ACCESS Newswire Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Management’s Annual Report Regarding Internal Disclosure Controls and Procedures Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes, in accordance with generally accepted accounting principles. The effectiveness of any system of internal control over financial reporting is subject to inherent limitations and therefore, may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of future periods are subject to the risk that the controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate. This Form 10-K does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Form 10-K. Evaluation of Disclosure Controls and Procedures Based on an evaluation under the supervision and with the participation of our management, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") were effective as of December 31, 2024, to ensure that information required to be disclosed in reports that are filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Inherent Limitations over Internal Controls Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements. Management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate. 32 Table of Contents Report of Management's Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations ("COSO") updated Internal Control—Integrated Framework (2013). Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2024. There were no changes in our internal controls that could materially affect the disclosure controls and procedures subsequent to the date of their evaluation, nor were there any material deficiencies or material weaknesses in our internal controls. As a result, no corrective actions were required or undertaken. ITEM 9B. OTHER INFORMATION. During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JUSRISDICATIONS THAT PREVENT INSPECTIONS Not applicable 33 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required by this Item is set forth under the headings “Directors, Executive Officers and Corporate Governance” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s 2025 Proxy Statement to be filed with the SEC within 120 days after December 31, 2024, in connection with the solicitation of proxies for the Company’s 2025 annual meeting of shareholders and is incorporated herein by reference. Our board of directors has adopted a Code of Conduct applicable to all officers, directors and employees, which is available on our website ( https://investors.accessnewswire.com/governance-documents ) under “Governance Documents." We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Conduct by posting such information on the website address and location specified above. We have adopted an Insider Trading Policy applicable to our directors, officers, employees and other covered persons that we believe are reasonably designed to promote compliance with insider trading laws, rules and regulations, and the NYSE American listing standards. Our Insider Trading Policy is filed as Exhibit 19.1 to this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item is set forth under the heading “Executive Compensation” and under the subheadings “Board Oversight of Risk Management,” “Compensation of Directors,” “Director Compensation-2024” and “Compensation Committee Interlocks and Insider Participation” under the heading “Directors, Executive Officers and Corporate Governance” in the Company’s 2025 Proxy Statement to be filed with the SEC within 120 days after December 31, 2024 and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The information required by this Item is set forth under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the Company’s 2025 Proxy Statement to be filed with the SEC within 120 days after December 31, 2024 and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required by this Item is set forth under the heading “Review, Approval or Ratification of Transactions with Related Persons” and under the subheading “Board Committees” under the heading “Directors, Executive Officers and Corporate Governance” in the Company’s 2025 Proxy Statement to be filed with the SEC within 120 days after December 31, 2024 and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required by this Item is set forth under the subheadings “Fees Paid to Auditors” and “Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services Performed by the Independent Registered Public Accounting Firm” under the proposal “Ratification of Appointment of Independent Registered Public Accounting Firm” in the Company’s 2025 Proxy Statement to be filed with the SEC within 120 days after December 31, 2024 and is incorporated herein by reference. 34 Table of Contents PART IV ITEM 15. EXHIBITS. (a) Financial Statements The financial statements listed in the accompanying index (page F-1) to the financial statements are filed as part of this Form 10-K. (b) Exhibits Exhibit Number Exhibit Description 3.1 Certificate of Incorporation, as amended.* 3.2 Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on January 27, 2025, 2025). 4.1 Credit Agreement dated March 20, 2023 with Pinnacle Bank and the other loan parties thereto (incorporated by referenced to Exhibit 4.1 to the Current Report on Form 8-K filed on March 22, 2023). 4.2 Third Modification to Credit Agreement and Partial Release dated February 28, 2025 with Pinnacle Bank and the other loan parties thereto (incorporated by referenced to Exhibit 10.2 to the Current Report on Form 8-K filed on March, 2023). 10.2 Executive Employment Agreement dated April 30, 2015 with Brian R. Balbirnie (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 5, 2014). 10.3 First Amendment to Executive Employment Agreement dated May 4, 2017 with Brian R. Balbirnie (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 5, 2017) . 10.4 Membership Interest Purchase Agreement dated November 1, 2022 with Lead Capital, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on November 3, 2022) . 10.5 2023 Equity Incentive Plan (incorporated by reference to Annex A to the Schedule 14A filed on April 28, 2023). 10.6 Executive Employment Agreement with Steven Knerr dated September 16, 2024 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 17, 2024). 10.7 Asset Purchase Agreement dated February 28, 2025 with Equiniti Transfer Company, LLC and Direct Transfer, LLC (incorporated by reference to Exhibit 10,1 to the Current Report on Form 8-K filed on March 6, 2025). 19.1 The Company’s Insider Trading Policy.* 21.1 Subsidiaries of the Registrant.* 23.1 Consent of Independent Registered Public Accounting Firm.* 31.1 Rule 13a-14(a) Certification of Principal Executive Officer.* 31.2 Rule 13a-14(a) Certification of Principal Financial Officer.* 32.1 Section 1350 Certification of Principal Executive Officer.* 32.2 Section 1350 Certification of Principal Financial Officer.* 97 ACCESS Newswire Inc. Policy for the Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97 to the Annual Report on Form 10-K filed on March 7, 2024). 101 The following financial information from ACCESS Newswire Inc.'s Annual Report on Form 10-K for the year ended December 31, 2024 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (Loss), (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Stockholders Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to the Consolidated Financial Statements. 104 Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101) _______________ * Filed herewith (c) Financial Statement Schedules omitted None. 35 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ACCESS NEWSWIRE INC. Date: March 25, 2025 By: /s/ BRIAN R. BALBIRNIE Brian R. Balbirnie Chief Executive Officer, Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated as of the dates set forth below. Signature Date Title /s/ Brian R. Balbirnie March 25, 2025 Director, Chairman of the Board and Chief Executive Officer Brian R. Balbirnie (Principal Executive Officer) /s/ Steven Knerr March 25, 2025 Chief Financial Officer Steven Knerr (Principal Financial Officer) /s/ Graeme Rein March 25, 2025 Director, Chairman of the Audit Committee Graeme Rein /s/ Joe Staples March 25, 2025 Director, Chairman of the Compensation Committee Joe Staples /s/ Wesley Pollard March 25, 2025 Director, Member of the Audit and Compensation Committee Wesley Pollard 36 Table of Contents INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 00 677 ) F-2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-6 Consolidated Statements of Income (Loss) for the years ended December 31, 2024 and 2023 F-7 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2024 and 2023 F-8 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024 and 2023 F-9 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-10 Notes to Consolidated Financial Statements F-11 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of ACCESS Newswire Inc. Raleigh, North Carolina Opinion on the Consolidated Financial Statements We have audited the accompanying balance sheets of ACCESS Newswire Inc. and subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related statements of income (loss), comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the two-period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F-2 Table of Contents Revenue from Contracts with