# EDGAR Filing Document

**Accession Number:** 0001880613
**File Stem:** 0001104659-23-035874
**Filing Date:** 2023-3
**Character Count:** 33365
**Document Hash:** b9154711c1fb1e3fed075b46f13bb6cb
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-035874.hdr.sgml**: 20230323

**ACCESSION NUMBER**: 0001104659-23-035874

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230323

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230323

**DATE AS OF CHANGE**: 20230323

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Direct Digital Holdings, Inc.
- **CENTRAL INDEX KEY:** 0001880613
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-ADVERTISING [7310]
- **IRS NUMBER:** 872306185
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41261
- **FILM NUMBER:** 23754648

**BUSINESS ADDRESS:**
- **STREET 1:** 1177 WEST LOOP SOUTH
- **STREET 2:** SUITE 1310
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77027
- **BUSINESS PHONE:** 832-402-1051

**MAIL ADDRESS:**
- **STREET 1:** 1177 WEST LOOP SOUTH
- **STREET 2:** SUITE 1310
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77027

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K**

**CURRENT REPORT**

**PURSUANT TO SECTION 13 OR 15(D)**

**OF THE SECURITIES EXCHANGE ACT OF 1934**

**Date of Report (Date of earliest event reported): March 23, 2023**

**Direct Digital Holdings, Inc.**

**(Exact name of registrant as specified in its charter)**

---

| | | |
|:---|:---|:---|
| **Delaware** | **001-41261** | **83-0662116** |
| **(State or other jurisdiction<br> of incorporation)** | **(Commission<br> File Number)** | **(IRS Employer<br> Identification No.)** |

---

---

| | |
|:---|:---|
| **1177 West Loop South, Suite 1310 <br> Houston, Texas** | **77027** |
| **(Address of principal executive offices)** | **(Zip Code)** |

---

**Registrant's telephone number, including area code: (832) 402-1051**

**Not Applicable**

**(Former name or former address, if changed since last report)**

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

---

| |
|:---|
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |

---

Securities registered pursuant to Section 12(b) of the Exchange Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading<br> Symbol(s)** | **Name of each exchange<br> on which registered** |
| **Class A common stock, par value $0.001 per share** | **DRCT** | **The Nasdaq Stock Market LLC** |
| **Warrants to purchase Class A common stock** | **DRCTW** | **The Nasdaq Stock Market LLC** |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (the "Exchange Act") (§240.12b-2 of this chapter).

Emerging growth company ⌧

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

---

| | |
|:---|:---|
| **Item 2.02** | **Results of Operations and Financial Condition.** |

---

On March 23, 2023, Direct Digital Holdings, Inc. (the "Company") issued a press release announcing its financial results for the three and twelve months ended December 31, 2022. A copy of the press release is furnished herewith as Exhibit 99.1 to this report and is incorporated herein by reference.

The information provided in Item 2.02 of this report, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference.

---

| | |
|:---|:---|
| **Item 9.01** | **Financial Statements and Exhibits.** |
|  | (d) Exhibits |

---

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| [99.1](tm2310270d1_ex99-1.htm) | [Press Release, dated March 23, 2023.](tm2310270d1_ex99-1.htm) |
| 104 | Cover Page Interactive Data File (embedded within Inline XBRL document) |

---

**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | |
|:---|:---|
| **March 23, 2023**<br> (Date) | **Direct Digital Holdings, Inc.** <br> (Registrant) |
|  | /s/ Susan Echard |
|  | Susan Echard |
|  | *Chief Financial Officer and Corporate Secretary* |

---

## Exhibit 99.1

**Exhibit 99.1**

![](tm2310270d1_ex99-1img01.jpg)

**Direct Digital Holdings Reports Fourth Quarter<br> & Full-Year 2022 Financial Results** 

***Full-Year 2022 Revenue Up 131% Year-Over-Year to $88.0 Million***

 ****

***Fourth Quarter 2022 Revenue Up 128% to $29.4 Million***

**Houston, March 23, 2023** -- Direct Digital Holdings, Inc. (Nasdaq: DRCT) ("Direct Digital Holdings" or the "Company"), a leading advertising and marketing technology platform operating through its companies Colossus Media, LLC ("Colossus SSP"), Huddled Masses LLC ("Huddled Masses") and Orange142, LLC ("Orange142"), today announced financial results for the fourth quarter and fiscal year ended December 31, 2022.

