All statements, other than statements of historical fact, included in this Form 10-K, including without limitation the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Business,” are, or may be deemed to be, forward-looking statements. Such forward-looking statements involve assumptions, known and unknown risks, uncertainties, and other factors, which may cause the actual results, performance or achievements of Issuer Direct Corporation, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements contained in this Form 10-K.

In our capacity as Company management, we may from time to time make written or oral forward-looking statements with respect to our long-term objectives or expectations which may be included in our filings with the Securities and Exchange Commission (the “SEC”), reports to stockholders and information provided inon our web site.

The words or phrases “will likely,” “are expected to,” “is anticipated,” “is predicted,” “forecast,” “estimate,” “project,” “plans to continue,” “believes,” or similar expressions identify “forward-looking statements.” Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. We wish to caution you not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We are calling to your attention important factors that could affect our financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Financial Data in XBRL,iXBRL, Current Reports on Form 8-K, proxy statements and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, in the investor relations section of our website at www.issuerdirect.com.

The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Overview

Issuer Direct Corporation and its subsidiaries are hereinafter collectively referred to as “Issuer Direct”, the “Company”, “We” or “Our” unless otherwise noted. Our corporate officesheadquarters are located at One Glenwood Ave., Suite 1001, Raleigh, North Carolina, 27603.

During 20212023 and going forward, we willplan to continue to innovate, improve and build new applications into and with our platform, with the objective of developing integrated application solutions that are typically not offered by our competitors. As a company focused on technology offerings, we understand the importance of advancements and fully appreciate the risks and consequences of losing our market position. The pursuit of technological innovation is and has been a part ofposition if our overall strategy as an organization over the last several years.

Each year we bring to market certain platform upgrades, add-ons, and new offerings that we believe will complement our overall platform solutions. We believe our innovation and technologicalplatform technology efficiencies continue to be a competitive advantage and focus for us.

We benefited during 2020 in each of these businesses and expect this year’s product advancements to continue to benefit us throughout the year as a result of the continued public gathering restrictions which have been caused by COVID-19.

We will continue to evaluate complimentary verticals and businesses that we can integrate into our communications platform. While we typically focus on accretive acquisition opportunities, we will also evaluate technology acquisitions that we believe would be strategic to our overall business. We will continue to maintain our acquisition focus in the communications industry. Specifically, we will look for communications products and businesses that have recurring revenues, customers and technologies that will further enhance our overall market position.

During 2020,2022, we continued to strengthen our brands in the market by working aggressively to expand our new customer footprint and continue to cross sell to increase average revenue per customer. Since our platform, systems and operations are built to handle growth, we can leverage them to produce consistently high margins and increased cash flows without a proportional increase in our capital or operating expenses.

Our sales organization is responsible for generating new customer opportunities and expanding our current customers. We ended 20202022 with a multi-tier organization of sales personnel, consisting of Sales Development Representatives, Business Development Managers and Strategic AccountCustomer Service Managers. During 2020, we created a new inbound digital sales and marketing group to manage all inbound leads and focus on e-commerce and digital marketing relating to the portions of our platform we believe may be attractive for online purchases. We believe this structured approach is the most efficient and effective way to reach new customers and grow our current install base. The total compensation packages for these teams are heavily weighted with commission compensation to incent sales and retention. All members of the sales team have quotas. As of December 31, 2020,2022, we employed 2940 full-time equivalent sales and marketing personnel compared to 2530 as of December 31, 2019.

In all our offerings, quality, support, and scalability as well as the need to preserve the confidential content of our customers are of utmost importance and part of our core values. We continue to maintain agreements with security software and hardware providers and consulting firms to identify, address and create policies and plans which enable us to mitigate our cybersecurity and information vulnerabilities on both a short-term and long-term basis. We believe having a strongsolid cyber and information security policy is not only necessary to maintain our current business model but also is important to attract new customers. During the latter half of 2021, we spent considerable amounts of time building processes, internal controls and systems requirements to adhere to the American Institute of Certified Public Accountants (“AICPA”) criteria for a Service Organization Control 2 (“SOC 2”) report. As a result, we were issued our SOC 2 with a favorable opinion for the period ended November 30, 2022. We plan to continue to work closely with these firms, as well as our audit partner, to maintain our service commitments and otherssystem related to ensure our security policies and practices meet our customers’ needs and requirements.

