Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 09, 2023 | |
Cover [Abstract] | ||
Entity Registrant Name | ISSUER DIRECT CORPORATION | |
Entity Central Index Key | 0000843006 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2023 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Entity Common Stock Shares Outstanding | 3,811,649 | |
Entity File Number | 1-10185 | |
Entity Incorporation State Country Code | DE | |
Entity Tax Identification Number | 26-1331503 | |
Entity Address Address Line 1 | One Glenwood Avenue | |
Entity Address Address Line 2 | Suite 1001 | |
Entity Address City Or Town | Raleigh | |
Entity Address State Or Province | NC | |
Entity Address Postal Zip Code | 27603 | |
City Area Code | 919 | |
Local Phone Number | 481-4000 | |
Security 12b Title | Common Stock, par value $0.001 | |
Trading Symbol | ISDR | |
Security Exchange Name | NYSE | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 5,050 | $ 4,832 |
Accounts receivable (net of allowance for doubtful accounts of $1,018 and $745, respectively) | 4,271 | 2,978 |
Income tax receivable | 0 | 51 |
Other current assets | 1,471 | 1,559 |
Total current assets | 10,792 | 9,420 |
Capitalized software (net of accumulated amortization of $3,408 and $3,364, respectively) | 413 | 138 |
Fixed assets (net of accumulated depreciation of $727 and $610, respectively) | 534 | 625 |
Right-of-use asset - leases | 1,086 | 1,277 |
Other long-term assets | 586 | 136 |
Goodwill | 21,928 | 22,498 |
Intangible assets (net of accumulated amortization of $8,877 and $6,821, respectively) | 30,175 | 32,231 |
Total assets | 65,514 | 66,325 |
Current liabilities: | ||
Accounts payable | 1,324 | 1,374 |
Accrued expenses | 1,922 | 2,255 |
Income taxes payable | 248 | 157 |
Current portion of long-term debt | 3,000 | 22,000 |
Deferred revenue | 5,164 | 5,405 |
Total current liabilities | 11,658 | 31,191 |
Long-term debt (net of debt discount of $92 and $0, respectively) | 16,908 | 0 |
Deferred income tax liability | 66 | 572 |
Lease liabilities - long-term | 1,093 | 1,339 |
Total liabilities | 29,725 | 33,102 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively. | 0 | 0 |
Common stock $0.001 par value, 20,000,000 shares authorized, 3,811,649 and 3,791,020 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively. | 4 | 4 |
Additional paid-in capital | 23,216 | 22,147 |
Other accumulated comprehensive loss | (91) | (96) |
Retained earnings | 12,660 | 11,168 |
Total stockholders' equity | 35,789 | 33,223 |
Total liabilities and stockholders' equity | $ 65,514 | $ 66,325 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance For Accounts Receivables | $ 1,018 | $ 745 |
Accumulated Amortization - Capitalized Software | 3,408 | 3,364 |
Accumulated depreciation | 727 | 610 |
Accumulated Amortization - Intangible Assets | 8,877 | 6,821 |
Debt discount | $ 92 | $ 0 |
Preferred Stock Shares, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock Shares, Authorized | 1,000,000 | 1,000,000 |
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 | 20,000,000 | 20,000,000 |
Common Stock Shares, Issued | 3,811,649 | 3,791,020 |
Common Stock Shares, Outstanding | 3,811,649 | 3,791,020 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||
Revenues | $ 7,569 | $ 5,280 | $ 25,839 | $ 16,375 |
Cost of revenues | 1,797 | 1,212 | 5,962 | 3,808 |
Gross profit | 5,772 | 4,068 | 19,877 | 12,567 |
Operating costs and expenses: | ||||
General and administrative | 2,033 | 1,657 | 6,639 | 4,903 |
Sales and marketing expenses | 1,838 | 1,231 | 6,258 | 3,866 |
Product development | 581 | 245 | 1,887 | 734 |
Depreciation and amortization | 727 | 146 | 2,172 | 439 |
Total operating costs and expenses | 5,179 | 3,279 | 16,956 | 9,942 |
Operating income | 593 | 789 | 2,921 | 2,625 |
Interest (expense) income, net | (298) | 77 | (817) | 99 |
Other income, net | 165 | 0 | 9 | 0 |
Income before taxes | 460 | 866 | 2,113 | 2,724 |
Income tax expense | 187 | 180 | 621 | 681 |
Net income | $ 273 | $ 686 | $ 1,492 | $ 2,043 |
Income per share - basic | $ 0.07 | $ 0.19 | $ 0.39 | $ 0.55 |
Income per share - fully diluted | $ 0.07 | $ 0.19 | $ 0.39 | $ 0.55 |
Weighted average number of common shares outstanding - basic | 3,810 | 3,618 | 3,799 | 3,717 |
Weighted average number of common shares outstanding - fully diluted | 3,823 | 3,636 | 3,814 | 3,738 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | ||||
Net income | $ 273 | $ 686 | $ 1,492 | $ 2,043 |
Foreign currency translation adjustment | (40) | (53) | 5 | (69) |
Comprehensive income | $ 233 | $ 633 | $ 1,497 | $ 1,974 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated other comprehensive Loss | Retained Earnings |
Balance, shares at Dec. 31, 2021 | 3,793,538 | ||||
Balance, amount at Dec. 31, 2021 | $ 31,620 | $ 4 | $ 22,401 | $ (19) | $ 9,234 |
Stock-based compensation expense | 184 | $ 0 | 184 | 0 | 0 |
Exercise of stock awards, net of tax, shares | 7,500 | ||||
Exercise of stock awards, net of tax, amount | 58 | $ 0 | 58 | 0 | 0 |
Stock repurchase and retirement, shares | 6,200 | ||||
Stock repurchase and retirement, amount | (182) | $ 0 | (182) | 0 | 0 |
Foreign currency translation | 7 | 0 | 0 | 7 | 0 |
Net income | 516 | $ 0 | 0 | 0 | 516 |
Balance, shares at Mar. 31, 2022 | 3,794,838 | ||||
Balance, amount at Mar. 31, 2022 | 32,203 | $ 4 | 22,461 | (12) | 9,750 |
Balance, shares at Dec. 31, 2021 | 3,793,538 | ||||
Balance, amount at Dec. 31, 2021 | 31,620 | $ 4 | 22,401 | (19) | 9,234 |
Foreign currency translation | (69) | ||||
Net income | 2,043 | ||||
Balance, shares at Sep. 30, 2022 | 3,610,839 | ||||
Balance, amount at Sep. 30, 2022 | 29,244 | $ 4 | 18,051 | (88) | 11,277 |
Balance, shares at Mar. 31, 2022 | 3,794,838 | ||||
Balance, amount at Mar. 31, 2022 | 32,203 | $ 4 | 22,461 | (12) | 9,750 |
Stock-based compensation expense | 188 | $ 0 | 188 | 0 | 0 |
Exercise of stock awards, net of tax, shares | 15,265 | ||||
Exercise of stock awards, net of tax, amount | 0 | $ 0 | 0 | 0 | 0 |
Stock repurchase and retirement, shares | 163,201 | ||||
Stock repurchase and retirement, amount | (3,859) | $ 0 | (3,859) | 0 | 0 |
Foreign currency translation | (23) | 0 | 0 | (23) | 0 |
Net income | 841 | $ 0 | 0 | 0 | 841 |
Balance, shares at Jun. 30, 2022 | 3,646,902 | ||||
Balance, amount at Jun. 30, 2022 | 29,350 | $ 4 | 18,790 | (35) | 10,591 |
Stock-based compensation expense | 187 | $ 0 | 187 | 0 | 0 |
Exercise of stock awards, net of tax, shares | 2,500 | ||||
Exercise of stock awards, net of tax, amount | 33 | $ 0 | 33 | 0 | 0 |
Stock repurchase and retirement, shares | 38,563 | ||||
Stock repurchase and retirement, amount | (959) | $ 0 | (959) | 0 | 0 |
Foreign currency translation | (53) | 0 | 0 | (53) | 0 |
Net income | 686 | $ 0 | 0 | 0 | 686 |
Balance, shares at Sep. 30, 2022 | 3,610,839 | ||||
Balance, amount at Sep. 30, 2022 | 29,244 | $ 4 | 18,051 | (88) | 11,277 |
Balance, shares at Dec. 31, 2022 | 3,791,020 | ||||
Balance, amount at Dec. 31, 2022 | 33,223 | $ 4 | 22,147 | (96) | 11,168 |
Stock-based compensation expense | 337 | 0 | 337 | 0 | 0 |
Foreign currency translation | 1 | 0 | 0 | 1 | 0 |
Net income | (144) | $ 0 | 0 | 0 | (144) |
Balance, shares at Mar. 31, 2023 | 3,791,020 | ||||
Balance, amount at Mar. 31, 2023 | 33,417 | $ 4 | 22,484 | (95) | 11,024 |
Balance, shares at Dec. 31, 2022 | 3,791,020 | ||||
Balance, amount at Dec. 31, 2022 | 33,223 | $ 4 | 22,147 | (96) | 11,168 |
Foreign currency translation | 5 | ||||
Net income | 1,492 | ||||
Balance, shares at Sep. 30, 2023 | 3,811,649 | ||||
Balance, amount at Sep. 30, 2023 | 35,789 | $ 4 | 23,216 | (91) | 12,660 |
Balance, shares at Mar. 31, 2023 | 3,791,020 | ||||
Balance, amount at Mar. 31, 2023 | 33,417 | $ 4 | 22,484 | (95) | 11,024 |
Stock-based compensation expense | 354 | $ 0 | 354 | 0 | 0 |
Exercise of stock awards, net of tax, shares | 18,129 | ||||
Exercise of stock awards, net of tax, amount | 0 | $ 0 | 0 | 0 | 0 |
Foreign currency translation | 44 | 0 | 0 | 44 | 0 |
Net income | 1,363 | $ 0 | 0 | 0 | 1,363 |
Balance, shares at Jun. 30, 2023 | 3,809,149 | ||||
Balance, amount at Jun. 30, 2023 | 35,178 | $ 4 | 22,838 | (51) | 12,387 |
Stock-based compensation expense | 359 | $ 0 | 359 | 0 | 0 |
Exercise of stock awards, net of tax, shares | 2,500 | ||||
Exercise of stock awards, net of tax, amount | 19 | $ 0 | 19 | 0 | 0 |
Foreign currency translation | (40) | 0 | 0 | (40) | 0 |
Net income | 273 | $ 0 | 0 | 0 | 273 |
Balance, shares at Sep. 30, 2023 | 3,811,649 | ||||
Balance, amount at Sep. 30, 2023 | $ 35,789 | $ 4 | $ 23,216 | $ (91) | $ 12,660 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 1,492,000 | $ 2,043,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,217,000 | 487,000 |
Bad debt expense | 373,000 | 279,000 |
Deferred income taxes | (506,000) | (80,000) |
Change in fair value of interest rate swaps | (379,000) | 0 |
Stock-based compensation expense | 1,050,000 | 559,000 |
Measurement period adjustments | 571 | 0 |
Amortization of debt issuance costs | 8,000 | 0 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | (1,669,000) | (61,000) |
Decrease (increase) in other assets | (92,000) | (166,000) |
Increase (decrease) in accounts payable | (49,000) | (2,000) |
Increase (decrease) in accrued expenses | (491,000) | (409,000) |
Increase (decrease) in deferred revenue | (235,000) | 375,000 |
Net cash provided by operating activities | 2,290,000 | 3,025,000 |
Cash flows from investing activities: | ||
Capitalized software | (319,000) | 0 |
Purchase of fixed assets | (26,000) | (52,000) |
Purchase of acquired business, net of cash received | 350,000 | 0 |
Net cash provided by (used in) investing activities | 5,000 | (52,000) |
Cash flows from financing activities: | ||
Exercise of stock options | 19,000 | 91,000 |
Payment for stock repurchase and retirement | 0 | (5,000,000) |
Payment of note payable | (22,000,000) | 0 |
