What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-13 compared with 2024-11-07 · 235 added, 215 removed, 250 unchanged (64% of the section changed)

FINANCIAL STATEMENTS

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

ACCESS NEWSWIRE INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

September 30,

Current assets:

1 unchanged sentence

Accounts receivable (net of allowance for credit losses of $ 1,321 and $ 1,059 respectively)

Income tax receivable

Other current assets

Current assets held for sale

Total current assets

4 unchanged sentences

Intangible assets (net of accumulated amortization of $ 7,654 and $ 7,024 , respectively)

Deferred tax asset

Non-current assets held for sale

LIABILITIES AND STOCKHOLDERS’ EQUITY

2 unchanged sentences

Accrued expenses

Income taxes payable

Income tax payable

Current portion of long-term debt

Deferred revenue

Current liabilities held for sale

Total current liabilities

Long-term debt (net of debt discount of $ 65 and $ 70 , respectively)

Deferred income tax liability

Lease liabilities – long-term

3 unchanged sentences

Stockholders' equity:

Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.

Common stock $ 0.001 par value, 20,000,000 shares authorized, 3,833,977 and 3,815,212 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.

Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.

Common stock $ 0.001 par value, 20,000,000 shares authorized, 3,847,743 and 3,838,743 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

4 unchanged sentences

The accompanying notes are an integral part of these unaudited financial statements.

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

ACCESS NEWSWIRE INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

1 unchanged sentence

For the Three Months Ended

For the Nine Months Ended

September 30,

Cost of revenues

1 unchanged sentence

General and administrative

Sales and marketing expenses

Sales and marketing

Product development

1 unchanged sentence

Total operating costs and expenses

Operating income

Operating loss

Interest expense, net

Other income (expense), net

Income (loss) before taxes

Income tax expense

Other income (expense)

Loss before taxes

Income tax benefit

Net loss from continuing operations

Net income from discontinued operations, net of taxes

Net income (loss)

Income (loss) per share – basic

Income (loss) per share – fully diluted

Net loss from continuing operations per share – basic

Net loss from continuing operations per share – diluted

Net income from discontinued operations per share – basic

Net income from discontinued operations per share – diluted

Net income per share – basic

Net income per share – fully diluted

Weighted average number of common shares outstanding – basic

1 unchanged sentence

The accompanying notes are an integral part of these unaudited financial statements.

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

ACCESS NEWSWIRE INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

1 unchanged sentence

For the Three Months Ended

For the Nine Months Ended

September 30,

Net income (loss)

2 unchanged sentences

The accompanying notes are an integral part of these unaudited financial statements.

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

ACCESS NEWSWIRE INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share amounts)

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’

Income (Loss)

Balance at December 31, 2023

Stock-based compensation expense

Foreign currency translation

Balance at March 31, 2023

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

Balance at June 30, 2023

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

Balance at September 30, 2023

Accumulated Other Comprehensive

Total Stockholders’

Income (Loss)

Balance at March 31, 2024

Balance at December 31, 2024

3 unchanged sentences

Balance at March 31, 2025

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

Balance at June 30, 2024

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

Balance at September 30, 2024

The accompanying notes are an integral part of these unaudited financial statements.

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

ACCESS NEWSWIRE INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income from discontinued operations, net of tax

Depreciation and amortization

1 unchanged sentence

Deferred income taxes

Change in fair value of interest rate swaps

Stock-based compensation expense

Measurement period adjustments

Non-cash interest adjustment on note payable

Non-cash interest expense

Changes in operating assets and liabilities:

2 unchanged sentences

Increase (decrease) in accounts payable

Increase (decrease) in accrued expenses

Increase (decrease) in income tax payable

Increase (decrease) in accrued expenses and other liabilities

Increase (decrease) in deferred revenue

Net cash provided by operating activities of continuing operations

Net cash (used in) provided by operating activities of discontinued operations

Net cash provided by operating activities

Cash flows from investing activities:

Capitalized software

Proceeds from Sale of Compliance Business

Purchase of fixed assets

Purchase of acquired business, net of cash received

Capitalized software

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Exercise of stock options

Payment of note payable

Issuance of secured promissory note

Payment for capitalized debt issuance costs

Payment of long-term debt

Net cash used in financing activities

4 unchanged sentences

Supplemental disclosures:

Cash paid for income taxes

Cash paid for interest

The accompanying notes are an integral part of these unaudited financial statements.

