☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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 Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
None | N/A | N/A |
Large accelerated filer ☐ | Accelerated filer ☐ | ||
Non-accelerated filer ☑ | Smaller reporting company ☑ | ||
Emerging growth company ☐ |
ITEM 1. | BUSINESS |
(1) |
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 |
ii. | The |
(2) | The Credit Limit Service product, an add-on subscription service, helps subscribers manage credit line limits for their customers, in light of changes in the customers’ financial strength. Available since 2007, this interactive product 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. The Credit Limit Service is fully integrated with the Fundamental Service, allowing subscribers to engage in deep analysis when specific credit line limits are questioned or further explanations are required. The additional fee is based, in part, on the number of companies evaluated during the annual subscription period, and includes email monitoring alerts. |
(3) | The Financial Statement |
(4) |
• | Low price. The prices of CreditRiskMonitor’s SaaS subscription products are low as compared to a subscriber’s possible losses from not being paid, and are low as compared to the cost of most competitive credit analysis 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, as 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 recurring 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 (LBOs, 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 very accurate number of the totals, but according to the Bank for International Settlements, as of June 2021, the notional value of Over-the-Counter Credit Default Swap Derivatives was $610 trillion4. For perspective, the world GDP estimate for the full year is approximately $89 trillion and the market value of all worldwide domestic equity was approximately $120 trillion5. 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 putting a premium on the speed and analytic strength of CreditRiskMonitor’s products. |
• | Recurring revenue stream. The recurring annual revenue stream of its SaaS subscription fee model gives the Company stability not found in a traditional, non-subscription 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 SaaS subscription products; therefore, its production costs, apart from the development cost of enhancing and upgrading the Company’s web platform, 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 SaaS subscription products if the Company chooses to increase content and not raise its prices to cover these additional costs. |
• | Self-financing. CreditRiskMonitor’s business has no inventory, manufacturing, or warehouse facilities, and payments for its products are made early in the subscription period with nearly all subscribers paying annual fees without termination for convenience rights as opposed to monthly or quarterly contracts. Thus, the Company’s business has a low capital intensity and is capable of generating high margins and sufficient positive cash flow to grow the business organically with little need for external capital. |
• | Management. CreditRiskMonitor has an experienced management team with proven talent in business credit evaluation systems and SaaS web development. The Company’s senior management team has an average tenure of over 15 years. |
• | 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 subscribers are unaware of its SaaS subscription products, while many others who are aware of CreditRiskMonitor have not evaluated its products. |
• | 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 SaaS subscription products. |
• | Broaden the services supplied. Revenue per subscriber may increase over time as the Company adds functionality, content, and new products. Also, revenue per subscriber should increase over time as the Company sells additional seat licenses (upsell) and products (cross-sell) to existing subscribers. |
• | Lowest cost provider. CreditRiskMonitor’s sourcing, analysis, and preparation of data into a usable form are highly automated. CreditRiskMonitor delivers all of its information to subscribers 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 customer service level for subscribers. |
• | 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 SaaS subscription products’ income stream. The Company has lower sales expenses for subscriber 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 subscribers over the Company’s in-place fixed costs. |
ITEM 2. | PROPERTIES. |
ITEM 3. | LEGAL PROCEEDINGS. |
ITEM 4. | MINE SAFETY DISCLOSURES. |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
High Bid | Low Bid | High Bid | Low Bid | |||||||||||||
2018 | ||||||||||||||||
2020 | ||||||||||||||||
First Quarter | $ | 2.15 | $ | 1.85 | $ | 1.62 | $ | 1.23 | ||||||||
Second Quarter | $ | 2.40 | $ | 1.99 | $ | 1.55 | $ | 1.40 | ||||||||
Third Quarter | $ | 2.25 | $ | 1.05 | $ | 2.30 | $ | 1.40 | ||||||||
Fourth Quarter | $ | 2.05 | $ | 1.55 | $ | 2.47 | $ | 2.10 | ||||||||
2019 | ||||||||||||||||
2021 | ||||||||||||||||
First Quarter | $ | 2.05 | $ | 1.60 | $ | 2.65 | $ | 2.18 | ||||||||
Second Quarter | $ | 1.75 | $ | 1.20 | $ | 3.29 | $ | 2.30 | ||||||||
Third Quarter | $ | 1.60 | $ | 1.20 | $ | 2.57 | $ | 1.90 | ||||||||
Fourth Quarter | $ | 1.60 | $ | 1.23 | $ | 2.02 | $ | 1.63 |
ITEM 6. | SELECTED FINANCIAL DATA. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
2019 | 2018 | 2021 | 2020 | |||||||||||||
Cash and cash equivalents | $ | 8,276 | $ | 8,067 | $ | 12,382 | $ | 10,303 | ||||||||
Accounts receivable, net | $ | 2,288 | $ | 2,455 | $ | 2,803 | $ | 2,557 | ||||||||
Working capital | $ | 832 | $ | 1,117 | $ | 3,964 | $ | 848 | ||||||||
Cash ratio | 0.80 | 0.81 | 1.04 | 0.79 | ||||||||||||
Quick ratio | 1.03 | 1.06 | 1.28 | 0.98 | ||||||||||||
Current ratio | 1.08 | 1.11 | 1.32 | 1.06 |
Year Ended December 31, | ||||||||||||||||||||||||||||||||
2019 | 2018 | Year Ended December 31, | ||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||
Amount | % of Total Revenue | Amount | % of Total Revenue | Amount | % of Total Revenue | Amount | % of Total Revenue | |||||||||||||||||||||||||
Operating revenues | $ | 14,501,173 | 100.00 | % | $ | 13,891,004 | 100.00 | % | $ | 17,065,132 | 100 | % | $ | 15,732,366 | 100 | % | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Data and product costs | 5,759,660 | 39.72 | % | 5,764,535 | 41.50 | % | 6,332,091 | 37 | % | 6,026,464 | 38 | % | ||||||||||||||||||||
Selling, general and administrative expenses | 8,347,083 | 57.56 | % | 8,257,619 | 59.44 | % | 8,134,694 | 48 | % | 9,724,182 | 62 | % | ||||||||||||||||||||
Depreciation and amortization | 207,224 | 1.43 | % | 190,156 | 1.37 | % | 296,299 | 2 | % | 219,847 | 1 | % | ||||||||||||||||||||
Total operating expenses | 14,313,967 | 98.71 | % | 14,212,310 | 102.31 | % | 14,763,084 | 87 | % | 15,970,493 | 102 | % | ||||||||||||||||||||
Income (loss) from operations | 187,206 | 1.29 | % | (321,306 | ) | (2.31 | %) | 2,302,048 | 13 | % | (238,127 | ) | (2 | %) | ||||||||||||||||||
Gain on forgiveness of bank loan | 1,561,500 | 9 | % | |||||||||||||||||||||||||||||
Other income, net | 155,852 | 1.08 | % | 129,111 | 0.93 | % | 9,962 | 0 | % | 26,774 | 0 | % | ||||||||||||||||||||
Income (loss) before income taxes | 343,058 | 2.37 | % | (192,195 | ) | (1.38 | %) | 3,873,510 | 23 | % | (211,353 | ) | (1 | %) | ||||||||||||||||||
Benefit from (provision for) income taxes | (125,464 | ) | (0.87 | %) | 12,863 | 0.09 | % | (509,806 | ) | (3 | %) | 163,925 | 1 | % | ||||||||||||||||||
Net income (loss) | $ | 217,594 | 1.50 | % | $ | (179,332 | ) | (1.29 | %) | $ | 3,363,704 | 20 | % | $ | (47,428 | ) | (0 | %) |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
2019 | 2018 | 2021 | 2020 | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 8,275,836 | $ | 8,066,899 | $ | 12,381,521 | $ | 10,302,732 | ||||||||
Accounts receivable, net of allowance of $30,000 | 2,287,921 | 2,454,585 | ||||||||||||||
Available-for-sale securities -municipal bonds | 0 | 458,237 | ||||||||||||||
Accounts receivable, net of allowance of $30,000 | 2,803,236 | 2,557,443 | ||||||||||||||
Other current assets | 549,821 | 561,861 | 581,149 | 589,072 | ||||||||||||
Total current assets | 11,113,578 | 11,083,345 | 15,765,906 | 13,907,484 | ||||||||||||
Property and equipment, net | 477,973 | 543,762 | 606,193 | 545,675 | ||||||||||||
Operating lease right-of-use asset | 2,380,974 | -- | 2,012,155 | 2,200,031 | ||||||||||||
Goodwill | 1,954,460 | 1,954,460 | 1,954,460 | 1,954,460 | ||||||||||||
Other assets | 35,723 | 35,613 | 86,714 | 84,892 | ||||||||||||
Total assets | $ | 15,962,708 | $ | 13,617,180 | $ | 20,425,428 | $ | 18,692,542 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Unexpired subscription revenue | $ | 8,651,843 | $ | 8,560,316 | $ | 9,520,226 | $ | 9,646,407 | ||||||||
Accounts payable | 137,500 | 94,767 | 358,307 | 130,089 | ||||||||||||
Current portion of operating lease liability | 147,229 | -- | 177,485 | 161,874 | ||||||||||||
Current portion of bank loan | 0 | 1,299,007 | ||||||||||||||
Accrued expenses | 1,344,550 | 1,311,218 | 1,745,290 | 1,822,485 | ||||||||||||
Total current liabilities | 10,281,122 | 9,966,301 | 11,801,308 | 13,059,862 | ||||||||||||
Deferred taxes on income, net | 521,765 | 490,381 | 407,805 | 333,432 | ||||||||||||
Unexpired subscription revenue, less current portion | 166,169 | 178,129 | 127,124 | 197,545 | ||||||||||||
Bank loan, less current portion | 0 | 262,493 | ||||||||||||||
Operating lease liability, less current portion | 2,299,433 | -- | 1,960,127 | 2,137,559 | ||||||||||||
Other liabilities | -- | 24,537 | ||||||||||||||
Total liabilities | 13,268,489 | 10,659,348 | 14,296,364 | 15,990,891 | ||||||||||||
Commitments and contingencies | 0 | 0 | ||||||||||||||
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 | ||||||||||||||
Preferred stock, $0.01 par value; authorized 5,000,000 shares; 0ne issued | 0 | 0 | ||||||||||||||
Common stock, $0.01 par value; authorized 32,500,000 shares; issued and outstanding 10,722,401 shares | 107,224 | 107,224 | ||||||||||||||
Additional paid-in capital | 29,705,673 | 29,650,760 | 29,824,242 | 29,760,533 | ||||||||||||
Accumulated deficit | (27,118,678 | ) | (26,800,152 | ) | (23,802,402 | ) | (27,166,106 | ) | ||||||||
Total stockholders’ equity | 2,694,219 | 2,957,832 | 6,129,064 | 2,701,651 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 15,962,708 | $ | 13,617,180 | $ | 20,425,428 | $ | 18,692,542 |
2019 | 2018 | 2021 | 2020 | |||||||||||||
Operating revenues | $ | 14,501,173 | $ | 13,891,004 | $ | 17,065,132 | $ | 15,732,366 | ||||||||
Operating expenses: | ||||||||||||||||
Data and product costs | 5,759,660 | 5,764,535 | 6,332,091 | 6,026,464 | ||||||||||||
Selling, general and administrative expenses | 8,347,083 | 8,257,619 | 8,134,694 | 9,724,182 | ||||||||||||
Depreciation and amortization | 207,224 | 190,156 | 296,299 | 219,847 | ||||||||||||
Total operating expenses | 14,313,967 | 14,212,310 | 14,763,084 | 15,970,493 | ||||||||||||
Income (loss) from operations | 187,206 | (321,306 | ) | 2,302,048 | (238,127 | ) | ||||||||||
Other income: | ||||||||||||||||
Gain on forgiveness of bank loan | 1,561,500 | 0 | ||||||||||||||
Other income, net | 155,852 | 129,111 | 9,962 | 26,774 | ||||||||||||
Income (loss) before income taxes | 343,058 | (192,195 | ) | 3,873,510 | (211,353 | ) | ||||||||||
Benefit from (provision for) income taxes | (125,464 | ) | 12,863 | |||||||||||||
(Provision for) Benefit from income taxes | (509,806 | ) | 163,925 | |||||||||||||
Net income (loss) | $ | 217,594 | $ | (179,332 | ) | $ | 3,363,704 | $ | (47,428 | ) | ||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.02 | $ | (0.02 | ) | $ | 0.31 | $ | (0.00 | ) | ||||||
Diluted | $ | 0.02 | $ | (0.02 | ) | $ | 0.31 | $ | (0.00 | ) |
Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||
Common Stock | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance January 1, 2018 | 10,722,401 | $ | 107,224 | $ | 29,559,784 | $ | (26,084,700 | ) | $ | 3,582,308 | ||||||||||