According to a 20202022 Burton-Taylor Media Intelligence report, the global communications technology market is almost $5more than $5.5 billion in annual revenue. This total includes spending on social media solutions, media monitoring, press release distribution engagementtargeting and targetingdistribution, and investor relations platforms globally. A key driver of growth in our industry is the introduction of new innovative technologies and solutions. We believe our technology and workflow automation solutions will help us gain market share within the industry.

Initially, the webcasting and virtual event side of the communications industry was greatly impacted by the COVID-19 pandemic as demand significantly increased for virtual events due to cancelled live, in-person events, meetings and conferences. Toward the end of the first quarter of 2020, we began enhancing our products by adding virtual components, as well as focusing our selling efforts on our webcasting technologies.

The compliance industry is highly fragmented, with hundreds of independent service companies that provide a range of financial reporting and document management services. There is also a wide range of printing and technology software providers. The demands for many of our services historically have been cyclical and reliant on capital market activity. Over the past few years, we have been offering subscriptions which combine both compliance software and service in one annual contract. We believe this new offering affords us the ability to reduce our revenue seasonality and provide a new baseline of recurring annualized revenue.

Despite some significant consolidation in recent years, the communications and compliance industries remain both highly fragmented and extremely competitive. The success of our products and services are generally based on price, quality, and the ability to service customer demands. Management has been focused on offsetting thesethe risks relating to competition as well as the seasonality by introducing our cloud-based subscription platforms,platform, with higher margins, clear competitive advantages, higher customer stickiness and scalability to withstand market and pricing pressures.

We also review our operations on a regular basis to balance growth with opportunities to maximize efficiencies and support our long-term strategic goals. We believe by blending our workflow technologies with our legacy service offerings we can offer a comprehensive set of products and solutions to each of our customers within one platform that most competitors cannot offer today.

We believe we are positioned to be the communications platform of choice as a cost-effective alternative to both small regional providers and global providers. We also believe we benefit from our location in Raleigh, North Carolina, as we can hire and retain sales, customer service or production personnel in the area at a reasonable cost. However, there are areaspositions where we have strong competition in hiring, such as research and development and qualified sales individuals with communications industry experience.

Our customers include a wide variety of public and private companies, mutual funds, law firms, brokerage firms, investment banks, individuals, and other institutions. For the year ended December 31, 2020,2022, we worked with 2,242 publicly traded customers and 4,426 private8,218 customers, compared to 2,169 publicly traded customers and 2,691 private customers8,045 for the year ended December 31, 2019.2021. This amount includes 1,196 customers from Newswire for the months of November and December. The increasedecrease in private companiescustomers on the ISDR side is primarily related to additionala reduction in private customers and customers from agencies we began tono longer partner with during the year as well asto reduce low margin business and have a direct sales to private companies inrelationship with our newswire business.customers. We did not have any customers during the year ended December 31, 20202022 that accounted for more than 10% of our revenue or more than 10% of our year end accounts receivable balance as of December 31, 2020.

Human Capital and Culture

As of December 31, 2020,2022, we employed eighty-six137 employees and engaged five independent contractors, none of which are represented by a union. Our employees work in our corporate offices in North Carolina and in otheror their home offices throughout North America.

Our headquarters are located in Raleigh, North Carolina. In October 2019, we began a new lease for 9,766 square feet of office space, which expires December 31, 2027.

As part of our acquisition of VWP in 2019, we assumed a three-year lease in Ft. Lauderdale, Florida, which expired on January 3, 2022 and a month-to-month lease in New York City, New York.we did not renew. Additionally, we havehad an office in Salt Lake City, Utah, which is also on a short-term lease. As a result of an increasewe vacated in our remote workforce, we are examining2022. We did not assume any leases associated with the needs for these satellite locations and have already vacated the New York City office after year-end. The Company intendsNewswire acquisition. We continue to monitor the needs of itsour employees both in a remote and on-site basis and will make the necessary adjustments to itsour locations on that basis.

