

The Purchasers included 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 aggregate gross proceeds for the Private Placement totaled $ 10,000 , before deducting offering expenses payable by the Company of $ 100 .

The Pre-Funded Warrants, which terminated when exercised in full, had an exercise price of $ 0.0005 per share of common stock and became immediately exercisable upon stockholder approval of the Private Placement.

In connection with the Private Placement, the Company entered into Support Agreements with three of the Purchasers, the Company's largest stockholders, who agreed to vote all of their beneficially owned shares of the Company's common stock in favor of the corporate actions required for stockholder approval.

Stockholder approval of the Private Placement was obtained on July 2, 2024, at a special meeting of the Company's stockholders.

As of September 30, 2024 , all of the Pre-Funded Warrants had been exercised.

The issuance of the shares upon exercise of the Pre-Funded Warrants was made in reliance upon the exemption from registration under Section 4 (a)( 2 ) of the Securities Act of 1933 as amended.

The settlement of the Pre-Funded Warrants was reflected in the Company's stockholder's equity within common stock and additional paid-in-capital as of September 30, 2024 .

The Pre-Funded Warrants met the requirements of being classified as equity because (i) they had a fixed share limit and the Company had sufficient authorized and unissued shares, (ii) they required physical or net share settlement, and (iii) no cash payments or settlement top-off was required by the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

Share-based compensation

1 unchanged sentence

2022 Omnibus Equity Incentive Plan (the "2022 Plan") that authorized for issuance 2,570,421 shares of the Company's common stock.

As of September 30, 2024 , the Company had 488,254 shares of common stock available for grants pursuant to the 2022 Plan, which includes 262,517 shares of common stock previously available for issuance under the 2018 Stock Incentive Plan.

As of March 31, 2025 , the Company had 734,379 shares of common stock available for grants pursuant to the 2022 Plan, which includes 328,517 shares of common stock previously available for issuance under the 2018 Stock Incentive Plan.

The primary purpose of the 2022 Plan and prior plans is to attract, retain, reward, and motivate certain individuals by providing them with opportunities to acquire or increase their ownership interests in the Company.

In October 2022, the Company issued to certain of its senior officers and employees, RSUs (time-based vesting), long-term incentive grants (performance and time-based vesting RSUs), or performance share units ("PSUs") (achievement of performance targets settled in cash) under the 2022 Plan.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

Stock options

In January 2019, the Compensation Committee of the Company's Board of Directors approved the grant of stock options to certain Company executives, which were issued on February 1, 2019, December 20, 2019, March 1, 2020, and March 1, 2021.

Subject to continuing service, 50 % of the shares subject to these stock options will vest if the Company's stock price remains above 125.00 %, 133.33 %, 133.33 % and 133.33 %, respectively, of the exercise price for 20 consecutive trading days, and the remaining 50 % of the shares subject to these stock options will vest if the Company's stock price remains above 156.25 %, 177.78 %, 177.78 % and 177.78 %, respectively, of the exercise price for 20 consecutive trading days;

The Compensation Committee of the Company's Board of Directors approved the grant of stock options to certain Company officers, which were issued on February 1, 2019, December 20, 2019, March 1, 2020, and March 1, 2021.

Subject to continuing service, 50 % of the shares subject to these stock options will vest if the Company's stock price remains above 125 %, 133.33 %, 133.3 % and 133.33 %, respectively, of the exercise prices for twenty consecutive trading days, and the remaining 50 % of the shares subject to these stock options will vest if the Company's stock price remains above 156.25 %, 177.78 %, 177.78 % and 177.78 %, respectively, of the exercise prices for twenty consecutive trading days;

provided, that no shares will vest prior to the first anniversary of the grant date.

As of September 30, 2024 , the first condition for the stock options issued on February 1, 2019, December 20, 2019 and March 1, 2020 had been met, and the second condition for the stock options issued on December 20, 2019 and March 1, 2020 had been met.

As of March 31, 2025 , the first condition for the stock options issued on February 1, 2019, December 20, 2019 and March 1, 2020 had been met and the second condition for the stock options issued on December 20, 2019 and March 1, 2020 had been met.

Any shares that remain unvested as of the fifth anniversary of the grant date will vest in full on such date.

