WaveDancer Releases Second Quarter 2022 Results
August 15 2022 - 8:30AM
WaveDancer (NASDAQ: WAVD), reported its results for the second
quarter ended June 30, 2022, which was characterized by continued
investment in its software development team and strategic efforts
focused on maintaining and growing profitability in the Company’s
professional services work. The Company recognized significant
revenues after achieving substantial project milestones on their
key United States government contract to bring a blockchain-enabled
supply chain and logistics platform into full production.
WaveDancer CEO Jamie Benoit commented, “The
various investments we have made in WaveDancer are helping
establish a strong foundation for growth. Our revenue has increased
44% from first quarter levels, while our gross profit has increased
by 147%, in part due to the significant revenue recognized by our
United States Government contracts. As we drive aggressively toward
Authority to Operate our supply chain platform with our government
customer, we are simultaneously readying our Maverix product for
the broader commercial markets.”
Mr. Benoit continued, “Our focus on higher
margin professional service opportunities, which resulted in our
second quarter gross margin expanding to 30.9%, will continue in
following quarters and establish a strong foundation upon which we
can continue with our long-term strategic transformation into a
leading technology company. I am optimistic, based on the strong
interest we are hearing from customers, that our blockchain
offering meets a large demand in the marketplace and am likewise
optimistic about acquisition opportunities that will be immediately
accretive.”
WaveDancer CFO Tim Hannon added, “The increase
in expenses this quarter, in comparison to last year, was driven in
part by one-time professional fees and other costs to conduct due
diligence related to our intended acquisition of Knowmadics. The
dramatic change in market sentiment during the first half of 2022
that made closing the transaction impossible was unfortunate, but
ultimately in the best interests of our shareholders. Our strategic
focus on profitability and investment in product development will
ultimately allow us to emerge stronger and better positioned for
the massive growth we expect in the blockchain and zero trust
sector.”
Second Quarter 2022 Key Financial Items
(all comparisons to prior year period unless otherwise
noted)
- Total revenues decreased 8.8% to
$4.3 million, compared with $4.7 million.
- Professional fees decreased 14.5%
to $2.8 million down from $3.3 million.
- Gross profit decreased slightly to
$0.93 million, compared with $0.96 million.
- Gross margin expanded to 30.9%;
higher-margin professional fees accounted for 65.9% of
revenues.
- Net loss of $(1.5) million,
compared with net income of $0.04 million.
- Adjusted EBITDA1 of ($1.4) million,
compared with $0.6 million
Six Months 2022 Key Financial Items (all
comparisons to prior year period unless otherwise
noted)
- Total revenues decreased to $7.3
million, compared with $8.2 million.
- Professional fees decreased to $4.9
million down from $5.8 million
- Gross margin improved
significantly, increasing to 25.1%, compared with 24.2%;
higher-margin professional fees accounted for 67.2% of
revenues.