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

ACCESS NEWSWIRE INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

The unaudited interim consolidated balance sheet as of September 30, 2024 and consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three and nine-month periods ended September 30, 2024 and 2023 included herein, have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 10 of Regulation S-X under the Exchange Act.

The unaudited interim consolidated balance sheet as of March 31, 2025 and consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three-month periods ended March 31, 2025 and 2024 included herein, have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 10 of Regulation S-X under the Exchange Act.

In the opinion of management, they include all normal recurring adjustments necessary for a fair presentation of the financial statements.

Results of operations reported for the interim periods are not necessarily indicative of results for the entire year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("US GAAP" or “GAAP”) have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements.

The interim financial information should be read in conjunction with the 2023 audited financial statements of Issuer Direct Corporation (the “Company”, “We”, or “Our”) filed on Form 10-K for the year ended December 31, 2023.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements.

The interim financial information should be read in conjunction with the 2024 audited financial statements of ACCESS Newswire Inc.

(the “Company”, “We”, or “Our”) filed on Form 10-K for the year ended December 31, 2024.

Summary of Significant Accounting Policies

1 unchanged sentence

Significant intercompany accounts and transactions are eliminated in consolidation.

Earnings Per Share (EPS)

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 54,750 and 52,750 were excluded in the computation of diluted earnings per common share during the three and nine-month periods ended September 30, 2024, respectively, because their impact was anti-dilutive.

There were 72,750 shares issuable upon the exercise of stock options excluded in the computation of diluted earnings per common share during the three and nine-month periods ended September 30, 2023, because their impact was anti-dilutive.

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 three months ended March 31, 2025 and 2024 (in 000’s):

Three months ended

March 31, 2025

Three months ended

March 31, 2024

Beginning balance

Provision for credit losses

Ending balance

Concentration of Credit Risk

Financial instruments and related items which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable.

The Company places its cash and temporary cash investments with credit quality institutions.

As of March 31, 2025, 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 $ 101,000 in Europe and $ 2,048,000 in Canada as of March 31, 2025.

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 three months ended March 31, 2025 or 2024 that accounted for more than 10% of revenue.

Revenue Recognition

Substantially all the Company’s revenue comes from contracts with customers for subscriptions to its cloud-based products or contracts for Communications and Compliance products and services.

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.

4 unchanged sentences

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.

The Company separates revenue from its contracts into two revenue streams:

i) Communications and ii) Compliance.

Performance obligations of Communications contracts include providing subscriptions to certain modules or our entire Communications platform, distributing press releases on a per release basis or conducting webcasts, virtual annual meetings, or other events on a per event basis.

Performance obligations 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.

Performance obligations of Compliance contracts include providing subscriptions to certain Compliance modules 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.

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.

11 unchanged sentences

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 press releases are disseminated for press release packages and ratably over the billing period for subscriptions.

Deferred revenue as of September 30, 2024 and December 31, 2023, was $ 5,308,000 and $ 5,412,000 , respectively, and is expected to be recognized within one year.

Revenue recognized for the nine months ended September 30, 2024 and 2023, which was included in the deferred revenue balance at the beginning of each reporting period, was approximately $ 4,699,000 and $ 3,659,000 , respectively.

Accounts receivable, net of allowance for credit losses, related to contracts with customers was $ 4,405,000 and $ 4,368,000 as of September 30, 2024 and December 31, 2023, respectively.

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.

Deferred revenue for the periods presented was primarily related to press release packages which have been invoiced or paid, 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 March 31, 2025 and December 31, 2024, was $ 5,021,000 and $ 4,743,000 , respectively, and is expected to be recognized primarily within one year.

Approximately $ 245,000 of the deferred revenue balance as of March 31, 2025, relates to contracts for press release packages with an expiration date after March 31, 2026, however the customer may use the balance within one year.

As of January 1, 2024, deferred revenue was $ 4,750,000 .

Revenue recognized for the three months ended March 31, 2025 and 2024, which was included in the deferred revenue balance at the beginning of each reporting period, was approximately $ 2,162,000 and $ 2,570,000 , respectively.