36 unchanged sentences

(Amounts in thousands, except share and per share data)

For the nine months ended September 30, 2024 , details of stock option activity were as follows:

For the three months ended March 31, 2025 , details of stock option activity were as follows:

Number of options

5 unchanged sentences

( 66,000 ) — — —

(41,333 ) — — —

Outstanding as of September 30, 2024

Outstanding as of March 31, 2025

331,667 $ 16.35 6.3

Options exercisable as of September 30, 2024

Options exercisable as of March 31, 2025

183,001 $ 25.03 4.1

( 1 ) Balance includes the stock options granted on June 3, 2024 to one employee of the Company totaling 16,667 that vest equally over four annual installments and are exercisable for ten years after the grant date.

The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the Company's common stock at the end of the reporting period and the corresponding exercise prices, multiplied by the number of in-the-money stock options as of the same date.

For the nine months ended September 30, 2024 , the unvested balance of stock options was as follows:

For the three months ended March 31, 2025 , the unvested balance of stock options was as follows:

Number of stock options

3 unchanged sentences

148,666 $ 5.66 9.4

136,667 3.06 9.8

( 6,000 ) — —

( 105,834 ) — —

Unvested as of September 30, 2024

Unvested as of March 31, 2025

148,666 $ 5.66 9.4

Compensation expense recognized for stock options was $ 4 and $ 0 for the three months ended September 30, 2024 and 2023 , respectively, and $ 5 and $ 0 for the nine months ended September 30, 2024 and 2023 , respectively.

As of September 30, 2024 , there was $ 264 of unrecognized share-based compensation with respect to outstanding stock options.

Compensation expense recognized for stock options was $ 19 and $ 0 for the three months ended March 31, 2025 and 2024 , respectively, was recognized in product development and general and administrative expenses in the consolidated statements of operations.

As of March 31, 2025 , there was $ 222 of unrecognized share-based compensation with respect to outstanding stock options.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1 unchanged sentence

Restricted stock units and restricted stock

For the nine months ended September 30, 2024 , details of unvested RSU activity were as follows:

For the three months ended March 31, 2025 , details of unvested RSU activity were as follows:

Number of units

3 unchanged sentences

Vested and delivered

( 305,348 ) 10.40

Withheld as treasury stock (1)

1 unchanged sentence

( 160,673 ) 9.41

Unvested as of September 30, 2024

( 34,411 ) 4.25

Unvested as of March 31, 2025

638,241 24.81

As discussed in Note 7 , Equity , the treasury stock was related to shares withheld to cover statutory withholding taxes upon the delivery of shares following the vesting of RSUs.

As of September 30, 2024 , there were 768,595 outstanding shares of treasury stock.

As of March 31, 2025 , there were 768,595 outstanding shares of treasury stock.

Vested not delivered represents vested RSUs with delivery deferred to a future time.

For the nine months ended September 30, 2024 , there was a change in the vested not delivered balance due to a net 568 shares that were deferred due to timing of delivery of certain shares, along with 3,265 shares that elected deferred delivery.

As of September 30, 2024 , 286,099 outstanding RSUs were vested not delivered.

Compensation expense recognized for RSUs of $ 466 and $ 982 for the three months ended September 30, 2024 and 2023 , respectively, and $ 1,517 and $ 3,090 for the nine months ended September 30, 2024 and 2023 , respectively, was recorded in sales and marketing, product development and general and administrative in the consolidated statements of operations, and intangible assets, net in the consolidated balance sheets.

For the three months ended March 31, 2025 , there was a change in the vested not delivered balance due to a net 160,673 shares that were deferred due to timing of delivery of certain shares, of which no shares had elected deferred delivery.

As of March 31, 2025 , 446,772 outstanding RSUs were vested not delivered.

Compensation expense recognized for RSUs of $ 330 and $ 618 for the three months ended March 31, 2025 and 2024 , respectively, was recorded in sales and marketing, product development and general and administrative in the consolidated statements of operations, and intangible assets, net in the consolidated balance sheets.

The fair value of the RSUs and restricted stock was estimated using the closing prices of the Company's common stock on the dates of grant.

As of September 30, 2024 , unrecognized share-based compensation expense associated with the granted RSUs and stock options amounted to $ 2,734 , which is expected to be recognized over a weighted average period of 2.1 years.

