WaveDancer, Inc. (WAVD) research, news, and more from GeoInvesting

Company description

Wed, 09 May 2018 16:02:58 GMT

Information Analysis Incorporated is engaged in the business of developing and maintaining information technology (IT) systems, modernizing client information systems, and performing professional services to government and commercial organizations. The Company's segment is providing products and services to modernize client information systems. The Company develops and markets computer applications software systems, programming services, and related software products and automation systems. The Company primarily applies its technology, services and experience to develop Web-based and mobile device solutions (including electronic forms conversions) for various agencies of the federal government, data analytics, cyber security applications, and legacy software migration and modernization. The Company provides services to customers throughout the United States, with a concentration in the Washington, District of Columbia metropolitan area.

Research

Thu, 01 Feb 2024 15:41:12 GMT

Comprehensive Report - “WAVD Strikes A Nerve With Us”

***Note: We have no position in WAVD, but this does not preclude us from taking any type of position at any time.

Through a reverse merger transaction with a start-up “A.I.” data analytics medical device company (Firefly Neuroscience), Wavedancer, Inc. (NASDAQ:WAVD) COBOL code modernization business is set to be sold to the CEO for $1.5 million, or at a P/S multiple below 0.2x, a valuation we feel is ridiculous.

We want to stress that we understand the last three years have been tough on management and members of the Board, and that we are not necessarily opposed to the company consummating a reverse merger.

However, it’s our opinion that the Board should have chosen a more established company than a start-up instead of one with less than $1 million in sales that is going to raise significant capital to attempt to commercialize its product. And we are not talking about a company that management was exploring in the “motorcycling industry,” as discussed on page 129 of the reverse merger proxy. Seriously!?

However, at the very least, the Firefly reverse merger transaction could have been structured in a manner more favorable to shareholders.

On a side note, Benoit’s $1.5 million offer is less than a $2.5 million tuck-in acquisition of an IT firm the company made before Benoit joined the company.

Please see our full summary and in-depth report detailing our gripes and alternatives we feel are available to the Board, here.

Research

Thu, 16 Nov 2023 15:55:43 GMT

WAVD - Removing from all model portfolios

Wavedancer, Inc.’s (NASDAQ:WAVD) ($2.75), a company that provides modernization, software development, and cybersecurity services to help organizations meet their business goals through technology, announced a business merger with Firefly Neuroscience in an all stock transaction. The combined Company will focus on continuing to develop and commercialize Firefly’s Artificial Intelligence driven Brain Network Analytics (BNA™) platform, which was previously cleared by the U.S. Food and Drug Administration.

There are no financial details in the release. Structurally, WAVD shareholders will only own roughly 8% of the newly formed company.

According to what we could find on Firefly, it appears they are an early stage company, but ready to commercialize their platform and have raised around $30 million.

We are extremely disappointed that this is the direction management has taken, when it appeared that the legacy business was finally starting to come into focus again, especially on the heels of two nice contracts.

We are removing the stock from all Model Portfolios, although we do see the potential that this development could be hyped, resulting in the stock getting pumped.

Research

Wed, 18 Oct 2023 12:40:29 GMT

Wavedancer, Inc.’s (NASDAQ:WAVD) ($0.28; $5.9M market cap) today announced it will be affecting a 1 for 10 reverse stock split in efforts to regain NASDAQ compliance.

The company will begin trading on a split adjusted basis on Wednesday, October 18, 2023.

WAVD’s wholly owned subsidiary,Tellenger, has been servicing federal and commercial customers since 1979. It provides modernization, software development, and cybersecurity services to help organizations meet their business goals through technology.

Research

Wed, 02 Aug 2023 19:37:32 GMT

Wavedancer, Inc.’s (NASDAQ:WAVD) ($0.27; $6.9M market cap) wholly owned subsidiary,Tellenger, has been servicing federal and commercial customers since 1979. It provides modernization, software development, and cybersecurity services to help organizations meet their business goals through technology.

Tellenger announced it has won a 7-year U.S Government Contract to continue supporting a major financial program for a large U.S. Government customer. The company expects total revenues between $12 and $15 million over the course of the contract’s period of performance.

At roughly $2 million a year, this adds almost a quarter's worth of revenue to each year. This is an important development because the 7-year $25 million contract we got excited about in 2019 is in its 4th year. Furthermore, it’s important for the Company to get back to its core business which is why we liked the stock in the first place.

Research

Tue, 18 Apr 2023 17:31:00 GMT

Wavedancer, Inc. (NASDAQ:WAVD) ($0.36; $6.9M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security, filed its 10-K for fiscal 2022. As anticipated, the results continue to show the failed attempts of the company to enter the blockchain arena. For more on the company’s struggles to execute on its growth plan, we encourage you to listen to our PodClip update from last week.

Full year sales of $12.0 million vs $15.0 million in the prior year
Non-GAAP net loss of $0.47 vs a net loss of $0.17
Q4 sales of $2.4 million vs $2.6 million in the prior year
Q4 non-GAAP net loss of 0.07 vs a loss of $0.11

There is one takeaway we would like to point out from the 10-K:

“However, we estimate that by the end of 2023 the Company will need to raise additional capital to meet its ongoing operating cash flow requirements as well as to grow its business either organically or through acquisition. The Company is evaluating strategic alternatives which include the potential merger or sale of the Company.”

It seems that new CEO Gerald Benoit’s failed growth plan may have him looking for an exit.

Research

Wed, 22 Mar 2023 19:18:11 GMT

Wavedancer, Inc. (NASDAQ:WAVD) ($0.63; $12.1M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security, announced it has sold its Gray Matters Inc to Gray Matters Data Corporation, whose lead investor is venture capital firm StealthPoint.

“WaveDancer has retained an indirect 20% interest in GMI through stock in GMDC received at closing. In addition, WaveDancer received $1 million of cash at closing and will receive annual contingent payments over the next seven years, up to a total of $4 million. Importantly, the transaction will eliminate over $2 million of annual WaveDancer operating expenses related to GMI. The full terms of the agreement will be included in a Form 8-K that will be available on the Company’s website.”

Ultimately, given the stability and a large long-term government contract in place (5 years left), the decision to focus on its government IT modernization business is probably the right one for the company. However, we could see selling pressure from investors who bought the stock on blockchain and AI hype. We are somewhat disappointed that the current CEO still holds his seat.

Having said that, Jamie did address the possibility of a business combination or sale of the company, given that the company's balance sheet has been relieved of some financial burdens.

“Now that we’ve eliminated the risk and expense of commercializing new technology, we can evaluate various strategic alternatives including a business combination or a sale.”

it’s obviously something that we should keep a close eye on.

