Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 02, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | ISSUER DIRECT CORP | ||
Entity Central Index Key | 843,006 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 18,172,473 | ||
Entity Common Stock, Shares Outstanding | 2,904,114 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 5,338,978 | $ 4,215,145 |
Accounts receivable (net of allowance for doubtful accounts of $429,192 and $396,884, respectively) | 1,299,698 | 1,253,628 |
Other current assets | 188,584 | 252,468 |
Total current assets | 6,827,260 | 5,721,241 |
Capitalized software (net of accumulated amortization of $207,438 and $25,133, respectively) | 2,048,273 | 723,962 |
Fixed assets (net of accumulated depreciation of $318,077 and $262,797, respectively) | 204,316 | 175,497 |
Deferred income tax asset - noncurrent | 140,974 | 97,974 |
Other long-term assets | 17,891 | 18,301 |
Goodwill | 2,241,872 | 2,241,872 |
Intangible assets (net of accumulated amortization of $3,323,782 and $2,512,704, respectively) | 1,380,218 | 2,191,296 |
Total assets | 12,860,804 | 11,170,143 |
Current liabilities: | ||
Accounts payable | 343,418 | 385,285 |
Accrued expenses | 806,399 | 995,999 |
Income taxes payable | 111,961 | 199,613 |
Deferred revenue | 842,642 | 822,481 |
Total current liabilities | 2,104,420 | 2,403,378 |
Deferred income tax liability | 66,332 | 94,566 |
Other long-term liabilities | 112,154 | 113,222 |
Total liabilities | 2,282,906 | 2,611,166 |
Commitments and contingencies (see Note 9) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 30,000,000 shares authorized, no shares issued and outstanding as of December 31, 2016 and 2015. | 0 | 0 |
Common stock $0.001 par value, 100,000,000 shares authorized, 2,860,944 and 2,785,044 shares issued and outstanding as of December 31, 2016 and 2015, respectively. | 2,861 | 2,785 |
Additional paid-in capital | 9,119,610 | 8,202,605 |
Other accumulated comprehensive loss | (35,798) | (35,154) |
Retained earnings | 1,491,225 | 388,741 |
Total stockholders' equity | 10,577,898 | 8,558,977 |
Total liabilities and stockholders' equity | $ 12,860,804 | $ 11,170,143 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | ||
Allowance for Accounts Receivables | $ 429,192 | $ 396,884 |
Accumulated Amortization - Capitalized Software | 207,438 | 25,133 |
Accumulated Depreciation - Fixed Assets | 318,077 | 262,797 |
Accumulated Amortization - Intangible Assets | $ 3,323,782 | $ 2,512,704 |
Stockholders Equity | ||
Preferred Stock shares, Par value | $ 0.001 | $ 0.001 |
Preferred Stock shares, Authorized | 30,000,000 | 30,000,000 |
Preferred Stock shares, Issued | 0 | 0 |
Preferred Stock shares, Outstanding | 0 | 0 |
Common Stock shares, Par value | $ 0.001 | $ 0.001 |
Common Stock shares, Authorized | 100,000,000 | 100,000,000 |
Common Stock shares, Issued | 2,860,944 | 2,785,044 |
Common Stock shares, Outstanding | 2,860,944 | 2,785,044 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||
Revenues | $ 12,058,866 | $ 11,619,883 |
Cost of services | 3,024,339 | 3,447,992 |
Gross profit | 9,034,527 | 8,171,891 |
Operating costs and expenses: | ||
General and administrative | 3,185,308 | 3,241,404 |
Sales and marketing | 2,600,851 | 2,343,330 |
Product development | 403,623 | 326,584 |
Depreciation and amortization | 909,432 | 1,079,337 |
Impairment loss on intangible assets | 0 | 547,000 |
Total operating costs and expenses | 7,099,214 | 7,537,655 |
Operating income | 1,935,313 | 634,236 |
Other income (expense): | ||
Other income, net | 80,165 | 0 |
Interest income (expense), net | 4,080 | (622,139) |
Total other income (expense) | 84,245 | (622,139) |
Income before taxes | 2,019,558 | 12,097 |
Income tax expense (benefit) | 464,350 | (132,487) |
Net income | $ 1,555,208 | $ 144,584 |
Income per share - basic | $ 0.55 | $ 0.06 |
Income per share - diluted | $ 0.54 | $ 0.06 |
Weighted average number of common shares outstanding - basic | 2,819,720 | 2,486,684 |
Weighted average number of common shares outstanding - diluted | 2,903,255 | 2,575,952 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements Of Comprehensive Income | ||
Net income | $ 1,555,208 | $ 144,584 |
Foreign currency translation adjustment | (644) | 12,129 |
Comprehensive income | $ 1,554,564 | $ 156,713 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total |
Beginning Balance, Shares at Dec. 31, 2014 | 2,316,743 | ||||
Beginning Balance, Amount at Dec. 31, 2014 | $ 2,317 | $ 5,725,470 | $ (47,283) | $ 327,258 | $ 6,007,762 |
Stock-based compensation expense, shares | 8,000 | ||||
Stock-based compensation expense, amount | $ 8 | 744,587 | 744,595 | ||
Exercise of stock options, net of tax, shares | 42,589 | ||||
Exercise of stock options, net of tax, amount | $ 42 | 66,293 | 66,335 | ||
Shares issued upon partial conversion of note payable (see Note 6), Shares | 417,712 | ||||
Shares issued upon partial conversion of note payable (see Note 6), Amount | $ 418 | 1,666,255 | 1,666,673 | ||
Dividends | (83,101) | (83,101) | |||
Foreign currency translation | 12,129 | 12,129 | |||
Net income | 144,584 | 144,584 | |||
Ending Balance, Shares at Dec. 31, 2015 | 2,785,044 | ||||
Ending Balance, Amount at Dec. 31, 2015 | $ 2,785 | 8,202,605 | (35,154) | 388,741 | 8,558,977 |
Stock-based compensation expense, amount | 882,087 | 882,087 | |||
Exercise of stock options, net of tax, shares | 75,900 | ||||
Exercise of stock options, net of tax, amount | $ 76 | 34,918 | 34,994 | ||
Shares issued upon partial conversion of note payable (see Note 6), Amount | 0 | ||||
Dividends | (452,724) | (452,724) | |||
Foreign currency translation | (644) | (644) | |||
Net income | 1,555,208 | 1,555,208 | |||
Ending Balance, Shares at Dec. 31, 2016 | 2,860,944 | ||||
Ending Balance, Amount at Dec. 31, 2016 | $ 2,861 | $ 9,119,610 | $ (35,798) | $ 1,491,225 | $ 10,577,898 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 1,555,208 | $ 144,584 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Bad debt expense | 195,327 | 169,020 |
Depreciation and amortization | 1,076,808 | 1,099,870 |
Impairment loss on intangible assets | 0 | 547,000 |
Deferred income taxes | (210,406) | (631,938) |
Non-cash interest expense | 0 | 535,397 |
Stock-based compensation expense | 592,025 | 549,184 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | (259,132) | 586,518 |
Decrease (increase) in deposits and prepaid assets | 63,171 | 68,813 |
Increase (decrease) in accounts payable | (38,602) | 132,168 |
Increase (decrease) in deferred revenue | 42,748 | (44,680) |
Increase (decrease) in accrued expenses | (255,821) | 20,630 |
Net cash provided by operating activities | 2,761,326 | 3,176,566 |
Cash flows from investing activities: | ||
Capitalized software | (1,077,382) | (553,684) |
Purchase of fixed assets | (112,244) | (109,512) |
Net cash used in investing activities | (1,189,626) | (663,196) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options, net of income taxes | 34,994 | 28,100 |
Excess tax benefit from share based compensation | 0 | 38,235 |
Payment of dividend | (452,724) | (83,101) |
Net cash (used in)/provided by financing activities | (417,730) | (16,766) |
Net change in cash | 1,153,970 | 2,496,604 |
Cash - beginning | 4,215,145 | 1,721,343 |
Currency translation adjustment | (30,137) | (2,802) |
Cash - ending | 5,338,978 | 4,215,145 |
Supplemental disclosures: | ||
Cash paid for interest | 0 | 85,870 |
Cash paid for income taxes | 715,614 | 282,951 |
Non-cash activities: | ||
Stock-based compensation - capitalized software | 429,234 | 195,411 |
Conversion of note payable to common stock | $ 0 | $ 1,666,673 |
Note 1. Description, Background
Note 1. Description, Background and Basis of Operations | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
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 October 1988 under the name Docucon Inc. Subsequent to the December 13, 2007 merger with My EDGAR, Inc., the Company changed its name to Issuer Direct Corporation. 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 a technology and issuer services focused company, Issuer Direct Corporation operates under several brands in the market, including Direct Transfer, PrecisionIR (PIR), Blueprint, Classify, Investor Network, iProxy Direct, iR Direct, QX Interactive and Accesswire. 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
Note 2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Summary of Significant Accounting Policies | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant intercompany accounts and transactions are eliminated in consolidation. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. The Company places its cash and cash equivalents on deposit with financial institutions in the United States, Canada, and Europe. The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially all depository accounts in the United States. As of December 31, 2016, the Company had $4,127,107 which exceeds the insured amounts in the United States. The Company also had cash of $625,785 in Europe, and $52,106 in Canada on hand at December 31, 2016. Revenue Recognition We recognize revenue in accordance with accounting principles generally accepted in the United States (“US GAAP”), including SEC Staff Accounting Bulletin No. 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 and/or delivered, where collectability is probable. Deferred revenue primarily consists of advance billings for annual contracts for our legacy annual report service and licenses of our cloud-based platforms. Fixed Assets Fixed assets are 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 Computer equipment 3 years Furniture & equipment 3 to 7 years Leasehold improvements 7 years or lesser of the lease term Earnings per Share We calculate earnings per share in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) No. 260 – EPS, which requires that basic net income per common share be computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and dilutive common equivalent shares outstanding during the period. Shares issuable upon the exercise of stock options and restricted stock units totaling 140,000 and 211,250 were excluded in the computation of diluted earnings per common share during the years ended December 31, 2016 and 2015, respectively, because their impact was anti-dilutive. 