For the three and nine months ended September 30, 2024 and 2023 , share-based compensation for the Company's stock options, RSUs, and common stock awards were allocated to the following accounts in the consolidated financial statements:

Three Months Ended September 30,

Nine Months Ended September 30,

As of March 31, 2025 , unrecognized share-based compensation expense associated with the granted RSUs and stock options amounted to $ 1,778 , which is expected to be recognized over a weighted average period of 1.9 years.

For the three months ended March 31, 2025 and 2024 , share-based compensation for the Company's stock options, RSUs, and common stock awards were allocated to the following accounts in the consolidated financial statements:

Three Months Ended March 31,

Sales and marketing

22 $ 123 $ 163 $ 419

Product development

74 158 174 485

General and administrative

364 680 1,146 2,114

Share-based compensation expense

460 961 1,483 3,018

Capitalized in intangible assets

Total share-based compensation

$ 470 $ 982 $ 1,522 $ 3,090

As of September 30, 2024 and December 31, 2023 , the Company recorded a liability of $ 29 and $ 22 , respectively, related to PSUs that are to be settled in cash.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

As of March 31, 2025 and December 31, 2024 , the Company recorded a liability of $ 25 and $ 29 , respectively, related to PSUs that are to be settled in cash.

Segment information

The Company identifies operating segments as components of an entity for which discrete financial information is available and is regularly reviewed by the CODM, in making decisions regarding resource allocation and performance assessment.

The Company identifies operating segments as components of an entity for which discrete financial information is available and are regularly reviewed by the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker ("CODM"), who has final authority in making decisions regarding resource allocation and performance assessment.

The profitability measure employed by CODM is earnings before interest, taxes, depreciation and amortization ("EBITDA").

As of September 30, 2024 , the Company had two operating segments and two corresponding reporting units, "Fluent" and "All Other," and one reportable segment.

"Fluent," for the purposes of segment reporting, represents the consolidated operating results of the Company excluding "All Other." "All Other" represents the operating results of AdParlor, LLC and is included for purposes of reconciliation of the respective balances below to the consolidated financial statements.

Summarized financial information concerning the Company's segments for the three and nine months ended September 30, 2024 and 2023 are shown in the following tables below:

Three Months Ended September 30,

Nine Months Ended September 30,

Fluent segment revenue (1) :

The use of EBITDA as a financial metric provides management and investors with a clearer view of the core business performance and profitability, excluding the effects of financing and other non-operational expenses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

As of March 31, 2025 , the Company had three operating segments:

a) "Fluent", which is Owned and Operated and Commerce Media Solutions revenue, b) "Call Solutions", and c) "AdParlor".

The Company determined that there was one reportable segment, "Fluent," for the purposes of segment reporting.

The Fluent reporting segment combines Fluent with the Call Solutions operating segment.

This reporting unit works with advertisers to then bring consumers to their products through multiple media channels and earn revenue when a consumer completes an action as agreed upon with the advertisers.

The "All Other" segment represents the operating results of AdParlor, LLC, which mainly performs media buying, and those businesses sold or in run-off, which are included for purposes of reconciliation of the respective balances below to the consolidated financial statements.

The Company determined its segments based on how revenue is earned as well as the agreements entered into with its advertisers.

In addition, certain advertisers overlap within the different operating segments.

Further, they are managed consistently with shared management.

As of December 31, 2024, the Company adopted ASU 2023 - 07.

Accordingly, the segment disclosures provided have been updated in accordance with the current presentation and accounting standard requirements.

The significant expense categories and amounts align with the segment-level information that is regularly provided to and used by the CODM in evaluating performance and EBITDA profitability and were identified as a) cost of revenue b) salaries and benefits, c) professional fees, and d) IT and software.

The Company does not allocate certain shared expenses such as interest expense and other non-recurring items.

The allocation methodology is regularly assessed, evaluated and subject to future changes.

