What changed in this filing

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Item 1. Financial Statements

2021-02-04 compared with 2020-08-06 · 166 added, 251 removed, 384 unchanged (52% of the section changed)

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(Dollars in Thousands, Except Par Value)

June 30, 2020 September 30, 2019

December 31, 2020 September 30, 2020

Current assets:

Cash and cash equivalents $ 77,844 $ 76,036

Short-term investments — 30,000

Accounts receivable, net of allowance for doubtful accounts of $ 396 and $ 389

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Current portion of operating lease liabilities 3,956 3,818

Distributions payable — 1,675

Deferred revenue 3,429 3,255

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Operating lease liabilities 10,006 7,499

Deferred taxes and other long-term liabilities 2,482 2,286

Other long-term liabilities 2,892 2,996

Total liabilities 90,191 84,819

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120,000,000 shares authorized;

34,021,773 shares issued and outstanding at June 30, 2020;

34,212,815 shares issued and outstanding at December 31, 2020;

34,082,406 shares issued and outstanding at September 30, 2020

Additional paid-in capital 250,002 247,892

Treasury stock, at cost;

866,388 shares at December 31, 2020 and 547,508 shares at September 30, 2020

( 8,255 ) ( 3,983 )

Accumulated other comprehensive loss ( 8,886 ) ( 9,782 )

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(Dollars in Thousands, Except Per Share Data)

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

Three Months Ended December 31,

Revenue $ 31,071 $ 30,349

3 unchanged sentences

Cost of goods sold (excludes depreciation and amortization) 22,573 24,176

Seller distributions — 2,994 — 8,393

Technology and operations 10,573 11,241

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(Dollars in Thousands)

Three Months Ended June 30, Nine Months Ended June 30,

2020 2019 2020 2019

Three Months Ended December 31,

Net income (loss) $ 4,514 $ ( 5,196 )

Other comprehensive income (loss):

Other comprehensive income:

Foreign currency translation 896 833

Other comprehensive income (loss) 424 ( 255 ) ( 46 ) ( 484 )

Other comprehensive income 896 833

Comprehensive income (loss) $ 5,410 $ ( 4,363 )

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(Dollars In Thousands)

Common Stock Treasury Stock

Shares Amount Additional

Capital Accumulated

Capital Shares Amount Accumulated

Comprehensive

2 unchanged sentences

Balance at September 30, 2020 34,082,406 $ 34 $ 247,892 ( 547,508 ) ( 3,983 ) $ ( 9,782 ) $ ( 122,346 ) $ 111,815

Net loss — — — — ( 5,196 ) ( 5,196 )

Net income — — — — — — 4,514 4,514

Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units 151,845 — 197 — — — — 197

1 unchanged sentence

Forfeitures of restricted stock awards ( 13,733 ) — — — — — — —

Common stock repurchased — — — ( 309,496 ) ( 4,103 ) — — ( 4,103 )

Common stock surrendered in the exercise of stock options — — 169 ( 9,384 ) ( 169 ) — — —

Stock compensation expense — — 1,801 — — — — 1,801

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Balance at December 31, 2020 34,212,815 $ 34 $ 250,002 ( 866,388 ) $ ( 8,255 ) $ ( 8,886 ) $ ( 117,832 ) $ 115,063

Net loss — — — — ( 4,238 ) ( 4,238 )

Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units 111,272 — 32 — — 32

Taxes paid associated with net settlement of stock compensation awards ( 10,065 ) — ( 60 ) — — ( 60 )

Stock compensation expense — — 1,244 — — 1,244

Foreign currency translation — — — ( 1,303 ) — ( 1,303 )

Balance at March 31, 2020 33,988,798 34 244,527 ( 8,443 ) ( 128,006 ) 108,112

Net income — — — — 213 213

Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units 34,185 — 1 — — 1

Taxes paid associated with net settlement of stock compensation awards ( 1,210 ) — ( 6 ) — — ( 6 )

Stock compensation expense — — 1,494 — — 1,494

Foreign currency translation — — — 424 — 424

Balance at June 30, 2020 34,021,773 $ 34 $ 246,016 $ ( 8,019 ) $ ( 127,793 ) $ 110,238

See accompanying notes to the unaudited consolidated financial statements.

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(Dollars In Thousands)

Nine Months Ended June 30,

Three Months Ended December 31,

Operating activities

Net loss $ ( 9,221 ) $ ( 14,033 )

Net income (loss) $ 4,514 $ ( 5,196 )

Adjustments to reconcile net loss to net cash used in operating activities:

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Deferred tax provision 32 100

Loss (gain) on disposal of property and equipment ( 29 ) 20

(Gain) on disposal of property and equipment ( 1 ) ( 12 )

Change in fair value of earnout liability — 200

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Maturities of short-term investments — 30,000

Net cash provided by (used in) investing activities 28,939 ( 14,692 )

Net cash (used in) provided by investing activities ( 846 ) 6,215

Financing activities

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Proceeds from exercise of stock options 197 2

Payment of earnout liability related to business acquisition ( 1,200 ) —

Net cash (used in) provided by financing activities ( 1,754 ) 129

Common stock repurchased ( 4,103 ) —

Net cash used in financing activities ( 3,973 ) ( 504 )

Effect of exchange rate differences on cash and cash equivalents 589 578

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Cash paid for income taxes, net $ 208 $ 9

Common stock surrendered in the exercise of stock options $ ( 169 ) $ —

See accompanying notes to the unaudited consolidated financial statements.

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Liquidity Services, Inc.

(the Company) operates a network of ecommerce marketplaces that enable buyers and sellers to transact in an efficient, automated environment offering o ver 500 product categories.

The Company’s marketplaces provide professional buyers access to a global, organized supply of new, surplu s and scrap assets presented with digital images and other relevant product information.

(the Company) operates a network of e-commerce marketplaces that enable buyers and sellers to transact in an efficient, automated environment offering over 600 product categories .

The Company’s marketplaces provide professional buyers access to a global, organized supply of new, surplus and idle assets presented with digital images and other relevant product information.

