Fluent, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS. FLUENT, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) (unaudited) June 30, 2025 December 31, 2024 ASSETS: Cash and cash equivalents $ 4,929 $ 9,439 Accounts receivable, net of allowance for credit losses of $ 502 and $ 487 , respectively 31,227 46,532 Prepaid expenses and other current assets 9,119 8,729 Current restricted cash 1,673 1,255 Total current assets 46,948 65,955 Non-current restricted cash 710 — Property and equipment, net 193 304 Operating lease right-of-use assets 3,214 1,570 Intangible assets, net 19,618 21,797 Other non-current assets 3,788 3,991 Total assets $ 74,471 $ 93,617 LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts payable $ 8,715 $ 8,776 Accrued expenses and other current liabilities 19,696 21,905 Deferred revenue 335 556 Current portion of long-term debt 19,860 31,609 Current portion of operating lease liability 1,045 1,836 Total current liabilities 49,651 64,682 Long-term debt, net — 250 Convertible Notes, at fair value with related parties 3,322 3,720 Operating lease liability, net 2,375 9 Other non-current liabilities — 1 Total liabilities 55,348 68,662 Contingencies (Note 10) Shareholders' equity: Preferred stock — $ 0.0001 par value, 10,000,000 Shares authorized; Shares outstanding — 0 shares for both periods — — Common stock — $ 0.0005 par value, 200,000,000 Shares authorized; Shares issued — 25,037,334 and 20,791,431 , respectively; and Shares outstanding — 24,268,739 and 20,022,836 , respectively 50 47 Treasury stock, at cost — 768,595 and 768,595 Shares, respectively ( 11,407 ) ( 11,407 ) Additional paid-in capital 456,767 447,110 Accumulated deficit ( 426,287 ) ( 410,795 ) Total shareholders' equity 19,123 24,955 Total liabilities and shareholders' equity $ 74,471 $ 93,617 See notes to consolidated financial statements 2 Table of Contents FLUENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share data) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenue $ 44,706 $ 58,717 $ 99,916 $ 124,700 Costs and expenses: Cost of revenue (exclusive of depreciation and amortization) 34,426 46,109 78,201 93,457 Sales and marketing 3,218 4,605 7,288 9,417 Product development 2,941 4,717 6,339 9,557 General and administrative 8,748 8,856 17,330 19,221 Depreciation and amortization 2,479 2,567 4,940 5,138 Goodwill and intangible assets impairment — 2,241 — 2,241 Total costs and expenses 51,812 69,095 114,098 139,031 Loss from operations ( 7,106 ) ( 10,378 ) ( 14,182 ) ( 14,331 ) Interest expense, net ( 702 ) ( 1,015 ) ( 1,582 ) ( 2,430 ) Fair value adjustment of Convertible Notes with related parties 478 — 398 — Loss on early extinguishment of debt — ( 1,009 ) — ( 1,009 ) Loss before income taxes ( 7,330 ) ( 12,402 ) ( 15,366 ) ( 17,770 ) Income tax benefit (expense) 107 775 ( 126 ) ( 133 ) Net loss $ ( 7,223 ) $ ( 11,627 ) $ ( 15,492 ) $ ( 17,903 ) Basic and diluted loss per share: Basic $ ( 0.30 ) $ ( 0.75 ) $ ( 0.68 ) $ ( 1.11 ) Diluted $ ( 0.30 ) $ ( 0.75 ) $ ( 0.68 ) $ ( 1.11 ) Weighted average number of shares outstanding: Basic 24,061,803 15,534,989 22,661,951 16,115,293 Diluted 24,061,803 15,534,989 22,661,951 16,115,293 See notes to consolidated financial statements 3 Table of Contents FLUENT, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Amounts in thousands, except share and per share data) (unaudited) Common stock Treasury stock Additional paid-in Accumulated Total shareholders' Shares Amount Shares Amount capital deficit equity Balance at March 31, 2025 21,412,255 $ 47 768,595 $ ( 11,407 ) $ 452,459 $ ( 419,064 ) $ 22,035 Vesting of restricted stock units and issuance of stock under incentive plans 317,830 1 — — ( 1 ) — — Share-based compensation — — — — 339 — 339 Issuance of pre-funded and common stock warrants — — — — 3,972 — 3,972 Exercise of pre-funded warrants 3,307,249 2 — — ( 2 ) — — Net loss — — — — — ( 7,223 ) ( 7,223 ) Balance at June 30, 2025 25,037,334 $ 50 768,595 $ ( 11,407 ) $ 456,767 $ ( 426,287 ) $ 19,123 Balance at December 31, 2024 20,791,431 $ 47 768,595 $ ( 11,407 ) $ 447,110 $ ( 410,795 ) $ 24,955 Vesting of restricted stock units and issuance of stock under incentive plans 317,830 1 — — ( 1 ) — — Share-based compensation expense — — — — 688 — 688 Issuance of pre-funded and common stock warrants — — — — 8,972 — 8,972 Exercise of pre-funded warrants 3,928,073 2 — — ( 2 ) — — Net loss — — — — — ( 15,492 ) ( 15,492 ) Balance at June 30, 2025 25,037,334 $ 50 768,595 $ ( 11,407 ) $ 456,767 $ ( 426,287 ) $ 19,123 Common stock Treasury stock Additional paid-in Accumulated Total shareholders' Shares Amount Shares Amount capital deficit equity Balance at March 31, 2024 14,429,193 $ 43 768,595 $ ( 11,407 ) $ 427,904 $ ( 387,794 ) $ 28,746 Vesting of restricted stock units and issuance of stock under incentive plans 251,053 1 — — ( 1 ) — — Share-based compensation — — — — 434 — 434 Issuance of pre-funded warrants — — — — 9,900 — 9,900 Net loss — — — — — ( 11,627 ) ( 11,627 ) Balance at June 30, 2024 14,680,246 $ 44 768,595 $ ( 11,407 ) $ 438,237 $ ( 399,421 ) $ 27,453 Balance at December 31, 2023 14,384,936 $ 43 768,595 $ ( 11,407 ) $ 427,286 $ ( 381,518 ) $ 34,404 Vesting of restricted stock units and issuance of stock under incentive plans 295,310 1 — — ( 1 ) — — Share-based compensation expense — — — — 1,052 — 1,052 Issuance of pre-funded warrants — — — — 9,900 — 9,900 Net loss — — — — — ( 17,903 ) ( 17,903 ) Balance at June 30, 2024 14,680,246 $ 44 768,595 $ ( 11,407 ) $ 438,237 $ ( 399,421 ) $ 27,453 See notes to consolidated financial statements 4 Table of Contents FLUENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (unaudited) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 15,492 ) $ ( 17,903 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 4,940 5,138 Non-cash loan amortization expense 365 837 Non-cash gain on contingent consideration — ( 250 ) Non-cash loss on early extinguishment of debt — 1,009 Share-based compensation expense 666 1,030 Fair value adjustment of Convertible Notes with related parties ( 398 ) — Goodwill impairment — 1,261 Impairment of intangible assets — 980 Non-cash loss on asset write-off 698 — Allowance for credit losses 18 71 Changes in assets and liabilities, net of business acquisitions: Accounts receivable 15,287 1,280 Prepaid expenses and other current assets ( 490 ) ( 1,579 ) Other non-current assets 134 191 Operating lease assets and liabilities, net ( 69 ) ( 168 ) Accounts payable ( 61 ) ( 3,140 ) Accrued expenses and other current liabilities ( 2,329 ) ( 1,443 ) Deferred revenue ( 221 ) 474 Other ( 1 ) ( 987 ) Net cash provided by (used in) operating activities 3,047 ( 13,199 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capitalized costs included in intangible assets ( 3,200 ) ( 3,542 ) Acquisition of property and equipment ( 31 ) — Net cash used in investing activities ( 3,231 ) ( 3,542 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt, net of debt financing costs 34,332 42,917 Repayments of long-term debt ( 46,377 ) ( 44,475 ) Debt financing costs ( 125 ) ( 968 ) Proceeds from issuance of pre-funded and common stock warrants 8,972 9,900 Net cash (used in) provided by financing activities ( 3,198 ) 7,374 Net decrease in cash, cash