Research

Thu, 05 Jan 2023 14:44:27 GMT

Wavedancer, Inc. (NASDAQ:WAVD) ($0.52; $10.1M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security, announced it has recognized nearly $500k in revenue from their U.S government contract.

“Given the complexity and sensitivity of this mission, I am extremely proud of the work we’ve done for the US Government to develop an easy-to-use interface powered by the security and transparency capabilities of blockchain technology,” said Jamie Benoit, WaveDancer’s CEO. “Combined with our recent successes with commercial clients, we are beginning to lead the way for a new type of supply chain management system that provides enterprises with instant visibility and verification of their data with the complete security and transparency of distributed ledger.”

While still minimal in value, it's nice to see WAVD begin to gain some traction with this contract and its recent contract win with a commercial customer announced on December 22, 2022.

Research

Tue, 22 Nov 2022 14:23:28 GMT

On November 15, 2022, Wavedancer, Inc. (NASDAQ:WAVD) ($0.72; $13.8M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security, filed a NT-10Q filing (late filing) which we covered here. Yesterday, the company issued its Q3 2022 release.

“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…

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…

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.”

We are not happy with the direction the company is taking, and will offer some recommendations to them.

Research

Tue, 15 Nov 2022 19:10:26 GMT

Wavedancer, Inc. (NASDAQ:WAVD) ($0.8; $15.4M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security, filed a NT-10Q filing (late filing). The filing offers a look at the Q3 2022 results:

The Company’s revenue for the three months ended September 30, 2022 decreased by 46.4%, or $2.0 million, from $4.3 million in 2021 to $2.3 million in 2022. This decrease reflects a de-emphasis by the Company of low-margin sales of third-party software, which is represented by a decline in software sales revenue of 87.2%, or $1.3 million.
For the three months and nine months ended September 30, 2022, the Company is finalizing its assessment of the recoverability of long-lived assets, including intangibles, and expects to recognize an impairment to its goodwill related to the Gray Matters, Inc. acquisition. The amount of the impairment is being finalized. There was no such impairment recognized in 2021.
As a result of the decreases in revenue, increases in SG&A, and the goodwill impairment charge, the Company will report an operating loss for the three months ended September 30, 2022 that will be significantly greater than the loss reported for the comparable period in 2021.The amount of the loss is subject to finalizing our assessment of the recoverability of long-lived assets, including intangibles, and our finalizing the amount of the goodwill impairment charge and as a result a reasonable estimate cannot yet be made.
The Company’s revenue for the nine months ended September 30, 2022 decreased by 22.7%, or $2.8 million, from $12.4 million in 2021 to $9.6 million in 2022. This decrease reflects a de-emphasis by the Company of low-margin sales of third-party software, resulting in a decline in software sales revenue of 33.2%, or $1.3 million. We will also report a $1.5 million decrease in professional services revenue comprising the net of decreases from changes in phases of software modernization projects and increases due to revenue generated from the Gray Matters, Inc. and Tellenger, Inc. acquisitions.

Obviously, this is a worse than expected development at WAVD and could bring into question the ability of the CEO to lead the charge, given the impairment charges related to Grey Matters, acquired shortly after he arrived at the company. If there are any silver linings they would be:

Deemphasizing low margin (under 3%) software sales
The drop in professional fees revenue seems to be temporary in nature due to the company completing a major phase of its seven year (5 years left) modernization contract with a branch of the U.S. government. Thus, we expect that the Q3 press releases could communicate this message.
Acquired companies (Telenger and Grey Matters) are experiencing revenue growth, although it looks like Grey Matter is performing well under expectations. However it’s unclear if growth in these companies occurred in Q3.

Research

Mon, 31 Oct 2022 11:51:35 GMT

Wavedancer, Inc. (NASDAQ:WAVD), a company that offers zero trust blockchain-enabled software solutions for supply chain security, announced the commercial launch of its Maverix platform, its supply chain digital transformation product.

“We are excited to be working with a commercial company that sees the tremendous value blockchain can bring to the supply chain ecosystem. Working with a number of partners and the Maverix platform will give them complete visibility up and down the chain, serving up data that is trustworthy and secure...

...After having proven the power of blockchain in supply chain management for the U.S. government, we are excited to bring it to the commercial marketplace,” said Jamie Benoit, WaveDancer’s CEO. He added, “This commercial engagement establishes our beachhead in the construction vertical and validates the hard work of our development team. It’s a watershed moment for us and provides an environment where we can further sharpen our technology in a new commercial vertical, refine our AI in a production environment, and significantly increase the security, visibility, and trust to our customer’s global supply chains. We anticipate a significant commercial rollout in the coming months.”

Research

Wed, 19 Oct 2022 04:00:00 GMT

Wavedancer, Inc. (NASDAQ:WAVD) ($1.16; $22.1M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security, saw CEO James Benoit buy more shares on the open market. A Form 4 filed this morning shows he added another 5,393 shares on the open market at an average price of $1.17. This marks his 5th filing in October

—

Research

Sun, 25 Sep 2022 04:00:00 GMT

Wavedancer, Inc. (NASDAQ:WAVD) a company that offers zero trust blockchain-enabled software solutions for supply chain security announced its subsidiary Tellenger Inc won a 3 year contract extension with the National Security Agency.

"I'm thrilled our customer has placed its trust in us once again with this contract renewal,” said Jamie Benoit, CEO of WaveDancer. “It represents a terrific multi-year revenue opportunity, providing a solid basis for double-digit top line growth in 2023. It's also a testament to the technical competence of our team and their dedication to the national security of the United States."

Research

Tue, 16 Aug 2022 04:00:00 GMT

Wavedancer, Inc. (NASDAQ:WAVD) ($1.21; $21.6M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security. CEO and 2 directors partake in a private placement:

CEO James Benoit purchased 500,000 at $1.20
Director James DiPaula purchased 208,334 at $1.20
Director Henry Pickle purchased 41,667 at $1.20

“We originally planned to raise this capital as part of our intended acquisition of Knowmadics but given the substantial change in market conditions since 2021, closing on the negotiated terms was impossible. Raising funds through this PIPE saves us time and money and allows us to act quickly. We’re thrilled with the response we received from members of the management team and our Board of Directors, underscoring the collective belief we have in the potential of WaveDancer. This capital will assist us with mid-term growth opportunities to achieve profitability, particularly within our professional services division,” stated WaveDancer CEO, Jamie Benoit.

“We are likewise in the process of evaluating acquisition opportunities that will be immediately accretive,” Mr. Benoit added. “We understand that in today’s environment, profitability must accompany growth and we are refocusing our strategic efforts to meet the market’s expectations. I continue to be extremely excited about our future and our ability to be very disruptive in the blockchain and zero trust markets.”

