ACCESS NEWSWIRE INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
FORM 10-Q
———————
☑
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended: June 30, 2019
or
☐
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from: _____________ to _____________
ISSUER DIRECT CORPORATION
(Exact
name of registrant as specified in its charter)
———————
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Delaware
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1-10185
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26-1331503
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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500 Perimeter Park Drive, Suite D, Morrisville NC
27560
(Address of Principal Executive Office) (Zip Code)
(919) 481-4000
(Registrant’s telephone number, including area
code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
———————
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
and posted on its corporate website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such
files). Yes
☑
No
☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, 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. (Check
one):
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Large
accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☐
(Do not check if a smaller reporting
company)
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Smaller
reporting company
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☒
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Emerging
growth company
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☐
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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
in Rule 12b-2 of the Act) Yes
☐
No
☑
Indicate
the number of shares outstanding of each of the issuer’s
classes of common stock, as of the latest practicable date
3,862,568 shares of common stock were issued and outstanding as of
August 1, 2019.
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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Common Stock, par value $0.001
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ISDR
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NYSE American
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
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3
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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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18
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27
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27
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PART II – OTHER INFORMATION
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28
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28
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28
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28
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28
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28
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28
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29
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2
PART I – FINANCIAL INFORMATION
I
SSUER DIRECT CORPORATION
CONSOLIDATED BALANCE SHEETS
(in
thousands, except share and per share amounts)
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June
30,
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December
31,
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2019
|
2018
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ASSETS
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(unaudited)
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Current
assets:
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Cash
and cash equivalents
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$
15,196
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$
17,222
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Accounts
receivable (net of allowance for doubtful accounts of $1,028 and
$534, respectively)
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2,422
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1,593
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Income
tax receivable
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163
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90
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Other
current assets
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250
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89
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Total
current assets
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18,031
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18,994
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Capitalized
software (net of accumulated amortization of $1,720 and $1,310,
respectively)
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1,567
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1,957
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Fixed
assets (net of accumulated depreciation of $468 and $452,
respectively)
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64
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132
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Other
long-term assets
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240
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35
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Goodwill
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6,051
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5,032
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Intangible
assets (net of accumulated amortization of $4,601 and $4,219,
respectively)
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4,176
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2,802
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Total assets
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$
30,129
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$
28,952
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current
liabilities:
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Accounts
payable
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$
438
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$
371
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Accrued
expenses
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613
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577
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Current
portion of note payable
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320
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320
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Income
taxes payable
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30
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83
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Deferred
revenue
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1,624
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1,249
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Total
current liabilities
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3,025
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2,600
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Note
payable – long-term (net of discount of $32 and $45,
respectively)
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288
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276
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Deferred
income tax liability
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419
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413
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Other
long-term liabilities
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62
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—
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Total liabilities
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3,794
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3,289
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Commitments
and contingencies
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Stockholders'
equity:
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Preferred
stock, $0.001 par value, 1,000,000 shares authorized, no shares
issued and outstanding as of June 30, 2019 and December 31, 2018,
respectively.
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—
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—
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Common
stock $0.001 par value, 20,000,000 shares authorized, 3,862,568 and
3,829,572 shares issued and outstanding as of June 30, 2019 and
December 31, 2018, respectively.
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4
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4
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Additional
paid-in capital
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22,793
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22,525
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Other
accumulated comprehensive loss
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(30
)
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(17
)
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Retained
earnings
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3,568
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3,151
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Total stockholders' equity
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26,335
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25,663
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Total liabilities and stockholders’ equity
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$
30,129
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$
28,952
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The
accompanying notes are an integral part of these unaudited
financial statements.
3
I
SSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in
thousands, except share and per share amounts)
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For the Three
Months Ended
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For the Six Months
Ended
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June
30,
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June
30,
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June
30,
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June
30,
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2019
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2018
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2019
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2018
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Revenues
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$
4,138
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$
3,799
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$
8,317
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$
7,329
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Cost of
revenues
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1,250
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1,030
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2,552
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2,051
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Gross
profit
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2,888
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2,769
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5,765
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5,278
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Operating costs and
expenses:
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General and
administrative
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1,322
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948
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2,683
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1,952
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Sales and marketing
expenses
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875
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799
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1,695
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1,549
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Product
development
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343
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285
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680
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583
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Depreciation and
amortization
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218
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142
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430
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284
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Total operating
costs and expenses
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2,758
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2,174
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5,488
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4,368
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Operating
income
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130
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595
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277
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910
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Interest
income (expense), net
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115
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(5
)
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186
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(10
)
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Net income before
income taxes
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245
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590
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463
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900
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Income tax
expense
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33
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224
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46
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214
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Net
income
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$
212
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$
366
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$
417
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$
686
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Income per share
– basic
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$
0.05
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$
0.12
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$
0.11
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$
0.22
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Income per share
– fully diluted
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$
0.05
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$
0.12
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$
0.11
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$
0.22
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Weighted average
number of common shares outstanding – basic
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3,857
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3,074
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3,854
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3,055
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Weighted average
number of common shares outstanding – fully
diluted
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3,873
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3,137
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3,871
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3,123
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The
accompanying notes are an integral part of these unaudited
financial statements.
4
I
SSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in
thousands)
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For the Three
Months Ended
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For the Six Months
Ended
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||
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June
30,
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June
30,
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June
30,
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June
30,
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2019
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2018
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2019
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2018
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Net
income
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$
212
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$
366
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$
417
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$
686
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Foreign
currency translation adjustment
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(10
)
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(76
)
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(13
)
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(33
)
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Comprehensive
income
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$
202
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$
290
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$
404
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$
653
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The
accompanying notes are an integral part of these unaudited
financial statements.
5
I
SSUER DIRECT CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in
thousands, except share and per share amounts)
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Common
Stock
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Additional
Paid-in
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Other
Accumulated
Comprehensive
Income
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Retained
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Total
Stockholders’
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Shares
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Amount
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Capital
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(Loss)
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Earnings
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Equity
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Balance at
December 31, 2017
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3,014,494
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$
3
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$
10,400
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$
34
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$
2,774
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$
13,211
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Stock-based compensation
expense
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—
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—
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142
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—
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—
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142
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Exercise of stock awards, net of
tax
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47,626
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—
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161
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—
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—
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161
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Foreign currency
translation
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—
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—
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—
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43
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—
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43
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Dividends
|
|
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(152
)
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(152
)
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Net income
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—
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—
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—
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—
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320
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320
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Balance at March
31, 2018
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3,062,120
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$
3
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$
10,703
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$
77
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$
2,942
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$
13,725
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Stock-based compensation
expense
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—
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—
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144
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—
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—
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144
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Exercise of stock awards, net of
tax
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41,250
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—
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549
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—
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—
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549
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Foreign currency
translation
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—
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—
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—
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(76
)
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—
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(76
)
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Dividends
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—
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—
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—
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—
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(153
)
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(153
)
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Net income
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—
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—
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—
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—
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366
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366
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Balance at June
30, 2018
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3,103,370
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$
3
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$
11,396
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$
1
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$
3,155
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$
14,555
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Balance at
December 31, 2018
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3,829,572
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$
4
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$
22,525
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$
(17
)
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$
3,151
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$
25,663
|
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Stock-based compensation
expense
|
—
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—
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137
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—
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—
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137
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Exercise of stock awards, net of
tax
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24,996
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—
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—
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—
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—
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—
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Foreign currency
translation
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—
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—
|
—
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(3
)
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—
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(3
)
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Net income
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—
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—
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—
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—
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205
|
205
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Balance at March
31, 2019
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3,854,568
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$
4
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$
22,662
|
$
(20
)
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$
3,356
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$
26,002
|
|
Stock-based compensation
expense
|
—
|
—
|
131
|
—
|
—
|
131
|
|
Exercise of stock awards, net of
tax
|
8,000
|
—
|
—
|
—
|
—
|
—
|
|
Foreign currency
translation
|
—
|
—
|
—
|
(10
)
|
—
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(10
)
|
|
Net income
|
—
|
—
|
—
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—
|
212
|
212
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Balance at June
30, 2019
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3,862,568
|
$
4
|
$
22,793
|
$
(30
)
|
$
3,568
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$
26,335
|
The
accompanying notes are an integral part of these consolidated
financial statements.
