Cash and cash equivalents at September 30, 2024 and December 31, 2023 are comprised of cash and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions. Restricted cash at September 30, 2024 and December 31, 2023 is comprised of amounts held in escrow accounts, as a result of a legal proceeding related to a tax assessment and is categorized as a Level 1 instrument. The fair value of outstanding long-term debt as of December 31, 2023 is estimated using a discounted cash flow analysis based on current market interest rates for debt issuances with similar remaining years-to-maturity and adjusted for credit risk, which represents a Level 3 measurement in the fair value hierarchy. The carrying amounts and estimated fair values of the Company's cash, restricted cash and long-term debt were as follows (in thousands):


	September 30, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Cash	$	48,795	$	48,795	$	27,704	$	27,704
Restricted cash		1,198		1,198		1,198		1,198
Total cash	$	49,993	$	49,993	$	28,902	$	28,902
First lien term loan facility (a)	$	-	$	-	$	159,639	$	162,560
Term loan facility (a)	$	100,000	(b)		$	-	$	-

(a) The amounts above do not include the impact of the interest rate swap or debt issuance costs.

(b) The Company’s outstanding long-term debt as of September 30, 2024 was recently originated and bears variable interest rates. As a result, the Company believes that the fair value of long-term debt as of September 30, 2024 approximates its carrying amount.

Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company’s financial instruments recorded at fair value on a recurring basis (in thousands):


		Fair Value Measurements at September 30, 2024								Fair Value Measurements at December 31, 2023
Description	Balance Sheet Location	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Derivative financial instruments (1)	Other current assets	$	385	$	-	$	385	$	-	$	2,372	$	-	$	2,372	$	-
Total assets		$	385	$	-	$	385	$	-	$	2,372	$	-	$	2,372	$	-
Liabilities:
Derivative financial instruments (1)	Other long term liabilities	$	460	$	-	$	460	$	-	$	-	$	-	$	-	$	-
Warrants	Warrant liabilities		-		-		-		-		20,400		-		20,400		-
Total liabilities		$	460	$	-	$	460	$	-	$	20,400	$	-	$	20,400	$	-

(1)

Consists of an amount attributable to interest rate swap contacts; see "Derivatives" below.

The fair value of the Public Warrants and 2020 PIPE Warrants are considered a Level 2 valuation and are determined using the Monte Carlo model. The Public Warrants expired on March 19, 2024, with warrants remaining unexercised as of the expiration date cancelled, and there were no amounts outstanding as of September 30, 2024 (See Note 5). The significant assumptions which the Company used in the Monte Carlo model are presented in the table below.


	December 31, 2023
	Public Warrants			2020 PIPE Warrants
Stock price	$	14.10		$	14.10
Strike price	$	11.50		$	5.75
Remaining life (in years)		0.22			1.45
Volatility		34	%		38	%
Interest rate		5.36	%		4.49	%
Redemption price	$	18.00		$	14.50

The fair value of the Sponsor Warrants is considered a Level 2 valuation and is determined using the Black-Scholes model. The Sponsor Warrants expired on March 19, 2024 and there were no amounts outstanding as of September 30, 2024 (See Note 5). The significant assumptions which the Company used in the model are presented in the table below.

Market risk associated with the Company’s long-term floating rate debt is the potential increase in interest expense from an increase in interest rates. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest

rate movements. These instruments are recorded on the balance sheet at their fair value and are designated as hedges. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged.

The Company assesses whether derivatives used in hedging transactions are “highly effective” in offsetting changes in the cash flow of its hedged forecasted transactions. The Company uses regression analysis for this hedge relationship and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction. These agreements involve the receipt of variable-rate amounts in exchange for fixed-rate interest payments over the life of the respective agreement without an exchange of the underlying notional amount. The Company classifies derivative instrument cash flows from hedges of benchmark interest rate as operating activities due to the nature of the hedged item. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive income (loss) until the underlying hedged transactions are recognized in earnings. If it is determined that the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other comprehensive income (loss) is released to earnings.

The Company monitors concentrations of credit risk associated with financial and other institutions with which the Company conducts significant business. Credit risk, including, but not limited to, counterparty nonperformance under derivatives, is not considered significant, as the Company primarily conducts business with large, well-established financial institutions with which the Company has established relationships, and which have credit risks acceptable to the Company. The Company does not anticipate non-performance by its counterparty. The amount of the Company’s credit risk exposure is equal to the fair value of the derivative when any of the derivatives are in a net gain position.

In September 2019, the Company entered into a floating-to-fixed interest rate swap agreement to make a series of payments based on a fixed interest rate of 1.457% and receive a series of payments based on the greater of 1 Month USD LIBOR or Strike which is used to hedge the Company’s exposure to changes in cash flows associated with its variable rate First Lien Term Loan Facility and has designated this derivative as a cash flow hedge. Both the fixed and floating payment streams are based on a notional amount of $174.7 million at the inception of the contract. In June 2023, the interest rate swap agreement was amended to replace the reference rate from LIBOR to SOFR, to be consistent with the amended First Lien Credit Facilities. The interest rate swap agreement matured on September 19, 2024. As of December 31, 2023, the notional amount was $95.4 million.

In September 2024, the Borrowers entered into two floating-to-fixed interest rate swap agreements with a notional amount of $70 million and $30 million, respectively, with Bank of America, N.A. to make a series of payments based on a fixed interest rate of 3.341% and 3.564%, respectively, and receive a series of payments based on the 1 Month USD-SOFR CME term which is used to hedge the Company’s exposure to changes in cash flows associated with its variable rate Term Loan Facility and has designated this derivative as a cash flow hedge. The interest rate swap agreements expire on September 20, 2027 and December 20, 2026, respectively. As of September 30, 2024, the aggregate notional amount of the interest rate swap agreements was $100.0 million.

There was no ineffectiveness related to the interest rate swaps. The gain or loss on the derivatives is recorded as a component of accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. The Company expects to reclassify $0.4 million of income from accumulated other comprehensive income (loss) into interest expense within the next twelve months.

The fair value of the interest rate swap contracts is measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates (forward curves) derived from observable market interest rate curves. The interest rate swap contracts were categorized as Level 2 in the fair value hierarchy. The Company is not required to post cash collateral related to these derivative instruments.

The effect of the interest rate swap contracts designated as cash flows hedging instrument on the condensed consolidated financial statements was as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
(Loss) gain recognized in accumulated other comprehensive income (loss)	$	(42	)	$	240		$	300		$	1,062

Gains reclassified from accumulated other comprehensive income (loss) to interest expense	$	(855	)	$	(936	)	$	(2,747	)	$	(2,530	)