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Discontinued Operations and Related Party Investment | 9 Months Ended
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Sep. 30, 2021
Discontinued Operations And Disposal Groups [Abstract] |
Discontinued Operations and Related Party Investment | (14) Discontinued Operations and Related Party Investment In October 2020, the Company sold certain assets related to its Local Leads Platform, Call Marketplace and other assets not related to core conversational analytics. The purchaser is a related party controlled by a shareholder and officers of the Company. This divestiture represented a discontinued operation since the disposal enables the Company to focus more wholly on its core conversational analytics and sales engagement solution activities, and it will have a significant effect on the Company’s operations and financial results. The Company has no further involvement in the key strategic decision making or operations of the divested assets. Accordingly, we have presented the results of operations of these assets in the Condensed Consolidated Financial Statements as discontinued operations, net of tax, for historical periods. The Company received cash consideration at closing of approximately $2.3 million. No gain or loss on the sale of discontinued operations was recognized in the Condensed Consolidated Statement of Operations as it was sold to a related party. The net consideration received from the sale is recognized in the Company’s Consolidated Statements of Stockholder’s Equity. The sale also includes (i) contingent consideration based on the achievement of certain revenue and thresholds from the Call Marketplace, Local Leads Platform and the purchaser’s total business; (ii) certain contingent sale transaction consideration; (iii) shares of Class B common stock in the purchaser equal to the issuance of a 10% equity interest; and (iv) the cancellation of Company stock options for 1.5 million shares currently held by two officers of the Company who are involved in the transaction. In connection with the closing, the Company also entered into an administrative support services agreement with the related party purchaser pursuant to which the Company will provide services to the related party purchaser for a support services fee, with certain guaranteed payments to the Company in the first year and conditionally in the second year following closing. Support services fees related to this arrangement totaled $2.2 million and $5.1 million for the three and nine months ended September 30, 2021 and are included in the Company’s Condensed Consolidated Statements of Operations, net of the related expenses, within Service costs, Sales and marketing, Product development, and General and administrative. As of September 30, 2021, the net amount of $604,000 is due from the purchaser and is included in the Company’s Condensed Consolidated Balance Sheet within Prepaid and other current assets as of September 30, 2021. The net amount due to the purchaser of $1.1 million is included in the Company’s Condensed Consolidated Balance Sheet within Accounts payable as of December 31, 2020. The Company had determined that although we hold variable interests in the related party purchaser, we are not the primary beneficiary and are not required to consolidate the entity. We considered whether we have the ability to exercise significant influence over the operating and financial policies of the purchaser and do not believe these criteria were met. As a result, the Company has elected to measure the investment at cost because the equity securities do not have a readily determinable fair value. The investment balance of $341,000 is included in Other assets, net on the Company’s Condensed Consolidated Balance Sheet as of December 31, 2020. During the third quarter of 2021, the company sold its 10% equity interest for proceeds of $400,000 and a modification to the support service agreement minimum commitments. The Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2020, respectively, reflect the operations of the divested assets as a discontinued operation. Discontinued operations include the following:
|  | Nine Months Ended September 30, 2020 |  |  | Three Months Ended September 30, 2020 |
Revenue |  | $ | 38,597 |  |  | $ | 12,689 |
Expenses: |  |  |  |  |  |  |  |
Service costs |  |  | 29,563 |  |  |  | 9,657 |
Sales and marketing |  |  | 1,729 |  |  |  | 297 |
Product development |  |  | 1,851 |  |  |  | 587 |
General and administrative |  |  | 689 |  |  |  | 212 |
Total operating expenses |  |  | 33,832 |  |  |  | 10,753 |
Impairment of goodwill |  |  | (469 | ) |  |  | - |
Income from discontinued operations before provision for income taxes |  |  | 4,296 |  |  |  | 1,936 |
Income tax expense |  |  | 1,015 |  |  |  | 457 |
Total income from discontinued operations |  | $ | 3,281 |  |  | $ | 1,479 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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