What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-19 compared with 2025-05-16 · 243 added, 124 removed, 221 unchanged (62% of the section changed)

8 unchanged sentences

Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the "SEC") on March 31, 2025 (the "2024 Form 10-K"), those

contained in this Quarterly Report on Form 10-Q, and such other factors contained in our

contained in our Quarterly Reports on Form 10-Q (including this one), and such other factors contained in our

other filings we make with the SEC.

22 unchanged sentences

(1) to serve advertisements that we believe will be relevant to users based on the information they provide when they engage on our O&O Sites or other partner sites through our commerce media marketplace and (2) to provide our clients with users' contact information so that such clients may communicate with them directly.

We may also leverage our existing technology and database to drive new revenue streams, including utilization-based models ( e.g.

We may also leverage our existing technology and database to drive non-core revenue streams, including utilization-based models ( e.g.

, programmatic advertising).

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The Call Solutions business serves clients across an array of industries but has had a heavy focus on the health insurance sector.

We generate revenue by delivering measurable marketing results to our clients.

Across our business, we generate revenue by delivering measurable marketing results to our clients.

We differentiate ourselves from other marketing alternatives by our ability to provide clients with a cost-effective and measurable return on advertising spend ("ROAS"), a measure of profitability of sales compared to the money spent on ads, and to manage highly targeted and highly fragmented online media sources.

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For our O&O Sites and Call Solutions business, we bear the responsibility and cost of acquiring consumers from media partners that ultimately generate qualified clicks, leads, calls, app downloads, or customers for our clients.

Our Commerce Media Solutions business does not bear media inventory risk.

Our Commerce Media Solutions business operates under exclusive long-term contracts with media partners that generally renumerate the partner on a revenue share basis.

Notwithstanding occasional minimum guarantees, the business does not take significant media inventory risk.

Through AdParlor, LLC ("AdParlor"), our wholly owned subsidiary, we conduct our non-core business which offers advertiser clients a managed service for creator marketing and media buying on different social platforms.

First Quarter Financial Summary

Three months ended March 31, 2025, compared to three months ended March 31, 2024:

Second Quarter Financial Summary

Three months ended June 30, 2025, compared to three months ended June 30, 2024:

Revenue decreased 24% to $44.7 million, compared to $58.7 million

Net loss was $7.2 million, or $0.30 per share, compared to net loss of $11.6 million or $0.75 per share

Gross profit (exclusive of depreciation and amortization) decreased 39% to $11.4 million, representing 21% of revenue for the three months ended March 31, 2025, from $18.6 million, representing 28% of revenue for the three months ended March 31, 2024

Media margin decreased 38% to $13.7 million, representing 24.9% of revenue for the three months ended March 31, 2025, from $22.1 million, representing 33.6% of revenue for the three months ended March 31, 2024

Adjusted EBITDA was negative $3.1 million, compared to positive $0.7 million

Gross profit (exclusive of depreciation and amortization) decreased 18% to $10.3 million, representing 23% of revenue for the three months ended June 30, 2025, from $12.6 million, representing 21% of revenue for the three months ended June 30, 2024

Media margin decreased 24% to $11.9 million, representing 26.7% of revenue for the three months ended June 30, 2025, from $15.7 million, representing 26.7% of revenue for the three months ended June 30, 2024

Adjusted EBITDA was negative $2.8 million, compared to negative $4.5 million

Adjusted net loss was $5.8 million, or $0.24 per share, compared to $7.3 million, or $0.47 per share

Six months ended June 30, 2025, compared to six months ended June 30, 2024:

Revenue decreased 20% to $99.9 million, compared to $124.7 million

Net loss was $15.5 million, or $0.68 per share, compared to net loss of $17.9 million or $1.11 per share

Gross profit (exclusive of depreciation and amortization) decreased 30% to $21.7 million, representing 22% of revenue for the six months ended June 30, 2025, from $31.2 million, representing 25% of revenue for the six months ended June 30, 2024

Media margin decreased 32% to $25.7 million, representing 25.7% of revenue for the six months ended June 30, 2025, from $37.8 million, representing 30.3% of revenue for the six months ended June 30, 2024

Adjusted EBITDA was negative $5.9 million, compared to negative $3.8 million

Adjusted net loss was $12.5 million, or $0.55 per share, compared to $11.5 million, or $0.72 per share

Media margin, adjusted EBITDA, and adjusted net income (loss) are non-GAAP financial measures.

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Sourcing high quality traffic will remain a focus and part of a broader initiative to improve customer acquisition for our clients.

Starting in 2022, we increased our spend with major digital media platforms, revised our bidding strategies for affiliate traffic, and developed partnerships to expand traffic from social media platforms, including the growing influencer sector.

We have pursued strategic initiatives that enable us to grow revenue per consumer with existing user traffic volume by attracting users to our O&O Sites using email and SMS messages.

Additionally, we have pursued strategic initiatives that enable us to grow revenue per consumer with existing user traffic volume by attracting users to our O&O Sites using email and SMS messages.

In addition, we have focused on improved monetization of consumer traffic through improved customer relationship management that allows us to re-engage consumers who have registered on our O&O Sites.

Through these initiatives, our business has become less dependent on the volume of users to generate revenue growth.

We believe that significant value has been, and will continue to be, created by improving the quality of traffic and consumers driven to our O&O Sites.

Better quality users lead to increased user participation rates and higher conversion rates for our advertiser clients, resulting in increased monetization, and ultimately increased revenue and media margin per consumer.

We believe that significant value has been, and will continue to be, created by improving the quality of consumers driven to our advertiser clients' offers.

Better quality users lead to increased user participation rates and higher conversion rates for our clients, resulting in increased monetization, and ultimately increased revenue and media margin per consumer.

Media margin, a non-GAAP measure, is the portion of gross profit (exclusive of depreciation and amortization) reflecting variable costs paid for media and related expenses and excluding non-media cost of revenue.

Since 2022, however, we have experienced challenges acquiring and maintaining traffic volume to our O&O Sites, primarily due to the Federal Trade Commission ("FTC") inquiry and subsequent Joint Motion for Entry of Proposed Stipulated Order (the "FTC Consent Order") filed by the Company and FTC in the United States District Court for the Southern District of Florida that mandated that we tighten our standards for media sourcing and put us at a competitive disadvantage to our competitors in the performance marketing market.

Since 2022, however, we have experienced challenges acquiring and maintaining traffic volume to our O&O Sites, primarily due to the Federal Trade Commission ("FTC") inquiry and resulting Joint Motion for Entry of Proposed Stipulated Order (the "FTC Consent Order") that mandated that we tighten our standards for media sourcing and put us at a competitive disadvantage to our competitors in the performance marketing market.

Other factors that affected our traffic volume have included the volatility and attrition of affiliate supply sources, changes in search engine algorithms, social media pricing and policies, and email and text message blocking algorithms.

