Public Policy Holding Company, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Report of Independent Registered Public Accounting Firm (PCAOB num b e r 686 ) 61 Consolidated Balance Sheets as of December 31, 2025 and 2024 63 Consolidated Statements o f Operations a nd Comprehensive Loss for the Years Ended December 31, 2025 and 2024 64 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2025 and 2024 65 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 a nd 2024 67 Notes to Consolidated Financial Statements Note 1. Organization an d Significant Accounting Policies 68 Note 2 . New Accounting Pronouncements 73 Note 3 . Basic and Diluted Earnings (Loss) Per Share 74 Note 4 . Revenue 75 Note 5 . Contract Balances and Allowance for Expected Credit Losses 75 Note 6 . Goodwill and Intangible Assets 76 Note 7 . Accounts Payable and Accrued Expenses 77 Note 8 . Leases 78 Note 9 . Notes Payable 78 Note 1 0 . Share-based Accounting Charge 79 Note 1 1 . Post-combination Compensation Charge 80 Note 1 2 . Related Party Transactions 82 Note 1 3 . Omnibus Incentive Plan 82 Note 1 4 . Income Taxes 87 Note 1 5 . Fair Value Measurement 90 Note 1 6 . Acquisitions 92 Note 1 7 . Segment Reporting 98 Note 1 8 . Stockholders' Equity 100 Note 19 . Subsequent Events 101 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders, Board of Directors, and Audit Committee of Public Policy Holding Company, Inc. Washington, D.C. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Public Policy Holding Company, Inc. and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and their cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. 61 PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES We are a public accounting firm registered with the Public Company Accounting Oversight Board ("United States") (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Forvis Mazars, LLP We have served as the Company's auditor since 2024. Tysons, Virginia March 31, 2026 62 PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) December 31, 2025 December 31, 2024 ASSETS: Current assets: Cash and cash equivalents $ 20,436 $ 14,536 Contract receivables, net 21,851 18,285 Notes receivable - related parties, current portion 750 863 Income taxes receivable 2,068 3,185 Prepaid post-combination compensation, current portion 3,585 6,070 Prepaid expenses and other current assets 9,598 2,726 Amounts due from related parties 266 — Total current assets 58,554 45,665 Property and equipment at cost, less accumulated depreciation 598 751 Notes receivable - related parties, long term 900 1,050 Operating lease right of use asset 18,829 18,428 Goodwill 56,990 64,308 Other intangible assets, net of accumulated amortization 37,113 32,144 Deferred income tax asset 24,600 11,038 Prepaid post-combination compensation, long term 4,692 888 Other long-term assets 276 189 TOTAL ASSETS $ 202,552 $ 174,461 LIABILITIES AND EQUITY: Current liabilities: Accounts payable and accrued expenses 30,819 20,044 Amounts owed to related parties — 556 Deferred revenue 3,310 3,150 Operating lease liability, current portion 5,070 4,827 Contingent consideration, current portion 3,134 2,093 Other liability, current portion 1,441 1,135 Notes payable, current portion, net 9,082 6,031 Total current liabilities 52,856 37,836 Notes payable, long term, net 37,906 26,014 Contingent consideration, long term 9,864 8,803 Other liability, long term 10,553 3,745 Operating lease liability, long term 16,469 16,808 Total liabilities $ 127,648 $ 93,206 Stockholders' equity: Common stock, $ 0.001 par value, 1,000,000,000 shares authorized, 25,174,492 and 24,017,599 shares issued and outstanding as of December 31, 2025, and 2024, respectively 24 23 Additional paid-in capital 237,075 197,489 Accumulated deficit ( 163,381 ) ( 115,721 ) Accumulated other comprehensive income (loss) 1,186 ( 536 ) Total stockholders’ equity 74,904 81,255 TOTAL LIABILITIES AND EQUITY $ 202,552 $ 174,461 The accompanying notes to the consolidated financial statements are an integral part of these statements 63 PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Amounts in thousands, except share and per share data) Years Ended December 31, 2025 2024 Revenue $ 186,541 $ 149,563 Operating expenses: Salaries and other personnel costs 160,800 126,640 Office and other direct costs 7,094 5,651 Cost of services 167,894 132,291 Salaries, general and administrative 31,791 26,837 Mergers and acquisitions expense 837 2,434 Depreciation and amortization expense 5,676 4,244 Loss on impairment of intangible assets 2,890 — Loss on impairment of goodwill 6,219 — Change in fair value of contingent consideration 5,147 1,910 Total operating expenses 220,454 167,716 Loss from operations ( 33,913 ) ( 18,153 ) Gain on bargain purchase 2,043 2,464 Interest income 81 177 Interest expense ( 3,402 ) ( 1,900 ) Other income, net 589 — Net loss before income taxes ( 34,602 ) ( 17,412 ) Income tax expense ( 4,399 ) ( 6,545 ) Net loss $ ( 39,001 ) $ ( 23,957 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 2.37 ) $ ( 2.34 ) Basic and diluted 17,466,665 13,409,160 Net loss $ ( 39,001 ) $ ( 23,957 ) Foreign currency translation gain (loss) 1,722 ( 536 ) Total comprehensive loss $ ( 37,279 ) $ ( 24,493 ) The accompanying notes to the consolidated financial statements are an integral part of these statements 64 PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in thousands, except share and per share data) Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount Balance at December 31, 2024 24,017,599 $ 23 $ 197,489 $ ( 115,721 ) $ ( 536 ) $ 81,255 Long term incentive program charges — — 5,790 — — 5,790 Issuance of unvested legally outstanding shares 753,453 — — — — — Related to acquisitions Issuance of common stock 143,909 — 1,284 — — 1,284 Issuance of common stock for settlement of other liability — — 342 — — 342 Vesting of stock issued from acquisitions — — 1 ( 1 ) — — Vesting of restricted stock awards — — 1 ( 1 ) — — Vesting of restricted stock units 329,141 1 — ( 1 ) — — Repayment of note receivable by Alpine Group ( 63,356 ) — ( 532 ) — — ( 532 ) Post-combination compensation charge-shares — — 3,074 — — 3,074 Dividends — — — ( 8,656 ) — ( 8,656 ) Forfeiture of unvested restricted stock ( 6,254 ) — — — — — Share-based accounting charge — — 29,626 — — 29,626 Foreign currency translation gain — — — — 1,722 1,722 Net loss — — — ( 39,001 ) — ( 39,001 ) Balance at December 31, 2025 25,174,492 $ 24 $ 237,075 $ ( 163,381 ) $ 1,186 $ 74,904 The accompanying notes to the consolidated financial statements are an integral part of these statements 65 PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in thousands, except share and per share data) Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Total Stockholders’ Equity Shares Amount Balance at December 31, 2023 23,054,393 $ 22 $ 156,972 $ ( 74,925 ) $ — $ 82,069 Issuance of unvested legally outstanding shares 537,054 — — — — — Long term incentive program charges — — 3,784 — — 3,784 Dividends — — — ( 16,836 ) — ( 16,836 ) Vesting of stock issued from acquisitions — — 1 ( 1 ) — — Vesting of restricted stock awards — 1 — ( 1 ) — — Vesting of restricted stock units 158,337 — 1 ( 1 ) — — Common stock issued to Multistate as settlement of contingent consideration 88,287 — 691 — — 691 Issuance of common stock for acquisition 179,528 — 1,443 — — 1,443 Post-combination compensation charge-shares — — 2,793 — — 2,793 Share-Based Accounting Charge Retained Pre-IPO Shares — — 31,804 — — 31,804 Foreign currency translation (loss) — — — — ( 536 ) ( 536 ) Net loss — — — ( 23,957 ) — ( 23,957 ) Balance at December 31, 2024 24,017,599 $ 23 $ 197,489 $ ( 115,721 ) $ ( 536 ) $ 81,255 The accompanying notes to the consolidated financial statements are an integral part of these statements 66 PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Years Ended December 31, 2025 2024 Cash Flows from Operating Activities: Net loss $ ( 39,001 ) $ ( 23,957 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 192 136 Amortization expense - intangibles 6,046 4,671 Amortization of right of use assets 5,466 4,071 Amortization of prepaid post-combination compensation 8,987 5,062 Accretion of other liability 8,490 3,742 Amortization of debt discount 236 182 Provision for deferred income taxes ( 2,712 ) ( 1,294 ) Share-based accounting charge 29,626 31,804 Stock-based compensation 7,086 4,162 Post-combination compensation charge-shares 3,074 2,793 Change in fair value of contingent consideration 5,147 1,910 Gain on bargain purchase ( 2,043 ) ( 2,464 ) Credit losses on accounts receivable 2,353 — Impairment of goodwill and other intangible assets 9,109 — Employee loan forgiveness 250 — (Increase) decrease in: Accounts receivable ( 5,060 ) ( 3,118 ) Prepaid post-combination expense ( 10,456 ) ( 4,640 ) Prepaid expenses and other assets ( 1,142 ) 573 Increase (decrease) in: Accounts payable and accrued expenses 6,325 ( 2,053 ) Income taxes payable and receivable 1,149 ( 2,219 ) Deferred revenue 149 959 Contingent consideration ( 4 ) ( 269 ) Operating lease liability ( 5,961 ) ( 4,277 ) Other liabilities ( 1,714 ) ( 982 ) Transactions with members and related parties ( 822 ) 1,611 Net Cash Provided by Operating Activities 24,770 16,403 Cash Flows from Investing Activities: Purchases of property and equipment ( 11 ) ( 56 ) Proceeds issued for notes receivable - related parties ( 500 ) — Proceeds received for notes receivable - related parties — 350 Cash paid for acquisitions, net of cash acquired ( 21,065 ) ( 19,784 ) Net Cash Used in Investing Activities ( 21,576 ) ( 19,490 ) Cash Flows from Financing Activities: Proceeds from notes payable 24,000 25,000 Payment of debt issuance costs ( 128 ) ( 215 ) Payment of deferred equity offering costs ( 2,919 ) — Principal payment of note payable ( 9,165 ) ( 3,863 ) Payment of contingent considerations ( 582 ) ( 750 ) Dividends paid ( 8,656 ) ( 16,836 ) Net Cash Provided by Financing Activities 2,550 3,336 Effect of foreign exchange rate changes on cash and cash equivalents 156 ( 54 ) Net Change in Cash and Cash Equivalents 5,900 195 Cash and Cash Equivalents as of Beginning of Period 14,536 14,341 Cash and Cash Equivalents at the End of Period $ 20,436 $ 14,536 The accompanying notes to the consolidated financial statements are an integral part of these statements Years Ended December 31, 2025 2024 Supplemental disclosure of cash flow information: Cash paid for interest $ 3,165 $ 1,718 Cash paid for income taxes 5,939 10,049 Common stock received for repayment of note receivable with Alpine Group 532 — Right of use assets obtained with lease liabilities 4,061 797 Right of use assets obtained with business combinations 1,806 268 Contingent consideration issued for acquisitions — 3,798 Common stock issued for acquisitions 1,284 1,443 Stock issued for settlement of other liability 342 — Accrued deferred equity offering costs 2,598 — Stock issued for settlement of contingent consideration — 691 The accompanying notes to the consolidated financial statements are an integral part of these statements 67 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business Public Policy Holding Company, Inc. ("PPHC-Inc.") was incorporated on February 4, 2021. From PPHC-Inc.'s incorporation until December 10, 2021 (the "Conversion Date"), all of the issued and outstanding shares of stock of PPHC-Inc. were owned by Public Policy Holding Company, LLC ("PPHC-LLC"), which (i) was organized as a Delaware limited liability company on July 1, 2014, and (ii) owned certain wholly-owned operating subsidiaries, all organized as Delaware limited liability companies (the "Subsidiaries," and collectively with PPHC-Inc., the "Company"). On the Conversion Date, PPHC-LLC contributed and assigned substantially all of its assets and liabilities (including all of the Subsidiaries, but excluding certain specified assets and liabilities) to PPHC-Inc. in exchange for the issuance by PPHC-Inc. of 20,000,000 shares (the "Contribution Shares") of Common Stock, par value $ 0.001 per share ("Common Stock") of PPHC-Inc. Pursuant to a formula approved by the Executive Board and General Board of PPHC-LLC (the "Waterfall"), PPHC-LLC then liquidated and distributed the Contribution Shares to each of PPHC-LLC's owners who (other than The Alpine Group, Inc.), in turn, distributed such shares to their respective owners in accordance with the Waterfall (collectively, the "Company Conversion"). The Company provides consulting services in the areas of Government Relations Consulting, Corporate Communications & Public Affairs Consulting and Compliance and Insights Services, primarily in the US. With the acquisition of Pagefield Communications Limited ("Pagefield") and TrailRunner International ("TrailRunner"), the Company has expanded its capabilities to the United Kingdom and parts of Asia. As of December 31, 2025, the Company conducts its business through 12 individual member companies. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for financial reporting. These consolidated financial statements, in the opinion of management, include all adjustments necessary for a fair statement of the results for the periods presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Our financial position, results of operations and cash flows are presented in United States Dollars ("USD" or "US Dollars"). Reverse Stock Split On September 29, 2025 , the Company’s Board of Directors approved an amendment to the Company's amended and restated certificate of incorporation to effect a reverse stock split of the Company’s Common Stock, including all unvested Common Stock, at a ratio of one share for every five shares (the “Reverse Stock Split”). The Reverse Stock Split was effective on October 2, 2025. The authorized number of shares, and par value per share, of Common Stock are not affected by the Reverse Stock Split. Under the terms of the Reverse Stock Split, the number of shares awarded, issuable upon exercise of options awarded or issued or issuable pursuant to other equity awards under the Company’s existing omnibus incentive plan, and the exercise price of such options, have been adjusted on a pro rata basis. For all periods presented, all references to shares, options to purchase common stock, share amounts, per share amount, and related information contained in the consolidated financial statements have been retrospectively adjusted to reflect the Reverse Stock Split. Use of Estimates The preparation of consolidated financial statements in accordance with GAAP requires the Company’s management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but not limited to, the allowance for credit losses, useful lives of intangible assets, recoverability of the carrying amounts of intangible assets, shared-based compensation, business acquisitions, valuation of contingent considerations, post-combination liabilities and income tax provision. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results could differ from these estimates. Certain monetary amounts, percentages and other figures included elsewhere in this Form 10-K have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables or charts may not be the arithmetic aggregation 68 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them. Basis of Presentation The accompanying consolidated financial statements have been prepared by PPHC-Inc. in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission (the "SEC") regarding financial reporting. The accompanying consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the years ended December 31, 2025 and 2024. The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant transactions among the Company and its subsidiaries have been eliminated upon consolidation. Significant Accounting Policies Revenue recognition: The Company generates the majority of its revenue by providing consulting services through fixed-fee arrangements related to Government Relations Consulting, Corporate Communications & Public Affairs Consulting and Compliance and Insights Services. Most of the consulting service contracts are based on one of the following types of contract arrangements: 1) Fixed-fee arrangements, (“Retainer Revenue” and “Subscription Services Revenue”) require the client to pay a fixed fee in exchange for a predetermined set of professional services. Retainer contracts generally comprise of a single stand-ready performance obligation for consulting services. The Company recognizes Retainer revenue over time by measuring the progress toward complete satisfaction of the performance obligation. Subscription Services generally comprise of a single performance obligation recognized over-time with a straight-line pattern of recognition. The Company’s standard practice as it relates to retainer revenue is to enter into agreements with clients that stipulate a fixed monthly fee, payable at the beginning of each month, for the services to be rendered. These agreements may also include provisions for the reimbursement of pre-approved, reasonable expenses incurred in fulfilling the performance obligations. Member companies typically invoice clients in advance, and the amounts billed are initially recorded as deferred revenue. Revenue is then recognized from deferred revenue as performance obligations are achieved. A significant portion of the Company’s contracts with customers have termination clauses that give the customer the right to terminate the contract without cause with one month's notice without any substantial penalty. As such, the Company believes such contracts should be treated as a month-to-month contract as this reflects the non-cancelable period of performance. The parties do not have enforceable rights and obligations beyond the month (or months) of services already performed. The Company's contracts generally do not contain a material right. 2) Project Revenue includes additional services such as 1) advertisement placement and management, 2) video production, 3) website development and 4) research services, in which third-party companies may be engaged to achieve specific business objectives. These services are either in a separate contract or within the fixed-fee consulting contract, in which the Company usually receives a markup on the cost incurred by the Company. Generally, these contracts are less than 12 months in length. The Company recognizes revenues earned to date in an amount that is probable or unlikely to reverse. The Company utilizes an output method to measure progress toward complete satisfaction of the performance obligation, recognizing revenue based on the services delivered to the customer to date as a proportion of the total services promised in the contract. This approach reflects the transfer of control to the customer, as the customer receives and consumes the benefits of each service as it is performed. Any out-of-pocket administrative expenses incurred are billed at cost. Revenue is recognized when control of services provided are transferred to customers and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services using the following steps: 1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when the Company satisfies the performance obligations. 69 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) In determining the method and amount of revenue to recognize, the Company has to make judgments and estimates. Specifically, complex arrangements with nonstandard terms and conditions may require management's judgment in interpreting the contract to determine the appropriate accounting, including whether the promised services specified in an arrangement are distinct performance obligations and should be accounted for separately, and how to allocate the transaction price, including any variable consideration, to the separate performance obligations. When a contract contains multiple performance obligations, the Company allocates the transaction price to each performance obligation based on its estimate of the stand-alone selling price. Other judgments include determining whether performance obligations are satisfied over-time or at a point-in-time and the selection of the method to measure progress towards completion. The Company has considered the guidance of combining contracts in accordance with ASC 606-10-25-9, Combining Contracts. The Company has considered the guidance as it relates to customer contracts and noted that the Company’s customers occasionally execute multiple orders for services, add-ons and professional services within a short period of time. The Company evaluate multiple orders to determine if the services across multiple orders relate directly to the same Retainer service or Project and will combine contracts if deemed to be related as they are packaged within a single commercial objective. For any contracts that meet one or more of the requirements of ASC 606-10-25-9, the Company will account for the contracts as a single contract. The majority of contracts entered into with customers are entered into with multiple commercial objectives, and the consideration of one contract is determined independently from the price or performance of other contracts. Certain services provided by the Company include the utilization of a third party in the delivery of those services. These services are primarily related to the production of an advertising campaign or media buying services. The Company has determined that it acts as an agent and is solely arranging for the third parties to provide services to the customer. Specifically, the Company does not control the specified services before transferring those services to the customer, is not primarily responsible for the performance of the third-party services, nor can the Company redirect those services to fulfill any other contracts. The Company does not have discretion in establishing the third-party pricing in its contracts with customers. For these performance obligations for which the Company acts as an agent, the Company records revenue as the net amount of the gross billings less amounts remitted to the third party. Cost of Services: Cost of services primarily consists of salaries, bonuses, benefits, share-based award expense, amortization of developed software, and other personnel costs that are directly attributable to the Company’s client engagements, as well as real estate lease expense of the Company's member companies. Cash and cash equivalents: The Company considers all cash investments with original maturities of three months or less to be cash equivalents. At times, the Company maintains cash accounts that exceed federally insured limits, but management does not believe that this results in any significant credit risk. Contract receivables: The Company provides for an allowance for credit losses; it is management's best estimate of possible losses based on historical experience and specific allowances for known troubled accounts, if needed. Accounts are generally considered past due after the contracted payment terms, which are generally net 30 day terms. All accounts or portions thereof that are deemed to be uncollectible or that require an excessive collection cost are written off to the allowance for credit losses. Leases: The Company determines if a contract is a leasing arrangement at inception. Operating lease assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized on the consolidated balance sheets at the commencement date based on the present value of lease payments over the lease term. The Company uses the incremental borrowing rate on the commencement date in determining the present value of its lease payments. The Company recognizes lease expense for its operating leases on a straight-line basis over the lease term. The Company has elected the practical expedient to not separate lease and non-lease components. The Company's non-lease components generally comprise of common area maintenance services and other services based items embedded in lease contracts. Lease expense of the Company’s member companies is recorded to cost of services while the lease expense of the Company’s corporate function is recorded to general and administrative expense in the consolidated statement of operations. The Company leases office space and equipment under non-cancelable operating leases, which may include renewal or termination options that are reasonably certain of exercise. Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s sole discretion. Certain of the Company’s lease agreements include rental 70 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) payments that are adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and are expensed on a straight-line basis. Property and equipment: Property and equipment consist of furniture, equipment and leasehold improvements and is carried at cost less accumulated depreciation. Depreciation is provided generally on a straight-line method over the estimated useful lives of the related assets ranging from 5 to 15 years. Business combinations: Business combinations are accounted for using the acquisition method which requires that the assets acquired and liabilities assumed be recorded as of the date of the acquisition at their respective fair values with limited exceptions. Assets acquired and liabilities assumed in a business combination that arise from contingencies are generally recognized at fair value. If fair value cannot be determined, the asset or liability is recognized if probable and reasonably estimable; if these criteria are not met, no asset or liability is recognized. Transaction costs are expensed as incurred. The operating results of the acquired business are reflected in the Company's consolidated financial statements after the date of acquisition. Goodwill and indefinite-lived intangible assets: Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired and the indefinite-lived intangible assets which consists of trademarks. Goodwill and indefinite-lived intangible assets are not amortized but tested for impairment annually and whenever events or changes in circumstances indicate that the recorded goodwill or indefinite-lived intangible assets may be impaired. The Company assesses goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or a business one level below that operating segment if discrete financial information is available and regularly reviewed by the chief operating decision maker (“CODM”). During 2025, the Company changed its annual goodwill impairment testing date from the end of the fourth quarter to October 1. This change in accounting principle was made to better balance the need for sufficient elapsed time to understand business performance trends for the year while also aligning the timing of the impairment testing process with the Company's operational priorities. The Company believes this change is preferable as it (i) allows for an informed assessment of fair value based on nine months of actual operating results and updated forecasts, and (ii) provides adequate time to complete the impairment testing analysis before the year-end financial reporting close, thereby reducing resource constraints during peak period-end activities. This change will not impact our consolidated financial statements, nor is it being done to accelerate, avoid, or trigger an impairment charge. The Company applied this change prospectively in accordance with ASC 250-10. Retrospective application was determined to be impracticable because it would require the application of significant estimates and assumptions that cannot be objectively distinguished without the use of hindsight. For the annual impairment test, the Company has the option of assessing qualitative factors to determine whether it is more likely than not that the carrying amount of a reporting unit exceeds its fair value or performing a quantitative goodwill impairment test. Qualitative factors considered in the assessment include industry and market considerations, the competitive environment, overall financial performance, changing cost factors such as labor costs, and other factors specific to each reporting unit such as change in management or key personnel. Based on the results of the Company’s qualitative assessment, as of October 1, 2025, we determined that the effects of the decline in operations was a result of certain client relationships and employee turnover at Pagefield constituted a triggering event for both the Pagefield Government Relations Consulting reporting unit and the Pagefield Corporate Communications & Public Affairs reporting unit. We applied the discounted cash flow method and the guideline public company method to determine the fair value of both reporting units. Other intangible assets: The Company's intangible assets consist of customer relationships, including the related customer contracts, developed technology and noncompete agreements acquired through acquisitions, which are definite lived assets and are amortized over their estimated useful lives. In addition, intangible assets consist of trade names, which are indefinite lived assets and evaluated for impairment on an annual basis or more frequently as needed. The Company amortizes these assets over their estimated useful lives. 71 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Long-lived assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. We group assets at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows generated by other asset groups. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset group, we estimate the fair value of the asset group to determine whether an impairment loss should be recognized. Advertising Expenses: The Company records advertising expenses per ASC 720-35-50-1, which are expensed as they are incurred or the first time when the advertising takes place. During the years ended December 31, 2025 and 2024, there were $ 0.6 million and $ 0.5 million advertising costs incurred by the Company, respectively. Deferred Offering Costs: Costs directly attributable to the Company’s offering of its equity securities are deferred as prepaid expenses and other current assets. These costs primarily represent specific incremental legal, accounting, investment banking and consulting costs directly related to the Company’s efforts to raise capital through a public sale of its Common Stock. Future costs will be deferred until the completion of the offering, at which time deferred costs will be reclassified to additional paid-in capital as a reduction of the offering proceeds. At December 31, 2025, the Company had $ 5.5 million of deferred offering costs, included within prepaid expenses and other current assets in the accompanying consolidated balance sheet. At December 31, 2024, the balance of deferred offering costs was not material . Income taxes: The Company utilizes the asset and liability method in the Company's accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets when realization of the tax benefit is uncertain. A valuation allowance is recorded, if necessary, to reduce net deferred taxes to their realizable values if management believes it is more likely than not that the net deferred tax assets will not be realized. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Share-based compensation: The Company accounts for its share-based compensation using the fair value method which requires the Company to estimate the grant-date fair value of its share-based awards and amortize this fair value to expense over the requisite service period or vesting term. For restricted and nonvested stock awards, the grant-date fair value is based upon the market price of the Company's common stock on the date of the grant. When estimating the grant date fair value of share-based awards, the Company considers whether an adjustment is required to the closing price or the expected volatility of its common stock on the date of grant when the Company is in possession of material nonpublic information. For stock options, the grant-date fair value is based on the Black-Scholes Option Pricing Model. For stock appreciation rights ("SARs") recorded as a liability, the Company adjusts the value of the SARs based on the fair value at each reporting date, which is calculated based on the Black-Scholes Option Pricing Model. The Company records forfeitures as they occur. Additionally, and as more full described in Note 10, the Company records a share-based expense relating to certain shares that were retained by executives of the Company after the Company’s initial public offering on the AIM of the London Stock Exchange in 2021. The retained shares vest in equal installments over five years , provided the executive remains continuously employed. Segment information: GAAP requires segmentation based on an entity's internal organization and reporting of revenue and operating income based upon internal accounting methods commonly referred to as the "management approach." Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the CODM, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company's CODM is its Chief Executive Officer. The Company's operations are conducted in three reportable segments which comprise of aggregated operating segments. Operating segments are aggregated if they have similar economic characteristics and aggregating them would be consistent with the objective and basic principles of Topic 72 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) 280. These reportable segments consist of Government Relations Consulting, Corporate Communications & Public Affairs Consulting and Compliance and Insights Services. See Note 17 for more information regarding the Company’s segment disclosures. Basic and diluted earnings (loss) per share: The Company computes earnings (loss) per share in accordance with ASC 260, Earnings per Share, which requires presentation of both basic and diluted earnings per share on the face of the consolidated statements of operations and other comprehensive loss. The Company computes net loss per share using the two-class method required for participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company determined that it had participating securities in the form of Restricted Stock Awards and shares issued in business acquisitions subject to vesting conditions. The holders of such shares have non-forfeitable dividend rights prior to their respective vesting date, or satisfaction of vesting condition. These participating securities do not contractually require the holders of such stocks to participate in the Company’s losses. As such, net loss for the period presented was not allocated to the Company’s participating securities. Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Due to their anti-dilutive effect, the calculation of diluted net loss per share for the years ended December 31, 2025 and 2024 does not include the common stock equivalent shares. Fair value measurements: The Company applies the fair value measurement guidance for financial assets and liabilities that are required to be measured at fair value and for non-financial assets and liabilities that are not required to be measured at fair value on a recurring basis, including goodwill, right-of-use lease assets and other identifiable intangible assets. See Note 15 of the Notes included herein for additional information regarding fair value measurements. Contingent consideration: The Company estimates and records the acquisition date fair value of contingent consideration as part of purchase price consideration for acquisitions. Subsequent to the acquisition date, at each reporting period, the Company remeasures the fair value of contingent consideration and recognizes any change in fair value in the consolidated statements of operations and other comprehensive loss. The estimate of the fair value of contingent consideration requires very subjective assumptions to be made of future operating results, discount rates and probabilities assigned to various potential operating result scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and, therefore, materially affect the Company's future financial results. The contingent consideration liability is to be settled through a combination of cash and shares of common stock based on each respective purchase agreement and the amount ultimately paid is dependent on the achievement of certain future operating results. Other liability: Other liability consists of certain future payments that the Company could be required to make if various operating targets are achieved from the acquisitions of KP LLC, MultiState Inc, LPA, and Pagefield (see Note 10 and Note 15). The Company records post-combination business expense over the vesting or claw-back period applicable for these future payments on a straight-line basis with the amount accrued recorded as other liability. The future earn-out payments that have vesting or claw-back rights tied to employment will reduce the amount of the other liability when paid . Derivatives: The Company analyzes contingent consideration, other liabilities and any other financial liabilities of the company in accordance with the guidance under ASC Topic 480, Distinguishing Liabilities from Equity to determine the appropriate classification in equity or liabilities. The Company continually assesses whether or not financial liabilities meet the definition of a derivative liability under ASC 815 Derivatives and Hedging. In the years ended December 31, 2025 and 2024, the Company has recorded derivative liabilities arising from contingent consideration and post-combination compensation obligations, See Note 16 Acquisitions and Note 15 Fair Value Measurement for further detail. NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements During December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands annual disclosures in an entity’s income tax rate reconciliation table and requires annual disclosures regarding cash taxes paid both in the United States (federal, state and local) and foreign jurisdictions. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, although early adoption is 73 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) permitted. The Company adopted ASU 2023-09 for the year ended December 31, 2025, and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. See Note 14 Income Taxes in the accompanying notes to the consolidated financial statements for further detail. Recently Issued Accounting Pronouncements Not Yet Adopted During November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The guidance requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. This guidance is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company expects to adopt this guidance in its fiscal year beginning January 1, 2027. The Company is evaluating the potential impact of this guidance on its consolidated financial statement disclosures. During June 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), which provides guidance on the scope application of profits interest and similar awards. This guidance is effective for public business entities for annual reporting periods beginning after December 15, 2024, and interim reporting periods beginning after December 15, 2025. The Company has determined that there is no impact of this guidance on its consolidated financial statement disclosures as the Company's stock compensation does not allow for profits interest and similar awards. NOTE 3. BASIC AND DILUTED EARNINGS (LOSS) PER SHARE The Company computes earnings (loss) per share in accordance with ASC 260, Earnings per Share , which requires presentation of both basic and diluted earnings per share on the face of the consolidated statements of operations and other comprehensive loss. Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Due to their anti-dilutive effect, the calculation of diluted net loss per share for the year ended December 31, 2025 and the year ended December 31, 2024 does not include the common stock equivalent shares and nonvested shares. The Company’s weighted-average shares utilized for its calculation of earnings (loss) per share includes only the common shares outstanding. The following table includes the outstanding number of shares and potentially dilutive stock options and Restricted Stock Units ("RSU's") as of December 31, 2025 and December 31, 2024, respectively: December 31, 2025 December 31, 2024 Common shares outstanding 20,821,959 16,883,847 Nonvested shares outstanding 4,352,533 7,133,752 Legally outstanding shares 25,174,492 24,017,599 Stock options and RSUs outstanding (1) 1,693,734 1,546,039 Total fully diluted shares 26,868,226 25,563,638 (1) The holders of Restricted Stock Units and Stock Options are not entitled to dividends or to vote The following tables includes the weighted average shares outstanding and potentially dilutive stock options and RSUs for years ended December 31, 2025 and 2024, respectively: 2025 2024 Common shares, weighted average 17,466,665 13,409,160 Nonvested shares, weighted average 7,308,131 10,231,644 Legally outstanding shares, weighted average 24,774,796 23,640,804 Stock options and RSUs outstanding, weighted average 1,664,182 1,313,622 Total securities on a fully diluted basis, weighted average 26,438,978 24,954,426 74 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) The following table shows the computation of basic and diluted loss per share for the years ended December 31, 2025 and 2024, respectively: 2025 2024 Numerator Net losses $ ( 39,001 ) $ ( 23,957 ) Less unvested common stock dividends under the two - class method ( 2,427 ) ( 7,396 ) Net loss attributable to common stockholders ( 41,428 ) ( 31,353 ) Denominator Weighted-average basic and diluted shares outstanding 17,466,665 13,409,160 Basic and diluted loss per share $ ( 2.37 ) $ ( 2.34 ) NOTE 4. REVENUE The following table provides disaggregated revenue by revenue type: Year Ended December 31, 2025 2024 Government Relations Consulting revenue $ 108,495 $ 102,464 Corporate Communications & Public Affairs Consulting revenue 65,050 36,405 Compliance and Insights Services revenue 12,996 10,694 Total revenue $ 186,541 $ 149,563 Revenue by geographic region: Year Ended December 31, 2025 2024 United States $ 177,648 $ 145,482 International 8,893 4,081 Revenue by geographic market $ 186,541 $ 149,563 NOTE 5. CONTRACT BALANCES AND ALLOWANCE FOR EXPECTED CREDIT LOSSES The following table provides information about receivables, contract receivables and contract liabilities from contracts with customers as of: December 31, 2025 December 31, 2024 Accounts receivable $ 23,831 $ 19,162 Unbilled receivables 512 225 Allowance for expected credit losses ( 2,492 ) ( 1,102 ) Total contract receivables, net 21,851 18,285 Contract Liabilities / (Deferred revenue) $ ( 3,310 ) $ ( 3,150 ) Contract liabilities relate to advance consideration received from customers under the terms of the Company's contracts primarily related to retainer fees and reimbursements of third-party expenses, both of which are generally recognized shortly after billing. Deferred revenue of $ 3.3 million and $ 3.2 million from December 31, 2025 and December 31, 2024 is expected to be recognized as revenue within one year of the respective balance sheet date. 75 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) The following table summarized information about the activity in the allowance for expected credit losses as follows: Balance at December 31, 2023 $ 794 Provision for expected credit losses 1,024 (Write-off)/Recoveries ( 716 ) Balance at December 31, 2024 $ 1,102 Provision for expected credit losses 2,353 (Write-off)/Recoveries ( 963 ) Balance at December 31, 2025 $ 2,492 As of December 31, 2025 and 2024 the balance of the allowance for credit losses approximated $ 2.5 million and $ 1.1 million . NOTE 6. GOODWILL AND INTANGIBLE ASSETS Goodwill Goodwill is an indefinite lived asset with balances as follows: Balance at December 31, 2023 $ 47,910 Acquired goodwill 16,779 Foreign currency translation ( 381 ) Balance at December 31, 2024 $ 64,308 Impairment ( 6,219 ) Other adjustment ( 2,527 ) Foreign currency translation 1,428 Balance at December 31, 2025 $ 56,990 Due to a combination of customer attrition and employee turnover at Pagefield, revenue and pre-bonus EBITDA were lower than expected in the first nine months of 2025. Based on that, the projected cash flows for the next five years were revised. We incurred a non-cash impairment charge of $ 6.2 million in 2025 on goodwill related to our Pagefield Government Relations Consulting reporting unit and Pagefield Corporate Communications & Public Affairs reporting unit. The fair value of the reporting units was estimated using the discounted cash flow method and the guideline public company method. This charge is reflected in the loss on impairment of goodwill line item on the Consolidated Statements of Operations and Comprehensive Loss. We did not recognize any impairment charges during 2024. There was no goodwill impairment for the year ended December 31, 2024. Intangible assets As of October 1, 2025, we determined that the effects of the expected decline in operations due to the impact of certain client relationships and employee turnover at Pagefield constituted a triggering event for both the Pagefield Government Relations Consulting reporting unit and the Pagefield Corporate Communications & Public Affairs reporting unit. As a result, we conducted a recoverability test by using the undiscounted cashflows of Pagefield acquisition's intangibles which indicated impairment. In order to estimate the fair values, we applied the multi-period excess earnings method for customer relationships. The fair value of the noncompete agreements could be measured directly. Fair value was estimated using the difference between entity value on an “as is” basis with present employees intact and a hypothetical firm value. We therefore concluded that a portion of the trade names and customer relationships was impaired as of December 31, 2025 and recorded non-cash impairment charges of $ 0.3 million and $ 2.6 million, respectively within our Pagefield Government Relations Consulting and Pagefield Corporate Communications & Public Affairs Consulting reporting units. The Company has not recorded any impairment charges related to long-lived assets for the year ended December 31, 2024. For the allocation of the impairment charge between segments, see Note 17. The fair value of customer relationships was estimated using the multi-period excess earnings method and the fair value trade names was estimated using the present value of discrete cash flows. These charges are reflected in loss on impairment of intangible assets line item on the Consolidated Statements of Operations and Comprehensive Loss. We did not recognize any impairment charges on indefinite-lived intangible assets during 2024. 76 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) The following presents the Company’s gross and net amounts of intangible assets, other than goodwill, as reported on the Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024: December 31, 2025 Weighted Average Useful Life (in Years) Gross Book Value Accumulated Amortization Net Book Value Customer relationships 7.1 $ 40,760 $ ( 20,283 ) $ 20,477 Developed technology 7.0 3,938 ( 1,594 ) 2,344 Noncompete agreements 4.7 3,111 ( 1,309 ) 1,802 Total definite lived assets 47,809 ( 23,186 ) 24,623 Trade names 12,490 12,490 Total intangible assets $ 60,299 $ ( 23,186 ) $ 37,113 December 31, 2024 Weighted Average Useful Life (in Years) Gross Book Value Accumulated Amortization Net Book Value Customer relationships 7.2 $ 33,556 $ ( 15,277 ) $ 18,279 Developed technology 7.0 3,938 ( 1,031 ) 2,907 Noncompete agreements 3.9 2,070 ( 767 ) 1,303 Total definite lived assets 39,564 ( 17,075 ) 22,489 Trade names 9,655 — 9,655 Total intangible assets 49,219 $ ( 17,075 ) $ 32,144 Amortization expense for customer relationship, noncompete agreement and developed technology assets approximated $ 6.0 million and $ 4.7 million for the years ended December 31, 2025 and 2024, respectively. The approximate estimated future amortization expense for the next five years and thereafter is as follows: Year Amortization 2026 $ 6,133 2027 5,883 2028 4,368 2029 4,110 2030 2,147 Thereafter 1,982 Total $ 24,623 NOTE 7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following as of: December 31, 2025 December 31, 2024 Accounts payable $ 6,248 $ 4,753 Bonus payable 15,855 9,927 Stock appreciation rights liability 1,964 668 Deferred equity offering costs 2,598 — Other accrued expenses 4,154 4,696 Total $ 30,819 $ 20,044 77 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) NOTE 8. L EASES The Company leases office space and equipment under non-cancelable operating leases, which may include renewal or termination options that are reasonably certain of exercise. Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s sole discretion. Certain of the Company’s lease agreements include rental payments that are adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company subleases office space to third parties under separate sublease agreements, which are generally month-to-month leases. The Company uses our incremental borrowing rate on the commencement date in determining the present value of its lease payments. The discount rate used to measure the lease asset and liability is determined at the beginning of the lease term using the rate implicit in the lease, if readily determinable, or using the Company's collateralized credit-adjusted borrowing rate. The following table presents lease costs and other quantitative information: Year Ended December 31, 2025 2024 Operating lease cost (cost resulting from lease payments) $ 5,793 $ 5,322 Variable lease cost (cost excluded from lease payments) 582 435 Sublease income ( 387 ) ( 337 ) Net lease cost $ 5,988 $ 5,420 Cash paid for amounts included in the measurement of lease liabilities $ 6,288 $ 5,468 Weighted average lease term - operating leases 4.1 years 4.5 years Weighted average discount rate - operating leases 5.6 % 5.2 % As of December 31, 2025, the current and long term operating lease liabilities are $ 5.1 million and $ 16.5 million, respectively. Future payments of operating leases as of December 31, 2025 are listed in the table below: Year Amount 2026 $ 6,047 2027 6,164 2028 5,470 2029 3,630 2030 2,049 Thereafter 856 Total future minimum lease payments 24,216 Amount representing interest ( 2,676 ) Present value of net future minimum lease payments $ 21,540 NOTE 9. NOTES PAYABLE The Company has several term loans outstanding with a financial institution ("Term Loans"). The 2023 Facility 2 loan matures on March 31, 2029 with monthly principal payments of $ 0.2 million plus interest. The 2024 Term Loan A and 2024 Term Loan B (collectively the "2024 Term Loans") require monthly principal payments of $ 0.3 million plus interest until their maturity date of April 30, 2028. The 2025 Term Loan C requires monthly principal payments of $ 0.2 million per month plus interest through March 1, 2026, increasing to $ 0.3 million per month plus interest through the maturity date of March 31, 2029. The interest rate for all of these loans is the Secured Overnight Financing Rate ("SOFR") plus 2.60 % per annum. 78 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) The Company's total debt consists of the following as of: Original Loan Amount December 31, 2025 December 31, 2024 2023 Facility 2 $ 14,000 $ 4,083 $ 7,875 2024 Term Loan A 6,000 4,950 5,850 2024 Term Loan B 19,000 15,675 18,525 2025 Term Loan C 24,000 22,407 — Other debt — 124 154 Less: unamortized debt issuance costs 748 251 359 Total debt, net of unamortized issuance costs $ 62,252 46,988 32,045 Less: current portion ( 9,082 ) ( 6,031 ) Total debt, long-term $ 37,906 $ 26,014 As of December 31, 2025, the future principal maturities of the Terms Loans are as follows: 2023 Facility 2 2024 Term Loan A 2024 Term Loan B 2025 Term Loan C Total 2026 $ 2,100 $ 900 $ 2,850 $ 3,298 $ 9,148 2027 1,983 900 2,850 3,600 9,333 2028 — 3,150 9,975 3,600 16,725 2029 — — — 11,909 11,909 Total $ 4,083 $ 4,950 $ 15,675 $ 22,407 $ 47,115 Total approximate interest expense incurred for the Term Loans was as follows: Year Ended December 31, 2025 2024 Cash interest on term loans $ 3,147 $ 1,693 Cash interest on other debt 19 25 Debt discount amortization 236 182 Total interest expense $ 3,402 $ 1,900 The Credit Agreement and Amended Credit Agreements for the Term Loans contain certain non-financial and financial covenants that the Company is required to comply with and submit a compliance certificate to the bank on a quarterly basis. The financial covenants include a total leverage ratio and fixed coverage ratio. The Company was in compliance with all covenants as of December 31, 2025 and December 31, 2024. NOTE 10. SHARE-BASED ACCOUNTING CHARGE On December 16, 2021, PPHC-Inc. completed its initial public offering ("UK IPO") and its shares began trading on the AIM market of the London Stock Exchange. During 2021, all ultimate owners of PPHC-LLC, referred to as Company Executives, entered into Executive Employment Agreements. These executives sold some of their shares during the UK IPO (referred to as Liquidated Pre-UK IPO Shares) but retained the majority of their shares ("Retained Pre-UK IPO Shares"). The retained shares vest in equal installments over five years , provided the executive remains continuously employed. If an executive's employment terminates, except in cases of death, disability, termination without cause, or for good reason, the unvested shares will be forfeited. In cases of death, disability, termination without cause, or for good reason, all unvested shares will vest immediately. Additionally, the agreements include clawback provisions, allowing the 79 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) company to reclaim cash from the sale of Liquidated Pre-UK IPO Shares and vested Retained Pre-UK IPO Shares under certain conditions. As a result of the vesting conditions for the Retained Pre-UK IPO Shares, the Company is recording share-based accounting charges over the five years 2022-2026. It recorded $ 29.6 million and $ 31.8 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, there were 14,181,439 Retained Pre-UK IPO Shares held by current employees and subject to vesting requirements, and 11,216,338 of these shares were fully vested. These shares were issued in 2021 and the weighted-average grant date fair value of these shares was $ 9.10 as of the grant date. For the Retained Pre-UK IPO shares, the grant-date fair value is based upon the market price of the Company's common stock on the date of the grant. As of December 31, 2025, the unrecognized compensation cost from these restricted shares was approximately $ 28.3 million, which is expected to be recognized over a weighted-average period of 1.0 years. The share-based accounting charge relating to the Retained Pre-UK IPO Shares is recorded to costs of services and general and administrative expense in the consolidated statement of operations. The table below represents the total expense relating to Retained Pre-UK IPO Shares recognized in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2025 and 2024 : Year Ended December 31, 2025 2024 Cost of services $ 26,664 $ 26,636 General and administrative expense 2,962 5,168 Total expense relating to Retained Pre-UK IPO Shares $ 29,626 $ 31,804 NOTE 11. POST-COMBINATION COMPENSATION CHARGE The Company has acquired various companies from 2022 to 2025 for a combination of cash, shares of Company Common Stock and future contingent payments ("Acquisition Payments"). A portion of the Acquisition Payments are subject to vesting and/or claw back provisions that are directly linked to the continuing employment of certain individuals of the acquired companies ("Post-Combination Payments"). As a result, the Post-Combination Payments are being recognized as a charge for post-combination compensation over the period of the applicable vesting requirement or the period over which the claw back rights linked to employment lapse. The Company analyzes post-combination obligations under the guidance of ASC Topic 480 Distinguishing liabilities from equity to determine if share-based instruments should be recorded as liabilities or within equity. Post-combination obligations of the Company that meet the criteria for liability classification are recorded to other liability in the consolidated balance sheets of the Company. Furthermore, the Company applies the guidance of ASC Topic 815 Derivatives and hedging to determine if liability instruments meet the criteria for derivative accounting. The post-combination compensation charge recorded by the Company was $ 21.3 million for the year ended December 31, 2025 as compared to $ 11.6 million for the year ended December 31, 2024. The post-combination compensation charge is recorded in cost of services in the consolidated statements of operations and comprehensive loss. This amount consists of the following components: Year Ended December 31, 2025 2024 Additions to other liability $ 7,514 $ 4,028 Vesting of common stock 3,074 2,509 Amortization of prepaid post-combination compensation 8,987 5,062 Other adjustment 1,696 — Total $ 21,271 $ 11,599 As of December 31, 2025, the unrecognized post-combination compensation charge was approximately $ 44.6 million, which is expected to be recognized over a weighted-average period of 2.5 years. The actual amount of Post-Combination Payments is subject to significant estimates and could change materially in the future. 80 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) The Company's potential future payments from its acquisitions exceed the liabilities recorded on the Company's consolidated balance sheets as the Company’s potential future payments include components of post-combination compensation and contingent consideration. Contingent consideration is recorded as a liability on the consolidated balance sheets at its estimated fair value. The fair value calculation of the contingent consideration includes certain discount rates and other factors that impact the value of these liabilities (see Note 15). The calculated fair value is based on the total payments that the Company expects to pay in the future rather than the total maximum payments that it could be required to pay. Other liability consists of certain future payments that the Company could be required to make if various operating targets are achieved from acquisitions. The Company records post-combination expense over the vesting or claw-back period applicable for these future payments on a straight-line basis with the amount accrued recorded as other liability. The future earn-out payments that have vesting or claw-back rights tied to employment will reduce the amount of the other liability when paid. The table below highlights the other liability and contingent consideration recorded on the Company's consolidated balance sheets (as discounted) compared to the undiscounted estimated payout and the maximum payout of cash and stock that could occur if all future contingent earn-out provisions from the acquisitions were achieved as of December 31, 2025: Total Liabilities recorded on balance sheet, December 31, 2025: Other liability, current $ 1,441 Other liability, long term 10,553 Contingent consideration, current 3,134 Contingent consideration, long term 9,864 Total liabilities recorded on balance sheet, December 31, 2025 (1) $ 24,992 Undiscounted potential future payments (2) : Potential cash future payments: Estimated (3) Maximum (4) 2026 $ 12,013 $ 17,516 2027 4,603 15,446 2028 22,750 22,750 2029 1,339 18,014 2030 3,928 10,000 Total potential cash future payments $ 44,633 $ 83,726 Potential stock future payments (2) : 2026 $ 4,600 $ 7,517 2027 1,661 6,907 2028 22,750 22,750 2029 775 11,010 2030 3,928 10,000 Total potential stock future payments (5) $ 33,714 $ 58,184 Total potential future payments $ 78,347 Total liabilities recorded on balance sheet, December 31, 2025 24,992 Total difference between future payments and reported liabilities $ 53,355 __________________ (1) At fair value (2) Includes estimate for future Pagefield payments based on December 12, 2025 exchange rate of GBP to USD (3) Management's estimate as of December 2025 of the future payments of cash and stock for earn-out payments (4) The maximum amount of future payments of cash and stock for earn-out payments (5) The monetary value of potential future payments are subject to the operating performance of the acquired business over the contractual earnout period and are not subject to changes in the fair value of the Company’s common shares. The number of shares that could be required to be issued under the estimated and maximum payment scenarios above depend on the fair value of the Company’s common shares. Based on the fair value of the Company’s common shares at December 31, 2025, the maximum potential future stock payment would be 3,899,371 shares. 81 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) NOTE 12. RELATED PARTY TRANSACTIONS As of December 31, 2025, the amounts due from related parties of approximately $ 0.3 million consists primarily of a receivable due from the sellers of TrailRunner. During the year ended December 31, 2025, the working capital loan with the sellers of TrailRunner was settled. As of December 31, 2024, the amounts due from related parties of approximately $ 0.6 million include the amount related to a working capital loan and adjustments associated with the LPA acquisition. During the year ended December 31, 2025, the working capital loan and adjustments with LPA was settled. During December 2021, the Company entered into a term note agreement ("2021 Note") with The Alpine Group, Inc. ("Alpine Inc"). The 2021 Note provided Alpine Inc with the ability to request a one-time borrowing of up to $ 0.8 million from the Company at any time prior to December 31, 2022. The purpose of the 2021 Note was to provide Alpine Inc with funds to cover certain federal and state income taxes to be owed by Alpine Inc in connection with the sale of shares of the Company's common stock in the UK IPO. During April 2022, the Company advanced $ 0.5 million to Alpine Inc in accordance with the terms of the 2021 Note. The interest rate on the 2021 Note is equal to the Prime Rate as published in the Wall Street Journal. The amount of accrued interest and interest revenue from the 2021 Note is not material. The 2021 Note requires an annual payment of accrued and unpaid interest on the last business day of December each year and through the maturity date of January 16, 2025. During February 2025, the 2021 Note plus accrued interest totaling approximately $ 0.5 million was repaid through the transfer of 63,356 shares of PPHC-Inc common stock from Alpine Inc to the Company, which shares have been retired. During November 2023, the Company entered into term note agreements ("2023 Notes") with certain employees of the Alpine Group Partners, LLC totaling $ 1.8 million. The interest rate on the 2023 Notes was 7.5 % and was subsequently reduced in 2024 to 4.45 %. The notes are payable in annual installments of $ 0.4 million plus all accrued and unpaid interest beginning on November 1, 2024 with a maturity date of November 1, 2028 or the effective date of the termination of employment of the respective employee borrower for any reason, if earlier than the maturity date. As of December 31, 2025 and 2024, the 2023 Notes were recorded in notes receivable - related parties with $ 0.7 million and $ 0.4 million classified as a current asset and $ 0.5 million and $ 1.1 million, respectively, classified as a non-current asset. The amount of accrued interest and interest revenue from the 2023 Notes is not material. On August 1, 2025, the Company issued a loan to employees in the amount of $ 0.5 million. The interest rate on the loan is 4.06 %. The employee loan has a maturity date of August 1, 2030. As of December 31, 2025, $ 0.1 million is classified in notes receivable - related parties, current portion and $ 0.4 million the employee loan was recorded in notes receivable - related parties, long term. NOTE 13. O MNIBUS I NCENTIVE P LAN In 2021, we adopted the Public Policy Holding Company, Inc. 2021 Omnibus Incentive Plan (the "Omnibus Incentive Plan"), under which Options (both nonqualified options, and incentive stock options), stock appreciation rights, restricted stock units, restricted stock, unrestricted stock, cash-based awards and dividend equivalent rights may be issued. An award may not be granted if the number of common shares committed to be issued under that award exceeds fifteen percent of the ordinary shares of the Company in issue immediately before that day, when added to the number of common shares which have been issued, or committed to be issued, to satisfy awards under the Omnibus Incentive Plan, or options or awards under any other employee share plan operated by the Company, granted in the five previous years. As of December 31, 2025, the total amount of shares authorized by the Board of Directors under the Omnibus Plan was 3,776,164 . During the years ended December 31, 2025 and 2024, the Company granted 62,588 and 85,000 Options to employees. In addition, during the year ended December 31, 2025, the Company granted 498,532 Restricted Stock Units ("RSUs") and 195,593 Restricted Stock Awards ("RSAs"). During the year ended December 31, 2024, the Company granted 586,000 RSUs and 140,748 RSAs. The stock options have a contractual term of ten years and vest three years after their issuance. The RSUs vest over a three-year period with one-third vesting each year after the grant date. The amortization of the fair value of share-based awards is recorded as an expense in long-term incentive program charges in the statement of operations. 82 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) The total long-term incentive program expense, net of forfeitures, is detailed in the following table: Year Ended December 31, 2025 2024 Options $ 269 $ 550 RSUs 3,127 1,974 RSAs 2,394 1,260 SARs 1,296 378 Total $ 7,086 $ 4,162 The table below represents the total expense relating to the long-term incentive program recognized in the consolidated statements of operations and comprehensive loss as follows: Year Ended December 31, 2025 2024 Cost of services $ 6,039 $ 3,328 General and administrative expense 1,047 834 Total $ 7,086 $ 4,162 As of December 31, 2025, total unrecognized compensation expense and the applicable weighted-average period for that expense to be recognized is as follows: Unrecognized compensation Weighted average period Options $ 215 0.4 years RSUs 5,686 0.8 years RSAs 1,926 1.4 years Total $ 7,826 Options Determining the appropriate fair value model and the related assumptions requires judgment. The fair value of each option granted is estimated using a Black-Scholes option-pricing model on the date of grant as follows for the years ended December 31: 2025 2024 Estimated dividend yield 4.0 % 4.0 % to 10.0 % Expected stock price volatility 40.0 % 40.0 % Risk-free interest rate 4.2 % 4.3 % to 4.4 % Expected life of option (in years) 6.5 6.5 Weighted Average Grant Date Fair Value $ 2.50 $ 1.25 The expected volatility rates are estimated based on the actual volatility of comparable public companies over the expected term. The expected term represents the average time that Options that vest are expected to be outstanding. Due to limited historical data, the Company calculates the expected life based on the midpoint between the vesting date and the contractual term, which is in accordance with the simplified method. The risk-free rate is based on the United States Treasury yield curve during the expected life of the option. 83 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) The following summarizes the stock option activity for the years ended December 31, 2025 and 2024: Number of Shares Weighted Average Exercise Price- (USD) (1) Weighted Average Exercise Price-(GBP) Weighted Average Contractual Term (in years) Outstanding as of December 31, 2024 676,709 $ 10.75 £ 8.60 7.8 Granted 62,588 15.16 11.27 10.0 Exercised — — — — Cancelled/Forfeited ( 37,295 ) 13.18 9.80 — Outstanding as of December 31, 2025 702,002 11.33 8.42 6.9 Exercisable as of December 31, 2025 463,391 11.90 8.84 5.8 Vested and expected to vest as of December 31, 2025 702,002 $ 11.33 £ 8.42 6.9 Number of Shares Weighted Average Exercise Price- (USD) (1) Weighted Average Exercise Price-(GBP) Weighted Average Contractual Term (in years) Outstanding as of December 31, 2023 617,812 $ 11.05 £ 8.70 8.9 Granted 85,000 10.10 8.10 — Exercised — — — — Cancelled/Forfeited ( 26,103 ) 10.70 8.55 — Outstanding as of December 31, 2024 676,709 10.75 8.60 7.8 Exercisable as of December 31, 2024 10,000 11.00 8.80 — Vested and expected to vest as of December 31, 2024 676,709 $ 10.75 £ 8.60 7.8 (1) The applicable exercise prices have been adjusted based on the applicable exchange rate of GBP to USD at the end of each period presented. Option expense for the years ended December 31, 2025 and 2024 was approximately $ 0.3 million and $ 0.6 million, respectively. The weighted average intrinsic value of stock options was $ 2.75 as of December 31, 2025. 84 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Restricted Stock Units ("RSUs") Determining the appropriate fair value model and the related assumptions requires judgment. The fair value of each RSU granted is estimated using a Black-Scholes option-pricing model on the date of grant as follows as for the years ended December 31: 2025 2024 Estimated dividend yield 4.0 % 10.0 % Expected stock price volatility 40.0 % 40.0 % to 50.0 % Risk-free interest rate 3.9 % to 4.0 % 4.5 % to 5.1 % Expected life of option (in years) 1 to 3 years 1 to 3 years Activity in the Company's non-vested RSUs was as follows for the years ended December 31, 2025 and 2024, respectively: Number of RSUs Weighted Average Grant Date Fair Value Nonvested as of December 31, 2024 869,330 $ 7.00 Granted 498,532 8.65 Vested ( 329,137 ) 8.54 Cancelled/Forfeited ( 46,993 ) 8.93 Nonvested as of December 31, 2025 991,732 $ 7.70 Nonvested as of December 31, 2023 445,000 7.05 Granted 586,000 7.05 Vested ( 161,670 ) 7.45 Cancelled/Forfeited — — Nonvested as of December 31, 2024 869,330 $ 7.00 RSU expense for the years ended December 31, 2025 and 2024, was approximately $ 3.1 million and $ 2.0 million, respectively. 85 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Restricted Stock Awards ("RSAs") Determining the appropriate fair value model and the related assumptions requires judgment. The fair value of each RSA granted is estimated using a Black-Scholes option-pricing model on the date of grant as follows for the years ended December 31: 2025 2024 Estimated dividend yield 0.0 % 0.0 % Expected stock price volatility 40.0 % 40.0 % Risk-free interest rate 4.0 % 5.1 % to 5.2 % Expected life of option (in years) 1 year 1 year Activity in the Company's non-vested RSAs was as follows: Number of RSAs Weighted Average Grant Date Fair Value Nonvested as of December 31, 2024 479,491 $ 6.15 Granted 195,593 9.45 Vested ( 263,176 ) 6.93 Cancelled/Forfeited ( 3,624 ) 6.08 Nonvested as of December 31, 2025 408,284 $ 7.91 Nonvested as of December 31, 2023 437,789 5.95 Granted 140,748 7.15 Vested ( 99,046 ) 6.70 Cancelled/Forfeited — — Nonvested as of December 31, 2024 479,491 $ 6.15 RSA expense for the years ended December 31, 2025 and 2024, was approximately $ 2.4 million and $ 1.3 million, respectively. Stock Appreciation Rights ("SARs") SARs are not issued shares or committed shares to be issued and therefore do not count against the total number of shares that can be issued under the Omnibus Plan. Upon exercise of a SAR, the Company shall pay the grantee in cash an amount equal to the excess of the fair market value of a share of stock on the effective date of exercise in excess of the exercise price of the SAR. This cash settlement feature requires the SARs to be classified as a liability and remeasured at each reporting period. The SARs vest over a three-year period with one-third vesting each year after the grant date. The fair value of each SAR granted is estimated using a Black-Scholes option-pricing model and the fair value is adjusted at each reporting period. As of December 31, 2025 and 2024, the total liability recorded was $ 2.0 million and $ 0.7 million, respectively. The fair value of the SARs was calculated as follows as of: December 31, 2025 December 31, 2024 Estimated dividend yield 4.0 % 4.0 % Expected stock price volatility 42.0 % 45.0 % Risk-free interest rate 3.5 % to 3.6 % 4.4 % to 4.5 % Expected life of instrument (in years) 1.9 to 3.3 years 2.9 to 3.9 years Weighted-average fair value per share $ 6.60 $ 2.55 86 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Activity in the Company's SARs was as follows for the year ended December 31, 2025 and year ended December 31, 2024: Number of Shares Weighted Average Exercise Price Outstanding as of December 31, 2023 352,000 $ 8.50 Granted — — Exercised — — Cancelled/Forfeited ( 11,000 ) 8.35 Outstanding as of December 31, 2024 341,000 $ 8.05 Granted — — Exercised — — Cancelled/Forfeited ( 30,000 ) 8.98 Outstanding as of December 31, 2025 311,000 8.97 Exercisable as of December 31, 2025 207,337 8.97 Vested and expected to vest as of December 31, 2025 311,000 $ 8.97 SAR expense for the years ended December 31, 2025 and 2024, was approximately $ 1.3 million and $ 0.4 million, respectively. The amount of the future expense for all SARs issued will depend upon the value of the Company's common stock and other factors at each future reporting date. NOTE 14. I NCOME T AXES Net loss before provision for income taxes for the years ended December 31, 2025 and 2024 was: 2025 2024 United States $ ( 27,259 ) $ ( 19,942 ) Foreign ( 7,343 ) 2,530 Net loss before income taxes $ ( 34,602 ) $ ( 17,412 ) The components of income tax expense attributable to income before income taxes was a follows for the years ended December 31, 2025 and 2024: 2025 2024 Current tax expense (benefit): Federal $ 5,438 $ 5,588 State 2,343 2,251 Foreign ( 757 ) — Total current tax expense (benefit) 7,024 7,839 Deferred tax expense (benefit): Federal ( 2,389 ) ( 1,252 ) State ( 790 ) ( 216 ) Foreign 554 174 Total deferred tax (benefit) ( 2,625 ) ( 1,294 ) Total provision for income taxes $ 4,399 $ 6,545 Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The acquisitions of KP, Engage, Multistate, Doherty, Lucas Public Affairs, TrailRunner and Pine Cove were taxable asset acquisitions. As such, the purchase consideration for these acquisitions generated tax-deductible goodwill in the combined amount of approximately $ 94.2 million. A deferred tax asset has been recorded in relation to the excess of the tax deductible goodwill as compared to the GAAP carrying value of goodwill. Of the $ 94.2 million of tax deductible goodwill, approximately $ 50.6 million is 87 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) eligible for amortization during 2025. None of the goodwill recorded in connection with the Pagefield business combination is deductible for tax purposes. As of December 31, 2025, there are no known items that would result in a material liability related to uncertain tax positions, as such, there are no unrecognized tax benefits. The Company's policy is to recognize interest and penalties related to uncertain tax positions in the provision for income taxes. As of December 31, 2025, the Company had no accrued interest or penalties related to uncertain tax positions. There were no changes in uncertain tax positions during the 2025 reporting year. The Company’s 2022 to 2024 domestic income tax return years are open under the statute of limitations for examination by the taxing authorities. Additionally, the Company’s income tax returns for Pagefield, TrailRunner UK, TrailRunner International Public Relations DMCC, and TrailRunner International Public Relations FZ for the years 2021 to 2024 are open under the statute of limitations for examination by the applicable taxing authorities. The Company had $ 0.2 million of foreign net operating losses that carry forward indefinitely. There were no federal or state net operating loss carryforwards as of December 31, 2025. The Company recorded a valuation allowance of less than $ 0.1 million against the deferred tax asset related to foreign net operating losses as of December 31, 2025 because realization is not more likely than not based on available positive and negative evidence. The change in valuation allowance was less than $ 0.1 million as of December 31, 2025. The Tax Cuts and Jobs Act of 2017 subjects a US shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The Company has elected to account for GILTI in the year the tax is incurred. The Company recorded a GILTI inclusion of approximately $ 1.4 million and $ 0.6 million during the years ended December 31, 2025 and 2024, respectively. On July 4, 2025, the US government enacted the One Big Beautiful Bill Act ("OBBBA"), which includes several changes to US federal income tax law including temporary and permanent extension of expiring provisions of the Tax Cuts and Jobs Act of 2017. Significant provisions for corporate taxpayers include permanent 100% bonus depreciation for qualified property, immediate expensing of domestic research & development expenditures, and changes to the limitation on business interest expense deductions under Section 163(j). None of these provisions had a material impact on the Company’s 2025 income tax provision. Significant components of the Company's deferred tax assets and liabilities are as follows as of December 31: 2025 2024 Deferred tax assets: Other assets $ 689 $ 318 Foreign net operating losses 35 1,087 Long term incentive plan RSUs 1,281 717 Foreign equity compensation and accrual — 392 Goodwill 23,492 10,998 ASC 842 Lease liability 5,834 5,810 Valuation Allowance ( 11 ) — Total deferred income tax assets 31,320 19,322 Deferred tax liabilities: Other ( 151 ) ( 183 ) Intangible assets ( 1,469 ) ( 3,152 ) Right of use asset ( 5,100 ) ( 4,949 ) Total deferred income tax liabilities ( 6,720 ) ( 8,284 ) Total net deferred tax asset $ 24,600 $ 11,038 A reconciliation for the difference between actual income tax expense (benefit) compared to the amount computed by applying the statutory federal income tax rate to net loss before income tax for the year ended December 31, 2025 after the adoption of ASU 2023-09 is as follows: 88 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) December 31, 2025 Amount % of Pretax Earnings Tax at US Federal Statutory Tax Rate $ ( 7,264 ) 21.0 % State and Local Income Taxes, Net of Federal Income Tax Effect 1,061 ( 3.1 ) % Foreign Tax Effects United Kingdom Statutory tax rate difference between UK and US ( 293 ) 0.8 % Nondeductible Goodwill Impairment 1,514 ( 4.4 ) % Other 111 ( 0.3 ) % United Arab Emirates Statutory tax rate difference between UAE and US ( 8 ) — Other 11 — Effect of Cross-Border Tax Laws 290 ( 0.8 ) % Nontaxable or Nondeductible Items – US Federal Impact Prepaid post combination compensation expense 3,670 ( 10.60 ) % Nondeductible share-based accounting charge 6,221 ( 18.00 ) % Excess Tax Benefit – Equity Compensation ( 539 ) 1.60 % Bargain Purchase Gain ( 571 ) 1.70 % Other 185 ( 0.50 ) % Other Adjustments 11 ( 0.10 ) % Effective Tax Rate $ 4,399 ( 12.7 ) % The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Washington D.C., and Virginia. A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory US federal income tax rate to income before income taxes for the year prior to the adoption of ASU 2023-09 is as follows: December 31, 2024 Amount % of Pretax Earnings Federal income tax benefit at statutory rate $ ( 3,657 ) ( 21.0 ) % State income taxes, net of federal income tax benefit ( 1,168 ) ( 6.7 ) % Nondeductible share-based accounting charge 8,541 49.1 % Prepaid post-combination compensation expense 3,107 17.8 % Foreign rate differential 101 0.6 % Other ( 379 ) ( 2.2 ) % Total provision for income taxes $ 6,545 37.6 % The amounts of cash income taxes paid (received) by the Company for the year ended December 31, 2025 were as follows: Federal $ 3,750 State and Local 2,508 Foreign (UK) ( 319 ) Income Taxes, net of amounts refunded $ 5,939 89 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) NOTE 15. F AIR V ALUE M EASUREMENT The following table presents a summary of the Company’s liabilities that are measured at fair value on a recurring basis by their respective fair value hierarchy level as of December 31, 2025: Level 1 Level 2 Level 3 Other liabilities $ — $ — $ 12,030 Contingent consideration — — 12,998 Total liabilities $ — $ — $ 25,028 The following table presents a summary of the Company’s liabilities that are measured at fair value on a recurring basis by their respective fair value hierarchy level as of December 31, 2024: Level 1 Level 2 Level 3 Other liabilities $ — $ — $ 4,880 Contingent consideration — — 10,896 Total liabilities $ — $ — $ 15,776 The carrying values of cash, contract receivables, and accounts payable and accrued expenses at December 31, 2025 and December 31, 2024 approximated their fair value due to the short maturity of these instruments. Financial Instruments that are Measured at Fair Value on a Recurring Basis Contingent Consideration The fair value of contingent consideration from the Company's acquisitions were measured using Level 3 inputs. The following table summarized the change in fair value, as determined by Level 3 inputs, for the contingent consideration using the unobservable Level 3 inputs for the year ended December 31, 2025 as follows: Balance at December 31, 2024 $ 10,896 Cash and stock payout of contingent consideration ( 582 ) Change in fair value 5,147 Effect of currency translation adjustment 42 Other adjustment ( 2,505 ) Balance at December 31, 2025 $ 12,998 The following table summarized the change in fair value, as determined by Level 3 inputs, for the contingent consideration using the unobservable Level 3 inputs for the year ended December 31, 2024 as follows: Balance at December 31, 2023 $ 6,920 Fair value at issuance 3,798 Cash and stock payout of contingent consideration ( 1,709 ) Change in fair value 1,910 Effect of currency translation adjustment ( 23 ) Balance at December 31, 2024 $ 10,896 The estimated fair value of contingent consideration is calculated by Monte Carlo simulations utilize estimates including; expected volatility of future operating results, discount rates applicable to future results, and expected growth rates. Other Liabilities The fair value of other liabilities, comprising of post-combination compensation obligations of the Company, relates to various acquisitions. The estimated fair value of other liabilities is calculated by Monte Carlo simulations utilize estimates 90 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) including; expected volatility of future operating results, discount rates applicable to future results, and expected growth rates. The following table summarized the change in fair value, as determined by Level 3 inputs, for the other liabilities using the Level 3 inputs for the year ended December 31, 2025 as follows: Balance at December 31, 2024 $ 4,880 Accretion of liability 8,490 Changes in other liabilities ( 1,714 ) Stock issued for settlement of other liability 342 Effect of currency translation adjustment ( 3 ) Other adjustment 35 Balance at December 31, 2025 $ 12,030 The following table summarized the change in fair value, as determined by Level 3 inputs, for the other liabilities using the Level 3 inputs for the year ended December 31, 2024 as follows: Balance at December 31, 2023 $ 2,120 Accretion of other liability 3,742 Other liabilities ( 982 ) Balance at December 31, 2024 $ 4,880 The Monte Carlo assumptions and inputs (which are Level 3 inputs) are as follows for the years ended December 31, 2025 and 2024 are as follows: December 31, 2025 Significant Input Weighted Average Input Input Range Discount rate for credit risk and time value 4.5 % 4.4 % to 4.8 % Discount rate for future profit after tax 15.1 % 11.3 % to 19.4 % Expected volatility of future annual profit after tax 29.0 % 29.0 % Discount Rate Applicable to Future Annual EBITDA 15.0 % 14.4 % to 15.5 % Expected Volatility of Future Annual EBITDA 30.5 % 29.0 % to 32.0 % Forecasted growth rate 8.6 % 0.9 % to 17.1 % December 31, 2024 Significant Input Weighted Average Input Input Range Discount rate for credit risk and time value 5.2 % 5.2 % to 5.4 % Discount rate for future profit after tax 16.4 % 11.5 % to 21.3 % Expected volatility of future annual profit after tax 31.0 % 29.0 % to 34.0 % Forecasted growth rate 8.9 % 4.9 % to 70.8 % Financial Instruments that are not Measured at Fair Value on a Recurring Basis The Notes Payable of the Company are subject to a variable interest rate and as such, the carrying amount closely approximates the fair value of this instrument. Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis Certain non-financial assets are measured at fair value on a nonrecurring basis, primarily goodwill, intangible assets (Level 3 fair value measurements) and right-of-use lease assets (Level 2 fair value measurement). Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic evaluations for potential impairment. 91 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) NOTE 16. ACQUISITIONS Lucas Public Affairs, Inc. (“LPA”) On May 1, 2024, the Company entered into an Asset Purchase Agreement ("LPA Agreement") and acquired certain assets and assumed certain liabilities of Lucas Public Affairs, Inc. ("Seller" or "LPA") through the creation of a wholly-owned subsidiary, Lucas Public Affairs, LLC ("LPA LLC"). At the closing of the transaction, the Company paid the Seller cash in the amount of $ 6.0 million ("LPA Closing Cash Payment") and issued 191,675 shares of the Company's common stock ("LPA Closing Share Payment") to Seller at an aggregate fair value of approximately $ 1.5 million, of which, all the shares have vesting requirements ("LPA Vesting Shares"). In addition, there are additional contingent payments that the Seller can earn in the future depending on certain operating results that are achieved. The total additional amount of consideration that the Company could be required to pay to the Seller is $ 9.8 million of cash and $ 4.7 million of stock ("LPA Seller Shares") for total additional consideration of up to $ 14.5 million. This combined with the closing payments already made could require total payments of up to $ 22.0 million to the Seller. The LPA Agreement provides certain forfeiture provisions applicable to any future cash or share payments owed, which generally require the owners of the Seller ("LPA Owner") to remain employed by the Company for a certain period of time to receive the full amount of those future payments, although there are certain exceptions. Reasons for the acquisition The Company acquired LPA to expand the scope of its consulting services provided in respect of federal, state and local governments. Specifically, LPA provides significant complementary services to companies and organizations doing business in the state of California. Purchase consideration The Company determined that certain consideration provided to LPA in the LPA Agreement does not qualify as purchase consideration in accordance with the guidance of ASC 805. The Company determined that the purchase consideration consists of the amount of cash and share payments owed to LPA that are not subject to a vesting or claw back provision that is directly linked to the continued employment of LPA Owners. The total purchase consideration consisted of the following amounts: LPA Closing Cash Payment $ 1,560 Contingent consideration 377 Total purchase consideration $ 1,937 The LPA Closing Cash Payment and contingent consideration allocated as purchase consideration consists of the amount of the LPA Closing Cash Payment and estimated fair value of future payments that are not subject to vesting or claw back provisions tied to continued employment. Purchase price allocation The allocation of the purchase consideration resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the purchase date of May 1, 2024 based on their respective estimated fair values is summarized below: 92 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Customer relationships $ 1,151 Right of use assets 284 Tradename 1,021 Noncompete agreements 159 Deferred income tax asset 1,962 Lease liability ( 284 ) Net assets acquired 4,293 Less estimated purchase price ( 1,937 ) Gain on bargain purchase $ 2,356 The fair value of customer relationships was determined using the income approach, which requires management to estimate a number of factors for each reporting unit, including projected future operating results, anticipating future cash flows and discount rates. The fair value of noncompete agreements was determined using an income approach method, which requires management to estimate a number of factors related to the expected future cash flows of LPA LLC and the potential impact and probability of competition, assuming such noncompete agreements were not in place. The primary factors that contributed to the gain on bargain purchase recognized from the LPA acquisition include the requirement for the key employees of LPA to stay employees of the Company for a significant period of time. The weighted average amortization period for customer relationships is seven years , and noncompete agreements is five years . The fair value of the contingent consideration was performed using Monte Carlo simulations to estimate the achievement and amount of certain future operating results. The Monte Carlo simulations utilize estimates including; expected volatility of future operating results, discount rates applicable to future results, and expected growth rates. The table below provides the significant inputs to the calculation of the contingent consideration as of the acquisition date: Significant Input Range Discount rate for credit risk and time value 5.2 % to 5.4 % Discount rate for future profit after tax 15.7 % to 16.4 % Expected volatility of future annual profit after tax 35.0 % to 38.0 % Forecasted growth rate 9.5 % to 13.4 % Pagefield Communications Limited ("Pagefield") On June 7, 2024, the Company entered into a Share Purchase Agreement ("Pagefield Agreement") and acquired the stock of Pagefield Communications Limited ("Pagefield") from the owners of Pagefield (“Seller” or “Sellers”) through the creation of a wholly-owned subsidiary, PPHC International Ltd. ("PPHC LTD"). At the closing of the transaction, the Company paid the Sellers cash in the amount of 15.0 million GBP, which was approximately $ 19.2 million USD ("Pagefield Closing Cash Payment") and issued 179,528 shares of the Company's common stock ("Pagefield Closing Share Payment") to Sellers at an aggregate fair value of approximately $ 1.4 million. In addition, there are additional contingent payments that the Sellers can earn in the future depending on certain operating results that are achieved. The total additional amount of consideration that the Company could be required to pay to the Sellers is up to 13.8 million GBP, which includes up to 8.8 million GBP subject to future vesting and clawback provisions. The additional contingent consideration combined with the closing payments already made could require total payments of up to 30.0 million GBP to the Sellers. The Pagefield Agreement provides certain vesting and forfeiture provisions applicable to a portion of the future cash or share payments owed. These provisions are specifically designated toward the continued employment of one of the Sellers ("Restricted Owner"). The Restricted Owner is required to remain employed by the Company for a certain period of time to receive the full amount of those future payments. There are certain exceptions to the forfeiture provisions if termination of employment occurs under certain permitted events ("Pagefield Acceleration Event") as defined in the Pagefield Agreement. If the Restricted Owner's employment is terminated as a result of a Pagefield Acceleration Event, a percentage of the unvested Restricted Owner Shares shall become fully vested. 93 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Reasons for the acquisition The Company acquired Pagefield to expand the geographic scope of its consulting services. Specifically, Pagefield provides services to companies and organizations doing business in the United Kingdom ("UK") while interacting with the UK government. Purchase consideration The Company determined that certain consideration provided to Pagefield in the Pagefield Agreement does not qualify as purchase consideration in accordance with the guidance of ASC 805. The Company determined that the purchase consideration consists of the amount of cash and share payments owed to Pagefield that are not subject to a vesting or claw back provision that is directly linked to the continued employment of one of the Sellers. The total purchase consideration consisted of the following amounts: Pagefield Closing Cash Payment $ 19,209 Pagefield Closing Share Payment 1,443 Contingent consideration 3,403 Total purchase consideration $ 24,056 The contingent consideration allocated as purchase consideration consists of the amount of the estimated fair value of the projected future payments that are not subject to vesting or claw back provisions tied to continued employment. Purchase price allocation The allocation of the purchase consideration resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the purchase date of June 7, 2024, based on their respective estimated fair values is summarized below: Cash acquired $ 1,055 Contract receivables 1,128 Other current assets 2,260 Property and equipment 31 Customer relationships 5,184 Tradename 1,549 Noncompete agreements 954 Accounts payable and accrued expenses ( 2,721 ) Other current liabilities ( 463 ) Deferred income tax liability ( 1,701 ) Net assets acquired 7,276 Less estimated purchase price ( 24,056 ) Goodwill (1) $ ( 16,779 ) _________________ (1) Based on the exchange rate in effect at the acquisition date The fair value of customer relationships was determined using the income approach, which requires management to estimate a number of factors for each reporting unit, including projected future operating results and discount rates. The fair value of noncompete agreements was determined using an income approach method, which requires management to estimate a number of factors related to the expected future cash flows of Pagefield and the potential impact and probability of competition, assuming such noncompete agreements were not in place. The weighted average amortization period for customer relationships is seven years , and noncompete agreements is three years . 94 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) The fair value of the contingent consideration was performed using Monte Carlo simulations to estimate the achievement and amount of certain future operating results. The Monte Carlo simulations utilize estimates including; expected volatility of future operating results, discount rates applicable to future results, and expected growth rates. The table below provides the significant inputs to the calculation of the contingent consideration as of the acquisition date: Significant Input Range Discount rate for credit risk and time value 5.3 % to 5.9 % Discount rate for future profit after tax 12.0 % to 12.4 % Expected volatility of future annual profit after tax 34.0 % to 37.0 % Forecasted growth rate 9.1 % to 9.5 % Supplemental Unaudited Pro Forma Financial Information The unaudited pro forma information for the periods set forth below gives effect to the business acquisitions that occurred during the year ended December 31, 2024 (Pagefield and Lucas), as if they occurred as of January 1, 2023. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time. Pro forma revenue and net income amounts are as follows for the years ended December 31, 2024 and 2023: 2024 2023 Revenue $ 154,552 $ 149,884 Net income $ ( 22,900 ) $ ( 12,409 ) Revenue attributable to LPA and Pagefield, included within the consolidated statements of operations for the year ended December 31, 2024, was $ 7.8 million. Net income attributable to Lucas and Pagefield, included within the consolidated statements of operations for the year ended December 31, 2024, was $ 2.9 million. TrailRunner On January 24, 2025, the Company entered into a binding agreement ("TrailRunner Agreement") to acquire TrailRunner International LLC and its wholly-owned subsidiaries (collectively, the “TrailRunner Seller” or "TrailRunner"), a Texas headquartered global strategic communications advisory firm. At the closing of the transaction, the Company agreed to pay the TrailRunner Seller cash in the amount of approximately $ 28.2 million and issue 593,228 shares of the Company’s common stock to the TrailRunner Seller at an aggregate fair value of approximately $ 5.2 million. In addition, there are additional contingent payments that the TrailRunner Seller can earn in the future depending on certain operating results that are achieved. The total additional amount of consideration that the Company could be required to pay to the TrailRunner Seller is $ 37.0 million. Although the Company remitted the funds to the TrailRunner Seller on March 31 2025, the effective date of the transaction was April 1, 2025. Reasons for the acquisition The Company acquired TrailRunner to expand the Company's ability to provide a distinct suite of corporate communication capabilities and enhance its global footprint. TrailRunner has eight office locations across the United States, United Kingdom, Middle East, and Asia. Accounting for the acquisition The acquisition of TrailRunner was accounted for as a business combination and reflects the application of acquisition accounting in accordance with ASC 805, Business Combinations ("ASC 805"). The acquired assets, including identifiable intangible assets and liabilities assumed, have been recorded at their estimated fair values. Purchase consideration The Company determined that certain consideration provided to TrailRunner does not qualify as purchase consideration in accordance with the guidance of ASC 805. The Company determined that the purchase consideration consists of the amount of cash and share payments owed to TrailRunner that are not subject to a vesting or claw back 95 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) provision that is directly linked to the continued employment of the TrailRunner Seller. The total purchase consideration consisted of the following amounts: Cash paid $ 18,607 Common stock issued 1,190 Total $ 19,797 Purchase price allocation The Company recognized a bargain purchase gain of $ 1.3 million in connection with the acquisition of TrailRunner, representing the excess of the fair value of identifiable net assets acquired over the aggregate amount transferred. In accordance with ASC 805 - business combinations, the Company reassessed the identification and measurement of the assets acquired and liabilities assumed prior to recognizing the gain. The primary factors that contributed to the gain on bargain purchase recognized from the TrailRunner acquisition include the requirement for the key employees of TrailRunner to stay employees of the Company for a significant period of time. The purchase price allocation was finalized as of December 31, 2025. The allocation of the purchase consideration resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the purchase date of April 1, 2025, based on their respective estimated fair values is summarized below: Cash acquired $ 85 Accounts receivable 758 Other current assets 172 Property and equipment 27 Right of use asset 1,806 Customer relationships 7,796 Tradename 2,760 Noncompete agreements 786 Deferred tax asset 9,118 Accounts payable and accrued expenses ( 372 ) Operating lease liability ( 1,806 ) Net assets acquired 21,130 Less estimated purchase price ( 19,797 ) Gain on bargain purchase $ 1,333 The fair value of the identified definite-lived intangible assets was as follows: Definite-lived Weighted-average useful life intangible assets (in years) Amount Customer relationship 7.0 $ 7,796 Noncompete agreements 5.0 $ 786 The fair value of customer relationships was determined using the income approach, which requires management to estimate a number of factors for each reporting unit, including projected future operating results and discount rates. The fair value of the trade names was determined using the relief from royalty method. The fair value of noncompete agreements was determined using an income approach method, which requires management to estimate a number of factors related to the expected future cash flows of TrailRunner and the potential impact and probability of competition, assuming such noncompete agreements were not in place. 96 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Pine Cove On July 11, 2025, the Company entered into an Asset Purchase Agreement (“APA”) with Pine Cove Capital, LLC, a strategic advisory and government relations business serving clients in technology, energy, digital health, and financial services. The transaction was structured as an asset purchase, with Purchaser acquiring substantially all operating assets of Seller, including tangible assets, intellectual property, client contracts, and goodwill, while assuming certain specified liabilities. At the closing of the transaction, the Company agreed to pay the Pine Cove Seller cash in the amount of approximately $ 2.6 million and issue 42,829 shares of the Company’s common stock to the Pine Cove Seller at an aggregate fair value of approximately $ 0.5 million. In addition, there are additional contingent payments that the Pine Cove Seller can earn in the future depending on certain operating results that are achieved. The total additional amount of consideration that the Company could be required to pay to the Pine Cove Seller is $ 10.0 million. The transaction closed effective August 1, 2025 (the “Closing Date” or “Acquisition Date”). Reasons for the acquisition The Company acquired Pine Cove to continue the Company's expansion into certain key US state capitals, complementing the Company’s federal capabilities with best-in-class local market expertise. Texas, as one of the largest state economies and most consequential for public policy activities, has long been a stated priority for local government relations expansion. Accounting for the acquisition The acquisition of Pine Cove was accounted for as a business combination and reflects the application of acquisition accounting in accordance with ASC 805, Business Combinations ("ASC 805"). The acquired assets, including identifiable intangible assets and liabilities assumed, have been recorded at their estimated fair values. Purchase consideration The Company determined that certain consideration provided to Pine Cove does not qualify as purchase consideration in accordance with the guidance of ASC 805. The Company determined that the purchase consideration consists of the amount of cash and share payments owed to Pine Cove that are not subject to a vesting or claw back provision that is directly linked to the continued employment of the Pine Cove Seller. The total purchase consideration consisted of the following amounts: Cash paid $ 2,550 Common stock issued 95 Total $ 2,645 Purchase price allocation The Company recognized a bargain purchase gain of $ 0.7 million in connection with the acquisition of Pine Cove, representing the excess of the fair value of identifiable net assets acquired over the aggregate amount transferred. In accordance with ASC 805 - business combinations, the Company reassessed the identification and measurement of the assets acquired and liabilities assumed prior to recognizing the gain. The primary factors that contributed to the gain on bargain purchase recognized from the Pine Cove acquisition include the requirement for the key employees of Pine Cove to stay employees of the Company for a significant period of time. The purchase price allocation was finalized as of December 31, 2025. The allocation of the purchase consideration resulted in the following amounts being allocated to the assets acquired and liabilities assumed as of the purchase date of August 1, 2025, based on their respective estimated fair values is summarized below: 97 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Customer relationships $ 1,621 Tradename 268 Noncompete agreements 402 Deferred tax asset 1,063 Net assets acquired 3,354 Less estimated purchase price ( 2,645 ) Gain on bargain purchase $ 710 The fair value of the identified definite-lived intangible assets was as follows: Definite-lived Weighted-average useful life intangible assets (in years) Amount Customer relationship 7.0 $ 1,621 Noncompete agreements 5.0 $ 402 The fair value of customer relationships was determined using the income approach, which requires management to estimate a number of factors for each reporting unit, including projected future operating results and discount rates. The fair value of the trade names was determined using the relief from royalty method. The fair value of noncompete agreements was determined using an income approach method, which requires management to estimate a number of factors related to the expected future cash flows of Pine Cove and the potential impact and probability of competition, assuming such noncompete agreements were not in place. Supplemental Unaudited Pro Forma Financial Information The unaudited pro forma information for the periods set forth below gives effect to the business acquisitions that occurred during the year ended December 31, 2025 (TrailRunner and Pine Cove), as if they occurred as of January 1, 2024. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time. Pro forma revenue and net income amounts are as follows for the years ended December 31, 2025 and 2024: 2025 2024 Revenue $ 195,727 $ 175,535 Net Loss $ ( 38,333 ) $ ( 21,886 ) Revenue attributable to TrailRunner and Pine Cove, included within the consolidated statements of operations for the year ended December 31, 2025, was $ 23.1 million. Net income attributable to TrailRunner and Pine Cove, included within the consolidated statements of operations for the year ended December 31, 2025, was $ 0.3 million. NOTE 17. SEGMENT REPORTING The Company determined that its business is conducted across three reportable segments as of December 31, 2025 as follows: Government Relations Consulting, Corporate Communications & Public Affairs Consulting and Compliance and Insights Services. • Government Relations Consulting services (which is also commonly referred to as “lobbying”) include advocacy, strategic guidance, political intelligence and issue monitoring at the US federal and state levels and in the United Kingdom through our offices in London; • Corporate Communications & Public Affairs Consulting services include policy communications, crisis communications, financial communications and investor relations, litigation support, community relations, social and digital media, public opinion research, branding and messaging, and relationship marketing, across the United States and internationally through our offices in London, Shanghai, Abu Dhabi, and Dubai; and • Compliance and Insights Services include lobbying compliance services and legislative tracking. 98 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) The Chief Operating Decision Maker ("CODM"), being its Chief Executive Officer, is not regularly provided assets on a segment basis since it is not used to allocate resources and assess performance for each of the segments; therefore, total segment assets have not been disclosed. In addition, for the years ended December 31, 2025 and 2024, revenues in each of the three segments were primarily attributable the United States operations as there were no other countries from which the Company derived segment revenues that exceeded 10% of that segment. The following tables present segment information by revenues, significant expenses consisting of staff costs and non-staff costs by segment and Adjusted Pre-Bonus EBITDA by segment, and a reconciliation to the consolidated net loss before income taxes for each of the years ended December 31, 2025 and 2024. For the years ended months ended December 31, 2024, the segment information has been recast to conform to the 2025 segment information. Year Ended December 31, 2025 Government Relations Consulting Corporate Communications & Public Affairs Consulting Compliance and Insights Services Total Revenue $ 108,495 $ 65,050 $ 12,996 $ 186,541 Costs and expenses: Staff costs by segment 50,175 37,377 5,124 92,676 Non-staff costs by segment 9,780 8,863 761 19,404 Segment Adjusted Pre-Bonus EBITDA $ 48,540 $ 18,810 $ 7,111 74,461 Reconciliation to net loss before income taxes: Unallocated bonuses ( 16,716 ) Unallocated corporate level expenses ( 13,181 ) Depreciation ( 192 ) Share-based accounting charge ( 29,626 ) Post-combination compensation charges ( 21,271 ) Long term incentive program charges ( 7,086 ) Change in contingent consideration ( 5,147 ) Loss on impairment of intangible assets ( 1,850 ) ( 1,040 ) — ( 2,890 ) Loss on impairment of goodwill ( 4,760 ) ( 1,459 ) — ( 6,219 ) Amortization of intangibles ( 6,046 ) Loss from operations ( 33,913 ) Gain on bargain purchase 2,043 Interest, net ( 3,321 ) Other income, net 589 Net loss before income taxes ( 34,602 ) Income tax expense 4,399 Net loss after income taxes $ ( 39,001 ) 99 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Year Ended December 31, 2024 Government Relations Consulting Corporate Communications & Public Affairs Consulting Compliance and Insights Services Total Revenue $ 102,464 $ 36,405 $ 10,694 $ 149,563 Costs and expenses: Staff costs by segment 47,342 23,419 4,893 75,654 Non-staff costs by segment 8,173 5,203 702 14,078 Segment Adjusted Pre-Bonus EBITDA $ 46,949 $ 7,783 $ 5,099 59,831 Reconciliation to net loss before income taxes: Unallocated bonuses ( 10,375 ) Unallocated corporate level expenses ( 13,327 ) Depreciation ( 136 ) Share-based accounting charge ( 31,804 ) Post-combination compensation charges ( 11,599 ) Long term incentive program charges ( 4,162 ) Change in contingent consideration ( 1,910 ) Amortization of intangibles ( 4,671 ) Loss from operations ( 18,153 ) Gain on bargain purchase 2,464 Interest, net ( 1,723 ) Net loss before income taxes ( 17,412 ) Income tax expense 6,545 Net loss after income taxes $ ( 23,957 ) NOTE 18. STOCKHOLDERS' EQUITY As of December 31, 2025, the authorized capital of the Company consists of 1,100,000,000 shares of capital stock, $ 0.001 par value per share, of which 1,000,000,000 shares are designated as common stock and 100,000,000 shares are designated as preferred stock. The Company’s stockholders include holders of fully vested Common Stock, unvested pre-UK IPO Shares, unvested Restricted Stock Awards, and unvested Common Stock issued in connection with business acquisitions. Each share of Common Stock, whether vested or unvested, carries one vote on matters submitted to stockholders and entitles the holder to nonforfeitable dividend rights on a per-share basis. Holders of all types of unvested Common Stock are not contractually obligated to fund Company losses. There are no shares of preferred stock outstanding. During May 2025 and October 2025, the Company issued dividends of $ 0.235 and $ 0.115 per share, respectively. During May 2024 and October 2024, the Company issued dividends of $ 0.485 and $ 0.235 per share, respectively. 100 Table of Contents PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data) Restricted Shares The Company has issued unvested restricted common stock as consideration for business combinations and as compensation to employees (collectively "Restricted Shares"). The holders of Restricted Shares hold the right to vote and a non-forfeitable right to dividends paid. The Company’s Restricted Shares are as follows as of December 31: Year Ended December 31, 2025 2024 KP Closing Share Payment 36,980 73,959 KP Earnout Shares 7,893 24,539 KP Interim payment shares 35,011 — Engage Restricted Shares — 32,487 MS Closing Vesting Shares 131,554 263,109 MS First Interim Vesting Shares 55,760 111,520 Lucas Public Affairs Closing Shares 191,674 191,675 Alpine Inc. restricted stock awards 213,232 342,231 TrailRunner Restricted Shares 458,313 — Pine Cove Restricted shares 33,835 — Other restricted shares 209,374 177,626 Total restricted Shares 1,373,626 1,217,146 The total fair value Restricted Shares and RSUs that vested during the years ended December 31, 2025 and 2024 was $ 11.4 million and $ 5.0 million, respectively. NOTE 19. SUBSEQUENT EVENTS On January 29, 2026, the Company consummated its initial public offering (“IPO”) of 4,150,000 shares the Company’s Common Stock, comprising 3,400,000 newly issued shares of Common Stock and 750,000 shares of existing Common Stock (together the “Shares”) sold by, respectively, the Company and certain shareholders of the Company (the “Selling Stockholders”). The Shares were sold at a price of $ 12.25 per Share, generating gross proceeds to the Company of $ 41.7 million and gross proceeds to the Selling Stockholders of $ 9.2 million. On March 2, 2026, the Company announced the issue of 342,500 new shares of Common Stock, pursuant to the partial exercise of the over-allotment option granted to the underwriters in connection with the Company's IPO and admission to the Nasdaq Global Market in January 2026. In connection with the IPO, the Company entered into an underwriting agreement (the “Underwriting Agreement”), dated January 27, 2026, by and among the Company, the selling stockholders listed therein and Oppenheimer & Co. Inc. and Canaccord Genuity LLC, as representative of the underwriters, a form of which was previously filed as an exhibit to the Company’s Registration Statement on Form S-1 (File No. 333-290834) initially filed with the SEC on October 10, 2025, and subsequently amended (as amended, the “Registration Statement”). The Underwriting Agreement contains customary representations, warranties, covenants and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the underwriters, including for liabilities under the Securities Act, certain other obligations of the parties and termination provisions. On March 20, 2026, the Company entered into a binding agreement to acquire all of the outstanding shares of Westminster Policy Partners Limited, a leading UK public affairs and economics consultancy. The acquisition is expected to close on April 1, 2026 for a combination of cash and shares. The first stock-based compensation units under the Omnibus incentive Plan were issued in 2022. On September 29, 2025, our board of directors approved an amendment (the "2025 Amendment") to our Omnibus Incentive Plan, which became effective on January 26, 2026. Key terms of the Omnibus Incentive Plan, as so amended, and of certain grant agreements thereunder are summarized in our Form S-1/A#5 as filed on January 23, 2026. 101 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Upon the recommendation of our audit committee, we engaged Forvis Mazars, LLP on July 13, 2024 as the Company’s independent external (statutory) auditors for the year ending December 31, 2024. In connection with this appointment, in July 2024, upon the recommendation of our audit committee, we terminated the engagement of MN Blum, LLC (“MN Blum”) as our component auditor and terminated the engagement of Crowe U.K. LLP (“Crowe UK”) as our statutory auditor for the year ended December 31, 2024. Neither MN Blum nor Crowe UK prepared reports on our financial statements for the years ended December 31, 2025 and 2024. No report by MN Blum or Crowe UK on our financial statements for the years ended December 31, 2023, or for any subsequent interim period, contained an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles, and there were no disagreements with respect to any such period with MN Blum or Crowe UK on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of MN Blum or Crowe UK, respectively, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report for such period. There were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K for such years and subsequent interim period through July 13, 2024. In accordance with Item 304(a)(3) of Regulation S-K, we have provided MN Blum and Crowe UK with a copy of our Annual Report on Form 10-K and requested that each of MN Blum and Crowe UK furnish the Company with a letter addressed to the SEC stating whether or not it agrees with the statements made herein. During the fiscal years ended December 31, 2023 and during the interim period through July 13, 2024, neither the Company nor anyone on its behalf consulted with Forvis Mazars, LLP regarding either (1) the application of accounting principles to a specific transaction, completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report nor oral advice was provided to the Company that Forvis Mazars, LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, or (2) any matter that was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a “reportable event” (as described in Item 304(a)(1)(v) of Regulation S-K).