Financial Data and Key Metrics Changes - In Q1 2019, Issuer Direct achieved total revenue of $4.2 million, representing an 18% increase year-over-year and a 15% sequential increase from Q4 2018 [5][10] - The overall gross margin percentage was 69% for Q1 2019, down from 71% in the same period last year [15][17] - GAAP net income for Q1 2019 was $205,000 or $0.05 per diluted share, compared to $320,000 or $0.10 per diluted share in Q1 2018 [21] - Non-GAAP net income was $518,000 or $0.13 per diluted share for Q1 2019, compared to $458,000 or $0.15 per diluted share in Q1 2018 [22] Business Line Data and Key Metrics Changes - Platform and Technology revenue accounted for 64% of total revenues in Q1 2019, up from 58% in Q1 2018, with revenue increasing by 31% to $2.665 million [6][11] - Services revenue was $1.514 million for Q1 2019, a 1% increase compared to Q1 2018, driven by acquisitions and increased print and proxy distribution revenue [13] - The company added 20 new subscriptions for Platform id during the quarter, with an annualized contract value of $189,000 [12] Market Data and Key Metrics Changes - The number of publicly traded customers increased to 1,482 in Q1 2019 from 1,176 in the same period last year, while privately held customers rose to 764 from 606 [26] - Deferred revenue increased by 17% since year-end to $1.464 million due to additional licenses of Platform id [23] Company Strategy and Development Direction - The company aims to increase the percentage of revenue from Platform and Technology to 70% in 2019 [6][25] - Issuer Direct is focusing on new customer acquisition and expanding average revenue per user (ARPU) from current customers [25] - The integration of Visualwebcaster is a key focus, with expectations for it to drive revenue growth when combined with existing products [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about revenue growth and the successful integration of Visualwebcaster, which is expected to enhance the company's offerings [24][28] - The company is committed to refining its products and expanding its conference software management capabilities [29][31] - Management highlighted the importance of building a strong pipeline for future growth and the need for continued investment in sales and marketing personnel [32][33] Other Important Information - The company reported an increase in operating expenses of 24% in Q1 2019, primarily due to higher general and administrative expenses [18] - The gross margin for Platform and Technology decreased to 75% in Q1 2019 from 79% in the prior year, attributed to costs associated with the Visualwebcaster platform [16] Q&A Session Summary Question: How is the conference management software performing? - Management indicated that the performance is in line with expectations, with plans to double the number of events in Q2 and a strong pipeline for the rest of the year [36][37] Question: What is the status of the insights and analytics module? - The module is expected to be released at the end of June, with a 30-day trial for current customers [38][39] Question: What is the acquisition pipeline like after FSC and Visualwebcaster? - Management stated they are being careful with future acquisitions, focusing on transactions that fit their core business [44][46] Question: What specific needs are being looked for in potential acquisitions? - The focus is on enhancing communication, news distribution, and analytics capabilities, aiming for products that can improve margins [47][48] Question: Will Platform and Technology customer data be included in the 10-Q? - Management confirmed a shift to reporting public and private customer metrics, emphasizing the importance of these distinctions [50][51] Question: Can you elaborate on the increase in bad debt expense? - Management explained that the increase is due to a few larger clients with outstanding balances, but they maintain good communication with these clients [54][55] Question: What are the most exciting prospects for 2019? - Management expressed excitement about the brand visibility and ecosystem being built around their products, which is expected to drive future growth [57][58]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents unaudited financials, management's discussion, market risk, and internal controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2019 financials show assets at $30.1M, revenues at $4.2M, and net income at $205K [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2019, total assets increased to $30.1 million, driven by acquisitions, while liabilities and equity also saw increases Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $14,961 | $17,222 | | Goodwill | $6,051 | $5,032 | | Intangible assets, net | $4,367 | $2,802 | | **Total Assets** | **$30,115** | **$28,952** | | **Liabilities & Equity** | | | | Total current liabilities | $3,338 | $2,600 | | Total liabilities | $4,113 | $3,289 | | Total stockholders' equity | $26,002 | $25,663 | | **Total Liabilities and Stockholders' Equity** | **$30,115** | **$28,952** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) For Q1 2019, revenues grew 18% to $4.18 million, but net income decreased 36% to $205,000 due to higher operating costs Consolidated Income Statement Summary (in thousands) | Metric | Q1 2019 | Q1 2018 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $4,179 | $3,530 | +18.4% | | Gross Profit | $2,877 | $2,509 | +14.7% | | Operating Income | $147 | $315 | -53.3% | | Net Income | $205 | $320 | -35.9% | | Diluted EPS | $0.05 | $0.10 | -50.0% | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2019 saw stable operating cash flow but a significant increase in cash used for investing activities, primarily due to an acquisition Consolidated Cash Flow Summary (in thousands) | Cash Flow Category | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $536 | $537 | | Net cash used in investing activities | ($2,794) | ($25) | | Net cash provided by financing activities | $0 | $8 | | **Net change in cash** | **($2,258)** | **$520** | - The primary use of cash in investing activities was the **$2.788 million** purchase of the VisualWebcaster Platform[23](index=23&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the January 2019 VisualWebcaster Platform acquisition, and the adoption of the new lease accounting standard - The company separates its revenue into two streams: Platform and Technology (subscriptions, press releases, webcasts) and Services (compliance, printing, distribution)[30](index=30&type=chunk) - On January 3, 2019, the company acquired the VisualWebcaster Platform (VWP) for a cash payment of **$2,788,000**. The acquisition resulted in preliminary goodwill of **$1,019,000** and intangible assets of **$1,756,000**[51](index=51&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) - The company adopted the new lease accounting standard, Topic 842, on January 1, 2019, resulting in the recognition of Right-of-Use (ROU) assets and lease liabilities on the balance sheet[49](index=49&type=chunk)[50](index=50&type=chunk) Revenue by Stream (in thousands) | Revenue Stream | Q1 2019 | % of Total | Q1 2018 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Platform and Technology | $2,665 | 63.8% | $2,032 | 57.6% | | Services | $1,514 | 36.2% | $1,498 | 42.4% | | **Total** | **$4,179** | **100.0%** | **$3,530** | **100.0%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strategic shift to cloud-based subscription model, driving 18% revenue growth, and net income decline [Overview and Business Strategy](index=18&type=section&id=Overview%20and%20Business%20Strategy) Issuer Direct is transitioning to a subscription-based, cloud-first platform model, with Platform and Technology revenue growing to 64% of total revenue - The company's core strategy is a 'platform first' engagement, transitioning customers from legacy services to its cloud-based subscription platform, Platform id[83](index=83&type=chunk) - Platform and Technology revenue has grown to represent **64% of total revenue** in Q1 2019, up from **56%** for the full year 2017, highlighting the success of the strategic shift[83](index=83&type=chunk) - The acquisition of the VisualWebcaster Platform (VWP) in January 2019 significantly strengthened the company's webcasting product and added over **120 customers**[97](index=97&type=chunk) - The company expects revenues from its legacy 'Services' business (e.g., document conversion, printing) to decrease as it focuses on the higher-margin platform business[104](index=104&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 2019 total revenue grew 18% to $4.2 million, driven by acquisitions, but net income decreased 36% due to rising operating expenses Revenue and Gross Margin by Stream (in thousands) | Revenue Stream | Q1 2019 Revenue | Q1 2018 Revenue | Q1 2019 Gross Margin % | Q1 2018 Gross Margin % | | :--- | :--- | :--- | :--- | :--- | | Platform and Technology | $2,665 | $2,032 | 75% | 79% | | Services | $1,514 | $1,498 | 58% | 60% | | **Total** | **$4,179** | **$3,530** | **69%** | **71%** | - Total revenue increased by **$649,000** (**18%**), with revenues from the VWP and FSCwire acquisitions accounting for **$627,000** of this growth[108](index=108&type=chunk) - General and administrative expenses increased by **36%** (**$357,000**), primarily due to a **$181,000** increase in the bad debt provision and **$112,000** in professional fees associated with recent acquisitions[117](index=117&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with $15.0 million in cash and an undrawn $3.0 million line of credit - As of March 31, 2019, the company had **$14,961,000** in cash and cash equivalents[128](index=128&type=chunk) - The company's working capital (current assets minus current liabilities) was **$14,220,000** at the end of the quarter[128](index=128&type=chunk) - The company has a **$3,000,000** line of credit, which was renewed in October 2018 with a reduced interest rate. No amounts were owed on the line of credit as of March 31, 2019[129](index=129&type=chunk) [2019 Outlook](index=26&type=section&id=2019%20Outlook) For 2019, management will focus on strategic initiatives for long-term growth, including transitioning to a subscription model - The company will continue its transition to a subscription model, which is considered key for long-term sustainable growth[132](index=132&type=chunk) - Key strategic initiatives for 2019 include: - Expanding the Platform and Technology sales team - Growing through strategic acquisitions - Expanding the customer base - Investing in technology advancements and upgrades[133](index=133&type=chunk)[134](index=134&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable to the company - The company states that this item is not applicable[136](index=136&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[136](index=136&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[137](index=137&type=chunk) [PART II – OTHER INFORMATION](index=28&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section details legal proceedings, risk factors, equity sales, and required exhibits [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any material litigation, nor is it aware of any threatened or pending litigation - As of the filing date, the company is not involved in any material legal proceedings[139](index=139&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors as disclosed in its most recent Annual Report on Form 10-K - No material changes to risk factors have occurred since the last 10-K filing[140](index=140&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[141](index=141&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including CEO and CFO certifications and XBRL data files - Exhibits filed include Sarbanes-Oxley Act certifications (302 and 906) and XBRL interactive data files[146](index=146&type=chunk)

Issuer Direct Corp (NYSE:ISDR) Q4 2018 Earnings Conference Call February 28, 2019 4:30 PM ET Company Participants Brian Balbirnie - Founder and Chief Executive Officer Steve Knerr - Chief Financial Officer Conference Call Participants Mike Grondahl - Northland Securities Todd Felte - RHK Capital Mike Schellinger - MicroCapClub Operator Ladies and gentlemen, thank you for standing by and welcome to the Issuer Direct Corporation Fourth Quarter and Year Ended December 31, 2018 Earnings Conference Call. Today’s ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ——————— FORM 10-K ——————— ☑ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Year Ended: December 31, 2018 ——————— ISSUER DIRECT CORPORATION (Name of small business issuer in its charter) ——————— (State or Other Jurisdiction of Incorporation) Delaware 1-10185 26-1331503 (Commission File Number) (I.R.S. Employer Identification No.) 500 Perimeter Park Drive, Suite D, Morrisville, NC ...