What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-07 compared with 2022-08-09 · 75 added, 81 removed, 181 unchanged (46% of the section changed)

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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 June 30, 2022 and 2021, IDI had 6,817 and 6,141 billable customers and FOREWARN had 101,261 and 67,578 users, respectively.

As of September 30, 2022 and 2021, IDI had 6,873 and 6,314 billable customers and FOREWARN had 110,051 and 74,377 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.

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

For the three months ended June 30, 2022 and 2021, 80% and 81% of total revenue was attributable to customers with pricing contracts, respectively, versus 20% and 19% attributable to transactional customers, respectively.

For the six months ended June 30, 2022 and 2021, 78% and 80% of total revenue was attributable to customers with pricing contracts, respectively, versus 22% and 20% attributable to transactional customers, respectively.

For the three months ended September 30, 2022 and 2021, 68% and 80% of total revenue was attributable to customers with pricing contracts, respectively, versus 32% and 20% attributable to transactional customers, respectively.

For the nine months ended September 30, 2022 and 2021, 74% and 80% of total revenue was attributable to customers with pricing contracts, respectively, versus 26% and 20% attributable to transactional customers, respectively.

We endeavor to understand our customers’

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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 six months ended June 30, 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.

During 2021 and the nine months ended September 30, 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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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 ("CARES Act 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 three and six months ended June 30, 2021.

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

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.

Critical Accounting Policies and Estimates

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in “Notes to Condensed Consolidated Financial Statements.”

Second Quarter Financial Results

For the three months ended June 30, 2022 as compared to the three months ended June 30, 2021:

Third Quarter Financial Results

For the three months ended September 30, 2022 as compared to the three months ended September 30, 2021:

Total revenue increased 29% to $15.0 million.

Platform revenue increased 31% to $14.8 million.

Services revenue increased 6% to $0.3 million.

Services revenue decreased 29% to $0.2 million.

Gross profit increased 36% to $10.3 million.

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Adjusted gross margin increased to 80% from 76%.

Net loss was $0.2 million compared to a net income of $1.8 million (inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the Cares Act Loan).

Adjusted EBITDA decreased 6% to $2.9 million.

Cash from operating activities increased 10% to $2.5 million.

Cash and cash equivalents were $32.3 million as of June 30, 2022.s

Second Quarter and Recent Business Highlights

Added 225 customers to IDI during the second quarter, ending the quarter with 6,817 customers.

Surpassed 100,000 users on FOREWARN during the second quarter, ending the quarter with 101,261 users.

Net income increased 80% to $2.3 million, which resulted in $0.16 per basic and diluted share.

Adjusted EBITDA increased 43% to $5.2 million.

Cash from operating activities decreased 9% to $3.1 million.

Cash and cash equivalents were $31.3 million as of September 30, 2022.

Third Quarter and Recent Business Highlights

Added 56 customers to IDI during the third quarter, ending the quarter with 6,873 customers.

Added 8,790 users to FOREWARN during the third quarter, ending the quarter with 110,051 users.

Over 225 REALTOR ® Associations are now contracted to use FOREWARN.

Released idiTRACE, a premier SSN Trace solution for background screening organizations.

Continue to enhance our go-to-market capabilities with the expansion of our sales team, including key new hires focused on several strategic areas within fraud and identity where we are seeing strong traction.

To date, we have purchased a total of 50,000 shares of the Company’s common stock at an average price of $17.52 per share pursuant to the Company’s Stock Repurchase Program authorized by the board of directors on May 4, 2022.

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 (loss) income, the most directly comparable financial measure based on US GAAP, excluding interest expense (income), net, income tax expense, 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, the most directly comparable financial measure based on US GAAP, excluding interest (income) expense, net, income tax expense, 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.

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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

Net (loss) income

Interest expense (income), net

Interest (income) expense, net

Income tax expense

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Adjusted EBITDA

Net (loss) income margin

Net income margin

Adjusted EBITDA margin

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

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Results of Operations

Three months ended June 30, 2022 compared to three months ended June 30, 2021

Revenue increased $1.6 million or 15% to $12.5 million for the three months ended June 30, 2022 from $10.9 million for the three months ended June 30, 2021.

Base revenue from existing customers increased $1.8 million or 22%, while growth revenue from existing customers decreased $0.1 million or 4%, and revenue from new customers decreased $0.1 million or 13%.

Our IDI billable customer base grew from 6,141 customers as of June 30, 2021 to 6,817 customers as of June 30, 2022, and our FOREWARN user base grew from 67,578 users to 101,261 users during that same period.

Three months ended September 30, 2022 compared to three months ended September 30, 2021

Revenue increased $3.3 million or 29% to $15.0 million for the three months ended September 30, 2022 from $11.7 million for the three months ended September 30, 2021.

Revenue from new customers increased $1.1 million or 130%, base revenue from existing customers increased $1.6 million or 18%, and growth revenue from existing customers increased $0.6 million or 35%.

Our IDI billable customer base grew from 6,314 customers as of September 30, 2021 to 6,873 customers as of September 30, 2022, and our FOREWARN user base grew from 74,377 users to 110,051 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 $0.2 million or 7% to $2.9 million for the three months ended June 30, 2022 from $2.7 million for the three months ended June 30, 2021.

Cost of revenue increased $0.3 million or 10% to $3.1 million for the three months ended September 30, 2022 from $2.8 million for the three months ended September 30, 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.

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 48% of our total data acquisition costs for the three months ended June 30, 2022 compared to approximately 50% for the three months ended June 30, 2021.

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 48% of our total data acquisition costs for the three months ended September 30, 2022 compared to approximately 49% for the three months ended September 30, 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 23% for the three months ended June 30, 2022 from 25% for the three months ended June 30, 2021.

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 20% for the three months ended September 30, 2022 from 24% for the three months ended September 30, 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 $0.5 million or 20% to $2.8 million for the three months ended June 30, 2022 from $2.3 million for the three months ended June 30, 2021.

Sales and marketing expenses increased $0.4 million or 22% to $2.6 million for the three months ended September 30, 2022 from $2.2 million for the three months ended September 30, 2021.

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.

The increase during the three months ended June 30, 2022 was primarily attributable to an increase of $0.4 million in salaries and benefits, and sales commissions resulting from increased revenue.

The increase during the three months ended September 30, 2022 was primarily attributable to an increase of $0.3 million in salaries and benefits, and sales commissions resulting from increased revenue.

General and administrative expenses .

General and administrative expenses increased $0.4 million or 8% to $5.3 million for the three months ended June 30, 2022 from $4.9 million for the three months ended June 30, 2021.

For the three months ended June 30, 2022 and 2021, our general and administrative expenses consisted primarily of employee salaries and benefits of $2.5 million and $1.6 million, share-based compensation expense of $1.3 million and $2.0 million, and professional fees of $0.9 million and $0.7 million, respectively.

General and administrative expenses increased $1.4 million or 32% to $5.5 million for the three months ended September 30, 2022 from $4.1 million for the three months ended September 30, 2021.

For the three months ended September 30, 2022 and 2021, our general and administrative expenses consisted primarily of employee salaries and benefits of $2.7 million and $2.0 million, share-based compensation expense of $1.2 million and $0.9 million, and professional fees of $1.0 million and $0.7 million, respectively.

Depreciation and amortization .

Depreciation and amortization expenses increased $0.3 million or 21% to $1.6 million for the three months ended June 30, 2022 from $1.3 million for the three months ended June 30, 2021.

The increase in depreciation and amortization for the three months ended June 30, 2022 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after June 30, 2021.

Gain on extinguishment of debt .

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

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

(Loss) income before income taxes .

Loss before income taxes was $0.2 million for the three months ended June 30, 2022 compared to income before income taxes of $1.8 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan, for the three months ended June 30, 2021.

The improvement in loss before income taxes, exclusive of the one-time gain of $2.2 million on the extinguishment of debt, 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 $1.3 million, professional fees of $0.2 million, and depreciation and amortization of $0.3 million.

Depreciation and amortization expenses increased $0.4 million or 27% to $1.7 million for the three months ended September 30, 2022 from $1.3 million for the three months ended September 30, 2021.

The increase in depreciation and amortization for the three months ended September 30, 2022 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after September 30, 2021.

Income before income taxes .

Income before income taxes increased $1.0 million or 82% to $2.3 million for the three months ended September 30, 2022 from $1.3 million for the three months ended September 30, 2021.

The increase in income before income taxes was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, which was partially offset by the increase in employee salaries and benefits and sales commissions of $1.0 million, share-based compensation expense of $0.3 million, professional fees of $0.3 million, and depreciation and amortization of $0.4 million.

Income tax expense .

Income tax expense of $44 thousand and $0 was recognized for the three months ended June 30, 2022 and 2021, respectively.

A valuation allowance on the deferred tax assets was recognized as of June 30, 2022 and 2021, to reduce the deferred tax assets to the amount that is more likely than not to be realized.

Income tax expense of $25 thousand and $0 was recognized for the three months ended September 30, 2022 and 2021, respectively.

A valuation allowance on the deferred tax assets was recognized as of September 30, 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,”

included in “Notes to Condensed Consolidated Financial Statements.”

Net (loss) income .

Net loss was $0.2 million for the three months ended June 30, 2022 compared to a net income of $1.8 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan, for the three months ended June 30, 2021, as a result of the foregoing.

Six months ended June 30, 2022 compared to six months ended June 30, 2021

Revenue increased $4.1 million or 20% to $25.2 million for the six months ended June 30, 2022 from $21.1 million for the six months ended June 30, 2021.

Base revenue from existing customers increased $4.2 million or 27%, while growth revenue from existing customers remained consistent, and revenue from new customers decreased $0.1 million or 4%.

Net income increased $1.0 million or 80% to $2.3 million for the three months ended September 30, 2022 from $1.3 million for the three months ended September 30, 2021, as a result of the foregoing.

Nine months ended September 30, 2022 compared to nine months ended September 30, 2021

Revenue increased $7.4 million or 23% to $40.2 million for the nine months ended September 30, 2022 from $32.8 million for the nine months ended September 30, 2021.

Revenue from new customers increased $1.0 million or 38%, base revenue from existing customers increased $5.8 million or 23%, and growth revenue from existing customers increased $0.6 million or 12%.

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 $0.6 million or 11% to $6.1 million for the six months ended June 30, 2022 from $5.5 million for the six months ended June 30, 2021.

Cost of revenue increased $0.9 million or 11% to $9.2 million for the nine months ended September 30, 2022 from $8.3 million for the nine months ended September 30, 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.

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 48% of our total data acquisition costs for the six months ended June 30, 2022 compared to approximately 49% for the six months ended June 30, 2021.

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 48% of our total data acquisition costs for the nine months ended September 30, 2022 compared to approximately 49% for the nine months ended September 30, 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 24% for the six months ended June 30, 2022 from 26% for the six months ended June 30, 2021.

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 23% for the nine months ended September 30, 2022 from 25% for the nine months ended September 30, 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 14% to $5.2 million for the six months ended June 30, 2022 from $4.6 million for the six months ended June 30, 2021.

Sales and marketing expenses increased $1.1 million or 17% to $7.8 million for the nine months ended September 30, 2022 from $6.7 million for the nine months ended September 30, 2021.

The increase during the six months ended June 30, 2022 was primarily attributable to an increase of $0.6 million in salaries and benefits, and sales commissions resulting from increased revenue.

The increase during the nine months ended September 30, 2022 was primarily attributable to an increase of $1.0 million in salaries and benefits, and sales commissions resulting from increased revenue.

General and administrative expenses .

General and administrative expenses increased $1.3 million or 13% to $10.7 million for the six months ended June 30, 2022 from $9.4 million for the six months ended June 30, 2021.

For the six months ended June 30, 2022 and 2021, our general and administrative expenses consisted primarily of employee salaries and benefits of $5.0 million and $3.0 million, share-based compensation expense of $2.6 million and $3.9 million, and professional fees of $1.8 million and $1.5 million, respectively.

General and administrative expenses increased $2.5 million or 19% to $16.1 million for the nine months ended September 30, 2022 from $13.6 million for the nine months ended September 30, 2021.

For the nine months ended September 30, 2022 and 2021, our general and administrative expenses consisted primarily of employee salaries and benefits of $7.7 million and $5.0 million, share-based compensation expense of $3.8 million and $4.8 million, and professional fees of $2.8 million and $2.2 million, respectively.

Depreciation and amortization .

Depreciation and amortization expenses increased $0.5 million or 22% to $3.1 million for the six months ended June 30, 2022 from $2.6 million for the six months ended June 30, 2021.

The increase in depreciation and amortization for the six months ended June 30, 2022 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after June 30, 2021.

Depreciation and amortization expenses increased $1.0 million or 24% to $4.9 million for the nine months ended September 30, 2022 from $3.9 million for the nine months ended September 30, 2021.

The increase in depreciation and amortization for the nine months ended September 30, 2022 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after September 30, 2021.

Gain on extinguishment of debt .

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

Income before income taxes .

Income before income taxes was $0.1 million for the six months ended June 30, 2022 compared to $1.2 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan, for the six months ended June 30, 2021.

The significant improvement in income before income taxes from a loss, exclusive of the one-time gain of $2.2 million on the extinguishment of debt, 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 $2.6 million, professional fees of $0.3 million, and depreciation and amortization of $0.5 million.

Income before income taxes was $2.4 million for the nine months ended September 30, 2022 compared to $2.4 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan, for the nine months ended September 30, 2021.

The significant $2.2 million increase in income before income taxes to $2.4 million for the nine months ended September 30, 2022 from $0.2 million, exclusive of the one-time gain of $2.2 million on the extinguishment of debt, for the nine months ended September 30, 2021, 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 $3.7 million, professional fees of $0.6 million, and depreciation and amortization of $1.0 million.

Income tax expense .

Income tax expense of $0.2 million and $0 was recognized for the six months ended June 30, 2022 and 2021, respectively.

A valuation allowance on the deferred tax assets was recognized as of June 30, 2022 and 2021, to reduce the deferred tax assets to the amount that is more likely than not to be realized.

Income tax expense of $0.2 million and $0 was recognized for the nine months ended September 30, 2022 and 2021, respectively.

A valuation allowance on the deferred tax assets was recognized as of September 30, 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,”

included in “Notes to Condensed Consolidated Financial Statements.”

Net (loss) income .

Net loss was $0.1 million for the six months ended June 30, 2022 compared to net income of $1.2 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan, for the six months ended June 30, 2021, as a result of the foregoing.

Net income was $2.2 million for the nine months ended September 30, 2022 compared to $2.4 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan, for the nine months ended September 30, 2021, as a result of the foregoing.

Effect of Inflation

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Cash flows provided by operating activities .

For the six months ended June 30, 2022, net cash provided by operating activities was $5.0 million, primarily the result of the net loss 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 $6.5 million, and the cash used as a result of changes in assets and liabilities of $1.4 million, primarily the result of the increase in accounts receivable and prepaid expenses and other current assets, and the decrease in accounts payable, deferred revenue and operating lease liabilities.

For the six months ended June 30, 2021, net cash provided by operating activities was $3.5 million, primarily the result of the net income of $1.2 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 $5.0 million, and the cash used as a result of changes in assets and liabilities of $2.6 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.

For the nine months ended September 30, 2022, net cash provided by operating activities was $8.1 million, primarily the result of the net income of $2.2 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 $9.6 million, and the cash used as a result of changes in assets and liabilities of $3.7 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.

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, interest expense, 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.

Cash flows used in investing activities .

For the six months ended June 30, 2022 and 2021, net cash used in investing activities was $4.1 million and $2.6 million, respectively, primarily as a result of capitalized costs included in intangible assets.

For the nine months ended September 30, 2022 and 2021, net cash used in investing activities was $6.4 million and $3.8 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Cash flows used in financing activities .

For the six months ended June 30, 2022 and 2021, net cash used in financing activities was $2.8 million and $0, respectively.

We paid taxes of $2.8 million related to the net share settlement of vesting of RSUs during the six months ended June 30, 2022.

As of June 30, 2022, we had material commitments under certain data licensing agreements of $30.6 million.

For the nine months ended September 30, 2022 and 2021, net cash used in financing activities was $4.7 million and $2.8 million, respectively.

For the nine months ended September 30, 2022, we paid taxes of $4.3 million related to the net share settlement of vesting of RSUs.

In addition, on May 4, 2022, we announced that the board of directors authorized the repurchase of up to $5.0 million of our common stock from time to time (the “Stock Repurchase Program”), and we paid an aggregate of $0.4 million for the repurchases of common stock.

For the nine months ended September 30, 2021, we paid taxes of $2.8 million related to the net share settlement of vesting of RSUs.

As of September 30, 2022, we had material commitments under certain data licensing agreements of $28.7 million.

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

We reported net loss of $0.2 million and net income of $1.8 million (inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan) for the three months ended June 30, 2022 and 2021, respectively, and net loss of $0.1 million and net income of $1.2 million (inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan) for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had a total shareholders’

We reported net income of $2.3 million and $1.3 million for the three months ended September 30, 2022 and 2021, respectively, and $2.2 million and $2.4 million (inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan) for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had a total shareholders’

equity balance of $72.2 million.

As of June 30, 2022, we had cash and cash equivalents of approximately $32.3 million.

As of September 30, 2022, we had cash and cash equivalents of approximately $31.3 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.

We further believe that our financial resources will allow us to manage the impact of Covid-19 on the Company's business operations for the foreseeable future.

However, subject to revenue growth, our ability to generate positive cash flow, and the potential impact of Covid-19, we may have to raise capital through the issuance of additional equity and/or debt, which, if we are able to obtain, could have the effect of diluting stockholders.

Subject to revenue growth and our ability to generate positive cash flow, we may have to raise capital through the issuance of additional equity and/or debt, which, if we are able to obtain, could have the effect of diluting stockholders.

Any equity or debt financings, if available at all, may be on terms which are not favorable to us.

Off-Balance Sheet Arrangements

As of June 30, 2022, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

As of September 30, 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