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 balances, and a reserve based on our historical experience. The following is a summary of our allowance for doubtful accounts during the years ended December 31, 2016 and 2015: Year Ended December 31, 2016 Year Ended December 31, 2015 Beginning balance $ 396,884 $ 460,564 Bad debt expense 195,327 169,020 Write-offs (163,019 ) (232,700 ) Ending balance $ 429,192 $ 396,884 Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for doubtful accounts and the valuation of goodwill, intangible assets, deferred tax assets, and stock-based compensation. Actual results could differ from those estimates. Income Taxes We comply with the FASB ASC No. 740 – Income Taxes which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, we recognize the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. Our policy regarding the classification of interest and penalties is to classify them as income tax expense in our financial statements, if applicable. Capitalized Software In accordance with FASB ASC No. 350 – Intangibles – Goodwill and Other, costs incurred to develop our cloud-based platform products and disclosure management system components are capitalized when the preliminary project phase is complete, management commits to fund the project and it is probable the project will be completed and used for its intended purposes. Once the software is substantially complete and ready for its intended use, the software is amortized over its estimated useful life. Costs related to design or maintenance of the software are expensed as incurred. The Company capitalized $1,506,616 and $749,095 during the years ended December 31, 2016 and 2015, respectively. Included in these amounts were $429,234 and $195,411 related to stock-based compensation during the years ended December 31, 2016 and 2015, respectively. The Company recorded amortization expense of $182,305 and $25,133 during the years ended December 31, 2016 and 2015, respectively, $168,914 and $20,532 of which is included in Cost of revenues on the Consolidated Statements of Income. For the years ended December 31, 2016 and 2015, the remaining amount of $13,391 and $4,601 is included in Depreciation and amortization, as it relates to back-office supporting systems. Impairment of Long-lived Assets In accordance with the authoritative guidance for accounting for long-lived assets, assets such as property and equipment, trademarks, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds fair value of the asset group. Fair Value Measurements As of December 31, 2016 and 2015, we do not have any financial assets or liabilities that are required to be, or that we elected to measure, at fair value. We believe that the fair value of our financial instruments, which consist of cash and cash equivalents, accounts receivable, our line of credit, notes payable, and accounts payable approximate their carrying amounts. Stock-based Compensation We account for stock-based compensation under FASB ASC No. 718 – Compensation – Stock Compensation. The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The cost is to be recognized over the period during which an employee is required to provide service in exchange for the award. The authoritative guidance for stock compensation also requires the benefit of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as prescribed under previous accounting rules. This requirement reduces net operating cash flows and increases net financing cash flows in periods subsequent to adoption, only if excess tax benefits exist. Translation of Foreign Financial Statements The financial statements of the foreign subsidiaries of the Company have been translated into U.S. dollars. All assets and liabilities have been translated at current rates of exchange in effect at the end of the period. Income and expense items have been translated at the average exchange rates for the year or the applicable interim period. The gains or losses that result from this process are recorded as a separate component of other accumulated comprehensive income (loss) until the entity is sold or substantially liquidated. Comprehensive Income Comprehensive income consists of net income and other comprehensive income related to changes in the cumulative foreign currency translation adjustment. Business Combinations, Goodwill and Intangible Assets We account for business combinations under FASB ASC No. 805 – Business Combinations and the related acquired intangible assets and goodwill under FASB ASC No. 350 – Intangibles – Goodwill and Other. The authoritative guidance for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill. We record the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recorded as goodwill. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets consist of client relationships, customer lists, software, technology and trademarks that are initially measured at fair value. At the time of the business combination the trademarks are considered an indefinite-lived asset and, as such, are not amortized as there is no foreseeable limit to cash flows generated from them. The goodwill and intangible assets are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. The client relationships, customer lists, software and technology are amortized over their estimated useful lives. Advertising The Company expenses advertising as incurred, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits. Advertising expense totaled $77,623 and $174,094, during the years ended December 31, 2016 and 2015, respectively. Newly Adopted Accounting Pronouncements On November 20, 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-17 ("ASU 2015-17”), Balance Sheet Classification of Deferred Taxes, which requires that all deferred tax assets and liabilities, along with any related valuation allowance, in each jurisdiction be classified as noncurrent on the balance sheet. For public business entities, ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods but may be early adopted. ASU 2015-17 may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively (i.e., by reclassifying the comparative balance sheets). The Company elected to early adopt ASU 2015-17, on a prospective basis, as of December 31, 2015. The FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments . The FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. ASU 2015-05 is effective for public entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. ASU 2015-05 did not have a significant impact on our financial statements. The FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The FASB issued this ASU as part of its initiative to reduce complexity in accounting standards. The objective of the simplification initiative is to identify, evaluate, and improve areas of US GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements. The amendments in ASU 2015-01 were effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. ASU 2015-01 did not have a significant impact on our financial statements. The FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The amendments in this ASU do not change the current criteria in US GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify how current US GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. Furthermore, the amendments clarify that no single term or feature would necessarily determine the economic characteristics and risks of the host contract. Rather, the nature of the host contract depends upon the economic characteristics and risks of the entire hybrid financial instrument. The amendments in this ASU were effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. ASU 2014-16 did not have a significant impact on our financial statements. The FASB issued ASU 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The issue is the result of a consensus of the FASB Emerging Issues Task Force (EITF). The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in this ASU were effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. ASU 2014-12 did not have a significant impact on our financial statements. Recent Accounting Pronouncement The FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments are effective for public business entities that are SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The company does not expect this pronouncement to have a significant impact on its financial statements. The FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The company does not expect this pronouncement to have a significant impact on its financial statements, unless an acquisition or disposal of assets is completed. The FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides cash flow statement classification guidance for: 1) Debt prepayment or debt extinguishment costs; 2) Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; 3) Contingent consideration payments made after a business combination; 4) Proceeds from the settlement of insurance claims; 5) Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) Distributions received from equity method investees; 7) beneficial interests in securitization transactions; and 8) Separately identifiable cash flows and application of the Predominance Principle. This is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early application is permitted, including adoption in an interim period. The company does not expect this pronouncement to have a significant impact on its financial statements. The FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which, among other things, requires the measurement of all expected credit losses for financial assets held at the reporting date to be based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. This is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The company does not expect this pronouncement to have a significant impact on its financial statements. The FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment award transactions including (a) income tax consequences; (b) classification of awards as either debt or equity liabilities; and (c) classification on the statement of cash flows. The amendments are effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustment should be reflected as of the beginning of the fiscal year that includes the interim period. Additionally, as a reminder, an entity that elects to early adopt the new guidance must adopt all of the amendments in the same period. The primary amendment that is expected to impact the Company's financial statements is the requirement for excess tax benefits or shortfalls on the exercise of stock-based compensation awards to be presented in income tax expense in the Consolidated Statements of Income during the period the award is exercised as opposed to being recorded in Additional paid-in capital on the Consolidated Balance Sheets. The excess tax benefit or shortfall is calculated as the difference between the fair value of the award on the date of exercise and the fair value of the award used to measure the expense to be recognized over the service period. As the result is dependent on the future value of the Company's stock as well as the timing of employee exercises, the amount of the impact cannot be quantified at this time. The FASB's new leases standard ASU 2016-02 Leases (Topic 842) was issued on February 25, 2016. ASU 2016-02 is intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The ASU will require organizations that lease assets referred to as “Lessees” to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. An organization is to provide disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements concerning additional information about the amounts recorded in the financial statements. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current US GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current US GAAP which requires only capital leases to be recognized on the balance sheet the new ASU will require both types of leases (i.e. operating and capital) to be recognized on the balance sheet. The FASB lessee accounting model will continue to account for both types of leases. The capital lease will be accounted for in substantially the same manner as capital leases are accounted for under existing US GAAP. The operating lease will be accounted for in a manner similar to operating leases under existing US GAAP, except that lessees will recognize a lease liability and a lease asset for all of those leases. Public companies will be required to adopt the new leasing standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For calendar year-end public companies, this means an adoption date of January 1, 2019 and retrospective application to previously issued annual and interim financial statements for 2018, however, early adoption is permitted. Lessees with a large portfolio of leases are likely to see a significant increase in balance sheet assets and liabilities. The Company currently has one lease on its corporate facilities which ends October 31, 2019. Absent any renewal of the lease or new leases entered into before January 1, 2019, the Company will be required to record a right-to-use asset and corresponding lease liability associated with the remaining lease payments beginning with the first interim period of 2019. This will increase both balance sheet assets and liabilities by insignificant amounts and will not have a significant impact on the income statement or affect any covenant calculations. The FASB has issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and several updates to the ASU. ASU 2014-09 requires revenue recognition to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 sets forth a new revenue recognition model that requires identifying the contract, identifying the performance obligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing the revenue upon satisfaction of performance obligations. The amendments in the ASU can be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the update recognized at the date of the initial application along with additional disclosures. The Company is currently evaluating the impact of ASU 2014-09 as well as the additional updates, however, does not believe it will have a significant impact on the Company's financial statements as the Company believes the current manner in which revenue is recognized will result in the same or similar timing and amount of revenue recognition as required by ASU 2014-09 and the additional amendments. These ASU's are currently effective for the Company in our year beginning on January 1, 2018. |
Note 3. Fixed Assets
Note 3. Fixed Assets | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | December 31, 2016 2015 Computers equipment $ 118,593 $ 95,814 Furniture & equipment 296,039 248,699 Leasehold improvements 107,761 93,781 Total fixed assets, gross 522,393 438,294 Less: Accumulated depreciation (318,077 ) (262,797 ) Total fixed assets, net $ 204,316 $ 175,497 Depreciation expense on fixed assets for the years ended December 31, 2016 and 2015 totaled $83,425 and $79,399, respectively. |
Note 4. Goodwill and Other Inta
Note 4. Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Goodwill and Other Intangible Assets | The components of intangible assets are as follows: December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer lists $ 1,770,000 $ (1,769,666 ) $ 334 Customer relationships 1,747,000 (810,810 ) 936,190 Proprietary software 782,000 (680,414 ) 101,586 Trademarks – definite-lived 173,000 (62,892 ) 110,108 Trademarks – indefinite-lived 232,000 — 232,000 Total intangible assets $ 4,704,000 $ (3,323,782 ) $ 1,380,218 December 31, 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer lists $ 1,770,000 $ (1,408,920 ) $ 361,080 Customer relationships 1,747,000 (564,810 ) 1,182,190 Proprietary software 782,000 (526,508 ) 255,492 Trademarks - definite-lived 173,000 (12,466 ) 160,534 Trademarks – indefinite-lived 232,000 — 232,000 Total intangible assets $ 4,704,000 $ (2,512,704 ) $ 2,191,296 The Company performed its annual assessment for impairment of goodwill and intangible assets and determined there was no impairment as of and for the year ended December 31, 2016. During the fourth quarter of 2015, the Company elected not to renew certain trademarks purchased in conjunction with the acquisition of PIR. These trademarks had an allocated value of $148,680 and the write-off of this value is included in Impairment loss on intangible assets on the Consolidated Statements of Net Income for the year ended December 31, 2015. Additionally, as part of the Company’s annual review of impairment of goodwill and intangible assets, the Company determined the remaining trademarks purchased as part of the acquisition of PIR were no longer indefinite-lived assets as the Company plans to integrate and rebrand the associated trademarks with Issuer Direct. As a result of this determination, the Company was required to perform a goodwill impairment assessment. Due to lower future projections of revenue associated with our ARS service and a shortened useful life of the trademarks, this assessment resulted in an impairment loss of $398,320, which is also included in Impairment loss on intangible assets in the Consolidated Statements of Income for the year ended December 31, 2015. The amortization of intangible assets is a charge to operating expenses and totaled $811,078 and $995,338 in the years ended 2016 and 2015, respectively. The future amortization of the identifiable intangible assets is as follows: Years Ending December 31: 2017 $ 332,964 2018 322,733 2019 286,042 2020 178,600 2021 27,879 Total $ 1,148,218 Our goodwill balance of $2,241,872 at December 31, 2016 and 2015, was related to our acquisition of Basset Press in July 2007, the acquisition of PIR in 2013 and the acquisition of Accesswire in 2014. We conducted our annual impairment analyses as of October 1, of 2016 and 2015 and determined that no goodwill was impaired. |
Note 5. Line of Credit
Note 5. Line of Credit | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Line of Credit | Effective September 2, 2016, the Company renewed its Line of Credit, which reduced the interest rate to LIBOR plus 2.50%. The amount of funds available for future borrowings remained at $2,000,000. As of December 31, 2016, the interest rate was 3.26% and the Company did not owe any amounts on the Line of Credit. |
Note 6. Note Payable (Related P
Note 6. Note Payable (Related Party) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Note Payable (Related Party) | On August 22, 2013, in connection with and to partially fund the acquisition and simultaneously with the acquisition of PIR, the Company entered into a Securities Purchase Agreement (the “8% Note Purchase Agreement”) relating to the sale of $2,500,000 aggregate principal amount of the Company’s 8% convertible secured promissory note (“8% Note”) with Red Oak Partners LP (“Red Oak”). The 8% Note paid interest on each of March 31, June 30, September 30, and December 31, beginning on September 30, 2013, at a rate of 8% per year. The maturity date of the 8% Note was August 22, 2015. The 8% Note was secured by all of the assets of the Company and was subordinated to the Company’s obligations to its primary financial institution. Furthermore, in connection with the 8% Note Purchase Agreement, a partner of Red Oak was appointed to the Company’s Board of Directors but subsequently resigned on August 18, 2016, as a member of our Board of Directors due to personal reasons and not as a result of a disagreement with the Company, as disclosed in the Current Report on Form 8-K filed with the SEC the same day. On November 10, 2014, Red Oak assigned the 8% Note between the Red Oak Fund, LP; Pinnacle Opportunities, LP; and the Red Oak Long Fund, LP; all of which are under management by Red Oak. Beginning immediately upon the date of issuance, Red Oak or its assignees had the right to convert the 8% Note into shares of the Company’s common stock at a conversion price of $3.99 per share. On the date the Company entered into the 8% Note Purchase Agreement, the Company’s stock price was $8.20 per share, and therefore the Company assigned a value of $2,500,000 to the common stock conversion feature and recorded this as debt discount and additional paid-in capital. This instrument also created a deferred tax liability of $1,000,000 that reduced the value recorded as additional paid in capital, and therefore the net amount recorded to stockholders' equity was $1,500,000. The debt discount of $2,500,000 was amortized over the two-year life of the loan as non-cash interest expense. On November 12, 2014, Red Oak converted $833,327 of principal and $23,369 of accrued interest payable on the 8% Note into 214,710 shares of the Company’s common stock at the conversion price of $3.99. Following this transaction, the principal balance of the note was $1,666,673. As a result of this transaction, the company recorded $323,250 of non-cash interest expense due to the acceleration of debt discount on the portion of the 8% Note that was converted. Effective August 22, 2015, upon the maturity of the 8% Note, Red Oak converted the remaining $1,666,673 of principal into 417,712 shares of the Company’s common stock at the conversion price of $3.99. As a result of the final conversion, the Company no longer has non-cash or cash interest expense associated with the 8% Note. During the year ended December 31, 2015, the Company recorded non-cash interest expense of $535,397 and cash interest expense of $85,870 related to the 8% Note. |
Note 7. Equity
Note 7. Equity | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Equity | Dividends During the years ended December 31, 2016 and 2015, we paid dividends totaling $452,724, or $0.16 per share, and $83,101, or $0.03 per share, respectively, to holders of shares of common stock. Preferred stock and common stock There were no issuances of preferred stock during the years ended December 31, 2016 and 2015. During the year ended December 31, 2015, the Company had the following issuances of common stock in addition to stock issued pursuant to exercises of restricted stock units and options to purchase common stock: ● The Company issued 8,000 shares of common stock to consultants in exchange for services during the year ended December 31, 2015, and recognized expense of $63,686 for the value of those shares. No shares were issued in exchange for services during the year ended December 31, 2016. ● On November 12, 2014, the Company issued 214,710 shares upon the partial conversion of a note payable and on August 22, 2015 issued another 417,712 shares on upon the final conversion of the note payable (see Note 6). |
Note 8. Stock Options and Restr
