Quest Resource Holding Corp

Previous wording

There has been heightened uncertainty in the macroeconomic environment, especially as it relates to fluctuations in unemployment, inflation, tariffs, consumer and business spending, and government actions or inactions, including government shutdowns. There are also significant geopolitical concerns, including ongoing global conflicts and recent military actions involving Iran and the broader Middle East, which have caused volatility in capital markets and may continue to have further global economic consequences, including disruptions of the global supply chains and energy markets. Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political unrest, war, military actions, or regional conflict, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Inflation can adversely affect us by increasing our operating costs. Any significant increases in inflation and related increases in interest rates could have a material adverse effect on our business, results of operations and financial condition.

Current wording

There has been heightened uncertainty in the macroeconomic environment, especially as it relates to fluctuations in unemployment, inflation, tariffs, consumer and business spending, and government actions or inactions, including government shutdowns. There are also significant geopolitical concerns, including ongoing global conflicts and recent military actions involving Iran and the broader Middle East, which have caused volatility in capital markets and may continue to have further global economic consequences, including disruptions of the global supply chains and energy markets. Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political unrest, war, military actions, or regional conflict, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Inflation can adversely affect us by increasing our operating costs.

Previous wording

The following table summarizes our operating results for the three months ended March 31, 2026 and 2025 (in thousands):

Current wording

The following table summarizes our operating results for the three and six months ended June 30, 2026 and 2025 (in thousands):

Previous wording

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

Current wording

Three and Six Months Ended June 30, 2026, Compared to Three and Six Months Ended June 30, 2025

Previous wording

The decline in revenue for the quarter ended March 31, 2026 was primarily driven by ongoing headwinds from certain clients in the industrial end-market, which reduced revenue by approximately $4.0 million compared to the prior year same period. These headwinds are mostly confined to a few clients and are primarily related to lower waste volumes and services which are directly tied to the clients’ lower production volumes. Additionally, our revenues decreased from the prior year same period by approximately $3.0 million due to the divestiture of an underperforming business operation which was sold on March 31, 2025. See Note 3 to our condensed consolidated financial statements for further discussion of the sale.

Current wording

For the six months ended June 30, 2026, the decrease in revenue was primarily attributable to the divestiture of an underperforming business operation, which was sold on March 31, 2025 and reduced revenue by approximately $3.0 million (see Note 3 to our condensed consolidated financial statements for further discussion of the sale). Additionally, continued softness experienced in the first quarter of 2026 from certain clients in the industrial end-market led to a $0.7 million decrease in revenues for the six months ended June 30, 2026 compared to the prior year period. These declines were partially offset by net growth of $1.5 million within our remaining business during the six months ended June 30, 2026 compared to the prior year period.

Previous wording

Three Months Ended March 31, 2026 and 2025 Operating Results

Current wording

For the three months ended June 30, 2026 and 2025, operating expenses were $20.4 million and $10.7 million, respectively. Operating expenses were $29.8 million and $29.7 million for the six months ended June 30, 2026 and 2025, respectively. The increase in operating expenses for the three months ended June 30, 2026, compared to the prior year period, was primarily due to an $11.0 million non-cash goodwill impairment charge, partially offset by lower selling, general and administrative expenses (“SG&A expenses”) and depreciation and amortization. See “Critical Accounting Estimates—Goodwill Impairment” below and Note 6 to our condensed consolidated financial statements for further discussion on the goodwill impairment. For the six months ended June 30, 2026, operating expenses increased $0.1 million, as the $9.3 million increase in impairment loss was offset by a $4.4 million lower loss on sale of assets and decreases of $4.1 million in SG&A expenses and $0.7 million in depreciation and amortization.

Previous wording

Operating expenses for the quarters ended March 31, 2026 and 2025 included depreciation and amortization of $1.0 million and $1.5 million, respectively. The decrease in depreciation and amortization expense is primarily due to a lower customer relationship intangible balance. During the quarter ended March 31, 2025, as a result of certain client attrition, we determined a customer relationship intangible was impaired and recorded an impairment charge of $1.7 million, which reduced the intangible value. See Note 6 to our condensed consolidated financial statements for further discussion.

