Statement of Financial Position
Statement of Financial Position (Consolidated) (USD $) | ||
Dec. 31, 2009
| Dec. 31, 2008
| |
Assets | ||
Cash and cash equivalents | $146,043 | $50,367 |
Accounts receivable (net of allowance for doubtful accounts of $16,785 and $43,764, respectively) | 152,069 | 165,681 |
Security deposits | 6,242 | 6,242 |
Other current assets | 19,201 | 2,855 |
Total current assets | 323,555 | 225,145 |
Furniture, equipment and improvements (net of accumulated depreciation of $18,316 and $43,201, respectively) | 21,087 | 15,987 |
Other long-term assets | 2,000 | |
Intangible assets (net of accumulated amortization and impairment of $67,833 and $170,000, respectively) | 120,363 | 147,695 |
Total assets | 465,005 | 390,827 |
Liabilities | ||
Accounts payable - Trade | 51,715 | 143,560 |
Accrued expenses | 59,810 | 128,050 |
Notes payable- related party | 73,525 | 73,525 |
Notes payable- other | 64,828 | |
Total liabilities | 185,050 | 409,963 |
Stockholders' equity (deficit) | ||
Preferred stock, $1.00 par value, 10,000,000 shares authorized Series A, 60 shares designated, 5 and 7 shares issued and outstanding, respectively | 5 | 7 |
Common stock $0.001 par value, 100,000,000 shares authorized, 16,826,342 and 18,834,717 shares issued and 16,826,342 and 18,830,222 shares outstanding , respectively | 16,826 | 18,834 |
Additional paid-in capital | 1,463,697 | 1,441,006 |
Treasury stock, at cost, 4,495 shares at December 31, 2008 | 4,236 | |
Accumulated deficit | (1,200,573) | (1,474,747) |
Total stockholders' equity (deficit) | 279,955 | (19,136) |
Liabilities and Stockholders' Equity | ||
Total liabilities and stockholders' equity | $465,005 | $390,827 |
Statement of Income
Statement of Income (USD $) | ||
12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | |
Revenues | ||
Document conversion | $713,510 | $677,852 |
Printing and financial communication | 381,347 | 453,928 |
Fulfillment and distribution | 444,920 | 236,066 |
Software licensing | 90,249 | 50,260 |
Transfer agent services | 255,206 | 7,225 |
Total revenue | 1,885,232 | 1,425,331 |
Cost of Services | ||
Total cost of services | 786,633 | 745,175 |
Gross Profit | ||
Total gross profit | 1,098,599 | 680,156 |
Operating Costs and Expenses | ||
Gereral and administrative | 537,604 | 1,226,243 |
Sales and marketing expenses | 247,887 | 287,198 |
Impairment charges | 130,000 | |
Depreciation and amortization | 38,246 | 35,191 |
Total operating costs and expenses | 823,737 | 1,678,632 |
Net Operating Income (loss) | ||
Total net operating income (loss) | 274,862 | (998,476) |
Other Income (expense) | ||
Total interest expense (income) | 688 | 8,886 |
Gain on settlement of debt | 16,902 | |
Other Income | 27,417 | |
Total other income (expense) | (688) | 35,433 |
Net Income (loss) | ||
Total net income (loss) | $274,174 | ($963,043) |
Earnings Per Share | ||
Income (loss) per share - basic | 0.02 | -0.05 |
Income (loss) per share - fully diluted | 0.02 | -0.05 |
Weighted Average Number of Shares Outstanding | ||
Weighted average number of common shares outstanding - basic | 17,014,713 | 17,834,100 |
Weighted average number of common shares outstanding - fully diluted | 17,017,850 | 17,834,100 |
Statement of Cash Flows
Statement of Cash Flows (USD $) | ||
12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | |
Net Income (loss) | ||
Total net income (loss) | $274,174 | ($963,043) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||
Bad debt expense | 61,340 | 54,490 |
Depreciation and amortization | 38,246 | 35,191 |
Impairment charges | 130,000 | |
Gain on settlement of debt | 16,902 | |
Stock-based expenses | 10,000 | 668,150 |
Changes in operating assets and liabilities | ||
Increase (decrease) in accounts receivable | 47,728 | 95,217 |
Increase (decrease) in deposits and prepaids | 14,347 | (69) |
Increase (decrease) in accounts payable | (91,844) | 88,855 |
Increase (decrease) in accrued expenses | (43,240) | 109,859 |
Net cash provided by (used in) operating activities | ||
Total net cash provided by (used in) operating activities | 186,601 | 11,452 |
Cash flows from investing activities | ||
Purchase of property and equipment | 16,014 | 10,341 |
Net cash provided by (used in) investing activities | (16,014) | (10,341) |
Cash flows from financing activities | ||
Repurchase of common stock | 10,083 | |
Proceeds from sale of common stock | 50,000 | |
Repayments of notes payable | 64,828 | 40,062 |
Net cash provided by (used in) financing activities | (74,911) | 9,938 |
Net change in cash | ||
Total net change in cash | 95,676 | 11,049 |
Cash - beginning | 50,367 | 39,318 |
Cash - ending | $146,043 | $50,367 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity (USD $) | ||||||
Preferred Stock
| Common Stock
| Treasury Stock
| Additional Paid-in Capital
| Accumulated Deficit
