Unless otherwise indicated or required by the context, all references in this Quarterly Report on Form 10-Q to ~~“we,” “us,” “our,” “cogint,”~~"we," "us," "our," "Fluent," or the ~~“Company,”~~"Company," refer to ~~Cogint,~~Fluent, Inc. and its consolidated subsidiaries.

~~CONDENSED~~ CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN ~~SHAREHOLDERS’~~SHAREHOLDERS' EQUITY

The accompanying unaudited ~~condensed~~ consolidated financial statements have been prepared ~~for Cogint,~~by Fluent, Inc., a Delaware corporation (the "Company" or "Fluent"), in accordance with accounting principles generally accepted in the United States (“("US ~~GAAP”~~GAAP") and applicable rules and regulations of the Securities and Exchange Commission (the ~~“SEC”~~"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.

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, ~~2017.~~2020.

From time to time, the Company may enter into relationships or investments with other entities, and, in certain instances, the entity in which the Company has a relationship or investment may qualify as a variableinterestentity (“VIE”). The Company consolidates a VIE in its financial statements if the Company is deemed to be the primary beneficiary of the VIE. The primary beneficiary is the party that has the power to direct activities that most significantly impact the operations of the VIE and has the obligation to absorb losses or the right to benefits from the VIE that could potentially be significant to the VIE. As of April 1, 2020, the Company has included Winopoly, LLC in its consolidated financial statements as a VIE (as further discussed in Note 11,Business acquisitions and Note 12,Variable interest entity).

The information included in this quarterly report on Form ~~10-Q~~10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in ~~our~~the Company's Annual Report on Form ~~10-K~~10-K for the year ended December 31, ~~2016 (“2016~~2019 ("2019 Form ~~10-K”~~10-K").

filed with the SEC on March 13, 2020. The ~~condensed~~ consolidated balance sheet as of December 31, ~~2016~~2019 included herein was derived from the audited financial statements as of that date included in the ~~2016~~2019 Form ~~10-K, but does not include all disclosures including notes required by US GAAP.~~10-K.

~~Certain prior period items, including write-off of long-lived assets, have been reclassified to conform to the current period presentation.~~

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.

In ~~May 2014,~~ January 2016, FASB issued ASU No.2016-13,Financial ~~Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”)~~Instruments—Credit Losses, and additional changes, modifications, clarifications or interpretations thereafter, which require a reporting entity to estimate credit losses on certain types of financial instruments, and present assets held at amortized cost and available-for-sale debt securities at the amount expected to be collected. The new guidance is effective for annual and interim periods beginning after December 15, 2022, “and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

(c) Revenue ~~from Contracts with Customers (Topic 606)~~~~.” The standard’s core principle~~recognition

Revenue is ~~that a company will recognize revenue~~recognized when ~~it transfers promised~~control of goods or services is transferred to customers, in ~~an amount~~amounts that ~~reflects~~reflect the consideration ~~to which~~ the ~~company~~Company expects to be entitled to in exchange for those goods or services. ~~In August 2015, FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral~~The Company's performance obligation is typically to (a) deliver data records, based on predefined qualifying characteristics specified by the customer or (b) generate conversions, based on predefined user actions (for example, a click, a registration or the installation of an app) and subject to certain qualifying characteristics specified by the customer.

If a customer pays consideration before the Company's performance obligations are satisfied, such amounts are classified as deferred revenue on the consolidated balance sheets. As of June 30, 2020 and December 31, 2019, the balance of deferred revenue was $2,468 and $1,140, respectively. The majority 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~~deferred revenue balance as of December 31, 2019 was recognized into revenue during the ~~original effective date.~~first quarter of 2020.

When there is a delay between the period in which revenue is recognized and when a customer invoice is issued, revenue is recognized and the related amounts are recorded as unbilled revenue within accounts receivable on the consolidated balance sheets. As of June 30, 2020 and December 31, 2019, unbilled revenue included in accounts receivable was $23,142 and $29,061, respectively. In ~~March 2016, FASB issued ASU No. 2016-08, “Revenue~~line with industry practice, the unbilled revenue balance is recorded based on the Company's internally tracked conversions, net of estimated variances between this amount and the amount tracked and subsequently confirmed by customers. Substantially all amounts included within the unbilled revenue balance are invoiced to customers within the month directly following the period of service. Historical estimates related to unbilled revenue have not been materially different from ~~Contracts~~actual revenue bille

The preparation of consolidated financial statements in accordance with ~~Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (“ASU 2016-08”), which clarifies~~US GAAP requires the ~~implementation guidance on principal versus agent considerations. The guidance includes indicators~~Company’s management to ~~assist an entity in evaluating whether it controls the good or the service before it is transferred~~make estimates and assumptions relating to the ~~customer. The new revenue recognition standard will be effective for public entities for annual reporting periods beginning after December 15, 2017,~~reported amounts of assets and ~~interim periods therein, that is,~~liabilities, the ~~first quarter~~disclosure 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 recognizedcontingent assets and liabilities at the date of ~~initial application (the modified retrospective method). We currently do not plan to early adopt ASU 2014-09, and we anticipate adopting~~ the ~~standard using the modified retrospective method. We plan to have our preliminary assessment on the impact this guidance will have on our condensed~~ consolidated financial statements, and ~~related disclosures in~~ the ~~fourth quarter~~reported amounts of ~~2017.~~revenue and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the allowance for doubtful accounts, useful lives of intangible assets, recoverability of the carrying amounts of goodwill and intangible assets, the portion of revenue subject to estimates for variances between internally-tracked conversions and those confirmed by the customer, purchase accounting, put/call considerations, consolidation of variable interest entity and income tax provision. These estimates are often based on complex judgments and assumptions that management believes to be reasonable, but are inherently uncertain and unpredictable. Actual results could differ from these estimates.

~~In February 2016, FASB issued ASU No. 2016-02 (“ASU 2016-02”)~~Except for the impairment of goodwill related to the Company’s All Other reporting unit as discussed in Note 4,Goodwill, “~~Leases (Topic 842),”~~ ~~which generally requires companies~~results of operations for the three and six months ended June 30, 2020 did not include any adjustments to ~~recognize operating and financing lease~~assets or liabilities ~~and corresponding right-of-use assets on~~due to the ~~balance sheet. This guidance will be effective in~~impact of COVID-19. While the ~~first quarter of 2019 on a modified retrospective basis and early adoption~~Company has not incurred significant disruptions to its business thus far from the COVID-19 pandemic, management is ~~permitted. We are still evaluating~~unable to accurately predict the ~~effect that this guidance~~impact COVID-19 will have on ~~our consolidated financial statements and related disclosures.~~

~~In March 2016, FASB issued ASU No. 2016-09 (“ASU 2016-09”), “Compensation-Stock Compensation (Topic 718): Improvement~~its operations due to ~~Employee Share-based Payment Accounting,”~~ ~~which simplifies the accounting for share-based payment transactions,~~numerous uncertainties, including the income tax consequences, an option to recognize gross share-based compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. We adopted ASU 2016-09 in the first quarter of 2017 on a retrospective basis. As a resultseverity of the ~~adoption,~~disease, the ~~Company recorded an increase to~~duration of the deferred tax asset balance and an increase to the corresponding valuation allowance of $301 related to the cumulative-effect adjustment as of January 1, 2017. For the three and nine months ended September 30, 2017, the Company recorded tax expense of $482 and $2,451, respectively, which was offsetoutbreak, actions that may be taken by ~~a corresponding reduction in the valuation allowance.~~

~~In August 2016,~~ ~~FASB issued ASU No. 2016-15 (“ASU 2016-15”), “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,”~~ which provides guidance for certain cash flow issues, including contingent consideration payments made after a business combination and debt prepayment or debt extinguishment costs, etc. The guidance will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and early adoption is permitted. We are still evaluatinggovernmental authorities, the impact to customers' and suppliers' businesses and numerous other factors. Management will continue to evaluate the nature and extent that COVID-19 will impact its business, results of ~~ASU 2016-15 on our condensed consolidated~~operations and financial ~~statements.~~condition.

In November 2016, the FASB issued ASU 2016-18 (“ASU 2016-18”), “Restricted Cash,” which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company plans to adopt this standard on January 1, 2018, and the standard will result in changes to its consolidated statements of cash flows such that restricted cash amounts will be included in the beginning-of-period and end-of-period cash and cash equivalents totals.

~~In January 2017, the FASB issued Accounting Standards Update No. 2017-04 (“ASU 2017-04”), “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,”~~ which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for us in the first quarter of 2020 on a prospective basis, and early adoption is permitted. We do not expect the standard to have a material impact on our condensed consolidated financial statements.

Basic ~~loss~~income per share is computed by dividing net ~~loss~~income by the weighted average number of common shares outstanding during the ~~periods.~~period, in addition to restricted stock units ("RSUs") and restricted common stock that are vested but not delivered. Diluted ~~loss~~income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock ~~were~~are exercised or converted into common stock and is calculated using the treasury stock method for stock options, restricted stock units, restricted stock, warrants and ~~unvested shares.~~deferred common stock. Common equivalent shares are excluded from the calculation in ~~the~~ loss periods, as their effects would be anti-dilutive.

For the three and six months ended June 30, 2020 and 2019, basic and diluted ~~loss~~income per share ~~for the three and nine months ended September 30, 2017 and 2016 is~~was as follows:

The following potentially dilutive securities were excluded from the calculation of diluted income per share, as their effects would have been anti-dilutive for the periods presented:

~~The gross amount associated with software developed for internal use mainly represents capitalized costs of internally developed software.~~ The amounts relating to acquired proprietary technology, customer relationships, trade names, domain names, databases and non-competition agreements ~~mainly~~primarily represent the fair values of intangible assets acquired as a result of the acquisition of Fluent, LLC, ~~(“Fluent”)~~ effective on December 8, 2015 ~~(the “Fluent Acquisition”~~(the "Fluent LLC Acquisition") ~~and~~ , the acquisition of Q Interactive, LLC, ~~(“Q Interactive”)~~ effective on June 8, 2016 (the "Q Interactive Acquisition"), the acquisition of substantially all the assets of AdParlor Holdings, Inc. and certain of its affiliates, effective July 1, 2019 (the "AdParlor Acquisition"), and the acquisition of a 50% interest in Winopoly, LLC (the ~~“Q Interactive Acquisition”~~"Winopoly Acquisition"), effective April 1, 2020 (see Note 11, Business acquisitions).

~~On January 18, 2017,~~During the ~~Company’s management~~three months ended June 30, 2020, the Company determined that the effects of the macroeconomic conditions arising from the global COVID-19 pandemic and ~~Board~~the social unrest throughout the United States during June 2020, which changed the media-buying patterns of ~~Directors approved a plan~~certain customers directly impacting the All Other reporting unit, constituted an impairment triggering event. As such, the Company conducted an interim test of the recoverability of its long-lived assets. Based on the results of this recoverability test, which measured the Company's projected undiscounted cash flows as compared to ~~merge and fully integrate Q Interactive’s business into Fluent (the “Q Interactive Integration”).~~ ~~As a result,~~ the ~~remaining balance~~carrying value of the asset group, the Company determined that, as of June 30, 2020, its long-lived assets were not impaired. Management believes that the assumptions utilized in this interim impairment testing, including the determination of ~~$3,626, relating primarily to~~estimated future cash flows, are reasonable. Future tests may indicate impairment if actual future cash flows or other factors differ from the ~~acquired proprietary technology and trade names acquired~~assumptions used in the ~~Q Interactive Acquisition, was written off to operating expenses as a write-off~~Company's interim impairment test at June 30, 2020.

Table of ~~long-lived assets.~~Contents

Amortization ~~expenses~~expense of ~~$3,362~~$3,659 and ~~$3,333~~$3,127 for the three months ended ~~September~~June 30, ~~2017~~ 2020 and ~~2016,~~2019, respectively, and ~~$9,931~~$7,206 and ~~$8,726~~$6,252, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~ 2020 and ~~2016,~~2019, respectively, ~~were~~is included in depreciation and amortization ~~expenses.~~expenses in the consolidated statements of operations. As of ~~September~~June 30, ~~2017,~~2020, intangible assets with a carrying amount of ~~$3,444,~~$633, included in the gross ~~amounts~~amount of software developed for internal use, have not ~~been amortized. These intangible assets will start to amortize when~~ commenced amortization, as they are ~~put into~~not ready for their intended use.

As of ~~September~~June 30, ~~2017,~~2020, estimated amortization ~~expenses~~expense related to the ~~Company’s~~Company's intangible assets for the remainder of ~~2017~~2020 and through ~~2022~~2025 and thereafter are as follows:

Goodwill represents the cost in excess of ~~the~~ fair value of ~~the~~ net assets acquired in a business combination. As of ~~September~~June 30, ~~2017 and December 31, 2016,~~2020, the total balance of goodwill ~~includes $5,227 as a result of~~was $165,088, and relates to the acquisition of Interactive Data, LLC, ~~(“Interactive Data”) effective on October 2, 2014, $155,645 as a result of~~ the Fluent LLC Acquisition, ~~effective on December 8, 2015, and $5,384 as a result of~~ the Q Interactive Acquisition, ~~effective on June 8, 2016.~~the AdParlor Acquisition, and the Winopoly Acquisition (see Note 11, Business acquisitions).

In accordance with ASC ~~Topic~~ 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~~the Company's annual goodwill impairment test is October 1.

During the three months ended June 30, 2020, the Company determined that the effects of the macroeconomic conditions arising from the global COVID-19 pandemic and the social unrest throughout the United States during June 2020, which changed the media-buying patterns of certain customers directly impacting the All Other reporting unit, constituted an impairment triggering event. As such, the Company conducted an interim test of the fair value of its goodwill for potential impairment as of June 30, 2020. The results of this interim impairment test, which used a combination of income and market approaches to determine the fair value of the All Other reporting unit, indicated that its carrying value exceeded its estimated fair value by 8.9%, the Company concluded that All Other's goodwill of $4,983 was impaired by $817. The Company believes that the assumptions utilized in its interim impairment testing, including the determination of an appropriate discount rate of 16%, long-term profitability growth projections, and estimated future cash flows, are reasonable. The interim goodwill impairment test reflected management's best estimate of the economic impact to its business, end-market conditions and recovery timelines. While no further triggering events were identified by management as of June 30, 2020, if the ongoing economic uncertainty proves to be more severe than estimated, or if the economic recovery takes longer to materialize or does not materialize as strongly as anticipated, this could result in future impairment charges.

As of ~~September~~June 30, ~~2017, there~~2020 and December 31, 2019, the change in the carrying value of goodwill for the Company's operating segments are ~~no events or changes in circumstances to indicate that goodwill is impaired.~~listed below:

Long-term debt, net, ~~including promissory notes payable~~related to ~~certain shareholders, net, as of September 30, 2017, consist~~the Refinanced Term Loan and Note Payable (as defined below) consisted of the following:

On March 26, 2018, Fluent, LLC refinanced and fully repaid its existing term loans and certain promissory notes, ~~payable to certain shareholders, net, as of December 31, 2016, consist of the following:~~

On which had been entered into on December 8, 2015, ~~Fluent entered into an agreement (“Credit Agreement”)~~ with ~~certain financial institutions, for~~ a new term loan in the amount of ~~$45,000 (“~~$70.0 million ("Refinanced Term ~~Loan”~~Loan"), ~~with Whitehorse Finance, Inc. acting as the agent~~pursuant to a Limited Consent and Amendment No.6 ("Amendment No.6") to its Credit Agreement (the ~~“Term Loan Agent”~~"Credit Agreement"). ~~Fluent’s obligations in respect of the~~The Refinanced Term Loan ~~are~~is guaranteed by the Company and ~~substantially all of the other~~its direct and indirect subsidiaries, ~~of the Company~~ and ~~secured by substantially all of such entities’ assets. The Credit Agreement has a five year term.~~

~~Prior to the Amendment No. 3 to Credit Agreement entered into on January 19, 2017 (the “Amendment No. 3”),~~ payments of principal in the amount of $563 each were due on the last day of each quarter, commencing March 31, 2016. Additionally, 50% of excess cash flow of Fluent and its subsidiaries for the immediately preceding fiscal year is required, in the Term Loan Agent’s sole discretion, to be paid towards the Term Loan obligations, commencing with the fiscal year ending December 31, 2016. As a result of the excess cash flow for the year ended December 31, 2016, we reclassified a total amount of $1,885 into current portion of long-term debt in the condensed consolidated balance sheet as of December 31, 2016. Because the Term Loan Agent refused the prepayment, we reclassified the $1,885 back to non-current portion of long-term debt in the first quarter of 2017. The Credit Agreement provides for certain other customary mandatory prepayments upon certain events, and also provides for certain prepayment premiums during the first four years of the Term Loan, provided that the prepayment premiums are not applicable to scheduled payments of principal, the required excess cash flow payments and certain other required prepayments.

Debt issuance costs, including the fair value of warrants issued to the Term Loan Agent and its affiliates in prior periods (“Whitehorse Warrants”), are amortized into interest expense over the term of the Term Loan using the interest method. The Whitehorse Warrants include warrants to purchase, in aggregate, 300,000 shares of common stock, ~~with an exercise price of $5.08 per share.~~ ~~We estimate the fair value of such warrants on the date of grant using a Black-Scholes pricing model and recognized them as debt issuance costs and additional paid-in capital.~~

The Credit Agreement, as amended, contains customary representations and warranties, covenants (including certain financial covenants), and events of default, upon the occurrence of which the Term Loan Agent may accelerate the obligations under the Credit Agreement. Certain restrictive covenants impose limitations on the way we conduct our business, including limitations on the amount of additional debt we can incur and restricts our ability to make certain investments and other restricted payments, including certain intercompany payments of cash and other property. The financial covenants include the requirement that the Company and its subsidiaries attain, on a quarterly basis, certain minimum EBITDA thresholds for the immediately preceding twelve-month period, Fluent and its subsidiaries attain, on a quarterly basis, certain minimum EBITDA thresholds for the immediately preceding twelve-month period, Fluent and its subsidiaries meet certain leverage ratios on a quarterly basis, Fluent and its subsidiaries meet certain fixed charge coverage ratios on a quarterly basis, and Fluent and its subsidiaries maintain at all times cash and cash equivalent balances of at least $2.0 million (or such lesser amount agreed to by the Term Loan Agent), in the aggregate. On August 7, 2017, the Company and its subsidiaries entered into Amendment No. 4 to the Credit Agreement (“Amendment No. 4”). Amendment No. 4 provides that there shall be no requirement that the Company and its subsidiaries meet any minimum EBITDA threshold for the twelve-month period ended June 30, 2017. The requirement that Fluent and its subsidiaries meet the required minimum EBITDA threshold for the twelve-month period ended June 30, 2017 was not impacted by Amendment No. 4. As of June 30, 2017, the Company was in compliance with the covenants under the Credit Agreement, after giving effect to Amendment No. 4. On November 3, 2017, the Company and its subsidiaries entered into Amendment No. 5 to the Credit Agreement (“Amendment No. 5”). Amendment No. 5 provides for certain amendments to the definition of EBITDA by adding back acquisition and restructuring costs resulting from the Business Combination Transaction (as defined below), and non-recurring costs relating to litigation with TRADS that we settled on July 22, 2017. Amendment No. 5 also amends the minimum EBITDA threshold for the Company and its subsidiaries beginning with the quarter ended September 30, 2017. In addition, Amendment No. 5 allows for additional transfer of cash from Fluent to the Company, provided that Fluent maintains a minimum cash balance. As of September 30, 2017, the Company was in compliance with the covenants under the Credit Agreement, after giving effect to Amendment No. 5.

