FLNT filing — read by section

Item 1. Financial Statements

ITEM 1. FINANCIAL STATEMENTS. 

 FLUENT, INC. 

 CONSOLIDATED BALANCE SHEETS 

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

 (unaudited) 

 March 31, 2026 
 December 31, 2025 
 
 ASSETS: 
 
 Cash and cash equivalents
 $ 10,299 $ 12,935 

 Accounts receivable, net of allowance for credit losses of $ 158 and $ 163 , respectively
 31,765 46,735 

 Prepaid expenses and other current assets
 7,367 7,799 

 Total current assets
 49,431 67,469 

 Non-current restricted cash
 710 710 

 Property and equipment, net
 128 104 

 Operating lease right-of-use assets
 2,676 2,859 

 Intangible assets, net
 16,704 17,276 

 Other non-current assets
 2,622 715 

 Total assets 
 $ 72,271 $ 89,133 

 LIABILITIES AND SHAREHOLDERS' EQUITY: 
 
 Accounts payable
 $ 7,483 $ 7,200 

 Accrued expenses and other current liabilities
 20,024 25,163 

 Deferred revenue
 143 721 

 Short-term debt, net
 23,456 30,846 

 Current portion of operating lease liability
 1,104 1,104 

 Total current liabilities
 52,210 65,034 

 Convertible Notes, at fair value with related parties
 4,571 3,734 

 Operating lease liability, net
 1,784 1,985 

 Other non-current liabilities
 420 168 

 Total liabilities 
 58,985 70,921 

 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 — 30,584,307 and 30,404,779 , respectively; and Shares outstanding — 29,815,712 and 29,636,184 , respectively
 54 53 

 Treasury stock, at cost — 768,595 and 768,595 Shares, respectively
 ( 11,407 ) ( 11,407 ) 

 Additional paid-in capital
 467,955 467,528 

 Accumulated deficit
 ( 443,316 ) ( 437,962 ) 

 Total shareholders' equity
 13,286 18,212 

 Total liabilities and shareholders' equity
 $ 72,271 $ 89,133 

 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 March 31, 
 
 2026 
 
 2025 
 
 Revenue 
 
 $ 
 44,852 
 
 $ 
 55,210 
 
 Costs and expenses: 
 
 Cost of revenue (exclusive of depreciation and amortization)
 
 34,813 
 
 43,775 
 
 Sales and marketing
 
 3,724 
 
 4,070 
 
 Product development
 
 2,821 
 
 3,398 
 
 General and administrative
 
 5,708 
 
 8,582 
 
 Depreciation and amortization
 
 1,681 
 
 2,461 
 
 Loss on disposal of assets
 
 14 
 
 — 
 
 Total costs and expenses 
 
 48,761 
 
 62,286 
 
 Loss from operations 
 
 ( 3,909 
 ) 
 
 ( 7,076 
 ) 
 
 Interest expense, net
 
 ( 605 
 ) 
 
 ( 880 
 ) 
 
 Fair value adjustment of Convertible Notes with related parties
 
 ( 837 
 ) 
 
 ( 80 
 ) 
 
 Loss before income taxes 
 
 ( 5,351 
 ) 
 
 ( 8,036 
 ) 
 
 Income tax expense
 
 ( 3 
 ) 
 
 ( 233 
 ) 
 
 Net loss 
 
 $ 
 ( 5,354 
 ) 
 
 $ 
 ( 8,269 
 ) 
 
 Basic and diluted loss per share: 
 
 Basic
 
 $ 
 ( 0.17 
 ) 
 
 $ 
 ( 0.39 
 ) 
 
 Diluted
 
 $ 
 ( 0.17 
 ) 
 
 $ 
 ( 0.39 
 ) 
 
 Weighted average number of shares outstanding: 
 
 Basic
 
 31,332,710 
 
 21,211,439 
 
 Diluted
 
 31,332,710 
 
 21,211,439 
 
 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 December 31, 2025 
 
 30,404,779 
 
 $ 
 53 
 
 768,595 
 
 $ 
 ( 11,407 
 ) 
 
 $ 
 467,528 
 
 $ 
 ( 437,962 
 ) 
 
 $ 
 18,212 
 
 Vesting of restricted stock units and issuance of stock under incentive plans
 
 93,814 
 
 1 
 
 — 
 
 — 
 
 ( 1 
 ) 
 
 — 
 
 — 
 
 Share-based compensation
 
 — 
 
 — 
 
 — 
 
 — 
 
 428 
 
 — 
 
 428 
 
 Exercise of pre-funded warrants
 
 85,714 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Net loss
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 5,354 
 ) 
 
 ( 5,354 
 ) 
 
 Balance at March 31, 2026 
 
 30,584,307 
 
 $ 
 54 
 
 768,595 
 
 $ 
 ( 11,407 
 ) 
 
 $ 
 467,955 
 
 $ 
 ( 443,316 
 ) 
 
 $ 
 13,286 
 
 Common stock 
 
 Treasury stock 
 
 Additional paid-in 
 
 Accumulated 
 
 Total shareholders' 
 
 Shares 
 
 Amount 
 
 Shares 
 
 Amount 
 
 capital 
 
 deficit 
 
 equity 
 
 Balance at December 31, 2024 
 
 20,791,431 
 
 $ 
 47 
 
 768,595 
 
 $ 
 ( 11,407 
 ) 
 
 $ 
 447,110 
 
 $ 
 ( 410,795 
 ) 
 
 $ 
 24,955 
 
 Share-based compensation
 
 — 
 
 — 
 
 — 
 
 — 
 
 349 
 
 — 
 
 349 
 
 Issuance of pre-funded warrants
 
 — 
 
 — 
 
 — 
 
 — 
 
 5,000 
 
 — 
 
 5,000 
 
 Exercise of pre-funded warrants
 
 620,824 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Net loss
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 8,269 
 ) 
 
 ( 8,269 
 ) 
 
 Balance at March 31, 2025 
 
 21,412,255 
 
 $ 
 47 
 
 768,595 
 
 $ 
 ( 11,407 
 ) 
 
 $ 
 452,459 
 
 $ 
 ( 419,064 
 ) 
 
 $ 
 22,035 
 
 See notes to consolidated financial statements

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 Table of Contents 
 
 FLUENT, INC. 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

 (Amounts in thousands) 

 (unaudited) 

 Three Months Ended March 31, 
 
 2026 
 
 2025 
 
 CASH FLOWS FROM OPERATING ACTIVITIES: 
 
 Net loss 
 
 $ 
 ( 5,354 
 ) 
 
 $ 
 ( 8,269 
 ) 
 
 Adjustments to reconcile net loss to net cash provided by operating activities: 
 
 Depreciation and amortization
 
 1,681 
 
 2,461 
 
 Non-cash loan amortization expense
 
 79 
 
 176 
 
 Non-cash gain on divestiture
 
 ( 2,352 
 ) 
 
 — 
 
 Share-based compensation expense
 
 954 
 
 335 
 
 Fair value adjustment of Convertible Notes with related parties
 
 837 
 
 80 
 
 Loss on disposal of asset
 
 14 
 
 — 
 
 Allowance for credit losses
 
 ( 5 
 ) 
 
 ( 4 
 ) 
 
 Changes in assets and liabilities, net of business acquisitions:
 
 Accounts receivable
 
 14,975 
 
 9,517 
 
 Prepaid expenses and other current assets
 
 123 
 
 603 
 
 Other non-current assets
 
 131 
 
 106 
 
 Operating lease assets and liabilities, net
 
 ( 18 
 ) 
 
 ( 83 
 ) 
 
 Accounts payable
 
 283 
 
 ( 263 
 ) 
 
 Accrued expenses and other current liabilities
 
 ( 5,658 
 ) 
 
 ( 2,331 
 ) 
 
 Deferred revenue
 
 ( 578 
 ) 
 
 ( 215 
 ) 
 
 Other
 
 — 
 
 ( 1 
 ) 
 
 Net cash provided by operating activities 
 
 5,112 
 
 2,112 
 
 CASH FLOWS FROM INVESTING ACTIVITIES: 
 
 Capitalized costs included in intangible assets
 
 ( 1,493 
 ) 
 
 ( 1,570 
 ) 
 
 Proceeds from note receivable
 
 69 
 
 — 
 
 Acquisition of property and equipment
 
 ( 57 
 ) 
 
 — 
 
 Net cash used in investing activities 
 
 ( 1,481 
 ) 
 
 ( 1,570 
 ) 
 
 CASH FLOWS FROM FINANCING ACTIVITIES: 
 
 Proceeds from issuance of short and long-term debt
 
 62,757 
 
 21,841 
 
 Repayments of short and long-term debt
 
 ( 69,024 
 ) 
 
 ( 31,869 
 ) 
 
 Debt financing costs
 
 — 
 
 ( 125 
 ) 
 
 Proceeds from issuance of common stock and warrants
 
 — 
 
 5,000 
 
 Net cash used in financing activities 
 
 ( 6,267 
 ) 
 
 ( 5,153 
 ) 
 
 Net decrease in cash, cash equivalents, and restricted cash 
 
 ( 2,636 
 ) 
 
 ( 4,611 
 ) 
 
 Cash, cash equivalents, and restricted cash at beginning of period
 
 13,645 
 
 10,694 
 
 Cash, cash equivalents, and restricted cash at end of period
 
 $ 
 11,009 
 
 $ 
 6,083 
 
 SUPPLEMENTAL DISCLOSURE INFORMATION 
 
 Cash paid for interest
 
 $ 
 612 
 
 $ 
 767 
 
 Cash refunded for income taxes
 
 $ 
 ( 120 
 ) 
 
 $ 
 ( 16 
 ) 
 
 Share-based compensation capitalized in intangible assets
 
 $ 
 11 
 
 $ 
 9 
 
 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES 
 
 Note receivable issuance for Call Solutions divestiture
 
 $ 
 3,000 
 
 $ 
 — 
 
 See notes to consolidated financial statements

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 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 March 31, 2026 and 2025 , 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, 2026 .

 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, 2025 filed with the SEC on March 31, 2026 , as amended April 30, 2026 ( as amended, "2025 Form 10 -K"). The consolidated balance sheet as of December 31, 2025 included herein was derived from the audited financial statements as of that date and included in the 2025 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.

 With the continuing difficulties in sourcing traffic for the owned and operated digital media properties ("O&O Sites"), the Company has shifted its strategic focus toward scaling its Commerce Media Solutions business. While Commerce Media Solutions has demonstrated growth and operates under a different economic model that reduces exposure to certain media sourcing risks, it represents a relatively new and evolving component of the Company’s business. Further, the success of the Commerce Media Solutions transition depends on the Company’s ability to continue to onboard and retain media partners, achieve favorable economics under long-term agreements, and maintain advertiser demand, and there can be no assurance that this strategy will be successful. 

 Since entering into the Financing Agreement (as defined in and discussed in Note 4,  Debt, net ), the Company has continued to receive advances, as needed, on its eligible account receivables. However, the facility remains uncommitted, with the advances typically due within 120 -days, leading to its classification as short-term. Although Bay View (as defined in Note 4, Debt, net ) has indicated in writing its intention, absent an event of default, to continue purchasing eligible receivables in the ordinary course, and has made advances since the facility was entered into, such funding remains subject to the discretion of Bay View and the terms and conditions of the Financing Agreement. If availability under the facility were reduced or if Bay View were to cease advances, the Company could have insufficient funds to support its operations and meet its obligations as they come due unless it found another lender or purchaser of its receivables. Based upon the foregoing, management has concluded that there is substantial doubt about the Company's ability to continue as a going concern. 

 Based on the Company's forecast, management expects to have sufficient liquidity over the next twelve months from the date of filing. However, the Company does have a history of not meeting its forecast and any substantial deviations from such forecasts could adversely affect the Company’s liquidity and ability to access funding. 

 In addition, the Company completed its procedures as it relates to the At-The-Market Issuance Sales Agreement (the “ATM Agreement”), which will allow the Company to offer and sell up to $ 11,200 shares of common stock. The Company's ability to raise capital under this program, or through other financing sources, is subject to market conditions and other factors and may be limited or unavailable at acceptable terms, if at all. 

 Although management believes its current plans will be sufficient and that the Company will maintain access to the Bay View facility, there is no guarantee such plans will be successful or have the expected benefit. As such, 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.

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 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 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.

 In July 2025, the FASB issued ASU No. 2025 - 05 , Financial Instruments-Credit Losses (Topic 236 ): Measurement of Credit Losses for Accounts Receivable and Contract Assets , which addresses challenges encountered when applying Topic 236 guidance to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606 . The amendments in this update will be effective for fiscal years beginning after December 15, 2025 and interim periods within those fiscal periods, and early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

 In September 2025, the FASB issued ASU No. 2025 - 06, Intangibles – Goodwill and Other – Internal-Use Software , which amends certain aspects of the accounting for and disclosure of software costs under ASC No. 350 - 40. ASU No. 2025 - 06 clarified and modernizes the accounting for costs related to internal-use software. The amendments in ASU No. 2025 - 06 remove all references to project stages throughout Subtopic No. 350 - 40 and clarify the threshold entities apply to begin capitalizing costs. The guidance will be effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal periods. Companies have the option to apply the guidance on a retrospective or prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

 In December 2025, the FASB issued ASU 2025 - 11, Interim Reporting (Topic 270 ): Narrow-Scope Improvements , which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events from the end of the last annual reporting period that have a material impact on the entity. The guidance is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures. 

 In December 2025, the FASB issued ASU 2025 - 12, Codification Improvements, which makes improvements to the ASC for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. This update is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.  

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 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) deliver media spend as a part of the business of AdParlor, LLC ("AdParlor"), a wholly-owned subsidiary of the Company, or previously, through January 31, 2026, and (d)  transfer calls with the Company's advertiser clients as a part of the call center operation. 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. As of March 31, 2026, December 31, 2025 and 2024, the balance of accounts receivable was $ 20,041 , $ 28,499 , and $ 26,131 , respectively. 

 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 
 March 31, 2026 ,
 December 31, 2025 , and
 December 31, 2024, the balance of deferred revenue was 
 $ 143 ,
 $ 721 , and
 $ 556 , respectively. The majority of the deferred revenue balance as of 
 December 31, 2025 was recognized as revenue during the
 first quarter of
 2026 .
 
 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 March 31, 2026 , December 31, 2025 , and December 31, 2024, unbilled revenue included in the Company's accounts receivable was $ 11,292 , $ 17,701 , and $ 18,625 , 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.

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 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.

 Revenue Disaggregation 

 The following table presents the Company’s disaggregated revenue by media resources along with its availability and demand for the three months ended March 31, 2026 and 2025 , based on segment reporting: 

 Three Months Ended March 31, 
 Three Months Ended March 31, 
 
 2026 
 2025 
 
 Fluent 
 All Other 
 Consolidated 
 Fluent 
 All Other 
 Consolidated 
 
 (In thousands) 
 
 Owned and Operated
 $ 15,747 $ — $ 15,747 $ 31,082 $ — $ 31,082 

 Commerce Media Solutions
 25,865 — 25,865 12,660 — 12,660 

 Call Solutions
 1,213 — 1,213 10,079 — 10,079 

 AdParlor
 — 2,027 2,027 — 1,397 1,397 

 All Other (1) 
 — — — — ( 8 ) ( 8 ) 

 Total Revenue 
 $ 42,825 $ 2,027 $ 44,852 $ 53,821 $ 1,389 $ 55,210 

 ( 1 ) 
 No balance for the three months ended March 31, 2026 . Balance is fully related for the three months ended March 31, 2025 to commission revenues in run-off. 

 Owned and Operated and Commerce Media Solutions in the table above represent the Company’s remaining data and performance-based marketing revenue. Prior to its divestiture, Call Solutions also consisted of performance-based marketing revenue (refer to Note 12, Divestiture for details).

 Seasonality 

 The Company's performance is subject to fluctuations related to seasonality and cyclicality in our clients' businesses and in media sources. Other factors affecting the Company may include macroeconomic conditions that impact the digital advertising industry, the various client and partner verticals served, 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, consolidation of VIE, fair value of Convertible Notes (as defined in Note 4 , Debt, net ) with related parties based on input assumptions, share-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.

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 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
 March 31, 2026 and 
 December 31, 2025 , there was
 no remaining goodwill. 

 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 months ended March 31, 2026 and 2025 , basic and diluted loss per share were as follows:

 Three Months Ended March 31, 
 
 2026 
 2025 
 
 Numerator: 
 
 Net loss 
 $ ( 5,354 ) $ ( 8,269 ) 

 Denominator: 
 
 Weighted average shares outstanding
 31,049,032 20,866,774 

 Weighted average restricted shares vested not delivered
 283,678 344,665 

 Total basic weighted average shares outstanding 
 31,332,710 21,211,439 

 Dilutive effect of assumed conversion of restricted stock units
 — — 

 Total diluted weighted average shares outstanding 
 31,332,710 21,211,439 

 Basic and diluted loss per share: 
 
 Basic 
 $ ( 0.17 ) $ ( 0.39 ) 

 Diluted 
 $ ( 0.17 ) $ ( 0.39 ) 

 Based on exercise prices compared to the average stock prices for the three months ended March 31, 2026 and 2025 , certain stock equivalents have been excluded from the diluted weighted average share calculations due to their anti-dilutive nature.

 Three Months Ended March 31, 
 
 2026 
 2025 
 
 Restricted stock units
 1,337,181 638,241 

 Stock options
 331,667 331,667 

 Common stock warrants
 7,701,383 — 

 Total anti-dilutive securities
 9,370,231 969,908 

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 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) March 31, 2026 
 December 31, 2025 
 
 Gross amount:
 
 Software developed for internal use
 3 $ 28,123 $ 28,141 

 Acquired proprietary technology
 3 - 5 13,482 14,282 

 Customer relationships
 5 - 10 34,986 36,686 

 Trade names
 4 - 20 16,657 16,657 

 Domain names
 20 191 195 

 Databases
 5 - 10 31,292 31,292 

 Non-compete agreements
 2 - 5 1,768 1,768 

 Total gross amount 
 126,499 129,021 

 Accumulated amortization:
 
 Software developed for internal use
 ( 19,526 ) ( 19,305 ) 

 Acquired proprietary technology
 ( 13,482 ) ( 14,282 ) 

 Customer relationships
 ( 34,895 ) ( 36,472 ) 

 Trade names
 ( 8,734 ) ( 8,529 ) 

 Domain names
 ( 98 ) ( 97 ) 

 Databases
 ( 31,292 ) ( 31,292 ) 

 Non-compete agreements
 ( 1,768 ) ( 1,768 ) 

 Total accumulated amortization 
 ( 109,795 ) ( 111,745 ) 

 Net intangible assets:
 
 Software developed for internal use
 8,597 8,836 

 Customer relationships
 91 214 

 Trade names
 7,923 8,128 

 Domain names
 93 98 

 Total intangible assets, net 
 $ 16,704 $ 17,276 

 The gross amounts associated with software developed for internal use primarily represent capitalized costs of internally developed software. The amounts relating to customer relationships, trade names, and domain names primarily represented 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; and previously the acquisition of a 50 % interest in Winopoly, LLC, effective April 1, 2020 . On January 31, 2026, the Company entered into a membership interest purchase agreement to divest its 100 % interest in Winopoly, LLC, and accordingly deconsolidated the entity under ASC 810 (see Note 12, Divestiture for details).

 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 March 31, 2026 and determined that no triggering event had occurred requiring further impairment assessment of its long-lived assets.

 Amortization expenses of $ 1,662 and $ 2,391 for the three months ended March 31, 2026 and 2025 , respectively, are included in depreciation and amortization expenses in the consolidated statements of operations. As of March 31, 2026 , intangible assets with a carrying amount of $ 481 , included in the gross amount of software developed for internal use, have not commenced amortization, as they are not ready for their intended use. 

 As of March 31, 2026 , estimated amortization expenses related to the Company's intangible assets for the remainder of 2026 and through 2031 and thereafter are as follows:

 Year 
 March 31, 2026 
 
 Remainder of 2026
 $ 2,861 

 2027
 3,693 

 2028
 3,693 

 2029
 1,544 

 2030
 827 

 2031 and thereafter
 4,086 

 Total
 $ 16,704 

 4. Debt, net 

 Debt, net of unamortized discount and financing costs, related to the Financing Agreement (as defined herein), Note Payable (as defined herein), and Convertible Notes with related parties (as defined herein) consisted of the following:

 March 31, 2026 
 December 31, 2025 
 
 Financing Agreement due 2028 (less unamortized discount and financing costs of $ 847 and $ 926 , respectively)
 $ 23,206 $ 30,346 

 Note Payable due 2026
 250 500 

 Convertible Notes, at fair value with related parties
 4,571 3,734 

 Debt, net
 28,027 34,580 

 Less: Short term and current portion of long-term debt
 ( 23,456 ) ( 30,846 ) 

 Long-term debt, net (non-current)
 $ 4,571 $ 3,734 

 Accounts Receivable Finance Agreement 
 
 On November 25, 2025, the Company and its affiliates Fluent, LLC, Fluent Media Labs, LLC and AdParlor, LLC, each a wholly owned subsidiary of the Company, entered into an Accounts Receivable Finance Agreement (the "Financing Agreement") with CSNK Working Capital Finance Corp. d/b/a Bay View Funding ("Bay View"). 

 Under the Financing Agreement, Bay View may extend financing to the Company based on eligible domestic and foreign accounts receivable, provided that the aggregate amount of advances thereon shall not exceed the lesser of a maximum credit of $30,000  (the "Maximum Credit") or an amount equal to the sum of all advances less any funds received by Bay View pursuant to the Financing Agreement over the collection amounts adjusted for obligation that is maintained in a reserve account. All collections of the financed receivables go directly to Bay View and are applied to the Company’s obligations under the Financing Agreement.  The transfer of the receivables was recorded as secured borrowings in accordance with ASC 860, Transfers and Servicing (“ASC 860” ), with the receivables remaining on the balance sheet as a current asset.  As of March 31, 2026 , the Financing Agreement had a balance of $ 24,053 , which was recorded within current liabilities as the underlying receivables are typically due within 120 -days and Bay View may require repayment of amounts outstanding beyond that period. In addition, the Company had $ 506 in its reserve accounts with Bay View as of March 31, 2026 , which was recorded within prepaids and other current assets. The net unused advance as of March 31, 2026 was $ 6,453 . 

