UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
☑☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 20172020
or

☐◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to _____

Commission File Number 1-8601

CreditRiskMonitor.com, Inc.
(Exact name of registrant as specified in its charter)

Nevada
 
36-2972588
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

704 Executive Boulevard, Suite A  
Valley Cottage, New York
 
10989
(Address of principal executive offices) (Zip (Zip Code)

Registrant’s telephone number, including area code: (845) 230-3000

Securities registered under Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered
NoneN/AN/A

Securities registered under Section 12(g) of the Act:

Common Stock $.01 Par Value
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.  Yes ☐  No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes ☐  No ☑

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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files).   Yes ☑    No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12-b-212b‑2 of the Exchange Act. (Check one):

 
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 pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☑

The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, 20172020 was $9,207,777.$6,327,730. The Company’s common stock is traded on the OTC Markets. There were 10,722,401 shares of common stock $.01 par value outstanding as of March 5, 2018.25, 2021.

Documents incorporated by reference: None

PART I

ITEM 1.BUSINESS

In addition to historical information, the following discussion of the Company’s business contains forward-looking statements. These forward-looking statements involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to, those discussed in the sections in this Annual Report on Form 10-K entitled “The CreditRiskMonitor Business”, “The Company’s Goals”, “Marketing and Sales”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and “Risks and Other Considerations”. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. CreditRiskMonitor.com, Inc. (the “Company” or “CreditRiskMonitor”) undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors described in this document as well as in other documents the Company files from time to time with the Securities and Exchange Commission, including Quarterly Reports on Form 10-Q to be filed by the Company in fiscal year 2018.

Overview

CreditRiskMonitor was organized in Nevada in February 1977 and was engaged in the development and sale of nutritional food products from 1982 until October 22, 1993, when it sold substantially all of its assets, as previously reported. Effective January 19, 1999, the Company acquired the assets of the CreditRisk Monitor credit information service (“CM Service”) from Market Guide Inc. Following the closing of the CM Service purchase, the Company commenced doing business under the name “CreditRiskMonitor.com”.

The CreditRiskMonitor Business

The overall focus of the Company’s services is on facilitating the analysis of corporate financial risk, in the context of (a) the extension of trade credit from one business to another, (b) the management by businesses of important relationships with suppliers, and/or (c) the management by businesses of significant “counter-party” (i.e., buying and selling) relationships.

CreditRiskMonitor (see our website at www.creditriskmonitor.com; the contents of our website are not incorporated in, or otherwise to be regarded as part of this Annual Report on Form 10-K) is a web-based publisher of financial information, that helps corporate credit and procurement professionals stay ahead of and manage financial risk quickly, accurately and cost effectively. Leading global companies, including more than 35% of the Fortune 1000, use CreditRiskMonitor’s timely news alerts, research and reports on public and private companies to make important risk decisions.

The Company publishes comprehensive commercial credit reports covering both public and private companies worldwide. The reports feature detailed analysis of financial statements, including ratio analysis and trend reports, and peer analyses.

To help subscribers prioritize and monitor risk, the reports offer the Company’s proprietary FRISK® and PAYCETMPAYCE® scores (measures of financial distress tied to the probability of bankruptcy, powered by crowdsourcingArtificial Intelligence including machine learning and deep neural network technology, respectively), as well as the well-known Altman Z” default scores, Moody’s Investors Service (“Moody’s”), Standard & Poor’s (“S&P”) and Fitch Ratings (“Fitch”) and DBRS, Inc. (“DBRS Morningstar”) issuer ratings. OnThe FRISK® scoring model also features aggregated sentiment inputs based on the crowdsourced usage behaviors of our subscribers, improving risk classification and accuracy, specifically lowering the false positive rate for the most risky corporations. We believe the FRISK® score, which can now predict public company bankruptcy risk with 96%1  accuracy within a 12-month period, is the only analytic featuring such inputs in the industry and is trained on our unmatched depth of usage data.

1 Claim based on back testing of the model on U.S. banks, reports include Institutional Risk Analytics (“IRA”) Counterparty Quality scorescompanies and financial data fromcontinued performance checks to validate if the Federal Financial Institutions Examination Council (“FFIEC”) Call Reports. Additionally, thescore indicated “high risk” (a score less than 5) at least 3 month prior to a subject company bankruptcy filing.

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The reports include company background information, trade payment reports, as well as public filings (i.e., suits, liens, judgments and bankruptcy information) on millions of U.S. companies.companies around the world. To keep subscribers current with changing risk conditions, the Company’s service uses email to “push” selected information to subscribers. These emails include continuously filtered news monitoring that keeps subscribers up to date on events affecting the creditworthiness of companies selected by the subscribers. Subscribers also receive alerts covering such topics as FRISK® score reports,changes, credit limit alerts, financial statement updates, SECU.S. Securities and Exchange Commission (“SEC”) filings and ratings changes. All news items are filtered to assure the stories have financial relevance.relevance and materiality.  On U.S. banks, reports include financial data from the Federal Financial Institutions Examination Council (“FFIEC”) call reports.
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CreditRiskMonitor’s service is most often purchased to review the risks of extending trade credit by a company to its corporate customers. Within a midsized or large corporation, there is often a professional whose responsibility is managing this credit (often together with managing collections of the company’s accounts receivable). CreditRiskMonitor believes that, with the long-term downsizing of corporations and the related reductions in credit departmental budgets and personnel, corporate credit professionals have to do more with less. It is also notable that trade credit decisions are often made under intense time pressure. Simultaneously, the Company believes, there has been an explosive growth in the volume of data about large businesses. Credit professionals are often faced with an overwhelming amount of available data concerning their most important customers, while the time for research and analysis is severely limited. CreditRiskMonitor’s service is designed to save them time, money and effort by prioritizing their risk and helping them automatically stay up to date as conditions change.

In a business-to-business transaction, for example the purchase and sale of $20,000 of merchandise, the seller usually will ship before the buyer pays – this is an extension of trade credit by the seller. The seller takes a financial risk extending this credit, referred to as “trade credit risk”. The buyer may pay late, causing the seller to incur increased borrowing costs; the seller may incur extra costs in attempting to collect the $20,000; or the buyer may never pay the full $20,000. Amounts unlikely to be repaid are called “bad debt”. If buyers fail to pay, the seller can suffer substantial losses (e.g., assuming the seller averages a 10% pre-tax margin it will take about $10 of sales to offset each $1 of bad debt).

Academic research has found that, in the United States, about a quarter of corporate debt is trade credit, and the size of this trade credit is roughly three times the size of bank loans. Therefore, more U.S. companies are using trade credit to finance their operations than are using loans from the banking system. Trade credit financing is typically interest-free or even offered at a discount for expedited payment in comparison to alternative sources of working capital financing such as bank or third party (hedge fund) loans, notes, and bonds.  Moreover, many corporations that are starting to show elevated risk are unable to secure bank financing due to poor performance, poor leverage ratios, or a lack of good cash flow metrics.  Finally, the need to tap trade credit financing is highest in points of distress when interest expenses are most burdensome.  CreditRiskMonitor’s crowdsourced usage behavior specifically identifies this shift in aggregate sentiment among the issuers of trade credit and therefore assists in the monitoring of the most critical situations when trade credit based working capital liquidity can dry up.  With so much trade credit being utilized out in the market, CreditRiskMonitor’s service, featuring its 96% predictive bankruptcy analytic for public companies, is emerging as a critical service in the marketplace to monitor this risk for many companies.

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There is little hard data on the size of CreditRiskMonitor’s addressable credit-risk market. The U.S. National Association of Credit Management has more than 15,000 members, but some industry observers believe the number of U.S. credit managers and other personnel performing this function is substantially greater. In addition, there are numerous U.S. based companies that do not have a full-time credit function but still require credit information. Furthermore, a market exists outside of the U.S. for information on U.S. and foreign companies.

Some of the Company’s subscribers use the service for managing the financial risk of relationships with suppliers and/or “counter-parties” with whom they both buy and sell. Strategic planning is another use of the Company’s service. In the last recession, and the current COVID-19 pandemic, risks to the “supply chain” became prominent and a renewed focus of management concern. Companies were reminded that while the financial distress of a single important customer might jeopardize a large receivable associated with that account, the financial distress of a single important supplier can shut down an entire factory and jeopardize a company’s entire revenue stream. The Company’s revenue from subscribers who have added the procurement function to their list of users, and new subscribers whose use is entirely about “supply chain”, is a small but growing percentage of total revenue.

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TheAfter its June 2020 IPO, the Dun & Bradstreet Corporation (“Dun & Bradstreet”), our major competitor, has disclosed that it generated approximately $775.9$811.1 million from its Finance & Risk Management Solutions business (i.e., credit, supply chain, and legal/regulatory information services revenue)services) in the AmericasNorth America (i.e., U.S., Canada and Latin America)Canada) for 20172020 which we believe serves a similar mix of business functions. The remaining market is extremely fragmented with numerous other vendors, notably including Experian plc and Equifax Inc. On that basis, we estimate that our revenue represents a little more than 1% of the U.S. market.

CreditRiskMonitor’s annual fixed-price subscription service represented over 99% of its fiscal 20172020 operating revenues. This annual service is sold to a diverse customer base with no single customer representing more than 2% of 20172020 operating revenues. Accordingly, the Company is not dependent on a single customer nor is the Company dependent on a few large customers, such that a loss of any one customer would have a material adverse effect on its financial condition or results of operations.

The Company has contractual agreements with its data suppliers, including IRA, Moody’s, S&PFitch  and FitchDBRS Morningstar to redistribute their information as part of our service. We also obtain financial statement and other data from Refinitiv US LLC, previously the Financial and Risk business of Thomson Reuters (Markets) LLC.LLC prior to the closing of a partnership deal between Thomson Reuters and private equity funds managed by The Blackstone Group Inc. Although we report some of this “raw” data directly on our website, the critical elements of our service – the FRISK® score, PAYCETM,® score, ratio analysis and trend reports, peer analyses, Altman Z” default scores and emails which “push” information to our subscribers – are computed by the Company using its own algorithms and weighting techniques, and are delivered in formats carefully designed for the way our subscribers prefer to use this information. Further, hundreds of subscribers and non-subscribers provide us with data from their accounts receivable systems that we aggregate and report, so subscribers can see how these firms are paying the invoices of other firms, without disclosing the specific contributors of this information.

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CreditRiskMonitor’s service is the result of management’s experience in the commercial credit industry and on-going research with respect to the information needs of corporate credit and purchasing/procurement departments. This has enabled CreditRiskMonitor to satisfy their need for a timely, efficient, low-cost credit information service. CreditRiskMonitor publishes and sells the following commercial financial analysis services:

(1)
An annual fixed-price service (the “Fundamental Service”) with unlimited usage and coverage of public and private (where available) companies, featuring multi-period spreads of financial reports and ratio analysis, as well as up-to-date financial news screened specifically for usefulness in credit evaluation. Another feature of the service is notification and delivery of this news via email, concerning only companies of interest to the subscriber. This service is supplemented with trade receivable data contributed mainly by CreditRiskMonitor’s subscribers, as well as U.S. public-record filing information (i.e., suits, liens, judgments and bankruptcy information) covering millions of public and private U.S. companies. Made available in 2011 as a part of the Fundamental Service, the IRA Counterparty Quality (“CQ”) score is a predictor of bank failure for U.S. banks.

The Fundamental Service features the Company’s proprietary credit scores, the FRISK® and PAYCETMPAYCE® scores. These proprietary scores indicates financial distress, by predicting the probability of bankruptcy within the next 12 months at public and private companies, respectively. The scorescores provide clients with a fast, consistent method for identifying those companies at greatest risk.

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i.
The FRISK® score is updated daily, based on the latest information available to the Company, and is derived from a structural statistical model back-tested using company data and bankruptcies between 2003 and 2013. This period covers 9,600 unique businesses and includes 580 bankruptcies over a period that includes the Great Recession. As of June 2016, the FRISK® score became even more predictive as we now factor in, when available, anonymous, aggregate crowd-sourced usage data from our subscribers.subscribers – the FRISK® score can now predict public company bankruptcy risk with 96% accuracy within a 12-month period. The Company believes that some of the most experienced and knowledgeable credit and risk professionals use its website every day to analyze the companies they do business with. When theythe Company’s subscribers are concerned with a risky company, they investigate thethat company more closely, in what we'vewe have found to be distinct behavioral patterns. With this anonymous, aggregate behavior included, the FRISK® score is more sensitive and accurate, moving a relatively small, but largely important segment of businesses from risky to riskier. Essentially, when credit professionals start looking more closely as a group, there'sthere is usually something to be seen. a growing concern that can result in the reduction or even elimination of trade credit extension, specifically at one of the most critical financing times for a corporation. Calculation of the FRISK® score involves preparation of data from multiple sources, the use of executable software created expressly by and owned by the Company as well as sophisticated algorithms and weighting techniques which are proprietary Company trade secrets. To its knowledge, CreditRiskMonitor is the only company currently using crowdsourcing of subscriber activity in generating a financial risk score. The Company’s website is highly structured, enabling it to track very specific patterns of use through its sophisticated and proprietary algorithms, which means the Company has been able to analyze click patterns for the past 10 years, through many financial shifts. At the end of 2017,2020, the Fundamental Service covered over 58,00057,000 public companies worldwide, totaling approximately $70.1$68 trillion in corporate revenue compared to world Gross Domestic Product (“GDP”) of $75.8$87.6 trillion. Subscribers may opt, at lower prices, for limited regional coverage, i.e., “North American Service” for coverage of just U.S., Canadian, Mexican and Caribbean companies.

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ii.
The PAYCE™PAYCE® score provides a highly accurate measure of financial stress when no financial statements are available for private companies. It utilizes payment and U.S. federal tax lien data from CreditRiskMonitor’s extensive database, analyzed with sophisticated deep neural network modeling technology to deliver a 75%70% accurate2  score on approximately 80,00090,000 private companies.companies in the United States. Unlike other payment based models, a PAYCE™PAYCE® score is only calculated when there is both a sufficient number of trade contributors (3) and trade lines (8) on a company for the analysis.

In addition, the Company sells its Credit Limit Service on an annual subscription basis. Available since 2007, this interactive service helps credit managers to manage credit line limits for their customers, in light of changes in the companies’ financial strength. This service monitors daily changes in a customized recommended credit limit for each customer and generates alert messages to subscribers as requested, so they can take immediate action when a customer’s circumstances change. This Credit Limit Service is fully integrated with the Fundamental Service, which provides analytical depth to subscribers when questions arise or more analysis is needed. It is only sold in conjunction with the Fundamental Service, for an additional fee. The fee is based, in part, on the number of companies evaluated during the annual subscription period, and includes email monitoring alerts.


(2)
Financial Statement Sourcing,statement processing, an add-on service, which provides customers flexible options to help ease their process in the collection, data entry and standardization of private company financial statements.statements, as well as providing private company FRISK® scores featuring accuracy levels in the 90%+ range2 and peer analysis to public company comparable.

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(3)
Single credit reports on any of the over 58,00057,000 companies covered in item (1) above. These reports are sold mainly via credit card and obtained via the Internet. Email alerts are not available with this single-report service.


(4)
Individual credit reports on approximately 20 million foreign public and private companies. These reports are purchased by CreditRiskMonitor through affiliationsan affiliation with a third-party supplierssupplier and sold to CreditRiskMonitor subscribers.

2Claim based on back testing of the model on U.S. companies and continued performance checks to validate if the score indicated “high risk” (a score less than 5) at least 3 month prior to a subject company bankruptcy filing.

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The viability and potential of CreditRiskMonitor’s business is made possible by the following characteristics:

·
Low price. The prices of CreditRiskMonitor’s services are low compared to a subscriber’s possible losses from not getting paid, and are low compared to the cost of most competitive credit report products.

·
Non-cyclical. As economic growth slows, general corporate credit risk usually increases and the credit manager’s function rises in importance and complexity. Additionally, products that allow credit managers to perform their jobs more efficiently and cost effectively, compared to competitive services, should gain market share in most business environments and especially during a downturn. In a contracting business environment, many companies face increasing price competition which should accelerate their shift to lower cost technologies and providers, such as CreditRiskMonitor. CreditRiskMonitor’s business and revenues have continued to grow as world economic growth slowed or declined. Over the last ten years the issuance of corporate “junk bonds” and other debt by public companies and public debt by private companies (LBO’s, etc.), and the development of credit instruments to hedge default and interest rate risk (i.e., credit derivatives) has increased dramatically. It is difficult to get a complete or totally accurate number of the totals, but according to the Bank for International Settlements, as of June 2017 the total “notional” value of Over the Counter Credit Default Swap Derivatives was $12.7 trillion. This was down from the peak value of $58.2 trillion at the end of 2007 and from $24.3 trillion at the end of 2013. To put this in perspective, in 2016 the world GDP was $75.8 trillion, and the market value of all worldwide domestic equity at December 31, 2017 was approximately $80.8
Non-cyclical. As economic growth slows, general corporate credit risk usually increases and the credit manager’s function rises in importance and complexity. Additionally, products that allow credit managers to perform their jobs more efficiently and cost effectively, compared to competitive services, should gain market share in most business environments and especially during a downturn. In a contracting business environment, many companies face increasing price competition which should accelerate their shift to lower cost technologies and providers, such as CreditRiskMonitor. CreditRiskMonitor’s business and revenues have continued to grow as world economic growth slowed or declined. Over the last ten years the issuance of corporate “junk bonds” and other debt by public companies and public debt by private companies (LBO’s, etc.), and the development of credit instruments to hedge default and interest rate risk (i.e., credit derivatives) has increased dramatically. It is difficult to get a complete or totally accurate number of the totals, but according to the Bank for International Settlements, as of June 2020 the total “notional” value of Over-the-Counter Credit Default Swap Derivatives was $8.8 trillion. This was down from the peak value of $61.2 trillion at the end of 2007 and from $21.1 trillion at the end of 2013. To put this in perspective, in 2019 the world GDP was $87.8 trillion, and the market value of all worldwide domestic equity at December 31, 2020 was approximately $95 trillion. Thus, publicly listed companies and private companies with public debt have a vulnerability to business cycle contraction and the attendant market risks for interest rates and stock markets. Large over-the-counter debt and generally high market uncertainty indicate continued high risk and complexity extending commercial trade credit to many companies, and puts a premium on the speed and analytic strength of CreditRiskMonitor’s service.

·
Recurring revenue stream. The recurring annual revenue stream of its subscription fee model gives the Company stability not found in a one-time sale product-based company.

·
Profit multiplier. Some of the Company’s basic costs are being reduced. On a broad generic basis, the prices of computer hardware, software and telecommunications have been coming down for all buyers, including CreditRiskMonitor. In addition, CreditRiskMonitor has automated a significant amount of the processes used to create and deliver its service; therefore, its production costs, apart from the development cost of enhancing and upgrading the Company’s website, are relatively stable over a wide range of increasing revenue. Offsetting these cost reductions is the cost of increasing the data content of CreditRiskMonitor’s services if the Company chooses to increase content and not raise its prices to cover these additional costs.

5Self-financing. CreditRiskMonitor’s business has no inventory, manufacturing or warehouse facilities, and payment for the subscription service is made early in the subscription cycle. Thus, the Company’s business is characterized by low capital-intensity, and yet it is a business capable of generating high margins and sufficient positive cash flow to grow the business organically with little need for external capital.

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·
Self-financing. CreditRiskMonitor’s business has no inventory, manufacturing or warehouse facilities, and payment for the subscription service is made early in the subscription cycle. Thus, the Company’s business is characterized by low capital-intensity, and yet it is a business capable of generating high margins and sufficient positive cash flow to grow the business organically with little need for external capital.
Management. CreditRiskMonitor has in-place an experienced management team with proven talent in business credit evaluation systems and Internet development. The Company’s senior management team has an average tenure of over 15 years.

·
Management. CreditRiskMonitor has in-place an experienced management team with proven talent in business credit evaluation systems and Internet development.

The Company’s Goals

·
Growth in U.S. market share. Faced with a dominant U.S. competitor, Dun & Bradstreet, as well as several other larger competitors, the Company’s primary goal is to gain market share. The Company believes that many potential customers are unaware of its service, while many others who are aware of CreditRiskMonitor have not evaluated its service.

·
International penetration. Foreign companies doing business within the U.S. or other foreign countries may have the same need as domestic companies for CreditRiskMonitor’s credit analysis of U.S. and foreign companies. Internationally, the Internet provides a mechanism for rapid and inexpensive marketing and distribution of CreditRiskMonitor’s service.

·
Broaden the services supplied
Broaden the services supplied.. Revenue per subscriber may increase over time as the Company adds functionality and content. Also, revenue per client should increase over time as the Company sells additional passwords (upsell) and services (cross sell) to existing clients.

·
Lowest cost provider. CreditRiskMonitor’s sourcing, analysis and preparation of data into a usable form is highly automated. CreditRiskMonitor delivers all of its information to customers via the Internet and there is automation between the sourcing of data and delivery of a company credit report to a subscriber. Because of this automation, CreditRiskMonitor’s production costs are relatively stable over a wide range of increasing revenue. Management believes CreditRiskMonitor’s cost structure is one of the lowest in its industry.
Lowest cost provider. CreditRiskMonitor’s sourcing, analysis and preparation of data into a usable form is highly automated. CreditRiskMonitor delivers all of its information to customers via the Internet and there is automation between the sourcing of data and delivery of a company credit report to a subscriber. Because of this automation, CreditRiskMonitor’s production costs are relatively stable over a wide range of increasing revenue. Management believes CreditRiskMonitor’s cost structure is one of the lowest in its industry while maintaining a higher client service level.

·
High margins and return on investment. The Company foresees declining unit costs in some important expense areas, such as computer and communication costs, which should increase net profits from its subscription income stream. The Company has lower sales expenses for customer renewals than for new sales, and the Company expects that its renewal revenue will continue to grow to be a larger share of total revenue each year. All these naturally occurring unit cost reductions will be in addition to the cost reductions achieved through servicing more accounts over the Company’s in-place fixed costs.

Marketing and Sales

To gain market share for the Company’s service, it will continue to use the Internet (at our website www.creditriskmonitor.com) as the primary mechanism for demonstrating and distributing its service. To inform potential subscribers about its service, CreditRiskMonitor uses a combination of telephone sales, Internet demonstration, and inbound and outbound marketing, including but not limited to digital strategies, media/PR outreach, trade show representation and speaking engagements before credit groups and associations.

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Value Proposition

The Company’s fundamental value proposition is that it creates and sells high quality, industry leading accuracy-level commercial credit reports that help busy risk professionals stay ahead of financial risk quickly, easily and accurately,precisely, at a competitive cost significantly below that of reportsto those from the leading provider (price comparison as of January 26, 2018).provider. Because Dun & Bradstreet has the largest share of the commercial credit market, their flagship product, DNBi, is the standard by which that market measures both quality and price. The Company’s research shows that its customers overwhelmingly agree that CreditRiskMonitor saves them time, helps them to make better credit decisions, and represents a significant value for the price paid compared to competitive services.

The operational strategy CreditRiskMonitor follows to deliver on its value proposition is straightforward. CreditRiskMonitor became (and remains) one of the industry’s lowest cost producers of high quality, accurate commercial credit information by continuously collecting data from a wide variety of sources and employing sophisticated proprietary computer algorithms to process that data into an extensive database of valuable reports on companies. Highly automated operations add to reliability and consistency, while limiting costs. The Company employs a small number of analysts who selectively review data at critical points in its process to further enhance the quality of its products and their relevance to credit professionals.

CreditRiskMonitor employs several different selling strategies to deliver this value to different customer segments:


·•
Credit professionals need to save time, when analyzing their most important customers and suppliers, and the CreditRiskMonitor service provides this critical benefit. CreditRiskMonitor believes that its reports and monitoring of public companies, having aggregate revenues of approximately $70.1$68 trillion (compared to world GDP of $75.8$87.6 trillion in 2016)2019), and private companies, are superior in this way to competitive products or services in that the CreditRiskMonitor service provides public and private company financial information in greater depth and better analytical efficiency. It also includes timely email alerts enabling credit professionals to easily stay on top of financial developments at their customers, without the clutter of non-financial news prevalent at other news services. Finally, the proprietary FRISK® and PAYCETMPAYCE® scores, ratings from Moody’s, S&PFitch and Fitch, Counterparty Quality scores from IRA,DBRS Morningstar, the Altman Z” scores and the trade payment reports delivered by the Company’s service enable further efficiency by focusing each subscriber’s attention on only those companies showing financial weakness. The accuracy of our proprietary FRISK® score, powered by the crowd-sourced usage data from our subscribers, has provedproven to be a unique selling point.
For low-volume customers, CreditRiskMonitor sells single commercial credit reports for a flat price of $250 per report, using credit card transactions via the Internet.

·For low-volume customers, CreditRiskMonitor sells single commercial credit reports for a flat price of $49.95 per report, using credit card transactions via the Internet.
Risks Related to Information Systems Security

The Company’s information systems, and those of its third-party service providers and vendors, are vulnerable to an increasing threat of continually evolving cybersecurity risks. These risks may take the form of malware, computer viruses, cyber threats, extortion, employee error, malfeasance, system errors or other types of risks, and may occur from inside or outside of our organization. Cybersecurity risk is increasingly difficult to identify and quantify and cannot be fully mitigated because of the rapid evolving nature of the threats, targets and consequences. Additionally, unauthorized parties may attempt to gain access to these systems or our information through fraud or other means of deceiving our third-party service providers, employees or vendors. The Company’s operations depend, in part, on how well it and its suppliers protect networks, equipment, information technology (“IT”) systems and software against damage from a number of threats. The Company has entered into agreements with third parties for hardware, software, telecommunications and other services in connection with its operations. The Company’s operations depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software. However, if the Company is unable or delayed in maintaining, upgrading or replacing its IT systems and software, the risk of a cybersecurity incident could materially increase. Any of these and other events could result in information system failures, delays and/or increases in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact the Company’s reputation and results of operations.

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In addition, targeted attacks on the Company’s systems (or on systems of third parties that it relies on), failure or non-availability of a key IT system or a breach of security measures designed to protect its IT systems could result in disruptions to its operations through delays or the corruption and destructions of its data, property damage, loss of confidential information or financial or reputational risks. As the threat landscape is ever-changing, the Company must make continuous mitigation efforts, including: risk prioritized controls to protect against known and emerging threats; tools to provide automated monitoring and alerting; frequent employee training; and backup and recovery systems to restore systems and return to normal operations. However, there can be no assurance that the Company’s ability to monitor for or mitigate cybersecurity risks will be fully effective, and the Company may fail to identify cybersecurity breaches or discover them in a timely way.

Any significant compromise or breach of the Company’s data security, whether external or internal, or misuse of data, could result in significant costs, lost sales, fines and lawsuits, as well as damage to its reputation. In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs. As cyber threats continue to evolve, the Company may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

Employees

As of March 5, 2018,25, 2021 the Company had 95approximately 100 full-time and 7 part-time employees. None of the Company’s employees are covered by a collective bargaining agreement. The Company believes its relations with its employees to be satisfactory and has suffered no interruption in operations.
7

The Company established a 401(k) Plan covering all employees effective January 1, 2000 that provides for discretionary Company contributions.  Employees are eligible to participate in the 401(k) plan if they are over the age of 21 and after completing one month of service with the company after their hire date.  The Company has no other retirement, pension, profit sharing or similar program in effect for its employees. The Company adopted a stock optionlong-term incentive plan in 20092020 that covercovers its employees.

Available Information

Copies of the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), are available free of charge on its website (www.creditriskmonitor.com) as soon as reasonably practicable after the Company electronically files the material with or furnishes it to the SEC. Printed copies of these documents may be requested, free of charge, by contacting the Corporate Secretary, CreditRiskMonitor.com, Inc., 704 Executive Boulevard, Valley Cottage, NY 10989. Additionally, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Information on the Company’s website or linked to its website is not incorporated by reference into this Annual Report.

9
ITEM 2.PROPERTIES.

The Company does not own any real property. The Company’s principal office is located in approximately 12,30016,900 square feet of leased space in an industrial warehouse complex located in Valley Cottage, New York. The lease expires on July 31, 20202025 and provides for an aggregate total monthly cost of $14,400,approximately $21,600, subject to annual increases, plus an allocated portion of real estate taxes insurance and common area maintenance.insurance.

ITEM 3.LEGAL PROCEEDINGS.

Neither the Company nor its property is a party to or the subject of a pending legal proceeding.

ITEM 4.MINE SAFETY DISCLOSURES.

Not applicable.

810
PART II

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

The Company’s Common Stock is listedtraded on the OTC Markets OTCQX U.S. Prior to May 11, 2017under the Company was listed on the OTC Markets OTCQX U.S. Premier (“Premier”), which is the highest tier of the OTC market, reserved exclusively for companies meeting the highest financial standards and that have undergone a thorough qualitative review. The Company’s listing was downgraded on May 11, 2017 as the Company did not meet the market capitalization standard for maintaining continued eligibility of Premier status.symbol “CRMZ”. The following table sets forth the high and low closing bid quotations reported on the OTCQX or Premier, as applicable, for each calendar quarter of 20162019 and 2017.2020. These quotations reflect inter-dealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

  High Bid  Low Bid 
       
2017      
First Quarter $2.61  $2.00 
Second Quarter $2.25  $2.00 
Third Quarter $2.00  $1.01 
Fourth Quarter $2.02  $1.46 
         
2016        
First Quarter $3.75  $2.30 
Second Quarter $3.65  $2.00 
Third Quarter $3.34  $2.20 
Fourth Quarter $3.00  $2.25 
   High Bid  Low Bid 
2019
      
 
First Quarter
 
$
2.05
  
$
1.60
 
 
Second Quarter
 
$
1.75
  
$
1.20
 
 
Third Quarter
 
$
1.60
  
$
1.20
 
 
Fourth Quarter
 
$
1.60
  
$
1.23
 
          
2020
        
 
First Quarter
 
$
1.62
  
$
1.23
 
 
Second Quarter
 
$
1.55
  
$
1.40
 
 
Third Quarter
 
$
2.30
  
$
1.40
 
 
Fourth Quarter
 
$
2.47
  
$
2.10
 

On March 5, 2018,18, 2021, there were approximately 200170 registered holders of the Company’s Common Stock based on information provided by our transfer agent. This number does not reflect the number of individuals or institutional investors holding stock in nominee name through banks, brokerage firms, and others.

In fiscal 2017,2020, the Company did not declare a cash dividend; in fiscal 2019, the Company paid a cash dividend of $0.05 per share on its Common Stock on December 11, 2017; in fiscal 2016, the Company paid a cash dividend of $0.05 per share on its Common Stock on December 6, 2016.2, 2019.

The Company did not repurchase any of its common stock during the fourth quarter of 2017.2020.

ITEM 6.SELECTED FINANCIAL DATA.

Not applicable.

911
ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Business Environment

Our customers operateThe continuing uncertainty in the global marketplace.worldwide financial system has negatively impacted general business conditions. It is possible that a weakened economy could adversely affect our customers’clients’ need for credit information, or even their solvency, but we cannot predict whether or to what extent this will occur.

Our strategic priorities and plans for 20182021 are to continue to build on the improvement initiatives underway to achieve sustainable, profitable growth. GlobalHowever, the COVID-19 pandemic has spread throughout the world, including the U.S. While the Company believes it meets the criteria of an essential business under the guidelines issued by New York State, the Company has elected to voluntarily close in-office personnel functions for the safety of our employees. Only a limited number of IT and other personnel are periodically visiting our office to ensure the integrity of our computer network, retrieve physical files, and any other function that cannot be done remotely. This has allowed our employee base to work remotely and the Company’s operations to continue normally. Nevertheless, the impact the pandemic will have on the Company’s operations is unknown at this time. The Company may face supply chain disruptions, loss of contracts and/or customers, loss of human capital or personnel at the Company, customer credit risk, and general economic calamities. Accordingly, these global market conditions however, maywill affect the level and timing of resources deployed in pursuit of these initiatives in 2018.2021.

Financial Condition, Liquidity and Capital Resources

The following table presents selected financial information and statistics as of December 31, 20172020 and 20162019 (dollars in thousands):

 2017  2016  2020  2019 
Cash and cash equivalents $8,735  $9,222  $10,303  $8,276 
Accounts receivable, net $2,140  $2,091  $2,557  $2,288 
Working capital $1,697  $2,332  $848  $832 
Cash ratio  0.90   0.97  0.79  0.80 
Quick ratio  1.12   1.19  0.98  1.03 
Current ratio  1.17   1.25  1.06  1.08 

The Company has invested some of its excess cash in cash equivalents.equivalents and available for sale securities. All highly liquid investments with an original maturity of three months or less when purchased are considered cash equivalents, while those with maturities in excess of three months when purchased are reflected as marketable securities.

As of December 31, 2017,2020, the Company had $8.74$10.76 million in available for sale securities & cash and cash equivalents, a decreasean increase of approximately $487,000$2.49 million from December 31, 2016. The reason for this decrease2019. This increase was thatprimarily the netresult of cash generatedprovided by financing activities through the SBA’s PPP loan program of approximately $1.56 million. In addition, cash provided by operating activities for the last 12 months ($248,000)of approximately $1.21 million was lessgreater than the cash used to acquire property and equipment and available for the purchase of fixed assets ($199,000) and the dividend paid to stockholders ($536,000).sale securities totaling approximately $746,000.

The Company’s cash generated by operating activities exceeded its net income primarily due to non-cash expenses (e.g., depreciation and stock-based compensation). Additionally, the main component of current liabilities at December 31, 20172020 is deferredunexpired subscription revenue of $8.30$9.65 million, which should not require significant future cash outlay, as this is annual reoccurring revenue, other than the cost of preparation and delivery of the applicable commercial credit reports, which cost much less than the deferredunexpired subscription revenue shown. The deferredUnexpired subscription revenue is recognized as income over the subscription term, which approximates 12 months.

12
The Company has no bank lines of credit or other currently available credit sources.

A major component of short-term liabilities is the Company’s bank loan from the SBA for the PPP program of $1.56 million. The loan and accrued interest is forgivable after eight weeks so long as the Company uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its employment levels.  In accordance with the requirements of the CARES Act, the Company has used the entire proceeds from the PPP Loan for eligible payroll, benefits, rent, utility costs, and maintained its employment levels.  If the Company does not apply for forgiveness, the current portion of this loan, including interest that is due within the next 12 months is $1,314,848.  The lender of this loan started accepting applications for forgiveness at the beginning of 2021.

TheGiven the current COVID-19 pandemic, there is no guarantee that our current business levels can be sustained or that our subscriber base will renew their service(s) at similar spend levels in the future. To ensure we have the financial resources to meet our commitments to our employees and service providers in the upcoming months, and to avoid lay-offs or other cost cutting measures, the Company believes thatapplied for and received a loan under the Paycheck Protection Program.  See Item 9C below. With the proceeds of this loan, along with its existing balancesbalance of cash and cash equivalents and cash generated from operations, will bethe Company expects to have sufficient liquidity to satisfy its currently anticipated cash requirements through at leastcontinue for the next 12 months and the foreseeable future. Moreover, the Company has been cash flow positive for 8 of the last 10 fiscal years and has no long-term debt. However, the Company’s liquidity could be negatively affected if it were to make an acquisition or if it were to license products or technologies, which may necessitate the need to raise additional capital through future debt or equity financing. Additional financing may not be available at all or on terms favorable to the Company.
10
As described more fully in Note 7 of the Notes to Financial Statements, at December 31, 2017 the Company had certain cash obligations, which are due as follows:months.

  Total  
Less than
1 Year
  1-3 Years  4-5 Years  
More than
5 Years
 
                
Operating leases $467,862  $176,944  $290,918  $-  $- 
                     
Total $467,862  $176,944  $290,918  $-  $- 

Off-Balance Sheet Arrangements

The Company is not a party to any other off-balance sheet arrangements.

Results of Operations

20172020 vs. 20162019

  Year Ended December 31, 
  2020
  2019
 
  Amount  
% of Total
Revenue
  Amount  
% of Total
Revenue
 
Operating revenues $15,732,366   100.00% $14,501,173   100.00%
                 
Operating expenses:                
Data and product costs  6,026,464   38.31%  5,759,660   39.72%
Selling, general and administrative expenses
  9,724,182   61.81%  8,347,083   57.56%
Depreciation and amortization  219,847   1.40%  207,224   1.43%
Total operating expenses  15,970,493   101.51%  14,313,967   98.71%
                 
(Loss) income from operations  (238,127)  (1.51%)  187,206   1.29%
Other income, net  26,774   0.17%  155,852   1.08%
                 
(Loss) income before income taxes  (211,353)  (1.34%)  343,058   2.37%
Benefit from (provision for) income taxes  163,925   1.04%  (125,354)  (0.87%)
                 
Net (loss) income $(47,428)  (0.30%) $217,704   1.50%

  Year Ended December 31, 
  2017  2016 
  Amount  
% of Total
Revenue
  Amount  
% of Total
Revenue
 
 
             
Operating revenues $13,385,068   100.00% $12,814,390   100.00%
                 
Operating expenses:                
Data and product costs  5,426,779   40.54%  4,944,053   38.58%
Selling, general and administrative expenses  8,044,256   60.10%  7,495,742   58.50%
Depreciation and amortization  191,960   1.43%  200,136   1.56%
Total operating expenses  13,662,995   102.07%  12,639,931   98.64%
                 
Income (loss) from operations  (277,927)  (2.07%)  174,459   1.36%
Other income, net  47,216   0.35%  27,183   0.21%
                 
Income (loss) before income taxes  (230,711)  (1.72%)  201,642   1.57%
Benefit (provision) for income taxes  242,781   1.81%  (149,199)  (1.16
%)
                 
Net income $12,070   0.09% $52,443   0.41%

13
Operating revenues increased $570,678,approximately $1.2 million, or 4%8%, for fiscal 20172020 over the prior year. This overall revenue growth resulted from an increase in Internetinternet subscription service revenue, attributable to increased sales to new and existing subscribers.

Data and product costs increased $482,726,approximately $267,000, or 10%5%, for fiscal 2017.2020 compared to fiscal 2019. This increase was due primarily due to (1) higher salary and related employee benefits as the Company increased its headcount, as well asdue to pay raises to staff, and (2) higher data costs of third-party content, due to price increases instituted by some of certain critical feeds.the Company’s major suppliers.

Selling, general and administrative expenses increased $548,514,approximately $1.38 million, or 7%16%, for fiscal 2017.2020 compared to fiscal 2019. This increase was due to higher salary and related employee benefits, because of a higher commission expense due to increased sales, revised methodology of accruing commissions, a new sales trainee class, maintaining employee head count, and even adding new ones. This increase was offset in part by lower marketing expenditures due to COVID related trade show cancellations and higher executive recruiting fees paid. The increase in marketing expenses was part of our 2017 plan to drive increased traffic to the Company’s website and improve customers’ experience using the website, with the hope of incremental future sales. The executive recruiting fees paid relate to the cost of staffing the Company’s marketing department.travel restrictions.

11
Depreciation and amortizationOther income decreased $8,176, or 4%,approximately $129,000 for fiscal 2017.2020 compared to fiscal 2019. This decrease was due to athe lower depreciable asset base reflectingreturn received on the continued use of certain items that have been fully depreciated.

Other income, net increased $20,033 for fiscal 2017, primarily due to higher income from cash equivalents recorded in 2017Company’s money market fund holdings compared to 2016.

The Company recorded a benefit for income taxes in 2017 as it had a pre-tax loss while it recorded a provision in 2016 as the Company had pre-tax income. Additionally, in accordance with the Tax Cuts and Jobs Act that was enacted on December 22, 2017 (“U.S. Tax Reform”), we have recorded a credit for income taxes of $220,954 in 2017 (see Note 4 to the financial statements for further details).

2016 vs. 2015

  Year Ended December 31, 
  2016  2015 
  Amount  
% of Total
Revenue
  Amount  
% of Total
Revenue
 
             
Operating revenues $12,814,390   100.00% $12,486,316   100.00%
                 
Operating expenses:                
Data and product costs  4,944,053   38.58%  4,665,360   37.37%
Selling, general and administrative expenses  7,495,742   58.50%  6,685,528   53.54%
Depreciation and amortization  200,136   1.56%  218,621   1.75%
Total operating expenses  12,639,931   98.64%  11,569,509   92.66%
                 
Income from operations  174,459   1.36%  916,807   7.34%
Other income, net  27,183   0.21%  2,344   0.02%
                 
Income before income taxes  201,642   1.57%  919,151   7.36%
Provision for income taxes  (149,199)  (1.16
%)
  (405,965)  (3.25
%)
                 
Net income $52,443   0.41% $513,186   4.11%

Operating revenues increased $328,074, or 3%, for fiscal 2016 over the prior year. This overall revenue growth resulted from an increase in Internet subscription service revenue, attributable to increased sales to new and existing subscribers, partially offset by a decrease in the Company’s third-party international credit report subscription service, attributable to lower usage by subscribers.

Data and product costs increased $278,693, or 6%, for fiscal 2016. This increase was due primarily higher salary and related employee benefits, as the Company increased its headcount.

Selling, general and administrative expenses increased $810,214, or 12%, for fiscal 2016. This increase was due to higher marketing expenditures and higher salary and related employee benefits. The increase in marketing expenses was part of our 2016 plan to drive increased traffic to the Company’s website and improve customers’ experience using the website, with the hope of incremental future sales. This is the Company’s first significant marketing campaign and it includes investment in a substantial redesign of the website, which was launched early in the second quarter.
12
Depreciation and amortization decreased $18,485, or 8%, for fiscal 2016. This decrease was due to a lower depreciable asset base reflecting the continued use of certain items that have been fully depreciated. The increase in property and equipment, net since year end is due to a deposit made at the end of the first quarter for a new telephone system that was not installed until mid-September.

Other income, net increased $24,839 for fiscal 2016, primarily due to a larger mark-to-market adjustment related to the Company’s investments recorded in 2016.

Provision for income taxes decreased $256,766 due to the Company having lower pre-tax income because of the reasons enumerated.2019.

Future Operations

The Company over time intends to expand its operations by expanding the breadth and depth of its product and service offerings and introducing new and complementary products. Gross margins attributable to new business areas may be lower than those associated with the Company’s existing business activities.

As a result of the evolving nature of the markets in which it competes and the uncertainties caused by the COVID-19 pandemic, the Company’s ability to accurately forecast its revenues, gross profits and operating expenses as a percentage of net sales is limited.limited, as the Company cannot utilize its historical subscription and renewal rates of its clients for guidance. The Company’s current and future expense levels are based largely on its investment plans and estimates of future revenues. To a large extent these costs do not vary with revenue. Sales and operating results generally depend on the Company’s ability to attract and retain customers and the volume of and timing of customer subscriptions for the Company’s services, which are difficult to forecast. The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues in relation to the Company’s planned expenditures would have an immediate adverse effect on the Company’s business, prospects, financial condition and results of operations. Further, as a strategic response to changes in the competitive environment, the Company may from time to time make certain pricing, service, marketing or acquisition decisions that could have a material adverse effect on its business, prospects, financial condition and results of operations.

Achieving greater profitability depends on the Company’s ability to generate and sustain increased revenue levels. The Company believes that its success will depend in large part on its ability to (i) increase its brand awareness, (ii) provide its customers with outstanding value, thus encouraging customer renewals, and (iii) achieve sufficient sales volume to realize economies of scale. Accordingly, the Company intends to continue to increase the size of its sales force and service staff, and to invest in product development, operating infrastructure, marketing and promotion. The Company believes that these expenditures will help it to sustain the revenue growth it has experienced over the last several years. We anticipate that sales and marketing expenses will continue to increase in dollar amount and as a percentage of revenues during 2018into 2021 and future periods as the Company continues to expand its business on a worldwide basis. Further, the Company expects that product development expenses will also continue to increase in dollar amount and may increase as a percentage of revenues in 2018into 2021 and future periods because it expects to employ more development personnel on average compared to prior periods and build the infrastructure required to support the development of new and improved products and services. However, as some these expenditures are discretionary in nature, the Company expects that the actual amounts incurred will be in line with its projections of future cash flows in order not to negatively impact its future liquidity and capital needs. There can be no assurance that the Company will be able to achieve these objectives within a meaningful time frame.

1314
The Company expects to experience fluctuations in its future quarterly operating results due to a variety of factors, some of which are outside the Company’s control. Factors that may adversely affect the Company’s quarterly operating results include, among others, (i) the short-term and long-term effects the COVID-19 outbreak and related developments will have on our customers and their ongoing businesses and how those effects may impact our sales to them, (ii) the Company’s ability to retain existing customers, attract new customers at a steady rate and maintain customer satisfaction, (iii) the Company’s ability to maintain gross margins in its existing business and in future product lines and markets, (iv) the development of new services and products by the Company and its competitors, (v) price competition, (vi) the Company’s ability to obtain products and services from its vendors, including information suppliers, on commercially reasonable terms, (vii) the Company’s ability to upgrade and develop its systems and infrastructure, and adapt to technological change, (viii) the Company’s ability to attract and retain personnel in a timely and effective manner, (ix) the Company’s ability to manage effectively its development of new business segments and markets, (x) the Company’s ability to successfully manage the integration of operations and technology of acquisitions or other business combinations, (xi) technical difficulties, system downtime or Internet brownouts, (xii) the amount and timing of operating costs and capital expenditures relating the Company’s business, operations and infrastructure, (xiii) governmental regulation and taxation policies, (xiv) disruptions in service by common carriers due to strikes or otherwise, (xv) risks of fire or other casualty, (xvi) litigation costs or other unanticipated expenses, (xvii) interest rate risks and inflationary pressures, and (xviii) general economic conditions and economic conditions specific to the Internet and online commerce.

Due to the foregoing factors, the Company believes that period-to-period comparisons of its revenues and operating results are not necessarily meaningful and should not be relied on as an indication of future performance.

Critical Accounting Policies, Estimates and Judgments

The Company’s financial statements are prepared in accordance with accounting principles that are generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and judgments 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 revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Management continually evaluates its estimates and judgments, the most critical of which are those related to:

Revenue recognition15 -- CreditRiskMonitor’s North American and worldwide service is sold on a subscription basis pursuant to customer contracts that span varying periods of time, but are generally for a period of one year. The Company initially records amounts billed as accounts receivable and defers the related revenue until persuasive evidence of an arrangement exists, fees are fixed and determinable, and collection is reasonably assured. Revenues are recognized ratably over the related subscription period. Revenue from the Company’s third-party international credit report service is recognized as information is delivered and products and services are used by customers.

Valuation of goodwill -- Goodwill is reviewed for impairment annually, or more frequently if events or changes in circumstances warrant. If the carrying value of this asset exceeds its estimated fair value, the Company will record an impairment loss to write the asset down to its estimated fair value.

Income taxes -- The Company provides for deferred income taxes resulting from temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. Deferred tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized.

Recently Issued Accounting Standards

The information set forth under Note 2 to the financial statements under the caption “Recently Issued Accounting Standards“ is incorporated herein by reference.

Risks and Other Considerations

The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties not presently known to the Company or currently deemed immaterial also may impair its business operations. If any of the risks described below actually occur, the Company’s business could be impaired.
14
From time to time, information provided by the Company or statements made by its employees, or information provided in its filings with the SEC may contain forward-looking information. Any statements contained herein or otherwise made that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes”, “expects”, “anticipates”, “plans” and similar expressions are intended to identify forward-looking statements. The Company’s actual future operating results or short-term or long-term liquidity may differ materially from those projections or statements made in such forward-looking information as a result of various risks and uncertainties, including but not limited to the following in addition to those set forth elsewhere herein or in other filings made by the Company with the SEC.

Slowing Rates of Growth and Margins. In order to continue to grow its business and maintain or increase its profit margins, the Company among other things, must maintain and increase its customer base, implement and successfully execute its business and marketing strategy and its expansion into new product markets, continue to develop and upgrade its technology and transaction-processing systems, improve its website, provide superior customer service, respond to competitive developments and attract, retain and motivate qualified personnel. There can be no assurance that the Company will be successful in addressing such risks, and the failure to do so could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Unpredictability of Future Revenues and Profits; Potential Fluctuations in Operating Results. The Company’s ability to accurately forecast its revenues, gross profits and operating expenses as a percentage of net sales is limited. The Company’s current and future expense levels are based largely on its investment plans and estimates of future revenues and to a large extent are fixed. Sales and operating results generally depend on the Company’s ability to attract and retain customers and the volume of and timing of their subscriptions for the Company’s services, which are difficult to forecast. The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues in relation to the Company’s planned expenditures would have an immediate adverse effect on the Company’s business, prospects, financial condition and results of operations. Further, as a strategic response to changes in the competitive environment, the Company may from time to time make certain pricing, service, marketing or acquisition decisions that could have a material adverse effect on its business, prospects, financial condition and results of operations.

Maintaining and improving profitability depends on the Company’s ability to generate and sustain substantially increased revenue levels. The Company believes that its success will depend in large part on its ability to (i) extend its brand position, (ii) provide its customers with outstanding value, and (iii) achieve sufficient sales volume to realize economies of scale. Accordingly, the Company intends to continue to invest in marketing and promotion, product development and technology and operating infrastructure development. There can be no assurance that the Company will be able to achieve these objectives within a meaningful time frame.

The Company expects to experience significant fluctuations in its future quarterly operating results due to a variety of factors, some of which are outside the Company’s control. Factors that may adversely affect the Company’s quarterly operating results include, among others, (i) the Company’s ability to retain existing customers, attract new customers at a steady rate and maintain customer satisfaction, (ii) the Company's ability to maintain gross margins in its existing business and in future product lines and markets, (iii) the development of new services and products by the Company and its competitors, (iv) price competition, (v) the level of use of the Internet and online services and increasing acceptance of the Internet and other online services for the purchase of products such as those offered by the Company, (vi) the Company’s ability to upgrade and develop its systems and infrastructure, (vii) the Company’s ability to attract new personnel in a timely and effective manner, (viii) the level of traffic on the Company’s website, (ix) the Company’s ability to manage effectively its development of new business segments and markets, (x) the Company’s ability to successfully manage the integration of operations and technology of acquisitions or other business combinations, (xi) technical difficulties, system downtime or Internet brownouts, (xii) the amount and timing of operating costs and capital expenditures relating to expansion of the Company’s business, operations and infrastructure, (xiii) governmental regulation and taxation policies, (xiv) disruptions in service by common carriers due to strikes or otherwise, (xv) risks of fire or other casualty, (xvi) litigation costs or other unanticipated expenses, (xvii) interest rate risks and inflationary pressures, and (xviii) general economic conditions and economic conditions specific to the Internet and online commerce.
15
Due to the foregoing factors and the Company’s limited forecasting abilities, the Company believes that period-to-period comparisons of its revenues and operating results are not necessarily meaningful and should not be relied on as an indication of future performance.

Competition. The online commerce market, particularly over the Web, is intensely competitive. The Company’s current or potential competitors include (i) companies now selling or who will be selling credit analysis data, such as Dun & Bradstreet which currently has the dominant position in the industry and the financial resources to invest much more than the Company can while withstanding substantial price competition, and (ii) a number of indirect competitors that specialize in online commerce or information or who derive a substantial portion of the revenues from online commerce, advertising or information, and who may offer competing products, and many of which possess significant brand awareness, sales volume and customer bases. The Company believes that the principal competitive factors in its market are brand recognition, selection, personalized services, convenience, price, accessibility, customer service, quality of search tools, breadth of coverage, quality of editorial and other site content and reliability and speed of delivery. Many of the Company’s competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than the Company. Certain of the Company’s competitors may be able to secure data from vendors on more favorable terms, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing and devote substantially more resources to Web site and systems development than the Company. Increased competition may result in reduced operating margins, loss of market share and a diminished brand franchise. There can be no assurance that the Company will be able to compete successfully against current and future competitors.

The Company expects that the competition in the Internet and online commerce markets will intensify in the future. For example, as various Internet market segments obtain large, loyal customer bases, participants in those segments may seek to leverage their market power to the detriment of participants in other market segments. In addition, new technologies and the expansion of existing technologies may increase the competitive pressures on the Company. Competitive pressures created by any one of the Company’s competitors, or by the Company’s competitors collectively, could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Need for Additional Financing; Risks of Default. The Company’s future liquidity and capital funding requirements will depend on numerous factors, including whether or when the Company will increase its customer base and revenues, and the costs and timing of expansion of sales, control of information costs and other expenses and competition. There can be no assurance that additional capital, if needed, will be available on terms acceptable to the Company, or at all. Furthermore, debt financing, if available, will likely include restrictive covenants, including financial maintenance covenants restricting the Company’s ability to incur additional indebtedness and to pay dividends. The failure of the Company to raise capital on acceptable terms when needed could have a material adverse effect on the Company.
16
System Development and Operation Risks. Any system interruptions that result in the unavailability of the Company’s Web site would reduce the attractiveness of the Company’s service offerings. The Company has experienced periodic system interruptions, which it believes will continue to occur from time to time. The Company will be required to add additional software and hardware and further develop and upgrade its existing technology and network infrastructure to accommodate increased traffic on its Web site resulting from increased sales volume. Any inability to do so may cause unanticipated system disruptions, slower response times, degradation in levels of customer service, impaired quality, or delays in reporting accurate financial information. There can be no assurance that the Company will be able to accurately project the rate or timing of increases, if any, in the use of its Web site or in a timely manner to effectively upgrade and expand its systems or to integrate smoothly any newly developed or purchased modules with its existing systems. Any inability to do so could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

The Company’s web servers are located at a secure offsite location. Its back office computer and communications hardware is located at a single leased facility in Valley Cottage, New York. The Company’s systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, break-ins, earthquake and similar events. The Company does not currently have redundant systems or a formal disaster recovery plan and does not have sufficient business interruption insurance to compensate it for losses that may occur. Despite the implementation of network security measures by the Company, its servers are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to interruptions, delays, loss of critical data or the inability to accept and fulfill customer orders. The occurrence of any of the foregoing events could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Management of Potential Growth. To continue to manage the expected growth of its operations and personnel, the Company will be required to improve existing and implement new operational and financial systems, procedures and controls, as well as to expand, train and manage its growing employee base. There can be no assurance that the Company's current and planned personnel, systems, procedures and controls will be adequate to support the Company’s future operations, that management will be able to hire, train, retain, motivate and manage required personnel or that Company management will be able to successfully identify, manage and exploit existing and potential market opportunities. If the Company is unable to manage growth effectively, such inability could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Limited Personnel. The Company currently has limited personnel and other resources to undertake the extensive marketing activities necessary to maintain and grow is revenues. The Company’s ability to continue to generate revenue will be dependent upon, among other things, its ability to manage an effective sales organization. The Company will need to continue to develop and expand a sales force and a marketing group with technical expertise to coordinate marketing efforts. In addition, there can be no assurance that the Company will be able to market its products effectively through an in-house sales force, independent sales representatives, through arrangements with an outside sales force, or through strategic partners.
17
Risks of New Business Areas. The Company intends to expand its operations by continuing to promote new and complementary products and by expanding the breadth and depth of its product or service offerings. Expansion of the Company’s operations in this manner will require significant additional expense and development, operations and editorial resources and could strain the Company’s management, financial and operational resources. There can be no assurance that the Company will be able to expand its operations in a cost-effective or timely manner. Furthermore, any new business launched by the Company that is not favorably received by customers could damage the Company’s reputation or the CreditRiskMonitor brand. The lack of market acceptance of such efforts or the Company’s inability to generate satisfactory revenues from such expanded services or products to offset their cost could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations. Gross margins attributable to new business areas may be lower than those associated with the Company’s existing business activities.

Risks of Business Combinations and Strategic Alliances. The Company may choose to expand its operations or market presence by entering into business combinations, investments, joint ventures or other strategic alliances with third parties. Any such transaction will be accompanied by risks commonly encountered in such transactions, which include, among others, the difficulty of assimilating the operations, technology and personnel of the combined companies, the potential disruption of the Company's ongoing business, the possible inability to retain key technical and managerial personnel, the potential inability of management to maximize the financial and strategic position of the Company through the successful integration of acquired businesses, additional expenses associated with amortization of purchased intangible assets, additional operating losses and expenses associated with the activities and expansion of acquired businesses, the maintenance of uniform standards, controls and policies and the possible impairment of relationships with existing employees and customers. There can be no assurance that the Company will be successful in overcoming these risks or any other problems encountered in connection with such business combinations, investments, joint ventures or other strategic alliances, or that such transactions will not have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Rapid Technological Change. To remain competitive, the Company must continue to enhance and improve the responsiveness, functionality and features of its services. The Internet and the online commerce industry are characterized by rapid technological change, changes in user and customer requirements and preferences, frequent new products and service introductions embodying new technologies and the emergence of new industry standards and practices that could render the Company’s existing website and proprietary technology and systems obsolete. The Company’s success will depend, in part, on its ability to license leading technologies useful in its business, enhance its existing services, develop new services and technology that address the increasingly sophisticated and varied needs of its prospective customers and respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. The continuing development of a website and other proprietary technology entails significant technical, financial and business risks. There can be no assurance that the Company will successfully implement new technologies or adapt its website, proprietary technology and transaction-processing systems to customer requirements or emerging industry standards. If the Company is unable, for technical, legal, financial or other reasons, to adapt in a timely manner in response to changing market conditions or customer requirements, such inability could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.
18
Dependence on Key Personnel. The Company’s performance is substantially dependent on the continued services and on the performance of its senior management and other key personnel. The Company does not have long-term employment agreements with any of its key personnel and maintains no “key person” life insurance policies. The loss of the services of its executive officers or other key employees could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Reliance on Certain Suppliers. The Company purchases its data and/or credit reports from a limited number of vendors under agreements having terms of 36 months or less. The Company has no longer-term contracts or arrangements with any vendor of data that guarantee the availability of data, the continuation of particular payment terms or the extension of credit. Nevertheless, the Company believes that it would be able to obtain the necessary data from other sources, at competitive prices, should it become necessary or advisable to do so. There can be no assurance, however, that the Company’s vendors will continue to supply data to the Company on current terms or that the Company will be able to establish new or extend current vendor relationships to ensure acquisition of information in a timely and efficient manner and on acceptable commercial terms. If the Company were unable to maintain or develop relationships with vendors that would allow it to obtain sufficient quantities of reliable information on acceptable commercial terms, such inability could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Risk of Expansion and Implementation of Growth Strategy. The Company’s growth and expansion have placed, and may continue to place, a strain on the Company’s management, administrative, operational, financial and technical resources and increased demands on its systems and controls. Demands on the Company’s network resources and technical staff and resources have grown rapidly with the Company’s expanding customer bases. A failure to effectively provide customer and technical support services will adversely affect the Company’s ability to attract and maintain its customer base. The Company expects to experience continued strain on its operational systems as it develops, operates and maintains its network. Expected increases in the Company’s Internet client base will produce increased demands on sales, marketing and administrative resources, its engineering and technical resources, and its customer and technical support resources. The Company believes that it will need, both in the short-term and the long-term, to hire additional sales and marketing and technical personnel as well as qualified administrative and management personnel in the accounting and finance areas to manage its financial control systems. In addition, the Company will need to hire or to train managerial and support personnel. Although the Company has hired additional personnel and upgraded certain of its systems, there can be no assurance that the Company’s administrative, operating and financial control systems, infrastructure, personnel and facilities will be adequate to support the Company’s future operations or maintain and effectively adapt to future growth.

There can be no assurance that the Company will be able to build its infrastructure, add services, expand its customer bases or implement the other features of its business strategy at the rate or to the extent presently planned, or that its business strategy will be successful. The Company’s ability to continue to grow may be affected by various factors, many of which are not within the Company’s control, including U.S. and foreign regulation of the Internet industry, competition and technological developments. The inability to continue to upgrade the networking systems or the operating and financial control systems, the inability to recruit and hire necessary personnel or the emergence of unexpected expansion difficulties could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.
19
Risks of Network Failure. The success of the Company is largely dependent on its ability to deliver high quality, uninterrupted access to its product over the Internet. Any system or network failure that causes interruptions in the Company’s Internet operations could have a material adverse effect on the business, financial condition or results of operations of the Company. The Company’s operations are dependent on its ability to successfully expand its network and integrate new and emerging technologies and equipment into its network, which are likely to increase the risk of system failure and cause unforeseen strain upon the network. The Company’s operations also are dependent on the Company’s protection of its hardware and other equipment from damage from natural disasters such as fires, floods, hurricanes, and earthquakes, or other sources of power loss, telecommunications failures or similar occurrences.

Significant or prolonged system failures could damage the reputation of the Company and result in the loss of customers. Such damage or losses could have a material adverse effect on the Company’s ability to obtain new subscribers and customers, and on the Company’s business, prospects, financial condition and results of operations.

Security Risks. Despite the implementation of network security measures by the Company, such as limiting physical and network access to its routers, its Internet access systems and information services are vulnerable to computer viruses, break-ins and similar disruptive problems caused by its customers or other Internet users. Such problems caused by third parties could lead to interruption, delays or cessation in service to the Company’s Internet customers. Furthermore, such inappropriate use of the Internet by third parties could also potentially jeopardize the security of confidential information stored in the computer systems of the Company’s customers and other parties connected to the Internet, which may deter potential subscribers. Persistent security problems continue to plague public and private data networks. Recent break-ins, “worms” and “viruses” reported in the press and otherwise have reached computers connected to the Internet at major corporations and Internet access providers and have involved the theft of information, including incidents in which hackers bypassed firewalls by posing as trusted computers. Alleviating problems caused by computer viruses, worms, break-ins or other problems caused by third parties may require significant expenditures of capital and resources by the Company, which could have a material adverse effect on the Company. Until more comprehensive security technologies are developed, the security and privacy concerns of existing and potential customers may inhibit the growth of the Internet service industry in general and the Company’s customer base and revenues in particular. Moreover, if the Company experiences a breach of network security or privacy, there can be no assurance that the Company’s customers will not assert or threaten claims against the Company based on or arising out of such breach, or that any such claims will not be upheld, which could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Risks Associated with Domain Names. The Company currently utilizes its domain names “CreditRiskMonitor.com” and “crmz.com” in its business. The acquisition and maintenance of domain names generally is regulated by governmental agencies and their designees. For example, in the United States, the National Science Foundation has appointed Network Solutions, Inc. as the exclusive registrar for the “.com”, “.net” and “.org” generic top-level domains. The regulation of domain names in the United States and in foreign countries is subject to change. Governing bodies may establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, there can be no assurance that the Company will be able to acquire or maintain relevant domain names in the United States and all other countries in which it may conduct business. Furthermore, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. The Company, therefore, may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of its trademarks and other proprietary rights. Any such inability could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.
20
Governmental Regulation and Legal Uncertainties. The Company is not currently subject to direct regulation by any domestic or foreign governmental agency, other than regulations applicable to businesses generally and laws or regulations directly applicable to access to online commerce. However, due to the increasing popularity and use of the Internet and other online services, it is possible that a number of laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, pricing, content, copyrights, distribution and characteristics and quality of products and services. Furthermore, the growth and development of the market for online commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on those companies conducting business online. The adoption of any additional laws or regulations may decrease the growth of the Internet or other online services, which could, in turn, decrease the demand for the Company’s products and services and increase the Company’s cost of doing business, or otherwise have a material adverse effect on the Company’s business, prospects, financial condition and results of operations. Moreover, the applicability to the Internet and other online services of existing laws in various jurisdictions governing issues such as property ownership, sales and other taxes, libel and personal privacy is uncertain and may take years to resolve. Any such new legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to the Company's business, or the application of existing laws and regulations to the Internet and other online services could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.

Proprietary Rights. The Company relies and expects to continue to rely on a combination of copyright, trademark and trade secret laws and contractual restrictions to establish and protect its technology. Other than trademarks for CRMZ and FRISK, the Company does not currently have any issued patents or registered copyrights or trademarks. The Company has applied for trademark registration for PAYCE.

The Company has a policy to require employees and consultants to execute confidentiality and technology ownership agreements upon the commencement of their relationships with the Company. There can be no assurance that the steps taken by the Company will be adequate to prevent misappropriation of its technology or other proprietary rights, or that the Company’s competitors will not independently develop technologies that are substantially equivalent or superior to the Company’s technology. There can be no assurance that the Company’s trademark applications will result in any trademark registrations, or that, if registered, any registered trademark will be held valid and enforceable if challenged.

In addition, to the extent the Company becomes involved in litigation to enforce or defend its intellectual property rights; such litigation can be a lengthy and costly process causing diversion of effort and resources by the Company and its management with no guarantee of success.
21
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
Stockholders of CreditRiskMonitor.com, Inc.:

Opinion on the Financial Statements

We have audited the accompanying balance sheets of CreditRiskMonitor.com, Inc. (the “Company”) as of December 31, 20172020 and 2016,2019, and the related statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172020 and 2016,2019, and the results of its operations and its cash flows for each of the years in the two-year periodthen ended, December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securitysecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal controlscontrol over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
 
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ CohnReznick LLP
We have served as the Company’s auditor since 2004.
Jericho, New York
March 27, 201825, 2021

2217
CREDITRISKMONITOR.COM, INC.
BALANCE SHEETS
December 31, 20172020 and 20162019

 2017  2016  2020  2019 
            
ASSETS            
Current assets:            
Cash and cash equivalents $8,735,148  $9,222,343  
$
10,302,732
  
$
8,275,836
 
Available-for-sale securities - municipal bonds
 
458,237
  
--
 
Accounts receivable, net of allowance of $30,000  2,139,707   2,090,676  
2,557,443
  
2,287,921
 
Other current assets  530,699   487,257   
589,072
   
549,821
 
              
Total current assets  11,405,554   11,800,276  
13,907,484
  
11,113,578
 
              
Property and equipment, net  437,216   430,324  
545,675
  
477,973
 
Operating lease right-of-use asset 
2,200,031
  
2,380,974
 
Goodwill  1,954,460   1,954,460  
1,954,460
  
1,954,460
 
Other assets  23,463   23,763   
84,892
   
35,723
 
              
Total assets $13,820,693  $14,208,823  
$
18,692,542
  
$
15,962,708
 
              
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities:              
Deferred revenue $8,304,877  $8,088,958 
Unexpired subscription revenue 
$
9,646,407
  
$
8,651,843
 
Accounts payable  58,901   96,725  
130,089
  
137,500
 
Current portion of operating lease liability 
161,874
  
147,229
 
Current portion of bank loan 
1,299,007
  
--
 
Accrued expenses  1,344,526   1,282,126   
1,822,485
   
1,344,550
 
              
Total current liabilities  9,708,304   9,467,809  
13,059,862
  
10,281,122
 
              
Deferred taxes on income, net  514,333   762,403  
333,432
  
521,765
 
Other liabilities  15,748   12,574 
Unexpired subscription revenue, less current portion 
197,545
  
166,169
 
Bank loan, less current portion 
262,493
  
--
 
Operating lease liability, less current portion  
2,137,559
   
2.299.433
 
              
Total liabilities  10,238,385   10,242,786   
15,990,891
   
13,268,489
 
              
Commitments and contingencies              
              
Stockholders’ equity:              
Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued  -   -  
-
  
-
 
Common stock, $.01 par value; authorized 32,500,000 shares; issued and outstanding 10,722,401 shares  107,224   107,224  
107,224
  
107,224
 
Additional paid-in capital  29,559,784   29,419,463  
29,760,533
  
29,705,673
 
Accumulated deficit  (26,084,700)  (25,560,650)  
(27,166,106
)
  
(27,118,678
)
              
Total stockholders’ equity  3,582,308   3,966,037   
2,701,651
   
2,694,219
 
              
Total liabilities and stockholders’ equity $13,820,693  $14,208,823  
$
18,692,542
  $
15,962,708
 

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

2318
CREDITRISKMONITOR.COM, INC.
STATEMENTS OF OPERATIONS
Years Ended December 31, 20172020 and 20162019
  2017  2016  2020  2019 
            
Operating revenues $13,385,068  $12,814,390  
$
15,732,366
  
$
14,501,173
 
              
Operating expenses:              
Data and product costs  5,426,779   4,944,053  
6,026,464
  
5,759,660
 
Selling, general and administrative expenses  8,044,256   7,495,742  
9,724,182
  
8,347,083
 
Depreciation and amortization  191,960   200,136   
219,847
   
207,224
 
              
Total operating expenses  13,662,995   12,639,931   
15,970,493
   
14,313,967
 
              
Income (loss) from operations  (277,927)  174,459  
(238,127
)
 
187,206
 
Other income, net  47,216   27,183   
26,774
   
155,852
 
              
Income (loss) before income taxes  (230,711)  201,642  
(211,353
)
 
343,058
 
Benefit (provision) for income taxes  242,781   (149,199)
Benefit from (provision for) income taxes  
163,925
   
(125,464
)
              
Net income $12,070  $52,443 
Net income (loss) 
$
(47,428
)
 
$
217,594
 
              
        
Net income per share:        
Net income (loss) per share:      
Basic
 $0.00  $0.00  
$
(0.00
)
 
$
0.02
 
Diluted $0.00  $0.00  
$
(0.00
)
 
$
0.02
 

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

2419
CREDITRISKMONITOR.COM, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
Years Ended December 31, 20172020 and 20162019

 Common Stock  
Additional
Paid-in
  Accumulated  
Total
Stockholders’
  Common Stock  
Additional
Paid-in
  Accumulated  
Total
Stockholders’
 
 Shares  Amount  
Capital
  
Deficit
  Equity  Shares  Amount  
Capital
  
Deficit
  Equity 
               
Balance January 1, 2016  10,722,321  $107,223  $29,279,791  $(25,076,973) $4,310,041 
                    
Net income  -   -   -   52,443   52,443 
Cash dividend paid  -   -   -   (536,120)  (536,120)
Exercise of stock options  80   1   (1)  -   - 
Stock-based compensation  -   -   139,673   -   139,673 
                    
Balance December 31, 2016  10,722,401   107,224   29,419,463   (25,560,650)  3,966,037 
Balance January 1, 2019 
10,722,401
  
$
107,224
  
$
29,650,760
  
$
(26,800,152
)
 
