Form 8-K - Current report

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): October 19, 2023

Direct Digital Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware		001-41261		87-2306185
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

1177 West Loop South, Suite 1310 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 Symbol(s)	Name of each exchange 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 x

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 1.01

Entry into a Material Definitive Agreement.

As previously reported, Direct Digital Holdings, Inc.’s (the “Company”) offer to each holder of its outstanding warrants (the “Warrants”) to purchase shares of its Class A common stock, par value $0.0001 per share, to purchase any and all outstanding Warrants for $1.20 in cash per Warrant, without interest (the “Offer”), expired one minute after 11:59 P.M., Eastern Time, on September 28, 2023 (the “Expiration Date”), in accordance with its terms. In connection with the Offer, the Company also solicited consents from holders of outstanding Warrants to amend that certain Warrant Agency Agreement, dated as of February 15, 2022, by and between the Company and Equiniti Trust Company, LLC (formerly known as American Stock Transfer and Trust Company, LLC) (the “Warrant Agent”), which governs all of the Warrants (the “Warrant Amendment”), to permit the Company to redeem all, but not less than all, outstanding Warrants for $0.35 in cash per Warrant, without interest (the “Redemption Price”). The valid tender of Warrants in connection with the Offer, that were not validly withdrawn prior to the Expiration Date, constituted the holder’s consent to the Warrant Amendment. Equiniti Trust Company, LLC, the depositary for the Offer, indicated to the Company that as of the Expiration Date, 2,193,021 outstanding Warrants (excluding Warrants tendered via guaranteed delivery), or approximately 68.2% of the then outstanding Warrants, were validly tendered in and not withdrawn prior to the expiration of the Offer, and therefore such Warrants consented to the Warrant Amendment.

Accordingly, on October 19, 2023, the Company and the Warrant Agent entered into the Warrant Amendment effective as of October 3, 2023, which permits the Company to redeem each Warrant that is outstanding following the closing of the Offer for the Redemption Price. Pursuant to the Warrant Amendment, the Company has the right to redeem not less than all of the Warrants at any time while such warrants are exercisable and prior to their expiration, at the office of the Warrant Agent, upon notice to the registered holders of the outstanding Warrants at least five days prior to the date of redemption fixed by the Company. The Company will exercise its right to redeem all remaining outstanding Warrants in accordance with the terms of the Warrant Amendment, and has fixed October 30, 2023 as the redemption date.

The foregoing description of the Warrant Amendment is qualified in its entirety by reference to the Warrant Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 3.03

Material Modification to Rights of Security Holders

Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03.

Item 8.01

Other Events

On October 23, 2023, the Company distributed a notice of redemption (the “Notice of Redemption”) to the registered holders of its outstanding Warrants announcing the redemption of those warrants for the Redemption Price pursuant to the terms of the Warrant Agreement, as amended by the Warrant Amendment. The terms of the Redemption are more specifically described in the Notice of Redemption, a copy of which is filed as Exhibit 99.1 hereto and is incorporated herein by reference.

Neither this Current Report on Form 8-K nor the Notice of Redemption attached hereto as Exhibit 99.1 constitutes an offer to sell or the solicitation of an offer to buy any of the Company’s securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

EXHIBIT INDEX

Exhibit No.		Description

10.1		Amendment to Warrant Agreement, effective as of October 3, 2023, by and between the Company and the Warrant Agent
99.1		Notice of Redemption dated October 23, 2023
104		Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).

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.

October 24, 2023 (Date)	Direct Digital Holdings, Inc. (Registrant)

	/s/ Mark Walker
	Mark Walker Chief Executive Officer

Exhibit 10.1

AMENDMENT TO WARRANT AGREEMENT

This Amendment to Warrant Agreement (this “Amendment”) is made effective as of October 3, 2023 by and between Direct Digital Holdings, Inc., a Delaware corporation (the “Company”), and Equiniti Trust Company, LLC (formerly American Stock Transfer & Trust Company, LLC), a New York corporation, as warrant agent (the “Warrant Agent”), and constitutes an amendment to that certain Warrant Agreement, dated as of February 15, 2022 (the “Existing Warrant Agreement”), between the Company and the Warrant Agent. Capitalized terms used but not otherwise defined in this Amendment shall have the meanings given to such terms in the Existing Warrant Agreement.

