What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-12 compared with 2025-11-12 · 382 added, 451 removed, 402 unchanged (67% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

March 31, 2026

December 31, 2025

Current assets:

Cash and cash equivalents

Accounts receivable (net of allowance for doubtful accounts of $ 1,661 and $ 1,059 respectively

Accounts receivable (net of allowance for credit losses of $ 1,317 and $ 1,336 , respectively)

Other current assets

Current assets held for sale

Total current assets

5 unchanged sentences

Deferred tax asset

Non-current assets held for sale

LIABILITIES AND STOCKHOLDERS’ EQUITY

2 unchanged sentences

Accrued expenses

Income taxes payable

Income tax payable

Current portion of long-term debt

Deferred revenue

Current liabilities held for sale

Total current liabilities

Long-term debt (net of debt discount of $ 48 and $ 52 , respectively)

Lease liabilities – long-term

Deferred tax liability

Other long-term liabilities

Interest rate swap liability

Lease liabilities – long-term

Total liabilities

1 unchanged sentence

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.

Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively.

Common stock $ 0.001 par value, 20,000,000 shares authorized, 3,882,144 and 3,850,435 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital

3 unchanged sentences

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of

these unaudited financial statements.

The accompanying notes are an integral part of these

unaudited consolidated financial statements.

ACCESS NEWSWIRE INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

1 unchanged sentence

For the Three Months Ended

For the Nine Months Ended

September 30,

Cost of revenues

1 unchanged sentence

General and administrative

Sales and marketing expenses

Sales and marketing

Product development

2 unchanged sentences

Operating loss

Interest income (expense), net

Other expense, net

Income (loss) before taxes

Income tax expense (benefit)

Interest expense, net

Other income (expense)

Loss from continuing operations before income taxes

Income tax benefit

Net loss from continuing operations

Net income from discontinued operations, net of tax

Net income from discontinued operations, net of taxes

Net income (loss)

Loss from continuing operations per share – basic

Loss from continuing operations per share – fully diluted

Income from discontinued operations per share – basic

Income from discontinued operations per share – fully diluted

Income (loss) per share – basic

Income (loss) per share – fully diluted

Net income (loss) from continuing operations per share – basic

Net income (loss) from continuing operations per share – diluted

Net income from discontinued operations per share – basic

Net income from discontinued operations per share – diluted

Net income (loss) per share – basic

Net income (loss) per share – fully diluted

Weighted average number of common shares outstanding – basic

Weighted average number of common shares outstanding – fully diluted

The accompanying notes are an integral part of

these unaudited financial statements.

The accompanying notes are an integral part of these

unaudited consolidated financial statements.

ACCESS NEWSWIRE INC.

3 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

Net income (loss)

1 unchanged sentence

Comprehensive income (loss)

The accompanying notes are an integral part of

these unaudited financial statements.

The accompanying notes are an integral part of these

unaudited consolidated financial statements.

ACCESS NEWSWIRE INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share amounts)

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’

Income (Loss)

Balance at December 31, 2024

3 unchanged sentences

Balance at March 31, 2025

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

Balance at June 30, 2024

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign Currency Translation

Balance at September 30, 2024

Balance at December 31, 2025

1 unchanged sentence

Exercise of stock awards, net of tax

Stock issued to consultants

Stock repurchase and retirement

Foreign currency translation

Balance at March 31, 2026

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

Balance at June 30, 2025

Stock-based compensation expense

Foreign currency translation

Balance at September 30, 2025

The accompanying notes are an integral part of

these unaudited financial statements.

The accompanying notes are an integral part of these

unaudited consolidated financial statements.

ACCESS NEWSWIRE INC.