Research

Mon, 15 Aug 2022 04:00:00 GMT

Q2 2022 bottom line affected by one-time R&D costs associated with abandoned Knowamatics acquisition

Wavedancer, Inc. (NASDAQ:WAVD) ($1.24; $21.6M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security announced Q2 2022 results:

Sales of $4.3 million vs $4.7 million in the prior year
Net loss of $0.09 vs $0.00 in the prior year

“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...

...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...

...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.”

There is no way to sugarcoat this quarter. It would’ve been nice if management disclosed how much of the loss for the quarter came from one time expenses related to the Knowmedics acquisition, while providing a non-gap number on the EPS line. Management also did not give us any indication of when profitability will be attained again - only that it’s “ultimately” in the cards.

PodClips

Tue, 26 Jul 2022 14:02:06 GMT

Here, Maj goes into detail on why hae and his team decided to remove Wavedander (WAVD) from the Top 5 Faves Model Portfolio. The stock remains a general Select Long Disclosure.

Research

Thu, 12 May 2022 17:39:19 GMT

Wavedancer, Inc. (NASDAQ:WAVD) ($4.87; $89M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security saw CEO James Benoit buy 12,000 shares on the open market at an average price of $3.65. Recall, last week hepurchased 12,000 shares at an average price of $4.57 and has participated in both offerings the company executed during his tenure.

Please note that these purchases are part of a 10b5-1 plan.

Research

Tue, 22 Mar 2022 20:22:00 GMT

Wavedancer, Inc. (NASDAQ:WAVD) ($4.87; $89M market cap), a company that offers zero trust blockchain-enabled software solutions for supply chain security. The company announced a definitive agreement to acquire Knowmadics for $90 million in cash and stock.

“The purchase price of $90 million comprises approximately $56.5 million in cash and $33.5 million of stock at a price of $6.50 per share, a premium on the company share price as of March 21, 2022. WaveDancer intends to raise approximately $67 million in a private offering of its common shares in connection with the transaction. The closing is contingent upon financing. Upon closing, the company expects revenues from its emerging technology business to be greater than its legacy Tellenger business.”

We need to dig deeper into the details of the transaction.

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Interviews

Thu, 20 Jan 2022 15:28:30 GMT

We sat down with Jamie Benoit, WaveDancer's new CEO and were able to get some great perspectives on his background and where he plans to take the company in the future. Please view the chat below.

Jamie started with high level view on his background and how he got to where he is right now:

"I got my career started as an officer in the United States Army. I spent the better part of the 90s serving in a variety of different US Army missions, both domestically and abroad. Subsequent to resigning from the army, I became a lawyer. I was an M&A and tax lawyer. I had a couple of large firms decide, after about four or five years, that I thought I'd be a better client than I was an attorney. So, I turned my attention to starting a company. The company I started was called Fed Data. I founded the company in about 2009. It had actually been in operation for a little while before I joined it, so I guess I co-founded it in its current iteration in 2009.

The company's primary business was government contracting, principally for the Department of Defense and for certain intelligence agencies. We offered a range of technical and IT services to our core customers.

For about five years I just grew up grew the business organically, heads down, being an operator. About four or five years into it, it attracted some interest of some private equity. I had an acquisition I wanted to do. So, we bought a business that further focused us in the intelligence community in 2015. And we operated that business as a minority private equity partner at that time, operated the business for about another two and a half years.

Ultimately, I sold it in 2018, to another constellation of family offices and private equity investors. When I did, the company was the largest company not traded on a public exchange doing business at the National Security Agency. We'd grown the business over the course of about 9 to 10 years to several 100 million dollars of revenue, and 10s of millions of dollars of EBITDA. The business was healthy, and we decided that it was time to exit it.

I ran the company for the buyers for about a year and a half during that time, I was able to grow EBITDA by another 50% in just 18 months for my new buyers and determined at that time, it was time for me to move on.

I had this idea for the company to build, and had just sort of been incubating it. But it was something that was a little early to the market, say 24 months ago, but I think the markets matured in a way that it’s now ready for the technology we're going to bring to bear.

During COVID 2020, I started thinking about this company and how I was going to capitalize and form it. I went through all the iterations. I didn't want to do another deal with private equity or venture capital. I thought about self-financing, and I went out and started talking to some of the SPAC investors and the vultures came out of the woodworks to greet me. And I ultimately decided on something a little different.

That was to look for and acquire a small public vehicle that had a long-ish operating history. When I found it, I knew I had found the right company. It was a sleepy company in need of some energy. But notwithstanding, it had a long history of really good clean financials, had a nice, based business against which I could finance other activities. So, I decided that was the company I was going to try to partner with. And I was I was able to do that last August. A

I did so with the intent of really transforming this business into a technology company. Its legacy business was principally doing professional services as a subcontractor for various government agencies. My intent was bringing with me some proprietary acquisition opportunities, one of which I closed last month, which puts us squarely in the theater of combat, if you will, in the world of blockchain.

And I'm happy to talk more to you about why I am so bullish on blockchain. I think I can take the business now that it’s got a really formidable powerful blockchain as part of its kind of core corporate DNA

There'll be some other things I look at in the future. There's nothing to talk about today. But know that I'm trying to piece together a SaaS based products company that'll be dual-use government and commercial, principally working in critical infrastructure, logistics, complex supply chains, both corporate and government. That's sort of a high level of how I got here."

Research

Mon, 13 Dec 2021 20:38:12 GMT

Information Analysis Inc (OOTC:IAIC) ($4.14; $56.0M market cap), an information technology product and service company, announced the closing of its acquisition of Gray Matters Inc.

The consideration at closing consisted of $7.5 million cash; deferred consideration of $1.5 million; and $1.5 million in IAI stock. The terms also include up to $4.0 million in additional consideration for achieving certain performance metrics in 2022.

“As noted in our announcement of the definitive agreement to acquire Gray Matters, we have been hard at work repositioning our company to be a leading provider of high-value software solutions…Closing of this acquisition is a significant piece of the puzzle. Gray Matters’ platform provides the company with valuable intellectual property and a beachhead from which to begin executing on our ambitious plans. Gray Matters’ technology was purpose-built to solve a difficult global problem to help the mission of a complex government agency and we’re confident our new capabilities will scale in the wider government and commercial marketplace. We start with several million dollars of booked 2022 revenue and a small but solid contract base with very desirable government customers and ample cash on our balance sheet.” Mr. Benoit added, “Jeff Gerald and his team have accomplished much in a very short period of time. I’m looking forward to working with Jeff to build on his significant technical achievements and help propel the new company to something special.”

