What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-11-04 · 87 added, 142 removed, 134 unchanged (63% of the section changed)

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consists of several related but distinct Communications and Compliance modules that companies utilize every quarter.

Over the next several years, we expect the Communications portion of our business to continue to increase, both in terms of overall revenue and as compared to the Compliance portion of our business.

Therefore, as noted below, for the year ended December 31, 2020, we began reporting our revenue as Communications and Compliance revenues rather than Platform & Technology and Services revenues as we have done in the past.

Communications revenues were 64% of total revenue during the first nine months of 2021 and 2020.

For the full year of 2020, Communications revenues were 64% of total revenue, which is a higher percentage of our total revenue as compared to 57% and 45% of revenues for the years ended December 31, 2019 and 2018, respectively.

In 2021, the growth from our Communications business was led by increased demands for our ACCESSWIRE news brand as well as increased subscriptions of Platform id .

In 2020, growth from our Communications business was led by the market demands for our events products that were upgraded to handle virtual needs in the industry, as well as our ACCESSWIRE news brand.

We plan to continue to invest in our Platform id.

We disclose our revenues in the following two main categories:

(i) Communications and (ii) Compliance.

Set forth below is an infographic depicting the products included in each of these two main categories we provide today:

Over the next several years, we expect the Communications portion of our business to increase, both in terms of overall revenue and as compared to the Compliance portion of our business.

Therefore, we plan to continue to invest in our Platform id.

communications offerings as well as additional offerings that we intend to incorporate into our Communications product lineup.

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We believe such partnerships will continue to yield increased exposure to a targeted customer base that could impact our revenue and overall brand in the market.

As noted above, in the past we have disclosed revenues in two main categories:

(i) Platform and Technology and (ii) Services.

However, to be more reflective of our strategy of primarily being a communications company, we have decided to re-categorize and disclose our revenues in the following two main categories:

(i) Communications and (ii) Compliance.

Set forth below is an infographic depicting the products included in each of these two main categories we provide today:

Communications

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We believe ACCESSWIRE is becoming a competitive alternative in the newswire industry because we have been able to use our technological advancements to allow customers to self-edit releases or use our editorial staff as desired to edit releases.

We also continue to expand our distribution points, improve our targeting and enhance our analytics reporting.

During 2020 we released a new e-commerce element to our ACCESSWIRE product, whereby customers can self-select their distribution and then register, upload their press release and tell their story in minutes without contacting a sales or operational employee.

We believe the above strategy will enable us to continue to add new customers during the remainder of 2021 and beyond.

We continue to expand our distribution points, improve our targeting and enhance our analytics reporting.

We also offer an e-commerce element to our ACCESSWIRE product, whereby customers can self-select their distribution, register, and then upload their press release for editorial review in minutes.

We believe these enhancements have helped lead to an increase in ACCESSWIRE revenues and customers each year compared to the prior year, a trend we expect to continue over the next several years.

We have also been able to maintain high gross margins while providing our customers flexible pricing, with options to pay per release or enter longer-term subscriptions for a designated package of releases.

Currently, ACCESSWIRE is available within our Platform id.

subscription, or as a stand-alone offering.

Since the beginning of 2021, we have been removing unlimited newswire subscriptions to preserve the per unit pricing of our newswire products.

This strategic change has decreased and may continue to decrease the number of net Platform id.

subscriptions;

however, the majority of these customers remain active, buying packages of releases, resulting in similar or greater average revenue.

Like other newswires globally, ACCESSWIRE is dependent upon several key partners for its news distribution.

Disruption in any of our partnerships could have a materially adverse impact on ACCESSWIRE and our overall business.

ACCESSWIRE revenues and customers have increased each year compared to the prior year, a trend we expect to continue over the next several years.

A significant portion of the growth has been due to increased private company customers, through either direct-sales, e-commerce or through partner and reseller relationships.

A natural expansion to our ACCESSWIRE and investor relations website business is a corporate Newsroom, which we began developing this year and recently brought to market during the middle of the third quarter of this year.

A natural expansion to our ACCESSWIRE and investor relations website business is a corporate Newsroom, which we began developing last year and brought to market during the middle of the third quarter of 2021.

This product offering can be an add-on to any customer’s ACCESSWIRE or Platform id.

The Newsroom suite includes a custom newsroom page builder, a brand asset manager and contact manager.

Our Newsroom suite addresses the needs of our customers looking to build connections with media, journalists, its customers and if applicable the investment community.

According to a recent survey from TekGroup, a majority of journalists and media professionals indicated the importance of newsrooms that includes digital media, press kits and video.

Our Newsroom suite addresses the needs of our customers looking to build connections with media, journalists, customers and if applicable the investment community.

According to a survey from TekGroup, a majority of journalists and media professionals indicated the importance of newsrooms that include digital media, press kits and video.

We believe our Newsroom suite accomplishes this by including the following three components:

Newsroom page – a custom URL, self-publishing system for customers that automatically add ACCESSWIRE news to their newsroom and allows them the ability to add any other mention, article or post from the web to their newsroom.

Customers can self-manage this platform and customize things like colors, font, logo, images, social integration, and contact and customer URLs from our platform.

Brand Asset Manager – a customizable library of images, video, press kits, which can be shared both privately and publicly, as well as integrated into the ACCESSWIRE editor for easy access of customers’ high- resolution images.

Newsroom page - a custom URL, self-publishing system for customers that automatically adds ACCESSWIRE news to their newsroom and allows them the ability to add any other mention, article or post from the internet to their newsroom.

Customers can self-manage this platform to customize colors, font, logo, images, social integration, and contact and customer URLs.

Brand Asset Manager - a customizable library of images, video and press kits, which can be shared both privately and publicly, as well as integrated into the ACCESSWIRE editor for easy access of customers’ high- resolution images.

Brand Asset Manager is one of the first media file managers built into the press release creation process.

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The demand for these products with a virtual component was at an all-time high for us in 2020 in large part due to the COVID-19 pandemic.

The industry overall has begun to see a reduction in the number of events, specifically annual meetings and deal/non-deal roadshows, as customers are relying on internal enterprise solutions or are returning to pre-pandemic travel and in-person meetings, reducing the need for a virtual component.

However, for the nine months ended September 30, 2021, our events business has increased compared to pre-pandemic results from 2019 but has declined compared to 2020.

We expect this heightened demand for virtual offerings will continue for the remainder of 2021, although, there can be no assurances it will continue in the future and may return to pre-pandemic levels.

The industry overall has begun to see a reduction in the number of virtual events, specifically annual meetings and deal/non-deal roadshows, as customers are relying on internal enterprise solutions or are returning to pre-pandemic travel and in-person meetings, reducing the need for a virtual component.

Traditional earnings calls and webcasts are a highly competitive market with the majority of the business being driven from practitioners in investor relations and communications firms.

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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.

Additionally, as a commitment to broadening the reach of our webcast platform, we broadcast live all earnings events, whether they are conducted on our platform or not, within our shareholder outreach module, which helps drive new audiences and give companies the ability to view their analytics and engagement of each event.

In the first half of 2021, we released the first version of this real-time engagement and analytics dashboard to our customers using Platform id.

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.

Additionally, as a commitment to broadening the reach of our webcast platform, we broadcast live additional companies’ earnings events, whether they are conducted on our platform or not, within our shareholder outreach module, which helps drive new audiences and give companies the ability to view their analytics and engagement of each event.

During the first half of 2021, we released the first version of this real-time engagement and analytics dashboard to our customers subscribing to Platform id.

Our VisualWebcaster Platform (“VWP”) is a leading cloud-based webcast, webinar and virtual meeting platform that delivers live and on-demand streaming of events to audiences of all sizes.

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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.

As a result of COVID-19 and as noted above, most companies have been holding meetings virtually over the past 18 months, which has increased demand for this product.

There can be no assurance that this demand will continue after the end of the pandemic.

Professional Conference and Events Software

At the end of 2018, we released a new module to Platform id.

, centered around the professional conference organizer (“PCO”).

This subscription offering is being licensed to investor conference organizers, which in the aggregate we believe held an estimated 1,000 plus events a year prior to 2020.

This number significantly decreased in 2020 and is expected to remain at significantly decreased numbers in the near future and possibly long-term as a result of COVID-19.

Our professional conference and events software, which is available as a mobile app, offers organizers, issuers and investors the ability to register, request and approve one-on-one meetings, manage schedules, perform event promotion and sponsorship, print attendee badges and manage lodging.

Our professional conference and events software is a subscription offering we currently license to investor conference organizers, which in the aggregate we believe held an estimated 1,000 plus events a year prior to 2020.

This number significantly decreased in 2020 and is expected to remain at decreased levels in the near future and possibly long-term as a result of COVID-19.

This software, which is also available as a native mobile app, offers organizers, issuers and investors the ability to register, request and approve one-on-one meetings, manage schedules, perform event promotion and sponsorship, print attendee badges and manage lodging.

This cloud-based product can be used in a virtual or in person conference setting and is integrated within Platform id.

to enhance our Communications module subscription offerings of newswire, newsrooms, webcasting and shareholder targeting.

We believe this integration gives us a unique offering for PCOs that is not available elsewhere in the market.

We believe entering this business expands our current Communications revenue base and assists in making Platform id.

We believe this integration gives us a unique offering for professional conference organizers that is not available elsewhere in the market.

We believe this software helps make Platform id.

a platform of choice for investment banks, issuers and investors.

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Disclosure Software and Services

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.

’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.

Our disclosure business also offers companies the ability to use our in-house staff to assist in the conversion, tagging and filing of their documents.

We generate revenues in disclosure both from software and services and, in most cases, customers have both components within their annual agreements, while others pay for services as they are completed.

Our Inline XBRL (Inline Extensible Business Reporting Language or “iXBRL”) product now includes upgrades that meet newly mandated SEC disclosure requirements.

We generate revenues in disclosure from both software and services and, in most cases, customers have both components within their annual agreements, while others pay for services as they are completed.

Our Inline XBRL (Inline Extensible Business Reporting Language or “iXBRL”) product now includes upgrades that meet mandated SEC disclosure requirements which became effective last year.

These requirements began impacting most of our customers on June 15, 2021, however, we had a number of customers previously file using our iXBRL upgrades.

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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 are introduced to new IPO customers and other larger cap customers listed on the NYSE.

As a supported and subsidized bundle product of the New York Stock Exchange (“NYSE”) offerings, we are introduced to new initial public offering (“IPO”) customers and other larger cap customers listed on the NYSE.

Since 2014, we have been a named NYSE subsidy provider of this Whistleblower solution.

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Annual Meeting / Proxy Voting Platform

During early 2020, we upgraded our webcasting and annual meeting platform to bring to market a virtual annual meeting solution.

This solution provides our customers the ability to conduct their annual meetings in a fully virtual manner as was often required during the COVID-19 pandemic.

Our solution incorporates shareholder and guest registration, voting integration, real-time statistics on attendance, audio video and presentation features as well as fully managed meeting managers and inspector of elections.

By adding a component of our webcasting and events business, we were able to offer a complete annual meeting solution, which incorporated real-time voting.

For perspective, during 2019 approximately 300 North American public companies opted for a virtual component to their annual meeting compared to an estimated 4,000+ public companies in 2020.

In 2021, it is estimated the market decreased its virtual component needs to an estimated 3,000 public companies.

We experienced a proportionate decrease in the demand for our virtual annual meetings similar to that of the market in general.

Although we believe a virtual component to an annual meeting is both a benefit to all shareholders and a corporate governance advantage, there can be no assurances this product has longevity in the market.

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 customers and offers both full-set mailing and notice of internet availability options.

This module has been incorporated within our webcasting offering to enable our customers the ability to conduct their annual meetings in-person or fully virtual, which has often been required since the COVID-19 pandemic.

Shareholder Distribution

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Results of Operations

Comparison of results of operations for the three and nine months ended September 30, 2021 and 2020:

Three months ended

Nine months ended

September 30,

Revenue Streams

Comparison of results of operations for the three months ended March 31, 2022 and 2021 (in 000’s):

Communications

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Gross margin %

Total revenue increased by $583,000, or 12%, to $5,465,000 during the three-month period ended September 30, 2021, as compared to $4,882,000 during the same period of 2020.

Total revenue increased by $2,383,000, or 17%, to $16,165,000 during the nine-month period ended September 30, 2021, compared to $13,782,000 during the same period of 2020.

The increase was due to increases in both the Communications and Compliance revenue streams.

Communications revenue increased $330,000, or 10%, and $1,606,000, or 18%, during the three and nine-month periods ended September 30, 2021, respectively, as compared to the same periods of 2020.

The increase in revenue is due primarily to an increase in revenue from our ACCESSWIRE news brand, as a result of both an increase in average price per release and an increase in volume.

ACCESSWIRE revenue for the three and nine months ended September 30, 2021, increased approximately 31% and 37%, respectively, compared to the same periods of the prior year.

We also benefited from an increase in subscriptions of Platform id.

During the three and nine months ended September 30, 2021, we signed 40 and 126 new licenses of Platform id.

with annual contract value of $306,000 and $1,029,000, respectively.

This brings our total subscriptions of Platform id.

to 418 with annual contract value of $3,499,000, as of September 30, 2021, compared to 341 subscriptions with annual contract value of $2,677,000 as of December 31, 2020.

These increases were partially offset by a decrease in revenue from our events and webcasting business due to a lower demand for events, virtual annual meetings and virtual conferences.

While revenue of this product decreased compared to the prior year, a year in which we experienced higher demand as a result of the COVID-19 pandemic, it still remains above the pre-pandemic levels of 2019.

Communications revenue was 67% and 64% of total revenue during the three and nine months ended September 30, 2021, respectively, as compared to 69% and 64% during the same periods of the prior year.

Compliance revenue increased $253,000, or 17%, and $777,000, or 16%, during the three and nine-month periods ended September 30, 2021, as compared to the same periods of 2020.

The increase in revenue during these periods is primarily related to an increase in revenue from print and proxy fulfillment services due to increased projects associated with annual meetings and special transactions.

Revenue from our transfer agent services also increased during the periods due to an increase in corporate transactions and directives.

Revenue from these two services tends to fluctuate from period to period depending on corporate transactions and market activity.

No customers accounted for more than 10% of the revenues during the three and nine-month periods ended September 30, 2021, or 2020.

Revenue Backlog

At September 30, 2021, our deferred revenue balance was $2,696,000, which we expect to recognize primarily over the next twelve months, compared to $2,212,000 at December 31, 2020, an increase of 22%.

Total revenue increased by $308,000, or 6%, to $5,288,000 during the three months ended March 31, 2022, as compared to $4,980,000 for the same period in 2021.

The increase is attributable to an increase in revenue in both our Communications business and Compliance businesses.

Communications revenue increased $196,000, or 6%, to $3,383,000 for the three months ended March 31, 2022, as compared to $3,187,000 for the same period of 2021.

The increase in revenue is primarily due to an increase in revenue from our ACCESSWIRE product, which increased 16% during the first quarter of 2022 compared to the first quarter of 2021, primarily as a result of higher volume.

We also generated increased revenue from our investor relations websites and news feeds.

These increases were partially offset by a decrease in revenue from our events and webcasting business due to lower demand for events compared to the first quarter of 2021, the timing of some events being pushed to the second quarter and lower teleconference revenue.

Communications revenue remained 64% of total revenue during the three months ended March 31, 2022, as compared to the same period of 2021.

Compliance revenue increased $112,000, or 6%, during the three months ended March 31, 2022, as compared to the same period of 2021.

The increase was due primarily to an increase in revenue from print and proxy fulfilment services due to increased projects associated with annual meetings and special transactions, partially offset by a decrease in revenue from our transfer agent services due to less corporate actions and a decline from our legacy ARS business due to customer attrition.

2022 Deferred revenue

As of March 31, 2022, our deferred revenue balance was $3,422,000, which we expect to recognize over the next twelve months, compared to $3,086,000 at December 31, 2021, an increase of 11%.

Deferred revenue primarily consists of advance billings for subscriptions of our cloud-based products and pre-paid packages of our news distribution product as well as advance billings for annual service contracts.

Cost of Revenues and Gross Margin

Cost of revenues

Communications cost of revenues consists primarily of direct labor costs, newswire distribution costs, teleconferencing costs and third-party licensing costs.

Compliance cost of revenue consists primarily of direct labor costs, warehousing, logistics, print production materials, postage, and amortization of capitalized software costs related to our disclosure software.

Cost of revenues decreased by $32,000, or 2%, and increased $227,000, or 6%, during the three and nine-month periods ended September 30, 2021, respectively, as compared to the same periods of 2020.

Overall gross margin increased $615,000, or 18%, and $2,156,000, or 22%, during the three and nine-month periods ended September 30, 2021, respectively, as compared to the same periods of the prior year.

Gross margin percentages increased to 75% and 74% during the three and nine months ended September 30, 2021, respectively, compared to 72% and 71% during the same periods of 2020.

Gross margin percentage from Communications revenue increased to 78% and 75% during the three and nine-month periods ended September 30, 2021, respectively, as compared to 74% and 73% during the same periods of 2020.

The increase in gross margin percentage is primarily due to product mix, as a higher percentage of revenue during 2021 is from our newswire business compared to our events and webcasting business which generates a lower gross margin.

Distribution costs were also lower during the period due to the mix of foreign and domestic news dissemination.

Gross margins from our Compliance revenue increased to 69% and 71% for the three and nine-month periods ended September 30, 2021, respectively, as compared to 67% for both periods of 2020.

The increase in gross margin percentage was due to an increase in revenue from our transfer agent services as well as a decrease in amortization of capitalized software associated with our disclosure software.

Operating Expenses

General and Administrative Expense

Compliance and other costs of revenue consists primarily of direct labor costs, warehousing, logistics, print production materials, postage, and amortization of capitalized software costs related to our disclosure software.

Cost of revenues decreased by $162,000, or 12%, during the three months ended March 31, 2022, as compared to the same period of 2021.

Overall gross margin increased $470,000, or 13%, during the three months ended March 31, 2022, compared to the same period of 2021.

As a result, overall gross margin percentage increased to 77% during the three months ended March 31, 2022, as compared to 72% during the same period of 2021.

Cost of revenues associated with our Communications revenue decreased $112,000, or 13%, during the three months ended March 31, 2022 as compared to the same period of 2021.

This decrease is primarily due to lower teleconferencing costs as well as variable costs associated with our events and webcasting business.

Gross margin percentage associated with our Communications revenue was 78% for the three months ended March 31, 2022 compared to 73% for the same period of 2021.

The increase in gross margin percentage is associated with an increase in press release revenue as a percentage of total Communications revenue, combined with the impact of lower teleconferencing costs noted above.

Cost of revenues associated with our Compliance revenue decreased $50,000, or 10%, during the three months ended March 31, 2022 as compared to the same period of 2021.

The decrease is due to lower amortization of capitalized software associated with our disclosure software, which became fully amortized in 2021.

This decrease was partially offset by higher print, postage and fulfillment costs associated with increased print and proxy fulfillment revenue.

As a result, gross margin percentage associated with our Compliance revenue increased to 75% for the three months ended March 31, 2022, compared to 71% for the same period of 2021.

General and administrative

General and administrative expenses consist primarily of salaries, bonuses, stock-based compensation, insurance, fees for professional services, general corporate expenses (including bad debt expense) and facility and equipment expenses.

General and administrative expenses were $1,258,000 and $3,923,000 during the three and nine months ended September 30, 2021, an increase of $206,000, or 20%, and $458,000, or 13%, compared to the same periods of the prior year.

The increase is primarily due to higher personnel expenses, insurance expense and professional fees during the three and nine months ended September 30, 2021.

As a percentage of revenue, general and administrative expenses were 23% and 24% for the three and nine-month periods ended September 30, 2021, respectively, compared to 22% and 25% for the same periods of 2020.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of salaries, stock-based compensation, sales commissions, advertising expenses and other marketing expenses.

Sales and marketing expenses were $1,349,000 and $3,633,000 for the three and nine-month periods ended September 30, 2021, respectively, an increase of $376,000, or 39%, and $814,000, or 29%, compared to the same periods ended September 30, 2020.

These increases are directly related to our investment in our sales and marketing initiatives with an increase in headcount, commissions and digital marketing.

As a percentage of revenue, sales and marketing expenses were 25% and 22% during the three and nine-month periods ended September 30, 2021, respectively, compared to 20% for both periods of the prior year.

Product Development Expenses

General and administrative expenses were $1,683,000 for the three months ended March 31, 2022, an increase of $279,000 or 20%, as compared to the same period of 2021.

The increase is primarily due to one-time executive recruiting fees of approximately $90,000, an increase in stock compensation expense of $86,000 and an increase in bad debt expense.

As a percentage of revenue, General and administrative expenses were 32% for the three months ended March 31, 2022, as compared to 28% for the same period of 2021.

Sales and marketing

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 were $1,264,000 for the three months ended March 31, 2022, an increase of $190,000, or 18%, as compared to the same period of 2021.

This increase is directly related to our investment in our sales and marketing initiatives with an increase in headcount and costs associated with our digital marketing strategy.

As a percentage of revenue, Sales and marketing expenses were 24% for the three months ended March 31, 2022, as compared to 22% for the same period of 2021.

Product development

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 $161,000, or 76%, and $307,000, or 54%, during the three and nine-month periods ended September 30, 2021, compared to the same periods in 2020.

The increase is due to an increase in headcount within the development team and use of more specialized consultants.

We anticipate product development expenses to continue to increase relative to previous periods for the foreseeable future as we continue to update current products and develop new add-ons to Platform id.

During the three and nine-month periods ended September 30, 2021, we capitalized $54,000 and $161,000, respectively, of costs related to the development of our newsroom product, which launched at the end of July 2021.

No costs were capitalized during the three and nine months ended September 30, 2020.

As a percentage of revenue, product development expenses were 7% and 5% for the three and nine-month periods ended September 30, 2021, respectively, compared to 4% during both of the same periods of 2020.

Depreciation and Amortization

Depreciation and amortization expenses decreased $29,000, or 16%, and $143,000, or 24%, during the three and nine-month periods ended September 30, 2021, respectively, as compared to the same periods of 2020.

The decrease is primarily related to intangible assets associated with the PIR acquisition that became fully amortized in the prior year.

Other income, net

Other income, net, for the three and nine months ended September 30, 2021, primarily represents a benefit of $366,000 related to the employee retention credit enacted under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).

Also included in this line is interest income on deposit and money market accounts.

For the prior year, other income, net also included 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 $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.

Product development costs increased $26,000, or 10%, to $275,000 during the three months ended March 31, 2022, as compared to 2021.

The increase is due to an increase in headcount within the development team.

As a percentage of revenue, Product development expenses were 5% for the three months ended March 31, 2022 and 2021.

We 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.

For the three-month periods ended March 31, 2022 and 2021, the variance between our 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 for the three-month period ended March 31, 2021.

Liquidity and capital resources

As of September 30, 2021, we had $22,415,000 in cash and cash equivalents and $3,037,000 in net accounts receivable.

Current liabilities at September 30, 2021, totaled $5,078,000 including our accounts payable, deferred revenue, accrued payroll liabilities, income taxes payable, current portion of lease liabilities and other accrued expenses.

At September 30, 2021, our current assets exceeded our current liabilities by $21,163,000.

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.

As of March 31, 2022, we had $24,271,000 in cash and cash equivalents and $3,950,000 in net accounts receivable.

Current liabilities as of March 31, 2022, totaled $6,324,000 including our accounts payable, deferred revenue, accrued payroll liabilities, income taxes payable, current portion of lease liabilities and other accrued expenses.

On March 31, 2022, our current assets exceeded our current liabilities by $22,776,000.

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

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 we did not owe any amounts on the Line of Credit.

Disclosure about Off-Balance Sheet Arrangements

We do not have any transactions, agreements or other contractual arrangements that constitute off-balance sheet arrangements.

The following statements and certain statements made elsewhere in this document are based upon current expectations.

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To date, we have seen both positive and negative impacts to our business.

Physical, in-person conferences have been delayed and in the prior year there was a delay in transactions processed by the Depository Trust Company and banks and brokers in our transfer agent business.

However, our ability to pivot and enhance our product offering with our virtual products generated increased revenue over the past 18 months.

Physical, in-person conferences have been delayed and in the past there have been delays in transactions processed by the Depository Trust Company and banks and brokers in our transfer agent business.

However, our ability to pivot and enhance our product offering with our virtual products generated increased revenue over the past two years.

Despite the short-term increase in revenue, the concentrations of our customer base within middle, small and micro-cap customers make it reasonably possible that we are vulnerable to the risk of a near-term negative impact related to the COVID-19 pandemic if a substantial portion of these customers are forced to scale back or cease operations.

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Overall, the demand for our platforms and services continues to be stable in a majority of the segments we serve.

Although we experienced a decline in our webcasting and events business since 2020, we are seeing increased demand from the pre-pandemic period for virtual events using both our conference software and webcasting products, as customers are opting to hold virtual meetings.

During the first and second quarter of 2020, we were able to pivot portions of our platform to specifically address COVID-19 business limitations.

This resulted in a new virtual annual meeting product, which combines our webcasting and proxy voting technology together.

Additionally, we also upgraded technology of our conference software product to allow conferences to go entirely virtual and hold one-on-one meetings with audio, video and sharing features.

We believe these developments will assist us not only in delivering attractive solutions to the market, but also lead us into new opportunities during this changing and challenging environment.

The extent to how long these shifts in demands will occur is uncertain at this time and could be longer than just 2020 and 2021.

However, we cannot make any assurances at this time that our product upgrades will be accepted by customers and revenue will be significant enough to offset losses in other aspects of our business in the long-term.

The success of our Communications offering has been led by our ACCESSWIRE branded newswire, for which we believe we will continue to see increased demand throughout 2022 and beyond.

Although we experienced a decline in demand for our webcasting and events business since 2020, we believe we are well-positioned in this market with our ability to hold both in-person and virtual events using both our conference software and webcasting products.

We believe this allows us to not only deliver attractive solutions to the market but may also lead us into new opportunities during this changing and challenging environment.

The COVID-19 pandemic has caused shifts in demands for these products, and we are uncertain at this time if these shifts will continue and cannot make any assurances at this time that our products will be accepted by customers in the long-term.

The transition to a platform subscription model has been and will continue to be key for our long-term sustainable growth.

We will also continue to focus on the following key strategic initiatives during the remainder of 2022:

Expanding our Communications products and adapt to this changing environment,

Growing through acquisitions in areas of strategic focus,

Expanding our Communications products and adapting to this changing industry,

Evaluating and completing acquisitions in areas of strategic focus,

Expanding our Communications sales and marketing teams and digital marketing strategy,

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What changed 10-Q

Item 2. Management’s Discussion and Analysis