NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data)
(unaudited)
1. Organization
On March 26, 2018, Fluent, Inc. (“Fluent”) completed the previously announced spin-off (the “Spin-off”) of its risk management business from its digital marketing business by way of a distribution of all the shares of common stock of Fluent’s wholly-owned subsidiary, Red Violet, Inc. (“red violet” or the “Company”), a Delaware corporation, to Fluent’s stockholders of record as of March 19, 2018 (the “Record Date”) and certain warrant holders. The distribution occurred by way of a pro rata stock distribution to such common stock and warrant holders, each of whom received one share of red violet’s common stock for every 7.5 shares of Fluent’s common stock held on the Record Date or to which they were entitled to under their warrants, which resulted in a distribution of a total of 10,266,613 shares of red violet common stock.
Upon the Spin-off, red violet owns Fluent
subsidiaries
that
previously
operated
Fluent’s
risk
manag
e
ment
business.
As a result of the Spin-off, red violet is an independent public company and red violet’s common stock began regular-way trading on The NASDAQ Capital Market under the symbol “RDVT” on March 27, 2018.
red violet has only one operating segment, as defined by ASC 280, “
Segment Reporting
.”
2. Summary of significant accounting policies
(a) Basis of preparation and liquidity
The accompanying unaudited condensed consolidated financial statements have been prepared by red violet in accordance with accounting principles generally accepted in the United States (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to those rules and regulations.
red violet accounted for the Spin-off in accordance with ASC 805-50-30-5
Initial Measurement- Transactions Between Entities Under Common Control
–
Transfer Date Measurement
and therefore the net assets transferred from Fluent to red violet upon the Spin-off were reflected in red violet’s condensed consolidated financial statements at Fluent’s carrying values at the time of the Spin-off.
The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending December 31, 2018.
The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated and combined financial statements and accompanying notes of red violet for the year ended December 31, 2017 (“2017 Financials”) included in Exhibit 99.1, Information Statement, to red violet’s current report on Form 8-K filed with the SEC on March 27, 2018.
The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited financial statements as of that date included in the 2017 Financials, but does not include all disclosures required by US GAAP.
Principles of consolidation
Although the Spin-off was completed on March 26, 2018, the Company has reflected the Spin-off in these financial statements as if it occurred on March 31, 2018 as the Company determined that the impact is not material to the condensed consolidated financial statements.
The financial statements present the consolidated results of operations, financial condition, and cash flows of red violet and its subsidiaries. For periods prior to the Spin-off, these financial statements were prepared on a consolidated and combined basis because certain of the entities were under common control. All intercompany accounts and transactions have been eliminated between the consolidated and combined entities.
6
The historical condensed consolidated and combined financial results presented prior to the Spin-off may not be indicative of the results that would have been achieved by the
Company had it operated as a separate, standalone entity prior to the Spin-off. The condensed consolidated and combined financial statements presented prior to the Spin-off do not reflect any changes that may occur in the Company’s operations in connectio
n with or as a result of the Spin-off.
(b) Recently issued accounting standards
As an emerging growth company, we have left open the opportunity to take advantage of the extended transition
period provided to emerging growth companies in Section 13(a) of the Exchange Act, however, it is the Company’s present intention to adopt any applicable new accounting standards timely.
In May 2014, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “
Revenue from Contracts with Customers (Topic 606)
.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, FASB issued ASU No. 2015-14, “
Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date
,” which delays the effective date of ASU 2014-09 by one year. FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, FASB issued ASU No. 2016-08, “
Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)
” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in evaluating whether it controls the good or the service before it is transferred to the customer. The new revenue recognition standard is effective for public entities for annual reporting periods beginning after December 15, 2017, and interim periods therein, that is, the first quarter of 2018. The new standard also permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We adopted Topic 606 as of January 1, 2018 using the modified retrospective method, and the adoption did not have a material impact on our consolidated balance sheets, statements of operations, or cash flows. Refer to Note 2(c) below for further details.
In February 2016, FASB issued ASU No. 2016-02 (“ASU 2016-02”), “
Leases (Topic 842)
,” which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. In July 2018, FASB issued ASU No. 2018-10, “
Codification Improvements to Topic 842, Leases
,” and ASU No. 2018-11, “
Leases (Topic 842): Targeted Improvements
.” Topic 842 will be effective for public entities and private entities in the first quarter of 2019 and the first quarter
of 2020, respectively, on a modified retrospective basis and early adoption is permitted. It will be effective for us in the first quarter of 2020.
We are still evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.
In June 2018, FASB issued ASU No. 2018-07 (“ASU 2018-07”), “
Improvements to Nonemployee Share-Based Payment Accounting
,” which generally expands the scope of ASC 718,
Compensation – Stock Compensation
, to include share-based payment transactions for acquiring goods and services from nonemployees and to supersede the guidance in ASC 505-50,
Equity-Based Payments to Non-employees
, which previously included the accounting for nonemployee awards. This guidance will be effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods, on a modified retrospective basis and early adoption is permitted. We early adopted ASU 2018-07 during the second quarter of 2018 and there was no material impact on our condensed consolidated financial statements and related disclosures.
In August 2018, FASB issued ASU No. 2018-15 (“ASU 2018-15”), “
Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
,” which requires an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. 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. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.
(c) Revenue recognition
On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to all contracts that were not completed contracts at the date of initial application. There was no impact on the opening accumulated deficit as of January 1, 2018 due to the adoption of Topic 606.
7
Revenue is recognized when control of goods or services is transferred to our customers, in an amount th
at reflects the consideration we expect to be entitled to in exchange for those goods or services.
O
ur performance obligation is to provide on demand solutions to our customers by leveraging our proprietary technology and applying machine learning and advan
ced analytics to our massive data repository. The pricing for the customer contracts is based on usage, a monthly fee, or a combination of both.
Available within Topic 606, we have applied the portfolio approach practical expedient in accounting for customer revenue as one collective group, rather than individual contracts. Based on our historical knowledge of the contracts contained in this portfolio and the similar nature and characteristics of the customers, we have concluded the financial statement effects are not materially different than if accounting for revenue on a contract by contract basis.
Revenue is recognized over a period of time since the performance obligation is delivered in a series. Our customers simultaneously receive and consume the benefits provided by the Company’s performance as and when provided. Furthermore, we have elected the “right to invoice” practical expedient, available within ASC 606-10-55-18, as our measure of progress, since we have a right to payment from a customer in an amount that corresponds directly with the value of our performance completed-to-date. The Company's revenue arrangements do not contain significant financing components.
If a customer pays consideration before we transfer services to the customer, those amounts are classified as deferred revenue. As of September 30, 2018 and December 31, 2017, the balance of deferred revenue was $15 and $33, respectively, all of which are expected to be realized in the next 12 months. In relation to the deferred revenue balance as of December 31, 2017, $6 and $33 was recognized into revenue during the three and nine months ended September 30, 2018, respectively.
As of September 30, 2018, approximately $892 of revenue is expected to be recognized in the future for outstanding performance obligations, primarily related to revenue for subscription contracts that have a term of more than 12 months. Approximately $154 will be recognized during the remaining three months of 2018, $567 in 2019 and the remainder in 2020. The actual timing of recognition may vary due to factors outside of the Company’s control. The Company excludes
variable consideration related entirely to wholly unsatisfied
performance
obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer.
Sales commissions are recorded at the time revenue is recognized. These costs are recorded in sales and marketing expenses.
In addition, we elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
3. Loss per share
Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the periods. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and is calculated using the treasury stock method for stock options and unvested shares. Common equivalent shares are excluded from the calculation in the loss periods as their effects would be anti-dilutive.
Prior to the Spin-off, the financial information of red violet represented the consolidated and combined figures of red violet and its subsidiaries. red violet only had 1,000 shares of common stock outstanding, all of which Fluent owned. On March 26, 2018, upon the Spin-off of red violet, an aggregate of 10,266,613 shares of red violet common stock were distributed to Fluent stockholders and certain warrant holders. This number of shares remained outstanding at September 30, 2018, and is utilized to calculate loss per share for the three and nine months ended September 30, 2018 and 2017, as shown in the table below.
