lqdt-20210331
0001235468false9/302021Q21us-gaap:AccountingStandardsUpdate201602Member00012354682020-10-012021-03-31xbrli:shares00012354682021-05-03iso4217:USD00012354682021-03-3100012354682020-09-30iso4217:USDxbrli:shares0001235468us-gaap:ProductMember2021-01-012021-03-310001235468us-gaap:ProductMember2020-01-012020-03-310001235468us-gaap:ProductMember2020-10-012021-03-310001235468us-gaap:ProductMember2019-10-012020-03-310001235468lqdt:ServiceFeeMember2021-01-012021-03-310001235468lqdt:ServiceFeeMember2020-01-012020-03-310001235468lqdt:ServiceFeeMember2020-10-012021-03-310001235468lqdt:ServiceFeeMember2019-10-012020-03-3100012354682021-01-012021-03-3100012354682020-01-012020-03-3100012354682019-10-012020-03-310001235468us-gaap:CommonStockMember2020-09-300001235468us-gaap:AdditionalPaidInCapitalMember2020-09-300001235468us-gaap:TreasuryStockMember2020-09-300001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001235468us-gaap:RetainedEarningsMember2020-09-300001235468us-gaap:RetainedEarningsMember2020-10-012020-12-3100012354682020-10-012020-12-310001235468us-gaap:CommonStockMember2020-10-012020-12-310001235468us-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-310001235468us-gaap:TreasuryStockMember2020-10-012020-12-310001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310001235468us-gaap:CommonStockMember2020-12-310001235468us-gaap:AdditionalPaidInCapitalMember2020-12-310001235468us-gaap:TreasuryStockMember2020-12-310001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001235468us-gaap:RetainedEarningsMember2020-12-3100012354682020-12-310001235468us-gaap:RetainedEarningsMember2021-01-012021-03-310001235468us-gaap:CommonStockMember2021-01-012021-03-310001235468us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001235468us-gaap:TreasuryStockMember2021-01-012021-03-310001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001235468us-gaap:CommonStockMember2021-03-310001235468us-gaap:AdditionalPaidInCapitalMember2021-03-310001235468us-gaap:TreasuryStockMember2021-03-310001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001235468us-gaap:RetainedEarningsMember2021-03-3100012354682019-09-3000012354682020-03-31lqdt:categorylqdt:segment0001235468lqdt:MachinioCorporationMember2021-04-012021-03-310001235468us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2021-03-310001235468us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2020-09-300001235468lqdt:TanagerAcquisitionsPromissoryNoteMember2015-09-300001235468lqdt:TanagerAcquisitionsPromissoryNoteMember2015-09-302015-09-300001235468lqdt:TanagerAcquisitionsPromissoryNoteMember2019-10-102019-10-100001235468lqdt:TanagerAcquisitionsPromissoryNoteMember2015-09-302021-03-310001235468lqdt:TanagerAcquisitionsPromissoryNoteMember2021-03-310001235468us-gaap:OtherAssetsMemberlqdt:TanagerAcquisitionsPromissoryNoteMember2021-03-310001235468lqdt:TanagerAcquisitionsPromissoryNoteMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2021-03-31xbrli:pure0001235468lqdt:ContractWithCommercialClientMemberus-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMember2021-01-012021-03-310001235468lqdt:ContractWithCommercialClientMemberus-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMember2020-01-012020-03-310001235468lqdt:ContractWithCommercialClientMemberus-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMember2020-10-012021-03-310001235468lqdt:ContractWithCommercialClientMemberus-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMember2019-10-012020-03-3100012354682021-04-012021-03-310001235468srt:MaximumMember2021-03-310001235468us-gaap:AccountingStandardsUpdate201602Member2019-10-010001235468lqdt:CAGMember2019-09-300001235468lqdt:GovDealsMember2019-09-300001235468lqdt:MachinioCorporationMember2019-09-300001235468lqdt:CAGMember2019-10-012020-09-300001235468lqdt:GovDealsMember2019-10-012020-09-300001235468lqdt:MachinioCorporationMember2019-10-012020-09-3000012354682019-10-012020-09-300001235468lqdt:CAGMember2020-09-300001235468lqdt:GovDealsMember2020-09-300001235468lqdt:MachinioCorporationMember2020-09-300001235468lqdt:CAGMember2020-10-012021-03-310001235468lqdt:GovDealsMember2020-10-012021-03-310001235468lqdt:MachinioCorporationMember2020-10-012021-03-310001235468lqdt:CAGMember2021-03-310001235468lqdt:GovDealsMember2021-03-310001235468lqdt:MachinioCorporationMember2021-03-310001235468us-gaap:ContractualRightsMember2020-10-012021-03-310001235468us-gaap:ContractualRightsMember2021-03-310001235468us-gaap:ContractualRightsMember2020-09-300001235468lqdt:BrandAssetsAndDevelopedTechnologyRightsMember2020-10-012021-03-310001235468lqdt:BrandAssetsAndDevelopedTechnologyRightsMember2021-03-310001235468lqdt:BrandAssetsAndDevelopedTechnologyRightsMember2020-09-300001235468srt:MinimumMemberlqdt:PatentsAndTrademarksMember2020-10-012021-03-310001235468srt:MaximumMemberlqdt:PatentsAndTrademarksMember2020-10-012021-03-310001235468lqdt:PatentsAndTrademarksMember2021-03-310001235468lqdt:PatentsAndTrademarksMember2020-09-300001235468us-gaap:CommonStockMember2019-09-300001235468us-gaap:AdditionalPaidInCapitalMember2019-09-300001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001235468us-gaap:RetainedEarningsMember2019-09-300001235468us-gaap:RetainedEarningsMember2019-10-012019-12-3100012354682019-10-012019-12-310001235468us-gaap:CommonStockMember2019-10-012019-12-310001235468us-gaap:AdditionalPaidInCapitalMember2019-10-012019-12-310001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-10-012019-12-310001235468us-gaap:CommonStockMember2019-12-310001235468us-gaap:AdditionalPaidInCapitalMember2019-12-310001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001235468us-gaap:RetainedEarningsMember2019-12-3100012354682019-12-310001235468us-gaap:RetainedEarningsMember2020-01-012020-03-310001235468us-gaap:CommonStockMember2020-01-012020-03-310001235468us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001235468us-gaap:CommonStockMember2020-03-310001235468us-gaap:AdditionalPaidInCapitalMember2020-03-310001235468us