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These consumers are the highest intent consumers and drive significantly higher ROAS for our advertiser clients than those from our O&O Sites.

Because Commerce Media Solutions does not require us to source traffic to partner sites, it is not subject to the sourcing challenges that resulted from the FTC Consent Order.

The mix and profitability of our media channels, strategies, and partners is likely to continue to be dynamic and reflect evolving market trends and the regulatory environment.

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We deliver data and performance-based marketing executions to our clients across a wide range of industries, including Media & Entertainment, Financial Products & Services, Health & Life Sciences, Retail & Consumer, and Staffing & Recruitment.

In 2024, both data and performance-based spend were challenged by general economic uncertainty, but revenue declined largely due to media supply challenges in our O&O Sites, an ongoing effect of the FTC Consent Order on our owned and operated business, and declines related to the divestiture of the Company's subscription business in May 2024.

For the full year ending December 31, 2025, we expect that the growth of our Commerce Media Solutions business will offset the year-over-year revenue decline in our owned and operated business related to continued media supply challenges and the declines related to the divestiture of the Company's subscription business in May 2024 and the discontinuation of our Affordable Care Act business in September 2024.

In 2024 and the first half of 2025, both data and performance-based spend were challenged by general economic uncertainty, but revenue declined largely due to media supply challenges in our O&O Sites, an ongoing effect of the FTC Consent Order on our owned and operated business, and declines related to the divestiture of the Company's subscription business in May 2024.

For the full year ending December 31, 2025, we expect that the growth of our Commerce Media Solutions business will partially offset the year-over-year revenue decline in our owned and operated business related to continued media supply challenges and the declines related to the divestiture of the Company's subscription business in May 2024 and the discontinuation of our Affordable Care Act business in September 2024.

We continue to work with select advertiser clients to define high performing consumer segments on both our O&O Sites and Commerce Media Solutions marketplace and strategically price paid conversions accordingly.

This initiative has helped clients drive higher ROAS and driven increased spend from clients across the Media & Entertainment industry, which represents a large component of our revenue mix.

Our performance is subject to fluctuations related to seasonality and cyclicality in our clients' businesses and fluctuations in media sources.

Specifically, our retail specific media partners in our Commerce Media Solutions marketplace experience high seasonality based on fourth quarter consumer spending and our Call Solutions business benefits from Medicare open enrollment periods ("OEPs") in the first and fourth quarters.

This initiative has helped clients drive higher ROAS and has driven increased spend from clients across the Media & Entertainment industry, which represents a large component of our revenue mix.

Our performance is subject to fluctuations related to seasonality and cyclicality in our clients' businesses and in media sources.

Other factors affecting our business may include macroeconomic conditions that impact the digital advertising industry, the various client verticals we serve, and general market conditions.

While we were not directly impacted by the changes to U.S.

tariff and trade policies, the first quarter of 2025 continued to be characterized by media supply uncertainty in the O&O Sites marketplaces and rising media costs in the Call Solutions business that have depressed gross profit in recent quarters.

To confront these headwinds, we have continued to invest in expanding supply channels for our O&O sites.

We have also made continued progress in driving the adoption of Commerce Media Solutions among enterprise media partners during the current quarter and anticipate securing additional long-term contracts as the market continues to expand.

However, we observed a contraction in gross margin for Commerce Media Solutions as we ventured into placements beyond post-transaction and faced increasing market competition.

We expect further margin pressure in the second quarter due to competitive dynamics and the introduction of channel partnerships, but we are confident that margins will improve and lift consolidated margin in the long term.

In parallel, we also continue to develop our ROAS program across additional segments of advertisers in an effort to gain additional allocations and pricing increases to further improve our user monetization.

tariff and trade policies, the second quarter of 2025 was characterized by continued media supply uncertainty in the O&O Sites marketplaces that has depressed gross profit in recent quarters.

To confront these headwinds, we have made continued progress in driving the adoption of Commerce Media Solutions among enterprise media partners during the current quarter and anticipate securing additional long-term contracts as the market continues to expand.

We observed a contraction in gross margin for Commerce Media Solutions in each of the first and second quarters of 2025 as we ventured into placements beyond post-transaction and offered early-term contract incentives on some longer-term contracts.

We expect that as we improve monetization of newer placements and move beyond early-term incentives, gross margin will improve in Commerce Media Solutions and lift consolidated gross margin over time.

We also continue to develop our ROAS program across additional segments of advertisers in an effort to gain additional allocations and pricing increases to help further improve our user monetization.

While we do believe that a prolonged period of economic downturn could negatively influence both our advertiser spend and our commerce media traffic volumes, conversely, we believe it would drive accelerated media partner adoption of our Commerce Media Solutions.

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Media margin is also presented as a percentage of revenue.

Adjusted EBITDA is defined as net income (loss), excluding (1) income taxes, (2) interest expense, net, (3) depreciation and amortization, (4) share-based compensation expense, (5) loss on early extinguishment of debt, (6) accrued compensation expense for put/call consideration, (7) goodwill impairment, (8) impairment of intangible assets, (9) loss (gain) on disposal of property and equipment, (10) fair value adjustment of Convertible Notes with related parties (see Note 4, Long-term debt, net ), (11) acquisition-related costs, (12) restructuring and other severance costs, and (13) certain litigation and other related costs.

Adjusted net income (loss) is defined as net income (loss), excluding (1) share-based compensation expense, (2) loss on early extinguishment of debt, (3) accrued compensation expense for put/call consideration, (4) goodwill impairment, (5) impairment of intangible assets, (6) loss (gain) on disposal of property and equipment, (7) fair value adjustment of Convertible Notes with related parties, (8) acquisition-related costs, (9) restructuring and other severance costs, and (10) certain litigation and other related costs.

Adjusted EBITDA is defined as net income (loss), excluding (1) income taxes, (2) interest expense, net, (3) depreciation and amortization, (4) share-based compensation expense, (5) loss on early extinguishment of debt, (6) goodwill impairment, (7) impairment of intangible assets, (8) fair value adjustment of Convertible Notes with related parties (see Note 4, Long-term debt, net ), (9) acquisition-related costs, (10) restructuring and other severance costs, and (11) certain litigation and other related costs.

Adjusted net income (loss) is defined as net income (loss), excluding (1) share-based compensation expense, (2) loss on early extinguishment of debt, (3) goodwill impairment, (4) impairment of intangible assets, (5) fair value adjustment of Convertible Notes with related parties, (6) acquisition-related costs, (7) restructuring and other severance costs, and (8) certain litigation and other related costs.

Adjusted net income (loss) is also presented on a per share (basic and diluted) basis.

Below is a reconciliation of media margin from gross profit (exclusive of depreciation and amortization) for the three months ended March 31, 2025 and 2024, which we believe is the most directly comparable U.S.

