Merger and Acquisitions - The Company entered into a merger agreement with Firefly Neuroscience, Inc. in an all-stock transaction, requiring the raising of $0.8 million to $1.1 million in additional capital[23] - Upon closing the merger, the combined entity will focus on developing and commercializing Firefly's AI-driven Brain Network Analytics platform, which has FDA clearance[23] - If the merger does not close, the Company will pursue organic growth and acquisitions, necessitating capital raising to fund operations and acquisitions[24] Growth Strategies - The Company aims to grow organically by becoming more proactive in bidding for government contracts and expanding outreach to larger prime contractors[27] - A significant portion of future revenue is expected to come from services provided to the Small Business Administration in connection with its 7A and 504 loan programs, highlighting dependency on key contracts[73] Financial Performance - The company has incurred net losses of $2,034,435, $17,753,838, $1,131,449, and $717,246 during the years ended December 31, 2023, 2022, 2021, and 2019, respectively, indicating ongoing financial challenges[62] - The company has experienced operating losses in four of the last five years, raising concerns about achieving or maintaining profitability in the future[62] - The company relies heavily on U.S. government contracting, which is subject to annual seasonality, with historically higher revenues in the third and fourth fiscal quarters[63] Market Competition - The Company faces strong competition in the IT services market, with many larger firms having more resources and established customer bases[43] - The company faces intense competition in software development and cloud services, which may affect its market position and profitability[79] - The company faces intense competition for hiring qualified personnel, which may hinder its ability to grow and meet client demands[110] Operational Risks - The company is dependent on third-party providers like AWS and Microsoft for its infrastructure, and any disruptions could adversely affect operations and financial results[64] - Changes in U.S. federal government funding priorities could materially impact revenue and earnings, given that it is the largest customer[74] - Cybersecurity threats pose significant risks to the company's information technology systems, potentially affecting operations and financial results[87] - The company must maintain effective internal controls over financial reporting to ensure accuracy, as required by the Sarbanes-Oxley Act[90] - The company frequently utilizes subcontractors, which may adversely affect contracts if they fail to perform as required[82] Financial Management - Future acquisitions may result in dilutive issuances of equity securities and could incur additional debt or liabilities, impacting financial condition[60] - The company does not intend to pay dividends for the foreseeable future, focusing instead on retaining earnings for business expansion[98] - The issuance of additional stock could dilute existing shareholders' investments, impacting the market price of common stock[97] - The company may seek credit facilities to fund working capital needs, which could expose it to additional risks associated with leverage[104] - Violating covenants in credit facilities could lead to accelerated debt maturity and restrictions on distributions to shareholders[105] Compliance and Regulatory Risks - Compliance with public company regulations has increased legal and financial costs, potentially diverting management's attention from revenue-generating activities[108] - The company has already hired additional employees to comply with regulatory requirements, indicating a potential increase in operational costs[108] Technological and Market Adaptation - Failure to keep pace with technological changes may negatively impact the company's ability to compete in the market[120] - The company must accurately estimate costs and timelines for contracts to maintain profitability, as inaccuracies could adversely affect financial outcomes[81] - The company has modernized nearly all necessary forms for compliance, but opportunities for further modernization are nearing maturity, potentially leading to revenue decline[78] Miscellaneous Risks - The variability in the company's results of operations could lead to significant fluctuations in stock price and investor expectations[114] - The company is subject to various risks, including natural disasters and geopolitical unrest, which could adversely affect its business and financial condition[119] - The company may face costly legal proceedings that could divert management resources and harm its financial position[118] - The company’s success is dependent on its ability to retain key employees, and loss of such personnel could limit project completion and competitiveness[113]