Proceeds from issuance of term loan | 19,988,000 | 0 |
Payment for capitalized debt issuance costs | (88,000) | 0 |
Net cash used in financing activities | (2,081,000) | (4,909,000) |
Net change in cash and cash equivalents | 214,000 | (1,936,000) |
Cash and cash equivalents - beginning | 4,832,000 | 23,852,000 |
Currency translation adjustment | 4,000 | (104,000) |
Cash and cash equivalents - ending | 5,050,000 | 21,812,000 |
Supplemental disclosures: | ||
Cash paid for income taxes | 993,000 | 782,000 |
Cash paid for interest | $ 1,208,000 | $ 0 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation | |
Basis of Presentation | Note 1. Basis of Presentation The unaudited interim consolidated balance sheet as of September 30, 2023 and consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for the three and nine-month periods ended September 30, 2023 and 2022 included herein, have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 10 of Regulation S-X under the Exchange Act. In the opinion of management, they include all normal recurring adjustments necessary for a fair presentation of the financial statements. Results of operations reported for the interim periods are not necessarily indicative of results for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("US GAAP") have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. The interim financial information should be read in conjunction with the 2022 audited financial statements of Issuer Direct Corporation (the “Company”, “We”, or “Our”) filed on Form 10-K. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary Of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Significant intercompany accounts and transactions are eliminated in consolidation. Earnings Per Share (EPS) Earnings per share accounting guidance 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 totaling 72,750 were excluded in the computation of diluted earnings per common share during the three and nine-month periods ended September 30, 2023, because their impact was anti-dilutive. There were 50,250 shares issuable upon the exercise of stock options excluded in the computation of diluted earnings per common share during the three and nine-month periods ended September 30, 2022, because their impact was anti-dilutive. Revenue Recognition Substantially all the Company’s revenue comes from contracts with customers for subscriptions to its cloud-based products or contracts for Communications and Compliance products and services. Customers consist of public corporate issuers and professional firms, such as investor and public relations firms. In the case of news distribution and webcasting offerings, customers also include private companies. The Company accounts for a contract with a customer when there is an enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has economic substance, and collectability of the contract consideration is probable. The Company's revenues are measured based on consideration specified in the contract with each customer. The Company's contracts include either a subscription to its entire platform, certain modules within the platform or to its Press Release Optimizer Plan ("PRO"), or an agreement to perform services, or any combination thereof, and often contain multiple subscriptions and services. For these bundled contracts, the Company accounts for individual subscriptions and services as separate performance obligations if they are distinct, which is when a product or service is separately identifiable from other items in the bundled package, and a customer can benefit from it on its own or with other resources that are readily available to the customer. The Company separates revenue from its contracts into two revenue streams: i) Communications and ii) Compliance. Performance obligations of Communications contracts include providing subscriptions to certain modules or our entire Communications platform, distributing press releases on a per release basis or conducting webcasts, virtual annual meetings, or other events on a per event basis. PRO subscription contracts contain two performance obligations of which the first is a series of distinct services that include, but are not limited to, developing specific media plans, and creating content to be distributed and the second performance obligation being access to the PRO platform along with distribution of press releases, ongoing support, and assessment of performance as a stand-ready obligation. Performance obligations of Compliance contracts include providing subscriptions to certain Compliance modules or other stand-ready obligations to deliver services and annual report printing and distribution. Additionally, services are provided on a per project basis. Set up fees for disclosure services are considered a separate performance obligation and are satisfied upfront. Set up fees for the transfer agent module and investor relations content management module are immaterial. The Company’s subscription and service contracts are generally for one year, with automatic renewal clauses included in the contract until the contract is cancelled. The contracts do not contain any rights of returns, guarantees, or warranties. Since contracts are generally for one year, all the revenue is expected to be recognized within one year from the contract start date. As such, the Company has elected the optional exemption that allows the Company not to disclose the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at the end of each reporting period. The Company recognizes revenue for subscriptions evenly over the contract period, upon distribution for per release contracts and upon event completion for webcasting and virtual annual meeting events. For service contracts that include stand ready obligations, revenue is recognized evenly over the contract period. For all other services delivered on a per project or event basis, the revenue is recognized at the completion of the event. The Company believes recognizing revenue for subscriptions and stand ready obligations using a time-based measure of progress, best reflects the Company’s performance in satisfying the obligations. For bundled contracts, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the subscription or service. If a standalone selling price is not directly observable, the Company uses the residual method to allocate any remaining price to that subscription or service. The Company reviews standalone selling prices, at least annually, and updates these estimates if necessary. The Company invoices its customers based on the billing schedules designated in its contracts, typically upfront on either a monthly, quarterly or annual basis or per transaction at the completion of the performance obligation. Deferred revenue for the periods presented was primarily related to press release packages which have been prepaid, however the releases have not yet been disseminated, as well as, subscription and service contracts, which are billed upfront, quarterly, or annually, however the revenue has not yet been recognized. The associated deferred revenue is generally recognized as releases are disseminated for press release packages and ratably over the billing period for subscriptions. Deferred revenue as of September 30, 2023 and December 31, 2022, was $5,164,000 and $5,405,000, respectively, and is expected to be recognized within one year. Revenue recognized for the nine months ended September 30, 2023 and 2022, which was included in the deferred revenue balance at the beginning of each reporting period, was approximately $3,659,000 and $2,763,000, respectively. Accounts receivable, net of allowance for doubtful accounts, related to contracts with customers was $4,271,000 and $2,978,000 as of September 30, 2023 and December 31, 2022, respectively. Since substantially all the contracts have terms of one year or less, the Company has elected to use the practical expedient regarding the existence of a significant financing. Costs to obtain contracts with customers consist primarily of sales commissions. As of September 30, 2023 and December 31, 2022, the Company has capitalized $179,000 and $105,000, respectively, of costs to obtain contracts that are expected to be amortized over more than one year. For contract costs expected to be amortized in less than one year, the Company has elected to use the practical expedient allowing the recognition of incremental costs of obtaining a contract as an expense when incurred. The Company has considered historical renewal rates, expectations of future renewals and economic factors in making these determinations. Cash Equivalents For purposes of the Company’s financial statements, the Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts The Company adopted Financial Accounting Standards Codification (“ASC”) Topic 326, Financial Statements – Credit Losses (“Topic 326”) with an adoption date of January 1, 2023. As a result, the Company changed its accounting policy for allowance for doubtful accounts using an expected losses model rather than using incurred losses. The new model is based on the credit losses expected to arise over the life of the asset based on the Company’s expectations as of the balances sheet date through analyzing historical customer data as well as taking into consideration current economic trends. The Company adopted Topic 326 and determined it did not have a material financial impact. The roll forward of the allowance for doubtful accounts for the three and nine-months ended September 30, 2023, was as follows: Three months ended September 30, 2023 Nine months ended September 30, 2023 Beginning balance $ 956 $ 745 Bad debt expense 113 373 Write-offs (51 ) (100 ) Ending Balance $ 1,018 $ 1,018 Concentration of Credit Risk Financial instruments and related items which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivables. The Company places its cash and temporary cash investments with credit quality institutions. Such cash balances are currently in excess of the FDIC insurance limit of $250,000. To reduce its risk associated with the failure of such financial institutions, each quarter the Company evaluates the rating of each financial institution in which it holds deposits. As of September 30, 2023, the total amount exceeding such limit was $982,000. The Company also had cash-on-hand of $69,000 in Europe and $1,571,000 in Canada as of September 30, 2023. The Company believes it did not have any financial instruments that could have potentially subjected us to significant concentrations of credit risk for any relevant period. 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 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, the Company recognizes 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. The Company’s policy regarding the classification of interest and penalties is to classify them as income tax expense in the financial statements, if applicable. Capitalized Software Costs incurred to develop the Company’s cloud-based platform products 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, which is typically four years. Costs related to design or maintenance of the software are expensed as incurred. Capitalized costs and amortization for the three and nine-month periods ended September 30, 2023 and 2022, are as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2023 2022 2023 2022 Capitalized software development costs $ 152 $ — $ 319 $ — Amortization included in cost of revenues 16 17 44 48 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. Lease Accounting The Company determines if an arrangement is a lease at inception. Operating lease agreements are primarily for office space and are included within lease right-of-use (“ROU”) assets and lease liabilities on the Consolidated balance sheet. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments consist of non-lease services related to the lease and payments under operating leases classified as short-term. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets include any lease payments due and exclude lease incentives. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. Fair Value Measurements Accounting Standards Codification (“ASC”) Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: · Level 1 - Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes debt and equity securities that are traded in an active market. Cash and cash equivalents are quoted at Level 1. · Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The fair value of the Company’s long-term debt and interest rate swap are quoted at Level 2. · Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. As of September 30, 2023 and December 31, 2022, the Company believes the fair value of its financial instruments, such as, accounts receivable, long-term debt, the line of credit, and accounts payable approximate their carrying amounts. 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 until the entity is sold or substantially liquidated. Business Combinations, Goodwill, and Intangible Assets The authoritative guidance for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill. The Company records 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, distribution partner relationships, software, technology, non-compete agreements and trademarks that are initially measured at fair value. At the time of the business combination, trademarks may be considered an indefinite-lived asset and, as such, are not amortized as there may be no foreseeable limit to cash flows generated from them. For the Newswire acquisition (see Note 3), the Company determined the trademarks acquired were considered a definite lived asset which will be amortized over a period of 15 years. 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 (5-10 years), customer lists (3 years), distribution partner relationships (10 years), non-compete agreements (5 years) and software and technology (3-7 years) are amortized over their estimated useful lives. Comprehensive Income Comprehensive income consists of net income and other comprehensive income related to changes in the cumulative foreign currency translation adjustment. Advertising The Company expenses advertising as incurred. During the three and nine-month periods ended September 30, 2023, advertising expense was $409,000 and $1,235,000, respectively. During the three and nine-month periods ended September 30, 2022, advertising expense was $95,000 and $304,000, respectively. Most of the increase is due to additional advertising expense resulting from Newswire, which was acquired in November 2022. Stock-based 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 associated cost is recognized over the period during which an employee or director is required to provide service in exchange for the award. Newly Adopted Accounting Pronouncements Topic 326 was effective for the Company beginning on January 1, 2023. This update requires a financial asset (or group of financial assets) measured at amortized cost basis, to be presented at the net amount expected to be collected. This allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value of the amount expected to be collected on the financial asset. The Company has evaluated the impact of Topic 326 and has determined it does not have a material financial impact. |
Acquisition of iNewswirecom LLC
Acquisition of iNewswirecom LLC | 9 Months Ended |
Sep. 30, 2023 | |
Acquisition of iNewswirecom LLC | |
Acquisition of iNewswire.com LLC | Note 3: Acquisition of iNewswire LLC On November 1, 2022, the Company entered into a Membership Interest Purchase Agreement with Lead Capital, LLC, a Delaware limited liability company (“Seller”), whereby the Company purchased all the issued and outstanding membership interests of iNewswire.com LLC, a Delaware limited liability company (“Newswire”). Newswire is a leading media and marketing communications technology company that provides press release distribution, media databases, media monitoring, and newsrooms through its PRO offering, formally Media Advantage Platform. In connection with the transaction (the “Acquisition”), the Company paid to the Seller aggregate consideration of $43.5 million, consisting of the following: (i) a cash payment of $18.0 million subject to a 60-day escrow to secure the payment of any working capital adjustments or any employee bonus obligations of Newswire, (ii) the issuance of a secured promissory note in the principal amount of $22.0 million (the “Secured Note”), and (iii) the issuance of 180,181 shares of the Company’s common stock, par value $0.001, valued at $3.9 million based on the Company’s closing stock price of $21.60 on the Closing Date. During the three months ended March 31, 2023, the Seller paid a $350,000 net working capital adjustment to the Company. The Secured Note was due and payable on November 8, 2023, with an annual interest rate of 6%. The Secured Note allowed for prepayment, however, the 6% interest payment was guaranteed through the Maturity Date even if prepayments were made. On March 20, 2023, the Company paid $370,000 to pay the Secured Note in full, with the Seller agreeing to forgive $440,000 of interest which would have otherwise been due. The $370,000 payment is recorded in Other income, net on the Consolidated statements of operations for the nine month-period ended September 30, 2023. As a result, there is no longer any obligation to the Seller as of September 30, 2023. The Company has determined that the acquisition of Newswire constitutes a business acquisition as defined by ASC 805, Business Combinations Fair Measurements and Disclosure During the three-month period ended September 30, 2023, the Company obtained the necessary information to determine contract assets and deferred revenue acquired and as such, completed its allocation of the fair value of the assets and liabilities acquired. The measurement period adjustments below did not have a material impact to the Company’s Consolidated statement of operations from November 1, 2022, to September 30, 2023. A summary of the fair value consideration transferred for the Acquisition and the allocation to the fair value of the assets and liabilities of Newswire are as follows (in 000's): Consideration transferred: Cash payment $ 18,000 Secured promissory note 22,000 Shares of Issuer Direct common stock based on closing market price prior to the Acquisition 3,892 Net working capital adjustment and other costs paid on behalf of Seller, net of cash (350 ) Total consideration transferred $ 43,542 As Originally Reported Measurement Period Adjustment As Adjusted Final allocation of tangible and intangible assets and liabilities: Goodwill $ 16,122 $ (571 ) $ 15,551 Trademarks/Tradenames 27,500 — 27,500 Technology 2,520 — 2,520 Customer relationships 580 — 580 Net liabilities assumed (3,180 ) 571 (2,609 ) Total amount allocated $ 43,542 $ — $ 43,542 Net liabilities assumed: Cash $ 37 $ — $ 37 Accounts Receivable 90 253 343 Other Current Assets 14 — 14 Accounts Payable (645 ) — (645 ) Accrued Expenses (226 ) — (226 ) Deferred Revenue (1,775 ) 318 (1,457 ) Deferred tax liability (675 ) — (675 ) $ (3,180 ) $ 571 $ (2,609 ) Supplemental pro forma information The following unaudited supplemental pro forma information summarizes the Company’s results of operations for the current reporting period, as if the Company completed the acquisition as of the beginning of the annual reporting period. Supplemental pro forma information is as follows: in $000’s, except per share amounts Three months ended September 30, 2022 Nine months ended September 30, 2022 Revenues $ 7,890 $ 25,533 Net income 41 1,143 Basic earnings per share 0.01 0.29 Diluted earnings per share 0.01 0.29 The unaudited pro forma combined financial information is presented for information purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that we would have reported had the acquisition been completed as of the date and for the periods presented and should not be taken as representative of our consolidated results of operations or financial condition following the acquisition. In addition, the unaudited pro forma combined financial information is not intended to project the future financial position or results of operations of the combined company. The unaudited pro forma financial information was prepared using the acquisition method of accounting for the acquisition under existing US GAAP. Issuer Direct has been treated as the acquirer. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity | |
Equity | Note 4: Equity Dividends The Company did not pay any dividends during the three and nine-month periods ended September 30, 2023 and 2022. Preferred stock and common stock Stock repurchase and retirement On March 1, 2022, the Company’s board of directors authorized a stock repurchase program under which the Company was authorized to repurchase up to $5,000,000 of its common shares. As of August 31, 2022, the Company completed the repurchase program by purchasing a total of 207,964 shares as shown in the table below ($ in 000’s, except share or per share amounts): Shares Repurchased Period Total Number of Shares Repurchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program March 1-31, 2022 6,200 $ 29.35 6,200 $ 4,818 April 1-30, 2022 8,226 27.76 8,226 4,590 May 1-31, 2022 80,748 22.92 80,748 2,739 June 1-30, 2022 74,227 23.98 74,227 959 July 1-31, 2022 32,392 24.88 32,392 153 August 1-31, 2022 6,171 24.79 6,171 — No shares repurchased between September 2022 and September 2023 Total 207,964 $ 24.04 207,964 $ — 2014 Equity Incentive Plan On May 23, 2014, the shareholders of the Company approved the 2014 Equity Incentive Plan, as amended (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 and June 17, 2020, the shareholders of the Company approved an additional 200,000 and 200,000 awards, respectively, to be issued under the 2014 Plan, bringing the total number of shares to be awarded to 600,000. 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 September 30, 2023, there were 45,995 shares which remained to be granted under the 2014 Plan. These shares were assumed by the 2023 Plan described below. On June 7, 2023, the shareholders of the Company approved the 2023 Equity Incentive Plan (the “2023 Plan”). Under the terms of the 2023 Plan, the Company is authorized to issue incentive awards for common stock up to 300,000 shares to employees and other personnel. The awards may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and performance awards. The 2023 Plan is effective through April 1, 2033. As of September 30, 2023, there are 331,663 shares which remain to be granted under the 2023 Plan, including 45,995 shares assumed under the 2014 Plan described above. The following table summarizes information about stock options outstanding and exercisable at September 30, 2023: Options Outstanding Options Exercisable Exercise Price Range Number Weighted Average Remaining Contractual Life (in Years) Weighted Average Exercise Price Number $ 0.01 - 8.00 5,000 2.14 $ 6.80 5,000 $ 8.01 - 11.00 3,000 4.25 $ 10.25 3,000 $ 11.01 - 16.00 18,000 4.78 $ 13.12 18,000 $ 16.01 - 27.00 68,000 8.31 $ 25.42 15,500 $ 27.01 - 27.71 12,750 8.30 $ 27.71 — Total 106,750 7.31 $ 22.32 41,500 As of September 30, 2023, the Company had unrecognized stock compensation related to the options of $619,000, which will be recognized through 2027. During the nine-months ended September 30, 2023, the Company granted 74,832 shares of restricted stock units to employees and the Board of Directors, which vest at various intervals over the next 3 years. No restricted stock units were granted during the three months ended September 30, 2023. The average grant date fair value of these grants was $26.08 per share during the nine-month period ended September 30, 2023. During the nine months ended September 30, 2022, the Company granted 32,240 restricted stock units, with an average grant date fair value of $26.35 per share. No restricted stock units were granted during the three months ended September 30, 2022. During the nine-month period ended September 30, 2023, 18,129 restricted stock units with an average intrinsic value of $25.85 per share, vested. No restricted stock units vested during the three-month period ended September 30, 2023. As of September 30, 2023, there was $1,821,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2026. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | Note 5: Income Taxes The Company recognized an income tax expense of $187,000 and $621,000 for the three and nine-month periods ended September 30, 2023, compared to income tax expense of $180,000 and $681,000 during the same periods of 2022. At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year and this rate is applied to the results for the year-to-date period, and then adjusted for any discrete period items. For the three and nine-month periods ended September 30, 2023 and 2022, the variance between our effective tax rate and the U.S. statutory rate of 21% is primarily attributable to state income tax and additional expense related to Global Intangible Low-Taxed Income inclusion. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | Note 6: Leases Leasing activity generally consists of office leases. In March 2019, a new lease was signed to move the corporate headquarters to Raleigh, North Carolina. The new lease, which had a lease commencement date of October 2, 2019, expires December 31, 2027. Minimum lease payments are $2,997,000, not including a tenant improvement allowance of $488,000, which is included in fixed assets as of September 30, 2023. The Company recognized a ROU asset and corresponding lease liability of $2,596,000, which represents the present value of minimum lease payments discounted at 3.77%, the Company’s incremental borrowing rate at lease inception. Lease liabilities totaled $1,469,000 as of September 30, 2023. The current portion of this liability of $376,000 is included in Accrued expenses on the Consolidated balance sheets and the long-term portion of $1,093,000 is included in Lease liabilities on the Consolidated balance sheets. Rent expense consists of both operating lease expense from amortization of our ROU assets as well as variable lease expense which consists of non-lease components of office leases (i.e. common area maintenance) or rent expense associated with short-term leases. The components of lease expense were as follows (in 000’s): For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2023 2022 2023 2022 Lease expense Operating lease expense $ 76 $ 89 $ 228 $ 268 Variable lease expense 19 4 40 31 Total lease expense $ 95 $ 93 $ 268 $ 299 The weighted-average remaining non-cancelable lease term for our operating leases was 4.25 years as of September 30, 2023. As of September 30, 2023, the weighted-average discount rate used to determine the lease liability was 3.77%. The future minimum lease payments to be made under non-cancelable operating leases on September 30, 2023, are as follows (in 000’s): Year Ended December 31: 2023 $ 94 2024 379 2025 390 2026 401 2027 412 Total lease payments 1,676 Present value adjustment (207 ) Lease liability $ 1,469 We have performed an evaluation of our other contracts with customers and suppliers in accordance with Topic 842 and have determined that, except for the leases described above, none of our contracts contain a lease. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2023 | |
Revenue | |
Revenue | Note 7: Revenue The Company considers itself to be a single reportable segment under the authoritative guidance for segment reporting, specifically a communications and compliance company for publicly traded and private companies. The following tables present revenue disaggregated by revenue stream in (000’s): Three months ended September 30, Revenue Streams 2023 2022 Communications $ 6,078 80.3 % $ 3,487 66.0 % Compliance 1,491 19.7 % 1,793 34.0 % Total $ 7,569 100.0 % $ 5,280 100.0 % Nine months ended September 30, Revenue Streams 2023 2022 Communications $ 18,580 71.9 % $ 10,561 64.5 % Compliance 7,259 28.1 % 5,814 35.5 % Total $ 25,839 100.0 % $ 16,375 100.0 % The Company did not have any customers during the three and nine-month periods ended September 30, 2023 or 2022 that accounted for more than 10% of our revenue. |
Credit Agreement
Credit Agreement | 9 Months Ended |
Sep. 30, 2023 | |
Credit Agreement | |
Credit Agreement | Note 8: Credit Agreement On March 20, 2023 (the “Closing Date”), the Company entered into a $25 million credit agreement (the “Credit Agreement”) with Pinnacle Bank (“Pinnacle”). The Credit Agreement provides for the following: (i) term loan facility in an aggregate principal amount of $20 million (the “Term Loan”), and (ii) revolving letter of credit in an up to aggregate principal amount of $5 million (the “Revolving LOC”), subject to an 85% limit based on the current eligible accounts receivable (as defined in the Credit Agreement). Pursuant to the terms of the Credit Agreement, the per annum interest rate of the Term Loan is variable based on the one-month secured overnight financing rate (“SOFR”) plus 2.35%, subject to a minimum SOFR of 2.00%. However, the Term Loan issued on the Closing Date has a per annum interest rate of 6.217%, which was fixed with respect to the entire principal amount as a result of an interest rate swap agreement entered into between the Company and Pinnacle on the Closing Date in accordance with the terms of the Credit Agreement. The Company began making monthly interest-only payments on the Term Loan on April 1, 2023. Beginning on January 1, 2024, the Company will make monthly principal payments of $333,333 plus interest payments on the Term Loan until the maturity date of December 28, 2028. The proceeds of the Term Loan along with certain cash on hand of the Company were used to repay in its entirety the one-year Secured Promissory Note (the “Secured Note”) issued to Lead Capital, LLC in connection with the Company’s November 1, 2022 acquisition of iNewswire.com LLC for a lump sum payment of $22,880,000. In order to settle the Secured Note on March 20, 2023, the Company paid $370,000 to the Seller, with the Seller agreeing to forgive $440,000 of interest which would have otherwise been due. The $370,000 payment is recorded in Other income, net on the Consolidated statements of operations. As a result, there is no longer any obligation to the Seller as of September 30, 2023. The Company currently has no plans to utilize the Revolving LOC but may do so in the future. If the Company does utilize any funds under the Revolving LOC, the funds will bear interest at a per annum rate equal to the then current SOFR plus 2.05%. Pinnacle’s commitment to fund under the Revolving LOC terminates on September 1, 2024, unless terminated earlier pursuant to the terms of the Credit Agreement. The Company terminated its $3,000,000 unsecured line of credit with Fifth Third Bank immediately prior to the Closing Date. As of September 30, 2023, there was no outstanding balance under the Revolving LOC and the interest rate was 7.37%. The Credit Agreement contains the following financial covenants, which commenced with fiscal quarter ended June 30, 2023: a fixed charge coverage ratio of no less than 1.20:1.00 and a leverage ratio requiring that, for each fiscal quarter of the Company ending after June 30, 2023 through September 30, 2023, the leverage ratio shall not exceed 2.75:1.00 and for each fiscal quarter of the Company ending after December 31, 2023, the leverage ratio shall not exceed 2.50:1.00. All covenants were successfully achieved during the three month-period ended September 30, 2023. The Credit Agreement also contains customary affirmative covenants for a transaction of this nature, including among other things, covenants relating to: maintenance of adequate financial and accounting books and records, delivery of financial statements and other information, preservation of existence of the Company and subsidiaries, payment of taxes and claims, compliance with laws, maintenance of insurance, foreign qualification, use of proceeds, cash management system, maintenance of properties, and conduct of business. The Credit Agreement also contains customary negative covenants for a transaction of this nature, including, among other things, covenants relating to debt, liens, investments, negative pledges, dividends and other debt payments, restriction on fundamental changes, sale of assets, transactions with affiliates, restrictive agreements, and changes in fiscal year. The Credit Agreement also contains various Events of Default (subject to certain grace periods, to the extent applicable), including among other things, Events of Default for the nonpayment of principal, interest or fees; breach of certain covenants; inaccuracy of the representations or warranties in any material respect; bankruptcy or insolvency; dissolution or change of control; certain unsatisfied judgments; defaults under material agreements; certain unfunded liabilities under employee benefit plans; certain unsatisfied judgments; certain ERISA violations; and the invalidity or unenforceability of the Credit Agreement. If an Event of Default occurs, the Company may be required to repay all amounts outstanding under the Credit Agreement. The Term Loan and any advances under the Revolving LOC are secured by a first priority lien and security interest to the benefit of Pinnacle in the Event of Default on all of the Company’s current or future assets and each of the Guarantor’s current or future assets. |
Interest Rate Swap
Interest Rate Swap | 9 Months Ended |
Sep. 30, 2023 | |
Interest Rate Swap | |
Interest Rate Swap | Note 9: Interest Rate Swap The Company entered into an interest rate swap agreement to convert its interest rate exposure from variable rate to fixed rate to control cash outflows related to interest on its variable rate debt. The Company has $20,000,000 of notional amount interest rate swap agreement, which amortizes in-line with its long-term credit agreement. Under the swap agreement, the Company pays a fixed rate of interest at 6.217% and receives an average variable rate of SOFR + 2.35% adjusted monthly. At September 30, 2023, the weighted average rate was 7.67%. The carrying amount for the Company’s derivative financial instrument is the estimated fair value of the financial instrument. The Company’s derivative is not exchange listed and therefore the fair value is estimated under a mark-to-market approach using an analytics model that is a readily observable market input. This model reflects the contractual terms of the derivative, such as notional value and expiration date, as well as market-based observables including interest rates, yield curves, and the credit quality of the counterparty. The model also incorporates the Company’s creditworthiness in order to appropriately reflect non-performance risk. Inputs to the derivative pricing model are generally observable and do not contain a high level of subjectivity, and accordingly, the Company’s derivative is classified within Level 2 of the fair value hierarchy. While the Company believes its estimate results in a reasonable reflection of the fair value of the instrument, the estimated value may not be representative of actual value that could have been realized or that will be realized in the near future. In accounting for the interest rate swap, the Company has determined it does not qualify for hedge accounting. The fair value of the swap agreement as of September 30, 2023 was a net asset of $379,000 and is included in Other long-term assets, in the Consolidated balance sheets. The fair value of the interest rate swap agreement excludes accrued interest and takes into consideration current interest rates and current likelihood of the swap counterparty’s compliance with its contractual obligations. As a result of the interest rate swap, we have also recognized a net unrealized gain of $165,000 and $379,000, which is included in Other income, net in the Consolidated statements of operations during the three and nine-month periods ended September 30, 2023, respectively. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Earnings Per Share (EPS) | Earnings per share accounting guidance 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 totaling 72,750 were excluded in the computation of diluted earnings per common share during the three and nine-month periods ended September 30, 2023, because their impact was anti-dilutive. There were 50,250 shares issuable upon the exercise of stock options excluded in the computation of diluted earnings per common share during the three and nine-month periods ended September 30, 2022, because their impact was anti-dilutive. |
Revenue Recognition | Substantially all the Company’s revenue comes from contracts with customers for subscriptions to its cloud-based products or contracts for Communications and Compliance products and services. Customers consist of public corporate issuers and professional firms, such as investor and public relations firms. In the case of news distribution and webcasting offerings, customers also include private companies. The Company accounts for a contract with a customer when there is an enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has economic substance, and collectability of the contract consideration is probable. The Company's revenues are measured based on consideration specified in the contract with each customer. The Company's contracts include either a subscription to its entire platform, certain modules within the platform or to its Press Release Optimizer Plan ("PRO"), or an agreement to perform services, or any combination thereof, and often contain multiple subscriptions and services. For these bundled contracts, the Company accounts for individual subscriptions and services as separate performance obligations if they are distinct, which is when a product or service is separately identifiable from other items in the bundled package, and a customer can benefit from it on its own or with other resources that are readily available to the customer. The Company separates revenue from its contracts into two revenue streams: i) Communications and ii) Compliance. Performance obligations of Communications contracts include providing subscriptions to certain modules or our entire Communications platform, distributing press releases on a per release basis or conducting webcasts, virtual annual meetings, or other events on a per event basis. PRO subscription contracts contain two performance obligations of which the first is a series of distinct services that include, but are not limited to, developing specific media plans, and creating content to be distributed and the second performance obligation being access to the PRO platform along with distribution of press releases, ongoing support, and assessment of performance as a stand-ready obligation. Performance obligations of Compliance contracts include providing subscriptions to certain Compliance modules or other stand-ready obligations to deliver services and annual report printing and distribution. Additionally, services are provided on a per project basis. Set up fees for disclosure services are considered a separate performance obligation and are satisfied upfront. Set up fees for the transfer agent module and investor relations