Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 04, 2020 | |
Cover | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | INNODATA INC | |
Entity Central Index Key | 0000903651 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Trading Symbol | INOD | |
Title of 12(b) Security | Common Stock | |
Security Exchange Name | NASDAQ | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 24,742,692 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 15,336 | $ 10,874 |
Accounts receivable, net of allowance for doubtful accounts of $500 and $750, respectively | 8,843 | 9,723 |
Prepaid expenses and other current assets | 4,112 | 3,407 |
Total current assets | 28,291 | 24,004 |
Property and equipment, net | 6,943 | 6,887 |
Right-of-use-asset | 6,923 | 7,005 |
Other assets | 2,838 | 2,110 |
Deferred income taxes | 2,232 | 1,906 |
Intangibles, net | 4,702 | 5,477 |
Goodwill | 2,069 | 2,108 |
Total assets | 53,998 | 49,497 |
Current liabilities: | ||
Accounts payable | 1,765 | 1,419 |
Accrued expenses and others | 3,612 | 3,340 |
Accrued salaries, wages and related benefits | 5,995 | 4,265 |
Income and other taxes | 4,949 | 4,183 |
Long-term obligations - current portion | 1,958 | 1,440 |
Operating lease liability - current portion | 967 | 1,107 |
Total current liabilities | 19,246 | 15,754 |
Deferred income taxes | 343 | 363 |
Long-term obligations, net of current portion | 5,421 | 4,534 |
Operating lease liability, net of current portion | 6,691 | 6,731 |
Total liabilities | 31,701 | 27,382 |
Commitments and contingencies | ||
Non-controlling interests | (3,392) | (3,417) |
STOCKHOLDERS' EQUITY: | ||
Serial preferred stock; 4,998,000 shares authorized, none outstanding | 0 | 0 |
Common stock, $.01 par value; 75,000,000 shares authorized; 27,921,000 shares issued and 24,737,000 outstanding at September 30, 2020; 27,643,000 shares issued and 24,459,000 outstanding at December 31, 2019 | 278 | 275 |
Additional paid-in capital | 29,438 | 28,426 |
Retained earnings | 3,648 | 4,216 |
Accumulated other comprehensive loss | (1,210) | (920) |
Stockholders' Equity before Treasury Stock, Total | 32,154 | 31,997 |
Less: treasury stock, 3,184,000 shares at September 30, 2020 and December 31, 2019 at cost | (6,465) | (6,465) |
Total stockholders' equity | 25,689 | 25,532 |
Total liabilities and stockholders' equity | $ 53,998 | $ 49,497 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, net of allowance for doubtful accounts | $ 500 | $ 750 |
Series preferred stock, shares authorized | 4,998,000 | 4,998,000 |
Series preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 27,921,000 | 27,643,000 |
Common stock, shares outstanding | 24,737,000 | 24,459,000 |
Treasury stock, shares | 3,184,000 | 3,184,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
Revenues | $ 14,553 | $ 13,846 | $ 42,946 | $ 41,179 |
Operating costs and expenses: | ||||
Direct operating costs | 9,784 | 9,019 | 29,209 | 28,154 |
Selling and administrative expenses | 4,582 | 4,945 | 13,663 | 14,154 |
Interest expense, net | 44 | 27 | 113 | 97 |
Totals | 14,410 | 13,991 | 42,985 | 42,405 |
Income (loss) before provision for income taxes | 143 | (145) | (39) | (1,226) |
Provision for income taxes | (70) | 421 | 504 | 493 |
Consolidated net income (loss) | 213 | (566) | (543) | (1,719) |
Income (loss) attributable to non-controlling interests | 7 | (3) | 25 | (10) |
Net income (loss) attributable to Innodata Inc. and Subsidiaries | $ 206 | $ (563) | $ (568) | $ (1,709) |
Income (loss) per share attributable to Innodata Inc. and Subsidiaries: | ||||
Basic | $ 0.01 | $ (0.02) | ||
Diluted | $ 0.01 | $ (0.02) | ||
Basic and diluted | $ (0.02) | $ (0.07) | ||
Weighted average shares outstanding: | ||||
Basic | 24,470 | 25,856 | 24,427 | 25,870 |
Diluted | 25,260 | 25,856 | 24,427 | 25,870 |
Basic and diluted | 24,427 | 25,870 | ||
Comprehensive income (loss): | ||||
Consolidated net income (loss) | $ 213 | $ (566) | $ (543) | $ (1,719) |
Pension liability adjustment, net of taxes | (1) | (41) | 24 | (118) |
Change in fair value of derivatives, net of taxes | 51 | (33) | ||
Foreign currency translation adjustment, net of taxes | 216 | (252) | (281) | 35 |
Other comprehensive income (loss) | 266 | (293) | (290) | (83) |
Total comprehensive income (loss) | 479 | (859) | (833) | (1,802) |
Comprehensive income (loss) attributed to non-controlling interests | 7 | (3) | 25 | (10) |
Comprehensive income (loss) attributable to Innodata Inc. and Subsidiaries | $ 472 | $ (856) | $ (858) | $ (1,792) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Consolidated net loss | $ (543) | $ (1,719) |
Adjustments to reconcile consolidated net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 1,720 | 2,106 |
Stock-based compensation | 700 | 624 |
Deferred income taxes | (412) | (607) |
Pension cost | 596 | 274 |
Loss on disposal of property and equipment | 33 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 568 | 2,509 |
Prepaid expenses and other current assets | (297) | 904 |
Other assets | (8) | 367 |
Accounts payable, accrued expenses and others | 814 | (208) |
Accrued salaries, wages and related benefits | 1,729 | (29) |
Income and other taxes | 753 | 669 |
Net cash provided by operating activities | 5,653 | 4,890 |
Cash flows from investing activities: | ||
Capital expenditures | (1,115) | (1,314) |
Proceeds from disposal of property and equipment | 39 | |
Net cash used in investing activities | (1,076) | (1,314) |
Cash flows from financing activities: | ||
Proceeds from bank loan | 580 | |
Payment of long-term obligations | (800) | (922) |
Proceeds from exercise of stock options | 167 | |
Purchase of treasury stock | (44) | |
Net cash used in financing activities | (53) | (966) |
Effect of exchange rate changes on cash and cash equivalents | (62) | (291) |
Net increase in cash and cash equivalents | 4,462 | 2,319 |
Cash and cash equivalents, beginning of period | 10,874 | 10,869 |
Cash and cash equivalents, end of period | 15,336 | 13,188 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 209 | 726 |
Cash paid for operating leases | 1,412 | $ 1,909 |
Vendor financed software licenses acquired | $ 1,079 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common StockCumulative effect restatement adjustment | Common Stock | Additional Paid-in CapitalCumulative effect restatement adjustment | Additional Paid-in Capital | Retained earningsCumulative effect restatement adjustment | Retained earnings | Accumulated Other Comprehensive LossCumulative effect restatement adjustment | Accumulated Other Comprehensive Loss | Treasury StockCumulative effect restatement adjustment | Treasury Stock | Cumulative effect restatement adjustment | Total |
Balance at Dec. 31, 2018 | $ 275 | $ 27,579 | $ 7,349 | $ (15) | $ (4,622) | $ 30,566 | ||||||
Balance (in shares) at Dec. 31, 2018 | 27,558,000 | |||||||||||
Balance (in shares) at Dec. 31, 2018 | 1,681,000 | |||||||||||
Net loss attributable to Innodata Inc. and Subsidiaries | $ 0 | 0 | (452) | 0 | $ 0 | (452) | ||||||
Stock-based compensation | $ 0 | 128 | 0 | 0 | 0 | 128 | ||||||
Stock based compensation (in shares) | 75,000 | |||||||||||
Pension liability adjustments, net of taxes | $ 0 | 0 | 0 | (36) | 0 | (36) | ||||||
Foreign currency translation adjustment | 0 | 0 | 0 | 264 | 0 | 264 | ||||||
Balance at Mar. 31, 2019 | $ 0 | $ 275 | $ 0 | 27,707 | $ (237) | 6,660 | $ 0 | 213 | $ 0 | $ (4,622) | $ (237) | 30,233 |
Balance (in shares) at Mar. 31, 2019 | 27,633,000 | |||||||||||
Balance (in shares) at Mar. 31, 2019 | 1,681,000 | |||||||||||
Balance at Dec. 31, 2018 | $ 275 | 27,579 | 7,349 | (15) | $ (4,622) | 30,566 | ||||||
Balance (in shares) at Dec. 31, 2018 | 27,558,000 | |||||||||||
Balance (in shares) at Dec. 31, 2018 | 1,681,000 | |||||||||||
Pension liability adjustments, net of taxes | (118) | |||||||||||
Foreign currency translation adjustment | 35 | |||||||||||
Balance at Sep. 30, 2019 | $ 275 | 28,203 | 5,403 | (98) | $ (4,666) | 29,117 | ||||||
Balance (in shares) at Sep. 30, 2019 | 27,633,000 | |||||||||||
Balance (in shares) at Sep. 30, 2019 | 1,715,000 | |||||||||||
Balance at Mar. 31, 2019 | 0 | $ 275 | 0 | 27,707 | (237) | 6,660 | 0 | 213 | 0 | $ (4,622) | (237) | 30,233 |
Balance (in shares) at Mar. 31, 2019 | 27,633,000 | |||||||||||
Balance (in shares) at Mar. 31, 2019 | 1,681,000 | |||||||||||
Net loss attributable to Innodata Inc. and Subsidiaries | $ 0 | 0 | (694) | 0 | $ 0 | (694) | ||||||
Stock-based compensation | $ 0 | 145 | 0 | 0 | 0 | 145 | ||||||
Stock based compensation (in shares) | 0 | |||||||||||
Pension liability adjustments, net of taxes | $ 0 | 0 | 0 | (41) | 0 | (41) | ||||||
Foreign currency translation adjustment | 0 | 0 | 0 | 23 | 0 | 23 | ||||||
Balance at Jun. 30, 2019 | $ 275 | 27,852 | 5,966 | 195 | $ (4,622) | 29,666 | ||||||
Balance (in shares) at Jun. 30, 2019 | 27,633,000 | |||||||||||
Balance (in shares) at Jun. 30, 2019 | 1,681,000 | |||||||||||
Net loss attributable to Innodata Inc. and Subsidiaries | $ 0 | 0 | (563) | 0 | $ 0 | (563) | ||||||
Purchase of treasury stock | 0 | 0 | 0 | 0 | $ (44) | (44) | ||||||
Purchase of treasury stock (in shares) | 34,000 | |||||||||||
Stock-based compensation | 0 | 351 | 0 | 0 | $ 0 | 351 | ||||||
Pension liability adjustments, net of taxes | 0 | 0 | 0 | (41) | 0 | (41) | ||||||
Foreign currency translation adjustment | 0 | 0 | 0 | (252) | 0 | (252) | ||||||
Balance at Sep. 30, 2019 | $ 275 | 28,203 | 5,403 | (98) | $ (4,666) | 29,117 | ||||||
Balance (in shares) at Sep. 30, 2019 | 27,633,000 | |||||||||||
Balance (in shares) at Sep. 30, 2019 | 1,715,000 | |||||||||||
Balance at Dec. 31, 2019 | $ 275 | 28,426 | 4,216 | (920) | $ (6,465) | $ 25,532 | ||||||
Balance (in shares) at Dec. 31, 2019 | 27,643,000 | |||||||||||
Balance (in shares) at Dec. 31, 2019 | 3,184,000 | 3,184,000 | ||||||||||
Net loss attributable to Innodata Inc. and Subsidiaries | $ 0 | 0 | (365) | 0 | $ 0 | $ (365) | ||||||
Stock-based compensation | $ 0 | 170 | 0 | 0 | 0 | 170 | ||||||
Stock based compensation (in shares) | 0 | |||||||||||
Pension liability adjustments, net of taxes | $ 0 | 0 | 0 | 14 | 0 | 14 | ||||||
Foreign currency translation adjustment | 0 | 0 | 0 | (718) | 0 | (718) | ||||||
Change in fair value of derivatives, net of taxes | 0 | 0 | 0 | (171) | 0 | (171) | ||||||
Balance at Mar. 31, 2020 | $ 275 | 28,596 | 3,851 | (1,795) | $ (6,465) | 24,462 | ||||||
Balance (in shares) at Mar. 31, 2020 | 27,643,000 | |||||||||||
Balance (in shares) at Mar. 31, 2020 | 3,184,000 | |||||||||||
Balance at Dec. 31, 2019 | $ 275 | 28,426 | 4,216 | (920) | $ (6,465) | $ 25,532 | ||||||
Balance (in shares) at Dec. 31, 2019 | 27,643,000 | |||||||||||
Balance (in shares) at Dec. 31, 2019 | 3,184,000 | 3,184,000 | ||||||||||
Pension liability adjustments, net of taxes | $ 24 | |||||||||||
Foreign currency translation adjustment | (281) | |||||||||||
Change in fair value of derivatives, net of taxes | (33) | |||||||||||
Balance at Sep. 30, 2020 | 0 | $ 278 | 0 | 29,438 | 148 | 3,648 | 0 | (1,210) | 0 | $ (6,465) | 148 | $ 25,689 |
Balance (in shares) at Sep. 30, 2020 | 27,921,000 | |||||||||||
Balance (in shares) at Sep. 30, 2020 | 3,184,000 | 3,184,000 | ||||||||||
Balance at Mar. 31, 2020 | $ 275 | 28,596 | 3,851 | (1,795) | $ (6,465) | $ 24,462 | ||||||
Balance (in shares) at Mar. 31, 2020 | 27,643,000 | |||||||||||
Balance (in shares) at Mar. 31, 2020 | 3,184,000 | |||||||||||
Net loss attributable to Innodata Inc. and Subsidiaries | $ 0 | 0 | (557) | 0 | $ 0 | (557) | ||||||
Stock-based compensation | $ 0 | 298 | 0 | 0 | 0 | 298 | ||||||
Stock based compensation (in shares) | 0 | |||||||||||
Pension liability adjustments, net of taxes | $ 0 | 0 | 0 | 11 | 0 | 11 | ||||||
Foreign currency translation adjustment | 0 | 0 | 0 | 221 | 0 | 221 | ||||||
Change in fair value of derivatives, net of taxes | 0 | 0 | 0 | 87 | 0 | 87 | ||||||
Balance at Jun. 30, 2020 | $ 275 | 28,894 | 3,294 | (1,476) | $ (6,465) | 24,522 | ||||||
Balance (in shares) at Jun. 30, 2020 | 27,643,000 | |||||||||||
Balance (in shares) at Jun. 30, 2020 | 3,184,000 | |||||||||||
Net loss attributable to Innodata Inc. and Subsidiaries | $ 0 | 0 | 206 | 0 | $ 0 | 206 | ||||||
Stock-based compensation | 0 | 232 | 0 | 0 | 0 | 232 | ||||||
Exercise of stock options | $ 3 | 312 | 0 | 0 | 0 | 315 | ||||||
Exercise of stock options (in shares) | 278,000 | |||||||||||
Pension liability adjustments, net of taxes | $ 0 | 0 | 0 | (1) | 0 | (1) | ||||||
Foreign currency translation adjustment | 0 | 0 | 0 | 216 | 0 | 216 | ||||||
Change in fair value of derivatives, net of taxes | 0 | 0 | 0 | 51 | 0 | 51 | ||||||
Balance at Sep. 30, 2020 | $ 0 | $ 278 | $ 0 | $ 29,438 | $ 148 | $ 3,648 | $ 0 | $ (1,210) | $ 0 | $ (6,465) | $ 148 | $ 25,689 |
Balance (in shares) at Sep. 30, 2020 | 27,921,000 | |||||||||||
Balance (in shares) at Sep. 30, 2020 | 3,184,000 | 3,184,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Basis of Presentation - The condensed consolidated financial statements for the interim periods included herein are unaudited; however, they contain all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the consolidated financial position of Innodata Inc. (including its subsidiaries, the “Company”, “we”, “our” and “us”) as of September 30, 2020, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2020 and 2019, cash flows for the nine months ended September 30, 2020 and 2019, and stockholders’ equity for the three and nine months ended September 30, 2020 and 2019. The results of operations for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Certain information and note disclosures normally included in or with financial statements prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations of the SEC and, accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2019, included in the Company’s 2019 Annual Report on Form 10‑K. Unless otherwise noted, the accounting policies used in preparing these condensed consolidated financial statements are the same as those described in the consolidated financial statements for the year ended December 31, 2019. Principles of Consolidation - The condensed consolidated financial statements include the accounts of Innodata Inc. and its wholly owned subsidiaries, and the Synodex and docGenix limited liability companies that are majority-owned by the Company. The non-controlling interests in the Synodex and docGenix limited liability companies are accounted for in accordance with Financial Accounting Standards Board (FASB) non-controlling interest guidance. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates - In preparing condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Management believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable, and management has made assumptions about the possible effects of the novel coronavirus ("COVID-19") pandemic on critical and significant accounting estimates. Actual results could differ from those estimates. Significant estimates include those related to allowance for doubtful accounts and billing adjustments, useful life of long-lived assets, useful life of intangible assets, impairment of goodwill, valuation of deferred tax assets, valuation of stock-based compensation, litigation accruals and estimated accruals for various tax exposures. Revenue Recognition – The Company’s revenue is recognized when services are rendered or goods are delivered to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services or goods as per the agreement with the customer. In cases where there are agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. Performance obligations that are not distinct at agreement inception are combined. For agreements with distinct performance obligation, the Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation, if any, and then evaluates how the services are performed for the customer to determine the timing of revenue recognition. For the Digital Data Solutions (DDS) segment, revenue is recognized primarily based on the quantity delivered or resources utilized in the period in which services are performed and performance conditions are satisfied as per the agreement. Revenues for agreements billed on a time-and-materials basis are recognized as services are performed. Revenues under fixed-fee agreements, which are not significant to overall revenues, are recognized based on the proportional performance method of accounting, as services are performed, or milestones are achieved. For the Synodex segment, revenue is recognized primarily based on the quantity delivered in the period in which services are performed and performance conditions are satisfied as per the agreement. A portion of the Synodex segment revenue is derived from licensing our functional software and providing access to the Company’s hosted software platform. Revenue from such services is recognized monthly when all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; access to the service is provided to the end user; and collection is probable. The Agility segment derives its revenue primarily from subscription arrangements and provision of enriched media analysis services. It also derives revenue as a reseller of corporate communication solutions. Revenue from subscriptions is recognized monthly when access to the service is provided to the end user; all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; and collection is probable. Revenue from enriched media analysis services is recognized when the services are performed, and performance conditions are satisfied. Revenues from the reseller agreements are recognized at the gross amount received for the goods in accordance with our functioning as a principal due to our meeting the following criteria: the Company acts as the primary obligor in the sales transaction; assumes the credit risk; sets the price; can select suppliers; and is involved in the execution of the services, including after sales service. Revenues include reimbursement of out-of-pocket expenses, with the corresponding out-of-pocket expenses included in direct operating costs. The Company considers U.S. GAAP criteria for determining whether to report gross revenue as a principal versus net revenue as an agent. The Company evaluates whether it is in control of the services before the same are transferred to the customer to assess whether it is principal or agent in the arrangement. Revenues are recognized on a gross basis if the Company is in the capacity of principal and on a net basis if it falls in the capacity of an agent. Contract acquisition costs, which are included in prepaid expenses and other current assets, for the Agility segment is amortized over the term of a subscription agreement that normally has a duration of 12 months or less. The Company reviews these costs on a periodic basis to determine the need to adjust the carrying values for pre-terminated contracts. Foreign Currency - The functional currency of the Company’s production operations located in the Philippines, India, Sri Lanka and Israel is the U.S. dollar. Transactions denominated in Philippine pesos, Indian and Sri Lankan rupees and Israeli shekels are translated to U.S. dollars at rates using the average rates in effect on the transaction dates. The functional currency for the Company’s subsidiaries in Germany, the United Kingdom and Canada are the Euro, the Pound Sterling and the Canadian dollar, respectively. The financial statements of these subsidiaries are prepared in these respective currencies. Financial information is translated from the applicable functional currency to the U.S. dollar (the reporting currency) for inclusion in the condensed consolidated financial statements. Income, expenses and cash flows are translated at weighted average exchange rates prevailing during the fiscal period, and assets and liabilities are translated at fiscal period-end exchange rates. Resulting translation adjustments are included as a component of Accumulated other comprehensive loss in the condensed consolidated balance sheets. Foreign exchange transaction gains or losses are included in Direct operating costs in the accompanying condensed consolidated statements of operations and comprehensive income (loss). To the extent that the currencies of the Company’s production facilities located in the Philippines, India, Sri Lanka and Israel fluctuate, the Company is subject to risks of changing costs of production after pricing is established for certain client projects. In addition, the Company is exposed to the risk of foreign currency fluctuations on the non-U.S. dollar denominated revenues, and on the monetary assets and liabilities held by its foreign subsidiaries that are denominated in local currencies. Income Taxes - Deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates, as well as any net operating loss or tax credit carryforwards expected to reduce taxes payable in future years. A valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax assets will not be realized. While the Company considers future taxable income in assessing the need for the valuation allowance, in the event that the Company determines that it would be able to realize the deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made. Similarly, in the event that the Company determines that it would not be able to realize the deferred tax assets in the future considering future taxable income, an adjustment to the deferred tax assets would decrease income in the period such determination was made. Changes in the valuation allowance from period to period are included in the Company’s tax provision in the period of change. The Company indefinitely reinvests foreign earnings in its foreign subsidiaries. Unremitted earnings of foreign subsidiaries have been included in the condensed consolidated financial statements without giving effect to the United States taxes that may be payable on distribution to the United States, because such earnings are not anticipated to be remitted to the United States. In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that all or some portion of the deferred tax assets will not be realizable. As the expectation of future taxable income resulting from the U.S. and Canadian operations cannot be predicted with certainty, the Company maintains a valuation allowance against all the U.S. and Canadian deferred tax assets. The Company accounts for income taxes regarding uncertain tax positions, and recognizes interest and penalties related to uncertain tax positions in Income tax expense in the condensed consolidated statements of operations and comprehensive income (loss). Deferred Revenue - Deferred revenue represents payments received from clients in advance of providing services and amounts deferred if conditions for revenue recognition have not been met. Accrued expenses and other on the condensed consolidated balance sheets includes $1.1 million of deferred revenue as of each of September 30, 2020 and December 31, 2019. Unbilled Receivable - (classified along-with Accounts receivable): Work performed, and expenses incurred in advance of invoicing are recorded as unbilled receivables. Accounts receivable on the Condensed Consolidated Balance Sheets includes $0.4 million and $0.5 million of unbilled receivables as of September 30, 2020 and December 31, 2019, respectively. Recent Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" as part of its initiative to reduce complexity in the accounting standards. The standard eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also clarifies and simplifies other aspects of the accounting for income taxes. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. We do not expect that the adoption of the new guidance will have a material impact on our financial statements. In August 2018, the FASB issued Accounting Standards Update (ASU) No. 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans” (ASU 2018-14), which makes changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. The guidance eliminates requirements for certain disclosures that are no longer considered cost beneficial and adds new disclosure requirements that the FASB considers pertinent. ASU 2018-14 is effective for fiscal years ending after December 15, 2020 for public entities; early adoption is permitted. The Company does not expect ASU 2018-14 to have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements” (ASU 2016-13). ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation amount that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” which clarifies codification and corrects unintended application of the guidance, and in November 2019, the FASB issued ASU No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” which clarifies or addresses specific issues about certain aspects of ASU 2016-13. In March 2020, the FASB issued ASU No. 2020-03, “Codification Improvements to Financial Instruments,” which modifies the measurement of expected credit losses of certain financial instruments. ASU 2016-13 is effective for certain Smaller Reporting Companies for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, which will be fiscal 2023 for us if we continue to be classified as a Smaller Reporting Company, with early adoption permitted. We do not expect that the adoption of the new guidance will have a material impact on our financial statements. Correction of Immaterial Errors – During the preparation of the September 30, 2020 condensed consolidated financial statements, certain historical errors were identified relating to the accounting for capital leases under ASC Topics 840 and 842. The lease obligations under certain leases were not recorded at their present values at the inception of the leases; in addition, the asset buyout prices were not reassessed in December 2019 by the Company, both of which resulted in an understatement of expenses from 2017 to December 31, 2019 and an overstatement of expenses for the six months ended June 30, 2020. The errors were not material, either quantitatively or qualitatively, in any of the reported periods. However, the corrections, if recorded in the three-month period ended September 30, 2020, would be material to such period. Accordingly, the prior period financial statements are being corrected by revising the prior period condensed consolidated financial statements for comparability. For the September 30, 2019 condensed consolidated financial statements and December 31, 2019 condensed consolidated balance sheet included in this Form 10-Q, the corrections are as follows: · Increase in expenses of $8,000 for the three months ended September 30, 2019 and $49,000 for the nine months ended September 30, 2019. There was no impact on the loss per share for the three and nine month periods ended September 30, 2019. · An increase in December 31, 2019 liabilities of $528,000. · A decrease in December 31, 2019 retained earnings of $777,000. · A decrease in December 31, 2019 total assets of $249,000. · The impact on cash flows for the nine months ended September 30, 2019 was: · A decrease in cash flows provided by operating activities of $38,000 · A decrease in cash flows used in investing activities of $79,000 · An increase in cash flows used in financing activities of $41,000 The Company evaluated each year’s/period’s errors under Staff Accounting Bulletins 99 and 108 and concluded that a restatement of year’s/prior periods’ consolidated financial statements is not required. Accordingly, the condensed consolidated financial statements and consolidated financial statements prior periods (March 31, 2020 and June 30, 2020) and year (December 31, 2019) consolidated financial statements will be revised in future Forms 10-Q and Form 10-K to be filed with the Securities and Exchange Commission. The September 2019 condensed consolidated financial statements and December 31, 2019 condensed consolidated balance sheet have been revised in this Form 10-Q. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 2. Goodwill and Intangible Assets The Company determined that adverse changes in macroeconomic trends as a consequence of the continuing COVID-19 pandemic constituted a triggering event under U.S. GAAP (Accounting Standards Codification (ASC) No. 350, “Intangibles - Goodwill and Other” and ASC No. 360, “Impairment or Disposal of Long-Lived Assets”). The Company completed its impairment analysis procedures as of March 31, 2020 and has updated its impairment analysis on its reporting units as of September 30, 2020. The Company determined that there was no impairment of long-lived assets, tangible or intangible, in any reporting units as of September 30, 2020. The changes in the carrying amount of goodwill for the nine months ended September 30, 2020 and 2019 were as follows (in thousands): Balance as of January 1, 2019 $ 2,050 Foreign currency translation adjustment 12 Balance as of September 30, 2019 $ 2,062 Balance as of January 1, 2020 $ 2,108 Foreign currency translation adjustment (39) Balance as of September 30, 2020 $ 2,069 The fair value measurement of goodwill was classified within Level 3 of the fair value hierarchy because the Company used the income approach, which utilizes significant inputs that are unobservable in the market. The Company believes it made reasonable estimates and assumptions to calculate the fair value of the reporting unit as of the impairment test measurement date. Information regarding the Company’s acquisition-related intangible assets was as follows (in thousands): Trademarks Media Developed Customer and Contact technology relationships tradenames Patents Database Total Gross carrying amounts: Balance as of January 1, 2020 $ 3,108 $ 2,177 $ 871 $ 43 $ 3,606 $ 9,805 Foreign currency translation (74) (65) (11) (1) (40) (191) Balance as of September 30, 2020 $ 3,034 $ 2,112 $ 860 $ 42 $ 3,566 $ 9,614 Trademarks Media Developed Customer and Contact technology relationships tradenames Patents Database Total Gross carrying amounts: Balance as of January 1, 2019 $ 2,999 $ 2,081 $ 855 $ 42 $ 3,546 $ 9,523 Foreign currency translation 51 63 4 1 (36) 83 Balance as of September 30, 2019 $ 3,050 $ 2,144 $ 859 $ 43 $ 3,510 $ 9,606 Trademarks Media Developed Customer and Contact technology relationships tradenames Patents Database Total Accumulated amortization: Balance as of January 1, 2020 $ 1,493 $ 983 $ 567 $ 24 $ 1,261 $ 4,328 Amortization expense 230 134 41 3 271 679 Foreign currency translation (39) (32) (5) — (19) (95) Balance as of September 30, 2020 $ 1,684 $ 1,085 $ 603 $ 27 $ 1,513 $ 4,912 Trademarks Media Developed Customer and Contact technology relationships tradenames Patents Database Total Accumulated amortization: Balance as of January 1, 2019 $ 1,137 $ 766 $ 440 $ 19 $ 886 $ 3,248 Amortization expense 230 133 90 3 269 725 Foreign currency translation 24 24 2 1 (15) 36 Balance as of September 30, 2019 $ 1,391 $ 923 $ 532 $ 23 $ 1,140 $ 4,009 Amortization expense relating to acquisition-related intangible assets was $0.2 million for each of the three months ended September 30, 2020 and 2019. Amortization expense relating to acquisition-related intangible assets was $0.7 million for each of the nine months ended September 30, 2020 and 2019. As of the date hereof, estimated amortization expense for intangible assets after September 30, 2020 is as follows (in thousands): Year Amortization 2020 $ 224 2021 895 2022 895 2023 895 2024 797 Thereafter 996 $ 4,702 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
Income Taxes | 3. Income Taxes The Company recorded a tax benefit of $0.1 million and a provision for income taxes of $0.4 million for the three months ended September 30, 2020 and 2019, respectively; and a tax provision of $0.5 million for each of the nine months ended September 30, 2020 and 2019. Taxes primarily consist of a provision for foreign taxes recorded by the Company’s foreign subsidiaries in accordance with local tax regulations. Effective income tax rates are disproportionate due to the losses incurred by the Company’s U.S. entities and Canadian subsidiaries, a valuation allowance recorded on deferred taxes of these entities, a tax effect of foreign operations, including foreign exchange gains and losses and tax impact on uncertain tax position (ASC 740). The reconciliations of the U.S. statutory rate with the Company’s effective tax rate for each of the nine months ended September 30, 2020 and 2019 are summarized in the table below: For the Nine Months Ended September 30, 2020 2019 Federal income tax benefit at statutory rate (21.0) % (21.0) % Effect of: — Change in valuation allowance (660.0) (15.1) Foreign rate differential (295.9) (1.8) Return to provision true up (14.8) (0.3) Withholding tax — 4.5 State income tax net of federal benefit (120.1) 1.8 Foreign operations permanent difference - foreign exchange gains and losses 90.3 (39.3) Increase in unrecognized tax benefits (ASC 740) 410.5 30.8 Tax effects of foreign operations 1,610.6 84.8 Effect of share based compensation 263.7 — Others 29.0 (4.2) Effective tax rate 1,292.3 % 40.2 % As of September 30, 2020, the Company performed a calculation of the Global Intangible Low-Taxed Income provisions and concluded that it continues to have no impact on account of the net losses of certain foreign subsidiaries. The following table presents a roll-forward of the Company’s unrecognized tax benefits and associated interest for the nine months ended September 30, 2020 (in thousands): Unrecognized tax benefits Balance - January 1, 2020 $ 2,957 Increase for current year tax position 225 Decrease for prior year tax position (161) Interest accrual 125 Foreign currency remeasurement (100) Balance - September 30, 2020 $ 3,046 The Company expects that unrecognized tax benefits as of September 30, 2020 and December 31, 2019, if recognized, would have a material impact on the Company’s effective tax rate. The Company is subject to Federal income tax, as well as income tax in various states and foreign jurisdictions. The Company has open periods for U.S. Federal and state taxes from 2016 through 2019. Various foreign subsidiaries currently have open tax years from 2003 through 2019. Tax Assessments In September 2015, the Company’s Indian subsidiary was subject to an inquiry by the Service Tax Department in India regarding the classification of services provided by this subsidiary, asserting that the services provided by this subsidiary fall under the category of online information and database access or retrieval services (OID Services), and not under the category of business support services (BS Services) that are exempt from service tax as historically indicated in the subsidiary’s service tax filings. The Company disagrees with the Service Tax Department’s position. In November 2019, the Commissioner of Central Tax, GST & Central Excise issued an order confirming the Service Tax Department's position. The Company is contesting this order in an appeal to the Customs, Excise and Service Tax Appellate Tribunal. In the event the Service Tax Department is ultimately successful in proving that the services fall under the category of OID Services, the revenues earned by the Company’s Indian subsidiary for the period July 2012 through November 2016 would be subject to a service tax of between 12.36% and 15%, and this subsidiary may also be liable for interest and penalties. The revenue of our Indian subsidiary during this period was approximately $66.0 million. In accordance with new rules promulgated by the Service Tax Department, as of December 1, 2016 service tax is no longer applicable to OID or BS Services. Based on the assessment of the Company’s counsel, the Company has not recorded any tax liability for this case. In a separate action relating to service tax refunds, in October 2016, the Company’s Indian subsidiary received notices from the Indian Service Tax Department in India seeking to reverse service tax refunds of approximately $160,000 previously granted to our Indian subsidiary for three quarters in 2014, asserting that the services provided by this subsidiary fall under the category of OID Services and not BS Services. The appeal was determined in favor of the Service Tax Department. The Company disagrees with the basis of this decision and is contesting it. The Company expects delays in its Indian subsidiary receiving further service tax refunds until this matter is adjudicated with finality, and currently has service tax credits of approximately $1.0 million recorded as a receivable. Based on the assessment of the Company’s counsel, the Company has not recorded any tax liability for this case. Substantial recovery against the Company in the above referenced 2015 Service Tax Department case could have a material adverse impact on the Company, and unfavorable rulings or recoveries in other tax proceedings could have a material adverse impact on the consolidated operating results of the period (and subsequent periods) in which the rulings or recovery occurs. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 4. Commitments and Contingencies COVID-19 Pandemic -The novel coronavirus disease 2019 (“COVID-19”), which the World Health Organization declared as a pandemic on March 11, 2020, continues to spread throughout the world. COVID-19 has created significant global economic downturn, disrupted global trade and supply chains, adversely impacted many industries, caused federal and regional governments to impose substantial restrictions on the operations of non-essential businesses and contributed to significant declines and volatility in financial markets. The rapid development and fluidity of this situation precludes any prediction as to the ultimate impact of COVID-19 on the Company’s performance and financial results. The situation surrounding the COVID-19 crisis remains fluid and the extent and duration of its impact on the economy remains unclear. For this reason, the Company cannot reasonably estimate with any degree of certainty the future impact that the pandemic may have on the Company’s results of operations and financial condition. The potential for a material impact on the Company’s results of operations and financial position increases the longer the virus affects the level of economic activity in the United States and globally. With the current level of demand for our services, the Company believes it has existing cash and cash equivalents that provide sufficient sources of liquidity to satisfy the Company’s financial needs for the next 12 months from the filing date of this Quarterly Report on Form 10-Q. In the event the Company experiences a significant or prolonged reduction in revenues, the likelihood of which is uncertain, it would seek to manage its liquidity by reducing capital expenditures, deferring investment activities and reducing operating costs, as it would likely have no other source of liquidity to support ongoing operations in a manner that is not significantly detrimental to the business. Litigation – In 2008, a judgment was rendered in the Philippines against a Philippine subsidiary of the Company that is no longer active and purportedly also against Innodata Inc., in favor of certain former employees of the Philippine subsidiary. The potential payment amount aggregates to approximately $6.4 million, plus legal interest that accrued at 12% per annum from August 13, 2008 to June 30, 2013, and thereafter accrued and continues to accrue at 6% per annum. The potential payment amount as expressed in U.S. dollars varies with the Philippine peso to U.S. dollar exchange rate. In December 2017, a group of 97 of the former employees of the Philippine subsidiary indicated that they proposed to record the judgment as to themselves in New Jersey. In January 2018, in response to an action initiated by Innodata Inc., the United States District Court for the District of New Jersey (USDC) entered a preliminary injunction that enjoins these former employees from pursuing or seeking recognition or enforcement of the judgment against Innodata Inc. in the United States during the pendency of the action and until further order of the USDC. In June 2018, the USDC entered a consent order administratively closing the action subject to return of the action to the active docket upon the written request of Innodata Inc. or the former employees, with the USDC retaining jurisdiction over the matter and the preliminary injunction remaining in full force and effect. The Company is also subject to various other legal proceedings and claims that have arisen in the ordinary course of business. While management currently believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company’s financial position and results of operations, litigation is subject to inherent uncertainties. Substantial recovery against the Company in the above-referenced Philippine action could have a material adverse impact on the Company, and unfavorable rulings or recoveries in the other proceedings could have a material adverse impact on the financial position and operating results of the Company. In addition, the Company’s estimate of the potential impact on the Company’s financial position and results of operations for the above referenced legal proceedings could change in the future. The Company’s legal accruals related to legal proceedings and claims are based on the Company’s determination of whether or not a loss is probable. The Company reviews outstanding proceedings and claims with external counsel to assess probability and estimates of loss. The accruals are adjusted if necessary. While the Company intends to vigorously defend against these matters, adverse outcomes that it estimates could reach approximately $300,000 in the aggregate beyond recorded amounts are reasonably possible. If circumstances change, the Company may be required to record adjustments that could be material to its reported consolidated financial condition and results of operations. |
