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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,
2025
FISCALNOTE HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
001-396972
88-3772307
(State or other jurisdiction of
incorporation or organization)
(Commission File Number)
(I.R.S. Employer
Identification No.)
1201 Pennsylvania Avenue NW, 6th Floor
,
Washington
, D.C.
20004
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (
202
)
793-5300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Class A common stock, par value $0.0001 per share
NOTE
NYSE
Warrants to purchase 0.131 shares of Class A common stock, each at an exercise price of $11.50 per warrant
NOTE.WS
NYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
☒
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company
☒
Emerging growth company
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
☒
As of November 3, 2025, the registrant had
15,018,986
s
hares of Class A common stock, $0.0001 par value per share, outstanding, and
690,909
shares of Class B common Stock, $0.0001 par value per share, outstanding.
This Quarterly Report on Form 10-Q includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They may appear in a number of places throughout this Quarterly Report on Form 10-Q, including Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A, “Risk Factors,” and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our future results of operations, financial condition and liquidity; our prospects, growth, strategies and the markets in which FiscalNote operates. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting FiscalNote. Factors that may impact such forward-looking statements include:
•
the risk that a protracted U.S. government shutdown negatively affects FiscalNote’s ability to enter into or renew public sector subscription contracts and generate advertising and events revenue as anticipated;
•
concentration of revenues from U.S. government agencies, changes in the U.S. government spending priorities, dependence on winning or renewing U.S. government contracts, delay, disruption or unavailability of funding on U.S. government contracts, and the U.S. government's right to modify, delay, curtail or terminate contracts;
•
FiscalNote’s ability to successfully execute on its strategy to achieve and sustain organic growth through a focus on its core Policy business, including risks to FiscalNote’s ability to develop, enhance, and integrate its existing platforms, products, and services, bring highly useful, reliable, secure and innovative products, product features and services to market, attract new customers, retain existing customers, expand its products and service offerings with existing customers, expand into geographic markets or identify other opportunities for growth;
•
FiscalNote's future capital requirements, as well as its ability to service its repayment obligations and maintain compliance with covenants and restrictions under its existing debt agreements;
•
demand for FiscalNote's services and the drivers of that demand;
•
the impact of cost reduction initiatives undertaken by FiscalNote;
•
risks associated with international operations, including compliance complexity and costs, increased exposure to fluctuations in currency exchange rates, political, social and economic instability, potential imposition of new or novel taxes on digital or subscription sales on the platforms, products and services FiscalNote provides, and supply chain disruptions;
•
FiscalNote's ability to introduce new features, integrations, capabilities and enhancements to its products and services, as well as obtain and maintain accurate, comprehensive and reliable data to support its products, and services;
•
FiscalNote's reliance on third-party systems and data, its ability to integrate such systems and data with its solutions and its potential inability to continue to support integration;
•
FiscalNote’s ability to maintain and improve its methods and technologies, and anticipate new methods or technologies, for data collection, organization, and analysis to support its products and services;
•
potential technical disruptions, cyberattacks, security, privacy or data breaches or other technical or security incidents that affect FiscalNote's networks or systems or those of its service providers;
•
competition and competitive pressures in the markets in which FiscalNote operates, including larger well-funded companies shifting their existing business models to become more competitive with FiscalNote;
•
FiscalNote's ability to comply with laws and regulations in connection with selling products and services to U.S. and foreign governments and other highly regulated industries;
•
FiscalNote's ability to retain or recruit key personnel;
•
FiscalNote's ability to adapt its products and services for changes in laws and regulations or public perception, or changes in the enforcement of such laws, relating to artificial intelligence, machine learning, data privacy and government contracts;
•
adverse general economic and market conditions reducing spending on our products and services;
•
the outcome of any known and unknown litigation and regulatory proceedings;
•
FiscalNote's ability to maintain public company-quality internal control over financial reporting; and
•
FiscalNote's ability to adequately protect and maintain its brands and other intellectual property rights.
The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of this Quarterly Report on Form 10-Q and the other documents filed by us from
time to time with the U.S. Securities and Exchange Commission ("SEC"). The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on us and our business. There can be no assurance that future developments affecting us will be those that we have anticipated. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under applicable securities laws.
Costs capitalized to obtain revenue contracts, net
2,416
3,016
Prepaid expenses
2,810
2,548
Other current assets
2,295
2,908
Total current assets
49,073
57,187
Property and equipment, net
4,354
5,051
Capitalized software costs, net
12,604
15,099
Noncurrent costs capitalized to obtain revenue contracts, net
2,567
3,197
Operating lease assets
14,120
15,620
Goodwill
135,363
159,061
Customer relationships, net
31,880
41,717
Database, net
14,594
16,147
Other intangible assets, net
8,538
13,018
Other non-current assets
773
100
Total assets
$
273,866
$
326,197
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt
$
6,344
$
36
Accounts payable and accrued expenses
7,417
8,462
Deferred revenue, current portion
30,826
35,253
Customer deposits
575
1,850
Operating lease liabilities, current portion
3,292
3,386
Other current liabilities
93
2,266
Total current liabilities
48,547
51,253
Long-term debt, net of current maturities
125,160
147,041
Deferred tax liabilities
586
1,934
Deferred revenue, net of current portion
263
222
Operating lease liabilities, net of current portion
20,139
22,490
Public and private warrant liabilities
1,015
2,458
Other non-current liabilities
2,658
2,968
Total liabilities
198,368
228,366
Commitment and contingencies (Note 16)
Temporary equity (
no
Class A Common Stock issued and outstanding at September 30, 2025)
-
-
Stockholders' equity:
Class A Common stock ($
0.0001
par value,
1,700,000,000
authorized,
14,011,577
and
11,899,532
issued and outstanding at September 30, 2025 and December 31, 2024, respectively)
1
1
Class B Common stock ($
0.0001
par value,
9,000,000
authorized,
690,909
issued and outstanding at September 30, 2025 and December 31, 2024, respectively)
-
-
Additional paid-in capital
924,524
899,943
Accumulated other comprehensive income (loss)
248
4,786
Accumulated deficit
(
849,275
)
(
806,899
)
Total stockholders' equity
75,498
97,831
Total liabilities, temporary equity and stockholders' equity
$
273,866
$
326,197
See accompanying notes to unaudited condensed consolidated financial statements.
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation
790
905
Amortization of intangible assets and capitalized software development costs
13,251
14,699
Amortization of deferred costs to obtain revenue contracts
2,471
2,795
Gain on sale of businesses (Note 4)
(
16,585
)
(
71,599
)
Non-cash operating lease expense
1,470
1,567
Stock-based compensation
10,975
13,885
Other non-cash expenses
-
4
Bad debt expense
316
201
Change in fair value of acquisition contingent consideration
-
(
4
)
Unrealized loss on securities
67
95
Change in fair value of financial instruments
7,900
3,174
Deferred income taxes
(
1,288
)
(
838
)
Paid-in-kind interest, net
4,201
5,995
Non-cash interest expense
2,602
2,244
Loss on debt extinguishment, net
7,958
-
Changes in operating assets and liabilities:
Accounts receivable, net
1,072
4,149
Prepaid expenses and other current assets
(
1,384
)
(
1,429
)
Costs capitalized to obtain revenue contracts, net
(
1,742
)
(
2,155
)
Other non-current assets
(
7
)
163
Accounts payable and accrued expenses
(
74
)
(
3,047
)
Deferred revenue
3,510
4,796
Customer deposits
(
772
)
(
928
)
Other current liabilities
(
999
)
1,082
Contingent liabilities from acquisitions, net of current portion
-
(
13
)
Operating lease liabilities
(
2,327
)
(
2,538
)
Other non-current liabilities
(
193
)
(
53
)
Net cash used in operating activities
(
11,164
)
(
3,950
)
Investing Activities:
Capital expenditures
(
5,561
)
(
6,875
)
Cash proceeds from the sale of businesses, net (Note 4)
46,913
91,384
Net cash provided by investing activities
41,352
84,509
Financing Activities:
Proceeds from long-term debt, net of issuance costs
100,985
801
Principal payments of long-term debt
(
128,353
)
(
65,781
)
Payment of deferred financing costs
(
5,273
)
(
7,068
)
Proceeds from exercise of stock options and employee stock purchase plan purchases
275
474
Net cash used in financing activities
(
32,366
)
(
71,574
)
Effects of exchange rates on cash
52
86
Net change in cash, cash equivalents, and restricted cash
(
2,126
)
9,071
Cash, cash equivalents, and restricted cash, beginning of period
29,454
17,300
Cash, cash equivalents, and restricted cash, end of period
$
27,328
$
26,371
Supplemental Noncash Investing and Financing Activities:
Issuance of common stock for conversion of debt and interest
$
1,902
$
10,934
Amounts held in escrow related to the sale of businesses
$
738
$
285
Property and equipment purchases included in accounts payable
$
67
$
74
Supplemental Cash Flow Activities:
Cash paid for interest
$
7,360
$
11,723
Cash paid for taxes
$
999
$
277
See accompanying notes to unaudited condensed consolidated financial statements.
6
FISCALNOTE HOLDINGS, INC.
Notes to the Condensed
Consolidated Financial Statements
(in thousands, except shares, par value, per share amounts, or as otherwise noted)
(Unaudited)
Note 1.
Summary of Business and Significant Accounting Policies
Description of Business
FiscalNote Holdings, Inc. (“FiscalNote,” or the “Company”) is a leading provider of artificial intelligence ("AI") driven policy and regulatory intelligence solutions. By uniquely combining proprietary artificial intelligence technology, comprehensive data, and decades of trusted analysis, FiscalNote helps customers efficiently manage political and business risk. Since 2013, the Company has pioneered solutions that deliver critical insights, enabling effective decision making and giving organizations the competitive edge they need.
Home to PolicyNote, CQ, Roll Call, VoterVoice, and many other industry-leading products and brands, FiscalNote serves thousands of customers worldwide with its global offices in North America, Europe, Asia and Australia. The Company is headquartered in Washington, D.C.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances have been eliminated in consolidation.
These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet and its results of operations, including its comprehensive loss, temporary equity, stockholders' equity (deficit), and cash flows. All adjustments are of a normal recurring nature. The results for the nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending December 31, 2025. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024
.
Reverse Stock Split
On August 22, 2025, the Board approved a 1-for-12 reverse stock split (the “Reverse Stock Split”) of the Company’s Common Stock. On August 28, 2025, the Company filed a certificate of amendment to its Certificate of Incorporation (as amended from time to time, the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, and the Company’s Class A Common Stock began trading on a split-adjusted basis at market open on September 2, 2025 under the existing symbol “NOTE”.
As a result of the Reverse Stock Split, every 12 shares of the Company’s Common Stock issued and outstanding as of the effective time of the Reverse Stock Split were automatically converted into one share of Common Stock. No fractional shares were issued in connection with the Reverse Stock Split. Instead, each stockholder received a cash payment in lieu thereof at a price equal to the fraction of one share to which the stockholder would otherwise be entitled multiplied by the closing price per share of Class A Common Stock (as adjusted for the Reverse Stock Split) on the New York Stock Exchange (“NYSE”) on August 29, 2025 the last trading day immediately preceding the effective time of the Reverse Stock Split.
Further, proportionate adjustments were made to the number of shares of Common Stock underlying the Company’s outstanding equity awards and the number of shares issuable under the Company’s equity incentive plans and existing agreements, as well as the exercise price and/or any stock price goals, as applicable. The Reverse Stock Split did not affect the number of authorized shares of Common Stock or the par value of the Common Stock. The Company’s publicly traded warrants continue to be traded on the NYSE under the symbol “NOTE.WS”. However, pursuant to the terms of the applicable warrant agreement, the number of shares of Class A Common Stock issuable on exercise of each warrant was proportionately decreased. Specifically, following effectiveness of the Reverse Stock Split, every warrant to purchase
1.571428
shares of Class A Common Stock (the exchange ratio in place immediately prior to the Reverse Stock Split) now represents the right to purchase
0.130952
shares of Class A Common Stock. Accordingly, the effective per share exercise price is $
87.82
.
All share and per share amounts in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.
Liquidity and Going Concern
In accordance with Accounting Standards Codification Topic 205-40, Going Concern, the Company evaluates whether there are certain conditions and events, considered in the aggregate, which raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s cash, cash equivalents, restricted cash, and short-term investments were
$
31.8
million at September 30, 2025, compared with
$
35.3
million at December 31, 2024. Further, the Company had a negative working capital balance of
$
31.3
million (excluding cash and short-term investments) at September 30, 2025 and had an accumulated deficit of
$
849.3
million and
$
806.9
million as of September 30, 2025 and December 31, 2024, respectively, and has incurred net losses (excluding the effect of the gain on sale of businesses) of
$
59.0
million and
$
48.7
million for the nine months ended September 30, 2025 and 2024, respectively.
Historically, the Company’s cash flows from operations have not been sufficient to fund its current operating model and the Company partially funded its operations through raising equity and debt and selling assets.
The
Company has implemented various cost saving
measures
throughout 2023, 2024 and 2025 to rationalize its cost structure. Accordingly, the Company has improved its cash used in operations by approximately $
35.0
million when comparing its cash used in operations for the twelve months ended September 30, 2025 to the cash used in operations for the twelve months ended September 30, 2023. The Company may execute other strategic actions to maximize stakeholder value, including further expense reductions, sale of all or portions of the business, corporate capital restructuring or formal reorganization, or liquidation of assets.
On August 12, 2025 and September 11, 2025 the Company completed the refinancing of a substantial amount of our legacy indebtedness, including a refinance of its Prior Senior Term Loan (as defined herein) with the 2025 Senior Term Loan (as defined herein). The 2025 Senior Term Loan contains four financial covenants: a minimum cash balance requirement, a minimum ARR requirement, a minimum adjusted EBITDA requirement and a capital expenditure limitation. The Company’s ability to maintain compliance with these financial covenants is based on the Company’s current expectations regarding revenues, improved net retention,, collections, cost structure, current cash burn rate and other operating assumptions, which in part, depend on general economic, financial, competitive, legislative, regulatory, and other conditions. Within one year from the date of this filing, without any actions taken by management and lenders, it is probable that the Company may not be compliant with one, or all, of its financial covenants. At the time that the Company does not maintain compliance with all of its financial covenants, the lenders may declare the amounts outstanding due and payable at which time the Company would not be able to satisfy the lenders' rights. Accordingly, the Company has concluded that there is substantial doubt about its ability to continue as a going concern within one year from the date of this filing.
If the Company raises funds in the future by issuing equity securities, dilution to stockholders will occur and may be substantial. Any equity securities issued may also provide for rights, preferences, or privileges senior to those of holders of common stock. If the Company raises funds in the future by issuing additional debt securities, these debt securities could have rights, preferences, and privileges senior to those of common stockholders. The terms of any additional debt securities, borrowings, and/or debt amendments could impose significant restrictions on the Company’s operations. The capital markets have experienced in the past, and may experience in the future, periods of upheaval that could impact the availability and cost of equity and debt financing. There can be no assurance that any necessary additional financing in the future will be available on terms acceptable to the Company, or at all.
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Segments
The Company is a leading provider of artificial intelligence ("AI") driven policy and regulatory intelligence solutions and operates out of a single operating segment. The Company derives revenues from customers by delivering critical, actionable legal and policy insights in a rapidly evolving political, regulatory and macroeconomic environment.
The Company's chief operating decision making ("CODM") is the chief executive officer. The chief operating decision maker assesses performance for the single operating segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net (loss) income. The measure of segment assets is reported on the balance sheet as total consolidated assets. The Company does not have intra-equity sales or transfers. The Company operates as a single operating segment as the chief operating decision maker manages the business activities on a consolidated basis.
The primary financial measures used by the CODM to evaluate performance and allocate resources are net income (loss) and operating income (loss). The CODM uses net income (loss) and operating income (loss) to evaluate the performance of the Company's ongoing operations and as part of the Company's internal planning and forecasting processes. Information on Net income (loss) and Operating income (loss) is disclosed in the Consolidated Statement of Operations. Segment expenses and other segment items are provided to the CODM on the same basis as disclosed in the Consolidated Statement of Operations.
The CODM does not evaluate performance or allocate resources based on assets of the single segment, and therefore such information is not presented in the notes to the financial statements.
Earnings per Share
Basic earnings per share ("EPS") is calculated by dividing the net income or loss available to common stockholders by the weighted average number of shares of common stock outstanding for the period without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income or loss available to common stockholders by the weighted average number of shares of common stock outstanding for the period and the weighted average number of dilutive common stock equivalents outstanding for the period determined using the if-converted method (convertible debt instruments) or treasury-stock method (warrants and share-based payment arrangements). For purposes of this calculation, common stock issuable upon conversion of debt, options and warrants are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive.
Fair Value of Financial Instruments
The Company has elected the fair value option for the 2025 GPO Convertible Note, GPO Convertible Note, Dragonfly Seller Convertible Notes, Convertible Debentures, and the Era Convertible Notes, refer to
Note 8, Debt
for further details. The Company records changes in fair value through the condensed consolidated statement of operations where the portion of the change that results from a change
in the instrument-specific credit risk is recorded separately in accumulated other comprehensive income, if applicable.
Additionally, under the fair value option, all issuance costs are expensed in the period that the debt is incurred.
Investments
The Company has invested in highly liquid investments that have investment-grade ratings. These investments are accounted for at fair value through the condensed consolidated statement of operations. The Company is able to easily liquidate these into cash; accordingly, the Company has presented these investments as available for current operations and are presented as short-term investments within current assets in the condensed consolidated balance sheets. Purchases and sales of short-term investments are classified in the investing section of our consolidated statement of cash flows.
