What changed in this filing

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Item 1. Financial Statements

2021-08-11 compared with 2021-05-11 · 157 added, 64 removed, 522 unchanged (30% of the section changed)

11 unchanged sentences

Premiums and agents' balances receivable, net

Receivable from Affiliate

Reinsurance recoverables on unpaid losses

10 unchanged sentences

Common stock, no par value ( 100,000,000 shares authorized;

9,681,728 issued and outstanding, respectively)

9,689,421 and 9,681,728 issued and outstanding, respectively)

Accumulated deficit

8 unchanged sentences

Three Months Ended

Six Months Ended

Revenue and Other Income

Gross earned premiums

4 unchanged sentences

Change in fair value of equity securities

Total revenue

Total revenue and other income

Losses and loss adjustment expenses, net

15 unchanged sentences

Three Months Ended

Six Months Ended June 30,

Net income (loss)

18 unchanged sentences

Shareholders'

(Accumulated)

Income (Loss)

Balances at December 31, 2020

Balances at March 31, 2021

Net income (loss)

Repurchase of common stock

Stock-based compensation expense

Other comprehensive income (loss)

Balances at June 30, 2021

Balances at March 31, 2020

Balances at December 31, 2019

Net income (loss)

2 unchanged sentences

Other comprehensive income (loss)

Balances at March 31, 2020

Balances at June 30, 2020

No Par, Common Stock

Comprehensive

Shareholders'

Income (Loss)

Balances at December 31, 2020

Net income (loss)

Repurchase of common stock

Stock-based compensation expense

Other comprehensive income (loss)

Balances at June 30, 2021

Balances at December 31, 2019

Net income (loss)

Repurchase of common stock

Restricted stock unit expense, net

Other comprehensive income (loss)

Balances at June 30, 2020

The accompanying notes are an integral part of the Consolidated Financial Statements.

3 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows From Operating Activities

1 unchanged sentence

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Gain on sale of agency business

Depreciation and amortization

13 unchanged sentences

Unearned premiums

Reinsurance premiums payable

Accounts payable and other liabilities

4 unchanged sentences

Proceeds from sales of investments

Proceeds from sale of agency business

Dividends from Affiliate

Purchases of property and equipment

11 unchanged sentences

Interest paid

Note receivable from sale of agency business

Payable from purchase of agency

The accompanying notes are an integral part of the Consolidated Financial Statements.

6 unchanged sentences

(the “Company” or “Conifer”), its wholly owned subsidiaries, Conifer Insurance Company ("CIC"), White Pine Insurance Company ("WPIC"), Red Cedar Insurance Company ("RCIC"), and Sycamore Insurance Agency, Inc.

("Sycamore").

CIC, WPIC, and RCIC are collectively referred to as the "Insurance Company Subsidiaries." On a stand-alone basis, Conifer Holdings, Inc.

is referred to as the "Parent Company."

is referred to as the "Parent Company." Sycamore owns a 50 % non-controlling interest in Venture Holdings, Inc.

(“Venture” or “Affiliate”).

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which differ from statutory accounting practices prescribed or permitted for insurance companies by regulatory authorities.

2 unchanged sentences

These consolidated financial statements and the notes thereto should be read in conjunction with the Company's audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC.

The results of operations for the three months ended March 31, 2021, are not necessarily indicative of the results expected for the year ended December 31, 2021.

The results of operations for the six months ended June 30, 2021, are not necessarily indicative of the results expected for the year ended December 31, 2021.

In addition, there are risks and uncertainties associated with the novel coronavirus (" COVID -19") and the impact it may have on our business, results of operations and financial condition.

36 unchanged sentences

Management does not expect the new guidance to have a material impact on the Company’s consolidated financial statements.

The cost or amortized cost, gross unrealized gain or loss, and estimated fair value of the investments in securities classified as available for sale at March 31, 2021 and December 31, 2020, were as follows (dollars in thousands):

March 31, 2021

Sale of Certain Agency Business

On June 30, 2021, Sycamore Insurance Agency sold to Venture Holdings, Inc.

the customer accounts and other related assets of some of its personal and commercial lines of business.

The customer accounts consist substantially of new and renewal rights and customer lists of the agency.

Sycamore will continue to produce various personal and commercial lines that it did not sell to Venture, which is substantially all produced for, and underwritten by, the Insurance Company Subsidiaries.

The Company recognized an $ 8.9 million gain on the sale which is reflected in Other Gains on the Consolidated Statements of Operations.

The purchase price was $ 10.0 million of which $ 1.0 million was paid in cash on June 30, 2021, and $ 9.0 million was in the form of two promissory notes (one for $ 6.0 million and one for $ 3.0 million).

Both notes require interest-only quarterly payments at a per annum rate of 7.0 %, with a five-year maturity.

There are no prepayment penalties.

The assets sold included the customer accounts of substantially all of the personal lines business and a small subset of the commercial lines business underwritten by the Insurance Company Subsidiaries, and all of the customer accounts Sycamore produced for third-party insurers.

The transaction included the transition of 21 employees from Conifer to Venture as well as necessary systems and office functions to operate the business.

Venture is not assuming any in-force business or liabilities.

The cost or amortized cost, gross unrealized gains or losses, and estimated fair value of the investments in securities classified as available for sale at June 30, 2021 and December 31, 2020, were as follows (dollars in thousands):

June 30, 2021

Gross Unrealized

21 unchanged sentences

The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position (dollars in thousands):

March 31, 2021

June 30, 2021

Less than 12 months

31 unchanged sentences

Total debt securities available for sale

The Company analyzed its investment portfolio in accordance with its other-than-temporary impairment ("OTTI") review procedures and determined the Company did not need to record a credit-related OTTI loss in net income, nor recognize a non-credit related OTTI loss in other comprehensive income for the three months ended March 31, 2021 and 2020.

The Company’s sources of net investment income and losses are as follows (dollars in thousands):

Three Months Ended

Six Months Ended June 30,

Debt securities

6 unchanged sentences

Three Months Ended

Six Months Ended June 30,

Debt securities:

7 unchanged sentences

Total net realized investment gains (losses)

Proceeds from the sales of available-for-sale debt securities were $14.2 million and $23.2 million for the three months ended March 31, 2021 and 2020, respectively.

The gross realized gains and losses from the sales of available-for-sale debt securities for the three months ended March 31, 2021, were $27,000 and $6,000, respectively.

The gross realized gains and losses from the sales of available-for-sale debt securities for the three months ended March 31, 2020, were $719,000 and $0, respectively.

As of March 31, 2021 and 2020, there were $0 and $6.5 million of payables from securities purchased, respectively.

There were $3,000 and $7,000 of receivables from securities sold as of March 31, 2021, and 2020, respectively.

Proceeds from the sales of available-for-sale debt securities were $ 20.0 million and $ 23.9 million for the six months ended June 30, 2021 and 2020, respectively.

There were no gross realized gains or losses from the sales of available-for-sale securities for the three months ended June 30, 2021.

The gross realized gains and losses from the sales of available-for-sale debt securities for the six months ended June 30, 2021, were $ 27,000 and $ 6,000 , respectively.

The gross realized gains and losses from the sales of available-for-sale debt securities for the three months ended June 30, 2020 were $ 3,000 and $ 0 ,

respectively.

The gross realized gains and losses from the sales of available-for-sale debt securities for the six months ended June 30 , 2020, were $ 722,000 and $ 0 , respectively.

As of June 30, 2021 and 2020, there were $ 249,000 and $ 125,000 of payables from securities purchased, respectively.

There were $ 11,000 and $ 17,000 of receivables from securities sold as of June 30, 2021, and 2020, respectively.

The Company carries other equity investments that do not have a readily determinable fair value at cost, less impairment or observable changes in price.

1 unchanged sentence

There were no impairments or observable changes in price recorded during 2021 related to the Company's equity securities without readily determinable fair value.

These investments are included in Other Assets in the Consolidated Balance Sheets and amounted to $1.3 million and $1.2 million as of March 31, 2021 and December 31, 2020, respectively.

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at March 31, 2021.

These investments are included in Other Assets in the Consolidated Balance Sheets and amounted to $ 1.2 million as of June 30, 2021 and December 31, 2020.

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at June 30, 2021.

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands):

9 unchanged sentences

Total debt securities

At March 31, 2021 and December 31, 2020, the Insurance Company Subsidiaries had $8.8 million on deposit in trust accounts to meet the deposit requirements of various state insurance departments.

At March 31, 2021 and December 31, 2020, the Company had $67.2 million and $67.6 million, respectively, held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements.

At June 30, 2021 and December 31, 2020, the Insurance Company Subsidiaries had $ 9.7 million and $ 8.8 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments.

At June 30, 2021 and December 31, 2020, the Company had $ 65.7 million and $ 67.6 million, respectively, held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements.

There are withdrawal and other restrictions on these deposits, including the type of investments that may be held, however, the Company may generally invest in high-grade bonds and short-term investments and earn interest on the funds.

15 unchanged sentences

These capital account balances reflect the fair value of the investment funds.

The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis, classified by the valuation hierarchy as of March 31, 2021 and December 31, 2020 (dollars in thousands):

March 31, 2021

The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis, classified by the valuation hierarchy as of June 30, 2021 and December 31, 2020 (dollars in thousands):

June 30, 2021

Fair Value Measurements

44 unchanged sentences

Level 1 also includes money market funds and other interest-bearing deposits at banks, which are reported as short-term investments.

The fair value measurements that were based on Level 1 inputs comprise 17.5% of the fair value of the total investment portfolio as of March 31, 2021.

The fair value measurements that were based on Level 1 inputs comprise 16.9 % of the fair value of the total investment portfolio as of June 30, 2021.

Level 2 investments include debt securities, which consist of U.S.

2 unchanged sentences

The third party pricing service monitors market indicators, as well as industry and economic events.

The fair value measurements that were based on Level 2 inputs comprise 82.2% of the fair value of the total investment portfolio as of March 31, 2021.

The fair value measurements that were based on Level 2 inputs comprise 82.8 % of the fair value of the total investment portfolio as of June 30, 2021.

The Company obtains pricing for each security from independent pricing services, investment managers or consultants to assist in determining fair value for its Level 2 investments.

4 unchanged sentences

The fair value of the borrowings under the senior revolving credit facility approximates its carrying amount because interest is based on a short-term, variable, market-based rate.

As of March 31, 2021 and December 31, 2020, Level 3 is entirely comprised of the Company's subordinated debt.

In determining the fair value of the subordinated debt outstanding at March 31, 2021 and December 31, 2020, the security attributes (issue date, maturity, coupon, calls, etc.) and market rates on September 24, 2018 (the date of the restated and amended agreement which was repriced at that time) were entered into a valuation model.

A lognormal trinomial interest rate

lattice was created within the model to compute the option adjusted spread (“OAS”) which is the amount, in basis points, of interest rate required to be paid under the debt agreement over the risk-free U.S .

As of June 30, 2021 and December 31, 2020, Level 3 is entirely comprised of the Company's subordinated debt.

In determining the fair value of the subordinated debt outstanding at June 30, 2021 and December 31, 2020, the security attributes (issue date, maturity, coupon, calls, etc.) and market rates on September 24, 2018 (the date of the restated and amended agreement which was repriced at that time) were entered into a valuation model.

A lognormal trinomial interest rate lattice was

created within the model to compute the option adjusted spread (“OAS”) which is the amount, in basis points, of interest rate required to be paid under the debt agreement over the risk-free U.S .

Treasury rates .

The OAS was then fed back into the model along with the March 31, 2021 and December 31, 2020 U.S .

The OAS was then fed back into the model along with the June 30, 2021 and December 31, 2020 U.S .

Treasury rates .

4 unchanged sentences

Net deferred policy acquisition costs are amortized and charged to expense in proportion to premium earned over the estimated policy term.

The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the three months ended March 31, 2021 and 2020.

The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the six months ended June 30, 2021 and 2020.

