UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM            10-QSB

 

| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE                            SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------------------------------------------------------------------------------------------------------|

For            the quarterly period ended:June 30, 2007

 

| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE                            EXCHANGE ACT |
|---|--------------------------------------------------------------------------------------------|

For            the transition period from________to_______

 

Commission file number1-8601

 

| CREDITRISKMONITOR.COM, INC.                                                                  |
|----------------------------------------------------------------------------------------------|
|                                                                                              |
| (Exact name of small business issuer as specified in its                            charter) |

 

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

 

| 704 Executive Boulevard, Suite AValley Cottage, New York 10989 |
|----------------------------------------------------------------|
|                                                                |
| (Address of principal executive offices)                       |

 

| (845) 230-3000                    |
|-----------------------------------|
|                                   |
| (Issuer’s telephone number) |

 

Check whether the issuer (1) filed all reports required to be filed by            Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter            period that the registrant was required to file such reports), and (2) has been subject            to such filing requirements for the past 90 days.

Yesx   Noo

 

Indicate by check mark whether the registrant is a shell company (as            defined by Rule 12b-2 of the Exchange Act).

Yeso   Nox

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Check whether the registrant filed all documents and reports required to            be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of            securities under a plan confirmed by a court.

Yeso   Noo

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer’s            classes of common equity, as of the latest practical date:

 

| Common stock $.01 par value -- 7,694,462 shares                            outstanding as of July 31, 2007. |
|-------------------------------------------------------------------------------------------------------------|
|                                                                                                             |

 

| Transitional Small Business Disclosure Format (check                            one): Yeso                              Nox |
|---------------------------------------------------------------------------------------------------------------------------------------|

 

 

 

----

CREDITRISKMONITOR.COM, INC.

INDEX

 

|   | Page |
|--------|------|

 

PART I.            FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Balance Sheets – June 30, 2007 (Unaudited) and

|   | December 31, 2006 | 2 |
|--------|-------------------|---|

             

Statements of Operations for the Three Months            Ended

|   | June 30, 2007 and 2006                            (Unaudited) | 3 |
|--------|---------------------------------------------------------------|---|

             

Statements of Operations for the Six Months            Ended

|   | June 30, 2007 and 2006                            (Unaudited) | 4 |
|--------|---------------------------------------------------------------|---|

             

Statements of Cash Flows for the Six Months            Ended

|   | June 30, 2007 and 2006                            (Unaudited) | 5 |
|--------|---------------------------------------------------------------|---|

             

|   | Condensed Notes to Financial                            Statements | 6 |
|--------|--------------------------------------------------------------------|---|

 

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

|   | and Results of Operations | 9 |
|--------|---------------------------|---|

             

|   | Item 3. Controls and                            Procedures | 13 |
|--------|------------------------------------------------------------|----|

             

PART            II. OTHER INFORMATION

 

|   | Item 6. Exhibits | 14 |
|--------|------------------|----|

 

| SIGNATURES | 15 |
|------------|----|

 

EXHIBITS

 

|   | 31.1 | Certification of Chief Executive Officer                            Pursuant to |
|--------|------|---------------------------------------------------------------------------------|

|   | Section 302 of the Sarbanes-Oxley Act of                            2002 | 16 |
|--------|--------------------------------------------------------------------------|----|

 

|   | 31.2 | Certification of Chief Financial Officer                            Pursuant to |
|--------|------|---------------------------------------------------------------------------------|

|   | Section 302 of the Sarbanes-Oxley Act of                            2002 | 18 |
|--------|--------------------------------------------------------------------------|----|

 

|   | 32.1 | Certification of Chief Executive Officer                            Pursuant to |
|--------|------|---------------------------------------------------------------------------------|

18 U.S.C. Section 1350, as Adopted Pursuant to            Section

|   | 906 of the Sarbanes-Oxley Act of                            2002 | 20 |
|--------|------------------------------------------------------------------|----|

 

|   | 32.2 | Certification of Chief Financial Officer                            Pursuant to |
|--------|------|---------------------------------------------------------------------------------|

18 U.S.C. Section 1350, as Adopted Pursuant to            Section

|   | 906 of the Sarbanes-Oxley Act of                            2002 | 21 |
|--------|------------------------------------------------------------------|----|

 

1

 

----

PART I.            FINANCIAL INFORMATION

 

Item 1.            Financial Statements

 

CREDITRISKMONITOR.COM, INC.

BALANCE SHEETS

JUNE            30, 2007 AND DECEMBER 31, 2006

 

|                                                                                                                          | June                        30,2007                        (Unaudited) |   | Dec.                        31,2006                        (Note 1) |        |
|-------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|--------|---------------------------------------------------------------------|-------------|
| ASSETS                                                                                                                        |                                                                   |   |                                                                |        |   |   |   |   |
| Current                        assets:                                                                                        |                                                                   |   |                                                                |        |   |   |   |   |
|      Cash                        and cash equivalents                                                |                                                                   |   | $                                                                   | 2,716,662   |   | $ | 2,467,520 |   |
|      Accounts                        receivable, net of allowance                                    |                                                                   |   |                                                                | 882,308     |   |   | 647,484 |   |
|      Other                        current assets                                                     |                                                                   |   |                                                                | 145,840     |   |   | 297,267 |   |
|                                                                                                                               |                                                                        |        |                                                                     |             |
|                                                                                                                          |                                                                   |   |
|          Total                        current assets                             |                                                                   |   |                                                                | 3,744,810   |   |   | 3,412,271 |   |
|                                                                                                                          |                                                                   |   |
| Property and                        equipment, net                                                                            |                                                                   |   |                                                                | 101,717     |   |   | 131,211 |   |
| Goodwill                                                                                                                      |                                                                   |   |                                                                | 1,954,460   |   |   | 1,954,460 |   |
| Prepaid and other                        assets                                                                               |                                                                   |   |                                                                | 33,033      |   |   | 27,753 |   |
|                                                                                                                               |                                                                        |        |                                                                     |             |
|                                                                                                                          |                                                                   |   |
|          Total                        assets                                     |                                                                   |   | $                                                                   | 5,834,020   |   | $ | 5,525,695 |   |
|                                                                                                                               |                                                                        |        |                                                                     |             |
|                                                                                                                          |                                                                   |   |
| LIABILITIES AND                        STOCKHOLDERS’ EQUITY                                                             |                                                                   |   |                                                                |        |   |   |   |   |
| Current                        liabilities:                                                                                   |                                                                   |   |                                                                |        |   |   |   |   |
|      Deferred                        revenue                                                         |                                                                   |   | $                                                                   | 3,476,847   |   | $ | 2,985,724 |   |
|      Accounts                        payable                                                         |                                                                   |   |                                                                | 59,003      |   |   | 78,364 |   |
|      Accrued                        expenses                                                         |                                                                   |   |                                                                | 234,034     |   |   | 415,645 |   |
|      Current                        portion of long-term debt                                        |                                                                   |   |                                                                | 129,335     |   |   | 122,870 |   |
|      Current                        portion of capitalized lease obligations                         |                                                                   |   |                                                                | 4,094       |   |   | 18,437 |   |
|                                                                                                                               |                                                                        |        |                                                                     |             |
|                                                                                                                          |                                                                   |   |
|          Total                        current liabilities                        |                                                                   |   |                                                                | 3,903,313   |   |   | 3,621,040 |   |
|                                                                                                                          |                                                                   |   |
| Long-term debt, net                        of current portion                                                                 |                                                                   |   |                                                                | 220,614     |   |   | 286,940 |   |
| Other                        liabilities                                                                                      |                                                                   |   |                                                                | 67,602      |   |   | 73,392 |   |
|                                                                                                                               |                                                                        |        |                                                                     |             |
|                                                                                                                          |                                                                   |   |
|          Total                        liabilities                                |                                                                   |   |                                                                | 4,191,529   |   |   | 3,981,372 |   |
|                                                                                                                               |                                                                        |        |                                                                     |             |
| Stockholders’                        equity:                                                                            |                                                                   |   |                                                                |        |   |   |   |   |
|      Preferred                        stock, $.01 par value; authorized                              |                                                                   |   |                                                                |        |   |   |   |   |
|          5,000,000                        shares; none issued                    |                                                                   |   |                                                                | —     |   |   | — |   |
|      Common                        stock, $.01 par value; authorized 25,000,000                      |                                                                   |   |                                                                |        |   |   |   |   |
|          shares;                        issued and outstanding 7,694,462 shares  |                                                                   |   |                                                                | 76,944      |   |   | 76,944 |   |
|      Additional                        paid-in capital                                               |                                                                   |   |                                                                | 28,197,818  |   |   | 28,177,684 |   |
|      Accumulated                        deficit                                                      |                                                                   |   |                                                                | (26,632,271 | ) |   | (26,710,305 | ) |
|                                                                                                                               |                                                                        |        |                                                                     |             |
|                                                                                                                          |                                                                   |   |
|          Total                        stockholders’ equity                 |                                                                   |   |                                                                | 1,642,491   |   |   | 1,544,323 |   |
|                                                                                                                               |                                                                        |        |                                                                     |             |
|                                                                                                                          |                                                                   |   |
|          Total                        liabilities and stockholders’ equity |                                                                   |   | $                                                                   | 5,834,020   |   | $ | 5,525,695 |   |
|                                                                                                                               |                                                                        |        |                                                                     |             |

 

 

See            accompanying condensed notes to financial statements.

 

2

 

----

CREDITRISKMONITOR.COM, INC.

STATEMENTS OF OPERATIONS

FOR            THE THREE MONTHS ENDED JUNE 30, 2007 AND 2006

(Unaudited)

 

|                                                                                                  | 2007   |   | 2006   |      |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|-----------|
|                                                                                                  |   |   |   |      |   |   |   |   |
| Operating                        revenues                                                             |   |   | $      | 1,233,177 |   | $ | 1,058,406 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Operating                        expenses:                                                            |   |   |   |      |   |   |   |   |
|      Data                        and product costs                           |   |   |   | 408,046   |   |   | 372,611 |   |
|      Selling,                        general and administrative expenses     |   |   |   | 754,042   |   |   | 775,842 |   |
|      Depreciation                        and amortization                    |   |   |   | 16,688    |   |   | 16,952 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
|          Total                        operating expenses |   |   |   | 1,178,776 |   |   | 1,165,405 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Income (loss) from                        operations                                                  |   |   |   | 54,401    |   |   | (106,999 | ) |
| Other                        income                                                                   |   |   |   | 18,390    |   |   | 17,483 |   |
| Interest                        expense                                                               |   |   |   | (9,889    | ) |   | (13,648 | ) |
|                                                                                                  |   |   |        |      |  |   |
|                                                                                                  |   |   |   |      |   |   |   |   |
| Income (loss) before                        income taxes                                              |   |   |   | 62,902    |   |   | (103,164 | ) |
| Provision for income                        taxes                                                     |   |   |   | 5,014     |   |   | 89 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Net income                        (loss)                                                              |   |   | $      | 57,888    |   | $ | (103,253 | ) |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Net income (loss)                        per share of common stock:                                   |   |   |   |      |   |   |   |   |
|                                                                                                  |   |   |
|      Basic                                                                   |   |   | $      | 0.01      |   | $ | (0.01 | ) |
|      Diluted                                                                 |   |   | $      | 0.01      |   | $ | (0.01 | ) |
|                                                                                                  |   |   |
| Weighted average                        number of common shares                                       |   |   |   |      |   |   |   |   |
| outstanding:                                                                                          |   |   |   |      |   |   |   |   |
|                                                                                                  |   |   |
|      Basic                                                                   |   |   |   | 7,694,462 |   |   | 7,679,462 |   |
|      Diluted                                                                 |   |   |   | 8,142,415 |   |   | 7,679,462 |   |

 

 

 

 

 

 

 

 

 

See            accompanying condensed notes to financial statements.

 

3

 

----

CREDITRISKMONITOR.COM, INC.

STATEMENTS OF OPERATIONS

FOR            THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

(Unaudited)

 

|                                                                                                  | 2007   |   | 2006   |      |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|-----------|
|                                                                                                  |        |        |        |           |  |  |  |  |
| Operating revenues                                                                                    |   |   | $      | 2,391,977 |   | $ | 2,086,251 |   |
|                                                                                                       |        |        |        |           |
| Operating                        expenses:                                                            |   |   |   |      |   |   |   |   |
|      Data                        and product costs                           |   |   |   | 829,302   |   |   | 693,003 |   |
|      Selling,                        general and administrative expenses     |   |   |   | 1,457,186 |   |   | 1,491,779 |   |
|      Depreciation                        and amortization                    |   |   |   | 33,327    |   |   | 33,203 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
|          Total                        operating expenses |   |   |   | 2,319,815 |   |   | 2,217,985 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Income (loss) from                        operations                                                  |   |   |   | 72,162    |   |   | (131,734 | ) |
| Other                        income                                                                   |   |   |   | 36,780    |   |   | 31,363 |   |
| Interest                        expense                                                               |   |   |   | (20,726   | ) |   | (28,150 | ) |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Income (loss) before                        income taxes                                              |   |   |   | 88,216    |   |   | (128,521 | ) |
| Provision for income                        taxes                                                     |   |   |   | 10,182    |   |   | 3,745 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Net income                        (loss)                                                              |   |   | $      | 78,034    |   | $ | (132,266 | ) |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Net income (loss)                        per share of common stock:                                   |   |   |   |      |   |   |   |   |
|                                                                                                  |   |   |
|      Basic                                                                   |   |   | $      | 0.01      |   | $ | (0.02 | ) |
|      Diluted                                                                 |   |   | $      | 0.01      |   | $ | (0.02 | ) |
|                                                                                                  |   |   |
| Weighted average                        number of common shares                                       |   |   |
| outstanding:                                                                                          |   |   |   |      |   |   |   |   |
|                                                                                                  |   |   |
|      Basic                                                                   |   |   |   | 7,694,462 |   |   | 7,679,462 |   |
|      Diluted                                                                 |   |   |   | 8,122,673 |   |   | 7,679,462 |   |

 

 

 

 

 

 

 

 

 

See            accompanying condensed notes to financial statements.

 

4

 

----

CREDITRISKMONITOR.COM, INC.

STATEMENTS OF CASH FLOWS

FOR            THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

(Unaudited)

 

|                                                                                                                                | 2007   |   | 2006   |      |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|-----------|
|                                                                                                                                |   |   |   |      |   |   |   |   |
| Cash flows from                        operating activities:                                                                        |   |   |   |      |   |   |   |   |
|      Net                        income (loss)                                                              |   |   | $      | 78,034    |   | $ | (132,266 | ) |
|      Adjustments                        to reconcile net income (loss) to                                  |   |   |   |      |   |   |   |   |
|          net                        cash provided by operating activities:             |   |   |   |      |   |   |   |   |
|               Depreciation                                    |   |   |   | 33,327    |   |   | 33,203 |   |
|               Deferred                        rent            |   |   |   | 43        |   |   | 1,467 |   |
|               Stock-based                        compensation |   |   |   | 20,134    |   |   | 15,134 |   |
|      Changes                        in operating assets and liabilities:                                   |   |   |   |      |   |   |   |   |
|          Accounts                        receivable                                    |   |   |   | (234,824  | ) |   | 167,476 |   |
|          Other                        current assets                                   |   |   |   | 151,427   |   |   | 59,766 |   |
|          Prepaid                        and other assets                               |   |   |   | (5,280    | ) |   | (1,908 | ) |
|          Deferred                        revenue                                       |   |   |   | 491,123   |   |   | 146,292 |   |
|          Accounts                        payable                                       |   |   |   | (19,361   | ) |   | (46,547 | ) |
|          Accrued                        expenses                                       |   |   |   | (181,611  | ) |   | (8,310 | ) |
|          Other                        liabilities                                      |   |   |   | (5,833    | ) |   | — |   |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Net cash provided by                        operating activities                                                                    |   |   |   | 327,179   |   |   | 234,307 |   |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Cash flows from                        investing activities:                                                                        |   |   |   |      |   |   |   |   |
|      Purchase                        of property and equipment                                             |   |   |   | (3,833    | ) |   | (21,155 | ) |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Net cash used in                        investing activities                                                                        |   |   |   | (3,833    | ) |   | (21,155 | ) |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Cash flows from                        financing activities:                                                                        |   |   |   |      |   |   |   |   |
|      Payments                        on long-term debt                                                     |   |   |   | (59,861   | ) |   | (54,026 | ) |
|      Payments                        on capitalized lease obligations                                      |   |   |   | (14,343   | ) |   | (12,876 | ) |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Net cash used in                        financing activities                                                                        |   |   |   | (74,204   | ) |   | (66,902 | ) |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Net increase in cash                        and cash equivalents                                                                    |   |   |   | 249,142   |   |   | 146,250 |   |
| Cash and cash                        equivalents at beginning of                                                                    |   |   |   |      |   |   |   |   |
|    period                                                                                                            |   |   |   | 2,467,520 |   |   | 2,034,786 |   |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Cash and cash                        equivalents at end of period                                                                   |   |   | $      | 2,716,662 |   | $ | 2,181,036 |   |
|                                                                                                                                     |        |        |        |           |

 

 

 

 

 

See            accompanying condensed notes to financial statements.

 

5

 

----

CREDITRISKMONITOR.COM, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

(1)            Basis of Presentation

 

The            condensed financial statements included herein have been prepared by            CreditRiskMonitor.com, Inc. (the “Company” or “CRM”), without            audit, pursuant to the rules and regulations of the Securities and Exchange Commission            (the “SEC”). Certain information and footnote disclosures normally included            in consolidated financial statements prepared in accordance with accounting principles            generally accepted in the United States (“GAAP”) have been condensed or            omitted pursuant to such rules and regulations, although the Company believes that the            disclosures herein are adequate to make the information presented not misleading. The            December 31, 2006 balance sheet has been derived from the audited financial statements            at that date, but does not include all disclosures required by GAAP. These financial            statements should be read in conjunction with the audited financial statements and the            notes thereto in the Company’s annual report on Form 10-KSB for the year ended            December 31, 2006.

 

In            the opinion of the Company, the unaudited financial statements reflect all adjustments            (consisting of normal recurring adjustments) considered necessary to present fairly the            Company’s financial position, results of operations and cash flows for the            periods presented. Results of operations for the three and six months ended June 30,            2007 are not necessarily indicative of the results that may be expected for the full            year.

 

During the first quarter of 2007, the Company filed documents to            dissolve Barbito Corp., its inactive wholly-owned subsidiary.

 

(2)            Stock-Based Compensation

 

The            Company applies Statement of Financial Accounting Standards (“SFAS”)            No. 123 (revised 2004), “Share-Based Payment” (“SFAS            123R”) to account for stock-based compensation.

 

The following table summarizes the stock-based compensation expense for            stock options that was recorded in the Company’s results of operations in            accordance with SFAS 123R for the three and six months ended June 30:

 

|                                                       | 3                        Months EndedJune 30, |   | 6                        Months EndedJune 30, |   |
|------------------------------------------------------------|-----------------------------------------------|--------|-----------------------------------------------|--------|
|                                                       | 2007                                          |   | 2006                                          |   | 2007 |   | 2006 |   |
|                                                       |                                          |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Data and product                        costs              |                                          |   | $                                             | 1,953  |   | $ | 1,682 |   | $ | 3,905 |   | $ | 3,365 |   |
| Selling, general and                        administrative |                                          |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|    expenses                                 |                                          |   |                                          | 8,114  |   |   | 5,885 |   |   | 16,229 |   |   | 11,769 |   |
|                                                            |                                               |        |                                               |        |  |  |  |  |
|                                                       |                                          |   |
|                                                       |                                          |   | $                                             | 10,067 |   | $ | 7,567 |   | $ | 20,134 |   | $ | 15,134 |   |
|                                                            |                                               |        |                                               |        |  |  |  |  |

 

 

6

 

----

The            following table summarizes information about stock option activity for the six months            ended June 30, 2007:

 

|                                                      | Shares |   | Weighted-                        Average                        ExercisePrice |    | Weighted                        Average                        Remaining                        Contractual                        Term(in years) |   | Aggregate                        IntrinsicValue |   |
|-----------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                      |   |   |                                                                          |    |                                                                                                                                              |   |                                            |   |   |   |   |   |   |   |
| Outstanding at                        beginning of period |   |   |                                                                          | 695,500 |                                                                                                                                              | $      | 0.8372                                          |   |   | 6.36 |   | $ | 1,504,235 |   |
| Granted                                                   |   |   |                                                                          | — |                                                                                                                                              |   | —                                         |   |   |   |   |   |   |   |
| Exercised                                                 |   |   |                                                                          | — |                                                                                                                                              |   | —                                         |   |   |   |   |   |   |   |
| Cancelled                                                 |   |   |                                                                          | — |                                                                                                                                              |   | —                                         |   |   |   |   |   |   |   |
|                                                           |        |        |                                                                          |         |                                                                                                                                              |        |                                            |        |
|                                                      |   |   |
| Outstanding at end                        of period       |   |   |                                                                          | 695,500 |                                                                                                                                              | $      | 0.8372                                          |   |   | 5.86 |   | $ | 1,031,295 |   |
|                                                           |        |        |                                                                          |         |                                                                                                                                              |        |                                            |        |
|                                                      |   |   |
| Exercisable at end                        of period       |   |   |                                                                          | 155,000 |                                                                                                                                              | $      | 0.0324                                          |   |   | 1.15 |   | $ | 354,585 |   |
|                                                           |        |        |                                                                          |         |                                                                                                                                              |        |                                            |        |

 

As            of June 30, 2007, there was $228,000 of total unrecognized compensation cost related to            non-vested stock option awards, which is expected to be recognized over a            weighted-average period of 4.05 years.

 

The            Company adopted the alternative transition method provided in FASB Staff Position No.            FAS 123R-3, “Transition Election Related to Accounting for the Tax Effects of            Share-Based Payment Awards”, for calculating the tax effects of stock-based            compensation. The alternative transition method includes simplified methods to            establish the beginning balance of the additional paid-in capital pool (“APIC            pool”) related to the tax effects of employee stock-based compensation, and to            determine the subsequent impact on the APIC pool and statements of cash flows of the            tax effects of employee stock-based compensation awards that were outstanding upon            adoption of SFAS 123R.

 

(3)            Other Recently Issued Accounting Standards

 

The            FASB and the SEC had issued certain accounting pronouncements as of June 30, 2007 that            will become effective in subsequent periods; however, management does not believe that            any of those pronouncements would have significantly affected our financial accounting            measurements or disclosures had they been in effect during the interim periods for            which financial statements are included in this quarterly report. Management also            believes those pronouncements will not have a significant effect on our future            financial position or results of operations.

 

(4) Net Income (Loss) Per Share

             

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

             

For            the three and six months ended June 30, 2006, the computation of diluted net loss per            share excludes the effects of the assumed exercise of 734,500 and 710,500 options,            respectively, since their inclusion would be anti-dilutive as the Company had a loss in            these periods.

 

7

 

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(5)            Income Taxes

 

In            June 2006, the FASB issued FASB Interpretation 48, “Accounting for            Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109”            (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes            recognized in an enterprise’s financial statements in accordance with SFAS 109,            “Accounting for Income Taxes,” and prescribes a recognition threshold and            measurement attribute for the financial statement recognition and measurement of a tax            position taken or expected to be taken in a tax return. FIN 48 also provides guidance            on derecognition, classification, interest and penalties, accounting in interim            periods, disclosure and transition. The Company adopted FIN 48 during the first quarter            of fiscal 2007 and the impact of adoption was not material to its financial position or            results of operations.

 

8

 

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

 

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

 

At            June 30, 2007, the Company had cash and cash equivalents of $2.72 million compared to            $2.47 million at December 31, 2006. The Company’s working capital deficit at June            30, 2007 was approximately $159,000 compared to a working capital deficit of            approximately $209,000 at December 31, 2006. The Company’s cash ratio (which            measures a company’s ability to pay its current bills and is computed by dividing            cash and cash equivalents by total current liabilities) improved from 0.68 at December            31, 2006 to 0.70 at June 30, 2007 and its current ratio (which measures a            company’s ability to meet its current obligations and is computed by dividing            total current assets by total current liabilities) went from 0.94 at December 31, 2006            to 0.96 at June 30, 2007. Additionally, the working capital deficit at June 30, 2007 is            mainly derived from $3.48 million in deferred revenue, which does not require any            future cash outlay other than the costs of acquiring the raw data and electronically            preparing and delivering the applicable commercial credit reports. The deferred revenue            is recognized as income over the subscription term, which approximates twelve months.            The Company has no bank lines of credit or other currently available credit            sources.

 

The            Company believes that it will have sufficient resources to meet its working capital and            capital expenditure needs, including debt service, for the foreseeable            future.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

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

 

RESULTS OF OPERATIONS

 

|                                                                          | 3                        Months Ended June 30, |
|-------------------------------------------------------------------------------|------------------------------------------------|
|                                                                          | 2007                                           |   | 2006 |   |   |
|                                                                          | Amount                                         |   | % of                        Total                        OperatingRevenues |   | Amount |   | % of                        Total                        OperatingRevenues |   |   |
|                                                                          |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                        revenues                                     |                                           |   | $ | 1,233,177 |   |   | 100.00 | % | $ | 1,058,406 |   |   | 100.00 | % |
|                                                                               |                                                |  |  |  |  |  |  |  |
|                                                                          |                                           |   |
| Operating                        expenses:                                    |                                           |   |
|    Data and product                        costs               |                                           |   |   | 408,046 |   |   | 33.09 | % |   | 372,611 |   |   | 35.20 | % |
|    Selling, general                        and administrative  |                                           |   |   | 754,042 |   |   | 61.15 | % |   | 775,842 |   |   | 73.30 | % |
|    Depreciation and                        amortization        |                                           |   |   | 16,688 |   |   | 1.35 | % |   | 16,952 |   |   | 1.60 | % |
|                                                                               |                                                |  |  |  |  |  |  |  |
|      Total                        operating expenses |                                           |   |   | 1,178,776 |   |   | 95.59 | % |   | 1,165,405 |   |   | 110.10 | % |
|                                                                               |                                                |  |  |  |  |  |  |  |
|                                                                          |                                           |   |
| Income (loss) from                        operations                          |                                           |   |   | 54,401 |   |   | 4.41 | % |   | (106,999 | ) |   | -10.10 | % |
| Other                        income                                           |                                           |   |   | 18,390 |   |   | 1.49 | % |   | 17,483 |   |   | 1.65 | % |
| Interest                        expense                                       |                                           |   |   | (9,889 | ) |   | -0.80 | % |   | (13,648 | ) |   | -1.29 | % |
|                                                                               |                                                |  |  |  |  |  |  |  |
|                                                                          |                                           |   |
| Income (loss) before                        income taxes                      |                                           |   |   | 62,902 |   |   | 5.10 | % |   | (103,164 | ) |   | -9.74 | % |
| Provision for income                        taxes                             |                                           |   |   | 5,014 |   |   | 0.41 | % |   | 89 |   |   | 0.01 | % |
|                                                                               |                                                |  |  |  |  |  |  |  |
|                                                                          |                                           |   |
| Net income                        (loss)                                      |                                           |   | $ | 57,888 |   |   | 4.69 | % | $ | (103,253 | ) |   | -9.75 | % |
|                                                                               |                                                |  |  |  |  |  |  |  |

 

Operating revenues increased 17% for the three months ended June 30,            2007. This increase was primarily due to an increase in the number of subscribers to            the Company’s Internet subscription service as the market became more aware of            the Company’s enhanced service as well as sales from the            Company’s

 

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new            credit limit service introduced during the first quarter, offset in part by a decrease            in the number of subscribers to the Company’s subscription service for            third-party international credit reports as the result of declining demand for such            reports.

 

Data            and product costs increased 10% for the second quarter of 2007 compared to the same            period of fiscal 2006. This increase was primarily due to higher salary and related            employee benefits, including the hiring of additional quality control personnel, as            well as the cost of new third-party content added to the Company’s website offset            in part by lower consulting fees.

 

Selling, general and administrative expenses decreased 3% for the second            quarter of fiscal 2007 compared to the same period of fiscal 2006. This decrease was            primarily due to lower salary and related employee benefit costs as the result of the            Company’s change in benefits provider effective January 1, 2007 and a decrease in            marketing expenses, partially offset by an increase in professional fees, primarily for            outside assistance in complying with the requirements of the Sarbanes-Oxley Act of            2002.

 

Depreciation and amortization decreased 2% for the second quarter of            fiscal 2007 compared to the same period of fiscal 2006. This decrease was due to a            lower depreciable asset base reflecting the continued use of certain items that have            been fully depreciated.

 

Other income increased 5% for second quarter of fiscal 2007 compared to            the same period last year. This increase was due to a higher level of funds invested in            interest bearing accounts as well as a higher interest rate received on such funds            during the current period compared to the same period last year.

 

Interest expense decreased 28% for the second quarter of fiscal 2007            compared to the same period of fiscal 2006. This decrease was primarily due to a lower            outstanding long-term debt balance.

 

The            Company reported net income of $58,000 versus a net loss of $103,000 for the three            months ended June 30, 2007 and 2006, respectively.

 

|                                                                          | Six Months Ended June                        30, |
|-------------------------------------------------------------------------------|--------------------------------------------------|
|                                                                          | 2007                                             |   | 2006 |   |
|                                                                          | Amount                                           |   | % of                        Total                        OperatingRevenues |   | Amount |   | % of                        Total                        OperatingRevenues |   |   |
|                                                                          |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                        revenues                                     |                                             |   | $ | 2,391,977 |   |   | 100.00 | % | $ | 2,086,251 |   |   | 100.00 | % |
|                                                                               |                                                  |  |  |  |  |  |  |  |
|                                                                          |                                             |   |
| Operating                        expenses:                                    |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Data and product                        costs               |                                             |   |   | 829,302 |   |   | 34.67 | % |   | 693,003 |   |   | 33.22 | % |
|    Selling, general                        and administrative  |                                             |   |   | 1,457,186 |   |   | 60.92 | % |   | 1,491,779 |   |   | 71.50 | % |
|    Depreciation and                        amortization        |                                             |   |   | 33,327 |   |   | 1.39 | % |   | 33,203 |   |   | 1.59 | % |
|                                                                               |                                                  |  |  |  |  |  |  |  |
|      Total                        operating expenses |                                             |   |   | 2,319,815 |   |   | 96.98 | % |   | 2,217,985 |   |   | 106.31 | % |
|                                                                               |                                                  |  |  |  |  |  |  |  |
|                                                                          |                                             |   |
| Income (loss) from                        operations                          |                                             |   |   | 72,162 |   |   | 3.02 | % |   | (131,734 | ) |   | -6.31 | % |
| Other                        income                                           |                                             |   |   | 36,780 |   |   | 1.54 | % |   | 31,363 |   |   | 1.50 | % |
| Interest                        expense                                       |                                             |   |   | (20,726 | ) |   | -0.87 | % |   | (28,150 | ) |   | -1.35 | % |
|                                                                               |                                                  |  |  |  |  |  |  |  |
|                                                                          |                                             |   |
| Income (loss) before                        income taxes                      |                                             |   |   | 88,216 |   |   | 3.69 | % |   | (128,521 | ) |   | -6.16 | % |
| Provision for income                        taxes                             |                                             |   |   | 10,182 |   |   | 0.43 | % |   | 3,745 |   |   | 0.18 | % |
|                                                                               |                                                  |  |  |  |  |  |  |  |
|                                                                          |                                             |   |
| Net income                        (loss)                                      |                                             |   | $ | 78,034 |   |   | 3.26 | % | $ | (132,266 | ) |   | -6.34 | % |
|                                                                               |                                                  |  |  |  |  |  |  |  |

 

 

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Operating revenues increased 15% for the six months ended June 30, 2007            versus the first half of 2006. This increase was primarily due to an increase in the            number of subscribers to the Company’s Internet subscription service as well as            sales from the Company’s new credit limit service introduced during the first            quarter, offset in part by a decrease in the number of subscribers to the            Company’s subscription service for third-party international credit            reports.

 

Data            and product costs increased 20% for the first six months of fiscal 2007 compared to the            same period of fiscal 2006. This increase was primarily due to higher salary and            related employee benefits, including the hiring of additional quality control            personnel, as well as the cost of new third-party content added to the Company’s            website offset in part by lower consulting fees.

 

Selling, general and administrative expenses decreased 2% for the first            six months of fiscal 2007 compared to the same period of fiscal 2006. This decrease was            primarily due to lower salary and related employee benefit costs, due to a decrease in            the Company’s sales force during the past 12 months as well as the result of the            Company’s change in benefits provider effective January 1, 2007 and a decrease in            marketing expenses, partially offset by an increase in professional fees, primarily for            outside assistance in complying with the requirements of the Sarbanes-Oxley Act of            2002.

 

Depreciation and amortization increased by less than 1% for the first            six months of fiscal 2007 compared to the same period of fiscal 2006. This increase was            due to a higher depreciable asset base during the current period resulting from the            purchase of new trade booths and computer equipment during the last 12 months,            partially offset by lower depreciation expense during the fiscal 2006 period on certain            items that have been fully depreciated but are still in use.

 

Other income increased 17% for the first six months of fiscal 2007            compared to the same period last year. This increase was due to a higher level of funds            invested in interest bearing accounts as well as a higher interest rate received on            such funds during the current period compared to the same period last year.

 

Interest expense decreased 26% for the first six months of fiscal 2007            compared to the same period of fiscal 2006. This decrease was due to a lower            outstanding long-term debt balance.

 

The            Company reported net income of $78,000 versus a net loss of $132,000 for the six months            ended June 30, 2007 and 2006, respectively.

 

FUTURE OPERATIONS

 

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

 

Due            to the evolving nature of the markets in which it competes, the Company’s ability            to accurately forecast its revenues, gross profits and operating expenses as a            percentage of net sales is limited. The Company’s current and future expense            levels are based largely on its investment plans and estimates

 

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

 

Maintaining profitability depends on the Company’s ability to            generate and sustain increased revenue levels. The Company believes that its success            will depend in large part on its ability to (i) increase its brand awareness, (ii)            provide its customers with outstanding value, thus encouraging customer renewals, and            (iii) achieve sufficient sales volume to realize economies of scale. Accordingly, the            Company intends to continue to invest in marketing and promotion, product development            and technology and operating infrastructure development. There can be no assurance that            the Company will be able to achieve these objectives within a meaningful time            frame.

 

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

 

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

 

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FORWARD-LOOKING STATEMENTS

 

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

 

Item 3.            Controls and Procedures

 

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

 

There have not been any changes in the Company’s internal control            over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)            under the Securities Exchange Act of 1934, as amended) during our most recent fiscal            quarter that have materially affected, or are reasonably likely to materially affect,            the Company’s internal control over financial reporting. Management is aware that            there is a lack of segregation of duties due to the small number of employees dealing            with general administrative and financial matters. However, management has decided that            considering the employees involved and the control procedures in place, risks            associated with such lack of segregation are insignificant and the potential benefit of            adding employees to clearly segregate duties do not justify the expenses associated            with such increase.

 

13

 

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PART            II. OTHER INFORMATION

 

Item 6.            Exhibits

 

|   | 31.1 | Certification of Chief                            Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of                            2002. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

             

|   | 31.2 | Certification of Chief                            Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of                            2002. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

             

|   | 32.1 | Certification of Chief                            Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted                            Pursuant to Section 906 of the Sarbanes-Oxley Act of                            2002. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

|   | 32.2 | Certification of Chief                            Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted                            Pursuant to Section 906 of the Sarbanes-Oxley Act of                            2002. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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SIGNATURES

 

In            accordance with the requirements of the Exchange Act, the Registrant caused this report            to be signed on its behalf by the undersigned, thereunto duly authorized.

 

CREDITRISKMONITOR.COM, INC.

(REGISTRANT)

 

| Date: August 9, 2007 | By:  /s/ Lawrence Fensterstock |
|----------------------|-----------------------------------------------|

Lawrence Fensterstock

Chief Financial Officer

 

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