Fluent Inc

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* September 30, 2024* and2023, respectively, but arenot necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending* December 31, 2024*.

From time to time, the Company* mayenter 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 Form10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form10-K for the year ended* December 31, 2023* ("2023 Form10-K") filed with the SEC on* April 2,2024. The consolidated balance sheet as of December 31, 2023* included herein was derived from the audited financial statements as of that date and included in the2023 Form10-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 forone year after the date these accompanying unaudited consolidated financial statements are issued (the "issuance date"). As part of this evaluation, management* mayconsider the potential mitigating impact of its plans that havenot* 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 withinone year after the issuance date.

The Company has experienced a continued decline in its operating results, driven primarily by the economic environment and continued impact of the imposed regulatory requirements on its owned and operated digital media properties (see Note11**,**Contingencies). On* April 2, 2024,*Fluent, LLC, a wholly-owned subsidiary of the Company (the "Borrower") entered into a credit agreement (as amended, the "SLR Credit Agreement") with the Company and certain subsidiaries of the Borrower as guarantors (collectively, the "Credit Parties"), Crystal Financial LLC D/B/A SLR Credit Solutions, as administrative agent, lead arranger and bookrunner ("SLR") and each other lender from time to time party thereto.

The SLR Credit Agreement requires the Credit Parties to maintain and comply with certain financial covenants. Moreover, the borrowings under the SLR Revolver (as defined in Note5,* Long-term debt, netunder the SLR Credit Agreement are limited to a borrowing base, that fluctuates as regularly as weekly based on eligible accounts receivable, as further described in Note5*. As a result of the continued decline in financial performance of the Company's owned and operated digital media properties that have continued into thethird quarter of2024, accounts receivable were insufficient to support the borrowing base needed to fund operations through the end of thethird quarter of2024. The Company therefore entered into convertible subordinated notes in* August 2024to raise funds (as defined in Note5*), further updated its projections to reflect the continued decline in its operating results and entered into the Second Amendment (as defined and discussed in Note5) with SLR on* August 19, 2024.*

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As of* September 30, 2024*, the Credit Parties werenot in compliance with their financial covenants under the SLR Credit Agreement, which the Borrower had to report by* October 31, 2024,and which would have resulted in an event of default. The Credit Parties then entered into a letter agreement on October 30, 2024pursuant to which SLR extended the deadline for delivery of the compliance certificate required for the fiscal month ended September 30, 2024*, and the related notice of event of default, to* November 19, 2024.*

On* November 15, 2024,the Credit Parties and SLR entered into the Third Amendment (as defined and discussed in Note5*) to the SLR Credit Agreement, which, among other things, required that the Company raise at least*$7,500* of additional capital by* November 29, 2024**.In addition, the Third Amendment waived non-compliance with the financial covenants as of September 30, 2024*, extended the duration of the call protection applicable to the loans, and modified the cash dominion provisions to remain in effect on an indefinite basis. The Company will seek to raise additional capital through equity, equity-linked, or subordinated debt financings; however, whether and when the Company can effect such financings and how much capital it can raise depend on a variety of factors, including, among others, market conditions, the trading price of the Company’s common stock and the Company’s determination as to the appropriate sources of funding for its operations. There can beno assurance that additional capital will be available by* November 29, 2024.*

Additionally, given the continued challenges the Company has faced achieving profitability, the Company made a reduction in workforce during thesecond quarter of2024 and continues to consider further cost reduction measures and focus resources on opportunities that will enable the Company to meet its projected budget and cash flow requirements. Initial measures included divesting a non-core business unit (see Note12,Variable Interest Entity), transferring another business unit (see Note3,Intangible assets, net), and reviewing additional other business units to determine the impact of potential divestments.

Based on current projections, the Company expects to be in compliance with the new financial covenants for each of the quarters in thetwelvemonths following the issuance date of this Quarterly Report on Form10-Q. However, the Company hasnot met its projections for certain recent quarters, so there can beno assurance that the Company will meet its projections in the future. If during any fiscal quarter, the Credit Parties donot comply with any of their financial covenants, such non-compliance would result in an event of default that would give SLR the right to accelerate maturities. Additionally, if the Company fails to raise capital in at least the amount required under the Third Amendment by* November 29, 2024,such failure would also result in an event of default. In such case, the Company wouldnot* have sufficient funds to repay the SLR Term Loan (as defined herein) and the SLR Revolver (as defined herein). In addition, even if the Company is able to raise additional capital as required by the Third Amendment, there isno assurance that such capital plus the available cash plus borrowing base on the SLR Revolver will be sufficient to fund operations over the nexttwelve months. If needed, the Company will consider implementing other cost-saving measures, but there isno guarantee that such plans would be successfully executed or have the expected benefits. As a result, management concluded that there is substantial doubt about the Company's ability to continue as a going concern forone year after the date of this Quarterly Report on Form10-Q.

The accompanying unaudited consolidated financial statements donot**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.

