What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-11 · 150 added, 116 removed, 235 unchanged (53% of the section changed)

24 unchanged sentences

In the future, we expect the Communications portion of our business to continue to increase, both in terms of overall revenue and as compared to the Compliance portion of our business as it has done in the past.

Therefore, we plan to continue to invest in offerings we intend to incorporate into our Communications product lineup.

Therefore, we plan to continue to invest in offerings we intend to incorporate into and complement our Communications product lineup.

Within most of our target markets, customers require several individual services and/or software providers to meet their investor relations and communications needs.

7 unchanged sentences

Our Communications platform consists of our press release distribution businesses branded as ACCESSWIRE and Newswire, our webcasting and events business, professional conference and events software, as well as our investor relations website technology.

We are currently in the process of integrating the ACCESSWIRE and Newswire news distribution platforms into one system that will give our customers all the benefits of both systems combined into one.

Our ACCESSWIRE and Newswire news distribution platforms have been integrated into one dissemination platform that will give our customers all the distribution benefits of our global distribution footprint.

These products are sold as the leading part of our Communications subscription, as well as individually to customers around the globe and are further described below.

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Newswire is a media technology company that provides customers press release distribution, media databases, media monitoring, and newsrooms for greater brand awareness through earned media, increased online visibility through greater search engine optimization recognition, and more sales inquiries through targeted digital marketing campaigns.

Through its Media Advantage Platform (“MAP”), Newswire automates media and marketing communications for large and small businesses seeking to deliver the right message to the right audience at the right time for the right purpose.

Through its PR Optimizer (”PRO”) offering, formally Media Advantage Platform, Newswire automates media and marketing communications for large and small businesses seeking to deliver the right message to the right audience at the right time for the right purpose.

We believe this transaction strengthens our entire communications portfolio and combined with our ACCESSWIRE business, grows our press release distribution business to now be one of North America’s largest press release distribution platforms.

The acquisition almost doubles our press release customer base and combines what we believe are qualified people and strong distribution, technology and brands.

Newswire customers will benefit from the global footprint ACCESSWIRE has built over the last eight years, whereas Issuer Direct's customers will have access to Newswire's brand-new media database platform, analytics, as well as its MAP.

Newswire customers will benefit from the global footprint ACCESSWIRE has built over the last eight years, whereas Issuer Direct’s customers will have access to Newswire’s brand-new media database platform, pitching and monitoring capabilities, as well as its PRO offering.

Lastly, we believe the acquisition will also result in meaningful operational synergies in the combined company.

Through the MAP product, Newswire provides a media and marketing communications utility that converts customers’ owned media into earned media opportunities to accelerate business growth.

The MAP Market Builder provides integrated media and marketing communications programs aimed to increase site traffic, qualified leads and lowering cost of acquisition for new accounts.

Through the PRO offering, we provide content and media communications services that provide customers the opportunity to optimize their content and increase their media visibility, therefore building their brand awareness and engaging a larger audience.

With the flexibility of these offerings, customers have the ability to choose between support with content optimization, increased media visibility, or both for optimal results.

We believe the Total PRO product offering provides the most effective and efficient integrated media and content communication program available in the market today.

Our existing press release offering, which is marketed under the brand ACCESSWIRE , is a news dissemination and media outreach service.

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We have also been able to maintain high gross margins while providing our customer flexible pricing, with options to pay per release or enter longer-term agreements for a designated package of releases.

Like other newswires globally, ACCESSWIRE is dependent upon several key partners for its news distribution.

Disruption in any of our partnerships could have a materially adverse impact on ACCESSWIRE and our overall business.

A natural expansion to our ACCESSWIRE and investor relations website business is our corporate Newsroom.

Like other newswires globally, ACCESSWIRE and Newswire are dependent upon several key partners for its news distribution.

Disruption in any of our partnerships could have a materially adverse impact on our overall business.

A natural addition to our ACCESSWIRE and investor relations website business is our corporate Newsroom.