Net loss | - | - | - | (179,332 | ) | (179,332 | ) | |||||||||||||
Cash dividend paid | - | - | - | (536,120 | ) | (536,120 | ) | |||||||||||||
Stock-based compensation | - | - | 90,976 | - | 90,976 | |||||||||||||||
Balance December 31, 2018 | 10,722,401 | 107,224 | 29,650,760 | (26,800,152 | ) | 2,957,832 | ||||||||||||||
Net income | - | - | - | 217,594 | 217,594 | |||||||||||||||
Cash dividend paid | - | - | - | (536,120 | ) | (536,120 | ) | |||||||||||||
Stock-based compensation | - | - | 54,913 | - | 54,913 | |||||||||||||||
Balance December 31, 2019 | 10,722,401 | $ | 107,224 | $ | 29,705,673 | $ | (27,118,678 | ) | $ | 2,694,219 |
Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
Balance January 1, 2020 | 10,722,401 | $ | 107,224 | $ | 29,705,673 | $ | (27,118,678 | ) | $ | 2,694,219 | ||||||||||
Net loss | - | 0 | 0 | (47,428 | ) | (47,428 | ) | |||||||||||||
Stock-based compensation | - | 0 | 54,860 | 0 | 54,860 | |||||||||||||||
Balance December 31, 2020 | 10,722,401 | 107,224 | 29,760,533 | (27,166,106 | ) | 2,701,651 | ||||||||||||||
Net income | - | 0 | 0 | 3,363,704 | 3,363,704 | |||||||||||||||
Stock-based compensation | - | 0 | 63,709 | 0 | 63,709 | |||||||||||||||
Balance December 31, 2021 | 10,722,401 | $ | 107,224 | $ | 29,824,242 | $ | (23,802,402 | ) | $ | 6,129,064 |
2019 | 2018 | |||||||||||||||
2021 | 2020 | |||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income (loss) | $ | 217,594 | $ | (179,332 | ) | $ | 3,363,704 | $ | (47,428 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
Adjustments to reconcile net income (loss) to net | ||||||||||||||||
cash provided by operating activities: | ||||||||||||||||
Gain on forgiveness of bank loan | (1,561,500 | ) | 0 | |||||||||||||
Deferred income taxes | 31,384 | (23,952 | ) | 74,373 | (188,333 | ) | ||||||||||
Depreciation and amortization | 207,224 | 190,156 | 296,299 | 219,847 | ||||||||||||
Operating lease | 26,055 | 33,715 | ||||||||||||||
Stock-based compensation | 54,913 | 90,976 | 63,709 | 54,860 | ||||||||||||
Operating lease | 41,151 | -- | ||||||||||||||
Deferred rent | -- | 8,789 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable, net | 166,664 | (314,878 | ) | (245,793 | ) | (269,523 | ) | |||||||||
Other current assets | 12,040 | (31,162 | ) | 7,923 | 3,153 | |||||||||||
Other assets | (110 | ) | (12,150 | ) | (1,821 | ) | (91,068 | ) | ||||||||
Unexpired subscription revenue | 79,567 | 433,568 | (196,603 | ) | 1,025,940 | |||||||||||
Accounts payable | 42,733 | 35,866 | 228,219 | (7,412 | ) | |||||||||||
Accrued expenses | 33,332 | (33,308 | ) | (77,196 | ) | 477,936 | ||||||||||
Net cash provided by operating activities | 886,492 | 164,573 | 1,977,369 | 1,211,687 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Sale (purchase) of available-for-sale securities - municipal bonds | 458,237 | (458,742 | ) | |||||||||||||
Purchase of property and equipment | (141,435 | ) | (296,702 | ) | (356,817 | ) | (287,549 | ) | ||||||||
Net cash used in investing activities | (141,435 | ) | (296,702 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 101,420 | (746,291 | ) | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Dividend paid to stockholders | (536,120 | ) | (536,120 | ) | ||||||||||||
Proceeds from bank loan | 0 | 1,561,500 | ||||||||||||||
Net cash used in financing activities | (536,120 | ) | (536,120 | ) | ||||||||||||
Net cash provided by financing activities | 0 | 1,561,500 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | 208,937 | (668,249 | ) | |||||||||||||
Net increase in cash and cash equivalents | 2,078,789 | 2,026,896 | ||||||||||||||
Cash and cash equivalents at beginning of year | 8,066,899 | 8,735,148 | 10,302,732 | 8,275,836 | ||||||||||||
Cash and cash equivalents at end of year | $ | 8,275,836 | $ | 8,066,899 | $ | 12,381,521 | $ | 10,302,732 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||||
Cash paid (refunded), net during the year for: | ||||||||||||||||
Cash paid, net during the year for: | ||||||||||||||||
Income taxes | $ | 41,261 | $ | (103,812 | ) | $ | 356,000 | $ | 66,000 |
As reported Dec. 31, 2018 | Adoption of ASC 842 Increase | Balance Jan. 1, 2019 | ||||||||||
Operating lease right-to-use asset | $ | - | $ | 2,589,875 | $ | 2,589,875 | ||||||
Total assets | 13,617,180 | 2,589,875 | 16,207,055 | |||||||||
Current portion of operating lease liability | - | 143,213 | 143,213 | |||||||||
Operating lease liability | - | 2,446,662 | 2,446,662 | |||||||||
Total liabilities and stockholders’ equity | 13,617,180 | 2,589,875 | 16,207,055 |
2019 | 2018 | |||||||
Cash | $ | 652,275 | $ | 958,739 | ||||
Money market funds | 7,623,561 | 7,108,160 | ||||||
$ | 8,275,836 | $ | 8,066,899 |
2019 | 2018 | |||||||
Current: | ||||||||
Federal | $ | 67,677 | $ | 3,620 | ||||
State | 26,404 | 7,469 | ||||||
Deferred: | ||||||||
Federal | 23,781 | (18,379 | ) | |||||
State | 7,602 | (5,573 | ) | |||||
$ | 125,464 | $ | (12,863 | ) |
December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash and cash equivalents | $ | 12,381,521 | $ | 0 | $ | 0 | $ | 12,381,521 |
December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash and cash equivalents | $ | 10,302,732 | $ | 0 | $ | 0 | $ | 10,302,732 | ||||||||
Available-for-sale securities | $ | 0 | $ | 458,237 | $ | 0 | $ | 458,237 |
Cost | Unrealized Loss | Fair Value | ||||||||||
Available-for-sale securities | $ | 458,742 | $ | (505 | ) | $ | 458,237 |
Available-for-sale securities | ||||
Due after 10 years | $ | 458,237 |
2021 | 2020 | |||||||
Current: | ||||||||
Federal | $ | 420,109 | $ | 37,373 | ||||
State | 15,324 | (12,854 | ) | |||||
Deferred: | ||||||||
Federal | 63,060 | (67,742 | ) | |||||
State | 11,313 | (120,702 | ) | |||||
$ | 509,806 | $ | (163,925 | ) |
2019 | 2018 | |||||||
Computed “expected” expense (benefit) | $ | 72,042 | $ | (40,361 | ) | |||
Permanent differences | 25,619 | 23,670 | ||||||
State and local income tax expense | 12,344 | (8,808 | ) | |||||
True-up of current taxes | 4,763 | 4,892 | ||||||
True-up of deferred taxes | 11,014 | 7,117 | ||||||
Change in federal statutory rate | (318 | ) | 627 | |||||
Income tax benefit | $ | 125,464 | $ | (12,863 | ) |
2021 | 2020 | |||||||
Computed “expected” (benefit) expense | $ | 813,312 | $ | (44,384 | ) | |||
Permanent differences | (329,906 | ) | 11,516 | |||||
State and local income tax expense | 34,493 | 2,720 | ||||||
True-up of current taxes | (51,039 | ) | (25,916 | ) | ||||
True-up of deferred taxes | 34,392 | 11,644 | ||||||
Change in state apportionment | 8,554 | (119,505 | ) | |||||
Income tax (benefit) expense | $ | 509,806 | $ | (163,925 | ) |
2019 | 2018 | 2021 | 2020 | |||||||||||||
Deferred tax assets: | ||||||||||||||||
Net operating loss carryovers | $ | - | $ | 10,443 | ||||||||||||
Stock options | 20,085 | 16,182 | $ | 19,711 | $ | 17,556 | ||||||||||
Accrued vacation | 70,654 | 76,817 | 86,176 | 85,436 | ||||||||||||
Bad debt allowance | 8,314 | 8,319 | 6,576 | 6,411 | ||||||||||||
Deferred revenue | 5,833 | 7,384 | 2,161 | 4,732 | ||||||||||||
Deferred rent | 11,403 | 6,804 | 22,121 | 15,999 | ||||||||||||
Other | 21,972 | 24,081 | 6,982 | 17,212 | ||||||||||||
Total deferred tax assets | 138,261 | 150,030 | 143,727 | 147,346 | ||||||||||||
Deferred tax liabilities: | ||||||||||||||||
Goodwill | (541,628 | ) | (541,972 | ) | (428,402 | ) | (417,688 | ) | ||||||||
Fixed assets | (118,398 | ) | (98,439 | ) | (123,130 | ) | (63,090 | ) | ||||||||
Total deferred tax liabilities | (660,026 | ) | (640,411 | ) | (551,532 | ) | (480,778 | ) | ||||||||
Net deferred tax liabilities | $ | (521,765 | ) | $ | (490,381 | ) | $ | (407,805 | ) | $ | (333,432 | ) |
Number of Shares | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | |||||||||||||
Outstanding at January 1, 2018 | 421,350 | $ | 3.0534 | |||||||||||||
Outstanding at January 1, 2020 | 456,870 | $ | 2.30 | |||||||||||||
Granted | 182,100 | 2.17 | ||||||||||||||
Expired | (26,000 | ) | 4.62 | |||||||||||||
Forfeited | (44,500 | ) | 3.6855 | (37,220 | ) | 2.15 | ||||||||||
Outstanding at December 31, 2018 | 376,850 | $ | 2.9786 | |||||||||||||
Outstanding at December 31, 2020 | 575,750 | $ | 2.17 | |||||||||||||
Granted | 195,800 | 1.4523 | 30,550 | 2.36 | ||||||||||||
Expired | (30,550 | ) | 4.81 | |||||||||||||
Forfeited | (115,780 | ) | 3.0584 | (7,100 | ) | 3.11 | ||||||||||
Outstanding at December 31, 2019 | 456,870 | $ | 2.3043 | |||||||||||||
Outstanding at December 31, 2021 | 568,650 | $ | 2.02 |
2019 | 2018 | 2021 | 2020 | |||||||||||||
Data and product costs | $ | 22,460 | $ | 35,656 | $ | 24,974 | $ | 19,928 | ||||||||
Selling, general and administrative costs | 32,453 | 55,320 | 38,735 | 34,932 | ||||||||||||
$ | 54,913 | $ | 90,976 | $ | 63,709 | $ | 54,860 |
2021 | 2020 | |||||||
Risk-free interest rate | 0.28 | % | 0.26 | % | ||||
Expected volatility factor | 61.97 | % | 72.57 | % | ||||
Expected dividends | 0.00 | 0.05 | ||||||
Expected life of the option (years) | 3.51 | 7.17 |
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 | ||||||||||||||||
$ 1.00 - $ 2.00 | 256,100 | 7.36 | $ | 1.52 | 10,960 | $ | 1.68 | ||||||||||||||
$ 2.01 - $ 3.00 | 307,550 | 4.63 | $ | 2.41 | 68,950 | $ | 2.58 | ||||||||||||||
$ 3.01 - $ 6.00 | 5,000 | 4.08 | $ | 4.00 | 2,000 | $ | 4.00 | ||||||||||||||
568,650 | 5.85 | $ | 2.02 | 81,910 | $ | 2.50 |
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 | ||||||||||||||||
$ 1.00 - $ 2.00 | 250,600 | 9.37 | $ | 1.5018 | - | - | |||||||||||||||
$ 2.01 - $ 3.00 | 139,720 | 4.71 | $ | 2.6746 | 46,176 | $ | 2.3154 | ||||||||||||||
$ 3.01 - $ 6.00 | 66,550 | 1.45 | $ | 4.5485 | 56,550 | $ | 4.7171 | ||||||||||||||
456,870 | 6.79 | $ | 2.3043 | 102,726 | $ | 3.6375 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||||
Non-vested, beginning of year | 488,450 | $ | 1.07 | |||||
Granted | 30,550 | 1.04 | ||||||
Vested | (27,760 | ) | 1.62 | |||||
Terminated or expired | (4,500 | ) | 1.98 | |||||
Non-vested, end of year | 486,740 | $ | 1.03 |
2019 | 2018 | 2021 | 2020 | |||||||||||||
Computer equipment and software | $ | 1,485,579 | $ | 1,347,020 | $ | 2,046,958 | $ | 1,720,814 | ||||||||
Furniture and fixtures | 507,503 | 504,628 | 536,535 | 512,975 | ||||||||||||
Leasehold improvements | 240,328 | 240,328 | 275,853 | 268,741 | ||||||||||||
2,233,410 | 2,091,976 | 2,859,346 | 2,502,530 | |||||||||||||
Less accumulated depreciation and amortization | (1,755,437 | ) | (1,548,214 | ) | (2,253,153 | ) | (1,956,855 | ) | ||||||||
$ | 477,973 | $ | 543,762 | $ | 606,193 | $ | 545,675 |
2020 | $ | 255,311 | ||||||
2021 | 262,970 | |||||||
2022 | 270,859 | $ | 270,859 | |||||
2023 | 278,985 | 278,985 | ||||||
2024 | 287,355 | 287,355 | ||||||
2025 | 295,975 | |||||||
2026 | 304,855 | |||||||
Thereafter | 1,769,054 | 1,168,277 | ||||||
Total future undiscounted lease payments | 3,124,534 | 2,606,306 | ||||||
LESS: Imputed interest at 4.54% | (677,872 | ) | ||||||
LESS: Imputed interest | (468,694 | ) | ||||||
Present value of lease liability | $ | 2,446,662 | $ | 2,137,612 | ||||
Current portion of operating lease liability | $ | 147,229 | $ | 177,485 | ||||
Non-current portion of operating lease liability | 2,299,433 | 1,960,127 | ||||||
$ | 2,446,662 | $ | 2,137,612 |
2019 | 2018 | 2021 | 2020 | |||||||||||||
Net income (loss) | $ | 217,594 | $ | (179,332 | ) | $ | 3,363,704 | $ | (47,428 | ) | ||||||
Weighted average common shares outstanding – basic | 10,722,401 | 10,722,401 | 10,722,401 | 10,722,401 | ||||||||||||
Potential shares exercisable under stock option plans | 13,700 | -- | 278,100 | 0 | ||||||||||||
LESS: Shares which could be repurchased under treasury stock method | (11,562 | ) | -- | |||||||||||||
Less: Shares which could be repurchased under treasury stock method | (241,642 | ) | 0 | |||||||||||||
Weighted average common shares outstanding – diluted | 10,724,539 | 10,722,401 | 10,758,859 | 10,722,401 | ||||||||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.02 | $ | (0.02 | ) | $ | 0.31 | $ | (0.00 | ) | ||||||
Diluted | $ | 0.02 | $ | (0.02 | ) | $ | 0.31 | $ | (0.00 | ) |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
ITEM 9A. | CONTROLS AND PROCEDURES. |
ITEM 9B. | OTHER INFORMATION. |
ITEM 9C. | COVID-19. |
ITEM 9D. | CYBER-SECURITY |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
Name | Age | Principal Occupation/Position Held with Company | Officer or Director Since | Age | Principal Occupation/Position Held with Company | Officer or Director Since | |
Jerome S. Flum | 79 | Chairman of the Board/Chief Executive Officer | 1983 | 81 | Chairman of the Board/Chief Executive Officer | 1983 | |
Michael I. Flum | 33 | Senior Vice President/Chief Operating Officer | 2019 | 35 | President/Chief Operating Officer | 2019 | |
Lawrence Fensterstock | 69 | Senior Vice President/Chief Financial Officer | 1999 | ||||
Jonathan L. Levy | 55 | Senior Vice President/General Counsel/Secretary | 2019 | ||||
Steven Gargano | 45 | Senior Vice President/Chief Financial Officer | 2020 | ||||
Andrew J. Melnick | 78 | Director | 2005 | 80 | Director | 2005 | |
Jeffrey S. Geisenheimer | 54 | Director | 2005 | ||||
Richard Lippe | 83 | Director | 2020 | ||||
Joshua M. Flum | 50 | Director | 2007 | 52 | Director | 2007 |
ITEM 11. | EXECUTIVE COMPENSATION. |
SUMMARY COMPENSATION TABLE | SUMMARY COMPENSATION TABLE | SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus (1) | Option Awards (2) | All Other Compensation | Total | Year | Salary | Bonus (1) | Option Awards (2) | All Other Compensation | Total | ||||||||||||||||||||||||||||||||||||
Jerome S. Flum, Chairman and Chief Executive Officer | 2019 2018 | $ $ | 188,640 183,120 | $ $ | 4,400 4,700 | $ $ | 51 2,971 | $ $ | -0- -0- | $ $ | 193,091 190,791 | 2021 2020 | $ $ | 150,000 157,292 | $ $ | - - | $ $ | - 1,200 | $ $ | - - | $ $ | 150,000 158,492 | ||||||||||||||||||||||||||
Michael I. Flum, Senior Vice President (3) | 2019 2018 | $ $ | 147,700 62,942 | $ $ | 28,880 8,800 | $ $ | 799 -0- | $ $ | -0- -0- | $ $ | 177,379 71,742 | |||||||||||||||||||||||||||||||||||||
Lawrence Fensterstock, Senior Vice President | 2019 2018 | $ $ | 188,640 183,120 | $ $ | 44,080 36,600 | $ $ | 1,461 1,461 | $ $ | -0- -0- | $ $ | 234,181 221,181 | |||||||||||||||||||||||||||||||||||||
Jonathan L. Levy, Senior Vice President (4) | 2019 | $ | 66,667 | $ | 11,830 | $ | 72 | $ | -0- | $ | 78,569 | |||||||||||||||||||||||||||||||||||||
Michael I. Flum, President (3) | 2021 2020 | $ $ | 180,820 172,765 | $ $ | 12,000 7,250 | $ $ | - 3,235 | $ $ | - - | $ $ | 192,820 183,250 | |||||||||||||||||||||||||||||||||||||
Lawrence Fensterstock, Former Senior Vice President (4) | 2021 2020 | $ $ | - 141,146 | $ $ | - 15,000 | $ $ | - - | $ $ | - - | $ $ | - 156,146 | |||||||||||||||||||||||||||||||||||||
Steven Gargano, Senior Vice President (5) | 2021 2020 | $ $ | 185,400 166,385 | $ $ | 38,000 37,000 | $ $ | - 898 | $ $ | - - | $ $ | 223,400 204,283 | |||||||||||||||||||||||||||||||||||||
Jonathan L. Levy, Former Senior Vice President (6) | 2021 2020 | $ $ | - 199,152 | $ $ | - - | $ $ | - - | $ $ | - - | $ $ | - 199,152 |
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 | 10-24-19 | N/A | 50,000 | $ | 1.45 | $ | 33,819 | |||||||||||||
Jonathan L. Levy | 10-24-19 | N/A | 4,500 | $ | 1.45 | $ | 3,044 |
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 ($/Sh) | Grant Date Fair Value of Stock and Option Awards |
Michael I. Flum | N/A | N/A | N/A | N/A | N/A |
Steven Gargano | N/A | N/A | N/A | N/A | N/A |
Steven Gargano | N/A | N/A | N/A | N/A | N/A |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | ||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Un-exercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | |||||||||||||||
Jerome S. Flum | -0- | 5,000 | -0- | $ | 3.19 | 01-05-21 | ||||||||||||||
Michael I. Flum | -0- | 50,000 | -0- | $ | 1.45 | 10-24-29 | ||||||||||||||
Lawrence Fensterstock | 2,080 -0- | 520 3,000 | -0- -0- | $ $ | 2.32 2.90 | 07-11-22 01-05-26 | ||||||||||||||
Jonathan L. Levy | -0- | 4,500 | -0- | $ | 1.45 | 10-24-29 |
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 | - | - | - | - | N/A | |||||||||||||||
Michael I. Flum | - - | 50,000 25,000 | - - | $ $ | 1.45 2.19 | 10-24-29 10-29-29 | ||||||||||||||
Steven Gargano | - - | 12,000 3,000 | - - | $ $ | 1.80 2.19 | 07-29-29 10-29-29 |
DIRECTOR COMPENSATION | DIRECTOR COMPENSATION | DIRECTOR COMPENSATION | ||||||||||||||||||||||
Name | Fees Earned or Paid in Cash | Option Awards(1) | Total | Fees Earned or Paid in Cash(1) | Option Awards(2) | Total | ||||||||||||||||||
Andrew J. Melnick | $ | 4,000 | $ | 2,524 | $ | 6,524 | $ | 4,000 | $ | 919 | $ | 4,919 | ||||||||||||
Jeffrey S. Geisenheimer | $ | 4,000 | $ | 2,524 | $ | 6,524 | ||||||||||||||||||
Joshua M. Flum | $ | 4,000 | $ | 6,744 | $ | 10,744 | $ | 4,000 | $ | 5,142 | $ | 9,142 | ||||||||||||
Richard J. James (2) | $ | 3,000 | $ | 2,331 | $ | 5,331 | ||||||||||||||||||
Richard Lippe | $ | 4,000 | $ | 174 | $ | 4,174 |
(1) | Fees earned in 2021 was $4,000 per director. Fees paid in cash was $7,000 due to timing of payments made in 2021 for fees earned in 2020. |
(2) | 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. |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
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 | 716,654 | 6.62% |
Tabatabai Investment Management LLC Tabatabai Investment Partners LP Alex Tabatabai(3) 540 N Dearborn Street, #101257 Chicago, IL 60610 | 727,430 | 6.72% |
Flum Partners (4) | 5,641,134 | 52.08% |
Jerome S. Flum | 6,239,776 (5)(6) | 57.61% |
Michael I. Flum | 6,500 | -----* |
Lawrence Fensterstock | 143,498 | 1.32% |
Andrew J. Melnick | 61,370 | -----* |
Jeffrey S. Geisenheimer | 127,048 | 1.17% |
Joshua M. Flum | 12,100 | -----* |
All directors and executive officers (as a group (6 persons)) | 6,590,292 (5)(6) | 60.85% |
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% |
Flum Partners (2) | 5,641,134 | 52.08% |
Named Executive Officers | ||
Jerome S. Flum | 6,239,776 (4)(5) | 57.61% |
Michael I. Flum | 6,500 | -----* |
Non-Employee Directors | ||
Andrew J. Melnick (5) | 63,070 | -----* |
Richard Lippe | 49,903 | -----* |
Joshua M. Flum (6) | 13,800 | -----* |
All directors and executive officers (as a group (5 persons)) | 6,373,049 (3)(4) | 59.30% |
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 | 456,870 | $ | 2.30 | -0- | 568,650 | $ | 2.02 | 787,450 | ||||||||||||||||
Total | 456,870 | $ | 2.30 | -0- | 568,650 | $ | 2.02 | 787,450 |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES. |
Fiscal Year Ended December 31, | Fiscal Year Ended December 31, | |||||||||||||||
2019 | 2018 | 2021 | 2020 | |||||||||||||
Audit fees (1) | $ | 99,500 | $ | 102,000 | $ | 131,500 | $ | 106,250 | ||||||||
Audit related fees (2) | - | - | - | 7,500 | ||||||||||||
Tax fees (3) | 12,600 | 12,200 | 13,500 | 12,800 | ||||||||||||
All other fees | - | - | - | - | ||||||||||||
Total fees | $ | 112,100 | $ | 114,200 | $ | 145,000 | $ | 126,550 |
(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. |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
Page | ||
Report of Independent Registered Public Accounting Firm (CohnReznick LLP, Melville, New York, PCAOB ID Number 596) | ||
Balance Sheets - December 31, | ||
Statements of Operations - Years Ended December 31, | 18 | |
Statements of Stockholders’ Equity - Years Ended December 31, | ||
Statements of Cash Flows - Years Ended December 31, | ||
Notes to Financial Statements |
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) | |||
Company’s By-Laws as amended March 9, 2020 | |||
Copy of Company’s | |||
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. |
Date: March | By: | /s/ Jerome S. Flum | |
Jerome S. Flum | |||
Chairman of the Board and | |||
Chief Executive Officer |
Date: March | By: | /s/ Jerome S. Flum | |
Jerome S. Flum | |||
Chairman of the Board and | |||
Chief Executive Officer | |||
(Principal Executive Officer) |
Date: March | By: | ||
Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
Date: March | By: | /s/ Andrew J. Melnick | |
Andrew J. Melnick | |||
Director |
Date: March 25, 2022 | By: /s/ Richard Lippe | ||
Director | |||
Date: March | By: | /s/ Joshua M. Flum | |
Joshua M. Flum | |||
Director |