Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On May 20, 2022, Direct Digital Holdings, Inc. (the "Company") received a
deficiency letter (the "Nasdaq Letter") from the Listing Qualifications
Department of The Nasdaq Stock Market LLC ("Nasdaq"), notifying the Company that
it is not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires the
Company to maintain a minimum of $2,500,000 in stockholders' equity for
continued listing on The Nasdaq Capital Market (the "Stockholders' Equity
Requirement"), nor is it in compliance with either of the alternative listing
standards, market value of listed securities of at least $35 million or net
income of $500,000 from continuing operations in the most recently completed
fiscal year, or in two of the three most recently completed fiscal years. The
Company's failure to comply with the Stockholders' Equity Requirement was based
on the Company's filing of its Quarterly Report on Form 10-Q for the quarter
ended March 31, 2022, reporting the stockholders' equity of $1,797,864.
Pursuant to the Nasdaq Letter, the Company has 45 calendar days from the date of
the Nasdaq Letter to submit a plan to regain compliance and the Company intends
to submit such a plan during this period. If it accepts the plan, Nasdaq can
grant an extension of up to 180 calendar days from the date of the Nasdaq Letter
to evidence compliance. In the event the plan is not accepted by the Nasdaq
staff, or in the event the plan is accepted and the 180-day extension period
granted but the Company fails to regain compliance within such plan period, the
Company would have the right to a hearing before an independent panel. The
hearing request would stay any suspension or delisting action pending the
conclusion of the hearing process and the expiration of any additional extension
period granted by the panel following the hearing.
The Company intends to take all reasonable measures available to regain
compliance under the Nasdaq Listing Rules and remain listed on Nasdaq. However,
there can be no assurance that Nasdaq will grant the Company's request for an
extension or that the Company will ultimately regain compliance with all
applicable requirements for continued listing.
Neither the Nasdaq Letter nor the Company's noncompliance have an immediate
effect on the listing or trading of the Company's Class A common stock or common
stock purchase warrants, which will continue to trade on The Nasdaq Capital
Market under the symbols "DRCT" and "DRCTW," respectively.
Forward Looking Statements
This Current Report on Form 8-K 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 Direct Digital. We use words such as "could,"
"would," "may," "might," "will," "expect," "likely," "believe," "continue,"
"anticipate," "estimate," "intend," "plan," "prospect," "project" and other
similar expressions to identify forward-looking statements, but not all
forward-looking statements include these words. All statements contained in this
Current Report on Form 8-K 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, such as the
ongoing global COVID-19 pandemic; 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, on
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 SEC 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 or implied by 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.
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