equivalents, and restricted cash ( 3,382 ) ( 9,367 ) Cash, cash equivalents, and restricted cash at beginning of period 10,694 15,804 Cash, cash equivalents, and restricted cash at end of period $ 7,312 $ 6,437 SUPPLEMENTAL DISCLOSURE INFORMATION Cash paid for interest $ 1,353 $ 1,690 Cash (refunded) paid for income taxes $ ( 8 ) $ 44 Share-based compensation capitalized in intangible assets $ 17 $ 29 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Long-term debt issuance $ — $ 2,000 Consideration for True North $ — $ 500 See notes to consolidated financial statements 5 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) (unaudited) 1. Summary of significant accounting policies (a) Basis of preparation The accompanying unaudited consolidated financial statements have been prepared by Fluent, Inc., a Delaware corporation (the "Company" or "Fluent"), in accordance with accounting principles generally accepted in the United States ("GAAP" or "U.S. GAAP") and applicable rules and regulations of the Securities and Exchange Commission (the "SEC") regarding interim financial reporting. 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 June 30, 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"). The Company consolidates a VIE in its financial statements if the Company is deemed to be the primary beneficiary of the VIE. 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, 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. Going concern In accordance with Accounting Standards Codification ("ASC") 205 - 40, Presentation of Financial Statements – Going Concern, management must evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date these accompanying unaudited consolidated financial statements are issued (the "issuance date"). 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 declining revenue and profitability in the last several years, in large part due to difficulties sourcing traffic for the Company's owned and operated digital media properties ("O&O Sites"). Additionally, 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). Moreover, 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 June 30, 2025, the Company was not in compliance with its financial covenants under the SLR Credit Agreement (as defined below in Note 4 , Long-term debt, net ) 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 $ 8,500 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 Note 12, Subsequent events , for further details. 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. 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. 6 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) Principles of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant transactions among the Company and its subsidiaries have been eliminated upon consolidation. (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, 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. 33 - 10532. 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. The guidance is to be applied prospectively, with early adoption prohibited. The Company is currently evaluating the impact of adopting the 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, 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. The new guidance is effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025, and early adoption is permitted. The guidance will be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures. In November 2024, the FASB issued ASU No. 2024 - 03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220 - 40 ): 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 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. The guidance will be applied on a prospective basis to financial statements issued for reporting periods after the effective date, or retrospectively to any and 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. 7 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) (c) Revenue recognition 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) 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. The Company applies the practical expedient related to the review of a portfolio of contracts in reviewing the terms of customer contracts as one collective group, rather than by individual contract. Based on historical performance of the contracts contained in this portfolio and the similar nature and characteristics of the customers, the Company concluded that the financial statement effects are not materially different than accounting for revenue on a contract-by-contract basis. The Company has elected the "right to invoice" practical expedient available within ASC 606 - 10 - 55 - 18 as the measure for revenue to be recognized, as it corresponds directly with the amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company's revenue arrangements do not contain significant financing components. The Company has further concluded that revenue does not require disaggregation. For each identified performance obligation in a contract with a customer, the Company assesses whether it or the third -party supplier is the principal or agent. In arrangements where the Company has substantive control of the specified goods and services, is primarily responsible for the integration of products and services into the final deliverable to the customer, and has inventory risk and discretion in establishing pricing, the Company is considered to have acted as the principal. For performance obligations in which the Company acts as principal, the Company records the gross amount billed to the customer within revenue and the related incremental direct costs incurred as cost of revenue. If the third -party supplier, rather than the Company, is primarily responsible for the performance and deliverable to the customer, and the Company solely arranges for the third -party supplier to provide services to the customer, the Company is considered to have acted as the agent. For performance obligations in which the Company acts as the agent, the net fees on such transactions are recorded as revenue, with no associated costs of revenue for the Company. 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. As of June 30, 2025 , December 31, 2024 , and December 31, 2023 the balance of deferred revenue was $ 335 , $ 556 , and $ 430 , respectively. The majority of the deferred revenue balance as of December 31, 2024 was recognized as revenue during the first quarter of 2025 . 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 June 30, 2025 , December 31, 2024 , and December 31, 2023, unbilled revenue included in the Company's accounts receivable was $ 11,014 , $ 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. Substantially all amounts included within the unbilled revenue balance are invoiced to customers within the month directly following the period of service. Historical estimates related to unbilled revenue have not differed materially from actual invoiced revenue. Sales commissions are recorded at the time revenue is recognized and recorded in sales and marketing in the consolidated statements of operations. The Company has elected to utilize a practical expedient to expense incremental costs incurred related to obtaining a contract. 