WaveDancer Releases Fiscal Year 2021 Results
04/12/2022 - 04:41 PM
Strategic Shift to Higher Margin Professional Services Under the Tellenger Banner Continues
FAIRFAX, Va., April 12, 2022 (GLOBE NEWSWIRE) -- 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.
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____________ 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, 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 SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, 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 Measures
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