- Net loss of ($3.6) million,
compared with a net income of $0.3 million
- Adjusted EBITDA of ($3.0) million,
compared with $0.05 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
1 Please see non-GAAP reconciliation on page
6
WAVEDANCER, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS)
INCOMEUnaudited
|
|
Three Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
Revenues |
|
|
|
|
|
|
|
|
Professional fees |
|
$ |
2,844,694 |
|
|
|
$ |
3,328,274 |
|
|
Software sales |
|
|
1,472,688 |
|
|
|
|
1,403,687 |
|
|
Total revenues |
|
|
4,317,382 |
|
|
|
|
4,731,961 |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
Cost of professional fees |
|
|
1,965,611 |
|
|
|
|
2,397,895 |
|
|
Cost of software sales |
|
|
1,421,990 |
|
|
|
|
1,378,138 |
|
|
Total cost of revenues |
|
|
3,387,601 |
|
|
|
|
3,776,033 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
929,781 |
|
|
|
|
955,928 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
|
3,240,388 |
|
|
|
|
819,193 |
|
|
Acquisition costs |
|
|
356,159 |
|
|
|
|
82,756 |
|
|
Change in fair value of
contingent consideration |
|
|
(942,609 |
) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations |
|
|
(1,724,157 |
) |
|
|
|
53,979 |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(19,818 |
) |
|
|
|
(15,226 |
) |
|
Other income (expense), net |
|
|
195 |
|
|
|
|
4,404 |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before provision
for income taxes |
|
|
(1,743,780 |
) |
|
|
|
43,157 |
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
218,338 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(1,525,442 |
) |
|
|
$ |
43,157 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss)
income |
|
$ |
(1,525,442 |
) |
|
|
$ |
43,157 |
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)/earnings per
share |
|
$ |
(0.09 |
) |
|
|
$ |
- |
|
|
Diluted (loss)/earnings per
share |
|
$ |
(0.09 |
) |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
17,376,697 |
|
|
|
|
11,980,397 |
|
|
Diluted |
|
|
17,376,697 |
|
|
|
|
12,665,267 |
|
|
WAVEDANCER, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS)
INCOMEUnaudited
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
Revenues |
|
|
|
|
|
|
|
|
Professional fees |
|
$ |
4,911,384 |
|
|
|
$ |
5,767,533 |
|
|
Software sales |
|
|
2,401,510 |
|
|
|
|
2,384,008 |
|
|
Total revenues |
|
|
7,312,894 |
|
|
|
|
8,151,541 |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
Cost of professional fees |
|
|
3,677,626 |
|
|
|
|
3,865,594 |
|
|
Cost of software sales |
|
|
2,329,422 |
|
|
|
|
2,310,369 |
|
|
Total cost of revenues |
|
|
6,007,048 |
|
|
|
|
6,175,963 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
1,305,846 |
|
|
|
|
1,975,578 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
|
5,954,730 |
|
|
|
|
1,499,443 |
|
|
Acquisition costs |
|
|
790,861 |
|
|
|
|
153,286 |
|
|
Change in fair value of
contingent consideration |
|
|
(930,000 |
) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations |
|
|
(4,509,745 |
) |
|
|
|
322,849 |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(39,137 |
) |
|
|
|
(16,684 |
) |
) |
Other income (expense), net |
|
|
789 |
|
|
|
|
7,807 |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before provision
for income taxes |
|
|
(4,548,093 |
) |
|
|
|
313,972 |
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
944,344 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(3,603,749 |
) |
|
|
$ |
313,972 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss)
income |
|
$ |
(3,603,749 |
) |
|
|
$ |
313,972 |
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)/earnings per
share |
|
$ |
(0.21 |
) |
|
|
$ |
0.03 |
|
|
Diluted (loss)/earnings per
share |
|
$ |
(0.21 |
) |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
17,335,979 |
|
|
|
|
11,633,464 |
|
|
Diluted |
|
|
17,335,979 |
|
|
|
|
12,305,182 |
|
|
WAVEDANCER, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
|
UnauditedJune 30, 2022 |
|
|
December 31, 2021 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
578,982 |
|
|
|
$ |
4,931,302 |
|
|
Accounts receivable |
|
|
|
3,583,136 |
|
|
|
|
1,664,862 |
|
|
Prepaid expenses and other current assets |
|
|
|
298,179 |
|
|
|
|
276,990 |
|
|
Total current assets |
|
|
|
4,460,297 |
|
|
|
|
6,873,154 |
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net of
accumulated amortization of $900,818 and $201,032 |
|
|
|
7,349,182 |
|
|
|
|
8,048,968 |
|
|
Goodwill |
|
|
|
7,585,269 |
|
|
|
|
7,585,269 |
|
|
Right-of-use operating lease
asset |
|
|
|
582,500 |
|
|
|
|
672,896 |
|
|
Property and equipment, net of
accumulated depreciation and amortization of $374,185 and
$347,886 |
|
|
|
109,990 |
|
|
|
|
105,256 |
|
|
Other assets |
|
|
|
77,100 |
|
|
|
|
77,100 |
|
|
Total assets |
|
$ |
|
20,164,338 |
|
|
|
$ |
23,362,643 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
|
1,546,945 |
|
|
|
$ |
650,499 |
|
|
Accrued payroll and related liabilities |
|
|
|
721,927 |
|
|
|
|
524,055 |
|
|
Commissions payable |
|
|
|
250,227 |
|
|
|
|
224,250 |
|
|
Other accrued liabilities |
|
|
|
562,428 |
|
|
|
|
204,080 |
|
|
Contract liabilities |
|
|
|
165,843 |
|
|
|
|
186,835 |
|
|
Operating lease liability- current |
|
|
|
199,553 |
|
|
|
|
192,128 |
|
|
Total current liabilities |
|
|
|
3,446,923 |
|
|
|
|
1,981,847 |
|
|
|
|
|
|
|
|
|
|
|
Operating lease liability -
non-current |
|
|
|
405,763 |
|
|
|
|
507,120 |
|
|
Deferred income taxes |
|
|
|
223,160 |
|
|
|
|
1,167,504 |
|
|
Other liabilities |
|
|
|
1,374,137 |
|
|
|
|
2,265,000 |
|
|
Total liabilities |
|
|
|
5,449,983 |
|
|
|
|
5,921,471 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Common stock at $0.001 and
$0.01 par value; 100,000,000 shares authorized, 19,039,313 and
18,882,313 shares issued,17,396,697 and 17,239,697 shares
outstanding, as ofJune 30,2022 and December 31, 2021,
respectively |
|
|
|
19,039 |
|
|
|
|
18,882 |
|
|
Additional paid-in capital |
|
|
|
32,666,239 |
|
|
|
|
31,789,464 |
|
|
Accumulated deficit |
|
|
|
(17,040,712 |
) |
|
|
|
(13,436,963 |
) |
|
Treasury stock, 1,642,616 shares at cost |
|
|
|
(930,211 |
) |
|
|
|
(930,211 |
) |
|
Total stockholders' equity |
|
|
|
14,714,355 |
|
|
|
|
17,441,172 |
|
|
Total liabilities and stockholders' equity |
|
$ |
|
20,164,338 |
|
|
|
$ |
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 |
Six months ended |
(in thousands) |
June 30, |
June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
Net (loss)
income |
$ |
(1,525 |
) |
|
$ |
314 |
|
$ |
(3,604 |
) |
|
$ |
43 |
Adjustments: |
|
|
|
|
|
|
|
Interest expense (income), net |
|
20 |
|
|
|
11 |
|
|
38 |
|
|
|
9 |
Income taxes |
|
(218 |
) |
|
|
- |
|
|
(944 |
) |
|
|
- |
Depreciation |
|
13 |
|
|
|
7 |
|
|
26 |
|
|
|
12 |
Amortization |
|
350 |
|
|
|
- |
|
|
700 |
|
|
|
44 |
EBITDA |
|
(1,360 |
) |
|
|
332 |
|
|
(3,784 |
) |
|
|
108 |
Non-cash stock-based compensation |
|
530 |
|
|
|
112 |
|
|
842 |
|
|
|
140 |
Acquisition Costs |
|
356 |
|
|
|
71 |
|
|
791 |
|
|
|
153 |
Change in FV of earnout |
|
(943 |
) |
|
|
- |
|
|
(930 |
) |
|
|
- |
Post-employment agreement |
|
- |
|
|
|
36 |
|
|
- |
|
|
|
71 |
Moving expense |
|
- |
|
|
|
8 |
|
|
- |
|
|
|
8 |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
(1,417 |
) |
|
$ |
559 |
|
$ |
(3,081 |
) |
|
$ |
480 |
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