This product offering can be an add-on to any customer’s ACCESSWIRE or Communications subscription account.

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The demand for these products with a virtual component was at an all-time high for us in 2020, largely due to the COVID-19 pandemic.

The industry overall has begun to see a reduction in the number of virtual events, specifically annual meetings and deal/non-deal roadshows, as customers are relying on internal enterprise solutions or are returning to pre-pandemic travel and in-person meetings, reducing the need for a virtual component.

This has contributed to a decline in demand for our virtual components since prior years.

Since the end of the pandemic, the industry overall has seen a reduction in the number of virtual events, specifically annual meetings and deal/non-deal roadshows, as customers are relying on internal enterprise solutions or are returning to pre-pandemic travel and in-person meetings, reducing the need for a virtual component.

This has contributed to a decline in demand for our virtual components since 2020 and 2021.

Traditional earnings calls and webcasts are a highly competitive market with the majority of the business being driven from practitioners in investor relations and communications firms.

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We believe this integration gives us a unique offering for professional conference organizers that is not available elsewhere in the market.

We believe this software helps make our platform a platform of choice for investment banks, issuers and investors.

Investor Relations Websites

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Results of Operations

Comparison of results of operations for the three months ended March 31, 2023 and 2022 (in 000’s):

Three Months Ended March 31,

Comparison of results of operations for the three and six-months ended June 30, 2023 and 2022 (in 000’s):

Three Months Ended June 30,

Percentage of Revenue (1)

Communications revenue

$ 6,566 $ 3,383 76 % 64 %

Compliance revenue

2,053 1,905 24 % 36 %

Total revenue

8,619 5,288 100 % 100 %

Cost of revenue:

Communications cost of revenue

1,384 761 21 % 22 %

Compliance cost of revenue

445 471 22 % 25 %

Total cost of revenue

1,829 1,232 21 % 23 %

Gross Margin:

Communications gross margin

5,182 2,622 79 % 78 %

Compliance gross margin

1,608 1,434 78 % 75 %

Total gross margin

6,790 4,056 79 % 77 %

Operating Expenses:

General and administrative

2,332 1,683 27 % 32 %

Sales and marketing

2,381 1,264 28 % 24 %

Product development

774 275 9 % 5 %

Depreciation and amortization

722 146 8 % 3 %

Total expenses

6,209 3,368 72 % 64 %

Operating income

581 688 7 % 13 %

Interest (expense) income, net

(238 ) 2 (3 )% 0 %

Other expense

(535 ) — (6 )% —

(Loss) income before income taxes

(192 ) 690 (2 )% 13 %

Income tax (benefit) expense

(48 ) 174 (1 )% 3 %

Net (loss) income

$ (144 ) $ 516 (2 )% 10 %

Income before income taxes

Income tax provision

Six Months Ended June 30,

Percentage of Revenue (1)

Communications revenue

Compliance revenue

Total revenue

Cost of revenue:

Communications cost of revenue

Compliance cost of revenue

Total cost of revenue

Gross Margin:

Communications gross margin

Compliance gross margin

Total gross margin

Operating Expenses:

General and administrative

Sales and marketing

Product development

Depreciation and amortization

Total expenses

Operating income

Interest (expense) income, net

Other expense, net

Income before income taxes

Income tax provision

Percentage of revenue is calculated as the relevant revenue, expense, income amount divided by total revenue, except for communications and compliance cost of revenue and communications and compliance gross margin, which are divided by the related component of revenue.

Total revenue increased $3,331,000, or 63%, to $8,619,000 during the three months ended March 31, 2023, as compared to $5,288,000 for the same period in 2022.

The increase is primarily attributable to the acquisition of Newswire on November 1, 2022.

Communications revenue increased $3,183,000, or 94%, to $6,566,000 for the three months ended March 31, 2023, as compared to $3,383,000 for the same period of 2022.

Total revenue increased $3,844,000, or 66%, to $9,651,000 during the three months ended June 30, 2023, as compared to $5,807,000 for the same period of 2022.

Total revenue increased by $7,175,000 or 65%, to $18,270,000 during the six months ended June 30, 2023, as compared to $11,095,000 during the same period of 2022.

The increases are primarily attributable to the acquisition of Newswire on November 1, 2022, as well as an increase in revenue from our Compliance revenue stream.

Communications revenue increased $2,245,000, or 61% and $5,428,000, or 77% to $5,936,000 and $12,502,000 for the three and six months ended June 30, 2023, respectively, as compared to the same periods of 2022.

The increase in revenue is primarily related to the acquisition of Newswire, which is all included in Communications revenue.

We also generated increased revenue from our ACCESSWIRE business, which increased 21% compared to the same period of the prior year, primarily due to an increase in average revenue per release.

Communications revenue represented 76% of total revenue during the three months ended March 31, 2023, as compared to 64% for the same period of 2022.

Compliance revenue increased $148,000, or 8%, to $2,053,000 during the three months ended March 31, 2023, as compared to $1,905,000 during the same period of 2022.

The increase was primarily related to an increase in revenue from our transfer agent services due to an increase in corporate actions and directives during the period as well as an increase in print and proxy fulfillment services due to larger transactions and an increase in number of projects.

For the six months ended June 30, 2023, we also generated increased revenue from our ACCESSWIRE business, which increased 10% compared to the same period of the prior year, primarily due to an increase in average revenue per release.

These increases were partially offset by a decrease in revenue from our events and webcasting business, primarily due to less virtual events and annual meetings during the three and six months ended June 30, 2023, as compared to the prior year.

Communications revenue represented 62% and 68% of total revenue during the three and six months ended June 30, 2023, respectively, as compared to 64% for the same periods of 2022.

Compliance revenue increased $1,599,000, or 76% and $1,747,000, or 43%, during the three and six months ended June 30, 2023, respectively, as compared to the same periods of 2022.

The increase was primarily related to an increase in revenue from our print and proxy fulfillment services due to a few significant transactions which occurred during the period as well as an increase in revenue from our transfer agent services due to an increase in corporate actions and directives during the period.

Revenue Backlog

As of March 31, 2023, our deferred revenue balance was $5,166,000, which we expect to recognize over the next twelve months, compared to $5,405,000 at December 31, 2022, a decrease of 4%.

Deferred revenue primarily consists of advance billings for subscriptions of our cloud-based products and pre-paid packages of our news distribution product as well as advance billings for annual service contracts.

As of June 30, 2023, our deferred revenue balance was $5,729,000, which we expect to recognize over the next twelve months, compared to $5,405,000 as of December 31, 2022, an increase of 6%.

Deferred revenue primarily consists of advance billings for packages of our news distribution product as well as advance billings for subscriptions of our cloud-based products and annual service contracts.

Cost of Revenues

Communications cost of revenues consists primarily of direct labor costs, newswire distribution costs, teleconferencing costs, and third-party licensing costs.

Compliance and other costs of revenue consists primarily of direct labor costs, warehousing, logistics, print production materials and postage.

Cost of revenues increased by $597,000, or 48%, during the three months ended March 31, 2023, as compared to the same period of 2022.

Overall gross margin increased $2,734,000, or 67%, during the three months ended March 31, 2023, compared to the same period of 2022.

As a result, overall gross margin percentage increased to 79% during the three months ended March 31, 2023, as compared to 77% during the same period of 2022.

Cost of revenues associated with our Communications revenue increased $623,000, or 82%, during the three months ended March 31, 2023 as compared to the same period of 2022.

This increase is primarily due to an increase in costs associated with operations of Newswire as well as an increase in distribution costs associated with ACCESSWIRE as we continue to expand our distribution.

Gross margin percentage associated with our Communications revenue was 79% for the three months ended March 31, 2023 compared to 78% for the same period of 2022.

Cost of revenues associated with our Compliance revenue decreased $26,000, or 6%, during the three months ended March 31, 2023 as compared to the same period of 2022.

The decrease is due to lower headcount and outsourcing costs associated with compliance services.

As a result, gross margin percentage associated with our Compliance revenue increased to 78% for the three months ended March 31, 2023, compared to 75% for the same period of 2022.

Communications cost of revenues consist primarily of direct labor costs, newswire distribution costs, teleconferencing costs, and third-party licensing costs.

Compliance cost of revenues consist primarily of direct labor costs, warehousing, logistics, print production materials and postage.

Cost of revenues increased $972,000, or 71% and $1,569,000, or 60%, during the three and six months ended June 30, 2023, respectively, as compared to the same periods of 2022.

Overall gross margin increased $2,872,000, or 65% and $5,606,000, or 66%, during the three and six months ended June 30, 2023, respectively, as compared to the same periods of 2022.

As a result, overall gross margin percentage decreased to 76% for the three months ended June 30, 2023, as compared to 77% during the same period of 2022, however, remained flat during the six months ended June 30, 2023, as compared to the same period of 2022.

Cost of revenues associated with our Communications revenue increased $686,000, or 92% and $1,309,000, or 87%, during the three and six months ended June 30, 2023, respectively, as compared to the same periods of 2022.

These increases are primarily due to an increase in costs associated with operations of Newswire as well as an increase in distribution costs associated with ACCESSWIRE as we continue to expand our distribution.

Gross margin percentage associated with our Communications revenue was 76% and 77% for the three and six-months ended June 30, 2023, respectively, as compared to 80% and 79% during the same periods of 2022.

Cost of revenues associated with our Compliance revenue increased $286,000, or 46% and $260,000, or 24%, during the three and six months ended June 30, 2023, respectively, as compared to the same period of 2022.

The increase is due to higher print and postage costs associated with the increased revenue from print and proxy fulfillment services during the periods.

As a result, gross margin percentage associated with our Compliance revenue increased to 76% and 77% for the three and six-months ended June 30, 2023, respectively, as compared to 71% and 73% for the same periods of 2022.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, bonuses, stock-based compensation, insurance, fees for professional services, general corporate expenses (including bad debt expense) and facility and equipment expenses.

General and administrative expenses were $2,332,000 for the three months ended March 31, 2023, an increase of $649,000 or 39%, as compared to the same period of 2022.

The increase is primarily driven by additional expenses associated with costs to operate Newswire, one-time transaction and integration costs, stock compensation expense and employee-related costs associated with investments for future growth, as well as an increase in bad debt expense.

These increases were offset by a reduction in executive recruiting fees compared to the same period of 2022.

As a percentage of revenue, general and administrative expenses were 27% for the three months ended March 31, 2023, as compared to 32% for the same period of 2022.

General and administrative expenses were $2,274,000 during the three months ended June 30, 2023, an increase of $711,000, or 45%, as compared to the same period of 2022.

General and administrative expenses were $4,606,000 for the six months ended June 30, 2023, an increase of $1,360,000, or 42%, as compared to the same periods of 2022.

The increase is primarily driven by additional expenses associated with costs to operate Newswire, one-time transaction and integration costs, employee-related costs and stock compensation expense.

These increases were offset by a reduction in executive recruiting fees during the six months ended June 30, 2023, compared to the same period of 2022.

As a percentage of revenue, general and administrative expenses were 24% and 25% for the three and six-months ended June 30, 2023, respectively, as compared to 27% and 29% for the same periods of 2022.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of salaries, stock-based compensation, sales commissions, advertising expenses, tradeshow expenses and other marketing expenses.

Sales and marketing expenses were $2,381,000 for the three months ended March 31, 2023, an increase of $1,117,000, or 88%, as compared to the same period of 2022.

This increase is primarily due to the addition of the Newswire sales team.

As a percentage of revenue, sales and marketing expenses were 28% for the three months ended March 31, 2023, as compared to 24% for the same period of 2022.

Sales and marketing expenses were $2,039,000 for the three months ended June 30, 2023, an increase of $668,000, or 49%, as compared to the same period of 2022.

Sales and marketing expenses were $4,420,000 for the six months ended June 30, 2023, an increase of $1,785,000, or 68% as compared to the same period of 2022.

These increases are primarily due to the addition of the Newswire sales team.

As a percentage of revenue, sales and marketing expenses were 21% and 24% for the three and six months ended June 30, 2023, respectively, as compared to 24% for the same periods of 2022.

Product Development Expenses

Product development expenses consist primarily of salaries, stock-based compensation, bonuses, and licenses to develop new products and technology to complement and/or enhance our platform.

Product development expenses increased $499,000, or 181%, to $774,000 during the three months ended March 31, 2023, as compared to 2022.

This increase is directly attributed to additional costs associated with Newswire as well as hiring our new Chief Technology Officer.

As a percentage of revenue, product development expenses were 9% for the three months ended March 31, 2023, as compared to 5% for the same period of 2022.

Product development expenses increased $318,000, or 149% and $817,000, or 167% to $532,000 and $1,306,000 during the three and six months ended June 30, 2023, respectively, as compared to the same periods of 2022.

These increases are directly attributed to additional costs associated with Newswire as well as hiring our new Chief Technology Officer.

During the three and six months ended June 30, 2023, we capitalized $167,000 costs related to the build of our new artificial intelligence and media database products.

As a percentage of revenue, product development expenses were 6% and 7% for the three and six months ended June 30, 2023, respectively, as compared to 4% for the same periods of 2022.

Depreciation and Amortization Expenses

Depreciation and amortization expenses increased $576,000, or 395%, compared to the same period of 2022.

Depreciation and amortization expenses increased $576,000, or 392% and $1,152,000, or 393% during the three and six months ended June 30, 2023, respectively, as compared to the same periods of 2022.

The increase is attributed to increased amortization associated with intangible assets acquired in the Newswire acquisition.

Interest Income (Expense), Net

We recognized interest expense of $337,000 for the three-month period ended March 31, 2023.

Interest expense primarily represents interest attributed to the $22,000,000 note payable associated with the acquisition of Newswire, as well as $47,000 of accrued interest related to our new, long-term credit agreement.

These amounts are offset by interest income on deposit and money market accounts of $99,000 and 2,000 for the three months ended March 31, 2023 and 2022, respectively.

Other expense

Other expense primarily represents $370,000 paid to extinguish the Seller Note associated with the Newswire transaction.

Additionally, included in other expense is the loss on the change in fair value of our interest rate swap agreement.

We recognized an income tax benefit of $48,000 for the three-month period ended March 31, 2023, compared to income tax expense of $174,000 during the same period of 2022.

For the three-month periods ended March 31, 2023 and 2022, the variance between our effective tax rate and the U.S.

Interest (expense) income, net

We recognized interest expense of $375,000 and $712,000 for the three and six months ended June 30, 2023.

Interest expense primarily represents interest attributed to our new, long-term credit agreement as well as interest on our settled $22,000,000 note payable associated with the acquisition of Newswire.

There was no interest expense during the three and six months ended June 30, 2022.

Interest expense is partially offset by interest income of $94,000 and $193,000 for the three and six months ended June 30, 2023, respectively, from deposit and money market accounts and interest income from our interest rate swap agreement.

During the three and six months ended June 30, 2022, interest income amounted to $20,000 and $22,000, respectively.

Other income (expense), net

During the three months ended June 30, 2023, other income represents the change in fair value of our interest rate swap agreement.

During the six months ended June 30, 2023, other expense represents $370,000 paid to extinguish the Seller Note associated with the Newswire transaction, partially offset by other income related to the change in fair value of our interest rate swap agreement.

There was no other income or expense during the three and six months ended June 30, 2022.

We recognized income tax expense of $482,000 and $434,000 for the three and six months ended June 30, 2023, compared to $327,000 and $501,000 during the same periods of 2022, respectively.

For the three and six-month periods ended June 30, 2023 and 2022, the variance between our effective tax rate and the U.S.

statutory rate of 21% is primarily attributable to state income tax.

For the three months ended March 31, 2022, the effective tax rate was also partially impacted by a benefit related to the Foreign Derived Intangible Income (“FDII”) deduction as well as foreign rate differentials.

The three and six months ended June 30, 2022, was also impacted by additional expense related to Global Intangible Low-Taxed Income inclusion.

Liquidity and Capital Resources

As of March 31, 2023, we had $3,349,000 in cash and cash equivalents and $3,546,000 in net accounts receivable.

Current liabilities as of March 31, 2023, totaled $10,240,000 including our accounts payable, deferred revenue, accrued payroll liabilities, income taxes payable, current portion of long-term debt, current portion of lease liabilities and other accrued expenses.

On March 31, 2023, our current liabilities exceeded our current assets by $1,790,000.

As of June 30, 2023, we had $4,961,000 in cash and cash equivalents and $4,311,000 in net accounts receivable.

Current liabilities as of June 30, 2023, totaled $12,084,000 including our, accounts payable, deferred revenue, accrued payroll liabilities, income taxes payable, current portion of long-term debt, current portion of lease liabilities and other accrued expenses.

On June 30, 2023, our current liabilities exceeded our current assets by $1,215,000.

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:

term loan facility in an aggregate principal amount of $20 million (the “Term Loan”), and 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).

term loan facility in an aggregate principal amount of $20 million (the “Term Loan”), and revolving letter 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).

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 will begin making monthly interest only payments on the Term Loan beginning on April 1, 2023.

Beginning on January 1, 2024, the Company will begin 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 “Secured Note”) issued to Lead Capital, LLC in connection with the Company’s November 1, 2022 acquisition of iNewswire.com LLC for a lump sum payment of $22,880,000.

In order to settle the Secured 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 expense on the Consolidated statements of operations.

As a result, there is no longer any obligation to the Seller as of March 31, 2023

The Company began making monthly interest-only payments on the Term Loan on April 1, 2023.

Beginning on January 1, 2024, the Company will make monthly principal payments of $333,333 plus interest payments on the Term Loan until the maturity date of December 28, 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 “Newswire Note”) issued to Lead Capital, LLC in connection with the Company’s November 1, 2022 acquisition of iNewswire.com LLC for a lump sum payment of $22,880,000.

In order to settle the Secured Note on March 20, 2023, the Company paid $370,000 to the 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) on the Consolidated statements of operations.

As a result, there is no longer any obligation to the Seller as of June 30, 2023.

The Company currently has no plans to utilize the Revolving LOC but may do so in the future.

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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, 2023, there was no outstanding balance under the Revolving LOC and the interest rate was 6.68%.

The Credit Agreement contains the following financial covenants, which commence with fiscal quarter ending June 30, 2023:

As of June 30, 2023, there was no outstanding balance under the Revolving LOC and the interest rate was 7.12%.

The Credit Agreement contains the following financial covenants, which commence with fiscal quarter ended June 30, 2023:

a fixed charge coverage ratio of no less than 1.20:1.00 and a leverage ratio requiring that, for each fiscal quarter of the Company ending on or after June 30, 2023 through September 30, 2023, the leverage ratio shall not exceed 2.75:1.00 and for each fiscal quarter of the Company ending after December 31, 2023, the leverage ratio shall not exceed 2.50:1.00.

All covenants were successfully exceeded during the three month-period ended June 30, 2023.

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

31 unchanged sentences

Free cash flow and adjusted free cash flow are non-GAAP financial measures.

For the three months ended March 31, 2023 and 2022, free cash flow and adjusted free cash flow were as follows:

Three Months Ended March 31,

For the three and six months ended June 30, 2023 and 2022, free cash flow and adjusted free cash flow were as follows:

Three Months Ended June 30,

Net cash provided by operating activities (US GAAP)

1 unchanged sentence

Free cash flow (Non-GAAP)

Cash paid for acquisition and integration related items (1)

Cash paid for acquisition and/or integration related items (1)

Adjusted free cash flow (Non-GAAP)

Six Months Ended June 30,

Net cash provided by operating activities (US GAAP)

Payments for purchase of fixed assets and capitalized software

Free cash flow (Non-GAAP)

Cash paid for acquisition and/or integration related items (1)

Cash paid for other unusual items (2)

Adjusted free cash flow (Non-GAAP)

This adjustment gives effect to one-time corporate projects, including acquisition and integration related expenses, paid during the periods.

For the three-months ended March 31, 2023, this adjustment is primarily related to a one-time payment of $370,000 related to the early extinguishment of the Seller Note.

For the three-months ended March 31, 2022, this adjustment gives effect to payment of a one-time executive recruiting fee payment of $60,000.

This adjustment gives effect to one-time corporate projects, including acquisition and/or integration related expenses, paid during the periods.

For the six months ended June 30, 2023, this adjustment gives effect to a one-time payment of approximately $370,000 related to the early termination of the note payable associated with the Newswire acquisition.

For the six months ended June 30, 2022, this adjustment gives effect to payment of a one-time executive recruiting fee payment of $60,000.

Adjusted EBITDA and adjusted net income are non-GAAP financial measures and should not be considered as a substitute for analysis of our results as reported under US GAAP.

These measures are defined differently by different companies, and accordingly, such measures may not be comparable to similarly titled measures of other companies and have important limitations as an analytical tool.

A reconciliation of net income to adjusted EBITDA for the three months ended March 31, 2023 and 2022 is presented in the following table (in 000’s):

Three Months Ended March 31,

Net (loss) income:

A reconciliation of net income to adjusted EBITDA for the three and six months ended June 30, 2023 and 2022, is presented in the following table (in 000’s):

Three Months Ended June 30,

Depreciation and amortization

Interest expense (income), net

Income tax (benefit) expense

Income tax expense

Acquisition and/or integration costs (1)

Other non-recurring expenses (2)

Other non-recurring items (2)

Stock-based compensation expense (3)

Adjusted EBITDA:

This adjustment gives effect to one-time corporate projects, including acquisition and integration related expenses, incurred during the periods.

For the three months ended March 31, 2023, this adjustment gives effect to $370,000 payment related to early extinguishment of Seller Note and $165,000 loss due to the change in fair value of our interest rate swap.

For the three months ended March 31, 2022, this adjustment gives effect to a one-time executive recruiting fee of $90,000.

Six Months Ended June 30,

Depreciation and amortization

Interest expense (income), net

Income tax expense

Acquisition and/or integration costs (1)

Other non-recurring items (2)

Stock-based compensation expense (3)

Adjusted EBITDA:

This adjustment gives effect to one-time corporate projects, including acquisition and/or integration related expenses, incurred during the periods.

For the six months ended June 30, 2023, this adjustment gives effect to $370,000 payment related to early extinguishment of our Seller Note and one-time non-recurring expenses of $45,000, partially offset by a gain recorded on the change in fair value of our interest rate swap of $214,000.

For the six months ended June 30, 2022, this adjustment gives effect to a one-time executive recruiting fee of $90,000.

The adjustments represent stock-based compensation expense related to awards of stock options, restricted stock units, or common stock in exchange for services.

Although we expect to continue to award stock in exchange for services, the amount of stock-based compensation is excluded as it is subject to change as a result of one-time or non-recurring projects.

A reconciliation of net income to adjusted net income for the three months ended March 31, 2023 and 2022 is presented in the following table (in 000’s):

Three Months Ended March 31,

Net (loss) income:

A reconciliation of net income to adjusted net income for the three and six months ended June 30, 2023 and 2022 is presented in the following table (in 000’s):

Three Months Ended June 30,

Per diluted share

Amortization of intangible assets (1)

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Weighted average number of common shares outstanding – diluted

Six Months Ended June 30,

Per diluted share

Amortization of intangible assets (1)

Stock-based compensation expense (2)

Other unusual items (3)

Tax impact of adjustments (4)

Non-GAAP net income:

Weighted average number of common shares outstanding – diluted

The adjustments represent the amortization of intangible assets related to acquired assets and companies.

1 unchanged sentence

For the three months ended March 31, 2023, this adjustment gives effect to one-time corporate projects, including acquisition and integration related expenses, incurred during the period of $234,000, $370,000 related to the early extinguishment of the Seller Note associated with the Newswire acquisition and $165,000 loss related to the change in fair value of our interest rate swap.

For the three months ended March 31, 2022, this adjustment gives effect to one-time corporate projects, including acquisition and integration related expenses, incurred during the period of $16,000 and one-time executive recruiting fee of $90,000.

For the three months ended June 30, 2023, this adjustment gives effect to a gain recorded on the change in fair value of our interest rate swap of $379,000, partially offset by one-time corporate projects, including acquisition and/or integration related expenses incurred during the period of $137,000 and $45,000 related to one-time, non-recurring expenses.

For the six months ended June 30, 2023, this adjustment gives effect to one-time corporate projects, including acquisition and/or integration related expenses incurred during the period of $371,000, $370,000 payment related to early extinguishment of our Seller Note and $45,000 of one-time, non-recurring expenses, partially offset by a gain recorded on the change in fair value of our interest rate swap of $214,000.

For the six months ended June 30, 2022, this adjustment gives effect to one-time corporate projects, including acquisition and/or integration related expenses incurred during the period of $16,000 and a one-time executive recruiting fee of $90,000.

This adjustment gives effect to the tax impact of all non-GAAP adjustments at the current Federal tax rate of 21%.

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Refer also to the Cautionary Statement Concerning Forward Looking Statements included in this report.

Market factors like the current military conflict in Ukraine, instability in global energy markets, global inflation and rapidly increasing interest rates have contributed to significant global economic uncertainty, disrupted global trade and supply chains, adversely impacted many industries, and contributed to significant declines and volatility in financial markets.

Market factors like the current military conflict in Ukraine, instability in global energy markets, global inflation and the increase of interest rates have contributed to significant global economic uncertainty, disrupted global trade and supply chains, adversely impacted many industries, and contributed to significant volatility in financial markets.

Overall, despite many uncertainties in the market regarding the economic outlook, the demand for our platforms and services continues to be stable in a majority of the markets we serve.

In the past, the success of our Communications offering has been led by our ACCESSWIRE branded newswire, for which we believe we will continue to see stable to increased demand throughout 2023 and beyond.

We believe the Newswire business will also contribute to providing stable to increased demand in our Communications offering.

The success of our Communications offering has been led by our ACCESSWIRE branded newswire, which is now complemented by the Newswire business, and we believe we will continue to see stable to increased demand for our combined newswire business throughout 2023 and beyond.

The transition to a platform subscription model has been and will continue to be key for our long-term sustainable growth.

The successful integration of the Newswire business with our ACCESSWIRE business is also a key initiative for 2023.

We will also continue to focus on the following key strategic initiatives during the year:

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Generating cash flows from operations.

We believe there is demand for our products around the world, led by our ACCESSWIRE/Newswire brands, as companies seek to find better platforms and tools to disseminate and communicate their messages in a more efficient and collaborative way.

We believe there is demand for our products around the world, led by our ACCESSWIRE and Newswire brands, as companies seek to find better platforms and tools to disseminate and communicate their messages in a more efficient and collaborative way.

We have invested and will continue to invest in our product sets, platforms and intellectual property development via internal development and acquisitions.

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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 2. Management’s Discussion and Analysis