Customers The Company had $23,057,000 in revenue from continuing operations and $5,831,000 in revenue from discontinued operations for the year ended December 31, 2024. As disclosed in Note 2 to the consolidated financial statements, the Company’s contracts include subscriptions to its cloud-based products or contracts for products and services. The Company’s contracts include either a subscription to the entire platform or certain modules within the platform, or an agreement to perform services, or any combination thereof, and often contain multiple subscriptions and services. Due to the nature of the Company’s contracts including multiple performance obligations, management exercises significant judgment in the following areas in determining appropriate revenue recognition: · Determination of which products and services are considered distinct performance obligations that should be accounted for separately or combined. · Determination of stand-alone selling prices for each performance obligation. · Estimation of contract transaction price and allocation of the transaction price to the performance obligations. · Determination of the pattern of delivery for each distinct performance obligation. · Determination of which products and services are recognized over time or point in time. As a result, a high degree of auditor judgment was required in performing audit procedures to evaluate the reasonableness of management’s judgments. Changes in these judgments can have a material effect on the amount of revenue recognized on these contracts. Based on our knowledge of the Company, we determined the nature and extent of procedures to be performed over revenue, including the determination of the revenue streams over which those procedures were performed. Our audit procedures included the following for each revenue stream where procedures were performed: · Obtained an understanding of the internal controls and processes in place over the Company’s revenue recognition processes. · Analyzed the significant assumptions and estimates made by management as discussed above. · Selected a sample of revenue transactions and assessed the recorded revenue, analyzed the related contract, tested management’s identification of distinct performance obligations, and compared the amounts recognized for consistency with underlying support and documentation. Collectability of Accounts Receivable The Company’s allowance for credit losses was $1,059,000 from continuing operations and was $559,000 from discontinued operations as of December 31, 2024. As disclosed in Note 2 to the consolidated financial statements, the Company accounts for the allowance for credit losses using an expected losses model, based on credit losses expected to arise over the life of the asset based on the Company’s expectations as of the balance sheet date through analyzing historical customer data as well as taking into consideration current economic trends. Management makes significant judgments when assessing the likelihood of collection of a customer’s accounts receivable by considering various factors such as communications from the customer, historical collections, and number of days accounts receivables have been outstanding. As a result, a high degree of auditor judgement was required in performing audit procedures to evaluate the reasonableness of management’s judgements. F-3 Table of Contents Our audit procedures included the following: · Obtained an understanding of the internal controls and processes in place over the Company’s allowance for credit losses. · Analyzed the significant assumptions and estimates made by management as discussed above. · Evaluated the reasonableness of management’s valuation for allowance for credit losses by performing an independent retrospective review. Goodwill and Intangible Assets Impairment Assessment The Company’s goodwill balance was $19,043,000 from continuing operations and $2,885,000 from discontinued operations and intangible asset balance was $11,976,000 from continuing operations and $637,000 from discontinued operations as of December 31, 2024. The Company’s evaluation of goodwill and intangible assets for impairment involves the comparison of the fair value of each reporting unit or asset group to its carrying value. The fair value of each reporting unit or asset group is estimated using discounted cash flow and guideline public company methods, which requires the use of estimates and assumptions related to cash flow forecasts, discount rates, terminal values, and market multiples of comparable companies. Management’s cash flow forecasts included significant judgments and assumptions relating to revenue growth rates and operating margins. The fair value of the reporting unit exceeded its carrying value as of December 31, 2024, therefore, no impairment of goodwill was recognized. The fair value of the Company’s Newswire trademarks did not exceed their carrying value as of December 31, 2024; therefore, an impairment charge of $14,150,000 was recognized during the year ended December 31, 2024. The impairment charge was recognized for the amount by which the carrying amount exceeded the estimated fair value. Management made significant judgments when developing the fair value estimate of the Newswire trademarks and reporting unit. As a result, a high degree of auditor judgment and effort was required, including involving the use of our valuation specialists, in performing audit procedures to evaluate the reasonableness of management’s cash flow forecasts and the significant assumptions identified above. Significant uncertainty exists with these assumptions because they are sensitive to future market or economic conditions. F-4 Table of Contents Our audit procedures included the following: · Obtained an understanding of the internal controls and processes in place over the Company’s impairment review process, including management’s review of the significant assumptions described above. · Evaluated the reasonableness of management’s revenue, operating margins, and other forecasted amounts by comparing the forecasts to actual historical results. · Evaluated the reasonableness of guideline public company valuation multiples. · Evaluated management’s determination of reporting units and segments. · With the assistance of our valuation specialists, evaluated the valuation methodologies and significant assumptions, including discount rates, and developed a range of independent estimates and compared those to the significant assumptions used by management. · Tested the mathematical accuracy of the calculations. /s/ Cherry Bekaert LLP We have served as the Company’s auditor since 2010. Raleigh, North Carolina March 25, 2025 F-5 Table of Contents ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) As of December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 4,103 $ 5,714 Accounts receivable (net of allowance for credit losses of $ 1,059 and $ 721 , respectively) 3,351 3,005 Income tax receivable — 232 Other current assets 1,234 1,134 Current assets held for sale 1,338 1,419 Total current assets 10,026 11,504 Capitalized software (net of accumulated amortization of $ 3,644 and $ 3,424 , respectively) 934 556 Fixed assets (net of accumulated depreciation of $ 914 and $ 765 , respectively) 365 495 Right-of-use asset – leases (See Note 10) 766 1,022 Other long-term assets 158 101 Goodwill 19,043 19,043 Intangible assets (net of accumulated amortization of $ 7,024 and $ 4,465 , respectively) 11,976 28,685 Deferred tax asset 3,793 — Non-current assets held for sale 3,577 3,746 Total assets $ 50,638 $ 65,152 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,423 $ 1,180 Accrued expenses 1,699 1,838 Income taxes payable 56 11 Current portion of long-term debt 4,000 4,000 Deferred revenue 4,743 4,750 Current liabilities held for sale 893 871 Total current liabilities 12,814 12,650 Long-term debt (net of debt discount of $ 70 and $ 87 , respectively) (see Note 6) 11,930 15,913 Deferred income tax liability — 139 Lease liabilities – long-term (See Note 10) 668 1,009 Other long-term liabilities — 21 Total liabilities 25,412 29,732 Stockholders' equity: Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of December 31, 2024 and 2023, respectively. — — Common stock $ 0.001 par value, 20,000,000 shares authorized, 3,838,743 and 3,815,212 shares issued and outstanding as of December 31, 2024 and 2023, respectively. 