On January 19, 2017, Fluent entered into Amendment No. 3, amending Fluent's Term Loan facility dated December 8, 2015. The Amendment No. 3, among other things, provides for a new term loan in the principal amount of $15,000 ("Incremental Term Loan"), subject to the terms and conditions of the Amendment No. 3, and modifies certain other Credit Agreement provisions, including certain financial covenants and related definitions. The entire Incremental Term Loan of $14,039, net of debt issuance costs of $961, was received on February 1, 2017.

~~The Incremental Term Loan and Fluent's existing Term Loan (collectively, the "Term Loans") are guaranteed by the Company and the other direct and indirect subsidiaries of the Company, and are~~ secured by substantially all of the assets of the Company and its direct and indirect subsidiaries, including Fluent, LLC, in each case, on an equal and ratable basis. The Refinanced Term ~~Loans accrue~~Loan accrues interest at the rate ~~of: (a)~~of either, at Fluent's option, (a) LIBOR (subject to a floor of 0.50%) plus ~~10.5%~~7.00% per annum, or (b) the base rate (generally equivalent to the U.S. prime rate) plus ~~9.5%~~6.0% per annum, payable in ~~cash, plus (b) 1% per annum,~~cash.

The Refinanced Term Loan matures on March 26,2023 and interest is payable ~~at Fluent's option, in either cash or in-kind. Payments of~~monthly. Scheduled principal amortization of the Refinanced Term ~~Loans are $688~~Loan is $875 per quarter, ~~replacing~~which commenced with the ~~original $563 for the Term Loan, payable at the end of each calendar~~fiscal quarter ~~commencing on March 31, 2017.~~ ended June 30, 2018. The ~~Term Loans mature on December 8, 2020.~~

~~On December 8, 2015,~~Credit Agreement, as amended, requires the Company ~~entered into~~to maintain and ~~consummated~~comply with certain financial and other covenants and includes certain prepayment provisions, including mandatory quarterly principal prepayments with a portion of the ~~promissory notes financing (the “Promissory Notes”) with each of Frost Gamma Investment Trust (“Frost Gamma”),~~ ~~an affiliate of Phillip Frost, M.D.~~Company's excess cash flow. For the three months ended June 30, 2020, the ~~Vice Chairman~~quarterly prepayment resulting from excess cash flow was $4,927. At June 30, 2020, the Company was in compliance with all of the ~~Company’s Board of Directors,~~ ~~Michael Brauser, Chairman of~~financial and other covenants under the ~~Board of Directors, and another investor (collectively,~~Credit Agreement.

On July 1, 2019, in connection with the ~~“Promissory~~AdParlor Acquisition (as defined in Note ~~Investors”~~11, Business acquisitions), ~~pursuant to which~~ the Company issued Promissory Notes of $5.0 million to Frost Gamma, $4.0 million to Michael Brauser, and $1.0 million to another investor, for an aggregate financing in the amount of $10.0 million. The Promissory Note Investors received (i) a promissory note (the "Note Payable") in the principal amount of $2,350, net of discount of $150 from imputing interest on the non-interest bearing note using a 4.28% rate. The promissory note is guaranteed by the Company's subsidiary, Fluent, LLC, will not accrue interest except in the case of default, is payable in twoequal toinstallments on the amount of their respective promissory notes, with a rate of interest of 10% per annum, which interest shall be capitalized monthly by adding to the outstanding principal amount of such Promissory Notes,first and (ii) a grant of 100 shares of convertible Series B preferred stock (“Series B Preferred”) for each $1.0 million increment of their respective Promissory Notes, with a total of 1,000 shares of Series B Preferred granted (“Promissory Note Shares”), pursuant to fee letter agreements. Each share of Series B Preferred automatically converted into 50 shares of common stock in February 2016.

~~Under the terms~~second anniversaries of the ~~Promissory Notes,~~date of closing of the ~~Company~~acquisition and is ~~required~~subject to ~~repay~~setoff in respect of certain indemnity and other matters.

As of June 30, 2020, scheduled future maturities of the ~~principal~~Refinanced Term Loan and ~~all accrued interest six months after~~Note Payable are as follows:

As of June 30, 2020, the repayment of all amounts due under the Credit Agreement, except that the Company may repay the Promissory Notes earlier from the proceeds of a round of public equity financing. During the nine months ended September 30, 2017, the Company repaid accrued paid-in-kind (“PIK”) interest of $533, $426, and $107 to Frost Gamma, Michael Brauser and another investor, respectively.

~~The~~ fair value of Promissory Note Shares of $413 was calculated by multiplying the closing common stock market price of the Company on December 8, 2015 of $8.45, with the total shares granted, as converted, which was recognized as debt issuance costs.

In connection with the Promissory Notes, on December 8, 2015, the Company, each lender under the Promissory Notes, and the Term Loan Agent, etc. entered into a Subordination Agreement (the “Subordination Agreement”), pursuant to which the debt under the Promissory Notes was made expressly subordinate to the debt under the Credit Agreement. In addition, the Subordination Agreement restricts the terms of the Promissory Notes. The terms of the Subordination Agreement shall remain in effect until such time that all obligations under the Credit Agreement are paid in full.

~~The net balance of Promissory Notes is presented as promissory notes payable to certain shareholders, net, in the condensed consolidated balance sheet.~~

~~As mentioned above, the Company’s~~ long-term debt outstanding as of September 30, 2017 represented 1) the Term Loans with interest at LIBOR (with a floor of 0.5%) plus 10.5% per annum and 2) the Promissory Notes pursuant to the agreements effective December 8, 2015, with a rate of interest of 10% per annum. Considering the Term Loans have a variable interest rate, and interest rates have been relatively stable, we regard the fair values of the long-term debtis considered to approximate ~~their~~its carrying ~~amount as of September 30, 2017. This~~value. The fair value assessment represents a Level 2 ~~measurements.~~ measurement.

The Company is subject to federal and state income taxes in the United States. ~~Our~~The tax provision for interim periods is determined using an estimate of ~~our~~the Company's annual effective tax rate. The Company updates its estimated annual effective tax rate ~~adjusted for discrete items arising in~~on a quarterly basis and, if the estimate changes, makes a cumulative adjustment.

As of June 30, 2020 and December 31, 2019, the Company has recorded a full valuation allowance against net deferred tax assets, and intends to continue maintaining a full valuation allowance on these net deferred tax assets until there is sufficient evidence to support the release of all or some portion of these allowances. Based on current income and anticipated future earnings, the Company believes there is a reasonable possibility that ~~quarter. In each quarter, we update our estimate~~within the next twelve months sufficient positive evidence may become available to allow a conclusion to be reached that a significant portion, if not all, of the ~~annual effective~~valuation allowance will be released. Release of some or all of the valuation allowance would result in the recognition of certain deferred tax ~~rate,~~assets and ~~if our estimated annual~~an increase in deferred tax ~~rate changes, we make~~benefit for any period in which such a ~~cumulative adjustment~~release may be recorded, however, the exact timing and amount of any valuation allowance release are subject to change, depending upon the level of profitability that the Company is able to achieve and the net deferred tax assets available.

Table of Contents

For the six months ended June 30, 2020 and 2019, the Company's effective income tax rate of 0% and 2%, respectively, differed from the statutory federal income tax rate of ~~34%~~ ~~for~~21%, with such differences resulting primarily from the ~~three and nine months ended September 30, 2017 and 2016.~~ ~~For the three and nine months ended September 30, 2017, the effective income tax rate was 0%, and the difference is mainly the result~~application of the full valuation allowance ~~applied~~ against the ~~Company’s~~Company's deferred tax assets and state income taxes. For the three and nine months ended September 30, 2016, the effective income tax rate was 32% and 33%, respectively, and this difference is primarily due to state income taxes and nondeductible expenses.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 atas of the reporting ~~date.~~dates. For those tax positions where it is ~~more-likely-than-not~~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~~ more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the ~~Company’s~~Company's financial statements.

As of June 30, 2020 and December 31, 2019, the balance of unrecognized tax benefits ~~as of September 30, 2017 and December 31, 2016~~ was $1,668. In the Company’s tax return filed for the year ended December 31, 2015, a loss of $4,375, resulting from the disposal of all assets and liabilities related to the Company’s Chinese and British Virgin Islands based subsidiaries (collectively, the “Advertising Business”) in 2015, was included. This uncertain tax position of $1,668 is reflected as a reduction in deferred tax assets. Based on management’s assessment, no tax benefit has been recognized for the loss mentioned above. This$1,480. The unrecognized tax ~~benefit,~~benefits, if recognized, would ~~favorably affect~~result in an increase to net operating losses that would be subject to a valuation allowance and, accordingly, result in no impact to the Company’s annual effective tax ~~rate before application~~rate. As of ~~any valuation allowance. The~~June 30, 2020, the Company has not accrued any interest or penalties ~~as of September 30, 2017~~ with respect to its uncertain tax positions.

The Company does not anticipate a significant increase or reduction in unrecognized tax benefits within the next twelve months.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law. The CARES Act includes several provisions for corporations, including increasing the amount of deductible interest, allowing companies to carryback certain Net Operating Losses (“NOLs”) and increasing the amount of NOLs that corporations can use to offset income. Management is currently assessing the future implications of these provisions within the CARES Act but does not anticipate the impact to be material to the Company's consolidated financial statements.

As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the number of issued shares of common stock was ~~56,418,136~~79,908,985 and ~~53,717,996,~~78,642,078, respectively, which included shares of treasury stock of ~~352,523~~3,616,398 and ~~160,235,~~2,768,399, respectively.

For the six months ended June 30, 2020, the change in the number of issued shares of common stock ~~during the nine months ended September 30, 2017~~ was ~~due to the issuance~~a result of an aggregate ~~of 2,700,140~~1,566,907 shares of common stock ~~from the~~issued upon vesting of ~~restricted stock units (“RSUs”) and the issuance of restricted stock,~~RSUs, including ~~192,288~~190,326 shares of common stock withheld to ~~pay withholding~~cover statutory taxes upon such vesting, which are reflected in treasury ~~stock.~~stock, discussed below. Additionally, as discussed and defined below, the holders of the Amended Whitehorse Warrants exercised the Put Right to require the Company to purchase from the warrant holders the 300,000 Warrant Shares for an aggregate of $1,150. The Company funded such purchase with cash on hand.

As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the Company held shares of treasury stock of ~~352,523~~3,616,398 and ~~160,235,~~2,768,399, with a cost of ~~$1,274~~$9,930 and ~~$531,~~$8,184, respectively. ~~This increase in~~

The Company's share-based incentive plans allow employees the option to either make cash payment or forfeit shares of common stock upon vesting to satisfy federal and state statutory tax withholding obligations associated with equity awards. The forfeited shares of common stock may be taken into treasury stock ~~during~~by the ~~nine~~Company or sold on the open market. For the six months ended ~~September~~June 30, ~~2017 was due to~~2020, 190,326 shares of common stock were withheld to ~~pay withholding~~cover statutory taxes ~~upon~~owed by certain employees for this purpose, all of which were taken into treasury stock. See Note 8, Share-based compensation. During the ~~vesting~~six months ended June 30, 2020, the Company repurchased 657,673 of ~~RSUs.~~its own shares as part of a stock repurchase program authorized by the Company's Board of Directors on November 19, 2019.

As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, warrants to purchase an aggregate of ~~2,220,102~~2,183,333 and 2,398,776 shares, respectively, of common stock were outstanding, respectively, with exercise prices ranging from $3.75 to ~~$10.00~~$6.00 per share.

On July 9, 2018 the Company entered into First Amendments (the "First Amendments") to the Amendments to Warrants and Agreements to Exercise ("Amended Whitehorse Warrants") with (i) H.I.G. Whitehorse SMA ABF, L.P. regarding 46,667 warrants to purchase common stock of the Company, par value $0.0005 per share, at an exercise price of $3.00 per share; (ii) H.I.G. Whitehorse SMA Holdings I, LLC regarding 66,666 warrants to purchase common stock of the Company at an exercise price of $3.00 per share; and (iii) Whitehorse Finance, Inc. regarding 186,667 warrants to purchase common stock of the Company at an exercise price of $3.00 per share. In November 2017, the Amended Whitehorse Warrants were exercised and the Company issued an aggregate of 300,000 shares of common stock of the Company (the "Warrant Shares") to the warrant holders. Pursuant to the First Amendments, the warrant holders had the right, but not the obligation, to require the Company to purchase from these warrant holders the 300,000 Warrant Shares at $3.8334 per share (the "Put Right"), which could be exercised during the period commencing January 1, 2019 and ending December 15, 2019. On December 6, 2019, the Company entered into the Second Amendments to the Amended Whitehorse Warrants, pursuant to which the expiration of the Put Right was extended from December 15, 2019 to January 31, 2020. On January 31, 2020, the holders of the Amended Whitehorse Warrants exercised the Put Right to require the Company to purchase from the warrant holders the 300,000 Warrant Shares for an aggregate of $1,150. The Company funded such purchase with cash on hand.

Table of Contents

As of ~~September~~June 30, ~~2017,~~2020, the Company maintains two share-based incentive plans: the 2008 Share Incentive Plan (the “2008 Plan”), which was carried forward as a result of the reverse acquisition between the Company and The Best One, Inc. (“TBO”) consummated on March 21, 2015, whereby TBO became a wholly-owned subsidiary of the Company (the “TBO Merger”), and the Cogint, Inc. 2015 Stock Incentive Plan (the ~~“2015 Plan”~~"2015 Plan")~~, approved during~~ and the ~~annual meeting of stockholders on June 2, 2015,~~Fluent, Inc. 2018 Stock Incentive Plan (the "2018 Plan") which, ~~authorized~~combined, authorize the issuance of ~~2,500,000~~21,129,259 shares of common stock. ~~The total~~As of June 30, 2020, there were 1,755,868 shares of common stock ~~authorized~~reserved for issuance under the 2015 Plan was increased on June 3, 2016 to 12,500,000 shares, and subsequently increased on September 6, 2017 to 13,500,000 shares, which subsequent increase becomes effective 20 days after the mailing of the stockholder notice on Schedule 14C.2018 Plan. The primary purpose of the ~~2015 Plan~~plans is to attract, retain, reward and motivate certain individuals by providing them with ~~an opportunity~~opportunities to acquire or increase ~~a proprietary interest~~their ownership interests in the ~~Company and to incentivize them to expend maximum effort for the growth and success~~Company.

The Compensation Committee of the ~~Company, so as to strengthen the mutuality of the interests between such individuals and the stockholders of the Company.~~

As of September 30, 2017, there were 180,568 and 3,838,658 shares (inclusive of the increase of 1,000,000 shares to the 2015 Plan approved on September 6, 2017) of common stock reserved for issuance under the 2008 Plan and the 2015 Plan, respectively.

Marlin Capital Investments, LLC (“Marlin Capital”), a company which our Chairman Michael Brauser owns 50% and is one of two managers, holds RSUs representing the right to receive 2,000,000 shares of the Company’s common stock, which RSUs are outside of the 2008 Plan and 2015 Plan. These RSUs vest annually beginning from October 13, 2015 only if certain performance goals of the Company are met. The shares underlying such RSUs will not be delivered until October 13, 2018, unless there is a change of control of the Company. Share-based compensation expenses of $315 and $315 for the three months ended September 30, 2017 and 2016, respectively, and $937 and $937 for the nine months ended September 30, 2017 and 2016, respectively, associated with shares under the Marlin Capital agreement, were recognized.

Effective November 16, 2015, the Company entered into an employment agreement with Michael Brauser (the “Michael Brauser Employment Agreement”) relating to his service as Executive Chairman of theCompany's Board of Directors ~~pursuant~~approved the grant of stock options to certain Company officers, which ~~Michael Brauser will receive an annual base salary of $25 payable in accordance with~~were issued on February 1, 2019, December 20, 2019 and March 1, 2020, respectively, under the ~~Company’s general payroll practices and RSUs outside~~2018 Plan. Subject to continuing service, 50% of the ~~2008 Plan~~shares subject to these stock options will vest if the Company's stock price remains above 125.00%, 133.33% and 2015 Plan representing the right to receive 5,000,000 shares of common stock. The issuance of shares of common stock underlying the RSUs was approved by the stockholders at the annual meeting in 2016. These RSUs vest ratably over a four-year period; provided, however, that no portion133.33%, respectively, of the ~~RSUs shall~~exercise price for twenty consecutive trading days, and the remaining 50% of the shares subject to these stock options will vest ~~unless~~if the Company's stock price remains above 156.25%, 177.78% and ~~until~~177.78%, respectively, of the ~~Company~~ exercise price for twenty consecutive trading days; provided, that no shares will vest prior to the first anniversary of the grant date. As of June 30, 2020, the first condition for the stock options issued on February 1, 2019 has ~~gross revenue in excess~~been met; therefore, 50% of ~~$100.0 million and positive EBITDA in any one fiscal year during~~ the ~~vesting period (the “Vesting Conditions”). In addition, such RSUs~~shares subject to these stock options vested on February 1, 2020. Any shares that remain unvested as of the fifth anniversary of the grant date will vest in full ~~upon a Company change in control, termination of Michael Brauser without cause, termination by Michael Brauser for good reason, or Michael Brauser’s death or disability.~~on such date. The Company determined that the Vesting Conditions were met, effective March 14, 2017, and as a result, 1,250,000 shares were vested, but Michael Brauser has elected to defer delivery of any vested RSUs until his separation from service from the Company or death or disability. ~~Effective on June 23, 2017, the Michael Brauser Employment Agreement was terminated. Mr. Brauser continues to serve as Chairman~~fair value of the ~~Board of Directors of~~stock options granted was estimated at the ~~Company.~~ On September 6, 2017, the Company entered into a consulting services agreement with Mr. Brauser, effective on June 23, 2017, for a term of four years (the “Consulting Agreement”), under which Mr. Brauser will serve as a strategic advisor to cogint but will receive no salary for such services. In consideration for Mr. Brauser’s services, the Consulting Agreement provides for continued vesting on all outstanding RSUs granted to Mr. Brausertrading day before the ~~effective~~ date of grant using a Monte Carlo simulation model. The key assumptions utilized to calculate the ~~Consulting Agreement.~~grant-date fair values for these awards are summarized below:

For the time Dr. Phillip Frost joined the Board of Directors of the Company as Vice Chairman, Frost Gamma was granted 3,000,000 RSUs, outside of the 2008 Plan and 2015 Plan. The issuance of shares of common stock underlying such RSUs was approved by the stockholders at the annual meeting in 2016. These grants were fully vested on December 8, 2015, but Frost Gamma has elected to defer delivery of any vested RSUs until Dr. Phillip Frost’s separation from service from the Company or death or disability.

~~Details of share options activity during the nine~~six months ended ~~September~~June 30, ~~2017~~2020, details of stock option activity were as follows:

The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the ~~Company’s~~Company's common stock ~~on September 30, 2017~~at the end of ~~$4.90~~the reporting period and the corresponding exercise ~~price,~~prices, multiplied by the number of in-the-money stock options as of the same date.

For the six months ended June 30, 2020, the unvested balance of options ~~is shown below~~was as follows:

Table of Contents

Compensation expense recognized for stock options of $152 and $1,252 for the ~~nine~~three months ended ~~September~~June 30, ~~2017:~~

~~Compensation expenses recognized from employee stock options~~2020 and 2019, respectively, and $1,351 and $2,103 for the ~~three~~six months ended ~~September~~June 30, ~~2017~~ 2020 and ~~2016 of $31~~2019, respectively, was recorded in sales and ~~$35, respectively,~~marketing, product development and ~~$91 and $82 for the nine months ended September 30, 2017 and 2016, respectively, were recognized in~~ general and administrative expenses in the ~~condensed~~ consolidated statements of operations. As of ~~September~~June 30, ~~2017,~~2020, there was $473 of unrecognized share-based compensation ~~cost relating~~with respect to ~~granted share options amounted to $274, which are expected to be recognized over a weighted average period of 2.2 years.~~outstanding stock options.

