ienect (US:ICCT)2024-05-15 21:21Financial Performance - Total revenue for the three months ended March 31, 2024, increased by 48% to $2,723,363 compared to $1,840,371 in the same period in 2023[166] - Gross profit margin improved to 81% for the three months ended March 31, 2024, up from 73% in 2023, driven by higher sales growth in subscription software[168] - Net loss attributable to common stockholders for the three months ended March 31, 2024, was $5,170,970, a 206% increase from $1,689,034 in 2023[173] - The company reported an operating loss of $3,042,185 for the three-month period ended March 31, 2024, with an accumulated deficit of $120,509,730 and a net working capital deficit of $10,906,673[183] Revenue Sources - Subscription revenue from SaaS and MSaaS offerings accounted for 95% and 93% of total revenue for the three months ended March 31, 2024, and 2023, respectively[160] - The company expects the growth rate of its SaaS and MSaaS offerings to outpace that of professional services over time, benefiting gross margin rates[168] Expenses - Selling, general and administrative expenses rose by 87% to $4,519,898 for the three months ended March 31, 2024, primarily due to increased payroll expenses[173] - Depreciation and amortization expenses increased by 154% to $732,553, reflecting higher amortization costs from asset acquisitions[176] - Financing fee expenses increased significantly to $1,302,697 for the three months ended March 31, 2024, compared to $80,063 in the same period of 2023, primarily due to expensing deferred financing fees of approximately $1,008,000 related to a cancelled equity line of credit[178] Cash Flow - Net cash used in operating activities decreased to $990,030 for the three months ended March 31, 2024, from $1,152,215 in the same period of 2023, attributed to larger non-cash charge add backs and increases in accounts payable[185] - Net cash used in investing activities rose to $1,204,437 for the three months ended March 31, 2024, compared to $194,115 in the same period of 2023, mainly due to asset acquisitions of FeatherPay and Verifi Dental Limited[186] - Net cash provided by financing activities decreased to $1,113,140 for the three months ended March 31, 2024, from $1,953,579 in the same period of 2023, reflecting changes in debt issuance and payments[187] Financing and Future Outlook - The company raised $1,423,093 in gross proceeds through secured and convertible notes in the first three months of 2024[172] - The company has entered into a purchase agreement with Arena Business Solutions for up to $40 million of common stock, subject to certain conditions[187] - The company is reliant on future fundraising to finance operations, with substantial doubt about its ability to continue as a going concern for the next 12 months[183] - Management is focused on increasing revenues through new service lines and strategic partnerships while exploring additional areas of opportunity[184] Tax and Dividends - The company incurred an income tax expense of $54,000 for the three months ended March 31, 2024, compared to no tax expense in the same period of 2023, due to its registration in Delaware[181] - Preferred dividends for the three months ended March 31, 2024, amounted to $448,000, reflecting dividends accrued for the Series A Preferred Stock[181] Market Strategy - The company continues to pursue contracts with larger enterprise healthcare businesses, enhancing its market presence[172] - Cost of sales remained flat at $513,097 for the three months ended March 31, 2024, indicating effective cost management[174]