Issuer Direct (ISDR) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This part presents ACCESS Newswire Inc.'s unaudited consolidated financial statements and related notes for Q1 2025 and 2024 Item 1. Financial Statements This section details ACCESS Newswire Inc.'s unaudited consolidated financial statements and comprehensive notes for Q1 2025 and 2024 Consolidated Balance Sheets This section presents the unaudited consolidated balance sheets for ACCESS Newswire Inc. as of March 31, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change (vs. Dec 31, 2024) | | :------------------------------------------------ | :------------- | :---------------- | :------------------------ | | Assets: | | | | | Cash and cash equivalents | $4,100 | $4,103 | -$3 | | Accounts receivable (net) | $3,489 | $3,351 | +$138 | | Total current assets | $10,137 | $10,026 | +$111 | | Total assets | $47,283 | $50,638 | -$3,355 | | Liabilities: | | | | | Accounts payable | $1,655 | $1,423 | +$232 | | Income tax payable | $3,787 | $56 | +$3,731 | | Current portion of long-term debt | $870 | $4,000 | -$3,130 | | Total current liabilities | $13,473 | $12,814 | +$659 | | Long-term debt (net) | $2,326 | $11,930 | -$9,604 | | Total liabilities | $16,388 | $25,412 | -$9,024 | | Stockholders' Equity: | | | | | Retained earnings | $6,528 | $1,141 | +$5,387 | | Total stockholders' equity | $30,895 | $25,226 | +$5,669 | Consolidated Statements of Operations This section presents the unaudited consolidated statements of operations for the three months ended March 31, 2025 and 2024 Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | Revenues | $5,476 | $5,572 | -$96 | | Cost of revenues | $1,203 | $1,388 | -$185 | | Gross profit | $4,273 | $4,184 | +$89 | | Total operating costs and expenses | $4,950 | $5,046 | -$96 | | Operating loss | $(677) | $(862) | +$185 | | Net income (loss) | $5,387 | $(139) | +$5,526 | | Net income per share – basic | $1.40 | $(0.04) | +$1.44 | | Net income per share – fully diluted | $1.40 | $(0.04) | +$1.44 | Consolidated Statements of Comprehensive Income (Loss) This section presents the unaudited consolidated statements of comprehensive income (loss) for the three months ended March 31, 2025 and 2024 Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $5,387 | $(139) | | Foreign currency translation adjustment | $2 | $(34) | | Comprehensive income (loss) | $5,389 | $(173) | Consolidated Statements of Stockholders' Equity This section presents the unaudited consolidated statements of stockholders' equity for the three months ended March 31, 2025 and 2024 Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | Balance at Dec 31, 2024 | Stock-based Comp. Expense | Foreign Currency Translation | Net Income | Balance at Mar 31, 2025 | | :----------------------- | :---------------------- | :------------------------ | :--------------------------- | :--------- | :---------------------- | | Common Stock Amount | $4 | $0 | $0 | $0 | $4 | | Additional Paid-in Capital | $24,259 | $280 | $0 | $0 | $24,539 | | Other Accumulated Comp. Loss | $(178) | $0 | $2 | $0 | $(176) | | Retained Earnings | $1,141 | $0 | $0 | $5,387 | $6,528 | | Total Stockholders' Equity | $25,226 | $280 | $2 | $5,387 | $30,895 | Consolidated Statements of Cash Flows This section presents the unaudited consolidated statements of cash flows for the three months ended March 31, 2025 and 2024 Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $747 | $986 | | Net cash provided by (used in) investing activities | $11,965 | $(261) | | Net cash used in financing activities | $(12,739) | $(1,000) | | Net change in cash and cash equivalents | $(27) | $(275) | | Cash and cash equivalents – ending | $4,100 | $5,399 | - Net cash provided by investing activities significantly increased to $11,965,000 in Q1 2025, primarily due to $12,000,000 in proceeds from the sale of the Compliance Business[24] - Net cash used in financing activities increased substantially to $12,739,000 in Q1 2025, mainly due to a $12,739,000 payment of long-term debt[24] Notes to Unaudited Consolidated Financial Statements This section provides detailed notes supporting the unaudited consolidated financial statements for ACCESS Newswire Inc Note 1. Basis of Presentation This note outlines the basis for preparing the unaudited interim financial statements in accordance with Form 10-Q and Regulation S-X - The unaudited interim financial statements are prepared in accordance with Form 10-Q and Article 10 of Regulation S-X, including all normal recurring adjustments for fair presentation. They should be read in conjunction with the 2024 audited financial statements filed on Form 10-K[26] Note 2. Summary of Significant Accounting Policies This note details the significant accounting policies, including those for credit losses, revenue recognition, deferred revenue, and capitalized software - The Company calculates its allowance for credit losses using an expected losses model based on historical customer data and current economic trends[29] Allowance for Credit Losses (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Beginning balance | $1,059 | $721 | | Provision for credit losses | $277 | $300 | | Write-offs | $(15) | $(241) | | Ending balance | $1,321 | $780 | - Revenue is primarily derived from press release distribution, investor relations website hosting, data feeds, events, webcasts, and incident hotline subscriptions. Contracts are generally for one year with automatic renewal[34][35] - Deferred revenue as of March 31, 2025, was $5,021,000, an increase from $4,743,000 at December 31, 2024, and is expected to be recognized primarily within one year[38] - Capitalized software development costs were $23,000 for Q1 2025, significantly down from $245,000 in Q1 2024. Amortization included in cost of revenues increased to $73,000 from $46,000 YoY[44] - The Company incurred $132,000 in costs associated with its corporate re-brand during the three months ended March 31, 2025[56] Note 3: Discontinued Operations This note details the sale of the Company's compliance business and its classification as discontinued operations - On February 28, 2025, the Company sold certain assets related to its compliance business to Equiniti Trust Company, LLC. These assets and associated revenues/expenses are classified as discontinued operations[61][62] Assets and Liabilities of Discontinued Operations (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------------------------------------------------------------------ | :------------- | :---------------- | | Assets: | | | | Accounts Receivable (net) | $633 | $1,321 | | Goodwill | — | $2,885 | | Intangible Assets (net) | — | $637 | | Total assets | $633 | $4,915 | | Liabilities: | | | | Accounts Payable | — | $107 | | Accrued Expenses | — | $168 | | Deferred Revenue | — | $618 | | Total liabilities | — | $893 | Income from Discontinued Operations (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revenues | $650 | $1,390 | | Gross margin | $335 | $963 | | Operating income | $150 | $809 | | Gain on disposal of compliance business | $8,974 | — | | Net income from discontinued operations | $6,152 | $644 | Note 4: Equity This note provides information on the Company's equity, including stock options, restricted stock units, and unrecognized compensation costs - No dividends were paid during the three months ended March 31, 2025 and 2024[66] - As of March 31, 2025, 366,078 shares remain to be granted under the 2023 Equity Incentive Plan[68] Stock Options Outstanding and Exercisable at March 31, 2025 | Exercise Price Range | Number of Options Outstanding | Weighted Average Remaining Contractual Life (in Years) | Weighted Average Exercise Price | Number of Options Exercisable | | :------------------- | :---------------------------- | :----------------------------------------------------- | :------------------------------ | :---------------------------- | | $0.01 - 8.00 | 5,000 | 0.64 | $6.80 | 5,000 | | $8.01 - 11.00 | 1,000 | 4.25 | $10.75 | 1,000 | | $11.01 - 16.00 | 10,000 | 3.92 | $13.21 | 10,000 | | $16.01 - 27.00 | 30,000 | 7.76 | $26.98 | 15,000 | | $27.01 - 27.71 | 12,750 | 6.80 | $27.71 | 12,750 | | Total | 58,750 | 6.23 | $22.80 | 43,750 | - Unrecognized stock compensation related to options was $183,000 as of March 31, 2025, to be recognized through 2027. Unrecognized compensation cost for unvested restricted stock units was $575,000, to be recognized through 2026[69][70] Note 5: Income Taxes This note details the income tax benefit and the factors influencing the variance from the U.S. statutory tax rate Income Tax Benefit (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------- | :-------------------------------- | :-------------------------------- | | Income tax benefit | $185 | $158 | - The variance from the U.S. statutory rate of 21% is primarily due to state income tax, Foreign Derived Intangible Income (FDII) deduction, and a lower Canadian statutory tax rate, partially offset by stock-based compensation expense[71] Note 6: Leases This note provides information on the Company's lease liabilities, lease expenses, and weighted-average lease terms - Lease liabilities totaled $973,000 as of March 31, 2025, with a current portion of $392,000 and a long-term portion of $581,000[73] Lease Expense (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Operating lease expense | $76 | $76 | | Variable lease expense | $15 | $14 | | Rent expense | $91 | $90 | - The weighted-average remaining non-cancelable lease term for operating leases was 2.75 years as of March 31, 2025, with a weighted-average discount rate of 3.77%[74] Note 7: Segment Reporting This note clarifies that the Company operates as a single reportable segment, focusing on communications for public and private entities - The Company operates as a single reportable segment, identified as a communications company for publicly traded and private companies. The CEO acts as the Chief Operating Decision Maker (CODM)[75] Segment Operating Results (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revenues | $5,476 | $5,572 | | Total cost of revenue | $1,203 | $1,388 | | Total operating costs and expenses | $4,950 | $5,046 | | Operating loss | $(677) | $(862) | Note 8: Credit Agreement This note details the Third Modification to the Credit Agreement, including the reduction in Term Loan principal and amended financial covenants - On February 28, 2025, the Company entered into a Third Modification to Credit Agreement, reducing the Term Loan principal balance by $12,000,000 to $3,333,333 following the sale of the Compliance Business[80][81] - Monthly principal payments for the Term Loan were reduced from $333,333 to $72,464, effective March 1, 2025[81] Amended Financial Covenants (Effective June 30, 2025) | Covenant | Ratio | | :------------------------ | :------ | | Fixed Charge Coverage Ratio | 1.2:1.0 | | Leverage Ratio | 2.25:1.0 | Unrestricted Liquidity Requirements Based on Leverage Ratio | Leverage Ratio | Unrestricted Liquidity | | :------------------------------------------------ | :--------------------- | | Less than or equal to 1.5:1.00 | $1,500,000 | | Greater than 1.5:1.00 but less than or equal to 1.75:1.00 | $1,000,000 | | Greater than 1.75:1.00 | $500,000 | Note 9: Interest Rate Swap This note describes the Company's interest rate swap agreement, its fair value, and the recognized unrealized gains or losses - The Company uses an interest rate swap to convert variable rate debt to a fixed rate of 6.217%. As of March 31, 2025, the variable rate was 6.68%[87] - The fair value of the swap agreement was a liability of $8,000 as of March 31, 2025, compared to an asset of $60,000 as of December 31, 2024[89] - A net unrealized loss of $69,000 was recognized from the interest rate swap during Q1 2025, compared to a net unrealized gain of $205,000 in Q1 2024[89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes ACCESS Newswire Inc.'s financial condition, operational results, and future outlook, including rebranding and compliance business sale Overview This section provides an overview of ACCESS Newswire Inc.'s rebranding, platform offerings, and subscription model - Effective January 27, 2025, the company changed its name from Issuer Direct Corporation to ACCESS Newswire Inc[93] - ACCESS Newswire offers a dynamic customer platform streamlining Public Relations (PR) and Investor Relations (IR) for businesses, distributing messaging to stakeholders globally[96] - Core products include Press Release Distribution, Media Monitoring, Database and Pitching, Investor Relations Websites, and Earnings and Event technologies[97] - As of March 31, 2025, the company had 955 subscriptions with an Annual Recurring Revenue (ARR) of approximately $10.6 million, following the launch of its new subscription platform in late 2024/early 2025[98] Sale of our Compliance Business This section details the sale of the Company's compliance business assets to Equiniti Trust Company, LLC, and its financial classification - On February 28, 2025, the Company sold certain assets of its compliance business to Equiniti Trust Company, LLC. This included disclosure software, stock transfer services, annual meeting services, and virtual annual meeting services (excluding IP)[99] - Revenue from SEDAR services and the whistleblower hotline will be retained by the Company[99] - Assets and associated revenues/expenses of the sold compliance business are categorized as discontinued operations in the financial statements[99] Our Platform This section describes the Company's consolidated product offerings, ACCESS PR, ACCESS IR, and ALL ACCESS, following its rebrand - As part of its rebrand in January 2025, the Company consolidated product naming conventions and subscriptions into three main offerings: ACCESS PR, ACCESS IR, and ALL ACCESS[100][101][102] - Customers can also purchase stand-alone solutions on a pay-as-you-go option before subscribing to the platform[102] Products in the Platform This section outlines the various products within the ACCESS Newswire platform, including press release distribution, media monitoring, and investor relations tools - Press Release Distribution offers comprehensive news dissemination with self-publishing or AI-assisted creation, reviewed by an editorial team, integrated into all three ACCESS subscription plans for 2025[103][105] - Press Release Optimizer (PRO) automates media and marketing communications, providing content and media services to optimize content and increase media visibility, and can be added to any ACCESS subscription[106] - Media Database & Pitching features a curated database of active journalists, with an AI writing and recommendation engine (AIMee) to enhance pitches[107][108] - Media Monitoring is a brand monitoring solution covering print, broadcast, web, radio, video, blogs, and social media, with plans for expansion[109] - Media Room is an add-on product including a custom newsroom page builder, brand asset manager, and contact manager, designed to build connections with media and the investment community[110][111] - Webcasting & Events is a cloud-based platform for live and on-demand streaming of earnings calls, virtual meetings, and other events, integrating earnings announcements and press releases for a full-service solution[112][113][114] - Professional Conference and Events Software is a subscription offering for investor conference organizers, available as a mobile app, integrating registration, meeting management, event promotion, and lodging[115] - Investor Relations Websites is a content network providing data feeds (news, stock, fundamentals, regulatory filings) for company websites, integrated with other offerings for automatic content linking and distribution[116] - Incident Hotline is an add-on product delivering secure notifications and basic incident workflow management, supported and subsidized by NYSE offerings[118] Results of Operations This section analyzes the Company's financial performance for Q1 2025 compared to Q1 2024, covering revenues, costs, and expenses Key Financial Performance (in thousands, except percentages) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | % of Revenue 2025 | % of Revenue 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | :------------------ | :------------------ | | Revenues | $5,476 | $5,572 | -$96 | | | | Cost of revenues | $1,203 | $1,388 | -$185 | 22% | 25% | | Gross margin | $4,273 | $4,184 | +$89 | 78% | 75% | | Total operating expenses | $4,950 | $5,046 | -$96 | 90% | 90% | | Operating loss | $(677) | $(862) | +$185 | (12)% | (15)% | | Net (loss) from continuing operations | $(765) | $(783) | +$18 | (14)% | (14)% | - Total revenue decreased by 2% YoY to $5,476,000, primarily due to slight declines across various product lines, though core press release business revenue increased by 1% due to higher volume[121] - Deferred revenue increased by 6% to $5,021,000 as of March 31, 2025, compared to $4,743,000 at December 31, 2024[122] - Cost of revenues decreased by 13% YoY, leading to an increase in gross margin percentage to 78% in Q1 2025 from 75% in Q1 2024[123] - General and administrative expenses increased by 19% YoY to $1,953,000, mainly due to a $340,000 benefit to stock compensation expense in the prior year from an executive's resignation[124] - Sales and marketing expenses decreased by 23% YoY to $1,594,000, driven by lower employee-related and advertising expenses[126] - Product development expenses increased by 12% YoY to $733,000, primarily due to lower capitalization of software ($23,000 in Q1 2025 vs. $245,000 in Q1 2024), partially offset by increased headcount[128] - Net interest expense decreased to $214,000 in Q1 2025 from $308,000 in Q1 2024[130] - Other income (expense) represents the change in fair value of the interest rate swap, resulting in a net unrealized loss of $69,000 in Q1 2025[131][89] Liquidity and Capital Resources This section discusses the Company's cash position, accounts receivable, current liabilities, and future liquidity outlook - As of March 31, 2025, cash and cash equivalents were $4,100,000, and net accounts receivable were $3,489,000[133] - Current liabilities from continuing operations exceeded current assets by $3,336,000 as of March 31, 2025[134] - Management believes its ability to renegotiate the Credit Agreement and generate cash will benefit future liquidity[134] Disclosure about Off-Balance Sheet Arrangements This section confirms the Company has no material off-balance sheet arrangements impacting stockholders - The Company has no off-balance sheet arrangements that are material to stockholders[135][150] Non-GAAP Measures This section presents and reconciles non-GAAP financial measures used by management to assess performance and cash generation - Management uses non-GAAP measures like free cash flow, adjusted free cash flow, adjusted EBITDA, and adjusted net income to assess financial performance and cash generation, believing they offer useful insights into core business operations[136][137] Free Cash Flow and Adjusted Free Cash Flow from Continuing Operations (Non-GAAP, in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities of continuing operations (GAAP) | $809 | $77 | | Payments for purchase of fixed assets and capitalized software | $(35) | $(261) | | Free cash flow from continuing operations (Non-GAAP) | $774 | $(184) | | Cash paid for acquisition and integration related items | $87 | $23 | | Cash paid for other unusual items | $168 | $35 | | Adjusted free cash flow from continuing operations (Non-GAAP) | $1,029 | $(126) | Reconciliation of Net Loss to Adjusted EBITDA from Continuing Operations (Non-GAAP, in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss from continuing operations | $(765) | $(783) | | Depreciation and amortization | $742 | $728 | | Interest expense, net | $204 | $284 | | Income tax expense (benefit) | $(185) | $16 | | EBITDA from continuing operations | $(4) | $245 | | Acquisition and/or integration costs | $129 | $65 | | Other non-recurring expenses | $236 | $(170) | | Stock-based compensation expense | $203 | $(79) | | Adjusted EBITDA from continuing operations | $564 | $61 | Reconciliation of Net Loss to Non-GAAP Net Income (Loss) from Continuing Operations (in thousands, except per share) | Metric | Three Months Ended March 31, 2025 (Amount) | Three Months Ended March 31, 2025 (Per diluted share) | Three Months Ended March 31, 2024 (Amount) | Three Months Ended March 31, 2024 (Per diluted share) | | :---------------------------------------------------- | :----------------------------------------- | :---------------------------------------------------- | :----------------------------------------- | :---------------------------------------------------- | | Net loss from continuing operations | $(765) | $(0.20) | $(783) | $(0.21) | | Amortization of intangible assets | $630 | $0.16 | $643 | $0.17 | | Stock-based compensation expense | $203 | $0.05 | $(79) | $(0.02) | | Other unusual items | $365 | $0.09 | $(105) | $(0.03) | | Discrete items impacting income tax expense | $25 | $0.01 | $55 | $0.01 | | Tax impact of adjustments | $(252) | $(0.06) | $(96) | $(0.02) | | Non-GAAP net income (loss) from continuing operations | $206 | $0.05 | $(365) | $(0.10) | | Weighted average number of common shares outstanding – diluted | 3,843 | | 3,821 | | Outlook This section discusses the Company's strategic initiatives and expectations for sustainable growth despite global uncertainties - Despite global economic and political uncertainties, the Company believes demand for its platforms and services remains stable in most markets[147] - The continued transition to a platform subscription model is key for long-term sustainable growth[148] - Key strategic initiatives for the remainder of 2025 include: * Expanding products and adapting to industry changes * Expanding customer base and newswire distribution * Investing in technology advancements and upgrades * Evaluating acquisitions in strategic focus areas * Generating profitable sustainable growth and cash flows from operations[148][149] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no applicable quantitative and qualitative disclosures about market risk for the Company - Not applicable[151] Item 4. Controls and Procedures The Company's CEO and CFO concluded disclosure controls are effective and unchanged since the last annual report - The Company's CEO and CFO concluded that disclosure controls and procedures are effective and have not materially changed since the last annual report[152] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The Company is not a party to any litigation that would materially adversely affect its business - The Company is not a party to any litigation, nor is it aware of any threatened or pending litigation that might result in a material adverse effect on its business[153] Item 1A. Risk Factors No material changes to risk factors have occurred since the most recent Form 10-K filing - No material changes to risk factors since the most recent Form 10-K filing[154] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported during the period - None[155] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None[156] Item 4. Mine Safety Disclosure This section is not applicable to the Company - Not applicable[157] Item 5. Other Information No director or officer trading arrangements were adopted, modified, or terminated in Q1 2025 - No director or officer adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2025[158] Item 6. Exhibits This section lists the exhibits filed or furnished with the Form 10-Q, including certifications and XBRL documents Exhibits Filed | Exhibit Number | Description | | :------------- | :-------------------------------------------------------------------------------- | | 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | | 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | | 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | | 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | | 101.INS | XBRL Instance Document.** | | 101.SCH | XBRL Taxonomy Extension Schema Document.** | | 101.CAL | XBRL Taxonomy Calculation Linkbase Document.** | | 101.LAB | XBRL Taxonomy Label Linkbase Document.** | | 101.PRE | XBRL Taxonomy Presentation Linkbase Document.** | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. ** | Signatures The report was signed by ACCESS Newswire, Inc.'s CEO and CFO on May 13, 2025 - The report was signed by Brian R. Balbirnie (CEO) and Steven Knerr (CFO) on May 13, 2025[162]