Additionally, the Company enables corporate and government sellers to enhance their financial return on offered assets by providing a liquid marketplace and value-added services that encompass the consultative management, valuation and sale of surplus assets.

The Company's services include program management, valuation, asset management, reconciliation, refurbishment and recycling, fulfillment, marketing and sales, warehousing and transportation, buyer support, compliance and risk mitigation, as well as self-directed service tools for its sellers.

The Company organizes the products on its marketplaces into categories across major industry verticals such as consumer electronics, general merchandise, apparel, scientific equipment, aerospace parts and equipment, technology hardware, energy equipment, industrial capital assets, fleet and transportation equipment and specialty equipment.

Currently, the Company’s marketplaces are:

www.liquidation.com, www.govdeals.com, www.networkintl.com, www.secondipity.com, and www.go-dove.com.

The Company organizes the products on its marketplaces into categories across major industry verticals such as consumer electronics, general merchandise, apparel, scientific equipment, aerospace parts and equipment, technology hardware, energy equipment, industrial capital assets, heavy equipment, fleet and transportation equipment and specialty equipment.

The Company’s marketplaces are:

www.allsurplus.com, www.liquidation.com, www.govdeals.com, www.networkintl.com, www.secondipity.com, and www.go-dove.com.

The Company also operates a global search engine for listing used machinery and equipment for sale at www.machinio.com.

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GovDeals, Retail Supply Chain Group (RSCG), Capital Assets Group (CAG), and Machinio.

See Note 12 in the Notes to the Consolidated Financial Statements for Segment Information.

See Note 12 for Segment Information.

The Company's operations are subject to certain risks and uncertainties, many of which are associated with technology-oriented companies, including, but not limited to, the Company's dependence on use of the Internet;

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The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (GAAP) for interim financial information.

generally accepted accounting principles (GAAP) for interim financial information and the rules and regulations of the Securities and Exchange Commission (SEC).

Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.

In the opinion of management, all adjustments, consisting of normal, recurring adjustments considered necessary for a fair presentation, have been included.

In the opinion of management, all adjustments, consisting of normal, recurring adjustments considered necessary for a fair presentation, have been included, and intercompany transactions and accounts have been eliminated in consolidation.

The information disclosed in the notes to the consolidated financial statements for these periods is unaudited.

Operating results for the three and nine months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2020 or for any future period.

Operating results for the three months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021 or for any future period.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect amounts in the consolidated financial statements and accompanying notes.

For the three and nine months ended June 30, 2020, these estimates required the Company to make assumptions about the extent and duration of the COVID-19 pandemic and its impacts on the Company's results of operations.

For the three months ended December 31, 2020, these estimates required the Company to make assumptions about the extent and duration of the COVID-19 pandemic and its impacts on the Company's results of operations.

As there remains uncertainty associated with the COVID-19 pandemic, the Company will continue to update its assumptions as conditions change.

Actual results could differ significantly from those estimates.

The Company adopted Accounting Standards Codification (ASC) Topic 842, Leases (ASC 842) effective October 1, 2019.

As a result of adopting ASC 842, there have been significant changes to the Company's lease accounting policy from the disclosures in the Company’s Annual Report on Form 10-K for the year ended September 30, 2019.

These changes are described below.

The Company determines if an arrangement is a lease upon inception.

A contract is or contains a lease if the contract provides the right to control the use of an identified asset for a period of time.

Lease assets and liabilities are recognized at the lease commencement date at an amount equal to the present value of the lease payments to be made over the lease term.

The lease payments represent the combination of lease and nonlease components.

The discount rate used to determine the present value is the Company’s incremental borrowing rate for a duration that is

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

consistent with the lease term, as the rates implicit in the Company’s leases are generally not determinable.

The Company’s incremental borrowing rate is estimated using publicly-available information for companies with comparable financial profiles, adjusted for the impact of collateralization.

The lease term includes the impacts of options to extend or terminate the lease only if it is reasonably certain that the option will be exercised.

Lease expense related to operating lease assets and liabilities is recognized on a straight-line basis over the lease term.

Lease expense related to finance lease assets is recognized on a straight-line basis over the shorter of the useful life of the asset or the lease term, while lease expense related to finance lease liabilities is recognized using the interest method.

Lease-related payments not included in the determination of the lease assets and liabilities, such as variable lease payments, are expensed as incurred.

Lease assets and liabilities are not recognized when the lease term is 12 months or less, however, short-term lease expense is still recognized on a straight-line basis over the lease term.

Balances related to the Company's finance leases are included with Other assets (finance lease assets), Accrued expenses and other liabilities (current portion of finance lease liabilities), and Deferred taxes and other long-term liabilities (non-current portion of finance lease liabilities).

Lease assets are assessed for impairment in accordance with the Company’s accounting policy for the impairment of long-lived assets.

Contract Assets and Liabilities

Contract assets reflect an estimate of expenses that will be reimbursed upon settlement with a seller.

The contract asset balance was $ 0.5 million as of June 30, 2020 and $ 0.3 million as of September 30, 2019 and is included in the line item Prepaid expenses and other current assets on the Consolidated Balance Sheets.

The contract asset balance was $ 0.4 million as of December 31, 2020 and $ 0.4 million as of September 30, 2020, and is included in the line item Prepaid expenses and other current assets on the Consolidated Balance Sheets.

Contract liabilities reflect obligations to provide services for which the Company has already received consideration, and generally arise from up-front payments received in connection with Machinio's subscription services.

The contract liability balance was $ 3.0 million as of June 30, 2020 and $ 3.0 million as of September 30, 2019, and is included in the line item Deferred revenue on the Consolidated Balance Sheets.

Of the September 30, 2019 contract liability balance, $ 2.8 million was earned as Fee revenue during the nine months ended June 30, 2020.

The $ 3.0 million contract liability balance as of June 30, 2020 also represents the Company's remaining performance obligations related to contracts with customers that are one year or greater in duration.

The contract liability balance was $ 3.4 million as of December 31, 2020 and $ 3.3 million as of September 30, 2020, and is included in the line item Deferred revenue on the Consolidated Balance Sheets.

