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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Information Analysis Releases Second Quarter 2021 Results Highlighted by Increase in Higher ...

August 16, 2021 GMT

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.

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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.”

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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:       
    Depreciation6,739  1,738   12,122  2,986  
    Amortization43,851     43,851    
    Interest expense (income), net10,822  170   8,877  (1,098) 
    Acquisition Costs82,756     153,286    
    Non-cash stock-based compensation111,862  356   139,573  806  
    Post-employment agreement35,500     71,000    
    Moving expense7,741     7,741    
    Taxes         
Adjusted EBITDA$342,428  $(32,356)  $750,422  $(158,265) 

1 Please see non-GAAP reconciliation on page 8