Concentrations of Risks
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company generally maintains its cash and cash equivalents with various nationally recognized financial institutions. The Company’s cash and cash equivalents at times exceed amounts guaranteed by the Federal Deposit Insurance Corporation. The Company considers cash on deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. At September 30, 2025, approximately
75
% of the Company’s cash and cash equivalents were held at JPMorgan Chase Bank, N.A.
The Company does not require collateral for accounts receivable. The Company maintains an allowance for its doubtful accounts receivable due to estimated credit losses. This allowance is based upon historical loss patterns, the number of days billings are past due, collection history of each customer, an evaluation of the potential risk of loss associated with delinquent accounts and current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss patterns. The Company records the allowance against bad debt expense through the condensed consolidated statements of operations, included in sales and marketing expense, up to the amount of revenues recognized to date. Any incremental allowance is recorded as an offset to deferred revenue on the condensed consolidated balance sheets. Receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success. As of September 30, 2025 and December 31, 2024, allowance for credit losses of
$
1,635
and $
1,343
, respectively
, was included in the accounts receivable, net balance.
No sin
gle customer accounted for more than
10
% of the Company's accounts receivable balance as of
September 30, 2025 and December 31, 2024. Revenues derived from the U.S. Federal Government were
17
% of revenues for the
nine months ended September 30, 2025 and 2024. As of September 30, 2025 and December 31, 2024, assets located in the United States were approximately
99
% and
85
% of total assets, respectively.
As of September 30, 2025 and December 31, 2024
, two vendors accounted for more than
10
% of the Company's accounts payable balance. During the
nine months ended September 30, 2025 and 2024
, no vendors represented more than
10
% of the total purchases made.
Recent Accounting Pronouncements Not Yet Effective
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09
Income Taxes (Topic 740): Improvements to Income Tax Disclosures
, which requires public entities to disclose disaggregated information about a reporting entity's effective tax rate reconciliation as well as additional information on income taxes paid. For public entities, ASU 2023-09 is required to be adopted for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures.
In November 2024, the FASB issued ASU 2024-03
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), as amended by ASU 2025-01
, which requires public entities to disclose disaggregated information about certain income statement line items in the notes to the financial statements. For public entities, ASU 2024-03 is required to be adopted for annual periods beginning after December 15, 2026 and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.
In September 2025, the FASB issued ASU No. 2025-06
Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):
Targeted Improvements to the Accounting for Internal-Use Software
, which removed the language around project stages that was used to assess when costs could be capitalized for an internal-use software. The update also requires internal-use software to be disclosed under the ASC 360 Property, Plant, and Equipment guidance. The guidance is effective for annual periods beginning after December 15, 2027. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.
Note 2. Business Combination with DSAC
On July 29, 2022, the Company consummated the transactions contemplated by the Agreement and Plan of Merger, dated as of November 7, 2021, and as amended on May 9, 2022, (the “Merger Agreement”), by and among FiscalNote Holdings, Inc., a Delaware corporation (“Old FiscalNote”), Duddell Street Acquisition Corp., a Cayman Islands exempted company (“DSAC”), and Grassroots Merger Sub, Inc., a Delaware Corporation and a wholly owned direct subsidiary of DSAC (“Merger Sub” and, together with DSAC, the “DSAC Parties”). Pursuant to these transactions, Merger Sub merged with and into Old FiscalNote, with Old FiscalNote becoming a wholly owned subsidiary of DSAC (the “Business Combination” and, collectively with the other transactions described in the Business Combination Agreement, the “Transactions”). In connection with the closing of the Transactions, DSAC domesticated and continued as a Delaware corporation under the name of “FiscalNote Holdings, Inc.” (“New FiscalNote”). Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company,” “FiscalNote,” “we,” “us,” or “our” refer to the business of Old FiscalNote, which became
the business of New FiscalNote and its subsidiaries following the closing on July 29, 2022. Subsequent to the closing of the Business Combination, the Company's Class A common stock and public warrants began trading on the New York Stock Exchange (“NYSE”) under the symbols “NOTE” and “NOTE.WS,” respectively.
The Company accounted for the Business Combination as a reverse recapitalization whereby Old FiscalNote was determined as the accounting acquirer and DSAC as the accounting acquiree. Accordingly, the Business Combination was treated as the equivalent of Old FiscalNote issuing stock for the net assets of DSAC, accompanied by a recapitalization. The net assets of DSAC are stated at historical cost, with no goodwill or other intangible assets recorded.
Note 3. Revenues
Disaggregation of Revenue
The following table depicts the Company's disaggregated revenue for the periods presented:
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Subscription
$
21,182
$
27,238
$
67,794
$
84,015
Advisory
348
1,123
1,724
3,345
Advertising
282
437
1,237
1,259
Books
1
39
7
220
Other revenue
616
602
2,442
1,958
Total
$
22,429
$
29,439
$
73,204
$
90,797
Revenue by Geographic Locations
The following table depicts the Company’s revenue by geographic operations for the periods presented:
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
North America
$
21,083
$
23,073
$
64,692
$
72,134
Europe
1,346
5,527
7,898
16,178
Australia
-
328
614
950
Asia
-
511
-
1,535
Total
$
22,429
$
29,439
$
73,204
$
90,797
Revenues by geography are determined based on the region of the Company's contracting entity, which may be different than the region of the customer. North America revenue consists solely of revenue attributed to the United States. For the three months ended September 30, 2024, revenue attributed to the United Kingdom represented approximately
15
% of total revenues. For the
nine months ended September 30, 2025 and 2024
, revenue attributed to the United Kingdom represented approximately
6
% and
14
% of total revenues, respectively. For the
three months ended September 30, 2025 and 2024, revenue attributed to Belgium represented approximately
6
%
and
4
% of total revenues, respectively. For the
nine months ended September 30, 2025 and 2024
, revenue attributed to Belgium represented approximately
5
% and
4
% of total revenues, respectively. No other foreign country represented more than
five
percent of total revenue during the
three and nine months ended September 30, 2025 and 2024.
Contract Assets
The Company had contract assets of
$
886
,
$
1,240
, and
$
1,183
as of September 30, 2025, December 31, 2024, and December 31, 2023, respectively. Contract assets are generated when contractual billing schedules differ from the timing of revenue recognition or cash collections. They represent a conditional right to consideration for satisfied performance obligations that becomes a receivable when the conditions are satisfied. They are recorded as part of other current assets on the condensed consolidated balance sheets.
Deferred Revenue
Details of the Company’s deferred revenue for the periods presented are as follows:
Balance at December 31, 2023
$
44,405
Sale of Board.org
(
9,117
)
Revenue recognized in the current period from amounts in the prior balance
(
35,869
)
New deferrals, net of amounts recognized in the current period
40,594
Effects of foreign currency
378
Balance at September 30, 2024
$
40,391
Balance at December 31, 2024
$
35,475
Sale of businesses
(
7,698
)
Revenue recognized in the current period from amounts in the prior balance
(
30,933
)
New deferrals, net of amounts recognized in the current period
During the nine months ended September 30, 2025 and 2024, the Company capitalized
$
1,688
and
$
2,155
, respectively, of costs to obtain revenue contracts. The Company amortized costs capitalized to obtain revenue contracts in the amount of
$
783
and
$
910
to sales and marketing expense during the three months ended September 30, 2025 and 2024, respectively, and
$
2,471
and
$
2,795
during the nine months ended September 30, 2025 and 2024
, respectively. There were
no
impairments of costs capitalized to obtain revenue contracts for the
three and nine months ended September 30, 2025 and 2024.
Unsatisfied Performance Obligations
At September 30, 2025, the Company had
$
68,900
o
f remaining contract consideration for which revenue has not been recognized due to unsatisfied performance obligations. The Company expects to recognize this
over
the next
five
years
.
Note 4. Dispositions
2025 Dispositions
Sale of Oxford Analytica and Dragonfly
On February 21, 2025 (the "Signing Date"), the Company entered into an equity purchase agreement (the "Equity Purchase Agreement") with Factiva Ltd., ("Factiva") a limited company organized under the laws of England and Wales, providing for the sale of all of the outstanding equity interests in each of Dragonfly Eye Limited, a UK private limited company (“Dragonfly”), and The Oxford Analytica International Group, LLC, a Delaware limited liability company (“Oxford” and collectively with Dragonfly, the “Sold Businesses”). At closing of the sale on March 31, 2025, after adjustments based on the Sold Businesses estimated working capital, indebtedness, and transaction expenses, the Company received $
40,000
in cash (excluding $
400
of the purchase price that was deposited into escrow to satisfy certain potential post-closing purchase price adjustments and indemnification claims and including $
813
of cash acquired by Factiva). The Equity Purchase Agreement contains representations, warranties and indemnification obligations of the parties customary for transactions similar to those contemplated by the Equity Purchase Agreement. As a result of the sale, the Company recorded a pre-tax gain on disposal of $
15,260
. The purchase price is subject to adjustment pursuant to the Equity Purchase Agreement; accordingly, the gain on sale may increase, or decrease, as the case may be, upon finalization of the purchase price.
The proceeds from the sale were used in part to prepay and retire $
27,136
of term loans under the Prior Senior Term Loan, and pay $
1,793
of related prepayment and exit fees associated with the retired amount. The remaining $
11,071
of net proceeds were retained by the Company to pay for related transaction costs, cash taxes that may result from the sale, and general corporate purposes. As part of the sale, the Company recorded a current tax receivable for federal and state income tax of $
281
.
The Company determined that Oxford Analytica and Dragonfly were not significant subsidiaries, and their sale did not constitute a strategic shift that would have a major effect on the Company’s operations or financial results. As a result, the results of operations for the Sold Businesses were not reported as discontinued operations under the guidance of ASC 205 “Presentation of Financial Statements."
Sale of TimeBase
On May 2, 2025, the Company entered into an agreement to sell the equity of the Company's Australian subsidiary, TimeBase Pty. Ltd. (“TimeBase”). On July 1, 2025 the Company closed the sale of TimeBase. Total consideration was $
7,414
comprising a cash payment to the Company of $
6,676
and a buyer holdback of $
738
(included in Other non-current assets as the buyer holdback is expected to be repaid in the first quarter of 2027). The proceeds from the sale were used in part to prepay and retire $
2,978
of term loans under the Prior Senior Term Loan, and pay $
197
of related prepayment and exit fees associated with the retired amount. The remaining $
3,501
of net proceeds were retained by the Company to pay for related transaction costs, cash taxes that may result from the sale, and general corporate purposes
. As a result of the sale of TimeBase, the Company recorded a gain on disposal of $
1,325
.
The Company determined that Timbase was not a significant subsidiary, and the disposition of TimeBase did not constitute a strategic shift that would have a major effect on the Company’s operations or financial results. As a result, the results of operations for TimeBase were not reported as discontinued operations under the guidance of ASC 205 “Presentation of Financial Statements."
2024 Dispositions
Sale of Board.org
On March 11, 2024, the Company entered into an agreement (the "Purchase Agreement") to sell the equity of the Company's subsidiary owning and operating its Board.org business with Exec Connect Intermediate LLC (“Exec Connect”). On March 11, 2024, after adjustments based on Board.org’s working capital, indebtedness and transaction expenses, as well as retention payments payable to certain employees of Board.org, the Company received $
90,905
in cash (excluding $
785
of the purchase price that was deposited into escrow to satisfy certain potential post-closing purchase price adjustments and indemnification claims and including $
21
of cash acquired by Exec Connect). As a result of the sale of Board.org, the Company recorded a pre-tax gain on disposal of $
71,599
, inclusive of the $
785
of funds placed in escrow that the Company anticipated receiving and $
50
of estimated post-closing purchase price adjustment. On June 6, 2024, the Company received $
500
of the $
785
placed in escrow and finalized the post-closing purchase price adjustment. At December 31, 2024 the Company had $
285
included in other current assets representing the remaining balance held in escrow pursuant to the Purchase Agreement. On March 17, 2025, the remaining $
285
of escrow was released to the Company.
The proceeds from the sale of Board.org were used in part to prepay $
65,700
of term loans under the Prior Senior Term Loan, and pay $
7,068
of related prepayment and exit fees associated with the retired amount. The remaining $
18,137
of
net proceeds were retained by the
Company
for general corporate purposes. As part of the sale the Company recorded a current tax liability for federal and state income tax of $
1,571
and a non-cash deferred tax charge of $
300
.
The Company determined that Board.org was not a significant subsidiary, and the disposition of Board.org did not constitute a strategic shift that would have a major effect on the Company’s operations or financial results. As a result, the results of operations for Board.org were not reported as discontinued operations under the guidance of ASC 205 “Presentation of Financial Statements."
Sale of Aicel
On October 31, 2024, the Company entered into an agreement to sell the equity of the Company's subsidiary owning and operating its Aicel Technologies business ("Aicel") to a South Korean based-group. Total consideration was $
9,650
comprised of a cash payment to the Company of $
8,500
and the assumption of an existing convertible note previously issued by Aicel in 2022, with an outstanding total principal and accrued paid-in-kind interest amount of $
1,150
. The net proceeds, after paying transaction fees, expenses, and taxes were used to repay $
5,000
of principal and accrued paid-in-kind interest of the Company's Prior Senior Term Loan. As a result of the sale of Aicel, the Company recorded a gain on disposal of $
480
.
The Company determined that Aicel was not a significant subsidiary, and the disposition of Aicel did not constitute a strategic shift that would have a major effect on the Company’s operations or financial results. As a result, the results of operations for Aicel were not reported as discontinued operations under the guidance of ASC 205 “Presentation of Financial Statements."
Note 5. Leases
The Company has operating leases, principally for corporate offices under non-cancelable operating leases that expire at various dates through 2031. The non-cancellable base terms of these remaining leases typically range from
one
to
six years
. Certain lease agreements include options to renew or terminate the lease, which are not factored into the determination of lease payments if they are not reasonably certain to be exercised.
The following table details the composition of lease expense for the periods presented:
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Operating lease cost
$
972
$
1,170
$
3,083
$
3,614
Variable lease cost
55
70
169
220
Short-term lease cost
5
77
50
167
Total lease costs
$
1,032
$
1,317
$
3,302
$
4,001
Sublease income
$
(
27
)
$
(
26
)
$
(
81
)
$
(
77
)
Cash payments related to operating lease liabilities were
$
1,282
and
$
1,462
for the three months ended September 30, 2025 and 2024, respectively and
$
3,964
and
$
4,442
for the nine months ended September 30, 2025 and 2024
, respectively.
Note 6. Intangible Assets
The following table summarizes the gross carrying amounts and accumulated amortization of the Company’s intangible assets by major class:
September 30, 2025
December 31, 2024
Weighted Average
Gross Carrying Amount
Accumulated Amortization
Net
Carrying Amount
Gross Carrying Amount
Accumulated Amortization
Net
Carrying Amount
Remaining Useful Life (Years) September 30, 2025
Customer relationships
$
66,570
$
(
34,690
)
$
31,880
$
76,584
$
(
34,867
)
$
41,717
7.2
Developed technology
21,738
(
18,586
)
3,152
29,015
(
23,662
)
5,353
5.3
Databases
29,145
(
14,551
)
14,594
29,135
(
12,988
)
16,147
7.1
Tradenames
9,325
(
4,931
)
4,394
10,808
(
5,100
)
5,708
6.9
Expert network
-
-
-
2,654
(
1,715
)
939
-
Patents
871
(
245
)
626
841
(
232
)
609
17.1
Content library
592
(
226
)
366
592
(
183
)
409
6.2
Total
$
128,241
$
(
73,229
)
$
55,012
$
149,629
$
(
78,747
)
$
70,882
Finite-lived intangible assets are stated at cost, net of amortization, generally using the straight-line method over the expected useful lives of the intangible assets. Amortization of intangible assets, excluding developed technology, was
$
1,904
and
$
2,435
for the three months ended September 30, 2025 and 2024, respectively, and
$
6,169
and
$
7,540
for the nine months ended September 30, 2025 and 2024, respectively.
Amortization of developed technology was recorded as part of cost of revenues, including amortization in the amount of
$
153
and
$
531
for the three months ended September 30, 2025 and 2024, respectively, and
$
519
and
$
2,059
for the nine months ended September 30, 2025 and 2024, respectively.
The expected future amortization expense for intangible assets as of
September 30, 2025 is as follows:
2025 (remainder)
$
2,061
2026
8,183
2027
8,178
2028
7,958
2029
7,688
Thereafter
20,944
Total
$
55,012
Capitalized software development costs
Capitalized software development costs are as follows:
September 30, 2025
December 31, 2024
Gross Carrying Amount
Accumulated Amortization
Net
Carrying Amount
Gross Carrying Amount
Accumulated Amortization
Net
Carrying Amount
Capitalized software development costs
$
36,675
$
(
24,071
)
$
12,604
$
34,946
$
(
19,847
)
$
15,099
During the nine months ended September 30, 2025 and 2024, the Company capitalized interest on capitalized software development costs in the amount of
$
326
and
$
393,
respectively. Amortization of capitalized software development costs was recorded as part of cost of revenues, including amortization in the amount of
$
1,617
and
$
1,693
for the three months ended September 30, 2025 and 2024, respectively, and
$
6,562
and
$
5,100
for the nine months ended September 30, 2025 and 2024
, respectively. The estimated useful life is determined at the time each project is placed in service.
Note 7. Goodwill
Goodwill represents the excess of the purchase price in a business combination over the fair value of net assets acquired. Goodwill amounts are not amortized, but are rather tested for impairment at least annually as of October 1 of each year.
The changes in the carrying amounts of goodwill, which are generally not deductible for tax purposes, are as follows:
Balance at December 31, 2024
$
159,061
Sale of Businesses
(
24,652
)
Impact of foreign currency fluctuations
954
Balance at September 30, 2025
$
135,363
On January 1, 2025, effective with the appointment of our new CEO, the Company reassessed its goodwill reporting units and determined that the Company now operates out of a single reporting unit. Accordingly, the Company performed a quantitative goodwill impairment assessment immediately prior to, and on, January 1, 2025, which resulted in
no
impairment of goodwill.
The fair value estimate of the Company's single reporting unit was derived based on an income approach. Under the income approach, the Company estimated the fair value of the single reporting unit based on the present value of estimated future cash flows, which the Company considers to be a Level 3 unobservable input in the fair value hierarchy. The Company prepared cash flow projections based on management's estimates of revenue growth rates and operating margins, taking into consideration the historical performance and the current macroeconomic, industry, and market conditions. The Company based the discount rate on the weighted-average cost of capital considering Company-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows.
Potential indicators of impairment include significant changes in performance relative to expected operating results, significant negative industry or economic trends, or a significant decline in the Company's stock price and/or market capitalization for a sustained period of time. It is reasonably possible that one or more of these impairment indicators could occur or intensify in the near term, which may result in an impairment of long-lived assets or goodwill.
The following presents the carrying value of the Company’s debt as of the respective period ends:
September 30, 2025
December 31, 2024
2025 Senior Term Loan
$
74,531
$
-
2025 GPO Convertible Note
19,223
-
Dragonfly Seller Convertible Notes
11,752
8,979
Convertible Debentures
29,753
-
Prior Senior Term Loan
-
88,595
GPO Convertible Note
-
36,524
Amended Legacy Notes
-
16,165
PPP loan
-
36
Total gross debt
135,259
150,299
Debt issuance costs and debt discount
(
3,755
)
(
3,222
)
Total
131,504
147,077
Less: Current maturities
(
6,344
)
(
36
)
Total Long-term debt
$
125,160
$
147,041
2025 Senior Term Loan / Prior Senior Term Loan
2025 Senior Term Loan
On August 5, 2025, the Company entered into a financing agreement (the "Financing Agreement"), by and among the Company, as parent guarantor, the Company's domestic subsidiaries party thereto as borrowers and guarantors, the lenders from time to time party thereto, and MGG Investment Group LP, as collateral agent and as administrative agent, pursuant to which the lenders agreed to advance $
75,000
which matures on August 12, 2029 (the "2025 Senior Term Loan"). The 2025 Senior Term Loan ranks senior to all other debt and is secured by a first priority lien on substantially all of the Company's assets. Obligations under the 2025 Senior Term Loan bear interest at variable rates, set at the Company’s option, based on a reference rate plus
7
%, or the secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”) plus
8
%. Interest is payable in cash monthly in arrears. The 2025 Senior Term Loan is repayable in consecutive quarterly installments on the last business day of each March, June, September and December of each fiscal year commencing September 30, 2025, in an amount equal to (i) $
469
with respect to each payment due on September 30, 2025, December 31, 2025, March 31, 2026 and June 30, 2026 and (ii) $
938
with respect to each payment due thereafter, with the remaining principal amount due at the maturity of the 2025 Senior Term Loan, or such earlier time as it may become payable. The Company must also pay a
quarterly
fee commencing on September 30, 2025, in an amount equal to (i) $
138
due on September 30, 2025, December 31, 2025, and March 31, 2026 and (ii) $
38
with respect to each quarterly payment due thereafter.
The 2025 Senior Term Loan also contains four financial covenants: a minimum cash balance requirement, a minimum ARR requirement, a minimum adjusted EBITDA requirement, and a capital expenditure limitation.
The 2025 Senior Term Loan also includes covenants limiting the ability of the Company and its subsidiaries, subject to certain exceptions, to, among other things, (i) incur indebtedness, (ii) incur liens on their assets, (iii) enter into any transaction of merger, consolidation or amalgamation, liquidate, wind up or dissolve, or dispose of all or substantially all of their property or business, (iv) dispose of any of their property, or, issue or sell any shares of a subsidiary’s stock, (v) make any payment or prepayment for any subordinated indebtedness, pay any earn-out payment, seller debt or deferred purchase price payments, or (vi) declare or pay any dividend or make any other distribution. The 2025 Senior Term Loan also contains certain events of default, including, among others, (i) failure to pay, (ii) breach of representations and warranties, (iii) breach of covenants, subject to any cure periods described therein, and (iv) failure to pay principal or interest on any other material debt.
On August 12, 2025 the Company closed on its 2025 Senior Term Loan and received net proceeds of $
72,937
after original issue discount (“OID”) of $
2,063
, or
2.75
%. The Company incurred $
960
of lender fees and $
962
of fees paid to third parties. OID and capitalized debt issuance costs totaled $
3,985
and is treated as a debt discount and will be amortized over the term of the 2025 Senior Term Loan using the effective interest method. Amortization expense for the three months ended September 30, 2025 was $
143
, and is included within interest expense in the consolidated statements of operations and comprehensive loss. The remaining unamortized debt discount at September 30, 2025 is $
3,841
, and is reflected net within debt on the condensed consolidated balance sheet.
The Company has elected to pay cash interest based on SOFR, which was
12.23
% at September 30, 2025. For the three months ended September 30, 2025, the Company recognized $
1,248
of cash interest on the 2025 Senior Term Loan.
Upon maturity, the Company is required to pay in cash the greater of $
500
or the fair market value of
60,416
Class A Common Stock of the Company (the “Exit Fee”). The Company will record non-cash interest expense over the life of the 2025 Senior Term Loan to accrete to the minimum Exit Fee due upon maturity. Accordingly, during the three months ended September 30, 2025 the Company recognized $
18
of interest expense related to the Exit Fee. At September 30, 2025 $
18
of the minimum Exit Fee has been accrued and is included within Other non-current liabilities on the condensed consolidated balance sheet.
Because the Exit Fee is payable in certain redemption scenarios, the Company determined that pursuant to ASC 815 “Derivatives and Hedging” certain of the embedded redemption features meet the definition of a derivative that must be accounted for at fair value with changes in fair value reflected in the consolidated statement of operations and comprehensive income (loss). The fair value of the embedded redemption feature at inception on August 12, 2025 was $
90
and
was accounted for as a debt premium and will be amortized over the term of the 2025 Senior Term Loan using the effective interest method. Amortization expense for the three months ended September 30, 2025
was
$
3
, and is included within interest expense in the consolidated statements of operations and comprehensive loss. The remaining unamortized debt premium at September 30, 2025 is $
87
, and is reflected net within debt on the condensed consolidated balance sheet. The fair value of the embedded redemption features at September 30, 2025 was $
238
and is included as a contra-liability in Other non-current liabilities on the condensed consolidated balance sheet. The $
148
change in fair value of the embedded redemption features from August 12, 2025 to September 30, 2025 is included within Change in fair value of financial instruments on the condensed consolidated statement of operations and comprehensive income (loss).
Prior Senior Term Loan
On July 29, 2022, concurrent with the closing of the Company's Business Combination, FiscalNote, Inc., a wholly owned indirect subsidiary of FiscalNote Holdings, Inc., entered into a senior credit agreement (the "Prior Senior Term Loan") as amended from time to time.
The annual interest of the Prior Senior Term Loan consisted of two components: (a) a cash interest component of the greater of (i) Prime Rate plus
5.0
% per annum or (ii)
9.0
% payable monthly, and (b) interest payable in kind component of
1.00
% per annum, payable in kind monthly.
In connection with the completion of the sale of Oxford Analytica and Dragonfly on March 31, 2025, the Company also entered into Amendment No. 5 to the Prior Senior Term Loan, pursuant to which, among other things, the lenders consented to releasing the liens on Oxford Analytica and Dragonfly's assets and permitting the consummation of the sale in exchange for the permanent retirement of $
27,136
of term loans under the Prior Senior Term Loan and payment of $
1,793
of related prepayment and exit fees.
In connection with the completion of the sale of TimeBase on July 1, 2025, the Company also entered into Amendment No. 6 to the Prior Senior Term Loan, pursuant to which, among other things, the lenders consented to releasing TimeBase as a guarantor under the Prior Senior Term Loan, along with the liens granted on the equity and assets of TimeBase and permitting
the consummation of the sale in exchange for the permanent retirement of $
2,978
of term loans under the Prior Senior Term Loan and payment of $
197
of related prepayment and exit fees.
On August 12, 2025, with proceeds from the 2025 Senior Term Loan, the Company retired all of its then outstanding obligations under the Prior Senior Term Loan totaling $
62,782
(including accrued and unpaid interest and deferred finance costs). The Company accounted for the retirement of its Prior Senior Term Loan as a debt extinguishment; accordingly, the Company recognized a loss on debt extinguishment of $
6,174
during the three months ended September 30, 2025.
For the nine months ended September 30, 2025 and 2024, the Company incurred $
5,610
and $
11,165
and $
448
and $
837
of cash interest and paid-in-kind interest, respectively, on the Prior Senior Term Loan. Paid-in-kind interest is reflected as a component of the carrying value of the Prior Senior Term Loan.
Amortization of debt issuance costs on the Prior Senior Term Loan is recorded within interest expense in the condensed consolidated statements of operations and comprehensive income (loss) and totaled $
424
and $
675
for the
three months ended September 30, 2025 and 2024
and $
2,062
and $
1,487
for the
nine months ended September 30, 2025 and 2024, respectively.
Convertible Debentures
In conjunction with the establishment of the 2025 Term Loan and in order to fund the GPO Redemption (defined below), on August 5, 2025 (the “Purchase Agreement Date”), the Company entered into a securities purchase agreement (the “Purchase Agreement”), with YA II PN, Ltd (“YA”), pursuant to which the Company would issue YA convertible debentures in an aggregate principal amount of up to
$
33,300
(the “Convertible Debentures”) for a total cash purchase price of
$
30,000
, subject to satisfaction of certain closing conditions.
On August 12, 2025, the initial tranche of Convertible Debentures comprising $
21,000
in stated principal amount were issued to YA, in accordance with the Purchase Agreement, with the Company receiving net proceeds of
$
18,900
(the "First YA Debenture"). On September 11, 2025, the second and final, tranche of Convertible Debentures comprising
$
12,300
in stated principal amount were issued to YA
,
in accordance with the Purchase Agreement with the Company receiving net proceeds of $
11,000
(the "Second YA Debenture").
The Company’s obligations under the Purchase Agreement and the Convertible Debentures are guaranteed by FiscalNote, Inc., a wholly owned subsidiary of the Company, and are contractually subordinated to the Company’s obligations under its 2025 Senior Term Loan and the 2025 GPO Note. The First YA Debenture matures on
February 12, 2027
and the Second YA Debenture matures on
March 11, 2027
and both bear interest at a rate of
5
% per annum or
18
% per annum in the event of an event of default.
At any time prior to the maturity dates, and subject to certain ownership and conversion limitations, YA is entitled to convert any portion of the principal amount of the Convertible Debentures and accrued interest thereon into shares of the Company’s Class A Common Stock (the “Debenture Conversion Shares”) at a conversion price equal to
94
% of the lowest daily volume weighted average trading price (“VWAP”) during the five trading days prior to the conversion date, subject to a floor price of $
0.8884
(the “Floor Price”).
In the event (i) the daily VWAP is less than the Floor Price then in effect for any five trading days during a period of seven consecutive trading days, (ii) the Company has issued substantially all of shares of the Class A Common Stock available for issuance without violating applicable rules of the NYSE, or (iii) YA is unable to utilize a registration statement to resell Debenture Conversion Shares for a period of ten (10) consecutive trading days, then the Company will be required to make certain amortization payments to YA.
The Convertible Debentures provide for customary events of default, upon which repayment of the Convertible Debentures may be accelerated, including failure to pay any amounts due and owing under the Convertible Debentures, failure to timely deliver the Debenture Conversion Shares, an uncured breach of any terms of the Convertible Debentures and a default under certain of the Company’s other indebtedness.
On September 12, 2025 YA converted $
1,803
of principal and accrued interest in exchange for
39,860
shares of the Company’s Class A common stock with a fair value of $
2,186
. The non-cash charge of $
563
recognized upon this conversion was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) during the three and nine months ended September, 2025.
The Company elected to account for the First YA Debenture and Second YA Debenture using the fair value option. The fair market value at August 12, 2025 and September 30, 2025 was $
29,970
and $
29,753
, respectively. The unrealized change in the fair value of the First YA Debenture and Second YA Debenture was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) in the amount of a charge of $
1,403
for the three months ended September 30, 2025. The Company incurred total interest expense related to the First YA Debenture and Second YA Debenture of $
170
for the three months ended September 30, 2025.
On June 30, 2023 the Company issued to GPO FN Noteholder LLC (the “GPO Investor”) a subordinated convertible promissory note in an initial principal amount of $
46,794
(the “Prior GPO Convertible Note”). Pursuant to the terms of the Prior GPO Convertible Note, paid-in-kind interest accrued from the date of issuance through June 30, 2024. Beginning on July 1, 2024 the Company was required to pay interest with either cash or shares, solely at the discretion of the Company. Accordingly, since September 30, 2024 and through September 30, 2025, the Company issued the GPO Investor
346,059
Class A Common Shares, in the aggregate, in satisfaction of quarterly interest.
In conjunction with the establishment of the 2025 Senior Term Loan, on August 5, 2025, the Company entered into a redemption and exchange agreement with the GPO Investor.
Pursuant to the redemption and exchange with the GPO Investor, on August 12, 2025, the Company redeemed $
30,000
of the
Prior GPO Convertible Note in exchange for a cash payment of $
27,000
to the GPO Investor (the "GPO Redemption"). The Company also issued a new senior subordinated promissory note to the GPO Investor in the aggregate amount of $
20,434
(the "2025 GPO Convertible Note") in exchange for, and the cancellation of, the remaining obligations under the existing Prior GPO Convertible Note.
The 2025 GPO Convertible Note is guaranteed by the Company’s domestic subsidiaries, which are parties to the 2025 Senior Term Loan, and is contractually subordinated to the Company’s obligations under the 2025 Senior Term Loan. The 2025 GPO Convertible Note matures on
November 13, 2029
and bears interest at a rate of
7.50
% per annum payable quarterly in arrears, in cash or, provided no event of default is then occurring under the 2025 GPO Convertible Note, freely tradeable shares of the Company's Class A Common Stock, at the Company’s option, with the value per share determined with reference to the VWAP of the Class A Common Stock over the trading days occurring within the thirty calendar days prior to the applicable interest payment date. At any time prior to
November 13, 2029
, the GPO Investor is entitled to convert all or any portion of the principal amount of the 2025 GPO Convertible Note and accrued interest thereon into shares of the Company's Class A Common Stock at an initial conversion price of $
82.92
per share (subject to customary anti-dilution adjustments). Under the terms of the 2025 GPO Convertible Note, the Company is required to make
quarterly
installment payments of $
2,000
of the outstanding principal beginning
April 1, 2026
in the form of freely tradeable shares of the Company's Class A Common Stock, cash, or a combination thereof, solely at the determination of the Company. Class A Common Stock issued to satisfy quarterly interest and principal repayments will be issued at a price equal to the lowest of (i) the then-effective Conversion Price under the 2025 GPO Convertible Note, (ii)
95
% of the VWAP of the Class A Common Stock over the ten trading days immediately preceding the applicable Installment Date and (iii)
95
% of the VWAP of the Class A Common Stock over the trading days occurring within the ninety calendar day period immediately preceding the applicable payment date.
The 2025 GPO Convertible Note provides for customary events of default upon which repayment of the 2025 GPO Convertible Note may be accelerated, including failure to pay any amounts due and owing under the 2025 GPO Convertible Note, failure to deliver the shares upon a conversion of the 2025 GPO Convertible Note, an uncured breach of any terms of the 2025 GPO Convertible Note and a default under certain of the Company’s other indebtedness. The 2025 GPO Convertible Note includes certain negative covenants related to the Company’s ability to incur indebtedness.
The Company elected to account for the 2025 GPO Convertible Note using the fair value option. The fair market value at August 12, 2025 and September 30, 2025 was $
18,865
and $
19,223
, respectively. The unrealized change in the fair value of the 2025 GPO Convertible Note was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) in the amount of a loss of $
358
during the three months ended September 30, 2025. The Company incurred total interest expense related to the 2025 GPO Convertible Note of $
209
for the three ended September 30, 2025.
The Company accounted for the redemption and exchange with the GPO Investor as a debt extinguishment. Accordingly, the Company recognized a gain of $
422
(net of a $
4,443
gain previously recognized in other comprehensive income), which is recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss).
The Company elected to account for the Prior GPO Convertible Note using the fair value option. The fair market value at August 12, 2025 and December 31, 2024 was $
41,844
and $
36,524
, respectively. The unrealized change in the fair value of the Prior GPO Convertible Note was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) in the amount of a loss of $
5,398
and $
5,320
for the three and nine months ended September 30, 2025, respectively. The Company incurred total interest expense related to the Prior GPO Convertible Note of $
452
and $
967
for the three months ended September 30, 2025 and 2024 and $
2,354
and $
2,826
for the nine months ended September 30, 2025 and 2024, respectively.
On March 17, 2025 and March 20, 2025, investors holding two convertible notes originally issued in 2020 and assumed by the Company in connection with the Business Combination, with a principal and accrued paid-in-kind interest balance of $
5,769
(the "Purchased Original Notes"), sold their convertible notes to EGT 11 LLC (the "Exchange Investor").
In connection with the acquisition of the Purchased Original Notes by the Exchange Investor, the Company entered into a Securities Exchange Agreement (the “Exchange Agreement”) on March 17, 2025, pursuant to which the Company cancelled the Purchased Original Notes and in exchange (i)
issued a convertible note to the Exchange Investor, for $
5,500
on March 17, 2025 and (ii) issued a second convertible note for $
269
on March 20, 2025 (collectively, the "Third Era Convertible Note"). The acquisition of the Purchased Original Notes by the Exchange Investor and the Exchange Agreement resulted in the extinguishment of the Purchased Original Notes. Accordingly, the Company recognized a loss on debt extinguishment of
$
1,784
during the nine months ended September 30, 2025. The Company incurred total interest expense related to the Purchased Original Notes, including the amortization of the various discounts, o
f $
209
during the three months ended September 30, 2024 and $
202
and $
620
during the nine months ended September 30, 2025 and 2024
, respectively.
