ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Except for the historical information contained herein, the matters discussed in this Form 10-K include certain forward-looking statements that involve risks and uncertainties, which are intended to be covered by safe harbors. Those statements include, but are not limited to, all statements regarding our and management’s intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. We generally use words such as “believe,” “may,” “could,” “will,” “intend,” “expect,” “anticipate,” “plan,” and similar expressions to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons including our ability to implement our business plan, our ability to raise additional funds and manage consumer acceptance of our products, our ability to broaden our customer base, our ability to maintain a satisfactory relationship with our suppliers and other risks described in our reports filed with the Securities and Exchange Commission, including Item 1A of this Report on Form 10-K. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, the factors set forth under the Risk Factors section of this report. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. All forward-looking statements made in this Form 10-K are based on information presently available to our management. We do not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in our expectations, except as required by law.
Results of Operations
The following table presents certain amounts included in our consolidated statements of income, the relative percentage that those amounts represent to revenue, and the change in those amounts from fiscal year 2025 compared to 2024. The data below is comprised of results from continuing operations only and does not include results from discontinued operations. For more information regarding continuing and discontinued operations, see Note 3 to our Consolidated Financial Statements for the years ended December 31, 2025 and 2024.
Comparison of results of operations for the years ended December 31, 2025 and 2024 (in thousands):
Percentage of Revenue
Revenue
Cost of revenue
Gross margin
Operating Expenses:
General and administrative
Sales and marketing
Product development
Depreciation and amortization
Impairment loss on intangible assets
Total operating expenses
Operating loss
Interest expense, net
Other income (expense)
Loss from continuing operations before income taxes
Income tax benefit
Net loss from continuing operations
Revenue
Total revenue decreased by $438,000, or 2%, to $22,619,000 during the year ended December 31, 2025, as compared to $23,057,000 in 2024. The decrease is primarily related to decrease in revenue from our PRO plan products and webcasting and events business, partially offset by an increase in revenue from our core press release business driven by increases in subscriptions.
Deferred Revenue
As of December 31, 2025, our deferred revenue balance was $5,265,000, which we expect to recognize primarily over the next twelve months, compared to $4,743,000 as of December 31, 2024, an increase of 11%. Deferred revenue primarily consists of advance billings for pre-paid packages of our news distribution products as well as advance billings for subscriptions of our cloud-based products.
Cost of Revenue
Cost of revenue consists primarily of direct labor costs, newswire distribution costs, teleconferencing costs and third-party licensing costs. Cost of revenue decreased by $312,000, or 6%, during the year ended December 31, 2025, as compared to the same period of 2024. The decrease was primarily related to a decrease in headcount and optimization of operational teams, partially offset by an increase in distribution costs of our newswire business. Overall gross margin decreased $126,000, or 1%, during the year ended December 31, 2025, compared to 2024, primarily due to the decline in revenue. As a result, overall gross margin percentage increased 1% to 77% during the year ended December 31, 2025, as compared to the prior year.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, stock-based compensation, insurance, fees for professional services, general corporate expenses (including bad debt expense) and facility and equipment expenses. General and administrative expenses were $7,151,000 for the year ended December 31, 2025, an increase of $151,000 or 2%, as compared to the prior year. During the year-ended December 31, 2025, general and administrative were impacted by an increase in one-time costs for the year of $484,000 partially offset by a decrease in employee-related expenses due to a decrease in corporate headcount. During the year ended December 31, 2024, general and administrative expenses were favorably impacted by a benefit of $340,000 to stock compensation expense as a result of the resignation of an executive officer.
As a percentage of revenue, General and administrative expenses were 32% for the year ended December 31, 2025, as compared to 30% for 2024.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of salaries, stock-based compensation, sales commissions, advertising expenses and other marketing expenses. Sales and marketing expenses were $6,405,000 for the year ended December 31, 2025, a decrease of $675,000, or 10%, as compared to $7,080,000 in the prior year. This decrease is primarily due to a decrease in employee-related expenses and commissions due to lower headcount and overall revenues.
As a percentage of revenue, sales and marketing expenses were 28% for the year ended December 31, 2025, as compared to 31% for 2024.
Product Development Expenses
Product development expenses consist primarily of salaries, stock-based compensation, bonuses and licenses to develop new products and technology to complement and/or enhance tour platform . Product development expenses decreased $129,000, or 5%, to $2,692,000 during the year ended December 31, 2025, as compared to $2,821,000 during the year ended December 31, 2024. This decrease is primarily due to a decrease in headcount and consulting expense, partially offset by a decrease in capitalized costs during the periods. During the year ended December 31, 2025, we capitalized $172,000 of costs related to the development of our news distribution systems and internal reporting platforms, compared to $597,000 during the year-ended December 31, 2024.
As a percentage of revenue, product development expenses was consistent at 12% for the year ended December 31, 2025 and 2024, respectively.
Depreciation and Amortization Expenses
During the year ended December 31, 2025, depreciation and amortization expenses decreased by $21,000 or 1%, to $2,687,000, as compared to $2,708,000 during 2024.
Impairment loss
On December 18, 2025, we entered into a Commercial Sublease Agreement (the “Sublease”), to lease 100% of our corporate headquarters for the remaining term of the lease, commencing on March 1, 2026 through December 31, 2027. As a result of the Sublease, the Company recorded an impairment charge of $250,000 for the year ended December 31, 2025. The impairment loss was allocated between our right-of-use-asset for the office lease in the amount of $187,000 and our leasehold improvements of $63,000.
During the year ended December 31, 2025, we performed our annual assessment for impairment of goodwill and intangible assets and determined there was no impairment charge. During the year ended December 31, 2024, an impairment charge of $14,150,000 associated with the Newswire trademarks was required. As a result of our rebranding to ACCESS Newswire, management determined the useful life of the Newswire trademarks to be 5 years as opposed to the original 15 years upon the initial valuation in 2022. This decrease caused a decrease in the expected cashflows the assets will generate, which resulted in the impairment charge.
Interest Expense, net
We recognized interest expense of $371,000 and $1,167,000 during the years ended December 31, 2025 and 2024, respectively, related to our long-term Credit Agreement. Interest expense, net was partially offset by interest income of $369,000 and $60,000 for the year ended December 31, 2025, and 2024, respectively, from deposit and money market accounts.
Other income (expense)
Other income (expense) represents the change in fair value of our interest rate swap.
Income Taxes
We recorded income tax benefit of $395,000 during the year ended December 31, 2025, compared to $4,064,000 during the year ended December 31, 2024. The difference in our effective tax rate as of December 31, 2025 and 2024, and the statutory rate of 21% is primarily attributable to state income taxes. For the year ended December 31, 2025, this was partially offset by the impact of stock-based compensation and foreign taxes.
Liquidity and Capital Resources
As of December 31, 2025, we had $3,025,000 in cash and cash equivalents and $3,884,000 in net accounts receivable. Current liabilities from continuing operations as of December 31, 2025, totaled $9,538,000 including the current portion of our long-term debt, accounts payable, deferred revenue, accrued payroll liabilities, income taxes payable, current portion of lease liabilities and other accrued expenses.
As of December 31, 2025, our current liabilities from continuing operations exceeded our current assets from continuing operations by $1,116,000. While our current liabilities from continuing operations exceed current assets from continuing operations, we believe our ability to renegotiate our Credit Agreement and ability to continue to generate cash will benefit us in the future.
As of December 31, 2025, the aggregate principal amount available under our Revolving LOC was $1,500,000 and is set to expire June 30, 2026. We currently have no plans to utilize the Revolving LOC but may do so in the future. If the Company does utilize any funds under the Revolving LOC, the funds will bear interest at a per annum rate equal to the then current SOFR plus 2.05%. As of December 31, 2025, there was no outstanding balance under the Revolving LOC and the interest rate was 5.74%. See Note 6 to our financial statements for additional information.
Disclosure about Off-Balance Sheet Arrangements
We do not have any transactions, agreements or other contractual arrangements that constitute off-balance sheet arrangements.
Non-GAAP Measures
The non-GAAP adjustments referenced below and herein relate to the exclusion of stock-based compensation, amortization of acquisition-related intangible assets. and other expenses the Company believes to be non-recurring. A reconciliation of GAAP to non-GAAP historical financial measures has been provided in the tables below.
Management believes that the use of EBITDA from continuing operations, Adjusted EBITDA from continuing operations, non-GAAP net income (loss) from continuing operations, non-GAAP net income (loss) from continuing operations per share, free cash flow and adjusted free cash flow is helpful to its investors. These measures, which are referred to as non-GAAP financial measures, are not prepared in accordance with generally accepted accounting principles in the United States, or GAAP. Our management uses these non-GAAP financial measures as tools for financial and operational decision making and for evaluating our own operating results over different periods of time.
EBITDA from continuing operations is calculated by excluding depreciation and amortization, interest expense, net, and income taxes from the loss from continuing operations. Adjusted EBITDA also excludes certain other expenses which the Company believes to be non-recurring as well as the gain or loss on the change in fair value of our interest rate swap.
Non-GAAP net income (loss) from continuing operations is calculated by excluding stock-based compensation expense and amortization expense for acquisition-related intangible assets from loss from continuing operations and certain other adjustments noted in the tables below. Non-GAAP net income (loss) from continuing operations per share is calculated by dividing non-GAAP net income (loss) from continuing operations by the weighted-average diluted shares outstanding as presented in the calculation of GAAP net income (loss) from continuing operations per share. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expenses, management believes that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between its operating results from period to period. For business combinations, management generally allocates a portion of the purchase price to intangible assets. The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization. The amount of purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition and thus management does not believe they are reflective of ongoing operations.
Free cash flow, a non-GAAP measure, represents cash flow from operating activities less purchases of property and equipment and capitalized software. Adjusted free cash flow also deducts certain cash payments which the Company believe to be non-recurring in nature. Management considers free cash flow and adjusted free cash flow to be liquidity measures that provide useful information to investors about the amount of cash generated or used by the business.
Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on our reported financial results.
The presentation of non-GAAP financial information below and herein are not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Investors should review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below and not rely on any single financial measure to evaluate our business.
A reconciliation of net income to adjusted EBITDA for the years ended December 31, 2025 and 2024 is presented in the following table (in thousands):
Year Ended December 31,
Amount
Amount
Net loss from continuing operations:
Adjustments:
Impairment loss
Depreciation and amortization
Interest expense, net
Income tax benefit
EBITDA
Acquisition and/or integration costs (1)
Other non-recurring expenses (2)
Stock-based compensation expense (3)
Adjusted EBITDA:
This adjustment gives effect to one-time corporate projects, including divestiture, acquisition and integration related expenses, incurred during the periods.
For the year ended December 31, 2025, this adjustment gives effect to a loss recorded on the change in fair value of our interest rate swap of $80,000, as well as corporate re-brand costs of $154,000 and non-recurring fees of $629,000. For the year ended December 31, 2024, this adjustment gives effect to a gain recorded on the change in fair value of our interest rate swap of $81,000, as well as a one-time accounting fees, termination benefits and other non-recurring or unusual expense of $219,000.
The adjustments represent stock-based compensation expense related to awards of stock options, restricted stock units, or common stock in exchange for services. Although we expect to continue to award stock in exchange for services, the amount of stock-based compensation is excluded as it is subject to change as a result of one-time or non-recurring projects.
A reconciliation of net income to adjusted net income for the years ended December 31, 2025 and 2024 is presented in the following table (in thousands):
Year Ended December 31,
Amount
Per diluted
share
Amount
Per diluted
share
Net loss from continuing operations:
Adjustments:
Impairment loss (1)
Amortization of intangible assets (2)
Stock-based compensation expense (3)
Other unusual items (4)
Tax impact of adjustments (5)
Impact of discrete items impacting income tax expense (6)
Non-GAAP net income:
Weighted average number of common shares outstanding – diluted
The adjustment represents the impairment loss on right-of-use asset and leasehold improvements due to the Company’s sublease for the year ended December 31, 2025, and intangible assets for the year ended December 31, 2024.
The adjustments represent the amortization of intangible assets related to acquired assets and companies.
The adjustments represent stock-based compensation expense related to awards of stock options, restricted stock units, or common stock in exchange for services. Although we expect to continue to award stock in exchange for services, the amount of stock-based compensation is excluded as it is subject to change as a result of one-time or non-recurring projects.
For the year ended December 31, 2025, this adjustment gives effect to a loss recorded on the change in fair value of our interest rate swap of $80,000, as well as corporate re-brand costs of $154,000 and one-time non-recurring expenses, including acquisition and/or integration expenses of $885,000. For the year ended December 31, 2024, this adjustment gives effect to a gain recorded on the change in fair value of our interest rate swap of $81,000, as well as, one-time accounting fees, termination benefits and other non-recurring or unusual expenses, including acquisition and/or integration expenses of $408,000.
This adjustment gives effect to the tax impact of all non-GAAP adjustments at the current Federal tax rate of 21%.
This adjustment eliminates discrete items impacting income tax expense. For the year ended December 31, 2025 and 2024, discrete items relate to additional income tax expense recorded during the period associated with vesting of stock-based compensation awards.
For the years ended December 31, 2025 and 2024, free cash flow and adjusted free cash flow were as follows:
Year Ended December 31,
Net cash provided by (used in) operating activities of continuing operations (US GAAP)
Payments for purchase of fixed assets and capitalized software
Free cash flow (Non-GAAP)
Cash paid for acquisition and integration related items (1)
Cash paid for other unusual items (2)
Adjusted free cash flow (Non-GAAP)
This adjustment gives effect to one-time corporate projects, including acquisition and/or integration related expenses, paid during the periods.
For the year ended December 31, 2025 and 2024, this adjustment gives effect to payments for one-time accounting fees, termination benefits and other non-recurring or unusual expenses.
Outlook
The following statements are forward-looking and are subject to factors that could cause actual results to differ materially from those suggested here, including, without limitation, demand for and acceptance of our services, new developments, competition and general economic or market conditions, particularly in the domestic and international capital markets. Refer also to the Cautionary Statement Concerning Forward Looking Statements included in this report.
Market factors like the current military conflicts in Ukraine, Israel and the Middle East, tariff wars, instability in global energy markets, global inflation and fluctuations in interest rates have contributed to significant global economic and political uncertainty, disrupted global trade and supply chains, adversely impacted many industries, and contributed to significant volatility in financial markets. Overall, despite many uncertainties in the market regarding the economic and political outlook, we believe the demand for our platforms and services is stable in a majority of the markets we serve.
We believe there is demand for our products around the world as companies seek to find better platforms and tools to disseminate and communicate their messages in a more efficient and collaborative way.
We also believe the continued transition to a platform subscription model has been and will continue to be key for our long-term sustainable growth. We will also continue to focus on the following key strategic initiatives during the remainder of 2026:
Expanding our products and adapting to this changing industry,
Expanding customer base,
Expanding our newswire distribution,
Investing in technology advancements and upgrades,
Evaluating acquisitions in areas of strategic focus,
Generating profitable sustainable growth
Generating cash flows from operations.
Critical Accounting Policies and Estimates
The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. Significant intercompany accounts and transactions are eliminated in consolidation.
Revenue Recognition
Substantially all the Company’s revenue comes from contracts with customers for its press release distribution and related products, investor relations website hosting or data feeds, events and webcast offerings and subscriptions to its incident hotline. Customers consist of public corporate issuers and professional firms, such as investor and public relations firms. In the case of news distribution and webcasting offerings, customers also include private companies. The Company accounts for a contract with a customer when there is an enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has economic substance, and collectability of the contract consideration is probable. The Company's revenues are measured based on consideration specified in the contract with each customer.
The Company's contracts include either a subscription to its entire platform, certain modules within the platform or to its Press Release Optimizer Plan (“PRO”), or an agreement to perform services, or any combination thereof, and often contain multiple subscriptions and services. For these bundled contracts, the Company accounts for individual subscriptions and services as separate performance obligations if they are distinct, which is when a product or service is separately identifiable from other items in the bundled package, and a customer can benefit from it on its own or with other resources that are readily available to the customer. Performance obligations include providing subscriptions to certain modules or our entire platform, distributing press releases on a per release basis or conducting webcasts, virtual annual meetings, or other events on a per event basis. PRO subscription contracts contain two performance obligations: (i) the first is a series of distinct services that include, but are not limited to, developing specific media plans, and creating content to be distributed and (ii) the second performance obligation being access to the PRO platform along with distribution of press releases, ongoing support, and assessment of performance as a stand-ready obligation. The Company’s subscription and service contracts are generally for one year, with automatic renewal clauses included in the contract until the contract is cancelled. The contracts do not contain any rights of returns, guarantees, or warranties. Since contracts are generally for one year, all the revenue is expected to be recognized within one year from the contract start date. As such, the Company has elected the optional exemption that allows the Company not to the transaction price allocated to performance obligations that are or partially at the end of each reporting period.
The Company recognizes revenue for subscriptions evenly over the contract period, upon distribution for pay per release or packages of press releases and upon event completion for webcasting and virtual annual meeting events. For service contracts that include stand-ready obligations, revenue is recognized evenly over the contract period. For all other services delivered on a per project or event basis, the revenue is recognized at the completion of the event. The Company believes recognizing revenue for subscriptions and stand ready obligations using a time-based measure of progress, best reflects the Company’s performance in satisfying the obligations.
For bundled contracts, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the subscription or service. If a standalone selling price is not directly observable, the Company uses the residual method to allocate any remaining price to that subscription or service. The Company reviews standalone selling prices, at least annually, and updates these estimates if necessary.
Accounts Receivable and Allowance for Credit Losses
The Company calculates its allowance for credit losses using an expected losses model rather than using incurred losses. The model is based on the credit losses expected to arise over the life of the asset based on the Company’s expectations as of the balances sheet date through analyzing historical customer data as well as taking into consideration current economic trends. The Company generally writes-off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues its collection.
Income Taxes
Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, the Company recognizes the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. The Company’s policy regarding the classification of interest and penalties is to classify them as income tax expense in the financial statements, if applicable.
Capitalized Software
Costs incurred to develop the Company’s cloud-based platform products are capitalized when the preliminary project phase is complete, management commits to fund the project and it is probable the project will be completed and used for its intended purposes. Once the software is substantially complete and ready for its intended use, the software is amortized over its estimated useful life, which is typically four years. Costs related to design or maintenance of the software are expensed as incurred.
Impairment of Long-lived Assets
In accordance with the authoritative guidance for accounting for long-lived assets, assets such as property and equipment, trademarks, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds fair value of the asset group.
Lease Accounting
The Company determines if an arrangement is a lease at inception. Operating lease agreements are primarily for office space and are included within lease right-of-use (“ROU”) assets and lease liabilities on the consolidated balance sheet.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments consist of non-lease services related to the lease and payments under operating leases classified as short-term. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets include any lease payments due and exclude lease incentives. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.
Business Combinations, Goodwill, and Intangible Assets
The authoritative guidance for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill. The Company records the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recorded as goodwill. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets consist of client relationships, customer lists, distribution partner relationships, software, technology, non-compete agreements and trademarks that are initially measured at fair value. At the time of the business combination, trademarks may be considered an indefinite-lived asset and, as such, are not amortized as there may be no foreseeable limit to cash flows generated from them. For the Newswire acquisition, the Company originally determined the trademarks acquired were considered a definite lived asset which will be amortized over a period of 15 years, however upon the re-brand of the Company to ACCESS Newswire and subsequent review of the trademarks associated with Newswire, determined the life to be 5 years remaining. The goodwill and intangible assets are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. The client relationships (5-10 years), customer lists (3 years), distribution partner relationships (10 years), non-compete agreements (5 years) and software and technology (3-7 years) are amortized over their estimated useful lives.
