This document contains forward-looking statements. These statements are only predictions. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include but are not limited to the factors set forth in our Annual Report on Form 10-K for the fiscal year ended September 30, 20172019 and subsequent filings with the Securities and Exchange Commission.Commission (SEC). You can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continues” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements.
All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this document and are expressly qualified in their entirety by the cautionary statements included in this document. Except as may be required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances occurring after the date of this document or to reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this document.
We believe our ability to create liquid marketplaces for surplus and salvage assets generates a continuous flow of goods from our corporate and government sellers. This flow of goods in turn attracts an increasing number of professional buyers to our marketplaces. During the twelve months ended DecemberMarch 31, 2017,2020, the approximate number of registered buyers grewincreased from 3,018,0003,580,000 to 3,209,000,3,675,000, or approximately 6.0%2.7%.
Key Business Metrics
Our management periodically reviews certain key business metrics for operational planning purposes and to evaluate the effectiveness of our operational strategies, allocation of resources and our capacity to fund capital expenditures and expand our business. These key business metrics include:
Gross merchandise volume.Gross merchandise volume or(GMV). GMV is the total sales value of all merchandise sold by us or our sellers through our marketplaces or by us through other channels during a given period.period of time. We review GMV because it provides a measure of the volume of goods being sold in our marketplaces and thus the activity of those marketplaces. GMV also provides a means to evaluate the effectiveness of investments that we have made and continue to make, including in the areas of buyer and seller support, value-added services, product development, sales and marketing, and operations. The GMV of goods sold in our marketplaces during the three months ended December 31, 2017 and 2016 totaled $155.4 million and $159.7 million, respectively.
Total registered buyers.Registered Buyers. We grow our buyer base through a combination of marketing and promotional efforts. A person becomes a registered buyer by completing an online registration process on one of our marketplaces. As part of this process, we collect business and personal information, including name, title, company name, business address and contact information, and information on how the person intends to use our marketplaces. Each prospective buyer must also accept our terms and conditions of use. Following the completion of the online registration process, we verify each prospective buyer’s e-mail address and confirm that the person is not listed on any banned persons list maintained internally or by the U.S. federal government. After the verification process, which is completed generally within 24 hours, the registration is approved and activated, and the prospective buyer is added to our registered buyer list.
Total registered buyers, as of a given date, represent the aggregate number of persons or entities who have registered on one of our marketplaces. We use this metric to evaluate how well our marketing and promotional efforts are performing. Total registered buyers exclude duplicate registrations, buyers who are suspended from utilizing our marketplaces and those buyers who have voluntarily removed themselves from our registration database. In addition, if we become aware of registered buyers that are no longer in business, we remove them from our database. As of DecemberMarch 31, 20172020 and September 30, 2017,2019, we had 3,209,000approximately 3,675,000 and 3,171,000 3,580,000 registered buyers, respectively.
Total auction participants. For each auction we manage, the number of auction participants represents the total number of registered buyers who have bid one or more times in that auction. As a result, a registered buyer who bids, or participates, in more than one auction is counted as an auction participant in each auction in which he or she participates. Thus, total auction participants for a given period is the sum of the auction participants in each auction conducted during that period. We use this metric to allow us to compare our online auction marketplaces to our competitors, including other online auction sites and traditional on-site auctioneers. In addition, we measure total auction participants on a periodic basis to evaluate the activity level of our base of registered buyers and to measure the performance of our marketing and promotional efforts. During the three months ended DecemberMarch 31, 20172020 and 2016, 519,0002019, approximately 490,000 and 544,000540,000, respectively, total auction participants participated in auctions on our marketplaces, respectively.marketplaces. During the six months ended March 31, 2020 and 2019, approximately 943,000 and 1,033,200, respectively, total auction participants participated in auctions on our marketplaces.
Completed transactions. Completed transactions represents the number of auctions in a given period from which we have recorded revenue. Similar to GMV, we believe that completed transactions is a key business metric because it provides an additional measurement of the volume of activity flowing through our marketplaces. During the three months ended DecemberMarch 31, 20172020 and 2016,2019, we completed 122,280approximately 150,000 and 129,000 transactions,153,000 transactions, respectively. During the six months ended March 31, 2020 and 2019, we completed approximately 286,000 and 297,500 transactions, respectively.
Non-GAAP Financial Measures
EBITDA and adjustedAdjusted EBITDA. EBITDA is a supplemental non-GAAP financial measure and is equal to net (loss) income plus interest and other (income) expense, net;net excluding the non-service components of net periodic pension (benefit) expense; provision (benefit) for income taxes; and depreciation and amortization. Interest and other (income) expense, net, can include nonoperatingnon-operating gains and losses, such as from foreign currency fluctuations and disposals of
fixed assets.fluctuations. Our definition of adjustedAdjusted EBITDA differs from EBITDA because we further adjust EBITDA for stock-based compensation expense, acquisition costs such as transaction expenses and changes in earn out estimates, business realignment expense, disposition expenses,deferred revenue purchase accounting adjustments, and goodwill and long-lived asset impairment.
We believe EBITDA and adjustedAdjusted EBITDA are useful to an investor in evaluating our performance for the following reasons:
•Depreciation and amortization expense primarily relates to property and equipment and the amortization of intangible assets. These expenses are non-cash charges that have fluctuated significantly overin the past five years.past. As a result, we believe that adding back these non-cash charges to net income is useful in evaluating the operating performance of our business on a consistent basis from year-to-year.
•As a result of varying federal and state income tax rates, we believe that presenting a financial measure that adjusts net income for provision (benefit) for income taxes is useful to investors when evaluating the operating performance of our business on a consistent basis from year to year.
•The authoritative guidance for stock-based compensation requires all share-based payments to employees, including grants of employee stock options, restricted stock and stock appreciation rights to be recognized in the income statement based on their estimated fair values. We believe adjusting net income for this stock-based compensation expense is useful to investors when evaluating the operating performance of our business on a consistent basis from year to year.
•The authoritative guidance related to business combinations requires the initial recognition of contingent consideration so that it is recognized at fair value with subsequent changes in fair value recorded through the timestatements of acquisition rather than when it is probableoperations, and disallows the capitalization of transaction costs. We believe adjusting net income for these acquisition related expenses is useful to investors when evaluating the operating performance of our business on a consistent basis from year to year.year-to-year.
•We believe adjusting net income for business realignment expense is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year, as these expenses are outside our ordinary course of business.
•We believe isolating non-cash charges, such as amortization and depreciation, and other items, such as impairment costs incurred outside our ordinary course of business, provides additional information about our cost structure, and, over time, helps track our performance.
•We believe EBITDA and adjustedAdjusted EBITDA are important indicators of our operational strength and the performance of our business because they provide a link between profitability and operating cash flow.
•We also believe that analysts and investors use EBITDA and adjustedAdjusted EBITDA as supplemental measures to evaluate the overall operating performance of companies in our industry.
Our management uses EBITDA and adjustedAdjusted EBITDA:
•as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis as they remove the impact of items not directly resulting from our core operations;
•for planning purposes, including the preparation of our internal annual operating budget;
•to allocate resources to enhance the financial performance of our business;
•to evaluate the effectiveness of our operational strategies; and
•to evaluate our capacity to fund capital expenditures and expand our business.
EBITDA and adjustedAdjusted EBITDA as calculated by us are not necessarily comparable to similarly titled measures used by other companies. In addition, EBITDA and adjustedAdjusted EBITDA: (a) do not represent net (loss) income or cash flows from operating activities as defined by GAAP; (b) are not necessarily indicative of cash available to fund our cash flow needs; and (c) should not be considered as alternatives to net (loss) income, income from operations, cash provided by operating activities or our other financial information as determined under GAAP.
We prepare adjustedAdjusted EBITDA by adjusting EBITDA to eliminate the impact of items that we do not consider indicative of our core operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. As an analytical tool, adjustedAdjusted EBITDA is subject to all of the limitations applicable to EBITDA. Our presentation of adjustedAdjusted EBITDA should not be construed as an implication that our future results will be unaffected by unusual or non-recurring items.
The table below reconciles income from continuing operationsnet loss to EBITDA and adjustedAdjusted EBITDA from continuing operations for the periods presented.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | | | Six Months Ended March 31, | | |
| | 2020 | | 2019 | | 2020 | | 2019 |
(in thousands) | | (Unaudited) | | | | | | |
Net loss | | $ | (4,238) | | | $ | (4,362) | | | | $ | (9,434) | | | | $ | (9,384) | |
Interest and other income, net1 | | (167) | | | (376) | | | | (332) | | | | (608) | |
Provision for income taxes | | 43 | | | 328 | | | | 501 | | | | 594 | |
Depreciation and amortization | | 1,577 | | | 1,165 | | | | 3,149 | | | 2,369 | |
EBITDA | | (2,785) | | | (3,245) | | | (6,116) | | | (7,029) | |
Stock compensation expense2 | | 1,231 | | | 2,581 | | | | 2,270 | | | 4,094 | |
Acquisition costs and impairment of long-lived assets3 | | — | | | 38 | | | | 5 | | | 119 | |
Business realignment expenses3,4 | | — | | | 5 | | | | — | | | 39 | |
Fair value adjustments to acquisition earn-outs3 | | — | | | 1,300 | | | | 200 | | | 1,400 | |
Deferred revenue purchase accounting adjustment | | — | | | 258 | | | | 3 | | | 690 | |
Adjusted EBITDA | | $ | (1,554) | | | $ | 937 | | | $ | (3,638) | | | $ | (687) | |
1 Represents Interest and other income, net, per the Statement of Operations, excluding the non-service components of net periodic pension (benefit) expense.
|
| | | | | | | | |
| | Three Months Ended December 31, |
| | 2017 | | 2016 |
| | (In thousands) (Unaudited) |
Net loss | | $ | (1,212 | ) | | $ | (8,397 | ) |
Interest and other (income) expense, net | | (425 | ) | | 34 |
|
(Benefit) provision for income taxes | | (4,815 | ) | | 103 |
|
Depreciation and amortization | | 1,211 |
| | 1,429 |
|
EBITDA | | (5,241 | ) | | (6,831 | ) |
Stock compensation expense | | 930 |
| | 2,500 |
|
Business realignment expenses* | | 1,349 |
| | — |
|
Adjusted EBITDA | | $ | (2,962 | ) | | $ | (4,331 | ) |
* Business2 Excludes the impact of forfeitures of stock awards by employees terminated by business realignment actions, which is included in the business realignment expenses whichline. There were no impacts for the three and six months ended March 31, 2020 and 2019.
3 Acquisition costs, impairment of long-lived assets, fair value adjustments to acquisition earn-outs, and business realignment expenses are excluded from Adjusted EBITDA, are included incomponents of Other operating expenses (income) on the StatementStatements of Operations. See
4 Business realignment expense includes the amounts accounted for as exit costs under ASC 420 as described in Note 1110 to Notes tothe Consolidated Financial Statements, and the related impacts of business realignment actions subject to other accounting guidance. There were no related impacts for further detail.the three and six months ended March 31, 2020 and 2019.
Critical Accounting Policies and Estimates
Our discussionThe Company's critical accounting policies and analysisestimates are described in our Annual Report on Form 10-K for the year ended September 30, 2019, and in Note 2 — Summary of our financial condition and results of operations are based upon ourSignificant Accounting Policies to the consolidated financial statements, whichstatements.
As discussed in Note 2 — Summary of Significant Accounting Policies, we adopted ASC 842, Leases, as of October 1, 2019, using a modified retrospective approach where our Consolidated Balance Sheet as of September 30, 2019 was not changed. Relative to the most recent annual report on Form 10-K, there have been preparedno other material changes to the Company's accounting policies used in accordance with GAAP. The preparation ofpreparing these interim consolidated financial statements requires us to make estimates and judgments that affectstatements.
As of July 1, 2019, the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. A “critical accounting estimate” is one which is both important to the portrayal of our financial condition and results and requires management’s most difficult, subjective or complex judgments, often asCompany performed its annual impairment testing using a result of the need to make estimates about the effect of matters that are inherently uncertain. We continuously evaluate our critical accounting estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue recognition. For transactions in our ecommerce marketplaces, which generate substantially all of our revenue, we recognize revenue when all of the following criteria are met:
a buyer submits the winning bid in an auction and, as a result, evidence of an arrangement exists, and the sale price has been determined;
the buyer has assumed risks and rewards of ownership; and
collection is reasonably assured.
Most of our sales are recorded subsequent to receipt of payment authorization, utilizing credit cards, wire transfers and PayPal, an Internetfair-value based payment system, as methods of payments. As a result, we are not subject to significant collection risk, as goods are generally not shipped before payment is received.
Fee revenue is principally revenue earned under the consignment model, and is presented separately as it accounts for more than 10% of total revenue.
Transactions are also evaluated to determine whether we should report gross proceeds as revenue, for example, when we act as the principal in the arrangement, or if we should report revenue as our net commissions, for example, when we act as an agent. In arrangements in which we are deemed to be the primary obligor, bear physical and general inventory risk, and credit risk, we recognize as revenue the gross proceeds from the sale, including buyer’s premiums. In arrangements in which we act as an agent or broker on a consignment basis, without taking general or physical inventory risk, revenue is recognized based on the sales commissions that are paid to us by the sellers for utilizing our services; in this situation, sales commissions represent a percentage of the gross proceeds from the sale that the seller pays to us upon completion of the transaction.
We have evaluated our revenue recognition policy related to sales under our purchase transaction model and determined it is appropriate to account for these sales on a gross basis. The following factors were most heavily relied upon in our determination:
We are the primary obligor in the arrangement.
We are the seller in substance and in appearance to the buyer; the buyer contacts us if there is a problem with the purchase. Only we and the buyer are parties to the sales contract and the buyer has no recourse to the supplier. If the buyer has a problem, he or she looks to us, not the supplier.
The buyer does not and cannot look to the supplier for fulfillment or for product acceptability concerns.
We have general inventory risk.
We take title to the inventory upon paying the amount set forth in the contract with the supplier. Such amount is generally a percentage of the supplier’s original acquisition cost and varies depending on the type of the inventory purchased or a fixed nominal amount under our Scrap contract.
We are at risk of losstest for all amounts paid to the supplier in the event the property is damaged or otherwise becomes unsaleable. In addition, under the previous Scrap contract, as payments made for inventory were excluded from the calculation for the profit-sharing distribution under our DoD contracts, we effectively bore inventory risk for the full amount paid to acquire the property (i.e., there was no sharing of inventory risk).
The amount of our revenue that was generated outside of the U.S. for the three months ended December 31, 2017reporting units, and 2016 was 13.4% and 13.3%, respectively.
Inventory. Inventory consists of products available for sale and is valued at net realizable value. This valuation requires us to make judgments based on currently available information about expected recoverable value.
Valuation of goodwill and other intangible assets. We identify and value intangible assets that we acquire in business combinations, such as customer arrangements, customer relationships and non-compete agreements, that arise from contractual or other legal rights or that are capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged. The fair value of identified intangible assets is based upon an estimate of the future economic benefits expected to result from ownership, which represents the amount at which the assets could be bought or sold in a current transaction between willing parties, that is, other than in a forced or liquidation sale.
We test our goodwill for impairment annually or more frequently if events or circumstances indicate impairment may exist. Examples of such events or circumstances could include a significant change in business climate, a loss of significant sellers or buyers, or a significant decline in stock price. We make a qualitative evaluation about the likelihood of goodwill impairment to determine whether we should calculatedetermined the fair value for each of a reporting unit. If our evaluation indicates a likelihood of goodwill impairment, we apply a two-step fair value-based test to assess goodwill for impairment of our fourits reporting units with goodwill balances substantially exceeded their carrying values except for the Machinio reporting unit, which areexceeded its carrying value by approximately 11%.
As of March 31, 2020, in response change in economic conditions resulting from the same as our four operating segments (RSCG, CAG, GovDeals,COVID-19 pandemic, the Company performed an interim impairment test using a fair-value based test for all reporting units with goodwill balances, and IronDirect). The first step comparesdetermined that the fair value for each of aits reporting unit to itsunits with goodwill balances substantially exceeded their carrying amount, including goodwill. If thevalues except for CAG and Machinio, which exceeded their carrying amount of the reporting unit exceeds its fair value, we perform the second step, which compares the carrying amount of the reporting unit’s goodwill to the implied fair value of the goodwill. Ifvalues by approximately 21% and 12%, respectively.
The Company determined the fair value of the goodwillCAG and Machinio reporting units using a discounted cash flow (DCF) analysis. The DCF analysis relied on significant assumptions and judgments about the forecasts of future cash flows over the five-year projection period, including revenues, gross profit margins, operating expenses, income taxes, capital expenditures, working capital, and an estimate of the impact and duration of COVID-19 on those factors. A long-term growth rate of 2.5% was applied thereafter. These forecasts of future cash flows represent the Company's best estimate using information that is less thancurrently available. However, given the carrying amount, an impairment loss would be recorded in our statements of operations. Intangible assetsuncertainty associated with definite lives are amortized over their estimated useful livesthe COVID-19 pandemic, including its extent and are also reviewedduration, actual results could differ significantly from those estimates.
The cash flows for impairment if events or changes in circumstances indicate that their carrying amount may not be realizable.
Our management makes certain estimatesCAG and assumptions in order to determine the fair value of net assets and liabilities, including, among other things, an assessment of market conditions, projected cash flows,Machinio were discounted at a weighted average cost of capital (WACC) of 17% and growth rates, which could significantly26%, respectively, and reflected an increase in the equity risk premium caused by the emergence of the COVID-19 pandemic. Given the uncertainty that COVID-19 has introduced into the equity markets, the Company performed a sensitivity analysis that noted
that the CAG and Machinio WACCs would need to increase by over 180 and 260 basis points, respectively, to impact the reported valuerecovery of goodwill and other intangible assets. Estimating future cash flows requires significant judgment, and our projections may vary from cash flows eventually realized. goodwill.
The valuations employ a combination of present value techniques to measure fair value, corroborated by comparisons to estimated market multiples. These valuations are based on a discount rate determined by our management to be consistent with industry discount rates and the risks inherent in our current business model.