Of the September 30, 2020 contract liability balance, $ 1.4 million was earned as Fee revenue during the three months ended December 31, 2020.

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

For the Company's Machinio business segment, performance obligations are satisfied over time as the Company provides the services over the term of the subscription.

At December 31, 2020, the Machinio business segment had a remaining performance obligation of $ 3.4 million;

the Company expects to recognize the substantial majority of that amount as Fee Revenue over the next 12 months.

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Contract costs are amortized over the expected life of the customer contract.

The contract cost balance was $ 0.6 million as of June 30, 2020 and $ 0.5 million as of September 30, 2019 and is included in the line item Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheet.

Amortization expense was immaterial during the three and nine months ended June 30, 2020 and 2019.

The contract cost balance w as $ 0.9 million a s of December 31, 2020 and $ 0.7 million as of September 30, 2020 and is included in the line item Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheet.

Amortization expense was immaterial during the three months ended December 31, 2020 and 2019.

Other Assets - Promissory Note

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JTC had the opportunity to prepay the full amount remaining before May 15, 2020 at a $ 0.5 million discount.

Of the $ 12.3 million owed to the Company, $ 6.6 million has been repaid as of June 30, 2020.

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

The Company considered the terms of the Forbearance Agreement and the cash flows expected to be received from JTC under the new repayment schedule in concludi ng that it remains probable that the Company will collect the amounts due to the Company as of June 30, 2020 and that no impairment loss has been incurred.

Of the $ 5.7 million outstanding at June 30, 2020, $ 4.2 million is recorded in Other assets, and $ 1.5 million is recorded in Prepaid expenses and other current assets, based on the scheduled repayment dates.

Of the $ 12.3 million owed to t he Company, $ 7.3 million has been repaid as of December 31, 2020.

Of the $ 5.0 million in principal outstanding at December 31, 2020, $ 3.4 million was recorded in Other assets, and $ 1.6 million in Prepaid expenses and other current assets based on the scheduled repayment dates.

Risk Associated with Certain Concentrations

The Company does not perform credit evaluations for the majority of its buyers.

However, most sales are recorded subsequent to payment authorization being received.

As a result, the Company is not subject to significant collection risk, as most goods are not shipped before payment is received.

For consignment sales transactions, funds are typically collected from buyers and are held by the Company on the sellers' behalf in Payables to sellers on the Consolidated Balance Sheets.

The Company releases the funds, less the Company's commission and other fees due, to the seller through Accounts payable after the buyer has accepted the goods or within 30 days, depending on the state where the buyer and seller conduct business.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash in banks over FDIC limits, certificates of deposit, accounts receivable, and the promissory note.

The Company deposits its cash with financial institutions that the Company considers to be of high credit quality.

The Company's RSCG segment has vendor contracts with Amazon.com, Inc.

under which the RSCG segment acquires and sells commercial merchandise.

Transactions under these contracts repres ented 60.4 % and 41.6 % of consolidated Cost of goods sold for the three months ended June 30, 2020 and 2019, respectively, and 54.5 % and 43.9 % of consolidated Cost of goods sold for the nine months ended June 30, 2020 and 2019, respectively.

During the three and nine months ended June 30, 2019, the Company had one material vendor contract with the Department of Defense (DoD) under which its CAG segment acquired, managed and sold government property:

the Scrap Contract, which concluded on September 30, 2019.

Sales of property acquired under the Scrap Contract accounted for 8.2 % and 7.8 % of the Company's consolidated revenues for the three and nine months ended June 30, 2019, respectively.

For the majority of buyers that receive goods before payment to the Company is made, credit evaluations are performed.

However, for the remaining buyers, goods are not shipped before payment is made, and as a result the Company is not subject to significant collection risk from those buyers.

For consignment sales transactions, funds are typically collected from buyers and are held by the Company on the sellers' behalf.

The funds are included in Cash and cash equivalents in the consolidated financial statements.

The Company releases the funds to the seller, less the Company's commission and other fees due, to the seller through Accounts payable after the buyer has accepted the goods or within 30 days, depending on the state where the buyer and seller conduct business.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of Cash and cash equivalents in banks over FDIC limits, Short-term investments, and Accounts receivable.

The Company deposits its Cash and cash equivalents with and acquires Short-term investments from financial institutions that the Company considers to be of high credit quality.

Additionally, the Company has multiple vendor contracts with Amazon.com, Inc.

under which it acquires and sells commercial merchandise.

The property purchased under this contract represented 60.0 % and 48.3 % of consolidated Cost of goods sold for the three months ended December 31, 2020 and 2019, respectively.

These contracts are included within the RSCG segment.

Earnings per Share

For the three months ended June 30, 2020, diluted weighted average common shares outstanding contains 119,396 shares representing the dilutive impact of stock options, RSUs and RSAs.

3,841,385 stock options, RSUs and RSAs were excluded from the computation of diluted weighted average common shares outstanding as they were anti-dilutive.

For the nine months ended June 30, 2020 and the three and nine months ended June 30, 2019, basic and diluted weighted average common shares were the same because the Company operated at a net loss in both periods, causing any inclusion of potentially dilutive securities in the computation of diluted net income (loss) per share to be anti-dilutive.

For the three months ended December 31, 2020, diluted weighted average common shares outstanding contains 1,734,225 shares representing the dilutive impact of stock options, RSUs and RSAs.

1,711,221 s tock options, RSUs and RSAs were excluded from the computation of diluted weighted average common shares outstanding as they were anti-dilutive.

For the three months ended December 31, 2019, basic and diluted weighted average common shares were the same because the Company operated at a net loss, causing any inclusion of potentially dilutive securities in the computation of diluted net income (loss) per share to be anti-dilutive.

See Note 7 for the amounts of outstanding stock options, restricted stock awards and restricted stock units that could potentially dilute net income (loss) per share in the future.

Recent Accounting Pronouncements

Accounting Standards Adopted

On October 1, 2019, the Company adopted ASC 842 using the modified retrospective transition method.

Prior periods have not been restated.

To perform the adoption, the Company elected several practical expedients, including the package of practical expedients to not reassess prior conclusions on whether a contract is or contains a lease, lease classification, and initial direct costs.

The Company also elected to combine both the lease and non-lease components as a single component to be accounted for as a lease, to not recognize lease assets or liabilities for leases with initial lease terms of 12 months or less, and to not use hindsight when determining the lease term.

Upon adoption, the Company recognized $ 11.3 million of operating lease assets and $ 12.2 million of operating lease liabilities.

The Company does not have significant finance lease assets and liabilities.

No cumulative-effect adjustment to opening retained earnings was required.

No material impacts were noted on the Consolidated Statements of Operations or Consolidated Statements of Cash Flows.

Refer to Note 3 for additional details on the Company’s leases.

Liquidity Services, Inc.

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Notes to the Unaudited Consolidated Financial Statements - (Continued)

On October 1, 2019, the Company adopted ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .

As the Company had no stranded tax effects resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017, no election to reclassify stranded tax effects from Accumulated other comprehensive to Retained earnings was made.

The Company also adopted the following ASU 2018-07, Improvements to Nonemployee Share-based Payment Accounting, during the nine months ended June 30, 2020.

It did not have a significant impact on the consolidated financial statements or the related footnote disclosures.

Recent Accounting Pronouncements

Accounting Standards Adopted

On October 1, 2020, the Company adopted ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract .

The Company has not identified any significant impacts as a result of adoption of this ASU however, material impacts could be experienced if and when the Company implements cloud computing arrangements in the future.

Accounting Standards Not Yet Adopted

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The guidance will be effective for the Company beginning on October 1, 2023 and will be applied on a modified-retrospective basis, with any cumulative-effect adjustment recorded to retained earnings on the adoption date.

The Company is in the process of evaluating the impact ASC 326 will have on its consolidated financial statements and expects to estimate credit losses on its financial assets such as its Accounts receivable, Short-term investments, and promissory note.

While the Company has not experienced significant credit losses historically, the materiality of the impact of adoption will depend on events and conditions as of the date of adoption, which cannot be determined conclusively at this time.

In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract .

ASU 2018-15 aligns the requirements for capitalizing implementation costs in a cloud computing arrangement with the requirement for capitalizing implementation costs incurred to develop or obtain internal-use software.

This ASU will become effective for the Company beginning October 1, 2020.

The Company is currently evaluating the effect that the adoption of this ASU may have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes .

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The components of lease expense are:

(in thousands) Three months ended June 30, 2020 Nine months ended June 30, 2020

Three Months Ended December 31,

(in thousands) 2020 2019

Finance lease – lease asset amortization $ 16 $ 21

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Maturities of lease liabilities are:

June 30, 2020

December 31, 2020

(in thousands) Operating Leases Finance Leases

Remainder of 2020 $ 1,261 $ 14

2021 $ 3,605 $ 42

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2023 3,302 56

2024 2,301 56

2025 1,786 55

Thereafter 744 50

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Supplemental disclosures of cash flow information related to leases are:

(in thousands) Nine Months Ended

June 30, 2020

Three Months Ended December 31,

(in thousands) 2020 2019

Cash paid for amounts included in operating lease liabilities $ 1,240 $ 1,266

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adjustments to lease assets and liabilities 3,187 1,598

(1) Amount includes $ 12.2 million of lease liabilities recognized upon the adoption of ASC 842 on October 1, 2019 (see Note 2).

(1) The December 31, 2019 a mount includes $ 12.2 million of lease liabilities recognized upon the adoption of ASC 842 on October 1, 2019.

Liquidity Services, Inc.

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Notes to the Unaudited Consolidated Financial Statements - (Continued)

The following table presents changes in the carrying amount of goodwill by reportable segment:

The carrying value and changes in the carrying value of goodwill attributable to each reportable segment were as follows:

(in thousands) CAG GovDeals Machinio Total

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Translation adjustments 287 — — 287

Balance at June 30, 2020

Balance at December 31, 2020

$ 21,837 $ 23,731 $ 14,558 $ 60,126

Goodwill is tested for impairment at the beginning of the fourth quarter and during interim periods whenever events or circumstances indicate that the carrying value may not be recoverable.

During the three months ended March 31, 2020, the Company identified factors associated with the COVID-19 pandemic that indicated that an interim goodwill impairment test was necessary.

These factors included a deterioration of macroeconomic conditions, near-term declines in the Company's results of operations as a result of "shelter-in-place" orders and other related measures, and a decline in the Company's market capitalization.

For the interim goodwill impairment test, the Company performed a fair-value based test for all reporting units with goodwill balances.

The fair value of each reporting unit was determined using a discounted cash flow (DCF) analysis.

The DCF analysis relied on significant assumptions and judgments about the forecasted future cash flows over the five-year projection period, including revenues, gross profit margins, operating expenses, income taxes, capital expenditures, working capital, and an estimate of the impact and duration of COVID-19 on those factors.

These forecasts of future cash flows represent the Company's best estimate using information that is currently available.

However, given the uncertainty associated with the COVID-19 pandemic, including its extent and duration, actual results could differ significantly from those estimates.

The DCF analysis also used included significant assumptions and judgments about long-term growth rates and discount rates.

The fair value of the Go vDeals reporting unit is substantially in excess of its carrying value.

The fair value of the CAG and Machinio reporting units exceeded their carrying values by 21 % and 12 %, res pectively, as of March 31, 2020.

No impairment charge was recorded as a result of the interim goodwill impairment test.

The Company did not identify any indicators of impairment that required an interim impairment test during the three months ended December 31, 2020.

The Company has continued to evaluate the impact of the COVID-19 pandemic on the recoverability of its goodwill.

As there have been favorable developments in the factors that indicated a goodwill impairment test was necessary in the previous quarter, the Company did not identify any indicators of impairment that required an additional interim goodwill impairment test during the three months ended June 30, 2020.

As there have been favorable developments in the factors that previously indicated an interim goodwill impairment test was necessary during the prior fiscal year, the Company did not identify any indicators of impairment that required an interim goodwill impairment test during the three months ended December 31, 2020.

