Direct Digital Holdings, Inc.

Previous wording

Direct Digital Holdings, Inc. owns 100% of the voting interest in DDH LLC and as of March 31, 2025, DDH owns 39.6% of the economic interest in DDH LLC. DDH LLC was formed on June 21, 2018 and acquired by the Company on

Current wording

Direct Digital Holdings, Inc. owns 100% of the voting interest in DDH LLC and as of June 30, 2025, DDH owns 53.6% of the economic interest in DDH LLC. DDH LLC was formed on June 21, 2018 and acquired by the Company on

Previous wording

Operating segments are components of an enterprise for which separate financial information is available and evaluated regularly by our chief operating decision maker (“CODM”) for purpose of assessing performance and allocating resources. Our CODM is our Chairman and Chief Executive Officer. Revenues and operating income (loss) are used by our CODM to assess performance of our operating segments and allocate resources. We operate as two reportable segments: sell-side advertising, which includes the results of Colossus Media, and buy-side advertising, which includes the results of Orange 142 and Huddled Masses. All our revenues are attributable to the United States.

Current wording

Operating segments are components of an enterprise for which separate financial information is available and evaluated regularly by our chief operating decision maker (“CODM”) for purpose of assessing performance and allocating resources. Our CODM is our Chairman and Chief Executive Officer. Revenues and operating income (loss) are used by our CODM to assess performance of our operating segments and allocate resources. We operate as two reportable segments: sell-side advertising, which includes the results of Colossus Media, and buy-side advertising, which includes the results of Orange 142. All our revenues are attributable to the United States.

Previous wording

During the appeal process, there is a stay on Nasdaq's delisting and the Company’s Class A Common Stock will continue to trade on The Nasdaq Capital Market under the symbol “DRCT.” If the Company is not able to regain compliance with Nasdaq’s continued listing requirements within the time period permitted by Nasdaq, then the Company’s securities will be delisted from Nasdaq. See “Risk Factors” in Item 1A herein.

Current wording

Subsequent to the end of an extension period granted by the Staff, the Company received a letter indicating that its common stock would be delisted. The Company then requested a hearing before the Nasdaq Hearings Panel (the “Panel”). The hearing was held on May 29, 2025 and, by decision dated June 9, 2025, the Panel accepted the Company’s proposed plan to regain compliance with the Stockholders’ Equity Requirement (the “Compliance Plan”), and granted the Company’s request for an extension through October 14, 2025, subject to the Company’s satisfaction of certain interim conditions. If the Company is not able to evidence compliance with Nasdaq’s continued listing requirements within the time period permitted by Nasdaq, then the Company’s securities will be delisted from Nasdaq. Separately, on May 12, 2025, the Company received notice from the Staff that the closing bid price of the Company’s Class A common stock was below $1.00 per share for the prior 30 consecutive business days, and therefore, the Company was not in compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule

Previous wording

On October 18, 2024, the Company entered into a Share Purchase Agreement (the “Purchase Agreement and the facility as a whole, the “Equity Reserve Facility”) with New Circle Principal Investments LLC, a Delaware limited liability company (“New Circle”), pursuant to which New Circle has committed to purchase, subject to certain limitations, up to $20 million (the “Total Commitment”) of the Company’s Class A Common Stock. The purchase price of the shares that may be sold to New Circle under the Purchase Agreement will be based on an agreed upon fixed discount to the market price of our Class A Common Stock as computed under the Purchase Agreement. The Company sold 1,580,000 shares of the Company's Class A Common Stock for $3.0 million during the year ended December 31, 2024. During the three months ended March 31, 2025, the Company sold 1,539,351 shares of the Company's Class A Common Stock for $2.0 million. Subsequently and through the date of this report, the Company sold an additional 1,020,000 shares of the Company's Class A Common Stock for $0.5 million.

