What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 109 added, 91 removed, 517 unchanged (28% of the section changed)

4 unchanged sentences

(Dollars in Thousands, Except Par Value)

March 31, 2021 September 30, 2020

June 30, 2021 September 30, 2020

Current assets:

28 unchanged sentences

120,000,000 shares authorized;

35,115,307 shares issued and outstanding at March 31, 2021;

35,417,715 shares issued and outstanding at June 30, 2021;

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

1 unchanged sentence

Treasury stock, at cost;

1,587,199 shares at March 31, 2021 and 547,508 shares at September 30, 2020

1,587,199 shares at June 30, 2021 and 547,508 shares at September 30, 2020

( 21,628 ) ( 3,983 )

8 unchanged sentences

(Dollars in Thousands, Except Per Share Data)

Three Months Ended March 31, Six Months Ended March 31,

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

2021 2020 2021 2020

8 unchanged sentences

Depreciation and amortization 1,705 1,567 5,246 4,716

Other operating expenses (income) 206 ( 12 ) 210 181

Other operating expenses 1,180 319 1,390 500

Total costs and expenses 61,072 47,524 168,346 159,294

13 unchanged sentences

(Dollars in Thousands)

Three Months Ended March 31, Six Months Ended March 31,

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

2021 2020 2021 2020

33 unchanged sentences

Balance at March 31, 2021 35,115,307 $ 35 $ 249,866 ( 1,587,199 ) $ ( 21,628 ) $ ( 8,763 ) $ ( 112,572 ) $ 106,938

Net income — — — — — — 8,419 8,419

Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units 318,242 — — — — — — —

Taxes paid associated with net settlement of stock compensation awards ( 15,834 ) — ( 343 ) — — — — ( 343 )

Stock compensation expense — — 1,525 — — — — 1,525

Foreign currency translation and other — — — — — 23 ( 1 ) 22

Balance at June 30, 2021 35,417,715 $ 35 $ 251,048 ( 1,587,199 ) $ ( 21,628 ) $ ( 8,740 ) $ ( 104,154 ) $ 116,561

See accompanying notes to the unaudited consolidated financial statements.

3 unchanged sentences

(Dollars In Thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

Operating activities

7 unchanged sentences

Change in fair value of earnout liability — 200

Impairment of long-lived assets 203 —

Impairment of long-lived and other assets 1,338 —

Changes in operating assets and liabilities:

10 unchanged sentences

Other liabilities ( 275 ) 522

Net cash provided by (used in) operating activities 31,315 ( 12,137 )

Net cash provided by operating activities 54,271 9,201

Investing activities

5 unchanged sentences

Maturities of short-term investments — 55,000

Net cash (used in) provided by investing activities ( 1,580 ) 19,708

Net cash provided by investing activities 900 28,939

Financing activities

42 unchanged sentences

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

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

Operating results for the three and nine months ended June 30, 2021 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 six months ended March 31, 2021, these estimates required the Company to make assumptions about the extent and duration of travel restrictions and the impact of the COVID-19 pandemic on macroeconomic conditions and, in turn, the Company's results of operations.

For the three and nine months ended June 30, 2021, these estimates required the Company to make assumptions about the extent and duration of restrictions on cross-border transactions and the impact of the COVID-19 pandemic on macroeconomic conditions and, in turn, 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.

2 unchanged sentences

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 March 31, 2021 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.

The contract asset balance was $ 0.4 million as of June 30, 2021 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.

Liquidity Services, Inc.

2 unchanged sentences

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 $ 4.2 million as of March 31, 2021 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, $ 2.4 million was earned as Fee revenue during the six months ended March 31, 2021.

The contract liability balance was $ 4.5 million as of June 30, 2021 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, $ 3.0 million was earned as Fee revenue during the nine months ended June 30, 2021.

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 March 31, 2021, the Machinio business segment had a remaining performance obligation of $ 4.2 million;

At June 30, 2021, the Machinio business segment had a remaining performance obligation of $ 4.5 million;

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

2 unchanged sentences

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

The contract cost balance w as $ 1.3 million a s of March 31, 2021 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 $ 0.2 million and $ 0.3 million during the three and six months ended March 31, 2021 and was $ 0.1 million and $ 0.2 million during the three and six months ended March 31, 2020.

The contract cost balance w as $ 1.5 million a s of June 30, 2021 and $ 0.7 million as of September 30, 2020 and is included in the line items Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheets.

Amortization expense was $ 0.2 million and $ 0.5 million during the three and nine months ended June 30, 2021 and was $ 0.1 million and $ 0.3 million during the three and nine months ended June 30, 2020.

Other Assets - Promissory Note

5 unchanged sentences

Upon execution of the Forbearance Agreement, JTC repaid $ 2.5 million in principal, plus $ 0.4 million in accrued interest.

Of the $ 12.3 million owed to t he Company, $ 7.7 million has been repaid as of March 31, 2021.

Of the $ 4.6 million in principal outstanding at March 31, 2021, $ 2.9 million was recorded in Other assets, and $ 1.7 million in Prepaid expenses and other current assets based on the scheduled repayment dates.

As of March 31, 2021, JTC had repaid $ 7.7 million of the $ 12.3 million owed to the Company and had an outstanding principal balance of $ 4.6 million.

On May 12, 2021, the Company entered into the First Amendment to the Forbearance Agreement with JTC, providing JTC with full satisfaction and discharge from its indebtedness upon receipt of a $ 3.5 million payment made on May 17, 2021.

As a result, the Company recorded a $ 1.1 million loss as component of Other operating expenses in its Consolidated Statement of Operations during the three and nine months ended June 30, 2021, representing the difference between the $ 4.6 million outstanding balance of principal and accrued interest and the $ 3.5 million payment received.

Risk Associated with Certain Concentrations

3 unchanged sentences

The funds are included in Cash and cash equivalents on the Consolidated Balance Sheets.

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.

The Company releases the funds to the seller, less the Company's commission and other fees due, 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 and cash equivalent money market funds in accounts which may at times exceed federally insured limits (FDIC and/or SIPC), and Accounts receivable.

The Company deposits its cash and acquires cash equivalent money market funds with financial institutions that the Company considers to be of high credit quality.

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

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 61.2 % and 55.3 % of consolidated Cost of goods sold for the three months ended March 31, 2021 and 2020, respectively, and 60.6 % and 51.9 % of consolidated Cost of goods sold for the six months ended March 31, 2021 and 2020, respectively.

under which the Company acquires and sells commercial merchandise.

The property purchased under these contracts with Amazon.com, Inc.

represented 63.5 % and 60.4 % of consolidated Cost of goods sold for the three months ended June 30, 2021 and 2020, respectively, and 61.7 % and 54.5 % of consolidated Cost of goods sold for the nine months ended June 30, 2021 and 2020, respectively.

These contracts are included within the RSCG segment.

1 unchanged sentence

Accounting Standards Adopted

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

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.

This accounting standard has not had a material impact on the Company's consolidated financial statements as no significant implementations of cloud computing arrangements have occurred since adoption.

Accounting Standards Not Yet Adopted

3 unchanged sentences

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, money market funds 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.

3 unchanged sentences

The ASU will become effective for the Company beginning October 1, 2021.

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

The Company does not expect the adoption of this ASU will have a material impact on its consolidated financial statements.

Earnings per Share

Basic net income per share is computed by dividing net income for the period by the weighted average number of shares outstanding during the period.

Diluted net income per share is computed by dividing net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period.

Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares outstanding during the period.

Diluted net income (loss) per share is computed by dividing net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period.

The calculation of diluted net income per share excludes all anti-dilutive common shares.

The computation of basic and diluted net income per share is as follows:

Three Months Ended March 31, Six Months Ended March 31,

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

2021 2020 2021 2020

18 unchanged sentences

The components of lease expense are:

Three Months Ended March 31, Six Months Ended March 31,

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

(in thousands) 2021 2020 2021 2020

10 unchanged sentences

To a lesser extent, the Company's equipment leases have variable costs associated with usage and subsequent changes to costs based upon an index.

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

Maturities of lease liabilities are:

March 31, 2021

June 30, 2021

(in thousands) Operating Leases Finance Leases

12 unchanged sentences

(2) The weighted average discount rate is 6.6 % for operating leases and 7.0 % for finance leases.

Additionally, the Company has approximately $ 4.8 million of future payment obligations related to executed warehouse lease agreements that have not yet commenced as of June 30, 2021.

Supplemental disclosures of cash flow information related to leases are:

Six Months Ended March 31,

Nine Months Ended June 30,

(in thousands) 2021 2020

4 unchanged sentences

adjustments to lease assets and liabilities 3,705 1,592

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

(1) Six months ended March 31, 2020 amount includes $ 12.2 million of lease liabilities recognized upon the adoption of ASC 842 on October 1, 2019.

(1) Nine months ended June 30, 2020 amount includes $ 12.2 million of lease liabilities recognized upon the adoption of ASC 842 on October 1, 2019.

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

6 unchanged sentences

Translation adjustments 184 — — 184

Balance at March 31, 2021

Balance at June 30, 2021

$ 21,734 $ 23,731 $ 14,558 $ 60,023

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.

The Company did not identify any indicators of impairment that required an interim impairment test during the three and six months ended March 31, 2021.

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 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 and six months ended March 31, 2021.

As there have been favorable developments in the factors that previously indicated an interim goodwill impairment test was necessary during the prior fiscal year ended September 30, 2020, the Company did not identify any indicators of impairment that required an interim goodwill impairment test during the three and nine months ended June 30, 2021.

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

Intangible Assets

Intangible assets consist of the following:

March 31, 2021 September 30, 2020

June 30, 2021 September 30, 2020

(dollars in thousands) Useful

9 unchanged sentences

Total intangible assets $ 8,150 $ ( 4,373 ) $ 3,777 $ 8,129 $ ( 3,371 ) $ 4,758

Future expected amortization of intangible assets at March 31, 2021, is as follows:

Future expected amortization of intangible assets at June 30, 2021, is as follows:

(in thousands) Expected Amortization Expense

2 unchanged sentences

Total $ 3,777

Intangible asset amortization expense was $ 0.3 million and $ 0.3 million for the three months ended March 31, 2021 and 2020, respectively and $ 0.7 million and $ 0.7 million for the six months ended March 31, 2021 and 2020, respectively.

Intangible asset amortization expense was $ 0.3 million and $ 0.3 million for the three months ended June 30, 2021 and 2020, respectively, and $ 1.0 million and $ 1.0 million for the nine months ended June 30, 2021 and 2020, respectively.

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

The Company has not identified indicators of impairment requiring an interim impairment test on material long-lived assets during the three and six months ended March 31, 2021.

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

The Company has not identified indicators of impairment requiring an interim impairment test on material long-lived assets during the three and nine months ended June 30, 2021.

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 six months of fiscal year 2021 and its corresponding effective tax rate is 6.7 % compared to ( 5.6 %) for the first six months of fiscal year 2020.

The change in the effective tax rate for the six months ended March 31, 2021 as compared to the same period in the prior year was primarily due to state and foreign taxes.

Tax expense in the six months ended March 31, 2021 is due to state and foreign taxes paid.

The Company recorded pre-tax income in the first nine months of fiscal year 2021 and its corresponding effective tax rate is 5.9 % compared to ( 8.4 %) for the first nine months of fiscal year 2020.

The change in the effective tax rate for the nine months ended June 30, 2021 as compared to the same period in the prior year was primarily due to state and foreign taxes.

Tax expense in the nine months ended June 30, 2021 is due to state and foreign taxes paid.

The effective tax rate differed from the U.S.

2 unchanged sentences

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 six months ended March 31, 2021.

The Company identified no new uncertain tax positions during the nine months ended June 30, 2021.

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 March 31, 2021, 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.

As of June 30, 2021, 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.

1 unchanged sentence

However, certain tax attribute carryforwards that were generated prior to fiscal year 2018 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.

3 unchanged sentences

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

Liquidity Services, Inc.

and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements - (Continued)

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.

21 unchanged sentences

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 and other — — — 424 — 424

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

Liquidity Services, Inc.

3 unchanged sentences

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 March 31, 2021, 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.

As of June 30, 2021, 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 March 31, 2021, 1,865,347 shares of common stock remained available for use.

As of June 30, 2021, 1,901,415 shares of common stock remained available for use.

Stock Compensation Expense

The table below presents the components of share-based compensation expense (in thousands):

Three Months Ended March 31, Six Months Ended March 31,

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

2021 2020 2021 2020

9 unchanged sentences

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

Six Months Ended

March 31, 2021

Nine Months Ended

June 30, 2021

Stock Options granted:

11 unchanged sentences

The stock options and RSUs & RSAs containing only service conditions will vest over a four-year service period.

The stock options and RSUs & RSAs containing performance conditions will vest upon the achievement of specified financial targets of the Company or its business units.

The stock options and RSUs & RSAs containing performance conditions will vest upon the achievement of specified financial targets of the Company or its segments.

The stock options and RSUs & RSAs containing market conditions will vest upon the achievement of specified increases in the Company’s share price.

3 unchanged sentences

Notes to the Unaudited Consolidated Financial Statements - (Continued)

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 six months ended March 31, 2021 were as follows:

Six Months Ended

March 31, 2021

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, 2021 were as follows:

Nine Months Ended

June 30, 2021

Dividend yield —

2 unchanged sentences

Expected term 4.6 - 7.6 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 six months ended March 31, 2021 were as follows:

Six Months Ended

March 31, 2021

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, 2021 were as follows:

Nine Months Ended

June 30, 2021

Dividend yield —

2 unchanged sentences

Expected holding period (% of remaining term) 31.7 % - 100.0 %

During the six months ended March 31, 2021, the Company did no t issue any SARs, 38,434 SARs were exercised requiring the Company to make cash payments of $ 0.3 million, and 73,681 SARs were canceled.

As of March 31, 2021 , 48,695 SARs were outstanding.

During the nine months ended June 30, 2021, the Company did no t issue any SARs, 43,959 SARs were exercised requiring the Company to make cash payments of $ 0.4 million, and 73,681 SARs were canceled.

As of June 30, 2021 , 43,170 SARs were outstanding.

Share Repurchase Program

5 unchanged sentences

On March 8, 2021, our Board of Directors authorized an additional $ 10 million of share repurchases of the Company's outstanding shares of common stock through March 31, 2023.

The Company repurchased 647,583 shares for $ 12.0 million and 957,079 shares for $ 16.1 million under this program during the three and six months ended March 31, 2021, respectively.

As of March 31, 2021, the Company had no remaining authorization to repurchase shares under this program.

On May 3, 2021, the Company's Board of Directors authorized the repurchase of up to $ 15 million of the Company's outstanding shares of common stock through June 30, 2023.

We repurchased 647,583 shares for $ 12.0 million and 957,079 shares for $ 16.1 million under this program during the three and six months ended March 31, 2021 , respectively.

As of March 31, 2021 , we had no remaining authorization to repurchase shares under these programs.

On May 3, 2021, the Company's Board of Directors authorized a new stock repurchase plan (the “May 3, 2021 Stock Repurchase Plan”) of up to $ 15 million of our outstanding shares of common stock through June 30, 2023.

We made no repurchases under the May 3, 2021 Stock Repurchase Plan during the three months ended June 30, 2021.

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 and six months ended March 31, 2021, participants surrendered 73,228 an d 82,612 share s of common stock in the exercise of stock options, respectively.

During the three months ended June 30, 2021, no shares of common stock were surrendered by participants in the exercise of stock options.

During the nine months ended June 30, 2021, participants surrendered 82,612 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.

9 unchanged sentences

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

The Company had $ 40.0 million of money market funds considered cash equivalents at March 31, 2021 and September 30, 2020 .