Note 8. Stock Options and Restricted Stock Units | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Stock Options and Restricted Stock Units | On May 23, 2014, the shareholders of the Company approved the 2014 Equity Incentive Plan (the “2014 Plan”). Under the terms of the 2014 Plan, the Company is authorized to issue incentive awards for common stock up to 200,000 shares to employees and other personnel. On June 10, 2016, the shareholders of the Company approved an additional 200,000 awards to be issued under the 2014 Plan, bringing the total number of shares to be awarded to 400,000. The awards may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and performance awards. The 2014 Plan is effective through March 31, 2024. As of December 31, 2016, 248,500 awards had been granted under the 2014 Plan. On August 9, 2010, the shareholders of the Company approved the 2010 Equity Incentive Plan (the “2010 Plan”). Under the terms of the 2010 Plan, 150,000 shares of the Company’s common stock were authorized for the issuance of stock options and restricted stock. The 2010 Plan also provides for an automatic annual increase in the number of authorized shares of common stock issuable beginning in 2011 equal to the lesser of (a) 2% of shares outstanding on the last day of the immediate preceding year, (b) 50,000 shares, or (c) such lesser number of shares as the Company’s board of directors shall determine, provided, however, in no event shall the maximum number of shares that may be issued under the Plan pursuant to stock awards be greater than 15% of the aggregate shares outstanding on the last day of the immediately preceding year. With the automatic increases, there were 220,416 authorized shares of common stock on January 1, 2012. On January 20, 2012, the Company’s Board of Directors approved an increase in the number of shares authorized under the 2010 Plan from 220,416 to 420,416. This increase was ratified by the shareholders of the Company on June 29, 2012. On December 31, 2016, there were no shares remaining for awards to be issued under the 2010 Plan. The following is a summary of stock options issued during the year ended December 31, 2016 and 2015: Number of Options Outstanding Range of Exercise Price Weighted Average Exercise Price Aggregate Intrinsic Value Balance at December 31, 2014 258,171 $ 0.01 - 13.49 $ 7.32 $ 608,750 Options granted 10,000 $ 6.80 $ 6.80 — Options exercised (20,671 ) $ 0.01 - 2.81 $ 2.55 $ 106,868 Options forfeited/cancelled (1,500 ) $ 9.26 $ 9.26 — Balance at December 31, 2015 246,000 $ 0.01 - 13.49 $ 7.69 $ 187,798 Options granted — $ — $ — — Options exercised (20,900 ) $ 0.01 - 3.33 $ 1.67 $ 89,180 Options forfeited/cancelled (61,250 ) $ 7.76 - 9.26 $ 8.11 — Balance at December 31, 2016 163,850 $ 0.01 - 13.49 $ 8.30 $ 297,542 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e. the aggregate difference between the closing price of our common stock on December 31, 2016 and 2015 of $9.00 and $5.77, respectively, and the exercise price for in-the-money options) that would have been received by the holders if all instruments had been exercised on December 31, 2016 and 2015. As of December 31, 2016, there was $303,099 of unrecognized compensation cost related to our unvested stock options, which will be recognized through 2019. The following table summarizes information about stock options outstanding and exercisable at December 31, 2016: Options Outstanding Options Exercisable Exercise Price Number Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years) Number $0.01 - $1.00 12,850 $ 0.01 5.05 12,850 $1.01 - $4.00 11,000 $ 3.33 5.25 11,000 $4.01 - $7.00 10,000 $ 6.80 8.88 2,500 $7.01 - $9.00 78,750 $ 7.76 3.70 63,751 $9.01 - $10.00 11,250 $ 9.26 7.99 6,670 $10.01 - $13.49 40,000 $ 13.49 2.19 27,500 Total 163,850 $ 8.30 4.15 124,271 Of the 163,850 stock options outstanding, 92,850 are non-qualified stock options. All options have been registered with the SEC. No stock options were granted during the year ended December 31, 2016. The fair value of common stock options issued during the year ended December 31, 2015 were estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used: Year ended December 31, 2015 Expected dividend yield 1.76 % Expected stock price volatility 158 % Weighted-average risk-free interest rate 1.84 % Weighted-average expected life of options (in years) 5.97 The following is a summary of restricted stock units issued during the year ended December 31, 2016 and 2015: Number of Options Outstanding Weighted Average Fair Value Aggregate Intrinsic Value Balance at December 31, 2014 26,000 $ 9.26 $ 232,960 Units granted 110,000 $ 7.32 804,800 Units vested/issued (25,000 ) $ 7.20 $ 201,500 Units forfeited (3,000 ) $ 9.26 26,880 Balance at December 31, 2015 108,000 $ 7.76 $ 626,400 Units granted 88,500 $ 5.28 467,300 Units vested/issued (55,000 ) $ 7.32 $ 379,588 Units forfeited (15,000 ) $ 6.61 111,941 Balance at December 31, 2016 126,500 $ 6.35 $ 1,138,500 As of December 31, 2016, there was $339,287 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2018. All restricted stock units have been registered with the SEC. During the year ended December 31, 2016 and 2015, we recorded compensation expense of $592,025 and $485,498, respectively, related to stock options and restricted stock units. Additionally, during the years ended December 31, 2016 and 2015, $429,234 and $195,411, respectively of additional cost was included as capitalized software on the Consolidated Balance Sheet as of December 31, 2016 and 2015. |
Note 9. Commitments and Conting
Note 9. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Office Lease In October 2015, we signed a three year lease extension for our 16,059 square-foot corporate headquarters in Morrisville, NC. At our option, we may terminate the lease any time in exchange for an early termination fee of $135,000. If we do not terminate the lease in Morrisville, NC early, our required minimum lease payments are as follows: Year Ended December 31: 2017 $ 153,337 2018 $ 157,994 2019 $ 134,896 Total $ 446,227 Additionally, we have a shared office facility in London, England, that is on a short term lease. Rent expense associated with our office leases totaled $207,104 and $203,953 for the years ended December 31, 2016 and 2015, respectively. Litigation From time to time, the Company may be involved in litigation that arises through the normal course of business. The Company is 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. |
Note 10. Concentrations
Note 10. Concentrations | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Concentrations | For the years ended December 31, 2016 and December 31, 2015, we generated revenues from the following revenue streams as a percentage of total revenue: 2016 2015 Amount Percentage Amount Percentage Revenue Streams Disclosure management $ 2,367,504 19.6 % $ 2,569,415 22.1 % Shareholder communications 7,539,098 62.5 % 7,942,421 68.4 % Platform and technology 2,152,264 17.9 % 1,108,047 9.5 % Total $ 12,058,866 100.0 % $ 11,619,883 100.0 % We did not have any customers during the years ended December 31, 2016 or 2015 that accounted for more than 10% of our revenue. We did not have any customers that comprised more than 10% of our total accounts receivable balances at December 31, 2016 or 2015. We believe we do 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. Geographic Operating I
Note 11. Geographic Operating Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Geographic Operating Information | We consider ourselves to be in a single reportable segment under the authoritative guidance for segment reporting, specifically a disclosure management and targeted communications company for publically traded companies. Revenue is attributed to a particular geographic region based on where the services are earned. The following tables set forth revenues by domestic versus international regions: Year Ended 2016 2015 Geographic region North America $ 10,492,799 $ 9,520,523 Europe 1,566,067 2,099,360 Total revenues $ 12,058,866 $ 11,619,883 |
Note 12. Income Taxes
Note 12. Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The provision (benefit) for income taxes consisted of the following components for the years ended December 31: 2016 2015 Current: Federal $ 500,181 $ 257,098 State 95,518 47,256 Foreign 55,874 193,055 Total Current 651,573 497,409 Deferred: Federal (129,822 ) (468,887 ) State (17,554 ) (67,423 ) Foreign (39,847 ) (93,586 ) Total Deferred (187,223 ) (629,896 ) Total expense (benefit) for income taxes $ 464,350 $ (132,487 ) Reconciliation between the statutory rate and the effective tax rate is as follows at December 31: 2016 2015 Amount Percentage Amount Percentage Federal statutory tax rate $ 686,597 34.0 % $ 4,113 34.0 % State tax rate 65,660 3.3 % (1,042 ) (8.6 )% Permanent difference - stock-based compensation 32,562 1.6 % 27,410 226.6 % Permanent difference – other 67,269 3.3 % 8,888 73.4 % Permanent items – disallowed interest — — 30,433 251.6 % Provision to return (7,796 ) (0.4 )% (30,797 ) (254.6 )% Change in unrecognized tax benefits (57,749 ) (2.8 )% 57,749 477.4 % Write-off of net operating losses — — 176,034 1,455.2 % Foreign rate differential (52,502 ) (2.6 )% (33,032 ) (273.1 )% Research and development credit (55,726 ) (2.8 )% (27,623 ) (228.3 )% UK Rate Change — — (3,898 ) (32.2 )% Other — — 14,738 121.8 % Sub-total 678,315 33.6 % 222,973 1,843.2 % Change in valuation allowance (213,965 ) (10.6 )% (355,460 ) (2,938.4 )% Total $ 464,350 23.0 % $ (132,487 ) (1,095.2 )% Components of net deferred income tax assets, including a valuation allowance, are as follows at December 31: 2016 2015 Change Assets: Net operating loss $ 178,699 $ 254,123 $ (75,424 ) Deferred revenue 138,009 51,914 86,095 Allowance for doubtful accounts 142,181 135,663 6,518 Stock options 297,861 345,779 (47,918 ) Basis difference in intangible assets 80,074 118,257 (38,183 ) Prepaid D&O Insurance 6,452 10,341 (3,889 ) Foreign tax credits carryforward 1,180,833 1,180,833 — Other 37,765 26,916 10,849 Total deferred tax asset 2,061,874 2,123,826 (61,952 ) Less: Valuation allowance (1,193,990 ) (1,407,955 ) 213,965 Total net deferred tax asset 867,884 715,871 152,013 Liabilities Prepaid expenses (38,484 ) (30,460 ) (8,024 ) Basis difference in fixed assets — (4,833 ) 4,833 Capitalized software (491,894 ) (171,584 ) (320,310 ) Purchase of intangibles (262,864 ) (505,586 ) 242,722 Total deferred tax liability (793,242 ) (712,463 ) (80,779 ) Total net deferred tax asset / (liability) $ 74,642 $ 3,408 $ 71,234 A valuation allowance of $1,193,990 and $1,407,955 was recorded against deferred tax assets as of December 31, 2016 and 2015, respectively. The valuation allowance as of December 31, 2016, relates to foreign tax credit carryforwards and foreign net operating losses. For the year ended December 31, 2016, the Company released a portion of the valuation allowance in the amount of $213,965. The release comprised a full valuation release of $191,072 and $20,173 related to federal and state net operating losses, respectively, on the basis of management’s reassessment of the amount of its deferred tax assets that are more likely than not to be realized. Additionally, the Company released a portion of the valuation allowance of $2,720 related to the utilization of foreign net operating losses; however, the Company maintains a full valuation allowance on the remaining foreign net operating losses. 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. It has been determined that it is more likely than not that the deferred tax assets attributable to foreign net operating losses and foreign tax credit carryforwards will not be realized, as it has been deemed unlikely that there will be generation of taxable income for the subsidiaries that carry these losses or that sufficient foreign source income would be generated to use the foreign tax credits. As of December 31, 2016, the Company had no unrecognized tax benefits. As of December 31, 2015, the Company had $57,749 of unrecognized tax benefits which is recorded in Income taxes payable on the Consolidated Balance Sheets. The Company's reserves for uncertain tax positions decreased as a result of expired statute of limitations for a prior tax year and management's conclusion that the uncertain tax positions related to the statute lapse were effectively settled. The Company released $57,749 of its uncertain tax positions during the year ended December 31, 2016, inclusive of interest and penalties. The aggregate changes in the balance of unrecognized tax benefits were as follows: 2016 2015 Balance as of January 1: $ 57,749 $ — Change related to current year positions — 57,749 Change related to statute expirations (57,749 ) — Balance as of December 31: $ — $ 57,749 The Company has not recorded deferred income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations. Generally, such earnings become subject to U.S. tax upon the remittance of dividends and under certain other circumstances. It is not practical to estimate the amount of deferred tax liabilities on such undistributed earnings. Undistributed earnings are insignificant as of December 31, 2016 and 2015. The Company is subject to income taxation by both federal and state taxing authorities. Income tax returns for the years ended December 31, 2015, 2014 and 2013 are open to audit by federal and state taxing authorities. |
Note 13. Employee Benefit Plan
Note 13. Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
13. Employee Benefit Plan | The Company sponsors a defined contribution 401(k) Profit Sharing Plan and allows all employees in the United States to participate. Matching and profit sharing contributions to the plan are at the discretion of management, but are limited to the amount deductible for federal income tax purposes. The Company made contributions to the plan of $21,011 and $16,932 during the years ended December 31, 2016 and 2015, respectively. The Company also sponsors a defined contribution plan which covers substantially all employees in the United Kingdom. Employer contributions to the plan are at the discretion of management. The Company's contribution expense for discretionary contributions were $3,645 and $3,566 for the year ended December 31, 2016 and 2015, respectively. |
Note 14. Subsequent Event
Note 14. Subsequent Event | 12 Months Ended |
Dec. 31, 2016 | |
Note 14. Subsequent Event | |
14. Subsequent Event | On January 10, 2017, the Company’s Board of Directors approved and declared a quarterly cash dividend of $0.05 per share. The dividend was paid on February 10, 2017 to shareholders of record as of January 23, 2017. On February 28, 2017, the Company filed a Definitive Schedule 14C to decrease the Company's authorized shares of common stock from 100,000,000 shares to 20,000,000 shares and its authorized shares of preferred stock from 30,000,000 shares to 1,000,000 shares (the "Decrease Amendment"). The Company expects to file its Certificate of Amendment to Certificate of Incorporation to finalize the Decrease Amendment with the Delaware Secretary of State in mid to late March and will file a Current Report on Form 8-K at such time. |
Note 2. Summary of Significan22
Note 2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Cash and Cash Equivalents | We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. The Company places its cash and cash equivalents on deposit with financial institutions in the United States, Canada, and Europe. The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially all depository accounts in the United States. As of December 31, 2016, the Company had $4,127,107 which exceeds the insured amounts in the United States. The Company also had cash of $625,785 in Europe, and $52,106 in Canada on hand at December 31, 2016. |
Revenue Recognition | We recognize revenue in accordance with accounting principles generally accepted in the United States (“US GAAP”), including SEC Staff Accounting Bulletin No. 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 and/or delivered, where collectability is probable. Deferred revenue primarily consists of advance billings for annual contracts for our legacy annual report service and licenses of our cloud-based platforms. |
Fixed Assets | Fixed assets are 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 Computer equipment 3 years Furniture & equipment 3 to 7 years Leasehold improvements 7 years or lesser of the lease term |
Earnings per Share | We calculate earnings per share in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) No. 260 – EPS, which requires that basic net income per common share be computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and dilutive common equivalent shares outstanding during the period. Shares issuable upon the exercise of stock options and restricted stock units totaling 140,000 and 211,250 were excluded in the computation of diluted earnings per common share during the years ended December 31, 2016 and 2015, respectively, because their impact was anti-dilutive. |
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 balances, and a reserve based on our historical experience. The following is a summary of our allowance for doubtful accounts during the years ended December 31, 2016 and 2015: Year Ended December 31, 2016 Year Ended December 31, 2015 Beginning balance $ 396,884 $ 460,564 Bad debt expense 195,327 169,020 Write-offs (163,019 ) (232,700 ) Ending balance $ 429,192 $ 396,884 |
Use of Estimates | The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for doubtful accounts and the valuation of goodwill, intangible assets, deferred tax assets, and stock-based compensation. Actual results could differ from those estimates. |
Income Taxes | We comply with the FASB ASC No. 740 – Income Taxes which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, we recognize the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. Our policy regarding the classification of interest and penalties is to classify them as income tax expense in our financial statements, if applicable. |
Capitalized Software | In accordance with FASB ASC No. 350 – Intangibles – Goodwill and Other, costs incurred to develop our cloud-based platform products and disclosure management system components are capitalized when the preliminary project phase is complete, management commits to fund the project and it is probable the project will be completed and used for its intended purposes. Once the software is substantially complete and ready for its intended use, the software is amortized over its estimated useful life. Costs related to design or maintenance of the software are expensed as incurred. The Company capitalized $1,506,616 and $749,095 during the years ended December 31, 2016 and 2015, respectively. Included in these amounts were $429,234 and $195,411 related to stock-based compensation during the years ended December 31, 2016 and 2015, respectively. The Company recorded amortization expense of $182,305 and $25,133 during the years ended December 31, 2016 and 2015, respectively, $168,914 and $20,532 of which is included in Cost of revenues on the Consolidated Statements of Income. For the years ended December 31, 2016 and 2015, the remaining amount of $13,391 and $4,601 is included in Depreciation and amortization, as it relates to back-office supporting systems. |
Impairment of Long-lived Assets | In accordance with the authoritative guidance for accounting for long-lived assets, assets such as property and equipment, trademarks, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds fair value of the asset group. |
Fair Value Measurements | As of December 31, 2016 and 2015, we do not have any financial assets or liabilities that are required to be, or that we elected to measure, at fair value. We believe that the fair value of our financial instruments, which consist of cash and cash equivalents, accounts receivable, our line of credit, notes payable, and accounts payable approximate their carrying amounts. |
Stock-based compensation | We account for stock-based compensation under FASB ASC No. 718 – Compensation – Stock Compensation. The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The cost is to be recognized over the period during which an employee is required to provide service in exchange for the award. The authoritative guidance for stock compensation also requires the benefit of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as prescribed under previous accounting rules. This requirement reduces net operating cash flows and increases net financing cash flows in periods subsequent to adoption, only if excess tax benefits exist. |
Translation of Foreign Financial Statements | The financial statements of the foreign subsidiaries of the Company have been translated into U.S. dollars. All assets and liabilities have been translated at current rates of exchange in effect at the end of the period. Income and expense items have been translated at the average exchange rates for the year or the applicable interim period. The gains or losses that result from this process are recorded as a separate component of other accumulated comprehensive income (loss) until the entity is sold or substantially liquidated. |
Comprehensive Income | Comprehensive income consists of net income and other comprehensive income related to changes in the cumulative foreign currency translation adjustment. |
Business Combinations, Goodwill and Intangible Assets | We account for business combinations under FASB ASC No. 805 – Business Combinations and the related acquired intangible assets and goodwill under FASB ASC No. 350 – Intangibles – Goodwill and Other. The authoritative guidance for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill. We record the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recorded as goodwill. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets consist of client relationships, customer lists, software, technology and trademarks that are initially measured at fair value. At the time of the business combination the trademarks are considered an indefinite-lived asset and, as such, are not amortized as there is no foreseeable limit to cash flows generated from them. The goodwill and intangible assets are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. The client relationships, customer lists, software and technology are amortized over their estimated useful lives. |
