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]
WaveDancer(WAVD) - 2023 Q1 - Quarterly Report