Financial Performance - Total revenue for Q3 2023 was $1,967,277, a decrease of $339,102 or 14.7% from $2,306,379 in Q3 2022[100] - Professional services revenue decreased by $192,712 or 9.1% to $1,921,300 in Q3 2023 from $2,114,012 in Q3 2022[100] - Gross profit for Q3 2023 was $649,812, down by $88,784 or 12.0% compared to $738,596 in Q3 2022[101] - Total revenue for the nine months ended September 30, 2023, was $6,152,022, a decrease of $2,900,389 or 32.0% from $9,052,411 in the prior year[105] - Gross profit for the nine months ended September 30, 2023, decreased by $327,284 or 14.0% to $2,011,623 compared to $2,338,907 in the prior year[106] Operating Loss and Expenses - Operating loss from continuing operations improved to $516,845 in Q3 2023, a reduction of $613,273 or 54.3% from a loss of $1,130,118 in Q3 2022[103] - Total Selling, General and Administrative (SG&A) expenses decreased by $2,312,807, from $6,745,357 in 2022 to $4,432,550 in 2023, primarily due to reductions in salaries, stock-based compensation, and legal fees[108] - The operating loss from continuing operations decreased by 77.8%, from $4,406,450 in 2022 to $978,459 in 2023, attributed to a litigation settlement gain of $1,442,468 and reduced SG&A expenses[109] - Discontinued operations resulted in a net loss of $335,993 in 2023, a significant improvement compared to a loss of $3,052,648 in 2022, reflecting a decrease in operating expenses and the sale of GMI[110] Cash Flow and Liquidity - As of September 30, 2023, the company had a net working capital of $537,375, with cash and cash equivalents totaling $877,198[116] - The company anticipates using $1.0 million to $1.5 million in operating activities over the next twelve months, indicating potential liquidity challenges[118] - The company received $1,400,000 from GMDC in August 2023, which included proceeds from the sale of common stock and contingent consideration[119] Strategic Focus and Growth - The company is focusing on organic growth and acquisitions, particularly in professional services, which are viewed as higher margin[98] - The company plans to leverage resources from the acquisition of Tellenger to capitalize on growth in the cybersecurity market[95] - The company plans to raise additional capital to support growth and is exploring strategic alternatives, including potential mergers or sales[117] Financial Management and Compliance - The company has no commitments for capital spending or plans for material capital expenditures, indicating a conservative approach to financial management[119] - The company has effective disclosure controls and procedures in place as of September 30, 2023, ensuring compliance with SEC regulations[121] - The company sold its remaining 24.9% interest in Gray Matters, Inc. for $400,000 in cash, recognizing a gain of $64,525[91]

Revenue Performance - Total revenue for Q2 2023 was $2,024,622, a decrease of 46.0% from $3,750,520 in Q2 2022, primarily due to reduced third-party software sales[107] - Total revenue for the six months ended June 30, 2023, was $4,184,745, a decrease of 38.0% from $6,746,032 in the same period in 2022[112] - The sale of GMI to GMDC on March 17, 2023, resulted in a revenue decrease of $566,862 and a gross profit decrease of $220,242 for the first half of 2023 compared to the same period in 2022[117] Professional Services - Professional services revenue decreased by 13.6% to $1,967,957 in Q2 2023 from $2,277,832 in Q2 2022, driven by fewer resources deployed on a software modernization project[107] - The company is focusing on organic growth and acquisitions, particularly in professional services, to enhance margins and expand its market presence[106] Gross Profit - Gross profit for Q2 2023 was $705,013, down 22.0% from $903,841 in Q2 2022, with professional services gross profit as a percentage of revenue declining from 37.5% to 35.8%[108] - Gross profit for the six months ended June 30, 2023, decreased by 14.9% to $1,361,811 from $1,600,311 in the prior year[113] Operating Income and Loss - Operating income from continuing operations improved to $493,116 in Q2 2023, compared to a loss of $1,599,270 in Q2 2022, largely due to a gain on litigation settlement[110] - The operating loss from continuing operations for the first half of 2023 was $461,614, a decrease of $2,814,718 or 85.9% compared to the first half of 2022[116] - The company generated a net loss from continuing operations of $779,174 for the six months ended June 30, 2023[123] Expenses - Total selling, general and administrative (SG&A) expenses for Q2 2023 were $1,654,365, down 33.9% from $2,503,111 in Q2 2022[109] - Total SG&A expenses for the six months ended June 30, 2023, were $3,265,893, a decrease of 33.0% from $4,876,643 in the same period in 2022[115] Discontinued Operations - The company sold 75.1% of its Gray Matters, Inc. subsidiary on March 17, 2023, and has reflected it as a discontinued operation[100] - The net loss on discontinued operations for the first half of 2023 was $335,993, a decrease of $813,497 compared to a net income of $477,504 in the first half of 2022[117] Cash Flow and Capital Needs - As of June 30, 2023, the company had a net working capital deficit of $780,357, with cash and cash equivalents of $338,300[123] - The company anticipates needing to raise additional capital by the first quarter of 2024 to meet ongoing operating cash flow requirements[124] - Cash used for continuing operations during the second quarter of 2023 was $389,177, with an anticipated total cash usage of approximately $1.0 million to $1.5 million over the next twelve months[125] - On August 9, 2023, the company received $1,400,000 from GMDC as proceeds from the sale of common stock and contingent consideration[125] - The company repaid $500,000 on its line of credit with Summit bank on August 9, 2023, and is finalizing an extension of the line of credit expiration date to December 31, 2023[125] - The company has no commitments for capital spending or plans for material capital expenditures[125]

Financial Performance - Total revenue for the three months ended March 31, 2023, was $2,160,123, a decrease of $835,389 or 27.9% compared to $2,995,512 in the prior year quarter[98] - Professional services revenue increased by 1.8% to $2,103,458 in Q1 2023 from $2,066,690 in Q1 2022, while third-party software sales accounted for only 2.6% of total sales in Q1 2023, down from 31.0% in the prior year quarter[99] - Gross profit decreased by $39,672 or 5.7% to $656,798 for Q1 2023, with professional services gross profit as a percentage of revenue declining from 32.7% to 31.2%[100] - Operating loss from continuing operations was $954,730 in Q1 2023, a decrease in loss of $722,332 or 43.1% compared to $1,677,062 in Q1 2022, primarily due to a reduction in SG&A expenses[102] Expenses and Liabilities - Total SG&A expenses decreased by $762,004 to $1,611,528 in Q1 2023 from $2,373,532 in Q1 2022, with significant reductions in legal and professional fees and acquisition costs[101] - Current liabilities as of March 31, 2023, amounted to $2,178,281, excluding $1.0 million outstanding under the bank line of credit[110] - The bank line of credit expired on May 16, 2023, and the Company is in discussions to extend it[110] - The Company reached a settlement with the seller of GMI, eliminating the obligation to pay deferred acquisition consideration of $1,435,576[110] Cash Flow and Working Capital - As of March 31, 2023, the Company had net working capital of $97,217, with cash and cash equivalents totaling $814,722[108] - The Company generated a loss from continuing operations of $1,013,959 and had an accumulated deficit of $32,540,753 as of March 31, 2023[108] - Cash consideration from the sale of GMI provided the Company with $935,974 in March 2023[109] - The Company anticipates using approximately $1.5 million to $2.0 million in operating activities over the next twelve months[110] Strategic Initiatives - The company has modernized over 100 million lines of COBOL code for over 35 governmental and commercial customers, maintaining a competitive advantage in a shrinking labor pool of COBOL programmers[94] - The acquisition of Tellenger, Inc. in April 2021 enhanced the company's capabilities in web-based solutions and cybersecurity, positioning it for growth in the modernization and cybersecurity markets[95] - The company plans to grow organically and through acquisitions, focusing on professional services viewed as higher margin and increasing its bidding activity on government contracts[97] Customer Dependency - The company is dependent on a few key customer contracts for a significant portion of future revenue, and any reduction in services to these contracts could adversely affect anticipated operating results[88] Discontinued Operations - The company sold 75.1% of its Gray Matters, Inc. subsidiary on March 17, 2023, resulting in GMI being treated as a discontinued operation[91] Shareholder Information - The Company received 993,768 common shares of GMDC, representing 19.0% of the fully diluted capitalization[107] Capital Expenditures - The Company has no commitments for capital spending or plans for material capital expenditures[111]

Financial Reporting and Compliance - Management's estimates and assumptions in financial reporting are subject to change, which may adversely affect operating results and stock price [101]. - The company must maintain effective internal controls over financial reporting to ensure accuracy and timeliness, as required by the Sarbanes-Oxley Act [102]. - Changes in accounting principles could lead to unfavorable charges that adversely affect financial results and growth prospects [105]. - The company faces increased legal and financial compliance costs due to public company requirements, which may divert management's attention from core business activities [123]. - The evolving regulatory landscape may create uncertainty and increase compliance costs, impacting operational efficiency [125]. - Future financing may require compliance with restrictive covenants, and violations could accelerate debt maturity and limit distributions to shareholders [120]. Dividend and Financing Strategy - The company does not intend to pay dividends for the foreseeable future, focusing instead on retaining earnings for business expansion [113]. - The issuance of additional stock could dilute existing shareholders' investments and potentially decrease the market price of common stock [111]. - The company may seek credit facilities to fund operations, which could expose it to additional risks associated with leverage [118]. - The company may need to engage in equity or debt financings to support growth, which could lead to significant dilution for existing shareholders [122]. Leadership and Human Resources - The company is highly dependent on the services of its Chief Executive Officer, Jamie Benoit, whose leadership is critical to its market presence and strategic direction [126]. - The company faces intense competition for highly skilled personnel, which may hinder its ability to hire and retain qualified employees necessary for its operations [130]. - Organizational changes and leadership transitions may lead to uncertainty and disruptions, increasing the likelihood of turnover among key personnel [127]. - The company does not maintain key person life insurance policies on its key employees, which poses a risk if any of them resign or cease to provide services [129]. Operational Risks and Challenges - The company’s results of operations may vary significantly from period to period, affecting the trading price of its common stock [132]. - The company must continue to improve its operational, financial, and management systems to achieve organic growth and maintain its competitive edge [138]. - The company is subject to risks from natural disasters and man-made problems, which could disrupt its supply chain and impact sales [142]. - The company must keep pace with rapidly changing technology in the IT industry to avoid negative impacts on its business [143]. - The company’s ability to attract and retain customers is influenced by its brand reputation and the quality of its security solutions and services [138]. - The company may face substantial costs and management distractions from potential litigation, which could harm its financial condition and results of operations [141].

Financial Performance - Total revenue for Q2 2022 was $4,317,382, a decrease of 8.8% from $4,731,961 in Q2 2021[108] - Gross profit for Q2 2022 decreased by 2.7% to $929,781 compared to $955,928 in Q2 2021[109] - Loss from operations in Q2 2022 was $1,724,157, a decrease of $1,778,135 compared to income from operations of $53,979 in Q2 2021[114] - Total revenue for the six months ended June 30, 2022, was $7,312,984, down 10.3% from $8,151,541 in the same period in 2021[115] - Gross profit for the six months ended June 30, 2022, was $1,305,846, a decrease of $669,732 or 33.9% compared to $1,975,578 in the same period of 2021[116] - Loss from operations was $4,509,745 for the six months ended June 30, 2022, a decrease of $4,832,594 from income of $322,849 in the same period of 2021[121] Expenses - Selling, general and administrative expenses increased significantly to $3,240,388 in Q2 2022, up from $819,193 in Q2 2021, reflecting a rise of $2,421,195[111] - SG&A expenses increased significantly to $5,954,730 for the six months ended June 30, 2022, up by $4,455,287 from $1,499,443 in 2021, driven primarily by personnel costs and legal fees[118] - The increase in personnel costs for SG&A was $1,372,917, rising from $904,524 in 2021[118] - Legal and professional fees surged to $1,006,415 in 2022, an increase of $913,071 from $93,344 in 2021[118] - Acquisition costs totaled $790,861 for the six months ended June 30, 2022, compared to $153,286 in the same period of 2021, related to the terminated acquisition of Knowmadics[119] Acquisitions and Growth Strategy - The company incurred acquisition expenses totaling $356,159 in 2022, compared to $82,756 in 2021[112] - The Gray Matters acquisition is expected to generate revenue, but delays in revenue recognition have impacted financial projections[94] - The contingent liability related to the Gray Matters acquisition was recorded at $930,000, with potential additional consideration of up to $4,000,000 based on performance[113] - The contingent liability related to the Gray Matters acquisition was recorded at $930,000, reflecting delays in revenue recognition that do not adversely affect long-term prospects[120] - The company aims to grow through acquisitions and has identified cybersecurity and cloud solutions as key growth areas[106] - The company intends to prioritize acquisition targets that are immediately accretive to operating cash flow while requiring additional capital to support its strategy[123] Working Capital and Financing - As of June 30, 2022, the company had working capital of approximately $1.0 million, including cash and cash equivalents of $0.6 million, and an accumulated deficit of $17.0 million[123] - The company raised $1,875,000 through the sale of 1,562,506 unregistered shares at $1.20 per share in August 2022 to support its growth strategy[123]

Financial Performance - Total revenues for the three months ended March 31, 2022, were $2,995,512, a decrease of 12.4% compared to $3,419,580 for the same period in 2021[12] - Gross profit for Q1 2022 was $376,065, down 63.1% from $1,019,650 in Q1 2021[12] - Net loss for the three months ended March 31, 2022, was $2,078,307, compared to a net income of $270,815 in the same period of 2021[12] - For the three months ended March 31, 2022, total revenue was $2,995,512, a decrease of 12.4% from $3,419,580 in the same period of 2021[38] - The net loss for the three months ended March 31, 2022, was $2,078,307, compared to a net loss of $577,394 for the same period in 2021[63] - Basic loss per share for the three months ended March 31, 2022, was $(0.12), while it was $0.02 for the same period in 2021[81] Cash and Assets - Cash and cash equivalents decreased to $2,999,201 as of March 31, 2022, from $4,931,302 at the end of 2021, representing a decline of 39.3%[13] - Total assets decreased to $21,222,990 as of March 31, 2022, down from $23,362,643 as of December 31, 2021, a reduction of 9.2%[10] - Accounts receivable as of March 31, 2022, totaled $1,672,072, with billed receivables from the federal government amounting to $1,625,138[40] - As of March 31, 2022, the balance of deferred costs of revenue was $101,656, down from $154,218 as of December 31, 2021, reflecting a decrease of approximately 34%[45] Liabilities and Expenses - Total liabilities as of March 31, 2022, were $5,521,150, a decrease from $5,921,471 at the end of 2021, reflecting a decline of 6.8%[10] - Selling, general and administrative expenses surged to $2,714,342 in Q1 2022, compared to $680,250 in Q1 2021, an increase of 299.0%[12] - The total expense incurred related to operating leases was $56,414 for the three months ended March 31, 2022, compared to $26,122 for the same period in 2021, representing an increase of approximately 116%[51] Acquisitions and Strategic Initiatives - The acquisition of Gray Matters, Inc. in December 2021 is part of the company's strategy to expand its offerings beyond systems modernization services[17] - The total purchase price for Tellenger, Inc. was $2,515,357, which included $2,315,357 in cash and $200,000 in common shares[55] - The acquisition of Gray Matters, Inc. had a total purchase price of $11,005,100, which included net cash consideration of $7,240,100 and common stock valued at $1,500,000[57] - The total assets acquired from Gray Matters included goodwill of $4,560,099, reflecting the value of human capital and strategic opportunities[60] Revenue Sources - Revenue from prime contracts with U.S. government agencies represented 34.3% of total revenue, while subcontracts under federal procurements accounted for 65.1%[24] - The company recognized revenue from services under time and materials arrangements at $1,912,996, representing 64.0% of total revenue for the three months ended March 31, 2022[38] - One prime contract accounted for 27.9% of total revenue, while three subcontracts represented 26.9%, 16.0%, and 11.0% of revenue, respectively[24] - The company sold third-party software and maintenance contracts that accounted for 30.5% of total revenue during the three months ended March 31, 2022[26] Stock-Based Compensation - The company reported stock-based compensation of $312,176 for the three months ended March 31, 2022, compared to $27,711 in the same period of 2021[14] - Total stock-based compensation expense for the three months ended March 31, 2022, was $312,176, compared to $27,711 for the same period in 2021[70] - There were 912,000 options granted with a total fair value of $2,074,670 during the three months ended March 31, 2022[69] - The company has three stock-based compensation plans, with the latest plan approved in December 2021[66] Tax and Compliance - The company has no material uncertain tax positions and no interest or penalties accrued as of March 31, 2022[23] - The effective tax rate for the three-month period ended March 31, 2022, was 25.89%, while it was 0% for the same period in 2021[79] COVID-19 Impact - The company continues to monitor the impact of the COVID-19 pandemic on its business, although no significant adverse effects have been reported as of March 31, 2022[29] Lease Obligations - The present value of lease liabilities as of March 31, 2022, was $652,633, with total future lease payments amounting to $716,649[51] - The company has a weighted average remaining lease term of 42 months and a weighted average discount rate of 4.5% as of March 31, 2022[51]

Business Strategy and Acquisitions - The company repositioned its legacy professional services business by focusing on higher-margin professional services, particularly in the SCM sector, following acquisitions of Tellenger and Gray Matters in 2021[26] - The company plans to acquire Knowmadics, Inc. to enhance its focus on IoT, pending stockholder approval and financing[26] - The company is expanding its blockchain-enabled supply chain management capabilities through the acquisition of Gray Matters, with products currently deployed for U.S. government requirements[33] Government Contracts and Clientele - The company has provided modernization solutions to over 40 government and private sector clients, focusing on legacy system modernizations and cloud migrations[30] - Tellenger's current contracts extend into 2023 and 2024, indicating ongoing revenue generation from government clients[34] Market Trends and Competition - The cybersecurity and cloud solutions markets are among the fastest-growing segments, with increasing demand for sophisticated web applications[37] - The company faces strong competition in the modernization market from larger firms with more resources, highlighting the need for strategic positioning[44] Workforce and Development - The company aims to enhance its business development efforts by hiring personnel and proactively bidding on government proposals[27] - The company employs 51 full-time and 4 part-time individuals, with all billable professionals having at least four years of related experience, contributing to a stable workforce[52] Corporate Visibility - The company has upgraded its listing from the OTCQB to the Nasdaq Capital Market in November 2021, indicating a strategic move to enhance visibility and credibility[28]

Financial Performance - Total revenue for the three months ended September 30, 2021, was $4,299,925, an increase of $377,179, or 9.6% compared to the prior year[96] - For the nine months ended September 30, 2021, total revenue was $12,451,467, an increase of $1,647,570, or 15.2% compared to the prior year[102] - Gross profit for the three months ended September 30, 2021, increased by $364,548, or 59.3%, to $978,875, with a gross profit margin of 22.8%[97] - Gross profit for the nine months ended September 30, 2021, increased by $1,672,282, or 130.4%, to $2,954,453, with a gross profit margin of 23.7%[103] Revenue Sources - Professional fees increased by $1,217,421, or 77.0%, while software sales revenue decreased by $840,242, or 35.9% for the same period[96] - Professional fees for the nine months increased by $5,212,131, or 155.4%, while software sales revenue decreased by $3,564,561, or 47.8%[102] - Three subcontracts represented 54.4% of revenue and 87.9% of gross profit for the three months ended September 30, 2021[91] - The acquisition of Tellenger contributed approximately two-thirds of the increase in professional fees for the third