2 unchanged sentences

(in thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash flows from operating activities:

Net income (loss)

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

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

Gain on disposal of business

1 unchanged sentence

Provision for credit losses

Change in fair value of interest rate swap

Deferred income taxes

Change in fair value of interest rate swaps

Stock-based compensation expense

Non-cash interest adjustment on note payable

Non-cash interest expense

Changes in operating assets and liabilities:

3 unchanged sentences

Increase (decrease) in income tax payable

Increase (decrease) in accrued expenses

Increase (decrease) in accrued expenses and other liabilities

Increase (decrease) in deferred revenue

2 unchanged sentences

Proceeds from Sale of Compliance Business

Capitalized software

Purchase of fixed assets

Capitalized software

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Payment of long-term debt

Payment of principal of Note Payable

Payment for stock repurchase and retirement

Net cash used in financing activities

4 unchanged sentences

Supplemental disclosures:

Cash paid for income taxes

Cash paid for interest

The accompanying notes are an integral part of

these unaudited financial statements.

The accompanying notes are an integral part of these

unaudited consolidated financial statements.

ACCESS NEWSWIRE INC.

3 unchanged sentences

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.

balance sheet as of March 31, 2026 and consolidated statements of operations, comprehensive income (loss), stockholders’ equity

and cash flows for the three-month periods ended March 31, 2026 and 2025 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

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 2025 audited financial

statements of ACCESS Newswire Inc.

(the “Company”, “We”, or “Our”) filed on Form 10-K for the year

ended December 31, 2025.

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.

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

2 unchanged sentences

less to be cash equivalents.

Accounts Receivable and Allowance for Credit

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):

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 months ended March 31, 2026 and 2025 (in thousands):

Schedule of allowance for credit losses

For the Three Months Ended

For the Nine Months Ended

September 30,

Three months ended

March 31, 2026

Three months ended

March 31, 2025

Beginning balance

2 unchanged sentences

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

Financial instruments and related

items which potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents and accounts

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

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.

As of March 31, 2026, 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 $ 2,039,000 and $ 1,943,000 in Canada as of March 31, 2026 and December 31, 2025,

respectively.

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

The Company did not have any

customers during the three months ended March 31, 2026 or 2025 that accounted for more than 10% of revenue.

Revenue Recognition

33 unchanged sentences

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 subscriptions evenly over the contract period, upon distribution for per release contracts and upon event completion for webcasting

and virtual annual meeting events.

For service contracts that include stand-ready obligations, revenue is recognized evenly over the contract

For all other services delivered on a per project or event basis, the revenue is recognized at the completion of the event.

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

14 unchanged sentences

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

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 ,

revenue as of March 31, 2026 and December 31, 2025, was $ 5,390,000 and $ 5,265,000 , respectively, and is expected to be recognized primarily

within one year.

Approximately $ 385,000 of the deferred revenue balance as of March 31, 2026, relates to contracts for press release packages

with an expiration date after March 31, 2027, however, since the customer may use the balance within one year, the entire balance is classified

As of January 1, 2025, deferred revenue was $ 4,743,000 .

Revenue recognized for the three months ended March 31, 2026 and 2025,

which was included in the deferred revenue balance at the beginning of each reporting period, was approximately $ 2,210,000 and $ 2,162,000 ,

respectively.

Accounts receivable, net of allowance for credit losses, related to contracts with customers was $ 3,596,000 and $ 3,884,000

as of March 31, 2026 and December 31, 2025, respectively.

As of January 1, 2025, accounts receivable, net of allowance for credit losses

was $ 3,351,000 .

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 March 31, 2026 and December 31, 2025, the Company has capitalized $ 40,000 and

$ 45,000 , 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

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.

The Company has considered historical renewal rates, expectations of future

renewals and economic factors in making these determinations.

Earnings Per Share (EPS)

5 unchanged sentences

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.

of stock options totaling 45,000 and 53,750 were excluded in the computation of diluted earnings per common share during the three months

ended March 31, 2026 and 2025, 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.

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.

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.

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

For any uncertain tax positions, the Company recognizes the impact of a tax position, only if it is more likely than not

3 unchanged sentences

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.

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):

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-month periods ended March 31, 2026 and

2025, is as follows (in thousands):

Schedule of capitalized costs and amortization

For the Three Months Ended

For the Nine Months Ended

September 30,

Capitalized software development costs

10 unchanged sentences

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.

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

4 unchanged sentences

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.

As most 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

13 unchanged sentences

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.

The fair value of the Company’s interest rate swap is 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.

As of March 31, 2026 and December

31, 2025, 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.

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

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.

The financial statements of the

foreign subsidiaries of the Company have been translated into U.S.

All assets and liabilities have been translated at current

4 unchanged sentences

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.

Comprehensive Loss

Comprehensive loss consists of

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

Business Combinations, Goodwill, and Intangible

The authoritative guidance

for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill.

The authoritative guidance for

business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill.

The Company records

18 unchanged sentences

The Company expenses advertising

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

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

During the three-month periods ended March 31, 2026 and 2025, advertising expense was $ 406,000 and $ 301,000 , respectively.

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

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.

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

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

As of March 31, 2026, we had $ 3,487,000

in cash and cash equivalents and $ 3,596,000 in net accounts receivable.

Current liabilities as of March 31, 2026, totaled $ 9,862,000 including

the current portion of our long-term debt, accounts payable, deferred revenue, accrued payroll liabilities, income taxes payable, current

portion of lease liabilities and other accrued expenses.

As of March 31, 2026, our current

liabilities exceeded our current assets by $ 1,191,000 .

While our current liabilities exceed current assets, we believe our ability

to renegotiate our Credit Agreement (as defined in Note 9) and ability to continue to generate cash will benefit us in the future.

Accounting Pronouncements Not Yet Effective

In November 2024, the FASB issued ASU 2024-03,

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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).

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

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

2 unchanged sentences

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.

as “compliance revenue” will be retained by the Company.

The Buyer assumed certain liabilities related to the Purchased Assets,

which included certain accounts payable, accrued liabilities and deferred revenue.

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

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.

9 unchanged sentences

using a time-based measure of progress, best reflects the Company’s performance in satisfying the obligations.

February 26, 2026, the Buyer submitted an indemnification notice to the Company alleging indemnity claims under the Purchase Agreement

in the aggregate of $ 549,000 .

While the Company disputes this amount and is in the process of discussing and negotiating the matter with

the Buyer, there is no guarantee that we will receive all or a substantial portion of the $500,000 holdback from the Buyer.

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

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

Other current assets

Total current assets

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

Other non-current assets

Accounts Payable

Accrued Expenses

Deferred Revenue

Total liabilities

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):

There were no remaining assets or liabilities associated with discontinued operations as of March 31, 2026 and December 31,

2025 as presented in the Consolidated Balance Sheets.

following table sets forth the details of income from discontinued operations for the three months ended March 31, 2025 (in thousands):

Schedule of income from discontinued operations

For the Three Months Ended

For the Nine Months Ended

September 30,

Three Months Ended March 31, 2025

Cost of revenues

1 unchanged sentence

General and administrative

Sales and marketing expenses

Sales and marketing

Depreciation and amortization

Total operating costs and expenses

Operating income (loss)

Operating income

Interest income

Income before taxes

Gain on disposal of compliance business

Income before income taxes

Income tax expense

Net income from continuing discontinued

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):

to reconcile net loss to net cash used in operating activities:

Net income from discontinued operations

following table presents the significant non-cash items related to discontinued operations for the three months ended March 31, 2025

(in thousands):

Schedule of reconcile net loss to net cash used in operating activities

September 30, 2025

September 30, 2024

Three Months Ended March 31, 2025

Depreciation and amortization

Provision for credit loses

Stock-based compensation expense

Gain on disposal of business

The Company did not pay

any dividends during the three and nine-month periods ended September 30, 2025 and 2024.

The Company did not pay any

dividends during the three-month periods ended March 31, 2026 and 2025.

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.

During the three months ended

March 31, 2026, there were 11,260 shares of common stock issued to consultants in exchange for services.

No common stock was issued to

consultants during the three months ended March 31, 2025.

There were no other issuances of common or preferred stock during the three-month

periods ended March 31, 2026 and 2025, other than stock awarded to employees and the Board of Directors.

Stock repurchase and retirement

On December 4, 2025, the Company’s

board of directors authorized a stock repurchase program under which the Company was authorized to repurchase up to $ 1,000,000

of its common shares.

The table below shows the shares that have been repurchased under the stock repurchase program ($ in thousands,

except per share amounts):

Schedule of stock repurchase program

Shares Repurchased

Total Number of Shares Repurchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Program

Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program

December 1-31, 2025

January 1-31, 2026

February 1-28, 2026

March 1-31, 2026

2023 Equity Incentive Plan

6 unchanged sentences

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.

As of March 31, 2026, there are 318,166 shares which remain to be granted under the 2023 Plan,

including 131,826 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:

information about stock options outstanding and exercisable at March 31, 2026:

Schedule of stock options outstanding and exercisable

12 unchanged sentences

$ 27.01 - 27.71

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

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

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

restricted stock units, respectively, to members of the Company’s Board of Directors, employees and contractors which vest at

various intervals over 3

The average grant date fair value of these grants was $ 8.06

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.

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.

As of March 31, 2026, the Company

had unrecognized stock compensation related to the options of $ 79,000 , which will be recognized through 2027.

The Company did no t grant any

restricted stock units during the three months ended March 31, 2026 and 2025.

During the three months ended March 31, 2026, 23,981 restricted

stock units with an intrinsic value of $ 25.45 , vested.

During the three months ended March 31, 2025, 9,000 restricted stock units with

an intrinsic value of $ 20.81 , vested.

As of March 31, 2026, there was $ 539,000 of unrecognized compensation cost related to our unvested

restricted stock units, which will be recognized through 2028.

The Company recognized income

tax benefit of $ 121,000 and $ 185,000 for the three-month periods ended March 31, 2026 and 2025.

At the end of each interim period, the

Company estimates the effective tax rate expected to be applicable for the full fiscal year and this rate is applied to the results for

the year-to-date period, and then adjusted for any discrete period items.

For the three-month periods ended March 31, 2026 and 2025, 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

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

The One Big Beautiful Bill

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

research and development expenditures

incurred in tax years beginning on or after January 1, 2025.

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,

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

Leasing activity generally

consists of office leases.

Leasing activity generally consists

of office leases.

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

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.

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.

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 March 31, 2026 and December 31, 2025.

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 $ 630,000

as of September 30, 2025.

as of March 31, 2026.

The current portion of this liability of $ 403,000

7 unchanged sentences

Schedule of lease expense

For the Three Months Ended

For the Nine Months Ended

September 30,

Three months ended

Lease expense

1 unchanged sentence

Variable lease expense

Total lease expense

The weighted-average remaining

non-cancelable lease term for our operating leases was 1.75

years as of September 30, 2025.

As of September 30, 2025, the weighted-average discount rate used to determine the lease liability was

The future minimum

lease payments to be made under non-cancelable operating leases on September 30, 2025, are as follows (in thousands):

years as of March 31, 2026.

As of March 31, 2026, the weighted-average discount rate used to determine the lease liability was 3.77 %.

The future minimum lease payments to be made under non-cancelable operating leases on March 31, 2026, are as follows (in thousands):

Schedule of future lease payments of operating leases

6 unchanged sentences

above, none of our contracts contain a lease.

On December 18, 2025, the Company

entered into a Commercial Sublease Agreement (the “Sublease”), to lease 100% of the corporate headquarters for the remaining

term of the lease, commencing on March 1, 2026 through December 31, 2027.

Under the terms of the Sublease, future minimum lease payments

are $ 486,000 .

As a result of the Sublease, the Company recorded an impairment charge of $ 250,000 , with $ 187,000 allocated to its right-of-use

asset for the office lease and $ 63,000 allocated to its leasehold improvements, as of December 31, 2025.

Segment Reporting

14 unchanged sentences

Below provides

a breakdown of costs and expenses of our one operating unit (in thousands):

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,

Three Months Ended March 31,

Cost of revenues

20 unchanged sentences

and administrative expenses

Commitments and Contingencies

From time to time, the Company

may be involved in litigation that arises through the normal course of business.

As of the date of this filing and except as set forth

below, the Company is neither a party to any litigation nor is it aware of any such threatened or pending litigation which the Company

believes might result in a material adverse effect to the Company’s business.

On April 1, 2026, Cycurion, Inc.

filed a complaint against the Company in the General Court of Justice, Superior Court Division, Wake County, North Carolina, together

with an unidentified “John Doe” defendant.

The complaint alleges that on March 16, 2026, the Company disseminated a press release

concerning Cycurion that the plaintiff contends was fabricated and submitted to the Company by an unauthorized third party, and asserts

claims against the Company for common law defamation, violation of the North Carolina Unfair and Deceptive Trade Practices Act, and common

law negligence.

The plaintiff seeks monetary damages.

The Company believes the claims against it are without merit and intends to defend

the matter vigorously.

This litigation matter is covered under the Company’s insurance policies.

At this time, the Company is unable to

reasonably estimate the amount or range of possible loss, if any, that may result from this matter, and accordingly no accrual for any

loss contingency has been recorded in the accompanying condensed consolidated financial statements.

The Company does not expect the outcome

of this litigation to have a material adverse effect on its financial condition or results of operations, or cash flows, although there

can be no assurance as to the ultimate outcome.

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%.

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.

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;

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:

Date”), the Company entered into a $ 25 million Credit Agreement, as amended (the “Credit Agreement”) with Pinnacle Bank

(“Pinnacle”).

The Credit Agreement provides for the following:

(i) term loan facility in an aggregate principal amount of

$ 20 million (the “Term Loan”), and (ii) revolving line of credit in an up to aggregate principal amount of $ 5 million (the

“Revolving LOC”), subject to an 85% limit based on the current eligible accounts receivable (as defined in the Credit Agreement).

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.

As of March 31, 2026, there was

no outstanding balance under the Revolving LOC and the interest rate was 5.72%.

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

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;

(iv) to release the Liens (as defined in the Credit Agreement) relating to the Purchased

and (v) to extend the maturity of the Revolving LOC to June 30, 2026 .

The Credit Agreement, as amended,

currently contains the following financial covenants:

Fiscal Quarter

1 unchanged sentence

Each fiscal quarter ending on or after June 30, 2025

Additionally, the Company

is required to maintain unrestricted liquidity, as follows.

Additionally, the Company is

required to maintain unrestricted liquidity, as follows.

Leverage Ratio

3 unchanged sentences

If the Leverage Ratio is greater than 1.75:1.00

The Credit Agreement also

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

of adequate financial and accounting books and records, delivery of financial statements and other information, preservation of existence

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;

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;

inaccuracy of the representations or warranties in any

material respect;

bankruptcy or insolvency;

1 unchanged sentence

certain unsatisfied judgments;

defaults under material

defaults under material agreements;

certain unfunded liabilities under employee benefit plans;

1 unchanged sentence

certain ERISA violations;

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.

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.

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

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 $ 20,000,00 0 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 March 31, 2026, the variable rate was 6.02 %.

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

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.

The fair value of the swap agreement as of March 31, 2026

and December 31, 2025 was a liability of $ 9,000 and $ 20,000 , respectively, and is included in Interest rate swap liability in the Consolidated

balance sheets.

The fair value of the interest rate swap agreement excludes accrued interest and takes into consideration current interest

rates and current likelihood of the swap counterparty’s compliance with its contractual obligations.

As a result of the interest

rate swap, the Company recognized a net unrealized gain of $ 11,000 for the three months ended March 31, 2026 compared to a loss of $ 69,000

during the three months ended March 31, 2025, which are included in Other income (expense), net in the Consolidated statements of operations.

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

What changed 10-Q

Item 1. Financial Statements