Below is a reconciliation of media margin from gross profit (exclusive of depreciation and amortization) for the three and six months ended June 30, 2025 and 2024, which we believe is the most directly comparable U.S.

GAAP measure:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except percentages)

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Represents the portion of cost of revenue (exclusive of depreciation and amortization) not attributable to variable costs paid for media and related expenses.

Below is a reconciliation of adjusted EBITDA from net loss for the three months ended March 31, 2025 and 2024, which we believe is the most directly comparable U.S.

Below is a reconciliation of adjusted EBITDA from net loss for the three and six months ended June 30, 2025 and 2024, which we believe is the most directly comparable U.S.

GAAP measure:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Income tax expense

Income tax (benefit) expense

Interest expense, net

1 unchanged sentence

Share-based compensation expense

Loss on early extinguishment of debt

Goodwill impairment

Impairment of intangible assets

Fair value adjustment of Convertible Notes with related parties

1 unchanged sentence

Restructuring and other severance costs

Certain litigation and other related costs

Adjusted EBITDA

Balance includes compensation expense related to non-compete agreements and earn-out expense incurred as a result of business combinations.

The earn-out expense was ($119) and $151 for the three months ended March 31, 2025 and 2024, respectively.

Below is a reconciliation of adjusted net loss and adjusted net loss per share from net loss for the three months ended March 31, 2025 and 2024, which we believe is the most directly comparable U.S.

Balance includes write-off of intangibles and prepaid expense related to the write-off of TAPP Influencers Corp.

("TAPP") in May 2025 (refer to Note 11, VIE of the Notes to our consolidated financial statements included in this Form 10-Q) in the amount of $698.

Balance also includes compensation expense related to non-compete agreements and earn-out expense incurred as a result of business combinations;

earn-out expense were in the amount of ($9) and ($14) for the three months ended June 30, 2025 and 2024, respectively, and ($128) and $137 for the six months ended June 30, 2025 and 2024, respectively, while non-compete agreements were in the amount of $412 and $412 for the three months ended June 30, 2025 and 2024, respectively, and $412 and $825 for the six months ended June 30, 2025 and 2024.

Below is a reconciliation of adjusted net loss and adjusted net loss per share from net loss for the three and six months ended June 30, 2025 and 2024, which we believe is the most directly comparable U.S.

GAAP measure.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except share and per share data)

Share-based compensation expense

Loss on early extinguishment of debt

Goodwill impairment

Impairment of intangible assets

Fair value adjustment of Convertible Notes with related parties

1 unchanged sentence

Restructuring and other severance costs

Certain litigation and other related costs

Adjusted net loss

1 unchanged sentence

Weighted average number of shares outstanding:

Balance includes compensation expense related to non-compete agreements and earn-out expense incurred as a result of business combinations.

The earn-out expense was ($119) and $151 for the three months ended March 31, 2025 and 2024, respectively.

Balance includes write-off of intangibles and prepaid expense related to the write-off of TAPP Influencers Corp.

("TAPP") in May 2025 (refer to Note 11, VIE of the Notes to our consolidated financial statements included in this Form 10-Q) in the amount of $698.

Balance also includes compensation expense related to non-compete agreements and earn-out expense incurred as a result of business combinations;

We present media margin, media margin as a percentage of revenue, adjusted EBITDA, adjusted net income (loss), and adjusted net income (loss) per share as supplemental measures of our financial and operating performance because we believe they provide useful information to investors.

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The way we measure media margin, adjusted EBITDA, and adjusted net income (loss) may not be comparable to similarly titled measures presented by other companies and may not be identical to corresponding measures used in our various agreements.

Comparison of Our Results of Operations for the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31,

Comparison of Our Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

For the three months ended March 31, 2025 and 2024, revenue was comprised of owned and operated marketplaces of $31.1 million and $44.7 million, Commerce Media Solutions of $12.7 million and $6.4 million, and other streams of $11.4 million and $14.9 million, respectively.

The decrease in owned and operated marketplaces revenue was primarily attributable to a decrease in media supply resulting from changes in our business practices to comply with the FTC Consent Order, which drove a reduction in spend from key clients in the Media & Entertainment and Staffing & Recruitment sectors.

Partially offsetting that decline, our Commerce Media Solutions business continued to add long-term contracts with new media partners which drove up revenue from advertiser clients in the Retail & Consumer and Financial Products & Services sectors.

Within our other streams, we experienced a decrease related to the True North business we exited in the second quarter of 2024 and the cessation of our ACA business in the third quarter of 2024.

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

For the three months ended June 30, 2025 and 2024, revenue was comprised of owned and operated marketplaces of $21.4 million and $42.0 million, Commerce Media Solutions of $16.1 million and $7.3 million, and other streams of $7.2 million and $9.4 million, respectively.

The decrease in owned and operated marketplaces revenue was primarily attributable to a decrease in media supply resulting from business practices enacted to comply with the FTC Consent Order that challenge our ability to maintain consistent volume on social media platforms.

The decline in traffic drove a reduction in ad spend from key clients in the Media & Entertainment and Staffing & Recruitment sectors.

Partially offsetting that decline, our Commerce Media Solutions business continued to add long-term contracts with new media partners which increased revenue from advertiser clients in the Retail & Consumer and Financial Products & Services sectors.

Within our other streams, we experienced a decrease related to the AdParlor business primarily due to loss of a key retail customer in the third quarter of 2024.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

For the six months ended June 30, 2025 and 2024, revenue was comprised of owned and operated marketplaces of $52.5 million and $86.7 million, Commerce Media Solutions of $28.7 million and $13.7 million, and other streams of $18.7 million and $24.3 million, respectively.

The decline in traffic drove a reduction in ad spend from key clients in the Media & Entertainment and Staffing & Recruitment sectors.

Within our other streams, we experienced a decrease related to the True North business we exited in the second quarter of 2024, the cessation of our Affordable Care Act ("ACA") business in the third quarter of 2024 and the loss of a key retail customer of the AdParlor business in the third quarter of 2024.

Cost of revenue (exclusive of depreciation and amortization)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Cost of revenue (exclusive of depreciation and amortization)

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

For the three months ended March 31, 2025 and 2024, cost of revenue (exclusive of depreciation and amortization) consisted mainly of owned and operated media and related fulfillment costs of $24.8 million and $35.0 million, Commerce Media Solutions media and related costs of $9.8 million and $4.6 million, and media enablement and other indirect costs related to our other revenue streams of $9.2 million and $7.7 million, respectively.

Our owned and operated marketplaces cost of revenue (exclusive of depreciation and amortization) primarily consisted of media and related costs associated with acquiring traffic from third-party publishers, digital media platforms, and influencers for our O&O Sites and fulfillment costs related to rewards earned by consumers.