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) Out of period correction

During the quarter ended* June 30, 2024,the Company determined that unauthorized changes made to submitted policies bythird* parties related to the sale of certain health insurance policies led to higher attrition of sold policies than expected. This determination was the result of the lower-than-expected monthly commission receipts based on the Company’s total policies written, after known constraints. The Company corrected this error related to thethree months ended* March 31, 2024and prior periods with a write-off of the total maximum impact to the accounts receivable and an associated offset to revenue of $1,958, or $0.13 and $0.12 per share (basic and diluted), respectively, during the quarter ended June 30, 2024.The Company assessed the impact of this out-of-period adjustment and concluded that it wasnot* material to the financial statements previously issued for the interim period, and the cumulative adjustment isnot expected to be material to the annual financial statements for2024. The out-of-period adjustment is included in the Fluent operating segment.

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(c) Reverse stock split

On* April 11, 2024,the Company effected a1*-for-6 reverse split of the issued shares (the "Reverse Stock Split") of the Company's common stock. All historical share amounts disclosed in this Quarterly Report on Form10-Q have been retroactively restated to reflect the Reverse Stock Split.No fractional shares were issued as a result of the Reverse Stock Split, as fractional shares of Common Stock were rounded up to the nearest whole share. See Note8,*Equity,*for additional information.

(d) Recently issued and adopted accounting standards

Accounting pronouncementsnot listed below were assessed and determined to benot 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 2018SEC ReleaseNo.* 33-10532. The amendment updates and simplifies certain SEC disclosure requirements that were duplicative, overlapping, or outdated due to changes in other SEC requirements and in U.S. GAAP, International Financial Reporting Standards ("IFRS"), or the overall financial reporting environment. 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 2023,the FASB issued ASUNo.* 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and an explanation of any additional measures the CODM uses in deciding how to allocate resources. The new guidance is effective for fiscal years beginning after* December 15, 2023and interim periods within fiscal years beginning after December 15, 2024,*and early adoption is permitted. The guidance will be applied on a retrospective basis, with such disclosures to be made in regard to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

In* December 2023,the FASB issued ASUNo.* 2023-09, Income Taxes (Topic 470): Improvements to Income Tax Disclosures, which is designed to increase the transparency and decision-usefulness of income tax disclosures for financial statement users. The ASU follows investors' indication and request for enhanced tax disclosures in order to better assess an entity's operations, related tax risks, jurisdictional tax exposures, and increase transparency regarding tax information through improvements to tax disclosures, specifically rate reconciliation, income taxes paid, and unrecognized tax benefits and certain temporary differences. The new guidance is effective for fiscal years beginning after* December 15, 2024and interim periods within fiscal years beginning after December 15, 2025,*and early adoption is permitted. The guidance will be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220*-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 investor's requests for more detailed information and disclosures of disaggregated financial reporting information about the types of expenses in commonly presented expense captions (such as cost of sales, selling, general, and administrative, and research and development), including purchases of inventory, employee compensation, depreciation, amortization, and depletion. The new guidance is effective for fiscal years beginning after* December 15, 2026and 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.

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(e) Revenue recognition

Data and performance-based marketing

Revenue is generated when there is a transfer of control of a good or service for a consideration amount the Company is expected to be entitled to. Revenue is recognized when a company has satisfied its performance obligations to a customer and can reasonably expect and measure the payment. The Company's performance obligations are typically to (a) deliver data records based on predefined qualifying characteristics specified by the customer, (b) generate conversions based on predefined user actions (for example, a click, a registration, or the installation of an app) and subject to certain qualifying characteristics specified by the customer, (c) verify user interest or transfer calls to advertiser clients as a part of the contact center operation, or (d) deliver media spend as a part of the business of AdParlor, LLC ("AdParlor"), a wholly-owned subsidiary of the Company. 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 asone 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 arenot materially different than accounting for revenue on a contract-by-contract basis.

The Company has elected the "right to invoice" practical expedient available within ASC606-10-55-18 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 donot contain significant financing components. The Company has further concluded that revenue doesnot require disaggregation.

For each identified performance obligation in a contract with a customer, the Company assesses whether it or thethird-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 thethird-party supplier, rather than the Company, is primarily responsible for the performance and deliverable to the customer, and the Company solely arranges for thethird-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, withno 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* September 30, 2024*,* December 31, 2023*, and* December 31, 2022the balance of deferred revenue was $428, $430, and $1,014, respectively. The majority of the deferred revenue balance as of December 31, 2023* was recognized as revenue during thefirst quarter of2024.

When there is a delay between the period in which revenue is recognized and when a customer invoice is issued, revenue is recognized, and the corresponding amounts are recorded as unbilled revenue within accounts receivable on the consolidated balance sheets. As of* September 30, 2024*,* December 31, 2023*, and* December 31, 2022,unbilled revenue included in the Company's accounts receivable was $17,299, $21,488, and $26,878, respectively. 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 havenot* 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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In addition, the Company elected the practical expedient tonot disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length ofone year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed.

Commission revenue

The Company, acting as the agent, recognizes commission revenue that it expects to receive from the insurance provider from the sale of certain of its health insurance policies, which includes the assumed automatic renewals of such policies once its performance obligation is satisfied. The Company considers its performance obligation related to commissions for both the initial policy sale and future renewals of the policy to be satisfied upon submission by the Company of the initial policy application.

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

The commission revenue is variable based on a policy's estimated lifetime value ("LTV"), which is the amount of time the Company expects the policy will remain effective based on past trends, industry data, expectations as to future retention rates, and commission rates. Further, the Company considers the application of constraints to the LTV and only recognizes the amount of variable consideration believed probable to be received that willnot be subject to a significant revenue reversal in the future. Based on this, the commission revenue is recorded upon satisfaction of the performance obligation, which is typically paid monthly by the insurance provider as the consumer renews and pays the insurance provider for the policy over the duration the consumer remains on the policy.

