CREDITRISKMONITOR COM INC - Quarter Report: 2023 September (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-8601
CreditRiskMonitor.com, Inc.
(Exact name of registrant as specified in its charter)
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Nevada
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36-2972588
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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704 Executive Boulevard, Suite A
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Valley Cottage, New York 10989
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(Address of principal executive offices, including zip code)
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Registrant’s telephone number, including area code: (845) 230-3000
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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None
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N/A
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N/A
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions
of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer
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☐
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||
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Non-accelerated filer ☑
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Smaller reporting company
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☑
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Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The Company’s common stock is traded on the OTC Markets. There were 10,722,401 shares of
common stock $.01 par value outstanding as of November
14, 2023.
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Page
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PART I. FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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2
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3
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4
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5
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| 6 | |||
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7
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8
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Item 2.
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12 | |
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Item 4.
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16 | |
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PART II. OTHER INFORMATION
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Item 6.
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17 | |
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| 18 | |||
PART I. FINANCIAL INFORMATION
CREDITRISKMONITOR.COM, INC.
SEPTEMBER 30, 2023
AND DECEMBER 31, 2022
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September 30,
2023
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December 31,
2022
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|||||||
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(Unaudited)
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(Note 1)
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|||||||
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ASSETS
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||||||||
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Current assets:
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||||||||
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Cash and cash equivalents
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$
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11,088,033
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$
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9,866,628
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||||
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Held-to-maturity securities – treasury bills
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4,143,863 | 4,028,565 | ||||||
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Accounts receivable, net of allowance of $30,000
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2,874,768
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3,500,259
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||||||
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Other current assets
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1,080,939
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656,379
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||||||
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Total current assets
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19,187,603
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18,051,831
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||||||
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Property and equipment, net
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497,462
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481,804
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||||||
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Operating lease right-to-use asset
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1,664,340
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1,816,505
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||||||
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Goodwill
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1,954,460
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1,954,460
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||||||
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Other assets
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18,110
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163,470
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||||||
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Total assets
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$
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23,321,975
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$
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22,468,070
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||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||||||
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Current liabilities:
|
||||||||
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Unexpired subscription revenue
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$
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9,867,156
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$
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9,980,092
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||||
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Accounts payable
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96,139
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245,854
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||||||
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Current portion of operating lease liability
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206,993
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193,953
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||||||
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Accrued expenses
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2,384,449
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2,216,376
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||||||
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Total current liabilities
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12,554,737
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12,636,275
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||||||
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Deferred taxes on income, net
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332,566
|
332,566
|
||||||
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Unexpired subscription revenue, less current portion
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74,072
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163,320
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||||||
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Operating lease liability, less current portion
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1,609,704
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1,766,174
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||||||
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Total liabilities
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14,571,079
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14,898,335
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||||||
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Stockholders’ equity:
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||||||||
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Preferred stock, $0.01 par value; authorized 5,000,000 shares; none
issued
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-
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-
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||||||
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Common stock, $0.01
par value; authorized 32,500,000 shares; issued and outstanding 10,722,401 shares
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107,224
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107,224
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||||||
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Additional paid-in capital
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29,980,528
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29,904,675
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||||||
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Accumulated deficit
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(21,336,856
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)
|
(22,442,164
|
)
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||||
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Total stockholders’ equity
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8,750,896
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7,569,735
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||||||
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Total liabilities and stockholders’ equity
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$
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23,321,975
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$
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22,468,070
|
||||
See accompanying notes to condensed financial statements.
CREDITRISKMONITOR.COM, INC.
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Unaudited)
|
2023
|
2022
|
|||||||
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Operating revenues
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$
|
4,792,869
|
$
|
4,547,708
|
||||
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Operating expenses:
|
||||||||
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Data and product costs
|
1,951,360
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1,644,489
|
||||||
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Selling, general and administrative expenses
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2,439,147
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2,230,553
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||||||
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Depreciation and amortization
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96,216
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100,448
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||||||
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Total operating expenses
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4,486,723
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3,975,490
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||||||
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Income from operations
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306,146
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572,218
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||||||
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Other income
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188,083
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54,581
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||||||
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Income before income taxes
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494,229
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626,799
|
||||||
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Provision for income taxes
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(115,552
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)
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(140,822
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)
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||||
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Net income
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$
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378,677
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$
|
485,977
|
||||
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Net income per share – Basic and diluted
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$
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0.04
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$
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0.05
|
||||
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Weighted average number of common shares outstanding –
|
||||||||
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Basic
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10,722,401
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10,722,401
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||||||
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Diluted
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10,799,481
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10,758,349
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||||||
See accompanying notes to condensed financial statements.
CREDITRISKMONITOR.COM, INC.
CONDENSED STATEMENTS OF
OPERATIONS
(Unaudited)
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2023
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2022
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|||||||
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Operating revenues
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$
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14,066,112
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$
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13,335,927
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||||
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Operating expenses:
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||||||||
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Data and product costs
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5,806,156
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5,117,975
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||||||
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Selling, general and administrative expenses
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7,050,702
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6,864,354
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||||||
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Depreciation and amortization
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288,303
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301,656
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||||||
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Total operating expenses
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13,145,161
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12,283,985
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||||||
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Income from operations
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920,951
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1,051,942
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||||||
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Other income
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521,630
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66,368
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||||||
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Income before income taxes
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1,442,581
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1,118,310
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||||||
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Provision for income taxes
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(337,273
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)
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(268,544
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)
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Net income
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$
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1,105,308
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$
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849,766
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||||
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Net income per share – Basic and diluted
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$ | 0.10 |
$
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0.08
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||||
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Weighted average number of common shares outstanding –
|
||||||||
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Basic
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10,722,401
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10,722,401
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||||||
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Diluted
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10,801,243
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10,760,397
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||||||
See accompanying notes to condensed financial statements.
CREDITRISKMONITOR.COM, INC.
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Unaudited)
| Common Stock |
Additional
Paid-in
Capital
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Accumulated
Deficit
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Total
Stockholders’
Equity
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|||||||||||||||||
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Shares
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Amount
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|||||||||||||||||||
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Balance July 1, 2022
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10,722,401
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$
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107,224
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$
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29,859,233
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$
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(23,438,613
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)
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$
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6,527,844
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||||||||||
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Net income
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-
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-
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-
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485,977
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485,977
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|||||||||||||||
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Stock-based compensation
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-
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-
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18,684
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-
|
18,684
|
|||||||||||||||
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Balance September 30, 2022
|
10,722,401
|
$
|
107,224
|
$
|
29,877,917
|
$
|
(22,952,636
|
)
|
$
|
7,032,505
|
||||||||||
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Balance July 1, 2023
|
10,722,401
|
$
|
107,224
|
$
|
29,958,199
|
$
|
(21,715,533
|
)
|
$
|
8,349,890
|
||||||||||
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Net income
|
-
|
-
|
-
|
378,677
|
378,677
|
|||||||||||||||
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Stock-based compensation
|
-
|
-
|
22,329
|
-
|
22,329
|
|||||||||||||||
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Balance September 30, 2023
|
10,722,401
|
$
|
107,224
|
$
|
29,980,528
|
$
|
(21,336,856
|
)
|
$
|
8,750,896
|
||||||||||
See accompanying notes to condensed financial statements.
CREDITRISKMONITOR.COM, INC.