The decrease in O&O Sites media cost was largely attributable to the challenges in acquiring media due to changes in our business practices to comply with the FTC Consent Order.

Such costs increased slightly as a percentage of revenue.

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

For the three months ended June 30, 2025 and 2024, cost of revenue (exclusive of depreciation and amortization) consisted mainly of owned and operated media and related fulfillment costs of $16.7 million and $33.5 million, Commerce Media Solutions media and related costs of $13.2 million and $5.3 million, and media enablement and other indirect costs related to our other revenue streams of $4.5 million and $7.3 million, respectively.

Our owned and operated marketplaces cost of revenue (exclusive of depreciation and amortization) primarily consists of media and related costs associated with acquiring traffic from third-party publishers, digital media platforms, and influencers for our O&O Sites, fulfillment costs related to rewards earned by consumers, and associated hosting costs.

The decrease in O&O Sites media cost was largely attributable to the challenges in acquiring media related to business practices enacted to comply with the FTC Consent Order.

Such costs increased as a percentage of revenue.

Commerce Media Solutions cost of revenue consisted of fees and revenue share payments made to media partners for ads served on their digital properties and associated hosting costs.

The increase in cost of revenue (exclusive of depreciation and amortization) in Commerce Media Solutions was driven by increased revenue generated from impressions from new media partners added over the period.

Cost of revenue (exclusive of depreciation and amortization) for Commerce Media Solutions increased as a percentage of revenue, due to the growth of certain lower margin commerce media placements.

The increase in cost of revenue (exclusive of depreciation and amortization) for other revenue streams, including media costs, enablement costs and tracking costs related to our consumer data associated with our call centers, was attributable to an increase in the cost of acquiring media for our Call Solutions business due to increased market demand in anticipation of regulations that were expected to go into effect during the first quarter of 2025, partly offset by our exit from the True North business in the second quarter of 2024 and cessation of new ACA business in the third quarter of 2024.

The regulations that had affected the cost of media for our Call Solutions business have been postponed until at least January 2026.

Cost of revenue (exclusive of depreciation and amortization) for other revenue streams increased materially as a percentage of revenue.

For the three months ended March 31, 2025, the total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue increased to 79% as compared to 72% for the three months ended March 31, 2024.

Commerce Media Solutions media partners are generally renumerated on a per impression or revenue share basis, leading to higher and more consistent profitability.

The increase in cost of revenue (exclusive of depreciation and amortization) in Commerce Media Solutions was driven by increased revenue share payments generated from impressions from new media partners added over the period.

Cost of revenue (exclusive of depreciation and amortization) for Commerce Media Solutions increased as a percentage of revenue, due to the growth of certain lower margin commerce media placements and renegotiation of a key media partner's agreement.

Cost of revenue (exclusive of depreciation and amortization) for other revenue streams decreased materially as a percentage of revenue largely related to the aforementioned exits from the True North and ACA businesses.

For the three months ended June 30, 2025, the total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue decreased to 77% as compared to 79% for the three months ended June 30, 2024.

The decrease was primarily driven by the aforementioned reasons and shifts in revenue mix related to the discontinuation of certain businesses in 2024.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

For the six months ended June 30, 2025 and 2024, cost of revenue (exclusive of depreciation and amortization) consisted mainly of owned and operated media and related fulfillment costs of $41.5 million and $68.5 million, Commerce Media Solutions media and related costs of $23.0 million and $9.8 million, and media enablement and other indirect costs related to our other revenue streams of $13.7 million and $15.2 million, respectively.

The decrease in O&O Sites media cost was largely attributable to the challenges in acquiring media related to business practices enacted to comply with the FTC Consent Order.

Such costs remained flat as a percentage of revenue.

The decrease in cost of revenue (exclusive of depreciation and amortization) for other revenue streams, including media costs, enablement costs and tracking costs related to our consumer data associated with our call centers, was attributable to our exit from the True North business in the second quarter of 2024 and cessation of our ACA business in the third quarter of 2024, partly offset an increase in the cost of acquiring media for our Call Solutions business in the first quarter of 2025 due to increased market demand in anticipation of regulations that were expected to go into effect during the quarter.

Cost of revenue (exclusive of depreciation and amortization) for other revenue streams decreased materially as a percentage of revenue.

For the six months ended June 30, 2025, the total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue increased to 78% as compared to 75% for the six months ended June 30, 2024.

The increase was primarily driven by the aforementioned reasons and shifts in revenue mix related to the discontinuation of certain businesses in 2024.

In the normal course of executing paid media campaigns to source consumer traffic for our O&O Sites, we regularly evaluate new channels, strategies, and partners.

For the three months ended March 31, 2025, O&O Sites digital media spend continued to be a mix of affiliate traffic, paid media from major digital platforms, influencer activations, and inventory from strategic media partners.

Traffic acquisition costs incurred with the major digital media platforms have historically been higher than affiliate traffic sources and the mix and profitability of our media channels, strategies, and partners reflect evolving market dynamics, the impact of our TQI, and the increased compliance obligations from the FTC Consent Order.

For the six months ended June 30, 2025, O&O Sites digital media spend continued to be a mix of affiliate traffic, paid media from major digital platforms, influencer activations, and inventory from strategic media partners.

Traffic acquisition costs incurred with the major digital media platforms have historically been higher than affiliate traffic sources and the mix and profitability of our media channels, strategies, and partners reflect evolving market dynamics, and the increased compliance obligations from the FTC Consent Order.

As we evaluate and scale new media channels, strategies, and partners, we may determine that certain sources initially able to provide us profitable quality traffic may not be able to maintain our quality standards over time, and we may need to discontinue, or modify the practices of, such sources, which could reduce profitability further.

Commerce Media Solutions media partners are generally renumerated on a per impression or revenue share basis, leading to higher and more consistent profitability.

Ultimately, we believe improved traffic quality is the foundation to support sustainable long-term growth and position us as an industry leader and Commerce Media Solutions is key to that goal.

Although past levels of cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue are not indicative of future percentages in the owned and operated and Call Solutions businesses, we expect revenue share agreements in the Commerce Media Solutions to create more gross margin stability in the long-term.

Sales and marketing

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Sales and marketing

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

For the three months ended March 31, 2025 and 2024, sales and marketing expenses consisted mainly of employee salaries and benefits of $3.1 million and $4.1 million, restructuring and severance costs of $0.4 million and $0.2 million, advertising costs of $0.3 million and $0.0 million, and professional fees of $0.1 million and $0.2 million, respectively.

The decrease was primarily due to lower salaries and other employee related costs driven by a decline in headcount, partly offset by an increase in restructuring and severance costs driven by the current year reductions in workforce, as described below, and an increase in advertising costs due to increased spend on conferences as the Company further invests into the growth of Commerce Media Solutions.

