|
Delaware
(State or other jurisdiction of
incorporation or organization) |
| |
7370
(Primary Standard Industrial
Classification Code Number) |
| |
83-0662116
(I.R.S. Employer
Identification Number) |
|
|
Phyllis Young, Esq.
Stephen E. Older, Esq. Rakesh Gopalan, Esq. McGuireWoods LLP 1251 Avenue of the Americas, 20th Floor New York, New York 10020 (212) 548-2100 |
| |
Ben A. Stacke, Esq.
Jonathan R. Zimmerman, Esq. Faegre Drinker Biddle & Reath LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 (612) 766-7000 |
|
|
Large accelerated filer
☐
|
| |
Accelerated filer
☐
|
|
|
Non-accelerated filer
☒
|
| |
Smaller reporting company
☒
Emerging growth company
☒
|
|
| | ||||||||
Title of Each Class of Securities
to be Registered |
| | |
Proposed Maximum
Aggregate Offering Price(1) |
| | |
Amount of
Registration Fee(7) |
|
Units consisting of: | | | |
$22,640,625
|
| | |
$2,098.79
|
|
(i) Class A common stock, par value $0.001 per share(2)(3)(4)
|
| | |
—
|
| | |
—
|
|
(ii) Warrants to purchase Class A common stock, par value $0.001 per share(4)
|
| | |
—
|
| | |
—
|
|
Class A common stock, par value $0.001 per share underlying warrants included in the Units(3)(5)
|
| | |
$22,640,625
|
| | |
$2,098.79
|
|
Representatives’ unit purchase option:
|
| | |
—
|
| | |
—
|
|
(i) Units underlying the Representatives’ unit purchase option(4)(6).
|
| | | | | | | | |
(ii) Class A common stock, par value $0.001 per share, included in the Units underlying Representatives’ unit purchase option and issuable upon exercise of additional Representatives’ unit purchase options issued in connection with over-allotment exercises(3)(4)
|
| | |
$1,358,438
|
| | |
$125.93
|
|
(iii) Warrants to purchase share of Class A common stock, par value $0.001 per share, included in the Units underlying Representatives’ unit purchase option and issuable upon exercise of additional Representatives’ unit purchase options issued in connection with over-allotment exercises (4)(6)
|
| | | | | | | | |
(iv) Class A common stock, par value $0.001 per share, issuable upon exercise of warrants included in the Units underlying Representatives’ unit purchase option and issuable upon exercise of additional Representatives’ unit purchase options issued in connection with over-allotment exercises(3)(6)
|
| | |
$1,358,438
|
| | |
$125.93
|
|
Total
|
| | |
$47,998,125
|
| | |
$4,449.44
|
|
| | |
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| | |
For the Three Months Ended
|
| ||||||||||||||||||||||||||||||||||||||||||
Revenue
|
| |
March 31,
2020 |
| |
June 30,
2020 |
| |
September 30,
2020 |
| |
December 31,
2020 |
| |
March 31,
2021 |
| |
June 30,
2021 |
| |
September 30,
2021 |
| | |||||||||||||||||||||||
DDH Historical | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Buy-side advertising
|
| | | $ | 1,444,533 | | | | | $ | 1,471,761 | | | | | $ | 1,461,414 | | | | | $ | 5,278,457 | | | | | $ | 4,828,047 | | | | | $ | 9,113,305 | | | | | $ | 6,033,883 | | | | ||
Sell-side advertising
|
| | | $ | 175,758 | | | | | $ | 537,832 | | | | | $ | 784,710 | | | | | $ | 1,323,054 | | | | | $ | 865,685 | | | | | $ | 2,068,588 | | | | | $ | 2,326,862 | | | | ||
Orange142 Historical
|
| | | $ | 5,264,746 | | | | | $ | 6,272,039 | | | | | $ | 6,401,296 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
Year Ended
December 31, 2020 |
| |
For the Nine Months Ended
September 30, 2020 |
| |
For the Nine Months Ended
September 30, 2021 |
| |||||||||||||||||||||||||||
| | |
As Reported
|
| |
Pro forma
for the acquisition of Orange142, LLC (unaudited) |