The Company reassesses the estimated LTV for the health insurance policies on a quarterly or as-needed basis. Adjustments to the LTV* mayresult in an increase or decrease in revenue and the corresponding asset in the period the change is made. Due to the higher attrition of policies sold, the Company reassessed its estimated LTV for the health insurance policies by increasing the constraints applied to the amount of consideration deemed probable which led to a reduction of estimated LTV during the quarter ended June 30, 2024.*

(f) Use of estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires the Company's management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the allowance for credit losses, useful lives of intangible assets, recoverability of the carrying amounts of goodwill and intangible assets, the portion of revenue subject to estimates for variances between internally-tracked conversions and those confirmed by the customer, the variable commission revenue based on the estimated LTV, purchase accounting, consolidation of variable interest entity, fair value of the Convertible Notes based on input assumptions, and income tax provision. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results could differ from these estimates.

(g) Fair value

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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Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC820, Fair Value Measurements and Disclosuredescribes a fair value hierarchy based on the followingthree levels of inputs, of which thefirst two are considered observable and the last unobservable, that* may*be used to measure fair value:

See Note6,Fair Value Measurements, for further details.

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 and restricted stock units ("RSUs") that have vested butnot been delivered during the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock are exercised or converted into common stock and is calculated using the treasury stock method for stock options, RSUs, restricted stock, warrants (including the Pre-Funded Warrants, as defined in Note8 below) and deferred common stock. Stock equivalent shares are excluded from the calculation in loss periods, as their effects would be anti-dilutive.

For thethree andnine months ended* September 30, 2024and2023*, basic and diluted income (loss) per share were as follows:

Based on exercise prices compared to the average stock prices for thethree andnine months ended* September 30, 2024and2023*, certain stock equivalents, including RSUs and stock options, have been excluded from the diluted weighted average share calculations due to their anti-dilutive nature.

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3. Intangible assets, net

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

The gross amounts associated with software developed for internal use primarily represent capitalized costs of internally developed software. The amounts relating to acquired proprietary technology, customer relationships, trade names, domain names, databases, and non-competition agreements primarily represent the fair values of intangible assets acquired as a result of the acquisition of Fluent, LLC, effective* December 8, 2015;the acquisition of Q Interactive, LLC, effective June 8, 2016;the acquisition of substantially all the assets of AdParlor Holdings, Inc. and certain of its affiliates, effective July 1, 2019 (the "AdParlor Acquisition"); the acquisition of a 50% interest in Winopoly, LLC, effective April 1, 2020;the acquisition of a 100% interest in True North Loyalty, LLC, (the "True North Acquisition"), effective January 1, 2022 (see Note12*,Variable Interest Entity); and the consolidation of TAPP Influencers Corp. ("TAPP") effective* January 9, 2023 (see Note12*,Variable Interest Entity).

During thesecond quarter of2024, the Company determined that the effects of the expected decline in operations due to the impact of certain client relationships constituted a triggering event for the All Other reporting unit. The Company conducted an interim test of recoverability of its long-lived assets, which compared the projected undiscounted cash flows to the carrying value of the asset group. The results of this approach indicated that this long-lived asset wasnot recoverable and required that an impairment loss related to its customer relationships be calculated. The Company determined that based on the facts and circumstances, the remaining balance was impaired and recorded a non-cash impairment charge of its customer relationship intangible of $383 as of* June 30, 2024*.

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The Company completed its quarterly triggering event assessment for thethree months ended of* September 30, 2024* and determined thatno triggering event had occurred requiring further impairment assessment of its long-lived assets.

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

Amortization expenses of $2,299** and $2,559 for thethree months ended September 30, 2024and2023, respectively, and $7,277 and $7,810 for thenine months ended* September 30, 2024and2023*, respectively, are included in depreciation and amortization expenses in the consolidated statements of operations. As of* September 30, 2024*, intangible assets with a carrying amount of $601, included in the gross amount of software developed for internal use, havenot commenced amortization, as they arenot ready for their intended use.

As of* September 30, 2024*, estimated amortization expenses related to the Company's intangible assets for the remainder of2024 and through2029 and thereafter are as follows:

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

In accordance with ASC350, Intangibles - Goodwill and Other, goodwill is to be assessed at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets* may**not* be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely thannot that its fair value exceeds the carrying value. The measurement date of the Company's annual goodwill impairment test had been set to* October 1,but withno* remaining goodwill for the fiscal year ended* December 31, 2024*, the annual testing willnot be performed.

During thesecond quarter of2024, the Company determined that the effects of the expected decline in operations due to the impact of certain client relationships constituted a triggering event for the All Other reporting unit. The Company conducted an interim test of the fair value of the All Other reporting unit's goodwill for potential impairment related to the triggering event. The Company applied solely the income approach to determine the fair value of the All Other reporting unit. The results of this approach indicated that the carrying value exceeded its fair value by58%. The Company therefore concluded that the goodwill was impaired as of* June 30, 2024*and recorded a non-cash impairment charge for its remaining balance of $1,261.

