What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 87 added, 42 removed, 315 unchanged (29% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

5 unchanged sentences

Capitalized software (net of accumulated amortization of $ 3,159 and $ 2,761 , respectively)

Fixed assets (net of accumulated amortization of $ 383 and $ 312 , respectively)

Fixed assets (net of accumulated depreciation of $ 419 and $ 312 , respectively)

Right-of-use asset – leases

13 unchanged sentences

Stockholders' equity:

Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.

Common stock $ 0.001 par value, 20,000,000 shares authorized, 3,786,525 and 3,770,752 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.

Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.

Common stock $ 0.001 par value, 20,000,000 shares authorized, 3,791,038 and 3,770,752 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.

Additional paid-in capital

8 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Cost of revenues

6 unchanged sentences

Operating income

Interest income, net

Other income, net

Income before taxes

9 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Foreign currency translation adjustment

4 unchanged sentences

(in thousands, except share and per share amounts)

Additional Paid-in

Other Accumulated Comprehensive

11 unchanged sentences

Balance at June 30, 2020

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

Balance at September 30, 2020

Balance at December 31, 2020

8 unchanged sentences

Balance at June 30, 2021

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

Balance at September 30, 2021

The accompanying notes are an integral part of these unaudited financial statements.

2 unchanged sentences

(in thousands)

For the Six Months Ended

For the Nine Months Ended

September 30,

Cash flows from operating activities:

30 unchanged sentences

Basis of Presentation

The unaudited interim consolidated balance sheet as of June 30, 2021 and consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the three-month and six-month periods ended June 30, 2021 and 2020 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.

The unaudited interim consolidated balance sheet as of September 30, 2021 and consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the three-month and nine-month periods ended September 30, 2021 and 2020 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.

8 unchanged sentences

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.

There were no shares issuable upon the exercise of stock options excluded in the computation of diluted earnings per common share during the three and six-month period ended June 30, 2021, because their impact was anti-dilutive.

Shares issuable upon the exercise of stock options totaling 93,000 were excluded in the computation of diluted earnings per common share during the three and six-month period ended June 30, 2020, because their impact was anti-dilutive.

There were no shares issuable upon the exercise of stock options excluded in the computation of diluted earnings per common share during the three and nine-month period ended September 30, 2021, because their impact was anti-dilutive.

Shares issuable upon the exercise of stock options totaling 25,000 and 75,000 were excluded in the computation of diluted earnings per common share during the three and nine-month periods ended September 30, 2020, respectively, because their impact was anti-dilutive.

Revenue Recognition

30 unchanged sentences

The associated deferred revenue is generally recognized ratably over the billing period for subscriptions and as releases are disseminated for press release packages.

Deferred revenue as of June 30, 2021, and December 31, 2020, was $ 2,699,000 and $ 2,212,000 , respectively, and is expected to be recognized within one year.

Revenue recognized for the six months ended June 30, 2021, and 2020, that was included in the deferred revenue balance at the beginning of each reporting period, was approximately $ 1,597,000 and $ 1,375,000 , respectively.

Accounts receivable, net of allowance for doubtful accounts, related to contracts with customers was $ 3,599,000 and $ 2,514,000 as of June 30, 2021, and December 31, 2020, respectively.

Deferred revenue as of September 30, 2021, and December 31, 2020, was $2,696,000 and $ 2,212,000 , respectively, and is expected to be recognized within one year.

Revenue recognized for the nine months ended September 30, 2021, and 2020, that was included in the deferred revenue balance at the beginning of each reporting period, was approximately $ 1,948,000 and $ 1,663,000 , respectively.

Accounts receivable, net of allowance for doubtful accounts, related to contracts with customers was $ 3,037,000 and $ 2,514,000 as of September 30, 2021, and December 31, 2020, respectively.

Since substantially all the contracts have terms of one year or less, the Company has elected to use the practical expedient regarding the existence of a significant financing.

Costs to obtain contracts with customers consist primarily of sales commissions.

As of June 30, 2021, and December 31, 2020, the Company has capitalized $ 54,000 and $ 44,000 , respectively, of costs to obtain contracts that are expected to be amortized over more than one year.

As of September 30, 2021, and December 31, 2020, the Company has capitalized $ 52,000 and $ 44,000 , respectively, of costs to obtain contracts that are expected to be amortized over more than one year.

For contract costs expected to be amortized in less than one year, the Company has elected to use the practical expedient allowing the recognition of incremental costs of obtaining a contract as an expense when incurred.

14 unchanged sentences

To reduce its risk associated with the failure of such financial institutions, each quarter the Company evaluates the rating of the financial institution in which it holds deposits.

As of June 30, 2021, the total amount exceeding such limit was $ 19,709,000 .

The Company also had cash-on-hand of $ 165,000 in Europe and $ 861,000 in Canada as of June 30, 2021.

As of September 30, 2021, the total amount exceeding such limit was $ 20,731,000 .

The Company also had cash-on-hand of $ 143,000 in Europe and $ 1,117,000 in Canada as of September 30, 2021.

The Company believes it did not have any financial instruments that could have potentially subjected us to significant concentrations of credit risk for any relevant period.

13 unchanged sentences

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, 2021 and 2020, are as follows (in thousands):

Capitalized costs and amortization for the three and nine-month periods ended September 30, 2021 and 2020, are as follows (in thousands):

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Capitalized software development costs

28 unchanged sentences

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, 2021 and December 31, 2020, we believe that the fair value of our financial instruments, such as, accounts receivable, our line of credit, and accounts payable approximate their carrying amounts.

As of September 30, 2021 and December 31, 2020, we believe that the fair value of our financial instruments, such as, accounts receivable, our line of credit, and accounts payable approximate their carrying amounts.

Translation of Foreign Financial Statements

20 unchanged sentences

The associated cost is recognized over the period during which an employee or director is required to provide service in exchange for the award.

Employee Retention Credit

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes.

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC.

We are eligible under the CARES Act ERC as an employer that carried on a trade or business during calendar year 2020 and whose business operations were fully or partially suspended during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19.

ASC 105, Generally Accepted Accounting Principles, describes the decision-making framework when no guidance exists in US GAAP for a particular transaction.

Specifically, ASC 105-10-05-2 instructs companies to look for guidance for a similar transaction within US GAAP and apply that guidance by analogy.

As such, forms of government assistance, such as the ERC, provided to business entities would not be within the scope of ASC 958, but it may be applied by analogy under ASC 105-10-05-2.

We accounted for the ERC as a government grant in accordance with Accounting Standards Update 2013-06, Not-for-Profit Entities (Topic 958) by analogy under ASC 105-10-05-2.

Under this standard, government grants are recognized when the conditions or conditions on which they depend are substantially met.

The conditions for recognition of the ERC include, but are not limited to:

An entity has been adversely affected by the COVID-19 pandemic

We have not used qualifying payroll for both the Paycheck Protection Program and the ERC

We incurred payroll costs to retain employees

During the three and nine months ended September 30, 2021, we recorded an ERC benefit of 366,000 in other income, net in our Consolidated statements of operations and in other current assets in our Consolidated balance sheets as of September 30, 2021.

2014 Equity Incentive Plan

4 unchanged sentences

The 2014 Plan is effective through March 31, 2024.

As of June 30, 2021, there are 218,818 shares which remain eligible to be granted under the 2014 Plan.

The following table summarizes information about stock options outstanding and exercisable at June 30, 2021:

As of September 30, 2021, there are 223,818 shares which remain eligible to be granted under the 2014 Plan.

The following table summarizes information about stock options outstanding and exercisable at September 30, 2021:

Options Outstanding

1 unchanged sentence

Exercise Price Range

Weighted Average Remaining

Contractual Life (in Years)

Weighted Average

Remaining Contractual

Life (in Years)

Weighted Average

Exercise Price

1 unchanged sentence

15.01 - 17.40

As of June 30, 2021, the Company did not have any unrecognized stock compensation related to the options.

During the three and six months ended June 30, 2021, the Company granted 17,765 restricted stock units with an intrinsic value of $ 25.92 per share.

As of September 30, 2021, the Company did not have any unrecognized stock compensation related to the options.

During the nine months ended September 30, 2021, the Company granted 17,765 restricted stock units with an intrinsic value of $ 25.92 per share.

No restricted stock units were granted during the three months ended September 30, 2021.

Non-employee directors were granted 12,765 restricted stock units, which vest on the earlier of the 2022 annual meeting of the shareholders or one year.

The other 5,000 restricted stock units were granted to an employee and vest 50 % during each of the first and second anniversary dates of the date of grant.

During the three and six months ended June 30, 2021, 19,000 restricted stock units with an intrinsic value of $ 10.78 vested.

As of June 30, 2021, there was $ 434,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2023.

The other 5,000 restricted stock units were granted to an employee and vest 50 % during each of the first and second anniversary dates of the date of grant, which was May 17, 2021.

No restricted stock units vested during the three months ended September 30, 2021.

During the nine months ended September 30, 2021, 19,000 restricted stock units with an intrinsic value of $ 10.78 vested.

As of September 30, 2021, there was $ 334,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2023.

Stock repurchase and retirement

3 unchanged sentences

Shares Repurchased

Total Number of Shares Repurchased

Total Number of Shares

Average Price Paid Per Share

13 unchanged sentences

March 1-31, 2021

We recognized income tax expense of $ 256,000 and $ 419,000 for the three and six-month periods ended June 30, 2021, respectively, compared to $ 230,000 and $ 310,000 during the same periods of 2020.

We recognized income tax expense of $ 319,000 and $ 738,000 for the three and nine-month periods ended September 30, 2021, respectively, compared to $ 283,000 and $ 593,000 during the same periods of 2020.

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, 2021, the variance between the Company’s effective tax rate and the U.S.

For the three and nine-month periods ended September 30, 2021, the variance between the Company’s effective tax rate and the U.S.

statutory rate of 21 % is primarily attributable to state income tax, partially offset by an excess stock-based compensation benefit, as well as foreign statutory tax rate differentials.

3 unchanged sentences

The new lease, which had a lease commencement date of October 2, 2019, is for 9,766 square feet and expires December 31, 2027.

Minimum lease payments are $ 2,997,000 , not including a tenant improvement allowance of $ 488,000 , which is included in fixed assets as of June 30, 2021.

Minimum lease payments are $ 2,997,000 , not including a tenant improvement allowance of $ 488,000 , which is included in fixed assets as of September 30, 2021.

We recognized a ROU asset and corresponding lease liability of $ 2,596,000 , which represents the present value of minimum lease payments discounted at 3.77 %, the Company’s incremental borrowing rate at lease inception.

2 unchanged sentences

As a result, we have elected the short-term lease recognition exemption for these leases, which means, for those leases we do not expect to extend beyond twelve months, we will not recognize ROU assets or lease liabilities.

Lease liabilities totaled $ 2,190,000 as of June 30, 2021.

Lease liabilities totaled $ 2,105,000 as of September 30, 2021.

The current portion of this liability of $ 367,000 is included in Accrued expenses on the Consolidated balance sheets and the long-term portion of $ 1,738,000 is included in Lease liabilities on the Consolidated Balance Sheets.

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Lease expense

2 unchanged sentences

Total lease expense

The weighted-average remaining non-cancelable lease term for our operating leases was 6.5 years as of June 30, 2021.

As of June 30, 2021, the weighted-average discount rate used to determine the lease liability was 3.8 %.

The future minimum lease payments to be made under non-cancelable operating leases on June 30, 2021, are as follows (in 000’s):

The weighted-average remaining non-cancelable lease term for our operating leases was 6.2 years as of September 30, 2021.

As of September 30, 2021, the weighted-average discount rate used to determine the lease liability was 3.8 %.

The future minimum lease payments to be made under non-cancelable operating leases on September 30, 2021, are as follows (in 000’s):

Year Ended December 31:

5 unchanged sentences

The following tables present revenue disaggregated by revenue stream in (000’s):

Three months ended June 30,

Three months ended September 30,

Revenue Streams

Communications

Six months ended June 30,

Nine months ended September 30,

Revenue Streams

Communications

We did not have any customers during the three and six-month periods ended June 30, 2021 or 2020 that accounted for more than 10% of our revenue.

We did not have any customers during the three and nine-month periods ended September 30, 2021 or 2020 that accounted for more than 10% of our revenue.

Line of Credit

1 unchanged sentence

The amount of funds available for borrowing are $ 3,000,000 and the interest rate is LIBOR plus 1.75 %.

As of June 30, 2021, the interest rate was 1.84 % and the Company did not owe any amounts on the Line of Credit.

As of September 30, 2021, the interest rate was 1.84 % and the Company did not owe any amounts on the Line of Credit.

Effective October 3, 2021, the Company renewed its unsecured Line of Credit, which changed the interest rate from LIBOR plus 1.75% to SOFR (Secured Overnight Financing Rate) plus 1.75%.

All other provisions remained the same.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements