STATEMENT OF CASH FLOWS

RECONCILIATION CHECK

Checkpoint Computation Result
Net Cash from Operating $15,750 + $20,100 + ($5,280) $30,570
Net Cash from Investing ($3,200) + ($9,800) + ($24,000) + $18,000 + ($600) ($19,600)
Net Cash from Financing $1,200 + ($120) $1,080
Net Increase in Cash $30,570 + ($19,600) + $1,080 $12,050
Beginning Cash Per Balance Sheet, 12/31/2023 $30,450
Ending Cash $30,450 + $12,050 $42,500
Ending Cash per Balance Sheet Per Balance Sheet, 12/31/2024 $42,500
Reconciliation Beginning + Net Change = Ending Confirmed

Beginning Cash of $30,450K plus Net Increase of $12,050K equals Ending Cash of $42,500K, which agrees with Cash and Cash Equivalents on the Balance Sheet as of December 31, 2024. Reconciliation confirmed.

FREE CASH FLOW RECONCILIATION (Non-GAAP)

Component Amount ($000)
Net Cash Provided by Operating Activities $30,570
Less: Capital Expenditures (PP&E) (3,200)
Less: Capitalized Software Development Costs (9,800)
Free Cash Flow (FCF) $17,570
FCF Margin (FCF / Revenue) 10.5%
Adjusted Free Cash Flow (Non-GAAP):
Free Cash Flow $17,570
Add: One-Time Litigation Settlement 1,400
Add: Non-Recurring Executive Recruiting 900
Adjusted Free Cash Flow $19,870
Adjusted FCF Margin 11.8%

NON-CASH ITEMS CHECKLIST

Item Status Amount ($000)
Depreciation of PP&E Included $2,000
Amortization of Capitalized Software Included $5,800
Amortization of Intangible Assets Included $400
Stock-Based Compensation Included $3,100
Amortization of Deferred Commissions Included $7,200
Deferred Income Taxes Included $600
Bad Debt Expense / Provision for Credit Losses Included $680
Non-Cash Lease Expense Included $200
Gain or Loss on Asset Disposal None in FY2024 --
Unrealized Gains/Losses on Investments Not applicable (HTM) --

All non-cash items have been addressed per the cash flow safeguards checklist.

SUPPLEMENTAL DISCLOSURES

Cash Paid for Interest During the Period: Interest expense per the Income Statement was $180K. There are no accrued interest balances on the Balance Sheet, indicating interest was paid as incurred. Cash paid for interest: $180K. The $15,000K revolving credit facility was undrawn throughout FY2024; interest relates to the commitment fee (0.25% on undrawn balance) and minor utilization during Q2 2024.

Cash Paid for Income Taxes During the Period: IMT is a Delaware C-Corporation subject to federal and state income taxes. Current income tax expense was $4,650K. Income taxes payable increased by $300K during the year, indicating cash tax payments of approximately $4,350K ($4,650K current provision less $300K increase in payable). Quarterly estimated tax payments were made in April, June, September, and December 2024.

Significant Non-Cash Investing and Financing Activities:

FOOTNOTES

[1] Depreciation of PP&E: Depreciation of $2,000K is allocated across R&D ($400K), S&M ($680K), and G&A ($920K) on the Income Statement. Depreciation is a non-cash charge added back to net income. See Structured Data Map, A-092 and D&A Allocation.

[2] Amortization of Capitalized Software: Amortization of $5,800K is allocated to COR ($3,360K) and R&D ($2,440K) on the Income Statement. This represents the consumption of previously capitalized internal-use software development costs over a 3-year useful life. See Structured Data Map, A-066.

[3] Amortization of Intangible Assets: Amortization of patent costs of $400K is included in G&A expense. Patents are amortized over 15-year useful lives. See Structured Data Map, A-071.

[4] Stock-Based Compensation Expense: SBC of $3,100K is a non-cash charge under ASC 718, allocated across COR ($200K), R&D ($1,400K), S&M ($500K), and G&A ($1,000K). The offsetting credit increases APIC. See Structured Data Map, A-092.

[5] Amortization of Deferred Commissions: Amortization of $7,200K represents the recognition of previously capitalized incremental costs of obtaining customer contracts (primarily sales commissions). This non-cash charge is included in S&M expense and added back here. Note: the $9,400K in new commissions capitalized during FY2024 is presented separately in operating working capital changes [12]. See Structured Data Map, A-053 and A-070.

[6] Deferred Income Taxes: Deferred tax expense of $600K represents the increase in the net deferred tax liability from $1,800K to $2,400K, arising primarily from timing differences on capitalized software amortization and deferred commissions. See Structured Data Map, A-084.

[7] Bad Debt Expense: The $680K provision for expected credit losses is a non-cash charge included in G&A on the Income Statement. It increases the allowance for doubtful accounts. Actual write-offs during FY2024 were $420K (charged against the allowance) with recoveries of $62K. Net impact on allowance: $680K provision - $420K write-offs + $62K recoveries = $322K increase (from $816K to $1,138K). See Structured Data Map, A-048.

[8] Non-Cash Lease Expense Adjustment: The $200K adjustment represents the excess of straight-line operating lease expense over cash rent payments during FY2024. This reduces the ROU asset and creates the difference between ROU assets and lease liabilities. See Structured Data Map, A-068.

[9] Increase in Trade Accounts Receivable: Net trade AR increased from $23,512K to $26,712K, a gross increase of $3,200K. Combined with the $680K provision for credit losses (presented separately as a non-cash adjustment), the cash flow impact from AR changes is ($3,880K). This increase reflects revenue growth of 27% year-over-year with a stable DSO of 58 days. See Structured Data Map, A-049.

[10] Increase in Contract Assets: Contract assets increased from $2,100K to $2,400K, an increase of $300K. Contract assets represent revenue recognized in excess of amounts billed, primarily related to consumption-based pricing where usage exceeds prepaid commitments. See Structured Data Map, A-050.

[11] Increase in Prepaid Expenses: Prepaid expenses increased from $3,800K to $4,200K, an increase of $400K. The increase reflects higher prepaid cloud infrastructure commitments and annual software license renewals. See Structured Data Map, A-052.

[12] Capitalization of Deferred Commissions: New commissions of $9,400K were capitalized during FY2024 under ASC 340-40, representing incremental costs of obtaining customer contracts. This is presented as an operating cash outflow because commissions relate to the core revenue-generating operations. The amortization of prior-period capitalized commissions ($7,200K) is presented separately as a non-cash adjustment [5]. See Structured Data Map, A-053 and A-070.

[13] Increase in Other Current Assets: Other current assets increased from $1,000K to $1,200K, an increase of $200K. See Structured Data Map, A-054.

[14] Increase in Other Non-Current Assets: Other non-current assets increased from $2,600K to $2,800K, an increase of $200K. Includes security deposits on office leases and long-term vendor prepayments. See Structured Data Map, A-072.

[15] Increase in Accounts Payable: AP increased from $5,400K to $6,200K, an increase of $800K. Reflects higher cloud infrastructure and vendor payables consistent with revenue growth. See Structured Data Map, A-074.

[16] Increase in Accrued Expenses: Accrued expenses increased from $7,200K to $8,400K, an increase of $1,200K. Includes accrued hosting costs, professional fees, and marketing obligations. See Structured Data Map, A-075.

[17] Increase in Accrued Compensation: Accrued compensation increased from $9,200K to $9,800K, an increase of $600K. Reflects headcount growth (from 340 to 385 employees) and year-end bonus accruals. See Structured Data Map, A-076.

[18] Increase in Deferred Revenue: Total deferred revenue increased by $5,600K ($4,600K current + $1,000K non-current), from $55,600K to $61,200K. The increase reflects strong bookings growth outpacing revenue recognition, with billings of $173,600K on revenue of $168,000K (billings-to-revenue ratio of 1.03x). See Structured Data Map, A-077 and A-082.

[19] Decrease in Operating Lease Liabilities (net of ROU): Net cash impact of ($200K) reflects the timing difference between lease payments and ROU asset amortization. Current lease liabilities increased by $200K while non-current decreased by $600K, with ROU assets decreasing by $600K. See Structured Data Map, A-068 and A-078.

[20] Increase in Income Taxes Payable: Income taxes payable increased from $1,100K to $1,400K, an increase of $300K. Cash tax payments of $4,350K were made against a current provision of $4,650K. See Structured Data Map, A-079.

[21] Increase in Other Liabilities: Combined other current liabilities (+$400K) and other non-current liabilities (+$400K) increased by $800K. Includes accrued vendor credits, deferred rent adjustments, and other miscellaneous obligations. See Structured Data Map, A-080 and A-085.

[22] Purchases of PP&E: Capital expenditures of $3,200K comprise computer equipment and servers ($2,100K), office furniture and fixtures ($600K), and leasehold improvements ($500K). See Structured Data Map, A-110 and Balance Sheet footnote [4].

[23] Capitalization of Internal-Use Software: $9,800K of qualifying software development costs were capitalized under ASC 350-40 during FY2024. This represents the application development stage costs (primarily engineer salaries and benefits) for platform enhancements, new features, and infrastructure improvements. Planning and post-implementation costs are expensed as incurred within R&D. See Structured Data Map, A-065.

[24] Purchases of Short-Term Investments: $24,000K was invested in US Treasury bills and certificates of deposit during FY2024 as part of IMT's cash management strategy. See Structured Data Map, A-046.

[25] Maturities and Redemptions of Short-Term Investments: $18,000K of prior-year short-term investments matured during FY2024. Net investment activity was ($6,000K), increasing the short-term investment balance from $12,000K to $18,000K. See Structured Data Map, A-046.

[26] Capitalization of Patent Costs: $600K of patent prosecution and legal costs were capitalized during FY2024 for 6 pending patent applications covering new Sentinel AI capabilities and security observability algorithms. See Structured Data Map, A-071.

[27] Proceeds from Stock Option Exercises: Employees exercised stock options for 1,200K shares at a weighted average exercise price of $1.00 per share, generating $1,200K in cash proceeds. See Statement of Stockholders' Equity and Structured Data Map, A-093.

[28] Taxes on Net Share Settlement: $120K in taxes were paid on behalf of employees in connection with net share settlement of certain equity award exercises. See Structured Data Map, A-094.

SOURCE REFERENCE INDEX

Cash Flow Statement Line Data Map Ref Verification Source
Net Income A-042, A-085 Income Statement bottom line
Depreciation of PP&E A-092 D&A Allocation table
Amortization of Capitalized SW A-066 Income Statement COR + R&D
Amortization of Intangibles A-071 Income Statement G&A
Stock-Based Compensation A-092 SBC Allocation table
Amortization of Deferred Commissions A-053, A-070 Income Statement S&M
Deferred Income Taxes A-084 Balance Sheet: $1,800 to $2,400
Bad Debt Expense A-048 Balance Sheet: allowance $816 to $1,138
Non-Cash Lease Expense A-068 ROU asset change vs. liability change
Increase in Trade AR A-049 Balance Sheet: $23,512 to $26,712
Increase in Contract Assets A-050 Balance Sheet: $2,100 to $2,400
Increase in Prepaid Expenses A-052 Balance Sheet: $3,800 to $4,200
Capitalized Deferred Commissions A-053, A-070 Balance Sheet: total $13,000 to $15,200
Increase in Other Current Assets A-054 Balance Sheet: $1,000 to $1,200
Increase in Other NC Assets A-072 Balance Sheet: $2,600 to $2,800
Increase in AP A-074 Balance Sheet: $5,400 to $6,200
Increase in Accrued Expenses A-075 Balance Sheet: $7,200 to $8,400
Increase in Accrued Compensation A-076 Balance Sheet: $9,200 to $9,800
Increase in Deferred Revenue A-077, A-082 Balance Sheet: $55,600 to $61,200
Operating Lease Net Change A-068, A-078 ROU and lease liability changes
Increase in Taxes Payable A-079 Balance Sheet: $1,100 to $1,400
Increase in Other Liabilities A-080, A-085 Balance Sheet: $2,900 to $3,700
Net Cash from Operations A-109 $15,750 + $20,100 + ($5,280) = $30,570
PP&E Purchases A-110 PP&E roll-forward
Capitalized Software A-065 Cap SW roll-forward
ST Investment Purchases A-046 Investment roll-forward
ST Investment Maturities A-046 Investment roll-forward
Patent Capitalization A-071 Intangible roll-forward
Net Cash from Investing A-115 ($3,200)+($9,800)+($24,000)+$18,000+($600)
Stock Option Proceeds A-093 Statement of Equity
Tax on Share Settlement A-094 Statement of Equity
Net Cash from Financing A-117 $1,200 + ($120) = $1,080
Net Increase in Cash C.5 $30,570 + ($19,600) + $1,080 = $12,050
Beginning Cash A-119 Balance Sheet, 12/31/2023
Ending Cash A-045, A-120 Balance Sheet, 12/31/2024: $42,500