 The Company used a portion of the net proceeds of the Financing Agreement to repay the outstanding SLR Credit Facility (as defined herein) under the SLR Credit Agreement (as defined herein) dated April 2, 2024. 

 The Financing Agreement has an initial term of 36 months (the "Initial Term") and renews automatically for additional 12 -month periods unless terminated in accordance with its terms. The Company is required to pay a facility fee in the amount of 0.50 % of the Maximum Credit as of November 25, 2025 and then annually a 0.33 % of the Maximum Credit as well as a finance charge based on prime plus 2.0 % based on the average balance outstanding during the month. In addition, the Company will be required to pay certain administrative fees. The finance rate shall increase or decrease monthly but not be less than 8.75 % for the first year from the initial funding date, 8.50 % for the second year of the Initial Term and 8.25 % for the third year of the Initial Term. As of March 31, 2026 , the annual finance charge rate was 11.75%, which includes the management fee of 3.0 % applied on the end of month average outstanding balance.  The total cost of the Financing Agreement for the three months ended March 31, 2026 was $ 604 , inclusive of the management fee, and was included in interest expense on the consolidated statements of operations under the effective interest method. In addition, amortization of the debt discount for the three months ended March 31, 2026 was $ 79 , and was included in interest expense on the consolidated statements of operations. 

 The Company’s obligations under the Financing Agreement are secured by a security interest in substantially all of the Company’s assets. 

 The Financing Agreement contains customary representations, warranties, covenants and events of default, including repurchase obligations with respect to certain receivables. 

 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 provided 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"). On November 25, 2025, the SLR Credit Facility had been repaid, prior to maturity, resulting in a debt extinguishment loss of approximately $ 3,759 , which included the $ 1,000 early termination fee.

 12 
 
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 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 and was 14.68 % (SOFR + 11% ) as of March 31, 2026 .

 A maximum of $ 1,000 of the borrowings under the Note Payable is secured by substantially all of the assets of Fluent, LLC. This security interest is subordinate to the security interest under the Financing Agreement.

 The Note Payable was to mature on March 31, 2026 and interest was payable quarterly. Scheduled principal amortization of the Note Payable was $ 250 per quarter. On April 8, 2026, the final payment was made on the Note Payable.

 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 to sell convertible subordinated promissory notes (the "Convertible Notes") in aggregate principal amount of $ 2,050 . The Convertible Notes mature on April 2, 2029, and bear interest at 13 % per annum payable quarterly. Subject to certain payment conditions in the Subordination Agreements (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 confirmed the subordinated nature of the Convertible Notes and restricted payments to and remedies of the holders of the Convertible Notes for so long as the SLR Credit Agreement had indebtedness outstanding. The Subordination Agreements provided that the Company may not make any payment of principal or interest on the Convertible Notes unless certain conditions are met. In connection with the refinancing of the SLR Credit Agreement with Bay View the subordination obligations automatically carried over such that the Convertible Notes remain subordinated to the Company's obligations under the Bay View credit facility.

 13 
 
 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 March 31, 2026 , the principal balance of the Convertible Notes was $ 2,519 , with a fair value of $ 4,571 . The Company recognized an additional increase in fair value of $ 837 for the three months ended March 31, 2026 , which was recognized in other income (expense) from operations. For the three months ended March 31, 2026 , accrued interest was paid in kind.

 Maturities 

 As of March 31, 2026 , scheduled future maturities of the Credit Agreement, including the required principal prepayment based on a portion of the Company's quarterly excess cash flow and excluding potential future additional principal prepayments, are as follows:

 Year 
 March 31, 2026 
 
 Remainder of 2026
 $ 24,303 

 2027
 — 

 2028
 — 

 2029
 2,519 

 Total maturities
 $ 26,822 

 14 
 
 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 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 and $ 710 in non-current restricted cash as of March 31, 2026 and December 31, 2025, respectively, on the consolidated balance sheets.

 As of March 31, 2026 , the Company regards the fair value of its Note (as defined in Note 12, Divestiture ) and debt to approximate its carrying value. 

 The following table presents the Company’s fair value hierarchy for assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 : 

 March 31, 2026 
 December 31, 2025 
 
 Level 1 
 Level 2 
 Level 3 
 Level 1 
 Level 2 
 Level 3 
 
 Assets: 
 
 Restricted cash
 $ 710 — — $ 710 — — 

 Note
 — 2,931 — — — — 

 Liabilities: 
 
 Debt, net (1) 
 — 24,303 — — 31,772 — 

 Convertible Notes with related parties 
 — — 4,571 — — 3,734 

 Contingent consideration in connection with TAPP (2) 
 — — — — — 34 

 ( 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 , D ebt, 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. 

 Convertible Notes with related parties 

 The Company issued the Convertible Notes on August 19, 2024 and elected the fair value option. See Note 4 , Debt, net . The following is a reconciliation of the fair value from December 31, 2025 to March 31, 2026 : 

 Amount 
 
 Fair value as of December 31, 2025
 $ 3,734 

 Loss on change in fair value reported in the consolidated statements of operations 
 837 

 Fair value as of March 31, 2026 
 $ 4,571 

 15 
 
 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 computed using the Black-Scholes model. Both approaches are based on the following assumptions:

 Assumptions 
 March 31, 2026 
 
 Face value of principal payable 
 $ 2,519 

 Strike price 
 3.01 

 Value of common stock 
 3.16 

 Expected term (years) 
 3.0 

 Volatility 
 76.0 % 

 Risk free rate 
 3.9 % 

 Discount rate 
 13.9 % 

 Contingent Consideration 

 In connection with the contingent consideration received related to the initial consolidation of TAPP Influencers Corp. ("TAPP") effective January 9, 2023, 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, 2025
 $ 34 

 Payment of compensation expense
 ( 34 ) 

 Fair value as of March 31, 2026
 $ 0 

 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 March 31, 2026 , 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 March 31, 2026 and December 31, 2025 , the Company recorded a full valuation allowance against U.S. 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 three months ended March 31, 2026 , the Company's effective income tax rate of 0.0 % differed from the statutory federal income tax rate of 21 % primarily due to state and local tax expense and losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance. For the three months ended March 31, 2025 , the Company's effective income tax rate of 2.9 % primarily represented state and local tax expense and losses for which no tax benefit was recognized. 

 16 
 
 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.

 7. Equity 

 Common stock 

 As of March 31, 2026 and December 31, 2025 , the number of issued shares of common stock was 30,584,307 and 30,404,779 , respectively, which included shares of treasury stock of 768,595 and 768,595 , respectively.

 For the three months ended March 31, 2026 , the increase in the number of issued shares of common stock was the result of the exercise of pre-funded warrants for 85,714 shares of common stock and the issuance of 93,814 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.

 Private equity securities offerings 

 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 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" Private Placement"). The May 2025 PFWs had a purchase price of $ 2.1995 , have an exercise price of $ 0.0005 per share of common stock, will become 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 Private Placement.

 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 become 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.

 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 or others for whom they have or share beneficial ownership (the “August 2025 Inside Investors”), 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 sold to the August 2025 Purchasers (i) 3,542,856 unregistered shares (the “August 2025 Shares”) of common stock, (ii) unregistered pre-funded warrants (the “August 2025 PFWs") to purchase up to 2,328,571 shares of the Company’s common stock, and (iii) unregistered warrants (the "August 2025 Common Stock Warrants" and, together with the August 2025 PFWs, the "August 2025 Warrants") to purchase up to 5,871,427 shares of the Company’s common stock (the "August 2025 Private Placement"). 

 Each August 2025 Share and accompanying August 2025 Common Stock Warrant were sold together at a purchase price of $ 1.75 per share and accompanying warrant, and each August 2025 PFW and accompanying August 2025 Common Stock Warrant were sold together at a purchase price of $ 1.7495 per pre-funded warrant and accompanying warrant, for aggregate gross proceeds of approximately $ 10,275 before deducting estimated offering expenses of approximately $ 742 payable by the Company. The allocation of the fair values was $ 3,271 for the August 2025 Shares, $ 2,150 for the August 2025 PFWs and $ 4,854 for the August 2025 Common Stock Warrants. 

 The August 2025 PFWs have an exercise price of $ 0.0005 per share of common stock and were immediately exercisable upon issuance for all August 2025 Purchasers other than the August 2025 Inside Investors, for whom exercisability requires stockholder approval, and will terminate when exercised in full. The August 2025 Common Stock Warrants are 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. The Company is prohibited from effecting an exercise of the August 2025 Warrants to the extent that, as a result of such exercise, the holder together with the holder’s affiliates, would beneficially own more than 4.99 % (or, at the election of the holder, 9.99 %) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of the August 2025 Warrants, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99 %.

 Substantially all of the August 2025 Purchasers (other than the August 2025 Inside Investors) exercised their August 2025 PFWs during the month of September 2025, for an aggregate of 1,657,143 shares of common stock, with the additional 85,714 shares related to non-affiliates being exercised in February 2026. The remaining unexercised August 2025 PFWs to purchase 585,714 shares of common stock, all of which are represented by August 2025 Inside Investors and are not exercisable until stockholder approval is obtained. 

 The Company was obligated to use its reasonable best efforts to obtain such stockholder approval of the exercise of the August 2025 PFWs by August 2025 Inside Investors no later than the 60th calendar day after the closing date of the offering. However, the Company entered into amendments to the August 2025 Purchase Agreements extending the obligation to obtain such stockholder approval until the 2026 annual meeting of stockholders.

 In connection with the August 2025 Private Placement, on August 19, 2025, the Company entered into support agreements (the “August Support Agreements”) with the August 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 August Support Agreements) and against 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 Private Placement, 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 was required to file a registration statement covering the resale of the Registrable Securities (as defined in the Registration Rights Agreement). The Company filed a registration statement on Form S- 3 with the SEC on September 15, 2025, and it was declared effective on September 24, 2025. 

 As of March 31, 2026 , and December 31, 2025, an aggregate of 5,670,930 and 5,585,216 respectively, of the December 2024 PFWs, March 2025 PFWs, May 2025 PFWs, and August 2025 PFWs were exercised. 

 The issuance of the March 2025 PFWs, May 2025 PFWs, and August 2025 PFWs was reflected in the Company's stockholders' equity within common stock and additional paid-in-capital. 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 stockholders' equity. The December 2024 PFWs, March 2025 PFWs, and August 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.​​​​​

 17 
 
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 Common stock warrants 

 As of March 31, 2026 and December 31, 2025 , the Company had 7,701,383 and 7,701,383 common stock warrants outstanding, respectively. The Company determined that the detachable common stock warrants issued in connection with the May 2025 Purchase Agreements and August 2025 Purchase Agreements met the definition of freestanding financial instruments and qualified for classification as permanent equity under applicable accounting guidance. 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. As the common stock warrants were issued in conjunction with the other equity instruments, 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. 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. 

 At-the-market issuance 

 On December 31, 2025, the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Lake Street Capital Markets, LLC (“Lake Street”), under which the Company may offer and sell shares of its common stock, par value $ 0.0005 per share (the “Shares”), having an aggregate sales price of up to $ 11,200 through Lake Street as the sales agent. Sales of shares of the Company’s common stock through Lake Street, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on The Nasdaq Stock Market LLC or any other existing trading market for the Shares. Lake Street will use commercially reasonable efforts to sell the Shares from time to time, based on instructions from the Company (including any price, time or size limits or other parameters or conditions the Company may impose). The Company will pay Lake Street a commission equal to 3.0 % of the aggregate gross proceeds from the sales of Shares sold through Lake Street under the ATM Agreement and will also reimburse Lake Street for certain specified expenses in connection with entering into the ATM Agreement as well as in connection with each Triggering Event Date (as defined in the ATM Agreement). Pursuant to the ATM Agreement, the Company also provided Lake Street with customary indemnification and contribution rights. The ATM Agreement contains customary representations and warranties and conditions to the sale of the Shares pursuant thereto. 

 The Company is not obligated to sell any of the Shares under the ATM Agreement and may at any time suspend solicitation and offers thereunder. The offering of Shares pursuant to the ATM Agreement will terminate on the earlier of ( 1 ) the sale, pursuant to the ATM Agreement, of Shares having an aggregate offering price of $ 11,200 and ( 2 ) the termination of the ATM Agreement by either the Company or Lake Street, as set forth therein. 

 Treasury stock 

 As of March 31, 2026 and December 31, 2025 , 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 three months ended March 31, 2026 , no shares of common stock were withheld to cover statutory taxes owed by certain employees for this purpose. See Note 8 , Share-based compensation .

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 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 March 31, 2026 , the Company had 1,619,116 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. 

 On September 22, 2025, the Company's board of directors (the "Board" or "Board of Directors") approved the Fluent, Inc. Equity Participation Plan (the “2025 Plan”). The 2025 Plan provides for the grant of cash-settled awards that track the value of the Company’s common stock and are accounted for under the same share reserve authorized under the 2022 Plan. No additional shares were authorized in connection with the adoption of the 2025 Plan.

 The primary purpose of the 2025 plan, 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), long-term incentive grants (performance and time-based vesting RSUs), or performance stock units ("PSUs") (on achievement of targets, a cash payout) under the 2022 Plan. In October 2025, the Company issued to certain of its senior officers and employees, RSU (time-based, a cash payout) and PSUs (performance and time-based vesting RSUs, a cash payout) under the 2025 Plan. Further, it issued RSUs (time-based) and PSUs (on achievement of targets) under the 2022 Plan.

 Stock options 

 The Compensation Committee of the Company's Board of Directors (the "Compensation Committee") 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 March 31, 2026 , 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 remained unvested as of the fifth anniversary of the grant date were vested 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 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 on 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 % 

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 FLUENT, INC. 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

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

 (unaudited) 
 
 For the three months ended March 31, 2026 , details of stock option activity were as follows:

 Number of stock options 
 Weighted average exercise price per share 
 Weighted average remaining contractual term (in years) 
 Aggregate intrinsic value 
 
 Outstanding as of December 31, 2025
 331,667 $ 16.35 5.6 $ — 

 Granted
 — — — — 

 Exercised
 — — — — 

 Forfeited
 — — — — 

 Outstanding as of March 31, 2026
 331,667 $ 16.35 5.3 
 $ 49 

 Options exercisable as of March 31, 2026
 199,167 $ 25.35 3.3 
 $ — 

 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 three months ended March 31, 2026 , 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, 2025
 138,500 $ 4.33 8.5 

 Granted
 — — — 

 Forfeited
 — — — 

 Vested
 ( 6,000 ) — — 

 Unvested as of March 31, 2026
 132,500 $ 2.81 8.4 

 Compensation expense recognized for stock options was $ 15 and $ 19 for the three months ended March 31, 2026 and 2025 , respectively, and was recognized in product development and general and administrative expenses in the consolidated statements of operations. As of March 31, 2026 , there was $ 115 of unrecognized share-based compensation with respect to outstanding stock options.

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 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 three months ended March 31, 2026 , details of unvested RSU activity were as follows:

 Number of units 
 Weighted average grant-date fair value 
 
 Unvested as of December 31, 2025
 1,471,345 $ 11.12 

 Granted
 15,095 2.63 

 Vested and delivered
 ( 93,814 ) 4.33 

 Withheld as treasury stock (1) 
 — — 

 Vested not delivered (2) 
 13,047 3.43 

 Forfeited
 ( 68,492 ) 3.00 

 Unvested as of March 31, 2026
 1,337,181 $ 11.88 

 ( 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 March 31, 2026 , 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 three months ended March 31, 2026 , there was a change in the vested not delivered balance due to a net 13,047 shares that were deferred due to timing of delivery of certain shares, of which no shares had elected deferred delivery. As of March 31, 2026 , 283,758 outstanding RSUs were vested not delivered.
 
 Compensation expense recognized for RSUs of $ 787 and $ 330 for the three months ended March 31, 2026 and 2025 , 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 March 31, 2026 , unrecognized share-based compensation expense associated with the granted RSUs and stock options amounted to $ 2,240 , which is expected to be recognized over a weighted average period of 1.9 years.

 For the three months ended March 31, 2026 and 2025 , share-based compensation for the Company's stock options, RSUs, and common stock awards were allocated to the following accounts in the consolidated financial statements:

 Three Months Ended March 31, 
 
 2026 
 2025 
 
 Sales and marketing
 $ 116 $ 24 

 Product development
 152 46 

 General and administrative
 523 270 

 Share-based compensation expense
 791 340 

 Capitalized in intangible assets
 11 9 

 Total share-based compensation
 $ 802 $ 349 

 As of March 31, 2026 and December 31, 2025 , the Company recorded a liability of $ 328 and $ 165 , respectively, related to PSUs that are to be settled in cash.

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 FLUENT, INC. 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 

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

 (unaudited) 

 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.

 As of March 31, 2026 , the Company had two continuing operating segments: a) "Fluent", which is Owned and Operated and Commerce Media Solutions revenue, and b) "AdParlor". The Company determined that it has one  reportable segment, "Fluent," for the purposes of segment reporting. The Fluent reporting segment combines Fluent with the Call Solutions operating segment. The Company noted that as of January 31, 2026, Call Solutions was divested (refer to Note 12, Divestiture, below for details), however, did not trigger a re-assessment under ASC 280. 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 remaining activity 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 and included within "Unallocated" below. 

 The Company determined its segments based on revenue sources and its agreements with advertisers. In addition, certain advertisers overlap within the different operating segments and they are managed consistently with shared management. Further, the Company considered other qualitative factors, such as the environment operated in, and quantitative factors to determine its reportable segment.

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

 The Company does not allocate certain shared expenses such as interest expense and other non-recurring items. The allocation methodology is regularly assessed, evaluated and subject to future changes.

 Summarized financial information concerning the Company's segments for the three months ended March 31, 2026 and 2025 are shown in the following tables below, noting prior period amounts have been recast to conform to the Company's current period segment presentation:

 Three Months Ended March 31, 
 Three Months Ended March 31, 
 
 2026 
 2025 
 
 Fluent 
 Total 
 Fluent 
 Total 
 
 Revenue (1) : 
 
 United States
 $ 25,884 $ 35,905 

 International
 16,941 17,916 

 Total segment revenue
 $ 42,825 $ 53,821 

 Reconciliation of revenue
 
 Other revenue
 2,027 1,389 

 Total revenue
 $ 44,852 $ 55,210 

 Costs of revenue 
 
 Cost of revenue (exclusive of depreciation and amortization)
 34,464 43,732 

 Costs and expenses: 
 
 Salaries and benefits
 7,566 7,689 

 Professional fees
 1,545 2,159 

 IT and software
 1,056 1,186 

 Other segment items (2) 
 451 3,333 

 Segment EBITDA 
 $ ( 2,257 ) $ ( 4,278 ) 

 Reconciliation of Segment EBITDA to loss before income taxes 
 
 Segment EBITDA (from above)
 $ ( 2,257 ) $ ( 4,278 ) 

 Plus: Unallocated revenue
 2,027 1,389 

 Less:
 
 Unallocated cost of revenue (exclusive of depreciation and amortization)
 349 43 

 Unallocated salaries and benefits
 1,062 1,117 

 Unallocated professional fees
 183 82 

 Unallocated IT and software
 57 92 

 Unallocated other operating items (2) 
 347 392 

 Depreciation and amortization
 1,681 2,461 

 Interest expense, net
 605 880 

 Fair value adjustment of Convertible Notes, with related parties
 837 80 

 Loss before income taxes 
 $ ( 5,351 ) $ ( 8,036 ) 

 ( 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, impairment of intangible assets, and other operating costs.

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 March 31, 
 December 31, 
 
 2026 
 2025 
 
 Total assets: 
 
 Fluent
 $ 63,471 $ 79,570 

 All Other
 8,800 9,563 

 Total assets
 $ 72,271 $ 89,133 

 As of March 31, 2026 , long-lived assets are all located in the United States.

 For the three months ended March 31, 2026 , 27.3 % of the Company's consolidated revenue was earned from customers located in Israel. In addition, the Company identified an international customer within the Fluent segment that represented 13.1 % of the Company’s consolidated revenue. 

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 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.

 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 , D ebt, 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.

 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. During the first quarter of 2025, TAPP’s key employee became a consultant to the Company, but as the Company concluded that it still had significant influence over TAPP, it continued to consolidate TAPP's operations. However, 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 made a one -time payment of $ 300 and 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 in the second quarter of 2025, mainly related to the write-off of the intangible assets.

 12. Divestiture 

 Winopoly  

 On January 31, 2026, Inbox Pal, LLC, an indirect subsidiary of the Company and InsurCo, LLC (“InsurCo”) entered into a membership interest purchase agreement pursuant to which it conveyed 100 % of the membership interests of Winopoly, LLC. ("Winopoly") to InsurCo. Winopoly was a call center-supported performance marketplace that provided live-call-based performance campaigns to help clients increase engagement through the Company's Call Solutions business. The deemed fair value of the consideration received was approximately $2,800, which consisted of a $ 3,000 secured promissory note (the “Note”) along with forgiveness of approximately $200 owed to the Company related to the profit share obligation. The Note bears interest at 12.96 % per annum and is payable in monthly installments of $100. In connection with the transaction, the Company conveyed dissimilar assets relating to the Call Solutions business, excluding net working capital. In addition, the Company terminated all remaining employees related to Winopoly prior to the transaction. InsurCo’s members are former employees of the Company.  The conveyance did not meet the threshold of a discontinued operation under ASC 205 - 20. 

 The Company determined the conveyance of Winopoly was a business under ASC 805, Business Combinations. As a result, in accordance with ASC 810, Consolidation, the Company recognized a gain of $2,352 on the conveyance of Winopoly, which is reflected in general and administrative expenses. Going forward, the Company’s continuing relationship with InsurCo will be limited to the payment of the Note. As of March 31, 2026, the Note has a principal balance of $ 969 , reflected in prepaids and other current assets, and $ 1,962 , reflected in other non-current assets.

 13. Subsequent events 

 The Company has evaluated subsequent events through May 13, 2026, and has determined that there are no material subsequent events to disclose in the consolidated financial statements.

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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Fluent, Inc. 10-Q

Item 1. Financial Statements
