Public Policy Holding Company, Inc.

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Public Policy Holding Company, Inc. ("PPHC-Inc.", "the Company", "we", "us", and "our") in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and Article 10 of Regulation S-X of the Securities and Exchange Commission (the "SEC"). Accordingly, certain information and footnote disclosures have been condensed or omitted. All intercompany balances and transactions have been eliminated.

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation, in all material respects, of the information contained herein. These unaudited condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Form 10-K"). Results for the interim periods are not necessarily indicative of results that may be expected for the year.

2026 U.S. Initial Public Offering

On January 26, 2026, we completed our U.S. initial public offering (“2026 U.S. IPO”) of 4,150,000 shares of common stock. The offering comprised 3,400,000 newly issued shares of common stock sold by the Company and 750,000 shares of existing common stock sold by certain shareholders, at a price of $12.25 per share.

On March 2, 2026, the Company announced the issuance of 342,500 additional shares of common stock, pursuant to the partial exercise of the over-allotment option granted to the underwriters in connection with the Company's 2026 U.S. IPO and admission to the Nasdaq Global Market.

We received net proceeds from the 2026 U.S. IPO of $36.0 million after deducting underwriting discounts and offering fees.

Omnibus Incentive Plan

On September 29, 2025, our board of directors approved an amendment (the "2025 Amendment") to the Public Policy Holding Company, Inc. 2021 Omnibus Incentive Plan (the "Omnibus Incentive Plan"), which became effective on January 26, 2026. The 2025 Amendment provides that no more than 2,600,000 shares of common stock may be available from the effective date of the amendment, for the grant of awards under the Omnibus Incentive Plan, subject to adjustment in accordance with the plan's provisions. The maximum aggregate number of shares of common stock that may be issued in the form of incentive stock options shall not exceed 2,164,801.

Use of Estimates

The preparation of the condensed consolidated financial statements in accordance with GAAP requires the Company’s management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but not limited to, the allowance for credit losses, useful lives of intangible assets, recoverability of the carrying amounts of intangible assets, shared-based compensation, business acquisitions, valuation of contingent considerations, post-combination liabilities and income tax provisions. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results could differ from these estimates.

Unless otherwise noted, dollars in tables are in thousands, except per share amounts.

Certain monetary amounts, percentages, and other figures included elsewhere in this Form 10-Q have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables or charts may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

Significant Accounting Policies

There have been no material changes to the significant accounting policies discussed in Note 1 - Organization And Significant Accounting Policies included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands annual disclosures in an entity’s income tax rate reconciliation table and requires annual disclosures regarding cash taxes paid both in the United States (federal, state and local) and foreign jurisdictions. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, although early adoption is permitted. The Company has adopted ASU 2023-09 for the year ended December 31, 2025, and has applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. See Note 8. Income Taxes, in the accompanying notes to the consolidated financial statements for further details.

In June 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), which provides guidance on the scope application of profits interest and similar awards. This guidance is effective for public business entities for annual reporting periods beginning after December 15, 2024, and interim reporting periods beginning after December 15, 2025. The Company has determined that there is no impact of this guidance on its consolidated financial statement disclosures, as the Company's stock compensation does not allow for profits interest and similar awards.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This guidance requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. This guidance is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company expects to adopt this guidance in its fiscal year beginning January 1, 2027, and is evaluating the potential impact of this guidance on its consolidated financial statement disclosures.

NOTE 2. REVENUE

Revenue recognition: The Company generates the majority of its revenue by providing consulting services through fixed-fee arrangements related to Government Relations Consulting, Corporate Communications & Public Affairs Consulting and Compliance and Insights Services.

Types of Contract Arrangements: Most of the consulting service contracts are based on one of the following types of contract arrangements:

1. Fixed-fee arrangements (“Retainer Revenue” and “Subscription Services Revenue”): these require the client to pay a fixed fee in exchange for a predetermined set of professional services. Retainer contracts generally comprise of a single stand-ready performance obligation for consulting services. The Company recognizes retainer revenue over time by measuring the progress toward complete satisfaction of the performance obligation. Subscription services generally comprise of a single performance obligation recognized over time with a straight-line pattern.

