ADVERTISEMENT
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 Third Quarter 2021 Results Highlighted by Continued Growth in ...

November 2, 2021 GMT

FAIRFAX, Va., Nov. 02, 2021 (GLOBE NEWSWIRE) -- Information Analysis Incorporated (OTCQB: IAIC) (“IAI”) today reported its results for the third quarter and nine months ended September 30, 2021, which were highlighted by continued expansion in professional fee revenues, significant gross profit growth, a private placement of IAI Common Stock and the appointment of Jamie Benoit as Chief Executive Officer and Tim Hannon as Interim Chief Financial Officer.

Third Quarter 2021 Financial Highlights (all comparisons to prior year period unless otherwise noted)

  • Total revenues increased 9.6% to $4.3 million, compared with $3.9 million.
  • Professional fees increased 77.0% to $2.8 million up from $1.6 million.
  • Gross profit improved 59.3%, with gross margin expanding to 22.8%, compared with 15.7%; higher-margin professional fees accounted for 65.1% of revenues.
  • Net loss of $(95,527), compared with net income of $214,703.
  • Adjusted EBITDA1 of $126 thousand, compared with $225 thousand.

ADVERTISEMENT

Nine Months 2021 Financial Highlights (all comparisons to prior year period unless otherwise noted)

  • Total revenues increased 15.2% to $12.5 million, compared with $10.8 million.
  • Professional fees increased 155% to $8.6 million up from $3.4 million
  • Gross profit expanded significantly, increasing to $3.0 million, or 23.7%, compared with $1.3 million, or 11.9%; higher-margin professional fees accounted for 68.8% of revenues.
  • Net income of $218,445, compared with net income of $53,744.
  • Adjusted EBITDA of $876 thousand, compared with $67 thousand.

IAI CEO Jamie Benoit commented, “I want to first thank everyone at IAI for the warm welcome when I joined the team just over two months ago. Since then, we have been hard at work building the foundation to support my growth vision for our company. We have a tremendous group and we are ready to seize the opportunity ahead of us.”

Mr. Benoit continued, “Our third quarter was highlighted by continued strong growth in professional fees. Driving our business mix to favor professional services is having a significant, positive effect on gross margins, with third quarter gross profit improving 59.3%, compared with last year’s third quarter. Our focus will continue to be on driving professional fee business, as the impact on margins is clear. Our bottom line was impacted by an increase in SG&A expense, some of which is non-recurring, resulting from investments to position the company for growth and the transformation we will outline in coming months.”

ADVERTISEMENT

Mr. Benoit concluded, “When I joined the company in August, we noted our mission was to ‘aggressively strive to reposition the company as a disruptive technology and commercial enablement leader in government and global private sector verticals’. The first stage of this evolution has been establishing a proper foundation, from senior management down to the various systems and vendors on which our business relies. We raised just under $3 million at the end of August as a down-payment on our plan, with that capital going directly into the SG&A investments made during the third quarter. Although that expense impacted our bottom line, I am very pleased with our top-line growth and significant gross margin expansion.”

Total Revenues
Three and nine-month revenues continued to benefit 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 $4.3 million for the third quarter ended September 30, 2021, compared with $3.9 million in the prior year quarter. Professional fees increased $1.2 million, or 77.0%, while software sales revenue decreased by $0.8 million, or 35.9%. 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 $364,548, or 59.3%, to $978,875, in the third quarter of 2021 over the third quarter of 2020, due to the increase in the revenue generated from professional fees. Overall gross profit margin was 22.8% in 2021, up from 15.7% in 2020, due to the increase in professional fees revenue relative to software sales revenue. Gross profit percentage for professional fees in the third quarter of 2021 was 34.5%, while software sales contributed a gross profit percentage of 0.9%.

Income (Loss) from Operations
(Loss) from operations was $(84,267) in the third quarter of 2021 compared to income from operations of $214,906 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, SVP & Corporate Controller
msands@infoa.com  
(703) 293-7925

Information Analysis Incorporated
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)

    Three months ended September 30,
     2021   2020 
Revenues    
 Professional fees $2,798,105  $1,580,684 
 Software sales  1,501,820   2,342,062 
  Total revenues  4,299,925   3,922,746 
       
Cost of revenues    
 Cost of professional fees  1,832,812   1,051,102 
 Cost of software sales  1,488,238   2,257,317 
  Total cost of revenues  3,321,050   3,308,419 
       
Gross profit  978,875   614,327 
       
Selling, general and administrative expenses  1,000,880   342,778 
Commissions expense  23,017   56,643 
Acquisition costs  39,245   - 
       
(Loss) income from operations  (84,267)  214,906 
       
Other expense, net  (11,260)  (203)
       
(Loss) income before provision for income taxes (95,527)  214,703 
       
Provision for income taxes  -   - 
       
Net (loss) income $(95,527) $214,703 
       
Comprehensive (loss) income $(95,527) $214,703 
       
       
Net (loss) income per common share - basic $(0.01) $0.02 
       
Net (loss) income per common share - diluted $(0.01) $0.02 
       
Weighted average common shares outstanding    
 Basic  12,596,126   11,211,760 
 Diluted  12,596,126   11,837,427 

Information Analysis Incorporated
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)

    Nine months ended September 30,
     2021   2020
Revenues    
 Professional fees $8,565,639  $3,353,508
 Software sales  3,885,828   7,450,389
  Total revenues  12,451,467   10,803,897
       
Cost of revenues    
 Cost of professional fees  5,698,407   2,232,405
 Cost of software sales  3,798,607   7,289,321
  Total cost of revenues  9,497,014   9,521,726
       
Gross profit  2,954,453   1,282,171
       
Selling, general and administrative expenses  2,346,680   1,049,761
Commissions expense  176,660   179,560
Acquisition costs  192,530   -
       
Income from operations  238,583   52,850
       
Other (expense) income, net                     (20,138)                              894
       
Income before provision for income taxes  218,445   53,744
       
Provision for income taxes  -   -
       
Net income $218,445  $53,744
       
Comprehensive income $218,445  $53,744
       
       
       
Net income per common share - basic $0.02  $-
       
Net income per common share - diluted $0.02  $-
       
Weighted average common shares outstanding    
 Basic  11,957,878   11,211,760
 Diluted  12,584,914   11,810,392

Information Analysis Incorporated
Condensed Consolidated Balance Sheets

   September 30, 2021 December 31, 2020
   (Unaudited)  
  ASSETS   
Current assets   
 Cash and cash equivalents$3,682,613  $1,858,160 
 Accounts receivable 2,874,656   1,442,231 
 Contract assets -   - 
 Prepaid expenses 283,567   142,770 
 Other current assets 5,556   - 
  Total current assets 6,846,392   3,443,161 
      
Intangible assets, net of amortization of $87,912 and $0 1,402,088   - 
Goodwill 785,000   - 
Contract assets - non-current -   210,688 
Right-of-use operating lease asset 285,667   51,405 
Property and equipment, net of accumulated depreciation   
 and amortization of $324,442 and $312,320 94,965   62,166 
Other assets 5,707   6,281 
  Total assets$9,419,819  $3,773,701 
      
  LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities   
 Accounts payable$926,643  $103,646 
 Revolving line of credit 402,306   - 
 Notes payable - current 797,295   93,009 
 Accrued payroll and related liabilities 555,483   375,168 
 Commissions payable 236,438   181,626 
 Other accrued liabilities 82,158   54,274 
 Contract liabilities 78,045   946,884 
 Operating lease liability - current 35,805   45,595 
 Interest payable 2,666   3,125 
  Total current liabilities 3,116,840   1,803,327 
      
Note payable - non-current 400,856   356,991 
Operating lease liability - non-current 260,141   - 
  Total liabilities 3,777,836   2,160,318 
      
Stockholders' equity   
 Common stock, $0.01 par value, 30,000,000 shares authorized,  
 15,153,306 and 12,904,376 shares issued, 13,510,690 and  
 11,261,760 shares outstanding as of September 30, 2021,   
 and December 31, 2020, respectively 151,532   129,043 
 Additional paid-in capital 18,507,731   14,720,065 
 Accumulated deficit (12,087,069)  (12,305,514)
 Treasury stock, 1,642,616 shares at cost (930,211)  (930,211)
  Total stockholders' equity 5,641,983   1,613,383 
      
  Total liabilities and stockholders' equity$9,419,819  $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
  Nine months ended
  September 30,
  September 30,
(in thousands) 2021   2020  2021  2020 
Net income (loss)$(96) $215 $218 $54 
        
Adjustments:       
Depreciation 11   4  23  7 
Amortization 44   -  88  - 
Interest expense (income), net 10   0  19  (1)
Acquisition Costs 39   -  193  - 
Non-cash stock-based compensation 81   6  220  7 
Post-employment agreement 36   -  107  - 
Moving expense 1   -  8  - 
Taxes -   -  -  - 
Adjusted EBITDA$126  $225 $876 $67 

1 Please see non-GAAP reconciliation on page 7