$
2,957,832
 
                                   
Net income  -   -   -   12,070   12,070  
-
  
-
  
-
  
217,594
  
217,594
 
Cash dividend paid  -   -   -   (536,120)  (536,120) 
-
  
-
  
-
  
(536,120
)
 
(536,120
)
Stock-based compensation  -   -   140,321   -   140,321   
-
   
-
   
54,913
   
-
   
54,913
 
                                   
Balance December 31, 2017  10,722,401  $107,224  $29,559,784  $(26,084,700) $3,582,308 
Balance December 31, 2019 
10,722,401
  
107,224
  
29,705,673
  
(27,118,678
)
 
2,694,219
 
               
Net loss 
-
  
-
  
-
  
(47,428
)
 
(47,428
)
Stock-based compensation  
-
   
-
   
54,860
   
-
   
54,860
 
               
Balance December 31, 2020  
10,722,401
  
$
107,224
  
$
29,760,533
  
$
(27,166,106
)
 
$
2,701,651
 

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

2520
CREDITRISKMONITOR.COM, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 20172020 and 20162019

  2017  2016 
       
Cash flows from operating activities:      
Net income $12,070  $52,443 
Adjustments to reconcile net income to net cash provided by operating activities:        
Deferred income taxes  (248,070)  2,949 
Depreciation and amortization  191,960   200,136 
Realized loss on marketable securities  -   5,063 
Stock-based compensation  140,321   139,673 
Deferred rent  3,174   8,260 
Changes in operating assets and liabilities:        
Accounts receivable, net  (49,031)  (163,248)
Other current assets  (43,442)  68,614 
Other assets  300   10,236 
Deferred revenue  215,919   652,194 
Accounts payable  (37,824)  18,458 
Accrued expenses  62,400   40,809 
         
Net cash provided by operating activities  247,777   1,035,587 
         
Cash flows from investing activities:        
Sale of marketable securities  -   240,411 
Purchase of property and equipment  (198,852)  (235,434)
         
Net cash provided by (used in) investing activities  (198,852)  4,977 
         
Cash flows from financing activities:        
Dividend paid to stockholders  (536,120)  (536,120)
         
Net cash used in financing activities  (536,120)  (536,120)
         
Net increase (decrease) in cash and cash equivalents  (487,195)  504,444 
Cash and cash equivalents at beginning of year  9,222,343   8,717,899 
         
Cash and cash equivalents at end of year $8,735,148  $9,222,343 
         
Supplemental disclosure of cash flow information:        
Cash paid during the year for:        
Income taxes $136,647  $74,356 

 2020  2019 
Cash flows from operating activities:      
Net income (loss) 
$
(47,428
)
 
$
217,594
 
Adjustments to reconcile net income (loss) to net        
cash provided by operating activities:        
Deferred income taxes  
(188,333
)
  
31,384
 
Depreciation and amortization  
219,847
   
207,224
 
Stock-based compensation  
54,860
   
54,913
 
Operating lease  
33,715
   
41,151
 
Changes in operating assets and liabilities:        
Accounts receivable, net  
(269,523
)
  
166,664
 
Other current assets  
3,153
   
12,040
 
Other assets  
(91,068
)
  
(110
)
Unexpired subscription revenue  
1,025,940
   
79,567
 
Accounts payable  
(7,412
)
  
42,733
 
Accrued expenses  
477,936
   
33,332
 
         
Net cash provided by operating activities  
1,211,687
   
886,492
 
         
Cash flows from investing activities:        
Purchase of available-for-sale securities - municipal bonds
  
(458,742
)
  
--
 
Purchase of property and equipment  
(287,549
)
  
(141,435
)
         
Net cash used in investing activities  
(746,291
)
  
(141,435
)
         
Cash flows from financing activities:        
Dividend paid to stockholders  
--
   
(536,120
)
Bank loan  
1,561,500
   
--
 
         
Net cash provided by (used in) financing activities  
1,561,500
   
(536,120
)
         
Net increase in cash and cash equivalents  
2,026,896
   
208,937
 
Cash and cash equivalents at beginning of year  
8,275,836
   
8,066,899
 
         
Cash and cash equivalents at end of year 
$
10,302,732
  
$
8,275,836
 
         
Supplemental disclosure of cash flow information:        
Cash paid, net during the year for:        
Income taxes 
$
66,000
  
$
41,261
 

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

2621
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

CreditRiskMonitor.com, Inc. (also referred to as the “Company” or “CreditRiskMonitor”) provides a totally interactive business-to-business Internet-based service designed specifically for credit and supply chain managers. This service is sold predominantly to corporations located in the United States. In addition, the Company is a re-distributor of international credit reports in the United States.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Standards

The Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”) have issued certain other accounting pronouncements as of December 31, 2020 that will become effective in subsequent periods; however, management does not believe that any of these pronouncements would have significantly affected the Company’s financial accounting measurements or disclosures had they been in effect during the periods for which financial statements are included in this annual report, nor does management believe those pronouncements would have a significant effect on the Company’s future financial position or results of operations.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash in banks and highly liquid instruments with original maturities of three months or less, primarily consisting of investments in institutional money market funds.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided on the straight-line method over the estimated useful life of the asset. Estimated useful lives are generally as follows:

·Fixtures, equipment and software -- 3 to 6 years
Fixtures, equipment and software -- 3 to 10 years
·Leasehold improvements -- lower of life or term of lease
Leasehold improvements -- lower of estimated useful life or term of lease (i.e., 2 to 7 years)

22
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

Goodwill

Goodwill and other indefinite-lived intangible assets are subject to annual impairment testing using the specific guidance and criteria described in the accounting guidance. The Company performs its goodwill impairment testing at least annually in the fourth quarter of each year, unless circumstances dictate the need for more frequent assessment. Goodwill impairment is determined using a two-step process. The first step of the impairment test is used to identify potential impairment by comparing the fair value of a reporting unit to the book value, including goodwill. If the fair value of a reporting unit exceeds its book value, goodwill of the reporting unit is not considered impaired and the second step of the impairment test is not required. If the book value of a reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment test compares the implied fair value of the reporting unit’s goodwill with the book value of that goodwill. If the book value of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. The Company completed its annual goodwill impairment tests for 20172020 and 20162019 during the fourth quarter of each year and determined there was no impairment of existing goodwill.
27
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

Long-Lived Assets

The Company reviews its long-lived amortizable assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with accounting guidance. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to undiscounted pre-tax future net cash flows expected to be generated by that asset. An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the fair value of the assets. As of December 31, 20172020 and 2016,2019, management believes no impairment of long-lived assets has occurred.

Income Taxes

The Company provides for deferred income taxes resulting from temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. Deferred tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized.

Revenue Recognition

CreditRiskMonitor’s North American and worldwide service is sold on a subscription basis pursuant to customer contracts that span varying periods of time, but are generally for a period of one year. The Company initially records amounts billedapplies FASB Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”) to recognize revenue. ASC 606 requires an entity to apply the following five-step approach: (1) identify the contract(s) with a customer; (2) identify each performance obligation in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation; and (5) recognize revenue when or as accounts receivable and defers the relatedeach performance obligation is satisfied. The Company’s primary source of revenue until persuasive evidence of an arrangement exists, fees are fixed and determinable, and collection is reasonably assured. Revenues aresubscription income which is recognized ratably over the related subscription period. Revenue fromterm.

23
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

The Company has applied the Company’s third-party international credit report servicepractical expedient to recognize incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less.

Lease Accounting

For all leases, at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the remaining lease payments under the lease. Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments and payments for optional renewal periods where it is reasonably certain the renewal period will be exercised. Lease expense for operating leases consists of the lease payments plus any initial direct costs, and is recognized as information is deliveredon a straight-line basis over the lease term. 

The Company’s operating lease right-of-use asset and products and services areoperating lease liability represent the lease for the office space used by customers.to conduct its business.

Net Income (Loss) Per Share

Net income (loss) per share is calculated based on the weighted average number of shares of common stock outstanding during the reporting period. Diluted net income (loss) per share is calculated giving effect to all potentially dilutive common shares, assuming such shares were outstanding during the reporting period. The difference between basic and diluted net income (loss) per share is solely attributable to stock options. The Company uses the treasury stock method to calculate the impact of outstanding stock options (see Note 8).
28
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

Fair Value of Financial Instruments

The Company calculates the fair value of financial instruments and includes this additional information in the notes to the financial statements when the fair value is different than the book value of those financial instruments. The Company believes the recorded value of cash and cash equivalents, accounts receivable, and accounts payable and other liabilities approximates fair value because of the short maturity of these financial instruments.

Comprehensive Income

The Company adheres to accounting guidance for the reporting and displaying of comprehensive income or loss and its components (revenues, expenses, gains and losses). The accounting guidance requires that all items that are required to be recognized under accounting standards as components of comprehensive income be classified by their nature. Furthermore, the Company is required to display the accumulated balances of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. For the years ended December 31, 2017 and 2016, there were no items that gave rise to other comprehensive income or loss and net income equaled comprehensive income.

Segment Information

An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues for purposes of making operating decisions and assessing financial performance. Accordingly, the Company currently believeshas determined that it operateshas a single operating and reportable segment. In addition, the Company has no foreign operations or any assets in one segment.foreign locations.

Stock-Based Compensation

The Company recognizes the grant-date fair value of all stock-based awards on a straight-line basis over their respective requisite service periods (generally equal to an award’s vesting period). The Company records deferred tax assets for awards that will result in deductions on its tax returns, based upon the amount of compensation cost recognized and the statutory tax rate in the jurisdiction in which it will receive a deduction.

24
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

See Note 5 for more information regarding the Company’s stock compensation plans.

Fair Value Measurements

The Company records its financial instruments at fair value in accordance with accounting guidance. The determination of fair value assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The fair value hierarchy is broken down into three levels based on the source of inputs as follows: (a) Level 1 – valuations based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; (b) Level 2 – valuations based on quoted prices in markets that are not active, or financial instruments for which all significant inputs are observable; either directly or indirectly; and (c) Level 3 – valuations based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable; thus, reflecting assumptions about the market participants.
29
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

Recently Issued Accounting Standards

In May 2014, new accounting guidance was issued that replaces most existing revenue recognition guidance under U.S. GAAP. The core principal of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Using this principle, a comprehensive framework was established for determining how much revenue to recognize and when it should be recognized. To be consistent with this core principle, an entity is required to apply the following five-step approach: (1) identify the contract(s) with a customer; (2) identify each performance obligation in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation; and (5) recognize revenue when or as each performance obligation is satisfied. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Entities have the option of adopting this standard using either a full retrospective approach or a modified retrospective approach (i.e., through a cumulative effect adjustment directly to retained earnings at the time of adoption). The Company, will adopt this standard in the first quarter of 2018 and apply the modified retrospective approach. Because the Company’s primary source of revenue is subscription income which is recognized ratably over the subscription term, the Company does not anticipate that the adoption of this standard will have a significant impact on its financial statements.

In February of 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and nonlease components in a contract in accordance with the new revenue guidance in ASU 2014-09. The updated guidance is effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the effect of ASU 2016-02 on its financial statements.

The Financial Accounting Standards BoardUpdate (“ASU”) 2016-01, classifies its debt securities as “available-for-sale” and the SEC have issued certainare recorded at fair value.  Realized gains and losses on available-for-sale debt securities are reported in net income with unrealized gains and losses reported in other accounting pronouncements as of December 31, 2017 that will become effective in subsequent periods; however, management does not believe that any of these pronouncements would have significantly affected the Company’s financial accounting measurements or disclosures had they been in effect during the interim periods for which financial statements are included in this annual report, nor does management believe those pronouncements would have a significant effect on the Company’s future financial position or results of operations.income.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of cash, cash equivalents, available-for-sale securities and accounts receivable. The Company maintains its cash and cash equivalents in bank deposit and other accounts, the balances of which, at times, may exceed federally insured limits. Exposure to credit risk is reduced by placing such deposits in high credit quality financial institutions.
30
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

The Company closely monitors the extension of credit to its customers. The Company’s accounts receivable balance is net of an allowance for doubtful accounts. The Company does not require collateral or other security to support credit sales, but provides an allowance for doubtful accounts of $30,000 as of December, 31, 2020 and 2019, based on historical experience and specifically identified risks. Accounts receivable are charged off against the allowance for doubtful accounts when management determines that recovery is unlikely and the Company ceases collection efforts. The Company does not believe that significant credit risk existed at December 31, 2017 and 2016.2020 nor 2019.

NOTE 3 - CASH AND CASH EQUIVALENTS

Cash and cash equivalents consisted of the following as of December 31:

  2017  2016 
       
Cash $508,942  $757,820 
Money market funds  8,226,206   8,464,523 
         
  $8,735,148  $9,222,343 

NOTE 4 - INCOME TAXES

In accordance with the Tax Cuts and Jobs Act that was enacted on December 22, 2017 (“U.S. Tax Reform Act”), we have recorded a credit for income taxes of $220,954. The impact of the U.S. Tax Reform Act is primarily from revaluing our U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%, effective for our 2018 tax year. The provisional impact of the U.S. Tax Reform Act is our current best estimate based on the preliminary review of the new law and is subject to revision based on our existing accounting for income taxes policy as further information is gathered and interpretation and analysis of the tax legislation evolves. The Securities and Exchange Commission has issued rules allowing for a measurement period of up to one year after the enactment date of the U.S Tax Reform Act to finalize the recording of the related tax impacts. Any future changes to our provisional estimated impact of the U.S Tax Reform Act will be included as an adjustment to the provision for income taxes.– FAIR VALUE MEASUREMENTS

The Company’s income tax expense (benefit) consistedcash, cash equivalents and available-for-sale securities are stated at fair value. The carrying value of accounts receivable, other current assets, bank loan and accounts payable approximates fair market value because of the following:short maturity of these financial instruments.

  2017  2016 
Current:      
Federal $(2,746) $127,768 
State  8,035   18,482 
Deferred:        
Federal  (264,707)  20,444 
State  16,637   (17,495)
         
  $(242,781) $149,199 
3125
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

The Company’s cash equivalents are generally classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

All available-for-sale securities as of December 31, 2020 were municipal bonds. Investments in municipal bonds are valued using pricing models maximizing the use of observable inputs for similar securities. Municipal bonds are classified as Level 2 of the fair value hierarchy.

The tables below set forth the Company’s cash and cash equivalents, as well as marketable securities as of December 31, 2020 and December 31, 2019, respectively, which are measured at fair value on a recurring basis by level within the fair value hierarchy.

  December 31, 2020 
  Level 1  Level 2  Level 3  Total 
             
Cash and cash equivalents 
$
10,302,732
  
$
-
  
$
-
  
$
10,302,732
 
                 
Available-for-sale securities 
$
-
  
$
458,237
  
$
-
  
$
458,237
 

  December 31, 2019 
  Level 1  Level 2  Level 3  Total 
             
Cash and cash equivalents 
$
8,275,836
  
$
-
  
$
-
  
$
8,275,836
 

The Company did not hold financial assets and liabilities which were recorded at fair value in the Level 2 or 3 categories as of December 31, 2019.

The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The cost and fair value of available-for-sale securities at December 31, 2020 is as follows:

  Cost  Unrealized Loss  Fair Value 
          
Available-for-sale securities 
$
458,742
  
$
(505
)
 
$
458,237
 

Maturities of available-for-sale securities were as follows at December 31, 2020:

Available-for-sale securities   
Due after 10 years 
$
458,237
 

The fair value of available-for-sale securities are presented in the available-for-sale category by contractual maturity in the preceding table. Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations without call or prepayment penalties.

26
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

Management evaluates securities for other-than-temporary impairment at least on an annual basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Management has determined that no other-than-temporary impairment exists as of December 31, 2020.

There were no proceeds from the sale of marketable securities in 2020. Subsequent to December 31, 2020 the Company liquidated all of their municipal bond investments in available-for-sale securities, and transferred the proceeds to Level 1 cash and cash equivalent investments.

NOTE 4 - INCOME TAXES

The Company’s income tax (benefit) expense consisted of the following:

  2020  2019 
Current:      
Federal 
$
37,373
  
$
67,677
 
State  
(12,854
)
  
26,404
 
Deferred:        
Federal  
(67,742
)
  
23,781
 
State  
(120,702
)
  
7,602
 
         
  
$
(163,925
)
 
$
125,464
 

The actual tax (benefit) expense (benefit) for 20172020 and 20162019 differs from the "expected"“expected” tax expense for those years (computed by applying the applicable United States federal corporate tax rate to income before income taxes) as follows:

  2017  2016 
       
Computed "expected" expense (benefit) $(78,408) $68,558 
Permanent differences  42,570   55,998 
State and local income tax expense  (7,749)  11,738 
True-up of current taxes  1,025   9,295 
True-up of deferred taxes  20,735   3,610 
Change in federal statutory rate  (220,954)  -- 
         
Income tax expense (benefit) $(242,781) $149,199 
27
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

  2020  2019 
       
Computed “expected” (benefit) expense 
$
(44,384
)
 
$
72,042
 
Permanent differences  
11,516
   
25,619
 
State and local income tax expense  
2,720
   
12,344
 
True-up of current taxes  
(25,916
)
  
4,763
 
True-up of deferred taxes  
11,644
   
11,014
 
Change in state apportionment  
(119,505
)
  
(318
)
         
Income tax (benefit) expense 
$
(163,925
)
 
$
125,464
 

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets/assets (liabilities) at December 31, 20172020 and 20162019 are as follows:

 2017  2016  2020  2019 
Deferred tax assets:            
Net operating loss carryovers 
$
-
  
$
-
 
Stock options $12,406  $39,837  
17,556
  
20,085
 
Accrued vacation  65,317   76,669  
85,436
  
70,654
 
Bad debt allowance  8,309   11,878  
6,411
  
8,314
 
Deferred revenue  4,674   6,682  
4,732
  
5,833
 
Deferred rent  4,362   4,978  
15,999
  
11,403
 
Other  19,945   24,402   
17,212
   
21,972
 
              
Total deferred tax assets  115,013   164,446   
147,346
   
138,261
 
              
Deferred tax liabilities:              
Goodwill  (541,310)  (773,848) 
(417,688
)
 
(541,628
)
Fixed assets  (88,036)  (153,001)  
(63,090
)
  
(118,398
)
              
Total deferred tax liabilities  (629,346)  (926,849)  
(480,778
)
  
(660,026
)
              
Net deferred tax liabilities $(514,333) $(762,403) 
$
(333,432
)
 
$
(521,765
)

NOTE 5 - COMMON STOCK STOCK OPTIONS, AND STOCK APPRECIATION RIGHTSOPTIONS

Common Stock

At December 31, 2017, 421,3502020 and 2019, there were 575,750 and 456,870 shares, respectively, of the Company’s authorized common stock were reserved for issuance upon exercise of outstanding options under its stock option plan.

Preferred Stock

The Company’s Articles of Incorporation provide that the Board of Directors has the authority, without further action by the holders of the outstanding common stock, to issue up to five million shares of preferred stock from time to time in one or more series. The Board of Directors shall fix the consideration to be paid, but not less than par value thereof, and to fix the terms of any such series, including dividend rights, dividend rates, conversion or exchange rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price and the liquidation preference of such series. As of December 31, 2017,2020 and 2019, the Company does not have any preferred stock outstanding.

3228
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

Stock Options and Stock Appreciation Rights

As of December 31, 2017,2020, the Company has onetwo stock option plan:plans: the 2009 Long-Term Incentive Plan (“2009 Plan”). During 2017, which ended in 2019, and the Company’s prior plan (the 19982020 Long-Term Incentive Plan) expired.Plan (“2020 Plan”).

TheBoth the 2009 and the 2020 Plan authorizesauthorize the grant of incentive stock options, non-qualified stock options, SARs, restricted stock, bonus stock, and performance shares to employees, consultants, and non-employee directors of the Company. The exercise price of each option shall not be less than the fair market value of the common stock at the date of grant. The total number of the Company’s shares that may be awarded under this plan is 1,300,000the 2009 Plan was 1,000,000 shares of common stock, and the 2020 Plan was 1,000,000 shares of common stock. At December 31, 2017,2020, there were options outstanding for 421,350393,650 shares of common stock under the 2009 Plan, and 182,100 shares of common stock under the 2020 Plan.  As of December, 31 2019, there were options outstanding for 456,870 shares of common stock under the 2009 Plan.

Options expire on the date determined, but not more than ten years from the date of grant. All of the options granted under the 2009 and 2020 Plan may be exercised after four years in installments upon the attainment of specified length of service.service, unless otherwise determined by the Compensation Committee as set forth in the Award Agreement. In the event of a change in control (as defined), the options will vest in full at the time of such change in control.

There have been no transactions with respect to the Company’s stock appreciation rights during the years ended December 31, 2017 and 2016, nor are there any stock appreciation rights outstanding at December 31, 2017 and 2016.

Transactions with respect to the Company’s stock option plans for the years ended December 31, 20172020 and 20162019 are as follows:

 
Number
of Shares
  
Weighted
Average
Exercise
Price
  
Number
of Shares
  
Weighted
Average
Exercise
Price
 
            
Outstanding at January 1, 2016  337,350  $3.0092 
Exercised  (260)  2.3154 
Outstanding at January 1, 2019 
376,850
  
$
2.98
 
Granted 
195,800
  
1.45
 
Forfeited  (55,500)  2.0946   
(115,780
)
 
3.06
 
      
Outstanding at December 31, 2019 
456,870
  
$
2.30
 
Granted  114,500   2.9873  
182,100
  
2.17
 
Expired 
(26,000
)
 
4.62
 
Forfeited  
(37,220
)
 
2.15
 
              
Outstanding at December 31, 2016  396,090  $3.1315 
Forfeited  (49,540)  2.1762 
Granted  74,800   2.0588 
        
Outstanding at December 31, 2017  421,350  $3.0534 
Outstanding at December 31, 2020  
575,750
  
$
2.17
 

As of December 31, 2017,2020, there were 878,390817,900 shares of common stock reserved for the granting of additional options.  The 2009 Plan expired at the end of 2019 and no additional options could be granted.
33
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

The following table summarizes the stock-based compensation expense for stock options that was recorded in the Company’s results of operations in accordance with ASC 718 for the years ended December 31:

  2017  2016 
       
Data and product costs $35,661  $32,588 
Selling, general and administrative costs  104,660   107,085 
         
  $140,321  $139,673 
29
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

  2020  2019 
       
Data and product costs 
$
19,928
  
$
22,460
 
Selling, general and administrative costs  
34,932
   
32,453
 
         
  
$
54,860
  
$
54,913
 

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model that uses the weighted average assumptions noted in the following table. Expected volatilities are based on historical volatility of our stock through the date of grant. The Company uses the simplified method under Staff Accounting Bulletin No. 110, “Use of a Simplified Method in Developing an Estimate of Expected Term of ‘Plain Vanilla’ Share Options”, to estimate the options’ expected term. The risk-free interest rate used is based on the U.S. Treasury constant maturities at the time of grant having a term that approximates the expected life of the option.

The fair value of options granted during the yearsyear ended December 31, 2017 and 20162019 was $1.21 and $2.97, respectively.$125,832. The fair value of options granted during the year ended December 31, 2020 was $206,087. The fair value of options at date of grant was estimated using the Black-Scholes model with the following assumptions:

 2017  2016 20202019
Risk-free interest rate  2.37%  2.07%0.26%1.78%
Expected dividend yield  2.61%  1.68%
Expected volatility factor  0.73   0.78 72.57%64.00%
Expected dividends0.05
Expected life of the option (years)  9.00   8.82 7.179

The Company issues new shares upon the exercise of options.

The following table summarizes information about the Company’s stock options outstanding at December 31, 2017:2020:

  Options Outstanding  Options Exercisable   Options Outstanding  Options Exercisable 
Range of
Exercise Prices
  
Number
Outstanding
  
Weighted
Average
Remaining
Contractual
Life
(in years)
  
Weighted
Average
Exercise
Price
  
Number
Exercisable
  
Weighted
Average
Exercise
Price
   
Number
Outstanding
  
Weighted
Average
Remaining
Contractual
Life
(in years)
  
Weighted
Average
Exercise
Price
  
Number
Exercisable
  
Weighted
Average
Exercise
Price
 
                                
$ 1.00 - $ 2.00   54,800   9.79  $1.6788   -   -   
256,100
  
8.36
  
$
1.52
  
-
  
-
 
$ 2.01 - $ 3.00   163,000   6.76  $2.6831   26,000  $2.3154   
279,100
  
5.67
  
$
2.42
  
57,350
  
$
2.49
 
$ 3.01 - $ 6.00   203,550   3.24  $3.7200   150,930  $3.6278    
40,550
  
0.84
  
$
4.51
   
32,550
  
$
4.73
 
                                     
   421,350   5.45  $3.0534   176,930  $3.4350    
575,750
  
6.53
  
$
2.17
   
89,900
  
$
3.30
 
34
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

The aggregate intrinsic value represents the total pre-tax intrinsic value, based on options with an exercise price less than the Company'sCompany’s closing stock price of $1.75$2.35 and $3.10$1.57 as of December 31, 20172020 and 2016,2019, respectively, which would have been received by the option holders had those option holders exercised their options as of that date. The aggregate intrinsic value of options outstanding as of December 31, 20172020 and 20162019 was $3,900$23,046 and $120,966,$238,548, respectively.

30
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

As of December 31, 2017,2020, the total compensation cost related to unvested stock-based awards granted to employees under the Company’s stock option plan but not yet recognized was $346,336.$407,771. This cost will be amortized on a straight-line basis over a weighted average term of 3.455.85 years and will be adjusted for subsequent changes in estimated forfeitures.

NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

 2017  2016  2020  2019 
            
Computer equipment and software $1,485,044  $1,389,854  
$
1,720,814
  
$
1,485,579
 
Furniture and fixtures  369,595   332,900   
512,975
   
507,503
 
Leasehold improvements  187,062   184,136   
268,741
   
240,328
 
  2,041,701   1,906,890   
2,502,530
   
2,233,410
 
Less accumulated depreciation and amortization  (1,604,485)  (1,476,566)  
(1,956,855
)
  
(1,755,437
)
              
 $437,216  $430,324  
$
545,675
  
$
477,973
 

NOTE 7 -– OPERATING LEASE COMMITMENTS

The following table reconciles the undiscounted cash flows for the Company’s operations are conducted from a leased facility, which is under an operating lease that expires on July 31, 2020. Rental expenses under operating leases were $290,634 and $291,016 for the years ended December 31, 2017 and 2016, respectively.

Future minimum lease payments for noncancelable operating leases at December 31, 2017 are as follows:2020 to the operating lease liability recorded on the balance sheet:

  
Operating
Leases
 
    
2018 $176,944 
2019  182,340 
2020  108,578 
     
Total minimum lease payments $467,862 
2021 
$
262,970
 
2022  
270,859
 
2023  
278,985
 
2024  
287,355
 
2025  
295,975
 
Thereafter  
1,473,078
 
Total future undiscounted lease payments  
2,869,222
 
LESS: Imputed interest  
(569,789
)
Present value of lease liability 
$
2,299,433
 
     
Current portion of operating lease liability 
$
161,874
 
Non-current portion of operating lease liability  
2,137,559
 
  
$
2,299,433
 

3531
CREDITRISKMONITOR.COM, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 8 - NET INCOME (LOSS) PER SHARE

The following table sets forthBasic net income (loss) per share is based on the weighted average number of common shares outstanding. Diluted net income (loss) per share is based on the weighted average number of common shares outstanding and the dilutive effect of outstanding stock options:

  2020  2019 
       
Net income (loss) 
$
(47,428
)
 
$
217,594
 
         
Weighted average common shares outstanding – basic  
10,722,401
   
10,722,401
 
Potential shares exercisable under stock option plans  
--
   
13,700
 
Less: Shares which could be repurchased under treasury stock method  
--
   
(11,562
)
Weighted average common shares outstanding – diluted  
10,722,401
   
10,724,539
 
         
Net income (loss) per share:        
Basic 
$
(0.00
)
 
$
0.02
 
Diluted 
$
(0.00
)
 
$
0.02
 

Because the Company has reported a net loss for fiscal 2020, diluted net loss per share is the same as basic net loss per share, as the effect of utilizing the fully diluted share count would have reduced the net loss per share. Therefore, all outstanding stock options were excluded from the computation of basic and diluted net incomeloss per share:share because their effect was anti‐dilutive for each of the periods presented.

  2017  2016 
       
Net income $12,070  $52,443 
         
Weighted average common shares outstanding – basic  10,722,401   10,722,323 
Potential shares exercisable under stock option plans  143,280   256,947 
LESS: Shares which could be repurchased under treasury stock method  (139,560)  (198,759)
Weighted average common shares outstanding – diluted  10,726,121   10,780,511 
         
Net income per share:        
Basic $0.00  $0.00 
Diluted $0.00  $0.00 

For fiscal 2017 and 2016,2019, the computation of diluted net income per share excludes the effects of the assumed exercise of 264,675 and 130,338369,455 options, respectively, since their inclusion would be anti-dilutive as their exercise prices were above the average market value.

NOTE 9 - RELATED PARTY TRANSACTION

In October 2020, the Company’s Board of Directors appointed Michael Flum to serve as President and Chief Operating Officer. Previously, he was serving as Senior Vice President and Chief Operating Officer effective October 2019 and had served as Vice President of Operations & Alternative Data since June 2018. Mr. Flum is the son of Jerome Flum, the Company’s Chief Executive Officer and Chairman of the Board of Directors, and the brother of Joshua Flum, a Director of the Company.

3632
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintainThe Company maintains disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and evaluating such controls and procedures, we recognizethe Company recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. OurThe Company’s management is necessarily required to use judgment in evaluating controls and procedures.

Under the supervision andThe Company’s management, with the participation of the Company’s management, including its principal executive officerChief Executive Officer and principal financial officer,Chief Financial Officer, has evaluated the Company conducted an evaluationeffectiveness of the Company’s disclosure and controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of December 31, 2017. Based on this evaluation, the Company’s management concluded that its disclosure controls and proceduresamended) as of the end of the period covered by this reportreport. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.effective to ensure that all material information required to be disclosed by us in reports that we file or submit under the Exchange Act are accumulated and communicated to them as appropriate to allow timely decisions regarding required disclosure and that all such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

In the ordinary course of business, we review ourthe Company reviews its internal control over financial reporting and make changes to ourits systems and processes to improve such controls and increase efficiency, while ensuring that we maintainthe Company maintains an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems and automating manual processes. These changes have not materially affected, and are not reasonably likely to materially affect, the Company’s internal control over financial reporting. However, they allow usthe Company to continue to enhance ourits internal control over financial reporting and ensure that ourits internal control environment remains effective.

Management’s Report on Internal Control Over Financial Reporting

Under the supervision and with the participation of the Company’s management, including its principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on criteria established in the framework in the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, the Company’s management concluded that its internal control over financial reporting was effective as of December 31, 2017.2020.

Internal controls over financial reporting, no matter how well designed, have inherent limitations. Therefore, internal control over financial reporting determined to be effective can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all misstatements. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
3733
Changes in Internal Control over Financial Reporting

There were noAs a result of governmental imposed limitations on the use our facilities due to the COVID-19 pandemic, we have had to make changes into the Company’soperating methods of some of our internal controls. For example, moving from manual sign-offs / in-person meetings to electronic sign-offs and electronic communications such as email and telephonic / or video conference due to out-of-office working arrangements. However, the design of our internal control framework / objectives over financial reporting duringis unchanged and the quarter ended December 31, 2017Company does not believe that these changes have materially affected, or are reasonably likely to materially affect, the Company’s internal controlscontrol over financial reporting.

Limitations of the Effectiveness of Internal Control

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

ITEM 9B.OTHER INFORMATION.

None.

ITEM 9C.COVID-19.

On March 11, 2020, the World Health Organization declared the outbreak of Coronavirus Disease 2019 (“COVID-19” or “virus”) as a global pandemic. The full impact of COVID-19 is unknown and evolving. The outbreak and any preventative or protective actions that the Company or its customers may take in respect of this virus may result in a period of disruption, including the Company’s financial reporting capabilities, its operations generally and could potentially impact the Company’s customers, data providers and other third parties. Any resulting financial impact cannot be reasonably estimated at this time, but may materially affect the business and the Company’s financial condition and results of operations. The extent to which COVID-19 impacts the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning COVID-19 and the speed and effectiveness of vaccinations, among others. The Company has been operating remotely without any significant disruption of operations. To date, the Company’s data providers have provided an uninterrupted stream of information, thus enabling the Company to deliver its product. The Company is actively monitoring the renewal rates of its current customers and those that subscribed after the outbreak.

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In response to COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property, and the creation of certain refundable employee retention credits. Additionally, the CARES Act contains relief for small businesses through several new temporary programs, one of which is the Paycheck Protection Program (“PPP”). The PPP is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. The Small Business Administration (“SBA”) will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent or utilities. The Company applied for a loan under this program and has received $1.56 million. The SBA provides a “safe harbor” for borrowers and has deemed certifications regarding the necessity of the loan to have been made in good faith for borrowers of less than $2 million. The PPP loan is scheduled to mature on April 15, 2022, has a 1.00% interest rate, may be prepaid at any time without penalty and is subject to the terms and conditions applicable to all loans made pursuant to the PPP as administered by the SBA under the CARES Act. The loan and accrued interest is forgivable after eight weeks so long as the Company uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels.  The “PPP” was amended on June 5, 2020 by the Paycheck Protection Program Flexibility Act, which stated that payments are deferred until the date on which the amount of forgiveness determined is remitted to the lender, with a maximum deferral of up to 16 months.  The president signed the Consolidated Appropriations Act 2021 (the “CAA”) into law on December 27, 2020. The new COVID-19 legislation enhances and expands certain aspects of the CARES Act, most notably allowing borrowers to select their covered period to meet payroll and qualified expense requirements between 8 and 24 weeks.  In accordance with the requirements for forgiveness of the PPP loan under the CARES Act, the Company has used the entire proceeds from the PPP loan for eligible payroll, benefits, rent, utility costs, and maintained its employment levels.  If the Company does not apply for forgiveness, the current portion of this loan, including interest that is due within the next 12 months which is $1,314,848.  The lender of this loan started accepting applications for forgiveness at the beginning of 2021.

35
PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers

The following table sets forth certain information with respect to the directors and executive officers of the Company and the period such persons held their respective positions with the Company.

NameAge
Principal Occupation/Position
 Held with Company
Officer or
Director
Since
Age
Principal Occupation/Position
Held with Company
Officer or
Director
Since
Jerome S. Flum77Chairman of the Board/Chief Executive Officer198380
Chairman of the Board/Chief Executive Officer
1983
William B. Danner61President/Chief Operating Officer2005
Lawrence Fensterstock67Senior Vice President/Chief Financial Officer/Secretary1999
Michael I. Flum
34
President/Chief Operating Officer
2019
Steven Gargano
44
Senior Vice President/Chief Financial Officer
2020
Andrew J. Melnick76Director200579
Director
2005
Jeffrey S. Geisenheimer52Director2005
Richard Lippe
82
Director
2020
Joshua M. Flum48Director200751
Director
2007
Richard J. James78Director1992

Jerome S. Flum was appointed President and Chief Executive Officer of the Company and Chairman of the Board of Directors in June 1985. Since 1968 he has been in the investment business as an Institutional Security Analyst, Research and Sales Partner at an investment firm and then as a General Partner of a private investment pool. Before entering the investment business, Mr. Flum practiced law, helped manage a U.S. congressional campaign and served as a Legal and Legislative Aide to a U.S. Congressman. He has been a guest lecturer at the Massachusetts Institute of Technology/Sloan School of Management Lab for Financial Engineering. Mr. Flum received a BS degree in business administration from Babson College and a JD degree from Georgetown University Law School. Mr. Flum served as a L/cplLance corporal in the USMCR.United States Marine Corps Reserve.

William B. DannerMichael I. Flum joined the Company in May 20052018 as Chief Marketing Officer,Vice President of Operations & Alternative Data. He was appointedelected Senior Vice President and Chief Operating Officer in October 20052019 and appointedsubsequently President and Chief Operating Officer in May 2007. Mr. Danner’s experience includes over 30 years in financial servicesOctober 2020. He is responsible for operational strategy and information services. implementation, leveraging technology to improve the efficiency of human capital and work processes. Prior to joining the Company, his most recent experience included brand strategy and business development consulting for financial services clients at his own firm, Danner Marketing. Clients included WellPoint and Bowne & Co. Previously, he was at Citigate Albert Frank, a marketing communications company in New York City, where he provided strategic planning and brand consulting for a variety of leading financial services organizations including Reuters Instinet and the CFA Institute. From 1997 to 2001,CreditRiskMonitor, Mr. Danner wasFlum served as Vice President of Market DevelopmentOperations at MetLife’s employee-benefits business. Before joining MetLife, heGullett & Associates, Inc., a Houston-based midstream oil & gas survey and drafting services firm from 2016-2017. Mr. Flum held various engineering and project management roles at Enterprise Products Partners, a Houston-based oil & gas pipeline owner/operator from 2009 to 2016. Over his time in the oil & gas sector, Mr. Flum successfully completed pipeline and plant projects totaling over $1.3 billion dollars. He was at Dun & Bradstreet for over 5 years, most recentlyalso able to install processes which streamline service offerings and unify customer experience across teams. Mr. Flum holds an MBA from Columbia Business School as Vice President, Strategic Planning. He spent nearly the first 10 years of his career at General Electric Company, workingwell as a BS in increasingly responsible positions at GE Information ServicesMechanical Engineering and GE Capital. Mr. Danner earned a BA in economics at Harvard College and an MBA at Harvard Business School.Religious Studies from Rice University. Mr. Flum is the son of Jerome Flum.

3936
Lawrence FensterstockSteven Gargano, CPA joined the Company in January 2020 as Senior Vice President and was elected to Senior Vice President and Chief Financial Officer in April 2020. Mr. Gargano has more than 20 years of experience in financial services, product development, workflow optimization, operations, customer experience, and financial technology. Prior to joining CreditRiskMonitor, he was the Managing Director and Head of Financial Information & Risk Analysis for over $12B in assets at 1199SEIU Pension and Benefit Funds. Before that, he served as a Senior Managing Director and Head of Product Development and Customer Support for U.S. Bancorp Fund Services’ Alternative Investment Solutions division. Prior to that, he was the Managing Director and Head of the Planning, Strategy, and Implementation Group for the Accounting, Finance, and Back Office groups at Mariner Investment Group, a $10B asset manager. Prior to joining Mariner, he worked at Deloitte & Touche within the firm’s Investment Management Business Advisory Services consulting group in New York. Prior to that, he held the Product Controller position at Gabelli Asset Management responsible for managing the middle office and its functions for all alternative products and their respective trading activities. He started his current offices in January 1999. Previously, he joined Market Guide Inc. in September 1996 to assistcareer at Arthur Andersen working as an auditor in the formationFinancial Service Industry Asset Management & Capital Markets Group specializing in brokerage and hedge funds. Recently, he served as Head of its credit information services division. From 1993 to 1996,Finance & Operations for financial technology platforms specializing in creating technology and service models for private equity, hedge fund, wealth management, and service providers. Mr. Fensterstock was with Information Clearinghouse Incorporated (“ICI”) and was closely involved in the formationGargano is a graduate of its credit reporting service.Harvard Business School. In addition, to being responsible for the publicationhe graduated with honors from Cornell University’s College of the various facets of this credit reporting service, he was chief operatingBusiness in Applied Economics, Management, and financial officer of ICI. From 1989 through 1992, Mr. Fensterstock was Vice President-Controller, Treasurer and Corporate Secretary for a private entity formed to acquire Litton Industries’ office products operations in a leveraged buyout. There, he spent over 2 years acting as de facto chief financial officer. Mr. Fensterstock is a certified public accountant who began his career in 1973 with Arthur Andersen LLP. He earned a BA degree in economics from Queens College and an MBA degree from The University of Chicago Business School.Accounting.

Andrew J. Melnick has been a Director since March 2005. He has been a Managing Partner of SkyView Investment Advisors since 2010. The firm acts as an investment advisor to various independent investment organizations. From 2014 to 2015, Mr. Melnick was the Chief Investment Strategist and a shareholder in the investment advisory firm BPV Capital Management, which provided investment advisory services to institutions and individual clients. From 2005 to 2009, Mr. Melnick helped manage two hedge funds. He retired from Goldman, Sachs & Co. at the end of 2004. He joined Goldman Sachs in 2002 as Co-Director of its Global Investment Research Division and a member of its Management Committee. Prior to joining Goldman Sachs, Mr. Melnick was Senior Vice President and Director of the Global Securities and Economics Research Group of Merrill Lynch. During his 13 years at Merrill Lynch, he expanded the Firm’s Research Group from primarily a domestic effort to one with research offices in 26 countries around the world. During that period Merrill Lynch was ranked as the top research department in nearly all regions of the world including six straight times as the number one equity research department in the United States. Previous employment: President of Woolcott & Co., a boutique research and investment banking firm; Director of Research and a Partner of L.F. Rothschild Unterberg Towbin; and Senior Analyst at Drexel Burnham Lambert. He was a U.S. Army Signal Corps Officer and served in Vietnam. Mr. Melnick is a Commissioner of the Monmouth County Improvement Authority, a member of the Board of Trustees of the Monmouth Medical Center, and serves on the Board of Governors of the American Jewish Committee and acts as Chairman of their Investment Committee. Mr. Melnick earned a BA in economics and MBA in finance from Rutgers. He is a Chartered Financial Analyst (C.F.A.).

Jeffrey S. GeisenheimerRichard Lippe has been a Director since December 2005. He has beenMay 2020. Mr. Lippe was one of the Chief Financial Officer/Chief Operating Officer for Estimize, Inc., founding members and a crowd-sourced financial estimates platform, since December 2017partner of the law firm Meltzer, Lippe, Goldstein and has served as a director since July 2016. Prior to joining Estimize, Inc., Mr. Geisenheimer was Chief Financial Officer for the Coleman Research Group, Inc., a primary research firm serving the investment and corporate communities, from 2011 to 2017.Breistone, LLP (1979-2004). Prior to that, Mr. Geisenheimerhe was a founding member and partner of the CFO of five private equity-backed companies (Ford Models, Inc.law firm Lippe, Ruskin, Schlissel and Moscou, LLP (1966-1978), from 2008 to 2011, Managed Systems, Inc., from 2007 to 2008, Register.com, Inc., 2007, Instant Information, Inc., from 2005 to 2007 and Moneyline Telerate, Inc., from 2003 to 2005) and two publicly traded companies (Multex.com, Inc., from 1999 to 2003, and Market Guide, Inc., from 1987 to 1999)was Deputy County Attorney for Nassau County, N.Y. (1964-1966). While CFOactively practicing law, among other things, he chaired the Corporate and Technology Groups at threethe two firms. He has extensive experience representing mature, middle and early stage private and public companies, and has provided other ongoing business related activities and advice to management and boards of these companies (Market Guide, Multexdirectors and Moneyline Telerate) he oversaw their acquisition by much larger corporations. Mr. Geisenheimer receivedgeneral partners. He has frequently served as general counsel and/or a BBA degree in banking and financemember of the board and an MBAactive business advisor to a number of companies. Mr. Lippe has a B.A. degree in accounting from Hofstra University.Tufts University and a J.D. degree from the University of Pennsylvania.

4037
Joshua M. Flum has been a Director since September 2007. He has been an executive with CVS Health Corporation since July 2004. Mr. Flum began his career at CVS Health in Store Operations and is currently Executive Vice President, Enterprise Strategy and Corporate Development.Digital. Mr. Flum is a graduate of the Yale Law School and spent the first years of his professional career clerking for the Honorable Edward R. Becker, Chief Judge of the United States Court of Appeals for the Third Circuit, and then at the law firm of Miller, Cassidy, Larroca and Lewin, LLP. He then joined the Boston Consulting Group where his work focused on the consumer and retail practice area. Mr. Flum is the son of Jerome Flum.

Richard J. James has been a Director since 1992. He is currently retired. He was a Consultant for Sigma Breakthrough Technologies, Inc. from 2005 to 2013, working with leading international and domestic Fortune 500 companies to improve their new product development and operational processes. From 1980 until 2002, Mr. James served as the Technical Manager for Polaroid Corporation’s Consumer Hardware Division, supporting manufacturing plants in Scotland, China and the United States. In this role, he was responsible for increasing the business performance of Polaroid’s instant consumer cameras through improved manufacturing processes and product redesigns. From 1968 through 1979, Mr. James was President of James Associates, a group of businesses involving accounting and tax preparation, small business consulting, real estate sales and rentals, and retail jewelry sales. Mr. James was a founding Board member and VP Finance of the Boston Chapter of the Society of Concurrent Product Development. Mr. James holds a BS in chemical engineering from Northeastern University and has completed extensive managerial and technical subjects.

The Company’s By-Laws provide that (a) directors shall be elected to hold office until the next annual meeting of stockholders and that each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which the director was elected and until a successor has been elected, and (b) officers shall hold office until their successors are chosen by the Board of Directors, except that the Board may remove any officer at any time.

Significant Employees

Peter Roma is the Senior Vice President of Sales and Service. He is responsible for both new sales growth and the servicing of our current subscriber base. He joined the Company in October 2004 as an Account Executive. Mr. Roma has over 35 years of sales experience. He started with Metropolitan Insurance Company but spent most of his career in financial services working for Shearson Lehman Bros., Inc. and then Merrill, Lynch, Pierce, Fenner & Smith where he was a Vice President-Private Client.  

Michael Broos has beenis the Chief Technology Officer and has been with the company since December 2001. He has more than 40 years of experience leading technology teams in the development and implementation of software applications for the Internet, Windows, DOS, and mainframes. Before joining the Company, Mr. Broos was Senior Vice President of Technology for About.com; Chief Technology Officer of Fan2Fan.com; Chief Technology Officer of AKA.com; Vice President of Internet Solutions for Inventure.com; and Vice President of Software Development for Dun & Bradstreetfor 8 years. Prior to joining Dun & Bradstreetin 1990, Mr. Broos was an independent consultant and entrepreneur for 10 years, during which time he co-founded several software companies, including Infocom (the creators of Zork). Mr. Broos began his career with a ten-year stint on the academic computer research staff of the M.I.T. Laboratory of Computer Science, where he developed interactive, graphical and email-based applications for the ARPANET (the precursor of today’s Internet).

Michael Clark is the Senior Vice President of Information Technology and is responsible for all aspects of technology. Previously, he had been Vice President of Software Development. Mr. Clark joined the company in 2002.  Mr. Clark brings over 30 years of software design and development experience. Prior to joining the Company, from 1997-2001, Mr. Clark was Director of Software Development for The Technology Group, creating early web-based smart-document and legal expert systems. From 1988 to 1996 he helped develop the award-winning word processing system Nota Bene, enabling multi-lingual document editing in Windows and MS-DOS systems. Mr. Clark has a B.A. in Computational Mathematics from the University of Buffalo.

38
Kirk Ellis is the Senior Vice President of Quality Assurance and has led the QA department since 2008. Mr. Ellis guides a team of more than 30 data and financial analysts who ensure the data quality and integrity of our information and scores, including benchmarking the ongoing accuracy of our proprietary FRISK®Score. He joined CreditRiskMonitor in 2005 as a research analyst and has held a series of progressively responsible data leadership roles. Mr. Ellis has more than 20 years of experience in information services, focused on financial data collection, quality and research. Before coming to CreditRiskMonitor, he managed data and analytics teams at Citigate Financial Intelligence and at Thomson Financial Research. Mr. Ellis holds a BA in Economics from the State University of New York at Purchase.

Camilo Gomez, Ph.D.  is Senior Vice President of Data Science and returned to CreditRiskMonitor in November 2020, having first joined the Company in October 2009 and leadsof 2009. During his decade-long tenure, which ended in June of 2019, Dr. Gomez served as Senior Vice President of Quantitative Research. In between stints at CreditRiskMonitor, Dr. Gomez held the Quantitative Research effort at the Company.role of Chief Analytics Officer for Beyond Finance, Inc. Prior to joining the Company in 2009, Dr. Gomez was a principal at Lone Pine Mesa LLC, where he consulted with companies in the area of specialty finance since 2005. Prior to that, he was a Managing Director at Standard & Poor’s Risk Solutions group since 2001. Before S&P, Dr. Gomez was co-founder and Group Head for Financial Analytics for the Center for Adaptive Systems & Applications (“CASA”), a company spun off from the Los Alamos National Laboratory where he had been a researcher. Formed in collaboration with Citibank, CASA provided quantitative analytical consulting services to Fortune 500 companies. A major focus at CASA was to develop scoring and economic response models covering different regions of the globe.Applications. Dr. Gomez earned a B.S. in 1980 and a Ph.D. in 1985 from the Massachusetts Institute of Technology.
41
Melinda M. Stach joined the Company in January 2017 to lead marketing efforts. She has more than 17 years of financial services and B2B experience in marketing. Prior to joining CreditRiskMonitor, Ms. Stach was a senior director of Golub Capital where she headed marketing operations. In this position, she played a vital role in leading the integration of the firm's marketing automation and CRM solutions, which helped align marketing and sales efforts. Ms. Stach also conceived and spearheaded hundreds of major marketing campaigns, programs and events over her 13-year tenure at Golub Capital, leading teams through strategy, implementation and analysis. Prior to Golub Capital, Ms. Stach was a marketing manager at TD Capital where she coordinated global marketing campaigns. Ms. Stach has a breadth of marketing expertise in advertising, branding, marketing communications, media/PR and marketing operations. Ms. Stach holds a B.B.A in Business Studies with distinction, concentrated in Marketing and Management, from Pace University.

Peter Roma joined the Company in October 2004 as an Account Executive. In 2010, he was promoted to Vice President of Sales where he was tasked with implementing firm wide the sales process he had developed while an Account Executive. In August 2017, he was promoted to the newly formed position of Senior Vice President of Sales and Service, and is now responsible for both new sales growth and the servicing of our current subscriber base. Mr. Roma has over 35 years of sales experience. He started with Metropolitan Insurance Company but spent most of his career in financial services working for Shearson Lehman Bros., Inc. and then Merrill, Lynch, Pierce, Fenner & Smith where he was a Vice President-Private Client.

The Audit Committee

The Audit Committee shall assist the Board of Directors in fulfilling its responsibility to the shareholders, potential shareholders and investment community relating to corporate accounting, reporting practices of the Company and the quality and integrity of the Company’s financial reporting. To fulfill its purposes, the Committee’s duties shall include to:

·Appoint, evaluate, compensate, oversee the work of, and if appropriate terminate, the independent auditor, who shall report directly to the Committee.
Appoint, evaluate, compensate, oversee the work of, and if appropriate terminate, the independent auditor, who shall report directly to the Committee.

·Approve in advance all audit engagement fees and terms of engagement as well as all audit and non-audit services to be provided by the independent auditor.
Approve in advance all audit engagement fees and terms of engagement as well as all audit and non-audit services to be provided by the independent auditor.

·Engage independent counsel and other advisors, as it deems necessary to carry out its duties.
Engage independent counsel and other advisors, as it deems necessary to carry out its duties.

In performing these functions, the Audit Committee meets periodically with the independent auditors and management to review their work and confirm that they are properly discharging their respective responsibilities. The Audit Committee met fourfive times duringin connection with the last fiscal year,year’s audit, prior to the filing of the Company’s annual and quarterly SEC reports.

The Audit Committee currently consists of its outside directors – Andrew Melnick, Jeffrey Geisenheimer,Richard Lippe, and Joshua FlumFlum.  Both Andrew Melnick and Richard James, all of whom, except Mr. Flum,Lippe are independent, and Andrew Melnick is an audit committee financial experts and are independent,expert, as such terms are defined by the SEC.
42

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission (“SEC”) initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Such persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file.

39
To the Company’s knowledge, based solely on its review of the copies of such reports received by it with respect to fiscal 2017,2020, or written representations from certain reporting persons, the Company believes that all filing requirements applicable to its directors, officers and persons who own more than 10% of a registered class of the Company’s equity securities have been timely complied with.

Code of Ethics

CreditRiskMonitor’s Board of Directors has adopted a Code of Ethics for its Principal Executive Officer and Senior Financial Officers. This Code applies to the Company’s Chief Executive Officer, PresidentChief Operating Officer and Chief Financial Officer (who also is the Company’s principal accounting officer).


ITEM 11.EXECUTIVE COMPENSATION.

The following table shows all cash compensation paid or to be paid by the Company during the fiscal years indicated to the chief executive officer and all other executive officers of the Company as of the end of the Company’s last fiscal year.

SUMMARY COMPENSATION TABLE
Name and Principal
Position
YearSalary
Bonus (1)
Option Awards (2)
All Other
Compensation
Total
Jerome S. Flum, Chairman and Chief Executive Officer
2017
2016
$
$
180,360
175,100
$
$
18,000
38,000
$
$
2,971
 2,850
$
$
-0-
 -0-
$
$
201,331
215,950
William B. Danner, President
2017
2016
$
$
217,080
210,700
$
$
39,400
63,000
$
$
12,114
 12,109
$
$
-0-
 -0-
$
$
268,594
285,809
Lawrence Fensterstock, Senior Vice President
2017
2016
$
$
180,360
175,100
$
$
45,000
61,000
$
$
1,461
 1,459
$
$
-0-
 -0-
$
$
226,821
237,559
 SUMMARY COMPENSATION TABLE 
 
Name and Principal
Position
 Year  Salary  
Bonus (1)
  
Option Awards (2)
  
All Other
Compensation
  Total 
 Jerome S. Flum, Chairman and Chief Executive Officer  
2020
2019
  
$
$
157,292
188,640
  
$
$
0
 4,400
  
$
$
1,200
 51
  
$
$
-0-
 -0-
  
$
$
158,492
193,091
 
 
Michael I. Flum, President (3)
  
2020
2019
  
$
$
172,765
147,700
  
$
$
7,250
28,880
  
$
$
3,235
 799
  
$
$
-0-
 -0-
  
$
$
183,250
177,379
 
 
Lawrence Fensterstock, Senior Vice President (4)
  
2020
2019
  
$
$
141,146
188,640
  
$
$
15,000
44,080
  
$
$
0
1,461
  
$
$
-0-
 -0-
  
$
$
156,146
234,181
 
 
Steven Gargano, Senior Vice President (5)
  2020  
$
166,385
  
$
37,000
  
$
898
  
$
-0-
  
$
204,283
 
 
Jonathan L. Levy, Senior Vice President (6)
  
2020
2019
  
$
$
199,152
 66,667
  
$
$
0
11,830
  
$
$
0
 72
  
$
$
-0-
 -0-
  
$
$
199,152
 78,569
 

(1) The amounts in this column reflect bonuses awarded for the fiscal year shown but paid in the subsequent fiscal year.

(2) Represents the compensation costs of stock option awards for financial reporting purposes for the year under ASC 718, rather than an amount paid to or realized by the Named Executive Officer. See Note 5 of the Notes to Financial Statements for a discussion of the assumptions used in calculating the aggregate grant date fair value computed in accordance with ASC 718. The ASC 718 value as of the grant date for stock options is spread over the number of months of service required for the grant to become non-forfeitable. There can be no assurance that the ASC 718 amounts will ever be realized.

4340
(3) Mr. Michael Flum was elected Senior Vice President and Chief Operating Officer on October 24, 2019. He was subsequently elected President on October, 29, 2020.

(4) Mr. Fensterstock resigned as Chief Financial Officer on March 31, 2020, and retired on June 30, 2020.

(5) Mr. Gargano joined the Company as Senior Vice President in January 2020, and was elected Senior Vice President, and Chief Financial Officer on April 1, 2020.

(6) Mr. Levy joined the Company as Senior Vice President and General Counsel in September 2019. The General Counsel position was eliminated on December 28, 2020.

Outstanding Equity Awards

NoThe following table sets forth all stock options stock awards or stock appreciation rights were granted to the Company’s executive officers during the last fiscal year.year:

 GRANTS OF PLAN-BASED AWARDS 
    Equity Grants 
 Name Grant Date  
All Other Stock
Awards:
Number of
Shares of Stock
or Units (#)
  
All Other
Option Awards:
Number of
Securities
Underlying
Options (#)
  
Exercise or Base
Price of Option
Awards ($/Sh)
  
Grant Date Fair
Value of Stock
and Option
Awards
 
 
Michael I. Flum
  10-29-20   N/A   25,000  
$
2.19
  
$
54,750
 
 
Steven Gargano
  7-29-20   N/A   12,000  
$
1.80
  
$
21,600
 
 
Steven Gargano
  10-29-20   N/A   3,000  
$
2.19
  
$
6,570
 

The following table reflects outstanding equity grants to the Company’s executive officers as of December 31, 2017:2020:

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 
Name 
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
  
Number of
 Securities
Underlying
Unexercised
Options
(#)
Un exercisable
  
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
 Unexercised
Unearned
Options
(#)
  
Option Exercise
Price
($)
  
Option
Expiration Date
 
Jerome S. Flum  -0-   5,000   -0-  $3.19   01-05-21 
William B. Danner  
7,800
2,600
-0-
   
5,200
3,900
5,000
   
-0-
-0-
-0-
  
$
$
$
5.58
2.32
2.90
   
01-14-21
07-11-22
01-05-26
 
Lawrence Fensterstock  
1,040
-0-
   
1,560
3,000
   
-0-
-0-
  
$
$
2.32
2.90
   
07-11-22
01-05-26
 
41
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 
Name 
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
  
Number of
Securities
Underlying
Unexercised
Options
(#)
Un-exercisable
  
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
  
Option Exercise
Price
($)
  
Option
Expiration Date
 
Jerome S. Flum
  1,000   4,000   -0-  
$
3.19
   01-05-21 
Michael I. Flum
  
-0-
-0-
   
50,000
25,000
   
-0-
-0-
  
$
$
1.45
2.19
   
10-24-29
10-29-29
 
Steven Gargano
  
-0-
-0-
   
12,000
3,000
   
-0-
-0-
  
$
$
1.80
2.19
   
07-29-29
10-29-29
 

The closing market price of the Company’s common stock on December 31, 20172020 was $1.75$2.35 per share.

The options under Messrs. Flum’s, Danner’s and Fensterstock’sthe above grants may be exercised after four years in installments upon the attainment of specified length of service. In the event of a change in control (as defined), the options will vest in full at the time of such change in control.

4442
Directors’ Fees

Effective January 1, 2016, non-employee directors receive $1,000 per quarter or a total of $4,000 per calendar year.

DIRECTOR COMPENSATIONDIRECTOR COMPENSATION DIRECTOR COMPENSATION 
Name 
Fees Earned or
Paid in Cash
  
Option
Awards(1)
  Total  

Fees Earned or
Paid in Cash
  
Option
Awards(1)
  Total 
Andrew J. Melnick $4,000  $2,331  $6,331  
$
4,000
  
$
1,852
  
$
5,852
 
Jeffrey S. Geisenheimer(2) $4,000  $2,331  $6,331  
$
1,000
  
$
0
  
$
1,000
 
Joshua M. Flum $4,000  $2,805  $6,805  
$
4,000
  
$
6,076
  
$
10,076
 
Richard J. James $4,000  $2,331  $6,331 
Richard Lippe (3)
 
$
2,000
  
$
326
  
$
2,326
 

(1) Represents the compensations costs for financial reporting purposes for the year under ASC 718. See Note 5 to the Notes to Financial Statements for the assumptions made in determining ASC 718 values.

(2) Resigned for personal reasons on May 5, 2020.

(3) Elected as an independent member to the Board of Directors on May 6, 2020.

4543
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth as of March 5, 201815, 2021 information regarding the beneficial ownership of the Company’s voting securities (i) by each person or group known by the Company to be the owner of record or beneficially of more than five percent of the Company’s voting securities, (ii) by each of the Company’s directors and executive officers, and (iii) by all directors and executive officers of the Company as a group. Except as indicated in the following notes, the owners have sole voting and investment power with respect to the shares. Unless otherwise noted, each owner’s mailing address is c/o CreditRiskMonitor.com, Inc., 704 Executive Boulevard, Valley Cottage, NY 10989.

Name of
Beneficial Owner
 
Amount and Nature of
Beneficial Ownership(1)
 
Percent of
Class
 
Santa Monica Partners, L.P.
SMP Asset Management, LLC
Lawrence J. Goldstein(2)
  1865 Palmer Avenue
  Larchmont, NY 10538
  822,220  7.54%
Tabatabai Investment Management LLC
Tabatabai Investment Partners LP
Alex Tabatabai(3)
  540 N Dearborn Street, #101257
  Chicago, IL 60610
  727,430  6.67%
Flum Partners (4)
  5,641,134  51.73%
Jerome S. Flum  
6,238,776 (5)(6) 
  57.21%
William B. Danner  193,439  1.77%
Lawrence Fensterstock  141,858  1.30%
Andrew J. Melnick  58,370  -----* 
Jeffrey S. Geisenheimer  124,048  1.14%
Joshua M. Flum  9,100  -----*
Richard J. James  63,050  -----*
All directors and executive officers
(as a group (7 persons))
  
6,828,641 (5)(6) 
  62.62% 
Name of
Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percent of
Class
5% or Greater Stockholders  
Santa Monica Partners, L.P.
SMP Asset Management, LLC
Lawrence J. Goldstein(1)
  1865 Palmer Avenue
  Larchmont, NY 10538
693,744
 6.47%
Tabatabai Investment Management LLC
Tabatabai Investment Partners LP
Alex Tabatabai(2)
  540 N Dearborn Street, #101257
  Chicago, IL 60610
727,4306.72%
Flum Partners (3)
5,641,13452.08%
Named Executive Officers  
Jerome S. Flum
6,239,776 (4)(5)
57.61%
Michael I. Flum
   6,500-----*
Non-Employee Directors  
Andrew J. Melnick (6)
   63,070-----*
Richard Lippe
  49,903-----*
Joshua M. Flum (7)
  13,800-----*
All directors and executive officers
(as a group (5 persons))
6,373,049 (4)(5)
59.30%

*less than 1%

(1) Does not give effect to (a) options to purchase 175,840 shares of Common Stock granted to 29 officers and employees pursuant to the 2009 Long-Term Incentive Plan of the Company, and (b) options to purchase an aggregate of 62,600 shares granted to the non-employee directors pursuant to the 2009 Long-Term Incentive Plan of the Company. All of the foregoing options are not exercisable within sixty days. Includes 2,600 shares of Common Stock issued to Flum Partners in consideration of loans to the Company. Includes options to purchase 10,400 shares of Common Stock granted to non-employee directors, 14,040 of Common Stock granted to Messrs. Danner and Fensterstock, and 158,470 shares of Common Stock granted to 12 employees, all of which are immediately exercisable.
46
(2) Based on the information contained in a Schedule 13G/A filed February 9, 2018.1, 2019. The general partner of Santa Monica Partners, L.P. is SMP Asset Management, LLC. Lawrence J. Goldstein is an individual investor, the sole managing member and the sole owner of SMP Asset Management, LLC, and may be deemed to beneficially own these shares.

44
(3)(2) Based on the information contained in a Schedule 13D filed April 11, 2017. Tabatabati Investment Management LLC is the general partner of Tabatabati Investment Partners LP. The managing member of Tabatabi Investment Management LLC is Alex Tabatabai.

(4)(3) The sole general partner of Flum Partners is Jerome S. Flum, Chairman of the Board and Chief Executive Officer of the Company.

(5)(4) Includes 5,641,134 shares owned by Flum Partners, of which Mr. Flum is the sole general partner, which are also deemed to be beneficially owned by Mr. Flum because of his power, as sole general partner of Flum Partners, to direct the voting of such shares held by the partnership. Mr. Flum disclaims beneficial ownership of the shares owned by Flum Partners. The 6,238,7766,239,776 shares of Common Stock, or 57.21%57.61% of the outstanding shares of Common Stock, may also be deemed to be owned, beneficially and collectively, by Flum Partners and Mr. Flum, as a “group”, within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Act”).

(6)(5) Includes 7,800 shares of Common Stock owned by a grandchild of Mr. Flum, the beneficial ownership of which is disclaimed by Mr. Flum. Also, includes 260,000 shares of Common Stock owned by Family Trusts established by Mr. Flum, the beneficial ownership of which is disclaimed by Mr. Flum.

(6) Includes 55,770 shares of Common Stock and 7,300 shares of Common Stock which may be acquired upon the exercise of stock options which have vested or will vest within 60 days of March 10, 2020.

(7) Includes 6,500 shares of Common Stock and 7,300 shares of Common Stock which may be acquired upon the exercise of stock options which have vested or will vest within 60 days of March 10, 2020.

The Company’s current equity compensation plan approved by stockholders is the 20092020 Long-Term Incentive Plan. The 20092020 Long-Term Incentive Plan provides for the grant of options and other awards up to an aggregate of 1,300,0001,000,000 shares of common stock. The Company’s previous equity compensation plan approved by stockholders was the 2009 Long-Term Incentive Plan. The 2009 Long-Term Incentive Plan provided for the grant of options and other awards up to an aggregate of 1,000,000 shares of common stock.  This plan expired at the end of 2019.

The following table summarizes information about the Company’s common stock that may be issued upon the exercise of options, warrants and rights under all equity compensation plans of the Company as of December 31, 2017.2020.

Plan category 
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
  
Weighted average
exercise price of
outstanding
options, warrants
and rights
  
Number of
securities
remaining available
for
future issuance
under
equity
compensation
plans (excluding
securities reflected
in
first column)
  
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
  
Weighted average
exercise price of
outstanding
options, warrants
and rights
  
Number of
securities
remaining available
for
future issuance
under
equity
compensation
plans
(excluding
securities reflected
in
first column)
 
Equity compensation plans
approved by stockholders
  421,350  $3.05   878,390   
575,750
  
$
2.17
   
817,900
 
Total  421,350  $3.05   878,390   
575,750
  
$
2.17
   
817,900
 

4745
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

There were no such reportable relationships or related transactions in 2017.2020.

ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES.

The aggregate fees incurred by CohnReznick LLP for professional services rendered to the Company for the last two fiscal years are as follows:

 
Fiscal Year Ended
December 31,
  
Fiscal Year Ended
December 31,
 
 2017  2016  2020  2019 
            
Audit fees (1)
 $99,000  $95,000  
$
106,250
  
$
103,250
 
Audit related fees (2)
  -   -  7,500
  -
 
Tax fees (3)
  11,550   10,000  
12,800
  
12,600
 
All other fees  -   -   -
   -
 
              
Total fees $110,550  $105,000  
$
126,550
  
$
115,850
 

(1)
Consists of fees for services provided in connection with the audit of the Company’s financial statements and review of the Company’s quarterly financial statements.

(2)
Consists of fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit fees.”

(3)
Consists of fees for preparation of federal and state income tax returns.

The engagement of CohnReznick LLP for the 20172020 and 20162019 fiscal years and the scope of audit-related services, including the audits and reviews described above, and tax services were all pre-approved by the Audit Committee.

The policy of the Audit Committee is to pre-approve the engagement of the Company’s independent auditors and the furnishing of all audit and non-audit services.

4846
PART IV

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)
Financial Statements – contained in Item 8:

 Page
  
Report of Independent Registered Public Accounting Firm
2217
Balance Sheets - December 31, 20172020 and 20162019
2318
Statements of Operations - Years Ended December 31, 20172020 and 20162019
2419
Statements of Stockholders’ Equity - Years Ended December 31, 20172020 and 20162019
2520
Statements of Cash Flows - Years Ended December 31, 20172020 and 20162019
2621
Notes to Financial Statements
2722

(b)Exhibits:

-Copy of the Company’s Amended and Restated Articles of Incorporation dated as of May 7, 1999 (incorporated by reference to Form 10-KSB for the year ended December 31, 1999, filed March 29, 2000)
-Copy of the Company’s By-Laws as amended April 27, 1987 and May 11, 1999 (incorporated by reference to Form 10-KSB for the year ended December 31, 2005, filed March 31, 2006)9, 2020
-
Copy of Company’s 2009 Long-Term Incentive Plan (incorporated by reference to Definitive Statement on Schedule 14C, filed October 22, 2010)
-
Copy of Company’s 2020 Long-Term Incentive Plan
-
CreditRiskMonitor.com, Inc. Code of Ethics for Principal Executive Officer and Senior Financial Officers (incorporated by reference to Form 10-KSB for the year ended December 31, 2003, filed March 30, 2004)
-
Consent of Independent Registered Public Accounting Firm
-
Certification of Chief Executive Officer
-
Certification of Chief Financial Officer
-
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
-
Certification of Chief 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
-
XBRL Instance Document
101.SCH
-
XBRL Taxonomy Extension Schema Document
101.CAL
-
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
-
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
-
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
-
XBRL Taxonomy Extension Presentation Linkbase Document

*
Filed herewith.

4947
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

CREDITRISKMONITOR.COM, INC.
(REGISTRANT)

Date: March 27, 201825, 2021
By:
/s/
Jerome S. Flum
  
Jerome S. Flum
 
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: March 27, 201825, 2021
By:
/s/
Jerome S. Flum
Jerome S. Flum
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
   
Jerome S. Flum
Date: March 25, 2021
By:
/s/ Steven Gargano
Steven Gargano
Chief Financial Officer
(Principal Financial and Accounting Officer)
   
Chairman of the Board and  Chief Executive Officer
Date: March 25, 2021
By:
/s/ Andrew J. Melnick
Andrew J. Melnick
Director
   
(Principal Executive Officer)
Date: March 25, 2021
By:
/s/ Richard Lippe

Date: March 27, 2018By:/s/
Richard Lippe
Lawrence Fensterstock
Director
   
Lawrence Fensterstock
Date: March 25, 2021
By:
/s/ Joshua M. Flum
  Chief Financial Officer
Joshua M. Flum
  (Principal Financial and Accounting Officer)
Director


Date: March 27, 2018By:/s/Andrew J. Melnick
Andrew J. Melnick
Director

Date: March 27, 2018By:/s/Jeffrey S. Geisenheimer
Jeffrey S. Geisenheimer
Director

Date: March 27, 2018By:/s/Joshua M. Flum
Joshua M. Flum
Director

Date: March 27, 2018By:/s/Richard J. James
Richard J. James
Director
5048