What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-10 · 215 added, 142 removed, 614 unchanged (37% of the section changed)

2 unchanged sentences

(Amounts in thousands, except share and per share data)

March 31, 2021

June 30, 2021

December 31, 2020

2 unchanged sentences

$ 21,087  

Accounts receivable, net of allowance for doubtful accounts of $268  and $368 , respectively

Accounts receivable, net of allowance for doubtful accounts of $326 and $368 , respectively

65,905  

36 unchanged sentences

93,335  

Contingencies (see Note 10)  

Shareholders' equity:

26 unchanged sentences

(Amounts in thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

$ 73,378  

$ 71,509  

$ 143,548  

$ 150,443  

Costs and expenses:

2 unchanged sentences

49,007  

107,595  

105,631  

Sales and marketing

3 unchanged sentences

10,044  

23,226  

21,120  

Depreciation and amortization

Goodwill impairment and write-off of intangible assets

Total costs and expenses

1 unchanged sentence

69,724  

150,587  

146,718  

(Loss) income from operations

( 4,752 )  

( 7,039 )  

Interest expense, net

( 427 )  

( 1,333 )  

( 1,435 )  

Loss on early extinguishment of debt

2 unchanged sentences

( 5,179 )  

( 11,438 )  

Income tax benefit

1 unchanged sentence

$ ( 5,179 )  

$ ( 11,437 )  

Basic and diluted (loss) income per share:

3 unchanged sentences

$ 0.01  

$ ( 0.06 )  

$ 0.01  

$ ( 0.14 )  

$ 0.01  

Weighted average number of shares outstanding:

3 unchanged sentences

78,557,331  

79,962,275  

78,666,776  

79,560,643  

78,905,792  

See notes to consolidated financial statements

4 unchanged sentences

Total shareholders'

Balance at December 31, 2019

Balance at March 31, 2021

82,228,823  

4 unchanged sentences

$ 212,209  

Vesting of restricted stock units and issuance of restricted stock

Vesting of restricted stock units and issuance of stock under incentive plans

211,436  

2 unchanged sentences

( 43 )  

Repurchase of shares into treasury stock  

Exercise of stock options

Share-based compensation

( 5,179 )  

Balance at June 30, 2021

82,440,259  

Exercise of warrants by certain warrant holders (see Note 7)  

4,068,832  

$ ( 10,666 )  

$ 415,325  

$ ( 196,346 )  

$ 208,354  

Balance at December 31, 2020

80,295,141  

3,945,867  

$ ( 9,999 )  

$ 411,753  

$ ( 184,909 )  

$ 216,885  

Vesting of restricted stock units and issuance of stock under incentive plans

1,947,118  

Increase in treasury stock resulting from shares withheld to cover statutory taxes

122,965  

( 667 )  

Exercise of stock options

198,000  

Share-based compensation

( 11,437 )  

Balance at June 30, 2021

82,440,259  

4,068,832  

$ ( 10,666 )  

$ 415,325  

$ ( 196,346 )  

$ 208,354  

Treasury stock

Additional paid-in

Total shareholders'

Balance at March 31, 2020

5 unchanged sentences

$ 212,065  

Vesting of restricted stock units and issuance of restricted stock

99,568  

Increase in treasury stock resulting from shares withheld to cover statutory taxes

14,594  

( 30 )  

Share-based compensation

Balance at June 30, 2020

79,908,985  

3,616,398  

$ ( 9,930 )  

$ 409,961  

$ ( 186,256 )  

$ 213,815  

Balance at December 31, 2019

10 unchanged sentences

( 446 )  

Exercise of stock options

Repurchase of shares into treasury stock

657,673  

Share-based compensation

( 1,300 )  

Balance at March 31, 2021

Exercise of warrants by certain warrant holders (see Note 7)

( 300,000 )  

Share-based compensation

Balance at June 30, 2020

79,908,985  

3 unchanged sentences

$ ( 186,256 )  

$ 213,815  

See notes to consolidated financial statements

1 unchanged sentence

(Amounts in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Share-based compensation expense