content management module are immaterial. The Company’s subscription and service contracts are generally for one year, with automatic renewal clauses included in the contract until the contract is cancelled. The contracts do not contain any rights of returns, guarantees, or warranties. Since contracts are generally for one year, all the revenue is expected to be recognized within one year from the contract start date. As such, the Company has elected the optional exemption that allows the Company not to disclose the transaction price allocated to performance obligations that are unsatisfied or partially satisfied at the end of each reporting period. The Company recognizes revenue for subscriptions evenly over the contract period, upon distribution for per release contracts and upon event completion for webcasting and virtual annual meeting events. For service contracts that include stand ready obligations, revenue is recognized evenly over the contract period. For all other services delivered on a per project or event basis, the revenue is recognized at the completion of the event. The Company believes recognizing revenue for subscriptions and stand ready obligations using a time-based measure of progress, best reflects the Company’s performance in satisfying the obligations. For bundled contracts, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the subscription or service. If a standalone selling price is not directly observable, the Company uses the residual method to allocate any remaining price to that subscription or service. The Company reviews standalone selling prices, at least annually, and updates these estimates if necessary. The Company invoices its customers based on the billing schedules designated in its contracts, typically upfront on either a monthly, quarterly or annual basis or per transaction at the completion of the performance obligation. Deferred revenue for the periods presented was primarily related to press release packages which have been prepaid, however the releases have not yet been disseminated, as well as, subscription and service contracts, which are billed upfront, quarterly, or annually, however the revenue has not yet been recognized. The associated deferred revenue is generally recognized as releases are disseminated for press release packages and ratably over the billing period for subscriptions. Deferred revenue as of September 30, 2023 and December 31, 2022, was $5,164,000 and $5,405,000, respectively, and is expected to be recognized within one year. Revenue recognized for the nine months ended September 30, 2023 and 2022, which was included in the deferred revenue balance at the beginning of each reporting period, was approximately $3,659,000 and $2,763,000, respectively. Accounts receivable, net of allowance for doubtful accounts, related to contracts with customers was $4,271,000 and $2,978,000 as of September 30, 2023 and December 31, 2022, respectively. Since substantially all the contracts have terms of one year or less, the Company has elected to use the practical expedient regarding the existence of a significant financing. Costs to obtain contracts with customers consist primarily of sales commissions. As of September 30, 2023 and December 31, 2022, the Company has capitalized $179,000 and $105,000, respectively, of costs to obtain contracts that are expected to be amortized over more than one year. For contract costs expected to be amortized in less than one year, the Company has elected to use the practical expedient allowing the recognition of incremental costs of obtaining a contract as an expense when incurred. The Company has considered historical renewal rates, expectations of future renewals and economic factors in making these determinations. |
Cash Equivalents | For purposes of the Company’s financial statements, the Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. |
Accounts Receivable And Allowance For Doubtful Accounts | The Company adopted Financial Accounting Standards Codification (“ASC”) Topic 326, Financial Statements – Credit Losses (“Topic 326”) with an adoption date of January 1, 2023. As a result, the Company changed its accounting policy for allowance for doubtful accounts using an expected losses model rather than using incurred losses. The new model is based on the credit losses expected to arise over the life of the asset based on the Company’s expectations as of the balances sheet date through analyzing historical customer data as well as taking into consideration current economic trends. The Company adopted Topic 326 and determined it did not have a material financial impact. The roll forward of the allowance for doubtful accounts for the three and nine-months ended September 30, 2023, was as follows: Three months ended September 30, 2023 Nine months ended September 30, 2023 Beginning balance $ 956 $ 745 Bad debt expense 113 373 Write-offs (51 ) (100 ) Ending Balance $ 1,018 $ 1,018 |
Concentration Of Credit Risk | Financial instruments and related items which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivables. The Company places its cash and temporary cash investments with credit quality institutions. Such cash balances are currently in excess of the FDIC insurance limit of $250,000. To reduce its risk associated with the failure of such financial institutions, each quarter the Company evaluates the rating of each financial institution in which it holds deposits. As of September 30, 2023, the total amount exceeding such limit was $982,000. The Company also had cash-on-hand of $69,000 in Europe and $1,571,000 in Canada as of September 30, 2023. The Company believes it did not have any financial instruments that could have potentially subjected us to significant concentrations of credit risk for any relevant period. |
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 | 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, the Company recognizes 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. The Company’s policy regarding the classification of interest and penalties is to classify them as income tax expense in the financial statements, if applicable. |
Capitalized Software | Costs incurred to develop the Company’s cloud-based platform products 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, which is typically four years. Costs related to design or maintenance of the software are expensed as incurred. Capitalized costs and amortization for the three and nine-month periods ended September 30, 2023 and 2022, are as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2023 2022 2023 2022 Capitalized software development costs $ 152 $ — $ 319 $ — Amortization included in cost of revenues 16 17 44 48 |
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. |
Lease Accounting | The Company determines if an arrangement is a lease at inception. Operating lease agreements are primarily for office space and are included within lease right-of-use (“ROU”) assets and lease liabilities on the Consolidated balance sheet. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments consist of non-lease services related to the lease and payments under operating leases classified as short-term. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets include any lease payments due and exclude lease incentives. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. |
Fair Value Measurements | Accounting Standards Codification (“ASC”) Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: · Level 1 - Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes debt and equity securities that are traded in an active market. Cash and cash equivalents are quoted at Level 1. · Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The fair value of the Company’s long-term debt and interest rate swap are quoted at Level 2. · Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. As of September 30, 2023 and December 31, 2022, the Company believes the fair value of its financial instruments, such as, accounts receivable, long-term debt, the line of credit, and accounts payable approximate their carrying amounts. |
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 until the entity is sold or substantially liquidated. |
Business Combinations, Goodwill And Intangible Assets | The authoritative guidance for business combinations specifies the criteria for recognizing and reporting intangible assets apart from goodwill. The Company records 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, distribution partner relationships, software, technology, non-compete agreements and trademarks that are initially measured at fair value. At the time of the business combination, trademarks may be considered an indefinite-lived asset and, as such, are not amortized as there may be no foreseeable limit to cash flows generated from them. For the Newswire acquisition (see Note 3), the Company determined the trademarks acquired were considered a definite lived asset which will be amortized over a period of 15 years. 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 (5-10 years), customer lists (3 years), distribution partner relationships (10 years), non-compete agreements (5 years) and software and technology (3-7 years) are amortized over their estimated useful lives. |
Comprehensive Income | Comprehensive income consists of net income and other comprehensive income related to changes in the cumulative foreign currency translation adjustment. |
Advertising | The Company expenses advertising as incurred. During the three and nine-month periods ended September 30, 2023, advertising expense was $409,000 and $1,235,000, respectively. During the three and nine-month periods ended September 30, 2022, advertising expense was $95,000 and $304,000, respectively. Most of the increase is due to additional advertising expense resulting from Newswire, which was acquired in November 2022. |
Stock-based 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 associated cost is recognized over the period during which an employee or director is required to provide service in exchange for the award. |
Newly Adopted Accounting Pronouncements | Topic 326 was effective for the Company beginning on January 1, 2023. This update requires a financial asset (or group of financial assets) measured at amortized cost basis, to be presented at the net amount expected to be collected. This allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value of the amount expected to be collected on the financial asset. The Company has evaluated the impact of Topic 326 and has determined it does not have a material financial impact. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Allowance for doubtful accounts | Three months ended September 30, 2023 Nine months ended September 30, 2023 Beginning balance $ 956 $ 745 Bad debt expense 113 373 Write-offs (51 ) (100 ) Ending Balance $ 1,018 $ 1,018 |
Capitalized costs and amortization | For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2023 2022 2023 2022 Capitalized software development costs $ 152 $ — $ 319 $ — Amortization included in cost of revenues 16 17 44 48 |
Acquisition of iNewswirecom L_2
Acquisition of iNewswirecom LLC (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Acquisition of iNewswirecom LLC | |
Schedule of fair value consideration transferred for the Acquisition | Consideration transferred: Cash payment $ 18,000 Secured promissory note 22,000 Shares of Issuer Direct common stock based on closing market price prior to the Acquisition 3,892 Net working capital adjustment and other costs paid on behalf of Seller, net of cash (350 ) Total consideration transferred $ 43,542 As Originally Reported Measurement Period Adjustment As Adjusted Final allocation of tangible and intangible assets and liabilities: Goodwill $ 16,122 $ (571 ) $ 15,551 Trademarks/Tradenames 27,500 — 27,500 Technology 2,520 — 2,520 Customer relationships 580 — 580 Net liabilities assumed (3,180 ) 571 (2,609 ) Total amount allocated $ 43,542 $ — $ 43,542 Net liabilities assumed: Cash $ 37 $ — $ 37 Accounts Receivable 90 253 343 Other Current Assets 14 — 14 Accounts Payable (645 ) — (645 ) Accrued Expenses (226 ) — (226 ) Deferred Revenue (1,775 ) 318 (1,457 ) Deferred tax liability (675 ) — (675 ) $ (3,180 ) $ 571 $ (2,609 ) |
Schedule of of the results of operations | in $000’s, except per share amounts Three months ended September 30, 2022 Nine months ended September 30, 2022 Revenues $ 7,890 $ 25,533 Net income 41 1,143 Basic earnings per share 0.01 0.29 Diluted earnings per share 0.01 0.29 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity | |
Schedule of Stock repurchase | Shares Repurchased Period Total Number of Shares Repurchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program March 1-31, 2022 6,200 $ 29.35 6,200 $ 4,818 April 1-30, 2022 8,226 27.76 8,226 4,590 May 1-31, 2022 80,748 22.92 80,748 2,739 June 1-30, 2022 74,227 23.98 74,227 959 July 1-31, 2022 32,392 24.88 32,392 153 August 1-31, 2022 6,171 24.79 6,171 — No shares repurchased between September 2022 and September 2023 Total 207,964 $ 24.04 207,964 $ — |
Schedule of stock Options Outstanding And Exercisable | Options Outstanding Options Exercisable Exercise Price Range Number Weighted Average Remaining Contractual Life (in Years) Weighted Average Exercise Price Number $ 0.01 - 8.00 5,000 2.14 $ 6.80 5,000 $ 8.01 - 11.00 3,000 4.25 $ 10.25 3,000 $ 11.01 - 16.00 18,000 4.78 $ 13.12 18,000 $ 16.01 - 27.00 68,000 8.31 $ 25.42 15,500 $ 27.01 - 27.71 12,750 8.30 $ 27.71 — Total 106,750 7.31 $ 22.32 41,500 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Lease Expense | For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2023 2022 2023 2022 Lease expense Operating lease expense $ 76 $ 89 $ 228 $ 268 Variable lease expense 19 4 40 31 Total lease expense $ 95 $ 93 $ 268 $ 299 |
Future Minimum Lease Payments | Year Ended December 31: 2023 $ 94 2024 379 2025 390 2026 401 2027 412 Total lease payments 1,676 Present value adjustment (207 ) Lease liability $ 1,469 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue | |
Disaggregated Revenue | Three months ended September 30, Revenue Streams 2023 2022 Communications $ 6,078 80.3 % $ 3,487 66.0 % Compliance 1,491 19.7 % 1,793 34.0 % Total $ 7,569 100.0 % $ 5,280 100.0 % Nine months ended September 30, Revenue Streams 2023 2022 Communications $ 18,580 71.9 % $ 10,561 64.5 % Compliance 7,259 28.1 % 5,814 35.5 % Total $ 25,839 100.0 % $ 16,375 100.0 % |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Summary of Significant Accounting Policies | ||
Allowance for doubtful accounts, beginning | $ 956 | $ 745 |
Bad debt expense | 113 | 373 |
Write-offs | (51) | (100) |
Allowance for doubtful accounts, ending | $ 1,018 | $ 1,018 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Summary of Significant Accounting Policies | ||||
Amortization included in cost of revenues | $ 152 | $ 0 | $ 319 | $ 0 |
Capitalized software development costs | $ 16 | $ 17 | $ 44 | $ 48 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Antidilutive securities excluded from computation of earnings per common share | 72,750 | 50,250 | |||
Deferred revenue | $ 5,164,000 | $ 5,164,000 | $ 5,405,000 | ||
Revenue Recognized Included in the Deferred Revenue | 3,659,000 | $ 2,763,000 | |||
Accounts receivable related to contracts with customers | 4,271,000 | 4,271,000 | 2,978,000 | ||
Capitalized costs | 179,000 | 179,000 | $ 105,000 | ||
FDIC insurance limit | 250,000 | 250,000 | |||
FDIC exceeding limit | 982,000 | 982,000 | |||
Advertising Expense | 409,000 | $ 95,000 | $ 1,235,000 | $ 304,000 | |
Intangible asset estimated useful lives | 15 years | ||||
Canada [Member] | |||||
Cash-on-hand | 1,571,000 | $ 1,571,000 | |||
Europe | |||||
Cash-on-hand | $ 69,000 | $ 69,000 | |||
Customer Lists | |||||
Intangible asset estimated useful lives | 3 years | ||||
Distribution Partner Relationships | |||||
Intangible asset estimated useful lives | 10 years | ||||
Non-compete Agreements | |||||
Intangible asset estimated useful lives | 5 years | ||||
Maximum [Member] | Customer Relationships | |||||
Intangible asset estimated useful lives | 10 years | ||||
Maximum [Member] | Software and Technology | |||||
Intangible asset estimated useful lives | 7 years | ||||
Minimum [Member] | Customer Relationships | |||||
Intangible asset estimated useful lives | 5 years | ||||
Minimum [Member] | Software and Technology | |||||
Intangible asset estimated useful lives | 3 years |
Acquisition of iNewswirecom L_3
Acquisition of iNewswirecom LLC (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Consideration transferred: | ||
Cash payment | $ 18,000,000 | |
Secured promissory note | 22,000,000 | |
Shares of Issuer Direct common stock based on closing market price prior to the Acquisition | 3,892,000 | |
Total consideration transferred | 43,542,000 | |
Goodwill | 21,928,000 | $ 22,498,000 |
Net working capital adjustment and other costs paid on behalf of Seller, net of cash | (350,000) | |
Accounts Receivable | 4,271,000 | 2,978,000 |
Other Current Assets | 1,471,000 | 1,559,000 |
Accounts Payable | (1,324,000) | (1,374,000) |
Accounts Payable | 1,324,000 | 1,374,000 |
Deferred Revenue | (5,164,000) | (5,405,000) |
Deferred Revenue | 5,164,000 | $ 5,405,000 |
As Originally Reported [Member] | ||
Consideration transferred: | ||
Goodwill | 16,122,000 | |
Trademarks/Tradename | 27,500,000 | |
Technology | 2,520,000 | |
Customer relationships | 580,000 | |
Net liabilities assumed | (3,180,000) | |
Total amount allocated | 43,542,000 | |
Total amount allocated | (43,542,000) | |
Net liabilities assumed | 3,180,000 | |
Adjustment [Member] | ||
Consideration transferred: | ||
Goodwill | (571,000) | |
Trademarks/Tradename | 0 | |
Technology | 0 | |
Customer relationships | 0 | |
Net liabilities assumed | (571,000) | |
Total amount allocated | 0 | |
Total amount allocated | 0 | |
Net liabilities assumed | 571,000 | |
As Adjustment [Member] | ||
Consideration transferred: | ||
Goodwill | 15,551,000 | |
Trademarks/Tradename | 27,500,000 | |
Technology | 2,520,000 | |
Customer relationships | 580,000 | |
Net liabilities assumed | (2,609,000) | |
Total amount allocated | 43,542,000 | |
Total amount allocated | (43,542,000) | |
Net liabilities assumed | 2,609,000 | |
Net liabilities assumed [Member] | As Originally Reported [Member] | ||
Consideration transferred: | ||
Net liabilities assumed | (3,180,000) | |
Cash | 37,000 | |
Accounts Receivable | 90,000 | |
Other Current Assets | 14,000 | |
Accounts Payable | (645,000) | |
Accounts Payable | 645,000 | |
Accrued Expenses | (226,000) | |
Accrued Expenses | 226,000 | |
Deferred Revenue | (1,775,000) | |
Deferred Revenue | 1,775,000 | |
Deferred tax liability | (675,000) | |
Deferred tax liability | 675,000 | |
Net liabilities assumed | 3,180,000 | |
Net liabilities assumed [Member] | Adjustment [Member] | ||
Consideration transferred: | ||
Net liabilities assumed | (571,000) | |
Cash | 0 | |
Accounts Receivable | 253,000 | |
Other Current Assets | 0 | |
Accounts Payable | 0 | |
Accounts Payable | 0 | |
Accrued Expenses | 0 | |
Accrued Expenses | 0 | |
Deferred Revenue | (318,000) | |
Deferred Revenue | 318,000 | |
Deferred tax liability | 0 | |
Deferred tax liability | 0 | |
Net liabilities assumed | 571,000 | |
Net liabilities assumed [Member] | As Adjustment [Member] | ||
Consideration transferred: | ||
Net liabilities assumed | (2,609,000) | |
Cash | 37,000 | |
Accounts Receivable | 343,000 | |
Other Current Assets | 14,000 | |
Accounts Payable | (645,000) | |
Accounts Payable | 645,000 | |
Accrued Expenses | (226,000) | |
Accrued Expenses | 226,000 | |
Deferred Revenue | (1,457,000) | |
Deferred Revenue | 1,457,000 | |
Deferred tax liability | (675,000) | |
Deferred tax liability | 675,000 | |
Net liabilities assumed | $ 2,609,000 |
Acquisition of iNewswirecom L_4
Acquisition of iNewswirecom LLC (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | $ 7,569 | $ 5,280 | $ 25,839 | $ 16,375 | ||||
Net income | $ 273 | $ 1,363 | $ (144) | $ 686 | $ 841 | $ 516 | $ 1,492 | $ 2,043 |
Basic earnings per share | $ 0.07 | $ 0.19 | $ 0.39 | $ 0.55 | ||||
Diluted earnings per share | $ 0.07 | $ 0.19 | $ 0.39 | $ 0.55 | ||||
Supplemental pro forma | ||||||||
Revenues | $ 7,890 | $ 25,533 | ||||||
Net income | $ 41 | $ 1,143 | ||||||
Basic earnings per share | $ 0.01 | $ 0.29 | ||||||
Diluted earnings per share | $ 0.01 | $ 0.29 |
Acquisition of iNewswirecom L_5
Acquisition of iNewswirecom LLC (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Principal amount | $ 22,000,000 | |||||
Cash payment | 18,000,000 | |||||
Total expenses | $ 5,179,000 | $ 3,279,000 | 16,956,000 | $ 9,942,000 | ||
Net working capital adjustment | $ (350,000) | $ (350,000) | ||||
Common stock par value | $ 0.001 | $ 0.001 | $ 0.001 | |||
Payment to secured notes | $ 370,000 | |||||
Interest forgiveness | 440,000 | |||||
November 1-30 2022 | ||||||
Principal amount | 22,000,000 | |||||
Cash payment | 18,000,000 | |||||
Total expenses | $ 178,000 | |||||
Interest rate | 6% | |||||
Common stock shares | 180,181 | |||||
Other shares issued, value | $ 3,900,000 | $ 3,900,000 | ||||
Seller aggregate consideration | $ 43,500,000 | |||||
Net working capital adjustment | $ 350,000 | |||||
Common stock par value | $ 0.001 | $ 0.001 | ||||
Closing stock price | $ 21.60 | |||||
Other expenss | $ 370,000 | |||||
Payment to secured notes | 370,000 | |||||
Interest forgiveness | $ 440,000 |
Equity (Details)
Equity (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Common Shares | |
Total number of shares repurchased | 207,964 |
Average price paid per share | $ / shares | $ 24.04 |
Total number of shares purchased as part of publicly announced program | 207,964 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 0 |
April 1-30, 2022 | |
Total number of shares repurchased | 8,226 |
Average price paid per share | $ / shares | $ 27.76 |
Total number of shares purchased as part of publicly announced program | 8,226 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 4,590,000 |
May 1-31, 2022 | |
Total number of shares repurchased | 80,748 |
Average price paid per share | $ / shares | $ 22.92 |
Total number of shares purchased as part of publicly announced program | 80,748 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 2,739,000 |
June 1-30, 2022 | |
Total number of shares repurchased | 74,227 |
Average price paid per share | $ / shares | $ 23.98 |
Total number of shares purchased as part of publicly announced program | 74,227 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 959,000 |
July 1-31, 2022 | |
Total number of shares repurchased | 32,392 |
Average price paid per share | $ / shares | $ 24.88 |
Total number of shares purchased as part of publicly announced program | 32,392 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 153,000 |
August 1-31, 2022 | |
Total number of shares repurchased | 6,171 |
Average price paid per share | $ / shares | $ 24.79 |
Total number of shares purchased as part of publicly announced program | 6,171 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 0 |
March 1-31, 2022 | |
Total number of shares repurchased | 6,200 |
Average price paid per share | $ / shares | $ 29.35 |
Total number of shares purchased as part of publicly announced program | 6,200 |
Maximum dollar value of shares that may yet be purchased under the program | $ | $ 4,818,000 |
Equity (Details 1)
Equity (Details 1) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Number of option outstanding | 106,750 |
Weighted Average Remaining Contractual Life (in Years) | 7 years 3 months 21 days |
Weighted average exercise price | $ / shares | $ 22.32 |
Number Of Options Exercisable | 41,500 |
Option 1 | |
Exercise Price Range | 0.01 - 8.00 |
Number of option outstanding | 5,000 |
Weighted Average Remaining Contractual Life (in Years) | 2 years 1 month 20 days |
Weighted average exercise price | $ / shares | $ 6.80 |
Number Of Options Exercisable | 5,000 |
Option 2 | |
Exercise Price Range | 8.01 - 11.00 |
Number of option outstanding | 3,000 |
Weighted Average Remaining Contractual Life (in Years) | 4 years 3 months |
Weighted average exercise price | $ / shares | $ 10.25 |
Number Of Options Exercisable | 3,000 |
Option 3 | |
Exercise Price Range | 11.01 - 16.00 |
Number of option outstanding | 18,000 |
Weighted Average Remaining Contractual Life (in Years) | 4 years 9 months 10 days |
Weighted average exercise price | $ / shares | $ 13.12 |
Number Of Options Exercisable | 18,000 |
Option 4 | |
Exercise Price Range | 16.01 - 27.00 |
Number of option outstanding | 68,000 |
Weighted Average Remaining Contractual Life (in Years) | 8 years 3 months 21 days |
Weighted average exercise price | $ / shares | $ 25.42 |
Number Of Options Exercisable | 15,500 |
Option 5 | |
Exercise Price Range | 27.01 - 27.71 |
Number of option outstanding | 12,750 |
Weighted Average Remaining Contractual Life (in Years) | 8 years 3 months 18 days |
Weighted average exercise price | $ / shares | $ 27.71 |
Number Of Options Exercisable | 0 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Jun. 10, 2016 | Jun. 17, 2020 | Sep. 30, 2023 | Sep. 30, 2022 | Aug. 31, 2022 | Mar. 01, 2022 | |
Unrecognized Compensation Expense, Options | $ 1,821,000 | |||||
Unrecognized Compensation Expense, Restricted Stock Units | $ 619,000 | |||||
Restricted stock units | 18,129 | |||||
Average intrinsic value | $ 25.85 | |||||
2014 Plan | ||||||
Shares Available For Grant | 45,995 | |||||
Shares Issued For Common Stock | 331,663 | |||||
Additional Awards | 200,000 | 200,000 | ||||
Total Number Of Shares To Be Awarded | 600,000 | |||||
2023 Plan | ||||||
Shares Available For Grant | 45,995 | |||||
Shares Issued For Common Stock | 300,000 | |||||
Employees [Member] | ||||||
Restricted Shares, Granted | 74,832 | 32,240 | ||||
Fair Value Of granted Shares | $ 26.08 | $ 26.35 | ||||
March 1, 2022 | ||||||
Shares Repurchased | $ 207,964 | $ 5,000,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Taxes | ||||
Income Tax Expense | $ 187,000 | $ 180,000 | $ 621,000 | $ 681,000 |
U.s. Statutory Rate | 21% | 21% |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||||
Operating Lease Expense | $ 76 | $ 89 | $ 228 | $ 268 |
Variable Lease Expense | 19 | 4 | 40 | 31 |
Total lease expense | $ 95 | $ 93 | $ 268 | $ 299 |
Leases (Details 1)
Leases (Details 1) $ in Thousands | Sep. 30, 2023 USD ($) |
Leases | |
2023 | $ 94 |
2024 | 379 |
2025 | 390 |
2026 | 401 |
2027 | 412 |
Total Lease Payments | 1,676 |
Present Value Adjustment | (207) |
Lease Liability | $ 1,469 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Lease Liability, Current Portion | $ 376,000 | |
Weighted Average Non Cancelable Lease Term | 4 years 3 months | |
Weighted-average Discount Rate | 3.77% | |
Lease Liability, Long term portion | $ 1,093,000 | $ 1,339,000 |
Operating Lease Liability, Total | $ 1,469,000 | |
March 2019 | ||
Expiry Of Lease | Dec. 31, 2027 | |
Right-of-use Asset - Leases | $ 2,596,000 | |
Lease Payments | 2,997,000 | |
Improvment Allowance Of Lease Payments | $ 488,000 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | $ 7,569 | $ 5,280 | $ 25,839 | $ 16,375 |
Percentage Of Revenue From Revenue Streams | 100% | 100% | 100% | 100% |
Communication [Member] | ||||
Revenues | $ 6,078 | $ 3,487 | $ 18,580 | $ 10,561 |
Percentage Of Revenue From Revenue Streams | 80.30% | 66% | 71.90% | 64.50% |
Compliance [Member] | ||||
Revenues | $ 1,491 | $ 1,793 | $ 7,259 | $ 5,814 |
Percentage Of Revenue From Revenue Streams | 19.70% | 34% | 28.10% | 35.50% |
Revenue (Details Narrative)
Revenue (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
One Customer [Member] | ||||
Percentage Of Revenue | 10% | 10% | 10% | 10% |
Credit Agreement (Details narra
Credit Agreement (Details narrative) - USD ($) | 1 Months Ended | 9 Months Ended |
Mar. 20, 2023 | Sep. 30, 2023 | |
Credit Agreement | ||
Description of credit agreement | (i) term loan facility in an aggregate principal amount of $20 million (the “Term Loan”), and (ii) revolving letter of credit in an up to aggregate principal amount of $5 million (the “Revolving LOC”), subject to an 85% limit based on the current eligible accounts receivable (as defined in the Credit Agreement) | the per annum interest rate of the Term Loan is variable based on the one-month secured overnight financing rate (“SOFR”) plus 2.35%, subject to a minimum SOFR of 2.00%. However, the Term Loan issued on the Closing Date has a per annum interest rate of 6.217%, which was fixed with respect to the entire principal amount as a result of an interest rate swap agreement entered into between the Company and Pinnacle on the Closing Date in accordance with the terms of the Credit Agreement |
Proceed from credit agreement | $ 25,000,000 | |
Maturity date | December 28, 2028 | |
Monthly principle payment | $ 333,333 | |
Acquisition of iNewswire.com LLC | $ 22,880,000 | |
Payment to secured notes | 370,000 | |
Interest forgiveness | 440,000 | |
Payment for other expenss | 370,000 | |
Termination of unsecured line of credit | $ 3,000,000 |
Interest Rate Swap (Details Nar
Interest Rate Swap (Details Narrative) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Interest Rate Swap | ||
Interest rate swap agreement | $ 20,000,000 | |
Description of interest rate swap agreement | the Company pays a fixed rate of interest at 6.217% and receives an average variable rate of SOFR + 2.35% adjusted monthly | |
Weighted average rate | 7.67% | |
Other long term assets | $ 379,000 | $ 379,000 |
Unrealized gain | $ 165,000 | $ 379,000 |