Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 16, 2020 | Jun. 28, 2019 | |
Cover | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | INNODATA INC | ||
Entity Central Index Key | 0000903651 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 22,277,574 | ||
Trading Symbol | INOD | ||
Entity Common Stock, Shares Outstanding | 24,459,359 | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 10,874 | $ 10,869 |
Accounts receivable, net of allowance for doubtful accounts of $750 and $1,000, respectively | 9,723 | 10,626 |
Prepaid expenses and other current assets | 3,418 | 4,667 |
Total current assets | 24,015 | 26,162 |
Property and equipment, net | 7,125 | 6,813 |
Right-of-use asset | 7,005 | |
Other assets | 2,110 | 2,436 |
Deferred income taxes | 1,906 | 1,204 |
Intangibles, net | 5,477 | 6,275 |
Goodwill | 2,108 | 2,050 |
Total assets | 49,746 | 44,940 |
Current liabilities: | ||
Accounts payable | 1,419 | 1,834 |
Accrued expenses | 3,340 | 2,803 |
Accrued salaries, wages and related benefits | 4,265 | 4,494 |
Income and other taxes | 4,183 | 3,235 |
Long-term obligations - current portion | 912 | 1,529 |
Operating lease liability - current portion | 1,107 | |
Total current liabilities | 15,226 | 13,895 |
Deferred income taxes | 363 | 571 |
Long-term obligations, net of current portion | 4,534 | 4,062 |
Operating lease liability, net of current portion | 6,731 | |
Non-controlling interests | (3,417) | (3,400) |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY: | ||
Serial preferred stock; 4,998,000 shares authorized, none outstanding | 0 | 0 |
Common stock, $.01 par value; 75,000,000 shares authorized; 27,643,000 shares issued and 24,459,000 outstanding at December 31, 2019; 27,558,000 shares issued and 25,877,000 outstanding at December 31, 2018 | 275 | 275 |
Additional paid-in capital | 28,426 | 27,579 |
Retained earnings | 4,993 | 6,595 |
Accumulated other comprehensive loss | (920) | (15) |
Stockholders' Equity before Treasury Stock, Total | 32,774 | 34,434 |
Less: treasury stock, 3,184,000 shares at December 31, 2019 and 1,681,000 shares at December 31, 2018, at cost | (6,465) | (4,622) |
Total stockholders' equity | 26,309 | 29,812 |
Total liabilities and stockholders' equity | $ 49,746 | $ 44,940 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, net of allowance for doubtful accounts | $ 750 | $ 1,000 |
Series preferred stock, shares authorized | 4,998,000 | 4,998,000 |
Series preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 27,643,000 | 27,558,000 |
Common stock, shares outstanding | 24,459,000 | 25,877,000 |
Treasury stock, shares | 3,184,000 | 1,681,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||
Revenues | $ 55,858 | $ 57,418 |
Operating costs and expenses: | ||
Direct operating costs | 37,325 | 39,302 |
Selling and administrative expenses | 19,010 | 15,846 |
Goodwill impairment | 0 | 675 |
Interest expense, net | 51 | 33 |
Totals | 56,386 | 55,856 |
Income (loss) before provision for income taxes | (528) | 1,562 |
Provision for income taxes | 1,091 | 1,808 |
Consolidated net loss | (1,619) | (246) |
Income (loss) attributable to non-controlling interests | (17) | 7 |
Net loss attributable to Innodata Inc. and Subsidiaries | $ (1,602) | $ (253) |
Loss per share attributable to Innodata Inc. and Subsidiaries: | ||
Basic and diluted | $ (0.06) | $ (0.01) |
Weighted average shares outstanding: | ||
Basic and diluted | 25,774 | 25,878 |
Comprehensive loss: | ||
Consolidated net loss | $ (1,619) | $ (246) |
Pension liability adjustment., net of taxes | (1,504) | 260 |
Change in fair value of derivatives, net of taxes | 33 | (342) |
Foreign currency translation adjustment, net of taxes | 566 | (779) |
Other comprehensive loss | (905) | (861) |
Total comprehensive loss | (2,524) | (1,107) |
Comprehensive income (loss) attributed to non-controlling interest | (17) | 7 |
Comprehensive loss attributable to Innodata Inc. and Subsidiaries | $ (2,507) | $ (1,114) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member]As previously reported | Common Stock [Member] | Additional Paid-in Capital [Member]As previously reported | Additional Paid-in Capital [Member] | Retained earningsAs previously reported | Retained earningsRestatement adjustments | Retained earnings | Accumulated Other Comprehensive Loss [Member]As previously reported | Accumulated Other Comprehensive Loss [Member] | Treasury Stock [Member]As previously reported | Treasury Stock [Member] | As previously reported | Restatement adjustments | Total |
Balance at Dec. 31, 2017 | $ 275 | $ 275 | $ 27,275 | $ 27,275 | $ 7,345 | $ (497) | $ 6,848 | $ 846 | $ 846 | $ (4,622) | $ (4,622) | $ 31,119 | $ (497) | $ 30,622 |
Balance (in shares) at Dec. 31, 2017 | 27,558,000 | 27,558,000 | ||||||||||||
Balance (in shares) at Dec. 31, 2017 | 1,681,000 | 1,681,000 | ||||||||||||
Net loss | (253) | $ 4 | (257) | $ (253) | ||||||||||
Stock-based compensation | 796 | 796 | ||||||||||||
Acquisition of non-controlling interest | (492) | (492) | ||||||||||||
Pension liability adjustments, net of taxes | 260 | 260 | ||||||||||||
Foreign currency translation adjustment | (779) | (779) | ||||||||||||
Change in fair value of derivatives, net of taxes | (342) | (342) | ||||||||||||
Balance at Dec. 31, 2018 | $ 275 | 27,579 | $ 7,349 | $ (754) | 6,595 | (15) | $ (4,622) | $ 30,566 | $ (754) | $ 29,812 | ||||
Balance (in shares) at Dec. 31, 2018 | 27,558,000 | |||||||||||||
Balance (in shares) at Dec. 31, 2018 | 1,681,000 | 1,681,000 | ||||||||||||
Net loss | (1,602) | $ (1,602) | ||||||||||||
Purchase of treasury stock | $ (1,843) | (1,843) | ||||||||||||
Stock-based compensation | $ 75 | 836 | 836 | |||||||||||
Exercise of stock options | 11 | 11 | ||||||||||||
Exercise of stock options (in shares) | 10,000 | |||||||||||||
Pension liability adjustments, net of taxes | (1,504) | (1,504) | ||||||||||||
Foreign currency translation adjustment | 566 | 566 | ||||||||||||
Change in fair value of derivatives, net of taxes | 33 | 33 | ||||||||||||
Purchase of treasury stock (in shares) | 1,503 | |||||||||||||
Balance at Dec. 31, 2019 | $ 275 | $ 28,426 | $ 4,993 | $ (920) | $ (6,465) | $ 26,309 | ||||||||
Balance (in shares) at Dec. 31, 2019 | 27,643,000 | |||||||||||||
Balance (in shares) at Dec. 31, 2019 | 3,184,000 | 3,184,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Consolidated net loss | $ (1,619) | $ (246) |
Adjustments to reconcile consolidated net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 2,922 | 3,374 |
Goodwill impairment | 0 | 675 |
Stock-based compensation | 836 | 796 |
Deferred income taxes | (313) | 175 |
Pension cost | 335 | 440 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,216 | (533) |
Prepaid expenses and other current assets | 1,056 | (70) |
Other assets | 332 | 521 |
Accounts payable and accrued expenses | (589) | (779) |
Accrued salaries, wages and related benefits | (249) | (1,020) |
Income and other taxes | 926 | 234 |
Net cash provided by operating activities | 4,853 | 3,567 |
Cash flows from investing activities: | ||
Capital expenditures | (1,769) | (2,033) |
Net cash used in investing activities | (1,769) | (2,033) |
Cash flows from financing activities: | ||
Purchase of treasury stock | (1,843) | |
Payment of long-term obligations | (1,038) | (2,025) |
Redemption of shares from non-controlling interest | (2) | |
Exercise of stock options | 11 | |
Net cash used in financing activities | (2,870) | (2,027) |
Effect of exchange rate changes on cash and cash equivalents | (209) | (45) |
Net increase (decrease) in cash and cash equivalents | 5 | (538) |
Cash and cash equivalents, beginning of period | 10,869 | 11,407 |
Cash and cash equivalents, end of period | 10,874 | 10,869 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 962 | 680 |
Cash paid for operating leases | 2,186 | 2,568 |
Common stock issued | $ 11 | 0 |
Non cash redemption of non-controlling interest | $ (490) |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Description of Business and Summary of Significant Accounting Policies | |
Description of Business and Summary of Significant Accounting Policies | 1. Description of Business and Summary of Significant Accounting Policies Description of Business - Innodata Inc. (including its subsidiaries, the “Company”, “Innodata”, “we”, “us” or “our”) is a global data engineering company. The Company solves complex data challenges that companies face when they build and maintain artificial intelligence (AI) systems and analytics platforms. To deliver the Company’s services and solutions, the Company uses a combination of human expertise and technology. The Company’s 3,000+ employees span 10 countries and are experts in data pertaining to many professional fields. The Company’s core technology harnesses machine learning and deep learning (branches of AI) to augment human expertise. The Company’s hybrid approach of using AI in conjunction with human experts enables the Company’s to deliver superior data quality with even the most complex and sensitive data. The Company also provides AI-augmented software-as-a-service (SaaS) platforms for customers who wish to perform their own data engineering tasks and for niche, industry-specific data-intensive use cases. The Company provides a range of solutions and platforms for solving complex data challenges that companies face when they seek to obtain the benefits of AI systems and analytics platforms. (i) Data Annotation The Company helps its clients train AI models by annotating data at scale and at industry-leading levels of quality. The quality of training data is critical for ensuring that a client’s AI models perform well. The Company annotates text, images, audio and video data for the most complex AI models, including computer vision, sentiment analysis, entity linking, text categorization, and syntactic parsing/tagging. The Company’s image and video annotation services and platforms may be used to annotate, or label, objects or people in images/video for facial recognition systems and automated object identification systems and in aerial/satellite imagery for autonomous driving/flying applications. The Company’s text annotation services and platforms may be used to convert raw text data into richly tagged, AI training data. The Company accommodates a wide range of input formats and taxonomies, and the Company performs a wide variety of complex tasks including entity annotation, relationship annotation, co-reference annotation, event annotation, multi-label annotation, and document labelling. The Company provides image/video data annotation and text annotation as full solutions, in which the Company provides all required technology, infrastructure and expert resources. Beginning in early 2020, the Company will also provide image/video data annotation platforms and text annotation platforms for its clients to license for internal use. The Company provides data annotation for a variety of complex requirements in healthcare, compliance, scientific, financial and legal markets. (ii) Data Transformation The Company provides AI-based data transformation solutions for high-accuracy data identification, aggregation, cleansing, augmentation and extraction. The Company’s solutions utilize highly-trained AI models and experts who custom-train the models for the Company’s clients’ most complex and unique requirements. The Company’s data transformation platform enables data to be extracted from websites, as well as internal data stores; converted from disparate formats including PDF; enriched with the necessary semantics, metadata and linking; and classified in accordance with an ontology or knowledge graph. The Company’s data transformation solutions may be consumed via API, so that they can be utilized as infrastructure by clients with ongoing needs for such services. The Company also provides a platform for clients to license for performing analytics on extracted data points. (iii) Data Curation For clients that need to maintain mission-critical databases of structured data, or fuse separately-created databases into a single, unified, high-quality source of data that can be relied upon for a variety of corporate functions and products (often referred to as a “golden source” of data), the Company provides AI-based data curation solutions that include data collection across external and internal data sources, data hygiene, data consolidation, and data compliance. (iv) Intelligent Automation Enterprises are increasingly looking to re-invent business processes to take advantage of advancements in AI and machine learning, computing, and storage. Many seek easier ways these advanced capabilities can be trained, deployed, and leveraged. For clients with critical business processes that involve documents, images, text, emails and other unstructured data, The Company deploys a range of technologies, including AI and robotic process automation (RPA), to eliminate repetitive tasks, automate where possible, speed up operations, and shift internal talent to creative and analytical work. The Company provides intelligent automation for an increasing diversity of complex functions. At present, these include IP rights management, contract management, client relationship management, regulatory change management, underwriting, and content operations management. (v) Intelligent Data Platforms The Company builds and manages intelligent data platforms that address specific, niche market requirements with the Company’s data engineering technologies. The Company deploys these platforms as software-as-a-service (SaaS) and as managed data solutions. To date, the Company has built an intelligent data platform for medical records data transformation (which we brand as “Synodex”) and for marketing communications/public relations workflow (which we brand as “Agility”). The Company’s Synodex intelligent data platform transforms medical records into useable digital data organized in accordance with the Company’s proprietary data models or client data models. At the end of 2019, the Company had 20 clients utilizing its Synodex platform, including John Hancock Insurance, the insurance operating unit of John Hancock Financial (a division of Manulife) and one of the largest life insurers in the United States. The Company’s Agility intelligent data platform provides marketing communications and public relations professionals with the ability to target and distribute content to journalists and social media influencers world-wide and to monitor and analyze global news channels (print, web, radio and TV) and social media channels. The Company also provides a variety of services for clients in the information industry that relate to content operations and product development. Principles of Consolidation - The consolidated financial statements include the accounts of Innodata Inc. and its wholly owned subsidiaries, and the Synodex and docGenix limited liability companies that are majority-owned by the Company. The non-controlling interests in the Synodex and docGenix limited liability companies are accounted for in accordance with Financial Accounting Standards Board (FASB) non-controlling interest guidance. All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates - In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities reported in the financial statements and accompanying notes. Actual results could differ from those estimates and changes in the estimates are recorded when known. Significant estimates include those related to the allowances for doubtful accounts and billing adjustments, long-lived assets, intangible assets, goodwill, valuation of deferred tax assets, valuation of stock-based compensation, litigation accruals and estimated accruals for various tax exposures. Revenue Recognition – Revenue is recognized when the Company satisfies its performance obligations under the contract, either implicit or explicit, by transferring the promised goods or rendering a service to its customer either when control of the promised product is transferred to a client or the service is rendered, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services as per the agreement with the client. For agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation, if any, and then evaluates how the goods are transferred to or services are performed for the client to determine the timing of revenue recognition. Performance obligations that are not distinct at agreement inception are combined. For the DDS segment, revenue is recognized primarily based on the quantity delivered or resources utilized in the period in which services are performed and performance conditions are satisfied as per the agreement. Revenues for agreements billed on a time-and-materials basis are recognized as services are performed. Revenues under fixed-fee agreements, which are not significant to the overall revenues, are recognized based on the proportional performance method of accounting, as services are performed, or milestones are achieved. For the Synodex segment, revenue is recognized primarily based on the quantity delivered in the period in which services are performed and performance conditions are satisfied as per the agreement. A portion of the Company’s Synodex segment revenue is derived from licensing our functional software and providing access to our hosted software platform. Revenue from such services is recognized monthly when all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; access to the service is provided to the end user; and collection is probable. The Agility segment derives its revenue primarily from subscription arrangements and provision of enriched media analysis services. It also derives revenue as a reseller of corporate communication solutions. Revenue from subscriptions is recognized monthly when access to the service is provided to the end user; all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; and collection is probable. Revenue from enriched media analysis services is recognized when the services are performed, and performance conditions are satisfied. Revenues from the reseller agreements are recognized at gross with the Company functioning as a principal due to the Company meeting the following criteria. The Company acts as the primary obligor in the sales transaction; assumes the credit risk; sets the price; can select suppliers; and is involved in the execution of the services, including after sales service. Revenues include reimbursement of out-of-pocket expenses, with the corresponding out-of-pocket expenses included in direct operating costs. The Company considers U.S. GAAP criteria for determining whether to report revenue gross as a principal versus net as an agent. Factors considered include whether the Company is the primary obligor, has risks and rewards of ownership, and bears the risk that a client may not pay for the services performed. If there are circumstances where the above criteria are not met and therefore, the Company is not the principal in providing services, amounts received from clients are presented net of payments in the consolidated statements of operations and comprehensive loss. Contract acquisition cost, which is included in prepaid expenses and other current assets, for our Agility segment is amortized over the term of a subscription agreement that normally has a duration of 12 months or less. The Company reviews these costs on a periodic basis to determine the need to adjust the carrying values for pre-terminated contracts. Foreign Currency Translation - The functional currency of our delivery centers located in the Philippines, India, Sri Lanka and Israel is the U.S. dollar. Transactions denominated in the Philippine pesos, Indian and Sri Lankan rupees and Israeli shekels are translated to U.S. dollars at rates which approximate those in effect on the transaction dates. Monetary assets and liabilities denominated in foreign currencies at December 31, 2019 and 2018 are translated at the exchange rate in effect as of those dates. Nonmonetary assets, liabilities, and stockholders’ equity were translated at the appropriate historical rates. Included in direct operating costs were exchange losses resulting from such transactions of approximately $158,000 and $56,000 for the years ended December 31, 2019 and 2018, respectively. The functional currency for the Company’s subsidiaries in Germany, the United Kingdom and Canada are the Euro, the Pound Sterling and the Canadian dollar, respectively. The financial statements of these subsidiaries are reported in these respective currencies. Financial information is translated from the applicable functional currency to the U.S. dollar (the reporting currency) for inclusion in the Company’s consolidated financial statements. Income, expenses and cash flows are translated at weighted average exchange rates prevailing during the fiscal period, and assets and liabilities are translated at fiscal period-end exchange rates. Resulting translation adjustments are included as a component of accumulated other comprehensive loss in stockholders’ equity. Foreign exchange transaction gains or losses are included in direct operating costs in the accompanying consolidated statements of operations and comprehensive loss. The amount of foreign currency translation adjustment was $566,000 and ($779,000) for the years ended December 31, 2019 and 2018, respectively. Derivative Instruments - The Company has designated its derivatives (foreign currency forward contracts) as a cash flow hedge. Accordingly, the Company initially reports the effective portion of the derivative’s gain or loss as a component of accumulated other comprehensive income or loss and subsequently reclassifies them to earnings when the hedge exposure affects earnings. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedging activities. The total notional value of outstanding foreign currency forward contracts at December 31, 2019 was $4.3 million. Cash Equivalents - For financial statement purposes (including cash flows), the Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Property and Equipment - Property and equipment are stated at cost and are depreciated on the straight-line method over the estimated useful lives of the related assets, which is generally two to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lives of the leases. Certain assets under capital leases are amortized over the lives of the respective leases or the estimated useful lives of the assets, whichever is shorter. Long-lived Assets - Management assesses the recoverability of its long-lived assets, which consist primarily of fixed assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The following factors, if present, may trigger an impairment review: (i) significant underperformance relative to expected historical or projected future operating results; (ii) significant negative industry or economic trends; (iii) significant decline in the Company’s stock price for a sustained period; and (iv) a change in the Company’s market capitalization relative to net book value. If the recoverability of these assets is unlikely because of the existence of one or more of the above-mentioned factors, an impairment analysis is performed, initially using a projected undiscounted cash flow method. Management makes assumptions regarding estimated future cash flows and other factors to determine the fair value of these respective assets. An impairment loss will be recognized only if the carrying value of a long-lived asset is not recoverable, exceeds its fair value, and is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. Goodwill and Other Intangible Assets – The Company performs a valuation of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocates the purchase price of each acquired business to its respective net tangible and intangible assets and liabilities. Acquired intangible assets principally consist of technology, client relationships, backlog and trademarks. Liabilities related to intangibles principally consist of unfavorable vendor contracts. The Company determines the appropriate useful life by performing an analysis of expected cash flows based on projected financial information of the acquired businesses. Intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the majority of the economic benefits are expected to be consumed. Intangible assets are amortized into direct operating costs ratably over their expected related revenue streams over their useful lives. Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. The Company does not amortize goodwill but evaluates it for impairment at the reporting unit level annually during the third quarter of each fiscal year (as of September 30 of that year) or when an event occurs, or circumstances change, that indicates the carrying value may not be recoverable. In 2018, the Company adopted Accounting Standards Update (ASU) No. 2017‑04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment”. Under this guidance, the optional qualitative assessment, referred to as “Step 0”, and the first step of the quantitative assessment (“Step 1”) remained unchanged versus the prior guidance. However, the requirement to complete the second step (“Step 2”), which involved determining the implied fair value of goodwill and comparing it to the carrying value of that goodwill to measure the impairment loss, was eliminated. As a result, Step 1 is used to determine both the existence and amount of goodwill impairment. An impairment loss is recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying value of goodwill in that reporting unit. The Company periodically analyzes whether any indicators of impairment have occurred. As part of these periodic analyses, we compare the Company’s estimated fair value, as determined based on our stock price, to the Company’s net book value. During 2018, due to a continuing decline in the Company’s stock price and other indicators of impairment that arose during the second quarter of 2018, the Company deemed it appropriate to assess goodwill impairment as of June 30, 2018, rather than the historical testing date of September 30. Based on the Company’s assessment, the Company concluded that the goodwill of the DDS segment, amounting to $675,000, was fully impaired. The Company performed its annual goodwill assessment for the Agility segment as of September 30, 2019. In performing the assessment, the Company adhered to the provisions of ASU 2017-04 by using a single step approach that determines the carrying value of goodwill and comparing it against the excess of the reporting unit’s fair value. Based on the Company’s assessment, the Company reached the conclusion that there was no goodwill impairment because the fair value of the Agility segment’s goodwill exceeded its carrying value. Therefore, there was no goodwill impairment recorded during the year ended December 31, 2019. Income Taxes – Estimated deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities, using enacted tax rates, as well as any net operating loss or tax credit carryforwards expected to reduce taxes payable in future years. A valuation allowance is provided when it is more likely than not that all or some portion of the estimated deferred tax assets will not be realized. While the Company considers future taxable income in assessing the need for the valuation allowance, in the event that the Company anticipates that it will be able to realize the estimated deferred tax assets in the future in excess of its net recorded amount, an adjustment to the provision for deferred tax assets would increase income in the period such determination was made. Similarly, in the event that the Company anticipates that it will not be able to realize the estimated deferred tax assets in the future considering future taxable income, an adjustment to the provision for deferred tax assets would decrease income in the period such determination was made. Changes in the valuation allowance from period to period are included in the Company’s tax provision in the period of change. The Company indefinitely reinvests the foreign earnings in its foreign subsidiaries. If such earnings are repatriated in the future, or are no longer deemed to be indefinitely reinvested, the Company would have to accrue as a liability the applicable amount of foreign jurisdiction withholding taxes associated with such remittances. In assessing the realization of deferred tax assets, management considered whether it is more likely than not that all or some portion of the U.S. and Canadian deferred tax assets will not be realizable. As the expectation of future taxable income resulting from the Synodex and Agility segments cannot be predicted with certainty, the Company maintains a valuation allowance against all the U.S. and Canadian deferred tax assets. The Company accounts for income taxes regarding uncertain tax positions, and recognizes interest and penalties related to uncertain tax positions in income tax expense in the consolidated statements of operations and comprehensive loss. Accounting for Leases - In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” as modified (ASU 2016-02), which replaced existing leasing rules with a comprehensive lease measurement and recognition standard and expanded disclosure requirements. ASU 2016-02 requires lessees to recognize most leases on their balance sheets as liabilities, with corresponding “right-of-use” assets and is effective for annual reporting periods beginning after December 15, 2018, subject to early adoption. The Company adopted ASU 2016-02 effective January 1, 2019. Upon adoption, the Company recognized a right-of-use asset and corresponding lease liability. See Note 6, Operating Leases. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: a. there is a change in contractual terms, other than a renewal or extension of the arrangement; b. a renewal option is exercised, or extension granted, unless the term of the renewal or extension was initially included in the lease term; c. there is a change in the determination of whether fulfillment is dependent on a specified asset; or d. there is a substantial change to the asset. Whenever a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) and at the date of renewal or extension period for scenario (b). Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. All of the Company’s leases are classified as operating leases. Operating lease payments are recognized as an operating expense on a straight-line basis over the lease term. Accounting for Stock-Based Compensation - The Company measures and recognizes stock-based compensation expense for all share-based payment awards made to employees and directors based on the estimated fair value at the grant date. The stock-based compensation expense is recognized over the requisite service period. The fair value is determined using the Black-Scholes option-pricing model. The stock-based compensation expense related to the Company’s stock plan was allocated as follows (in thousands): Year Ended December 31, 2019 2018 Direct operating costs $ 113 $ 264 Selling and adminstrative expenses 723 532 Total stock-based compensation $ 836 $ 796 Fair Value of Financial Instruments - The carrying amounts of financial instruments approximated their fair value as of December 31, 2019 and 2018, because of the relative short maturity of these instruments. See Note 14, Financial Instruments. Fair value measurements and disclosures define fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes the inputs used to measure fair value into three levels. The three levels are defined as follows: · Level 1 : Unadjusted quoted price in active market for identical assets and liabilities. · Level 2: Inputs other than those included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. Accounts Receivable - The Company establishes credit terms for new clients based upon management’s review of their credit information and project terms, and performs ongoing credit evaluations of its clients, adjusting credit terms when management believes appropriate based upon payment history and an assessment of the client’s current creditworthiness. The Company records an allowance for doubtful accounts for estimated losses resulting from the inability of its clients to make required payments. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due (accounts outstanding longer than the payment terms are considered past due), the Company’s previous loss history, the client’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. This cannot guarantee that credit loss rates in the future will not be greater than those experienced in the past. In addition, there is credit exposure if the financial condition of one of the Company’s major clients were to deteriorate. In the event that the financial condition of one of the Company’s clients were to deteriorate resulting in an impairment of their ability to make payments, additional allowances may be necessary. The allowance for doubtful accounts as of December 31, 2019 and 2018 was approximately $0.8 million and $1.0 million, respectively. Concentration of Credit Risk - The Company maintains its cash with highly rated financial institutions, located in the United States and in foreign locations where the Company has its operations. At December 31, 2019, the Company had cash and cash equivalents of $10.9 million, of which $4.8 million was held by its foreign subsidiaries with local banks located mainly in Asia and $6.1 million was held in the United States. To the extent that such cash exceeds the maximum insurance levels, the Company would be uninsured. The Company has not experienced any losses in such accounts. Income (Loss) per Share – Income (loss) per share is computed using the weighted-average number of common shares outstanding during the year. Diluted income (loss) per share is computed by considering the impact of the potential issuance of common shares, using the treasury stock method, on the weighted average number of shares outstanding. For those securities that are not convertible into a class of common stock, the “two class” method of computing income (loss) per share is used. Pension - The Company records annual pension costs based on calculations, which include various actuarial assumptions including discount rates, compensation increases and other assumptions involving demographic factors. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends. The Company believes that the assumptions used in recording its pension obligations are reasonable based on its experience, market conditions and inputs from its actuaries. Deferred Revenue - Deferred revenue represents payments received from clients in advance of providing services and amounts deferred if conditions for revenue recognition have not been met. Included in accrued expenses on the accompanying consolidated balance sheets is deferred revenue amounting to $1.1 million for each of the years ended December 31, 2019 and 2018. Recent Accounting Pronouncements – In January 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The Company adopted this standard in the first quarter of 2019, and it did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018‑14, “Compensation-Retirement Benefits-Defined Benefit Plans-General: Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans” (ASU 2018‑14), that makes changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. The guidance eliminates requirements for certain disclosures that are no longer considered cost beneficial and adds new disclosure requirements that the FASB considers pertinent. ASU 2018‑14 is effective for fiscal years ending after December 15, 2020 for public entities; early adoption is permitted. The Company is currently evaluating the early adoption of ASU 2018-14 but does not expect it to have a material impact on the Company’s consolidated financial statements. Correction of Errors – During the quarter ended December 31, 2019, the Company determined that the refundable taxes recorded in one of its subsidiaries were not being properly revalued in accordance with ASC 830 “Foreign Currency Matters.” Under ASC 830, entities whose functional currency is the U.S. dollar are required to use the remeasurement method and classify accounts into monetary and non-monetary items. Under this method only monetary accounts are subject to foreign currency remeasurement. Monetary accounts are those items whose amounts are fixed in terms of unit of currency by contract or otherwise. The refundable taxes in our foreign subsidiary should have been classified as monetary assets but were excluded from remeasurement. This exclusion resulted in the understatement of the foreign exchange gains and losses for the years 2008 through 2018. Additionally, the Company identified and corrected an error relating to an overstatement of two long-standing accruals that the Company deemed to no longer be necessary. The Company evaluated the materiality of these errors on both a quantitative and qualitative basis under the guidance of ASC 250, “Accounting Changes and Errors Corrections,” and determined that it did not have a material impact on pr |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 2. Goodwill and Intangible Assets The changes in the carrying amount of goodwill as of December 31, 2019 and 2018 were as follows (in thousands): Balance as of January 1, 2018 $ 2,832 Foreign currency translation adjustment (107) Goodwill impairment (675) Balance as of December 31, 2018 2,050 Foreign currency translation adjustment 58 Balance as of December 31, 2019 $ 2,108 The Company recorded a full goodwill impairment of $675,000 for its DDS segment in the year ended December 31, 2018. The Company periodically analyzes whether any indicators of impairment have occurred. As part of these periodic analyses, the Company compares its estimated fair value, as determined based on its stock price, to its net book value. The continued decline in the Company’s stock price was viewed by the Company as a triggering event under ASU 2017‑04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment” (ASU 2017-04), which required an assessment for possible goodwill impairment as of June 30, 2018. Under the provisions of ASU 2017‑04, which the Company opted to early adopt, goodwill impairment is recognized based on Step 1 of the current guidance, which calculates the carrying value in excess of the reporting unit’s fair value. The Company performed this assessment as of June 30, 2018 and determined that the fair value of the Agility segment exceeded its carrying value, but the fair value of the DDS segment was below its carrying value. As a result, the Company recorded a full goodwill impairment of $675,000 for the DDS segment reporting unit as of June 30, 2018. The Company performed its annual goodwill assessment for the Agility segment as of September 30, 2019. In performing the assessment, the Company adhered to the provisions of ASU 2017-04 by using a single step approach that determines the carrying value of goodwill and comparing it against the excess of the reporting unit’s fair value. Based on the Company’s assessment, the Company reached the conclusion that there was no goodwill impairment because the fair value of the Agility segment’s goodwill exceeded its carrying value. Therefore, there was no goodwill impairment recorded during the year ended December 31, 2019. The fair value measurement of goodwill for all segments was classified within Level 3 of the fair value hierarchy because the Company used the income approach, which utilizes significant inputs that are unobservable in the market. The Company believes it made reasonable estimates and assumptions to calculate the fair value of the reporting unit as of the impairment test measurement date (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Assets Goodwill $ — $ — $ 2,108 December 31, 2018 Level 1 Level 2 Level 3 Assets Goodwill $ — $ — $ 2,050 Information regarding our acquisition-related intangible assets was as follows for the dates indicated (in thousands): Trademarks Media Developed Customer and Contact technology relationships trade names Patents Database Total Gross carrying amounts: Balance as of January 1, 2018 $ 3,204 $ 2,264 $ 884 $ 46 $ 3,647 $ 10,045 Foreign currency translation (205) (183) (29) (4) (101) (522) Balance as of December 31, 2018 2,999 2,081 855 42 3,546 9,523 Foreign currency translation 109 96 16 1 60 282 Balance as of December 31, 2019 $ 3,108 $ 2,177 $ 871 $ 43 $ 3,606 $ 9,805 Trademarks Media Developed Customer and Contact technology relationships trade names Patents Database Total Accumulated amortization: Balance as of January 1, 2018 $ 902 $ 645 $ 330 $ 15 $ 547 $ 2,439 Amortization expense 317 185 122 5 367 996 Foreign currency translation (82) (64) (12) (1) (28) (187) Balance as of December 31, 2018 1,137 766 440 19 886 3,248 Amortization expense 305 178 120 4 357 964 Foreign currency translation 51 39 7 1 18 116 Balance as of December 31, 2019 $ 1,493 $ 983 $ 567 $ 24 $ 1,261 $ 4,328 Amortization expense relating to acquisition-related intangible assets was approximately $1.0 million for both years ended December 31, 2019 and 2018. Estimated annual amortization expense for intangible assets subsequent to December 31, 2019 is as follows (in thousands): Year Amortization 2020 $ 913 2021 913 2022 913 2023 913 2024 812 Thereafter 1,013 $ 5,477 |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Taxes | |
Taxes | 3. Taxes In December 2017, the President signed the U.S. Tax Cuts and Jobs Act (2017 Tax Act), which includes a broad range of provisions, many of which significantly differ from those contained in previous U.S. tax law. Changes in tax law are accounted for in the period of enactment. As such, the 2017 consolidated financial statements reflect the immediate tax effect of the 2017 Tax Act, which was enacted on December 22, 2017 (Enactment Date). The 2017 Tax Act contains several key provisions including, among other things: · A one-time tax on the mandatory deemed repatriation of post‑1986 untaxed foreign earnings and profits (E&P), referred to as the toll charge; · A reduction in the maximum corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017; · The introduction of a new U.S. tax on certain off-shore earnings referred to as Global Intangible Low-Taxed Income (GILTI) at an effective tax rate of 10.5% for tax years beginning after December 31, 2017 (increasing to 13.125% for tax years beginning after December 31, 2025) with a partial offset by applicable foreign tax credits; and · The introduction of a quasi-territorial tax system for tax years beginning after December 31, 2017 by providing a dividend received deduction under the participation exemption system. Pursuant to the 2017 Tax Act, we recorded the following adjustments to income tax expense during the fourth quarter of 2017: · A one-time deemed repatriation of E&P on the Company’s post‑1986 untaxed foreign E&P amounting to $25.8 million. No toll tax charge was recorded due to the available net operating loss carryforwards; and · A reduction of deferred tax assets and a corresponding reduction of the valuation allowance of $2.3 million, primarily for the remeasurement of our deferred tax assets at the enacted tax rate of 21%. Beginning January 1, 2018, the Company performed a calculation of the GILTI provisions and concluded that it has no impact on account of the net losses of the Company’s foreign subsidiaries. The significant components of the provision for income taxes for the years ended December 31, 2019 and 2018 were as follows (in thousands): 2019 2018 Current income tax expense: Foreign $ 1,333 $ 1,467 Federal 71 121 State and local — 45 1,404 1,633 Deferred income tax expense (benefit): Foreign (323) 312 Federal 10 (139) State and local — 2 (313) 175 Provision for income taxes $ 1,091 $ 1,808 The reconciliation of the U.S. statutory rate with the Company’s effective tax rate for the years ended December 31, 2019 and 2018 is summarized as follows (in thousands, except percentage information): 2018 2019 Restated Federal income tax expense at statutory rate (21.0) % 21.0 % Effect of: Foreign operations permanent difference - foreign exchange gains and losses (24.8) 27.8 Return to provision true-up (5.2) — 2017 Tax Act — (112.6) Tax effects of foreign operations 120.8 58.8 Increase in unrecognized tax benefits (ASC 740) 109.7 22.2 Change in valuation allowance 23.9 68.3 Withholding tax 12.2 7.8 State income tax net of federal benefit 2.6 2.4 Foreign tax rate differential 1.6 25.6 Others (13.2) (5.5) 206.6 % 115.8 % Deferred tax assets and liabilities are classified as non-current. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows (in thousands): December 31, 2019 2018 Deferred income tax assets: Allowances not currently deductible $ 223 $ 232 Depreciation and amortization 297 338 Equity compensation not currently deductible 966 775 Net operating loss carryforwards 5,317 5,089 Expenses not deductible until paid 1,245 769 Other 379 99 Total gross deferred income tax assets before valuation allowance 8,427 7,302 Valuation allowance (6,521) (6,098) Deferred income tax assets, net $ 1,906 $ 1,204 Deferred income tax liabilities: Intangibles from acquisition of MediaMiser (316) (356) Other (47) (215) Total deferred income tax liabilities (363) (571) Net deferred income tax assets $ 1,543 $ 633 Net deferred income tax asset $ 1,906 $ 1,204 Net deferred income tax liability (363) (571) Net deferred income tax assets $ 1,543 $ 633 In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realizable. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating losses are available. As of December 31, 2019, the Company continues to maintain a valuation allowance on all U.S. and Canadian deferred tax assets. The Company maintained a valuation allowance of approximately $6.5 million and $6.1 million as of December 31, 2019 and 2018, respectively. The valuation allowance relates to U.S. and the Company’s Canadian subsidiaries deferred tax assets. The net change in the total valuation allowance was an increase of $0.4 million for the year ended December 31, 2019 compared to an increase of $0.7 million for the year ended December 31, 2018. Despite the access to the overseas earnings and the resulting toll charge, we intend to indefinitely reinvest the foreign earnings in our foreign subsidiaries on account of the foreign jurisdiction withholding tax that the Company has to incur on the actual remittances. Unremitted earnings of foreign subsidiaries amounted to approximately $25.7 million at December 31, 2019. If such earnings are repatriated in the future, or are no longer deemed to be indefinitely reinvested, the Company would have to accrue the applicable amount of foreign jurisdiction withholding taxes associated with such remittances. The 2017 Tax Act imposes a mandatory transition tax on accumulated foreign earnings and eliminates U.S. taxes on foreign subsidiary distribution. Due to the one-time transition tax on the deemed repatriation of post‑1986 undistributed foreign subsidiary earnings and profits, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have now been subjected to U.S. federal income tax. As a result, earnings in foreign jurisdictions are available for distribution to the U.S. without incremental U.S. taxes. To the extent the Company repatriates these earnings to the United States, it estimates that it will not incur significant additional taxes related to such amounts, however, the estimates are provisional and subject to further analysis. United States and foreign components of income (loss) before provision for income taxes for each of the two years ended December 31, were as follows (in thousands): 2018 2019 (Restated) United States $ (161) $ 3,107 Foreign (367) (1,545) Totals $ (528) $ 1,562 At December 31, 2019, the Company had available U.S. federal net operating loss carryforwards of approximately $15.3 million. These net operating loss carryforwards expire at various times through the year 2035. At December 31, 2019, the Company’s Canadian subsidiaries had available net operating loss carryforwards of approximately $13.4 million in Canada which begin to expire in 2028. In addition, these subsidiaries also have research and development credits of approximately $1.5 million available to reduce taxable income in future years, which may be carried forward indefinitely. The potential benefits from these balances have not been recognized for financial statement purposes. The Company had unrecognized tax benefits of $3.0 million and $2.4 million as of December 31, 2019 and 2018, respectively. The portion of unrecognized tax benefits relating to interest and penalties was $0.2 million and $0.1 million for the years ended December 31, 2019 and 2018, respectively. The unrecognized tax benefits as of December 31, 2019 and 2018, if recognized, would have an impact on the Company’s effective tax rate. The Company is subject to Federal income tax, as well as income tax in various states and foreign jurisdictions. The Company has open tax years for U.S. Federal and State taxes from 2015 through 2019. Various foreign subsidiaries have open tax years from 2003 through 2019, some of which are under audit by local tax authorities. The Company believes that its ASC 740 accruals as of December 31, 2019 are adequate to cover the Company’s income tax exposures. The following table represents a roll forward of the Company’s unrecognized tax benefits and associated interest for the years ended (amounts in thousands): December 31, 2019 2018 Balance at January 1 $ 2,424 $ 2,177 Increase for tax position 355 285 Interest accrual 234 63 Foreign currency revaluation (56) (101) Balance at December 31 $ 2,957 $ 2,424 Tax assessments In September 2015, the Company’s Indian subsidiary was subject to an inquiry by the Service Tax Department in India regarding the classification of services provided by this subsidiary, asserting that the services provided by this subsidiary fall under the category of online information and database access or retrieval services (OID Services), and not under the category of business support services (BS Services) that are exempt from service tax as historically indicated in the subsidiary’s service tax filings. The Company disagrees with the Service Tax Department’s position. In November 2019, the Commissioner of Central Tax, GST & Central Excise issued an order confirming the Service Tax Department’s position. The Company is contesting this order in an appeal to the Customs, Excise and Service Tax Appellate Tribunal. In the event the Service Tax Department is ultimately successful in proving that the services fall under the category of OID Services, the revenues earned by the Company’s Indian subsidiary for the period July 2012 through November 2016 would be subject to a service tax of between 12.36% and 15%, and this subsidiary may also be liable for interest and penalties. The revenue of our Indian subsidiary during this period was approximately $66.0 million. In accordance with new rules promulgated by the Service Tax Department, as of December 1, 2016 service tax is no longer applicable to OID or BS Services. Based on the assessment of the Company’s counsel, the Company has not recorded any tax liability for this case. In a separate action relating to service tax refunds, in October 2016, the Company’s Indian subsidiary received notices from the Indian Service Tax Department in India seeking to reverse service tax refunds of approximately $160,000 previously granted to our Indian subsidiary for three quarters in 2014, asserting that the services provided by this subsidiary fall under the category of OID Services and not BS Services. The appeal was determined in favor of the Service Tax Department. The Company disagrees with the basis of this decision and is contesting it. The Company expects delays in its Indian subsidiary receiving further service tax refunds until this matter is adjudicated with finality, and currently has service tax credits of approximately $1.0 million recorded as a receivable. Based on the assessment of the Company’s counsel, the Company has not recorded any tax liability for this case. Substantial recovery against the Company in the above referenced 2015 Service Tax Department case could have a material adverse impact on the Company, and unfavorable rulings or recoveries in other tax proceedings could have a material adverse impact on the consolidated operating results of the period in which the rulings or recovery occurs. |
Long-term obligations
Long-term obligations | 12 Months Ended |
Dec. 31, 2019 | |
Long-term obligations | |
Long-term obligations | 4. Long-term obligations Total long-term obligations as of December 31, 2019 and 2018 consisted of the following (in thousands): December 31, 2019 2018 Pension obligations - accrued pension liability $ 4,611 $ 2,591 Settlement agreement (1) 708 1,010 Capital lease obligations 127 574 Deferred lease payments — 489 Microsoft licenses (2) — 355 Lease incentive liability — 572 5,446 5,591 Less: Current portion of long-term obligations 912 1,529 Totals $ 4,534 $ 4,062 (1) Represents payment to be made pursuant to a settlement agreement entered into in December 2018 between a subsidiary of the Company and 19 former employees of such subsidiary. The balance is payable in monthly installments through March 2023. (2) In March 2017, the Company renewed a vendor agreement to acquire certain additional software licenses and to receive support and subsequent software upgrades on these and other currently owned software licenses through February 2020. Pursuant to this agreement, the Company was obligated to pay approximately $0.4 million annually over the term of the agreement. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and contingencies. | |
Commitments and contingencies | 5. Commitments and contingencies Litigation – In 2008, a judgment was rendered in the Philippines against a Philippine subsidiary of the Company that is no longer active and purportedly also against Innodata Inc., in favor of certain former employees of the Philippine subsidiary. The potential payment amount aggregates to approximately $6.4 million, plus legal interest that accrued at 12% per annum from August 13, 2008 to June 30, 2013, and thereafter accrued and continues to accrue at 6% per annum. The potential payment amount as expressed in U.S. dollars varies with the Philippine peso to U.S. dollar exchange rate. In December 2017, a group of 97 of the former employees of the Philippine subsidiary indicated that they proposed to record the judgment as to themselves in New Jersey. In January 2018, in response to an action initiated by Innodata Inc., the United States District Court for the District of New Jersey (USDC) entered a preliminary injunction that enjoins these former employees from pursuing or seeking recognition or enforcement of the judgment against Innodata Inc. in the United States during the pendency of the action and until further order of the USDC. In June 2018, the USDC entered a consent order administratively closing the action subject to return of the action to the active docket upon the written request of Innodata Inc. or the former employees, with the USDC retaining jurisdiction over the matter and the preliminary injunction remaining in full force and effect. The Company is also subject to various other legal proceedings and claims that have arisen in the ordinary course of business. While management currently believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company’s consolidated financial position or overall trends in consolidated results of operations, litigation is subject to inherent uncertainties. Substantial recovery against the Company in the above-referenced Philippine action could have a material adverse impact on the Company, and unfavorable rulings or recoveries in the other proceedings could have a material adverse impact on the consolidated operating results of the period in which the ruling or recovery occurs. In addition, the Company’s estimate of the potential impact on the Company’s consolidated financial position or overall consolidated results of operations for the above referenced legal proceedings could change in the future. The Company’s legal reserves related to legal proceedings and claims are based on the Company’s determination of whether or not a loss is probable. The Company reviews outstanding proceedings and claims with external counsel to assess probability and estimates of loss. The reserves are adjusted if necessary. While the Company intends to defend these matters vigorously, adverse outcomes that it estimates could reach approximately $300,000 in the aggregate beyond recorded amounts are reasonably possible. If circumstances change, the Company may be required to record adjustments that could be material to its reported consolidated financial condition and results of operations. Foreign Currency - To the extent that the currencies of the Company’s production facilities located in the Philippines, India, Sri Lanka and Israel fluctuate, the Company is subject to risks of changing costs of production after pricing is established for certain client projects. In addition, the Company is exposed to the risk of foreign currency fluctuation on the non-U.S. dollar denominated revenues, and on the monetary assets and liabilities held by its foreign subsidiaries that are denominated in local currency. Indemnifications - The Company is obligated under certain circumstances to indemnify directors, certain officers and employees against costs and liabilities incurred in actions or threatened actions brought against such individuals because such individuals acted in the capacity of director, officer or fiduciary of the Company. In addition, the Company has contracts with certain clients pursuant to which the Company has agreed to indemnify the client for certain specified and limited claims. These indemnification obligations occur in the ordinary course of business and, in many cases, do not include a limit on potential maximum future payments. As of December 31, 2019, the Company has not recorded a liability for any obligations arising as a result of these indemnification obligations. |
Operating Leases
Operating Leases | 12 Months Ended |
Dec. 31, 2019 | |
Operating Leases | |
Operating Leases | 6. Operating Leases The Company has various lease agreements for its offices and service delivery centers. The Company has determined that the risks and benefits related to the leased properties are retained by the lessors. Accordingly, these are accounted for as operating leases. These lease agreements are for terms ranging from two to eleven years and, in most cases, provide for rental escalations ranging from 1.75% to 10%. Most of these agreements are renewable at the mutual consent of the parties to the contract. The Company adopted ASU 2016-02 , beginning January 1, 2019 and applied the practical expedients consistently for all of its leases. Accordingly, the Company: 1. Did not reassess whether any expired or existing contracts are or contain leases. 2. Did not reassess the lease classification for any expired or existing leases. 3. Did not reassess initial direct costs for any existing leases. In addition, the Company elected to retrospectively determine the lease term and assess impairment of the right-of-use asset. At the date of transition, the Company recognized an operating lease liability and right-of-use asset. The amount of lease liability is equal to the present value of the remaining lease payments as of January 1, 2019, discounted using the incremental borrowing rate of each respective country. A right-of-use asset is measured as the amount of the lease liability adjusted for the amount of deferred straight-line rent, prepaid rent and lease incentive allowances previously recognized. The table below summarizes the amounts recognized in the financial statements related to operating leases for the years presented (in thousands): Year ended December 31, 2019 December 31, 2018 Rent expense for long-term operating leases $ 1,813 $ 2,246 Rent expense for short-term leases 297 322 Total rent expense $ 2,110 $ 2,568 The following table presents the maturity profile of the Company’s operating lease liabilities based on the contractual undiscounted payments with a reconciliation of these amounts to the remaining net present value of the operating lease liability reported in the consolidated balance sheet as of December 31, 2019 (in thousands): Year Amount 2020 $ 1,742 2021 1,338 2022 1,255 2023 1,050 2024 1,067 2025 and thereafter 4,628 Total lease payments 11,080 Less: Interest (3,242) Net present value of lease liabilities $ 7,838 Current portion $ 1,107 Long-term portion 6,731 Total $ 7,838 The weighted average remaining lease terms and discount rates for all of our operating leases as of December 31, 2019 were as follows: Weighted-average lease term remaining 68 months Weighted-average discount rate |
Pension Benefits
Pension Benefits | 12 Months Ended |
Dec. 31, 2019 | |
Pension Benefits | |
Pension Benefits | 7. Pension Benefits U.S. Defined Contribution Pension Plan - The Company has a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code, pursuant to which substantially all of its U.S. employees are eligible to participate after completing six months of service. Participants may elect to contribute a portion of their compensation to the plan. Under the plan, the Company has the discretion to match a portion of participants’ contributions. For the years ended December 31, 2019 and 2018, the Company did not make any matching contributions. Non-U.S. Pension Benefits - The accounting standard for pensions requires an employer to recognize a net liability or asset and an offsetting adjustment to accumulated other comprehensive loss to report the funded status of defined benefit pension and other post-retirement benefit plans. Most of the non-U.S. subsidiaries provide for government-mandated defined pension benefits. For certain of these subsidiaries, vested eligible employees are provided a lump sum payment upon retiring from the Company at a defined age. The lump sum amount is based on the salary and tenure as of retirement date. Other non-U.S. subsidiaries provide for a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment, based upon the salary and tenure as of the date employment ceases. The liability for such defined benefit obligations is determined and provided on the basis of actuarial valuations. As of December 31, 2019, these plans were unfunded. Pension expense for foreign subsidiaries totaled approximately $0.3 million and $0.7 million for the years ended December 31, 2019 and 2018, respectively. Included in the $0.7 million pension expense for the year ended 2018 is $269,000 representing the correction of an understatement of pension liabilities from prior years. The following table summarizes the amounts recognized in accumulated other comprehensive loss, net of taxes (in thousands): Years Ended December 31, 2019 2018 Amortization of transition obligation $ 41 $ 41 Actuarial gain (loss) (1,910) 416 Totals $ (1,869) $ 457 Amounts in accumulated other comprehensive loss not yet reflected in net periodic pension cost, net of taxes: Actuarial gain (loss) $ (163) $ 1,747 Transition obligation (50) (91) Totals $ (213) $ 1,656 Amounts in accumulated other comprehensive loss expected to be amortized in 2020 net periodic pension cost, net of taxes: Actuarial gain $ 1 Transition obligation 38 Total $ 39 The following table sets out the status of the non-U.S. pension benefits and the amounts (in thousands) recognized in the Company’s consolidated financial statements as of and for each of the two years in the period ended December 31, 2019: Benefit Obligations: 2019 2018 Projected benefit obligation at beginning of the year $ 2,591 $ 3,121 Service cost 289 344 Interest cost 194 198 Actuarial loss (gain) 1,720 (622) Foreign currency exchange rates changes 52 (237) Benefits paid (235) (213) Projected benefit obligation at end of the year $ 4,611 $ 2,591 Components of Net Periodic Pension Cost: 2019 2018 Service cost $ 289 $ 344 Interest cost 194 198 Past service cost — 34 Actuarial gain recognized (148) 133 Net periodic pension cost $ 335 $ 709 The accumulated benefit obligation, which represents benefits earned to date, was approximately $2.9 million and $1.7 million as of December 31, 2019 and 2018, respectively. Amounts recognized in the consolidated balance sheets for the years ended December 31, 2019 and 2018 consisted of the following (in thousands): 2019 2018 Current accrued benefit cost $ 570 $ 320 Non-current accrued benefit cost 4,041 2,271 Net amount recognized $ 4,611 $ 2,591 Current accrued benefit cost for pension benefits was included in the current portion of long-term obligations in the consolidated balance sheets. Non-current accrued benefit cost for pension benefits was included in long-term obligations, net of current portion, in the consolidated balance sheets. Actuarial assumptions for all non-U.S. plans are described below. The discount rates are used to measure the year end benefit obligations and the earnings effects for the subsequent year. The assumptions for each of the two years in the period ended December 31, 2019 were as follows: 2019 2018 Discount rate 4.85%‑10.42% 7.25%‑12.17% Rate of increase in compensation level 5%‑7% 5%‑7% Estimated Future Benefit Payments: As of December 31, 2019, the following benefit payments, which reflect expected future service, as appropriate, were expected to be paid (in thousands): Years Ending December 31, Amount 2020 $ 578 2021 329 2022 159 2023 156 2024 217 2025 to 2029 2,665 $ 4,104 |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2019 | |
Capital Stock | |
Capital Stock | 8. Capital Stock Common Stock - The Company is authorized to issue 75,000,000 shares of common stock. Each share of common stock has one vote. Subject to preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors. No common stock dividends have been declared to date. Preferred Stock - The Company is authorized to issue 4,998,000 shares of preferred stock. The Board of Directors is authorized to fix the terms, rights, preferences and limitations of the preferred stock and to issue the preferred stock in series that differ as to their relative terms, rights, preferences and limitations. Stockholders Rights Agreement - On February 1, 2019, the Board of Directors declared a dividend of one preferred share purchase right (each, a “Right,” and collectively, the “Rights”) for each outstanding share of the Company’s common stock on February 15, 2019. The description and terms of the Rights are set forth in a Rights Agreement between the Company and American Stock Transfer & Trust Co., as rights agent, dated as of February 1, 2019 (the “Rights Agreement”). Each Right entitles its holder to purchase, under certain conditions, one one-thousandth of a share of Series C Participating Preferred Stock (“Preferred Stock”). Each one one-thousandth of a share of Preferred Stock has substantially the same rights as one share of the Company’s common stock. Subject to the terms and conditions of the Rights Agreement, Rights become exercisable ten days after the public announcement that a “Person” has become an “Acquiring Person” (as each such term is defined in the Rights Agreement) by obtaining beneficial ownership of 20% or more of the Company’s outstanding common stock, or, if earlier, ten business days (or a later date determined by the Board of Directors before any Person becomes an Acquiring Person) after a Person begins a tender or exchange offer which, if completed, would result in that Person becoming an Acquiring Person. Any Rights held by an Acquiring Person are void and may not be exercised. If a Person becomes an Acquiring Person, all holders of Rights, except the Acquiring Person, may purchase at the Right’s then-current exercise price, the Company’s common stock having a market value equal to twice the exercise price. Moreover, at any time after a Person becomes an Acquiring Person (unless such Person acquires 50 percent or more of the common stock of the Company then outstanding, as more fully described in the Rights Agreement), the Board of Directors may exchange one share of the Company’s common stock for each outstanding Right (other than rights owned by such Person, which would have become void). In addition, if the Company is acquired in a merger or other business combination transaction after a Person becomes an Acquiring Person, all holders of Rights, except the Acquiring Person, may purchase at the Right’s then-current exercise price, a number of the acquiring company’s common stock having a market value of twice the exercise price. If the Company receives a “qualifying offer” (which includes certain all-cash fully financed tender offers or exchange offers for all of the Company’s outstanding common stock), under certain circumstances, holders of 10 percent of the Company’s outstanding common stock (excluding stock held by the offeror and its affiliates and associates) may direct the Board of Directors to call a special meeting of stockholders to consider a resolution exempting such “qualifying offer” from the Rights Agreement. The Rights themselves have no voting power. The Board of Directors may redeem the Rights at an initial redemption price of $0.001 per Right under certain circumstances set forth in the Rights Agreement. The Rights Agreement was approved by the Company’s stockholders at the 2019 annual meeting. The Rights will expire on January 31, 2022 unless earlier redeemed or exchanged. Common Stock Reserved - As of December 31, 2019, the Company had available for future issuance approximately 3,340,470 shares of common stock pursuant to the Company’s stock option plans. Treasury Stock - In July 2019, the Company’s Board of Directors authorized the repurchase of up to $2.0 million of its common stock in open market or private transactions. There is no expiration date associated with the program. As of December 31, 2019, the Company repurchased 1,503,095 shares of its common stock under the July 2019 authorization. |
Stock Options
Stock Options | 12 Months Ended |
Dec. 31, 2019 | |
Stock Options | |
Stock Options | 9. Stock Options On June 7, 2016, stockholders of the Company approved amendments to the Innodata Inc. 2013 Stock Plan. The Innodata Inc. 2013 Stock Plan, as amended and restated effective June 7, 2016, is referred to herein as the “Plan.” The number of shares of common stock of Innodata Inc. that may be delivered, purchased or used for reference purposes (with respect to stock appreciation rights or stock units) for awards granted under the Plan after June 7, 2016 is 5,858,892 (the Share Reserve). Shares subject to an option or stock appreciation right granted under the Plan after June 7, 2016 count against the Share Reserve as one share for every share granted, and shares subject to any other type of award granted under the Plan after June 7, 2016 count against the Share Reserve as two shares for every share granted. Any award, or portion of an award, under the Plan or under the Company’s 2009 Stock Plan (as amended and restated (the Prior Plan)) that expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares without delivery of shares or other consideration will be added back to the Share Reserve as one share for each such share that was subject to an option or stock appreciation right granted under the Plan or the Prior Plan, and two shares for each such share that was subject to an award other than an option or stock appreciation right granted under the Plan or the Prior Plan. If any shares are withheld, tendered or exchanged by a participant in the Plan as full or partial payment to Innodata of the exercise price under an option under the Plan or the Prior Plan or in satisfaction of a participant’s tax withholding obligations with respect to any award under the Plan or the Prior Plan, there will be added back to the Share Reserve one share for each such share that was withheld, tendered or exchanged in respect of an option or stock appreciation right granted under the Plan or the Prior Plan, and two shares for each such share that was withheld, tendered or exchanged in respect of an award other than an option or stock appreciation right granted under the Plan or the Prior Plan. The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average fair value of the options granted and weighted-average assumptions were as follows: For the Years Ended December 31, 2019 2018 Weighted average fair value of options granted $ $ Risk-free interest rate 1.68% - 2.55 % % Expected life (years) 5‑6 5‑6 Expected volatility factor 45.03%-46.38 % 44.16%-48.82 % Expected dividends None None The Company estimates the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant. The expected term of options granted is based on a combination of vesting schedules, term of the options and historical experience. Expected volatility is based on historical volatility of the Company’s common stock. The Company uses an expected dividend yield of zero since it has never declared or paid any dividends on its capital stock. A summary of option activity under the Plans as of December 31, 2019, and changes during the year then ended, are presented below: Weighted-Average Weighted -Average Remaining Number of Exercise Contractual Term Aggregate Options Price (years) Intrinsic Value Outstanding at January 1, 2019 4,982,040 $ 2.14 Granted 2,112,500 1.25 Exercised (10,000) 1.11 Forfeited/Expired (251,237) Outstanding at December 31, 2019 6,833,303 $ $ 89,405 Exercisable at December 31, 2019 4,365,333 $ $ 50,743 Vested and Expected to Vest at December 31, 2019 6,833,303 $ $ 89,405 The total compensation cost related to non-vested stock options not yet recognized as of December 31, 2019 totaled approximately $1.3 million. The weighted-average period over which these costs will be recognized is 26 months. There were no option exercises during the year ended December 31, 2018. A summary of restricted shares under the Company’s Plan as of December 31, 2019 are presented below: Weighted-Average Grant Date Fair Number of Shares Value Granted 75,000 $ 1.38 Vested — — Forfeited/Expired — — Unvested at December 31, 2019 75,000 $ 1.38 |
Comprehensive loss
Comprehensive loss | 12 Months Ended |
Dec. 31, 2019 | |
Comprehensive Loss | |
Comprehensive Loss | 10. Comprehensive loss Accumulated other comprehensive loss, as reflected in the consolidated balance sheets, consists of pension liability adjustments, net of taxes, foreign currency translation adjustment and changes in fair value of derivatives, net of taxes. The components of accumulated other comprehensive loss as of December 31, 2019 and 2018, and reclassifications out of accumulated other comprehensive loss for the years then ended, are presented below (in thousands): Foreign Currency Accumulated Other Pension Liability Fair Value of Translation Comprehensive Adjustment Derivatives Adjustment Loss Balance at January 1, 2019 $ 1,451 $ — $ (1,466) $ (15) Other comprehensive income before reclassifications, net of taxes — 46 566 612 Total other comprehensive income (loss) before reclassifications, net of taxes 1,451 46 (900) 597 Net amount reclassified to earnings (1,504) (13) — (1,517) Balance at December 31, 2019 $ (53) $ 33 $ (900) $ (920) Foreign Currency Accumulated Other Pension Liability Fair Value of Translation Comprehensive Adjustment Derivatives Adjustment Loss Balance at January 1, 2018 $ 1,191 $ 342 $ (687) $ 846 Other comprehensive loss before reclassifications, net of taxes — (695) (779) (1,474) Total other comprehensive income (loss) before reclassifications, net of taxes 1,191 (353) (1,466) (628) Net amount reclassified to earnings 260 353 — 613 Balance at December 31, 2018 $ 1,451 $ — $ (1,466) $ (15) All reclassifications out of accumulated other comprehensive loss had an impact on direct operating costs in the consolidated statements of operations and comprehensive loss. |
Segment Reporting and concentra
Segment Reporting and concentrations | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting and concentrations | |
Segment reporting and concentrations | 11. Segment reporting and concentrations The Company’s operations are classified in three reporting segments: Digital Data Solutions (DDS), Synodex and Agility. The DDS segment provides a range of solutions and platforms for solving complex data challenges that companies face when they seek to obtain the benefits of AI systems and analytics platforms. These include data annotation, data transformation, data curation and intelligent automation. The DDS segment also provides a variety of services for clients in the information industry that relate to content operations and product development. The Synodex segment provides an intelligent data platform that transforms medical records into useable digital data organized in accordance with our proprietary data models or client data models. The Agility segment provides an intelligent data platform that provides marketing communications and public relations professionals with the ability to target and distribute content to journalists and social media influencers world-wide and to monitor and analyze global news channels (print, web, radio and TV) and social media channels. A significant portion of the Company’s revenues is generated from its facilities in the Philippines, India, Sri Lanka, Canada, Germany, the United Kingdom and Israel. Revenues from external clients and segment operating profit (loss), and other reportable segment information were as follows (in thousands): For the Years Ended December 31, 2018 2019 Restated Revenues: DDS $ 41,172 $ 43,546 Synodex 3,942 4,063 Agility 10,744 9,809 Total Consolidated $ 55,858 $ 57,418 Income (loss) before provision for income taxes (1) : DDS $ 1,320 $ 3,625 Synodex (129) 284 Agility (1,719) (2,347) Total Consolidated $ (528) $ 1,562 Income (loss) before provision for income taxes (2) : DDS $ 1,059 $ 3,391 Synodex 40 446 Agility (1,627) (2,275) Total Consolidated $ (528) $ 1,562 December 31, 2018 December 31, 2019 Restated Total assets: DDS $ 23,196 $ 21,223 Synodex 675 787 Agility 25,875 22,930 Total Consolidated $ 49,746 $ 44,940 December 31, 2019 December 31, 2018 Goodwill: Agility $ 2,108 $ 2,050 Total $ 2,108 $ 2,050 (1) Before elimination of any inter-segment profits (2) After elimination of any inter-segment profits Long-lived assets as of December 31, 2019 and 2018 by geographic region were comprised of (in thousands): 2019 2018 United States $ 4,591 $ 4,383 Foreign countries: Canada 8,876 7,023 United Kingdom 1,907 2,045 Philippines 5,135 900 India 508 475 Sri Lanka 678 280 Israel 19 30 Germany 1 2 Total foreign 17,124 10,755 Totals $ 21,715 $ 15,138 Two clients in the DDS segment generated approximately 26% and 30% of the Company’s total revenues in the fiscal years ended December 31, 2019 and 2018, respectively. No other client accounted for 10% or more of total revenues during these periods. Further, in the years ended December 31, 2019 and 2018, revenues from non-US clients accounted for 55% and 56%, respectively, of the Company’s revenues. Revenues for each of the two years in the period ended December 31, 2019 by geographic region (determined based upon client’s domicile), were as follows (in thousands): 2019 2018 United States $ 25,357 $ 25,403 United Kingdom 9,577 10,874 The Netherlands 6,982 7,488 Canada 6,192 5,985 Others - principally Europe 7,750 7,668 Totals $ 55,858 $ 57,418 As of December 31, 2019, approximately 60% of the Company’s accounts receivable was due from foreign (principally European) clients and 44% of accounts receivable was due from three clients. As of December 31, 2018, approximately 57% of the Company’s accounts receivable was due from foreign (principally European) clients and 48% of accounts receivable was due from three clients. No other client accounted for 10% or more of the accounts receivable as of December 31, 2019. |
Loss per Share
Loss per Share | 12 Months Ended |
Dec. 31, 2019 | |
Loss per Share | |
Loss per Share | 12. Loss per Share For the Years Ended December 31, 2018 2019 (Restated) (in thousands) Net loss attributable to Innodata Inc. and Subsidiaries $ (1,602) $ (253) Weighted average common shares outstanding 25,774 25,878 Dilutive effect of outstanding options — — Adjusted for dilutive computation 25,774 25,878 Basic loss per share is computed using the weighted-average number of common shares outstanding during the year. Diluted loss per share is computed by considering the impact of the potential issuance of common shares, using the treasury stock method, on the weighted average number of shares outstanding. For those securities that are not convertible into a class of common stock, the two-class method of computing loss per share is used. Options to purchase 6.8 million and 5.0 million shares of common stock for the years ended December 31, 2019 and 2018, respectively, were outstanding but not included in the computation of diluted loss per share because the effect would have been anti-dilutive. |
Derivatives
Derivatives | 12 Months Ended |
Dec. 31, 2019 | |
Derivatives | |
Derivatives | 13. Derivatives The Company conducts a large portion of its operations in international markets that subject it to foreign currency fluctuations. The most significant foreign currency exposures occur when revenue and associated accounts receivable are collected in one currency and expenses to generate that revenue are incurred in another currency. The Company’s primary exchange rate exposure relates to payroll, other payroll costs and operating expenses in the Philippines, India, Sri Lanka and Israel. In addition, although most of the Company’s revenues are denominated in U.S. dollars, a significant portion of the total revenues is denominated in Canadian dollars, Pound Sterling and Euros. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. The Company does not hold or issue derivatives for trading purposes. All derivatives are recognized at their fair value and classified based on the instrument’s maturity date. As of December 31, 2018, we had no outstanding forward contracts. The total notional amount for outstanding derivatives as of December 31, 2019 was $4.3 million. The following table presents the fair value of derivative instruments included within the consolidated balance sheets as of December 31, 2019 and 2018 (in thousands): Balance Sheet Location Fair Value 2019 2018 Derivatives designated as hedging instruments: Foreign currency forward contracts Prepaid expenses and other current assets $ 33 $ — The effect of foreign currency forward contracts designated as cash flow hedges on the consolidated statements of operations for the years ended December 31, 2019 and 2018 were as follows (in thousands): 2019 2018 Net gain (loss) recognized in OCI (1) $ 46 $ (695) Net gain (loss) reclassified from accumulated OCI into income (2) $ 13 $ (353) Net gain recognized in income (3) $ — $ — (1) Net change in fair value of the effective portion classified into other comprehensive income ("OCI") (2) Effective portion classified within direct operating costs (3) There were no ineffective portions for the period presented. |
Financial Instruments
Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Financial Instruments | |
Financial Instruments | 14. Financial Instruments The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated their fair value as of December 31, 2019 and 2018, because of the relative short maturity of these instruments. “ Fair Value Measurements and Disclosures ” defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes the inputs used to measure fair value into three levels. The three levels are defined as follows: Level 1 : Unadjusted quoted price in active market for identical assets and liabilities. Level 2: Inputs other than those included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. December 31, 2019 Level 1 Level 2 Level 3 Assets Derivatives $ — $ 33 $ — |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Description of Business and Summary of Significant Accounting Policies | |
Description of Business | Description of Business - Innodata Inc. (including its subsidiaries, the “Company”, “Innodata”, “we”, “us” or “our”) is a global data engineering company. The Company solves complex data challenges that companies face when they build and maintain artificial intelligence (AI) systems and analytics platforms. To deliver the Company’s services and solutions, the Company uses a combination of human expertise and technology. The Company’s 3,000+ employees span 10 countries and are experts in data pertaining to many professional fields. The Company’s core technology harnesses machine learning and deep learning (branches of AI) to augment human expertise. The Company’s hybrid approach of using AI in conjunction with human experts enables the Company’s to deliver superior data quality with even the most complex and sensitive data. The Company also provides AI-augmented software-as-a-service (SaaS) platforms for customers who wish to perform their own data engineering tasks and for niche, industry-specific data-intensive use cases. The Company provides a range of solutions and platforms for solving complex data challenges that companies face when they seek to obtain the benefits of AI systems and analytics platforms. (i) Data Annotation The Company helps its clients train AI models by annotating data at scale and at industry-leading levels of quality. The quality of training data is critical for ensuring that a client’s AI models perform well. The Company annotates text, images, audio and video data for the most complex AI models, including computer vision, sentiment analysis, entity linking, text categorization, and syntactic parsing/tagging. The Company’s image and video annotation services and platforms may be used to annotate, or label, objects or people in images/video for facial recognition systems and automated object identification systems and in aerial/satellite imagery for autonomous driving/flying applications. The Company’s text annotation services and platforms may be used to convert raw text data into richly tagged, AI training data. The Company accommodates a wide range of input formats and taxonomies, and the Company performs a wide variety of complex tasks including entity annotation, relationship annotation, co-reference annotation, event annotation, multi-label annotation, and document labelling. The Company provides image/video data annotation and text annotation as full solutions, in which the Company provides all required technology, infrastructure and expert resources. Beginning in early 2020, the Company will also provide image/video data annotation platforms and text annotation platforms for its clients to license for internal use. The Company provides data annotation for a variety of complex requirements in healthcare, compliance, scientific, financial and legal markets. (ii) Data Transformation The Company provides AI-based data transformation solutions for high-accuracy data identification, aggregation, cleansing, augmentation and extraction. The Company’s solutions utilize highly-trained AI models and experts who custom-train the models for the Company’s clients’ most complex and unique requirements. The Company’s data transformation platform enables data to be extracted from websites, as well as internal data stores; converted from disparate formats including PDF; enriched with the necessary semantics, metadata and linking; and classified in accordance with an ontology or knowledge graph. The Company’s data transformation solutions may be consumed via API, so that they can be utilized as infrastructure by clients with ongoing needs for such services. The Company also provides a platform for clients to license for performing analytics on extracted data points. (iii) Data Curation For clients that need to maintain mission-critical databases of structured data, or fuse separately-created databases into a single, unified, high-quality source of data that can be relied upon for a variety of corporate functions and products (often referred to as a “golden source” of data), the Company provides AI-based data curation solutions that include data collection across external and internal data sources, data hygiene, data consolidation, and data compliance. (iv) Intelligent Automation Enterprises are increasingly looking to re-invent business processes to take advantage of advancements in AI and machine learning, computing, and storage. Many seek easier ways these advanced capabilities can be trained, deployed, and leveraged. For clients with critical business processes that involve documents, images, text, emails and other unstructured data, The Company deploys a range of technologies, including AI and robotic process automation (RPA), to eliminate repetitive tasks, automate where possible, speed up operations, and shift internal talent to creative and analytical work. The Company provides intelligent automation for an increasing diversity of complex functions. At present, these include IP rights management, contract management, client relationship management, regulatory change management, underwriting, and content operations management. (v) Intelligent Data Platforms The Company builds and manages intelligent data platforms that address specific, niche market requirements with the Company’s data engineering technologies. The Company deploys these platforms as software-as-a-service (SaaS) and as managed data solutions. To date, the Company has built an intelligent data platform for medical records data transformation (which we brand as “Synodex”) and for marketing communications/public relations workflow (which we brand as “Agility”). The Company’s Synodex intelligent data platform transforms medical records into useable digital data organized in accordance with the Company’s proprietary data models or client data models. At the end of 2019, the Company had 20 clients utilizing its Synodex platform, including John Hancock Insurance, the insurance operating unit of John Hancock Financial (a division of Manulife) and one of the largest life insurers in the United States. The Company’s Agility intelligent data platform provides marketing communications and public relations professionals with the ability to target and distribute content to journalists and social media influencers world-wide and to monitor and analyze global news channels (print, web, radio and TV) and social media channels. The Company also provides a variety of services for clients in the information industry that relate to content operations and product development. |
Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the accounts of Innodata Inc. and its wholly owned subsidiaries, and the Synodex and docGenix limited liability companies that are majority-owned by the Company. The non-controlling interests in the Synodex and docGenix limited liability companies are accounted for in accordance with Financial Accounting Standards Board (FASB) non-controlling interest guidance. All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates - In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities reported in the financial statements and accompanying notes. Actual results could differ from those estimates and changes in the estimates are recorded when known. Significant estimates include those related to the allowances for doubtful accounts and billing adjustments, long-lived assets, intangible assets, goodwill, valuation of deferred tax assets, valuation of stock-based compensation, litigation accruals and estimated accruals for various tax exposures. |
Revenue Recognition | Revenue Recognition – Revenue is recognized when the Company satisfies its performance obligations under the contract, either implicit or explicit, by transferring the promised goods or rendering a service to its customer either when control of the promised product is transferred to a client or the service is rendered, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services as per the agreement with the client. For agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation, if any, and then evaluates how the goods are transferred to or services are performed for the client to determine the timing of revenue recognition. Performance obligations that are not distinct at agreement inception are combined. For the DDS segment, revenue is recognized primarily based on the quantity delivered or resources utilized in the period in which services are performed and performance conditions are satisfied as per the agreement. Revenues for agreements billed on a time-and-materials basis are recognized as services are performed. Revenues under fixed-fee agreements, which are not significant to the overall revenues, are recognized based on the proportional performance method of accounting, as services are performed, or milestones are achieved. For the Synodex segment, revenue is recognized primarily based on the quantity delivered in the period in which services are performed and performance conditions are satisfied as per the agreement. A portion of the Company’s Synodex segment revenue is derived from licensing our functional software and providing access to our hosted software platform. Revenue from such services is recognized monthly when all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; access to the service is provided to the end user; and collection is probable. The Agility segment derives its revenue primarily from subscription arrangements and provision of enriched media analysis services. It also derives revenue as a reseller of corporate communication solutions. Revenue from subscriptions is recognized monthly when access to the service is provided to the end user; all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; and collection is probable. Revenue from enriched media analysis services is recognized when the services are performed, and performance conditions are satisfied. Revenues from the reseller agreements are recognized at gross with the Company functioning as a principal due to the Company meeting the following criteria. The Company acts as the primary obligor in the sales transaction; assumes the credit risk; sets the price; can select suppliers; and is involved in the execution of the services, including after sales service. Revenues include reimbursement of out-of-pocket expenses, with the corresponding out-of-pocket expenses included in direct operating costs. The Company considers U.S. GAAP criteria for determining whether to report revenue gross as a principal versus net as an agent. Factors considered include whether the Company is the primary obligor, has risks and rewards of ownership, and bears the risk that a client may not pay for the services performed. If there are circumstances where the above criteria are not met and therefore, the Company is not the principal in providing services, amounts received from clients are presented net of payments in the consolidated statements of operations and comprehensive loss. Contract acquisition cost, which is included in prepaid expenses and other current assets, for our Agility segment is amortized over the term of a subscription agreement that normally has a duration of 12 months or less. The Company reviews these costs on a periodic basis to determine the need to adjust the carrying values for pre-terminated contracts. |
Foreign Currency Translation | Foreign Currency Translation - The functional currency of our delivery centers located in the Philippines, India, Sri Lanka and Israel is the U.S. dollar. Transactions denominated in the Philippine pesos, Indian and Sri Lankan rupees and Israeli shekels are translated to U.S. dollars at rates which approximate those in effect on the transaction dates. Monetary assets and liabilities denominated in foreign currencies at December 31, 2019 and 2018 are translated at the exchange rate in effect as of those dates. Nonmonetary assets, liabilities, and stockholders’ equity were translated at the appropriate historical rates. Included in direct operating costs were exchange losses resulting from such transactions of approximately $158,000 and $56,000 for the years ended December 31, 2019 and 2018, respectively. The functional currency for the Company’s subsidiaries in Germany, the United Kingdom and Canada are the Euro, the Pound Sterling and the Canadian dollar, respectively. The financial statements of these subsidiaries are reported in these respective currencies. Financial information is translated from the applicable functional currency to the U.S. dollar (the reporting currency) for inclusion in the Company’s consolidated financial statements. Income, expenses and cash flows are translated at weighted average exchange rates prevailing during the fiscal period, and assets and liabilities are translated at fiscal period-end exchange rates. Resulting translation adjustments are included as a component of accumulated other comprehensive loss in stockholders’ equity. Foreign exchange transaction gains or losses are included in direct operating costs in the accompanying consolidated statements of operations and comprehensive loss. The amount of foreign currency translation adjustment was $566,000 and ($779,000) for the years ended December 31, 2019 and 2018, respectively. |
Derivative Instruments | Derivative Instruments - The Company has designated its derivatives (foreign currency forward contracts) as a cash flow hedge. Accordingly, the Company initially reports the effective portion of the derivative’s gain or loss as a component of accumulated other comprehensive income or loss and subsequently reclassifies them to earnings when the hedge exposure affects earnings. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedging activities. The total notional value of outstanding foreign currency forward contracts at December 31, 2019 was $4.3 million. |
Cash Equivalents | Cash Equivalents - For financial statement purposes (including cash flows), the Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. |
Property and Equipment | Property and Equipment - Property and equipment are stated at cost and are depreciated on the straight-line method over the estimated useful lives of the related assets, which is generally two to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lives of the leases. Certain assets under capital leases are amortized over the lives of the respective leases or the estimated useful lives of the assets, whichever is shorter. |
Long-lived Assets | Long-lived Assets - Management assesses the recoverability of its long-lived assets, which consist primarily of fixed assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The following factors, if present, may trigger an impairment review: (i) significant underperformance relative to expected historical or projected future operating results; (ii) significant negative industry or economic trends; (iii) significant decline in the Company’s stock price for a sustained period; and (iv) a change in the Company’s market capitalization relative to net book value. If the recoverability of these assets is unlikely because of the existence of one or more of the above-mentioned factors, an impairment analysis is performed, initially using a projected undiscounted cash flow method. Management makes assumptions regarding estimated future cash flows and other factors to determine the fair value of these respective assets. An impairment loss will be recognized only if the carrying value of a long-lived asset is not recoverable, exceeds its fair value, and is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets – The Company performs a valuation of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocates the purchase price of each acquired business to its respective net tangible and intangible assets and liabilities. Acquired intangible assets principally consist of technology, client relationships, backlog and trademarks. Liabilities related to intangibles principally consist of unfavorable vendor contracts. The Company determines the appropriate useful life by performing an analysis of expected cash flows based on projected financial information of the acquired businesses. Intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the majority of the economic benefits are expected to be consumed. Intangible assets are amortized into direct operating costs ratably over their expected related revenue streams over their useful lives. Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. The Company does not amortize goodwill but evaluates it for impairment at the reporting unit level annually during the third quarter of each fiscal year (as of September 30 of that year) or when an event occurs, or circumstances change, that indicates the carrying value may not be recoverable. In 2018, the Company adopted Accounting Standards Update (ASU) No. 2017‑04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment”. Under this guidance, the optional qualitative assessment, referred to as “Step 0”, and the first step of the quantitative assessment (“Step 1”) remained unchanged versus the prior guidance. However, the requirement to complete the second step (“Step 2”), which involved determining the implied fair value of goodwill and comparing it to the carrying value of that goodwill to measure the impairment loss, was eliminated. As a result, Step 1 is used to determine both the existence and amount of goodwill impairment. An impairment loss is recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying value of goodwill in that reporting unit. The Company periodically analyzes whether any indicators of impairment have occurred. As part of these periodic analyses, we compare the Company’s estimated fair value, as determined based on our stock price, to the Company’s net book value. During 2018, due to a continuing decline in the Company’s stock price and other indicators of impairment that arose during the second quarter of 2018, the Company deemed it appropriate to assess goodwill impairment as of June 30, 2018, rather than the historical testing date of September 30. Based on the Company’s assessment, the Company concluded that the goodwill of the DDS segment, amounting to $675,000, was fully impaired. The Company performed its annual goodwill assessment for the Agility segment as of September 30, 2019. In performing the assessment, the Company adhered to the provisions of ASU 2017-04 by using a single step approach that determines the carrying value of goodwill and comparing it against the excess of the reporting unit’s fair value. Based on the Company’s assessment, the Company reached the conclusion that there was no goodwill impairment because the fair value of the Agility segment’s goodwill exceeded its carrying value. Therefore, there was no goodwill impairment recorded during the year ended December 31, 2019. |
Income Taxes | Income Taxes – Estimated deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities, using enacted tax rates, as well as any net operating loss or tax credit carryforwards expected to reduce taxes payable in future years. A valuation allowance is provided when it is more likely than not that all or some portion of the estimated deferred tax assets will not be realized. While the Company considers future taxable income in assessing the need for the valuation allowance, in the event that the Company anticipates that it will be able to realize the estimated deferred tax assets in the future in excess of its net recorded amount, an adjustment to the provision for deferred tax assets would increase income in the period such determination was made. Similarly, in the event that the Company anticipates that it will not be able to realize the estimated deferred tax assets in the future considering future taxable income, an adjustment to the provision for deferred tax assets would decrease income in the period such determination was made. Changes in the valuation allowance from period to period are included in the Company’s tax provision in the period of change. The Company indefinitely reinvests the foreign earnings in its foreign subsidiaries. If such earnings are repatriated in the future, or are no longer deemed to be indefinitely reinvested, the Company would have to accrue as a liability the applicable amount of foreign jurisdiction withholding taxes associated with such remittances. In assessing the realization of deferred tax assets, management considered whether it is more likely than not that all or some portion of the U.S. and Canadian deferred tax assets will not be realizable. As the expectation of future taxable income resulting from the Synodex and Agility segments cannot be predicted with certainty, the Company maintains a valuation allowance against all the U.S. and Canadian deferred tax assets. The Company accounts for income taxes regarding uncertain tax positions, and recognizes interest and penalties related to uncertain tax positions in income tax expense in the consolidated statements of operations and comprehensive loss. |
Accounting for Leases | Accounting for Leases - In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” as modified (ASU 2016-02), which replaced existing leasing rules with a comprehensive lease measurement and recognition standard and expanded disclosure requirements. ASU 2016-02 requires lessees to recognize most leases on their balance sheets as liabilities, with corresponding “right-of-use” assets and is effective for annual reporting periods beginning after December 15, 2018, subject to early adoption. The Company adopted ASU 2016-02 effective January 1, 2019. Upon adoption, the Company recognized a right-of-use asset and corresponding lease liability. See Note 6, Operating Leases. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: a. there is a change in contractual terms, other than a renewal or extension of the arrangement; b. a renewal option is exercised, or extension granted, unless the term of the renewal or extension was initially included in the lease term; c. there is a change in the determination of whether fulfillment is dependent on a specified asset; or d. there is a substantial change to the asset. Whenever a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) and at the date of renewal or extension period for scenario (b). Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. All of the Company’s leases are classified as operating leases. Operating lease payments are recognized as an operating expense on a straight-line basis over the lease term. |
Accounting for Stock-Based Compensation | Accounting for Stock-Based Compensation - The Company measures and recognizes stock-based compensation expense for all share-based payment awards made to employees and directors based on the estimated fair value at the grant date. The stock-based compensation expense is recognized over the requisite service period. The fair value is determined using the Black-Scholes option-pricing model. The stock-based compensation expense related to the Company’s stock plan was allocated as follows (in thousands): Year Ended December 31, 2019 2018 Direct operating costs $ 113 $ 264 Selling and adminstrative expenses 723 532 Total stock-based compensation $ 836 $ 796 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - The carrying amounts of financial instruments approximated their fair value as of December 31, 2019 and 2018, because of the relative short maturity of these instruments. See Note 14, Financial Instruments. Fair value measurements and disclosures define fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes the inputs used to measure fair value into three levels. The three levels are defined as follows: · Level 1 : Unadjusted quoted price in active market for identical assets and liabilities. · Level 2: Inputs other than those included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. |
Accounts Receivable | Accounts Receivable - The Company establishes credit terms for new clients based upon management’s review of their credit information and project terms, and performs ongoing credit evaluations of its clients, adjusting credit terms when management believes appropriate based upon payment history and an assessment of the client’s current creditworthiness. The Company records an allowance for doubtful accounts for estimated losses resulting from the inability of its clients to make required payments. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due (accounts outstanding longer than the payment terms are considered past due), the Company’s previous loss history, the client’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. This cannot guarantee that credit loss rates in the future will not be greater than those experienced in the past. In addition, there is credit exposure if the financial condition of one of the Company’s major clients were to deteriorate. In the event that the financial condition of one of the Company’s clients were to deteriorate resulting in an impairment of their ability to make payments, additional allowances may be necessary. The allowance for doubtful accounts as of December 31, 2019 and 2018 was approximately $0.8 million and $1.0 million, respectively. |
Concentration of Credit Risk | Concentration of Credit Risk - The Company maintains its cash with highly rated financial institutions, located in the United States and in foreign locations where the Company has its operations. At December 31, 2019, the Company had cash and cash equivalents of $10.9 million, of which $4.8 million was held by its foreign subsidiaries with local banks located mainly in Asia and $6.1 million was held in the United States. To the extent that such cash exceeds the maximum insurance levels, the Company would be uninsured. The Company has not experienced any losses in such accounts. |
Income (Loss) per Share | Income (Loss) per Share – Income (loss) per share is computed using the weighted-average number of common shares outstanding during the year. Diluted income (loss) per share is computed by considering the impact of the potential issuance of common shares, using the treasury stock method, on the weighted average number of shares outstanding. For those securities that are not convertible into a class of common stock, the “two class” method of computing income (loss) per share is used. |
Pension | Pension - The Company records annual pension costs based on calculations, which include various actuarial assumptions including discount rates, compensation increases and other assumptions involving demographic factors. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends. The Company believes that the assumptions used in recording its pension obligations are reasonable based on its experience, market conditions and inputs from its actuaries. |
Deferred Revenue | Deferred Revenue - Deferred revenue represents payments received from clients in advance of providing services and amounts deferred if conditions for revenue recognition have not been met. Included in accrued expenses on the accompanying consolidated balance sheets is deferred revenue amounting to $1.1 million for each of the years ended December 31, 2019 and 2018. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In January 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The Company adopted this standard in the first quarter of 2019, and it did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018‑14, “Compensation-Retirement Benefits-Defined Benefit Plans-General: Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans” (ASU 2018‑14), that makes changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. The guidance eliminates requirements for certain disclosures that are no longer considered cost beneficial and adds new disclosure requirements that the FASB considers pertinent. ASU 2018‑14 is effective for fiscal years ending after December 15, 2020 for public entities; early adoption is permitted. The Company is currently evaluating the early adoption of ASU 2018-14 but does not expect it to have a material impact on the Company’s consolidated financial statements. |
Correction of Errors | Correction of Errors – During the quarter ended December 31, 2019, the Company determined that the refundable taxes recorded in one of its subsidiaries were not being properly revalued in accordance with ASC 830 “Foreign Currency Matters.” Under ASC 830, entities whose functional currency is the U.S. dollar are required to use the remeasurement method and classify accounts into monetary and non-monetary items. Under this method only monetary accounts are subject to foreign currency remeasurement. Monetary accounts are those items whose amounts are fixed in terms of unit of currency by contract or otherwise. The refundable taxes in our foreign subsidiary should have been classified as monetary assets but were excluded from remeasurement. This exclusion resulted in the understatement of the foreign exchange gains and losses for the years 2008 through 2018. Additionally, the Company identified and corrected an error relating to an overstatement of two long-standing accruals that the Company deemed to no longer be necessary. The Company evaluated the materiality of these errors on both a quantitative and qualitative basis under the guidance of ASC 250, “Accounting Changes and Errors Corrections,” and determined that it did not have a material impact on previously issued financial statements. Although the errors were immaterial to prior periods, the 2018 financial statements are restated below in accordance with Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”, due to the significance of the out-of-period correction to the 2019 period. The impact of the errors for the improper remeasurement of the refundable taxes and the long-standing accruals relating to periods prior to the year ended December 31, 2019 are reflected as an adjustment to the 2018 direct operating costs in the Consolidated Statement of Operations and Comprehensive Loss while the remainder of the errors were adjusted in the 2018 beginning retained earnings. Quarterly periods not presented herein will be revised, as applicable, in future filings. A reconciliation of the effects of the restatement to amounts in the previously reported consolidated financial statements for the year ended December 31, 2018 is as follows (in thousands): As of December 31, 2018 As previously reported Adjustment As Restated Consolidated Balance Sheet Prepaid expenses and other current assets (1) $ 5,778 (1,111) $ 4,667 Total current assets 27,273 (1,111) 26,162 Total assets 46,051 (1,111) 44,940 Accrued expenses (2) 2,903 (100) 2,803 Income and other taxes (3) 3,532 (297) 3,235 Total current liabilities 14,292 (397) 13,895 Non-controlling interests (4) (3,440) 40 (3,400) Retained earnings, December 31, 2018 (5) 7,349 (754) 6,595 Total stockholders’ equity 30,566 (754) 29,812 Total liabilities and stockholders’ equity 46,051 (1,111) 44,940 (1) This adjustment relates to cumulative foreign currency remeasurement for refundable taxes from years 2008 to 2018 (2) This relates to the reversal of an expense accrual (3) This relates to the reversal of previously accrued withholding taxes in a foreign jurisdiction (4) This represents the corresponding share of the non-controlling interest in the reversal of the expense accrual (5) This represents the net impact of all adjustments made to correct errors reflected in 2018 balances As of December 31, 2018 As previously reported Adjustment As Restated Consolidated Statement of Stockholders' Equity Retained earnings, January 1, 2018 $ 7,345 (497) $ 6,848 Retained earnings, December 31, 2018 7,349 (754) 6,595 Total stockholders’ equity 30,566 (754) 29,812 For the year ended December 31, 2018 As previously reported Adjustment As Restated Consolidated Statement of Operations and Comprehensive Loss Direct operating costs $ 39,045 257 $ 39,302 Income before provision for income taxes 1,819 (257) 1,562 Net income (loss) 11 (257) (246) Net income (loss) attributable to Innodata Inc. and Subsidiaries 4 (257) (253) Total comprehensive loss (850) (257) (1,107) For the year ended December 31, 2018 As previously reported Adjustment As Restated Consolidated Statement of Cash Flows Net income (loss) $ 11 (257) $ (246) Prepaid expenses and other current assets (327) (257) (70) As of December 31, 2018 As previously reported Adjustment As Restated Working capital $ 12,981 (714) $ 12,267 During the preparation of the 2018 consolidated financial statements, the Company identified a cumulative error in accounting for pension expense under ASC 715, resulting in an immaterial understatement of pension liabilities and overstatement of retained earnings. The cumulative error resulted from the cumulative effect of under-recorded pension expense from December 31, 2008 through December 31, 2013 with respect to the Company’s DDS segment. The cumulative error resulted in an understatement of pension liabilities and an overstatement of retained earnings, each by an aggregate amount of $269,000 and was included in the 2018 reported amounts. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Description of Business and Summary of Significant Accounting Policies | |
Schedule of Stock-Based Compensation Expense | The stock-based compensation expense related to the Company’s stock plan was allocated as follows (in thousands): Year Ended December 31, 2019 2018 Direct operating costs $ 113 $ 264 Selling and adminstrative expenses 723 532 Total stock-based compensation $ 836 $ 796 |
Schedule of reconciliation of the effects of the restatement to amounts in the previously reported consolidated financial statements | As of December 31, 2018 As previously reported Adjustment As Restated Consolidated Balance Sheet Prepaid expenses and other current assets (1) $ 5,778 (1,111) $ 4,667 Total current assets 27,273 (1,111) 26,162 Total assets 46,051 (1,111) 44,940 Accrued expenses (2) 2,903 (100) 2,803 Income and other taxes (3) 3,532 (297) 3,235 Total current liabilities 14,292 (397) 13,895 Non-controlling interests (4) (3,440) 40 (3,400) Retained earnings, December 31, 2018 (5) 7,349 (754) 6,595 Total stockholders’ equity 30,566 (754) 29,812 Total liabilities and stockholders’ equity 46,051 (1,111) 44,940 As of December 31, 2018 As previously reported Adjustment As Restated Consolidated Statement of Stockholders' Equity Retained earnings, January 1, 2018 $ 7,345 (497) $ 6,848 Retained earnings, December 31, 2018 7,349 (754) 6,595 Total stockholders’ equity 30,566 (754) 29,812 For the year ended December 31, 2018 As previously reported Adjustment As Restated Consolidated Statement of Operations and Comprehensive Loss Direct operating costs $ 39,045 257 $ 39,302 Income before provision for income taxes 1,819 (257) 1,562 Net income (loss) 11 (257) (246) Net income (loss) attributable to Innodata Inc. and Subsidiaries 4 (257) (253) Total comprehensive loss (850) (257) (1,107) For the year ended December 31, 2018 As previously reported Adjustment As Restated Consolidated Statement of Cash Flows Net income (loss) $ 11 (257) $ (246) Prepaid expenses and other current assets (327) (257) (70) As of December 31, 2018 As previously reported Adjustment As Restated Working capital $ 12,981 (714) $ 12,267 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets | |
Schedule of Carrying Amount of Goodwill | The changes in the carrying amount of goodwill as of December 31, 2019 and 2018 were as follows (in thousands): Balance as of January 1, 2018 $ 2,832 Foreign currency translation adjustment (107) Goodwill impairment (675) Balance as of December 31, 2018 2,050 Foreign currency translation adjustment 58 Balance as of December 31, 2019 $ 2,108 |
Schedule of fair value measurement of goodwill | The Company believes it made reasonable estimates and assumptions to calculate the fair value of the reporting unit as of the impairment test measurement date (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Assets Goodwill $ — $ — $ 2,108 December 31, 2018 Level 1 Level 2 Level 3 Assets Goodwill $ — $ — $ 2,050 |
Schedule of company's acquisition-related intangible assets | Information regarding our acquisition-related intangible assets was as follows for the dates indicated (in thousands): Trademarks Media Developed Customer and Contact technology relationships trade names Patents Database Total Gross carrying amounts: Balance as of January 1, 2018 $ 3,204 $ 2,264 $ 884 $ 46 $ 3,647 $ 10,045 Foreign currency translation (205) (183) (29) (4) (101) (522) Balance as of December 31, 2018 2,999 2,081 855 42 3,546 9,523 Foreign currency translation 109 96 16 1 60 282 Balance as of December 31, 2019 $ 3,108 $ 2,177 $ 871 $ 43 $ 3,606 $ 9,805 Trademarks Media Developed Customer and Contact technology relationships trade names Patents Database Total Accumulated amortization: Balance as of January 1, 2018 $ 902 $ 645 $ 330 $ 15 $ 547 $ 2,439 Amortization expense 317 185 122 5 367 996 Foreign currency translation (82) (64) (12) (1) (28) (187) Balance as of December 31, 2018 1,137 766 440 19 886 3,248 Amortization expense 305 178 120 4 357 964 Foreign currency translation 51 39 7 1 18 116 Balance as of December 31, 2019 $ 1,493 $ 983 $ 567 $ 24 $ 1,261 $ 4,328 |
Schedule of estimated amortization expense for intangible assets | Estimated annual amortization expense for intangible assets subsequent to December 31, 2019 is as follows (in thousands): Year Amortization 2020 $ 913 2021 913 2022 913 2023 913 2024 812 Thereafter 1,013 $ 5,477 |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Taxes | |
Schedule of components of the provision for income taxes | The significant components of the provision for income taxes for the years ended December 31, 2019 and 2018 were as follows (in thousands): 2019 2018 Current income tax expense: Foreign $ 1,333 $ 1,467 Federal 71 121 State and local — 45 1,404 1,633 Deferred income tax expense (benefit): Foreign (323) 312 Federal 10 (139) State and local — 2 (313) 175 Provision for income taxes $ 1,091 $ 1,808 |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of the U.S. statutory rate with the Company’s effective tax rate for the years ended December 31, 2019 and 2018 is summarized as follows (in thousands, except percentage information): 2018 2019 Restated Federal income tax expense at statutory rate (21.0) % 21.0 % Effect of: Foreign operations permanent difference - foreign exchange gains and losses (24.8) 27.8 Return to provision true-up (5.2) — 2017 Tax Act — (112.6) Tax effects of foreign operations 120.8 58.8 Increase in unrecognized tax benefits (ASC 740) 109.7 22.2 Change in valuation allowance 23.9 68.3 Withholding tax 12.2 7.8 State income tax net of federal benefit 2.6 2.4 Foreign tax rate differential 1.6 25.6 Others (13.2) (5.5) 206.6 % 115.8 % |
Schedule of deferred tax assets and liabilities | Deferred tax assets and liabilities are classified as non-current. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows (in thousands): December 31, 2019 2018 Deferred income tax assets: Allowances not currently deductible $ 223 $ 232 Depreciation and amortization 297 338 Equity compensation not currently deductible 966 775 Net operating loss carryforwards 5,317 5,089 Expenses not deductible until paid 1,245 769 Other 379 99 Total gross deferred income tax assets before valuation allowance 8,427 7,302 Valuation allowance (6,521) (6,098) Deferred income tax assets, net $ 1,906 $ 1,204 Deferred income tax liabilities: Intangibles from acquisition of MediaMiser (316) (356) Other (47) (215) Total deferred income tax liabilities (363) (571) Net deferred income tax assets $ 1,543 $ 633 Net deferred income tax asset $ 1,906 $ 1,204 Net deferred income tax liability (363) (571) Net deferred income tax assets $ 1,543 $ 633 |
Schedule of United States and foreign components of income (loss) before provision for income taxes | United States and foreign components of income (loss) before provision for income taxes for each of the two years ended December 31, were as follows (in thousands): 2018 2019 (Restated) United States $ (161) $ 3,107 Foreign (367) (1,545) Totals $ (528) $ 1,562 |
Schedule Of unrecognized Tax Benefits | The following table represents a roll forward of the Company’s unrecognized tax benefits and associated interest for the years ended (amounts in thousands): December 31, 2019 2018 Balance at January 1 $ 2,424 $ 2,177 Increase for tax position 355 285 Interest accrual 234 63 Foreign currency revaluation (56) (101) Balance at December 31 $ 2,957 $ 2,424 |
Long-term obligations (Tables)
Long-term obligations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Long-term obligations | |
Schedule of Total Long-Term Obligations | Total long-term obligations as of December 31, 2019 and 2018 consisted of the following (in thousands): December 31, 2019 2018 Pension obligations - accrued pension liability $ 4,611 $ 2,591 Settlement agreement (1) 708 1,010 Capital lease obligations 127 574 Deferred lease payments — 489 Microsoft licenses (2) — 355 Lease incentive liability — 572 5,446 5,591 Less: Current portion of long-term obligations 912 1,529 Totals $ 4,534 $ 4,062 (1) Represents payment to be made pursuant to a settlement agreement entered into in December 2018 between a subsidiary of the Company and 19 former employees of such subsidiary. The balance is payable in monthly installments through March 2023. (2) In March 2017, the Company renewed a vendor agreement to acquire certain additional software licenses and to receive support and subsequent software upgrades on these and other currently owned software licenses through February 2020. Pursuant to this agreement, the Company was obligated to pay approximately $0.4 million annually over the term of the agreement. |
Operating Leases (Tables)
Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Operating Leases | |
Schedule of Operating Lease Expense Recognized in Financial Statements | Year ended December 31, 2019 December 31, 2018 Rent expense for long-term operating leases $ 1,813 $ 2,246 Rent expense for short-term leases 297 322 Total rent expense $ 2,110 $ 2,568 |
Schedule of Net Present Value of Operating Lease Liability | Year Amount 2020 $ 1,742 2021 1,338 2022 1,255 2023 1,050 2024 1,067 2025 and thereafter 4,628 Total lease payments 11,080 Less: Interest (3,242) Net present value of lease liabilities $ 7,838 Current portion $ 1,107 Long-term portion 6,731 Total $ 7,838 |
Schedule of Weighted Average Remaining Lease Terms and Discount Rates | Weighted-average lease term remaining 68 months Weighted-average discount rate |
Pension Benefits (Tables)
Pension Benefits (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Pension Benefits | |
Schedule of amounts recognized in accumulated other comprehensive loss | The following table summarizes the amounts recognized in accumulated other comprehensive loss, net of taxes (in thousands): Years Ended December 31, 2019 2018 Amortization of transition obligation $ 41 $ 41 Actuarial gain (loss) (1,910) 416 Totals $ (1,869) $ 457 Amounts in accumulated other comprehensive loss not yet reflected in net periodic pension cost, net of taxes: Actuarial gain (loss) $ (163) $ 1,747 Transition obligation (50) (91) Totals $ (213) $ 1,656 Amounts in accumulated other comprehensive loss expected to be amortized in 2020 net periodic pension cost, net of taxes: Actuarial gain $ 1 Transition obligation 38 Total $ 39 |
Schedule of status of the non-U.S. pension benefits pertaining to benefit obligations | 2019 2018 Projected benefit obligation at beginning of the year $ 2,591 $ 3,121 Service cost 289 344 Interest cost 194 198 Actuarial loss (gain) 1,720 (622) Foreign currency exchange rates changes 52 (237) Benefits paid (235) (213) Projected benefit obligation at end of the year $ 4,611 $ 2,591 |
Schedule of status of the non-U.S. pension benefits pertaining to components of Net periodic pension cost | 2019 2018 Service cost $ 289 $ 344 Interest cost 194 198 Past service cost — 34 Actuarial gain recognized (148) 133 Net periodic pension cost $ 335 $ 709 |
Schedule of accumulated benefit obligation | 2019 2018 Current accrued benefit cost $ 570 $ 320 Non-current accrued benefit cost 4,041 2,271 Net amount recognized $ 4,611 $ 2,591 |
Schedule of actuarial assumptions for all non-U.S. plans | 2019 2018 Discount rate 4.85%‑10.42% 7.25%‑12.17% Rate of increase in compensation level 5%‑7% 5%‑7% |
Schedule of estimated future benefit payments | As of December 31, 2019, the following benefit payments, which reflect expected future service, as appropriate, were expected to be paid (in thousands): Years Ending December 31, Amount 2020 $ 578 2021 329 2022 159 2023 156 2024 217 2025 to 2029 2,665 $ 4,104 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock Options | |
Schedule of weighted average assumptions | For the Years Ended December 31, 2019 2018 Weighted average fair value of options granted $ $ Risk-free interest rate 1.68% - 2.55 % % Expected life (years) 5‑6 5‑6 Expected volatility factor 45.03%-46.38 % 44.16%-48.82 % Expected dividends None None |
Schedule of Stock Option Activity | Weighted-Average Weighted -Average Remaining Number of Exercise Contractual Term Aggregate Options Price (years) Intrinsic Value Outstanding at January 1, 2019 4,982,040 $ 2.14 Granted 2,112,500 1.25 Exercised (10,000) 1.11 Forfeited/Expired (251,237) Outstanding at December 31, 2019 6,833,303 $ $ 89,405 Exercisable at December 31, 2019 4,365,333 $ $ 50,743 Vested and Expected to Vest at December 31, 2019 6,833,303 $ $ 89,405 |
Summary of restricted shares under the Company's Plan | Weighted-Average Grant Date Fair Number of Shares Value Granted 75,000 $ 1.38 Vested — — Forfeited/Expired — — Unvested at December 31, 2019 75,000 $ 1.38 |
Comprehensive loss (Tables)
Comprehensive loss (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Comprehensive Loss | |
Schedule of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss as of December 31, 2019 and 2018, and reclassifications out of accumulated other comprehensive loss for the years then ended, are presented below (in thousands): Foreign Currency Accumulated Other Pension Liability Fair Value of Translation Comprehensive Adjustment Derivatives Adjustment Loss Balance at January 1, 2019 $ 1,451 $ — $ (1,466) $ (15) Other comprehensive income before reclassifications, net of taxes — 46 566 612 Total other comprehensive income (loss) before reclassifications, net of taxes 1,451 46 (900) 597 Net amount reclassified to earnings (1,504) (13) — (1,517) Balance at December 31, 2019 $ (53) $ 33 $ (900) $ (920) Foreign Currency Accumulated Other Pension Liability Fair Value of Translation Comprehensive Adjustment Derivatives Adjustment Loss Balance at January 1, 2018 $ 1,191 $ 342 $ (687) $ 846 Other comprehensive loss before reclassifications, net of taxes — (695) (779) (1,474) Total other comprehensive income (loss) before reclassifications, net of taxes 1,191 (353) (1,466) (628) Net amount reclassified to earnings 260 353 — 613 Balance at December 31, 2018 $ 1,451 $ — $ (1,466) $ (15) |
Segment Reporting and concent_2
Segment Reporting and concentrations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting and concentrations | |
Schedule of Segment Reporting Information, by Segment | For the Years Ended December 31, 2018 2019 Restated Revenues: DDS $ 41,172 $ 43,546 Synodex 3,942 4,063 Agility 10,744 9,809 Total Consolidated $ 55,858 $ 57,418 Income (loss) before provision for income taxes (1) : DDS $ 1,320 $ 3,625 Synodex (129) 284 Agility (1,719) (2,347) Total Consolidated $ (528) $ 1,562 Income (loss) before provision for income taxes (2) : DDS $ 1,059 $ 3,391 Synodex 40 446 Agility (1,627) (2,275) Total Consolidated $ (528) $ 1,562 December 31, 2018 December 31, 2019 Restated Total assets: DDS $ 23,196 $ 21,223 Synodex 675 787 Agility 25,875 22,930 Total Consolidated $ 49,746 $ 44,940 December 31, 2019 December 31, 2018 Goodwill: Agility $ 2,108 $ 2,050 Total $ 2,108 $ 2,050 (1) Before elimination of any inter-segment profits (2) After elimination of any inter-segment profits |
Schedule of Revenue from External Customers and Long-Lived Assets | 2019 2018 United States $ 4,591 $ 4,383 Foreign countries: Canada 8,876 7,023 United Kingdom 1,907 2,045 Philippines 5,135 900 India 508 475 Sri Lanka 678 280 Israel 19 30 Germany 1 2 Total foreign 17,124 10,755 Totals $ 21,715 $ 15,138 |
Schedule of Revenue from External Customers based on Client domicile | 2019 2018 United States $ 25,357 $ 25,403 United Kingdom 9,577 10,874 The Netherlands 6,982 7,488 Canada 6,192 5,985 Others - principally Europe 7,750 7,668 Totals $ 55,858 $ 57,418 |
Loss per Share (Tables)
Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Loss per Share | |
Schedule of Earnings Per Share, Basic and Diluted | For the Years Ended December 31, 2018 2019 (Restated) (in thousands) Net loss attributable to Innodata Inc. and Subsidiaries $ (1,602) $ (253) Weighted average common shares outstanding 25,774 25,878 Dilutive effect of outstanding options — — Adjusted for dilutive computation 25,774 25,878 |
Derivatives (Tables)
Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivatives | |
Schedule of fair value of derivative instruments | The following table presents the fair value of derivative instruments included within the consolidated balance sheets as of December 31, 2019 and 2018 (in thousands): Balance Sheet Location Fair Value 2019 2018 Derivatives designated as hedging instruments: Foreign currency forward contracts Prepaid expenses and other current assets $ 33 $ — |
Schedule | Balance Sheet Location Fair Value 2019 2018 Derivatives designated as hedging instruments: Foreign currency forward contracts Prepaid expenses and other current assets $ 33 $ — The effect of foreign currency forward contracts designated as cash flow hedges on the consolidated statements of operations for the years ended December 31, 2019 and 2018 were as follows (in thousands): 2019 2018 Net gain (loss) recognized in OCI (1) $ 46 $ (695) Net gain (loss) reclassified from accumulated OCI into income (2) $ 13 $ (353) Net gain recognized in income (3) $ — $ — (1) Net change in fair value of the effective portion classified into other comprehensive income ("OCI") (2) Effective portion classified within direct operating costs (3) There were no ineffective portions for the period presented. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Financial Instruments | |
Schedule of fair value of financial instruments | December 31, 2019 Level 1 Level 2 Level 3 Assets Derivatives $ — $ 33 $ — |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Stock Options | ||||
Direct operating costs | $ 113 | $ 264 | ||
Selling and administrative expenses | 723 | 532 | ||
Total stock-based compensation | $ 836 | $ 796 | $ 836 | $ 796 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Consolidated Balance Sheet - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Balance Sheet | |||
Prepaid expenses and other current assets (1) | $ 3,418 | $ 4,667 | |
Total current assets | 24,015 | 26,162 | |
Total assets | 49,746 | 44,940 | |
Accrued expenses (2) | 3,340 | 2,803 | |
Income and other taxes (3) | 4,183 | 3,235 | |
Total current liabilities | 15,226 | 13,895 | |
Non-controlling interests (4) | (3,417) | (3,400) | |
Retained earnings, December 31, 2018 (5) | 4,993 | 6,595 | |
Total stockholders' equity | 26,309 | 29,812 | $ 30,622 |
Total liabilities and stockholders' equity | 49,746 | 44,940 | |
Consolidated Statement of Equity | |||
Total stockholders' equity | 26,309 | 29,812 | 30,622 |
Consolidated Statement of Operations and Comprehensive Loss | |||
Direct operating costs | 37,325 | 39,302 | |
Income before provision for income taxes | (528) | 1,562 | |
Net income (loss) | (1,619) | (246) | |
Net income (loss) attributable to Innodata Inc. and Subsidiaries | (1,602) | (253) | |
Total comprehensive loss | (2,524) | (1,107) | |
Reconciliation Of Effects Of Restatement To Amounts In Previously Reported Consolidated Statement Of Cash Flows [Abstract] | |||
Net income (loss) | (1,619) | (246) | |
Prepaid expenses and other current assets | 1,056 | (70) | |
Working Capital | 12,267 | ||
Retained earnings | |||
Consolidated Balance Sheet | |||
Total stockholders' equity | 4,993 | 6,595 | 6,848 |
Consolidated Statement of Equity | |||
Total stockholders' equity | 4,993 | 6,595 | 6,848 |
Consolidated Statement of Operations and Comprehensive Loss | |||
Net income (loss) attributable to Innodata Inc. and Subsidiaries | $ (1,602) | (253) | |
As previously reported | |||
Consolidated Balance Sheet | |||
Prepaid expenses and other current assets (1) | 5,778 | ||
Total current assets | 27,273 | ||
Total assets | 46,051 | ||
Accrued expenses (2) | 2,903 | ||
Income and other taxes (3) | 3,532 | ||
Total current liabilities | 14,292 | ||
Non-controlling interests (4) | (3,440) | ||
Retained earnings, December 31, 2018 (5) | 7,349 | ||
Total stockholders' equity | 30,566 | 31,119 | |
Total liabilities and stockholders' equity | 46,051 | ||
Consolidated Statement of Equity | |||
Total stockholders' equity | 30,566 | 31,119 | |
Consolidated Statement of Operations and Comprehensive Loss | |||
Direct operating costs | 39,045 | ||
Income before provision for income taxes | 1,819 | ||
Net income (loss) | 11 | ||
Net income (loss) attributable to Innodata Inc. and Subsidiaries | 4 | ||
Total comprehensive loss | (850) | ||
Reconciliation Of Effects Of Restatement To Amounts In Previously Reported Consolidated Statement Of Cash Flows [Abstract] | |||
Net income (loss) | 11 | ||
Prepaid expenses and other current assets | (327) | ||
Working Capital | 12,981 | ||
As previously reported | Retained earnings | |||
Consolidated Balance Sheet | |||
Total stockholders' equity | 7,349 | 7,345 | |
Consolidated Statement of Equity | |||
Total stockholders' equity | 7,349 | 7,345 | |
Restatement adjustments | |||
Consolidated Balance Sheet | |||
Prepaid expenses and other current assets (1) | (1,111) | ||
Total current assets | (1,111) | ||
Total assets | (1,111) | ||
Accrued expenses (2) | (100) | ||
Income and other taxes (3) | (297) | ||
Total current liabilities | (397) | ||
Non-controlling interests (4) | 40 | ||
Retained earnings, December 31, 2018 (5) | (754) | ||
Total stockholders' equity | (754) | (497) | |
Total liabilities and stockholders' equity | (1,111) | ||
Consolidated Statement of Equity | |||
Total stockholders' equity | (754) | (497) | |
Consolidated Statement of Operations and Comprehensive Loss | |||
Direct operating costs | 257 | ||
Income before provision for income taxes | (257) | ||
Net income (loss) | (257) | ||
Net income (loss) attributable to Innodata Inc. and Subsidiaries | (257) | ||
Total comprehensive loss | (257) | ||
Reconciliation Of Effects Of Restatement To Amounts In Previously Reported Consolidated Statement Of Cash Flows [Abstract] | |||
Net income (loss) | (257) | ||
Prepaid expenses and other current assets | (257) | ||
Working Capital | (714) | ||
Restatement adjustments | Retained earnings | |||
Consolidated Balance Sheet | |||
Total stockholders' equity | (754) | (497) | |
Consolidated Statement of Equity | |||
Total stockholders' equity | $ (754) | $ (497) |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Additional Information (Details) | Jun. 30, 2018USD ($) | Dec. 31, 2019USD ($)clientemployeeitem | Dec. 31, 2018USD ($) |
Description of Business and Summary of Significant Accounting Policies [Line Items] | |||
Deferred Revenue | $ 1,100,000 | ||
Entity Number of Employees | employee | 3,000 | ||
Number of offices | item | 10 | ||
Amortization period | 12 months | ||
Foreign Currency Transaction Gain (Loss), before Tax | $ 158,000 | $ 56,000 | |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | 566,000 | (779,000) | |
Goodwill, Impairment Loss | 0 | 675,000 | |
Outstanding foreign currency forward contracts | 0 | ||
Allowance for Doubtful Accounts Receivable | 1,000,000 | ||
Cash and Cash Equivalents, at Carrying Value, Total | $ 10,874,000 | 10,869,000 | |
Quantifying Misstatement in Current Year Financial Statements, Amount | 269,000,000 | ||
Unrecorded Pension Expense [Member] | |||
Description of Business and Summary of Significant Accounting Policies [Line Items] | |||
Quantifying Misstatement in Current Year Financial Statements, Amount | $ 269,000 | ||
Minimum [Member] | |||
Description of Business and Summary of Significant Accounting Policies [Line Items] | |||
Property and equipment useful lives | 2 years | ||
Maximum [Member] | |||
Description of Business and Summary of Significant Accounting Policies [Line Items] | |||
Property and equipment useful lives | 5 years | ||
Digital Data Solutions [Member] | |||
Description of Business and Summary of Significant Accounting Policies [Line Items] | |||
Goodwill, Impairment Loss | $ 675,000 | $ 675,000 | |
Agility [Member] | |||
Description of Business and Summary of Significant Accounting Policies [Line Items] | |||
Goodwill, Impairment Loss | $ 0 | ||
Intelligent Data Platforms [Member] | |||
Description of Business and Summary of Significant Accounting Policies [Line Items] | |||
Entity Number of Employees | client | 20 | ||
Foreign Subsidiaries [Member] | |||
Description of Business and Summary of Significant Accounting Policies [Line Items] | |||
Cash and Cash Equivalents, at Carrying Value, Total | $ 4,800,000 | ||
United States | |||
Description of Business and Summary of Significant Accounting Policies [Line Items] | |||
Cash and Cash Equivalents, at Carrying Value, Total | $ 6,100,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets | ||
Balance | $ 2,050 | $ 2,832 |
Foreign currency translation adjustment | 58 | (107) |
Goodwill impairment | 0 | (675) |
Balance | $ 2,108 | $ 2,050 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Goodwill fair value (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Level 1 | ||
Assets | ||
Goodwill | $ 0 | $ 0 |
Level 2 | ||
Assets | ||
Goodwill | 0 | 0 |
Level 3 | ||
Assets | ||
Goodwill | $ 2,108 | $ 2,050 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Acquisition-Related Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Gross carrying amounts: | ||
Balance | $ 9,523 | $ 10,045 |
Foreign currency translation | 282 | (522) |
Balance | 9,805 | 9,523 |
Accumulated amortization: | ||
Balance | 3,248 | 2,439 |
Amortization expense | 964 | 996 |
Foreign currency translation | 116 | (187) |
Balance | 4,328 | 3,248 |
Developed technology [Member] | ||
Gross carrying amounts: | ||
Balance | 2,999 | 3,204 |
Foreign currency translation | 109 | (205) |
Balance | 3,108 | 2,999 |
Accumulated amortization: | ||
Balance | 1,137 | 902 |
Amortization expense | 305 | 317 |
Foreign currency translation | 51 | (82) |
Balance | 1,493 | 1,137 |
Customer relationships [Member] | ||
Gross carrying amounts: | ||
Balance | 2,081 | 2,264 |
Foreign currency translation | 96 | (183) |
Balance | 2,177 | 2,081 |
Accumulated amortization: | ||
Balance | 766 | 645 |
Amortization expense | 178 | 185 |
Foreign currency translation | 39 | (64) |
Balance | 983 | 766 |
Trademarks and trade names [Member] | ||
Gross carrying amounts: | ||
Balance | 855 | 884 |
Foreign currency translation | 16 | (29) |
Balance | 871 | 855 |
Accumulated amortization: | ||
Balance | 440 | 330 |
Amortization expense | 120 | 122 |
Foreign currency translation | 7 | (12) |
Balance | 567 | 440 |
Patents [Member] | ||
Gross carrying amounts: | ||
Balance | 42 | 46 |
Foreign currency translation | 1 | (4) |
Balance | 43 | 42 |
Accumulated amortization: | ||
Balance | 19 | 15 |
Amortization expense | 4 | 5 |
Foreign currency translation | 1 | (1) |
Balance | 24 | 19 |
Media Contact Database [Member] | ||
Gross carrying amounts: | ||
Balance | 3,546 | 3,647 |
Foreign currency translation | 60 | (101) |
Balance | 3,606 | 3,546 |
Accumulated amortization: | ||
Balance | 886 | 547 |
Amortization expense | 357 | 367 |
Foreign currency translation | 18 | (28) |
Balance | $ 1,261 | $ 886 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Estimated Amortization Expense (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Goodwill and Intangible Assets | |
2020 | $ 913 |
2021 | 913 |
2022 | 913 |
2023 | 913 |
2024 | 812 |
Thereafter | 1,013 |
Finite-Lived Intangible Assets, Net | $ 5,477 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets | |||
Goodwill, Impairment Loss | $ 0 | $ 675,000 | |
Amortization of Intangible Assets | 964,000 | 996,000 | |
Digital Data Solutions [Member] | |||
Goodwill and Intangible Assets | |||
Goodwill, Impairment Loss | $ 675,000 | 675,000 | |
Agility [Member] | |||
Goodwill and Intangible Assets | |||
Goodwill, Impairment Loss | 0 | ||
Intangible Assets, Amortization Period [Member] | |||
Goodwill and Intangible Assets | |||
Amortization of Intangible Assets | $ 1,000,000 | $ 1,000,000 |
Taxes - Components of provision
Taxes - Components of provision for income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current income tax expense: | ||
Foreign | $ 1,333 | $ 1,467 |
Federal | 71 | 121 |
State and local | 45 | |
Current income tax expense | 1,404 | 1,633 |
Deferred income tax expense (benefit): | ||
Foreign | (323) | 312 |
Federal | 10 | (139) |
State and local | 2 | |
Deferred income tax expense (benefit) | (313) | 175 |
Provision for income taxes | $ 1,091 | $ 1,808 |
Taxes - Tax Rate Reconciliation
Taxes - Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Taxes | ||
Federal income tax expense at statutory rate | 21.00% | 21.00% |
Effect of: | ||
Foreign operations permanent difference- foreign exchange gains and losses | (24.80%) | 27.80% |
Return to provision true - up | (5.20%) | |
2017 Tax Act | (112.60%) | |
Tax effects of foreign operations | 120.80% | 58.80% |
Increase in unrecognized tax benefits (ASC 740) | 109.70% | 22.20% |
Change in valuation allowance | 23.90% | 68.30% |
Withholding tax | 12.20% | 7.80% |
State income tax net of federal benefit | 2.60% | 2.40% |
Foreign rate differential | 1.60% | 25.60% |
Others | (13.20%) | (5.50%) |
Effective tax rate (expense) | 206.60% | 115.80% |
Taxes - Deferred tax assets and
Taxes - Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred income tax assets: | ||
Allowances not currently deductible | $ 223 | $ 232 |
Depreciation and amortization | 297 | 338 |
Equity compensation not currently deductible | 966 | 775 |
Net operating loss carryforwards | 5,317 | 5,089 |
Expenses not deductible until paid | 1,245 | 769 |
Other | 379 | 99 |
Total gross deferred income tax assets before valuation allowance | 8,427 | 7,302 |
Valuation allowance | (6,521) | (6,098) |
Deferred income tax assets, net | 1,906 | 1,204 |
Deferred income tax liabilities: | ||
Intangibles from acquisition of MediaMiser | (316) | (356) |
Other | (47) | (215) |
Total deferred income tax liabilities | (363) | (571) |
Net deferred income tax assets | 1,543 | 633 |
Deferred income taxes | 1,906 | 1,204 |
Net deferred income tax liability | (363) | (571) |
Net deferred income tax assets | $ 1,543 | $ 633 |
Taxes - United States and forei
Taxes - United States and foreign components of income (loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Taxes | ||
United States | $ (161) | $ 3,107 |
Foreign | (367) | (1,545) |
Totals | $ (528) | $ 1,562 |
Taxes - Unrecognized Tax Benefi
Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Taxes | ||
Balance - January 1, 2019 | $ 2,424 | $ 2,177 |
Increase in tax position | 355 | 285 |
Interest accrual | 234 | 63 |
Foreign currency remeasurement | (56) | (101) |
Balance - December 31, 2019 | $ 2,957 | $ 2,424 |
Taxes - Additional Information
Taxes - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Oct. 31, 2016 | Sep. 30, 2015 | Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes [Line Items] | ||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% | ||||
Effective Income Tax Rate Reconciliation, Repatriation of Foreign Earnings, Amount | $ 25,800,000 | |||||
Toll tax charge | 0 | |||||
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | 2,300,000 | |||||
Deferred Tax Assets, Valuation Allowance | $ 6,521,000 | $ 6,098,000 | ||||
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | 400,000 | (700,000) | ||||
Undistributed Earnings of Foreign Subsidiaries | 25,700,000 | |||||
Unrecognized Tax Benefits | $ 2,177,000 | 2,957,000 | 2,424,000 | $ 2,177,000 | ||
Income Tax Examination, Penalties and Interest Accrued | 200,000 | 100,000 | ||||
Subsidiary Revenue | $ 66,000,000 | |||||
Reversal of Service Tax Refund | $ 160,000 | |||||
Service Tax Credit Receivable | $ 1,000,000 | |||||
Income Tax Expense (Benefit) | 1,091,000 | $ 1,808,000 | ||||
Canadian Subsidiaries [Member] | ||||||
Income Taxes [Line Items] | ||||||
Operating Loss Carryforwards | 13,400,000 | |||||
Canadian Subsidiaries [Member] | Research Tax Credit Carryforward [Member] | ||||||
Income Taxes [Line Items] | ||||||
Tax Credit Carryforward, Amount | 1,500,000 | |||||
Domestic Tax Authority [Member] | ||||||
Income Taxes [Line Items] | ||||||
Operating Loss Carryforwards | $ 15,300,000 | |||||
Maximum [Member] | ||||||
Income Taxes [Line Items] | ||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | ||||
Percentage for Subsidiary Service Tax | 15.00% | |||||
Minimum [Member] | ||||||
Income Taxes [Line Items] | ||||||
Percentage for Subsidiary Service Tax | 12.36% |
Long-term Obligations (Details)
Long-term Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Pension obligations | ||
Pension obligations - accrued pension liability | $ 4,611 | $ 2,591 |
Settlement agreement | 708 | 1,010 |
Vendor obligations | ||
Capital lease obligations | 127 | 574 |
Deferred lease payments | 0 | 489 |
Microsoft licenses | 0 | 355 |
Lease incentive liability | 0 | 572 |
Long-term Debt | 5,446 | 5,591 |
Less: Current portion of long-term obligations | 912 | 1,529 |
Totals | $ 4,534 | $ 4,062 |
Long-term Obligations - Textual
Long-term Obligations - Textual (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Vendor Agreement [Member] | |
Debt Instrument [Line Items] | |
Cost of Goods and Services Sold | $ 0.4 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and contingencies. | ||
Estimated Litigation Liability | $ 6,400,000 | |
Litigation Settlement, Expense | $ 300,000 | |
Interest Rate Description Litigation | plus legal interest that accrued at 12% per annum from August 13, 2008 to June 30, 2013, and thereafter accrued and continues to accrue at 6% per annum | |
Operating Leases, Rent Expense | $ 2,110,000 | $ 2,568,000 |
Operating Leases - Operating Le
Operating Leases - Operating Leases Amount Recognized (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating Leases, Rent Expense | $ 2,110 | $ 2,568 |
Long Term Operating Lease [Member] | ||
Operating Leases, Rent Expense | 1,813 | 2,246 |
Short Term Operating Lease [Member] | ||
Operating Leases, Rent Expense | $ 297 | $ 322 |
Operating Leases - Net Present
Operating Leases - Net Present Value of Operating Lease Liability (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Operating Leases | |
2020 | $ 1,742 |
2021 | 1,338 |
2022 | 1,255 |
2023 | 1,050 |
2024 | 1,067 |
2025 and thereafter | 4,628 |
Total lease payments | 11,080 |
Less: Interest | (3,242) |
Net present value of lease liabilities | 7,838 |
Current portion | 1,107 |
Long- term portion | 6,731 |
Total | $ 7,838 |
Operating Leases - Weighted Ave
Operating Leases - Weighted Average Remaining Lease Terms (Details) | Dec. 31, 2019 |
Operating Leases | |
Weighted-average lease term remaining | 68 months |
Weighted-average discount rate | 8.98% |
Operating Leases - Additional I
Operating Leases - Additional Information (Details) | Dec. 31, 2019 |
Minimum [Member] | |
Percentage of Rental Escalations | 1.75% |
Lessee, Operating Lease, Term of Contract | 2 years |
Maximum [Member] | |
Percentage of Rental Escalations | 10.00% |
Lessee, Operating Lease, Term of Contract | 11 years |
Pension Benefits - Recognized i
Pension Benefits - Recognized in AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Pension Benefits | ||
Amortization of transition obligation | $ 41 | $ 41 |
Actuarial gain (loss) | (1,910) | 416 |
Totals | (1,869) | 457 |
Amounts in accumulated other comprehensive loss not yet reflected in net periodic pension cost, net of taxes: | ||
Actuarial gain (loss) | (163) | 1,747 |
Transition obligation | (50) | (91) |
Totals | (213) | $ 1,656 |
Amounts in accumulated other comprehensive loss expected to be amortized in 2020 net periodic pension cost, net of taxes: | ||
Actuarial gain | 1 | |
Transition obligation | 38 | |
Total | $ 39 |
Pension Benefits - Benefit obli
Pension Benefits - Benefit obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Pension Benefits | ||
Projected benefit obligation at beginning of the year | $ 2,591 | $ 3,121 |
Service cost | 289 | 344 |
Interest cost | 194 | 198 |
Actuarial loss (gain) | 1,720 | (622) |
Foreign currency exchange rates changes | 52 | (237) |
Benefits paid | (235) | (213) |
Projected benefit obligation at end of the year | $ 4,611 | $ 2,591 |
Pension Benefits - Net periodic
Pension Benefits - Net periodic pension cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Pension Benefits | ||
Service cost | $ 289 | $ 344 |
Interest cost | 194 | 198 |
Past service cost | 0 | 34 |
Actuarial gain recognized | (148) | 133 |
Net periodic pension cost | $ 335 | $ 709 |
Pension Benefits - Recognized_2
Pension Benefits - Recognized in balance sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Pension Benefits | ||
Current accrued benefit cost | $ 570 | $ 320 |
Non-current accrued benefit cost | 4,041 | 2,271 |
Net amount recognized | $ 4,611 | $ 2,591 |
Pension Benefits - Assumptions
Pension Benefits - Assumptions (Details) | Dec. 31, 2019 | Dec. 31, 2018 |
Minimum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 4.85% | 7.25% |
Rate of increase in compensation level | 5.00% | 5.00% |
Maximum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 10.42% | 12.17% |
Rate of increase in compensation level | 7.00% | 7.00% |
Pension Benefits - Estimated fu
Pension Benefits - Estimated future benefit payments (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Pension Benefits | |
2020 | $ 578 |
2021 | 329 |
2022 | 159 |
2023 | 156 |
2024 | 217 |
2025 to 2029 | 2,665 |
Total | $ 4,104 |
Pension Benefits - Additional I
Pension Benefits - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Period of service to become eligible | 6 months | |
Quantifying Misstatement in Current Year Financial Statements, Amount | $ 269,000,000 | |
Defined Benefit Plan, Accumulated Benefit Obligation | $ 2,900,000 | 1,700,000 |
Unrecorded Pension Expense [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Quantifying Misstatement in Current Year Financial Statements, Amount | 269,000 | |
Subsidiaries [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Pension expense | $ 300,000 | $ 700,000 |
Capital Stock (Details)
Capital Stock (Details) $ / shares in Units, $ in Millions | Feb. 01, 2019D$ / sharesshares | Dec. 31, 2019Vote / shares$ / sharesshares | Jul. 31, 2019USD ($) | Dec. 31, 2018shares |
Class of Stock [Line Items] | ||||
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 | ||
Number of votes per share | Vote / shares | 1 | |||
Dividends declared (in dollars per share) | $ / shares | $ 0 | |||
Preferred Stock, Shares Authorized | 4,998,000 | 4,998,000 | ||
Common Stock, Capital Shares Reserved for Future Issuance | 3,340,470 | |||
Treasury Stock, Shares, Acquired | 1,503,095 | |||
Treasury Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Stock Repurchase Program, Authorized Amount | $ | $ 2 | |||
Stockholders Rights Agreement [Member] | ||||
Class of Stock [Line Items] | ||||
Number of days rights become exercisable, acquisition | D | 10 | |||
Number of days rights become exercisable, tender or exchange offer | D | 10 | |||
Percentage before rights become exercisable | 20.00% | |||
Percentage of ownership to direct Board of Directors | 10.00% | |||
Redemption price (in dollars per share) | $ / shares | $ 0.001 | |||
Stockholders Rights Agreement [Member] | Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Number of rights/shares | 1 | |||
Number of shares with same rights | 0.001 | |||
Stockholders Rights Agreement [Member] | Common Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Number of rights/shares | 1 | |||
Number of shares with same rights | 1 | |||
Stockholders Rights Agreement [Member] | Common Stock [Member] | Minimum [Member] | ||||
Class of Stock [Line Items] | ||||
Equity Method Investment, Ownership Percentage | 50.00% | |||
Series C Preferred Stock [Member] | Stockholders Rights Agreement [Member] | ||||
Class of Stock [Line Items] | ||||
Number of shares converted | 0.001 |
Stock Options - Weighted Averag
Stock Options - Weighted Average Fair Values and Assumptions (Details) - Employee Stock Option [Member] - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average fair value of options granted (in dollars per share) | $ 0.56 | $ 0.54 | ||
Risk-free interest rate | 2.73% | |||
Expected dividends | 0.00% | 0.00% | ||
Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Risk-free interest rate | 1.68% | |||
Expected life (years) | 5 years | 5 years | ||
Expected volatility factor | 45.03% | 44.16% | ||
Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Risk-free interest rate | 2.55% | |||
Expected life (years) | 6 years | 6 years | ||
Expected volatility factor | 46.38% | 48.82% |
Stock Options - Summary of Stoc
Stock Options - Summary of Stock Option Activity (Details) - Employee Stock Option [Member] | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Options, Outstanding at January 1, 2019 (in shares) | shares | 4,982,040 |
Number of Options, Granted (in shares) | shares | 2,112,500 |
Number of Options, Exercised (in shares) | shares | 10,000 |
Number of Options, Forfeited/Expired (in shares) | shares | (251,237) |
Number of Options, Outstanding at September 30, 2019 (in shares) | shares | 6,833,303 |
Number of Options Exercisable at September 30, 2019 (in shares) | shares | 4,365,333 |
Number of Options, Vested and Expected to Vest at September 30, 2019 (in shares) | shares | 6,833,303 |
Weighted Average Exercise Price Outstanding at January 1, 2019 (in dollars per shares) | $ / shares | $ 2.14 |
Weighted Average Exercise Price Granted (in dollars per shares) | $ / shares | 1.25 |
Weighted Average Exercise Price Exercised (in dollars per shares) | $ / shares | 1.11 |
Weighted Average Exercise Price Forfeited/Expired (in dollars per shares) | $ / shares | 2.42 |
Weighted Average Exercise Price Outstanding at September 30, 2019 (in dollars per shares) | $ / shares | 1.86 |
Weighted Average Exercise Price Exercisable at September 30, 2019 (in dollars per shares) | $ / shares | 2.24 |
Weighted Average Exercise Price Vested and Expected to Vest at September 30, 2019 (in dollars per shares) | $ / shares | $ 1.86 |
Weighted Average Remaining Contractual Term Outstanding at September 30, 2019 (in years) | 6 years 10 months 10 days |
Weighted Average Remaining Contractual Term Exercisable at September 30, 2019 (in years) | 5 years 6 months 18 days |
Weighted Average Remaining Contractual Term Vested and Expected to Vest at September 30, 2019 (in years) | 6 years 10 months 10 days |
Aggregate Intrinsic Value, Outstanding at September 30, 2019 | $ | $ 89,405 |
Aggregate Intrinsic Value, Exercisable at September 30, 2019 | $ | 50,743 |
Aggregate Intrinsic Value, Vested and Expected to Vest at September 30, 2019 | $ | $ 89,405 |
Stock Options - Summary of Rest
Stock Options - Summary of Restricted Shares (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Stock Options | |
Number of Shares, Granted | shares | 75,000 |
Number of Shares, Unvested at December 31, 2019 | shares | 75,000 |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | $ 1.38 |
Weighted-Average Grant Date Fair Value, Unvested at December 31, 2019 | $ / shares | $ 1.38 |
Stock Options - Additional Info
Stock Options - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jun. 07, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Employee Service Share-Based Compensation, Nonvested Awards, Total Compensation Cost Not Yet Recognized | $ 1.3 | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 26 months | ||
Share-based Payment Arrangement, Option And Stock Appreciation Rights (SARs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares counted against Share Reserve | 1 | ||
Number of shares added back, expiration or termination | 1 | ||
Number of shares added back, withheld, tendered or exchanged | 1 | ||
Share-based Payment Arrangement, Excluding Than Option And Stock Appreciation Rights (SARs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares counted against Share Reserve | 2 | ||
Number of shares added back, expiration or termination | 2 | ||
Number of shares added back, withheld, tendered or exchanged | 2 | ||
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% | |
Exercise of stock options (in shares) | 0 | ||
2013 Stock Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares Authorized | 5,858,892 |
Comprehensive loss (Details)
Comprehensive loss (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | $ 29,812 | $ 30,622 |
Balance | 26,309 | 29,812 |
Accumulated Other Comprehensive Loss [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | (15) | 846 |
Other comprehensive income (loss) before reclassifications, net of taxes | 612 | (1,474) |
Total other comprehensive income (loss) before reclassifications, net of taxes | 597 | (628) |
Net amount reclassified to earnings | (1,517) | 613 |
Balance | (920) | (15) |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | 1,451 | 1,191 |
Total other comprehensive income (loss) before reclassifications, net of taxes | 1,451 | 1,191 |
Net amount reclassified to earnings | (1,504) | 260 |
Balance | (53) | 1,451 |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | 342 | |
Other comprehensive income (loss) before reclassifications, net of taxes | 46 | (695) |
Total other comprehensive income (loss) before reclassifications, net of taxes | 46 | (353) |
Net amount reclassified to earnings | (13) | 353 |
Balance | 33 | |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | (1,466) | (687) |
Other comprehensive income (loss) before reclassifications, net of taxes | 566 | (779) |
Total other comprehensive income (loss) before reclassifications, net of taxes | (900) | (1,466) |
Balance | $ (900) | $ (1,466) |
Segment Reporting and Concent_3
Segment Reporting and Concentrations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment reporting information | |||
Revenues | $ 55,858 | $ 57,418 | |
Income (loss) before provision for income taxes | (528) | 1,562 | |
Total assets | 49,746 | 44,940 | |
Goodwill | 2,108 | 2,050 | $ 2,832 |
Before Intersegment Eliminations [Member] | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (528) | 1,562 | |
After Intersegment Eliminations [Member] | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (528) | 1,562 | |
DDS [Member] | |||
Segment reporting information | |||
Revenues | 41,172 | 43,546 | |
Total assets | 23,196 | 21,223 | |
DDS [Member] | Before Intersegment Eliminations [Member] | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | 1,320 | 3,625 | |
DDS [Member] | After Intersegment Eliminations [Member] | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | 1,059 | 3,391 | |
Synodex [Member] | |||
Segment reporting information | |||
Revenues | 3,942 | 4,063 | |
Total assets | 675 | 787 | |
Synodex [Member] | Before Intersegment Eliminations [Member] | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (129) | 284 | |
Synodex [Member] | After Intersegment Eliminations [Member] | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | 40 | 446 | |
Agility [Member] | |||
Segment reporting information | |||
Revenues | 10,744 | 9,809 | |
Total assets | 25,875 | 22,930 | |
Goodwill | 2,108 | 2,050 | |
Agility [Member] | Before Intersegment Eliminations [Member] | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (1,719) | (2,347) | |
Agility [Member] | After Intersegment Eliminations [Member] | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | $ (1,627) | $ (2,275) |
Segment Reporting and Concent_4
Segment Reporting and Concentrations - Long-lived assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | $ 21,715 | $ 15,138 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 4,591 | 4,383 |
Canada | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 8,876 | 7,023 |
United Kingdom | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 1,907 | 2,045 |
Philippines [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 5,135 | 900 |
India [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 508 | 475 |
Sri Lanka [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 678 | 280 |
Israel [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 19 | 30 |
Germany [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | 1 | 2 |
Foreign Countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived assets | $ 17,124 | $ 10,755 |
Segment Reporting and Concent_5
Segment Reporting and Concentrations - Revenues by geographic region (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 55,858 | $ 57,418 |
Other - principally Europe | ||
Segment Reporting Information [Line Items] | ||
Revenues | 7,750 | 7,668 |
United States | ||
Segment Reporting Information [Line Items] | ||
Revenues | 25,357 | 25,403 |
United Kingdom | ||
Segment Reporting Information [Line Items] | ||
Revenues | 9,577 | 10,874 |
The Netherlands | ||
Segment Reporting Information [Line Items] | ||
Revenues | 6,982 | 7,488 |
Canada | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 6,192 | $ 5,985 |
Segment Reporting and Concent_6
Segment Reporting and Concentrations - Additional information (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)segmentclient | Dec. 31, 2018USD ($)client | |
Segment Reporting Information [Line Items] | ||
Number of Reportable Segments | segment | 3 | |
Operating Lease, Right-of-Use Asset | $ | $ 7,005 | |
Revenues | $ | $ 55,858 | $ 57,418 |
Foreign Customer [Member] | Sales Revenue, Net [Member] | ||
Segment Reporting Information [Line Items] | ||
Concentration Risk, Percentage | 55.00% | 56.00% |
Foreign Customer [Member] | Accounts Receivable [Member] | ||
Segment Reporting Information [Line Items] | ||
Concentration Risk, Percentage | 60.00% | 57.00% |
Two clients [Member] | Sales Revenue, Net [Member] | ||
Segment Reporting Information [Line Items] | ||
Number of clients | 2 | 2 |
Concentration Risk, Percentage | 26.00% | 30.00% |
Three Clients [Member] | Accounts Receivable [Member] | ||
Segment Reporting Information [Line Items] | ||
Number of clients | 3 | |
Concentration Risk, Percentage | 44.00% | 48.00% |
Client [Member] | Sales Revenue, Net [Member] | ||
Segment Reporting Information [Line Items] | ||
Number of clients | 0 | |
Concentration Risk, Percentage | 10.00% | |
Client [Member] | Accounts Receivable [Member] | ||
Segment Reporting Information [Line Items] | ||
Number of clients | 0 | |
Concentration Risk, Percentage | 10.00% |
Loss per Share (Details)
Loss per Share (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Loss per Share | ||
Net income (loss) attributable to Innodata Inc. and Subsidiaries | $ (1,602) | $ (253) |
Weighted average common shares outstanding | 25,774 | 25,878 |
Adjusted for dilutive computation | 25,774 | 25,878 |
Loss Per Share - Additional inf
Loss Per Share - Additional information (Details) - shares shares in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Employee Stock Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share, Amount | 6.8 | 5 |
Derivatives - (Details)
Derivatives - (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Prepaid expenses and other current assets [Member] | Foreign Exchange Forward [Member] | |
Derivatives, Fair Value [Line Items] | |
Derivatives designated as hedging instruments | $ 33 |
Derivatives - Contracts designa
Derivatives - Contracts designated as cash flow hedges (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Derivatives | ||
Net gain (loss) recognized in OCI | $ 46 | $ (695) |
Net gain (loss) reclassified from accumulated OCI into income | $ 13 | $ (353) |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Derivatives | ||
Derivative, Notional Amount | $ 4.3 | $ 0 |
Financial Instruments - (Detail
Financial Instruments - (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Level 2 | |
Assets | |
Derivative | $ 33 |