CONDENSED
STATEMENTS OF
STOCKHOLDERS’ EQUITY
(Unaudited)
|
Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
|
|||||||||||||||||
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Shares
|
Amount
|
|||||||||||||||||||
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Balance January 1, 2022
|
10,722,401
|
$
|
107,224
|
$
|
29,824,242
|
$
|
(23,802,402
|
)
|
$
|
6,129,064
|
||||||||||
|
Net income
|
-
|
-
|
-
|
849,766
|
849,766
|
|||||||||||||||
|
Stock-based compensation
|
-
|
-
|
53,675
|
-
|
53,675
|
|||||||||||||||
|
Balance September 30, 2022
|
10,722,401
|
$
|
107,224
|
$
|
29,877,917
|
$
|
(22,952,636
|
)
|
$
|
7,032,505
|
||||||||||
|
Balance January 1, 2023
|
10,722,401
|
$
|
107,224
|
$
|
29,904,675
|
$
|
(22,442,164
|
)
|
$
|
7,569,735
|
||||||||||
|
Net income
|
-
|
-
|
-
|
1,105,308
|
1,105,308
|
|||||||||||||||
|
Stock-based compensation
|
-
|
-
|
75,853
|
-
|
75,853
|
|||||||||||||||
|
Balance September 30, 2023
|
10,722,401
|
$
|
107,224
|
$
|
29,980,528
|
$
|
(21,336,856
|
)
|
$
|
8,750,896
|
||||||||||
See accompanying notes to condensed financial statements.
CREDITRISKMONITOR.COM, INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND
2022
(Unaudited)
|
2023
|
2022
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net income
|
$
|
1,105,308
|
$
|
849,766
|
||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Amortization of bond discount
|
(121,798 | ) | - | |||||
|
Deferred income taxes
|
-
|
217,313
|
||||||
|
Depreciation and amortization
|
288,303
|
301,656
|
||||||
|
Operating lease right-to-use asset, net
|
8,735
|
14,795
|
||||||
|
Stock-based compensation
|
75,853
|
53,675
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
630,732
|
(147,626
|
)
|
|||||
|
Other current assets
|
(434,901
|
)
|
(157,112
|
)
|
||||
|
Other assets
|
-
|
5,530
|
||||||
|
Unexpired subscription revenue
|
(202,185
|
)
|
457,968
|
|||||
|
Accounts payable
|
(149,715
|
)
|
(172,116
|
)
|
||||
|
Accrued expenses
|
168,073
|
(2,494
|
)
|
|||||
|
Net cash provided by operating activities
|
1,368,405
|
1,421,355
|
||||||
|
Cash flows from investing activities:
|
||||||||
|
Proceeds from held-to-maturity securities – treasury bills
|
3,630,000 | - | ||||||
|
Purchase of held-to-maturity securities – treasury bills
|
(3,628,741 | ) | - | |||||
|
Purchase of property and equipment
|
(148,259
|
)
|
(196,910
|
)
|
||||
|
Net cash used in investing activities
|
(147,000
|
)
|
(196,910
|
)
|
||||
|
Net increase in cash and cash equivalents
|
1,221,405
|
1,224,445
|
||||||
|
Cash and cash equivalents at beginning of period
|
9,866,628
|
12,381,521
|
||||||
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Cash and cash equivalents at end of period
|
$
|
11,088,033
|
$
|
13,605,966
|
||||
See accompanying notes to condensed financial statements.
(1) Basis of Presentation
The accompanying unaudited condensed financial
statements of CreditRiskMonitor.com, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosure required by generally accepted accounting principles (“GAAP”) in the United States for complete financial statements have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the accompanying unaudited condensed financial statements reflect all material adjustments, including
normal recurring accruals, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented, and have been prepared in a manner consistent with the audited financial
statements for the fiscal year ended December 31, 2022.
The results of operations for the three and
nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results for an entire fiscal year.
The December 31, 2022 condensed balance sheet
has been derived from the audited financial statements at that date, but does not include all disclosures required by GAAP. These condensed financial statements should be read in conjunction with the audited financial statements and
the footnotes for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K.
(2) Recently Issued Accounting Standards
The Financial Accounting Standards Board (“FASB”) and the SEC have issued certain accounting pronouncements that will become effective in subsequent periods;
however, management does not believe that any of those pronouncements would have significantly affected the Company’s financial accounting measurements or disclosures had they been in effect during the interim periods for which condensed
financial statements are included in this quarterly report. Management also believes those pronouncements will not have a significant effect on the Company’s future financial position or results of operations.
(3) Revenue Recognition
The Company applies FASB Accounting Standards
Codification (“ASC”) 606, Revenue from Contract with Customers (“ASC 606”) to recognize revenue. ASC 606 requires an entity to apply the following five-step approach: (1) identify the
contract(s) with a customer; (2) identify each performance obligation in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation; and (5) recognize revenue when or as each
performance obligation is satisfied. The Company’s primary source of revenue is subscription income which is recognized ratably over the subscription term.
(4) Stock-Based Compensation
The Company applies ASC 718, Compensation-Stock
Compensation (“ASC 718”) to account for stock-based compensation.
The following table summarizes the stock-based compensation expense for stock
options that was recorded in the Company’s results of operations in accordance with ASC 718 for the three and nine months ended September 30:
|
3 Months Ended
September 30,
|
9 Months Ended
September 30,
|
|||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
|||||||||||||
|
Data and product costs
|
$ |
8,489
|
$ |
6,792
|
$ |
28,974
|
$ |
17,834
|
||||||||
|
Selling, general and administrative expenses
|
13,840
|
11,892
|
46,879
|
35,841
|
||||||||||||
| $ |
22,329
|
$ |
18,684
|
$ |
75,853
|
$ |
53,675
|
|||||||||
(5) Fair Value Measurements
The Company’s cash, cash equivalents and
marketable securities are stated at fair value. The carrying value of accounts receivable, other current assets, accrued expenses, and accounts payable approximates fair market value because of the short maturity of these financial
instruments.
The Company’s cash equivalents are generally
classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.
All held-to-maturity securities as of September 30, 2023 were US Treasury and federal bonds. Investments in these bonds are based
on quoted market prices in active markets, and are included in the Level 1 fair value hierarchy.
The tables below set forth the Company’s cash
and cash equivalents, as well as marketable securities as of September 30, 2023 and December 31, 2022, respectively, which are measured at fair value on a recurring basis by level within the fair value hierarchy.
|
September 30, 2023
|
||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Cash and cash equivalents
|
$
|
11,088,033
|
$
|
-
|
$
|
-
|
$
|
11,088,033
|
||||||||
| Held-to-maturity securities |
4,143,863 | - | - | 4,143,863 | ||||||||||||
| $ |
15,231,896 | $ |
- | $ |
- | $ |
15,231,896 | |||||||||
|
December 31, 2022
|
||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Cash and cash equivalents
|
$
|
9,866,628
|
$
|
-
|
$
|
-
|
$
|
9,866,628
|
||||||||
| Held-to-maturity securities | 4,028,565 | - | - | 4,028,565 | ||||||||||||
| $ |
13,895,193 | $ |
- | $ |
- | $ |
13,895,193 | |||||||||
The Company did not hold financial assets and liabilities which were recorded at fair value in the Level 2 or 3 categories as of
September 30, 2023.
The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of
future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of
certain financial instruments could result in a different fair value measurement at the reporting date.
(6) Marketable Securities
Based upon the Company’s intent and ability to hold its US Treasury and federal bond securities to maturity (which maturities range up to 12
months at purchase), such securities have been classified as held-to-maturity and are carried at amortized cost, which approximates market value. Accrued bond interest receivable as of September 30, 2023 is $8,964.
The following table summarizes the cost and fair value of marketable securities at September 30, 2023 as follows:
|
Amortized Cost
|
Gross Unrealized Gain (Loss)
|
Fair Value
|
||||||||||
|
Held-to-maturity securities
|
||||||||||||
|
US Treasuries
|
$ |
4,143,863
|
$ |
86,137
|
$ |
4,230,000
|
||||||
Maturities of marketable securities were as follows at September 30, 2023:
|
Held-to-maturity securities
|
||||
|
Due in one year or less
|
$
|
4,143,863
|
||
The Company’s investments in marketable securities consist primarily of investments in US Treasury securities and federal bonds. Market values
were determined for each individual security in the investment portfolio.
Management evaluates securities for other-than-temporary impairment at least on an annual basis, and more frequently when economic or market
concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of
the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Management has determined that no other-than-temporary impairment exists as of September 30, 2023.
(7) Net Income per Share
Basic net income per share is based on the weighted average number of common shares
outstanding. Diluted net income per share is based on the weighted average number of common shares outstanding and the dilutive effect of outstanding stock options.
|
3 Months Ended
September 30,
|
9 Months Ended
September 30,
|
|||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
|||||||||||||
|
Weighted average number of common shares outstanding –
basic
|
10,722,401
|
10,722,401
|
10,722,401
|
10,722,401
|
||||||||||||
|
Potential shares exercisable under stock option plans
|
311,950
|
237,000
|
320,697
|
237,692
|
||||||||||||
|
LESS: Shares which could be repurchased under treasury stock method
|
(234,870 | ) | (201,052 | ) | (241,855 | ) | (199,696 | ) | ||||||||
|
|
||||||||||||||||
|
Weighted average number of common shares outstanding –
diluted
|
10,799,481
|
10,758,349
|
10,801,243
|
10,760,397
|
||||||||||||
For the three and nine months ended September 30, 2023, the computation of diluted
net income per share excludes the effects of the assumed exercise of 402,100 and 402,100 options, respectively, since their inclusion would be anti-dilutive as their exercise prices were above market value.
For the three and nine months ended September 30, 2022, the computation of diluted net income per share excludes the effects of the assumed exercise of 393,200 and 393,200 options,
respectively, since their inclusion would be anti-dilutive as their exercise prices were above market value.
(8) Commitments and Contingencies
From time to time, the Company is involved in various legal proceedings arising in the ordinary course of business. The Company records a liability when it believes
that a loss will be incurred and the amount of loss or range of loss can be reasonably estimated. Based on the currently available information, the Company does not believe that there are claims or legal proceedings that would have a material
adverse effect on the business, or the condensed financial statements of the Company.
(9) Related Party Transactions
On May 1, 2023, the Company’s Board of Directors appointed Michael Flum, age 36, to serve as Chief Executive Officer and President. Michael Flum joined the Company
in June 2018 as Vice President of Operations & Alternative Data. He was appointed Chief Operating Officer in October 2019 and subsequently President in October 2020. Mr. Flum is the son of Jerome S. Flum, the Company’s former Chief Executive
Officer and current Chairman of the Board of Directors, and the brother of Joshua Flum, a Director of the Company.
(10) Supplemental Disclosures of Noncash Investing Activities
For the nine months ended September 30, 2023, there was a noncash transfer of deposits from operating activities to property and equipment in the amount of $155,700.
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Business Environment
The continuing uncertainty in the worldwide financial system has negatively impacted general business conditions. It is possible that a weakened economy could adversely affect our subscribers’
discretionary spending for financial risk information, or even their solvency, but we cannot predict whether or to what extent this will occur.
Our strategic priorities and plans for 2023 are to continue to build on the improvement initiatives underway to achieve sustainable, profitable growth.
Financial Condition, Liquidity and Capital Resources
The following table presents selected financial information and statistics as of September 30, 2023 and December 31, 2022 (dollars in thousands):
|
September 30,
2023
|
December 31,
2022
|
|||||||
|
Cash and cash equivalents
|
$
|
11,088
|
$
|
9,867
|
||||
|
Held-to-maturity securities
|
$
|
4,144
|
$
|
4,028
|
||||
|
Accounts receivable, net
|
$
|
2,875
|
$
|
3,500
|
||||
|
Working capital
|
$
|
6,633
|
$
|
5,416
|
||||
|
Cash ratio
|
0.88
|
0.78
|
||||||
|
Quick ratio
|
1.44
|
1.38
|
||||||
|
Current ratio
|
1.53
|
1.43
|
||||||
As of September 30, 2023, the Company had $11.09 million in cash and cash equivalents, an increase of approximately $1.2 million from December 31, 2022. This increase was primarily the result of cash provided by
operating activities of approximately $1.4 million offset by the net cash used in investing activities totaling approximately $147 thousand.
The main component of current liabilities at September 30, 2023 was unexpired subscription revenue of approximately $9.9 million, which should not require significant future cash outlay, as this is annual reoccurring
revenue, other than the cost of preparation and delivery of the applicable commercial credit reports, which cost much less than the unexpired subscription revenue shown. Unexpired subscription revenue is recognized as income over the subscription
term, which approximates 12 months.
The Company has no bank lines of credit or other currently available credit sources.
The Company believes that its existing balances of cash and cash equivalents and cash generated from operations will be sufficient to satisfy its anticipated cash requirements through at least the next 12 months and
the foreseeable future. Moreover, the Company has no long-term debt. However, the Company’s liquidity could be negatively affected if it were to make an acquisition or license products or technologies, which may necessitate the need to raise
additional capital through future debt or equity financing. Additional financing may not be available at all or on terms favorable to the Company.
Off-Balance Sheet Arrangements
The Company is not a party to any off-balance sheet arrangements.
Results of Operations
|
3 Months Ended September 30,
|
||||||||||||||||
|
2023
|
2022
|
|||||||||||||||
|
Amount
|
% of Total
Operating
Revenues
|
Amount
|
% of Total
Operating
Revenues
|
|||||||||||||
|
Operating revenues
|
$
|
4,792,869
|
100
|
%
|
$
|
4,547,708
|
100
|
%
|
||||||||
|
Operating expenses:
|
||||||||||||||||
|
Data and product costs
|
1,951,360
|
41
|
%
|
1,644,489
|
36
|
%
|
||||||||||
|
Selling, general and administrative expenses
|
2,439,147
|
51
|
%
|
2,230,553
|
49
|
%
|
||||||||||
|
Depreciation and amortization
|
96,216
|
2
|
%
|
100,448
|
2
|
%
|
||||||||||
|
Total operating expenses
|
4,486,723
|
94
|
%
|
3,975,490
|
87
|
%
|
||||||||||
|
Income from operations
|
306,146
|
6
|
%
|
572,218
|
13
|
%
|
||||||||||
|
Other income, net
|
188,083
|
4
|
%
|
54,581
|
1
|
%
|
||||||||||
|
Income before income taxes
|
494,229
|
10
|
%
|
626,799
|
14
|
%
|
||||||||||
|
Provision for income taxes
|
(115,552
|
)
|
(2
|
%)
|
(140,822
|
)
|
(3
|
%)
|
||||||||
|
Net income
|
$
|
378,677
|
8
|
%
|
$
|
485,977
|
11
|
%
|
||||||||
Operating revenues increased approximately $245 thousand, or 5%, for the third quarter of fiscal 2023 compared to the same period of fiscal 2022. This overall revenue growth resulted from increased subscription
service revenue from sales to new and existing subscribers as well as price increases.
Data and product costs increased approximately $307 thousand, or 19%, for the third quarter of 2023 compared to the same period of fiscal 2022. This increase was due primarily to: (1) higher costs of third-party
content, due to inflationary increases instituted by some of the Company’s suppliers, (2) additional and expanded data coverage costs to supplement new product offerings, and (3) higher salary and related employee benefits due to pay raises to
staff.
Selling, general and administrative expenses increased approximately $209 thousand, or 9%, for the third quarter of fiscal 2023 compared to the same period of fiscal 2022. This increase was primarily due to higher
salary and related employee benefits due to pay raises to staff, and higher commission expense.
Other income increased approximately $134 thousand for the third quarter of fiscal 2023 compared to the same period of fiscal 2022. This increase was primarily due to an increase in interest earned on our cash and
cash equivalents and marketable securities balance.
|
9 Months Ended September 30,
|
||||||||||||||||
|
2023
|
2022
|
|||||||||||||||
|
Amount
|
% of Total
Operating
Revenues
|
Amount
|
% of Total
Operating
Revenues
|
|||||||||||||
|
Operating revenues
|
$
|
14,066,112
|
100
|
%
|
$
|
13,335,927
|
100
|
%
|
||||||||
|
Operating expenses:
|
||||||||||||||||
|
Data and product costs
|
5,806,156
|
41
|
%
|
5,117,975
|
38
|
%
|
||||||||||
|
Selling, general and administrative expenses
|
7,050,702
|
50
|
%
|
6,864,354
|
52
|
%
|
||||||||||
|
Depreciation and amortization
|
288,303
|
2
|
%
|
301,656
|
2
|
%
|
||||||||||
|
Total operating expenses
|
13,145,161
|
93
|
%
|
12,283,985
|
92
|
%
|
||||||||||
|
Income from operations
|
920,951
|
6
|
%
|
1,051,942
|
8
|
%
|
||||||||||
|
Other income, net
|
521,630
|
4
|
%
|
66,368
|
0
|
%
|
||||||||||
|
Income before income taxes
|
1,442,581
|
10
|
%
|
1,118,310
|
8
|
%
|
||||||||||
|
Provision for income taxes
|
(337,273
|
)
|
(2
|
%)
|
(268,544
|
)
|
(2
|
%)
|
||||||||
|
Net income
|
$
|
1,105,308
|
8
|
%
|
$
|
849,766
|
6
|
%
|
||||||||
Operating revenues increased approximately $730 thousand, or 5%, for the nine months ended September 30, 2023 compared to the same period of fiscal 2022. This overall revenue growth resulted from increased
subscription service revenue from sales to new and existing subscribers as well as price increases.
Data and product costs increased approximately $688 thousand, or 13%, for the nine months ended September 30, 2023 compared to the same period of fiscal 2022. This increase was due primarily to: (1) higher costs of
third-party content, due to inflationary increases instituted by some of the Company’s suppliers, (2) additional and expanded data coverage costs to supplement new product offerings, and (3) higher salary and related employee benefits due to pay
raises to staff.
Selling, general and administrative expenses increased approximately $186 thousand, or 3%, for the nine months ended September 30, 2023 compared to the same period of fiscal 2022. This increase was primarily due to
higher salary and related employee benefits due to pay raises to staff, and higher commission expense.
Other income increased approximately $455 thousand for the nine months ended September 30, 2023 compared to the same period of fiscal 2022. This increase was primarily due to an increase in interest earned on our
cash and cash equivalents and marketable security balance.
Future Operations
The Company over time intends to expand its operations by expanding the breadth and depth of its product and service offerings and introducing new and complementary products. Gross margins attributable to new
business areas may be lower than those associated with the Company’s existing business activities.
The Company’s current and future expense levels are based largely on its investment plans and estimates of future revenues. To a large extent these costs do not vary with revenue. Sales and operating results
generally depend on the Company’s ability to attract and retain subscribers and the volume of and timing of the subscriptions for the Company’s products, which are difficult to forecast. The Company may be unable to adjust spending in a timely
manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues in relation to the Company’s planned expenditures would have an immediate adverse effect on the Company’s business, prospects, financial
condition and results of operations. Further, as a strategic response to changes in the competitive environment, the Company may from time to time make certain pricing, service, marketing or acquisition decisions that could have a material adverse
effect on its business, prospects, financial condition and results of operations.
Achieving greater profitability depends on the Company’s ability to generate and sustain increased revenue levels. The Company believes that its success will depend in large part on its ability to (i) increase its
brand awareness, (ii) provide its subscribers with outstanding value, thus encouraging renewals, and (iii) achieve sufficient sales volume to realize economies of scale. Accordingly, the Company intends to continue to increase the size of its sales
force and service staff, and to invest in product development, operating infrastructure, marketing and promotion. The Company believes that these expenditures will help it to sustain the revenue growth it has experienced over the last several
years. We anticipate that sales and marketing expenses will continue to increase in dollar amount and as a percentage of revenues into 2024 and future periods as the Company continues to expand its business on a worldwide basis. Further, the
Company expects that product development expenses will also continue to increase in dollar amount and may increase as a percentage of revenues into 2024 and future periods because it expects to employ more development personnel on average compared
to prior periods and build the infrastructure required to support the development of new and improved products and services. However, as some of these expenditures are discretionary in nature, the Company expects that the actual amounts incurred
will be in line with its projections of future cash flows in order not to negatively impact its future liquidity and capital needs. There can be no assurance that the Company will be able to achieve these objectives within a meaningful time frame.
The Company expects to experience fluctuations in its future quarterly operating results due to a variety of factors, some of which are outside the Company’s control. Factors that may adversely affect the Company’s
quarterly operating results include, among others, (i) the Company’s ability to retain existing subscribers, attract new subscribers at a steady rate and maintain customer satisfaction, (ii) the Company’s ability to maintain gross margins in its
existing business and in future product lines and markets, (iii) the development of new services and products by the Company and its competitors, (iv) price competition, (v) the Company’s ability to obtain products and services from its vendors,
including information suppliers, on commercially reasonable terms, (vi) the Company’s ability to upgrade and develop its systems and infrastructure, and adapt to technological change, (vii) the Company’s ability to attract and retain personnel in a
timely and effective manner, (viii) the Company’s ability to manage effectively its development of new business segments and markets, (ix) the Company’s ability to successfully manage the integration of operations and technology of acquisitions or
other business combinations, (x) technical difficulties, system downtime, cybersecurity breaches, or Internet brownouts, (xi) the amount and timing of operating costs and capital expenditures relating the Company’s business, operations and
infrastructure, (xii) governmental regulation and taxation policies, (xiii) disruptions in service by common carriers due to strikes or otherwise, (xiv) risks of fire or other casualty, (xv) litigation costs or other unanticipated expenses, (xvi)
interest rate risks and inflationary pressures, and (xvii) general economic conditions and economic conditions specific to the Internet and online commerce.
Due to the foregoing factors, the Company believes that period-to-period comparisons of its revenues and operating results are not necessarily meaningful and should not be relied on as an indication of future
performance.
Forward-Looking Statements
This Quarterly Report on Form 10-Q may contain forward-looking statements, including statements regarding future prospects, industry trends, competitive conditions and litigation issues. Any statements contained
herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes”, “expects”, “anticipates”, “plans” or words of similar meaning are intended to identify
forward-looking statements. This notice is intended to take advantage of the “safe harbor” provided by the Private Securities Litigation Reform Act of 1995 with respect to such forward-looking statements. These forward-looking statements involve a
number of risks and uncertainties. Among others, factors that could cause actual results to differ materially from the Company’s beliefs or expectations are those listed under “Business Environment” and “Results of Operations” and other factors
referenced herein or from time to time as “risk factors” or otherwise in the Company’s Registration Statements or Securities and Exchange Commission reports. The Company disclaims any intention or obligation to revise any forward-looking statement,
whether as a result of new information, a future event or otherwise.
| Item 4. |
Controls and Procedures
|
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term
is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective to ensure that all material information required to be disclosed by us in reports that we file or submit under the Exchange Act is
accumulated and communicated to them as appropriate to allow timely decisions regarding required disclosure and that all such information is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and
forms.
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the
most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Limitations of the Effectiveness of Internal Control
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any
internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.
PART II. OTHER INFORMATION
| Item 6. |
Exhibits
|
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
CREDITRISKMONITOR.COM, INC.
|
|
|
(REGISTRANT)
|
|
|
Date: November 14, 2023
|
By: /s/ Steven Gargano
|
| |
Steven Gargano |
| |
Senior Vice President & Chief Financial Officer |
| |
(Principal Accounting Officer) |
18