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

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

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

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ☒ ~~YES~~ Yes☐ NONo

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

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

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

As of May ~~10, 2018,~~5, 2023, the registrant had ~~10,266,613~~13,917,225 shares of common stock outstanding.

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

CONDENSED CONSOLIDATED ~~AND COMBINED STATEMENT~~STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


	Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017			2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,084	)	$	(2,893	)
Adjustments to reconcile net loss to net cash used in operating activities:
Net income							$	716		$	107
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		451			216			1,916			1,534
Share-based compensation expense		165			458			1,384			1,387
Write-off of long-lived assets		55			-			3			3
Provision for (recovery of) bad debts		(56	)		6
Allocation of expenses from Fluent, Inc.		325			840
Provision for bad debts								668			37
Noncash lease expenses								145			132
Deferred income tax (benefit) expense								(30	)		175
Changes in assets and liabilities:
Accounts receivable		(326	)		(202	)		(1,022	)		(862	)
Prepaid expenses and other current assets		(237	)		(12	)		(539	)		(482	)
Other non-current assets		(2	)		85
Trade accounts payable		144			(29	)
Other noncurrent assets								(293	)		-
Accounts payable								116			628
Accrued expenses and other current liabilities		(1,248	)		(14	)		(1,460	)		47
Deferred revenue		(12	)		(17	)		93			(128	)
Net cash used in operating activities		(2,825	)		(1,562	)
Operating lease liabilities								(166	)		(148	)
Net cash provided by operating activities								1,531			2,430
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(16	)		(225	)		(44	)		(113	)
Capitalized costs included in intangible assets		(1,370	)		(1,702	)		(2,273	)		(1,794	)
Net cash used in investing activities		(1,386	)		(1,927	)		(2,317	)		(1,907	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributed by Fluent, Inc.		23,939			3,263
Net cash provided by financing activities		23,939			3,263
Net increase (decrease) in cash and cash equivalents	$	19,728		$	(226	)
Taxes paid related to net share settlement of vesting of restricted stock units								(31	)		(6	)
Repurchases of common stock								(175	)		-
Net cash used in financing activities								(206	)		(6	)
Net (decrease) increase in cash and cash equivalents							$	(992	)	$	517
Cash and cash equivalents at beginning of period		65			226			31,810			34,258
Cash and cash equivalents at end of period	$	19,793		$	-		$	30,818		$	34,775
SUPPLEMENTAL DISCLOSURE INFORMATION
Cash paid for interest	$	-		$	-		$	-		$	-
Cash paid for income taxes	$	-		$	-		$	1		$	-
Share-based compensation capitalized in intangible assets	$	181		$	191		$	459		$	301
Retirement of treasury stock							$	31		$	6

1. Summary of significant accounting policies

(a) Basis of preparation

~~1. Organization~~

~~On March 26, 2018, Fluent, Inc. (“Fluent”), formerly known as Cogint,~~The accompanying unaudited condensed consolidated financial statements of Red Violet, Inc., a Delaware corporation, ~~completed the previously announced spin-off (the “Spin-off”) of~~and its ~~risk management business from its digital marketing business by way of a distribution of all the shares of common stock of Fluent’s wholly-owned subsidiary, Red Violet, Inc. (“red~~consolidated subsidiaries (collectively, “red violet” or the “Company”), a Delaware corporation, to Fluent’s stockholders of record as of March 19, 2018 (the “Record Date”) and certain warrant holders. The distribution occurred by way of a pro rata stock distribution to such common stock and warrant holders, each of whom received one share of red violet’s common stock for every 7.5 shares of Fluent’s common stock held on the Record Date or to which they were entitled to under their warrant, which resulted in a distribution of a total of 10,266,613 shares of red violet common stock. ~~Upon the Spin-off, red violet owns FluentsubsidiarieswhichpreviouslyoperatedFluent’sriskmanag~~e~~mentbusiness.~~

As a result of the Spin-off, red violet is an independent public company and red violet’s common stock began regular-way trading on The NASDAQ Capital Market under the symbol “RDVT” on March 27, 2018.

~~red violet has only one operating segment, as defined by ASC 280, “Segment Reporting~~.”

~~2. Summary of significant accounting policies~~

~~(a) Basis of preparation and liquidity~~

~~The accompanying unaudited condensed consolidated and combined financial statements~~ have been prepared ~~for red violet~~ in accordance with accounting principles generally accepted in the United States (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to those rules and regulations.

~~red violet accounted for the Spin-off in accordance with ASC 805-50-30-5~~ ~~Initial Measurement- Transactions Between Entities Under Common Control~~ – ~~Transfer Date Measurement~~ ~~and therefore the net assets transferred from Fluent to red violet upon the Spin-off were reflected in our consolidated financial statements at Fluent carrying values at the time of the Spin-off.~~

The accompanying unaudited condensed consolidated ~~and combined~~ financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending December 31, ~~2018.~~2023.

The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated ~~and combined~~ financial statements and accompanying notes ~~of red violet~~included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2022 (“~~2017 Financials”) included in Exhibit 99.1, Information Statement, to the current report on~~ Form ~~8-K filed with the SEC on March 27, 2018.~~10-K”).

The condensed consolidated ~~and combined~~ balance sheet as of December 31, ~~2017~~2022 included herein was derived from the audited financial statements as of that date included in the ~~2017 Financials,~~Form 10-K, but does not include all disclosures ~~including notes~~ required by US GAAP.

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

Principles of consolidation ~~and combination~~

~~Although~~The condensed consolidated financial statements include the ~~Spin-off was completed on March 26, 2018,~~financial statements of the Company has reflected the Spin-off in these financial statements as if it occurred on March 31, 2018 as the Company determined that the impact is not material to the consolidated and combined financial statements.

~~The financial statements present the consolidated and combined results of operations, financial condition, and cash flows of red violet~~ and its subsidiaries. ~~These financial statements were prepared on a consolidated~~All significant transactions among the Company and ~~combined basis because certain of the entities were under common control for periods prior to the Spin-off. All intercompany accounts and transactions~~its subsidiaries have been eliminated ~~between the consolidated and combined entities.~~upon consolidation.

The historical condensed consolidated and combined financial results presented prior to the Spin-off may not be indicative of the results that would have been achieved by the Company had it operated as a separate, standalone entity prior to the Spin-off. The

condensed consolidated and combined financial statements presented prior to the Spin-off do not reflect any changes that may occur in the Company’s operations in connection with or as a result of the Spin-off.

(b) Recently issued accounting standards

As an emerging growth company, ~~we have~~the Company has left open the opportunity to take advantage of the extended transitionperiod provided to emerging growth companies in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), however, it is the Company’s present intention to adopt any applicable new accounting standards timely.

~~In May 2014, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606)~~.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, FASB issued ASU No. 2015-14, “~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date~~,” which delays the effective date of ASU 2014-09 by one year. FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, FASB issued ASU No. 2016-08, “~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in evaluating whether it controls the good or the service before it is transferred to the customer. The new revenue recognition standard is effective for public entities for annual reporting periods beginning after December 15, 2017, and interim periods therein, that is, the first quarter of 2018. The new standard also permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We adopted Topic 606 as of January 1, 2018 using the modified retrospective method, and the adoption did not have any material impact on our consolidated and combined balance sheets, statements of operations, or cash flows. Refer to Note 1(c) below for further details.

~~In February 2016, FASB issued ASU No. 2016-02 (“ASU 2016-02”), “Leases (Topic 842)~~,” which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. This guidance will be effective for public entities and private entities in the first quarter of 2019 and the first quarter of 2020, respectively, on a modified retrospective basis and early adoption is permitted. It will be effective for us in the first quarter of 2020. We are still evaluating the effect that this guidance will have on our consolidated and combined financial statements and related disclosures.

~~In August 2016, FASB issued ASU No. 2016-15 (“ASU 2016-15”), “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~,” which provides guidance for certain cash flow issues, including contingent consideration payments made after a business combination and debt prepayment or debt extinguishment costs etc. The guidance is effective for public entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and early adoption is permitted. We adopted ASU 2016-15 for the first quarter of 2018 and ASU 2016-15 did not have any material impact on our condensed consolidated and combined financial statements.

~~(c) Revenue recognition~~

On January 1, 2018, we adopted Topic 606 using the modiﬁed retrospective method applied to all contracts that are not completed contracts at the date of initial application. There was no impact on the opening accumulated deﬁcit as of January 1, 2018 due to the adoption of Topic 606.

Revenue is recognized when control of goods or services is transferred to our customers, in an amount that reﬂects the consideration we expect to be entitled to in exchange for those goods or services. In other words, our performance obligation is to provide on demand solutions to our customers by leveraging our proprietary technology and applying machine learning and advanced analytic techniques to our massive data repository. The pricing for the customer contracts is based on usage, a monthly fee, or a combination of both.

Available within Topic 606, we have applied the portfolio approach practical expedient in accounting for customer revenue as one collective group, rather than individual contracts. Based on our historical knowledge of the contracts contained in this portfolio and the similar nature and characteristics of the customers, we have concluded the financial statement effects are not materially different than if accounting for revenue on a contract by contract basis.

Revenue is recognized over a period of time since the performance obligation is delivered in a series. Our customers simultaneously receive and consume the benefits provided by the performance as the Company performs. Furthermore, we have elected the “right to invoice” practical expedient, available within ASC 606-10-55-18, as our measure of progress, since we have a right to payment from a customer in an amount that corresponds directly with the value of our performance completed-to-date. The Company's revenue arrangements do not contain significant financing components.

If a customer pays consideration before we transfer services to the customer, those amounts are classiﬁed as deferred revenue. As of March 31, 2018 and December 31, 2017, the balance of deferred revenue was $21 and $33, respectively, all of which are expected to be realized in the next 12 months. $17 of the deferred revenue balance as of December 31, 2017 had been recognized into revenue during the three months ended March 31, 2018.

As of March 31, 2018, approximately $363 of revenue is expected to be recognized in the future related to outstanding performance obligations. The balance relates primarily to revenues for subscription contracts that has a term of more than 12 months. Approximately $180 will be recognized during the remaining nine months of 2018, $174 in 2019 and the remainder in 2020. The actual timing of recognition may vary due to factors outside of the Company’s control. The Company has elected to exclude variable consideration related entirely to wholly unsatisfied performance ~~obligations and contracts where revenue is recognized based upon the right to invoice the customer.~~

~~Sales commissions are recorded at the time revenue is recognized. These costs are recorded in sales and marketing expenses.~~

In addition, we elected the practical expedient to not disclose the value of unsatisﬁed performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

~~3. Loss~~2. Earnings per share

Basic ~~loss~~earnings per share is computed by dividing net ~~loss~~income by the weighted average number of shares of common ~~shares~~stock outstanding during the periods. Diluted ~~loss~~earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and is calculated using the treasury stock method for ~~stock options and~~ unvested shares. ~~Common equivalent shares are excluded from the calculation in the loss periods as their effects would be anti-dilutive.~~


	Three Months Ended March 31,
(In thousands, except share data)	2023		2022
Numerator:
Net income	$	716	$	107
Denominator:
Weighted average shares outstanding:
Basic		13,997,154		13,543,607
Diluted(1)		14,236,771		14,047,635
Earnings per share:
Basic	$	0.05	$	0.01
Diluted	$	0.05	$	0.01

Prior to the Spin-off, the financial information of red violet represented the consolidated and combined figures of red violet and its subsidiaries. red violet only had 1,000 shares of common stock outstanding, all of which Fluent owned. On March 26, 2018, upon the Spin-off of red violet, an aggregate of 10,266,613 shares of red violet common stock were distributed to Fluent stockholders and certain warrant holders. This number of shares remained outstanding at March 31, 2018, and is utilized to calculate loss per share for

(1)

For the three months ended March 31, ~~2018~~2023 and ~~2017, as shown in~~2022, diluted weighted average shares outstanding are calculated by the ~~table below.~~

Three Months Ended March 31,

(In thousands, except share data)

2018

2017

Numerator:

Net loss

$
(2,084
)

$
(2,893
)
Denominator:

Weighted average shares outstanding - Basic and diluted

10,266,613

10,266,613

Loss per share:

Basic and diluted:

$
(0.20
)

$
(0.28
)

~~A total of 56,000 shares~~inclusion of unvested restricted stock units ~~(“RSUs”~~("RSUs") ~~have been excluded from the diluted loss per share calculation as the impact is anti-dilutive.~~.

3. Intangible assets, net

Intangible assets other than goodwill consist of the following:


									March 31, 2023							December 31, 2022
(In thousands)	Amortization period	March 31, 2018			December 31, 2017			Amortization period	Gross amount		Accumulated amortization			Net		Gross amount		Accumulated amortization			Net
Gross amount:
Software developed for internal use	10 years	$	18,193		$	16,642		5-10 years	$	55,410	$	(22,889	)	$	32,521	$	52,678	$	(21,031	)	$	31,647
Accumulated amortization:
Software developed for internal use			(1,662	)		(1,289	)
Net intangible assets:
Software developed for internal use		$	16,531		$	15,353

The gross amount associated with software developed for internal use ~~mainly~~ represents capitalized costs of ~~internally developed~~internally-developed software, including eligible salaries and staff benefits, share-based compensation, ~~expense, traveling~~travel expenses incurred by relevant employees, and other relevant costs.

Amortization expenses of ~~$373~~$1,858 and ~~$156 were included in depreciation and amortization expenses~~$1,472 for the three months ended March 31, ~~2018~~2023 and ~~2017, respectively.~~2022, respectively, were included in depreciation and amortization expense. As of March 31, ~~2018,~~2023, intangible assets of ~~$1,920,~~$5,359, included in the gross amounts of software developed for internal use, have not started amortization, as they ~~have~~are not ~~yet been~~ ready for their intended use.

~~red violet~~The Company capitalized ~~$1,551~~costs of software developed for internal use of $2,732 and ~~$1,893 related to internally developed software~~$2,095 during the three months ended March 31, ~~2018~~2023 and ~~2017,~~2022, respectively.

As of March 31, ~~2018,~~2023, estimated amortization ~~expenses~~expense related to the Company’s intangible assets for the remainder of ~~2018~~2023 through ~~2023~~2028 and thereafter are as follows:


(In thousands)
Year	March 31, 2023
Remainder of 2023		6,033
2024		8,029
2025		6,863
2026		5,381
2027		3,755
2028 and thereafter		2,460
Total	$	32,521

(In thousands)

Year

March 31, 2018

Remainder of 2018

$
1,270

2019

1,822

2020

1,821

2021

1,819

2022

1,818

2023 and thereafter

7,981

Total

$
16,531

Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As of March 31, ~~2018~~2023 and December 31, ~~2017,~~2022, the balance of goodwill of ~~$5,227~~$5,227 was as a result of the acquisition of Interactive Data, LLC, ~~(“Interactive Data”),~~ a wholly-owned subsidiary of red violet, effective on October 2, 2014.

In accordance with ASC 350, “Intangibles - Goodwill and Other,” goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value. The measurement date of ~~our~~the Company’s annual goodwill impairment test is October 1.1.

The Company did not record a goodwill impairment loss during the three months ended March 31, 2023 and 2022, and as of March 31, 2023, there was no accumulated goodwill impairment loss.

5. Revenue recognition

The Company recognized revenue in accordance with ASC 606, “Revenue from Contracts with Customers” (“Topic 606”). Under this standard, revenue is recognized when control of goods or services is transferred to the Company’s customers, in an amount that reﬂects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s performance obligation is to provide on demand information and identity intelligence solutions to its customers by leveraging its proprietary technology and applying machine learning and advanced analytics to its massive data repository. The pricing for the customer contracts is based on usage, a monthly fee, or a combination of both.

Available within Topic 606, the Company has applied the portfolio approach practical expedient in accounting for customer revenue as one collective group, rather than individual contracts. Based on the Company’s historical knowledge of the contracts contained in this portfolio and the similar nature and characteristics of the customers, the Company has concluded the financial statement effects are not materially different than if accounting for revenue on a contract by contract basis.

Revenue is recognized over a period of time. The Company’s customers simultaneously receive and consume the benefits provided by the Company’s performance as and when provided. Furthermore, the Company has elected the “right to invoice” practical expedient, available within Topic 606, as its measure of progress, since it has a right to payment from a customer in an amount that corresponds directly with the value of its performance completed-to-date. In some arrangements, a right to consideration for the Company's performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable. As of March 31, ~~2018~~2023, the current and noncurrent portion unbilled accounts receivable of $733 and $757, respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets. As of December 31, 2022, the current and noncurrent portion unbilled accounts receivable of $923 and $464, respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets. The Company's revenue arrangements do not contain significant financing components.

For the three months ended March 31, 2023 and 2022, 75% and 77% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 23% attributable to transactional customers, respectively. Pricing contracts are generally annual contracts or longer, with auto renewal.

If a customer pays consideration before the Company transfers services to the customer, those amounts are classiﬁed as deferred revenue. As of March 31, 2023 and December 31, ~~2017, there~~2022, the balance of deferred revenue was $763 and $670, respectively, all of which is expected to be realized in the next 12 months. In relation to the deferred revenue balance as of December 31, 2022, $283 was recognized into revenue during the three months ended March 31, 2023.

As of March 31, 2023, $10,614 of revenue is expected to be recognized in the future for performance obligations that are ~~no events~~unsatisfied or ~~changes~~partially unsatisfied, related to pricing contracts that have a term of more than 12 months, of which, $5,904 of revenue will be recognized in ~~circumstances~~the remainder of 2023, $3,858 in 2024, $708 in 2025, $136 in 2026, and $8 in 2027. The actual timing of recognition may vary due to ~~indicate that goodwill is impaired.~~factors outside of the Company’s control. The Company excludes variable consideration related entirely to wholly unsatisfied performance obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer.

Sales commissions are incurred and recorded on an ongoing basis over the term of the customer relationship. These costs are recorded in sales and marketing expenses.