Determining the fair value of a reporting unit requires the exercise of significant judgment, including judgments about the appropriate discount rates, terminal growth rates, weighted average costs of capital, exit multiples, and the amount and timing of expected future cash flows. The judgments used in determining the fair value of our reporting units are based on significant unobservable inputs which causes the determination of the implied fair value of goodwill to fall within level three of the GAAP fair value hierarchy. The cash flows employed in the discounted cash flow analysis are based on the most recent budgets, forecasts, and business plans as well as various growth rate assumptions for years beyond the current business plan period. Discount rate assumptions are based on an assessment of the risk inherent in the future revenue streams and cash flows of the reporting unit. Various factors, including the failure to successfully implement our business plan for any of our reporting units, as well as other factors beyond our control, could have a negative effect on the fair value of such reporting unit, and increase the risk of further impairments of goodwill in the future.
A reporting unit represents a component of an operating segment that (a) constitutes a business, (b) has discrete financial information, and (c) its performance is reviewed by management. During fiscal year 2016 we concluded we had five
reporting units-RSCG, CAG, GovDeals, TruckCenter, and IronDirect. On January 30, 2017, we decided to exit certain TruckCenter operations in order to focus our time and resources on our ecommerce marketplace strategy. As a result, as of December 31, 2017, we have four reporting units. WeCompany will continue to sell trucks and related equipment through our other ecommerce marketplaces.
As part of our fiscal year 2017 annual impairment assessment performed as of July 1, 2017, we believedmonitor these reporting units for changes that certain events required performing a step one evaluationcould impact the recoverability of goodwill, to identify potential impairment. As a result of the step one test, we determined that our reporting units with goodwill had fair values as of September 30, 2017, that substantially exceeded their respective book values.
During the three months ended December 31, 2017, we did not identify any indicators of impairment.
We cannot predict the occurrence of certain future events that might adversely affect the reported value of goodwill and other intangible assets, which totaled $45.9 million at December 31, 2017. Such events may include strategic decisions made in response to economic and competitive conditions, the impact of the economic environmentwill depend on our base of buyers and sellers or material negative changes in our relationships with material customers.
Income taxes. We account for income taxes using the asset and liability approach for measuring deferred taxes based on temporary differences between the financial statement and income tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for the years in which the taxes are expected to be paid or recovered. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such determination, we consider all available positive and negative evidence to estimate whether future taxable income will be generated to permit useduration of the existing deferred tax asset. A significant piece of subjective negative evidence evaluated was the cumulative loss incurred over the three-year period ended September 30, 2017,COVID-19 pandemic, and projected losses in the near-term future. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.
On the basis of the evaluation, we recorded a charge of $10.1 million to our valuation allowance during the fiscal year ended September 30, 2017. During the three months ended December 31, 2017, we recorded a reduction to our valuation allowance of $10.3 million. The reduction is comprised of $10.3 million for the re-measurement of deferred tax assets at the newly enacted tax rate and $1.7 million for the recognition of tax credits resulting from the repeal of the alternative minimum tax, netted against a charge of $1.7 million of net operating losses generated in the first quarter.
We apply the authoritative guidance related to accounting for uncertainty in income taxes. A benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes,its impact on the basis of the technical merits. During the three months ended December 31, 2017, we did not identify new uncertain tax benefits.equity markets.
We provide for income taxes based on our estimate of federal and state tax liabilities. These estimates include, among other items, effective rates for state and local income taxes, estimates related to depreciation and amortization expense allowable for tax purposes, and the tax deductibility of certain other items. Our estimates are based on the information available to us at the time we prepare the income tax provision. We generally file our annual income tax returns several months after our fiscal year-end. Income tax returns are subject to audit by federal, state and local governments, generally years after the returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws.
Stock-based compensation. We recognize all share-based payments to employees, including grants of employee stock options, in the statements of operations based on their estimated fair values. We use the Black-Scholes option pricing model as well as a Monte Carlo simulation to estimate the fair values of certain share-based payments.
The above list is not intended to be a comprehensive list of all of our accounting estimates. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP, with little need for management’s judgment in their application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. See our audited financial statements and related notes, which contain accounting policies and other disclosures required by GAAP.
Components of Revenue and Expenses
Revenue. We generate a large portionRefer to the discussion in the Our revenue section above, and to Note 2 — Summary of our revenue from the proceeds of sales of merchandise held in inventory. We also generate commission revenue from salesSignificant Accounting Policies in our marketplacesAnnual Report on Form 10-K for discussion of merchandise that is owned by others. Our revenue recognition practices are discussed in more detail in the section above entitled “Critical Accounting Estimates.”
Company's related accounting policies.
Cost of goods sold. CostRefer to the discussion in Note 2 — Summary of Significant Accounting Policies in our Annual Report on Form 10-K for discussion of the Company's Costs of goods sold includes the costs of purchasing and transporting property for auction, as well as credit card transaction fees.related accounting policies.
Seller distributions. Under the current Scrap contract,Contract, which concluded on September 30, 2019, we acquireacquired scrap property from the DLA for resale and paypaid the DLA a revenue-sharing paymentseller distributions equal to 64.5% of the gross resale proceeds. We bear all of the costs for the sorting, merchandising and sale of the property. Our previous Scrap contract with the DoD was structured as a profit-sharing arrangement in which we purchased and took possession of all goods we received from the DoD at a contractual price per pound. After deducting allowable operating expenses, we disbursed to the DoD on a monthly basis a percentage of the profits of the aggregate monthly sales. We retained the remaining percentage of these profits after the DoD’s disbursement.
Technology and operations. Technology expenses consist primarily of the cost of technical staff who develop, deploy, and maintain our marketplaces and corporate infrastructure. These personnel also develop and upgrade the software systems that support our operations, such as sales processing. Technology expenses also includes certain costs associated with our LiquidityOnee-commerce platform.
Because our marketplaces and support systems require frequent upgrades and enhancements to maintain viability, we have determined that the useful life for certain internally developed software is less than one year. As a result, we expense those costs as incurred. However, where we determine that the useful life of the internally developed software will be greater than one year, we capitalize development costs in accordance with ASC 350.350-40, Internal-use software. As such, we are capitalizing certain development costs associated with our LiquidityOne platform. At the end of the first quarter of fiscal 2017, we determined that a seller and buyer management module of the LiquidityOnee-commerce platform, was ready for its intended use. As such, we began amortizing the associated capitalized costs during the second quarter of fiscal year 2017. During the fourth quarter of fiscal year 2017, we launched our Network International energy marketplace on the new LiquidityOne platform. As such, we determined that additional modules of the LiquidityOne platform were ready for their intended use, and began amortizing the associated capitalized costs during the fourth quarter of fiscal year 2017. During the first quarter of fiscal 2018, we completedas well as other software development of our new Return to Vendor ("RTV") module of the LiquidityOne platform, and began amortizing the associated capitalized costs during the quarter.activities.
Operations expenses consist primarily of operating costs, including buyer relations, shipping logistics and distribution center operating costs.
Sales and marketing. Sales and marketing expenses include the cost of our sales and marketing personnel as well as the cost of marketing and promotional activities. These activities include all sales and marketing-related activity, including but not limited to trade shows and online marketing campaigns such as paid search advertising.
General and administrative. General and administrative expenses include all corporate and administrative functions that support our operations and provide an infrastructure to facilitate our future growth. Components of these expenses include executive management and staff salaries, bonuses and related taxes and employee benefits; travel; headquarters rent and related occupancy costs; and legal and accounting fees. The salaries, bonus and employee benefits costs included as general and administrativeThese expenses are generally more fixed in nature than our other operating expenses and do not significantly vary directly within response to the volume of merchandise sold through our marketplaces.
Depreciation and amortization. Depreciation and amortization expenses consist primarily of the depreciation of property and equipment, amortization of amounts recorded in connection with the purchase of furniture, fixtures and equipmentinternally developed software, and amortization of intangible assets from our acquisitions.assets.
Other operating expenses (income). Other operating expenses (income)expense includes the change in fair value of financial assets and liabilities,contingent consideration, as well as business realignment expenses, including those associated with restructuring initiatives and the exit of certain business operations.
Interest and other (income) expense, net. Interest (income) expense and other (income) expense, net consists of interest income on short-term investments and the promissory note receivable relatedissued to JTC, the salecomponents of net periodic pension (benefit) other than the Jacobs Trading business,service component, and impacts of foreign currency fluctuations, and gains and losses on the sale of fixed assets.fluctuations.
Income taxes. For interim income tax reporting, the Company estimates itswe estimate our annual effective tax rate and appliesapply this effective tax rate to its year to dateour year-to-date pre-tax (loss) income. The Company’sOur effective income tax rate before discrete items was -5.8%(5.6%) for the threesix months ended DecemberMarch 31, 2017.2020. The 2018 effective tax rate differed from the statutory federal rate of 24.53%21% primarily as a result of the valuation allowance charge for fiscal 2017on current year losses and the impact of foreign, state, and local income taxes and permanent tax adjustments.
Results of Operations
The following table sets forth, for the periods indicated, selected statement of operations data expressed as a percentage of revenue:our operating results:
| | | | | | | | Three Months Ended March 31, | | | Six Months Ended March 31, | | |
| | Three Months Ended December 31, | |
| | 2017 | | 2016 | |
(dollars in thousands) | | (dollars in thousands) | 2020 | | 2019 | | $ Change | | % Change | | 2020 | | 2019 | | $ Change | | % Change |
Revenue | | 100.0 | % | | 100.0 | % | Revenue | $ | 35,203 | | | $ | 37,355 | | | $ | (2,152) | | | (5.8) | % | | $ | 65,552 | | | $ | 73,090 | | | $ | (7,538) | | | (10.3) | % |
Fee revenue | | Fee revenue | 17,621 | | | 19,445 | | | (1,824) | | | (9.4) | | | 36,776 | | | 37,763 | | | (987) | | | (2.6) | |
Total revenue | | Total revenue | 52,824 | | | 56,800 | | | (3,976) | | | (7.0) | | | 102,328 | | | 110,853 | | | (8,525) | | | (7.7) | |
Costs and expenses from operations: | | |
| | |
| Costs and expenses from operations: | | | | | | | |
Cost of goods sold | | 45.2 |
| | 45.7 |
| |
Cost of goods sold (excludes depreciation and amortization) | | Cost of goods sold (excludes depreciation and amortization) | 26,619 | | | 24,807 | | | 1,812 | | | 7.3 | | | 50,795 | | | 49,763 | | | 1,032 | | | 2.1 | |
Seller distributions | | 5.4 |
| | 6.4 |
| Seller distributions | — | | | 2,775 | | | (2,775) | | | (100.0) | | | — | | | 5,399 | | | (5,399) | | | (100.0) | |
Technology and operations | | 29.6 |
| | 30.9 |
| Technology and operations | 11,586 | | | 13,429 | | | (1,843) | | | (13.7) | | | 22,827 | | | 25,953 | | | (3,126) | | | (12.0) | |
Sales and marketing | | 13.6 |
| | 14.1 |
| Sales and marketing | 10,109 | | | 9,135 | | | 974 | | | 10.7 | | | 19,714 | | | 18,116 | | | 1,598 | | | 8.8 | |
General and administrative | | 12.4 |
| | 13.9 |
| General and administrative | 7,397 | | | 8,624 | | | (1,227) | | | (14.2) | | | 15,104 | | | 17,258 | | | (2,154) | | | (12.5) | |
Depreciation and amortization | | 2.0 |
| | 2.0 |
| Depreciation and amortization | 1,577 | | | 1,165 | | | 412 | | | 35.4 | | | 3,149 | | | 2,369 | | | 780 | | | 32.9 | |
Other operating expenses (income) | | 2.4 |
| | (1.3 | ) | |
Other operating (income) expenses | | Other operating (income) expenses | (12) | | | 1,350 | | | (1,362) | | | (100.9) | | | 181 | | | 1,555 | | | (1,374) | | | (88.4) | |
Total costs and expenses | | 110.6 |
| | 111.7 |
| Total costs and expenses | 57,276 | | | 61,285 | | | (4,009) | | | (6.5) | | | 111,770 | | | 120,413 | | | (8,643) | | | (7.2) | |
Loss from operations | | (10.6 | ) | | (11.7 | ) | Loss from operations | (4,452) | | | (4,485) | | | 33 | | | 0.7 | | | (9,442) | | | (9,560) | | | 118 | | | 1.2 | |
Interest and other (income) expense, net | | (0.7 | ) | | — |
| |
(Loss) before provision for income taxes | | (9.9 | ) | | (11.7 | ) | |
(Benefit) provision for income taxes | | (7.9 | ) | | 0.2 |
| |
Interest and other income, net | | Interest and other income, net | (257) | | | (451) | | | 194 | | | 43.0 | | | (509) | | | (770) | | | 261 | | | 33.9 | |
Loss before provision for income taxes | | Loss before provision for income taxes | (4,195) | | | (4,034) | | | (161) | | | (4.0) | | | (8,933) | | | (8,790) | | | (143) | | | (1.6) | |
Provision for income taxes | | Provision for income taxes | 43 | | | 328 | | | (285) | | | (86.9) | | | 501 | | | 594 | | | (93) | | | (15.7) | |
Net loss | | (2.0 | )% | | (11.9 | )% | Net loss | $ | (4,238) | | | $ | (4,362) | | | $ | 124 | | | 2.8 | % | | $ | (9,434) | | | $ | (9,384) | | | $ | (50) | | | (0.5) | % |
The following table presents segment GMV, revenue, gross profit and gross profit margin for the periods indicated:
|
| | | | | | | | | |
| | | Three Months Ended December 31, |
| | | 2017 | | 2016 |
GovDeals: | | | | |
| Total revenue | | $ | 7,040 |
| | $ | 5,813 |
|
| Gross profit | | 6,543 |
| | 5,438 |
|
| Gross profit margin | | 92.9 | % | | 93.5 | % |
| | | | | |
CAG: | | | | |
| Total revenue | | 32,063 |
| | 42,506 |
|
| Gross profit | | 17,603 |
| | 21,202 |
|
| Gross profit margin | | 54.9 | % | | 49.9 | % |
| | | | | |
RSCG: | | | | |
| Total revenue | | 20,485 |
| | 21,411 |
|
| Gross profit | | 6,728 |
| | 7,002 |
|
| Gross profit margin | | 32.8 | % | | 32.7 | % |
| | | | | |
Corporate & Other: | | | | |
| Total revenue | | 1,555 |
| | 1,065 |
|
| Gross profit | | (675 | ) | | 335 |
|
| Gross profit margin | | (43.4 | )% | | 31.5 | % |
| | | | | |
Consolidated: | | | | |
| Total revenue | | 61,143 |
| | 70,796 |
|
| Gross profit | | $ | 30,199 |
| | $ | 33,977 |
|
| Gross profit margin | | 49.4 | % | | 48.0 | % |
Three Months Ended December 31, 2017 Compared to Three Months Ended December 31, 2016
Segment Results
GovDeals. Revenue from our GovDeals segment increased 21.1%, or $1.2 million, due to additional sales volume from existing clients and an increase in the number of new sellers. GMV from this segment increased 26.8%, or $15.1 million, also due to additional sales volume from existing clients and an increase in the number of new sellers. Gross profit within this segment increased 20.3%, or $1.1 million, to $6.5 million for the three months ended December 31, 2017, from $5.4 million for the three months ended December 31, 2016, due to the new business. As a percentage of revenue, gross profit slightly decreased to 92.9%, from 93.5% in the prior year. Gross profit(which is calculated as total revenue less cost of goods sold (exclusive of depreciation and client distributions.amortization) and Seller distributions), and gross profit margin for the periods indicated:
CAG. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, | | | | Six Months Ended March 31, | | |
(dollars in thousands) | | | 2020 | | 2019 | | 2020 | | 2019 |
GovDeals: | | | | | | | | | |
| GMV | | $ | 77,158 | | | $ | 77,390 | | | $ | 156,349 | | | | $ | 153,698 | |
| Total revenue | | 7,822 | | | 7,697 | | | 15,837 | | | | 15,355 | |
| Gross profit | | 7,278 | | | 7,042 | | | 14,724 | | | | 14,103 | |
| Gross profit margin | | 93.0 | % | | 91.5 | % | | 93.0 | % | | | 91.8 | % |
| | | | | | | | | |
RSCG: | | | | | | | | | |
| GMV | | 44,320 | | | 41,899 | | | 84,190 | | | | 77,343 | |
| Total revenue | | 36,257 | | | 34,011 | | | 67,954 | | | | 63,489 | |
| Gross profit | | 12,394 | | | 12,287 | | | 22,699 | | | | 21,836 | |
| Gross profit margin | | 34.2 | % | | 36.1 | % | | 33.4 | % | | | 34.4 | % |
| | | | | | | | | |
CAG: | | | | | | | | | |
| GMV | | 22,822 | | | 36,070 | | | 52,355 | | | | 82,429 | |
| Total revenue | | 7,039 | | | 13,684 | | | 14,981 | | | | 29,165 | |
| Gross profit | | 4,922 | | | 8,614 | | | 10,736 | | | | 17,496 | |
| Gross profit margin | | 69.9 | % | | 62.9 | % | | 71.7 | % | | | 60.0 | % |
| | | | | | | | | |
Machinio: | | | | | | | | | |
| GMV | | — | | | — | | | — | | | | — | |
| Total revenue | | 1,706 | | | 1,374 | | | 3,556 | | | | 2,366 | |
| Gross profit | | 1,611 | | | 1,265 | | | 3,374 | | | | 2,143 | |
| Gross profit margin | | 94.4 | % | | 92.1 | % | | 94.9 | % | | | 90.6 | % |
| | | | | | | | | |
Corporate & Other: | | | | | | | | | |
| GMV | | — | | | 34 | | | — | | | | 469 | |
| Total revenue | | — | | | 34 | | | — | | | | 478 | |
| Gross profit | | — | | | 10 | | | — | | | | 113 | |
| Gross profit margin | | — | % | | 29.4 | % | | — | % | | | 23.6 | % |
| | | | | | | | | |
Consolidated: | | | | | | | | | |
| GMV | | 144,300 | | | 155,393 | | | 292,894 | | | | 313,939 | |
| Total revenue | | 52,824 | | | 56,800 | | | 102,328 | | | | 110,853 | |
| Gross profit | | 26,205 | | | 29,218 | | | 51,533 | | | | 55,691 | |
| Gross profit margin | | 49.6 | % | | 51.4 | % | | 50.4 | % | | | 50.2 | % |
Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019
Segment Results
GovDeals. Revenue from our CAGGovDeals segment decreased 24.6%increased 1.6%, or $10.4$0.1 million, and GMV decreased 0.3%, or $0.2 million. Beginning in mid-March, GovDeals began to experience reduced volumes resulting from government facility closures in response to the COVID-19 pandemic, which also prevented buyer pickups and ability to complete related transactions. As a result of the increase in revenues and an increase in gross profit margin, gross profit increased 3.4%, or $0.2 million. Gross profit margin increased 1.5%, primarily due to a decline in vehicle sales which required transportation costs to arrive at the point of sale.
RSCG. Revenue from our RSCG segment increased 6.6%, or $2.2 million, due to a lower volume5.8%, or $2.4 million, increase in GMV driven by growing volumes within existing seller accounts and launching new programs with mid-sized and large retailers, and an increase in the mix of transactions performed under the purchase model. Beginning in mid-March, RSCG began to experience reduced volumes resulting from retailers prioritizing their attention and resources to meet the demands for essential goods sold under our Surplus Contract,in response to the COVID-19 pandemic. Buyer demand has been mixed, with some buyers increasing their average purchases and some decreasing, depending on varying circumstances. As a changeresult of the increase in revenues, partially offset by a decline in gross profit margin, gross profit increased 0.9%, or $0.1 million. Gross profit margin decreased 1.9% primarily due to increased shipping costs and an increase in mix of commodities tofrom lower value commodities sold under our Scrap contract. Also contributing to the decrease in revenue is lower service revenue related to our Surplus contract, as well as a decrease in revenue within our CAG Commercial business.margin product categories.
CAG. Revenue and GMV from ourthe CAG segment decreased 29.4%48.6%, or $22.4$6.6 million, dueand 36.7%, or $13.2 million, respectively. The conclusion of the Scrap Contract caused revenue and GMV to each decline by $4.3 million. Excluding the impact of the completed Scrap Contract, revenue decreased by 24.9%, or $2.3 million, and GMV decreased by 28.1%, or $8.9 million. The declines were driven by the COVID-19 pandemic, which had a lower volume oflarger effect on CAG, as travel restrictions and facility closures in China early in the quarter interrupted supply from sellers and prevented buyers from inspecting goods sold underalready for sale. This trend affected our Surplus Contract, a changeEMEA and North American regions in mix of commodities to lower value commodities sold under our Scrap contract,March as well as a decreasethe pandemic spread. In addition, the North American region experienced softness in GMV related to our CAG Commercial business. its industrial and bio-pharma verticals. Gross profit within the CAG segment decreased 17.0%42.9%, or $3.6$3.7 million, due to $17.6a $1.4 million forimpact from the three months ended December 31, 2017,completion of the Scrap Contract, and the impacts of the revenue declines. Gross profit margin increased to 69.9% from $21.2 million for62.9% due the three months ended December 31, 2016. This decrease can primarily be attributed tocompletion of the Scrap Contract, which had lower volume of goods sold under our Surplus Contract, a changegross profit margins than the remaining business, partially offset by an increase in mix of commodities to lower value commodities sold under our Scrap Contract, and lower service revenue underrevenues earned from the Surplus Contract. As a percentage of revenue, gross profit increased to 54.9%, from 49.9%.purchase model.
RSCG. Machinio. Revenue from our RSCG segment decreased 4.3%, or $0.9 million. The decrease in revenue is driven by the change in mix from purchase model to consignment model transactions. GMV from our RSCGMachinio segment increased 16.9%, or
$4.2 million over fiscal 2016. The increase in GMV is attributable to increased sales under our consignment model during fiscal 2018. The overall decrease in revenue, but increase in GMV is due to a change in mix from purchase to consignment model transactions. Gross profit within the RSCG segment decreased 3.9%24.2%, or $0.3 million, fordue to an increase in subscription activity, and due to revenue earned from deferred revenues no longer containing effects from purchase accounting. As a result of the three months ended December 31, 2017,increase in revenues, gross profit increased 27.4%, or $0.3 million. However, beginning in March, Machinio began to experience a reduction in traffic due to the decrease in revenue. As a percentage of revenue, gross profit slightly increased to 32.8%, from 32.7%.COVID-19 pandemic.
Corporate & Other. Revenue from Corporate & Other primarily relates to IronDirect and certain TruckCenter operations. The decreasechanges in revenue, of $0.5 million is largely made up ofGMV, gross profit and gross profit margin are due to the decreases in revenue related to our decision toCompany's exit certain TruckCenter operationsfrom the IronDirect business in January 2017, partially offset by increases in revenue from IronDirect. Gross profit within Corporate & Other decreased $1.0 million over prior year, mostly attributable to a $0.6 million inventory reserve within IronDirect during the first quarter of fiscal 2018, and $0.3 million of gross profit related to our Truckcenter operations during the three months ended December 31, 2017, which we subsequently exited.2019.
Consolidated Results
Total Revenue.Revenue - Total consolidated revenue decreased $9.7$4.0 million, or 13.7%,7.0%. Refer to $61.1the discussion of Segment Results above for discussion of the decrease in revenue.
Cost of goods sold. Cost of goods sold increased $1.8 million, for the three months ended December 31, 2017, from $70.8 million for the three months ended December 31, 2016,or 7.3%, primarily due to a $10.4revenue increases in RSCG, partially offset by revenue declines in CAG.
Seller distributions. Seller distributions decreased $2.8 million, or 100.0%, due to the completion of the Scrap Contract.
Technology and operations expenses. Technology and operations expenses decreased $1.8 million, or 13.7%. The decrease included $1.4 million due to the completion of the Scrap Contract and $1.6 million in revenuereductions in Corporate and CAG (excluding the Scrap Contract) driven by benefits from our CAG segment, a $0.9 million decreaserestructuring and other organizational changes performed in revenue from our RSCG segment,fiscal 2019. These decreases were partially offset by a $1.2 million increase in revenueRSCG and GovDeals driven by increased customer support and operations expenses from our GovDeals segment. Total consolidated GMVthe continued growth in those segments. Due to the timing of implementation, the actions taken to reduce operating expenses in response to the COVID-19 pandemic did not have a significant impact this quarter, but are expected to result in decreased $4.3technology and operations expenses while they are in effect.
Sales and marketing expenses. Sales and marketing expenses increased $1.0 million, or 2.8%10.7%, due to $155.4a $0.4 million increase in sales expenses driven by the increases in revenues at GovDeals, RSCG and Machinio, and a $0.3 million increase in marketing labor and expenses to promote our new e-commerce technology platform and develop our consolidated marketplace. Due to the timing of implementation, the actions taken to reduce operating expenses in response to the COVID-19 pandemic did not have a significant impact this quarter, but are expected to result in decreased sales and marketing expenses while they are in effect.
General and administrative expenses. General and administrative expenses decreased $1.2 million, or 14.2%, and was impacted by the completion of the Scrap Contract and by benefits from restructuring and other organizational changes performed in fiscal 2019. Due to the timing of implementation, the actions taken to reduce operating expenses in response to the COVID-19 pandemic did not have a significant impact this quarter, but are expected to result in decreased general and administrative expenses while they are in effect.
Other operating expenses. Other operating expense for the three months ended DecemberMarch 31, 2017, from $159.7 million for the three months ended December 31, 2016, primarily due to a $22.4 million decrease in GMV from our CAG segment, a $1.2 million decrease within Corporate &2020 was not significant. Other partially offset by a $15.1 million increase in GMV from our GovDeals segment, and a $4.2 million increase in GMV from our RSCG segment.
Costoperating expense of goods sold. Cost of goods sold decreased $4.7 million, or 14.6%, to $27.6 million for the three months ended December 31, 2017, from $32.3 million for the three months ended December 31, 2016. Approximately $4.3 million of this decrease is attributable to a lower volume of sales under our Surplus Contract during the three months ended December 31, 2017. In line with these changes, cost of goods sold slightly decreased to 45.2% of revenue, from 45.7%.
Seller distributions. Seller distributions decreased $1.2 million, or 26.7%, to $3.3 million for the three months ended December 31, 2017, from $4.5 million for the three months ended December 31, 2016, due to lower sales under our Scrap Contract during the three months ended December 31, 2017. As a percentage of revenue, seller distributions decreased to 5.4%, from 6.4%.
Technology and operations expenses. Technology and operations expenses decreased $3.8 million, or 17.4%, to $18.1 million for the three months ended December 31, 2017, from $21.9 million for the three months ended December 31, 2016, due to a decrease in staff costs of approximately $3.4 million, partially the result of business realignment activities. As a percentage of revenue, technology and operations expenses decreased to 29.6%, from 30.9%.
Sales and marketing expenses. Sales and marketing expenses decreased $1.7 million, or 17.0%, to $8.3 million for the three months ended December 31, 2017, from $10.0 million for the three months ended December 31, 2016, due to decreases in staff cost of approximately $1.2 million, as well as lower marketing and promotional expenses. As a percentage of revenue, sales and marketing expenses decreased to 13.6%, from 14.1% in the prior year.
General and administrative expenses. General and administrative expenses decreased $2.3 million, or 23.2%, to $7.6 million for the three months ended December 31, 2017, from $9.9 million for the three months ended December 31, 2016. Included within this decrease are reductions in overall staff cost of approximately $1.2 million, partially the result of business realignment activities, as well as lower non-income tax regulatory costs, and a decrease in certain lease costs. As a percentage of revenue, general and administrative expenses decreased to 12.4%, from 13.9% in the prior year.
Depreciation and amortization expenses. Depreciation and amortization expenses decreased $0.2 million, or 14.3%, to $1.2 million for the three months ended December 31, 2017, from $1.4 million for the three months ended DecemberMarch 31, 2016.
Other operating expenses (income). Other operating expenses (income) reflected an expense of approximately $1.5 million2019 represents the increase in the three months ended December 31, 2017, which consisted of approximately $1.3 million of restructuring cost (for further information, see Note 11 to the Consolidated Financial Statements included in this Report), and a $0.1 million loss on thefair value of a right the Company holds from its participation in certain principal transactions in the Company's CAG business. In the three months ended December 31, 2016, Other operating expenses (income) reflected income of $0.9 million, whichMachinio earn-out liability and acquisition related costs.
represented a gain on the value of a right the Company holds from its participation in certain principal transactions in the Company's CAG business.
Interest and other (income) expense,income, net. Interest and other (income) expense,income, net, increased $0.4decreased by $0.2 million over prior year, consistingdue to a decline in the holdings of a gain on sale of equipment of approximately $0.3 million,short-term investments and $0.1 million ofalso in their interest income on our note receivable.rates.
(Benefit) provisionProvision for income taxes. (Benefit) provisionProvision for income taxes increased $4.9decreased $0.3 million to a benefit of $4.8 million for the three months ended December 31, 2017, from a provision of $0.1 million for the three months ended December 31, 2016, due to a decrease in the deferred tax balance resulting from the newly enacted lower corporate tax rate, a reduction to the valuation allowance, and the impact of foreign, state, and local taxes and permanent tax adjustments.
Net loss. Net lossSix Months Ended March 31, 2020 Compared to the Six Months Ended March 31, 2019
Segment Results
GovDeals. Revenue from our GovDeals segment increased 3.1%, or $0.5 million, due to a 1.7%, or $2.7 million increase in GMV from adding new sellers. However, beginning in mid-March, GovDeals began to experience reduced volumes resulting from government facility closures in response to the COVID-19 pandemic, which also prevented buyer pickups and ability to complete related transactions. As a result of the increase in revenues and an increase in gross profit margin, gross profit increased 4.4%, or $0.6 million. Gross profit margin increased 1.2%, primarily due to a decline in vehicle sales which required transportation costs to arrive at the point of sale.
RSCG. Revenue from our RSCG segment increased 7.0%, or $4.5 million, due to an 8.9%, or $6.8 million, increase in GMV driven by growing volumes within existing seller accounts and launching new programs with mid-sized and large retailers. Beginning in mid-March, RSCG began to experience reduced volumes resulting from retailers prioritizing their attention and resources to meet the demands for essential goods in response to the three months ended December 31, 2017 wasCOVID-19 pandemic. Buyer demand has been mixed, with some buyers increasing their average purchases and some decreasing, depending on varying circumstances. As a result of the increase in revenues, partially offset by a decline in gross profit margin, gross profit increased 4.0%, or $0.9 million. Gross profit margin decreased 1.0% primarily due to increased shipping costs and an increase in mix from lower margin product categories.
CAG. Revenue and GMV from the CAG segment decreased 48.6%, or $14.2 million, and 36.5%, or $30.1 million, respectively. The conclusion of the Scrap Contract caused revenue and GMV to each decline by $8.4 million. Excluding the impact of the completed Scrap Contract, revenue decreased by 28.3%, or $5.9 million, and GMV decreased by 29.4%, or $21.8 million. The declines were driven by the COVID-19 pandemic, which had a larger effect on CAG, as travel restrictions and facility closures in China early in the quarter interrupted supply from sellers and prevented buyers from inspecting goods already for sale. This trend affected our EMEA and North American regions in March as the pandemic spread. The declines were also influenced by a strong prior year performance in the Asia-Pacific region, and associated with softness in the energy, industrial, and bio-pharma verticals in North America. Gross profit within the CAG segment decreased 38.6%, or $6.8 million, due to a $2.9 million impact from the completion of the Scrap Contract, and as a result of reduction in revenues. Gross profit margin increased to 71.7% from 60.0% due the completion of the Scrap Contract, which had lower gross profit margins than the remaining business, and from the increase in mix of revenues earned from the consignment model.
Machinio. Revenue from our Machinio segment increased 50.3%, or $1.2 million, compareddue to $8.4an increase in subscription activity, and due to revenue earned from deferred revenues no longer containing effects from purchase accounting. As a result of the increase in revenues, gross profit increased 57.4%, or $1.2 million.
Corporate & Other. The changes in revenue, GMV, gross profit and gross profit margin are due to the Company's exit from the IronDirect business in January 2019.
Consolidated Results
Revenue - Total consolidated revenue decreased $8.5 million, or 7.7%. Refer to the discussion of Segment Results above for discussion of the decrease in revenue.
Cost of goods sold. Cost of goods sold increased $1.0 million, or 2.1%, primarily due to revenue increases in RSCG, partially offset by revenue declines in CAG.
Seller distributions. Seller distributions decreased $5.4 million, or 100.0%, due to the completion of the Scrap Contract.
Technology and operations expenses. Technology and operations expenses decreased $3.1 million, or 12.0%. The decrease included $2.7 million due to the completion of the Scrap Contract and $2.3 million in reductions in Corporate and CAG (excluding the Scrap Contract) driven by benefits from restructuring and other organizational changes performed in fiscal 2019. These decreases were partially offset by a $2.2 million increase in RSCG and GovDeals driven by increased customer support and operations expenses from the continued growth in those segments. Due to the timing of implementation, the actions taken to reduce operating expenses in response to the COVID-19 pandemic did not have a significant impact this period, but are expected to result in decreased technology and operations expenses while they are in effect.
Sales and marketing expenses. Sales and marketing expenses increased $1.6 million, or 8.8%, due to a $0.4 million increase in sales expenses driven by the increases in revenues at GovDeals and RSCG, partially offset by the reduced revenues in CAG, and a $1.1 million increase in marketing labor and expenses to promote our new e-commerce technology platform and develop our consolidated marketplace. Due to the timing of implementation, the actions taken to reduce operating expenses in response to the COVID-19 pandemic did not have a significant impact this quarter, but are expected to result in decreased sales and marketing expenses while they are in effect.
General and administrative expenses. General and administrative expenses decreased $2.2 million, or 12.5%, and were impacted by the completion of the Scrap Contract and by benefits from restructuring and other organizational changes performed in fiscal 2019. Due to the timing of implementation, the actions taken to reduce operating expenses in response to the COVID-19 pandemic did not have a significant impact this quarter, but are expected to result in decreased general and administrative expenses while they are in effect.
Other operating expenses. Other operating expense of $0.2 million for the threesix months ended DecemberMarch 31, 2016.2020 represents the increase in fair value of the Machinio earn-out liability. Other operating expense of $1.6 million for the six months ended March 31, 2019 represents the increase in the fair value of the Machinio earn-out liability and acquisition related costs.
Interest and other income, net. Interest and other income, net, decreased by $0.3 million due to a decline in the holdings of short-term investments and also in their interest rates.
Provision for income taxes. Provision for income taxes decreased $0.1 million due to the impact of foreign, state, and local taxes and permanent tax adjustments.
Liquidity and Capital Resources
Historically, our primaryOur operational cash needs have beenprimarily relate to working capital, (includingincluding staffing costs, technology expenses and capital used for inventory purchases),purchases, which we have funded primarily through cash generated from operations. From time to time, we may use our capital resources for other activities, such as contract start-up costs, joint ventures and acquisitions. As of DecemberMarch 31, 2017,2020, we had approximately $96.8$41.8 million in cash as well as $10.0 million in short-term investments.
We expect that the COVID-19 pandemic may cause the Company's GMV, EBITDA and cash position to decline in the short-term although the Company's actions taken to conserve resources and the speed at which business activity may return may mitigate these short-term declines. These mitigation efforts include salary reductions, furloughs, moderation in discretionary spending and non-essential investments, and amendments to vendor payment terms. However, we believe that our existing cash, cash equivalents, and short-term investments will be sufficient to meet our anticipated cash needs for at least the next twelve months.
In fiscal 2019, we deployed our new e-commerce technology platform. We expect to continue to invest in enhancements to our marketplace capabilities and for the implementation of tools for data-driven product recommendations, omni-channel behavioral marketing and predictive analytics and integrated services for our retail supply chain segment.
During the second quarter of fiscal 2020 the Company paid the $5.0 million earn-out payment for the Machinio acquisition we made in July 2018 for which we paid $16.7 million in cash. Throughout the quarter, we have continued to advance the design and development of our LiquidityOne platform, services and analytical tools to empower our clients to maximize bottom-line return, and transform their supply chain into
We did not record a high-performing business function. During the fourth quarter of fiscal year 2017, we launched our Network International energy marketplaceprovision for deferred U.S. tax expense on the new LiquidityOne platform, and during fiscal 2018,undistributed earnings of foreign subsidiaries because we plan to launch further marketplaces onto the platform. We will continue to incur additional costs throughout the duration of this initiative to implement the new platform and educate our employees and clients about the initiative.
The effects of the international provisions of the Tax Cuts and Job Act (“the Act”), which establish a territorial tax system and subject certain foreign earnings on which US tax is currently deferred to a one-time transition tax is uncertain. Based on a preliminary analysis, the Company has not recorded any provisional amounts in the financial statements for the three months ending December 31, 2017 and will re-evaluate its existing accounting positionintend to indefinitely reinvest unremittedthe earnings of these foreign earnings.subsidiaries outside the United States. The amount of such unremittedundistributed foreign earnings was approximately $8.4$4.0 million as of DecemberMarch 31, 2017.2020. As of DecemberMarch 31, 2017,2020 and September 30, 2017, approximately $17.42019, $16.9 million and $14.9$21.0 million, respectively, of cash and cash equivalents was held overseasoutside of the U.S.
We are authorized to repurchase issued and outstanding shares of our common stock under a share repurchase program approved by our Board of Directors. Share repurchases may be made through open market purchases, privately negotiated transactions or otherwise, at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. The repurchase program may be discontinued or suspended at any time and will be funded using our available cash. We did not repurchase shares under this program during the threesix months ended DecemberMarch 31, 20172020 or 2016.2019. As of DecemberMarch 31, 2017,2020, we mayare authorized to repurchase up to an additional $10.1 million in shares under this program.
Most of our sales are recorded subsequent to receipt of payment authorization, utilizing credit cards, wire transfers, and PayPal, an Internet based payment system, as methods of payments. As a result, we are not subject to significant collection risk, as goods are generally not shipped before payment is received.
Changes in Cash Flows: ThreeSix Months Ended DecemberMarch 31, 20172020 Compared to Threethe Six Months Ended DecemberMarch 31, 20162019
Net cash used in operating activities was $12.1 million and $11.6 million for the six months ended March 31, 2020 and 2019, respectively. The $0.5 million increase in cash used in operations between periods was attributable to the $3.8 million portion of the Machinio earn-out payment associated with its increase in value post-acquisition, partially offset by $2.1 million of lower net income as adjusted for non-cash items, and $1.1 million of final payments of seller distributions associated with the completion of the Scrap Contract. Our working capital accounts are subject to natural variations depending on the timing of cash receipts and payments, and our variations in our transaction volumes are related to settlements between our buyers and sellers.
Net cash provided by operatinginvesting activities was $3.5$19.7 million for the threesix months ended DecemberMarch 31, 2017, as compared to net cash2020, and $13.0 million was used by operatinginvesting activities of $5.0 million for the threesix months ended DecemberMarch 31, 2016.2019. The $8.5$32.7 million increase in cash provided by operations between periodsinvesting activities was attributabledriven by a $30.0 million increase in activity related to improved profitability as well as working capital improvements primarily from collectionsshort-term investments which are used to manage the Company's excess cash balances, and $2.5 million principal payment on the promissory note issued to JTC. As discussed in Note 2 - Summary of receivablesSignificant Accounting Policies to the Company's consolidated financial statements, the Company concluded that it remains probable that the Company will collect the amounts related to the promissory note issued to JTC. However, the Company will continue to monitor for changes that could impact the recoverability of the promissory note, which will depend on JTC's subsequent operating performance and sales of inventory.ability to make the payments required by the new repayment schedule.
Net cash used in investingfinancing activities was $1.0$1.7 million for the threesix months ended DecemberMarch 31, 2017, and $2.32020. The $1.9 million for the three months ended December 31, 2016. Netincrease in cash used in investing activities for the three months ended December 31, 2017 consisted primarily of expenditures for capitalized software, purchases of equipment, and leasehold improvements.
Net cash provided by financing activities consisted of $1.2 million the portion of the Machinio earn-out payment that represented its fair value at the date of acquisition, and $0.6 million taxes paid associated with net settlement of stock compensation awards. Net settlement was zero fornot used in the three months ended December 31, 2017, and net cash provided by financing activities was $0.03 million for the three months ended December 31, 2016. Net cash provided byprior year comparable period.
financing activities for the three months ended December 31, 2016 consisted primarily of proceeds from the exercise of common stock options.
Capital Expenditures. Our capital expenditures consist primarily of capitalized software, computers and purchased software, office equipment, furniture and fixtures, and leasehold improvements. Capitalized software includes costs associated with our LiquidityOne platform. The timing and volume of such capital expenditures in the future will be affected by the addition of new customerssellers or buyers or expansion of existing customerseller or buyer relationships. We intend to fund those expenditures primarily from operating cash flows. Our capital expenditures for the threesix months ended DecemberMarch 31, 20172020 were $1.0$2.8 million. As of DecemberMarch 31, 2017,2020, we had no significant outstanding commitments for capital expenditures.
We believe that our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements will depend on many factors including our rate of revenue growth, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the development and deployment of new marketplaces, the introduction of new value-added services and the costs to establish additional distribution centers. Although we are currently not a party to any definitive agreement with respect to potential investments in, or acquisitions of, complementary businesses, products or technologies, we may enter into these types of arrangements in the future, which could also require us to seek additional equity or debt financing. The sale of additional equity securities or convertible debt securities would result in additional dilution to our stockholders. Additional debt would result in increased interest expense and could result in covenants that would restrict our operations. There is no assurance that such financing, if required, will be available in amounts or on terms acceptable to us, if at all.
Off-Balance Sheet Arrangements
We do not have any transactions, obligationsagreements or relationshipsother contractual arrangements that could be considered material off-balance sheet arrangements.
Item 3.Quantitative and Qualitative Disclosures aboutAbout Market Risk.
Interest rate sensitivity. We had no debt as of DecemberMarch 31, 2017,2020, but we do hold $10.0 million of short-term investments with interest rates of 1.76% and thus do$10.0 million of cash equivalents in money market funds. Changes in interest rates on these short-term investments are not expected to have any related interest rate exposure.a significant impact to our consolidated results of operations. Our investment policy
requires us to invest funds in excess of current operating requirements. The principal objectives of our investment activities are to preserve principal, provide liquidity and maximize income consistent with minimizing risk of material loss.
Exchange rate sensitivity. We consider our exposure to foreign Because of the number of countries and currencies we operate in, movements in currency exchange rate fluctuations to be minimal, as approximately 13.4% percentrates may affect our results. We report our operating results and financial condition in U.S. dollars. Our U.S. operations earn revenues and incur expenses primarily in U.S. dollars. Outside the United States, we predominantly generate revenues and expenses in the local currency. When we translate the results and net assets of these operations into U.S. dollars for reporting purposes, movements in exchange rates will affect reported results and net assets. Volatile market conditions arising from the COVID-19 pandemic may result in significant changes in exchange rates, which would affect our sales are denominatedresults of operations expressed in foreign currencies. We have not engaged in any hedging or other derivative transactions to date.U.S. dollars.
Item 4. Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer and Chief Accounting Officer,(Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
During the quarterthree months ended DecemberMarch 31, 2017, as part of2020, no change occurred in our LiquidityOne platform project, we continued to roll out a new enterprise resource planning system to additional areas of the company. The roll-out resulted in changes to certain internal controls over financial reporting. There has not occurred any further change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. While the impact of COVID-19 pandemic and our actions taken in response, including furloughs and employees working remotely, has not materially affected our internal control over financial reporting.reporting as of March 31, 2020, we will continue to monitor and assess this ongoing situation for potential material affects.
As of DecemberMarch 31, 2017,2020, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer and our Chief Accounting Officer,(Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer and Chief Accounting Officer(Principal Financial Officer) concluded that our disclosure controls and procedures were effective and were operating to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer, principal financial officer, and principal accounting officer, as appropriate to allow timely decisions regarding required disclosure.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Howard v. Liquidity Services, Inc., et al., Civ. No. 14-1183 (D.D.C. 2014).
On July 14, 2014, Leonard Howard filed a putative class action complaintInformation regarding the Company's legal proceedings may be found in the United States District Court for the District of Columbia (the ‘‘District Court’’) against our company and our chief executive officer, chief financial officer, and chief accounting officer, on behalf of stockholders who purchased our common stock between February 1, 2012, and May 7, 2014. The complaint alleged that the defendants violated Sections 10(b) and 20(a)Note 11 of the Securities Exchange Act of 1934 by, among other things, misrepresenting our growth initiative, growth potential, and financial and operating conditions, thereby artificially inflating its stock price, and sought unspecified compensatory damages and costs and expenses, including attorneys’ and experts’ fees. On October 14, 2014, the Court appointed Caisse de Dépôt et Placement du Québec and the Newport News Employees’ Retirement Fund as co-lead plaintiffs. The plaintiffs filed an amended complaint on December 15, 2014, which alleges substantially similar claims, but which does not name the chief accounting officer as a defendant. On March 2, 2015, we moved to dismiss the amended complaint for failure to state a claim or plead fraud with the requisite particularity. On March 31, 2016, the Court granted that motion in part and denied it in part. Only the claims relatedaccompanying Notes to the alleged misrepresentation regarding the Company’s retail division were not dismissed. On May 16, 2016, we answered the amended complaint. Plaintiffs’ class certification was granted on September 6, 2017. The scheduling order in this action requires that fact discovery be completed by April 9, 2018, and that expert discovery be completed by October 1, 2018.Unaudited Consolidated Financial Statements.
We believe the allegations in the amended complaint are without merit and cannot estimate a range of potential liability, if any, at this time.
In re Liquidity Services, Inc. Derivative Litigation, Civ. No. 2017-0080-JTL (Del. Ch.).
On February 2, 2017, plaintiff David Girardi filed a putative derivative complaint in the Court of Chancery of the State of Delaware (the “Court of Chancery”), and on February 7, 2017, plaintiff Harold Slingerland filed a putative derivative complaint in the Court of Chancery. On March 9, 2017, plaintiffs Girardi and Slingerland filed a consolidated putative derivative complaint in the Court of Chancery, purportedly on our behalf. The consolidated complaint names as defendants our chief executive officer and chief financial officer, as well as certain other individuals who served on our Board of Directors between 2012 and 2014, and seeks recovery from those individuals, not from us. The complaint asserts that, among other things, the defendants breached their fiduciary duties to us and our stockholders by causing or allowing us to make the same misstatements that are alleged in the amended complaint in the Howard action, and for alleged trading in our securities while in possession of material non-public information. On November 27, 2017, the Court of Chancery granted the defendants’ motion to dismiss.
Following the dismissal of the putative derivative action discussed above, former plaintiffs Girardi and Slingerland sent us a letter dated January 5, 2018 (the “Shareholder Demand”) demanding that the Board of Directors take action to remedy purported breaches of fiduciary duties allegedly related to the claims asserted in the above-discussed securities class action and derivative actions. We acknowledged the Shareholder Demand on January 22, 2018. Our Board of Directors has delegated evaluation of the Shareholder Demand to the Audit Committee of the Board of Directors.
Item 1A. Risk Factors.
Natural or man-made disasters, including health emergencies related to the COVID-19 (coronavirus) pandemic, could have a material adverse effect on our business operations, results of operations, cash flows and financial position.
COVID-19 has caused volatility in the global financial markets and threatened a slowdown in the global economy. In addition, we cannot predict the impact that COVID-19 will have on our sellers, buyers, vendors, and other business partners, and each of their financial conditions; however, any material effect on these parties could adversely impact us. The COVID-19 pandemic has already begun to disrupt our marketplace operations, including by reducing the supply of surplus assets that might otherwise be sold due to government and commercial business closures. Further, shelter-in-place orders could cause buyers to refrain from bidding or otherwise engaging in transactions, at least in the near term, as they may have reduced demand in their businesses or, alternatively, are unable to engage in inspection and pick-up activities relating to winning auctions or closing sales.
A prolonged quarantine or border closure could result in temporary or longer-term disruptions of surplus disposal patterns, consumption and trade patterns, supply chains, production processes, and operations. A widespread health crisis, such as the COVID-19 pandemic, could negatively affect the economies and financial markets of many countries resulting in a global economic downturn which could negatively impact the volume of assets available for sale, the number of interested buyers or bidders, recovery maximization on marketplace transactions and marketplace GMV.
The COVID-19 pandemic has also heightened the risk that a significant portion of our workforce will suffer illness or otherwise not be permitted or be unable to work and exposing us to cyber and other risks associated with a large number of our employees working remotely. Certain of our RSCG warehouse facilities have experienced cases of COVID-19, and although we have not had temporary workplace disruptions, we cannot predict whether these will occur in the future or if our RSCG warehouse facilities will experience more significant or frequent disruptions in the future.
Pandemics, such as the current global COVID-19 virus, outbreaks of communicable infections or diseases, or other public health concerns in the markets in which our consumers or employees live and/or in which we or our distributors, retailers, and suppliers operate.
Supply disruption may result from restrictions on the ability of employees and others in the reverse supply chain to travel and work, such as caused by quarantine or individual illness, or which may result from border closures imposed by governments to deter the spread of communicable infection or disease, or determinations by us or our sellers or buyers to temporarily suspend operations in affected areas, or other actions which restrict the ability to engage in transactions for surplus assets or which may otherwise negatively impact our ability to facilitate inspection and shipment of surplus assets. Ports or channels of entry may be closed or operate at only a portion of capacity, or transportation of surplus assets within a region or country may be limited, if workers are unable to report to work due to travel restrictions or personal illness. Our operations and the operations of our sellers and buyers may become less efficient or otherwise become negatively impacted if our executive leaders or other personnel critical to our operations are unable to work or if a significant percentage of the workforce is unable to work or is required to work from home. Cost saving measures may not be enough. A prolonged quarantine or border closure could result in temporary or longer-term disruptions of reverse supply chain patterns, consumption and trade patterns. A widespread health crisis, such as the COVID-19 pandemic, could negatively affect the economies and financial markets of many countries resulting in a global economic downturn that could, in turn, negatively impact demand for surplus assets and our ability to facilitate transactions. Any of these events could have a material adverse effect on our business, liquidity, financial condition, or results of operations.
As a result of a decline in transactional activity attributable to the COVID-19 pandemic and our need to conserve cash, we have implemented furloughs and temporary pay cuts, which could adversely impact the morale and performance of employees and our ability to retain them.
Certain employees have been furloughed without pay and most other employees earning more than $50,000 in base salary have received pay cuts. These actions could have unintended impact on our employees, could lead to a decline in employee morale,
and could lead to a loss of these or other employees. In the event of employee attrition, we may not be able to replace the lost employees on a timely basis, or with individuals having the same level of skills. In either case, our business prospects, results of operations and financial condition could be materially and adversely affected.
In addition to the other information set forth in this report, you should carefully consider the factors set forth in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017,2019, which could materially affect our business, financial condition or future results. The risks described in our Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 5. Other Information.
Given the continued uncertainty in the current business climate and to respond to changing conditions resulting from the COVID-19 pandemic, Mr. William P. Angrick, III, Chairman and Chief Executive Officer of the Company, has agreed to continue his voluntary reduction in his base salary at a level of a 50% reduction. Messrs. Jorge A. Celaya, John Daunt, Michael Lutz, Nicholas Rozdilsky, Mark A. Shaffer, and Steven Weiskircher have also voluntarily agreed to continue to reduce their base salaries at a level of a 25% reduction.
In addition, each member of the Board of Directors has agreed to continue to voluntarily forgo half of all fees paid to such directors for his or her service on the Board, including the annual retainer, committee membership and lead and committee chair fees.
These measures are effective for the months of May and June and will be reviewed based on evolving operating and financial conditions in the future.
Item 6. Exhibits.
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| | | | | | | |
Exhibit No. | | Description |
3.12.1 |
| | Stock Purchase Agreement, dated July 10, 2018, by and among the Company, Machinio, Corp., the stockholders of Machinio, Corp., and Shareholder Representative Services., LLC., incorporated herein by reference to Exhibit 2.1 to the Company's Quarterly Report on 10-Q, filed with SEC on August 2, 2018. |
3.1 | | | |
3.2 |
| | |
10.110.1# |
| | |
31.110.2# |
| | |
10.3# | | |
|
10.4# | | | |
10.5# | | | |
10.6# | | | |
10.7# | | | |
10.8# | | | |
10.9# | | | |
10.10# | | | |
31.1 | | | |
31.2 |
| | |
31.332.1 |
| | |
32.1 |
| | |
32.2 |
| | |
32.3101 |
| | |
101 |
| | The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended DecemberMarch 31, 2017,2020, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Loss, (iv) Consolidated Statement of Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (iv)(vi) Notes to the Unaudited Consolidated Financial Statements. |
104 | | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
# DesignatesIndicates management contract or compensation plans.compensatory plan.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on February 1, 2018.authorized.
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| |
LIQUIDITY SERVICES, INC. | |
| | (Registrant) |
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| | |
By:May 7, 2020 | By: | /s/ William P. Angrick, III |
| | William P. Angrick, III |
| | Chairman of the Board of Directors |
| | and Chief Executive Officer |
| | |
| | |
By:May 7, 2020 | By: | /s/ Jorge A. Celaya |
| | Jorge A. Celaya |
| | Executive Vice President and Chief Financial Officer |
| | |
| | |
By:May 7, 2020 | By: | /s/ Michael SweeneySamuel M. Guzman, Jr. |
| Michael Sweeney | Samuel M. Guzman, Jr. |
| | Vice President and Chief Accounting Officer |