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
(In thousands, except share data)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,252
|
)
|
|
$
|
(3,334
|
)
|
|
$
|
(4,830
|
)
|
|
$
|
(18,360
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - Basic and diluted
|
|
$
|
10,266,613
|
|
|
$
|
10,266,613
|
|
|
$
|
10,266,613
|
|
|
$
|
10,266,613
|
|
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted:
|
|
$
|
(0.12
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(1.79
|
)
|
A total of 2,145,500 shares of unvested restricted stock units (“RSUs”) granted during the nine months ended September 30, 2018 have been excluded from the diluted loss per share calculation as the impact is anti-dilutive for the three and nine months ended September 30, 2018.
8
4. Intangible assets, net
Intangible assets other than goodwill consist of the following:
|
|
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
(In thousands)
|
|
Amortization
Period
|
|
Gross Amount
|
|
|
Accumulated Amortization
|
|
|
Net
|
|
|
Gross Amount
|
|
|
Accumulated Amortization
|
|
|
Net
|
|
Software developed for internal use
|
|
5-10 years
|
|
$
|
21,455
|
|
|
$
|
(2,524
|
)
|
|
$
|
18,931
|
|
|
$
|
16,642
|
|
|
$
|
(1,289
|
)
|
|
$
|
15,353
|
|
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, traveling expenses incurred by relevant employees, and other relevant costs.
Amortization expenses of $445 and $217 for the three months ended September 30, 2018 and 2017, respectively, and $1,235 and $528 for the nine months ended September 30, 2018 and 2017, respectively, were included in depreciation and amortization expense. As of September 30, 2018, intangible assets of $3,719, included in the gross amounts of software developed for internal use, have not started amortization, as they are not ready for their intended use.
As of September 30, 2018, estimated amortization expense related to the Company’s intangible assets for the remainder of 2018 through 2023 and thereafter are as follows:
(In thousands)
|
|
|
|
|
Year
|
|
September 30, 2018
|
|
Remainder of 2018
|
|
$
|
458
|
|
2019
|
|
|
2,331
|
|
2020
|
|
|
2,330
|
|
2021
|
|
|
2,328
|
|
2022
|
|
|
2,327
|
|
2023 and thereafter
|
|
|
9,157
|
|
Total
|
|
$
|
18,931
|
|
5. Goodwill
Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As of September 30, 2018 and December 31, 2017, the balance of goodwill of $5,227 was as a result of the acquisition of Interactive Data, LLC (“Interactive Data”), 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 our annual goodwill impairment test is October 1.
As of September 30, 2018 and December 31, 2017, there are no events or changes in circumstances to indicate that goodwill is impaired.
6. Income taxes
red violet is a “C” corporation, while its subsidiaries are all limited liability companies. Before the Spin-off, red violet and its subsidiaries were consolidated with Fluent for U.S. federal income tax purposes. However, for purposes of these financial statements, the income tax provisions were prepared assuming the entities filed separate tax returns.
The Company is subject to federal and state income taxes in the United States.
Our tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, we update our estimate of the annual effective tax rate, and if our estimated annual tax rate changes, we make a cumulative adjustment in that quarter.
9
On December 22, 2017,
the tax reform legislation
commonly known as the Tax Cuts and Jobs Act (the “Act”)
was enacted, with the statutory federal income tax rate lowered to 21% among other changes, effective on January 1, 2018. As a full valuation allowance was provided as of
September 30, 2018
, the Act
does not have a material net impact on our condensed consolidated financial statements, however, certain income tax disclosures are affected.
The Company’s effective income tax rate differed from the statutory federal income tax rate of 21% for the three and nine months ended September 30, 2018 and 34%
for the three and nine months ended September 30, 2017.
For the three and nine months ended September 30, 2018 and 2017, the effective income tax rate was 0%, 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. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the Company’s financial statements.
red violet continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new
authoritative
rulings. red violet has no federal income tax filings that remain open for tax examination as 2018 will be the first filing year for the Company for U.S. federal income tax purposes. However
, Interactive Data’s stand-alone state income tax returns since 2014 remain open for tax examination.
red violet does not have any unrecognized tax benefits as of September 30, 2018 and December 31, 2017.
7. Common stock and preferred stock
Common stock
As of September 30, 2018 and December 31, 2017, the number of authorized shares of common stock was 200,000,000 and 5,000, with a par value of $0.001 per share, respectively, of which, 10,266,613 and 1,000 shares of common stock were issued and outstanding, respectively.
On March 26, 2018, Fluent completed the Spin-off of its risk management business from its digital marketing business by way of a distribution of all the shares of common stock of red violet to Fluent’s stockholders of record as of March 19, 2018, the Record Date, and certain warrant holders, which resulted in a distribution of a total of 10,266,613 shares of red violet common stock.
Preferred stock
As of September 30, 2018, we had 10,000,000 shares of preferred stock with par value of $0.001 per share authorized, and there were no shares of preferred stock issued or outstanding. There was no preferred stock authorized as of December 31, 2017.
8. Share-based compensation
On March 22, 2018, the board of directors of red violet and Fluent, in its capacity as sole stockholder of red violet prior to the Spin-off, 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 March 29, 2018, an aggregate of 56,000 RSUs were granted to certain nonemployee directors, at a grant date fair value of $6.10 per share, under the 2018 Plan, with vesting periods ranging from one to three years.
In July 2018, an aggregate of 602,000 RSUs were granted to certain employees of the Company, at a grant date fair value ranging from $7.53 to $8.60 per share, under the 2018 Plan, with vesting periods ranging from three to four years.
10
On September 5, 2018,
the Company’s
c
omp
ensation
c
ommittee approved the grant of
an aggregate of 1,48
7
,
500
RSUs
, subject to both time- and performance-based requirements,
to certain of its executive officers and directors
,
at a grant date fair value of $7.69 per share,
under
the
2018 Plan
,
with a three-year vesting period.
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 stateme
nts in excess of $7.0 million for such fiscal quarter, (ii) positive adjusted EBITDA, as determined based on
amounts derived from
the Company’s reviewed or audited financial statements for such fiscal quarter, and (iii) the participant continues to provide
services to the Company either as an employee, director or consultant on the last date of the quarter that the performance criteria is met (collectively, the “Performance Criteria”). If the Performance Criteria are met, the RSUs will vest one-third annual
ly on
each of
July 1, 2019, July 1, 2020 and July 1, 2021 (“Time-Based Vesting Requirement”). In the event of a
c
hange of
c
ontrol, all RSUs which have not vested on the date of such
c
hange of
c
ontrol shall immediately vest.
N
o
amortization of share-based compensation expense has been recognized during the three and nine months ended September 30, 2018, in relation to RSUs with Performance Criteria
, because, as of September 30, 2018, the Company determined that it is not probabl
e
that
the Performance Criteria
will be met
.
As of September 30, 2018, unrecognized share-based compensation expense associated with the granted RSUs, excluding those RSUs with Performance Criteria, amounted to $4,449, which is expected to be recognized over a weighted average period of 3.0 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, 2018 and 2017:
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
(In thousands)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Sales and marketing expenses
|
|
$
|
54
|
|
|
$
|
59
|
|
|
$
|
95
|
|
|
$
|
221
|
|
General and administrative expenses
|
|
|
164
|
|
|
|
504
|
|
|
|
337
|
|
|
|
2,025
|
|
Share-based compensation expense
|
|
|
218
|
|
|
|
563
|
|
|
|
432
|
|
|
|
2,246
|
|
Capitalized in intangible assets
|
|
|
135
|
|
|
|
236
|
|
|
|
316
|
|
|
|
629
|
|
Total
|
|
$
|
353
|
|
|
$
|
799
|
|
|
$
|
748
|
|
|
$
|
2,875
|
|
The amounts recorded included an allocation of share-based compensation related to the share-based awards granted by Fluent to company employees or non-employees prior to the Spin-off.
9. Related party transactions
Contribution by Fluent, Inc., recorded in the condensed consolidated statement of changes in shareholders’ equity, represents cash funding provided or the portion of certain expenses allocated by Fluent to red violet, on or prior to the Spin-off.
These allocated expenses are primarily corporate employee salaries and benefits of the functional groups (inclusive of executive management, accounting, administrative and information technology) and corporate administrative expenses (inclusive of legal services, accounting and finance services and other corporate and infrastructure services). Corporate employee salaries and benefits were allocated on the basis of time spent, and corporate administrative expenses were allocated on the basis of relative percentage of services utilized or benefit received. red violet recorded expenses of $0 and $961 for the three months ended September 30, 2018 and 2017, respectively, and $325 and $2,849 for the nine months ended September 30, 2018 and 2017, respectively, as a result of the allocation of expenses from Fluent. Upon the Spin-off, Fluent no longer allocates any expenses to red violet.
In addition, share-based compensation of $0 and $799 for the three months ended September 30, 2018 and 2017, respectively, and $344 and $2,875 for the nine months ended September 30, 2018 and 2017, respectively, relating to the share-based awards granted by Fluent prior to the Spin-off, were recorded.
Management believes the assumptions and allocations underlying the condensed consolidated financial statements are reasonable and appropriate under the circumstances. The expense allocations have been determined on a basis considered to be a reasonable reflection of the utilization of services provided to or the benefit received by red violet during the periods presented relative to the total costs and expenses incurred by Fluent. However, these expenses may not be reflective of the expenses that would have been recorded had red violet been an entity that operated independently of Fluent, and not been a subsidiary of Fluent. Consequently, future results of operations of red violet after the Spin-off will include costs and expenses that may be materially different than red violet’s historical results of operations, financial position, and cash flows. Accordingly, the financial statements for these periods are not indicative of red violet’s future results of operations, financial position, and cash flow.
11
MDB Agreement
and
Services
Agreement
On April 26, 2018, the Company entered into a consulting agreement with MDB Management, Inc. (“MDB”), a company owned by Michael Brauser, the then chairman of the Company’s board of directors, and one of his sons, for MDB to provide consulting services to the Company related to business development, future acquisitions, and strategic transactions (“MDB Agreement”), f
or a term of
six months
, automatically renewing for additional six month periods unless either party provides written notice to the other of its intent not to renew not fewer than 30 days prior to the expiration of the then current term
. Under the MDB Agreement, the consulting service fee is $30 per month. The Company recognized consulting service fees relating to the MDB Agreement of a total of $30 and $90 during the three and nine months ended September 30, 2018, respectively.
On August 7, 2018, the MDB Agreement was terminated by mutual agreement of the parties with no further liability under the MDB Agreement by either party. On the same day, the board of directors of the Company appointed Michael Brauser Executive Chairman of the Company and the Company entered into an executive chairman services agreement with Mr. Brauser, pursuant to which Mr. Brauser will be providing recommendations on organizational and capital structure, future acquisitions and strategic transactions (“Services Agreement”), for a term of one year, automatically renewing for additional one-year periods unless either party provides written notice to the other of its intent not to renew not fewer than 30 days prior to the expiration of the then current term. Under the Services Agreement, Mr. Brauser 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 and nine months ended September 30, 2018.
Effective September 9, 2018, Mr. Brauser resigned as Executive Chairman and as a member of the board of directors of the Company. Mr. Brauser remains a consultant to the Company and continues to provide services under the existing Services Agreement.
10. Commitments and contingencies
(a) Capital commitment
The Company incurred data costs of $1,447 and $1,154 for the three months ended September 30, 2018 and 2017, respectively, and $4,080 and $3,333 for the nine months ended September 30, 2018 and 2017, respectively, under certain data licensing agreements. As of September 30, 2018, material capital commitments under certain data licensing agreements were $20,331, shown as follows:
(In thousands)
|
|
|
|
|
Year
|
|
September 30, 2018
|
|
Remainder of 2018
|
|
$
|
1,444
|
|
2019
|
|
|
6,410
|
|
2020
|
|
|
6,400
|
|
2021
|
|
|
4,775
|
|
2022
|
|
|
1,302
|
|
Total
|
|
$
|
20,331
|
|
(b) Contingencies
We may be involved in litigation from time to time in the ordinary course of business. We do not believe that the ultimate resolution of any such matters will have a material adverse effect on our business, financial condition, results of operations or cash flows. However, the results of such matters cannot be predicted with certainty and we cannot assure you that the ultimate resolution of any legal or administrative proceeding or dispute will not have a material adverse effect on our business, financial condition, results of operations and cash flows.
12