PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q2 2023 reflect decreased assets and equity, a $235,000 net income from continuing operations, driven by a $1.44 million litigation settlement gain, despite declining revenues [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets decreased to $6.25 million from $7.98 million, primarily due to the disposal of assets held for sale, leading to a decline in cash and stockholders' equity Balance Sheet Comparison (in thousands) | Account | June 30, 2023 | Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and cash equivalents | $338.3 | $731.1 | -$392.8 | | Total current assets | $2,599.1 | $2,803.1 | -$204.0 | | Assets held for sale | $0.0 | $2,316.8 | -$2,316.8 | | Total assets | $6,247.3 | $7,981.2 | -$1,733.9 | | **Liabilities & Equity** | | | | | Revolving line of credit | $1,000.0 | $425.0 | +$575.0 | | Deferred acquisition consideration | $0.0 | $1,415.1 | -$1,415.1 | | Total liabilities | $3,629.7 | $4,251.3 | -$621.6 | | Total stockholders' equity | $2,617.6 | $3,729.9 | -$1,112.3 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2023 total revenues decreased 46% to $2.02 million due to lower software sales, yet operating income improved to $493,116 from a $1.6 million loss, driven by a $1.44 million litigation settlement gain, narrowing the H1 net loss Q2 2023 vs Q2 2022 (Three Months Ended June 30) | Metric | Q2 2023 | Q2 2022 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $2,024,622 | $3,750,520 | -46.0% | | - Software Sales | $56,665 | $1,472,688 | -96.1% | | Gross Profit | $705,013 | $903,841 | -22.0% | | Gain on settlement of litigation | $1,442,468 | $0 | N/A | | Operating Income (Loss) | $493,116 | ($1,599,270) | +$2,092,386 | | Net Income (Loss) | $234,785 | ($1,525,442) | +$1,760,227 | | Diluted EPS | $0.01 | ($0.09) | +$0.10 | H1 2023 vs H1 2022 (Six Months Ended June 30) | Metric | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $4,184,745 | $6,746,032 | -38.0% | | Gross Profit | $1,361,811 | $1,600,311 | -14.9% | | Operating Loss | ($461,614) | ($3,276,332) | +85.9% | | Net Loss | ($1,115,167) | ($3,603,749) | +69.1% | | Diluted EPS | ($0.06) | ($0.21) | +$0.15 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2023, net cash used in operating activities improved to $2.15 million, with investing activities providing $936,000 and financing activities $825,000, resulting in a $392,781 decrease in cash, ending at $338,300 Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,153,536) | ($4,356,478) | | Net cash provided by (used in) investing activities | $935,974 | ($31,033) | | Net cash provided by financing activities | $824,781 | $35,191 | | **Net decrease in cash** | **($392,781)** | **($4,352,320)** | | **Cash at end of period** | **$338,300** | **$578,982** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes include the GMI subsidiary sale as a discontinued operation, substantial doubt about going concern requiring capital by Q2 2024, a $1.44 million litigation settlement gain, and a post-quarter $1.4 million cash infusion from GMDC interest sale - The company has **substantial doubt** about its ability to continue as a going concern, estimating a need for **additional capital by Q2 2024** to meet ongoing operating cash flow requirements[25](index=25&type=chunk)[123](index=123&type=chunk) - On March 17, 2023, the company sold **75.1% of its GMI subsidiary** to GMDC, resulting in deconsolidation and treatment as a discontinued operation, with consideration including cash, stock, and contingent payments[23](index=23&type=chunk)[40](index=40&type=chunk) - On April 28, 2023, litigation with GMI's former owner was settled, extinguishing a **$1.5 million deferred consideration liability** and resulting in a **net gain of $1,442,468**[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - Subsequent to quarter-end, on August 9, 2023, the company sold its remaining equity interest in GMDC for **$1.4 million in cash**, expecting a recognized gain of approximately **$382,525**[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The company has a high concentration of revenue from U.S. government contracts, with **one prime contractor accounting for 55.1% of total revenue** for Q2 2023[33](index=33&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 46% Q2 2023 revenue decline to strategic software de-emphasis, with operating income improving due to a $1.44 million litigation gain and reduced SG&A, while acknowledging going concern doubts, mitigated by a post-quarter $1.4 million cash infusion [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q2 2023 revenue declined by $1.73 million (46%) due to reduced software sales, but operating income improved by $2.1 million to $493,000, driven by a $1.44 million litigation gain and $849,000 SG&A reduction, narrowing the H1 operating loss - The revenue decrease for Q2 and H1 2023 was primarily due to the company's de-emphasis of third-party software sales, which fell from **39.3% of revenue in Q2 2022 to 2.8% in Q2 2023**[106](index=106&type=chunk)[112](index=112&type=chunk) - Operating income for Q2 2023 improved by **$2.1 million** year-over-year, primarily due to a **$1.44 million gain on litigation settlement** and an **$849,000 decrease in SG&A expenses**[109](index=109&type=chunk) SG&A Expense Breakdown (Three Months Ended June 30) | Expense Category | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Salaries and benefits | $528,573 | $765,710 | ($237,137) | | Stock based compensation | $88,159 | $343,492 | ($255,333) | | Legal and professional fees | $343,042 | $424,866 | ($81,824) | | **Total SG&A** | **$1,654,365** | **$2,503,111** | **($848,746)** | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company had a $780,357 working capital deficit and $338,300 cash, raising substantial doubt about its going concern, though a subsequent $1.4 million cash infusion from GMDC sale improved liquidity - The company had a working capital deficit of **$780,357** and cash of **$338,300** as of June 30, 2023[122](index=122&type=chunk) - Management states there is **substantial doubt** about the company's ability to continue as a going concern, estimating a need to raise **capital by Q1 2024**[123](index=123&type=chunk) - On August 9, 2023, the company received **$1.4 million in cash** from the sale of its GMDC common stock and subsequently repaid **$500,000** on its line of credit[124](index=124&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2023, the company's **disclosure controls and procedures are effective**[125](index=125&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023[126](index=126&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) A lawsuit filed by Jeffrey Gerald concerning severance and deferred consideration from the GMI acquisition was fully settled on April 28, 2023, with no other pending legal proceedings reported - A lawsuit filed by Jeffrey Gerald regarding severance pay and deferred consideration from the GMI acquisition was **settled on April 28, 2023**[130](index=130&type=chunk)[131](index=131&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K have occurred - There have been **no material changes** to the risk factors disclosed in the company's 2022 Form 10-K[133](index=133&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[133](index=133&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2023 financial statements detail the GMI subsidiary sale, a **$1.35 million** net loss, and liquidity issues raising going concern doubts [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$7.29 million** and liabilities increased to **$4.92 million** by March 31, 2023, driven by the GMI sale and increased borrowings, reducing equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | **Total Assets** | **$7,290,035** | **$7,981,214** | | Cash and cash equivalents | $814,722 | $731,081 | | Assets held for sale | $0 | $2,316,845 | | **Total Liabilities** | **$4,918,717** | **$4,251,311** | | Revolving line of credit | $1,000,000 | $425,000 | | **Total Stockholders' Equity** | **$2,371,318** | **$3,729,903** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues decreased by **27.9%** to **$2.16 million** in Q1 2023, primarily due to lower software sales, while the net loss narrowed to **$1.35 million** Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :--- | :--- | :--- | | Total Revenues | $2,160,123 | $2,995,512 | | Gross Profit | $656,798 | $696,470 | | Operating loss from continuing operations | $(954,730) | $(1,677,062) | | Net loss from continuing operations | $(1,013,959) | $(2,159,360) | | Net loss | $(1,349,952) | $(2,078,308) | | Basic and diluted loss per share | $(0.07) | $(0.12) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$1.76 million** in Q1 2023, offset by cash from investing activities (GMI disposal) and financing, resulting in a net cash increase of **$83,641** Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,764,359) | $(1,947,128) | | Net cash provided by (used in) investing activities | $935,974 | $(11,773) | | Net cash provided by financing activities | $912,026 | $26,799 | | **Net increase (decrease) in cash** | **$83,641** | **$(1,932,102)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide critical context on the GMI subsidiary sale, the company's liquidity issues raising 'going concern' doubts, revenue concentration, and a significant post-quarter litigation settlement - The company's financial condition has raised substantial doubt about its ability to continue as a going concern, anticipating a need to raise additional capital by the end of 2023 to meet operating cash flow requirements[19](index=19&type=chunk) - On March 17, 2023, the company sold its Gray Matters, Inc. (GMI) subsidiary, receiving cash, a **24.9%** equity interest in the purchaser (GMDC), and contingent future payments, with GMI's results now reported as discontinued operations[17](index=17&type=chunk)[32](index=32&type=chunk) - Revenue from U.S. government contracts and subcontracts constituted **96.6%** of total revenue for the quarter, with revenue from one prime contractor representing **50.9%** of total revenue, indicating significant customer concentration[27](index=27&type=chunk) - Subsequent to the quarter's end, on April 28, 2023, the company settled litigation with Jeffrey Gerald, extinguishing a **$1.5 million** deferred consideration obligation related to the GMI acquisition, which is expected to result in a gain of approximately **$1.41 million** in Q2 2023[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic shift towards higher-margin professional services, Q1 2023 financial results, and severe liquidity constraints raising substantial doubt about its going concern ability [Our Business and Strategy](index=24&type=section&id=Our%20Business%20and%20Strategy) The company provides IT services primarily to U.S. government agencies, focusing on organic and acquisition-driven growth, with a strategic shift towards higher-margin professional services over third-party product reselling - The company's strategy is to grow business organically and through acquisitions, with a focus on professional services over third-party product reselling[93](index=93&type=chunk) - WaveDancer's core competencies include legacy software migration, web-based and mobile solutions, data analytics, and developing cybersecurity and cloud services practices[88](index=88&type=chunk) [Results of Continuing Operations](index=24&type=section&id=Results%20of%20Continuing%20Operations) Q1 2023 revenue from continuing operations fell **27.9%** to **$2.16 million** due to a strategic decline in software sales, while professional services revenue grew **1.8%**, and the operating loss improved **43.1%** due to reduced SG&A expenses Revenue and Gross Profit Comparison (Q1 2023 vs Q1 2022) | Metric | Q1 2023 ($) | Q1 2022 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $2,160,123 | $2,995,512 | -27.9% | | Professional Services Revenue | $2,103,458 | $2,066,690 | +1.8% | | Gross Profit | $656,798 | $696,470 | -5.7% | - The operating loss from continuing operations decreased by **$722,332** (**43.1%**) to **$954,730**, primarily due to a **$762,004** reduction in SG&A expenses[97](index=97&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces critical liquidity challenges with net working capital of only **$97,217**, necessitating additional capital by Q4 2023 and raising substantial doubt about its ability to continue as a going concern - The company had net working capital of **$97,217** and cash of **$814,722** as of March 31, 2023[103](index=103&type=chunk) - Management estimates that by Q4 2023, additional capital will be needed to fund operations, and it is exploring strategic alternatives like a merger or sale, which raises substantial doubt about its ability to continue as a going concern[104](index=104&type=chunk) - A **$1,435,576** deferred acquisition consideration liability was extinguished after the quarter ended due to a litigation settlement, which will improve the company's financial position in Q2 2023[105](index=105&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the evaluation date, March 31, 2023[106](index=106&type=chunk) - No material changes to the company's internal control over financial reporting were identified during the first quarter of 2023[107](index=107&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section discloses a lawsuit filed by Jeffrey Gerald concerning severance and deferred acquisition consideration, which was settled on April 28, 2023, with no other significant legal proceedings pending - A lawsuit was filed by Jeffrey Gerald regarding severance and deferred consideration related to the GMI acquisition[110](index=110&type=chunk) - The litigation with Jeffrey Gerald was settled on April 28, 2023, with terms detailed in Note 12 of the financial statements[111](index=111&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes from the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the risk factors described in the company's 2022 annual report on Form 10-K[113](index=113&type=chunk) [Other Items (2, 3, 4, 5)](index=30&type=section&id=Other%20Items%20%282%2C%203%2C%204%2C%205%29) The company reported no unregistered sales of equity securities, no defaults upon senior securities, and no other material information to disclose, with Mine Safety Disclosures being not applicable - The company reported 'None' for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), and Item 5 (Other Information), while Item 4 (Mine Safety Disclosures) was 'Not applicable'[113](index=113&type=chunk)[114](index=114&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Settlement Agreement with Jeffrey Gerald, the Stock Purchase Agreement for the GMI sale, and various officer certifications - A list of exhibits filed with the report is provided, including key agreements and required CEO/CFO certifications[115](index=115&type=chunk)[116](index=116&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-41092 WAVEDANCER WAVEDANCER, INC. (Exact name of registrant as specified in its charter) Delaware 54-1167364 State or other jurisdic ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-41092 WaveDancer, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identificat ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-41092 WaveDancer, Inc. (Exact name of registrant as specified in its charter) Delaware 54-1167364 (State or other jurisdiction of incorporation or organization) (I.R.S. Emplo ...

Securities registered pursuant to Section 12(b) of the Act: | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common Stock, par value $0.001 per | WAVD | The Nasdaq Stock Market LLC | | share | | | Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file ...

OR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-22405 WAVEDANCER, INC. (Exact name of registrant as specified in its charter) | Delaware | 54-1167364 | | --- | --- | | (State or ot ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-22405 Information Analysis Incorporated (Exact name of registrant as specified in its charter) Virginia 54-1167364 (State o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-22405 Information Analysis Incorporated (Exact name of registrant as specified in its charter) Virginia 54-1167364 (State or ot ...