WaveDancer Releases Third Quarter 2022 Results
22 November 2022 - 8:10AM
WaveDancer (NASDAQ: WAVD), reported its results for the third
quarter ended September 30, 2022, which was characterized by an
increased emphasis on professional services that generate higher
gross margin for the company, as well as continued investment in
the Company’s move to become a leading provider of blockchain
software as it signed its first commercial customer.
WaveDancer CEO Jamie Benoit commented, “After
developing a blockchain solution for a United States government
supply chain, in 2022 we invested significant time and financial
resources toward the development of a new and vastly improved
platform suitable for deployment at scale into commercial and
government environments. While sales efforts were slowed while we
completed development work on our new Maverix platform, we believe
that investment can pay off as we are working with our first
commercial customer and are in advanced discussions with others. We
remain optimistic that we have established a foundation for future
growth.”
Benoit added, “In our professional services
business we continued our shift toward professional services that
generate higher gross margin for the company. Part of this
transition is a decreased emphasis on sales of low-margin
third-party software, which led to a decline in our consolidated
revenue compared with the prior year period. In addition, the prior
year quarter benefited from a significant amount of higher-margin
overtime work as our engineers worked to meet key milestones
associated with a software modernization project.”
Mr. Benoit concluded, “Our recently announced
commercial agreement is an important step toward validating the
potential of our Maverix platform in the marketplace. Our
predecessor platform has been stress-tested in critical use cases
by the US Government, providing us with an excellent technical
foundation to bring a new and formidable commercial product to the
market.”
Third Quarter 2022 Key Financial Items
(all comparisons to prior year period unless otherwise
noted)
- Total revenues decreased to $2.3
million, compared with $4.3 million.
- Professional fees decreased to $2.1
million down from $2.8 million.
- Gross profit decreased to $0.48
million, compared with $0.98 million.
- Gross margin declined to 20.9% from
22.8%; higher-margin professional fees accounted for 91.7% of
revenues.
- Net loss of $(4.7) million,
including a goodwill impairment charge of $2.3 million, compared
with net loss of $(0.1) million.
- Adjusted EBITDA1 of $(1.5) million,
compared with $0.1 million
Nine Months 2022 Key Financial Items
(all comparisons to prior year period unless otherwise
noted)
- Total revenues decreased to $9.6
million, compared with $12.5 million.
- Professional fees decreased to $7.0
million down from $8.6 million
- Gross margin for our Tellenger
business unit improved to 25.8% compared with 23.7%; higher-margin
professional fees accounted for 71.3% of revenues.
- Net loss of $(8.3) million,
including a goodwill impairment charge of $2.3 million, compared
with net income of $0.2 million
- Adjusted EBITDA of $(4.6) million,
compared with $0.9 million.
About WaveDancerWaveDancer
(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
WAVEDANCER, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS)
INCOMEUnaudited
|
|
Three Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
Revenues |
|
|
|
|
|
|
|
|
Professional fees |
|
$ |
2,114,012 |
|
|
|
$ |
2,798,105 |
|
|
Software sales |
|
|
192,367 |
|
|
|
|
1,501,820 |
|
|
Total revenues |
|
|
2,306,379 |
|
|
|
|
4,299,925 |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
Cost of professional fees |
|
|
1,724,040 |
|
|
|
|
1,832,812 |
|
|
Cost of software sales |
|
|
100,717 |
|
|
|
|
1,488,238 |
|
|
Total cost of revenues, excluding depreciation and
amortization |
|
|
1,824,757 |
|
|
|
|
3,321,050 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
481,622 |
|
|
|
|
978,875 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
|
2,926,243 |
|
|
|
|
1,023,897 |
|
|
Acquisition costs |
|
|
38,617 |
|
|
|
|
39,245 |
|
|
Goodwill impairment |
|
|
2,254,624 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations |
|
|
(4,737,862 |
) |
|
|
|
(84,267 |
) |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(20,437 |
) |
|
|
|
(15,055 |
) |
|
Other income (expense), net |
|
|
3,188 |
|
|
|
|
3,795 |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before provision
for income taxes |
|
|
(4,755,111 |
) |
|
|
|
(95,527 |
) |
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
54,592 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(4,700,519 |
) |
|
|
$ |
(95,527 |
) |
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss)
income |
|
$ |
(4,700,519 |
) |
|
|
$ |
(95,527 |
) |
|
|
|
|
|
|
|
|
|
|
Basic (loss)/earnings per
share |
|
$ |
(0.26 |
) |
|
|
$ |
(0.01 |
) |
|
Diluted (loss)/earnings per
share |
|
$ |
(0.26 |
) |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
18,382,131 |
|
|
|
|
12,596,126 |
|
|
Diluted |
|
|
18,382,131 |
|
|
|
|
12,596,126 |
|
|
WAVEDANCER, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS)
INCOMEUnaudited
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
Revenues |
|
|
|
|
|
|
|
|
Professional fees |
|
|
$ |
7,025,396 |
|
|
|
$ |
8,565,639 |
|
|
Software sales |
|
|
|
2,593,877 |
|
|
|
|
3,885,828 |
|
|
Total revenues |
|
|
|
9,619,273 |
|
|
|
|
12,451,467 |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
Cost of professional fees |
|
|
|
5,401,666 |
|
|
|
|
5,698,407 |
|
|
Cost of software sales |
|
|
|
2,430,139 |
|
|
|
|
3,798,607 |
|
|
Total cost of revenues, excluding depreciation and
amortization |
|
|
|
7,831,805 |
|
|
|
|
9,497,014 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
1,787,468 |
|
|
|
|
2,954,453 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
|
|
8,880,973 |
|
|
|
|
2,523,340 |
|
|
Acquisition costs |
|
|
|
829,478 |
|
|
|
|
192,530 |
|
|
Change in fair value of
contingent consideration |
|
|
|
(930,000 |
) |
|
|
|
- |
|
|
Goodwill Impairment |
|
|
|
2,254,624 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations |
|
|
|
(9,247,607 |
) |
|
|
|
238,583 |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
(59,574 |
) |
|
|
|
(31,738 |
) |
|
Other income (expense), net |
|
|
|
3,977 |
|
|
|
|
11,600 |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before provision
for income taxes |
|
|
|
(9,303,204 |
) |
|
|
|
218,445 |
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
|
998,936 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
|
(8,304,268 |
) |
|
|
$ |
218,445 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss)
income |
|
$ |
|
(8,304,268 |
) |
|
|
$ |
218,445 |
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)/earnings per
share |
|
$ |
|
(0.47 |
) |
|
|
$ |
0.02 |
|
|
Diluted (loss)/earnings per
share |
|
$ |
|
(0.47 |
) |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
|
17,688,528 |
|
|
|
|
11,957,878 |
|
|
Diluted |
|
|
|
17,688,528 |
|
|
|
|
12,584,914 |
|
|
WAVEDANCER, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
|
UnauditedSeptember 30, 2022 |
|
|
December 31, 2021 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,521,651 |
|
|
|
$ |
4,931,302 |
|
|
Accounts receivable |
|
|
1,532,174 |
|
|
|
|
1,664,862 |
|
|
Prepaid expenses and other current assets |
|
|
302,443 |
|
|
|
|
276,990 |
|
|
Total current assets |
|
|
3,356,268 |
|
|
|
|
6,873,154 |
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net of
accumulated amortization of $1,250,711 and $201,032 |
|
|
6,999,289 |
|
|
|
|
8,048,968 |
|
|
Goodwill |
|
|
5,330,645 |
|
|
|
|
7,585,269 |
|
|
Right-of-use operating lease
asset |
|
|
536,455 |
|
|
|
|
672,896 |
|
|
Property and equipment, net of
accumulated depreciation and amortization of $381,473 and
$347,886 |
|
|
305,729 |
|
|
|
|
105,256 |
|
|
Other assets |
|
|
79,305 |
|
|
|
|
77,100 |
|
|
Total assets |
|
$ |
16,607,691 |
|
|
|
$ |
23,362,643 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
227,560 |
|
|
|
$ |
650,499 |
|
|
Accrued payroll and related liabilities |
|
|
701,652 |
|
|
|
|
524,055 |
|
|
Commissions payable |
|
|
225,096 |
|
|
|
|
224,250 |
|
|
Other accrued liabilities |
|
|
680,269 |
|
|
|
|
204,080 |
|
|
Contract liabilities |
|
|
37,686 |
|
|
|
|
186,835 |
|
|
Operating lease liability- current |
|
|
203,342 |
|
|
|
|
192,128 |
|
|
Total current liabilities |
|
|
2,075,605 |
|
|
|
|
1,981,847 |
|
|
|
|
|
|
|
|
|
|
|
Operating lease liability -
non-current |
|
|
353,486 |
|
|
|
|
507,120 |
|
|
Deferred income taxes |
|
|
154,252 |
|
|
|
|
1,167,504 |
|
|
Other liabilities |
|
|
1,394,467 |
|
|
|
|
2,265,000 |
|
|
Total liabilities |
|
|
3,977,810 |
|
|
|
|
5,921,471 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Common stock at $0.001 par
value; 100,000,000 shares authorized, 20,808,654 and 18,882,313
shares issued, 19,135,603 and 17,239,697 shares outstanding,
as of September 30,2022 and December 31, 2021,
respectively |
|
|
20,809 |
|
|
|
|
18,882 |
|
|
Additional paid-in capital |
|
|
35,315,514 |
|
|
|
|
31,789,464 |
|
|
Accumulated deficit |
|
|
(21,741,231 |
) |
|
|
|
(13,436,963 |
) |
|
Treasury stock, 1,673,051 and 1,642,616 shares at cost, as
of September 30, 2022 and December 31, 2021, respectively |
|
|
(965,211 |
) |
|
|
|
(930,211 |
) |
|
Total stockholders' equity |
|
|
12,629,881 |
|
|
|
|
17,441,172 |
|
|
Total liabilities and stockholders' equity |
|
$ |
16,607,691 |
|
|
|
$ |
23,362,643 |
|
|
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 (Unaudited) |
|
|
|
|
|
Three months ended |
Nine months ended |
(in thousands) |
September 30, |
September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
Net (loss)
income |
$ |
(4,701 |
) |
|
$ |
(96 |
) |
|
$ |
(8,304 |
) |
|
$ |
218 |
Adjustments: |
|
|
|
|
|
|
|
Interest expense (income), net |
|
17 |
|
|
|
11 |
|
|
|
56 |
|
|
|
20 |
Income taxes |
|
(55 |
) |
|
|
- |
|
|
|
(999 |
) |
|
|
- |
Depreciation |
|
7 |
|
|
|
11 |
|
|
|
34 |
|
|
|
23 |
Amortization |
|
350 |
|
|
|
44 |
|
|
|
1,050 |
|
|
|
88 |
EBITDA |
|
(4,382 |
) |
|
|
(30 |
) |
|
|
(8,163 |
) |
|
|
349 |
Goodwill impairment |
|
2,255 |
|
|
|
- |
|
|
|
2,255 |
|
|
|
- |
Non-cash stock-based compensation |
|
614 |
|
|
|
81 |
|
|
|
1,456 |
|
|
|
220 |
Acquisition Costs |
|
39 |
|
|
|
39 |
|
|
|
829 |
|
|
|
193 |
Change in FV of earnout |
|
- |
|
|
|
|
|
(930 |
) |
|
|
- |
Post-employment agreement |
|
- |
|
|
|
36 |
|
|
|
|
|
107 |
Adjusted
EBITDA |
$ |
(1,474 |
) |
|
$ |
126 |
|
|
$ |
(4,553 |
) |
|
$ |
869 |
1 Please see non-GAAP reconciliation on page 6
WaveDancer (NASDAQ:WAVD)
Historical Stock Chart
From Mar 2024 to Apr 2024
WaveDancer (NASDAQ:WAVD)
Historical Stock Chart
From Apr 2023 to Apr 2024