For the six months ended June 30, 2020, details of unvested ~~RSUs~~RSU and restricted stock activity ~~during the nine months ended September 30, 2017~~ were as follows:

Compensation expense recognized ~~share-based compensation (included~~for RSUs and restricted stock of $1,176 and $1,732 for the three months ended June 30, 2020 and 2019, respectively, and $2,413 and $3,171 for the six months ended June 30, 2020 and 2019, respectively, was recorded in sales and marketing, ~~expenses,~~product development and general and administrative ~~expenses~~ in the ~~condensed~~ consolidated statements of operations, and intangible assets in the ~~condensed~~ consolidated balance sheets) for these RSUs and restricted stock of $11,461 and $7,615 for the three months ended September 30, 2017 and 2016, respectively, and $28,613 and $22,561 for the nine months ended September 30, 2017 and 2016, respectively.sheets. The fair value of the RSUs and restricted stock was estimated using the ~~market value~~closing prices of the ~~Company’s~~Company's common stock on the ~~date~~dates of ~~grant, which was equivalent to the closing price of the common stock on the grant date.~~grant.

As of ~~September~~June 30, ~~2017,~~2020, unrecognized share-based compensation ~~expenses~~expense associated with the granted RSUs and ~~restricted~~ stock options amounted to ~~$59,625,~~$10,434, which ~~are~~is expected to be recognized over a weighted average period of ~~1.9~~2.6 years.

~~The Company issues shares to certain third-party vendors from time to time in lieu of cash for services rendered. Stock~~For the three and six months ended June 30, 2020 and 2019, share-based compensation ~~expenses for shares issued to third-party vendors of $0 and $37~~ for the ~~three months ended September 30, 2017~~Company's stock option, RSU, common stock and ~~2016, respectively, and $0 and $166 for the nine months ended September 30, 2017 and 2016, respectively, were recognized in general and administrative expenses.~~

~~The share-based compensation expenses for the Company’s share options, RSUs and common~~restricted stock awards were allocated to the following accounts in the ~~condensed~~ consolidated financial ~~statements for the three and nine months ended September 30, 2017 and 2016:~~statements:

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

2017

2016

2017

2016

Sales and marketing expenses

$
862

$
657

$
2,428

$
1,778

General and administrative expenses

10,209

6,661

25,274

20,163

11,071

7,318

27,702

21,941

Capitalized in intangible assets

421

369

1,002

868

Total

$
11,492

$
7,687

$
28,704

$
22,809

Table of Contents

The Company ~~currently manages its operations~~identifies operating segments as components of an entity for which discrete financial information is available and is regularly reviewed by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and performance assessment. The profitability measure employed by CODM is segment income (loss) from operations. As of June 30, 2020, the Company has two operating segments and two corresponding reporting units, “Fluent” and “All Other,” and one reportable segment. “All Other” represents the operating results for the three and six months ended June 30, 2020 of AdParlor, LLC (see Note 11, Business acquisitions), and is included for purposes of reconciliation of the respective balances below to the consolidated financial statements. “Fluent,” for the purposes of segment reporting, represents the consolidated operating results of the Company excluding “All Other.”

Summarized financial information concerning the Company's segments ~~Information Services~~is shown in the following tables below:

Table of Contents

In the ordinary course of business, the Company is subject to loss contingencies that cover a range of matters. An estimated loss from a loss contingency, such as a legal proceeding or claim, is accrued if it is probable that a liability has been incurred and ~~Performance Marketing. The segments reflect~~ the ~~way~~amount of the loss can be reasonably estimated. In determining whether a loss should be accrued, the Company evaluates, ~~its business performance~~among other factors, the degree of probability and ~~manages its operations.~~

~~Information regarding our Information Services and Performance Marketing segments is as follows:~~the ability to reasonably estimate the amount of any such loss.

~~A reconciliation of loss from operations from segments to loss before income taxes for the periods presented is as follows:~~

~~Revenue by geography is based on the location of the customers. The following table sets forth revenue by geographic areas:~~

~~For the three and nine months ended September 30, 2017 and 2016, material related party transactions were as follows:~~

On ~~December 8, 2015, the Company entered into the Promissory Notes with certain investors, for an aggregate financing of $10.0 million, pursuant to which~~ October 26, 2018, the Company received ~~$5.0 million~~a subpoena from ~~Frost Gamma, $4.0 million~~the New York Attorney General’s Office (“NY AG”) regarding compliance with New York Executive Law § 63(12) and New York General Business Law § 349, as they relate to the collection, use, or disclosure of information from ~~Michael Brauser, and $1.0 million from another investor. As of September 30, 2017,~~or about consumers or individuals, as such information was submitted to the principal, plus accrued PIK interest, of such Promissory Notes, owing to Frost Gamma, Michael Brauser and such other investor, were $5,437, $4,349, and $1,087, respectively. During the nine months ended September 30, 2017, ~~the Company repaid $533, $426, and $107 to Frost Gamma, Michael Brauser and another investor, respectively. See Note 5, “Long-term debt, net,” for details.~~

On February 22, 2016, the Company’s Series B Preferred, 450,962 shares in total, including 141,430 shares previously issued to Frost Gamma in relation to certain financial arrangements, and 156,544 and 105,704 shares previously issued to Ryan Schulke, Chief Executive Officer of Fluent, and Matthew Conlin, President of Fluent, respectively,Federal Communication Commission (“FCC”) in connection with the ~~Fluent Acquisition, automatically converted into the Company’s common stock, by multiplying each such share of Series B Preferred by 50.~~

FCC’s rulemaking proceeding captioned “Restoring Internet Freedom,” WC Docket No.17-108.On ~~March 11, 2016,~~ December 13, 2018, the Company ~~issued 900,108 common earn-out shares to Frost Gamma, and 1,800,220 Series A earn-out shares to certain investors (which were converted to 1,800,220 shares~~received a subpoena from the United States Department of ~~common stock in~~ Justice (“DOJ”) regarding the same issue. On March ~~2016), including 567,069 shares to Grander Holdings, Inc. 401K, an entity owned by Michael Brauser, upon~~12, 2020, the Company received a ~~Board of Directors determination that certain financial targets had been achieved as set forth in~~subpoena from the ~~merger agreement~~Office of the ~~TBO Merger effective on March 21, 2015.~~

~~Marlin Capital holds RSUs representing the right to receive 2,000,000 shares~~Attorney General of the ~~Company’s common stock. These RSUs vest annually beginning from October 13, 2015 only if certain performance goals~~District of Columbia ("DC AG") regarding the same issue. The Company has been fully cooperating with the NY AG, the DOJ, and the DC AG. Based on recent communications with the NY AG, the Company ~~are met. The shares underlying~~believes that a loss from these matters is probable, but it is not yet possible to reasonably estimate the magnitude of such RSUs will not be delivered until October 13, 2018, unless there is a change of control of the Company. Share-based compensation expenses of $315 and $315 for the three months ended September 30, 2017 and 2016, respectively, and $937 and $937 for the nine months ended September 30, 2017 and 2016, respectively, associated with shares under the Marlin Capital agreement, were recognized, respectively. See Note 8, “Share-based payments,” for details.

Effective on August 1, 2015, the Company entered into a consulting agreement with DAB Management Group Inc. (“DAB”) for DAB to provide consulting services related to business development, future acquisitions and strategic transactions for a term of six months, and shall automatically renew 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 (the “DAB Agreement”). DAB is owned by Daniel Brauser, a director of the Company at the time the DAB Agreement was entered into and the son of Michael Brauser, our Chairman. Under the DAB Agreement, the consulting service fee is $20 per month. The Company recognized consulting service fee of $60 each for the three months ended September 30, 2017 and 2016, and $180 each for the nine months ended September 30, 2017 and 2016.

~~In October 2015, the Company entered into a Non-Exclusive Aircraft Dry Lease Agreement with Brauser Aviation, LLC,~~loss. However, an affiliated entity of our Chairman, to pay a set hourly rate for Company-related usage of the aircraft. The Company recognized aircraft lease fee of $0 and $58 for the three months ended September 30, 2017 and 2016, respectively, and $27 and $168 for the nine months ended September 30, 2017 and 2016, respectively.

On September 6, 2017, the Company entered into the Consulting Agreement with Mike Brauser, effective on June 23, 2017, for a term of four years, under which, Mr. Brauser will serve as a strategic advisor to cogint but will receive no salary for such services. In consideration for Mr. Brauser’s services, the Consulting Agreement provides for continued vesting on all outstanding RSUs granted to Mr. Brauser before the effective date of the Consulting Agreement. See Note 8, “Share-based payments,” for details.

The Company incurred data costs of $1,179 and $874 for the three months ended September 30, 2017 and 2016, respectively, and $3,400 and $2,757 for the nine months ended September 30, 2017 and 2016, respectively, under certain non-cancellable data licensing agreements. As of September 30, 2017, material capital commitments under non-cancellable data licensing agreements were $24,321, shown as follows:

On July 22, 2017, the Company entered in a settlement agreement with TransUnion and TransUnion Risk and Alternative Data Solutions, Inc. (“TRADS”), settling all litigation with TransUnion and TRADS. Company subsidiary, IDI Holdings, LLC (“IDI Holdings”), will pay $7,000 to TRADS over the course of one year to settle all matters (the “TRADS Litigation Settlement”). The terms of the settlement agreement are confidential. The Company recorded the expense of $7,000 in general and administrative expenses during the three months ended June 30, 2017. As of September 30, 2017, the remaining unpaid balance of $5,000 was reflected in accrued expenses and other current liabilities in the condensed consolidated balance sheet. For a description of the legal proceedings settled in the TRADS Litigation Settlement, see Part I, Item 3 of the Company’s 2016 Form 10-K and Part II, Item 1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.

~~Following the TRADS Litigation Settlement, the Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to~~unfavorable outcome could have a material adverse effect on the Company’s business, ~~financial condition,~~ results of operations or ~~cash flows. Legal fees associated with such legal proceedings, are expensed~~ financial position.

On June 27, 2019, as ~~incurred. We review legal proceedings~~a part of two sales and ~~claims on an ongoing basis~~use tax audits covering the period from December 1, 2010 to November 30, 2019, the New York State Department of Taxation and ~~follow appropriate accounting guidance, including ASC 450, when making accrual and disclosure decisions. We establish accruals for those contingencies where the incurrence of~~Finance (the “Tax Department”) issued a ~~loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess~~letter stating its position that revenue derived from certain of the ~~amount accrued, if such disclosure is necessary for our financial statements~~Company’s customer acquisition and list management services are subject to ~~not be misleading. To estimate whether~~sales tax, as a ~~loss contingency should be accrued by a charge to income, we evaluate, among other factors,~~result of being deemed information services. The Company disputed the ~~degree~~Tax Department's position on several grounds, but on January 14 and 15,2020, the Tax Department issued Statements of ~~probability~~Proposed Audit Adjustment totaling $8.2 million, including $2.0 million of ~~an unfavorable outcome and the ability to make a reasonable estimate of~~interest. The Company formally disagreed with the amount of the ~~loss. We do not record liabilities when~~Proposed Audit Adjustments and met with the ~~likelihood~~Tax Department on March 4, 2020. During that meeting, the ~~liability has been incurred~~Company informed the Tax Department that a majority of the Proposed Audit Adjustments was attributable to revenue derived from transfers which were either excluded resales or sourced outside of New York and renewed its challenge as to the taxability of its customer acquisition revenue. On July 22 and 31,2020, the Company received notices of determination from the Tax Department totaling $3.0 million, including $0.7 million of interest. Based on the foregoing, the Company believes that it is probable ~~but~~that a sales tax liability may result from this matter, and has estimated the ~~amount cannot be reasonably estimated.~~

~~In addition, we may be involved in litigation from time to time in the ordinary course of business. We do not believe that the ultimate resolution~~range of any such ~~matters will have~~liability to be between $0.7 million and $3.0 million. The Company has accrued a ~~material adverse effect on our~~liability associated with these sales and use tax audits at the low end of this range.

On January 28, 2020, the Company received a Civil Investigative Demand (“CID”) from the Federal Trade Commission (“FTC”) regarding compliance with the Federal Trade Commission Act, 15 U.S.C. §45 or the Telemarketing Sales Rule, 16 C.F.R. Part 310, as they relate to the advertising, marketing, promotion, offering for sale, or sale of rewards and other products, the transmission of commercial text messages, and/or consumer privacy or data security. The Company has been fully cooperating with the FTC and is responding to the CID. At this time, it is not possible to predict the ultimate outcome of this matter or the significance, if any, to the Company’s 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.~~position.

On ~~September 6, 2017,~~ April 1, 2020, the Company ~~entered into~~acquired, through a ~~Business Combination Agreement~~wholly owned subsidiary, a 50% membership interest in Winopoly, LLC (the ~~“Business Combination Agreement”~~"Winopoly Acquisition") ~~with BlueFocus International Limited (“BlueFocus”),~~for a ~~private company limited by shares registered in Hong Kong. Under the terms~~deemed purchase price of ~~the Business Combination Agreement, the Company will issue to BlueFocus shares~~$2,553, which consisted of the Company’s common stock, representing 63% of the Company’s common stock on a fully diluted, post-transaction basis (the “Purchased Shares”). In consideration of the Purchased Shares, BlueFocus will contribute to the Company (i) all of the issued and outstanding membership interests, shares of capital stock, and/or other equity interests of certain entities (the “Contributed Entities”), (ii) $100.0 million$1,553 in cash ~~(the “Cash Consideration”)~~ and ~~if applicable, certain net working capital adjustments, and (iii) repay, assume, or refinance indebtedness for borrowed money~~contingent consideration with a fair value of $1,000 payable based upon the ~~Company as~~achievement of specified revenue targets over the ~~Closing (as defined below). We refer to~~eighteen-month period following the issuance of the Purchased Shares in consideration of the contribution of the Contributed Entities and the Cash Consideration, together with the Cash Dividend hereinafter described, as the “Business Combination Transaction.”

As a condition to closing the Business Combination Transaction (the “Closing”), immediately before Closing, cogint will contribute its data and analytics operations and assets (the “IDI Business”) into its wholly-owned subsidiary, Red Violet, Inc. (“Red Violet”). The shares of Red Violet will be distributed as a stock dividend (the “Spin-Off”) to cogint stockholders of record as of the record date (the “Record Date”) and to holders of derivative securities who are entitled to participate in such a dividend in accordance with the terms of their securities. Before the Company effects the Spin-Off, Red Violet will file with the SEC a Registration Statement on Form 10 (the “Form 10”), registering under the Securities Exchange Act of 1934, the shares of Red Violet to be distributed in the Spin-Off. As a result, upon completion of the ~~Spin-Off, cogint stockholders will hold shares~~acquisition. Winopoly, LLC is a contact center operation, which serves as a marketplace that matches consumers sourced by Fluent with advertiser clients. In accordance with ASC 805, the Company determined that the Winopoly Acquisition constituted the purchase of ~~two public companies, cogint~~a business. For the six months ended June 30, 2020, the Company incurred transaction-related expenses of $60 in connection with the acquisition, which are recorded in general and ~~Red Violet. We expect cogint common stock to continue trading on~~administrative expenses in the ~~NASDAQ Stock Market (the “NASDAQ”)~~consolidated statements of operations. Assets and ~~we intend to apply~~revenues of Winopoly, LLC totaled 0.9% and 0.7%, respectively, of the Company's consolidated financial statements at and for ~~listing~~ the ~~Red Violet shares on NASDAQ.~~six months ended June 30, 2020, and are included in the Fluent operating segment.

The ~~Cash Consideration, after deductions for certain transaction expenses and an amount up to $20.0 million to capitalize Red Violet at the time~~preliminary fair value of the ~~Spin-Off, will~~acquired customer relationships of $600, to be distributed pro rata as a cash dividend or payment (the “Cash Dividend”) to the holders of cogint common stock and the holders of certain warrants of the Company. The Cash Dividend is contingent on Closing.

Before the Record Date, cogint expects to accelerate the vesting of all outstanding RSUs and deliver all shares of common stock underlying such RSUs so that such shares will participate in the Spin-Off and Cash Dividend pro rata. Also, before the Record Date, cogint expects to vest all outstanding stock options, and any options not exercised before the Record Date will terminate on the Record Date, except for options issued under the 2015 Plan, which will terminate immediately before the Closing. Options outstanding but unexercised on the Record Date will not be equitably adjusted in respect of the Spin-off, the Cash Dividend, or otherwise. Shares issued pursuant to any option exercised before the Record Date will participate in the Spin-off and Cash Dividend pro rata. In addition, before the Record Date, cogint expects to vest all outstanding shares of restricted stock, so that such shares will participate in the Spin-off and Cash Dividend pro rata, and holders of warrants to purchase cogint common stock will participate in the Spin-off and Cash Dividend pro rata, in accordance with the terms of their warrants.

There are certain conditions to the Closing and the other transactions contemplated by the Business Combination Agreement, which include the receipt of the required Company stockholders’ approval, the consent under ~~the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (~~the “HSR Act”) and the Committee on Foreign Investment in the United States (“CFIUS”) approval, the effectiveness of the Form 10 and consummation of the Spin-Off, the approval by NASDAQ of the listing of the Purchased Shares, and others.

On October 17, 2017, the Company entered into certain amendment agreements (collectively, the “Intracoastal and Anson Warrant Amendments”) with warrant holders, representing a total of 861,769 warrants to purchase the Company’s common stock, previously granted to Intracoastal Capital, LLC (“Intracoastal”) and Anson Investments Master Fund LP (“Anson”). Pursuant to the Warrant Amendments, the Company agreed to reduce the exercise price of all common stock warrants described above to $3.00 per share, and Intracoastal and Anson separately agreed to exercise all common stock warrants held by them. The proceeds from the exercise were approximately $2.6 million, which were received in October 2017.

The Intracoastal and Anson Warrant Amendments also provide that the Company deliver to each of Anson and Intracoastal an additional warrant for common stock equal to 25% of the number of shares exercised, at an exercise price of $5.35 per share (collectively, the “Additional Warrants”). The Additional Warrants provided to Intracoastal and Anson are exercisable into 184,193 shares and 31,250 shares of common stock, respectively. The Additional Warrants are exercisable from the date of issuance and expire on the earlier of the close of business on the two-year anniversary of (i) the date the registration statement registering the resale of the underlying shares is declared effective by the SEC, or (ii) the commencement date that such Additional Warrant may be exercised by means of a “cashless exercise.” ~~These Additional Warrants do not participate in the Cash Dividend or Spin-Off of the Business Combination Transaction.~~

On November 3, 2017, the Company entered into warrant amendments (the "Whitehorse Warrant Amendments") with H.I.G. Whitehorse SMA ABF, L.P., H.I.G. Whitehorse SMA Holdings I, LLC and Whitehorse Finance, Inc., regarding an aggregate of 300,000 Whitehorse Warrants to purchase the Company’s common stock (the “Whitehorse Shares”), at an original exercise price of $5.0829 per share. Pursuant to the Whitehorse Warrant Amendments, the Company agreed to reduce the exercise price of all common stock warrants described above to $3.00 per share, and each warrant holder set forth above separately agreed to exercise all common stock warrants held by them within 30 days. Pursuant to the terms of the Whitehorse Warrant Amendments, the warrant holders are prohibited from engaging or otherwise agreeing to any sale, pledge, or other transfer of the Whitehorse Shares foramortized over a period of ~~120 days (the “Whitehorse Lock-Up Period”) following~~five years, was determined using the ~~exercise of such warrants in full. Following the Whitehorse Lock-Up Period, (i) the warrant holders may only sell such number of shares underlying the warrants representing up to 5%~~excess earnings method, a variation of the ~~Company’s daily trading volume on~~income approach, while the ~~immediately prior trading day prior to a sale and (ii) the warrant holders may not transfer any~~preliminary fair value of the ~~Whitehorse Shares for less than $4.50 per share, provided that~~acquired developed technology of $800, to be amortized over a period of three years, was determined using the ~~warrant holders may not transfer any Whitehorse Shares unless the Company has an effective registration statement permitting the resale~~cost approach. The amount of the ~~Whitehorse Shares. Provided that such warrant holders have exercised the Whitehorse Warrants, upon either the Record Date or the termination~~purchase price in excess of ~~the Business Combination Agreement, such warrant holders can require the Company to purchase from them all the Whitehorse Shares at a price of $4.50 per share.~~

In relation to the Q Interactive Acquisition, Selling Source, LLC (“Selling Source”), the seller, was entitled to receive additional consideration as it was concluded that the earn-out target (the “Q Interactive Earn-out Target”) specified in the purchase agreement had been met. As of September 30, 2017 and December 31, 2016, after certain measurement period adjustments, the net balance of acquisition consideration payable in stock of $10,225 was recognized. ~~We used the probability-weighted method to determine~~ the fair value of the net assets acquired was recorded as goodwill in the amount of $1,131 and primarily relates to intangible assets that do not qualify for separate recognition, including assembled workforce and synergies. The purchase accounting process has not yet been completed, primarily because the valuation of acquired assets and liabilities assumed has not been finalized. The Company expects to complete the purchase accounting as soon as practicable but no later than one year from the acquisition date. The Company does not believe there will be material adjustments.

At any time between the fourth and sixth anniversary of the Winopoly Acquisition, the sellers may exercise a put option whereby the Company is required to acquire the remaining 50% membership interests in Winopoly, LLC. During this period, the Company also has the ability to exercise a call option whereby the sellers must sell the remaining 50% membership interests in Winopoly, LLC to the Company. The purchase price paid for the remaining 50% membership interests would be calculated based on a multiple of 4.0x EBITDA (as such term is defined in the agreement between the parties), applied to a twelve-month period spanning the five months prior to month of put/call closing extending through six months following the month of put/call closing. In connection with the exercise of the put/call option, certain of the seller parties must enter into employment agreements with the Company in order to receive their share of the consideration for the remaining 50% of the membership interests (the "Put/Call Consideration").

Although the sellers maintain an equity interest in Winopoly, LLC, we have deemed this equity interest to be non-substantive in nature, as the sellers will primarily benefit from the Winopoly Acquisition based on periodic distributions of the earnings of Winopoly, LLC and the Put/Call Consideration, both of which are dependent on their continued service. Without providing service, the sellers could benefit from their pro rata share of the proceeds upon a third-party sale or liquidation of Winopoly, LLC; however, such a liquidity event is considered unlikely. Therefore, no non-controlling interest has been recognized. Periodic distributions for services rendered will be recorded as compensation expense. In addition, we will estimate the amount of the Put/Call Consideration, which will be accreted over the six year estimated service period, consisting of the estimated four years until the put/call can be exercised and the additional two-year service requirement. For the three and six months ended June 30, 2020, compensation expense of $530 related to the Put/Call Consideration was recorded in general and administrative on the consolidated statement of operations, with a corresponding liability in other non-current liabilities on the consolidated balance sheet.

On July 1, 2019, two wholly owned subsidiaries of the Company, AdParlor, LLC (formerly known as AdParlor Acquisition, LLC), a Delaware limited liability company, and Fluent Media Canada, Inc., a British Columbia company (together with AdParlor, LLC, each a "Buyer" and collectively "Buyers"), completed the acquisition of substantially all of the assets of AdParlor Holdings, Inc., a Delaware corporation ("AdParlor Holdings"), AdParlor International, Inc., a Delaware corporation ("AdParlor International"), AdParlor Media, Inc., a Delaware corporation ("AdParlor Media US"), and AdParlor Media ULC, a British Columbia unlimited liability company (together with AdParlor Holdings, AdParlor International and AdParlor Media US, each a "Seller" and collectively "Sellers") pursuant to an Asset Purchase Agreement (the "Purchase Agreement") dated June 17, 2019, by and among Buyers, Sellers and the parent of the Sellers, v2 Ventures Group LLC, a Delaware limited liability company (the "AdParlor Acquisition"). The purpose of the acquisition was to expand the Company's performance-based marketing capabilities. In accordance with ASC 805, the Company determined that the AdParlor Acquisition constituted the purchase of a business.

At closing, the Buyers paid to Sellers cash consideration of $7,302, net of adjustments for working capital and indebtedness, and issued a promissory note to Sellers with a present value of $2,350 in exchange for substantially all of the assets of Sellers. This promissory note is guaranteed by Fluent, LLC, and will not accrue interest except in the case of default, is payable in ~~stock,~~ two equal installments on the firstand ~~this~~second anniversaries of the date of closing and is subject to setoff in respect of certain indemnity and other matters. See Note 5, Long-term debt, net for further detail. For the year ended December 31, 2019, the Company incurred transaction-related expenses of $483 in connection with the AdParlor Acquisition, which it recorded in general and administrative expenses in the consolidated statements of operations.

The following table summarizes the fair values of the assets acquired and the liabilities assumed at the closing date:

The fair values of the identifiable intangible assets and goodwill acquired at the closing date are as follows:

With the assistance of a third-party valuation firm, the fair value ~~assessment represents Level 3 measurements. It~~of the acquired customer relationships was determined using the excess earnings method, a variation of the income approach, while the fair value of the acquired developed technology, trade names and trademarks were determined using the relief from royalty method of the income approach. The amount of the purchase price in excess of the fair value of the net assets acquired was recorded as goodwill and primarily relates to intangible assets that do not qualify for separate recognition, including assembled workforce and synergies. For tax purposes, the goodwill is ~~classified~~deductible over fifteen years.

The Company has determined that Winopoly, LLC (as discussed in Note 11,Business acquisitions) qualifies as a ~~non-current liability in~~VIE, for which the ~~condensed consolidated balance sheets because this liability will~~Company is the primary beneficiary. A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. The primary beneficiary is the party that has the power to direct activities that most significantly impact the operations of the VIE and has the obligation to absorb losses or the right to benefits from the VIE that could potentially be ~~settled~~significant to the VIE. We assess whether we are the primary beneficiary of a VIE at the inception of the arrangement and at each reporting date.

Winopoly is a VIE, and the Company is its primary beneficiary, as contractual arrangements provides the Company with the ~~Company’s common stock. On November 3, 2017,~~control over certain activities that most significantly impact its economic performance. These significant activities include the compliance practices of Winopoly, LLC and the Company's provisions of leads that Winopoly, LLC uses to generate its revenue, which ultimately give the Company ~~issued~~controlling interest. The Company therefore consolidates Winopoly, LLC in its consolidated financial statements, inclusive of deemed compensation expense to the sellers for services rendered.

The Company earns revenue and incurs expenses from a ~~total~~client in which the Company's Chief Executive Officer holds a significant ownership interest. For the three and six months ended June 30, 2020, the Company recognized revenue from this client of ~~2,750,000 shares~~$95 and $145, respectively. For both the three and six months ended June 30, 2020, the Company incurred expenses from this client of ~~common stock to settle the acquisition consideration payable in stock.~~$1.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion in conjunction with our ~~condensed~~ consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 ~~(“PSLRA”~~("PSLRA"), Section 27A of the Securities Act of 1933, as amended (the ~~“Securities Act”~~"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, (the ~~“Exchange Act”~~"Exchange Act"), about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, the outcome of litigation, or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends, or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in this Quarterly Report on Form 10-Q, as well as the disclosures made in the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 filed on March ~~14, 2017 (“2016~~13, 2020 ("2019 Form ~~10-K”~~10-K"), and other filings we make with the Securities and Exchange Commission (the ~~“SEC”~~"SEC"). We do not undertake any obligation to update forward-looking statements, except as required by law. We intend that all forward-looking statements be subject to the safe harbor provisions of PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance.

Fluent, Inc. (“("we,~~” “us,” “our,” “cogint,”~~" "us," "our," "Fluent," or the ~~“Company”~~"Company"), ~~a Delaware corporation,~~ is aan industry leader in data-driven digital marketing services. We primarily perform customer acquisition services by operating highly scalable digital marketing campaigns, through which we connect our advertiser clients with consumers they are seeking to reach. We deliver data and ~~analytics company providing cloud-based mission-critical~~performance-based marketing executions to our clients, which in 2019 included over 500 consumer brands, direct marketers and agencies across a wide range of industries, including Financial Products & Services, Retail & Consumer, Media & Entertainment, Staffing & Recruitment and Marketing Services.

We attract consumers at scale to our owned digital media properties primarily through promotional offerings and employment opportunities. On average, our websites receive over 900,000 first-party user registrations daily, which include users’ names, contact information and ~~performance marketing solutions~~opt-in permission to enterprises in a variety of industries. cogint’s mission is to transform data into intelligence utilizing our proprietary technology platforms to solve complex problems for our clients. Harnessing the power of data fusion and powerful analytics, we transform data into intelligence, in a fast and efficient manner, so that our clients can spend their time on what matters most, running their organizationspresent them with ~~confidence. Through our intelligent platforms, CORE~~^TM ~~and Agile Audience Engine~~^TM, we uncover the relevance of disparate data points to deliver end-to-end, ROI-driven results for our customers. Our analytical capabilities enable us to build comprehensive datasets in real-time and provide insightful views of people, businesses, assets and their interrelationships. We empower clients across markets and industries to better execute all aspects of their business, from managing risk, identifying fraud and abuse, ensuring legislative compliance, and debt recovery, to identifying and acquiring new customers. With the goal of reducing the cost of doing business and enhancing the consumer experience, our solutions enable our clients to optimize overall decision-making and to have a holistic view of their customers.

We provide unique and compelling solutions essential to the daily workflow of organizations within both the public and private sectors. Our cloud-based data fusion and customer acquisition technology platforms, combined with our massive database consisting of public-record, proprietary and publicly-available data, as well as a unique repository of self-reported information on millions of consumers, enables the delivery of differentiated products and solutions used for a variety of essential functions throughout the customer life cycle. These essential functions include customer identification and authentication, investigation and validation, and customer acquisition and retention.

~~The Company operates through two reportable segments: (i) Information Services and (ii) Performance Marketing.~~

~~Information Services~~—Leveraging leading-edge technology, proprietary algorithms, and massive datasets, and through intuitive and powerful analytical applications, we provide solutions to organizations within the risk management and consumer marketing industries. CORE is our next generation data fusion platform, providing mission-critical information about individuals, businesses and assets to a variety of markets and industries. Through machine learning and advanced analytics, our Information Services segment uses the power of data fusion to ingest and analyze data at a massive scale. The derived information from the data fusion process ultimately serves to generate unique solutions for banking and financial services companies, insurance companies, healthcare companies, law enforcement and government, the collection industry, law firms, retail, telecommunications companies, corporate security and investigative firms. In addition, our data acquisition solutions enable clients to rapidly grow their customer databases by using self-declared consumer insights to identify, connect with, and acquire first-party consumer data and multi-channel marketing consent at massive scale.

Built in a secure Payment Card Industry (PCI) compliant environment, our cloud-based next generation technology delivers greater than four 9s of service uptime. By leveraging our proprietary infrastructure design within the cloud, we currently operate in six datacenters spread geographically across the U.S. and are able to dynamically and seamlessly scale as needed. Using our intelligent framework and leveraging a micro services architecture where appropriate, we reduce operational cost and complexity, thus delivering superior performance at greatly reduced costs compared to traditional datacenter architectures. Since the release of our CORE platform in May 2016, we have added billions of data records and continue to add approximately over a billion records per month on average. Our average query response time for a comprehensive profile is less than 250 milliseconds versus competitive platforms that measure comprehensive profile response times in seconds.

~~Performance Marketing~~—Our Agile Audience Engine drives our Performance Marketing segment, which provides solutions to help brands, advertisers and marketers find the right customers in every major business-to-consumer (B2C) vertical, including internet and telecommunications, financial services, health and wellness, consumer packaged goods, career and education, and retail and entertainment. We deterministically target consumers across various marketing channels and devices, through the user- supplied acquisition of personally identifiable informationoffers on behalf of our ~~clients,~~clients. According to comScore, we reach 13% of the U.S. digital population on a monthly basis through our owned media properties. Nearly 90% of these users engage with our media on their mobile devices or tablets. Our always-on, real-time capabilities enable users to access our media whenever and wherever they choose.

Once users have registered with our sites, we integrate proprietary direct marketing technologies to engage them with surveys, polls and other experiences, through which we learn about their lifestyles, preferences and purchasing histories. Based on these insights, we serve targeted, relevant offers to them on behalf of our clients. As new users register and engage with our sites and existing registrants re-engage, we believe the enrichment of our database expands our addressable client base and improves the effectiveness of our performance-based campaigns.

Since our inception, we have amassed a large, proprietary database of first-party, self-declared user information and preferences. We have permission to contact the majority of users in our database through multiple channels, such as email, ~~addresses, other identifying~~home address, telephone, push notifications and SMS text messaging. We leverage our data primarily to serve advertisements that we believe will be relevant to users based on the information ~~and responses~~they have provided. We have also begun to ~~dynamically-populated survey questions. Additionally, 80% of~~leverage our ~~consumer interaction comes from mobile, a highly-differentiated characteristic compared to our competitors whose platforms are not mobile-first.~~

~~We own hundreds of media properties, through which we engage millions of consumers everyday with interactive content,~~existing database into new revenue streams, including utilization-based models, such as ~~job postings, cost savings, surveys, promotions~~programmatic advertising, as well as services-based models, such as marketing research and sweepstakes that generate on average over 850,000 consumer registrations and over 8.8 million compiled survey responses daily, with a recent record high of over 1.0 million registrations and over 10.3 million compiled survey responses in a single day. Our owned media properties alone have created a database of approximately 130 million U.S. adults with detailed profiles, including 224 million unique email addresses, across over 75 million households. With meaningful, people-based interaction that focuses on consumer behavior and declared first-party data, leveraged on a mobile-centric platform that provides seamless omni-channel capabilities, we have the ability to target and develop comprehensive consumer profiles that redefine the way advertisers view their most valuable customers.insights.

In order for the Company to continue to develop new products, grow its existing business and expand into additional markets, we must generate and sustain sufficient operating profits and cash flow in future periods. This will require us to generate additional sales from current products and new products currently under development. We continue to build out our sales organization to drive current products and to introduce new products into the market place. We will incur ~~increased compensation expenses for our sales and marketing, executive and administrative, and infrastructure related persons as we increase headcount in the next 12 months.~~

On September 6, 2017, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with BlueFocus International Limited (“BlueFocus”), a private company limited by shares registered in Hong Kong. Under the terms of the Business Combination Agreement, the Company will issue to BlueFocus shares of the Company’s common stock, representing 63% of the Company’s common stock on a fully diluted, post-transaction basis (the “Purchased Shares”). In consideration of the Purchased Shares, BlueFocus will contribute to the Company (i) all of the issued and outstanding membership interests, shares of capital stock, and/or other equity interests of certain entities (the “Contributed Entities”), (ii) $100.0 million in cash (the “Cash Consideration”) and if applicable, certain net working capital adjustments, and (iii) repay, assume, or refinance indebtedness for borrowed money of the Company as of the Closing (as defined below). We refer to the issuance of the Purchased Shares in consideration of the contribution of the Contributed Entities and the Cash Consideration, together with the Cash Dividend hereinafter described, as the “Business Combination Transaction.”

The Cash Consideration, after deductions for certain transaction expenses and an amount up to $20.0 million to capitalize Red Violet at the time of the Spin-Off, will be distributed pro rata as a cash dividend or payment (the “Cash Dividend”) to the holders of company common stock and the holders of certain warrants of the Company. The Cash Dividend is contingent on Closing.

Management’s discussion and analysis of financial condition and results of operations are based upon cogint’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The preparation of these financial statements requires cogint to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, cogint evaluates its estimates, including those related to bad debts, income taxes, and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For additional information, please refer to our 2016 Form 10-K, filed with the SEC on March 14, 2017. There have been no material changes to Critical Accounting Policies and Estimates disclosed in the 2016 Form 10-K.

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

Three months ended June 30, 2020 compared to three months ended ~~September~~June 30, ~~2017, as compared to the three months ended September 30, 2016:~~2019:

Media margin, adjusted EBITDA and adjusted net income are non-GAAP financial measures.

On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. At this time, our operations have not been significantly impacted by the global economic impact of COVID-19, and we have taken appropriate measures to ensure that we are able to conduct our business remotely without significant disruptions. The economic uncertainty caused by COVID-19 has had an impact on certain of our advertiser clients in certain industry verticals, such as staffing and recruitment and financial products and services, who have reduced their pricing and/or demand during the quarter. We took steps to reduce our costs of acquiring traffic and to match available consumers with other advertiser clients in the various industries we serve, thereby enabling us to more effectively manage our margins during the quarter. We anticipate additional shifts in pricing and/or demand among affected clients, as the trajectory of the pandemic and future economic outlook remain uncertain.

We implemented company-wide work-from-home beginning on March 13, 2020. While we believe we are well-positioned to adapt to a work-from-home environment, COVID-19 increases the likelihood of certain risks of disruption to our business, such as the incapacity of certain employees or system interruptions, which could lead to diminishment of our regular business operations, technological capacity and cybersecurity capabilities, as well as operational inefficiencies and reputational harm.

Please see "Results of Operations" and Item 1A. Risk Factors for further discussion of the possible impact of the COVID-19 pandemic on our business.

~~Generated on average over 850,000 consumer registrations and over 8.8 million compiled survey responses daily, with a recent record high~~

Table of ~~over 1.0 million registrations and over 10.3 million compiled survey responses in a single day.~~

Contents

After successful launch of Mobile App Install product offering and Pay Per Call ad format in 2016, revenue for these offerings continues to scale with $5.5 million and $1.9 million, respectively, for the third quarter 2017.

Powered by our proprietary CORE™ data fusion platform, launched FOREWARN™, a real-time information solution, via mobile application, for the real estate industry, providing risk assessment and due diligence.

~~Released the Comprehensive Report, an idiCORE™ offering, to the risk management industry, addressing our clients’ needs in delivering the most essential tool in their risk mitigation arsenal.~~

~~Use~~

Definitions, Reconciliations and ~~Reconciliation~~Uses of Non-GAAP Financial Measures

~~Management evaluates~~We report the following non-GAAP measures:

Media margin is defined as revenue minus cost of revenue (exclusive of depreciation and amortization) attributable to variable costs paid for media and related expenses. Media margin is also presented as percentage of revenue.

Adjusted EBITDA is defined as net income excluding (1) income taxes, (2) interest expense, net, (3) depreciation and amortization, (4) goodwill impairment, (5) accrued compensation expense for Put/Call Consideration, (6) share-based compensation expense, (7) acquisition-related costs, (8) restructuring and certain severance costs, (9) certain litigation and other related costs, and (10) one-time items.

Adjusted net income is defined as net income excluding (1) goodwill impairment, (2) accrued compensation expense for Put/Call Consideration, (3) share-based compensation expense, (4) acquisition-related costs, (5) restructuring and certain severance costs, (6) certain litigation and other related costs, and (7) one-time items. Adjusted net income is also presented on a per share (basic and diluted) basis.

Below is a reconciliation of media margin from net income, which we believe is the most directly comparable GAAP measure.

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income	$	452		$	715		$	860		$	1,760
Income tax benefit		—			—			—			(35	)
Interest expense, net		1,333			1,767			2,865			3,545
Goodwill impairment		817			—			817			—
Depreciation and amortization		3,853			3,306			7,586			6,623
General and administrative		10,044			10,294			21,120			20,329
Product development		3,115			2,287			5,846			4,445
Sales and marketing		2,888			3,058			5,718			6,492
Non-media cost of revenue ⁽¹⁾		2,312			1,475			3,915			2,836
Media margin	$	24,814		$	22,902		$	48,727		$	45,995
Revenue	$	71,509		$	70,560		$	150,443		$	137,121
Media margin % of revenue		34.7	%		32.5	%		32.4	%		33.5	%

(1)	Represents the portion of cost of revenue (exclusive of depreciation and amortization) not attributable to variable costs paid for media and related expenses.

Below is a reconciliation of adjusted EBITDA from net income, which we believe is the most directly comparable GAAP measure:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net income	$	452	$	715	$	860	$	1,760
Income tax benefit		—		—		—		(35	)
Interest expense, net		1,333		1,767		2,865		3,545
Depreciation and amortization		3,853		3,306		7,586		6,623
Goodwill impairment		817		—		817		—
Accrued compensation expense for Put/Call Consideration		530		—		530		—
Share-based compensation expense		1,281		2,954		3,678		5,229
Acquisition-related costs		15		448		62		448
Restructuring and certain severance costs		—		250		—		360
Certain litigation and other related costs		1,115		227		2,022		716
One-time items		—		—		—		168
Adjusted EBITDA	$	9,396	$	9,667	$	18,420	$	18,814

Table of Contents

Below is a reconciliation of adjusted net income and adjusted net income per share from net income, which we believe is the most directly comparable GAAP measure.

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except share data)	2020		2019		2020		2019
Net income	$	452	$	715	$	860	$	1,760
Goodwill impairment		817		—		817		—
Accrued compensation expense for Put/Call Consideration		530		—		530		—
Share-based compensation expense		1,281		2,954		3,678		5,229
Acquisition-related costs		15		448		62		448
Restructuring and certain severance costs		—		250		—		360
Certain litigation and other related costs		1,115		227		2,022		716
One-time items		—		—		—		168
Adjusted net income	$	4,210	$	4,594	$	7,969	$	8,681
Adjusted net income per share:
Basic	$	0.05	$	0.06	$	0.10	$	0.11
Diluted	$	0.05	$	0.06	$	0.10	$	0.11
Weighted average number of shares outstanding:
Basic		78,510,383		79,388,383		78,557,331		79,297,599
Diluted		78,666,776		81,132,304		78,905,792		80,443,530

We present media margin, adjusted EBITDA, adjusted net income and adjusted net income per share as supplemental measures of our financial and operating performance because we believe they provide useful information to investors. More specifically:

Media margin, as defined above, is a measure of the efficiency of the Company’s operating model. We use media margin and the related measure of media margin as a percentage of revenue as primary metrics to measure the financial return on our media and related costs, specifically to measure the degree by which the revenue generated from our digital marketing services exceeds the cost to attract the consumers to whom offers are made through our services. Media margin is used extensively by our management to manage our operating performance, including evaluating operational performance against budgeted media margin and understanding the efficiency of our media and related expenditures. We also use media margin for performance evaluations and compensation decisions regarding certain personnel.

Adjusted EBITDA, as defined above, is another primary metric by which we evaluate the operating performance of our business, on ~~a variety~~which certain operating expenditures and internal budgets are based and by which, in addition to media margin and other factors, our senior management is compensated. The first three adjustments represent the conventional definition of ~~key indicators, including adjusted EBITDA.~~ EBITDA, and the remaining adjustments are items recognized and recorded under GAAP in particular periods but might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded. These adjustments include certain severance costs associated with department-specific reorganizations and certain litigation and other related costs associated with legal matters outside the ordinary course of business. Items are considered one-time in nature if they are non-recurring, infrequent or unusual and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules. Adjusted EBITDA ~~is a non-GAAP financial measure equal to net loss,~~for the most directly comparable financial measure based on US GAAP, adding back interest expense, income tax benefit, depreciation and amortization, share-based compensation expense, non-recurring legal and litigationsix months ended June 30, 2019 excluded as one-time items $0.2 million of costs ~~acquisition and restructuring costs, write-off~~associated with the move of ~~long-lived assets, and~~our corporate headquarters. There were no other adjustments ~~as noted~~for one-time items in the ~~tables below.~~current period presented.

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

2017

2016

2017

2016

Net loss

$
(14,095
)

$
(9,744
)

$
(47,229
)

$
(23,700
)
Interest expense, net

2,426

1,880

7,098

5,561

Income tax benefit

-

(4,493
)

-

(11,519
)
Depreciation and amortization

3,585

3,507

10,460

9,112

Share-based compensation expense

11,071

7,318

27,702

21,941

Non-recurring legal and litigation costs

340

633

9,170

1,493

Acquisition and restructuring costs

2,474

-

4,792

431

Write-off of long-lived assets

-

4,055

3,626

4,055

Non-cash loss on exchange of warrants

-

-

-

1,273

Adjusted EBITDA

$
5,801

$
3,156

$
15,619

$
8,647

~~We present adjusted EBITDA~~Adjusted net income, as ~~a supplemental~~defined above, and the related measure of ~~our operating performance because we believe it provides useful information to our investors as it eliminates the impact of~~adjusted net income per share exclude certain items that ~~we do~~are recognized and recorded under GAAP in particular periods but might be viewed as not ~~consider indicative~~necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded. Adjusted net income for the six months ended June 30, 2019 excluded as one-time items $0.2 million of costs associated with the move of our ~~cash operations and ongoing operating performance. In addition, we use it as an integral part~~corporate headquarters. There were no other adjustments for one-time items in the current period presented. We believe adjusted net income affords investors a different view of ~~our internal reporting to measure~~ the overall financial performance of ~~our reportable segments, evaluate~~ the ~~performance~~Company than adjusted EBITDA and the GAAP measure of ~~our senior management and measure the operating strength of our business.~~net income.

~~Adjusted~~Media margin, adjusted EBITDA, ~~is a measure frequently used by securities analysts, investors~~adjusted net income and other interested parties in their evaluation of the operating performance of companies similar to ours and is an indicator of the operational strength of our business. Adjusted EBITDA eliminates the uneven effect across all reportable segments of considerable amounts of non-cash depreciation and amortization, share-based payments and write-off of long-lived assets.

~~Adjusted EBITDA is~~adjusted net income per share are not intended to be a performance ~~measure~~measures that should be regarded as an alternative to, or more meaningful than, ~~either operating income or~~ net income as indicators of operating ~~performance or to cash flows from operating activities~~performance. None of these metrics are presented as ~~a measure~~measures of liquidity. The way we measure media margin, adjusted EBITDA and adjusted net income may not be comparable to similarly titled measures presented by other companies and may not be identical to corresponding measures used in our various agreements.

Table of Contents

Results of Operations

Three ~~and nine~~ months ended ~~September~~June 30, ~~2017~~2020 compared to three ~~and nine~~ months ended ~~September~~June 30, ~~2016~~2019

Revenue. ~~Total revenue~~Revenue increased ~~$5.1~~$0.9 million, or ~~10%~~1%, to $57.2 million, and $28.4 million or 21% to $161.0 million for the three and nine months ended September 30, 2017, respectively, from $52.2 million and $132.6 million for the three and nine months ended September 30, 2016, respectively. This increase was driven by strong growth in our Information Services segment. Revenue generated from our Information Services segment was $22.8 million and $57.8 million for the three and nine months ended September 30, 2017, respectively, versus $14.8 million and $39.3 million for the three and nine months ended September 30, 2016, respectively. Revenue generated from our Performance Marketing segment was $34.4 million and $103.2 million for the three and nine months ended September 30, 2017, versus $37.4 million and $93.4 million for the three and nine months ended September 30, 2016, respectively.

~~Gross profit.~~ Gross profit margin was 34% and 32% for the three and nine months ended September 30, 2017, respectively, as compared to 24% and 26% for the three and nine months ended September 30, 2016, respectively. The increase in gross profit margin was mainly attributed to scaling of our Information Services segment, producing higher gross margin relative to the consolidated business.

Historically, the relative mix of revenue derived from our Information Services and Performance Marketing segments produces a consolidated average gross margin between 26% and 32%. At scale, the Information Services segment will trend with average gross margins between 70% and 85%. As a result of our continued focus on scaling the Information Services segment, our consolidated average gross margin has increased to between 30% and 34%. We continue to expect our consolidated gross margin to increase over the next twelve months as our Information Services revenue continues to scale.

~~As a result of the increase in revenue and gross profit margin, gross profit increased $7.1 million or 56% to $19.6~~$71.5 million for the three months ended ~~September~~June 30, ~~2017,~~2020, from ~~$12.5~~$70.6 million for the three months ended ~~September~~June 30, ~~2016;~~2019. The increase was primarily attributable to greater availability of consumer traffic to our websites, along with corresponding demand for our performance-based marketing services. We believe that the effect of consumers spending more time on their mobile devices during the period of social isolation brought on by the COVID-19 pandemic yielded a greater supply of consumer traffic, although this effect dissipated and reversed later in the quarter. As the trajectory of the pandemic and governmental, business and individual responses to the same remain dynamic and unpredictable, we are unable to assess the availability of consumer traffic to our websites in future quarters. After the initial onset of the COVID-19 pandemic, certain advertisers in industry verticals such as staffing and recruitment and financial products and services began to reduce their spend with us, while ~~gross profit~~certain advertisers in other verticals such as streaming services and mobile gaming have increased ~~$16.6 million or 48%~~their demand. While the combination of these trends did not result in a significant disruption to ~~$51.5~~our business in the quarter ended June 30, 2020, the trajectory of these trends is uncertain.

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue was relatively flat at $49.0 million for the ~~nine~~three months ended ~~September~~June 30, ~~2017, from $34.9~~2020, as compared with $49.1 million for the ~~nine~~three months ended ~~September~~June 30, ~~2016.~~2019. Our cost of revenue primarily consists of media and related costs associated with acquiring traffic from third-party publishers and digital media platforms for our owned and operated websites and, historically, on behalf of third-party advertisers, as well as the costs of fulfilling rewards earned by consumers who complete the requisite number of advertiser offers.

The total cost of revenue as a percentage of revenue decreased to 69% for the three months ended June 30, 2020, compared to 70% in the corresponding period in 2019, as a reduction in our cost of media was partly offset by increased reward fulfillment expense, as we tested certain changes to the consumer flows and experience during the quarter.

Sales and ~~marketing expenses.~~marketing. Sales and marketing expenses ~~increased $2.6~~decreased $0.2 million, or ~~70%~~6%, to ~~$6.3 million, and $6.6 million or 66% to $16.6~~$2.9 million for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017, respectively,~~2020, from ~~$3.7~~$3.1 million for the three months ended June 30, 2019. For the three months ended June 30, 2020 and 2019, the amounts consisted mainly of employee salaries and benefits of $2.4 million and $2.3 million, non-cash share-based compensation expense of $0.3 million and $0.2 million, and advertising costs of $0.2 million and $0.4 million, respectively. We are actively managing our sales and marketing expenditures to reflect the rapidly shifting market dynamics associated with the impact of COVID-19 on our advertiser clients’ industries. As a result, past levels of sales and marketing expenditures may not be indicative of future expenditures, which may increase or decrease as these uncertainties in our business play out.

Product development.Product development increased $0.8, or 36%, to $3.1 million for the three months ended June 30, 2020, from $2.3 million for the three months ended June 30, 2019. For the three months ended June 30, 2020 and 2019, the amounts consisted mainly of salaries and benefits of $2.2 million and $2.0 million and software license and maintenance costs of $0.3 million and $0.0 million, respectively. We have not implemented any material changes to our product development strategy as a result of the COVID-19 pandemic.

General and administrative.General and administrative expenses decreased $0.3 million, or 2%, to $10.0 million for the three ~~and nine~~ months ended ~~September~~June 30, ~~2016,~~2020, from $10.3 million for the June 30, 2019. For the three months ended June 30, 2020 and 2019, the amounts consisted mainly of employee salaries and benefits of $4.3 million and $3.9 million, professional fees of $1.2 million and $1.2 million, office overhead of $1.2 million and $0.8 million, certain litigation and related costs of $1.1 million and $0.2 million, non-cash share-based compensation expense of $0.7 million and $2.5 million, and accrued compensation expense for Put/Call Consideration from the Winopoly Acquisition of $0.5 million and $0.0 million (see Note 11, Business acquisitions, in the Notes to Consolidated Financial Statements), respectively. The decrease was mainly the result of reduced non-cash share-based compensation expense, partially offset by an increase in certain litigation and related costs year over year as well as accrued compensation expense for the Put/Call Consideration. At this time, we do not anticipate material changes to our general and administrative expenditures due to the COVID-19 pandemic. See “Item 1A Risk Factors” below.

Depreciation and amortization.Depreciation and amortization expenses increased $0.5 million, or 17%, to $3.9 million for the three months ended June 30, 2020, from $3.3 million for the three months ended June 30, 2019, as the results of the AdParlor Acquisition are included in the current period but were not present in the prior period.

Goodwill impairment.During the second quarter of 2020, we recognized $0.8 million of goodwill impairment related to the All Other reporting unit, with no corresponding impairment charge in the prior period.

Interest expense, net. Interest expense, net, decreased $0.4 million, or 25%, to $1.3 million for the three months ended June 30, 2020, from $1.8 million for the three months ended June 30, 2019. The decrease was attributable to a lower interest rate environment, as well as lower average debt balance outstanding on the Refinanced Term Loan described below under "Liquidity and Capital Resources".

Income before income taxes.For the three months ended June 30, 2020, income before income taxes decreased $0.3 million to $0.5 million, compared to $0.7 million for the three months ended June 30, 2019. The change was primarily due to an increase in product development of $0.8 million, goodwill impairment of $0.8 million and depreciation and amortization expense of $0.5 million, partially offset by an increase in revenue of $0.9 million, decrease in interest expense of $0.4 million, decrease in general and administrative expense of $0.3 million, decrease in sales and marketing of $0.2 million and decrease in cost of revenue of $0.1, discussed above.

Income taxes. There was no income tax recorded for the three months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020 and 2019, we recorded a full valuation allowance against our net deferred tax assets. We intend to maintain a full valuation allowance against the net deferred tax assets until there is sufficient evidence to support the release of all or some portion of this allowance. Based on the our history of losses, current income, estimated future taxable income, exclusive of reversing temporary differences and carryforwards, future reversals of existing taxable temporary differences and consideration of available tax planning strategies, we believe there is a reasonable possibility that, within the next twelve months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance may be released. Release of some or all of the valuation allowance would result in the recognition of certain deferred tax assets and an increase in deferred tax benefit for any period in which such a release may be recorded, however, the exact timing and amount of any valuation allowance release are subject to change, depending on the profitability that we are able to achieve and the net deferred tax assets available.

Net income. Net income of $0.5 million and $0.7 million was recognized for the three months ended June 30, 2020 and 2019, respectively, as a result of the foregoing.

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

Revenue. Revenue increased $13.3 million, or 10%, to $150.4 million for the six months ended June 30, 2020, from $137.1 million for the six months ended June 30, 2019. The increase was primarily attributable to greater availability of consumer traffic to our websites, along with corresponding demand for our performance-based marketing services. We believe that a combination of reduced competition for media early in the year, followed by consumers spending more time on their mobile devices during the period of social isolation brought on by the COVID-19 pandemic, yielded a greater supply of consumer traffic, although this effect dissipated and reversed later in the second quarter. After the initial onset of the COVID-19 pandemic, certain advertisers in industry verticals such as staffing and recruitment and financial products and services began to reduce their spend with us, while certain advertisers in other verticals such as streaming services and mobile gaming increased their demand. The combination of these trends did not result in a significant disruption to our business in the six months ended June 30, 2020.

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue increased $11.7 million, or 12%, to $105.6 million for the six months ended June 30, 2020, from $94.0 million for the six months ended June 30, 2019.

The total cost of revenue as a percentage of revenue increased to 70% for the six months ended June 30, 2020, compared to 69% in the corresponding period in 2019, as we sourced increased media at slightly lower margins, and incurred increased reward fulfillment expense, as we tested certain changes to the consumer flows and experience during the second quarter.

Sales and marketing. Sales and marketing expenses decreased $0.8 million, or 12%, to $5.7 million for the six months ended June 30, 2020, from $6.5 million for the six months ended June 30, 2019. For the six months ended June 30, 2020 and 2019, the amounts consisted mainly of employee salaries and benefits of $4.6 million and $4.6 million, non-cash share-based compensation expense of $0.5 million and $0.5 million, and advertising costs of $0.4 million and $0.9 million, respectively. The reduction in sales and marketing expenses derived primarily from reduced advertising costs.

Product development.Product development increased $1.4, or 32%, to $5.8 million for the six months ended June 30, 2020, from $4.4 million for the six months ended June 30, 2019, partly owing to the development of new media properties. For the six months ended June 30, 2020 and 2019, the amounts consisted mainly of salaries and benefits of $4.4 million and $3.8 million, non-cash share-based compensation expense of $0.5 million and $0.5 million, and software license and maintenance costs of $0.4 million and $0.0 million, respectively.

General and administrative.General and administrative expenses increased $0.8 million, or 4%, to $21.1 million for the six months ended June 30, 2020, from $20.3 million for the June 30, 2019. For the six months ended June 30, 2020 and 2019, the amounts consisted mainly of employee salaries and benefits of $8.8 million and $8.0 million, non-cash share-based compensation expense of $2.7 million and $4.2 million, professional fees of $2.5 million and $3.0 million, office overhead of $2.0 million and $1.8 million, certain litigation and related costs of $2.0 million and $0.7 million, and accrued compensation expense for Put/Call Consideration from the Winopoly Acquisition of $0.5 million and $0.0 million, respectively. The increase was mainly the result of increased ~~headcount as we continue to invest in~~employee-related costs resulting from the expansion of our ~~sales organization, increased fulfillment~~workforce to support growth, increase in certain litigation and related costs year over year and ~~increased bad debt expenses. Sales and marketing expenses consist of advertising and marketing, salaries and benefits, traveling expenses incurred~~accrued compensation expense for Put/Call Consideration, partially offset by ~~our sales team, share-based compensation expenses, provision for bad debts, and fulfillment costs. Included~~a decrease in ~~sales and marketing expenses was~~ non-cash share-based compensation ~~expenses of $0.9 million~~expense and ~~$2.4 million for the three and nine months ended September 30, 2017, respectively, as compared to $0.6 and $1.8 million for the three and nine months ended September 30, 2016, respectively.~~ professional fees.

~~General and administrative expenses.~~ General and administrative expenses increased $7.8 million or 57% to $21.4 million, and $20.8 million or 52% to $60.9 million for the three and nine months ended September 30, 2017, respectively, from $13.6 million and $40.1 million for the three and nine months ended September 30, 2016, respectively. The increase was mainly the result of increased non-cash share-based payments, employee salaries and benefits, non-recurring legal and litigation costs, and acquisition and restructuring costs. For the three months ended September 30, 2017 and 2016, ~~the amounts consisted mainly of~~ non-cash share-based payments of $10.2 million and $6.7 million, non-recurring legal and litigation costs of $0.3 million and $0.6 million, acquisition and restructuring costs of $2.4 million and $0 million, other professional fees of $0.8 million and $1.0 million, and employee salaries and benefits of $4.2 million and $3.2 million, respectively. For the nine months ended September 30, 2017 and 2016, ~~the amounts consisted mainly of~~ non-cash share-based payments of $25.3 million and $20.2 million, non-recurring legal and litigation costs of $9.2 million, including $7.0 million in connection with the TRADS Litigation Settlement, and $1.4 million, acquisition and restructuring costs of $4.8 million and $0.4 million, other professional fees of $2.2 million and $3.8 million, and employee salaries and benefits of $11.7 million and $8.4 million, respectively. The Company expects a significant reduction in litigation costs going forward.

Depreciation and amortization.Depreciation and amortization expenses increased ~~$0.1~~$1.0 million, or 2%15%, to ~~$3.6 million, and $1.3 million or 15% to $10.5~~$7.6 million for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017, respectively,~~2020, from ~~$3.5 million and $9.1~~$6.6 million for the ~~three and nine~~six months ended ~~September~~June 30, ~~2016, respectively. For~~2019, as the ~~nine months ended September 30, 2017,~~results of the ~~increase~~AdParlor Acquisition are included in ~~depreciation and amortization was mainly due to~~ the ~~amortization of intangible assets resulting from~~current period but were not present in the ~~Q Interactive Acquisition effective on June 8, 2016 and the launch of software developed for internal use in~~prior period.

Goodwill impairment.During the second quarter of ~~2016.~~

~~Write-off~~2020, we recognized $0.8 million of ~~long-lived assets.~~ ~~During the nine months ended September 30, 2017,~~ ~~as a result of the Q Interactive Integration, we wrote off $3.6 million, primarily relating~~goodwill impairment related to the ~~remaining balance of the~~ ~~acquired proprietary technology and trade names, acquired~~All Other reporting unit, with no corresponding impairment charge in the ~~Q Interactive Acquisition. We included it in the operating expenses as a write-off of long-lived assets~~. During the nine months ended September 30, 2016, the write-off of intangible assets of $4.1 million represented the write-off of the remaining balance of the intellectual property pursuant to the Intellectual Property Purchase Agreement dated October 14, 2014 (“Purchased IP”) and capitalized litigation costs as a result of an unfavorable ruling in relation to the Purchased IP litigation.prior period.

Interest expense, net.Interest expense, net, represented the interest expense and amortization of debt issuance costs associated with (i) the term loan in the amount of $45.0 million (“Term Loan”) pursuant to a credit agreement entered in December 2015 (“Credit Agreement”), (ii) promissory notes payable to certain stockholders in the amount of $10 million (“Promissory Notes”) pursuant to agreements with certain stockholders in December 2015, and (iii) the incremental term loan in the amount of $15.0 million (“Incremental Term Loan”, together with Term Loan, collectively, “Term Loans”), pursuant to the amendment No. 3 to the Credit Agreement effective in January 2017 (the “Amendment No. 3”). Interest expense, net, increased $0.5decreased $0.7 million, or ~~29%~~19%, to ~~$2.4 million, and $1.5 million or 28% to $7.1~~$2.9 million for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017, respectively,~~2020, from ~~$1.9 million and $5.6~~$3.5 million for the ~~three and nine~~six months ended ~~September~~June 30, ~~2016, respectively.~~2019. The ~~increase~~decrease was ~~mainly~~ attributable to ~~the addition of the Incremental Term Loan. The long-term~~a lower interest rate environment and a lower average debt balance ~~including~~outstanding on the ~~current portion of long-term debt~~Refinanced Term Loan described below under "Liquidity and ~~net of unamortized debt issuance costs, was $62.8 million as of September 30, 2017.~~Capital Resources".

~~Loss~~Income before income taxes.For the ~~three~~six months ended ~~September~~June 30, ~~2017 and 2016,~~ ~~we had a loss~~2020, income before income taxes decreased $0.9 million, or 50%, to $0.9 million for the six months ended June 30, 2020, from $1.7 million for the six months ended June 30, 2019. The change was primarily due to an increase in cost of ~~$14.1~~revenue of $11.7 million, ~~and $14.2~~product development of $1.4 million, ~~including non-cash share-based payments~~goodwill impairment charge of ~~$11.1 million and $7.3~~$0.8 million, depreciation and amortization expense of ~~$3.6~~$1.0 million, and ~~$3.5~~general and administrative expense of $0.8 million, ~~non-recurring legal~~partially offset by an increase in revenue of $13.3 million, decrease in sales and ~~litigation costs~~marketing of ~~$0.3~~$0.8 and decrease in interest expense of $0.7 million, ~~and $0.6 million, acquisition and restructuring costs of $2.5 million and $0, and one-time write-off of long-lived assets of $0 and $4.1 million, respectively.~~ ~~For the nine months ended September 30, 2017 and 2016,~~ we had a loss before income taxes of $47.2 million and $35.2 million, including non-cash share-based payments of $27.7 million and $21.9 million, depreciation and amortization of $10.5 million and $9.1 million, non-recurring legal and litigation costs of $9.2 million and $1.5 million, acquisition and restructuring costs of $4.8 million and $0.4 million, one-time write-off of long-lived assets of $3.6 million and $4.1 million, and non-cash loss on exchange of warrants of $0 and $1.3 million, respectively.discussed above.

Income taxes.Income tax benefit ~~of $0~~ was ~~recognized~~$0.0 thousand and $35.0 thousand for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017, as compared to $4.5~~2020 and 2019, respectively.

Net income. Net income of $0.9 million and $11.5 million for the three and nine months ended September 30, 2016, respectively. A full valuation allowance on the net deferred tax assets was recognized for the three and nine months ended September 30, 2017. See Note 6, “Income Taxes,” for details.

~~Net loss. A net loss of $14.1 million and $47.2~~$1.8 million was recognized for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017, respectively, as compared to $9.7 million~~2020 and ~~$23.7 million for the three and nine months ended September 30, 2016,~~2019, respectively, as a result of the foregoing.

Table of Contents

Effect of Inflation

The rates of inflation experienced in recent years have had no material impact on our financial statements. We attempt to recover increased costs by increasing prices for our services, to the extent permitted by contracts and ~~competition.~~the competitive environment within our industry.

Liquidity and Capital Resources

Cash flows ~~(used in)~~ provided by operating activities. For the ~~nine~~six months ended ~~September~~June 30, 2017, net cash used in operating activities was $2.9 million, which was mainly the result of the operating loss of $0.8 million, after the adjustments of non-cash items of $46.4 million. For the nine months ended September 30, 2016,2020 and 2019, net cash provided by operating activities was ~~$4.4~~$9.8 million ~~which was mainly the result~~and $13.1 million, respectively. The decline of ~~the operating income $3.6~~$3.3 million ~~after the adjustments of non-cash items of $27.3 million.~~resulted primarily from a $3.2 million reduction in changes in assets and liabilities.

Cash flows used in investing activities. ~~Net~~For the six months ended June 30, 2020 and 2019, net cash used in investing activities ~~for the nine months ended September 30, 2017 and 2016~~ was ~~$6.7~~$2.7 million and ~~$9.5~~$2.9 million, ~~respectively, which~~respectively. The decrease in cash used was mainly due to ~~capitalized costs included in intangible assets of $5.5~~$1.9 million ~~and $8.0 million,~~reduced capital expenditures year over year, partially offset by cash paid for the ~~corresponding periods, respectively.~~Winopoly Acquisition in the amount of $1.4 million in the current year.

Cash flows ~~provided by~~used in financing activities. Net cash ~~provided by~~used in financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and 2019 was ~~$9.8~~$5.6 million ~~which was mainly the result of net proceeds from the Incremental Term Loan of $14.0~~and $6.2 million, respectively. The decrease in ~~February 2017, partially offset by repayments of long-term debt of $3.5 million. Net~~ cash ~~provided by financing activities~~used for the ~~nine~~six months ended ~~September~~June 30, ~~2016 was $2.0 million, which~~2020 was mainly due to a $2.7 million decrease in statutory taxes paid related to the net ~~proceeds from the registered direct offering~~share settlement of ~~$4.7 million in May 2016,~~vested restricted stock units, partially offset by an increase of $0.8 million in repayment of the ~~repayments~~Refinanced Term Loan and the repurchase of treasury stock as part of a stock repurchase program of $1.3 million in 2020, which was not in effect in the prior period.

As of June 30, 2020, we had noncancelable operating lease commitments of $11.9 million and long-term debt ~~of $1.7 million.~~

~~As of September 30, 2017, the Company~~which had ~~material commitments under non-cancellable data licensing agreements of $24.3 million.~~$50.9 million principal balance. For the ~~nine~~six months ended ~~September~~June 30, ~~2017, the Company~~2020, we funded ~~its~~our operations using available ~~cash and proceeds from the Incremental Term Loan.~~cash.

The Company reported net loss of $14.1 million and $47.2 million for the three and nine months ended September 30, 2017, respectively, as compared to $9.7 million and $23.7 million for the three and nine months ended September 30, 2016, respectively. As of September 30, 2017, the Company had an accumulated deficit of $161.5 million.

As of ~~September~~June 30, ~~2017, the Company~~2020, we had cash, ~~and~~ cash equivalents and restricted cash of approximately ~~$10.3~~$21.7 million, ~~of which, $9.4 million was held by Fluent,~~ an increase of ~~$0.2~~$1.5 million from ~~$10.1~~$20.2 million as of December 31, 2016. A portion of this cash held by Fluent may be used by Fluent only for general operating purposes. Based on projections of growth in revenue and operating results in the coming year, the proceeds of $2.6 million from the exercise of certain warrants in October 2017, and other potential financings, the Company believes2019. We believe that itwe will have sufficient cash resources to finance ~~its~~our operations and expected capital expenditures for the next twelve months. Subject to revenue growth, the Company may have to continue to raise capital through the issuance of additional equity and/or debt, which, if the Company is able to obtain, could have the effect of diluting stockholders. Any equity or debt financings, if available at all, may be on terms which are not favorable to the Company. If the Company’s operations do not generate positive cash flow in the upcoming year, or if it is not able to meet the debt covenants specified in the Credit Agreement, as amended, or if it is not able to obtain additional equity or debt financing on termsmonths and ~~conditions acceptable to it, if at all, it may be unable to implement its business plan, or even continue its operations.~~beyond.

~~The Company~~

We may explore the possible acquisition of businesses, products and/or technologies that are complementary to ~~its~~our existing business. ~~The Company is~~We are continuing to identify and prioritize additional technologies, which itwe may wish to develop internally or through licensing or acquisition from third parties. While ~~the Company~~we may engage from time to time in discussions with respect to potential acquisitions, there can be no assurances that any such acquisitions will be made or that ~~the Company~~we will be able to successfully integrate any acquired business. In order to finance such acquisitions and working capital, it may be necessary for us to raise additional funds through public or private financings. Any equity or debt financings, if available at all, may be on terms which are not favorable to us and, in the case of equity financings, may result in dilution to ~~stockholders.~~shareholders. On July 1, 2019, we acquired substantially all of the assets of AdParlor Holdings, Inc. and certain affiliates for $7.3 million in cash, using cash on hand, and a $2.4 million promissory note to the sellers. On April 1, 2020, we acquired a 50% membership interest in Winopoly, LLC, for a deemed purchase price of $2.6 million, comprised of $1.6 million in upfront cash paid to the seller parties and contingent consideration with a fair value of $1.0 million, payable based upon the achievement of specified revenue targets over the eighteen-month period following the completion of the acquisition. See Note 11, Business acquisitions, in the Notes to Consolidated Financial Statements.

As of ~~September~~June 30, ~~2017, we had financed approximately $70.0 million, for~~2020, the ~~cash portion of the purchase price of the Fluent Acquisition and other general operating purposes, with the proceeds from the~~Refinanced Term ~~Loans and Promissory Notes described herein. The Term Loans have~~Loan has an outstanding principal balance ~~plus paid-in-kind (“PIK”) interest,~~ of ~~$56.2~~$48.4 million and ~~the Promissory Notes have an outstanding principal balance, plus PIK interest, of $10.9 million. All obligations under the Term Loans mature~~matures on ~~December 8, 2020 and our Promissory Notes are due six months after payment in full of our Term Loans.~~March 26, 2023. The Credit Agreement, along with the related Amendment No. 6 governing the Refinanced Term ~~Loans contains~~Loan and subsequent amendments, contain restrictive covenants which impose limitations on the way we conduct our business, including limitations on the amount of additional debt we are able to incur and ~~restricts~~ our ability to make certain investments and other restricted ~~payments, including certain intercompany payments of cash and other property.~~payments. The restrictive covenants and prepayment penalties in the Credit Agreement, as amended, may limit our strategic and financing options and our ability to return capital to our ~~stockholders~~shareholders through dividends or stock buybacks. Furthermore, we ~~still~~ may need to incur additional debt to meet future financing needs.

The Refinanced Term ~~Loans are~~Loan is guaranteed by ~~the Company~~us and ~~the other~~our direct and indirect subsidiaries ~~of the Company,~~ and ~~are~~is secured by substantially all of ~~the~~our assets and those of ~~the Company and its~~our direct and indirect subsidiaries, including Fluent, LLC, in each case, on an equal and ratable basis. The Refinanced Term ~~Loans accrue~~Loan accrues interest at the rate ~~of: (a)~~of either, at Fluent's option, (a) LIBOR (subject to a floor of 0.50%) plus ~~10.5%~~7.00% per annum, or (b) base rate (generally equivalent to the U.S. prime rate) plus ~~9.5%~~6.0% per annum, payable in ~~cash, plus (b) 1% per annum, payable, at Fluent's option, in either cash or in-kind.~~cash. Principal amortization of the Refinanced Term ~~Loans~~Loan is ~~$0.7~~$0.9 million per quarter, ~~payable at the end of each calendar quarter,~~ which commenced ~~on March 31, 2017. The Term Loans mature on December 8, 2020.~~with the fiscal quarter ended June 30, 2018.

The Credit Agreement, as amended, requires us to maintain and comply with certain financial and other covenants. WeWhile we were in compliance with the financial and other covenants at June 30, 2020, we cannot assure ~~you~~ that we will be able to maintain compliance with such financial or other covenants. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness, which would materially adversely affect our financial health if we are unable to access sufficient funds to repay all the outstanding amounts. Moreover, if we are unable to meet our debt obligations as they come due, we could be forced to restructure or refinance such obligations, seek additional equity financing or sell assets, which we may not be able to do on satisfactory terms, or at all. In addition, the Credit Agreement includes certain ~~mandatory~~ prepayment provisions, including ~~annual~~mandatory quarterly prepayments of the Refinanced Term ~~Loans~~Loan with a portion of our excess cash ~~flow.~~flow and prepayment penalties if we prepay the Refinanced Term Loan before the fourth anniversary of Amendment No. 6. As long as the Refinanced Term ~~Loans remain~~Loan remains outstanding, the restrictive covenants and mandatory quarterly prepayment provisions and prepayment penalties could impair our ability to expand or pursue our business strategies or obtain additional funding. On August 7, 2017, the Company and its subsidiaries entered into Amendment No. 4 to the Credit Agreement (“Amendment No. 4”). Amendment No. 4 provides that there shall be no requirement that the Company and its subsidiaries meet any minimum EBITDA threshold for the twelve-month period ended June 30, 2017. The requirement that Fluent and its subsidiaries meet the required minimum EBITDA threshold for the twelve-month period ended June 30, 2017 was not impacted by Amendment No. 4. As of June 30, 2017, the Company was in compliance with the covenants under the Credit Agreement, after giving effect to Amendment No. 4. On November 3, 2017, the Company and its subsidiaries entered into Amendment No. 5 to the Credit Agreement (“Amendment No. 5”). Amendment No. 5 provides for certain amendments to the definition of EBITDA by adding back acquisition and restructuring costs resulting from the Business Combination Transaction, and non-recurring costs relating to litigation with TRADS that we settled on July 22, 2017. Amendment No. 5 also amends the minimum EBITDA threshold for the Company and its subsidiaries beginning with the quarter ended September 30, 2017. In addition, Amendment No. 5 allows for additional transfer of cash from Fluent to the Company, provided that Fluent maintains a minimum cash balance. As of September 30, 2017, the Company was in compliance with the covenants under the Credit Agreement, after giving effect to Amendment No. 5.

~~Contractual Obligations~~

~~As of September 30, 2017,~~ ~~the Company has the following future contractual obligations~~:

(In thousands)

Remainder of 2017

2018

2019

2020

2021

2022 and
thereafter

Total

Lease agreements

$
427

$
1,961

$
686

$
705

$
724

$
2,127

$
6,630

Data licensing agreements

1,074

4,990

5,930

6,250

4,775

1,302

24,321

Debt

2,526

8,905

9,597

55,667

15,782

-

92,477

Acquisition consideration payable in stock

10,225

-

-

-

-

-

10,225

Litigation settlement

1,500

3,500

-

-

-

-

5,000

Employment agreements

638

1,145

905

301

-

-

2,989

Total

$
16,390

$
20,501

$
17,118

$
62,923

$
21,281

$
3,429

$
141,642

Table of Contents

The lease agreements represent future minimum rental payments under non-cancellable operating leases having initial or remaining lease terms of more than one year. The data licensing agreements of $24.3 million represent material data purchase commitments under non-cancellable data licensing agreements. Debt of $92.5 million represents the payment of principal and interest of the Term Loans and Promissory Notes. Acquisition consideration payable in stock mainly represents the fair value of earn-out shares associated with the Q Interactive Acquisition, payable in 2017. Litigation settlement represents payments, ~~over the course of one year, in connection with the TRADS Litigation Settlement~~. Employment agreements represent related agreements reached with certain executives, including our Chief Executive Officer and Chief Financial Officer, etc., which provide for compensation and certain other benefits and for severance payments under certain circumstances. The total future contractual obligations as of September 30, 2017 increased by $28.1 million from December 31, 2016, which was primarily due to the increase in data licensing agreements of $7.6 million, debt of $12.7 million, and litigation settlement of $5.0 million.

Off-Balance Sheet Arrangements

As of ~~September~~June 30, ~~2017,~~2020, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

Critical Accounting Policies and Estimates

Management's discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We periodically evaluate our estimates, including those related to revenue recognition, allowance for doubtful receivables, lease commitments, useful lives of intangible assets, recoverability of the carrying amounts of goodwill and intangible assets, share-based compensation and income taxes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, 2020, we determined that the decline in market value of our publicly traded stock and the macroeconomic conditions arising from the global COVID-19 pandemic constituted an impairment triggering event for our two reporting units, Fluent and All Other. As such, we conducted an interim test of the fair value of our goodwill for potential impairment as of March 31, 2020. Based on the results of this interim impairment test, which used a combination of income and market approaches to determine the fair value of our two reporting units, we concluded that Fluent's goodwill of $159,791 and All Other's goodwill of $4,983, were not impaired since the results of the interim test indicated that the estimated fair values exceeded their carrying value by approximately 18% and 4%, respectively. We believe that the assumptions utilized in the interim impairment testing over our two reporting units, including the determination of an appropriate discount rate of 13.0% for Fluent and 16.5% for All Other, long-term profitability growth projections, and estimated future cash flows, are reasonable. The risk of future impairment of goodwill exists if actual results, such as lower than expected revenue, profitability, cash flows, market multiples, discount rates and control premiums, differ from the assumptions used in our interim impairment test. In addition, a sustained decline in the market value of our publicly traded stock could impact the fair value assessment.

During the three months ended June 30, 2020, we determined that the effects of the macroeconomic conditions arising from the global COVID-19 pandemic and the social unrest throughout the United States during June 2020, which changed the media-buying patterns of certain customers directly impacting the All Other reporting unit, constituted an impairment triggering event. As such, we conducted an interim test of the fair value of its goodwill for potential impairment as of June 30, 2020. The results of this interim impairment test, which used a combination of income and market approaches to determine the fair value of the All Other reporting unit, indicated that its carrying value exceeded its estimated fair value by 8.9%, we concluded that All Other's goodwill of $5.0 million was impaired by $0.8 million. We believe that the assumptions utilized in the interim impairment testing, including the determination of an appropriate discount rate of 16%, long-term profitability growth projections, and estimated future cash flows, are reasonable. The interim goodwill impairment test reflected management's best estimate of the economic impact to its business, end market conditions and recovery timelines. While no further triggering events were identified by management as of June 30, 2020, if the ongoing economic uncertainty proves to be more severe than estimated, or if the economic recovery takes longer to materialize or does not materialize as strongly as anticipated, this could result in future impairment charges.

For additional information, please refer to our 2019 Form 10-K. There have been no additional material changes to Critical Accounting Policies and Estimates disclosed in the 2019 Form 10-K.

Recently issued accounting and adopted standards

See Note 1(b), "Recently issued and adopted accounting standards," in the Notes to Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk for the effect of interest rate changes. To date, we have not used derivative instruments to mitigate the impact of our market risk exposures. We have also not used, nor do we intend to use, derivatives for trading or speculative purposes.

~~Interest Rate Risk~~Not applicable.

We are exposed to market risk related to changes in interest rates. Our investments are considered cash equivalents and primarily consist of money market mutual funds. As of September 30, 2017, we had cash and cash equivalents of $10.3 million. The carrying amount of our cash and cash equivalents reasonably approximates fair value, due to the fact that we can redeem such investment freely. The primary objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs and the fiduciary control of cash and investments. We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to a fluctuation in interest rates, which may affect our interest income and the fair market value of our investments. Due to the short-term nature of our investment portfolio, we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

As of September 30, 2017, we have the principal amount of long-term debt, plus PIK interest, in the aggregate of $67.1 million, including current portion of long-term debt. Our Term Loans accrue interest at LIBOR (with a floor of 0.5%) plus 10.5% per annum, payable in cash, plus an additional 1.0% per annum payable, at Fluent’s election, in-kind or in cash. Interest under the Term Loans is payable monthly, including monthly compounding of PIK interest. Our Promissory Notes have a rate of interest of 10% per annum, which interest is capitalized monthly by adding to the outstanding principal amount of such Promissory Notes. The fair value of our debt will generally fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest.

A hypothetical 10% increase in interest rates relative to our current interest rates would not have a material impact on the fair value of all of our outstanding long-term debt, net. Changes in interest rates would, however, affect operating results and cash flows, because of the variable rate nature of the Term Loans. A hypothetical 10% increase or decrease in overall interest rates as of September 30, 2017 would result in an impact to interest expense for the next twelve months by $0.8 million.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September~~June 30, ~~2017.~~2020. We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~SEC’s~~SEC's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), the ~~Company’s~~Company's Chief Executive Officer and Chief Financial Officer concluded that the ~~Company’s~~Company's disclosure controls and procedures were not effective as of ~~September~~June 30, ~~2017.~~2020. As described below and as previously reported in our 2019 Form 10-K, in connection with management’s assessment of the effectiveness of our internal control over financial reporting at the end of our last fiscal year, management identified a material weakness in our internal control over financial reporting as of December 31, 2018, which was not remediated as of December 31, 2019 and which is in the process of being remediated as of June 30, 2020.

On July 1, 2019, we acquired substantially all of the assets of AdParlor Holdings, LLC and certain of its affiliates, as described in Note 11, Business acquisitions. As permitted by the SEC Staff interpretive guidance for newly acquired businesses, management's assessment of our internal control over financial reporting as of June 30, 2020 did not include an assessment of those disclosure controls and procedures that are subsumed by internal control over financial reporting as it relates to the AdParlor Acquisition. We will continue the process of implementing internal controls over financial reporting for the AdParlor business. As of June 30, 2020, assets and revenue excluded from management's assessment totaled 4.7% and 1.7%, respectively, of total assets and revenue for the six months ended June 30, 2020.

On April 1, 2020, we acquired a 50% membership interest in Winopoly, LLC which is consolidated in our condensed consolidated financial statements as a VIE, as described in Note 11, Business acquisitions, in the Notes to Consolidated Financial Statements. As permitted by the SEC Staff interpretive guidance for newly acquired businesses, management's assessment of our internal control over financial reporting as of June 30, 2020 did not include an assessment of those disclosure controls and procedures that are subsumed by internal control over financial reporting as it relates to the Winopoly Acquisition. We will continue the process of implementing internal controls over financial reporting for the Winopoly business. As of June 30, 2020, assets and revenue excluded from management's assessment totaled 0.9% and 0.7%, respectively, of total assets and revenue for the six months ended June 30, 2020.

Notwithstanding the identified material weakness, management believes the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Remediation Efforts to Address Material Weakness

With the oversight of management and the audit committee of the Company’s board of directors, we are actively taking the appropriate steps towards the remediation of the underlying causes of the material weakness described above. During the third quarter of 2019, we commenced configuration of our new ERP system, NetSuite, with the first phase of our implementation completed on January 1, 2020, at which point we transitioned to NetSuite as our general ledger. While the full integration of our internal revenue tracking platforms with NetSuite remains ongoing, we believe that once NetSuite is fully integrated, its automated processes will include controls that will render unnecessary the manual preventative and detective controls that were deemed inadequate at December 31, 2019. We will continue our implementation of NetSuite, including the design of appropriate automated processes and controls, and continue to monitor, evaluate and update, as necessary, our processes and controls during the post-implementation period for an appropriate period of time before concluding that the material weakness described above has been effectively remediated.

Changes in Internal Control Over Financial Reporting

~~There~~

Except as noted above, there were no changes ~~in the Company’s~~to our internal control over financial reporting during ~~the~~this quarter ended ~~September~~June 30, ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

Table of Contents

PART II - ~~OTHE~~ROTHER INFORMATION

Item 1. Legal Proceedings.

On July 22, 2017, the Company entered in a settlement agreement with TransUnion and TransUnion Risk and Alternative Data Solutions, Inc. (“TRADS”), settling all litigation with TransUnion and TRADS. Company subsidiary, IDI Holdings, LLC (“IDI Holdings”), will pay $7.0 million to TRADS over the course of one year to settle all matters (the “TRADS Litigation Settlement”). The terms of the settlement agreement are confidential. The Company recorded an expense of $7.0 million in general and administrative expenses during the three months ended June 30, 2017. For a description of the legal proceedings settled in the TRADS Litigation Settlement, see Part I, Item 3 of the Company’s 2016 Form 10-K and Part II, Item 1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.

~~Following the TRADS Litigation Settlement,~~Other than as disclosed below under "—Certain Legal Matters," the Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to have a material adverse effect on the business, financial condition, results of operations or cash flows. Legal fees associated with ~~such~~ legal proceedings are expensed as incurred. We review legal proceedings and claims on an ongoing basis and follow appropriate accounting guidance, including ASC 450, when making accrual and disclosure decisions. We establish accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, we evaluate, 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. We do not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated.

In addition, 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.

Certain Legal Matters

On October 26, 2018, the Company received a subpoena from the New York Attorney General’s Office (“NY AG”) regarding compliance with New York Executive Law § 63(12) and New York General Business Law § 349, as they relate to the collection, use, or disclosure of information from or about consumers or individuals, as such information was submitted to the Federal Communication Commission (“FCC”) in connection with the FCC’s rulemaking proceeding captioned “Restoring Internet Freedom,” WC Docket No. 17-108. On December 13, 2018, the Company received a subpoena from the United States Department of Justice (“DOJ”) regarding the same issue. On March 12, 2020, the Company received a subpoena from the Office of the Attorney General of the District of Columbia ("DC AG") regarding the same issue. The Company has been fully cooperating with the NY AG, the DOJ, and the DC AG. Based on recent communications with the NY AG, the Company believes that a loss from these matters is probable, but it is not yet possible to reasonably estimate the magnitude of such loss. However, an unfavorable outcome could have a material adverse effect on our business, results of operations or financial position.

On June 27, 2019, as a part of two sales and use tax audits covering the period from December 1, 2010 to November 30, 2019, the New York State Department of Taxation and Finance (the “Tax Department”) issued a letter stating its position that revenue derived from certain of the Company’s customer acquisition and list management services are subject to sales tax, as a result of being deemed information services. The Company disputed the Tax Department's position on several grounds, but on January 14 and 15, 2020, the Tax Department issued Statements of Proposed Audit Adjustment totaling $8.2 million, including $2.0 million of interest. The Company formally disagreed with the amount of the Proposed Audit Adjustments and met with the Tax Department on March 4, 2020. During that meeting, the Company informed the Tax Department that a majority of the Proposed Audit Adjustments was attributable to revenue derived from transfers which were either excluded resales or sourced outside of New York and renewed its challenge as to the taxability of its customer acquisition revenue. On July 22 and 31, 2020, the Company received notices of determination from the Tax Department totaling $3.0 million, including $0.7 million of interest. Based on the foregoing, the Company believes that it is probable that a sales tax liability may result from this matter, and has estimated the range of any such liability to be between $0.7 million and $3.0 million. The Company has accrued a liability associated with these sales and use tax audits at the low end of this range.

On January 28, 2020, the Company received a Civil Investigative Demand (“CID”) from the FTC regarding compliance with the FTC Act or the TSR, as they relate to the advertising, marketing, promotion, offering for sale, or sale of rewards and other products, the transmission of commercial text messages, and/or consumer privacy or data security. The Company has been fully cooperating with the FTC and is responding to the CID. At this time, it is not possible to predict the ultimate outcome of this matter or the significance, if any, to our business, results of operations or financial position.

Item 1A. Risk Factors.

Our business, financial condition, ~~operating~~ results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our ~~Annual Report on~~2019 Form 10-K, ~~for the year ended December 31, 2016 (“2016 Form 10-K”), filed on March 14, 2017,~~ the occurrence of any one of which could have a material adverse effect on our actual results.

There have been no material changes to the Risk Factors previously disclosed in our ~~2016~~2019 Form ~~10-K.~~10-K, except as noted below.

Unfavorable global economic conditions, including as a result of health and safety concerns around the ongoing COVID-19 pandemic, could adversely affect our business, financial condition and results of operations.

Our results of operations could be adversely affected by general conditions in the global economy, including conditions that are outside of our control, such as the impact of health and safety concerns from the current outbreak of the COVID-19 coronavirus. The most recent global financial crisis caused by COVID-19 has resulted in extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn presents a variety of risks to our business, including the potential for weakened demand from our advertiser clients or delays in client payments. A weak or declining economy could also strain our media supply channels.

After the initial onset of the COVID-19 pandemic, certain advertisers in industry verticals such as staffing and recruitment and financial products and services began to reduce their spend with us, while certain advertisers in other verticals, such as streaming services and mobile gaming, increased their demand, with many consumers spending more time on their mobile devices during the period of social isolation. We have taken steps to reduce our costs of acquiring traffic and to match available consumers with other advertiser clients in the various industries we serve, thereby enabling us to effectively manage our margins during this period of uncertainty. We anticipate additional shifts in pricing and/or demand among affected clients as the trajectory of the pandemic and future economic outlook remain uncertain. While the combination of these trends did not result in a significant disruption to our business in the six months ended June 30, 2020, the trajectory of these trends is uncertain. These trends, or others that have yet to be identified, could have a material adverse impact on our business, financial condition and results of operations in subsequent periods. The extent of any impact is uncertain and cannot be reasonably estimated at this time.

Table of Contents

Additionally, our business relies heavily on people, and adverse events such as health-related concerns about working in our offices, the inability to travel and other matters affecting the general work environment could harm our business. We implemented company-wide work-from-home beginning on March 13, 2020. While we believe we are well-positioned to adapt to a work-from-home environment, COVID-19 increases the likelihood of certain risks of disruption to our business, such as the incapacity of certain employees or system interruptions, which could lead to diminishment of our regular business operations, technological capacity and cybersecurity capabilities, as well as operational inefficiencies and reputational harm.

While we do not anticipate any material impact to our operational capabilities as a result of COVID-19, we cannot predict the impact it may have on our business due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to our clients’ businesses and other factors.

The expansion of our international operations subjects us to increased challenges and risks.

We have begun expanding our website offerings into additional international markets beyond the United Kingdom and we may expand further into additional countries in Europe or other regions. Our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, legal and regulatory systems, taxation regimes, and commercial infrastructures. Continued international expansion will require us to invest significant funds and other resources and may subject us to new risks that we have not faced before or increase risks that we currently face, including risks associated with:

•	compliance with applicable foreign laws and regulations and adapting to foreign customs and practices as they relate to our business;


•	compliance with the General Data Protection Regulation ("GDPR") and other foreign privacy, data protection and information security laws and regulations and the risks and costs of noncompliance;

•	cross-border data transfers among us, our subsidiaries, and our customers, vendors, and business partners;

•	difficulties and added costs of conducting our business in foreign languages;


•	credit risk and higher levels of payment fraud, as well as longer sales or collection cycles in some countries;


•	compliance with anti-bribery laws, such as the Foreign Corrupt Practices Act;


•	recruiting and retaining employees in foreign countries;

•	increased competition from local providers;


•	economic and political instability in some countries, including as a result of health concerns, terrorist attacks and civil unrest;


•	less protective intellectual property laws;


•	compliance with the laws of numerous foreign taxing jurisdictions in which we conduct business, potential double taxation of our international earnings and potentially adverse tax consequences due to changes in applicable U.S. and foreign tax laws; and


•	overall higher costs of doing business internationally.

If our revenue from our international operations does not exceed the expense of establishing and maintaining these operations, our business and operating results could suffer and we may decide to make changes to our business in an effort to mitigate losses. If are unable to successfully manage the risks and costs associated with international operations, it could adversely affect our business and/or results of operations.

Table of Contents

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

~~Amendment No. 5~~

On November 3, 2017, the Company and its subsidiaries entered into Amendment No. 5 to the Credit Agreement (“Amendment No. 5”). Amendment No. 5 provides for certain amendments to the definition of EBITDA by adding back acquisition and restructuring costs resulting from the potential business combination transaction pursuant to the Business Combination Agreement entered into on September 6, 2017, and non-recurring costs relating to litigation with ~~TransUnion Risk and Alternative Data Solutions, Inc.~~ that we settled on July 22, 2017. Amendment No. 5 also amends the minimum EBITDA threshold for the Company and its subsidiaries beginning with the quarter ended September 30, 2017. In addition, Amendment No. 5 allows for additional transfer of cash from Fluent, LLC to the Company, provided that Fluent maintains a minimum cash balance. As of September 30, 2017, the Company was in compliance with the covenants under the Credit Agreement, after giving effect to Amendment No. 5.None.

~~Amendment No. 5 is~~ ~~filed as Exhibits 10.9 to this quarterly report on Form 10-Q and incorporated herein by reference.~~

~~Whitehorse Warrant Amendments~~

On November 3, 2017, the Company entered into warrant amendments (the "Whitehorse Warrant Amendments") with (i) H.I.G. Whitehorse SMA ABF, L.P. regarding 46,667 warrants to purchase common stock of the Company, ~~par value $0.0005 per share,~~ at an exercise price of $5.0829 per share; (ii) H.I.G. Whitehorse SMA Holdings I, LLC regarding 66,666 warrants to purchase common stock of the Company at an exercise price of $5.0829 per share; and (iii) Whitehorse Finance, Inc. regarding 186,667 warrants to purchase common stock of the Company at an exercise price of $5.0829 per share; pursuant to which the Company agreed to reduce the exercise price of all common stock warrants described above to $3.00 per share, and each warrant holder set forth above separately agreed to exercise all common stock warrants held by them within 30 days. Pursuant to the terms of the Whitehorse Warrant Amendments, the warrant holders are prohibited from engaging or otherwise agreeing to any sale, pledge, or other transfer of the shares of common stock underlying the warrants for a period of 120 days following the exercise of such warrants in full (the “Whitehorse Lock-Up Period”). Following the Whitehorse Lock-Up Period, (i) the warrant holders may only sell such number of shares underlying the warrants representing up to 5% of the Company’s daily trading volume on the immediately prior trading day prior to a sale and (ii) the warrant holders may not transfer any of the shares underlying the warrants for less than $4.50 per share, provided that the warrant holder may not transfer any shares underlying the warrants unless the Company has an effective registration statement permitting the resale of the shares underlying the warrants.

The Company has also agreed to register the resale of the shares underlying the warrants, if exercised in full as set forth in the Whitehorse Warrant Amendments, during the Whitehorse Lock-Up Period. The issuance of the shares of such common stock upon exercise of the above-described warrants is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”), in accordance with Section 4(a)(2) of the Act, as a transaction by an issuer not involving a public offering.

The description of the Whitehorse Warrant Amendments does not purport to be complete and is qualified in its entirety by reference to each respective Whitehorse Warrant Amendment, which are filed as Exhibits 4.6, 4.7, and 4.8 to this quarterly report on Form 10-Q and incorporated herein by reference.

~~Acquisition consideration payable in stock~~

On November 3, 2017, in connection with the terms of that certain Membership Interest Purchase Agreement (the “Purchase Agreement”) entered into on June 8, 2016 between the Company and Selling Source, LLC (“Selling Source”) pursuant which Selling Source sold to the Company all of Selling Source’s right, title, and interest in all of the issued and outstanding membership interests in Q Interactive, LLC, the Company issued 2,750,000 shares (the “Shares”) of the Company’s common stock, representing the earn-out shares and certain other adjustments, including the monetized shares and the net working capital adjustment.

Within 10 business days following the issuance of the Shares, the Company shall file a registration statement registering the resale of the Shares and shall use commercially reasonable best efforts to cause such registration statement to become effective no later than 30 days thereafter.

The Shares issued in connection with the Purchase Agreement are exempt from the registration requirements of the Act, in accordance with Section 4(a)(2) of the Act, as a transaction by an issuer not involving a public offering.

Item 6. E~~xhibits.~~Exhibits.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Incorporated by Reference

Filed

Exhibit No.

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith

3.1

Certificate of Incorporation

8-K

001-37893

3.2

3/26/2015

3.2

Certificate of Amendment to the Certificate of Incorporation.

8-K

001-37893

3.1

4/16/2018

3.3

Amended and Restated Bylaws.

8-K

001-37893

3.2

2/19/2019

4.1

Form of Common Stock Certificate.

8-K

001-37893

4.1

4/16/2018

10.1

Amendment No. 11 to Credit Agreement, dated as of April 1, 2020, by and among Fluent, Inc., Fluent, LLC as borrower, the other borrower parties thereto, WhiteHorse Finance, Inc., as administrative agent, and the other lenders party thereto.

10.2

Amendment No. 12 to Credit Agreement, dated as of May 19, 2020, by and among Fluent, Inc., Fluent, LLC as borrower, the other borrower parties thereto, WhiteHorse Finance, Inc., as administrative agent, and the other lenders party thereto.

31.1

Certification of Chief Executive Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act.

~~Exhibit No.~~		~~Description~~

~~2.1~~		Business Combination Agreement dated September 6, 2017, by and among Cogint, Inc., and BlueFocus International Limited (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed September 7, 2017).

~~4.1~~		First Amendment to Common Stock Purchase Warrant and Notice of Exercise with Intracoastal Capital, LLC - $3.75 Warrants (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed October 17, 2017).

~~4.2~~		First Amendment to Common Stock Purchase Warrant and Notice of Exercise with Intracoastal Capital, LLC - $8.00 Warrants (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed October 17, 2017).

~~4.3~~		First Amendment to Common Stock Purchase Warrant and Notice of Exercise with Intracoastal Capital, LLC - $10.00 Warrants (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed October 17, 2017).

~~4.4~~		First Amendment to Common Stock Purchase Warrant and Notice of Exercise with Anson Investment Master Fund LP - $8.00 Warrants (incorporated by reference to Exhibit 4.4 to the Company's Current Report on Form 8-K filed October 17, 2017).

~~4.5~~		~~Form of Additional Warrants (incorporated by reference to Exhibit 4.5 to the Company's Current Report on Form 8-K filed October 17, 2017).~~

~~4.6~~		Amendment to Warrants and Agreement to Exercise with H.I.G. Whitehorse SMA ABF, L.P. dated November 3, 2017.*

~~4.7~~		Amendment to Warrants and Agreement to Exercise with H.I.G. Whitehorse SMA Holdings I, LLC dated November 3, 2017.*

~~4.8~~		Amendment to Warrants and Agreement to Exercise with Whitehorse Finance, Inc. dated November 3, 2017.*

~~10.1~~		Written Consent and Voting Agreement dated September 6, 2017, by and among certain Consenting Stockholders and Blue Focus International Limited (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed September 7, 2017).

~~10.2~~		Stockholders’ Agreement dated September 6, 2017, by and among certain Consenting Stockholders and BlueFocus International Limited (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed September 7, 2017).

~~10.3~~		Separation and Distribution Agreement dated September 6, 2017, by and among Cogint, Inc. and Red Violet, Inc. (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed September 7, 2017).

~~10.4~~		Tax Matters Agreement dated September 6, 2017, by and among Cogint, Inc. and Red Violet, Inc. (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed September 7, 2017).

~~10.5~~		Employee Matters Agreement dated September 6, 2017, by and among Cogint, Inc. and Red Violet, Inc. (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed September 7, 2017).+

~~10.6~~		Third Amendment to Employment Agreement dated September 6, 2017, by and between Cogint, Inc. and James Reilly (incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed September 7, 2017).+

~~10.7~~		Consulting Services Agreement, effective as of June 23, 2017, by and between Cogint, Inc. and Michael Brauser (incorporated by reference to Exhibit 10.7 to the Company's Current Report on Form 8-K filed September 7, 2017).

~~10.8~~		Amendment No. 4 to Credit Agreement, dated as of August 7, 2017, by and among Cogint, Inc., Fluent, LLC, the other borrowers party thereto, Whitehorse Finance, Inc., as administrative agent, and the other lenders party thereto.*

~~10.9~~		Amendment No. 5 to Credit Agreement, dated as of November 3, 2017, by and among Cogint, Inc., Fluent, LLC, the other borrowers party thereto, Whitehorse Finance, Inc., as administrative agent, and the other lenders party thereto.*
~~31.1~~		Certification of Chief Executive Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

~~31.2~~		Certification of Chief Financial Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

~~32.1~~		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

~~32.2~~		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

~~101.INS~~		XBRL Instance Document*
~~101.SCH~~		XBRL Taxonomy Extension Schema Document*
~~101.CAL~~		XBRL Taxonomy Extension Calculation Linkbase Document*
~~101.DEF~~		XBRL Taxonomy Extension Definition Linkbase Document*
~~101.LAB~~		XBRL Taxonomy Extension Label Linkbase Document*
~~101.PRE~~		XBRL Taxonomy Extension Presentation Linkbase Document*

+		~~Management contract or compensatory plan or arrangement~~
*		~~Filed herewith~~
**		~~Furnished herewith~~

Table of Contents

~~SIGNATURES~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		~~Cogint,~~Fluent, Inc.

~~November 8, 2017~~August 10, 2020	By:	/s/ ~~Daniel MacLachlan~~Alexander Mandel
		~~Daniel MacLachlan~~Alexander Mandel
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

	~~By:~~	~~/s/ Jacky Wang~~
		~~Jacky Wang~~
		~~Chief Accounting Officer~~
		~~(Principal Accounting Officer)~~

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐☒
Emerging growth company	☐

	(unaudited)
	September 30, 2017			December 31, 2016			*June 30, 2020*			*December 31, 2019*
ASSETS:
Current assets:
Cash and cash equivalents	$	10,323		$	10,089		$	20,218		$	18,679
Accounts receivable, net of allowance for doubtful accounts of $2,401 and $790 at September 30, 2017 and December 31, 2016, respectively		37,148			30,958
Accounts receivable, net of allowance for doubtful accounts of $309 and $1,967, respectively								55,304			60,915
Prepaid expenses and other current assets		2,315			2,053			1,996			1,921
Total current assets		49,786			43,100			77,518			81,515
Restricted cash								1,480			1,480
Property and equipment, net		1,899			1,350			2,566			2,863
Operating lease right-of-use assets								9,063			9,865
Intangible assets, net		91,554			98,531			51,094			55,603
Goodwill		166,256			166,256			165,088			164,774
Other non-current assets		2,425			2,674			1,592			993
Total assets	$	311,920		$	311,911		$	308,401		$	317,093
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Trade accounts payable	$	12,400		$	14,725
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable							$	11,601		$	21,574
Accrued expenses and other current liabilities		15,622			6,981			21,027			20,358
Deferred revenue		444			318			2,468			1,140
Current portion of long-term debt		2,750			4,135			9,677			6,873
Current portion of operating lease liability								2,279			2,282
Total current liabilities		31,216			26,159			47,052			52,227
Promissory notes payable to certain shareholders, net		10,543			10,748
Long-term debt, net		49,555			35,130			38,115			44,098
Acquisition consideration payable in stock		10,225			10,225
Operating lease liability								8,176			9,056
Other non-current liabilities								1,243			775
Total liabilities		101,539			82,262			94,586			106,156
Contingencies (Note 10)
Shareholders' equity:
Series A preferred stock—$0.0001 par value, 10,000,000 shares authorized; 0 share issued and outstanding at September 30, 2017 and December 31, 2016		-			-
Series B preferred stock—$0.0001 par value, 10,000,000 shares authorized; 0 share issued and outstanding at September 30, 2017 and December 31, 2016		-			-
Common stock—$0.0005 par value, 200,000,000 shares authorized; 56,418,136 and 53,717,996 shares issued at September 30, 2017 and December 31, 2016, respectively; and 56,065,613 and 53,557,761 shares outstanding at September 30, 2017 and December 31, 2016, respectively		28			27
Treasury stock, at cost, 352,523 and 160,235 shares at September 30, 2017 and December 31, 2016, respectively		(1,274	)		(531	)
Preferred stock — $0.0001 par value, 10,000,000 Shares authorized; Shares outstanding — 0 shares for both periods								—			—
Common stock — $0.0005 par value, 200,000,000 Shares authorized; Shares issued — 79,908,985 and 78,642,078, respectively; and Shares outstanding — 76,292,587 and 75,873,679, respectively								40			39
Treasury stock, at cost — 3,616,398 and 2,768,399 shares, respectively								(9,930	)		(8,184	)
Additional paid-in capital		373,087			344,384			409,961			406,198
Accumulated deficit		(161,460	)		(114,231	)		(186,256	)		(187,116	)
Total shareholders’ equity		210,381			229,649
Total liabilities and shareholders’ equity	$	311,920		$	311,911
Total shareholders' equity								213,815			210,937
Total liabilities and shareholders' equity							$	308,401		$	317,093

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue	$	57,248		$	52,176		$	161,038		$	132,643
Cost of revenues (exclusive of depreciation and amortization)		37,687			39,658			109,509			97,709
Gross profit		19,561			12,518			51,529			34,934
Operating expenses:
Sales and marketing expenses		6,280			3,699			16,636			10,004
General and administrative expenses		21,365			13,614			60,938			40,148
Depreciation and amortization		3,585			3,507			10,460			9,112
Write-off of long-lived assets		-			4,055			3,626			4,055
Total operating expenses		31,230			24,875			91,660			63,319
Loss from operations		(11,669	)		(12,357	)		(40,131	)		(28,385	)
Other income (expense):
Interest expense, net		(2,426	)		(1,880	)		(7,098	)		(5,561	)
Other expenses, net		-			-			-			(1,273	)
Total other expense		(2,426	)		(1,880	)		(7,098	)		(6,834	)
Loss before income taxes		(14,095	)		(14,237	)		(47,229	)		(35,219	)
Income taxes		-			(4,493	)		-			(11,519	)
Net loss	$	(14,095	)	$	(9,744	)	$	(47,229	)	$	(23,700	)
Loss per share:
Basic and diluted	$	(0.25	)	$	(0.19	)	$	(0.86	)	$	(0.56	)
Weighted average number of shares outstanding:
Basic and diluted		55,390,247			50,654,690			54,665,776			42,100,504
Comprehensive loss:
Net comprehensive loss	$	(14,095	)	$	(9,744	)	$	(47,229	)	$	(23,700	)

	Common stock				Treasury stock					Additional paid-in			Accumulated			Total Shareholders'
	Shares		Amount		Shares		Amount			capital			deficit			equity
Balance as at December 31, 2016		53,717,996	$	27		160,235	$	(531	)	$	344,384		$	(114,231	)	$	229,649
Vesting of restricted stock units and issuance of restricted stock		2,700,140		1		-		-			(1	)		-			-
Increase in treasury stock resulting from shares withheld to pay statutory taxes in connection with the vesting of restricted stock units		-		-		192,288		(743	)		-			-			(743	)
Share-based compensation		-		-		-		-			28,704			-			28,704
Net loss		-		-		-		-			-			(47,229	)		(47,229	)
Balance as at September 30, 2017		56,418,136	$	28		352,523	$	(1,274	)	$	373,087		$	(161,460	)	$	210,381

	*Common stock*				*Treasury stock*					*Additional paid-in*			*Accumulated*			*Total shareholders'*
	*Shares*		*Amount*		*Shares*		*Amount*			*capital*			*deficit*			*equity*
Balance at March 31, 2019		77,603,189	$	39		1,554,829	$	(4,882	)	$	399,208		$	(184,324	)	$	210,041
Vesting of restricted stock units and issuance of restricted stock		931,585															—
Increase in treasury stock resulting from shares withheld to cover statutory taxes						230,660		(1,469	)								(1,469	)
Share-based compensation expense											2,984						2,984
Net income														715			715
Balance at June 30, 2019		78,534,774	$	39		1,785,489	$	(6,351	)	$	402,192		$	(183,609	)	$	212,271

Balance at December 31, 2018		76,525,581	$	38		1,233,198	$	(3,272	)	$	395,769		$	(185,369	)	$	207,166
Vesting of restricted stock units and issuance of restricted stock		2,009,193		1							(1	)					—
Increase in treasury stock resulting from shares withheld to cover statutory taxes						552,291		(3,079	)								(3,079	)
Reclassification of exercisable warrants from liability to equity											1,150						1,150
Share-based compensation expense											5,274						5,274
Net income														1,760			1,760
Balance at June 30, 2019		78,534,774	$	39		1,785,489	$	(6,351	)	$	402,192		$	(183,609	)	$	212,271

				Page
PART I - FINANCIAL INFORMATION

Item 1.		Financial Statements (unaudited)
		~~Condensed~~ Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019		2
		~~Condensed~~ Consolidated Statements of Operations ~~and Comprehensive Loss~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019		3
		~~Condensed~~ Consolidated ~~Statement~~Statements of Changes in Shareholders' Equity for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2020 and 2019		4
		~~Condensed~~ Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019		5
		Notes to ~~Condensed~~ Consolidated Financial Statements		6
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		2117
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		2822
Item 4.		Controls and Procedures		2922

PART II - OTHER INFORMATION

Item 1.		Legal Proceedings		3023
Item 1A.		Risk Factors		3023
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		3025
Item 3.		Defaults Upon Senior Securities		3025
Item 4.	Mine Safety Disclosures	~~Mine Safety Disclosure~~25s		30
Item 5.		Other Information		3125
Item 6.		Exhibits		3225
Signatures		26	34

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2020*			*2019*			*2020*			*2019*
Revenue	$	71,509		$	70,560		$	150,443		$	137,121
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization)		49,007			49,133			105,631			93,962
Sales and marketing		2,888			3,058			5,718			6,492
Product development		3,115			2,287			5,846			4,445
General and administrative		10,044			10,294			21,120			20,329
Depreciation and amortization		3,853			3,306			7,586			6,623
Goodwill impairment		817			—			817			—
Total costs and expenses		69,724			68,078			146,718			131,851
Income from operations		1,785			2,482			3,725			5,270
Interest expense, net		(1,333	)		(1,767	)		(2,865	)		(3,545	)
Income before income taxes		452			715			860			1,725
Income tax benefit		—			—			—			35
Net income		452			715			860			1,760

Basic and diluted income per share:
Basic	$	0.01		$	0.01		$	0.01		$	0.02
Diluted	$	0.01		$	0.01		$	0.01		$	0.02

Weighted average number of shares outstanding:
Basic		78,510,383			79,388,383			78,557,331			79,297,599
Diluted		78,666,776			81,132,304			78,905,792			80,443,530

(In thousands)	Amortization period	September 30, 2017			December 31, 2016
								*Amortization period (in years)*		*June 30, 2020*			*December 31, 2019*
Gross amount:
Software developed for internal use	3-10 years		17,945			11,438			3	$	5,987		$	4,866
Acquired proprietary technology	5 years		11,381			13,532			3-5		14,638			13,661
Customer relationships	7-10 years		34,986			34,986			5-10		37,886			37,286
Trade names	20 years		16,357			18,057			4-20		16,657			16,657
Domain names	20 years		199			191			20		191			191
Databases	5-10 years		31,292			31,292			5-10		31,292			31,292
Non-competition agreements	2-5 years		1,768			1,768			2-5		1,768			1,768
			113,928			111,264
Total gross amount											108,419			105,721
Accumulated amortization:
Software developed for internal use			(1,312	)		(505	)				(2,752	)		(1,995	)
Acquired proprietary technology			(4,124	)		(2,660	)				(11,021	)		(9,516	)
Customer relationships			(8,431	)		(4,840	)				(22,011	)		(19,396	)
Trade names			(1,482	)		(916	)				(3,806	)		(3,359	)
Domain names			(17	)		(10	)				(44	)		(39	)
Databases			(6,061	)		(3,354	)				(15,987	)		(14,182	)
Non-competition agreements			(947	)		(448	)				(1,704	)		(1,631	)
			(22,374	)		(12,733	)
Total accumulated amortization											(57,325	)		(50,118	)
Net intangible assets:
Software developed for internal use			16,633			10,933					3,235			2,871
Acquired proprietary technology			7,257			10,872					3,617			4,145
Customer relationships			26,555			30,146					15,875			17,890
Trade names			14,875			17,141					12,851			13,298
Domain names			182			181					147			152
Databases			25,231			27,938					15,305			17,110
Non-competition agreements			821			1,320					64			137
		$	91,554		$	98,531
Total intangible assets, net										$	51,094		$	55,603

Year	*June 30, 2020*
Remainder of 2020	$	7,266
2021		11,674
2022		10,341
2023		4,912
2024		4,470
2025 and thereafter		12,431
Total	$	51,094

	*Fluent*		*All Other*			*Total*
Balance as of December 31, 2019	$	159,791	$	4,983		$	164,774
Winopoly Acquisition		1,131		—			1,131
Goodwill impairment		—		(817	)		(817	)
Balance as of June 30, 2020	$	160,922	$	4,166		$	165,088

	12% term loan,		12% incremental term loan,		10% promissory notes,
(In thousands)	due 2020		due 2020		due 2021		Total
Principal amount	$	41,203	$	14,485	$	10,000	$	65,688
Less: unamortized debt issuance costs		3,156		783		330		4,269
Add: PIK interest accrued to the principal balance		546		10		873		1,429
Long-term debt, net		38,593		13,712		10,543		62,848
Less: Current portion of long-term debt		2,062		688		-		2,750
Long-term debt, net (non-current)	$	36,531	$	13,024	$	10,543	$	60,098

	*June 30, 2020*			*December 31, 2019*
Refinanced Term Loan due 2023 (less unamortized discount of $3,072 and $3,715, respectively)	$	45,341		$	48,571
Note Payable due 2021 (less unamortized discount of $49 and $100, respectively)		2,451			2,400
Long-term debt, net		47,792			50,971
Less: Current portion of long-term debt		(9,677	)		(6,873	)
Long-term debt, net (non-current)	$	38,115		$	44,098

Issuance Date	February 1, 2019			December 20, 2019			March 1, 2020
Fair value lower range	$	2.81		$	1.58		$	1.46
Fair value higher range	$	2.86		$	1.61		$	1.49
Exercise price	$	4.72		$	2.56		$	2.33
Expected term (in years)		1.0 - 1.3			1.0 - 1.6			1.0 - 1.5
Expected volatility		65	%		70	%		70	%
Dividend yield		—	%		—	%		—	%
Risk-free rate		2.61	%		1.85	%		1.05	%

	Number of options		Weighted average exercise price per share		Weighted average remaining contractual term	Aggregate intrinsic value
Outstanding as of December 31, 2016		352,000	$	10.25	4.4 years	$	-
Outstanding as of September 30, 2017		352,000	$	10.25	3.6 years	$	-
Options vested and expected to vest as of September 30, 2017		352,000	$	10.25	3.6 years	$	-
Options exercisable as of September 30, 2017		294,500	$	8.36	2.7 years	$	-

	*Number of options*			*Weighted average exercise price per share*		*Weighted average remaining contractual term (in years)*		*Aggregate intrinsic value*
Outstanding as of December 31, 2019		2,120,000		$	5.21		8.7	$	—
Granted		478,000		$	2.48		9.5
Expired		(30,000	)	$	7.14		—
Outstanding as of June 30, 2020		2,568,000		$	4.34		8.6	$	—
Options exercisable as of June 30, 2020		1,086,000		$	4.82		8.1	$	—

	Number of units			Weighted average grant-date fair value
Unvested as of December 31, 2016		12,407,029		$	8.40
Granted⁽¹⁾		2,732,000		$	5.61
Vested and delivered		(2,357,852	)	$	6.58
Withheld as treasury stock ⁽²⁾		(192,288	)	$	6.86
Vested not delivered ⁽³⁾		(1,660,001	)	$	3.36
Forfeited		(172,416	)	$	5.80
Unvested as of September 30, 2017		10,756,472		$	8.94

	*Number of units*			*Weighted average grant-date fair value*
Unvested as of December 31, 2019		3,394,370		$	8.03
Granted		1,545,032		$	2.03
Vested and delivered		(1,376,581	)	$	3.58
Withheld as treasury stock ⁽¹⁾		(190,326	)	$	4.04
Vested not delivered ⁽²⁾		525,334		$	2.84
Forfeited		(161,506	)	$	2.77
Unvested as of June 30, 2020		3,736,323		$	6.83

	*June 30*		*December 31*
	*2020*		*2019*
Total assets:
Fluent	$	293,917	$	296,714
All Other		14,484		20,379
Total assets	$	308,401	$	317,093

	*July 1, 2019*

Cash and cash equivalents	$	56
Accounts receivable		7,835
Prepaid expenses and other current assets		54
Property and equipment		138
Intangible assets		4,700
Goodwill		4,983
Other non-current assets		28
Accounts payable		(7,691	)
Accrued expenses and other current liabilities		(418	)
Deferred revenue		(33	)
Total net assets acquired	$	9,652

	*Fair Value*		*Weighted Average Amortization Period (Years)*
Trade name & trademarks	$	300	4
Developed technology		2,100	4
Customer relationships		2,300	6
Goodwill		4,983
Total intangible assets, net	$	9,683

	•	Revenue increased 10% to $150.4 million, from $137.1 million.
	•	Net income was $0.9 million, or $0.01 per share, compared to $1.8 million or $0.02 per share.
	•	Media margin increased 6% to $48.7 million, from $46.0 million, representing 32.4% of revenue.
	•	Adjusted EBITDA decreased $0.4 to $18.4 million, based on net income of $0.9 million, from $18.8 million, based on a net income of $1.8 million.
	•	Adjusted net income was $8.0 million, or $0.10 per share, compared to $8.7 million, or $0.11 per share.

(In thousands)	Remainder of 2017		2018		2019		2020		2021		2022 and thereafter		Total
Lease agreements	$	427	$	1,961	$	686	$	705	$	724	$	2,127	$	6,630
Data licensing agreements		1,074		4,990		5,930		6,250		4,775		1,302		24,321
Debt		2,526		8,905		9,597		55,667		15,782		-		92,477
Acquisition consideration payable in stock		10,225		-		-		-		-		-		10,225
Litigation settlement		1,500		3,500		-		-		-		-		5,000
Employment agreements		638		1,145		905		301		-		-		2,989
Total	$	16,390	$	20,501	$	17,118	$	62,923	$	21,281	$	3,429	$	141,642