Non-cash loss on early extinguishment of debt  

Non-cash accrued compensation expense for Put/Call Consideration  

Non-cash loss on early extinguishment of debt

Non-cash accrued compensation expense for Put/Call Consideration

Goodwill impairment

Write-off of intangible assets

Provision for bad debt

( 99 )  

Changes in assets and liabilities, net of business acquisition:

Accounts receivable

Prepaid expenses and other current assets

( 3,334 )  

Prepaid expenses and other current assets

Other non-current assets

7 unchanged sentences

( 151 )  

Net cash provided by (used in) operating activities

( 64 )  

Net cash (used in) provided by operating activities

( 665 )  

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

( 1,535 )  

Business acquisition, net of cash acquired

Acquisition of property and equipment

3 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of long-term debt, net of debt financing costs  

49,624  

1 unchanged sentence

( 42,986 )  

Exercise of stock options  

Prepayment penalty on debt extinguishment

2 unchanged sentences

( 667 )  

Repurchase of treasury stock  

Proceeds from the issuance of stock

Repurchase of treasury stock

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

11,573  

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

7 unchanged sentences

$ 1,097  

$ 2,100  

Cash paid for income taxes

41 unchanged sentences

If a customer pays consideration before the Company's performance obligations are satisfied, such amounts are classified as deferred revenue on the consolidated balance sheets.

March 31, 2021 and December 31, 2020 , the balance of deferred revenue was $ 1,935 and $ 1,373 , respectively.

June 30, 2021 and December 31, 2020 , the balance of deferred revenue was $ 1,222 and $ 1,373 , respectively.

The majority of the deferred revenue balance as of 

1 unchanged sentence

When there is a delay between the period in which revenue is recognized and when a customer invoice is issued, revenue is recognized and the related amounts are recorded as unbilled revenue within accounts receivable on the consolidated balance sheets.

March 31, 2021 and December 31, 2020 , unbilled revenue included in accounts receivable was $ 21,437 and $ 28,337 , respectively.

June 30, 2021 and December 31, 2020 , unbilled revenue included in accounts receivable was $ 25,581 and $ 28,337 , respectively.

In line with industry practice, the unbilled revenue balance is recorded based on the Company's internally tracked conversions, net of estimated variances between this amount and the amount tracked and subsequently confirmed by customers.

9 unchanged sentences

(Loss) income per share

Basic (loss) income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period, in addition to restricted stock units ("RSUs") and restricted common stock that are vested but not delivered.

Basic (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period, in addition to restricted stock units ("RSUs") and restricted common stock that are vested but not delivered.

Diluted (loss) income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock are exercised or converted into common stock and is calculated using the treasury stock method for stock options, restricted stock units, restricted stock, warrants and deferred common stock.

1 unchanged sentence

For the 

three months ended March 31, 2021 and 2020 , basic and diluted (loss) income per share was as follows:

Three Months Ended March 31,

six months ended June 30, 2021 and 2020 , basic and diluted (loss) income per share was as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Net (loss) income

$ ( 5,179 )  

$ ( 11,437 )  

Weighted average shares outstanding

1 unchanged sentence

76,244,975  

77,574,295  

76,007,997  

Weighted average restricted shares vested not delivered

1 unchanged sentence

2,265,408  

1,986,348  

2,549,334  

Total basic weighted average shares outstanding

1 unchanged sentence

78,510,383  

79,560,643  

78,557,331  

Dilutive effect of assumed conversion of restricted stock units

156,393  

348,461  

Total diluted weighted average shares outstanding

1 unchanged sentence

78,666,776  

79,560,643  

78,905,792  

Basic and diluted (loss) income per share:

3 unchanged sentences

$ 0.01  

$ ( 0.06 )  

$ 0.01  

$ ( 0.14 )  

$ 0.01  

The following potentially dilutive securities were excluded from the calculation of diluted (loss) income per share, as their effects would have been anti-dilutive for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Restricted stock units

1 unchanged sentence

3,412,390  

2,843,570  

2,288,573  

Stock options

3 unchanged sentences

2,568,000  

833,333  

2,183,333  

833,333  

2,183,333  

Total anti-dilutive securities

1 unchanged sentence

8,163,723  

5,880,903  

7,039,906  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3 unchanged sentences

Amortization period (in years)

March 31, 2021

June 30, 2021

December 31, 2020

44 unchanged sentences

13,501  

Non-competition agreements

Total intangible assets, net

9 unchanged sentences

Management believes that the assumptions utilized in this interim impairment testing, including the determination of estimated future cash flows, were reasonable. 