Summarized financial information concerning the Company's segments for the three months ended March 31, 2025 and 2024 are shown in the following tables below, noting prior period amounts have been recast to conform to the Company's current period segment presentation:

Three Months Ended March 31,

United States

2 unchanged sentences

17,916 — 17,916 22,862 — 22,862

Fluent segment revenue

Total segment revenue

$ 53,821 $ 1,389 $ 55,210 $ 57,961 $ 8,022 $ 65,983

All Other segment revenue (1) :

United States

Costs of revenue

Cost of revenue (exclusive of depreciation and amortization)

43,732 43 43,775 42,317 5,031 47,348

International

All Other segment revenue

Costs and expenses:

Salaries and benefits

7,689 1,117 8,806 8,857 3,194 12,051

Segment EBITDA

Fluent segment EBITDA

Professional fees

2,159 82 2,241 2,084 265 2,349

All Other segment EBITDA

IT and software

1,186 92 1,278 980 241 1,221

Other segment items (2)

3,333 392 3,725 3,525 871 4,396

$ ( 4,278 ) $ ( 337 ) $ ( 4,615 ) $ 198 $ ( 1,580 ) $ ( 1,382 )

Depreciation and amortization

2,406 55 2,461 2,088 483 2,571

Total loss from operations

Loss from operations

$ ( 6,684 ) $ ( 392 ) $ ( 7,076 ) $ ( 1,890 ) $ ( 2,063 ) $ ( 3,953 )

Reconciliation of profit or loss

Interest Expense

( 880 ) ( 1,415 )

Fair value adjustment of Convertible Notes with related parties

Loss on early extinguishment of debt

Loss before income taxes

$ ( 8,036 ) $ ( 5,368 )

( 1 ) Revenue aggregation is based upon location of the customer.

September 30,

( 2 ) Balance includes sales and marketing expense, travel and entertainment expense, office overhead, restructuring and severance, goodwill impairment and impairment of intangible assets, and other operating costs.

Total assets:

1 unchanged sentence

$ 77,494 $ 93,617

$ 95,945 $ 111,867

As of September 30, 2024 , long-lived assets are all located in the United States.

For the nine months ended September 30, 2024 , 20 % of the Company's consolidated revenue was earned from customers located in Israel.

As of March 31, 2025 , long-lived assets are all located in the United States.

For the three months ended March 31, 2025 , 17.8 % of the Company's consolidated revenue was earned from customers located in Israel.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6 unchanged sentences

On January 28, 2020, the Company received a Civil Investigative Demand from the Federal Trade Commission ("FTC") regarding compliance with the FTC Act and the Telemarketing Sales Rule.

On October 18, 2022, the FTC staff sent the Company a draft complaint and proposed consent order seeking injunctive relief and a civil monetary penalty.

On January 12, 2023, the Company made an initial proposal of $ 5,000 for the civil monetary penalty contingent on successful negotiation of the remaining outstanding terms.

The Company accrued the same amount for the year ending December 31, 2022.

On May 26, 2023, the Company agreed to the terms of a Stipulated Order for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (the "FTC Consent Order").

The FTC Consent Order imposed a civil penalty of $ 2,500 , required additional changes to the Company's employment opportunities marketplace and programmatic advertising business, and resulted in the implementation of compliance measures across the business.

On July 17, 2023, the FTC filed its Complaint for Civil Penalties, Permanent Injunction, Monetary Relief, and Other Relief and, together with the Company, filed a Joint Motion for Entry of Proposed Stipulated Order in the United States District Court for the Southern District of Florida.

On July 17, 2023, the FTC and the Company filed a Joint Motion for Entry of Proposed Stipulated Order (the "FTC Consent Order") in the United States District Court for the Southern District of Florida.

The FTC Consent Order was entered by the Court on August 11, 2023, and the escrow funds were released on August 15, 2023.

On August 12, 2024, the Company filed its required compliance report.

The Company maintains insurance policies that cover certain legal costs, which include those incurred related to the FTC inquiry.

On October 6, 2020, the Company received notice from the Pennsylvania Office of the Attorney General ("PAAG") that it was reviewing the Company's business practices relating to telemarketing.

After the Company and the PAAG were unable to reach agreement on a proposed Assurance of Voluntary Compliance, the Commonwealth of Pennsylvania filed a complaint for permanent injunction, civil penalties, and other relief in the United States District Court for the Western District of Pennsylvania on November 2, 2022.

On May 18, 2023, the parties entered into a settlement and jointly filed a Consent Petition of Final Decree, wherein the Company agreed to injunctive relief and to pay the PAAG $ 250 for investigatory costs, all of which was paid as of June 30, 2023.

The Company was involved in a Telephone Consumer Protection Act class action, Daniel Berman v.