The Company’s standard practice for retainer revenue is to enter into agreements with clients that stipulate a fixed monthly fee, payable at the beginning of each month, for the services to be rendered. These agreements may also include provisions for the reimbursement of pre-approved, reasonable expenses incurred in fulfilling the performance obligations. Member companies typically invoice clients in advance, and the amounts billed are initially recorded as deferred revenue. Revenue is then recognized from deferred revenue as performance obligations are achieved.

A significant portion of the Company’s contracts with customers have termination clauses that give the customer the right to terminate the contract without cause with one month's notice without any substantial penalty. As such, the

Company believes such contracts should be treated as a month-to-month contract as this reflects the non-cancelable period of performance. The parties do not have enforceable rights and obligations beyond the month (or months) of services already performed. The Company's contracts generally do not contain a material right.

2. Project Revenue includes additional services such as 1) advertisement placement and management, 2) video production, 3) website development and 4) research services, in which third-party companies may be engaged to achieve specific business objectives. These services are either in a separate contract or within the fixed-fee consulting contract, in which the Company usually receives a markup on the cost incurred. Generally, these contracts are less than 12 months in length. The Company recognizes revenue earned to date in an amount that is probable and not likely to reverse. The Company utilizes an output method to measure progress toward complete satisfaction of the performance obligation, recognizing revenue based on the services delivered to the customer to date as a proportion of the total services promised in the contract. This approach reflects the transfer of control to the customer, as the customer receives and consumes the benefits of each service as it is performed. Any out-of-pocket administrative expenses incurred are billed at cost.

Revenue is recognized when control of services provided is transferred to customers and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services, using the following steps: 1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when the Company satisfies the performance obligations.

In determining the method and amount of revenue to recognize, the Company must make judgments and estimates. Specifically, complex arrangements with nonstandard terms and conditions may require management's judgment in interpreting the contract to determine the appropriate accounting, including whether the promised services specified in an arrangement are distinct performance obligations and should be accounted for separately, and how to allocate the transaction price, including any variable consideration, to the separate performance obligations. When a contract contains multiple performance obligations, the Company allocates the transaction price to each performance obligation based on its estimate of the stand-alone selling price. Other judgments include determining whether performance obligations are satisfied over time or at a point in time, and the selection of the method to measure progress towards completion.

The Company has considered the guidance of combining contracts in accordance with ASC 606-10-25-9, Combining Contracts. The Company has noted that its customers occasionally execute multiple orders for services, add-ons and professional services within a short period of time. The Company evaluates multiple orders to determine if the services across multiple orders relate directly to the same retainer service or project and will combine contracts if deemed to be related, as they are packaged within a single commercial objective. For any contracts that meet one or more of the requirements of ASC 606-10-25-9, the Company will account for the contracts as a single contract. The majority of contracts entered into with customers are entered into with multiple commercial objectives, and the consideration of one contract is determined independently from the price or performance of other contracts.

Certain services provided by the Company include the utilization of a third party in the delivery of those services. These services are primarily related to the production of an advertising campaign or media buying services. The Company has determined that it acts as an agent and is solely arranging for the third parties to provide services to the customer. Specifically, the Company does not control the specified services before transferring those services to the customer, is not primarily responsible for the performance of the third-party services, nor can the Company redirect those services to fulfill any other contracts. The Company does not have discretion in establishing the third-party pricing in its contracts with customers. For these performance obligations for which the Company acts as an agent, the Company records revenue as the net amount of the gross billings less amounts remitted to the third party.

The following table provides disaggregated revenue by revenue type:

Revenue by geographic region:

NOTE 3. BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

The Company presents both basic and diluted earnings per share on the face of the consolidated statements of operations and other comprehensive loss. Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Due to their anti-dilutive effect, the calculation of diluted net loss per share for the three months ended March 31, 2026 and the year ended December 31, 2025, does not include the common stock equivalent shares and nonvested shares. The Company’s weighted average shares utilized for its calculation of earnings (loss) per share include only the common shares outstanding.

The following table includes the number of shares outstanding and potentially dilutive stock options and Restricted Stock Units ("RSU's") as of March 31, 2026, and December 31, 2025, respectively:

(1)The holders of Restricted Stock Units and Stock Options are not entitled to dividends or to vote

The following tables includes the weighted average shares outstanding and potentially dilutive stock options and RSUs for three months ended March 31, 2026 and 2025, respectively:

The following table shows the computation of basic and diluted loss per share for the three months ended March 31, 2026 and 2025, respectively:

NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill is an indefinite lived asset with balances as follows:

We monitor our reporting units for indicators of impairment throughout the year to determine if a change in facts or circumstances warrants a re-evaluation of our goodwill. No goodwill impairment charges were recognized for the three months ended March 31, 2026. We incurred a non-cash impairment charge of $6.2 million in 2025 related to our Pagefield Communications Limited (“Pagefield”) Government Relations Consulting reporting unit and Pagefield Corporate Communications & Public Affairs reporting unit. There wasno goodwill impairment for the three months ended March 31, 2025.

Intangible assets

We didnot recognize any impairment charges on indefinite-lived intangible assets during the three months ended March 31, 2026. We incurred non-cash impairment charges of $0.3 million and $2.6 million respectively, within our Pagefield Government Relations Consulting and Pagefield Corporate Communications & Public Affairs Consulting reporting units in 2025. The Company hasnot recorded any impairment charges related to long-lived assets for the three months ended March 31, 2025.

The following presents the Company’s gross and net amounts of intangible assets, other than goodwill, as reported on the Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025:

Amortization expense for customer relationships, noncompete agreement and developed technology assets approximated $1.6 million and $1.3 million for the three months ended March 31, 2026 and 2025, respectively.

NOTE 5. LEASES

The Company leases office space and equipment under non-cancelable operating leases, which may include renewal or termination options that are reasonably certain of exercise. Most leases includeone or more options to renew, and the exercise of lease renewal options is at the Company’s sole discretion. Certain of the Company’s lease agreements include rental payments that are adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company also subleases office space to third parties under separate sublease agreements, which are generally month-to-month leases.

ASC 842 -Leases, requires use of the interest rate that a lessee would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. When the Company cannot readily determine the discount rate implicit in the lease agreement, the Company will utilize the incremental borrowing rate.

The Company uses its incremental borrowing rate on the commencement date to determine the present value of its lease payments. The discount rate used to measure the lease asset, and the liability is determined at the beginning of the lease term, using the rate implicit in the lease if readily determinable, or otherwise using the Company's collateralized credit-adjusted borrowing rate.

The following table presents lease costs and other quantitative information:

As of March 31, 2026, the current and long term operating lease liabilities are $4.8 million and $23.6 million, respectively. Future payments of operating leases as of March 31, 2026 are listed in the table below:

NOTE 6. NOTES PAYABLE

On February 28, 2023, PPHC entered into a $17.0 million credit agreement with Bank of America (as amended, the “Credit Agreement”), providing for a senior secured line of credit of up to $3.0 million (the “2023 Facility 1”) and a senior secured term loan of $14.0 million (the “2023 Facility 2,” and, together with the 2023 Facility 1, the “2023 Facilities”).

In April 2024 and June 2024, we executed two separate amendments to our Credit Agreement. These amendments provided fortwo additional term loans: a $6.0 million facility (“2024 Term Loan A”) and a $19.0 million facility (“2024 Term Loan B”). Collectively, these loans, together with the 2024 Term Loan A, are referred to as the “2024 Term Loans.”

In January 2025, we entered into a third amendment to our Credit Agreement, which established an additional term loan facility of up to $24.0 million (the “2025 Term Loan C”). The 2025 Term Loan C, together with the 2023 Facilities and the 2024 Term Loans, are collectively referred to as the “Bank Credit Facilities.”

The interest rate applicable to the 2023 Facilities is the Secured Overnight Financing Rate (“SOFR”), as administered by the Federal Reserve Bank of New York, plus 2.25% per annum. The 2024 Term Loans and the 2025 Term Loan C each bear interest at SOFR plus 2.60% per annum. Interest on all Bank Credit Facilities is payable monthly.

The Bank Credit Facilities are collateralized by substantially all of our assets.