We maintain both a general business liability, cyber-security and an errors and omissions policies specific to our industry and operations. We believe that our insurance policies provide adequate coverage for all reasonable risks associated with operating our business. Additionally, we maintain a Directors and Officers insurance policy, which is standard for our industry and size. We also maintain key person life insurance on our C level executives, and one other key individual.

The securities and financial services industries generally are subject to regulation in the United States and elsewhere. Regulatory policies in the United States and the rest of the world are tasked with safeguarding the integrity of the securities and financial markets and with protecting the interests of both issuers and shareholders.

In the United States, corporate issuers are subject to regulation under both federal and state laws, which often require public disclosure and regulatory filings. At the federal level, the SEC regulates the securities industry, along with the Financial Industry Regulatory Authority, or FINRA, formally known as NASD, and NYSE market regulations, various stock exchanges, and other self-regulatory organizations (“SRO”).

We operate our filing agent business and transfer agent business under the supervision and regulations of the SEC.

Our missionobjective is to assist corporate issuers with these regulations, communication and compliance of rules imposed by regulatory bodies. The majority of our business involves the distribution of content, either electronically or on paper, to governing bodies and shareholders alike. We are recognized under these regulations to disseminate, communicate and or solicit on behalf of our customers, the issuers.

Investing in our common stock involves a high degree of risk. Prospective investors should carefully consider the following risks and uncertainties and all other information contained or referred to in this Annual Report on Form 10-K before investing in our common stock. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that we are unaware of, or that we currently deem immaterial, also may become important factors that affect us. If any of the following risks occur, our business, financial condition or results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline, and you could lose some or all of your investment.

The market for our solutions depends in part on the requirements of the SEC and other regulatory bodies. Any legislation or rulemaking substantially affecting the content or method of delivery of documents to be filed with these regulatory bodies could have an adverse effect on our business. In addition, evolving market practices in light of regulatory developments could adversely affect the demand for our solutions. Uncertainty caused by political change in the United States and European Union heightens regulatory uncertainty in these areas. For example, the SEC has proposed a rule to require certain over-the-counter (“OTC”) companies to provide greater transparency to investors and other market participants by requiring that information about the issuer be current and publicly available, which could cause a decrease in the number of publicly traded companies. New legislation, or a significant change in rules, regulations, directives or standards could reduce demand for our products and services. Regulatory changes could also increase expenses as we modify our products and services to comply with new requirements and retain relevancy, impose limitations on our operations, and increase compliance or litigation expense, each of which could have a material adverse effect on our business, financial condition and results of operations.

Competition across all of our businesses is intense. The speed and accuracy with which we can meet customers’ needs, the price of our services and the quality of our products and supporting services are factors in this competition.

These competitive pressures to any aspect of our business could reduce our revenue and earnings.

Our product solutions are complex, and we often release new features. As such, our solutions could have errors, defects, viruses or security flaws that could result in unanticipated downtime for our customers and harm our reputation and our business. Internet-based software may contain undetected errors or security flaws when first introduced or when new versions or enhancements are released. We might from time to time find such defects in our solutions, the detection and correction of which could be time consuming and costly. Since our customers use our solutions for important aspects of their business, any errors, defects, disruptions in access, security flaws, viruses, data corruption or other performance problems with our solutions could hurt our reputation and may damage our customers’ businesses. If that occurs, customers could elect not to renew, could delay or withhold payment to us or may make claims against us, which could result in an increase in our provision for doubtful accounts, an increase in collection cycles for accounts receivable or the expense and risk of litigation. We could also lose future sales. In addition, a security breach of our solutions could result in our future business prospects being materially adversely impacted.

