What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-04 · 87 added, 153 removed, 249 unchanged (49% of the section changed)

FINANCIAL STATEMENTS

I SSUER DIRECT CORPORATION AND SUBSIDIARIES

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

September 30,

Current assets:

1 unchanged sentence

Accounts receivable (net of allowance for doubtful accounts of $ 774 and $ 675 , respectively)

Income tax receivable

Other current assets

17 unchanged sentences

Stockholders’ equity:

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.

Preferred stock, $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

Common stock $ 0.001 par value, 20,000,000 shares authorized, 3,794,838 and 3,793,538 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

Additional paid-in capital

4 unchanged sentences

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

I SSUER DIRECT CORPORATION AND SUBSIDIARIES

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

1 unchanged sentence

For the Three Months Ended

For the Nine Months Ended

September 30,

Cost of revenues

1 unchanged sentence

General and administrative

Sales and marketing expenses

Sales and marketing

Product development

2 unchanged sentences

Operating income

Other income, net

Income before taxes

Interest income

Net income before income taxes

Income tax expense

4 unchanged sentences

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

I SSUER DIRECT CORPORATION AND SUBSIDIARIES

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

1 unchanged sentence

For the Three Months Ended

For the Nine Months Ended

September 30,

Foreign currency translation adjustment

2 unchanged sentences

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

C ONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share amounts)

Other Accumulated Comprehensive

Total Stockholders’

Accumulated Other Comprehensive

Stockholders’

Income (Loss)

Balance at December 31, 2020

1 unchanged sentence

Exercise of stock awards, net of tax

Stock repurchase and retirement

Stock repurchase and retirement (See Note 3)

Foreign currency translation

Balance at March 31, 2021

Stock-based compensation expense

Exercise of stock awards, net of tax

Stock repurchase and retirement

Foreign currency translation

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, 2021

1 unchanged sentence

Exercise of stock awards, net of tax

Stock repurchase and retirement

Stock repurchase and retirement (See Note 3)

Foreign currency translation

Balance at March 31, 2022

Stock-based compensation expense

Exercise of stock awards, net of tax

Foreign currency translation

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.

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

C ONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash flows from operating activities:

3 unchanged sentences

Deferred income taxes

Non-cash interest expense

Stock-based compensation expense

7 unchanged sentences

Cash flows from investing activities:

Capitalized software

Purchase of fixed assets

5 unchanged sentences

Net change in cash and cash equivalents

Cash – beginning

Cash and cash equivalents – beginning

Currency translation adjustment

4 unchanged sentences

ISSUER DIRECT CORPORATION AND SUBSIDIARIES

N OTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

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.

The unaudited interim consolidated balance sheet as of March 31, 2022 and consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for the three-month periods ended March 31, 2022 and 2021 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 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.

Shares issuable upon the exercise of stock options totaling 50,250 were excluded in the computation of diluted earnings per common share during the three-month period ended March 31, 2022 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-month period ended March 31, 2021 because their impact was anti-dilutive.

Revenue Recognition

Substantially all the Company’s revenue comes from contracts with customers for subscriptions to its cloud-based products or contracts for Communications and Compliance products and services.

Customers consist of public corporate issuers and professional firms, such as investor and public relations firms.

In the case of our news distribution and webcasting offerings, our customers also include private companies.

Customers consist of public and private corporate issuers and professional firms, such as investor and public relations firms.

In the case of news distribution and webcasting offerings, customers also include private companies.

The Company accounts for a contract with a customer when there is an enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has economic substance, and collectability of the contract consideration is probable.

The Company’s revenues are measured based on consideration specified in the contract with each customer.

The Company's contracts include either a subscription to 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.

The Company’s contracts include either a subscription to its entire platform or certain modules within the 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.

3 unchanged sentences

Communications module, distributing press releases on a per release basis or conducting webcasts, virtual annual meetings or other events on a per event basis.

Performance obligations of Compliance contracts include providing subscriptions to our cloud-based Platform id.

Performance obligations of Compliance contracts include providing subscriptions to its cloud-based Platform id .

Compliance module, Whistleblower module or other stand-ready obligations to deliver services and annual report printing and distribution.

1 unchanged sentence

Set up fees for disclosure 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.

Set up fees for the transfer agent module and investor relations content management module are immaterial.

The Company’s subscription and service contracts are generally for one year, with automatic renewal clauses included in the contract until the contract is cancelled.

11 unchanged sentences

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 and press release packages which have been prepaid, however the releases have not yet been disseminated.

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 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.

Deferred revenue for the periods presented was primarily related to press release packages which have been prepaid, however the releases have not yet been disseminated, as well as, subscription and service contracts, which are billed upfront, quarterly or annually, however the revenue has not yet been recognized.

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

Deferred revenue as of March 31, 2022 and December 31, 2021, was $ 3,422,000 and $ 3,086,000 , respectively, and is expected to be recognized within one year.

Revenue recognized for the three months ended March 31, 2022 and 2021, that was included in the deferred revenue balance at the beginning of each reporting period, was approximately $ 1,391,000 and $ 1,075,000 , respectively.

Accounts receivable, net of allowance for doubtful accounts, related to contracts with customers was $ 3,950,000 and $ 3,291,000 as of March 31, 2022 and December 31, 2021, respectively.

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

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

As of September 30, 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.

As of March 31, 2022 and December 31, 2021, the Company has capitalized $ 53,000 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.

7 unchanged sentences

There is judgment involved with estimating the allowance for doubtful accounts and if the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against revenues.

Given the current environment of the COVID-19 pandemic, additional attention has been paid to the financial viability of our customers.

Given the current environment of the COVID-19 pandemic additional attention has been paid to the financial viability of its customers.

The Company generally writes-off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues its collection.

Concentration of Credit Risk

Financial instruments and related items which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable.

Financial instruments and related items which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivables.

The Company places its cash and temporary cash investments with credit quality institutions.

1 unchanged sentence

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 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.

As of March 31, 2022, the total amount exceeding such limit was $ 22,307,000 .

The Company also had cash-on-hand of $ 113,000 in Europe and $ 1,640,000 in Canada as of March 31, 2022.

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.

3 unchanged sentences

Actual results could differ from those estimates.

We comply with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No.

740 – Income Taxes which requires an asset and liability approach to financial accounting and reporting for income taxes.

Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.

6 unchanged sentences

Costs related to design or maintenance of the software are expensed as incurred.

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

For the Three Months Ended

For the Nine Months Ended

September 30,

Capitalized software development costs

Amortization included in cost of revenues

Amortization included in depreciation and amortization

The Company did not capitalize any costs for software development during the three-month periods ended March 31, 2022 and 2021.

The Company recorded amortization expense of $ 16,000 and $ 132,000 during the three-month periods ended March 31, 2022 and 2021, respectively, all of which was recorded in Cost of revenues on the Consolidated Statements of Income.

Impairment of Long-lived Assets

3 unchanged sentences

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 lease right-of-use (“ROU”) assets and 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.

The Company determines if an arrangement is a lease at inception.

Operating lease agreements are primarily for office space and are included within lease right-of-use (“ROU”) assets and lease liabilities on the consolidated balance sheet.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

Our variable lease payments consist of non-lease services related to the lease and payments under operating leases classified as short-term.

Variable lease payments consist of non-lease services related to the lease and payments under operating leases classified as short-term.

Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

As most of 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 include any lease payments made and exclude lease incentives.

As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

ROU assets include any lease payments due and exclude lease incentives.

Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.

Fair Value Measurements

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.

Accounting Standards Codification (“ASC”) Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value.

2 unchanged sentences

Generally, this includes debt and equity securities that are traded in an active market.

Our cash and cash equivalents are quoted at Level 1.

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;

4 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 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.

As of March 31, 2022 and December 31, 2021, the Company believes the fair value of its financial instruments, such as, accounts receivable, the line of credit, and accounts payable approximate their carrying amounts.

Translation of Foreign Financial Statements

4 unchanged sentences

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.

The Company records the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recorded as goodwill.

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

6 unchanged sentences

The Company expenses advertising as incurred.

During the three-month periods ended March 31, 2022 and 2021, advertising expense was $ 95,000 and $ 80,000 , respectively.

Stock-based Compensation

1 unchanged sentence

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

On May 23, 2014, the shareholders of the Company approved the 2014 Equity Incentive Plan (the “2014 Plan”).

On May 23, 2014, the shareholders of the Company approved the 2014 Equity Incentive Plan, as amended (the “2014 Plan”).

Under the terms of the 2014 Plan, the Company is authorized to issue incentive awards for common stock up to 200,000 shares to employees and other personnel.

2 unchanged sentences

The 2014 Plan is effective through March 31, 2024.

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:

As of March 31, 2022, there are 153,235 shares which remain to be granted under the 2014 Plan.

The following table summarizes information about stock options outstanding and exercisable at March 31, 2022:

Options Outstanding

8 unchanged sentences

15.01 - 27.11

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, 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.

As of March 31, 2022, the Company had unrecognized stock compensation related to the options of $ 577,000 , which will be recognized through 2026.

During the three months ended March 31, 2022, the Company granted 20,000 restricted stock units, which do not vest until the third anniversary of the grant date, to an employee with a grant date fair value of $ 26.00 per share.

During the three months ended March 31, 2021, the Company did not grant any restricted stock units.

As of March 31, 2022, there was $ 624,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2025.

Stock repurchase and retirement

3 unchanged sentences

Shares Repurchased

Total Number of Shares

Total Number of Shares Repurchased

Average Price Paid Per Share

13 unchanged sentences

March 1-31, 2021

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 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.

Generally, our leasing activity consists of office leases.

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 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 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.

Additionally, we have a three-year office lease in Florida, which was signed on January 4, 2019, at which time 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.

We also have facilities in Salt Lake City, Utah, and New York, 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 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 $ 2,105,000 as of September 30, 2021.

On March 1, 2022, the Company’s board of directors authorized a stock repurchase program under which the Company may repurchase up to $ 5,000,000 of its common shares.

The repurchase program does not have a specific expiration date, however, the board of directors may terminate it at any time.

During the three-month period ended March 31, 2022, the Company repurchased 6,200 shares as shown in the table below ($ in 000’s, except share or per share amounts):

Shares Repurchased

Total Number of Shares Repurchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Program

Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program

March 1-31, 2022

The Company recognized income tax expense of $ 174,000 for the three-month period ended March 31, 2022, compared to income tax expense of $ 163,000 during the same period of 2021.

At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year and this rate is applied to the results for the year-to-date period, and then adjusted for any discrete period items.

For the three-month periods ended March 31, 2022 and 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 a benefit related to the Foreign Derived Intangible Income (“FDII”) deduction as well as foreign rate differentials.

Leasing activity generally consists of office leases.

In March 2019, a new lease was signed to move the corporate headquarters to Raleigh, North Carolina.

The new lease, which had a lease commencement date of October 2, 2019, expires December 31, 2027 .

Minimum lease payments are $ 2,997,000 , not including a tenant improvement allowance of $ 488,000 , which is included in fixed assets as of March 31, 2022.

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

The Company also has an office in Salt Lake City, Utah, which is on a short-term lease that is month-to-month.

As a result, the short-term lease recognition exemption has been elected for this lease, which means, for leases not expected to extend beyond twelve months, a ROU asset or lease liability will not be recognized.

Lease liabilities totaled $ 1,941,000 as of March 31, 2022.

The current portion of this liability of $ 361,000 is included in Accrued expenses on the Consolidated balance sheets and the long-term portion of $ 1,580,000 is included in Lease liabilities on the Consolidated Balance Sheets.

2 unchanged sentences

The components of lease expense were as follows (in 000’s):

For the Three Months Ended

For the Nine Months Ended

September 30,

Three months ended

Lease expense

1 unchanged sentence

Variable lease expense

Total lease expense

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):

The weighted-average remaining non-cancelable lease term for our operating leases was 5.8 years as of March 31, 2022.

As of March 31, 2022, the weighted-average discount rate used to determine the lease liability was 3.77 %.

The future minimum lease payments to be made under non-cancelable operating leases on March 31, 2022, are as follows (in 000’s):

Year Ended December 31:

3 unchanged sentences

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.

We consider ourselves to be in a single reportable segment under the authoritative guidance for segment reporting, specifically a communications and compliance company for publicly traded and private companies.

The Company considers itself to be a single reportable segment under the authoritative guidance for segment reporting, specifically a communications and compliance company for publicly traded and private companies.

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

Three months ended September 30,

Revenue Streams

Communications

Nine months ended September 30,

Three months ended March 31,

Revenue Streams

Communications

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.

The Company did not have any customers during the three-month periods ended March 31, 2022 or 2021 that accounted for more than 10% of our revenue.

Line of Credit

Effective October 3, 2019, the Company renewed its unsecured Line of Credit, which increased the term to two years, with all other provisions remaining the same.

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

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.

The amount of funds available for borrowing remained $ 3,000,000 and the term remained two years.

As of March 31, 2022, the interest rate was 1.91 % and the Company did not owe any amounts on the Line of Credit.

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