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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________
FORM 10-Q
__________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 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 000-28275
___________________________________________
PFSweb, Inc.
(Exact name of registrant as specified in its charter)
___________________________________________
Delaware75-2837058
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
 
505 Millennium Drive,
Allen, Texas
75013
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (972881-2900
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
__________________________________________
Securities registered pursuant 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 valuePFSWNASDAQ Capital Market

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 checkmark 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 and post 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 filerAccelerated filer
Non-accelerated filerSmaller 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 a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes      No  
As of February 2, 2022, there were 22,132,876 shares of registrant’s common stock outstanding.



PFSWEB, INC. AND SUBSIDIARIES
Form 10-Q
INDEX
PART I. FINANCIAL INFORMATIONPage
Number
2


PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
3


PFSWEB, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
(Unaudited) June 30,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$12,486 $10,359 
Restricted cash214 214 
Accounts receivable, net of allowance for doubtful accounts of $548 and $611 at June 30, 2021 and December 31, 2020, respectively
49,117 69,594 
Inventories, net of reserves of $107 and $96 at June 30, 2021 and December 31, 2020, respectively
4,036 3,644 
Other receivables2,530 3,314 
Prepaid expenses and other current assets6,020 7,524 
Current assets of discontinued operations54,465 13,920 
Total current assets128,868 108,569 
Property and equipment:
Cost95,588 97,343 
Less: accumulated depreciation(78,415)(79,826)
17,173 17,517 
Operating lease right-of-use assets, net33,945 34,350 
Goodwill22,358 22,358 
Other assets1,557 385 
Long-term assets of discontinued operations 31,717 
Total assets$203,901 $214,896 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable$26,982 $34,613 
Accrued expenses20,008 26,242 
Current portion of operating lease liabilities9,391 9,399 
Current portion of long-term debt and finance lease obligations49,732 3,411 
Deferred revenues3,216 4,595 
Current liabilities of discontinued operations11,049 6,285 
Total current liabilities120,378 84,545 
Long-term debt and capital lease obligations, less current portion151 39,069 
Deferred revenue, less current portion1,374 1,341 
Operating lease liabilities, less current portion29,279 30,012 
Other liabilities6,529 5,286 
Long-term liabilities of discontinued operations 545 
Total liabilities157,711 160,798 
COMMITMENTS AND CONTINGENCIES
Shareholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued or outstanding
  
Common stock, $0.001 par value; 35,000,000 shares authorized; 21,209,300 and 20,408,558 issued at June 30, 2021 and December 31, 2020, respectively; and 21,175,833 and 20,375,091 outstanding at June 30, 2021 and December 31, 2020, respectively
21 20 
Additional paid-in capital170,486 168,244 
Accumulated deficit(123,554)(113,712)
Accumulated other comprehensive loss(638)(329)
Treasury stock at cost, 33,467 shares
(125)(125)
Total shareholders’ equity46,190 54,098 
Total liabilities and shareholders’ equity$203,901 $214,896 



The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


PFSWEB, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In Thousands, Except Per Share Data)


Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Revenues:
Service fee revenue$43,009 $44,852 $88,529 $81,577 
Product revenue, net4,492 5,915 8,800 13,447 
Pass-through revenue13,598 14,524 24,474 29,393 
Total revenues61,099 65,291 121,803 124,417 
Costs of Revenues:
Cost of service fee revenue31,863 31,561 65,393 56,833 
Cost of product revenue4,284 5,590 8,370 12,713 
Cost of pass-through revenue13,598 14,524 24,474 29,393 
Total costs of revenues49,745 51,675 98,237 98,939 
Gross profit11,354 13,616 23,566 25,478 
Selling, general and administrative expenses15,678 12,514 28,609 25,075 
Income (loss) from operations(4,324)1,102 (5,043)403 
Interest expense, net333 374 708 788 
Income (loss) before income taxes(4,657)728 (5,751)(385)
Income tax expense (benefit), net(155)332 124 613 
Net income (loss) from continuing operations(4,502)396 (5,875)(998)
Income (loss) from discontinued operations before income taxes(590)(1,088)(1,410)233 
Income tax expense, net2,528 161 2,557 186 
Net income (loss) from discontinued operations(3,118)(1,249)(3,967)47 
Net loss $(7,620)$(853)$(9,842)$(951)
Basic earnings (loss) per share:
Net income (loss) from continuing operations per share$(0.21)$0.02 $(0.28)$(0.05)
Net income (loss) from discontinued operations per share(0.15)(0.06)(0.19) 
Basic loss per share$(0.36)$(0.04)$(0.47)$(0.05)
Diluted earnings (loss) per share:
Net income (loss) from continuing operations per share$(0.21)$0.02 $(0.28)$(0.05)
Net income (loss) from discontinued operations per share(0.15)(0.06)(0.19) 
Diluted loss per share$(0.36)$(0.04)$(0.47)$(0.05)
Weighted average number of shares outstanding:
Basic21,16619,80021,22119,739
Diluted21,16620,52721,22119,739
Comprehensive loss:
Net loss $(7,620)$(853)$(9,842)$(951)
Foreign currency translation adjustment46 (77)(309)(1,021)
Total comprehensive loss$(7,574)$(930)$(10,151)$(1,972)