The Company completed its quarterly triggering event assessment for the three months ended June 30, 2021 and determined that no triggering event had occurred requiring further impairment assessments for its long lived assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands, except share data)

Amortization expense of $ 3,177 and $ 3,547 for the three months ended March 31, 2021 and 2020 , respectively, is included in depreciation and amortization expenses in the consolidated statements of operations.

As of March 31, 2021 , intangible assets with a carrying amount of $ 948 , included in the gross amount of software developed for internal use, have not commenced amortization, as they are not ready for their intended use.

As of March 31, 2021 , estimated amortization expense related to the Company's intangible assets for the remainder of 2021  and through 2026 and thereafter are as follows:

March 31, 2021

Remainder of 2021  

Amortization expense of $ 3,169 and $ 3,659 for the three months ended June 30, 2021 and 2020 , respectively, and $ 6,346 and $ 7,206 , for the six months ended 

June 30, 2021 and 2020 , respectively, is included in depreciation and amortization expenses in the consolidated statements of operations.

As of June 30, 2021 , intangible assets with a carrying amount of $ 790 , included in the gross amount of software developed for internal use, have not commenced amortization, as they are not ready for their intended use.

As of June 30, 2021 , estimated amortization expense related to the Company's intangible assets for the remainder of 2021  and through 2026 and thereafter are as follows:

June 30, 2021

Remainder of 2021

$ 6,059  

3 unchanged sentences

Goodwill represents the cost in excess of fair value of net assets acquired in a business combination.

As of March 31, 2021 , the total balance of goodwill was $ 165,088 , and relates to the acquisition of Interactive Data, LLC, the Fluent LLC Acquisition, the Q Interactive Acquisition, the AdParlor Acquisition, and the Winopoly Acquisition 

As of June 30, 2021 , the total balance of goodwill was $ 165,088 , and relates to the acquisition of Interactive Data, LLC, the Fluent LLC Acquisition, the Q Interactive Acquisition, the AdParlor Acquisition, and the Winopoly Acquisition 

(see Note 

5 unchanged sentences

The Company believes that the assumptions utilized in its interim impairment testing, including the determination of an appropriate discount rate of 14.5 %, long-term profitability growth projections, and estimated future cash flows, are reasonable. The risk of future impairment of goodwill exists if actual results, such as lower than expected revenue, profitability, cash flows, market multiples, discount rates and control premiums, differ from the assumptions used in the Company's interim impairment test.

The Company completed its quarterly triggering event assessment for the three months ended June 30, 2021 and determined no triggering event had occurred requiring further interim impairment assessments for its remaining goodwill.

However, if additional reduction in operating results or a decline in the market value of its publicly-traded stock occurs, this could result in future impairment charges.

Long-term debt, net

Long-term debt, net, related to the Refinanced Term Loan, the New Credit Facility Term Loan, and Note Payable (each as defined below) consisted of the following:

March 31, 2021

June 30, 2021

December 31, 2020

1 unchanged sentence

$ 39,350  

New Credit Facility Term Loan due 2026 (less unamortized discount and financing costs of $ 1,142 and $0 , respectively)  

New Credit Facility Term Loan due 2026 (less unamortized discount and financing costs of $1,067 and $0 , respectively)

47,683  

13 unchanged sentences

New Credit Facility

On March 31, 2021, Fluent, LLC entered into a credit agreement (the “Credit Agreement”) by and among, Fluent, LLC, certain subsidiaries of Fluent, LLC as guarantors, Citizens Bank, N.A., as administrative agent, lead arranger and bookrunner, and BankUnited, N.A.

