Discontinued Operations

3 Months Ended

Mar. 31, 2025

Discontinued Operations

Discontinued Operations

Note 3: Discontinued Operations

On February 28, 2025 (the “Closing Date”), the Company and Direct Transfer, LLC, its wholly owned subsidiary entered into and closed an Asset Purchase Agreement (the “Purchase Agreement”) with Equiniti Trust Company, LLC (the “Buyer”). Pursuant to, and subject to the terms and conditions of, the Purchase Agreement, the Buyer purchased certain assets related to the Company’s compliance business (the “Purchased Assets”). The Purchased Assets consist of certain accounts receivable, prepaid assets, contracts and intellectual property, among other things, related to the Company’s services of providing i) disclosure software and services for financial reporting, ii) stock transfer services, iii) annual meeting, print and shareholder distribution and fulfillment services and iv) virtual annual meeting services (but not the intellectual property relating to the virtual annual meeting services). Revenue related to these services was previously included in the Company’s “compliance revenue” stream as reported with the SEC in previous filings, except revenue related to virtual annual meeting services, which was previously reported in “communications revenue” stream in previous SEC filings. Additionally, revenue related to providing SEDAR services and revenue related to our whistleblower hotline, which was previously reported as “compliance revenue” will be retained by the Company. The Buyer assumed certain liabilities related to the Purchased Assets, which included certain accounts payable, accrued liabilities and deferred revenue.

The Company reviewed ASC 205-20-45, which provides guidance over the disposal of a component of an entity and determined that the criteria were met to classify the assets of the compliance business as held-for-sale as of December 31, 2024. Further guidance states that once a group of assets are determined to be held-for-sale, then they should be recorded as discontinued operations in the financial statements of the entity.

Performance obligations of contracts included in discontinued operations include providing subscriptions to certain modules of our compliance software or other stand-ready obligations to deliver services and annual report printing and distribution.  Additionally, services are provided on a per project basis. Set up fees for disclosure services are considered a separate performance obligation and are satisfied upfront. Set up fees for the transfer agent module and investor relations content management module are immaterial. 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.

As of the Closing Date, there was $1,227,000 of gross accounts receivable that did not transfer to the Buyer as a result of the Purchase Agreement. The following table sets forth the assets and liabilities included in discontinued operations as of March 31, 2025 and December 31, 2024 as presented in the Consolidated Balance Sheets:

in $000’s
	March 31, 2025		December 31, 2024
Accounts Receivable (net of provision for credit losses of $559 as of  March 31, 2025 and December 31, 2024	$	633	$	1,321
Other current assets		—		17
Total current assets		633		1,338
Goodwill		—		2,885
Intangible Assets (net of accumulated amortization $5,265 as of December 31, 2024		—		637
Other non-current assets		—		55
Total assets	$	633	$	4,915

Accounts Payable	$	—	$	107
Accrued Expenses		—		168
Deferred Revenue		—		618
Total liabilities	$	—	$	893

The following table sets forth the details of income from discontinued operations for the three months ended March 31, 2025 and 2024 as presented in the Consolidated Statement of Operations:

In $000’s

	Three Months Ended March 31,
	2025		2024
Revenues	$	650	$	1,390
Cost of revenues		315		427
Gross margin		335		963
Operating costs and expenses:
General and administrative		140		86
Sales and marketing		17		26
Depreciation and amortization		28		42
Total operating costs and expenses		185		154
Operating income		150		809
Other income
Interest income		8		9
Gain on disposal of compliance business		8,974		—
Income before income taxes		9,132		818
Income tax expense		2,980		174
Net income from discontinued operations	$	6,152	$	644