Current wording

Operating expenses for the three months ended June 30, 2026 and 2025 included depreciation and amortization of $1.1 million and $1.3 million, respectively. Operating expenses for the six months ended June 30, 2026 and 2025 included depreciation and amortization of $2.1 million and $2.8 million, respectively. The decrease in depreciation and amortization expense for the six months ended June 30, 2026, compared to the prior year period, is primarily due to a lower customer relationship intangible balance. During the first quarter of 2025, as a result of certain client attrition, we determined a customer relationship intangible was impaired and recorded an impairment charge of $1.7 million, which reduced the intangible value. See Note 6 to our condensed consolidated financial statements for further discussion.

Previous wording

On March 31, 2025, we completed the sale of substantially all of the assets used in an underperforming business operation. The selling price of the assets was approximately $5.0 million in cash plus (i) additional amounts, not to exceed $6.5 million, based on future performance of the contracts sold over the three years following the date of closing and (ii) a one-time payment based on the purchaser’s ability to collect the accounts receivable and other monies due for sales and deliveries of goods, performance of services and other business transactions, subject to certain other adjustments as set forth in the asset purchase agreement. In connection with the sale, we recognized a $4.4 million loss on sale of assets during the quarter ended March 31, 2025. See Note 3 to our condensed consolidated financial statements for further discussion.

Current wording

On March 31, 2025, we completed the sale of substantially all of the assets used in an underperforming business operation. The selling price of the assets was approximately $5.0 million and we recognized a $4.5 million loss on sale of assets for the six months ended June 30, 2025. See Note 3 to our condensed consolidated financial statements for further discussion.

Previous wording

Interest expense was $2.1 million and $2.3 million for the quarters ended March 31, 2026 and 2025, respectively. The decrease in expense is primarily due to lower borrowings on our PNC ABL Facility for the first quarter of 2026 compared to the first quarter of 2025.

Current wording

Interest expense was $2.2 million and $2.4 million for the three months ended June 30, 2026 and 2025, respectively. Interest expense was $4.3 million and $4.6 million for the six months ended June 30, 2026 and 2025, respectively. The decrease in expense is primarily due to lower borrowings on our TCB ABL Facility (as defined below) for the three and six months ended June 30, 2026 compared to borrowings on our PNC ABL Facility in the prior year periods.

Previous wording

During the quarter ended March 31, 2026, we entered into a Loan and Security Agreement with Texas Capital Bank (the “TCB Loan Agreement”). In connection with the execution and delivery of the TCB Loan Agreement, which provides for an asset-based revolving credit facility (the “TCB ABL Facility”), the PNC Loan Agreement was terminated, and all outstanding amounts were paid in full. The termination of the PNC Loan Agreement resulted in a loss on debt extinguishment of $488 thousand, primarily due to the write-off of unamortized debt issuance costs.

Current wording

During the three months ended March 31, 2026, we entered into a Loan and Security Agreement with Texas Capital Bank (the “TCB Loan Agreement”). In connection with the execution and delivery of the TCB Loan Agreement, which provides for an asset-based revolving credit facility (the “TCB ABL Facility”), the PNC Loan Agreement was terminated, and all outstanding amounts were paid in full. The termination of the PNC Loan Agreement resulted in a loss on debt extinguishment of $488 thousand, attributable to the write-off of unamortized debt issuance costs.

Previous wording

Additionally, in March 2026, we amended our Credit Agreement with Monroe Capital (“Monroe”) to, among other things, modify its financial covenants, which resulted in overall favorable terms for us. As a result of this modification, we entered into a fee arrangement with Monroe for the payment of an exit fee upon the occurrence of certain triggering events, which include a change in control, a debt refinancing, or the maturity of the Credit Agreement. The calculation of the exit fee is dependent upon the financial performance of our business at the time of the triggering event, and the fee has a minimum value of $2.0 million. While the exit fee does not include a limit on the maximum fee to be paid, we do not believe that any amount paid by us will be materially different from the $2.0 million. Therefore, as of March 31, 2026, we recorded the estimated exit fee as an other long-term liability, and the fee has been included in our debt issuance costs which is amortized to interest expense over the remaining term of the Credit Agreement. The value of the estimated liability for the exit fee will be adjusted, in addition to interest expense, if there is a material change in our estimate prior to a triggering event.

