KLDISCOVERY INC. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including information incorporated herein by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts. This includes, without limitation, statements regarding our financial position, business strategy and management's plans and objectives for future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "strive," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When we discuss our strategies or plans, we are making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, our management.
All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expect, including:
• potential failure to comply with privacy and information security
regulations governing the client datasets that we process and store;
• the outbreak of disease or similar public health threat, such as COVID-19;
• the ability to operate in highly competitive markets, and potential adverse
effects of this competition;
• risk of decreased revenues if we do not adapt our pricing models;
• the ability to attract, motivate and retain qualified employees, including
members of our senior management team;
• the ability to maintain a high level of client service and expand operations;
• potential issues with our product offerings that could cause legal
exposure, reputational damage and an inability to deliver services;
• the ability to develop and successfully grow revenues from new products
such as Nebula, improve existing products and adapt our business model to
keep pace with industry trends;
• risk that our products and services fail to interoperate with third-party
systems;
• potential unavailability of third-party technology that we use in our
products and services;
• potential disruption of our products, offerings, website and networks;
• difficulties resulting from our implementation of new consolidated business
systems;
• the ability to deliver products and services following a disaster or
business continuity event;
• potential unauthorized use of our products and technology by third parties
and/or data security breaches and other incidents;
• potential intellectual property infringement claims;
• the ability to comply with various trade restrictions, such as sanctions
and export controls, resulting from our international operations;
• consequences of our substantial levels of indebtedness;
• potential impairment charges related to goodwill, identified intangible
assets and fixed assets;
• impacts of laws and regulations on our business;
• macroeconomic inflationary pressure
• potential litigation and regulatory proceedings involving us;
• expectations regarding the time during which we will be an emerging growth
company or smaller reporting company;
• the potential liquidity and trading of our public securities; and
• other risks and uncertainties indicated in the section titled "Risk
Factors" in this Quarterly Report on Form 10-Q.
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The forward-looking statements contained in this Quarterly Report on Form 10-Q
are based on current expectations and beliefs, which we believe to be
reasonable, concerning future developments and their potential effects on us.
There can be no assurance that future developments affecting us will be those
that we have anticipated. These forward-looking statements involve a number of
risks, uncertainties (many of which are beyond our control) or other assumptions
that may cause actual results or performance to be materially different from
those expressed or implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, those factors described in "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and in our consolidated financial statements and the
related notes thereto included elsewhere in this Quarterly Report on Form 10-Q
and in our Annual Report on Form 10-K for the year ended
In addition, statements that include phrases such as "we believe" and similar phrases reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for these statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Throughout this section, unless otherwise noted "we," "us," "our," "Company,"
"
• Executive Summary - a general description of our business and key highlights
for the three and six months ended June 30, 2022 .
• Results of Operations - an analysis of our results of operations in our
condensed consolidated financial statements.
• Liquidity and Capital Resources - an analysis of our cash flows, sources and
uses of cash, commitments and contingencies and quantitative and qualitative
disclosures about market risk.
• Critical Accounting Policies and Estimates - a discussion of critical
accounting policies requiring judgments and estimates.
Overview
KLD is a leading global provider of eDiscovery, information governance and data recovery solutions to corporations, law firms, insurance agencies and individuals. We provide technology solutions to help our clients solve complex legal, regulatory and data challenges. We have broad geographical coverage in the eDiscovery and data recovery industries with 31 locations in 19 countries, as well as 9 data centers and 17 data recovery labs globally. Our integrated proprietary technology solutions enable the efficient and accurate collection, processing, transmission, review and/or recovery of complex and large-scale enterprise data. In conjunction with proprietary technology, we provide immediate expert consultation and 24/7/365 support wherever a customer is located worldwide, which empowers us to become a "first-call" partner for mission-critical, time-sensitive, or nuanced eDiscovery and data recovery challenges. We are continuously innovating to provide a more reliable, secure and seamless experience when tackling various "big data" volume, velocity, and veracity challenges. A key example of our purpose-built innovation is Nebula, our flagship, end-to-end artificial intelligence/machine learning, or AI/ML, powered solution that serves as a singular platform of engagement for legal data.
Key factors affecting our performance
Our operating results, financial performance and future growth will depend on a
variety of factors, including, among others, maintaining our history of product
innovation, increasing adoption of Nebula, maintaining and growing our client
base while driving greater penetration, growth in the number of our matters,
particularly large matters and establishing our partner channel for Nebula. Some
of the more important factors are discussed in our Annual Report on Form 10-K
for the fiscal year ended
Key business metrics
The following are among the key operational and financial metrics we use to measure and evaluate our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
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Clients
We have a strong track record of growing our client base, and we believe that our ability to increase the number of clients utilizing our Legal Technology solutions, including Nebula, is an important indicator of our market penetration, our business growth, and our future opportunities.
We define Legal Technology clients as each primary law firm and corporation to which we provided services in a litigation matter that we billed during the past two years. We define Nebula clients, each of which is included in the number of Legal Technology clients, as the total number of primary law firm, corporation, insurance company and service provider clients to which we provided legal technology solutions for a matter that we billed for use of our Nebula solution during the two years prior to the applicable date.
The following table sets forth the number of Legal Technology clients and Nebula clients as of the dates shown:
June 30,
2022 2021
Legal Technology clients 5,731 5,402
Nebula clients 1,419 1,077
Number and size of matters
We believe our ability to continuously grow the number of matters on our platform over time is an important measure of scale for our business and is indicative of our future growth prospects.
We define Legal Technology matters as the total number of matters on which our Legal Technology solutions were used in the twelve months preceding the applicable date. Matters refer to a range of activities that include collecting, tracking, analyzing, and exchanging relevant data. Legal Technology solutions currently drive the majority of our revenue, and provide the foundation for additional adoption of our proprietary technology solutions and other offerings. We define Nebula matters, which are included in the number of Legal Technology matters, as the total number of matters on which our Nebula solution was used in the twelve months preceding the applicable date. Nebula is our ecosystem of proprietary technology solutions that enables clients to collect, process, store, analyze, and govern their data on a single platform. Nebula comprises a steadily growing component of our revenue and we expect Nebula adoption to increase and the number of Nebula matters to grow in the long term as we continue to introduce new product capabilities and cross-sell Nebula to our existing clients.
The following table sets forth the number of Legal Technology matters and Nebula matters as of the dates shown:
June 30,
2022 2021
Legal Technology matters 8,048 7,894
Nebula matters 1,089 867
Our comprehensive product offerings, technology-enabled service offerings and
reputation as a trusted partner to our clients enable us to capture matters of
large size and complexity. During the three and six months ended
Legal Technology net revenue retention
We calculate our Legal Technology net revenue retention rate by dividing (1) total Legal Technology revenue in the twelve-month period from accounts that generated Legal Technology revenue during the corresponding immediately preceding twelve month period by (2) total Legal Technology revenue in the immediately preceding twelve month period generated from those same accounts. Our Legal Technology net revenue retention rate includes revenue from use of Nebula.
Twelve Months Ended June 30,
2022 2021
Legal Technology net revenue retention 101% 96%
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For the three months ended
Our Legal Technology net revenue retention rate is impacted by our usage-based pricing model, and revenue could fluctuate in any given period due to frequency of matters, client upsell, cross-sell, and churn. During 2020, 2021 and 2022, the COVID-19 pandemic impacted our Legal Technology net revenue retention rate, as it impacted the rest of our business, as certain accounts experienced a slowdown in the number and frequency of matters. In the long-term, we plan to increase our net revenue retention rate by increasing the number of solutions that we sell on a subscription-basis, as well as broadening the scope of our Nebula offerings, to promote strong product adoption. As we expand our products beyond eDiscovery to other information governance solutions such as big data hosting and processing, including through Nebula, we expect clients to leverage our technology earlier in the data lifecycle, providing further opportunity for us to increase our product and service penetration and client retention. Furthermore, we plan to establish and broaden our channel partnerships over time and leverage these strong relationships to further our awareness of our products and overall usage within the industry.
KEY COMPONENTS OF OUR RESULTS OF OPERATIONS
Revenue
The Company primarily generates revenue from selling solutions that fall into the following categories:
(1) Legal Technology, including Nebula and our expansive suite of technology solutions, such as our end-to-end eDiscovery technology solutions, managed review solutions, collections, processing, analytics, hosting, production, and professional services; and
(2) Data recovery solutions, which provides data restoration, data erasure and data management services.
The Company generates the majority of its revenues by providing Legal Technology solutions to our clients. Most of the Company's eDiscovery contracts are time and materials types of arrangements, while others are subscription-based, fixed-fee arrangements.
Time and materials arrangements are based on units of data stored or processed. Unit-based revenues are recognized as services are provided, based on either the amount of data stored or processed, the number of concurrent users accessing the information or the number of pages or images processed for a client, at agreed upon per unit rates. The Company recognizes revenues for these arrangements utilizing a right-to-invoice practical expedient because it has a contractual right to consideration for services completed to date.
Certain of the Company's eDiscovery contracts are subscription-based, fixed fee arrangements, which have tiered pricing based on the quantity of data hosted. For a fixed monthly fee, the Company's clients receive a variety of optional eDiscovery solutions, which are included in addition to the data hosting. The Company recognizes revenues for these arrangements based on predetermined monthly fees as determined in its contractual agreements, utilizing a right-to-invoice practical expedient because the Company has a contractual right to consideration for services completed to date.
Other eDiscovery agreements are time and material arrangements that require the client to pay us based on the number of hours worked at contractually agreed-upon rates. The Company recognizes revenues for these arrangements based on hours incurred and contracted rates utilizing a right-to-invoice practical expedient because it has a contractual right to consideration for services completed to date.
Data recovery engagements are mainly fixed fee arrangements requiring the client to pay a pre-established fee in exchange for the successful completion of such engagement on a predetermined device. For the recovery performed by the Company's technicians, the revenue is recognized at a point in time, when the recovered data is sent to the customer.
Data erasure engagements are also fixed fee arrangements for which revenue is recognized at a point in time when the certificate of erasure is sent to the customer.
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The Company offers term license subscriptions to Ontrack PowerControls software to customers with on-premises installations of the software pursuant to contracts that are historically one to four years in length. The term license subscriptions include maintenance and support, as well as access to future software upgrades and patches. The license and the additional support services are deemed to be one performance obligation, and thus revenue for these arrangements is recognized ratably over the term of the agreement.
For the three months ended
We currently expect non-Nebula Legal Technology revenues to remain relatively consistent over time and that Nebula revenue will continue to accelerate, with Nebula growing as a larger percentage of the mix of total revenue over time.
Cost of Revenues
Cost of revenue consists primarily of technology infrastructure costs, personnel costs and amortization of capitalized developed technology costs. Infrastructure costs include hardware, software, occupancy and cloud costs to support our legal technology and data recovery solutions. Personnel costs include salaries, benefits, bonuses, and stock-based compensation as well as costs associated with document reviewers which are variable based on managed review revenue. We intend to continue to invest additional resources in our infrastructure to expand the capability of solutions and enable our customers to realize the full benefit of our solutions. The level, timing and relative investment in our cloud infrastructure could affect our cost of revenue in the future. Additionally, cost of revenue in future periods could be impacted by fluctuations in document reviewer costs associated with managed review revenue.
Operating expenses
Our operating expenses consist of research and development, sales and marketing, general and administrative and amortization and depreciation expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, share-based compensation and sales commissions. Operating expenses also include occupancy, software expense and professional services. In 2022, we intend to continue to invest in research and development to further develop our proprietary technology and support further penetration and adoption of our offering, including our end-to-end Nebula platform, including through hiring additional personnel. We expect these investments to cause research and development expense to increase in 2022 versus 2021, and thereafter anticipate research and development expense normalizing as a percentage of revenues. We also intend to significantly increase our investment in sales and marketing through the end of 2022 in connection with an expected increase in headcount. The anticipated long-term benefits from these investments are expected to increase revenues, which is also expected to slightly decrease sales and marketing expense as a percentage of revenue over time. We also expect general and administrative expense to decrease slightly as a percentage of revenue over time due to our ability to scale as revenues increase and as a result of historical cost-cutting measures.
Interest Expense
Interest expense consists primarily of interest payments and accruals relating to outstanding borrowings. We expect interest expense to vary each reporting period depending on the amount of outstanding borrowings and prevailing interest rates.
Income Tax (Benefit) Provision
Income tax (benefit) provision is primarily related to foreign tax activity and
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Non-
We prepare financial statements in accordance with
Our management believes EBITDA and Adjusted EBITDA reflect our ongoing operating
performance because the isolation of non-cash charges, such as amortization and
depreciation, and other items, such as interest, income taxes, equity
compensation, acquisition and transaction costs, restructuring costs, and
systems establishment costs which are incurred outside the ordinary course of
our business, provides information about our cost structure and helps us to
track our operating progress. We encourage investors and potential investors to
carefully review our
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) plus interest (income) expense, income tax
expense (benefit), extinguishment of debt, impairment losses, and depreciation
and amortization. We view adjusted EBITDA as an operating performance measure
and as such, we believe that the most directly comparable
• Acquisition, financing and transaction costs generally represent earn-out
payments, rating agency fees and letter of credit and revolving facility
fees, as well as professional service fees and direct expenses related to
acquisitions and public offerings. Because we do not acquire businesses on a
predictable cycle, we do not consider the amount of acquisition- and
integration-related costs to be a representative component of the day-to-day
operating performance of our business.
• Stock compensation and other primarily represent portions of compensation
paid to our employees and executives through stock-based instruments.
Determining the fair value of the stock-based instruments involves a high
degree of judgment and estimation and the expenses recorded may not align
with the actual value realized upon the future exercise or termination of
the related stock-based awards. Additionally, stock compensation is a
non-cash expense. Therefore, we believe it is useful to exclude stock-based
compensation to better understand the long-term performance of our core
business.
• Change in fair value of Private Warrants relates to changes in the fair
market value of the Private Warrants issued in conjunction with the Business
Combination. We do not consider the amount to be representative of a
component of the day-to-day operating performance of our business.
• Restructuring costs generally represent non-ordinary course costs incurred
in connection with a change in a contract or a change in the makeup of our
personnel often related to an acquisition, such as severance payments,
recruiting fees and retention charges. We do not consider the amount of
restructuring costs to be a representative component of the day-to-day
operating performance of our business.
• Systems establishment costs relate to non-ordinary course expenses incurred
to develop our IT infrastructure, including system automation and enterprise
resource planning system implementation. We do not consider the amount to be
representative of a component of the day-to-day operating performance of our
business.
Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by any of these adjustments, or that our projections and estimates will be realized in their entirety or at all. In addition, because of these limitations, adjusted EBITDA should not be considered as a measure of liquidity or discretionary cash available to us to fund our cash needs, including investing in the growth of our business and meeting our obligations.
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The use of EBITDA and adjusted EBITDA instead of
• our cash expenditures or future requirements for capital expenditures;
• changes in, or cash requirements for, our working capital needs;
• interest expense, or the cash requirements necessary to service interest or
principal payments, on our indebtedness;
• any cash income taxes that we may be required to pay;
• any cash requirements for replacements of assets that are depreciated or
amortized over their estimated useful lives and may have to be replaced in
the future; or
• all non-cash income or expense items that are reflected in our statements of
cash flows.
See "-Results of Operations" below for reconciliations of adjusted EBITDA to net loss.
RESULTS OF OPERATIONS
Impacts of the COVID-19 pandemic on the Company's Business
The COVID-19 pandemic continues to impact the global economy and cause significant macroeconomic uncertainty. The future impacts of the pandemic on the Company's business are currently not estimable or determinable. As new variants of the virus emerge, infection rates vary across the countries in which we operate, and governmental authorities have continued to implement numerous and evolving measures to try to contain the spread of the virus, including travel bans and restrictions, masking recommendations and mandates, vaccine recommendations and mandates, limits on gatherings, quarantines, shelter-in-place orders and business shutdowns. We have taken proactive measures to protect the health and safety of our employees, customers, partners and suppliers, consistent with governmental guidelines.
The Company modified employee travel and work locations, and cancelled certain
events, among other actions taken in response to the COVID-19 pandemic. During
2020, the Company implemented a salary exchange program pursuant to which
certain employees took a temporary reduction in salary through
On
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For the three months ended
The following table sets forth statements of operations data for each of the
periods indicated:
For the Three Months Ended June 30,
(in millions) 2022 2021
Revenues $ 75.2 $ 81.7
Cost of revenues 39.6 40.9
Gross profit 35.6 40.8
Operating expenses 34.2 36.6
Income from operations 1.3 4.2
Interest expense 12.9 12.5
Change in fair value of Private Warrants (0.5 ) 0.3
Loss before income taxes (11.0 ) (8.6 )
Income tax provision 0.2 0.3
Net loss (11.2 ) (8.9 )
Total other comprehensive (loss) income, net of tax (5.7 ) 0.7
Comprehensive loss (16.9 ) (8.2 )
Adjusted EBITDA
For the Three Months Ended June 30,
(in millions) 2022 2021
Net Loss $ (11.2 ) $ (8.9 )
Interest expense 12.9 12.5
Income tax provision 0.2 0.3
Depreciation and amortization expense 7.8 9.8
EBITDA (1) $ 9.7 $ 13.7
Acquisition, financing and transaction costs 1.6 1.2
Stock compensation and other 1.3 1.0
Change in fair value of Private Warrants (0.5 ) 0.3
Restructuring costs - 1.0
Systems establishment 0.3 0.5
Adjusted EBITDA (1) $ 12.4 $ 17.7
(1) EBITDA and adjusted EBITDA are non-GAAP measures. See "-Non-
Revenues
Revenues decreased by
Cost of Revenues
Cost of revenues decreased by
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Gross Profit
Gross profit decreased by
Operating Expenses
Operating expenses decreased by
Interest Expense
Interest expense increased by
Change in Fair Value of Private Warrants
During the first quarter of 2021, the Company determined that its Private
Warrants, which had historically been accounted for as a component of equity,
should be reclassified and recorded as a liability at fair value during each
reporting period. For the three months ended
Income Tax Provision
During the three months ended
Net Loss
Net loss for the three months ended
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For the six months ended
The following table sets forth statements of operations data for each of the
periods indicated:
For the Six Months Ended June 30,
(in millions) 2022 2021
Revenues $ 157.1 $ 157.1
Cost of revenues 82.9 78.3
Gross profit 74.2 78.8
Operating expenses 69.6 71.3
Income from operations 4.6 7.5
Interest expense 25.6 24.8
Change in fair value of Private Warrants (0.7 ) (1.7 )
Loss on debt extinguishment - 7.3
Other expense - (0.1 )
Loss before income taxes (20.3 ) (22.8 )
Income tax provision 0.5 0.9
Net loss (20.8 ) (23.7 )
Total other comprehensive loss, net of tax (7.8 ) (1.8 )
Comprehensive loss (28.6 ) (25.5 )
Adjusted EBITDA
For the Six Months Ended June 30,
(in millions) 2022 2021
Net Loss $ (20.8 ) $ (23.7 )
Interest expense 25.6 24.8
Income tax provision 0.5 0.9
Extinguishment of debt - 7.3
Depreciation and amortization expense 15.7 19.5
EBITDA (1) $ 21.0 $ 28.7
Acquisition, financing and transaction costs 2.9 2.0
Stock compensation and other 2.4 2.1
Change in fair value of Private Warrants (0.7 ) (1.7 )
Restructuring costs 0.1 1.0
Systems establishment 0.7 0.9
Adjusted EBITDA (1) $ 26.4 $ 33.1
(1) EBITDA and adjusted EBITDA are non-GAAP measures. See "-Non-
Revenues
Revenues remained flat at
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Cost of Revenues
Cost of revenues increased by
Gross Profit
Gross profit decreased by
Operating Expenses
Operating expenses decreased by
Interest Expense
Interest expense increased by
Loss on Debt Extinguishment
For the six months ended
Change in Fair Value of Private Warrants
During the first quarter of 2021, the Company determined that its Private
Warrants, which had historically been accounted for as a component of equity,
should be reclassified and recorded as a liability at fair value during each
reporting period. For the six months ended
Income Tax Provision
During the six months ended
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Net Loss
Net loss for the six months ended
Liquidity and Capital Resources
Our primary cash needs are and have been to meet debt service requirements and
to fund working capital and capital expenditures. We fund these requirements
from cash generated by our operations, as well as funds available under our
revolving credit facility discussed below. We may also seek to access the
capital markets opportunistically from time-to-time depending on, among other
things, financial market conditions. Although our eDiscovery solutions and
information archiving services are billed on a monthly basis in arrears with
amounts typically due within 30 to 45 days, the eDiscovery industry tends
towards longer collectability trends. As a result, we have typically collected
the majority of our eDiscovery accounts receivable within 90 to 120 days, which
is consistent within the industry. With respect to our data recovery services,
they are billed as the services are provided, with payments due within 30 days
of billing. We typically collect our data recovery services accounts receivables
within 30 to 45 days. Lastly, the majority of our data recovery software is
billed monthly in advance with amounts typically due within 30 to 45 days;
however, depending on the client contract, billing can occur annually, quarterly
or monthly. Long outstanding receivables are not uncommon due to the nature of
our Legal Technology services as litigation cases can continue for years, and in
certain instances, our collections are delayed until the customer has received
payment for their services in connection with a legal matter or the case has
been settled. These long-outstanding invoices are a function of the industry in
which we operate, rather than indicative of an inability to collect. We have
experienced no material seasonality trends as it relates to collection of our
accounts receivable. As of
2021 Credit Agreement
On
The 2021 Credit Agreement provides for (i) initial term loans in an aggregate
principal amount of
The Initial Term Loans and Delayed Draw Term Loans bear interest, at the Loan
Parties' option, at the rate of (x) with respect to Eurocurrency Rate Loans (as
defined in the 2021 Credit Agreement), the Adjusted Eurocurrency Rate (as
defined in the 2021 Credit Agreement) with a 1.0% floor, plus 6.50% per annum,
or (y) with respect to Base Rate Loans (as defined in the 2021 Credit
Agreement), the Base Rate (as defined in the 2021 Credit Agreement) plus 5.50%
per annum. The Revolving Credit Loans bear interest, at our option, at the rate
of (x) with respect to Eurocurrency Rate Loans, the Adjusted Eurocurrency Rate
plus 4.00% per annum, or (y) with respect to Base Rate Loans, the Base Rate plus
3.00% per annum. The Initial Term Loans and Delayed Draw Term Loans amortize at
a rate of 1.00% of the aggregate principal amount of Initial Term Loans and
Delayed Draw Term Loans outstanding, payable in consecutive quarterly
installments of
The Initial Term Loans, Delayed Draw Term Loans and Revolving Credit Loans are
each scheduled to mature on the earlier of
The obligations under the 2021 Credit Agreement are secured by substantially all
of the Loan Parties' assets. The 2021 Credit Agreement contains customary
affirmative and negative covenants as well as a financial maintenance covenant
that requires the Loan Parties to maintain a First Lien Net Leverage Ratio (as
defined in the 2021 Credit Agreement) of less than or equal to 7.00 to 1.00,
tested at the end of each fiscal quarter. The Company was in compliance with all
Credit Agreement covenants as of
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Revolving Credit Loans
The 2021 Credit Agreement also provides for the Revolving Credit Loans pursuant
to an unfunded revolver commitment for borrowing up to
2016 Credit Agreement and Revolving Credit Facility
On
Convertible Debentures
On
The Debentures mature on
At any time, upon notice as set forth in the Debentures, the Debentures are redeemable at the Company's option, in whole or in part, at a price equal to 100% of the principal amount of the Debentures redeemed, plus accrued and unpaid interest thereon.
The Debentures are convertible into shares of Common Stock at the option of the
Debenture holders at any time and from time to time at a price of
The Debentures contain covenants that limit the Company's ability to, among
other things: (i) incur additional debt; (ii) create liens on assets;
(iii) engage in certain transactions with affiliates; or (iv) designate the
Company's subsidiaries as unrestricted subsidiaries. The Debentures provide for
customary events of default, including non-payment, failure to comply with
covenants or other agreements in the Debentures and certain events of bankruptcy
or insolvency. If an event of default occurs and continues, the holders of at
least 25% in aggregate principal amount of the outstanding Debentures may
declare the entire principal amount of all the Debentures to be due and payable
immediately. As of
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Our net cash flows from operating, investing and financing activities for the
six months ended
Six Months Ended Six Months Ended
(in thousands) June 30, 2022 June 30, 2021
Net cash (used in) provided by:
Operating activities $ 1,877 $ (2,535 )
Investing activities $ (7,429 ) $ (7,343 )
Financing activities $ (2,639 ) $ 1,685
Effect of foreign exchange rates $ (740 ) $ (129 )
Net decrease in cash $ (8,931 ) $ (8,322 )
Cash Flows Used in Operating Activities
Net cash provided by operating activities was
Cash Flows Used in Investing Activities
Net cash used in investing activities was
Cash Flows Used in/Provided by Financing Activities
For the six months ended
Capital Resources and Material Cash Requirements
A summary of our capital resources and material cash requirements is presented
in Part II, Item 7 of our Annual Report . Other than as described above,
there were no material changes to our capital resources and material cash
requirements during the six months ended
Recent Accounting Pronouncements
There were no changes to our recent accounting pronouncements from those described in our Annual Report.
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in accordance with
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