4 4 Additional paid-in capital 24,259 23,531 Other accumulated comprehensive loss ( 178 ) ( 49 ) Retained earnings 1,141 11,934 Total stockholders' equity 25,226 35,420 Total liabilities and stockholders’ equity $ 50,638 $ 65,152 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands, except per share amounts) Years Ended December 31, 2024 2023 Revenues $ 23,057 $ 24,522 Cost of revenues 5,617 5,607 Gross margin 17,440 18,915 Operating costs and expenses: General and administrative 7,000 8,354 Sales and marketing 7,080 8,028 Product development 2,821 2,544 Depreciation and amortization 2,708 2,728 Impairment loss on intangible assets 14,150 — Total operating costs and expenses 33,759 21,654 Operating loss ( 16,319 ) ( 2,739 ) Other income (expense) Interest expense, net ( 1,107 ) ( 1,249 ) Other income (expense) (See Notes 6 and 7) 81 ( 391 ) Loss before income taxes ( 17,345 ) ( 4,379 ) Income tax benefit ( 4,064 ) ( 938 ) Net loss from continuing operations $ ( 13,281 ) $ ( 3,441 ) Net income from discontinued operations, net of taxes 2,488 4,207 Net (loss) income ( 10,793 ) 766 Loss from continuing operations per share – basic $ ( 3.47 ) $ ( 0.90 ) Loss from continuing operations per share – diluted $ ( 3.47 ) $ ( 0.90 ) Income from discontinued operations per share – basic $ 0.65 $ 1.10 Income from discontinued operations per share – diluted $ 0.65 $ 1.10 (Loss) income per share – basic $ ( 2.82 ) $ 0.20 (Loss) income per share – diluted $ ( 2.82 ) $ 0.20 Weighted average number of common shares outstanding – basic 3,827 3,802 Weighted average number of common shares outstanding – diluted 3,829 3,816 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Years Ended December 31, 2024 2023 Net (loss) income $ ( 10,793 ) $ 766 Foreign currency translation adjustment ( 129 ) 47 Comprehensive (loss) income $ ( 10,922 ) $ 813 The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 2024 AND 2023 (in thousands, except share and per share amounts) Common Stock Additional Paid-in Accumulated Other Comprehensive Retained Total Stockholders’ Shares Amount Capital Loss Earnings Equity Balance on December 31, 2022 3,791,020 $ 4 $ 22,147 $ ( 96 ) $ 11,168 $ 33,223 Stock-based compensation expense — — 1,365 — — 1,365 Exercise of stock awards, net of tax 24,192 — 19 — — 19 Foreign currency translation — — — 47 — 47 Net income — — — — 766 766 Balance on December 31, 2023 3,815,212 $ 4 $ 23,531 $ ( 49 ) $ 11,934 $ 35,420 Stock-based compensation expense — — 684 — — 684 Exercise of stock awards, net of tax 18,999 — — — — — Stock issued to consultants 4,532 — 44 — — 44 Foreign currency translation — — — ( 129 ) — ( 129 ) Net loss — — — — ( 10,793 ) ( 10,793 ) Balance on December 31, 2024 3,838,743 $ 4 $ 24,259 $ ( 178 ) $ 1,141 $ 25,226 The accompanying notes are an integral part of these consolidated financial statements. F-9 Table of Contents ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except share and per share amounts) Years Ended December 31, 2024 2023 Cash flows from operating activities Net (loss) income $ ( 10,793 ) $ 766 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Net income from discontinued operations, net of tax ( 2,488 ) ( 4,207 ) Loss on impairment of intangible assets 14,150 — Provision for credit losses 1,083 538 Depreciation and amortization 2,928 2,788 Deferred income taxes ( 3,933 ) ( 433 ) Stock-based compensation expense – employees and directors 684 1,365 Stock-based compensation expense - consultants 44 — Change in fair value of interest rate swap ( 81 ) 21 Amortization of debt issuance costs 17 13 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable ( 1,462 ) ( 1,150 ) Decrease (increase) in other assets 391 152 Increase (decrease) in accounts payable 245 ( 60 ) Increase (decrease) in deferred revenue 44 267 Increase (decrease) in accrued expenses and other liabilities ( 429 ) ( 801 ) Net cash provided by (used in) operating activities of continuing operations 400 ( 741 ) Net cash provided by operating activities of discontinued operations 2,760 3,801 Net cash provided by operating activities 3,160 3,060 Cash flows from investing activities Purchase of fixed assets ( 19 ) ( 25 ) Capitalized software ( 597 ) ( 478 ) Purchase of acquired business, net of cash received (See note 4) — 350 Net cash used in investing activities ( 616 ) ( 153 ) Cash flows from financing activities Payment of note payable (see Note 6) ( 4,000 ) ( 22,000 ) Proceeds from issuance of term loan (see Note 6) — 19,988 Payment for capitalized debt issuance costs — ( 88 ) Proceeds from exercise of stock options, net of income taxes — 19 Net cash used in financing activities ( 4,000 ) ( 2,081 ) Net change in cash and cash equivalents ( 1,456 ) 826 Cash and cash equivalents - beginning 5,714 4,832 Currency translation adjustment ( 155 ) 56 Cash and cash equivalents - ending $ 4,103 $ 5,714 Supplemental disclosures : Cash paid for income taxes $ 342 $ 1,314 Cash paid for interest $ 1,387 $ 1,394 The accompanying notes are an integral part of these consolidated financial statements. F-10 Table of Contents ACCESS NEWSWIRE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1: Description, Background and Basis of Operations Nature of Operations ACCESS Newswire Inc. (the “Company” or “ACCESS”) was incorporated in the State of Delaware in October 1988 under the name Docucon Inc. Subsequent to the December 13, 2007 merger with My EDGAR, Inc., the Company changed its name to Issuer Direct Corporation and on January 27, 2025, changed its name to ACCESS Newswire Inc. Today, ACCESS is a leading communications company providing solutions for both public relations and investor relations professionals. The Company operates under several brands in the market, including Direct Transfer, Interwest, ACCESSWIRE and Newswire. The Company leverages its securities compliance and regulatory expertise to provide a comprehensive set of services that enhance a customer’s ability to communicate effectively with its shareholder base while meeting all reporting regulations required. Note 2: Summary of Significant Accounting Policies The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Significant intercompany accounts and transactions are eliminated in consolidation. Cash Equivalents For purposes of the Company’s financial statements, the Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Accounts Receivable and Allowance for Credit Losses The Company calculates its allowance for credit losses using an expected losses model rather than using incurred losses. The model is based on the credit losses expected to arise over the life of the asset based on the Company’s expectations as of the balances sheet date through analyzing historical customer data as well as taking into consideration current economic trends. The Company generally writes-off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues its collection. The following is a summary of the allowance for credit losses during the years ended December 31, 2024 and 2023 (in 000’s): Year Ended December 31, 2024 Year Ended December 31, 2023 Beginning balance $ 721 $ 546 Provision for credit losses 1,083 538 Write-offs ( 745 ) ( 363 ) Ending balance $ 1,059 $ 721 F-11 Table of Contents Concentrations of Credit Risk & Customers Financial instruments and related items which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivables. The Company places its cash and temporary cash investments with credit quality institutions. As of December 31, 2024, the Company’s domestic cash balance is spread among different depository institutions such that there is no balance which exceeds the FDIC insurance limit of $ 250,000 . The Company also had cash-on-hand of $ 68,000 in Europe and $ 1,691,000 in Canada as of December 31, 2024. The Company believes it did not have any financial instruments that could have potentially subjected us to significant concentrations of credit risk for any relevant period. The Company did not have any customers during the years ended December 31, 2024 or 2023 that accounted for more than 10% of revenue. Revenue Recognition Substantially all the Company’s revenue comes from contracts with customers for its press release distribution and related products, investor relations website hosting or data feeds, events and webcast offerings and subscriptions to its incident hotline. Customers consist of public corporate issuers and professional firms, such as investor and public relations firms. In the case of news distribution and webcasting offerings, customers also include private companies. The Company accounts for a contract with a customer when there is an enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has economic substance, and collectability of the contract consideration is probable. The Company's revenues are measured based on consideration specified in the contract with each customer. The Company's contracts include either a subscription to its entire platform, certain modules within the platform or to its Press Release Optimizer Plan (“PRO”), or an agreement to perform services, or any combination thereof, and often contain multiple subscriptions and services. For these bundled contracts, the Company accounts for individual subscriptions and services as separate performance obligations if they are distinct, which is when a product or service is separately identifiable from other items in the bundled package, and a customer can benefit from it on its own or with other resources that are readily available to the customer. Performance obligations of include providing subscriptions to certain modules or our entire platform, distributing press releases on a per release basis or conducting webcasts, virtual annual meetings, or other events on a per event basis. PRO subscription contracts contain two performance obligations: (i) the first is a series of distinct services that include, but are not limited to, developing specific media plans, and creating content to be distributed and (ii) the second performance obligation being access to the PRO platform along with distribution of press