FAIRFAX, Va., Aug. 16, 2021 (GLOBE NEWSWIRE) -- Information Analysis Incorporated (OTCQB: IAIC) (“IAI”) today reported its results for the second quarter and six months ended June 30, 2021, which were highlighted by a significant expansion in professional fee revenues, bottom-line profitability, and the successful closing of the acquisition of Tellenger.
Second Quarter 2021 Financial Highlights (all comparisons to prior year period unless otherwise noted)
- Professional fees increased to $3.3 million up from $1 million.
- Gross margin improved significantly, increasing to 20.2% compared with 8.1%; higher-margin professional fees accounted for 70.3% of revenues.
- Net income of $43,157, compared with a net loss of $(34,620).
- Adjusted EBITDA1 of $342,428, compared with $(32,356).
- Secured financing consisting of a $1 million term loan and a $1 million revolving credit line.
Six Months 2021 Financial Highlights (all comparisons to prior year period unless otherwise noted)
- Total revenues increased to $8.2 million, compared with $6.9 million.
- Professional fees increased to $5.8 million up from $1.8 million
- Gross margin improved significantly, increasing to 24.2%, compared with 9.7%; higher-margin professional fees accounted for 70.8% of revenues.
- Net income of $313,972, compared with a net loss of $(160,789).
- Adjusted EBITDA of $750,422, compared with $(158,265).
IAI CEO Stan Reese commented, “Our second quarter was highlighted by very strong growth in professional fees. This is our highest margin revenue stream and the favorable mix shift in the quarter resulted in gross margin of 20.2%, compared with 8.1% a year ago. That allowed us to report a profitable quarter despite an increase in SG&A expense which was due in part to the closing of our acquisition of Tellenger in April. The integration of our two businesses has been seamless to date, and IAI is already seeing a meaningful expansion in our sales opportunities. Tellenger brought us added capabilities along with several key high-level clearances, allowing IAI to bid on previously unavailable government contracts.”
Mr. Reese continued, “We have aggressive growth plans for IAI and we have been investing in the resources needed to drive and support those plans through both operational and managerial improvements. The new members of our Board are providing new avenues for potential growth as a result of their industry connections and relationships. We have also added proven sales leadership to leverage and capitalize on those relationships, while solidifying our corporate infrastructure so we can properly manage that growth. While those costs added to our SG&A expense in the near term, we are very confident that those investments will yield a substantial return in the form of substantial growth, both organic and through additional acquisitions.”
Total Revenues
Three and six-month revenues benefited from IAI’s SBA 7a modernization contract, which began in June 2020. The contract is expected to run through May 2027, providing a relatively stable level of professional fees revenues throughout its duration.
Total revenue was $4.7 million for the second quarter ended June 30, 2021, compared with $4.8 million in the prior year quarter. Professional fees increased $2.4 million, or 258.5%, while software sales revenue decreased almost $2.5 million, or 63.9%. The decrease in software revenue in 2021 versus the same period in 2020 is due to the non-recurring nature of software sales transactions, as well as the timing of recurring orders.
Gross Profit / Margin
Gross profit increased $566,912, or 145.7%, to $955,928, in the second quarter of 2021 over the second quarter of 2020, due to the increase in the revenue generated from professional fees. Overall gross profit margin was 20.2% in 2021, up from 8.1% in 2020, due to the increase in professional fees revenue relative to software sales revenue. Gross profit percentage for professional fees in the second quarter of 2021 was 28.0%, while software sales contributed a gross profit percentage of 1.8%.
Income (Loss) from Operations
Income from operations was $53,979 in the second quarter of 2021 compared to a loss from operations of $(34,450) in 2020.
About Information Analysis Incorporated
Information Analysis Incorporated (www.infoa.com), headquartered in Fairfax, Virginia, is an information technology product and services company. The Company is a software conversion specialist, modernizing legacy systems and securely extending their reach to the cloud and more modern platforms.
Additional information for investors
This release may contain forward-looking statements regarding the Company's business, customer prospects, or other factors that may affect future earnings or financial results. Such statements involve risks and uncertainties which could cause actual results to vary materially from those expressed in the forward-looking statements. Investors should read and understand the risk factors detailed in the Company's 10-K for the fiscal year ended December 31, 2020 and in other filings with the Securities and Exchange Commission.
For additional information contact:
Jeremy Hellman, CFA
Vice President
The Equity Group
(212) 836-9626
Matt Sands, CFO
msands@infoa.com
(703) 293-7925
Information Analysis Incorporated
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)
| For the three months ended June 30, | ||||||||||
| 2021 | 2020 | |||||||||
| Revenues | ||||||||||
| Professional fees | $ | 3,328,274 | $ | 928,421 | ||||||
| Software sales | 1,403,687 | 3,890,974 | ||||||||
| Total revenues | 4,731,961 | 4,819,395 | ||||||||
| Cost of revenues | ||||||||||
| Cost of professional fees | 2,397,895 | 601,672 | ||||||||
| Cost of software sales | 1,378,138 | 3,828,707 | ||||||||
| Total cost of revenues | 3,776,033 | 4,430,379 | ||||||||
| Gross profit | 955,928 | 389,016 | ||||||||
| Selling, general and administrative expenses | 800,137 | 366,170 | ||||||||
| Acquisition costs | 82,756 | - | ||||||||
| Commissions expense | 19,056 | 57,296 | ||||||||
| Income (loss) from operations | 53,979 | (34,450 | ) | |||||||
| Other expense, net | (10,822 | ) | (170 | ) | ||||||
| Net income (loss) | $ | 43,157 | $ | (34,620 | ) | |||||
| Comprehensive income (loss) | $ | 43,157 | $ | (34,620 | ) | |||||
| Net income (loss) per common share - basic | $ | - | $ | - | ||||||
| Net income (loss) per common share - diluted | $ | - | $ | - | ||||||
| Weighted average common shares outstanding | ||||||||||
| Basic | 11,980,397 | 11,211,760 | ||||||||
| Diluted | 12,665,267 | 11,211,760 | ||||||||
Information Analysis Incorporated
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)
| For the six months ended June 30, | ||||||||||
| 2021 | 2020 | |||||||||
| Revenues | ||||||||||
| Professional fees | $ | 5,767,533 | $ | 1,772,824 | ||||||
| Software sales | 2,384,008 | 5,108,327 | ||||||||
| Total revenues | 8,151,541 | 6,881,151 | ||||||||
| Cost of revenues | ||||||||||
| Cost of professional fees | 3,865,594 | 1,181,303 | ||||||||
| Cost of software sales | 2,310,369 | 5,032,005 | ||||||||
| Total cost of revenues | 6,175,963 | 6,213,308 | ||||||||
| Gross profit | 1,975,578 | 667,843 | ||||||||
| Selling, general and administrative expenses | 1,345,800 | 706,983 | ||||||||
| Commissions expense | 153,643 | 122,917 | ||||||||
| Acquisition costs | 153,286 | - | ||||||||
| Income (loss) from operations | 322,849 | (162,057 | ) | |||||||
| Other (expense) income, net | (8,877 | ) | 1,098 | |||||||
| Net income (loss) | $ | 313,972 | $ | (160,959 | ) | |||||
| Comprehensive income (loss) | $ | 313,972 | $ | (160,959 | ) | |||||
| Net income (loss) per common share - basic | $ | 0.03 | $ | (0.01 | ) | |||||
| Net income (loss) per common share - diluted | $ | 0.03 | $ | (0.01 | ) | |||||
| Weighted average common shares outstanding | ||||||||||
| Basic | 11,633,464 | 11,211,760 | ||||||||
| Diluted | 12,305,182 | 11,211,760 | ||||||||
Information Analysis Incorporated
Condensed Consolidated Balance Sheets
| June 30, 2021 | December 31, 2020 | ||||||||
| (Unaudited) | |||||||||
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 1,532,764 | $ | 1,858,160 | |||||
| Accounts receivable | 2,097,521 | 1,442,231 | |||||||
| Contract assets | 477,268 | - | |||||||
| Prepaid expenses and other current assets | 138,686 | 142,770 | |||||||
| Total current assets | 4,246,239 | 3,443,161 | |||||||
| Intangible assets, net of amortization of $43,851 and $0 | 2,231,149 | - | |||||||
| Contract assets - non-current | - | 210,688 | |||||||
| Right-of-use operating lease asset | 297,620 | 51,405 | |||||||
| Property and equipment, net of accumulated depreciation | |||||||||
| and amortization of $324,442 and $312,320 | 72,498 | 62,166 | |||||||
| Other assets | 5,706 | 6,281 | |||||||
| Total assets | $ | 6,853,212 | $ | 3,773,701 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Current liabilities | |||||||||
| Accounts payable | $ | 747,942 | $ | 103,646 | |||||
| Revolving line of credit | 402,306 | - | |||||||
| Notes payable - current | 855,134 | 93,009 | |||||||
| Accrued payroll and related liabilities | 571,089 | 375,168 | |||||||
| Commissions payable | 256,075 | 181,626 | |||||||
| Other accrued liabilities | 116,308 | 57,399 | |||||||
| Contract liabilities | 105,884 | 946,884 | |||||||
| Operating lease liability - current | 18,008 | 45,595 | |||||||
| Total current liabilities | 3,072,746 | 1,803,327 | |||||||
| Note payable - non-current | 661,533 | 356,991 | |||||||
| Operating lease liability - non-current | 273,906 | - | |||||||
| Total liabilities | 4,008,185 | 2,160,318 | |||||||
| Stockholders' equity | |||||||||
| Common stock, $0.01 par value, 30,000,000 shares authorized, | |||||||||
| 13,688,306 and 12,904,376 shares issued, 12,045,690 and | |||||||||
| 11,261,760 shares outstanding as of June 30, 2021, | |||||||||
| and December 31, 2020, respectively | 136,882 | 129,043 | |||||||
| Additional paid-in capital | 15,629,898 | 14,720,065 | |||||||
| Accumulated deficit | (11,991,542 | ) | (12,305,514 | ) | |||||
| Treasury stock, 1,642,616 shares at cost | (930,211 | ) | (930,211 | ) | |||||
| Total stockholders' equity | 2,845,027 | 1,613,383 | |||||||
| Total liabilities and stockholders' equity | $ | 6,853,212 | $ | 3,773,701 | |||||
Non-GAAP Financial Measures
In assessing the performance of our business, management utilizes a variety of financial and performance measures. The key measure is Adjusted EBITDA, a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) plus depreciation and amortization expense, net interest expense (income), and taxes, as further adjusted to eliminate the impact of, when applicable, expenses that are unusual or non-recurring that we believe do not reflect our core operating results. and non-cash stock-based compensation. We believe that Adjusted EBITDA is meaningful to our investors to enhance their understanding of our financial performance for the current period and our ability to generate cash flows from operations that are available for taxes, capital expenditures and debt service. We understand that Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare our performance with the performance of other companies that report Adjusted EBITDA. Our calculation of Adjusted EBITDA, however, may not be comparable to similarly titled measures reported by other companies. When assessing our operating performance, investors and others should not consider this data in isolation or as a substitute for net income (loss) calculated in accordance with GAAP. Further, the results presented by Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes. A reconciliation of net income (loss) to Adjusted EBITDA, the most comparable GAAP measure, is provided below.
We refer to our estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, less the revenue we have recognized under such contracts, as “backlog.” Backlog includes unexercised contract options.
| Reconciliation of Net income (loss) to Adjusted EBITDA | |||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
| (in thousands) | 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net income (loss) | $ | 43,157 | $ | (34,620 | ) | $ | 313,972 | $ | (160,959 | ) | |||||||
| Adjustments: | |||||||||||||||||
| Depreciation | 6,739 | 1,738 | 12,122 | 2,986 | |||||||||||||
| Amortization | 43,851 | — | 43,851 | — | |||||||||||||
| Interest expense (income), net | 10,822 | 170 | 8,877 | (1,098 | ) | ||||||||||||
| Acquisition Costs | 82,756 | — | 153,286 | — | |||||||||||||
| Non-cash stock-based compensation | 111,862 | 356 | 139,573 | 806 | |||||||||||||
| Post-employment agreement | 35,500 | — | 71,000 | — | |||||||||||||
| Moving expense | 7,741 | — | 7,741 | — | |||||||||||||
| Taxes | — | — | — | — | |||||||||||||
| Adjusted EBITDA | $ | 342,428 | $ | (32,356 | ) | $ | 750,422 | $ | (158,265 | ) | |||||||
1 Please see non-GAAP reconciliation on page 8