Freedom Financial Network , which was originally filed in 2018.

On May 31, 2023, the p arties entered into an Amended Class Action Settlement Agreement (the "Berman Settlement Agreement"), which included injunctive provisions and payment to plaintiffs of $ 9,750 for legal fees and a consumer redress fund, of which the Company was responsible for $ 3,100 due upon final approval of the settlement.

That amount had been accrued as of December 31, 2022.

On July 28, 2023, the Court preliminarily approved the Berman Settlement Agreement.

Freedom Financial Network, which was originally filed in the Northern District of California in 2018.

On May 31, 2023, the parties entered into an Amended Class Action Settlement Agreement (the "Berman Settlement Agreement"), which included injunctive provisions and payment to plaintiffs of $ 9,750 for legal fees and a consumer redress fund, of which the Company was responsible for $ 3,100 .

The final approval of the Berman Settlement Agreement was filed on February 23, 2024.

To satisfy its obligations under the Berman Settlement Agreement, the Company made a cash payment of $ 1,100 on March 15, 2024 and entered into the $ 2,000 Note Payable provided by co-defendant, FDR, as discussed in Note 5 , Long-term debt, net .

To satisfy its obligations under the Berman Settlement Agreement, the Company made a cash payment of $ 1,100 on March 15, 2024 and issued a junior secured promissory note in the principal amount of $ 2,000 payable to the co-defendant, FDR, as discussed in Note 4 , Long-term debt, net .

Variable Interest Entity

2 unchanged sentences

The Company assesses whether it is the primary beneficiary of a VIE at the inception of the arrangement and as of the reporting date.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share and per share data)

On May 1, 2024, the Company and Caspian Ventures, LLC ("Caspian") entered into a membership interest purchase agreement pursuant to which the Company conveyed 100 % of the membership interests of True North Loyalty, LLC and its direct and indirect subsidiaries (collectively, "True North") to Caspian (the "True North Conveyance").

3 unchanged sentences

It was determined that True North did not meet the discontinued operations criterion under ASC 205 - 20, Discontinued Operations .

In accordance with ASC 810, Consolidation ("ASC 810" ), the Company determined that True North was a VIE based upon the receivable for the consideration to be received.

Initially, as the majority membership owner of Caspian remained a full-time employee of the Company and had the power to unilaterally make significant decisions at True North, it was determined that the Company was the primary beneficiary of Caspian and therefore should consolidate Caspian's operations going forward, under the de facto agent guidance.

In accordance with ASC 810, Consolidation ("ASC 810" ), the Company had determined that True North was a VIE based upon the receivable for the consideration to be received.

Initially, the majority membership owner of Caspian remained a full-time employee of the Company and had the power to unilaterally make significant decisions at True North, and it was determined that the Company was the primary beneficiary of Caspian and therefore should consolidate Caspian's operations going forward, under the de facto agent guidance.

As a result, no gain or loss was to be recognized on the True North Conveyance.

On September 1, 2024, Caspian’s operating agreement was amended to require the consent of multiple members rather than a majority interest for major decisions.

As a result, the Company determined that it was no longer the primary beneficiary, and under ASC 810, True North was no longer consolidated as of September 1, 2024.

No gain or loss was recognized for the three months ended September 30, 2024 .

The Company will have no continued business relationship with True North apart from receiving the remaining consideration owed by True North.

The Company’s total exposure to True North consists solely of the carrying amount of the receivable related to the True North Conveyance which is recorded as other non-current assets totaling $ 489 as of September 30, 2024 .

January 9, 2023, the Company entered into employment agreements with certain key employees of TAPP, an influencer-based business that uses an application to utilize its relationships with influencers to bring consumers to advertising clients.

The Company is also a customer of TAPP and accounts for the majority of TAPP's revenues.

As a result of significant influence over TAPP's key employees and financial performance, the Company determined that TAPP qualified as a VIE in which the Company has a variable interest and that the Company is the primary beneficiary.

Therefore, the Company consolidates the TAPP operations.

As the Company does

not have an equity interest in TAPP,

100 % of the net assets and results of the operations of TAPP are attributable to non-controlling interests.

As the Company gained control of TAPP, in accordance with ASC 805, Business Combinations, it was then determined that TAPP constituted a business.

The deemed fair value of the consideration was $ 4,165 , which consisted of $ 1,250 of initial cash and $ 2,915 contingent upon the achievement of specified revenue and media margin targets over three years.

The fair value of assets acquired, which excluded the immaterial net-working capital, were determined to be the publisher contracts of $ 1,100 , which were valued using the 'with or without' method, a variation of the income approach, to be amortized over a period of one year and industry-based trade secrets of $ 1,510 , which were valued using the excess earnings method, a variation of the income approach, to be amortized over a period of four years.

The amount of the purchase price in excess of the fair value of the net assets acquired was recorded as goodwill in the amount of $ 1,555 and primarily represents workforce and expected cash flow generation for the TAPP business that does not qualify for separate recognition as intangible assets included within the Fluent operating segment.

For tax purposes, the value of the acquisition payments is treated as ordinary compensation for services rendered, deductible when paid and included in the employees' wages.

On September 1, 2024, as Caspian’s operating agreement was amended to require the consent of multiple members rather than a majority interest for major decisions, the Company determined that it was no longer the primary beneficiary, and under ASC 810, True North was no longer consolidated as of September 1, 2024.

No gain or loss was recognized as a result of the change at that time.

As of December 31, 2024 , True North had ceased operations and the remaining receivable was fully written off.

The Company determined that TAPP qualified as a VIE, as of January 9, 2023, in which the Company has a variable interest and that the Company is the primary beneficiary.

This was the result of the Company determining it has significant influence over TAPP's key employees due to the employment agreements of key employees, as well as being responsible for a majority of TAPP's revenues as a customer.

During the first quarter of 2025, TAPP’s key employee became a consultant to the Company.

However, the Company concluded that it still had significant influence over TAPP, so the Company continues to consolidate TAPP's operations.

As the Company does not have an equity interest in TAPP, 100% of the net assets and results of the operations of TAPP are attributable to non-controlling interests.

Subsequent Events

Amendment to the Sublease

On April 15, 2025 , the Company received the landlord’s consent for the second amendment to its sublease (the "Sublease Amendment") with sublandlord Virtu KCG Holdings LLC, which reduced the subleased premises by 42 % and monthly payments by approximately 54 %, effective March 19, 2025.

The consent also approved the extension of the sublease term by four years, effective April 15, 2025.

Private Placement

On May 15, 2025 , the Company entered into securities purchase agreements (the " May 2025 Purchase Agreements") with certain accredited or sophisticated investors (the " May 2025 Purchasers"), all of whom were related parties, pursuant to which the Company agreed to sell to the May 2025 Purchasers (i) unregistered pre-funded warrants (the " May 2025 Pre-Funded Warrants") to purchase up to 1,829,956 shares of the Company’s common stock, and (ii) unregistered warrants (the "May Common Stock Warrants") to purchase up to 1,829,956 shares of the Company’s common stock.

The May 2025 Pre-Funded Warrants had a purchase price of $ 2.1995 and will have an exercise price of $ 0.0005 per share of common stock, will be immediately exercisable after stockholder approval and will terminate when exercised in full.

The May Common Stock Warrants have an exercise price of $ 2.20 and will expire three years from the issuance date.

The May 2025 Purchasers consisted of four officers' and/or directors, the Company’s largest stockholder, and institutional investors or others for whom they have or share beneficial ownership.

No underwriting discounts or commissions were paid with respect to the May 2025 offering.

The gross proceeds from the offering is expected to be $ 4,025 , before deducting expenses payable by the Company.

The exercise of certain of the May 2025 Pre-Funded Warrants is subject to stockholder approval, which the Company shall seek approval no later than the 2026 annual meeting of stockholders.

The Company is obligated to use its reasonable best efforts to obtain such stockholder approval of the exercise of the officers' and/or directors May 2025 Pre-Funded Warrants.

If, despite the Company’s reasonable best efforts the Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company is required to cause an additional stockholder meeting to be held.

In connection with the offering, the Company entered into Support Agreements with the May 2025 Purchasers, 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 May 2025 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 May 2025 Purchase Agreements or impede, delay or otherwise adversely affect the consummation of the transactions contemplated by the May 2025 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.

The closing of the sales of the Warrants under the Purchase Agreements is expected to occur on May 19, 2025, subject to the satisfaction of customary closing conditions.

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

What changed 10-Q

Item 1. Financial Statements