Mark Walker, Chairman and Chief Executive Officer, commented, "We are pleased to report that 2022, our first year as a public company, saw robust financial performance, significant operational expansion and continued gains in market share for Direct Digital Holdings. Both our quarterly and full-year results capitalized on brands and businesses moving dollars away from less efficient traditional advertising outlets towards digital media. We are expecting strong double-digit percentage revenue growth in FY 2023 across both our sell- and buy-side business segments as we further drive customer adoption of our digital advertising solutions."

Keith Smith, President, added, "Our fourth quarter and full-year 2022 performance, particularly during a difficult macroeconomic environment, is a testament to our market-leading approach working with middle market and multicultural audiences. Looking ahead, we are excited to continue scaling across these fast-growing and underrepresented communities from a position of financial strength, which we expect will give us a significant competitive advantage for sustainable, long-term growth."

**<u>Fourth Quarter 2022 Financial Highlights:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Revenue was $29.4 million in the fourth quarter of
 2022, an increase of $16.5 million, or 128% over the $12.9 million in the same period of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Sell-side advertising segment revenue grew to $22.3
 million and contributed $15.6 million of the increase, or 231% growth over the $6.7 million of sell-side revenue in the same period
 of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Buy-side advertising segment revenue grew to $7.1
 million and contributed $0.9 million of the increase, or 15% growth over the $6.2 million of buy-side revenue in the same period
 of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Operating income was $1.2 million for the fourth quarter
 of 2022 compared to $1.3 million in the same period of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Net income was $0.2 million in the fourth quarter
 of 2022, compared to a net loss of $2.1 million in the same period of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Adjusted EBITDA<sup>(1)</sup> was $1.8 million in
 the fourth quarter 2022, compared to $1.8 million in the same period of 2021.

**<u>Fiscal Year 2022 Financial Highlights:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Revenue in fiscal year 2022 was $88.0 million, an
 increase of $49.9 million, or 131%, over the $38.1 million in fiscal year 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Sell-side advertising segment ended the year at $58.7
 million in revenue and contributed $46.7 million of the increase, or 389% growth over the $12.0 million of sell-side revenue in fiscal
 year 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ Buy-side advertising segment ended the year at $29.3
 million in revenue and contributed $3.2 million of the increase, or 12% growth over the $26.1 million of buy-side revenue in fiscal
 year 2021.

![](tm2310270d1_ex99-1img01.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Operating income increased $2.3 million, or 52%, to
 $6.7 million for 2022 compared to operating income of $4.4 million for 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Operating income for the buy-side and sell-side advertising
 segments combined totaled $14.0 million, an increase of $7.1 million, or 102%, compared to $6.9 million for 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Net income for 2022 was $2.9 million, compared to
 a net loss of $1.5 million in 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Adjusted EBITDA<sup>(1)</sup> for 2022 was $8.8 million,
 compared to $6.4 million for 2021.

---

| |
|:---|
| Cash and accounts receivable balances as of December 31, 2022 were $29.1 million compared to $12.6 million as of December 31, 2021. |
| As previously disclosed, on January 9, 2023, the Company entered into a Loan and Security Agreement with Silicon Valley Bank which provides for a revolving credit facility (the "Credit Facility"). As the Company had not yet drawn any amounts under the Credit Facility, the Company issued a notice of termination of the Loan and Security Agreement and is in the process of terminating the Credit Facility. The Company has received a consent to terminate the Credit Facility and a waiver of the terms relating to the Credit Facility under its Term Loan and Security Agreement, dated as of December 3, 2021, with Lafayette Square Loan Servicing, LLC. |
| Based on our expectations of cash flows from operations and the available cash held, we believe that we will have sufficient cash resources to finance our operations and service any debt obligations until at least the end of fiscal year 2023. |