8 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) In addition, the Company elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed. Commission revenue 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, based on the expected value method. 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, 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. Revenue Disaggregation The following table presents the Company’s disaggregated revenue by media resources along with its availability and demand for the three and six months ended June 30, 2025 and 2024 , based on segment reporting: Three Months Ended June 30, Three Months Ended June 30, 2025 2024 Fluent All Other Consolidated Fluent All Other Consolidated (In thousands) Owned and Operated $ 21,402 $ — $ 21,402 $ 42,000 $ — 42,000 Commerce Media Solutions 16,080 — 16,080 7,292 — 7,292 Call Solutions 5,630 — 5,630 5,840 — 5,840 AdParlor — 1,551 1,551 — 3,152 3,152 All Other (1) — 43 43 — 433 433 Total Revenue $ 43,112 $ 1,594 $ 44,706 $ 55,132 $ 3,585 $ 58,717 ( 1 ) Balance is fully related for the three months ended June 30, 2025 and partially related for the three months ended June 30, 2024 to commission revenues. Six Months Ended June 30, Six Months Ended June 30, 2025 2024 Fluent All Other Consolidated Fluent All Other Consolidated (In thousands) Owned and Operated $ 52,484 $ — $ 52,484 $ 86,654 $ — $ 86,654 Commerce Media Solutions 28,740 — 28,740 13,668 — 13,668 Call Solutions 15,709 — 15,709 12,771 — 12,771 AdParlor — 2,948 2,948 — 5,957 5,957 All Other (1) — 35 35 — 5,650 5,650 Total Revenue $ 96,933 $ 2,983 $ 99,916 $ 113,093 $ 11,607 $ 124,700 ( 1 ) Balance is fully related for the six months ended June 30, 2025 and partially related for the six months ended June 30, 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. Seasonality 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. (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 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 , Long-term debt, net ) 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. (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. 9 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820, Fair Value Measurements and Disclosure describes a fair value hierarchy based on the following three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value: ● Level 1 — defined as observable inputs, such as quoted prices in active markets; ● Level 2 — defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and ● Level 3 — defined as unobservable inputs, for which little or no market data exists, therefore requiring an entity to develop its own assumptions. See Note 5 , Fair Value Measurements , for further details. (f) Goodwill 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 June 30, 2025 and December 31, 2024 , there was no remaining goodwill. (g) Common stock warrants The Company accounts for warrants as either equity-classified or liability-classified instruments in accordance with the guidance provided in ASC 480, Distinguishing Liabilities from Equity , and ASC 815, Derivatives and Hedging . Equity-classified warrants are those that are indexed to the Company’s own stock and meet the criteria for equity classification under ASC 815 - 40. These instruments are recorded in equity at fair value on the issuance date and are not subsequently remeasured, provided the Company continues to meet the equity classification criteria. 2. 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, 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, common stock warrants, direct offering, deferred common stock, and unvested shares (see Note 7 , Equity below). Stock equivalent shares are excluded from the calculation in loss periods, as their effects would be anti-dilutive. For the three and six months ended June 30, 2025 and 2024 , basic and diluted loss per share were as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Numerator: Net loss $ ( 7,223 ) $ ( 11,627 ) $ ( 15,492 ) $ ( 17,903 ) Denominator: Weighted average shares outstanding 23,840,664 15,289,622 22,378,144 15,827,411 Weighted average restricted shares vested not delivered 221,139 245,367 283,807 287,882 Total basic weighted average shares outstanding 24,061,803 15,534,989 22,661,951 16,115,293 Dilutive effect of assumed conversion of restricted stock units — — — — Total diluted weighted average shares outstanding 24,061,803 15,534,989 22,661,951 16,115,293 Basic and diluted loss per share: Basic $ ( 0.30 ) $ ( 0.75 ) $ ( 0.68 ) $ ( 1.11 ) Diluted $ ( 0.30 ) $ ( 0.75 ) $ ( 0.68 ) $ ( 1.11 ) Based on exercise prices compared to the average stock prices for the three and six months ended June 30, 2025 and 2024 , certain stock equivalents have been excluded from the diluted weighted average share calculations due to their anti-dilutive nature. Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Restricted stock units 836,393 993,975 836,393 993,975 Stock options 331,667 298,331 331,667 298,331 Common stock warrants 1,829,956 — 1,829,956 — Total anti-dilutive securities 2,998,016 1,292,306 2,998,016 1,292,306 10 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) 3. Intangible assets, net Intangible assets, net, other than goodwill, consist of the following: Amortization period (in years) June 30, 2025 December 31, 2024 Gross amount: Software developed for internal use 3 $ 28,695 $ 25,478 Acquired proprietary technology 3 - 5 14,282 15,792 Customer relationships 5 - 10 36,686 36,686 Trade names 4 - 20 16,657 16,657 Domain names 20 195 195 Databases 5 - 10 31,292 31,292 Non-compete agreements 2 - 5 1,768 1,768 Total gross amount 129,575 127,868 Accumulated amortization: Software developed for internal use ( 19,337 ) ( 16,709 ) Acquired proprietary technology ( 14,282 ) ( 15,037 ) Customer relationships ( 36,227 ) ( 35,952 ) Trade names ( 8,120 ) ( 7,711 ) Domain names ( 92 ) ( 87 ) Databases ( 30,131 ) ( 28,807 ) Non-compete agreements ( 1,768 ) ( 1,768 ) Total accumulated amortization ( 109,957 ) ( 106,071 ) Net intangible assets: Software developed for internal use 9,358 8,769 Acquired proprietary technology — 755 Customer relationships 459 734 Trade names 8,537 8,946 Domain names 103 108 Databases 1,161 2,485 Total intangible assets, net $ 19,618 $ 21,797 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, 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 acquisition of a 50 % interest in Winopoly, LLC, effective April 1, 2020; and the initial consolidation of TAPP Influencers Corp. ("TAPP"), effective January 9, 2023 . 