8-K
Zedge, Inc. (ZDGE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
Date of Report (Date of earliest event reported):December 13, 2021
ZEDGE, INC.
(Exact name of registrant as specified in itscharter)
| Delaware | 1-37782 | 26-3199071 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 1178 Broadway, Ste 1450 (3rd Floor), New York, NY | 10001 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, includingarea code: (330) 577-3424
Not Applicable
(Former name or former address, if changed sincelast 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 (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under 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 |
|---|---|---|
| Class B common stock, par value $.01 per share | ZDGE | NYSE American |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). ☐
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 December 13, 2021, Zedge, Inc. (the “Registrant”) issued a press release announcing its results of operations for its fiscal quarter ended October 31, 2021. A copy of the press release issued by the Registrant concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The Registrant is furnishing the information contained in this Report, including Exhibit 99.1, pursuant to Item 2.02 of Form 8-K promulgated by the Securities and Exchange Commission (the “SEC”). This information shall not be deemed to be “filed” with the SEC or incorporated by reference into any other filing with the SEC unless otherwise expressly stated in such filing. In addition, this Report and the press release contain statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in the press release.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No | Document |
|---|---|
| 99.1 | Earnings Release, dated December 13, 2021, reporting the results of operations for Zedge, Inc.’s fiscal quarter ended October 31, 2021. |
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SIGNATURE
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 hereunto duly authorized.
| ZEDGE, INC. | |
|---|---|
| By: | /s/ Jonathan Reich |
| Name: | Jonathan Reich |
| Title: | Chief Executive Officer |
Dated: December 13, 2021
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EXHIBIT INDEX
| ExhibitNumber | Document |
|---|---|
| 99.1 | Earnings Release, dated December 13, 2021, reporting the results of operations for Zedge, Inc.’s fiscal quarter ended October 31, 2021. |
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Exhibit 99.1
Zedge Announces Record First Quarter Results
Reports record first quarter with revenue growth of60% to $6.0 million; Net income of $2.1 million; earnings per share (EPS) of $0.14, EBITDA^1^ of $3.0 million
New York, NY – December 13, 2021: Zedge, Inc. (NYSE AMERICAN: ZDGE), a global app publisher with a portfolio of leading digital consumer brands serving 43 million users across the portfolio in October 2021, today announced results for its first-quarter fiscal year 2022 ended October 31, 2021.
“We experienced strong performance in both our core and emerging businesses despite tougher year-over-year comps,” said Jonathan Reich, chief executive officer. “Advertising revenue continued to expand to record levels, while active subscriptions*^2^* returned to modest sequential growth and average revenue per monthly active user (ARPMAU)^2^ increased by over 46%. Our emerging businesses also performed well with the Zedge Premium marketplace experiencing gross transaction value (GTV)^2^ growth of 58%.
“Our priorities for fiscal 2022 remain unchanged. Tomorrow morning, we will launch an exciting, high-potential NFT product called “NFTs Made Easy” to select Zedge Premium artists. In the months to come, we plan to expand this unique offering to more artists and introduce additional features and capabilities to build out the ecosystem. To drive monthly active user (MAU) ^2^ growth, especially in well-developed markets, we have begun to scale paid user acquisition and also recently rolled out our first social and community features for our Zedge app, including “Follow Me,” with additional features expected in the new year. Furthermore, we continue to look at new content categories for our personalization and Shortz entertainment offerings and are working on new monetization opportunities for Emojipedia. In addition, new and enhanced subscription and product localization capabilities remain on the roadmap for several products. Finally, we continue to evaluate complementary M&A. Overall, we are executing on the plan I laid out during our last earnings call, and I am excited to see what we can accomplish in fiscal 2022 and beyond,” continued Reich.
