GRID DYNAMICS HOLDINGS INC

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

Note 1 —Nature of operations and summary of significant accounting policies

Grid Dynamics Holdings, Inc. (the “Company”) is a leading provider of technology consulting, platform and product engineering, and advanced analytics services. The Company’s core business includes cloud platform and product engineering, supply chain and advanced manufacturing, and data and machine learning platform engineering. Grid Dynamics also helps organizations become more agile and create innovative digital products and experiences through its deep expertise in emerging technology, such as artificial intelligence (“AI”), data science, cloud computing, big data and DevOps, lean software development practices and a high-performance product culture. The Company’s headquarters and principal place of business is in San Ramon, California.

The following is a summary of critical accounting policies consistently applied in the preparation of the accompanying unaudited condensed consolidated financial statements. Full description of significant accounting policies is provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on February 29, 2024.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of the Company’s management, necessary for the fair presentation of the results of operations for the interim periods. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2023 included in the Company’s annual report on Form 10-K that the Company filed with the SEC on February 29, 2024.

Principles of consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries that are directly or indirectly owned or controlled. Intercompany transactions and balances have been eliminated upon consolidation.

The Company provides services to its customers utilizing its own personnel as well as personnel from subcontractors. One of the subcontractors exclusively supports and performs services on behalf of the Company and its customers. The Company had no ownership in this subcontractor (“Affiliate”) as of September 30, 2024. The Company is required to apply accounting standards which address how a business enterprise should evaluate whether it has a controlling financial interest in a variable interest entity (“VIE”) through means other than voting rights and accordingly should determine whether or not to consolidate the entity. The Company has determined that it is required to consolidate the Affiliate because the Company has the power to direct the VIE’s most significant activities and is the primary beneficiary of the Affiliate. The assets and liabilities of the Affiliate primarily consist of inter-company balances and transactions all of which have been eliminated in consolidation. There was minimal activity in the Affiliate during the three and nine months ended September 30, 2024.

Use of estimates

The preparation of the unaudited condensed consolidated financial statements in accordance with the U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates and such differences could be material. Significant estimates include determination of fair value, useful lives and recoverability of intangible assets and goodwill, valuation of stock-based compensation and contingent consideration payable, determination of provision for income taxes, deferred tax assets and liabilities and uncertain tax positions.

Allowance for credit losses

The Company maintains an allowance against accounts receivable for the estimated probable losses on uncollectible accounts. The allowance is based upon historical loss experience, as adjusted for the current market conditions and forecasts about future economic conditions. As of September 30, 2024 and December 31, 2023, the Company recorded $1.8 million and $1.4 million of allowance for credit losses, respectively.

Stock-based compensation

The Company recognizes the cost of its stock-based awards based on the fair value of these awards at the date of grant. The fair value of service-based and performance based awards without market conditions at the date of grant is based on the closing price of the Company’s shares on NASDAQ. For performance awards with market conditions the grant date fair value is measured using the Monte-Carlo model. Grant-date fair value of stock options is estimated using the Black-Scholes-Merton option pricing model. The model requires management to make a number of key assumptions including expected volatility, expected term, risk-free interest rate, and expected dividends. The Company evaluates the assumptions used to value its share-based awards on each grant date. For an award with graded vesting that is subject only to a service condition (e.g., time-based vesting), the Company uses the straight-line attribution method under ASC Topic 718 under which it recognizes compensation cost on a straight-line basis over the total requisite service period for the entire award (i.e., over the requisite service period of the last separately-vesting tranche of the award). For awards with performance conditions the compensation cost recognized is based on the actual or expected achievement of the performance condition based on the graded attribution method. Additionally, the Company applies the “floor” concept so that the amount of compensation cost that is recognized as of any date is at least equal to the grant-date fair value of the vested portion of the award on that date. That is, if the straight-line expense recognized to date is less than the grant date fair value of the award that is legally vested at that date, the company will increase its recognized expense to at least equal the fair value of the vested amount. The requisite service period, which is the vesting period, of service-based and performance-based awards is typically 4 years and 3 years, respectively. The Company made an accounting policy election to account for forfeitures when they occur.

