Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Sep. 30, 2013 | |
Document And Entity Information | ' |
Entity Registrant Name | 'ISSUER DIRECT CORP |
Entity Central Index Key | '0000843006 |
Document Type | 'Other |
Document Period End Date | 30-Sep-13 |
Amendment Flag | 'false |
Current Fiscal Year End Date | '--12-31 |
Is Entity a Well-known Seasoned Issuer? | 'No |
Is Entity a Voluntary Filer? | 'No |
Is Entity's Reporting Status Current? | 'Yes |
Entity Filer Category | 'Smaller Reporting Company |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Current assets: | ' | ' | ' |
Cash and cash equivalents | $1,926,674 | $1,250,643 | $862,386 |
Accounts receivable, (net of allowance for doubtful accounts of $407,776, $117,030 and $125,987, respectively) | 1,688,385 | 544,684 | 361,191 |
Deferred project costs | 0 | 0 | 76,106 |
Deferred income tax asset - current | 264,000 | 49,000 | 135,000 |
Other current assets | 577,775 | 38,710 | 35,093 |
Total current assets | 4,456,834 | 1,883,037 | 1,469,776 |
Furniture, equipment and improvements, net | 347,016 | 55,611 | 66,611 |
Deferred income tax - noncurrent | 0 | 159,000 | 64,000 |
Intangible assets (net of accumulated amortization of $352,763, $187,666 and $79,166, respectively) | 4,243,237 | 388,334 | 109,029 |
Goodwill | 1,502,887 | 43,195 | 0 |
Other noncurrent assets | 22,351 | 12,069 | 22,074 |
Total assets | 10,572,325 | 2,541,246 | 1,731,490 |
Current liabilities: | ' | ' | ' |
Accounts payable | 444,876 | 62,886 | 103,566 |
Accrued expenses | 1,794,168 | 263,753 | 39,324 |
Accrued litigation | 0 | 0 | 130,000 |
Deferred revenue | 1,189,220 | 112,906 | 177,708 |
Line of credit | 500,000 | 150,000 | 0 |
Total current liabilities | 3,928,264 | 589,545 | 450,598 |
Note payable (net of debt discount of $2,365,591 and $0, respectively) | 134,409 | 0 | 0 |
Deferred tax liability | 2,201,150 | 0 | 0 |
Other long-term liabilities | 147,800 | 105,554 | 69,287 |
Total liabilities | 6,411,623 | 695,099 | 519,885 |
Stockholders' equity: | ' | ' | ' |
Preferred stock, $0.001 par value, 30,000,000 shares authorized, no shares issued and outstanding as of September 30, 2013, December 31, 2012 and 2011. | 0 | 0 | 0 |
Common stock $0.001 par value, 100,000,000 shares authorized, 1,976,399, 1,937,329 and 1,752,175 shares issued and outstanding as of September 30, 2013, December 31, 2012 and 2011, respectively | 1,976 | 1,937 | 1,752 |
Additional paid-in capital | 3,843,454 | 2,070,369 | 1,741,744 |
Other accumulated comprehensive loss | -39,247 | 0 | 0 |
Retained earnings (accumulated deficit) | 354,519 | -226,159 | -531,891 |
Total stockholders' equity | 4,160,702 | 1,846,147 | 1,211,605 |
Total liabilities and stockholders' equity | $10,572,325 | $2,541,246 | $1,731,490 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Assets | ' | ' | ' |
Allowance for Accounts Receivables | $407,776 | $117,030 | $125,987 |
Accumulated Amortization | $352,763 | $187,666 | $79,166 |
Stockholders Equity | ' | ' | ' |
Preferred Stock shares par value | $0.00 | $0.00 | $0.00 |
Preferred Stock shares Authorized | 30,000,000 | 30,000,000 | 30,000,000 |
Preferred Stock shares Issued | 0 | 0 | 0 |
Preferred Stock shares Outstanding | 0 | 0 | 0 |
Common Stock shares par value | $0.00 | $0.00 | $0.00 |
Common Stock shares Authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Common Stock shares Issued | 1,976,399 | 1,937,329 | 1,752,175 |
Common Stock shares Outstanding | 1,976,399 | 1,937,329 | 1,752,175 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Statement [Abstract] | ' | ' | ' | ' | ' | ' |
Revenues | $2,102,831 | $1,215,511 | $5,238,244 | $3,120,544 | $4,305,566 | $3,228,099 |
Cost of services | 627,532 | 340,832 | 1,539,244 | 1,106,966 | 1,501,158 | 1,391,967 |
Gross profit | 1,475,299 | 874,679 | 3,699,000 | 2,013,578 | 2,804,408 | 1,836,132 |
Operating costs and expenses: | ' | ' | ' | ' | ' | ' |
General and administrative | 610,232 | 323,139 | 1,405,498 | 990,649 | 1,309,166 | 965,159 |
Sales and marketing expenses | 377,664 | 167,748 | 757,254 | 606,154 | 799,760 | 361,641 |
Litigation | 0 | 0 | 0 | 0 | 0 | 206,263 |
Depreciation and amortization | 143,689 | 32,523 | 211,212 | 104,020 | 138,349 | 54,704 |
Total operating costs and expenses | 1,131,585 | 523,410 | 2,373,964 | 1,700,823 | 2,247,275 | 1,587,767 |
Net Operating income | 343,714 | 351,269 | 1,325,036 | 312,755 | 557,133 | 248,365 |
Other income (expense): | ' | ' | ' | ' | ' | ' |
Interest income (expense), net | -154,076 | -678 | -151,778 | 3,348 | -401 | 12,711 |
Total other income (expense) | -154,076 | -678 | -151,778 | 3,348 | -401 | 12,711 |
Net income before taxes | 189,638 | 350,591 | 1,173,258 | 316,103 | 556,732 | 261,076 |
Income tax expense | 72,294 | 137,000 | 475,294 | 123,500 | 251,000 | 21,800 |
Net income | $117,344 | $213,591 | $697,964 | $192,603 | $305,732 | $239,276 |
Income per share - basic | $0.06 | $0.11 | $0.36 | $0.10 | $0.16 | $0.14 |
Income (loss) per share - fully diluted | $0.05 | $0.11 | $0.34 | $0.10 | $0.15 | $0.14 |
Weighted average number of common shares outstanding - basic | 1,968,871 | 1,931,438 | 1,954,314 | 1,892,703 | 1,902,921 | 1,757,329 |
Weighted average number of common shares outstanding - fully diluted | 2,273,497 | 2,001,266 | 2,056,995 | 1,956,262 | 1,978,617 | 1,770,078 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Consolidated Statements Of Comprehensive Income | ' | ' | ' | ' |
Net income | $117,344 | $213,591 | $697,964 | $192,603 |
Foreign currency translation adjustment | -39,247 | 0 | -39,247 | 0 |
Comprehensive income | $78,097 | $213,591 | $658,717 | $192,603 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2010 | $1,769 | $1,677,128 | ($771,167) | $907,730 |
Beginning Balance, Shares at Dec. 31, 2010 | 1,768,531 | ' | ' | ' |
Repurchase and retirement of treasury shares, Shares | -16,356 | ' | ' | ' |
Repurchase and retirement of treasury shares, Amount | -17 | -36,528 | ' | -36,545 |
Stock-based compensation expense | ' | 101,144 | ' | 101,144 |
Net income | ' | ' | 239,276 | 239,276 |
Ending Balance, Amount at Dec. 31, 2011 | 1,752 | 1,741,744 | -531,891 | 1,211,605 |
Ending Balance, Shares at Dec. 31, 2011 | 1,752,175 | ' | ' | ' |
Issuance of shares for acquisition of customer list from SEC Compliance Services, Inc. ("SECCS"), shares | 70,000 | ' | ' | ' |
Issuance of shares for acquisition of customer list from SEC Compliance Services, Inc. ("SECCS"), amount | 70 | 139,930 | ' | 140,000 |
Stock-based compensation expense, shares | 95,000 | ' | ' | ' |
Stock-based compensation expense, amount | 95 | 415,780 | ' | 415,875 |
Exercise of stock options, net of tax, shares | 20,154 | ' | ' | ' |
Exercise of stock options, net of tax, amount | 20 | 43,505 | ' | 43,525 |
Dividends | ' | -270,590 | ' | -270,590 |
Net income | ' | ' | 305,732 | 305,732 |
Ending Balance, Amount at Dec. 31, 2012 | $1,937 | $2,070,369 | ($226,159) | $1,846,147 |
Ending Balance, Shares at Dec. 31, 2012 | 1,937,329 | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Cash flows from operating activities: | ' | ' | ' | ' |
Net income | $697,964 | $192,603 | $305,732 | $239,276 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' | ' |
Depreciation and amortization | 211,212 | 104,020 | 138,349 | 54,704 |
Bad debt expense | 131,409 | 60,819 | 65,327 | 121,949 |
Deferred income taxes | 7,326 | 100,906 | -9,000 | 21,800 |
Non-cash interest expense | 134,409 | 0 | 0 | 0 |
Excess tax benefit from share based compensation | 0 | 0 | -11,000 | 0 |
Stock-based compensation expense | 222,439 | 327,858 | 415,875 | 101,144 |
Changes in operating assets and liabilities: | ' | ' | ' | ' |
Decrease (increase) in accounts receivable | 130,098 | -264,785 | -248,820 | -307,804 |
Decrease (increase) in deposits and prepaids | -172,189 | 51,900 | 72,494 | -101,116 |
Increase (decrease) in accounts payable | 89,538 | -54,807 | -40,680 | 37,996 |
Increase (decrease) in accrued expenses | 74,982 | -69,289 | 130,696 | 183,883 |
Increase (decrease) in deferred revenue | -376,466 | -92,532 | -64,802 | 126,326 |
Net cash provided by operating activities | 1,150,722 | 356,693 | 754,171 | 478,158 |
Cash flows from investing activities: | ' | ' | ' | ' |
Purchase of property and equipment | -40,444 | -9,065 | -18,849 | -43,940 |
Purchase of acquired business, net of cash acquired | -3,178,399 | 0 | 0 | 0 |
Acquisition of intangible assets | 0 | -281,000 | -281,000 | -40,000 |
Net cash used in investing activities | -3,218,843 | -290,065 | -299,849 | -83,940 |
Cash flows from financing activities: | ' | ' | ' | ' |
Proceeds from exercise of stock options | 50,685 | 30,825 | 43,525 | 0 |
Repurchase of common stock | 0 | 0 | 0 | -36,545 |
Payment of dividend | -117,286 | -115,751 | -270,590 | 0 |
Excess tax benefit from share based compensation | 0 | 0 | 11,000 | 0 |
Advances from line of credit (net) | 350,000 | 255,000 | 275,000 | 0 |
Borrowings on long term debt | 2,500,000 | 0 | 0 | 0 |
Repayment of line of credit | 0 | 0 | -125,000 | 0 |
Net cash provided by financing activities | 2,783,399 | 170,074 | -66,065 | -36,545 |
Effect of exchange rate changes on cash | -39,247 | 0 | 0 | 0 |
Net change in cash | 715,278 | 236,702 | 388,257 | 357,673 |
Cash - beginning | 1,250,643 | 862,386 | 862,386 | 504,713 |
Cash - ending | 1,926,674 | 1,099,088 | 1,250,643 | 862,386 |
Supplemental disclosures: | ' | ' | ' | ' |
Cash paid for interest | 21,739 | 9,126 | 12,034 | 28 |
Cash paid for income taxes | 446,564 | 22,594 | 22,594 | 0 |
Non-cash activities: | ' | ' | ' | ' |
Common stock issued for acquisition of customer list | 0 | 140,000 | 0 | 0 |
Issuance of beneficial conversion feature to holder of note payable | $2,500,000 | $0 | $0 | $0 |
Note_1_Basis_of_Presentation
Note 1. Basis of Presentation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' |
Basis of Presentation | ' | ' |
The unaudited interim consolidated balance sheet as of September 30, 2013 and statements of operations, statements of comprehensive income, and statements of cash flows for the three and nine-month periods ended September 30, 2013 and 2012 included herein, have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 10 of Regulation S-X under the Exchange Act. In the opinion of the management, they include all normal recurring adjustments necessary for a fair presentation of the consolidated financial statements. Results of operations reported for the interim periods are not necessarily indicative of results for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. The interim financial information should be read in conjunction with Issuer Direct Corporation’s (the “Company’s”) 2012 Annual Report on Form 10-K, including Item 1, Business Risk Factors included therein. The year-ended condensed balance sheet data was derived from audited financial statements in accordance with the rules and regulations of the SEC, but does not include all disclosures required for financial statments prepared in accordance with accounting principles generally accepted in the United States of America. | Nature of Operations | |
Issuer Direct Corporation (the “Company” or “Issuer Direct”) was incorporated in the state of Delaware in October 1988 under the name Docucon Inc. Subsequent to the December 13, 2007 merger with My EDGAR, Inc., the Company changed its name to Issuer Direct Corporation. The surviving company was formed for the purposes of helping companies produce and distribute their financial and business communications both online and in print. As an issuer services focused company, Issuer Direct Corporation operates under several brands in the market, including Direct Transfer, New York Stock Transfer, iProxy Direct, iFund Direct, iR Direct, QX Interactive, and Issuer Services Group. The Company leverages its securities compliance and regulatory expertise to provide a comprehensive set of services that enhance a client's ability to communicate effectively with its shareholder base while meeting all reporting regulations required. |
Note_2_Summary_of_Significant_
Note 2. Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||
Notes to Financial Statements | ' | ' | ||||||||
Summary of Significant Accounting Policies | ' | ' | ||||||||
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Significant intercompany accounts and transactions are eliminated in consolidation. | The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Direct Transfer LLC, and QX Interactive LLC. Significant intercompany accounts and transactions are eliminated in consolidation. | |||||||||
Earnings per Share (EPS) | Common Stock Split | |||||||||
Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average common shares outstanding for the period. Fully diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. | On October 31, 2011, the Company effected a one-for-ten reverse stock split to shareholders of record as of October 31, 2011. All share and per share information has been retroactively adjusted to reflect the stock split. The number of authorized shares of the Company's common stock and its par value remain unchanged. Outstanding stock incentive awards are adjusted to give effect to the reverse split and the shares available for future grants will be proportionately reduced. | |||||||||
Revenue Recognition | Cash and Cash Equivalents | |||||||||
We recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104, “Revenue Recognition,” which requires that: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. We recognize revenue when services are rendered or delivered, where collectability is probable. Deferred revenue primarily consists of upfront payments for annual service contracts, and is recognized throughout the year as the services are performed. | We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. | |||||||||
Allowance for Doubtful Accounts | The Company places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially all depository accounts and temporarily provides unlimited coverage through December 31, 2012 for certain qualifying and participating non-interest bearing transaction accounts. The Company from time to time may have amounts on deposit in excess of the insured limits. As of December 31, 2012, the Company had $458,372 which exceeds these insured amounts. | |||||||||
We initially record our provision for doubtful accounts based on our historical experience and then adjust this provision at the end of each reporting period based on a detailed assessment of our accounts receivable and allowance for doubtful accounts. | Revenue Recognition | |||||||||
Use of Estimates | We recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104, “Revenue Recognition,” which requires that: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. We recognize revenue when services are rendered or delivered, where collectability is probable. Deferred revenue primarily consists of upfront payments for annual service contracts, and is recognized throughout the year as the services are performed. | |||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for doubtful accounts and the valuation of goodwill and intangible assets, deferred tax assets, and stock based compensation. Actual results could differ from those estimates. | Deferred Costs | |||||||||
Income Taxes | For all customer sales arrangements in which we defer the recognition of revenue, we also defer the associated costs, such as the personnel or expenses incurred with third parties to perform the services. | |||||||||
We comply with FASB ASC No. 740 – Income Taxes which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, we recognize the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. Our policy regarding the classification of interest and penalties is to classify them as income tax expense in our financial statements, if applicable. At the end of each interim period, we estimate the effective tax rate we expect to be applicable for the full fiscal year and this rate is applied to our results for the interim year-to-date period. | Property and Equipment | |||||||||
Fair Value Measurements | Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. The range of estimated useful lives used to calculate depreciation for principal items of property and equipment are as follow: | |||||||||
As of September 30, 2013 and December 31, 2012, we do not have any financial assets or liabilities that are required to be, or that we elected to measure, at fair value. | Asset Category | Depreciation / Amortization Period | ||||||||
Furniture, fixtures and equipment | 3 to 5 years | |||||||||
We comply with the authoritative guidance for fair value provisions applicable to nonfinancial assets and nonfinancial liabilities. Our assets and liabilities that are subject to these provisions include our intangible assets, consisting of goodwill, client relationships, customer lists, software, technology and trademarks, and our long-lived assets. | Computer equipment and purchased software | 3 years | ||||||||
Machinery and equipment | 3 to 5 years | |||||||||
We believe that the fair value of our financial instruments, which consist of cash and cash equivalents, accounts receivable, our line of credit, notes payable, and accounts payable approximate their carrying amounts. | Leasehold Improvements | 7 years or lesser of the lease term | ||||||||
Translation of Foreign Financial Statements | Earnings per Share | |||||||||
The financial statements of the foreign subsidiaries of the Company have been translated into U.S. dollars. All assets and liabilities have been translated at current rates of exchange in effect at the end of the fiscal period. Income and expense items have been translated at the average exchange rates for the year or the applicable interim period. The gains or losses that result from this process are recorded as a separate component of other accumulated comprehensive income until the entity is sold or substantially liquidated. | We calculate earnings per share in accordance with the authoritative guidance for earnings per share, which requires that basic net income per common share be computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares, such as convertible preferred stock, outstanding during the period. Shares issuable upon the exercise of stock options totaling 323,500 and 130,000, respectively, were included in the computation of diluted earnings per common share during the years ended December 31, 2012, and 2011. | |||||||||
Goodwill | Allowance for Doubtful Accounts | |||||||||
Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment, and any such impairment will be recognized in the period identified. | We provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables as well as historical collection information. Credit is granted on an unsecured basis. In determining the amount of the allowance, management is required to make certain estimates and assumptions. The allowance is made up of specific reserves, as deemed necessary, on client account balances, and a reserve based on our historical experience. The following is a summary of our allowance for doubtful accounts during the years ended December 31, 2012 and 2011: | |||||||||
Comprehensive Income (Loss) | Year Ended | Year Ended | ||||||||
December 31, | December 31, | |||||||||
Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss) related to changes in the cumulative foreign currency translation adjustment. | 2012 | 2011 | ||||||||
Beginning balance | $ | 125,987 | $ | 56,024 | ||||||
Intangible Assets | Bad Debt Expense | 65,327 | 121,949 | |||||||
Write-offs | (74,284 | ) | (51,986 | ) | ||||||
Intangible assets consist of client relationships, customer lists, software, technology and trademarks that are initially measured at fair value. The trademarks have an indefinite life and are not amortized. The trademarks are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. The client relationships, customer lists, software and technology are amortized over their estimated useful lives. | Ending Balance | $ | 117,030 | $ | 125,987 | |||||
Advance Postage Fees | Use of Estimates | |||||||||
In the past, the Company required that each client deposit a postage fee advance for annual report services. The amount was held until the client canceled the service and the Company reimbursed the amount deposited; yet the Company is still holding amounts from prior contracts. Advance postage fees of $823,320 are included in accrued expenses at September 30, 2013. There were no amounts accrued at December 31, 2012. | The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||
Advertising | Income Taxes | |||||||||
The Company expenses the production costs of advertising the first time the advertising takes place, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits. | We comply with the authoritative guidance for accounting for income taxes which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, we recognize the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. Our policy regarding the classification of interest and penalties is to classify them as income tax expense in our financial statements, if applicable. The tax returns for the prior three years are generally subject to review by federal and state taxing authorities. | |||||||||
Stock-based compensation | Impairment of Long-lived Assets | |||||||||
We account for stock-based compensation under the authoritative guidance for stock compensation. The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The cost is to be recognized over the period during which an employee is required to provide service in exchange for the award. Included in the determination of the fair value under the option model are highly subjective assumptions regarding expected dividend yields, prior volatility, risk free rate of interest, and the expected life of options. The authoritative guidance for stock compensation also requires the benefit of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as prescribed under previous accounting rules. This requirement reduces net operating cash flows and increases net financing cash flows in periods when the award is exercised. | In accordance with the authoritative guidance for accounting for long-lived assets, such as property and equipment, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds fair value of the asset group. Goodwill is tested for impairment annually or whenever events indicate that the asset may be impaired. | |||||||||
The Company recognized stock based compensation expense of $66,346 and $61,255 during the three-month periods ended September 30, 2013 and 2012, respectively. The Company recognized stock based compensation expense of $222,439 and $327,858 during the nine-month periods ended September 30, 2013 and 2012, respectively. | Fair Value Measurements | |||||||||
Recent Accounting Pronouncements | As of December 31, 2012 and 2011, we do not have any financial assets or liabilities that are required to be, or that we elected to measure, at fair value. | |||||||||
In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU 2013-02"), which is intended to improve the reporting of reclassifications out of accumulated other comprehensive income. The ASU requires an entity to report, either on the face of the income statement or in the notes to the financial statements, the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in the income statement if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other required disclosures that provide additional detail about those amounts. Effective January 1, 2013, the Company adopted ASU 2013-02. The adoption of the standard did not have an impact on the consolidated financial statements. | We believe that the fair value of our financial instruments, which consist of cash and cash equivalents, accounts receivable, our line of credit, and accounts payable approximate their carrying amounts. | |||||||||
In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"). ASU 2013-11 is effective for the first interim or annual period beginning on or after December 15, 2013 with early adoption permitted. ASU 2013-11 amends ASC Topic 740, Income Taxes, to provide guidance and reduce diversity in practice on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Except for the changes, if any, in the Company's presentation, the initial application of the standard is not expected to significantly impact the Company. | Stock-based compensation | |||||||||
We account for stock-based compensation under the authoritative guidance for stock compensation. The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The cost is to be recognized over the period during which an employee is required to provide service in exchange for the award. The authoritative guidance for stock compensation also requires the benefit of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as prescribed under previous accounting rules. This requirement reduces net operating cash flows and increases net financing cash flows in periods subsequent to adoption, only if excess tax benefits exist. | ||||||||||
Recent Accounting Pronouncements | ||||||||||
On July 27, 2012, the FASB issued ASU No. No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The ASU simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill. The amendments allow an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An organization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment, that it is “more likely than not” that the asset is impaired. Under former guidance, an organization was required to test an indefinite-lived intangible asset for impairment on at least an annual basis by comparing the fair value of the asset with its carrying amount. The amendments in this ASU are effective for annual and interim tests performed for fiscal years beginning after September 15, 2012, early adoption is permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. |
Note_3_Furniture_Equipment_and
Note 3. Furniture, Equipment, and Improvements | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Furniture, Equipment, and Improvements | ' | ||||||||
December 31, | |||||||||
2012 | 2011 | ||||||||
Computers & equipment | $ | 97,482 | $ | 83,708 | |||||
Furniture | 27,479 | 25,978 | |||||||
Leasehold improvements | 25,358 | 21,783 | |||||||
Total fixed assets, gross | 150,319 | 131,469 | |||||||
Less: Accumulated depreciation | (94,708 | ) | (64,858 | ) | |||||
Total fixed assets, net | $ | 55,611 | $ | 66,611 | |||||
Depreciation expense for the years ended December 31, 2012 and 2011 totaled $29,850 and $30,704, respectively. |
Note_4_Intangible_Assets
Note 4. Intangible Assets | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||||||
Intangible Assets | ' | ' | ||||||||||||||||||||
Acquisition of Precision IR Group, Inc. | ||||||||||||||||||||||
The components of goodwill and intangible assets are as follows: | ||||||||||||||||||||||
On August 22, 2013, the Company and PrecisionIR Group Inc., a Delaware corporation (“PrecisionIR” or “PIR”) entered into and consummated an Agreement and Plan of Merger (the “Acquisition Agreement”). Under the terms of the Acquisition Agreement, the Company paid $3,450,000 to certain debtors of PIR as full consideration to acquire all of the outstanding shares of PIR (the “Acquisition”). | ||||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||
During the quarter ended September 30, 2013, the Company employed a third party valuation firm to assist in determining the assumptions for the preliminary purchase price allocation of assets and liabilities acquired from PIR as set forth in the tables below. The income approach was used to determine the value of the PIR’s trademarks and client relationships. The income approach determines the fair value for the asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a rate of return that reflects the relative risk of achieving the cash flow and the time value of money. Projected cash flows for each asset considered multiple factors, including current revenue from existing customers; analysis of expected revenue and attrition trends; reasonable contract renewal assumptions from the perspective of a marketplace participant; expected profit margins giving consideration to marketplace synergies; and required returns to contributory assets. The cost approach was used to determine the value of PIR’s fixed assets, customer list, and software. The cost approach is based on replacement cost as an indicator of value. It assumes that a prudent investor would pay no more for an asset than the amount for which it could be replaced new. Further, to the extent a particular asset provides less utility than a new one, its value will be less than its replacement cost new. To account for this difference, the replacement cost new is adjusted for losses in value, that is, depreciated. | Gross Carrying | Accumulated | Net Carrying | |||||||||||||||||||
Amount | Amortization | Amount | ||||||||||||||||||||
The transaction resulted in recording intangible assets and goodwill at a fair value of $5,479,692 as follows: | Customer lists | $ | 500,000 | $ | (128,333 | ) | $ | 371,667 | ||||||||||||||
Customer relationships-noncontractual | 25,000 | (25,000 | ) | - | ||||||||||||||||||
Total Consideration | $ | 3,450,000 | Proprietary software | 51,000 | (34,333 | ) | 16,667 | |||||||||||||||
Plus: Liabilities assumed in excess of tangible assets | 2,029,692 | Goodwill | 43,195 | — | 43,195 | |||||||||||||||||
Total fair value of PIR intangible assets and goodwill | $ | 5,479,692 | Total intangible assets | $ | 619,195 | $ | (187,666 | ) | $ | 431,529 | ||||||||||||
Allocation of PIR intangible assets and goodwill: | December 31, 2011 | |||||||||||||||||||||
Amortizable intangible assets | $ | 3,300,000 | Gross Carrying | Accumulated | Net Carrying | |||||||||||||||||
Trademarks | 720,000 | Amount | Amortization | Amount | ||||||||||||||||||
Goodwill | 1,459,692 | Customer lists | $ | 70,000 | $ | (31,666 | ) | $ | 38,334 | |||||||||||||
Total fair value of PIR intangible assets and goodwill | $ | 5,479,692 | Customer relationships-noncontractual | 25,000 | (22,500 | ) | 2,500 | |||||||||||||||
Proprietary software | 50,000 | (25,000 | ) | 25,000 | ||||||||||||||||||
Goodwill | 43,195 | — | 43,195 | |||||||||||||||||||
The tangible assets and liabilities acquired were as follows: | Total intangible assets | $ | 188,195 | $ | (79,166 | ) | $ | 109,029 | ||||||||||||||
Cash | $ | 271,602 | Goodwill | |||||||||||||||||||
Accounts receivable | 1,405,208 | |||||||||||||||||||||
Prepaid expenses and other assets | 366,876 | At December 31, 2012 and 2011, our recorded goodwill totaled $43,195, which was solely related to our acquisition of Basset Press in July 2007. We conducted our 2012 annual impairment analysis during the third quarter of 2012 and determined that our goodwill was not impaired. | ||||||||||||||||||||
Furniture, equipment, and improvements | 297,076 | |||||||||||||||||||||
Deposits | 10,283 | Intangible Assets | ||||||||||||||||||||
Total assets | 2,351,045 | |||||||||||||||||||||
Accounts payable and accrued expenses | (1,790,133 | ) | In July 2007, as part of the Basset Press acquisition, we acquired $105,000 of identifiable intangible assets including $30,000 for customer lists, $25,000 for non-contractual customer relationships, and $50,000 for proprietary software or intellectual property. These assets have been amortized over their useful lives of five or six years. In June 2011, we acquired the rights to the customers of Edgar Tech Filing Services for $40,000. This asset has been recorded as a customer list and is being amortized over an estimated useful life of five years. The Company acquired rights to all customer contracts of privately held SEC Compliance Services, Inc. (“SECCS”) on January 4, 2012. The purchase price of $425,000 consisted of cash proceeds of $285,000 and 70,000 shares of common stock with a value of $140,000 based on the Company’s stock price of $2.00 per share on the close of business on January 4, 2012. The Company borrowed $275,000 from its line of credit to finance the transaction. The Company is amortizing the purchase price of $425,000 over its estimated useful life of five years. | |||||||||||||||||||
Deferred revenue | (1,452,780 | ) | ||||||||||||||||||||
Net tax liabilities | (1,137,824 | ) | We conducted our annual impairment analyses during the third quarters of 2012 and 2011 and determined that no intangible assets were impaired. | |||||||||||||||||||
Total liabilities | (4,380,737 | ) | ||||||||||||||||||||
Liabilities assumed in excess of tangible assets | $ | 2,029,692 | The amortization of intangible assets is a charge to operating expenses and totaled $108,500 and $24,000 in the years ended 2012 and 2011, respectively. | |||||||||||||||||||
The identifiable amortizable intangible assets created as a result of the acquisition will be amortized straight line over it’s estimated useful life as follows: | The future amortization of the identifiable intangible assets is as follows: | |||||||||||||||||||||
Asset Amount | Useful Life (years) | Years Ending December 31: | ||||||||||||||||||||
Client relationships | $ | 1,480,000 | 7 | 2013 | $ | 102,333 | ||||||||||||||||
Customer list | 1,270,000 | 3 | 2014 | 102,334 | ||||||||||||||||||
Software | 550,000 | 3 | 2015 | 94,000 | ||||||||||||||||||
$ | 3,300,000 | 2016 | 89,333 | |||||||||||||||||||
2017 | 334 | |||||||||||||||||||||
Select Pro-Forma Financial Information (Unaudited) | Total | $ | 388,334 | |||||||||||||||||||
The following represents our unaudited condensed pro-forma financial results as if the Acquisition with PIR and the Company had occurred as of January 1, 2012. Unaudited condensed pro-forma results are based upon accounting estimates and judgments that we believe are reasonable. The condensed pro-forma results are not necessarily indicative of the actual results of our operations had the acquisitions occurred at the beginning of the periods presented, nor does it purport to represent the results of operations for future periods. | ||||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||
September 30, | ||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||
Revenues | $ | 12,288,244 | $ | 13,826,544 | ||||||||||||||||||
Net Income | $ | 839,595 | $ | 738,101 | ||||||||||||||||||
Basic earnings per share | $ | 0.43 | $ | 0.39 | ||||||||||||||||||
Diluted earnings per share | $ | 0.41 | $ | 0.38 | ||||||||||||||||||
Acquisition of SEC Compliance Services | ||||||||||||||||||||||
The Company acquired rights to all customer contracts of privately held SEC Compliance Services, Inc. (“SECCS”) on January 4, 2012. The purchase price of $425,000 consisted of cash proceeds of $285,000 and 70,000 shares of common stock with a value of $140,000 based on the Company’s stock price of $2.00 per share on the close of business on January 4, 2012. The Company borrowed $275,000 from its line of credit to finance the transaction. The Company is amortizing the purchase price of $425,000 over its estimated useful life of five years. |
Note_5_Stockholders_Equity
Note 5. Stockholders' Equity | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||
Notes to Financial Statements | ' | ' | ||||||||
Stockholders' Equity | ' | ' | ||||||||
Preferred Stock | ||||||||||
On October 31, 2011, the Company effected a one-for-ten reverse stock split to shareholders of record as of October 31, 2011. All share and per share information has been retroactively adjusted to reflect the stock split. The number of shares of the Company's common stock and its par value remain unchanged. Outstanding stock incentive awards are adjusted to give effect to the reverse split and the shares available for future grants will be proportionately reduced. | ||||||||||
On March 26, 2012, the Company filed a Certificate of Amendment to the Certificate of Designation for the Series A and B Convertible Preferred Stock (the “Amendment”). Under the terms of the Amendment, the Series A and Series B Designations were removed. As a result, at March 31, 2012, the Company has 30,000,000 shares of Preferred Stock authorized, with no shares designated, issued, or outstanding. On June 29, 2012, the shareholders of the Company approved a reduction in the par value of the Preferred Stock from $1.00 per share to $0.001 per share, which became effective on July 16, 2012. | ||||||||||
On March 26, 2012, the Company filed a Certificate of Amendment to the Certificate of Designation for the Series A and B Convertible Preferred Stock (the “Amendment”). Under the terms of the Amendment, the Series A and Series B Designations were removed. As a result, at December 31, 2012, the Company has 30,000,000 shares of Preferred Stock authorized, with no shares designated, issued, or outstanding. On June 29, 2012, the shareholders of the Company approved a reduction in the par value of the Preferred Stock from $1.00 per share to $0.001 per share, which became effective on July 16, 2012. | ||||||||||
Common Stock | ||||||||||
The Company paid cash dividends of $270,590 to holders of shares of common stock during the year ended December 31, 2012. No dividends were paid during the year ended December 31, 2011. | ||||||||||
As discussed in Note 3, the Company issued 70,000 shares of common stock with a value of $140,000 to the former shareholders of SECCS on January 4, 2012 as part of the consideration given for the purchase of assets obtained from SECCS. | ||||||||||
During years ended December 31, 2012 and 2011, changes in the shares of our common stock outstanding are as follows: | ||||||||||
Restricted Common Stock | ||||||||||
Year ended | Year ended | |||||||||
On April 2, 2012, the Company issued grants for a total of 95,000 restricted shares of the Company’s common stock (the “Awards”) to its executive officers and certain other employees. The Awards vest over periods up to two years as stated in the Award Agreements, and will accelerate in the event of a Corporate Transaction, as such term is defined in the Award Agreements. In the event a grantee’s relationship with the Company is terminated for any reason, vesting will immediately cease. These Awards are not part of the 2010 Equity Incentive Plan. | December 31, | December 31, | ||||||||
2012 | 2011 | |||||||||
Dividends | Balance at beginning of year | 1,752,175 | 1,768,531 | |||||||
Repurchase and retirement of shares (1) | — | (16,356 | ) | |||||||
The Company paid cash dividends of $270,590 to holders of shares of common stock during the year ended December 31, 2012. The Company has paid cash dividends to holders of common stock during the nine months ended September 30, 2013 of $117,286. | Issuance of common stock for services (2) | 95,000 | — | |||||||
Issuance of shares for acquisition of customer list from SECCS (3) | 70,000 | — | ||||||||
Shares issued upon exercise of stock options | 20,154 | — | ||||||||
Balance at end of year | 1,937,329 | 1,752,175 | ||||||||
1. | Repurchase and retirement of treasury shares: | |||||||||
Year ended December 31, 2011 | ||||||||||
· | During the year ended December 2011, the Company purchased a total of 16,356 shares from shareholders in both private transactions and in the open market for proceeds of $36,545. | |||||||||
2. | Shares issued for services for services: | |||||||||
Year ended December 31, 2012 | ||||||||||
· | On April 2, 2012, the Company issued grants for a total of 95,000 restricted shares of the Company’s common stock (the “Awards”) to its executive officers and certain other employees. The Awards vest over periods up to two years as stated in the Award Agreements, and will accelerate in the event of a Corporate Transaction, as such term is defined in the Award Agreements. In the event a grantee’s relationship with the Company is terminated for any reason, vesting will immediately cease. These Awards are not part of the 2010 Equity Incentive Plan. | |||||||||
3. | Issuance of shares for acquisition of customer list of SECCS. | |||||||||
Year ending December 31, 2012 | ||||||||||
· | As discussed in Note 4, the Company issued 70,000 shares of common stock with a value of $140,000 to the former shareholders of SECCS on January 4, 2012 as part of the consideration given for the purchase of assets obtained from SECCS. |
Note_6_Stock_Options
Note 6. Stock Options | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||||||||||||
Stock Options | ' | ' | ||||||||||||||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at September 30, 2013: | ||||||||||||||||||||||||||||
On August 9, 2010, the shareholders of the Company approved the 2010 Equity Incentive Plan (the “Plan”). Under the terms of the Plan, 150,000 shares of the Company’s common stock are authorized for the issuance of stock options and restricted stock. The Plan also provides for an automatic annual increase in the number of authorized shares of common stock issuable beginning in fiscal 2011 equal to the lesser of (a) 2% of shares outstanding on the last day of the immediate preceding fiscal year, (b) 50,000 shares, or (c) such lesser number of shares as the Company’s board of directors shall determine, provided, however, in no event shall the maximum number of shares that may be issued under the Plan pursuant to stock awards be greater than 15% of the aggregate shares outstanding on the last day of the immediately preceding fiscal year. With the automatic increases, there were 220,416 shares of common stock on January 1, 2012. On January 20, 2012, the Company’s Board of Directors approved an increase in the number of shares authorized under the Plan from 220,416 to 420,416.This increase was ratified by the shareholders of the Company on June 29, 2012. | ||||||||||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||
Exercise Price Range | Number | Weighted Average Remaining Contractual Life (in Years) | Weighted Average Exercise Price | Number | The following is a summary of stock options issued during the year ended December 31, 2012 and 2011: | |||||||||||||||||||||||
$0.01 - $1.00 | 27,300 | 8.31 | $0.01 | 27,300 | ||||||||||||||||||||||||
$1.01 - $2.00 | 16,750 | 7.65 | $1.73 | 16,750 | Number of Options Outstanding | Range of Exercise Price | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||||||||||
$2.01 - $3.00 | 111,276 | 6.46 | $2.41 | 72,526 | Balance at December 31, 2010 | 100,000 | $ | 2.10 - $2.32 | $ | 2.13 | $ | 16,700 | ||||||||||||||||
$3.01 - $4.00 | 20,800 | 8.5 | $3.33 | 20,800 | Options granted | 30,000 | $ | 1.70 - $2.30 | $ | 1.82 | $ | 13,240 | ||||||||||||||||
$4.01 - $8.00 | 60,000 | 9.99 | $7.76 | 3,751 | Options forfeited | (2,500 | ) | $ | 1.70 - $2.10 | $ | 1.78 | $ | 1,175 | |||||||||||||||
$8.01 - $8.25 | 40,000 | 4.89 | $8.25 | 2,500 | Balance at December 31, 2011 | 127,500 | $ | 1.70 - $2.32 | $ | 2.07 | $ | 24,590 | ||||||||||||||||
Total | 276,126 | 7.41 | $4.21 | 143,627 | Options granted | 196,000 | $ | 0.01 - $3.33 | $ | 1.37 | $ | 370,750 | ||||||||||||||||
Options exercised | (25,154 | ) | $ | 1.70 - $2.10 | $ | 2.04 | $ | 35,661 | ||||||||||||||||||||
Options expired or cancelled | (70,000 | ) | $ | 0.01 | $ | 0.01 | $ | 226,800 | ||||||||||||||||||||
Options forfeited | (7,750 | ) | $ | 1.70 - $3.33 | $ | 2.45 | $ | 6,438 | ||||||||||||||||||||
Balance at December 31, 2012 | 220,596 | $ | 0.01 - $3.33 | $ | 2.09 | $ | 257,835 | |||||||||||||||||||||
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e. the aggregate difference between the closing price of our common stock on December 31, 2012 and 2011 of $3.25 and $2.25, respectively, and the exercise price for in-the-money options) that would have been received by the holders if all instruments had been exercised on December 31, 2012 and 2011. As of December 31, 2012, there was $147,922 of unrecognized compensation cost related to our unvested stock options, which will be recognized through 2014. | ||||||||||||||||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at December 31, 2012: | ||||||||||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||
Exercise Price | Number | Weighted Average Remaining Contractual Life (in Years) | Number | |||||||||||||||||||||||||
$ | 0.01 | 35,000 | 9.05 | 35,000 | ||||||||||||||||||||||||
$ | 1.7 | 15,000 | 8.4 | 15,000 | ||||||||||||||||||||||||
$ | 1.87 | 3,000 | 8.4 | 3,000 | ||||||||||||||||||||||||
$ | 2.1 | 57,596 | 7.61 | 35,096 | ||||||||||||||||||||||||
$ | 2.3 | 15,000 | 8.97 | 15,000 | ||||||||||||||||||||||||
$ | 2.31 | 16,500 | 7.61 | 16,500 | ||||||||||||||||||||||||
$ | 2.81 | 45,000 | 5.06 | 10,000 | ||||||||||||||||||||||||
$ | 3 | 5,000 | 9.75 | 5,000 | ||||||||||||||||||||||||
$ | 3.33 | 28,500 | 9.25 | 0 | ||||||||||||||||||||||||
Total | 220,596 | 7.74 | 134,596 | |||||||||||||||||||||||||
Of the 220,596 stock options outstanding, 151,596 are non-qualified stock options. All of the options have been registered with the SEC. | ||||||||||||||||||||||||||||
The fair value of common stock options issued during the year ended December 31, 2012 and 2011 were estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used: | ||||||||||||||||||||||||||||
Year ended | Year ended | |||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||||||||
Expected dividend yield | 0 | % | 0 | % | ||||||||||||||||||||||||
Expected stock price volatility | 131 | % | 157 | % | ||||||||||||||||||||||||
Weighted-average risk-free interest rate | 0.98 | % | 1.81 | % | ||||||||||||||||||||||||
Weighted-average expected life of options (in years) | 5.5 | 5.4 | ||||||||||||||||||||||||||
During the year ended December 31, 2012 and 2011, we recorded expense of $246,134 and $101,144, respectively, related to these stock options. |
Note_7_Income_taxes
Note 7. Income taxes | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||
Income Tax Disclosure [Abstract] | ' | ' | ||||||||
Income taxes | ' | ' | ||||||||
During the three and nine-month periods ended September 30, 2013, the Company recorded income tax expense of $72,294 and $475,294, respectively. During the three and nine-month periods ended September 30, 2012, the Company recorded income tax expense of $137,000 and $123,500, respectively. As of September 30, 2013, the Company has recorded a short-term deferred tax asset of $264,000 and a deferred tax liability of $2,201,150, primarily resulting from deferred tax liabilities assumed from the Acquisition. | At December 31, 2011, we had a Federal net operating loss carry forward of approximately $6,000 which was fully utilized in the year end December 31, 2012. | |||||||||
The provision (benefit) for income taxes consisted of the following components for the years ended December 31: | ||||||||||
2012 | 2011 | |||||||||
Current: | ||||||||||
Federal | $ | 221,000 | $ | — | ||||||
State | 39,000 | — | ||||||||
Total Current | 260,000 | — | ||||||||
Deferred: | ||||||||||
Federal | (8,000 | ) | 105,000 | |||||||
State | (1,000 | ) | 19,000 | |||||||
Total Deferred | (9,000 | ) | 124,000 | |||||||
Valuation Allowance | — | (102,200 | ) | |||||||
Total provision (benefit) for income taxes | $ | 251,000 | $ | 21,800 | ||||||
Reconciliation between the statutory rate and the effective tax rate is as follows at December 31: | ||||||||||
2012 | 2011 | |||||||||
Federal statutory tax rate | 34 | % | 34 | % | ||||||
State tax rate | 6 | % | 6 | % | ||||||
Permanent difference | 5.6 | % | 7.1 | % | ||||||
Other | (0.5 | )% | 0.4 | % | ||||||
45.1 | % | 47.5 | % | |||||||
Change in valuation allowance | — | (39.1 | %) | |||||||
Total | 45.1 | % | (8.4 | %) | ||||||
Components of net deferred income tax assets, including a valuation allowance, are as follows at December 31: | ||||||||||
2012 | 2011 | |||||||||
Current: | ||||||||||
Net operating loss carryforward | $ | — | $ | 2,000 | ||||||
Deferred revenue | 45,000 | 71,000 | ||||||||
Allowance for doubtful accounts | 47,000 | 50,000 | ||||||||
Charitable contributions | — | 4,000 | ||||||||
Accrued litigation expenses | — | 52,000 | ||||||||
Stock Options | (28,000 | ) | — | |||||||
Prepaid Expenses | (15,000 | ) | (44,000 | |||||||
Total current deferred income tax assets | 49,000 | 135,000 | ||||||||
Noncurrent: | ||||||||||
Stock options | 135,000 | 29,000 | ||||||||
Basis difference in intangible assets | 46,000 | 56,000 | ||||||||
Basis difference in fixed assets | (22,000 | ) | (21,000 | ) | ||||||
Total noncurrent deferred income tax assets | 159,000 | 64,000 | ||||||||
Total net deferred income tax assets | $ | 208,000 | $ | 199,000 | ||||||
The company had no valuation allowance for deferred tax assets as of December 31, 2012 or 2011. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. | ||||||||||
The Company has reviewed its tax positions and has determined that it has no significant uncertain positions as of December 31, 2012 or 2011. |
Note_8_Commitments_and_Conting
Note 8. Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2012 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Commitments and Contingencies | ' | ||||
Office Lease | |||||
In August 2010, we signed a six year and two month lease for 16,059 square feet for our corporate headquarters in Morrisville, NC. At our option, we may terminate the lease anytime after October 31, 2014 in exchange for an early termination fee of $135,000. If we do not terminate the lease early, our required minimum lease payments are as follows: | |||||
Year Ended December 31: | |||||
2013 | 137,589 | ||||
2014 | 141,428 | ||||
2015 | 144,411 | ||||
2016 | 123,336 | ||||
Thereafter | — | ||||
Total | $ | 546,764 | |||
Rental expenses associated with our office leases totaled $155,822 and $153,585 for the years ended December 31, 2012 and 2011, respectively. | |||||
Litigation | |||||
On June 24, 2011, Kinder Investments, LP (“Kinder”), a former holder of five shares of the Company’s Series A preferred stock, sued the Company, its current officers and directors, and it’s outside legal counsel, claiming the Company falsely forced the redemption of Kinder’s preferred stock without paying $1,075,000 in accumulated dividends and other amounts it believed was due. The Company believed the claims were without merit and retained legal counsel and disputed the claims. The Company settled the litigation on February 22, 2012 on favorable terms without admitting any liability. The Company recorded litigation expense of $206,263 during the year ended December 31, 2011, of which $130,000 was recorded as an accrued liability at December 31, 2011. All amounts were paid during the first three months of fiscal 2012, and therefore there was no accrual as of December 31, 2012. |
Note_9_Operations_and_Concentr
Note 9. Operations and Concentrations | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||||||||||||||
Operations and Concentrations | ' | ' | ||||||||||||||||||||||||||||
For the three and nine-month periods ended September 30, 2013 and 2012, we earned revenues (as a percentage of total revenues) in the following categories: | ||||||||||||||||||||||||||||||
For the years ended December 31, 2012 and December 31, 2011, we generated revenues from the following revenue streams as a percentage of total revenue: | ||||||||||||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||||||||||||
September 30, | September 30, | 2012 | 2011 | |||||||||||||||||||||||||||
Revenue Streams | 2013 | 2012 | 2013 | 2012 | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
Disclosure management | 40.80% | 75.40% | 59.80% | 67.30% | Revenue Streams | |||||||||||||||||||||||||
Shareholder communications | 54.70% | 20.60% | 35.20% | 28.00% | Compliance and reporting services | $ | 2,530,127 | 58.8 | % | $ | 1,632,889 | 50.6 | % | |||||||||||||||||
Software licensing | 4.50% | 4.00% | 5.00% | 4.70% | Printing and financial communication | 561,802 | 13 | % | 536,912 | 16.6 | % | |||||||||||||||||||
Total | 100.00% | 100.00% | 100.00% | 100.00% | Fulfillment and distribution | 554,957 | 12.9 | % | 639,578 | 19.8 | % | |||||||||||||||||||
Software licensing | 189,245 | 4.4 | % | 86,389 | 2.7 | % | ||||||||||||||||||||||||
No customers accounted for more than 10% of the operating revenues during the three or nine-month periods ended September 30, 2013 or 2012. We did not have any customers that comprised more than 10% of our total accounts receivable balances at September 30, 2013 or December 31, 2012. | Transfer agent services | 469,435 | 10.9 | % | 332,331 | 10.3 | % | |||||||||||||||||||||||
Total | $ | 4,305,566 | 100 | % | $ | 3,228,099 | 100 | % | ||||||||||||||||||||||
We do not believe we had any financial instruments that could have potentially subjected us to significant concentrations of credit risk. A portion of our revenues are paid at the beginning of the month via credit card or in advance by check, the remaining accounts receivable amounts are generally due within 30 days, none of which is collateralized. | ||||||||||||||||||||||||||||||
We did not have any customers during the years ended December 31, 2012 or 2011 that accounted for more than 10% of our revenue. We did not have any customers that comprised more than 10% of our total accounts receivable balances at December 31, 2012 or 2011. | ||||||||||||||||||||||||||||||
We believe we do not have any financial instruments that could have potentially subjected us to significant concentrations of credit risk. Since a portion of the revenues are paid at the beginning of the month via credit card or advance by check, the remaining accounts receivable amounts are generally due within 30 days, none of which is collateralized. |
Note_10_Line_of_Credit
Note 10. Line of Credit | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' |
Line of Credit | ' | ' |
Effective April 30, 2013, the Company renewed it’s line of credit and increased the amount of funds available to 75% of eligible accounts receivable, as defined in the line of credit agreement, up to a maximum of $2,000,000. The interest rate was also reduced to Libor plus 3.5%. The Company borrowed $500,000 during the three-month period ended September 30, 2013 to partially finance the Acquisition of PIR, and therefore owed $500,000 on the line of credit as of September 30, 2013. As of September 30, 2013, the Company had approximately $355,000 remaining for future borrowings under the line of credit based on the calculation of eligible accounts receivable. | ||
On November 5, 2012, the Company renewed their working capital line of credit (the “Line of Credit”), and increased the amount available from $450,000 to $500,000. The Line of Credit has an interest rate equal to the 30 day LIBOR rate plus 4.5%, and therefore was 6.6% at December 31, 2012. The Line of Credit has a twelve month term and is renewable annually. No amounts were outstanding on the Line of Credit as of December 31, 2011. During the year ended December 31, 2012, the Company borrowed $275,000 under the Line of Credit as part of the purchase of the customer list from SECCS, and repaid $125,000 during the year. Therefore, the amount owed on the Line of Credit as of December 31, 2012 was $150,000. |
Note_11_Long_Term_Debt
Note 11. Long Term Debt | 9 Months Ended |
Sep. 30, 2013 | |
Debt Disclosure [Abstract] | ' |
Long Term Debt | ' |
On August 22, 2013, in connection with and to partially fund the Acquisition and simultaneously with the Acquisition of PIR as discussed in Note 3, the Company entered into a Securities Purchase Agreement (the “8% Note Purchase Agreement”) relating to the sale of $2,500,000 aggregate principal amount of the Company’s 8% convertible secured promissory note (“8% Note”) with Red Oak Partners LP (“Red Oak”). The 8% Note will pay interest on each of March 31, June 30, September 30 and December 31, beginning on September 30, 2013, at a rate of 8% per year. The 8% Note will mature on August 22, 2015. If event of default occurs pursuant to the terms of the 8% Note, the interest rate immediately increases to 18%. The 8% Note is secured by all of the assets of the Company and is subordinated to the Company’s obligations to its primary financial institution. | |
Beginning immediately upon the date of issuance, Red Oak or its assignees may convert the 8% Note into shares of the Company’s common stock at a conversion price of $3.99 per share. The conversion price will be adjusted for certain events, such as stock dividends and stock splits. On the date the Company entered into the 8% Note Purchase Agreement, the Company’s stock price was $8.20 per share, and therefore the Company assigned a value of $2,500,000 to the common stock conversion feature and recorded this as debt discount and additional paid in capital. This instrument also created a deferred tax liability of $1,000,000 that reduced the value recorded as additional paid in capital, and therefore the net amount recorded to stockholders’ equity was $1,500,000. The debt discount of $2,500,000 will be amortized over the two-year life of the loan as non-cash interest expense. | |
Additionally, as part of the 8% Note Purchase Agreement, the Company granted Red Oak certain registration rights. Specifically, the Company has agreed, within six months following the closing of the purchase and sale of the 8% Note (“Closing Date”), to file with the Securities and Exchange Commission (“SEC”) a registration statement covering the resale of the shares issuable upon conversion of the 8% Note. The Company agreed to use its best efforts to have the registration statement declared effective by the SEC no later than eight months following the Closing Date. If the Company fails to satisfy the filing deadline or the effectiveness deadline, the Company will pay to Red Oak or its assigns an amount of cash equal to 0.75% of the amount paid for such holder’s 8% Note on (i) the date of the filing failure and on every thirtieth day thereafter until the filing failure is cured and (ii) the date of the effectiveness failure and on every thirtieth day thereafter until the effectiveness failure is cured. Furthermore, in connection with the 8% Note Purchase Agreement, a partner of Red Oak was appointed to the Company’s Board of Directors. | |
During the three and nine-month periods ended September 30, 2013, the Company recorded non-cash interest expense of $134,408 and cash interest expense of $21,739 related to the 8% Note. |
Note_12_Geographic_Operating_I
Note 12. Geographic Operating Information | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||||
Geographic Operating Information | ' | ||||||||||||||||||||||
We consider ourselves to be in a single reportable segment under the authoritative guidance for segment reporting, specifically a disclosure management and targeted communications company for publically traded companies. Revenue is attributed to a particular geographic region based on where the services are earned. The following tables set forth revenues by domestic versus international regions: | |||||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||
Geographic region | |||||||||||||||||||||||
North America | $ | 1,756,446 | $ | 1,215,511 | $ | 4,891,859 | $ | 3,120,544 | |||||||||||||||
Europe | 346,385 | - | 346,385 | - | |||||||||||||||||||
Total revenues | $ | 2,102,831 | $ | 1,215,511 | $ | 5,238,244 | $ | 3,120,544 | |||||||||||||||
Note_2_Summary_of_Significant_1
Note 2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||
Notes to Financial Statements | ' | ' | ||||||||
Common Stock Split | ' | ' | ||||||||
On October 31, 2011, the Company effected a one-for-ten reverse stock split to shareholders of record as of October 31, 2011. All share and per share information has been retroactively adjusted to reflect the stock split. The number of authorized shares of the Company's common stock and its par value remain unchanged. Outstanding stock incentive awards are adjusted to give effect to the reverse split and the shares available for future grants will be proportionately reduced. | ||||||||||
Cash and Cash Equivalents | ' | ' | ||||||||
We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. | ||||||||||
The Company places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially all depository accounts and temporarily provides unlimited coverage through December 31, 2012 for certain qualifying and participating non-interest bearing transaction accounts. The Company from time to time may have amounts on deposit in excess of the insured limits. As of December 31, 2012, the Company had $458,372 which exceeds these insured amounts. | ||||||||||
Earnings per Share | ' | ' | ||||||||
Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average common shares outstanding for the period. Fully diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. | We calculate earnings per share in accordance with the authoritative guidance for earnings per share, which requires that basic net income per common share be computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares, such as convertible preferred stock, outstanding during the period. Shares issuable upon the exercise of stock options totaling 323,500 and 130,000, respectively, were included in the computation of diluted earnings per common share during the years ended December 31, 2012, and 2011. | |||||||||
Revenue Recognition | ' | ' | ||||||||
We recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104, “Revenue Recognition,” which requires that: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. We recognize revenue when services are rendered or delivered, where collectability is probable. Deferred revenue primarily consists of upfront payments for annual service contracts, and is recognized throughout the year as the services are performed. | ||||||||||
We recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104, “Revenue Recognition,” which requires that: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. We recognize revenue when services are rendered or delivered, where collectability is probable. Deferred revenue primarily consists of upfront payments for annual service contracts, and is recognized throughout the year as the services are performed. | ||||||||||
Deferred Costs | ' | ' | ||||||||
For all customer sales arrangements in which we defer the recognition of revenue, we also defer the associated costs, such as the personnel or expenses incurred with third parties to perform the services. | ||||||||||
Property and Equipment | ' | ' | ||||||||
Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. The range of estimated useful lives used to calculate depreciation for principal items of property and equipment are as follow: | ||||||||||
Asset Category | Depreciation / Amortization Period | |||||||||
Furniture, fixtures and equipment | 3 to 5 years | |||||||||
Computer equipment and purchased software | 3 years | |||||||||
Machinery and equipment | 3 to 5 years | |||||||||
Leasehold Improvements | 7 years or lesser of the lease term | |||||||||
Allowance for Doubtful Accounts | ' | ' | ||||||||
We initially record our provision for doubtful accounts based on our historical experience and then adjust this provision at the end of each reporting period based on a detailed assessment of our accounts receivable and allowance for doubtful accounts. | ||||||||||
We provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables as well as historical collection information. Credit is granted on an unsecured basis. In determining the amount of the allowance, management is required to make certain estimates and assumptions. The allowance is made up of specific reserves, as deemed necessary, on client account balances, and a reserve based on our historical experience. The following is a summary of our allowance for doubtful accounts during the years ended December 31, 2012 and 2011: | ||||||||||
Year Ended | Year Ended | |||||||||
December 31, | December 31, | |||||||||
2012 | 2011 | |||||||||
Beginning balance | $ | 125,987 | $ | 56,024 | ||||||
Bad Debt Expense | 65,327 | 121,949 | ||||||||
Write-offs | (74,284 | ) | (51,986 | ) | ||||||
Ending Balance | $ | 117,030 | $ | 125,987 | ||||||
Use of Estimates | ' | ' | ||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for doubtful accounts and the valuation of goodwill and intangible assets, deferred tax assets, and stock based compensation. Actual results could differ from those estimates. | ||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||||||||||
Income Taxes | ' | ' | ||||||||
We comply with FASB ASC No. 740 – Income Taxes which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, we recognize the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. Our policy regarding the classification of interest and penalties is to classify them as income tax expense in our financial statements, if applicable. At the end of each interim period, we estimate the effective tax rate we expect to be applicable for the full fiscal year and this rate is applied to our results for the interim year-to-date period. | We comply with the authoritative guidance for accounting for income taxes which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. For any uncertain tax positions, we recognize the impact of a tax position, only if it is more likely than not of being sustained upon examination, based on the technical merits of the position. Our policy regarding the classification of interest and penalties is to classify them as income tax expense in our financial statements, if applicable. The tax returns for the prior three years are generally subject to review by federal and state taxing authorities. | |||||||||
Impairment of Long-lived Assets | ' | ' | ||||||||
In accordance with the authoritative guidance for accounting for long-lived assets, such as property and equipment, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds fair value of the asset group. Goodwill is tested for impairment annually or whenever events indicate that the asset may be impaired. | ||||||||||
Fair Value Measurements | ' | ' | ||||||||
As of September 30, 2013 and December 31, 2012, we do not have any financial assets or liabilities that are required to be, or that we elected to measure, at fair value. | As of December 31, 2012 and 2011, we do not have any financial assets or liabilities that are required to be, or that we elected to measure, at fair value. | |||||||||
We comply with the authoritative guidance for fair value provisions applicable to nonfinancial assets and nonfinancial liabilities. Our assets and liabilities that are subject to these provisions include our intangible assets, consisting of goodwill, client relationships, customer lists, software, technology and trademarks, and our long-lived assets. | We believe that the fair value of our financial instruments, which consist of cash and cash equivalents, accounts receivable, our line of credit, and accounts payable approximate their carrying amounts. | |||||||||
We believe that the fair value of our financial instruments, which consist of cash and cash equivalents, accounts receivable, our line of credit, notes payable, and accounts payable approximate their carrying amounts. | ||||||||||
Translation of Foreign Financial Statements | ' | ' | ||||||||
The financial statements of the foreign subsidiaries of the Company have been translated into U.S. dollars. All assets and liabilities have been translated at current rates of exchange in effect at the end of the fiscal period. Income and expense items have been translated at the average exchange rates for the year or the applicable interim period. The gains or losses that result from this process are recorded as a separate component of other accumulated comprehensive income until the entity is sold or substantially liquidated. | ||||||||||
Goodwill | ' | ' | ||||||||
Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment, and any such impairment will be recognized in the period identified. | ||||||||||
Comprehensive Income (Loss) | ' | ' | ||||||||
Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss) related to changes in the cumulative foreign currency translation adjustment. | ||||||||||
Intangible Assets | ' | ' | ||||||||
Intangible assets consist of client relationships, customer lists, software, technology and trademarks that are initially measured at fair value. The trademarks have an indefinite life and are not amortized. The trademarks are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. The client relationships, customer lists, software and technology are amortized over their estimated useful lives. | ||||||||||
Advance Postage Fees | ' | ' | ||||||||
In the past, the Company required that each client deposit a postage fee advance for annual report services. The amount was held until the client canceled the service and the Company reimbursed the amount deposited; yet the Company is still holding amounts from prior contracts. Advance postage fees of $823,320 are included in accrued expenses at September 30, 2013. There were no amounts accrued at December 31, 2012. | ||||||||||
Advertising | ' | ' | ||||||||
The Company expenses the production costs of advertising the first time the advertising takes place, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits. | ||||||||||
Stock-based compensation | ' | ' | ||||||||
We account for stock-based compensation under the authoritative guidance for stock compensation. The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The cost is to be recognized over the period during which an employee is required to provide service in exchange for the award. Included in the determination of the fair value under the option model are highly subjective assumptions regarding expected dividend yields, prior volatility, risk free rate of interest, and the expected life of options. The authoritative guidance for stock compensation also requires the benefit of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as prescribed under previous accounting rules. This requirement reduces net operating cash flows and increases net financing cash flows in periods when the award is exercised. | ||||||||||
We account for stock-based compensation under the authoritative guidance for stock compensation. The authoritative guidance for stock compensation requires that companies estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The cost is to be recognized over the period during which an employee is required to provide service in exchange for the award. The authoritative guidance for stock compensation also requires the benefit of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as prescribed under previous accounting rules. This requirement reduces net operating cash flows and increases net financing cash flows in periods subsequent to adoption, only if excess tax benefits exist. | ||||||||||
The Company recognized stock based compensation expense of $66,346 and $61,255 during the three-month periods ended September 30, 2013 and 2012, respectively. The Company recognized stock based compensation expense of $222,439 and $327,858 during the nine-month periods ended September 30, 2013 and 2012, respectively. | ||||||||||
Recent Accounting Pronouncements | ' | ' | ||||||||
In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU 2013-02"), which is intended to improve the reporting of reclassifications out of accumulated other comprehensive income. The ASU requires an entity to report, either on the face of the income statement or in the notes to the financial statements, the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in the income statement if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other required disclosures that provide additional detail about those amounts. Effective January 1, 2013, the Company adopted ASU 2013-02. The adoption of the standard did not have an impact on the consolidated financial statements. | ||||||||||
On July 27, 2012, the FASB issued ASU No. No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The ASU simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill. The amendments allow an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An organization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment, that it is “more likely than not” that the asset is impaired. Under former guidance, an organization was required to test an indefinite-lived intangible asset for impairment on at least an annual basis by comparing the fair value of the asset with its carrying amount. The amendments in this ASU are effective for annual and interim tests performed for fiscal years beginning after September 15, 2012, early adoption is permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. | ||||||||||
In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"). ASU 2013-11 is effective for the first interim or annual period beginning on or after December 15, 2013 with early adoption permitted. ASU 2013-11 amends ASC Topic 740, Income Taxes, to provide guidance and reduce diversity in practice on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Except for the changes, if any, in the Company's presentation, the initial application of the standard is not expected to significantly impact the Company. |
Note_2_Summary_of_Significant_2
Note 2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Note 2. Summary Of Significant Accounting Policies Tables | ' | ||||||||
Schedule of estimated useful lives for property and equipment | ' | ||||||||
Asset Category | Depreciation / Amortization Period | ||||||||
Furniture, fixtures and equipment | 3 to 5 years | ||||||||
Computer equipment and purchased software | 3 years | ||||||||
Machinery and equipment | 3 to 5 years | ||||||||
Leasehold Improvements | 7 years or lesser of the lease term | ||||||||
Summary of allowance for doubtful accounts | ' | ||||||||
Year Ended | Year Ended | ||||||||
December 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
Beginning balance | $ | 125,987 | $ | 56,024 | |||||
Bad Debt Expense | 65,327 | 121,949 | |||||||
Write-offs | (74,284 | ) | (51,986 | ) | |||||
Ending Balance | $ | 117,030 | $ | 125,987 |
Note_3_Furniture_Equipment_and1
Note 3. Furniture, Equipment, and Improvements (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Schedule of Furniture, Equipment and Improvements | ' | ||||||||
December 31, | |||||||||
2012 | 2011 | ||||||||
Computers & equipment | $ | 97,482 | $ | 83,708 | |||||
Furniture | 27,479 | 25,978 | |||||||
Leasehold improvements | 25,358 | 21,783 | |||||||
Total fixed assets, gross | 150,319 | 131,469 | |||||||
Less: Accumulated depreciation | (94,708 | ) | (64,858 | ) | |||||
Total fixed assets, net | $ | 55,611 | $ | 66,611 |
Note_4_Intangible_Assets_Table
Note 4. Intangible Assets (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||
Note 4. Intangible Assets Tables | ' | ' | ||||||||||||||||||||
Fair value of PIR intangible assets and goodwill | ' | ' | ||||||||||||||||||||
Total Consideration | $ | 3,450,000 | December 31, 2012 | |||||||||||||||||||
Plus: Liabilities assumed in excess of tangible assets | 2,029,692 | Gross Carrying | Accumulated | Net Carrying | ||||||||||||||||||
Total fair value of PIR intangible assets and goodwill | $ | 5,479,692 | Amount | Amortization | Amount | |||||||||||||||||
Customer lists | $ | 500,000 | $ | (128,333 | ) | $ | 371,667 | |||||||||||||||
Allocation of PIR intangible assets and goodwill: | Customer relationships-noncontractual | 25,000 | (25,000 | ) | - | |||||||||||||||||
Amortizable intangible assets | $ | 3,300,000 | Proprietary software | 51,000 | (34,333 | ) | 16,667 | |||||||||||||||
Trademarks | 720,000 | Goodwill | 43,195 | — | 43,195 | |||||||||||||||||
Goodwill | 1,459,692 | Total intangible assets | $ | 619,195 | $ | (187,666 | ) | $ | 431,529 | |||||||||||||
Total fair value of PIR intangible assets and goodwill | $ | 5,479,692 | ||||||||||||||||||||
December 31, 2011 | ||||||||||||||||||||||
Gross Carrying | Accumulated | Net Carrying | ||||||||||||||||||||
Amount | Amortization | Amount | ||||||||||||||||||||
Customer lists | $ | 70,000 | $ | (31,666 | ) | $ | 38,334 | |||||||||||||||
Customer relationships-noncontractual | 25,000 | (22,500 | ) | 2,500 | ||||||||||||||||||
Proprietary software | 50,000 | (25,000 | ) | 25,000 | ||||||||||||||||||
Goodwill | 43,195 | — | 43,195 | |||||||||||||||||||
Total intangible assets | $ | 188,195 | $ | (79,166 | ) | $ | 109,029 | |||||||||||||||
Assets and liabilities acquired | ' | ' | ||||||||||||||||||||
Cash | $ | 271,602 | ||||||||||||||||||||
Accounts receivable | 1,405,208 | |||||||||||||||||||||
Prepaid expenses and other assets | 366,876 | |||||||||||||||||||||
Furniture, equipment, and improvements | 297,076 | |||||||||||||||||||||
Deposits | 10,283 | |||||||||||||||||||||
Total assets | 2,351,045 | |||||||||||||||||||||
Accounts payable and accrued expenses | (1,790,133 | ) | ||||||||||||||||||||
Deferred revenue | (1,452,780 | ) | ||||||||||||||||||||
Net tax liabilities | (1,137,824 | ) | ||||||||||||||||||||
Total liabilities | (4,380,737 | ) | ||||||||||||||||||||
Liabilities assumed in excess of tangible assets | $ | 2,029,692 | ||||||||||||||||||||
Amortizable intangible assets | ' | ' | ||||||||||||||||||||
Asset Amount | Useful Life (years) | |||||||||||||||||||||
Client relationships | $ | 1,480,000 | 7 | |||||||||||||||||||
Customer list | 1,270,000 | 3 | ||||||||||||||||||||
Software | 550,000 | 3 | ||||||||||||||||||||
$ | 3,300,000 | |||||||||||||||||||||
Unaudited condensed pro-forma financial results | ' | ' | ||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||
September 30, | ||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||
Revenues | $ | 12,288,244 | $ | 13,826,544 | ||||||||||||||||||
Net Income | $ | 839,595 | $ | 738,101 | ||||||||||||||||||
Basic earnings per share | $ | 0.43 | $ | 0.39 | ||||||||||||||||||
Diluted earnings per share | $ | 0.41 | $ | 0.38 | ||||||||||||||||||
Schedule of future amortization of intangible assets | ' | ' | ||||||||||||||||||||
Years Ending December 31: | ||||||||||||||||||||||
2013 | $ | 102,333 | ||||||||||||||||||||
2014 | 102,334 | |||||||||||||||||||||
2015 | 94,000 | |||||||||||||||||||||
2016 | 89,333 | |||||||||||||||||||||
2017 | 334 | |||||||||||||||||||||
Total | $ | 388,334 |
Note_5_Stockholders_Equity_Tab
Note 5. Stockholders' Equity (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Note 5. Stockholders Equity Tables | ' | ||||||||
Changes in the shares of common stock outstanding | ' | ||||||||
Year ended | Year ended | ||||||||
December 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
Balance at beginning of year | 1,752,175 | 1,768,531 | |||||||
Repurchase and retirement of shares (1) | — | (16,356 | ) | ||||||
Issuance of common stock for services (2) | 95,000 | — | |||||||
Issuance of shares for acquisition of customer list from SECCS (3) | 70,000 | — | |||||||
Shares issued upon exercise of stock options | 20,154 | — | |||||||
Balance at end of year | 1,937,329 | 1,752,175 |
Note_6_Stock_Options_Tables
Note 6. Stock Options (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||||||||||||
Summary of stock options issued | ' | ' | ||||||||||||||||||||||||||
Number of Options Outstanding | Range of Exercise Price | Weighted Average Exercise Price | Aggregate Intrinsic Value | |||||||||||||||||||||||||
Balance at December 31, 2010 | 100,000 | $ | 2.10 - $2.32 | $ | 2.13 | $ | 16,700 | |||||||||||||||||||||
Options granted | 30,000 | $ | 1.70 - $2.30 | $ | 1.82 | $ | 13,240 | |||||||||||||||||||||
Options forfeited | (2,500 | ) | $ | 1.70 - $2.10 | $ | 1.78 | $ | 1,175 | ||||||||||||||||||||
Balance at December 31, 2011 | 127,500 | $ | 1.70 - $2.32 | $ | 2.07 | $ | 24,590 | |||||||||||||||||||||
Options granted | 196,000 | $ | 0.01 - $3.33 | $ | 1.37 | $ | 370,750 | |||||||||||||||||||||
Options exercised | (25,154 | ) | $ | 1.70 - $2.10 | $ | 2.04 | $ | 35,661 | ||||||||||||||||||||
Options expired or cancelled | (70,000 | ) | $ | 0.01 | $ | 0.01 | $ | 226,800 | ||||||||||||||||||||
Options forfeited | (7,750 | ) | $ | 1.70 - $3.33 | $ | 2.45 | $ | 6,438 | ||||||||||||||||||||
Balance at December 31, 2012 | 220,596 | $ | 0.01 - $3.33 | $ | 2.09 | $ | 257,835 | |||||||||||||||||||||
Schedule Of Stock Options | ' | ' | ||||||||||||||||||||||||||
Options Outstanding | Options Exercisable | Options Outstanding | Options Exercisable | |||||||||||||||||||||||||
Exercise Price Range | Number | Weighted Average Remaining Contractual Life (in Years) | Weighted Average Exercise Price | Number | Exercise Price | Number | Weighted Average Remaining Contractual Life (in Years) | Number | ||||||||||||||||||||
$0.01 - $1.00 | 27,300 | 8.31 | $0.01 | 27,300 | $ | 0.01 | 35,000 | 9.05 | 35,000 | |||||||||||||||||||
$1.01 - $2.00 | 16,750 | 7.65 | $1.73 | 16,750 | $ | 1.7 | 15,000 | 8.4 | 15,000 | |||||||||||||||||||
$2.01 - $3.00 | 111,276 | 6.46 | $2.41 | 72,526 | $ | 1.87 | 3,000 | 8.4 | 3,000 | |||||||||||||||||||
$3.01 - $4.00 | 20,800 | 8.5 | $3.33 | 20,800 | $ | 2.1 | 57,596 | 7.61 | 35,096 | |||||||||||||||||||
$4.01 - $8.00 | 60,000 | 9.99 | $7.76 | 3,751 | $ | 2.3 | 15,000 | 8.97 | 15,000 | |||||||||||||||||||
$8.01 - $8.25 | 40,000 | 4.89 | $8.25 | 2,500 | $ | 2.31 | 16,500 | 7.61 | 16,500 | |||||||||||||||||||
Total | 276,126 | 7.41 | $4.21 | 143,627 | $ | 2.81 | 45,000 | 5.06 | 10,000 | |||||||||||||||||||
$ | 3 | 5,000 | 9.75 | 5,000 | ||||||||||||||||||||||||
$ | 3.33 | 28,500 | 9.25 | 0 | ||||||||||||||||||||||||
Total | 220,596 | 7.74 | 134,596 | |||||||||||||||||||||||||
Schedule of Stock Options, Valuation Assumptions | ' | ' | ||||||||||||||||||||||||||
Year ended | Year ended | |||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||||||||
Expected dividend yield | 0 | % | 0 | % | ||||||||||||||||||||||||
Expected stock price volatility | 131 | % | 157 | % | ||||||||||||||||||||||||
Weighted-average risk-free interest rate | 0.98 | % | 1.81 | % | ||||||||||||||||||||||||
Weighted-average expected life of options (in years) | 5.5 | 5.4 |
Note_7_Income_Taxes_Tables
Note 7. Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Schedule of Components of Income Tax Expense (Benefit) | ' | ||||||||
2012 | 2011 | ||||||||
Current: | |||||||||
Federal | $ | 221,000 | $ | — | |||||
State | 39,000 | — | |||||||
Total Current | 260,000 | — | |||||||
Deferred: | |||||||||
Federal | (8,000 | ) | 105,000 | ||||||
State | (1,000 | ) | 19,000 | ||||||
Total Deferred | (9,000 | ) | 124,000 | ||||||
Valuation Allowance | — | (102,200 | ) | ||||||
Total provision (benefit) for income taxes | $ | 251,000 | $ | 21,800 | |||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||||
2012 | 2011 | ||||||||
Federal statutory tax rate | 34 | % | 34 | % | |||||
State tax rate | 6 | % | 6 | % | |||||
Permanent difference | 5.6 | % | 7.1 | % | |||||
Other | (0.5 | ) % | 0.4 | % | |||||
45.1 | % | 47.5 | % | ||||||
Change in valuation allowance | - | (39.1 | %) | ||||||
Total | 45.1 | % | (8.4 | %) | |||||
Schedule of Deferred Tax Assets and Liabilities | ' | ||||||||
2012 | 2011 | ||||||||
Current: | |||||||||
Net operating loss carryforward | $ | — | $ | 2,000 | |||||
Deferred revenue | 45,000 | 71,000 | |||||||
Allowance for doubtful accounts | 47,000 | 50,000 | |||||||
Charitable contributions | — | 4,000 | |||||||
Accrued litigation expenses | — | 52,000 | |||||||
Stock Options | (28,000 | ) | — | ||||||
Prepaid Expenses | (15,000 | ) | (44,000 | ||||||
Total current deferred income tax assets | 49,000 | 135,000 | |||||||
Noncurrent: | |||||||||
Stock options | 135,000 | 29,000 | |||||||
Basis difference in intangible assets | 46,000 | 56,000 | |||||||
Basis difference in fixed assets | (22,000 | ) | (21,000 | ) | |||||
Total noncurrent deferred income tax assets | 159,000 | 64,000 | |||||||
Total net deferred income tax assets | $ | 208,000 | $ | 199,000 |
Note_8_Commitments_and_Conting1
Note 8. Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2012 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Schedule of Future Minimum Lease Payments | ' | ||||
Year Ended December 31: | |||||
2013 | 137,589 | ||||
2014 | 141,428 | ||||
2015 | 144,411 | ||||
2016 | 123,336 | ||||
Thereafter | — | ||||
Total | $ | 546,764 |
Note_9_Operations_and_Concentr1
Note 9. Operations and Concentrations (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||||||||||||||
Concentration of revenue as a percentage of total revenue | ' | ' | ||||||||||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||||||||||||
September 30, | September 30, | 2012 | 2011 | |||||||||||||||||||||||||||
Revenue Streams | 2013 | 2012 | 2013 | 2012 | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
Disclosure management | 40.80% | 75.40% | 59.80% | 67.30% | Revenue Streams | |||||||||||||||||||||||||
Shareholder communications | 54.70% | 20.60% | 35.20% | 28.00% | Compliance and reporting services | $ | 2,530,127 | 58.8 | % | $ | 1,632,889 | 50.6 | % | |||||||||||||||||
Software licensing | 4.50% | 4.00% | 5.00% | 4.70% | Printing and financial communication | 561,802 | 13 | % | 536,912 | 16.6 | % | |||||||||||||||||||
Total | 100.00% | 100.00% | 100.00% | 100.00% | Fulfillment and distribution | 554,957 | 12.9 | % | 639,578 | 19.8 | % | |||||||||||||||||||
Software licensing | 189,245 | 4.4 | % | 86,389 | 2.7 | % | ||||||||||||||||||||||||
Transfer agent services | 469,435 | 10.9 | % | 332,331 | 10.3 | % | ||||||||||||||||||||||||
Total | $ | 4,305,566 | 100 | % | $ | 3,228,099 | 100 | % |
Note_12_Geographic_Operating_I1
Note 12. Geographic Operating Information (Tables) | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||||
Revenue based on geographic region | ' | ||||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||
Geographic region | |||||||||||||||||||||||
North America | $ | 1,756,446 | $ | 1,215,511 | $ | 4,891,859 | $ | 3,120,544 | |||||||||||||||
Europe | 346,385 | - | 346,385 | - | |||||||||||||||||||
Total revenues | $ | 2,102,831 | $ | 1,215,511 | $ | 5,238,244 | $ | 3,120,544 |
Note_2_Schedule_of_estimated_u
Note 2. Schedule of estimated useful lives for property and equipment (Details) | 12 Months Ended |
Dec. 31, 2012 | |
Furniture, fixtures and equipment | ' |
Depreciation / Amortization Period | '3 to 5 years |
Computer equipment and purchased software | ' |
Depreciation / Amortization Period | '3 years |
Machinery and equipment | ' |
Depreciation / Amortization Period | '3 to 5 years |
Leasehold Improvements | ' |
Depreciation / Amortization Period | '7 years or lesser of the lease term |
Note_2_Summary_of_allowance_fo
Note 2. Summary of allowance for doubtful accounts (Details) (USD $) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Note 2. Summary Of Significant Accounting Policies Tables | ' | ' | ' | ' |
Beginning balance | $117,030 | $125,987 | $125,987 | $56,024 |
Bad Debt Expense | 131,409 | 60,819 | 65,327 | 121,949 |
Write-offs | ' | ' | -74,284 | -51,986 |
Ending Balance | $407,776 | ' | $117,030 | $125,987 |
Note_2_Summary_of_Significant_3
Note 2. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Note 2. Summary Of Significant Accounting Policies Details Narrative | ' | ' | ' | ' | ' | ' |
Advance postage fees | $823,320 | ' | $823,320 | ' | $0 | ' |
Stock based compensation expense | 66,346 | 61,255 | 222,439 | 327,858 | 415,875 | 101,144 |
Cash and cash equivalents in excess of FDIC insured amount | ' | ' | ' | ' | $458,372 | ' |
Stock options included in computation of diluted earnings per share | ' | ' | ' | ' | 323,500 | 130,000 |
Note_3_Schedule_of_Furniture_E
Note 3. Schedule of Furniture, Equipment and Improvements (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Property, Plant and Equipment [Abstract] | ' | ' | ' |
Computers & equipment | ' | $97,482 | $83,708 |
Furniture | ' | 27,479 | 25,978 |
Leasehold improvements | ' | 25,358 | 21,783 |
Total fixed assets, gross | ' | 150,319 | 131,469 |
Less: Accumulated depreciation | ' | -94,708 | -64,858 |
Total fixed assets, net | $347,016 | $55,611 | $66,611 |
Note_3_Furniture_Equipment_and2
Note 3. Furniture, Equipment, and Improvements (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Note 3. Furniture Equipment And Improvements Details Narrative | ' | ' |
Depreciation expense | $29,850 | $30,704 |
Note_4_Intangible_Assets_Detai
Note 4. Intangible Assets (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 |
PrecisionIR | ||||
Total Consideration | ' | ' | ' | $3,450,000 |
Plus: Liabilities assumed in excess of tangible assets | ' | ' | ' | 2,029,692 |
Total fair value of PIR intangible assets and goodwill | ' | ' | ' | 5,479,692 |
Allocation of PIR intangible assets and goodwill: | ' | ' | ' | ' |
Amortizable intangible assets | 3,300,000 | 619,195 | 188,195 | 3,300,000 |
Trademarks | ' | ' | ' | 720,000 |
Goodwill | 1,502,887 | 43,195 | 0 | 1,459,692 |
Total fair value of PIR intangible assets and goodwill | ' | ' | ' | $5,479,692 |
Note_4_Intangible_Assets_Detai1
Note 4. Intangible Assets (Details 1) (PrecisionIR, USD $) | Sep. 30, 2013 |
PrecisionIR | ' |
Cash | $271,602 |
Accounts receivable | 1,405,208 |
Prepaid expenses and other assets | 366,876 |
Furniture, equipment, and improvements | 297,076 |
Deposits | 10,283 |
Total assets | 2,351,045 |
Accounts payable and accrued expenses | -1,790,133 |
Deferred revenue | -1,452,780 |
Net tax liabilities | -1,137,824 |
Total liabilities | -4,380,737 |
Liabilities assumed in excess of tangible assets | $2,029,692 |
Note_4_Intangible_Assets_Detai2
Note 4. Intangible Assets (Details 2) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Client relationships | Customer list | Software | ||||
Asset Amount | $3,300,000 | $619,195 | $188,195 | $1,480,000 | $1,270,000 | $550,000 |
Useful Life (years) | ' | ' | ' | '7 years | '3 years | '3 years |
Note_4_Intangible_Assets_Detai3
Note 4. Intangible Assets (Details 3) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Note 4. Intangible Assets Tables | ' | ' |
Revenues | $12,288,244 | $13,826,544 |
Net Income | $839,595 | $738,101 |
Basic earnings per share | $0.43 | $0.39 |
Diluted earnings per share | $0.41 | $0.38 |
Recovered_Sheet1
Note 4. Intangible assets (Details 4) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Gross Carrying Amount | $3,300,000 | $619,195 | $188,195 |
Accumulated Amortization | -352,763 | -187,666 | -79,166 |
Net Carrying Amount | ' | 431,529 | 109,029 |
Customer lists | ' | ' | ' |
Gross Carrying Amount | ' | 500,000 | 70,000 |
Accumulated Amortization | ' | -128,333 | -31,666 |
Net Carrying Amount | ' | 371,667 | 38,334 |
Customer relationships - noncontractual | ' | ' | ' |
Gross Carrying Amount | ' | 25,000 | 25,000 |
Accumulated Amortization | ' | -25,000 | -22,500 |
Net Carrying Amount | ' | 0 | 2,500 |
Proprietary software | ' | ' | ' |
Gross Carrying Amount | ' | 51,000 | 50,000 |
Accumulated Amortization | ' | -34,333 | -25,000 |
Net Carrying Amount | ' | 16,667 | 25,000 |
Goodwill | ' | ' | ' |
Gross Carrying Amount | ' | 43,195 | 43,195 |
Accumulated Amortization | ' | 0 | 0 |
Net Carrying Amount | ' | $43,195 | $43,195 |
Recovered_Sheet2
Note 4. Intangible assets (Details 5) (USD $) | Dec. 31, 2012 |
Note 4. Intangible Assets Details 5 | ' |
2013 | $102,333 |
2014 | 102,334 |
2015 | 94,000 |
2016 | 89,333 |
2017 | 334 |
Total | $388,334 |
Note_4_Intangible_Assets_Detai4
Note 4. Intangible Assets (Details Narrative) (USD $) | 12 Months Ended | 1 Months Ended | ||
Dec. 31, 2012 | Dec. 31, 2011 | Jan. 31, 2012 | Jan. 04, 2012 | |
SEC Compliance Services | SEC Compliance Services | |||
Purchase price for Customer Contractual Rights | ' | ' | ' | $425,000 |
Payments To Acquire Customer Contractual Rights | ' | ' | 285,000 | ' |
Common Stock Issued For Acquisition Of Customer List | ' | ' | ' | 140,000 |
Shares Issued For Acquisition Of Customer List | ' | ' | 70,000 | ' |
Amortization of intangible assets | $108,500 | $24,000 | ' | ' |
Note_5_Stockholders_Equity_Det
Note 5. Stockholders' Equity (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Notes to Financial Statements | ' | ' | ' | ' |
Cash dividends paid | $117,286 | $115,751 | $270,590 | $0 |
Note_6_Summary_of_stock_option
Note 6. Summary of stock options issued (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Notes to Financial Statements | ' | ' |
Number of Options Outstanding, Beginning | 127,500 | 100,000 |
Number of Options Granted | 196,000 | 30,000 |
Number of Options Exercised | -25,154 | ' |
Number of Options expired or cancelled | -70,000 | ' |
Number of Options Forfeited | -7,750 | -2,500 |
Number of Options Outstanding, Ending | 220,596 | 127,500 |
Range of Exercise Price Options Outstanding, Beginning | '1.70 - $2.32 | '2.10 - $2.32 |
Range of Exercise Price Options Granted | '0.01 - $3.33 | '1.70 - $2.30 |
Range of Exercise Price Options Exercised | '1.70 - $2.10 | '- |
Range of Exercise Price Options expired or cancelled | '0.01 | '- |
Range of Exercise Price Options Forfeited | '1.70 - $3.33 | '1.70 - $2.10 |
Range of Exercise Price Options Outstanding, Ending | '0.01 - $3.33 | '1.70 - $2.32 |
Weighted Average Exercise Price Outstanding, Beginning | $2.07 | $2.13 |
Weighted Average Exercise Price Granted | $1.37 | $1.82 |
Weighted Average Exercise Price Exercised | $2.04 | ' |
Weighted Average Exercise Price expired or Canceled | $0.01 | ' |
Weighted Average Exercise Price Forfeited | $2.45 | $1.78 |
Weighted Average Exercise Price Outstanding, Ending | $2.09 | $2.07 |
Aggregate Intrinsic Value Outstanding, Beginning | $24,590 | $16,700 |
Aggregate Intrinsic Value Granted | $370,750 | $13,240 |
Aggregate Intrinsic Value Exercised | 35,661 | ' |
Aggregate Intrinsic Value Options expired or cancelled | 226,800 | ' |
Aggregate Intrinsic Value Forfeited | $6,438 | $1,175 |
Aggregate Intrinsic Value Outstanding, Ending | $257,835 | $24,590 |
Note_6_Stock_Options_Details_1
Note 6. Stock Options (Details 1) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 |
Option 1 | Option 1 | Option 2 | Option 2 | Option 3 | Option 3 | Option 4 | Option 4 | Option 5 | Option 5 | Option 6 | Option 6 | Option 7 | Option 8 | Total | Total | ||||
Exercise Price Range | ' | ' | ' | '$0.01 - $1.00 | ' | '$1.01 - $2.00 | ' | '$2.01 - $3.00 | ' | '$3.01 - $4.00 | ' | '$4.01 - $8.00 | ' | '$8.01 - $8.25 | ' | ' | ' | ' | ' |
Number of Options Outstanding | 220,596 | 127,500 | 100,000 | 27,300 | 35,000 | 16,750 | 15,000 | 111,276 | 3,000 | 20,800 | 57,596 | 60,000 | 15,000 | 40,000 | 16,500 | 45,000 | 5,000 | 276,126 | 220,596 |
Weighted Average Remaining Contractual Life (in Years) | ' | ' | ' | '8 years 3 months 22 days | '9 years 5 days | '7 years 7 months 24 days | '8 years 4 months | '6 years 5 months 16 days | '8 years 4 months | '8 years 6 months | '7 years 6 months 1 day | '9 years 11 months 26 days | '8 years 9 months 7 days | '4 years 10 months 20 days | '7 years 6 months 1 day | '5 years 6 days | '9 years 7 months 5 days | '7 years 4 months 28 days | '7 years 7 months 4 days |
Weighted Average Exercise Price | ' | ' | ' | $0.01 | $0.01 | $1.73 | $1.70 | $2.41 | $1.87 | $3.33 | $2.10 | $7.76 | $2.30 | $8.25 | $2.31 | $2.81 | $3 | $4.21 | ' |
Number of Options Exercisable | ' | ' | ' | 27,300 | 35,000 | 16,750 | 15,000 | 72,526 | 3,000 | 20,800 | 35,096 | 3,751 | 15,000 | 2,500 | 16,500 | 10,000 | 5,000 | 143,627 | 134,596 |
Note_6_Schedule_of_Stock_Optio
Note 6. Schedule of Stock Options Outstanding (Details 2) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 |
Option 1 | Option 1 | Option 2 | Option 2 | Option 3 | Option 3 | Option 4 | Option 4 | Option 5 | Option 5 | Option 6 | Option 6 | Option 7 | Option 8 | Option 9 | Total | Total | ||||
Exercise Price | ' | ' | ' | $0.01 | $0.01 | $1.73 | $1.70 | $2.41 | $1.87 | $3.33 | $2.10 | $7.76 | $2.30 | $8.25 | $2.31 | $2.81 | $3 | $3.33 | $4.21 | ' |
Number of Options Outstanding | 220,596 | 127,500 | 100,000 | 27,300 | 35,000 | 16,750 | 15,000 | 111,276 | 3,000 | 20,800 | 57,596 | 60,000 | 15,000 | 40,000 | 16,500 | 45,000 | 5,000 | 28,500 | 276,126 | 220,596 |
Weighted Average Remaining Contractual Life (in Years) | ' | ' | ' | '8 years 3 months 22 days | '9 years 5 days | '7 years 7 months 24 days | '8 years 4 months | '6 years 5 months 16 days | '8 years 4 months | '8 years 6 months | '7 years 6 months 1 day | '9 years 11 months 26 days | '8 years 9 months 7 days | '4 years 10 months 20 days | '7 years 6 months 1 day | '5 years 6 days | '9 years 7 months 5 days | '9 years 2 months 5 days | '7 years 4 months 28 days | '7 years 7 months 4 days |
Number of Options Exercisable | ' | ' | ' | 27,300 | 35,000 | 16,750 | 15,000 | 72,526 | 3,000 | 20,800 | 35,096 | 3,751 | 15,000 | 2,500 | 16,500 | 10,000 | 5,000 | 0 | 143,627 | 134,596 |
Note_6_Schedule_of_Stock_Optio1
Note 6. Schedule of Stock Options, Valuation Assumptions (Details 3) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Notes to Financial Statements | ' | ' |
Expected dividend yield | 0.00% | 0.00% |
Expected stock price volatility | 131.00% | 157.00% |
Weighted-average risk-free interest rate | 0.98% | 1.81% |
Weighted-average expected life of options (in years) | '5 years 5 months | '5 years 4 months |
Note_6_Stock_Options_Details_N
Note 6. Stock Options (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Note 6. Stock Options Details Narrative | ' | ' |
Unrecognized Compensation Expense | $147,922 | ' |
Stock options expense | $246,134 | $101,144 |
Note_7_Schedule_of_Components_
Note 7. Schedule of Components of Income Tax Expense (Benefit) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Current: | ' | ' | ' | ' | ' | ' |
Federal tax | ' | ' | ' | ' | $221,000 | $0 |
State tax | ' | ' | ' | ' | 39,000 | 0 |
Total Current taxes | ' | ' | ' | ' | 260,000 | 0 |
Deferred: | ' | ' | ' | ' | ' | ' |
Federal | ' | ' | ' | ' | -8,000 | 105,000 |
State | ' | ' | ' | ' | -1,000 | 19,000 |
Total Deferred | ' | ' | ' | ' | -9,000 | 124,000 |
Valuation Allowance | ' | ' | ' | ' | ' | -102,200 |
Total provision (benefit) for income taxes | $72,294 | $137,000 | $475,294 | $123,500 | $251,000 | $21,800 |
Note_7_Schedule_of_Effective_I
Note 7. Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Income Tax Disclosure [Abstract] | ' | ' |
Federal statutory tax rate | 34.00% | 34.00% |
State tax rate | 6.00% | 6.00% |
Permanent difference | 5.60% | 7.10% |
Other | -0.50% | 0.40% |
Tax rate | 45.10% | 47.50% |
Change in valuation allowance | 0.00% | -39.10% |
Total | 45.10% | -8.40% |
Note_7_Schedule_of_Deferred_Ta
Note 7. Schedule of Deferred Tax Assets and Liabilities (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Current: | ' | ' | ' |
Net operating loss carryforward | ' | $0 | $2,000 |
Deferred revenue | ' | 45,000 | 71,000 |
Allowance for doubtful accounts | ' | 47,000 | 50,000 |
Charitable contributions | ' | 0 | 4,000 |
Accrued litigation expenses | ' | 0 | 52,000 |
Stock Options | ' | -28,000 | 0 |
Prepaid Expenses | ' | -15,000 | -44,000 |
Total current deferred income tax assets | 264,000 | 49,000 | 135,000 |
Noncurrent: | ' | ' | ' |
Stock options | ' | 135,000 | 29,000 |
Basis difference in intangible assets | ' | 46,000 | 56,000 |
Basis difference in fixed assets | ' | -22,000 | -21,000 |
Total noncurrent deferred income tax assets | 0 | 159,000 | 64,000 |
Total net deferred income tax assets | ' | $208,000 | $199,000 |
Note_7_Income_taxes_Details_Na
Note 7. Income taxes (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Note 7. Income Taxes Details Narrative | ' | ' | ' | ' | ' | ' |
Income tax expense | $72,294 | $137,000 | $475,294 | $123,500 | $251,000 | $21,800 |
Deferred tax asset | 264,000 | ' | 264,000 | ' | 49,000 | 135,000 |
Deferred tax liability | 2,201,150 | ' | 2,201,150 | ' | 0 | 0 |
Net operating loss carry forward | ' | ' | ' | ' | $0 | $6,000 |
Note_8_Schedule_of_Future_Mini
Note 8. Schedule of Future Minimum Lease Payments (Details) (USD $) | Dec. 31, 2012 |
Commitments and Contingencies Disclosure [Abstract] | ' |
2013 | $137,589 |
2014 | 141,428 |
2015 | 144,411 |
2016 | 123,336 |
Thereafter | 0 |
Total | $546,764 |
Note_8_Commitments_and_Conting2
Note 8. Commitments and Contingencies (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Note 8. Commitments And Contingencies Details Narrative | ' | ' | ' | ' | ' | ' |
Rental expenses | ' | ' | ' | ' | $155,822 | $153,585 |
Litigation expense | 0 | 0 | 0 | 0 | 0 | 206,263 |
Accrued litigation | $0 | ' | $0 | ' | $0 | $130,000 |
Note_9_Concentration_of_revenu
Note 9. Concentration of revenue as a percentage of total revenue (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Percentage of revenue from various revenue streams | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Revenue from various revenue streams | $2,102,831 | $1,215,511 | $5,238,244 | $3,120,544 | $4,305,566 | $3,228,099 |
Disclosure management | ' | ' | ' | ' | ' | ' |
Percentage of revenue from various revenue streams | 40.80% | 75.40% | 59.80% | 67.30% | 58.80% | 50.60% |
Revenue from various revenue streams | ' | ' | ' | ' | 2,530,127 | 1,632,889 |
Shareholder communications | ' | ' | ' | ' | ' | ' |
Percentage of revenue from various revenue streams | 54.70% | 20.60% | 35.20% | 28.00% | 13.00% | 16.60% |
Revenue from various revenue streams | ' | ' | ' | ' | 561,802 | 536,912 |
Fulfillment and distribution | ' | ' | ' | ' | ' | ' |
Percentage of revenue from various revenue streams | ' | ' | ' | ' | 12.90% | 19.80% |
Revenue from various revenue streams | ' | ' | ' | ' | 554,957 | 639,578 |
Software licensing | ' | ' | ' | ' | ' | ' |
Percentage of revenue from various revenue streams | 4.50% | 4.00% | 5.00% | 4.70% | 4.40% | 2.70% |
Revenue from various revenue streams | ' | ' | ' | ' | 189,245 | 86,389 |
Transfer agent services | ' | ' | ' | ' | ' | ' |
Percentage of revenue from various revenue streams | ' | ' | ' | ' | 10.90% | 10.30% |
Revenue from various revenue streams | ' | ' | ' | ' | $469,435 | $332,331 |
Note_10_Line_of_Credit_Details
Note 10. Line of Credit (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Notes to Financial Statements | ' | ' | ' |
Line Of Credit, Maximum Borrowing Capacity | $2,000,000 | ' | ' |
Line of Credit, Interest Rate Description | 'LIBOR plus 3.5%. | '30 day LIBOR rate plus 4.5%. | ' |
Line of Credit Facility, Interest Rate at Period End | ' | 6.60% | ' |
Line of Credit, amount outstanding | 500,000 | 150,000 | 0 |
Line Of Credit, Amount Available | $355,000 | $500,000 | ' |
Note_12_Geographic_Operating_I2
Note 12. Geographic Operating Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Revenues | $2,102,831 | $1,215,511 | $5,238,244 | $3,120,544 | $4,305,566 | $3,228,099 |
North America | ' | ' | ' | ' | ' | ' |
Revenues | 1,756,446 | 1,215,511 | 4,891,859 | 3,120,544 | ' | ' |
Europe | ' | ' | ' | ' | ' | ' |
Revenues | $346,385 | $0 | $346,385 | $0 | ' | ' |