Note 10 - Cyber-Attack

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Business Insurance Recoveries [Text Block]

( 1 0 )  CYBER-ATTACK

We were the target of an external ransomware attack in

February 2020

which resulted in a temporary suspension of our services to clients. Since then, we have fully restored our services. 

We recorded an insurance receivable of

$2.8

million for incremental costs related to the cyber-attack that our insurer has confirmed as reimbursable. We are expecting reimbursement of

$2.4

million of this amount in the quarter ending

June 30, 2020.

We expect the remaining

$400,000

of costs to be paid directly by the insurer to our vendors. This

$400,000

is also recorded in accrued expenses, since we are the primary obligor of these costs. Due to the attack in the

three

-month period ended

March 31, 2020,

we also recognized revenue adjustments decreasing revenue by approximately

$280,000

for our estimate of variable consideration related to subscription-based services that could

not

be performed. In addition, we incurred other expenses related to the incident including but

not

limited to professional fees and information technology costs amounting to approximately

$285,000.

These revenue adjustments and costs will be further evaluated and submitted as a loss claim to the insurer. We will record any insurance recovery when it is probable of collection. Due to insurance recoverability, we do

not

believe the cyber-attack will have a significant impact on our consolidated financial statements.