RADIANT LOGISTICS, INC - Quarter Report: 2020 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2020

☐	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 001-35392

RADIANT LOGISTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

04-3625550

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

405 114^th Avenue S.E., Third Floor

Bellevue, Washington 98004

(Address of principal executive offices) (Zip Code)

(425) 943-4599

(Registrant’s telephone number, including area code)

N/A

(Former name, former address, and former fiscal year, if changed since last report)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $.001 Par Value		RLGT		NYSE American

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 (§232.405 of this chapter) 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated 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 Exchange Act). Yes ☐ No ☒

There were 49,395,639 shares outstanding of the registrant’s common stock as of May 1, 2020.

RADIANT LOGISTICS, INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2020 and June 30, 2019	3
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2020 and 2019	4
	Condensed Consolidated Statements of Changes in Equity for the three and nine months ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2020 and 2019	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	42
Item 6.	Exhibits	44
Signatures		46

RADIANT LOGISTICS, INC.

Condensed Consolidated Balance Sheets

	March 31,			June 30,
		2020		2019
(In thousands, except share and per share data)	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	16,697		$	5,420
Accounts receivable, net of allowance of $1,683 and $1,887, respectively		93,021			93,123
Contract assets		15,754			17,777
Income tax receivable		806			506
Prepaid expenses and other current assets		15,886			8,066
Total current assets		142,164			124,892

Property, technology, and equipment, net		19,684			20,127

Goodwill		72,078			65,389
Intangible assets, net		53,845			55,742
Operating lease right-of-use assets		12,610			—
Deposits and other assets		4,004			1,560
Total other long-term assets		142,537			122,691
Total assets	$	304,385		$	267,710

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	66,687		$	74,097
Operating partner commissions payable		10,391			12,891
Accrued expenses		6,339			6,224
Current portion of notes payable		3,609			3,687
Current portion of operating lease liability		6,476			—
Current portion of finance lease liability		686			683
Other current liabilities		1,471			840
Total current liabilities		95,659			98,422

Notes payable, net of current portion		58,619			30,047
Operating lease liability, net of current portion		6,862			—
Finance lease liability, net of current portion		2,668			3,161
Deferred income taxes		6,301			7,838
Deferred rent liability		—			862
Other long-term liabilities		1,810			100
Total long-term liabilities		76,260			42,008
Total liabilities		171,919			140,430

Commitments and contingencies (Note 15)

Stockholders' equity:
Common stock, $0.001 par value, 100,000,000 shares authorized; 50,028,486 and 49,678,262 shares issued, and 49,395,639 and 49,586,464 shares outstanding, respectively		31			31
Additional paid-in capital		101,324			100,186
Treasury stock, at cost, 632,847 and 91,798 shares, respectively		(2,749	)		(253	)
Retained earnings		32,758			26,883
Accumulated other comprehensive income		864			187
Total Radiant Logistics, Inc. stockholders’ equity		132,228			127,034
Non-controlling interest		238			246
Total equity		132,466			127,280
Total liabilities and equity	$	304,385		$	267,710

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

RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
(In thousands, except share and per share data)		2020			2019		2020			2019
Revenues	$	177,221		$	206,048		$	579,691		$	685,868

Operating expenses:
Cost of transportation and other services		129,440			153,302			420,419			514,293
Operating partner commissions		20,352			23,125			69,899			76,309
Personnel costs		14,412			14,806			44,487			45,256
Selling, general and administrative expenses		8,027			6,812			22,370			21,458
Depreciation and amortization		4,282			3,847			12,413			11,295
Transition, lease termination, and other costs		—			—			328			(11	)
Change in fair value of contingent consideration		3			(611	)		52			(1,182	)
Total operating expenses		176,516			201,281			569,968			667,418

Income from operations		705			4,767			9,723			18,450

Other income (expense):
Interest income		17			13			50			37
Interest expense		(752	)		(684	)		(2,070	)		(2,345	)
Foreign currency transaction gain (loss)		169			(24	)		120			169
Other		89			49			164			258
Total other expense		(477	)		(646	)		(1,736	)		(1,881	)

Income before income taxes		228			4,121			7,987			16,569

Income tax expense		(102	)		(942	)		(1,850	)		(3,793	)

Net income		126			3,179			6,137			12,776
Less: net income attributable to non-controlling interest		(73	)		(247	)		(262	)		(891	)

Net income attributable to Radiant Logistics, Inc.		53			2,932			5,875			11,885
Less: preferred stock dividends		—			—			—			(956	)
Less: issuance costs for preferred stock redemption		—			—			—			(1,659	)

Net income attributable to common stockholders	$	53		$	2,932		$	5,875		$	9,270

Other comprehensive income:
Foreign currency translation gain (loss)		711			(278	)		677			215
Comprehensive income	$	837		$	2,901		$	6,814		$	12,991

Income per share attributable to common stockholders:
Basic	$	—		$	0.06		$	0.12		$	0.19
Diluted	$	—		$	0.06		$	0.11		$	0.18

Weighted average common shares outstanding:
Basic		49,577,370			49,515,717			49,667,243			49,471,556
Diluted		50,974,994			51,169,321			51,266,348			50,979,319

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

RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Changes in Equity

(unaudited)

	RADIANT LOGISTICS, INC. STOCKHOLDERS' EQUITY
(In thousands, except share and per share data)	Preferred Stock				Common Stock					Additional Paid-in			Treasury			Retained		Accumulated Other Comprehensive			Total Radiant Logistics, Inc. Stockholders'			Non- Controlling			Total
	Shares		Amount		Shares			Amount		Capital			Stock			Earnings		Income (Loss)			Equity			Interest			Equity
Balance as of June 30, 2019		—	$	—		49,586,464		$	31	$	100,186		$	(253	)	$	26,883	$	187		$	127,034		$	246		$	127,280
Issuance of common stock upon vesting of restricted stock awards, net of taxes withheld and paid		—		—		138,147			—		(314	)		—			—		—			(314	)		—			(314	)
Issuance of common stock upon exercise of stock options, net of taxes withheld and paid		—		—		82,627			—		(146	)		—			—		—			(146	)		—			(146	)
Distribution to non-controlling interest		—		—		—			—		—			—			—		—			—			(180	)		(180	)
Share-based compensation		—		—		—			—		430			—			—		—			430			—			430
Net income		—		—		—			—		—			—			3,235		—			3,235			96			3,331
Other comprehensive income		—		—		—			—		—			—			—		114			114			—			114
Balance as of September 30, 2019		—	$	—		49,807,238		$	31	$	100,156		$	(253	)	$	30,118	$	301		$	130,353		$	162		$	130,515

Repurchase of common stock		—		—		(189,558	)		—		—			(1,000	)		—		—			(1,000	)		—			(1,000	)
Issuance of common stock upon vesting of restricted stock awards, net of taxes withheld and paid		—		—		34,434			—		—			—			—		—			—			—			—
Issuance of common stock upon exercise of stock options, net of taxes withheld and paid		—		—		10,000			—		39			—			—		—			39			—			39
Distribution to non-controlling interest		—		—		—			—		—			—			—		—			—			(90	)		(90	)
Share-based compensation		—		—		—			—		467			—			—		—			467			—			467
Net income		—		—		—			—		—			—			2,587		—			2,587			93			2,680
Other comprehensive loss		—		—		—			—		—			—			—		(148	)		(148	)		—			(148	)
Balance as of December 31, 2019		—	$	—		49,662,114		$	31	$	100,662		$	(1,253	)	$	32,705	$	153		$	132,298		$	165		$	132,463

Issuance of common stock to shareholders of acquired business		—		—		45,086			—		250			—			—		—			250			—			250
Repurchase of common stock		—		—		(351,491	)		—		—			(1,496	)		—		—			(1,496	)		—			(1,496	)
Issuance of common stock upon vesting of restricted stock awards, net of taxes withheld and paid		—		—		4,149			—		(12	)		—			—		—			(12	)		—			(12	)
Issuance of common stock upon exercise of stock options, net of taxes withheld and paid		—		—		35,781			—		15			—			—		—			15			—			15
Share-based compensation		—		—		—			—		409			—			—		—			409			—			409
Net income		—		—		—			—		—			—			53		—			53			73			126
Other comprehensive income		—		—		—			—		—			—			—		711			711			—			711
Balance as of March 31, 2020		—	$	—		49,395,639		$	31	$	101,324		$	(2,749	)	$	32,758	$	864		$	132,228		$	238		$	132,466

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

RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Changes in Equity (continued)

(unaudited)

	RADIANT LOGISTICS, INC. STOCKHOLDERS' EQUITY
	Preferred Stock						Common Stock				Additional Paid-in			Treasury			Retained			Accumulated Other Comprehensive			Total Radiant Logistics, Inc. Stockholders'			Non- Controlling			Total
(In thousands, except share and per share data)	Shares			Amount			Shares		Amount		Capital			Stock			Earnings			Income (Loss)			Equity			Interest			Equity
Balance as of June 30, 2018		839,200		$	1			49,420,109	$	31	$	117,968		$	(253	)	$	15,539		$	186		$	133,472		$	142		$	133,614
Cumulative effect adjustment, upon adoption of ASC 606 on July 1, 2018		—			—			—		—		—			—			(335	)		—			(335	)		—			(335	)
Cumulative effect adjustment, upon adoption of ASU 2016-16 on July 1, 2018		—			—			—		—		—			—			(1,705	)		—			(1,705	)		—			(1,705	)
Share-based compensation		—			—			—		—		331			—			—			—			331			—			331
Issuance of common stock upon exercise of stock options, net of taxes withheld and paid		—			—			32,979		—		(63	)		—			—			—			(63	)		—			(63	)
Preferred dividends paid		—			—			—		—		—			—			(511	)		—			(511	)		—			(511	)
Distribution to non-controlling interest		—			—			—		—		—			—			—			—			—			(90	)		(90	)
Net income		—			—			—		—		—			—			3,083			—			3,083			180			3,263
Other comprehensive loss		—			—			—		—		—			—			—			(305	)		(305	)		—			(305	)
Balance as of September 30, 2018		839,200		$	1			49,453,088	$	31	$	118,236		$	(253	)	$	16,071		$	(119	)	$	133,967		$	232		$	134,199

Share-based compensation		—			—			—		—		464			—			—			—			464			—			464
Issuance of common stock upon exercise of stock options, net of taxes withheld and paid		—			—			16,488		—		(34	)		—			—			—			(34	)		—			(34	)
Preferred dividends paid		—			—			—		—		—			—			(792	)		—			(792	)		—			(792	)
Redemption of preferred stock		(839,200	)		(1	)		—		—		(19,320	)		—			(1,659	)		—			(20,980	)		—			(20,980	)
Distribution to non-controlling interest		—			—			—		—		—			—			—			—			—			(150	)		(150	)
Net income		—			—			—		—		—			—			5,870			—			5,870			464			6,334
Other comprehensive income		—			—			—		—		—			—			—			798			798			—			798
Balance as of December 31, 2018		—		$	—			49,469,576	$	31	$	99,346		$	(253	)	$	19,490		$	679		$	119,293		$	546		$	119,839

Share-based compensation		—			—			—		—		409			—			—			—			409			—			409
Issuance of common stock upon exercise of stock options, net of taxes withheld and paid		—			—			32,326		—		(76	)		—			—			—			(76	)		—			(76	)
Issuance of common stock to former shareholders of acquired businesses		—			—			36,806		—		203			—			—			—			203			—			203
Distribution to non-controlling interest		—			—			—		—		—			—			—			—			—			(420	)		(420	)
Net income		—			—			—		—		—			—			2,932			—			2,932			247			3,179
Other comprehensive loss		—			—			—		—		—			—			—			(278	)		(278	)		—			(278	)
Balance as of March 31, 2019		—		$	—			49,538,708	$	31	$	99,882		$	(253	)	$	22,422		$	401		$	122,483		$	373		$	122,856

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

RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended March 31,
(In thousands, except share and per share data)		2020			2019
OPERATING ACTIVITIES:
Net income	$	6,137		$	12,776
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Share-based compensation		1,306			1,204
Amortization of intangible assets		7,718			7,491
Depreciation and amortization of property, technology, and equipment		4,695			3,804
Deferred income tax benefit		(1,537	)		(658	)
Amortization of debt issuance costs		278			171
Change in fair value of contingent consideration		52			(1,182	)
Transition, lease termination, and other costs		328			(11	)
Gain on disposal of property, technology, and equipment		—			(46	)
Change in (recovery of) allowance for doubtful accounts		(204	)		835
CHANGES IN OPERATING ASSETS AND LIABILITIES NET OF BUSINESS ACQUISITIONS:
Accounts receivable		(657	)		13,058
Contract assets		1,976			13,323
Income tax receivable		(312	)		1,795
Prepaid expenses, deposits and other assets		(3,734	)		(3,031	)
Accounts payable		(8,250	)		(8,261	)
Operating partner commissions payable		(2,500	)		(77	)
Accrued and other liabilities		(6,335	)		(7,092	)
Payment of contingent consideration		(280	)		(626	)
Net cash provided by (used for) operating activities		(1,319	)		33,473

INVESTING ACTIVITIES:
Payments to acquire businesses		(9,150	)		—
Payments to acquire intangible assets		—			(262	)
Purchases of property, technology, and equipment		(4,728	)		(4,733	)
Proceeds from sale of property, technology, and equipment		73			271
Net cash used for investing activities		(13,805	)		(4,724	)

FINANCING ACTIVITIES:
Proceeds from (repayments to) revolving credit facility, net		32,164			(4,662	)
Payments of debt issuance costs		(1,636	)		—
Repayments of notes payable and finance lease liability		(3,215	)		(2,713	)
Repurchases of common stock		(2,496	)		—
Payments of contingent consideration		(47	)		(164	)
Payments of preferred stock dividends		—			(1,303	)
Payment for preferred stock redemption		—			(20,980	)
Distribution to non-controlling interest		(270	)		(660	)
Proceeds from exercise of stock options		39			—
Payments of employee tax withholdings related to vesting of restricted stock awards		(326	)		—
Payments of employee tax withholdings related to cashless exercise of stock options		(131	)		(173	)
Net cash provided by (used for) financing activities		24,082			(30,655	)

Effect of exchange rate changes on cash and cash equivalents		2,319			398

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		11,277			(1,508	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		5,420			6,992

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	16,697		$	5,484

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid	$	3,801		$	3,168
Interest paid	$	1,779		$	2,158

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

RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Cash Flows (continued)

(unaudited)

(In thousands, except share and per share data)

Supplemental disclosure of non-cash investing and financing activities:

During the nine months ended March 31, 2019, the Company acquired $812 of refrigerated trailers financed through a capital lease.