Current wording

Additionally, in March 2026, we amended our Credit Agreement (the “Credit Agreement”) with Monroe Capital Management Advisors LLC (“Monroe”) to, among other things, modify its financial covenants, which resulted in overall favorable terms for us. As a result of this modification, we entered into a fee arrangement with Monroe for the payment of an exit fee upon the occurrence of certain triggering events, which include a change in control, a debt refinancing, or the maturity of the Credit Agreement. The calculation of the exit fee is dependent upon the financial performance of our business at the time of the triggering event, and the fee has a minimum value of $2.0 million. While the exit fee does not include a limit on the maximum fee to be paid, we do not believe that any amount paid by us will be materially different from the $2.0 million. Therefore, as of June 30, 2026, the estimated exit fee of

Previous wording

We also incurred approximately $868 thousand in additional debt issuance costs resulting from the March 2026 financing transactions. As a result of these transactions, as of March 31, 2026, our unamortized debt issuance costs and debt discount is $4.6 million. See Note 8 to our condensed consolidated financial statements for further discussion.

Current wording

We also incurred approximately $914 thousand in additional debt issuance costs resulting from the March 2026 financing transactions. As a result of these transactions, as of June 30, 2026, our unamortized debt issuance costs and debt discount is $4.4 million. See Note 8 to our condensed consolidated financial statements for further discussion.

Previous wording

We recorded a provision for income taxes of $22 thousand and an income tax benefit of $(22) thousand for the quarters ended March 31, 2026 and 2025, respectively. The provision/(benefit) for income tax is primarily attributable to state tax obligations based on current estimated state tax income/(loss) multiplied by the state tax apportionment percentage for states with no net operating loss carryforwards.

Current wording

We recorded a provision for income taxes of $46 thousand and an income tax benefit of $(22) thousand for the three months ended June 30, 2026 and 2025, respectively. We recorded a provision for income taxes of $68 thousand and an income tax benefit of $(44) thousand for the six months ended June 30, 2026 and 2025, respectively. The provision/(benefit) for income tax is primarily attributable to state tax obligations based on current estimated state tax income/(loss) multiplied by the state tax apportionment percentage for states with no net operating loss carryforwards.

Previous wording

Net loss for the quarter ended March 31, 2026 was $(2.3) million, compared to a net loss of $(10.4) million for the quarter ended March 31, 2025. The discussions above explain the majority of the changes which contributed to the change in net results year-over-year.

Current wording

Net loss for the three months ended June 30, 2026 was $(12.2) million, compared to a net loss of $(2.0) million for the three months ended June 30, 2025. Net loss for the six months ended June 30, 2026 was $(14.5) million, compared to net loss of $(12.4) million for the six months ended June 30, 2025. The discussions above explain the majority of the changes which contributed to the change in net results year-over-year.

Previous wording

Our operating results, including revenue, operating expenses, and operating margins, vary from period to period depending on commodity prices of recyclable materials, the volumes and mix of services provided, as well as customer mix during the reporting period, and the timing of acquisitions and divestitures.

Current wording

Our operating results, including revenue, operating expenses, and operating margins, vary from period to period depending on commodity prices of recyclable materials, the volumes and mix of services provided, as well as customer mix during the reporting period, and the timing of acquisitions, divestitures, and impairments.

Previous wording

Net loss per basic and diluted share attributable to common stockholders was $(0.11) and $(0.50) for the quarters ended March 31, 2026 and 2025, respectively. The basic and diluted weighted average number of shares of common stock outstanding was approximately 21.2 million and 20.9 million for the three months ended March 31, 2026 and 2025, respectively.

Current wording

Net loss per basic and diluted share attributable to common stockholders was $(0.57) and $(0.09) for the three months ended June 30, 2026 and 2025, respectively. Net loss per basic and diluted share attributable to common stockholders was $(0.68) and $(0.59) for the six months ended June 30, 2026 and 2025, respectively. The basic and diluted weighted average number of shares of common stock outstanding was approximately 21.3 million for the three and six months ended June 30, 2026 and 20.9 million for the three and six months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2026, Adjusted EBITDA (as defined below), a non-GAAP financial measure, increased 15.2% to $1.8 million from $1.6 million for the three months ended March 31, 2025.

Current wording

For the three months ended June 30, 2026, Adjusted EBITDA (as defined below), a non-GAAP financial measure, increased 4.0% to $2.8 million from $2.7 million for the three months ended June 30, 2025. For the six months ended June 30, 2026, Adjusted EBITDA increased 8.1% to $4.6 million from $4.2 million for the same period in 2025.

Previous wording

We use the non-GAAP measurement of earnings before interest, taxes, depreciation, amortization, stock-related compensation charges, and other adjustments, or “Adjusted EBITDA”, to evaluate our performance. Adjusted EBITDA is a non-GAAP measure that is frequently used by analysts, investors and other interested parties to evaluate the market value of companies considered to be in similar businesses. We suggest that Adjusted EBITDA be viewed in conjunction with our reported financial results or other financial information prepared in accordance with GAAP.

Current wording

We use the non-GAAP measurement of earnings before interest, taxes, depreciation, amortization, stock-related compensation charges, and certain other adjustments, or “Adjusted EBITDA”, to evaluate our performance. Adjusted EBITDA is a non-GAAP measure that is frequently used by analysts, investors and other interested parties to evaluate the market value of companies considered to be in similar businesses. We suggest that Adjusted EBITDA be viewed in conjunction with our reported financial results or other financial information prepared in accordance with GAAP.

Previous wording

The following table reflects the reconciliation of net loss to Adjusted EBITDA for the three months ended March 31, 2026 and 2025 (in thousands):

Current wording

The following table reflects the reconciliation of net loss to Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025 (in thousands):

Previous wording

For the three months ended March 31, 2026, other adjustments result from an adjustment to estimated severance costs recorded in the prior year. For the three months ended March 31, 2025, other adjustments primarily related to severance and retirement costs, in addition to certain professional fees.

Current wording

For the three and six months ended June 30, 2026, other adjustments result primarily from severance costs. For the three and six months ended June 30, 2025, other adjustments primarily related to severance and retirement costs, certain loan amendment costs, and other professional fees.

Previous wording

As of March 31, 2026, we had working capital of $11.9 million, including $1.1 million of cash and cash equivalents, compared with working capital of $11.7 million, including $1.0 million of cash and cash equivalents as of December 31, 2025.

Current wording

As of June 30, 2026, we had working capital of $7.9 million, including $1.0 million of cash and cash equivalents, compared with working capital of $11.7 million, including $1.0 million of cash and cash equivalents as of December 31, 2025.

Previous wording

We believe our existing cash and cash equivalents of $1.1 million, our borrowing availability under our $40.0 million TCB ABL Facility (as defined and discussed in Note 8 to our condensed consolidated financial statements), and cash expected to be generated from operations will be sufficient to fund our operations for the next 12 months and thereafter for the foreseeable future. Our known current- and long-term uses of cash include, among other possible demands, capital expenditures, lease payments and repayments to service debt and other long-term obligations. We have no agreements, commitments, or understandings with respect to any such placements of our securities and any such placements could be dilutive to our stockholders.

Current wording

We believe our existing cash and cash equivalents of $1.0 million, our borrowing availability under our $40.0 million TCB ABL Facility (as defined and discussed in Note 8 to our condensed consolidated financial statements), and cash expected to be generated from operations will be sufficient to fund our operations for the next 12 months and thereafter for the foreseeable future. Our known current- and long-term uses of cash include, among other possible demands, capital expenditures, lease payments and repayments to service debt and other long-term obligations. We have no agreements, commitments, or understandings with respect to any such placements of our securities and any such placements could be dilutive to our stockholders.

Previous wording

The following table presents a summary of our cash flows for the three months ended March 31, 2026 and 2025 (in thousands):

Current wording

The following table presents a summary of our cash flows for the six months ended June 30, 2026 and 2025 (in thousands):

Previous wording

For the three months ended March 31, 2026, our net loss of $(2.3) million included a non-cash loss on debt extinguishment of $488 thousand. Other non-cash items included in our net loss for the three months ended March 31, 2026 totaled approximately $1.8 million and related primarily to depreciation, amortization of intangible assets and debt issuance costs and discounts, a provision for doubtful accounts, and stock-based compensation. For the three months ended March 31, 2025, our net loss of $(10.4) million included a non-cash net loss on sale of $4.4 million and an impairment loss of $1.7 million. Other non-cash items included in our net loss for the three months ended March 31, 2025 totaled approximately $2.9 million and related primarily to depreciation, amortization of intangible assets and debt issuance costs and discounts, a provision for doubtful accounts, and stock-based compensation.

Current wording

For the six months ended June 30, 2026, our net loss of $(14.5) million included a non-cash goodwill impairment loss of $11.0 million and loss on debt extinguishment of $488 thousand. Other non-cash items included in our net loss for the six months ended June 30, 2026 totaled approximately $3.8 million and related primarily to depreciation, amortization of intangible assets and debt issuance costs and discounts, a provision for doubtful accounts, and stock-based compensation. For the six months ended June 30, 2025, our net loss of $(12.4) million included a non-cash net loss on sale of $4.5 million and a non-cash intangible asset impairment loss of $1.7 million. Other non-cash items included in our net loss for the six months ended June 30, 2025 totaled approximately $5.3 million and related primarily to depreciation, amortization of intangible assets and debt issuance costs and discounts, a provision for doubtful accounts, and stock-based compensation.

Previous wording

The favorable change in our net cash provided by operating activities primarily results from improved working capital management, especially related to our continued focus on strong collection efforts and improved billing cycle times, which contributed to an improvement in days sales outstanding compared to the first quarter of 2025. During the three months ended March 31, 2026, we also recognized decreased spending for operating expenses as a result of our cost savings initiatives. These positive impacts to our cash provided by operating activities were partially offset by the net decline in client activity during the three months ended March 31, 2026. See Management’s Discussion and Analysis of Financial Condition: Results of Operations for further discussion of our cost savings initiatives and client activity.

Current wording

The favorable change in our net cash provided by operating activities primarily results from improved working capital management, especially related to our continued focus on strong collection efforts and improved billing cycle times, which contributed to an improvement in days sales outstanding. Days sales outstanding (defined as “Accounts receivable, less allowance for doubtful accounts” at quarter end divided by “Revenue” for the most recent quarter multiplied by 91.25 days) decreased from 75.9 days at December 31, 2025 to 70.5 days at June 30, 2026. During the six months ended June 30, 2026, we also recognized decreased spending for operating expenses as a result of our cost savings initiatives. These positive impacts to our cash provided by operating activities were partially offset by the net decline in client activity during the six months ended June 30, 2026. See Management’s Discussion and Analysis of Financial Condition: Results of Operations for further discussion of our cost savings initiatives and client activity.

Previous wording

Cash used in investing activities for the three months ended March 31, 2026 was $(0.4) million and primarily relates to software development costs. Cash provided by investing activities for the three months ended March 31, 2025 was $4.5 million and primarily related to the sale of our divested business operations, which generated cash proceeds of approximately $5.0 million. These proceeds were used to repay a portion of our outstanding debt at March 31, 2025. Other investing activities for the three months ended March 31, 2025 related to software development costs and the purchase of other property and equipment.

Current wording

Cash used in investing activities for the six months ended June 30, 2026 was $(0.7) million and primarily relates to software development costs. Cash provided by investing activities for the six months ended June 30, 2025 was $4.2 million and primarily related to the sale of our divested business operations, which generated cash proceeds of approximately $5.0 million. These proceeds were used to repay a portion of our outstanding debt in 2025.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2026 was $0.3 million. During the three months ended March 31, 2026, we had net borrowings of $2.7 million from our credit facilities, which were partially offset by repayments of $2.1 million on our notes payable and payments for debt issuance costs of $178 thousand resulting from the March 2026 financing transactions. Additionally, during the three months ended March 31, 2026, we paid $41 thousand in tax withholding costs for the vesting of certain restricted stock units.

Current wording

Net cash used in financing activities for the six months ended June 30, 2026 was $(4.0) million, primarily due to the repayment of $4.3 million on our notes payable and payments for debt issuance costs of $0.2 million resulting from the March 2026 debt refinancing transactions, partially offset by net borrowings of $0.5 million from our credit facilities.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025 was $(2.5) million, primarily due to the repayment of $3.5 million on our notes payable using proceeds from the sale of certain divested business operations as further discussed in Note 3 to our condensed consolidated financial statements. Other financing activities included net borrowings of $0.9 million on our credit facility, which included a repayment of $1.5 million using the proceeds from the sale of assets, and $0.4 million of borrowings from our PNC equipment term loan. See Note 8 to our condensed consolidated financial statements for further discussion.

Current wording

Net cash used in financing activities for the six months ended June 30, 2025 was $(7.0) million, primarily due to the repayment of $3.5 million on our notes payable using proceeds from the sale of certain divested business operations as further discussed in Note 3 to our condensed consolidated financial statements. Other financing activities included net repayment of $2.8 million on our credit facility. See Note 8 to our condensed consolidated financial statements for further discussion.

Previous wording

Although the overall economy has experienced some inflationary pressures, we do not believe that inflation had a material impact on us during the three months ended March 31, 2026 and 2025. We believe our flexible pricing structures and cost recovery fees may help mitigate volatility in costs, such as fuel, labor, and certain capital items, by allowing us to recover certain inflation-related cost increases from our customer base. Ongoing geopolitical conflicts, including recent military actions involving Iran and the broader Middle East, may contribute to further volatility in energy markets and fuel costs, which could increase inflationary pressure on our business or create timing delays in our ability to recover such costs from customers. However, consistent with industry practice, we believe many of our contracts allow us to pass through certain costs to our customers or adjust pricing. While we believe that we should be able to offset many cost increases that result from inflation in the ordinary course of business, we may be required to absorb at least part of these cost increases due to competitive pressures or delays in timing of rate increases. Although we have not been materially affected by inflation to date, we can provide no assurance that we will not be affected in the future by higher rates of inflation, increases in interest rates, or continued volatility in energy and fuel costs.

Current wording

Although the overall economy has experienced some inflationary pressures, we do not believe that inflation had a material impact on us during the six months ended June 30, 2026 and 2025. We believe our flexible pricing structures and cost recovery fees may help mitigate volatility in costs, such as fuel, labor, and certain capital items, by allowing us to recover certain inflation-related cost increases from our customer base. Ongoing geopolitical conflicts, including recent military actions involving Iran and the broader Middle East, may contribute to further volatility in energy markets and fuel costs, which could increase inflationary pressure on our business or create timing delays in our ability to recover such costs from customers. However, consistent with industry practice, we believe many of our contracts allow us to pass through certain costs to our customers or adjust pricing. While we believe that we should be able to offset many cost increases that result from inflation in the ordinary course of business, we may be required to absorb at least part of these cost increases due to competitive pressures or delays in timing of rate increases. Although we have not been materially affected by inflation to date, we can provide no assurance that we will not be affected in the future by higher rates of inflation, increases in interest rates, or continued volatility in energy and fuel costs.

Previous wording

Our discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to areas that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. These areas include carrying amounts of accounts receivable, goodwill and other intangible assets, the liability for estimated exit fees, stock-based compensation expense, and deferred taxes. We base our estimates on historical experience, our observance of trends in particular areas, and information or valuations and various other assumptions that we believe to be reasonable under the circumstances and which form the basis for making judgments about the carrying value of assets and liabilities that may not be readily apparent from other sources. Actual amounts could differ significantly from amounts previously estimated. For a discussion of our critical accounting policies, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report. There have been no significant changes in our critical accounting policies during the three months ended March 31, 2026, except as follows:

Current wording

Our discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to areas that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. These areas include carrying amounts of accounts receivable, goodwill and other intangible assets, the liability for estimated exit fees, stock-based compensation expense, and deferred taxes. We base our estimates on historical experience, our observance of trends in particular areas, and information or valuations and various other assumptions that we believe to be reasonable under the circumstances and which form the basis for making judgments about the carrying value of assets and liabilities that may not be readily apparent from other sources. Actual amounts could differ significantly from amounts previously estimated. For a discussion of our critical accounting policies, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report. There have been no significant changes in our critical accounting policies during the six months ended June 30, 2026, except as follows: