8-K
INNODATA INC (INOD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11, 2021
INNODATAINC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35774 | 13-3475943 |
|---|---|---|
| (State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer |
| incorporation) | Identification No.) | |
| 55 Challenger Road | 07660 | |
| --- | --- | |
| Ridgefield Park, NJ | (Zip Code) | |
| (Address of principal executive offices) | ||
| Registrant's telephone number, including area code (201) 371-8000 | ||
| --- | ||
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under<br>the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under<br>the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under<br>the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under<br>the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | INOD | The Nasdaq Stock Market LLC |
| Preferred Stock Purchase Right | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On March 11, 2021, Innodata Inc. issued a press release announcing its fourth quarter 2020 and fiscal year 2020 financial results. A copy of the press release is furnished with this Current Report on Form 8-K as Exhibit 99.1.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
See Exhibit Index below.
Exhibit Index
| Exhibit No. | Description |
|---|---|
| 99.1 | Press<br>Release dated March 11, 2021. |
| --- | --- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| INNODATA INC. | ||
|---|---|---|
| Date: March 11, 2021 | By: | /s/<br> Mark A Spelker |
| --- | --- | --- |
| Mark A. Spelker | ||
| Chief Financial Officer & Executive Vice President |
Exhibit 99.1
Innodata Reports Fourth Quarter and FiscalYear 2020 Results
NEW YORK – March 11, 2021 – INNODATA INC. (NASDAQ: INOD) today reported results for the fourth quarter and the year ended December 31, 2020.
| · | Total revenue was $15.3 million in the<br>fourth quarter of 2020, a 5% increase from $14.6 million in the third quarter of 2020. Total revenue was $14.7 million in the fourth<br>quarter of 2019. |
|---|---|
| · | Net income was $1.2 million in the fourth<br>quarter of 2020, or $0.05 per basic share and $0.04 per diluted share, compared to a net income of $0.2 million, or $0.01 per basic<br>and diluted share, in the third quarter of 2020 and a net loss of $0.5 million, or $(0.02) per basic and diluted share, in the<br>fourth quarter of 2019. |
| --- | --- |
| · | Total revenue for the year ended December 31,<br>2020 was $58.2 million, an increase of 4% from $55.9 million in 2019. |
| --- | --- |
| · | Net income was $0.6 million, or $0.03<br>per basic share and $0.02 per diluted share, in the year ended December 31, 2020, compared to a net loss of $2.1 million,<br>or $(0.08) per basic and diluted share, in 2019. |
| --- | --- |
| · | Cash and cash equivalents were $17.6 million<br>at December 31, 2020 and $10.9 million December 31, 2019. |
| --- | --- |
Amounts in this press release have been rounded. All percentages have been calculated using unrounded amounts.
Jack Abuhoff, CEO, said, “Despite the unprecedented disruptions in 2020, we were still able to grow our revenues and earnings, but more importantly, we are much better positioned entering this new year to show accelerating growth moving forward. Our confidence is underpinned by the fact that we are seeing a blue-sky growth trajectory in the industry segments we serve, and our offerings are seeing strong customer adoption. To take advantage of this opportunity we plan to significantly increase our sales and marketing team. Through most of 2020, we had 15 people in sales. Our 2021 budget, by contrast, calls for ending 2021 with a sales team of 98 in total. We are also investing in our proprietary technology solutions to maintain and enhance our product excellence and leadership as well as enable us to scale our business for growth.
I look forward to presenting additional context on our analyst call today.”
Timing of Conference Call with Q&A
Innodata will conduct an earnings conference call, including a question-and-answer period, at 11:00 AM eastern time today. You can participate in this call by dialing the following call-in numbers:
The call-in numbers for the conference call are:
| 1-800-289-0438 | (Domestic) |
|---|---|
| 1-323-794-2423 | (International) |
| 1-888-203-1112 | (Domestic Replay) |
| 1-719-457-0820 | (International Replay) |
Pass code on both: 8696893
It is recommended that participants dial in approximately 10 minutes prior to the start of the call. Investors are also invited to access a live Webcast of the conference call at the Investor Relations section of www.innodata.com. Please note that the Webcast feature will be in listen-only mode.
Call-in or Webcast replay will be available for 30 days following the conference call.
About Innodata
Innodata (NASDAQ: INOD) is a leading data engineering company. Prestigious companies across the globe turn to Innodata for help with their biggest data challenges. By combining advanced machine learning and artificial intelligence (ML/AI) technologies, a global workforce of over 3,500 subject matter experts, and a high-security infrastructure, we’re helping usher in the promise of digital data and ubiquitous AI.
Forward Looking Statements
This press release may contain forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Words such as “project,” “believe,” “expect,” “can,” “continue,” “could,” “intend,” “may,” “should,” “will,” “anticipate,” “indicate,” “forecast,” “predict,” “likely,” “goals,” “estimate,” “plan,” “potential,” or the negatives thereof and other similar expressions generally identify forward-looking statements, which speak only as of the date hereof.
These forward-looking statements are based on management’s current expectations, assumptions and estimates and are subject to a number of risks and uncertainties, including without limitation, the expected or potential effects of the novel coronavirus (COVID-19) pandemic and the responses of governments, the general global population, our customers, and the Company thereto; that contracts may be terminated by clients; projected or committed volumes of work may not materialize; continuing Digital Data Solutions segment reliance on project-based work and the primarily at-will nature of such contracts and the ability of these clients to reduce, delay or cancel projects; the likelihood of continued development of the markets, particularly new and emerging markets, that our services support; continuing Digital Data Solutions segment revenue concentration in a limited number of clients; potential inability to replace projects that are completed, canceled or reduced; our dependency on content providers in our Agility segment; difficulty in integrating and deriving synergies from acquisitions, joint venture and strategic investments; potential undiscovered liabilities of companies and businesses that we may acquire; potential impairment of the carrying value of goodwill and other acquired intangible assets of companies and businesses that we acquire; changes in our business or growth strategy; a continued downturn in or depressed market conditions, whether as a result of the COVID-19 pandemic or otherwise; changes in external market factors; the ability and willingness of our clients and prospective clients to execute business plans that give rise to requirements for our services; changes in our business or growth strategy; the emergence of new or growth in existing competitors; various other competitive and technological factors; our use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, client, employee or Company information, or service interruptions; and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.
Our actual results could differ materially from the results referred to in forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, uncertainty around the COVID-19 pandemic and the effects of the global response thereto and the risks discussed in Part I, Item 1A. “Risk Factors,” Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other parts of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 16, 2020, as updated or amended by our other filings with the Securities and Exchange Commission. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements will occur, and you should not place undue reliance on these forward-looking statements. We undertake no obligation to update or review any guidance or other forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by the Federal securities laws.
CompanyContact
Suzanne Srsich
Innodata Inc.
ssrsich@innodata.com
(201) 371-8033
Explanatory Note:
During the preparation of the September 30, 2020 condensed consolidated financial statements, management became aware of immaterial errors in the Company’s lease accounting for certain capital leases. Certain financial information for the year ended December 31, 2019 has been revised in the 2019 condensed consolidated financial statements of the Company due to the correction of these errors.
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS
(Unaudited)
(In thousands, except per-share amounts)
| Three Months Ended<br> December 31, | Year Ended <br><br>December 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||||||||
| Revenues: | |||||||||||
| Services and Solutions | $ | 12,338 | $ | 11,845 | $ | 46,811 | $ | 45,114 | |||
| SaaS Platforms | 2,955 | 2,834 | 11,429 | 10,744 | |||||||
| Total | 15,293 | 14,679 | 58,240 | 55,858 | |||||||
| Direct operating costs | 9,303 | 9,179 | 38,350 | 37,167 | |||||||
| Foreign exchange (gain) loss | (114 | ) | (8 | ) | 48 | 158 | |||||
| 9,189 | 9,171 | 38,398 | 37,325 | ||||||||
| Gross Profit | **** | 6,104 | **** | **** | 5,508 | **** | **** | 19,842 | **** | 18,533 | **** |
| Operating expenses: | |||||||||||
| Research and development | 304 | 307 | 1,279 | 1,347 | |||||||
| Selling and marketing | 1,900 | 2,111 | 7,737 | 7,938 | |||||||
| General and administrative | 2,794 | 2,897 | 9,646 | 10,196 | |||||||
| Interest expense, net | 22 | 84 | 135 | 120 | |||||||
| 5,020 | 5,399 | 18,797 | 19,601 | ||||||||
| Income (loss) before provision for income taxes | 1,084 | 109 | 1,045 | (1,068 | ) | ||||||
| Provision for income taxes | (104 | ) | 598 | 401 | 1,091 | ||||||
| Consolidated net income (loss) | 1,188 | (489 | ) | 644 | (2,159 | ) | |||||
| Income (loss) attributable to non-controlling interests | 2 | (7 | ) | 27 | (17 | ) | |||||
| Net income (loss) attributable to Innodata Inc. and Subsidiaries | $ | 1,186 | **** | $ | (482 | ) | $ | 617 | $ | (2,142 | ) |
| Income (loss) per share attributable to Innodata Inc. and Subsidiaries: | |||||||||||
| Basic | $ | 0.05 | $ | (0.02 | ) | $ | 0.03 | $ | (0.08 | ) | |
| Diluted | $ | 0.04 | $ | (0.02 | ) | $ | 0.02 | $ | (0.08 | ) | |
| Weighted average shares outstanding: | |||||||||||
| Basic | 25,143 | 25,490 | 24,607 | 25,774 | |||||||
| Diluted | 27,849 | 25,490 | 25,573 | 25,774 |
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
| December 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 17,573 | $ | 10,874 | ||
| Accounts receivable, net | 10,048 | 9,723 | ||||
| Prepaid expenses and other current assets | 4,240 | 3,407 | ||||
| Total current assets | 31,861 | 24,004 | ||||
| Property and equipment, net | 7,227 | 6,887 | ||||
| Right-of-use assets, net | 6,610 | 7,005 | ||||
| Other assets | 2,563 | 2,110 | ||||
| Deferred income taxes | 2,187 | 1,906 | ||||
| Intangibles, net | 4,656 | 5,477 | ||||
| Goodwill | 2,150 | 2,108 | ||||
| Total assets | $ | 57,254 | $ | 49,497 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable, accrued expenses and other | $ | 4,925 | $ | 4,759 | ||
| Accrued salaries, wages and related benefits | 5,719 | 4,265 | ||||
| Income and other taxes | 5,000 | 4,183 | ||||
| Current portion of long-term obligations | 1,712 | 1,440 | ||||
| Operating lease liability - current portion | 990 | 1,107 | ||||
| Total current liabilities | 18,346 | 15,754 | ||||
| Deferred income taxes | 44 | 363 | ||||
| Long-term obligations, net of current portion | 6,282 | 4,534 | ||||
| Operating lease liability, net of current portion | 6,332 | 6,731 | ||||
| Total liabilities | 31,004 | 27,382 | ||||
| Non-controlling interests | (3,390 | ) | (3,417 | ) | ||
| STOCKHOLDERS' EQUITY | 29,640 | 25,532 | ||||
| Total liabilities and stockholders’ equity | $ | 57,254 | $ | 49,497 |
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(Unaudited)
(In thousands)
| Year Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Cash flows from operating activities: | ||||||
| Net income (loss) | $ | 644 | $ | (2,159 | ) | |
| Non-cash expenses: | ||||||
| Depreciation and amortization | 2,266 | 2,697 | ||||
| Stock-based compensation | 913 | 836 | ||||
| Deferred income tax | (618 | ) | (313 | ) | ||
| Pension amortization | 791 | 335 | ||||
| Loss on disposal of property and equipment | 48 | - | ||||
| Total | 3,400 | 3,555 | ||||
| Changes in assets and liabilities | 1,616 | 2,884 | ||||
| Cash flows from operating activities | $ | 5,660 | $ | 4,280 | ||
| Cash flows from investing activities | $ | (1,375 | ) | $ | (1,667 | ) |
| Cash flows from financing activities | $ | 2,312 | $ | (2,399 | ) |
INNODATA INC. AND SUBSIDIARIES
CONSOLIDATED REVENUE
(Unaudited)
(In thousands)
| Three Months Ended | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| Revenue | ||||||||
| DDS | $ | 11,190 | $ | 10,818 | $ | 41,983 | $ | 41,172 |
| Synodex | 1,148 | 1,027 | 4,828 | 3,942 | ||||
| Agility | 2,955 | 2,834 | 11,429 | 10,744 | ||||
| Total Revenue | $ | 15,293 | $ | 14,679 | $ | 58,240 | $ | 55,858 |