Intangible Assets

The components of intangible assets are as follows:

June 30, 2020 September 30, 2019

Intangible assets consist of the following:

December 31, 2020 September 30, 2020

(dollars in thousands) Useful

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Total intangible assets $ 8,133 $ ( 3,706 ) $ 4,427 $ 8,129 $ ( 3,371 ) $ 4,758

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

The remaining intangible assets balance at June 30, 2020 is expected to be amortized as follows:

Future expected amortization of intangible assets at December 31, 2020, is as follows:

(in thousands) Expected Amortization Expense

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Remainder of 2021

2025 and thereafter

Total $ 4,427

Intangible asset amortization expense was $ 0.3 million and $ 0.3 million for the three months ended June 30, 2020 and 2019, respectively and $ 1.0 million and $ 1.0 million for the nine months ended June 30, 2020 and 2019, respectively.

The factors associated with the COVID-19 pandemic discussed in Note 4 also indicated that an interim long-lived asset impairment test was necessary during the three months ended March 31, 2020.

For each asset group, the Company performed an undiscounted cash flow analysis that relies on significant assumptions and judgments surrounding the forecasts of future cash flows over each asset group's projection period.

These forecasts of future cash flows represent the Company's best estimate using information that is currently available.

However, given the significant uncertainty associated with the COVID-19 pandemic, including its extent and duration, actual results could differ significantly from those estimates.

For each asset group, the undiscounted cash flows exceeded the asset group's carrying value as of March 31, 2020.

No impairment charge was recorded as a result of the interim long-lived asset impairment test.

Intangible asset amortization expense was $ 0.3 million and $ 0.3 million for the three months ended December 31, 2020 and 2019, respectively.

The Company has continued to evaluate the impact of the COVID-19 pandemic on the recoverability of its long-lived assets.

As there have been favorable developments in the factors that indicated a long-lived asset impairment test was necessary in the previous quarter, the Company did not identify any indicators of impairment that required an additional long-lived asset impairment test during the three months ended June 30, 2020.

The Company’s interim effective income tax rate is based on management’s best current estimate of the Company's expected annual effective income tax rate.

The Company recorded a pre-tax loss in the first nine months of fiscal year 2020 and its corresponding effective tax rate is ( 8.4 %) compared to ( 8.8 %) for the first nine months of fiscal year 2019.

The change in the effective tax rate for the nine months ended June 30, 2020 as compared to the same period in the prior yea

r was primarily due to state and foreign taxes .

Tax expense in the nine months ended June 30, 2020 is due to state and foreign taxes paid.

The effective tax rate differed from the statutory federal rate of 21% primarily as a result of the valuation allowance charge on current year losses and the impact of foreign, state, and local income taxes and permanent tax adjustments.

The Company identified no new uncertain tax positions during the nine months ended June 30, 2020.

The Company and its subsidiaries file income tax returns in the U.S.

federal jurisdiction, various state and local jurisdictions and in foreign jurisdictions, primarily Canada and the United Kingdom.

As of June 30, 2020, none of the Company's federal or state income tax returns are under examination, however, we remain subject to examination for certain of our foreign income tax returns.

The statute of limitations for U.S.

federal income tax returns for years prior to fiscal 2017 is now closed.

However, certain tax attribute carryforwards that were generated prior to fiscal 2017 may be adjusted upon examination by tax authorities if they are utilized.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law.

The CARES Act provides opportunities for additional liquidity, loan guarantees, and other government programs to support companies affected by the COVID-19 pandemic and their employees.

Based on our preliminary analysis of the CARES Act, we do not expect a significant impact to our consolidated financial statements.

As there have been favorable developments in the factors that previously indicated an interim long-lived assets impairment test was necessary during the prior fiscal year, the Company did not identify any indicators of impairment that required an interim long-lived assets impairment test during the three months ended December 31, 2020.

Liquidity Services, Inc.

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Notes to the Unaudited Consolidated Financial Statements - (Continued)

The Company’s interim effective income tax rate is based on management’s best current estimate of the Company's expected annual effective income tax rate.

The Company recorded pre-tax income in the first three months of fiscal year 2021 and its corresponding effective tax rate is 6.2 % compared to ( 9.7 %) for the first three months of fiscal year 2020.

The change in the effective tax rate for the three months ended December 31, 2020 as compared to the same period in the prior year was primarily due to state and foreign taxes.

Tax expense in the three months ended December 31, 2020 is due to state and foreign taxes paid.

The effective tax rate differed from the U.S.

statutory federal rate of 21% primarily as a result of the utilization of net operating losses and the impact of foreign, state, and local income taxes and permanent tax adjustments.

The Company applies the authoritative guidance related to uncertainty in income taxes.

ASC Topic 740, Income Taxes , states that a benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, on the basis of technical merits.

The Company identified no new uncertain tax positions during the three months ended December 31, 2020.

The Company and its subsidiaries file income tax returns in the U.S.

federal jurisdiction, various state and local jurisdictions and in foreign jurisdictions, primarily Canada and the United Kingdom.

As of December 31, 2020, none of the Company's federal or state income tax returns are under examination, however, we remain subject to examination for certain of our foreign income tax returns.

The Company has no open income tax examinations in the U.S.

and the statute of limitations for years prior to 2017 is now closed.

However, certain tax attribute carryforwards that were generated prior to fiscal year 2017 may be adjusted upon examination by tax authorities if they are utilized.

The Company's Hong Kong subsidiary is currently under examination for fiscal years 2015 through 2017.

On March 27, 2020, The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, accelerates the recovery of alternative minimum tax (AMT) credits into fiscal year 2020.

During fiscal year 2020, the Company recovered its full AMT refund of $ 1.7 million.

Prior to the CARES Act, the Company’s AMT credits were recoverable in fiscal years 2021 through 2023.

The CARES Act also permits net operating loss (NOL) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021.

In addition, NOLs incurred in fiscal years 2019, 2020, and 2021 may be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

The Company is currently evaluating the impact of the CARES Act, but at present does not expect the NOL provisions of the CARES Act to result in a material cash benefit.

Stockholders’ Equity

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Balance at September 30, 2019 33,687,115 $ 34 $ 242,686 $ ( 7,973 ) $ ( 118,572 ) $ 116,175

Cumulative adjustment related to the adoption of ASC 606 — — — — 730 730

Net loss — — — — ( 5,196 ) ( 5,196 )

Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units 283,164 — 2 — — 2

Taxes paid associated with net settlement of stock compensation awards ( 67,688 ) — ( 498 ) — — ( 498 )

Forfeitures of restricted stock awards ( 15,000 ) — — — — —

Stock compensation expense — — 1,121 — — 1,121

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Balance at December 31, 2019 33,887,591 $ 34 $ 243,311 $ ( 7,140 ) $ ( 123,768 ) $ 112,437

Net loss — — — — ( 4,362 ) ( 4,362 )

Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units 197,642 — 116 — — 116

Stock compensation expense — — 2,011 — — 2,011

Forfeitures of restricted stock awards ( 33,163 ) — — — — —

Foreign currency translation and other — — — 198 3 201

Balance at March 31, 2019 33,347,657 $ 33 $ 239,806 $ ( 6,678 ) $ ( 108,696 ) $ 124,465

Net loss — — — — ( 4,649 ) ( 4,649 )

Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units 150,421 — 5 — — 5

Stock compensation expense — — 1,550 — — 1,550

Foreign currency translation and other — — — ( 255 ) ( 3 ) ( 258 )

Balance at June 30, 2019 33,498,078 $ 33 $ 241,361 $ ( 6,933 ) $ ( 113,348 ) $ 121,113

Stock Compensation Incentive Plans

During the quarter ended March 31, 2020, the Company's shareholders approved an amendment and restatement to its Second Amended and Restated 2006 Omnibus Long-Term Incentive Plan (the Third Amended and Restated 2006 Omnibus Long-Term Incentive Plan) to increase the number of shares of common stock reserved for issuance from 16,300,000 to 19,100,000 .

Stock Compensation Expense

Stock-based compensation expense was $ 3.8 million for the nine months ended June 30, 2020, which included $ 3.9 million of expense related to equity-classified stock options and RSUs & RSAs (restricted stock units and awards) and a $ 0.1 million benefit related to liability-classified SARs (cash-settled stock appreciation rights).

Liquidity Services, Inc.

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Notes to the Unaudited Consolidated Financial Statements - (Continued)

Stock Compensation Incentive Plans

The Company has several incentive plans under which stock options, restricted stock units (RSUs), restricted stock awards (RSAs), and cash-settled stock appreciation rights (SARs) have been issued, including the Third Amended and Restated 2006 Omnibus Long-Term Incentive Plan, as amended, and a plan and private placement issuances related to the Company’s acquisition of Machinio.

As of December 31, 2020, the Company has reserved at total of 19,100,000 shares of its common stock for exercises of stock options, vesting of RSUs, and grants of RSAs under these plans.

Vesting of RSUs and grants of RSAs count as 1.5 x shares against the plan reserves.

As of December 31, 2020, 2,037,876 shares of common stock remained available for use.

Stock Compensation Expense

Stock-based compensation expense was $ 2.2 million for the three months ended December 31, 2020, which included $ 1.8 million of expense related to equity-classified stock options and RSUs & RSAs (restricted stock units and awards) and a $ 0.4 million benefit related to liability-classified SARs (cash-settled stock appreciation rights).

Stock Options and RSUs & RSAs

The following table presents stock option and RSUs & RSAs grant activity:

Nine Months Ended

June 30, 2020

Three Months Ended

December 31, 2020

Stock Options granted:

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Vesting is measured the first day of each fiscal quarter over the four-year terms of the awards, starting with the first fiscal quarter after the first anniversary of the grant date, based upon the trailing 20-days average of the Company’s share price.

The range of assumptions used to determine the fair value of stock options containing only service conditions using the Black-Sc holes option-pricing model during the nine months ended June 30, 2020 include a dividend yield of 0.0 %, expected volatility rates of 46.5 % to 51.0 %, risk-free interest rates of 0.5 % to 1.5 %, and expected terms of 4.6 to 7.4 years.

The range of assumptions used to determine the fair value of stock options and RSUs & RSAs containing market conditions using Monte Carlo simulations during the nine months ended June 30, 2020 include a dividend yield of 0.0 %, expected volatility rates of 46.7 % to 51.2 %, risk-free interest rates of 1.5 % to 1.7 %, and expected holding period (% of remaining term for stock options only) of 30.7 % to 100 %.

During the six months ended June 30, 2020, the Company did no t issue any SARs, 225,267 SARs were exercised requiring the Company to make cash payments of $ 0.6 million, and 40,355 SARs were canceled.

As of June 30, 2020 , 167,960 SARs were outstanding.

Share Repurchase Program

The Company did no t repurchase shares during the nine months ended June 30, 2020 or 2019.

As of June 30, 2020, the Company has $ 10.1 million of remaining authorization to repurchase shares under its share repurchase program.

The range of assumptions used to determine the fair value of stock options containing only service conditions using the Black-Sc holes option-pricing model during the three months ended December 31, 2020 include a dividend yield of 0.0 %, expected volatility rates of 51.0 % to 51.7 %, risk-free interest rates of 0.36 % to 0.42 %, and expected terms of 4.6 to 5.0 years.

The range of assumptions used to determine the fair value of stock options and RSUs & RSAs containing market conditions using Monte Carlo simulations during the three months ended December 31, 2020 include a dividend yield of 0.0 %, expected volatility rates of 51.6 % to 54.6 %, risk-free interest rates of 0.3 % to 0.9 %, and expected holding period (% of remaining term for stock options only) of 31.7 % to 100 %.

Liquidity Services, Inc.

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Notes to the Unaudited Consolidated Financial Statements - (Continued)

During the three months ended December 31, 2020, the Company did no t issue any SARs, 28,379 SARs were exercised requiring the Company to make cash payments of $ 0.2 million, and 72,681 SARs were canceled.

As of December 31, 2020 , 59,750 SARs were outstanding.

Share Repurchase Program

We are authorized to repurchase issued and outstanding shares of our common stock under a share repurchase program approved by our Board of Directors.

Share repurchases may be made through open market purchases, privately negotiated transactions or otherwise, at times and in such amounts as management deems appropriate.

The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions.

The repurchase program may be discontinued or suspended at any time and will be funded using our available cash.

The Company repurchased 309,496 shares for $ 4.1 million under this program during the three months ended December 31, 2020 .

As of December 31, 2020 , the Company may repurchase an additional $ 2.0 million of shares under this program.

Other Share Repurchases

Separate from the share repurchase program, our stock incentive plans allow for participants to exercise stock options by surrendering shares of common stock equivalent in value to the exercise price due.

During the three months ended December 31, 2020, participants surrendered 9,384 shares of common stock in the exercise of stock options.

Any shares surrendered to the Company in this manner are not available for future grant.

Fair Value Measurement

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Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use.

During the year ended September 30, 2018, and as a result of the acquisition of Machinio, the Company recorded contingent consideration which was measured at fair value (Level 3).

At September 30, 2019, the Company estimated the fair value of the contingent consideration using a Monte Carlo simulation.

The simulation estimated Machinio's adjusted EBITDA over the calendar year 2019 earn-out period using a market-based volatility factor and market interest rates resulting in an average EBITDA.

A present value factor was applied based on the expected settlement date of the contingent consideration.

At June 30, 2020, the calendar year 2019 earn-out period was complete and the liability has been paid in full.

The changes in the earn-out liability measured at fair value using Level 3 inputs to determine fair value for the nine months ended June 30, 2020 are as follows:

(in thousands) Contingent Consideration

Balance at September 30, 2019

Change in fair value 200

Settlement ( 5,000 )

Balance at June 30, 2020

The increase in the fair value of the earn-out liability is due to Machinio's full attainment of its actual adjusted EBITDA target for the calendar year 2019 earn-out period.

The expense for the change in fair value was included in Other operating expenses in the Consolidated Statements of Operations.

The earn-out liability was paid in full during the three months ended March 31, 2020.

The Company had short-term investments of $ 30.0 million at September 30, 2019 in certificates of deposit with maturities of six months or less, and interest rates between 1.97 % and 2.50 % .

The Company has $ 30.0 million of money market funds considered cash equivalents at June 30, 2020.

These assets were measured at fair value at June 30, 2020 and September 30, 2019 and were cl assified as Level 1 assets within the fair value hierarchy.

The Company’s financial assets and liabilities not measured at fair value are cash and cash equivalents (which includes cash and commercial paper with original maturities of less than 90 days), accounts receivable, a promissory note and accounts payable.

The Company believes the carrying values of these instruments approximate fair value.

At June 30, 2020 and September 30, 2019, the Company did not have any assets or liabilities measured at fair value on a non-recurring basis.

The Company had $ 30.0 million of money market funds considered cash equivalents at December 31, 2020 and September 30, 2020 .

These assets were measured at fair value at December 31, 2020 and September 30, 2020 and were cl assified as Level 1 assets within the fair value hierarchy.

The Company’s financial assets and liabilities not measured at fair value are cash, accounts receivable, a promissory note, and accounts payable.

The Company believes the carrying values of these assets and liabilities approximate fair value.

As of December 31, 2020 and September 30, 2020, the Company did no t have any assets or liabilities measured at fair value on a non-recurring basis.

Defined Benefit Pension Plan

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Notes to the Unaudited Consolidated Financial Statements - (Continued)

The net periodic benefit, other than service costs, is recognized within Interest other income, net in the Consolidated Statements of Operations, and for the three and nine months ended June 30, 2020 and 2019 included the following components:

Three Months Ended June 30, Nine Months Ended June 30,

The net periodic (benefit) is recognized within Interest and other income, net in the Consolidated Statements of Operations, and for the three months ended December 31, 2020 and 2019 included the following components:

Three Months Ended December 31,

(in thousands) 2020 2019

Service cost $ — $ — $ — $ —

Interest cost 107 109

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Total net periodic (benefit) $ ( 82 ) $ ( 86 )

Business Realignment Expenses

Business realignment expenses are associated with management changes, exiting certain businesses, or other cost saving actions and are recorded as a component of Other operating expenses on the Consolidated Statements of Operations.

For the three and nine ended June 30, 2020, business realignment expenses were incurred related to the elimination of certain positions in response to the COVID-19 pandemic.

For the year ended September 30, 2019, business realignment expenses were incurred related to:

management changes associated with a strategic reorganization of the Company's go-to-market strategy for self-directed and fully-managed market place services, the conclusion of the Scrap Contract, and other cost saving actions.

Business realignment expenses were as follows for the periods presented:

Three Months Ended June 30, Nine Months Ended June 30,

(in thousands)

2020 2019 2020 2019

Employee severance and benefit costs:

GovDeals $ 25 $ — $ 25 $ —

RSCG 64 — 64 —

CAG 67 248 67 248

Corporate & Other 172 1,125 172 1,295

Total employee severance and benefit costs $ 328 $ 1,373 $ 328 $ 1,543

Occupancy and other costs:

Corporate & Other — — — 134

Total occupancy and other costs — — — 185

Total business realignment expenses $ 328 $ 1,373 $ 328 $ 1,728

Liquidity Services, Inc.

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Notes to the Unaudited Consolidated Financial Statements - (Continued)

The table below sets forth the significant components and activity in the liability for business realignment initiatives, on a segment and consolidated basis:

(in thousands) Liability Balance at September 30, 2018 Business

Business Realignment Expenses

Business realignment expenses are associated with management changes, exiting certain businesses, or other cost saving actions, and include employee severance and benefit costs associated with terminations, occupancy costs associated the ceased use of facilities, and other related costs, such as impairments.

Business realignment expenses are recorded as a component of Other operating expenses on the Consolidated Statements of Operations.

For the year ended September 30, 2020, business realignment expenses were incurred related to the elimination of certain positions in response to the COVID-19 pandemic.

The table below sets forth the significant components and activity in the liability for business realignment initiatives during the year ended September 30, 2020 and for the three months ended December 31, 2020, on a segment and consolidated basis:

(in thousands) Liability Balance at September 30, 2019 Adoption of ASC 842 Business

Expenses Cash

Payments Liability Balance at September 30, 2019 Adoption of ASC 842 Business

Payments Liability Balance at September 30, 2020 Business

Expenses Cash

Payments Liability Balance at June 30, 2020

Payments Liability Balance at December 31, 2020

Employee severance and benefit costs:

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Total business realignment $ 821 $ ( 169 ) $ 405 $ ( 980 ) $ 77 $ 5 $ ( 82 ) $ —

Legal Proceedings and Other Contingencies

The Company reserves for contingent liabilities based on ASC 450, Contingencies , when it determines that a liability is probable and reasonably estimable.

From time to time, the Company may become involved in litigation relating to claims arising in the ordinary course of the business.

There are no claims or actions pending or threatened against the Company that, if adversely determined, would in management's judgment have a material adverse effect on the Company.

During the three months ended December 31, 2019, the Company paid its $ 0.6 million liability resulting from a sales tax audit performed by the State of California.

Liquidity Services, Inc.

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Notes to the Unaudited Consolidated Financial Statements - (Continued)

Legal Proceedings and Other Contingencies

The Company reserves for contingent liabilities based on ASC 450, Contingencies , when it determines that a liability is probable and reasonably estimable.

From time to time, the Company may become involved in litigation relating to claims arising in the ordinary course of the business.

On December 22, 2020, the Company’s former Vice President, Human Resources filed a claim with the Equal Employment Opportunity Commission for wrongful termination on the basis of gender, race, and age.

Separately, he has alleged wage and hour violations under Maryland law for failure to pay his fiscal year 2020 performance bonus.

The Company believes the allegations are without merit and cannot estimate a range of potential liability, if any, at this time.

The Company’s employment practices liability insurance carrier, CNA, has accepted tender of these claims.

Unless otherwise noted, there are no claims or actions pending or threatened against the Company that, if adversely determined, would in the Company's management's judgment have a material adverse effect on the Company.

Segment Information

The Company provides results in four reportable operating segments:

GovDeals, RSCG, CAG and Machinio.

The Company provides operating results in four reportable segments:

GovDeals, Retail Supply Chain Group (RSCG), Capital Asset Group (CAG), and Machinio.

Descriptions of our reportable segments are as follows:

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GovDeals also offers a suite of services to sellers that includes asset sales and marketing.

Through the end of fiscal 2019, GovDeals provided self-directed service solutions to commercial businesses as part of the Auction Deals marketplace.

• The RSCG reportable segment consists of marketplaces that enable corporations located in the United States and Canada to sell surplus and salvage consumer goods and retail capital assets.

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This segment includes the Company's Liquidation.com, Liquidation.com DIRECT, and Secondipity marketplaces.

• The CAG reportable segment provides full-service solutions to sellers and it consists of marketplaces that enable commercial businesses to sell surplus, salvage, and scrap assets.

• The CAG reportable segment provides full-service solutions to sellers and it consists of marketplaces that enable commercial businesses to sell surplus and idle assets.

CAG also offers a suite of services that includes surplus management, asset valuation, asset sales and marketing.

Commercial sellers are located in the United States, Europe, Australia and Asia.

This segment includes the Company's Network International and GoIndustry DoveBid marketplaces and, beginning in fiscal 2020, self-directed service solutions for commercial businesses within a unified marketplace previously referred to as Auction Deals.

Prior to the conclusion of the Scrap Contract (see Note 2), CAG sold scrap assets from the DoD on its Government Liquidation marketplace.

This segment includes the Company's Network International and GoIndustry DoveBid marketplaces and self-directed service solutions for commercial businesses on the AllSurplus marketplace.

• The Machinio reportable segment operates a global online platform for listing used equipment for sale in the construction, machine tool, transportation, printing and agriculture sectors.

We also report results of Corporate & Other, which for the nine months ended June 30, 2019 includes a previously existing operating segment that did not meet the quantitative thresholds to be a reportable segment, IronDirect.

The Company exited the IronDirect business in January 2019.

Decisions concerning the allocation of the Company’s resources are made by the Company’s Chief Operating Decision Maker (CODM), which is the Company's Chief Executive Officer.

We also report results of Corporate & Other, including elimination adjustments.

Decisions concerning the allocation of the Company’s resources are made by the Company’s Chief Operating Decision Maker (CODM), which is the Company's Chief Executive Officer, with oversight by the Board of Directors.

The Company reports segment information based on the internal performance measures used by the CODM to assess the performance of each operating segment in a given period.

In connection with that assessment, the CODM uses segment gross profit to evaluate the performance of each segment.

Gross profit is calculated as total revenue less cost of goods sold and seller distributions.

Segment gross profit is calculated as total revenue less cost of goods sold (excludes depreciation and amortization).

Liquidity Services, Inc.

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The following table sets forth certain financial information for the Company's reportable segments:

Three Months Ended June 30, Nine Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2020 2019

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Gross Profit $ 1,991 $ 1,763

Corporate & Other:

Corporate & Other, including elimination adjustments:

Revenue $ — $ —

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The following table presents a reconciliation of gross profit used in the reportable segments to the Company's consolidated results:

Three Months Ended June 30, Nine Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2020 2019

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Income (loss) before provision for income taxes $ 4,811 $ ( 4,738 )

The percent of our revenues that came from transactions conducted outside of the United States for the three months ended June 30, 2020 and 2019 was 11.2 % and 13.6 %, respectively and the percent of our revenues that came from transactions conducted outside of the United States for the nine months ended June 30, 2020 and 2019 was 12.5 % and 14.9 %, respectively.

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

The percent of our revenues that came from transactions conducted outside of the United States for the three months ended December 31, 2020 and 2019 was 9.6 % and 13.9 %, respectively.

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