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The following constitutes Amendment No. 1 (“Amendment No. 1”) to the Schedule 13D filed with the Securities and Exchange Commission (“SEC”) by Prescott Group Capital Management, L.L.C., an Oklahoma limited liability company (“Prescott Capital”), Prescott Group Aggressive Small Cap, L.P., an Oklahoma limited partnership (“Prescott Small Cap”), Prescott Group Aggressive Small Cap II, L.P., an Oklahoma limited partnership (“Prescott Small Cap II”, and, together with Prescott Small Cap, the “Small Cap Funds”), Prescott Group Aggressive Small Cap Master Fund, G.P., an Oklahoma general partnership (“Master Fund”) and Phil Frohlich, the principal of Prescott Capital, relating to Common Stock, par value $0.0001 per share (the “Common Stock”), of Performant Financial Corporation, a Delaware corporation (the “Issuer”) on March 26, 2020.

This Amendment No. 1 relates to shares of Common Stock of the Issuer held in the account of the Master Fund, of which the Small Cap Funds are general partners. Prescott Capital serves as the general partner and investment manager of the Small Cap Funds and may direct the Small Cap Funds, the general partners of the Master Fund, to direct the vote and disposition of the 12,545,261 shares of Common Stock held by the Master Fund. As the principal of Prescott Capital, Mr. Frohlich may direct the vote and disposition of the 12,545,261 shares of Common Stock held by the Master Fund.

All capitalized terms contained herein but not otherwise defined shall have the meanings ascribed to such terms in the Schedule 13D. Information given in response to each item shall be deemed incorporated by reference in all other items, as applicable.

Item 4 of Schedule 13D is supplemented and superseded, as the case may be, as follows:

This Amendment No. 1 is being filed to report that on October 15, 2020, Prescott Group Capital Management, L.L.C. entered into an amendment to a confidentiality agreement with the Issuer (the “Amended Agreement”).  The Amended Agreement permits certain representatives of the Reporting Persons to attend portions of the meetings of the Board of Directors of the Issuer (“Board”) as observers.  In addition, the Amended Agreement places certain “standstill” obligations (the “Standstill”) on the Reporting Persons for a period of 12 months from the date of the Amended Agreement.  Pursuant to the Standstill, unless specifically invited in writing by the Board, the Reporting Persons agreed not to:  (i) acquire, offer or propose to acquire, solicit an offer to sell or agree to acquire, alone or in concert with others, any direct or indirect beneficial interest in any voting securities of the Issuer or any rights, warrants or options to acquire, or securities convertible into or exchangeable for voting securities of the Issuer; (ii) make, or in any way participate in, any solicitation of proxies of the Issuer or influence the vote of any Issuer securities; (iii) form, join or participate in a “group” with respect to voting securities of the Issuer; (iv) acquire, offer to acquire or agree to acquire, alone or in concert with others, any assets of the Issuer or any of its subsidiaries or options to acquire assets of the Issuer or any of its subsidiaries except in the ordinary course of business; (v) arrange, or in any way participate, directly or indirectly, in any financing for the purchase of any voting securities or securities convertible or exchangeable into or exercisable for any voting securities of the Issuer or assets of the Issuer or any of its subsidiaries; (vi) propose, either alone or in concert with others, to the Issuer or any of its affiliates or any of their respective shareholders or unitholders any merger, business combination, consolidation, sale, restructuring, reorganization, recapitalization or other transaction involving the Issuer or otherwise seek, alone or in concert with others, to control, change or influence the management of the Board or nominate any person as a director who is not nominated by the then incumbent directors, or propose any matter to be voted upon by the shareholders of the Issuer or any of its affiliates; (vii) make any request or proposal to amend, waive or terminate any provisions of the Standstill; or (viii) announce an intention to do, or enter into any arrangement or understanding with others to do, any of the actions restricted or prohibited by the Standstill.  The Standstill would also terminate if the Issuer enters into a definitive agreement pursuant to which any person or group would acquire beneficial ownership of a majority of the Issuer’s outstanding voting securities or all or a majority of the Issuer’s assets or the Issuer announces its intention to enter into such a definitive agreement with any person or group.

The Amended Agreement terminates six months following the date of the last Board meeting attended by a representative of the Reporting Persons as an observer or earlier upon the occurrence of certain customary termination events for confidentiality agreements.

The Reporting Persons intend to review their investment in the Issuer on a continuing basis and may from time to time and at any time in the future depending on various factors, including, without limitation, the Issuer’s financial position and strategic direction, actions taken by the Issuer’s Board, price levels of the Issuer’s securities, other investment opportunities available to the Reporting Persons, conditions in the securities market and general economic and industry conditions, take such actions with respect to the investment in the Issuer as they deem appropriate. These actions may include: (i) acquiring additional shares of Common Stock and/or other equity, debt, notes, other securities, or derivative or other instruments that are based upon or relate to the value of securities of the Issuer (collectively, “Securities”) in the open market or otherwise; (ii) disposing of any or all of their Securities in the open market or otherwise; (iii) engaging in any hedging or similar transactions with respect to the Securities; or (iv) proposing or considering one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D.

(a) and (b) Items 7 through 11 and 13 of each of the cover pages of this Schedule 13D are incorporated herein by reference.  Such information is based on 54,711,484 shares of Common Stock outstanding as of August 11, 2020, as reported in the Issuer’s Form 10-Q filed with the Securities and Exchange Commission on August 12, 2020.

As of October 26, 2020, the Master Fund directly held and beneficially owned 12,545,261 shares of Common Stock, representing approximately 22.9% of the outstanding Common Stock.  As general partners of the Master Fund, the Small Cap Funds may be deemed to beneficially own the shares of Common Stock held by the Master Fund.  As the general partner of the Small Cap Funds, Prescott Capital may also be deemed to beneficially own the shares of Common Stock held by the Master Fund.  As managing member of Prescott Capital, Phil Frohlich may be deemed to beneficially own the shares of Common Stock held by the Master Fund.

The filing of this statement on Schedule 13D shall not be construed as admission that any of Prescott Capital, the Small Cap Funds or Mr. Frohlich is for the purposes of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, the beneficial owner of any of the 12,545,261 shares of Common Stock held by the Master Fund and pursuant to Rule 13d-4, Prescott Capital, the Small Cap Funds and Mr. Frohlich disclaim all such beneficial ownership.

(c) There have been no transactions by the Reporting Persons in the class of securities reported on that were effected within the past 60 days.

(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the shares of Common Stock.

(e) Not applicable.

Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

The information in Item 4 is incorporated herein by reference.

After reasonable inquiry and to the best of their knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated:  October 26, 2020

Prescott Group Capital Management, L.L.C.

By:  /s/ Phil Frohlich

                                                                                              Phil Frohlich, Managing Member

Prescott Group Aggressive Small Cap, L.P.

By:   Prescott Group Capital Management, L.L.C., its general partner

By:   /s/ Phil Frohlich

                                                                                                Phil Frohlich, Managing Member

Prescott Group Aggressive Small Cap II, L.P.

By:   Prescott Group Capital Management, L.L.C., its general partner

By:   /s/ Phil Frohlich

                                                                                                Phil Frohlich, Managing Member

Prescott Group Aggressive Small Cap Master Fund, G.P.

By:  Prescott Group Aggressive Small Cap, L.P., general partner

By:  Prescott Group Aggressive Small Cap II, L.P., general partner

By:   /s/ Phil Frohlich

Phil Frohlich

By:   /s/ Phil Frohlich

                                                                                                Phil Frohlich