In addition, the Company elected the practical expedient to not disclose the value of unsatisﬁed performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.

6. Income taxes

red violet is a “C” corporation, while its subsidiaries are all limited liability companies. Before the Spin-off, red violet and its subsidiaries, were consolidated with Fluent for U.S. federal income tax purposes. However, for purposes of these financial statements, the income tax provisions were prepared assuming the entities filed separate tax returns.

The Company is subject to federal and state income taxes in the United States. ~~Our~~The Company’s tax provision for interim periods is determined using an estimate of ~~our~~its annual effective tax rate, adjusted for discrete items arising in that ~~quarter.~~quarter, unless a reliable estimate of ordinary income or the related tax expense/benefit cannot be made or the Company is in cumulative losses for which the benefit cannot be realized. In each quarter, ~~we update our~~the Company updates its estimate of the annual effective tax rate, and if ~~our~~its estimated annual tax rate changes, ~~we make~~the Company makes a cumulative adjustment in that quarter.

~~On December 22, 2017,~~ For the ~~tax reform legislation commonly known as~~three months ended March 31, 2023 and 2022, the ~~Tax Cuts and Jobs Act (the “Act”)~~ ~~was enacted, with the statutory federal income tax rate lowered~~Company concluded that, due to ~~21% among other changes, effective on January 1, 2018. As~~ a ~~full~~recent history of operating losses, a valuation allowance ~~was provided as of March 31, 2018,~~should be applied to reduce its deferred tax assets to the ~~Act does~~amount that is more likely than not ~~have any material net impact on our consolidated and combined financial statements, however, certain income tax disclosures are affected.~~to be realized.

The Company’s effective income tax rate ~~differed from the statutory federal income tax rate of 21%~~was (4%) and 62% for the three months ended March 31, ~~2018~~2023 and ~~34%~~ ~~for~~2022, respectively, differing from the ~~three months ended March 31, 2017.~~ ~~For the three months ended March 31, 2018 and 2017, the effective~~U.S. corporate statutory federal income tax rate ~~was 0%~~of 21%, and the difference is primarily the result of the ~~full~~ valuation allowance applied ~~against~~to reduce the Company’s deferred tax ~~assets.~~assets to the amount that is more likely than not to be realized.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax

positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the Company’s financial statements.

~~red violet~~The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. ~~red violet has no federal~~Due to the existence of net operating loss carryforwards since inception, all of the Company’s income tax filings ~~that~~ remain open for tax ~~examinations as 2018 will be the first filing year for the~~examinations.

The Company ~~for U.S. federal income tax purposes; however, one of red violet’s subsidiaries, Interactive Data’s stand-alone state income tax returns since 2014 remain open for tax examinations.~~

~~red violet~~ does ~~not~~not have any material unrecognized tax benefits as of March 31, ~~2018~~2023 and December 31, ~~2017.~~2022.

7. Common stock and ~~preferred~~treasury stock

~~Common stock~~

As of March 31, ~~2018~~2023 and December 31, ~~2017,~~2022, the number of ~~authorized~~issued shares of common stock was ~~200,000,000~~13,961,643 and ~~5,000, with par value~~13,956,404, respectively, which included shares of ~~$0.001 per share, respectively,~~treasury stock of ~~which, 10,266,613~~10,937 and ~~1,000~~0, respectively. The changes in the number of issued shares of common stock and treasury stock were due to the following factors:

•

An aggregate of 6,800 shares of common stock were issued ~~and outstanding, respectively.~~

~~On March 26, 2018, Fluent completed~~as a result of the ~~Spin-off~~vesting of ~~its risk management business from its digital marketing business by way~~RSUs, of ~~a distribution of all the~~which, 1,561 shares of common stock were withheld to pay withholding taxes upon such vesting, which were reflected in treasury stock, with a cost of ~~red violet~~$31. The treasury stock of 1,561 shares was then retired during the three months ended March 31, 2023.

•

On May 2, 2022, the board of directors of the Company authorized the repurchase of up to ~~Fluent’s stockholders~~$5.0 million of ~~record as~~the Company's common stock from time to time (the “Stock Repurchase Program”). The Stock Repurchase Program does not obligate the Company to repurchase any shares and may be modified, suspended or terminated at any time and for any reason at the discretion of the board of directors. During the three months ended March ~~19, 2018,~~31, 2023, the ~~Record Date, and certain warrant holders, which resulted in a distribution of a total of 10,266,613~~Company repurchased 10,937 shares of ~~red violet~~ common ~~stock.~~

~~Preferred~~ stock

~~As of March 31, 2018, we had��10,000,000 shares of preferred~~ under the Stock Repurchase Program, which was reflected in treasury stock, with ~~par value~~a cost of ~~$0.001 per share authorized, and there were no shares of preferred stock issued or outstanding. There was no preferred stock authorized as of December 31, 2017.~~

$201.

Three Months Ended March 31,

(In thousands)

2018

2017

Sales and marketing expenses

$
41

$
85

General and administrative expenses

124

373

Share-based compensation expense

165

458

Capitalized in intangible assets

181

191

Total

$
346

$
649

~~Contribution by Fluent, Inc., recorded~~The Company leases its corporate headquarters of 21,020 rentable square feet in accordance with a non-cancelable 89-month operating lease agreement as amended and effective in January 2017, with an option to extend for an additional 60 months. The Company also leases an additional office space of 6,003 rentable square feet in accordance with a non-cancellable 90-month operating lease agreement entered into in April 2017, with an option to extend for an additional 60 months. The extension option is not included in the condensed consolidated and combined statement of changes in shareholders’ equity, represents cash funding provided or the portion of certain expenses allocated by Fluent to red violet, on or prior to the Spin-off.

~~These allocated expenses are primarily corporate employee salaries and benefits~~determination of the functional groups (inclusive of executive management, accounting, administrative and information technology) and corporate administrative expenses (inclusive of legal services, accounting and finance services and other corporate and infrastructure services). Corporate employee salaries and benefits were allocated on the basis of time spent, and corporate administrative expenses were allocated on the basis of relative percentage of services utilized or benefit received. red violet recorded expenses of $325 and $840lease term as ~~a result of the allocation of expenses from Fluent during~~it is not reasonably certain to be exercised.

For the three months ended March 31, ~~2018~~2023 and ~~2017, respectively. Upon~~2022, a summary of the ~~Spin-off, Fluent no longer allocates any expenses to red violet.~~Company’s lease information is shown below:


	Three Months Ended March 31,
(In thousands)	2023		2022
Lease cost:
Operating lease costs	$	168	$	168
Other information:
Cash paid for operating leases	$	190	$	184

As ~~discussed in Note 8, “Share-based compensation,” share-based compensation~~ of ~~$344 and $649 in relation with the share-based awards granted by Fluent were recorded during the three months ended~~ March 31, ~~2018~~2023, the weighted average remaining operating lease term was 1.6 years.

As of March 31, 2023, scheduled future maturities and ~~2017, respectively.~~

Management believes the assumptions and allocations underlying the condensed consolidated and combined financial statements are reasonable and appropriate under the circumstances. The expense allocations have been determined on a basis considered to be a reasonable reflectionpresent value of the ~~utilization of services provided to or the benefit received by red violet during the periods presented relative to the total costs~~operating lease liabilities are as follows:


(In thousands)
Year	March 31, 2023
Remainder of 2023		575
2024		542
2025		77
Total maturities	$	1,194
Present value included in condensed consolidated balance sheet:
Current portion of operating lease liabilities	$	711
Noncurrent operating lease liabilities		413
Total operating lease liabilities	$	1,124
Difference between the maturities and the present value of operating lease liabilities	$	70

10. Commitments and expenses incurred by Fluent. However, these expenses may not be reflective of the expenses that would have been recorded had red violet been an entity that operated independently of Fluent, and not been a subsidiary of Fluent. Consequently, future results of operations of red violet after the Spin-off will include costs and expenses that may be materially different than red violet’s historical results of operations, financial position, and cash flows. Accordingly, the financial statements for these periods are not indicative of red violet’s future results of operations, financial position, and cash flow.contingencies

~~10. Commitments~~

(a) Capital commitment

The Company incurred data costs of ~~$1,241~~$2,361 and ~~$980~~$2,248 for the three months ended March 31, ~~2018~~2023 and ~~2017,~~2022, respectively, under certain data licensing agreements. As of March 31, ~~2018,~~2023, material capital commitments under certain data licensing agreements were ~~$22,011,~~$24,983, shown as follows:

(In thousands)

Year

March 31, 2018

Remainder of 2018

$
3,784

2019

5,900

2020

6,250

2021

4,775

2022

1,302

Total

$
22,011


(In thousands)
Year	March 31, 2023
Remainder of 2023		6,108
2024		7,548
2025		7,507
2026		3,820
Total	$	24,983

(b) ~~Guarantees~~Contingencies

AsThe Company establishes accruals for those contingencies where the incurrence of ~~December 31, 2017,~~a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for its financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, the Company ~~was~~evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a ~~guarantor~~reasonable estimate of the amount of the loss. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated.

