What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-08-11 compared with 2020-05-11 · 149 added, 56 removed, 114 unchanged (64% of the section changed)

23 unchanged sentences

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 March 31, 2020 and 2019, idiCORE had 5,326 and 4,020 billable customers and FOREWARN had 36,506 and 15,444 users, respectively.

As of June 30, 2020 and 2019, idiCORE had 5,375 and 4,370 billable customers and FOREWARN had 40,857 and 19,721 users, respectively.

The Company defines a billable customer of idiCORE as a single entity that generated revenue in the last month of the period.

8 unchanged sentences

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

Revenue from pricing contracts represented 69 % and 67 % of total revenue for the three months ended March 31, 20 20 and 201 9 , respectively.

Revenue from pricing contracts represented 79 % and 73 % of total revenue for the three and six months ended June 30 , 20 20 , respectively , as compared to 62% and 64% for the three and six months ended June 30, 2019, respectively.

Our go-to-market strategy leverages (a) an inside sales team that cultivates relationships, and ultimately closes business, with their end-user markets, (b) a strategic sales team that provides a more personal, face-to-face approach for major accounts within certain industries, and (c) distributors, resellers, and strategic partners that have a significant foothold in many of the industries that we have not historically served, as well as to further penetrate those industries that we do serve.

6 unchanged sentences

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

The Company has taken numerous steps, and will continue to take further actions, in its approach to minimizing the impact of the Covid-19 pandemic.

As a result of the Covid-19 pandemic, to ensure the health and well-being of our employees, the Company instructed employees at its offices to work from home on a temporary basis.

The Company has 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.

In the second half of March, as preventative and protective actions were taken by governments, including the implementation of stay-at-home orders, we experienced reduced transactional volume that we believe was a result of customers adjusting to the effects of these stay-at-home orders.

Beginning April 1, 2020, the Company 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.

We have taken numerous steps, and will continue to take further actions as appropriate, in our approach to minimizing the impact of the Covid-19 pandemic.

To ensure the health and well-being of our employees, beginning in March 2020, we instructed employees at our offices to work from home on a temporary basis.

During 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 which resulted in significantly reduced commercial activity, and certain temporary government-imposed moratoria on collection customers’ activities, we experienced reduced transactional volume.

In addition, 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 during the second quarter.

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

In April 2020, we provided concessions to a total of 124 customers, representing $130 thousand reduction of minimum committed spend.

In May 2020, we provided concessions to a total of 123 customers, representing $129 thousand reduction of minimum committed spend.

In June 2020, we provided concessions to a total of 72 customers, representing $83 thousand reduction of minimum committed spend.

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.

Under the CARES Act, employers can forgo timely payment of the employer portion of Social Security taxes that would otherwise be due from March 27, 2020 through December 31, 2020, without penalty or interest charges.

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

The Company will continue to assess the CARES Act and other applicable government-related 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 the Company’s ongoing business, results of operations and overall financial performance cannot be reasonably estimated at this time.

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”).

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

In accordance with best practices and guidance from the Centers for Disease Control and Prevention, we implemented protective safeguards, including daily temperature checks, mandatory wearing of masks, social distancing, plexiglass protective barriers, and an entire office HVAC UV-C system.

We began our first phase of employees returning to the Boca Raton, Florida office in June 2020.

We will continue to assess the need and timing of additional employees returning to the office.

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

8 unchanged sentences

See Note 1(b), “ Recently issued accounting standards,” in “Notes to Condensed Consolidated Financial Statements.”

First Quarter Financial Results

For the three months ended March 31, 2020 as compared to the three months ended March 31, 2019:

Total revenue increased 62% to $9.3 million.

Net loss was $1.5 million (including share-based compensation expense of $2.2 million) as compared to $1.4 million (including share-based compensation expense of $0.3 million).

Adjusted EBITDA was $1.7 million as compared to a negative $0.4 million

Gross profit increased 105% to $5.2 million.

Second Quarter Financial Results

For the three months ended June 30, 2020 as compared to the three months ended June 30, 2019:

Total revenue decreased 3% to $7.1 million.

Platform revenue increased 11% to $6.9 million.

Services revenue decreased 82% to $0.2 million.

Net loss narrowed 34% to $2.5 million.

Adjusted EBITDA increased 155% to $0.9 million.

Gross profit decreased 1% to $3.5 million.

Gross margin increased to 50% from 49%.

1 unchanged sentence

Adjusted gross margin increased to 63% from 58%.

Generated $1.2 million in cash from operating activities in the first quarter.

Cash and cash equivalents were $11.5 million as of March 31, 2020.

Generated $1.8 million in cash from operating activities in the second quarter.

Cash and cash equivalents were $13.8 million as of June 30, 2020.

Covid-19 Impact, Recovery and Opportunity

Our high-margin, platform revenue business demonstrated strong resilience throughout the Covid-impacted period.

As a result, on less revenue our adjusted EBITDA more than doubled to $0.9 million and our positive cash flow from operating activities increased $1.7 million compared to prior year.

Business trends in the quarter have been positive since April, experiencing a 12% increase in monthly revenue for June compared to the April low.

June provided our highest monthly new customer applications for the year, surpassing our pre-Covid monthly high, and up 33% compared to April low.

The positive momentum building throughout the second quarter has continued in July with monthly revenue up 9% and new customer applications up 8% over June.

Government actions, including stay-at-home orders, social distancing policies, and temporary collections moratoria resulted in reduced transactional volumes during the quarter.

However, transactional volumes in July returned to pre-Covid levels.

Our services revenue, comprised of our ancillary collections market offering, idiVERIFIED™, which is purely transactional and of a lower margin profile, experienced sharp volume declines in April attributed to transitory collections moratoria, forbearance programs and government stimulus.

However, this offering showed signs of recovery in the quarter and into July.

Given current visibility, customer feedback and the overall economic impact on consumer financial profiles, we believe we will realize pent-up demand in the back half of 2020 with strong tailwinds extending throughout 2021.

During the quarter, we took a proactive customer-centric approach working with those impacted by the pandemic, temporarily granting requests for reductions, or eliminations where applicable, of minimum monthly contractual commitments on a month-to-month basis during the second quarter.

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

In April we provided concessions to a total of 124 customers, representing $130 thousand reduction of minimum committed spend.

In May we provided concessions to a total of 123 customers, representing $129 thousand reduction of minimum committed spend.

In June we provided concessions to a total of 72 customers, representing $83 thousand reduction of minimum committed spend.

In July we provided concessions to a total of 20 customers, representing $42 thousand reduction of minimum committed spend.

As our business model has proved resilient during this unprecedented time, we are well positioned within the markets we serve and with the solutions we provide to quickly return to our pre-Covid growth levels in the near-term.

The pandemic has accelerated the pace of digital transformation for virtually every business, creating a confluence of micro and macro trends that will provide strong momentum for our business for years to come through growth in e-commerce, demand for cloud efficiency and scale, increased reliance on fraud mitigation solutions as greater transactions move online, the necessity of solving for data fragmentation, and the need for enhanced understanding of consumer risk and financial profiles.

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

It includes all revenue generated through our idiCORE and FOREWARN solutions.

The cost of revenue, which consists primarily of data acquisition costs, remains relatively fixed irrespective of revenue generation.

Services revenue consists of transactional revenue generated from our idiVERIFIED service.

The cost of revenue, which consists primarily of third-party servicer costs, is variable.

Use and Reconciliation of Non-GAAP Financial Measures

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

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

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

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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2 unchanged sentences

Share-based compensation expense

Litigation costs, net

Write-off of long-lived assets and others

1 unchanged sentence

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

16 unchanged sentences

Results of Operations

Three months ended March 31, 2020 compared to three months ended March 31, 2019

Revenue increased $3.6 million or 62% to $9.3 million for the three months ended March 31, 2020 from $5.7 million for the three months ended March 31, 2019.

This increase was driven by strong growth in usage from existing customers.

Revenue from new customers increased $0.2 million or 10%, base revenue from existing customers increased $3.0 million or 84%, and growth revenue from existing customers increased $0.4 million or 46% for the three months ended March 31, 2020 compared to the three months ended March 31, 2019, respectively.

Our idiCORE billable customer base grew from 4,020 customers as of March 31, 2019 to 5,326 customers as of March 31, 2020.

Three months ended June 30, 2020 compared to three months ended June 30, 2019

Revenue decreased $0.1 million or 3% to $7.1 million for the three months ended June 30, 2020 from $7.2 million for the three months ended June 30, 2019.

As a result of government mandated stay-at-home orders and certain moratoria on our customer’s business activities as a result of Covid-19, we experienced reduced transactional volume for the three months ended June 30, 2020.

In addition, we took a proactive customer centric approach working with customers who were impacted by Covid-19.

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

As a result of these Covid-19 related factors, revenue from new customers decreased $0.7 million or 43%, and growth revenue from existing customers decreased $0.1 million or 6%, partially offset by base revenue from existing customers increasing $0.6 million or 13% for the three months ended June 30, 2020.

Our idiCORE billable customer base grew from 4,370 customers as of June 30, 2019 to 5,375 customers as of June 30, 2020.

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

4 unchanged sentences

Cost of revenue (exclusive of depreciation and amortization) .

Cost of revenue increased $0.6 million or 23% to $3.3 million for the three months ended March 31, 2020 from $2.7 million for the three months ended March 31, 2019.

Cost of revenue decreased $0.5 million or 15% to $2.6 million for the three months ended June 30, 2020 from $3.1 million for the three months ended June 30, 2019.

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 39% of our total data acquisition costs for the three months ended March 31, 2020 compared to approximately 41% for the three months ended March 31, 2019.

The decrease in cost of revenue was primarily attributable to the decrease in transactional based data acquisition costs.

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 51% of our total data acquisition costs for the three months ended June 30, 2020 compared to approximately 41% for the three months ended June 30, 2019.

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 35% for the three months ended March 31, 2020 from 47% for the three months ended March 31, 2019.

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 37% for the three months ended June 30, 2020 from 42% for the three months ended June 30, 2019.

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

1 unchanged sentence

Sales and marketing expenses .

Sales and marketing expenses increased $0.7 million or 45% to $2.2 million for the three months ended March 31, 2020 from $1.5 million for the three months ended March 31, 2019.

Sales and marketing expenses decreased $0.3 million or 13% to $1.7 million for the three months ended June 30, 2020 from $2.0 million for the three months ended June 30, 2019.

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 March 31, 2020 was primarily attributable to an aggregate of $0.5 million increase in salaries and benefits, as we continue to invest in the expansion of our sales organization, and sales commissions from increased revenue.

The decrease during the three months ended June 30, 2020 was primarily attributable to an aggregate of $0.2 million decrease in sales commissions from decreased revenue.

General and administrative expenses .

General and administrative expenses increased $2.0 million or 87% to $4.4 million for the three months ended March 31, 2020 from $2.4 million for the three months ended March 31, 2019.

The increase during the three months ended March 31, 2020 was primarily attributable to the $1.9 million increase in share-based compensation expense, resulting from the achievement of certain performance-based milestones and certain new grants issued after the first quarter of 2019, as outlined in Note 8, “Share-based compensation,” included in “Notes to Condensed Consolidated Financial Statements.”

For the three months ended March 31, 20 20 and 201 9 , our general and administrative expenses consisted primarily of employee salaries and benefits of $ 1 .

2 million and $ 1 .

0 million, share-based compensation expense of $ 2 .

1 million and $0.

2 million, and professional fees of $ 0 .6 million and $ 0 .7 million, respectively .

General and administrative expenses de creased $ 1 .

1 million or 21 % to $ 4 .

3 million for the three months ended June 30 , 20 20 from $ 5 .4 million for the three months ended June 30 , 201 9 .

The de crease during the three months ended June 30 , 2020 was primarily attributable to the $ 1 .

3 million de crease in share-based compensation expense .

For the three months ended June 30, 2020 and 2019, our general and administrative expenses consisted primarily of employee salaries and benefits of $1.0 million and $1.0 million, share-based compensation expense of $2.2 million and $3.5 million, and professional fees of $0.5 million and $0.4 million, respectively.

Depreciation and amortization .

Depreciation and amortization expenses increased $0.3 million or 47% to $0.9 million for the three months ended March 31, 2020 from $0.6 million for the three months ended March 31, 2019.

The increase in depreciation and amortization for the three months ended March 31, 2020 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after March 31, 2019.

Depreciation and amortization expenses increased $0.3 million or 46% to $1.0 million for the three months ended June 30, 2020 from $0.7 million for the three months ended June 30, 2019.

The increase in depreciation and amortization for the three months ended June 30, 2020 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after June 30, 2019.

Loss before income taxes .

We had a loss before income taxes of $1.5 million for the three months ended March 31, 2020 as compared to $1.4 million for the three months ended March 31, 2019.

The slight increase in loss before income taxes was primarily attributable to the increase in noncash share-based compensation expense of $1.9 million, salaries and benefits and sales commission of $0.7 million, and depreciation and amortization of $0.3 million, which was partially offset by the increase in revenue and the decrease in our cost of revenue as a percentage of revenue.

L oss before income taxes narrowed $1.4 million or 34% to $2.5 million for the three months ended June 30, 2020 from $3.9 million for the three months ended June 30, 2019.

The decrease in loss before income taxes was primarily attributable to the decrease in share-based compensation expense of $1.3 million, sales commission of $0.2 million, and our cost of revenue as a percentage of revenue, which was partially offset by the increase in depreciation and amortization of $0.3 million.

Income taxes .

Income tax expense of $0 was recognized for the three months ended March 31, 2020 and 2019.

A full valuation allowance on the deferred tax assets was recognized as of March 31, 2020 and 2019.

Income tax expense of $0 was recognized for the three months ended June 30, 2020 and 2019.

A full valuation allowance on the deferred tax assets was recognized as of June 30, 2020 and 2019.

See Note 6, “Income Taxes,” included in “Notes to Condensed Consolidated Financial Statements,” for details.

A net loss of $1.5 million was recognized for the three months ended March 31, 2020 as compared to $1.4 million for the three months ended March 31, 2019, as a result of the foregoing .

Net loss narrowed $1.4 million or 34% to $2.5 million for the three months ended June 30, 2020 from $3.9 million for the three months ended June 30, 2019, as a result of the foregoing .

Six months ended June 30, 2020 compared to six months ended June 30, 2019

Revenue increased $3.4 million or 26% to $16.4 million for the six months ended June 30, 2020 from $13.0 million for the six months ended June 30, 2019.

This increase was driven by strong growth in usage from existing customers, with base revenue from existing customers increasing $3.6 million or 45% and growth revenue from existing customers increasing $0.3 million or 16%.

This growth was partially offset by a decrease in revenue from new customers of $0.6 million or 19%.

In the second half of the period, we experienced reduced transactional volume as a result of government mandated stay-at-home orders and certain moratoria on our customer’s business activities as a result of Covid-19.

In addition, we took a proactive customer centric approach working with customers who were impacted by Covid-19.

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

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.

Growth revenue from existing customers represents the total monthly revenue generated from existing customers in a given period in excess of the customers' trailing six-month average revenue.

Cost of revenue (exclusive of depreciation and amortization) .

Cost of revenue increased $0.2 million or 3% to $5.9 million for the six months ended June 30, 2020 from $5.7 million for the six months ended June 30, 2019.

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 increase in cost of revenue was primarily attributable to the increase in flat-fee based data acquisition costs, which was partially offset by the decrease in transactional based data acquisition costs.

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 44% of our total data acquisition costs for the six months ended June 30, 2020 compared to approximately 41% for the six months ended June 30, 2019.

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 36% for the six months ended June 30, 2020 from 44% for the six months ended June 30, 2019.

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 increased $0.

4 million or 12 % to $ 3 .

9 million for the six months ended June 30, 2020 from $ 3 .5 million for the six months ended June 30, 2019.

The increase during the six months ended June 30, 2020 was primarily attributable to an aggregate of $0.

3 million increase in salaries and benefits, as we continue to invest in the expansion of our sales organization, and sales commissions from increased revenue.

General and administrative expenses .

General and administrative expenses increased $0.9 million or 12% to $8.7 million for the six months ended June 30, 2020 from $7.8 million for the six months ended June 30, 2019.

The increase during the six months ended June 30, 2020 was primarily attributable to the $0.6 million increase in share-based compensation expense.

For the six months ended June 30, 2020 and 2019, our general and administrative expenses consisted primarily of employee salaries and benefits of $2.2 million and $2.0 million, share-based compensation expense of $4.3 million and $3.7 million, and professional fees of $1.2 million and $1.2 million, respectively.

Depreciation and amortization .

Depreciation and amortization expenses increased $0.6 million or 46% to $1.9 million for the six months ended June 30, 2020 from $1.3 million for the six months ended June 30, 2019.

The increase in depreciation and amortization for the six months ended June 30, 2020 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after June 30, 2019.

Loss before income taxes .

L oss before income taxes narrowed $1.2 million or 23% to $4.0 million for the six months ended June 30, 2020 from $5.2 million for the six months ended June 30, 2019.

The decrease in loss before income taxes was primarily attributable to the increase in revenue and the decrease in our cost of revenue as a percentage of revenue, which was partially offset by the increase in share-based compensation expense of $0.7 million, salaries and benefits and sales commission of $0.5 million, and depreciation and amortization of $0.6 million.

Income taxes .

Income tax expense of $0 was recognized for the six months ended June 30, 2020 and 2019.

A full valuation allowance on the deferred tax assets was recognized as of June 30, 2020 and 2019.

See Note 6, “Income Taxes,” included in “Notes to Condensed Consolidated Financial Statements,” for details.

Net loss narrowed $1.2 million or 23% to $4.0 million for the six months ended June 30, 2020 from $5.2 million for the six months ended June 30, 2019, as a result of the foregoing .

Effect of Inflation

3 unchanged sentences

Cash flows provided by (used in) operating activities .

For the three months ended March 31, 2020, net cash provided by operating activities was $1.2 million, primarily the result of the net loss of $1.5 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 and noncash lease expenses) totaling $3.4 million, and the cash used as a result of changes in assets and liabilities of $0.7 million, primarily the result of the increase in prepaid expenses and other current assets and the decrease in accrued expenses and other current liabilities.

For the three months ended March 31, 2019, net cash used in operating activities was $1.2 million, primarily the result of the net loss of $1.4 million, adjusted for certain non-cash items, as mentioned above, totaling $1.2 million, and the cash used as a result of changes in assets and liabilities of $1.0 million, primarily the result of the increase in accounts receivable and prepaid expenses and other current assets.

For the six months ended June 30, 2020, net cash provided by operating activities was $3.0 million, primarily the result of the net loss of $4.0 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 and noncash lease expenses) totaling $7.1 million.

For the six months ended June 30, 2019, net cash used in operating activities was $1.1 million, primarily the result of the net loss of $5.2 million, adjusted for certain non-cash items, as mentioned above, totaling $5.7 million, and the cash used as a result of changes in assets and liabilities of $1.6 million, primarily the result of the increase in accounts receivable and decrease in operating lease liabilities.

Cash flows used in investing activities .

For the three months ended March 31, 2020 and 2019, net cash used in investing activities was $1.6 million and $1.4 million, respectively, primarily as a result of capitalized costs included in intangible assets of $1.5 million and $1.4 million, respectively.

As of March 31, 2020, we had material commitments under certain data licensing agreements of $12.8 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 $1.5 million and $1.4 million for the three months ended March 31, 2020 and 2019, respectively.

As of March 31, 2020, we had a total shareholders’ equity balance of $43.4 million.

As of March 31, 2020, we had cash and cash equivalents of approximately $11.5 million.

Based on projections of growth in revenue and operating results in the next twelve months, the available cash and cash equivalents held by us, and an unsecured non-recourse loan in the principal amount of approximately $2.2 million under the CARES Act, 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, including the CARES Act loan, will allow us to manage the impact of Covid-19 on the Company's business operations for the foreseeable future.

For the six months ended June 30, 2020 and 2019, net cash used in investing activities was $3.1 million and $2.9 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Cash flows provided by financing activities .

For the six months ended June 30, 2020 and 2019, net cash provided by financing activities was $2.2 million and $0, respectively.

On May 5, 2020, we received funding under a promissory note dated May 5, 2020 evidencing the Loan in the principal amount of $2.2 million under the CARES Act.

The Loan has a two-year term and matures on May 5, 2022.

The interest rate on the Loan is 1.0% per annum.

Payments can be deferred until loan forgiveness is determined, or if the Company does not apply for forgiveness, then 10 months after the covered period ends.

As of June 30, 2020, we had material commitments under certain data licensing agreements of $10.8 million.

We anticipate funding our operations using available cash and cash flow generated from operations, and the Loan proceeds under the CARES Act, within the next twelve months.

We reported net loss of $ 2 .5 million and $ 3 .

9 million for the three months ended June 30, 2020 and 2019, respectively , and $ 4 .

0 million and $ 5 .

2 million for the six months ended June 30 , 2020 and 201 9 , respectively .

As of June 30 , 2020 , we had a total shareholders’ equity balance of $ 4 3 .

As of June 30, 2020, we had cash and cash equivalents of approximately $13.8 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.

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.

1 unchanged sentence

Off-Balance Sheet Arrangements

As of March 31, 2020, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

As of June 30, 2020, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

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