8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 8-K

______________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2014

______________

Issuer Direct Corporation

(Exact name of registrant as specified in its charter)

______________

Delaware	1-10185	26-1331503
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

500 Perimeter Park Drive Suite D, Morrisville, North Carolina 27560

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (919) 481-4000

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 — Results of Operations and Financial Condition

On May 7, 2014, Issuer Direct Corporation (the “Company”) issued a press release reporting the Company’s results for the quarter ended March 31, 2014. The press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference.

The information in Item 2.02 of this report, including the press release attached as Exhibit 99.1, is furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore, such information shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933, as amended.

Item 9.01 — Financial Statements and Exhibits

 (d) Exhibits:

Exhibit No.	Description
99.1	Press Release issued by the Company on May 7, 2014

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	Issuer Direct Corporation
Date: May 7, 2014	By:	/s/ Brian R. Balbirnie
		Brian R. Balbirnie
		Chief Executive Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued by the Company on May 7, 2014

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EX-99.1

Exhibit 99.1

Issuer Direct Reports First Quarter 2014 Results

Q1 2014 Revenue Increases 147% and EBITDA Up 63%;

Gross Margins Reach 71% and Non-GAAP Income Increases 50%, as Company Leverages Its Cloud-Based Disclosure Management System and Recurring Revenue Model

MORRISVILLE, NC -- May 7, 2014 - Issuer Direct Corporation (NYSE MKT:ISDR), a market leader and innovator of disclosure management solutions and cloud-based compliance technologies, today reported its operating results for the three months ended March 31, 2014. The results for the first quarter of 2014 included the contribution from PrecisionIR, which was acquired by Issuer Direct on August 22, 2013. The Company will host an investor conference call at 4:15 EST today, to discuss operating results and relevant topics of interest.

First Quarter 2014 Financial Highlights Include:

●   Revenues increased 147% year-over-year reaching $3.4 million;

●   EBITDA increased 63% year-over-year to $0.7 million;

●   Non-GAAP net income increased 50% year-over-year, reaching $0.4 million

Please refer to the tables below for the calculation of EBITDA and the reconciliation of GAAP income and earnings per share to Non-GAAP income and earnings per share.

Brian Balbirnie, CEO of Issuer Direct commented, “The successful acquisition of PrecisionIR helped us expand our customer base and broaden our portfolio of solutions and services, which resulted in substantial revenue growth in our first quarter. As we continue to add customers, cross sell our products and increase partnerships, we expect to see organic revenue growth in subsequent quarters in 2014.”

Mr. Balbirnie continued, “To continue our growth trajectory, we have expanded our channel partner and strategic relationships, something we had great success with during our XBRL growth stage. We are off to a great start this year with several new key partners through which we will be offering our best of breed products, specifically the New York Stock Exchange, where we will provide our whistleblower platform to newly listed and currently listed issuers. Not only does the relationship with NYSE have direct revenue growth potential, but from a branding perspective it helps raise our profile and enhance our ability to cross sell our products, and further extend our Disclosure Management System brand.”

Financial Results for the First Quarter ended March 31, 2014:

First quarter 2014 revenue was $3.5 million, an increase of 147%, compared to $1.4 million for the first quarter of 2013. Approximately $2.2 million of the total revenues for the quarter  resulted from including the operating results  of PrecisionIR for the period.

Shareholder communication revenue was $2.3 million, an increase of $2.0 million, or 808% during the three-month period ended March 31, 2014 as compared to the same period of fiscal 2013. The increase in shareholder communication revenue is almost entirely attributable to the inclusion of PrecisionIR revenue in the three-month period ended March 31, 2014, as PrecisionIR was acquired on August 22, 2013. The Company anticipates that it will achieve significant growth in shareholder communication revenue through the end of the third quarter of 2014 due to the impact of PrecisionIR.

Software licensing revenues were $0.2 million, an increase of $185,000, or 356% during the three-month period ended March 31, 2014 as compared to the same period of fiscal 2013. The increase for the quarter was due primarily to the inclusion of $155,000 from PrecisionIR’s webcasting business and to a lesser extent to increases in revenue from the Company’s market streams and investor relations platform. .

Gross profit was $2.5 million, or gross profit margin of 71%, for the first quarter of 2014, compared to $1.0 million, or 72% gross profit margin, for the first quarter of 2013. Operating income was $375,000 compared to operating income of $368,000 in the first quarter of last year.

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First quarter EBITDA was $0.7 million, a 63% increase compared to the $0.4 million in the same quarter last year. Non-GAAP net income, excluding amortization of intangible assets, stock based compensation, integration of acquisition costs, non cash interest expense, and tax impact of adjustments, was $ 409,425, or $0.20 per diluted share, an increase of 50% compared to $273,261 or $0.13 per diluted share in the first quarter of 2013. On a GAAP basis, the Company reported a net loss of $36,942 or ($0.02) per diluted share compared to net income of $215,538 or $0.11 per diluted share in the same period of fiscal 2013. During the quarter, the Company incurred $ 230,108 of non-cash amortization expense and $312,500 of non-cash interest expense associated with the acquisition of PrecisionIR.The Company also incurred $66,572 of costs related to the  integration of PrecisionIR in the first quarter of 2014. Non-GAAP results backing out these non-cash expenses and other expenses have been computed below. 

Non-GAAP Information

Certain non-GAAP financial measures are included in this press release. In the calculation of these measures, the Company generally excludes certain items such as amortization and impairment of acquired intangibles, non-cash stock-based compensation charges, unusual, non-recurring gains and charges and non-cash interest expense. The Company believes that excluding such items provides investors and management with a representation of the Company's core operating performance and with information useful in assessing its prospects for the future and underlying trends in the Company's operating expenditures and continuing operations. Management uses such non-GAAP measures to evaluate financial results and manage operations. The release and the attachments to this release provide a reconciliation of each of the non-GAAP measures referred to in this release to the most directly comparable GAAP measure. The non-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial statements and investors should evaluate them carefully. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Calculation of EBITDA table below.

CALCULATION OF EBITDA

	Three Months ended March 31,
	2014			2013
	Amount			Amount
Net income (loss):	$	(36,942	)	$	215,538
Adjustments:
Depreciation and amortization		281,866			34,935
Interest expense, net		362,055			247
Income tax expense		50,010			152,000
EBIDTA :	$	656,989		$	402,720

RECONCILATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

	Three Months ended March 31,
	2014						2013
	Amount			Per diluted share			Amount			Per diluted share
Net income (loss):	$	(36,942	)	$	(0.02	)	$	215,538		$	0.11
Adjustments:
Amortization of intangible assets  (1)		230,108			0.11			26,833			0.01
Stock based compensation (2)		110,766			0.06			66,269			0.03
Integration and acquisition costs (3)		66,572			0.03			-			-
Non-cash interest expense (4)		312,500			0.15			-			-
Tax impact of adjustments (5)		(273,579	)		(0.13	)		(35,379	)		(0.02	)
Non-GAAP net income:	$	409,425		$	0.20		$	273,261		$	0.13
Weighted average diluted shares outstanding					2,060,039						2,013,749

(1) The adjustments represent the amortization of intangible assets related to acquired assets and companies.

(2) The adjustments represent stock-based compensation expense recognized related to awards of stock options or common stock in exchange for services.

(3)  The adjustments represent legal fees, consulting fees, integration costs, and other non-recurring cost incurred in connection with the acquisition of PrecisionIR Group, Inc.

(4)  The adjustment represents the amortization of debt-discount that was created as a result of a beneficial conversion feature that was embedded in a note payable that the Company issued in order to finance the acquisition of PrecisionIR Group, Inc.  The amortization of the debt discount is recorded as non-cash interest expense and has no impact on the cash flows or operations of the Company.

(5)  This adjustment gives effect to the tax impact of all non-GAAP adjustments at a rate of 38%, which approximates the Company's state and federal tax rates.

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Conference Call Information

To participate in the conference call, please dial 877.407.8133 (international callers dial 201.689.8040) approximately five minutes prior to 4:15 Eastern Time (EST). Additionally, you can listen to the event online at: http://www.investorcalendar.com/IC/CEPage.asp?ID=172732.

A replay of the conference call will be available two hours after completion of the call until Wednesday, May 14, 2014 at 11:59 p.m. EST. To access the replay, dial 201.612.7415 and enter the conference I.D. # 13581916.

About Issuer Direct Corporation:

Issuer Direct is a disclosure management and targeted communications company. Our integrated platform provides tools, technologies and services that enable our clients to disclose and disseminate information through our network. With a focus on corporate issuers, the Company alleviates the complexity of maintaining compliance with its integrated portfolio of products and services that enhance companies' ability to efficiently produce and distribute their financial and business communications both online and in print.

Learn more about Issuer Direct today: http://ir.issuerdirect.com/tearsheet/html/isdr

Forward-Looking Statements. This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "prospects," "outlook," and similar words or expressions, or future or conditional verbs such as "will," "should," "would," "may," and "could" are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any anticipated results, performance or achievements. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2013, including but not limited to the discussion under "Risk Factors" therein, which the Company has filed with the SEC and which may be viewed at http://www.sec.gov.

Contact:

For Further Information: 

Issuer Direct Corporation 

Brian R. Balbirnie 

919-481-4000 

brian.balbirnie@issuerdirect.com 

Brett Maas 

Hayden IR 

(646) 536-7331 

brett@haydenir.com 

James Carbonara 

Hayden IR 

(646)-755-7412 

james@haydenir.com

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ISSUER DIRECT CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2014			2013
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,820,984		$	1,713,479
Accounts receivable, (net of allowance for doubtful accounts of $483,541 and $429,509, respectively)		2,193,691			1,970,531
Deferred income tax asset – current		25,842			25,843
Other current assets		441,184			160,756
Total current assets		4,481,701			3,870,609
Furniture, equipment and improvements, net		253,953			297,577
Goodwill		1,056,873			1,056,873
Intangible assets (net of accumulated amortization of $812,979 and $582,871, respectively)		3,783,021			4,013,129
Other noncurrent assets		22,351			22,351
Total assets	$	9,597,899		$	9,260,539
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	294,534		$	267,637
Accrued expenses		1,342,536			1,553,334
Deferred revenue		972,586			1,053,401
Total current liabilities		2,609,656			2,874,372
Note payable (net of debt discount of $1,740,591and $2,053,091, respectively)		759,409			446,909
Deferred tax liability		1,650,294			1,650,460
Other long term liabilities		127,264			83,063
Total liabilities		5,146,623			5,054,804
Stockholders' equity:
Preferred stock, $0.001 par value, 30,000,000 shares authorized, no shares issued and outstanding as of March 31, 2014 and December 31, 2013.		-			-
Common stock $0.001 par value, 100,000,000 shares authorized, 2,047,939 and 2,006,689 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively.		2,048			2,007
Additional paid-in capital		4,266,637			3,977,661
Other accumulated comprehensive loss		(65,599	)		(59,065	)
Retained earnings		248,190			285,132
Total stockholders' equity		4,451,276			4,205,735
Total liabilities and stockholders’ equity	$	9,597,899		$	9,260,539

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ISSUER DIRECT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended
	March 31,			March 31,
	2014			2013
Revenues	$	3,494,356		$	1,411,228
Cost of services		1,027,591			398,890
Gross profit		2,466,765			1,012,338
Operating costs and expenses:
General and administrative		1,286,253			408,601
Sales and marketing expenses		523,523			201,017
Depreciation and amortization		281,866			34,935
Total operating costs and expenses		2,091,642			644,553
Operating income		375,123			367,785
Interest income (expense), net		(362,055	)		(247	)
Net income before income taxes		13,068			367,538
Income tax (expense) benefit		(50,010	)		(152,000	)
Net income (loss)	$	(36,942	)	$	215,538
Income (loss) per share – basic and fully diluted	$	(0.02	)	$	0.11
Weighted average number of common shares outstanding – basic		2,016,240			1,942,635
Weighted average number of common shares outstanding – fully diluted		2,016,240			2,013,749

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ISSUER DIRECT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	For the Three Months Ended
	March 31,			March 31,
	2014			2013
Net income (loss)	$	(36,942	)		$	215,538
Foreign currency translation adjustment		(6,534	)			-
Comprehensive income (loss)	$	(43,476	)		$	215,538

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ISSUER DIRECT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three months ended  March 31,
	2014			2013
Cash flows from operating activities:
Net income (loss)	$	(36,942	)	$	215,538
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization		281,866			34,935
Bad debt expense		104,980			40,776
Deferred income taxes		(165	)		-
Stock-based expense		191,201			66,269
Non-cash interest expense		312,500			-
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		(326,813	)		(241,746	)
Decrease (increase) in deposits and prepaid assets		(279,751	)		14,149
Increase (decrease) in accounts payable		26,656			47,504
Increase (decrease) in accrued expenses		(169,070	)		(22,218	)
Increase (decrease) in deferred revenue		(82,831	)		(45,468	)
Net cash provided by operating activities		21,631			109,739
Cash flows from investing activities:
Purchase of property and equipment		(8,134	)		(27,584	)
Net cash used in investing activities		(8,134	)		(27,584	)
Cash flows from financing activities:
Proceeds from exercise of stock options		97,816			64
Repayment of line of credit		-			(75,000	)
Net cash provided by (used in) financing activities		97,816			(74,936	)
Net change in cash		111,313			7,219
Cash – beginning		1,713,479			1,250,643
Currency translation adjustment		(3,808	)		-
Cash – ending	$	1,820,984		$	1,257,862
Supplemental disclosure for non-cash investing and financing activities:
Cash paid for interest	$	50,000		$	1,779
Cash paid for income taxes	$	331,000		$	253,814

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