Advertising | The Company expenses advertising as incurred, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits. Advertising expense totaled $77,623 and $174,094, during the years ended December 31, 2016 and 2015, respectively. |
Newly Adopted Accounting Pronouncements | On November 20, 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-17 ("ASU 2015-17”), Balance Sheet Classification of Deferred Taxes, which requires that all deferred tax assets and liabilities, along with any related valuation allowance, in each jurisdiction be classified as noncurrent on the balance sheet. For public business entities, ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods but may be early adopted. ASU 2015-17 may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively (i.e., by reclassifying the comparative balance sheets). The Company elected to early adopt ASU 2015-17, on a prospective basis, as of December 31, 2015. The FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments . The FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. ASU 2015-05 is effective for public entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. ASU 2015-05 did not have a significant impact on our financial statements. The FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The FASB issued this ASU as part of its initiative to reduce complexity in accounting standards. The objective of the simplification initiative is to identify, evaluate, and improve areas of US GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements. The amendments in ASU 2015-01 were effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. ASU 2015-01 did not have a significant impact on our financial statements. The FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The amendments in this ASU do not change the current criteria in US GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify how current US GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. Furthermore, the amendments clarify that no single term or feature would necessarily determine the economic characteristics and risks of the host contract. Rather, the nature of the host contract depends upon the economic characteristics and risks of the entire hybrid financial instrument. The amendments in this ASU were effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. ASU 2014-16 did not have a significant impact on our financial statements. The FASB issued ASU 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The issue is the result of a consensus of the FASB Emerging Issues Task Force (EITF). The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in this ASU were effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. ASU 2014-12 did not have a significant impact on our financial statements. |
Recent Accounting Pronouncements | The FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments are effective for public business entities that are SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The company does not expect this pronouncement to have a significant impact on its financial statements. The FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The company does not expect this pronouncement to have a significant impact on its financial statements, unless an acquisition or disposal of assets is completed. The FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides cash flow statement classification guidance for: 1) Debt prepayment or debt extinguishment costs; 2) Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; 3) Contingent consideration payments made after a business combination; 4) Proceeds from the settlement of insurance claims; 5) Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) Distributions received from equity method investees; 7) beneficial interests in securitization transactions; and 8) Separately identifiable cash flows and application of the Predominance Principle. This is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. Early application is permitted, including adoption in an interim period. The company does not expect this pronouncement to have a significant impact on its financial statements. The FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which, among other things, requires the measurement of all expected credit losses for financial assets held at the reporting date to be based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. This is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The company does not expect this pronouncement to have a significant impact on its financial statements. The FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment award transactions including (a) income tax consequences; (b) classification of awards as either debt or equity liabilities; and (c) classification on the statement of cash flows. The amendments are effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustment should be reflected as of the beginning of the fiscal year that includes the interim period. Additionally, as a reminder, an entity that elects to early adopt the new guidance must adopt all of the amendments in the same period. The primary amendment that is expected to impact the Company's financial statements is the requirement for excess tax benefits or shortfalls on the exercise of stock-based compensation awards to be presented in income tax expense in the Consolidated Statements of Income during the period the award is exercised as opposed to being recorded in Additional paid-in capital on the Consolidated Balance Sheets. The excess tax benefit or shortfall is calculated as the difference between the fair value of the award on the date of exercise and the fair value of the award used to measure the expense to be recognized over the service period. As the result is dependent on the future value of the Company's stock as well as the timing of employee exercises, the amount of the impact cannot be quantified at this time. The FASB's new leases standard ASU 2016-02 Leases (Topic 842) was issued on February 25, 2016. ASU 2016-02 is intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The ASU will require organizations that lease assets referred to as “Lessees” to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. An organization is to provide disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements concerning additional information about the amounts recorded in the financial statements. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current US GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current US GAAP which requires only capital leases to be recognized on the balance sheet the new ASU will require both types of leases (i.e. operating and capital) to be recognized on the balance sheet. The FASB lessee accounting model will continue to account for both types of leases. The capital lease will be accounted for in substantially the same manner as capital leases are accounted for under existing US GAAP. The operating lease will be accounted for in a manner similar to operating leases under existing US GAAP, except that lessees will recognize a lease liability and a lease asset for all of those leases. Public companies will be required to adopt the new leasing standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For calendar year-end public companies, this means an adoption date of January 1, 2019 and retrospective application to previously issued annual and interim financial statements for 2018, however, early adoption is permitted. Lessees with a large portfolio of leases are likely to see a significant increase in balance sheet assets and liabilities. The Company currently has one lease on its corporate facilities which ends October 31, 2019. Absent any renewal of the lease or new leases entered into before January 1, 2019, the Company will be required to record a right-to-use asset and corresponding lease liability associated with the remaining lease payments beginning with the first interim period of 2019. This will increase both balance sheet assets and liabilities by insignificant amounts and will not have a significant impact on the income statement or affect any covenant calculations. The FASB has issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and several updates to the ASU. ASU 2014-09 requires revenue recognition to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 sets forth a new revenue recognition model that requires identifying the contract, identifying the performance obligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing the revenue upon satisfaction of performance obligations. The amendments in the ASU can be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the update recognized at the date of the initial application along with additional disclosures. The Company is currently evaluating the impact of ASU 2014-09 as well as the additional updates, however, does not believe it will have a significant impact on the Company's financial statements as the Company believes the current manner in which revenue is recognized will result in the same or similar timing and amount of revenue recognition as required by ASU 2014-09 and the additional amendments. These ASU's are currently effective for the Company in our year beginning on January 1, 2018. |
Note 2. Summary of Significan23
Note 2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Note 2. Summary Of Significant Accounting Policies Tables | |
Schedule of estimated useful lives for fixed assets | Asset Category Depreciation / Amortization Period Computer equipment 3 years Furniture & equipment 3 to 7 years Leasehold improvements 7 years or lesser of the lease term |
Summary of allowance for doubtful accounts | Year Ended December 31, 2016 Year Ended December 31, 2015 Beginning balance $ 396,884 $ 460,564 Bad debt expense 195,327 169,020 Write-offs (163,019 ) (232,700 ) Ending balance $ 429,192 $ 396,884 |
Note 3. Fixed Assets (Tables)
Note 3. Fixed Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | December 31, 2016 2015 Computers equipment $ 118,593 $ 95,814 Furniture & equipment 296,039 248,699 Leasehold improvements 107,761 93,781 Total fixed assets, gross 522,393 438,294 Less: Accumulated depreciation (318,077 ) (262,797 ) Total fixed assets, net $ 204,316 $ 175,497 |
Note 4. Goodwill and Intangible
Note 4. Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Note 4. Goodwill And Intangible Assets Tables | |