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5. Long-term debt, net

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

Citizens Credit Facility

On* April**2,* 2024, the Company repaid the $30,000 aggregate principal amount of the term loan ("Citizens Term Loan") due on* September 30, 2025,resulting in a loss due to the early extinguishment of debt of $1,009, which was recognized in thesecond* quarter of2024.

New Credit Facility

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

The SLR Credit Agreement provides for a $20,000 term loan (the "SLR Term Loan") and a revolving credit facility of up to $30,000 (the "SLR Revolver" and together with the SLR Term Loan, the "SLR Credit Facility"). As of* September 30, 2024*, the SLR Credit Facility had an outstanding principal balance of $32,486 (of which $12,486 relates to the SLR Revolver) and matures on* April**2,* 2029.

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

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There isno principal amortization prior to maturity under the SLR Credit Agreement except for certain mandatory prepayments to be made with the net cash proceeds of certain asset sales, casualty events, and other extraordinary receipts and upon the occurrence of certain other events, in each case subject to certain reinvestment rights, thresholds and other exceptions. Unfunded commitments will be subject to an unused facility fee, which will be payable monthly in arrears, as of the month following the closing, at a rate of 0.50% per annum. All amounts owed under the SLR Credit Facility are due and payable on thefive-year anniversary of the closing date (the "Maturity Date"), or earlier following a change in control or an event of default, unless otherwise extended in accordance with the terms of the SLR Credit Agreement. Borrowings under the SLR Credit Agreement bear interest at a rate per annum equal to a3-month term SOFR plus 0.26161%, subject to a 1.50% floor, plus a margin (the "Applicable Margin") of 5.25% which was increased to 5.75% pursuant to the Second Amendment to the SLR Credit Agreement (the "Second Amend ment"). The Applicable Margin will be reduced to 5.0% when the Borrower's fixed charge coverage ratio is greater than 1.10 to1. The opening interest rate of the SLR Credit Facility was 10.81% (SOFR + CSA +5.25%), which increased to 11.03% (SOFR + CSA+5.75%) as of* September 30, 2024*.

The SLR Credit Agreement contains restrictive covenants which impose limitations on the way the Credit Parties conducts business, including limitations on the amount of additional debt the Credit Parties are able to incur and their ability to make certain investments or other restricted payments. The SLR Credit Agreement is guaranteed by the Company and certain of its direct and indirect subsidiaries and is secured by substantially all of the Company's assets and those of its direct and indirect subsidiaries, including the Borrower.

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

Debt issuance costs and debt discount costs, net of accumulated amortization, related to the issuance and amendments of the SLR Revolver was $903 and $827, respectively, as of* September 30, 2024*. The amounts are included in other non-current assets in the Company's consolidated balance sheets. The Company amortizes these costs over the life of the related debt.

On* May 15, 2024,the Credit Parties and SLR entered into the First Amendment to the SLR Credit Agreement (the "First Amendment"), pursuant to which SLR, among other things, (1) waived any required prepayments on the SLR Revolver from the proceeds from the Company's Private Placement, (2) required that the Credit Parties (as defined in the SLR Credit Agreement) retain a financial advisor to assist in preparing the Company's projections, (3) increased the minimum excess availability covenant following the Private Placement (as defined herein) (see Note8*,Equity) (4) amended the definition of borrowing base (as defined in the SLR Credit Agreement), and (5) amended certain post-closing obligations.

On* August 19, 2024,the Credit Parties and SLR entered into the Second Amendment, which, among other things, required that the Company raise$2,000* in additional capital. To raise the capital, the Company entered into convertible subordinated notes, as described below, raising an aggregate $2,050. In addition, SLR waived non-compliance with the financial covenants as of* June 30, 2024,modified the financial covenants through December 31, 2025,*ended a requirement to engage a financial advisor, increased the Applicable Margin from 5.25% to 5.75%, and waived any required prepayments from the proceeds from the convertible subordinated notes financing.

As of* September 30, 2024*, the Credit Parties werenot in compliance with their financial covenants under the SLR Credit Agreement, which the Borrower had to report by* October 31, 2024**,and which would have resulted in an event of default; however, on October 30, 2024**,the Credit Parties and SLR entered into a letter agreement pursuant to which SLR extended the deadline for delivery of the compliance certificate required for the fiscal month ended September** 30, 2024,and the related notice of event of default, to November** 19, 2024. *

On* November 15, 2024*, the Credit Parties and SLR entered into the Third Amendment to the SLR Credit Agreement, which, among other things, required that the Company raise at least*$7,500* of additional capital by* November 29, 2024**.** In addition, the Third Amendment waived non-compliance with the financial covenants as of September 30, 2024*, extended the duration of the call protection applicable to the loans, and modified the cash dominion provisions to remain in effect on an indefinite basis.

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Based on current projections, the Company expects to be in compliance with the new financial covenants during the nexttwelve months. However, the Company hasnot met its projections for certain recent quarters, so there can beno assurance that the Company will meet its projections in the future. If during any fiscal quarter, the Credit Parties donot comply with any of their financial covenants, such non-compliance would result in an event of default that would give SLR the right to accelerate maturities. Additionally, if the Company fails to raise capital in at least the amount required under the Third Amendment by* November 29, 2024,such failure would also result in an event of default that would give SLR the right to accelerate maturities. Accordingly, all borrowings under the Credit Agreement have been classified as current as of September 30, 2024*.