The Company may be involved in litigation from time to time in the ordinary course of business. The Company does not believe that the ultimate resolution of any such matters will have a material adverse effect on ~~certain Fluent debt,~~its business, financial condition, results of operations or cash flows. However, the results of such matters cannot be predicted with ~~an outstanding principal amount,~~ ~~plus paid-in-kind interest, of $55.6 million~~ ~~as of December 31, 2017,~~certainty and ~~a maturity date in December 2020.~~

~~Upon the Spin-off on March 26, 2018, Fluent, LLC, a subsidiary of Fluent, refinanced such Fluent debt, and red violet’s obligations as a guarantor ceased.~~

~~(c) Employment agreements~~

We have employment agreements with certain executives, including our Chief Executive Officer, President, Chief Financial Officer and Chief Accounting Officer, which provide for compensation and certain other benefits and for severance payments under certain circumstances.

~~11. Subsequent events~~

~~On April 26, 2018,~~ the Company ~~entered into~~cannot assure you that the ultimate resolution of any legal or administrative proceeding or dispute will not have a ~~consulting agreement with MDB Management, Inc. (“MDB”), a company owned by Michael Brauser, chairman~~material adverse effect on its business, financial condition, results of ~~the Company’s board of directors,~~operations and ~~one of his sons, for MDB to provide consulting services related to business development, future acquisitions, and strategic transactions to the Company (“MDB Agreement”), f~~or a term of six months, and shall automatically renew for additional six-month periods unless either party provides written notice to the other of its intent not to renew not fewer than 30 days prior to the expiration of the then current term~~. Under the MDB Agreement, the consulting service fee is $30 per month.~~cash flows.

1210

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

~~Executive Overview~~

You should read the following discussion and analysis in conjunction with our condensed consolidated ~~and combined~~ financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”). This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, ~~the outcome of litigation,~~ or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends, or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in this ~~Quarterly Report on~~ Form 10-Q, as well as the disclosures made in the Company’s ~~Information Statement included in the current report~~Annual Report on Form ~~8-K~~10-K for the year ended December 31, 2022 filed ~~with the Securities and Exchange Commission (the “SEC”)~~ on March ~~27, 2018~~8, 2023 (“~~2017 Financials”~~Form 10-K”), and other filings we make with the ~~SEC.~~Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements, except as required by law. We intend that all forward-looking statements be subject to the safe harbor provisions of PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance.

~~The historical financial statements we have included~~References in this ~~Form 10-Q may not reflect what our business, financial position~~discussion and analysis to “we,” “us,” “our,” “red violet,” or ~~results of operations would have been had we been a publicly traded company during~~ the ~~periods presented or what our results of operations, financial position~~“Company,” refer to Red Violet, Inc. and ~~cash flows will be in the future when we are a stand-alone company.~~its consolidated subsidiaries.

Overview

~~Overview~~

~~On March 26, 2018, Fluent, Inc. (“Fluent”), formerly known as Cogint,~~Red Violet, Inc., a Delaware corporation, ~~completed~~is dedicated to making the ~~previously announced spin-off (the “Spin-off”)~~world a safer place and reducing the cost of ~~its risk management business from its digital marketing business by way of a distribution of all the shares of common stock of Fluent’s wholly-owned subsidiary, Red Violet, Inc.,~~ ~~a Delawarecorporation(“red violet,”“we,” “us,”“our,”~~doing business. We build proprietary technologies and ~~similarterms)~~, to Fluent’s stockholders of record as of March 19, 2018 (the “Record Date”) and certain warrant holders. The distribution occurred by way of a pro rata stock distribution to such common stock and warrant holders, each of whom received one share of red violet’s common stock for every 7.5 shares of Fluent’s common stock held on the Record Date or to which they were entitled to under their warrant, which resulted in a distribution of a total of 10,266,613 shares of red violet common stock. ~~Upon the Spin-off, red violet owns FluentsubsidiarieswhichpreviouslyoperatedFluent’sriskmanag~~e~~mentbusiness.~~

Although the Spin-off was completed on March 26, 2018, the Company has reflected the Spin-off in these financial statements as if it occurred on March 31, 2018 as the Company determined that the impact is not material to the consolidated and combined financial statements.

The financial statements present the consolidated and combined results of operations, financial condition, and cash flows of red violet and its subsidiaries. These financial statements were prepared on a consolidated and combined basis because the operations were under common control. All intercompany accounts and transactions have been eliminated between the consolidated and combined entities.

red violet is a software and services company specializing in big data analysis, providing cloud-based, mission-critical solutions to enterprises in a variety of industries. red violet’s mission is to transform data into intelligence utilizing our proprietary technology platform to solve complex problems for our clients. Harnessing the power of data fusion and powerful analytics, we transform data into intelligence, in a fast and efficient manner, so our clients can spend their time on what matters most, running their organizations with confidence. Through our intelligent platform, CORE^TM~~, we uncover the relevance of disparate data points utilizing our~~apply analytical capabilities to ~~provide~~deliver identity intelligence. Our technology powers critical solutions, which empower organizations to operate with confidence. Our solutions enable the real-time identification and ~~insightful views~~location of people, businesses, assets and their interrelationships. These solutions are used for purposes including risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition. Our intelligent platform, CORETM, is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We ~~empower clients across markets~~drive workflow efficiency and ~~industries~~enable organizations to make better ~~execute all aspects~~data-driven decisions.

Organizations are challenged by the structure, volume and disparity of ~~their business, from managing risk, identifying fraud~~data. Our platform and ~~abuse,~~applications transform the way our customers interact with information, presenting connections and ~~ensuring legislative compliance,~~relevance of information otherwise unattainable, which drives actionable insights and better outcomes. Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to ~~debt recovery.~~

~~We provide unique and compelling solutions essential to the daily workflow of organizations within both the~~ public and private ~~sectors. Our cloud-based~~sector organizations through intuitive, easy-to-use analytical interfaces. With massive data ~~fusion platform, combined with our massive database~~assets consisting of ~~public-record,~~public record, proprietary and publicly-available data, ~~as well as a unique repository of self-reported~~our differentiated information ~~on millions of consumers, enables the delivery of differentiated products~~and innovative platform and solutions deliver identity intelligence – entities, relationships, affiliations, interactions, and events. Our solutions are used today to enable frictionless commerce, to ensure safety, and to reduce fraud and the concomitant expense borne by society.

While our platform powers many diverse solutions for our customers, we presently market our solutions primarily through two brands, IDI™ and FOREWARN®. IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to the risk management industry in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE™ is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of ~~essential functions. These essential functions include identification and~~organizational challenges including due diligence, risk mitigation, identity authentication and ~~investigation and validation.~~

Leveraging leading-edge technology, proprietary algorithms, and massive datasets, and through intuitive and powerful analytical applications, we provide solutions to organizations within the risk management industry. CORE is our next generation data fusion platform, providing mission-critical information about individuals, businesses and assets to a variety of markets and industries. Through machine learning and advanced analytics, we use the power of data fusion to ingest and analyze data at a massive scale. The derived information from the data fusion process ultimately serves to generate unique solutions for banking andregulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, ~~the collection industry,~~collections, law firms, retail, ~~telecommunications~~telecommunication companies, corporate security and investigative firms. FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of March 31, 2023 and 2022, IDI had 7,256 and 6,592 billable customers and FOREWARN had 131,348 and 91,490 users, respectively. We define a billable customer of IDI as a single entity that generated revenue during the last three months of the period. Billable customers are typically corporate organizations. In most cases, corporate organizations will have multiple users and/or departments purchasing our solutions, however, we count the entire organization as a discrete customer. We define a user of FOREWARN as a unique person that has a subscription to use the FOREWARN service as of the last day of the period. A unique person can only have one user account.

~~Built~~11

We generate substantially all of our revenue from licensing our solutions. Customers access our solutions through a hosted environment using an online interface, batch processing, API and custom integrations. We recognize revenue from licensing fees (a) on a transactional basis determined by the customer’s usage, (b) via a monthly fee or (c) from a combination of both. Revenue pursuant to pricing contracts containing a monthly fee is recognized ratably over the contract period. Pricing contracts are generally annual contracts or longer, with auto renewal. For the three months ended March 31, 2023 and 2022, 75% and 77% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 23% attributable to transactional customers, respectively.

We endeavor to understand our customers’ needs at the moment of first engagement. We continuously engage with our customers and evaluate their usage of our solutions throughout their life cycle, to maximize utilization of our solutions and, hence, their productivity. Our go-to-market strategy leverages (a) an inside sales team that cultivates relationships, and ultimately closes business, with their end-user markets, (b) a strategic sales team that provides a more personal, face-to-face approach for major accounts within certain industries, and (c) distributors, resellers, and strategic partners that have a significant foothold in many of the industries that we have not historically served, as well as to further penetrate those industries that we do serve. We employ a ~~secure payment card industry (PCI) compliant environment,~~“land and expand” approach. Our sales model generally begins with a free trial followed by an initial purchase on a transactional basis or minimum-committed monthly spend. As organizations derive benefits from our ~~cloud-based next generation technology delivers greater than four 9s of service uptime. By leveraging our proprietary infrastructure design within the cloud,~~solutions, we ~~currently operate in six datacenters spread geographically across the U.S. and~~ are able to ~~dynamically~~expand within organizations as additional use cases are presented across departments, divisions and ~~seamlessly scale as needed. Using~~geographic locations and customers become increasingly reliant on our intelligent framework, and leveraging a microservices architecture where appropriate, we reduce operational cost and complexity, thus delivering superior performance at greatly reduced costs compared to traditional datacenter architectures. Since the release of our CORE platformsolutions in May 2016, we have added billions of data records and continue to add over a billion records per month on average. Our average query response time for a comprehensive profile is less than 250 milliseconds versus competitive platforms that measure comprehensive profile response times in seconds.their daily workflow.

From Fluent’s acquisition of the risk management business in September 2014 through December 2016, the majority of our operations were dedicated to the early stage development of our business model, including the development of our proprietary, cloud-based technology platform, CORE, and the buildout of our initial-phase suite of products, powered by CORE, to serve a variety of industries within risk management. Beginning January 2017, with our technology platform production ready and hardened, our initial suite of products released into the marketplace, and a multi-year product roadmap defined, we transformed from a development organization to a sales-driven organization with sales increasing from a $5.8 million annual run-rate for the month ended January 31, 2017, to a $15.1 million annual run-rate for the month ended March 31, 2018.

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

Critical Accounting Policies and Estimates

Management’s di~~scussion~~discussion and ~~ana~~l~~ysis~~analysis of financial condition and results of ~~oper~~a~~tions~~operations are based upon ~~red violet’s~~our condensed consolidated ~~and comb~~i~~ned~~ financial ~~statement~~s,statements, which have been prepared in accordance with ~~acc~~ount~~ing~~accounting principles generally acce~~pted~~accepted in the ~~Unit~~e~~d St~~a~~tes~~United States (“US GA~~AP”~~GAAP”). The ~~preparati~~onpreparation of these financial statements requires ~~red violet~~us to make estimates and judgments that affect the reported amounts of ~~ass~~e~~ts, li~~abiliti~~es,~~assets, liabilities, revenues and expenses, and re~~lated~~related disclosure of contingent a~~ssets~~assets and liabilities. On an ~~ongo~~ingongoing basis, ~~red violet evaluates its~~we evaluate our estimates, including those related to the allowance for doubtful ~~receivables,~~accounts, useful lives of ~~property and equipment and~~ intangible ~~ass~~e~~ts, income tax provision, and~~assets, recoverability of the carrying amounts of goodwill and in~~tangible assets.~~intangible assets, share-based compensation and income tax provision. We base our es~~timates~~estimates on historical expe~~rience a~~ndexperience and on various other assumptions that are believed to be ~~reason~~a~~ble~~reasonable under the circumstances, the results of which form the basis forfor making judgments aboutabout the ca~~rrying valu~~escarrying values of assetsassets and li~~abi~~lities t~~hat a~~reliabilities that are not readily apparent from other sources. Actual results may differ from these ~~est~~imatesestimates under dif~~ferent~~different assumptions or conditions.

For additional information, please refer to our ~~2017 Financials.~~Form 10-K. There have been no material changes to Critical Accounting Policies and Estimates disclosed in our ~~2017 Financials.~~Form 10-K.

Recently issued accounting standards

See Note ~~2(b)~~1(b), “Recently issued accounting standards,” in “Notes to Condensed Consolidated ~~and Combined~~ Financial Statements.”

First Quarter Financial Results

For the three months ended March 31, ~~2018,~~2023, as compared to the three months ended March 31, ~~2017:~~2022:

•

Total revenue increased ~~112%~~15% to ~~$3.3~~$14.6 million.

•	~~Net loss improved by $0.8 million to $2.1 million.~~

•

~~Loss per share improved by $0.08~~Gross profit increased 19% to ~~$0.20.~~

$9.6 million. Gross margin increased to 66% from 64%.

•

Adjusted gross profit increased ~~665%~~20% to ~~$1.3~~$11.4 million.

Adjusted gross margin increased to ~~39%~~78% from ~~11%~~75%.

•

Net income increased 569% to $0.7 million, which resulted in $0.05 per basic and diluted share.

•

Adjusted EBITDA ~~improved by $0.3~~increased 15% to $3.7 million.

•

Net cash from operating activities decreased 37% to $1.5 million.

•

Cash and cash equivalents were $30.8 million ~~to negative $1.4 million.~~

as of March 31, 2023.

First Quarter and Recent Business Highlights

•

~~Successfully completed the spin-off of our business on March 26, 2018, with red violet operating as a NASDAQ-listed emerging growth company.~~

~~Well-capitalized balance sheet, with approximately $20 million in cash as of March 31, 2018 and no debt, allowing the Company~~Added 235 customers to ~~intently focus on driving the business to profitability.~~

~~With our early-stage development completed~~, including our proprietary, cloud-based technology platform, CORE™, and our initial suite of products released into the marketplace, monthly sales increased at a CAGR of 126% from a $5.8 million annual run-rate for the month ended January 31, 2017, to a $15.1 million annual run-rate for the month ended March 31, 2018.

~~FOREWARN™, our subscription app-based solution for the real estate industry, powered by CORE, grew revenue at a CAGR of 660% in~~IDI during the first quarter, ~~2018, representing an annual run-rate~~ending the quarter with 7,256 customers.

•

Added 14,388 users to FOREWARN during the first quarter, ending the quarter with 131,348 users. Over 255 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.

•

Launched redesigned corporate websites, www.redviolet.com, www.ididata.com, and www.forewarn.com, providing a more valuable user experience with modern design, improved functionality, easier navigation, and greater detail on the breadth and applicability of ~~$0.3 million for the month ended March 31, 2018, with no incremental cost of revenue.~~

our identity solutions.

•

~~Fixed cost of revenue model allows for continued scaling~~Purchased 44,766 shares of the ~~business with exponential growth in adjusted gross profit, as reflected in~~Company’s common stock year to date through May 5, 2023, at an average price of $16.88 per share pursuant to the ~~28 percentage point increase in adjusted gross margin to 39% over prior year quarter.~~

Company’s $5.0 million Stock Repurchase Program that was authorized on May 2, 2022. The Company has $3.4 million remaining under the Stock Repurchase Program.

Use and Reconciliation of Non-GAAP Financial Measures

Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, ~~and~~ adjusted gross ~~margin.~~margin and free cash flow ("FCF"). Adjusted EBITDA is a financial measure equal to net ~~loss,~~income, the most directly comparable financial measure based on US GAAP, ~~adding back~~excluding interest income, net, income tax (benefit) expense, depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others, as noted in the tables below. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue. We define FCF as net cash provided by operating activities reduced by purchase of property and equipment and capitalized costs included in intangible assets.


	Three Months Ended March 31,						Three Months Ended March 31,
(In thousands)	2018			2017			2023			2022
Net loss	$	(2,084	)	$	(2,893	)
Net income							$	716		$	107
Interest income, net								(286	)		(1	)
Income tax (benefit) expense								(29	)		175
Depreciation and amortization		451			216			1,916			1,534
Share-based compensation expense		165			458			1,384			1,387
Litigation costs		-			504			3			15
Write-off of long-lived assets		55			-
Write-off of long-lived assets and others								2			3
Adjusted EBITDA	$	(1,413	)	$	(1,715	)	$	3,706		$	3,220
Revenue							$	14,626		$	12,729

Net income margin								5	%		1	%
Adjusted EBITDA margin								25	%		25	%

The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit:


	Three Months Ended March 31,						Three Months Ended March 31,
(In thousands)	2018			2017			2023			2022
Revenue	$	3,325		$	1,572		$	14,626		$	12,729
Cost of revenue (exclusive of depreciation and amortization)		2,017			1,401			(3,179	)		(3,170	)
Depreciation and amortization of intangible assets								(1,858	)		(1,472	)
Gross profit								9,589			8,087
Depreciation and amortization of intangible assets								1,858			1,472
Adjusted gross profit	$	1,308		$	171		$	11,447		$	9,559

Gross margin								66	%		64	%
Adjusted gross margin		39	%		11	%		78	%		75	%

The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP measure, to FCF:


	Three Months Ended March 31,
(In thousands)	2023			2022
Net cash provided by operating activities	$	1,531		$	2,430
Less:
Purchase of property and equipment		(44	)		(113	)
Capitalized costs included in intangible assets		(2,273	)		(1,794	)
Free cash flow	$	(786	)	$	523

In order to assist readers of our condensed consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, ~~and~~ adjusted gross margin and FCF as supplemental measures of our operating ~~performance because we~~performance. We believe they provide useful information to our investors as they eliminate the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. In addition, we use them as an integral part of

our internal reporting to measure the performance ~~of our business, evaluate the performance of our senior management~~ and ~~measure the~~ operating strength of our business.