These assets were measured at fair value at March 31, 2021 and September 30, 2020 and were cl assified as Level 1 assets within the fair value hierarchy.

The Company had $ 40.0 million of money market funds considered cash equivalents at June 30, 2021 and September 30, 2020.

These assets were measured at fair value at June 30, 2021 and September 30, 2020 and were classified as Level 1 assets within the fair value hierarchy.

There were no transfers between levels during the periods presented.

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

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

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

As of March 31, 2021 and September 30, 2020, the Company did no t have any material assets or liabilities measured at fair value on a non-recurring basis.

As of June 30, 2021 and September 30, 2020, the Company did no t have any material assets or liabilities measured at fair value on a non-recurring basis.

Defined Benefit Pension Plan

2 unchanged sentences

The Scheme was closed to new members on January 1, 2002.

The net periodic (benefit) is recognized within Interest and other income, net in the Consolidated Statements of Operations, and for the three and six months ended March 31, 2021 and 2020 included the following components:

Three Months Ended March 31, Six Months Ended March 31,

The net periodic (benefit) is recognized within Interest and other income, net in the Consolidated Statements of Operations, and for the three and nine months ended June 30, 2021 and 2020 included the following components:

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

(in thousands) 2021 2020 2021 2020

3 unchanged sentences

Total net periodic (benefit) $ ( 97 ) $ ( 68 ) $ ( 277 ) $ ( 244 )

During the three months ended June 30, 2021, the Company extended early settlement offers to all members of the Scheme.

The impact of the potential pension settlement, which could be significant, has not been reflected in the financial statements for the three and nine months ended June 30, 2021 as the window for members to respond to the early settlement offer extends into the three months ended September 30, 2021.

Liquidity Services, Inc.

10 unchanged sentences

Expenses Cash

Payments Liability Balance at March 31, 2021

Payments Liability Balance at June 30, 2021

Employee severance and benefit costs:

15 unchanged sentences

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.

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

The Equal Employment Opportunity Commission subsequently assigned Plaintiff’s claim to the Montgomery County Office of Human Rights for investigation, which, in turn, dismissed Plaintiff’s claim after plaintiff filed a complaint in the United States District Court for the District of Maryland Southern Division on May 19, 2021.

The Company believes this claim is 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 this claim.

The same former executive also has alleged wage and hour violations under Maryland law for failure to pay his fiscal year 2020 performance bonus.

The parties have reached a settlement in principle of the wage and hour claims and the Company expects that the amount of such settlement will be immaterial.

Separately, Plaintiff also alleged outside of the above process wage and hour violations under Maryland law for failure to pay his fiscal year 2020 performance bonus.

The parties settled the wage and hour claims for an immaterial amount in May 2021.

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.

22 unchanged sentences

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

Three Months Ended March 31, Six Months Ended March 31,

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

(in thousands) 2021 2020 2021 2020

25 unchanged sentences

Gross profit $ 41,123 $ 25,228 $ 109,703 $ 76,761

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

Three Months Ended March 31, Six Months Ended March 31,

The following table reconciles gross profit used in the reportable segments to the Company's consolidated results:

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

(in thousands) 2021 2020 2021 2020

2 unchanged sentences

Operating expenses 31,349 24,711 89,455 85,505

Other operating expenses (income) 206 ( 12 ) 210 181

Other operating expenses 1,180 319 1,390 500

Interest and other income, net ( 254 ) ( 224 ) ( 468 ) ( 733 )

Income (loss) before provision for income taxes $ 8,848 $ 422 $ 19,326 $ ( 8,511 )

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 March 31, 2021 and 2020 was 18.4 % and 10.9 %, respectively, and the percent of our revenues that came from transactions conducted outside the United States for the six months ended March 31, 2021 and 2020 was 17.2 % and 13.1 %, respectively.

The percent of our revenues that came from transactions conducted outside of the United States for the three months ended June 30, 2021 and 2020 was 14.4 % and 11.2 %, respectively, and the percent of our revenues that came from transactions conducted outside the United States for the nine months ended June 30, 2021 and 2020 was 16.2 % and 12.5 %, 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