---
schema_version: "secwatch.filing_event.v1"
accession: "0001880613-25-000123"
form_type: "8-K"
ticker: "DRCT"
cik: "0001880613"
company_name: "Direct Digital Holdings, Inc."
filed_at: "2025-10-20T23:59:59+00:00"
generated_at: "2026-05-17T03:18:06.086481+00:00"
event_type: "debt"
sentiment: "negative"
materiality_score: 0.85
calibrated_materiality_score: 0.85
confidence: "high"
source: SEC EDGAR
---

# Direct Digital converts $10M debt to preferred; adds EBITDA loss covenants

## Summary
- Converted $10M term loans into 10,000 Series A Preferred shares; total preferred face now $35M.
- Paid $3.5M amendment fee added to principal; $9.99M term loans remain outstanding.
- New covenants: min cash $0.45M, min quarterly EBITDA loss $(0.652M) and $(1.921M) for Q4 2025 and Q1 2026.
- Existing defaults (non-payment, EBITDA miss, cash covenant) waived; must appoint independent director by Oct 29.
- Preferred pays 10% cumulative dividend, converts at $2.50/sh, liquidation preference 3x accumulation.

## SEC filing metadata
- accession: 0001880613-25-000123
- form_type: 8-K
- ticker: DRCT
- cik: 0001880613
- company_name: Direct Digital Holdings, Inc.
- filed_at: 2025-10-20T23:59:59+00:00
- event_type: debt
- sentiment: negative
- materiality_score: 0.85
- calibrated_materiality_score: 0.85
- confidence: high
- sec_items: 1.01, 2.03, 3.02, 3.03, 5.03, 9.01
- EDGAR index: https://www.sec.gov/Archives/edgar/data/1880613/000188061325000123/0001880613-25-000123-index.htm
- EDGAR primary document: https://www.sec.gov/Archives/edgar/data/1880613/000188061325000123/drct-20251014.htm

## Machine-readable alternates
- HTML: https://secwatch.observer/filing/0001880613-25-000123
- JSON: https://secwatch.observer/filing/0001880613-25-000123.json
- Plain text: https://secwatch.observer/filing/0001880613-25-000123.txt

## Key facts
- Equity Issuances
  Direct Digital Holdings, Inc. issued $10.0 million face amount of Series A Preferred Stock of preferred stock to Lafayette Square USA, Inc. for conversion and exchange of $10.0 million aggregate principal amount of term loans and other debt obligations.
  - Security: preferred stock
  - Shares: $10.0 million face amount of Series A Preferred Stock
  - Purchaser: Lafayette Square USA, Inc.
  - Consideration: conversion and exchange of $10.0 million aggregate principal amount of term loans and other debt obligations
  source text: the parties agreed to convert and exchange term loans and other debt obligations with an aggregate principal amount of $10.0 million for newly authorized shares of Series A Preferred Stock, par value $0.001, of the Company (the “ Series A Preferred Stock ”), with an aggregate face amount of $10.0 million issued to Lafayette.
  evidence_url: https://www.sec.gov/Archives/edgar/data/1880613/000188061325000123/0001880613-25-000123-index.htm
- Governance Changes
  Direct Digital Holdings, Inc.: Amended and restated Certificate of Designation of Series A Convertible Preferred Stock, increasing designated shares from 25,000 to 35,000 and modifying dividend and voting terms (effective 2025-10-15).
  - Change: charter amendment
  - Effective: 2025-10-15
  source text: Pursuant to the terms of the Ninth Amendment, on October 15, 2025, the Company filed the Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock (the “ A&R Certificate of Designation ”) with the Secretary of State of the State of Delaware, which amended and restated in its entirety the Certificate of Designation establishing the Series A Convertible Preferred Stock, filed on August 8, 2025.
  evidence_url: https://www.sec.gov/Archives/edgar/data/1880613/000188061325000123/0001880613-25-000123-index.htm

This AI-assisted summary is a reading aid. Review the linked SEC EDGAR filing before relying on any specific claim.