Company: ACCS
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0000843006-25-000012
Chunk: 56

Company: ACCESS Newswire Inc.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 1
Chunk 56
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 the sale of our Compliance business.

On February 28, 2025, we sold our Compliance business to the Buyer for aggregate cash consideration of $12,500,000, with $12,000,000 of the purchase price paid at closing and $500,000 retained by the Buyer as a holdback for a period of 12 months post-closing to satisfy potential indemnification claims by the Buyer under the Purchase Agreement if any. We used the entire $12,000,000 in closing cash to reduce our indebtedness to Pinnacle Bank.  As such, we did not receive any cash at closing as a result of the sale of our Compliance business.

Our Compliance business has historically provided strong revenue and cash flow at high gross margins.  While we believe our Communications business, which has been our primary focus for approximately the last 10 years, will be a strong stand-alone business, there can be no guaranty that it will be able to replace the revenue and cash flow of the Compliance business, which would result in a material adverse effect on our business, financial condition and results of operations.  

Additionally, the sale of our Compliance business required us to separate and allocate specific assets to the business, including some shared assets. We could face disputes with the Buyer regarding whether or not certain assets were included in the sale. Moreover, we agreed, for a period of time after the sale pursuant to a Transition Services Agreement, to continue to perform certain services that we historically performed for the Compliance business, and we also undertook other customary obligations associated with a disposition of a business by means of asset sale.  The attention of our management may be directed toward closing or post-closing matters relating to the sale of our Compliance business, including the services required by the Transition Services Agreement, and their focus may be diverted from the day-to-day business operations of our company.

We have also agreed to indemnify the Buyer against certain losses suffered as a result of certain breaches of our representations, warranties, covenants and agreements in the Purchase Agreement and related documents. Any event that results in a right for the Buyer to seek indemnity from us could result in substantial liability to us and could adversely affect our financial position and results of operations.  Although the Buyer agreed to assume certain liabilities associated with the Compliance business, it did not assume all such liabilities, which could lead to a dispute. 

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Any disputes with the Buyer related to the sale of our Compliance business could divert the attention of our management or otherwise have