WHEREAS, Section 8.8 of the Existing Warrant Agreement provides that the Company and the Warrant Agent may amend the Existing Warrant Agreement with the written consent of the Registered Holders of a majority of the outstanding Warrants as it relates to the Warrants;

WHEREAS, the Company desires to amend the Existing Warrant Agreement to provide the Company with the right to redeem the Warrants for cash on the terms and subject to the conditions set forth herein; and

WHEREAS, following a consent solicitation undertaken by the Company, the Registered Holders of a majority of the outstanding Warrants have consented to and approved this Amendment.

NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree to amend the Existing Warrant Agreement as set forth herein.

Amendment of Existing Warrant Agreement. The Existing Warrant Agreement is hereby amended by adding the new Section 6A thereto:

“6A. 6A Redemption.

6A.1 Company Election to Redeem. Notwithstanding any other provision in this Agreement to the contrary, not less than all of the outstanding Warrants may be redeemed, at the option of the Company, at any time while they are exercisable and prior to their expiration, at the office of the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6A.2 below, for $0.35 in cash for every Warrant held by the holder thereof (the “6A Redemption Price”) (subject to equitable adjustment by the Company in the event of any stock splits, stock dividends, recapitalizations or similar transaction with respect to the Common Stock).

6A.2 Date Fixed for, and Notice of, Redemption. In the event that the Company elects to redeem all of the Warrants, the Company shall fix a date for the redemption (the “6A Redemption Date”). Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than five (5) days prior to the 6A Redemption Date to the Registered Holders of the Warrants at their last addresses as they shall appear on the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Registered Holder received such notice.

6A.3 Exercise After Notice of Redemption. The Warrants may be exercised for cash only in accordance with subsection 3.3.1 of this Agreement at any time after notice of redemption shall have been given by the Company pursuant to Section 6A.2 hereof and prior to the 6A Redemption Date. On and after the 6A Redemption Date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of the Warrants, the 6A Redemption Price.

8. Miscellaneous Provisions.

8.1 Severability. This Amendment shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Amendment or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Amendment a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

8.2 Applicable Law and Exclusive Forum. The validity, interpretation and performance of this Amendment shall be governed in all respects by the laws of the State of New York. Subject to applicable law, the parties hereby agree that any action, proceeding or claim against them arising out of or relating in any way to this Amendment shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submit to such jurisdiction, which jurisdiction shall be exclusive forum for any such action, proceeding or claim. Each of the parties hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Notwithstanding the foregoing, the provisions of this section will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.

8.3 Counterparts. This Amendment may be executed in any number of counterparts, and by facsimile or portable document format (pdf) transmission, and each of such counterparts shall for all purposes be deemed to be an original and all such counterparts shall together constitute but one and the same instrument.

8.4 Effect of Headings. The section headings herein are for convenience only and are not part of this Amendment and shall not affect the interpretation thereof.

8.5 Entire Agreement. The Existing Warrant Agreement, as modified by this Amendment, constitutes the entire understanding of the parties and supersedes all prior agreements, understandings, arrangements, promises and commitments, whether written or oral, express or implied, relating to the subject matter hereof, and all such prior agreements, understandings, arrangements, promises and commitments are hereby canceled and terminated.

[Signatures Appear on Following Page]

IN WITNESS WHEREOF, each of the parties has caused this Amendment to be duly executed as of October 19, 2023.

	DIRECT DIGITAL HOLDINGS, INC.

	By:	/s/ Mark Walker
		Name: Mark Walker
		Title: Chief Executive Officer


	EQUINITI TRUST COMPANY, LLC

	By:	/s/ Michael Legregin
		Name: Michael Legregin
		Title: Senior Vice President, Corporate Actions Relationship Management & Operations

[Signature Page to Amendment to Warrant Agreement]

Exhibit 99.1

October 23, 2023

NOTICE OF REDEMPTION OF WARRANTS (CUSIP 25461T113)

Dear Warrant Holder,

Direct Digital Holdings, Inc. (the “Company”) hereby gives notice that it is redeeming, at 5:00 p.m. New York City time on October 30, 2023 (the “Redemption Date”), all of the Company’s outstanding warrants (the “Warrants”) to purchase shares of the Company’s Class A Common Stock, par value $0.0001 per share (the “Common Stock”), that were issued under that certain Warrant Agency Agreement, dated February 15, 2022 (as amended, the “Warrant Agreement”), by and between the Company and American Stock Transfer & Trust Company, LLC (now Equiniti Trust Company, LLC), a New York limited liability company, as warrant agent (the “Warrant Agent”), as amended by that certain Amendment to Warrant Agreement, effective as of October 3, 2023, by and among the Company and the Warrant Agent, as part of the units sold in the Company’s initial public offering for a redemption price of $0.35 per Warrant (the “Redemption Price”). Each Warrant entitles the holder thereof to purchase one share of Common Stock for a purchase price of $5.50 per share (the “Exercise Price”), subject to customary adjustments. Any Warrants that remain unexercised at 5:00 p.m. New York City time on the Redemption Date will be void and no longer exercisable and their holders will have no rights with respect to those Warrants, except to receive the Redemption Price or as otherwise described in this notice for holders who hold their Warrants in “street name.”

