Firefly Neuroscience, Inc 10-Q for FY2021 Q1

Firefly Neuroscience, Inc. (AIFF)

10-Q 2021-05-17 For: 2021-03-31

Added on April 11, 2026

About this 10-Q

Firefly Neuroscience, Inc filed this 10-Q on May 17, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.42M; up 65.9% from $2.06M a year earlier
Net income: $270.82K; compared with a net loss of $126.34K a year earlier
Diluted EPS: $0.02; compared with -$0.01 a year earlier

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Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☑
		Emerging growth company ☐

		Page Number
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited except for the balance sheet as of December 31, 2020)

	Balance Sheets as of March 31, 2021 and December 31, 2020	3

	Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020	4

	Statements of Cash Flows for the three months ended March 31, 2021 and 2020	5

	Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2021 and 2020	6

	Notes to Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 4.	Controls and Procedures	23

PART II.	OTHER INFORMATION	24

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Mine Safety Disclosures	24

Item 5.	Other Information	24

Item 6.	Exhibits	24

SIGNATURES		25

	March 31, 2021			December 31, 2020
	(Unaudited)			(Note 1)
ASSETS
Current assets
Cash and cash equivalents	$	3,015,943		$	1,858,160
Accounts receivable		1,185,963			1,442,231
Prepaid expenses and other current assets		106,294			142,770
Total current assets		4,308,200			3,443,161

Contract assets - non-current		342,631			210,688
Right-of-use operating lease asset		25,911			51,405
Property and equipment, net of accumulated depreciation and amortization of $317,703 and $312,320		61,395			62,166
Other assets		-			6,281
Total assets	$	4,738,137		$	3,773,701

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	192,213		$	103,646
Revolving line of credit		500,000			-
Contract liabilities		455,496			946,884
Accrued payroll and related liabilities		421,183			375,168
Commissions payable		276,794			181,626
Notes payable - current		149,001			93,009
Operating lease liability - current		18,363			45,595
Other accrued liabilities		8,047			54,274
Interest payable		4,583			3,125
Total current liabilities		2,025,680			1,803,327

Note payable - non-current		300,999			356,991
Total liabilities		2,326,679			2,160,318

Stockholders' equity
Common stock, $0.01 par value, 30,000,000 shares authorized, 13,260,042 and 12,904,376 shares issued, 11,617,426 and 11,261,760 shares outstanding as of March 31, 2021, and December 31, 2020, respectively		132,599			129,043
Additional paid-in capital		15,243,769			14,720,065
Accumulated deficit		(12,034,699	)		(12,305,514	)
Treasury stock, 1,642,616 shares at cost as of March 31, 2021, and December 31, 2020		(930,211	)		(930,211	)
Total stockholders' equity		2,411,458			1,613,383

Total liabilities and stockholders' equity	$	4,738,137		$	3,773,701

	For the three months ended March 31,
	2021		2020
Revenues
Professional fees	$	2,439,259	$	844,403
Software sales		980,321		1,217,353
Total revenues		3,419,580		2,061,756

Cost of revenues
Cost of professional fees		1,467,699		579,631
Cost of software sales		932,231		1,203,298
Total cost of revenues		2,399,930		1,782,929

Gross profit		1,019,650		278,827

Selling, general and administrative expenses		545,663		340,813
Commissions expense		134,587		65,621
Acquisition costs		70,530		-

Income (loss) from operations		268,870		(127,607	)

Other income, net		1,945		1,268

Income (loss) before provision for income taxes		270,815		(126,339	)

Provision for income taxes		-		-

Net income (loss)	$	270,815	$	(126,339	)

Comprehensive income (loss)	$	270,815	$	(126,339	)



Net income (loss) per common share - basic	$	0.02	$	(0.01	)

Net income (loss) per common share - diluted	$	0.02	$	(0.01	)

Weighted average common shares outstanding
Basic		11,282,671		11,211,760
Diluted		12,286,216		11,211,760

	For the three months ended March 31,
	2021			2020
Cash flows from operating activities:
Net income (loss)	$	270,815		$	(126,339	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		5,383			1,248
Stock option compensation		27,711			450
Changes in operating assets and liabilities:
Accounts receivable		256,268			73,787
Prepaid expenses and other current assets		36,476			208,699
Contract assets		(131,943	)		-
Other assets		31,775			-
Accounts payable		88,567			(191,879	)
Contract liabilities		(491,388	)		(193,432	)
Accrued payroll and related liabilities and other accrued liabilities		(25,986	)		(51,152	)
Commissions payable		95,168			(9,778	)
Net cash provided by (used in) operating activities		162,846			(288,396	)

Cash flows from investing activities
Acquisition of property and equipment		(4,612	)		-
Net cash used in investing activities		(4,612	)		-

Cash flows from financing activities
Borrowing under revolving line of credit		500,000			-
Proceeds from issuance of stock		495,999			-
Proceeds from issuance of stock from exercise of options		3,550			-
Net cash provided by financing activities		999,549			-

Net increase (decrease) in cash and cash equivalents		1,157,783			(288,396	)

Cash and cash equivalents, beginning of the period		1,858,160			1,039,442

Cash and cash equivalents, end of the period	$	3,015,943		$	751,046

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

	For the three months ended March 31, 2021:
			Additional
	Common		Paid-In		Accumulated			Treasury
	Stock		Capital		Deficit			Stock			Total
Balances at December 31, 2020	$	129,043	$	14,720,065	$	(12,305,514	)	$	(930,211	)	$	1,613,383
Net income		-		-		270,815			-			270,815
Stock option compensation		-		27,711		-			-			27,711
Stock issued		3,306		492,693		-			-			495,999
Issuance of stock from exercise of options		250		3,300		-			-			3,550
Balances at March 31, 2021	$	132,599	$	15,243,769	$	(12,034,699	)	$	(930,211	)	$	2,411,458

Contract	3 Months ended 03/31/2021					3 Months ended 03/31/2020
Type	Amount		Percentage			Amount		Percentage

Services Time & Materials	$	1,966,129		57.5	%	$	590,570		28.7	%

Services Fixed Price		16,800		0.5	%		123,405		6.0	%

Services Combination		409,870		12.0	%		82,408		4.0	%

Services Fixed Price per Unit		46,460		1.4	%		48,020		2.3	%

Third-Party Software		920,695		26.9	%		1,004,305		48.7	%

Software Support & Maintenance		16,939		0.5	%		212,568		10.3	%

Incentive Payments		42,687		1.2	%		480		0.0	%

Total Revenue	$	3,419,580				$	2,061,756

Contract Assets

Balance at December 31, 2020	$	210,688

Contract assets added		131,943

Balance at March 31, 2021	$	342,631

Contract Liabilities
Balance at December 31, 2020	$	946,884
Contract liabilities added		93,934
Revenue recognized		(585,322	)
Balance at March 31, 2021	$	455,496


Balance at December 31, 2019	$	464,223
Contract liabilities added		19,136
Revenue recognized		(212,568	)
Balance at March 31, 2020		270,791

Deferred Costs of Revenue
Balance at December 31, 2020	$	89,068
Defered costs added		17,406
Deferred costs expensed		(75,223	)
Balance at March 31, 2021	$	31,251


Balance at December 31, 2019	$	453,607
Defered costs added		181
Deferred costs expensed		(207,437	)
Balance at March 31, 2020	$	246,351

Balance Sheet	as of		as of
Classification	March 31, 2021		December 31, 2020

Assets:
Right-to-use operating lease asset	$	25,911	$	51,405

Liabilities:
Operating lease liability - current	$	18,363	$	45,595

	March 31, 2021

Remainder of 2021	$	18,573
Total lease payments		18,573
Less: discount		(210	)
Present value of lease liabilities	$	18,363

	March 31, 2021		December 31, 2020
Billed federal government	$	1,153,203	$	1,425,217
Unbilled receivables		32,760		17,014
Accounts receivable	$	1,185,963	$	1,442,231

	Three Months Ended
	March 31, 2021
Risk-free interest rate	0.46%	-	0.92%
Dividend yield		0%
Expected term (in years)		5
Expected volatility	92.6%	-	93.8%

	Options outstanding
				Weighted average		Weighted average	Aggregate
				exercise price		remaining	intrinsic
Incentive Options	Shares			per share		contractual term	value
Outstanding at December 31, 2020		1,395,000		$	0.31
Options granted		145,000			2.62
Options exercised		(25,000	)		0.14
Options expired		-			-
Options forfeited		-			-
Outstanding at March 31, 2021		1,515,000		$	0.53	4 years, 5 months	$	3,585,623
Exercisable at March 31, 2021		1,135,000		$	0.25	3 years, 1 month	$	3,013,473


Outstanding at December 31, 2019		1,349,000		$	0.23
Options granted		-			-
Options exercised		-			-
Options expired		(129,000	)		0.17
Options forfeited		-			-
Outstanding at March 31, 2020		1,220,000		$	0.24	3 years, 11 months	$	-
Exercisable at March 31, 2020		1,201,500		$	0.24	3 years, 10 months	$	-

	Nonvested
				Weighted average
				grant date
	Shares			fair value
Nonvested at December 31, 2020		235,000		$	0.36
Granted		145,000			1.87
Vested		-			-
Forfeited		-			-
Nonvested at March 31, 2021		380,000		$	0.94


Nonvested at December 31, 2019		23,500		$	0.17
Granted		-			-
Vested		(5,000	)		0.21
Forfeited		-			-
Nonvested at March 31, 2020		18,500		$	0.15

	March 31, 2021			December 31, 2020
PPP loan	$	450,000		$	450,000
Total		450,000			450,000
Less current portion		(149,001	)		(93,009	)
Non-current portion	$	300,999		$	356,991

	Net income					Per share
	(loss)			Shares		amount
Basic net income per common share for the three months ended March 31, 2021:
Income available to common shareholders	$	270,815			11,282,671	$	0.02
Effect of dilutive stock options		-			1,003,545		-
Diluted net income per common share for the three months ended March 31, 2021:	$	270,815			12,286,216	$	0.02

Basic net loss per common share for the three months ended March 31, 2020:
Loss available to common shareholders	$	(126,339	)		11,211,760	$	(0.01	)
Effect of dilutive stock options		-			-		-
Diluted net loss per common share for the three months ended March 31, 2020:	$	(126,339	)		11,211,760	$	(0.01	)

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 Principal 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
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

		Information Analysis Incorporated
		(Registrant)

Date: May 17, 2021	By:	/s/ Stanley A. Reese
		Stanley A. Reese,
		Chief Executive Officer and President

Date: May 17, 2021	By:	/s/ Matthew T. Sands
		Matthew T. Sands, Chief Financial Officer

Date:	May 17, 2021	By:	/s/ Stanley A. Reese
			Stanley A. Reese
			Chief Executive Officer and President