---

**<u>Business Highlights</u>**

&nbsp;&nbsp;&nbsp;&nbsp;· For
 the fourth quarter ended December 31, 2022, Direct Digital Holdings processed approximately
 132 billion monthly impressions through its sell-side advertising segment, an increase of
 81% over the same period of 2021, with over 833 billion bid requests for the quarter.

&nbsp;&nbsp;&nbsp;&nbsp;· In
 addition, the Company's sell-side advertising platforms received over 17 billion bid
 responses in the fourth quarter of 2022, an increase of over 25% over the same period in
 2021, through 170,000 buyers for the quarter, which equates to a 109% increase over the same
 period in 2021.

&nbsp;&nbsp;&nbsp;&nbsp;· The
 Company's buy-side advertising segment served approximately 218 customers in the fourth
 quarter of 2022, an increase of 7% compared to the same period of 2021.

**<u>Financial Outlook</u>**

Assuming the U.S. economy does not experience any major economic conditions that deteriorate or otherwise significantly reduce advertiser demand, we estimate the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· For fiscal year 2023, we expect revenue to be in the
 range of $118 million to $122 million, or 36% year-over-year growth at the mid-point.

"As we enter into our second year as a public company, we remain disciplined in our strategic organic growth initiatives, continue to focus on increasing EBITDA and aim to provide maximum value for our shareholders," commented Susan Echard, Chief Financial Officer.

![](tm2310270d1_ex99-1img01.jpg)

**<u>Conference Call and Webcast Details</u>**

Direct Digital will host a conference call on Thursday, March 23, 2023 at 5:00 p.m. Eastern Time to discuss the Company's fourth quarter and full-year financial results. The live webcast and replay can be accessed at **https://ir.directdigitalholdings.com/**. Please access the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. For those who cannot access the webcast, a replay will be available at https://ir.directdigitalholdings.com/ for a period of twelve months.

**<u>Footnote</u>**

<u><sup>(1)</sup></u> "Adjusted EBITDA" is a non-GAAP financial measure. The section titled "Non-GAAP Financial Measures" below describes our usage of non-GAAP financial measures and provides reconciliations between historical GAAP and non-GAAP information contained in this press release.

**<u>Forward Looking Statements</u>**

This press release may contain forward-looking statements within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and which are subject to certain risks, trends and uncertainties.

As used below, "we," "us," and "our" refer to the Company. We use words such as "could," "would," "may," "might," "will," "expect," "likely," "believe," "continue," "anticipate," "estimate," "intend," "plan," "project" and other similar expressions to identify forward-looking statements, but not all forward-looking statements include these words. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements.

All of our forward-looking statements involve estimates and uncertainties that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Our forward-looking statements are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance expressed in or implied by the forward-looking statements, including, but not limited to: our dependence on the overall demand for advertising, which could be influenced by economic downturns; any slow-down or unanticipated development in the market for programmatic advertising campaigns; the effects of health epidemics; operational and performance issues with our platform, whether real or perceived, including a failure to respond to technological changes or to upgrade our technology systems; any significant inadvertent disclosure or breach of confidential and/or personal information we hold, or of the security of our or our customers', suppliers' or other partners' computer systems; any unavailability or non-performance of the non-proprietary technology, software, products and services that we use; unfavorable publicity and negative public perception about our industry, particularly concerns regarding data privacy and security relating to our industry's technology and practices, and any perceived failure to comply with laws and industry self-regulation; restrictions on the use of third-party "cookies," mobile device IDs or other tracking technologies, which could diminish our platform's effectiveness; any inability to compete in our intensely competitive market; any significant fluctuations caused by our high customer concentration; our limited operating history, which could result in our past results not being indicative of future operating performance; any violation of legal and regulatory requirements or any misconduct by our employees, subcontractors, agents or business partners; any strain on our resources, diversion of our management's attention or impact on our ability to attract and retain qualified board members as a result of being a public company; our dependence, as a holding company, of receiving distributions from Direct Digital Holdings, LLC to pay our taxes, expenses and dividends; and other factors and assumptions discussed in the "Risk Factors," "Management's Discussion and Analysis of Financial Conditions and Results of Operations" and other sections of our filings with the Securities and Exchange Commission that we make from time to time. Should one or more of these risks or uncertainties materialize or should any of these assumptions prove to be incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this Current Report on Form 8-K to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

**<u>About Direct Digital Holdings</u>**

Direct Digital Holdings (Nasdaq: DRCT), owner of operating companies Colossus SSP, Huddled Masses, and Orange 142, brings state-of-the-art sell- and buy-side advertising platforms together under one umbrella company. Direct Digital Holdings' sell-side platform, Colossus SSP, offers advertisers of all sizes extensive reach within general market and multicultural media properties. The company's subsidiaries Huddled Masses and Orange142 deliver significant ROI for middle market advertisers by providing data-optimized programmatic solutions at scale for businesses in sectors that range from energy to healthcare to travel to financial services. Direct Digital Holdings' sell- and buy-side solutions manage approximately 90,000 clients monthly, generating over 100 billion impressions per month across display, CTV, in-app and other media channels. Direct Digital Holdings is the ninth black-owned company to go public in the U.S and was named a top minority-owned business by The Houston Business Journal.

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **DECEMBER 31,** | **DECEMBER 31,** |
|  | **2022** | **2021** |
| **ASSETS** |  |  |
| CURRENT ASSETS |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $4047453 | $4684431 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 25034728 | 7871181 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 883322 | 1225447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 29965503 | 13781059 |
| Property, equipment and software, net | 673218 |  |
| Goodwill | 6519636 | 6519636 |
| Intangible assets, net | 13637759 | 15591578 |
| Deferred tax asset, net | 5164776 |  |
| Deferred financing costs, net |  | 96152 |
| Operating lease right-of-use assets | 798774 |  |
| Other long-term assets | 46987 | 11508 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $56806653 | $35999933 |
| **LIABILITIES AND MEMBERS' EQUITY** |  |  |
| CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $17695404 | $6710015 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities | 4777764 | 1044907 |
| &nbsp;&nbsp;&nbsp;Notes payable, current portion | 655000 | 550000 |
| &nbsp;&nbsp;&nbsp;Operating lease liability, current portion | 91989 |  |
| &nbsp;&nbsp;&nbsp;Deferred revenues | 546710 | 1348093 |
| &nbsp;&nbsp;&nbsp;Related party payables | 1003841 | 70801 |
| &nbsp;&nbsp;&nbsp;Income taxes payable | 102278 |  |
| &nbsp;&nbsp;&nbsp;Current portion of liability related to tax receivable agreement | 182571 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 25055557 | 9723816 |
| &nbsp;&nbsp;&nbsp;Notes payable, net of short-term portion and $2,250,171 and $2,091,732 deferred financing cost, respectively | 22913589 | 19358268 |
| Liability related to tax receivable agreement, net of current portion | 4149619 |  |
| Operating lease liabilities, net of current portion | 745340 |  |
| Mandatorily redeemable non-participating preferred units |  | 6455562 |
| Line of credit |  | 400000 |
| Paycheck Protection Program loan |  | 287143 |
| Economic Injury Disaster Loan | 150000 | 150000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 53014105 | 36374789 |
| MEMBERS' EQUITY (DEFICIT) |  |  |
| Units, 1,000,000 units authorized at December 31, 2021, 34,182 units issued and outstanding as of December 31, 2021 |  | 4294241 |
| Class A common stock, $0.001 par value per share, 160,000,000 shares authorized, 3,252,764 shares issued and outstanding as of December 31, 2022 | 3253 |  |
| Class B common stock, $0.001 par value per share, 20,000,000 shares authorized 11,278,000 shares issued and outstanding as of December 31, 2022 | 11278 |  |
| Additional paid-in capital | 8224012 |  |
| Accumulated deficit | (4445995) | (4669097) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total members' equity (deficit) | 3792548 | (374856) |
| Total liabilities and members' equity (deficit) | $56806653 | $35999933 |

---

![](tm2310270d1_ex99-1img01.jpg)

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br> December 31, <br> (unaudited)** | **Three Months Ended<br> December 31, <br> (unaudited)** | **Year Ended <br> December 31,** | **Year Ended <br> December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| Revenues |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Buy-side advertising | $7065731 | $6152552 | $29348775 | $26127787 |
| &nbsp;&nbsp;&nbsp;Sell-side advertising | 22357596 | 6747940 | 58691572 | 12009075 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 29423327 | 12900492 | 88040347 | 38136862 |
| Cost of revenues |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Buy-side advertising | 2743560 | 2446568 | 10438547 | 9927295 |
| &nbsp;&nbsp;&nbsp;Sell-side advertising | 19254440 | 5431686 | 49599110 | 9780442 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of revenues | 21998000 | 7878254 | 60037657 | 19707737 |
| Gross profit | 7425327 | 5022238 | 28002690 | 18429125 |
| Operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Compensation, taxes and benefits | 4228620 | 2387488 | 14124266 | 8519418 |
| &nbsp;&nbsp;&nbsp;General and administrative | 2030996 | 1310878 | 7218871 | 5525107 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 6259616 | 3698366 | 21343137 | 14044525 |
| Income from operations | 1165711 | 1323872 | 6659553 | 4384600 |
| Other (expense) income | (960532) | (3446022) | (3485739) | (5828171) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax expense | 39324 | 8648 | 254436 | 63526 |
| Net income (loss) | $165855 | $(2130798) | $2919378 | $(1507097) |
| Net income (loss) per common unit: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $.01 | $(62.34) | $0.17 | $(44.09) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $.01 | $(62.34) | $0.17 | $(44.09) |
| Weighted-average common units outstanding: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | 14538409 | 34182 | 16896360 | 34182 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | 14567669 | 34182 | 16896360 | 34182 |

---

![](tm2310270d1_ex99-1img01.jpg)

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| **Cash Flows Provided By (Used In) Operating Activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) | $2919378 | $(1507097) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred financing costs | 598018 | 356442 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangible assets | 1953818 | 1953818 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on early extinguishment of debt |  | 2663148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of right-of-use asset | 136706 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of capitalized software | 31769 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation of property and equipment | 2449 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 153778 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | 105433 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment on tax receivable agreement | (114538) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forgiveness of Paycheck Protection Program loan | (287143) | (10000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paid-in-kind interest |  | 269260 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain from revaluation and settlement of earnout liability |  | (31443) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on redemption of non-participating preferred units | 590689 | 41622 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense | 16664 | 91048 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (17180211) | (3282853) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 306649 | (1005159) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 10965910 | 3446689 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities | 2797355 | (273735) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable | 102278 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability | (98151) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenues | (801383) | 1039411 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Related party payable | (70801) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 2128667 | 3751151 |
| **Cash Flows Used In Investing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for capitalized software and property and equipment | (687957) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (687957) |  |
| Cash Flows Provided By (Used In) Financing Activities: |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from note payable | 4260000 | 22000000 |
| &nbsp;&nbsp;&nbsp;Payments of notes payable | (576250) | (15672912) |
| &nbsp;&nbsp;&nbsp;Payments of litigation settlement | (64500) |  |
| &nbsp;&nbsp;&nbsp;Proceeds from lines of credit |  | 400000 |
| &nbsp;&nbsp;&nbsp;Payments on lines of credit | (400000) | (407051) |
| &nbsp;&nbsp;&nbsp;Payment of deferred financing costs | (525295) | (2190874) |
| &nbsp;&nbsp;&nbsp;Proceeds from Paycheck Protection Program loan |  | 287143 |
| &nbsp;&nbsp;&nbsp;Proceeds from Issuance of Class A common stock, net of transaction costs | 11167043 |  |
| &nbsp;&nbsp;&nbsp;Redemption of common units | (7200000) |  |
| &nbsp;&nbsp;&nbsp;Redemption of non-participating preferred units | (7046251) | (3500000) |
| &nbsp;&nbsp;&nbsp;Payments on seller notes and earnouts payable |  | (358975) |
| &nbsp;&nbsp;&nbsp;Distributions to members | (1692435) | (1236049) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities | (2077688) | (678718) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net (decrease) increase in cash and cash equivalents | (636978) | 3072433 |
| Cash and cash equivalents, beginning of the period | 4684431 | 1611998 |
| Cash and cash equivalents, end of the year | $4047453 | $4684431 |

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![](tm2310270d1_ex99-1img01.jpg)

**NON-GAAP FINANCIAL MEASURES**

In addition to our results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), including, in particular operating income, net cash provided by operating activities, and net income, we believe that earnings before interest, taxes, depreciation and amortization ("EBITDA"), as adjusted for stock compensation expense, forgiveness of Paycheck Protection Program loans, gain from revaluation and settlement of seller notes and earnout liability, loss on early extinguishment of debt, and loss on early redemption of non-participating preferred units ("Adjusted EBITDA"), a non-GAAP financial measure, is useful in evaluating our operating performance. The most directly comparable GAAP measure to Adjusted EBITDA is net income (loss).

In addition to operating income and net income, we use Adjusted EBITDA as a measure of operational efficiency. We believe that this non-GAAP financial measure is useful to investors for period-to-period comparisons of our business and in understanding and evaluating our operating results for the following reasons:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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, and certain one-time items such as acquisition transaction costs and gains from settlements
 or loan forgiveness that can vary substantially from company to company depending upon their financing, capital structures and the
 method by which assets were acquired;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our management uses Adjusted EBITDA in conjunction
 with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of operating
 performance and the effectiveness of our business strategies and in communications with our board of directors concerning our financial
 performance; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted EBITDA provides consistency and comparability
 with our past financial performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with
 other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Our use of this non-GAAP financial measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. The following table presents a reconciliation of Adjusted EBITDA to net income (loss) for each of the periods presented:

![](tm2310270d1_ex99-1img01.jpg)

**NON-GAAP FINANCIAL METRICS**

**(unaudited)**

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| Net income (loss) | $165855 | $(2130798) | $2919378 | $(1507097) |
| Add back (deduct): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Amortization of intangible assets | 488454 | 488454 | 1953818 | 1953818 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization of property and equipment | 34218 |  | 34218 |  |
| &nbsp;&nbsp;&nbsp;Stock compensation expense | 68340 |  | 153780 |  |
| &nbsp;&nbsp;&nbsp;Loss on early extinguishment of debt |  | 2663148 |  | 2663148 |
| &nbsp;&nbsp;&nbsp;Interest expense | 960969 | 751463 | 3230612 | 3184029 |
| &nbsp;&nbsp;&nbsp;Forgiveness of Paycheck Protection Program loan |  |  | (287143) | (10000) |
| &nbsp;&nbsp;&nbsp;Tax expense | 39324 | 8648 | 254436 | 63526 |
| &nbsp;&nbsp;&nbsp;Gain from revaluation and settlement of seller notes and earnout liability |  |  |  | (31443) |
| &nbsp;&nbsp;&nbsp;Loss on early redemption of non-participating Preferred units |  | 41622 | 590689 | 41622 |
| Adjusted EBITDA | $1757160 | $1822537 | $8849788 | $6357603 |

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**Contacts:** 

**Investors:**

Brett Milotte, ICR

Brett.Milotte@icrinc.com