Since 2013, we have experienced overall growth in our business, customer base, employee headcount and operations, and we expect to continue to grow our business over the next several years. This growth places a significant strain on our executive management team and employees and on our operating and financial systems. To manage our future growth, we must continue to scale our business functions, improve our financial and management controls and our reporting systems and procedures and expand and train our work force. In particular, we grew from twenty-four24 employees and contractors as of December 31, 2012 to ninety-one137 (including 518 independent contractors) as of December 31, 2020.2022. We anticipate that additional investments in sales personnel, infrastructure and research and development spending will be required to:

We cannot assure you that our controls, systems and procedures will be adequate to support our future operations or that we will be able to manage our growth effectively. We also cannot assure you that we will be able to continue to expand our market presence in the United States and other current markets or successfully establish our presence in other markets. Failure to effectively manage growth could result in difficulty or delays in deploying customers, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features or other operational difficulties, and any of these difficulties could adversely impact our business performance and results of operations.

Our ability to grow and our future success will depend to a significant extent on the continued contributions of our key executives, managers and employees. In addition, many of our individual technical and sales personnel have extensive experience in our business operations and/or have valuable customer relationships that would be difficult to replace. Their departure, if unexpected and unplanned, could cause a disruption to our business. Our competition for these individuals is intense in certain areas of our business. We may not succeed in identifying and retaining the appropriate personnel in key positions. Further, competitors and other entities have in the past recruited and may in the future attempt to recruit our employees, particularly our sales personnel. The loss of the services of our key personnel, the inability to identify, attract and retain qualified personnel in the future or delays in hiring qualified personnel, particularly technical and sales personnel, could make it difficult for us to manage our business and meet key objectives, such as the timely introduction of new technology-based products and services, which could harm our business, financial condition and operating results

If we fail to keep customers’ proprietary information and documentation confidential, we may lose existing customers and potential new customers and may expose them to significant loss of revenue based on the premature release of confidential information. While we have security measures in place to protect customer information and prevent data loss and other security breaches, these measures may be breached as a result of third-party action, employee error, malfeasance or otherwise. Because the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

In addition, our service providers (including, without limitation, hosting facilities, disaster recovery providers and software providers) may have access to our customers’ data and could suffer security breaches or data losses that affect our customers’ information.

If an actual or perceived security breach or premature release occurs, our reputation could be damaged, and we may lose future sales and customers. We may also become subject to civil claims, including indemnity or damage claims in certain customer contracts, or criminal investigations by appropriate authorities, any of which could harm our business and operating results. Furthermore, while our errors and omissions insurance policies include liability coverage for these matters, if we experienced a widespread security breach that impacted a significant number of our customers for whom we have these indemnity obligations, we could be subject to indemnity claims that exceed such coverage.

We generally recognize subscription and support revenue from customers ratably over the terms of their subscription agreements, which are typically on a quarterly or annual cycle and automatically renew for additional periods. As a result, a substantial portion of the revenue we report in each quarter will be derived from the recognition of deferred revenue relating to subscription agreements entered into during previous quarters. Consequently, a decline in new or renewed subscriptions in any one quarter may not be immediately reflected in our revenue results for that quarter. This decline, however, will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of our solutions and potential changes in our rate of renewals may not be fully reflected in our results of operations until future periods. Our subscription model also makes it difficult for us to rapidly increase our subscription revenue through additional sales in any period, as revenue from new customers must be recognized over the applicable subscription term. In addition, we may be unable to adjust our cost structure to reflect the changes in revenue, which could adversely affect our operating results.

From time to time, we may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. We expect that the number and significance of these potential disputes may increase as our business expands and we grow larger. While most of our agreements with customers limit our liability for damages arising from our solutions, we cannot assure you that these contractual provisions will protect us from liability for damages in the event we are sued. Although we carry general liability insurance coverage, our insurance may not cover all potential claims to which we are exposed or may not be adequate to indemnify us for all liability that may be imposed. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, and result in the diversion of significant operational resources. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, financial condition, results of operations and prospects.

The computation of sales and use taxes and our provision for income tax is complex, as it is based on the laws of multiple taxing jurisdictions and requires significant judgment on the application of complicated rules governing accounting for such tax provisions under U.S. generally accepted accounting principles. Since sales and use tax varies by state, it may be difficult to determine taxability of our products and services in each state and remain current on frequently changing laws. Additionally, provisions for income tax for interim quarters are based on forecasts of our U.S. and non-U.S. effective tax rates for the year and contain numerous assumptions. Various items cannot be accurately forecasted, and future events may be treated as discrete to the period in which they occur. Our provision for income tax can be materially impacted by things such as changes in our business, internal restructuring and acquisitions, changes in tax laws and accounting guidance and other regulatory, legislative developments, tax audit determinations, changes in uncertain tax positions, tax deductions attributed to equity compensation and changes in our determination for a valuation allowance for deferred tax assets. For all of these reasons, our actual income taxes may be materially different than our provision for income tax.

We manage private and confidential information and documentation related to our customers’ finances and transactions, often prior to public dissemination. The use of insider information is highly regulated in the United States and abroad, and violations of securities laws and regulations may result in civil and criminal penalties. In addition, we are subject to the data privacy and protection laws and regulations adopted by federal, state and foreign legislatures and governmental agencies. Data privacy and protection is highly regulated and may become the subject of additional regulation in the future. Privacy laws restrict our storage, use, processing, disclosure, transfer and protection of non-public personal information by our customers or collected from visitors of our website. We strive to comply with all applicable laws, regulations, policies and legal obligations relating to privacy and data protection. However, it is possible that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure, or perceived failure, by us to comply with federal, state or international laws, including laws and regulations regulating privacy, payment card information, personal health information, data or consumer protection, could result in proceedings or actions against us by governmental entities or others.

The regulatory framework for privacy and data protection issues worldwide is evolving, and various government and consumer agencies and public advocacy groups have called for new regulation and changes in industry practices, including some directed at providers of mobile and online resources in particular. Our obligations with respect to privacy and data protection may become broader or more stringent. If we are required to change our business activities or revise or eliminate services, or to implement costly compliance measures, our business and results of operations could be harmed.

The acceptance of our services depends on a number of factors, including the nature and size of the potential customer base, the effectiveness of our system, and the extent of the commitment being made by the potential customer, and is difficult to predict. Currently, our sales and marketing expenses per customer are fairly low. If potential customers take longer than we expect to decide whether to use our services and require that we travel to their sites, present more marketing material, or spend more time in completing the sales process, our selling expenses could increase, and decrease our profitability.

A greater portion of our printing, distribution and solicitation of proxy materials business will be processed during the second quarter of our fiscal year. Therefore, the seasonality of our revenue makes it difficult to estimate future operating results based on the results of any specific quarter and could affect an investor’s ability to compare our financial condition and results of operations on a quarter-by-quarter basis. To balance the seasonal activity of print, distribution and solicitation of proxy materials, we will attempt to continue to grow other revenues linked to predictable periodic activity that is not cyclical in nature.

In the past few years, we have expended significant resources to develop and introduce new technology-based products and improve and enhance our existing technology-based products in an attempt to maintain or increase our sales. The long-term success of new or enhanced technology-based products may depend on a number of factors including, but not limited to, the following: anticipating and effectively addressing customer preferences and demand, the success of our sales and marketing efforts, timely and successful development, changes in governmental regulations and the quality of or defects in our products.

The development of our technology-based products is complex and costly, and we typically have multiple technology-based products in development at the same time. Given the complexity, we occasionally have experienced, and could experience in the future, delays in completing the development and introduction of new and enhanced technology-based products. Problems in the design or quality of our products or services may also have an adverse effect on our brand, business, financial condition, and operating results. Unanticipated problems in developing technology-based products could also divert substantial development resources, which may impair our ability to develop new technology-based products and enhancements of such products and could substantially increase our costs. If new or enhanced product and service introductions are delayed or not successful, we may not be able to achieve an acceptable return, if any, on our development efforts, and our business may be adversely affected.

The stock prices of smaller public companies can experience extreme price and volume fluctuations. These fluctuations often have been unrelated or out of proportion to the operating performance of such companies. We expect our stock price to be similarly volatile. These broad market fluctuations may continue and could harm our stock price. Any negative change in the public’s perception of our prospects or companies in our market could also depress our stock price, regardless of our actual results. Factors affecting the trading price of our common stock may include:

The trading market for our common stock is influenced by the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us adversely change their recommendation regarding our common stock, or provide more favorable relative recommendations about our competitors, the trading price of our common stock could decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price of our common stock or trading volume to decline.

Market conditions may result in volatility in the level of, and fluctuations in, market prices of stocks generally and, in turn, our common stock and sales of substantial amounts of our common stock in the market, in each case being unrelated or disproportionate to changes in our operating performance. A weak global economy could also contribute to extreme volatility of the markets, which may have an effect on the market price of our common stock.

We paid dividends in 2012, part of 2013 and from the fourth quarter of 2015 through the third quarter of 2018. In the fourth quarter of 2018, we announced that we would no longer be declaring quarterly dividends for the foreseeable future in order to invest such money in our business. The declaration and payment of dividends in the future will be determined by our Board of Directors in light of conditions then existing, including our earnings, financial condition, capital requirements and other factors. There can be no assurances that dividends will be paid in the future in the form of either cash or stock.

We currently have authorized but unissued “blank check” preferred stock. Without the vote of our shareholders, the Board of Directors may issue such preferred stock with both economic and voting rights and preferences senior to those of the holders of our common stock. Any such issuances may negatively impact the ultimate benefits to the holders of our common stock in the event of a liquidation event and may have the effect of preventing a change of control and could dilute the voting power of our common stock and reduce the market price of our common stock.

Our certificate of incorporation authorizes us to issue up to 20,000,000 shares of common stock. Future sales and issuances of our capital stock or rights to purchase our capital stock could result in substantial dilution to our existing stockholders. We may sell common stock, convertible securities, and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time. If we sell any such securities in subsequent transactions, investors may be materially diluted, which could result in downward pressure on the price of our common stock. New investors in subsequent transactions could gain rights, preferences, and privileges senior to those of holders of our common stock. In addition, if outstanding stock options are exercised or when outstanding restricted stock units are settled in shares, current shareholders will experience dilution.

As a public company, we incur significant legal, accounting, and other expenses that would not be incurred as a private company. For example, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act), and are required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Act, as well as rules and regulations subsequently implemented by the SEC and the New York Stock Exchange, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Compliance with these requirements has increased our legal and financial compliance costs and made some activities more time consuming and costly. Many of these costs recur annually. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. If we have a material weaknessesweakness or significant deficiency in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. Effective internal controls are necessary for us to produce reliable financial reports and are important to prevent fraud. As a result, our failure to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act on a timely basis could result in us being subject to regulatory action and a loss of investor confidence in the reliability of our financial statements, both of which in turn could cause the market value of our common stock to decline and affect our ability to raise capital.

Because we are a smaller reporting company, our independent registered public accounting firm was not required to and did not perform an audit of our internal control over financial reporting for the fiscal year ended December 31, 2020.

None.

Our headquarters are located in Raleigh, North Carolina. In October 2019, we began a new lease for 9,766 square feet of office space, which expires December 31, 2027.

As part of our acquisition of VWP in 2019, we assumed a three-year lease in Ft. Lauderdale, Florida, which expired on January 3, 2022 and a month-to-month lease in New York City, New York.we did not renew. Additionally, we havehad an office in Salt Lake City, Utah, which is also on a short-term lease. As a result of an increasewe vacated in our remote workforce, we are examining2022. We did not assume any leases associated with the needs for these satellite locations and have already vacated the New York City office after year-end. The Company intendsNewswire acquisition. We continue to monitor the needs of itsour employees both in a remote and on-site basis and will make the necessary adjustments to itsour locations on that basis.

From time to time, we may be involved in litigation that arises through the normal course of business. As of the date of this filing, we are neither a party to any litigation nor are we aware of any such threatened or pending litigation that might result in a material adverse effect to our business.

Not applicable.

As of December 31, 2020,2022, there were approximately 150 registered holders of record of our common stock and 3,770,7523,791,020 shares outstanding.

We did not pay any dividends during the year ended December 31, 20202022 and 2019.2021. There can be no assurances that dividends will be paid in the future. The declaration and payment of dividends in the future will be determined by our Board of Directors in light of conditions then existing, including our earnings, financial condition, capital requirements and other factors.

The graph below compares the five-yearcumulative 5-Year total return provided shareholders on Issuer Direct Corporation's common stock relative to the cumulative total return on our common stock with thatreturns of the Russell MicroCap index and a customtwo customized peer group, which was selected by the Company. The chart assumesgroups of three companies and four companies respectively, whose individual companies are listed in footnotes 1 and 2 below. An investment of $100 was invested on December 31, 2015,(with reinvestment of all dividends) is assumed to have been made in our common stock, the Russell MicroCapin each index, and the peer group, and that any dividends were reinvested. The Peer Group is composed of: Broadridge Financial Solutions Inc., Donnelley Financial Solutions, Inc., and Workiva, Inc. The peer group index utilizes the same method of presentation and assumptions for the total return calculation as does Issuer Direct Corporation (ISDR) and the Russell MicroCap index. All companies in the peer group index are weighted in accordance with their market capitalizations.

Except for the historical information contained herein, the matters discussed in this Form 10-K include certain forward-looking statements that involve risks and uncertainties, which are intended to be covered by safe harbors. Those statements include, but are not limited to, all statements regarding our and management’s intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. We generally use words such as "believe," "may," "could," "will," "intend," "expect," "anticipate," "plan," and similar expressions to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons including our ability to implement our business plan, our ability to raise additional funds and manage consumer acceptance of our products, our ability to broaden our customer base, our ability to maintain a satisfactory relationship with our suppliers and other risks described in our reports filed with the Securities and Exchange Commission, including Item 1A of this Report on Form 10-K. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, the factors set forth under the Risk Factors section of this report. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. All forward-looking statements made in this Form 10-K are based on information presently available to our management. We do not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in our expectations, except as required by law.

Total revenue increased by $2,231,000,$1,631,000, or 14%7%, to $18,526,000$23,514,000 during the year ended December 31, 2020,2022, as compared to $16,295,000$21,883,000 in 2019.2021. The increase is attributablepartially related to revenue attributed to the acquisition of Newswire on November 1, 2022 and an increase in ACCESSWIRE revenue partially offset by a decrease in our Communications business.

Communications cost of revenues consists primarily of direct labor costs, newswire distribution costs, teleconferencing costs and third-party licensing costs. Compliance and other costscost of revenue consists primarily of direct labor costs, warehousing, logistics, print production materials, postage, and amortization of capitalized software costs related to our compliancedisclosure software. Cost of revenues increaseddecreased by $335,000,$64,000, or 7%1%, during the year ended December 31, 2020,2022, as compared to the same period of 2019.2021. Overall gross margin increased $1,896,000,$1,695,000, or 17%11%, during the year ended December 31, 2020,2022, compared to 2019.2021. As a result, overall gross margin percentage increased to 71%76% during the year ended December 31, 2020,2022, as compared to 69%74% during the prior year. The increase in cost

Cost of sales isrevenues associated with Communications revenues increased $334,000, or 10%, as compared to the prior year primarily due partially to an increase laborin costs associated with delivering our newswire and webcasting revenue, increase in distribution costs as we continue to expand our distribution capabilities as well as increase in teleconferencing costs. These increases were offset by decreases in amortization of capitalized software as well as decreases in postage and fulfillment costs associated with our legacy ARSoperating the Newswire business.

General and administrative expenses consist primarily of salaries, stock-based compensation, insurance, fees for professional services, general corporate expenses (including bad debt expense) and facility and equipment expenses. General and administrative expenses were $5,029,000$6,963,000 for the year ended December 31, 2020, a decrease2022, an increase of $57,000$1,142,000 or 1%20%, as compared to the prior year. This decreaseincrease is primarily due to a decreasedriven by incremental expenses associated with operating the Newswire business , stock compensation expense, employee-related costs, recruiting fees and insurance expense associated with investments for future growth as well as an increase in our bad debt provision of $449,000 offset by a one-time accrual of $350,000 recorded in 2020 regarding sales and use tax compliance. As a result of our growing customer base, transition from a service-based company to a cloud-based platform company and the complex economic nexus provisions of various states, we completed an assessment of our sales and use tax position during the year. As a result, we recorded a one-time estimate of our current and historical state sales and use tax liabilities of approximately $350,000 for the year ended December 31, 2020. The high bad debt provision in the prior year was primarily related to reserves on accounts receivable balances of two significant investment commentary newswire customers which were written off in 2019.

As a percentage of revenue, General and Administrativeadministrative expenses were 27%30% for the year ended December 31, 2020,2022, as compared to 31%27% for 2019.

Sales and marketing expenses consist primarily of salaries, stock-based compensation, sales commissions, advertising expenses tradeshow expenses and other marketing expenses. Sales and marketing expenses were $3,812,000$5,922,000 for the year ended December 31, 2020,2022, an increase of $261,000,$1,029,000, or 7%21%, as compared to the prior year. This increase is directly relatedprimarily due to incremental costs associated with operating the Newswire business as well as our continued investment in ouradvertising, digital marketing spend, and system enhancements, partially offset by sales and marketing initiatives with an increase in headcount and digital marketing.

As a percentage of revenue, sales and marketing expenses were 21%25% for the year ended December 31, 20202022 compared to 22% for 2019.

As a percentage of revenue, Product Developmentproduct development expenses were 4%increased to 6% for the year ended December 31, 2020,2022, as compared to 7%5% for 2019.

During the year ended December 31, 2020,2022, depreciation and amortization expenses decreasedincreased by $134,000,$367,000 or 15%61%, to $751,000,$970,000, as compared to $885,000$603,000 during 2019.2021. The decreaseincrease is primarilydue to additional amortization of intangible assets related to intangible assets associatedthe Newswire acquisition.

Interest Income (Expense), net

                Interest income (expense), net, represents accrued interest of $220,000 attributed to the note assumed with the acquisition of PIR that became fully amortized during the year.

Other Income

For the non-cash interest associated withyear ended December 31, 2021, other income primarily represents a benefit of $366,000 related to the present value ofemployee retention credit enacted under the anniversary payments of the Interwest acquisition.

We recorded income tax expense of $724,000 during the year ended December 31, 2020,2022, compared to $109,000$821,000 during the year ended December 31, 2019.2021. The increasedecrease in income tax expense is attributable to higherlower pre-tax income for the year ended December 31, 2020.2022. The difference between the Company’sin our effective tax rate of 26%27% and the statutory rate of 21% is primarily attributable to state income taxes, foreign taxes and the impact of stock-based compensation.   

For the year ended December 31, 2021, the difference between our effective tax rate of 20% and the federal statutory rate of 21% is primarily due to state taxes for 2020.

As of December 31, 2020,2022, we had $19,556,000$4,832,000 in cash and cash equivalents and $2,514,000$2,978,000 in net accounts receivable. Current liabilities as of December 31, 2020,2022, totaled $4,494,000$31,191,000 including our note payable, accounts payable, deferred revenue, accrued payroll liabilities, income taxes payable, current portion of lease liabilities and other accrued expenses. At

As of December 31, 2020,2022, our current liabilities exceeded our current assets exceededby $21,771,000.  While our current liabilities by $17,789,000.

Effective October 3, 2019, the Company2021, we renewed itsour unsecured Line of Credit, which increasedchanged the terminterest rate from LIBOR plus 1.75% to two years, with all other provisions remaining the same.SOFR (Secured Overnight Financing Rate) plus 1.75%.  The amount of funds available for borrowing areremained $3,000,000 and the interest rate is LIBOR plus 1.75%.term remained two years. As of December 31, 2020,2022, the interest rate was 1.89%5.81% and the Companywe did not owe any amounts on the Line of Credit.

We do not have any transactions, agreements or other contractual arrangements that constitute off-balance sheet arrangements.