10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2019

or

[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to ________

Commission File Number 001-35929

         National Research Corporation         

(Exact name of Registrant as specified in its charter)

Wisconsin	47-0634000
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1245 Q Street, Lincoln, Nebraska          68508

(Address of principal executive offices) (Zip Code)

(402) 475-2525

(Registrant’s telephone number, including area code)

Securities registered pursuant to 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.001 par value	NRC	The NASDAQ stock 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 check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T 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, 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 Act.) Yes ☐    No  ☒ 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Common Stock, $.001 par value, outstanding as of October 25, 2019: 24,920,050

NATIONAL RESEARCH CORPORATION

FORM 10-Q INDEX

For the Quarter Ended September 30, 2019

			Page No.
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Income	4
		Condensed Consolidated Statements of Comprehensive Income	5
		Condensed Consolidated Statements of Shareholders' Equity	6-8
		Condensed Consolidated Statements of Cash Flows	9
		Notes to Condensed Consolidated Financial Statements	10-23
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24-30
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
	Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	31
	Item 1A.	Risk Factors	31
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
	Item 6.	Exhibits	32
	Signatures		33

1

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can generally be identified as such because the context of the statement includes phrases such as National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), “believes,” “expects,” “may,” “could,” or other words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. In this Quarterly Report on Form 10-Q, statements relating to the future impact of recent accounting pronouncements, future customer needs and service models, the future sufficiency of our liquidity, future interest rates on our debt, the expected time period for recognition of equity based compensation cost, and future capital expenditure purchases, among others, are forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, some of which cannot be predicted or quantified, which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include, without limitation, the following factors:

● The possibility of non-renewal of our client service contracts and retention of key clients;

● Our ability to compete in our markets, which are highly competitive with new market entrants, and the possibility of increased price pressure and expenses;

● The effects of an economic downturn;

● The impact of consolidation in the healthcare industry;

● The impact of federal healthcare reform legislation or other regulatory changes;

● Our ability to attract and retain key managers and other personnel;

● The possibility that our intellectual property and other proprietary information technology could be copied or independently developed by our competitors;

● The possibility for failures or deficiencies in our information technology platform;

● The possibility that we could be subject to security breaches or computer viruses; and

● The factors set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, as such section may be updated or supplemented by Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q (including this Report).

Shareholders, potential investors and other readers are urged to consider these and other factors in evaluating the forward-looking statements, and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included are only made as of the date of this Quarterly Report on Form 10-Q and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances except as required by the federal securities laws.

2

PART I – Financial Information

ITEM 1. Financial Statements

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts and par value)
 

	September 30, 2019			December 31, 2018
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	8,358		$	12,991
Trade accounts receivable, less allowance for doubtful accounts of $138 and $175, respectively		15,308			11,922
Prepaid expenses		2,000			2,925
Income taxes receivable		556			348
Other current assets		348			224
Total current assets		26,570			28,410
Net property and equipment		13,696			14,153
Intangible assets, net		1,822			2,102
Goodwill		57,896			57,831
Deferred contract costs, net		3,993			3,484
Operating lease right-of-use assets		1,805			--
Other assets		1,867			2,052
Total assets	$	107,649		$	108,032
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of notes payable, net of unamortized debt issuance costs	$	4,133		$	3,667
Accounts payable		777			613
Accrued wages, bonus and profit sharing		5,192			5,798
Accrued expenses		3,504			2,834
Income taxes payable		14			636
Dividends payable		4,735			17,113
Deferred revenue		19,133			16,244
Other current liabilities		824			204
Total current liabilities		38,312			47,109
Notes payable, net of current portion		30,977			34,176
Deferred income taxes		7,210			6,276
Other long-term liabilities		2,175			1,388
Total liabilities		78,674			88,949
Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued		--			--
Common stock, $0.001 par value; authorized 60,000,000 shares, issued 30,100,762 in 2019 and 29,917,667 in 2018, outstanding 24,920,050 in 2019 and 24,800,796 in 2018		30			30
Additional paid-in capital		160,524			157,312
Retained earnings (accumulated deficit)		(96,817	)		(106,339	)
Accumulated other comprehensive loss, foreign currency translation adjustment		(2,442	)		(2,916	)
Treasury stock, at cost; 5,180,712 Common shares in 2019 and 5,116,871 shares in 2018		(32,320	)		(29,004	)
Total shareholders’ equity		28,975			19,083
Total liabilities and shareholders’ equity	$	107,649		$	108,032

See accompanying notes to condensed consolidated financial statements.

3

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for per share amounts, unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Revenue	$	32,465		$	30,013		$	95,359		$	89,047
Operating expenses:
Direct, exclusive of depreciation and amortization		12,109			11,780			35,269			35,685
Selling, general and administrative, exclusive of depreciation and amortization		8,706			7,679			24,732			23,486
Depreciation and amortization		1,430			1,388			4,285			3,996
Total operating expenses		22,245			20,847			64,286			63,167
Operating income		10,220			9,166			31,073			25,880
Other income (expense):
Interest income		10			3			24			57
Interest expense		(510	)		(544	)		(1,613	)		(990	)
Other, net		89			(242	)		(330	)		222
Total other (expense) income		(411	)		(783	)		(1,919	)		(711	)
Income before income taxes		9,809			8,383			29,154			25,169
Provision for income taxes		1,690			1,391			5,446			2,923
Net income	$	8,119		$	6,992		$	23,708		$	22,246
Earnings Per Share of Common Stock:
Basic Earnings Per Share:
Common (formerly Class A)	$	0.33		$	0.28		$	0.95		$	0.76
Class B	$	--		$	--		$	--		$	1.31
Diluted Earnings Per Share:
Common (formerly Class A)	$	0.31		$	0.27		$	0.92		$	0.73
Class B	$	--		$	--		$	--		$	1.27
Weighted average shares and share equivalents outstanding:
Common (formerly Class A) – basic		24,827			24,671			24,794			23,184
Class B – basic		--			--			--			3,527
Common (formerly Class A) – diluted		25,741			25,526			25,624			24,083
Class B – diluted		--			--			--			3,628

See accompanying notes to condensed consolidated financial statements.

4

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2019			2018		2019		2018
Net income	$	8,119		$	6,992	$	23,708	$	22,246
Other comprehensive income:
Foreign currency translation adjustment		(146	)		280		474		(418	)
Other comprehensive income	$	(146	)	$	280	$	474	$	(418	)
Comprehensive Income	$	7,973		$	7,272	$	24,182	$	21,828

See accompanying notes to condensed consolidated financial statements.

5

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED Consolidated Statements of Shareholders’ Equity     

(In thousands except share and per share amounts, unaudited)

	Common Stock (formerly Class A)		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balances at December 31, 2018	$	30	$	157,312	$	(106,339	)	$	(2,916	)	$	(29,004	)	$	19,083
Purchase of 28,657 shares treasury stock		--		--		--			--			(1,116	)		(1,116	)
Issuance of 86,247 common shares for the exercise of stock options		--		633		--			--			--			633
Issuance of 6,005 restricted common shares		--		--		--			--			--			--
Non-cash stock compensation expense		--		302		--			--			--			302
Dividends declared of $0.19 per common share		--		--		(4,724	)		--			--			(4,724	)
Other comprehensive income, foreign currency translation adjustment		--		--		--			365			--			365
Net income		--		--		8,196			--			--			8,196
Balances at March 31, 2019	$	30	$	158,247	$	(102,867	)	$	(2,551	)	$	(30,120	)	$	22,739
Purchase of 2,977 shares treasury stock		--		--		--			--			(137	)		(137	)
Issuance of 18,000 common shares for the exercise of stock options		--		137		--			--			--			137
Non-cash stock compensation expense		--		307		--			--			--			307
Dividends declared of $0.19 per common share		--		--		(4,727	)		--			--			(4,727	)
Other comprehensive income, foreign currency translation adjustment		--		--		--			255			--			255
Net income		--		--		7,393			--			--			7,393
Balances at June 30, 2019	$	30	$	158,691	$	(100,201	)	$	(2,296	)	$	(30,257	)	$	25,967
Purchase of 32,207 shares treasury stock		--		--		--			--			(2,063	)		(2,063	)
Issuance of 72,843 common shares for the exercise of stock options		--		1,525		--			--			--			1,525
Non-cash stock compensation expense		--		308		--			--			--			308
Dividends declared of $0.19 per common share		--		--		(4,735	)		--			--			(4,735	)
Other comprehensive income, foreign currency translation adjustment		--		--		--			(146	)		--			(146	)
Net income		--		--		8,119			--			--			8,119
Balances at September 30, 2019	$	30	$	160,524	$	(96,817	)	$	(2,442	)	$	(32,320	)	$	28,975

See accompanying notes to condensed consolidated financial statements.

6

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED Consolidated Statements of Shareholders’ Equity

(In thousands, except share and per share amounts, unaudited)

	Common Stock (formerly Class A)		Class B Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balances at December 31, 2017	$	26	$	4		$	51,025		$	77,574		$	(1,635	)	$	(36,953	)	$	90,041
Purchase of 30,180 shares of class A and 3,677 shares of class B treasury stock		--		--			--			--			--			(1,272	)		(1,272	)
Issuance of 74,769 class A and 9,296 class B common shares for the exercise of stock options		--		--			737			--			--			--			737
Issuance of 6,793 class A restricted common shares		--		--			--			--			--			--			--
Non-cash stock compensation expense		--		--			454			--			--			--			454
Dividends declared of $0.10 per class A and $0.60 per class B common share		--		--			--			(4,223	)		--			--			(4,223	)
Cumulative effect adjustment for adoption of ASC 606, net of income tax		--		--			--			2,735			--			--			2,735
Other comprehensive income, foreign currency translation adjustment		--		--			--			--			(414	)		--			(414	)
Net income		--		--			--			7,306			--			--			7,306
Balances at March 31, 2018	$	26	$	4		$	52,216		$	83,392		$	(2,049	)	$	(38,225	)	$	95,364
Purchase of 126,617 shares of class A treasury stock		--		--			--			--			--			(4,358	)		(4,358	)
Issuance of 270,189 class A common shares for the exercise of stock options		--		--			4,182			--			--			--			4,182
Forfeitures of (10,289) class A restricted common shares		--		--			--			--			--			--			--
Non-cash stock compensation expense		--		--			541			--			--			--			541
Settlement of class B restricted common shares and stock options in connection with Recapitalization for cash of $3,271 and 90,369 class A common shares		--		--			(2,548	)		--			--			(723	)		(3,271	)
Settlement of class B common shares in connection with Recapitalization (3,527,246 class B common shares exchanged for $69,099 cash and 3,527,246 class A common shares)		4		--			118,335			--			--			(187,438	)		(69,099	)
Retirement of 4,328,552 class B common shares in connection with Recapitalization		--		(4	)		(17,112	)		(186,944	)		--			204,060			--
Dividends declared of $0.17 per class A common share		--		--			--			(4,206	)		--			--			(4,206	)
Other comprehensive income, foreign currency translation adjustment		--		--			--			--			(284	)		--			(284	)
Net income		--		--			--			7,948			--			--			7,948
Balances at June 30, 2018	$	30	$	--		$	155,614		$	(99,810	)	$	(2,333	)	$	(26,684	)	$	26,817

See accompanying notes to condensed consolidated financial statements.

7

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED Consolidated Statements of Shareholders’ Equity

(In thousands, except share and per share amounts, unaudited)

	Common Stock (formerly Class A)		Class B Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balances at June 30, 2018	$	30	$	--	$	155,614	$	(99,810	)	$	(2,333	)	$	(26,684	)	$	26,817
Purchase of 12,771 shares of class A shares of treasury stock		--		--		--		--			--			(511	)		(511	)
Issuance of 36,000 class A common shares for the exercise of stock options		--		--		510		--			--			--			510
Non-cash stock compensation expense		--		--		260		--			--			--			260
Dividends declared of $0.17 per class A common share		--		--		--		(4,209	)		--			--			(4,209	)
Other comprehensive income, foreign currency translation adjustment		--		--		--		--			280			--			280
Net income		--		--		--		6,992			--			--			6,992
Balances at September 30, 2018	$	30	$	--	$	156,384	$	(97,027	)	$	(2,053	)	$	(27,195	)	$	30,139

See accompanying notes to condensed consolidated financial statements.

8

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Nine months ended
	September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	23,708		$	22,246
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,285			3,996
Deferred income taxes		919			1,775
Reserve for uncertain tax positions		(262	)		(297	)
Non-cash share-based compensation expense		917			1,255
Loss on disposal of property and equipment		40			212
Net changes in assets and liabilities:
Trade accounts receivable		(3,343	)		(1,842	)
Prepaid expenses and other current assets		978			(1,632	)
Deferred contract costs, net		(508	)		1
Operating lease assets and liability, net		(10	)		--
Accounts payable		69			147
Accrued expenses, wages, bonuses and profit sharing		138			(1,310	)
Income taxes receivable and payable		(829	)		(554	)
Deferred revenue		2,872			1,939
Net cash provided by operating activities		28,974			25,936
Cash flows from investing activities:
Purchases of property and equipment		(3,429	)		(4,858	)
Net cash used in investing activities		(3,429	)		(4,858	)
Cash flows from financing activities:
Payments related to Recapitalization		--			(72,370	)
Proceeds from issuance of note payable		--			40,000
Borrowings on line of credit		21,000			2,500
Payments on line of credit		(21,000	)		(2,500	)
Payment of debt issuance costs		--			(187	)
Payments on notes payable		(2,767	)		(2,170	)
Payments on finance lease obligations		(223	)		(104	)
Payment of employee payroll tax withholdings on share-based awards exercised		(1,021	)		(712	)
Payment of dividends on common stock		(26,564	)		(12,650	)
Net cash used in financing activities		(30,575	)		(48,193	)
Effect of exchange rate changes on cash		397			(345	)
Change in cash and cash equivalents		(4,633	)		(27,460	)
Cash and cash equivalents at beginning of period		12,991			34,733
Cash and cash equivalents at end of period	$	8,358		$	7,273
Supplemental disclosure of cash paid for:
Interest, net of capitalized amounts	$	1,558		$	767
Income taxes	$	5,607		$	2,017
Supplemental disclosure of non-cash investing and financing activities:
Common stock (formerly class A) issued in the Recapitalization in exchange for then-existing class B shares and options.	$	--		$	121,371
Finance lease obligations originated for property and equipment	$	206		$	879
Stock tendered to the Company for cashless exercise of stock options in connection with equity incentive plans	$	2,295		$	5,429

See accompanying notes to condensed consolidated financial statements.

9

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business and basis of presentation

National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), is a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare organizations in the United States and Canada. Our portfolio of solutions represent a unique set of capabilities that individually and collectively provide value to our clients. The solutions are offered at an enterprise level through the Voice of the Customer ("VoC") platform, The Governance Institute, and legacy Experience solutions.

Our six operating segments are aggregated into one reporting segment because they have similar economic characteristics and meet other aggregation criteria from the Financial Accounting Standards Board (“FASB”) guidance on segment disclosure. The six operating segments are Experience, The Governance Institute, Market Insights, Transparency, National Research Corporation Canada and Transitions, which offer a portfolio of solutions that address specific needs around market insight, experience, transparency and governance for healthcare providers, payers and other healthcare organizations.

Our condensed consolidated balance sheet at December 31, 2018 was derived from our audited consolidated balance sheet as of that date. All other financial statements contained herein are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) that we consider necessary for a fair presentation of financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States.

Information and footnote disclosures included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto that are included in our Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2019.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, National Research Corporation Canada, doing business as NRC Health Canada. All significant intercompany transactions and balances have been eliminated.

Our Canadian subsidiary uses as its functional currency the local currency of the country in which it operates. It translates its assets and liabilities into U.S. dollars at the exchange rate in effect at the balance sheet date. It translates its revenue and expenses at the average exchange rate during the period. We include translation gains and losses in accumulated other comprehensive income (loss), a component of shareholders’ equity. Gains and losses related to transactions denominated in a currency other than the functional currency of the country in which we operate and short-term intercompany accounts are included in other income (expense) in the consolidated statements of income. 

10

Revenue Recognition

We derive a majority of our revenues from our annually renewable subscription-based service agreements with our customers, which include performance measurement and improvement services, healthcare analytics and governance education services. Such agreements are generally cancelable on short or no notice without penalty. See Note 3 for further information about our contracts with customers. We account for revenue using the following steps:

● Identify the contract, or contracts, with a customer

● Identify the performance obligations in the contract

● Determine the transaction price

● Allocate the transaction price to the identified performance obligations; and

● Recognize revenue when, or as, we satisfy the performance obligations.

Our revenue arrangements with a client may include combinations of more than one service offering which may be executed at the same time, or within close proximity of one another. We combine contracts with the same customer into a single contract for accounting purposes when the contract is entered into at or near the same time and the contracts are negotiated together. For contracts that contain more than one separately identifiable performance obligation, the total transaction price is allocated to the identified performance obligations based upon the relative stand-alone selling prices of the performance obligations. The stand-alone selling prices are based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost-plus margin or residual approach. We estimate the amount of total contract consideration we expect to receive for variable arrangements based on the most likely amount we expect to earn from the arrangement based on the expected quantities of services we expect to provide and the contractual pricing based on those quantities. We only include some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. We consider the sensitivity of the estimate, our relationship and experience with the client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. Our revenue arrangements do not contain any significant financing element due to the contract terms and the timing between when consideration is received and when the service is provided.

Our arrangements with customers consist principally of four different types of arrangements: 1) subscription-based service agreements; 2) one-time specified services performed at a single point in time; 3) fixed, non-subscription service agreements; and 4) unit-priced service agreements.

Subscription-based services - Services that are provided under subscription-based service agreements are usually for a twelve month period and represent a single promise to stand ready to provide reporting, tools and services throughout the subscription period as requested by the customer. These agreements are renewable at the option of the customer at the completion of the initial contract term for an agreed upon price increase each year. These agreements represent a series of distinct monthly services that are substantially the same, with the same pattern of transfer to the customer as the customer receives and consumes the benefits throughout the contract period. Accordingly, subscription services are recognized ratably over the subscription period. Subscription services are typically billed annually in advance but may also be billed on a quarterly and monthly basis.

One-time services – These agreements typically require us to perform a specific one-time service in a particular month. We are entitled to a fixed payment upon completion of the service. Under these arrangements, we recognize revenue at the point in time we complete the service and it is accepted by the customer.

Fixed, non-subscription services – These arrangements typically require us to perform an unspecified amount of services for a fixed price during a fixed period of time. Revenues are recognized over time based upon the costs incurred to date in relation to the total estimated contract costs. In determining cost estimates, management uses historical and forecasted cost information which is based on estimated volumes, external and internal costs and other factors necessary in estimating the total costs over the term of the contract. Changes in estimates are accounted for using a cumulative catch up adjustment which could impact the amount and timing of revenue for any period.

Unit-price services – These arrangements typically require us to perform certain services on a periodic basis as requested by the customer for a per-unit amount which is typically billed in the month following the performance of the service. Revenue under these arrangements is recognized over the time the services are performed at the per-unit amount.