quarter[96] Expenses and Financial Management - The company incurred legal, accounting, and other acquisition-related expenses totaling $39,245 in the third quarter of 2021[99] - The Company accrued $545,152 through July 31, 2021, related to a subcontract, which was fully invoiced on September 8, 2021[113] - The Company has no material commitments for capital expenditures as of the reporting date[114] Corporate Developments - The Company upgraded its listing from OTC pink sheets to OTCQB and has a pending application to list on the NASDAQ Capital Market[90] - The Company established a new position of Senior Vice President & Corporate Controller in September 2021 to enhance financial reporting oversight[116] - Tellenger, Inc. has been fully integrated into the Company's internal controls over financial reporting, with migration to the primary accounting system expected by the start of 2022[116] Loan and Cash Management - The Company received a Paycheck Protection Program loan of $450,000 on April 20, 2020, with a fixed interest rate of 1% and a term of two years[112] - The Company expects its application for loan forgiveness to be fully resolved during the fourth quarter of 2021[112] - The Company anticipates being able to meet its cash requirements for at least one year from the filing date of the Quarterly Report[113] Internal Controls and Legal Matters - There were no changes in the Company's internal control over financial reporting that materially affected its effectiveness during the quarter ended September 30, 2021[116] - The Company believes its disclosure controls and procedures provide reasonable assurance of achieving their objectives despite inherent limitations[117] - There are no legal proceedings against the Company as of the reporting date[119]

Financial Performance - Total revenue for the second quarter of 2021 decreased by 1.8% compared to the same period in 2020, while revenue from professional fees increased by $2.4 million, or 258.5%[108] - Gross profit for the second quarter of 2021 increased by $566,912, or 145.7%, reaching $955,928, with an overall gross profit margin of 20.2%, up from 8.1% in 2020[109] - For the three months ended June 30, 2021, three subcontracts represented 47.5% of total revenue and 85.7% of gross profit[103] - Income from operations for the first six months of 2021 was $322,849, compared to a loss of $162,057 in 2020, marking a difference of $484,906[118] - The gross profit margin for professional fees in the first six months of 2021 was 33.0%, while software sales contributed a gross profit margin of only 3.1%[115] Acquisition and Integration - The acquisition of Tellenger, Inc. contributed to a $4.0 million increase in professional fees revenue, or 225.3%, in the first six months of 2021[114] - Selling, general and administrative expenses (SG&A) increased by $638,817 in the first six months of 2021, partly due to the incorporation of Tellenger's administrative structure[116] - The company incurred acquisition costs of $153,286 related to the Tellenger acquisition in the first six months of 2021[117] - The integration of Tellenger, Inc. into the company's internal control systems is expected to be completed by the start of the 2022 calendar year[128] Liquidity and Financing - Cash balance at June 30, 2021, was $1,532,764, indicating sufficient liquidity for operations[119] - The company secured a $1 million term loan and a $1 million revolving line of credit, with a current balance of $916,667 and $402,306 respectively as of June 30, 2021[120] - A private placement raised $495,999 in March 2021, with an additional $83,545 from exercised stock options through June 30, 2021[121] - The company accrued $477,268 through June 30, 2021, related to a financing component of a subcontract, with expectations to release the total amount in Q4 2021[123] - The company received a $450,000 Paycheck Protection Program loan on April 20, 2020, with a fixed interest rate of 1% and a two-year term[122] Operational Developments - A lease for new headquarters in Fairfax, Virginia, was executed to begin on July 1, 2021, to meet foreseeable facility requirements[124] - There were no material commitments for capital expenditures reported[125] Compliance and Controls - The company’s disclosure controls and procedures were evaluated as effective as of June 30, 2021[127] - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended June 30, 2021[128] - No legal proceedings were reported against the company[131] Future Plans - The company plans to elevate its common stock to trade on a major exchange before the end of 2021[102]