UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            

Commission File Number: 1-8601

CreditRiskMonitor.com, Inc.
(Exact name of registrant as specified in its charter)

Nevada
 
36-2972588
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

 
704 Executive Boulevard, Suite A
 
 
Valley Cottage, New York  10989
 
 
(Address of principal executive offices, including zip code)
 

Registrant’s telephone number, including area code: (845) 230-3000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☑     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 
Large accelerated filer ☐
Accelerated filer 

 
Non-accelerated filer   ☐
Smaller reporting company ☑
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).   Yes ☐    No ☑

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:
Common stock $.01 par value – 10,722,401 shares outstanding as of May 6, 2019.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $.01
CRMZ
OTC Markets OTCQX U.S.



CREDITRISKMONITOR.COM, INC.
INDEX


   
Page
     
PART I.
FINANCIAL INFORMATION
 
     
 
Item 1. Financial Statements
 
     
  2
 
 
 
  3
 
 
 
  4
 
 
 
  5
 
 
 
  6
     
  10
     
  13
     
PART II.
OTHER INFORMATION
 
     
 
Item 6. Exhibits
13
     
14

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CREDITRISKMONITOR.COM, INC.
BALANCE SHEETS
MARCH 31, 2019 AND DECEMBER 31, 2018

   
March 31,
2019
   
December 31,
2018
 
   
(Unaudited)
   
(Note 1)
 
             
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
8,389,953
   
$
8,066,899
 
Accounts receivable, net of allowance
   
1,954,108
     
2,454,585
 
Other current assets
   
655,315
     
561,861
 
                 
Total current assets
   
10,999,376
     
11,083,345
 
                 
Property and equipment, net
   
532,624
     
543,762
 
Operating lease right-to-use asset
   
2,512,484
     
--
 
Goodwill
   
1,954,460
     
1,954,460
 
Other assets
   
44,513
     
35,613
 
                 
Total assets
 
$
16,043,457
   
$
13,617,180
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Unexpired subscription revenue
 
$
9,120,049
   
$
8,738,445
 
Accounts payable
   
226,434
     
94,767
 
Current portion of operating lease liability
   
136,815
     
--
 
Accrued expenses
   
837,118
     
1,311,218
 
                 
Total current liabilities
   
10,320,416
     
10,144,430
 
                 
Deferred taxes on income, net
   
476,155
     
490,381
 
Operating lease liability, less current portion
   
2,411,258
     
--
 
Other liabilities
   
--
     
24,537
 
                 
Total liabilities
   
13,207,829
     
10,659,348
 
                 
Stockholders’ equity:
               
Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued
   
--
     
--
 
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
   
29,665,024
     
29,650,760
 
Accumulated deficit
   
(26,936,620
)
   
(26,800,152
)
                 
Total stockholders’ equity
   
2,835,628
     
2,957,832
 
 
               
Total liabilities and stockholders’ equity
 
$
16,043,457
   
$
13,617,180
 

See accompanying condensed notes to financial statements.

CREDITRISKMONITOR.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(Unaudited)

   
2019
   
2018
 
             
Operating revenues
 
$
3,495,809
   
$
3,371,924
 
                 
Operating expenses:
               
Data and product costs
   
1,468,993
     
1,483,991
 
Selling, general and administrative expenses
   
2,167,411
     
2,188,124
 
Depreciation and amortization
   
50,989
     
47,048
 
                 
Total operating expenses
   
3,687,393
     
3,719,163
 
                 
Loss from operations
   
(191,584
)
   
(347,239
)
Other income, net
   
40,890
     
21,042
 
                 
Loss before income taxes
   
(150,694
)
   
(326,197
)
Benefit from income taxes
   
14,226
     
70,761
 
                 
Net loss
 
$
(136,468
)
 
$
(255,436
)
                 
Net loss per share – Basic and diluted
 
$
(0.01
)
 
$
(0.02
)
                 
Weighted average number of common shares outstanding –
               
Basic and diluted
   
10,722,401
     
10,722,401
 

See accompanying condensed notes to financial statements.

CREDITRISKMONITOR.COM, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(Unaudited)

    

Common Stock
     
Additional
Paid-in
C apital
     
Accumulated
D eficit
     
Total
Stockholders’
Equity
  
Shares
   
Amount
                               
Balance January 1, 2018
   
10,722,401
   
$
107,224
   
$
29,559,784
   
$
(26,084,700
)
 
$
3,582,308
 
                                         
Net loss
   
-
     
-
     
-
     
(255,436
)
   
(255,436
)
Stock-based compensation
   
-
     
-
     
25,493
     
-
     
25,493
 
                                         
Balance March 31, 2018
   
10,722,401
   
$
107,224
   
$
29,585,277
   
$
(26,340,136
)
 
$
3,352,365
 
                                         
Balance January 1, 2019
   
10,722,401
   
$
107,224
   
$
29,650,760
   
$
(26,800,152
)
 
$
2,957,832
 
                                         
Net loss
   
-
     
-
     
-
     
(136,468
)
   
(136,468
)
Stock-based compensation
   
-
     
-
     
14,264
     
-
     
14,264
 
                                         
Balance March 31, 2019
   
10,722,401
   
$
107,224
   
$
29,665,024
   
$
(26,936,620
)
 
$
2,835,628
 

See accompanying condensed notes to financial statements.

CREDITRISKMONITOR.COM, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(Unaudited)

   
2019
   
2018
 
             
Cash flows from operating activities:
           
Net loss
 
$
(136,468
)
 
$
(255,436
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
               
Deferred income taxes
   
(14,226
)
   
(75,052
)
Depreciation and amortization
   
50,989
     
47,048
 
Deferred rent
   
--
     
39
 
Operating lease right-to-use asset, net
   
11,052
     
--
 
Stock-based compensation
   
14,264
     
25,493
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
500,477
     
165,052
 
Other current assets
   
(93,454
)
   
25,771
 
Other assets
   
(8,900
)
   
(26,305
)
Unexpired subscription revenue
   
381,604
     
588,669
 
Accounts payable
   
131,667
     
86,677
 
Accrued expenses
   
(474,100
)
   
(588,020
)
                 
Net cash provided by (used in) operating activities
   
362,905
     
(6,064
)
                 
Cash flows from investing activities:
               
Purchase of property and equipment
   
(39,851
)
   
(9,258
)
                 
Net cash used in investing activities
   
(39,851
)
   
(9,258
)
                 
Net increase (decrease) in cash and cash equivalents
   
323,054
     
(15,322
)
Cash and cash equivalents at beginning of period
   
8,066,899
     
8,735,148
 
                 
Cash and cash equivalents at end of period
 
$
8,389,953
   
$
8,719,826
 

See accompanying condensed notes to financial statements.

CREDITRISKMONITOR.COM, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Unaudited)

(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, 2018.

The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results for an entire fiscal year.

The December 31, 2018 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, 2018 included in the Company’s Annual Report on Form 10-K.

(2) Adoption of ASC 842

On January 1, 2019, the Company adopted FASB Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), which requires the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. As permitted by ASC 842, the Company elected the adoption date of January 1, 2019, which is the date of initial application. As a result, the Company’s balance sheet as of December 31, 2018 was not restated, continues to be reported under ASC Topic 840, Leases (“ASC 840”), which did not require the recognition of operating lease liabilities on the balance sheet, and is not comparative. Under ASC 842, all leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The lease classification affects the expense recognition in the statement of operations. Operating lease charges are recorded entirely in operating expenses. Finance lease charges are split, where amortization of the right-of-use asset is recorded in operating expenses and an implied interest component is recorded in interest expense. The expense recognition for operating leases and finance leases under ASC 842 is substantially consistent with ASC 840. As a result, there is no significant difference in the Company’s results of operations presented in its statement of operations for each period presented.

The Company adopted ASC 842 using a modified retrospective approach for all leases existing at January 1, 2019. The adoption of ASC 842 had a substantial impact on its balance sheet. The most significant impact was the recognition of the operating lease right-of-use assets and the liability for operating leases. Accordingly, upon adoption, leases that were classified as operating leases under ASC 840 were classified as operating leases under ASC 842, and the Company recorded an adjustment of $2.59 million to operating lease right-of-use assets and the related lease liability. The lease liability is based on the present value of the remaining minimum lease payments. As permitted under ASC 842, the Company elected several practical expedients that permits it to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. The application of the practical expedients did not have a significant impact on the measurement of the operating lease liability.

The impact of the adoption of ASC 842 on the balance sheet at December 31, 2018 was:

   
As reported
Dec. 31, 2018
   
Adoption of
ASC 842
Increase
   
Balance
Jan. 1, 2019
 
Operating lease right-to-use asset
 
$
-
   
$
2,589,875
   
$
2,589,875
 
Total assets
   
13,617,180
     
2,589,875
     
16,207,055
 
Current portion of operating lease liability
   
-
     
143,213
     
143,213
 
Operating lease liability
   
-
     
2,446,662
     
2,446,662
 
Total liabilities and stockholders’ equity
   
13,617,180
     
2,589,875
     
16,207,055
 

For all leases, at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the remaining lease payments under the lease. Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments and payments for optional renewal periods where it is reasonably certain the renewal period will be exercised. Lease expense for operating leases consists of the lease payments plus any initial direct costs, and is recognized on a straight-line basis over the lease term.

The Company’s operating lease right-of-use asset and operating lease liability represents the lease for the office space used to conduct its business.

The following table reconciles the undiscounted cash flows for the Company’s operating lease at March 31, 2019 to the operating lease liability recorded on the balance sheet:

2019 Remainder
 
$
186,671
 
2020
   
255,311
 
2021
   
262,970
 
2022
   
270,859
 
2023
   
278,985
 
2024
   
287,355
 
Thereafter
   
1,769,054
 
Total undiscounted lease payments
   
3,311,205
 
LESS: Imputed interest at 4.54%
   
(763,132
)
Present value of lease payments
 
$
2,548,073
 
         
Current portion of operating lease liability
 
$
136,815
 
Operating lease liability
   
2,411,258
 

 
$
2,548,073
 

(3) Recently Issued Accounting Standards

The FASB and the SEC have issued certain other accounting pronouncements as of March 31, 2019 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.

(4) Revenue Recognition

The Company applies 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 .

(5) 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 months ended March 31:

   
2019
   
2018
 
             
Data and product costs
 
$
6,440
   
$
8,914
 
Selling, general and administrative expenses
   
7,824
     
16,579
 
                 
   
$
14,264
   
$
25,493
 

(6) 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, 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 March 31, 2019 and December 31, 2018, respectively, which are measured at fair value on a recurring basis by level within the fair value hierarchy.

   
March 31, 2019
   
December 31, 2018
 
   
Level 1
   
Level 2
   
Level 3
   
Total
   
Total
 
                               
Cash and cash equivalents
 
$
8 ,389,953
   
$
-
   
$
-
   
$
8,389,953
   
$
8,066,899
 

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 March 31, 2019 or December 31, 2018.

(7) Net Loss per Share

During the three months ended March 31, 2019 and 2018 the Company recorded a net loss. Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share, as the effect of utilizing the fully diluted share count would have reduced the net loss per share. Therefore, all outstanding stock options were excluded from the computation of diluted net loss per share because their effect was anti-dilutive for each of the periods presented.

(8) Related Party Transaction

Michael Flum has been employed part-time by the Company since 2018 as Vice President of Operations & Alternative Data. 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.

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Environment

The continuing uncertainty in the worldwide financial system has negatively impacted general business conditions. It is possible that a weakened economy could adversely affect our clients’ need for credit information, or even their solvency, but we cannot predict whether or to what extent this will occur.

Our strategic priorities and plans for 2019 are to continue to build on the improvement initiatives underway to achieve sustainable, profitable growth. Global market conditions, however, may affect the level and timing of resources deployed in pursuit of these initiatives in 2019.

Financial Condition, Liquidity and Capital Resources

The following table presents selected financial information and statistics as of March 31, 2019 and December 31, 2018 (dollars in thousands):

   
March 31,
2019
   
December 31,
2018
 
Cash and cash equivalents
 
$
8,390
   
$
8,067
 
Accounts receivable, net
 
$
1,954
   
$
2,455
 
Working capital
 
$
679
   
$
939
 
Cash ratio
   
0.81
     
0.80
 
Quick ratio
   
1.00
     
1.04
 
Current ratio
   
1.07
     
1.09
 

The Company has invested some of its excess cash in cash equivalents. All highly liquid investments with an original maturity of three months or less when purchased are considered cash equivalents, while those with maturities in excess of three months when purchased are reflected as marketable securities.

As of March 31, 2019, the Company had $8.39 million in cash and cash equivalents, an increase of approximately $323,000 from December 31, 2018. This increase was the result of cash provided by operating activities ($363,000) being greater than cash used to acquire property and equipment ($40,000).

The main component of current liabilities at March 31, 2019 is unexpired subscription revenue of $9.12 million, which should not require significant future cash outlay other than the cost of preparation and delivery of the applicable commercial credit reports, which cost much less than the unexpired subscription revenue shown. Unexpired subscription revenue is recognized as income over the subscription term, which approximates twelve months.

The Company has no bank lines of credit or other currently available credit sources.

The Company believes that its existing balances of cash and cash equivalents and cash generated from operations will be sufficient to satisfy its currently anticipated cash requirements through at least the next 12 months and the foreseeable future. Moreover, the Company has been cash flow positive for 7 of the last 10 fiscal years and has no long-term debt. However, the Company’s liquidity could be negatively affected if it were to make an acquisition or license products or technologies, which may necessitate the need to raise additional capital through future debt or equity financing. Additional financing may not be available at all or on terms favorable to the Company.

Off-Balance Sheet Arrangements

The Company is not a party to any off-balance sheet arrangements.

Results of Operations

   
3 Months Ended March 31,
 
   
2019
   
2018
 
   
Amount
   
% of Total
Operating
Revenues
   
Amount
   
% of Total
Operating
Revenues
 
                         
Operating revenues
 
$
3,495,809
     
100.00
%
 
$
3,371,924
     
100.00
%
                                 
Operating expenses:
                               
Data and product costs
   
1,468,993
     
42.02
%
   
1,483,991
     
44.01
%
Selling, general and administrative expenses
   
2,167,411
     
62.00
%
   
2,188,124
     
64.89
%
Depreciation and amortization
   
50,989
     
1.46
%
   
47,048
     
1.40
%
Total operating expenses
   
3,687,393
     
105.48
%
   
3,719,163
     
110.30
%
                                 
Loss from operations
   
(191,584
)
   
(5.48
%)
   
(347,239
)
   
(10.30
%)
Other income, net
   
40,890
     
1.17
%
   
21,042
     
0.63
%
                                 
Loss before income taxes
   
(150,694
)
   
(4.31
%)
   
(326,197
)
   
(9.67
%)
Benefit from income taxes
   
14,226
     
0.41
%
   
70,761
     
2.09
%
                                 
Net loss
 
$
(136,468
)
   
(3.90
% )
 
$
(255,436
)
   
(7.58
% )

Operating revenues increased $123,885, or 4%, for the three months ended March 31, 2019 compared to the first quarter of fiscal 2018. This overall revenue growth resulted from an increase in Internet subscription service revenue, attributable to increased sales to new and existing subscribers.

Data and product costs decreased $14,998, or 1%, for the first quarter of 2019 compared to the same period of fiscal 2018. This decrease was due primarily to: (1) lower hosted facility costs, as the Company incurred spikes in its Internet usage in 2018 above the contracted amount resulting in additional charges that were not incurred in 2019, and (2) lower costs associated with the outsourcing of certain data entry tasks, as in 2018 the Company authorized overtime to catch up on some processing backlogs which were not incurred in 2019. These cost savings were offset in part by: (1) higher costs of third-party content, due to minor inflationary increases instituted by some of the Company’s major suppliers, and (2) higher salary and related employee benefits due to pay raises to staff.

Selling, general and administrative expenses decreased $20,713, or 1%, for the first quarter of fiscal 2019 compared to the same period of fiscal 2018. This decrease was due to: (1) lower salary and related employee benefits, because of a headcount reduction as well as a lower bonus accrual, and (2) lower professional and consulting fees. These decreases were offset in part by higher rent and related expenses resulting from the Company’s expansion of its office in mid-2018.

Depreciation and amortization increased $3,941, or 8%, for the first quarter of fiscal 2019 compared to the same period of fiscal 2018. This increase was due to the leasehold improvements incurred in connection with the Company’s expansion of its office in mid-2018.

Other income, net increased $19,848 for first quarter of fiscal 2019 compared to the same period last year. This increase was due to greater dividend income received in the first quarter of fiscal 2019 on all of the Company’s money market fund holdings.

Benefit for income taxes decreased $56,535 for the first quarter of fiscal 2019 compared to the same period of fiscal 2018. This decrease was due to the Company reporting a lower pre-tax loss in 2019 versus 2018, because of the reasons enumerated above, as well as a lower effective tax rate in 2019.

Future Operations

The Company over time intends to expand its operations by expanding the breadth and depth of its product and service offerings and introducing new and complementary products. Gross margins attributable to new business areas may be lower than those associated with the Company’s existing business activities.

As a result of the evolving nature of the markets in which it competes, the Company’s ability to accurately forecast its revenues, gross profits and operating expenses as a percentage of net sales is limited. The Company’s current and future expense levels are based largely on its investment plans and estimates of future revenues. To a large extent these costs do not vary with revenue. Sales and operating results generally depend on the Company’s ability to attract and retain customers and the volume of and timing of customer subscriptions for the Company’s services, which are difficult to forecast. The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues in relation to the Company’s planned expenditures would have an immediate adverse effect on the Company’s business, prospects, financial condition and results of operations. Further, as a strategic response to changes in the competitive environment, the Company may from time to time make certain pricing, service, marketing or acquisition decisions that could have a material adverse effect on its business, prospects, financial condition and results of operations.

Achieving greater profitability depends on the Company’s ability to generate and sustain increased revenue levels. The Company believes that its success will depend in large part on its ability to (i) increase its brand awareness, (ii) provide its customers with outstanding value, thus encouraging customer renewals, and (iii) achieve sufficient sales volume to realize economies of scale. Accordingly, the Company intends to continue to increase the size of its sales force and service staff, and to invest in product development, operating infrastructure, marketing and promotion. The Company believes that these expenditures will help it to sustain the revenue growth it has experienced over the last several years. We anticipate that sales and marketing expenses will continue to increase in dollar amount and as a percentage of revenues during the remainder of 2019 and future periods as the Company continues to expand its business on a worldwide basis. Further, the Company expects that product development expenses will also continue to increase in dollar amount and may increase as a percentage of revenues during the remainder of 2019 and future periods because it expects to employ more development personnel on average compared to prior periods and build the infrastructure required to support the development of new and improved products and services. However, as these expenditures are discretionary in nature, the Company expects that the actual amounts incurred will be in line with its projections of future cash flows in order not to negatively impact its future liquidity and capital needs. There can be no assurance that the Company will be able to achieve these objectives within a meaningful time frame.

The Company expects to experience fluctuations in its future quarterly operating results due to a variety of factors, some of which are outside the Company’s control. Factors that may adversely affect the Company’s quarterly operating results include, among others, (i) the Company’s ability to retain existing customers, attract new customers at a steady rate and maintain customer satisfaction, (ii) the Company’s ability to maintain gross margins in its existing business and in future product lines and markets, (iii) the development of new services and products by the Company and its competitors, (iv) price competition, (v) the Company’s ability to obtain products and services from its vendors, including information suppliers, on commercially reasonable terms, (vi) the Company’s ability to upgrade and develop its systems and infrastructure, and adapt to technological change, (vii) the Company’s ability to attract and retain personnel in a timely and effective manner, (viii) the Company’s ability to manage effectively its development of new business segments and markets, (ix) the Company’s ability to successfully manage the integration of operations and technology of acquisitions or other business combinations, (x) technical difficulties, system downtime or Internet brownouts, (xi) the amount and timing of operating costs and capital expenditures relating the Company’s business, operations and infrastructure, (xii) governmental regulation and taxation policies, (xiii) disruptions in service by common carriers due to strikes or otherwise, (xiv) risks of fire or other casualty, (xv) litigation costs or other unanticipated expenses, (xvi) interest rate risks and inflationary pressures, and (xvii) general economic conditions and economic conditions specific to the Internet and online commerce.

Due to the foregoing factors, the Company believes that period-to-period comparisons of its revenues and operating results are not necessarily meaningful and should not be relied on as an indication of future performance.

Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain forward-looking statements, including statements regarding future prospects, industry trends, competitive conditions and litigation issues. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes”, “expects”, “anticipates”, “plans” or words of similar meaning are intended to identify forward-looking statements. This notice is intended to take advantage of the “safe harbor” provided by the Private Securities Litigation Reform Act of 1995 with respect to such forward-looking statements. These forward-looking statements involve a number of risks and uncertainties. Among others, factors that could cause actual results to differ materially from the Company’s beliefs or expectations are those listed under “Results of Operations” and other factors referenced herein or from time to time as “risk factors” or otherwise in the Company’s Registration Statements or Securities and Exchange Commission reports. The Company disclaims any intention or obligation to revise any forward-looking statement, whether as a result of new information, a future event or otherwise.

Item 4.
Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 6.
Exhibits

 
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
101.INS
XBRL Instance Document
 
101.SCH
XBRL Taxonomy Extension Schema Document
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
 
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
CREDITRISKMONITOR.COM, INC.
 
(REGISTRANT)
   
Date: May 14, 2019
By: /s/ Lawrence Fensterstock
 
Lawrence Fensterstock
 
Chief Financial Officer &
 
Principal Accounting Officer


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