UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
 
FORM 8-K
______________
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): July 30, 2020
______________
 
Issuer Direct Corporation
(Exact name of registrant as specified in its charter)
______________
 
Delaware
1-10185
26-1331503
(State or other jurisdiction
(Commission
(I.R.S. Employer
of incorporation)
File Number)
Identification No.)
 
One Glenwood Drive, Suite 1001, Raleigh, NC 27603
(Address of principal executive offices) (Zip Code)
 
Registrant’s telephone number, including area code (919) 481-4000
 
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company    
 
If an emerging growth company, indicate by checkmark 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.     
 
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 $0.001
ISDR
NYSE American
 

 
 
  
Item 2.02 — Results of Operations and Financial Condition
 
On July 30, 2020, Issuer Direct Corporation (the “Company”) issued a press release reporting the Company’s results for the quarter ended June 30, 2020. The press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference.
 
The information in Item 2.02 of this report, including the press release attached as Exhibit 99.1, is furnished and shall not be deemed to be“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.Furthermore, such information shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933,as amended.
 
Item 9.01 —Financial Statements and Exhibits
 
(d) Exhibits:
 
Exhibit No. Description
 
Exhibit No.
 
Description
 
 
 
 
Press Release issued by the Company on July 30, 2020.
 
  
 
 
 
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, hereunto duly authorized.
 
 
Issuer Direct Corporation
 
 
 
 
 
Date: July 30, 2020
By:  
/s/ Brian R. Balbirnie
 
 
 
Brian R. Balbirnie 
 
 
 
Chief Executive Officer 
 
 
 
 
 
 
 
 
 
 
 
 
isdr_ex991
  Exhibit 99.1
 
Issuer Direct Reports Second Quarter 2020 Results

Platform and Technology Revenue Increased 24% to $3.3 million, 68% of Total Revenue; Year-over-Year EBITDA margins more than doubled to 28% or $1.4 Million
 
RALEIGH, NC / ACCESSWIRE / July 30, 2020 / Issuer Direct Corporation (NYSE American: ISDR) (the "Company"), an industry-leading communications and compliance company, today reported its operating results for the three months ended June 30, 2020.
 
Brian Balbirnie, CEO of Issuer Direct, commented, "The second quarter was a record quarter for us in terms of top-line revenue, operating income, EBITDA and cash flow from operations, as we benefited from our virtual product line-up and continued newswire expansion.”
 
Mr. Balbirnie continued, “Looking at our growth drivers, they were threefold. First, ACCESSWIRE continues to be a steady contributor to our top line results, growing 19% year-over-year. This is a product offering we believe can continue its strong growth in both customer counts and revenue for years to come. Secondly, despite the current environment caused by the COVID-19 pandemic, the rest of our business performed well and exceeded our expectations in many ways. We believe this is a good indicator for us as we move to the back half of the year. Finally, in terms of new offerings, we delivered on our product pivot with a virtual focus, which supported our revenue growth, increased our profitability and also drove our overall platform branding and marketplace awareness.”
 
Mr. Balbirnie concluded, “It is encouraging to see the growth in revenue and EBITDA margins in the quarter. We remain committed to continue the innovation of our products, the search for acquisition targets in the communications industry and the drive to increase market awareness through our sales and marketing teams.”
 
Second Quarter 2020 Highlights:
Revenue - Total revenue was $4,884,000, an 18% increase from $4,138,000 in Q2 2019 and a 22% increase from $4,016,000 in Q1 2020. Platform and Technology revenue increased 24% from Q2 2019 and 23% from Q1 2020. The increase in Platform and Technology revenue was due to an increase in webcasting revenue as a result of our new virtual products, increased revenue from our newswire business and additional subscriptions of Platform id. Platform & Technology revenue increased to 68% of total revenue for Q2 2020, compared to 64% for Q2 2019. Services revenue increased 7% from Q2 2019 and 19% from Q1 2020.
Gross Margin - Gross margin for Q2 2020 was $3,522,000, or 72% of revenue, compared to $2,888,000, or 70% of revenue, during Q2 2019 and $2,763,000, or 69%, in Q1 2020. Platform and Technology gross margin was 78%, compared to 73% in Q2 2019 and 74% in Q1 2020. The increase in gross margin is primarily related to the increase in revenue from our virtual products.
Operating Income - Operating income was $1,001,000 for Q2 2020, as compared to $130,000 during Q2 2019. The increase in operating income is due to the increase in gross margin as well as a decrease in operating expenses. General and Administrative Expenses decreased $125,000, or 9%, primarily due to a decrease in bad debt expense due to a large reserve in Q2 2019. Product development expense decreased $178,000, or 52% from Q2 2019 due to a decrease in headcount.
Net Income - Net income was $772,000, or $0.21 per diluted share, during Q2 2020, compared to $212,000, or $0.05 per diluted share, during Q2 2019.
Operating Cash Flows - Cash flows from operations for Q2 2020 were $1,477,000 compared to $259,000 in Q2 2019 and $602,000 in Q1 2020.
Non-GAAP Measures  Q2 2020 EBITDA was $1,354,000, or 28% of revenue, compared to $550,000, or 13% of revenue, during Q2 2019. Non-GAAP net income for Q2 2020 was $974,000, or $0.26 per diluted share, compared to $477,000, or $0.12 per diluted share, during Q2 2019.
Stock Repurchase Plan – During the quarter, the Company repurchased an additional 62,198 of its shares at a total aggregate value of $580,000, under the Company’s $2,000,000 share repurchase program originally announced on August 7, 2019 and increased on March 16, 2020. As of June 30, 2020, we have purchased a total of 160,068 shares under the stock repurchase plan.
 
First Half 2020 Highlights:
Revenue - Total revenue was $8,900,000, a 7% increase from $8,317,000 during the first half of 2019. The increase in Platform and Technology revenue was due to an increase in webcasting revenue as a result of our new virtual products, increased revenue from our newswire business and additional subscriptions of Platform id. Platform & Technology revenue increased to 67% of total revenue for the first half of 2020, compared to 64% for the first half of 2019. Services revenue decreased 3% from the first half of 2019.
Gross Margin - Gross margin for the first half of 2020 was $6,285,000, or 71% of revenue, compared to $5,765,000, or 69% of revenue, during the first half of 2019. Platform and Technology gross margin was 76%, compared to 74% during the first half of 2019. The increase in gross margin is primarily related to the increase in revenue from our virtual products.
Operating Income - Operating income was $1,249,000 for the first half of 2020, as compared to $277,000 during the first half of 2019. The increase in operating income is due to the increase in gross margin as well a decrease in operating expenses as noted for Q2 2020.
Net Income - Net income was $998,000, or $0.26 per diluted share, during the first half of 2020, compared to $417,000, or $0.11 per diluted share, during the first half of 2019.
Operating Cash Flows - Cash flows from operations for the first half of 2020 were $2,079,000 compared to $795,000 during the first half of 2019.
Non-GAAP Measures – EBITDA for the first half of 2020 was $1,976,000, or 22% of revenue, compared to $1,108,000, or 13% of revenue, during the first half of 2019. Non-GAAP net income for the first half of 2020 was $1,372,000, or $0.36 per diluted share, compared to $995,000, or $0.26 per diluted share, during the first half of 2019.
 
 
1
 
 
Key Performance Indicators:
During the quarter, the Company worked with 1,477 publicly traded customers, compared to 1,440 during the same period last year.
During the quarter, the Company worked with 1,390 privately held customers compared to 997 during the same period last year.
During the quarter we signed 35 new Platform id. subscriptions to new or existing customers with a total annual contract value of $225,000.
Total Platform id. subscriptions as of June 30, 2020 were 295, with an annual contract value of $2,228,000, compared to 273 subscriptions with an annual contract value of $2,098,000 as of March 31, 2020.
 
Non-GAAP Information
Certain Non-GAAP financial measures are included in this press release. In the calculation of these measures, the Company excludes certain items, such as amortization of intangible assets, stock-based compensation, integration and acquisition costs, the impact of discrete items impacting income tax expense and tax impact of adjustments. The Company believes that excluding such items provides investors and management with a representation of the Company's core operating performance and with information useful in assessing its prospects for the future and underlying trends in the Company's operating expenditures and continuing operations. Management uses such Non-GAAP measures to evaluate financial results and manage operations. The release and the attachments to this release provide a reconciliation of each of the Non-GAAP measures referred to in this release to the most directly comparable GAAP measure. TheNon-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial statements and investors should evaluate them carefully. These Non-GAAP financial measures may differ materially from the Non-GAAP financial measures used by other companies.
 
CALCULATION OF EBITDA
($ in ‘000’s)
 
 
Three Months ended June 30,
 
 
 
2020
 
 
2019
 
 
 
Amount
 
 
Amount
 
 
 
 
 
 
 
 
Net income:
 $772 
 $212 
Adjustments:
    
    
Depreciation and amortization
  353 
  419 
Interest expense (income)
  (1)
  (114)
Income tax expense
  230 
  33 
EBITDA:
 $1,354 
 $550 
 
 
 
Six Months ended June 30,
 
 
 
2020
 
 
2019
 
 
 
Amount
 
 
Amount
 
 
 
 
 
 
 
 
Net income:
 $998 
 $417 
Adjustments:
    
    
Depreciation and amortization
  727 
  831 
Interest expense (income)
  (59)
  (186)
Income tax expense
  310 
  46 
EBITDA:
 $1,976 
 $1,108 
 
 
2
 
 
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
($ in ‘000’s, except per share amounts)
 
 
 
Three Months ended June 30,
 
 
 
2020
 
 
2019
 
 
 
Amount
 
 
Per diluted share
 
 
Amount
 
 
Per diluted share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income:
 $772 
 $0.20 
 $212 
 $0.05 
Adjustments:
    
    
    
    
Amortization of intangible assets (1)
  172 
  0.05 
  191 
  0.05 
Stock-based compensation (2)
  84 
  0.02 
  131 
  0.03 
Tax impact of adjustments (4)
  (54)
  (0.01)
  (68)
  (0.02)
Impact of discrete items impacting income tax expense (5)
   
   
  11 
  0.01 
Non-GAAP net income:
 $974 
 $0.26 
 $477 
 $0.12 
 
 
 
Six Months ended June 30,
 
 
 
2020
 
 
2019
 
 
 
Amount
 
 
Per diluted share
 
 
Amount
 
 
Per diluted share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income:
 $998 
 $0.27 
 $417 
 $0.11 
Adjustments:
    
    
    
    
Amortization of intangible assets (1)
  344 
  0.09 
  382 
  0.10 
Stock-based compensation (2)
  129 
  0.03 
  268 
  0.07 
Integration and acquisition costs (3)
   
   
  112 
  0.03 
Tax impact of adjustments (4)
  (99)
  (0.03)
  (160)
  (0.04)
Impact of discrete items impacting income tax expense (5)
   
   
  (24)
  (0.01)
Non-GAAP net income:
 $1,372 
 $0.36 
 $995 
 $0.26 
 
1)
The adjustments represent the amortization of intangible assets related to acquired assets and companies.
2)
The adjustments represent stock-based compensation expense related to awards of stock options, restricted stock units or common stock in exchange for services. Although the Company expects to continue to award stock in exchange for services, the amount of stock-based compensation is excluded as it is highly variable based on the stock price and not tied directly to the operations of the business.
3)
The adjustments represent legal and accounting fees and other non-recurring costs in connection with the acquisition of VisualWebcaster Platform.
4)
This adjustment gives effect to the tax impact of all non-GAAP adjustments at the current Federal rate of 21%.
5)
The adjustments eliminate discrete items impacting income tax expense. For the periods ended June 30, 2019, the discrete items relate to either the excess or shortfall stock-based compensation benefit recognized in income tax expense during the period.
 
 
3
 
 
Conference Call Information
 
To participate in this event, dial approximately 5 to 10 minutes before the beginning of the call.
 
Date: July 30, 2020
Time: 4:30 PM ET
Participant: 877-407-8133 | 201-689-8040
 
Live Webcast: https://www.webcaster4.com/Webcast/Page/842/36011
 
Conference Call Replay Information
 
The replay will be available beginning approximately 1 hour after the completion of the live event, ending at midnight eastern on August 13, 2020.
 
Toll-free: 877.481.4010
International: 919.882.2331
Reference ID: 36011
 
Web replay: http://www.issuerdirect.com/earnings-calls-and-scripts/
 
About Issuer Direct Corporation
Issuer Direct® is an industry-leading communications and compliance company focusing on the needs of corporate issuers. Issuer Direct's principal platform, Platform id. , empowers users by thoughtfully integrating the most relevant tools, technologies, and services, thus eliminating the complexity associated with producing and distributing financial and business communications. Headquartered in Raleigh, NC, Issuer Direct serves thousands of public and private companies globally. For more information, please visit www.issuerdirect.com.
 
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "prospects," "outlook," and similar words or expressions, or future or conditional verbs, such as "will," "should," "would," "may," and "could," are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance, or achievements to be materially different from any anticipated results, performance, or achievements for many reasons including the impact of the coronavirus pandemic. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarter ended June 30, 2020, including but not limited to the discussion under "Risk Factors" therein, which the Company filed with the SEC and which may be viewed at http://www.sec.gov/.
 
For Further Information:
Issuer Direct Corporation 
Brian R. Balbirnie 
(919)-481-4000 
brian.balbirnie@issuerdirect.com
Hayden IR 
Brett Maas 
(646)-536-7331 
brett@haydenir.com
Hayden IR 
James Carbonara 
(646)-755-7412 
james@haydenir.com
 
SOURCE: Issuer Direct Corporation
 
 
4
 
 
ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
 
 
June 30,
 
 
December 31,
 
 
 
2020
 
 
2019
 
ASSETS
 
(unaudited)
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $17,097 
 $15,766 
Accounts receivable (net of allowance for doubtful accounts of $601 and $700, respectively)
  2,599 
  2,051 
Income tax receivable
   
  48 
Other current assets
  273 
  141 
Total current assets
  19,969 
  18,006 
Capitalized software (net of accumulated amortization of $2,472 and $2,153, respectively)
  815 
  1,134 
Fixed assets (net of accumulated amortization of $245 and $181, respectively)
  839 
  899 
Right-of-use asset – leases
  1,979 
  2,127 
Deferred tax asset
  292 
  256 
Other long-term assets
  64 
  77 
Goodwill
  6,376 
  6,376 
Intangible assets (net of accumulated amortization of $5,281 and $4,937, respectively)
  3,171 
  3,515 
Total assets
 $33,505 
 $32,390 
 
    
    
LIABILITIES AND STOCKHOLDERS’ EQUITY
    
    
Current liabilities:
    
    
Accounts payable
 $430 
 $266 
Accrued expenses
  1,385 
  1,151 
Note payable – short-term (net of discount of $6 and $19, respectively)
  314 
  301 
Income taxes payable
  614 
  310 
Deferred revenue
  2,015 
  1,812 
Total current liabilities
  4,758 
  3,840 
Deferred income tax liability
  130 
  141 
Lease liabilities – long-term
  2,138 
  2,309 
Total liabilities
  7,026 
  6,290 
Commitments and contingencies
    
    
Stockholders' equity:
    
    
Preferred stock, $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.
   
   
Common stock $0.001 par value, 20,000,000 shares authorized, 3,734,502 and 3,786,398 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.
  4 
  4 
Additional paid-in capital
  21,619 
  22,275 
Other accumulated comprehensive income (loss)
  21 
  (16)
Retained earnings
  4,835 
  3,837 
Total stockholders' equity
  26,479 
  26,100 
Total liabilities and stockholders’ equity
 $33,505 
 $32,390 
 
 
5
 
 
ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share amounts)
 
 
 
 
For the Three Months Ended
 
 
For the Six Months Ended
 
 
 
June 30,
 
 
June 30,
 
 
June 30,
 
 
June 30,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
Revenues
 $4,884 
 $4,138 
 $8,900 
 $8,317 
Cost of revenues
  1,362 
  1,250 
  2,615 
  2,552 
Gross profit
  3,522 
  2,888 
  6,285 
  5,765 
Operating costs and expenses:
    
    
    
    
General and administrative
  1,197 
  1,322 
  2,413 
  2,683 
Sales and marketing expenses
  950 
  875 
  1,846 
  1,695 
Product development
  165 
  343 
  359 
  680 
Depreciation and amortization
  209 
  218 
  418 
  430 
Total operating costs and expenses
  2,521 
  2,758 
  5,036 
  5,488 
Operating income
  1,001 
  130 
  1,249 
  277 
Interest income (expense), net
  1 
  115 
  59 
  186)
Income before income taxes
  1,002 
  245 
  1,308 
  463 
Income tax expense
  230 
  33 
  310 
  46 
Net income
 $772 
 $212 
 $998 
 $417 
Income per share – basic
 $0.21 
 $0.05 
 $0.27 
 $0.11 
Income per share – fully diluted
 $0.21 
 $0.05 
 $0.26 
 $0.11 
Weighted average number of common shares outstanding – basic
  3,736 
  3,857 
  3,762 
  3,854 
Weighted average number of common shares outstanding – fully diluted
  3,761 
  3,873 
  3,789 
  3,871 
  
 
6
 
 
ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 
 
 
For the Six Months Ended
 
 
 
June 30,
 
 
June 30,
 
 
 
2020
 
 
2019
 
Cash flows from operating activities:
 
 
 
 
 
 
Net income
 $998 
 $417 
Adjustments to reconcile net income to net cash provided by operating activities:
    
    
Depreciation and amortization
  727 
  831 
Bad debt expense
  182 
  555 
Deferred income taxes
  (51)
  6 
Non-cash interest expense
  13 
  13 
Stock-based compensation expense
  129 
  268 
Changes in operating assets and liabilities:
    
    
Decrease (increase) in accounts receivable
  (730)
  (1,384)
Decrease (increase) in other assets
  77 
  (266)
Increase (decrease) in accounts payable
  164 
  67 
Increase (decrease) in accrued expenses and other liabilities
  367 
  (87)
Increase (decrease) in deferred revenue
  203 
  375 
Net cash provided by operating activities
  2,079 
  795 
 
    
    
Cash flows from investing activities:
    
    
Purchase of VisualWebcaster Platform
   
  (2,788)
Capitalized software
   
  (20)
Purchase of fixed assets
  (4)
  (6)
Net cash used in investing activities
  (4)
  (2,814)
 
    
    
Cash flows from financing activities:
    
    
Payment for stock repurchase and retirement
  (785)
   
Net cash used in financing activities
  (785)
   
 
    
    
Net change in cash
  1,290 
  (2,019)
Cash – beginning
  15,766 
  17,222 
Currency translation adjustment
  41 
  (7)
Cash – ending
 $17,097 
 $15,196 
 
    
    
Supplemental disclosures:
    
    
Cash paid for income taxes
 $12 
 $128 
Non-cash activities:
    
    
Right-of-use assets obtained in exchange for lease liabilities
 $ 
 $260 
  
 
 
7