What changed in this filing

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Item 1. Financial Statements

2025-08-12 compared with 2025-05-13 · 121 added, 94 removed, 391 unchanged (35% of the section changed)

6 unchanged sentences

Cash and cash equivalents

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

Accounts receivable (net of allowance for doubtful accounts of $ 1,600 and $ 1,059 , respectively)

Other current assets

12 unchanged sentences

Accrued expenses

Income tax payable

Income taxes payable

Current portion of long-term debt

4 unchanged sentences

Lease liabilities – long-term

Deferred Tax Liability

Other long-term liabilities

2 unchanged sentences

Stockholders' equity:

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

Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively.

Common stock $ 0.001 par value, 20,000,000 shares authorized, 3,868,826 and 3,838,743 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively.

Additional paid-in capital

9 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Cost of revenues

1 unchanged sentence

General and administrative

Sales and marketing

Sales and marketing expenses

Product development

2 unchanged sentences

Operating loss

Interest expense, net

Other income (expense)

Interest income (expense), net

Other income (loss), net

Loss before taxes

1 unchanged sentence

Net loss from continuing operations

Net income from discontinued operations, net of taxes

Net income (loss) from discontinued operations, net of tax

Net income (loss)

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

Loss from continuing operations per share – basic

Loss from continuing operations per share – fully diluted

Income (loss) from discontinued operations per share – basic

Income (loss) from discontinued operations per share – fully diluted

Income (loss) per share – basic

Income (loss) 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.

ACCESS NEWSWIRE INC.

ACESS NEWSWIRE INC.

AND SUBSIDIARIES

2 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Net income (loss)

Foreign currency translation adjustment

Comprehensive income (loss)

Comprehensive (loss) income

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

ACCESS NEWSWIRE INC.

ACCESS NEEWSWIRE INC.

AND SUBSIDIARIES

8 unchanged sentences

Balance at March 31, 2024

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

Balance at June 30, 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, 2025

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

3 unchanged sentences

(in thousands)

For the Three Months Ended

For the Six Months Ended

Cash flows from operating activities:

1 unchanged sentence

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

Net income from discontinued operations, net of tax

Gain on disposal of business

Depreciation and amortization

2 unchanged sentences

Stock-based compensation expense

Non-cash interest expense

Non-cash interest adjustment on note payable

Changes in operating assets and liabilities:

3 unchanged sentences

Increase (decrease) in income tax payable

Increase (decrease) in accrued expenses and other liabilities

Increase (decrease) in accrued expenses

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

1 unchanged sentence

Proceeds from Sale of Compliance Business

Purchase of fixed assets

Capitalized software

Purchase of fixed assets

Net cash provided by (used in) investing activities

7 unchanged sentences

Supplemental disclosures:

Cash paid for income taxes

Cash paid for interest

4 unchanged sentences

Basis of Presentation

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.

The unaudited interim Consolidated Balance Sheet as of June 30, 2025 and Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Stockholders’ Equity and Consolidated Statements of Cash Flows for the three and six-month periods ended June 30, 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.

12 unchanged sentences

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

The following is a summary of the allowance for credit losses during the three and six months ended June 30, 2025 and 2024 (in thousands):

For the Three Months Ended

For the Six Months Ended

Beginning balance

4 unchanged sentences

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.

As of June 30, 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 $ 10,000 in Europe and $ 2,196,000 in Canada as of June 30, 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.

The Company did not have any customers during the three months ended June 30, 2025 or 2024 that accounted for more than 10% of revenue.

Revenue Recognition

13 unchanged sentences

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.

The Company recognizes revenue for subscriptions evenly over the contract period, upon distribution for pay per release or packages of press releases 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.

8 unchanged sentences

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.

Deferred revenue as of June 30, 2025 and December 31, 2024, was $ 4,741,000 and $ 4,743,000 , respectively, and is expected to be recognized primarily within one year.

Approximately $ 817,000 of the deferred revenue balance as of June 30, 2025, relates to contracts for press release packages with an expiration date after June 30, 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.

Revenue recognized for the six months ended June 30, 2025 and 2024, which was included in the deferred revenue balance at the beginning of each reporting period, was approximately $ 3,569,000 and $ 4,629,000 , respectively.