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 (see Note11*,Contingencies). The Note Payable bears interest equal toone-month CME Term SOFR (defined as the rate published by the CME Group Benchmark Administration Limited) plus 11.0% per annum, compounded quarterly. The opening interest rate of the Note Payable was 16.32% (SOFR +11%), which decreased to 16.17% (SOFR +11%) as of* September 30, 2024*.

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

The Note Payable matures on* March 31, 2026and interest is payable quarterly. Scheduled principal amortization of the Note Payable is $250 per quarter, which commenced with the fiscal quarter ended June 30, 2024,but was subsequently paid upon receipt of the invoice from FDR and applied as of July 17, 2024.*

Convertible Notes, with related parties

On* August 19, 2024,the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with certain of the Company's officers and directors and the largest stockholder (the "Purchasers") to sell convertible subordinated promissory notes (the "Convertible Notes") in aggregate principal amount of $2,050. The Convertible Notes mature on April 2, 2029,and bear interest at 13% per annum payable quarterly in kind or maybe paid in cash (subject to payment conditions in the Subordination Agreement (as defined below)) beginning December 31, 2024.Subject to certain payment conditions in the Subordination Agreement, the Company mayprepay the Convertible Notes in whole or in part at any time uponten* days’ written notice, provided thatno prepayment will be permitted prior to stockholder approval without the consent of the applicable holder.

Each holder of the Convertible Notes is entitled to convert the Conversion Amount (as defined below) into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $3.01 and (ii) the greater of (A) the consolidated closing bid price of the Company's Common Stock as reported on Nasdaq on the applicable conversion date and (B) $1.00, in each case subject to adjustments for stock splits, recapitalizations and the like. However, the applicable conversion price will inno event be lower than the price established by clause (ii) above unless and until the Company's stockholders have approved matters related to the issuance of common stock upon conversion of the Convertible Notes. The "Conversion Amount" is the sum of all or any portion of the outstanding principal amount of the Convertible Note, as designated by the holder upon exercise of its right of conversion, plus all accrued and unpaid interest. The Convertible Notes are subject to additional limits on conversion until stockholder approval is obtained, including an aggregate limit on the number of shares that* maybe issued upon conversion to 19.99% of the Company’s outstanding shares of common stock and provisions to prevent a change of control as defined in the rules of the Nasdaq Stock Market. The Company has agreed to use its reasonable efforts to secure stockholder approval at such meeting, including providing a recommendation for approval by the Company’s board of directors. Holders of the Convertible Notes will be permitted to vote on such stockholder approval, but may**not* vote any shares obtained from conversion of the Convertible Notes prior to such vote.No underwriting discounts or commissions were paid with respect to the Convertible Notes.

In connection with the Second Amendment and the Securities Purchase Agreement, the Company and SLR entered into a Second Amendment Subordination Agreement with each purchaser of the Convertible Notes on* August 19, 2024 (the "Subordination Agreements"). The Subordination Agreements confirm the subordinated nature of the Convertible Notes and restrict payments to and remedies of the holders of the Convertible Notes for so long as the SLR Credit Agreement has indebtedness outstanding. The Subordination Agreements provide that the Company may**not* make any payment of principal or interest on the Convertible Notes unless certain conditions are met.

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The Convertible Notes are accounted for at fair value due to the election of the fair value option ("FVO") in accordance with ASC825, Financial Instruments ("ASC825"). Within ASC825, 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 ASC815. Notwithstanding, ASC825-10-15-4 provides for the FVO election, to the extentnot otherwise prohibited by ASC825-10-15-5, to be afforded to financial instruments, wherein bifurcation of an embedded derivative isnot 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 ASC825-10-45-5, 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 ASC825-10-50-30(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 wasnot attributable to instrument specific credit risk. The Company then elected tonot 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 ASC825-10, the Company recorded a dayone unrealized loss on the Convertible Notes of $2,110.

As of* September 30, 2024*, the principal balance of the Convertible Notes was $2,050, with a fair value of $4,860. The Company recognized an additional increase in fair value of $700 for thethree andnine months ended* September 30, 2024*, which was recognized as after current period other income (loss) from operations. For thethree andnine months ended* September 30, 2024*, accrued interest was paid in kind.

Maturities

As of* September 30, 2024*, scheduled future maturities of the Company's debt are as follows,not reflective of the debt being accelerated as noted in Note1:

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6. Fair Value Measurement

The fair value of the Company's cash, cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate their carrying values because of the short-term nature of these instruments. Restricted cash includes a separately maintained cash account, as required under the terms of a lease agreement the Company entered into on* October 10, 2018** *for office space in New York City.

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

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

Convertible Notes, with related parties

The Company issued the Convertible Notes on* August 19, 2024and elected the fair value option, see Note5*,Long-term debt, net. The following is a reconciliation of the fair value from the issuance date of such notes to* September 30, 2024*:

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As the Convertible Notes mature on* April 2, 2029,and bear interest at 13% per annum paid in kind but may*be converted into shares of the Company’s common stock ( the "call option"), the estimated fair value is computed as the sum of (a) the present value of the expected interest and principal payments using the discounted cash flow method based on an estimated discount rate and (b) the fair value of the call option computer using the Black-Scholes model. Both approaches are based on the following assumptions:

Contingent Consideration

In connection with the contingent consideration received related tothe consolidation of TAPP, the Company had to determine the fair value of the identified assets acquired and liabilities assumed. The Company determined that the estimated fair value of the net assets acquired, excluding the net working capital, was a Level3 measurement, as certain inputs to determine fair value were unobservable. See Note12,Variable Interest Entity.