Accounts receivable, net of allowance for credit losses, related to contracts with customers was $ 3,489,000 and $ 3,351,000 as of March 31, 2025 and December 31, 2024, respectively.

As of January 1, 2024, accounts receivable, net of allowance for credit losses was $ 3,005,000 .

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 significant financing.

Costs to obtain contracts with customers consist primarily of sales commissions.

As of September 30, 2024 and December 31, 2023, the Company has capitalized $ 125,000 and $ 130,000 , respectively, of costs to obtain contracts that are expected to be amortized over more than one year.

As of March 31, 2025 and December 31, 2024, the Company has capitalized $ 69,000 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.

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 adopted Financial Accounting Standards Codification (“ASC”) Topic 326, Financial Statements – Credit Losses (“Topic 326”) with an adoption date of January 1, 2023.

As a result, the Company changed its accounting policy for allowance for doubtful accounts using an expected losses model rather than using incurred losses.

The new 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 adopted Topic 326 and determined it did not have a material financial impact.

The roll forward of the allowance for credit losses for the three and nine-months ended September 30, 2024 and 2023, are as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

Beginning balance

Provision for credit losses

Ending Balance

Concentration of Credit Risk

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 September 30, 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 $ 69,000 in Europe and $ 1,524,000 in Canada as of September 30, 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.

Earnings Per Share (EPS)

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 53,750 and 65,750 were excluded in the computation of diluted earnings per common share during the three months ended March 31, 2025 and 2024, respectively, because their impact was anti-dilutive.

Use of Estimates

The preparation of financial statements in conformity with US 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.

The preparation of financial statements in conformity with 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.

8 unchanged sentences

Costs related to design or maintenance of the software are expensed as incurred.

Capitalized costs and amortization for the three and nine-month periods ended September 30, 2024 and 2023, are as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

Amortization for the three-month periods ended March 31, 2025 and 2024, is as follows (in thousands):

Capitalized software development costs

11 unchanged sentences

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.

As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

ROU assets include any lease payments due and exclude lease incentives.

13 unchanged sentences

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 September 30, 2024 and December 31, 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.

As of March 31, 2025 and December 31, 2024, 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

3 unchanged sentences

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

Comprehensive loss consists of net loss and other comprehensive income related to changes in the cumulative foreign currency translation adjustment.

Business Combinations, Goodwill, and Intangible Assets

4 unchanged sentences

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 the Company determined the trademarks acquired were considered a definite lived asset which will be amortized over a period of 15 years.

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.

For the Newswire acquisition, 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.

At times during the nine months ended September 30, 2024, the Company’s market capitalization was less than the Company’s book equity, which may be an indicator of impairment of the Company’s long-lived assets.

Although, at this time, management believes the Company’s stock price is in temporary decline, the Company performed a quantitative test to determine the fair market value of the Company.

This test concluded that the fair market value of the Company’s assets approximates the book value of the Company.

This conclusion was determined using valuations based on the trading price of the Company’s stock, the discounted cash flow method and the guideline public company method.

The test includes several estimations and assumptions of future performance and market conditions, which are subject to change.

Additionally, should the stock price continue to remain at levels below the Company’s carrying value, an additional quantitative test may be necessary, which could conclude an impairment exists.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income related to changes in the cumulative foreign currency translation adjustment.

The Company expenses advertising as incurred.

During the three and nine-month periods ended September 30, 2024, advertising expense was $ 255,000 and $ 1,033,000 , respectively.

During the three and nine-month periods ended September 30, 2023, advertising expense was $ 409,000 and $ 1,235,000 , respectively.

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.

During the three and nine-month period ended September 30, 2024, the Company recorded a loss reserve of $ 115,000 relating to a civil penalty which the Company believes is probable in connection with the settlement of an ongoing regulatory investigation of the Company’s transfer agent business.

This loss reserve is included in general and administrative expenses on the Consolidated statements of operations for the three and nine months ended September 30, 2024, and within accrued expenses on Consolidated balance sheets as of September 30, 2024.

Reclassifications

Certain amounts from prior periods have been reclassified to conform with current period presentation.

Included in general and administrative expenses were $ 94,000 for the three-month period ended March 31, 2024, and $84,000 for the three months ended June 30, 2024, which has been reclassified to cost of revenues for the same periods presented.

The Company did not pay any dividends during the three and nine-month periods ended September 30, 2024 and 2023.

During the three-month periods ended March 31, 2025 and 2024, advertising expense was $ 301,000 and $ 439,000 , respectively.

Additionally, during the three-month period ended March 31,2025, the Company incurred $ 132,000 in costs associated with its corporate re-brand.

Liquidity and Capital Resources

As of March 31, 2025, we had $ 4,100,000 in cash and cash equivalents and $ 3,489,000 in net accounts receivable.

Current liabilities from continuing operations as of March 31, 2025, totaled $ 13,473,000 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 March 31, 2025, our current liabilities from continuing operations exceeded our current assets from continuing operations by $ 3,336,000 .

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.

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.

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.

Discontinued Operations

On February 28, 2025 (the “Closing Date”), the Company and Direct Transfer, LLC, its wholly owned subsidiary entered into and closed 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 assumed certain liabilities related to the Purchased Assets, which included certain accounts payable, accrued liabilities and deferred revenue.

The Company reviewed 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.

As of the Closing Date, there was $ 1,227,000 of gross accounts receivable that did not transfer to the Buyer as a result of the Purchase Agreement.

The following table sets forth the assets and liabilities included in discontinued operations as of March 31, 2025 and December 31, 2024 as presented in the Consolidated Balance Sheets:

Accounts Receivable (net of provision for credit losses of $559 as of March 31, 2025 and December 31, 2024

$ 633 $ 1,321

Other current assets

Total current assets

Intangible Assets (net of accumulated amortization $5,265 as of December 31, 2024

Other non-current assets

$ 633 $ 4,915

Accounts Payable

Accrued Expenses

Deferred Revenue

Total liabilities

The following table sets forth the details of income from discontinued operations for the three months ended March 31, 2025 and 2024 as presented in the Consolidated Statement of Operations:

Three Months Ended March 31,

Cost of revenues

Operating costs and expenses:

General and administrative

Sales and marketing

Depreciation and amortization

Total operating costs and expenses

Operating income

Interest income

Gain on disposal of compliance business

Income before income taxes

Income tax expense

Net income from discontinued operations

The Company did not pay any dividends during the three-month periods ended March 31, 2025 and 2024.

Preferred stock and common stock

There were no issuances of preferred stock or common stock during the three and nine-month periods ended September 30, 2024 and 2023, other than stock awarded to the Company’s employees and Board of Directors.

There were no issuances of preferred stock or common stock during the three-month periods ended March 31, 2025 and 2024, other than stock awarded to employees and the Board of Directors.

2023 Equity Incentive Plan

On May 23, 2014, the shareholders of the Company approved the 2014 Equity Incentive Plan, as amended (the “2014 Plan”).

Under the terms of the 2014 Plan, the Company was authorized to issue incentive awards for common stock up to 200,000 shares to employees and other personnel.

On June 10, 2016 and June 17, 2020, the shareholders of the Company approved an additional 200,000 and 200,000 awards, respectively, to be issued under the 2014 Plan, bringing the total number of shares to be awarded to 600,000 .

The awards could have been in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and performance awards.

The 2014 Plan was effective through March 31, 2024.

As of September 30, 2024, there are 121,076 shares which remain to be granted under the 2014 Plan.

These shares were assumed by the 2023 Plan described below.

On June 7, 2023, the shareholders of the Company approved the 2023 Equity Incentive Plan (the “2023 Plan”).

2 unchanged sentences

The 2023 Plan is effective through April 1, 2033.

As of September 30, 2024, there are 364,078 shares which remain to be granted under the 2023 Plan, including 121,076 shares assumed under the 2014 Plan described above.

The following table summarizes information about stock options outstanding and exercisable at September 30, 2024:

As of March 31, 2025, there are 366,078 shares which remain to be granted under the 2023 Plan, including 123,076 shares assumed under the Company’s previous 2014 Equity Incentive Plan, as amended.

The following table summarizes information about stock options outstanding and exercisable at March 31, 2025:

Options Outstanding

11 unchanged sentences

$ 27.01 - 27.71

As of September 30, 2024, the Company had unrecognized stock compensation related to the options of $ 250,000 , which will be recognized through 2027.

