WaveDancer Releases Fiscal Year 2021 Results
13 April 2022 - 06:41AM
WaveDancer (NASDAQ: WAVD), today reported its results for the
fiscal year ended December 31, 2021, with results highlighted by
expansion in gross margins driven by a sharp shift away from lower
margin 3rd party software sales and toward higher margin
professional services. During 2021, WaveDancer completed two key
acquisitions and successfully rebranded the company as a leading
provider of secure, blockchain-based supply chain management
solutions.
WaveDancer CEO Jamie Benoit commented, “2021 was
a transformational year dominated by change as we assembled the
pieces needed to become a leader in the zero trust, blockchain, and
security supply chain market. Our up-listing to NASDAQ, rebranding
from IAI to WaveDancer, acquisition of Gray Matters Inc.,
reorganization of our legacy services business into our Tellenger
subsidiary, and the new members we added to our team, both at the
board and senior management levels, comprised an eventful and
positive end to the year. We are excited to continue our
transformation in 2022 and beyond.”
Mr. Benoit continued, “This fiscal year was one
of impressive growth in professional services revenues and gross
profit. Our legacy business had sales of $12.6 million and its
professional services revenues were 64.7% of total revenue for the
fiscal year. The shift to higher margin professional services
revenue helped drive substantial growth in gross margin, which
expanded to 24.1% from 15.9% a year ago. We also paid down $1.5
million of debt related to the acquisition of Tellenger and began
2022 debt-free. SG&A increased in 2021 reflecting significant
investments in the acquisitions that comprise the foundation of our
transformation, new members of our management team, a new Maryland
facility, up-listing to NASDAQ and an increase in professional fees
to improve the quality of our communications, disclosures, and
governance. I firmly believe that we are on the cusp of a
sea-change in our business and our investments in 2021 reflect our
commitment to a total transformation of WaveDancer.”
Twelve Months 2021 Financial Highlights
(all comparisons to prior year period unless otherwise
noted)
- Total revenues increased 8.1% to
$15.0 million, compared with $13.9 million.
- Professional fees increased 91.6%
to $10.6 million up from $5.5 million.
- Gross profit expanded
significantly, increasing to $3.6 million, compared with $2.2
million; gross margin expanded to 24.1%; higher-margin professional
fees accounted for 70.5% of revenues.
- Net loss of $(1.1) million,
compared with net income of $0.4 million as our gross margin growth
was more than offset by our investments in SG&A.
- Adjusted EBITDA1 of $0.4 million,
compared with $0.5 million, notwithstanding significant SG&A
investments
Other Key Developments Subsequent to
Year End
- Company paid down all its bank
debt, had its PPP loan forgiven, and finished the year with $4.9
million of cash on hand, having raised $10 million in a private
offering of common stock to fund its acquisition of Gray
Matters.
- SG&A increases were driven by
non-cash share-based compensation, acquisition activities and
investments in the infrastructure needed to execute the Company’s
transformational shift in business strategy to a
Software-as-a-Service (“SaaS”) provider of secure, blockchain-based
supply chain management solutions.
- Approved for inclusion on Amazon
Web Services (AWS) GovCloud, which significantly expands the
availability of WaveDancer’s secure supply chain management
solutions.
- Announced a partnership with Cyber
Intell Solutions which is expected to enhance supply chain and
communications security for customers.
- Announced a definitive agreement to
acquire Knowmadics, Inc. for $90 Million in cash and stock, which
will continue the company’s transformation into a leading provider
of cybersecurity and blockchain enabled software solutions.
About WaveDancer
WaveDancer (www.wavedancer.com), headquartered
in Fairfax, Virginia, is a provider of zero trust software
solutions, specializing in secure blockchain supply chain
management (SCM), asset tracking and security. Our technologies are
deployed and being used to help organizations manage very complex
supply chain challenges. Initially developed to secure a complex
international supply chain for a global U.S. Government (USG)
national security organization, the technology has matured to
address multiple operational capabilities. Customers are using the
WaveDancer platform to gain unprecedented levels of accountability,
auditability, and predictability from their data, while giving
insights to their partners and suppliers through a controlled,
distributed ledger that is immutable and can be trusted by all
parties. The sophisticated blockchain technology is now available
to the entirety of the USG through GovCloud.
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, 2021 and in other filings with the Securities
and Exchange Commission.
For additional information contact:Jeremy
Hellman, CFAVice PresidentThe Equity Group(212)
836-9626jhellman@equityny.com
____________1 Please see non-GAAP
reconciliation on page 6
WAVEDANCER, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME
|
|
Year Ended December 31, |
|
|
|
2021 |
|
|
2020 |
|
Revenues |
|
|
|
|
|
|
|
|
Professional fees |
|
$ |
10,592,278 |
|
|
$ |
5,527,139 |
|
Software sales |
|
|
4,441,226 |
|
|
|
8,375,932 |
|
Total revenues |
|
|
15,033,504 |
|
|
|
13,903,071 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
Cost of professional fees |
|
|
7,082,767 |
|
|
|
3,566,229 |
|
Cost of software sales |
|
|
4,335,121 |
|
|
|
8,127,509 |
|
Total cost of revenues |
|
|
11,417,888 |
|
|
|
11,693,738 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
3,615,616 |
|
|
|
2,209,333 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
|
5,487,984 |
|
|
|
1,797,485 |
|
Acquisition costs |
|
|
754,781 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations |
|
|
(2,627,149 |
) |
|
|
411,848 |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(37,325 |
) |
|
|
(3,125 |
) |
Other income (expense), net |
|
|
12,171 |
|
|
|
4,656 |
|
Gain on forgiveness of note payable |
|
|
450,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
(Loss) income before provision
for income taxes |
|
|
(2,202,303 |
) |
|
|
413,379 |
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
1,070,854 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(1,131,449 |
) |
|
$ |
413,379 |
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss)
income |
|
$ |
(1,131,449 |
) |
|
$ |
413,379 |
|
|
|
|
|
|
|
|
|
|
Basic (loss)/earnings per
share |
|
$ |
(0.09 |
) |
|
$ |
0.04 |
|
Diluted (loss)/earnings per
share |
|
$ |
(0.09 |
) |
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
12,574,016 |
|
|
|
11,222,826 |
|
Diluted |
|
|
12,574,016 |
|
|
|
12,049,322 |
|
|
|
|
|
|
|
|
|
|
WAVEDANCER, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,931,302 |
|
|
$ |
1,858,160 |
|
Accounts receivable |
|
|
1,664,862 |
|
|
|
1,442,231 |
|
Prepaid expenses and other current assets |
|
|
276,990 |
|
|
|
142,770 |
|
Total current assets |
|
|
6,873,154 |
|
|
|
3,443,161 |
|
|
|
|
|
|
|
|
|
|
Intangible assets, net of
accumulated amortization of $201,032 and $0 |
|
|
8,048,968 |
|
|
|
- |
|
Goodwill |
|
|
7,585,269 |
|
|
|
- |
|
Contract assets -
non-current |
|
|
- |
|
|
|
210,688 |
|
Right-of-use operating lease
asset |
|
|
672,896 |
|
|
|
51,405 |
|
Property and equipment, net of
accumulated depreciation and amortization of $347,886 and
$312,320 |
|
|
105,256 |
|
|
|
62,166 |
|
Other assets |
|
|
77,100 |
|
|
|
6,281 |
|
Total assets |
|
$ |
23,362,643 |
|
|
$ |
3,773,701 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
650,499 |
|
|
$ |
103,646 |
|
Notes payable - current |
|
|
- |
|
|
|
93,009 |
|
Accrued payroll and related liabilities |
|
|
524,055 |
|
|
|
375,168 |
|
Commissions payable |
|
|
224,250 |
|
|
|
181,626 |
|
Other accrued liabilities |
|
|
203,078 |
|
|
|
54,274 |
|
Contract liabilities |
|
|
186,835 |
|
|
|
946,884 |
|
Operating lease liability- current |
|
|
192,128 |
|
|
|
45,595 |
|
Interest payable |
|
|
1,002 |
|
|
|
3,125 |
|
Total current liabilities |
|
|
1,981,847 |
|
|
|
1,803,327 |
|
|
|
|
|
|
|
|
|
|
Note payable -
non-current |
|
|
- |
|
|
|
356,991 |
|
Operating lease liability -
non-current |
|
|
507,120 |
|
|
|
- |
|
Deferred income taxes |
|
|
1,167,504 |
|
|
|
- |
|
Other liabilities |
|
|
2,265,000 |
|
|
|
- |
|
Total liabilities |
|
|
5,921,471 |
|
|
|
2,160,318 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Common stock at $0.001 and $0.01 par value; 100,000,000 and
30,000,000 shares authorized, 18,882,313 and 12,904,376 shares
issued, 17,239,697 and 11,261,760 shares outstanding, as of
December 31, 2021 and 2020, respectively |
|
|
18,882 |
|
|
|
129,043 |
|
Additional paid-in capital |
|
|
31,789,464 |
|
|
|
14,720,065 |
|
Accumulated deficit |
|
|
(13,436,963 |
) |
|
|
(12,305,514 |
) |
Treasury stock, 1,642,616 shares at cost |
|
|
(930,211 |
) |
|
|
(930,211 |
) |
Total stockholders' equity |
|
|
17,441,172 |
|
|
|
1,613,383 |
|
Total liabilities and stockholders' equity |
|
$ |
23,362,643 |
|
|
$ |
3,773,701 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial MeasuresIn
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.
Reconciliation of
Net (loss) income to Adjusted EBITDA |
|
|
|
|
(in thousands) |
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
Net (loss)
income |
$ |
(1,131 |
) |
$ |
413 |
|
|
Adjustments: |
|
|
|
|
|
Interest expense (income), net |
|
23 |
|
|
(2 |
) |
|
Tax (benefit) expense |
|
(1,071 |
) |
|
0 |
|
|
Depreciation |
|
35 |
|
|
12 |
|
|
Amortization |
|
201 |
|
|
0 |
|
|
EBITDA |
|
(1,932 |
) |
|
424 |
|
|
Non-cash stock-based compensation |
1,869 |
|
|
28 |
|
|
Acquisition Costs |
|
755 |
|
|
0 |
|
|
PPP loan forgiveness |
|
(450 |
) |
|
0 |
|
|
Post-employment agreement |
|
142 |
|
|
0 |
|
|
Moving expense |
|
11 |
|
|
0 |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
384 |
|
$ |
452 |
|
|
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