ACCESS Newswire Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) September 30, December 31, 2025 2024 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 3,261 $ 4,103 Accounts receivable (net of allowance for doubtful accounts of $ 1,661 and $ 1,059 respectively 4,137 3,351 Other current assets 1,603 1,234 Current assets held for sale – 1,338 Total current assets 9,001 10,026 Capitalized software (net of accumulated amortization of $ 3,854 and $ 3,644 , respectively) 747 934 Fixed assets (net of accumulated depreciation of $ 848 and $ 914 , respectively) 274 365 Right-of-use asset – leases 575 766 Other long-term assets 80 158 Goodwill 19,043 19,043 Intangible assets (net of accumulated amortization of $ 8,906 and $ 7,024 , respectively) 10,094 11,976 Deferred tax asset 4,236 3,793 Non-current assets held for sale – 3,577 Total assets $ 44,050 $ 50,638 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,354 $ 1,423 Accrued expenses 2,038 1,699 Income taxes payable 1,565 56 Current portion of long-term debt 870 4,000 Deferred revenue 5,020 4,743 Current liabilities held for sale – 893 Total current liabilities 10,847 12,814 Long-term debt (net of debt discount of $ 57 and $ 70 , respectively) 1,899 11,930 Lease liabilities – long-term 408 668 Deferred tax liability 82 – Other long-term liabilities 20 – Total liabilities 13,256 25,412 Commitments and contingencies – – Stockholders' equity: Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of September 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 September 30, 2025 and December 31, 2024, respectively. 4 4 Additional paid-in capital 24,909 24,259 Other accumulated comprehensive loss ( 127 ) ( 178 ) Retained earnings 6,008 1,141 Total stockholders' equity 30,794 25,226 Total liabilities and stockholders’ equity $ 44,050 $ 50,638 The accompanying notes are an integral part of these unaudited financial statements. 3 ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts) For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2025 2024 2025 2024 Revenues $ 5,723 $ 5,639 $ 16,820 $ 17,231 Cost of revenues 1,455 1,411 3,994 4,172 Gross profit 4,268 4,228 12,826 13,059 Operating costs and expenses: General and administrative 1,484 1,893 5,189 5,374 Sales and marketing expenses 1,626 1,592 4,682 5,606 Product development 684 671 2,072 2,044 Depreciation and amortization 658 676 1,993 2,032 Total operating costs and expenses 4,452 4,832 13,936 15,056 Operating loss ( 184 ) ( 604 ) ( 1,110 ) ( 1,997 ) Interest income (expense), net 207 ( 270 ) 14 ( 857 ) Other expense, net ( 1 ) ( 343 ) ( 80 ) ( 124 ) Income (loss) before taxes 22 ( 1,217 ) ( 1,176 ) ( 2,978 ) Income tax expense (benefit) 67 ( 347 ) ( 127 ) ( 642 ) Net loss from continuing operations ( 45 ) ( 870 ) ( 1,049 ) ( 2,336 ) Net income from discontinued operations, net of tax – 404 5,916 1,738 Net income (loss) $ ( 45 ) $ ( 466 ) $ 4,867 $ ( 598 ) Loss from continuing operations per share – basic $ ( 0.01 ) $ ( 0.23 ) $ ( 0.27 ) $ ( 0.61 ) Loss from continuing operations per share – fully diluted $ ( 0.01 ) $ ( 0.23 ) $ ( 0.27 ) $ ( 0.61 ) Income from discontinued operations per share – basic $ 0.00 $ 0.11 $ 1.53 $ 0.45 Income from discontinued operations per share – fully diluted $ 0.00 $ 0.11 $ 1.53 $ 0.45 Income (loss) per share – basic $ ( 0.01 ) $ ( 0.12 ) $ 1.26 $ ( 0.16 ) Income (loss) per share – fully diluted $ ( 0.01 ) $ ( 0.12 ) $ 1.26 $ ( 0.16 ) Weighted average number of common shares outstanding – basic 3,869 3,833 3,856 3,823 Weighted average number of common shares outstanding – fully diluted 3,870 3,835 3,857 3,826 The accompanying notes are an integral part of these unaudited financial statements. 4 ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (in thousands) For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2025 2024 2025 2024 Net income (loss) $ ( 45 ) $ ( 466 ) $ 4,867 $ ( 598 ) Foreign currency translation adjustment ( 30 ) 21 51 ( 26 ) Comprehensive income (loss) $ ( 75 ) $ ( 445 ) $ 4,918 $ ( 624 ) The accompanying notes are an integral part of these unaudited financial statements. 5 ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (in thousands, except share and per share amounts) Common Stock Additional Paid-in Accumulated Other Comprehensive Retained Total Stockholders’ Shares Amount Capital Income (Loss) Earnings Equity Balance at December 31, 2023 3,815,212 $ 4 $ 23,531 $ ( 49 ) $ 11,934 $ 35,420 Stock-based compensation expense – – ( 67 ) – – ( 67 ) Exercise of stock awards, net of tax 2,167 – – – – – Foreign currency translation – – – ( 34 ) – ( 34 ) Net loss – – – – ( 139 ) ( 139 ) Balance at March 31, 2024 3,817,379 $ 4 $ 23,464 $ ( 83 ) $ 11,795 $ 35,180 Stock-based compensation expense – – 267 – – 267 Exercise of stock awards, net of tax 14,332 – – – – – Foreign currency translation – – – ( 13 ) – ( 13 ) Net income – – – – 7 7 Balance at June 30, 2024 3,831,711 $ 4 $ 23,731 $ ( 96 ) $ 11,802 $ 35,441 Stock-based compensation expense – – 247 – – 247 Exercise of stock awards, net of tax 2,266 – 21 – – 21 Foreign Currency Translation – – – 21 – 21 Net Income – – – – ( 466 ) ( 466 ) Balance at September 30, 2024 3,833,977 $ 4 $ 23,999 $ ( 75 ) $ 11,336 $ 35,264 Balance at December 31, 2024 3,838,743 $ 4 $ 24,259 $ ( 178 ) $ 1,141 $ 25,226 Stock-based compensation expense – – 280 – – 280 Exercise of stock awards, net of tax 9,000 – – – – – Foreign currency translation – – – 2 – 2 Net income – – – – 5,387 5,387 Balance at March 31, 2025 3,847,743 $ 4 $ 24,539 $ ( 176 ) $ 6,528 $ 30,895 Stock-based compensation expense – – 189 – – 189 Exercise of stock awards, net of tax 21,083 – – – – – Foreign currency translation – – – 79 – 79 Net loss – – – – ( 475 ) ( 475 ) Balance at June 30, 2025 3,868,826 $ 4 $ 24,728 $ ( 97 ) $ 6,053 $ 30,688 Stock-based compensation expense – – 181 – – 181 Foreign currency translation – – – ( 30 ) – ( 30 ) Net income – – – – ( 45 ) ( 45 ) Balance at September 30, 2025 3,868,826 $ 4 $ 24,909 $ ( 127 ) $ 6,008 $ 30,794 The accompanying notes are an integral part of these unaudited financial statements. 6 ACCESS NEWSWIRE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) For the Nine Months Ended September 30, September 30, 2025 2024 Cash flows from operating activities: Net income (loss) $ 4,867 $ ( 598 ) Adjustments to reconcile net income to net cash provided by operating activities: Gain on disposal of business ( 8,974 ) – Depreciation and amortization 2,231 2,317 Provision for credit losses 1,056 906 Deferred income taxes ( 360 ) ( 99 ) Change in fair value of interest rate swaps – 124 Stock-based compensation expense 650 468 Non-cash interest adjustment on note payable 13 13 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable ( 1,056 ) ( 951 ) Decrease (increase) in other assets 411 78 Increase (decrease) in accounts payable 8 113 Increase (decrease) in income tax payable 1,509 2 Increase (decrease) in accrued expenses ( 26 ) 17 Increase (decrease) in deferred revenue ( 29 ) ( 96 ) Net cash provided by operating activities 300 2,294 Cash flows from investing activities: Proceeds from Sale of Compliance Business 12,000 – Capitalized software ( 23 ) ( 537 ) Purchase of fixed assets ( 20 ) ( 19 ) Net cash provided by (used in) investing activities 11,957 ( 556 ) Cash flows from financing activities: Payment of long-term debt ( 13,174 ) ( 3,333 ) Net cash used in financing activities ( 13,174 ) ( 3,333 ) Net change in cash and cash equivalents ( 917 ) ( 1,595 ) Cash and cash equivalents – beginning 4,103 5,714 Currency translation adjustment 75 ( 33 ) Cash and cash equivalents – ending $ 3,261 $ 4,086 Supplemental disclosures: Cash paid for income taxes $ 1,519 $ 170 Cash paid for interest $ 368 $ 1,093 The accompanying notes are an integral part of these unaudited financial statements. 7 ACCESS NEWSWIRE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Basis of Presentation The unaudited interim consolidated balance sheet as of September 30, 2025 and consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three and nine-month periods ended September 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. 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 ("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. Note 2. Summary of Significant Accounting Policies The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Significant intercompany accounts and transactions are eliminated in consolidation. Cash Equivalents For purposes of the Company’s financial statements, the Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Accounts Receivable and Allowance for Credit Losses The Company calculates its allowance for credit losses using an expected losses model rather than using incurred losses. The model is based on the credit losses expected to arise over the life of the asset based on the Company’s expectations as of the balance 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 and nine months ended September 30, 2025 and 2024 (in thousands): Schedule of allowance for credit losses For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2025 2024 2025 2024 Beginning balance $ 1,600 $ 712 $ 1,059 $ 721 Provision for credit losses 80 283 636 773 Write-offs ( 19 ) ( 57 ) ( 34 ) ( 556 ) Ending Balance $ 1,661 $ 938 $ 1,661 $ 938 8 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 September 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 $ 1,647,000 in Canada as of September 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 September 30, 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 its press release distribution and related products, investor relations website hosting or data feeds, events and webcast offerings and subscriptions to its incident hotline. Customers consist of public corporate issuers and professional firms, such as investor and public relations firms. In the case of news distribution and webcasting offerings, customers also include private companies. The Company accounts for a contract with a customer when there is an enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has economic substance, and collectability of the contract consideration is probable. The Company's revenues are measured based on consideration specified in the contract with each customer. The Company's contracts include either a subscription to its entire platform, certain modules within the platform or to its Press Release Optimizer Plan (“PRO”), or an agreement to perform services, or any combination thereof, and often contain multiple subscriptions and services. For these bundled contracts, the Company accounts for individual subscriptions and services as separate performance obligations if they are distinct, which is when a product or service is separately identifiable from other items in the bundled package, and a customer can benefit from it on its own or with other resources that are readily available to the customer. Performance obligations include providing subscriptions to certain modules or our entire platform, distributing press releases on a per release basis or conducting webcasts, virtual annual meetings, or other events on a per event basis. PRO subscription contracts contain two performance obligations: (i) the first is a series of distinct services that include, but are not limited to, developing specific media plans, and creating content to be distributed and (ii) the second performance obligation being access to the PRO platform along with distribution of press releases, ongoing support, and assessment of performance as a stand-ready obligation. The Company’s subscription and service contracts are generally for one year, with automatic renewal clauses included in the contract until the contract is cancelled. The contracts do not contain any rights of returns, guarantees, or warranties. Since contracts are generally for one year, all the revenue is expected to be recognized within one year from the contract start date. As such, the Company has elected the optional exemption that allows the Company not to disclose the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at the end of each reporting period. The Company recognizes revenue for subscriptions evenly over the contract period, upon distribution for 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. For all other services delivered on a per project or event basis, the revenue is recognized at the completion of the event. The Company believes recognizing revenue for subscriptions and stand ready obligations using a time-based measure of progress, best reflects the Company’s performance in satisfying the obligations. For bundled contracts, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the subscription or service. If a standalone selling price is not directly observable, the Company uses the residual method to allocate any remaining price to that subscription or service. The Company reviews standalone selling prices, at least annually, and updates these estimates if necessary. 9 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 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 September 30, 2025 and December 31, 2024, was $ 5,020,000 and $ 4,743,000 , respectively, and is expected to be recognized primarily within one year. Approximately $ 688,000 of the deferred revenue balance as of September 30, 2025, relates to contracts for press release packages with an expiration date after September 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 nine months ended September 30, 2025 and 2024, which was included in the deferred revenue balance at the beginning of each reporting period, was approximately $ 3,642,000 and $ 3,396,000 , respectively. Accounts receivable, net of allowance for credit losses, related to contracts with customers was $ 4,137,000 and $ 3,351,000 as of September 30, 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, 2025 and December 31, 2024, the Company has capitalized $ 52,000 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. The Company has considered historical renewal rates, expectations of future renewals and economic factors in making these determinations. 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 53,750 were excluded in the computation of diluted earnings per common share during the three and nine months ended September 30, 2025, respectively, because their impact was anti-dilutive. 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 months ended September 30, 2024, respectively, because their impact was anti-dilutive. Use of Estimates 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. Actual results could differ from those estimates. Income Taxes Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, the Company recognizes the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. The Company’s policy regarding the classification of interest and penalties is to classify them as income tax expense in the financial statements, if applicable. 10 Capitalized Software Costs incurred to develop the Company’s cloud-based platform products are capitalized when the preliminary project phase is complete, management commits to fund the project and it is probable the project will be completed and used for its intended purposes. Once the software is substantially complete and ready for its intended use, the software is amortized over its estimated useful life, which is typically four years. Costs related to design or maintenance of the software are expensed as incurred. Amortization for the three and nine-month periods ended September 30, 2025 and 2024, is as follows (in thousands): Schedule of capitalized costs and amortization For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2025 2024 2025 2024 Capitalized software development costs $ – $ 137 $ 23 $ 537 Amortization included in cost of revenues $ 64 $ 59 $ 209 $ 159 Impairment of Long-lived Assets In accordance with the authoritative guidance for accounting for long-lived assets, assets such as property and equipment, trademarks, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds fair value of the asset group. Lease Accounting The Company determines if an arrangement is a lease at inception. Operating lease agreements are primarily for office space and are included within lease right-of-use (“ROU”) assets and lease liabilities on the consolidated balance sheet. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments consist of non-lease services related to the lease and payments under operating leases classified as short-term. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. ROU assets include any lease payments due and exclude lease incentives. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. Fair Value Measurements Accounting Standards Codification (“ASC”) Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: ● Level 1 – Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes debt and equity securities that are traded in an active market. Cash and cash equivalents are quoted at Level 1. 11 ● Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The fair value of the Company’s long-term debt and interest rate swap are quoted at Level 2. ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. As of September 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 The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The associated cost is recognized over the period during which an employee or director is required to provide service in exchange for the award. Translation of Foreign Financial Statements The financial statements of the foreign subsidiaries of the Company have been translated into U.S. dollars. All assets and liabilities have been translated at current rates of exchange in effect at the end of the period. Income and expense items have been translated at the average exchange rates for the year or the applicable interim period. The gains or losses that result from this process are recorded as a separate component of other accumulated comprehensive income until the entity is sold or substantially liquidated. Comprehensive Income (Loss) Comprehensive income (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 The authoritative guidance for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill. The Company records the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recorded as goodwill. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets consist of client relationships, customer lists, distribution partner relationships, software, technology, non-compete agreements and trademarks that are initially measured at fair value. At the time of the business combination, trademarks may be considered an indefinite-lived asset and, as such, are not amortized as there may be no foreseeable limit to cash flows generated from them. For the Newswire acquisition, the Company originally determined the trademarks acquired were considered a definite lived asset which will be amortized over a period of 15 years, however upon the re-brand of the Company to ACCESS Newswire and subsequent review of the trademarks associated with Newswire, determined the life to be 5 years remaining. The goodwill and intangible assets are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. The client relationships ( 5 - 10 years), customer lists ( 3 years), distribution partner relationships ( 10 years), non-compete agreements ( 5 years) and software and technology ( 3 - 7 years) are amortized over their estimated useful lives. 12 Advertising The Company expenses advertising as incurred. During the three and nine-month periods ended September 30, 2025, advertising expense was $ 248,000 and $ 879,000 , respectively. Additionally, during the nine-month period ended September 30, 2025, the Company incurred $ 132,000 in costs associated with its corporate re-brand. During the three and nine-month periods ended September 30, 2024, advertising expense was $ 255,000 and $ 1,033,000 , respectively. Liquidity and Capital Resources As of September 30, 2025, we had $ 3,261,000 in cash and cash equivalents and $ 4,137,000 in net accounts receivable. Current liabilities from continuing operations as of September 30, 2025, totaled $ 10,847,000 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 September 30, 2025, our current liabilities from continuing operations exceeded our current assets from continuing operations by $ 1,846,000 . 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 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. Note 3: 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 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” 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. 13 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 September 30, 2025 and December 31, 2024 as presented in the Consolidated Balance Sheets (in thousands): Schedule of discontinued operations of assets and liabilities September 30, 2025 December 31, 2024 Accounts Receivable (net of provision for credit losses of $ 1,016 and $ 559 as of September 30, 2025 and December 31, 2024 $ – $ 1,321 Other current assets – 17 Total current assets – 1,338 Goodwill – 2,885 Intangible Assets (net of accumulated amortization $ 5,265 as of December 31, 2024) – 637 Other non-current assets – 55 Total assets $ – $ 4,915 Accounts Payable $ – $ 107 Accrued Expenses – 168 Deferred Revenue – 618 Total liabilities $ – $ 893 14 The following table sets forth the details of income from discontinued operations for the three and nine months ended September 30, 2025 and 2024 as presented in the Consolidated Statement of Operations (in thousands): Schedule of income from discontinued operations For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2025 2024 2025 2024 Revenues $ – $ 1,315 $ 650 $ 4,371 Cost of revenues – 371 315 1,294 Gross profit – 944 335 3,077 Operating costs and expenses: General and administrative – 116 560 438 Sales and marketing expenses – 26 17 78 Depreciation and amortization – 42 28 126 Total operating costs and expenses – 184 605 642 Operating income (loss) – 760 ( 270 ) 2,435 Interest income – 5 8 22 Other income – – 8,974 – Income before taxes – 765 8,712 2,457 Income tax expense – 361 2,796 719 Net income from continuing discontinued $ – $ 404 $ 5,916 $ 1,738 The following table presents the significant non-cash items related to discontinued operations for the nine-month periods ended September 30, 2025 and 2024 that are included in the accompanying statement of cash flows (in thousands): Adjustments to reconcile net loss to net cash used in operating activities: Schedule of reconcile net loss to net cash used in operating activities September 30, 2025 September 30, 2024 Depreciation and amortization $ 28 $ 126 Provision for credit loses 420 135 Stock-based compensation expense 78 63 Gain on disposal of business 8,974 – Note 4: Equity Dividends The Company did not pay any dividends during the three and nine-month periods ended September 30, 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, 2025 and 2024, other than stock awarded to employees and the Board of Directors. 15 2023 Equity Incentive Plan On June 7, 2023, the shareholders of the Company approved the 2023 Equity Incentive Plan (the “2023 Plan”). Under the terms of the 2023 Plan, the Company is authorized to issue incentive awards for common stock up to 300,000 shares to employees and other personnel. The awards may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and performance awards. The 2023 Plan is effective through April 1, 2033. As of September 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 September 30, 2025: Schedule of stock options outstanding and exercisable Options Outstanding Options Exercisable Exercise Price Range Number Weighted Average Remaining Contractual Life (in Years) Weighted Average Exercise Price Number $ 0.01 - 8.00 5,000 0.14 $ 6.80 5,000 $ 8.01 - 11.00 1,000 3.75 $ 10.75 1,000 $ 11.01 - 16.00 10,000 3.41 $ 13.21 10,000 $ 16.01 - 27.00 30,000 7.26 $ 26.98 15,000 $ 27.01 - 27.71 12,750 6.30 $ 27.71 12,750 Total 58,750 5.73 $ 22.80 43,750 As of September 30, 2025, the Company had unrecognized stock compensation related to the options of $ 131,000 , which will be recognized through 2027. During the nine-month period ended September 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 . No restricted stock units were granted during the three-month period ended September 30, 2025. During the three and nine-month periods ended September 30, 2024, the Company granted 11,166 and 43,666 restricted stock units, respectively, to members of the Company’s Board of Directors, employees and contractors which vest at various intervals over 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-month period ended September 30, 2025, 30,083 restricted stock units with an intrinsic value of $ 15.63 , vested. During the nine-month period ended September 30, 2024, 16,499 restricted stock units with an intrinsic value of $ 19.95 , vested. No restricted stock units vested during the three-month periods ended September 30, 2025 and 2024. As of September 30, 2025, there was $ 347,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2027. Note 5: Income Taxes The Company recognized an income tax expense of $ 67,000 and benefit of $ 127,000 for the three and nine-month periods ended September 30, 2025, respectively, compared to income tax benefits of $ 347,000 and $ 642,000 for the three and nine-month periods ended September 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 and nine-month periods ended September 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. 16 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. However, 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. While the Company currently does not anticipate the OBBB Act will have a material impact on its estimated annual effective tax rate in 2025, the Company will continue to assess its impact. The OBBB Act also enacted changes to rules governing global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII). Those changes will go into effect for tax years beginning after December 31, 2025; and thus do not impact current financial statements. Under US GAAP, the effects of the changes in tax laws are recognized in the period in which the tax laws are enacted. Accordingly, the Company has reflected the estimated impact of provisions of the OBBB Act in the Company’s financial statements for the three and nine months ended September 30, 2025. Note 6: Leases Leasing activity generally consists of office leases. In March 2019, a lease was signed to move the corporate headquarters to Raleigh, North Carolina. The lease had a lease commencement date of October 2, 2019 and expires December 31, 2027. Minimum lease payments are $ 2,997,000 , not including a tenant improvement allowance of $ 488,000 , which is included in fixed assets as of September 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 $ 804,000 as of September 30, 2025. The current portion of this liability of $ 396,000 is included in Accrued expenses on the Consolidated balance sheets and the long-term portion of $ 408,000 is included in Lease liabilities on the Consolidated balance sheets. Rent expense consists of both operating lease expense from amortization of our ROU assets as well as variable lease expense which consists of non-lease components of office leases (i.e. common area maintenance) or rent expense associated with short-term leases. The components of lease expense were as follows (in thousands): Schedule of lease expense For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2025 2024 2025 2024 Lease expense Operating lease expense $ 76 $ 76 $ 228 $ 228 Variable lease expense 17 18 48 50 Total lease expense $ 93 $ 94 $ 276 $ 278 The weighted-average remaining non-cancelable lease term for our operating leases was 2.25 years as of September 30, 2025. As of September 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 September 30, 2025, are as follows (in thousands): Schedule of future lease payments of operating leases Year Ended December 31: 2025 $ 100 2026 401 2027 412 Total lease payments 913 Present value adjustment ( 109 ) Lease liability $ 804 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. 17 Note 7: 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. Below provides a breakdown of costs and expenses of our one operating unit (in thousands): Schedule of segment reporting For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2025 2024 2025 2024 Revenues $ 5,723 $ 5,639 $ 16,820 $ 17,231 Cost of revenues Costs to deliver products 810 643 2,309 1,940 Employee costs 470 635 1,263 1,858 Teleconference costs 98 56 192 169 Amortization of capitalized software 64 60 209 160 Other segment costs 13 17 21 45 Total cost of revenue 1,455 1,411 3,994 4,172 Operating costs and expenses: Employee costs 1,730 1,824 5,134 6,327 Consultants and professional services 529 750 1,800 2,298 Depreciation and amortization 658 676 1,993 2,032 Advertising 248 255 879 1,033 Provision for credit losses 80 283 636 773 Software licensing 189 225 648 726 Stock compensation 201 241 593 399 Hosting 147 140 418 374 Merchant and bank fees 115 117 333 358 Capitalized Software – ( 137 ) ( 23 ) ( 537 ) Acquisition/integration and other non-recurring costs 214 168 667 362 Rent 93 94 276 278 Other operating expenses (1) 248 196 582 633 Total operating costs and expenses 4,452 4,832 13,936 15,056 Operating loss $ ( 184 ) $ ( 604 ) $ ( 1,110 ) $ ( 1,997 ) (1) Other operating expenses include insurance, travel, reseller commissions, tradeshow expense and other miscellaneous selling, general and administrative expenses 18 Note 8: 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”). 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). 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. Effective June 25, 2024, the aggregate principal amount of the Revolving LOC was reduced to $ 1,500,000 . The Company currently has no plans to utilize the Revolving LOC but may do so in the future. If the Company does utilize any funds under the Revolving LOC, the funds will bear interest at a per annum rate equal to the then current SOFR plus 2.05%. Effective June 25, 2024, Pinnacle’s commitment to fund under the Revolving LOC was amended to terminate on June 30, 2025, unless terminated earlier pursuant to the terms of the Credit Agreement. The Company terminated its existing $3,000,000 unsecured line of credit with Fifth Third Bank immediately prior to the Closing Date. As of September 30, 2025, there was no outstanding balance under the Revolving LOC and the interest rate was 6.36%. 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 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 ; (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 Credit Agreement, as amended, contains the following financial covenants: As Amended Fiscal Quarter Fixed Charge Coverage Ratio Each fiscal quarter ending on or after June 30, 2025 1:2:1.0 Additionally, 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 $ 1,500,000 If the Leverage Ratio is greater than 1.5:1.00 but less than or equal to 1.75:1.00 $ 1,000,000 If the Leverage Ratio is greater than 1.75:1.00 $ 500,000 19 The Credit Agreement also contains customary affirmative covenants for a transaction of this nature, including among other things, covenants relating to: maintenance of adequate financial and accounting books and records, delivery of financial statements and other information, preservation of existence of the Company and subsidiaries, payment of taxes and claims, compliance with laws, maintenance of insurance, foreign qualification, use of proceeds, cash management system, maintenance of properties, and conduct of business. The Credit Agreement also contains customary negative covenants for a transaction of this nature, including, among other things, covenants relating to debt, liens, investments, negative pledges, dividends and other debt payments, restriction on fundamental changes, sale of assets, transactions with affiliates, restrictive agreements, and changes in fiscal year. The Credit Agreement also contains various Events of Default (subject to certain grace periods, to the extent applicable), including among other things, Events of Default for the nonpayment of principal, interest or fees; breach of certain covenants; inaccuracy of the representations or warranties in any material respect; bankruptcy or insolvency; dissolution or change of control; certain unsatisfied judgments; defaults under material agreements; certain unfunded liabilities under employee benefit plans; certain unsatisfied judgments; certain ERISA violations; and the invalidity or unenforceability of the Credit Agreement. If an Event of Default occurs, the Company may be required to repay all amounts outstanding under the Credit Agreement. The Term Loan and any advances under the Revolving LOC are secured by a first priority lien and security interest to the benefit of Pinnacle in the Event of Default on all of the Company’s current or future assets and each of the Guarantor’s current or future assets. Note 9: Interest Rate Swap The Company entered into an interest rate swap agreement to convert its interest rate exposure from variable rate to fixed rate to control cash outflows related to interest on its variable rate debt. The Company 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. As of September 30, 2025, the variable rate was 6.66 %. The carrying amount for the Company’s derivative financial instrument is the estimated fair value of the financial instrument. The Company’s derivative is not exchange listed and therefore the fair value is estimated under a mark-to-market approach using an analytics model that is a readily observable market input. This model reflects the contractual terms of the derivative, such as notional value and expiration date, as well as market-based observables including interest rates, yield curves, and the credit quality of the counterparty. The model also incorporates the Company’s creditworthiness in order to appropriately reflect non-performance risk. Inputs to the derivative pricing model are generally observable and do not contain a high level of subjectivity, and accordingly, the Company’s derivative is classified within Level 2 of the fair value hierarchy. While the Company believes its estimate results in a reasonable reflection of the fair value of the instrument, the estimated value may not be representative of actual value that could have been realized or that will be realized in the near future. 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, 2025 was a liability of $ 20,000 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 $ 1,000 and $ 80,000 during the three and nine months ended September 30, 2025, respectively, compared to a net unrealized loss of $ 343,000 and $ 124,000 during the three and nine months ended September 30, 2024, which are included in Other expense in the Consolidated statements of operations. 20