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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2025

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results may differ

from those estimates. The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the revenue recognition guidance for contracts in which control is transferred to the customer over time affect the amounts of revenues, expenses, contract assets and contract liabilities. Numerous internal and external factors can affect estimates. Estimates are also used for but are not limited to allowance for credit losses, useful lives of furniture, fixtures and equipment and definite lived intangible assets, depreciation expense, fair value assumptions in evaluating goodwill for impairment, income taxes and deferred tax asset valuation and the valuation of stock-based compensation.

Restricted Cash

Restricted Cash

Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits and are not available for general corporate purposes.

Fair Value

The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities and accrued interest approximated their fair values as of March 31, 2025 and December 31, 2024 due to the short-term nature of these accounts.

Fair value measurements were applied with respect to the Company’s non-financial assets and liabilities measured on a nonrecurring basis, which would consist of measurements primarily to goodwill, intangible assets and other long-lived assets and assets acquired and liabilities assumed in a business combination.

Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy:

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Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market;

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Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and

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Level 3 measurements include those that are unobservable and of a highly subjective measure.

The following tables summarize the assets and liabilities (as applicable) measured at fair value on a recurring basis at the dates indicated:


		Basis of Fair Value Measurements
		March 31, 2025
		Level 1			Level 2			Level 3			Total
Assets:
Cash equivalents		$	96		$	—		$	—		$	96
Total		$	96		$	—		$	—		$	96

Liabilities:
Contingent consideration ⁽¹⁾		$	—		$	—		$	1,237		$	1,237
Total		$	—		$	—		$	1,237		$	1,237


		Basis of Fair Value Measurements
		December 31, 2024
		Level 1			Level 2			Level 3			Total
Assets:
Cash equivalents		$	84		$	—		$	—		$	84
Total		$	84		$	—		$	—		$	84

Liabilities:
Contingent consideration ⁽¹⁾		$	—		$	—		$	1,225		$	1,225
Total		$	—		$	—		$	1,225		$	1,225

(1)	The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of March 31, 2025 and December 31, 2024.

The following table represents the change in contingent consideration liability during the three months ended March 31, 2025:


		Three Months Ended
		March 31,
		2025
Beginning Balance		$	1,225
Accretion of contingent consideration			12
Ending Balance		$	1,237

The Company’s accompanying unaudited condensed consolidated financial instruments include outstanding borrowings of $59.2 million both as of March 31, 2025 and December 31, 2024, respectively, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company’s outstanding borrowings was approximately $59.5 million and $59.6 million as of March 31, 2025 and December 31, 2024, respectively. The fair values of debt have been estimated using a discounted cash flow analysis based on the Company’s incremental borrowing rate for similar borrowing arrangements. The incremental borrowing rate used to discount future cash flows was 6.1% and 6.4% as of March 31, 2025 and December 31, 2024, respectively. The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions and interest rates.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Income Taxes

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued updated guidance to enhance the transparency of income tax disclosure by requiring disaggregated information about an entity’s effective tax rate

reconciliation, as well as information on taxes paid. This updated guidance is effective for annual periods beginning after December 15, 2024 and is not expected to have a material impact on the Company’s consolidated financial statements.

Income Statement Disaggregation

In November 2024, the FASB issued ASU 2024-03 to improve the disaggregation of income statement expenses. This updated guidance requires additional disclosure of certain amounts included in the expense captions presented on the statement of operations as well as disclosures about selling expenses. The ASU is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted for annual financial statements that have not yet been issued. The Company does not expect ASU 2024-03 to have a material impact on the Company’s consolidated financial statements.