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001235468us-gaap:RetainedEarningsMember2020-03-310001235468us-gaap:StockCompensationPlanMember2021-01-012021-03-310001235468us-gaap:StockCompensationPlanMember2020-01-012020-03-310001235468us-gaap:StockCompensationPlanMember2020-10-012021-03-310001235468us-gaap:StockCompensationPlanMember2019-10-012020-03-310001235468lqdt:RSUsAndRSAsMember2021-01-012021-03-310001235468lqdt:RSUsAndRSAsMember2020-01-012020-03-310001235468lqdt:RSUsAndRSAsMember2020-10-012021-03-310001235468lqdt:RSUsAndRSAsMember2019-10-012020-03-310001235468us-gaap:StockAppreciationRightsSARSMember2021-01-012021-03-310001235468us-gaap:StockAppreciationRightsSARSMember2020-01-012020-03-310001235468us-gaap:StockAppreciationRightsSARSMember2020-10-012021-03-310001235468us-gaap:StockAppreciationRightsSARSMember2019-10-012020-03-310001235468lqdt:EmployeeStockOptionServiceBasedMember2020-10-012021-03-310001235468lqdt:EmployeeStockOptionMarketBasedMember2020-10-012021-03-310001235468lqdt:RestrictedStockServiceBasedMember2020-10-012021-03-310001235468lqdt:RestrictedStockMarketBasedMember2020-10-012021-03-310001235468us-gaap:EmployeeStockOptionMember2020-10-012021-03-310001235468srt:MinimumMemberus-gaap:EmployeeStockOptionMember2020-10-012021-03-310001235468us-gaap:EmployeeStockOptionMembersrt:MaximumMember2020-10-012021-03-310001235468lqdt:StockOptionsRestrictedStockUnitsAndStockAppreciationRightsMarketBasedMember2020-10-012021-03-310001235468lqdt:StockOptionsRestrictedStockUnitsAndStockAppreciationRightsMarketBasedMembersrt:MinimumMember2020-10-012021-03-310001235468lqdt:StockOptionsRestrictedStockUnitsAndStockAppreciationRightsMarketBasedMembersrt:MaximumMember2020-10-012021-03-310001235468us-gaap:StockAppreciationRightsSARSMember2021-03-310001235468us-gaap:TreasuryStockMember2021-03-080001235468us-gaap:TreasuryStockMember2021-01-012021-03-310001235468us-gaap:TreasuryStockMember2020-10-012021-03-310001235468us-gaap:SubsequentEventMemberus-gaap:TreasuryStockMember2021-05-030001235468us-gaap:TreasuryStockMember2020-10-012021-03-310001235468us-gaap:FairValueMeasurementsNonrecurringMember2021-03-310001235468us-gaap:FairValueMeasurementsNonrecurringMember2020-09-30iso4217:GBP00012354682019-10-012020-06-300001235468us-gaap:EmployeeSeveranceMemberlqdt:GovDealsMember2019-09-300001235468us-gaap:EmployeeSeveranceMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberlqdt:GovDealsMember2019-10-012020-09-300001235468us-gaap:EmployeeSeveranceMemberlqdt:GovDealsMember2019-10-012020-09-300001235468us-gaap:EmployeeSeveranceMemberlqdt:GovDealsMember2020-09-300001235468us-gaap:EmployeeSeveranceMemberlqdt:GovDealsMember2020-10-012021-03-310001235468us-gaap:EmployeeSeveranceMemberlqdt:GovDealsMember2021-03-310001235468lqdt:RSCGMemberus-gaap:EmployeeSeveranceMember2019-09-300001235468lqdt:RSCGMemberus-gaap:EmployeeSeveranceMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-10-012020-09-300001235468lqdt:RSCGMemberus-gaap:EmployeeSeveranceMember2019-10-012020-09-300001235468lqdt:RSCGMemberus-gaap:EmployeeSeveranceMember2020-09-300001235468lqdt:RSCGMemberus-gaap:EmployeeSeveranceMember2020-10-012021-03-310001235468lqdt:RSCGMemberus-gaap:EmployeeSeveranceMember2021-03-310001235468lqdt:CAGMemberus-gaap:EmployeeSeveranceMember2019-09-300001235468lqdt:CAGMemberus-gaap:EmployeeSeveranceMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-10-012020-09-300001235468lqdt:CAGMemberus-gaap:EmployeeSeveranceMember2019-10-012020-09-300001235468lqdt:CAGMemberus-gaap:EmployeeSeveranceMember2020-09-300001235468lqdt:CAGMemberus-gaap:EmployeeSeveranceMember2020-10-012021-03-310001235468lqdt:CAGMemberus-gaap:EmployeeSeveranceMember2021-03-310001235468us-gaap:CorporateNonSegmentMemberus-gaap:EmployeeSeveranceMember2019-09-300001235468us-gaap:CorporateNonSegmentMemberus-gaap:EmployeeSeveranceMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-10-012020-09-300001235468us-gaap:CorporateNonSegmentMemberus-gaap:EmployeeSeveranceMember2019-10-012020-09-300001235468us-gaap:CorporateNonSegmentMemberus-gaap:EmployeeSeveranceMember2020-09-300001235468us-gaap:CorporateNonSegmentMemberus-gaap:EmployeeSeveranceMember2020-10-012021-03-310001235468us-gaap:CorporateNonSegmentMemberus-gaap:EmployeeSeveranceMember2021-03-310001235468us-gaap:EmployeeSeveranceMember2019-09-300001235468us-gaap:EmployeeSeveranceMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-10-012020-09-300001235468us-gaap:EmployeeSeveranceMember2019-10-012020-09-300001235468us-gaap:EmployeeSeveranceMember2020-09-300001235468us-gaap:EmployeeSeveranceMember2020-10-012021-03-310001235468us-gaap:EmployeeSeveranceMember2021-03-310001235468lqdt:CAGMemberlqdt:OccupancyAndOtherCostsMember2019-09-300001235468lqdt:CAGMemberlqdt:OccupancyAndOtherCostsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-10-012020-09-300001235468lqdt:CAGMemberlqdt:OccupancyAndOtherCostsMember2019-10-012020-09-300001235468lqdt:CAGMemberlqdt:OccupancyAndOtherCostsMember2020-09-300001235468lqdt:CAGMemberlqdt:OccupancyAndOtherCostsMember2020-10-012021-03-310001235468lqdt:CAGMemberlqdt:OccupancyAndOtherCostsMember2021-03-310001235468lqdt:OccupancyAndOtherCostsMemberus-gaap:CorporateNonSegmentMember2019-09-300001235468lqdt:OccupancyAndOtherCostsMemberus-gaap:CorporateNonSegmentMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-10-012020-09-300001235468lqdt:OccupancyAndOtherCostsMemberus-gaap:CorporateNonSegmentMember2019-10-012020-09-300001235468lqdt:OccupancyAndOtherCostsMemberus-gaap:CorporateNonSegmentMember2020-09-300001235468lqdt:OccupancyAndOtherCostsMemberus-gaap:CorporateNonSegmentMember2020-10-012021-03-310001235468lqdt:OccupancyAndOtherCostsMemberus-gaap:CorporateNonSegmentMember2021-03-310001235468lqdt:OccupancyAndOtherCostsMember2019-09-300001235468lqdt:OccupancyAndOtherCostsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-10-012020-09-300001235468lqdt:OccupancyAndOtherCostsMember2019-10-012020-09-300001235468lqdt:OccupancyAndOtherCostsMember2020-09-300001235468lqdt:OccupancyAndOtherCostsMember2020-10-012021-03-310001235468lqdt:OccupancyAndOtherCostsMember2021-03-310001235468srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-10-012020-09-300001235468us-gaap:ProductMemberus-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2021-01-012021-03-310001235468us-gaap:ProductMemberus-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2020-01-012020-03-310001235468us-gaap:ProductMemberus-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2020-10-012021-03-310001235468us-gaap:ProductMemberus-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2019-10-012020-03-310001235468lqdt:ServiceFeeMemberus-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2021-01-012021-03-310001235468lqdt:ServiceFeeMemberus-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2020-01-012020-03-310001235468lqdt:ServiceFeeMemberus-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2020-10-012021-03-310001235468lqdt:ServiceFeeMemberus-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2019-10-012020-03-310001235468us-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2021-01-012021-03-310001235468us-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2020-01-012020-03-310001235468us-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2020-10-012021-03-310001235468us-gaap:OperatingSegmentsMemberlqdt:GovDealsMember2019-10-012020-03-310001235468us-gaap:ProductMemberlqdt:RSCGMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001235468us-gaap:ProductMemberlqdt:RSCGMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310001235468us-gaap:ProductMemberlqdt:RSCGMemberus-gaap:OperatingSegmentsMember2020-10-012021-03-310001235468us-gaap:ProductMemberlqdt:RSCGMemberus-gaap:OperatingSegmentsMember2019-10-012020-03-310001235468lqdt:ServiceFeeMemberlqdt:RSCGMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001235468lqdt:ServiceFeeMemberlqdt:RSCGMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310001235468lqdt:ServiceFeeMemberlqdt:RSCGMemberus-gaap:OperatingSegmentsMember2020-10-012021-03-310001235468lqdt:ServiceFeeMemberlqdt:RSCGMemberus-gaap:OperatingSegmentsMember2019-10-012020-03-310001235468lqdt:RSCGMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001235468lqdt:RSCGMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310001235468lqdt:RSCGMemberus-gaap:OperatingSegmentsMember2020-10-012021-03-310001235468lqdt:RSCGMemberus-gaap:OperatingSegmentsMember2019-10-012020-03-310001235468lqdt:CAGMemberus-gaap:ProductMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001235468lqdt:CAGMemberus-gaap:ProductMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310001235468lqdt:CAGMemberus-gaap:ProductMemberus-gaap:OperatingSegmentsMember2020-10-012021-03-310001235468lqdt:CAGMemberus-gaap:ProductMemberus-gaap:OperatingSegmentsMember2019-10-012020-03-310001235468lqdt:CAGMemberlqdt:ServiceFeeMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001235468lqdt:CAGMemberlqdt:ServiceFeeMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310001235468lqdt:CAGMemberlqdt:ServiceFeeMemberus-gaap:OperatingSegmentsMember2020-10-012021-03-310001235468lqdt:CAGMemberlqdt:ServiceFeeMemberus-gaap:OperatingSegmentsMember2019-10-012020-03-310001235468lqdt:CAGMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001235468lqdt:CAGMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310001235468lqdt:CAGMemberus-gaap:OperatingSegmentsMember2020-10-012021-03-310001235468lqdt:CAGMemberus-gaap:OperatingSegmentsMember2019-10-012020-03-310001235468us-gaap:ProductMemberlqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001235468us-gaap:ProductMemberlqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310001235468us-gaap:ProductMemberlqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2020-10-012021-03-310001235468us-gaap:ProductMemberlqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2019-10-012020-03-310001235468lqdt:ServiceFeeMemberlqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001235468lqdt:ServiceFeeMemberlqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310001235468lqdt:ServiceFeeMemberlqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2020-10-012021-03-310001235468lqdt:ServiceFeeMemberlqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2019-10-012020-03-310001235468lqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001235468lqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2020-01-012020-03-310001235468lqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2020-10-012021-03-310001235468lqdt:MachinioCorporationMemberus-gaap:OperatingSegmentsMember2019-10-012020-03-310001235468us-gaap:ProductMemberus-gaap:CorporateNonSegmentMember2021-01-012021-03-310001235468us-gaap:ProductMemberus-gaap:CorporateNonSegmentMember2020-01-012020-03-310001235468us-gaap:ProductMemberus-gaap:CorporateNonSegmentMember2020-10-012021-03-310001235468us-gaap:ProductMemberus-gaap:CorporateNonSegmentMember2019-10-012020-03-310001235468lqdt:ServiceFeeMemberus-gaap:CorporateNonSegmentMember2021-01-012021-03-310001235468lqdt:ServiceFeeMemberus-gaap:CorporateNonSegmentMember2020-01-012020-03-310001235468lqdt:ServiceFeeMemberus-gaap:CorporateNonSegmentMember2020-10-012021-03-310001235468lqdt:ServiceFeeMemberus-gaap:CorporateNonSegmentMember2019-10-012020-03-310001235468us-gaap:CorporateNonSegmentMember2021-01-012021-03-310001235468us-gaap:CorporateNonSegmentMember2020-01-012020-03-310001235468us-gaap:CorporateNonSegmentMember2020-10-012021-03-310001235468us-gaap:CorporateNonSegmentMember2019-10-012020-03-310001235468us-gaap:SalesRevenueNetMemberus-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMember2021-01-012021-03-310001235468us-gaap:SalesRevenueNetMemberus-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMember2020-01-012020-03-310001235468us-gaap:SalesRevenueNetMemberus-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMember2020-10-012021-03-310001235468us-gaap:SalesRevenueNetMemberus-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMember2019-10-012020-03-31


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

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 0-51813
https://cdn.kscope.io/8213c9829048939e4905dd832b2841ef-lqdt-20210331_g1.jpg
 
LIQUIDITY SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware 52-2209244
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
  
6931 Arlington Road, Suite 200, Bethesda, MD

 20814
(Address of Principal Executive Offices) (Zip Code)
 
(202) 467-6868
(Registrant’s Telephone Number, Including Area Code) 
 
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Securities registered to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.001 par valueLQDTNasdaq
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
 
Accelerated filer ☒
   
Non-accelerated filer ☐
 
Smaller reporting company 
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No ☒

The number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of May 3, 2021 was 35,126,267.




INDEX
 
  Page
PART I. FINANCIAL INFORMATION  
Item 1.
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION 
Item 1.
Item 1A.
Item 2.
Item 6.

2

Table of Contents
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.
Liquidity Services, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in Thousands, Except Par Value)
March 31, 2021September 30, 2020
 (Unaudited)
Assets  
Current assets:  
Cash and cash equivalents$87,613 $76,036 
Accounts receivable, net of allowance for doubtful accounts of $569 and $389
5,731 5,322 
Inventory, net13,124 5,607 
Prepaid taxes and tax refund receivable1,594 1,652 
Prepaid expenses and other current assets6,843 5,962 
Total current assets114,905 94,579 
Property and equipment, net of accumulated depreciation of $16,554 and $14,555
17,341 17,843 
Operating lease assets12,596 10,561 
Intangible assets, net4,110 4,758 
Goodwill59,986 59,839 
Deferred tax assets777 806 
Other assets7,868 8,248 
Total assets$217,583 $196,634 
Liabilities and stockholders’ equity  
Current liabilities:  
Accounts payable$36,904 $21,957 
Accrued expenses and other current liabilities21,727 19,124 
Current portion of operating lease liabilities4,058 3,818 
Deferred revenue4,172 3,255 
Payables to sellers31,552 26,170 
Total current liabilities98,413 74,324 
Operating lease liabilities9,421 7,499 
Other long-term liabilities2,811 2,996 
Total liabilities110,645 84,819 
Commitments and contingencies (Note 12)00
Stockholders’ equity:  
Common stock, $0.001 par value; 120,000,000 shares authorized; 35,115,307 shares issued and outstanding at March 31, 2021; 34,082,406 shares issued and outstanding at September 30, 2020
35 34 
Additional paid-in capital249,866 247,892 
Treasury stock, at cost; 1,587,199 shares at March 31, 2021 and 547,508 shares at September 30, 2020
(21,628)(3,983)
Accumulated other comprehensive loss(8,763)(9,782)
Accumulated deficit(112,572)(122,346)
Total stockholders’ equity106,938 111,815 
Total liabilities and stockholders’ equity$217,583 $196,634 
 
See accompanying notes to the unaudited consolidated financial statements.

3

Table of Contents
Liquidity Services, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in Thousands, Except Per Share Data)




 Three Months Ended March 31,Six Months Ended March 31,
 2021202020212020
(Unaudited)
Revenue$35,968 $35,203 $67,040 $65,552 
Fee revenue25,818 17,621 50,498 36,776 
Total revenue61,786 52,824 117,538 102,328 
Costs and expenses from operations:   
Cost of goods sold (excludes depreciation and amortization)26,385 26,619 48,958 50,795 
Technology and operations12,085 11,586 22,644 22,827 
Sales and marketing8,910 10,109 18,018 19,714 
General and administrative6,892 7,397 13,902 15,104 
Depreciation and amortization1,670 1,577 3,541 3,149 
Other operating expenses (income)206 (12)210 181 
Total costs and expenses56,148 57,276 107,273 111,770 
Income (loss) from operations5,638 (4,452)10,265 (9,442)
Interest and other income, net(29)(257)(214)(509)
Income (loss) before provision for income taxes5,667 (4,195)10,479 (8,933)
Provision for income taxes407 43 704 501 
Net income (loss)$5,260 $(4,238)$9,775 $(9,434)
Basic income (loss) per common share$0.16 $(0.13)$0.29 $(0.28)
Diluted income (loss) per common share$0.15 $(0.13)$0.28 $(0.28)
Basic weighted average shares outstanding33,491,395 33,624,889 33,332,417 33,584,844 
Diluted weighted average shares outstanding35,559,747 33,624,889 34,914,549 33,584,844 
 
See accompanying notes to the unaudited consolidated financial statements.

4

Table of Contents
Liquidity Services, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(Dollars in Thousands)




 Three Months Ended March 31,Six Months Ended March 31,
 2021202020212020
(Unaudited)
Net income (loss)$5,260 $(4,238)$9,775 $(9,434)
Other comprehensive income (loss):    
Foreign currency translation123 (1,303)1,019 (470)
Other comprehensive income (loss)123 (1,303)1,019 (470)
Comprehensive income (loss)$5,383 $(5,541)$10,794 $(9,904)
 
See accompanying notes to the unaudited consolidated financial statements.


5

Table of Contents
Liquidity Services, Inc. and Subsidiaries
Consolidated Statement of Stockholders’ Equity
(Dollars In Thousands)






 Common StockTreasury Stock
 SharesAmountAdditional
Paid-in
Capital
SharesAmountAccumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
(Unaudited)
Balance at September 30, 202034,082,406 $34 $247,892 (547,508)$(3,983)$(9,782)$(122,346)$111,815 
Net income— — — — — — 4,514 4,514 
Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units            151,845 — 197 — — — — 197 
Taxes paid associated with net settlement of stock compensation awards(7,703)— (57)— — — — (57)
Forfeitures of restricted stock awards(13,733)— — — — — —  
Common stock repurchased— — — (309,496)(4,103)— — (4,103)
Common stock surrendered in the exercise of stock options— — 169(9,384)(169)— — — 
Stock compensation expense — — 1,801 — — — — 1,801 
Foreign currency translation— — — — — 896 — 896 
Balance at December 31, 202034,212,815 $34 $250,002 (866,388)$(8,255)$(8,886)$(117,832)$115,063 
Net income— — — — — — 5,260 5,260 
Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units1,079,955 1 154 — — — — 155 
Taxes paid associated with net settlement of stock compensation awards(177,463)— (3,145)— — — — (3,145)
Common stock repurchased— — — (647,583)(12,040)— — (12,040)
Common stock surrendered in the exercise of stock options— — 1,333 (73,228)(1,333)— —  
Stock compensation expense— — 1,522 — — — — 1,522 
Foreign currency translation— — — — — 123 — 123 
Balance at March 31, 202135,115,307 $35 $249,866 (1,587,199)$(21,628)$(8,763)$(112,572)$106,938 


See accompanying notes to the unaudited consolidated financial statements.
6

Table of Contents
Liquidity Services, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars In Thousands)


 Six Months Ended March 31,
 20212020
(Unaudited)
Operating activities  
Net income (loss)$9,775 $(9,434)
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation and amortization3,541 3,149 
Stock compensation expense3,990 2,270 
Provision for doubtful accounts175 66 
Deferred tax provision64 362 
Loss (gain) on disposal of property and equipment44 (25)
Change in fair value of earnout liability 200 
Impairment of long-lived assets203  
Changes in operating assets and liabilities:  
Accounts receivable(594)666 
Inventory(7,517)(2,648)
Prepaid and deferred taxes57 (869)
Prepaid expenses and other assets(1,358)2,337 
Operating lease assets and liabilities(52)(174)
Accounts payable14,947 4,116 
Accrued expenses and other current liabilities2,003 (10,060)
Distributions payable (1,675)
Deferred revenue916 (88)
Payables to sellers5,383 1,113 
Other liabilities(262)(1,443)
Net cash provided by (used in) operating activities31,315 (12,137)
Investing activities  
Increase in intangibles(21)(48)
Purchases of property and equipment, including capitalized software(2,418)(2,834)
Proceeds from sales of property and equipment35 36 
Proceeds from promissory note824 2,554 
Purchases of short-term investments (25,000)
Maturities of short-term investments 45,000 
Net cash (used in) provided by investing activities(1,580)19,708 
Financing activities  
Payments of the principal portion of finance lease liabilities(17)(17)
Taxes paid associated with net settlement of stock compensation awards(3,202)(558)
Proceeds from exercise of stock options351 34 
Payment of earnout liability related to business acquisition (1,200)
Common stock repurchased(16,143) 
Net cash used in financing activities(19,011)(1,741)
Effect of exchange rate differences on cash and cash equivalents853 (511)
Net increase in cash and cash equivalents11,577 5,319 
Cash and cash equivalents at beginning of period76,036 36,497 
Cash and cash equivalents at end of period$87,613 $41,816 
Supplemental disclosure of cash flow information  
Cash paid for income taxes, net$508 $177 
Non-cash: Common stock surrendered in the exercise of stock options$1,502 $ 
See accompanying notes to the unaudited consolidated financial statements.
7

Table of Contents
Liquidity Services, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements

1.    Organization

Liquidity Services, Inc. (the Company) operates a network of e-commerce marketplaces that power the circular economy which benefits businesses, society, and the environment through the safe and effective resale and redeployment of surplus assets; reducing waste, carbon emissions and transportation costs; and by creating markets for items that would otherwise be landfilled. The Company's marketplaces enable buyers and sellers to transact in an efficient, automated environment offering over 600 product categories and provide professional buyers access to a global, organized supply of new, surplus and idle assets presented with digital images and other relevant product information. The Company's marketplaces enable corporate and government sellers to enhance their financial return on offered assets by providing a liquid marketplace and value-added services that encompass the consultative management, valuation and sale of surplus assets. The Company's services include program management, valuation, asset management, reconciliation, refurbishment and recycling, fulfillment, marketing and sales, warehousing and transportation, buyer support, compliance and risk mitigation, as well as self-directed service tools for its sellers. The Company organizes the products on its marketplaces into categories across major industry verticals such as consumer electronics, general merchandise, apparel, scientific equipment, aerospace parts and equipment, technology hardware, energy equipment, industrial capital assets, heavy equipment, fleet and transportation equipment and specialty equipment. The Company’s marketplaces are: www.allsurplus.com, www.liquidation.com, www.govdeals.com, www.secondipity.com, and www.go-dove.com. The Company also operates a global search engine for listing used machinery and equipment for sale at www.machinio.com. The Company has four reportable segments: GovDeals, Retail Supply Chain Group (RSCG), Capital Assets Group (CAG), and Machinio. See Note 13 for Segment Information.

The Company's operations are subject to certain risks and uncertainties, many of which are associated with technology-oriented companies, including, but not limited to, the Company's dependence on use of the Internet; the effect of general business and economic trends, including the extent and duration of travel restrictions and the COVID-19 pandemic's impact on current and future macroeconomic conditions; the Company's susceptibility to rapid technological change; actual and potential competition by entities with greater financial and other resources; and the potential for the commercial sellers from which the Company derives a significant portion of its inventory to change the way they conduct their disposition of surplus assets or to otherwise terminate or not renew their contracts with the Company.

2.     Summary of Significant Accounting Policies

Unaudited Interim Financial Information
 
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal, recurring adjustments considered necessary for a fair presentation, have been included, and intercompany transactions and accounts have been eliminated in consolidation. The information disclosed in the notes to the consolidated financial statements for these periods is unaudited. Operating results for the three and six months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021 or for any future period. 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect amounts in the consolidated financial statements and accompanying notes. For the three and six months ended March 31, 2021, these estimates required the Company to make assumptions about the extent and duration of travel restrictions and the impact of the COVID-19 pandemic on macroeconomic conditions and, in turn, the Company's results of operations. As there remains uncertainty associated with the COVID-19 pandemic, the Company will continue to update its assumptions as conditions change. Actual results could differ significantly from those estimates.

Contract Assets and Liabilities

Contract assets reflect an estimate of expenses that will be reimbursed upon settlement with a seller. The contract asset balance was $0.5 million as of March 31, 2021 and $0.4 million as of September 30, 2020 and is included in the line item Prepaid expenses and other current assets on the Consolidated Balance Sheets.

8

Liquidity Services, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements - (Continued)


Contract liabilities reflect obligations to provide services for which the Company has already received consideration, and generally arise from up-front payments received in connection with Machinio's subscription services. The contract liability balance was $4.2 million as of March 31, 2021 and $3.3 million as of September 30, 2020, and is included in the line item Deferred revenue on the Consolidated Balance Sheets. Of the September 30, 2020 contract liability balance, $2.4 million was earned as Fee revenue during the six months ended March 31, 2021.

For the Company's Machinio business segment, performance obligations are satisfied over time as the Company provides the services over the term of the subscription. At March 31, 2021, the Machinio business segment had a remaining performance obligation of $4.2 million; the Company expects to recognize the substantial majority of that amount as Fee Revenue over the next 12 months.

Contract Costs

Contract costs relate to sales commissions paid on subscription contracts that are capitalized. Contract costs are amortized over the expected life of the customer contract. The contract cost balance was $1.3 million as of March 31, 2021 and $0.7 million as of September 30, 2020 and is included in the line item Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheet. Amortization expense was $0.2 million and $0.3 million during the three and six months ended March 31, 2021 and was $0.1 million and $0.2 million during the three and six months ended March 31, 2020.

Other Assets - Promissory Note

On September 30, 2015, the Company sold certain assets related to its Jacobs Trading business to Tanager Acquisitions, LLC (Tanager). In connection with the disposition, Tanager assumed certain liabilities related to the Jacobs Trading business. Tanager issued a $12.3 million five-year interest-bearing promissory note to the Company.

On October 10, 2019, the Company entered into a Forbearance Agreement and Amendment to Note, Security Agreement and Guaranty Agreement (the "Forbearance Agreement") with Tanager (now known as Jacobs Trading, LLC) and certain of its affiliates (collectively, "JTC"). In exchange for additional collateral, security, and a higher interest rate, the Company granted JTC a new repayment schedule that requires quarterly payments to be made from August 2020 to August 2023. Upon execution of the Forbearance Agreement, JTC repaid $2.5 million in principal, plus $0.4 million in accrued interest. Of the $12.3 million owed to the Company, $7.7 million has been repaid as of March 31, 2021. Of the $4.6 million in principal outstanding at March 31, 2021, $2.9 million was recorded in Other assets, and $1.7 million in Prepaid expenses and other current assets based on the scheduled repayment dates.

Risk Associated with Certain Concentrations

For the majority of buyers that receive goods before payment to the Company is made, credit evaluations are performed. However, for the remaining buyers, goods are not shipped before payment is made, and as a result the Company is not subject to significant collection risk from those buyers.

For consignment sales transactions, funds are typically collected from buyers and are held by the Company on the sellers' behalf. The funds are included in Cash and cash equivalents on the Consolidated Balance Sheets. The Company releases the funds to the seller, less the Company's commission and other fees due, to the seller through Accounts payable after the buyer has accepted the goods or within 30 days, depending on the state where the buyer and seller conduct business.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of Cash in banks and cash equivalent money market funds in accounts which may at times exceed federally insured limits (FDIC and/or SIPC), and Accounts receivable. The Company deposits its Cash and acquires cash equivalent money market funds with financial institutions that the Company considers to be of high credit quality.

Additionally, the Company has multiple vendor contracts with Amazon.com, Inc. under which it acquires and sells commercial merchandise. The property purchased under this contract represented 61.2% and 55.3% of consolidated Cost of goods sold for the three months ended March 31, 2021 and 2020, respectively, and 60.6% and 51.9% of consolidated Cost of goods sold for the six months ended March 31, 2021 and 2020, respectively. These contracts are included within the RSCG segment.

Recent Accounting Pronouncements
 
Accounting Standards Adopted

9

Liquidity Services, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements - (Continued)


On October 1, 2020, the Company adopted ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The Company has not identified any significant impacts as a result of adoption of this ASU, however, material impacts could be experienced if and when the Company implements cloud computing arrangements in the future.

Accounting Standards Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), or ASC 326. ASC 326, including all amendments and related guidance, was designed to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit. ASC 326 will require estimation of expected credit losses using a methodology that takes into consideration a broad range of reasonable and supportable information. The guidance will be effective for the Company beginning on October 1, 2023 and will be applied on a modified-retrospective basis, with any cumulative-effect adjustment recorded to retained earnings on the adoption date. The Company is in the process of evaluating the impact ASC 326 will have on its consolidated financial statements and expects to estimate credit losses on its financial assets such as its Accounts receivable, money market funds and promissory note. While the Company has not experienced significant credit losses historically, the materiality of the impact of adoption will depend on events and conditions as of the date of adoption, which cannot be determined conclusively at this time.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. ASU 2019-12 seeks to improve the consistent application of and simplify the guidance for the accounting for income taxes. The ASU removes certain exceptions to the general principals in ASC 740, Income Taxes, and clarifies and amends other existing guidance. The ASU will become effective for the Company beginning October 1, 2021. The Company is currently evaluating the effect that the adoption of this ASU may have on its consolidated financial statements.


3.     Earnings per Share
 
Basic net income per share is computed by dividing net income for the period by the weighted average number of shares outstanding during the period. Diluted net income per share is computed by dividing net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The calculation of diluted net income per share excludes all anti-dilutive common shares.

The computation of basic and diluted net income per share is as follows:


Three Months Ended March 31,Six Months Ended March 31,
2021202020212020
Numerator:
Net income (loss)$5,260 $(4,238)$9,775 $(9,434)
Denominator:
Basic weighted average shares outstanding33,491,395 33,624,889 33,332,417 33,584,844 
Dilutive impact of stock options, RSUs and RSAs2,068,352  1,582,132  
Diluted weighted average shares outstanding35,559,747 33,624,889 34,914,549 33,584,844 
Basic income (loss) per common share$0.16 $(0.13)$0.29 $(0.28)
Diluted income (loss) per common share$0.15 $(0.13)$0.28 $(0.28)
Stock options, RSUs and RSAs excluded from income (loss) per diluted share because their effect would have been anti-dilutive
367,539 5,051,829 969,089 5,051,829 







10

Liquidity Services, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements - (Continued)



4.    Leases

The Company has operating leases for its corporate offices, warehouses, vehicles and equipment. The operating leases have remaining terms of up to 5.2 years. Some of the leases have options to extend or terminate the leases. The exercise of such options is generally at the Company’s discretion. The lease agreements do not contain any significant residual value guarantees or restrictive covenants. The Company also subleases excess corporate office space. The Company's finance leases and related balances are not significant.

The components of lease expense are:

Three Months Ended March 31,Six Months Ended March 31,
(in thousands)2021202020212020
Finance lease – lease asset amortization$16 $16 $32 $37 
Finance lease – interest on lease liabilities5 5 10 12 
Operating lease cost1,249 1,344 2,655 2,680 
Operating lease impairment expense 172  172  
Short-term lease cost47 23 121 44 
Variable lease cost (1)
455 420 818 751 
Sublease income(30)(20)(106)(139)
Total net lease cost$1,914 $1,788 $3,702 $3,385 
(1) Variable lease costs primarily relate to the Company's election to combine non-lease components such as common area maintenance, insurance and taxes related to its real estate leases. To a lesser extent, the Company's equipment leases have variable costs associated with usage and subsequent changes to costs based upon an index.

Maturities of lease liabilities are:

March 31, 2021
(in thousands)Operating LeasesFinance Leases
2021$2,511 $28 
20224,318 55 
20233,406 56 
20242,366 56 
20251,846 55 
Thereafter822 50 
Total lease payments (1)
$15,269 $300 
Less: imputed interest (2)
(1,790)(52)
Total lease liabilities$13,479 $248 

(1) The weighted average remaining lease term is 3.8 years for operating leases and 5.3 years for finance leases.
(2) The weighted average discount rate is 6.6% for operating leases and 7.5% for finance leases.

Supplemental disclosures of cash flow information related to leases are:

Six Months Ended March 31,
(in thousands)20212020
Cash paid for amounts included in operating lease liabilities$2,251 $2,506 
Cash paid for amounts included in finance lease liabilities 17 17 
Non-cash: lease liabilities arising from new operating lease assets obtained (1)
885 12,188 
Non-cash: lease liabilities arising from new finance lease assets obtained  10 
Non-cash: adjustments to lease assets and liabilities 3,286 1,675 
11

Liquidity Services, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements - (Continued)


(1) Six months ended March 31, 2020 amount includes $12.2 million of lease liabilities recognized upon the adoption of ASC 842 on October 1, 2019.

5.    Goodwill
 
The carrying value and changes in the carrying value of goodwill attributable to each reportable segment were as follows:
(in thousands)CAGGovDealsMachinioTotal
Balance at September 30, 2019
$21,178 $23,731 $14,558 $59,467 
Translation adjustments372   372 
Balance at September 30, 2020
$21,550 $23,731 $14,558 $59,839 
Translation adjustments147   147 
Balance at March 31, 2021
$21,697 $23,731 $14,558 $59,986 

Goodwill is tested for impairment at the beginning of the fourth quarter and during interim periods whenever events or circumstances indicate that the carrying value may not be recoverable. The Company did not identify any indicators of impairment that required an interim impairment test during the three and six months ended March 31, 2021.

The Company has continued to evaluate the impact of the COVID-19 pandemic on the recoverability of its goodwill. As there have been favorable developments in the factors that previously indicated an interim goodwill impairment test was necessary during the prior fiscal year, the Company did not identify any indicators of impairment that required an interim goodwill impairment test during the three and six months ended March 31, 2021.

6.    Intangible Assets
 
Intangible assets consist of the following:  
  March 31, 2021September 30, 2020
(dollars in thousands)Useful
Life
(in years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Contract intangibles6$3,100 $(1,421)$1,679 $3,100 $(1,162)$1,938 
Technology52,700 (1,485)1,215 2,700 (1,215)1,485 
Patent and trademarks
7 - 10
2,350 (1,134)1,216 2,329 (994)1,335 
Total intangible assets $8,150 $(4,040)$4,110 $8,129 $(3,371)$4,758 
 
Future expected amortization of intangible assets at March 31, 2021, is as follows: 

(in thousands)Expected Amortization Expense
Years ending September 30,
Remainder of 2021
$668 
20221,330 
20231,186 
2024647 
2025279 
Total$4,110 
 
Intangible asset amortization expense was $0.3 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively and $0.7 million and $0.7 million for the six months ended March 31, 2021 and 2020, respectively.

The Company has continued to evaluate the impact of the COVID-19 pandemic on the recoverability of its long-lived assets. The Company has not identified indicators of impairment requiring an interim impairment test on material long-lived assets during the three and six months ended March 31, 2021.

12

Liquidity Services, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements - (Continued)


7.    Income Taxes

The Company’s interim effective income tax rate is based on management’s best current estimate of the Company's expected annual effective income tax rate. The Company recorded pre-tax income in the first six months of fiscal year 2021 and its corresponding effective tax rate is 6.7% compared to (5.6%) for the first six months of fiscal year 2020. The change in the effective tax rate for the six months ended March 31, 2021 as compared to the same period in the prior year was primarily due to state and foreign taxes. Tax expense in the six months ended March 31, 2021 is due to state and foreign taxes paid. The effective tax rate differed from the U.S. statutory federal rate of 21% primarily as a result of the utilization of net operating losses and the impact of foreign, state, and local income taxes and permanent tax adjustments.

The Company applies the authoritative guidance related to uncertainty in income taxes. ASC Topic 740, Income Taxes, states that a benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, on the basis of technical merits. The Company identified no new uncertain tax positions during the six months ended March 31, 2021. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions and in foreign jurisdictions, primarily Canada and the United Kingdom. As of March 31, 2021, none of the Company's federal or state income tax returns are under examination, however, we remain subject to examination for certain of our foreign income tax returns. The Company has no open income tax examinations in the U.S. and the statute of limitations for years prior to 2017 is now closed. However, certain tax attribute carryforwards that were generated prior to fiscal year 2017 may be adjusted upon examination by tax authorities if they are utilized. The Company's Hong Kong subsidiary is currently under examination for fiscal years 2015 through 2017.

On March 27, 2020, The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, accelerates the recovery of alternative minimum tax (AMT) credits into fiscal year 2020. During fiscal year 2020, the Company recovered its full AMT refund of $1.7 million. Prior to the CARES Act, the Company’s AMT credits were recoverable in fiscal years 2021 through 2023. The CARES Act also permits net operating loss (NOL) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, NOLs incurred in fiscal years 2019, 2020, and 2021 may be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company is currently evaluating the impact of the CARES Act, but at present does not expect the NOL provisions of the CARES Act to result in a material cash benefit.