On March 31, 2021, Fluent, LLC entered into a credit agreement (the “Credit Agreement”) by and among, Fluent, LLC, certain subsidiaries of Fluent, LLC as guarantors, Citizens Bank, N.A. as administrative agent, lead arranger and bookrunner, BankUnited, N.A.

and Silicon Valley Bank.

8 unchanged sentences

subsidiaries of Fluent, LLC.

The Credit Agreement contains negative covenants that, among other things, limit the Borrower's ability to:

The Credit Agreement contains negative covenants that, among other things, limit Fluent, LLC's ability to:

incur indebtedness;

9 unchanged sentences

31, 2026 and interest is payable monthly.

Scheduled principal amortization of the Term Loan is $ 1,250  per quarter, which will commence with the fiscal quarter ended June 30, 2021. 

At March 31, 2021 , the Company was in compliance with all of the financial and other covenants under the Credit Agreement.

Scheduled principal amortization of the Term Loan is $ 1,250  per quarter, which commenced with the fiscal quarter ended June 30, 2021. 

At June 30, 2021 , the Company was in compliance with all of the financial and other covenants under the Credit Agreement.

On July 1, 2019, in connection with the AdParlor Acquisition , the Company issued a promissory note (the "Note Payable") in the principal amount of $ 2,350 , net of discount of $ 150 from imputing interest on the non-interest bearing note using a 4.28 % rate. The promissory note is guaranteed by the Company's subsidiary, Fluent, LLC, does 

not accrue interest except in the case of default, is payable in two equal installments on the first and second anniversaries of the date of closing of the acquisition and is subject to setoff in respect of certain indemnity and other matters. 

The first installment payment of $ 1,250 was made on July 1, 2020, using cash on hand.

As of March 31, 2021 , scheduled future maturities of the Credit Agreement and Note Payable are as follows:

March 31, 2021  

 The first installment payment of $ 1,250 was made on July 1, 2020, and the second installment payment of $ 1,250 was made on July 1, 2021, in each case using cash on hand.

As of June 30, 2021 , scheduled future maturities of the Credit Agreement and Note Payable are as follows:

June 30, 2021  

Remainder of 2021

3 unchanged sentences

$ 50,000  

As of March 31, 2021 , the fair value of long-term debt is considered to approximate its carrying value.

As of June 30, 2021 , the fair value of long-term debt is considered to approximate its carrying value.

The fair value assessment represents a Level 2 measurement.

2 unchanged sentences

The Company updates its estimated annual effective tax rate on a quarterly basis and, if the estimate changes, makes a cumulative adjustment. 

March 31, 2021 and December 31, 2020 , the Company has recorded a full valuation allowance against net deferred tax assets, and intends to continue maintaining a full valuation allowance on these net deferred tax assets until there is sufficient evidence to support the release of all or a portion of these allowances.

Based on current income and anticipated future earnings, the Company believes there is a reasonable possibility that within the next twelve months sufficient positive evidence may become available to allow a conclusion to be reached that a significant portion, if not all, of the valuation allowance will be released.

June 30, 2021 and December 31, 2020 , the Company has recorded a full valuation allowance against net deferred tax assets, and intends to continue maintaining a full valuation allowance on these net deferred tax assets until there is sufficient evidence to support the release of all or a portion of these allowances.

Release of some or all of the valuation allowance would result in the recognition of certain deferred tax assets and an increase in deferred tax benefit for any period in which such a release may be recorded, however, the exact timing and amount of any valuation allowance release are subject to change, depending upon the level of profitability the Company is able to achieve and the net deferred tax assets available.

1 unchanged sentence

(Amounts in thousands, except share data)

For the three months ended March 31, 2021 and 2020 , the Company's effective income tax benefit rate of 0 % differed from the statutory federal income tax rate of 21 %, with such differences resulting primarily from the application of the full valuation allowance against the Company's deferred tax assets.

For the six months ended June 30, 2021 and 2020 , the Company's effective income tax benefit rate of 0 % differed from the statutory federal income tax rate of 21 %, with such differences resulting primarily from the application of the full valuation allowance against the Company's deferred tax assets.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available as of the reporting dates.

1 unchanged sentence

For those income tax positions where it is not more-likely-than- not that a tax benefit will be sustained, no tax benefit has been recognized in the Company's financial statements.

March 31, 2021 and December 31, 2020 , the balance of unrecognized tax benefits was $ 1,480 .

June 30, 2021 and December 31, 2020 , the balance of unrecognized tax benefits was $ 1,480 .

The unrecognized tax benefits, if recognized, would result in an increase to net operating losses that would be subject to a valuation allowance and, accordingly, result in no impact to the Company’s annual effective tax rate.

As of March 31, 2021 , the Company has not accrued any interest or penalties with respect to its uncertain tax positions.

As of June 30, 2021 , the Company has not accrued any interest or penalties with respect to its uncertain tax positions.

The Company does not anticipate a significant increase or reduction in unrecognized tax benefits within the next twelve months.

Common stock, treasury stock and warrants

March 31, 2021 and December 31, 2020 , the number of issued shares of common stock was 

June 30, 2021 and December 31, 2020 , the number of issued shares of common stock was 

82,440,259 and 80,295,141 , respectively, which included shares of treasury stock of 

4,068,832 and 3,945,867 , respectively.

For the three months ended March 31, 2021 , the change in the number of issued shares of common stock was the result of an aggregate 

For the six months ended June 30, 2021 , the change in the number of issued shares of common stock was the result of an aggregate 

1,947,118 shares of common stock issued upon vesting of RSUs, including 

2 unchanged sentences

Treasury stock

March 31, 2021 and December 31, 2020 , the Company held shares of treasury stock of 4,055,011  and 3,945,867 , with a cost of $ 10,623 and $ 9,999 , respectively.

June 30, 2021 and December 31, 2020 , the Company held shares of treasury stock of 4,068,832  and 3,945,867 , with a cost of $ 10,666 and $ 9,999 , respectively.

The Company's share-based incentive plans allow employees the option to either make cash payment or forfeit shares of common stock upon vesting to satisfy federal and state statutory tax withholding obligations associated with equity awards.

The forfeited shares of common stock may be taken into treasury stock by the Company or sold on the open market.

For the three months ended March 31, 2021 , 109,144  shares of common stock were withheld to cover statutory taxes owed by certain employees for this purpose, all of which were taken into treasury stock. See Note 8 , Share-based compensation. 

March 31, 2021 and December 31, 2020 , warrants to purchase an aggregate of 

For the six months ended June 30, 2021 , 122,965  shares of common stock were withheld to cover statutory taxes owed by certain employees for this purpose, all of which were taken into treasury stock. See Note 8 , Share-based compensation. 

June 30, 2021 and December 31, 2020 , warrants to purchase an aggregate of 

833,333 of common stock were outstanding with exercise prices ranging from $ 3.75 to $ 6.00 per share.

15 unchanged sentences

Share-based compensation

As of March 31, 2021 , the Company maintains two share-based incentive plans:

As of June 30, 2021 , the Company maintains two share-based incentive plans:

the Cogint, Inc.

2 unchanged sentences

21,337,143 shares of common stock.

As of March 31, 2021 , there were 

As of June 30, 2021 , there were 

1,509,149 shares of common stock reserved for issuance under the 2018  Plan.

17 unchanged sentences

Fair value lower range

$ 2.81  

$ 1.58  

$ 1.46  

$ 4.34  

Fair value higher range

$ 2.86  

$ 1.61  

$ 1.49  

$ 4.43  

Exercise price

$ 4.72  

$ 2.56  

$ 2.33  

$ 6.33  

Expected term (in years)

1.0 - 1.3  

1.0 - 1.6  

1.0 - 1.5  

1.0 - 1.3  

Expected volatility

1 unchanged sentence

Risk-free rate

2.61 %  

1.85 %  

1.05 %  

For the three months ended March 31, 2021 , details of stock option activity were as follows:

For the six months ended June 30, 2021 , details of stock option activity were as follows:

Number of options

3 unchanged sentences

Outstanding as of December 31, 2020

2,294,000  

$ 4.34  

$ 2,256  

Granted  

108,000  

$ 6.33  

Exercised  

( 198,000 )  

Outstanding as of March 31, 2021

2,204,000  

$ 4.41  

Options exercisable as of March 31, 2021

1,307,000  

$ 4.06  

Outstanding as of June 30, 2021

Options exercisable as of June 30, 2021

The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the Company's common stock at the end of the reporting period and the corresponding exercise prices, multiplied by the number of in-the-money stock options as of the same date.

For the 

three months ended March 31, 2021 , the unvested balance of options was as follows:

six months ended June 30, 2021 , the unvested balance of options was as follows:

Number of options

2 unchanged sentences

Unvested as of December 31, 2020

1,225,000  

$ 3.98  

108,000  

$ 6.33  

Vested  

( 436,000 )  

Unvested as of March 31, 2021

897,000  

$ 4.91  

Unvested as of June 30, 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1 unchanged sentence

Compensation expense recognized for stock options of $ 123 and $ 152  for the 

three months ended March 31, 2021 and 2020 , respectively, was recorded in sales and marketing, product development and general and administrative expenses in the consolidated statements of operations. As of March 31, 2021 , there was $ 457 of unrecognized share-based compensation with respect to outstanding stock options.

three months ended June 30, 2021 and 2020 , respectively, and $ 290 and $ 1,351 for the six months ended June 30, 2021 and 2020 , respectively, was recorded in sales and marketing, product development and general and administrative expenses in the consolidated statements of operations. As of June 30, 2021 , there was $ 334 of unrecognized share-based compensation with respect to outstanding stock options.

Restricted stock units and restricted stock

For the three months ended March 31, 2021 , details of unvested RSU and restricted stock activity were as follows:

For the six months ended June 30, 2021 , details of unvested RSU and restricted stock activity were as follows:

Number of units

1 unchanged sentence

Unvested as of December 31, 2020

3,377,097  

$ 7.09  

909,234  

$ 6.46  

Vested and delivered

( 1,626,538 )  

$ 3.10  

Withheld as treasury stock (1)

( 109,144 )  

$ 4.85  

Vested not delivered (2)

565,255  

$ 2.67  

( 73,031 )  

$ 2.88  

Unvested as of March 31, 2021

3,042,873  

$ 8.38  

Unvested as of June 30, 2021

As discussed in Note 7 , Common stock, treasury stock and warrants, 

the increase in treasury stock was due to shares withheld to cover statutory withholding taxes upon the delivery of shares following vesting of RSUs.

As of March 31, 2021 , there were 

As of June 30, 2021 , there were 

4,068,832  outstanding shares of treasury stock.

Vested not delivered represents vested RSUs with delivery deferred to a future time.

For the three months ended March 31, 2021 , there was a net decrease of 

For the six months ended June 30, 2021 , there was a net decrease of 

570,335 shares included in the vested not delivered balance as a result of the delivery of 

650,333 shares, partially offset by the vesting of 79,998 shares with deferred delivery election.

As of March 31, 2021 , 

As of June 30, 2021 , 

1,691,666 outstanding RSUs were vested not delivered.

Compensation expense recognized for RSUs and restricted stock of $ 1,105  and $ 1,237  for the three months ended March 31, 2021 and 2020 , respectively, was recorded in sales and marketing, product development and general and administrative in the consolidated statements of operations, and intangible assets in the consolidated balance sheets.

Compensation expense recognized for RSUs and restricted stock of $ 1,108  and $ 1,176  for the three months ended June 30, 2021 and 2020 , respectively, and $ 2,213  and $ 2,413 for the six months ended June 30, 2021 and 2020 , respectively, was recorded in sales and marketing, product development and general and administrative in the consolidated statements of operations, and intangible assets in the consolidated balance sheets.

The fair value of the RSUs and restricted stock was estimated using the closing prices of the Company's common stock on the dates of grant.

As of March 31, 2021 , unrecognized share-based compensation expense associated with the granted RSUs and stock options amounted to $ 11,605 , which is expected to be recognized over a weighted average period of 

For the 

three months ended March 31, 2021 and 2020 , share-based compensation for the Company's stock option, RSU, common stock and restricted stock awards were allocated to the following accounts in the consolidated financial statements:

Three Months Ended March 31,

As of June 30, 2021 , unrecognized share-based compensation expense associated with the granted RSUs and stock options amounted to $ 9,998 , which is expected to be recognized over a weighted average period of 

For the three and 

six months ended June 30, 2021 and 2020 , share-based compensation for the Company's stock option, RSU, common stock and restricted stock awards were allocated to the following accounts in the consolidated financial statements:

Three Months Ended June 30,

Six Months Ended June 30,

Sales and marketing

4 unchanged sentences

Total share-based compensation

$ 1,272  

$ 2,436  

On May 13, 2021, the Company's then-CEO and then-President purchased a total of 50,000 shares from the Company for cash under the 2018 Stock Incentive Plan.

The per share purchase price for each transaction was the closing price reported on Nasdaq on the date of purchase.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3 unchanged sentences

The profitability measure employed by CODM is EBITDA.

As of March 31, 2021 , the Company has two operating segments and two corresponding reporting units, “Fluent”

As of June 30, 2021 , the Company has two operating segments and two corresponding reporting units, “Fluent”

and “All Other,”

5 unchanged sentences

Summarized financial information concerning the Company's segments is shown in the following tables below:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Fluent segment revenue:

2 unchanged sentences

$ 57,462  

$ 117,558  

$ 125,613  

International

10,693  

12,935  

19,983  

22,346  

Fluent segment revenue

1 unchanged sentence

$ 70,397  

$ 137,541  

$ 147,959  

All Other segment revenue:

2 unchanged sentences

$ 1,012  

$ 5,935  

$ 2,197  

International

2 unchanged sentences

$ 1,112  

$ 6,007  

$ 2,484  

Segment EBITDA

2 unchanged sentences

$ 6,809  

$ ( 172 )  

$ 12,698  

All Other segment EBITDA

( 1,171 )  

( 128 )  

( 1,386 )  

( 300 )  

11,311  

Depreciation and amortization

2 unchanged sentences

$ 1,785  

$ ( 7,039 )  

$ 3,725  

Total assets:

16 unchanged sentences

WC Docket 

 On May 6, 2021, the Company and the NY AG executed an Assurance of Discontinuance (the “AOD”) to resolve this matter. The AOD imposed injunctive provisions on the Company’s practices with regard to political advocacy campaigns, most of which the Company had already implemented, and imposed a $ 3.7 million penalty, in line with the Company's accrual as of March 31, 2021.

 On May 6, 2021, the Company and the NY AG executed an Assurance of Discontinuance (the “AOD”) to resolve this matter. The AOD imposed injunctive provisions on the Company’s practices with regard to political advocacy campaigns, most of which the Company had already implemented, and imposed a $ 3.7 million penalty, which was in line with the Company's accrual in the prior quarter and paid in full as of June 30, 2021.

On December 13, 2018, the Company received a subpoena from the United States Department of Justice (“DOJ”) regarding the same issue. On March 12, 2020, the Company received a subpoena from the Office of the Attorney General of the District of Columbia ("DC AG") regarding the same issue.

The Company has been fully cooperating with the DOJ and the DC AG.

The Company was responsive and fully cooperated with each of the DOJ and the DC AG.

On June 27, 2019, as a part of two  sales and use tax audits covering the period from December 1, 2010 to November 30, 2019, the New York State Department of Taxation and Finance (the “Tax Department”) issued a letter stating its position that revenue derived from certain of the Company’s customer acquisition and list management services are subject to sales tax, as a result of being deemed information services.

5 unchanged sentences

On July 22 and 31, 2020, the Company received Notices of Determination from the Tax Department totaling $ 3.0  million, including $ 0.7 million of interest.

On October 16, 2020, the Company filed challenges to the Notices of Determination.

On October 16, 2020, the Company filed challenges to the Notices of Determination. On June 21, 2021, the Company and the Tax Department participated in a conciliation conference, but the audits were not resolved.

Based on the foregoing, the Company believes it is probable that a sales tax liability may result from this matter, and has estimated the range of any such liability to be between $ 0.7  million and $ 3.0 million.

2 unchanged sentences

§45 or the Telemarketing Sales Rule, 16 C.F.R.

Part 310, as they relate to the advertising, marketing, promotion, offering for sale, or sale of rewards and other products, the transmission of commercial text messages, and/or consumer privacy or data security. The Company has been fully cooperating with the FTC and is responding to the CID. At this time, it is not possible to predict the ultimate outcome of this matter or the significance, if any, to the Company’s business, results of operations or financial position.

Part 310, as they relate to the advertising, marketing, promotion, offering for sale, or sale of rewards and other products, the transmission of commercial text messages, and/or consumer privacy or data security. The Company has been responsive and is fully cooperating with the FTC. At this time, it is not possible to predict the ultimate outcome of this matter or the significance, if any, to the Company’s business, results of operations or financial position.

Business acquisition

Winopoly acquisition

On April 1, 2020, the Company acquired, through a wholly owned subsidiary, a 50 % membership interest in Winopoly (the "Winopoly Acquisition") for a deemed purchase price of $ 2,553 , which consisted of $ 1,553 in cash and contingent consideration with a fair value of $ 1,000 payable based upon the achievement of specified revenue targets over the eighteen -month period following the completion of the acquisition. Winopoly is a contact center operation, which serves as a marketplace that matches consumers sourced by Fluent with advertiser clients. 

As of the first quarter of 2021, the initial contingent consideration of $ 1,000 had been paid based on specific revenue targets having been met.

On May 17, 2021, additional contingent consideration that was not previously deemed to be probable of payment in the amount of $ 500 was paid based on a specific revenue target having been met.

Winopoly is a contact center operation, which serves as a marketplace that matches consumers sourced by Fluent and other third parties with advertiser clients. 

In accordance with ASC 805, the Company determined that the Winopoly Acquisition constituted the purchase of a business. 

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In addition, the Company estimates the amount of the Put/Call Consideration, which is accreted over the six -year estimated service period, consisting of the estimated four years until the put/call can be exercised and the additional two -year service requirement.

For the 

three months ended March 31, 2021 , compensation expense of $ 1,746 related to the Put/Call Consideration was recorded in general and administrative on the consolidated statement of operations, with a corresponding liability in other non-current liabilities on the consolidated balance sheet.

For the three and 

six months ended June 30, 2021 , compensation expense of $ 881  and $ 2,627 , respectively, and for the three and 

six months ended June 30, 2020  compensation expense of $ 530  related to the Put/Call Consideration was recorded in general and administrative on the consolidated statement of operations, with a corresponding liability in other non-current liabilities on the consolidated balance sheet.

Variable Interest Entity

6 unchanged sentences

 Related party transactions

The Company earns revenue and incurs expenses from a client in which the Company's Chief Executive Officer holds a significant ownership interest.

For the 

three months ended March 31, 2021 , the Company recognized revenue from this client of $ 33  and incurred expenses from this client of $ 0 .

During the three and 

six months ended June 30, 2021 , the Company recognized revenue from a client in which the then-CEO holds a significant ownership interest.

Accounts receivable for this client were $ 119 and $ 137 as of June 30, 2021 and December 31, 2020, respectively. For the three and 

six months ended June 30, 2021 , the Company recognized revenue from this client of $ 0 and $ 33 , respectively, and for the three and six months ended June 30, 2020, the Company recognized revenue from this client of $ 95 and $ 145 , respectively. In accordance with the Company's policies and procedures for determining allowances for doubtful accounts and write-offs, the Company wrote-off the outstanding accounts receivable from this client as of June 30, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements