Innodata Inc. (NASDAQ:INOD) Q1 2020 Earnings Conference Call May 14, 2020 11:00 AM ET Company Participants Amy Agress - Senior Vice President and General Counsel Jack Abuhoff - Chairman and CEO Robert O'Connor - CFO Conference Call Participants Tim Clarkson - Van Clemens Joe First - First Associates Operator Ladies and gentlemen, thank you for standing by. Good morning, and welcome to the Innodata First Quarter 2020 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the ...

Revenue Performance - Total revenues for the three months ended March 31, 2020, were $14.5 million, an increase of approximately $0.8 million or 6% compared to $13.7 million for the same period in 2019[143]. - Revenues from the Digital Data Solutions (DDS) segment were $10.4 million for Q1 2020, up from $10.2 million in Q1 2019, reflecting a 2% increase primarily due to volume from new customers[144]. - Revenues from the Synodex segment increased by approximately 30%, from $1.0 million in Q1 2019 to $1.3 million in Q1 2020, attributed to higher revenues from one existing client[146]. - The Agility segment saw revenues rise by approximately 12%, from $2.5 million in Q1 2019 to $2.8 million in Q1 2020, driven by increased subscriptions to the Agility intelligent data platform[147]. - One client in the DDS segment accounted for approximately 14% of total revenues in Q1 2020, down from 16% in Q1 2019, indicating a slight diversification in revenue sources[148]. - Non-U.S. clients represented 54% of total revenues in Q1 2020, compared to 52% in Q1 2019, highlighting the company's growing international presence[148]. Financial Position - The company has sufficient cash and cash equivalents to meet financial needs for the next 12 months, despite reduced demand for services due to COVID-19[136]. - Cash and cash equivalents stood at $10.7 million as of March 31, 2020, with $5.4 million held by foreign subsidiaries[166]. - Working capital decreased to approximately $8.1 million as of March 31, 2020, down from $8.8 million as of December 31, 2019[167]. - Cash provided by operating activities was $0.7 million for Q1 2020, a decrease from $2.1 million in Q1 2019[171]. - The company received loan proceeds of $579,700 under the Paycheck Protection Program on May 4, 2020[169]. Operating Costs - Direct operating costs increased to $9.8 million for the three months ended March 31, 2020, from $9.6 million in the same period of 2019, representing a 2% increase[150]. - Direct operating costs as a percentage of total revenues decreased to 68% for Q1 2020 from 70% in Q1 2019[150]. - Selling and administrative expenses rose to $4.7 million in Q1 2020, compared to $4.6 million in Q1 2019, an increase of approximately 2%[156]. Profitability - Net loss for the company was $0.4 million for the three months ended March 31, 2020, a slight improvement from a net loss of $0.5 million in the same period of 2019[162]. Operational Resilience - The company experienced a remote working capability of 93% as of April 20, 2020, ensuring continued operations during the pandemic[133]. - The company has not identified any impairment of long-lived assets as of March 31, 2020, despite the economic challenges posed by COVID-19[138]. - The company anticipates potential challenges in recovering cost increases due to high inflation in wage rates in the countries where it operates[139]. Efficiency Metrics - Days' sales outstanding (DSO) improved to 60 days for Q1 2020, down from 66 days for the year ended December 31, 2019[173]. Capital Expenditures - Anticipated capital expenditures for ongoing technology upgrades are expected to be between $2.0 million and $2.3 million over the next 12 months[175].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) x Annual report under section 13 or 15(d) of the securities exchange act of 1934 For the fiscal year ended December 31, 2019 ¨ Transition report under section 13 or 15(d) of the securities exchange act of 1934 Commission file number 001-35774 INNODATA INC. (Exact name of registrant as specified in its charter) incorporation or organization) Delaware 13-3475943 (State or other jurisdiction of (I.R.S. Employer Identif ...

Innodata, Inc. (NASDAQ:INOD) Q4 2019 Earnings Conference Call March 12, 2020 11:00 AM ET Company Participants Amy Agress – Senior Vice President and General Counsel Jack Abuhoff – Chairman and Chief Executive Officer Robert O'Connor – Chief Financial Officer Conference Call Participants Tim Clarkson – Van Clemens Operator Good morning, and welcome to the Innodata Fourth Quarter and the Year Ended December 31, 2019 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the co ...

Innodata Inc. (NASDAQ:INOD) Q3 2019 Earnings Conference Call November 7, 2019 11:00 AM ET Company Participants Amy Agress - Senior Vice President & General Counsel Jack Abuhoff - Chairman & Chief Executive Officer Robert O’Connor - Chief Financial Officer Conference Call Participants Tim Clarkson - Van Clemens Operator Good morning, and welcome to the Innodata Third Quarter 2019 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Amy Agress. Please ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number: 001-35774 INNODATA INC. (Exact name of registrant as specified in its charter) Delaware 13-3475943 (Stat ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number: 001-35774 INNODATA INC. (Exact name of registrant as specified in its charter) None (Former name, former addr ...

Part I – Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2019 financials show revenues at $13.7 million, a $0.5 million net loss, and total assets at $52.7 million, influenced by new lease accounting standards Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $12,161 | $10,869 | | Total current assets | $25,728 | $27,273 | | Right of use asset | $7,784 | - | | Total assets | $52,680 | $46,051 | | Total current liabilities | $14,600 | $14,292 | | Total liabilities | $22,209 | $22,051 | | Total stockholders' equity | $30,471 | $30,566 | Condensed Consolidated Statement of Operations (in thousands, except per share amounts) | Account | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Revenues | $13,694 | $14,120 | | Direct operating costs | $9,560 | $9,894 | | Selling and administrative expenses | $4,602 | $3,916 | | Net loss | $(451) | $(276) | | Loss per share (Basic and diluted) | $(0.02) | $(0.01) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Account | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,101 | $1,652 | | Net cash used in investing activities | $(485) | $(625) | | Net cash used in financing activities | $(387) | $(301) | | Net increase in cash and cash equivalents | $1,292 | $772 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business segments, new lease accounting standard adoption, a $7.8 million right-of-use asset, ongoing tax inquiry, and significant client concentration - The company operates in three segments: **Digital Data Solutions (DDS)** as its core business, and two venture businesses, **Synodex** (medical data transformation) and **Agility PR Solutions** (SaaS platform for PR)[24](index=24&type=chunk)[25](index=25&type=chunk) - Effective January 1, 2019, the company adopted the new lease accounting standard (**ASU 2016-02**), recognizing a right-of-use asset and a corresponding lease liability on the balance sheet[58](index=58&type=chunk)[94](index=94&type=chunk) - The company is contesting a tax inquiry in India regarding service classification for periods between July 2012 and November 2016, which could subject approximately **$67.0 million** in revenue to service tax if unsuccessful[77](index=77&type=chunk) - A 2008 judgment in the Philippines against a former subsidiary, purportedly also against Innodata Inc., amounts to approximately **$6.2 million** plus interest The company has obtained a preliminary injunction in the U.S. against enforcement of this judgment[80](index=80&type=chunk) - There is significant client concentration, with two clients in the DDS segment accounting for **26%** of total revenues for the three months ended March 31, 2019[115](index=115&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 3% revenue decrease to $13.7 million, an 18% rise in selling and administrative expenses, and an increased net loss of $0.5 million, while maintaining adequate liquidity [Business Overview](index=28&type=section&id=Business%20Overview) Innodata is a global services and technology company structured into a core DDS segment and venture businesses Synodex and Agility, leveraging a three-tiered AI infrastructure - The company's core business is the **Digital Data Solutions (DDS)** segment, which combines deep neural networks and human expertise to make unstructured information usable for digital products and AI[130](index=130&type=chunk)[132](index=132&type=chunk) - Venture businesses include **Synodex** (SaaS platform for medical data) and **Agility PR Solutions** (SaaS platform for PR professionals), which leverage core capabilities to target specific industry solutions[131](index=131&type=chunk)[155](index=155&type=chunk) - The company's technology infrastructure is built on a **three-tiered system**: an orchestration layer to configure workflows, a microservices layer of deep learning networks for automated tasks, and a human-expert layer for review and continuous machine learning improvement[147](index=147&type=chunk)[148](index=148&type=chunk)[151](index=151&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q1 2019 total revenues decreased 3% to $13.7 million, direct operating costs remained stable, but selling and administrative expenses rose 18%, leading to a wider $0.5 million net loss Revenues by Segment (in thousands) | Segment | Q1 2019 | Q1 2018 | Change (%) | | :--- | :--- | :--- | :--- | | DDS | $10,177 | $10,477 | -3% | | Synodex | $1,024 | $981 | +4% | | Agility | $2,493 | $2,662 | -6% | | **Total** | **$13,694** | **$14,120** | **-3%** | - Direct operating costs decreased by **$0.3 million** (**3%**) to **$9.6 million**, remaining stable at **70%** of total revenues for both Q1 2019 and Q1 2018[188](index=188&type=chunk) - Selling and administrative expenses increased by **$0.7 million** (**18%**) to **$4.6 million**, primarily driven by a **$0.6 million** increase in the DDS segment due to higher professional fees, incentives, and new hires[193](index=193&type=chunk)[194](index=194&type=chunk) Adjusted EBITDA by Segment (in thousands) | Segment | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | DDS | $565 | $1,231 | | Synodex | $162 | $7 | | Agility | $(257) | $96 | | **Consolidated** | **$470** | **$1,334** | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2019, the company held $12.2 million in cash, with $2.1 million from operating activities, maintaining sufficient liquidity for the next 12 months Liquidity Measures (in thousands) | Measure | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $12,161 | $10,869 | | Working capital | $11,128 | $12,981 | - Of the **$12.2 million** in cash, **$5.7 million** was held by foreign subsidiaries and **$6.5 million** was held in the United States[206](index=206&type=chunk) - Net cash provided by operating activities was **$2.1 million** for the quarter, mainly due to a **$2.5 million** decrease in accounts receivable from improved collection efforts[210](index=210&type=chunk) - The company anticipates capital expenditures of approximately **$1.0 million** to **$2.0 million** over the next 12 months for technology and infrastructure upgrades[213](index=213&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - Disclosure is not applicable for smaller reporting companies[224](index=224&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2019, with no material changes in internal control over financial reporting - Based on an evaluation as of March 31, 2019, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective**[227](index=227&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[228](index=228&type=chunk) Part II – Other Information [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the 'Legal Proceedings' disclosure in the company's 2018 Annual Report on Form 10-K for detailed information - For details on legal proceedings, the report refers to the disclosure in the Annual Report on Form 10-K for the year ended December 31, 2018[230](index=230&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported compared to those disclosed in the company's 2018 Annual Report on Form 10-K - No material changes to risk factors were reported compared to those disclosed in the 2018 Form 10-K[231](index=231&type=chunk) [Other Items (Items 2, 3, 4, 5)](index=45&type=section&id=Other%20Items%20(Items%202,%203,%204,%205)) The company reported no unregistered sales of equity securities, no defaults, no mine safety disclosures, and no other information under Item 5 - The company reported **'None'** for the following items: Unregistered Sales of Equity Securities and Use of Proceeds, Defaults Upon Senior Securities, Mine Safety Disclosures, and Other Information[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) The report lists various exhibits filed with the Form 10-Q, including a Rights Agreement, an Offer of Employment, and CEO/CFO certifications - **Key exhibits** filed include a Rights Agreement (4.1), an Offer of Employment for Robert O'Connor (10.1), and CEO/CFO certifications (31.1, 31.2, 32.1, 32.2)[237](index=237&type=chunk)

Part I [Business](index=4&type=section&id=Item%201.%20Business) Innodata Inc. is a global services and technology company leveraging human expertise and AI across three segments with concentrated client revenue [Business Overview](index=4&type=section&id=Business%20Overview) Innodata provides global services and technology, combining human expertise with AI and machine learning across three core segments - The company's core services include data acquisition and transformation, digital operations management, and content applications, which are reported under the Digital Data Solutions (DDS) segment[18](index=18&type=chunk) - Innodata operates two venture businesses as separate segments: Synodex, which offers a SaaS platform for transforming medical data, and Agility PR Solutions, which provides a SaaS platform for media intelligence and monitoring[19](index=19&type=chunk) [Digital Data Solutions (DDS) Segment](index=5&type=section&id=Digital%20Data%20Solutions%20(DDS)%20Segment) The DDS segment, Innodata's core, transforms unstructured information into usable digital data for AI and products using deep learning and human expertise - The DDS segment's primary function is to process unstructured content into usable digital data for business information companies and enterprise AI applications, serving clients in financial services, technology, and digital retail[21](index=21&type=chunk)[25](index=25&type=chunk) - The company employs a hybrid technology-and-human approach, using deep learning machines to automate tasks and routing low-confidence results to domain experts for review, creating a continuous learning loop[23](index=23&type=chunk)[24](index=24&type=chunk)[39](index=39&type=chunk) - Services offered include data acquisition from sources like websites, digital data transformation into structured formats (e.g., XML), and semantic enrichment such as entity tagging and text categorization[26](index=26&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) [Venture Businesses](index=8&type=section&id=Venture%20Businesses) Innodata's venture businesses, Synodex and Agility, offer industry-specific SaaS solutions for medical data and media intelligence - The Synodex segment focuses on extracting and classifying data from unstructured medical records for insurance underwriting and claims, serving **11** clients as of year-end 2018[45](index=45&type=chunk)[46](index=46&type=chunk)[48](index=48&type=chunk) - The Agility PR Solutions segment provides a SaaS platform for media and influencer targeting, content distribution, and media monitoring, competing in a **$3.2 billion** market[50](index=50&type=chunk) [Clients](index=10&type=section&id=Clients) The company has significant client concentration in its DDS segment, with two major clients contributing **30%** of total revenues under short-notice contracts Major Client Revenue Contribution (2018) | Client Group | Revenue (Approx.) | % of Total Revenue | | :--- | :--- | :--- | | Wolters Kluwer (WK Clients) | $10.6 million | 19% | | Reed Elsevier (RE Clients) | $6.4 million | 11% | | **Total** | **$17.0 million** | **30%** | - Contracts with major clients consist of Master Services Agreements (MSAs) and specific Statements of Work (SOWs), which can be terminated by the clients on notice periods ranging from zero to six months[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) [Competition](index=12&type=section&id=Competition) Innodata faces intense competition across its DDS, Synodex, and Agility segments from various data service and media intelligence firms - **DDS Segment:** Competes with data service firms (Apex CoVantage, Aptara) and operations management companies (Cognizant, Infosys)[78](index=78&type=chunk) - **Synodex Segment:** Competes with firms like Risk Righter and EMSI, as well as in-house client operations[80](index=80&type=chunk) - **Agility Segment:** Competes with established media intelligence providers like Meltwater, Cision, and Kantar[82](index=82&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from client concentration, lack of credit, potential delisting, international operations, and a **$6.2 million** Philippines litigation - The company has historically relied on a very limited number of clients, with two clients in the DDS segment accounting for approximately **30%** of total revenues in both 2018 and 2017[86](index=86&type=chunk) - The company has no bank facilities or lines of credit, relying on existing cash and internally generated funds for liquidity, which could be adversely affected by operating losses or other expenditures[88](index=88&type=chunk) - The company's Indian subsidiary is involved in a service tax dispute where authorities claim services should be classified as OID Services, potentially subjecting approximately **$67.0 million** of revenue from July 2012 to November 2016 to a service tax of **12.36%** to **15%**[131](index=131&type=chunk) - A judgment was rendered in the Philippines against a subsidiary and purportedly Innodata Inc. for approximately **$6.2 million** plus accruing interest, related to former employees. The company is contesting the enforcement of this judgment in the U.S[146](index=146&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[155](index=155&type=chunk) [Properties](index=25&type=section&id=Item%202.