Jeff Gerald, Gray Matters’ CEO said, “Working with Jamie and the IAI team is the next logical step for Gray Matters. Our visions are totally aligned. Jamie’s track record with government customers like ours combined with his proven ability to build organizations and raise capital to fund them will help us grow. His commitment to continue enabling our core customers’ unique requirements will make this a seamless transition and will give us the ability to do more for them. We are ecstatic about this next chapter.”

We touched on the recent performance and big picture possibilities for IAIC in our weekly wrap-up email last night, and are excited for the next chapter of the company’s initiatives going forward into 2022.

One aspect of the acquisition we want to dig into is if any cross-selling opportunities exist between Gray Matters and IAIC‘s legacy business, which has deep relationships with several U.S. government agencies.

Research

Fri, 10 Dec 2021 16:10:55 GMT

Information Analysis Inc (OOTC:IAIC) ($3.72; $50.2M market cap), an information technology product and service company, announced a $10 million equity financing which appears to be mainly backed by the board of directors and management, similar to the $2.8 million financing the company did in August at $2.00 per share which was also man

“We believe that IAI is in an excellent position to continue its transformation strategy and reposition the Company as a disruptive technology and commercial enablement leader in government and global private sector verticals. We were delighted that members of the management team and our Board of Directors invested in the transaction, which reflects our collective belief in the significant potential of IAI in the market.

The speed with which we closed on this financing, its significant oversubscription, the fact that this was done without incurring bankers’ fees and the broad base of new stockholders who invested today demonstrates acceptance of our thesis and belief in our management team. The proceeds from this financing positions us to close on the acquisition of Gray Matters, Inc. just three months after I joined the Company and provide the additional working capital required to aggressively deploy our unique blockchain technology to the wider government and commercial markets.”

PodClips

Fri, 03 Dec 2021 14:29:19 GMT

IAIC "Raiser"

When you have a huge block of stock that's weighing on a company's shares, maybe the share price gets walked down because of that. We call that a "Raiser", a term we coined in-house as an identifation of such a scenario. Once that block is gone, the stock can often shoot up. We belive this is what happened yesterday with IAIC.

Research

Tue, 16 Nov 2021 18:01:19 GMT

Information Analysis Inc (OOTC:IAIC) ($3.15; $42.5M market cap), an information technology product and service company announced a definitive agreement to acquire Gray Matters Inc, a leader in blockchain and encryption algorithm technology, founded to solve real-world problems through innovation in secure Supply Chain Management (SCM) in United States intelligence, national security and diplomatic organizations.

The transaction terms are for a combined cash and stock transaction valued at $10.5 million consisting of $7.5 million cash at close; deferred consideration of $1.5 million; and $1.5 million in IAI stock. The terms also include up to $4.0 million in additional consideration for achieving certain performance metrics in 2022.

The deal is expected to close in December 2021. We cannot find any financial details on the company, but we will continue to dig into this new development.

Research

Wed, 03 Nov 2021 15:30:13 GMT

Information Analysis Inc (OOTC:IAIC) ($3.70; $49.9M market cap), an information technology product and service company announced Q3 2021 results:

Sales of $4.3 million vs $3.9 million in the prior year
Professional fees increased to $2.8 million vs $1.6 million (higher margin revenues)
Gross margins improved to 22.8% vs 15.7%
Loss of $0.01 vs EPS of $0.02

InfoArb presented in the 10-Q filing.

“We currently have a pending application to list our shares on the NASDAQ Capital Market.”

An uplist to a major exchange is one of the catalysts we were waiting upon, as well as the company continuing to make accretive acquisitions as it continues to grow its professional fee business. While we did not want to see a loss in the quarter, SG&A was $700,000 higher than last year's Q3 due to, as management stated, investments for growth in the coming quarters. On an apples to apples comparison, EPS would have been $0.05 vs $0.02 if SG&A was the same in both quarters. We want to stress this point again: Even though total sales growth may look weak, or down from time to time, mainly due to lumpy software revenue, there is essentially zero margin in its software sales because it is just third party software. Thus, professional fee growth is the stat we need to monitor and where we expect to see nice growth for the next few quarters.

Comments from management:

“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.

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.”

Research

Tue, 17 Aug 2021 16:06:58 GMT

Information Analysis Inc (OOTC:IAIC) ($2.69; $32.4M market cap), an information technology product and service company announced Q2 2021 results:

Sales of $4.7 million vs $4.8 million in the prior year
Professional fees increased to $3.3 million vs $1 million (higher margin revenues)
Gross margins improved to 20.2% vs 8.1%
Small net income gain vs small loss

“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.

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.”

Research

Thu, 03 Jun 2021 04:00:00 GMT

Information Analysis Inc (OOTC:IAIC) ($2.36; $29.3M market cap), an information technology product and service company, published a new investor presentation, which we encourage you to look through in full. Key points and the company’s 2025 goals include:

Highlights of the presentation include:

“...

Contracted backlog of $43.1 million as of April 30, 2021; Q1 2021 revenue growth of 66%; Adjusted EBITDA of $340,000.

Recent Board of Directors additions by IAI are expected to significantly enhance the company’s acquisition strategy.

IAI’s recent acquisition of Tellenger is expected to be accretive while adding important cybersecurity and cloud solutions capabilities to the company’s product suite

There are approximately 220 billion lines of COBOL code currently in use, according to a Reuters report1

The cost to modernize each line of COBOL code ranges from $5 to $10 per line

43% of banking systems in the US currently operate on COBOL

A number of critical government agencies, such as the Department of Homeland Security and the Social Security Administration, still need to adopt and implement full modernization plans2

…”

Comments from management:

“We have an aggressive growth plan which is already well underway. We are leveraging our deep experience in modernizing enterprise IT systems by adding cloud solutions and cybersecurity tools to our product suite. We recently completed the acquisition of Tellenger, which added to our customer base along with high-level security clearances and key solutions capabilities. The modernization opportunity is truly massive and provides substantial opportunity for us to grow our business. We continue to add key software partners, with McAfee and Nutanix the most-recently added. In addition, we intend to continue adding strategic acquisitions in support of our growth plans and look forward to reporting on our success.”

Outlook:

“Our core modernization business has a massive market opportunity which we will further leverage by expanding our IT solutions coupled with strategic acquisitions. We expect this strategy to drive significant growth in our sales, profits and cash flow.”

The company’s current trailing twelve month revenues are $15.3 million. We first disclosed a long position on January 17, 2018 at $0.49 based on a strong Q3 2017 financial report and our belief that the company would see a meaningful long-awaited uptick in project work where it performs upgrades to outdated computer database infrastructures for various departments of the U.S. government. We concurrently added the stock to our “Run To One” Model Portfolio.

Research

Wed, 05 May 2021 14:56:22 GMT

Information Analysis Inc (OOTC:IAIC) ($2.48; $27.9M market cap), an information technology product and service company, issued its annual letter to shareholders. We encourage you to read the full letter here, but below are a few highlights:

“We have built a very strong base in our legacy systems modernization business and believe there is still a big opportunity for us to grow and expand this business.”

“There are substantial growth opportunities for our legacy business and we expect to capitalize on the moment by hiring new salesmen and leveraging our existing relationships with major blue chip clients including the Department of Defense, Department of Treasury, PricewaterhouseCoopers, General Dynamics Information Technology, Guidehouse, and Department of Homeland Security.”

“While we are very excited about the mid-term opportunity to grow our systems modernization business, we’re even more energized by a massive long term growth opportunity we see arising from our ability to leverage our multi-decade relationships with blue-chip clients to provide them with more comprehensive high-margin solutions in areas such as cybersecurity, cloud computing, data analytics, and machine learning.”

“I have no doubt that we can build substantial value for all of our shareholders.”

“The Company has achieved profitability, strengthened its Board of Directors and management team, successfully completed a very strategic and accretive acquisition in Tellenger, and is moving toward a listing on a major exchange.”

Research

Wed, 14 Apr 2021 16:36:38 GMT

Information Analysis Inc (OOTC:IAIC) ($2.96; $33.4M market cap), an information technology product and service company, issued an 8-K filing showing that the purchase price for its recent acquisition of Tellenger Inc, a provider of cybersecurity, cloud, and data analytics services to support companies in protecting their cyber systems and infrastructure, is valued at $2.5 million. In connection with the acquisition, the company issued 495,999 shares at $1.50 as shown in a form D filed yesterday.

The financials will be filed within the next 70 days. Based on the purchase price, the acquisition seems small as we initially assumed, but more importantly opens new market opportunities for IAIC.

Research

Thu, 08 Apr 2021 17:06:49 GMT

Information Analysis Inc (OOTC:IAIC) ($3.00; $33.8M market cap) an information technology product and service company, announced the acquisition of Tellenger Inc, a provider of cybersecurity, cloud, and data analytics services, to support companies in protecting their cyber systems and infrastructure. The acquisition is expected to be accretive in its first year.

“The innovations from the talented team at Tellenger, Inc. will further accelerate our suite of cyber, cloud, and data analytics designed to help financial institutions, merchants and governments secure their digital assets,” explained Stan Reese, President and CEO of IAI. “Through a powerful combination of product and services, and data-driven advanced technology, Tellenger offers an exciting opportunity to complement our existing strategy and technology to expand into the cyber and cloud space.”

While we believe this is a small acquisition, we feel it is significant in that it opens new market opportunities for IAIC. For more background on IAIC, see our article published in October, “$25 Million Contract Resurrects Information Analysis from The Dead”

Research

Thu, 18 Feb 2021 21:49:21 GMT

Information Analysis Inc (OOTC:IAIC) ($1.99; $22.4M market cap) an information technology product and service company, announced fourth quarter 2020 results after the market opened yesterday. SInce it was after our morning email, we decided to make sure you were aware of the event via an alert.

That is why it's important that you follow us on Premium Twitter. However if you choose, you can subscribe to our alerts via email too by going to the appropriate setting page on the pro portal and checking ‘Tweet to Email’ on the following tab:

(if it’s already checked, please uncheck it then recheck it to apply the setting)

And don’t forget, you can always see the history of alerts via the company's profile. See this page for IAIC.

The results for the quarter continues to demonstrate the company's positive operational progress that we have been highlighting for the past several months.

Sales of $3.09 million vs $2.09 million in the prior year
EPS of $0.03 vs a loss of $0.01 in the prior year

“We significantly accelerated our business in 2020, delivering our highest annual revenues since the mid-1990’s, while expanding gross margin and increasing net income,” said Stan Reese, IAI’s CEO. “Our 2021 financial outlook highlights the strength of our services and product portfolios and robust demand for modernizing mainframe applications, particularly in the federal government. We are excited about the opportunities ahead and very confident in our long-term strategy as we continue executing our vision for both the services and products roadmaps.

Our earnings and cash flow are solid, we are upgrading and updating our business development processes, and we are bringing much-needed communication, value and, in light of being traded on the OTCQB Market, greater liquidity to our shareholders. Without losing focus on our core competencies and strategic relationships, we are actively making strides towards such targeted high-growth fields such as cyber security and cloud services.”

Guidance for 2021:

With consideration for the investments IAI is making in progressing toward its business plan, and making allowances for unknowns such as the effects of COVID-19, IAI is projecting net income for 2021 of between $1.1 million and $1.2 million.

The company guidance implies EPS of around $0.10 for 2021 vs the reported $0.03 for 2020. We think this is purely based on the current contracts in hand and does not account for any additional wins based on contracts which management is actively pursuing, or goals to expand its business into other areas such as cyber security or cloud services.

In related news, a new 13G filed this morning shows Palm Management established a 1.05 million share, or a 9.3% stake. This comes off the heels of another 13G filed by Alan Gelbaand on February 2nd showing a new 7% stake.

Research

Wed, 27 Jan 2021 05:00:00 GMT

Information Analysis Inc (OOTC:IAIC) ($1.60; $20.6M market cap) an information technology product and service company announced a new Chairman of the Board, Mark Krial, who has been serving as president of Marathon TS, Inc., an information technology and professional services company which serves the federal government and commercial markets, since 2009.

“Mark shares our renewed vision and drive to broaden our product and service offerings, aggressively pursue the cyber security and cloud services markets, pursue new contract vehicles, and expand our existing modernization practice in the federal, state, and commercial markets," said Stan Reese, who became IAI’s interim CEO on January 1, 2021. "As we look to the future and seek expansion through both organic growth and acquisition, we are fortunate that Mark will provide proven industry and leadership experience.”

We have noticed an increasing trend of the company talking about cyber security and commercial endeavors . This could lead to an expansion of the company's valuation if these areas start contributing to growth. We’d like to reiterate that, as conveyed in our report we published on October 25, 2020, the company generates revenue from 2 sources:

Third party software licensing revenues
And professional fee revenues

We addressed the margins of the above 2 segments in our October 25 report...

The gross margins on the software revenue have been quite volatile and are currently near historical lows, sitting under 3% since 2017. Compared to this, the professional fee gross margins are much higher and more stable, ranging from 20% to 45% range. It’s nice to see that professional fee margins have been holding at around 40% since 2009.

One other positive catalyst we talk about is the company potentially developing its own software which would significantly increase gross margins.

Research

Wed, 20 Jan 2021 05:00:00 GMT

**Call To Action - Removing IEC From Our Top 5 Faves and Replacing It With IAIC

Shares of Iec Electronics Corp. (AMEX:IEC) hit new 52 week highs during yesterday’s trading session of $16.52. On July 13, 2020 when it was trading at $8.64 we added the stock as one of our top 5 favorites. With a 91% gain we are now removing IEC from our Top 5 and adding IAIC. As we have stated before, we absolutely love IEC's CEO and think the company has a best in class product offering. Yet, when we added the stock to the Top 5, shares were trading at a worst in class P/E of around 11 and we felt shares could eventually trade near a P/E of 25. So, given that IEC now trades at a trailing P/E of 24 and is expected to experience flattish growth in 2021, we decided it would be prudent to remove the stock from the list.

Regarding our actual long position in the stock, since the position size is very small, we have not decided if we will just hang on to the position and add more if it pulls back or just sell the position and potentially do the same (on a pullback). In any event, we do feel shares are fairly valued at current prices and that we would welcome a sharp pullback. There is a wildcard - it is not out of the question that the CEO will pull a rabbit out of his hat to increase the growth prospects of the company in the short term. Furthermore, we do believe that the company and stock will be much higher in the long term.

Because the company has a first class CEO and a superior product, we believe valuation ratios could expand well above our current expectations. And now you know why investing is hard. Investing decisions are rarely black and white.

Now, Why IAIC?

Ultimately, while we are still bullish on IEC's long term prospects, we feel IAIC has more multi-bagger upside in the short and long-term.

We first disclosed a long position in Information Analysis Inc (OOTC:IAIC) on January 17, 2018 at $0.49 based on a strong Q3 2017 financial report and our belief that the company would see a meaningful long-awaited uptick in project work, where it performs upgrades to outdated computer database infrastructures for various departments of the U.S. government.

Yesterday IAIC announced it uplisted from the Pinksheets to the OTCQB.

“Upgrading our listing by moving to the OTCQB is intended to make trading our shares more efficient and broaden our exposure to a greater base of shareholders,” said Matt Sands, Acting Principal Financial Officer of Information Analysis. “Investors will now get an exchange-comparable experience with real-time quotes, thereby enhancing liquidity. While our shares have been quoted on OTC Pink for the last several years, we have always been a fully-reporting company. The upgrade to OTCQB is another step in our plan to enhance shareholder value.”

We have reached out to Matt Sands for a follow up call with the Company. You can see Maj’s video pitch on IAIC here, and our full research coverage here.

Research

Thu, 19 Nov 2020 17:46:07 GMT

Moving IAIC to Favorite Stock Model Portfolio

We first disclosed a long position in Information Analysis Inc (OOTC:IAIC) on January 17, 2018 at $0.49 based on a strong Q3 2017 financial report and our belief that the company would see a meaningful long-awaited uptick in project work where it performs upgrades to outdated computer database infrastructures for various departments of the U.S. government. We also concurrently added the stock to our “Run To One” Model Portfolio. Afterward, the stock went on to hit a low of $0.08 in October 2019.

While we were a bit early in our initial long call, we feel the company has reached the growth inflection point we hoped it would. The company’s recent strong Q3 2020 results and management comments have led us to add the stock to our Favorite Stocks Model Portfolio.

See our full coverage history here.

Research

Tue, 17 Nov 2020 19:16:30 GMT

Information Analysis Inc (OOTC:IAIC) ($0.79; $58.8M market cap) an information technology product and service company announced Q3 2020 results:

Sales of $3.9 million vs $3.1 million in the prior year
EPS of $0.02 vs a loss of $0.02 in the prior years

We are getting really excited about IAIC. The set up is beginning to look like one where a classic Tier One microcap that's been hanging around for decades receives catalysts that create new growth opportunities that will lead to a significant expansion in valuation: from boring to exciting.

In the third quarter we completely reversed our losses from the first half of the year,” Reese said. “Since May, we have increased our billable workforce by over 80% under new long-term, large-scale contracts. We anticipate that these contracts will provide a solid foundation of revenue and profitability for the foreseeable future. This has allowed us to shift our focus from maintaining operations to meaningful growth for 2021 and beyond.

“Our capabilities when it comes to modernizing legacy systems such as COBOL-based systems, no matter how large, we believe are second to none. We now turn our attention to investments in corporate infrastructure and business development. Pursuit of strategic partnerships with synergistic emerging technology companies, as well as merger & acquisition opportunities, are also part of our plans.”

Reese further commented, “While COBOL-related legacy system modernization is expected to remain a core competency, we recognize that expanding our service and product offerings is necessary to carry us through the new decade. We believe that our extensive roster of satisfied clients could prove appealing to prospective partners in high-growth fields such as cloud services and cyber security. We remain excited about the Company’s future for the long-term benefit of our shareholders.”

As we suspected, the company’s focus on generating more revenue from its professional service segment is leading to meaningfully improved bottom line growth as it carries much better gross margins than its software sales segment. (34% vs 3%)

See our recent article summarizing the company’s large contracts that have set the stage for continued sales and earrings growth for years to come.

Research

Wed, 07 Oct 2020 17:01:22 GMT

As promised, Maj completed his virtual video pitch on Information Analysis Inc (OOTC:IAIC). Specifically, he talks about the company's tier one characteristics, Geo's coverage history on the IAIC, as well as the company's momentum, catalysts and caveats to the story, and more. We appreciate you taking a look, and feel free to comment!

You can view the pitch here.

Research

Wed, 19 Aug 2020 19:23:19 GMT

Information Analysis Inc (OOTC:IAIC) ($0.50; $5.6M market cap) issued a press release yesterday confirming our due diligence we reported in our weekly wrap up email on Sunday night that the company will begin to see meaningful uptick in sales as a long awaited delayed project commenced in June. Comments from the release:

“There is no doubt about it - 2019 was a tough year,” said Sandor Rosenberg, Chairman and Chief Executive Officer of IAI. “Contracts were expiring in normal course, but every material new contract and subcontract we won was delayed due to protests by companies competing for the business. Despite managing our offices and employees through ever-changing directives and regulations due to the COVID health emergency, we turned the corner during this second quarter, as the largest of these delayed subcontracts emerged from protest almost a year after it was originally won. In June we were able to commence a massive modernization effort at a federal agency that could be worth upwards of $25 million over the subcontract’s seven-year term. With the addition of this effort, we expect our third quarter to be profitable, and we should remain so for the foreseeable future.