The Company has several term loans outstanding with a financial institution (the "Term Loans"). The 2023 Facility 2 loan matures on March 31, 2029, with monthly principal payments of $0.2 million plus interest. The 2024 Term Loans require monthly principal payments of $0.3 million plus interest until their maturity date of April 30, 2028. The 2025 Term Loan C requires monthly principal payments of $0.2 million per month plus interest through March 1, 2026, increasing to $0.3 million per month plus interest through the maturity date of March 31, 2029.

The Company's total debt consists of the following as of:

As of March 31, 2026, the future principal maturities of the Term Loans are as follows:

Total approximate interest expense incurred was as follows:

The Credit Agreement and Amended Credit Agreements for the Term Loans contain certain non-financial and financial covenants with which the Company is required to comply. The Company must submit a compliance certificate to the bank on a quarterly basis. The financial covenants include a total leverage ratio and fixed coverage ratio. The Company was in compliance with all covenants as of March 31, 2026 and December 31, 2025.

NOTE 7. SEGMENT REPORTING

The Company has determined that its business is conducted across three reportable segments as of March 31, 2026, as follows: Government Relations Consulting, Corporate Communications & Public Affairs Consulting and Compliance and Insights Services.

•Government Relations Consulting services (also commonly referred to as “lobbying”) include advocacy, strategic guidance, political intelligence and issue monitoring at the U.S. federal and state levels, and in the United Kingdom through our offices in London;

•Corporate Communications & Public Affairs Consulting services include policy communications, crisis communications, financial communications and investor relations, litigation support, community relations, social and digital media, public opinion research, branding and messaging, and relationship marketing, across the United States and internationally through our offices in London, Shanghai, Abu Dhabi, and Dubai; and

•Compliance and Insights Services include lobbying compliance services and legislative tracking.

The Chief Operating Decision Maker ("CODM"), who is the Company's Chief Executive Officer, is not regularly provided asset information on a segment basis, as it is not used to allocate resources or assess performance for each segment. Therefore, total segment assets have not been disclosed. In addition, for the three months ended March 31, 2026 and 2025, revenues in each of thethree segments were primarily attributable the United States operations, as there were no other countries from which the Company derived segment revenues that exceeded 10% of that segment's total.

The CODM utilizes segment revenues, significant expenses consisting of staff costs and non-staff costs by segment and Adjusted Pre-Bonus EBITDA by segment (as described in the MD&A) to evaluate the Company’s financial performance, allocate resources, and make key operating decisions.

The following tables present key segment information and a reconciliation to the consolidated net loss after income taxes for each of the three months ended March 31, 2026, and 2025.

NOTE 8. INCOME TAXES

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted.

The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of March 31, 2026, and March 31, 2025, no material valuation allowance has been recorded against the Company’s deferred tax assets.

The Company applies a recognition threshold and measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For a tax benefit to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company has not identified any uncertain income tax positions that could have a material impact on the condensed consolidated financial statements. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense; the Company didnot have any such amounts accrued as of March 31, 2026, and December 31, 2025. Tax years from 2022 to 2024 remain subject to examination; 2025 has not yet been filed.

For interim periods, the Company recognizes an income tax expense or benefit based on an estimated annual effective tax rate ("EAETR"), calculated on a worldwide consolidated basis and expected for the full fiscal year. The EAETR is based on the statutory tax rates then in effect and adjusted for estimated permanent differences. Discrete items, when material, are excluded from the EAETR and are recognized in the interim period in which they occur.

For the three months ended March 31, 2026, the Company recognized an income tax expense of approximately $2.7 million on a net loss before income taxes of $8.8 million. Income tax expense for the period included a discrete tax benefit of approximately $1.7 million related to a one‑time transaction that resulted in the recognition of a deferred tax asset. This discrete benefit was recognized in the period incurred and was excluded from the Company’s estimated annual effective tax rate. The Company’s effective tax rate for the three months ended March 31, 2026, was (31.3)%, which was significantly impacted by the discrete item described above.

For the three months ended March 31, 2025, the Company recognized an income tax expense of approximately $4.1 million on a net loss before income taxes of $6.5 million. The effective tax rate for the period was (63.2)%.