releases, ongoing support, and assessment of performance as a stand-ready obligation. The Company’s subscription and service contracts are generally for one year, with automatic renewal clauses included in the contract until the contract is cancelled. The contracts do not contain any rights of returns, guarantees, or warranties. Since contracts are generally for one year, all the revenue is expected to be recognized within one year from the contract start date. As such, the Company has elected the optional exemption that allows the Company not to disclose the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at the end of each reporting period. The Company recognizes revenue for subscriptions evenly over the contract period, upon distribution for per release contracts and upon event completion for webcasting and virtual annual meeting events. For service contracts that include stand ready obligations, revenue is recognized evenly over the contract period. For all other services delivered on a per project or event basis, the revenue is recognized at the completion of the event. The Company believes recognizing revenue for subscriptions and stand ready obligations using a time-based measure of progress, best reflects the Company’s performance in satisfying the obligations. For bundled contracts, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the subscription or service. If a standalone selling price is not directly observable, the Company uses the residual method to allocate any remaining price to that subscription or service. The Company reviews standalone selling prices, at least annually, and updates these estimates if necessary. F-12 Table of Contents The Company invoices its customers based on the billing schedules designated in its contracts, typically upfront on either a monthly, quarterly or annual basis or per transaction at the completion of the performance obligation. Deferred revenue for the periods presented was primarily related to press release packages which have been prepaid, however the releases have not yet been disseminated, as well as, subscription and service contracts, which are billed upfront, quarterly, or annually, however the revenue has not yet been recognized. The associated deferred revenue is generally recognized as releases are disseminated for press release packages and ratably over the billing period for subscriptions. Deferred revenue as of December 31, 2024 and December 31, 2023, was $ 4,743,000 and $ 4,750,000 , respectively, and is expected to be recognized within one year. Approximately $ 200,000 of the deferred revenue balance as of December 31, 2024, relates to contracts for press release packages with an expiration date after December 31, 2025, however the customer may use the balance within one year. As of January 1, 2023, deferred revenue was $ 4,788,000 . Revenue recognized for the years ended December 31, 2024 and 2023, which was included in the deferred revenue balance at the beginning of each reporting period, was approximately $ 4,750,000 and $ 4,788,000 , respectively. Accounts receivable, net of allowance for credit losses, related to contracts with customers was $ 3,351,000 and $ 3,005,000 as of December 31, 2024 and 2023, respectively. As of January 1, 2023, accounts receivable, net of allowance for credit losses was $2,130,000. Since substantially all the contracts have terms of one year or less, the Company has elected to use the practical expedient regarding the existence of a significant financing. Costs to obtain contracts with customers consist primarily of sales commissions. As of December 31, 2024 and 2023, the Company has capitalized $ 69,000 and $ 73,000 , respectively, of costs to obtain contracts that are expected to be amortized over more than one year. For contract costs expected to be amortized in less than one year, the Company has elected to use the practical expedient allowing the recognition of incremental costs of obtaining a contract as an expense when incurred. The Company has considered historical renewal rates, expectations of future renewals and economic factors in making these determinations. Fixed Assets Fixed assets are recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. The range of estimated useful lives used to calculate depreciation for principal items of property and equipment are as follow: Asset Category Depreciation / Amortization Period Computer equipment 3 years Furniture & equipment 3 to 7 years Leasehold improvements lesser of 8 years or the lease term Earnings per Share Earnings per share accounting guidance requires that basic net income per common share be computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and dilutive common equivalent shares outstanding during the period. Shares issuable upon the exercise of stock options totaling 52,750 and 72,750 were excluded in the computation of diluted earnings per common share during the years ended December 31, 2024 and 2023, respectively, because their impact was anti-dilutive. Use of Estimates The preparation of financial statements in conformity with United States Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for credit losses and the valuation of goodwill, intangible assets, deferred tax assets, and stock-based compensation. Actual results could differ from those estimates. F-13 Table of Contents Income Taxes Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, the Company recognizes the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. The Company’s policy regarding the classification of interest and penalties is to classify them as income tax expense in the financial statements, if applicable. Capitalized Software Costs incurred to develop the Company’s cloud-based platform products are capitalized when the preliminary project phase is complete, management commits to fund the project and it is probable the project will be completed and used for its intended purposes. Once the software is substantially complete and ready for its intended use, the software is amortized over its estimated useful life, which is typically four years. Costs related to design or maintenance of the software are expensed as incurred. Capitalized costs and amortization for the years ended December 31, 2024 and 2023, are as follows (in thousands): December 31, 2024 2023 Capitalized software development costs $ 597 $ 478 Amortization included in cost of revenues 220 60 Impairment of Long-lived Assets In accordance with the authoritative guidance for accounting for long-lived assets, assets such as property and equipment, trademarks, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds fair value of the asset group. Lease Accounting The Company determines if an arrangement is a lease at inception. Operating lease agreements are primarily for office space and are included within lease right-of-use (“ROU”) assets and lease liabilities on the consolidated balance sheet. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments consist of non-lease services related to the lease and payments under operating leases classified as short-term. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets include any lease payments due and exclude lease incentives. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. F-14 Table of Contents Fair Value Measurements Accounting Standards Codification (“ASC”) Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: · Level 1 – Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes debt and equity securities that are traded in an active market. Cash and cash equivalents are quoted at Level 1. · Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The fair value of the Company’s long-term debt and interest rate swap are quoted at Level 2. · Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. As of December 31, 2024 and 2023, the Company believes the fair value of its financial instruments, such as, accounts receivable, long-term debt, the line of credit, and accounts payable approximate their carrying amounts. Stock-based Compensation The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The associated cost is recognized over the period during which an employee or director is required to provide service in exchange for the award. Translation of Foreign Financial Statements The financial statements of the foreign subsidiaries of the Company have been translated into U.S. dollars. All assets and liabilities have been translated at current rates of exchange in effect at the end of the period. Income and expense items have been translated at the average exchange rates for the year or the applicable interim period. The gains or losses that result from this process are recorded as a separate component of other accumulated comprehensive income until the entity is sold or substantially liquidated. Comprehensive (Loss) Income Comprehensive (loss) income consists of net (loss) income and other comprehensive loss (income) related to changes in the cumulative foreign currency translation adjustment. Business Combinations, Goodwill, and Intangible Assets The authoritative guidance for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill. The Company records the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recorded as goodwill. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets consist of client relationships, customer lists, distribution partner relationships, software, technology, non-compete agreements and trademarks that are initially measured at fair value. At the time of the business combination, trademarks may be considered an indefinite-lived asset and, as such, are not amortized as there may be no foreseeable limit to cash flows generated from them. For the Newswire acquisition (see Note 4), the Company originally determined the trademarks acquired were considered a definite lived asset which will be amortized over a period of 15 years, however upon the re-brand of the Company to ACCESS Newswire and subsequent review of the trademarks associated with Newswire, determined the life to be 5 years remaining. The goodwill and intangible assets are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. The client relationships ( 5 - 10 years), customer lists ( 3 years), distribution partner relationships ( 10 years), non-compete agreements ( 5 years) and software and technology ( 3 - 7 years) are amortized over their estimated useful lives. F-15 Table of Contents Advertising The Company expenses advertising as incurred. During the years ended December 31, 2024 and 2023, advertising expense was $ 1,267,000 and $ 1,690,000 , respectively. Liquidity and Capital Resources As of December 31, 2024, we had $ 4,103,000 in cash and cash equivalents and $3,351,000 in net accounts receivable. Current liabilities from continuing operations as of December 31, 2024, totaled $ 12,790,000 including the current portion of our long-term debt, accounts payable, deferred revenue, accrued payroll liabilities, income taxes payable, current portion of lease liabilities and other accrued expenses. As of December 31, 2024, our current liabilities from continuing operations exceeded our current assets from continuing operations by $ 2,510,000 . While our current liabilities from continuing operations exceed current assets from continuing operations, we believe our ability to renegotiate our Credit Agreement and ability to continue to generate cash will benefit us in the future. See Note 15 (Subsequent Events) to our Consolidated Financial Statements relating to the sale of our Compliance business and the repayment of $ 12,000,000 of our long-term debt as of February 28, 2025. Newly Adopted Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for the Company for the year ended December 31, 2024. The Company adopted the new standard effective December 31, 2024 on a retrospective basis. The adoption did not have any impact on the Company’s financial position, results of operations or cash flows. Refer to Note 12, Segment Information, for details. Accounting Pronouncements Not Yet Effective In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 is effective for the Company for the year ending December 31, 2025 and early adoption is permitted. The guidance allows for adoption using either a prospective or retrospective transition method. The Company does not believe the adoption of this standard will have a significant impact on the Company’s financial position, results of operations or cash flows, however, is evaluating the impact that the updated standard will have on its financial statement disclosures. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This update requires enhanced disclosures of certain costs and expenses in the notes to the financial statements. This update is applicable to all public entities and is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update should be applied prospectively; however, retrospective application is permitted. The Company is currently evaluating the impact the new accounting guidance will have on its disclosures. F-16 Table of Contents Note 3: Discontinued Operations On February 28, 2025, the Company and Direct Transfer, LLC, its wholly owned subsidiary entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Equiniti Trust Company, LLC (the “Buyer”). Pursuant to, and subject to the terms and conditions of, the Purchase Agreement, the Buyer purchased certain assets related to the Company’s compliance business (the “Purchased Assets”). The Purchased Assets consist of certain accounts receivable, prepaid assets, contracts and intellectual property, among other things, related to the Company’s services of providing i) disclosure software and services for financial reporting, ii) stock transfer services, iii) annual meeting, print and shareholder distribution and fulfillment services and iv) virtual annual meeting services (but not the intellectual property relating to the virtual annual meeting services). Revenue related to these services was previously included in the Company’s “compliance revenue” stream as reported with the SEC in previous filings, except revenue related to virtual annual meeting services, which was previously reported in “communications revenue” stream in previous SEC filings. Additionally, revenue related to providing SEDAR services and revenue related to our whistleblower hotline, which was previously reported as “compliance revenue” will be retained by the Company. The Buyer will only assume certain liabilities related to the Purchased Assets, which includes certain accounts payable, accrued liabilities and deferred revenue. This transaction also closed on February 28, 2025. The Company reviewed Accounting Standards Codification (ASC) 205-20-45, which provides guidance over the disposal of a component of an entity and determined that the criteria were met to classify the assets of the compliance business as held-for-sale as of December 31, 2024. Further guidance states that once a group of assets are determined to be held-for-sale, then they should be recorded as discontinued operations in the financial statements of the entity. Performance obligations of contracts included in discontinued operations include providing subscriptions to certain modules of our compliance software or other stand-ready obligations to deliver services and annual report printing and distribution. Additionally, services are provided on a per project basis. Set up fees for disclosure services are considered a separate performance obligation and are satisfied upfront. Set up fees for the transfer agent module and investor relations content management module are immaterial. For service contracts that include stand ready obligations, revenue is recognized evenly over the contract period. For all other services delivered on a per project or event basis, the revenue is recognized at the completion of the event. The Company believes recognizing revenue for subscriptions and stand ready obligations using a time-based measure of progress, best reflects the Company’s performance in satisfying the obligations. The following table sets forth the assets and liabilities included in discontinued operations as of December 31, 2024 and 2023 as presented into the Consolidated Balance Sheets: in $000’s December 31, 2024 2023 Accounts Receivable (net of provision for credit losses of $559 and $398 as of December 31, 2024 and 2023, respectively $ 1,321 $ 1,363 Other current assets 17 56 Total current assets 1,338 1,419 Goodwill 2,885 2,885 Intangible Assets (net of accumulated amortization of $5,265 and $5,097 as of December 31, 2024 and 2023, respectively 637 805 Other non current assets 55 56 Total assets $ 4,915 $ 5,165 Accounts Payable $ 107 $ 128 Accrued Expenses 168 81 Deferred Revenue 618 662 Total liabilities $ 893 $ 871 F-17 Table of Contents The following table sets forth the details of income from discontinued operations for the years ended December 31, 2024 and 2023 as presented in the Consolidated Statement of Operations: In $000's Years Ended December 31, 2024 2023 Revenues $ 5,831 $ 8,856 Cost of revenues 1,690 2,322 Gross margin 4,141 6,534 Operating costs and expenses: General and administrative 666 581 Sales and marketing 104 223 Product development — 7 Depreciation and amortization 168 168 Total operating costs and expenses 938 979 Operating income 3,203 5,555 Other income (expense) Interest income 31 133 Income before income taxes 3,234 5,688 Income tax expense 746 1,481 Net income from discontinued operations $ 2,488 $ 4,207 Note 4: Fixed Assets in $000’s December 31, 2024 2023 Computer equipment $ 243 $ 224 Furniture & equipment 331 331 Leasehold improvements 705 705 Total fixed assets, gross 1,279 1,260 Less: Accumulated depreciation ( 914 ) ( 765 ) Total fixed assets, net $ 365 $ 495 Included in leasehold improvements is $ 488,000 of tenant improvement allowance associated with a lease signed in March 2019 related to the Company’s corporate headquarters. Depreciation expense on fixed assets for the years ended December 31, 2024 and 2023 totaled $ 149,000 and $ 155,000 , respectively. No disposals were made during the years ended December 31, 2024 and 2023. Note 5: Goodwill and Other Intangible Assets The components of intangible assets are as follows (in 000’s): December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 1,998 ( 1,426 ) 572 Proprietary software 3,198 ( 1,458 ) 1,740 Distribution partner relationships 153 ( 99 ) 54 Non-compete agreement 69 ( 69 ) — Trademarks – definite-lived 13,350 ( 3,972 ) 9,378 Trademarks – indefinite-lived 232 — 232 Total intangible assets $ 19,000 $ ( 7,024 ) $ 11,976 F-18 Table of Contents December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 1,998 ( 1,158 ) 840 Proprietary software 3,198 ( 1,015 ) 2,183 Distribution partner relationships 153 ( 84 ) 69 Non-compete agreement 69 ( 69 ) — Trademarks – definite-lived 27,500 ( 2,139 ) 25,361 Trademarks – indefinite-lived 232 — 232 Total intangible assets $ 33,150 $ ( 4,465 ) $ 28,685 The Company performed its annual assessment for impairment of intangible assets and determined an impairment charge of $ 14,150,000 associated with the Newswire trademarks was necessary for the year ended December 31, 2024. As a result of the Company’s rebranding to ACCESS Newswire, management determined the useful life of the Newswire trademarks to be 5 years as opposed to the original 15 years upon the initial valuation in 2022. This decrease caused a decrease in the expected cashflows the assets will generate, which resulted in the impairment charge. There was no impairment loss recorded as of and for the year ended December 31, 2023. The amortization of intangible assets is a charge to operating expenses and totaled $ 2,559,000 in the years ended 2024 and 2023, respectively. The future amortization of the identifiable intangible assets is as follows (in 000’s): Years Ending December 31: 2025 $ 2,502 2026 2,475 2027 2,347 2028 2,243 2029 2,177 Thereafter — Total $ 11,744 During the year ended December 31, 2022, we acquired Newswire, which added $ 16,122,000 of goodwill based on our preliminary purchase price allocation. During the year ending December 31, 2023, we concluded our purchase price allocation, which resulted in a reduction in goodwill of $ 571,000 . Along with Newswire, the goodwill balance of $ 19,043,000 is related to the stock acquisitions of ACCESSWIRE in 2014 and Filing Services Canada, Inc. in 2018 and the assets of the Visual Webcasting Platform in 2019. The Company conducted its annual impairment analyses as of December 31, 2024 and 2023 and determined that no goodwill was impaired. F-19 Table of Contents Note 6: Credit Agreement On March 20, 2023 (the “Closing Date”), the Company entered into a $ 25 million Credit Agreement (the “Credit Agreement”) with Pinnacle Bank (“Pinnacle”). The Credit Agreement provides for the following: (i) term loan facility in an aggregate principal amount of $20 million (the “Term Loan”), and (ii) revolving line of credit in an up to aggregate principal amount of $5 million (the “Revolving LOC”), subject to an 85% limit based on the current eligible accounts receivable (as defined in the Credit Agreement) . Please also see Note 15 (Subsequent Events) relating to the amendments to the Credit Agreement as of February 28, 2025. Pursuant to the terms of the Credit Agreement, the per annum interest rate of the Term Loan is variable based on the one-month secured overnight financing rate (“SOFR”) plus 2.35%, subject to a minimum SOFR of 2.00%. However, the Term Loan issued on the Closing Date has a per annum interest rate of 6.217%, which was fixed with respect to the entire principal amount as a result of an interest rate swap agreement entered into between the Company and Pinnacle on the Closing Date in accordance with the terms of the Credit Agreement . The Company began making monthly interest only payments on the Term Loan on April 1, 2023. On January 1, 2024, the Company began making monthly principal payments of $ 333,333 plus interest payments on the Term Loan until the maturity date of December 20, 2028 . The proceeds of the Term Loan along with certain cash on hand of the Company were used to repay in its entirety the one-year Secured Promissory Note (the “Seller Note”) issued to Lead Capital, LLC (“the Seller”) in connection with the Company’s November 1, 2022 acquisition of iNewswire.com LLC (“Newswire”) for a lump sum payment of $ 22,880,000 . In order to settle the Seller Note on March 20, 2023, the Company paid $ 370,000 to Seller, with the Seller agreeing to forgive $ 440,000 of interest which would have otherwise been due. The $ 370,000 payment is recorded in Other income (expense), net on the Consolidated statements of operations for the year ended December 31, 2023. Effective June 25, 2024, the aggregate principal amount of the Revolving LOC was reduced to $ 1,500,000 . The Company currently has no plans to utilize the Revolving LOC but may do so in the future. If the Company does utilize any funds under the Revolving LOC, the funds will bear interest at a per annum rate equal to the then current SOFR plus 2.05%. Effective June 25, 2024, Pinnacle’s commitment to fund under the Revolving LOC was amended to terminate on June 30, 2025, unless terminated earlier pursuant to the terms of the Credit Agreement. The Company terminated its existing $ 3,000,000 unsecured line of credit with Fifth Third Bank immediately prior to the Closing Date. As of December 31, 2024, there was no outstanding balance under the Revolving LOC and the interest rate was 6.58 %. The Credit Agreement originally contained financial covenants, which commenced with fiscal quarter ending September 30, 2023, and were subsequently amended on June 25, 2024, as follows: Original As Amended Fiscal Quarter Fixed Charge Coverage Ratio Fixed Charge Coverage Ratio Each fiscal quarter ending on or after June 30, 2023 through June 30, 2024 1.2:1.0 1.2:1.0 Fiscal quarter ending on or after September 30, 2024 through March 31, 2025 1.2:1.0 1.15:1.0 Each fiscal quarter ending on or after June 30, 2025 1.2:1.0 1.2:1.0 Leverage Ratio Leverage Ratio Each fiscal quarter ending on or after June 30, 2023 through September 30, 2023 2.75:1.0 2.75:1.0 Fiscal quarter ending December 31, 2023 2.5:1.0 2.5:1.0 Fiscal quarter ending March 31, 2024 2.5:1.0 2.75:1.0 Each fiscal quarter ending on or after June 30, 2024 through September 30, 2024 2.5:1.0 3.5:1.0 Fiscal quarter ending December 31, 2024 2.5:1.0 3.0:1.0 Fiscal quarter ending March 31, 2025 2.5:1.0 2.85:1.0 Each fiscal quarter ending on or after June 30, 2025 2.5:1.0 2.75:1.0 F-20 Table of Contents Additionally, as long as the Company maintains a Leverage Ratio greater than 2.75:1.0, the Company is required to maintain unrestricted liquidity, as defined in the amendment, of not less than $1,500,000, beginning June 30, 2024. As of December 31,2024, the Company was not in compliance with the above covenants. However, with sale of the Purchased Assets and simultaneous restructuring of the Credit Agreement (See Note 15: Subsequent Events) the above covenants were modified that the Company is in compliance and based on future projections expects to be in Compliance for the following twelve months. The Credit Agreement also contains customary affirmative covenants for a transaction of this nature, including among other things, covenants relating to: maintenance of adequate financial and accounting books and records, delivery of financial statements and other information, preservation of existence of the Company and subsidiaries, payment of taxes and claims, compliance with laws, maintenance of insurance, foreign qualification, use of proceeds, cash management system, maintenance of properties, and conduct of business. The Credit Agreement also contains customary negative covenants for a transaction of this nature, including, among other things, covenants relating to debt, liens, investments, negative pledges, dividends and other debt payments, restriction on fundamental changes, sale of assets, transactions with affiliates, restrictive agreements, and changes in fiscal year. The Credit Agreement also contains various Events of Default (subject to certain grace periods, to the extent applicable), including among other things, Events of Default for the nonpayment of principal, interest or fees; breach of certain covenants; inaccuracy of the representations or warranties in any material respect; bankruptcy or insolvency; dissolution or change of control; certain unsatisfied judgments; defaults under material agreements; certain unfunded liabilities under employee benefit plans; certain unsatisfied judgments; certain ERISA violations; and the invalidity or unenforceability of the Credit Agreement. If an Event of Default occurs, the Company may be required to repay all amounts outstanding under the Credit Agreement. The Term Loan and any advances under the Revolving LOC are secured by a first priority lien and security interest to the benefit of Pinnacle in the Event of Default on all of the Company’s current or future assets and each of the Guarantor’s current or future assets. Note 7: Interest Rate Swap The Company entered into an interest rate swap agreement to convert its interest rate exposure from variable rate to fixed rate to control cash outflows related to interest on its variable rate debt. The Company has $ 20,000,000 of notional amount interest rate swap agreement, which amortizes in-line with its long-term Credit Agreement. Under the swap agreement, the Company pays a fixed rate of interest at 6.217% and receives an average variable rate of SOFR + 2.35% adjusted monthly . As of December 31, 2024, the variable rate was 6.88 %. The carrying amount for the Company’s derivative financial instrument is the estimated fair value of the financial instrument. The Company’s derivative is not exchange listed and therefore the fair value is estimated under a mark-to-market approach using an analytics model that is a readily observable market input. This model reflects the contractual terms of the derivative, such as notional value and expiration date, as well as market-based observables including interest rates, yield curves, and the credit quality of the counterparty. The model also incorporates the Company’s creditworthiness in order to appropriately reflect non-performance risk. Inputs to the derivative pricing model are generally observable and do not contain a high level of subjectivity, and accordingly, the Company’s derivative is classified within Level 2 of the fair value hierarchy. While the Company believes its estimate results in a reasonable reflection of the fair value of the instrument, the estimated value may not be representative of actual value that could have been realized or that will be realized in the near future. F-21 Table of Contents In accounting for the interest rate swap, the Company has determined it does not qualify for hedge accounting. The fair value of the swap agreement as of December 31, 2024 and 2023 was an asset of $ 60,000 and liability of $ 21,000 , respectively and is included in Other long-term assets and liabilities, in the Consolidated balance sheets. The fair value of the interest rate swap agreement excludes accrued interest and takes into consideration current interest rates and current likelihood of the swap counterparty’s compliance with its contractual obligations. As a result of the interest rate swap, the Company recognized a net unrealized gain of $ 81,000 during the year ended December 31, 2024, and a net unrealized loss of $ 21,000 during the year ended December 31, 2023, which are included in Other expense in the Consolidated statements of operations. Note 8: Equity Dividends The Company did not pay any dividends during the years ended December 31, 2024 and 2023. Preferred stock and common stock During the year ended December 31, 2024, there was 4,532 shares of common stock issued to a consultant in exchange for services. There were no issuances of preferred stock or common stock during the years ended December 31, 2024 and 2023 other than stock awarded to employees and the Board of Directors. Note 9: Stock Options and Restricted Stock Units On June 7, 2023, the shareholders of the Company approved the 2023 Equity Incentive Plan (the “2023 Plan”). Under the terms of the 2023 Plan, the Company is authorized to issue incentive awards for common stock up to 300,000 shares to employees and other personnel. The awards may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and performance awards. The 2023 Plan is effective through April 1, 2033. As of December 31, 2024, there are 365,078 shares which remain to be granted under the 2023 Plan, including 122,076 shares assumed under the Company’s previous 2014 Equity Incentive Plan, as amended. The following is a summary of stock options issued during the year ended December 31, 2024 and 2023: Number of Options Outstanding Range of Exercise Price Weighted Average Exercise Price Aggregate Intrinsic Value Balance on December 31, 2022 81,250 $ 6.80 – 27.71 $ 20.17 $ 462,390 Options granted 30,000 26.98 26.98 — Options exercised ( 2,500 ) 7.76 7.76 19,400 Options forfeited/cancelled ( 2,000 ) 9.26 – 27.71 23.10 — Balance on December 31, 2023 106,750 $ 6.80 – 27.71 $ 22.32 $ 176,360 Options granted — — — — Options exercised — — — — Options forfeited/cancelled ( 47,000 ) 9.26 – 26.00 21.97 — Balance on December 31, 2024 59,750 $ 6.80 – 27.71 $ 22.60 10,700 F-22 Table of Contents The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e. the aggregate difference between the closing price of the Company’s common stock on December 31, 2024 and 2023 of $ 8.94 and $ 18.13 , respectively, and the exercise price for in-the-money options) that would have been received by the holders if all instruments had been exercised on December 31, 2024 and 2023. As of December 31, 2024, there was $ 208,000 of unrecognized compensation cost related to stock options, which will be recognized through 2027. The following is a summary of unvested stock options during the year ended December 31, 2024 and 2023: Number of Options Outstanding Weighted Average Exercise Price Weighted Average Grant Date Fair Value Balance on December 31, 2022 44,250 $ 26.55 $ 12.41 Options granted 30,000 26.98 13.89 Options vested ( 7,500 ) 27.71 13.53 Options forfeited/cancelled ( 1,500 ) 26.00 11.87 Balance on December 31, 2023 65,250 26.78 13.12 Options granted — — — Options vested ( 27,750 ) 27.05 13.18 Options forfeited/cancelled ( 15,000 ) 26.00 11.87 Balance on December 31, 2024 22,500 26.98 13.89 The following table summarizes information about stock options outstanding and exercisable on December 31, 2024: Options Outstanding Options Exercisable Exercise Price Range Number Weighted Average Remaining Contractual Life (in Years) Weighted Average Exercise Price Number $ 0.01 - 8.00 5,000 0.89 6.80 5,000 $ 8.01 - 11.00 2,000 4.50 10.75 2,000 $ 11.01 - 16.00 10,000 4.16 13.21 10,000 $ 16.01 - 27.00 30,000 8.01 26.98 7,500 $ 27.01 – 27.71 12,750 7.05 27.71 12,750 Total 59,750 6.45 22.60 37,250 Of the 59,750 stock options outstanding, 20,926 are non-qualified stock options. All options have been registered with the SEC. F-23 Table of Contents The following is a summary of restricted stock units issued during the years ended December 31, 2024 and 2023: Number of RSUs Outstanding Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Balance on December 31, 2022 50,740 $ 25.00 $ 1,268,500 Units granted 74,832 26.08 1,951,619 Units vested/issued ( 21,490 ) 25.24 ( 542,408 ) Units forfeited ( 9,250 ) 23.87 ( 220,798 ) Balance on December 31, 2023 94,832 $ 25.90 $ 2,456,149 Units granted 43,666 12.41 541,932 Units vested/issued ( 18,999 ) 20.26 ( 384,830 ) Units forfeited ( 24,333 ) 25.85 ( 628,984 ) Balance on December 31, 2024 95,166 20.85 1,984,267 During the year ended December 31, 2024, the Company granted 43,666 shares of restricted stock units to employees, contractors and the Board of Directors, which vest at various intervals over the next 3 years. The average grant date fair value of these grants was $ 12.41 per share during the year ended December 31, 2024. During the year ended December 31, 2024, 18,999 restricted stock units with a grant date average intrinsic value of $ 20.26 per share, vested. As of December 31, 2024, there was $ 830,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2027. During the years ended December 31, 2024 and 2023, the Company recorded compensation expense of $ 684,000 and $ 1,365,000 , respectively, related to stock options and restricted stock units. Note 10: Leases Leasing activity generally consists of office leases. In March 2019, a lease was signed to move the corporate headquarters to Raleigh, North Carolina. The lease had a lease commencement date of October 2, 2019 and expires December 31, 2027. Minimum lease payments are $ 2,997,000 , not including a tenant improvement allowance of $ 488,000 , which is included in fixed assets as of December 31, 2024. The Company recognized a ROU asset and corresponding lease liability of $ 2,596,000 , which represents the present value of minimum lease payments discounted at 3.77 %, the Company’s incremental borrowing rate at lease inception. Lease liabilities totaled $ 1,057,000 as of December 31, 2024. The current portion of this liability of $ 389,000 is included in Accrued expenses on the Consolidated balance sheets and the long-term portion of $ 668,000 is included in Lease liabilities on the Consolidated balance sheets. Rent expense consists of both operating lease expense from amortization of our ROU assets as well as variable lease expense which consists of non-lease components of office leases (i.e. common area maintenance) or rent expense associated with short-term leases. The components of lease expense were as follows (in 000’s): Year ended December 31, 2024 Year ended December 31, 2023 Lease expense Operating lease expense $ 304 $ 304 Variable lease expense 64 56 Rent expense $ 368 $ 360 F-24 Table of Contents The weighted-average remaining non-cancelable lease term for our operating leases was 3 years as of December 31, 2024. As of December 31, 2024, the weighted-average discount rate used to determine the lease liability was 3.77 %. The future minimum lease payments to be made under non-cancelable operating leases on December 31, 2024, are as follows (in 000’s): Year Ended December 31: 2025 $ 389 2026 401 2027 413 Total lease payments 1,203 Present value adjustment ( 146 ) Lease liability $ 1,057 We have performed an evaluation of our other contracts with customers and suppliers in accordance with Topic 842 and have determined that, except for the leases described above, none of our contracts contain a lease. Note 11: Commitments and Contingencies From time to time, the Company may be involved in litigation that arises through the normal course of business. The Company is neither a party to any litigation nor is aware of any such threatened or pending litigation that might result in a material adverse effect to the Company’s business. Note 12: Segment Reporting Operating segments are components of an enterprise about which separate financial information is available and is evaluated periodically by management, namely the Chief Operating Decision Maker (“CODM”) of an organization, in order to determine operating and resource allocation decisions. By this definition, the Company has identified its CEO as the CODM. The Company considers itself to be in a single reportable segment under the authoritative guidance for segment reporting, specifically a communications company for publicly traded and private companies. The CODM uses operating income to evaluate our capital allocation, which could be re-investing income back into the Company, executing a share-repurchase, paying dividends or acquiring other entities. Operating income is used to monitor budget versus actual results. The CODM also uses operating income in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the Company. In $000's Years Ended December 31, 2024 2023 Revenues $ 23,057 $ 24,522 Cost of revenues Costs to deliver products 2,623 2,987 Employee costs 2,462 2,339 Teleconference costs 252 216 Amortization of capitalized software 220 61 Other segment costs 60 4 Total cost of revenue 5,617 5,607 Operating costs and expenses: Employee costs 8,103 9,603 Consultants and professional services 3,035 2,206 Depreciation and amortization 2,708 2,728 Advertising 1,267 1,690 Provision for credit losses 1,083 538 Software licensing 938 969 Stock compensation 703 1,341 Hosting 461 267 Merchant and bank fees 481 534 Acquisition/integration and other non-recurring costs 408 591 Rent 368 360 Impairment loss on intangible assets 14,150 — Other operating expenses (1) 54 827 Total operating costs and expenses 33,759 21,654 Operating loss $ ( 16,319 ) $ ( 2,739 ) (1) Other operating expenses include insurance, travel, reseller commissions, tradeshow expense and other miscellaneous selling, general and administrative expenses F-25 Table of Contents Note 13: Income Taxes The provision for income taxes consisted of the following components for the years ended December 31 (in 000’s): 2024 2023 Current: Federal $ 20 $ ( 79 ) State 5 45 Foreign 12 ( 55 ) Total Current 37 ( 89 ) Deferred: Federal ( 3,611 ) ( 670 ) State ( 590 ) ( 175 ) Foreign 100 ( 4 ) Total Deferred ( 4,101 ) ( 849 ) Total benefit for income taxes $ ( 4,064 ) $ ( 938 ) Reconciliation between the statutory rate and the effective tax rate is as follows on December 31 (in 000's, except percentages): 2024 2023 Amount Percentage Amount Percentage Federal statutory tax rate $ ( 3,642 ) 21.0 % $ ( 920 ) 21.0 % State tax rate ( 586 ) 3.3 % ( 139 ) 3.2 % Permanent difference – stock-based compensation 56 ( 0.3 )% 54 ( 1.2 )% Permanent difference – other 19 ( 0.1 )% 8 ( 0.2 )% Foreign tax credit generated — — — — Tax on foreign earnings – tax reform 40 ( 0.2 )% — — Foreign rate differential 4 ( 0.1 )% ( 9 ) 0.2 % FDII Deduction — — % — — Other 45 ( 0.3 )% 68 ( 1.6 )% Total $ ( 4,064 ) 23.4 % $ ( 938 ) 21.4 % F-26 Table of Contents Components of net deferred income tax assets are as follows on December 31 (in 000's): 2024 2023 Change Assets: Deferred revenue $ 129 $ 80 $ 49 Allowance for doubtful accounts 350 311 39 Stock options 385 338 47 Transaction costs 61 69 ( 8 ) IRC Section 174 capitalized costs 936 510 426 ROU lease liability 279 293 ( 14 ) Purchase of intangible assets 2,144 — 2,144 Other 12 19 ( 7 ) Total deferred tax asset 4,296 1,620 2,676 Liabilities Prepaid expenses ( 3 ) ( 1 ) ( 2 ) Basis difference in fixed assets ( 88 ) ( 149 ) 61 Capitalized software ( 63 ) ( 20 ) ( 43 ) ROU Assets ( 251 ) ( 260 ) 9 Purchase of intangibles — ( 1,268 ) 1,268 Other ( 98 ) ( 61 ) ( 37 ) Total deferred tax liability ( 503 ) ( 1,759 ) 1,256 Total net deferred tax asset / (liability) $ 3,793 $ ( 139 ) $ 3,932 As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. It has been determined that is more likely than not that the Company's deferred tax assets are able to be realized based on future positive earnings and reversal of existing temporary differences. The Company had no unrecognized tax benefits as of December 31, 2024 or December 31, 2023. Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. There are no accruals for interest and penalties on December 31, 2024. Undistributed earnings of the Company are insignificant as of December 31, 2024. With the enactment of the 2017 Act, the Company does not consider any of its foreign earnings as indefinitely reinvested. The Company is subject to income taxation by both federal and state taxing authorities. Income tax returns for the years ended December 31, 2023, 2022 and 2021 are open to audit by federal and state taxing authorities. Note 14: Employee Benefit Plans The Company sponsors two defined contribution 401(k) Profit Sharing Plans and allows all employees in the United States to participate. Matching and profit-sharing contributions to the plan are at the discretion of management but are limited to the amount deductible for federal income tax purposes. The Company made contributions to the plan of $ 135,000 and $ 174,000 during the years ended December 31, 2024 and 2023, respectively. F-27 Table of Contents Note 15: Subsequent Events In accordance with ASC 855 “Subsequent Events”, the Company evaluated subsequent events after December 31, 2024, through the date these Consolidated Financial Statements were issued and has no transactions or events requiring disclosure except as set forth below: Name Change On January 23, 2025, the Company filed a Certificate of Amendment to its Certificate of Incorporation to change its corporate name from “Issuer Direct Corporation” to “ACCESS Newswire Inc.” effective as of January 27, 2025. Asset Purchase Agreement On February 28, 2025, the Company and Direct Transfer, LLC, a wholly owned subsidiary of the Company (“Direct Transfer” and, collectively with the Company, the “Sellers”) entered into the Purchase Agreement with the Buyer. Pursuant to, and subject to the terms and conditions of, the Purchase Agreement, the Buyer purchased certain assets related to the Sellers’s Compliance business (the “Purchased Assets”). The Purchased Assets consist of certain accounts receivable, prepaid assets, contracts and intellectual property, among other things, related to the Company’s services of providing the following: (i) disclosure software and services for financial reporting; (ii) stock transfer services; (iii) annual meeting, print and shareholder distribution and fulfillment services; and (iv) virtual annual meeting services (but not the intellectual property relating to the virtual annual meeting services). Revenue related to these services was previously included in the Company’s “Compliance revenue” stream as reported with the SEC in previous filings, except revenue related to virtual annual meeting services, which was previously reported in “Communications revenue” stream in previous SEC filings. Additionally, revenue related to providing SEDAR services and revenue related to our whistleblower hotline, which was previously reported as “Compliance revenue” will be retained by the Company. The Buyer will only assume certain liabilities related to the Purchased Assets, which includes certain accounts payable, accrued liabilities and deferred revenue. The transaction also closed on February 28, 2025. The purchase price for the Purchased Assets is $ 12,500,000 in cash, subject to adjustment as set forth in the Purchase Agreement, with $ 12,000,000 of the purchase price being paid to the Sellers at closing and $500,000 being retained by the Buyer as a holdback for a period of 12 months post-closing to satisfy potential indemnification claims by the Buyer under the Purchase Agreement if any. As discussed in more detail below, the Company used the entire $ 12,000,000 in closing cash to reduce its indebtedness to Pinnacle Bank (“Pinnacle”). Third Modification to Credit Agreement and Partial Release On February 28, 2025 and in connection with the Purchased Assets transaction described above, the Company and each of its wholly-owned subsidiaries entered into a Third Modification to Credit Agreement and Partial Release (the “Third Modification to Credit Agreement”) with Pinnacle with respect to that certain Credit Agreement dated as of March 20, 2023, as amended (the “Credit Agreement”), and more fully described in the Company’s Current Report on Form 8-K filed with the SEC on March 22, 2023 and in the Company’s subsequent periodic filings with the SEC. Pursuant to the terms of the Third Modification to Credit Agreement, the Company and Pinnacle agreed to the following: (i) to pay down the current principal balance of the Term Loan (as defined in the Credit Agreement) by $12,000,000 as of the closing of the Purchased Assets transaction such that the current principal balance was reduced from $15,333,333 to $3,333,333 ; (ii) beginning on March 1, 2025, to reduce the monthly principal payments due by the Company to Pinnacle under the Term Loan from $333,333 to $72,464 ; (iii) to amend the financial covenants set forth in the Credit Agreement, as amended; and (iv) to release the Liens (as defined in the Credit Agreement) relating to the Purchased Assets. F-28