10-Q 1 rdvt-20210930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38407

 

RED VIOLET, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

82-2408531

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

2650 North Military Trail, Suite 300, Boca Raton, Florida 33431

(Address of Principal Executive Offices) (Zip Code)

(561) 757-4000

(Registrant’s Telephone Number, Including Area Code)

None

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol (s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

RDVT

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ YesNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ YesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes No

As of November 5, 2021, the registrant had 12,865,524 shares of common stock outstanding.

 

 

 

 


 

RED VIOLET, INC.

TABLE OF CONTENTS FOR FORM 10-Q

 

 

 

 

 

Page

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements (unaudited)

 

 

 

 

Condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020

 

1

 

 

Condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020

 

2

 

 

Condensed consolidated statements of changes in shareholders' equity for the three and nine months ended September 30, 2021 and 2020

 

3

 

 

Condensed consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020

 

4

 

 

Notes to condensed consolidated financial statements

 

5

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

12

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

19

Item 4.

 

Controls and Procedures

 

19

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

20

Item 1A.

 

Risk Factors

 

20

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

20

Item 3.

 

Defaults Upon Senior Securities

 

20

Item 4.

 

Mine Safety Disclosures

 

20

Item 5.

 

Other Information

 

20

Item 6.

 

Exhibits

 

21

 

 

 

 

 

SIGNATURES

 

22

 

 

 

 


 

PART I - FINANCIAL INFORMATION

Unless otherwise indicated or required by the context, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” “red violet,” or the “Company,” refer to Red Violet, Inc. and its consolidated subsidiaries.

Item 1. Financial Statements.

 

RED VIOLET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(unaudited)

 

 

 

September 30, 2021

 

 

December 31, 2020

 

ASSETS:

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,397

 

 

$

12,957

 

Accounts receivable, net of allowance for doubtful accounts of $17 and $38 as of
  September 30, 2021 and December 31, 2020, respectively

 

 

4,040

 

 

 

3,201

 

Prepaid expenses and other current assets

 

 

650

 

 

 

581

 

Total current assets

 

 

18,087

 

 

 

16,739

 

Property and equipment, net

 

 

587

 

 

 

558

 

Intangible assets, net

 

 

27,979

 

 

 

27,170

 

Goodwill

 

 

5,227

 

 

 

5,227

 

Right-of-use assets

 

 

1,790

 

 

 

2,161

 

Other noncurrent assets

 

 

137

 

 

 

139

 

Total assets

 

$

53,807

 

 

$

51,994

 

LIABILITIES AND SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,366

 

 

$

2,075

 

Accrued expenses and other current liabilities

 

 

746

 

 

 

1,458

 

Current portion of operating lease liabilities

 

 

600

 

 

 

552

 

Current portion of long-term loan

 

 

-

 

 

 

449

 

Deferred revenue

 

 

424

 

 

 

504

 

Total current liabilities

 

 

3,136

 

 

 

5,038

 

Noncurrent operating lease liabilities

 

 

1,452

 

 

 

1,908

 

Long-term loan

 

 

-

 

 

 

1,703

 

Total liabilities

 

 

4,588

 

 

 

8,649

 

Shareholders' equity:

 

 

 

 

 

 

Preferred stock—$0.001 par value, 10,000,000 shares authorized, and 0 shares
  issued and outstanding, as of September 30, 2021 and December 31, 2020

 

 

-

 

 

 

-

 

Common stock—$0.001 par value, 200,000,000 shares authorized, 12,863,024 and
  
12,167,327 shares issued and outstanding, as of September 30, 2021 and
  December 31, 2020

 

 

13

 

 

 

13

 

Additional paid-in capital

 

 

69,440

 

 

 

66,005

 

Accumulated deficit

 

 

(20,234

)

 

 

(22,673

)

Total shareholders' equity

 

 

49,219

 

 

 

43,345

 

Total liabilities and shareholders' equity

 

$

53,807

 

 

$

51,994

 

 

See notes to condensed consolidated financial statements

1


 

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share data)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

11,668

 

 

$

9,267

 

 

$

32,764

 

 

$

25,623

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (exclusive of depreciation and amortization)

 

 

2,787

 

 

 

2,703

 

 

 

8,268

 

 

 

8,582

 

Sales and marketing expenses

 

 

2,154

 

 

 

2,217

 

 

 

6,724

 

 

 

6,139

 

General and administrative expenses

 

 

4,127

 

 

 

4,147

 

 

 

13,567

 

 

 

12,844

 

Depreciation and amortization

 

 

1,345

 

 

 

1,118

 

 

 

3,933

 

 

 

3,020

 

Total costs and expenses

 

 

10,413

 

 

 

10,185

 

 

 

32,492

 

 

 

30,585

 

Income (loss) from operations

 

 

1,255

 

 

 

(918

)

 

 

272

 

 

 

(4,962

)

Interest income (expense), net

 

 

1

 

 

 

(7

)

 

 

(8

)

 

 

24

 

Gain on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

2,175

 

 

 

-

 

Income (loss) before income taxes

 

 

1,256

 

 

 

(925

)

 

 

2,439

 

 

 

(4,938

)

Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income (loss)

 

$

1,256

 

 

$

(925

)

 

$

2,439

 

 

$

(4,938

)

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.10

 

 

$

(0.08

)

 

$

0.20

 

 

$

(0.42

)

Diluted

 

$

0.09

 

 

$

(0.08

)

 

$

0.19

 

 

$

(0.42

)

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

12,741,723

 

 

 

12,072,716

 

 

 

12,408,152

 

 

 

11,758,907

 

Diluted

 

 

13,645,208

 

 

 

12,072,716

 

 

 

13,140,854

 

 

 

11,758,907

 

 

See notes to condensed consolidated financial statements

2


 

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Amounts in thousands, except share data)

(unaudited)

 

 

 

Common stock

 

 

Treasury stock

 

 

Additional paid-in

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

Total

 

Balance at June 30, 2020

 

 

11,707,829

 

 

$

12

 

 

 

(103,147

)

 

$

(1,255

)

 

$

64,806

 

 

$

(19,873

)

 

$

43,690

 

Vesting of restricted stock units

 

 

663,836

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

-

 

Increase in treasury stock resulting
  from shares withheld to cover
  statutory taxes

 

 

-

 

 

 

-

 

 

 

(121,608

)

 

 

(1,828

)

 

 

-

 

 

 

-

 

 

 

(1,828

)

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,277

 

 

 

-

 

 

 

2,277

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(925

)

 

 

(925

)

Balance at September 30, 2020

 

 

12,371,665

 

 

$

13

 

 

 

(224,755

)

 

$

(3,083

)

 

$

67,082

 

 

$

(20,798

)

 

$

43,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2021

 

 

12,248,794

 

 

$

13

 

 

 

-

 

 

$

-

 

 

$

70,911

 

 

$

(21,490

)

 

$

49,434

 

Vesting of restricted stock units

 

 

742,101

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Increase in treasury stock resulting
  from shares withheld to cover
  statutory taxes

 

 

-

 

 

 

-

 

 

 

(127,871

)

 

 

(2,785

)

 

 

-

 

 

 

-

 

 

 

(2,785

)

Retirement of treasury stock

 

 

(127,871

)

 

 

-

 

 

 

127,871

 

 

 

2,785

 

 

 

(2,785

)

 

 

 

 

 

-

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,314

 

 

 

-

 

 

 

1,314

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,256

 

 

 

1,256

 

Balance at September 30, 2021

 

 

12,863,024

 

 

$

13

 

 

 

-

 

 

$

-

 

 

$

69,440

 

 

$

(20,234

)

 

$

49,219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

Treasury stock

 

 

Additional paid-in

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

Total

 

Balance at December 31, 2019

 

 

11,657,912

 

 

$

12

 

 

 

(103,147

)

 

$

(1,255

)

 

$

59,187

 

 

$

(15,860

)

 

$

42,084

 

Vesting of restricted stock units

 

 

713,753

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

-

 

Increase in treasury stock resulting
  from shares withheld to cover
  statutory taxes

 

 

-

 

 

 

-

 

 

 

(121,608

)

 

 

(1,828

)

 

 

-

 

 

 

-

 

 

 

(1,828

)

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,896

 

 

 

-

 

 

 

7,896

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,938

)

 

 

(4,938

)

Balance at September 30, 2020

 

 

12,371,665

 

 

$

13

 

 

 

(224,755

)

 

$

(3,083

)

 

$

67,082

 

 

$

(20,798

)

 

$

43,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

12,167,327

 

 

$

13

 

 

 

-

 

 

$

-

 

 

$

66,005

 

 

$

(22,673

)

 

$

43,345

 

Vesting of restricted stock units

 

 

823,568

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Increase in treasury stock resulting
  from shares withheld to cover
  statutory taxes

 

 

-

 

 

 

-

 

 

 

(127,871

)

 

 

(2,785

)

 

 

-

 

 

 

-

 

 

 

(2,785

)

Retirement of treasury stock

 

 

(127,871

)

 

 

-

 

 

 

127,871

 

 

 

2,785

 

 

 

(2,785

)

 

 

 

 

 

-

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,220

 

 

 

-

 

 

 

6,220

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,439

 

 

 

2,439

 

Balance at September 30, 2021

 

 

12,863,024

 

 

$

13

 

 

 

-

 

 

$

-

 

 

$

69,440

 

 

$

(20,234

)

 

$

49,219

 

 

See notes to condensed consolidated financial statements

3


 

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss)

 

$

2,439

 

 

$

(4,938

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

3,933

 

 

 

3,020

 

Share-based compensation expense

 

 

5,197

 

 

 

6,416

 

Write-off of long-lived assets

 

 

24

 

 

 

117

 

Provision for bad debts

 

 

67

 

 

 

360

 

Noncash lease expenses

 

 

371

 

 

 

341

 

Interest expense

 

 

11

 

 

 

7

 

Gain on extinguishment of debt

 

 

(2,175

)

 

 

-

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(906

)

 

 

263

 

Prepaid expenses and other current assets

 

 

(69

)

 

 

106

 

Other noncurrent assets

 

 

2

 

 

 

109

 

Accounts payable

 

 

(709

)

 

 

61

 

Accrued expenses and other current liabilities

 

 

(700

)

 

 

(803

)

Deferred revenue

 

 

(80

)

 

 

52

 

Operating lease liabilities

 

 

(408

)

 

 

(362

)

Net cash provided by operating activities

 

 

6,997

 

 

 

4,749

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(223

)

 

 

(98

)

Capitalized costs included in intangible assets

 

 

(3,549

)

 

 

(4,310

)

Net cash used in investing activities

 

 

(3,772

)

 

 

(4,408

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from long-term loan

 

 

-

 

 

 

2,152

 

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

 

 

(2,785

)

 

 

(1,828

)

Net cash (used in) provided by financing activities

 

 

(2,785

)

 

 

324

 

Net increase in cash and cash equivalents

 

$

440

 

 

$

665

 

Cash and cash equivalents at beginning of period

 

 

12,957

 

 

 

11,776

 

Cash and cash equivalents at end of period

 

$

13,397

 

 

$

12,441

 

SUPPLEMENTAL DISCLOSURE INFORMATION

 

 

 

 

 

 

Cash paid for interest

 

$

-

 

 

$

-

 

Cash paid for income taxes

 

$

-

 

 

$

-

 

Share-based compensation capitalized in intangible assets

 

$

1,023

 

 

$

1,480

 

Retirement of treasury stock

 

$

2,785

 

 

$

-

 

 

See notes to condensed consolidated financial statements

4


 

RED VIOLET, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share data)

(unaudited)

1. Summary of significant accounting policies

(a) Basis of preparation

The accompanying unaudited condensed consolidated financial statements of Red Violet, Inc., a Delaware corporation, and its consolidated subsidiaries (collectively, “red violet” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States (“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 GAAP have been condensed or omitted pursuant to those rules and regulations.

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, 2021.

The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“Form 10-K”).

The condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited financial statements as of that date included in the Form 10-K, but does not include all disclosures required by GAAP.

The Company has only one operating segment, as defined by Accounting Standards Codification (“ASC”) 280, “Segment Reporting.”

Principles of consolidation

The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant transactions among the Company and its subsidiaries have been eliminated upon consolidation.

(b) Recently issued accounting standards

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. 

 

2. Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings (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 unvested shares. 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,

 

(In thousands, except share data)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,256

 

 

$

(925

)

 

$

2,439

 

 

$

(4,938

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

12,741,723