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: September  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  October  31, 2007. |
|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                      |

 

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

 

 

 

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CREDITRISKMONITOR.COM, INC.

INDEX

 

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

 

PART I.            FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Balance Sheets –  September 30, 2007 (Unaudited)            and

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

             

Statements of Operations for the Three Months            Ended

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

             

Statements of Operations for the Nine  Months            Ended

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

             

Statements of Cash Flows for the Nine  Months            Ended

|   | September 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

SEPTEMBER 30, 2007 AND DECEMBER 31, 2006

 

|                                                                                                                          | Sept.                         30,2007                        (Unaudited) |   | Dec.                        31,2006                        (Note 1) |        |
|-------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|-------------|
| ASSETS                                                                                                                        |                                                                          |   |                                                                |        |   |   |   |   |
| Current                        assets:                                                                                        |                                                                          |   |                                                                |        |   |   |   |   |
|      Cash                        and cash equivalents                                                |                                                                          |   | $                                                                   | 2,954,452   |   | $ | 2,467,520 |   |
|      Accounts                        receivable, net of allowance                                    |                                                                          |   |                                                                | 633,077     |   |   | 647,484 |   |
|      Other                        current assets                                                     |                                                                          |   |                                                                | 132,744     |   |   | 297,267 |   |
|                                                                                                                               |                                                                               |        |                                                                     |             |
|                                                                                                                          |                                                                          |   |
|          Total                        current assets                             |                                                                          |   |                                                                | 3,720,273   |   |   | 3,412,271 |   |
|                                                                                                                          |                                                                          |   |
| Property and                        equipment, net                                                                            |                                                                          |   |                                                                | 90,051      |   |   | 131,211 |   |
| Goodwill                                                                                                                      |                                                                          |   |                                                                | 1,954,460   |   |   | 1,954,460 |   |
| Prepaid and other                        assets                                                                               |                                                                          |   |                                                                | 26,196      |   |   | 27,753 |   |
|                                                                                                                               |                                                                               |        |                                                                     |             |
|                                                                                                                          |                                                                          |   |
|          Total                        assets                                     |                                                                          |   | $                                                                   | 5,790,980   |   | $ | 5,525,695 |   |
|                                                                                                                               |                                                                               |        |                                                                     |             |
|                                                                                                                          |                                                                          |   |
| LIABILITIES AND                        STOCKHOLDERS’ EQUITY                                                             |                                                                          |   |                                                                |        |   |   |   |   |
| Current                        liabilities:                                                                                   |                                                                          |   |                                                                |        |   |   |   |   |
|      Deferred                        revenue                                                         |                                                                          |   | $                                                                   | 3,263,004   |   | $ | 2,985,724 |   |
|      Accounts                        payable                                                         |                                                                          |   |                                                                | 81,274      |   |   | 78,364 |   |
|      Accrued                        expenses                                                         |                                                                          |   |                                                                | 243,916     |   |   | 415,645 |   |
|      Current                        portion of long-term debt                                        |                                                                          |   |                                                                | 132,694     |   |   | 122,870 |   |
|      Current                        portion of capitalized lease obligations                         |                                                                          |   |                                                                | —     |   |   | 18,437 |   |
|                                                                                                                               |                                                                               |        |                                                                     |             |
|                                                                                                                          |                                                                          |   |
|          Total                        current liabilities                        |                                                                          |   |                                                                | 3,720,888   |   |   | 3,621,040 |   |
|                                                                                                                          |                                                                          |   |
| Long-term debt, net                        of current portion                                                                 |                                                                          |   |                                                                | 186,154     |   |   | 286,940 |   |
| Other                        liabilities                                                                                      |                                                                          |   |                                                                | 67,134      |   |   | 73,392 |   |
|                                                                                                                               |                                                                               |        |                                                                     |             |
|                                                                                                                          |                                                                          |   |
|          Total                        liabilities                                |                                                                          |   |                                                                | 3,974,176   |   |   | 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                                               |                                                                          |   |                                                                | 28,208,700  |   |   | 28,177,684 |   |
|      Accumulated                        deficit                                                      |                                                                          |   |                                                                | (26,468,840 | ) |   | (26,710,305 | ) |
|                                                                                                                               |                                                                               |        |                                                                     |             |
|                                                                                                                          |                                                                          |   |
|          Total                        stockholders’ equity                 |                                                                          |   |                                                                | 1,816,804   |   |   | 1,544,323 |   |
|                                                                                                                               |                                                                               |        |                                                                     |             |
|                                                                                                                          |                                                                          |   |
|          Total                        liabilities and stockholders’ equity |                                                                          |   | $                                                                   | 5,790,980   |   | $ | 5,525,695 |   |
|                                                                                                                               |                                                                               |        |                                                                     |             |

 

 

See            accompanying condensed notes to financial statements.

 

2

 

----

CREDITRISKMONITOR.COM, INC.

STATEMENTS OF OPERATIONS

FOR            THE THREE MONTHS ENDED SEPTEMBER  30, 2007 AND 2006

(Unaudited)

 

|                                                                                                  | 2007   |   | 2006   |      |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|-----------|
|                                                                                                  |   |   |   |      |   |   |   |   |
| Operating                        revenues                                                             |   |   | $      | 1,273,983 |   | $ | 1,084,838 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Operating                        expenses:                                                            |   |   |   |      |   |   |   |   |
|      Data                        and product costs                           |   |   |   | 367,944   |   |   | 316,397 |   |
|      Selling,                        general and administrative expenses     |   |   |   | 738,751   |   |   | 678,013 |   |
|      Depreciation                        and amortization                    |   |   |   | 16,089    |   |   | 16,794 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
|          Total                        operating expenses |   |   |   | 1,122,784 |   |   | 1,011,204 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Income from                        operations                                                         |   |   |   | 151,199   |   |   | 73,634 |  |
| Other                        income                                                                   |   |   |   | 25,220    |   |   | 18,349 |   |
| Interest                        expense                                                               |   |   |   | (8,858    | ) |   | (12,674 | ) |
|                                                                                                  |   |   |        |      |  |   |
|                                                                                                  |   |   |   |      |   |   |   |   |
| Income before                        income taxes                                                |   |   |   | 167,561   |   |   | 79,309 |  |
| Provision for income                        taxes                                                     |   |   |   | 4,129     |   |   | 517 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Net income                                                                                            |   |   | $      | 163,432   |   | $ | 78,792 |  |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Net income per share                        of common stock:                                          |   |   |   |      |   |   |   |   |
|                                                                                                  |   |   |
|      Basic                                                                   |   |   | $      | 0.02      |   | $ | 0.01 |  |
|      Diluted                                                                 |   |   | $      | 0.02      |   | $ | 0.01 |  |
|                                                                                                  |   |   |
| Weighted average                        number of common shares                                       |   |   |   |      |   |   |   |   |
| outstanding:                                                                                          |   |   |   |      |   |   |   |   |
|                                                                                                  |   |   |
|      Basic                                                                   |   |   |   | 7,694,462 |   |   | 7,679,462 |   |
|      Diluted                                                                 |   |   |   | 8,144,281 |   |   | 7,933,052 |   |

 

 

 

 

 

 

 

 

 

See            accompanying condensed notes to financial statements.

 

3

 

----

CREDITRISKMONITOR.COM, INC.

STATEMENTS OF OPERATIONS

FOR            THE NINE  MONTHS ENDED SEPTEMBER  30, 2007 AND 2006

(Unaudited)

 

|                                                                                                  | 2007   |   | 2006   |      |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|-----------|
|                                                                                                  |        |        |        |           |  |  |  |  |
| Operating revenues                                                                                    |   |   | $      | 3,665,960 |   | $ | 3,171,089 |   |
|                                                                                                       |        |        |        |           |
| Operating                        expenses:                                                            |   |   |   |      |   |   |   |   |
|      Data                        and product costs                           |   |   |   | 1,197,246 |   |   | 1,009,400 |   |
|      Selling,                        general and administrative expenses     |   |   |   | 2,195,938 |   |   | 2,169,792 |   |
|      Depreciation                        and amortization                    |   |   |   | 49,416    |   |   | 49,997 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
|          Total                        operating expenses |   |   |   | 3,442,600 |   |   | 3,229,189 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Income (loss) from                        operations                                                  |   |   |   | 223,360   |   |   | (58,100 | ) |
| Other                        income                                                                   |   |   |   | 62,000    |   |   | 49,713 |   |
| Interest                        expense                                                               |   |   |   | (29,584   | ) |   | (40,824 | ) |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Income (loss) before                        income taxes                                              |   |   |   | 255,776   |   |   | (49,211 | ) |
| Provision for income                        taxes                                                     |   |   |   | 14,311    |   |   | 4,262 |   |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Net income                        (loss)                                                              |   |   | $      | 241,465   |   | $ | (53,473 | ) |
|                                                                                                       |        |        |        |           |
|                                                                                                  |   |   |
| Net income (loss)                        per share of common stock:                                   |   |   |   |      |   |   |   |   |
|                                                                                                  |   |   |
|      Basic                                                                   |   |   | $      | 0.03      |   | $ | (0.01 | ) |
|      Diluted                                                                 |   |   | $      | 0.03      |   | $ | (0.01 | ) |
|                                                                                                  |   |   |
| Weighted average                        number of common shares                                       |   |   |
| outstanding:                                                                                          |   |   |   |      |   |   |   |   |
|                                                                                                  |   |   |
|      Basic                                                                   |   |   |   | 7,694,462 |   |   | 7,679,462 |   |
|      Diluted                                                                 |   |   |   | 8,129,875 |   |   | 7,679,462 |   |

 

 

 

 

 

 

 

 

 

See            accompanying condensed notes to financial statements.

 

4

 

----

CREDITRISKMONITOR.COM, INC.

STATEMENTS OF CASH FLOWS

FOR            THE NINE  MONTHS ENDED SEPTEMBER  30, 2007 AND 2006

(Unaudited)

 

|                                                                                                                                | 2007   |   | 2006   |      |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|-----------|
|                                                                                                                                |   |   |   |      |   |   |   |   |
| Cash flows from                        operating activities:                                                                        |   |   |   |      |   |   |   |   |
|      Net                        income (loss)                                                              |   |   | $      | 241,465   |   | $ | (53,473 | ) |
|      Adjustments                        to reconcile net income (loss) to                                  |   |   |   |      |   |   |   |   |
|          net                        cash provided (used) by operating activities: |   |   |   |      |   |   |   |   |
|               Depreciation                                    |   |   |   | 49,416    |   |   | 49,997 |   |
|               Deferred                        rent            |   |   |   | (426      | ) |   | 1,725 |   |
|               Stock-based                        compensation |   |   |   | 31,016    |   |   | 22,701 |   |
|      Changes                        in operating assets and liabilities:                                   |   |   |   |      |   |   |   |   |
|          Accounts                        receivable                                    |   |   |   | 14,407    |  |   | 191,171 |   |
|          Other                        current assets                                   |   |   |   | 164,523   |   |   | 31,306 |   |
|          Prepaid                        and other assets                               |   |   |   | 1,557     |  |   | 7,797 |  |
|          Deferred                        revenue                                       |   |   |   | 277,280   |   |   | 143,940 |   |
|          Accounts                        payable                                       |   |   |   | 2,910     |  |   | (62,669 | ) |
|          Accrued                        expenses                                       |   |   |   | (171,729  | ) |   | 47,586 |  |
|          Other                        liabilities                                      |   |   |   | (5,832    | ) |   | — |   |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Net cash provided by                        operating activities                                                                    |   |   |   | 604,587   |   |   | 380,081 |   |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Cash flows from                        investing activities:                                                                        |   |   |   |      |   |   |   |   |
|      Purchase                        of property and equipment                                             |   |   |   | (8,256    | ) |   | (22,976 | ) |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Net cash used in                        investing activities                                                                        |   |   |   | (8,256    | ) |   | (22,976 | ) |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Cash flows from                        financing activities:                                                                        |   |   |   |      |   |   |   |   |
|      Payments                        on long-term debt                                                     |   |   |   | (90,962   | ) |   | (82,095 | ) |
|      Payments                        on capitalized lease obligations                                      |   |   |   | (18,437   | ) |   | (19,580 | ) |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Net cash used in                        financing activities                                                                        |   |   |   | (109,399  | ) |   | (101,675 | ) |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Net increase in cash                        and cash equivalents                                                                    |   |   |   | 486,932   |   |   | 255,430 |   |
| Cash and cash                        equivalents at beginning of                                                                    |   |   |   |      |   |   |   |   |
|    period                                                                                                            |   |   |   | 2,467,520 |   |   | 2,034,786 |   |
|                                                                                                                                     |        |        |        |           |
|                                                                                                                                |   |   |
| Cash and cash                        equivalents at end of period                                                                   |   |   | $      | 2,954,452 |   | $ | 2,290,216 |   |
|                                                                                                                                     |        |        |        |           |

 

 

 

 

 

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 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 nine months            ended September 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            appliesStatement            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 nine months ended            September 30:

 

|                                                       | 3                        Months EndedSept.  30, |   | 9                         Months EndedSept.  30, |   |
|------------------------------------------------------------|------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                       | 2007                                                 |   | 2006                                                       |   | 2007 |   | 2006 |   |
|                                                       |                                                 |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |
| Data and product                        costs              |                                                 |   | $                                                          | 1,953  |   | $ | 1,682 |   | $ | 5,858 |   | $ | 5,047 |   |
| Selling, general and                        administrative |                                                 |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |
|    expenses                                 |                                                 |   |                                                       | 8,929  |   |   | 5,885 |   |   | 25,158 |   |   | 17,654 |   |
|                                                            |                                                      |        |                                                            |        |  |  |  |  |
|                                                       |                                                 |   |
|                                                       |                                                 |   | $                                                          | 10,882 |   | $ | 7,567 |   | $ | 31,016 |   | $ | 22,701 |   |
|                                                            |                                                      |        |                                                            |        |  |  |  |  |

 

 

6

 

----

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

 

|                                                      | Shares |   | Weighted-                        Average                        ExercisePrice |    | Weighted                        Average                        Remaining                        Contractual                        Term(in years) |   | Aggregate                        IntrinsicValue |   |
|-----------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                      |   |   |                                                                          |    |                                                                                                                                              |   |                                            |   |   |   |   |   |   |   |
| Outstanding at                        beginning of period |   |   |                                                                          | 695,500 |                                                                                                                                              | $      | 0.8372                                          |   |   | 6.11 |   | $ | 1,073,025 |   |
| Granted                                                   |   |   |                                                                          | 50,000  |                                                                                                                                              |   | 2.3800                                          |   |   | 9.95 |   |   | —  |   |
| Exercised                                                 |   |   |                                                                          | — |                                                                                                                                              |   | —                                         |   |   |   |   |   |   |   |
| Cancelled                                                 |   |   |                                                                          | — |                                                                                                                                              |   | —                                         |   |   |   |   |   |   |   |
|                                                           |        |        |                                                                          |         |                                                                                                                                              |        |                                            |        |
|                                                      |   |   |
| Outstanding at end                        of period       |   |   |                                                                          | 745,500 |                                                                                                                                              | $      | 0.9407                                          |   |   | 5.90 |   | $ | 1,073,025 |   |
|                                                           |        |        |                                                                          |         |                                                                                                                                              |        |                                            |        |
|                                                      |   |   |
| Exercisable at end                        of period       |   |   |                                                                          | 155,000 |                                                                                                                                              | $      | 0.0324                                          |   |   | 0.90 |   | $ | 363,885 |   |
|                                                           |        |        |                                                                          |         |                                                                                                                                              |        |                                            |        |

 

As            of September  30, 2007, there was $336,389 of total unrecognized compensation cost            related to non-vested stock option awards, which is expected to be recognized over a            weighted-average period of 4.13 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  September 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 nine months ended September 30, 2006, the computation of diluted net loss            per share excludes the effects of the assumed exercise of            710,500 options since their inclusion would be anti-dilutive as the Company            had a loss in this period.

 

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 September 30, 2007, the Company            had cash and cash equivalents of $2.95 million compared to $2.47 million at December            31, 2006. The Company’s working capital deficit at September 30, 2007 was            approximately $1,000 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 0.79 at            September 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 1.00 at September 30, 2007.            Additionally, the working capital deficit at September 30, 2007 is mainly derived from            $3.26 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 September  30, |
|-------------------------------------------------------------------------------|----------------------------------------------------------------|
|                                                                          | 2007                                                           |   | 2006 |   |   |
|                                                                          | Amount                                                         |   | % of                        Total                        OperatingRevenues |   | Amount |   | % of                        Total                        OperatingRevenues |   |   |
|                                                                          |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                        revenues                                     |                                                           |   | $ | 1,273,983 |   |   | 100.00 | % | $ | 1,084,838 |   |   | 100.00 | % |
|                                                                               |                                                                |  |  |  |  |  |  |  |
|                                                                          |                                                           |   |
| Operating                        expenses:                                    |                                                           |   |
|    Data and product                        costs               |                                                           |   |   | 367,944 |   |   | 28.88 | % |   | 316,397 |   |   | 29.16 | % |
|    Selling, general                        and administrative  |                                                           |   |   | 738,751 |   |   | 57.99 | % |   | 678,013 |   |   | 62.50 | % |
|    Depreciation and                        amortization        |                                                           |   |   | 16,089 |   |   | 1.26 | % |   | 16,794 |   |   | 1.55 | % |
|                                                                               |                                                                |  |  |  |  |  |  |  |
|      Total                        operating expenses |                                                           |   |   | 1,122,784 |   |   | 88.13 | % |   | 1,011,204 |   |   | 93.21 | % |
|                                                                               |                                                                |  |  |  |  |  |  |  |
|                                                                          |                                                           |   |
| Income from                        operations                                 |                                                           |   |   | 151,199 |   |   | 11.87 | % |   | 73,634 |  |   | 6.79 | % |
| Other                        income                                           |                                                           |   |   | 25,220 |   |   | 1.98 | % |   | 18,349 |   |   | 1.69 | % |
| Interest                        expense                                       |                                                           |   |   | (8,858 | ) |   | -0.70 | % |   | (12,674 | ) |   | -1.17 | % |
|                                                                               |                                                                |  |  |  |  |  |  |  |
|                                                                          |                                                           |   |
| Income  before                        income taxes                       |                                                           |   |   | 167,561 |   |   | 13.15 | % |   | 79,309 |  |   | 7.31 | % |
| Provision for income                        taxes                             |                                                           |   |   | 4,129 |   |   | 0.32 | % |   | 517 |   |   | 0.05 | % |
|                                                                               |                                                                |  |  |  |  |  |  |  |
|                                                                          |                                                           |   |
| Net income                                                                    |                                                           |   | $ | 163,432 |   |   | 12.83 | % | $ | 78,792 |  |   | 7.26 | % |
|                                                                               |                                                                |  |  |  |  |  |  |  |

 

Operating revenues increased 17% for the three months            ended September 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 new credit limit service introduced during the first            quarter.

 

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Data and product costs            increased 16% for the third 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 increased 9% for the third quarter of fiscal 2007 compared to            the same period of fiscal 2006. This increase was primarily due to higher salary and            related employee benefit costs, resulting from an increase in the Company’s sales            force during the past 12 months, and an increase in professional fees, primarily for            outside assistance in complying with the requirements of the Sarbanes-Oxley Act of            2002, partially offset by a decrease in marketing expenses.

Depreciation and            amortization decreased 4% for the third 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 37%            for third 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 30% for the third 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            $163,000 versus net income of $79,000 for the three months ended September 30, 2007 and            2006, respectively.

 

|                                                                          | Nine Months Ended  September                        30, |
|-------------------------------------------------------------------------------|--------------------------------------------------------------|
|                                                                          | 2007                                                         |   | 2006 |   |
|                                                                          | Amount                                                       |   | % of                        Total                        OperatingRevenues |   | Amount |   | % of                        Total                        OperatingRevenues |   |   |
|                                                                          |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                        revenues                                     |                                                         |   | $ | 3,665,960 |   |   | 100.00 | % | $ | 3,171,089 |   |   | 100.00 | % |
|                                                                               |                                                              |  |  |  |  |  |  |  |
|                                                                          |                                                         |   |
| Operating                        expenses:                                    |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Data and product                        costs               |                                                         |   |   | 1,197,246 |   |   | 32.66 | % |   | 1,009,400 |   |   | 31.83 | % |
|    Selling, general                        and administrative  |                                                         |   |   | 2,195,938 |   |   | 59.90 | % |   | 2,169,792 |   |   | 68.42 | % |
|    Depreciation and                        amortization        |                                                         |   |   | 49,416 |   |   | 1.35 | % |   | 49,997 |   |   | 1.58 | % |
|                                                                               |                                                              |  |  |  |  |  |  |  |
|      Total                        operating expenses |                                                         |   |   | 3,442,600 |   |   | 93.91 | % |   | 3,229,189 |   |   | 101.83 | % |
|                                                                               |                                                              |  |  |  |  |  |  |  |
|                                                                          |                                                         |   |
| Income (loss) from                        operations                          |                                                         |   |   | 223,360 |   |   | 6.09 | % |   | (58,100 | ) |   | -1.83 | % |
| Other                        income                                           |                                                         |   |   | 62,000 |   |   | 1.70 | % |   | 49,713 |   |   | 1.57 | % |
| Interest                        expense                                       |                                                         |   |   | (29,584 | ) |   | -0.81 | % |   | (40,824 | ) |   | -1.29 | % |
|                                                                               |                                                              |  |  |  |  |  |  |  |
|                                                                          |                                                         |   |
| Income (loss) before                        income taxes                      |                                                         |   |   | 255,776 |   |   | 6.98 | % |   | (49,211 | ) |   | -1.55 | % |
| Provision for income                        taxes                             |                                                         |   |   | 14,311 |   |   | 0.39 | % |   | 4,262 |   |   | 0.14 | % |
|                                                                               |                                                              |  |  |  |  |  |  |  |
|                                                                          |                                                         |   |
| Net income                        (loss)                                      |                                                         |   | $ | 241,465 |   |   | 6.59 | % | $ | (53,473 | ) |   | -1.69 | % |
|                                                                               |                                                              |  |  |  |  |  |  |  |

 

Operating revenues increased 16% for the nine months            ended September 30, 2007 versus the first nine months 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

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number of subscribers to the Company’s subscription service for            third-party international credit reports.

Data and product costs            increased 19% for the first nine 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 increased 1% for the first nine months of            fiscal 2007 compared to the same period of fiscal 2006. This increase was primarily due            to an increase in professional fees, principally for outside assistance in complying            with the requirements of the Sarbanes-Oxley Act of 2002, partially offset by 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.                          Depreciation and amortization decreased by 1% for the first nine months 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 25%            for the first nine 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 28% for the first nine 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            $241,000 versus a net loss of $53,000 for the nine months ended September 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 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

 

 

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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.

 

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

12

 

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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.

 

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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: November 12, 2007 | By:  /s/ Lawrence Fensterstock |
|-------------------------|-----------------------------------------------|

Lawrence Fensterstock

Chief Financial Officer

 

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