Amended Legacy Notes
On March 25, 2025 (the "Amendment Date"), the Company entered into a letter agreement (the “Amendment”) with the holders (the "Legacy Investors") of two convertible notes originally issued in 2020 and assumed by the Company in connection with the Business Combination (the "Legacy Notes") with a principal and accrued paid-in-kind interest balance of $
10,961
modifying certain provisions in favor of each of the Legacy Investors. The Legacy Notes were unsecured and earned payable in kind interest of
15
% per annum, payable annually in arrears.
The Maturity Date of the Legacy Notes was
July 31, 2025
(the “Original Maturity Date”), however, the Amendment extended the Original Maturity Date to April 15, 2026 (the "Extended Maturity Date"). The repayment of the Legacy Notes may be accelerated upon certain events of default, as defined with the Legacy Notes.
Pursuant to the terms of the amended Legacy Notes, during the nine months ended September 30, 2025 the Company converted $
8,136
of the Legacy Notes into
1,049,421
Class A Common Shares.
The Company incurred total interest expense related to the amended Legacy Notes, including the amortization of the various discounts, of $
251
and $
421
during the
three months ended September 30, 2025 and 2024
and $
1,153
and $
1,209
during the
nine months ended September 30, 2025 and 2024, respectively.
On July 30, 2025, the Company and the holders of the Amended Legacy Notes agreed to extend the original maturity date to
August 15, 2025
. On August 12, 2025, the Company retired all of its then outstanding obligations under the Amended Legacy Notes by paying the holders $
3,600
in cash.
No
extinguishment gain or loss was recognized.
Dragonfly Seller Convertible Notes
In connection with the Company's acquisition of Dragonfly, the Company financed part of the purchase with the issuance of convertible notes. The Dragonfly Convertible Notes were issued in a principal amount of £
8,929
pounds sterling (approximately $
11,050
on January 23, 2023, the closing date of the acquisition of Dragonfly by the Company), with interest at an annual rate of
8
%, which can be paid in cash or paid-in-kind. The paid-in-kind interest will be annually credited to the principal amount. All principal and accrued interest are due upon maturity on
January 27, 2028
. The Company can convert any portion of the principal and accrued interest at the volume weighted-average price for the five consecutive trading day period ending on the last trading day of the calendar month preceding the date the Company provides notice of conversion to the Sellers. The lender has the right to convert the outstanding principal and accrued interest for FiscalNote common stock at $
120.00
per share, subject to adjustment in the event of any stock dividend, stock split, reverse stock split, combination or other similar recapitalization with respect to common stock.
In January 2025 one of the noteholders voluntarily elected to convert £
547
pounds sterling (approximately $
702
) pursuant to the lender conversion right of $
10.00
per share; accordingly, the Company issued the holder
5,613
shares of the Company's Class A common stock with a fair value of $
67
. The non-cash gain of $
635
recognized upon this conversion was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) during the three months ended March 31, 2025.
The Company elected to account for the Dragonfly Seller Convertible Notes using the fair value option. The fair market value at September 30, 2025 and at December 31, 2024 was
$
11,752
and $
8,979
, respectively.
The cumulative unrealized change in the fair value of the Dragonfly Seller Convertible Note of
$
151
is recorded in accumulated other comprehensive income at September 30, 2025.
The non-cash loss of $
707
and $
770
was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) during the
three and nine months ended September 30, 2025, respectively. The non-cash loss
of $
743
and $
339
was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss)
for the three and nine months ended September 30, 2024, respectively. The Company incurred total interest expense related to the Dragonfly Seller Convertible Notes of
$
258
and $
259
d
uring the three months ended September 30, 2025 and 2024, respectively, and
$
786
and $
747
for the nine months ended September 30, 2025 and 2024, respectively.
Era Convertible Notes
First Era Convertible Note
In connection with the Company’s strategic commercial partnership, the Company issued a convertible note to EGT-East, LLC ("Era"), a third-party lender, for $
5,500
on December 8, 2023 and a second convertible note for $
801
on
January 5, 2024 (collectively, the "First Era
Convertible
Note"). The First Era Convertible Note was issued in aggregate principal amount of $
6,301
, with cash interest at a rate equal to the applicable federal rate published by the Internal Revenue Service beginning on June 8, 2024. All principal and unpaid interest were to mature on
December 8, 2027
.
Pursuant to the copilot agreement (the "Co-Pilot Agreement") entered into by and among the Company, FiscalNote Inc., a subsidiary of the Company, and Era on December 8, 2023, the Company agreed to issue Era up to an additional $
3,150
in the form of shares of the Company's Class A Common Stock no later than June 2024 (the "First Era Convertible Note Partnership Shares").
On April 11, 2024, the Company entered into a letter agreement (the “Letter Agreement”) with Era modifying certain provisions of the First Era Convertible Note and the Co-Pilot Agreement. The Letter Agreement permitted and required the Company to convert approximately $
1,599
in aggregate principal amount of the First Era Convertible Note (the “Early Converted Note”). Pursuant to the Letter Agreement, the Company was also required to issue to Era the First Era Convertible Note Partnership Shares. Pursuant to the Letter Agreement, Era had the right to convert the aggregate principal amount of the remaining First Era Convertible Note, but only on or after June 30, 2024, if such conversion right was not cancelled by the terms of the Letter Agreement. On April 11, 2024 and pursuant to the Letter Agreement, the Company issued Era
250,272
shares of Common Stock.
On June 12, 2024 and June 25, 2024 the Company issued the Investor an aggregate amount of
320,735
shares of Common Stock to satisfy its remaining obligations with regards to the First Era Convertible Note and Co-Pilot Agreement
. Accordingly, the Company has no obligations outstanding related to the First Era Convertible Note at December 31, 2024 or September 30, 2025.
The Company elected to account for the First Era Convertible Note using the fair value option. The First Era Convertible Note dated December 8, 2023 was recorded at its acquisition date fair value of $
5,500
. The First Era Convertible Note dated January 5, 2024 was recorded at its acquisition date fair value of $
801
. The fair market value of the Era Convertible Note dated December 8, 2023 was $
5,977
at December 31, 2023. The non-cash loss of $
1,506
and $
3,189
was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) for the
three and nine months ended September 30, 2024.
Second Era Convertible Note
The Company issued a senior subordinated convertible note to an affiliate of Era ("Era II"), for $
5,500
on November 12, 2024 (the "Second Era Convertible Note"). The Second Era Convertible Note had a maturity date of November 12, 2027 and a cash interest rate equal to the applicable federal rate published by the Internal Revenue Service beginning on May 12, 2025. The Company issued
212,427
shares of common stock to Era II (the "Second Era Convertible Note Success Fee Shares") as a success fee and
54,166
shares of common stock to Northland Securities, Inc. to cover brokerage fees incurred by Era II in connection with its liquidating (i) any shares of common stock underlying the Second Era Convertible Note and the Second Era Convertible Note Success Fee Shares and (ii) the shares of common stock underlying the First Era Convertible Note as well as shares of common stock issued pursuant to the Co-Pilot Agreement.
On December 18, 2024 and December 27, 2024 the Company converted all of the outstanding principal of the Second Era Convertible Note and issued Era II, in aggregate,
448,106
shares of common stock. Accordingly, the Company had
no
obligations outstanding related to the Second Era Convertible Note at December 31, 2024 or September 30, 2025.
The Company elected to account for the Second Era Convertible Note using the fair value option. The Second Era Convertible Note was recorded at its acquisition date fair value of $
5,500
. The non-cash loss of $
2,973
was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) during the fourth quarter of 2024. In January 2025, Era II returned
89,288
shares of common stock pursuant to the terms of the Second Era Convertible Note.
Third Era Convertible Note
The Third Era Convertible Note was issued in an aggregate principal amount of $
5,769
, with cash interest accruing at a rate equal to the applicable federal rate published by the Internal Revenue Service beginning on September 17, 2025. All principal and unpaid interest mature on
March 17, 2028
. The Company received no cash from the Third Era Convertible Note because they were exchanged for the Purchased Original Notes.
The Third Era Convertible Notes are contractually subordinated to the Company’s obligations under its senior secured indebtedness, and accordingly the Company’s right to make certain cash payments in connection therewith is limited by the terms of such subordination agreement. Beginning on the six-month anniversary of the issuance of the applicable Third Era Convertible Note, the Exchange Investor may convert such Third Era Convertible Notes into shares (the “Conversion Shares”) of the Company's Class A Common Stock, based on the volume weighted average market price of the Class A Common Stock for the 30 consecutive trading day period prior to the date of conversion (the "Conversion Price"). In addition, subject to certain limitations, the Company may elect to convert the Third Era Convertible Notes into Conversion Shares at the Conversion Price. The Exchange Notes provide for customary events of default, upon which repayment of the Exchange Notes may be accelerated.
Pursuant to the Exchange Agreement, the Company issued
216,337
shares of Common Stock (the “Third Era Convertible Note Fee Shares") to the Exchange Investor as an inducement for the Exchange Investor to exchange the Purchased Original Notes for the Third Era Convertible Note. The Third Era Convertible Note Fee Shares were presented as temporary equity in the condensed consolidated balance sheet at their grant date fair value of $
2,719
.
As compensation for its brokerage services provided to the Exchange Investor, the Company also issued
25,000
shares of Common Stock to Northland Securities, Inc. (the “Brokerage Fee Shares”) with a fair value of $
315
that was reflected as a non-cash charge within general and administrative in the condensed consolidated statements of operations and comprehensive income (loss) during the
nine months ended September 30, 2025.
On
August 12, 2025, the Company retired all of its then outstanding obligations under the Third Era Convertible Note by paying the
holders
$
8,176
in cash. As a result of the extinguishment, the Company recognized a gain of $
634
that was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) during the three and nine months ended September 30, 2025.
PPP Loan
As of September 30, 2025
, the Company has
no
remaining obligations under the
PPP Loan balance.
Total Debt
The following table summarizes the total estimated fair value of the Company's debt as of
September 30, 2025 and December 31, 2024, respectively. These fair values are deemed Level 3 liabilities within the fair value measurement framework.
September 30, 2025
December 31, 2024
2025 Senior Term Loan
$
73,373
$
-
2025 GPO Convertible Note
19,223
-
Dragonfly Seller Convertible Notes
11,772
8,979
Convertible Debentures
19,835
-
Prior Senior Term Loan
-
90,679
GPO Convertible Note
-
36,524
Amended Legacy Notes
-
15,728
Total
$
124,203
$
151,910
Note 9. Stockholders’ Equity and Temporary Equity
Authorized Capital Stock
The Company’s charter authorizes the issuance of
1,809,000,000
shares, which includes Class A common stock, Class B common stock, and preferred stock.
Class A Common Stock
Subsequent to the Closing of the Business Combination, the Company's Class A common stock and public warrants began trading on the New York Stock Exchange (“NYSE”) under the symbols “NOTE” and “NOTE.WS,” respectively. Pursuant to the Company’s charter, the Company is authorized to issu
e
1,700,000,000
sh
ares of Class A common stock, par value $
0.0001
per share. As of
September 30, 2025, the Company had
14,011,577
shares of C
lass A common stock issued and outstanding.
Additionally, the Company has outstanding warrants to purchase shares of New FiscalNote Class A common stock that became exercisable upon the Closing of the Business Combination. Refer to Note 11, "Warrant Liabilities."
Class B Common Stock
Pursuant to the Company’s charter, the Company is authorized to issue
9,000,000
shares of Class B common stock, par value $
0.0001
per share.
In connection with the Closing of the Business Combination, the Co-Founders, or entities controlled by the Co-Founders, received Class B shares of New FiscalNote common stock as consideration (see further details in Note 2, "Business Combination with DSAC").
As of September 30, 2025
, the Company had
690,909
shares of Class B common stock issued and outstanding.
Preferred Stock
Pursuant to the Company’s charter, the Company is authorized to issue
100,000,000
shares of preferred stock, par value $
0.0001
per share. Our board of directors has the authority without action by the stockholders, to designate and issue shares of preferred stock in one or more classes or series, and the number of shares constituting any such class or series, and to fix the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of preferred stock, including, without limitation, dividend rights, conversion rights, redemption privileges and liquidation preferences, which rights may be greater than the rights of the holders of the common stock.
No
preferred stock has been issued to date.
Dividends
The Company's Class A and Class B common stock are entitled to dividends if and when any dividend is declared by the Company's board of directors, subject to the rights of all classes of stock outstanding having priority rights to dividends. The Company has not paid any cash dividends on common stock to date. The Company may retain future earnings, if any, for the further development and expansion of the Company's business and have no current plans to pay cash dividends for the foreseeable future. Any future determination to pay dividends will be made at the discretion of the Company's board of directors and will depend on, among other things, the Company's financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as the Company's board of directors may deem relevant.
As discussed in
Note 8, Debt
, the Company issued
216,337
shares of common stock to the Exchange Investor as an inducement for the Exchange Investor to exchange the Purchased Original Notes for the Third Era Convertible Note. Pursuant to ASC 480, “Distinguishing Liabilities from Equity”, at the time of issuance, the Company presented the Third Era Convertible Note Fee Shares as temporary equity as they were
not mandatorily redeemable on the issuance date but were redeemable at an unknown time in the future upon an event that would have been outside of the control of the Company.
In the third quarter of 2025, the Exchange Investor returned, and the Company subsequently cancelled,
182,580
shares of Class A Common Stock
.
Note 10. Earnout Shares and RSUs
The shareholders and other equity holders of Old FiscalNote as described below are entitled to receive up to
1,599,590
additional shares of Class A Common Stock of New FiscalNote (the “Earnout Awards”) in the form of Earnout Shares or as shares reserved for issuances upon settlement of Earnout RSUs, as described below. The Earnout Awards are split into
five
tranches each consisting of
319,918
shares of Class A Common Stock in New FiscalNote. Certain Old FiscalNote equity holders will receive Earnout Restricted Stock Units (the “Earnout RSUs”), which are settled in Class A Common Stock. The right to receive Earnout Awards will expire on
July 29, 2027
(the “Earnout Period”). Each tranche of the Earnout Awards will be issued only when the dollar volume-weighted average price of one share of New FiscalNote Class A common stock is greater than or equal to $
126.00
, $
150.00
, $
180.00
, $
240.00
, or $
300.00
, respectively, for any 10 trading days within any period of 20 consecutive trading days during the Earnout Period (collectively, the “Triggering Events”).
A portion of the Earnout Shares that may be issued to Old FiscalNote common stockholders, Old FiscalNote vested option holders and Old FiscalNote warrant holders and all of the Earnout RSUs were determined to represent additional compensation for accounting purposes pursuant to ASC 718, “Compensation-Stock Compensation”. The Company recognizes stock-compensation expense based on the fair value of the Earnout Awards over the requisite service period for each tranche. The Company recognized
$
43
and $
108
of s
hare-based compensation expense during the three and nine months ended September 30, 2025, respectively. The Company recognized
$
106
and $
278
of share-based compensation expense during the
three and nine months ended September 30, 2024, respectively. The remaining Earnout Shares were determined to represent an equity transaction in conjunction with the reverse recapitalization and were evaluated pursuant to ASC 480, “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives and Hedging”. These remaining Earnout Shares are accounted for as a liability as the arrangement is indexed to something other than the Company’s stock. The liability is revalued at each reporting period with changes being recorded as a non-operating gain or loss in the condensed consolidated statements of operations and comprehensive income (loss). The liability
of $
68
was recorded in other non-current liabilities on the condensed consolidated balance sheets
as of September 30, 2025 and December 31, 2024.
As of September 30, 2025
, there was
no
unrecognized compensation expense related to the Earnout Awards. As of September 30, 2025,
no
Earnout Shares and no Earnout RSUs have been issued as
no
Triggering Events have occurred.
Note 11. Warrant Liabilities
As a result of the Reverse Stock Split, and pursuant to the terms of the applicable warrant agreement, at September 30, 2025 the Company has
8,358,964
public warrants outstanding to purchase a total of
1,094,625
shares of Class A common stock and
7,000,000
private placement warrants outstanding to purchase a total of
916,666
shares of Class A common stock, with each whole warrant being exercisable to purchase
0.130952
shares of Class A common stock at an effective price per share of $
87.82
per whole share.
During the nine months ended September 30, 2025
,
no
public warrants were exercised into shares of Class A common stock.
No
private placement warrants have been exercised to date.
The public and private warrants are accounted for as a liability and have an aggregate fair value of
$
1,015
at
September 30, 2025
.
Note 12. Stock-Based Compensation
2022 Long-Term Incentive Plan
In connection with the Business Combination, the Company's board of directors adopted, and its stockholders approved, the 2022 Long-Term Incentive Plan (the “2022 Plan”) under which
1,690,466
shares of Class A common stock were initially reserved for issuance. Effective December 31, 2024, the 2022 Plan was amended to (i) effectuate a one-time increase of
333,333
shares authorized for issuance under the 2022 Plan and (ii) revise the “evergreen” provision of the 2022 Plan such that the number of shares of Class A common stock that are automatically added to the 2022 Plan on January 1st of each year will be increased up to the lesser of (a) five percent (
5
%) of the total number of shares of Class A common stock outstanding on December 31st of the preceding calendar year or (b)
1,126,977
shares of Class A Common Stock (the “2022 Plan Amendment”). The 2022 Plan Amendment allows for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, other stock-based awards and cash-based awards. The number of shares of the Company’s Class A common stock available for issuance under the 2022 Plan increases on the first day of each calendar year, continuing through and including January 1, 2027, by the lesser of (a)
1,126,977
, (b) three percent (
3
%) prior to the 2022 Plan Amendment and five percent (
5
%) after the 2022 Plan Amendment, in each case, the total number of shares of Class A Common Stock outstanding on December 31st of the immediately preceding fiscal year or (c) a lesser number determined by the Company’s board of directors prior to January 1 of a given year. In accordance with this provision, on each of January 1, 2023 and January 1, 2024, the number of shares authorized for issuance under the 2022 Plan increased by
304,199
and
928,309
, respectively.
During the nine months ended September 30, 2025, the Company issued
677,848
rest
ricted stock units. At September 30, 2025,
802,120
stock options,
999,138
restricted stock units, and
226,620
performance based restricted stock units remain outstanding. As of September 30, 2025, the Company had
361,799
shares of Class A common stock available for issuance under the 2022 Plan.
The Company recognized
$
3,599
and $
3,853
of
stock-based compensation expense for all long term incentive plans in effect during the three months ended September 30, 2025 and 2024, respectively, and
$
10,648
and
$
13,092
during the
nine months ended September 30, 2025 and 2024
, respectively. The Company recognized an expense of $
138
and $
238
of stock-based compensation expense related to acquisition earnouts during the
three and nine months ended September 30, 2024, respectively.
2022 Employee Stock Purchase Plan
In connection with the Business Combination, the Company’s board of directors adopted, and its stockholders approved, the 2022 Employee Stock Purchase Plan (the “ESPP”) whereby eligible employees may authorize payroll deductions of up to
15
% of their regular base salary to purchase shares at the lower of
85
% of the fair market value of the common stock on the date of commencement of the offering period or on the last day of the six-month offering period. The plan is defined as compensatory, and accordingly, a stock-based compensation charge of
$
28
and $
46
was
recorded as the difference between the fair market value and the discounted purchase price of the Company's common stock for the three months ended September 30, 2025 and 2024
and $
115
and $
239
for the
nine months ended September 30, 2025 and 2024
, respectively. The number of shares of Common Stock reserved for issuance under the ESPP will automatically increase on January 1st each year, starting on January 1, 2023 and continuing through and including January 1, 2027, by the lesser of (a)
272,313
, (b) one percent (
1
%) of the total number of shares of all classes of Common Stock outstanding on December 31st of the preceding fiscal year, or (c) a lesser number determined by the Board prior to January 1 of a given year. Pursuant to this provision, on each of January 1, 2024 and January 1, 2025, the number of shares authorized for issuance under the ESPP increased by
108,308
and
125,904
, respectively. For the nine months ended
September 30, 2025
,
37,231
shares have been issued under the ESPP and the Company had
664,343
shares of Class A common stock available for issuance under the ESPP.
2024 Inducement Plan Grants
The Company's board of directors adopted the 2024 Inducement Equity Incentive Plan (the “Plan”). The plan allows for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, other stock-based awards and cash-based awards. Under the Plan,
41,666
shares of Class A common stock were initially reserved for issuance.
During 2024, the Company issued
16,666
stock options and
25,000
restricted stock units. At
September 30, 2025
,
16,666
stock options and
15,285
restricted stock units remain outstanding. The Company recognized
$
35
a
nd $
38
of stock-based compensation expense for this plan in effect during the three months ended September 30, 2025 and 2024
, respectively and $
104
and $
38
for the
nine months ended September 30, 2025 and 2024, respectively.
Withholding Taxes on Equity Awards
In connection with the settlement of equity awards, the Company records a non-cash liability and corresponding APIC adjustment for the withholding taxes on net share settlement of stock-based compensation and option exercises until such time as those taxes have been remitted to the respective taxing authorities.
Note 13. Earnings (Loss) Per Share
The Company has two classes of common stock authorized: Class A common stock and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting. Each share of Class A common stock is entitled to
one vote
per share and each share of Class B common stock is entitled to
twenty-five votes
per share. The Company allocates undistributed earnings attributable to common stock between the common stock classes on a one‑to‑one basis when computing net loss per share. As a result, basic and diluted net income (loss) per share of Class A common stock and Class B common stock are equivalent.
Earnings (loss) per share is computed by dividing net earnings (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period on a basic and diluted basis. The Company's net (loss) income used in computing basic and diluted earnings per share. Diluted (loss) earnings per share considers the impact of potentially dilutive securities.
The following is a calculation of the basic and diluted earnings per share for the Company's common stock, including a reconciliation between net income attributable to common stockholders used for Basic EPS and Diluted EPS for the
three and nine months ended September 30, 2025 and 2024:
(in thousands, except share and per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Basic Earnings Per Share
Numerator:
Net (loss) income used to compute basic and diluted EPS
$
(
24,855
)
$
(
14,935
)
$
(
42,376
)
$
22,900
Denominator:
Weighted average common stock outstanding, basic and diluted
14,376,802
11,254,174
13,259,124
11,263,344
Earnings Per Share, basic and diluted
$
(
1.73
)
$
(
1.33
)
$
(
3.20
)
$
2.03
Since the Company was in a net loss position during the three months ended September 30, 2024 and the three and nine months ended September 30, 2025, basic net loss per share attributable to common stockholders is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been anti-dilutive.
Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:
Anti-dilutive securities excluded from diluted loss per share:
2025
2024
2025
2024
Earnout Awards
1,599,591
1,599,591
1,599,591
1,599,591
Restricted stock units
1,241,043
884,607
1,241,043
884,607
2025 GPO Convertible Note/GPO Convertible Note
246,430
500,930
246,430
500,930
Dragonfly Seller Convertible Notes
112,577
95,586
112,577
95,586
Convertible Debentures
7,391,618
-
7,391,618
-
Stock options
-
14,207
-
14,207
Total anti-dilutive securities excluded from diluted loss per share
10,591,259
3,094,921
10,591,259
3,094,921
Note 14. Provision (Benefit) from Income Taxes
Effective Tax Rate
The Company computes its quarterly and year-to-date provisions for income taxes by applying the estimated effective tax rates to the quarterly and year-to-date pre-tax income or losses and adjusting the provisions for discrete tax items recorded in the periods. For the three months ended September 30, 2025 the Company reported a tax benefit of
$
237
on a pre-tax loss of
$
25,092
, which resulted in an effective tax rate of (
0.94
) percent. For the nine months ended September 30, 2025, the Company reported a tax benefit of
$
1,071
on a pre-tax loss of
$
43,447
, which resulted in an effective tax rate of (
2.47
) percent. The Company’s effective tax rate differed from the U.S. statutory rate of
21
percent primarily due to the impact of a valuation allowance on the Company’s deferred tax assets and the sale of businesses discussed in Note 4, Dispositions
. During the nine months ended September 30, 2025, the Company recorded a discrete tax benefit for the impact of the sale of Dragonfly and Oxford Analytica o
f $
281
. During the second quarter ended June 30, 2025, the Company filed a tax accounting method change that created an additional discrete tax benefit of $
689
.
For the three months ended September 30, 2024, the Company reported a tax provision of
$
621
on a pre-tax loss of
$
15,556
, which resulted in an effective tax rate of (
3.99
) percent. For the nine months ended September 30, 2024, the Company reported a tax provision of
$
1,129
on a pre-tax income of
$
24,029
, which resulted in an effective tax rate of (
4.70
) percent.
The Company’s effective tax rate differed from the U.S. statutory rate of
21
percent primarily due to the impact of a valuation allowance on the Company’s deferred tax assets. During the
nine months ended September 30, 2024
, the Company recorded a discrete tax charge for the impact of the sale of Board.org of $
2,578
.
Unrecognized Tax Benefits and Other Considerations
The Company records liabilities related to its uncertain tax positions. Tax positions for the Company and its subsidiaries are subject to income tax audits by multiple tax jurisdictions throughout the world. The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. As the outcome of the tax audits cannot be predicted with certainty, if any issues arising in the Company's tax audits progress in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future. As of September 30, 2025, the Company reported an uncertain tax position totalin
g $
832
rel
ating to a deduction for shares distributed for services associated with the payment of convertible debt. As of September 30, 2024, the Company reported an uncertain tax position
totaling $
639
relating to a state tax filing position.
Tax law changes
On July 4, 2025, U.S. legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (“The Act”) was signed into law. The Act, among other things, extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced targeted changes to the U.S. federal income tax regime. The Company has recorded an income tax benefit of $
46
in the three and nine months ended September 30, 2025 as a result of
The Act.
Note 15. Fair Value Measurements and Disclosures
Fair value is defined as the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date. Accounting standards utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, which are described below:
•
Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets
•
Level 2 – Observable inputs other than quoted prices that are either directly or indirectly observable for the asset or
liability
•
Level 3 – Unobservable inputs that are supported by little or no market activity
The carrying value of cash and cash equivalents (including investments with an original maturity of
three months or less
at the date of purchase), restricted cash, accounts receivable, accounts payable, and other accruals readily convertible into cash approximate fair value because of the short-term nature of the instruments.
The following table presents the Company’s financial assets and liabilities accounted for at fair value on a recurring basis as of
September 30, 2025 by level within the fair value hierarchy:
Level 1
Level 2
Level 3
Total
Assets:
Cash equivalents
$
6,552
$
-
$
-
$
6,552
Short-term investments
-
4,511
-
4,511
Liabilities:
Public warrants
$
553
$
-
$
-
$
553
Private placement warrants
-
462
-
462
2025 GPO Note
-
-
19,223
19,223
Dragonfly Seller Convertible Notes
-
-
11,752
11,752
Convertible Debentures
-
-
29,753
29,753
The following table presents the Company’s financial assets and liabilities accounted for at fair value on a recurring basis as of December 31, 2024 by level within the fair value hierarchy:
Level 1
Level 2
Level 3
Total
Assets:
Cash equivalents
$
4,836
$
-
$
-
$
4,836
Short-term investments
-
5,796
-
5,796
Liabilities:
Public warrants
$
1,338
$
-
$
-
$
1,338
Private placement warrants
-
1,120
-
1,120
Prior GPO Convertible Note
-
-
36,524
36,524
Dragonfly Seller Convertible Notes
-
-
8,979
8,979
The following table summarizes changes in fair value of the Company’s level 3 liabilities during the periods presented
:
GPO Convertible Note
Dragonfly Seller Convertible Notes
Era Convertible Note
2025 GPO Note
Convertible Debentures
Balance at December 31, 2024
$
36,524
$
8,979
$
-
$
-
$
-
Fair value at issuance date
-
-
4,728
18,865
29,970
Change in fair value
included in the determination of net (income) loss
5,320
770
481
358
1,403
Change in fair value included in accumulated other comprehensive income
-
1,113
-
-
-
Paid in kind interest
1,902
802
-
-
-
Note and interest conversion
(
1,902
)
(
702
)
-
-
(
1,620
)
Note extinguishment
(
41,844
)
-
-
-
-
Note settlement
-
-
(
5,209
)
-
-
Foreign exchange
-
790
-
-
-
Balance at September 30, 2025
$
-
$
11,752
$
-
$
19,223
$
29,753
Short-Term Investments
The fair value of the short-term investments is based on the quoted market price of the securities on the valuation date. As of September 30, 2025
, the estimated fair value of the short-term investments was $
4,511
. The Company recognized non-cash gain of $
4
and a non-cash loss of $
15
and a non-cash loss of $
67
and $
94
for the
three and nine months ended September 30, 2025 and 2024, respectively, resulting from the change in fair value of the short-term investments. The change in fair value is recorded in the condensed consolidated statements of operations and comprehensive income (loss).
Public Warrants
The fair value of the public warrants is based on the quoted market price of such warrants on the valuation date. As of September 30, 2025 and December 31, 2024
, the estimated fair value of the public warrants was $
553
and $
1,338
, respectively. The Company recognized a non-cash gain of $
276
and a non-cash gain of $
251
during the
three months ended September 30, 2025 and 2024
, respectively, and a non-cash gain of $
785
and $
1,337
during the
nine months ended September 30, 2025 and 2024 resulting from the change in fair value of the public warrants, respectively. The change in fair value is recorded in change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss).
Private Placement Warrants
As of September 30, 2025 and December 31, 2024, the estimated fair value of the private warrants was
$
462
and $
1,120
, respectively.
The Company recognized a non-cash gain of $
231
and a non-cash gain of $
210
during the
three months ended September 30, 2025 and 2024
, respectively, and a non-cash gain of $
658
and $
1,120
during the
nine months ended September 30, 2025 and 2024, respectively,
resulting from the change in fair value of the private warrants. The change in fair value is recorded in change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss).
2025 GPO Note / Prior GPO Convertible Note
The Prior GPO Convertible Note was recognized as a liability on June 30, 2023 issuance date at its estimated fair value of $
36,583
. The estimated fair value of the Prior GPO Convertible Note was determined based on a trinomial lattice model. On August 12, 2025, the Company extinguished $
30,000
of the Prior GPO Convertible Note with a $
27,000
cash payment and issued the 2025 GPO Note. The 2025 GPO Note was recognized as a liability at its estimated fair value of $
18,865
at its issuance date of August 12, 2025.
The non-cash loss of $
358
for the 2025 GPO Note was recorded in the change of in the fair value of financial instruments in the condensed consolidated statement of operations for the three and nine months ended September 30, 2025, respectively.
The following table presents the assumptions used to determine the fair value of the 2025 GPO Note and the Prior GPO Convertible Note at September 30, 2025 and at December 31, 2024:
2025 GPO Note
2025 GPO Note
Prior GPO Convertible Note
Prior GPO Convertible Note
September 30, 2025
August 12, 2025
August 12, 2025
December 31, 2024
Common stock share price
$
4.63
$
6.67
$
6.67
$
12.84
Risk free rate
3.7
%
3.8
%
3.7
%
4.3
%
Yield
14.9
%
15.5
%
15.1
%
18.0
%
Expected volatility
50.0
%
50.0
%
50.0
%
50.0
%
Expected term (years)
4.1
4.3
2.9
3.5
Dragonfly Seller Convertible Notes
The Dragonfly Seller Convertible Notes were recognized as a liability in connection with the acquisition on January 27, 2023 at a fair value of $
8,635
. As of
September 30, 2025 and December 31, 2024, the estimated fair value of the Dragonfly Seller Convertible Notes were
$
11,752
and $
8,979
, respectively.
The unrealized change in the fair value of the Dragonfly Seller Convertible Note of $
1,113
and the
non-cash loss of $
707
and
$
770
(excluding the non-cash gain recognized from the January 2025 conversion) was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operations and comprehensive income (loss) during the three and nine months ended September 30, 2025. The unrealized change in the fair value of the Dragonfly Seller Convertible Note of
$
1,264
is recorded in accumulated other comprehensive income for the nine months ended September 30, 2024 and t
he non-cash loss of $
743
and $
339
was recorded in the change in fair value of financial instruments in the condensed consolidated statements of operation
s and comprehensive loss for the three and nine months ended September 30, 2024
, respectively.
The following table presents the assumptions used to determine the fair
value of the Dragonfly Seller Convertible Notes at September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Common stock share price
$
4.63
$
12.84
Risk free rate
3.6
%
4.3
%
Yield
15.4
%
19.5
%
Expected volatility
50.0
%
50.0
%
Expected term (years)
2.3
3.1
Convertible Debentures
The initial tranche of the Convertible Debentures were recognized as a liability on the August 12, 2025 issuance date at its estimated fair value of $
18,900
using a Monte Carlo simulation. The second tranche of the Convertible Debentures were recognized as a liability on September 11, 2025 at its estimated fair value of $
11,000
. The non-cash loss of
$
1,403
was
recorded in the change of in the fair value of financial instruments in the condensed consolidated statement of operations for the three and nine months ended September 30, 2025, respectively.
The following table presents the assumptions used to determine the fair
value of the Convertible Debentures at September 30, 2025, September 11, 2025 and August 12, 2025:
September 30, 2025
September 11, 2025
August 12, 2025
Common stock share price
$
4.63
$
5.10
$
6.67
Risk free rate
3.65
% and
3.64
%
(a)
3.6
%
3.8
%
Yield
95.0
%
96.0
%
98.0
%
Expected volatility
97.0
%
99.0
%
101.0
%
Expected term (years)
1.4
and
1.5
(a)
1.5
1.5
(a)
-
Includes both the First and Second YA Debenture
Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Company’s long-lived assets, including property and equipment, intangible assets and goodwill are measured at fair value on a non-recurring basis when an impairment has occurred. The Company has not identified any impairments to be recorded during the three and nine months ended September 30, 2025 and 2024.
There were
no
transfers of assets or liabilities between levels during the
nine months ended September 30, 2025 and 2024
.
From time to time the Company is a party to various disputes, claims, lawsuits and other regulatory and legal matters, including both asserted and unasserted legal claims, in the ordinary course of business. The status of each such matter, referred to herein as a loss contingency, is reviewed and assessed in accordance with applicable accounting rules regarding the nature of the matter, the likelihood that a loss will be incurred, and the amounts involved.
Legal fees are recognized as incurred when the legal services are provided, and therefore are not recognized as part of the loss contingency.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of O
perations.
The following discussion provides information that FiscalNote’s management believes is relevant to an assessment and understanding of FiscalNote’s condensed consolidated results of operations and financial condition. The discussion should be read together with the unaudited interim condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Certain monetary amounts, percentages and other figures included below have been subject to rounding adjustments as amounts are presented in thousands or millions, as the context describes. Percentage amounts included below have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts may vary from those obtained by performing the same calculations using the figures in our condensed consolidated financial statements included elsewhere herein. Certain other amounts that appear below may not sum due to rounding.
This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A, “Risk Factors” and other factors set forth in other parts of this Quarterly Report on Form 10-Q. Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company,” “FiscalNote,” “we,” “us,” or “our” refer to the business of Old FiscalNote, which became the business of New FiscalNote and its subsidiaries following the Closing.