6
I
SSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
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For the
Six Months Ended
|
|
|
|
June
30,
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June
30,
|
|
|
2019
|
2018
|
|
Cash flows from operating activities:
|
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Net
income
|
$
417
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$
686
|
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Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
and amortization
|
831
|
680
|
|
Bad
debt expense
|
555
|
93
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Deferred
income taxes
|
6
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(17
)
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Non-cash
interest expense (See Note 3)
|
13
|
13
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Stock-based
compensation expense
|
268
|
286
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Decrease
(increase) in accounts receivable
|
(1,384
)
|
(467
)
|
|
Decrease
(increase) in other assets
|
(266
)
|
194
|
|
Increase
(decrease) in accounts payable
|
67
|
(304
)
|
|
Increase
(decrease) in accrued expenses and other liabilities
|
(87
)
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31
|
|
Increase
(decrease) in deferred revenue
|
375
|
394
|
|
Net
cash provided by operating activities
|
795
|
1,589
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
Purchase
of VisualWebcaster Platform
|
(2,788
)
|
—
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Capitalized
software
|
(20
)
|
—
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Purchase
of fixed assets
|
(6
)
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(39
)
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Net
cash used in investing activities
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(2,814
)
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(39
)
|
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|
|
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Cash flows from financing activities:
|
|
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Proceeds
from exercise of stock options, net of income taxes
|
—
|
709
|
|
Payment
of dividends
|
—
|
(305
)
|
|
Net
cash provided by (used in) financing activities
|
—
|
404
|
|
|
|
|
|
Net
change in cash
|
(2,019
)
|
1,954
|
|
Cash
– beginning
|
17,222
|
4,917
|
|
Currency
translation adjustment
|
(7
)
|
(37
)
|
|
Cash
– ending
|
$
15,196
|
$
6,834
|
|
|
|
|
|
Supplemental disclosures:
|
|
|
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Cash
paid for income taxes
|
$
128
|
$
31
|
|
Non-cash
activities:
|
|
|
|
Right-of-use
assets obtained in exchange for lease liabilities
|
$
260
|
$
—
|
The
accompanying notes are an integral part of these unaudited
financial statements.
7
I
SSUER DIRECT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
The
unaudited interim consolidated balance sheet as of June 30, 2019
and statements of income, comprehensive income, stockholders’
equity, and cash flows for the three and six-month periods ended
June 30, 2019 and 2018 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 2018 audited
financial statements of Issuer Direct Corporation (the
“Company”, “We”, or “Our”)
filed on Form 10-K.
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
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 and restricted
stock units totaling 115,000 and 41,000 were excluded in the
computation of diluted earnings per common share during the three
and six-month periods ended June 30, 2019 and 2018, respectively,
because their impact was anti-dilutive.
Revenue Recognition
Substantially all
of the Company’s revenue comes from contracts with customers
for subscriptions to its cloud-based products or contracts to
perform compliance or other services. Customers consist primarily
of corporate issuers and professional firms, such as investor
relations and public relations firms. In the case of our news
distribution and webcasting offerings, our 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 our entire
platform or certain modules within our platform, 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) Platform and Technology and ii) Services.
Performance obligations of Platform and Technology contracts
include providing subscriptions to certain modules or the entire
Platform
id.
system, distributing press releases on a per release basis or
conducting webcasts on a per event basis. Performance obligations
of Service contracts include obligations to deliver compliance
services and annual report printing and distribution on either a
stand ready obligation or on a per project or event basis. Set up
fees for compliance services are considered a separate performance
obligation and are satisfied upfront. Set up fees for our 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 of 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.
8
The
Company recognizes revenue for subscriptions evenly over the
contract period, upon distribution for per-release contracts and
upon event completion for webcasting 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 services. If a
standalone selling price is not directly observable, the Company
uses the residual method to allocate any remaining costs to that
subscription or service. The Company regularly reviews standalone
selling prices 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 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 ratably over the billing period.
Deferred revenue as of June 30, 2019 and December 31, 2018 was
$1,624,000 and $1,249,000, respectively, and is expected to be
recognized within one year. Revenue recognized for the six months
ended June 30, 2019 and 2018, that was included in the deferred
revenue balance at the beginning of each reporting period, was
approximately $785,000 and $714,000, respectively. Accounts
receivable related to contracts with customers was $2,422,000 and
$1,593,000 as of June 30, 2019 and December 31, 2018, respectively.
Since substantially all of 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 June 30, 2019 and December 31, 2018, the Company
has capitalized $21,000 and $18,000 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.
Allowance for Doubtful Accounts
We
provide an allowance for doubtful accounts, which is based upon a
review of outstanding receivables as well as historical collection
information. Credit is granted on an unsecured basis. In
determining the amount of the allowance, management is required to
make certain estimates and assumptions. The allowance is made up of
specific reserves, as deemed necessary, on customer account
balances, and a reserve based on our historical
experience.
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, we recognize the impact of a tax position,
only if it is more likely than not of being sustained upon
examination, based on the technical merits of the position. Our
policy regarding the classification of interest and penalties is to
classify them as income tax expense in our financial statements, if
applicable. At the end of each interim period, we estimate the
effective tax rate we expect to be applicable for the full year and
this rate is applied to our results for the interim year-to-date
period and then adjusted for any discrete period
items.
9
Capitalized Software
Costs
incurred to develop our 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.
Costs related to design or maintenance of the software are expensed
as incurred. Capitalized costs and amortization for the three and
six-month periods ended June 30, 2019 and 2018, are as follows (in
thousands):
|
|
For the Three
Months Ended
|
For the Six
Months Ended
|
||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
Capitalized
software development costs
|
$
20
|
$
—
|
$
20
|
$
—
|
|
Amortization
included in cost of revenues
|
201
|
198
|
401
|
396
|
|
Amortization
included in depreciation and amortization
|
5
|
2
|
9
|
5
|
Lease Accounting
We
determine if an arrangement is a lease at inception. Our operating
lease agreements are primarily for office space and are included
within operating lease right-of-use (“ROU”) assets and
operating lease liabilities on the consolidated balance
sheets.
ROU
assets represent our right to use an underlying asset for the lease
term and lease liabilities represent our 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. Our variable lease payments
consist of non-lease services related to the lease. 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 our leases do not provide an
implicit rate, we use our incremental borrowing rate based on the
information available at commencement date in determining the
present value of lease payments. ROU assets also include any lease
payments made 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
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. Our 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. Generally, this includes
debt and equity securities that are not traded in an active
market.
●
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
June 30, 2019 and December 31, 2018, we believe that the fair value
of our financial instruments other than cash and cash equivalents,
such as, accounts receivable, our line of credit, notes payable,
and accounts payable approximate their carrying
amounts.
10
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
We
account for business combinations under FASB ASC No. 805 –
Business Combinations and the related acquired intangible assets
and goodwill under FASB ASC No. 350 – Intangibles –
Goodwill and Other. The authoritative guidance for business
combinations specifies the criteria for recognizing and reporting
intangible assets apart from goodwill. We record the assets
acquired and liabilities assumed in business combinations at their
respective fair values at the date of acquisition, with any excess
purchase price recorded as goodwill. Goodwill is an asset
representing the future economic benefits arising from other assets
acquired in a business combination that are not individually
identified and separately recognized. Intangible assets consist of
client relationships, customer lists, 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 are considered an
indefinite-lived asset and, as such, are not amortized as there is
no foreseeable limit to cash flows generated from them. The
goodwill and intangible assets are assessed annually for
impairment, or whenever conditions indicate the asset may be
impaired, and any such impairment will be recognized in the period
identified. The client relationships (7-10 years), customer lists
(3 years), distribution partner relationships (10 years),
non-compete agreements (5 years) and software and technology (3-6
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 costs as incurred, except for
direct-response advertising, which is capitalized and amortized
over its expected period of future benefits.
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 is
required to provide service in exchange for the award.
Recently adopted accounting pronouncements
In
February 2016, the FASB established Topic 842, Leases, by issuing
Accounting Standards Update (ASU) No. 2016-02, which requires
lessees to recognize leases on-balance sheet and disclose key
information about leasing arrangements. Topic 842 was subsequently
amended by ASU No. 2018-01, Land Easement Practical Expedient for
Transition to Topic 842; ASU No. 2018-10, Codification Improvements
to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements.
The new standard establishes a right-of-use model that requires a
lessee to recognize an ROU asset and lease liability on the balance
sheet for all leases with a term longer than 12 months. Leases will
be classified as finance or operating, with classification
affecting the pattern and classification of expense recognition in
the income statement.
11
The new
standard is effective for the Company on January 1, 2019, which is
also the day we elected to adopt the new standard. A modified
retrospective transition approach is required, applying the new
standard to all leases existing at the date of initial application.
We chose the effective date as our date of initial application.
Consequently, financial information will not be updated and the
disclosures required under the new standard will not be provided
for dates and periods before January 1, 2019. We elected the
package of practical expedients permitted under the transition
guidance within the new standard, which among other things, allowed
us to carry forward the historical lease classification of those
leases in place as of January 1, 2019. See the table below for the
impact of adoption of the lease standard on our balance sheet
accounts as of the day of adoption, January 1, 2019 ($ in
000’s):
|
|
As Previously
Reported
|
New Lease
Standard Adjustment
|
As
Adjusted
|
|
ROU
asset
|
$
-
|
$
102
|
$
102
|
|
Lease
liability
|
-
|
135
|
135
|
|
Deferred
rent
|
33
|
(33
)
|
-
|
Note 3: Recent Acquisitions
Acquisition of the VisualWebcaster Platform
(“VWP”)
On
January 3, 2019 (the “Closing Date”), the Company
entered into an Asset Purchase Agreement (the “VWP
Agreement”) with Onstream Media Corporation, a Florida
corporation (the “Seller”), whereby the Company
purchased certain assets related primarily to customer accounts,
intellectual property, lease deposits and assumed certain existing
contractual obligations related primarily to data processing and
storage, bandwidth and facility leases relating to the
Seller’s VisualWebcaster Platform ("VWP”) for a
purchase price of $2,788,000 paid as of the Closing Date. The
accounts receivable and the accounts payable related to VWP and
existing as of the Closing Date were not included as part of the
VWP Agreement.
The
acquisition was accounted for under the acquisition method of
accounting for business combinations, which requires, among other
things, that the assets acquired and liabilities assumed be
recognized at their fair values as of the acquisition date.
Acquisition-related costs, which totaled approximately $155,000,
are not included as a component of the acquisition accounting, but
are recognized as expenses in the periods in which the costs are
incurred. Any changes within the measurement period resulting from
facts and circumstances that existed as of the acquisition date may
result in retrospective adjustments to the provisional amounts
recorded at the acquisition date. The Company employed a third
party valuation firm to assist in determining the preliminary
purchase price allocation of assets and liabilities acquired from
Seller. The valuation resulted in the tangible and intangible
assets and liabilities disclosed below. The income approach was
used to determine the value of the customer relationships and
non-compete agreement. The income approach determines the fair
value for the asset based on the present value of cash flows
projected to be generated by the asset. Projected cash flows are
discounted at a rate of return that reflects the relative risk of
achieving the cash flow and the time value of money. Projected cash
flows considered multiple factors, including current revenue from
existing customers; analysis of expected revenue and attrition
trends; reasonable contract renewal assumptions from the
perspective of a marketplace participant; probability of executives
competing, expected profit margins giving consideration to
marketplace synergies; and required returns to contributory assets.
The relief from royalty method was used to value the technology.
The relief from royalty method determines the fair value by
calculating what a typical license fee would be in order to obtain
the same or similar license of the technology from market
participants. Projected cash flows consider revenue assumptions
allocated to the technology.
The
transaction consisted of a single cash payment to the Seller in the
amount of $2,788,000. In connection with the acquisition, the
Company assumed two short-term leases associated with an office and
co-location for certain computer equipment in New York City, New
York as well as entered into a three-year office lease in Florida.
In addition to the intangible assets listed below, the purchase
price included lease deposits of $13,000 and a right of use asset
and corresponding lease liability for the office lease in Florida
in the amount of $125,000.
The
preliminary identified intangible assets as a result of the
acquisition are as follows (in 000’s):
|
Customer
relationships
|
$
1,190
|
|
Technology
|
497
|
|
Non-compete
agreement
|
69
|
|
Goodwill
|
1,019
|
|
|
$
2,775
|
12
Select Pro-Forma Financial Information (Unaudited)
The
following represents our unaudited condensed pro-forma financial
results as if the VWP acquisition had occurred as of January 1,
2018. Unaudited condensed pro-forma results are based upon
accounting estimates and judgments that we believe are reasonable.
The condensed pro-forma results are not necessarily indicative of
the actual results of our operations had the acquisitions occurred
at the beginning of the period presented, nor does it purport to
represent the results of operations for future
periods.
|
$
in 000’s
|
Three months
ended
June
30,
2018
|
Six months
ended
June
30,
2018
|
|
|
|
|
|
Revenues
|
$
4,400
|
$
8,524
|
|
Net
Income
|
$
436
|
$
763
|
|
Basic earnings per
share
|
$
0.14
|
$
0.25
|
|
Diluted earnings
per share
|
$
0.14
|
$
0.24
|
Acquisition of Filing Services Canada Inc.
(“FSCwire”)
On July
3, 2018, the Company entered into a Stock Purchase Agreement (the
“FSCwire Agreement”) with the sole shareholder of
FSCwire, a company incorporated under the Business Corporations Act
(Alberta), whereby the Company purchased all of the outstanding
equity securities of FSCwire. Under the terms of the FSCwire
Agreement, the Company paid $1,140,000 at closing ($180,000 of
which was paid into an escrow account to cover standard
representations and warranties included within the FSCwire
Agreement) and issued 3,402 shares of restricted common stock of
the Company.
The
acquisition was accounted for under the acquisition method of
accounting for business combinations, which requires, among other
things, that the assets acquired and liabilities assumed be
recognized at their fair values as of the acquisition date.
Acquisition-related costs, which totaled approximately $52,000, are
not included as a component of the acquisition accounting, but are
recognized as expenses in the periods in which the costs are
incurred. Any changes within the measurement period resulting from
facts and circumstances that existed as of the acquisition date may
result in retrospective adjustments to the provisional amounts
recorded at the acquisition date. During the year ended December
31, 2018, the Company employed a third party valuation firm to
assist in determining the purchase price allocation of assets and
liabilities acquired from FSCwire. The valuation resulted in the
tangible and intangible assets and liabilities disclosed below. The
income approach was used to determine the value of FSCwire’s
customer relationships and the relief from royalty method was used
to value the distribution partner relationships.
The
transaction resulted in recording intangible assets and goodwill at
a fair value of $1,426,000 as follows (in
000’s):
|
Initial cash
payment
|
$
1,140
|
|
Fair value of
restricted common stock issued
|
62
|
|
Total
Consideration
|
1,202
|
|
Plus: excess of
liabilities assumed over assets acquired
|
224
|
|
Total fair value of
FSCwire intangible assets and goodwill
|
$
1,426
|
13
The
tangible assets and liabilities acquired were as follows (in
000’s):
|
Cash
|
$
17
|
|
Accounts
receivable, net
|
42
|
|
Total
assets
|
59
|
|
|
|
|
Accounts payable
and accrued expenses
|
35
|
|
Deferred
revenue
|
78
|
|
Deferred tax
liability
|
170
|
|
Total
liabilities
|
283
|
|
Excess of
liabilities assumed over assets acquired
|
$
(224
)
|
The
identified intangible assets as a result of the acquisition are as
follows (in 000’s):
|
Customer
relationships
|
$
311
|
|
Distribution
partner relationships
|
153
|
|
Goodwill
|
962
|
|
|
$
1,426
|
The
Company has elected not to provide unaudited pro forma financial
information for the FSCwire acquisition, because the acquisition
was not considered a significant acquisition in accordance with
Rule 3-05 of the SEC's Regulation S-X.
Note 4: Stock Options and Restricted Stock Units
2014 Equity Incentive Plan
On May
23, 2014, the shareholders of the Company approved the 2014 Equity
Incentive Plan (the “2014 Plan”). Under the terms of
the 2014 Plan, the Company is authorized to issue incentive awards
for common stock up to 200,000 shares to employees and other
personnel. On June 10, 2016, the shareholders of the Company
approved an additional 200,000 awards to be issued under the 2014
Plan, bringing the total number of shares to be awarded to 400,000.
The awards may be in the form of incentive stock options,
nonqualified stock options, restricted stock, restricted stock
units and performance awards. The 2014 Plan is effective through
March 31, 2024. As of June 30, 2019, there are 27,500 shares which
remain to be granted under the 2014 Plan.
The
following table summarizes information about stock options
outstanding and exercisable at June 30, 2019:
|
|
Options
Outstanding
|
Options
Exercisable
|
||
|
Exercise Price
Range
|
Number
|
Weighted
Average
Remaining
Contractual
Life (in
Years)
|
Weighted
Average
Exercise
Price
|
Number
|
|
$
0.01 - 7.00
|
10,000
|
6.39
|
$
6.80
|
10,000
|
|
$
7.01 - 8.00
|
20,313
|
4.24
|
$
7.76
|
20,313
|
|
$
8.01 - 12.00
|
4,250
|
5.49
|
$
9.26
|
4,250
|
|
$
12.01 - 15.00
|
57,000
|
8.87
|
$
13.09
|
32,000
|
|
$
15.01 - 17.40
|
32,000
|
8.92
|
$
17.40
|
32,000
|
|
Total
|
123,563
|
7.81
|
$
12.69
|
98,563
|
As of
June 30, 2019, the Company had unrecognized stock compensation
related to the options of $117,000, which will be recognized
through 2021.
During
the three and six months ended June 30, 2019, the Company granted
24,000 and 46,000 restricted stock units with an intrinsic value of
$11.27 and $11.57, respectively, to certain employees and board
members of the Company. The vesting period for the restricted stock
units varies between one and three years. During the three and six
months ended June 30, 2019, 8,000 and 33,000 restricted stock units
with an intrinsic value of $17.40 and $8.62 vested. As of June 30,
2019, there was $478,000 of unrecognized compensation cost related
to our unvested restricted stock units, which will be recognized
through 2021.
14
Note 5: Income taxes
We
recognized income tax expense of $33,000 and $46,000 for the three
and six-month periods ended June 30, 2019, compared to $224,000 and
$214,000 during the same periods of 2018, respectively. At the end
of each interim period, we estimate the effective tax rate we
expect to be applicable for the full fiscal year and this rate is
applied to our results for the year-to-date period, and then
adjusted for any discrete period items. For the three and six-month
periods ended June 30, 2019 and 2018, the variance between the
Company’s effective tax rate and the U.S. statutory rate of
21% is primarily attributable to stock-based compensation tax
(shortfall)/benefit of ($11,000) and $24,000, respectively,
recognized in income tax expense during the periods, as well as,
tax credits offset by state income taxes. For the three- month
period ended June 30, 2018, the variance between the U.S. statutory
rate and the Company’s effective rate is primarily
attributable to additional expense as a result of a tax shortfall
associated with stock-based compensation in the amount of $68,000,
offset by foreign statutory rate differentials and tax credits. For
the six-month period ended June 30, 2018, the Company’s
effective tax rate was in-line with the statutory rate plus
additional state taxes.
Note 6: Leases
As
described further in "Note 2. Summary of Significant Accounting
Policies", we adopted Topic 842 as of January 1, 2019. Prior period
amounts have not been adjusted and continue to be reported in
accordance with our historic accounting under Topic
840.
Generally, our
leasing activity consists of office leases. As of January 1, 2019,
we had three existing leases for office space. In October 2015, we
signed a three-year lease extension for our 16,059 square-foot
corporate headquarters in Morrisville, NC. This lease expires on
October 31, 2019 and as of January 1, 2019, we had remaining
minimum lease payments of $135,000. An ROU asset and corresponding
lease liability was recorded for this amount on January 1,
2019.
Additionally, we
have an office in Salt Lake City, Utah and a shared office facility
in London, England, both of which are on short-term leases that are
less than twelve months. As a result, we have elected the
short-term lease recognition exemption for our Utah and London
office leases, which means, for those leases that qualify, we will
not recognize ROU assets or lease liabilities.
In
connection with the Company’s acquisition of VWP (See Note
3), the Company assumed two short term leases in New York City, NY
and entered into a three-year office lease in Florida. We have
elected the short term lease exemption for the two New York leases.
For the Florida lease, which was signed on January 4, 2019, we
recognized a ROU asset and corresponding lease liability of
$125,000, which represents the present value of minimum lease
payments discounted at 4.25%, the Company’s incremental
borrowing rate at lease inception.
ROU
assets totaled $145,000 as of June 30, 2019 and are included in
Other long-term assets on the Consolidated balance sheets. Lease
liabilities totaled $159,000 as of June 30, 2019. The current
portion of this liability of $97,000 is included in accrued
expenses on the Consolidated balance sheets and the long-term
portion of $62,000 is included in other long-term 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 Six
Months Ended
|
||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|
|
2019
|
2018
|
2019
|
2018
|
|
Lease expense
|
|
|
|
|
|
Operating
lease expense
|
$
42
|
$
30
|
$
83
|
$
59
|
|
Variable
lease expense
|
34
|
20
|
58
|
40
|
|
Rent
expense
|
$
76
|
$
50
|
$
141
|
$
99
|
15
The
weighted-average remaining non-cancelable lease term for our
operating leases was 1.4 years as of June 30, 2019. As of June 30,
2019, the weighted-average discount rate used to determine the
lease liability was 4.25%. The future minimum lease payments to be
made under noncancelable operating leases at June 30, 2019, are as
follows (in 000’s):
|
Year
Ended December 31:
|
|
|
2019
|
$
75
|
|
2020
|
43
|
|
2021
|
45
|
|
Total lease
payments
|
$
163
|
|
Present
value adjustment
|
(4
)
|
|
Lease
liability
|
159
|
In
March 2019, we signed a new lease to move our corporate
headquarters to Raleigh, North Carolina. As we continue our
transition from a services based company to a cloud-based platform
company, the new lease affords us the ability to separate our
warehouse from our corporate office. The new lease, which is
scheduled to commence at the later of the date tenant improvements
are completed (as defined in the lease) or August 1, 2019, is for
9,766 square feet and has a term of eight years and four months.
Minimum lease payments are $2,997,000, not including a tenant
improvement allowance up to $488,000, which will be reflected in
the balance sheet upon lease commencement date.
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.
Note 7: Revenue
We
consider ourselves to be in a single reportable segment under the
authoritative guidance for segment reporting, specifically a
shareholder communications and compliance company for publicly
traded and private companies. Revenue is attributed to a particular
geographic region based on where subscriptions are sold or the
services are performed. The following tables present revenue
disaggregated by revenue stream and geography in
(000’s):
|
|
Three months ended
June
30,
|
|||
|
Revenue Streams
|
2019
|
2018
|
||
|
Platform
and Technology
|
$
2,661
|
64.3
%
|
$
2,246
|
59.1
%
|
|
Services
|
1,477
|
35.7
%
|
1,553
|
40.9
%
|
|
Total
|
$
4,138
|
100.0
%
|
$
3,799
|
100.0
%
|
|
|
Six months ended
June
30,
|
|||
|
Revenue Streams
|
2019
|
2018
|
||
|
Platform
and Technology
|
$
5,326
|
64.0
%
|
$
4,277
|
58.4
%
|
|
Services
|
2,991
|
36.0
%
|
3,052
|
41.6
%
|
|
Total
|
$
8,317
|
100.0
%
|
$
7,329
|
100.0
%
|
|
|
Three months
ended
|
Six months
ended
|
||
|
|
June
30,
|
June
30,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
Geographic region
|
|
|
|
|
|
North
America
|
$
3,993
|
$
3,599
|
$
8,020
|
$
6,922
|
|
Europe
|
145
|
200
|
297
|
407
|
|
Total
revenues
|
$
4,138
|
$
3,799
|
$
8,317
|
$
7,329
|
16
No
customers accounted for more than 10% of the operating revenues
during the three-month periods ended June 30, 2019 or
2018.
We
believe we did not have any financial instruments that could have
potentially subjected us to significant concentrations of credit
risk for any relevant period.
Note 8: Line of Credit
Effective October
4, 2018, the Company renewed its Line of Credit, which increased
the amount of funds available for borrowing from $2,500,000 to
$3,000,000. The interest rate was reduced from LIBOR plus 2.50% to
LIBOR plus 1.75%. As of June 30, 2019, the interest rate was 4.14%
and the Company did not owe any amounts on the Line of
Credit.
17
I
TEM 2. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The discussion of the financial condition and results of operations
of the Company set forth below should be read in conjunction with
the consolidated financial statements and related notes thereto
included elsewhere in this Form10-Q. This Form10-Q contains
forward-looking statements that involve risks and uncertainties.
The statements contained in this Form10-Q that are not purely
historical are forward-looking statements within the meaning of
Section 27a of the Securities Act and Section 21e of the Exchange
Act. When used in this Form10-Q, or in the documents incorporated
by reference into this Form10-Q, the words
“anticipate,” “believe,”
“estimate,” “intend” and
“expect” and similar expressions are intended to
identify such forward-looking statements. Such forward-looking
statements include, without limitation, the statements regarding
the Company’s strategy, future sales, future expenses, future
liquidity and capital resources. All forward-looking statements in
this Form10-Q are based upon information available to the Company
on the date of this Form10-Q, and the Company assumes no obligation
to update any such forward-looking statements. The Company’s
actual results could differ materially from those discussed in this
Form10-Q. Factors that could cause or contribute to such
differences (“Cautionary Statements”) include, but are
not limited to, those discussed in Item 1. Business —
“Risk Factors” and elsewhere in the Company’s
Annual Report on Form10-K for the year ended December 31, 2018,
which are incorporated by reference into this Form 10-Q. All
subsequent written and oral forward-looking statements attributable
to the Company, or persons acting on the Company’s behalf,
are expressly qualified in their entirety by the Cautionary
Statements.
Overview
Issuer
Direct Corporation (Issuer Direct Corporation and its subsidiaries
are hereinafter collectively referred to as “Issuer
Direct”, the “Company”, “We” or
“Our” unless otherwise noted). Our corporate offices
are located at 500 Perimeter Park Drive, Suite D, Morrisville,
North Carolina, 27560.
We
announce material financial information to our investors using our
investor relations website, Securities and Exchange Commission
("SEC") filings, investor events, news and earnings releases,
public conference calls, webcasts and social media. We use these
channels to communicate with our investors and the public about our
company, our products and services and other related matters. It is
possible that information we post on some of these channels could
be deemed to be material information. Therefore, we encourage
investors, the media and others interested in our company to review
the information we post to all of our channels, including our
social media accounts.
Issuer Direct® is a premier provider of
communications and compliance technology solutions that are
designed to help organizations tell their stories globally. Issuer
Direct's principal platform, Platform
id.™
,
empowers users by thoughtfully integrating the most relevant tools,
technologies and products, thus eliminating the complexity
associated with producing and distributing their business
communications and financial information.
We work with a diverse customer base, which
includes not only corporate issuers and private companies, but also
investment banks, professional firms, such as investor relations
and public relations firms, as well as the accounting and legal
communities. We also sell products and services to others in the
financial services industry, including brokerage firms and mutual
funds. Our customers and their service providers utilize
Platform
id
.
and
related services from document creation all the way to
dissemination to regulatory bodies, platforms and shareholders.
Private companies primarily use our news distribution and
webcasting products and services to disseminate their message
globally. Platform
id.
’s intelligent subscription platform guides
thousands of customers through the process of communicating their
message to a large audience.
We also work with several select stock exchanges
by making available certain parts of our platform
under agreements to integrate our
offerings within their products. We believe such partnerships will
yield increased exposure to a targeted customer base that could
impact our revenue and overall brand in the
market.
18
In order to provide a good representation of our
business and reflect our
platform first
engagement strategy, we report revenue
in two revenue streams: (i) Platform and Technology and (ii)
Services. Set forth below is an infographic depicting the modules
included in Platform
id.
and the services we
provide:
Platform and Technology
As our transition to a cloud-based subscription
business continues to mature, we expect the Platform and Technology
portion of our business to continue to increase over the next
several years, both in terms of overall revenue and as compared to
the Services portion of our business. Platform and Technology
revenue grew to 64% of total revenue during the first half of 2019,
compared to 60%, 56% and approximately 44% of our revenue for the
years ending December 31, 2018, 2017 and 2016, respectively. Our
ACCESSWIRE® news distribution offering initially represented a
majority of the year over year growth in our Platform and
Technology revenue, however, during the three and six months ended
June 30, 2019, this growth was led by the acquisition of the
VisualWebcaster Platform (“VWP”) in our webcasting
business as well as increased subscriptions of Platform
id.
as a result of our focus on a
platform
first
engagement strategy and
converting customers which historically relied on us for services
work to utilizing Platform
id.
We plan to continue to invest in both our current
Platform
id.
offerings as well as additional
offerings that we plan to incorporate into our Platform. These new
offerings will further help establish our ecosystem and strategy of
bringing the issuer and investor closer together. One of these
opportunities is helping public issuers better understand the
shareholder composition of their company, which we believe is an
area that is underserved by the market today.
Platform
id.
Platform
id.
is our primary cloud-based
subscription platform that efficiently and effectively helps manage
the events of our customers seeking to distribute their messaging
to key constituents, investors, markets and regulatory systems
around the globe. Currently, Platform
id.
consists of several related but
distinct shareholder communications and compliance modules. Certain
of these capabilities were historically part of our disclosure
management and shareholder communications offerings, but are now
included in our fully integrated platform.
Within most of our target markets, customers
require several individual services and/or software providers to
meet their investor relations, communications and compliance needs.
We believe Platform
id.
can address all of these needs in a
single, secure, cloud-based platform - one that offers a customer
control, increases efficiencies, demonstrates clear value and, most
importantly, delivers consistent and compliant messaging from one
centralized platform.
19
Communications Modules
ACCESSWIRE
Our press release offering, which is marketed
under the brand,
ACCESSWIRE
,
is a cost-effective, Regulation Fair Disclosure
(“FD”) news dissemination and media outreach service.
The ACCESSWIRE product offering focuses on press release
distribution for both private and publicly held companies globally.
We believe ACCESSWIRE is becoming a competitive alternative to the
traditional newswires because we have been able to integrate
customer editing features and improve our targeting and growing
analytics reporting systems. We believe this strategy will enable
us to add new customers for 2019 and beyond. We have also been able
to maintain flexible pricing by offering our customers the option
to pay per release or enter into longer-term, flat-fee
subscriptions. Currently, ACCESSWIRE is available within
Platform
id.
as part of a subscription, or as a
stand-alone module.
On July 3, 2018, we completed the acquisition of
Filing Services Canada Inc. (“FSCwire”), which not only
increased our customer base, but more importantly increased our
global footprint, distribution capabilities and editorial team of
our press release business. During the latter part of 2018, we
completed the integration of FSCwire and rebranded it as ACCESSWIRE
Canada, and are now focused on offering those customers the full
suite of products included in Platform
id.
ACCESSWIRE
is dependent upon several key partners for news distribution, some
of which are also partners that we rely on for other investor
outreach offerings. During the quarter, one of our key partners
made an industry-wide decision to no longer accept investor
commentary content. A significant portion of our historical
ACCESSWIRE revenue was generated from this type of content, as
further discussed in the Results of Operations below. However, as
part of our efforts to increase overall distribution during the
second half of 2018, we began to market ACCESSWIRE more heavily
towards public and private company news issuers, which we believe
will mitigate the impact of the loss of the investment commentary
content long-term. Further disruption in any of our partnerships
could have a materially adverse impact on our
business.
Professional Conference Organizer (PCO) Module
At the end of 2018, we released a new module to
Platform
id.
, centered around the professional conference
organizer (“PCO”)
. This subscription is being
licensed to investor conference organizers, which together we
believe hold an estimated 1,000 plus events a year. This
cloud-based product is integrated within, and enhances our
communications module subscription offerings of newswire,
newsrooms, webcasting and shareholder targeting.
This
cloud-based platform, which is now available as a mobile app,
offers organizers, issuers and investors the ability to register,
request and approve 1x1 meetings, manage schedules, event promotion
and sponsorship, badge printing and lodging management. By
combining this module with the other components of Platform
id.,
we believe it
gives us a unique offering for PCOs that is not available elsewhere
in the market.
Entering this
business expands our current Platform and Technology revenue base,
and as an adjacency, should assist in making Platform
id.
the core ecosystem of
choice for investment banks, issuers and investors.
Investor Network
Over the past two years, we have been focused on
refining the model of digital distribution of our customers’
message to the investment community and beyond. This has been
accomplished by integrating our shareholder outreach module,
Investor Network, into and with Platform
id.
Most of the customers subscribing to
this module today are historical PrecisionIR (“PIR”)
– Annual Report Service (“ARS”) users, as well as
new customers purchasing the entire Platform
id.
subscription. We have migrated some of
the customers from the traditional ARS business into this new
digital subscription business. However, there can be no assurances
these customers will continue using this digital platform in the
long term if market conditions or shareholder interest is not
present.
20
Webcasting
The earnings event industry is a highly
competitive space with the majority of the business being driven
from practitioners in investor relations and communications firms.
We estimate there are over 5,000 companies in North America
conducting earnings events each quarter that include
teleconference, webcast or both as part of their events.
Platform
id.
also
incorporates other elements of the
earnings event, including earnings date/call announcement, earnings
press release and SEC Form 8-K filings. There are a handful of our
competitors that can offer this integrated full service solution
today. However, we believe our real-time event setup and integrated
approach offers a more effective way to manage the process as well
as attract an audience of investors.
We have also attempted to differentiate our
offering by investing time and financial resources developing and
integrating systems and processes within Platform
id.
and creating an application
programming interface (“API”). This API allows
customers, such as financial content sites and investment banks, to
query an industry or a single company’s current and past
earnings calls and present those webcasts on their
platforms
.
Initially, this has been broadly distributed via
our Investor Network platform, with expectations that customers
will license this dataset for their platforms in the future. We
believe this offering will further increase our brand awareness.
Additionally, as a commitment to broadening the reach of our
webcast platform, all events are broadcast live within our
shareholder outreach module, which helps drive new audiences and
give companies the ability to view their analytics and engagement
of each event. We believe these analytics, which are a component of
our Insight and Analytics module, will increase the demand for our
webcasting platform among the corporate issuer
community.
On
January 3, 2019, we acquired the VWP from Onstream Media
Corporation. VWP is a leading cloud-based webcast, webinar and
training platform that delivers live and on-demand streaming of
events to audiences of all sizes. VWP allows customers to create,
produce and deliver events, which we believe will integrate well
into Platform
id.
We believe by acquiring VWP we have significantly strengthened our
webcasting product and Platform
id.
offering as well as
acquired over 120 customers, ranging from small private companies
to Fortune 500 companies. The VWP technology enables us the ability
to host thousands of additional webcasts each year, expanding our
webcast business from our historical earnings based events to now
being able to host corporate meetings, trainings and town hall
types of events. As we expand our platform, it is vital for us to
have solutions that service both our core public companies but also
a growing segment of private customers.
Investor Relations Content
Our investor relations content network is another
component of Platform
id.
, which is used to create the investor
relations’ tab of a public company’s website. This
investor relations content network is a robust series of data feeds
including news feeds, stock feeds, fundamentals, regulatory
filings, corporate governance and many other components which are
aggregated from a majority of the major exchanges and news
distribution outlets around the world. Customers can subscribe to
one or more of these data feeds or as a component of a fully
designed and hosted website for pre-IPO companies, reporting
companies and partners seeking to display our content on their
corporate sites. The clear benefit to our investor relations module
is its integration into all of Platform
id.
modules. As such, companies can
produce content for public distribution and it is automatically
linked to their corporate website, distributed to targeted groups
and placed into our data feed partners.
Compliance Modules
Platform
id.
’s disclosure reporting module is a document
conversion, editing and filing offering which is designed for
reporting companies and professionals seeking to insource the
document drafting, editing and filing processes to the SEC’s
EDGAR system and SEDAR (the Canadian equivalent of EDGAR). This
module is available in both a secure public cloud within our
Platform
id.
subscription as well as in a private
cloud option for corporations, mutual funds and the legal community
looking to further enhance their internal document process. As this
module has begun to be adopted by our customers, we have seen a
negative impact on our legacy disclosure conversion services
business. However, the margins associated with our Platform and
Technology business compared to our Services business are higher
and align with our long-term strategy, and as such, we believe this
module will have a positive impact on our compliance business going
forward.
21
Toward the end of 2017, we completed upgrades to
our disclosure reporting product to include tagging functionality
that meets newly mandated SEC requirements. On June 28, 2018, the
SEC voted to adopt rules mandating the use of Inline XBRL (Inline
Extensible Business Reporting Language or “iXBRL”) for
the submission of financial statement information to the SEC. The
new requirements for iXBRL will have a three-year phase in
beginning for large accelerated filers that use U.S. GAAP to be
compliant for fiscal periods ending on or after June 15, 2019, for
accelerated filers to begin reporting for fiscal periods ending on
or after June 15, 2020 and for all other filers to begin reporting
for fiscal periods ending on or after June 15, 2021. These upgrades
also include meeting new SEC mandates for foreign filers that
compile financial statements using International Financial
Reporting Standards (“IFRS”) to be able to utilize our
cloud-based platform. Beginning in 2018, foreign filers with fiscal
year’s ending on or after December 15, 2017, are now required
to report their financial statements in XBRL with the SEC.
Platform
id.
has adopted the new IFRS taxonomy into
and with its new disclosure upgrade for iXBRL to ensure our
customers are able to meet these new mandates.
Our whistleblower module is an add-on product
within Platform
id.
This system delivers secure
notifications and basic incident workflow management processes that
align with a company’s corporate governance whistleblower
policy. As a supported and subsidized bundle product of the New
York Stock Exchange (“NYSE”) offerings, we hope we will
gain relationships with new IPO customers and other larger cap
customers listed on the NYSE.
A valued subscription add-on in our
Platform
id.
offering is the ability for our
customers to gain access to real-time information of their
shareholders, stock ledgers and reports and to issue new shares
from our cloud-based stock transfer module. Managing the
capitalization table of a public company or pre-IPO company is a
cornerstone of corporate governance and transparency, and as such
companies and community banks have chosen us to assist with their
stock transfer needs, including bond offerings and dividend
management. This is an industry which has experienced declining
overall revenues as it was affected by the replacement of paper
certificates with digital certificates. However, we have been
focused on selling subscriptions of the stock transfer component of
our platform, allowing customers to gain access to our cloud-based
system in order to move shares or query shareholders, which has
resulted in a more efficient process for both our customers and
us.
Our
proxy module is marketed as a fully integrated, real-time voting
platform for our customers and their shareholders of record. This
module is utilized for every annual meeting or special meeting we
manage for our customer base and offers both full-set mailing and
notice of internet availability options.
Services
As we focus on expanding our cloud-based
subscription business, we expect to see decreases in the overall
revenues associated with our Services business, absent additional
acquisitions which may occur in the future. Typically, Services
revenues relate to activities where substantial resources are
required to perform the work for our customers and/or hard goods
are utilized as part of the engagement. To date, most of our
Services have been related to converting and editing SEC documents
and XBRL tagging, which has been our core disclosure business over
the last 13 years. Services also include telecommunications
services and print, fulfillment and delivery of stock certificates,
proxy materials or annual reports depending on each
customer’s engagement. Services are not required, but are
optional for customers that utilize our Platform
id.
Our investor outreach and engagement offering,
formerly known as ARS, was acquired from PIR in 2013. The ARS
business has existed for over 20 years primarily as a physical hard
copy delivery service of annual reports and prospectuses. We
continue to operate a portion of this legacy system for customers
who opt to take advantage of physical delivery of material.
Additionally, we continue to attempt to migrate the install base
over to subscriptions of our digital outreach engagement module
within Platform
id.
We believe we will continue to see
further attrition of both customers and revenues in this category
as we focus our efforts on our Platform and Technology
business.
22
Results of Operations
Comparison of results of operations for the three and six months
ended June 30, 2019 and 2018:
|
|
Three months ended
|
Six months ended
|
||
|
|
June 30,
|
June 30,
|
||
|
Revenue Streams
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
Platform and Technology
|
|
|
|
|
|
Revenue
|
$
2,661
|
$
2,246
|
$
5,326
|
$
4,277
|
|
Gross
margin
|
$
1,954
|
$
1,825
|
$
3,946
|
$
3,432
|
|
Gross
margin %
|
73
%
|
81
%
|
74
%
|
80
%
|
|
|
|
|
|
|
|
Services
|
|
|
|
|
|
Revenue
|
$
1,477
|
$
1,553
|
$
2,991
|
$
3,052
|
|
Gross
margin
|
$
934
|
$
944
|
$
1,819
|
$
1,846
|
|
Gross
margin %
|
63
%
|
61
%
|
61
%
|
60
%
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Revenue
|
$
4,138
|
$
3,799
|
$
8,317
|
$
7,329
|
|
Gross
margin
|
$
2,888
|
$
2,769
|
$
5,765
|
$
5,278
|
|
Gross
margin %
|
70
%
|
73
%
|
69
%
|
72
%
|
Revenues
Total
revenue increased by $339,000, or 9%, to $4,138,000 during the
three-month period ended June 30, 2019, as compared to $3,799,000
during the same period of 2018. Total revenue increased by
$988,000, or 13%, to $8,317,000 during the six-month period ended
June 30, 2019, compared to $7,329,000 during the same period of
2018. Revenue from customers obtained from our acquisitions of VWP
and FSCwire totaled $649,000 and $1,275,000 during the three and
six months ended June 30, 2019, respectively. A portion of this
revenue is included in both the Platform and Technology and
Services revenue streams.
Platform and
Technology revenue increased $415,000, or 18%, and $1,049,000, or
25%, during the three and six-month periods ended June 30, 2019,
respectively, as compared to the same periods of 2018. A majority
of the increase is due to the acquisitions of VWP and FSCwire,
which accounted for a combined $468,000 and $977,000 of Platform
and Technology revenue during the three and six months ended June
30, 2019, respectively. Additionally, we generated increased
revenue from additional subscriptions of Platform
id.
These increases were offset
by a decline in revenue from our shareholder outreach offering due
to customer attrition as revenue of this offering is typically
tied-in with contracts of our annual report distribution services.
Additionally, ACCESSWIRE revenue was negatively impacted by the
industry-wide loss of the investment commentary business, which
accounted for approximately $78,000 and $403,000 of revenue during
the three and six months ended June 30, 2019, respectively,
compared to $485,000 and $863,000 during the same periods of 2018.
Other than the impact of the investment commentary business and
acquisition of FSCwire, ACCESSWIRE revenue increased 34% and 21%
during the three and six months ended June 30, 2019, respectively,
compared to the same periods of the prior year. Platform and
Technology revenue increased to 64% of total revenue during both
the three and six months ended June 30, 2019, as compared to 59%
and 58% during the same periods of the prior year.
Services revenue
decreased $76,000, or 5%, and $61,000, or 2%, during the three and
six-month periods ended June 30, 2019, respectively, as compared to
the same periods of 2018. The decrease is primarily the result of a
decline in revenue from our transfer agent services due to a
decline in corporate transactions, directives or actions. The
timing of these corporate directives and actions are difficult to
predict as they are controlled by our customers and the conditions
of the market, and therefore fluctuate from quarter to quarter.
Additionally, ARS services continued to decline as a result of
continued customer attrition as customers elect to leave the
service or transition to digital fulfillment. These decreases were
offset by the acquisitions of VWP and FSCwire, which accounted for
$181,000 and $298,000 of Services revenue during the three and six
months ended June 30, 2019, respectively.
No
customers accounted for more than 10% of the revenues during the
three and six-month periods ended June 30, 2019 or
2018.
23
Revenue Backlog
At June
30, 2019, our deferred revenue balance was $1,624,000, which we
expect to recognize over the next twelve months, compared to
$1,249,000 at December 31, 2018. Deferred revenue primarily
consists of advance billings for subscriptions of our news
distribution and cloud-based products, as well as, annual contracts
for legacy ARS services. The increase is primarily due to an
increase in subscriptions of Platform
id.
, with annualized contract
value of $414,000, to 58 net new or existing customers during the
six months ended June 30, 2019. As of June 30, 2019, our total
number of subscriptions of Platform
id.
was 163, with a total
annual contract value of $1,550,000.
Cost of Revenues and Gross Margin
Platform and
Technology cost of revenues consists primarily of direct labor
costs, newswire distribution costs, third party licensing and
amortization of capitalized software costs related to platforms
licensed to customers. Services costs of revenue consists primarily
of direct labor costs, warehousing, logistics, print production
materials, postage, and outside services directly related to the
delivery of services to our customers. Cost of revenues increased
by $220,000, or 21%, and $501,000, or 24% during the three and
six-month periods ended June 30, 2019, respectively, as compared to
the same periods of 2018. Overall gross margin increased $119,000,
or 4%, and $487,000, or 9%, during the three and six-month periods
ended June 30, 2019, respectively, as compared to the same periods
of the prior year. However, during these periods, gross margin
percentage decreased to 70% and 69%.
Gross
margin percentage from Platform and Technology revenue was 73% and
74% during the three and six-month periods ended June 30, 2019,
respectively, as compared to 81% and 80% during the same periods of
2018. The decrease in gross margin percentage is primarily
attributable to the addition of revenue and costs associated with
the acquisition of VWP as well as increased distribution costs
associated with our newswire business.
Gross
margins from our Services revenue increased to 63% and 61% during
the three and six-month periods ended June 30, 2019, respectively,
as compared to 61% and 60% during the same periods of 2018. The
increase is due in part to lower print and fulfillment costs and
headcount among our operations department.
Operating Expenses
General and Administrative Expense
General
and administrative expenses consist primarily of salaries,
stock-based compensation, insurance, fees for professional
services, general corporate expenses (including bad debt expense)
and facility and equipment expenses. General and administrative
expenses increased $374,000, or 39%, and $731,000 or 37%, during
the three and six-month periods ended June 30, 2019, respectively,
as compared the same periods of 2018. This increase is primarily
due to an increase in our bad debt provision of $282,000 and
$463,000 during the three and six months ended June 30, 2019,
respectively, compared to the prior year. A majority of this
increase is related to additional reserve for accounts receivable
balances related to two significant investment commentary newswire
customers, which are now fully reserved. Also contributing to the
increase in general and administrative expenses are additional
expenses associated with our recent acquisitions, including
additional one-time acquisition-related expenses, which were
$112,000 during the six-month period ended June 30, 2019 compared
to $41,000 during three and six months ended June 30, 2018. There
were no one-time acquisition-related expenses during the three
months ended June 30, 2019.
As a
percentage of revenue, general and administrative expenses were 32%
for both the three and six-month periods ended June 30, 2019,
respectively, an increase from 25% and 27% for the same periods of
2018.
Sales and Marketing Expenses
Sales
and marketing expenses consist primarily of salaries, stock-based
compensation, sales commissions, advertising expenses, tradeshow
expenses and other marketing expenses. Sales and marketing expenses
for the three and six-month periods ended June 30, 2019, increased
$76,000, or 10%, and $146,000, or 9%, respectively, compared to the
same periods of 2018. This increase is directly related to our
investment in our sales and marketing initiatives with an increase
in personnel costs and digital marketing.
As a
percentage of revenue, sales and marketing expense were 21% and 20%
during the three and six-month periods ended June 30, 2019,
respectively, compared to 21% for the same periods of the prior
year.
24
Product Development Expenses
Product
Development expenses consist primarily of salaries, stock-based
compensation, bonuses and licenses to develop new products and
technology to complement and/or enhance Platform
id
. Product development
expenses increased $58,000, or 20%, and $97,000, or 17%, during the
three and six-month periods ended June 30, 2019, compared to the
same periods in 2018. The increase is due to an increase in
employee-related and consulting expenses associated with the
development of our cloud-based products.
As a
percentage of revenue, product development expenses were 8% for
each of the three and six-month periods ended June 30, 2019 and
2018.
Depreciation and Amortization
Depreciation and
amortization expenses increased $76,000, or 54%, and $146,000, or
51%, during the three and six-month periods ended June 30, 2019,
respectively, as compared to the same periods of 2018. The increase
is due to amortization of intangible assets acquired in both the
VWP and FSCwire acquisitions.
Interest income (expense), net
Interest income
(expense), net, represents interest income on deposit and money
market accounts, partially offset by the non-cash interest
associated with the present value of the remaining anniversary
payments of the Interwest acquisition.
Income tax (benefit) expense
We
recognized income tax expense of $33,000 and $46,000 for the three
and six-month periods ended June 30, 2019, compared to $224,000 and
$214,000 during the same periods of 2018, respectively. At the end
of each interim period, we estimate the effective tax rate we
expect to be applicable for the full fiscal year and this rate is
applied to our results for the year-to-date period, and then
adjusted for any discrete period items. For the three and six-month
periods ended June 30, 2019, the variance between the
Company’s effective tax rate and the U.S. statutory rate of
21% is primarily attributable to tax credits and stock-based
compensation tax (shortfall)/benefit of ($11,000) and $24,000,
respectively, recognized in income tax expense during the periods,
offset by state income taxes. For the three-month period ended June
30, 2018, the variance between the U.S. statutory rate and the
Company’s effective rate is primarily attributable to
additional expense as a result of a tax shortfall associated with
stock-based compensation in the amount of $68,000, offset by
foreign statutory rate differentials and tax credits. For the
six-month period ended June 30, 2018, the Company’s effective
tax rate was in-line with the statutory rate plus additional state
taxes.
Net Income
Net
income for the three and six-month periods ended June 30, 2019 was
$212,000 and $417,000, respectively, compared to $366,000 and
$686,000 for the same periods of 2018.
Although we
achieved increases in revenue and gross margin, these increases
were offset by higher operating expenses due to an increase in bad
debt expense and investments made to position ourselves for growth
by increasing headcount, incurring costs related to acquisitions as
well as continuing to invest in our cloud-based products.
Depreciation and amortization expense increased as well, due to
amortization associated with acquired intangible assets. The
increase in operating expense was partially offset by an increase
in interest income on deposit and money market
accounts.
Liquidity and Capital Resources
As of
June 30, 2019, we had $15,196,000 in cash and cash equivalents and
$2,422,000 in net accounts receivable. Current liabilities at June
30, 2019, totaled $3,025,000 including our accounts payable,
deferred revenue, accrued payroll liabilities, income taxes
payable, current portion of remaining payments for Interwest, lease
liabilities and other accrued expenses. At June 30, 2019, our
current assets exceeded our current liabilities by
$15,006,000.
Effective October
4, 2018, the Company renewed its Line of Credit, which increased
the amount of funds available for borrowing from $2,500,000 to
$3,000,000. The interest rate was reduced from LIBOR plus 2.50% to
LIBOR plus 1.75%. As of June 30, 2019, the interest rate was 4.14%
and the Company did not owe any amounts on the Line of
Credit.
25
2019 Outlook
The following statements and certain statements made elsewhere in
this document are based upon current expectations. These statements
are forward looking and are subject to factors that could cause
actual results to differ materially from those suggested here,
including, without limitation, demand for and acceptance of our
services, new developments, competition and general economic or
market conditions, particularly in the domestic and international
capital markets. Refer also to the Cautionary Statement Concerning
Forward Looking Statements included in this report.
Overall,
the demand for our platforms continues to be stable in the majority
of the segments we serve. In a portion of our business, we will
continue to see demand shift from traditional printed and
service-based engagements to a cloud-based subscription model, as
well as digital distribution offerings. We believe we are
positioned well in this space to be both competitive and agile to
deliver these solutions to the market. As we have seen over the
last several quarters, the transition to digital platforms has had
a negative effect on our revenue in some areas and this is a trend
we expect will continue over the next few quarters.
One
of our competitive strengths is that we have embraced cloud
computing early on in our strategy. The transition to a platform
subscription model has been and will continue to be key for our
long-term sustainable growth.
We will continue to focus on the following key strategic
initiatives during the remainder of 2019:
●
Expand
our Platform and Technology business development and sales
team,
●
Continue
to grow through acquisitions in areas of strategic
focus,
●
Expand
customer base,
●
Continue
to migrate acquired businesses to our current
platform,
●
Continue
to expand our newswire distribution,
●
Invest
in technology advancements and upgrades,
●
Continue
development of our Insight and Analytics module,
●
Generate
profitable sustainable growth,
●
Generate
cash flows from operations
We
believe there is significant demand for our products among the
middle, small and micro-cap markets globally, as they seek to find
better platforms and tools to disseminate and communicate their
respective messages. We believe we have the product sets, platforms
and capacity to meet their requirements.
We
have invested and will continue to invest in our product sets,
platforms and intellectual property development via internal
development and acquisitions. These developments are key to our
overall offerings in the market and necessary to keep our
competitive advantages and sustain the next round of growth that
management believes it can achieve. If we are successful in this
development effort, we believe we can achieve increases in revenues
per user as we move through 2019 and beyond.
Off-Balance Sheet Arrangements
We have
no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital
resources that is material to stockholders.
26
I
TEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
Not
applicable
I
TEM 4. CONTROLS AND
PROCEDURES.
As of
the end of the period covered by this quarterly report on Form10-Q,
the Company’s Chief Executive Officer and Chief Financial
Officer conducted an evaluation of the Company’s disclosure
controls and procedures (as defined in Rules 13a-15 and 15d-15 of
the Securities Exchange Act of 1934). Based upon this evaluation,
the Company’s Chief Executive Officer and Chief Financial
Officer concluded that the Company’s disclosure controls and
procedures are effective and have not changed since its most recent
annual report.
Changes in Internal Control over Financial Reporting
We
regularly review our system of internal control over financial
reporting to ensure we maintain an effective internal control
environment. There were no changes in our internal control over
financial reporting that occurred during the period covered by this
Quarterly Report on Form 10-Q that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
27
PART II – OTHER INFORMATION
I
TEM 1. LEGAL PROCEEDINGS.
From
time to time, we may be involved in litigation that arises through
the normal course of business. As of the date of this filing, we
are neither a party to any litigation nor are we aware of any such
threatened or pending litigation that might result in a material
adverse effect to our business.
I
TEM 1A.
RISK FACTORS.
There
have been no material changes to our risk factors as previously
disclosed in our most recent Form 10-K filing.
I
TEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS.
None.
I
TEM 3.
DEFAULTS UPON SENIOR
SECURITIES.
None
.
I
TEM 4.
MINE SAFETY DISCLOSURE.
Not
applicable
.
I
TEM 5.
OTHER INFORMATION.
None.
I
TEM 6.
EXHIBITS.
(a)
Exhibits.
|
Exhibit
|
|
|
|
Number
|
|
Description
|
|
|
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 Section 906 of the
Sarbanes-Oxley Act of 2002.*
|
|
|
|
Certification
of Chief Financial Officer 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 Calculation Linkbase Document.**
|
|
101.LAB
|
|
XBRL
Taxonomy Label Linkbase Document.**
|
|
101.PRE
|
|
XBRL
Taxonomy Presentation Linkbase Document.**
|
|
101.DEF
|
|
XBRL
Taxonomy Extension Definition Linkbase Document. **
|
_______________________________
|
*
|
filed
or furnished herewith
|
|
**
|
submitted
electronically herewith
|
28
S
IGNATURES
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.
Date:
August 1, 2019
|
|
ISSUER DIRECT CORPORATION
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
Brian R. Balbirnie
|
|
|
|
|
Brian
R. Balbirnie
|
|
|
|
|
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
Steven Knerr
|
|
|
|
|
Steven
Knerr
|
|
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
29
TABLE OF CONTENTS
Part I Financial InformationItem 1. Financial StatementsNote 1. Basis Of PresentationNote 2. Summary Of Significant Accounting PoliciesNote 3: Recent AcquisitionsNote 4: Stock Options and Restricted Stock UnitsNote 5: Income TaxesNote 6: LeasesNote 7: RevenueNote 8: Line Of CreditItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosureItem 5. Other InformationItem 6. Exhibits