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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 September 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 March 6, 2022, there were 22,160,376 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) September 30,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$193,999 $10,359 
Restricted cash214 214 
Accounts receivable, net of allowance for doubtful accounts of $862 and $611 at September 30, 2021 and December 31, 2020, respectively
53,139 69,594 
Inventories, net of reserves of $107 and $96 at September 30, 2021 and December 31, 2020, respectively
3,210 3,644 
Other receivables4,164 3,314 
Prepaid expenses and other current assets5,483 7,524 
Current assets of discontinued operations 13,920 
Total current assets260,209 108,569 
Property and equipment:
Cost98,151 97,343 
Less: accumulated depreciation(79,785)(79,826)
18,366 17,517 
Operating lease right-of-use assets, net38,265 34,350 
Goodwill22,195 22,358 
Other assets3,582 385 
Long-term assets of discontinued operations 31,717 
Total assets$342,617 $214,896 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable$26,595 $34,613 
Accrued expenses23,256 25,381 
Income taxes payable31,528 861 
Current portion of operating lease liabilities10,337 9,399 
Current portion of long-term debt and finance lease obligations310 3,411 
Deferred revenues2,211 4,595 
Current liabilities of discontinued operations 6,285 
Total current liabilities94,237 84,545 
Long-term debt and finance lease obligations, less current portion98 39,069 
Deferred revenue, less current portion1,330 1,341 
Operating lease liabilities, less current portion32,452 30,012 
Other liabilities6,131 5,286 
Long-term liabilities of discontinued operations 545 
Total liabilities134,248 160,798 
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; 21,244,350 and 20,408,558 issued and 21,210,883 and 20,375,091 outstanding at September 30, 2021 and December 31, 2020, respectively
21 20 
Additional paid-in capital175,675 168,244 
Retained earnings (accumulated deficit)33,797 (113,712)
Accumulated other comprehensive loss(999)(329)
Treasury stock at cost, 33,467 shares
(125)(125)
Total shareholders’ equity208,369 54,098 
Total liabilities and shareholders’ equity$342,617 $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 INCOME (LOSS)
(In Thousands, Except Per Share Data)


Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Revenues:
Service fee revenue$44,275 $42,383 $132,804 $123,961 
Product revenue, net4,096 4,229 12,896 17,677 
Pass-through revenue12,970 12,661 37,444 42,053 
Total revenues61,341 59,273 183,144 183,691 
Costs of Revenues:
Cost of service fee revenue33,383 31,524 98,776 88,357 
Cost of product revenue3,895 4,019 12,265 16,732 
Cost of pass-through revenue12,970 12,661 37,444 42,053 
Total costs of revenues50,248 48,204 148,485 147,142 
Gross profit11,093 11,069 34,659 36,549 
Selling, general and administrative expenses16,161 14,083 44,768 39,159 
Loss from operations(5,068)(3,014)(10,109)(2,610)
Interest expense, net165 365 873 1,154 
Loss on extinguishment of debt426  426  
Loss from continuing operations before income taxes(5,659)(3,379)(11,408)(3,764)
Income tax expense, net1,152 217 1,276 821 
Net loss from continuing operations(6,811)(3,596)(12,684)(4,585)
Income from discontinued operations before income taxes197,920 1,152 196,508 1,385 
Income tax expense, net33,758 241 36,315 436 
Net income from discontinued operations164,162 911 160,193 949 
Net income (loss) $157,351 $(2,685)$147,509 $(3,636)
Basic earnings (loss) per share:
Net loss from continuing operations per share$(0.32)$(0.18)$(0.60)$(0.23)
Net income from discontinued operations per share7.71 0.05 7.57 0.05 
Basic earnings (loss) per share$7.39 $(0.13)$6.97 $(0.18)
Diluted earnings (loss) per share:
Net loss from continuing operations per share$(0.32)$(0.18)$(0.60)$(0.23)
Net income from discontinued operations per share7.71 0.05 7.57 0.05 
Diluted earnings (loss) per share$7.39 $(0.13)$6.97 $(0.18)
Weighted average number of shares outstanding:
Basic21,28220,21121,16419,899
Diluted21,28220,21121,16419,899
Comprehensive income (loss):
Net income (loss) $157,351 $(2,685)$147,509 $(3,636)
Foreign currency translation adjustment(34)944 (343)(77)
Reclassifications of foreign currency translation adjustments realized upon disposal of business(327) (327) 
Total comprehensive income (loss)$156,990 $(1,741)$146,839 $(3,713)





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 September 30, 2021
Retained Accumulated
AdditionalEarningsOtherTotal
Common StockPaid-In(AccumulatedComprehensiveTreasury StockShareholders'
SharesAmountCapitalDeficit)Income (Loss)SharesAmountEquity
Balance, June 30, 202121,209,300 $21 $170,486 $(123,554)$(638)33,467 $(125)$46,190 
Net income— — — 157,351 — — — 157,351 
Stock-based compensation— — 4,962 — — — — 4,962 
Exercise of stock options35,050 — 227 — — — — 227 
Issuance of shares under stock-based compensation awards   — — — —  
Tax withholding on shares under stock-based compensation awards— —  — — — —  
Foreign currency translation— — — — (361)— — (361)
Balance, September 30, 202121,244,350 $21 $175,675 $33,797 $(999)33,467 $(125)$208,369 

Nine Months Ended September 30, 2021
Retained Accumulated
AdditionalEarningsOtherTotal
Common StockPaid-In(AccumulatedComprehensiveTreasury StockShareholders'
SharesAmountCapitalDeficit)Income (Loss)SharesAmountEquity
Balance, December 31, 202020,408,558 $20 $168,244 $(113,712)$(329)33,467 $(125)$54,098 
Net income— — — 147,509 — — — 147,509 
Stock-based compensation— — 8,417 — — — — 8,417 
Exercise of stock options178,133 — 923 — — — — 923 
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— — — — (670)— — (670)
Balance, September 30, 202121,244,350 $21 $175,675 $33,797 $(999)33,467 $(125)$208,369 
















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 September 30, 2020
Accumulated
AdditionalOtherTotal
Common StockPaid-InAccumulatedComprehensiveTreasury StockShareholders'
SharesAmountCapitalDeficitIncome (Loss)SharesAmountEquity
Balance, June 30, 202019,976,731 $19 $163,139 $(109,694)$(2,322)33,467 $(125)$51,017 
Net loss— — — (2,685)— — — (2,685)
Stock-based compensation— — 3,235 — — — — 3,235 
Exercise of stock options41,583 — 226 — — — — 226 
Issuance of shares under stock-based compensation awards263,324 1 — — — — — 1 
Tax withholding on shares under stock-based compensation awards— — (396)— — — — (396)
Foreign currency translation adjustment, net of taxes— — — — 944 — — 944 
Balance, September 30, 202020,281,638 $20 $166,204 $(112,379)$(1,378)33,467 $(125)$52,342 


Nine Months Ended September 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— — — (3,636)— — — (3,636)
Stock-based compensation— — 8,934 — — — — 8,934 
Exercise of stock options76,083 — 352 — — — — 352 
Issuance of shares under stock-based compensation awards739,678 1 — — — — — 1 
Tax withholding on shares under stock-based compensation awards— — (1,274)— — — — (1,274)
Foreign currency translation adjustment, net of taxes— — — — (77)— — (77)
Balance, September 30, 202020,281,638 $20 $166,204 $(112,379)$(1,378)33,467 $(125)$52,342 


















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)
Nine Months Ended September 30,
20212020
Cash flows from operating activities:
Net income (loss)$147,509 $(3,636)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization6,208 6,278 
Loss on early extinguishment of debt426  
Gain on LiveArea Transaction(200,817) 
Deferred income taxes2,717 126 
Stock-based compensation expense8,417 8,934 
Other95 494 
Changes in operating assets and liabilities:
Accounts receivable9,129 15,901 
Inventories410 (1,790)
Prepaid expenses, other receivables and other assets(617)(194)
Operating leases(448)(1,033)
Income taxes payable30,211 573 
Trade accounts payable, deferred revenues, accrued expenses and other liabilities(6,409)(24,150)
Net cash provided by (used in) operating activities(3,169)1,503 
Cash flows from investing activities:
Purchases of property and equipment(4,815)(2,755)
Proceeds from LiveArea Transaction, net of cash divested236,358  
Proceeds from sale of property and equipment31 145 
Net cash provided by (used in) investing activities231,574 (2,610)
Cash flows from financing activities:
Net proceeds from issuance of common stock923 352 
Taxes paid on behalf of employees for withheld shares(1,908)(1,274)
Payments on finance lease obligations(732)(968)
Payments on revolving loan(160,181)(88,407)
Borrowings on revolving loan126,681 90,407 
Payments on other debt(10,046)(1,414)
Borrowings on other debt49 148 
Net cash used in financing activities(45,214)(1,156)
Effect of exchange rates on cash, cash equivalents and restricted cash57 226 
Net increase (decrease) in cash and cash equivalents183,248 (2,037)
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 period193,999 8,940 
Restricted cash, end of period214 214 
Cash and cash equivalents discontinued operations, end of period 1,457 
Cash, cash equivalents and restricted cash, end of period$194,213 $10,611 
Supplemental cash flow information:
Cash paid for income taxes$6,293 $1,079 
Cash paid for interest$763 $1,078 
Non-cash investing and financing activities:
Property and equipment acquired under long-term debt and finance leases$2,139 $4,454 
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 income (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 consolidated 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"). All periods presented in the Company's Quarterly Report on Form 10-Q for the three and nine months ended September 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 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 and comprehensive income (loss) for the three months ended June 30, 2021 would be material to the Company’s results for that 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 nine months ended September 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 nine months ended September 30, 2020. See Note 3. Discontinued Operations.
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 September 30, 2020 is as follows (in thousands, except per share data):
Three Months Ended September 30, 2020
Adjustments
As Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Income from discontinued operations before income taxes$ $1,152 $— $1,152 
Income tax expense (benefit), net 375 (134)241 
Net income from discontinued operations 777 134 911 
Net income (loss) $(2,819)$— $134 $(2,685)
Basic earnings (loss) per share:
Net income (loss) from discontinued operations per share$ $0.04 $0.01 $0.05 
Basic income (loss) per share$(0.14)$— $0.01 $(0.13)
Diluted earnings (loss) per share:
Net income (loss) from discontinued operations per share$ $0.04 $0.01 $0.05 
Diluted income (loss) per share$(0.14)$— $0.01 $(0.13)
Comprehensive income (loss):
Net income (loss) $(2,819)$— $134 $(2,685)
Total comprehensive income (loss)$(1,875)$— $134 $(1,741)

The effect of the above adjustments on the consolidated statement of operations and comprehensive income (loss) for the nine months ended September 30, 2020 is as follows (in thousands, except per share data):
Nine Months Ended September 30, 2020
Adjustments
As Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Income from discontinued operations before income taxes$ $1,385 $— $1,385 
Income tax expense (benefit), net 837 (401)436 
Net income from discontinued operations 548 401 949 
Net income (loss) $(4,037)$— $401 $(3,636)
Basic earnings (loss) per share:
Net income (loss) from discontinued operations per share$ $0.03 $0.02 $0.05 
Basic income (loss) per share$(0.20)$— $0.02 $(0.18)
Diluted earnings (loss) per share:
Net income (loss) from discontinued operations per share$ $0.03 $0.02 $0.05 
Diluted income (loss) per share$(0.20)$— $0.02 $(0.18)
Comprehensive income (loss):
Net income (loss) $(4,037)$— $401 $(3,636)
Total comprehensive income (loss)$(4,114)$— $401 $(3,713)




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The effect of the above adjustments on the consolidated statement of shareholders’ equity for the three months ended September 30, 2020 is as follows (in thousands):
Three Months Ended September 30, 2020
Adjustments
Accumulated deficitAs Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Balance, June 30, 2020$(111,161)$— $1,467 $(109,694)
Net loss(2,819)— 134 (2,685)
Balance, September 30 2020$(113,980)$— $1,601 $(112,379)

The effect of the above adjustments on the consolidated statement of shareholders’ equity for the nine months ended September 30, 2020 is as follows (in thousands):
Nine Months Ended September 30, 2020
Adjustments
Accumulated deficitAs Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Balance, December 31, 2019$(109,943)$— $1,200 $(108,743)
Net loss(4,037)— 401 (3,636)
Balance, September 30 2020$(113,980)$— $1,601 $(112,379)

The effect of the above adjustments on the consolidated statement of cash flows for the nine months ended September 30, 2020 is as follows (in thousands):
Nine Months Ended September 30, 2020
Adjustments
As Previously ReportedDiscontinued OperationsDeferred Tax AssetAs Revised
Cash flows from operating activities:
Net loss$(4,037)$— $401 $(3,636)
Deferred income taxes$527 $— $(401)$126 
Net cash provided by operating activities$1,503 $— $ $1,503 

2. Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements and related disclosures in conformity with U.S. 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 nine months ended September 30, 2021; however, the extent and duration of future impacts of the COVID-19 pandemic and any
11


resulting 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.
Income Taxes
For the three and nine months ended September 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 approximately $250.0 million in cash, subject to certain adjustments and customary closing conditions including receipt of regulatory approvals. As of June 30, 2021, the Company 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 in the Company's June 30, 2021 Form 10-Q and is reported as a discontinued operation in this Form 10-Q for the three and nine months periods ended September 30, 2021 and 2020.
The LiveArea Transaction closed on August 25, 2021 for gross proceeds of approximately $250.0 million in cash, resulting in a pre-tax gain of $200.8 million. The Company incurred approximately $15 million in cash-based transaction related costs during 2021 and used proceeds of approximately $35 million to make estimated income tax payments related to the LiveArea Transaction, of which approximately $30 million was paid during the December 2021 quarter.
In connection with the LiveArea Transaction, the Company entered into a transition services agreement with the purchaser to provide certain accounting and administrative services for a period of up to twelve months. Income generated from transition services provided to the purchaser were $0.4 million for the three and nine months ended September 30, 2021 and are recorded in selling, general and administrative expenses from continuing operations in the condensed consolidated statement of operations and comprehensive income (loss).
Additionally, in connection with the LiveArea Transaction, in July 2021 the Company's Board of Directors approved a modification to the Company's existing stock-based compensation plans to provide for accelerated vesting of certain restricted stock awards and stock options for LiveArea personnel. As a result of the LiveArea Transaction, approximately 635,000 shares of restricted stock and approximately 160,000 stock options previously awarded to certain executives and employees were accelerated and fully vested on August 25, 2021. Also as a result of the LiveArea Transaction, the Company's Board of Directors approved the full payout of the 2021 cash compensation plan to certain LiveArea executives and employees. We recorded incremental compensation expense of $3.3 million and $0.3 million related to the stock-based compensation modification and full targeted payout of the 2021 cash compensation plan, respectively, which is included in net income (loss) from discontinued operations on the condensed consolidated statement of operations and comprehensive income (loss) for the three months ended September 30, 2021.
Furthermore, certain executives and employees of PFSweb, inclusive of certain LiveArea personnel, received cash transaction bonuses as a result of the successful completion of the LiveArea Transaction. We recorded compensation expense of $3.5 million for executives and employees of the LiveArea business segment, which is included in net income (loss) from discontinued operations on the condensed consolidated statement of operations and comprehensive income (loss) for each of the three and nine months ended September 30, 2021. In addition, we recorded compensation expense of $1.0 million for the executives and employees of PFSweb, which is included in selling, general and administrative expense on the condensed consolidated statement of operations and comprehensive income (loss) for each of the three and nine months ended September 30, 2021. Furthermore, a total of $0.7 million of compensation expense will be reflected in the results of continuing operations during the period from October 1, 2021 through March 31, 2022.
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.

13


At September 30, 2021 there were no remaining assets and liabilities of LiveArea following the close of the 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 sheet (in thousands):

December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$392 
Accounts receivable, net of allowance for doubtful accounts of $854
11,184 
Related party receivable730 
Other receivables444 
Prepaid expenses and other current assets1,170 
Current assets of discontinued operations13,920 
Property and equipment, net1,661 
Operating lease right-of use assets632 
Identifiable intangibles, net665 
Goodwill23,257 
Other assets5,502 
Long-term assets of discontinued operations31,717 
Total assets of discontinued operations$45,637 
LIABILITIES
Current liabilities:
Trade accounts payable$1,035 
Accrued expenses4,639 
Current portion of operating lease liabilities88 
Current portion of long-term debt and finance lease obligations3 
Deferred revenues520 
Current liabilities of discontinued operations6,285 
Long-term debt and capital lease obligations, less current portion4 
Operating lease liabilities541 
Long-term liabilities of discontinued operations545 
Total liabilities of discontinued operations$6,830 

14


The following table presents the major components of net income of LiveArea through the August 25, 2021 LiveArea Transaction close date and a reconciliation to the amounts reported in the unaudited condensed consolidated statements of operations and comprehensive income (loss) (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Revenues:
Service fee revenue$13,616 $17,563 $50,197 $52,256 
Pass-through revenue159  159  
Related party revenue 248 574 272 
Total revenues13,775 17,811 50,930 52,528 
Costs of revenues: