What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-04 compared with 2021-11-09 · 58 added, 128 removed, 154 unchanged (55% of the section changed)

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Our solutions are used today to enable frictionless commerce, to ensure safety, and to reduce fraud and the concomitant expense borne by society .

While our platform powers many diverse solutions for our customers, we presently market our solutions primarily through two brands, idiCORE , our flagship product, and FOREWARN ® .

While our platform powers many diverse solutions for our customers, we presently market our solutions primarily through two brands, IDI and FOREWARN ® .

IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to the risk management industry in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery.

idiCORE is IDI's flagship product.

idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges including due diligence, risk mitigation, identity authentication and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, collections, law firms, retail, telecommunication companies, corporate security and investigative firms.

FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk.

As of September 30, 2021 and 2020, idiCORE had 6,314 and 5,758 billable customers and FOREWARN had 74,377 and 44,927 users, respectively.

The Company defines a billable customer of idiCORE as a single entity that generated revenue during the last three months of the period.

As of March 31, 2022 and 2021, IDI had 6,592 and 5,902 billable customers and FOREWARN had 91,490 and 58,831 users, respectively.

The Company defines a billable customer of IDI as a single entity that generated revenue during the last three months of the period.

Billable customers are typically corporate organizations.

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Pricing contracts are generally annual contracts or longer, with auto renewal.

Revenue from pricing contracts represented 80% of total revenue for the three and nine months ended September 30, 2021, as compared to 68% and 71% for the three and nine months ended September 30, 2020, respectively .

For the three months ended March 31, 2022 and 2021, 77% and 80% of total revenue was attributable to customers with pricing contracts, respectively, versus 23% and 20% attributable to transactional customers, respectively .

We endeavor to understand our customers’

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We continue to build out our sales organization to drive current products and to introduce new products into the marketplace.

In December 2019, a novel strain of coronavirus, known as Covid-19, was reported in Wuhan, China and has since extensively impacted the global health and economic environment.

In March 2020, the World Health Organization characterized Covid-19 as a pandemic.

We have taken numerous steps, and will continue to take further actions as appropriate, to minimize the impact of the Covid-19 pandemic on our business, results of operations and financial performance.

In accordance with best practices and guidance from the Centers for Disease Control and Prevention, we have implemented certain protective safeguards to protect the well-being of our employees, our customers, and the communities in which we operate.

We will continue to assess the need and timing of these protective measures.

Starting in the second quarter of 2020, we implemented cost containment strategies across all areas of the organization, including continued curtailment of Company travel and partnering with suppliers, landlords and vendors for price concessions and payment deferrals during this interim period.

As a result of preventative and protective actions taken by federal, state and local governments, including the implementation of stay-at-home orders and social distancing policies that resulted in significantly reduced commercial activity, and certain temporary government-imposed moratoria on collection customers’

activities, we experienced reduced transaction volume in the second and third quarters of 2020.

Transaction volume returned to pre-Covid levels by the end of the third quarter of 2020, except for collection customer volume.

Collection customer transaction volume returned to pre-Covid levels during the second quarter of 2021, with the exception of our idiVERIFIED service, which is an ancillary collections market offering that is purely transactional and of a lower margin profile.

idiVERIFIED service revenue was down $0.8 million for the three months ended September 30, 2021, compared to the three months ended March 31, 2020.

We expect idiVERIFIED service volume to return to pre-Covid levels in the first half of 2022.

Beginning the second quarter of 2020, we took a proactive customer-centric approach working with customers who were impacted by Covid-19.

Customers who had minimum contractual commitments and requested concessions because they were temporarily unable to meet their minimum contractual commitments as a result of Covid-19 were granted reductions, or eliminations where applicable, of minimums on a month-to-month basis.

The end date of the customer’s agreement was extended by one month for each month of the temporary concession.

During the three months ended September 30, 2021 and 2020, we provided concessions to a total of 7 and 22 customers, representing a $24 thousand and $94 thousand reduction in minimum committed spend, respectively.

During the nine months ended September 30, 2021 and 2020, we provided concessions to a total of 15 and 164 customers, representing a $50 thousand and $436 thousand reduction in minimum committed spend, respectively.

We continue to work with customers who have been impacted by Covid-19 and consider potential concessions on a case-by-case basis.

We continue to take precautionary measures intended to minimize the risk of the Covid-19 pandemic to our employees, our customers, and the communities in which we operate.

These measures may result in inefficiencies, delays and additional costs to our business.

The Covid-19 pandemic and its impact on us and the economy has significantly limited our ability to forecast our future operating results, including our ability to predict revenue and expense levels, and plan for and model future operating results.

We will continue to evaluate the nature and extent of the impact of the Covid-19 pandemic to our business.

During 2020, we experienced significantly reduced commercial activity in numerous aspects of our business as a result of the preventative and protective actions taken by federal, state and local governments to combat Covid-19, including the implementation of stay-at-home orders, social distancing policies and certain temporary government-imposed moratoria on collection customers’

During 2021 and the first quarter of 2022, we saw ongoing improvement in our results of operations, with the exception of our idiVERIFIED service, which is an ancillary collections market offering that is purely transactional and of a lower margin profile.

We expect our idiVERIFIED service volume to return to pre-Covid levels in the first half of 2023.

Given the ongoing uncertainty and the unpredictable nature of the pandemic, including the emergence of new variants and the development, availability, distribution and effectiveness of vaccines, the full impact of the Covid-19 pandemic on our ongoing business, results of operations and overall financial performance cannot be reasonably estimated at this time.

To further support our liquidity, beginning April 1, 2020, we elected, under Section 2302 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), to defer payment of the employer portion of Social Security payroll tax.

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Employers must pay 50% of the deferred amount by December 31, 2021, and the remainder by December 31, 2022.

On May 5, 2020, we received funding under a promissory note dated May 5, 2020 evidencing an unsecured non-recourse loan in the principal amount of $2.2 million under the CARES Act (the “Loan”), which was fully forgiven by Legacy Bank of Florida (the “Lender”) and the U.S.

Small Business Administration in June 2021, resulting in a gain on extinguishment of debt of $2.2 million during the nine months ended September 30, 2021.

We paid 50% of the deferred amount in December 2021.

On May 5, 2020, we received funding under a promissory note dated May 5, 2020 evidencing an unsecured non-recourse loan in the principal amount of $2.2 million under the CARES Act, which was fully forgiven by Legacy Bank of Florida and the U.S.

Small Business Administration in June 2021, resulting in a gain on extinguishment of debt of $2.2 million during the year ended December 31, 2021.

We will continue to assess the CARES Act and other applicable government legislation aimed at assisting businesses during the Covid-19 pandemic

Given the dynamic nature of this health emergency, the full impact of the Covid-19 pandemic on our ongoing business, results of operations and overall financial performance cannot be reasonably estimated at this time.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

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in “Notes to Condensed Consolidated Financial Statements.”

Third Quarter Financial Results

For the three months ended September 30, 2021 as compared to the three months ended September 30, 2020:

First Quarter Financial Results

For the three months ended March 31, 2022 as compared to the three months ended March 31, 2021:

Total revenue increased 25% to $12.7 million.

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Services revenue increased 27% to $0.5 million.

Net income was $1.3 million compared to a loss of $0.9 million.

Adjusted EBITDA increased 73% to $3.6 million.

Gross profit increased 29% to $8.1 million.

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Adjusted gross margin increased to 75% from 73%.

Generated $3.5 million in cash from operating activities in the third quarter.

Cash and cash equivalents were $13.4 million as of September 30, 2021.

Third Quarter and Recent Business Highlights

Achieved first quarter ever of GAAP profitability without a one-time gain, generating $1.3 million of net income, or $0.09 diluted earnings per share.

Launched our “Innovations in Identity”

Advisory Board, comprised of industry luminaries and accomplished executives to provide strategic guidance in support of our expansion in current and new markets.

Added over 170 new customers to idiCORE during the third quarter, ending the quarter with 6,314 customers.

Added over 6,700 users to FOREWARN ® during the third quarter, ending the quarter with 74,377 users.

Net income was $0.1 million compared to a loss of $0.6 million.

Adjusted EBITDA increased 12% to $3.2 million.

Cash from operating activities increased 97% to $2.4 million.

Cash and cash equivalents were $34.8 million as of March 31, 2022.

First Quarter and Recent Business Highlights

Added 27 team members, including 18 members to our technology team, expanding our capabilities, depth and efficiency to drive product suite expansion.

Added 44 customers to IDI during the first quarter, ending the quarter with 6,592 customers.

Added 9,071 users to FOREWARN ® during the first quarter, ending the quarter with 91,490 users.

Over 200 REALTOR ® Associations throughout the U.S.

are now contracted to use FOREWARN.

Continued addition of thought leadership, including key strategic hires to lead expansion within the public sector and financial services.

Released idiCORE Mobile, an app-based solution providing customers with the power of IDI’s next-generation data fusion platform for investigative, due-diligence, and fraud prevention needs, all in the palm of their hands.

Platform revenue consists of both contractual and transactional revenue generated from our technology platform, CORE.

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Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit and adjusted gross margin.

Adjusted EBITDA is a financial measure equal to net income (loss), the most directly comparable financial measure based on GAAP, excluding interest (income) expense, net, depreciation and amortization, share-based compensation expense, gain on extinguishment of debt, litigation costs, and write-off of long-lived assets and others, as noted in the tables below.

Adjusted EBITDA is a financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, excluding interest (income) expense, net, depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others, as noted in the tables below.

We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue.

We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Interest (income) expense, net

Income tax expense

Depreciation and amortization

Share-based compensation expense

Gain on extinguishment of debt

Litigation costs

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Adjusted EBITDA margin

The following is a reconciliation of gross profit, the most directly comparable GAAP financial measure, to adjusted gross profit:

Three Months Ended September 30,

Nine Months Ended September 30,

The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit:

Three Months Ended March 31,

(In thousands)

Cost of revenue (exclusive of depreciation and

amortization)

Cost of revenue (exclusive of depreciation and amortization)

Depreciation and amortization of intangible assets

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Adjusted gross margin is calculated as adjusted gross profit as a percentage of revenue.

Adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit and adjusted gross margin are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with GAAP.

The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit and adjusted gross margin may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements.

Results of Operations

Three months ended September 30, 2021 compared to three months ended September 30, 2020

Revenue increased $2.4 million or 26% to $11.7 million for the three months ended September 30, 2021 from $9.3 million for the three months ended September 30, 2020.

Base revenue from existing customers increased $3.4 million or 58%, and revenue from new customers increased $0.2 million or 21%, which was partially offset by a decrease in growth revenue from existing customers of $1.1 million or 42%.

Our idiCORE billable customer base grew from 5,758 customers as of September 30, 2020 to 6,314 customers as of September 30, 2021, and our FOREWARN user base grew from 44,927 users to 74,377 users during that same period.

Three months ended March 31, 2022 compared to three months ended March 31, 2021

Revenue increased $2.5 million or 25% to $12.7 million for the three months ended March 31, 2022 from $10.2 million for the three months ended March 31, 2021.

Base revenue from existing customers increased $2.4 million or 32%, growth revenue from existing customers increased $0.1 million or 5%, and revenue from new customers increased $0.05 million or 5%.

Our IDI billable customer base grew from 5,902 customers as of March 31, 2021 to 6,592 customers as of March 31, 2022, and our FOREWARN user base grew from 58,831 users to 91,490 users during that same period.

Revenue from new customers represents the total monthly revenue generated from new customers in a given period.

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Cost of revenue (exclusive of depreciation and amortization) .

Cost of revenue increased $0.1 million or 3% to $2.8 million for the three months ended September 30, 2021 from $2.7 million for the three months ended September 30, 2020.

Our cost of revenue primarily includes data acquisition costs.

Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements.

We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for approximately 49% of our total data acquisition costs for the three months ended September 30, 2021 compared to approximately 48% for the three months ended September 30, 2020.