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

For the three months ended June 30, 2025 and 2024, sales and marketing expenses consisted mainly of employee salaries and benefits of $2.6 million and $3.8 million, restructuring and severance costs of $0.0 million and $0.2 million, advertising costs of $0.2 million and $0.2 million, and professional fees of $0.1 million and $0.1 million, respectively.

The decrease was primarily due to lower salaries and other employee related costs driven by a decline in headcount, along with the decrease in restructuring and severance costs in the current year period.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

For the six months ended June 30, 2025 and 2024, sales and marketing expenses consisted mainly of employee salaries and benefits of $5.7 million and $8.0 million, restructuring and severance costs of $0.4 million and $0.4 million, advertising costs of $0.5 million and $0.2 million, and professional fees of $0.3 million and $0.3 million, respectively.

The decrease was primarily due to lower salaries and other employee related costs driven by a decline in headcount, partly offset by an increase in advertising costs due to increased spend on conferences as the Company further invests into the growth of Commerce Media Solutions.

Product development

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Product development

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

For the three months ended March 31, 2025 and 2024, product development expenses consisted mainly of salaries and benefits of $2.3 million and $3.2 million, professional fees of $0.5 million and $0.4 million, software license and maintenance costs of $0.4 million and $0.5 million, and restructuring and severance costs of $0.1 million and $0.4 million, respectively.

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

For the three months ended June 30, 2025 and 2024, product development expenses consisted mainly of salaries and benefits of $2.0 million and $3.5 million, professional fees of $0.4 million and $0.5 million, software license and maintenance costs of $0.3 million and $0.4 million, and restructuring and severance costs of $0.0 million and $0.2 million, respectively.

The decrease was primarily due to a decline in salaries driven by lower headcount and lower spend on IT-related vendors, along with the decrease in restructuring and severance costs in the current year period due to the timing of the reductions in product development workforce.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

For the six months ended June 30, 2025 and 2024, product development expenses consisted mainly of salaries and benefits of $4.3 million and $6.7 million, professional fees of $0.9 million and $1.0 million, software license and maintenance costs of $0.7 million and $0.9 million, and restructuring and severance costs of $0.1 million and $0.5 million, respectively.

General and administrative

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

General and administrative

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

For the three ended March 31, 2025 and 2024, general and administrative expenses consisted mainly of employee salaries and benefits of $3.5 million and $4.7 million, professional fees of $1.6 million and $1.7 million, office overhead of $1.0 million and $1.0 million, software license and maintenance costs of $0.9 million and $0.7 million, restructuring and severance costs of $0.8 million and $0.1 million, non-cash share-based compensation expense of $0.3 million and $0.5 million, and acquisition-related costs of ($0.1) million and $0.8 million, respectively.

General and administrative expenses decreased primarily due to lower salary and benefits from reduced headcount, reduced acquisition-related costs pursuant to amended non-compete agreements in the first quarter of 2025 related to the 2021 acquisition of Winopoly, LLC, and decreased share-based compensation from fewer grants.

The decrease in general and administrative expenses was partially offset by an increase in restructuring or severance costs in connection with the reduction in workforce, as described below.

During the first, second, and third quarters of 2024 and the first quarter of 2025, we implemented reductions in the workforce that resulted in the termination of 20, 19, 29, and 24 employees, respectively, following management's determination to more effectively align resources with our strategic initiatives.

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

For the three months ended June 30, 2025 and 2024, general and administrative expenses consisted mainly of employee salaries and benefits of $3.6 million and $4.2 million, professional fees of $1.1 million and $1.7 million, office overhead of $1.2 million and $1.0 million, software license and maintenance costs of $0.8 million and $0.7 million, restructuring and severance costs of $0.0 million and $0.3 million, non-cash share-based compensation expense of $0.3 million and $0.3 million, acquisition-related costs of $1.2 million and $0.0 million, and certain litigation and related costs of $0.3 million and $0.0 million, respectively.

General and administrative expenses slightly decreased primarily due to lower professional fees, lower salary and benefits from reduced headcount, and lower restructuring and severance costs due to the timing of the reduction in workforce, as described below, partially offset by higher acquisition-related costs mainly due to the write-off of TAPP, and certain litigation and related costs incurred in the current period.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

For the six months ended June 30, 2025 and 2024, general and administrative expenses consisted mainly of employee salaries and benefits of $7.0 million and $8.9 million, professional fees of $2.7 million and $3.4 million, office overhead of $2.2 million and $2.0 million, software license and maintenance costs of $1.6 million and $1.5 million, restructuring and severance costs of $0.8 million and $0.4 million, non-cash share-based compensation expense of $0.5 million and $0.8 million, acquisition-related costs of $1.1 million and $0.8 million, and certain litigation and related costs of $0.3 million and $0.0 million, respectively.

General and administrative expenses decreased primarily due to lower salary and benefits from reduced headcount, lower professional fees, and decreased share-based compensation from fewer grants.

This was partially offset by higher restructuring and severance costs due to timing of the reduction in workforce, as described below, higher acquisition-related costs mainly due to the write-off of TAPP, and certain litigation and related costs incurred in the current period.

In each of the first three quarters of 2024 and the first quarter of 2025, we reduced our workforce by 20, 19, 29, and 24 employees, respectively, to better align resources with our strategic initiatives.

In connection with the first quarter 2024 reductions, we incurred $0.7 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs, fully settled in cash by September 30, 2024.

In connection with the second quarter 2024 reductions, we incurred $0.6 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs, fully settled in cash by December 31, 2024.

In connection with the third quarter 2024 reductions, we incurred $0.5 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs, to be fully settled in cash by March 15, 2025.

In connection with the first quarter of 2025 reductions, we incurred $1.3 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs, to be fully settled in cash by March 31, 2026.

Apart from these exit-related restructuring costs, these reductions in workforce are expected to result in corresponding reductions in future salary and benefits within sales and marketing, product development, and general and administrative expenses.

Apart from these exit-related restructuring costs, these reductions in workforce have resulted in corresponding reductions in future salary and benefits within sales and marketing, product development, and general and administrative expenses.

Depreciation and amortization

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Depreciation and amortization

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

The decrease in depreciation and amortization costs was mainly due to the full amortization of certain intangible assets as compared to the three months ended March 31, 2024.

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

The decrease in depreciation and amortization costs was mainly due to the full amortization of certain intangible assets as compared to the three months ended June 30, 2024.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

The decrease in depreciation and amortization costs was mainly due to the full amortization of certain intangible assets as compared to the six months ended June 30, 2024.

Goodwill impairment and write-off of intangible assets

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Goodwill impairment and impairment of intangible assets

We recognized a $1.3 million goodwill impairment in the 2024 periods related to the All Other reporting unit and a $1.0 million impairment of its software developed for internal use related to the Fluent reporting unit and customer relationships related to the All Other reporting unit, as compared to no impairment in the 2025 periods.

Interest expense, net

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Interest expense, net

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

The decrease in interest expense was driven by consulting fees capitalized and amortized over a shortened period of time during the prior period that related to the term loan with Citizens Bank N.A., partly offset by the overall higher average interest rate on the SLR (as defined herein) term loan in the current period.

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

The decrease in interest expense was driven by consulting fees capitalized and amortized over a shortened period of time during the prior period that related to the term loan with Citizens Bank, N.A.

("Citizens Bank"), partly offset by the overall higher average interest rate on the SLR Term Loan (as defined herein) in the current period.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

The decrease in interest expense was driven by consulting fees capitalized and amortized over a shortened period of time during the prior period that related to the term loan with Citizens Bank, partly offset by the overall higher average interest rate on the SLR Term Loan (as defined herein) in the current period.

Fair value adjustment of Convertible Notes with related parties

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Fair value adjustment of Convertible Notes with related parties

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

The change was due to a Company recognized $0.1 million of an unrealized loss related to the fair value of Convertible Notes entered into in August 2024 and therefore none in the prior period.

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

We recognized a $0.5 million unrealized gain from the fair value adjustment of the Convertible Notes issued in August 2024 for the three months ended June 30, 2025, with no comparable gain in the prior period.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

We recognized a $0.4 million unrealized gain from the fair value adjustment of the Convertible Notes issued in August 2024 for the six months ended June 30, 2025, with no comparable gain in the prior period.

Loss on early extinguishment of debt

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Loss on early extinguishment of debt

We recognized a $1.0 million loss on early extinguishment of debt related to the Citizens Bank credit agreement in the 2024 periods, as compared to no loss on debt extinguishment in the 2025 periods.

Loss before income taxes

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Loss before income taxes

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

The decline in loss before income taxes of $5.1 million was a result of the foregoing.

Income tax expense

Three Months Ended March 31,

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

The decline in loss before income taxes of $2.4 million was a result of the foregoing.

Income tax benefit (expense)

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Income tax expense

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

For the three months ended March 31, 2025, the 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% was primarily driven by 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.

As of March 31, 2025 and 2024, the Company recorded full valuation allowances against its net deferred tax assets.

Income tax benefit (expense)

Three months ended June 30, 2025 compared to the three months ended June 30, 2024

For the three months ended June 30, 2025, the effective income tax rate of 1.4% 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 three months ended June 30, 2024, the Company's effective income tax rate of 6.5% 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.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

For the six months ended June 30, 2025 and 2024, the effective income tax rate of 0.8% 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.

As of June 30, 2025 and 2024, the Company recorded full valuation allowances against its net deferred tax assets.

The Company intends to maintain full valuation allowances against the net deferred tax assets until there is sufficient evidence to support the release of all or some portion of such valuation allowances.

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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.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

T hree m onths ended March 31, 2025 compared to the three months ended March 31, 2024

For the three months ended

March 31, 2025 and 2024,

$8.3 million and

$6.3 million, respectively, as a result of the foregoing.

T hree m onths ended June 30, 2025 compared to the three months ended June 30, 2024

For the three months ended June 30, 2025 and 2024, net loss was $7.2 million and $11.6 million, respectively, as a result of the foregoing.

Six months ended June 30, 2025 compared to the six months ended June 30, 2024

For the six months ended June 30, 2025 and 2024, net loss was $15.5 million and $17.9 million, respectively, as a result of the foregoing.

Liquidity and Capital Resources

Cash provided by (used in) operating activities .

For the three months ended March 31, 2025, net cash provided by operating activities was $2.1 million, compared to net cash used in operating activities of $0.1 million for the three months ended March 31, 2024.

Net loss in the current year period of $8.3 million represents an increase of $2.0 million, as compared with net loss of $6.3 million in the prior period.

Adjustments to reconcile net loss to net cash provided by operating activities of $3.0 million in the current year period decreased by $1.0 million, as compared with $4.0 million in the prior period, primarily due to a decrease in amortization of debt and lower share-based compensation expense.

Changes in assets and liabilities generated cash of $7.3 million in the current year period, as compared with $2.2 million in the prior period, primarily due to ordinary-course changes in working capital, largely involving the timing of receipt of amounts owing from clients and disbursements of amounts payable to vendors.

For the six months ended June 30, 2025, net cash provided by operating activities was $3.0 million, compared to net cash used in operating activities of $13.2 million for the six months ended June 30, 2024.

Net loss in the current year period of $15.5 million represents an improvement of $2.4 million, as compared with net loss of $17.9 million in the prior period.

Adjustments to reconcile net loss to net cash provided by operating activities of $6.3 million in the current year period decreased by $3.8 million, as compared with net cash used in operating activities of $10.1 million in the prior period, primarily due to a goodwill impairment of $1.3 million, impairment of intangible assets of $1.0 million, and a loss on early extinguishment of debt of $1.0 million in the prior period that did not occur in the current year period, a fair value adjustment of Convertible Notes with related parties of $0.4 million in the current year period that did not occur in prior year period, and lower amortization of debt and share-based compensation expense in the current year period compared to prior year period, partially offset by a non-cash loss on asset write-off of $0.7 million in the current year period.

Changes in assets and liabilities generated cash of $12.3 million in the current year period, as compared with consuming cash of $5.4 million in the prior period, primarily due to ordinary-course changes in working capital, largely involving the timing of receipt of amounts owing from clients and disbursements of amounts payable to vendors.

Cash used in investing activities .

For the three months ended March 31, 2025 and 2024, net cash used in investing activities was $1.6 million and $1.8 million, respectively.

The decrease was due to a decrease in investment in capitalized software in the current year period.

Cash used in financing activities.

For the three months ended March 31, 2025, net cash used in financing activities was $5.2 million, compared to $2.2 million for the three months ended March 31, 2024.

The change was mainly due to net repayments on the SLR debt revolver, which was partly offset by the net proceeds received from the issuance of pre-funded warrants and lower debt financing costs.

As of March 31, 2025, we had noncancelable operating lease commitments of $1.2 million and long-term debt with a $25.2 million principal balance.

As of March 31, 2025, we had cash, cash equivalents, and restricted cash of $6.1 million, a decrease of $4.6 million from $10.7 million as of December 31, 2024.

For the six months ended June 30, 2025 and 2024, net cash used in investing activities was $3.2 million and $3.5 million, respectively.

The decrease was primarily due to a decrease in investment in capitalized software in the current year period.

Cash (used in) provided by financing activities.

For the six months ended June 30, 2025, net cash used in financing activities was $3.2 million, compared to net cash provided by $7.4 million for the six months ended June 30, 2024.

The change was mainly due to lower net proceeds and higher repayments on the SLR debt revolver and less proceeds from the issuance of warrants, partly offset by lower debt financing costs.

As of June 30, 2025, we had noncancelable operating lease commitments of $4.1 million and long-term debt with a $23.3 million principal balance.

As of June 30, 2025, we had cash, cash equivalents, and restricted cash of $7.3 million, a decrease of $3.4 million from $10.7 million as of December 31, 2024.

Private Placement of Securities

On August 19, 2025, the Company entered into securities purchase agreements (the “August Purchase Agreements”) with certain officers and/or directors of the Company (collectively, the “August Inside Investors”), and the largest stockholder of the Company and other accredited investors (collectively, together with the August Inside Investors, the “August Purchasers”), pursuant to which the Company agreed to sell and the August Purchasers agreed to purchase an aggregate of (i) 3,542,856 shares (the “August Shares”) of the Company’s common stock, (ii) pre-funded warrants (the “August Pre-Funded Warrants”) to purchase up to 2,328,571 shares of the Company’s common stock (the “August Pre-Funded Warrant Shares”) and (iii) warrants (the “August Common Stock Warrants” and together with the August Pre-Funded Warrants, the “August Warrants”) to purchase up to 5,871,427 shares (the “August Common Stock Warrant Shares” and together with the August Pre-Funded Warrant Shares, the “August Warrant Shares”) of the Company’s common stock at a purchase price of (i) $1.75 per August Share and accompanying August Common Stock Warrant or (ii) $1.7495 per August Pre-Funded Warrant and accompanying August Common Stock Warrant in a private placement for aggregate gross proceeds of approximately $10.3 million, before deducting placement agent fees and other offering expenses (the “August Offering”).

The August Offering is expected to close on August 19, 2025.

The Company intends to use the net proceeds from the August Offering for working capital and general corporate purposes.

The August Shares, the August Warrants and the August Warrant Shares are hereinafter referred to as the “August Securities”.

Each August Common Stock Warrant is exercisable for a period of five and one-half years from the date of issuance and may be exercised six months and one day from the date of issuance at an exercise price of $2.21 per share, subject to adjustment.

If, at any time after the issuance date of the August Common Stock Warrants, a registration statement covering the resale of the August Common Stock Warrant Shares is not effective, the holders may exercise the August Common Stock Warrants by means of a cashless exercise.

Each August Pre-Funded Warrant will have an exercise price of $0.0005 per share of common stock, subject to adjustment, and will be immediately exercisable.

Notwithstanding the foregoing, any August Pre-Funded Warrant issued to August Inside Investors will be immediately exercisable after Stockholder Approval (as defined below) and will terminate when exercised in full.

The August Pre-Funded Warrants may be exercised by means of a cashless exercise.

The Company is prohibited from effecting an exercise of the August Warrants to the extent that, as a result of such exercise, the holder together with the holder’s affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of the August Warrants, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%.

Pursuant to the August Purchase Agreements, subject to certain exceptions, for a period of 90 days after the Effectiveness Date (as defined below), the Company and its subsidiaries are prohibited from issuing, entering into any agreement to issue or announcing the issuance or proposed issuance of any shares of common stock or Common Stock Equivalents (as defined in the August Purchase Agreements) or filing any registration statement or amendment or supplement thereto, in each case other than as contemplated by the Registration Rights Agreement (as defined below).

In addition, subject to certain exceptions, until the earlier of (i) the one year anniversary of the Effectiveness Date and (ii) the date on which no August Purchaser owns any August Securities, the Company is prohibited from entering into a Variable Rate Transaction (as defined in the August Purchase Agreements).

In connection with the August Offering, on August 19, 2025, the Company entered into Support Agreements with the August 2025 Inside Investors (the "August Support Agreements").

Pursuant to the August Support Agreements, the investors party thereto agreed to vote shares of the Company's common stock beneficially owned by them in favor of certain actions subject to Stockholder Approval (as defined in the August Support 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 August Purchase Agreements or impede, delay or otherwise adversely affect the consummation of the transactions contemplated by the August 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 August Purchase Agreements.

The Company will be obligated to use its reasonable best efforts to obtain Stockholder Approval in accordance with the rules of the Nasdaq Stock Market no later than the 60th calendar day after the closing date of the August Offering (the “August Stockholder Meeting Deadline”).

If, despite the Company’s reasonable best efforts the Stockholder Approval is not obtained on or prior to the August Stockholder Meeting Deadline, the Company is required to cause an additional stockholder meeting to be held within 60 days after the August Stockholder Meeting Deadline (the “Extended Stockholder Approval Period”);

provided that if the Company’s annual meeting of stockholders is to be held within such period, the Company may be permitted to seek the Stockholder Approval at such annual meeting of stockholders in lieu of such additional special meeting.

If the Stockholder Approval is not obtained within the Extended Stockholder Approval Period, then the Company shall convene additional stockholder meetings every 60 days thereafter until the Stockholder Approval is obtained;

In connection with the August Offering, on August 19, 2025, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the August Purchasers pursuant to which the Company shall prepare and file with the SEC a registration statement covering the Registrable Securities (as defined in the Registration Rights Agreement) on or prior to the date that is 30 calendar days following the date of the Registration Rights Agreement (the “Filing Date”).

The Company shall use its best efforts to cause the registration statement covering the Registrable Securities to be declared effective as promptly as practicable after the filing thereof, but in any event no later the 60th calendar day following the date of the Registration Rights Agreement (or in the event of a full review by the SEC, the 90th calendar day following the date of the Registration Rights Agreement) (the “Effectiveness Date”).

If, among other things, the Company fails to file the registration statement by the Filing Date or fails to have such registration statement declared effective by the Effectiveness Date (the date on which such failure occurs, the “Event Date”), then on each such Event Date and on each monthly anniversary of each such Event Date until the applicable failure is cured, the Company shall pay to each August Purchaser, in cash, a fee (the “Fee”) equal to 1% of the aggregate purchase price paid by such August Purchaser;

provided, however, that the Fee payable to an August Purchaser shall not exceed 10% of the aggregate purchase price paid by such August Purchaser.

The Benchmark Company, LLC, a StoneX Company (“Benchmark”), acted as sole placement agent in connection with the August Offering.

The Kestrel Merchant Partners group (“Kestrel”) at Benchmark was responsible for sourcing and executing the August Offering.

An affiliate of Kestrel purchased August Shares and August Common Stock Warrants in the August Offering on the same terms as the other August Purchasers.

Pursuant to the terms of an engagement letter (the “Engagement Letter”) dated as of July 21, 2025 between the Company and Benchmark, the Company (i) will pay Benchmark a total cash fee equal to 7.0% of the aggregate gross proceeds of the August Offering;

provided, however, that the fee shall be equal to 3.0% for certain pre-existing investors of the Company, and (ii) will reimburse Benchmark for certain expenses.

The August Securities have not been registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration under the Securities Act afforded by Section 4(a)(2).

The representations, warranties and covenants contained in the August Purchase Agreements were made solely for the benefit of the parties to the August Purchase Agreements.

In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties to the August Purchase Agreements and not as statements of fact, and (ii) may apply standards of materiality in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company.

Accordingly, the August Purchase Agreements are included as exhibits with this filing only to provide investors with information regarding the terms of the transaction, and not to provide investors with any other factual information regarding the Company.

Moreover, information concerning the subject matter of the representations and warranties may change after the date of the August Purchase Agreements, which subsequent information may or may not be fully reflected in public disclosures.

The foregoing descriptions of the August Purchase Agreements, the August Pre-Funded Warrants, the August Common Stock Warrants, the August Support Agreements and the Registration Rights Agreement are not complete and are qualified in their entirety by reference to the full text of the form of the August Purchase Agreement, the August Pre-Funded Warrant, the August Common Stock Warrant, the August Support Agreement and the Registration Rights Agreement copies of which are filed as Exhibits 10.7, 4.3, 4.4, 10.8 and 10.9, respectively, to this Quarterly Report on Form 10-Q and are incorporated by reference herein.

Going concern

As of March 31, 2025, we were in compliance with our financial covenants under the SLR Credit Agreement (as defined below).

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

If, during any fiscal quarter, we do not comply with any of our financial covenants, such non-compliance would result in an event of default that would give SLR (as defined below) the right to accelerate maturities.

In such case, we would not have sufficient funds to repay the SLR Term Loan (as defined below) under the SLR Credit Agreement and any outstanding balance on the SLR Revolver (as defined below).

On May 15, 2025, the Company entered into securities purchase agreements, pursuant to which the purchasers agreed to invest expected gross aggregate proceeds of $4.1 million (refer to Note 12 of the Notes to our consolidated financial statements included in this Form 10-Q).

Even with the proceeds of 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, we would expect to raise additional capital.

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

As of June 30, 2025, the Company was not in compliance with its financial covenants under the SLR Credit Agreement (as defined below) which would have resulted in an event of default.

However, on August 15, 2025, the Credit Parties and SLR entered into the Fifth Amendment to the SLR Credit Agreement, (the "Fifth Amendment") which, among other things, required that the Company raise at least $8.5 million of additional capital by August 19, 2025.

As noted above, on August 19, 2025, the Company entered into securities purchase agreements for approximately $10.3 million in equity capital, expected to close on August 19, 2025.

In addition, the Fifth Amendment waived non-compliance with the financial covenants as of June 30, 2025 and modified the financial covenants for the periods through August 31, 2026.

Although the financial covenants under the SLR Credit Agreement were reset based on the Company’s twelve month projections, the Company has not met its projection for certain recent quarters and if during any future quarter, the Company does not comply with any of its financial covenants, such non-compliance would result in default and therefore give SLR the right to accelerate maturities.

In such case, the Company would not have sufficient funds to repay the borrowings under the SLR Credit Agreement.

As a result of the foregoing, 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.

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

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For more information regarding our SLR Credit Facility, refer to Note 4 of the Notes to our consolidated financial statements included in this Form 10-Q.

Our future cash requirements will depend on many factors, including employee-related expenditures from expansion of our headcount, costs to support the growth in our client and partner accounts and continued client expansion, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced solutions, features, and functionality, and litigation.

Our future cash requirements will depend on many factors, including changes in cash flows from our owned and operated business, employee-related expenditures, costs to support the growth in our client and partner accounts and continued client expansion of the Commerce Media Solutions business, and the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced solutions, features, and functionality.

We may, in the future, enter into arrangements to acquire or invest in complementary businesses, services, technologies, and intellectual property rights.

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We used a portion of the net proceeds of the SLR Credit Facility to repay our then-outstanding obligations under the Citizens Credit Agreement dated March 31, 2021, prior to its maturity.

As of March 31, 2025, the SLR Credit Facility had an outstanding principal balance of $21.8 million (of which $1.8 million relates to the SLR Revolver) and matures on April 2, 2029 (the "Maturity Date").

As of June 30, 2025, the SLR Credit Facility had an outstanding principal balance of $20.0 million (none of which relates to the SLR Revolver) and matures on April 2, 2029 (the "Maturity Date").

The SLR Credit Facility is secured by substantially all of our assets and those of certain of our direct and indirect subsidiaries, including Fluent, LLC.

The SLR Credit Agreement contains restrictive covenants which impose limitations on the way we conduct our business, including, but not limited to, limitations on the amount of additional debt we are able to incur and our ability to make certain investments or to pay dividends or other restricted payments.

The SLR Credit Agreement also contains certain affirmative covenants and customary events of default provisions, including, subject to grace periods, among others, payment default, covenant default and judgment default.

The SLR Credit Agreement also contains certain affirmative covenants and customary events of default provisions, including, subject to grace periods, payment default, covenant default and judgment default.

We may voluntarily prepay the SLR Term Loan, in whole or in part, at any time, subject to a premium payable on the aggregate principal amount of any such voluntary prepayments within the first three years following the closing date.

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The Applicable Margin will be reduced to 5.0% when our 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 changed to 10.33% (SOFR + CSA+5.75%) as of March 31, 2025.

The opening interest rate of the SLR Credit Facility was 10.81% (SOFR + CSA + 5.25%), which changed to 10.34% (SOFR + CSA+5.75%) as of June 30, 2025.

On March 10, 2025, we entered into the Fourth Amendment to the SLR Credit Agreement, which, among other things, required that we raise at least $5.0 million of additional capital by March 20, 2025.

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In addition, the Fourth Amendment waived non-compliance with the financial covenants as of December 31, 2024, extended the duration of the call protection applicable to the loans, and modified the financial covenants, among other things (See Note 4 , Long-term debt, net in the Notes to the consolidated financial statements).

As of March 31, 2025, we were in compliance with the financial covenants under the SLR Credit Agreement, as discussed above.

As of June 30, 2025, we were not in compliance with the financial covenants under the SLR Credit Agreement, as discussed above.

On August 15, 2025, we entered into the Fifth Amendment to the SLR Credit Agreement, which, among other things, required that we raise at least $8.5 million of additional capital by August 19, 2025.

On August 19, 2025, the Company entered into securities purchase agreements for approximately $10.3 million in equity capital, expected to close on August 19, 2025.

See Part I, Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Private Placement of Securities for additional information on this capital raise.

In addition, the Fifth Amendment waived non-compliance with the financial covenants as of June 30, 2025 and modified the financial covenants for the periods through August 31, 2026.

Sales of securities

On March 20, 2025, the Company issued 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 warrant.

On May 15, 2025, the Company issued pre-funded warrants to purchase up to 1,829,956 shares of the Company's common stock, at a purchase price of $2.1995 per warrant.

The aggregate gross proceeds totaled $4.0 million before deducting offering expenses payable by the Company.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis