WAVEDANCER, INC. - Quarter Report: 2014 March (Form 10-Q)

(Mark One)
þ				QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
				For the quarterly period ended March 31, 2014
		OR
o				TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
				For the transition period from          to

Virginia		54-1167364
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o		Smaller reporting company þ

 

 

 

 

 

 

		March 31, 2014				December 31, 2013
		(Unaudited)				(see Note 1)
ASSETS
Current assets:
Cash and cash equivalents		$	2,268,852			$	2,359,527
Accounts receivable, net			793,729				1,437,754
Prepaid expenses and other current assets			492,523				534,992
Notes receivable, current			5,859				6,294
Total current assets			3,560,963				4,338,567
Property and equipment, net			58,516				52,887
Notes receivable, long-term			7,658				8,665
Other assets			6,281				6,281
Total assets		$	3,633,418			$	4,406,400
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	57,254			$	611,781
Commissions payable			853,447				902,972
Deferred revenue			444,843				503,482
Accrued payroll and related liabilities			211,338				221,378
Other accrued liabilities			52,810				60,796
Total current liabilities			1,619,692				2,300,409
Stockholders' equity:
Common stock, par value $0.01, 30,000,000 shares authorized;
12,844,376 shares issued, 11,201,760 shares outstanding as of March 31, 2014 and December 31, 2013			128,443				128,443
Additional paid-in capital			14,604,950				14,599,696
Accumulated deficit			(11,789,456	)			(11,691,937	)
Treasury stock, 1,642,616 shares at cost			(930,211	)			(930,211	)
Total stockholders' equity			2,013,726				2,105,991
Total liabilities and stockholders' equity		$	3,633,418			$	4,406,400

 

 

 

		For the three months ended
		March 31,
		2014			2013
Revenues:
Professional fees		$	875,260		$	1,180,806
Software sales			304,550			136,243
Total revenues			1,179,810			1,317,049
Cost of revenues:
Cost of professional fees			497,827			690,643
Cost of software sales			227,705			113,342
Total cost of revenues			725,532			803,985
Gross profit			454,278			513,064
Selling, general and administrative expenses			445,819			454,280
Commission expense			108,677			112,306
Loss from operations			(100,218	)		(53,522	)
Other income			2,699			1,381
Loss before provision for income taxes			(97,519	)		(52,141	)
Provision for income taxes			--			--
Net loss		$	(97,519	)	$	(52,141	)
Comprehensive loss		$	(97,519	)	$	(52,141	)
Loss per common share:
Basic		$	(0.01	)	$	(0.00	)
Diluted		$	(0.01	)	$	(0.00	)
Weighted average common shares outstanding:
Basic			11,201,760			11,201,760
Diluted			11,201,760			11,201,760

 

 

 

 

		For the three months ended March 31,
		2014				2013
Cash flows from operating activities:
Net loss		$	(97,519	)		$	(52,141	)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization			7,585				5,657
Stock-based compensation			5,254				3,487
Changes in operating assets and liabilities:
Accounts receivable			644,025				(159,196	)
Prepaid expenses and other current assets			42,469				(9,700	)
Accounts payable and accrued expenses			(572,553	)			(19,410	)
Deferred revenue			(58,639	)			(34,244	)
Commissions payable			(49,525	)			(15,977	)
Net cash used in operating activities			(78,903	)			(281,524	)
Cash flows from investing activities:
Capital expenditures			(13,214	)			(2,909	)
Increase in notes receivable			--				(10,000	)
Payments received on notes receivable			1,442				824
Net cash used in investing activities			(11,772	)			(12,085	)
Net decrease in cash and cash equivalents			(90,675	)			(293,609	)
Cash and cash equivalents, beginning of the period			2,359,527				2,623,016
Cash and cash equivalents, end of the period		$	2,268,852			$	2,329,407
Supplemental cash flow information
Interest paid		$	--			$	--
Income taxes paid		$	--			$	--

The accompanying notes are an integral part of the financial statements

 

 

 

2.           Summary of Significant Accounting Policies (continued)

 

 

2.           Summary of Significant Accounting Policies (continued)

Risk free interest rate	0.88 – 0.90%
Dividend yield	0%
Expected term	5 years
Expected volatility	62.8%

		Options outstanding
		Number of shares				Weighted average exercise price per share
Balance at December 31, 2013			1,187,000			$	0.26
Options granted, exercised, expired or forfeited			--				--
Balance at March 31, 2014			1,187,000			$	0.26

 

		Options outstanding
		Number of shares				Weighted average exercise price per share
Balance at December 31, 2012			1,032,500			$	0.29
Options granted			160,000				0.16
Options exercised, expired or forfeited			(10,000	)			0.15
Balance at March 31, 2013			1,182,500			$	0.28

 

3.           Stock-Based Compensation (continued)

Options outstanding																Options exercisable
Total shares				Weighted average exercise price				Weighted average remaining contractual life in years				Aggregate intrinsic value				Total shares				Weighted average exercise price				Weighted average remaining contractual life in years				Aggregate intrinsic value
	1,187,000			$	0.26				6.00			$	60,518				910,750			$	0.30				4.98			$	35,483

 

		Nonvested
		Number of shares				Weighted average grant date fair value
Balance at December 31, 2013			431,250			$	0.08
Vested			(155,000	)			0.08
Balance at March 31, 2014			276,250			$	0.08

 

 

 

 

●	changes in the funding priorities of the U.S. federal government;

●	changes in the way the U.S. federal government contracts with businesses;

●	terms specific to U.S. federal government contracts;

●	our failure to keep pace with a changing technological environment;

●	intense competition from other companies;

●	inaccuracy in our estimates of the cost of services and the timeline for completion of contracts;

●	non-performance by our subcontractors and suppliers;

●	our dependence on key personnel;

●	our dependence on third-party software and software maintenance suppliers;

●	our failure to adequately integrate businesses we may acquire;

●	fluctuations in our results of operations and the resulting impact on our stock price;

●	the exercise of outstanding options;

●	our failure to adequately protect our intellectual property;

●	the limited public market for our common stock; and

●	our forward-looking statements and projections may prove to be inaccurate.

 

Net loss for the three months ended March 31, 2014, was $97,519, or 8.3% of revenue, versus net loss of $52,141, or 4.0% of revenue, for the same period in 2013.

 

 

 

We have no off-balance sheet arrangements.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, and people performing similar functions, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of March 31, 2014 (the “Evaluation Date”).  Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

31.1	Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934
31.2	Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

 

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