The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


PFSWEB, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In Thousands, Except Share Data)


Three Months Ended June 30, 2021
Accumulated
AdditionalOtherTotal
Common StockPaid-InAccumulatedComprehensiveTreasury StockShareholders'
SharesAmountCapitalDeficitIncome (Loss)SharesAmountEquity
Balance, March 31, 202120,482,974 $20 $169,474 $(115,934)$(684)33,467 $(125)$52,751 
Net loss— — — (7,620)— — — (7,620)
Stock-based compensation— — 2,601 — — — — 2,601 
Exercise of stock options68,667 — 320 — — — — 320 
Issuance of shares under stock-based compensation awards657,659 1 (1)— — — —  
Tax withholding on shares under stock-based compensation awards— — (1,908)— — — — (1,908)
Foreign currency translation— — — — 46 — — 46 
Balance, June 30, 202121,209,300 $21 $170,486 $(123,554)$(638)33,467 $(125)$46,190 

Six Months Ended June 30, 2021
Accumulated
AdditionalOtherTotal
Common StockPaid-InAccumulatedComprehensiveTreasury StockShareholders'
SharesAmountCapitalDeficitIncome (Loss)SharesAmountEquity
Balance, December 31, 202020,408,558 $20 $168,244 $(113,712)$(329)33,467 $(125)$54,098 
Net loss— — — (9,842)— — — (9,842)
Stock-based compensation— — 3,454 — — — — 3,454 
Exercise of stock options143,083 — 697 — — — — 697 
Issuance of shares under stock-based compensation awards657,659 1 (1)— — — —  
Tax withholding on shares under stock-based compensation awards— — (1,908)— — — — (1,908)
Foreign currency translation— — — — (309)— — (309)
Balance, June 30, 202121,209,300 $21 $170,486 $(123,554)$(638)33,467 $(125)$46,190 
















The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6


PFSWEB, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (cont.)
(In Thousands, Except Share Data)


Three Months Ended June 30, 2020
Accumulated
AdditionalOtherTotal
Common StockPaid-InAccumulatedComprehensiveTreasury StockShareholders'
SharesAmountCapitalDeficitIncome (Loss)SharesAmountEquity
Balance, March 31, 202019,499,220 $19 $158,664 $(108,841)$(2,245)33,467 $(125)$47,472 
Net loss— — — (853)— — — (853)
Stock-based compensation— — 5,153 — — — — 5,153 
Exercise of stock options34,500 — 127 — — — — 127 
Issuance of shares under stock-based compensation awards443,011 — — — — — — — 
Tax withholding on shares under stock-based compensation awards— — (805)— — — — (805)
Foreign currency translation adjustment, net of taxes— — — — (77)— — (77)
Balance, June 30, 202019,976,731 $19 $163,139 $(109,694)$(2,322)33,467 $(125)$51,017 


Six Months Ended June 30, 2020
Accumulated
AdditionalOtherTotal
Common StockPaid-InAccumulatedComprehensiveTreasury StockShareholders'
SharesAmountCapitalDeficitIncome (Loss)SharesAmountEquity
Balance, December 31, 201919,465,877 $19 $158,192 $(108,743)$(1,301)33,467 $(125)$48,042 
Net loss— — — (951)— — — (951)
Stock-based compensation— — 5,698 — — — — 5,698 
Exercise of stock options34,500 — 127 — — — — 127 
Issuance of shares under stock-based compensation awards476,354 — — — — — — — 
Tax withholding on shares under stock-based compensation awards— — (878)— — — — (878)
Foreign currency translation adjustment, net of taxes— — — — (1,021)— — (1,021)
Balance, June 30, 202019,976,731 $19 $163,139 $(109,694)$(2,322)33,467 $(125)$51,017 


















The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


PFSWEB, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Six Months Ended June 30,
20212020
Cash flows from operating activities:
Net loss$(9,842)$(951)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization4,262 4,249 
Deferred income taxes(77)102 
Stock-based compensation expense3,454 5,698 
Other62 471 
Changes in operating assets and liabilities:
Accounts receivable14,504 6,666 
Inventories(412)(1,096)
Prepaid expenses, other receivables and other assets1,714 (2,194)
Operating leases(301)(693)
Trade accounts payable, deferred revenues, accrued expenses and other liabilities(13,688)(15,056)
Net cash used in operating activities(324)(2,804)
Cash flows from investing activities:
Purchases of property and equipment(1,985)(1,722)
Proceeds from sale of property and equipment6 142 
Net cash used in investing activities(1,979)(1,580)
Cash flows from financing activities:
Net proceeds from issuance of common stock697 127 
Taxes paid on behalf of employees for withheld shares(1,908)(878)
Payments on finance lease obligations(511)(653)
Payments on revolving loan(84,830)(71,707)
Borrowings on revolving loan92,630 74,707 
Payments on other debt(1,330)(946)
Borrowings on other debt49 1,193 
Net cash provided by financing activities4,797 1,843 
Effect of exchange rates on cash, cash equivalents and restricted cash(389)(213)
Net increase (decrease) in cash and cash equivalents2,105 (2,754)
Cash and cash equivalents, beginning of period10,359 11,354 
Restricted cash, beginning of period214 214 
Cash and cash equivalents discontinued operations, beginning of period392 1,080 
Cash, cash equivalents and restricted cash, beginning of period10,965 12,648 
Cash and cash equivalents, end of period12,486 8,964 
Restricted cash, end of period214 214 
Cash and cash equivalents discontinued operations, end of period370 716 
Cash, cash equivalents and restricted cash, end of period$13,070 $9,894 
Supplemental cash flow information:
Cash paid for income taxes$2,466 $466 
Cash paid for interest$619 $742 
Non-cash investing and financing activities:
Property and equipment acquired under long-term debt and finance leases$1,818 $1,489 




The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8


PFSWEB, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of PFSweb, Inc. and its subsidiaries have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and include all normal and recurring adjustments necessary to present fairly the unaudited condensed consolidated balance sheets, statements of operations and comprehensive loss, statements of shareholders' equity, and statements of cash flows for the periods indicated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the SEC. This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020.  We refer to PFSweb, Inc. and its subsidiaries collectively as “PFSweb,” the “Company,” “us,” “we” and “our” in these unaudited condensed consolidated financial statements.
In July 2021, we announced an agreement to sell our LiveArea Professional Services business unit ("LiveArea") and the divestiture was completed on August 25, 2021 ("the LiveArea Transaction"). As of June 30, 2021, the criteria for reporting LiveArea as a discontinued operation were met and as such, all periods presented in the Company's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2021 (this "Form 10-Q") have been recast to present LiveArea as a discontinued operation. Results of our operations for interim periods may not be indicative of results for the full fiscal year. See Note 3. Discontinued Operations and Note 9. Subsequent Events for additional information on our sale of LiveArea.
Revision of previously issued consolidated financial statements
In connection with the preparation of its financial statements for the quarter ended June 30, 2021, the Company identified an immaterial error related to deferred income taxes that were incorrectly recorded in prior periods. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality and SAB No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the materiality of this error both quantitatively and qualitatively and determined that it was not material to any previously issued interim or annual consolidated financial statements. However, adjusting for the cumulative effect of this error in the consolidated statement of operations for the three months ended June 30, 2021 would be material to the Company’s results for this period as the cumulative amount of the error increased over time. As such, the Company has revised its previously issued consolidated balance sheet as of December 31, 2020 and its unaudited condensed consolidated financial statements for the three and six months ended June 30, 2020 to correct the error.
The accompanying financial statements and relevant footnotes to the condensed consolidated financial statements in this Form 10-Q have been revised to correct for the immaterial error discussed above. The tables below provide reconciliations of our previously reported amounts to our revised amounts to correct for the immaterial error and to recast certain amounts in order to present LiveArea as a discontinued operation in the Company's consolidated balance sheet as of December 31, 2020 and its unaudited condensed consolidated financial statements for the three and six months ended June 30, 2020. See Note 3. Discontinued Operations and Note 9. Subsequent Events for additional information on our sale of LiveArea.
The effect of the above adjustments on the consolidated balance sheet at December 31, 2020 is as follows (in thousands):
December 31, 2020
Adjustments
As Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Long-term assets of discontinued operations$ $29,982 $1,735 $31,717 
Total assets$213,161 $— $1,735 $214,896 
Accumulated deficit$(115,447)$— $1,735 $(113,712)
Total shareholders’ equity$52,363 $— $1,735 $54,098 
Total liabilities and shareholders’ equity$213,161 $— $1,735 $214,896 





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The effect of the above adjustments on the consolidated statement of operations and comprehensive income (loss) for the three months ended June 30, 2020 is as follows (in thousands, except per share data):
Three Months Ended June 30, 2020
Adjustments
As Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Income (loss) from discontinued operations before income taxes$ $(1,088)$— $(1,088)
Income tax expense (benefit), net 295 (134)161 
Net income (loss) from discontinued operations (1,383)134 (1,249)
Net income (loss) $(987)$— $134 $(853)
Basic earnings (loss) per share:
Net income (loss) from discontinued operations per share$ $(0.07)$0.01 $(0.06)
Basic income (loss) per share$(0.05)$— $0.01 $(0.04)
Diluted earnings (loss) per share:
Net income (loss) from discontinued operations per share$ $(0.07)$0.01 $(0.06)
Diluted income (loss) per share$(0.05)$— $0.01 $(0.04)
Comprehensive income (loss):
Net income (loss) $(987)$— $134 $(853)
Total comprehensive income (loss)$(1,064)$— $134 $(930)

The effect of the above adjustments on the consolidated statement of operations and comprehensive income (loss) for the six months ended June 30, 2020 is as follows (in thousands, except per share data):
Six Months Ended June 30, 2020
Adjustments
As Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Income (loss) from discontinued operations before income taxes$ $233 $— $233 
Income tax expense (benefit), net 453 (267)186 
Net income (loss) from discontinued operations (220)267 47 
Net income (loss) $(1,218)$— $267 $(951)
Basic earnings (loss) per share:
Net income (loss) from discontinued operations per share$ $(0.01)$0.01 $ 
Basic income (loss) per share$(0.06)$— $0.01 $(0.05)
Diluted earnings (loss) per share:
Net income (loss) from discontinued operations per share$ $(0.01)$0.01 $ 
Diluted income (loss) per share$(0.06)$— $0.01 $(0.05)
Comprehensive income (loss):
Net income (loss) $(1,218)$— $267 $(951)
Total comprehensive income (loss)$(2,239)$— $267 $(1,972)




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The effect of the above adjustments on the consolidated statement of shareholders’ equity for the three months ended June 30, 2020 is as follows (in thousands):
Three Months Ended June 30, 2020
Adjustments
Accumulated deficitAs Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Balance, March 31, 2020$(110,174)$— $1,333 $(108,841)
Net loss(987)— 134 (853)
Balance, June 30, 2020$(111,161)$— $1,467 $(109,694)

The effect of the above adjustments on the consolidated statement of shareholders’ equity for the six months ended June 30, 2020 is as follows (in thousands):
Six Months Ended June 30, 2020
Adjustments
Accumulated deficitAs Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Balance, December 31, 2019$(109,943)$— $1,200 $(108,743)
Net loss(1,218)— 267 (951)
Balance, June 30, 2020$(111,161)$— $1,467 $(109,694)

The effect of the above adjustments on the consolidated statement of cash flows for the six months ended June 30, 2020 is as follows (in thousands):
Six Months Ended June 30, 2020
Adjustments
As Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Cash flows from operating activities:
Net loss$(1,218)$— $267 $(951)
Deferred income taxes$369 $— $(267)$102 
Net cash used in operating activities$(2,804)$— $— $(2,804)

2. Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements and related disclosures in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The recognition and allocation of certain revenues, costs of revenues and selling, general and administrative expenses in these unaudited condensed consolidated financial statements also require management estimates and assumptions.
Estimates and assumptions about future events and their effects cannot be determined with certainty. The Company bases its estimates on historical experience and various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as the operating environment changes. These changes have been included in the unaudited condensed consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. Based on a critical assessment of accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes the Company’s unaudited condensed consolidated financial statements are fairly stated in accordance with U.S. GAAP and provide a fair presentation of the Company’s financial position and results of operations.
Furthermore, we considered the impact of the COVID-19 pandemic on the use of estimates and assumptions used for financial reporting and determined that there was no adverse material impact to our results of operations for the three and six months ended June 30, 2021; however, the extent and duration of future impacts of the COVID-19 pandemic and any resulting
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economic impact are largely unknown and difficult to predict due to these unknown factors which may have a material impact on our financial position and results of operations in the future.
For a complete set of our significant accounting policies, refer to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. Other than the presentation of LiveArea as a discontinued operation, there were no changes to our significant accounting policies during the three and six-month periods ended June 30, 2021.  
Income Taxes
For the three and six months ended June 30, 2021 and 2020, we have utilized the discrete effective tax rate method, as allowed by Accounting Standards Codification (“ASC”) 740-270-30-18, “Income Taxes—Interim Reporting,” to calculate the interim income tax provision. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year to date period as if it was the annual period and determines the income tax expense or benefit on that basis. We believe that, at this time, the use of this discrete method is more appropriate than the annual effective tax rate method as (i) the estimated annual effective tax rate method is not reliable due to the high degree of uncertainty in estimating annual pretax earnings by certain jurisdiction and (ii) our ongoing assessment that the recoverability of our deferred tax assets is not likely in certain jurisdictions.
Impact of Recently Issued Accounting Standards
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, as well as improve consistency of application by clarifying and amending existing guidance. The Company adopted ASU No. 2019-12 on January 1, 2021, the effect of which was not material on its financial position, results of operations, and cash flows.
Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," ("ASU 2016-13") which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019 for all public entities, excluding smaller reporting companies, and after December 15, 2022 for smaller reporting companies. It requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. We will adopt ASU 2016-13 on January 1, 2023. We are currently in the early phase of evaluating the impact of the adoption of ASU 2016-13 on our condensed consolidated financial statements.
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3. Discontinued Operations
On July 2, 2021, the Company entered into a definitive agreement to sell LiveArea for $250.0 million in cash, subject to certain adjustments and customary closing conditions including receipt of regulatory approvals. The LiveArea Transaction closed on August 25, 2021. As of June 30, 2021, we met the criteria set forth in ASC 205-20, "Presentation of Financial Statements - Discontinued Operations"; therefore, the LiveArea segment has been presented as a discontinued operation for all periods presented in this Form 10-Q. As a result of the LiveArea Transaction, we now only operate in one business segment, PFS Operations, and therefore will no longer present segment data. See Note 9. Subsequent Events for additional information on our LiveArea Transaction.
The following table presents the carrying amount of major classes of assets and liabilities of LiveArea and a reconciliation to the amounts reported in the condensed consolidated balance sheets (in thousands):
(Unaudited) June 30,
2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$370 $392 
Accounts receivable, net of allowance for doubtful accounts of $884 and $854 at June 30, 2021 and December 31, 2020, respectively
17,222 11,184 
Related party receivable525 730 
Other receivables559 444 
Prepaid expenses and other current assets1,505 1,170 
Current assets of discontinued operations13,920 
Property and equipment, net1,578 1,661 
Operating lease right-of use assets3,133 632 
Identifiable intangibles, net524 665 
Goodwill23,339 23,257 
Other assets5,710 5,502 
Long-term assets of discontinued operations31,717 
Total assets of discontinued operations$54,465 $45,637 
LIABILITIES
Current liabilities:
Trade accounts payable$1,120 $1,035 
Accrued expenses6,655 4,639 
Current portion of operating lease liabilities557 88 
Current portion of long-term debt and finance lease obligations2 3 
Deferred revenues130 520 
Current liabilities of discontinued operations6,285 
Long-term debt and capital lease obligations, less current portion4 4 
Operating lease liabilities2,581 541 
Long-term liabilities of discontinued operations545 
Total liabilities of discontinued operations$11,049 $6,830 

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The following table presents the major components of net income (loss) of LiveArea and a reconciliation to the amounts reported in the unaudited condensed consolidated statements of operations (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Revenues:
Service fee revenue$19,783 $17,120 $36,581 $34,693 
Related party revenue106 24 574 24 
Total revenues19,889 17,144 37,155 34,717 
Costs of revenues:
Cost of service fee revenue10,325 9,204 20,039 18,648 
Gross profit9,564 7,940 17,116 16,069 
Selling, general and administrative expenses10,154 9,027 18,526 15,836 
Interest expense, net 1   
Income (loss) from discontinued operations before income taxes(590)(1,088)(1,410)233 
Income tax expense2,528 161 2,557 186 
Net income (loss) from discontinued operations$(3,118)$(1,249)$(3,967)$47 

The following table presents the depreciation and amortization, capital expenditures and significant noncash operating items of LiveArea (in thousands):
Six Months Ended June 30,
20212020
Cash flows from operating activities discontinued operations:
Depreciation and amortization $405 $537 
Stock-based compensation expense$1,056 $2,400 
Cash flows from investing activities discontinued operations:
Capital expenditures$102 $12