Prior period reclassifications

The Company presented and analyzed its revenues by customer locations attributing revenues based upon billed customer location. Effective December 31, 2023, the Company attributes revenues to geographic regions based upon location of the customer served irrespective of the location billed, or the location of the delivery center performing the work. The Company believes this change allows it to more effectively analyze its geographies and associated risks. This change did not result in any adjustments to our previously issued financial statements and were applied retrospectively beginning on January 1, 2021. Comparative information for the three and nine months ended September 30, 2023 is presented in the following table:

Recently adopted accounting pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (the “FASB”), in the form of Accounting Standards Updates (“ASUs”), to the FASB’s ASC. The Company will adopt these changes according to the various timetables the FASB specifies.

There were no recently adopted accounting standards which had a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows.

Recently issued accounting pronouncements

On November 2023, the FASB issued ASU 2023-07, Segment Reporting(Topic 280)— Improvements to Reportable Segment Disclosures, that expands disclosures requirements around significant segment expenses and other segment items that are included in reported measure of segment profit or loss. The guidance also requires entities to provide in their interim financial reports all disclosures about a reportable segment’s profit or loss and assets that are currently required only on annual basis. Guidance also obliges entities with a single reportable segment to provide all the disclosures under amended ASC 280 in their interim and annual financial statement. The new guidance is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods within fiscal years beginning after December 15, 2024 on a retrospective basis, The Company is currently evaluating the impact on this guidance on its consolidated financial statements.

On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740)—Improvements to Income Tax Disclosures, which expands annual disclosure requirements around income taxes primarily related to the rate reconciliation and income taxes paid. The new guidance is effective for annual reporting periods beginning after December 15, 2024 with early adoption permitted. The guidance will be applied on a prospective basis with a retrospective application option. The Company is currently evaluating the impact on this guidance on its consolidated financial statements.

Note 2 —Acquisitions

JUXT— On September 26, 2024, the Company acquired 100% of Headrunner Limited and Congreve Computing Ltd., with their wholly owned subsidiary JUXT Ltd. (collectively referred to as “JUXT”). JUXT is a group of UK-based companies specializing in data-intensive information systems for banking and other financial institutions, with a particular focus on risk platforms, structured notes, equity derivatives, and financial reporting. JUXT primary expertise includes full trade life cycle, prime brokerage, structured notes, and risk management. The Company believes that acquisition of JUXT strengthens its go-to-market positioning in Finance vertical and opens new opportunities across the European market.

The total purchase consideration is $47.0 million and consists of cash consideration of $39.5 million paid at closing, and fair value of the contingent consideration at the date of the acquisition of $7.5 million. As a result of the acquisition, the Company recorded $54.9 million of total assets, including $7.3 million of cash, $18.9 million of intangible assets, primarily consisting of customer relationships, and $19.9 million of goodwill; as well as $7.9 million of total liabilities. The estimated fair values are provisional and based on the information available as of the acquisition date. The Company expects to finalize the purchase price allocations as soon as practicable but no later thanone year from the acquisition date.

NextSphere— On April 18, 2023, the Company completed the acquisition of 100% of NextSphere Technologies, Inc. (“NextSphere”). Founded in 2006, NextSphere is headquartered in Tampa, FL, has an engineering presence in Phoenix, AZ, and operates two large engineering centers in India’s tech hubs of Hyderabad and Chennai. NextSphere specializes in modern application development, systems monetization, product development, cloud and infrastructure services, and quality assurance. NextSphere has worked with several brands across numerous industry verticals with expertise in Healthcare, Fintech, and CPG/Manufacturing industries. The Company believes this acquisition will support the Company’s objectives of enhancing its technical capabilities, expanding its global footprint, and increasing its client base.

The total purchase consideration is $25.2 million and consists of cash consideration of $24.3 million paid at closing, and fair value of the contingent consideration at the date of the acquisition of $0.9 million. As a result of NextSphere acquisition, the Company recorded $29.3 million of total assets, including $6.4 million of cash, $9.9 million of intangible assets, primarily consisting of customer relationships, and $9.0 million of goodwill; as well as $4.4 million of total liabilities.

These unaudited pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations as they would have been had the acquisition of JUXT occurred on the assumed date, nor are they necessarily an indication of future operating results.

Note 3 —Fair value

Estimates of fair value of financial instruments not carried at fair value on a recurring basis are generally subjective in nature, and are determined as of a specific point in time based on the characteristics of the financial instruments and relevant market information. The Company’s financial assets and liabilities are generally short-term in nature; therefore, the carrying value of these items approximates their fair value. The following table summarizes certain fair value information as of September 30, 2024 and December 31, 2023 for financial assets and liabilities measured at fair value on a recurring basis, as well as estimated fair values of certain other financial assets and liabilities not measured on a recurring basis:

(1)Equity securities that do not have readily determinable fair value and are measured at cost.

Contingent consideration payable

The Company measures contingent consideration payable at fair value on a recurring basis using significant inputs that are not observable in the market. Fair value of the contingent consideration liability is based on the Monte-Carlo model which is primarily based on forecasts and discounted cash flow analysis. The Company believes its estimates and assumptions are reasonable; however, there is significant judgment involved. Changes in the fair value of contingent consideration payable primarily result from changes in the timing and amount of specific milestone estimates and changes in probability assumptions with respect to the likelihood of achieving the various earnout criteria. These changes could cause a material impact to, and volatility in the Company’s operating results.

During the three months ended September 30, 2024, the Company completed the acquisition of JUXT, under which the Company committed to make a cash earnout payment subject to attainment of specific performance targets. The weighted average discount rates used to determine fair value of JUXT contingent consideration payable was 10.5%.

A reconciliation of the beginning and ending balances of Level 3 acquisition-related contingent consideration payable using significant unobservable inputs for the nine months ended September 30, 2024 is as follows:

Investments in equity securities

The Company holds investments in public and privately-held entities. As the Company does not have either controlling interest or significant influence over these entities, investments are accounted using two different methods depending on the type of equity investments:

•Equity investments in public entities are measured and carried at fair value with any changes recognized in Other income/(expense), net in the condensed consolidated statements of income/(loss) and comprehensive income/(loss).

•Equity investments that do not have readily determinable fair value are accounted for under the fair value measurement alternative. Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. All gains and losses on non-marketable securities, whether realized or unrealized, are recognized in Other income/(expense), net in the condensed consolidated statements of loss and comprehensive loss.

The Company classifies its investments in equity securities in Other noncurrent assets in the Company’s unaudited condensed consolidated balance sheets.

Investment in non-marketable equity securities held by the Company as of September 30, 2024 and December 31, 2023 represents investment in its related party, a company affiliated with the member of the Company’s Board of Directors, that does not have readily determinable fair values.

Note 4 —Property and equipment, net

Property and equipment, net consisted of the following:

Note 5 —Intangible assets, net

Intangible assets, net consisted of the following:

Based on the carrying value of the Company’s existing intangible assets as of September 30, 2024, the estimated amortization expense for the future years is as follows:

Note 6 —Accrued expenses and other current liabilities

The components of accrued expenses and other current liabilities were as follows:

As of December 31, 2023, the Company had a payable to its related party, a company affiliated with the member of the Company’s Board of Directors, in the amount of $0.6 million that was classified as Other current liabilities in the unaudited condensed consolidated balance sheet. The Company fully settled this payable during the first quarter of 2024. There wereno payables to related parties as of September 30, 2024.

Note 7 —Debt

Revolving Credit Facility — On March 15, 2022, the Company entered into a Credit Agreement (the “2022 Credit Agreement”) by and among the Company, as borrower, the guarantors party thereto from time to time, the lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders. The 2022 Credit Agreement provides for a secured multicurrency revolving loan facility with an initial aggregate principal amount of up to $30.0 million, with a $10.0 million letter of credit sublimit. The Company may increase the size of the revolving loan facility up to $50.0 million, subject to certain conditions and additional commitments from existing and/or new lenders. The 2022 Credit Agreement matures on March 15, 2025.

At the Company’s option, borrowings under the 2022 Credit Agreement accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 1.0% to 1.5%, (ii) an adjusted term Secured Overnight Financing Rate (“SOFR”) or adjusted the Euro Interbank Offer Rate (“EURIBOR”) (based on one, three or six-month interest periods) plus a margin ranging from 2.0% to 2.5%, or (iii) an adjusted daily simple SOFR rate (or SONIA rate in the case of loans denominated in pounds sterling, or SARON rate in the case of loans denominated in Swiss francs), plus a margin ranging from 2.0% to 2.5%, in each case, with the applicable margin determined based on the Company’s consolidated total leverage ratio. The Company is also obligated to pay other closing fees, administration fees, commitment fees and letter of credit fees customary for a credit facility of this size and type.

The Company’s obligations under the 2022 Credit Agreement are required to be guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the 2022 Credit Agreement. Such obligations, including the guaranties, are secured by substantially all of the personal property of the Company and the Company’s subsidiary guarantors.

The 2022 Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments and acquisitions, make certain restricted payments, dispose of assets, enter into certain transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the 2022 Credit Agreement. The Company is also required to maintain compliance with a consolidated total leverage ratio, determined in accordance with the terms of the 2022 Credit Agreement. As of September 30, 2024, the Company was in compliance with all covenants contained in the 2022 Credit Agreement.

As of September 30, 2024 and December 31, 2023, respectively, the Company didnot have any outstanding debt under the 2022 Credit Agreement.

Note 8 —Revenues

Disaggregation of revenues

The tables below present disaggregated revenues from contracts with customer by customer location, industries and contract-types. The Company believes this disaggregation best depicts how the nature, amount, timing and uncertainty of its revenues and cash flows are affected by industry, market and other economic factors. The Company has a single reportable segment for the three and nine months ended September 30, 2024 and 2023.

The following table shows the disaggregation of the Company’s revenues by major customer location. Revenues are attributed to geographic regions based upon location of the customer served irrespective of the location billed, or the location of the delivery center performing the work. Substantially all of the revenue in our North America region relates to operations in the United States.

The following table shows the disaggregation of the Company’s revenues by main vertical markets:

(1)CPG stands for Consumer Packaged Goods.

The following table shows the disaggregation of the Company’s revenues by contract types:

Contract balances

A contract asset is a right to consideration that is conditional upon factors other than the passage of time. A contract liability, or deferred revenue, consists of advance payments and billings in excess of revenues recognized. As of September 30, 2024 and

December 31, 2023 the Company didnot have contract assets recorded in its unaudited condensed consolidated balance sheet. Contract liabilities were $0.4 million and $0.6 million as of September 30, 2024 and December 31, 2023, respectively. These balances were classified as Accrued and other current liabilities in the unaudited condensed consolidated balance sheets.

During the three and nine months ended September 30, 2024, the Company recognized $0.1 million and $0.5 million of revenues, respectively, that were included in Accrued and other current liabilities at December 31, 2023. During the three and nine months ended September 30, 2023, the Company recognized $0.1 million and $1.0 million of revenues, respectively, that were included in Accrued and other current liabilities at December 31, 2022.

Remaining performance obligations

As of September 30, 2024, the aggregate amount of transaction price allocated to remaining performance obligations was $6.5 million. Our remaining performance obligations represent commitments for future services for which work has not been performed and revenues are to be recorded in future periods. The Company expects to recognize approximately 31.0% of its remaining performance obligations as revenues during 3 months of the fiscal year 2024, and an additional 69.0% in 2025. Remaining performance obligations include currently recorded contract liability as well as amounts that will be invoiced in future periods and excludes the contracts that meet at least one of the following criteria under ASC Topic 606 “Revenue from Contracts with Customers”:

1)contracts with an original duration of one year or less, including contracts that can be terminated for convenience without a substantive penalty,

2)contracts for which the Company recognizes revenues based on the right to invoice for services performed,

3)variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with ASC 606-10-25-14(b), for which the criteria in ASC 606-10-32-40 have been met, or

4)variable consideration in the form of a sales-based or usage-based royalty promised in exchange for a license of intellectual property.

Many of the Company’s contracts met one or more of these exemptions as of September 30, 2024.

Customers concentration

The following table shows the amount of revenue derived from each customer exceeding 10% of the Company’s revenue:

The following table shows number of customers exceeding 10% of the Company’s billed and unbilled receivable balances:

Transactions with related parties

During the nine months ended September 30, 2024 and 2023, the Company conducted transactions with a number of companies affiliated with the members of the Company’s Board of Directors. As a result, during the three and nine months ended September 30, 2024, the Company recorded revenues from related parties of $5.6 million and $12.9 million, respectively. During the same periods of 2023, the Company recorded revenues from its related parties of $2.0 million and $6.0 million, respectively. As of September 30, 2024 and December 31, 2023, accounts receivable from related parties were $4.0 million and $0.9 million, respectively. Unbilled receivables from related parties as of September 30, 2024 were $0.1 million. The Company didnot have unbilled receivables from related parties as of December 31, 2023.

Note 9 —Leases

A major part of the Company’s lease obligations is for office real estate. The Company may also lease corporate apartments, cars and office equipment. Payments on some of our leases may depend on index or rate, including Consumer Price Index. Such payments are included in the calculation of lease liability and assets at the commencement dates, all future changes are accounted as variable payments similar to other variable payments, such as common area maintenance, property and other taxes, utilities and insurance that are based on the lessor’s cost.

The Company’s leases have remaining lease terms ranging from 0.1 to 5.7 years. Certain lease agreements may include the option to extend or terminate before the end of the contractual term and are often non-cancelable or cancellable only by the payment of penalties. The Company includes these options in the lease term when it is reasonably certain that they will be exercised.

As of September 30, 2024 and December 31, 2023, the Company had no finance leases.

Operating lease expense is recorded on a straight-line basis over the lease term. During the three and nine months ended September 30, 2024 and 2023, lease costs were as follows:

Supplemental information related to operating lease transactions is as follows:

Weighted average remaining lease term and discount rate as of September 30, 2024 and December 31, 2023 is as follows:

As of September 30, 2024, operating lease liabilities will mature as follows:

There were no material lease agreements signed with related parties as of September 30, 2024 and December 31, 2023.

Note 10 —Income taxes

The Company recorded income tax expense of $1.3 million and $2.6 million for the three months ended September 30, 2024 and 2023, respectively. The Company’s effective tax rate was 23.6% and 79.5% for the third quarter of 2024 and 2023, respectively. The Company recorded income tax expense of $5.8 million and $8.0 million for the nine months ended September 30, 2024 and 2023, respectively. The Company’s effective tax rate was not meaningful during the nine months ended September 30, 2024 and 2023 due to immaterial income/(loss) before tax compared to the income tax expense recorded.

The change in the effective tax rate for the three and nine months ended September 30, 2024, as compared to the same period in 2023, was attributable mainly to Section 162(m) compensation deduction limitations, state tax expense, and foreign inclusion adjustments.

For the three and nine months ended September 30, 2024, the Company used a discrete effective tax rate method to calculate income taxes due to sensitivity of the forecast. Through September 30, 2024, the Company determined that small changes in the estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate causing material distortion in the year-to-date tax provision.

As of September 30, 2024, the Company is unable to produce a reliable estimate of ordinary income for the quarter and year ending 2024 due to the inability to reliably or accurately forecast 2024 operating expenses. Similarly, for the three and nine months ended September 30, 2024, due to uncertainties created by geopolitical risks, the Company’s estimated annual effective tax rate method would not provide a reliable estimate and therefore was not used.

Note 11 —Stock-based compensation

Employee stock-based compensation cost recognized in the condensed consolidated statements of loss and comprehensive loss was as follows:

Stock Options

2018 Plan

Stock option activity under the Company’s 2018 Plan is set forth below:

As of September 30, 2024, the Company fully recognized stock-based compensation costs related to 2018 Plan options.

2020 Plan

As of September 30, 2024,2.1 million shares were available for grant under 2020 Incentive Stock Plan (“2020 Plan”).

Stock option activity under the Company’s 2020 Plan is set forth below:

The Company elected the policy to account for forfeitures upon occurrence. The total unrecognized compensation expenses related to 2020 Stock Plan options as of September 30, 2024 were $5.5 million to be expensed on a straight-line basis over the remaining 2.1 years.

Restricted Stock Units

RSUs granted do not participate in earnings or dividends, and do not have voting rights until vested.

The following table summarizes activity of the Company’s RSUs for the nine months ended September 30, 2024:

The total unrecognized compensation expenses related to 2020 Stock Plan RSUs as of September 30, 2024 were $17.0 million to be expensed on a straight-line basis over 2.4 years.

Performance Stock Units

The following table summarizes activity of the Company’s PSUs for the nine months ended September 30, 2024:

(1)Reported at the certified performance achievement of 170% of the target shares granted.

(2)Reported of 100% of the target shares granted.

(3)Reported at the estimate performance achievement of 153% for the first tranche of the target shares granted in 2024.

The total estimated unrecognized compensation expenses related to 2020 Stock Plan PSUs as of September 30, 2024 were $15.3 million to be expensed over 1.4 years.

Note 12 —Earnings (loss) per share

Basic earnings (loss) per share (“EPS”) is computed by dividing the net income (loss) applicable to common stockholders for the period by the weighted average number of shares of common stock outstanding during the same period. Diluted EPS is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, restricted stock units, and performance stock units. The dilutive effect of potentially dilutive securities is reflected in diluted EPS in order of dilution and by application of the treasury stock method and the if-converted method for stock-based compensation and convertible preferred securities, respectively.

The following table sets forth the computation of basic and diluted EPS of common stock as follows:

The following table represents the number of share equivalents outstanding during the period that were excluded from the calculation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect.

Note 13 —Segment and geographic information

The Company’s business activities have similar economic characteristics and are similar in all of the following areas: the nature of services, the type or class of customer for which they provide their services, and the methods used to provide their services. In accordance with ASC Topic 280, Segment Reporting, the Company has determined it has single operating and reportable segments. This determination is consistent with the financial information regularly reviewed by the chief operating decision maker who assesses the Company’s performance and allocates resources based on the Company’s consolidated financial information.

Geographic Information

The following table presents revenues by customer location for the three and nine months ended September 30, 2024 and 2023. The Company attributes customers to respective countries based upon location of the customer served. It differs from the prior period definition that was based upon location of the customer billed. Refer to Note 1 for more details on reclassifications.

Long-lived assets include property and equipment, net of accumulated depreciation and amortization. Physical locations and values of the Company’s long-lived assets are summarized below:

Note 14 —Commitments and contingencies

Legal Matters

The Company is subject to legal proceedings and claims that arise in the ordinary course of its business. Management evaluates each claim and provides for potential loss when the claim is probable to be paid and reasonably estimable. While adverse decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any future accruals with respect to these currently known contingencies would not have a material effect on the financial condition, liquidity or cash flows of the Company. There were no material amounts required to be reflected in these unaudited condensed consolidated financial statements related to contingencies.

Note 15 —Subsequent events

The Company performed its subsequent event procedures through October 31, 2024, the date these unaudited condensed consolidated financial statements were issued.

On October 4, 2024, the Company acquired Mobile Computing S.A. (“Mobile Computing”), which is based in Argentina and offers a comprehensive suite of solutions spanning industries including manufacturing, CPG, and financial services. The Company paid approximately $13.3 million at closing. The Company is currently in the process of finalizing the accounting for this transaction and expects to complete its preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the fourth quarter of 2024.