Amortizable intangible assets | December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer lists $ 1,770,000 $ (1,769,666 ) $ 334 Customer relationships 1,747,000 (810,810 ) 936,190 Proprietary software 782,000 (680,414 ) 101,586 Trademarks – definite-lived 173,000 (62,892 ) 110,108 Trademarks – indefinite-lived 232,000 — 232,000 Total intangible assets $ 4,704,000 $ (3,323,782 ) $ 1,380,218 December 31, 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer lists $ 1,770,000 $ (1,408,920 ) $ 361,080 Customer relationships 1,747,000 (564,810 ) 1,182,190 Proprietary software 782,000 (526,508 ) 255,492 Trademarks - definite-lived 173,000 (12,466 ) 160,534 Trademarks – indefinite-lived 232,000 — 232,000 Total intangible assets $ 4,704,000 $ (2,512,704 ) $ 2,191,296 |
Schedule of future amortization of intangible assets | Years Ending December 31: 2017 $ 332,964 2018 322,733 2019 286,042 2020 178,600 2021 27,879 Total $ 1,148,218 |
Note 8. Stock Options and Res26
Note 8. Stock Options and Restricted Stock Units (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Summary of stock options issued | Number of Options Outstanding Range of Exercise Price Weighted Average Exercise Price Aggregate Intrinsic Value Balance at December 31, 2014 258,171 $ 0.01 - 13.49 $ 7.32 $ 608,750 Options granted 10,000 $ 6.80 $ 6.80 — Options exercised (20,671 ) $ 0.01 - 2.81 $ 2.55 $ 106,868 Options forfeited/cancelled (1,500 ) $ 9.26 $ 9.26 — Balance at December 31, 2015 246,000 $ 0.01 - 13.49 $ 7.69 $ 187,798 Options granted — $ — $ — — Options exercised (20,900 ) $ 0.01 - 3.33 $ 1.67 $ 89,180 Options forfeited/cancelled (61,250 ) $ 7.76 - 9.26 $ 8.11 — Balance at December 31, 2016 163,850 $ 0.01 - 13.49 $ 8.30 $ 297,542 |
Schedule Of Stock Options | Options Outstanding Options Exercisable Exercise Price Number Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years) Number $0.01 - $1.00 12,850 $ 0.01 5.05 12,850 $1.01 - $4.00 11,000 $ 3.33 5.25 11,000 $4.01 - $7.00 10,000 $ 6.80 8.88 2,500 $7.01 - $9.00 78,750 $ 7.76 3.70 63,751 $9.01 - $10.00 11,250 $ 9.26 7.99 6,670 $10.01 - $13.49 40,000 $ 13.49 2.19 27,500 Total 163,850 $ 8.30 4.15 124,271 |
Schedule of Stock Options, Valuation Assumptions | Year ended December 31, 2015 Expected dividend yield 1.76 % Expected stock price volatility 158 % Weighted-average risk-free interest rate 1.84 % Weighted-average expected life of options (in years) 5.97 |
Summary of restricted stock units issued | Number of Options Outstanding Weighted Average Fair Value Aggregate Intrinsic Value Balance at December 31, 2014 26,000 $ 9.26 $ 232,960 Units granted 110,000 $ 7.32 804,800 Units vested/issued (25,000 ) $ 7.20 $ 201,500 Units forfeited (3,000 ) $ 9.26 26,880 Balance at December 31, 2015 108,000 $ 7.76 $ 626,400 Units granted 88,500 $ 5.28 467,300 Units vested/issued (55,000 ) $ 7.32 $ 379,588 Units forfeited (15,000 ) $ 6.61 111,941 Balance at December 31, 2016 126,500 $ 6.35 $ 1,138,500 |
Note 9. Commitments and Conti27
Note 9. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | Year Ended December 31: 2017 $ 153,337 2018 $ 157,994 2019 $ 134,896 Total $ 446,227 |
Note 10. Concentrations (Tables
Note 10. Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Concentration of revenue as a percentage of total revenue | 2016 2015 Amount Percentage Amount Percentage Revenue Streams Disclosure management $ 2,367,504 19.6 % $ 2,569,415 22.1 % Shareholder communications 7,539,098 62.5 % 7,942,421 68.4 % Platform and technology 2,152,264 17.9 % 1,108,047 9.5 % Total $ 12,058,866 100.0 % $ 11,619,883 100.0 % |
Note 11. Geographic Operating29
Note 11. Geographic Operating Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Revenue based on geographic region | Year Ended 2016 2015 Geographic region North America $ 10,492,799 $ 9,520,523 Europe 1,566,067 2,099,360 Total revenues $ 12,058,866 $ 11,619,883 |
Note 12. Income Taxes (Tables)
Note 12. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | 2016 2015 Current: Federal $ 500,181 $ 257,098 State 95,518 47,256 Foreign 55,874 193,055 Total Current 651,573 497,409 Deferred: Federal (129,822 ) (468,887 ) State (17,554 ) (67,423 ) Foreign (39,847 ) (93,586 ) Total Deferred (187,223 ) (629,896 ) Total expense (benefit) for income taxes $ 464,350 $ (132,487 ) |
Schedule of Effective Income Tax Rate Reconciliation | 2016 2015 Amount Percentage Amount Percentage Federal statutory tax rate $ 686,597 34.0 % $ 4,113 34.0 % State tax rate 65,660 3.3 % (1,042 ) (8.6 )% Permanent difference - stock-based compensation 32,562 1.6 % 27,410 226.6 % Permanent difference – other 67,269 3.3 % 8,888 73.4 % Permanent items – disallowed interest — — 30,433 251.6 % Provision to return (7,796 ) (0.4 )% (30,797 ) (254.6 )% Change in unrecognized tax benefits (57,749 ) (2.8 )% 57,749 477.4 % Write-off of net operating losses — — 176,034 1,455.2 % Foreign rate differential (52,502 ) (2.6 )% (33,032 ) (273.1 )% Research and development credit (55,726 ) (2.8 )% (27,623 ) (228.3 )% UK Rate Change — — (3,898 ) (32.2 )% Other — — 14,738 121.8 % Sub-total 678,315 33.6 % 222,973 1,843.2 % Change in valuation allowance (213,965 ) (10.6 )% (355,460 ) (2,938.4 )% Total $ 464,350 23.0 % $ (132,487 ) (1,095.2 )% |
Schedule of Deferred Tax Assets and Liabilities | 2016 2015 Change Assets: Net operating loss $ 178,699 $ 254,123 $ (75,424 ) Deferred revenue 138,009 51,914 86,095 Allowance for doubtful accounts 142,181 135,663 6,518 Stock options 297,861 345,779 (47,918 ) Basis difference in intangible assets 80,074 118,257 (38,183 ) Prepaid D&O Insurance 6,452 10,341 (3,889 ) Foreign tax credits carryforward 1,180,833 1,180,833 — Other 37,765 26,916 10,849 Total deferred tax asset 2,061,874 2,123,826 (61,952 ) Less: Valuation allowance (1,193,990 ) (1,407,955 ) 213,965 Total net deferred tax asset 867,884 715,871 152,013 Liabilities Prepaid expenses (38,484 ) (30,460 ) (8,024 ) Basis difference in fixed assets — (4,833 ) 4,833 Capitalized software (491,894 ) (171,584 ) (320,310 ) Purchase of intangibles (262,864 ) (505,586 ) 242,722 Total deferred tax liability (793,242 ) (712,463 ) (80,779 ) Total net deferred tax asset / (liability) $ 74,642 $ 3,408 $ 71,234 |
Schedule of Changes in the Balance of Unrecognized Tax Benefits | 2016 2015 Balance as of January 1: $ 57,749 $ — Change related to current year positions — 57,749 Change related to statute expirations (57,749 ) — Balance as of December 31: $ — $ 57,749 |
Note 2. Summary of Significan31
Note 2. Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Computer equipment | |
Depreciation / Amortization Period | 3 years |
Furniture & equipment | |
Depreciation / Amortization Period | 3 to 7 years |
Leasehold Improvements | |
Depreciation / Amortization Period | 7 years or lesser of the lease term |
Note 2. Summary of Significan32
Note 2. Summary of Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Note 2. Summary Of Significant Accounting Policies Tables | ||
Beginning balance | $ 396,884 | $ 460,564 |
Bad Debt Expense | 195,327 | 169,020 |
Write-offs | (163,019) | (232,700) |
Ending Balance | $ 429,192 | $ 396,884 |
Note 2. Summary of Significan33
Note 2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Note 2. Summary Of Significant Accounting Policies Details Narrative | ||
Cash and cash equivalents in excess of FDIC insured amount | $ 4,127,107 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | 140,000 | 211,250 |
Capitalized software development costs | $ 1,506,616 | $ 749,095 |
Advertising expense | $ 77,623 | $ 174,094 |
Note 3. Fixed Assets (Details)
Note 3. Fixed Assets (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Computers equipment | $ 118,593 | $ 95,814 |
Furniture & equipment | 296,039 | 248,699 |
Leasehold improvements | 107,761 | 93,781 |
Total fixed assets, gross | 522,393 | 438,294 |
Less: Accumulated depreciation | (318,077) | (262,797) |
Total fixed assets, net | $ 204,316 | $ 175,497 |
Note 3. Fixed Assets (Details N
Note 3. Fixed Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Note 3. Fixed Assets Details Narrative | ||
Depreciation expense | $ 83,425 | $ 79,399 |
Note 4. Goodwill and Other In36
Note 4. Goodwill and Other Intangible Assets (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accumulated Amortization | $ (3,323,782) | $ (2,512,704) |
Customer list | ||
Gross Carrying Amount | 1,770,000 | 1,770,000 |
Accumulated Amortization | (1,769,666) | (1,408,920) |
Net Carrying Amount | 334 | 361,080 |
Client relationships | ||
Gross Carrying Amount | 1,747,000 | 1,747,000 |
Accumulated Amortization | (810,810) | (564,810) |
Net Carrying Amount | 936,190 | 1,182,190 |
Proprietary software | ||
Gross Carrying Amount | 782,000 | 782,000 |
Accumulated Amortization | (680,414) | (526,508) |
Net Carrying Amount | 101,586 | 255,492 |
Trademarks - definite-lived [Member] | ||
Gross Carrying Amount | 173,000 | 173,000 |
Accumulated Amortization | (62,892) | (12,466) |
Net Carrying Amount | 110,108 | 160,534 |
Trademarks [Member] | ||
Gross Carrying Amount | 232,000 | 232,000 |
Accumulated Amortization | 0 | 0 |
Net Carrying Amount | 232,000 | 232,000 |
Total Intangible Assets | ||
Gross Carrying Amount | 4,704,000 | 4,704,000 |
Accumulated Amortization | (3,323,782) | (2,512,704) |
Net Carrying Amount | $ 1,380,218 | $ 2,191,296 |
Note 4. Goodwill and Other In37
Note 4. Goodwill and Other Intangible Assets (Details 1) | Dec. 31, 2016USD ($) |
Note 4. Goodwill And Other Intangible Assets Details 1 | |
2,017 | $ 332,964 |
2,018 | 322,733 |
2,019 | 286,042 |
2,020 | 178,600 |
2,021 | 27,879 |
Total | $ 1,148,218 |
Note 4. Goodwill and Other In38
Note 4. Goodwill and Other Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Notes to Financial Statements | ||
Amortization of intangible assets | $ 811,078 | $ 995,338 |
Note 5. Line of Credit (Details
Note 5. Line of Credit (Details Narrative) | Dec. 31, 2016USD ($) |
Notes to Financial Statements | |
Line Of Credit, Maximum Borrowing Capacity | $ 2,000,000 |
Line of Credit Facility, Interest Rate at Period End | 3.26% |
Line Of Credit | $ 0 |
Note 6. Note Payable (Related40
Note 6. Note Payable (Related Party) (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Non-cash interest expense on related party note | $ 0 | $ 535,397 |
Interest paid in cash on related party note | $ 85,870 | |
Red Oak | ||
Related party transaction | On November 12, 2014, Red Oak converted $833,327 of principal and $23,369 of accrued interest payable on the 8% Note into 214,710 shares of the Company’s common stock at the conversion price of $3.99. Following this transaction, the principal balance of the note was $1,666,673. As a result of this transaction, the company recorded $323,250 of non-cash interest expense due to the acceleration of debt discount on the portion of the 8% Note that was converted. |
Note 7. Equity (Details Narrati
Note 7. Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Notes to Financial Statements | ||
Cash dividends paid | $ 452,724 | $ 83,101 |
Note 8. Stock Options and Res42
Note 8. Stock Options and Restricted Stock Units (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Notes to Financial Statements | ||
Number of Options Outstanding, Beginning | 246,000 | 258,171 |
Number of Options Granted | 0 | 10,000 |
Number of Options Exercised | (20,900) | (20,671) |