~~Adjusted~~We believe adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, ~~and~~ adjusted gross margin and FCF are ~~measures~~relevant and provide useful information frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and are indicators of the operational strength of our business. ~~Adjusted~~We believe adjusted EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation and amortization, share-based compensation expense and ~~write-off of long-lived assets, and~~ the impact of other ~~items.~~non-recurring items, providing useful comparisons versus prior periods or forecasts. Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of revenue. Our adjusted gross profit is a measure used by management in evaluating the business’s current operating performance by excluding the impact of prior historical costs of assets that are expensed systematically and allocated over the estimated useful lives of the assets, which may not be indicative of the current operating activity. Our adjusted gross ~~margin are~~profit is calculated by using revenue, less cost of revenue (exclusive of depreciation and amortization). We believe adjusted gross profit provides useful information to our investors by eliminating the impact of non-cash depreciation and amortization, and specifically the amortization of software developed for internal use, providing a baseline of our core operating results that allow for analyzing trends in our underlying business consistently over multiple periods. Adjusted gross margin is calculated as adjusted gross profit as a percentage of revenue. We believe FCF is an important liquidity measure of the cash that is available, after capital expenditures, for operational expenses and investment in our business. FCF is a measure used by management to understand and evaluate the business’s operating performance and trends over time. FCF is calculated by using net cash provided by operating activities, less purchase of property and equipment and capitalized costs included in intangible assets.

Adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, ~~and~~ adjusted gross margin and FCF are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, ~~either loss before income taxes or net loss as indicators of operating performance or~~financial measures presented in accordance with US GAAP. In addition, FCF is not intended to represent our residual cash ~~flows from operating activities as~~flow available for discretionary expenses and is not necessarily a measure of ~~liquidity.~~our ability to fund our cash needs. The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, ~~and~~ adjusted gross margin and FCF may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements.

Results of Operations

Three months ended March 31, ~~2018~~2023 compared to three months ended March 31, ~~2017~~2022

Revenue. Revenue increased ~~$1.7~~$1.9 million or ~~112%~~15% to ~~$3.3~~$14.6 million for the three months ended March 31, ~~2018,~~2023 from ~~$1.6~~$12.7 million for the three months ended March 31, ~~2017. This increase was driven by strong~~2022. Revenue from new customers increased $0.9 million or 84%, and base revenue from existing customers increased $1.4 million or 14%, while growth ~~in volume resulting~~revenue from ~~the continued staged release~~existing customers decreased $0.4 million or 18%. Our IDI billable customer base grew from 6,592 customers as of our product suite, following our transformation from a development organization to a sales-driven organization beginning January 2017. During this time frame, our monthly sales increased from a $5.8 million annual run-rate for the month ended January 31, 2017, to a $15.1 million annual run-rate for the month ended March 31, ~~2018.~~2022 to 7,256 customers as of March 31, 2023, and our FOREWARN user base grew from 91,490 users to 131,348 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period. A customer is defined as a new customer during the first six months of revenue generation. Base revenue from existing customers represents the total monthly revenue generated from existing customers in a given period that does not exceed the customers' trailing six-month average revenue. A customer is defined as an existing customer six months after their initial month of revenue. Growth revenue from existing customers represents the total monthly revenue generated from existing customers in a given period in excess of the customers' trailing six-month average revenue.

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue ~~increased $0.6 million or 43% to $2.0~~remained consistent at $3.2 million for the three months ended March 31, ~~2018, from $1.4 million for the three months ended March 31, 2017.~~2023 and 2022. Our cost of revenue primarily includes data acquisition costs. Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements. We continue to ~~expand~~enhance the breadth and depth of our data through the addition and expansion of relationships with ~~our~~ key data suppliers, including our largest data supplier, which accounted for ~~approximately 49%~~48% and 47% of our total data acquisition costs for the three months ended March 31, ~~2018, compared to approximately 33% for the three months ended March 31, 2017.~~2023 and 2022, respectively. Other cost of revenue ~~includes~~items include expenses related to third-party infrastructure fees.

~~We continued to develop our baseline data repository in anticipation of completing the development of our full suite of risk management products during the development periods.~~ As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to ~~61%~~22% for the three months ended March 31, ~~2018~~2023 from ~~89%~~25% for the three months ended March 31, ~~2017, as a result of the scaling.~~2022. We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases. Historically, at scale, the industry business model’s cost of revenue will trend between 15% and 30% as a percentage of revenue.

Sales and marketing expenses. Sales and marketing expenses increased ~~$0.3~~$1.5 million or ~~33%~~63% to ~~$1.1~~$3.9 million for the three months ended March 31, ~~2018,~~2023 from ~~$0.8~~$2.4 million for the three months ended March 31, ~~2017. The increase resulted from increased headcount as we continue to invest in the expansion of our sales organization.~~2022. Sales and marketing expenses consist of salaries and benefits, advertising and marketing, ~~traveling~~travel expenses, and share-based compensation expense, incurred by our sales ~~team.~~team, and provision for bad debts. The increase during the three months ended March 31, 2023 was primarily attributable to the increase of $0.7 million in salaries and benefits, and sales commissions, resulting from increased revenue, and $0.6 million in provision for bad debts.

General and administrative expenses. General and administrative expenses decreased ~~$0.1~~$0.2 million or 9%2% to ~~$1.9~~$5.2 million for the three months ended March 31, ~~2018,~~2023 from ~~$2.0~~$5.4 million for the three months ended March 31, 2017. The decrease resulted from decreases in litigation costs and share-based compensation expense, which were partially offset by increases in employee salaries and benefits and other professional fees.2022. For the three months ended March 31, ~~2018~~2023 and ~~2017,~~2022, our general and administrative expenses consisted primarily of ~~litigation costs of $0 and $0.5 million, non-cash share-based compensation expense of $0.1 million and $0.4 million,~~ employee salaries and benefits of ~~$0.8~~$2.8 million and $2.5 million, share-based compensation expense of $1.3 million and $1.3 million, and professional fees of $0.6 million and ~~other professional fees of $0.3~~$1.0 million, ~~and $0.1 million,~~ respectively.

Depreciation and amortization. Depreciation and amortization expenses increased ~~$0.3~~$0.4 million or ~~109%~~25% to ~~$0.5~~$1.9 million for the three months ended March 31, ~~2018,~~2023 from ~~$0.2~~$1.5 million for the three months ended March 31, ~~2017.~~2022. The increase in depreciation and amortization for the three months ended March 31, ~~2018~~2023 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after ~~the first quarter~~March 31, 2022.

Interest income, net. Interest income of ~~2017.~~

~~Loss before income taxes~~. ~~We had a loss before income taxes of~~ ~~$2.1 million and $2.9 million, including non-cash share-based compensation expense of $0.2 million and $0.5 million, and depreciation and amortization of $0.5 million and $0.2~~$0.3 million for the three

months ended March 31, ~~2018 and 2017, respectively. The decrease~~2023 was primarily due to interest income earned on investments in ~~loss~~certain money market funds. There was no significant interest income, net for the three months ended March 31, 2022.

Income before income taxes. Income before income taxes ~~resulted from~~was $0.7 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively. The increase in income before income taxes for the three months ended March 31, 2023 was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, ~~decreases~~and increase in ~~litigation costs and share-based compensation expense,~~interest income, which ~~were~~was partially offset by ~~increases~~the increase in employee salaries and benefits ~~other professional fees~~and sales commissions of $1.0 million, provision for bad debts of $0.6 million, and depreciation and ~~amortization.~~amortization of $0.4 million.

Income taxes. Income tax benefit of $0$0.03 million and income tax expense of $0.2 million was recognized for the three months ended March 31, ~~2018~~2023 and ~~2017,~~2022, respectively. A ~~full~~ valuation allowance on the deferred tax assets was recognized as of March 31, ~~2018~~2023 and ~~2017. On December 22, 2017,~~2022, to reduce the deferred tax ~~reform legislation commonly known as~~assets to the ~~Tax Cuts and Jobs Act (the “Act”)~~ ~~was enacted, with the statutory federal income tax rate lowered~~amount that is more likely than not to 21% among other changes, effective on January 1, 2018. As a full valuation allowance was provided as of March 31, 2018, the Act does not have any material net impact on our condensed consolidated and combined financial statements.be realized. See Note 6, “Income Taxes,” included in “Notes to Condensed Consolidated ~~and Combined~~ Financial ~~Statements,~~Statements.”

Net income. Net income was $0.7 million for ~~details.~~

~~Net loss. A net loss of $2.1 million and $2.9 million was recognized for~~the three months ended March 31, ~~2018 and 2017, respectively,~~2023 compared to $0.1 million for the three months ended March 31, 2022, as a result of the ~~foregoing~~.foregoing.

Effect of Inflation

~~The~~We believe that the persistent inflationary pressure throughout 2022 and up to March 31, 2023 has contributed to deteriorating macroeconomic conditions and increased recession fears, causing businesses to slow their spending over the last several months, which have resulted, and may continue to result, in fluctuations in volumes, pricing and operating margins for our services. Also, higher interest rates imposed to combat inflation, may reduce the demand for credit, which may lead to a decline in the volume of services we provide to our customers in the banking or financial industry, or other industries that are affected by these types of disruptions. However, the rates of inflation experienced in recent years have had no material impact on our financial ~~statements. We attempt~~statements as we have attempted to recover increased costs by increasing prices for our services, to the extent permitted by contracts and competition.

Liquidity and Capital Resources

Cash flows ~~used in~~provided by operating activities. For the three months ended March 31, ~~2018,~~2022, net cash ~~used in~~provided by operating activities was ~~$2.9~~$1.5 million, primarily the result of the net ~~loss~~income of ~~$2.1~~$0.7 million, adjusted for certain non-cash items ~~totaling $0.9 million, including~~(consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and ~~allocation~~deferred income tax (benefit) expense) totaling $4.1 million, and the cash used as a result of ~~expenses from Fluent, Inc. In addition, the net working capital increased $1.7~~changes in assets and liabilities of $3.3 million, primarily the result of the increase in accounts receivable, prepaid expenses and other current assets and other noncurrent assets, and the decrease in accrued expenses and other current liabilities, and ~~the increase in accounts receivable following the increase in revenue.~~operating lease liabilities. For the three months ended March 31, ~~2017,~~2022, net cash ~~used in~~provided by operating activities was ~~$1.6~~$2.4 million, primarily the result of the net ~~loss~~income of ~~$2.9~~$0.1 million, adjusted for certain non-cash items, ~~of an aggregate of $1.5~~as mentioned above, totaling $3.3 million, and the cash used as a result of changes in ~~net working capital~~assets and liabilities of ~~$0.2 million. Net cash used~~$0.9 million, primarily the result of the increase in accounts receivable and prepaid expenses and other current assets, and the decrease in deferred revenue and operating ~~activities~~lease liabilities, which was offset by the increase in ~~2017 increased by $3.7 million resulting from the factors discussed above.~~accounts payable.

Cash flows used in investing activities. ~~Net cash used in investing activities for~~For the three months ended March 31, ~~2018~~2023 and ~~2017~~2022, net cash used in investing activities was ~~$1.4~~$2.3 million and $1.9 million, respectively, primarily as a result of capitalized costs included in intangible ~~assets~~assets.

Cash flows used in financing activities. For the three months ended March 31, 2023, net cash used in financing activities was $0.2 million, mainly the result of ~~$1.4~~$0.2 million ~~and $1.7 million~~paid in aggregate for the ~~corresponding periods.~~

~~Cash flows provided by financing activities. Net cash provided by~~repurchase of common stock pursuant to a stock repurchase program that the board of directors authorized on May 2, 2022 (the "Stock Repurchase Program"), authorizing the repurchase of up to $5.0 million of our common stock. There were no significant financing activities for the three months ended March 31, 2018 and 2017 was $23.9 million (inclusive of $20.0 cash contribution by Fluent to red violet upon the Spin-off) and $3.3 million, respectively, as a result of capital contributed by Fluent during the corresponding periods.2022.

As of March 31, ~~2018, red violet~~2023, we had material commitments under certain data licensing agreements of ~~$22.0~~$25.0 million. ~~red violet anticipates~~We anticipate funding ~~its~~our operations using available cash and cash flow generated from operations within the next twelve months.

~~red violet~~We reported net ~~loss~~income of ~~$2.1~~$0.7 million and $0.1 million for the three months ended March 31, ~~2018, as compared to $2.9 million for the three months ended March 31, 2017.~~2023 and 2022, respectively. As of March 31, ~~2018, red violet~~2023, we had a total shareholders’ equity balance of ~~$40.3~~$73.4 million.

As of March 31, ~~2018, red violet~~2023, we had cash and cash equivalents of approximately ~~$19.8~~$30.8 million. ~~Historically, red violet has funded its operations via intercompany transfers from Fluent on an as needed basis.~~ Based on projections of growth in revenue and operating results in the ~~coming year,~~next twelve months, and the available cash and cash equivalents held by ~~red violet after the Spin-off, the Company believes~~us, we believe that itwe will have sufficient cash resources to finance ~~its~~our operations and expected capital expenditures for the next twelve months.

Subject to revenue growth ~~red violet~~and our ability to generate positive cash flow, we may have to raise capital through the issuance of additional equity and/or debt, which, if ~~red violet is~~we are able to obtain, could have the effect of diluting stockholders. Any equity or debt financings, if available at all, may be on terms which are not favorable to red violet. If red violet’s operations do not generate positive cash flow in the upcoming year, or if it is not able to obtain additional equity or debt financing on terms and conditions acceptable to it, if at all, it may be unable to implement its business plan, or even continue its operations.us.

Off-Balance Sheet Arrangements

As of March 31, ~~2018,~~2023, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

Item 3. Quantitative and Q~~ualitati~~veQualitative Disclosures About Market Risk.

As a smaller reporting company as defined in Rule 12b-2 of the Exchange Act, we are not required to include information ~~otherwise~~ required by this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of ~~our chief executive officer~~the Company’s Chief Executive Officer and ~~chief financial officer,~~Chief Financial Officer, evaluated the effectiveness of ~~our~~the Company’s disclosure controls and procedures (as ~~such term is~~ defined in Rules 13a-15(e) and ~~15d-15(e) under~~15d–15(e) of the Exchange Act) as of March 31, ~~2018.~~2023. We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer,~~Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Based on the evaluation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) ~~under~~of the ~~Securities~~ Exchange ~~Act of 1934)~~Act), the Company’s ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer~~Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, ~~2018.~~2023.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the fiscal quarter ended March 31, ~~2018~~2023 that ~~have~~ materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply ~~its~~ judgment in evaluating the benefits of possible controls and procedures relative to their costs.

1817

PART II - ~~OTHE~~ROTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to have a material adverse effect on the business, financial condition, results of operations or cash flows. Legal fees associated with any legal proceedings, are expensed as incurred. We review legal proceedings and claims on an ongoing basis and follow appropriate accounting guidance, including ~~ASC~~Accounting Standards Codification 450, when making accrual and disclosure decisions. We establish accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. We do not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated.

~~In addition, we~~We may be involved in litigation from time to time in the ordinary course of business. We do not believe that the ultimate resolution of any such matters will have a material adverse effect on our business, financial condition, results of operations or cash flows. However, the results of such matters cannot be predicted with certainty and we cannot assure you that the ultimate resolution of any legal or administrative proceeding or dispute will not have a material adverse effect on our business, financial condition, results of operations and cash flows.

Item 1A. Risk Factors.

There have been no material changes ~~during the quarter ended March 31, 2018~~ to the risk factors previously disclosed in the Company’s ~~Information Statement filed as Exhibit 99.1 to the Company’s current report~~Annual Report on Form ~~8-K~~10-K for the year ended December 31, 2022 filed with the ~~Securities and Exchange Commission~~SEC on March ~~27, 2018.~~8, 2023.

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

~~None.~~Issuer Purchases of Equity Securities

The following table provides information relating to the Company's repurchase of common stock during the three months ended March 31, 2023 pursuant to the Stock Repurchase Program:


Period(1)	Total number of shares purchased		Average price paid per share(2)		Total number of shares purchased as part of publicly announced plans or programs		Approximate dollar value of shares that may yet be purchased under the plans or programs
January 1, 2023 - January 31, 2023		-	$	-		-	$	4,123,914
February 1, 2023 - February 28, 2023		-	$	-		-	$	4,123,914
March 1, 2023 - March 31, 2023		10,937	$	18.34		10,937	$	3,923,311
Total		10,937	$	18.34		10,937

(1)

From April 1, 2023 to April 30, 2023, the Company purchased an additional 21,430 shares at an average price of $16.20 per share pursuant to the Stock Repurchase Program.

(2)

Exclusive of commission fees incurred in relation to the repurchase of common stock.

On May 2, 2022, the Company's board of directors authorized the repurchase of up to $5.0 million of the Company's common stock pursuant to the Stock Repurchase Program. The Stock Repurchase Program does not obligate the Company to repurchase any shares and it may be modified, suspended or terminated at any time and for any reason at the discretion of the board of directors.

Shares of common stock withheld as payment of withholding taxes in connection with the vesting of equity awards are also treated as common stock repurchases. Those withheld shares of common stock are not required to be disclosed under Item 703 of Regulation S-K and accordingly are excluded from the amounts in the table above.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

~~None.~~On May 8, 2023, the Company and each of Derek Dubner, Chief Executive Officer, James Reilly, President, Daniel MacLachlan, Chief Financial Officer, and Jeffrey Dell, Chief Information Officer, entered into an amendment to their respective employment agreements which extended the term expiration date by three years, from March 26, 2024, to March 26, 2027.

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

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

Incorporated by Reference

Filed
Exhibit No.

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith
2.1

Separation and Distribution Agreement by and between Cogint, Inc. and Red Violet, Inc., dated February 27, 2018.

Form 10

001-38407

2.1

February 28, 2018

10.1+

Form of Restricted Stock Unit Agreement Pursuant to the Red Violet, Inc. 2018 Stock Incentive Plan.

Form 10

001-38407

10.2

February 28, 2018

10.3

Amended and Restated Tax Matters Agreement by and between Cogint, Inc. and Red Violet, Inc., dated February 27, 2018.

Form 10

001-38407

10.3

February 28, 2018

10.4

Employee Matters Agreement by and between Cogint, Inc. and Red Violet, Inc., dated February 27, 2018.

Form 10

001-38407

10.4

February 28, 2018

10.5

Transition Services Agreement by and between Cogint, Inc. and Red Violet, Inc., dated February 27, 2018.

Form 10

001-38407

10.5

March 5, 2018

10.6

Assignment and Assumption Agreement, dated March 26, 2018, by and between Red Violet and Cogint.

8-K

001-38407

10.1

March 27, 2018

10.7+

Employment Agreement, dated March 26, 2018, by and between Red Violet and Derek Dubner.

8-K

001-38407

10.2

March 27, 2018

10.8+

Employment Agreement, dated March 26, 2018, by and between Red Violet and James Reilly.

8-K

001-38407

10.3

March 27, 2018

10.9+

Employment Agreement, dated March 26, 2018, by and between Red Violet and Dan MacLachlan.

8-K

001-38407

10.4

March 27, 2018

10.10+

Red Violet, Inc. 2018 Stock Incentive Plan.

8-K

001-38407

10.5

March 27, 2018

10.11

Form of Indemnification Agreement.

8-K

001-38407

10.6

March 27, 2018

10.12+

Employment Agreement, dated July 21, 2014, by and between Tiger Media, Inc. (aka Cogint, Inc.) and Jacky Wang.

10-K

333-158336

10.26

March 18, 2016

31.1

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

X
31.2

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

X
32.1*

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

X
32.2*

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

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XBRL Taxonomy Extension Definition Linkbase Document

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XBRL Taxonomy Extension Label Linkbase Document

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XBRL Taxonomy Extension Presentation Linkbase Document

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Management contract or compensatory plan or arrangement

*

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

Incorporated by Reference

Filed

Exhibit No.

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith

31.1

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

31.2

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

32.1*

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

32.2*

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

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

2019

~~SIGNATURES~~

SIGNATURES

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


May 9, 2023		Red Violet, Inc.

~~May 14, 2018~~	By:	/s/ Daniel MacLachlan
		Daniel MacLachlan
		Chief Financial Officer
		(Principal Financial ~~Officer)~~

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

2120


Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	RDVT	The NASDAQ Stock Market LLC


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

	(unaudited)
	March 31, 2018		December 31, 2017
ASSETS:
Current assets:
Cash and cash equivalents	$	19,793	$	65
Accounts receivable, net of allowance for doubtful accounts of $153 and $228 at March 31, 2018 and December 31, 2017, respectively		2,032		1,650
Prepaid expenses and other current assets		796		559
Total current assets		22,621		2,274
Property and equipment, net		974		1,091
Intangible assets, net		16,531		15,353
Goodwill		5,227		5,227
Other non-current assets		1,182		1,180
Total assets	$	46,535	$	25,125
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Trade accounts payable	$	1,063	$	919
Accrued expenses and other current liabilities		5,189		6,437
Deferred revenue		21		33
Total liabilities		6,273		7,389
Shareholders' equity:
Preferred stock—$0.001 par value, 10,000,000 and 0 authorized, and 0 shares issued and outstanding, at March 31, 2018 and December 31, 2017, respectively		-		-
Common stock—$0.001 par value, 200,000,000 and 5,000 shares authorized, and 10,266,613 and 1,000 shares issued and outstanding, at March 31, 2018 and December 31, 2017, respectively		10		-
Additional paid-in capital		40,252		-
Member's capital		-		17,736
Total shareholders' equity		40,262		17,736
Total liabilities and shareholders' equity	$	46,535	$	25,125


	March 31, 2023			December 31, 2022
ASSETS:
Current assets:
Cash and cash equivalents	$	30,818		$	31,810
Accounts receivable, net of allowance for doubtful accounts of $40 and $60 as of March 31, 2023 and December 31, 2022, respectively		5,889			5,535
Prepaid expenses and other current assets		1,310			771
Total current assets		38,017			38,116
Property and equipment, net		692			709
Intangible assets, net		32,521			31,647
Goodwill		5,227			5,227
Right-of-use assets		969			1,114
Other noncurrent assets		894			601
Total assets	$	78,320		$	77,414
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable	$	2,345		$	2,229
Accrued expenses and other current liabilities		411			1,845
Current portion of operating lease liabilities		711			692
Deferred revenue		763			670
Total current liabilities		4,230			5,436
Noncurrent operating lease liabilities		413			598
Deferred tax liabilities		257			287
Total liabilities		4,900			6,321
Shareholders' equity:
Preferred stock—$0.001 par value, 10,000,000 shares authorized, and 0 shares issued and outstanding, as of March 31, 2023 and December 31, 2022		-			-
Common stock—$0.001 par value, 200,000,000 shares authorized, 13,961,643 and 13,956,404 shares issued, and 13,950,706 and 13,956,404 shares outstanding, as of March 31, 2023 and December 31, 2022		14			14
Treasury stock, at cost, 10,937 and 0 shares as of March 31, 2023 and December 31, 2022		(201	)		-
Additional paid-in capital		94,293			92,481
Accumulated deficit		(20,686	)		(21,402	)
Total shareholders' equity		73,420			71,093
Total liabilities and shareholders' equity	$	78,320		$	77,414

	Common stock				Additional paid-in		Member's
	Shares		Amount		capital		capital			Total
Balance at December 31, 2017		1,000	$	-	$	-	$	17,736		$	17,736
Contribution by Fluent, Inc., including allocation of expenses		-		-		-		24,264			24,264
Share-based compensation		-		-		-		346			346
Net loss		-		-		-		(2,084	)		(2,084	)
Spin-off from Fluent, Inc.		10,265,613		10		40,252		(40,262	)		-
Balance at March 31, 2018		10,266,613	$	10	$	40,252	$	-		$	40,262


		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed ~~Consolidated and Combined Balance Sheets~~consolidated balance sheets as of March 31, ~~2018~~2023 and December 31, ~~2017~~2022	21
	Condensed ~~Consolidated and Combined Statements~~consolidated statements of ~~Operations~~operations for the three months ended March 31, ~~2018~~2023 and ~~2017~~2022	32
	Condensed ~~Consolidated and Combined Statement~~consolidated statements of ~~Changes~~changes in ~~Shareholders' Equity~~shareholders' equity for the three months ended March 31, ~~2018~~2023 and 2022	43
	Condensed ~~Consolidated and Combined Statements~~consolidated statements of ~~Cash Flows~~cash flows for the three months ended March 31, ~~2018~~2023 and ~~2017~~2022	54
	Notes to ~~Condensed Consolidated and Combined Financial Statements~~condensed consolidated financial statements	65
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1311
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1816
Item 4.	Controls and Procedures	1816

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	1918
Item 1A.	Risk Factors	1918
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1918
Item 3.	Defaults Upon Senior Securities	1918
Item 4.	Mine Safety Disclosures	1918
Item 5.	Other Information	19
Item 6.	Exhibits	2019

SIGNATURES		2120


	Common stock					Treasury stock						Additional paid-in			Accumulated
	Shares			Amount		Shares			Amount			capital			deficit			Total
Balance at December 31, 2021		13,488,540		$	13		-		$	-		$	91,434		$	(22,018	)	$	69,429
Vesting of restricted stock units		34,750			1		-			-			(1	)		-			-
Increase in treasury stock resulting from shares withheld to cover statutory taxes		-			-		(223	)		(6	)		-			-			(6	)
Retirement of treasury stock		(223	)		-		223			6			(6	)					-
Share-based compensation		-			-		-			-			1,688			-			1,688
Net income		-			-		-			-			-			107			107
Balance at March 31, 2022		13,523,067		$	14		-		$	-		$	93,115		$	(21,911	)	$	71,218

Balance at December 31, 2022		13,956,404		$	14		-		$	-		$	92,481		$	(21,402	)	$	71,093
Vesting of restricted stock units		6,800			-		-			-			-			-			-
Increase in treasury stock resulting from shares withheld to cover statutory taxes		-			-		(1,561	)		(31	)		-			-			(31	)
Common stock repurchased		-			-		(10,937	)		(201	)		-			-			(201	)
Retirement of treasury stock		(1,561	)		-		1,561			31			(31	)		-			-
Share-based compensation		-			-		-			-			1,843			-			1,843
Net income		-			-		-			-			-			716			716
Balance at March 31, 2023		13,961,643		$	14		(10,937	)	$	(201	)	$	94,293		$	(20,686	)	$	73,420


	Number of units			Weighted average grant-date fair value
Unvested as of December 31, 2022		1,044,132		$	20.64
Granted(1)		17,500		$	19.16
Vested and delivered		(5,239	)	$	26.18
Withheld as treasury stock(2)		(1,561	)	$	25.08
Forfeited		(27,750	)	$	20.20
Unvested as of March 31, 2023		1,027,082		$	20.59