| Total
| |
Balance(Beginning) at Dec. 31, 2007 | $7 | $16,235 | ($4,236) | $654,455 | ($511,704) | $154,757 |
Issuance of common stock for cash at $0.50 | 100 | 49,900 | 50,000 | |||
Issuance of common stock for employee incentives | 800 | 186,700 | 187,500 | |||
Issuance of common stock for settlement of accrued liabilities and for services | 1,699 | 549,951 | 551,650 | |||
Total net income (loss) | (963,043) | (963,043) | ||||
Balance(Ending) at Dec. 31, 2008 | 7 | 18,834 | (4,236) | 1,441,006 | (1,474,747) | (19,136) |
Repurchase and retirement of treasury shares | (2,273) | 4,236 | (12,046) | (10,083) | ||
Issuance of common stock for employee incentives | 150 | 24,850 | 25,000 | |||
Issuance of common stock for settlement of accrued liabilities and for services | 100 | 9,900 | 10,000 | |||
Redemption of preferred shares | (2) | 20 | (18) | |||
Cancellation of shares | (5) | 5 | ||||
Total net income (loss) | 274,174 | 274,174 | ||||
Balance(Ending) at Dec. 31, 2009 | $5 | $16,826 | $0 | $1,463,697 | ($1,200,573) | $279,955 |
Notes to Financial Statements
Notes to Financial Statements | |
12 Months Ended
Dec. 31, 2009 | |
Notes to Financial Statements | |
Note 1. Description, Background and Basis of Operations | Note 1:Description, Background and Basis of Operations Nature of Operations Issuer Direct Corporation (the "Company" or "Issuer Direct") was incorporated in the state of Delaware in October1988 under the name Docucon Inc. Subsequent to the December13, 2007 merger of My EDGAR, Inc., the Company changed its name to Issuer Direct Corporation. The transaction has been accounted for as a reverse merger.My EDGAR was the acquiring entity for accounting purposes. While the transaction was accounted for using the purchase method of accounting, in substance the transaction was a recapitalization of My EDGAR's capital structure. The surviving company was formed for the purposes of helping companies produce and distribute their financial and business communications both online and in print. As an issuer services focused company, Issuer Direct Corporation operates under several brands in the market, including Elite Financial Press, iProxy Direct, Issuer Logistics, The Edgar Service Bureau / My EDGAR, Bassett Press, Edgarization, Shareholder Direct, and Audit Ready. The Company leverages its securities compliance and regulatory expertise to provide a comprehensive set of services that enhance a client's ability to communicate effectively with its shareholder base while meeting all reporting regulations required. |
Note 2. Summary of Significant Accounting Policies | Note 2:Summary of Significant Accounting Policies The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Significant intercompany accounts and transactions are eliminated in consolidation. Cash and Cash Equivalents We maintained a minimal cash balance with financial institutions that has not exceeded insured limits during the reporting period. We have not experienced any losses in such accounts. Revenue Recognition We recognize revenue in accordance with SEC Staff Accounting BulletinNo.104, "Revenue Recognition," which requires that: (i)persuasive evidence of an arrangement exists, (ii)delivery has occurred or services have been rendered, (iii)the sales price is fixed or determinable, and (iv)collectability is reasonably assured. We recognize revenue when services are rendered or delivered, where collectability is probable. Revenue for completed but unbilled work is recognized based on our historical standard pricing for the type of service and is adjusted to actual when billed. Property and Equipment Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. The range of estimated useful lives used to calculate depreciation for principal items of property and equipment are as follow: Asset Category Depreciation / Amortization Period Furniture, fixtures and equipment 3 to 5 years Computer equipment and purchased software 3 years Machinery and equipment 3 to 5 years Earnings per Share We comply with FASB ASC No. 260 - Earnings per Share (formerly Statement of Financial Accounting Standards ("SFAS") No.128, "Earnings per Share") and SEC Staff Accounting Bulletin ("SAB") No. 98, which require that basic net income/(loss) per common share be computed by dividing net income/(loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income/(loss) per share is computed by dividing the net income/(loss) for the period by the weighted average number of common and common equivalent shares, such as convertible preferred stock, outstanding during the period.Common shares of approximately 2,777 issuable upon the potential conversion of the Company's Series A Convertible Preferred Stock were included in the computation of diluted earnings per common share forthe year ended December 31, 2009. Allowance for Doubtful Accounts We provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables as well as historical collection information. Credit is granted on an unsecured basis. In determining the amount of the allowance, management is required to make certain estimates and assumptions. The allowance is made up of specific reserves, as deemed necessary, on client account |
Note 3. Fixed Assets | Note 3:Fixed Assets December31, 2009 2008 Computers equipment $ 35,442 $ 35,004 Furniture 3,961 3,961 Software - 20,223 Total fixed assets, gross 39,403 59,188 Less: Accumulated depreciation (18,316 ) (43,201 ) Total fixed assets $ 21,087 $ 15,987 Depreciation expense for the years ended December31, 2009 and 2008 totaled $10,913 and $10,691, respectively. |
Note 4. Goodwill and Other Intangible Assets | Note 4:Goodwill and Other Intangible Assets The components of goodwill and intangible assets are as follows: December31, 2009 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Domain name $ 40,000 $ (32,000 ) $ 8,000 Customer lists 30,000 (15,000 ) 15,000 Customer relationships-noncontractual 25,000 (12,500 ) 12,500 Proprietary software 50,000 (8,333 ) 41,667 Goodwill 43,195 - 43,195 Total intangible assets $ 188,195 $ (67,833 ) $ 120,362 December31, 2008 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Domain name $ 40,000 $ (24,000 ) $ 16,000 Customer lists 30,000 (9,000 ) 21,000 Customer relationships-noncontractual 25,000 (7,500 ) 17,500 Proprietary software 50,000 - 50,000 Goodwill 43,195 - 43,195 Total intangible assets $ 188,195 $ (40,500 ) $ 147,695 Goodwill At December31, 2009 and 2008, our recorded goodwill totaled $43,195, which was solely related to our acquisition of Basset Press in July2007. We conducted our 2008 annual impairment analysis during the third quarter of 2008 and determined that the total amount of goodwill recorded related to our 2007 acquisition of Edgarization, LLC was impaired. Accordingly, we recorded an impairment charge of $130,000 during the year ended December 31, 2008, which also included an impairment of $40,000 for intangible assets acquired from Edgarization LLC.In connection with the determination of the impairment, management weighed specific business factors at that time, such as: ●General market conditions and lack of financing/liquidity/interest in the industry, ●Customers' inability to pay for services timely, ●Note payable to Edgarization LLC was in default, ●Legal dispute against Edgarization LLC in regards to interference of business ongoing by the note holder Based upon our evaluation of goodwill at December 31, 2009, no impairment was necessary. Intangible Assets In July2007, as part of the Basset Press acquisition, we acquired $105,000 of identifiable intangible assets including $30,000 for customer lists, $25,000 for non-contractual customer relationships, and $50,000 for proprietary software or intellectual property. Customer lists and relationships are subject to amortization and have approximate estimated useful lives of five years.At the date of the acquisition and through the year ended December31, 2008, we assigned an indefinite life to the proprietary software and included such software in our annual evaluation of impairment. During the first quarter of 2009, we reevaluated the useful life of the propriety software and have assigned a remaining es |
Note 5. Notes payable- other | Note 5:Notes payable As of December31, 2008, we had two unsecured notes payable as follows: December 31, 2009 December 31, 2008 Unsecured Note Payable in connection with the asset purchase agreement in March2007, with interest of 8%; $ - 35,000 Unsecured Note Payable in connection with the July2, 2007 acquisition of Bassett Press, with interest of 8%, due and payable monthly - 29,828 - 64,828 Less current portion - 64,828 Total long-term notes payable $ - $ - On January28, 2009, we entered into a settlement and release agreement with the holder of the note payable that we issued in March2007. Pursuant to the terms of the agreement, the holder agreed to accept $35,000 in full payment of principal and interest, which was paid in full on January28, 2009. We recognized a gain on settlement of debt of approximately $16,900 as of December31, 2008, when we reduced the carrying value of the debt pursuant to the settlement agreement. In August 2009, we fully repaid the $25,000 note payable issued in connection with the Bassett Press acquisition. |
Note 6. Notes payable- related party | Note 6:Notes payable - Related Party As of December 31, 2009 and 2008, we had three unsecured related party notes payable outstanding, totaling $73,525 as follows: December31 2009 2008 Note Payable to our Chief Executive Officer in the amount of $25,000 for various obligations the former company was party to, including former legal counsel, former transfer agent and tax obligations with the state of Delaware. The unsecured note carries interest in the amount of 8% per annum and was due on December31, 2008. The note is in default at December31, 2009, and as of the date of this filing, and the holder has the right to demand payment at any time. There are no penalties associated with the default. $ 23,525 $ 23,525 Unsecured Note Payable to a Director of the Company in the amount of $25,000, with interest of 8%, due on receipt by the Company or its designated escrow agent the placement agent funds of an aggregate of $1,000,000 in gross proceeds of the private placement. 25,000 25,000 Unsecured Note Payable to a Director of the Company in the amount of $25,000, with interest of 8%, due on receipt by the Company or its designated escrow agent the placement agent funds of an aggregate of $1,000,000 in gross proceeds of the private placement. 25,000 25,000 Total notes payable- related party $ 73,525 $ 73,525 |
Note 7. Preferred stock and common stock | Note 7:Preferred stock and common stock As of December31, 2009 and 2008, there were five and seven shares of SeriesA Convertible Preferred Stock ("Preferred Stock") outstanding, respectively, each of which are convertible into 556 shares of our common stock. Although the Certificate of Designation of the rights, preferences and limitations of the Preferred Stock provides for dividends equal to elevenpercent (11.0%) per year on the liquidation preference of $25,000 per share, we have not declared or accrued such dividends.At December 31, 2009, cumulative undeclared dividends on the five shares of Preferred Stock then issued and outstanding were approximately $210,000. These shares were issued by our predecessor company and the original documentation which would validate claims thereto is not available, and we are taking steps to retire the series. In April 2009, we issued 20,000 common shares to the holder of two preferred shares, for a value of $100 each, in settlement of the stated value and any potential claims to accumulated dividends thereon. Additionally, under Delaware law, dividends are an obligation only when declared, and the Board has not declared any dividends payable on the SeriesA Preferred Stock. The Certificate of Designation of the rights, preferences and limitations of the Company's SeriesB Non-Convertible, Cumulative, Non-Voting, Redeemable Preferred Stock provides that the Company may issue up to 476,200 shares of SeriesB Non-Convertible, Cumulative, Non-Voting, Redeemable Preferred Stock, par value $1.00 per share, which shall earn dividends at the rate of fifteenpercent (15.0%) per year. Declaration and payment of dividends are at the sole discretion of the Company's Board of Directors, and are not mandatory. The Certificate of Designation of the rights, preferences and limitations of the Company's SeriesB Non-Convertible, Cumulative, Non-Voting, Redeemable Preferred Stock also provides that the Company may not pay dividends on its common stock until all accrued but unpaid dividends on such preferred stock have been paid. At December31, 2009 and 2008, there were no issued and outstanding shares of such preferred stock. The Company has never declared or paid any cash dividends on its common stock. During year ended December31, 2009, changes in the shares of our common stock outstanding as follows: Year ended December 31, 2009 Year ended December31, 2008 Balance at beginning of year 18,834,717 16,235,723 Repurchase and retirement of treasury shares (1) (2,273,804 ) - Issuance of common stock for services(2) 100,000 1,699,000 Equity Transactions (3) - 100,000 Issuance of common stock for employee incentives (4) 150,000 800,000 Cancellation of shares (4,571 ) (6 ) Redemption of preferred shares 20,000 - Balance at end of year 16,826,342 18,834,717 1.Repurchase and retirement of treasury shares: ●In February 2009, our former President, who remained on the Board of Directors until December 9, 2009, sold 2,250,000 shares from his beneficial holding |
Note 8. Commitments and Contingencies | Note 8:Commitments and Contingencies Office Lease In May2007, we signed a three-year lease for 5,700 square feet for our corporate headquarters, located at 201Shannon Oaks Circle Suite 105 Cary, NC 27511. Rental expenses associated with the leased premise totaled $78,189 and $92,335 for the years ended December31, 2009 and 2008. Required minimum lease payments for fiscal 2010 total $60,000. |
Note 9. Selected Quarterly Financial Data (unaudited) | Note 9:Selected Quarterly Financial Data (unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter Year ended December31, 2009 Revenues $ 475,538 $ 765,808 $ 326,433 $ 320,453 Cost of goods 214,001 271,041 145,491 156,100 Gross profit 258,537 494,767 180,942 164,353 Gross profitpercentage 55 % 65 % 55 % 51 % Operating costs and expenses 165,921 225,850 191,982 239,590 Net income (loss) 91,345 268,852 (9,958 ) (75,237 ) Net income (loss) per share - fully diluted $ 0.01 $ 0.02 $ (0.00 ) $ (0.00 ) Weighted average shares outstanding basic - fully diluted 17,635,276 16,751,905 16,854,717 16,827,087 First Quarter Second Quarter Third Quarter Fourth Quarter Year ended December31, 2008 Revenues $ 293,350 $ 450,799 $ 312,378 $ 368,804 Cost of goods 137,721 284,195 161,853 161,406 Gross profit 155,628 166,604 150,525 207,399 Gross profitpercentage 53 % 37 % 48 % 56 % Operating costs and expenses 516,493 521,480 413,554 227,103 Net income (loss) (388,541 ) (332,826 ) (267,609 ) 25,933 Net income (loss) per share - fully diluted $ (0.023 ) $ (0.019 ) $ (0.015 ) $ 0.001 Weighted average shares outstanding basic - fully diluted 16,887,877 17,243,658 18,346,282 18,834,723 |
Note 10. Concentrations | Note 10:Concentrations For the years ended December31, 2009 and December31, 2008, we generated revenues from the following revenue streams as apercentage of total revenue: 2009 2008 Revenue Streams Document conversion 37.8 % 47.6 % Printing and financial communication 20.2 % 31.8 % Fulfillment and distribution 23.6 % 16.6 % Software licensing 4.8 % 3.5 % Transfer agent services 13.6 % 0.5 % Total 100.0 % 100.0 % During the years ended December31, 2009 and 2008, revenue generated from one customer comprised 28.6% and 10.4%, respectively, of our total annual revenues. As of December 31, 2009, one customer comprised 17.8% of our total accounts receivable.As of December31, 2008, two customers comprised 41.0% and 14.3% of our total accounts receivable. We believe we did not have any financial instruments that could have potentially subjected us to significant concentrations of credit risk. Since a portion of the revenues are paid at the beginning of the month via credit card or advance by check, the remaining accounts receivable amounts are generally due within 30 days, none of which is collateralized. |
Note 11. Income Taxes | Note 11:Income Taxes At December31, 2009 and 2008, we had a federal net operating loss carry forward of approximately $10,526,081 and $10,980,180, respectively.These loss carry forwards are available to reduce future taxable income and will expire through 2029 if not utilized.Due to the reverse merger and change in control in 2007, the Company's utilization of pre-merger net operating losses may be subject to limitations. As a result of the reverser merger transaction on December 13, 2007, we had a Section382 ownership change. The ownership change does not limit our ability to utilize future tax deductions and no adjustments were made to our gross deferred tax assets as a result of the reverse merger. Future changes in our ownership may limit our ability to utilize our deferred tax assets. Realization of our deferred tax assets is dependent upon future earnings; accordingly, a full valuation allowance was recorded against the assets. The provision for income taxes consisted of the following components for the years ended December31: 2009 2008 Current: Federal - - State - - Deferred: - - - - Components of net deferred tax assets, including a valuation allowance, are as follows at December31: 2009 2008 Deferred tax assets: Net operating loss carryforward $ 3,684,000 $ 3,815,000 Accrued liabilities 42,000 23,000 Intangibles and goodwill 18,000 39,000 Total deferred tax assets 3,744,000 3,877,000 Less: valuation allowance (3,744,000 ) (3,877,000 ) Net deferred tax assets $ - $ - The valuation allowance for deferred tax assets as of December31, 2009 and 2008 was $3,744,000 and $3,877,000, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. Due to the uncertainty around their ultimate realization, management elected to fully reserve the Company's deferred tax assets as of December31, 2009 and 2008. Reconciliation between the statutory rate and the effective tax rate is as follows at December31: 2009 2008 Federal statutory tax rate 35.0 % (35.0 ) % Utilization of net operating loss carryforward (35.0 ) % - % Permanent difference and valuation allowance - % 35.0 % Effective tax rate 0.0 % 0.0 % |
Note 12. Subsequent Events | Note 12:Subsequent Events The Company evaluated subsequent events through March 16, 2010, which is the date the financial statements were issued and there were no other significant events to report. |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 | |
Document Information | |
Document Type | 10-K |
Amendment Flag | true |
Amendment Description | Amendment |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Jun. 30, 2009
| Mar. 16, 2009
| |
Entity Information | |||
Entity Trading Symbol | ISDR | ||
Entity Registrant Name | Issuer Direct Corporation | ||
Entity Central Index Key | 0000843006 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 16,826,342 | ||
Entity Public Float | $746,324 |