rdvt-10q_20210331.htm

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 March 31, 2021

☐	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. ☒ Yes ☐ No

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). ☒ Yes ☐ No

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 May 7, 2021, the registrant had 12,241,752 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 March 31, 2021 and December 31, 2020	2
	Condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020	3
	Condensed consolidated statements of changes in shareholders' equity for the three months ended March 31, 2021 and 2020	4
	Condensed consolidated statements of cash flows for the three months ended March 31, 2021 and 2020	5
	Notes to condensed consolidated financial statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	20

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	22

SIGNATURES		23

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)

	March 31, 2021			December 31, 2020
ASSETS:
Current assets:
Cash and cash equivalents	$	12,896		$	12,957
Accounts receivable, net of allowance for doubtful accounts of $5 and $38 as of March 31, 2021 and December 31, 2020, respectively		3,582			3,201
Prepaid expenses and other current assets		973			581
Total current assets		17,451			16,739
Property and equipment, net		530			558
Intangible assets, net		27,565			27,170
Goodwill		5,227			5,227
Right-of-use assets		2,040			2,161
Other noncurrent assets		137			139
Total assets	$	52,950		$	51,994
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable	$	1,974		$	2,075
Accrued expenses and other current liabilities		880			1,458
Current portion of operating lease liabilities		567			552
Current portion of long-term loan		806			449
Deferred revenue		453			504
Total current liabilities		4,680			5,038
Noncurrent operating lease liabilities		1,760			1,908
Long-term loan		1,346			1,703
Total liabilities		7,786			8,649
Shareholders' equity:
Preferred stock—$0.001 par value, 10,000,000 shares authorized, and 0 shares 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 12,167,327 shares issued and outstanding, as of March 31, 2021 and December 31, 2020		13			13
Additional paid-in capital		68,402			66,005
Accumulated deficit		(23,251	)		(22,673	)
Total shareholders' equity		45,164			43,345
Total liabilities and shareholders' equity	$	52,950		$	51,994

See notes to condensed consolidated financial statements

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share data)

(unaudited)

	Three Months Ended March 31,
	2021			2020
Revenue	$	10,217		$	9,300
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization)		2,761			3,292
Sales and marketing expenses		2,221			2,176
General and administrative expenses		4,550			4,434
Depreciation and amortization		1,258			910
Total costs and expenses		10,790			10,812
Loss from operations		(573	)		(1,512	)
Interest (expense) income, net		(5	)		31
Loss before income taxes		(578	)		(1,481	)
Income taxes		-			-
Net loss	$	(578	)	$	(1,481	)
Loss per share:
Basic and diluted	$	(0.05	)	$	(0.13	)
Weighted average number of shares outstanding:
Basic and diluted		12,207,193			11,583,214

See notes to condensed consolidated financial statements

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 December 31, 2019		11,657,912	$	12		(103,147	)	$	(1,255	)	$	59,187	$	(15,860	)	$	42,084
Vesting of restricted stock units		35,250		-		-			-			-		-			-
Share-based compensation		-		-		-			-			2,809		-			2,809
Net loss		-		-		-			-			-		(1,481	)		(1,481	)
Balance at March 31, 2020		11,693,162	$	12		(103,147	)	$	(1,255	)	$	61,996	$	(17,341	)	$	43,412

Balance at December 31, 2020		12,167,327	$	13		-		$	-		$	66,005	$	(22,673	)	$	43,345
Vesting of restricted stock units		40,750		-		-			-			-		-			-
Share-based compensation		-		-		-			-			2,397		-			2,397
Net loss		-		-		-			-			-		(578	)		(578	)
Balance at March 31, 2021		12,208,077	$	13		-		$	-		$	68,402	$	(23,251	)	$	45,164

See notes to condensed consolidated financial statements

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(unaudited)

	Three Months Ended March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(578	)	$	(1,481	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,258			910
Share-based compensation expense		2,046			2,221
Write-off of long-lived assets		19			17
Provision for bad debts		59			190
Noncash lease expenses		121			111
Interest expense		5			-
Changes in assets and liabilities:
Accounts receivable		(440	)		314
Prepaid expenses and other current assets		(392	)		(394	)
Other noncurrent assets		2			63
Accounts payable		(101	)		91
Accrued expenses and other current liabilities		(583	)		(755	)
Deferred revenue		(51	)		79
Operating lease liabilities		(133	)		(117	)
Net cash provided by operating activities		1,232			1,249
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(46	)		(33	)
Capitalized costs included in intangible assets		(1,247	)		(1,538	)
Net cash used in investing activities		(1,293	)		(1,571	)
Net decrease in cash and cash equivalents	$	(61	)	$	(322	)
Cash and cash equivalents at beginning of period		12,957			11,776
Cash and cash equivalents at end of period	$	12,896		$	11,454
SUPPLEMENTAL DISCLOSURE INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Share-based compensation capitalized in intangible assets	$	351		$	588

See notes to condensed consolidated financial statements

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. (“red violet” or the “Company”), a Delaware corporation, 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 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.

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): 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 a

SEC Form 10-Q filed by Red Violet, Inc.