Overview
FiscalNote is a leading provider of artificial intelligence (AI) driven policy and regulatory intelligence solutions. It delivers critical, actionable legal and policy insights in a rapidly evolving political, regulatory and macroeconomic environment. By combining AI technology, other technologies with analytics, workflow tools, and expert peer insights, FiscalNote empowers customers to manage policy, address regulatory developments, and mitigate global risk. FiscalNote ingests unstructured legislative and regulatory data, and employs AI and data science to deliver structured, relevant and actionable information in order to facilitate key operational and strategic decisions by global enterprises, midsized and smaller businesses, government institutions, trade groups and nonprofits. FiscalNote delivers that intelligence through its suite of public policy and issues management products, coupled with expert research and analysis of markets and geopolitical events, as well as powerful tools to manage workflows, advocacy campaigns and constituent relationships.
Business Combination
On July 29, 2022, the Company consummated the transactions contemplated by the Agreement and Plan of Merger, dated as of November 7, 2021, and as amended on May 9, 2022, (the “Merger Agreement”), by and among FiscalNote Holdings, Inc., a Delaware corporation (“Old FiscalNote”), Duddell Street Acquisition Corp., a Cayman Islands exempted company (“DSAC”), and Grassroots Merger Sub, Inc., a Delaware Corporation and a wholly owned direct subsidiary of DSAC (“Merger Sub” and, together with DSAC, the “DSAC Parties”). Pursuant to these transactions, Merger Sub merged with and into Old FiscalNote, with Old FiscalNote becoming a wholly owned subsidiary of DSAC (the “Business Combination” and, collectively with the other transactions described in the Business Combination Agreement, the “Transactions”). In connection with the closing of the Transactions, DSAC domesticated and continued as a Delaware corporation under the name of “FiscalNote Holdings, Inc.” (“New FiscalNote”). Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company,” “FiscalNote,” “we,” “us,” or “our” refer to the business of Old FiscalNote, which became the business of New FiscalNote and its subsidiaries following the closing on July 29, 2022. Subsequent to the closing of the Business Combination, the Company's Class A common stock and public warrants began trading on the New York Stock Exchange (“NYSE”) under the symbols “NOTE” and “NOTE.WS,” respectively. The Company accounted for the Business Combination as a reverse recapitalization whereby Old FiscalNote was determined as the accounting acquirer and DSAC as the accounting acquiree. Accordingly, the Business Combination was treated as the equivalent of Old FiscalNote issuing stock for the net assets of DSAC, accompanied by a recapitalization. The net assets of DSAC are stated at historical cost, with no goodwill or other intangible assets recorded.
Significant Events
Debt Refinance
As described in Note 8 “Debt” to the condensed consolidated financial statements included elsewhere herein, on August 12, 2025, the Company closed a series of transactions whereby the Company (a) retired all of its then outstanding obligations under the senior term loan consummated pursuant to the Credit Agreement with Runway Growth Finance Corp., ORIX Growth Capital, LLC, Clover Orochi LLC, and ACM ASOF VIII SaaS FinCo LLC entered into concurrent with the Business Combination (the "Prior Senior Term Loan") totaling approximately $62.7 million (including accrued and unpaid interest and deferred finance costs) and replaced it with a $75.0 million new senior term loan maturing in August 2029; (b) issued $21,9 million of Convertible Debentures in exchange for $18.9 million of cash; (c) paid the holder of the GPO Convertible Note $27.0 million to redeem $30.0 million of aggregate principal under the GPO Convertible Note and exchanged the GPO Convertible Note for a new convertible note with a principal balance of $20.4 million maturing in November 2029 (the "2025 GPO Convertible Note"), and (d) retired all of its then outstanding obligations under the Amended Legacy Notes by paying the holders $3.6 million in cash. On September 11, 2025, the Company issued another $12.3 million of Convertible Debentures whereby the net proceeds of approximately $11.1 million was used to repay the outstanding obligations under the Third Era Convertible Note totaling $8.2 million
.
As a result of these series of transactions, beginning August 12, 2025, the Company's annualized cash interest payments will be approximately $9.0 million (based on current SOFR interest rates), and its principal repayments will be approximately $1.9 million during year one, and approximately $3.8 million thereafter.
Factors Impacting the Comparability of Our Operating Results
Dispositions
On July 1, 2025, we completed the sale of TimeBase for $7.4 million comprised of a cash payment to the Company of $6.7 million and a buyer holdback of $0.7 million. The Company recorded a gain of $1.3 million from the sale of TimeBase during the nine months ended September 30, 2025.
On March 31, 2025, we completed the sale of Dragonfly and Oxford Analytica for $40.3 million in cash. The Company recorded a gain of $15.3 million from the sale of Dragonfly and Oxford Analytica during the nine months ended September 30, 2025.
On October 31, 2024, we completed the sale of Aicel Technologies business ("Aicel") for $9.7 million comprising of $8.5 million of cash and the assumption of an existing convertible note issued by Aicel in 2022, with an outstanding total principal and accrued paid-in-kind interest amount of $1.2 million. The Company recorded a gain of $0.5 million from the sale of Aicel in the fourth quarter of 2024.
On March 11, 2024, we completed the sale of Board.org for $90.9 million in cash at closing. The Company recorded a gain on sale of business of $71.5 million during the nine months ended September 30, 2024.
These businesses contributed the following:
•
Subscription revenue of approximately $4.3 million for the three months ended September 30, 2024 and approximately $4.0 million and $15.5 million for the nine months ended September 30, 2025 and 2024, respectively.
•
Non-subscription revenue of approximately $0.8 million for the three months ended September 30, 2024 and approximately $0.7 million and $2.4 million for the nine months ended September 30, 2025 and 2024, respectively.
•
ARR of approximately $17.3 and $15.5 million at September 30, 2024 and December 31, 2024, respectively.
At the beginning of the third quarter of 2025 the Company had approximately 439 employees. As a result of the Company's business dispositions, product rationalization, business simplification, and cost takeout actions, the Company's full-time equivalent headcount reduced by approximately 27 from the beginning of the third quarter of 2025 through September 30, 2025. As a result, the Company has seen a reduction in overall cash costs across all operating expenses. Management will continue evaluating for additional rationalization opportunities to further reduce the complexity of the business and reduce ongoing operating expenses.
We continue to invest for future growth. We are focused on several key growth levers, including cross-selling and upselling opportunities at existing clients, expanding our client base with a focus on enterprise and government customers, expansion into adjacent markets and deepening our offerings for regulated industries or sectors. Several of these growth drivers require investment in and refinement of our go-to-market approach and, as a result, we may continue to incur additional costs upfront to obtain new customers and expand our relationships with existing customers, including additional sales and marketing expenses specific to subscription revenue.
We plan to invest a portion of our available capital resources in building innovative products, attracting new customers and expanding our leadership role in the legal and regulatory information market to drive growth organically. We may also evaluate acquisitions and investment opportunities in complementary businesses to supplement our existing platform, enable us to enter new markets and ensure that we are well positioned to provide critical insights to the regulated sectors of the future. Past acquisitions have enabled us to deliver innovative solutions in new categories and enhance the functionality of our existing products. Strategic acquisitions may be a component of our growth strategy in the future.
Key Performance Indicators
In addition to our GAAP results further described and discussed below in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we monitor the following key performance indicators to evaluate growth trends, prepare financial projections, make strategic decisions, and measure the effectiveness of our sales and marketing efforts. Our management team assesses our performance based on these key performance indicators because it believes they reflect the underlying trends of our business and serve as meaningful measures of our ongoing operational performance.
Annual Recurring Revenue (“ARR”)
Approximately 93% of our revenues are subscription based. Our ability to retain existing subscription customers is a key performance indicator that helps explain the evolution of our historical results and is a leading indicator of our revenues and cash flows for subsequent periods. We use ARR as a measure of our revenue trend and an indicator of our future revenue opportunity from existing recurring subscription customer contracts. We calculate ARR on a parent account level by annualizing the contracted subscription revenue, and our total ARR as of the end of a period is the aggregate thereof. ARR is not adjusted for the impact of any known or projected future customer cancellations, upgrades or downgrades, or price increases or decreases. The amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to timing of the revenue bookings during the period, cancellations, upgrades, or downgrades and pending renewals. ARR should be viewed independently of revenue as it is an operating metric and is not intended to be a replacement or forecast of revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies.
Our ARR at September 30, 2025 and December 31, 2024, was $84.8 million and $107.5 million, respectively. ARR at September 30, 2024 and December 31, 2024, excluding products we discontinued in 2023, and the impact of the sale of Board.org, Aicel, Oxford Analytica, Dragonfly, and TimeBase was $92.2 million and $91.9 million, respectively.
Our NRR, which we use to measure our success in retaining and growing recurring revenue from our existing customers, compares our recognized recurring revenue from a set of customers across comparable periods. We calculate our NRR for a given period as ARR at the end of the period minus ARR contracted from new clients for which there is no historical revenue booked during the period, divided by the beginning ARR for the period. We calculate NRR at our parent account level. Our calculation of NRR for any fiscal period includes the positive recurring revenue impacts of selling additional licenses and services to existing customers and the negative recognized recurring revenue impacts of contraction and attrition among this set of customers. Our NRR may fluctuate as a result of a number of factors, including the level of our revenue base, the level of penetration within our customer base, expansion of products and features, the timing of renewals, and our ability to retain our customers. Our calculation of NRR may differ from similarly titled metrics presented by other companies. NRR, excluding the impact of Board.org, Aicel, Oxford Analytica, Dragonfly, and TimeBase was 98% for the three months ended September 30, 2025 and 2024, respectively.
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures to clarify and enhance our understanding, and aid in the period-to-period comparison, of our performance. Where applicable, we provide reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measure. Investors are encouraged to review the reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure. While we believe that these non-GAAP financial measures provide useful supplemental information, non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for, their most comparable GAAP measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be comparable to similarly titled measures of other companies due to potential differences in their financing and accounting methods, the book value of their assets, their capital structures, the method by which their assets were acquired and the manner in which they define non-GAAP measures.
Adjusted Gross Profit and Adjusted Gross Profit Margin
We define Adjusted Gross Profit as Total revenues minus cost of revenues, including amortization of capitalized software development costs and acquired developed technology, before amortization of intangible assets that are included in costs of revenues. We define Adjusted Gross Profit Margin as Adjusted Gross Profit divided by Total revenues.
We use Adjusted Gross Profit and Adjusted Gross Profit Margin to understand and evaluate our core operating performance and trends. We believe these metrics are useful measures to us and to our investors to assist in evaluating our core operating performance because they provide consistency and direct comparability with our past financial performance and between fiscal periods, as the metrics eliminate the non-cash effects of amortization of intangible assets that may fluctuate for reasons unrelated to overall operating performance.
Adjusted Gross Profit and Adjusted Gross Profit Margin have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. They should not be considered as replacements for gross profit and gross profit margin, as determined by GAAP, or as measures of our profitability. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures only for supplemental purposes. Adjusted Gross Profit and Adjusted Gross Profit Margin as presented herein are not necessarily comparable to similarly titled measures presented by other companies.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA reflects further adjustments to EBITDA to exclude certain non-cash items and other items that management believes are not indicative of ongoing operations. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by Total revenues.
We disclose EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin in this Quarterly Report on Form 10-Q because these non-GAAP measures are key measures used by management to evaluate our business, measure our operating performance and make strategic decisions. We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are useful for investors and others in understanding and evaluating our operating results in the same manner as management. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not financial measures calculated in accordance with GAAP and should not be considered as substitutes for net income (loss), net income (loss) before income taxes, or any other operating performance measure calculated in accordance with GAAP. Using these non-GAAP financial measures to analyze our business would have material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that investors may otherwise find significant. In addition, although other companies in our industry may report measures titled EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate non-GAAP financial measures, which reduces their comparability. Because of these limitations, you should consider EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin alongside other financial performance measures, including net income and our other financial results presented in accordance with GAAP.
We derive our revenues from subscription revenue arrangements and advisory, advertising and other revenues. Subscription revenues accounted for approximately 93% of our total revenues for the nine months ended September 30, 2025 and 2024.
Subscription revenue
Subscription revenues consist of revenue earned from subscription-based arrangements that provide customers the right to use the Company’s software and products in a cloud-based infrastructure. Subscription revenues are driven primarily by the number of active licenses, the types of products and the price of the subscriptions. The Company also earns subscription revenues by licensing to customers its digital content, including transcripts, news and analysis, images, video and podcast data.
Our subscription arrangements generally have contractual terms of 12 months or more and are non-refundable regardless of the actual use of the service. Subscription revenues are recognized ratably over the non-cancellable contract terms beginning on the commencement date of each contract, which is the date our service is first made available to customers.
Advisory, advertising, and other revenues
Advisory revenues are typically earned under contracts for specific deliverables and are non-recurring in nature, although we regularly sell different advisory services to repeat customers. One-time advisory revenues are invoiced according to the terms of the contract, usually delivered to the customer over a short period of time, during which revenues are recognized.
Advertising revenues are primarily generated by delivering advertising in our own publications (Roll Call and CQ) in both print and digital formats. Revenues for print advertising are recognized upon publication of the advertisement. Revenues for digital advertising are recognized over the period of the advertisement or, if the contract contains impression guarantees, based on delivered impressions.
Cost of revenues, including amortization
Cost of revenues, including amortization primarily consists of expenses related to hosting our service, the costs of data center capacity, amortization of developed technology and capitalized software development costs, certain fees paid to various third parties for the use of their technology, services, or data, costs of compensation, including bonuses, stock compensation, benefits and other expenses for employees associated with providing professional services and other direct costs of production. Also included in cost of revenues, including amortization are our costs related to the preparation of contracted advisory deliverables, as well as costs to develop, publish, print and deliver our publications underlying our books revenue.
Research and development
Research and development expenses include the costs of compensation, including bonuses, stock compensation, benefits and other expenses for employees associated with the creation and testing of the products we offer, related software subscriptions, consulting and contractor fees and allocated overhead.
Sales and marketing
Sales and marketing expenses consist primarily of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for our sales and marketing staff, including commissions, related software subscriptions, consulting fees, marketing programs and allocated overhead. Marketing programs consist of advertising, events, corporate communications, brand building and product marketing activities.
Editorial
Editorial expenses consist of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses for the editorial team involved in acquiring, creating, and distributing content and allocated overhead.
General and administrative
General and administrative expenses are primarily related to our executive offices, finance and accounting, human resources, legal, internal operations and other corporate functions. These expenses consist of salaries and related expenses, including bonuses, stock compensation, benefits and other expenses, along with professional fees, depreciation and other allocated overhead.
Amortization of intangible assets
Amortization expense relates to our finite-lived intangible assets, including developed technology, customer relationship, databases and tradenames. These assets are amortized over periods of between three and twenty years. Finite-lived intangible assets are tested for impairment when indicators are present, and, if impaired, are written down to fair value. No impairment of intangible assets has been identified during any financial period included in our accompanying condensed consolidated financial statements.
Interest expense, net
Interest expense, net, consists of expense related to interest on our borrowings, the amortization and write off of debt issuance costs and original discount, and interest related to certain derivative instruments.
The fair value of financial instruments are accounted for in accordance with ASC 815 and ASC 480. The warrant and derivative liabilities are marked to market each reporting period in accordance with ASC 820 with all gains and losses being recorded within the consolidated statement of operations and comprehensive income (loss).
Income taxes
We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the condensed consolidated financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the condensed consolidated statements of operations and comprehensive income (loss) in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts that are expected to be realized based on the weighting of positive and negative evidence.
Results of Operations
The period-to-period comparisons of our results of operations have been prepared using the historical periods included in our condensed consolidated financial statements. The following discussion should be read in conjunction with those condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.
Comparison of the Consolidated Results for the Three and Nine Months Ended September 30, 2025 and September 30, 2024
The following table presents our results of operations for the periods indicated:
Three Months Ended
September 30,
Change
Nine Months Ended
September 30,
Change
(In thousands)
2025
2024
$
%
2025
2024
$
%
Revenues:
Subscription
$
21,182
$
27,238
$
(6,056
)
(22.2
)%
$
67,794
$
84,015
$
(16,221
)
(19.3
)%
Advisory, advertising, and other
1,247
2,201
(954
)
(43.3
)%
5,410
6,782
(1,372
)
(20.2
)%
Total revenues
22,429
29,439
(7,010
)
(23.8
)%
73,204
90,797
(17,593
)
(19.4
)%
Operating expenses:
Cost of revenues, including amortization
4,774
6,235
(1,461
)
(23.4
)%
16,706
20,342
(3,636
)
(17.9
)%
Research and development
2,081
3,250
(1,169
)
(36.0
)%
7,451
9,935
(2,484
)
(25.0
)%
Sales and marketing
6,262
9,068
(2,806
)
(30.9
)%
20,713
27,484
(6,771
)
(24.6
)%
Editorial
3,247
4,639
(1,392
)
(30.0
)%
11,517
13,752
(2,235
)
(16.3
)%
General and administrative
13,900
10,622
3,278
30.9
%
41,576
37,958
3,618
9.5
%
Amortization of intangible assets
1,904
2,436
(532
)
(21.8
)%
6,169
7,541
(1,372
)
(18.2
)%
Transaction (gains) costs, net
-
-
-
-
(4
)
4
(100.0
)%
Total operating expenses
32,168
36,250
(4,082
)
(11.3
)%
104,132
117,008
(12,876
)
(11.0
)%
Operating loss
(9,739
)
(6,811
)
(2,928
)
43.0
%
(30,928
)
(26,211
)
(4,717
)
18.0
%
Gain on sale of business
(1,161
)
-
(1,161
)
100%
(16,585
)
(71,599
)
55,014
(76.8
)%
Interest expense, net
3,695
5,585
(1,890
)
(33.8
)%
13,160
18,267
(5,107
)
(28.0
)%
Change in fair value of financial instruments
6,994
3,501
3,493
99.8
%
7,900
3,174
4,726
NM
Loss on debt extinguishment
6,174
-
6,174
100%
7,958
-
7,958
100.0
%
Other (income) expense, net
(349
)
(341
)
(8
)
2.3
%
86
(82
)
168
NM
Net (loss) income before income taxes
(25,092
)
(15,556
)
(9,536
)
61.3
%
(43,447
)
24,029
(67,476
)
NM
(Benefit) provision from income taxes
(237
)
(621
)
384
(61.8
)%
(1,071
)
1,129
(2,200
)
NM
Net (loss) income
$
(24,855
)
$
(14,935
)
$
(9,920
)
66.4
%
$
(42,376
)
$
22,900
$
(65,276
)
NM
NM - Not meaningful
Revenue:
Subscription revenue
Subscription revenue of $21.2 million for the three months ended September 30, 2025 decreased $6.1 million, or 22%, from $27.2 million for the three months ended September 30, 2024. Subscription revenue of $67.8 million for the nine months ended September 30, 2025 decreased $16.2 million for the nine months ended September 30, 2024.
The comparability of our revenues between periods was impacted by the sales of the businesses of Dragonfly, Oxford Analytica, TimeBase, Board.org, and Aicel, described under “Factors Impacting the Comparability of Our Results of Operations” above. The table below presents the primary items that impacted the comparability of our subscription revenues between periods.
The decrease in subscription revenue during the three and nine month periods is largely due to the impact from the sale of businesses of Dragonfly and Oxford Analytica on March 31, 2025 and TimeBase on July 1, 2025. The decrease in organic subscription revenue is primarily the result of customer retention challenges combined with the impact of Federal government cuts.
Advisory, advertising, and other revenue
Advisory, advertising, and other revenue was $1.2 million for the three months ended September 30, 2025, as compared to $2.2 million for the three months ended September 30, 2024. The decrease of $1.0 million, or 43%, was primarily the result of the reduction of revenue from the sale of businesses in 2024 and 2025.
Advisory, advertising, and other revenue was $5.4 million for the nine months ended September 30, 2025, as compared to $6.8 million for the three months ended September 30, 2024. The decrease of $1.4 million, or 20%, was the result of the reduction of revenue from the sales of businesses of $1.7 million partially offset by increases in revenue for advocacy campaigns.
Revenue by Geography
The below tables present our revenues split by geographic region for the periods presented:
Three Months Ended
September 30,
Change
(In thousands)
2025
2024
$
%
North America
$
21,083
$
23,073
$
(1,990
)
(8.6
)%
Europe
1,346
5,527
(4,181
)
(75.6
)%
Australia
-
328
(328
)
(100.0
)%
Asia
-
511
(511
)
(100.0
)%
Total revenues
$
22,429
$
29,439
$
(7,010
)
(23.8
)%
Nine Months Ended
September 30,
Change
(In thousands)
2025
2024
$
%
North America
$
64,692
$
72,134
$
(7,442
)
(10.3
)%
Europe
7,898
16,178
(8,280
)
(51.2
)%
Australia
614
950
(336
)
(35.4
)%
Asia
-
1,535
(1,535
)
(100.0
)%
Total revenues
$
73,204
$
90,797
$
(17,593
)
(19.4
)%
Revenues by geography are determined based on the region of the FiscalNote contracting entity, which may be different than the region of the customer. North America revenues decreased primarily for the reasons stated above. Asia revenues decreased primarily due to the sale of Aicel in October 2024. Europe revenues decreased primarily due to the sales of Dragonfly and Oxford Analytica on March 31, 2025. Australia revenues decreased primarily due to sales of TimeBase on July 1, 2025.
Cost of revenues, including amortization
Cost of revenues, including amortization, was $4.8 million for the three months ended September 30, 2025, as compared to $6.2 million for the three months ended September 30, 2024. The decrease of $1.5 million, or 23%, was primarily attributable to the impact from the business dispositions totaling approximately $1.0 million combined with a decrease in amortization expense of $0.4 million, which related to the introduction of PolicyNote.
Cost of revenues, including amortization, was $16.7 million for the nine months ended September 30, 2025, as compared to $20.3 million for the nine months ended September 30, 2024. The decrease of $3.6 million, or 18%, was primarily attributable to the impact from the business dispositions totaling approximately $2.9 million and other decreases in third party costs.
Research and development
Research and development expense was $2.1 million for the three months ended September 30, 2025 as compared to $3.3 million for the three months ended September 30, 2024. The decrease of $1.2 million, or 36%, was primarily attributable to the impact from the business dispositions totaling approximately $0.3 million and a result of workforce planning actions.
Research and development expense was $7.5 million for the nine months ended September 30, 2025 as compared to $9.9 million for the nine months ended September 30, 2024. The decrease of $2.5 million, or 25%, was primarily attributable to the impact from the business dispositions totaling approximately $0.6 million and a result of workforce planning actions.
Sales and marketing expense was $6.3 million for the three months ended September 30, 2025 as compared to $9.1 million for the three months ended September 30, 2024. The decrease of $2.8 million, or 31%, was primarily attributable to the impact from the business dispositions totaling approximately $1.7 million and a result of workforce planning actions.
Sales and marketing expense was $20.7 million for the nine months ended September 30, 2025 as compared to $27.5 million for the nine months ended September 30, 2024. The decrease of $6.8 million, or 25%, was primarily attributable to the impact from the business dispositions totaling approximately $4.3 million and a result of workforce planning actions.
Editorial expense
Editorial expense was $3.2 million for the three months ended September 30, 2025 as compared to $4.6 million for the three months ended September 30, 2024. The decrease of $1.4 million, or 30%, was primarily attributable to the impact from the business dispositions.
Editorial expense was $11.5 million for the nine months ended September 30, 2025 as compared to $13.8 million for the nine months ended September 30, 2024. The decrease of $2.2 million, or 16%, was primarily attributable to the impact from the business dispositions.
General and administrative
General and administrative expense was $13.9 million for the three months ended September 30, 2025 as compared to $10.6 million for the three months ended September 30, 2024. The increase of $3.3 million, or 31%, was primarily attributable to an increase related to overall legal and accounting costs associated with the debt transaction discussed in "Significant Events-Debt Refinance" partially offset by decreases from the business dispositions.
General and administrative expense was $41.6 million for the nine months ended September 30, 2025 as compared to $38.0 million for the nine months ended September 30, 2024. The increase of $3.6 million, or 10%, was primarily attributable to an increase related to overall legal and accounting costs associated with the debt transaction discussed in "Significant Events-Debt Refinance" partially offset by a decrease in stock compensation expense and decreases from the business dispositions.
Amortization of intangibles
Amortization of intangibles was $1.9 million for the three months ended September 30, 2025 as compared to $2.4 million for the three months ended September 30, 2024. The decrease was primarily attributable to the impact from the business dispositions.
Amortization of intangibles was $6.2 million for the nine months ended September 30, 2025 as compared to $7.5 million for the nine months ended September 30, 2024. The decrease was primarily attributable to the impact from the business dispositions.
Interest expense, net
Interest expense was $3.7 million for the three months ended September 30, 2025 as compared to $5.6 million for the three months ended September 30, 2024. The decrease in interest expense of $1.9 million was primarily due to the principal repayments made on the Prior Senior Term Loan made throughout 2024 and the first half of 2025 as part of the business dispositions.
Interest expense was $13.2 million for the nine months ended September 30, 2025 as compared to $18.3 million for the nine months ended September 30, 2024. The decrease in interest expense of $5.1 million was primarily due to the principal repayments made on the Prior Senior Term Loan made throughout 2024 and the first half of 2025 as part of the business dispositions.
Change in fair value of financial instruments
Change in fair value of financial instruments was a $7.0 million loss for the three months ended September 30, 2025 as compared to a $3.5 million loss for the three months ended September 30, 2024. The change in financial instruments of $3.5 million is primarily related to the changes in the Dragonfly Seller Convertible Notes, Era Note, Convertible Debentures, Prior GPO Convertible Note, and the 2025 GPO Convertible Note partially offset by the change in the fair value adjustment of the warrant liabilities.
Change in fair value of financial instruments was a $7.9 million loss for the nine months ended September 30, 2025 as compared to a $3.2 million loss for the nine months ended September 30, 2024. The change in financial instruments of $4.7 million is primarily related to the changes in the Dragonfly Seller Convertible Notes, Era Note, Convertible Debentures, Prior GPO Convertible Note, and the 2025 GPO Convertible Note partially offset by the change in the fair value adjustment of the warrant liabilities.
Certain Non-GAAP Measures
We present certain non-GAAP financial measures including Adjusted Gross Profit, Adjusted Gross Profit Margin and Adjusted EBITDA. Our management team assesses our performance based on these non-GAAP measures because it believes they reflect the underlying trends and indicators of our business and serve as meaningful indicators of our continuous operational performance. We believe these measures are useful for investors for the same reasons. Investors should be aware that these measures are not a substitute for GAAP financial measures or disclosures. Where applicable, we provide reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measure.
Adjusted Gross Profit and Adjusted Gross Profit Margin
The following table presents our calculation of Adjusted Gross Profit and Adjusted Gross Profit Margin for the periods presented:
Three Months Ended September 30,
Nine Months Ended September 30,
(In thousands)
2025
2024
2025
2024
Total revenues
$
22,429
$
29,439
$
73,204
$
90,797
Costs of revenue, including amortization of capitalized software development costs and acquired developed technology
(4,774
)
(6,235
)
(16,706
)
(20,342
)
Gross Profit
$
17,655
$
23,204
$
56,498
$
70,455
Gross Profit Margin
79
%
79
%
77
%
78
%
Gross Profit
17,655
23,204
56,498
70,455
Amortization of intangible assets
1,770
2,224
7,081
7,159
Adjusted Gross Profit
$
19,425
$
25,428
$
63,579
$
77,614
Adjusted Gross Profit Margin
87
%
86
%
87
%
85
%
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
The following table presents our calculation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the periods presented:
Three Months Ended September 30,
Nine Months Ended September 30,
(In thousands)
2025
2024
2025
2024
Net (loss) income
$
(24,855
)
$
(14,935
)
$
(42,376
)
$
22,900
Income tax (benefit) provision
(237
)
(621
)
(1,071
)
1,129
Depreciation and amortization
3,962
4,961
14,040
15,604
Interest expense, net
3,695
5,585
13,160
18,267
EBITDA
(17,435
)
(5,010
)
(16,247
)
57,900
Gain on sale of businesses
(a)
(1,161
)
-
(16,585
)
(71,599
)
Stock-based compensation
3,636
4,181
10,975
13,885
Change in fair value of financial instruments
(b)
6,994
3,501
7,900
3,174
Other non-cash charges
(c)
6,016
17
8,817
93
Disposal related costs
(d)
1,423
40
7,368
1,138
Employee severance costs
(e)
211
437
2,355
635
Non-capitalizable debt costs
2,506
49
3,250
527
Costs incurred related to the Special Committee
(f)
171
229
338
682
Non-operating income (g)
(181
)
-
(409
)
-
Adjusted EBITDA
$
2,180
$
3,444
$
7,762
$
6,435
Adjusted EBITDA Margin
9.7
%
11.7
%
10.6
%
7.1
%
(a)
Reflects the gain on disposal from the sale of TimeBase on July 1, 2025, Dragonfly and Oxford Analytica on March 31, 2025, and the gain on sale of Board.org on March 11, 2024.
(b)
Reflects the non-cash impact from the mark to market adjustments on our financial instruments.
(c)
Reflects the non-cash impact of the following: (i) charge of $40 in the first quarter of 2025, charge of $30 in the second quarter of 2025, and a charge of $9 in the third quarter of 2025 related to the unrealized loss on investments; (ii) charge of $315 for fees satisfied with Common Stock of the Company during the first quarter of 2025; (iii) charge of $1,784 from the loss on debt extinguishment during the first quarter of 2025 and a charge of $6,174 in the third quarter of 2025 from the loss on debt extinguishment; (iv) charge of $632 in the second quarter of 2025 and a gain of $167 in the third quarter of 2025 related to foreign currency translation losses, principally arising from converting a GBP denominated convertible note into USD, (v) non-cash charge of $49 in the first quarter of 2024, charge of $31 in the second quarter of 2024, and a charge of $17 in the third quarter of 2024 related to the unrealized loss on investments; and (vi) gain of $4 in the first quarter of 2024 from the change in fair value related to the contingent consideration and contingent compensation related to the 2021, 2022, and 2023 Acquisitions.
(d)
Reflects the costs incurred related to the sale of TimeBase on July 1, 2025, Oxford Analytica and Dragonfly on March 31, 2025 and Board.org in March 11, 2024, principally consisting of transaction advisory, accounting, tax, and legal fees.
(e)
Severance costs associated with workforce changes related to business realignment actions.
(f)
Reflects costs incurred related to the Special Committee.
(g)
Reflects non-operating income from the Transition Services Agreement that was entered into with the acquirer of Dragonfly and Oxford Analytica on March 31, 2025.
Liquidity and Capital Resources
Historically the Company has partially funded its operations through raising equity and debt. At September 30, 2025, the Company’s cash, cash equivalents, restricted cash, and short-term investments was $31.8 million compared to $35.3 million at December 31, 2024.
The Company had a negative working capital balance of $31.3 million (excluding cash and short-term investments) at September 30, 2025 and had an accumulated deficit of $849.3 million and $806.9 million as of September 30, 2025 and December 31, 2024, respectively, and has incurred net losses (excluding the gain on sale of businesses) of $59.0 million for the nine months ended September 30, 2025 and $48.7 million for the nine months ended September 30, 2024, respectively.
As described in Note 8 “Debt” to the condensed consolidated financial statements included elsewhere herein, we refinanced a substantial amount of our legacy indebtedness. We believe the impact of these actions provides us the flexibility to fund future operations and provide a path toward generating positive cash flows from operations.
Our ability to maintain our minimum cash requirement, fund our future cash interest and principal repayment requirements under our 2025 Senior Term Loan and fund our operating expenses and capital expenditure requirements will depend in part on general economic,
financial, competitive, legislative, regulatory and other conditions that may be beyond our control. The Company has implemented various cost saving measures throughout 2024 and 2025 that have also contributed toward our overall improvement in cash flows used in operations.
Our historical financing activities included borrowings under senior secured credit facilities, senior secured promissory notes, and convertible debt. Our principal debt outstanding, including paid-in kind interest as applicable, as of September 30, 2025 and December 31, 2024 consisted of the following (excluding any fair value adjustments and debt discounts, as applicable):
(In thousands)
September 30, 2025
December 31, 2024
2025 Senior Term Loan
$
74,531
$
-
2025 GPO Convertible Note
20,434
-
Dragonfly Seller Convertible Notes
14,024
13,030
Convertible Debentures
31,500
-
Prior Senior Term Loan
-
88,595
Prior GPO Convertible Note
-
50,434
Amended Legacy Notes
-
16,165
PPP Loan
-
36
Total Principal plus PIK Outstanding
$
140,489
$
168,260
2025 Senior Term Loan
On August 12, 2025 the Company closed on its new $75.0 million senior term loan that matures on August 12, 2029 (the "2025 Senior Term Loan") and received net proceeds of $72.9 million after original issue discount (“OID”) of $2.1 million, or 2.75%. The Company incurred approximately $1.9 million of lender fees and fees paid to third parties. OID and capitalized debt issuance costs totaled $3,985 and is treated as a debt discount and will be amortized over the term of the 2025 Senior Term Loan using the effective interest method.
Obligations under the 2025 Senior Term Loan bear interest at variable rates, set at the Company’s option, based on a reference rate plus 7%, or the secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”) plus 8%. Interest is payable in cash monthly in arrears. The Company has elected to pay cash interest based on SOFR, which was 12.23% at September 30, 2025. For the three months ended September 30, 2025, the Company recognized $1,248 of cash interest on the 2025 Senior Term Loan, representing the cash interest on the 2025 Senior Term Loan from August 12, 2025 to September 30, 2025. Going forward, the Company expects to incur approximately $2.2 million of quarterly cash interest based on current SOFR rates and expected outstanding principal balances.
The 2025 Senior Term Loan is repayable in consecutive quarterly installments on the last business day of each March, June, September and December of each fiscal year commencing September 30, 2025, in an amount equal to (i) $0.5 million with respect to each payment due on September 30, 2025, December 31, 2025, March 31, 2026 and June 30, 2026 and (ii) $0.9 million with respect to each payment due thereafter, with the remaining principal amount due at the maturity of the 2025 Senior Term Loan, or such earlier time as it may become payable. The Company must also pay a quarterly fee commencing on September 30, 2025, in an amount equal to (i) $0.1 million due on September 30, 2025, December 31, 2025, and March 31, 2026 and (ii) $38 with respect to each quarterly payment due thereafter.
The 2025 Senior Term Loan is senior to all other debt and has a first priority lien on substantially all of the Company’s assets. The 2025 Senior Term Loan contains customary negative covenants related to borrowing, events of default and covenants, including certain non-financial covenants and covenants limiting the Company’s ability to dispose of assets, undergo a change in control, merge with or acquire stock, and make investments, in each case subject to certain exceptions. In addition to the negative covenants, there are four financial covenants in place at August 12, 2025: a minimum cash balance requirement, minimum annual recurring revenue requirement, an adjusted EBITDA requirement (as defined in the 2025 Senior Term Loan) and a capital expenditure limitation. The Company believes it will maintain future compliance with all of its covenants.
On August 12, 2025 the Prior Senior Term Loan was replaced with the 2025 Senior Term Loan and the Company retired all of its then outstanding obligations with a cash payment of approximately $62.7 million.
Convertible Debentures
In conjunction with the establishment of the 2025 Senior Term Loan and in order to fund the GPO Redemption (defined below), on August 5, 2025 (the “Purchase Agreement Date”), the Company entered into a securities purchase agreement (the “Purchase Agreement”), with YA II PN, Ltd (“YA”), pursuant to which the Company issued YA convertible debentures in an aggregate principal amount of $33.3 million (the “Convertible Debentures”) for a total cash purchase price of approximately $30.0 million, subject to satisfaction of certain closing conditions.
On August 12, 2025, the initial tranche of Convertible Debentures comprising $21.0 million in stated principal amount were issued to YA, in accordance with the Purchase Agreement, with the Company receiving net proceeds of $18.9 million (the "First YA Debenture"). On September 11, 2025, the second, and final tranche of Debentures comprising $12.3 million in stated principal amount were issued to YA, in accordance with the Purchase Agreement with the Company receiving net proceeds of $11.0 million (the "Second YA Debenture").
The Company’s obligations under the Purchase Agreement and the Debentures are guaranteed by FiscalNote, Inc., a wholly owned subsidiary of the Company, and are contractually subordinated to the Company’s obligations under its 2025 Senior Term Loan and the 2025 GPO Convertible Note. The First YA Debenture matures on February 12, 2027 and the Second YA Debenture matures on March 11, 2027 and both bear interest at a rate of 5% per annum or 18% per annum in the event of an event of default.
At any time prior to the maturity dates, and subject to certain ownership and conversion limitations, YA is entitled to convert any portion of the principal amount of the Debentures and accrued interest thereon into shares of the Company’s Class A Common Stock (the
“Debenture Conversion Shares”) at a conversion price equal to 94% of the lowest daily volume weighted average trading price (“VWAP”) during the five trading days prior to the conversion date, subject to a floor price of $0.8884 (the “Floor Price”).
On June 30, 2023 the Company issued to GPO FN Noteholder LLC (the “GPO Investor”) a subordinated convertible promissory note in an initial principal amount of $46.8 million(the “Prior GPO Convertible Note”). Pursuant to the terms of the Prior GPO Convertible Note, paid-in-kind interest accrued from the date of issuance through June 30, 2024. Beginning on July 1, 2024 the Company was required to pay interest with either cash or shares, solely at the discretion of the Company. Accordingly, since September 30, 2024 and through September 30, 2025, the Company issued the GPO Investor 346,059 Class A Common Shares, in the aggregate, in satisfaction of quarterly interest.
In conjunction with the establishment of the 2025 Senior Term Loan, on August 5, 2025, the Company entered into a redemption and exchange agreement with the GPO Investor.
Pursuant to the redemption and exchange with the GPO Investor, on August 12, 2025, the Company redeemed $30,000 of the Prior GPO Convertible Note in exchange for a cash payment of $27,000 to the GPO Investor (the "GPO Redemption"). The Company also issued a new senior subordinated promissory note to the GPO Investor in the aggregate principal amount of $20,434 (the "2025 GPO Convertible Note") in exchange for, and the cancellation of, the remaining obligations under the existing Prior GPO Convertible Note.
The 2025 GPO Convertible Note is guaranteed by the Company’s domestic subsidiaries, which are parties to the 2025 Senior Term Loan, and is contractually subordinated to the Company’s obligations under the 2025 Senior Term Loan. The 2025 GPO Convertible Note matures on November 13, 2029 and bears interest at a rate of 7.50% per annum payable quarterly in arrears, in cash or, provided no event of default is then occurring under the 2025 GPO Convertible Note, freely tradeable shares of the Company's Class A Common Stock, at the Company’s option, with the value per share determined with reference to the VWAP of the Class A Common Stock over the trading days occurring within the thirty calendar days prior to the applicable interest payment date. At any time prior to November 13, 2029, the GPO Investor is entitled to convert all or any portion of the principal amount of the 2025 GPO Convertible Note and accrued interest thereon into shares of the Company's Class A Common Stock at an initial conversion price of $82.92 per share (subject to customary anti-dilution adjustments). Under the terms of the 2025 GPO Convertible Note, the Company is required to make quarterly installment payments of $2.0 million of the outstanding principal beginning April 1, 2026 in the form of freely tradeable shares of the Company's Class A Common Stock, cash, or a combination thereof, solely at the determination of the Company. Class A Common Stock issued to satisfy quarterly interest and principal repayments will be issued at a price equal to the lowest of (i) the then-effective Conversion Price under the 2025 GPO Convertible Note, (ii) 95% of the VWAP of the Class A Common Stock over the ten trading days immediately preceding the applicable Installment Date and (iii) 95% of the VWAP of the Class A Common Stock over the trading days occurring within the ninety calendar day period immediately preceding the applicable payment date..
Dragonfly Seller Convertible Note
On January 27, 2023, we acquired Dragonfly and financed part of the purchase with the issuance of convertible notes. The Dragonfly Convertible Note is subordinate to our 2025 Senior Term Loan, accrues interest of 8% per annum, payable in kind or in cash, and matures in January 2028.
Capital expenditures
Capital expenditures primarily consist of purchases of capitalized software costs and property and equipment. Our capital expenditures program includes discretionary spending, which we can adjust in response to economic and other changes in our business environment to grow our business. We typically fund our capital expenditures through cash flow from operations and external financing. In the event that we are unable to obtain the necessary funding for capital expenditures, our long-term growth strategy could be significantly affected. Our total capital expenditures were $5.6 million and $6.9 million for the nine months ended September 30, 2025 and 2024, respectively.
Cash Flow Summary
The following tables summarizes our cash flows for the periods presented:
Nine Months Ended September 30,
2025
2024
Net cash (used in) provided by:
Operating activities
$
(11,164
)
$
(3,950
)
Investing activities
$
41,352
$
84,509
Financing activities
$
(32,366
)
$
(71,574
)
Effect of exchange rates on cash
$
52
$
86
Net change in cash and cash equivalents
$
(2,126
)
$
9,071
Operating activities
Cash used in operating activities consists of net loss adjusted for certain non-cash items including depreciation and amortization, stock-based compensation, changes in fair value of warrant liabilities, non-cash interest expense, and loss on debt extinguishment, as well as the effect of changes in working capital and other activities.
Cash used in operating activities in the nine months ended September 30, 2025 was $11.2 million, an increase of $7.2 million compared to the nine months ended September 30, 2024. The primary factors affecting our net operating cash flows during this period was our net loss of $42.4 million, which includes non-cash expense items totaling $34.1 million, including a gain on disposal of business of $16.6 million, non-cash and paid-in kind interest expense of $6.8 million, loss on debt extinguishment of $8.0 million, stock-based compensation expense
of $11.0 million, a change in fair value of financial instruments of $7.9 million, non-cash lease expense of $1.5 million, amortization and depreciation of $16.5 million, other non-cash items of $1.0 million and the effect of changes in operating assets and liabilities that resulted in cash outflows of $2.9 million.
Cash used in operating activities in the nine months ended September 30, 2024 was $4.0 million, a decrease of $28.0 million compared to the nine months ended September 30, 2023. The primary factors affecting our net operating cash flows during this period was our net income of $22.9 million, which includes non-cash expense items totaling $26.9 million, including a gain on disposal of business of $71.6 million, non-cash and paid-in kind interest expense of $8.2 million, stock-based compensation expense of $13.9 million, a gain due to the change in fair value of financial instruments of $3.2 million, non-cash lease expense of $1.6 million, amortization and depreciation of $18.4 million, and other non-cash items of $0.6 million.
Investing activities
Net cash provided by investing activities in the nine months ended September 30, 2025 was $41.4 million compared to $84.5 million in the nine months ended September 30, 2024. Net cash provided by investing activities in the nine months ended September 30, 2025 primarily consisted of cash proceeds from the sale of a business of $46.9 million partially offset by cash paid of $5.6 million of capital expenditures primarily related to software development costs. Net cash provided by investing activities in the nine months ended September 30, 2024 was $84.5 million, which primarily consisted of cash paid for acquisitions, net of cash acquired of $91.4 million partially offset by cash paid of $6.9 million of capital expenditures primarily related to software development costs.
Financing activities
Net cash used in financing activities in the nine months ended September 30, 2025 was $32.4 million, compared to $71.6 million for the nine months ended September 30, 2024. Net cash used in financing activities during the nine months ended September 30, 2025 primarily consisted of payments of long-term debt and deferred financing costs primarily related to the repayments of debt obligations of $133.6 million partially offset by cash proceeds from the issuance of debt of $101.0 million and $0.3 million from the proceeds of the exercise of stock options and ESPP purchases. Net cash used in financing activities in the nine months ended September 30, 2024 was $71.6 million, which primarily consisted of payments of long-term debt and deferred financing costs primarily related to Amendment 4 to the Credit Agreement and the sale of Board.org of $72.8 million partially offset by the proceeds from the issuance of Era Convertible Notes of $0.8 million and proceeds from the issuance of stock options and ESPP purchases of $0.5 million.
Commitments and Contingencies
Our principal commitments consist of obligations under leases for office space. For more information regarding our lease obligations, see Note 5 “Leases” to the condensed consolidated financial statements included elsewhere herein. For more information regarding our debt service obligations, see Note 8 “Debt” to the condensed consolidated financial statements included elsewhere herein.
Off-Balance Sheet Arrangements
During the periods presented, we did not engage in any off-balance sheet financing activities or other arrangements that have or are reasonably likely to have a current or future material effect on our financial condition or results of operations.
Recently Issued Accounting Pronouncements and Tax Reform
For information regarding new accounting pronouncements, and the impact of these pronouncements on our condensed consolidated financial statements, if any, refer to Note 1 of the notes to our financial statements included in this Quarterly Report on Form 10-Q.
On July 4, 2025, U.S. legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (“The Act”) was signed into law. The Act, among other things, extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced targeted changes to the U.S. federal income tax regime. Adoption of The Act has not had a material impact on the Company.
Critical Accounting Estimates and Policies
Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that involve a significant level of estimation uncertainty and are reasonably likely to have a material impact on the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
There were no significant and material changes in our critical accounting policies and use of estimates during the nine months ended September 30, 2025, as compared to those disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates and Accounting Policies" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on April 1, 2025.
Item 3. Q
uantitative and Quali
tative Disclosures About Market Risks.
We are exposed to market risks in the ordinary course of our business. These risks primarily consist of inflation risk and fluctuations in interest rates and foreign currency exchange rates. We do not enter into derivatives or other financial instruments for trading or speculative purposes.
Foreign Currency Exchange Risk
We use the U.S. Dollar ("USD") as our reporting currency. Our local subsidiaries transact generally in their local currency, considered the functional currency for that subsidiary. Our foreign currency exchange rate risk is related to translation of our assets and liabilities from the subsidiaries' functional currencies to USD. These adjustments are recorded in accumulated other comprehensive income (loss) on our consolidated balance sheets. Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro and British Pound Sterling. Our expenses are generally denominated in the currencies of the jurisdictions in which we conduct our operations, which are primarily in the United States as well as the European Union, United Kingdom, and India. Our results of operations and cash flows in the future may be adversely affected due to an expansion of non-U.S. dollar denominated contracts, growth of our international entities and changes in foreign exchange rates. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our cash denominated in foreign currency. To date, we have not engaged in any hedging strategies. We will continue to reassess our approach to manage the risk relating to fluctuations in currency rates.
Fluctuations in foreign currencies impact the amount of total assets, liabilities, revenues, operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into USD. Total revenue for the three and nine months ended September 30, 2025, was impacted by approximately 1.0% compared to the three and nine months ended September 30, 2024.
Interest Rate Risk
We are subject to market risk associated with changing interest rates within our variable rate 2025 Senior Term Loan. Our exposure to changes in interest rates in the future is currently associated with the secured overnight financing rate as determined by the Federal Reserve Bank of New York ("SOFR").
As of September 30, 2025, we had outstanding borrowings on our 2025 Senior Term Loan of $74.5 million, which bear interest at variable rates, set at the Company’s option, based on a reference rate plus 7%, or SOFR plus 8%. At September 30, 2025, the interest rate on our 2025 Senior Term Loan was 12.23% determined based on SOFR plus 8%%. Assuming no change in the outstanding borrowings on our 2025 Senior Term Loan, we estimate that a one percentage point increase in SOFR would increase our annual cash interest expense by approximately $0.7 million.
Inflation Risk
Although we do not believe inflation has had a material impact on our financial condition, results of operations or cash flows to date, a high rate of inflation in the future may have an adverse effect on our business.
Ite
m 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q.
Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2025, our disclosure controls and procedures were not effective as of September 30, 2025 due to the material weakness in internal control over financial reporting described below.
Material Weakness in Internal Control over Financial Reporting
During the third quarter of 2025, management identified a deficiency in the design of the Company’s internal controls over financial reporting. The deficiency related to the failure to ensure that all manual journal entries throughout fiscal year 2025 were independently reviewed and approved prior to posting, which could impact all financial statement accounts. This deficiency represents a material weakness in the design of certain controls intended to prevent or detect potential misstatements in the financial statements on a timely basis. As of the date of this Form 10-Q, management does not believe this design deficiency resulted in any identified misstatements in the Company’s financial statements and management has concluded that the consolidated financial statements included in this Form 10-Q are fairly stated in all material respects, although the control design deficiency represents a material weakness in the Company’s internal control over financial reporting.
Remediation Plan
Subsequent to the identification of this design deficiency management has implemented and is continuing to implement remediation measures designed to address the underlying control deficiency. Specifically, management implemented a review process to ensure that all manual journal entries are subject to an independent review and approval process prior to posting. The Company is also enhancing documentation and monitoring procedures to ensure the consistent operation of these controls.
Limitations on Effectiveness of Disclosure Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of the disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
From time to time, we may become involved in legal or regulatory proceedings, including intellectual property claims, commercial contract matters or employment-related disputes. Such cases may raise complex factual and legal issues, may subject us to material risks and uncertainties, could require significant management time and corporate resources to defend, could result in significant media coverage and negative publicity, and could be harmful to our reputation and our brand. We are not currently a party to any litigation or regulatory proceeding that we expect to have a material adverse effect on our business, results of operations, financial conditions or cash flows.
Item 1A.
Risk Fact
ors.
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on April 1, 2025, except as set forth below.
The protracted U.S. government shutdown has had a negative impact on our revenues, profitability and cash flows, and we expect that such effects will worsen to the extent that the shutdown continues.
In years when the U.S. government fails to complete its budget process or to provide for a continuing resolution, a federal government shutdown may result, as is the case as of the filing of this quarterly report. A protracted government shutdown can result in the non-renewal, delay or cancellation of public sector subscription contracts, which negatively affects our revenues, annual recurring revenues and cash flows, as well as our future results. In addition, we may be unable to generate revenue to the extent anticipated from our CQ-Roll Call advertising and events business during a federal government shutdown. We expect the negative impacts of a government shutdown on our results of operations to worsen as the shutdown becomes increasingly protracted, and the Company may be required to reduce costs or take other near-term operational measures that may adversely affect our results in future periods.
We have identified a material weakness in our internal control over financial reporting. If we are unable to develop and maintain effective internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us; materially and adversely affect our business and operating results; and expose us to potential litigation.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected and corrected on a timely basis.
During the third quarter of 2025, management identified a deficiency in the design of the Company’s internal controls over financial reporting related to the failure to ensure that all manual journal entries were independently reviewed and approved prior to posting. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
If we are not able to remediate the material weakness, or if we identify any new material weaknesses in the future, we may be unable to maintain compliance with the requirements of securities laws, stock exchange listing rules, or debt instrument covenants regarding timely filing of information; we could lose access to sources of capital or liquidity; and investors may lose confidence in our financial reporting and our stock price may decline as a result. Though we are evaluating steps to remediate the material weakness, we cannot assure you that any measures we may take in the future will be sufficient to remediate the material weakness or avoid potential future material weaknesses.
Item 2. Unregiste
red Sales of Equity Securities and
Use of Proceeds.
Unregistered Sales of Equity Securities
Other than as reported on each of our Current Reports on Form 8-K, we did not have any unregistered sales of equity securities during the three months ended September 30, 2025.
Use of Proceeds
Not applicable
Purchase of Equity Securities
We did not repurchase shares of our common stock during the three months ended September 30, 2025.
Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).
Exhibit
Number
Description
Incorporation by Reference (where a report is indicated below, that document has been previously filed with the SEC and the applicable exhibit is incorporated by reference thereto)
2.1
Agreement and Plan of Merger, dated as of November 7, 2021, by and among Duddell Street Acquisition Corp. (renamed “FiscalNote Holdings, Inc.”), Grassroots Merger Sub, Inc. and FiscalNote Holdings, Inc. (renamed “FiscalNote Intermediate Holdco, Inc.”).
First Amendment to Agreement and Plan of Merger, dated as of May 9, 2022, by and among Duddell Street Acquisition Corp. (renamed “FiscalNote Holdings, Inc.”), Grassroots Merger Sub, Inc. and FiscalNote Holdings, Inc. (renamed “FiscalNote Intermediate Holdco, Inc.”).
Warrant Agreement, dated as of October 28, 2020, by and among Duddell Street Acquisition Corp ad Continental Stock Transfer & Trust Company, as warrant agent.
Financing Agreement, dated as of August 5, 2025, by and among the Company, as Parent Guarantor, the Company's domestic subsidiaries party thereto as borrowers and guarantors the lenders from time to time party thereto, and MGG Investment Group LP, as collateral agent and as administrative agent
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
Cover Page Interactive Data File (embedded within the Inline XBRL document).
Submitted electronically with this report.
* All schedules have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish a copy of all omitted schedules to the SEC upon its request.
+ Certain portions of this exhibit have been omitted in accordance with Regulation S-K Item 601. The Company agrees to furnish an unredacted copy of the exhibit to the SEC upon request.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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