The effective tax rates for the periods differed from the federal statutory rate of 21% primarily due to state taxes, GAAP compensation incurred that is not deductible for tax purposes, as well as other items related to prior periods’ business combinations that generate permanent book/tax differences.

The Company does not expect that any law changes enacted during the period will have a material impact on the provision for income taxes.

NOTE 9. FAIR VALUE MEASUREMENT

The following table presents a summary of the Company’s liabilities that are measured at fair value on a recurring basis by their respective fair value hierarchy level as of March 31, 2026:

The following table presents a summary of the Company’s liabilities that are measured at fair value on a recurring basis by their respective fair value hierarchy level as of December 31, 2025:

The carrying values of cash, contract receivables, and accounts payable and accrued expenses on March 31, 2026 and December 31, 2025 approximated their fair value due to the short maturity of these instruments.

Financial Instruments that are Measured at Fair Value on a Recurring Basis

Contingent Consideration

The fair value of contingent consideration from the Company's acquisitions were measured using Level 3 inputs.

The following table summarizes the change in fair value, as determined by Level 3 inputs, for the contingent consideration using the unobservable Level 3 inputs for the three months ended March 31, 2026 as follows:

The following table summarizes the change in fair value, as determined by Level 3 inputs, for the contingent consideration using the unobservable Level 3 inputs for the three months ended March 31, 2025 as follows:

The estimated fair value of contingent consideration is calculated using Monte Carlo simulations with inputs such as expected volatility of future operating results, discount rates applicable to future results, and expected growth rates.

Other Liabilities

The fair value of other liabilities, comprising of post-combination compensation obligations of the Company, relates to various acquisitions. The estimated fair value of other liabilities is calculated by Monte Carlo simulations utilize estimates including expected volatility of future operating results, discount rates applicable to future results, and expected growth rates.

The following table summarizes the change in fair value, as determined by Level 3 inputs, for the other liabilities using the Level 3 inputs for the three months ended March 31, 2026 as follows:

The following table summarizes the change in fair value, as determined by Level 3 inputs, for the other liabilities using the Level 3 inputs for the three months ended March 31, 2025 as follows:

The Monte Carlo assumptions and inputs (which are Level 3 inputs) are as follows for the years ended March 31, 2026 and 2025 are as follows:

(1)The weighted average is calculated using the estimated fair values

Financial Instruments Not Measured at Fair Value on a Recurring Basis

The Company's Notes Payable are subject to a variable interest rate. As a result, the carrying amount of these instruments closely approximates their fair value.

Non-financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain non-financial assets are measured at fair value on a nonrecurring basis, primarily goodwill and intangible assets, which are classified as Level 3 fair value measurements, and right-of-use lease assets, which are classified as Level 2 fair value measurements. These assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic evaluations for potential impairment.

NOTE 10. CONTRACT BALANCES AND ALLOWANCE FOR EXPECTED CREDIT LOSSES

The following table provides information about receivables, contract receivables and contract liabilities from contracts with customers as of:

Contract liabilities represent advance consideration received from customers under the terms of the Company's contracts, primarily related to retainer fees and reimbursements of third-party expenses. These amounts are generally recognized as revenue shortly after billing, as the related services are performed or expenses are incurred. Deferred revenue totaled $6.1 million as of March 31, 2026, and $3.3 million as of December 31, 2025. The Company expects that these amounts will be recognized as revenue within one year of the respective balance sheet dates.

The following table summarizes information about the activity in the allowance for expected credit losses as follows:

As of March 31, 2026 and December 31, 2025 the balance of the allowance for credit losses approximated$2.4 million and$2.5 million. respectively.

NOTE 11. SUBSEQUENT EVENTS

On March 20, 2026, the Company entered into a binding agreement to acquire all of the outstanding shares of Westminster Policy Partners Limited, a leading UK public affairs and economics consultancy. The acquisition was completed on April 1, 2026, for a combination of cash and shares.

On May 1, 2026, the Company acquired the assets of the management companies Cowen Consulting, LLC and Putnam Strategies, LLC, specialists in federal, state, and local government relations. The acquisition was completed for a combination of cash and shares.