In January 2019, the Company issued 36,806 shares of common stock at a fair value of $5.51 per share in satisfaction of $203 of earnout payments related to Highways and Skyways, Inc. for the period ended June 30, 2018, resulting in a decrease to the current portion of contingent consideration, and an increase to common stock and additional paid-in capital of $203.

In February 2020, the Company issued 45,086 shares of common stock at fair value in satisfaction of $250 of consideration towards the acquisition of Friedway Enterprises, Inc. and CIC2, Inc.

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

RADIANT LOGISTICS, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

(Dollars in thousands, except share and per share data)

NOTE 1 – THE COMPANY AND BASIS OF PRESENTATION

The Company

Radiant Logistics, Inc. and its consolidated subsidiaries (the “Company”) operates as a third-party logistics company, providing multi-modal transportation and logistics services primarily to customers based in the United States and Canada. The Company services a large and diversified account base, which it supports from an extensive multi-brand network of over 100 operating locations (including 20 Company-owned offices) across North America as well as an integrated international service partner network located in other key markets around the globe. As a third-party logistics company, the Company has a vast carrier network of asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines. The Company believes shippers value its services because it is able to objectively arrange the most efficient and cost-effective means, type and provider of transportation service since it is not influenced by the ownership of transportation assets. In addition, the Company’s minimal investment in physical assets affords it the opportunity for a higher return on invested capital and net cash flows than the Company’s asset-based competitors.

Through its operating locations across North America, the Company offers domestic and international air and ocean freight forwarding services and freight brokerage services, including truckload services, less than truckload services, and intermodal services, which is the movement of freight in trailers or containers by combination of truck and rail. The Company’s primary transportation services involve arranging shipments, on behalf of its customers, of materials, products, equipment and other goods that are generally larger than shipments handled by integrated carriers of primarily small parcels, such as FedEx, DHL and UPS, including arranging and monitoring all aspects of material flow activity utilizing advanced information technology systems. The Company also provides other value-added supply chain services, including order fulfillment, inventory management, and warehouse and distribution services (collectively, “MM&D” services), and customs brokerage services to complement its core transportation service offering.

The Company expects to grow its business organically and by completing acquisitions of other companies with complementary geographical and logistics service offerings. The Company’s organic growth strategy will continue to focus on strengthening existing and expanding new customer relationships leveraging the benefit of the Company’s truck brokerage and intermodal service offerings, while continuing its efforts on the organic build-out of the Company’s network of strategic operating partner locations. In addition, as the Company continues to grow and scale its business, the Company believes that it is creating density in its trade lanes, which creates opportunities for the Company to more efficiently source and manage its transportation capacity.

In addition to its focus on organic growth, the Company will continue to search for acquisition candidates that bring critical mass from a geographic and purchasing power standpoint, along with providing complementary service offerings to the current platform. As the Company continues to grow and scale its business, it also remains focused on leveraging its back-office infrastructure and technology systems to drive productivity improvement across the organization.

The recent COVID-19 outbreak was declared a pandemic by the World Health Organization on March 11, 2020 and has rapidly spread to the United States and many other parts of the world and has impacted and may continue to impact our business operations, including employees, customers, financial condition, liquidity and cash flow for an extended period of time. In particular, we are seeing significant changes in demand among our various customers depending on their industry. Federal and state governments have implemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, supply chain logistical changes, and closure of nonessential businesses. The Company has initiated a series of workforce reduction measures including reductions of salaries, bonuses, hours, furloughs and terminations. The Company has also tabled acquisition opportunities, suspended the stock buy-back program and deferred certain other discretionary investments and expenses.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this filing. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on its financial condition, liquidity, operations, industry, and workforce.

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The Company’s management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2019.

The interim period information included in this Quarterly Report on Form 10-Q reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of the Company’s management, necessary for a fair statement of the results of the respective interim periods. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.

NOTE 2 - RECENT ACCOUNTING GUIDANCE

Recent Accounting Guidance Not Yet Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15 (Subtopic 350-40), Intangibles - Goodwill and Other - Internal-Use Software - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This ASU aligns the accounting for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for the Company in the first quarter of fiscal year 2021, and early adoption is permitted. The Company is assessing the impact of this guidance on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for the Company in the first quarter of fiscal year 2021, and earlier adoption is permitted. The Company is assessing the impact of this guidance on its consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19, 2019-04, 2019-05, and 2020-03 (collectively, Topic 326). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 is effective for the Company in the first quarter of fiscal year 2024. The Company is currently evaluating the impact of the standard on its consolidated financial statements and disclosures.

Recently Adopted Accounting Guidance

ASC 842 - Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20, and ASU 2019-01 (collectively, Topic 842). Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use (“ROU”) assets. Companies are required to use a modified retrospective approach on adoption, with the option of applying the requirements of the standard either (1) retrospectively to each prior comparative reporting period presented or (2) retrospectively at the beginning of the period of adoption, through a cumulative-effect adjustment to retained earnings. The Company adopted the standard on July 1, 2019. The Company transitioned using the modified retrospective approach at the beginning of the period of adoption. Consequently, periods before July 1, 2019 will continue to be reported in accordance with the prior accounting guidance in ASC 840. We elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification for leases that commenced before July 1, 2019.

The disclosure requirements of ASC 842 are included within Note 5. Adoption of the standard had no impact on our condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows. Adoption of Topic 842 resulted in increases in assets and liabilities in the Company’s condensed consolidated balance sheets as follows:

(In thousands)	Balance as of June 30, 2019		Transition Adjustment			Balance as of July 1, 2019
Assets
Operating lease right-of-use assets	$	—	$	16,637		$	16,637

Liabilities
Current portion of operating lease liability		—		6,711			6,711
Current portion of finance lease liability		683		—			683
Operating lease liability, net of current portion		—		10,788			10,788
Finance lease liability, net of current portion		3,161		—			3,161
Deferred rent liability		862		(862	)		—

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)	Principles of Consolidation

The condensed consolidated financial statements include the accounts of Radiant Logistics, Inc. and its wholly-owned subsidiaries as well as a single variable interest entity, Radiant Logistics Partners, LLC (“RLP”), which is 40% owned by Radiant Global Logistics, Inc. (“RGL”) and 60% owned by Radiant Capital Partners, LLC (“RCP”, see Note 11), an entity owned by the Company’s Chief Executive Officer. All significant intercompany balances and transactions have been eliminated.

Non-controlling interest in the condensed consolidated balance sheets represents RCP’s proportionate share of equity in RLP. Net income (loss) of non-wholly owned consolidated subsidiaries or variable interest entities is allocated to the Company and the holder(s) of the non-controlling interest in proportion to their percentage ownership.

b)	Use of Estimates

The preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results reported in future periods may be based upon amounts that could differ from these estimates due to the inherent uncertainty involved in making estimates and risks and uncertainties, including uncertainty in the current economic environment due to the recent outbreak of a novel strain of the coronavirus (“COVID-19)”.

c)	Cash and Cash Equivalents

The Company maintains its cash in bank deposit accounts that, at times, may exceed federally-insured limits. The Company has not experienced any losses in such accounts.

d)	Accounts Receivable

The Company’s receivables are recorded when billed and represent amounts owed by third-party customers, as well as amounts owed by strategic operating partners. The carrying value of the Company’s receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. The Company evaluates the collectability of accounts receivable on a customer-by-customer basis. The Company records an allowance for doubtful accounts to reduce the net recognized receivable to an amount the Company believes will be reasonably collected. The allowance for doubtful accounts is determined from the analysis of the aging of the accounts receivable, historical experience and knowledge of specific customers.

The Company derives a substantial portion of its revenue through independently-owned strategic operating partner locations operating under various Company brands. Each strategic operating partner is responsible for some or all of the collection of the accounts related to the underlying customers being serviced by such strategic operating partner. To facilitate this arrangement, based on contractual agreements, certain strategic operating partners are required to maintain a bad debt reserve in the form of a security deposit with the Company. The Company charges each strategic operating partner’s bad debt reserve account for any accounts receivable aged beyond 90 days along with any other amounts owed to the Company by strategic operating partners. However, the bad debt reserve account may carry a deficit balance when amounts charged to this reserve account exceed amounts otherwise available. In these circumstances, a deficit bad debt reserve account is recognized as a receivable in the Company’s financial statements. Some strategic operating partners are not required to establish a bad debt reserve; however, they are still responsible to make up for any deficits and the Company may withhold all or a portion of future commissions payable to the strategic operating partner to satisfy any deficit balance. Currently, a number of the Company’s strategic operating partners have a deficit balance in their bad debt reserve accounts. The Company expects to replenish these funds through the future business operations of these strategic operating partners or as their customers satisfy the amounts payable to the Company. However, to the extent any of these strategic operating partners were to cease operations or otherwise be unable to replenish these deficit accounts, the Company would be at risk of loss for any such amounts and generally would reserve for them.

e)	Property, Technology, and Equipment

Property, technology, and equipment is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets. Upon retirement or other disposition of these assets, the cost and related accumulated depreciation or amortization are removed from the accounts and the resulting gain or loss, if any, is reflected in other income or expense. Expenditures for maintenance, repairs and renewals of minor items are expensed as incurred. Major renewals and improvements are capitalized.

Goodwill

Goodwill represents the excess acquisition cost of an acquired entity over the estimated fair values assigned to the net tangible and identifiable intangible assets acquired. The Company performs its annual goodwill impairment test as of April 1 of each year or more frequently if facts or circumstances indicate that the carrying amount may not be recoverable. Based on the most recent annual impairment test, there was no impairment.

An entity has the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount prior to performing a quantitative impairment test. The qualitative assessment evaluates various factors, such as macro-economic conditions, industry and market conditions, cost factors, relevant events and financial trends that may impact the fair value of the reporting unit. If it is determined that the estimated fair value of the reporting unit is more-likely-than-not less than its carrying amount, including goodwill, a quantitative assessment is required. Otherwise, no further analysis is required.

If a quantitative assessment is performed, a reporting unit’s fair value is compared to its carrying value. A reporting unit’s fair value is determined based upon consideration of various valuation methodologies, including the income approach, which utilizes projected future cash flows discounted at rates commensurate with the risks involved and multiples of current and future earnings. If the fair value of a reporting unit is less than its carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. See Note 7, for the Company’s assessment of any indicators of goodwill impairment for the quarter ended March 31, 2020.

g)	Long-Lived Assets

Long-lived assets, such as property, technology, and equipment and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company compares the undiscounted expected future cash flows to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent the carrying amount of the asset or asset group exceeds the fair value. Fair values of long-lived assets are determined through various techniques, such as applying probability weighted, expected present value calculations to the estimated future cash flows using assumptions a market participant would utilize or through the use of a third-party independent appraiser or valuation specialist.

Management has performed a review of all long-lived assets and has determined no impairment of the respective carrying value has occurred as of March 31, 2020. Intangible assets consist of customer related intangible assets, trade names and trademarks, and non-compete agreements arising from the Company’s acquisitions. Customer related intangible assets are amortized using the straight-line method over a period of up to ten years, trademarks and trade names are amortized using the straight-line method over 15 years, and non-compete agreements are amortized using the straight-line method over the term of the underlying agreements.

h)	Business Combinations

The Company accounts for business acquisitions using the acquisition method as required by FASB ASC Topic 805, Business Combinations. The assets acquired and liabilities assumed in business combinations, including identifiable intangible assets, are recorded based upon their estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired is recorded as goodwill. Acquisition expenses are expensed as incurred. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed as of the acquisition date, the estimates are inherently uncertain and subject to refinement.

The fair values of intangible assets are generally estimated using a discounted cash flow approach with Level 3 inputs. The estimate of fair value of an intangible asset is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To estimate fair value, the Company generally uses risk-adjusted cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes the level and timing of cash flows appropriately reflects market participant assumptions.

For acquisitions that involve contingent consideration, the Company records a liability equal to the fair value of the contingent consideration obligation as of the acquisition date. The Company determines the acquisition date fair value of the contingent consideration based on the likelihood of paying the additional consideration. The fair value is generally estimated using projected future operating results and the corresponding future earn-out payments that can be earned upon the achievement of specified operating objectives and financial results by acquired companies using Level 3 inputs and the amounts are then discounted to present value. These liabilities are measured quarterly at fair value, and any change in the fair value of the contingent consideration liability is recognized in the condensed consolidated statements of comprehensive income. Amounts are generally due annually on November 1^st and 90 days following the quarter of the final earn-out period of each respective acquisition.

During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in the condensed consolidated statements of comprehensive income.

i)	Revenue Recognition

The Company’s revenues are primarily from transportation services, which includes providing for the arrangement of freight, both domestically and internationally, through modes of transportations, such as air freight, ocean freight, truckload, less than truckload and intermodal. The Company generates its transportation services revenue by purchasing transportation from direct carriers and reselling those services to its customers.

In general, each shipment transaction or service order constitutes a separate contract with the customer. A performance obligation is created once a customer agreement with an agreed upon transaction price exists. The transaction price is typically fixed and not contingent upon the occurrence or non-occurrence of any other event. The transaction price is generally due 30 to 45 days from the date of invoice. The Company’s transportation transactions provide for the arrangement of the movement of freight to a customer’s destination. The transportation services, including certain ancillary services, such as loading/unloading, freight insurance and customs clearance, that are provided to the customer represent a single performance obligation as these promises aren’t distinct in the context of the contract. This performance obligation is satisfied over time and recognized in revenue upon the transfer of control of the services over the requisite transit period as the customer’s goods move from origin to destination. The Company determines the period to recognize revenue in transit based upon the departure date and the delivery date, which may be estimated if delivery has not occurred as of the reporting date. Determination of the transit period and the percentage of completion of the shipment as of the reporting date requires management to make judgments that affect the timing of revenue recognition. The Company has determined that revenue recognition over the transit period provides a reasonable estimate of the transfer of services to its customers as it depicts the pattern of the Company’s performance under the contracts with its customers.

The Company also provides warehouse and distribution logistics services for its customers under contracts generally ranging from a few months to five years and include renewal provisions. These warehouse and distribution logistics services contracts provide for inventory management, order fulfilment and warehousing of the Customer’s product and arrangement of transportation of the customer’s product. The Company’s performance obligations are satisfied over time as the customers simultaneously receive and consume the services provided by the Company as they are performed. The transaction price is based on the consideration specified in the contract with the customer and contains fixed and variable consideration. In general, the fixed consideration component of a contract represents reimbursement for facility and equipment costs incurred to satisfy the performance obligation and is recognized on a straight-line basis over the term of the contract. The variable consideration component is comprised of cost reimbursement per unit pricing for time and pricing for materials used and is determined based on cost plus a mark-up for hours of services provided and materials used and is recognized over time based on the level of activity volume.

Other services include primarily customs clearance services sold on a standalone basis as a single performance obligation. The Company recognizes revenue from this performance obligation at a point in time, which is the completion of the services. Duties and taxes collected from the customer and paid to the customs agent on behalf of the customers are excluded from revenue.

The Company uses independent contractors and third-party carriers in the performance of its transportation services. The Company evaluates who controls the transportation services to determine whether its performance obligation is to transfer services to the customer or to arrange for services to be provided by another party. The Company determined it acts as the principal for its transportation services performance obligation since it is in control of establishing the prices for the specified services, managing all aspects of the shipments process and assuming the risk of loss for delivery and collection. Such transportation services revenue is presented on a gross basis in the condensed consolidated statements of comprehensive income.

A summary of the Company’s gross revenues disaggregated by major service lines and geographic markets (reportable segments), and timing of revenue recognition for the three and nine months ended March 31, 2020 and 2019 are as follows:

	Three Months Ended March 31, 2020
(In thousands)	United States		Canada		Corporate/ Eliminations			Total
Major Service Lines:
Transportation services	$	148,941	$	21,217	$	(123	)	$	170,035
Value-added services ⁽¹⁾		3,290		3,896		—			7,186
Total	$	152,231	$	25,113	$	(123	)	$	177,221

Timing of Revenue Recognition:
Services transferred over time	$	151,587	$	25,113	$	(123	)	$	176,577
Services transferred at a point in time		644		—		—			644
Total	$	152,231	$	25,113	$	(123	)	$	177,221

	Nine Months Ended March 31, 2020
(In thousands)	United States		Canada		Corporate/ Eliminations			Total
Major Service Lines:
Transportation services	$	492,567	$	63,402	$	(508	)	$	555,461
Value-added services ⁽¹⁾		11,642		12,588		—			24,230
Total	$	504,209	$	75,990	$	(508	)	$	579,691

Timing of Revenue Recognition:
Services transferred over time	$	501,814	$	75,990	$	(508	)	$	577,296
Services transferred at a point in time		2,395		—		—			2,395
Total	$	504,209	$	75,990	$	(508	)	$	579,691

	Three Months Ended March 31, 2019
(In thousands)	United States		Canada		Corporate/ Eliminations			Total
Major Service Lines:
Transportation services	$	175,462	$	22,340	$	(165	)	$	197,637
Value-added services ⁽¹⁾		3,684		4,727		—			8,411
Total	$	179,146	$	27,067	$	(165	)	$	206,048

Timing of Revenue Recognition:
Services transferred over time	$	178,369	$	27,067	$	(165	)	$	205,271
Services transferred at a point in time		777		—		—			777
Total	$	179,146	$	27,067	$	(165	)	$	206,048

	Nine Months Ended March 31, 2019
(In thousands)	United States		Canada		Corporate/ Eliminations			Total
Major Service Lines:
Transportation services	$	592,341	$	69,197	$	(310	)	$	661,228
Value-added services ⁽¹⁾		9,781		14,859		—			24,640
Total	$	602,122	$	84,056	$	(310	)	$	685,868

Timing of Revenue Recognition:
Services transferred over time	$	599,941	$	84,056	$	(310	)	$	683,687
Services transferred at a point in time		2,181		—		—			2,181
Total	$	602,122	$	84,056	$	(310	)	$	685,868

⁽¹⁾Value-added services include warehouse, distribution services, and other services.

Practical Expedients

The Company has elected to not disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied as of the end of the period as the Company’s contracts with its transportation customers have an expected duration of one year or less.

For the performance obligation to transfer warehouse and distribution services in contracts with customers, revenue is recognized in the amount for which the Company has the right to invoice the customer, as this amount corresponds directly with the value provided to the customer for the Company’s performance completed to date.

The Company also applies the practical expedient that permits the recognition of employee sales commissions related to transportation services as an expense when incurred since the amortization period of such costs is less than one year. These costs are included in the condensed consolidated statements of comprehensive income.

Contract Assets

Contract assets represent amounts for which the Company has the right to consideration for the services provided while a shipment is still in-transit but for which it has not yet completed the performance obligation or has not yet invoiced the customer. Upon completion of the performance obligations, which can vary in duration based upon the method of transport and billing the customer, these amounts become classified within accounts receivable.

Operating Partner Commissions

The Company enters into contractual arrangements with independent agents that operate, on behalf of the Company, an office in a specific location that engages primarily in arranging, domestic and international, transportation services. In return, the independent agent is compensated through the payment of sales commissions, which are based on individual shipments. The Company accrues the independent agent’s commission obligation ratably as the goods are transferred to the customer.

j)	Defined Contribution Savings Plans

The Company has an employee savings plan under which the Company provides safe harbor matching contributions. The Company’s contributions under the plan were $377 and $989 for the three and nine months ended March 31, 2020, respectively and $218 and $671 for the three and nine months ended March 31, 2019, respectively.

k)	Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company records a liability for unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Interest and penalties, if any, are recorded as a component of interest expense or other expense, respectively.

l)	Share-Based Compensation

The Company grants restricted stock awards, restricted stock units and stock options to certain directors, officers and employees. The Company accounts for share-based compensation as equity awards such that compensation cost is measured at the grant date based on the fair value of the award and is expensed ratably over the vesting period. The fair value of restricted stock is the market price as of the grant date, and the fair value of each stock option grant is estimated as of the grant date using the Black-Scholes option pricing model. Determining the fair value of share-based awards at the grant date requires judgment about, among other things, stock volatility, the expected life of the award, and other inputs. The Company accounts for forfeitures as they occur. The Company issues new shares of common stock to satisfy exercises and vesting of awards granted under its stock plans. Share-based compensation expense is reflected in the condensed consolidated statements of comprehensive income as part of personnel costs.

m)	Basic and Diluted Income per Share Allocable to Common Stockholders

Basic income per common share is computed by dividing net income allocable to common stockholders by the weighted average number of common shares outstanding. Diluted income per common share is computed by dividing net income allocable to common stockholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if the potential common shares, such as restricted stock awards and stock options, had been issued and were considered dilutive. Net income allocable to common stockholders is after consideration for preferred stock dividends, whether or not declared, and preferred stock redemption.

n)	Foreign Currency Translation

For the Company’s foreign subsidiaries that prepare financial statements in currencies other than U.S. dollars, the local currency is the functional currency. All assets and liabilities are translated at period-end exchange rates and all income statement amounts are translated at the weighted average rates for the period. Translation adjustments are recorded in accumulated other comprehensive (loss) income. Gains and losses on transactions of monetary items denominated in a foreign currency are recognized in other income (expense) in the condensed consolidated statements of comprehensive income.

o)	Reclassifications of Previously Issued Financial Statements

Certain amounts for prior periods have been reclassified in the condensed consolidated financial statements to conform to the current year presentation.

p)	Leases (Effective July 1, 2019)

The Company determines if an arrangement is a lease at inception. Assets and obligations related to operating leases are included in operating lease right-of-use (“ROU”) assets; current portion of operating lease liability; and operating lease liability, net of current portion in our condensed consolidated balance sheets. Assets and obligations related to finance leases are included in property, technology, and equipment, net; current portion of finance lease liability; and finance lease liability, net of current portion in our condensed consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate based on the information available at commencement date is used in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The Company’s agreements with lease and non-lease components, are all each accounted for as a single lease component. For leases with an initial term of twelve months or less, the Company elected the exemption from recording right of use assets and lease liabilities for all leases that qualify and records rent expense on a straight-line basis over the lease term. Expenses for these short-term leases for the three and nine months ended March 31, 2020 are immaterial.

Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. We exclude variable payments from lease ROU assets and lease liabilities, to the extent not considered fixed, and instead expense as incurred. Variable lease costs for the three and nine months ended March 31, 2020 are immaterial.

q)	Derivatives

Derivative instruments are recognized as either assets or liabilities and measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.

For derivative instruments designated as cash flow hedges, gains and losses are initially reported as a component of other comprehensive income and subsequently recognized in earnings with the corresponding hedged item. Gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in earnings.

For derivative instruments that are not designated as hedges, gains and losses from changes in fair values are recognized in other income (expense), net.

NOTE 4 – EARNINGS PER SHARE

The computations of the numerator and denominator of basic and diluted income per share are as follows:

	Three Months Ended March 31,				Nine Months Ended March 31,
(In thousands, except share data)	2020		2019		2020		2019
Numerator:
Net income attributable to Radiant Logistics, Inc.	$	53	$	2,932	$	5,875	$	11,885
Less: preferred stock dividends		—		—		—		(956	)
Less: issuance costs for preferred stock redemption		—		—		—		(1,659	)
Net income attributable to common stockholders	$	53	$	2,932	$	5,875	$	9,270

Denominator:
Weighted average common shares outstanding, basic		49,577,370		49,515,717		49,667,243		49,471,556
Dilutive effect of share-based awards		1,397,624		1,653,604		1,599,105		1,507,763

Weighted average common shares outstanding, diluted		50,974,994		51,169,321		51,266,348		50,979,319

Potentially dilutive common shares excluded		318,116		363,485		320,525		592,943

NOTE 5 – LEASES

The Company has operating and finance leases for office space, warehouse space, trailers and other equipment. Lease terms expire at various dates through October 2025 with options to renew for varying terms at the Company’s sole discretion. The Company has not included these options to extend or terminate in its calculation of right-or-use assets or lease liabilities as it is not reasonably certain to exercise these options.

The components of lease expense were as follows:

(In thousands)	Three Months Ended March 31, 2020		Nine Months Ended March 31, 2020
Operating:
Operating lease cost	$	1,775	$	5,465

Financing:
Amortization of right-of-use assets		153		466
Interest on lease liabilities		41		131

Total finance lease cost	$	194	$	597

Under ASC 840, Rent expense amounted to $2,273 and $6,936 for the three and nine months ended March 31, 2019, respectively.

Supplemental cash flow information related to leases was as follows:

(In thousands)	Nine Months Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows arising from operating leases	$	5,484
Operating cash flows arising from finance leases		128
Financing cash flows arising from finance leases		497

Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases		1,163
Finance leases		26

Supplemental balance sheet information related to leases was as follows:

	March 31,
(In thousands)	2019
Operating lease:
Operating lease right-of-use assets	$	12,610

Current portion of operating lease liability		6,476
Operating lease liability, net of current portion		6,862

Total operating lease liabilities	$	13,338

Finance lease:
Property, technology, and equipment, net	$	3,407

Current portion of finance lease liability		686
Finance lease liability, net of current portion		2,668

Total finance lease liabilities	$	3,354

Weighted average remaining lease term:
Operating leases	2.5 years
Finance leases	5.1 years

Weighted average discount rate:
Operating leases		3.19	%
Finance leases		4.52	%

As of March 31, 2020, maturities of lease liability for each of the next five fiscal years ending June 30 and thereafter are as follows:

(In thousands)	Operating			Finance
2020 (remaining)	$	1,819		$	208
2021		6,142			821
2022		4,068			805
2023		1,136			623
2024		386			552
Thereafter		309			697

Total lease payments		13,860			3,706

Less imputed interest		(522	)		(352	)

Total lease liability	$	13,338		$	3,354

Under ASC 840, minimum future lease commitments as of June 30, 2019 under operating leases for each of the next five fiscal years ending June 30 and thereafter were as follows:

(In thousands)
2020	$	7,176
2021		5,753
2022		3,691
2023		1,003
2024		392
Thereafter		314

Total minimum lease payments	$	18,329

NOTE 6 – PROPERTY, TECHNOLOGY, AND EQUIPMENT

		March 31,			June 30,
(In thousands)	Useful Life	2020			2019
Computer software	3 - 5 years	$	21,644		$	18,013
Trailers and related equipment	3 - 15 years		6,807			6,941
Office and warehouse equipment	3 - 15 years		4,205			4,082
Leasehold improvements	⁽¹⁾		3,648			3,672
Computer equipment	3 - 15 years		2,828			2,529
Furniture and fixtures	3 - 15 years		965			973

			40,097			36,210
Less: accumulated depreciation and amortization			(20,413	)		(16,083	)

		$	19,684		$	20,127

⁽¹⁾ The cost is amortized over the shorter of the lease term or useful life.

Depreciation and amortization expenses related to property, technology, and equipment were $1,792 and $4,695 for the three and nine months ended March 31, 2020, respectively and $1,328 and $3,804 for the three and nine months ended March 31, 2019, respectively. Computer software includes approximately $1,111 and $722 of software in development as of March 31, 2020 and June 30, 2019, respectively.

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

The table below reflects the changes in the carrying amounts of goodwill for the nine months ended March 31, 2020:


(In thousands)	Total
Balance as of June 30, 2019	$	65,389
Acquisition		6,689

Balance as of March 31, 2020	$	72,078

At March 31, 2020, the Company had $72,078 of goodwill. The Company performed quantitative assessments for its US and Canada reporting units during the quarter, and results indicated that the estimated fair values of the US and Canada reporting units exceed their respective carrying values. Thus, goodwill was not impaired as of March 31, 2020.

The results for the US reporting unit indicated that the fair value only exceeded the carrying value by 5%. The US reporting unit has goodwill of $50,680 as of March 31, 2020, Management’s projections used to estimate the undiscounted cash flows included increasing revenue and steady margins. Changes in any of the significant assumptions used, including if the Company does not successfully achieve its fiscal year 2021 plan, can materially affect the expected cash flows, and such impacts could result in a potentially material non-cash impairment charge. Therefore, the key assumptions most susceptible to change are projected revenue and projected operational profit.

Intangible assets consisted of the following as of March 31, 2020 and June 30, 2019, respectively:

	March 31, 2020
(In thousands)	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer related	5.3 years	$	102,344	$	(58,986	)	$	43,358
Trade names and trademarks	9.9 years		14,977		(5,014	)		9,963
Covenants not to compete	4.5 years		1,355		(831	)		524

		$	118,676	$	(64,831	)	$	53,845

	June 30, 2019
(In thousands)	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer related	5.5 years	$	97,002	$	(52,076	)	$	44,926
Trade names and trademarks	10.6 years		14,977		(4,252	)		10,725
Covenants not to compete	2.7 years		875		(784	)		91

		$	112,854	$	(57,112	)	$	55,742

Amortization expense amounted to $2,490 and $7,718 for the three and nine months ended March 31, 2020, respectively and $2,519 and $7,491 for the three and nine months ended March 31, 2019, respectively. Future amortization expense for each of the next five fiscal years ending June 30 are as follows:

(In thousands)
2020 (remaining)	$	2,536
2021		10,119
2022		9,565
2023		9,088
2024		8,712

NOTE 8 – NOTES PAYABLE

Notes payable consist of the following:

	March 31,			June 30,
(In thousands)	2020			2019
Revolving Credit Facility	$	45,953		$	13,781
Senior Secured Loans		16,620			20,591
Unamortized debt issuance costs		(345	)		(638	)

Total notes payable		62,228			33,734
Less: current portion		(3,609	)		(3,687	)

Total notes payable, net of current portion	$	58,619		$	30,047

Future maturities of notes payable for each of the next five fiscal years ending June 30 and thereafter are as follows:

(In thousands)
2020 (remaining)	$	880
2021		3,669
2022		3,920
2023		4,189
2024		3,961
Thereafter		45,954

	$	62,573

Revolving Credit Facility

The Company entered into a $150,000 syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated on March 13, 2020. The Revolving Credit Facility was entered into with Bank of America Securities, Inc. as sole book runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A as lender and documentation and Bank of America, N. A., Keybank National Association and Washington Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as “Lenders”). This replaces the Company’s $75,000 credit facility agreement dated June 14, 2017, and from an accounting standpoint, represents a modification of the previous credit facility.

The Revolving Credit Facility has a term of five years, matures on March 13, 2025, and is collateralized by a first-priority security interest in the accounts receivable and other assets of the Company. Borrowings under the Revolving Credit Facility accrue interest (at the Company’s option), at the Lenders’ base rate plus 1.00% or LIBOR plus 2.00% and can be subsequently adjusted based on the Company’s consolidated leverage ratio under the facility at the Lenders’ base rate plus 1.00% to 1.75% or LIBOR plus 2.00% to 2.75%.

The Revolving Credit Facility includes a $50,000 accordion feature to support future acquisition opportunities. For general borrowings under the Revolving Credit Facility, the Company is subject to the maximum consolidated leverage ratio of 3.00 and minimum consolidated fixed charge coverage ratio of 1.25. Additional minimum availability requirements and financial covenants apply in the event the Company seeks to use advances under the Revolving Credit Facility to pursue acquisitions or repurchase its common stock. As of March 31, 2020, the borrowings outstanding on the Revolving Credit Facility was $45,953 and the Company was in compliance with all of its covenants.

Senior Secured Loans

In connection with the Company’s acquisition of Radiant Canada (formerly, Wheels International Inc.), Radiant Canada obtained a CAD$29,000 senior secured Canadian term loan from Fiera Private Debt Fund IV LP (“FPD IV” formerly, Integrated Private Debt Fund IV LP) pursuant to a CAD$29,000 Credit Facilities Loan Agreement. The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on April 1, 2024 and accrues interest at a rate of 6.65% per annum. The Company is required to maintain five months interest in a debt service reserve account to be controlled by FPD IV. The amount of approximately $600 is recorded as deposits and other assets in the accompanying condensed consolidated financial statements. The Company made interest-only payments for the first 12 months followed by monthly principal and interest payments of CAD$390 that will be paid through maturity.

In connection with the Company’s acquisition of Lomas, Radiant Canada obtained a CAD$10,000 senior secured Canadian term loan from Fiera Private Debt Fund V LP (formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000 Credit Facilities Loan Agreement. The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on June 1, 2024 and accrues interest at a fixed rate of 6.65% per annum. The loan repayment consists of monthly principal and interest payments of CAD$149.

The loans may be prepaid in whole at any time providing the Company gives at least 30 days prior written notice and pays the difference between (i) the present value of the loan interest and the principal payments foregone discounted at the Government of Canada Bond Yield for the term from the date of prepayment to the maturity date and (ii) the face value of the principal amount being prepaid.

Concurrently with entering into the new Revolving Credit Facility, the Company amended and restated the FPD IV and FPD V term loans to make the financial and other covenants in such term loans consistent with those contained in the new Revolving Credit Facility. In addition, the security interest securing such term loans were changed to be on a parity basis with those securing the new Revolving Credit Facility. As of March 31, 2020, the Company was in compliance with all of its covenants.

NOTE 9 – DERIVATIVES

All derivatives are recognized on the Company’s Condensed Consolidated Balance Sheets at their fair values and consist of interest rate swap contracts at March 31, 2020 (none at June 30, 2019). On March 20, 2020, and effective April 17, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows at one-month LIBOR for a $20,000 notional amount, for fixed interest cash outflows at 0.635%. This interest rate swap matures and terminates on March 13, 2025.

The Company uses an interest rate swap for the management of interest rate risk exposure, as the interest rate swap effectively converts a portion of the Company’s Revolving Credit Facility from a floating to a fixed rate. The interest rate swap is an agreement between the Company and Bank of America to pay, in the future, a fixed-rate payment in exchange for Bank of America paying the Company a variable payment. The net payment obligation is based on the notional amount of the swap contract and the prevailing market interest rates. The Company may terminate the swap contract prior to its expiration date, at which point a realized gain or loss would be recognized. The value of the Company’s commitment would increase or decrease based primarily on the extent to which interest rates move against the rate fixed for each swap. As of March 31, 2020, the derivative instrument had a total notional amount of $20,000 and fair value of $227.

NOTE 10 – STOCKHOLDERS’ EQUITY

The Company is authorized to issue 5,000,000 shares of preferred stock, par value at $0.001 per share and 100,000,000 shares of common stock, $0.001 per share.

Series A Preferred Stock

At June 30, 2018, the Company had 839,200 shares of 9.75% Series A Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Shares”) outstanding with a liquidation preference of $25.00 per share that were issued on December 20, 2013. Net proceeds received from the Series A Preferred Shares issuance totaled approximately $19,320. Dividends on the Series A Preferred Shares were cumulative from the date of original issue and were payable on January 31, April 30, July 31 and October 31, as and if declared by the Company’s board of directors. Commencing on December 20, 2018, the Series A Preferred Shares were redeemable at the Company’s option, in whole or in part, at a cash redemption price of $25.00 per share plus accrued and unpaid dividends (whether declared).

On December 21, 2018, the Company redeemed all its Series A Preferred Shares for an aggregated price of $20,980 and charged to retained earnings $1,659 for the excess of consideration paid over carrying value of preferred stock on redemption. As a result, during the nine months ended March 31, 2020, no dividend was paid. Dividends paid to prior holders of Series A Preferred Shares for the nine months ended March 31, 2019 were $1.5536 per share, totaling $1,303.

Common Stock

In March 2018, the Company’s board of directors authorized the repurchase of up to 5,000,000 shares of the Company’s common stock through December 31, 2019. On February 4, 2020, the Company announced that its board of directors has approved the renewal of the repurchase program through December 31, 2021. Under the stock repurchase program, the Company is authorized to repurchase, from time-to-time, shares of its outstanding common stock in the open market at prevailing market prices or through privately negotiated transactions as permitted by securities laws and other legal requirements. The program does not obligate the Company to repurchase any specific number of shares and could be suspended or terminated at any time without prior notice. Under this repurchase program, the Company purchased 541,049 shares of its common stock at an average cost of $4.61 per share for an aggregate cost of $2,496 during the nine months ended March 31, 2020. Prior to the second fiscal quarter, there were no purchases of common stock executed under the repurchase program authorized by the board of directors in March 2018. We have temporarily suspended our share repurchases under our stock repurchase program as we continue to assess the impacts of COVID-19.

NOTE 11 – VARIABLE INTEREST ENTITY AND RELATED PARTY TRANSACTIONS

RLP is owned 40% by RGL and 60% by RCP, a company for which the Chief Executive Officer of the Company is the sole member. RLP is a certified minority business enterprise that was formed for the purpose of providing the Company with a national accounts strategy to pursue corporate and government accounts with diversity initiatives. RCP’s ownership interest entitles it to a majority of the profits and distributable cash, if any, generated by RLP. The operations of RLP are intended to provide certain benefits to the Company, including expanding the scope of services offered by the Company and participating in supplier diversity programs not otherwise available to the Company. In the course of evaluating and approving the ownership structure, operations and economics emanating from RLP, a committee consisting of the independent Board member of the Company, considered, among other factors, the significant benefits provided to the Company through association with a minority business enterprise, particularly as many of the Company’s largest current and potential customers have a need for diversity offerings. In addition, the committee concluded that the economic relationship with RLP was on terms no less favorable to the Company than terms generally available from unaffiliated third parties.

Certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have the sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties are considered variable interest entities. RLP qualifies as a variable interest entity and is consolidated in these condensed consolidated financial statements as the Company is the primary beneficiary.

RLP recorded $123 and $438 in profits, of which RCP’s distributable share was $73 and $262, for the three and nine months ended March 31, 2020, respectively. RLP recorded $412 and $1,485 in profits, of which RCP’s distributable share was $247 and $891 for the three and nine months ended March 31, 2019, respectively. The non-controlling interest recorded as a reduction of net income available to common stockholders in the condensed consolidated statements of comprehensive income represents RCP’s distributive share.

NOTE 12 – FAIR VALUE MEASUREMENT

The accounting guidance for fair value, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The framework for measuring fair value consists of a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The fair value measurement level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques:

•

Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

•

Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost); and

•

Income approach: Techniques to convert future amounts to a single present amount based upon market expectations, including present value techniques, option-pricing, and excess earning models.

The following table sets forth the Company’s financial assets (liabilities) measured at fair value on a recurring basis:

(In thousands)	Fair Value Measurements as of March 31, 2020
	Level 3			Total
Contingent consideration	$	(3,250	)	$	(3,250	)
Interest rate swap contracts (derivatives)		227			227


	Fair Value Measurements as of June 30, 2019
	Level 3			Total
Contingent consideration	$	(375	)	$	(375	)

The following table provides a reconciliation of the financial assets (liabilities) measured at fair value using significant unobservable inputs (Level 3):

(In thousands)	Contingent Consideration			Interest rate swap contracts (derivatives)
Balance as of June 30, 2019	$	(375	)	$	—

Increase related to accounting for acquisitions		(3,150	)		—
Contingent consideration paid		327			—
Change in fair value		(52	)		227

Balance as of March 31, 2020	$	(3,250	)	$	227

The Company has contingent obligations to transfer cash payments and equity shares to former shareholders of acquired operations in conjunction with certain acquisitions if specified operating results and financial objectives are met over the next four fiscal years. Contingent consideration is measured quarterly at fair value, and any change in the fair value of the contingent liability is included in the condensed consolidated statements of comprehensive income. The change in the current period fair value is principally attributable to a net increase in management’s estimates of future earn-out payments through the remainder of the earn-out periods. Contingent consideration is recorded in other current liabilities and other long-term liabilities.

The Company uses projected future financial results based on recent and historical data to value the anticipated future earn-out payments. To calculate fair value, the future earn-out payments were then discounted using Level 3 inputs. The Company has classified the contingent consideration as Level 3 due to the lack of relevant observable market data over fair value inputs. The Company believes the discount rate used to discount the earn-out payments reflects market participant assumptions. Changes in assumptions and operating results could have a significant impact on the earn-out amount, up to a maximum of $10,500 through earn-out periods measured through July 2023, although there are no maximums on certain earn-out payments.

Interest rate swap contracts are included in deposits and other assets.

Fair Value of Financial Instruments

The carrying values of the Company’s cash, receivables, contract assets, accounts payable, commissions payable, accrued expenses, and the income tax receivable and payable approximate the fair values due to the relatively short maturities of these instruments. The carrying value of the Company’s Revolving Credit Facility and notes payable would not differ significantly from fair value (based on Level 2 inputs) if recalculated based on current interest rates.

NOTE 13 – INCOME TAXES

For the three and nine months ended March 31, 2020 and 2019, respectively, the Company’s income tax expense is composed of the following:

	Three Months Ended March 31,						Nine Months Ended March 31,
(In thousands)	2020			2019			2020			2019
Current income tax expense	$	923		$	990		$	3,387		$	4,451
Deferred income tax benefit		(821	)		(48	)		(1,537	)		(658	)

Income tax expense	$	102		$	942		$	1,850		$	3,793

The Company’s effective tax rates prior to discrete items for the nine months ended March 31, 2020 and 2019 are higher than the U.S. federal statutory rates primarily due to earnings in foreign operations and state taxes. The actual income tax through the third quarter results in an effective tax rate of 23.1%, which is higher than the U.S. federal statutory rate primarily due to earnings in foreign operations and state taxes, but also includes $203 of share-based compensation benefits to date, which is discretely recognized in the quarter and is not a component of the company’s annualized forecasted effective tax rate for fiscal year 2020. The Company does not have any uncertain tax positions and has a federal net operating loss carryover of approximately $726 due to expire primarily through fiscal year 2027 and a foreign net operating loss carryover of approximately $1,730 due to expire through fiscal year 2038.

The Company and its wholly-owned U.S. subsidiaries file a consolidated federal income tax return. The Company also files unitary or separate returns in various state, local, and non-U.S. jurisdictions based on state, local and non-U.S. filing requirements. Tax years that remain subject to examination by U.S. authorities are the years ended June 30, 2017 through June 30, 2019. Tax years that remain subject to examination by state authorities are the years ended June 30, 2016 through June 30, 2019. Tax years that remain subject to examination by non-U.S. authorities are the fiscal year ended June 30, 2016 through June 30, 2019. Occasionally acquired entities have tax years that differ from the Company’s and are still open under the relevant statute of limitations and therefore are subject to potential adjustment.

The Company’s Canadian Subsidiary, Radiant Canada (formerly, “Wheels International, Inc.”), is no longer under examination by the Canada Revenue Agency ("CRA") for fiscal year 2015. During the quarter ended December 31, 2019, the Company was notified that the audit had been finalized with the CRA and that the adjustment will result in an immaterial charge.

The Company is currently under examination by the U.S. Internal Revenue Service for the 2017 tax year. At this time, the Company is not able to estimate the potential impact that the examination may have on income tax expense. If the examination is resolved unfavorably, it may have a negative impact on the Company’s results of operations.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP).  The Company applied for funds under the Paycheck Protection Program of the CARES Act in April of 2020 – see Note 18. At this time, management does not believe that the CARES Act will have a material impact on the Company’s income tax provision for 2020.  The Company will continue to evaluate the impact of the CARES Act on its financial position, results of operations and cash flows.

NOTE 14 – SHARE-BASED COMPENSATION

The Company has two stock-based plans: the 2005 Stock Incentive Plan and the 2012 Stock Option and Performance Award Plan. Each plan authorizes the granting of up to 5,000,000 shares of the Company’s common stock. The plans provide for the grant of stock options, stock appreciation rights, shares of restricted stock, restricted stock units, performance shares and performance units. Restricted stock awards and units are equivalent to one share of common stock and generally vest after three years. The Company does not plan to make additional grants under the 2005 Stock Incentive Plan.

Restricted Stock Awards

The Company recognized share-based compensation expense related to restricted stock awards of $298 and $868 for the three and nine months ended March 31, 2020, respectively and $215 and $580 for the three and nine months ended March 31, 2019, respectively. As of March 31, 2020, there was $2,162 of total unrecognized share-based compensation cost for restricted stock awards. Such costs are expected to be recognized over a weighted average period of approximately 2.10 years.

The following table summarizes stock award activity under the plans:

	Number of Units			Weighted Average Grant Date Fair Value
Unvested balance as of June 30, 2019		687,920		$	4.08
Vested		(235,379	)		2.88
Granted		331,966			5.56
Forfeited		(19,128	)		4.91

Unvested balance as of March 31, 2020		765,379		$	5.07

Stock Options

Stock options are granted at exercise prices equal to the fair value of the common stock at the date of the grant and have a term of ten years. Generally, grants under each plan vest 20% annually over a five-year period from the date of grant. The Company recognized share-based compensation expense related to stock options of $112 and $438 for the three and nine months ended March 31, 2020, respectively and $194 and $624 for the three and nine months ended March 31, 2019, respectively. The aggregate intrinsic value of options exercised was $719 and $1,877 for the three and nine months ended March 31, 2020, respectively and $257 and $592 for the three and nine months ended March 31, 2019, respectively. As of March 31, 2020, there was $180 of total unrecognized share-based compensation cost for stock options. Such costs are expected to be recognized over a weighted average period of approximately 1.04 years.

The following table summarizes stock option activity under the plans:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding as of June 30, 2019		2,458,093		$	3.30		4.69	$	6,995
Exercised		(244,871	)		1.57		—		1,877
Forfeited		(30,259	)		4.74		—		—

Outstanding as of March 31, 2020		2,182,963		$	3.47		4.12	$	1,669

Exercisable as of March 31, 2020		1,991,400		$	3.30		3.97	$	1,613

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is involved in various claims and legal actions arising in the ordinary course of business. In many claims and actions, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the size or range of the possible loss. Accordingly, an adverse outcome from such proceedings could have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity. Legal expenses are expensed as incurred. A summary of potential material proceedings and litigation is as follows.

Ingrid Barahona v. Accountabilities, Inc. d/b/a/ Accountabilities Staffing, Inc., Radiant Global Logistics, Inc. and DBA Distribution Services, Inc. (Ingrid Barahona California Class Action)

On February 19, 2019, the Company filed a Motion to Dismiss the class action case, which the court granted on March 14, 2019, and subsequently entered judgment in favor of the Company on April 30, 2019. By mutual written agreement of the parties, the matter was dismissed by Order of the Court of Appeals of the State of California, Second Appellate District, Division 8 on February 28, 2020. This matter is closed.

Contingent Consideration and Earn-out Payments

The Company’s agreements with respect to previous acquisitions contain future consideration provisions, which provide for the selling equity owners to receive additional consideration if specified operating objectives and financial results are achieved in future periods. Earn-out payments are generally due annually on November 1st and 90 days following the quarter of the final earn-out period for each respective acquisition.

The following table represents the estimated discounted earn-out payments to be paid in each of the following fiscal years:

(In thousands)	2020 (remaining)		2021		2022		2023		2024		Total
Earn-out payments:
Cash	$	75	$	1,182	$	1,046	$	619	$	303	$	3,225
Equity⁽¹⁾		25		—		—		—		—		25

Total estimated earn-out payments	$	100	$	1,182	$	1,046	$	619	$	303	$	3,250

⁽¹⁾	The Company generally has the right but not the obligation to satisfy a portion of the earn-out payments in stock.

NOTE 16 – OPERATING AND GEOGRAPHIC SEGMENT INFORMATION

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker or decision-making group in making decisions regarding allocation of resources and assessing performance. The Company’s chief operating decision-maker is the Chief Executive Officer. The Company has two operating segments: United States and Canada.

The Company evaluates the performance of the segments primarily based on their respective revenues and income from operations. In addition, the Company includes the costs of the Company’s executives, board of directors, professional services, such as legal and consulting, amortization of intangible assets, and certain other corporate costs associated with operating as a public company as Corporate.

Three Months Ended March 31, 2020 (In thousands)	United States		Canada			Corporate/ Eliminations			Total
Revenues	$	152,231	$	25,113		$	(123	)	$	177,221
Income (loss) from operations		3,540		1,829			(4,664	)		705
Other income (expense)		113		145			(735	)		(477	)
Income (loss) before income taxes		3,653		1,974			(5,399	)		228
Depreciation and amortization		1,200		589			2,493			4,282
Property, technology, and equipment, net		13,979		5,705			—			19,684
Goodwill		50,680		21,398			—			72,078

Three Months Ended March 31, 2019 (In thousands)
Revenues	$	179,146	$	27,067		$	(165	)	$	206,048
Income (loss) from operations		5,929		2,417			(3,579	)		4,767
Other income (expense)		136		(111	)		(671	)		(646	)
Income (loss) before income taxes		6,065		2,306			(4,250	)		4,121
Depreciation and amortization		958		366			2,523			3,847
Property, technology, and equipment, net		15,280		4,703			—			19,983
Goodwill		43,991		21,398			—			65,389

Nine Months Ended March 31, 2020 (In thousands)	United States		Canada			Corporate/ Eliminations			Total
Revenues	$	504,209	$	75,990		$	(508	)	$	579,691
Income (loss) from operations		17,300		6,410			(13,987	)		9,723
Other income (expense)		183		101			(2,020	)		(1,736	)
Income (loss) before income taxes		17,483		6,511			(16,007	)		7,987
Depreciation and amortization		3,208		1,478			7,727			12,413
Property, technology, and equipment, net		13,979		5,705			—			19,684
Goodwill		50,680		21,398			—			72,078

Nine Months Ended March 31, 2019 (In thousands)
Revenues	$	602,122	$	84,056		$	(310	)	$	685,868
Income (loss) from operations		22,812		7,037			(11,399	)		18,450
Other income (expense)		397		30			(2,308	)		(1,881	)
Income (loss) before income taxes		23,209		7,067			(13,707	)		16,569
Depreciation and amortization		2,638		1,153			7,504			11,295
Property, technology, and equipment, net		15,280		4,703			—			19,983
Goodwill		43,991		21,398			—			65,389

NOTE 17 – BUSINESS COMBINATION

On February 7, 2020 the Company acquired the assets and operations of two of its Adcom agency locations: Alexandria, Virginia based Friedway Enterprises, Inc. (“Friedway”) and Pittsburgh, Pennsylvania based CIC2, Inc. (“CIC2”) through its wholly-owned subsidiary, Radiant Global Logistics, Inc. Friedway and CIC2 are expected to transition to the Radiant brand and will continue to provide a full range of domestic and international services from the mid-Atlantic region. The acquired agencies are expected to strengthen and diversify Radiant’s network of Company-owned operations and will continue to provide a full range of hyper-care domestic and international transportation and logistics service to customers in medical device, high-tech and trade-show industries. The goodwill recognized is attributable to expanded service lines and geographic footprint. The acquisitions of Friedway and CIC2 were accounted for as purchases of a business under ASC 805 Business Combinations.

As consideration for the acquisition, the Company paid $9,150 in cash upon closing and issued 45,086 shares of common stock recorded at fair value, and the seller is entitled to additional contingent consideration payable in subsequent periods based on future performance of the acquired operation. The maximum contingent consideration payable is $10,000. The Company has engaged valuation specialists to assist the Company with its estimate of the fair value of the contingent consideration using future projected earnings relative to the corresponding future earn-out payments. To calculate fair value, the future earn-out payments were then discounted using Level 3 inputs. The Company believes the rate used to discount the earn-out payments reflect market participant assumptions.

The fair values of the intangible assets were estimated by valuation specialists engaged by the Company to assist with its estimate of the fair value. The fair value was estimated using a discounted cash flow approach with Level 3 inputs. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, the Company used risk-adjusted cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes the level and timing of cash flows appropriately reflect market participant assumptions. The goodwill is recorded in the US operating segment and is expected to be deductible for income tax purposes over a period of 15 years.

The acquisition date fair value of the consideration transferred for the acquisitions consisted of the following:

(In thousands)
Cash	$	9,150
Common stock (45,086 common shares)		250
Contingent consideration, at fair value		3,150

	$	12,550

The preliminary purchase price allocation for the acquisitions is as follows:

(In thousands)
Prepaid expenses and other current assets	$	36
Intangible assets		5,822
Deposits and other assets		8
Accrued expenses		(5	)
Total identifiable net assets		5,861
Goodwill		6,689
	$	12,550

Intangible assets that were acquired and their respective useful lives are as follows:

(In thousands)	Amount		Useful Life
Customer related	$	5,342	8.5 years
Covenants not to compete		480	5 years
	$	5,822

The preliminary fair value estimates for the assets acquired and liabilities assumed are based upon preliminary calculations and valuations. The estimates and assumptions are subject to change as additional information is obtained for the estimates during the respective measurement periods (up to one year from the acquisition date). The primary areas of the preliminary estimates not yet finalized relate to identifiable intangible assets and contingent consideration.

The results of operations for these acquired entities subsequent to the date of acquisition for the three and nine months ended March 31, 2020, are immaterial and thus not presented. The proforma results of operations as if the acquisition had occurred on the first day of each reporting period have not been presented because the operations of these above-mentioned acquisitions was not material to the consolidated financial statements.

NOTE 18 – SUBSEQUENT EVENTS

Paycheck Protection Program

On May 4, 2020, the Company received loan proceeds of $5,900 pursuant to the Paycheck Protection Program (the “PPP”) under the Cares Act. The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further required the Company to take into account our current business activity and our ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. On April 28, 2020, the Secretary of the U.S. Department of the Treasury stated that the SBA will perform a full review of any PPP loan over $2.0 million before forgiving the loan. The certification made by the Company did not contain any objective criteria and is subject to interpretation. If, despite the good-faith belief that given the Company’s circumstances all eligibility requirements for the PPP Loan were satisfied, it is later determined that the Company had violated any applicable laws or regulations or it is otherwise determined the Company was ineligible to receive the PPP Loan, it may be required to repay the PPP Loan in its entirety and/or be subject to additional penalties.

The term of the Company’s PPP Loan is two years. The annual interest rate on the PPP Loan is 1% and no payments of principal or interest are due during the six-month period beginning on the date of the PPP Loan. Under the terms of the PPP, all or a portion of the principal may be forgiven if the Loan proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits, rent, and utilities. No assurance is provided that the Company will obtain forgiveness of the Loan in whole or in part. With respect to any portion of the SBA Loan that is not forgiven, the SBA Loan will be repayable on the terms set forth above.

Interest Rate Swap Contract

On April 1, 2020, and effective April 2, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade the variable interest cash inflows at one-month LIBOR for a $10,000 notional amount, for fixed interest cash outflows at 0.5865%. This interest rate swap matures and terminates on March 13, 2025.

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

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning set forth in United States securities laws and regulations – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business, financial performance and financial condition, and often contain words such as “anticipate,” “believe,” “estimates,” “expect,” “future,” “intend,” “may,” “plan,” “see,” “seek,” “strategy,” or “will” or the negative thereof or any variation thereon or similar terminology or expressions. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. We have developed our forward-looking statements based on management’s beliefs and assumptions, which in turn rely upon information available to them at the time such statements were made. Such forward-looking statements reflect our current perspectives on our business, future performance, existing trends and information as of the date of this report. These include, but are not limited to, our beliefs about future revenue and expense levels, growth rates, prospects related to our strategic initiatives and business strategies, along with express or implied assumptions about, among other things: our continued relationships with our strategic operating partners; the performance of our historic business, as well as the businesses we have recently acquired, at levels consistent with recent trends and reflective of the synergies we believe will be available to us as a result of such acquisitions; our ability to successfully integrate our recently acquired businesses; our ability to locate suitable acquisition opportunities and secure the financing necessary to complete such acquisitions; transportation costs remaining in-line with recent levels and expected trends; our ability to mitigate, to the best extent possible, our dependence on current management and certain of our larger strategic operating partners; our compliance with financial and other covenants under our indebtedness; the absence of any adverse laws or governmental regulations affecting the transportation industry in general, and our operations in particular; the impact of COVID-19 on our operations and financial results; and such other factors that may be identified from time to time in our Securities and Exchange Commission (“SEC”) filings and other public announcements, including those set forth under the caption “Risk Factors” in our Form 10-K for the year ended June 30, 2019 and this Form 10-Q for the quarter ended March 31, 2020. In addition, the global economic climate and additional or unforeseen effects from the COVID-19 pandemic amplify many of these risks. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Readers are cautioned not to place undue reliance on our forward-looking statements, as they speak only as of the date made. We disclaim any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

The following discussion and analysis of our financial condition and result of operations should be read in conjunction with the condensed consolidated financial statements and the related notes and other information included elsewhere in this report.

Overview

We operate as a third-party logistics company, providing multi-modal transportation and logistics services primarily in the United States and Canada. We service a large and diversified account base consisting of consumer goods, food and beverage, manufacturing and retail customers, which we support from an extensive network of operating locations across North America as well as an integrated international service partner network located in other key markets around the globe. We provide these services through a multi-brand network, which includes over 100 locations operated exclusively on our behalf by independent agents, who we also refer to as our “strategic operating partners”, as well as approximately 20 Company-owned offices. As a third-party logistics company, we have approximately 10,000 asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in our carrier network. We believe shippers value our services because we are able to objectively arrange the most efficient and cost-effective means, type and provider of transportation service without undue influence caused by the ownership of transportation assets. In addition, our minimal investment in physical assets affords us the opportunity for a higher return on invested capital and net cash flows than our asset-based competitors.

Through our operating locations across North America, we offer domestic, international air and ocean freight forwarding services and freight brokerage services, including truckload services, LTL services, and intermodal services, which is the movement of freight in trailers or containers by combination of truck and rail. Our primary business operations involve arranging the shipment, on behalf of our customers, of materials, products, equipment and other goods that are generally larger than shipments handled by integrated carriers of primarily small parcels, such as FedEx, DHL and UPS. Our services include arranging and monitoring all aspects of material flow activity utilizing advanced information technology systems. We also provide other value-added logistics services, including customs brokerage and MM&D solutions to complement our core transportation service offering.

We expect to grow our business organically and by completing acquisitions of other companies with complementary geographic and logistics service offerings. Our organic growth strategy will continue to focus on strengthening existing and expanding new customer relationships leveraging the benefit of our truck brokerage and intermodal service offerings, while continuing our efforts on the organic build-out of our network of strategic operating partner locations. In addition to our focus on organic growth, we continue to search for acquisition candidates that bring to our current platform a critical mass from a geographic and/or purchasing power standpoint along with complementary service offerings. As we continue to grow and scale our business, we believe that we are creating density in our trade lanes, which creates opportunities for us to more efficiently source and manage our transportation capacity. In addition, we remain focused on leveraging our back-office infrastructure to drive productivity improvement across the organization.

COVID-19

The recent COVID-19 outbreak was declared a pandemic by the World Health Organization on March 11, 2020 and has rapidly spread to the United States and many other parts of the world and has impacted and may continue to impact our business operations, including employees, customers, financial condition, liquidity and cash flow for an extended period of time. In particular, we are seeing significant changes in demand among our various customers depending on their industry. Certain industries saw an increase in demand, while other industries experienced a slowdown of demand and production. Federal and state governments have implemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, supply chain logistical changes, and closure of nonessential businesses. Since late March, we shifted our focus to delivering against four key objectives: ensuring the health and safety of our employees; providing supply chain continuity for our customers, operating partners and carriers; protecting the economic security of our people to the greatest extent possible; and taking the steps necessary to mitigate the impacts of the slowing economy on our own business.

Our business model has also shown its strength in the diversity of our service offerings. Although the pandemic has had a substantial negative impact on many of the industry verticals and customers that we serve, the Radiant network is proud to be playing an active role in the fight against COVID-19: delivering personal protective equipment, food and beverage, consumer goods, technology and other essential products for our customers in North America and around the world. Notwithstanding this great effort by our team, we anticipate the contraction in our business from the shelter-at-home mandates, closing of manufacturing facilities and general global economic slowdown will more than off-set any financial benefit from our support of essential businesses. The effects of COVID-19, however, will not be fully reflected in our financial results until future periods. The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic activity including the possibility of recession or financial market instability. These factors may adversely impact consumer, business, and government spending as well as customers' ability to pay for our services on an ongoing basis. This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions, including receivables and forward-looking guidance.

In response to COVID-19 we have implemented the following measures to ensure the health and safety of our employees, the financial soundness of the Company and the continuity of our services to our customers:

•

We are applying the social distancing guidelines by having a majority of our office employees work from their homes;

•

We provide clear communication to our employees promoting essential healthy hygiene habits and assist in responsibly responding to potential symptoms including self-quarantining and testing;

•

We initiated a series of workforce reduction measures impacting employees across our U.S. operations that included 20% salary reductions, reduction in hours, furloughs and terminations;

•

We implemented temporary salary reductions for company executive officers and temporary reductions in cash retainers for board members;

•

Our executives have agreed to forgo any bonuses under the Company’s discretionary quarterly Short-term Incentive Plan; and

•

We have tabled any acquisition opportunities, suspended our stock buy-back program, deferred discretionary technology investments and reduced discretionary operating expenses.

Performance Metrics

Our principal source of income is derived from freight forwarding and freight brokerage services we provide to our customers. As a third-party logistics provider, we arrange for the shipment of our customers’ freight from point of origin to point of destination. Generally, we quote our customers a turnkey cost for the movement of their freight. Our price quote will often depend upon the customer’s time-definite needs (first day through fifth day delivery), special handling needs (heavy equipment, delicate items, environmentally sensitive goods, electronic components, etc.), and the means of transport (motor carrier, air, ocean or rail). In turn, we assume the responsibility for arranging and paying for the underlying means of transportation.

Our transportation revenue represents the total dollar value of services we sell to our customers. Our cost of transportation includes direct costs of transportation, including motor carrier, air, ocean and rail services. Our net transportation revenue (gross transportation revenue less the direct cost of transportation) is the primary indicator of our ability to source, add value and resell services provided by third parties, and is considered by management to be a key performance measure. In addition, management believes measuring its operating costs as a function of net transportation revenue provides a useful metric, as our ability to control costs as a function of net transportation revenue directly impacts operating earnings.

Our operating results will be affected as acquisitions occur. Since all acquisitions are made using the acquisition method of accounting for business combinations, our financial statements will only include the results of operations and cash flows of acquired companies for periods subsequent to the date of acquisition.

Our GAAP-based net income will be affected by non-cash charges relating to the amortization of customer related intangible assets and other intangible assets attributable to completed acquisitions. Under applicable accounting standards, purchasers are required to allocate the total consideration in a business combination to the identified assets acquired and liabilities assumed based on their fair values at the time of acquisition. The excess of the consideration paid over the fair value of the identifiable net assets acquired is to be allocated to goodwill, which is tested at least annually for impairment. Applicable accounting standards require that we separately account for and value certain identifiable intangible assets based on the unique facts and circumstances of each acquisition. As a result of our acquisition strategy, our net income will include material non-cash charges relating to the amortization of customer related intangible assets and other intangible assets acquired in our acquisitions. Although these charges may increase as we complete more acquisitions, we believe we will be growing the value of our intangible assets (e.g. customer relationships). Thus, we believe that earnings before interest, taxes, depreciation and amortization, or EBITDA, is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business.

EBITDA is a non-GAAP measure of income and does not include the effects of preferred stock dividends, interest and taxes, and excludes the “non-cash” effects of depreciation and amortization on long-term assets. Companies have some discretion as to which elements of depreciation and amortization are excluded in the EBITDA calculation. We exclude all depreciation charges related to property, technology, and equipment and all amortization charges (including amortization of leasehold improvements). We then further adjust EBITDA to exclude changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, transition and lease termination costs, foreign currency transaction gains and losses, extraordinary items, share-based compensation expense, litigation expenses unrelated to our core operations, MM&D start-up costs and other non-cash charges. While management considers EBITDA and adjusted EBITDA useful in analyzing our results, it is not intended to replace any presentation included in our condensed consolidated financial statements.

Our operating results are also subject to seasonal trends when measured on a quarterly basis. The impact of seasonality on our business will depend on numerous factors, including the markets in which we operate, holiday seasons, consumer demand, and economic conditions. Since our revenue is largely derived from customers whose shipments are dependent upon consumer demand and just-in-time production schedules, the timing of our revenue is often beyond our control. Factors such as shifting demand for retail goods and/or manufacturing production delays could unexpectedly affect the timing of our revenue. As we increase the scale of our operations, seasonal trends in one area of our business may be offset to an extent by opposite trends in another area. We cannot accurately predict the timing of these factors, nor can we accurately estimate the impact of any particular factor, and thus, we can give no assurance any historical seasonal patterns will continue in future periods.

Results of Operations

Three months ended March 31, 2020 and 2019 (unaudited)

The following table summarizes revenues, cost of transportation and other services, and net revenues by geographic operating segments for the three months ended March 31, 2020 and 2019 (in thousands):

	Three Months Ended March 31, 2020												Three Months Ended March 31, 2019
	United States			Canada			Corporate/ Eliminations			Total			United States			Canada			Corporate/ Eliminations			Total
Revenues
Transportation	$	148,941		$	21,217		$	(123	)	$	170,035		$	175,462		$	22,340		$	(165	)	$	197,637
Value-added services		3,290			3,896			—			7,186			3,684			4,727			—			8,411
		152,231			25,113			(123	)		177,221			179,146			27,067			(165	)		206,048
Cost of transportation and other services
Transportation		109,657			17,383			(123	)		126,917			131,242			17,956			(165	)		149,033
Value-added services		2,073			450			—			2,523			2,548			1,721			—			4,269
		111,730			17,833			(123	)		129,440			133,790			19,677			(165	)		153,302
Net revenues⁽¹⁾
Transportation		39,284			3,834			—			43,118			44,220			4,384			—			48,604
Value-added services		1,217			3,446			—			4,663			1,136			3,006			—			4,142
	$	40,501		$	7,280		$	—		$	47,781		$	45,356		$	7,390		$	—		$	52,746
Net Margins
Transportation		26.4	%		18.1	%	N/A				25.4	%		25.2	%		19.6	%	N/A				24.6	%
Value-added services		37.0	%		88.4	%	N/A				64.9	%		30.8	%		63.6	%	N/A				49.2	%

⁽¹⁾Net revenues are revenues net of cost of transportation and other services.

Transportation revenue was $170.0 million and $197.6 million for the three months ended March 31, 2020 and 2019, respectively. The decrease of $27.6 million, or 14.0%, is primarily attributable to general market softness including a slight impact from COVID-19, a decrease in non-recurring disaster relief project work reported in the comparable prior year period, and decisions to exit certain lower margin business. Net transportation revenue was $43.1 million and $48.6 million for the three months ended March 31, 2020 and 2019, respectively. Net transportation margins increased from 24.6% to 25.4%, primarily due to shifts in product mix and exiting certain lower margin business.

Value-added services revenue was $7.2 million and $8.4 million, for the three months ended March 31, 2020 and 2019, respectively. The decrease of $1.2 million, or 14.6%, is primarily attributable to slowdown in our contract logistics and custom brokerage services offerings. Net value-added services revenue was $4.7 million for the three months ended March 31, 2020, compared to $4.1 million for the comparable prior year period. Net value-added services revenue margins increased from 49.2% to 64.9%, primarily due to lower personnel and warehousing costs as a percentage of revenue.

The following table compares condensed consolidated statements of comprehensive income data by operating segment for the three months ended March 31, 2020 and 2019 (in thousands):

	Three Months Ended March 31, 2020											Three Months Ended March 31, 2019
	United States			Canada		Corporate/ Eliminations			Total			United States			Canada			Corporate/ Eliminations			Total
Net revenues⁽¹⁾	$	40,501		$	7,280	$	—		$	47,781		$	45,356		$	7,390		$	—		$	52,746

Operating expenses:
Operating partner commissions		20,352			—		—			20,352			23,125			—			—			23,125
Personnel costs		10,216			3,278		918			14,412			10,664			3,197			945			14,806
Selling, general and administrative expenses		5,193			1,584		1,250			8,027			4,680			1,410			722			6,812
Depreciation and amortization		1,200			589		2,493			4,282			958			366			2,523			3,847
Change in fair value of contingent consideration		—			—		3			3			—			—			(611	)		(611	)

Total operating expenses		36,961			5,451		4,664			47,076			39,427			4,973			3,579			47,979

Income (loss) from operations		3,540			1,829		(4,664	)		705			5,929			2,417			(3,579	)		4,767
Other income (expense)		113			145		(735	)		(477	)		136			(111	)		(671	)		(646	)

Income (loss) before income taxes		3,653			1,974		(5,399	)		228			6,065			2,306			(4,250	)		4,121
Income tax expense		—			—		(102	)		(102	)		—			—			(942	)		(942	)

Net income (loss)		3,653			1,974		(5,501	)		126			6,065			2,306			(5,192	)		3,179
Less: Net income attributable to non-controlling interest		(73	)		—		—			(73	)		(247	)		—			—			(247	)

Net income (loss) attributable to Radiant Logistics, Inc.		3,580			1,974		(5,501	)		53			5,818			2,306			(5,192	)		2,932

Net income (loss) attributable to common stockholders	$	3,580		$	1,974	$	(5,501	)	$	53		$	5,818		$	2,306		$	(5,192	)	$	2,932

	Three Months Ended March 31, 2020										Three Months Ended March 31, 2019
Operating expenses as a percent of net revenue ⁽¹⁾:	United States			Canada			Corporate/ Eliminations	Total			United States			Canada			Corporate/ Eliminations	Total
Operating partner commissions		50.3	%		0.0	%	N/A		42.6	%		51.0	%		0.0	%	N/A		43.8	%
Personnel costs		25.2	%		45.0	%	N/A		30.2	%		23.5	%		43.3	%	N/A		28.1	%
Selling, general and administrative expenses		12.8	%		21.8	%	N/A		16.8	%		10.3	%		19.1	%	N/A		12.9	%
Depreciation and amortization		3.0	%		8.1	%	N/A		9.0	%		2.1	%		5.0	%	N/A		7.3	%

⁽¹⁾Net revenues are revenues net of cost of transportation and other services.

Operating partner commissions decreased $2.7 million, or 12.0%, to $20.4 million for the three months ended March 31, 2020. The decrease is primarily due to decreased net revenues from operating partners. As a percentage of net revenues, operating partner commissions decreased 125 basis points to 42.6% from 43.8% for the three months ended March 31, 2020 and 2019, respectively, as a result of reduced volume of special projects with lower margin characteristic.

Personnel costs decreased $0.4 million, or 2.7%, to $14.4 million for the three months ended March 31, 2020. The decrease is primarily due to decreased headcount. As a percentage of net revenues, personnel costs increased 209 basis points to 30.2% from 28.1% for the three months ended March 31, 2020 and 2019, respectively.

Selling, general and administrative (“SG&A”) expenses increased $1.2 million, or 17.8%, to $8.0 million for the three months ended March 31, 2020. The increase is primarily attributable to increased technology spending for the quarter. As a percentage of net revenues, SG&A increased 388 basis points to 16.8% from 12.9% for the three months ended March 31, 2020 and 2019, respectively.

Depreciation and amortization costs increased $0.5 million, or 11.3%, to $4.3 million for the three months ended March 31, 2020. The increase is due to investments in a new transportation management system and technology infrastructure.

Change in fair value of contingent consideration represents the change in the fair value of contingent consideration due to former shareholders of acquired operations. The change in the current period is primarily attributable to an increase in management’s estimates of future earn-out payments through the remainder of the respective earn-out periods.

Other net expenses were $0.5 million and $0.6 million for the three months ended March 31, 2020 and 2019, respectively.

Our change in net income is driven principally by decreased net revenues, partially offset by decreased operating expenses and decreased income taxes compared to the comparable prior year period.

Our future financial results may be impacted by amortization of intangible assets resulting from acquisitions as well as gains or losses from changes in fair value of contingent consideration that are difficult to predict.

The following table provides a reconciliation for the three months ended March 31, 2020 and 2019 of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure (in thousands):

	Three Months Ended March 31, 2020												Three Months Ended March 31, 2019
	United States			Canada			Corporate/ Eliminations			Total			United States			Canada			Corporate/ Eliminations			Total
Net income (loss) attributable to common stockholders	$	3,580		$	1,974		$	(5,501	)	$	53		$	5,818		$	2,306		$	(5,192	)	$	2,932
Net income (loss) attributable to Radiant Logistics, Inc.		3,580			1,974			(5,501	)		53			5,818			2,306			(5,192	)		2,932

Income tax expense		—			—			102			102			—			—			942			942
Depreciation and amortization		1,200			589			2,493			4,282			958			366			2,523			3,847
Net interest expense		—			—			735			735			—			—			671			671

EBITDA		4,780			2,563			(2,171	)		5,172			6,776			2,672			(1,056	)		8,392

Share-based compensation		211			60			138			409			253			37			119			409
Change in fair value of contingent consideration		—			—			3			3			—			—			(611	)		(611	)
Acquisition related costs		—			—			183			183			—			—			75			75
Litigation costs		—			—			400			400			—			—			148			148
Transition, lease termination, and other costs		59			—			—			59			—			—			—			—
Foreign currency transaction loss (gain)		(24	)		(145	)		—			(169	)		(87	)		111			—			24

Adjusted EBITDA	$	5,026		$	2,478		$	(1,447	)	$	6,057		$	6,942		$	2,820		$	(1,325	)	$	8,437
Adjusted EBITDA as a % of net revenues ⁽¹⁾		12.4	%		34.0	%	N/A				12.7	%		15.3	%		38.2	%	N/A				16.0	%

⁽¹⁾Net revenues are revenues net of cost of transportation and other services.

Nine months ended March 31, 2020 and 2019 (unaudited)

The following table summarizes revenues, cost of transportation and other services, and net revenues by geographic operating segments for the nine months ended March 31, 2020 and 2019 (in thousands):

	Nine Months Ended March 31, 2020												Nine Months Ended March 31, 2019
	United States			Canada			Corporate/ Eliminations			Total			United States			Canada			Corporate/ Eliminations			Total
Revenues
Transportation	$	492,567		$	63,402		$	(508	)	$	555,461		$	592,341		$	69,197		$	(310	)	$	661,228
Value-added services		11,642			12,588			—			24,230			9,781			14,859			—			24,640
		504,209			75,990			(508	)		579,691			602,122			84,056			(310	)		685,868
Cost of transportation and other services
Transportation		359,512			51,659			(508	)		410,663			447,349			54,690			(310	)		501,729
Value-added services		7,575			2,181			—			9,756			6,784			5,780			—			12,564
		367,087			53,840			(508	)		420,419			454,133			60,470			(310	)		514,293
Net revenues⁽¹⁾
Transportation		133,055			11,743			—			144,798			144,992			14,507			—			159,499
Value-added services		4,067			10,407			—			14,474			2,997			9,079			—			12,076
	$	137,122		$	22,150		$	—		$	159,272		$	147,989		$	23,586		$	—		$	171,575
Net Margins
Transportation		27.0	%		18.5	%	N/A				26.1	%		24.5	%		21.0	%	N/A				24.1	%
Value-added services		34.9	%		82.7	%	N/A				59.7	%		30.6	%		61.1	%	N/A				49.0	%

⁽¹⁾Net revenues are revenues net of cost of transportation and other services.

Transportation revenue was $555.5 million and $661.2 million for the nine months ended March 31, 2020 and 2019, respectively. The decrease of $105.7 million, or 16.0%, is primarily attributable to general market softness including a slight impact from COVID-19, a decrease in non-recurring disaster relief project revenue reported in the comparable prior year period, and decisions to exit certain lower margin business. Net transportation revenue was $144.8 million and $159.5 million for the nine months ended March 31, 2020 and 2019, respectively. Net transportation margins increased from 24.1% to 26.1%, primarily due to shifts in product mix and exiting certain lower margin business.

Value-added services revenue was $24.2 million and $24.6 million, for the nine months ended March 31, 2020 and 2019, respectively. The decrease of $0.4 million, or 1.7%, is primarily attributable to the slowdown in our contract logistics and custom brokerage services offerings. Net value-added services revenue was $14.5 million for the nine months ended March 31, 2020, compared to $12.1 million for the comparable prior year period. Net value-added services revenue margins increased from 49.0% to 59.7%, primarily due to lower personnel and warehousing costs as a percentage of revenue.

The following table compares condensed consolidated statements of comprehensive income data by operating segment for the nine months ended March 31, 2020 and 2019 (in thousands):

	Nine Months Ended March 31, 2020											Nine Months Ended March 31, 2019
	United States			Canada		Corporate/ Eliminations			Total			United States			Canada		Corporate/ Eliminations			Total
Net revenues⁽¹⁾	$	137,122		$	22,150	$	—		$	159,272		$	147,989		$	23,586	$	—		$	171,575

Operating expenses:
Operating partner commissions		69,899			—		—			69,899			76,309			—		—			76,309
Personnel costs		31,617			10,136		2,734			44,487			32,055			10,403		2,798			45,256
Selling, general and administrative expenses		14,770			4,126		3,474			22,370			14,186			4,993		2,279			21,458
Depreciation and amortization		3,208			1,478		7,727			12,413			2,638			1,153		7,504			11,295
Transition, lease termination, and other costs		328			—		—			328			(11	)		—		—			(11	)
Change in fair value of contingent consideration		—			—		52			52			—			—		(1,182	)		(1,182	)

Total operating expenses		119,822			15,740		13,987			149,549			125,177			16,549		11,399			153,125

Income (loss) from operations		17,300			6,410		(13,987	)		9,723			22,812			7,037		(11,399	)		18,450
Other income (expense)		183			101		(2,020	)		(1,736	)		397			30		(2,308	)		(1,881	)

Income (loss) before income taxes		17,483			6,511		(16,007	)		7,987			23,209			7,067		(13,707	)		16,569
Income tax expense		—			—		(1,850	)		(1,850	)		—			—		(3,793	)		(3,793	)

Net income (loss)		17,483			6,511		(17,857	)		6,137			23,209			7,067		(17,500	)		12,776
Less: net income attributable to non- controlling interest		(262	)		—		—			(262	)		(891	)		—		—			(891	)

Net income (loss) attributable to Radiant Logistics, Inc.		17,221			6,511		(17,857	)		5,875			22,318			7,067		(17,500	)		11,885
Less: preferred stock dividends		—			—		—			—			—			—		(956	)		(956	)
Less: issuance costs for preferred stock redemption		—			—		—			—			—			—		(1,659	)		(1,659	)

Net income (loss) attributable to common stockholders	$	17,221		$	6,511	$	(17,857	)	$	5,875		$	22,318		$	7,067	$	(20,115	)	$	9,270

	Nine Months Ended March 31, 2020										Nine Months Ended March 31, 2019
Operating expenses as a percent of net revenue ⁽¹⁾:	United States			Canada			Corporate/ Eliminations	Total			United States			Canada			Corporate/ Eliminations	Total
Operating partner commissions		51.0	%		0.0	%	N/A		43.9	%		51.6	%		0.0	%	N/A		44.5	%
Personnel costs		23.1	%		45.8	%	N/A		27.9	%		21.7	%		44.1	%	N/A		26.4	%
Selling, general and administrative expenses		10.8	%		18.6	%	N/A		14.0	%		9.6	%		21.2	%	N/A		12.5	%
Depreciation and amortization		2.3	%		6.7	%	N/A		7.8	%		1.8	%		4.9	%	N/A		6.6	%

⁽¹⁾Net revenues are revenues net of cost of transportation and other services.

Operating partner commissions decreased $6.4 million, or 8.4%, to $69.9 million for the nine months ended March 31, 2020. The decrease is primarily due to decreased net revenues from operating partners. As a percentage of net revenues, operating partner commissions decreased 59 basis points to 43.9% from 44.5% for the nine months ended March 31, 2020 and 2019, respectively.

Personnel costs decreased $0.8 million, or 1.7%, to $44.5 million for the nine months ended March 31, 2020. The decrease is primarily due to decreased headcount. As a percentage of net revenues, personnel costs increased 155 basis points to 27.9% from 26.4% for the nine months ended March 31, 2020 and 2019, respectively.

Selling, general and administrative (“SG&A”) expenses increased $0.9 million, or 4.3%, to $22.4 million for the nine months ended March 31, 2020. The increase is primarily attributable to increased technology, legal and other general expenses for the nine-month period. As a percentage of net revenues, SG&A increased 154 basis points to 14.0% from 12.5% for the nine months ended March 31, 2020 and 2019, respectively.

Depreciation and amortization costs increased $1.1 million, or 9.9%, to $12.4 million for the nine months ended March 31, 2020. The increase is primarily due to investments in a new transportation management system and technology infrastructure.

Transition, lease termination and other costs increased $0.3 million for the nine months ended March 31, 2020. The increase is primarily attributable to non-recurring severance expense during the most recent nine-month period.

Other expenses were $1.7 million and $1.9 million for the nine months ended March 31, 2020 and 2019, respectively.

Our change in net income is driven principally by decreased net revenues, partially offset by decreased operating expenses, and decreased income taxes compared to the comparable prior year period.

The following table provides a reconciliation for the nine months ended March 31, 2020 and 2019 of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure (in thousands):

	Nine Months Ended March 31, 2020												Nine Months Ended March 31, 2019
	United States			Canada			Corporate/ Eliminations			Total			United States			Canada			Corporate/ Eliminations			Total
Net income (loss) attributable to common stockholders	$	17,221		$	6,511		$	(17,857	)	$	5,875		$	22,318		$	7,067		$	(20,115	)	$	9,270
Plus: preferred stock dividends		—			—			—			—			—			—			956			956
Plus: issuance costs for preferred stock redemption		—			—			—			—			—			—			1,659			1,659
Net income (loss) attributable to Radiant Logistics, Inc.		17,221			6,511			(17,857	)		5,875			22,318			7,067			(17,500	)		11,885

Income tax expense		—			—			1,850			1,850			—			—			3,793			3,793
Depreciation and amortization		3,208			1,478			7,727			12,413			2,638			1,153			7,504			11,295
Net interest expense		—			—			2,020			2,020			—			—			2,308			2,308

EBITDA		20,429			7,989			(6,260	)		22,158			24,956			8,220			(3,895	)		29,281

Share-based compensation		723			154			429			1,306			746			62			396			1,204
Change in fair value of contingent consideration		—			—			52			52			—			—			(1,182	)		(1,182	)
Acquisition related costs		—			—			495			495			—			—			93			93
Litigation costs		—			—			832			832			—			—			533			533
Transition, lease termination, and other costs		387			—			—			387			(11	)		—			—			(11	)
Foreign currency transaction loss (gain)		(19	)		(101	)		—			(120	)		(179	)		10			—			(169	)

Adjusted EBITDA	$	21,520		$	8,042		$	(4,452	)	$	25,110		$	25,512		$	8,292		$	(4,055	)	$	29,749
Adjusted EBITDA as a % of net revenues ⁽¹⁾		15.7	%		36.3	%	N/A				15.8	%		17.2	%		35.2	%	N/A				17.3	%

⁽¹⁾Net revenues are revenues net of cost of transportation and other services.

Liquidity and Capital Resources

Generally, our primary sources of liquidity are cash generated from operating activities and borrowings under our Revolving Credit Facility, as described below. These sources also fund a portion of our capital expenditures and contractual contingent consideration obligations. Our level of cash and financing capabilities along with cash flows from operations have historically been sufficient to meet our operating and capital needs.

We believe that during the next 12 months the COVID-19 pandemic is likely to impact general economic activity and demand in our markets, which if continued unabated could continue to have an adverse effect on our results of operations; which, in turn, could cause the amounts available to us under the Revolving Credit Facility to be limited and cause us to seek other external financing sources to meet our operating and capital needs. However, in this case, conditions in the credit markets may also deteriorate and the availability of alternative sources of credit on commercially reasonable terms may be reduced. In addition, the Company has a limited market capitalization and its stock price has declined roughly 30% since January 1, 2020. The Company believes access to capital markets has tightened and that accessing such markets at this time would be significantly detrimental to the business.

Net cash used in operating activities were $1.3 million for the nine months ended March 31, 2020. Net cash provided by operating activities were $33.5 million for the nine months ended March 31, 2019. The cash used or provided primarily consisted of net income adjusted for depreciation and amortization and changes in accounts receivable, contract assets, accounts payable, income taxes, operating partner commissions payable, and accrued and other liabilities. Cash flow from operating activities for the nine months ended March 31, 2020 decreased by $34.8 million, compared with the same period in fiscal year 2019, primarily due to the decrease in net income and net change in operating assets and liabilities.

Net cash used for investing activities were $13.8 million and $4.7 million for the nine months ended March 31, 2020 and 2019, respectively. The primary uses of cash were for business acquisitions and purchases of property, technology, and equipment. Cash paid for business acquisition were $9.2 million for the nine months ended March 31, 2020. Cash paid for purchases of property, technology, and equipment were $4.7 million for each of the nine months ended March 31, 2020 and 2019.

Net cash provided by financing activities was $24.1 million for the nine months ended March 31, 2020. Net cash used for financing activities were $30.7 million for the nine months ended March 31, 2019. Net proceeds from the Revolving Credit Facility were $32.2 million for the nine months ended March 31, 2020. Net repayments to the Revolving Credit Facility were $4.7 million for the nine months ended March 31, 2019. Repayments of notes payable and finance lease liability were $3.2 million and $2.7 million for the nine months ended March 31, 2020 and 2019, respectively. Repurchases of common stock were $2.5 million for the nine months ended March 31, 2020. Payments of contingent consideration were $0 million and $0.2 million for the nine months ended March 31, 2020 and 2019, respectively. Payments for the redemption of preferred stock and payments of preferred stock dividends were $21 million and $1.3 million for the nine months ended March 31, 2019. Distributions to non-controlling interest were $0.3 million and $0.7 million for the nine months ended March 31, 2020 and 2019, respectively. Payments of employee tax withholdings related to vesting of restricted stock awards were $0.3 million for the nine months ended March 31, 2020. Payments of employee tax withholdings related to the cashless exercise of stock option were $0.1 million for both the nine months ended March 31, 2020 and 2019.

Revolving Credit Facility

The Company entered into a $150 million syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated as of March 13, 2020. On March 31, 2020, the borrowings outstanding on the Revolving Credit Facility was $46 million. The Revolving Credit Facility was entered into with Bank of America Securities, Inc. as sole book runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A as lender and documentation and Bank of America, N. A., Keybank National Association and Washington Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as “Lenders”). This replaces the Company’s $75 million facility dated June 14, 2017.

The Revolving Credit Facility includes a $50.0 million accordion feature to support future acquisition opportunities. For general borrowings under the Revolving Credit Facility, the Company is subject to the maximum consolidated leverage ratio of 3.00 and minimum consolidated fixed charge coverage ratio of 1.25. Additional minimum availability requirements and financial covenants apply in the event the Company seeks to use advances under the Revolving Credit Facility to pursue acquisitions or repurchase its common stock.

In conjunction with the Revolving Credit Facility, Radiant entered into two interest rate swap contracts. On March 20, 2020, and effective April 17, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows at one-month LIBOR for a $20,000 notional amount, for fixed interest cash outflows at 0.635%. This interest rate swap matures and terminates on March 13, 2025. On April 1, 2020, and effective April 2, 2020, Radiant entered into an interest rate swap

contract with Bank of America to trade the variable interest cash inflows at one-month LIBOR for a $10,000 notional amount, for fixed interest cash outflows at 0.5865%. This interest rate swap matures and terminates on March 13, 2025.

Senior Secured Loan

On April 2, 2015, Radiant Canada obtained a CAD$29.0 million senior secured Canadian term loan from Fiera Private Debt Fund IV LP (“FPD IV” formerly, Integrated Private Debt Fund IV LP) pursuant to a CAD$29,000,000 Credit Facilities Loan Agreement (the “FPD IV Loan Agreement”). The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on April 1, 2024 and accrues interest at a rate of 6.65% per annum. We made interest-only payments for the first 12 months and blended principal and interest payments through maturity. In connection with the loan, we paid an amount equal to five months of interest payments into a debt service reserve account controlled by FPD IV.

In connection with our acquisition of Lomas, Radiant Canada obtained a CAD$10.0 million senior secured Canadian term loan from Fiera Private Debt Fund V LP (“FPD V” formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000,000 Credit Facilities Loan Agreement (the “FPD V Loan Agreement,” and together with the FPD IV Loan Agreement, the “FPD Loan Agreements”). The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on June 1, 2024 and accrues interest at a rate of 6.65% per annum. The loan repayment consists of monthly blended principal and interest payments.

The loans may be prepaid in whole at any time upon providing at least 30 days prior written notice and paying the difference between (i) the present value of the loan interest and the principal payments foregone discounted at the Government of Canada Bond Yield for the term from the date of prepayment to the maturity date and (ii) the face value of the principal amount being prepaid.

For additional information regarding our indebtedness, see Note 8 to our unaudited condensed consolidated financial statements contained elsewhere in this report.

Working Capital

The outbreak of COVID-19 has already started to have an adverse impact on the Company’s results of operations during its quarter ended March 31, 2020. If these conditions continue unabated for more than the short-term, as most industry sources are predicting, the impact of COVID-19 is expected to significantly reduce our revenue, earnings and operating cash flow in future quarters. Since continued growth through strategic acquisitions would normally require additional draws from our sources of financing, the Company’s search for new, potential acquisitions has been temporarily paused. Furthermore, the Company has temporarily suspended its stock repurchase program.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

The Company uses interest rate swaps for the management of interest rate risk exposure, as the interest rate swaps effectively convert a portion of the Company’s Revolving Credit Facility from a floating to a fixed rate. The interest rate swap is an agreement between the Company and Bank of America to pay, in the future, a fixed-rate payment in exchange for Bank of America paying the Company a variable payment. The net payment obligation is based on the notional amount of the swap contract and the prevailing market interest rates. The Company may terminate the swap contract prior to its expiration date, at which point a realized gain or loss would be recognized. The value of the Company’s commitment would increase or decrease based primarily on the extent to which interest rates move against the rate fixed for each swap.

Radiant entered into two interest rate swap contracts. On March 20, 2020, and effective April 17, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows at one-month LIBOR for a $20,000 notional amount, for fixed interest cash outflows at 0.635%. This interest rate swap matures and terminates on March 13, 2025. On April 1, 2020, and effective April 2, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade the variable interest cash inflows at one-month LIBOR for a $10,000 notional amount, for fixed interest cash outflows at 0.5865%. This interest rate swap matures and terminates on March 13, 2025.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

An evaluation of the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act as of March 31, 2020, was carried out by our management under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon that evaluation, our CEO and CFO concluded that, as of March 31, 2020, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding disclosure.

During the three months ended March 31, 2020, there was no change in our internal control over financial reporting that materially affected, or was reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Ingrid Barahona v. Accountabilities, Inc. d/b/a Accountabilities Staffing, Inc., Radiant Global Logistics, Inc. and DBA Distribution Services, Superior Court of the State of California, Los Angeles County, Case No. BC525802

Item 1A. Risk Factors

In addition to the following additional risk factors set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2019.

COVID-19 or other health crises may adversely affect our business.

The occurrence of regional epidemics or a global pandemic may adversely affect our operations, financial condition, and results of operations. The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. Federal and state governments have implemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, supply chain logistical changes, and closure of non-essential businesses. Although transportation services are generally considered essential services, and the overall demand for such services has continued, we are experiencing significant changes in demand from certain customers. We anticipate the contraction in our business from the shelter-at-home mandates, closing of manufacturing facilities and general global economic slowdown has, and will continue to more than off-set any financial benefit from our support of essential businesses. Although we are working hard to mitigate the negative financial impacts of COVID-19 with a number of initiatives in response our declining gross margins, these measures may have little or no effect depending on the severity of the pandemic. We face significant risks related to the spread of COVID-19 and the recent developments surrounding the global pandemic have had, and will continue to have, significant effects on our business, financial condition, results of operations, and cash flows. We are facing increased operational challenges from the need to protect employee health and safety. We face significant risks related to the global economic downturn and severe reduction in sales caused by the pandemic. These risks include materially reduced demand for our services and challenges to the ongoing viability of some of our customers. The extent to which the pandemic impacts our business and operating results will depend on future developments, which are highly uncertain and cannot be predicted. We may face similar risks in connection with any future public health crises.

Risks related to our receipt of PPP funding.

In response to the COVID-19 pandemic and the resulting impact on our current and future operations we applied for funds under the Paycheck Protection Program (the “PPP”). In April of 2020 we were approved for the amount of $5.9 million. The PPP loan application required us to certify, among other things, that the current economic uncertainty made the PPP Loan request necessary to support our ongoing operations. While we made this certification in good faith, the certification does not contain any objective criteria and is subject to interpretation. Recently the Small Business Administration (“SBA”) has provided guidance that it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such company should be prepared to demonstrate to SBA, upon request, the basis for its certification. Further, the Secretary of the Treasury and SBA Administrator announced that the government will conduct a full audit of all PPP loans of more than $2 million for which the borrower applies for forgiveness. While we believe we have satisfied all eligibility requirements for the PPP loan, there is a risk that we may be deemed to ineligible to receive the PPP loan or in violation of any of the laws or governmental regulations that apply to us in connection with the PPP loan; we may be required to repay the PPP loan in its entirety and we could be subject to additional penalties.

The terms of our credit facility impose operating and financial restrictions on us that may impair our ability to respond to changing business and economic condition.

We maintain a Revolving Credit Facility led by Bank of America, N.A. The Revolving Credit Facility contains financial covenants setting forth requirements for certain levels of liquidity and profitability. We expect these ratios will become less favorable as our trailing twelve months EBITDA is expected to continue to compress in coming quarters and could be exacerbated by potential bad debts from our end customers, the financial health of our operating partners and the ultimate economic recovery. These limitations and covenants may restrict our ability to access capital in order to respond to changing business and economic conditions, including as a result of the COVID-19 pandemic, and may therefore absent accommodations from our senior lender cause us to seek external financing from the equity or credit markets, which given our market capitalization and potential market conditions may not be available on commercially reasonable terms, if at all.

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

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
October 1 - 31, 2019		—	$	—		—		—
November 1 - 30, 2019		110,509		5.14		110,509		—
December 1 - 31, 2019		79,049		5.47		79,049		—
January 1 - 31, 2020		—		—		—		—
February 1 - 29, 2020		205,016		4.71		205,016		—
March 1 - 31, 2020		146,475		3.63		146,475		—

Total		541,049	$	4.61		541,049		—

ITEM 6. EXHIBITS

Incorporated by Reference

Exhibit

Number

Description

Filed/Furnished Herewith

Form

Period Ending

Exhibit Number

Filing Date

10.1

Credit Agreement, dated March 13, 2020, by and among Radiant Logistics, Inc., the Subsidiaries of the Borrower Party Hereto, and Bank of America, N.A., Bank of Montreal Chicago Branch, MUFG Union Bank, N.A., the Lenders Party Hereto, BofA Securities, Inc.

8-K

10.1

3/19/2020

10.2

$29,000,000 Credit Facilities Amended and Restated Loan Agreement, dated March 13, 2020, by and among Radiant Global Logistics (Canada) Inc., 2062698 Ontario Inc., Clipper Exxpress Company, Radiant Logistics, Inc., Radiant Global Logistics, Inc., Radiant Transportation Services, Inc., Radiant Logistics Partners LLC, Adcom Express, Inc., DBA Distribution Services, Inc., International Freight Systems (of Oregon), Inc., Radiant Off-Shore Holdings LLC, Green Acquisition Company, Inc., On Time Express, Inc., Radiant Global Logistics (CA), Inc., Radiant Trade Services, Inc., Service By Air, Inc., Radiant Customs Services, Inc., and Fiera Private Debt Fund IV LP

8-K

10.2

3/19/2020

10.3

$10,000,000 Credit Facility Amended and Restated Loan Agreement, dated March 13, 2020, by and among Radiant Global Logistics (Canada) Inc. and 2062698 Ontario Inc., Clipper Exxpress Company, Radiant Logistics, Inc., Radiant Global Logistics, Inc., Radiant Transportation Services, Inc., Radiant Logistics Partners LLC, Adcom Express, Inc., DBA Distribution Services, Inc., International Freight Systems (of Oregon), Inc., Radiant Off-Shore Holdings LLC, Green Acquisition Company, Inc., On Time Express, Inc., Radiant Global Logistics (CA), Inc., Radiant Trade Services, Inc., Service By Air, Inc., Radiant Customs Services, Inc., Highways & Skyways, Inc., and Fiera Private Debt Fund V LP

8-K

10.3

3/19/2020

10.4

First Lien Pari Passu Intercreditor Agreement, dated as of March 13, 2020, by and among Bank of America, M.A., Fiera Private Debt Fund IV LP and Fiera Private Debt Fund V LP, and acknowledged and agreed to by Radiant Logistics, Inc.

8-K

10.4

3/19/2020

31.1

Certification by Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification by Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification by the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance

Incorporated by Reference

Exhibit

Number

Description

Filed/Furnished Herewith

Form

Period Ending

Exhibit Number

Filing Date

101.SCH

Inline XBRL Taxonomy Extension Schema

101.CAL

Inline XBRL Taxonomy Extension Calculation

101.DEF

Inline XBRL Taxonomy Extension Definition

101.LAB

Inline XBRL Taxonomy Extension Label

101.PRE

Inline XBRL Taxonomy Extension Presentation

104

Cover Page Interactive Data (embedded within the Inline XBRL document)

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.

		RADIANT LOGISTICS, INC.

Date: May 11, 2020		/s/ Bohn H. Crain
		Bohn H. Crain
		Chief Executive Officer
		(Principal Executive Officer)

Date: May 11, 2020		/s/ Todd E. Macomber
		Todd E. Macomber
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)