What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 189 added, 130 removed, 516 unchanged (38% of the section changed)

Financial Statements

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

ASSETS (unaudited)

1 unchanged sentence

Cash and cash equivalents $ 232,375 $ 236,559

Accounts receivable (net of allowance of $ 389 and $ 572 at March 31, 2024, and December 31, 2023, respectively)

Accounts receivable (net of allowance of $ 383 and $ 572 at June 30, 2024, and December 31, 2023, respectively)

30,242 38,765

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Operating lease liabilities, current 1,732 2,351

Current maturities of notes payable (includes unamortized discount of $ 2,143 and $ 2,228 at March 31, 2024, and December 31, 2023, respectively)

Current maturities of notes payable (includes unamortized discount of $ 2,087 and $ 2,228 at June 30, 2024, and December 31, 2023, respectively)

Total current liabilities 122,283 130,647

Notes payable, less current maturities (includes unamortized discount of $ 2,657 and $ 3,148 at March 31, 2024, and December 31, 2023, respectively)

Notes payable, less current maturities (includes unamortized discount of $ 2,201 and $ 3,148 at June 30, 2024, and December 31, 2023, respectively)

471,749 473,502

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5,000,000 shares authorized;

115,000 shares issued and outstanding as of March 31, 2024, and December 31, 2023, respectively

115,000 shares issued and outstanding as of June 30, 2024, and December 31, 2023, respectively

120,403 117,638

2 unchanged sentences

75,000,000 shares authorized;

27,996,656 and 29,908,407 shares issued and outstanding as of March 31, 2024, and December 31, 2023, respectively

27,265,746 and 29,908,407 shares issued and outstanding as of June 30, 2024, and December 31, 2023, respectively

Additional paid-in capital 603,526 608,995

Accumulated other comprehensive income 2,307 6,168

Accumulated other comprehensive income (loss)

( 600 ) 6,168

Accumulated deficit ( 596,441 ) ( 488,872 )

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(in thousands, except for share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Subscription and support $ 65,504 $ 70,494 $ 132,582 $ 143,408

21 unchanged sentences

Total other expense ( 4,858 ) ( 5,993 ) ( 9,894 ) ( 10,029 )

Loss before benefit from income taxes ( 96,677 ) ( 141,467 )

Benefit from income taxes 547 1,422

Loss before benefit from (provision for) income taxes ( 10,229 ) ( 15,380 ) ( 106,906 ) ( 156,847 )

Benefit from (provision for) income taxes ( 1,210 ) 233 ( 663 ) 1,655

Net loss $ ( 11,439 ) $ ( 15,147 ) $ ( 107,569 ) $ ( 155,192 )

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Upland Software, Inc.

Condensed Consolidated Statements of Comprehensive Loss

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net loss $ ( 11,439 ) $ ( 15,147 ) $ ( 107,569 ) $ ( 155,192 )

3 unchanged sentences

Interest rate swaps ( 2,441 ) 7,905 ( 2,279 ) ( 249 )

Other comprehensive loss:

Other comprehensive income (loss):

$ ( 2,907 ) $ 11,209 $ ( 6,768 ) $ 4,305

4 unchanged sentences

(in thousands, except share amounts)

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Preferred Stock Common Stock Additional

5 unchanged sentences

Shares Amount Shares Amount

Balance at December 31, 2023 115,000 $ 117,638 29,908,407 $ 3 $ 608,995 $ 6,168 $ ( 488,872 ) $ 126,294

Balance at March 31, 2024 115,000 $ 119,013 27,996,656 $ 3 $ 602,813 $ 2,307 $ ( 585,002 ) $ 20,121

Dividends accrued - Convertible Preferred Stock 1,390 — — ( 1,390 ) — — ( 1,390 )

6 unchanged sentences

Net loss — — — — ( 11,439 ) ( 11,439 )

Balance at June 30, 2024 115,000 $ 120,403 27,265,746 $ 3 $ 603,526 $ ( 600 ) $ ( 596,441 ) $ 6,488

Three Months Ended June 30, 2023

Preferred Stock Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Accumulated

Deficit Total

Stockholders’

Shares Amount Shares Amount

Balance at March 31, 2023 115,000 $ 113,606 32,441,010 $ 3 $ 611,667 $ 4,206 $ ( 449,043 ) $ 166,833

Three Months Ended March 31, 2023

Dividends accrued - Convertible Preferred Stock — 1,329 — — ( 1,329 ) — — ( 1,329 )

Issuance of stock under Company plans, net of shares withheld for tax — — 213,605 — ( 152 ) — — ( 152 )

Stock-based compensation — — — — 6,370 — — 6,370

Foreign currency translation adjustment — — — — — 840 — 840

Unrealized translation gain (loss) on intercompany loans with foreign subsidiaries — — — — — 2,464 — 2,464

Interest rate swaps — — — — — 7,905 — 7,905

Net loss — — — — — — ( 15,147 ) ( 15,147 )

Balance at June 30, 2023 115,000 $ 114,935 32,654,615 $ 3 $ 616,556 $ 15,415 $ ( 464,190 ) $ 167,784

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

Upland Software, Inc.

Condensed Consolidated Statements of Equity - continued

(in thousands, except share amounts)

Six Months Ended June 30, 2024

Preferred Stock Common Stock Additional

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Issuance of stock under Company plans, net of shares withheld for tax — — 566,044 — ( 563 ) — — ( 563 )

Stock repurchase and retirement ( 3,208,705 ) ( 10,796 ) ( 10,796 )

Stock-based compensation — — — — 8,655 — — 8,655

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Net loss — — — — — — ( 107,569 ) ( 107,569 )

Balance at March 31, 2023 115,000 $ 113,606 32,441,010 $ 3 $ 611,667 $ 4,206 $ ( 449,043 ) $ 166,833

Balance at June 30, 2024 115,000 $ 120,403 27,265,746 $ 3 $ 603,526 $ ( 600 ) $ ( 596,441 ) $ 6,488

Six Months Ended June 30, 2023

Preferred Stock Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Accumulated

Deficit Total

Stockholders’

Shares Amount Shares Amount

Balance at December 31, 2022 115,000 $ 112,291 32,221,855 $ 3 $ 606,755 $ 11,110 $ ( 308,998 ) $ 308,870

Dividends accrued - Convertible Preferred Stock — 2,644 — — ( 2,644 ) — — ( 2,644 )

Issuance of stock under Company plans, net of shares withheld for tax — — 432,760 — ( 387 ) — — ( 387 )

Stock-based compensation — — — — 12,832 — — 12,832

Foreign currency translation adjustment — — — — — 855 — 855

Unrealized translation gain (loss) on intercompany loans with foreign subsidiaries, net of taxes — — — — — 3,699 — 3,699

Interest rate swaps — — — — — ( 249 ) — ( 249 )

Net loss — — — — — — ( 155,192 ) ( 155,192 )

Balance at June 30, 2023 115,000 $ 114,935 32,654,615 $ 3 $ 616,556 $ 15,415 $ ( 464,190 ) $ 167,784

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2024 2023

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Amortization of deferred costs 6,076 6,667

Foreign currency re-measurement loss ( 164 ) ( 859 )

Foreign currency re-measurement gain

( 694 ) ( 882 )

Non-cash interest, net and other income, net ( 1,776 ) 1,152

1 unchanged sentence

Non-cash loss on impairment of goodwill 87,227 128,755

Non-cash loss on retirement of fixed assets 18 34

Changes in operating assets and liabilities, net of purchase business combinations:

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Taxes paid related to net share settlement of equity awards ( 563 ) ( 388 )

Issuance of common stock, net of issuance costs — 1

Additional consideration paid to sellers of businesses — ( 5,550 )

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(“Upland,” “we,” “us,” “our,” or the “Company”), a Delaware corporation, enables global businesses to work smarter with over 25 cloud software products that help increase revenue, reduce costs, and deliver business value.

Upland's solutions cover digital marketing, knowledge management, contact center service, sales productivity, and content lifecycle automation.

Upland's solutions offer many integrated AI capabilities and cover digital marketing, knowledge management, contact center service, sales productivity, and content lifecycle automation.

Upland services over 10,000 customers ranging from large global corporations and various government agencies to small and medium-sized businesses.

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Through a series of acquisitions and integrations, the Company has established a library of diverse software applications under the Upland brand that address specific digital transformation needs.

In addition to its strategy to increase core organic growth, Upland intends to pursue acquisitions within its cloud offerings of complementary technologies and businesses.

Upland expects that this will expand its product offerings, customer base and market access, resulting in increased benefits of scale.

In addition to its strategy to increase core organic growth, Upland may pursue acquisitions within its cloud offerings of complementary technologies and businesses.

Basis of Presentation and Summary of Significant Accounting Policies

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In the opinion of management of the Company, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, in all material respects, and include all adjustments of a normal recurring nature necessary for a fair presentation.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other period.

The results of operations for the six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other period.

The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2023 Annual Report on Form 10-K filed with the SEC on February 22, 2024.

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however, actual results could differ from those estimates.

Upland is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of May 2, 2024, the date of issuance of this Quarterly Report on Form 10-Q.

Upland is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of August 1, 2024, the date of issuance of this Quarterly Report on Form 10-Q.

These estimates may change as new events occur and additional information is obtained.

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To manage accounts receivable credit risk, the Company performs periodic credit evaluations of its customers and maintains current expected credit losses which considers such factors as historical loss information, geographic location of customers, current market conditions, and reasonable and supportable forecasts.

No individual customer represented more than 10% of total revenues for the three months ended March 31, 2024, or more than 10% of accounts receivable as of March 31, 2024 or December 31, 2023.

No individual customer represented more than 10% of total revenues for the six months ended June 30, 2024, or more than 10% of accounts receivable as of June 30, 2024 or December 31, 2023.

Recent Accounting Pronouncements

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Assets measured at fair value on a recurring basis are summarized below (in thousands):

Fair Value Measurements at March 31, 2024

Fair Value Measurements at June 30, 2024

Level 1 Level 2 Level 3 Total

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As the fair value measure is based on the market approach, they are categorized as Level 2.

The Company believes the carrying value of its long-term debt at March 31, 2024 approximates its fair value based on its variable interest rate feature and interest rates currently available to the Company.

The estimated fair value of the Company's debt, before debt discount, at March 31, 2024 and December 31, 2023 was $ 480.7 million and $ 482.1 million, respectively, based on valuation methodologies using interest rates currently available to the Company which are Level 2 inputs..

The Company believes the carrying value of its long-term debt at June 30, 2024 approximates its fair value based on its variable interest rate feature and interest rates currently available to the Company.

The estimated fair value of the Company's debt, before debt discount, at June 30, 2024 and December 31, 2023 was $ 479.4 million and $ 482.1 million, respectively, based on valuation methodologies using interest rates currently available to the Company which are Level 2 inputs..

Goodwill and Other Intangible Assets

Changes in the Company’s goodwill balance for the three months ended March 31, 2024 are summarized in the table below (in thousands):

Changes in the Company’s goodwill balance for the six months ended June 30, 2024 are summarized in the table below (in thousands):

Balance at December 31, 2023 $ 353,778

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Foreign currency translation adjustment ( 2,387 )

Balance at March 31, 2024 $ 264,012

As a result of the decline of our stock price impacting our market capitalization during the quarters ended March 31, 2024 and March 31, 2023, we performed quantitative impairment evaluations, which resulted in goodwill impairments of $ 87.2 million and $ 128.8 million, respectively.

Balance at June 30, 2024 $ 264,164

As a result of the decline of our stock price impacting our market capitalization during the quarter ended March 31, 2024, we performed a quantitative impairment evaluation, which resulted in a goodwill impairment of $ 87.2 million.

Our quantitative goodwill impairment analysis applied two methodologies to estimate the Company’s fair value which were:

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Amortization Net Carrying

March 31, 2024:

June 30, 2024:

Customer relationships 1 - 10

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Total intangible assets $ 483,318 $ 300,969 $ 182,349

Management recorded no impairments of intangible assets during the three months ended March 31, 2024 and March 31, 2023.

Management recorded no impairments of intangible assets during the three and six months ended June 30, 2024 and June 30, 2023.

The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value or revised useful life.

Total amortization expense was $ 13.5 million and $ 18.2 million during the three months ended March 31, 2024 and March 31, 2023, respectively.

As of March 31, 2024, the estimated annual amortization expense for the next five years and thereafter is as follows (in thousands):

Year ending December 31:

Remainder of 2024 $ 40,297

2029 and thereafter 5,644

Total $ 166,988

The Company’s income tax benefit for the three months ended March 31, 2024 and March 31, 2023 reflects its estimate of the effective tax rates expected to be applicable for the full years, adjusted for any discrete events that are recorded in the period in which they occur.

Total amortization expense was $ 13.5 million and $ 27.0 million during the three and six months ended June 30, 2024, respectively and $ 18.0 million and $ 36.1 million for the three and six months ended June 30, 2023, respectively.

The Company’s income tax benefit for the three and six months ended June 30, 2024 and June 30, 2023 reflects its estimate of the effective tax rates expected to be applicable for the full years, adjusted for any discrete events that are recorded in the period in which they occur.

The estimates are re-evaluated each quarter based on the estimated tax expense for the full year.

The income tax benefit of $ 0.5 million and $ 1.4 million for the three months ended March 31, 2024 and March 31, 2023, respectively, is primarily related to the deferred tax impacts of the goodwill impairments booked during the first quarter of 2024 and 2023, respectively.

The tax benefit is offset by the foreign income taxes associated with our combined non U.S.

The income tax expense of $ 1.2 million and $ 0.7 million for the three and six months ended June 30, 2024, respectively, is largely comprised of foreign income taxes associated with our combined non-U.S.

operations which is partially offset for the six months ended June 30, 2024 by the non-cash impact of deferred taxes related to the goodwill impairment recorded in the first quarter of 2024.

The income tax benefit of $ 0.2 million and $ 1.7 million for the three and six months ended June 30, 2023, respectively, is primarily related to the non-cash impact of deferred taxes related to the goodwill impairment recorded during the first quarter of 2023.

This tax benefit is offset by the foreign income taxes associated with our combined non-U.S.

operations, changes in deferred tax liabilities associated with amortization of United States tax deductible goodwill, and state taxes in certain states in which the Company does not file on a consolidated basis or have net operating loss carryforwards.

The Company historically incurred operating losses in the United States prior to 2021 and, given its cumulative losses and limited history of profits, has recorded a valuation allowance against its United States net deferred tax assets, exclusive of tax deductible goodwill, at March 31, 2024 and December 31, 2023, respectively.

The Company has reflected uncertain tax positions primarily within its long-term taxes payable and a portion within deferred tax assets for which the balance is immaterial at March 31, 2024.

The company has also recorded valuation allowances in Germany, Australia and the United Kingdom to offset larger losses in those jurisdictions.

The Company has reflected uncertain tax positions primarily within its long-term taxes payable and a portion within deferred tax assets for which the balance is immaterial at June 30, 2024.

The Company and its subsidiaries file tax returns in the U.S.

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federal income tax examinations for years ending before December 31, 2020 and is no longer subject to state and local or foreign income tax examinations by tax authorities for years ending before December 31, 2019, other than where cross-border transactions extend the statute of limitations.

The Company is not currently under audit in any federal, state or any foreign jurisdictions.

operating losses generated in years prior to 2020 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized.

Long-term debt consisted of the following at March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

Senior secured loans (includes unamortized discount of $ 4,800 and $ 5,376 based on an imputed interest rate of 7.6 % and 7.6 %, at March 31, 2024 and December 31, 2023, respectively)

Long-term debt consisted of the following at June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

Senior secured loans (includes unamortized discount of $ 4,288 and $ 5,376 based on an imputed interest rate of 7.6 % and 7.6 %, at June 30, 2024 and December 31, 2023, respectively)

$ 475,062 $ 476,674

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Total long-term debt $ 471,749 $ 473,502

In 2019, the Company entered into a credit agreement (the “Credit Facility”) which provides for (i) fully-drawn, 7 year, senior secured term loans (the “Term Loans”) and (ii) a $ 60 million, 5 year, revolving credit facility (the “Revolver”) that was undrawn as of March 31, 2024.

In August 2019, the Company entered into a credit agreement (the “Credit Facility”) which provides for (i) fully-drawn, 7 year, senior secured term loans (the “Term Loans”) maturing August 6, 2026 and (ii) a $ 60 million, 5 year, revolving credit facility (the “Revolver”) maturing August 6, 2024 that was undrawn as of June 30, 2024.

The Term Loans are repayable on a quarterly basis beginning on December 31, 2019 by an amount equal to 0.25 % ( 1.00 % per annum) of the aggregate principal amount of such loan.

Any amount remaining unpaid is due and payable in full on August 6, 2026 (the “Term Loan Maturity Date”).

Any amount remaining unpaid is due and payable in full on August 6, 2026.

At the option of the Company, the Term Loans accrue interest at a per annum rate based on (i) the Base Rate (as defined below) plus a margin of 2.75 % or (ii) the rate (not less than 0.00 %) published by CME Group Benchmark Administration Limited (CBA), or as otherwise determined in accordance with the Credit Facility (based on a period equal to 1, 2, 3 or 6 months or, if available and agreed to by all relevant Lenders and the Agent, 12 months or such period of less than 1 month) plus a margin of 3.75 %.

The Base Rate for any day is a rate per annum equal to the greatest of (i) the prime rate in effect on such day, (ii) the Federal Funds Effective Rate (not less than 0.00 %) in effect on such day plus ½ of 1.00%, and (iii) the Federal Funds Effective Rate for a one month interest period beginning on such day plus 1.00 %.

After giving effect to the interest rate swaps described below, $ 257.9 million of the Term Loans outstanding at March 31, 2024 has an effective annualized fixed interest rate of 5.4 %, and the remaining principal outstanding at March 31, 2024 has a floating interest rate of 9.2 % .

After giving effect to the interest rate swaps described below, $ 257.2 million of the Term Loans outstanding at June 30, 2024 has an effective annualized fixed interest rate of 5.4 %, and the remaining principal outstanding at June 30, 2024 has a floating interest rate of 9.2 % .

Accrued interest is paid quarterly or, with respect to Term Loans that are accruing interest based on the Federal Funds Effective Rate, at the end of the applicable interest rate period.

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The aggregate amount of outstanding Letters of Credit are reserved against the credit availability under the Maximum Revolver Amount.

As of March 31, 2024, the Company had no borrowings outstanding under the Revolver or related sub-facility.

As of June 30, 2024, the Company had no borrowings outstanding under the Revolver or related sub-facility.

The Company incurs a 0.50 % per annum unused line fee on the unborrowed balance of the Revolver which is paid quarterly.

Loans under the Revolver may be borrowed, repaid and reborrowed until August 6, 2024 (the “Maturity Date”), at which time all amounts borrowed under the Revolver must be repaid.

Loans under the Revolver may be borrowed, repaid and reborrowed until its maturity date, August 6, 2024, at which time any amounts borrowed under the Revolver must be repaid.

The Credit Facility contains customary affirmative and negative covenants.

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The Term Loans and Revolver are secured by substantially all of the Company's assets.

As of March 31, 2024 the Company was in compliance with all covenants under the Credit Facility.

As of June 30, 2024 the Company was in compliance with all covenants under the Credit Facility.

Interest rate swaps

In 2019, the Company entered into floating-to-fixed interest rate swap agreements to limit exposure to interest rate risk related to our debt, effectively converting the entire balance of the Company's Term Loans from variable interest payments to fixed interest rate payments, based on an annualized fixed rate of 5.4 %, for the 7 -year term of debt.

In August 2019, the Company entered into floating-to-fixed interest rate swap agreements to limit exposure to interest rate risk related to our debt, effectively converting the entire balance of the Company's Term Loans from variable interest payments to fixed interest rate payments, based on an annualized fixed rate of 5.4 %, for the 7 -year term of debt.

The interest rate associated with our undrawn $ 60 million Revolver remains floating.

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At that time, a $ 20.5 million gain was recorded in accumulated other comprehensive income related to the notional amount sold.

That gain is being released to interest expense, net as interest is accrued on the Company’s variable-rate debt over the remaining term of the Term Loans as a decrease to interest expense, net, the amortization of which totaled $ 1.5 million for the three months ended March 31, 2024.

As of March 31, 2024, $ 257.9 million of the Term Loans have an effective annualized fixed interest rate of 5.4 % due to the floating-to-fixed interest rate swaps, and the remaining principal has a floating interest rate as described above.

That gain is being released to interest expense, net as interest is accrued on the Company’s variable-rate debt over the

remaining term of the Term Loans as a decrease to interest expense, net, the amortization of which totaled $ 1.5 million and $ 2.9 million for the three and six months ended June 30, 2024, respectively.

Amounts reported in accumulated other comprehensive income related to the Company's derivatives are reclassified to interest expense, net as interest is accrued on the Company’s variable-rate debt.

The impact of the Company’s derivative financial instruments on its condensed consolidated statements of comprehensive (loss) income for the three months ended March 31, 2024 and March 31, 2023 was as follows (in thousands):

Three Months Ended March 31,

The impact of the Company’s derivative financial instruments on its condensed consolidated statements of comprehensive (loss) income for the three and six months ended June 30, 2024 and June 30, 2023 was as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Unrealized gain (loss) recognized in Other comprehensive income (loss) on interest rate swaps ( 956 ) $ 7,905 663 $ ( 249 )

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Total Other comprehensive income (loss) on interest rate swaps $ ( 2,441 ) $ 7,905 $ ( 2,279 ) $ ( 249 )

Cash interest costs averaged 7.2 % and 5.4 % for the three months ended March 31, 2024 and 2023, respectively.

In addition, as of March 31, 2024 and December 31, 2023 the Company had $ 4.8 million and $ 5.4 million, respectively, of unamortized deferred financing costs associated with the Credit Facility.

Cash interest costs averaged 7.2 % and 5.4 % for the six months ended June 30, 2024 and 2023, respectively.

In addition, as of June 30, 2024 and December 31, 2023 the Company had $ 4.3 million and $ 5.4 million, respectively, of unamortized deferred financing costs associated with the Credit Facility.

These financing costs will be amortized to non-cash interest expense over the remaining term of the Credit Facility.

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The following table sets forth the computations of loss per share (in thousands, except share and per share amounts):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net Loss $ ( 11,439 ) $ ( 15,147 ) $ ( 107,569 ) $ ( 155,192 )

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Net loss per common share, basic and diluted $ ( 0.47 ) $ ( 0.51 ) $ ( 3.92 ) $ ( 4.88 )

Due to the net losses for the three months ended March 31, 2024 and March 31, 2023, respectively, basic and diluted loss per share were the same.

Due to the net losses for the three and six months ended June 30, 2024 and June 30, 2023, respectively, basic and diluted loss per share were the same.

The Company uses the application of the if-converted method for calculating diluted earnings per share on our Series A Preferred Stock.

The Company applies the treasury stock method for calculating diluted earnings per share on our stock options, restricted stock units and performance restricted stock units.

The following table sets forth the anti–dilutive common share equivalents as of:

The Company applies the treasury stock method for calculating diluted earnings per share on our stock options, restricted stock units and performance-based restricted stock units.

Potential shares of common stock are excluded from the computation of diluted earnings per share when their effect would be antidilutive.

Performance-based restricted stock units are considered dilutive when the related performance criteria have been met assuming the end of the reporting period represents the end of the performance period.

All potential shares of common stock are antidilutive in periods of net loss.

Potential shares of common stock not included in the computation of earnings per share because their effect would have been antidilutive or because the performance criterion was not met were as follows (in thousands):

Contingently issuable shares associated with outstanding performance-based restricted stock units (each, a “PSU”) were not included in the basic earnings per share calculations for the periods presented, as the applicable vesting conditions had not been satisfied.

Stock options 122,530 152,683

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Total anti–dilutive common share equivalents 10,329,311 9,416,485

(1) As of March 31, 2024 , the Series A Preferred Stock plus accumulated dividends totaled $ 123.6 million.

(1) As of June 30, 2024 , the Series A Preferred Stock plus accumulated dividends totaled $ 125.0 million.

The Series A Preferred Stock has a conversion price of $ 17.50 per share, as detailed in “ Note 9.

Series A Convertible Preferred Stock ”.

Mezzanine Equity ”.

Commitments and Contingencies

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The Company does not anticipate that any current or pending legal proceedings will have a material adverse effect on the Company's condensed consolidated balances sheets or condensed consolidated statements of operations.

Mezzanine Equity

Series A Convertible Preferred Stock

On July 14, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Ulysses Aggregator, LP (the “Purchaser”), an affiliate of HGGC, LLC, to issue and sell at closing 115,000 shares of Series A Preferred Stock of the Company, par value $ 0.0001 per share, at a price of $ 1,000 per share (the “Initial Liquidation Preference”) for an aggregate purchase price of $ 115.0 million (the “Investment”).

The Company is using the proceeds of the Investment for general corporate purposes and for transaction-related fees and expenses.

On August 23, 2022 (the “Closing Date”), the closing of the Investment (the “Closing”) occurred, and the Series A Preferred Stock was issued to the Purchaser.

In connection with the issuance of the Series A Preferred Stock, the Company incurred direct and incremental expenses comprised of transaction fees, and financial advisory and legal expenses (the “Series A Preferred Stock Issuance Costs”), which reduced the carrying value of the Series A Preferred Stock.

As of March 31, 2024, the Series A Preferred Stock Issuance Costs totaled $ 4.6 million.

In connection with the issuance of the Series A Preferred Stock, the Company incurred direct and incremental expenses of $ 4.6 million comprised of transaction fees, and financial advisory and legal expenses (the “Series A Preferred Stock Issuance Costs”), which reduced the carrying value of the Series A Preferred Stock.

Contemporaneous with the Closing Date, the Company and the Purchaser entered into a Registration Rights Agreement (the “Registration Rights Agreement”) and the Company filed a Certificate of Designation (the “Certificate of Designation”) setting out the powers, designations, preferences, and other rights of the Series A Preferred Stock with the Secretary of State of the State of Delaware in connection with the Closing.

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The Series A Preferred Stock is also entitled to fully participate in any dividends paid to the holders of Common Stock in cash, in stock or otherwise, on an as-converted basis.

The Series A Preferred Stock had accrued unpaid dividends of $ 8.6 million as of March 31, 2024, representing 489,617 Common Stock shares upon conversion at $ 17.50 per share.

The Series A Preferred Stock had accrued unpaid dividends of $ 10.0 million as of June 30, 2024, representing 569,054 Common Stock shares upon conversion at $ 17.50 per share.

Liquidation Rights

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The Series A Preferred Stock will have distribution and liquidation rights senior to all other equity interests of the Company.

As of March 31, 2024, the Liquidation Preference of the Series A Preferred Stock was $ 123.6 million.

As of June 30, 2024, the Liquidation Preference of the Series A Preferred Stock was $ 125.0 million.

Optional Redemption

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Stockholders' Equity

Common and Preferred Stock

The common stock has a par value of 0.0001 per share.

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The holders of common stock are also entitled to receive dividends, when, if and as declared by our board of directors, whenever funds are legally available therefore, subject to the priority rights of any outstanding preferred stock.

See “ Note 9.

Series A Convertible Preferred Stock ” for a description of our Series A Preferred Stock, which is the only class of preferred stock outstanding.

Share repurchase program

In 2023, the Board of Directors authorized a stock repurchase program (the “Share Repurchase Plan”) in the aggregate amount of up to $ 25 million that would allow the Company to repurchase shares of its issued and outstanding Common Stock, from time to time in the open market or otherwise including pursuant to a Rule 10b5-1 trading plan and in compliance with Rule10b-18 under the Exchange Act so long as the aggregate purchase price paid for such transactions does not exceed $ 25 million for all such purchases.

The authorization does not have a specified expiration date.

Accordingly, unless terminated earlier by resolution of the Board, the Share Repurchase Plan will expire when the Company has repurchased all shares authorized for repurchase.

In September 2023, the Board of Directors authorized a stock repurchase program (the “Share Repurchase Plan”) in the aggregate amount of up to $ 25 million that allowed the Company to repurchase shares of its issued and outstanding Common Stock, from time to time in the open market or otherwise including pursuant to a Rule 10b5-1 trading plan and in compliance with Rule10b-18 under the Exchange Act so long as the aggregate purchase price paid for such transactions does not exceed $ 25 million for all such purchases.

The Share Repurchase Plan expired in May 2024 when the Company had repurchased all shares authorized for repurchase.

6,453,805 total shares were repurchased under the Share Repurchase Plan from September 2023 through its completion in May 2024.

In fiscal year 2024, the Company’s net stock repurchases are subject to a 1 percent excise tax under the Inflation Reduction Act.

The excise tax is included as a reduction to accumulated deficit in the condensed consolidated statements of stockholders equity.

Total accrued excise tax of $ 0.2 million is included in total cost of shares repurchases, excluded from average cost per share and excluded from total cash paid during the three months ended March 31, 2024 as amounts were unpaid at period end.

During the three months ended March 31, 2024, the Company repurchased and subsequently retired 2,242,654 shares of Common Stock, for a total of $ 7.9 million cash paid under the Share Repurchase Plan.

As of March 31, 2024, approximately $ 2.8 million remained available for additional share repurchases.

The Company is not obligated to acquire any particular amount of Common Stock and may modify or suspend the repurchases at any time in the Company’s discretion.

Total accrued excise tax of $ 0.2 million is included in total cost of shares repurchased, excluded from average cost per share and excluded from total cash paid during the three months ended June 30, 2024 as amounts were unpaid at period end.

During the three and six months ended June 30, 2024, the Company repurchased and subsequently retired 966,051 and 3,208,705 shares of Common Stock, respectively, for a total of $ 2.8 million and $ 11.0 million, respectively, cash paid under the Share Repurchase Plan.

As of June 30, 2024, the Share Repurchase Plan was complete and no further amounts are available for share repurchases.

Tax Benefit Preservation Plan and Preferred Stock Purchase Rights

On May 2, 2023, our Board of Directors authorized and declared a dividend of one preferred stock purchase right (a “Right”) for each outstanding share of Common Stock of the Company as of May 12, 2023 (the “Record Date”).

The preferred stock purchase rights (“the 2023 Rights”), as described in the Tax Benefit Preservation Plan dated as of May 2, 2023, by and between Upland Software, Inc.

and Broadridge Corporate Issuer Solutions, LLC, as Rights Agent, (the “2023 Tax Benefit Preservation Plan”), expired on May 1, 2024, pursuant to the terms of the 2023 Tax Benefit Preservation Plan.

The Company filed a Form 15-12G on May 29, 2024 to terminate the registration of the 2023 Rights.

On June 5, 2024 at the Company’s annual meeting of stockholders, the Company’s stockholders approved the 2024 Tax Benefit Preservation Plan between the Company and Broadridge Corporate Issuer Solutions, LLC, as Rights Agent (the “2024 Tax Benefit Preservation Plan”), which had previously been approved by the Company’s Board of Directors on April 12, 2024, subject to stockholder approval.

Also on April 12, 2024, the Board of Directors declared, subject to approval by the stockholders at the annual meeting, a dividend of one preferred stock purchase right (a “2024 Right”) for each outstanding share of Common Stock payable as of June 15, 2024.

27,030,605 2024 Rights were issued to the holders of record of shares of Common Stock.

The description and terms of the Rights are set forth in a Tax Benefit Preservation Plan, dated as of May 2, 2023, as the same may be amended from time to time (the “Plan”), between the Company and Broadridge Corporate Issuer Solutions, LLC, as Rights Agent.

By adopting the Plan, the Board of Directors is seeking to protect the Company’s ability to use its net operating loss carryforwards (“NOLs”) and other tax attributes to offset potential future income tax liabilities.

The description and terms of the 2024 Rights are set forth in the 2024 Tax Benefit Preservation Plan.

The Company filed a Form 8-A to register the 2024 Rights on June 5, 2024.

By adopting the 2024 Tax Benefit Preservation Plan, the Board of Directors is seeking to protect the Company’s ability to use its net operating loss carryforwards (“NOLs”) and other tax attributes to offset potential future income tax liabilities.

The Company’s ability to use such NOLs and other tax attributes would be substantially limited if the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code (the “Code”).

Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more “five percent stockholders” increases by more than fifty percentage points over the lowest percentage of stock owned by such stockholders at any time during the prior three-year period or, if sooner, since the last “ownership change” experienced by the Company.

The Plan is intended to make it more difficult for the Company to undergo an ownership change by deterring any person from acquiring 4.9 % or more of the outstanding shares of stock without the approval of the Board of Directors.

The Board of Directors believes it is in the best interest of the Company and its stockholders to reduce the likelihood of an ownership change, which could harm the Company’s future operating results by effectively increasing the Company future tax liabilities.

The 2024 Tax Benefit Preservation Plan is intended to make it more difficult for the Company to undergo an ownership change by deterring any person from acquiring 4.9 % or more of the outstanding shares of stock without the approval of the Board of Directors.

The Board of Directors believes it is in the best interest of the Company and its stockholders to

reduce the likelihood of an ownership change, which could harm the Company’s future operating results by effectively increasing the Company future tax liabilities.

The 2024 Rights trade with, and are inseparable from, the Common Stock, and the record holders of shares of Common Stock are the record holders of the 2024 Rights.

The 2024 Rights are evidenced only by certificates (or, in the case of uncertificated shares, by notations in the book-entry account system) that represent shares of Common Stock.

Rights will also be issued in respect of any shares of Common Stock that shall become outstanding after the Record Date (including upon conversion of any shares of Series A Preferred Stock of the Company) and, subject to certain exceptions specified in the Plan, prior to the earlier of the Distribution Date (as defined below) and the Expiration Date (as defined below).

2024 Rights will also be issued in respect of any shares of Common Stock that shall become outstanding after the Record Date (including upon conversion of any shares of Series A Preferred Stock of the Company) and, subject to certain exceptions specified in the 2024 Tax Benefit Preservation Plan, prior to the earlier of the Distribution Date (as defined below) and the Expiration Date (as defined below).

The 2024 Rights are not exercisable until the Distribution Date.

After the Distribution Date, each Right will be exercisable to purchase from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $ 0.0001 per share, of the Company (the “Series B Preferred”), at a purchase price of $18.00 per one one-thousandth of a share of Series B Preferred (the “Purchase Price”), subject to adjustment as provided in the Plan.

After the Distribution Date, each 2024 Right will be exercisable to purchase from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $ 0.0001 per share, of the Company (the “Series B Preferred”), at a purchase price of $15.25 per one one-thousandth of a share of Series B Preferred (the “Purchase Price”), subject to adjustment as provided in the 2024 Tax Benefit Preservation Plan.

The “Distribution Date” is the earlier of (i) the close of business on the tenth day after the public announcement that a person or group has become an Acquiring Person (as defined below) or that discloses information which reveals the existence of an Acquiring Person or such earlier date as a majority of the Board shall become aware of the existence of an Acquiring Person (the date described in this clause (i), the “Stock Acquisition Date”) and (ii) the close of business on the tenth business day (or such later date as the Board of Directors shall determine prior to such time as any person or group becomes an Acquiring Person) after the date that a tender or exchange offer by any person is commenced, the consummation of which would result in such person becoming an Acquiring Person.

A person or group becomes an “Acquiring Person” upon acquiring beneficial ownership of 4.9 % or more of the outstanding shares of Common Stock, except in certain situations specified in the Plan.

The Rights will expire on the earliest of (a) the close of business on May 1, 2024, (b) the time at which the Rights are redeemed or exchanged pursuant to the Plan, or (c) the time at which the Board of Directors determines that the Tax Benefits are utilized in all material respects or that an ownership change under Section 382 of the Code would not adversely impact in any material respect the time period in which the Company could use the Tax Benefits, or materially impair the amount of the Tax Benefits that could be used by the Company in any particular time period, for applicable tax purposes (such earliest date, the “Expiration Date”).

A person or group becomes an “Acquiring Person” upon acquiring beneficial ownership of 4.9 % or more of the outstanding shares of Common Stock, except in certain situations specified in the 2024 Tax Benefit Preservation Plan.

The 2024 Rights will expire on the earliest of (a) the close of business on June 4, 2027, (b) the time at which the Rights are redeemed or exchanged pursuant to the 2024 Tax Benefit Preservation Plan, or (c) the time at which the Rights are exchanged as provided in the 2024 Tax Benefit Preservation Plan, or (d) the time at which the Board of Directors determines that the Tax Benefits are utilized in all material respects or that an ownership change under Section 382 of the Code would not adversely impact in any material respect the time period in which the Company could use the Tax Benefits, or materially impair the amount of the Tax Benefits that could be used by the Company in any particular time period, for applicable tax purposes (such earliest date, the “Expiration Date”).

Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company by virtue of holding such Right, including, without limitation, the right to vote and to receive dividends.

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No adjustments to the Purchase Price of less than 1 % are required to be made.

In connection with the adoption of the Plan, the Board of Directors approved a Certificate of Designations of the Series B Junior Participating Preferred Stock (the “Certificate of Designations”).

In connection with the adoption of the 2023 Tax Benefit Preservation Plan, the Board of Directors approved a Certificate of Designations of the Series B Junior Participating Preferred Stock (the “Certificate of Designations”).

The Certificate of Designations was filed with the Secretary of State of the State of Delaware on May 2, 2023.

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• If shares of Common Stock are exchanged as a result of a merger, consolidation, or a similar transaction, will entitle holders to a per share payment equal to the payment made on one share of Common Stock.

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income (Loss)

Comprehensive income consists of two elements, net loss and other comprehensive income (loss).

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The following table shows the components of accumulated other comprehensive income (loss), net of income taxes, (“AOCI”) in the stockholders’ equity section of our condensed consolidated balance sheets at the dates indicated (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Foreign currency translation adjustment $ ( 22,766 ) $ ( 19,947 )

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Realized gain on interest rate swap sale, net of amounts reclassified into interest expense, net 12,233 15,175

Total accumulated other comprehensive income $ 2,307 $ 6,168

Total accumulated other comprehensive income (loss)

$ ( 600 ) $ 6,168

The Company has intercompany loans that were used to fund the acquisitions of foreign subsidiaries.

Due to the long-term nature of the loans, the unrealized translation gains (losses) resulting from re-measurement are recognized as a component of AOCI.

The unrealized translation gains (losses) on intercompany loans with foreign subsidiaries as of March 31, 2024 is net of income tax expense of $ 3.2 million.

The tax provision (benefit) to unrealized translation gains (losses) on intercompany three months ended March 31, 2024 and March 31, 2023 was $ 0.1 million benefit and $ 0.5 million detriment, respectively.

The unrealized translation gains (losses) on intercompany loans with foreign subsidiaries as of June 30, 2024 is net of income tax expense of $ 3.1 million.

The tax benefit related to unrealized translation gains (losses) on intercompany loans for the three and six months ended June 30, 2024 was $ 0.1 million and $ 0.2 million, respectively.

The tax provision related to unrealized translation gains (losses) on intercompany loans for the three and six months ended June 30, 2023 was $ 0.5 million and $ 1.0 million, respectively.

The income tax expense/benefit allocated to each component of other comprehensive income for all other periods and components is not material.

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Stock-Based Compensation

The Company recognizes stock-based compensation expense from all awards in the following expense categories included in our condensed consolidated statements of income were as follows (in thousands):

Three Months Ended March 31,

Cost of revenue $ 186 $ 302

Research and development 606 655

Sales and marketing 397 576

General and administrative 2,333 4,929

Total $ 3,522 $ 6,462

Restricted Stock Units (“RSU”) and Performance-Based Restricted Stock Units (“PSU”)

Beginning in 2019, the Company began granting restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) under its 2014 Equity Incentive Plan, in lieu of restricted stock awards, primarily for stock plan administrative purposes.

Since 2022, fifty percent of the equity awards granted to our Chief Executive Officer were PSUs.

The 2024 and 2023 PSU agreements provide that the quantity of units subject to vesting may range from 0 % to 300 % and 0 % to 200 %, respectively, of the units granted based on the Company's absolute total shareholder return (“TSR”) at the end of the 36 month performance periods.

The following table summarizes PSU and RSU activity during the three months ended March 31, 2024:

The Company’s stock-based compensation generally includes awards of restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”).

Key employees, officers and directors of the Company and its consultants or advisors are eligible to receive awards.

On June 5, 2024, the Company’s stockholders approved the Upland Software, Inc.

2024 Omnibus Incentive Plan (the “2024 Equity Plan”).

No further awards will be made under the Upland Software, Inc.

2014 Equity Incentive Plan (the “Prior Plan”) or the Amended and Restated Upland Software, Inc.

2010 Stock Option Plan (the “2010 Plan”).

As of June 30, 2024, there were 122,530 outstanding options that were previously granted under the 2010 Plan and the Prior Plan.

The Company no longer grants stock options;

however if the outstanding options were to be forfeited or otherwise canceled without the issuance of shares, the shares underlying those stock options will become available for issuance under the 2024 Equity Plan.

As of June 30, 2024, there were 3,066,299 outstanding RSU and PSU awards under the Prior Plan that will remain outstanding and subject to the terms of the Prior Plan and the respective award agreements, until the vesting, expiration or lapse of such awards in accordance with their terms.

Any shares covered by awards granted under the Prior Plan will become available for issuance under the 2024 Equity Plan if the award (or a portion of such award) is forfeited, canceled or expires without the issuance of shares.

The following table summarizes PSU and RSU activity during the six months ended June 30, 2024:

Number of Units Weighted-Average Grant Date Fair Value

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Forfeited ( 123,821 ) 10.17

Unvested restricted units outstanding as of March 31, 2024 3,287,337 $ 6.51

The PSU and RSU activity table above includes PSU units granted that are based on a 100 % target payout.

Compensation expense is recognized over the required service period of the grant.

Unvested restricted units outstanding as of June 30, 2024 3,066,299 $ 6.07

The PSU and RSU activity table above includes 100,000 PSUs granted in 2023 and 250,000 PSUs granted in 2024 based on a 100 % target payout.

Compensation cost related to awards is based on the fair market value at the time of the grant.

The fair value of the RSUs is determined based on the grant date fair value of the award.

The fair value of the PSUs is determined using the Monte Carlo simulation model and is not subject to fluctuation due to achievement of the underlying market-based target.

Significant assumptions used in the Monte Carlo simulation model for the PSUs granted during the three months ended March 31, 2024 and year ended December 31, 2023 are as follows:

March 31, 2024 December 31, 2023

Compensation expense for RSUs is recognized over the required service period of the grant.

The PSUs vest upon the achievement of specified market performance thresholds.

The PSUs have a vesting condition that is tied to the Company’s total shareholder return based on the Company’s stock performance up to a maximum of 200 % and 300 %, depending on the specified performance condition and the level of achievement obtained, for the 2023 PSUs and 2024

PSUs, respectively.

The fair value of PSUs is determined using the Monte Carlo simulation model.

Compensation expense for PSUs is recognized over the requisite service period and is not subject to adjustment regardless of whether the PSUs meet the performance metric.

The range of significant assumptions used in the Monte Carlo simulation model for the PSUs granted during the six months ended June 30, 2024 was as follows:

Expected volatility 74.6 % - 62.06 %

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Dividend yield —

Stock Option Activity

Stock option activity during the three months ended March 31, 2024 was as follows:

Outstanding Weighted–

Outstanding at December 31, 2023 149,914 $ 11.44

Options expired ( 8,215 ) 6.22

Outstanding at March 31, 2024 141,699 $ 11.72

The Company recognizes stock-based compensation expense from all awards in the following expense categories included in our condensed consolidated statements of income (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Cost of revenue $ 199 $ 301 $ 385 $ 604

Research and development 638 648 1,244 1,303

Sales and marketing 362 558 759 1,134

General and administrative 3,934 4,863 6,267 9,791

Total $ 5,133 $ 6,370 $ 8,655 $ 12,832

Revenue Recognition

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Professional services provided with subscription and support licenses and perpetual licenses consist of implementation fees, data extraction, configuration, and training.

The Company’s implementation and configuration services do not involve

significant customization of the software and are not considered essential to the functionality.

The Company’s implementation and configuration services do not involve significant customization of the software and are not considered essential to the functionality.

Revenue from professional services are recognized over time as such services are performed.

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Our payment terms vary by the type and location of our customer and the products or services offered.

The term between invoicing and when payment is due is not significant.

The term between invoicing and

when payment is due is not significant.

For certain products or services and customer types, we require payment before the products or services are delivered to the customer.

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Unbilled receivables represent amounts for which the Company has recognized revenue, pursuant to its revenue recognition policy, for software licenses already delivered and professional services already performed, but invoiced in arrears and for which the Company believes it has an unconditional right to payment.

As of March 31, 2024 and December 31, 2023, unbilled receivables were $ 3.2 million and $ 2.7 million, respectively.

As of June 30, 2024 and December 31, 2023, unbilled receivables were $ 3.5 million and $ 2.7 million, respectively.

Deferred Commissions

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Deferred commissions are reviewed for impairment whenever events or circumstances indicate their carrying value may not be recoverable consistent with the Company's long-lived assets policy.

No indicators of impairment were identified during the three months ended March 31, 2024.

Amortization of deferred commissions in excess of commissions capitalized for the three months ended March 31, 2024 was $ 0.7 million.

No indicators of impairment were identified during the six months ended June 30, 2024.

Amortization of deferred commissions in excess of commissions capitalized for the three and six months ended June 30, 2024 was $ 0.3 million and $ 1.0 million, respectively.

Deferred Revenue

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Deferred revenue is mainly unearned revenue related to subscription services and support services.

During the three months ended March 31, 2024, we recognized $ 45.5 million and $ 1.2 million of subscription services and professional services revenue, respectively, that was included in the deferred revenue balances at the beginning of the period.

During the six months ended June 30, 2024, we recognized $ 72.7 million and $ 1.8 million of subscription services and professional services revenue, respectively, that was included in the deferred revenue balances at the beginning of the period.

Remaining Performance Obligations

As of March 31, 2024, approximately $ 258.4 million of revenue is expected to be recognized from remaining performance obligations.

As of June 30, 2024, approximately $ 252.7 million of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 69 % of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

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Information about these operations is presented below (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Subscription and support:

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United Kingdom 56 69 155 292

Canada 93 14 152 56

Other International 702 448 1,323 1,098

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

What changed 10-Q

Item 1. Financial Statements