Annual Report for Fiscal Year Ending 12-31, 2024 (Form 10-K)

Business Environment

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

Our strategic priorities and plans for 2025 are to continue to build on the improvement initiatives underway to enhance our value proposition to subscribers while continuing to achieve sustainable, profitable growth.

Financial Condition, Liquidity and Capital Resources

The following table presents selected financial information and statistics as of December 31, 2024 and 2023 (dollars in thousands):

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Off-Balance Sheet Arrangements

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

Results of Operations

2024 vs. 2023

Operating revenues increased approximately $878 thousand, or 5%, for fiscal 2024 compared to fiscal 2023. This overall revenue growth resulted from an increase in SaaS subscription product revenue, attributable to increased sales to new and existing subscribers, as well as related price increases for subscriptions.

Data and product costs increased approximately $789 thousand, or 10%, for fiscal 2024 compared to fiscal 2023. This increase was due primarily to (1) higher salary and related employee expenses from new hires, pay raises to existing staff, and expansion of the expert network and (2) higher costs of third-party content due to price increases instituted by some of the Company's major suppliers.

Selling, general and administrative expenses increased approximately $313 thousand, or 3%, for fiscal 2024 compared to fiscal 2023. This increase was due primarily to (1) higher salary and related employee expenses from new hires and pay raises to existing staff and (2) higher customer acquisition costs.

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Other income, net increased approximately $203 thousand for fiscal 2024 compared to fiscal 2023. This increase was due to a higher interest rate earned on a larger balance of held-to-maturity securities as compared to fiscal 2023.

Future Operations

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

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

Achieving greater profitability depends on the Company's ability to generate and sustain increased revenue levels. The Company believes that its success will depend in large part on its ability to (i) increase its brand awareness, (ii) provide its subscribers with outstanding value, thus encouraging renewals, and (iii) achieve sufficient sales volume to realize economies of scale. Accordingly, the Company intends to continue to increase the size of its sales force as well as invest in product development, operating infrastructure, marketing and promotion. The Company believes that these expenditures will help it to sustain the revenue growth it has experienced over the last several years. We anticipate that sales and marketing expenses will continue to increase in dollar amount and as a percentage of revenues into 2025 and future periods as the Company continues to expand its business on a worldwide basis. Further, the Company expects that product development expenses will also continue to increase in dollar amount and may increase as a percentage of revenues into 2025 and future periods because it expects to employ more development personnel on average compared to prior periods and build the infrastructure required to support the development of new and improved products and services. However, as some of these expenditures are discretionary in nature, the Company expects that the actual amounts incurred will be in line with its projections of future cash flows in order not to negatively impact its future liquidity and capital needs. There can be no assurance that the Company will be able to achieve these objectives within a meaningful time frame.

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

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

Critical Accounting Policies, Estimates and Judgments

The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of these financial statements requires management to make estimates and judgments 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. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Management continually evaluates its estimates and judgments and has not identified significant accounting estimates made in accordance with U.S. GAAP that involve a significant level of estimation uncertainty and have, or are likely to have, a material impact on the financial statements.

Recently Issued Accounting Standards

The information set forth under Note 2 to the financial statements under the caption "Recently Issued Accounting Standards" is incorporated herein by reference.

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CREDITRISKMONITOR.COM, INC.

BALANCE SHEETS

December 31, 2024 and 2023

The accompanying notes are an integral part of these financial statements.

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CREDITRISKMONITOR.COM, INC.

STATEMENTS OF OPERATIONS

Years Ended December 31, 2024 and 2023

The accompanying notes are an integral part of these financial statements.

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CREDITRISKMONITOR.COM, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

Years Ended December 31, 2024 and 2023

The accompanying notes are an integral part of these financial statements.

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CREDITRISKMONITOR.COM, INC.

STATEMENTS OF CASH FLOWS

Years Ended December 31, 2024 and 2023

The accompanying notes are an integral part of these financial statements.

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NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

CreditRiskMonitor.com, Inc. (also referred to as the "Company" or "CreditRiskMonitor.com") provides interactive business-to-business SaaS subscription products designed specifically for credit and supply chain managers. These products are sold predominantly to corporations located in the U.S.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Standards

The Financial Accounting Standards Board ("FASB") and the U.S. Securities and Exchange Commission ("SEC") have issued certain other accounting pronouncements as of December 31, 2024 that will become effective in subsequent periods; however, management does not believe that any of these pronouncements would have significantly affected the Company's financial accounting measurements or disclosures had they been in effect during the periods for which financial statements are included in this Annual Report, nor does management believe those pronouncements would have a significant effect on the Company's future financial position or results of operations.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

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Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided on the straight-line method over the estimated useful life of the asset. Estimated useful lives are generally as follows:

Goodwill

Goodwill and other indefinite-lived intangible assets are subject to annual impairment testing using the specific guidance and criteria described in the accounting guidance FASB ASU No. 2017-04. The Company performs its goodwill impairment testing at least annually in the fourth quarter of each year. The Company tests for impairment of intangible assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. With respect to goodwill, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value is less than the carrying value. If, based on that assessment, the Company believes it is more likely than not that the fair value is less than the carrying value, a one-step goodwill impairment test is performed. The Company concluded that there was no impairment to goodwill in the 2024 or 2023 fiscal years.

Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with accounting guidance. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to undiscounted pre-tax future net cash flows expected to be generated by that asset. An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the fair value of the assets. As of December 31, 2024 and 2023, management believes no impairment of long-lived assets has occurred.

Income Taxes

The Company provides for deferred income taxes resulting from temporary differences between financial statements and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years' tax returns. Deferred tax assets are recognized for temporary differences that will be deductible in future years' tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized (see Note 5).

Revenue Recognition and Contract Balances

The Company applies FASB Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers("ASC 606"), to recognize revenue. ASC 606 requires an entity to apply the following five-step approach: (1) identify the contract(s) with a customer; (2) identify each performance obligation in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation; and (5) recognize revenue when or as each performance obligation is satisfied. The Company's primary source of revenue is subscription income which is recognized ratably over the subscription term.

Accounts receivable consists of trade accounts receivable for services provided to customers. Accounts receivable is stated at the amount the Company expects to collect. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses and allowance for receivables based upon the Company's assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company's ability to collect from customers. As of January 1, 2023, the balances of the accounts receivable net of allowances was $3.5 million.

Contract liabilities consist of amounts collected prior to having satisfied the performance obligation. The Company periodically invoices customers for recurring services in advance. During the year ended December 31, 2024, the Company recognized $10.3 million of revenue that was included in the contract liabilities balance as of December 31, 2023. During the year ended December 31, 2023, the Company recognized $10.0 million of revenue that was included in the contract liabilities balance as of December 31, 2022. As of January 1, 2023, the balance of the contract liabilities was $10.1 million.

The Company has applied the practical expedient to recognize incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less.

Lease Accounting

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

The Company's operating lease right-of-use asset and operating lease liability represent the lease for the office space used to conduct its business. On December 13, 2024, the Company notified the landlord of its determination not to exercise its option to extend the lease term for the renewal period, which consisted of five years of consecutive annual resets. Accordingly, the lease will terminate on July 31, 2025. Upon notification, the operating lease right-of-use asset and lease liability were adjusted to zeroon this remeasurement date. The lease will be accounted for as a short-term lease under the practical expedient in ASC 842, from the date of the remeasurement to the date of the expiration.

Stock-Based Compensation

The Company recognizes the grant-date fair value of all stock-based awards on a ratable basis over the award's vesting period. The Company records deferred tax assets for awards that will result in deductions on its tax returns, based upon the amount of compensation cost recognized and the statutory tax rate in the jurisdiction in which it will receive a deduction (see Note 6).

Fair Value Measurements

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

The Company, in accordance with ASU 2016-01, classifies its debt securities as "held-to-maturity" and are recorded at a premium or a discount. Realized gains on held-to-maturity debt securities are amortized and reported in other income, net until their maturity date.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of cash, cash equivalents, and accounts receivable. The Company maintains its cash and cash equivalents in bank deposits and other accounts, the balances of which, at times, may exceed federally insured limits. Exposure to credit risk is reduced by placing such deposits in high credit quality financial institutions.

The Company closely monitors the extension of credit to its subscribers. The Company's accounts receivable balance is net of an allowance for credit losses. The Company does not require collateral or other security to support credit sales but provides an allowance for credit losses of $30,000 as of December 31, 2024 and 2023, based on historical experience and specifically identified risks. Accounts receivable are charged off against the allowance for credit losses when management determines that recovery is unlikely and the Company ceases collection efforts. The Company does not believe that significant credit risk existed as of December 31, 2024 or 2023.

NOTE 3 - FAIR VALUE MEASUREMENTS

The Company's cash, cash equivalents and marketable securities are stated at fair value. The carrying value of accounts receivable, other current assets, accrued expenses, and accounts payable approximates fair market value because of the short maturity of these financial instruments.

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

The tables below set forth the Company's cash and cash equivalents, as well as marketable securities as of December 31, 2024 and 2023, respectively, which are measured at fair value on a recurring basis by level within the fair value hierarchy:

The Company did not hold financial assets and liabilities which were recorded at fair value in the Level 2 or 3 categories as of December 31, 2024 or 2023.

The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

NOTE 4 - MARKETABLE SECURITIES

Based upon the Company's intent and ability to hold its U.S. Treasury securities to maturity, such securities have been classified as held-to-maturity and are carried at amortized cost, which approximates fair market value. Maturities on these U.S. Treasury security holdings range from 12 to 25 months from the date of purchase. Accrued bond interest receivable as of December 31, 2024 and 2023 is $79,497 and $11,828, respectively.

The tables below summarize the Company's cost and fair value of marketable securities as of December 31, 2024 and 2023:

		December 31, 2024
		Amortized Cost				Gross Unrealized Gain (Loss)				Fair Value
Held-to-maturity securities
U.S. Treasury securities		$	11,225,475			$	227,525			$	11,453,000

		December 31, 2023
		Amortized Cost				Gross Unrealized Gain (Loss)				Fair Value
Held-to-maturity securities
U.S. Treasury securities		$	4,194,958			$	77,042			$	4,272,000

Maturities of marketable securities were as follows as of December 31, 2024 and 2023:

		2024				2023
Held-to-maturity securities:
Due in one year or less		$	2,467,475			$	3,494,958
Due in 12 - 24 months			8,758,000				700,000
		$	11,225,475			$	4,194,958

The Company's investments in marketable securities consist of investments in U.S. Treasury securities. Market values were determined for each individual security in the investment portfolio.

Management evaluates securities for other-than-temporary impairment at least on an annual basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Management has determined that no other-than-temporary impairment exists as of December 31, 2024 and 2023.

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NOTE 5 - INCOME TAXES

The Company's income tax (benefit) expense consisted of the following:

The actual income tax expense for 2024 and 2023 differs from the "expected" tax expense for those years (computed by applying the applicable U.S. federal corporate tax rate to income before income taxes) as follows:

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets (liabilities) at December 31, 2024 and 2023 are as follows:

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NOTE 6 - COMMON STOCK AND STOCK OPTIONS

Common Stock

At December 31, 2024 and 2023, there were 760,150 and 714,050 shares, respectively, of the Company's authorized common stock reserved for issuance upon exercise of outstanding options under its stock option plan.

Preferred Stock

The Company's Articles of Incorporation provide that the Board of Directors has the authority, without further action by the holders of the outstanding common stock, to issue up to five million shares of preferred stock from time to time in one or more series. The Board of Directors shall fix the consideration to be paid, but not less than par value thereof, and to fix the terms of any such series, including dividend rights, dividend rates, conversion or exchange rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price and the liquidation preference of such series. As of December 31, 2024 and 2023, the Company does not have any preferred stock outstanding.

Stock Options

As of December 31, 2024, the Company has two stock option plans: the 2009 Long-Term Incentive Plan ("2009 Plan") which ended in 2019, and the 2020 Long-Term Incentive Plan ("2020 Plan").

Options expire on the date determined, but not more than ten years from the date of grant. All of the options granted under the 2009 and 2020 Plan may be exercised after four years in installments upon the attainment of specified length of service, unless otherwise determined by the Compensation Committee as set forth in the Award Agreement. In the event of a change in control (as defined), the options will vest in full at the time of such change in control.

Transactions with respect to the Company's stock option plans for the years ended December 31, 2024 and 2023 are as follows:

As of December 31, 2024, there were 532,350 shares of common stock reserved for the granting of additional options. The 2009 Plan expired at the end of 2019 and no additional options could be granted.

The following table summarizes the stock-based compensation expense for stock options that was recorded in the Company's results of operations for the years ended December 31:

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model that uses the weighted average assumptions noted in the following table. Expected volatilities are based on historical volatility of our stock through the date of grant. The Company uses the simplified method to estimate the options' expected term. The risk-free interest rate used is based on the U.S. Treasury constant maturities at the time of grant having a term that approximates the expected life of the option.

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The fair value of options granted during the year ended December 31, 2024 was $104,445. The fair value of options granted during the year ended December 31, 2023 was $236,600. The fair value of options at date of grant was estimated using the Black-Scholes model with the following assumptions:

The Company issues new shares upon the exercise of options.

The following table summarizes information about the Company's stock options outstanding at December 31, 2024:

The aggregate intrinsic value represents the total pre-tax intrinsic value, based on options with an exercise price less than the Company's closing stock price of $3.03 and $2.33 as of December 31, 2024 and 2023, respectively, which would have been received by the option holders had those option holders exercised their options as of that date. The aggregate intrinsic value of options outstanding as of December 31, 2024 and 2023 was $673,741 and $249,396, respectively.

NOTE 7 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

Concurrent with the decision not to extend the term on the leased office space for the renewal period, the Company disposed of certain property and equipment that would no longer be of use, resulting in a loss on disposal of property and equipment of $36,792 which is recorded in other income, net on the Statements of Operations.

NOTE 8 - OPERATING LEASE

At the time of adoption of ASC 842, the Company believed it was reasonably certain of exercising the renewal option of its office lease to extend the lease term through July 31, 2030. On December 13, 2024, the Company made the decision not to extend the term on the leased office space beyond the expiration date of July 31, 2025. As a result, the Company remeasured the operating lease right-of-use asset and lease liability as of the date the landlord was notified. As the remaining lease term would be under 12 months, the Company elected the practical expedient for short-term leases under ASC 842 and wrote off the operating lease right-of-use asset and lease liability. This resulted in a gain on lease remeasurement of $155,332 and is recorded in other income, net on the Statements of Operations. The Company will record the monthly rent payments as rent expense until the expiration of the lease.

Total rent expense for the years ended December 31, 2024 and 2023 was $289,024 and $289,024, respectively. The weighted average incremental borrowing rate and weighted average remaining term for the operating leases was 4.54% and 6.5 years for the year ended December 31, 2023. Due to the remeasurement and election of the practical expedient, this was not applicable for the year ended December 31, 2024.

NOTE 9 - NET INCOME PER SHARE

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

For fiscal 2024, the computation of diluted net income per share excludes the effects of 501,400 options, since their inclusion would be anti-dilutive as their exercise prices were above the average market value.

For fiscal 2023, the computation of diluted net income per share excludes the effects of 402,100 options, since their inclusion would be anti-dilutive as their exercise prices were above the average market value.

NOTE 10 - RELATED PARTY TRANSACTION

NOTE 11 - COMMITMENTS AND CONTINGENCIES

From time to time, the Company is involved in various legal proceedings arising in the ordinary course of business. The Company records a liability when it believes that a loss will be incurred and the amount of loss or range of loss can be reasonably estimated. Based on the currently available information, the Company does not believe that there are claims or legal proceedings that would have a material adverse effect on the business, or the financial statements of the Company.

		2024				2023
Segment operating revenues		$	19,809,881			$	18,931,931
Less:
Significant segment expenses
Data and product costs
Employee expenses			5,476,111				5,008,498
Data feed expenses			1,955,210				1,947,327
Hosting and computer services expenses			239,101				153,388
Other data and product costs			951,429				723,824
Data and product costs subtotal			8,621,851				7,833,037
Selling, general and administrative expenses
Marketing expenses (1)			844,939				854,500
Employee expenses			7,161,422				6,959,539
Professional fee expenses			647,884				469,941
Occupancy expenses (2)			429,532				442,910
Other general and administrative expenses			452,715				496,141
Selling, general and administrative expenses subtotal			9,536,492				9,223,031
Other significant segment items
Depreciation and amortization			401,996				383,767
Other (income), net			(918,572	)			(715,330	)
Provision for income taxes			493,212				512,373
Segment net income		$	1,674,902			$	1,695,053