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We recognize contract assets or unbilled receivables related to revenue recognized for services completed but not invoiced to the clients. Unbilled receivables are classified as receivables when we have an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when we invoice clients in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation.  

Deferred Contract Costs

Deferred contract costs, net is stated at gross deferred costs less accumulated amortization. We defer commissions and incentives, including payroll taxes, if they are incremental and recoverable costs of obtaining a renewable customer contract. Deferred contract costs are amortized over the estimated term of the contract, including renewals, which generally ranges from three to five years. The contract term was estimated by considering factors such as historical customer attrition rates and product life. The amortization period is adjusted for significant changes in the estimated remaining term of a contract.  An impairment of deferred contract costs is recognized when the unamortized balance of deferred contract costs exceeds the remaining amount of consideration we expect to receive net of the expected future costs directly related to providing those services.  We deferred incremental costs of obtaining a contract of $1.0 million and $616,000 in the three-month periods ended September 30, 2019 and 2018, respectively. We deferred incremental costs of obtaining a contract of $2.6 million and $1.8 million in the nine-month periods ended September 30, 2019 and 2018, respectively. Total amortization by expense classification for the three and nine month-periods ended September 30, 2019 and 2018 was as follows:

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
	(In thousands)
Direct expenses	$	10	$	13	$	26	$	73
Selling, general and administrative expenses		738		601		2,072		1,815
Total	$	748	$	614	$	2,097	$	1,888

Additional expense included in selling, general and administrative expenses for impairment of costs capitalized due to lost clients was $1,000 and $12,000 for the three months ended September 30, 2019 and 2018, respectively and $22,000 and $31,000 in the nine months ended September 30, 2019 and 2018, respectively. We have elected the practical expedient to expense contract costs when incurred for any nonrenewable contracts with a term of one year or less.

Leases

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“Topic 842” or the “New Leases Standard”) effective January 1, 2019 using a modified retrospective transition, with the cumulative-effect adjustment recorded to retained earnings as of the effective date. As a result, the financial results for periods prior to 2019 have not been restated. We elected practical expedients related to existing leases at transition to not reassess whether contracts are or contain leases, to not reassess lease classification, initial direct costs, or lease terms. Additionally, we elected the practical expedient to account for lease and non-lease components as a single lease component for all asset classifications. We have also made a policy election to not record short-term leases with a duration of 12 months or less on the balance sheet.

Topic 842 requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset on the balance sheet for operating leases. We recorded $2.3 million of ROU assets and $2.4 million of lease liabilities related to operating leases at the date of transition. The ROU assets recorded were net of $43,000 of accrued liabilities and prepaid expenses representing previously deferred (prepaid) rent. There was no significant impact to the unaudited condensed consolidated statements of income, comprehensive income, shareholders’ equity or cash flows. Accounting for finance leases is substantially unchanged.

We determine whether a lease is included in an agreement at inception. Operating lease ROU assets are included in operating lease right-of-use assets in our consolidated balance sheet. Finance lease assets are included in property and equipment. Operating and finance lease liabilities are included in other current liabilities and other long term liabilities. Certain lease arrangements may include options to extend or terminate the lease. We include these provisions in the ROU and lease liabilities only when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term and is included in direct expenses and selling, general and administrative expenses. Our lease agreements do not contain any residual value guarantees.

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ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments during the lease term. ROU assets and lease liabilities are recorded at lease commencement based on the estimated present value of lease payments. Because the rate of interest implicit in each lease is not readily determinable, we use our estimated incremental collateralized borrowing rate at lease commencement, to calculate the present value of lease payments. When determining the appropriate incremental borrowing rate, we consider our available credit facilities, recently issued debt and public interest rate information.

Fair Value Measurements

Our valuation techniques are based on maximizing observable inputs and minimizing the use of unobservable inputs when measuring fair value. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. The inputs are then classified into the following hierarchy: (1) Level 1 Inputs—quoted prices in active markets for identical assets and liabilities; (2) Level 2 Inputs—observable market-based inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities in active markets, quoted prices for similar or identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; (3) Level 3 Inputs—unobservable inputs.

The following details our financial assets within the fair value hierarchy at September 30, 2019 and December 31, 2018:

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of September 30, 2019
Money market funds	$	2,605	$	--	$	--	$	2,605
Total cash equivalents	$	2,605	$	--	$	--	$	2,605
As of December 31, 2018
Money market funds	$	1,848	$	--	$	--	$	1,848
Total cash equivalents	$	1,848	$	--	$	--	$	1,848

There were no transfers between levels during the three and nine-month periods ended September 30, 2019.

Our long-term debt described in Note 5 is recorded at historical cost. The fair value of long-term debt is classified in Level 2 of the fair value hierarchy and was estimated based primarily on estimated current rates available for debt of the same remaining duration and adjusted for nonperformance and credit. The following are the carrying amount and estimated fair values of long-term debt:

	September 30, 2019		December 31, 2018
	(In thousands)
Total carrying amount of long-term debt	$	35,229	$	37,966
Estimated fair value of long-term debt	$	36,311	$	38,257

The carrying amounts of accounts receivable, accounts payable, and accrued expenses approximate their fair value. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which includes ROU assets, property and equipment, goodwill, intangibles and cost method investments, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). As of September 30, 2019 and December 31, 2018, there was no indication of impairment related to these assets.

Contingencies

From time to time, we are involved in certain claims and litigation arising in the normal course of business. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. Legal fees, net of estimated insurance recoveries, are expensed as incurred.

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Recent Accounting 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.  This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for years beginning after December 15, 2019 and interim periods within those fiscal years. We believe our adoption will not significantly impact our results of operations and financial position.  

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40). This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The guidance is to be applied either retrospectively or prospectively and is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the method of adoption and impact that this guidance will have upon our results of operations and financial position and have not yet determined whether early adoption will be elected.

(2) RECAPITALIZATION

On April 16, 2018, our shareholders approved, among other things, an amendment to our Amended and Restated Articles of Incorporation (the “Articles”) to effect a recapitalization (the “Recapitalization”) pursuant to which each share of our then-existing class B common stock was exchanged for one share of the our then-existing Class A common stock plus $19.59 in cash, without interest. On April 17, 2018, we filed an amendment to our Articles effecting the Recapitalization, followed by an amendment and restatement of our Articles, which resulted in the elimination of our class B common stock and the reclassification of our class A common stock as a share of Common Stock, par value $0.001 per share (“Common Stock”). We issued 3,617,615 shares of Common Stock and paid $72.4 million in exchange for all class B shares outstanding and to settle outstanding share-based awards for class B common stock.

(3) CONTRACTS WITH CUSTOMERS

The following table disaggregates revenue based on timing of revenue recognition (In thousands):

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Subscription services recognized ratably over time	$	28,629	$	26,328	$	84,460	$	77,746
Services recognized at a point in time		1,606		807		4,231		2,923
Fixed, non-subscription recognized over time		1,043		973		2,083		2,561
Unit price services recognized over time		1,187		1,905		4,585		5,817
Total revenue		32,465		30,013		95,359		89,047

Our solutions within the digital VoC platform accounted for 63.8% and 51.2% of total revenue, in the three-month periods ending September 30, 2019 and 2018, respectively, and 61.3% and 48.7% of total revenue in the nine-month periods ending September 30, 2019 and 2018, respectively. The remaining revenue consists of legacy Experience and Governance Solutions.  

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

	September 30, 2019			December 31, 2018
	(In thousands)
Accounts receivable	$	15,308		$	11,922
Contract assets included in other current assets	$	133		$	53
Deferred revenue	$	(19,133	)	$	(16,244	)

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Significant changes in contract assets and contract liabilities during the nine months ended September 30, 2019 and 2018 are as follows (in thousands):

	Nine months ended September 30, 2019						Nine months ended September 30, 2018
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(15,214	)	$	-		$	(15,377	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			17,829			-			17,522
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(51	)		-			(71	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration					274						(145	)
Decreases due to impairment		-			-			-			-
Increases due to revenue recognized in the period with additional performance obligations before invoicing		131			-			65			-

We have elected to apply the practical expedient to not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Total remaining contract revenue for contracts with original duration of greater than one year expected to be recognized in the future related to performance obligations that are unsatisfied at September 30, 2019 approximated $1,252,000, of which $308,000, $889,000 and $55,000 will be recognized during the remainder of 2019, 2020 and 2021, respectively.

(4) INCOME TAXES

The effective tax rate for the three-month period ended September 30, 2019 increased to 17.2% compared to 16.6% for the same period in 2018 primarily due to a tax depreciation method change election for software development costs creating an income tax benefit of $308,000 in 2018, additional withholding on unrepatriated Canadian earnings of $90,000 and higher projected state taxes. These were partially offset by increased tax benefits from the exercise of options and dividends paid to non-vested shareholders of $459,000. The effective tax rate for the nine-month period ended September 30, 2019 increased to 18.7% compared to 11.6% for the same period in 2018. The effective tax rate for the nine-month period ended September 30, 2019, was higher mainly due to income tax benefits from the Recapitalization due to accelerated vesting of restricted stock and settlement of stock options of $1.1 million, a tax depreciation method change election for software development costs creating an income tax benefit of $308,000 in 2018 and a $247,000 reduction in tax benefits from the exercise of options and dividends paid to non-vested shareholders compared to 2018. In addition, there was additional withholding on unrepatriated Canadian earnings of $90,000. This was partially offset by less non-deductible fees of $154,000 primarily related to the Recapitalization.

(5) NOTES PAYABLE

Our long-term debt consists of the following (In thousands):  

	September 30, 2019			December 31, 2018
Term Loans	$	35,229		$	37,996
Less: current portion		(4,133	)		(3,667	)
Less: unamortized debt issuance costs		(119	)		(153	)
Notes payable, net of current portion	$	30,977		$	34,176

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Our credit agreement (the “Credit Agreement”) with First National Bank of Omaha, includes (i) a $15,000,000 revolving credit facility (the “Line of Credit”), (ii) a $40,000,000 term loan (the “Term Loan”) and (iii) a $15,000,000 delayed draw-dawn term facility (the “Delayed Draw Term Loan”). The Term Loan was used to fund, in part, the cash payment to the holders of the class B common stock in connection with the Recapitalization and certain costs of the Recapitalization. The Delayed Draw Term Loan may be used to fund any permitted future business acquisitions or repurchases of our Common Stock and the Line of Credit is used to fund ongoing working capital needs and for other general corporate purposes.

The Term Loan is payable in monthly installments of $462,988 through April 2020 and $526,362 thereafter, with a balloon payment due at maturity in April 2023. The Term Loan bears interest at a fixed rate per annum of 5%.

Borrowings under the Line of Credit and the Delayed Draw Term Loan, if any, bear interest at a floating rate equal to the 30-day London Interbank Offered Rate plus 225 basis points (4.33% at September 30, 2019). Interest on the Line of Credit accrues and is payable monthly. Principal amounts outstanding under the Line of Credit are due and payable in full at maturity, in April 2021. As of September 30, 2019, there were no borrowings outstanding under the Line of Credit and we had the availability to borrow $15.0 million. There were no borrowings outstanding under the Line of Credit at December 31, 2018. The weighted average interest rate on borrowings on the Line of Credit for the three and nine-month periods ended September 30, 2019 was 4.62% and 4.72%, respectively. There have been no borrowings on the Delayed Draw Term Loan since origination.

The Credit Agreement is collateralized by substantially all of our assets, subject to permitted liens and other agreed exceptions, and contains customary representations, warranties, affirmative and negative covenants (including financial covenants) and events of default. The negative covenants include, among other things, restrictions regarding the incurrence of indebtedness and liens, repurchases of our Common Stock and acquisitions, subject in each case to certain exceptions. The Credit Agreement also contains certain financial covenants with respect to a minimum fixed charge coverage ratio of 1.10x and a maximum cash flow leverage ratio of 3.00x. The special dividend paid on January 15, 2019, is excluded from the calculation of the fixed charge coverage ratio pursuant to a consent received from the lender. As of September 30, 2019, we were in compliance with these financial covenants. 

(6) SHARE-BASED COMPENSATION

We measure and recognize compensation expense for all share-based payments based on the grant-date fair value of those awards. All of our existing stock option awards and unvested stock awards have been determined to be equity-classified awards. We account for forfeitures as they occur. We completed a Recapitalization in April 2018 which, among other things, settled all then-existing outstanding class B share-based awards and resulted in the elimination of the class B common stock. As a result, we accelerated vesting of all outstanding class B share based awards, resulting in accelerated share-based compensation of $331,000 in the nine-month period ended September 30, 2018. All outstanding class B share-based awards were then settled for the same stock to cash proportion of the class B common stock, less the exercise price, if any, which approximated the awards’ intrinsic values.

The 2001 Equity Incentive Plan provided for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of 1,800,000 shares of our former class A common stock and 300,000 shares of our former class B common stock. Stock options granted could have been either nonqualified or incentive stock options. Stock options vest over one to five years following the date of grant and option terms are generally five to ten years following the date of grant. Due to the expiration of the 2001 Equity Incentive Plan, at December 31, 2015, there were no shares of stock available for future grants.

The 2004 Non-Employee Director Stock Plan, as amended (the “2004 Director Plan”), is a nonqualified plan that provides for the granting of options with respect to 3,000,000 shares of the our Common Stock and, prior to the Recapitalization, 500,000 shares of our former class B common stock. The 2004 Director Plan provides for grants of nonqualified stock options to each of our non-employee directors. Beginning in 2018, on the date of each annual meeting of our shareholders, options to purchase shares of Common Stock equal to an aggregate grant date fair value of $100,000 are granted to each non-employee director that is elected or retained as a director at each such meeting. Stock options vest approximately one year following the date of grant and option terms are generally ten years following the date of grant, or three years in the case of termination of the outside director’s service.

The 2006 Equity Incentive Plan (the “2006 Equity Incentive Plan”), as amended, provides for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of 1,800,000 shares of Common Stock and, prior to the Recapitalization, 300,000 shares of our former class B common stock. Stock options granted may be either incentive stock options or nonqualified stock options. Vesting terms vary with each grant and option terms are generally five to ten years following the date of grant. 

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We granted options to purchase 100,615 and 116,276 shares of our Common Stock during the nine-month periods ended September 30, 2019 and 2018, respectively. Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant. The fair value of the stock options granted was estimated using a Black-Scholes valuation model with the following weighted average assumptions:

	2019			2018
Expected dividend yield at date of grant		2.60	%		2.59	%
Expected stock price volatility		34.01	%		32.47	%
Risk-free interest rate		2.38	%		2.51	%
Expected life of options (in years)		7.5			7.3

The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. The expected volatility was based on historical monthly price changes of our stock based on the expected life of the options at the date of grant. The expected life of options is the average number of years we estimate that options will be outstanding. We consider groups of associates that have similar historical exercise behavior separately for valuation purposes.

The following table summarizes stock option activity under the 2001 and 2006 Equity Incentive Plans and the 2004 Director Plan for the nine-month period ended September 30, 2019:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2018		1,373,209		$	15.99
Granted		100,615		$	41.64
Exercised		(177,090	)	$	12.96			$	6,548
Forfeited		--		$	--
Outstanding at September 30, 2019		1,296,734		$	18.39		4.81	$	51,038
Exercisable at September 30, 2019		858,349		$	15.02		3.52	$	36,675

As of September 30, 2019, the total unrecognized compensation cost related to non-vested stock option awards was approximately $1.7 million which was expected to be recognized over a weighted average period of 2.98 years.

The following table summarizes information regarding non-vested stock granted to associates under the 2006 Equity Incentive Plan for the nine-month period ended September 30, 2019:

	Common Shares Outstanding		Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2018		78,171	$	15.61
Granted		6,005		38.30
Vested		--		--
Forfeited		--	$	--
Outstanding at September 30, 2019		84,176	$	17.23

As of September 30, 2019, the total unrecognized compensation cost related to non-vested stock awards was approximately $484,000 and is expected to be recognized over a weighted average period of 3.03 years. 

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(7) GOODWILL AND OTHER INTANGIBLE ASSETS

The following represents a summary of changes in our carrying amount of goodwill for the nine months ended September 30, 2019:

	(In thousands)
Balance as of December 31, 2018	$	57,831
Foreign currency translation		65
Balance as of September 30, 2019	$	57,896

 Intangible assets consisted of the following:

	September 30, 2019			December 31, 2018
	(In thousands)
Non-amortizing other intangible assets:
Trade name	$	1,191		$	1,191
Amortizing other intangible assets:
Customer related		9,334			9,327
Technology		1,360			1,360
Trade name		1,572			1,572
Total other intangible assets		13,457			13,450
Accumulated amortization		(11,635	)		(11,348	)
Other intangible assets, net	$	1,822		$	2,102

(8) PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	September 30, 2019			December 31, 2018
	(In thousands)
Property and equipment at cost	$	48,245		$	44,730
Accumulated depreciation		(34,549	)		(30,577	)
Property and equipment, net	$	13,696		$	14,153

(9) EARNINGS PER SHARE

Prior to the Recapitalization, net income per share of our former class A common stock and former class B common stock was computed using the two-class method. Basic net income per share was computed by allocating undistributed earnings to common shares and using the weighted-average number of common shares outstanding during the period.

Diluted net income per share was computed using the weighted-average number of common shares and, if dilutive, the potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method.

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The liquidation rights and the rights upon the consummation of an extraordinary transaction were the same for the holders of our former class A common stock and former class B common stock. Other than share distributions and liquidation rights, the amount of any dividend or other distribution payable on each share of former class A common stock was equal to one-sixth (1/6^th) of the amount of any such dividend or other distribution payable on each share of former class B common stock. As a result, the undistributed earnings for each period were allocated based on the contractual participation rights of the former class A and former class B common stock as if the earnings for the year had been distributed.

As described in Note 2, we completed a Recapitalization in April 2018, resulting in the elimination of the class B common stock and settlement of all then-existing outstanding class B share-based awards and reclassification of all class A common stock to Common Stock. The Recapitalization was effective on April 17, 2018. Therefore, income was allocated between the former class A and class B stock using the two-class method through April 16, 2018, and fully allocated to the Common Stock (formerly class A) following the Recapitalization.

We had 27,284 and 107,512 options of Common Stock (former class A shares) for the three-month periods ended September 30, 2019 and 2018, respectively which have been excluded from the diluted net income per share computation because their inclusion would be anti-dilutive.