Fiscal First-Quarter Highlights (Fiscal 2022 versusFiscal 2021)
| ● | Revenue increased 60.2% to $6.0 million versus $3.8 million; | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| ● | Active subscriptions and subscription revenue increased 25.3% and 47.7%, respectively; | ||||||||
| --- | --- | ||||||||
| ● | Operating income and operating margin of $2.6 million and 42.9% versus $1.1 million and 29.1%, respectively; | ||||||||
| --- | --- | ||||||||
| ● | Net income and diluted EPS of $2.1 million and $0.14 versus $1.0 million and $0.08, respectively; | ||||||||
| --- | --- | ||||||||
| ● | Cash flow from operations increased 81.2% to a record $2.7 million versus $1.5 million; | ||||||||
| --- | --- | ||||||||
| ● | EBITDA increased 110.9% to $3.0 million versus $1.4 million; | ||||||||
| --- | --- | ||||||||
| ● | MAU*^2^* increased by 5.6%; | ||||||||
| --- | --- | ||||||||
| ● | Zedge Premium GTV increased 58.2% to $0.33 million. | ||||||||
| --- | --- | ||||||||
| Select Financial Metrics: Q1 Fiscal 2022 versus Fiscal 2021 as of 10/31/21 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in $M except for EPS) | Q1 '22 | Q1 '21 | Change | ||||||
| Total Revenue | $ | 6.0 | $ | 3.8 | 60.2 | % | |||
| Advertising Revenue | $ | 4.6 | $ | 3.0 | 53.0 | % | |||
| Subscription Revenue | $ | 1.0 | $ | 0.7 | 47.7 | % | |||
| Other Revenue | $ | 0.5 | $ | 0.1 | 296.0 | % | |||
| Operating Income | $ | 2.6 | $ | 1.1 | 136.8 | % | |||
| Operating Margin | 42.9 | % | 29.1 | % | |||||
| Net Income | $ | 2.1 | $ | 1.0 | 96.7 | % | |||
| Diluted Earnings Per Share | $ | 0.14 | $ | 0.08 | 63.5 | % | |||
| EBITDA | $ | 3.0 | $ | 1.4 | 110.9 | % | |||
| Cash Flow from Operations | $ | 2.7 | $ | 1.5 | 81.2 | % | |||
| Zedge Premium GTV | $ | 0.33 | $ | 0.21 | 58.2 | % | |||
| nm | = not measurable/meaningful | ||||||||
| --- | --- | ||||||||
| * | numbers may not add due to rounding | ||||||||
| --- | --- | ||||||||
| Select Business Metrics: 1st Quarter Fiscal 2022 versus Fiscal 2021* | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | ||
| (in MM except for ARPMAU and where noted) | Q1 '22 | Q1 '21 | Change | ||||||
| Total Installs - Cumulative | 525.6 | 465.2 | 13.0 | % | |||||
| MAU | 34.2 | 32.4 | 5.6 | % | |||||
| Well-developed Markets | 8.4 | 9.2 | -8.5 | % | |||||
| Emerging Markets | 25.8 | 23.2 | 11.2 | % | |||||
| ARPMAU | $ | 0.053 | $ | 0.036 | 46.4 | % | |||
| Active Subscriptions (in 000s) | 763 | 609 | 25.3 | % | |||||
| *numbers may not add due to rounding |
| ^1^ | Throughout this release, EBITDA is a Non-GAAP financialmeasure intended to provide useful information that supplements Zedge’s results in accordance with GAAP. Please refer to the Reconciliationof Non-GAAP Financial Measure at the end of this release for an explanation of Zedge’s formulation of EBITDA and reconciliationsto the most directly comparable GAAP measure. |
|---|---|
| ^2^ | We use the following business metrics in this releasebecause we believe they are useful in evaluating Zedge as an investment. |
| --- | --- |
| ● | Monthly active users, or MAU, captures the number of unique users that used our Zedge app duringthe previous 30-days of the relevant period, is useful for evaluating consumer engagement with our app which correlates to advertisingrevenue as more users drive more ad impressions for sale. It also allows readers and potential advertisers to evaluate the size of ouruser base. |
| --- | --- |
| ● | Zedge Premium Gross Transaction Value, or GTV, is the total dollar amount of transactions conductedthrough the Zedge Premium Marketplace. As Zedge Premium is an internal focus for growth, we believe that this metric will help investorsevaluate the progress we are making in growing this part of our business. |
| --- | --- |
| ● | Average Revenue Per Monthly Active User for our Zedge app, or ARPMAU, is a useful statistic in evaluatinghow well we are monetizing our user base. |
| --- | --- |
| ● | The term Active Subscriptions is a subscription that has commenced and not been canceled, includingpaused subscriptions, and subscriptions in free trials, grace periods, or account hold. |
| --- | --- |
| ● | Total Installs - Cumulative is a measure of the cumulative number of times our Zedge app has beendownloaded since inception. |
| --- | --- |
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Trended Financial Information*
| (in $M except for EPS, ARPMAU, Paid Subscriptions) | Q121 | Q221 | Q321 | Q421 | Q122 | FY 2020 | FY 2021 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Revenue | $ | 3.8 | $ | 5.3 | $ | 5.3 | $ | 5.2 | $ | 6.0 | $ | 9.5 | $ | 19.6 | |
| Advertising Revenue | $ | 3.0 | $ | 4.4 | $ | 4.3 | $ | 4.2 | $ | 4.6 | $ | 7.4 | $ | 15.7 | |
| Subscription Revenue | $ | 0.7 | $ | 0.8 | $ | 0.9 | $ | 1.0 | $ | 1.0 | $ | 1.6 | $ | 3.2 | |
| Other Revenue | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.2 | $ | 0.5 | $ | 0.5 | $ | 0.5 | |
| Operating (loss) Income | $ | 1.1 | $ | 2.5 | $ | 2.0 | $ | 2.2 | $ | 2.6 | ($ | 0.4 | ) | $ | 7.8 |
| Net (loss) Income | $ | 1.0 | $ | 2.3 | $ | 2.4 | $ | 2.5 | $ | 2.1 | ($ | 0.6 | ) | $ | 8.2 |
| Diluted Earnings (Loss) Per Share | $ | 0.08 | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.14 | ($ | 0.05 | ) | $ | 0.59 |
| EBITDA | $ | 1.4 | $ | 2.9 | $ | 2.3 | $ | 2.7 | $ | 3.0 | $ | 1.0 | $ | 9.3 | |
| Cash Flow from Operations | $ | 1.5 | $ | 2.3 | $ | 4.0 | $ | 2.4 | $ | 2.7 | $ | 2.1 | $ | 10.1 | |
| Zedge Premium – GTV | $ | 0.21 | $ | 0.21 | $ | 0.25 | $ | 0.27 | $ | 0.33 | $ | 0.73 | $ | 0.95 | |
| MAU | 32.4 | 35.4 | 34.5 | 34.4 | 34.2 | nm | nm | ||||||||
| Well-developed Markets | 9.2 | 9.5 | 8.9 | 8.5 | 8.4 | nm | nm | ||||||||
| Emerging Markets | 23.2 | 25.9 | 25.6 | 25.9 | 25.8 | nm | nm | ||||||||
| ARPMAU | $ | 0.036 | $ | 0.049 | $ | 0.049 | $ | 0.050 | $ | 0.053 | nm | nm | |||
| Active Subscriptions (in 000s) | 609 | 711 | 753 | 752 | 763 | 504 | 752 | ||||||||
| nm | = not measurable/meaningful | ||||||||||||||
| --- | --- | ||||||||||||||
| * | numbers may not add due to<br>rounding | ||||||||||||||
| --- | --- |
Fiscal 2022 Commentary
“Similar to last year when we also reported a record first quarter, we will wait until after we report our second fiscal quarter earnings to update the annual financial guidance we provided in our fourth fiscal quarter earnings report,” concluded Reich.
Earnings Announcement and Supplemental Information
Zedge's earnings release will be filed on Form 8-K and posted on the Zedge investor relations website (https://investor.zedge.net) at approximately 4:10 p.m. Eastern on December 13, 2021. Management will host an earnings conference call beginning at 4:30 p.m. Eastern followed by a Q&A with investors.
To participate in the call, please dial Toll-Free: 888-506-0062 or International: 973-528-0011, at least five minutes before the 4:30PM Eastern start. Please ask for the Zedge earnings conference call with Participant Access Code: 499616
The call will also be webcast through the Zedge investor relations website: https://investor.zedge.net and will be available through Tuesday, December 13, 2022.
Following the call and continuing through Monday, December 27, 2021, a call replay will be available by dialing Toll-Free: 877-481-4010 or International: 919-882-2331 and entering the replay access code: 43673
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About Zedge
Zedge is an app publisher that owns a portfolio of leading digital consumer brands serving 43 million users globally in October 2021. Our portfolio consists of Zedge Ringtones and Wallpapers, the leading mobile app used for mobile phone personalization, social content, and fandom art; Zedge Premium, a marketplace for artists, celebrities, and emerging creators to market their digital content, to Zedge’s users; Emojipedia, the leading source of all things emoji; and Shortz, a mobile entertainment app in beta, focused on short-form storytelling. Zedge monetizes its content through ad-supported offerings, tokens, and subscriptions. For more information, visit https://www.zedge.net.
Forward-Looking Statements
All statements above that are not purely about historicalfacts, including, but not limited to, those in which we use the words “believe,” “anticipate,” “expect,”“plan,” “intend,” “estimate,” “target” and similar expressions, are forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our currentjudgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statementsdue to numerous important factors. Our filings with the SEC provide detailed information on such statements and risks and should be consultedalong with this release. To the extent permitted under applicable law, we assume no obligation to update any forward-looking statements.
Contact:
Brian Siegel IRC, MBA Managing Director
Hayden IR
(346) 396-8696
ir@zedge.net
4
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data)
| July 31, | |||||
|---|---|---|---|---|---|
| 2021 | |||||
| (Audited) | |||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 27,249 | $ | 24,908 | ||
| Trade accounts receivable, net of allowance of 0 at October 31, 2021 and July 31, 2021 | 2,816 | 2,545 | |||
| Prepaid expenses | 322 | 111 | |||
| Other current assets | 105 | 49 | |||
| Total current assets | 30,492 | 27,613 | |||
| Property and equipment, net | 1,891 | 1,980 | |||
| Intangible assets, net | 6,791 | - | |||
| Goodwill | 2,361 | 2,262 | |||
| Deferred tax assets, net | 477 | 477 | |||
| Other assets | 358 | 5,145 | |||
| Total assets | 42,370 | $ | 37,477 | ||
| Liabilities and stockholders’ equity | |||||
| Current liabilities: | |||||
| Trade accounts payable | 407 | $ | 585 | ||
| Due to seller of Emojipedia | 2,094 | - | |||
| Accrued expenses and other current liabilities | 2,501 | 1,771 | |||
| Deferred revenues | 1,803 | 1,821 | |||
| Total current liabilities | 6,805 | 4,177 | |||
| Other liabilities | 126 | 145 | |||
| Total liabilities | 6,931 | 4,322 | |||
| Commitments and contingencies (Note 8) | |||||
| Stockholders’ equity: | |||||
| Preferred stock, .01 par value; authorized shares—2,400; no shares issued | - | - | |||
| Class A common stock, .01 par value; authorized shares—2,600; 525 shares issued and outstanding at October 31, 2021 and July 31, 2021 | 5 | 5 | |||
| Class B common stock, .01 par value; authorized shares—40,000; 13,935 shares issued and 13,861 shares outstanding at October 31, 2021, and 13,923 shares issued and 13,865 ouststanding at July 31, 2021 | 139 | 139 | |||
| Additional paid-in capital | 41,983 | 41,664 | |||
| Accumulated other comprehensive loss | (855 | ) | (997 | ) | |
| Accumulated deficit | (5,499 | ) | (7,554 | ) | |
| Treasury stock, 74 shares at October 31, 2021 and 58 shares at July 31, 2021, at cost | (334 | ) | (102 | ) | |
| Total stockholders’ equity | 35,439 | 33,155 | |||
| Total liabilities and stockholders’ equity | 42,370 | $ | 37,477 |
All values are in US Dollars.
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ZEDGE,INC.
CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME
(in thousands, except pershare data)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| October 31, | ||||||
| 2021 | 2020 | |||||
| Revenues | $ | 6,028 | $ | 3,762 | ||
| Costs and expenses: | ||||||
| Direct cost of revenues (exclusive of amortization of capitalized software and technology development costs included below) | 310 | 304 | ||||
| Selling, general and administrative | 2,732 | 2,006 | ||||
| Depreciation and amortization | 398 | 359 | ||||
| Income from operations | 2,588 | 1,093 | ||||
| Interest and other income, net | 13 | 1 | ||||
| Net loss resulting from foreign exchange transactions | (10 | ) | (41 | ) | ||
| Income before income taxes | 2,591 | 1,053 | ||||
| Provision for income taxes | 536 | 8 | ||||
| Net Income | 2,055 | 1,045 | ||||
| Other comprehensive income (loss): | ||||||
| Changes in foreign currency translation adjustment | 142 | (159 | ) | |||
| Total other comprehensive income (loss) | 142 | (159 | ) | |||
| Total comprehensive income | $ | 2,197 | $ | 886 | ||
| Income per share attributable to Zedge, Inc. common stockholders: | ||||||
| Basic | $ | 0.14 | $ | 0.09 | ||
| Diluted | $ | 0.14 | $ | 0.08 | ||
| Weighted-average number of shares used in calculation of income per share: | ||||||
| Basic | 14,281 | 12,191 | ||||
| Diluted | 15,031 | 12,496 |
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ZEDGE, INC.
CONSOLIDATED STATEMENTS OFCASH FLOWS
(in thousands)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| October 31, | ||||||
| 2021 | 2020 | |||||
| Operating activities | ||||||
| Net income | $ | 2,055 | $ | 1,045 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 398 | 359 | ||||
| Stock-based compensation | 319 | 237 | ||||
| Change in assets and liabilities: | ||||||
| Trade accounts receivable | (295 | ) | (554 | ) | ||
| Prepaid expenses and other current assets | (279 | ) | 80 | |||
| Other assets | (8 | ) | 19 | |||
| Trade accounts payable and accrued expenses | 522 | 80 | ||||
| Deferred revenue | (18 | ) | 221 | |||
| Net cash provided by operating activities | 2,694 | 1,487 | ||||
| Investing activities | ||||||
| Capitalized software and technology development costs and purchase of equipment | (188 | ) | (215 | ) | ||
| Net cash used in investing activities | (188 | ) | (215 | ) | ||
| Financing activities | ||||||
| Repayment of insurance premium loan payable | - | (40 | ) | |||
| Purchase of treasury stock in connection with restricted stock vesting | (232 | ) | (26 | ) | ||
| Net cash used in financing activities | (232 | ) | (66 | ) | ||
| Effect of exchange rate changes on cash and cash equivalents | 67 | (65 | ) | |||
| Net increase in cash and cash equivalents | 2,341 | 1,141 | ||||
| Cash and cash equivalents at beginning of period | 24,908 | 5,111 | ||||
| Cash and cash equivalents at end of period | $ | 27,249 | $ | 6,252 | ||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||
| Cash payments made for income taxes | $ | - | $ | 1 | ||
| Cash payments made for interest expenses | $ | - | $ | 3 | ||
| SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||
| Acquistion of Emojipedia through release of escrow fund of $4,776, due to seller of $2,118 and legal fee of $12 | $ | 6,906 | $ | - | ||
| Accounts receivable from certain Emojipedia websites collected by Seller | $ | 24 | $ | - | ||
| Note payable issued for insurance premium financing | $ | - | $ | 181 |
7
Use of EBITDA as a Non-GAAP Measure
EBITDA is defined as earnings (loss) before interest, taxes, depreciation and amortization. EBITDA represents a measure that we believe is customarily used by investors and analysts to evaluate the financial performance of companies in addition to the GAAP measures that we present. Our management also believes that EBITDA is useful in evaluating our core operating results. However, EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income or operating income as an indicator of our operating performance or to net cash provided by operating activities as a measure of our liquidity.
| Reconciliation of EBITDA to Net Income (Loss) | Q121 | Q221 | Q321 | Q421 | Q122 | FY 2020 | FY 2021 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net (Loss) Income | $ | 1.0 | $ | 2.3 | $ | 2.4 | $ | 2.5 | $ | 2.1 | ($ | 0.6 | ) | $ | 8.2 | ||||||
| Excluding: | |||||||||||||||||||||
| Interest and other income (expense), net | $ | (0.0 | ) | $ | (0.0 | ) | $ | (0.0 | ) | $ | (0.0 | ) | $ | (0.0 | ) | $ | (0.0 | ) | $ | (0.0 | ) |
| Provision for (benefit from) income taxes | $ | 0.0 | $ | 0.3 | $ | (0.5 | ) | $ | (0.1 | ) | $ | 0.5 | $ | 0.0 | $ | (0.2 | ) | ||||
| Depreciation and amortization | $ | 0.4 | $ | 0.3 | $ | 0.3 | $ | 0.3 | $ | 0.4 | $ | 1.6 | $ | 1.3 | |||||||
| EBITDA | $ | 1.4 | $ | 2.9 | $ | 2.3 | $ | 2.7 | $ | 3.0 | $ | 1.0 | $ | 9.3 | |||||||
| * | numbers may not add due to<br>rounding | ||||||||||||||||||||
| --- | --- |
8