The fair value of certain long-lived non-financial assets and liabilities* maybe required to be measured on a nonrecurring basis in certain circumstances, including when there is evidence of impairment. As of September 30, 2024*, certain non-financial assets have been measured at fair value subsequent to their initial recognition. The Company determined the estimated fair value to be a Level3 measurement, as certain inputs used to determine fair value are unobservable. See Note4,Goodwill.

7. 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* September 30, 2024* and* December 31, 2023*, the Company recorded a full valuation allowance against net deferred tax assets and intends to continue maintaining a full valuation allowance on these net deferred tax assets until there is sufficient evidence to support the release of all or a portion of these allowances. 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 thenine months ended* September 30, 2024*, the Company's effective income tax rate of 0.4% differed from the statutory federal income tax rate of 21% primarily due to state and local tax expense and losses for whichno tax benefit is recognized as such amounts are fully offset with a valuation allowance. For thenine months ended* September 30, 2023*, the Company's effective income tax rate of 0.9% primarily represents the projected federal and state cash tax expense expected to result in taxable income for full-year2023 after the impact of a non-deductible goodwill impairment against pre-tax year-to-date losses, offset by the benefit of federal research and development credits on expected federal cash tax expense.

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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 than50% 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 isnot more-likely-than-not that a tax benefit will be sustained,no tax benefit has been recognized in the Company's financial statements.

As of* September 30, 2024* and* December 31, 2023*, the balance of unrecognized tax benefits was $1,480. If the Company's tax positions are ultimately sustained, the Company's liability would be reduced by$1,480, all of which would impact the Company's tax provision. As of* September 30, 2024*, the Company hasnot accrued any interest or penalties with respect to its uncertain tax positions.

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

8. Equity

Common stock

Effective at6:00 p.m. Eastern Time on* April 11, 2024,the Company effected a1*-for-6 (the "Reverse Stock Split Ratio") reverse split of the issued shares of the Company's common stock (the "Reverse Stock Split") pursuant to a certificate of amendment to the Company's Certificate of Incorporation, as amended, filed with the Secretary of State of the State of Delaware on* April 11, 2024.As a result of the Reverse Stock Split, everysix* shares of common stock issued and outstanding or held by the Company in treasury stock were combined and reclassified intoone share of common stock. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders who were otherwise entitled to receive a fractional share received an additional fraction of a share of common stock to round up to the next whole share. The Reverse Stock Split affected all stockholders uniformly and didnot alter any stockholder's percentage ownership interest or any stockholder's proportionate voting power, except for immaterial adjustments that resulted from the treatment of fractional shares. The Reverse Stock Split didnot change the number of authorized shares of common stock or the par value per share of the common stock.

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

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

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

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

For thenine months ended* September 30, 2024*, the increase in the number of issued shares of common stock was the result of the exercise of 2,955,084 shares related to the warrants, as described below, and 305,348 shares of common stock issued upon vesting of RSUs, in whichno shares of common stock were withheld to cover statutory taxes upon such vesting.

Treasury stock

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

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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* maybe taken into treasury stock by the Company or sold on the open market. For thenine* months ended* September 30, 2024*, no shares of common stock were withheld to cover statutory taxes owed by certain employees for this purpose. See Note9,Share-based compensation.

Warrants

On* May 13, 2024,the Company entered into Securities Purchase Agreements (the "Purchase Agreements") with certain accredited investors (the "Purchasers"), pursuant to which the Company sold pre-funded warrants (the "Pre-Funded Warrants") to purchase up to 2,955,084 shares of the Company's common stock, at a purchase price of $3.384 per Pre-Funded Warrant (the "Private Placement"). The Purchasers includedthree* individuals who are officers and/or directors of the Company and a principal stockholder of the Company. No underwriting discounts or commissions were paid with respect to the Private Placement.

The aggregate gross proceeds for the Private Placement totaled $10,000, before deducting offering expenses payable by the Company of $100. The Pre-Funded Warrants, which terminated when exercised in full, had an exercise price of $0.0005 per share of common stock and became immediately exercisable upon stockholder approval of the Private Placement. In connection with the Private Placement, the Company entered into Support Agreements withthree of the Purchasers, the Company's largest stockholders, who agreed to vote all of their beneficially owned shares of the Company's common stock in favor of the corporate actions required for stockholder approval. Stockholder approval of the Private Placement was obtained on* July 2, 2024,*at a special meeting of the Company's stockholders.

As of* September 30, 2024*, all of the Pre-Funded Warrants had been exercised. The issuance of the shares upon exercise of the Pre-Funded Warrants was made in reliance upon the exemption from registration under Section4(a)(2) of the Securities Act of1933 as amended.

The settlement of the Pre-Funded Warrants was reflected in the Company's stockholder's equity within common stock and additional paid-in-capital as of* September 30, 2024*. In accordance with ASC815-40, Derivatives and Hedging, a contract is classified as an equity agreement if it is both indexed to its own stock and classified in stockholder's equity in its financial position. The Pre-Funded Warrants met the requirements of being classified as equity because (i) they had a fixed share limit and the Company had sufficient authorized and unissued shares, (ii) they required physical or net share settlement, and (iii)no cash payments or settlement top-off was required by the Company.

9. 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. As of* September 30, 2024*, the Company had 488,254 shares of common stock available for grants pursuant to the2022 Plan, which includes 262,517 shares of common stock previously available for issuance under the2018 Stock Incentive Plan.

The primary purpose of the2022 Plan and prior plans is to attract, retain, reward, and motivate certain individuals by providing them with opportunities to acquire or increase their ownership interests in the Company. In* October 2022,the Company issued to certain of its senior officers and employees, RSUs (time-based vesting), long-term incentive grants (performance and time-based vesting RSUs), or performance share units ("PSUs") (achievement of performance targets settled in cash) under the2022* Plan.

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Stock options

In* January 2019,the Compensation Committee of the Company's Board of Directors approved the grant of stock options to certain Company executives, which were issued on February 1, 2019,** December 20, 2019,** March 1, 2020,and March 1, 2021.Subject to continuing service,50% of the shares subject to these stock options will vest if the Company's stock price remains above 125.00%,133.33%,133.33% and 133.33%, respectively, of the exercise price for20* consecutive trading days, and the remaining 50% of the shares subject to these stock options will vest if the Company's stock price remains above 156.25%,177.78%,177.78% and 177.78%, respectively, of the exercise price for20 consecutive trading days; provided, thatno shares will vest prior to thefirst anniversary of the grant date.

As of* September 30, 2024*, thefirst condition for the stock options issued on* February 1, 2019,** December 20, 2019and March 1, 2020had been met, and thesecond* condition for the stock options issued on* December 20, 2019and March 1, 2020*had been met. Any shares that remain unvested as of thefifth anniversary of the grant date will vest in full on such date. The fair value of the stock options granted was estimated at the trading day before the date of grant using a Monte Carlo simulation model. The key assumptions utilized to calculate the grant-date fair values for these awards are summarized below:

On* September 9, 2024,the Compensation Committee of the Company's Board of Directors approved the grant of stock options to the Company's Chief Financial Officer in connection with his employment agreement. Subject to continuing service,50% of the shares subject to these stock options will vest when the average closing price of the Company's common stock is equal tothree* times the exercise price of the option forten consecutive trading days, and the remaining50% of the shares subject to these stock options will vest when the average closing price of the Company's common stock is equal tofive times the exercise price of the option forten consecutive trading days. Notwithstanding the foregoing, the options will immediately vest upon the occurrence of certain conditions such as a change in control. The fair value of the stock option granted was estimated at the trading day of the date of the grant using a Monte Carlo simulation model. The key assumptions utilized to calculate the grant-date fair value for the award is summarized below:

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

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

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

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

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

Compensation expense recognized for stock options was $4 and $0 for thethree months ended* September 30, 2024and2023*, respectively, and $5 and $0 for thenine months ended* September 30, 2024and2023*, respectively. As of* September 30, 2024*, there was $264 of unrecognized share-based compensation with respect to outstanding stock options.

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Restricted stock units and restricted stock

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

Compensation expense recognized for RSUs of $466 and $982 for thethree months ended* September 30, 2024and2023*, respectively, and $1,517 and $3,090 for thenine months ended* September 30, 2024and2023*, respectively, was recorded in sales and marketing, product development and general and administrative in the consolidated statements of operations, and intangible assets, net in the consolidated balance sheets. The fair value of the RSUs and restricted stock was estimated using the closing prices of the Company's common stock on the dates of grant.

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

For thethree andnine months ended* September 30, 2024and2023*, 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:

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

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10. Segment information

The Company identifies operating segments as components of an entity for which discrete financial information is available and is regularly reviewed by the CODM, in making decisions regarding resource allocation and performance assessment. The profitability measure employed by CODM is earnings before interest, taxes, depreciation, and amortization ("EBITDA"). As of* September 30, 2024*, the Company hadtwo operating segments andtwo corresponding reporting units, "Fluent" and "All Other," andone reportable segment. "Fluent," for the purposes of segment reporting, represents the consolidated operating results of the Company excluding "All Other." "All Other" represents the operating results of AdParlor, LLC and is included for purposes of reconciliation of the respective balances below to the consolidated financial statements.

Summarized financial information concerning the Company's segments for thethree andnine months ended* September 30, 2024and2023* are shown in the following tables below:

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

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

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

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11. 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 doesnot accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated.

On* January 28, 2020,the Company received a Civil Investigative Demand from the Federal Trade Commission ("FTC") regarding compliance with the FTC Act and the Telemarketing Sales Rule. On October 18, 2022,the FTC staff sent the Company a draft complaint and proposed consent order seeking injunctive relief and a civil monetary penalty. On January 12, 2023,the Company made an initial proposal of $5,000 for the civil monetary penalty contingent on successful negotiation of the remaining outstanding terms. The Company accrued the same amount for the year ending December 31, 2022.On May 26, 2023,the Company agreed to the terms of a Stipulated Order for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief (the "FTC Consent Order"). The FTC Consent Order imposed a civil penalty of $2,500, required additional changes to the Company's employment opportunities marketplace and programmatic advertising business, and resulted in the implementation of compliance measures across the business. On July**17,* 2023, the FTC filed its Complaint for Civil Penalties, Permanent Injunction, Monetary Relief, and Other Relief and, together with the Company, filed a Joint Motion for Entry of Proposed Stipulated Order in the United States District Court for the Southern District of Florida. The FTC Consent Order was entered by the Court on* August 11, 2023,and the escrow funds were released on August 15, 2023.On August 12, 2024,*the Company filed its required compliance report. The Company maintains insurance policies that cover certain legal costs, which include those incurred related to the FTC inquiry.

On* October 6, 2020,the Company received notice from the Pennsylvania Office of the Attorney General ("PAAG") that it was reviewing the Company's business practices relating to telemarketing. After the Company and the PAAG were unable to reach agreement on a proposed Assurance of Voluntary Compliance, the Commonwealth of Pennsylvania filed a complaint for permanent injunction, civil penalties, and other relief in the United States District Court for the Western District of Pennsylvania on November 2, 2022.On May 18, 2023,the parties entered into a settlement and jointly filed a Consent Petition of Final Decree, wherein the Company agreed to injunctive relief and to pay the PAAG $250 for investigatory costs, all of which was paid as of June 30, 2023.*

The Company was involved in a Telephone Consumer Protection Act class action,Daniel Berman v. Freedom Financial Network, which was originally filed in2018. 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 due upon final approval of the settlement. That amount had been accrued as of December 31, 2022.On July 28, 2023,the Court preliminarily approved the Berman Settlement Agreement. 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, 2024and entered into the $2,000 Note Payable provided by co-defendant, FDR, as discussed in Note5*,Long-term debt, net.

12. 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.

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True North

On* May 1, 2024**,* the Company and Caspian Ventures, LLC ("Caspian") entered into a membership interest purchase agreement pursuant to which the Company conveyed 100% of the membership interests of True North Loyalty, LLC and its direct and indirect subsidiaries (collectively, "True North") to Caspian (the "True North Conveyance"). True North is a subscription-based business that utilizes call center operations and other media channels to marketthird-party recurring revenue services to consumers. The deemed fair value of the consideration received was $989, which consisted of (i) the forgiveness of a $500 deferred payment owed by the Company in connection with the True North Acquisition on* January 1, 2022, (ii) a share of the True North contribution margin after the closing until the Company has received an amount equal to the closing net working capital of approximately $168, and (iii) a continued share of the True North contribution margin of an additional amount at fair value of $321. The True North founder who entered into an employment agreement in connection with the True North Acquisition has remained an employee of the Company after the closing of the True North Conveyance. It was determined that True North didnot* meet the discontinued operations criterion under ASC205-20, Discontinued Operations.

In accordance with ASC810, Consolidation ("ASC810"), the Company determined that True North was a VIE based upon the receivable for the consideration to be received. Initially, as the majority membership owner of Caspian remained a full-time employee of the Company and had the power to unilaterally make significant decisions at True North, it was determined that the Company was the primary beneficiary of Caspian and therefore should consolidate Caspian's operations going forward, under the de facto agent guidance. As a result,no gain or loss was to be recognized on the True North Conveyance. On* September 1, 2024,Caspian’s operating agreement was amended to require the consent of multiple members rather than a majority interest for major decisions. As a result, the Company determined that it wasno* longer the primary beneficiary, and under ASC810, True North wasno longer consolidated as of* September 1, 2024.No gain or loss was recognized for thethree months ended September 30, 2024*. The Company will haveno continued business relationship with True North apart from receiving the remaining consideration owed by True North.

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

TAPP

On* January 9, 2023,the Company entered into employment agreements with certain key employees of TAPP, an influencer-based business that uses an application to utilize its relationships with influencers to bring consumers to advertising clients. The Company is also a customer of TAPP and accounts for the majority of TAPP's revenues. As a result of significant influence over TAPP's key employees and financial performance, the Company determined that TAPP qualified as a VIE in which the Company has a variable interest and that the Company is the primary beneficiary. Therefore, the Company consolidates the TAPP operations. As the Company doesnot* have an equity interest in TAPP,100% of the net assets and results of the operations of TAPP are attributable to non-controlling interests.

As the Company gained control of TAPP, in accordance with ASC805, Business Combinations, it was then determined that TAPP constituted a business. The deemed fair value of the consideration was $4,165, which consisted of $1,250 of initial cash and $2,915 contingent upon the achievement of specified revenue and media margin targets over three years. The fair value of assets acquired, which excluded the immaterial net-working capital, were determined to be the publisher contracts of $1,100, which were valued using the 'with or without' method, a variation of the income approach, to be amortized over a period ofone year and industry-based trade secrets of $1,510, which were valued using the excess earnings method, a variation of the income approach, to be amortized over a period offour years. The amount of the purchase price in excess of the fair value of the net assets acquired was recorded as goodwill in the amount of $1,555 and primarily represents workforce and expected cash flow generation for the TAPP business that doesnot qualify for separate recognition as intangible assets included within the Fluent operating segment. For tax purposes, the value of the acquisition payments is treated as ordinary compensation for services rendered, deductible when paid and included in the employees' wages.

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