Research

Mon, 17 Aug 2020 11:58:28 GMT

Information Analysis Inc (OOTC:IAIC) (Information Technology Services): Classic information arbitrage in Q2 hints that the company could be on the cusp of sustained revenue growth and profitability for the first time in its history.

IAIC has been struggling to consistently grow profitably for years.

	REV	EPS
2019	$10.10	($0.06)
2018	$8.90	$0.00
2017	$10.60	$0.02
2016	$6.70	$0.05
2015	$6.20	$0.01
2014	$5.70	$0.00
2013	$7.40	($0.01)
2012	$7.00	$0.01
2011	$7.80	$0.01
2010	$6.90	$0.01
2009	$6.70	$0.01
2008	$6.70	($0.03)

We first disclosed a long position in IAIC on January 17, 2018 at $0.49 based on a strong Q3 2017 financial report and our belief that the company would see a meaningful long-awaited uptick in project work where it performs upgrades to outdated computer database infrastructures for various departments of the U.S. government. We also concurrently added the stock to our “Run To One” Model Portfolio.

Unfortunately, the stock basically went straight down from the time we bought shares, hitting a low of $0.08 in October 2019. Project delays and a delay of a major government contract award were the culprits. We’ve come to realize that project pipeline uncertainty is a risk when dealing with the government.

Well, late Friday, IAIC reported breakeven 2020 Q2 results vs. a loss of $0.02, on revenue of $4.8 million vs. $3.7 million. The Q2 results were disclosed in the company’s SEC quarterly filing with no associated press release. So naturally, we wanted to read the filling for the presence of Information Arbitrage disclosures related to project or government award change status.

Recall that in our weekly wrap up email in early April, we discussed that potential revenue from a subcontract award that the company won, displacing the previous firm that had been awarded this contract in prior years, would be very material for IAIC. Specifically, in its 2019 10K IAIC commented that the award could generate in excess of $5 million annually and help the company achieve profitability. Given that the company had been generating annual revenue ranging between $5 million and $10 million for several years, we surmised that this award could be a big deal.

One thorn in the side of IAIC had been that the incumbent firm protested IAIC’s displacement of them from the contract. As a result, IAIC could not perform any work under the award until the matter was resolved.

However, we decided to dig into the company’s 2020 Q1 and Q2 filings and found that the incumbent withdrew their protest as of IAIC’s 2020 Q1 filing. This, along with the resumption of revenue that has been delayed due to COVID-19, is likely the reason for the company’s strong Q2 revenue numbers, which are actually the highest quarterly revenues since 1998.

Q2 filings indicate that project work is recommencing:

“IAI has been experiencing prolonged delays in the commencement of new professional fees contracts and subcontracts due to protests and now coronavirus. The largest of these contracts, originally delayed due to protest and subsequently delayed due to indirect effects related to coronavirus, commenced on June 1, 2020.

In April 2020, we were made aware that the incumbent withdrew its subsequent protest, thereby confirming the initial contract award to our prime contractor. The coronavirus pandemic indirectly impacted the commencement of services under this contract for a few months, but we finally commenced providing services under this seven-year subcontract award on June 1, 2020. We anticipate net income in the third quarter due to the increase of our professional fee revenue we are experiencing under the commencement of new contracts.

The details surrounding these events have only been disclosed in SEC financial filings, hence the Information Arbitrage.

With this issue behind them, the contract could lead to improved results for years to come and may be why shares have quietly risen over the past few months.

While this new development is encouraging, we need be cognizant of the following:

We estimate that IAIC would reach a quarterly profit at about $7 million in revenue. So, they are not quite there, yet.
The company’s base business can be volatile. So, we need to perform some research on the likelihood that the base business or potential new business will be able to provide the revenue to enable the company to reach profitability.
A good deal of the company’s business is very low margin. For example, the company has two sources of revenue – third party software license revenue and professional fee revenue. The gross margin on the software revenue is minimal, but the professional fee revenues are respectable. From a cursory glance, it appears that professional fees comprise somewhere between 25% to 40% of revenue. Therefore, net income can be greatly impacted by this revenue mix. However, the company gave us a clue that the 3rd quarter of 2020 will include some additional professional fee revenue. On this note, it’ll be important for us to determine to which extent professional fees will be associated with the software revenue tied to the new contract the company just won.

Please note that the stock is extremely illiquid.

As for valuation the stock is selling at

P/E: NA losing money
Price to ttm Sales: 0.29
Enterprise Value to ttm Sales: 0.21
Tangible Book Value per share: 0.09
Cash per share: $0.09
Debt: Zero

Given the possibility the company may be close to achieving consistent profitability we think IAIC could be particularly cheap down here.

We are considering the possibility that IAIC may now have become an acquisition target, maybe by the company it displaced in the recent contract dispute? However, we still need to dig into who the incumbent was.

Research

Sun, 05 Apr 2020 04:00:00 GMT

Information Analysis Inc (OOTC:IAIC) (Information Technology Services) – Reported full year 2019 sales of $10.1 million vs $8.9 million and a loss of $0.06 vs break even in prior year.

We did notice some interesting information/verbiage in the 10-K:

With regard to professional fees, in 2019, the U. S. Small Business Administration, or SBA, awarded two contracts to teams in which IAI is a subcontractor that potentially may have a material impact on our business. The revenue for IAI under these contracts could exceed $5 million per year for seven years. Unfortunately, in both cases, the incumbent contractors protested and both awards have been delayed. IAI’s teams have survived the initial protests, but there is a follow-on protest on the larger of the two contracts, and the timing of the commencement of the other is uncertain. IAI feels confident that the protests will be resolved in favor of IAI’s teams, and that the work will eventually commence.
Our management will continue to explore ways to expand our current market spaces and develop new ones that may offer more opportunity. This may take the shape of organic growth or through acquisition or merger with other companies.
In the first quarter of 2020 we introduced both temporary and permanent measures to reduce administrative expenses until we can increase our revenue from professional fees to levels needed to sustain profitability.

The first bullet point is what has us excited. Although there is no indication of how long the legal process will take and no guarantee that IAIC will prevail, the company could be in a position to attain an annual revenue run-rate of $15 million, or 50% higher than current levels. This is a development we will be watching closely and might induce us to add to our position, especially since the stock is trading right around its cash per share of 8 cents. However, the cash per share has come down significantly since we first bought the stock, as the company has encountered government project delay issues.

Research

Tue, 05 Mar 2019 17:56:50 GMT

Information Analysis (PINK:IAIC) ($0.21 2.4M market cap) an information technology services company sees insider activity. Yesterday, a form 4 was filed showing director Bonnie Wachtel had purchased 50,000 shares at an average price of $0.22 in a private transaction.

IAIC is a turnaround play in the early stages. Like many stocks on our Run to One portfolio, time will be needed to see if the story can play out as we hope. The stock continues to trade near its cash per share level of $0.17.

You can see our past coverage on IAIC here.

Research

Tue, 27 Nov 2018 15:36:40 GMT

Information Analysis (PINK:IAIC) ($0.23 2.5M market cap) an information technology services company reported Q3 2018 results on November 14, 2018:

Sales of $2.4 million vs $2.7 million
EPS of $0.00 vs $0.01

The company is still in the early stages of its turnaround plan, and because of its heavy reliance on government contracts, we still expect volatility in quarterly results. IAIC is trading near its cash levels of $0.17, which could offer some downside support as we wait for a potential catalyst.

Research

Tue, 14 Aug 2018 14:40:20 GMT

Information Analysis (PINK:IAIC) ($0.27 3.0M market cap) an information technology services company, reported Q2 2018:

Sales of $3.7 million vs $4.0 million in the prior year
EPS of $0.00 vs $0.01 in the prior year

In our May 7, 2018 email we stated the company is still in the early stages of its turnaround plan, and because of its heavy reliance on government contracts, we still expect volatility in quarterly results. Like many stocks in our Run to One mock portfolio, time may be needed for the story to play out. We see downside support in the stock at its cash per share of $0.19.

Research

Wed, 16 May 2018 14:45:47 GMT

Information Analysis (PINK:IAIC) ($0.44; $5.0 M market cap) an information technology services company, reported Q1 2018 results:

Sales of $1.39 million vs $1.48 million in the prior year
EPS of $0.00 vs $0.00

In our May 7, 2018 email we stated the company is still in the early stages of its turnaround plan, and because of its heavy reliance on government contracts, we still expect volatility in quarterly results. Like many stocks in our run to one mock portfolio, time is needed for the story to play out.

Research

Mon, 07 May 2018 04:00:00 GMT

Q1 Earnings Watch:

We wanted to give you some color on which stocks in some of our Model/Mock portfolios that may not be timely in the short-run.

Specifically, Information Analys (OOTC:IAIC) ($0.40, $4.5m market cap) and Rcm Technologies, Inc. (NASDAQ:RCMT) ($5.01, $61.3m market cap) Q1 financial results could disappoint investors. On its Q4 conference call, RCMT indicated that Q1 2018 might see some softness compared to its previous quarters. Thus, short term investors should be aware of this possibility. We do think RCMT is a potential takeover candidate at some point, but we will have to dissect Q1 2018 results to determine if the stock should remain in our favorite stock portfolio.

As for IAIC, the company is still in the early stages of its turnaround plan, and because of its heavy reliance on government contracts, we still expect volatility in quarterly results. Like many stocks in our run to one mock portfolio, time is needed for the story to play out.

We also want to mention Tss Inc (OOTC:TSSI) ($0.50, $7.8m marker cap). We are still very bullish on the company and believe it will continue to successfully execute its turnaround. But we must be aware that Q1 may not be up to par with what the market is expecting due to Q4 2017 conference call comments that Q1 2018 will be sequentially down from Q4. Regardless, we still think the company will show significant growth in the quarter and throughout 2018.

Research

Thu, 29 Mar 2018 15:53:13 GMT

Information Analysis (PINK:IAIC) ($0.45; $5.0 M market cap) an information technology services company, reported Q4 2017 results:

Revenue of $2.4M vs. $1.4M
EPS of $0.01 vs ($0.01)

Commentary from management was also bullish:

“In 2017, the Company continued its effort to focus on legacy system modernization,” said Sandor Rosenberg, Chairman and Chief Executive Officer of IAI. “This has driven a 48 per cent increase in professional services revenue. In addition, we are making investments in marketing and sales in both the commercial market as well as in the government sector. We have been aggressively pursuing new business opportunities through the bidding process for prime contracts and teaming with our partners. Recently, a federal government customer elected to proceed with a needed modernization effort that we have been pursuing for years with a key partner, and we have once again proven ourselves to be able to engineer substantial modernization efforts on time and within budget. We expect that effort to expand into other opportunities.

“In recent months, several large companies have approached IAI to be part of their modernization teams due to IAI’s unique knowledge of legacy systems and unique tools to efficiently and cost-effectively modernize them.

“We continue to pursue merger and acquisition opportunities.”

We added IAIC to our “Run to One” portfolio in January of 2018 on the heels of a positive call with management. You can see our past research notes on IAIC here.

Research

Wed, 17 Jan 2018 16:08:50 GMT

Established Long Position In IAIC and Added to Run To One Portfolio

Information Analysis (PINK:IAIC) ($0.49; $5.4M market cap) - We are adding IAIC, an information technology services company, to our Run to One portfolio on the heels of a positive call with management.

Research

Tue, 16 Jan 2018 16:12:11 GMT

Information Analysis (PINK:IAIC) ($0.49; $5.4M market cap), is an information technology services company. We highlighted the Company’s strong Q3 2017 results in our December 7, 2017 email. The company's strong results coupled with bullish commentary has prompted us to interview management. We have an interview scheduled for later this afternoon and will provide any necessary updates.

Research

Thu, 07 Dec 2017 19:02:38 GMT

Information Analysis (PINK:IAIC) ($0.38; $4.2M market cap), an information technology services company. has entered our radar due to strong Q3 2017 results. The Company reported its Q3 results on November 13, 2017. As we look back through the number of microcap earnings reports from Q3, IAIC has caught our attention. Q3 2017 results:

Sales of $2.7 million vs $2.0 million in the prior year
EPS of $0.01 vs a loss of $0.01 in the prior year

Quotes from management:

“The Company has made a dedicated effort to renew our focus on legacy system modernization – one of our core competencies,” said Sandor Rosenberg, Chairman and Chief Executive Officer of IAI, “which has in turn driven an increase in professional services revenue of greater than 35%, and a return to sustainable profitability. In recent months, several large companies have approached IAI to be part of their modernization teams due to IAI’s unique knowledge of legacy systems and unique tools to efficiently and cost-effectively modernize them. We also continue to pursue merger and acquisition opportunities.

With the introduction of recent bipartisan supported federal legislation for IT modernization, the government is expected to be in a position to support and fund programs designed to reduce expenditures for maintaining old and out-of-date legacy systems. Federal agency Chief Information Officers anticipate being empowered to move forward with long-overdue projects that will streamline agency operations and materially reduce costs. Management believes that IAI is well positioned individually and in conjunction with its technology solution partners to take advantage of such modernization initiatives for the foreseeable future.”

We will take a deeper dive into the story in the coming days.