Accounts receivable, net of allowance for credit losses, related to contracts with customers was $ 3,731,000 and $ 3,351,000 as of June 30, 2025 and December 31, 2024, respectively.

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

1 unchanged sentence

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

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.

As of June 30, 2025 and December 31, 2024, the Company has capitalized $ 60,000 and $ 69,000 , 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.

3 unchanged sentences

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.

Shares issuable upon the exercise of stock options totaling 53,750 were excluded in the computation of diluted earnings per common share during the three and six months ended June 30, 2025 because their impact was anti-dilutive.

Shares issuable upon the exercise of stock options totaling 70,750 and 68,750 were excluded in the computation of diluted earnings per common share during the three and six months ended June 30, 2024, respectively, because their impact was anti-dilutive.

Use of Estimates

10 unchanged sentences

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

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

Amortization for the three and six-month periods ended June 30, 2025 and 2024, is as follows (in thousands):

For the Three Months Ended

For the Six Months Ended

Capitalized software development costs

6 unchanged sentences

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.

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 Sheets.

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.

18 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 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.

As of June 30, 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

18 unchanged sentences

The Company expenses advertising as incurred.

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.

During the three and six-month periods ended June 30, 2025, advertising expense was $ 330,000 and $ 631,000 , respectively.

Additionally, during the six-month period ended June 30,2025, the Company incurred $ 132,000 in costs associated with its corporate re-brand.

During the three and six-month periods ended June 30, 2024, advertising expense was $ 339,000 and $ 778,000 , respectively.

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.

As of June 30, 2025, we had $ 4,111,000 in cash and cash equivalents and $ 3,731,000 in net accounts receivable.

Current liabilities from continuing operations as of June 30, 2025, totaled $ 12,167,000 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 June 30, 2025, our current liabilities from continuing operations exceeded our current assets from continuing operations by $ 2,609,000 .

While our current liabilities from continuing operations exceed current assets from continuing operations, we believe our ability to renegotiate our Credit Agreement (see Note 8 below) and ability to continue to generate cash will benefit us in the future.

Accounting Pronouncements Not Yet Effective

15 unchanged sentences

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).

The Purchased Assets consisted 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.

Additionally, revenue related to providing SEDAR services and revenue related to our whistleblower hotline, which was previously reported as “compliance revenue” was retained by the Company.

The Buyer assumed certain liabilities related to the Purchased Assets, which included certain accounts payable, accrued liabilities and deferred revenue.

9 unchanged sentences

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

The following table sets forth the assets and liabilities included in discontinued operations as of June 30, 2025 and December 31, 2024 as presented in the Consolidated Balance Sheets (in thousands):

Accounts Receivable (net of provision for credit losses of $1,016 and $559 as of June 30, 2025 and December 31, 2024)

Other current assets

2 unchanged sentences

Other non-current assets

$ 633 $ 4,915

Accounts Payable

2 unchanged sentences

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,

The following table sets forth the details of income from discontinued operations for the three and six months ended June 30, 2025 and 2024 as presented in the Consolidated Statement of Operations (in thousands):

For the Three Months Ended

For the Six Months Ended

Cost of revenues

1 unchanged sentence

General and administrative

Sales and marketing

Sales and marketing expenses

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.

Operating income (loss)

Interest income (expense), net

Gain on disposal of business

Income (loss) before taxes

Income tax expense (benefit)

Net income (loss) from discontinued operations

The following table presents the significant non-cash items related to discontinued operations for the six-month period ended June 30, 2025 and 2024 that are included in the accompanying statements of cash flows:

Adjustments to reconcile net income (loss) to net cash used in operating activities

Depreciation and amortization

Provision for credit losses

Stock-based compensation expense

Gain on disposal of business

The Company did not pay any dividends during the three and six-month periods ended June 30, 2025 and 2024.

Preferred stock and common stock

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.

There were no issuances of preferred stock or common stock during the three and six-month periods ended June 30, 2025 and 2024, other than stock awarded to employees and the Board of Directors.

2023 Equity Incentive Plan

3 unchanged sentences

The 2023 Plan is effective through April 1, 2033.

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:

As of June 30, 2025, there are 358,416 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 June 30, 2025:

Options Outstanding

11 unchanged sentences

$ 27.01 - 27.71

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.

As of June 30, 2025, the Company had unrecognized stock compensation related to the options of $ 157,000 , which will be recognized through 2027.

During the three and six months ended June 30, 2025, the Company granted 7,662 restricted stock units to its Board of Directors which vest at the earlier of June 13, 2026, or the Company’s 2026 annual meeting.

The average grant date fair value of these grants was $ 11.75 .

During the three and six months ended June 30, 2024, the Company granted 6,000 and 32,500 restricted stock units, respectively, to employees and contractors which vest at various intervals over 3 years.

The average grant date fair value of these grants was $ 9.70 and $ 13.91 per share during the three and six months ended June 30, 2024, respectively.

During the three and six months ended June 30, 2025, 21,083 and 30,083 restricted stock units with an intrinsic value of $ 13.41 and $ 15.63 , respectively, vested.

During the three and six months ended June 30, 2024, 14,332 and 16,499 restricted stock units with an intrinsic value of $ 18.70 and $ 19.95 , respectively, vested.

As of June 30, 2025, there was $ 502,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2027.

The Company recognized an income tax benefit of $ 9,000 and $ 194,000 for the three and six-month periods ended June 30, 2025, respectively, compared to $ 137,000 and $ 295,000 for the three and six-month periods ended June 30, 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-month periods ended March 31, 2025 and 2024, the variance between our effective tax rate and the U.S.

For the three and six-month periods ended June 30, 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.

The One Big Beautiful Bill Act (or “OBBB Act”), enacted on July 4, 2025, permits the deduction of certain U.S.

research and development expenditures incurred in tax years beginning on or after January 1, 2025 but expenditures attributable to research and development conducted outside the U.S.

must continue to be capitalized and amortized over fifteen years.

The OBBB Act also provides the option to accelerate the amortization of any remaining unamortized U.S.

research and development expenditures incurred in tax years beginning on or after January 1, 2022, and before January 1, 2025, over a one or two year period beginning with the first taxable year beginning after December 31, 2024.

As the law was enacted after June 30, 2025, the effects of the OBBB are not reflected in our financial results for the three months ended June 30, 2025.

The Company is currently evaluating the provisions of the OBBB Act and assessing its potential effects on its Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Cash Flows, including the expected tax benefits that may arise from the implementation of this new law.

Leasing activity generally consists of office leases.

1 unchanged sentence

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.

Minimum lease payments are $ 2,997,000 , not including a tenant improvement allowance of $ 488,000 , which is included in fixed assets as of June 30, 2025 and 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 $ 973,000 as of March 31, 2025.

Lease liabilities totaled $ 889,000 as of June 30, 2025.

The current portion of this liability of $ 394,000 is included in Accrued expenses on the Consolidated Balance Sheets and the long-term portion of $ 495,000 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 000’s):

Three months ended

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

For the Three Months Ended

For the Six Months Ended

Lease expense

1 unchanged sentence

Variable lease expense

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):

Total lease expense

The weighted-average remaining non-cancelable lease term for our operating leases was 2.50 years as of June 30, 2025.

As of June 30, 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 June 30, 2025, are as follows (in thousands):

Year Ended December 31:

11 unchanged sentences

The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the Company.

Three Months Ended

Below provides a further breakdown of costs and expenses of our one reporting segment (in thousands):

For the Three Months Ended

For the Six Months Ended

Cost of revenues

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

As of June 30, 2025, there was no outstanding balance under the Revolving LOC and the interest rate was 6.37 %.

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:

Pursuant to the terms of the Third Modification to Credit Agreement and a subsequent amendment, 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;

2 unchanged sentences

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:

The Credit Agreement, as amended, contains the following financial covenants:

Fiscal Quarter

1 unchanged sentence

Each fiscal quarter ending on or after June 30, 2025

Leverage Ratio

Each fiscal quarter ending on or after June 30, 2025

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

Additionally, the Company is required to maintain unrestricted liquidity, as follows.

Leverage Ratio

23 unchanged sentences

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

As of June 30, 2025, the variable rate was 6.67 %.

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 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 swap agreement as of June 30, 2025 was a liability of $ 18,000 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.

As a result of the interest rate swap, the Company recognized a net unrealized loss of $ 10,000 and $ 78,000 during the three and six months ended June 30, 2025, respectively, compared to a net unrealized gain of $ 14,000 and $ 219,000 during the three and six months ended June 30, 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