Current wording

On October 18, 2024, the Company entered into a Share Purchase Agreement (the “Purchase Agreement" and the facility as a whole, the “Equity Reserve Facility”) with New Circle Principal Investments LLC, a Delaware limited liability company (“New Circle”), pursuant to which New Circle has committed to purchase, subject to certain limitations, up to $20 million (the “Total Commitment”) of the Company’s Class A Common Stock. The purchase price of the shares that may be sold to New Circle under the Purchase Agreement will be based on an agreed upon fixed discount to the market price of our Class A Common Stock as computed under the Purchase Agreement. The Company sold 1,580,000 shares of the Company's Class A Common Stock for $3.0 million during the year ended December 31, 2024. During the six months ended June 30, 2025, the Company sold 6,059,351 shares of the Company's Class A Common Stock for $4.6 million.

Previous wording

Colossus Media operates our proprietary sell-side programmatic platform operating under the trademarked banner of Colossus SSP. Our customers (or buyers) include ad exchanges, DSPs, agencies and individual advertisers. We have broad exposure to the ecosystem of buyers, reaching on average approximately 160,000 advertisers per month in the three months ended March 31, 2025, an increase of 19,000 over the 141,000 advertisers per month in the three months ended March 31, 2024. As spending on programmatic advertising increasingly becomes a larger share of the overall ad spend, advertisers and agencies are seeking greater control of their digital advertising supply chains. To take advantage of this industry shift, we have entered into Supply Path Optimization agreements directly with customers which address acceptable advertisements and data usage. As part of these agreements, we provide advertisers and agencies with benefits ranging from custom data and workflow integrations, product features, volume-based business terms, and visibility into campaign performance data and methodology. As a result of these direct relationships, our existing advertisers and agencies are incentivized to allocate an increasing percentage of their advertising budgets to our platform.

Current wording

Colossus Media operates our proprietary sell-side programmatic platform operating under the trademarked banner of Colossus SSP. Our customers (or buyers) include ad exchanges, DSPs, agencies and individual advertisers. We have broad exposure to the ecosystem of buyers, reaching on average approximately 182,000 advertisers per month in the six months ended June 30, 2025, an increase of 33,000, or 22%, over the 149,000 advertisers per month in the six months ended June 30, 2024. As spending on programmatic advertising increasingly becomes a larger share of the overall ad spend, advertisers and agencies are seeking greater control of their digital advertising supply chains. To take advantage of this industry shift, we have entered into Supply Path Optimization agreements directly with customers which address acceptable advertisements and data usage. As part of these agreements, we provide advertisers and agencies with benefits ranging from custom data and workflow integrations, product features, volume-based business terms, and visibility into campaign performance data and methodology. As a result of these direct relationships, our existing advertisers and agencies are incentivized to allocate an increasing percentage of their advertising budgets to our platform.

Previous wording

Historically, our growth has been driven by a variety of factors including increased access to a variety of impressions. Advertisers and agencies often have a large portfolio of brands requiring a variety of campaign types and support for a wide array of inventory formats and devices, including OTT/CTV, video and display, in-app, native and audio. Our omni-channel proprietary technology platform is designed to maximize these various advertising channels, which we believe is a further driver of efficiency for our buyers. The platform is comprised of publishers across multiple channels including OTT/CTV, display, native, in-app, online video (“OLV”), audio and digital out of home (“DOOH"). In the three months ended March 31, 2025, we processed approximately 188 billion average monthly impressions across many unique audiences including multicultural growth audiences at scale with 61 billion, or 33%, of those impressions from growing multicultural-focused audiences. The Colossus SSP continues to expand its capabilities to give our content providers more avenues to distribute ad inventory such as OTT/CTV, digital audio, DOOH, etc. and inform our publishers to enhance their ad selling needs by distributing content in various forms to meet the rising demands of the ad buying community.

Current wording

Historically, our growth has been driven by a variety of factors including increased access to a variety of impressions. Advertisers and agencies often have a large portfolio of brands requiring a variety of campaign types and support for a wide array of inventory formats and devices, including OTT/CTV, video and display, in-app, native and audio. Our omni-channel proprietary technology platform is designed to maximize these various advertising channels, which we believe is a further driver of efficiency for our buyers. The platform is comprised of publishers across multiple channels including OTT/CTV, display, native, in-app, online video (“OLV”), audio and digital out of home (“DOOH"). In the six months ended June 30, 2025, we processed approximately 202 billion average monthly impressions across many unique audiences including multicultural growth audiences at scale with 79 billion, or 39%, of those impressions from growing multicultural-focused audiences. The Colossus SSP continues to expand its capabilities to give our content providers more avenues to distribute ad inventory such as OTT/CTV, digital audio, DOOH, etc. and inform our publishers to enhance their ad selling needs by distributing content in various forms to meet the rising demands of the ad buying community.

Previous wording

Our customers understand the independent nature of our platform and relentless focus on driving results based on return on investment (“ROI”). Our value proposition is complete alignment across our entire digital supply platform beginning with the first dollar in and last dollar out. We are technology and media agnostic, and we believe our clients trust us to provide the best opportunity for success of their brands and businesses. As a result, our clients have been loyal, with approximately 81% client retention amongst the clients that represent approximately 80% of our revenue during the three months ended March 31, 2025. In addition, we cultivate client relationships through our pipeline of managed and moderate serve clients that conduct campaigns through our platform. The managed services delivery model allows us to combine our technology with a highly personalized offering to strategically design and manage advertising campaigns.

Current wording

Our customers understand the independent nature of our platform and relentless focus on driving results based on return on investment (“ROI”). Our value proposition is complete alignment across our entire digital supply platform beginning with the first dollar in and last dollar out. We are technology and media agnostic, and we believe our clients trust us to provide the best opportunity for success of their brands and businesses. As a result, our clients have been loyal, with approximately 88% client retention amongst the clients that represent approximately 80% of our revenue during the six months ended June 30, 2025. In addition, we cultivate client relationships through our pipeline of managed and moderate serve clients that conduct campaigns through our platform. The managed services delivery model allows us to combine our technology with a highly personalized offering to strategically design and manage advertising campaigns.

Previous wording

Expenses for Equity Reserve Facility. Expenses are is mainly related to our Equity Reserve Facility as further described below in “—Liquidity and Capital Resources.”

Current wording

Expenses for Equity Reserve Facility. Expenses are mainly related to our Equity Reserve Facility as further described below in “—Liquidity and Capital Resources.”

Previous wording

Comparison of the Three Months Ended March 31, 2025 and 2024

Current wording

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

Previous wording

Our revenues of $8.2 million for the three months ended March 31, 2025 decreased by $14.1 million, or 63%, from $22.3 million for the three months ended March 31, 2024. Sell-side advertising revenue decreased $14.5 million, or 88% while buy-side revenue increased $0.4 million, or 6%, compared to the prior year period. The decrease in sell-side advertising revenue was primarily due to a decrease in impression inventory. Management attributes the cause of this decrease to unexpected business disruption amongst our partners, advertisers and clients caused by multiple short attacks and a market-discredited blog post against our supply-side platform, Colossus SSP, in mid May 2024. Sell-side volumes have resumed but not yet at the levels experienced prior to the post in May 2024, which negatively affected revenue in the first quarter of 2025. The Company sold approximately 188 million average monthly impressions in the first quarter of 2025, a decrease of 90% from the prior period. The increase in buy-side revenue of $0.4 million was due to growth from new and existing customers of $2.6 million, including $1.2 million from customers in new verticals, partially offset by a $2.2 million decrease in spending from customers, including a $1.0 million decrease from customers no longer actively purchasing from the Company.

Current wording

Our revenues of $10.1 million for the three months ended June 30, 2025 decreased by $11.7 million, or 54%, from $21.9 million for the three months ended June 30, 2024. Sell-side advertising revenue decreased $11.8 million, or 83% while buy-side revenue increased $0.1 million, or 1%, compared to the prior year period. The decrease in sell-side advertising revenue was primarily due to a decrease in impression inventory. Management attributes the cause of this decrease to unexpected business disruption amongst our partners, advertisers and clients caused by multiple short attacks and a market-discredited blog post against our supply-side platform, Colossus SSP, in mid May 2024. Sell-side volumes have resumed but not yet at the levels experienced prior to the post in May 2024, which negatively affected revenue in the first half of 2025. The Company sold approximately 182 million average monthly impressions in the second quarter of 2025, a decrease of 91% from the prior period. The increase in buy-side revenue of $0.1 million was due to growth from new customers of $2.1 million, including $1.0 million from customers in new verticals, partially offset by a $2.0 million decrease in spending from existing customers, including a $1.6 million decrease from customers no longer actively purchasing from the Company.

Previous wording

Cost of revenues of $5.8 million for the three months ended March 31, 2025 decreased by $11.5 million, or 67% from $17.3 million for the three months ended March 31, 2024. Sell-side advertising cost of revenues decreased $12.2 million, to $2.6 million, or 130% of sell-side revenue for the three months ended March 31, 2025, compared to $14.8 million, or 90% of revenue of sell-side revenue, for the same period in 2024. The decrease in costs was primarily due to the related decrease in revenue, while the 40% increase as a percentage of revenue was due to fixed costs not decreasing at the same proportionate rate as the revenue decline. Fixed cost of sell-side revenues for the three months ended March 31, 2025 of $0.9 million decreased by $0.3 million, or 25%, from fixed cost of sell-side revenues of $1.2 million for the same period in 2024. Buy-side advertising cost of revenues increased $0.7 million, to $3.1 million, or 51% of buy-side revenue for the three months ended March 31, 2025, compared to $2.5 million, or 43% of buy-side revenue, for the same period in 2024.

Current wording

Cost of revenues of $6.6 million for the three months ended June 30, 2025 decreased by $9.3 million, or 59% from $15.9 million for the three months ended June 30, 2024. Sell-side advertising cost of revenues decreased $10.4 million, to $2.9 million, or 115% of sell-side revenue, for the three months ended June 30, 2025, compared to $13.2 million, or 92% of sell-side revenue, for the same period in 2024. The decrease in costs was primarily due to the related decrease in revenue, while the 23% increase as a percentage of revenue was due to fixed costs not decreasing at the same proportionate rate as the revenue decline. Fixed cost of sell-side revenues for the three months ended June 30, 2025 of $0.9 million decreased by $0.5 million, or 40%, from fixed cost of sell-side revenues of $1.4 million for the same period in 2024. Buy-side advertising cost of revenues increased $1.0 million to $3.7 million, or 49% of buy-side revenue, for the three months ended June 30, 2025, compared to $2.7 million, or 36% of buy-side revenue, for the same period in 2024.

Previous wording

Gross profit was $2.4 million, or 29% of revenue, for the three months ended March 31, 2025, compared to $5.0 million, or 22% of revenue, for the same period in 2024, reflecting a decrease of $2.6 million, or 52%. The change in gross profit margin percentage for the three months ended March 31, 2025 is attributable to the mix in revenue between our business segments as our sell-side segment has higher cost of revenues compared to our buy-side segment, as well as the lower sell-side fixed costs related to server capacity, analytic, development and technology-related costs.

Current wording

Gross profit was $3.6 million, or 35% of revenue, for the three months ended June 30, 2025, compared to $5.9 million, or 27% of revenue, for the same period in 2024, reflecting a decrease of $2.4 million, or 40%. The change in gross profit margin percentage for the three months ended June 30, 2025 is attributable to the mix in revenue between our business segments as our sell-side segment has higher cost of revenues compared to our buy-side segment, as well as the lower sell-side fixed costs related to server capacity, analytic, development and technology-related costs.

Previous wording

Sell-side advertising gross profit decreased $2.3 million for the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to the decrease in revenue partially offset by lower fixed costs. Sell-side advertising gross margin percentage was (30)% and 10% for the three months ended March 31, 2025 and 2024, respectively. Buy-side advertising gross profit decreased $0.3 million for the three months ended March 31, 2025, as compared to the same period in the prior year. Buy-side advertising gross margin percentage was 49% and 57% for the three months ended March 31, 2025 and 2024, respectively, with the decrease in gross margin percentage due to higher cost to provide services to customers and the mix of services provides.

Current wording

Sell-side advertising gross profit decreased $1.5 million for the three months ended June 30, 2025 as compared to the same period in 2024, primarily due to the decrease in revenue partially offset by lower fixed costs. Sell-side advertising gross margin percentage was (15)% and 8% for the three months ended June 30, 2025 and 2024, respectively. Buy-side advertising gross profit decreased $0.9 million for the three months ended June 30, 2025, as compared to the same period in the prior year. Buy-side advertising gross margin percentage was 51% and 64% for the three months ended June 30, 2025 and 2024, respectively, with the decrease in gross margin percentage due to higher cost to provide services to customers and the mix of services provided.

Previous wording

Compensation, taxes and benefits of $3.7 million, decreased by $0.9 million, or 19%, for the three months ended March 31, 2025 from $4.5 million for the same period in 2024 primarily due to lower payroll costs resulting from a staff reduction made effective July 1, 2024 when we began to execute an internal reorganization plan that included a staff reduction, a pause on hiring and cost savings measures, which has lowered certain ongoing expenses that positively affected the current period.

Current wording

Compensation, taxes and benefits of $3.6 million decreased by $0.5 million, or 13%, for the three months ended June 30, 2025 from $4.2 million for the same period in 2024. Compensation, taxes and benefits of $7.3 million decreased by $1.4 million, or 16%, for the six months ended June 30, 2025 from $8.7 million for the same period in 2024. The decrease is primarily due to lower payroll costs resulting from a staff reduction made effective July 1, 2024 when we began to execute an internal reorganization plan that included a staff reduction, a pause on hiring and cost savings measures, which has lowered certain ongoing expenses that positively affected the current period.

Previous wording

General and administrative (“G&A”) expenses of $2.7 million for the three months ended March 31, 2025 decreased by $0.6 million for the same period in 2024. G&A expenses as a percentage of revenue was 33% and 15% for the three months ended March 31, 2025 and 2024, respectively. The decrease in G&A expenses was primarily due to lower professional fees and sales and marketing expenses.

Current wording

General and administrative (“G&A”) expenses of $2.3 million for the three months ended June 30, 2025 decreased by $1.5 million from the same period in 2024. G&A expenses as a percentage of revenue were 23% and 18% for the three months ended June 30, 2025 and 2024, respectively. The decrease in G&A expenses was primarily due to lower professional fees and sales and marketing expenses.

Previous wording

Total other expense, net for the three months ended March 31, 2025 and 2024 primarily consists of $1.8 million and $1.3 million, respectively, of interest expense. Interest expense increased by $0.5 million compared to the prior period primarily due to the debt discount amortization partially offset by lower interest rates.

Current wording

Total other expense, net for the three months ended June 30, 2025 and 2024 primarily consists of $1.8 million and $1.4 million, respectively, of interest expense. Interest expense increased by $0.4 million compared to the prior period primarily due to the debt discount amortization partially offset by lower interest rates.

Previous wording

As discussed in Note 9 — Commitments and Contingencies to our condensed consolidated financial statements, on May 10, 2024, the Company was the subject of a defamatory article / blog post which the Company believes was part of a coordinated misinformation campaign. In connection with this post, one of the Company’s sell-side customers paused its connection to the Company for a couple of weeks in May 2024, which reduced sell-side sales volumes. As of the date of this report, sell-side volumes related to this customer have resumed but not yet at the levels experienced prior to the pause in May 2024 which has created significant disruption in the Company’s sell-side business. The Company is actively working with its partners to achieve prior volume levels. However, there can be no assurance that the Company will be able to achieve prior volume levels with its partners or on the timing of achieving such volume levels. Additionally, the Company (1) incurred a net loss of $5.9 million for the three months ended March 31, 2025 including the impact of the sell-side disruption described above, (2) reported an accumulated deficit of $11.1 million as of March 31, 2025, (3) reported cash and cash equivalents of $1.8 million as of March 31, 2025, (4) has borrowed $3.7 million as of March 31, 2025 and the date of this report, under the Credit Agreement (as amended, the “Credit Agreement”), dated July 7, 2023, with East West Bank (“EWB”), as lender, which matures in July 2025, (5) was notified by Nasdaq on October 18, 2024 that it was not in compliance with Nasdaq's minimum stockholders' equity requirement and is currently subject to a delisting letter and a hearings and appeal process. These factors raise substantial doubt about the Company’s ability to continue as a going concern over the next twelve months.

Current wording

As discussed in Note 9 — Commitments and Contingencies to our condensed consolidated financial statements, on May 10, 2024, the Company was the subject of a defamatory article / blog post which the Company believes was part of a coordinated misinformation campaign. In connection with this post, one of the Company’s sell-side customers paused its connection to the Company for a couple of weeks in May 2024, which reduced sell-side sales volumes. As of the date of this report, sell-side volumes have resumed but not yet at the levels experienced prior to the pause in May 2024 which has created significant disruption in the Company’s sell-side business. The Company is actively working with its partners to achieve prior volume levels. However, there can be no assurance that the Company will be able to achieve prior volume levels with its partners or on the timing of achieving such volume levels. Additionally, the Company (1) incurred a net loss of $10.1 million for the six months ended June 30, 2025 including the impact of the sell-side disruption described above, (2) reported an accumulated deficit of $13.4 million as of June 30, 2025, (3) reported cash and cash equivalents of $1.6 million as of June 30, 2025, (4) has borrowed $3.7 million as of June 30, 2025 and the date of this report, under the Credit Agreement (as amended, the “Credit Agreement”), dated July 7, 2023, with East West Bank (“EWB”), as lender, which matured in July 2025, (5) was notified by Nasdaq on October 18, 2024 that it was not in compliance with Nasdaq's minimum stockholders' equity requirement and is currently subject to a delisting letter and a hearings and appeal process. These factors raise substantial doubt about the Company’s ability to continue as a going concern over the next twelve months.

Previous wording

The Company anticipates sources of liquidity to include cash on hand, cash flow from operations and cash generated from its sales under the Company's Equity Reserve Facility and has taken several actions to address liquidity concerns. These actions include (1) a plan to reduce expenses through a staff reduction, a pause on hiring and cost savings measures that were executed on July 1, 2024 with continuing cost saving impacts through March 31, 2025, (2) working with lenders to provide temporary various relief from debt covenants via amendments on October 15, 2024 and December 27, 2024 (see Note 3 — Long-Term Debt to our condensed consolidated financial statements) while rebuilding sell-side volumes, (3) putting in place a program to raise capital through an Equity Reserve Facility with stock sales continuing into 2025 (see Note 4 — Stockholders’ Deficit and Stock-Based Compensation to our condensed consolidated financial statements), and (4) a plan to achieve compliance with Nasdaq's minimum stockholders' equity requirements by raising additional funds in a registered or private offering. There can be no assurance that the Company’s actions will be successful or that additional financing will be available when needed or on acceptable terms.

Current wording

The Company anticipates sources of liquidity to include cash on hand, cash flow from operations, cash generated from its sales under the Company's Equity Reserve Facility and cash generated from other potential sales of equity and/or debt securities and has taken several actions to address liquidity concerns. These actions include (1) a plan to reduce expenses through a staff reduction, a pause on hiring and cost savings measures that were executed on July 1, 2024 with continuing cost saving impacts through June 30, 2025, (2) working with lenders to provide temporary various relief from debt covenants via amendments on October 15, 2024, December 27, 2024, July 17, 2025 and August 5, 2025 (see Note 3 — Long-Term Debt to our condensed consolidated financial statements) while rebuilding sell-side volumes, (3) putting in place a program to raise capital through an Equity Reserve Facility with stock sales continuing into 2025 (see Note 4 — Stockholders’ Deficit and Stock-Based Compensation to our condensed consolidated financial statements), and (4) a plan to achieve compliance with Nasdaq's minimum stockholders' equity requirements by raising additional funds in a registered or private offering. There can be no assurance that the Company’s actions will be successful or that additional financing will be available when needed or on acceptable terms.

Previous wording

The following table sets forth our cash flows for the three months ended March 31, 2025 and 2024 (in thousands):

Current wording

The following table sets forth our cash flows for the six months ended June 30, 2025 and 2024 (in thousands):

Previous wording

Our cash and cash equivalents at March 31, 2025 were held for working capital and general corporate purposes. The increase in cash and cash equivalents compared with December 31, 2024, primarily resulted from $3.1 million in cash flows provided by financing activities partially offset by $2.7 million in cash flows used in operating activities.

Current wording

Our cash and cash equivalents at June 30, 2025 were held for working capital and general corporate purposes. The increase in cash and cash equivalents compared with December 31, 2024, primarily resulted from $5.6 million in cash flows provided by financing activities partially offset by $5.4 million in cash flows used in operating activities.

Previous wording

For the three months ended March 31, 2025, net cash flows used in operating activities were $2.7 million and consisted of net loss of $5.9 million, offset by $2.9 million in adjustments for non-cash and non-operating items and $0.3 million of cash inflows from working capital. Adjustments for non-cash and non-operating items mainly consisted of depreciation and amortization expense of $2.4 million, stock-based compensation expense of $0.3 million and expenses for the equity reserve facility of $0.2 million. The $0.3 million increase in cash resulting from changes in working capital primarily consisted of a $0.6 million decrease in accounts receivable and a $0.3 million increase in accrued expenses such as payroll and payroll related expenses, partially offset by a $0.6 million decrease in accounts payable. The decrease in accounts payable and accounts receivable is mainly due to the continued impact from the May 2024 temporary disconnection by a significant customer as a result of a customer investigating a defamatory article / blog post against the Company.

Current wording

For the six months ended June 30, 2025, net cash flows used in operating activities were $5.4 million and consisted of net loss of $10.1 million, offset by $5.0 million in adjustments for non-cash and non-operating items and $0.3 million of cash outflows from working capital. Adjustments for non-cash and non-operating items mainly consisted of depreciation and amortization expense of $4.1 million, stock-based compensation expense of $0.7 million and expenses for the equity reserve facility of $0.2 million. The $0.3 million decrease in cash resulting from changes in working capital primarily consisted of a $1.5 million decrease in accounts payable and a $0.8 million increase in prepaid expense partially offset by a $1.1 million decrease in accounts receivable and a $1.0 million increase in accrued expenses such as payroll and payroll related expenses. The decrease in accounts payable and accounts receivable is mainly due to the continued impact from the May 2024 temporary disconnection by a significant customer as a result of the customer investigating a defamatory article / blog post against the Company.

Previous wording

For the three months ended March 31, 2024, net cash flows used in operating activities were $5.7 million and consisted of net loss of $3.8 million, offset by $1.1 million in adjustments for non-cash and non-operating items and $3.0 million of cash outflows from working capital. Adjustments for non-cash and non-operating items mainly consisted of depreciation and amortization expense of $0.8 million, stock-based compensation expense of $0.5 million and partially offset by deferred tax benefit of $0.2 million. The $3.0 million decrease in cash resulting from changes in working capital primarily consisted of a $18.1 million decrease in accounts payable and a $0.7 million decrease in accrued expenses partially offset by a $15.8 million decrease in accounts receivable. The decrease in accounts payable and accounts receivable is mainly due to the typical seasonal decrease in revenue in the first quarter compared to the fourth quarter.

Current wording

For the six months ended June 30, 2024, net cash flows used in operating activities were $10.1 million and consisted of net loss of $7.0 million, offset by $1.7 million in adjustments for non-cash and non-operating items and $4.9 million of cash outflows from working capital. Adjustments for non-cash and non-operating items mainly consisted of depreciation and amortization expense of $1.6 million and stock-based compensation expense of $0.7 million partially offset by a deferred tax benefit of $0.5 million. The $4.9 million decrease in cash resulting from changes in working capital primarily consisted of a $21.6 million decrease in accounts payable and a $1.2 million decrease in accrued expenses partially offset by a $17.7 million decrease in accounts receivable. The decrease in accounts payable and accounts receivable is mainly due to the typical seasonal decrease in revenue in the first half of the year compared to the fourth quarter.

Previous wording

Our investing activities to date have consisted primarily of purchases of software, office furniture and leasehold improvements. For the three months ended March 31, 2025 and 2024, net cash flows used in investing activities of less than $0.1 million were primarily related to office furniture and leasehold improvements.

Current wording

Our investing activities to date have consisted primarily of purchases of software, office furniture and leasehold improvements. For the six months ended June 30, 2025 and 2024, net cash flows used in investing activities of less than $0.1 million were primarily related to office furniture and leasehold improvements.

Previous wording

For the three months ended March 31, 2025, net cash provided by financing activities was $3.1 million mainly resulting from $3.3 million of proceeds from issuance of Class A Common Stock under the Equity Reserve Facility partially offset by $0.2 million for payments on deferred financing costs.

Current wording

For the six months ended June 30, 2025, net cash provided by financing activities was $5.6 million mainly resulting from $5.9 million of proceeds from issuance of Class A Common Stock under the Equity Reserve Facility partially offset by $0.2 million for payments of expenses for the Equity Reserve Facility and deferred financing costs.

Previous wording

For the three months ended March 31, 2024, net cash provided by financing activities was $3.9 million mainly resulting from $4.0 million of proceeds from line of credit.

Current wording

For the six months ended June 30, 2024, net cash provided by financing activities was $6.1 million mainly resulting from $6.7 million of proceeds from line of credit.

Previous wording

As of March 31, 2025, our principal contractual obligations expected to give rise to material cash requirements consist of the 2021 Credit Facility, the Credit Agreement and non-cancelable leases for our various facilities. We anticipate that the future minimum payments related to our current indebtedness over the next five years will be $3.7 million in 2025, $37.4 million in 2026, less than $0.1 million in each of 2027, 2028, and 2029, and $0.1 million thereafter, assuming we do not refinance our indebtedness or enter into a new credit facility. The leases will require minimum payments of $0.2 million in 2025, $0.3 million in 2026, $0.3 million in 2027, $0.2 million in 2028, $0.2 million in 2029, and less than $0.1 million thereafter. As of March 31, 2025, we had cash and cash equivalents of $1.8 million.

Current wording

As of June 30, 2025, our principal contractual obligations expected to give rise to material cash requirements consist of the 2021 Credit Facility, the Credit Agreement and non-cancelable leases for our various facilities. We anticipate that the future minimum payments related to our current indebtedness over the next five years will be $3.7 million in the remainder of 2025, $37.4 million in 2026, less than $0.1 million in each of 2027, 2028, and 2029, and $0.1 million thereafter, assuming we do not refinance our indebtedness or enter into a new credit facility. The leases will require minimum payments of $0.1 million in 2025, $0.3 million in 2026, $0.3 million in 2027, $0.2 million in 2028, $0.2 million in 2029, and less than $0.1 million thereafter. As of June 30, 2025, we had cash and cash equivalents of $1.6 million.

Previous wording

•Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, provision for income taxes, stock-based compensation, and certain one-time items such as acquisition transaction costs and costs for the Equity Reserve Line that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;

Current wording

•Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, provision for income taxes, stock-based compensation, and certain one-time items such as acquisition transaction costs and costs for the Equity Reserve Facility that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;