8.    Stockholders’ Equity

The changes in stockholders’ equity for the prior year comparable period is as follows:

 Common Stock
(dollars in thousands)SharesAmountAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Balance at September 30, 201933,687,115 $34 $242,686 $(7,973)$(118,572)$116,175 
Net loss— — — — (5,196)(5,196)
Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units283,164 — 2 — — 2 
Taxes paid associated with net settlement of stock compensation awards(67,688)— (498)— — (498)
Forfeitures of restricted stock awards(15,000)— — — —  
Stock compensation expense— — 1,121 — — 1,121 
Foreign currency translation— — — 833  833 
Balance at December 31, 201933,887,591 $34 $243,311 $(7,140)$(123,768)$112,437 
Net loss— — — — (4,238)(4,238)
Exercise of stock options, grants of restricted stock awards, and vesting of restricted stock units111,272 — 32 — — 32 
Taxes paid associated with net settlement of stock compensation awards(10,065)— (60)— — (60)
Stock compensation expense— — 1,244 — — 1,244 
Foreign currency translation— — — (1,303) (1,303)
Balance at March 31, 202033,988,798 $34 $244,527 $(8,443)$(128,006)$108,112 

13

Liquidity Services, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements - (Continued)


Stock Compensation Incentive Plans

The Company has several incentive plans under which stock options, restricted stock units (RSUs), restricted stock awards (RSAs), and cash-settled stock appreciation rights (SARs) have been issued, including the Third Amended and Restated 2006 Omnibus Long-Term Incentive Plan, as amended, and a plan and private placement issuances related to the Company’s acquisition of Machinio. As of March 31, 2021, the Company has reserved at total of 19,100,000 shares of its common stock for exercises of stock options, vesting of RSUs, and grants of RSAs under these plans. Vesting of RSUs and grants of RSAs count as 1.5x shares against the plan reserves. As of March 31, 2021, 1,865,347 shares of common stock remained available for use.

Stock Compensation Expense

The table below presents the components of share-based compensation expense (in thousands):

Three Months Ended March 31,Six Months Ended March 31,
2021202020212020
Equity-classified awards:
Stock options$844 $561 $1,729 $977 
RSUs & RSAs678 683 1,594 1,389 
Total equity-classified awards$1,522 $1,244 $3,323 $2,366 
Liability-classified awards:
SARs239 (13)667 (96)
Total stock compensation expense:$1,761 $1,231 $3,990 $2,270 

Stock Options and RSUs & RSAs

The following table presents stock option and RSUs & RSAs grant activity:

Six Months Ended
March 31, 2021
Stock Options granted:
Options containing only service conditions:558,673 
Weighted average exercise price$10.69 
Weighted average grant date fair value$4.49 
Options containing performance or market conditions:549,600 
Weighted average exercise price$10.51 
Weighted average grant date fair value$4.35 
RSUs & RSAs granted:
RSUs & RSAs containing only service conditions:139,945 
Weighted average grant date fair value$13.48 
RSUs & RSAs containing performance or market conditions:139,600 
Weighted average grant date fair value$9.43 

The stock options and RSUs & RSAs containing only service conditions will vest over a four-year service period. The stock options and RSUs & RSAs containing performance conditions will vest upon the achievement of specified financial targets of the Company or its business units. The stock options and RSUs & RSAs containing market conditions will vest upon the achievement of specified increases in the Company’s share price. Vesting is measured the first day of each fiscal quarter over the four-year terms of the awards, starting with the first fiscal quarter after the first anniversary of the grant date, based upon the trailing 20-days average of the Company’s share price.

14

Liquidity Services, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements - (Continued)


The range of assumptions used to determine the fair value of stock options containing only service conditions using the Black-Scholes option-pricing model during the six months ended March 31, 2021 were as follows:

Six Months Ended
March 31, 2021
Dividend yield 
Expected volatility
51.0% - 55.9%
Risk-free interest rate
0.4% - 0.8%
Expected term
4.6 - 7.6 years


The range of assumptions used to determine the fair value of stock options and RSUs & RSAs containing market conditions using Monte Carlo simulations during the six months ended March 31, 2021 were as follows:

Six Months Ended
March 31, 2021
Dividend yield 
Expected volatility
51.6% - 54.6%
Risk-free interest rate
0.3% - 0.9%
Expected holding period (% of remaining term)
31.7% - 100.0%

SARs

During the six months ended March 31, 2021, the Company did not issue any SARs, 38,434 SARs were exercised requiring the Company to make cash payments of $0.3 million, and 73,681 SARs were canceled. As of March 31, 2021, 48,695 SARs were outstanding.

Share Repurchase Program

We are authorized to repurchase issued and outstanding shares of our common stock under a share repurchase program approved by our Board of Directors. Share repurchases may be made through open market purchases, privately negotiated transactions or otherwise, at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. The repurchase program may be discontinued or suspended at any time and will be funded using our available cash.

As of the fiscal year ended September 30, 2020, we had $6.1 million of remaining share repurchase authorization. On March 8, 2021, our Board of Directors authorized an additional $10 million of share repurchases of the Company's outstanding shares of common stock through March 31, 2023.

The Company repurchased 647,583 shares for $12.0 million and 957,079 shares for $16.1 million under this program during the three and six months ended March 31, 2021, respectively. As of March 31, 2021, the Company had no remaining authorization to repurchase shares under this program. On May 3, 2021, the Company's Board of Directors authorized the repurchase of up to $15 million of the Company's outstanding shares of common stock through June 30, 2023.

Other Share Repurchases

Separate from the share repurchase program, our stock incentive plans allow for participants to exercise stock options by surrendering shares of common stock equivalent in value to the exercise price due. During the three and six months ended March 31, 2021, participants surrendered 73,228 and 82,612 shares of common stock in the exercise of stock options, respectively. Any shares surrendered to the Company in this manner are not available for future grant.

15

Liquidity Services, Inc. and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements - (Continued)


9.    Fair Value Measurement

The Company measures and records certain assets and liabilities at fair value on a recurring basis. Authoritative guidance issued by the FASB establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels:
 
Level 1: Quoted market prices in active markets for identical assets or liabilities;
Level 2: Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3: Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use.
 
The Company had $40.0 million of money market funds considered cash equivalents at March 31, 2021 and September 30, 2020. These assets were measured at fair value at March 31, 2021 and September 30, 2020 and were classified as Level 1 assets within the fair value hierarchy. There were no transfers between levels during the periods presented.

The Company’s financial assets and liabilities not measured at fair value are cash, accounts receivable, a promissory note, and accounts payable. The Company believes the carrying values of these assets and liabilities approximate fair value.

As of March 31, 2021 and September 30, 2020, the Company did not have any material assets or liabilities measured at fair value on a non-recurring basis.

10.     Defined Benefit Pension Plan

Certain employees of Liquidity Services UK Limited (GoIndustry), which the Company acquired in July 2012, are covered by the Henry Butcher Pension Fund and Life Assurance Scheme (the Scheme), a qualified defined benefit pension plan. The Company guarantees GoIndustry's performance on all present and future obligations to make payments to the Scheme for up to a maximum of £10 million British pounds. The Scheme was closed to new members on January 1, 2002.

The net periodic (benefit) is recognized within Interest and other income, net in the Consolidated Statements of Operations, and for the three and six months ended March 31, 2021 and 2020 included the following components:

 Three Months Ended March 31,Six Months Ended March 31,
(in thousands)2021202020212020