	Three months Ended September 30, 2019			Three months Ended September 30, 2018
	Common Stock			Common Stock (formerly Class A)
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	8,119		$	6,992
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(27	)		(22	)
Net income attributable to common shareholders	$	8,092		$	6,970
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		24,827			24,671
Net income per share – basic	$	0.33		$	0.28
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	8,092		$	6,970
Denominator for net income per share - diluted:
Weighted average common shares outstanding - basic		24,827			24,671
Weighted average effect of dilutive securities – stock options		914			855
Denominator for diluted earnings per share – adjusted weighted average shares		25,741			25,526
Net income per share – diluted	$	0.31		$	0.27

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We had 12,493 and 88,572 options of Common Stock (former class A shares) for the nine-month periods ended September 30, 2019 and 2018, respectively which have been excluded from the diluted net income per share computation because their inclusion would be anti-dilutive

	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
	Common Stock			Common Stock (formerly Class A)			Class B Common Stock
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	23,708		$	17,622		$	4,624
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(80	)		(61	)		(18	)
Net income attributable to common shareholders	$	23,628		$	17,561		$	4,606
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		24,794			23,184			3,527
Net income per share – basic	$	0.95		$	0.76		$	1.31
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	23,628		$	17,561		$	4,606
Denominator for net income per share - diluted:
Weighted average common shares outstanding - basic		24,794			23,184			3,527
Weighted average effect of dilutive securities – stock options		830			899			101
Denominator for diluted earnings per share – adjusted weighted average shares		25,624			24,083			3,628
Net income per share – diluted	$	0.92		$	0.73		$	1.27

(10) LEASES

We lease printing equipment in the United States, and office space in Canada, California, Georgia, Washington, and Tennessee. The leases remaining terms as of September 30, 2019 range from less than one year to 5.9 years.

Certain equipment and office lease agreements include provisions for periodic adjustments to rates and charges. The rates and charges are adjusted based on actual usage or actual costs for internet, common area maintenance, taxes or insurance, as determined by the lessor and are considered variable lease costs.

The components of lease expense for the three and nine-month periods ended September 30, 2019 included:

	Three months ended September 30, 2019		Nine months ended September 30, 2019
	(In thousands)
Operating leases	$	196	$	601
Finance leases:
Asset amortization		65		189
Interest on lease liabilities		11		31
Variable lease cost		29		72
Short-term lease cost		10		29
Total net lease cost	$	311	$	922

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Supplemental balance sheet information related to leases (in thousands):     

	September 30, 2019		January 1, 2019
Operating leases:
Operating ROU assets	$	1,805	$	2,308	(1)
Current operating lease liabilities		589		699	(1)
Noncurrent operating lease liabilities		1,248		1,652	(1)
Total operating lease liabilities	$	1,837	$	2,351	(1)

(1) Represents the December 31, 2018 balance recorded at implementation of Topic 842

	September 30, 2019			December 31, 2018
Finance leases:
Furniture and equipment	$	1,095		$	1,062
Computer Equipment		551			487
Computer Software		224			224
Property and equipment under finance lease, gross		1,870			1,773
Less accumulated amortization		(959	)		(839	)
Property and equipment under finance lease, net	$	911		$	934
Current obligations of finance leases	$	235		$	204
Noncurrent obligations of finance leases		629			676
Total finance lease liabilities	$	864		$	880
Weighted average remaining lease term (in years):
Operating leases		4.22
Finance leases		3.77
Weighted average discount rate:
Operating leases		4.81	%
Finance leases		4.68	%

Supplemental cash flow and other information related to leases was as follows (in thousands):

	Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	601
Operating cash flows from finance leases		31
Financing cash flows from finance leases		223
ROU assets obtained in exchange for operating lease liabilities		16
ROU assets obtained in exchange for finance lease liabilities		206

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Undiscounted payments under non-cancelable operating leases and finance leases at September 30, 2019 are as follows (in thousands):

	Finance Leases			Operating Leases
Remainder 2019	$	70		$	191
2020		263			597
2021		257			452
2022		208			225
2023		125			246
Thereafter		13			321
Total minimum lease payments		936			2,032
Less: Amount representing interest		(72	)		(195	)
Present value of minimum lease payments		864			1,837
Less: Current maturities		(235	)		(589	)
Lease obligations, net of current portion	$	629		$	1,248

Undiscounted payments under non-cancelable operating leases and finance leases at December 31, 2018 were as follows (in thousands):

Year Ending December 31,	Finance Leases			Operating Leases
2019	$	258		$	882
2020		241			672
2021		214			564
2022		168			273
2023		85			262
Total minimum lease payments		966
Less: Amount representing interest		(86	)
Present value of minimum lease payments		880
Less: Current maturities		(204	)
Capital lease obligations, net of current portion	$	676

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(11)  RELATED PARTY

One of our directors also serves as an officer and board member of Ameritas Life Insurance Corp. (“Ameritas”). In connection with our regular assessment of our insurance-based associate benefits, which is conducted by an independent insurance broker, and the costs associated therewith, we purchase dental and vision insurance for certain of our associates from Ameritas. The total value of these purchases was $61,000 and $54,000 in the three-month periods ended September 30, 2019 and 2018, respectively, and $187,000 and $148,000 in the nine-month periods ended September 30, 2019 and 2018, respectively.

During 2017, we acquired a cost method investment in convertible preferred stock of Practicing Excellence.com, Inc., a privately-held Delaware Corporation (“PX”), which is included in other non-current assets and is carried at cost, adjusted for changes resulting from observable price changes in orderly transactions of the same investment in PX, if any.  We also have an agreement with PX which commenced in 2016 under which we act as a reseller of PX services and receive a portion of the revenues. Our total revenue earned from the PX reseller agreement was $170,000 and $87,000 agreement in the three-month periods ended September 30, 2019 and 2018, respectively, and $493,000 and $195,000 in nine-month periods ended September 30, 2019 and 2018, respectively.

(12)  SEGMENT INFORMATION

Our six operating segments are aggregated into one reporting segment because they have similar economic characteristics and meet the other aggregation criteria from the FASB guidance on segment disclosure. The six operating segments are Experience, The Governance Institute, Market Insights, Transparency, National Research Corporation Canada and Transitions, which offer a portfolio of solutions that address specific needs around market insight, experience, transparency and governance for healthcare providers, payers and other healthcare organizations. The table below presents entity-wide information regarding our assets, after elimination of intercompany balances by geographic area:

	September 30, 2019		December 31, 2018
	(In thousands)
Long-lived assets:
United States	$	78,490	$	77,331
Canada		2,589		2,291
Total	$	81,079	$	79,622
Total assets:
United States	$	92,849	$	91,080
Canada		14,800		16,952
Total	$	107,649	$	108,032

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare organizations. Our solutions enable our clients to understand the voice of the customer with greater clarity, immediacy and depth. Our heritage, proprietary methods, and holistic approach enable our partners to better understand the people they care for and design experiences that inspire loyalty and trust, while also facilitating regulatory compliance and the shift to population-based health management. Our ability to measure what matters most and systematically capture, analyze and deliver insights based on self-reported information from patients, families and consumers is critical in today’s healthcare market. We believe that access to and analysis of our extensive consumer-driven information is becoming more valuable as healthcare providers increasingly need to more deeply understand and engage the people they serve to build customer loyalty.

Our portfolio of subscription-based solutions provides actionable information and analysis to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, health risk assessments, employee engagement, reputation management, and brand loyalty. We partner with clients across the continuum of healthcare services. Our clients include integrated health systems, post-acute providers and payer organizations. We believe this cross-continuum positioning is a unique and an increasingly important capability as evolving payment models drive healthcare providers and payers towards a more collaborative and integrated service model.

 Results of Operations

The following table and graphs set forth, for the periods indicated, select financial information derived from our condensed consolidated financial statements expressed as a percentage of total revenue. The trends illustrated may not necessarily be indicative of future results. The discussion that follows the table should be read in conjunction with the condensed consolidated financial statements.

	Three months ended						Nine months ended
	September 30,						September 30,
	2019			2018			2019			2018
Revenue:		100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses:
Direct		37.3			39.3			37.0			40.1
Selling, general and administrative		26.8			25.6			25.9			26.4
Depreciation and amortization		4.4			4.6			4.5			4.4
Total operating expenses		68.5			69.5			67.4			70.9
Operating income		31.5	%		30.5	%		32.6	%		29.1	%

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Three Months Ended September 30, 2019, Compared to Three Months Ended September 30, 2018

Revenue. Revenue for the three-month period ended September 30, 2019, increased 8.2% to $32.5 million, compared to $30.0 million in the three-month period ended September 30, 2018. This was primarily due to new customer sales, as well as increases in sales to the existing client base.

Direct expenses. Direct expenses, which represent direct costs of fulfilling our performance obligations, increased 2.8% to $12.1 million for the three-month period ended September 30, 2019, compared to $11.8 million in the same period in 2018. This was primarily due to an increase in fixed expenses of $744,000 partially offset by a decrease in variable expenses of $416,000. Variable expenses decreased due to less postage, printing and paper costs due to lower volumes and increased use of digital survey methodologies. Fixed expenses increased primarily due to higher salary and benefit costs in the customer service and information technology areas and higher company incentive event costs. Direct expenses as a percentage of revenue were 37.3% in the three-month periods ended September 30, 2019 and 39.3% for the same period in 2018 as direct expenses increased by 2.8% while revenue increased by 8.2%.

Selling, general and administrative expenses. Selling, general and administrative expenses increased 13.4% to $8.7 million for the three-month period ended September 30, 2019, compared to $7.7 million for the same period in 2018, primarily due to higher salary and benefit costs of $488,000, increased legal and accounting expenses of $293,000, higher increased software license fees and platform hosting expenses of $221,000, additional marketing program costs of $133,000, higher insurance costs of $71,000 and additional travel costs of $56,000. These were partially offset by lower contracted services of $334,000. Selling, general and administrative expenses as a percentage of revenue were 26.8% in the three-month period ended September 30, 2019 and 25.6% for the same period in 2018 as selling, general and administrative expenses increased by 13.4% while revenues increased by 8.2%.

Depreciation and amortization. Depreciation and amortization increased 3.0% to $1.4 million for the three-month period ended September 30, 2019 due to increased amortization from additional computer software investments, partially offset by an intangible asset that was fully amortized prior to the 2019 period. Depreciation and amortization expenses as a percentage of revenue was 4.4% for the three-month period ended September 30, 2019, and 4.6% for the same period in 2018.

Other income (expense). Other expense, net was $411,000 for the three-month period ended September 30, 2019, compared to $783,000 for the same period in 2018.  This decrease in other expense was primarily due to revaluation on intercompany transactions due to changes in the foreign exchange rate.

Provision for income taxes. Provision for income taxes was $1.7 million (17.2% effective tax rate) for the three-month period ended September 30, 2019, compared to $1.4 million (16.6% effective tax rate) for the same period in 2018. The effective tax rate for the three-month period ended September 30, 2019, was higher mainly due to a tax depreciation method change election for software development costs creating an income tax benefit of $308,000 in the 2018 period, additional withholding on unrepatriated Canadian earnings of $90,000 in the 2019 period, and higher projected state taxes in the 2019 period. These were partially offset by increased tax benefits from the exercise of options and dividends paid to non-vested shareholders of $459,000.

 

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Nine Months Ended September 30, 2019, Compared to Nine Months Ended September 30, 2018

Revenue. Revenue for the nine-month period ended September 30, 2019, increased 7.1% to $95.4 million, compared to $89.0 million in the nine-month period ended September 30, 2018. The increase was due to new customer sales and increases in sales to the existing client base.

Direct expenses. Direct expenses, which represent direct costs of fulfilling our performance obligations, decreased 1.2% to $35.3 million for the nine-month period ended September 30, 2019, compared to $35.7 million in the same period in 2018. This was due to a decrease in variable expenses of $2.0 million, partially offset by an increase in fixed expenses of $1.6 million. Variable expenses decreased mainly due to less postage, printing and paper costs due to lower volumes and increased use of digital survey methodologies. Fixed expenses increased primarily as a result of increased salary and benefit costs in the customer service and information technology areas partially offset by lower contracted services. Direct expenses decreased as a percentage of revenue to 37.0% in the nine-month period ended September 30, 2019, compared to 40.1% during the same period of 2018 as expenses decreased by 1.2% while revenue for the same period increased by 7.1%.

Selling, general and administrative expenses. Selling, general and administrative expenses increased 5.3% to $24.7 million for the nine-month period ended September 30, 2019, compared to $23.5 million for the same period in 2018 primarily due to increased salary and benefit costs of $750,000, higher software license fees and platform hosting expenses of $772,000, additional travel costs of $204,000, increased marketing program expenses of $143,000 and higher insurance costs of $214,000. These were partially offset by a reduction in legal and accounting costs of $410,000 mainly associated with the Recapitalization in the 2018 period, the Tax Cut and Jobs Act and adoption of ASC 606 in the 2018 period, as well as decreased contracted services of $327,000, lower bad debt expense of $55,000 and decreased repairs and maintenance costs of $40,000 in the 2019 period. Selling, general and administrative expenses as a percentage of revenue were 25.9% in the nine-month periods ended September 30, 2019 and 26.4% for the same period in 2018 as selling, general and administrative expenses increased by 5.3% while revenues increased by 7.1%.

Depreciation and amortization. Depreciation and amortization expenses increased 7.2% to $4.3 million for the nine-month period ended September 30, 2019, compared to $4.0 million for the same period in 2018 due to increased amortization from additional computer software investments, partially offset by an intangible asset that was fully amortized prior to the 2019 period. Depreciation and amortization expenses as a percentage of revenue was 4.5% and 4.4% for the nine-month periods ended September 30, 2019 and 2018, respectively.

Other income (expense). Other expense, net was $1.9 million for the nine-month period ended September 30, 2019, compared to $711,000 for the same period in 2018.  Interest expense increased $623,000 due to additional interest related to the term loan originated in April 2018 and borrowings on the line of credit. Other expense, net increased $552,000 primarily due to revaluation of intercompany transactions for changes in the foreign exchange rates

Provision for income taxes. Provision for income taxes was $5.4 million (18.7% effective tax rate) for the nine-month period ended September 30, 2019, compared to $2.9 million (11.6% effective tax rate) for the same period in 2018. The effective tax rate for the nine-month period ended September 30, 2019, was higher mainly due to income tax benefits from the Recapitalization due to accelerated vesting of restricted stock and settlement of stock options of $1.1 million, a tax depreciation method change election for software development costs creating an income tax benefit of $308,000 in 2018 and a $247,000 reduction in tax benefits from the exercise of options and dividends paid to non-vested shareholders compared to 2018. In addition, there was additional withholding on unrepatriated Canadian earnings of $90,000 in the 2019 period. This was partially offset by less non-deductible fees of $154,000 primarily related to the Recapitalization in the 2018 period.

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Liquidity and Capital Resources

We believe that our existing sources of liquidity, including cash and cash equivalents, borrowing availability, and operating cash flows will be sufficient to meet our projected capital and debt maturity needs and dividend policy for the foreseeable future, and therefore we feel that our working capital deficit has little impact on our liquidity. Requirements for working capital, capital expenditures, and debt maturities will continue to be funded by operations and our borrowing arrangements.

As of September 30, 2019, our principal sources of liquidity included $8.4 million of cash and cash equivalents, up to $15.0 million of unused borrowings under our line of credit and up to $15.0 million on our delayed draw term note. Of this cash, $3.0 million was held in Canada. The delayed draw term note can only be used to fund permitted future business acquisitions or repurchasing our Common Stock.

Working Capital

We had a working capital deficit of $11.7 million and $18.7 million on September 30, 2019 and December 31, 2018, respectively.

The change was primarily due to a decrease in dividends payable of $12.4 million, an increase in trade accounts receivable of $3.4 million, a decrease in income taxes payable of $622,000 and a decrease in accrued wages, bonus and profit sharing of $606,000 million. These were partially offset by a decrease in cash and cash equivalents of $4.6 million, a $2.9 million increase in deferred revenue, an increase in accrued expenses of $670,000 and an increase in the current portion of operating lease liability included in other current liabilities of $589,000 (mainly due to the adoption of the New Leases Standard). Dividends payable decreased due to a special dividend, in addition to a quarterly dividend declaration, that was declared in 2018 and paid in January 2019. Trade accounts receivable increased due to the timing of billings and collections on new and renewal contracts. Accrued expenses changed due to the timing of payment for services and supplies. Accrued wages, bonus and profit sharing decreased due to the payment of 2018 annual bonuses in the three-month period ended March 31, 2019. Income taxes payable changed due to the timing of income tax payments. Our working capital is significantly impacted by our large deferred revenue balances which will vary based on the timing and frequency of billings on annual agreements. The deferred revenue balances as of September 30, 2019 and December 31, 2018, were $19.1 million and $16.2 million, respectively.

The deferred revenue balance is primarily due to timing of initial billings on new and renewal contracts. We typically invoice clients for services before they have been completed. Billed amounts are recorded as deferred revenue in our consolidated financial statements and are recognized as income when earned. In addition, when work is performed in advance of billing, we record this work as contract assets or unbilled revenue. Substantially all deferred revenue and all unbilled revenue will be earned and billed respectively, within 12 months of the respective period ends.

Cash Flow Analysis

A summary of operating, investing, and financing activities is shown in the following table:

	Nine Months Ended September 30,
	2019			2018
	(In thousands)
Provided by operating activities	$	28,974		$	25,936
Used in investing activities		(3,429	)		(4,858	)
Used in financing activities		(30,575	)		(48,193	)
Effect of exchange rate change on cash		397			(345	)
Net change in cash and cash equivalents		(4,633	)		(27,460	)
Cash and cash equivalents at end of period	$	8,358		$	7,273

Cash Flows from Operating Activities

Cash flows from operating activities consist of net income adjusted for non-cash items including depreciation and amortization, deferred income taxes, share-based compensation and related taxes, reserve for uncertain tax positions, loss on disposal of property and equipment and the effect of working capital changes.

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Net cash provided by operating activities was $29.0 million for the nine-month period ended September 30, 2019, which included net income of $23.7 million, plus non-cash charges (benefits) for deferred income taxes, depreciation and amortization, reserve for uncertain tax positions, non-cash share-based compensation expense, and loss on disposal of property and equipment totaling $5.9 million. Net changes in assets and liabilities decreased cash flows from operating activities by $633,000, primarily due to increases in trade accounts receivable, deferred contract costs, net, and income taxes receivable and payable. These were partially offset by increases in deferred revenue and decreases in prepaid expenses and other current assets.

Net cash provided by operating activities was $25.9 million for the nine months ended September 30, 2018, which included net income of $22.2 million, plus non-cash charges (benefits) for deferred income taxes, depreciation and amortization, reserve for uncertain tax positions, stock compensation and loss on disposal of property and equipment, totaling $6.9 million. Net changes in assets and liabilities decreased cash flows from operating activities by $3.2 million, primarily due to decreases in accrued wages, bonus and profit sharing and increases in trade accounts receivable, prepaid expenses and other current assets, and income taxes receivable and payable, which fluctuate with the timing of income tax payments. These were partially offset by a decrease in deferred revenue which fluctuates due to timing and frequency of billings on new and renewal contract.

Cash Flows from Investing Activities

Net cash of $3.4 million and $4.9 million was used for investing activities in each of the nine months ended September 30, 2019 and 2018, respectively. These expenditures consisted mainly of computer software classified in property and equipment. We expect similar capital expenditure purchases for the remainder of 2019 consisting primarily of computer software and hardware and other equipment to be funded through cash generated from operations.

Cash Flows from Financing Activities

Net cash used in financing activities was $30.6 million in the nine months ended September 30, 2019. Cash was used to repay borrowings on the line of credit of $21.0 million, repay borrowings under the note payable totaling $2.8 million, and for finance lease obligations of $223,000. Cash was also used to pay $26.6 million of dividends on common stock, and to pay payroll tax withholdings related to share-based compensation of $1.0 million. Cash was provided from proceeds of the line of credit of $21.0 million.

Net cash used in financing activities was $48.2 million in the nine months ended September 30, 2018. Cash was used for the Recapitalization of $72.4 million (see Note 2), to repay borrowings under the term notes totaling $2.2 million, to repay borrowings on the line of credit of $2.5 million, to pay loan origination fees on the Credit Agreement of $187,000 and for capital lease obligations of $104,000. Cash was also used to pay $12.7 million of dividends on common stock, and to pay payroll tax withholdings related to share-based compensation of $712,000. Cash was provided from proceeds of the new term loan of $40 million and the line of credit for $2.5 million.

The effect of changes in foreign exchange rates (decreased) increased cash and cash equivalents by $397,000 in the nine months ended September 30, 2019 and $(345,000) in the nine months ended September 30, 2018.

Capital Expenditures

Cash paid for capital expenditures was $3.4 million for the nine months ended September 30, 2019. These expenditures consisted mainly of computer software classified in property and equipment. We expect similar capital expenditure purchases for the remainder of 2019 consisting primarily of computer software and hardware and other equipment to be funded through cash generated from operations.

Debt and Equity

Our credit agreement (the “Credit Agreement”) with First National Bank of Omaha (“FNB”) provides for (i) a $15,000,000 revolving credit facility (the “Line of Credit”), (ii) a $40,000,000 term loan (the “Term Loan”) and (iii) a $15,000,000 delayed draw-down term facility (the “Delayed Draw Term Loan” and, together with the Line of Credit and the Term Loan, the “Credit Facilities”). The Term Loan was used to fund, in part, the cash payment to the holders of the class B common stock in connection with the Recapitalization and certain costs of the Recapitalization. The Delayed Draw Term Loan may be used to fund any permitted future business acquisitions or repurchases of our Common Stock and the Line of Credit is used to fund ongoing working capital needs and for other general corporate purposes.

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The Term Loan is payable in monthly installments of $462,988 through April 2020 and $526,362 thereafter, with a balloon payment due at maturity in April 2023. The Term Loan bears interest at a fixed rate per annum of 5%.

Borrowings under the Line of Credit and the Delayed Draw Term Loan, if any, bear interest at a floating rate equal to the 30 day London Interbank Offered Rate (“LIBOR”) plus 225 basis points (4.33% at September 30, 2019). Interest on the Line of Credit accrues and is payable monthly. Principal amounts outstanding under the Line of Credit are due and payable in full at maturity, in April 2021. At September 30, 2019, the Line of Credit did not have an outstanding balance. The weighted average borrowings on the Line of Credit for the nine-month period ended September 30, 2019 was $4.9 million. The weighted average interest rate on borrowings on the Line of Credit for the nine-month period ended September 30, 2019 was 4.72%. We are also obligated to pay ongoing unused commitment fees quarterly in arrears pursuant to the Line of Credit and the Delayed Draw Term Loan facility at a rate of 0.20% per annum based on the actual daily unused portions of the Line of Credit and the Delayed Draw Term Loan facility, respectively.

In the event that the Delayed Draw Term Loan is used, interest-only payments will be due through the calendar year in which the Delayed Draw Term Loan is drawn upon. After that, amortization will occur at the then current Term Loan rate and schedule with principal and accrued interest amounts outstanding under the Delayed Draw Term Loan due and payable monthly during the term of the Delayed Draw Term Loan, which expires on April 18, 2023.  There have been no borrowings on the Delayed Draw Term Loan since origination.

All obligations under the Credit Facilities are to be guaranteed by each of our direct and indirect wholly owned domestic subsidiaries, if any, and, to the extent required by the Credit Agreement, direct and indirect wholly owned foreign subsidiaries (each, a “guarantor”).

The Credit Facilities are secured, subject to permitted liens and other agreed upon exceptions, by a first-priority lien on and perfected security interest in substantially all of our and the guarantors’ present and future assets (including, without limitation, fee-owned real property, and limited, in the case of the equity interests of foreign subsidiaries, to 65% of the outstanding equity interests of such subsidiaries).

The Credit Agreement contains customary representations, warranties, affirmative and negative covenants (including financial covenants) and events of default. The negative covenants include, among other things, restrictions regarding the incurrence of indebtedness and liens, repurchases of our Common Stock and acquisitions, subject in each case to certain exceptions. The Credit Agreement also contains certain financial covenants with respect to minimum fixed charge coverage ratio and maximum cash flow leverage ratio. Pursuant to the Credit Agreement, we are required to maintain a minimum fixed charge coverage ratio of 1.10x for all testing periods throughout the terms of the Credit Facilities. The special dividend paid on January 15, 2019, is excluded from the calculation of the fixed charge coverage ratio pursuant to a consent received from the lender. We are also required to comply with a maximum cash flow leverage ratio of 3.00x for all testing periods throughout the terms of the Credit Facilities. As of September 30, 2019, we were in compliance with these financial covenants. 

LIBOR is currently expected to be phased out in 2021. We are required to pay interest on borrowings under our Line of Credit and Delayed Draw Term Loan at floating rates based on LIBOR. Future debt that we may incur may also require that we pay interest based upon LIBOR. Under the terms of our Credit Agreement with FNB, if LIBOR becomes unavailable during the term of the agreement, FNB may, in its reasonable discretion and in a manner consistent with market practice, designate a substitute index. We currently expect that the determination of interest under our Credit Agreement would be revised as to provide for an interest rate that approximates the existing interest rate as calculated in accordance with LIBOR. Despite our current expectations, we cannot be sure that if LIBOR is phased out or transitioned, the changes to the determination of interest under our agreements would approximate the current calculation in accordance with LIBOR. We do not know what standard, if any, will replace LIBOR if it is phased out or transitioned.

We have finance leases for computer equipment, office equipment, printing and inserting equipment. The balance of the finance leases as of September 30, 2019 was $863,000.

Shareholders’ equity increased $9.9 million to $29.0 million at September 30, 2019, from $19.1 million at December 31, 2018. The increase was mainly due to net income of $23.7 million, share-based compensation of $917,000 and changes in the cumulative currency translation adjustment of $474,000. This was partially offset by dividends declared of $14.2 million, and share repurchases exceeding the cost of stock options exercised of $1.0 million.

29

Contractual Obligations

We had contractual obligations to make payments in the following amounts in the future as of September 30, 2019:

Contractual Obligations(1)	Total Payments		Remainder of 2019		One to Three Years		Three to Five Years		After Five Years
(In thousands)
Operating leases(2)	$	2,032	$	191	$	1,049	$	471	$	321
Finance leases		936		70		520		333		13
Uncertain tax positions(3)		--		--		--		--		--
Line of credit		--		--
Long term debt		40,226		1,389		12,379		26,458		--
Total	$	43,194	$	1,650	$	13,948	$	27,262	$	334

(1)	Amounts are inclusive of interest payments, where applicable.
(2)	Excludes variable costs such as taxes, insurance, and maintenance which vary from year to year.
(3)	We have $298,000 in liabilities associated with uncertain tax positions. We are unable to reasonably estimate the expected cash settlement dates of these uncertain tax positions with the taxing authorities.

Stock Repurchase Program

Our Board of Directors authorized the repurchase of up to 2,250,000 then-existing class A shares and 375,000 then-existing class B shares of common stock in the open market or in privately negotiated transactions under a stock repurchase program that was originally approved in February 2006 and subsequently amended in May 2013. In connection with the Recapitalization in April 2018, the Board of Directors further amended the stock repurchase program to eliminate the repurchase of the former class B common stock. As of September 30, 2019, the remaining number of shares of Common Stock that could be purchased under this authorization was 280,491 shares.  

Critical Accounting Estimates

There have been no changes to our critical accounting estimates described in the Annual Report on Form 10-K for the year ended December 31, 2018 that have a material impact on our Condensed Consolidated Financial Statements and the related Notes.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

There are no material changes to the disclosures regarding our market risk exposures made in our Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM 4. Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that, as of the end of such period, our disclosure controls and procedures were effective.

On January 1, 2019, we adopted the New Leases Standard, Topic 842 (see Note 1 to the Condensed Consolidated Financial Statements). We implemented internal controls to ensure we adequately evaluated our vendor contracts and properly assessed the impact of the new accounting standard on our financial statements. We also implemented changes to our business processes related to lease arrangements and the control activities within them. The changes included training within business operations management, ongoing vendor contract review and monitoring, and gathering of information for disclosures.

There have been no other changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended September 30, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – Other Information

ITEM 1. Legal Proceedings

From time to time, we are involved in certain claims and litigation arising in the normal course of business. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. Based on our knowledge of the facts and, in certain cases, advice of outside counsel, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a materially adverse effect on our consolidated financial statements.

ITEM 1A. Risk Factors

There have been no material changes to our risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

In February 2006 and subsequently amended in May 2013, our Board of Directors authorized the repurchase of 2,250,000 shares of class A common stock and 375,000 shares of class B common stock in the open market or in privately negotiated transactions. In connection with the Recapitalization in April 2018, the Board of Directors further amended the stock repurchase program to eliminate the repurchase of the former class B common stock. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares of Common Stock authorized for repurchase thereunder. No Common Stock was repurchased during the three-month period ended September 30, 2019. The remaining shares of Common Stock that may be purchased under that authorization are 280,491.

Our Credit Agreement provides that, in order for us to pay dividends, there must be no default or event of default existing or that would result from such payment and we must show that we would comply with the Credit Agreement’s fixed charge coverage ratio and consolidated cash flow leverage ratio after giving pro forma effect to such payment.

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ITEM 6. Exhibits

The exhibits listed in the exhibit index below are filed as part of this Quarterly Report on Form 10-Q.

EXHIBIT INDEX  

Exhibit Number	Exhibit Description
(3.1)	Amended and Restated Articles of Incorporation of National Research Corporation, effective as of 5:01 pm, CT, on April 17, 2018 [Incorporated by reference to Exhibit 3.3 to National Research Corporation’s Current Report on Form 8-K dated April 16, 2018 and filed on April 20, 2018 (File No. 001-35929)]
(3.2)	By-Laws of National Research Corporation, as amended to date [Incorporated by reference to Exhibit (3.2) to National Research Corporation’s Current Report on Form 8-K dated October 26, 2015 and filed on October 28, 2015 (File No. 001-35929)]
(4.1)	Amended and Restated Articles of Incorporation of National Research Corporation, effective as of 5:01 pm, CT, on April 17, 2018 [Incorporated by reference to Exhibit 3.3 to National Research Corporation’s Current Report on Form 8-K dated April 16, 2018 and filed on April 20, 2018 (File No. 001-35929)]
(4.2)	By-Laws of National Research Corporation, as amended to date [Incorporated by reference to Exhibit (3.2) to National Research Corporation’s Current Report on Form 8-K dated October 26, 2015 and filed on October 28, 2015 (File No. 001-35929)]
(31.1)	Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
(31.2)	Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
(32)	Written Statement of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
(101)*	Financial statements from the Quarterly Report on Form 10-Q of National Research Corporation for the quarter ended September 30, 2019, formatted in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Notes to Condensed Consolidated Financial Statements, and (vi) document and entity information.

* In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NATIONAL RESEARCH CORPORATION
Date: November 8, 2019	By:	/s/ Michael D. Hays
		Michael D. Hays
		Chief Executive Officer (Principal Executive Officer)
Date: November 8, 2019	By:	/s/ Kevin R. Karas
		Kevin R. Karas Senior Vice President Finance, Treasurer, Secretary and Chief Financial Officer (Principal Financial and Accounting Officer)

33

EX-31.1

 Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

I, Michael D. Hays, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of National Research Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2019	/s/ Michael D. Hays
	Michael D. Hays
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

I, Kevin R. Karas, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of National Research Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2019	/s/ Kevin R. Karas
	Kevin R. Karas
	Chief Financial Officer

EX-32

Exhibit 32

Certification Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the accompanying Quarterly Report on Form 10-Q of National Research Corporation (the “Company”) for the quarter ended September 30, 2019 (the “Report”), I, Michael D. Hays, Chief Executive Officer of the Company, and I, Kevin R. Karas, Chief Financial Officer, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, based on my knowledge, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael D. Hays

Michael D. Hays

Chief Executive Officer

/s/ Kevin R. Karas

Kevin R. Karas

Chief Financial Officer

Date: November 8, 2019 

A signed original of this written statement required by Section 906 has been provided to National Research Corporation and will be retained by National Research Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Note 7 - Goodwill and Other Intangible Assets - Summary of Changes in the Carrying Amount of Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Balance	$ 57,831
Foreign currency translation	65
Balance	$ 57,896

XML

Note 6 - Share-based Compensation (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	100,615
Share-based Payment Arrangement, Option [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 1,700,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	2 years 357 days
Common Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	100,615	116,276
Nonvested [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 484,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	3 years 10 days
The 2001 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant			0
The 2001 Equity Incentive Plan [Member] | Share-based Payment Arrangement, Option [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	5 years
The 2001 Equity Incentive Plan [Member] | Share-based Payment Arrangement, Option [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Director Plan 2004 [Member] | Nonqualified Stock Options [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Share Based Compensation Arrangement By Share Based Payment Award, Award Annual Options Grant Amount	$ 100,000
Director Plan 2004 [Member] | Nonqualified Stock Options [Member] | Minimum [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	3 years
Director Plan 2004 [Member] | Nonqualified Stock Options [Member] | Maximum [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
The 2006 Equity Incentive Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	5 years
The 2006 Equity Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Common Class B [Member]
Share-based Payment Arrangement, Accelerated Cost		$ 331,000
Common Class B [Member] | The 2001 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	300,000
Common Class B [Member] | Director Plan 2004 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	500,000
Common Class B [Member] | The 2006 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	300,000
Common Stock [Member] | The 2001 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	1,800,000
Common Stock [Member] | Director Plan 2004 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	3,000,000
Common Stock [Member] | The 2006 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	1,800,000

XML

Note 3 - Contracts With Customers (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Subscription services recognized ratably over time	$	28,629	$	26,328	$	84,460	$	77,746
Services recognized at a point in time		1,606		807		4,231		2,923
Fixed, non-subscription recognized over time		1,043		973		2,083		2,561
Unit price services recognized over time		1,187		1,905		4,585		5,817
Total revenue		32,465		30,013		95,359		89,047

Contract with Customer, Asset and Liability [Table Text Block]

	September 30, 2019			December 31, 2018
	(In thousands)
Accounts receivable	$	15,308		$	11,922
Contract assets included in other current assets	$	133		$	53
Deferred revenue	$	(19,133	)	$	(16,244	)

	Nine months ended September 30, 2019						Nine months ended September 30, 2018
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(15,214	)	$	-		$	(15,377	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			17,829			-			17,522
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(51	)		-			(71	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration					274						(145	)
Decreases due to impairment		-			-			-			-
Increases due to revenue recognized in the period with additional performance obligations before invoicing		131			-			65			-

XML

Note 8 - Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	September 30, 2019			December 31, 2018
	(In thousands)
Property and equipment at cost	$	48,245		$	44,730
Accumulated depreciation		(34,549	)		(30,577	)
Property and equipment, net	$	13,696		$	14,153

XML

Note 3 - Contracts With Customers 2 (Details Textual)	Sep. 30, 2019 USD ($)
Revenue, Remaining Performance Obligation, Amount	$ 1,252,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01
Revenue, Remaining Performance Obligation, Amount	$ 308,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Amount	$ 889,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Amount	$ 55,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year

XML

Note 1 - Summary of Significant Accounting Policies - Amortization Expense Classification (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Capitalized contract cost	$ 748	$ 614	$ 2,097	$ 1,888
Direct Expenses [Member]
Capitalized contract cost	10	13	26	73
Selling, General and Administrative Expenses [Member]
Capitalized contract cost	$ 738	$ 601	$ 2,072	$ 1,815

XML

Note 11 - Related Party

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

( 11 )  RELATED PARTY

One of our directors also serves as an officer and board member of Ameritas Life Insurance Corp. (“Ameritas”). In connection with our regular assessment of our insurance-based associate benefits, which is conducted by an independent insurance broker, and the costs associated therewith, we purchase dental and vision insurance for certain of our associates from Ameritas. The total value of these purchases was

$61,000

and

$54,000

in the

three

-month periods ended

September 30, 2019

and

2018,

respectively, and

$187,000

and

$148,000

in the

nine

-month periods ended

September 30, 2019

and

2018,

respectively.

During

2017,

we acquired a cost method investment in convertible preferred stock of Practicing Excellence.com, Inc., a privately-held Delaware Corporation (“PX”), which is included in other non-current assets and is carried at cost, adjusted for changes resulting from observable price changes in orderly transactions of the same investment in PX, if any.  We also have an agreement with PX which commenced in

2016

under which we act as a reseller of PX services and receive a portion of the revenues. Our total revenue earned from the PX reseller agreement was

$170,000

and

$87,000

agreement in the

three

-month periods ended

September 30, 2019

and

2018,

respectively, and

$493,000

and

$195,000

in

nine

-month periods ended

September 30, 2019

and

2018,

respectively.

XML

Note 3 - Contracts With Customers

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

( 3 ) CONTRACTS WITH CUSTOMERS

The following table disaggregates revenue based on timing of revenue recognition (In thousands):

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Subscription services recognized ratably over time	$	28,629	$	26,328	$	84,460	$	77,746
Services recognized at a point in time		1,606		807		4,231		2,923
Fixed, non-subscription recognized over time		1,043		973		2,083		2,561
Unit price services recognized over time		1,187		1,905		4,585		5,817
Total revenue		32,465		30,013		95,359		89,047

Our solutions within the digital VoC platform accounted for

63.8%

and

51.2%

of total revenue, in the

three

-month periods ending

September 30, 2019

and

2018,

respectively, and

61.3%

and

48.7%

of total revenue in the

nine

-month periods ending

September 30, 2019

and

2018,

respectively. The remaining revenue consists of legacy Experience and Governance Solutions.  

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

	September 30, 2019			December 31, 2018
	(In thousands)
Accounts receivable	$	15,308		$	11,922
Contract assets included in other current assets	$	133		$	53
Deferred revenue	$	(19,133	)	$	(16,244	)

Significant changes in contract assets and contract liabilities during the

nine

months ended

September 30, 2019

and

2018

are as follows (in thousands):

	Nine months ended September 30, 2019						Nine months ended September 30, 2018
	Contract Asset			Deferred Revenue			Contract Asset			Deferred Revenue
	Increase (Decrease)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	$	-		$	(15,214	)	$	-		$	(15,377	)
Increases due to invoicing of client, net of amounts recognized as revenue		-			17,829			-			17,522
Decreases due to completion of services (or portion of services) and transferred to accounts receivable		(51	)		-			(71	)		-
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration					274						(145	)
Decreases due to impairment		-			-			-			-
Increases due to revenue recognized in the period with additional performance obligations before invoicing		131			-			65			-

We have elected to apply the practical expedient to

not

disclose the value of unsatisfied performance obligations for contracts with an original expected length of

one

year or less. Total remaining contract revenue for contracts with original duration of greater than

one

year expected to be recognized in the future related to performance obligations that are unsatisfied at

September 30, 2019

approximated

$1,252,000,

of which

$308,000,

$889,000

and

$55,000

will be recognized during the remainder of

2019,

2020

and

2021,

respectively.

XML

Note 7 - Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

( 7 ) GOODWILL AND OTHER INTANGIBLE ASSETS

The following represents a summary of changes in our carrying amount of goodwill for the

nine

months ended

September 30, 2019:

	(In thousands)
Balance as of December 31, 2018	$	57,831
Foreign currency translation		65
Balance as of September 30, 2019	$	57,896

 Intangible assets consisted of the following:

	September 30, 2019			December 31, 2018
	(In thousands)
Non-amortizing other intangible assets:
Trade name	$	1,191		$	1,191
Amortizing other intangible assets:
Customer related		9,334			9,327
Technology		1,360			1,360
Trade name		1,572			1,572
Total other intangible assets		13,457			13,450
Accumulated amortization		(11,635	)		(11,348	)
Other intangible assets, net	$	1,822		$	2,102

XML

Note 10 - Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019		Dec. 31, 2018
Operating ROU assets	$ 1,805	$ 2,308
Current operating lease liabilities	589	699	[1]
Operating lease obligations, net of current portion	1,248	1,652	[1]
Total operating lease liabilities	1,837	$ 2,351
Property and equipment under finance lease, gross	48,245			44,730
Less accumulated amortization	(34,549)			(30,577)
Property and equipment under finance lease, net	13,696			14,153
Current obligations of finance leases	235			204
Noncurrent obligations of finance leases	629			676
Total finance lease liabilities	$ 864			880
Operating leases (Year)	4 years 80 days
Finance leases (Year)	3 years 281 days
Operating leases	4.81%
Finance leases	4.68%
Furniture and Equipment Held under Finance Leases [Member]
Property and equipment under finance lease, gross	$ 1,095			1,062
Computer Equipment Held under Finance Leases [Member]
Property and equipment under finance lease, gross	551			487
Computer Software Held under Finance Leases [Member]
Property and equipment under finance lease, gross	224			224
Assets Held under Finance Leases [Member]
Property and equipment under finance lease, gross	1,870			1,773
Less accumulated amortization	(959)			(839)
Property and equipment under finance lease, net	$ 911			$ 934

[1] Represents the December 31, 2018 balance recorded at implementation of Topic 842

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue	$ 32,465	$ 30,013	$ 95,359	$ 89,047
Operating expenses:
Direct, exclusive of depreciation and amortization	12,109	11,780	35,269	35,685
Selling, general and administrative, exclusive of depreciation and amortization	8,706	7,679	24,732	23,486
Depreciation and amortization	1,430	1,388	4,285	3,996
Total operating expenses	22,245	20,847	64,286	63,167
Operating income	10,220	9,166	31,073	25,880
Other income (expense):
Interest income	10	3	24	57
Interest expense	(510)	(544)	(1,613)	(990)
Other, net	89	(242)	(330)	222
Total other (expense) income	(411)	(783)	(1,919)	(711)
Income before income taxes	9,809	8,383	29,154	25,169
Provision for income taxes	1,690	1,391	5,446	2,923
Net income	$ 8,119	6,992	$ 23,708	22,246
Denominator for net income per share - basic:
Basic earnings per share (in dollars per share)	$ 0.33		$ 0.95
Numerator for net income per share - diluted:
Diluted earnings per share (in dollars per share)	$ 0.31		$ 0.92
Weighted average shares and share equivalents outstanding:
Weighted average shares and share equivalents outstanding, basic (in shares)	24,827		24,794
Weighted average shares and share equivalents outstanding, diluted (in shares)	25,741		25,624
Common Class A [Member]
Other income (expense):
Net income		$ 6,992		$ 17,622
Denominator for net income per share - basic:
Basic earnings per share (in dollars per share)		$ 0.28		$ 0.76
Numerator for net income per share - diluted:
Diluted earnings per share (in dollars per share)		$ 0.27		$ 0.73
Weighted average shares and share equivalents outstanding:
Weighted average shares and share equivalents outstanding, basic (in shares)		24,671		23,184
Weighted average shares and share equivalents outstanding, diluted (in shares)		25,526		24,083
Common Class B [Member]
Other income (expense):
Net income				$ 4,624
Denominator for net income per share - basic:
Basic earnings per share (in dollars per share)				$ 1.31
Numerator for net income per share - diluted:
Diluted earnings per share (in dollars per share)				$ 1.27
Weighted average shares and share equivalents outstanding:
Weighted average shares and share equivalents outstanding, basic (in shares)				3,527
Weighted average shares and share equivalents outstanding, diluted (in shares)				3,628

XML

Note 11 - Related Party (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Ameritas Life Insurance Corp [Member]
Related Party Transaction, Amounts of Transaction	$ 61,000	$ 54,000	$ 187,000	$ 148,000
PracticingExcellence.com [Member]
Revenue from Related Parties	$ 170,000	$ 87,000	$ 493,000	$ 195,000

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 23,708	$ 22,246
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,285	3,996
Deferred income taxes	919	1,775
Reserve for uncertain tax positions	(262)	(297)
Non-cash share-based compensation expense	917	1,255
Loss on disposal of property and equipment	40	212
Net changes in assets and liabilities:
Trade accounts receivable	(3,343)	(1,842)
Prepaid expenses and other current assets	978	(1,632)
Deferred contract costs, net	(508)	1
Operating lease assets and liability, net	(10)
Accounts payable	69	147
Accrued expenses, wages, bonuses and profit sharing	138	(1,310)
Income taxes receivable and payable	(829)	(554)
Deferred revenue	2,872	1,939
Net cash provided by operating activities	28,974	25,936
Cash flows from investing activities:
Purchases of property and equipment	(3,429)	(4,858)
Net cash used in investing activities	(3,429)	(4,858)
Cash flows from financing activities:
Payments related to Recapitalization		(72,370)
Proceeds from issuance of note payable		40,000
Borrowings on line of credit	21,000	2,500
Payments on line of credit	(21,000)	(2,500)
Payment of debt issuance costs		(187)
Payments on notes payable	(2,767)	(2,170)
Payments on finance lease obligations	(223)	(104)
Payment of employee payroll tax withholdings on share-based awards exercised	(1,021)	(712)
Payment of dividends on common stock	(26,564)	(12,650)
Net cash used in financing activities	(30,575)	(48,193)
Effect of exchange rate changes on cash	397	(345)
Change in cash and cash equivalents	(4,633)	(27,460)
Cash and cash equivalents at beginning of period	12,991	34,733
Cash and cash equivalents at end of period	8,358	7,273
Supplemental disclosure of cash paid for:
Interest, net of capitalized amounts	1,558	767
Income taxes	5,607	2,017
Supplemental disclosure of non-cash investing and financing activities:
Common stock (formerly class A) issued in the Recapitalization in exchange for then-existing class B shares and options.		121,371
Finance lease obligations originated for property and equipment	206	879
Stock tendered to the Company for cashless exercise of stock options in connection with equity incentive plans	$ 2,295	$ 5,429

XML

Note 3 - Contracts With Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue	$ 32,465	$ 30,013	$ 95,359	$ 89,047
Transferred over Time [Member] | Subscription Services [Member]
Revenue	28,629	26,328	84,460	77,746
Transferred over Time [Member] | Fixed, Non-subscription Services [Member]
Revenue	1,043	973	2,083	2,561
Transferred over Time [Member] | Unit Price Services [Member]
Revenue	1,187	1,905	4,585	5,817
Transferred at Point in Time [Member] | Subscription Services [Member]
Revenue	$ 1,606	$ 807	$ 4,231	$ 2,923

XML

Note 1 - Summary of Significant Accounting Policies - Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Total carrying amount of long-term debt	$ 35,229	$ 37,966
Estimated fair value of long-term debt	36,311	38,257
Fair Value, Recurring [Member]
Assets, fair value	2,605	1,848
Money Market Funds [Member] | Fair Value, Recurring [Member]
Assets, fair value	2,605	1,848
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Assets, fair value	2,605	1,848
Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member] | Fair Value, Recurring [Member]
Assets, fair value	2,605	1,848
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Assets, fair value
Fair Value, Inputs, Level 2 [Member] | Money Market Funds [Member] | Fair Value, Recurring [Member]
Assets, fair value
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Assets, fair value
Fair Value, Inputs, Level 3 [Member] | Money Market Funds [Member] | Fair Value, Recurring [Member]
Assets, fair value

XML

Note 2 - Recapitalization

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Recapitalization [Text Block]

( 2 ) RECAPITALIZATION

On

April 16, 2018,

our shareholders approved, among other things, an amendment to our Amended and Restated Articles of Incorporation (the “Articles”) to effect a recapitalization (the “Recapitalization”) pursuant to which each share of our then-existing class B common stock was exchanged for

one

share of the our then-existing Class A common stock plus

$19.59

in cash, without interest. On

April 17, 2018,

we filed an amendment to our Articles effecting the Recapitalization, followed by an amendment and restatement of our Articles, which resulted in the elimination of our class B common stock and the reclassification of our class A common stock as a share of Common Stock, par value

$0.001

per share (“Common Stock”). We issued

3,617,615

shares of Common Stock and paid

$72.4

million in exchange for all class B shares outstanding and to settle outstanding share-based awards for class B common stock.

XML

Note 6 - Share-based Compensation

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

( 6 ) SHARE-BASED COMPENSATION

We measure and recognize compensation expense for all share-based payments based on the grant-date fair value of those awards. All of our existing stock option awards and unvested stock awards have been determined to be equity-classified awards. We account for forfeitures as they occur. We completed a Recapitalization in

April 

2018

which, among other things, settled all then-existing outstanding class B share-based awards and resulted in the elimination of the class B common stock. As a result, we accelerated vesting of all outstanding class B share based awards, resulting in accelerated share-based compensation of

$331,000

in the

nine

-month period ended

September 30, 2018.

All outstanding class B share-based awards were then settled for the same stock to cash proportion of the class B common stock, less the exercise price, if any, which approximated the awards’ intrinsic values.

The

2001

Equity Incentive Plan provided for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of

1,800,000

shares of our former class A common stock and

300,000

shares of our former class B common stock. Stock options granted could have been either nonqualified or incentive stock options. Stock options vest over

one

to

five

years following the date of grant and option terms are generally

five

to

ten

years following the date of grant. Due to the expiration of the

2001

Equity Incentive Plan, at

December 31, 2015,

there were

no

shares of stock available for future grants.

The

2004

Non-Employee Director Stock Plan, as amended (the

“2004

Director Plan”), is a nonqualified plan that provides for the granting of options with respect to

3,000,000

shares of the our Common Stock and, prior to the Recapitalization,

500,000

shares of our former class B common stock. The

2004

Director Plan provides for grants of nonqualified stock options to each of our non-employee directors. Beginning in

2018,

on the date of each annual meeting of our shareholders, options to purchase shares of Common Stock equal to an aggregate grant date fair value of

$100,000

are granted to each non-employee director that is elected or retained as a director at each such meeting. Stock options vest approximately

one

year following the date of grant and option terms are generally

ten

years following the date of grant, or

three

years in the case of termination of the outside director’s service.

The

2006

Equity Incentive Plan (the

“2006

Equity Incentive Plan”), as amended, provides for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of

1,800,000

shares of Common Stock and, prior to the Recapitalization,

300,000

shares of our former class B common stock. Stock options granted

may

be either incentive stock options or nonqualified stock options. Vesting terms vary with each grant and option terms are generally

five

to

ten

years following the date of grant. 

We granted options to purchase

100,615

and

116,276

shares of our Common Stock during the

nine

-month periods ended

September 30, 2019

and

2018,

respectively. Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant. The fair value of the stock options granted was estimated using a Black-Scholes valuation model with the following weighted average assumptions:

	2019			2018
Expected dividend yield at date of grant		2.60	%		2.59	%
Expected stock price volatility		34.01	%		32.47	%
Risk-free interest rate		2.38	%		2.51	%
Expected life of options (in years)		7.5			7.3

The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. The expected volatility was based on historical monthly price changes of our stock based on the expected life of the options at the date of grant. The expected life of options is the average number of years we estimate that options will be outstanding. We consider groups of associates that have similar historical exercise behavior separately for valuation purposes.

The following table summarizes stock option activity under the

2001

and

2006

Equity Incentive Plans and the

2004

Director Plan for the

nine

-month period ended

September 30, 2019:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2018		1,373,209		$	15.99
Granted		100,615		$	41.64
Exercised		(177,090	)	$	12.96			$	6,548
Forfeited		--		$	--
Outstanding at September 30, 2019		1,296,734		$	18.39		4.81	$	51,038
Exercisable at September 30, 2019		858,349		$	15.02		3.52	$	36,675

As of

September 30, 2019,

the total unrecognized compensation cost related to non-vested stock option awards was approximately

$1.7

million which was expected to be recognized over a weighted average period of

2.98

years.

The following table summarizes information regarding non-vested stock granted to associates under the

2006

Equity Incentive Plan for the

nine

-month period ended

September 30, 2019:

	Common Shares Outstanding		Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2018		78,171	$	15.61
Granted		6,005		38.30
Vested		--		--
Forfeited		--	$	--
Outstanding at September 30, 2019		84,176	$	17.23

As of

September 30, 2019,

the total unrecognized compensation cost related to non-vested stock awards was approximately

$484,000

and is expected to be recognized over a weighted average period of

3.03

years. 

XML

Note 10 - Leases

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

( 10 ) LEASES

We lease printing equipment in the United States, and office space in Canada, California, Georgia, Washington, and Tennessee. The leases remaining terms as of

September 30, 2019

range from less than

one

year to

5.9

years.

Certain equipment and office lease agreements include provisions for periodic adjustments to rates and charges. The rates and charges are adjusted based on actual usage or actual costs for internet, common area maintenance, taxes or insurance, as determined by the lessor and are considered variable lease costs.

The components of lease expense for the

three

and

nine

-month periods ended

September 30, 2019

included:

	Three months ended September 30, 2019		Nine months ended September 30, 2019
	(In thousands)
Operating leases	$	196	$	601
Finance leases:
Asset amortization		65		189
Interest on lease liabilities		11		31
Variable lease cost		29		72
Short-term lease cost		10		29
Total net lease cost	$	311	$	922

Supplemental balance sheet information related to leases (in thousands):     

	September 30, 2019		January 1, 2019
Operating leases:
Operating ROU assets	$	1,805	$	2,308	(1)
Current operating lease liabilities		589		699	(1)
Noncurrent operating lease liabilities		1,248		1,652	(1)
Total operating lease liabilities	$	1,837	$	2,351	(1)

(

1

) Represents the

December 31, 2018

balance recorded at implementation of Topic

842

	September 30, 2019			December 31, 2018
Finance leases:
Furniture and equipment	$	1,095		$	1,062
Computer Equipment		551			487
Computer Software		224			224
Property and equipment under finance lease, gross		1,870			1,773
Less accumulated amortization		(959	)		(839	)
Property and equipment under finance lease, net	$	911		$	934
Current obligations of finance leases	$	235		$	204
Noncurrent obligations of finance leases		629			676
Total finance lease liabilities	$	864		$	880
Weighted average remaining lease term (in years):
Operating leases		4.22
Finance leases		3.77
Weighted average discount rate:
Operating leases		4.81	%
Finance leases		4.68	%

Supplemental cash flow and other information related to leases was as follows (in thousands):

	Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	601
Operating cash flows from finance leases		31
Financing cash flows from finance leases		223
ROU assets obtained in exchange for operating lease liabilities		16
ROU assets obtained in exchange for finance lease liabilities		206

Undiscounted payments under non-cancelable operating leases and finance leases at

September 30, 2019

are as follows (in thousands):

	Finance Leases			Operating Leases
Remainder 2019	$	70		$	191
2020		263			597
2021		257			452
2022		208			225
2023		125			246
Thereafter		13			321
Total minimum lease payments		936			2,032
Less: Amount representing interest		(72	)		(195	)
Present value of minimum lease payments		864			1,837
Less: Current maturities		(235	)		(589	)
Lease obligations, net of current portion	$	629		$	1,248

Undiscounted payments under non-cancelable operating leases and finance leases at

December 31, 2018

were as follows (in thousands):

Year Ending December 31,	Finance Leases			Operating Leases
2019	$	258		$	882
2020		241			672
2021		214			564
2022		168			273
2023		85			262
Total minimum lease payments		966
Less: Amount representing interest		(86	)
Present value of minimum lease payments		880
Less: Current maturities		(204	)
Capital lease obligations, net of current portion	$	676

XML

Note 1 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

( 1 ) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business and basis of presentation

National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), is a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare organizations in the United States and Canada. Our portfolio of solutions represent a unique set of capabilities that individually and collectively provide value to our clients. The solutions are offered at an enterprise level through the Voice of the Customer ("VoC") platform, The Governance Institute, and legacy Experience solutions.

Our

six

operating segments are aggregated into

one

reporting segment because they have similar economic characteristics and meet other aggregation criteria from the Financial Accounting Standards Board (“FASB”) guidance on segment disclosure. The

six

operating segments are Experience, The Governance Institute, Market Insights, Transparency, National Research Corporation Canada and Transitions, which offer a portfolio of solutions that address specific needs around market insight, experience, transparency and governance for healthcare providers, payers and other healthcare organizations.

Our condensed consolidated balance sheet at

December 31, 2018

was derived from our audited consolidated balance sheet as of that date. All other financial statements contained herein are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) that we consider necessary for a fair presentation of financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States.

Information and footnote disclosures included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto that are included in our Form

10

-K for the year ended

December 31, 2018,

filed with the Securities and Exchange Commission (the “SEC”) on

March 8, 2019.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, National Research Corporation Canada, doing business as NRC Health Canada. All significant intercompany transactions and balances have been eliminated.

Our Canadian subsidiary uses as its functional currency the local currency of the country in which it operates. It translates its assets and liabilities into U.S. dollars at the exchange rate in effect at the balance sheet date. It translates its revenue and expenses at the average exchange rate during the period. We include translation gains and losses in accumulated other comprehensive income (loss), a component of shareholders’ equity. Gains and losses related to transactions denominated in a currency other than the functional currency of the country in which we operate and short-term intercompany accounts are included in other income (expense) in the consolidated statements of income. 

Revenue Recognition

We derive a majority of our revenues from our annually renewable subscription-based service agreements with our customers, which include performance measurement and improvement services, healthcare analytics and governance education services. Such agreements are generally cancelable on short or

no

notice without penalty. See Note

3

for further information about our contracts with customers. We account for revenue using the following steps:

● Identify the contract, or contracts, with a customer

● Identify the performance obligations in the contract

● Determine the transaction price

● Allocate the transaction price to the identified performance obligations; and

● Recognize revenue when, or as, we satisfy the performance obligations.

Our revenue arrangements with a client

may

include combinations of more than

one

service offering which

may

be executed at the same time, or within close proximity of

one

another. We combine contracts with the same customer into a single contract for accounting purposes when the contract is entered into at or near the same time and the contracts are negotiated together. For contracts that contain more than

one

separately identifiable performance obligation, the total transaction price is allocated to the identified performance obligations based upon the relative stand-alone selling prices of the performance obligations. The stand-alone selling prices are based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost-plus margin or residual approach. We estimate the amount of total contract consideration we expect to receive for variable arrangements based on the most likely amount we expect to earn from the arrangement based on the expected quantities of services we expect to provide and the contractual pricing based on those quantities. We only include some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will

not

occur. We consider the sensitivity of the estimate, our relationship and experience with the client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. Our revenue arrangements do

not

contain any significant financing element due to the contract terms and the timing between when consideration is received and when the service is provided.

Our arrangements with customers consist principally of

four

different types of arrangements:

1

) subscription-based service agreements;

2

)

one

-time specified services performed at a single point in time;

3

) fixed, non-subscription service agreements; and

4

) unit-priced service agreements.

Subscription-based services -

Services that are provided under subscription-based service agreements are usually for a

twelve

month period and represent a single promise to stand ready to provide reporting, tools and services throughout the subscription period as requested by the customer. These agreements are renewable at the option of the customer at the completion of the initial contract term for an agreed upon price increase each year. These agreements represent a series of distinct monthly services that are substantially the same, with the same pattern of transfer to the customer as the customer receives and consumes the benefits throughout the contract period. Accordingly, subscription services are recognized ratably over the subscription period. Subscription services are typically billed annually in advance but

may

also be billed on a quarterly and monthly basis.

One-time services –

These agreements typically require us to perform a specific

one

-time service in a particular month. We are entitled to a fixed payment upon completion of the service. Under these arrangements, we recognize revenue at the point in time we complete the service and it is accepted by the customer.

Fixed, non-subscription services –

These arrangements typically require us to perform an unspecified amount of services for a fixed price during a fixed period of time. Revenues are recognized over time based upon the costs incurred to date in relation to the total estimated contract costs. In determining cost estimates, management uses historical and forecasted cost information which is based on estimated volumes, external and internal costs and other factors necessary in estimating the total costs over the term of the contract. Changes in estimates are accounted for using a cumulative catch up adjustment which could impact the amount and timing of revenue for any period.

Unit-price services –

These arrangements typically require us to perform certain services on a periodic basis as requested by the customer for a per-unit amount which is typically billed in the month following the performance of the service. Revenue under these arrangements is recognized over the time the services are performed at the per-unit amount.

We recognize contract assets or unbilled receivables related to revenue recognized for services completed but

not

invoiced to the clients. Unbilled receivables are classified as receivables when we have an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when we invoice clients in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation.  

Deferred Contract Costs

Deferred contract costs, net is stated at gross deferred costs less accumulated amortization. We defer commissions and incentives, including payroll taxes, if they are incremental and recoverable costs of obtaining a renewable customer contract. Deferred contract costs are amortized over the estimated term of the contract, including renewals, which generally ranges from

three

to

five

years. The contract term was estimated by considering factors such as historical customer attrition rates and product life. The amortization period is adjusted for significant changes in the estimated remaining term of a contract.  An impairment of deferred contract costs is recognized when the unamortized balance of deferred contract costs exceeds the remaining amount of consideration we expect to receive net of the expected future costs directly related to providing those services.  We deferred incremental costs of obtaining a contract of

$1.0

million and

$616,000

in the

three

-month periods ended

September 30, 2019

and

2018,

respectively. We deferred incremental costs of obtaining a contract of

$2.6

million and

$1.8

million in the

nine

-month periods ended

September 30, 2019

and

2018,

respectively. Total amortization by expense classification for the

three

and

nine

month-periods ended

September 30, 2019

and

2018

was as follows:

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
	(In thousands)
Direct expenses	$	10	$	13	$	26	$	73
Selling, general and administrative expenses		738		601		2,072		1,815
Total	$	748	$	614	$	2,097	$	1,888

Additional expense included in selling, general and administrative expenses for impairment of costs capitalized due to lost clients was

$1,000

and

$12,000

for the

three

months ended

September 30, 2019

and

2018,

respectively and

$22,000

and

$31,000

in the

nine

months ended

September 30, 2019

and

2018,

respectively. We have elected the practical expedient to expense contract costs when incurred for any nonrenewable contracts with a term of

one

year or less.

Leases

We adopted Accounting Standards Update (“ASU”)

2016

-

02,

Leases (Topic

842

) (“Topic

842”

or the “New Leases Standard”) effective

January 1, 2019

using a modified retrospective transition, with the cumulative-effect adjustment recorded to retained earnings as of the effective date. As a result, the financial results for periods prior to

2019

have

not

been restated. We elected practical expedients related to existing leases at transition to

not

reassess whether contracts are or contain leases, to

not

reassess lease classification, initial direct costs, or lease terms. Additionally, we elected the practical expedient to account for lease and non-lease components as a single lease component for all asset classifications. We have also made a policy election to

not

record short-term leases with a duration of

12

months or less on the balance sheet.

Topic

842

requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset on the balance sheet for operating leases. We recorded

$2.3

million of ROU assets and

$2.4

million of lease liabilities related to operating leases at the date of transition. The ROU assets recorded were net of

$43,000

of accrued liabilities and prepaid expenses representing previously deferred (prepaid) rent. There was

no

significant impact to the unaudited condensed consolidated statements of income, comprehensive income, shareholders’ equity or cash flows. Accounting for finance leases is substantially unchanged.

We determine whether a lease is included in an agreement at inception. Operating lease ROU assets are included in operating lease right-of-use assets in our consolidated balance sheet. Finance lease assets are included in property and equipment. Operating and finance lease liabilities are included in other current liabilities and other long term liabilities. Certain lease arrangements

may

include options to extend or terminate the lease. We include these provisions in the ROU and lease liabilities only when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term and is included in direct expenses and selling, general and administrative expenses. Our lease agreements do

not

contain any residual value guarantees.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments during the lease term. ROU assets and lease liabilities are recorded at lease commencement based on the estimated present value of lease payments. Because the rate of interest implicit in each lease is

not

readily determinable, we use our estimated incremental collateralized borrowing rate at lease commencement, to calculate the present value of lease payments. When determining the appropriate incremental borrowing rate, we consider our available credit facilities, recently issued debt and public interest rate information.

Fair Value Measurements

Our valuation techniques are based on maximizing observable inputs and minimizing the use of unobservable inputs when measuring fair value. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. The inputs are then classified into the following hierarchy: (

1

) Level

1

Inputs—quoted prices in active markets for identical assets and liabilities; (

2

) Level

2

Inputs—observable market-based inputs other than Level

1

inputs, such as quoted prices for similar assets or liabilities in active markets, quoted prices for similar or identical assets or liabilities in markets that are

not

active, or other inputs that are observable or can be corroborated by observable market data; (

3

) Level

3

Inputs—unobservable inputs.

The following details our financial assets within the fair value hierarchy at

September 30, 2019

and

December 31, 2018:

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of September 30, 2019
Money market funds	$	2,605	$	--	$	--	$	2,605
Total cash equivalents	$	2,605	$	--	$	--	$	2,605
As of December 31, 2018
Money market funds	$	1,848	$	--	$	--	$	1,848
Total cash equivalents	$	1,848	$	--	$	--	$	1,848

There were

no

transfers between levels during the

three

and

nine

-month periods ended

September 30, 2019.

Our long-term debt described in Note

5

is recorded at historical cost. The fair value of long-term debt is classified in Level

2

of the fair value hierarchy and was estimated based primarily on estimated current rates available for debt of the same remaining duration and adjusted for nonperformance and credit. The following are the carrying amount and estimated fair values of long-term debt:

	September 30, 2019		December 31, 2018
	(In thousands)
Total carrying amount of long-term debt	$	35,229	$	37,966
Estimated fair value of long-term debt	$	36,311	$	38,257

The carrying amounts of accounts receivable, accounts payable, and accrued expenses approximate their fair value. All non-financial assets that are

not

recognized or disclosed at fair value in the financial statements on a recurring basis, which includes ROU assets, property and equipment, goodwill, intangibles and cost method investments, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). As of

September 30, 2019

and

December 31, 2018,

there was

no

indication of impairment related to these assets.

Contingencies

From time to time, we are involved in certain claims and litigation arising in the normal course of business. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. Legal fees, net of estimated insurance recoveries, are expensed as incurred.

Recent Accounting 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.  This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for years beginning after

December 15, 2019

and interim periods within those fiscal years. We believe our adoption will

not

significantly impact our results of operations and financial position.  

In

August 2018,

the FASB issued ASU

2018

-

15,

Intangibles-Goodwill and Other-Internal Use Software (Subtopic

350

-

40

). This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The guidance is to be applied either retrospectively or prospectively and is effective for annual reporting periods beginning after

December 15, 2019

and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the method of adoption and impact that this guidance will have upon our results of operations and financial position and have

not

yet determined whether early adoption will be elected.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 25, 2019
Document Information [Line Items]
Entity Registrant Name	National Research Corporation
Entity Central Index Key	0000070487
Trading Symbol	nrc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding (in shares)		24,920,050
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Common Stock, $.001 par value

XML

Note 10 - Leases - Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Operating leases	$ 196	$ 601
Asset amortization	65	189
Interest on lease liabilities	11	31
Variable lease cost	29	72
Short-term lease cost	10	29
Total net lease cost	$ 311	$ 922

XML

Note 10 - Leases - Payments Under Non-cancelable Operating Leases and Capital Leases (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Capital leases, 2019	$ 258
Operating leases, 2019	882
Capital leases, 2020	241
Operating leases, 2020	672
Capital leases, 2021	214
Operating leases, 2021	564
Capital leases, 2022	168
Operating leases, 2022	273
Capital leases, 2023	85
Operating leases, 2023	262
Capital leases, Total minimum lease payments	966
Less: Amount representing interest	(86)
Present value of minimum lease payments	880
Less: Current maturities	(204)
Capital lease obligations, net of current portion	$ 676

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income	$ 8,119	$ 6,992	$ 23,708	$ 22,246
Other comprehensive income:
Foreign currency translation adjustment	(146)	280	474	(418)
Other comprehensive income	(146)	280	474	(418)
Comprehensive Income	$ 7,973	$ 7,272	$ 24,182	$ 21,828

XML

Note 7 - Goodwill and Other Intangible Assets - Summary of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Indefinite trade name	$ 1,191	$ 1,191
Amortizing intangible assets	13,457	13,450
Accumulated amortization	(11,635)	(11,348)
Other intangible assets, net	1,822	2,102
Customer Relationships [Member]
Amortizing intangible assets	9,334	9,327
Technology-Based Intangible Assets [Member]
Amortizing intangible assets	1,360	1,360
Trade Names [Member]
Amortizing intangible assets	$ 1,572	$ 1,572

XML

Note 6 - Share-based Compensation - Stock Options Valuation Assumptions (Details) - Share-based Payment Arrangement, Option [Member]	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Expected dividend yield at date of grant	2.60%	2.59%
Expected stock price volatility	34.01%	32.47%
Risk-free interest rate	2.38%	2.51%
Expected life of options (in years) (Year)	7 years 182 days	7 years 109 days

XML

Note 1 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Capitalized Contract Cost [Table Text Block]

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
	(In thousands)
Direct expenses	$	10	$	13	$	26	$	73
Selling, general and administrative expenses		738		601		2,072		1,815
Total	$	748	$	614	$	2,097	$	1,888

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of September 30, 2019
Money market funds	$	2,605	$	--	$	--	$	2,605
Total cash equivalents	$	2,605	$	--	$	--	$	2,605
As of December 31, 2018
Money market funds	$	1,848	$	--	$	--	$	1,848
Total cash equivalents	$	1,848	$	--	$	--	$	1,848

	September 30, 2019		December 31, 2018
	(In thousands)
Total carrying amount of long-term debt	$	35,229	$	37,966
Estimated fair value of long-term debt	$	36,311	$	38,257

XML

Note 7 - Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Goodwill [Table Text Block]

	(In thousands)
Balance as of December 31, 2018	$	57,831
Foreign currency translation		65
Balance as of September 30, 2019	$	57,896

Schedule of Intangible Assets [Table Text Block]

<div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style="margin-right: 5%; margin-left: 36pt; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px; min-; min-width: 700px;"> <tr style="vertical-align: bottom;"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">September 30,</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">2019</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">December 31,</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">2018</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="6" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(In thousands)</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 68%;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Non-amortizing other intangible assets:</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Trade name</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,191</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,191</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Amortizing other intangible assets:</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Customer related</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">9,334</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">9,327</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Technology</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,360</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,360</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Trade name</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,572</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,572</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total other intangible assets</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,457</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,450</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Accumulated amortization</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(11,635</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(11,348</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Other intangible assets, net</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,822</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2,102</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> </tr> </table></div>

XML

Note 4 - Income Taxes

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

( 4 ) INCOME TAXES

The effective tax rate for the

three

-month period ended

September 30, 2019

increased to

17.2%

compared to

16.6%

for the same period in

2018

primarily due to a tax depreciation method change election for software development costs creating an income tax benefit of

$308,000

in

2018,

additional withholding on unrepatriated Canadian earnings of

$90,000

and higher projected state taxes. These were partially offset by increased tax benefits from the exercise of options and dividends paid to non-vested shareholders of

$459,000.

The effective tax rate for the

nine

-month period ended

September 30, 2019

increased to

18.7%

compared to

11.6%

for the same period in

2018.

The effective tax rate for the

nine

-month period ended

September 30, 2019,

was higher mainly due to income tax benefits from the Recapitalization due to accelerated vesting of restricted stock and settlement of stock options of

$1.1

million, a tax depreciation method change election for software development costs creating an income tax benefit of

$308,000

in

2018

and a

$247,000

reduction in tax benefits from the exercise of options and dividends paid to non-vested shareholders compared to

2018.

In addition, there was additional withholding on unrepatriated Canadian earnings of

$90,000.

This was partially offset by less non-deductible fees of

$154,000

primarily related to the Recapitalization.

XML

Note 8 - Property and Equipment

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

( 8 ) PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	September 30, 2019			December 31, 2018
	(In thousands)
Property and equipment at cost	$	48,245		$	44,730
Accumulated depreciation		(34,549	)		(30,577	)
Property and equipment, net	$	13,696		$	14,153

XML

Note 3 - Contracts With Customers 1 (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue, Remaining Performance Obligation, Amount	$ 1,252,000		$ 1,252,000
Solutions within the VOC Platform [Member]
Revenue from Contract with Customer, Percent of Total Revenue	63.80%	51.20%	61.30%	48.70%

XML

Note 1 - Summary of Significant Accounting Policies (Details Textual)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)	Jan. 01, 2019 USD ($)
Number of Operating Segments			6
Number of Reportable Segments			1
Incremental Costs of Obtaining a Contract, Deferred During Period	$ 1,000,000	$ 616,000	$ 2,600,000	$ 1,800,000
Operating Lease, Right-of-Use Asset	1,805,000		1,805,000			$ 2,308,000
Operating Lease, Liability, Total	1,837,000		1,837,000			2,351,000
Accrued Liabilities and Prepaid Expenses, Net						$ 43,000
Asset Impairment Charges, Total			0		$ 0
Selling, General and Administrative Expenses [Member]
Capitalized Contract Cost, Impairment Loss	$ 1,000	$ 12,000	$ 22,000	$ 31,000
Minimum [Member]
Capitalized Contract Cost, Amortization Period	3 years		3 years
Maximum [Member]
Capitalized Contract Cost, Amortization Period	5 years		5 years

XML

Note 4 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Effective Income Tax Rate Reconciliation, Percent, Total	17.20%	16.60%	18.70%	11.60%
Increase Decrease In Income Tax Expense From Changing Software Development Tax Depreciation Method		$ (308,000)		$ (308,000)
Increase (Decrease) in Income Tax Expense from Exercise of Options and Dividends Paid to Non-vested Shareholders	$ (459,000)			247,000
Income Tax Expense (Benefit) Related to Recapitalization				$ (1,100,000)
Increase (Decrease) in Income Tax Expense from Non-deductible Recapitalization Expenses			$ 154,000
Foreign Tax Authority [Member] | Canada Revenue Agency [Member]
Increase (Decrease) in Income Tax Expense from Withholding on Unrepatriated Foreign Earnings	$ 90,000		$ 90,000

XML

Note 12 - Segment Information (Details Textual)	9 Months Ended
	Sep. 30, 2019
Number of Operating Segments	6
Number of Reportable Segments	1

XML

Note 9 - Earnings Per Share - Net Income Per Share Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Numerator for net income per share - basic:
Net income	$ 8,119	$ 7,393	$ 8,196	$ 6,992	$ 7,948	$ 7,306	$ 23,708	$ 22,246
Allocation of distributed and undistributed income to unvested restricted stock shareholders	(27)						(80)
Net income attributable to common shareholders	$ 8,092						$ 23,628
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic (in shares)	24,827						24,794
Net income per share – basic (in dollars per share)	$ 0.33						$ 0.95
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$ 8,092						$ 23,628
Weighted average common shares outstanding - basic (in shares)	24,827						24,794
Weighted average effect of dilutive securities – stock options (in shares)	914						830
Denominator for diluted earnings per share – adjusted weighted average shares (in shares)	25,741						25,624
Net income per share – diluted (in dollars per share)	$ 0.31						$ 0.92
Common Class A [Member]
Numerator for net income per share - basic:
Net income				6,992				17,622
Allocation of distributed and undistributed income to unvested restricted stock shareholders				(22)				(61)
Net income attributable to common shareholders				$ 6,970				$ 17,561
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic (in shares)				24,671				23,184
Net income per share – basic (in dollars per share)				$ 0.28				$ 0.76
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation				$ 6,970				$ 17,561
Weighted average common shares outstanding - basic (in shares)				24,671				23,184
Weighted average effect of dilutive securities – stock options (in shares)				855				899
Denominator for diluted earnings per share – adjusted weighted average shares (in shares)				25,526				24,083
Net income per share – diluted (in dollars per share)				$ 0.27				$ 0.73
Common Class B [Member]
Numerator for net income per share - basic:
Net income								$ 4,624
Allocation of distributed and undistributed income to unvested restricted stock shareholders								(18)
Net income attributable to common shareholders								$ 4,606
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic (in shares)								3,527
Net income per share – basic (in dollars per share)								$ 1.31
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation								$ 4,606
Weighted average common shares outstanding - basic (in shares)								3,527
Weighted average effect of dilutive securities – stock options (in shares)								101
Denominator for diluted earnings per share – adjusted weighted average shares (in shares)								3,628
Net income per share – diluted (in dollars per share)								$ 1.27

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Allowance for doubtful accounts	$ 138	$ 175
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	60,000,000	60,000,000
Common stock, shares issued (in shares)	30,100,762	29,917,667
Common stock, shares outstanding (in shares)	24,920,050	24,800,796
Treasury stock, shares (in shares)	5,180,712	5,116,871

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018
Treasury Stock [Member] | Common Class A [Member]
Shares of stock (in shares)				12,771
Shares of common stock for the exercise of stock options (in shares)				36,000
Dividends declared per common share (in dollars per share)				$ 0.17
Treasury Stock [Member]
Shares of stock (in shares)	32,207	2,977	28,657
Common Stock [Member]
Shares of common stock for the exercise of stock options (in shares)	72,843	18,000	86,247
Shares of restricted common shares, net of (forfeitures) (in shares)			6,005
Dividends declared per common share (in dollars per share)	$ 0.19	$ 0.19	$ 0.19
Common Class A [Member]
Shares of stock (in shares)				12,771	126,617	30,180
Shares of common stock for the exercise of stock options (in shares)				36,000	270,189	74,769
Shares of restricted common shares, net of (forfeitures) (in shares)						6,793
Dividends declared per common share (in dollars per share)				$ 0.17	$ 0.17	$ 0.10
Forfeitures of class A restricted common shares (in shares)					10,289
Settlement of class B restricted common shares and stock options in connection with Recapitalization, number of shares (in shares)					90,369
Settlement of common shares in connection with Recapitalization, number of shares received (in shares)					3,527,246
Common Class B [Member]
Shares of stock (in shares)						3,677
Shares of common stock for the exercise of stock options (in shares)						9,296
Dividends declared per common share (in dollars per share)						$ 0.60
Settlement of class B restricted common shares and stock options in connection with Recapitalization, cash exchanged					$ 3,271
Settlement of common shares in connection with Recapitalization, number of shares settled (in shares)					3,527,246
Settlement of common shares in connection with Recapitalization, value of cash					$ 69,099
Retirement in connection with recapitalization, shares (in shares)					4,328,552

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Note 10 - Leases - Supplemental Cash Flow and Other Information Related to Leases (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Operating cash flows from operating leases	$ 601
Operating cash flows from finance leases	31
Financing cash flows from finance leases	223	$ 104
ROU assets obtained in exchange for operating lease liabilities	16
ROU assets obtained in exchange for finance lease liabilities	$ 206

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Note 6 - Share-based Compensation - Non-vested Stock (Details) - The 2006 Equity Incentive Plan [Member]	9 Months Ended
	Sep. 30, 2019 $ / shares shares
Outstanding (in shares) | shares	78,171
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 15.61
Granted (in shares) | shares	6,005
Granted, weighted average grant date fair value (in dollars per share) | $ / shares	$ 38.30
Vested (in shares) | shares
Vested, weighted average grant date fair value (in dollars per share) | $ / shares
Forfeited (in shares) | shares
Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares
Outstanding (in shares) | shares	84,176
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 17.23

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Note 5 - Notes Payable - Summary of Notes Payable (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Less: current portion	$ (4,133)	$ (3,667)
Less: unamortized debt issuance costs	(119)	(153)
Notes payable, net of current portion	30,977	34,176
Term Loan [Member]
Term Loans	$ 35,229	$ 37,996

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Note 9 - Earnings Per Share (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2019 shares	Sep. 30, 2018 shares	Sep. 30, 2019 shares	Sep. 30, 2018 shares
Ratio of Dividends or Other Distribution Payable of Common Stock A to Common Stock B				0.16
Share-based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	27,284	107,512	12,493	88,572

XML

Note 9 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three months Ended September 30, 2019			Three months Ended September 30, 2018
	Common Stock			Common Stock (formerly Class A)
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	8,119		$	6,992
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(27	)		(22	)
Net income attributable to common shareholders	$	8,092		$	6,970
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		24,827			24,671
Net income per share – basic	$	0.33		$	0.28
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	8,092		$	6,970
Denominator for net income per share - diluted:
Weighted average common shares outstanding - basic		24,827			24,671
Weighted average effect of dilutive securities – stock options		914			855
Denominator for diluted earnings per share – adjusted weighted average shares		25,741			25,526
Net income per share – diluted	$	0.31		$	0.27

	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
	Common Stock			Common Stock (formerly Class A)			Class B Common Stock
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	23,708		$	17,622		$	4,624
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(80	)		(61	)		(18	)
Net income attributable to common shareholders	$	23,628		$	17,561		$	4,606
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		24,794			23,184			3,527
Net income per share – basic	$	0.95		$	0.76		$	1.31
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	23,628		$	17,561		$	4,606
Denominator for net income per share - diluted:
Weighted average common shares outstanding - basic		24,794			23,184			3,527
Weighted average effect of dilutive securities – stock options		830			899			101
Denominator for diluted earnings per share – adjusted weighted average shares		25,624			24,083			3,628
Net income per share – diluted	$	0.92		$	0.73		$	1.27

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Note 12 - Segment Information

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

( 12 )  SEGMENT INFORMATION

Our

six

operating segments are aggregated into

one

reporting segment because they have similar economic characteristics and meet the other aggregation criteria from the FASB guidance on segment disclosure. The

six

operating segments are Experience, The Governance Institute, Market Insights, Transparency, National Research Corporation Canada and Transitions, which offer a portfolio of solutions that address specific needs around market insight, experience, transparency and governance for healthcare providers, payers and other healthcare organizations. The table below presents entity-wide information regarding our assets, after elimination of intercompany balances by geographic area:

	September 30, 2019		December 31, 2018
	(In thousands)
Long-lived assets:
United States	$	78,490	$	77,331
Canada		2,589		2,291
Total	$	81,079	$	79,622
Total assets:
United States	$	92,849	$	91,080
Canada		14,800		16,952
Total	$	107,649	$	108,032

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Note 5 - Notes Payable (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Debt [Table Text Block]

	September 30, 2019			December 31, 2018
Term Loans	$	35,229		$	37,996
Less: current portion		(4,133	)		(3,667	)
Less: unamortized debt issuance costs		(119	)		(153	)
Notes payable, net of current portion	$	30,977		$	34,176

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Note 8 - Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Property and equipment at cost	$ 48,245	$ 44,730
Accumulated depreciation	(34,549)	(30,577)
Property and equipment, net	$ 13,696	$ 14,153

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Note 6 - Share-based Compensation - Stock Option Activity Under Equity Incentive Plans and Director Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2019
Outstanding, number of options (in shares)	1,373,209
Outstanding, weighted average exercise price (in dollars per share)	$ 15.99
Granted, number of options (in shares)	100,615
Granted, weighted average exercise price (in dollars per share)	$ 41.64
Exercised, number of options (in shares)	(177,090)
Exercised, weighted average exercise price (in dollars per share)	$ 12.96
Exercised, aggregate intrinsic value	$ 6,548
Forfeited, number of options (in shares)
Forfeited, weighted average exercise price (in dollars per share)
Outstanding, number of options (in shares)	1,296,734
Outstanding, weighted average exercise price (in dollars per share)	$ 18.39
Outstanding, weighted average remaining contractual term (Year)	4 years 295 days
Outstanding, aggregate intrinsic value	$ 51,038
Exercisable, number of options (in shares)	858,349
Weighted average exercise price (in dollars per share)	$ 15.02
Exercisable, weighted average remaining contractual term (Year)	3 years 189 days
Exercisable, aggregate intrinsic value	$ 36,675

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Note 5 - Notes Payable (Details Textual)		1 Months Ended	3 Months Ended	9 Months Ended
	Apr. 18, 2018 USD ($)	May 31, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Proceeds from Notes Payable, Total					$ 40,000,000
Credit Agreement [Member] | First National Bank of Omaha [Member]
Debt Instrument, Covenant, Minimum Fixed Charge Coverage Ratio				1.1
Debt Instrument, Covenant, Maximum Cash Flow Leverage Ratio				3
Credit Agreement [Member] | First National Bank of Omaha [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	2.25%
Debt Instrument, Percentage Bearing Variable Interest, Percentage Rate			4.33%	4.33%
Credit Agreement [Member] | First National Bank of Omaha [Member] | Term Loan [Member]
Proceeds from Notes Payable, Total	$ 40,000,000
Debt Instrument, Periodic Payment, Total	$ 462,988
Debt Instrument, Interest Rate, Stated Percentage	5.00%
Credit Agreement [Member] | First National Bank of Omaha [Member] | Term Loan [Member] | Forecast [Member]
Debt Instrument, Periodic Payment, Total		$ 526,362
Credit Agreement [Member] | First National Bank of Omaha [Member] | Delayed Draw Term Loan [Member]
Debt Instrument, Unused Borrowing Capacity, Amount	$ 15,000,000
Proceeds from Issuance of Long-term Debt, Total				$ 0
Credit Agreement [Member] | First National Bank of Omaha [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 15,000,000
Debt Instrument, Unused Borrowing Capacity, Amount			$ 15,000,000	15,000,000
Long-term Line of Credit, Total			$ 0	$ 0		$ 0
Short-term Debt, Weighted Average Interest Rate, over Time			4.62%	4.72%

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

We derive a majority of our revenues from our annually renewable subscription-based service agreements with our customers, which include performance measurement and improvement services, healthcare analytics and governance education services. Such agreements are generally cancelable on short or

no

notice without penalty. See Note

3

for further information about our contracts with customers. We account for revenue using the following steps:

● Identify the contract, or contracts, with a customer

● Identify the performance obligations in the contract

● Determine the transaction price

● Allocate the transaction price to the identified performance obligations; and

● Recognize revenue when, or as, we satisfy the performance obligations.

Our revenue arrangements with a client

may

include combinations of more than

one

service offering which

may

be executed at the same time, or within close proximity of

one

another. We combine contracts with the same customer into a single contract for accounting purposes when the contract is entered into at or near the same time and the contracts are negotiated together. For contracts that contain more than

one

separately identifiable performance obligation, the total transaction price is allocated to the identified performance obligations based upon the relative stand-alone selling prices of the performance obligations. The stand-alone selling prices are based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost-plus margin or residual approach. We estimate the amount of total contract consideration we expect to receive for variable arrangements based on the most likely amount we expect to earn from the arrangement based on the expected quantities of services we expect to provide and the contractual pricing based on those quantities. We only include some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will

not

occur. We consider the sensitivity of the estimate, our relationship and experience with the client and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. Our revenue arrangements do

not

contain any significant financing element due to the contract terms and the timing between when consideration is received and when the service is provided.

Our arrangements with customers consist principally of

four

different types of arrangements:

1

) subscription-based service agreements;

2

)

one

-time specified services performed at a single point in time;

3

) fixed, non-subscription service agreements; and

4

) unit-priced service agreements.

Subscription-based services -

Services that are provided under subscription-based service agreements are usually for a

twelve

month period and represent a single promise to stand ready to provide reporting, tools and services throughout the subscription period as requested by the customer. These agreements are renewable at the option of the customer at the completion of the initial contract term for an agreed upon price increase each year. These agreements represent a series of distinct monthly services that are substantially the same, with the same pattern of transfer to the customer as the customer receives and consumes the benefits throughout the contract period. Accordingly, subscription services are recognized ratably over the subscription period. Subscription services are typically billed annually in advance but

may

also be billed on a quarterly and monthly basis.

One-time services –

These agreements typically require us to perform a specific

one

-time service in a particular month. We are entitled to a fixed payment upon completion of the service. Under these arrangements, we recognize revenue at the point in time we complete the service and it is accepted by the customer.

Fixed, non-subscription services –

These arrangements typically require us to perform an unspecified amount of services for a fixed price during a fixed period of time. Revenues are recognized over time based upon the costs incurred to date in relation to the total estimated contract costs. In determining cost estimates, management uses historical and forecasted cost information which is based on estimated volumes, external and internal costs and other factors necessary in estimating the total costs over the term of the contract. Changes in estimates are accounted for using a cumulative catch up adjustment which could impact the amount and timing of revenue for any period.

Unit-price services –

These arrangements typically require us to perform certain services on a periodic basis as requested by the customer for a per-unit amount which is typically billed in the month following the performance of the service. Revenue under these arrangements is recognized over the time the services are performed at the per-unit amount.

We recognize contract assets or unbilled receivables related to revenue recognized for services completed but

not

invoiced to the clients. Unbilled receivables are classified as receivables when we have an unconditional right to contract consideration. A contract liability is recognized as deferred revenue when we invoice clients in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when we have satisfied the related performance obligation.  

Deferred Charges, Policy [Policy Text Block]

Deferred Contract Costs

Deferred contract costs, net is stated at gross deferred costs less accumulated amortization. We defer commissions and incentives, including payroll taxes, if they are incremental and recoverable costs of obtaining a renewable customer contract. Deferred contract costs are amortized over the estimated term of the contract, including renewals, which generally ranges from

three

to

five

years. The contract term was estimated by considering factors such as historical customer attrition rates and product life. The amortization period is adjusted for significant changes in the estimated remaining term of a contract.  An impairment of deferred contract costs is recognized when the unamortized balance of deferred contract costs exceeds the remaining amount of consideration we expect to receive net of the expected future costs directly related to providing those services.  We deferred incremental costs of obtaining a contract of

$1.0

million and

$616,000

in the

three

-month periods ended

September 30, 2019

and

2018,

respectively. We deferred incremental costs of obtaining a contract of

$2.6

million and

$1.8

million in the

nine

-month periods ended

September 30, 2019

and

2018,

respectively. Total amortization by expense classification for the

three

and

nine

month-periods ended

September 30, 2019

and

2018

was as follows:

	Three months ended				Nine months ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
	(In thousands)
Direct expenses	$	10	$	13	$	26	$	73
Selling, general and administrative expenses		738		601		2,072		1,815
Total	$	748	$	614	$	2,097	$	1,888

Additional expense included in selling, general and administrative expenses for impairment of costs capitalized due to lost clients was

$1,000

and

$12,000

for the

three

months ended

September 30, 2019

and

2018,

respectively and

$22,000

and

$31,000

in the

nine

months ended

September 30, 2019

and

2018,

respectively. We have elected the practical expedient to expense contract costs when incurred for any nonrenewable contracts with a term of

one

year or less.

Lessee, Leases [Policy Text Block]

Leases

We adopted Accounting Standards Update (“ASU”)

2016

-

02,

Leases (Topic

842

) (“Topic

842”

or the “New Leases Standard”) effective

January 1, 2019

using a modified retrospective transition, with the cumulative-effect adjustment recorded to retained earnings as of the effective date. As a result, the financial results for periods prior to

2019

have

not

been restated. We elected practical expedients related to existing leases at transition to

not

reassess whether contracts are or contain leases, to

not

reassess lease classification, initial direct costs, or lease terms. Additionally, we elected the practical expedient to account for lease and non-lease components as a single lease component for all asset classifications. We have also made a policy election to

not

record short-term leases with a duration of

12

months or less on the balance sheet.

Topic

842

requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset on the balance sheet for operating leases. We recorded

$2.3

million of ROU assets and

$2.4

million of lease liabilities related to operating leases at the date of transition. The ROU assets recorded were net of

$43,000

of accrued liabilities and prepaid expenses representing previously deferred (prepaid) rent. There was

no

significant impact to the unaudited condensed consolidated statements of income, comprehensive income, shareholders’ equity or cash flows. Accounting for finance leases is substantially unchanged.

We determine whether a lease is included in an agreement at inception. Operating lease ROU assets are included in operating lease right-of-use assets in our consolidated balance sheet. Finance lease assets are included in property and equipment. Operating and finance lease liabilities are included in other current liabilities and other long term liabilities. Certain lease arrangements

may

include options to extend or terminate the lease. We include these provisions in the ROU and lease liabilities only when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term and is included in direct expenses and selling, general and administrative expenses. Our lease agreements do

not

contain any residual value guarantees.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments during the lease term. ROU assets and lease liabilities are recorded at lease commencement based on the estimated present value of lease payments. Because the rate of interest implicit in each lease is

not

readily determinable, we use our estimated incremental collateralized borrowing rate at lease commencement, to calculate the present value of lease payments. When determining the appropriate incremental borrowing rate, we consider our available credit facilities, recently issued debt and public interest rate information.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

Our valuation techniques are based on maximizing observable inputs and minimizing the use of unobservable inputs when measuring fair value. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. The inputs are then classified into the following hierarchy: (

1

) Level

1

Inputs—quoted prices in active markets for identical assets and liabilities; (

2

) Level

2

Inputs—observable market-based inputs other than Level

1

inputs, such as quoted prices for similar assets or liabilities in active markets, quoted prices for similar or identical assets or liabilities in markets that are

not

active, or other inputs that are observable or can be corroborated by observable market data; (

3

) Level

3

Inputs—unobservable inputs.

The following details our financial assets within the fair value hierarchy at

September 30, 2019

and

December 31, 2018:

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of September 30, 2019
Money market funds	$	2,605	$	--	$	--	$	2,605
Total cash equivalents	$	2,605	$	--	$	--	$	2,605
As of December 31, 2018
Money market funds	$	1,848	$	--	$	--	$	1,848
Total cash equivalents	$	1,848	$	--	$	--	$	1,848

There were

no

transfers between levels during the

three

and

nine

-month periods ended

September 30, 2019.

Our long-term debt described in Note

5

is recorded at historical cost. The fair value of long-term debt is classified in Level

2

of the fair value hierarchy and was estimated based primarily on estimated current rates available for debt of the same remaining duration and adjusted for nonperformance and credit. The following are the carrying amount and estimated fair values of long-term debt:

	September 30, 2019		December 31, 2018
	(In thousands)
Total carrying amount of long-term debt	$	35,229	$	37,966
Estimated fair value of long-term debt	$	36,311	$	38,257

The carrying amounts of accounts receivable, accounts payable, and accrued expenses approximate their fair value. All non-financial assets that are

not

recognized or disclosed at fair value in the financial statements on a recurring basis, which includes ROU assets, property and equipment, goodwill, intangibles and cost method investments, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). As of

September 30, 2019

and

December 31, 2018,

there was

no

indication of impairment related to these assets.

Commitments and Contingencies, Policy [Policy Text Block]

Contingencies

From time to time, we are involved in certain claims and litigation arising in the normal course of business. Management assesses the probability of loss for such contingencies and recognizes a liability when a loss is probable and estimable. Legal fees, net of estimated insurance recoveries, are expensed as incurred.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting 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.  This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for years beginning after

December 15, 2019

and interim periods within those fiscal years. We believe our adoption will

not

significantly impact our results of operations and financial position.  

In

August 2018,

the FASB issued ASU

2018

-

15,

Intangibles-Goodwill and Other-Internal Use Software (Subtopic

350

-

40

). This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The guidance is to be applied either retrospectively or prospectively and is effective for annual reporting periods beginning after

December 15, 2019

and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the method of adoption and impact that this guidance will have upon our results of operations and financial position and have

not

yet determined whether early adoption will be elected.

XML

Note 6 - Share-based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2019			2018
Expected dividend yield at date of grant		2.60	%		2.59	%
Expected stock price volatility		34.01	%		32.47	%
Risk-free interest rate		2.38	%		2.51	%
Expected life of options (in years)		7.5			7.3

Share-based Payment Arrangement, Activity [Table Text Block]

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2018		1,373,209		$	15.99
Granted		100,615		$	41.64
Exercised		(177,090	)	$	12.96			$	6,548
Forfeited		--		$	--
Outstanding at September 30, 2019		1,296,734		$	18.39		4.81	$	51,038
Exercisable at September 30, 2019		858,349		$	15.02		3.52	$	36,675

Schedule of Nonvested Share Activity [Table Text Block]

	Common Shares Outstanding		Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2018		78,171	$	15.61
Granted		6,005		38.30
Vested		--		--
Forfeited		--	$	--
Outstanding at September 30, 2019		84,176	$	17.23

XML

Note 10 - Leases (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Lease, Cost [Table Text Block]

	Three months ended September 30, 2019		Nine months ended September 30, 2019
	(In thousands)
Operating leases	$	196	$	601
Finance leases:
Asset amortization		65		189
Interest on lease liabilities		11		31
Variable lease cost		29		72
Short-term lease cost		10		29
Total net lease cost	$	311	$	922

Lessee, Lease, Balance Sheet Information [Table Text Block]

	September 30, 2019		January 1, 2019
Operating leases:
Operating ROU assets	$	1,805	$	2,308	(1)
Current operating lease liabilities		589		699	(1)
Noncurrent operating lease liabilities		1,248		1,652	(1)
Total operating lease liabilities	$	1,837	$	2,351	(1)

	September 30, 2019			December 31, 2018
Finance leases:
Furniture and equipment	$	1,095		$	1,062
Computer Equipment		551			487
Computer Software		224			224
Property and equipment under finance lease, gross		1,870			1,773
Less accumulated amortization		(959	)		(839	)
Property and equipment under finance lease, net	$	911		$	934
Current obligations of finance leases	$	235		$	204
Noncurrent obligations of finance leases		629			676
Total finance lease liabilities	$	864		$	880
Weighted average remaining lease term (in years):
Operating leases		4.22
Finance leases		3.77
Weighted average discount rate:
Operating leases		4.81	%
Finance leases		4.68	%

Lease, Cash flow [Table Text Block]

<div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style="margin-right: 5%; margin-left: 36pt; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px; min-; min-width: 700px;"> <tr style="vertical-align: bottom;"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Nine months ended</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">September 30, 2019</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 84%;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Cash paid for amounts included in the measurement of lease liabilities:</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Operating cash flows from operating leases</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">601</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Operating cash flows from finance leases</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">31</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 9pt;">Financing cash flows from finance leases</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">223</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">ROU assets obtained in exchange for operating lease liabilities</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">16</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">ROU assets obtained in exchange for finance lease liabilities</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">206</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> </table></div>

Lessee, Operating and Finance Lease, Liability, Maturity [Table Text Block]

	Finance Leases			Operating Leases
Remainder 2019	$	70		$	191
2020		263			597
2021		257			452
2022		208			225
2023		125			246
Thereafter		13			321
Total minimum lease payments		936			2,032
Less: Amount representing interest		(72	)		(195	)
Present value of minimum lease payments		864			1,837
Less: Current maturities		(235	)		(589	)
Lease obligations, net of current portion	$	629		$	1,248

Schedule of Future Minimum Payments for Operating Leases and Capital Leases [Table Text Block]

<div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style="margin-right: 5%; margin-left: 36pt; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px; min-; min-width: 700px;"> <tr style="vertical-align: bottom;"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 68%;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;"><div style="display: inline; text-decoration: underline;">Year Ending December 31,</div></div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Finance Leases</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Operating Leases</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2019</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">258</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">882</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2020</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">241</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">672</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2021</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">214</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">564</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2022</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">168</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">273</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2023</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">85</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">262</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total minimum lease payments</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">966</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div></td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Less: Amount representing interest</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(86</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div></td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Present value of minimum lease payments</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">880</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div></td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Less: Current maturities</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(204</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div></td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Capital lease obligations, net of current portion</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 13%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">676</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div></td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px;"> </td> </tr> </table></div>

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Note 5 - Notes Payable

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

( 5 ) NOTES PAYABLE

Our long-term debt consists of the following (In thousands):  

	September 30, 2019			December 31, 2018
Term Loans	$	35,229		$	37,996
Less: current portion		(4,133	)		(3,667	)
Less: unamortized debt issuance costs		(119	)		(153	)
Notes payable, net of current portion	$	30,977		$	34,176

Our credit agreement (the “Credit Agreement”) with First National Bank of Omaha, includes (i) a

$15,000,000

revolving credit facility (the “Line of Credit”), (ii) a

$40,000,000

term loan (the “Term Loan”) and (iii) a

$15,000,000

delayed draw-dawn term facility (the “Delayed Draw Term Loan”). The Term Loan was used to fund, in part, the cash payment to the holders of the class B common stock in connection with the Recapitalization and certain costs of the Recapitalization. The Delayed Draw Term Loan

may

be used to fund any permitted future business acquisitions or repurchases of our Common Stock and the Line of Credit is used to fund ongoing working capital needs and for other general corporate purposes.

The Term Loan is payable in monthly installments of

$462,988

through

April 2020

and

$526,362

thereafter, with a balloon payment due at maturity in

April 2023.

The Term Loan bears interest at a fixed rate per annum of

5%.

Borrowings under the Line of Credit and the Delayed Draw Term Loan, if any, bear interest at a floating rate equal to the

30

-day London Interbank Offered Rate plus

225

basis points (

4.33%

at

September 30, 2019).

Interest on the Line of Credit accrues and is payable monthly. Principal amounts outstanding under the Line of Credit are due and payable in full at maturity, in

April 2021.

As of

September 30, 2019,

there were

no

borrowings outstanding under the Line of Credit and we had the availability to borrow

$15.0

million. There were

no

borrowings outstanding under the Line of Credit at

December 31, 2018.

The weighted average interest rate on borrowings on the Line of Credit for the

three

and

nine

-month periods ended

September 30, 2019

was

4.62%

and

4.72%,

respectively. There have been

no

borrowings on the Delayed Draw Term Loan since origination.

The Credit Agreement is collateralized by substantially all of our assets, subject to permitted liens and other agreed exceptions, and contains customary representations, warranties, affirmative and negative covenants (including financial covenants) and events of default. The negative covenants include, among other things, restrictions regarding the incurrence of indebtedness and liens, repurchases of our Common Stock and acquisitions, subject in each case to certain exceptions. The Credit Agreement also contains certain financial covenants with respect to a minimum fixed charge coverage ratio of

1.10x

and a maximum cash flow leverage ratio of

3.00x.

The special dividend paid on

January 15, 2019,

is excluded from the calculation of the fixed charge coverage ratio pursuant to a consent received from the lender. As of

September 30, 2019,

we were in compliance with these financial covenants. 

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Note 9 - Earnings Per Share

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

( 9 ) EARNINGS PER SHARE

Prior to the Recapitalization, net income per share of our former class A common stock and former class B common stock was computed using the

two

-class method. Basic net income per share was computed by allocating undistributed earnings to common shares and using the weighted-average number of common shares outstanding during the period.

Diluted net income per share was computed using the weighted-average number of common shares and, if dilutive, the potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method.

The liquidation rights and the rights upon the consummation of an extraordinary transaction were the same for the holders of our former class A common stock and former class B common stock. Other than share distributions and liquidation rights, the amount of any dividend or other distribution payable on each share of former class A common stock was equal to

one

-

sixth

(

1/6

th

) of the amount of any such dividend or other distribution payable on each share of former class B common stock. As a result, the undistributed earnings for each period were allocated based on the contractual participation rights of the former class A and former class B common stock as if the earnings for the year had been distributed.

As described in Note

2,

we completed a Recapitalization in

April 2018,

resulting in the elimination of the class B common stock and settlement of all then-existing outstanding class B share-based awards and reclassification of all class A common stock to Common Stock. The Recapitalization was effective on

April 17, 2018.

Therefore, income was allocated between the former class A and class B stock using the

two

-class method through

April 16, 2018,

and fully allocated to the Common Stock (formerly class A) following the Recapitalization.

We had

27,284

and

107,512

options of Common Stock (former class A shares) for the

three

-month periods ended

September 30, 2019

and

2018,

respectively which have been excluded from the diluted net income per share computation because their inclusion would be anti-dilutive.

	Three months Ended September 30, 2019			Three months Ended September 30, 2018
	Common Stock			Common Stock (formerly Class A)
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	8,119		$	6,992
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(27	)		(22	)
Net income attributable to common shareholders	$	8,092		$	6,970
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		24,827			24,671
Net income per share – basic	$	0.33		$	0.28
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	8,092		$	6,970
Denominator for net income per share - diluted:
Weighted average common shares outstanding - basic		24,827			24,671
Weighted average effect of dilutive securities – stock options		914			855
Denominator for diluted earnings per share – adjusted weighted average shares		25,741			25,526
Net income per share – diluted	$	0.31		$	0.27

We had

12,493

and

88,572

options of Common Stock (former class A shares) for the

nine

-month periods ended

September 30, 2019

and

2018,

respectively which have been excluded from the diluted net income per share computation because their inclusion would be anti-dilutive

	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
	Common Stock			Common Stock (formerly Class A)			Class B Common Stock
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	23,708		$	17,622		$	4,624
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(80	)		(61	)		(18	)
Net income attributable to common shareholders	$	23,628		$	17,561		$	4,606
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		24,794			23,184			3,527
Net income per share – basic	$	0.95		$	0.76		$	1.31
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	23,628		$	17,561		$	4,606
Denominator for net income per share - diluted:
Weighted average common shares outstanding - basic		24,794			23,184			3,527
Weighted average effect of dilutive securities – stock options		830			899			101
Denominator for diluted earnings per share – adjusted weighted average shares		25,624			24,083			3,628
Net income per share – diluted	$	0.92		$	0.73		$	1.27

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Note 3 - Contracts With Customers - Information About Receivables, Contract Assets, and Contract Liabilities From Contracts With Customers (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Accounts receivable	$ 15,308		$ 11,922
Deferred revenue	(19,133)		(16,244)
Revenue recognized that was included in deferred revenue at beginning of year due to completion of services	(15,214)	$ (15,377)
Increases due to invoicing of client, net of amounts recognized as revenue	17,829	17,522
Decreases due to completion of services (or portion of services) and transferred to accounts receivable	(51)	(71)
Change due to cumulative catch-up adjustments arising from changes in expected contract consideration	274	(145)
Increases due to revenue recognized in the period with additional performance obligations before invoicing	131	$ 65
Other Current Assets [Member]
Contract assets included in other current assets	$ 133		$ 53

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Note 2 - Recapitalization (Details Textual) - USD ($) $ / shares in Units, $ in Thousands			9 Months Ended
	Apr. 17, 2018	Apr. 16, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Conversion of Stock, Cash Paid Per Share Converted		$ 19.59
Common Stock, Par or Stated Value Per Share	$ 0.001		$ 0.001		$ 0.001
Payments Related to Recapitalization				$ 72,370
Conversion of Class B Common Stock Into Class A Common Stock [Member]
Conversion of Stock, Shares Issued	3,617,615
Payments Related to Recapitalization	$ 72,400

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Note 12 - Segment Information (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	September 30, 2019		December 31, 2018
	(In thousands)
Long-lived assets:
United States	$	78,490	$	77,331
Canada		2,589		2,291
Total	$	81,079	$	79,622
Total assets:
United States	$	92,849	$	91,080
Canada		14,800		16,952
Total	$	107,649	$	108,032

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Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 8,358	$ 12,991
Trade accounts receivable, less allowance for doubtful accounts of $138 and $175, respectively	15,308	11,922
Prepaid expenses	2,000	2,925
Income taxes receivable	556	348
Other current assets	348	224
Total current assets	26,570	28,410
Net property and equipment	13,696	14,153
Intangible assets, net	1,822	2,102
Goodwill	57,896	57,831
Deferred contract costs, net	3,993	3,484
Operating lease right-of-use assets	1,805
Other assets	1,867	2,052
Total assets	107,649	108,032
Current liabilities:
Current portion of notes payable, net of unamortized debt issuance costs	4,133	3,667
Accounts payable	777	613
Accrued wages, bonus and profit sharing	5,192	5,798
Accrued expenses	3,504	2,834
Income taxes payable	14	636
Dividends payable	4,735	17,113
Deferred revenue	19,133	16,244
Other current liabilities	824	204
Total current liabilities	38,312	47,109
Notes payable, net of current portion	30,977	34,176
Deferred income taxes	7,210	6,276
Other long-term liabilities	2,175	1,388
Total liabilities	78,674	88,949
Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued	0	0
Common stock, $0.001 par value; authorized 60,000,000 shares, issued 30,100,762 in 2019 and 29,917,667 in 2018, outstanding 24,920,050 in 2019 and 24,800,796 in 2018	30	30
Additional paid-in capital	160,524	157,312
Retained earnings (accumulated deficit)	(96,817)	(106,339)
Accumulated other comprehensive loss, foreign currency translation adjustment	(2,442)	(2,916)
Treasury stock, at cost; 5,180,712 Common shares in 2019 and 5,116,871 shares in 2018	(32,320)	(29,004)
Total shareholders’ equity	28,975	19,083
Total liabilities and shareholders’ equity	$ 107,649	$ 108,032

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Note 10 - Leases (Details Textual)	9 Months Ended
	Sep. 30, 2019
Minimum [Member]
Operating Lease, Remaining Lease Term	1 year
Maximum [Member]
Operating Lease, Remaining Lease Term	5 years 328 days

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Note 10 - Leases - Undiscounted Payments Under Non-cancelable Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019		Dec. 31, 2018
Finance leases, remainder 2019	$ 70
Operating leases, remainder 2019	191
Finance leases, 2020	263
Operating leases, 2020	597
Finance leases, 2021	257
Operating leases, 2021	452
Finance leases, 2022	208
Operating leases, 2022	225
Finance leases, 2023	125
Operating leases, 2023	246
Finance leases, thereafter	13
Operating leases, thereafter	321
Finance leases, total minimum lease payments	936
Operating leases, total minimum lease payments	2,032
Finance leases, less: Amount representing interest	(72)
Operating leases, less: Amount representing interest	(195)
Present value of minimum finance lease payments	864			$ 880
Operating Lease, Liability, Total	1,837	$ 2,351
Finance leases, less: current maturities	(235)			(204)
Operating leases, less: current maturities	(589)	(699)	[1]
Finance leases obligations, net of current portion	629			$ 676
Operating lease obligations, net of current portion	$ 1,248	$ 1,652	[1]

[1] Represents the December 31, 2018 balance recorded at implementation of Topic 842

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member] Common Class A [Member]	Common Stock [Member] Common Class B [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock [Member]	Common Class A [Member]	Common Class B [Member]	Total
Balances at Dec. 31, 2017	$ 26	$ 4		$ 51,025	$ 77,574	$ (1,635)	$ (36,953)			$ 90,041
Purchase of shares							(1,272)			(1,272)
Issuance of common shares for the exercise of stock options				737						737
Issuance of restricted common shares, net of (forfeitures)
Non-cash stock compensation expense				454						454
Dividends declared					(4,223)					(4,223)
Other comprehensive income, foreign currency translation adjustment						(414)				(414)
Net income					7,306					7,306
Cumulative effect adjustment for adoption of ASC 606, net of income tax					2,735					2,735
Balances at Mar. 31, 2018	26	4		52,216	83,392	(2,049)	(38,225)			95,364
Balances at Dec. 31, 2017	26	4		51,025	77,574	(1,635)	(36,953)			90,041
Other comprehensive income, foreign currency translation adjustment										(418)
Net income								$ 17,622	$ 4,624	22,246
Balances at Sep. 30, 2018	30			156,384	(97,027)	(2,053)	(27,195)			30,139
Balances at Mar. 31, 2018	26	4		52,216	83,392	(2,049)	(38,225)			95,364
Purchase of shares							(4,358)			(4,358)
Issuance of common shares for the exercise of stock options				4,182						4,182
Non-cash stock compensation expense				541						541
Dividends declared					(4,206)					(4,206)
Other comprehensive income, foreign currency translation adjustment						(284)				(284)
Net income					7,948					7,948
Settlement of class B restricted common shares and stock options in connection with Recapitalization for cash of $3,271 and 90,369 class A common shares				(2,548)			(723)			(3,271)
Settlement of class B common shares in connection with Recapitalization (3,527,246 class B common shares exchanged for $69,099 cash and 3,527,246 class A common shares)	4			118,335			(187,438)			(69,099)
Retirement of 4,328,552 class B common shares in connection with Recapitalization		(4)		(17,112)	(186,944)		204,060
Balances at Jun. 30, 2018	30			155,614	(99,810)	(2,333)	(26,684)			26,817
Purchase of shares							(511)			(511)
Issuance of common shares for the exercise of stock options				510						510
Non-cash stock compensation expense				260						260
Dividends declared					(4,209)					(4,209)
Other comprehensive income, foreign currency translation adjustment						280				280
Net income					6,992			$ 6,992		6,992
Balances at Sep. 30, 2018	$ 30			156,384	(97,027)	(2,053)	(27,195)			30,139
Balances at Dec. 31, 2018			$ 30	157,312	(106,339)	(2,916)	(29,004)			19,083
Purchase of shares							(1,116)			(1,116)
Issuance of common shares for the exercise of stock options				633						633
Issuance of restricted common shares, net of (forfeitures)
Non-cash stock compensation expense				302						302
Dividends declared					(4,724)					(4,724)
Other comprehensive income, foreign currency translation adjustment						365				365
Net income					8,196					8,196
Balances at Mar. 31, 2019			30	158,247	(102,867)	(2,551)	(30,120)			22,739
Balances at Dec. 31, 2018			30	157,312	(106,339)	(2,916)	(29,004)			19,083
Other comprehensive income, foreign currency translation adjustment										474
Net income										23,708
Balances at Sep. 30, 2019			30	160,524	(96,817)	(2,442)	(32,320)			28,975
Balances at Mar. 31, 2019			30	158,247	(102,867)	(2,551)	(30,120)			22,739
Purchase of shares							(137)			(137)
Issuance of common shares for the exercise of stock options				137						137
Non-cash stock compensation expense				307						307
Dividends declared					(4,727)					(4,727)
Other comprehensive income, foreign currency translation adjustment						255				255
Net income					7,393					7,393
Balances at Jun. 30, 2019			30	158,691	(100,201)	(2,296)	(30,257)			25,967
Purchase of shares							(2,063)			(2,063)
Issuance of common shares for the exercise of stock options				1,525						1,525
Non-cash stock compensation expense				308						308
Dividends declared					(4,735)					(4,735)
Other comprehensive income, foreign currency translation adjustment						(146)				(146)
Net income					8,119					8,119
Balances at Sep. 30, 2019			$ 30	$ 160,524	$ (96,817)	$ (2,442)	$ (32,320)			$ 28,975

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Note 12 - Segment Information - Assets by Geographic Area (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Long-lived assets	$ 81,079	$ 79,622
Total assets	107,649	108,032
UNITED STATES
Long-lived assets	78,490	77,331
Total assets	92,849	91,080
CANADA
Long-lived assets	2,589	2,291
Total assets	$ 14,800	$ 16,952