CREDITRISKMONITOR COM INC, 10-Q filed on 10 Nov 20
 | XBRL Documents
v3.20.2
Document and Entity Information - shares
 9 Months Ended
Sep. 30, 2020
Nov. 10, 2020
Cover [Abstract]    
Entity Registrant Name CREDITRISKMONITOR COM INC  
Entity Central Index Key 0000315958  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Shell Company false  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   10,722,401
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2020  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q3  
Entity Address, State or Province NY  
v3.20.2
CONDENSED BALANCE SHEETS (Unaudited) - USD ($)
Sep. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 10,451,155 $ 8,275,836
Accounts receivable, net of allowance 1,945,280 2,287,921
Other current assets 596,558 549,821
Total current assets 12,992,993 11,113,578
Property and equipment, net 405,131 477,973
Operating lease right-to-use asset 2,245,896 2,380,974
Goodwill 1,954,460 1,954,460
Other assets 108,437 35,723
Total assets 17,706,917 15,962,708
Current liabilities:    
Unexpired subscription revenue 9,189,823 8,651,843
Accounts payable 47,541 137,500
Current portion of operating lease liability 158,117 147,229
Current portion of bank loan 1,102,833 0
Accrued expenses 1,135,506 1,344,550
Total current liabilities 11,633,820 10,281,122
Deferred taxes on income, net 397,528 521,765
Unexpired subscription revenue, less current portion 188,906 166,169
Bank loan, less current portion 458,667 0
Operating lease liability, less current portion 2,179,856 2,299,433
Total liabilities 14,858,777 13,268,489
Stockholders' equity:    
Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued 0 0
Common stock, $.01 par value; authorized 32,500,000 shares; issued and outstanding 10,722,401 shares 107,224 107,224
Additional paid-in capital 29,747,939 29,705,673
Accumulated deficit (27,007,023) (27,118,678)
Total stockholders' equity 2,848,140 2,694,219
Total liabilities and stockholders' equity $ 17,706,917 $ 15,962,708
v3.20.2
CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2020
Dec. 31, 2019
Stockholders' equity:    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, authorized (in shares) 5,000,000 5,000,000
Preferred stock, issued (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 32,500,000 32,500,000
Common stock, issued (in shares) 10,722,401 10,722,401
Common stock, outstanding (in shares) 10,722,401 10,722,401
v3.20.2
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) [Abstract]        
Operating revenues $ 4,037,456 $ 3,673,241 $ 11,598,210 $ 10,736,581
Operating expenses:        
Data and product costs 1,514,659 1,421,290 4,556,456 4,316,780
Selling, general and administrative expenses 2,110,280 1,962,150 6,919,804 6,277,294
Depreciation and amortization 52,931 52,667 160,736 153,701
Total operating expenses 3,677,870 3,436,107 11,636,996 10,747,775
Income (loss) from operations 359,586 237,134 (38,786) (11,194)
Other income 916 40,223 27,017 124,322
Income (loss) before income taxes 360,502 277,357 (11,769) 113,128
Benefit from (provision for) income taxes (79,420) (73,767) 123,424 (57,536)
Net income $ 281,082 $ 203,590 $ 111,655 $ 55,592
Net income per share - Basic and diluted (in dollars per share) $ 0.03 $ 0.02 $ 0.01 $ 0.01
Weighted average number of common shares outstanding - Basic (in shares) 10,722,401 10,722,401 10,722,401 10,722,401
Weighted average number of common shares outstanding - Diluted (in shares) 10,746,834 10,722,401 10,730,545 10,725,252
v3.20.2
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit [Member]
Total
Balance at Dec. 31, 2018 $ 107,224 $ 29,650,760 $ (26,800,152) $ 2,957,832
Balance (in shares) at Dec. 31, 2018 10,722,401      
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income (loss) $ 0 0 55,592 55,592
Stock-based compensation 0 40,522 0 40,522
Balance at Sep. 30, 2019 $ 107,224 29,691,282 (26,744,560) 3,053,946
Balance (in shares) at Sep. 30, 2019 10,722,401      
Balance at Jun. 30, 2019 $ 107,224 29,678,817 (26,948,150) 2,837,891
Balance (in shares) at Jun. 30, 2019 10,722,401      
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income (loss) $ 0 0 203,590 203,590
Stock-based compensation 0 12,465 0 12,465
Balance at Sep. 30, 2019 $ 107,224 29,691,282 (26,744,560) 3,053,946
Balance (in shares) at Sep. 30, 2019 10,722,401      
Balance at Dec. 31, 2019 $ 107,224 29,705,673 (27,118,678) $ 2,694,219
Balance (in shares) at Dec. 31, 2019 10,722,401     10,722,401
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income (loss) $ 0 0 111,655 $ 111,655
Stock-based compensation 0 42,266 0 42,266
Balance at Sep. 30, 2020 $ 107,224 29,747,939 (27,007,023) $ 2,848,140
Balance (in shares) at Sep. 30, 2020 10,722,401     10,722,401
Balance at Jun. 30, 2020 $ 107,224 29,736,129 (27,288,105) $ 2,555,248
Balance (in shares) at Jun. 30, 2020 10,722,401      
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income (loss) $ 0 0 281,082 281,082
Stock-based compensation 0 11,810 0 11,810
Balance at Sep. 30, 2020 $ 107,224 $ 29,747,939 $ (27,007,023) $ 2,848,140
Balance (in shares) at Sep. 30, 2020 10,722,401     10,722,401
v3.20.2
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Cash flows from operating activities:    
Net income $ 111,655 $ 55,592
Adjustments to reconcile net income to net cash provided by operating activities:    
Deferred income taxes (124,237) 74,099
Depreciation and amortization 160,736 153,701
Operating lease right-to-use asset, net 26,389 31,935
Stock-based compensation 42,266 40,522
Changes in operating assets and liabilities:    
Accounts receivable 342,641 609,260
Other current assets (46,737) 39,216
Other assets (72,714) (13,041)
Unexpired subscription revenue 560,717 (166,409)
Accounts payable (89,959) (68,797)
Accrued expenses (209,044) (129,771)
Net cash provided by operating activities 701,713 626,307
Cash flows from investing activities:    
Purchase of property and equipment (87,894) (124,856)
Net cash used in investing activities (87,894) (124,856)
Cash flows from financing activities:    
Proceeds from bank loan 1,561,500 0
Net cash provided from financing activities 1,561,500 0
Net increase in cash and cash equivalents 2,175,319 501,451
Cash and cash equivalents at beginning of period 8,275,836 8,066,899
Cash and cash equivalents at end of period $ 10,451,155 $ 8,568,350
v3.20.2
Basis of Presentation
 9 Months Ended
Sep. 30, 2020
Basis of Presentation [Abstract]  
Basis of Presentation
(1) Basis of Presentation

The accompanying unaudited condensed financial statements of CreditRiskMonitor.com, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosure required by generally accepted accounting principles (“GAAP”) in the United States for complete financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the accompanying unaudited condensed financial statements reflect all material adjustments, including normal recurring accruals, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented, and have been prepared in a manner consistent with the audited financial statements for the fiscal year ended December 31, 2019.

The results of operations for the three and nine months ended September 30, 2020 and 2019 are not necessarily indicative of the results for an entire fiscal year.

The December 31, 2019 balance sheet has been derived from the audited financial statements at that date, but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the audited financial statements and the footnotes for the fiscal year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K.
v3.20.2
Recently Issued Accounting Standards
 9 Months Ended
Sep. 30, 2020
Recently Issued Accounting Standards [Abstract]  
Recently Issued Accounting Standards
(2) Recently Issued Accounting Standards

The Financial Accounting Standards Board (“FASB”) and the SEC have issued certain accounting pronouncements that will become effective in subsequent periods; however, management does not believe that any of those pronouncements would have significantly affected the Company’s financial accounting measurements or disclosures had they been in effect during the interim periods for which financial statements are included in this quarterly report. Management also believes those pronouncements will not have a significant effect on the Company’s future financial position or results of operations.
v3.20.2
Revenue Recognition
 9 Months Ended
Sep. 30, 2020
Revenue Recognition [Abstract]  
Revenue Recognition
(3) Revenue Recognition

The Company applies FASB Accounting Standards Codification (“ASC”) 606, Revenue from Contract with Customers (“ASC 606”) to recognize revenue. ASC 606 requires an entity to apply the following five-step approach: (1) identify the contract(s) with a customer; (2) identify each performance obligation in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation; and (5) recognize revenue when or as each performance obligation is satisfied. The Company’s primary source of revenue is subscription income which is recognized ratably over the subscription term.
v3.20.2
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2020
Stock-Based Compensation [Abstract]  
Stock-Based Compensation
(4) Stock-Based Compensation

The Company applies ASC 718, Compensation-Stock Compensation (“ASC 718”) to account for stock-based compensation.

The following table summarizes the stock-based compensation expense for stock options that was recorded in the Company’s results of operations in accordance with ASC 718 for the three and nine months ended September 30:
 
  
3 Months Ended
September 30,
  
9 Months Ended
September 30,
 
  
2020
  
2019
  
2020
  
2019
 
Data and product costs
 
$
4,282
  
$
4,789
  
$
15,448
  
$
17,198
 
Selling, general and administrative expenses
  
7,528
   
7,676
   
26,818
   
23,324
 
                 
  
$
11,810
  
$
12,465
  
$
42,266
  
$
40,522
 
v3.20.2
Fair Value Measurements
 9 Months Ended
Sep. 30, 2020
Fair Value Measurements [Abstract]  
Fair Value Measurements
 (5) Fair Value Measurements

The Company records its financial instruments at fair value in accordance with accounting guidance. The determination of fair value assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The fair value hierarchy is broken down into three levels based on the source of inputs as follows: (a) Level 1 – valuations based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; (b) Level 2 – valuations based on quoted prices in markets that are not active, or financial instruments for which all significant inputs are observable, either directly or indirectly; and (c) Level 3 – valuations based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable, thus, reflecting assumptions about the market participants.

The Company’s cash and cash equivalents are stated at fair value. The carrying value of accounts receivable, other current assets, bank loan, accounts payable and other current liabilities approximates fair market value because of the short maturity of these financial instruments.

The Company’s cash equivalents are generally classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

The table below sets forth the Company’s cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, which are measured at fair value on a recurring basis by level within the fair value hierarchy.

  
September 30, 2020
 
  
Level 1
  
Level 2
  
Level 3
  
Total
 
Cash and cash equivalents
 
$
10,451,155
  
$
-
  
$
-
  
$
10,451,155
 
                 
  
December 31, 2019
 
  
Level 1
  
Level 2
  
Level 3
  
Total
 
Cash and cash equivalents
 
$
8,275,836
  
$
-
  
$
-
  
$
8,275,836
 

The Company did not hold financial assets and liabilities which were recorded at fair value in the Level 2 or 3 categories as of either September 30, 2020 or December 31, 2019.
v3.20.2
Net Income per Share
 9 Months Ended
Sep. 30, 2020
Net Income per Share [Abstract]  
Net Income per Share
(6) Net Income per Share

Basic net income per share is based on the weighted average number of common shares outstanding. Diluted net income per share is based on the weighted average number of common shares outstanding and the dilutive effect of outstanding stock options.

  
3 Months Ended
September 30,
  
9 Months Ended
September 30,
 
  
2020
  
2019
  
2020
  
2019
 
Weighted average number of common shares outstanding – basic
  
10,722,401
   
10,722,401
   
10,722,401
   
10,722,401
 
Potential shares exercisable under stock option plans
  
320,200
   
-
   106,733   
36,533
 
LESS: Shares which could be repurchased under treasury stock method
  (295,767)  
-
   (98,589)
  (33,682
)
Weighted average number of common shares outstanding – diluted
  10,746,834   
10,722,401
   10,730,545
   10,725,252 

For the three and nine months ended September 30, 2020, the computation of diluted net income per share excludes the effects of the assumed exercise of 148,550 and 362,017 options, respectively, since their inclusion would be anti-dilutive as their exercise prices were above market value.

For the three and nine months ended September 30, 2019, the computation of diluted net income per share excludes the effects of the assumed exercise of 376,850 and 340,317 options, respectively, since their inclusion would be anti-dilutive as their exercise prices were above market value.
v3.20.2
Related Party Transaction
 9 Months Ended
Sep. 30, 2020
Related Party Transaction [Abstract]  
Related Party Transaction
(7) Related Party Transaction

On October 24, 2019, the Company’s Board of Directors appointed Michael Flum to serve as Senior Vice President and Chief Operating Officer effective immediately. Mr. Flum had served as Vice President of Operations & Alternative Data since June 4, 2018. Mr. Flum is the son of Jerome Flum, the Company’s Chief Executive Officer and Chairman of the Board of Directors, and the brother of Joshua Flum, a director of the Company.
v3.20.2
COVID-19
 9 Months Ended
Sep. 30, 2020
COVID-19 [Abstract]  
COVID-19
(8) COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of Coronavirus Disease 2019 (“COVID-19” or “virus”) as a global pandemic. The full impact of COVID-19 is unknown and rapidly evolving. The outbreak and any preventative or protective actions that the Company or its customers may take in respect of this virus may result in a period of disruption, including the Company’s financial reporting capabilities, its operations generally and could potentially impact the Company’s customers, data providers and other third parties. Any resulting financial impact cannot be reasonably estimated at this time, but may materially affect the business and the Company’s financial condition and results of operations. The extent to which the COVID-19 impacts the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain the virus or treat its impact, among others. The Company has been operating remotely without any significant disruption of operations. To date, the Company’s data providers have provided an uninterrupted stream of information thus enabling the Company to deliver its product. The Company is currently evaluating the impact, if any, on its financial statements and has not yet quantified what material impacts to the financial statements may result from the actions taken by the Company and its customers in respect of this virus.

In response to COVID-19, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property, and the creation of certain refundable employee retention credits. Additionally, the CARES Act contains relief for small businesses through several new temporary programs, one of which is the Paycheck Protection Program (“PPP”). The PPP is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. The Small Business Administration (“SBA”) will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent or utilities. The Company applied for a loan under this program and has received $1.56 million. The SBA provides a “safe harbor” for borrowers and has deemed certifications regarding the necessity of the loan to have been made in good faith for borrowers of less than $2 million. The PPP loan is scheduled to mature on April 15, 2022, has a 1.00% interest rate, may be prepaid at any time without penalty and is subject to the terms and conditions applicable to all loans made pursuant to the PPP as administered by the SBA under the CARES Act. The loan and accrued interest is forgivable after eight weeks so long as the Company uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The “PPP” was amended on June 5, 2020 by the Paycheck Protection Program Flexibility Act, which stated that payments are deferred until the date on which the amount of forgiveness determined is remitted to the lender, with a maximum deferral of up to 16 months.  In accordance with the requirements for forgiveness of the CARES Act, the Company has used the entire proceeds from the PPP Loan for eligible payroll, benefits, rent, utility costs, and maintained its employment levels.  If the Company does not apply for forgiveness, the current portion of this loan, including interest that is due within the next 12 months is $1,117,621.  The lender of this loan has not started accepting applications for forgiveness.
v3.20.2
Stock-Based Compensation (Tables)
 9 Months Ended
Sep. 30, 2020
Stock-Based Compensation [Abstract]  
Stock-based Compensation Expense for Stock Options
The following table summarizes the stock-based compensation expense for stock options that was recorded in the Company’s results of operations in accordance with ASC 718 for the three and nine months ended September 30:
 
  
3 Months Ended
September 30,
  
9 Months Ended
September 30,
 
  
2020
  
2019
  
2020
  
2019
 
Data and product costs
 
$
4,282
  
$
4,789
  
$
15,448
  
$
17,198
 
Selling, general and administrative expenses
  
7,528
   
7,676
   
26,818
   
23,324
 
                 
  
$
11,810
  
$
12,465
  
$
42,266
  
$
40,522
 
v3.20.2
Fair Value Measurements (Tables)
 9 Months Ended
Sep. 30, 2020
Fair Value Measurements [Abstract]  
Cash and Cash Equivalents Measured at Fair Value on Recurring Basis
The table below sets forth the Company’s cash and cash equivalents as of September 30, 2020 and December 31, 2019, respectively, which are measured at fair value on a recurring basis by level within the fair value hierarchy.

  
September 30, 2020
 
  
Level 1
  
Level 2
  
Level 3
  
Total
 
Cash and cash equivalents
 
$
10,451,155
  
$
-
  
$
-
  
$
10,451,155
 
                 
  
December 31, 2019
 
  
Level 1
  
Level 2
  
Level 3
  
Total
 
Cash and cash equivalents
 
$
8,275,836
  
$
-
  
$
-
  
$
8,275,836
 
v3.20.2
Net Income per Share (Tables)
 9 Months Ended
Sep. 30, 2020
Net Income per Share [Abstract]  
Computation of Basic and Diluted Net Income per Share
Diluted net income per share is based on the weighted average number of common shares outstanding and the dilutive effect of outstanding stock options.

  
3 Months Ended
September 30,
  
9 Months Ended
September 30,
 
  
2020
  
2019
  
2020
  
2019
 
Weighted average number of common shares outstanding – basic
  
10,722,401
   
10,722,401
   
10,722,401
   
10,722,401
 
Potential shares exercisable under stock option plans
  
320,200
   
-
   106,733   
36,533
 
LESS: Shares which could be repurchased under treasury stock method
  (295,767)  
-
   (98,589)
  (33,682
)
Weighted average number of common shares outstanding – diluted
  10,746,834   
10,722,401
   10,730,545
   10,725,252 
v3.20.2
Stock-Based Compensation (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Stock-based compensation expense for stock options [Abstract]        
Stock-based compensation expense $ 11,810 $ 12,465 $ 42,266 $ 40,522
Data and Product Costs [Member]        
Stock-based compensation expense for stock options [Abstract]        
Stock-based compensation expense 4,282 4,789 15,448 17,198
Selling, General and Administrative Expenses [Member]        
Stock-based compensation expense for stock options [Abstract]        
Stock-based compensation expense $ 7,528 $ 7,676 $ 26,818 $ 23,324
v3.20.2
Fair Value Measurements (Details) - Recurring [Member] - USD ($)
Sep. 30, 2020
Dec. 31, 2019
Cash and cash equivalents measured at fair value on recurring basis [Abstract]    
Cash and cash equivalents $ 10,451,155 $ 8,275,836
Level 1 [Member]    
Cash and cash equivalents measured at fair value on recurring basis [Abstract]    
Cash and cash equivalents 10,451,155 8,275,836
Level 2 [Member]    
Cash and cash equivalents measured at fair value on recurring basis [Abstract]    
Cash and cash equivalents 0 0
Level 3 [Member]    
Cash and cash equivalents measured at fair value on recurring basis [Abstract]    
Cash and cash equivalents $ 0 $ 0
v3.20.2
Net Income per Share (Details) - shares
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Net Income per Share [Abstract]        
Weighted average number of common shares outstanding - basic (in shares) 10,722,401 10,722,401 10,722,401 10,722,401
Potential shares exercisable under stock option plans (in shares) 320,200 0 106,733 36,533
LESS: Shares which could be repurchased under treasury stock method (in shares) (295,767) 0 (98,589) (33,682)
Weighted average number of common shares outstanding - diluted (in shares) 10,746,834 10,722,401 10,730,545 10,725,252
Stock Options [Member]        
Antidilutive Securities Excluded from Computation [Abstract]        
Antidilutive securities excluded from computation of earnings per share (in shares) 148,550 376,850 362,017 340,317
v3.20.2
COVID-19 (Details) - USD ($)
 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Loans Payable [Abstract]    
Proceeds from loans $ 1,561,500 $ 0
PPP Loan [Member]    
Loans Payable [Abstract]    
Proceeds from loans $ 1,560,000  
Maturity date Apr. 15, 2022  
Interest rate 1.00%  
Current portion of loan including interest $ 1,117,621  
PPP Loan [Member] | Maximum [Member]    
Loans Payable [Abstract]    
Paycheck protection program deferral payments period 16 months