Number of Options Forfeited/Cancelled | (61,250) | (1,500) |
Number of Options Outstanding, Ending | 163,850 | 246,000 |
Range of Exercise Price Options Outstanding, Beginning | $0.01 - $13.49 | $0.01 - $13.49 |
Range of Exercise Price Options Granted | $ 0 | $ 6.80 |
Range of Exercise Price Options Exercised | $0.01 - $3.33 | $0.01 - $2.81 |
Range of Exercise Price Options Forfeited/Cancelled | $7.76 - $9.26 | $ 9.26 |
Range of Exercise Price Options Outstanding, Ending | $0.01 - $13.49 | $0.01 - $13.49 |
Weighted Average Exercise Price Outstanding, Beginning | $ 7.69 | $ 7.32 |
Weighted Average Exercise Price Granted | 0 | 6.80 |
Weighted Average Exercise Price Exercised | 1.67 | 2.55 |
Weighted Average Exercise Price Forfeited/Cancelled | 8.11 | 9.26 |
Weighted Average Exercise Price Outstanding, Ending | $ 8.30 | $ 7.69 |
Aggregate Intrinsic Value Outstanding, Beginning | $ 187,798 | $ 608,570 |
Aggregate Intrinsic Value Granted | $ 0 | $ 0 |
Aggregate Intrinsic Value Exercised | $ 89,180 | $ 106,868 |
Aggregate Intrinsic Value Forfeited/Cancelled | $ 0 | $ 0 |
Aggregate Intrinsic Value Outstanding, Ending | $ 297,542 | $ 187,798 |
Note 8. Stock Options and Res43
Note 8. Stock Options and Restricted Stock Units (Details 1) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Number of Options Outstanding, Ending | 163,850 |
Option 1 | |
Exercise Price Range | $0.01 - $1.00 |
Number of Options Outstanding, Ending | 12,850 |
Weighted Average Exercise Price | $ / shares | $ 0.01 |
Weighted Average Remaining Contractual Life (in Years) | 5 years 18 days |
Number of Options Exercisable | 12,850 |
Option 2 | |
Exercise Price Range | $1.01 - $4.00 |
Number of Options Outstanding, Ending | 11,000 |
Weighted Average Exercise Price | $ / shares | $ 3.33 |
Weighted Average Remaining Contractual Life (in Years) | 5 years 3 months |
Number of Options Exercisable | 11,000 |
Option 3 | |
Exercise Price Range | $4.01 - $7.00 |
Number of Options Outstanding, Ending | 10,000 |
Weighted Average Exercise Price | $ / shares | $ 6.80 |
Weighted Average Remaining Contractual Life (in Years) | 8 years 10 months 17 days |
Number of Options Exercisable | 2,500 |
Option 4 | |
Exercise Price Range | $7.01 - $9.00 |
Number of Options Outstanding, Ending | 78,750 |
Weighted Average Exercise Price | $ / shares | $ 7.76 |
Weighted Average Remaining Contractual Life (in Years) | 3 years 8 months 12 days |
Number of Options Exercisable | 63,751 |
Option 5 | |
Exercise Price Range | $9.01 - $10.00 |
Number of Options Outstanding, Ending | 11,250 |
Weighted Average Exercise Price | $ / shares | $ 9.26 |
Weighted Average Remaining Contractual Life (in Years) | 7 years 11 months 26 days |
Number of Options Exercisable | 6,670 |
Option 6 | |
Exercise Price Range | $10.01 - $13.49 |
Number of Options Outstanding, Ending | 40,000 |
Weighted Average Exercise Price | $ / shares | $ 13.49 |
Weighted Average Remaining Contractual Life (in Years) | 2 years 2 months 8 days |
Number of Options Exercisable | 27,500 |
Total | |
Number of Options Outstanding, Ending | 163,850 |
Weighted Average Exercise Price | $ / shares | $ 8.30 |
Weighted Average Remaining Contractual Life (in Years) | 4 years 1 month 24 days |
Number of Options Exercisable | 124,271 |
Note 8. Stock Options and Res44
Note 8. Stock Options and Restricted Stock Units (Details 2) | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Expected dividend yield | 1.76% |
Expected stock price volatility | 158.00% |
Weighted-average risk-free interest rate | 1.84% |
Weighted-average expected life of options (in years) | 5 years 11 months 19 days |
Note 8. Stock Options and Res45
Note 8. Stock Options and Restricted Stock Units (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Note 8. Stock Options And Restricted Stock Units Details 3 | ||
Number of Restricted Stock Units Outstanding, Beginning | 108,000 | 26,000 |
Number of Restricted Stock Units Granted | 88,500 | 110,000 |
Number of Restricted Stock Units Vested/Issued | (55,000) | (25,000) |
Number of Restricted Stock Units Forfeited | (15,000) | (3,000) |
Number of Restricted Stock Units Outstanding, Ending | 126,500 | 108,000 |
Weighted Average Exercise Price Outstanding, Beginning | $ 7.76 | $ 9.26 |
Weighted Average Exercise Price Granted | 5.28 | 7.32 |
Weighted Average Exercise Price Vested/Issued | 7.32 | 7.20 |
Weighted Average Exercise Price Forfeited | 6.61 | 9.26 |
Weighted Average Exercise Price Outstanding, Ending | $ 6.35 | $ 7.76 |
Aggregate Intrinsic Value Outstanding, Beginning | $ 626,400 | $ 232,960 |
Aggregate Intrinsic Value Granted | 467,300 | 804,800 |
Aggregate Intrinsic Value, Vested/Issued | 379,588 | 201,500 |
Aggregate Intrinsic Value Forfeited | 111,941 | 26,880 |
Aggregate Intrinsic Value Outstanding, Ending | $ 1,138,500 | $ 626,400 |
Note 8. Stock Options and Res46
Note 8. Stock Options and Restricted Stock Units (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Note 8. Stock Options And Restricted Stock Units Details Narrative | ||
Unrecognized Compensation Expense, Options | $ 303,099 | |
Unrecognized Compensation Expense, Restricted Stock Units | 339,287 | |
Stock Options and Restricted Stock Units Expense | $ 592,025 | $ 485,498 |
Note 9. Commitments and Conti47
Note 9. Commitments and Contingencies (Details) | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 153,337 |
2,018 | 157,994 |
2,019 | 134,896 |
Total | $ 446,227 |
Note 9. Commitments and Conti48
Note 9. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Note 9. Commitments And Contingencies Details Narrative | ||
Rent expense | $ 207,104 | $ 203,953 |
Note 10. Concentrations (Detail
Note 10. Concentrations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Percentage of revenue from various revenue streams | 100.00% | 100.00% |
Amount of revenue from various revenue streams | $ 12,058,866 | $ 11,619,883 |
Disclosure management | ||
Percentage of revenue from various revenue streams | 19.60% | 22.10% |
Amount of revenue from various revenue streams | $ 2,367,504 | $ 2,569,415 |
Shareholder communications | ||
Percentage of revenue from various revenue streams | 62.50% | 68.40% |
Amount of revenue from various revenue streams | $ 7,539,098 | $ 7,942,421 |
Platform and technology | ||
Percentage of revenue from various revenue streams | 17.90% | 9.50% |
Amount of revenue from various revenue streams | $ 2,152,264 | $ 1,108,047 |
Note 11. Geographic Operating50
Note 11. Geographic Operating Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | $ 12,058,866 | $ 11,619,883 |
North America | ||
Revenues | 10,492,799 | 9,520,523 |
Europe | ||
Revenues | $ 1,566,067 | $ 2,099,360 |
Note 12. Income Taxes (Details)
Note 12. Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | ||
Federal | $ 500,181 | $ 257,098 |
State | 95,518 | 47,256 |
Foreign | 55,874 | 193,055 |
Total Current | 651,573 | 497,409 |
Deferred: | ||
Federal | (129,822) | (468,887) |
State | (17,554) | (67,423) |
Foreign | (39,847) | (93,586) |
Total Deferred | (187,223) | (629,896) |
Total expense (benefit) for income taxes | $ 464,350 | $ (132,487) |
Note 12. Income Taxes (Details
Note 12. Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory tax rate | 34.00% | 34.00% |
Federal statutory tax rate, amount | $ 686,597 | $ 4,113 |
State tax rate | 3.30% | (8.60%) |
State tax rate, amount | $ 65,660 | $ (1,042) |
Permanent difference - stock-based compensation | 1.60% | 226.60% |
Permanent difference - stock-based compensation, amount | $ 32,562 | $ 27,410 |
Permanent difference - other | 3.30% | 73.40% |
Permanent difference - other, amount | $ 67,269 | $ 8,888 |
Permanent items - disallowed interest | 0.00% | 251.60% |
Permanent items - disallowed interest, amount | $ 0 | $ 30,433 |
Provision to return | (0.40%) | (254.60%) |
Provision to return, amount | $ (7,796) | $ (30,797) |
Change in unrecognized tax benefits | (2.80%) | 477.40% |
Change in unrecognized tax benefits, amount | $ (57,749) | $ 57,749 |
Write-off of net operating losses | 0.00% | 1455.20% |
Write-off of net operating losses, amount | $ 0 | $ 176,034 |
Foreign rate differential | (2.60%) | (273.10%) |
Foreign rate differential, amount | $ (52,502) | $ (33,032) |
Research and development credit | (2.80%) | (228.30%) |
Research and development credit, amount | $ (55,726) | $ (27,623) |
UK rate change | 0.00% | (32.20%) |
UK rate change, amount | $ 0 | $ (3,898) |
Other | 0.00% | 121.80% |
Other, amount | $ 0 | $ 14,738 |
Subtotal | 33.60% | 1843.20% |
Subtotal, amount | $ 678,315 | $ 222,973 |
Change in valuation allowance | (10.60%) | (2938.40%) |
Change in valuation allowance, amount | $ (213,965) | $ (355,460) |
Total | 23.00% | (1095.20%) |
Total, amount | $ 464,350 | $ (132,487) |
Note 12. Income Taxes (Detail53
Note 12. Income Taxes (Details 2) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Assets: | ||
Net operating loss | $ 178,699 | $ 254,123 |
Deferred revenue | 138,009 | 51,914 |
Allowance for doubtful accounts | 142,181 | 135,663 |
Stock options | 297,861 | 345,779 |
Basis difference in intangible assets | 80,074 | 118,257 |
Prepaid D&O Insurance | 6,452 | 10,341 |
Foreign tax credits carryforward | 1,180,833 | 1,180,833 |
Other | 37,765 | 26,916 |
Total deferred tax asset | 2,061,874 | 2,123,826 |
Less: Valuation allowance | (1,193,990) | (1,407,955) |
Total net deferred tax asset | 867,884 | 715,871 |
Liabilities: | ||
Prepaid expenses | (38,484) | (30,460) |
Basis difference in fixed assets | 0 | (4,833) |
Capitalized software | (491,894) | (171,584) |
Purchase of intangibles | (262,864) | (505,586) |
Total deferred tax liability | (793,242) | (712,463) |
Total net deferred tax asset / (liability) | 74,642 | $ 3,408 |
Change | ||
Assets: | ||
Net operating loss | (75,424) | |
Deferred revenue | 86,095 | |
Allowance for doubtful accounts | 6,518 | |
Stock options | (47,918) | |
Basis difference in intangible assets | (38,183) | |
Prepaid D&O Insurance | (3,889) | |
Foreign tax credits carryforward | 0 | |
Other | 10,849 | |
Total deferred tax asset | (61,952) | |
Less: Valuation allowance | 213,965 | |
Total net deferred tax asset | 152,013 | |
Liabilities: | ||
Prepaid expenses | (8,024) | |
Basis difference in fixed assets | 4,833 | |
Capitalized software | (320,310) | |
Purchase of intangibles | 242,722 | |
Total deferred tax liability | (80,779) | |
Total net deferred tax asset / (liability) | $ 71,234 |
Note 12. Income Taxes (Detail54
Note 12. Income Taxes (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Note 12. Income Taxes Details 3 | ||
Balance as of January 1: | $ 57,749 | $ 0 |
Change related to current year positions | 0 | 57,749 |
Change related to statute expirations | (57,749) | 0 |
Balance as of December 31: | $ 0 | $ 57,749 |
Note 13. Employee Benefit Plan
Note 13. Employee Benefit Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Note 13. Employee Benefit Plan Details Narrative | ||
401(k) Contribution Amount | $ 21,011 | $ 16,932 |
Employer Discretionary Contribution Amount | $ 3,645 | $ 3,566 |