The Warrants are listed on the Nasdaq Capital Market under the symbol “DRCTW”. On October 20, 2023, the closing price of the Warrants was $0.36, and the closing price of the Common Stock, listed on the Nasdaq Capital Market under the symbol “DRCT,” was $2.62.

TERMS OF REDEMPTION; CESSATION OF RIGHTS

The rights of the Warrant holders to exercise their Warrants will terminate immediately prior to 5:00 p.m. New York City time on the Redemption Date. At 5:00 p.m. New York City time on the Redemption Date and thereafter, holders of unexercised Warrants will have no rights with respect to those Warrants, except to receive the Redemption Price or as otherwise described in this notice for holders who hold their Warrants in “street name.” We encourage you to consult with your broker, financial advisor and/or tax advisor to consider whether or not to exercise your Warrants.

The Company is exercising this right to redeem the Warrants pursuant to Section 6A of the Warrant Agreement. Pursuant to Section 6A.1 of the Warrant Agreement and at the Company’s option, the Company has the right to redeem not less than all of the outstanding Warrants for $0.35 in cash for every Warrant held by the holder thereof (subject to equitable adjustment by the Company in the event of any stock splits, stock dividends, recapitalizations or similar transaction with respect to the Common Stock).

EXERCISE PROCEDURE

Warrant holders have until 5:00 p.m. New York City time on the Redemption Date to exercise their Warrants to purchase Common Stock. Each Warrant entitles the holder thereof to purchase one share of Common Stock at the Exercise Price.

In accordance with Section 6A.3 of the Warrant Agreement, the Warrants may be exercised for cash only in accordance with subsection 3.3.1 of the Warrant Agreement at any time after this Notice of Redemption has been given by the Company pursuant to Section 6A.2 of the Warrant Agreement and prior to the Redemption Date.

Those who hold their Warrants in “street name” should immediately contact their broker to determine their broker’s procedure for exercising their Warrants.

Persons who are holders of record of their Warrants may exercise their Warrants by delivery (whether via facsimile, electronic mail or otherwise) of a written notice, (i) in the form attached to the form of Warrant as Exhibit A thereto or (ii) via an electronic warrant exercise through the DTC system (the “Exercise Notice”), of the Holder’s election to exercise the Warrant

The method of delivery of the Warrants is at the option and risk of the holder, but if mail is used, registered mail properly insured is suggested.

The fully and properly completed Exercise Notice must be received by the Warrant Agent prior to 5:00 p.m. New York City time on the Redemption Date. Any failure to deliver a fully and properly completed Exercise Notice before such time will result in such holder’s Warrants being redeemed and not exercised.

REDEMPTION PROCEDURE

Payment of the Redemption Price will be made by the Company upon presentation and surrender of a Warrant for payment after 5:00 p.m. New York City time on the Redemption Date. Those who hold their shares in “street name” should contact their broker to determine their broker’s procedure for redeeming their Warrants.

Any questions you may have about redemption and exercising your Warrants may be directed to the Warrant Agent at its address and telephone number set forth above.

Sincerely,

DIRECT DIGITAL HOLDINGS, INC.

/s/ Mark Walker
Mark Walker
Chief Executive Officer

Cover	Oct. 19, 2023
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 19, 2023
Entity File Number	001-41261
Entity Registrant Name	Direct Digital Holdings, Inc.
Entity Central Index Key	0001880613
Entity Tax Identification Number	87-2306185
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1177 West Loop South
Entity Address, Address Line Two	Suite 1310
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77027
City Area Code	832
Local Phone Number	402-1051
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Class A common stock, par value $0.001 per share
Document Information [Line Items]
Title of 12(b) Security	Class A common stock, par value $0.001 per share
Trading Symbol	DRCT
Security Exchange Name	NASDAQ
Warrants to purchase Class A common stock
Document Information [Line Items]
Title of 12(b) Security	Warrants to purchase Class A common stock
Trading Symbol	DRCTW
Security Exchange Name	NASDAQ