Other cost of revenue items include expenses related to third-party infrastructure fees.

As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 24% for the three months ended September 30, 2021 from 29% for the three months ended September 30, 2020.

We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases.

Historically, at scale, the industry business model’s cost of revenue will trend between 15% and 30% as a percentage of revenue.

Sales and marketing expenses .

Sales and marketing expenses remained consistent at $2.2 million for the three months ended September 30, 2021 and 2020.

Sales and marketing expenses consist of salaries and benefits, advertising and marketing, travel expenses, and share-based compensation expense, incurred by our sales team, and provision for bad debts.

General and administrative expenses .

General and administrative expenses remained consistent at $4.1 million for the three months ended September 30, 2021 and 2020.

For the three months ended September 30, 2021 and 2020, our general and administrative expenses consisted primarily of employee salaries and benefits of $2.0 million and $1.2 million, share-based compensation expense of $0.9 million and $1.7 million, and professional fees of $0.7 million and $0.8 million, respectively.

Depreciation and amortization .

Depreciation and amortization expenses increased $0.2 million or 20% to $1.3 million for the three months ended September 30, 2021 from $1.1 million for the three months ended September 30, 2020.

The increase in depreciation and amortization for the three months ended September 30, 2021 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after September 30, 2020.

Income (loss) before income taxes .

Income before income taxes was $1.3 million for the three months ended September 30, 2021 compared to a loss of $0.9 million for the three months ended September 30, 2020.

Income taxes .

Income tax expense of $0 was recognized for the three months ended September 30, 2021 and 2020.

A full valuation allowance on the deferred tax assets was recognized as of September 30, 2021 and 2020.

See Note 6, “Income Taxes,”

included in “Notes to Condensed Consolidated Financial Statements,”

Net income (loss) .

Net income was $1.3 million for the three months ended September 30, 2021 compared to a loss of $0.9 million for the three months ended September 30, 2020, as a result of the foregoing.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020

Revenue increased $7.2 million or 28% to $32.8 million for the nine months ended September 30, 2021 from $25.6 million for the nine months ended September 30, 2020.

This increase was driven by strong growth in usage from existing customers, with base revenue from existing customers increasing $7.4 million or 42%.

This growth was partially offset by a decrease in revenue from new customers of $0.3 million or 9%.

As a result of certain Covid-19 related government mandated collections moratoria remaining in place during the period, our idiVERIFIED service, which is an ancillary collections market offering that is purely transactional and of a lower margin profile, was down $0.6 million for the nine months ended September 30, 2021.

We expect our idiVERIFIED service volume to return to pre-Covid levels in the first half of 2022.

Revenue from new customers represents the total monthly revenue generated from new customers in a given period.

A customer is defined as a new customer during the first six months of revenue generation.

Base revenue from existing customers represents the total monthly revenue generated from existing customers in a given period that does not exceed the customers' trailing six-month average revenue.

A customer is defined as an existing customer six months after their initial month of revenue.

Cost of revenue (exclusive of depreciation and amortization) .

Cost of revenue decreased $0.3 million or 4% to $8.3 million for the nine months ended September 30, 2021 from $8.6 million for the nine months ended September 30, 2020.

Cost of revenue increased $0.4 million or 15% to $3.2 million for the three months ended March 31, 2022 from $2.8 million for the three months ended March 31, 2021.

Our cost of revenue primarily includes data acquisition costs.

Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements.

The decrease in cost of revenue was primarily attributable to the decrease in transactional based data acquisition costs associated with the reduction in our idiVERIFIED services revenue.

We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for approximately 49% of our total data acquisition costs for the nine months ended September 30, 2021 compared to approximately 45% for the nine months ended September 30, 2020.

We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for approximately 47% of our total data acquisition costs for the three months ended March 31, 2022 compared to approximately 45% for the three months ended March 31, 2021.

Other cost of revenue items include expenses related to third-party infrastructure fees.

As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 25% for the nine months ended September 30, 2021 from 33% for the nine months ended September 30, 2020.

As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 25% for the three months ended March 31, 2022 from 27% for the three months ended March 31, 2021.

We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases.

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Sales and marketing expenses .

Sales and marketing expenses increased $0.6 million or 10% to $6.7 million for the nine months ended September 30, 2021 from $6.1 million for the nine months ended September 30, 2020.

Sales and marketing expenses increased $0.2 million or 8% to $2.4 million for the three months ended March 31, 2022 from $2.2 million for the three months ended March 31, 2021.

The increase during the nine months ended September 30, 2021 was primarily attributable to an aggregate of $0.8 million increase in salaries and benefits and sales commissions from increased revenue, which was partially offset by the decrease in provision for bad debts of $0.3 million.

The increase during the three months ended March 31, 2022 was primarily attributable to an increase of $0.2 million in salaries and benefits, and sales commissions resulting from increased revenue.

General and administrative expenses .

General and administrative expenses increased $0.8 million or 6% to $13.6 million for the nine months ended September 30, 2021 from $12.8 million for the nine months ended September 30, 2020.

For the nine months ended September 30, 2021 and 2020, our general and administrative expenses consisted primarily of employee salaries and benefits of $5.0 million and $3.4 million, share-based compensation expense of $4.8 million and $6.0 million, and professional fees of $2.2 million and $1.9 million, respectively.

General and administrative expenses increased $0.8 million or 18% to $5.4 million for the three months ended March 31, 2022 from $4.6 million for the three months ended March 31, 2021.

For the three months ended March 31, 2022 and 2021, our general and administrative expenses consisted primarily of employee salaries and benefits of $2.5 million and $1.5 million, share-based compensation expense of $1.3 million and $1.9 million, and professional fees of $1.0 million and $0.7 million, respectively.

Depreciation and amortization .

Depreciation and amortization expenses increased $0.9 million or 30% to $3.9 million for the nine months ended September 30, 2021 from $3.0 million for the nine months ended September 30, 2020.

The increase in depreciation and amortization for the nine months ended September 30, 2021 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after September 30, 2020.

Gain on extinguishment of debt .

On May 5, 2020, we received the Loan in the principal amount of $2.2 million under the CARES Act.

On June 16, 2021, we received a notice from the Lender that the full principal amount of the Loan and its accrued interest had been fully forgiven, resulting in a gain on extinguishment of debt of $2.2 million during the nine months ended September 30, 2021.

Depreciation and amortization expenses increased $0.2 million or 22% to $1.5 million for the three months ended March 31, 2022 from $1.3 million for the three months ended March 31, 2021.

The increase in depreciation and amortization for the three months ended March 31, 2022 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after March 31, 2021.

Income (loss) before income taxes .

Income before income taxes was $2.4 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the Loan, for the nine months ended September 30, 2021 compared to a loss of $4.9 million for the nine months ended September 30, 2020.

The significant improvement in income before income taxes (exclusive of the one-time gain on extinguishment of debt) from a loss was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, and decrease in share-based compensation expense, which was partially offset by the increase in employee salaries and benefits and sales commissions of $2.4 million, and depreciation and amortization of $0.9 million.

Income before income taxes was $0.3 million for the three months ended March 31, 2022 compared to a loss of $0.6 million for the three months ended March 31, 2021.

The significant improvement in income before income taxes from a loss was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, and decrease in share-based compensation expense, which was partially offset by the increase in employee salaries and benefits and sales commissions of $1.2 million, professional fees of $0.3 million, and depreciation and amortization of $0.2 million.

Income taxes .

Income tax expense of $0 was recognized for the nine months ended September 30, 2021 and 2020.

A full valuation allowance on the deferred tax assets was recognized as of September 30, 2021 and 2020.

Income tax expense of $0.2 million and $0 was recognized for the three months ended March 31, 2022 and 2021, respectively.

A valuation allowance on the deferred tax assets was recognized as of March 31, 2022 and 2021, to reduce the deferred tax assets to the amount that is more likely than not to be realized.

See Note 6, “Income Taxes,”

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Net income (loss) .

Net income was $2.4 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the Loan, for the nine months ended September 30, 2021 compared to a loss of $4.9 million for the nine months ended September 30, 2020, as a result of the foregoing.

Net income was $0.1 million for the three months ended March 31, 2022 compared to a net loss of $0.6 million for the three months ended March 31, 2021, as a result of the foregoing.

Effect of Inflation

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Cash flows provided by operating activities .

For the nine months ended September 30, 2021, net cash provided by operating activities was $7.0 million, primarily the result of the net income of $2.4 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and gain on extinguishment of debt) totaling $7.4 million, and the cash used as a result of changes in assets and liabilities of $2.9 million, primarily the result of the increase in accounts receivable, and the decrease in accounts payable, accrued expenses and other current liabilities, and operating lease liabilities.

For the nine months ended September 30, 2020, net cash provided by operating activities was $4.7 million, primarily the result of the net loss of $4.9 million, adjusted for certain non-cash items, as mentioned above, totaling $10.3 million, and the cash used as a result of changes in assets and liabilities of $0.6 million, primarily the result of the decrease in accrued expenses and other current liabilities, and operating lease liabilities.

For the three months ended March 31, 2022, net cash provided by operating activities was $2.4 million, primarily the result of the net income of $0.1 million, adjusted for certain non-cash items (consisting primarily of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax expense) totaling $3.3 million, and the cash used as a result of changes in assets and liabilities of $0.9 million, primarily the result of the increase in accounts receivable and prepaid expenses and other current assets, and the decrease in deferred revenue and operating lease liabilities, which was offset by the increase in accounts payable.

For the three months ended March 31, 2021, net cash provided by operating activities was $1.2 million, primarily the result of the net loss of $0.6 million, adjusted for certain non-cash items, as mentioned above, totaling $3.5 million, and the cash used as a result of changes in assets and liabilities of $1.7 million, primarily the result of the increase in accounts receivable and prepaid expenses and other current assets, and the decrease in accounts payable, accrued expenses and other current liabilities and operating lease liabilities.

Cash flows used in investing activities .

For the nine months ended September 30, 2021 and 2020, net cash used in investing activities was $3.8 million and $4.4 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Cash flows (used in) provided by financing activities .

For the nine months ended September 30, 2021, net cash used in financing activities was $2.8 million, which was related to the taxes paid for the net share settlement of vesting of restricted stock units (“RSUs”).

For the nine months ended September 30, 2020, net cash provided by financing activities was $0.3 million.

On May 5, 2020, we received the Loan in the principal amount of $2.2 million under the CARES Act.

In addition, we paid taxes of $1.8 million related to the net share settlement of vesting of RSUs during the nine months ended September 30, 2020.

As of September 30, 2021, we had material commitments under certain data licensing agreements of $34.1 million.

For the three months ended March 31, 2022 and 2021, net cash used in investing activities was $1.9 million and $1.3 million, respectively, primarily as a result of capitalized costs included in intangible assets.

As of March 31, 2022, we had material commitments under certain data licensing agreements of $31.6 million.

We anticipate funding our operations using available cash and cash flow generated from operations within the next twelve months.

We reported net income of $1.3 million and net loss of $0.9 million for the three months ended September 30, 2021 and 2020, respectively, and net income of $2.4 million and net loss of $4.9 million for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, we had a total shareholders’

We reported net income of $0.1 million and a net loss of $0.6 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, we had a total shareholders’

equity balance of $71.2 million.

As of September 30, 2021, we had cash and cash equivalents of approximately $13.4 million.

As of March 31, 2022, we had cash and cash equivalents of approximately $34.8 million.

Based on projections of growth in revenue and operating results in the next twelve months, and the available cash and cash equivalents held by us, we believe that we will have sufficient cash resources to finance our operations and expected capital expenditures for the next twelve months.

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Off-Balance Sheet Arrangements

As of September 30, 2021, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

As of March 31, 2022, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

Quantitative and Qualitati ve Disclosures About Market Risk.

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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 2. Management’s Discussion and Analysis