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| · Page |
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| PART I. · |
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| ITEM 1. | | Business | 5 |
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| ITEM 1A. | | Risk Factors | 14 |
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| ITEM 1B. | | Unresolved Staff Comments | 40 |
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| ITEM 1C. | | Cybersecurity | 40 |
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| ITEM 2. | | Properties | 41 |
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| ITEM 3. | | Legal Proceedings | 41 |
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| ITEM 4. | | Mine Safety Disclosures | 41 |
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| PART II. | | |
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| ITEM 5. | | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 42 |
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| ITEM 6. | | [Reserved] | 43 |
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| ITEM 7. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 44 |
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| ITEM 7A. | | Quantitative and Qualitative Disclosures About Market Risk | 64 |
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| ITEM 8. | | Consolidated Financial Statements and Supplementary Data | 65 |
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| ITEM 9. | | Changes in and Disagreement with Accountants on Accounting and Financial Disclosure | 115 |
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| ITEM 9A. | | Controls and Procedures | 115 |
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| ITEM 9B. | | Other Information | 117 |
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| ITEM 9C. | | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 117 |
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| PART III. | | |
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| ITEM 10. | | Directors, Executive Officers and Corporate Governance | 118 |
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| ITEM 11. | | Executive Compensation | 122 |
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| ITEM 12. | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 130 |
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| ITEM 13. | | Certain Relationships and Related Person Transactions, and Director Independence | 132 |
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| ITEM 14. | | Principal Accountant Fees and Services | 137 |
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| PART IV. | | |
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| ITEM 15. | | Exhibits and Financial Statement Schedules | 138 |
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| EXHIBIT INDEX | 139 | |
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| SIGNATURES | 144 | |
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CERTAIN DEFINITIONS
Unless the context requires otherwise, references in this Annual Report on Form 10-K to:
| ● | the “Company,” “Direct Digital,” “Direct Digital Holdings,” “DDH,” “we,” “us” and “our” refer to Direct Digital Holdings, Inc., and, unless otherwise stated, all of its subsidiaries, including Direct Digital Holdings, LLC, which we refer to as “DDH LLC,” and, unless otherwise stated, its subsidiaries. |
| ● | “Colossus Media” refers to Colossus Media, LLC, the sell-side marketing platform of our business acquired by the Company in 2018, operating under the trademarked banner of Colossus SSP™. |
| ● | “DDH LLC” refers to Direct Digital Holdings LLC, a Texas limited liability company jointly owned by the Company and DDM. |
| ● | “DDM” refers to Direct Digital Management, LLC, a Delaware limited liability company indirectly owned by Mark Walker, our Chairman and Chief Executive Officer, and Keith Smith, our President, which entity owns LLC Units (as defined below) and which also holds noneconomic shares of Class B Common Stock. DDM may exchange or redeem its LLC Units for shares of our Class A Common Stock as described in Item 13 “Certain Relationships and Related Person Transactions, and Director Independence,” together with a cancellation of the same number of its shares of Class B Common Stock. |
| ● | “Huddled Masses®” refers to Huddled Masses, LLC, a buy-side advertising and marketing service provider acquired by the Company in 2018. |
| ● | “LLC Units” refers to (i) economic nonvoting units in DDH LLC held by us and DDM and (ii) noneconomic voting units in DDH LLC, 100% of which are held by us. |
| ● | “Orange 142®” refers to Orange142, LLC, a buy-side advertising and marketing service provider acquired by the Company in 2020. |
| ● | “Tax Receivable Agreement” refers to the tax receivable agreement by and among Direct Digital Holdings, DDH LLC and DDM. See Item 13 “Certain Relationships and Related Person Transactions, and Director Independence” for additional information. |