%20Properties) The company's services are performed from its headquarters in Ridgefield, New Jersey, and ten overseas delivery centers, all of which are leased. The total leased space is approximately **246,000 square feet** - All of the company's properties, including its New Jersey headquarters and ten global delivery centers, are leased, totaling approximately **246,000 square feet**[156](index=156&type=chunk) [Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in a significant legal proceeding originating from a 2008 judgment in the Philippines against a former subsidiary, purportedly also against Innodata Inc., in favor of former employees. The judgment amounts to approximately **$6.2 million** plus significant accruing interest. Innodata has obtained a preliminary injunction in a U.S. court to prevent enforcement of the judgment in the United States while the matter is pending - A 2008 judgment in the Philippines against a former subsidiary and purportedly Innodata Inc. totals approximately **$6.2 million** plus interest, which accrued at **12% per annum** until June 2013 and **6% thereafter**[158](index=158&type=chunk) - In January 2018, a U.S. District Court granted Innodata a preliminary injunction, preventing the former employees from seeking enforcement of the judgment in the United States[158](index=158&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports no mine safety disclosures - None[161](index=161&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Innodata Inc.'s common stock is traded on The Nasdaq Stock Market under the symbol "INOD". As of February 22, 2019, there were **69** stockholders of record, with an estimated **2,848** beneficial holders. The company has a **$2.0 million** stock repurchase program authorized in September 2011, but no shares were repurchased during 2018 - The company's common stock is listed on The Nasdaq Stock Market under the symbol "INOD"[164](index=164&type=chunk) - A **$2.0 million** stock repurchase program was authorized in 2011 with no expiration date. No shares were repurchased in 2018[165](index=165&type=chunk)[166](index=166&type=chunk) [Selected Financial Data](index=26&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable as the company is a smaller reporting company - Not applicable[168](index=168&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2018, revenues decreased **6%** to **$57.4 million**, but profitability improved to **$4,000** net income from a **$5.1 million** loss, driven by cost reductions [Results of Operations](index=31&type=section&id=Results%20of%20Operations) In 2018, total revenues decreased **6%** to **$57.4 million** due to a **9%** DDS segment decline, but cost reductions led to positive operating income and near breakeven net income Consolidated Financial Performance (2018 vs. 2017) | Metric | 2018 | 2017 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **$57.4M** | **$60.9M** | **($3.5M)** | **-6%** | | DDS Segment | $43.5M | $47.8M | ($4.3M) | -9% | | Synodex Segment | $4.1M | $3.7M | $0.4M | +11% | | Agility Segment | $9.8M | $9.4M | $0.4M | +4% | | **Direct Operating Costs** | **$39.0M** | **$45.8M** | **($6.8M)** | **-15%** | | **S&A Expenses** | **$15.8M** | **$20.2M** | **($4.4M)** | **-22%** | | **Net Income (Loss)** | **$4K** | **($5.1M)** | **$5.1M** | **N/A** | - The improvement in profitability was primarily driven by cost rationalization implemented in late 2017, leading to lower labor costs[204](index=204&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) [Goodwill Impairment](index=33&type=section&id=Goodwill%20Impairment) In 2018, the company recorded a full goodwill impairment charge of **$675,000** related to its DDS segment, triggered by a stock price decline - A full goodwill impairment of **$675,000** was recorded for the DDS segment during the year ended December 31, 2018[212](index=212&type=chunk) - The impairment was triggered by a decline in the company's stock price, leading to an assessment where the fair value of the DDS segment was determined to be below its carrying value[213](index=213&type=chunk)[214](index=214&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2018, the company had **$10.9 million** cash and **$13.0 million** working capital, with **$3.6 million** cash from operations, relying on existing funds without bank facilities Liquidity and Capital Resources (in thousands) | Metric | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | Cash and cash equivalents | $10,869 | $11,407 | | Working capital | $12,981 | $9,729 | - The company generated **$3.6 million** in cash from operating activities in 2018, compared to **$0.7 million** in 2017[236](index=236&type=chunk)[237](index=237&type=chunk) - The company has no bank facilities or lines of credit[235](index=235&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies involve significant estimates and judgments, including revenue recognition, goodwill impairment, and income taxes with a valuation allowance - The company adopted ASC 606 for revenue recognition on January 1, 2018, using the modified retrospective method, which did not result in a material impact on financial statements[254](index=254&type=chunk) - A valuation allowance is maintained against all U.S. and Canadian deferred tax assets due to uncertainty regarding their realization[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk) - Goodwill is evaluated for impairment annually or when triggering events occur. In 2018, the company adopted ASU 2017-04, simplifying the impairment test, which led to the full impairment of the DDS segment's goodwill[269](index=269&type=chunk)[270](index=270&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[282](index=282&type=chunk) [Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the full consolidated financial statements and supplementary data, which begin on page F-1 of the report - The full financial statements and supplementary data are located starting on page F-1 of the filing[283](index=283&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=43&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[284](index=284&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures, and internal control over financial reporting, were effective as of December 31, 2018 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2018[286](index=286&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2018, based on the COSO framework (2013)[289](index=289&type=chunk) [Other Information](index=44&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[291](index=291&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=45&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2019 proxy statement - Required information is incorporated by reference from the 2019 Annual Meeting proxy statement[294](index=294&type=chunk) [Executive Compensation](index=45&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2019 proxy statement - Required information is incorporated by reference from the 2019 Annual Meeting proxy statement[296](index=296&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=45&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's 2019 proxy statement, including details on outstanding options and shares available for future issuance Equity Compensation Plan Information (as of Dec 31, 2018) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 4,982,040 | $2.14 | 5,351,733 | [Certain Relationships and Related Transactions, and Director Independence](index=46&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's 2019 proxy statement - Required information is incorporated by reference from the 2019 Annual Meeting proxy statement[300](index=300&type=chunk) [Principal Accounting Fees and Services](index=46&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's 2019 proxy statement - Required information is incorporated by reference from the 2019 Annual Meeting proxy statement[301](index=301&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=47&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section provides references to the financial statements under Item 8 and the Exhibit Index - This section contains the index to financial statements and exhibits[305](index=305&type=chunk) [Form 10-K Summary](index=47&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary - None[304](index=304&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=50&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) CohnReznick LLP issued an unqualified opinion on Innodata Inc.'s consolidated financial statements for the years ended December 31, 2018 and 2017 - CohnReznick LLP expressed an unqualified opinion on the company's consolidated financial statements for the years ended December 31, 2018 and 2017[314](index=314&type=chunk) [Consolidated Financial Statements](index=51&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements for 2018 and 2017 present the company's financial position, operations, equity, and cash flows, showing **$46.1 million** assets and **$4,000** net income in 2018 Key Balance Sheet Data (in thousands) | Account | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | Total Assets | $46,051 | $47,871 | | Total Current Liabilities | $14,292 | $15,599 | | Total Stockholders' Equity | $30,566 | $31,119 | Key Income Statement Data (in thousands) | Account | 2018 | 2017 | | :--- | :--- | :--- | | Revenues | $57,418 | $60,929 | | Income (loss) from operations | $1,819 | ($5,074) | | Net income (loss) attributable to Innodata | $4 | ($5,055) | [Notes to Consolidated Financial Statements](index=55&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosure on the company's accounting policies and financial results, including segment descriptions, revenue recognition, goodwill impairment, tax assessments, pension obligations, and litigation - Effective in Q1 2018, the results for the docGenix subsidiary are reported within the DDS segment, having previously been in the Synodex (formerly IADS) segment[334](index=334&type=chunk) - A cumulative, immaterial error in accounting for pension expense from 2008-2013 was identified, resulting in an understatement of pension liabilities by **$269,000**. The correction was recorded in the 2018 financial statements[384](index=384&type=chunk)[385](index=385&type=chunk) - On February 1, 2019, the Board of Directors adopted a stockholder rights plan (a "poison pill") that becomes exercisable if a person or group acquires **20% or more** of the company's common stock[441](index=441&type=chunk)