Stock Options
Stock Options | 9 Months Ended |
Sep. 30, 2020 | |
Stock Options | |
Stock Options | 5. Stock Options A summary of stock option activity under the Innodata Inc. 2013 Stock Plan , as amended and restated effective June 7, 2016 (Plan), as of September 30, 2020, and changes during the nine months then ended, are presented below: Weighted- Weighted - Average Average Remaining Aggregate Number of Exercise Contractual Term Intrinsic Options Price (years) Value Outstanding at January 1, 2020 6,833,303 $ 1.86 Granted 1,080,000 1.37 Exercised (278,333) 1.13 Forfeited/Expired (644,303) 3.06 Outstanding at September 30, 2020 6,990,667 $ 1.70 $ 9,704,426 Exercisable at September 30, 2020 4,651,624 $ 1.93 $ 5,420,040 Vested and Expected to Vest at September 30, 2020 6,990,667 $ 1.70 $ 9,704,426 The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average fair value of the options granted, and weighted-average assumptions were as follows: For the Nine Months Ended September 30, 2020 2019 Weighted average fair value of options granted $ 0.61 $ 0.56 Risk-free interest rate 0.29%-0.56 % 1.7% - 2.6 % Expected term (years) 5-6 5-6 Expected volatility factor 47% - 50 % 45% - 46 % Expected dividends None None A summary of restricted shares under the Plan as of September 30, 2020 are presented below: Weighted-Average Grant Date Fair Number of Shares Value Granted 75,000 $ 1.38 Vested (25,000) Forfeited/Expired — Unvested at September 30, 2020 50,000 The compensation cost related to non-vested stock options and restricted stock awards not yet recognized as of September 30, 2020 totaled approximately $1.3 million. The weighted-average period over which these costs will be recognized is twenty-four months. The stock-based compensation expense related to the Company’s various stock awards was allocated as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Direct operating costs $ 40 $ 34 $ 119 $ 72 Selling and administrative expenses 192 317 581 552 Total stock-based compensation $ 232 $ 351 $ 700 $ 624 |
Operating Leases
Operating Leases | 9 Months Ended |
Sep. 30, 2020 | |
Operating Leases | |
Operating Leases | 6. Operating Leases The Company has various operating lease agreements for its offices and service delivery centers. The Company has determined that the risks and benefits related to the leased properties are retained by the lessors. Accordingly, these are accounted for as operating leases. These lease agreements have remaining lease terms ranging from two to ten years and, in most cases, provide for rental escalations ranging from 1.75% to 10%. Most of these agreements are renewable at the mutual consent of the parties in the contract. The Company adopted ASU No. 2016-02, “Leases (Topic 842) ”, beginning January 1, 2019 and applied the practical expedients consistently for all of its leases. The table below summarizes the amounts recognized in the condensed consolidated financial statements related to operating leases for the periods presented (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Rent expense for long-term operating leases $ 402 $ 453 $ 1,266 $ 1,360 Rent expense for short-term leases 122 143 511 473 Total rent expense $ 524 $ 596 $ 1,777 $ 1,833 The following table presents the maturity profile of the Company’s operating lease liabilities based on the contractual undiscounted payments with a reconciliation of these amounts to the remaining net present value of the operating lease liability reported in the condensed consolidated balance sheets as of September 30, 2020 (in thousands): Year Amount 2020 $ 396 2021 1,603 2022 1,569 2023 1,289 2024 1,060 2025 and thereafter 4,612 Total lease payments 10,529 Less: Interest (2,871) Net present value of lease liabilities $ 7,658 Current portion $ 967 Long-term portion 6,691 Total $ 7,658 The weighted-average remaining lease terms and discount rates for all of our operating leases as of September 30, 2020 were as follows: Weighted-average lease term remaining 75 months Weighted-average discount rate % |
Long-term Obligations
Long-term Obligations | 9 Months Ended |
Sep. 30, 2020 | |
Long-term Obligations | |
Long-term Obligations | 7. Long-term Obligations Total long-term obligations of the Company as of September 30, 2020 and December 31, 2019 consisted of the following (in thousands): September 30, December 31, 2020 2019 Pension obligations - accrued pension liability $ 5,224 $ 4,611 Settlement agreement (1) 572 708 Capital lease obligations 269 655 Microsoft licenses (2) 734 — Bank loans payable (3) 580 — 7,379 5,974 Less: Current portion of long-term obligations 1,958 1,440 Totals $ 5,421 $ 4,534 (1) Represents payment to be made pursuant to a settlement agreement entered into in December 2018 between a subsidiary of the Company and 19 former employees of such subsidiary. The balance is payable in monthly installments through March 2023. (2) In April 2020, the Company renewed a vendor agreement to acquire certain additional software licenses and to receive support and subsequent software upgrades on these and other currently owned software licenses through February 2023. Pursuant to this agreement, the Company is obligated to pay approximately $0.4 million annually over the term of the agreement. (3) On May 4, 2020, we received loan proceeds of $579,700 under the Paycheck Protection Program which was established as part of the Coronavirus Aid, Relief and Economic Security Act. The loans and accrued interest are forgivable, as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The unforgiven portion of the loan, if any, is payable over two years at an interest rate of 1% per year, with a deferral of payments until the date that the Small Business Administration remits the borrower's loan forgiveness amount to the lender. |
Comprehensive Loss
Comprehensive Loss | 9 Months Ended |
Sep. 30, 2020 | |
Comprehensive Loss | |
Comprehensive Loss | 8. Comprehensive Loss Accumulated other comprehensive loss, as reflected in the condensed consolidated balance sheets, consists of pension liability adjustments, net of taxes, foreign currency translation adjustments, net of taxes, and changes in fair value of derivatives, net of taxes. The components of Accumulated other comprehensive loss as of September 30, 2020, and reclassifications out of Accumulated other comprehensive loss, for the nine months ended September 30, 2020 and 2019, were as follows (net of tax) (in thousands): Foreign Accumulated Pension Fair Value Currency Other Liability of Translation Comprehensive Adjustment Derivatives Adjustment Income (Loss) Balance at July 1, 2020 $ (28) $ (51) $ (1,397) $ (1,476) Other comprehensive income before reclassifications, net of taxes — 12 216 228 Total other comprehensive loss before reclassifications, net of taxes (28) (39) (1,181) (1,248) Net amount reclassified to earnings (1) 39 — 38 Balance at September 30, 2020 $ (29) $ — $ (1,181) $ (1,210) Foreign Accumulated Pension Fair Value Currency Other Liability of Translation Comprehensive Adjustment Derivatives Adjustment Loss Balance at July 1, 2019 $ 1,374 $ — $ (1,179) $ 195 Other comprehensive loss before reclassifications, net of taxes — — (252) (252) Total other comprehensive income (loss) before reclassifications, net of taxes 1,374 — (1,431) (57) Net amount reclassified to earnings (41) — — (41) Balance at September 30, 2019 $ 1,333 $ — $ (1,431) $ (98) Foreign Accumulated Pension Fair Value Currency Other Liability of Translation Comprehensive Adjustment Derivatives Adjustment Loss Balance at January 1, 2020 $ (53) $ 33 $ (900) $ (920) Other comprehensive loss before reclassifications, net of taxes — (154) (281) (435) Total other comprehensive income (loss) before reclassifications, net of taxes (53) (121) (1,181) (1,355) Net amount reclassified to earnings 24 121 — 145 Balance at September 30, 2020 $ (29) $ — $ (1,181) $ (1,210) Foreign Accumulated Pension Fair Value Currency Other Liability of Translation Comprehensive Adjustment Derivatives Adjustment Income (Loss) Balance at January 1, 2019 $ 1,451 $ — $ (1,466) $ (15) Other comprehensive income before reclassifications, net of taxes — — 35 35 Total other comprehensive income (loss) before reclassifications, net of taxes 1,451 — (1,431) 20 Net amount reclassified to earnings (118) — — (118) Balance at September 30, 2019 $ 1,333 $ — $ (1,431) $ (98) All reclassifications out of Accumulated other comprehensive loss had an impact on Direct operating costs in the condensed consolidated statements of operations and comprehensive loss. |
Segment Reporting and Concentra
Segment Reporting and Concentrations | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting and Concentrations | |
Segment Reporting and Concentrations | 9. Segment Reporting and Concentrations The Company’s operations are classified in three reporting segments: Digital Data Solutions (DDS), Synodex and Agility. The DDS segment provides a range of solutions and platforms for solving complex data challenges that companies face when they seek to obtain the benefits of artificial intelligence (AI) systems and analytics platforms. These include data annotation, data transformation, data curation and intelligent automation. The DDS segment also provides a variety of services for clients in the information industry that relate to content operations and product development. The Synodex segment provides an intelligent data platform that transforms medical records into useable digital data organized in accordance with our proprietary data models or client data models. The Agility segment provides an intelligent data platform that provides marketing communications and public relations professionals with the ability to target and distribute content to journalists and social media influencers world-wide and to monitor and analyze global news channels (print, web, radio and TV) and social media channels. A significant portion of the Company’s revenues are generated from its facilities in the Philippines, India, Sri Lanka, Canada, Germany, the United Kingdom and Israel. Revenues from external clients and segment operating profit (loss), and other reportable segment information for the periods presented were as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Revenues: DDS $ 10,526 $ 10,124 $ 30,793 $ 30,353 Synodex 1,197 977 3,680 2,916 Agility 2,830 2,745 8,473 7,910 Total Consolidated $ 14,553 $ 13,846 $ 42,946 $ 41,179 Income (loss) before provision for income taxes (1) : DDS $ 4 $ 371 $ 226 $ 579 Synodex 79 (70) 356 (81) Agility 60 (446) (621) (1,724) Total Consolidated $ 143 $ (145) $ (39) $ (1,226) Income (loss) before provision for income taxes (2) : DDS $ (64) $ 304 $ 27 $ 391 Synodex 124 (26) 487 42 Agility 83 (423) (553) (1,659) Total Consolidated $ 143 $ (145) $ (39) $ (1,226) September 30, 2020 December 31, 2019 Total assets: DDS $ 27,433 $ 23,115 Synodex 564 675 Agility 26,001 25,707 Total Consolidated $ 53,998 $ 49,497 September 30, 2020 December 31, 2019 Goodwill: Agility $ 2,069 $ 2,108 Total Consolidated $ 2,069 $ 2,108 (1) Before elimination of any inter-segment profits (2) After elimination of any inter-segment profits The following table summarizes revenues by geographic region (determined and based upon customers’ domicile) for the periods presented (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 United States $ 6,613 $ 5,967 $ 19,561 $ 18,507 United Kingdom 2,832 2,394 8,284 7,120 The Netherlands 1,704 1,730 5,003 5,146 Canada 1,434 1,634 4,304 4,594 Others - principally Europe 1,970 2,121 5,794 5,812 Totals $ 14,553 $ 13,846 $ 42,946 $ 41,179 Long-lived assets of the Company as of September 30, 2020 and December 31, 2019, respectively, by geographic region, were comprised of the following (in thousands): September 30, December 31, 2020 2019 United States $ 4,162 $ 4,521 Foreign countries: Canada 8,532 8,708 United Kingdom 1,699 1,907 Philippines 4,688 5,135 India 1,025 508 Sri Lanka 529 678 Israel 1 19 Germany 1 1 Total foreign 16,475 16,956 Totals $ 20,637 $ 21,477 Long-lived assets include the unamortized balance of right-of-use assets amounting to $6.9 million and $7.0 million as of September 30, 2020 and December 31, 2019, respectively. Two clients in the DDS segment generated approximately 23% and 25% of the Company's total revenues for the three months ended September 30, 2020 and September 30, 2019 , respectively. No other client accounted for 10% or more of total revenues during these periods. Further, revenues from non-U.S. clients accounted for 55% and 57% of the Company's total revenues for the three months ended September 30, 2020 and 2019, respectively. One client in the DDS segment generated approximately 14% and 16% of the Company’s total revenues for the nine months ended September 30, 2020 and 2019 , respectively. Another client in the DDS segment generated 10% of the Company’s total revenues for the nine months ended September 30, 2019. No other client accounted for 10% or more of total revenues during these periods. Further, revenues from non-U.S. clients accounted for 54% of the Company’s total revenues for each of the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, approximately 57% of the Company's accounts receivable was from foreign (principally European) clients and 24% of the Company’s accounts receivable was due from two clients. As of December 31, 2019, approximately 60% of the Company's accounts receivable was from foreign (principally European) clients and 44% of the Company’s accounts receivable was due from three clients. |
Income (Loss) Per Share
Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Income (Loss) Per Share | |
Income (Loss) Per Share | 10. Income (Loss) Per Share (In thousands) For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net income (loss) attributable to Innodata Inc. and Subsidiaries $ 206 $ (563) $ (568) $ (1,709) Weighted average common shares outstanding 24,470 25,856 24,427 25,870 Dilutive effect of outstanding options 790 — — — Adjusted for dilutive computation 25,260 25,856 24,427 25,870 Basic income (loss) per share is computed using the weighted-average number of common shares outstanding during the year. Diluted income (loss) per share is computed by considering the impact of the potential issuance of common shares, using the treasury stock method, on the weighted average number of shares outstanding. For those securities that are not convertible into a class of common stock, the two-class method of computing income (loss) per share is used. Options to purchase 2.3 million shares of common stock for the three months ended September 30, 2020, were outstanding but not included in the computation of diluted income (loss) per share because the exercise price of the options were greater than the average market price of the common shares and therefore have not been considered as potential equity shares. Diluted loss per share and Basic loss per share are the same due to the reported loss for three months ended September 30, 2019. Options to purchase 6.9 million shares of common stock were anti-dilutive for three months ended September 30, 2019. Diluted loss per share and Basic loss per share are the same due to the reported loss for the nine months ended September 30, 2020 and September 30, 2019. Options to purchase 7.0 million shares and 6.9 million shares of common stock were anti-dilutive for nine months ended September 30, 2020 and September 30, 2019, respectively. |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2020 | |
Derivatives | |
Derivatives | 11. Derivatives The Company conducts a large portion of its operations in international markets that subject it to foreign currency fluctuations. The most significant foreign currency exposures occur when revenue and associated accounts receivable are collected in one currency and expenses to generate that revenue are incurred in another currency. The Company’s primary exchange rate exposure relates to payroll, other payroll costs and operating expenses in the Philippines, India, Sri Lanka and Israel. In addition, although most of the Company’s revenues are denominated in U.S. dollars, a significant portion of the total revenues is denominated in Canadian dollars, Pound Sterling and Euros. To manage its exposure to fluctuations in foreign currency exchange rates, the Company enters into foreign currency forward contracts, authorized under Company policies. The Company utilizes non-deliverable forward contracts expiring within six months to reduce its foreign currency risk. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking hedging transactions. The Company does not hold or issue derivatives for trading purposes. All derivatives are recognized at their fair value and classified based on the instrument’s maturity date. There were no notional amounts outstanding as of September 30, 2020. The effects of foreign currency forward contracts designated as cash flow hedges on the Company’s condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2020 and 2019, respectively, were as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net gain (loss) recognized in OCI (1) $ 12 $ — $ (154) $ — Net (gain) loss reclassified from accumulated OCI into income (2) $ 39 $ — $ 121 $ — Net gain recognized in income (3) $ — $ — $ — $ — (1) Net change in fair value of the effective portion classified into other comprehensive income ("OCI") (2) Effective portion classified within direct operating costs (3) There were no ineffective portions for the periods presented. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation - The condensed consolidated financial statements for the interim periods included herein are unaudited; however, they contain all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the consolidated financial position of Innodata Inc. (including its subsidiaries, the “Company”, “we”, “our” and “us”) as of September 30, 2020, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2020 and 2019, cash flows for the nine months ended September 30, 2020 and 2019, and stockholders’ equity for the three and nine months ended September 30, 2020 and 2019. The results of operations for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Certain information and note disclosures normally included in or with financial statements prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations of the SEC and, accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2019, included in the Company’s 2019 Annual Report on Form 10‑K. Unless otherwise noted, the accounting policies used in preparing these condensed consolidated financial statements are the same as those described in the consolidated financial statements for the year ended December 31, 2019. |
Principles of Consolidation | Principles of Consolidation - The condensed consolidated financial statements include the accounts of Innodata Inc. and its wholly owned subsidiaries, and the Synodex and docGenix limited liability companies that are majority-owned by the Company. The non-controlling interests in the Synodex and docGenix limited liability companies are accounted for in accordance with Financial Accounting Standards Board (FASB) non-controlling interest guidance. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates - In preparing condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Management believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable, and management has made assumptions about the possible effects of the novel coronavirus ("COVID-19") pandemic on critical and significant accounting estimates. Actual results could differ from those estimates. Significant estimates include those related to allowance for doubtful accounts and billing adjustments, useful life of long-lived assets, useful life of intangible assets, impairment of goodwill, valuation of deferred tax assets, valuation of stock-based compensation, litigation accruals and estimated accruals for various tax exposures. |
Revenue Recognition | Revenue Recognition – The Company’s revenue is recognized when services are rendered or goods are delivered to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services or goods as per the agreement with the customer. In cases where there are agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. Performance obligations that are not distinct at agreement inception are combined. For agreements with distinct performance obligation, the Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation, if any, and then evaluates how the services are performed for the customer to determine the timing of revenue recognition. For the Digital Data Solutions (DDS) segment, revenue is recognized primarily based on the quantity delivered or resources utilized in the period in which services are performed and performance conditions are satisfied as per the agreement. Revenues for agreements billed on a time-and-materials basis are recognized as services are performed. Revenues under fixed-fee agreements, which are not significant to overall revenues, are recognized based on the proportional performance method of accounting, as services are performed, or milestones are achieved. For the Synodex segment, revenue is recognized primarily based on the quantity delivered in the period in which services are performed and performance conditions are satisfied as per the agreement. A portion of the Synodex segment revenue is derived from licensing our functional software and providing access to the Company’s hosted software platform. Revenue from such services is recognized monthly when all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; access to the service is provided to the end user; and collection is probable. The Agility segment derives its revenue primarily from subscription arrangements and provision of enriched media analysis services. It also derives revenue as a reseller of corporate communication solutions. Revenue from subscriptions is recognized monthly when access to the service is provided to the end user; all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; and collection is probable. Revenue from enriched media analysis services is recognized when the services are performed, and performance conditions are satisfied. Revenues from the reseller agreements are recognized at the gross amount received for the goods in accordance with our functioning as a principal due to our meeting the following criteria: the Company acts as the primary obligor in the sales transaction; assumes the credit risk; sets the price; can select suppliers; and is involved in the execution of the services, including after sales service. Revenues include reimbursement of out-of-pocket expenses, with the corresponding out-of-pocket expenses included in direct operating costs. The Company considers U.S. GAAP criteria for determining whether to report gross revenue as a principal versus net revenue as an agent. The Company evaluates whether it is in control of the services before the same are transferred to the customer to assess whether it is principal or agent in the arrangement. Revenues are recognized on a gross basis if the Company is in the capacity of principal and on a net basis if it falls in the capacity of an agent. Contract acquisition costs, which are included in prepaid expenses and other current assets, for the Agility segment is amortized over the term of a subscription agreement that normally has a duration of 12 months or less. The Company reviews these costs on a periodic basis to determine the need to adjust the carrying values for pre-terminated contracts. |
Foreign Currency | Foreign Currency - The functional currency of the Company’s production operations located in the Philippines, India, Sri Lanka and Israel is the U.S. dollar. Transactions denominated in Philippine pesos, Indian and Sri Lankan rupees and Israeli shekels are translated to U.S. dollars at rates using the average rates in effect on the transaction dates. The functional currency for the Company’s subsidiaries in Germany, the United Kingdom and Canada are the Euro, the Pound Sterling and the Canadian dollar, respectively. The financial statements of these subsidiaries are prepared in these respective currencies. Financial information is translated from the applicable functional currency to the U.S. dollar (the reporting currency) for inclusion in the condensed consolidated financial statements. Income, expenses and cash flows are translated at weighted average exchange rates prevailing during the fiscal period, and assets and liabilities are translated at fiscal period-end exchange rates. Resulting translation adjustments are included as a component of Accumulated other comprehensive loss in the condensed consolidated balance sheets. Foreign exchange transaction gains or losses are included in Direct operating costs in the accompanying condensed consolidated statements of operations and comprehensive income (loss). To the extent that the currencies of the Company’s production facilities located in the Philippines, India, Sri Lanka and Israel fluctuate, the Company is subject to risks of changing costs of production after pricing is established for certain client projects. In addition, the Company is exposed to the risk of foreign currency fluctuations on the non-U.S. dollar denominated revenues, and on the monetary assets and liabilities held by its foreign subsidiaries that are denominated in local currencies. |
Income Taxes | Income Taxes - Deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates, as well as any net operating loss or tax credit carryforwards expected to reduce taxes payable in future years. A valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax assets will not be realized. While the Company considers future taxable income in assessing the need for the valuation allowance, in the event that the Company determines that it would be able to realize the deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made. Similarly, in the event that the Company determines that it would not be able to realize the deferred tax assets in the future considering future taxable income, an adjustment to the deferred tax assets would decrease income in the period such determination was made. Changes in the valuation allowance from period to period are included in the Company’s tax provision in the period of change. The Company indefinitely reinvests foreign earnings in its foreign subsidiaries. Unremitted earnings of foreign subsidiaries have been included in the condensed consolidated financial statements without giving effect to the United States taxes that may be payable on distribution to the United States, because such earnings are not anticipated to be remitted to the United States. In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that all or some portion of the deferred tax assets will not be realizable. As the expectation of future taxable income resulting from the U.S. and Canadian operations cannot be predicted with certainty, the Company maintains a valuation allowance against all the U.S. and Canadian deferred tax assets. The Company accounts for income taxes regarding uncertain tax positions, and recognizes interest and penalties related to uncertain tax positions in Income tax expense in the condensed consolidated statements of operations and comprehensive income (loss). |
Deferred Revenue | Deferred Revenue - Deferred revenue represents payments received from clients in advance of providing services and amounts deferred if conditions for revenue recognition have not been met. Accrued expenses and other on the condensed consolidated balance sheets includes $1.1 million of deferred revenue as of each of September 30, 2020 and December 31, 2019. |
Unbilled Receivable | Unbilled Receivable - (classified along-with Accounts receivable): Work performed, and expenses incurred in advance of invoicing are recorded as unbilled receivables. Accounts receivable on the Condensed Consolidated Balance Sheets includes $0.4 million and $0.5 million of unbilled receivables as of September 30, 2020 and December 31, 2019, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" as part of its initiative to reduce complexity in the accounting standards. The standard eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also clarifies and simplifies other aspects of the accounting for income taxes. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. We do not expect that the adoption of the new guidance will have a material impact on our financial statements. In August 2018, the FASB issued Accounting Standards Update (ASU) No. 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans” (ASU 2018-14), which makes changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. The guidance eliminates requirements for certain disclosures that are no longer considered cost beneficial and adds new disclosure requirements that the FASB considers pertinent. ASU 2018-14 is effective for fiscal years ending after December 15, 2020 for public entities; early adoption is permitted. The Company does not expect ASU 2018-14 to have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements” (ASU 2016-13). ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation amount that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” which clarifies codification and corrects unintended application of the guidance, and in November 2019, the FASB issued ASU No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” which clarifies or addresses specific issues about certain aspects of ASU 2016-13. In March 2020, the FASB issued ASU No. 2020-03, “Codification Improvements to Financial Instruments,” which modifies the measurement of expected credit losses of certain financial instruments. ASU 2016-13 is effective for certain Smaller Reporting Companies for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, which will be fiscal 2023 for us if we continue to be classified as a Smaller Reporting Company, with early adoption permitted. We do not expect that the adoption of the new guidance will have a material impact on our financial statements. |
Correction of Immaterial Errors | Correction of Immaterial Errors – During the preparation of the September 30, 2020 condensed consolidated financial statements, certain historical errors were identified relating to the accounting for capital leases under ASC Topics 840 and 842. The lease obligations under certain leases were not recorded at their present values at the inception of the leases; in addition, the asset buyout prices were not reassessed in December 2019 by the Company, both of which resulted in an understatement of expenses from 2017 to December 31, 2019 and an overstatement of expenses for the six months ended June 30, 2020. The errors were not material, either quantitatively or qualitatively, in any of the reported periods. However, the corrections, if recorded in the three-month period ended September 30, 2020, would be material to such period. Accordingly, the prior period financial statements are being corrected by revising the prior period condensed consolidated financial statements for comparability. For the September 30, 2019 condensed consolidated financial statements and December 31, 2019 condensed consolidated balance sheet included in this Form 10-Q, the corrections are as follows: · Increase in expenses of $8,000 for the three months ended September 30, 2019 and $49,000 for the nine months ended September 30, 2019. There was no impact on the loss per share for the three and nine month periods ended September 30, 2019. · An increase in December 31, 2019 liabilities of $528,000. · A decrease in December 31, 2019 retained earnings of $777,000. · A decrease in December 31, 2019 total assets of $249,000. · The impact on cash flows for the nine months ended September 30, 2019 was: · A decrease in cash flows provided by operating activities of $38,000 · A decrease in cash flows used in investing activities of $79,000 · An increase in cash flows used in financing activities of $41,000 The Company evaluated each year’s/period’s errors under Staff Accounting Bulletins 99 and 108 and concluded that a restatement of year’s/prior periods’ consolidated financial statements is not required. Accordingly, the condensed consolidated financial statements and consolidated financial statements prior periods (March 31, 2020 and June 30, 2020) and year (December 31, 2019) consolidated financial statements will be revised in future Forms 10-Q and Form 10-K to be filed with the Securities and Exchange Commission. The September 2019 condensed consolidated financial statements and December 31, 2019 condensed consolidated balance sheet have been revised in this Form 10-Q. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets | |
Schedule of Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the nine months ended September 30, 2020 and 2019 were as follows (in thousands): Balance as of January 1, 2019 $ 2,050 Foreign currency translation adjustment 12 Balance as of September 30, 2019 $ 2,062 Balance as of January 1, 2020 $ 2,108 Foreign currency translation adjustment (39) Balance as of September 30, 2020 $ 2,069 |
Schedule of company's acquisition-related intangible assets | Information regarding the Company’s acquisition-related intangible assets was as follows (in thousands): Trademarks Media Developed Customer and Contact technology relationships tradenames Patents Database Total Gross carrying amounts: Balance as of January 1, 2020 $ 3,108 $ 2,177 $ 871 $ 43 $ 3,606 $ 9,805 Foreign currency translation (74) (65) (11) (1) (40) (191) Balance as of September 30, 2020 $ 3,034 $ 2,112 $ 860 $ 42 $ 3,566 $ 9,614 Trademarks Media Developed Customer and Contact technology relationships tradenames Patents Database Total Gross carrying amounts: Balance as of January 1, 2019 $ 2,999 $ 2,081 $ 855 $ 42 $ 3,546 $ 9,523 Foreign currency translation 51 63 4 1 (36) 83 Balance as of September 30, 2019 $ 3,050 $ 2,144 $ 859 $ 43 $ 3,510 $ 9,606 Trademarks Media Developed Customer and Contact technology relationships tradenames Patents Database Total Accumulated amortization: Balance as of January 1, 2020 $ 1,493 $ 983 $ 567 $ 24 $ 1,261 $ 4,328 Amortization expense 230 134 41 3 271 679 Foreign currency translation (39) (32) (5) — (19) (95) Balance as of September 30, 2020 $ 1,684 $ 1,085 $ 603 $ 27 $ 1,513 $ 4,912 Trademarks Media Developed Customer and Contact technology relationships tradenames Patents Database Total Accumulated amortization: Balance as of January 1, 2019 $ 1,137 $ 766 $ 440 $ 19 $ 886 $ 3,248 Amortization expense 230 133 90 3 269 725 Foreign currency translation 24 24 2 1 (15) 36 Balance as of September 30, 2019 $ 1,391 $ 923 $ 532 $ 23 $ 1,140 $ 4,009 |
Schedule of estimated amortization expense for intangible assets | As of the date hereof, estimated amortization expense for intangible assets after September 30, 2020 is as follows (in thousands): Year Amortization 2020 $ 224 2021 895 2022 895 2023 895 2024 797 Thereafter 996 $ 4,702 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliations of the U.S. statutory rate with the Company’s effective tax rate for each of the nine months ended September 30, 2020 and 2019 are summarized in the table below: For the Nine Months Ended September 30, 2020 2019 Federal income tax benefit at statutory rate (21.0) % (21.0) % Effect of: — Change in valuation allowance (660.0) (15.1) Foreign rate differential (295.9) (1.8) Return to provision true up (14.8) (0.3) Withholding tax — 4.5 State income tax net of federal benefit (120.1) 1.8 Foreign operations permanent difference - foreign exchange gains and losses 90.3 (39.3) Increase in unrecognized tax benefits (ASC 740) 410.5 30.8 Tax effects of foreign operations 1,610.6 84.8 Effect of share based compensation 263.7 — Others 29.0 (4.2) Effective tax rate 1,292.3 % 40.2 % |
Schedule Of unrecognized Tax Benefits | The following table presents a roll-forward of the Company’s unrecognized tax benefits and associated interest for the nine months ended September 30, 2020 (in thousands): Unrecognized tax benefits Balance - January 1, 2020 $ 2,957 Increase for current year tax position 225 Decrease for prior year tax position (161) Interest accrual 125 Foreign currency remeasurement (100) Balance - September 30, 2020 $ 3,046 |
Stock Options (Tables)
Stock Options (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stock Options | |
Schedule of Stock Option Activity | A summary of stock option activity under the Innodata Inc. 2013 Stock Plan , as amended and restated effective June 7, 2016 (Plan), as of September 30, 2020, and changes during the nine months then ended, are presented below: Weighted- Weighted - Average Average Remaining Aggregate Number of Exercise Contractual Term Intrinsic Options Price (years) Value Outstanding at January 1, 2020 6,833,303 $ 1.86 Granted 1,080,000 1.37 Exercised (278,333) 1.13 Forfeited/Expired (644,303) 3.06 Outstanding at September 30, 2020 6,990,667 $ 1.70 $ 9,704,426 Exercisable at September 30, 2020 4,651,624 $ 1.93 $ 5,420,040 Vested and Expected to Vest at September 30, 2020 6,990,667 $ 1.70 $ 9,704,426 |
Schedule of weighted average assumptions | The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average fair value of the options granted, and weighted-average assumptions were as follows: For the Nine Months Ended September 30, 2020 2019 Weighted average fair value of options granted $ 0.61 $ 0.56 Risk-free interest rate 0.29%-0.56 % 1.7% - 2.6 % Expected term (years) 5-6 5-6 Expected volatility factor 47% - 50 % 45% - 46 % Expected dividends None None |
Summary of restricted shares under the Company's Plan | A summary of restricted shares under the Plan as of September 30, 2020 are presented below: Weighted-Average Grant Date Fair Number of Shares Value Granted 75,000 $ 1.38 Vested (25,000) Forfeited/Expired — Unvested at September 30, 2020 50,000 |
Schedule of Stock-Based Compensation Expense | The stock-based compensation expense related to the Company’s various stock awards was allocated as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Direct operating costs $ 40 $ 34 $ 119 $ 72 Selling and administrative expenses 192 317 581 552 Total stock-based compensation $ 232 $ 351 $ 700 $ 624 |
Operating Leases (Tables)
Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Operating Leases | |
Schedule of Operating Lease Expense Recognized in Financial Statements | The table below summarizes the amounts recognized in the condensed consolidated financial statements related to operating leases for the periods presented (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Rent expense for long-term operating leases $ 402 $ 453 $ 1,266 $ 1,360 Rent expense for short-term leases 122 143 511 473 Total rent expense $ 524 $ 596 $ 1,777 $ 1,833 |
Schedule of Net Present Value of Operating Lease Liability | The following table presents the maturity profile of the Company’s operating lease liabilities based on the contractual undiscounted payments with a reconciliation of these amounts to the remaining net present value of the operating lease liability reported in the condensed consolidated balance sheets as of September 30, 2020 (in thousands): Year Amount 2020 $ 396 2021 1,603 2022 1,569 2023 1,289 2024 1,060 2025 and thereafter 4,612 Total lease payments 10,529 Less: Interest (2,871) Net present value of lease liabilities $ 7,658 Current portion $ 967 Long-term portion 6,691 Total $ 7,658 |
Schedule of Weighted Average Remaining Lease Terms and Discount Rates | The weighted-average remaining lease terms and discount rates for all of our operating leases as of September 30, 2020 were as follows: Weighted-average lease term remaining 75 months Weighted-average discount rate % |
Long-term Obligations (Tables)
Long-term Obligations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Long-term Obligations | |
Schedule of Total Long-Term Obligations | Total long-term obligations of the Company as of September 30, 2020 and December 31, 2019 consisted of the following (in thousands): September 30, December 31, 2020 2019 Pension obligations - accrued pension liability $ 5,224 $ 4,611 Settlement agreement (1) 572 708 Capital lease obligations 269 655 Microsoft licenses (2) 734 — Bank loans payable (3) 580 — 7,379 5,974 Less: Current portion of long-term obligations 1,958 1,440 Totals $ 5,421 $ 4,534 (1) Represents payment to be made pursuant to a settlement agreement entered into in December 2018 between a subsidiary of the Company and 19 former employees of such subsidiary. The balance is payable in monthly installments through March 2023. (2) In April 2020, the Company renewed a vendor agreement to acquire certain additional software licenses and to receive support and subsequent software upgrades on these and other currently owned software licenses through February 2023. Pursuant to this agreement, the Company is obligated to pay approximately $0.4 million annually over the term of the agreement. (3) On May 4, 2020, we received loan proceeds of $579,700 under the Paycheck Protection Program which was established as part of the Coronavirus Aid, Relief and Economic Security Act. The loans and accrued interest are forgivable, as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The unforgiven portion of the loan, if any, is payable over two years at an interest rate of 1% per year, with a deferral of payments until the date that the Small Business Administration remits the borrower's loan forgiveness amount to the lender. |
Comprehensive Loss (Tables)
Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Comprehensive Loss | |
Schedule of Accumulated Other Comprehensive Loss | The components of Accumulated other comprehensive loss as of September 30, 2020, and reclassifications out of Accumulated other comprehensive loss, for the nine months ended September 30, 2020 and 2019, were as follows (net of tax) (in thousands): Foreign Accumulated Pension Fair Value Currency Other Liability of Translation Comprehensive Adjustment Derivatives Adjustment Income (Loss) Balance at July 1, 2020 $ (28) $ (51) $ (1,397) $ (1,476) Other comprehensive income before reclassifications, net of taxes — 12 216 228 Total other comprehensive loss before reclassifications, net of taxes (28) (39) (1,181) (1,248) Net amount reclassified to earnings (1) 39 — 38 Balance at September 30, 2020 $ (29) $ — $ (1,181) $ (1,210) Foreign Accumulated Pension Fair Value Currency Other Liability of Translation Comprehensive Adjustment Derivatives Adjustment Loss Balance at July 1, 2019 $ 1,374 $ — $ (1,179) $ 195 Other comprehensive loss before reclassifications, net of taxes — — (252) (252) Total other comprehensive income (loss) before reclassifications, net of taxes 1,374 — (1,431) (57) Net amount reclassified to earnings (41) — — (41) Balance at September 30, 2019 $ 1,333 $ — $ (1,431) $ (98) Foreign Accumulated Pension Fair Value Currency Other Liability of Translation Comprehensive Adjustment Derivatives Adjustment Loss Balance at January 1, 2020 $ (53) $ 33 $ (900) $ (920) Other comprehensive loss before reclassifications, net of taxes — (154) (281) (435) Total other comprehensive income (loss) before reclassifications, net of taxes (53) (121) (1,181) (1,355) Net amount reclassified to earnings 24 121 — 145 Balance at September 30, 2020 $ (29) $ — $ (1,181) $ (1,210) Foreign Accumulated Pension Fair Value Currency Other Liability of Translation Comprehensive Adjustment Derivatives Adjustment Income (Loss) Balance at January 1, 2019 $ 1,451 $ — $ (1,466) $ (15) Other comprehensive income before reclassifications, net of taxes — — 35 35 Total other comprehensive income (loss) before reclassifications, net of taxes 1,451 — (1,431) 20 Net amount reclassified to earnings (118) — — (118) Balance at September 30, 2019 $ 1,333 $ — $ (1,431) $ (98) |
Segment Reporting and Concent_2
Segment Reporting and Concentrations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting and Concentrations | |
Schedule of Segment Reporting Information, by Segment | Revenues from external clients and segment operating profit (loss), and other reportable segment information for the periods presented were as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Revenues: DDS $ 10,526 $ 10,124 $ 30,793 $ 30,353 Synodex 1,197 977 3,680 2,916 Agility 2,830 2,745 8,473 7,910 Total Consolidated $ 14,553 $ 13,846 $ 42,946 $ 41,179 Income (loss) before provision for income taxes (1) : DDS $ 4 $ 371 $ 226 $ 579 Synodex 79 (70) 356 (81) Agility 60 (446) (621) (1,724) Total Consolidated $ 143 $ (145) $ (39) $ (1,226) Income (loss) before provision for income taxes (2) : DDS $ (64) $ 304 $ 27 $ 391 Synodex 124 (26) 487 42 Agility 83 (423) (553) (1,659) Total Consolidated $ 143 $ (145) $ (39) $ (1,226) September 30, 2020 December 31, 2019 Total assets: DDS $ 27,433 $ 23,115 Synodex 564 675 Agility 26,001 25,707 Total Consolidated $ 53,998 $ 49,497 September 30, 2020 December 31, 2019 Goodwill: Agility $ 2,069 $ 2,108 Total Consolidated $ 2,069 $ 2,108 (1) Before elimination of any inter-segment profits (2) After elimination of any inter-segment profits |
Schedule of Revenue from External Customers and Long-Lived Assets | The following table summarizes revenues by geographic region (determined and based upon customers’ domicile) for the periods presented (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 United States $ 6,613 $ 5,967 $ 19,561 $ 18,507 United Kingdom 2,832 2,394 8,284 7,120 The Netherlands 1,704 1,730 5,003 5,146 Canada 1,434 1,634 4,304 4,594 Others - principally Europe 1,970 2,121 5,794 5,812 Totals $ 14,553 $ 13,846 $ 42,946 $ 41,179 |
Schedule of Revenue from External Customers based on Client domicile | Long-lived assets of the Company as of September 30, 2020 and December 31, 2019, respectively, by geographic region, were comprised of the following (in thousands): September 30, December 31, 2020 2019 United States $ 4,162 $ 4,521 Foreign countries: Canada 8,532 8,708 United Kingdom 1,699 1,907 Philippines 4,688 5,135 India 1,025 508 Sri Lanka 529 678 Israel 1 19 Germany 1 1 Total foreign 16,475 16,956 Totals $ 20,637 $ 21,477 |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income (Loss) Per Share | |
Schedule of Earnings Per Share, Basic and Diluted | (In thousands) For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net income (loss) attributable to Innodata Inc. and Subsidiaries $ 206 $ (563) $ (568) $ (1,709) Weighted average common shares outstanding 24,470 25,856 24,427 25,870 Dilutive effect of outstanding options 790 — — — Adjusted for dilutive computation 25,260 25,856 24,427 25,870 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivatives | |
Schedule of effects of foreign currency forward contracts designated as cash flow hedges | The effects of foreign currency forward contracts designated as cash flow hedges on the Company’s condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2020 and 2019, respectively, were as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net gain (loss) recognized in OCI (1) $ 12 $ — $ (154) $ — Net (gain) loss reclassified from accumulated OCI into income (2) $ 39 $ — $ 121 $ — Net gain recognized in income (3) $ — $ — $ — $ — (1) Net change in fair value of the effective portion classified into other comprehensive income ("OCI") (2) Effective portion classified within direct operating costs (3) There were no ineffective portions for the periods presented. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | Sep. 30, 2020 | |
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||
Deferred Revenue | $ 1,100,000 | $ 1,100,000 | ||
Error corrections | ||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||
Increase in expenses | $ 8,000 | $ 49,000 | ||
Increase in liabilities | 528,000 | |||
Decrease in retained earnings | (777,000) | |||
Decrease in total assets | (249,000) | |||
Decrease in cash flows provided by operating activities | (38,000) | |||
Decrease in cash flows used in investing activities | (79,000) | |||
Increase in cash flows used in financing activities | $ 41,000 | |||
Accounts receivable | ||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||
Unbilled receivables | $ 500,000 | $ 400,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets | ||
Balance | $ 2,108 | $ 2,050 |
Foreign currency translation adjustment | (39) | 12 |
Balance | $ 2,069 | $ 2,062 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Acquisition-Related Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Gross carrying amounts: | ||
Balance | $ 9,805 | $ 9,523 |
Foreign currency translation | (191) | 83 |
Balance | 9,614 | 9,606 |
Accumulated amortization: | ||
Balance | 4,328 | 3,248 |
Amortization expense | 679 | 725 |
Foreign currency translation | (95) | 36 |
Balance | 4,912 | 4,009 |
Developed technology [Member] | ||
Gross carrying amounts: | ||
Balance | 3,108 | 2,999 |
Foreign currency translation | (74) | 51 |
Balance | 3,034 | 3,050 |
Accumulated amortization: | ||
Balance | 1,493 | 1,137 |
Amortization expense | 230 | 230 |
Foreign currency translation | (39) | 24 |
Balance | 1,684 | 1,391 |
Customer relationships [Member] | ||
Gross carrying amounts: | ||
Balance | 2,177 | 2,081 |
Foreign currency translation | (65) | 63 |
Balance | 2,112 | 2,144 |
Accumulated amortization: | ||
Balance | 983 | 766 |
Amortization expense | 134 | 133 |
Foreign currency translation | (32) | 24 |
Balance | 1,085 | 923 |
Trademarks and trade names [Member] | ||
Gross carrying amounts: | ||
Balance | 871 | 855 |
Foreign currency translation | (11) | 4 |
Balance | 860 | 859 |
Accumulated amortization: | ||
Balance | 567 | 440 |
Amortization expense | 41 | 90 |
Foreign currency translation | (5) | 2 |
Balance | 603 | 532 |
Patents [Member] | ||
Gross carrying amounts: | ||
Balance | 43 | 42 |
Foreign currency translation | (1) | 1 |
Balance | 42 | 43 |
Accumulated amortization: | ||
Balance | 24 | 19 |
Amortization expense | 3 | 3 |
Foreign currency translation | 0 | 1 |
Balance | 27 | 23 |
Media Contact Database [Member] | ||
Gross carrying amounts: | ||
Balance | 3,606 | 3,546 |
Foreign currency translation | (40) | (36) |
Balance | 3,566 | 3,510 |
Accumulated amortization: | ||
Balance | 1,261 | 886 |
Amortization expense | 271 | 269 |
Foreign currency translation | (19) | (15) |
Balance | $ 1,513 | $ 1,140 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Estimated Amortization Expense (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Goodwill and Intangible Assets | |
2020 | $ 224 |
2021 | 895 |
2022 | 895 |
2023 | 895 |
2024 | 797 |
Thereafter | 996 |
Finite-Lived Intangible Assets, Net | $ 4,702 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets | ||||
Amortization expense | $ 679 | $ 725 | ||
Intangible Assets, Amortization Period [Member] | ||||
Goodwill and Intangible Assets | ||||
Amortization expense | $ 200 | $ 200 | $ 700 | $ 700 |
Income Taxes - Tax Rate Reconci
Income Taxes - Tax Rate Reconciliation (Details) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Taxes | ||
Federal income tax expense at statutory rate | (21.00%) | (21.00%) |
Effect of: | ||
Change in valuation allowance | (660.00%) | (15.10%) |
Foreign rate differential | (295.90%) | (1.80%) |
Return to provision true up | (14.80%) | (0.30%) |
Withholding tax | 0.00% | 4.50% |
State income tax net of federal benefit | (120.10%) | 1.80% |
Foreign operations permanent difference - foreign exchange gains and losses | 90.30% | (39.30%) |
Increase in unrecognized tax benefits (ASC 740) | 410.50% | 30.80% |
Tax effects of foreign operations | 1610.60% | 84.80% |
Effect of share based compensation | 263.70% | 0.00% |
Others | 29.00% | (4.20%) |
Effective tax rate | 1292.30% | 40.20% |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Income Taxes | |
Balance - January 1, 2020 | $ 2,957 |
Increase for current year tax position | 225 |
Decrease for prior year tax position | (161) |
Interest accrual | 125 |
Foreign currency remeasurement | (100) |
Balance - September 30, 2020 | $ 3,046 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Oct. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Taxes [Line Items] | |||||||
Income Tax Expense (Benefit) | $ (70,000) | $ 421,000 | $ 504,000 | $ 493,000 | |||
Unrecognized Tax Benefits | $ 3,046,000 | $ 3,046,000 | $ 2,957,000 | ||||
Subsidiary Revenue | $ 66,000,000 | ||||||
Reversal of Service Tax Refund | $ 160,000 | ||||||
Service Tax Credit Receivable | $ 1,000,000 | ||||||
Maximum [Member] | |||||||
Income Taxes [Line Items] | |||||||
Percentage for Subsidiary Service Tax | 15.00% | ||||||
Minimum [Member] | |||||||
Income Taxes [Line Items] | |||||||
Percentage for Subsidiary Service Tax | 12.36% |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Commitments and Contingencies | |
Estimated Litigation Liability | $ 6,400,000 |
Interest Rate Description Litigation | plus legal interest that accrued at 12% per annum from August 13, 2008 to June 30, 2013, and thereafter accrued and continues to accrue at 6% per annum |
Litigation Settlement, Expense | $ 300,000,000 |
Stock Options - Summary of Stoc
Stock Options - Summary of Stock Option Activity (Details) - Employee Stock Option [Member] - USD ($) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Options, Outstanding at January 1, 2020 (in shares) | 6,833,303 |
Number of Options, Granted (in shares) | 1,080,000 |
Number of Options, Exercised (in shares) | (278,333) |
Number of Options, Forfeited/Expired (in shares) | (644,303) |
Number of Options, Outstanding at September 30, 2020 (in shares) | 6,990,667 |
Number of Options Exercisable at September 30, 2020 (in shares) | 4,651,624 |
Number of Options, Vested and Expected to Vest at September 30, 2020 (in shares) | 6,990,667 |
Weighted Average Exercise Price Outstanding at January 1, 2020 (in dollars per shares) | $ 1.86 |
Weighted Average Exercise Price Granted (in dollars per shares) | 1.37 |
Weighted Average Exercise Price Exercised (in dollars per shares) | 1.13 |
Weighted Average Exercise Price Forfeited/Expired (in dollars per shares) | 3.06 |
Weighted Average Exercise Price Outstanding at September 30, 2020 (in dollars per shares) | 1.70 |
Weighted Average Exercise Price Exercisable at September 30, 2020 (in dollars per shares) | 1.93 |
Weighted Average Exercise Price Vested and Expected to Vest at September 30, 2020 (in dollars per shares) | $ 1.70 |
Weighted Average Remaining Contractual Term Outstanding at September 30, 2020 (in years) | 7 years 26 days |
Weighted Average Remaining Contractual Term Exercisable at September 30, 2020 (in years) | 6 years 1 month 24 days |
Weighted Average Remaining Contractual Term Vested and Expected to Vest at September 30, 2020 (in years) | 7 years 26 days |
Aggregate Intrinsic Value, Outstanding at September 30, 2020 | $ 9,704,426 |
Aggregate Intrinsic Value, Exercisable at September 30, 2020 | 5,420,040 |
Aggregate Intrinsic Value, Vested and Expected to Vest at September 30, 2020 | $ 9,704,426 |
Stock Options - Weighted Averag
Stock Options - Weighted Average Fair Values and Assumptions (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average fair value of options granted (in dollars per share) | $ 0.61 | $ 0.56 |
Expected dividends | 0.00% | 0.00% |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 0.29% | 1.70% |
Expected term (years) | 5 years | 5 years |
Expected volatility factor | 47.00% | 45.00% |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 0.56% | 2.60% |
Expected term (years) | 6 years | 6 years |
Expected volatility factor | 50.00% | 46.00% |
Stock Options - Summary of Rest
Stock Options - Summary of Restricted Shares (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Stock Options | |
Number of Shares, Granted | 75,000 |
Number of Shares, Vested | (25,000) |
Number of Shares, Forfeited/Expired | 0 |
Number of Shares, Unvested at September 30, 2020 | 50,000 |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | $ 1.38 |
Stock Options - Stock-Based Com
Stock Options - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock Options | ||||
Direct operating costs | $ 40 | $ 34 | $ 119 | $ 72 |
Selling and administrative expenses | 192 | 317 | 581 | 552 |
Total stock-based compensation | $ 232 | $ 351 | $ 700 | $ 624 |
Stock Options - Additional Info
Stock Options - Additional Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Stock Options | |
Employee Service Share-Based Compensation, Nonvested Awards, Total Compensation Cost Not Yet Recognized | $ 1.3 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 24 months |
Operating Leases - Operating Le
Operating Leases - Operating Leases Amount Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Operating Leases, Rent Expense | $ 524 | $ 596 | $ 1,777 | $ 1,833 |
Long Term Operating Lease [Member] | ||||
Operating Leases, Rent Expense | 402 | 453 | 1,266 | 1,360 |
Short Term Operating Lease [Member] | ||||
Operating Leases, Rent Expense | $ 122 | $ 143 | $ 511 | $ 473 |
Operating Leases - Net Present
Operating Leases - Net Present Value of Operating Lease Liability (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Operating Leases | ||
2020 | $ 396 | |
2021 | 1,603 | |
2022 | 1,060 | |
2023 | 1,569 | |
2024 | 1,289 | |
2025 and thereafter | 4,612 | |
Total lease payments | 10,529 | |
Less: Interest | (2,871) | |
Net present value of lease liabilities | 7,658 | |
Current portion | 967 | $ 1,107 |
Long- term portion | 6,691 | $ 6,731 |
Total | $ 7,658 |
Operating Leases - Weighted Ave
Operating Leases - Weighted Average Remaining Lease Terms (Details) | Sep. 30, 2020 |
Operating Leases | |
Weighted-average lease term remaining | 75 months |
Weighted-average discount rate | 8.92% |
Operating Leases - Additional I
Operating Leases - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Minimum [Member] | |
Lessee, Operating Lease, Term of Contract | 2 years |
Percentage of Rental Escalations | 1.75% |
Maximum [Member] | |
Lessee, Operating Lease, Term of Contract | 10 years |
Percentage of Rental Escalations | 10.00% |
Long-term Obligations (Details)
Long-term Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Pension obligations | ||
Pension obligations - accrued pension liability | $ 5,224 | $ 4,611 |
Settlement agreement | 572 | 708 |
Capital lease obligations | 269 | 655 |
Vendor obligations | ||
Microsoft licenses | 734 | |
Bank loans payable | 580 | |
Long-term Debt | 7,379 | 5,974 |
Less: Current portion of long-term obligations | 1,958 | 1,440 |
Totals | $ 5,421 | $ 4,534 |
Long-term Obligations - Additio
Long-term Obligations - Additional Information (Details) - USD ($) | May 04, 2020 | Sep. 30, 2020 |
Vendor Agreement [Member] | ||
Debt Instrument [Line Items] | ||
Cost of Goods and Services Sold | $ 400,000 | |
Paycheck Protection Program Loan [Member] | ||
Debt Instrument [Line Items] | ||
Proceeds from Issuance of Debt | $ 579,700 | |
Unforgiven portion of loan payable term | 2 years | |
Debt Instrument, Interest Rate, Stated Percentage | 1.00% |
Comprehensive Loss - Reclassifi
Comprehensive Loss - Reclassifications out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | $ 24,522 | $ 29,666 | $ 25,532 | $ 30,566 |
Balance | 25,689 | 29,117 | 25,689 | 29,117 |
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (1,476) | 195 | (920) | (15) |
Other comprehensive income (loss) before reclassifications, net of taxes | 228 | (252) | (435) | 35 |
Total other comprehensive income (loss) before reclassifications, net of taxes | (1,248) | (57) | (1,355) | 20 |
Net amount reclassified to earnings | 38 | (41) | 145 | (118) |
Balance | (1,210) | (98) | (1,210) | (98) |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (28) | 1,374 | (53) | 1,451 |
Total other comprehensive income (loss) before reclassifications, net of taxes | (28) | 1,374 | (53) | 1,451 |
Net amount reclassified to earnings | (1) | (41) | 24 | (118) |
Balance | (29) | 1,333 | (29) | 1,333 |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (51) | 33 | ||
Other comprehensive income (loss) before reclassifications, net of taxes | 12 | (154) | ||
Total other comprehensive income (loss) before reclassifications, net of taxes | (39) | (121) | ||
Net amount reclassified to earnings | 39 | 121 | ||
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance | (1,397) | (1,179) | (900) | (1,466) |
Other comprehensive income (loss) before reclassifications, net of taxes | 216 | (252) | (281) | 35 |
Total other comprehensive income (loss) before reclassifications, net of taxes | (1,181) | (1,431) | (1,181) | (1,431) |
Balance | $ (1,181) | $ (1,431) | $ (1,181) | $ (1,431) |
Segment Reporting and Concent_3
Segment Reporting and Concentrations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Segment reporting information | ||||||
Revenues | $ 14,553 | $ 13,846 | $ 42,946 | $ 41,179 | ||
Income (loss) before provision for income taxes | 143 | (145) | (39) | (1,226) | ||
Total assets | 53,998 | 53,998 | $ 49,497 | |||
Goodwill | 2,069 | 2,062 | 2,069 | 2,062 | 2,108 | $ 2,050 |
Before Intersegment Eliminations [Member] | ||||||
Segment reporting information | ||||||
Income (loss) before provision for income taxes | 143 | (145) | (39) | (1,226) | ||
After Intersegment Eliminations [Member] | ||||||
Segment reporting information | ||||||
Income (loss) before provision for income taxes | 143 | (145) | (39) | (1,226) | ||
DDS [Member] | ||||||
Segment reporting information | ||||||
Revenues | 10,526 | 10,124 | 30,793 | 30,353 | ||
Total assets | 27,433 | 27,433 | 23,115 | |||
DDS [Member] | Before Intersegment Eliminations [Member] | ||||||
Segment reporting information | ||||||
Income (loss) before provision for income taxes | 4 | 371 | 226 | 579 | ||
DDS [Member] | After Intersegment Eliminations [Member] | ||||||
Segment reporting information | ||||||
Income (loss) before provision for income taxes | (64) | 304 | 27 | 391 | ||
Synodex [Member] | ||||||
Segment reporting information | ||||||
Revenues | 1,197 | 977 | 3,680 | 2,916 | ||
Total assets | 564 | 564 | 675 | |||
Synodex [Member] | Before Intersegment Eliminations [Member] | ||||||
Segment reporting information | ||||||
Income (loss) before provision for income taxes | 79 | (70) | 356 | (81) | ||
Synodex [Member] | After Intersegment Eliminations [Member] | ||||||
Segment reporting information | ||||||
Income (loss) before provision for income taxes | 124 | (26) | 487 | 42 | ||
Agility [Member] | ||||||
Segment reporting information | ||||||
Revenues | 2,830 | 2,745 | 8,473 | 7,910 | ||
Total assets | 26,001 | 26,001 | 25,707 | |||
Goodwill | 2,069 | 2,069 | $ 2,108 | |||
Agility [Member] | Before Intersegment Eliminations [Member] | ||||||
Segment reporting information | ||||||
Income (loss) before provision for income taxes | 60 | (446) | (621) | (1,724) | ||
Agility [Member] | After Intersegment Eliminations [Member] | ||||||
Segment reporting information | ||||||
Income (loss) before provision for income taxes | $ 83 | $ (423) | $ (553) | $ (1,659) |
Segment Reporting and Concent_4
Segment Reporting and Concentrations - Revenues by geographic region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 14,553 | $ 13,846 | $ 42,946 | $ 41,179 |
Other - principally Europe | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,970 | 2,121 | 5,794 | 5,812 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 6,613 | 5,967 | 19,561 | 18,507 |
United Kingdom | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,832 | 2,394 | 8,284 | 7,120 |
The Netherlands | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,704 | 1,730 | 5,003 | 5,146 |
Canada | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 1,434 | $ 1,634 | $ 4,304 | $ 4,594 |
Segment Reporting and Concent_5
Segment Reporting and Concentrations - Long-lived assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | $ 20,637 | $ 21,477 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 4,162 | 4,521 |
Canada | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 8,532 | 8,708 |
United Kingdom | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 1,699 | 1,907 |
Philippines | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 4,688 | 5,135 |
India | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 1,025 | 508 |
Sri Lanka | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 529 | 678 |
Israel | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 1 | 19 |
Germany | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 1 | 1 |
Total Foreign | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | $ 16,475 | $ 16,956 |
Segment Reporting and Concent_6
Segment Reporting and Concentrations - Additional information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($)client | Sep. 30, 2019client | Sep. 30, 2020USD ($)segmentclient | Sep. 30, 2019client | Dec. 31, 2019USD ($)client | |
Segment Reporting Information [Line Items] | |||||
Number of Reportable Segments | segment | 3 | ||||
Right-of-use-asset | $ | $ 6,923 | $ 6,923 | $ 7,005 | ||
Sales Revenue, Net [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Concentration Risk, Percentage | 10.00% | ||||
Foreign Customer [Member] | Sales Revenue, Net [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Concentration Risk, Percentage | 55.00% | 57.00% | 54.00% | 54.00% | |
Foreign Customer [Member] | Accounts receivable | |||||
Segment Reporting Information [Line Items] | |||||
Concentration Risk, Percentage | 57.00% | 60.00% | |||
One Client [Member] | Sales Revenue, Net [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Number of clients | 1 | 1 | |||
Concentration Risk, Percentage | 14.00% | 16.00% | |||
Two clients [Member] | Sales Revenue, Net [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Number of clients | 2 | 2 | |||
Concentration Risk, Percentage | 23.00% | 25.00% | |||
Two clients [Member] | Accounts receivable | |||||
Segment Reporting Information [Line Items] | |||||
Number of clients | 2 | ||||
Concentration Risk, Percentage | 24.00% | ||||
Three Clients [Member] | Accounts receivable | |||||
Segment Reporting Information [Line Items] | |||||
Number of clients | 3 | ||||
Concentration Risk, Percentage | 44.00% | ||||
Client [Member] | Sales Revenue, Net [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Number of clients | 0 | 0 | 0 | 0 | |
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | 10.00% |
Income (Loss) Per Share (Detail
Income (Loss) Per Share (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income (Loss) Per Share | ||||
Net income (loss) attributable to Innodata Inc. and Subsidiaries | $ 206 | $ (563) | $ (568) | $ (1,709) |
Weighted Average Number of Shares Outstanding, Basic | 24,470 | 25,856 | 24,427 | 25,870 |
Dilutive effect of outstanding options | 790 | 0 | 0 | 0 |
Adjusted for dilutive computation | 25,260 | 25,856 | 24,427 | 25,870 |
Income (Loss) Per Share - Addit
Income (Loss) Per Share - Additional information (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share, Amount | 2.3 | 6.9 | 7 | 6.9 |
Derivatives - Contracts designa
Derivatives - Contracts designated as cash flow hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Derivatives | ||
Net gain (loss) recognized in OCI(1) | $ 12 | $ (154) |
Net (gain) loss reclassified from accumulated OCI into income(2) | $ 39 | $ 121 |