The activity in deferred policy acquisition costs, net of reinsurance transactions, is as follows (dollars in thousands):

Three Months Ended

Six Months Ended June 30,

Balance at beginning of period

17 unchanged sentences

Three months ended

Six months ended

Gross reserves - beginning of period

10 unchanged sentences

Gross reserves - end of period

The Company’s incurred losses during the three months ended March 31, 2021 include prior-year adverse reserve development of $5.8 million.

Of the $5.8 million of adverse development, $5.2 million was related to the Company’s commercial lines of business, while $612,000 was related to the Company’s personal lines of business.

Of the $5.2 million of adverse development in the Company’s commercial lines of business, $2.7 million was experienced in the Company’s hospitality lines of business, while $2.5 million was experienced in the Company’s small business lines of business.

The Company’s incurred losses during the three months ended March 31, 2020 included prior-year adverse reserve development of $3.7 million related to the Company’s commercial lines of business.

Net losses and LAE increased by $ 6.0 million, or 50.1 %, to $ 17.9 million during the second quarter of 2021, compared to $ 11.9 million for the same period in 2020.

The increase in losses was driven by adverse development that occurred during the second quarter of 2021.

The Company experienced $ 6.2 million of adverse development for the three months ended June 30, 2021.

Of the $6.2 million in adverse development, $ 1.9 million was related to 2017 and prior accident years, $ 2.4 million was related to the 2018 accident year, and $ 1.9 million was related to the 2019 and 2020 accident years.

Substantially all of the development was from the Company’s commercial lines of business.

Net losses and LAE increased by $ 11.1 million, or 42.2 %, to $ 37.3 million for the six months ended June 30, 2021, compared to $ 26.2 million for the same period in 2020.

The Company experienced $ 2.0 million of catastrophe losses, net of reinsurance recoverables, during the first quarter of 2021 from Winter Storm Uri.

The Company also experienced $ 12.0 million of adverse development for the six months ended June 30, 2021, which increased losses further.

Of the $12.0 million in adverse development, $ 11.4 million was related to commercial lines, while $ 636,000 was related to personal lines.

The adverse development was mostly attributable to the 2018 and 2017 and prior accident years.

The Company’s incurred losses during the three and six months ended June 30, 2020 included prior-year adverse reserve development of $ 3.0 million and $ 6.7 million, respectively.

These losses were related to the Company’s commercial lines of business.

In the normal course of business, the Company participates in reinsurance agreements in order to limit losses that may arise from catastrophes or other individually severe events.

15 unchanged sentences

Three Months Ended

Six months ended

Written premiums:

16 unchanged sentences

The Company may redeem the Notes, in whole or in part, at face value at any time after September 30, 2021.

The Company did not repurchase any of the Notes for the three months ended March 31, 2021.

During the first quarter of 2020, the Company repurchased 9,761 units of the Notes in the public market with a face value of $244,000.

The Notes were repurchased at a discount to face value, which resulted in a $115,000 gain on extinguishment.

This gain is reflected in the Consolidated Statement of Operations as Other gains.

The Company did no t repurchase any of the Notes for the three and six months ended June 30, 2021.

For the three and six months ended June 30, 2020, the Company repurchased in the public market 9,761 and 36,761 units of the Notes with a face value of $ 244,000 and $ 919,000 , respectively.

The Notes were repurchased at a discount to face value, which resulted in a $ 145,000 and $ 260,000 gain on extinguishment for the three and six months ended June 30, 2020.

Subordinated notes

4 unchanged sentences

The call premium escalates each quarter to ultimately $ 1.75 million on September 30, 2023, then steps up to $ 3.05 million on December 31, 2023, and increases quarterly at a 12.5 % per annum rate thereafter.

As of March 31, 2021, the carrying value of the Notes and Subordinated Notes are offset by $650,000 and $900,000 of debt issuance costs, respectively.

As of June 30, 2021, the carrying value of the Notes and Subordinated Notes are offset by $ 585,000 and $ 887,000 of debt issuance costs, respectively.

The debt issuance costs will be amortized through interest expense over the life of the loans.

The Subordinated Notes contain various restrictive financial debt covenants that relate to the Company’s minimum tangible net worth, minimum fixed-charge coverage ratios, dividend paying capacity, reinsurance retentions, and risk-based capital ratios.

At March 31, 2021, the Company was in compliance with all of its financial covenants.

At June 30, 2021, the Company was in compliance with all of its financial covenants.

Line of credit

2 unchanged sentences

The agreement includes several financial debt covenants, including a minimum tangible net worth, a minimum fixed-charge coverage ratio, and minimum statutory risk-based capital levels.

As of March 31, 2021, the Company had $5.7 million outstanding on the line of credit (including the PPP loan described below), and was in compliance with all of its financial debt covenants.

On June 19, 2020, the line of credit was renewed with a maturity of June 18, 2021.

As of June 30, 2021, the Company had $ 3.7 million outstanding on the line of credit (including the PPP loan described below), and was in compliance with all of its financial debt covenants.

On June 18, 2021, the line of credit was renewed with a maturity of December 1, 2022.

Paycheck Protection Program loan

On April 24, 2020, the Company received a $2,745,000 loan from the line of credit Lender pursuant to the Paycheck Protection Program of the CARES Act administered by the U.S.

On April 24, 2020, the Company received a $ 2.7 million loan from the line of credit Lender pursuant to the Paycheck Protection Program of the CARES Act administered by the U.S.

Small Business Administration (“SBA”).

3 unchanged sentences

The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

This loan may be subject to forgiveness under the CARES Act provisions.

The Company applied for forgiveness of the loan in 2020, at which point the principal and interest payments were deferred until the SBA remits the loan forgiveness amount to the Lender.

As of March 31, 2021, the loan remains on the Company’s balance sheet as a liability.

As of June 30, 2021, the loan remains on the Company’s balance sheet as a liability.

The Company received notice from the SBA that the loan was 100% forgiven on July 8, 2021 .

The Company will recognize the forgiveness of the loan in the Other Gains section of the Consolidated Statement of Operations in the third quarter of 2021.

Shareholders’ Equity

On December 5, 2018, the Company's Board of Directors authorized a stock repurchase program, under which the Company may repurchase up to one million shares of the Company's common stock.

The Company did not repurchase any shares of stock for the three months ended March 31, 2021 related to the stock repurchase program.

The Company repurchased 700 shares valued at approximately $2,000 related to the stock repurchase program for the three months ended March 31, 2020.

For the three months ended March 31, 2021 and 2020, the Company did not repurchased any shares of stock related to the vesting of the Company’s restricted stock units.

As of March 31, 2021 and December 31, 2020, the Company had 9,681,728 issued and outstanding shares of common stock, respectively.

The Company did no t repurchase any shares of stock for the three and six months ended June 30, 2021 related to the stock repurchase program.

For the three and six months ended June 30, 2020, the Company repurchased 1,698 and 2,398 shares of stock valued at $ 6,000 and $ 8,000 , respectively, related to the stock repurchase program.

For the three months ended June 30, 2021, and 2020, the Company repurchased 2,307 and 2,308 shares of stock valued at approximately $ 7,000 and $ 8,000 , respectively, related to the vesting of the Company’s restricted stock units.

The Company made no repurchases of stock relating to the vesting of restricted stock units during the first quarters of 2021 and 2020.

Upon the repurchase of the Company’s shares, the shares remain authorized, but not issued or outstanding.

As of June 30, 2021 and December 31, 2020, the Company had 9,689,421 and 9,681,728 issued and outstanding shares of common stock, respectively.

Holders of common stock are entitled to one vote per share and to receive dividends only when and if declared by the board of directors.

3 unchanged sentences

Three months ended

Six months ended

Balance at beginning of period

7 unchanged sentences

Three Months Ended

Six months ended

Net income (loss)

1 unchanged sentence

Earnings (loss) per common share, basic and diluted

The nonvested shares of the restricted stock units and stock options were anti-dilutive as of March 31, 2021 and 2020.

Therefore, the basic and diluted weighted average common shares are equal for the three months ended March 31, 2021 and 2020.

The non-vested shares of the restricted stock units and stock options were anti-dilutive as of June 30, 2021 and 2020.

Therefore, the basic and diluted weighted average common shares are equal for the three and six months ended June 30, 2021 and 2020 .

Stock-based Compensation

2 unchanged sentences

The options have a strike price of $ 3.81 per share and expire on June 30, 2030 .

The estimated value of these options is $290,000, which will be expensed ratably over the vesting period.

The estimated value of these options is $ 290,000 , which is being expensed ratably over the vesting period.

In 2015, 2016, and 2018, the Company issued 390,352 , 111,281 , and 70,000 , respectively, of restricted stock units (“RSUs”) to various employees to be settled in shares of common stock, which were valued at $ 4.1 million, $ 909,000 , and $ 404,000 , respectively, on the dates of grant.

The Company recorded $54,000 and $239,000 of compensation expense related to the RSUs for the three months ended March 31, 2021 and 2020, respectively.

There were 51,941 unvested RSUs as of March 31, 2021, which will generate an estimated future expense of $204,000.

The Company recorded $12,000 of compensation expense for the three months ended March 31, 2021 related to the stock options granted on June 30, 2020.

There were 265,000 unvested options as of March 31, 2021, which will generate an estimated future expense of $233,000.

The Company recorded $ 108,000 and $ 475,000 of compensation expense related to the RSUs for the six months ended June 30, 2021 and 2020, respectively.

There were 41,941 unvested RSUs as of June 30, 2021, which will generate an estimated future expense of $ 150,000 .

The Company recorded $ 25,000 of compensation expense for the six months ended June 30, 2021 related to the stock options granted on June 30, 2020.

There were 209,000 unvested options as of June 30, 2021, which will generate an estimated future expense of $ 219,000 .

Commitments and Contingencies

23 unchanged sentences

All of the Company’s insurance activities are conducted in the United States with a concentration of activity in Michigan, Florida, Texas and California.

For the three months ended March 31, 2021 and 2020 gross written premiums attributable to these four states were 53.5% and 52.6%, respectively, of the Company’s total gross written premiums.

The Agency business sells insurance products on behalf of the Company’s commercial and personal lines businesses as well as to third-party insurers.

Certain acquisition costs incurred by the commercial and personal lines businesses are reflected as commission revenue for the Agency business and are eliminated in the Eliminations category.

For the six months ended June 30, 2021 and 2020 gross written premiums attributable to these four states were 51.7 % and 50.5 %, respectively, of the Company’s total gross written premiums.

The Wholesale Agency business sells insurance products on behalf of the Company’s commercial and personal lines businesses as well as to third-party insurers.

Certain acquisition costs incurred by the commercial and personal lines businesses are reflected as commission revenue for the Wholesale Agency business and are eliminated in the Eliminations category.

In addition to the reportable operating segments, the Company maintains a Corporate category to reconcile segment results to the consolidated totals.

6 unchanged sentences

Three months ended

March 31, 2021

June 30, 2021

Commercial Lines

14 unchanged sentences

Three months ended

March 31, 2020

June 30, 2020

Gross written premiums

12 unchanged sentences

Income (loss) before equity earnings in Affiliate and income taxes

Six months ended

June 30, 2021

Gross written premiums

Net written premiums

Net earned premiums

Segment revenue

Losses and LAE, net

Policy acquisition costs

Operating expenses

Segment expenses

Segment gain (loss)

Investment income

Net realized investment gains

Change in fair value of equity securities

Interest expense

Income (loss) before equity earnings in Affiliate and income taxes

Six months ended

June 30, 2020

Gross written premiums

Net written premiums

Net earned premiums

Segment revenue

Losses and LAE, net

Policy acquisition costs

Operating expenses

Segment expenses

Segment gain (loss)

Investment income

Net realized investment gains

Change in fair value of equity securities

Interest expense

Income (loss) before equity earnings in Affiliate and income taxes

Subsequent Events

On July 8, 2021, the Company received forgiveness under the CARES Act from the SBA for the entire amount of its $ 2.7 million PPP loan.

The Company will recognize the forgiveness of the loan in the Other Gains section of the Consolidated Statement of Operations in the third quarter of 2021.

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

What changed 10-Q

Item 1. Financial Statements