11 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) The Company completed its quarterly triggering event assessment for the three months ended of June 30, 2025 and determined that no triggering event had occurred requiring further impairment assessment of its long-lived assets. Amortization expenses of $ 2,407 and $ 2,495 for the three months ended June 30, 2025 and 2024 , respectively, and $ 4,798 and $ 4,978 for the six months ended June 30, 2025 and 2024 , respectively, are included in depreciation and amortization expenses in the consolidated statements of operations. As of June 30, 2025 , intangible assets with a carrying amount of $ 750 , included in the gross amount of software developed for internal use, have not commenced amortization, as they are not ready for their intended use. Further, during the six months ended June 30, 2025 , the Company recognized a loss of $ 598 related to the write-off of the acquired proprietary technology in connection with TAPP ( see Note 11 , Variable Interest Entity). As of June 30, 2025 , estimated amortization expenses related to the Company's intangible assets for the remainder of 2025 and through 2030 and thereafter are as follows: Year June 30, 2025 Remainder of 2025 $ 3,379 2026 4,161 2027 3,947 2028 2,387 2029 828 2030 and thereafter 4,916 Total $ 19,618 4. Long-term debt, net 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: June 30, 2025 December 31, 2024 Credit Facility due 2029 (less unamortized discount and financing costs of $ 1,140 and $ 1,186 , respectively) $ 18,860 $ 30,359 Note Payable due 2026 1,000 1,500 Convertible Notes with related parties 3,322 3,720 Long-term debt, net 23,182 35,579 Less: Current portion of long-term debt ( 19,860 ) ( 31,609 ) Long-term debt, net (non-current) $ 3,322 $ 3,970 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 June 30, 2025 , the SLR Credit Facility had an outstanding principal balance of $ 20,000 (of which none 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. 12 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) There is no principal amortization prior to maturity under the SLR Credit Agreement except for certain mandatory prepayments to be made with the net cash proceeds of certain asset sales, casualty events, and other extraordinary receipts and upon the occurrence of certain other events, in each case subject to certain reinvestment rights, thresholds and other exceptions. 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 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 changed to 10.34 % (SOFR + CSA+ 5.75 %) as of June 30, 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 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. When the borrowing base does not support amounts exceeding our $ 20,000 SLR Term Loan, we are required to maintain a restricted cash balance with the lender. Debt issuance costs and debt discount costs, net of accumulated amortization, related to the issuance and amendments of the SLR Revolver were $ 753 and $ 956 , respectively, as of June 30, 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 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 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. 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 June 30, 2025, the Company was not in compliance with its financial covenants under the SLR Credit Agreement which would have resulted in an event of default. 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 $ 8,500 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 Note 12, Subsequent events , for further details. In addition, SLR ( 1 ) waived non-compliance with the financial covenants as of June 30, 2025 and ( 2 ) modified the financial covenants for the periods through August 31, 2026. 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 under the SLR Credit Agreement and any outstanding balance on the SLR Revolver. As a result of the foregoing, all borrowings under the Credit Agreement have been classified as current as of June 30, 2025. 13 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) Note Payable 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 (as defined herein) (see Note 10 , 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 changed to 15.32 % (SOFR + 11% ) as of June 30, 2025 . A maximum of $ 1,000 of the borrowings under the Note Payable are secured by substantially all of the assets of Fluent, LLC. This security interest is subordinate to the security interest under the SLR Credit Agreement. The Note Payable matures on March 31, 2026 and interest is payable quarterly. Scheduled principal amortization of the Note Payable is $ 250 per quarter, which commenced with the fiscal quarter ended June 30, 2024, but was subsequently paid upon receipt of the invoice from FDR and applied as of July 17, 2024. Convertible Notes with related parties 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. 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 were subject to additional limits on conversion until stockholder approval was obtained on June 18, 2025. 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. The Subordination Agreements provide that the Company may not make any payment of principal or interest on the Convertible Notes unless certain conditions are met. 14 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) The Convertible Notes are accounted for at fair value due to the election of the fair value option ("FVO") in accordance with ASC 825 , Financial Instruments ("ASC 825" ). Within ASC 825, the FVO can be elected for debt host financial instruments containing embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815. Notwithstanding, ASC 825 - 10 - 15 - 4 provides for the FVO election, to the extent not otherwise prohibited by ASC 825 - 10 - 15 - 5, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. Within ASC 825 - 10 - 45 - 5, the estimated fair value adjustments are recognized as a component of other comprehensive income with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value adjustment recognized as other income (expense) within the consolidated statement of operations. As then provided by ASC 825 - 10 - 50 - 30 (b), the estimated fair value adjustment is presented in a respective single line item within other income (expense) in the consolidated statements of operations, as the Company concluded that the change in fair value of the Convertible Notes was not attributable to instrument specific credit risk. The Company then elected to not present the interest expense for the Convertible Notes separately. The initial fair value was determined to be greater than the principal balance of the Convertible Notes. The Company noted that the transaction was entered into with certain of the Company's officers and directors and the largest stockholder and was required under the Second Amendment for liquidity needs. Further, the Company reviewed the valuation and determined it was appropriate. 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 June 30, 2025 , the principal balance of the Convertible Notes was $ 2,289 , with a fair value of $ 3,322 . The Company recognized an additional decrease in fair value of $ 478 and $ 398 for the three and six months ended June 30, 2025 , respectively, which was recognized in other income (loss) from operations. For the six months ended June 30, 2025 , accrued interest was paid in kind. Maturities As of June 30, 2025 , scheduled future maturities of the Company's debt are as follows, not reflective of the debt being accelerated as noted in Note 1 : Year June 30, 2025 Remainder of 2025 $ 750 2026 250 2027 — 2028 — 2029 22,289 Total maturities $ 23,289 15 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) 5. Fair Value Measurements The fair value of the Company's cash, cash equivalents, current restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate their carrying values because of the short-term nature of these instruments. Restricted cash 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. On April 15, 2025, the Company received the landlord’s consent for the second amendment to its sublease, which reduced the subleased premises and payments, effective March 19, 2025. The consent also approved the extension of the sublease term by four years, effective April 15, 2025. In connection with this lease agreement, the Company recorded $ 710 in non-current restricted cash as of June 30, 2025 , and $ 1,255 in current restricted cash as of December 31, 2024 , on the consolidated balance sheets. The Company also recorded $ 1,673 as current restricted cash on the consolidated balance sheets as of June 30, 2025 related to the SLR Credit Agreement (as defined below in Note 4 , Long-term debt, net ). As of June 30, 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 June 30, 2025 and December 31, 2024 : June 30, 2025 December 31, 2024 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Restricted cash $ 2,383 — — $ 1,255 — — Liabilities: Long term debt, net (1) — 21,000 — — 33,045 — Convertible Notes with related parties — — 3,322 — — 3,720 Contingent consideration in connection with TAPP (2) — — 17 — — 988 ( 1 ) 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. ( 2 ) 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. Convertible Notes with related parties 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 June 30, 2025 : Amount Fair value as of December 31, 2024 $ 3,720 Gain on change in fair value reported in the consolidated statements of operations ( 398 ) Fair value as of June 30, 2025 $ 3,322 16 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) As the Convertible Notes mature on April 2, 2029, and bear interest at 13 % per annum paid in kind but may be converted into shares of the Company’s common stock (the "call option"), the estimated fair value is computed as the sum of (a) the present value of the expected interest and principal payments using the discounted cash flow method based on an estimated discount rate and (b) the fair value of the call option computer using the Black-Scholes model. Both approaches are based on the following assumptions: Assumptions June 30, 2025 Face value of principal payable $ 2,289 Strike price 3.01 Value of common stock 2.00 Expected term (years) 3.8 Volatility 79.0 % Risk free rate 3.8 % Discount rate 16.4 % Contingent Consideration In connection with the contingent consideration received related to the initial consolidation of TAPP, the Company had to determine the fair value of the identified assets acquired and liabilities assumed. 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. Amount Fair value as of December 31, 2024 $ 988 Adjustment to compensation expense 17 Payment of compensation expense ( 988 ) Fair value as of June 30, 2025 $ 17 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 June 30, 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 1 (f) , Goodwill. 6. Income taxes The Company is subject to federal and state income taxes in the United States. The tax provision for interim periods is determined using an estimate of the Company's annual effective tax rate ("AETR"). The Company updates its estimated AETR on a quarterly basis and, if the estimate changes, a cumulative adjustment is made. As of June 30, 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 six months ended June 30, 2025 , the Company's effective income tax rate of negative 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. For the six months ended June 30, 2024 , the Company's effective income tax rate of 0.8 % primarily represents state and local tax expense and losses for which no tax benefit was recognized. 17 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances, and information available as of the reporting dates. For those tax positions where it is more-likely-than- not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. 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. On July 4, 2025, the One Big Beautiful Bill Act (the “OBBB Act”) was enacted, introducing amendments to U.S. tax laws with various effective dates from 2025 to 2027. The Company is currently assessing the implications of these tax law changes and does not expect that they will have a material impact on its financial statements in the current year. Since the OBBB Act was enacted subsequent to the Company’s balance sheet date, the Company’s tax provision for the three and six months ended June 30, 2025, does not incorporate the effects of these tax law changes. 7. Equity Common stock Effective at 6:00 p.m. 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 June 30, 2025 and December 31, 2024 , the number of issued shares of common stock was 25,037,334 and 20,791,431 , respectively, which included shares of treasury stock of 768,595 and 768,595 , respectively. For the six months ended June 30, 2025 , the increase in the number of issued shares of common stock was the result of the exercise of pre-funded warrants for 3,928,073 shares, as described below, and 317,830 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. Registered direct offering On 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 $ 4,500 . The Registered Direct Offering closed on December 2, 2024, with aggregate gross proceeds totaling $ 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. Private equity securities offerings On May 13, 2024, the Company entered into securities purchase agreements (the "May 2024 Purchase Agreements") with certain accredited or sophisticated investors (the "May 2024 Purchasers"), all of whom were related parties, pursuant to which the Company sold pre-funded warrants (the "May 2024 PFWs") to purchase up to 2,955,084 shares of the Company's common stock, at a purchase price of $ 3.384 per May 2024 PFW (the "May 2024 Private Placement"). The May 2024 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 2024 Private Placement. The aggregate gross proceeds for the May 2024 Private Placement totaled $ 10,000 , before deducting offering expenses payable by the Company of $ 100 . The May 2024 PFWs, 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 2024 Private Placement was obtained on July 2, 2024, at a special meeting of the Company's stockholders. 18 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) On November 29, 2024, the Company entered into securities purchase agreements (the "December 2024 Purchase Agreements") with certain accredited or sophisticated investors (the "December 2024 Purchasers"), all of whom were related parties, pursuant to which the Company agreed to sell to the December 2024 Purchasers unregistered pre-funded warrants (the "December 2024 PFWs") to purchase up to 1,187,802 shares of the Company’s common stock, at a purchase price of $ 2.3147 per December 2024 PFW and an exercise price of $ 0.0005 per share of common stock (the "December Private Placement"). The December 2024 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. The Company closed the December 2024 Private Placement on December 2, 2024, with aggregate gross proceeds totaling $ 2,750 from the sale of the December 2024 PFWs, before deducting offering expenses payable by the Company of $ 22 . The Company's largest stockholder exercised its warrant on December 9, 2024. The December 2024 PFWs purchased by three officers and/or directors of the Company were subject to stockholder approval, which was obtained on June 18, 2025, and terminated when exercised in full. The officers and/or directors exercised their December 2024 PFWs on June 24, 2025. On March 19, 2025, the Company entered into securities purchase agreements (the "March 2025 Purchase Agreements") with certain accredited or sophisticated investors (the "March 2025 Purchasers"), all of whom were related parties, pursuant to which the Company sold to the March 2025 Purchasers unregistered pre-funded warrants (the "March 2025 PFWs") to purchase up to 2,332,104 shares of the Company's common stock, at a purchase price of $ 2.174 per March 2025 PFW and an exercise price of $ 0.0005 per share of common stock (the "March 2025 Private Placement"). The March 2025 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 2025 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 2025 PFWs on March 20, 2025. The March 2025 PFWs purchased by the three officers and/or directors of the Company were subject to stockholder approval, which was obtained on June 18, 2025, and terminated when exercised in full. The officers and/or directors exercised their March 2025 PFWs on June 24, 2025. 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 sold to the May 2025 Purchasers (i) unregistered pre-funded warrants (the "May 2025 PFWs") to purchase up to 1,829,956 shares of the Company’s common stock, and (ii) unregistered warrants (the "May 2025 Common Stock Warrants") to purchase up to 1,829,956 shares of the Company’s common stock. The May 2025 PFWs had a purchase price of $ 2.1995 , 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 2025 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 aggregate gross proceeds totaled $ 4,025 , before deducting offering expenses payable by the Company of $ 54 . The allocation of the fair values was $ 2,671 for the May 2025 PFW and $ 1,354 for the May 2025 Common Stock Warrants. The Company's largest stockholder exercised its May 2025 PFWs on May 19, 2025. The May 2025 PFWs purchased by the four officers and/or directors of the Company will be immediately exercisable after stockholder approval of the transactions contemplated by the May 2025 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 May 2025 PFWs, no later than the 2026 annual meeting of stockholders. In connection with the offering, on May 15, 2025, the Company entered into support agreements (the “Support Agreements”) with the May 2025 Purchasers, pursuant to which the purchasers agreed to vote their beneficially owned shares of the Company’s common stock in favor of certain actions requiring Stockholder Approval (as defined in the Support Agreements) and against 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 May 2025 Purchase Agreements. As of June 30, 2025 , an aggregate of 3,928,073 of the December 2024 PFWs, March 2025 PFWs, and May 2025 PFWs had been exercised. As of December 31, 2024 , all of the May 2024 PFWs and 647,892 of the December 2024 PFWs had been exercised. The issuance of the March 2025 PFWs and May 2025 PFWs was reflected in the Company's stockholder's equity within common stock and additional paid-in-capital as of June 30, 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 2024 PFWs, December 2024 PFWs, and March 2025 PFWs 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. ​​​​​​ 19 Table of Contents Common stock warrants As of June 30, 2025 and December 31, 2024 , the Company had 1,829,956 and 0 common stock warrants outstanding, respectively. The Company determined that the detachable common stock warrants issued in connection with the May 2025 Purchase Agreements met the definition of freestanding financial instruments and qualified for classification as permanent equity under applicable accounting guidance. As the common stock warrants were issued in conjunction with the pre-funded warrants, the proceeds have been allocated to each using the relative fair value method, and recorded as a component of additional paid-in-capital as of the issuance date. Each warrant has an exercise price of $ 2.20 and will expire three years from the issuance date. These warrants are included in the diluted earnings per share calculation when they are in-the-money and dilutive, as their features are considered participatory in nature. See Note 2 , Income (loss) per share for further detail. Treasury stock As of June 30, 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 six months ended June 30, 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 . 20 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) 8. Share-based compensation On June 8, 2022, the stockholders of the Company approved the Fluent, Inc. 2022 Omnibus Equity Incentive Plan (the "2022 Plan") that authorized for issuance 2,570,421 shares of the Company's common stock. The 2022 Plan was amended on June 18, 2025 at the Company’s annual meeting of stockholders which approved an increase of the number of shares of common stock authorized for issuance under the 2022 Plan by 2,000,000 shares. As of June 30, 2025 , the Company had 2,378,672 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. Stock options 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 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 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 June 30, 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 stock options that remain unvested as of the fifth anniversary of the grant date will vest in full on such date. The fair value of the stock options granted was estimated at the trading day before the date of grant using a Monte Carlo simulation model. The key assumptions utilized to calculate the grant-date fair values for these awards are summarized below: Issuance Date February 1, 2019 December 20, 2019 March 1, 2020 March 1, 2021 Fair value lower range $ 16.86 $ 9.48 $ 8.76 $ 26.04 Fair value higher range $ 17.16 $ 9.66 $ 8.94 $ 26.58 Exercise price $ 28.32 $ 15.36 $ 13.98 $ 37.98 Expected term (in years) 1.0 - 1.3 1.0 - 1.6 1.0 - 1.5 1.0 - 1.3 Expected volatility 65 % 70 % 70 % 80 % Dividend yield — % — % — % — % Risk-free rate 2.61 % 1.85 % 1.05 % 1.18 % On September 9, 2024, the Compensation Committee of the Company's Board of Directors approved the grant of stock options to the Company's Chief Financial Officer in connection with his employment agreement. Subject to his continuing service, 50% of the stock options will vest if the average closing price of the Company's common stock is equal to three times the exercise price for ten consecutive trading days, and the remaining 50% of the shares subject to these stock options will vest if the average closing price of the Company's common stock is equal to five times the exercise price for ten consecutive trading days. Notwithstanding the foregoing, the options will immediately vest upon the occurrence of certain conditions such as a change in control. The fair value of the stock option granted was estimated at the trading day of the date of the grant using a Monte Carlo simulation model. The key assumptions utilized to calculate the grant-date fair value for the award is summarized below: Issuance Date September 9, 2024 Fair value lower range $ — Fair value higher range $ 15.59 Exercise price $ 2.75 Expected term (in years) 3.0 - 4.3 Expected volatility 65 % Dividend yield — % Risk-free rate 3.7 % 21 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) For the six months ended June 30, 2025 , details of stock option activity were as follows: Number of options Weighted average exercise price per share Weighted average remaining contractual term (in years) Aggregate intrinsic value Outstanding as of December 31, 2024 397,667 $ 18.33 6.2 $ — Granted — — — — Exercised — — — — Forfeited ( 66,000 ) — — — Outstanding as of June 30, 2025 331,667 $ 16.35 6.1 $ — Options exercisable as of June 30, 2025 183,001 $ 25.03 3.8 $ — 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 six months ended June 30, 2025 , the unvested balance of stock options was as follows: Number of stock options Weighted average exercise price per share Weighted average remaining contractual term (in years) Unvested as of December 31, 2024 148,666 $ 5.66 9.4 Granted — — — Forfeited — — — Vested — — — Unvested as of June 30, 2025 148,666 $ 5.66 9.4 Compensation expense recognized for stock options was $ 18 and $ 1 for the three months ended June 30, 2025 and 2024 , respectively, and $ 37 and $ 1 for the six months ended June 30, 2025 and 2024 ,respectively, was recognized in product development and general and administrative expenses in the consolidated statements of operations. As of June 30, 2025 , there was $ 203 of unrecognized share-based compensation with respect to outstanding stock options. 22 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) Restricted stock units and restricted stock For the six months ended June 30, 2025 , details of unvested RSU activity were as follows: Number of units Weighted average grant-date fair value Unvested as of December 31, 2024 801,525 $ 20.72 Granted 419,101 2.72 Vested and delivered ( 317,830 ) — Withheld as treasury stock (1) — — Vested not delivered (2) ( 398 ) 8.77 Forfeited ( 66,005 ) 4.25 Unvested as of June 30, 2025 836,393 24.68 ( 1 ) As discussed in Note 7 , Equity , the treasury stock relates to shares withheld to cover statutory withholding taxes upon the delivery of shares following the vesting of RSUs. As of June 30, 2025 , there were 768,595 outstanding shares of treasury stock. ( 2 ) Vested not delivered represents vested RSUs with delivery deferred to a future time. For the six months ended June 30, 2025 , there was a change in the vested not delivered balance due to a net 398 shares that were deferred due to timing of delivery of certain shares, of which no shares had elected deferred delivery. As of June 30, 2025 , 286,497 outstanding RSUs were vested not delivered. Compensation expense recognized for RSUs of $ 321 and $ 433 for the three months ended June 30, 2025 and 2024 , respectively, and $ 651 and $ 1,051 for the six months ended June 30, 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 June 30, 2025 , unrecognized share-based compensation expense associated with the granted RSUs and stock options amounted to $ 2,186 , which is expected to be recognized over a weighted average period of 2 years. For the three and six months ended June 30, 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 June 30, Six Months Ended June 30, 2025 2024 2025 2024 Sales and marketing $ 28 $ 57 $ 52 $ 141 Product development 36 55 82 100 General and administrative 267 311 537 782 Share-based compensation expense 331 423 671 1,023 Capitalized in intangible assets 8 11 17 29 Total share-based compensation $ 339 $ 434 $ 688 $ 1,052 As of June 30, 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. 9. Segment information 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"). 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. 23 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) As of June 30, 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 revenue sources and its agreements with advertisers. Some advertisers span multiple segments, which 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 and six months ended June 30, 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 June 30, Three Months Ended June 30, 2025 2024 Fluent All Other Total Fluent All Other Total Revenue (1) : United States $ 27,897 $ 1,594 $ 29,491 $ 34,221 $ 3,585 $ 37,806 International 15,215 — 15,215 20,911 — 20,911 Total segment revenue $ 43,112 $ 1,594 $ 44,706 $ 55,132 $ 3,585 $ 58,717 Costs of revenue Cost of revenue (exclusive of depreciation and amortization) 34,301 125 34,426 43,014 3,095 46,109 Costs and expenses: Salaries and benefits 7,343 930 8,273 9,144 2,357 11,501 Professional fees 1,501 82 1,583 2,029 311 2,340 IT and software 1,071 53 1,124 952 229 1,181 Other segment items (2) 3,830 97 3,927 2,773 2,624 5,397 EBITDA $ ( 4,934 ) $ 307 $ ( 4,627 ) $ ( 2,780 ) $ ( 5,031 ) $ ( 7,811 ) Depreciation and amortization 2,424 55 2,479 2,299 268 2,567 Total (loss) income from operations $ ( 7,358 ) $ 252 $ ( 7,106 ) $ ( 5,079 ) $ ( 5,299 ) $ ( 10,378 ) Reconciliation of profit or loss Interest Expense ( 702 ) ( 1,015 ) Fair value adjustment of Convertible Notes with related parties 478 — Loss on early extinguishment of debt — ( 1,009 ) Loss before income taxes $ ( 7,330 ) $ ( 12,402 ) ( 1 ) Revenue aggregation is based upon location of the customer. ( 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. 24 Table of Contents Six Months Ended June 30, Six Months Ended June 30, 2025 2024 Fluent All Other Total Fluent All Other Total Revenue (1) : United States $ 63,802 $ 2,983 $ 66,785 $ 69,320 $ 11,607 $ 80,927 International 33,131 — 33,131 43,773 — 43,773 Total segment revenue $ 96,933 $ 2,983 $ 99,916 $ 113,093 $ 11,607 $ 124,700 Costs of revenue Cost of revenue (exclusive of depreciation and amortization) 78,033 168 78,201 85,331 8,126 93,457 Costs and expenses: Salaries and benefits 15,032 2,047 17,079 18,001 5,551 23,552 Professional fees 3,660 164 3,824 4,113 576 4,689 IT and software 2,257 145 2,402 1,932 470 2,402 Other segment items (2) 7,163 489 7,652 6,298 3,495 9,793 EBITDA $ ( 9,212 ) $ ( 30 ) $ ( 9,242 ) $ ( 2,582 ) $ ( 6,611 ) $ ( 9,193 ) Depreciation and amortization 4,830 110 4,940 4,387 751 5,138 Total loss from operations $ ( 14,042 ) $ ( 140 ) $ ( 14,182 ) $ ( 6,969 ) $ ( 7,362 ) $ ( 14,331 ) Reconciliation of profit or loss Interest Expense ( 1,582 ) ( 2,430 ) Fair value adjustment of Convertible Notes with related parties 398 — Loss on early extinguishment of debt — ( 1,009 ) Loss before income taxes $ ( 15,366 ) $ ( 17,770 ) ( 1 ) Revenue aggregation is based upon location of the customer. ( 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. June 30, December 31, 2025 2024 Total assets: Fluent $ 65,529 $ 84,373 All Other 8,942 9,244 Total assets $ 74,471 $ 93,617 As of June 30, 2025 , long-lived assets are all located in the United States. For the six months ended June 30, 2025 , 18.6 % of the Company's consolidated revenue was earned from customers located in Israel. 25 Table of Contents FLUENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Amounts in thousands, except share and per share data) (unaudited) 10. Contingencies In the ordinary course of business, the Company is subject to loss contingencies that cover a range of matters. An estimated loss from a loss contingency, such as a legal proceeding or claim, is accrued if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In determining whether a loss should be accrued, the Company evaluates, among other factors, the degree of probability and the ability to reasonably estimate the amount of any such loss. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated. 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 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 was involved in a Telephone Consumer Protection Act class action, Daniel Berman v. 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 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 . 11. Variable Interest Entity A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. 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 Company assesses whether it is the primary beneficiary of a VIE at the inception of the arrangement and as of the reporting date. True North 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"). True North is a subscription-based business that utilizes call center operations and other media channels to market third -party recurring revenue services to consumers. The deemed fair value of the consideration received was $ 989 , which consisted of (i) the forgiveness of a $ 500 deferred payment owed by the Company in connection with the True North Acquisition on January 1, 2022, ( ii) a share of the True North contribution margin after the closing until the Company has received an amount equal to the closing net working capital of approximately $ 168 , and (iii) a continued share of the True North contribution margin of an additional amount at fair value of $ 321 . The True North founder entered into an employment agreement in connection with the True North Acquisition has remained an employee of the Company after the closing of the True North Conveyance. The Company 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 consideration to be received. Initially, the controlling member of Caspian remained a full-time employee of the Company and had the power to unilaterally make significant decisions at True North, so the Company determined that it 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, however, 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 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. TAPP As of January 9, 2023, the Company initially determined that TAPP qualifies as a VIE because it held a variable interest and was the primary beneficiary. This conclusion was based on the Company’s significant influence over TAPP’s key employees through their employment agreements and its role as the primary source of TAPP’s revenue. 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 continued to consolidate TAPP's operations. As the Company did not have an equity interest in TAPP, 100% of the net assets and results of the operations of TAPP were attributable to non-controlling interests. On May 20, 2025, the Company entered into an updated agreement with the key employee and TAPP, terminating all prior agreements. As a result, the Company determined that it was no longer the primary beneficiary, and under ASC 810 , TAPP was no longer being consolidated under ASC 810. The Company recognized a loss of $ 698 in general and administrative expenses in the consolidated statements of operations, mainly related to the write-off of the intangible assets, as discussed in Note 3 , Intangible assets. 12. Subsequent events Amendment to the SLR Credit Agreement 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 $8,500 of additional capital by August 19, 2025 ( refer below for details on the 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. Private placement On August 19, 2025, the Company entered into securities purchase agreements (the "August 2025 Purchase Agreements") with certain officers and/or directors of the Company (collectively, the “August 2025 Inside Investors”), and the largest stockholder of the Company and other accredited investors (collectively, together with the August 2025 Inside Investors, the “August 2025 Purchasers”), pursuant to which the Company agreed to sell to the August 2025 Purchasers (i) 3,542,856unregistered shares (the “August 2025 Shares”) of common stock, (i) unregistered pre-funded warrants (the “August 2025 Pre-Funded Warrants") to purchase up to 2,382,571 shares of the Company’s common stock, and (ii) unregistered warrants (the "August 2025 Common Stock Warrants") to purchase up to 5,871,427 shares of the Company’s common stock at a purchase price of (i) $ 1.75 per August 2025 Share and accompanying August 2025 Common Stock Warrant or (ii) $1.7495 per August 2025 Pre-Funded Warrant and accompanying August 2025 Common Stock Warrant (the “August 2025 Offering”). Each August 2025 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. Each August 2025 Pre-Funded Warrant has an exercise price of $ 0.0005 per share of common stock and will terminate when exercised in full. Notwithstanding the foregoing, any August 2025 Pre-Funded Warrant issued to August 2025 Inside Investors will be immediately exercisable after stockholder approval and will terminate when exercised in full. The August 2025 Inside Investors consisted of three officers and/or directors, and the Company’s largest stockholder, or others for whom they have or share beneficial ownership. Pursuant to the terms of an engagement letter (the “Engagement Letter”) dated as of July 21, 2025 between the Company and The Benchmark Company, LLC, a StoneX Company (“Benchmark”), the Company (i) will pay Benchmark a total cash fee equal to 7.0 % of the aggregate gross proceeds of the August 2025 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 gross proceeds from the offering is expected to be $ 10.3 , before deducting placement agent fees and other expenses payable by the Company. The Company is obligated to use its reasonable best efforts to obtain such stockholder approval of the exercise of the August 2025 Pre-Funded Warrants by August 2025 Inside Investors no later than the 60th calendar day after the closing date of the August 2025 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 additional stockholder meetings to be held. In connection with the August 2025 Offering, the Company entered into Support Agreements (the “August 2025 Support Agreements”) with the August 2025 Inside Investors, pursuant to which such 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 August Support Agreements 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 2025 Purchase Agreements or impede, delay or otherwise adversely affect the consummation of the transactions contemplated by the August 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 August 2025 Purchase Agreements. Furthermore, in connection with the August 2025 Offering, on August 19, 2025, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the August 2025 Purchasers pursuant to which the Company is required to file a registration statement covering the resale of the Registrable Securities (as defined in the Registration Rights Agreement). The closing of the sales of the securities under the August 2025 Purchase Agreements is expected to occur on August 19, 2025. 26 Table of Contents