During the three and nine-months ended September 30, 2024, the Company granted 11,166 and 43,666 , respectively, of restricted stock units to members of the Company’s Board of Directors, employees and contractors, which vest at various intervals over the next 3 years.

The average grant date fair value of these grants was $ 8.06 and $ 12.41 per share during the three and nine-month periods ended September 30, 2024, respectively.

During the nine-months ended September 30, 2023, the Company granted 74,832 restricted stock units, with a grant date fair value of $ 26.08 per share.

No restricted stock units were granted during the three months ended September 30, 2023.

During the nine-month period ended September 30, 2024, 16,499 restricted stock units with an average intrinsic value of 19.95 per share, vested.

During the nine-month period ended September 30, 2023, 18,129 restricted stock units with an average intrinsic value of $ 25.85 per share, vested.

No restricted stock units vested during the three-month periods ending on September 30, 2024 and 2023.

As of September 30, 2024, there was $ 1,027,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2027.

The Company recognized income tax expense of $ 14,000 and $ 77,000 for the three and nine-month periods ended September 30, 2024, compared to $ 187,000 and $ 621,000 during the same periods of 2023.

As of March 31, 2025, the Company had unrecognized stock compensation related to the options of $ 183,000 , which will be recognized through 2027.

The Company did not grant any restricted stock units during the three months ended March 31, 2025.

During the three months ended March 31, 2024, the Company granted 26,500 restricted stock units to employees, which vest at various intervals over 3 years.

The average grant date fair value of these grants was $ 14.86 per share.

During the three months ended March 31, 2025, 9,000 restricted stock units with an intrinsic value of $ 20.81 , vested.

During the three months ended March 31, 2024, 2,167 restricted stock units with an average intrinsic value of $ 28.24 , vested.

As of March 31, 2025, there was $ 575,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2026.

The Company recognized income tax benefit of $ 185,000 for the three-month period ended March 31, 2025 compared to $ 158,000 for the three-month period ended March 31, 2024.

At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year and this rate is applied to the results for the year-to-date period, and then adjusted for any discrete period items.

For the three and nine-month periods ended September 30, 2024 and 2023, the variance between our effective tax rate and the U.S.

statutory rate of 21 % is primarily attributable to state income tax and expenses not deductible for tax purposes.

For the nine-month period ended September 30, 2024, the effective tax rate was also impacted by additional expense associated with vesting of stock-based compensation.

For the three-month periods ended March 31, 2025 and 2024, the variance between our effective tax rate and the U.S.

statutory rate of 21 % is primarily attributable to state income tax, a benefit related to the Foreign Derived Intangible Income ("FDII") deduction and a lower statutory tax rate applied to the Company's Canadian income.

This is partially offset by additional expense associated with vesting of stock-based compensation awards.

Leasing activity generally consists of office leases.

In March 2019, we signed a lease to move the corporate headquarters to Raleigh, North Carolina.

The lease, which had a lease commencement date of October 2, 2019, 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 September 30, 2024.

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 $ 1,142,000 as of September 30, 2024.

Lease liabilities totaled $ 973,000 as of March 31, 2025.

The current portion of this liability of $ 392,000 is included in Accrued expenses on the Consolidated balance sheets and the long-term portion of $ 581,000 is included in Lease liabilities on the Consolidated balance sheets.

1 unchanged sentence

common area maintenance) or rent expense associated with short-term leases.

The components of lease expense were as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

The components of lease expense were as follows (in 000’s):

Three months ended

Lease expense

1 unchanged sentence

Variable lease expense

Total lease expense

The weighted-average remaining non-cancelable lease term for our operating leases was 3.25 years as of September 30, 2024.

As of September 30, 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 September 30, 2024, are as follows (in thousands):

The weighted-average remaining non-cancelable lease term for our operating leases was 2.75 years as of March 31, 2025.

As of March 31, 2025, 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 March 31, 2025, are as follows (in 000’s):

Year Ended December 31:

3 unchanged sentences

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.

The Company considers itself to be a single reportable segment under the authoritative guidance for segment reporting, specifically a communications and compliance company for publicly traded and private companies.

The following tables present revenue disaggregated by revenue stream (in thousands):

Three months ended Nine 30,

Revenue Streams

Communications

Nine months ended September 30,

Revenue Streams

Communications

The Company did not have any customers during the three and nine-month periods ended September 30, 2024 and 2023 that accounted for more than 10 % of our revenue.

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 Chief Executive Officer 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.

Three Months Ended

Cost of revenues

Costs to deliver products

Employee costs

Teleconference costs

Amortization of capitalized software

Other segment costs

Total cost of revenue

Operating costs and expenses:

Employee costs

Consultants and professional services

Depreciation and amortization

Provision for credit losses

Software licensing

Stock compensation

Merchant and bank fees

Capitalized Software

Acquisition/integration and other non-recurring costs

Other operating expenses (1)

Total operating costs and expenses

Operating loss

(1) Other operating expenses include insurance, travel, reseller commissions, tradeshow expense and other miscellaneous selling, general and administrative expenses

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:

Initially, the Credit Agreement provided 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) .

1 unchanged sentence

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 nine months ended September 30, 2023.

Effective June 25, 2024, the aggregate principal amount of the Revolving LOC was reduced to $ 1,500,000 .

3 unchanged sentences

The Company terminated its existing $ 3,000,000 unsecured line of credit with Fifth Third Bank immediately prior to the Closing Date.

As of September 30, 2024, there was no outstanding balance under the Revolving LOC and the interest rate was 7.21 %.

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:

As of March 31, 2025, there was no outstanding balance under the Revolving LOC and the interest rate was 6.38 %.

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 the Credit Agreement.

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 .

The Third Modification to Credit Agreement contains financial covenants, as follows:

Fiscal Quarter

Fixed Charge Coverage Ratio

Each fiscal quarter ending on or after June 30, 2023 through June 30, 2024

Fiscal quarter ending on or after September 30, 2024 through March 31, 2025

Each fiscal quarter ending on or after June 30, 2025

Leverage Ratio

Each fiscal quarter ending on or after June 30, 2023 through September 30, 2023

Fiscal quarter ending December 31, 2023

Fiscal quarter ending March 31, 2024

Each fiscal quarter ending on or after June 30, 2024 through September 30, 2024

Fiscal quarter ending December 31, 2024

Fiscal quarter ending March 31, 2025

Each fiscal quarter ending on or after June 30, 2025

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.

Additionally, depending on the Company’s Leverage Ratio, the Company is required to maintain unrestricted liquidity, as follows.

Leverage Ratio

Unrestricted Liquidity

If the Leverage Ratio is less than or equal to 1.5:1.00

If the Leverage Ratio is greater than 1.5:1.00 but less than or equal to 1.75:1.00

If the Leverage Ratio is greater than 1.75:1.00

The Credit Agreement also contains customary affirmative covenants for a transaction of this nature, including among other things, covenants relating to:

16 unchanged sentences

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.

The Company originally had $ 20,000,000 of notional amount interest rate swap agreement, which amortized 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 .

At September 30, 2024, the weighted average rate was 7.51 %.

As of March 31, 2025, the variable rate was 6.68 %.

The carrying amount for the Company’s derivative financial instrument is the estimated fair value of the financial instrument.

5 unchanged sentences

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 September 30, 2024 and December 31, 2023 was a net liability of $ 145,000 and $ 21,000 , respectively, and is included in Other long-term liabilities, in the Consolidated Balance Sheets.

The fair value of the 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.

During the three and nine-month periods ended September 30, 2024, the Company recognized a loss of $ 343,000 and $ 124,000 , respectively, in Other income (expense) in the Consolidated statements of operations, as a result of the interest rate swap.

During the three and nine-month periods ended September 30, 2023, the Company recognized a gain of $ 165,000 and $ 379,000 , respectively, in Other income (expense) in the Consolidated statements of operations, as a result of the interest rate swap.

The fair value of the swap agreement as of March 31, 2025 was a liability of $ 8,000 and December 31, 2024 was an asset of $ 60,000 and is included in either Other long-term assets or liabilities, accordingly, 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 loss of $ 69,000 during the three months ended March 31, 2025, and a net unrealized gain of $ 205,000 during the three months ended March 31, 2024, which are included in Other expense in the Consolidated statements of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements