CREDITRISKMONITOR.COM, INC. 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 2020 are to continue to build on the
improvement initiatives underway to achieve sustainable, profitable growth.
However, the COVID-19 pandemic has spread throughout the world, including the
Financial Condition, Liquidity and Capital Resources
The following table presents selected financial information and statistics as of
June 30, December 31,
2020 2019
Cash and cash equivalents $ 9,956 $ 8,276
Accounts receivable, net $ 2,270 $ 2,288
Working capital $ 1,216 $ 832
Cash ratio 0.84 0.80
Quick ratio 1.04 1.03
Current ratio 1.10 1.08
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
The main component of current liabilities at
The Company has no bank lines of credit or other currently available credit sources.
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The main component of long term liabilities is the Company's bank loan from the
SBA for the PPP program of
Under normal circumstances, the Company believes its existing balances of cash and cash equivalents and cash generated from operations would be sufficient to satisfy its currently anticipated cash requirements. However, given the current COVID-19 pandemic, there is no guarantee that our current business levels can be sustained or that our subscriber base will renew their service(s) at similar spend levels in the future. To ensure we have the financial resources to meet our commitments to our employees and service providers in the upcoming months, and to avoid lay-offs or other cost cutting measures, the Company applied for and received a loan under the Paycheck Protection Program. See Note 8 to our Financial Statements in Item 1 above.
Off-Balance Sheet Arrangements
The Company is not a party to any off-balance sheet arrangements.
Results of Operations
3 Months Ended June 30,
2020 2019
% of Total % of Total
Operating Operating
Amount Revenues Amount Revenues
Operating revenues $ 3,852,003 100.00 % $ 3,567,531 100.00 %
Operating expenses:
Data and product costs 1,515,469 39.34 % 1,426,497 39.99 %
Selling, general and
administrative expenses 2,394,266 62.16 % 2,147,733 60.20 %
Depreciation and
amortization 53,693 1.39 % 50,045 1.40 %
Total operating expenses 3,963,428 102.89 % 3,624,275 101.59 %
Loss from operations (111,425 ) (2.89 %) (56,744 ) (1.59 %)
Other income, net 3,417 0.09 % 43,209 1.21 %
Loss before income taxes (108,008 ) (2.80 %) (13,535 ) (0.38 %) Benefit from income taxes 136,929
3.55 % 2,005 0.06 %
Net loss $ 28,921 (0.75 %) $ (11,530 ) (0.32 %)
Operating revenues increased approximately
Data and product costs increased approximately
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Selling, general and administrative expenses increased approximately
Depreciation and amortization increased approximately
Other income, net decreased approximately
Benefit for income taxes increased approximately
6 Months Ended June 30,
2020 2019
% of Total % of Total
Operating Operating
Amount Revenues Amount Revenues
Operating revenues $ 7,560,754 100.00 % $ 7,063,340 100.00 %
Operating expenses:
Data and product costs 3,041,797 40.23 % 2,895,490 40.99 %
Selling, general and
administrative expenses 4,809,524 63.61 % 4,315,144 61.09 %
Depreciation and
amortization 107,805 1.43 % 101,034 1.43 %
Total operating expenses 7,959,126 105.27 % 7,311,668 103.52 %
Loss from operations (398,372 ) (5.27 %) (248,328 ) (3.52 %)
Other income, net 26,101 0.35 % 84,099 1.19 %
Loss before income taxes (372,271 ) (4.92 %) (164,229 ) (2.33 %)
Benefit from income taxes 202,844 2.68 % 16,231 0.23 %
Net loss $ (169,427 ) (2.24 %) $ (147,998 ) (2.10 %)
Operating revenues increased approximately
Data and product costs increased approximately
Selling, general and administrative expenses increased approximately
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Depreciation and amortization increased approximately
Other income, net decreased approximately
Benefit for income taxes increased approximately
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 and the uncertainties caused by the COVID-19 pandemic, the Company's ability to accurately forecast its revenues, gross profits and operating expenses as a percentage of net sales is limited, as the Company cannot utilize its historical subscription and renewal rates of its clients for guidance. 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 2020 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 2020 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.
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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 short-term and long-term effects the COVID-19 outbreak and related developments will have on our customers and their ongoing businesses and how those effects may impact our sales to them, (ii) the Company's ability to retain existing customers, attract new customers at a steady rate and maintain customer satisfaction, (iii) the Company's ability to maintain gross margins in its existing business and in future product lines and markets, (iv) the development of new services and products by the Company and its competitors, (v) price competition, (vi) the Company's ability to obtain products and services from its vendors, including information suppliers, on commercially reasonable terms, (vii) the Company's ability to upgrade and develop its systems and infrastructure, and adapt to technological change, (viii) the Company's ability to attract and retain personnel in a timely and effective manner, (ix) the Company's ability to manage effectively its development of new business segments and markets, (x) the Company's ability to successfully manage the integration of operations and technology of acquisitions or other business combinations, (xi) technical difficulties, system downtime or Internet brownouts, (xii) the amount and timing of operating costs and capital expenditures relating the Company's business, operations and infrastructure, (xiii) governmental regulation and taxation policies, (xiv) disruptions in service by common carriers due to strikes or otherwise, (xv) risks of fire or other casualty, (xvi) litigation costs or other unanticipated expenses, (xvii) interest rate risks and inflationary pressures, and (xviii) 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 "Business Environment" and "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
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