What changed in this filing

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Item 1. Financial Statements

2021-05-11 compared with 2020-11-10 · 97 added, 119 removed, 240 unchanged (47% of the section changed)

3 unchanged sentences

(Amounts in thousands, except share data)

September 30, 2020

March 31, 2021

December 31, 2020

2 unchanged sentences

Accounts receivable, net of allowance for doubtful accounts of $ 5 and $ 38

as of September 30, 2020 and December 31, 2019, respectively

as of March 31, 2021 and December 31, 2020, respectively

Prepaid expenses and other current assets

17 unchanged sentences

Preferred stock—$ 0.001 par value, 10,000,000 shares authorized, and 0 shares

issued and outstanding, as of September 30, 2020 and December 31, 2019

issued and outstanding, as of March 31, 2021 and December 31, 2020

Common stock—$ 0.001 par value, 200,000,000 shares authorized, 12,208,077 and

11,657,912 shares issued, 12,146,910 and 11,554,765 shares outstanding, as of

September 30, 2020 and December 31, 2019

Treasury stock, at cost, 224,755 and 103,147 shares as of September 30, 2020 and

December 31, 2019

12,167,327 shares issued and outstanding, as of March 31, 2021 and December 31, 2020

Additional paid-in capital

6 unchanged sentences

(Amounts in thousands, except share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Costs and expenses:

17 unchanged sentences

Additional paid-in

Balance at June 30, 2019

Vesting of restricted stock units

Increase in treasury stock resulting

from shares withheld to cover

statutory taxes

Issuance of common stock upon direct

offering to certain investors, net of

issuance costs of $ 55

Share-based compensation

Balance at September 30, 2019

Balance at June 30, 2020

Vesting of restricted stock units

Increase in treasury stock resulting

from shares withheld to cover

statutory taxes

Share-based compensation

Balance at September 30, 2020

Treasury stock

Additional paid-in

Balance at December 31, 2019

Vesting of restricted stock units

Increase in treasury stock resulting

from shares withheld to cover

statutory taxes

Issuance of common stock upon direct

offering to certain investors, net of

issuance costs of $ 55

Share-based compensation

Balance at September 30, 2019

Balance at March 31, 2020

Balance at December 31, 2020

Vesting of restricted stock units

Increase in treasury stock resulting

from shares withheld to cover

statutory taxes

Share-based compensation

Balance at September 30, 2020

Balance at March 31, 2021

See notes to condensed consolidated financial statements

2 unchanged sentences

(Amounts in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

19 unchanged sentences

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of shares, net of issuance costs

Proceeds from long-term loan

Taxes paid related to net share settlement of vesting of restricted stock units

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

4 unchanged sentences

Share-based compensation capitalized in intangible assets

Right-of-use assets obtained in exchange of operating lease liabilities

Operating lease liabilities arising from obtaining right-of-use assets

See notes to condensed consolidated financial statements

16 unchanged sentences

As an emerging growth company, the Company has left open the opportunity to take advantage of the extended transition period provided to emerging growth companies in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), however, it is the Company’s present intention to adopt any applicable new accounting standards timely.

In August 2018, Financial Accounting Standard Board (“FASB”) issued ASU No.

In August 2018, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standard Updates (“ASU”) No.

2018-15 (“ASU 2018-15”), “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

1 unchanged sentence

It also requires the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals.

This guidance will be effective for the Company for annual reporting periods beginning after December 15, 2020, on a retrospective or prospective basis and early adoption is permitted.

The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.

This guidance is effective for the Company for annual reporting periods beginning after December 15, 2020, on a retrospective or prospective basis.

The Company adopted it on January 1, 2021 on a prospective basis and this guidance had no material impact on the Company’s condensed consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU No.

2019-12 (“ASU 2019-12”), “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes” , which is intended to improve consistent application and simplify the accounting for income taxes.

This ASU removes certain exceptions to the general principals in Topic 740 and clarifies and amends existing guidance.

This standard is effective for the Company for annual reporting periods beginning after December 15, 2020.

The Company adopted it on January 1, 2021 and this guidance had no material impact on the Company’s condensed consolidated financial statements and related disclosures.

Loss per share

2 unchanged sentences

Common equivalent shares are excluded from the calculation in the loss periods as their effects would be anti-dilutive.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except share data)

2 unchanged sentences

Basic and diluted:

A total of 1,529,657 unvested restricted stock units (“RSUs”) have been excluded from the diluted loss per share for the three and nine months ended September 30, 2020, and 1,954,910 RSUs have been excluded for the three and nine months ended September 30, 2019, as the impact is anti-dilutive.

A total of 1,686,499 and 2,185,577 unvested restricted stock units (“RSUs”) have been excluded from the diluted loss per share for the three months ended March 31, 2021 and 2020, respectively, as the impact is anti-dilutive .

Intangible assets, net

Intangible assets other than goodwill consist of the following:

September 30, 2020

March 31, 2021

December 31, 2020

4 unchanged sentences

The gross amount associated with software developed for internal use represents capitalized costs of internally-developed software, including eligible salaries and staff benefits, share-based compensation, travel expenses incurred by relevant employees, and other relevant costs.

Amortization expenses of $ 1,063 and $ 689 for the three months ended September 30, 2020 and 2019, respectively, and $ 2,847 and $ 1,860 for the nine months ended September 30, 2020 and 2019, respectively, were included in depreciation and amortization expense.

As of September 30, 2020, intangible assets of $ 2,635 , included in the gross amounts of software developed for internal use, have not started amortization, as they are not ready for their intended use.

The Company capitalized costs of software developed for internal use of $ 1,646 and $ 1,708 during the three months ended September 30, 2020 and 2019, respectively, and $ 5,790 and $ 4,939 during the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, estimated amortization expense related to the Company’s intangible assets for the remainder of 2020 through 2025 and thereafter are as follows:

Amortization expenses of $ 1,203 and $ 850 were included in depreciation and amortization expense for the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, intangible assets of $ 2,974 , included in the gross amounts of software developed for internal use, have not started amortization, as they are not ready for their intended use.

The Company capitalized costs of software developed for internal use of $ 1,598 and $ 2,126 during the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, estimated amortization expense related to the Company’s intangible assets for the remainder of 2021 through 2026 and thereafter are as follows:

(In thousands)

September 30, 2020

March 31, 2021

Remainder of 2021

1 unchanged sentence

Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination.

As of September 30, 2020 and December 31, 2019, the balance of goodwill of $ 5,227 was as a result of the acquisition of Interactive Data, LLC, a wholly-owned subsidiary of red violet, effective on October 2, 2014.

As of March 31, 2021 and December 31, 2020, the balance of goodwill of $ 5,227 was as a result of the acquisition of Interactive Data, LLC, a wholly-owned subsidiary of red violet, effective on October 2, 2014.

In accordance with ASC 350, “Intangibles - Goodwill and Other,” goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value.

The measurement date of the Company’s annual goodwill impairment test is October 1 .

For the periods ended September 30, 2020 and 2019, no goodwill impairment charges were recorded.

For the periods ended March 31, 2021 and 2020, no goodwill impairment charges were recorded.

Revenue recognition

On January 1, 2018, the Company adopted ASC 606, “Revenue from Contracts with Customers,” (“Topic 606”) using the modiﬁed retrospective method applied to all contracts that were not completed contracts at the date of initial application.

Revenue is recognized when control of goods or services is transferred to the Company’s customers, in an amount that reﬂects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company recognized revenue in accordance with ASC 606, “Revenue from Contracts with Customers” (“Topic 606”).

Under this standard, revenue is recognized when control of goods or services is transferred to the Company’s customers, in an amount that reﬂects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company’s performance obligation is to provide on demand solutions to its customers by leveraging its proprietary technology and applying machine learning and advanced analytics to its massive data repository.

6 unchanged sentences

The Company's revenue arrangements do not contain significant financing components.

For the three months ended September 30, 2020 and 2019, 68 % and 66 % of total revenue was attributable to customers with pricing contracts, respectively, versus 32 % and 34 % attributable to transactional customers, respectively.

For the nine months ended September 30, 2020 and 2019, 71 % and 65 % of total revenue was attributable to customers with pricing contracts, respectively, versus 29 % and 35 % attributable to transactional customers, respectively.

For the three months ended March 31, 2021 and 2020, 80 % and 69 % of total revenue was attributable to customers with pricing contracts, respectively, versus 20 % and 31 % attributable to transactional customers, respectively.

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

If a customer pays consideration before the Company transfers services to the customer, those amounts are classiﬁed as deferred revenue.

As of September 30, 2020 and December 31, 2019, the balance of deferred revenue was $ 180 and $ 128 , respectively, all of which is expected to be realized in the next 12 months.

In relation to the deferred revenue balance as of December 31, 2019, $ 0 and $ 128 was recognized into revenue during the three and nine months ended September 30, 2020, respectively.

As of September 30, 2020, $ 2,626 of revenue is expected to be recognized in the future for outstanding performance obligations, primarily related to pricing contracts that have a term of more than 12 months.

$ 602 of revenue will be recognized in the remainder of 2020, $ 1,860 in 2021, $ 138 in 2022, and $ 26 in 2023 and thereafter.

As of March 31, 2021 and December 31, 2020, the balance of deferred revenue was $ 453 and $ 504 , respectively, all of which is expected to be realized in the next 12 months.

In relation to the deferred revenue balance as of December 31, 2020, $ 252 was recognized into revenue during the three months ended March 31, 2021.

As of March 31, 2021, $ 3,164 of revenue is expected to be recognized in the future for outstanding performance obligations, primarily related to pricing contracts that have a term of more than 12 months.

$ 2,128 of revenue will be recognized in the remainder of 2021, $ 957 in 2022, $ 70 in 2023, and $ 9 in 2024.

The actual timing of recognition may vary due to factors outside of the Company’s control.

6 unchanged sentences

In each quarter, the Company updates its estimate of the annual effective tax rate, and if its estimated annual tax rate changes, the Company makes a cumulative adjustment in that quarter.

For the three and nine months ended September 30, 2020 and 2019, the Company’s effective income tax rate was 0 %, differing from the statutory federal income tax rate of 21 %, and the difference is primarily the result of the full valuation allowance applied against the Company’s deferred tax assets.

For the three months ended March 31, 2021 and 2020, the Company’s effective income tax rate was 0 %, differing from the statutory federal income tax rate of 21 %, and the difference is primarily the result of the full valuation allowance applied against the Company’s deferred tax assets.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date.

3 unchanged sentences

All of the Company’s income tax filings since 2017 remain open for tax examinations.

The Company does no t have any unrecognized tax benefits as of September 30, 2020 and December 31, 2019.

Common stock and treasury stock

As of September 30, 2020 and December 31, 2019, the number of issued shares of common stock was 12,371,665 and 11,657,912 , respectively, which included shares of treasury stock of 224,755 and 103,147 , respectively.

The change in the number of issued shares of common stock was due to an aggregate of 713,753 shares of common stock issued as a result of the vesting of RSUs.

Treasury stock

As of September 30, 2020 and December 31, 2019, the Company held 224,755 and 103,147 shares of treasury stock, with a cost of $ 3,083 and $ 1,255 , respectively, as a result of the shares withheld to pay withholding taxes upon the vesting of RSUs.

The Company does no t have any unrecognized tax benefits as of March 31, 2021 and December 31, 2020.

As of March 31, 2021 and December 31, 2020, the number of issued and outstanding shares of common stock was 12,208,077 and 12,167,327 , respectively.

The change in the number of issued and outstanding shares of common stock was due to an aggregate of 40,750 shares of common stock issued as a result of the vesting of RSUs.

Share-based compensation

On March 22, 2018, the board of directors of the Company and Fluent, Inc., in its capacity as sole stockholder of the Company at that time, approved the Red Violet, Inc.

2018 Stock Incentive Plan (the “2018 Plan”).

On March 22, 2018, the board of directors of the Company and Cogint, Inc.

(“cogint”) (now known as Fluent, Inc.) , in its capacity as sole stockholder of the Company prior to the Company’s spin-off from cogint on March 26, 2018, approved the Red Violet, Inc.

2018 Stock Incentive Plan (the “2018 Plan”), which became effective immediately prior to the spin-off.

A total of 3,000,000 shares of common stock were authorized to be issued under the 2018 Plan.

The primary purpose of the 2018 Plan is to attract, retain, reward and motivate certain individuals by providing them with an opportunity to acquire or increase a proprietary interest in the Company and to incentivize them to expend maximum effort for the growth and success of the Company, so as to strengthen the mutuality of the interests between such individuals and the stockholders of the Company.

On June 3, 2020, the Company’s stockholders approved an amendment to the 2018 Plan to increase the number of shares of common stock authorized for issuance under the 2018 Plan from 3,000,000 shares to 4,500,000 shares.

As of September 30, 2020, there were 1,525,624 shares of common stock available for future issuance under the 2018 Plan, as amended.

As of March 31, 2021, there were 1,270,415 shares of common stock available for future issuance under the 2018 Plan, as amended.

To date, all stock incentives issued under the 2018 Plan have been in the form of RSUs.

1 unchanged sentence

The time-based condition for these awards is generally satisfied over three or four years with annual vesting.

Details of unvested RSU activity during the nine months ended September 30, 2020 were as follows:

Details of unvested RSU activity during the three months ended March 31, 2021 were as follows:

Number of units

3 unchanged sentences

Vested and delivered

Withheld as treasury stock

Vested not delivered (1)

Unvested as of September 30, 2020

As of September 30, 2020, unrecognized share-based compensation expense associated with the granted RSUs amounted to $ 7,969 , which is expected to be recognized over a remaining weighted average period of 1.6 years.

Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended September 30,

Nine Months Ended September 30,

Unvested as of March 31, 2021

During the period from August 29, 2019 to September 8, 2020, the Company granted an aggregate of 277,500 RSUs to its employees.

Such RSU grants shall not vest unless and until the Company has, for any fiscal quarter in which the RSUs are outstanding, (i) gross revenue determined in accordance with the Company’s reviewed or audited financial statements in excess of $ 10.0 million for such fiscal quarter, (ii) positive adjusted EBITDA of at least $ 1.5 million, as determined based on amounts derived from the Company’s reviewed or audited financial statements for such fiscal quarter, and (iii) the recipient continues to provide services to the Company either as an employee, director or consultant on the last day of the quarter that the performance criteria are met.

Provided the performance criteria are met, the RSUs will vest in accordance with the time-based requirements contained in the award agreement over three or four years .

In the event of a change of control, all RSUs which have not vested on the date of such change of control shall immediately vest even if the performance criteria have not been met.

As of the respective grant dates, the Company determined that it was probable that the performance criteria would be met and therefore, began to record the related amortization expense on the grant dates.

As of March 31, 2021, the Company determined that the performance criteria were met, and 33,200 shares were included in “Vested not delivered” in the table above.

The remaining shares underlying such awards are expected to vest and be issued in accordance with their time-based vesting requirement .

As of March 31, 2021, unrecognized share-based compensation expense associated with the granted RSUs amounted to $ 9,446 , which is expected to be recognized over a remaining weighted average period of 2.3 years.

Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

(In thousands)

8 unchanged sentences

Under the Services Agreement, the Consultant receives cash compensation of $ 30 per month and is entitled to participate in the Company’s incentive compensation plan.

The Company recognized consulting service fees relating to the Services Agreement of a total of $ 90 during the three months ended September 30, 2020 and 2019, and $ 270 during the nine months ended September 30, 2020 and 2019.

In addition, amortization of share-based compensation expense of $ 343 and $ 343 for the three months ended September 30, 2020 and 2019, respectively, and $ 1,022 and $ 1,458 for the nine months ended September 30, 2020 and 2019, respectively, was recognized in relation to the RSUs previously granted to the Consultant.

On February 16, 2021, the Company entered into a Separation Agreement (the "Separation Agreement") with the Consultant.

Pursuant to the Separation Agreement, the parties have agreed that the Services Agreement expiring on August 6, 2021 (“Expiration Date”), will not be renewed, but will continue in force and effect until the Expiration Date and that the Consultant will not take any actions on behalf of the Company, including pursuant to the Services Agreement, unless specifically requested in writing by the Company.

Pursuant to the Separation Agreement, the Consultant also agreed (i) to certain non-solicitation obligations contained therein, (ii) that he and his affiliates will not disparage or assist or cooperate with any person or entity seeking to publicly disparage or economically harm the Company, and (iii) that the Consultant and his affiliates will not initiate any lawsuit, claim, or proceeding with respect to any claims against the Company, except (with designated exceptions) for any legal proceeding initiated solely to remedy a breach of or to enforce the Separation Agreement.

With respect to each annual or special meeting of the Company's stockholders until the Expiration Date of the Separation Agreement, the Consultant has agreed to vote the shares of the Company's common stock or any other securities entitled to vote then held by him or his affiliates in accordance with the board of directors' recommendations on director proposals, provided there is a change in no more than 25 % of the current directors (not including changes resulting from a director's death or resignation), and the ratification of the appointment of the Company’s independent registered public accounting firm.

The Company agreed (i) that the remaining unvested 166,666 RSUs previously granted to Consultant in accordance with the 2018 RSU Agreement will continue to vest on July 1, 2021, in accordance with and subject to all other provisions and conditions of such grant, (ii) to amend the 2020 RSU Agreement, previously granting Consultant 30,000 RSUs such that the 30,000 RSUs will continue to vest 33 -1/3% on November 1, 2021, 66 -2/3% on November 1, 2022, and 100 % on November 1, 2023, without certain Company performance criteria, subject to all other provisions and conditions of such grant, (iii) to include shares of the Company's common stock held by the Consultant or his affiliates in any registration statement the Company files for the benefit of selling stockholders at any time when the Consultant or his affiliates beneficially own 10 % or more of the Company's common stock, and (iv) to not initiate any lawsuit, claim, or proceeding with respect to any claims against the Consultant and his affiliates, except (with designated exceptions) for any legal proceeding initiated solely to remedy a breach of or to enforce the Separation Agreement.

As a result of the modification to the 2020 RSU Agreement, beginning February 16, 2021, the Company expects to recognize an aggregate of $ 723 in share-based compensation expense over the remaining service period which ends on the Expiration Date.

The Company recognized consulting service fees relating to the Services Agreement of a total of $ 90 during the three months ended March 31, 2021 and 2020.

In addition, amortization of share-based compensation expense of $ 548 and $ 339 for the three months ended March 31, 2021 and 2020, respectively, was recognized in relation to the RSUs previously granted to the Consultant.

Long-term loan

1 unchanged sentence

The Loan to the Company was made through Legacy Bank of Florida (the “Lender”).

Long-term loan as of September 30, 2020 consists of the following:

Long-term loan consists of the following:

(In thousands)

September 30, 2020

March 31, 2021

December 31, 2020

Principal amount

Included in condensed consolidated balance sheet:

Included in consolidated balance sheet:

Current portion of long-term loan

8 unchanged sentences

Any forgiveness of the Loan will be subject to approval by the SBA and the Lender.

The Company will be required to apply for such forgiveness within 10 months after the Covered Period.

The Company applied for forgiveness of the Loan in November 2020.

Because the Loan exceeds $ 2,000 , the Company anticipates the U.S.

Department of Treasury will audit the loan.

Although the Company used the proceeds of the Loan for such covered purposes and intends to apply for forgiveness by the end of December 2020, it can provide no assurance that the Company will obtain forgiveness of the Loan in whole or in part.

As the Loan was effective in May 2020, the fair value of the Loan approximates its carrying amount as of September 30, 2020.

Although the Company used the proceeds of the Loan for such covered purposes and applied for forgiveness as required, it can provide no assurance that the Company will obtain forgiveness of the Loan in whole or in part.

The fair value of the Loan approximates its carrying amount as of March 31, 2021 as the interest rate approximates market rates for similar loans.

On January 1, 2019, the Company adopted Leases (Topic 842) using the modified retrospective method applied to all leases existing at the date of initial application.

3 unchanged sentences

The extension option is not included in the determination of the lease term as it is not reasonably certain to be exercised.

For the three and nine months ended September 30, 2020 and 2019, a summary of the Company’s lease information is shown below:

Three Months Ended September 30,

Nine Months Ended September 30,

For the three months ended March 31, 2021 and 2020, a summary of the Company’s lease information is shown below:

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

Cash paid for operating leases

Right-of-use assets obtained in exchange for operating lease liabilities

Weighted average discount rate for operating leases (1)

The Company used 8.0 %, its estimated incremental borrowing rate for similar secured assets, as the discount rate for the leases to determine the present value of the lease payments because the implicit rate in each lease is not readily determinable.

The discount rate was calculated on the basis of information available as of January 1, 2019, the application date.

As of September 30, 2020, the weighted average remaining operating lease term was 4.1 years.

As of September 30, 2020, scheduled future maturities and present value of the operating lease liabilities are as follows:

As of March 31, 2021, the weighted average remaining operating lease term was 3.6 years.

As of March 31, 2021, scheduled future maturities and present value of the operating lease liabilities are as follows:

(In thousands)

September 30, 2020

March 31, 2021

Remainder of 2021

2025 and thereafter

Total maturities

Present value included in condensed consolidated balance sheet:

Present value included in consolidated balance sheet:

Current portion of operating lease liabilities

4 unchanged sentences

(a) Capital commitment

The Company incurred data costs of $ 2,093 and $ 1,946 for the three months ended September 30, 2020 and 2019, respectively, and $ 6,396 and $ 5,501 for the nine months ended September 30, 2020 and 2019, respectively, under certain data licensing agreements.

As of September 30, 2020, material capital commitments under certain data licensing agreements were $ 9,012 , shown as follows:

The Company incurred data costs of $ 2,122 and $ 2,132 for the three months ended March 31, 2021 and 2020, respectively, under certain data licensing agreements.

As of March 31, 2021, material capital commitments under certain data licensing agreements were $ 8,688 , shown as follows:

(In thousands)

September 30, 2020

March 31, 2021

Remainder of 2021

2026 and thereafter

(b) Contingencies

The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Company’s financial statements to not be misleading.

To estimate whether a loss contingency should be accrued by a charge to income, the Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss.

4 unchanged sentences

(c ) Covid-19 update

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

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.

The Company has taken numerous steps, and will continue to take further actions as appropriate, in its approach to minimizing the impact of the Covid-19 pandemic on the Company’s business, results of operations and financial performance.

The Company has taken numerous steps, and will continue to take further actions as appropriate, to minimize the impact of the Covid-19 pandemic on the Company’s business, results of operations and financial performance.

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

Starting in the second quarter of 2020, the Company 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, the Company 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 2020, except for collection customer volume, which was down $ 1.0 million, primarily attributable to the Company’s idiVERIFIED service, which is an ancillary collections market offering that is purely transactional and of a lower margin profile, for the three months ended September 30, 2020, compared to the three months ended March 31, 2020.

The Company expects collection customer transaction volume, including that of its idiVERIFIED service, to return to pre-Covid levels in the first half of 2021.

During the second and third quarters of 2020, the Company took a proactive customer-centric approach working with customers who were impacted by Covid-19.

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, the Company 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 remained below pre-Covid levels during the first quarter of 2021, down $ 0.7 million, primarily attributable to the Company’s idiVERIFIED service, which is an ancillary collections market offering that is purely transactional and of a lower margin profile, for the three months ended March 31, 2021, compared to the three months ended March 31, 2020.

The Company expects collection customer transaction volume, including that of its idiVERIFIED service, to return to pre-Covid levels in the second half of 2021.

Beginning the second quarter of 2020, the Company 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.

2 unchanged sentences

During the third quarter of 2020, the Company provided concessions to a total of 22 customers, representing a $ 94 reduction in minimum committed spend.

During the fourth quarter of 2020, the Company provided concessions to a total of 7 customers, representing a $ 32 reduction in minimum committed spend.

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

The Company continues to take precautionary measures intended to minimize the risk of the Covid-19 pandemic to its employees, its customers, and the communities in which it operates.

These measures may result in inefficiencies, delays and additional costs to the Company’s business.

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

The Company will continue to evaluate the nature and extent of the impact of the COVID-19 pandemic to its business.

To further support the Company’s liquidity, beginning April 1, 2020, the Company elected, under Section 2302 of the CARES Act, to defer payment of the employer portion of Social Security payroll tax.

5 unchanged sentences

The Company began its first phase of employees returning to the Boca Raton, Florida office in June 2020.

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

By the end of the first quarter of 2021, nearly all of the Boca Raton office employees have returned to an in-office work environment.

The Company will continue to assess the need and timing of additional employees returning to an in-office work environment.

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.

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

What changed 10-Q

Item 1. Financial Statements