| |
As Reported
(unaudited) |
| |
Pro forma
for the acquisition of Orange142, LLC (unaudited) |
| |
As Reported
(unaudited) |
| |
Pro forma,
as adjusted for the Organizational Transactions (unaudited) |
| ||||||||||||||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Buy-side advertising
|
| | | $ | 9,656,165 | | | | | $ | 27,594,246 | | | | | $ | 4,377,708 | | | | | $ | 22,315,789 | | | | | $ | 19,975,235 | | | | | $ | 19,975,235 | | |
Sell-side advertising
|
| | | | 2,821,354 | | | | | | 2,821,354 | | | | | | 1,498,300 | | | | | | 1,498,300 | | | | | | 5,261,135 | | | | | | 5,261,135 | | |
Total revenues
|
| | | | 12,477,519 | | | | | | 30,415,600 | | | | | | 5,876,008 | | | | | | 23,814,089 | | | | | | 25,236,370 | | | | | | 25,236,370 | | |
Cost of revenues
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Buy-side advertising
|
| | | | 4,864,234 | | | | | | 10,131,697 | | | | | | 2,836,035 | | | | | | 8,103,498 | | | | | | 7,480,727 | | | | | | 7,480,727 | | |
Sell-side advertising
|
| | | | 2,440,975 | | | | | | 2,440,975 | | | | | | 1,350,083 | | | | | | 1,350,083 | | | | | | 4,348,756 | | | | | | 4,348,756 | | |
Total cost of revenues
|
| | | | 7,305,209 | | | | | | 12,572,672 | | | | | | 4,186,118 | | | | | | 9,453,581 | | | | | | 11,829,483 | | | | | | 11,829,483 | | |
Gross profit
|
| | | | 5,172,310 | | | | | | 17,842,928 | | | | | | 1,689,890 | | | | | | 14,360,508 | | | | | | 13,406,887 | | | | | | 13,406,887 | | |
Operating expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Compensation, taxes and
benefits |
| | | | 3,334,060 | | | | | | 7,095,086 | | | | | | 1,324,196 | | | | | | 5,085,222 | | | | | | 6,131,930 | | | | | | 6,131,930 | | |
General and administrative
|
| | | | 1,848,407 | | | | | | 4,791,311 | | | | | | 600,543 | | | | | | 3,543,447 | | | | | | 4,214,229 | | | | | | 4,214,229 | | |
Total operating expenses
|
| | | | 6,016,874 | | | | | | 11,886,397 | | | | | | 2,574,739 | | | | | | 8,628,669 | | | | | | 10,346,159 | | | | | | 10,346,159 | | |
(Loss) income from operations
|
| | | | (844,564) | | | | | | 5,956,531 | | | | | | (884,849) | | | | | | 5,731,839 | | | | | | 3,060,728 | | | | | | 3,060,728 | | |
Other (expense) income | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Other income
|
| | | | 134,776 | | | | | | 146,676 | | | | | | 134,761 | | | | | | 146,661 | | | | | | 19,186 | | | | | | 19,186 | | |
Forgiveness of Paycheck Protection
Program loan |
| | | | 277,100 | | | | | | 277,100 | | | | | | — | | | | | | — | | | | | | 10,000 | | | | | | 10,000 | | |
Gain from revaluation and settlement of seller notes and earnout liability
|
| | | | 401,677 | | | | | | 401,677 | | | | | | 401,677 | | | | | | 401,677 | | | | | | 21,232 | | | | | | 21,232 | | |
Loss on redemption of preferred units
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (590,689) | | |
Interest expense
|
| | | | (865,055) | | | | | | (2,937,006) | | | | | | (19,925) | | | | | | (2,229,103) | | | | | | (2,432,567) | | | | | | (2,432,567) | | |
Total other (expense) income
|
| | | | (51,502) | | | | | | (2,111,553) | | | | | | 516,513 | | | | | | (1,680,765) | | | | | | (2,382,149) | | | | | | (2,972,838) | | |
Tax expense
|
| | | | (12,124) | | | | | | (61,095) | | | | | | (12,154) | | | | | | (61,125) | | | | | | (54,878) | | | | | | (54,878) | | |
Net income (loss)
|
| | | $ | (908,190) | | | | | $ | 3,783,883 | | | | | $ | (380,490) | | | | | $ | 3,989,949 | | | | | $ | 623,701 | | | | | $ | 33,012 | | |
Net income (loss) per common unit/Class A common stock:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Basic and diluted
|
| | | $ | (30.32) | | | | | $ | 110.70 | | | | | $ | (13.32) | | | | | $ | 121.74 | | | | | $ | 18.25 | | | | | $ | nm | | |
Weighted-average common units/Class A common stock outstanding:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Basic | | | | | 29,954 | | | | | | 34,182 | | | | | | 28,566 | | | | | | 32,773 | | | | | | 34,182 | | | | | | 13,565,500 | | |
Diluted | | | | | 29,954 | | | | | | 34,182 | | | | | | 28,566 | | | | | | 32,773 | | | | | | 34,182 | | | | | | 15,753,000 | | |
| | | | | | | | |
As of
September 30, 2021 |
| |||||||||
| | |
December 31,
2020 (audited) |
| |
Actual
(unaudited) |
| |
Pro Forma
for the Organizational Transactions (unaudited) |
| |||||||||
ASSETS | | | | | | | | | | | | | | | |||||
CURRENT ASSETS | | | | | | | | | | | | | | | |||||
Cash and cash equivalents
|
| | | $ | 1,611,998 | | | | | $ | 2,603,152 | | | | | $ | 2,921,028 | | |
Accounts receivable, net
|
| | | | 4,679,376 | | | | | | 3,903,809 | | | | | | 3,903,809 | | |
Prepaid expenses and other current assets
|
| | | | 223,344 | | | | | | 727,075 | | | | | | 727,075 | | |
Total current assets
|
| | | | 6,514,718 | | | | | | 7,234,036 | | | | | | 7,551,912 | | |
Goodwill
|
| | | | 6,519,636 | | | | | | 6,519,636 | | | | | | 6,519,636 | | |
Intangible assets, net
|
| | | | 17,545,396 | | | | | | 16,080,032 | | | | | | 16,080,032 | | |
Deferred financing costs, net
|
| | | | 90,607 | | | | | | 51,775 | | | | | | 51,775 | | |
Other long-term assets
|
| | | | 25,118 | | | | | | 12,948 | | | | | | 12,948 | | |
Total assets
|
| | | $ | 30,695,475 | | | | | $ | 29,898,427 | | | | | $ | 30,216,303 | | |
LIABILITIES AND MEMBERS’ EQUITY/STOCKHOLDERS’ EQUITY
|
| | | | | | | | | | | | | | |||||
CURRENT LIABILITIES | | | | | | | | | | | | | | | |||||
Accounts payable
|
| | | $ | 3,263,326 | | | | | $ | 3,110,281 | | | | | $ | 3,110,281 | | |
Accrued liabilities
|
| | | | 1,392,520 | | | | | | 1,510,563 | | | | | | 1,510,563 | | |
Notes payable, current portion
|
| | | | 1,206,750 | | | | | | 2,611,685 | | | | | | 2,611,685 | | |
Deferred revenues
|
| | | | 308,682 | | | | | | 684,303 | | | | | | 684,303 | | |
Related party payables
|
| | | | 70,801 | | | | | | 69,837 | | | | | | 69,837 | | |
Seller notes payable
|
| | | | 315,509 | | | | | | — | | | | | | — | | |
Seller earnout payable
|
| | | | 74,909 | | | | | | — | | | | | | — | | |
Total current liabilities
|
| | | | 6,632,497 | | | | | | 7,986,669 | | | | | | 7,986,669 | | |
Notes payable, net of short-term portion and
$501,796 and $286,741 of deferred financing, respectively, cost as of December 31, 2020 and September 30, 2021 |
| | | | 11,213,697 | | | | | | 9,086,328 | | | | | | 9,086,328 | | |
Mandatorily redeemable non-participating
preferred units |
| | | | 9,913,940 | | | | | | 9,913,940 | | | | | | 3,458,378 | | |
Line of credit
|
| | | | 407,051 | | | | | | 407,051 | | | | | | 407,051 | | |
Paycheck Protection Program loan
|
| | | | 10,000 | | | | | | 287,143 | | | | | | 287,143 | | |
Economic Injury Disaster Loan
|
| | | | 150,000 | | | | | | 150,000 | | | | | | 150,000 | | |
Total liabilities
|
| | | | 28,327,185 | | | | | | 27,831,131 | | | | | | 21,375,569 | | |
MEMBERS’/STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | |||||
Units, 1,000,000 units authorized as of December 31, 2020 and
September 30, 2021; 34,182 units issued and outstanding as of December 31, 2020 and September 30, 2021 |
| | | | 4,294,241 | | | | | | 4,294,241 | | | | | | — | | |
Accumulated deficit
|
| | | | (1,925,951) | | | | | | (2,226,945) | | | | | | (2,817,634) | | |
| | | | | | | | |
As of
September 30, 2021 |
| |||||||||
| | |
December 31,
2020 (audited) |
| |
Actual
(unaudited) |
| |
Pro Forma
for the Organizational Transactions (unaudited) |
| |||||||||
Class A common stock, $0.001 par value per share; no shares authorized, issued or outstanding as of December 31, 2020 and September 30, 2021, actual; 160,000,000 shares authorized, 2,187,500 shares issued and outstanding as of September 30, 2021, pro forma
|
| | | | — | | | | | | — | | | | | | 2,188 | | |
Class B common stock, $0.001 par value per share; no shares authorized, issued or outstanding as of December 31, 2020 and September 30, 2021, actual; 20,000,000 shares authorized, 11,378,000 shares issued and outstanding as of September 30, 2021, pro forma
|
| | | | — | | | | | | — | | | | | | 11,378 | | |
Additional paid-in capital
|
| | | | | | | | | | — | | | | | | 11,644,802 | | |
Total members’/stockholders’ equity
|
| | | | 2,368,290 | | | | | | 2,067,296 | | | | | | 8,840,734 | | |
Total liabilities and members’/stockholders’ equity
|
| | | $ | 30,695,475 | | | | | $ | 29,898,427 | | | | | $ | 30,216,303 | | |
|
| | |
For the Nine Months Ended
September 30, |
| |
For the Year Ended
December 31, |
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Net income (loss)
|
| | | $ | 623,701 | | | | | $ | (380,490) | | | | | $ | (908,190) | | | | | $ | (883,768) | | |
Add back (deduct): | | | | | | | | | | | | | | | | | | | | | | | | | |
Amortization of intangible assets
|
| | | | 1,465,364 | | | | | | — | | | | | | 488,454 | | | | | | — | | |
Acquisition transaction costs
|
| | | | — | | | | | | 650,000 | | | | | | 834,407 | | | | | | — | | |
Interest expense
|
| | | | 2,432,567 | | | | | | 19,925 | | | | | | 865,055 | | | | | | 57,105 | | |
Tax expense
|
| | | | 54,878 | | | | | | 12,154 | | | | | | 12,124 | | | | | | 39,137 | | |
Forgiveness of Paycheck Protection Program loan
|
| | | | (10,000) | | | | | | — | | | | | | (277,100) | | | | | | — | | |
Gain from revaluation and settlement of seller notes and earnout liability
|
| | | | (21,232) | | | | | | (401,677) | | | | | | (401,677) | | | | | | (79,091) | | |
Adjusted EBITDA
|
| | | $ | 4,545,278 | | | | | $ | (100,088) | | | | | $ | 613,073 | | | | | $ | (866,617) | | |
| | |
As of September 30, 2021
|
| |||||||||
| | |
Actual
(unaudited) |
| |
Pro Forma for the
Organizational Transactions and the offering (unaudited)(1) |
| ||||||
Cash and cash equivalents
|
| | | $ | 2,603,152 | | | | | $ | 2,921,028 | | |
Long-term debt
|
| | | | 19,844,462 | | | | | | 13,388,900 | | |
Members’/stockholders’ (deficit) equity: | | | | | | | | | | | | | |
Members’ (deficit) equity attributable to Direct Digital Holdings, LLC
|
| | | | (2,226,945) | | | | | | (2,817,634) | | |
Units, 1,000,000 units authorized; 34,182 issued and outstanding
|
| | | | 4,294,241 | | | | | | — | | |
Class A common stock, $0.001 par value per share; no shares authorized, issued and outstanding, actual; and 160,000,000 shares authorized, 2,187,500 shares issued and outstanding, pro forma as adjusted
|
| | | | — | | | | | | 2,188 | | |
Class B common stock, $0.001 par value per share; no shares authorized, issued and outstanding, actual; and 20,000,000 shares authorized, 11,378,000 shares issued and outstanding, pro forma as
adjusted |
| | | | — | | | | | | 11,378 | | |
Additional paid-in capital
|
| | | | — | | | | | | 11,644,802 | | |
Total members’/stockholders’ equity
|
| | | | 2,067,296 | | | | | | 8,840,734 | | |
Total capitalization
|
| | | $ | 21,911,758 | | | | | $ | 22,229,634 | | |
|
Assumed initial public offering price per share (attributing no value to the warrants)
|
| | | | | | | | | $ | 8.00 | | |
|
Pro forma net tangible book value (deficit) per share as of September 30, 2021(1)(2)
|
| | | $ | (1.80) | | | |
|
| |||
|
Increase (decrease) in pro forma as adjusted net tangible book value (deficit) per share attributable to new investors purchasing shares in this offering
|
| | | $ | 0.79 | | | | | | | | |
|
Pro forma as adjusted net tangible book value (deficit) per share after giving effect to this offering
|
| | | | | | | | | $ | (1.01) | | |
|
Dilution per share to new investors in this offering
|
| | | | | | | | | $ | 9.01 | | |
| Numerator: | | | | |
|
Book value of tangible assets
|
| |
$7.3 million
|
|
|
Less: total liabilities
|
| |
(27.8) million
|
|
|
Pro forma net tangible book value (deficit)(a)
|
| |
$(20.5) million
|
|
| Denominator: | | | | |
|
Shares of Class A common stock outstanding immediately prior to this offering and after the Assumed Redemption
|
| |
11,378,000
|
|
|
Pro forma net tangible book value (deficit) per share
|
| |
$(1.80)
|
|
| Numerator: | | | | |
|
Book value of tangible assets
|
| |
$7.6 million
|
|
|
Less: total liabilities
|
| |
(21.4) million
|
|
|
Pro forma net tangible book value (deficit)
|
| |
$(13.8) million
|
|
| Denominator: | | | | |
|
Shares of Class A common stock outstanding immediately after this offering and after the Assumed Redemption
|
| |
13,565,500
|
|
|
Pro forma net tangible book value (deficit) per share
|
| |
$(1.01)
|
|
| | |
Shares of Class A
Common Stock Purchased |
| |
Total Consideration
|
| |
Average Price
Per Unit |
| |||||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
Continuing LLC Owner
|
| | | | — | | | | | | —% | | | | | $ | — | | | | | | —% | | | | | $ | — | | |
New investors in this offering
|
| | | | 2,187,500 | | | | | | 100 | | | | | | 17,500,000 | | | | | | 100 | | | | | | 8.00 | | |
Total
|
| | | | 2,187,500 | | | | | | 100% | | | | | $ | 17,500,000 | | | | | | 100% | | | | | $ | 8.00 | | |
| | |
September 30, 2020
|
| |
December 31, 2020
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
Direct Digital
Holdings, LLC (unaudited) |
| |
Orange142, LLC
(unaudited) |
| |
Pro forma
adjustments for the Orange142 acquisition (unaudited) |
| |
Notes
|
| |
Pro Forma, as
adjusted, for the Orange142 acquisition and Organizational Transactions (unaudited) |
| |
Direct Digital
Holdings, LLC |
| |
Orange142, LLC
|
| |
Pro forma
adjustments for the Orange142 acquisition (unaudited) |
| |
Notes
|
| |
Pro Forma, as
adjusted, for the Orange142 acquisition and Organizational Transactions (unaudited) |
| |||||||||||||||||||||||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Buy-side advertising
|
| | | $ | 4,377,708 | | | | | $ | 17,938,081 | | | | | $ | — | | | | | | | | | |
$22,315,789
|
| | | $ | 9,656,165 | | | | | $ | 17,938,081 | | | | | $ | — | | | | | | | | | | | $ | 27,594,246 | | |
Sell-side advertising
|
| | | | 1,498,300 | | | | | | — | | | | | | — | | | | | | | | | |
1,498,300
|
| | | | 2,821,354 | | | | | | — | | | | | | — | | | | | | | | | | | | 2,821,354 | | |
Total revenues
|
| | | | 5,876,008 | | | | | | 17,938,081 | | | | | | — | | | | | | | | | |
23,814,089
|
| | | | 12,477,519 | | | | | | 17,938,081 | | | | | | — | | | | | | | | | | | | 30,415,600 | | |
Cost of revenues | | | | | | | | | | | | | | | | | <