AIFF
Firefly Neuroscience, INC
NASDAQ
10-Q: WaveDancer Inc. Reports First Quarter 2024 Results Amidst Merger Plans and Financial Challenges
Sentiment:
Quarterly Report
14 May 2024 4:00 PM
WaveDancer Inc. reported a net loss of $673,950 for the first quarter of 2024, while navigating a planned merger and ongoing financial constraints.
Worse than expected
The company's revenue decreased by 11.3% year-over-year, indicating a decline in business activity.
The company has a net working capital deficit and is facing potential liquidity issues.
The company's line of credit is expiring, and there is no guarantee of an extension.
Capital raise
The company may need to raise additional capital if the merger with Firefly does not close.
The company is considering raising capital through private placement, which could be highly dilutive.
Summary
- WaveDancer Inc. reported a net loss of $673,950 for the first quarter of 2024, compared to a net loss of $1,349,952 in the same period last year.
- Total revenue decreased by 11.3% to $1,915,372, primarily due to a reduction in third-party software sales and a decrease in professional services revenue.
- Gross profit increased by 6.5% to $699,258, with professional services gross profit margin improving to 37.1%.
- The company's operating loss improved to $673,971 from $954,730 year-over-year, driven by lower selling, general, and administrative expenses.
- As of March 31, 2024, WaveDancer had a net working capital deficit of $480,073 and cash and cash equivalents of $563,324.
- The company's revolving line of credit of $500,000 expires on May 16, 2024, and they are seeking a short-term extension to facilitate a planned merger.
- WaveDancer is in the process of merging with Firefly Neuroscience, Inc., with the merger expected to close in late May or early June 2024.
- The merger is contingent on several factors, including shareholder approval, sufficient cash to cover liabilities, and Nasdaq approval of Firefly's listing application.
- As part of the merger, WaveDancer plans to sell its Tellenger subsidiary for $1.5 million to WaveTop Solutions, Inc.
- If the merger does not close, WaveDancer faces potential delisting from Nasdaq and will need to consider strategic alternatives, including raising capital or ceasing to be a reporting company.
Sentiment
Score: 4
Explanation: The document presents a mixed picture with some positive improvements in profitability but significant concerns about revenue decline, liquidity, and the uncertainty surrounding the planned merger. The potential for delisting and the need for a capital raise add to the negative sentiment.
Highlights
- WaveDancer's net loss for Q1 2024 was $673,950, an improvement from the $1,349,952 loss in Q1 2023.
- Total revenue decreased by 11.3% to $1,915,372, with professional services revenue down 10.3% to $1,885,867.
- Gross profit increased by 6.5% to $699,258, with professional services gross profit margin improving to 37.1%.
- Operating loss improved by 29.4% to $673,971, primarily due to a decrease in selling, general, and administrative expenses.
- The company had a net working capital deficit of $480,073 and cash and cash equivalents of $563,324 as of March 31, 2024.
- A revolving line of credit of $500,000 expires on May 16, 2024, and the company is seeking an extension.
- WaveDancer is planning a merger with Firefly Neuroscience, Inc., expected to close in late May or early June 2024.
- The merger includes the sale of the Tellenger subsidiary for $1.5 million.
- The company's prime contracts with U.S. government agencies represented 8.9% of revenue, while subcontracts under federal procurements represented 91.1% of revenue.
- Three subcontracts under federal procurements represented 29.0%, 23.0%, and 17.0% of revenue, respectively.
- Revenue from one prime contractor under which the Company has multiple subcontracts represented 58.8% of the Company's revenue in aggregate.
Positives
- The net loss improved significantly year-over-year, decreasing from $1,349,952 to $673,950.
- Gross profit increased by 6.5%, indicating improved profitability on services.
- The operating loss decreased by 29.4%, driven by lower operating expenses.
- Professional services gross profit margin improved to 37.1%, suggesting better pricing or cost management.
- The company is actively pursuing a merger with Firefly Neuroscience, which could provide a new strategic direction.
Negatives
- Total revenue decreased by 11.3%, indicating a decline in overall business activity.
- Professional services revenue decreased by 10.3%, suggesting challenges in maintaining project volumes.
- The company has a net working capital deficit of $480,073, indicating potential short-term liquidity issues.
- The revolving line of credit of $500,000 expires soon, creating uncertainty about short-term financing.
- The company is dependent on a few key customer contracts for a significant portion of its future revenue.
- The company is facing potential delisting from Nasdaq if the merger does not close.
Risks
- The company faces significant risks related to the planned merger with Firefly, including the possibility of the merger not closing.
- If the merger fails, WaveDancer may be delisted from Nasdaq, which would affect the liquidity of its stock.
- The company has a net working capital deficit and may struggle to meet its short-term financial obligations.
- The company's reliance on a few key customer contracts poses a risk to future revenue.
- The company's line of credit is expiring, and there is no guarantee of an extension.
- The company may need to raise additional capital, which could be dilutive to existing shareholders.
- The company is dependent on information technology, and disruptions, failures or security breaches of its information technology infrastructure could have a material adverse effect on its operations.
- The company depends on computing infrastructure operated by Microsoft and other third parties to support some of its solutions and customers, and any errors, disruption, performance problems, or failure in their or our operational infrastructure could adversely affect its business, financial condition, and results of operations.
Future Outlook
The company is focused on closing the merger with Firefly Neuroscience, Inc. and will focus on developing and commercializing Firefly's AI-driven Brain Network Analytics platform. If the merger does not close, the company will need to make fundamental decisions about its future, including potentially ceasing to be a reporting company, raising capital, or selling the business.
Management Comments
- The company is seeking a short-term extension of its line of credit from the lender to allow for additional time to close the Merger transaction, upon which the lender will be repaid in full.
- In the absence of an extension, the Company and FireFly are considering options to prevent or resolve the issues arising from a default.
- If the Merger does not close, we will need to make fundamental decisions as to how to proceed with our business.
- We can operate profitably but cannot support the administrative expenses of being a public reporting company.
- We will consider all of our options, including, but not limited to, ceasing to be a reporting company (which would reduce our operating expenses significantly), raising capital through private placement (which could be highly dilutive), transferring to the OTC Market, seeking another merger partner (which may be difficult if we are delisted from Nasdaq), or selling our business to satisfy our liabilities and dissolving.
Industry Context
The company operates in the IT services sector, providing solutions to government and commercial clients. The planned merger with Firefly represents a shift into the medical technology sector, specifically AI-driven brain analytics. The company's focus on system modernization and cybersecurity aligns with current industry trends, but the potential delisting and financial challenges highlight the competitive nature of the market.
Comparison to Industry Standards
- WaveDancer's revenue decline of 11.3% contrasts with some IT services companies that have seen growth in the same period, though specific comparisons are difficult without detailed peer data.
- The improvement in gross profit margin to 37.1% is a positive sign, but it is important to compare this to industry benchmarks for similar service providers.
- The company's operating loss, while improved, still indicates challenges in achieving profitability, which is a common issue for smaller companies in the IT services sector.
- The planned merger with Firefly is a significant strategic shift, and its success will depend on the company's ability to integrate and commercialize the new technology, which is a common challenge in mergers and acquisitions.
- The company's reliance on government contracts is typical for many IT service providers, but the concentration of revenue in a few subcontracts highlights a potential risk.
Stakeholder Impact
- Shareholders face significant risks due to the potential delisting from Nasdaq and the uncertainty surrounding the merger.
- Employees may be affected by potential restructuring or changes in the company's direction.
- Customers may experience changes in service delivery or product offerings due to the merger or strategic shifts.
- Suppliers and creditors face risks related to the company's financial instability and potential default on obligations.
Next Steps
- The company will focus on closing the merger with Firefly Neuroscience, Inc.
- The company will seek a short-term extension of its line of credit.
- If the merger does not close, the company will need to make fundamental decisions about its future, including potentially ceasing to be a reporting company, raising capital, or selling the business.
Key Dates
- 2021-12: WaveDancer, Inc. converted from a Virginia corporation to a Delaware corporation.
- 2023-03-17: WaveDancer sold 75.1% of its Gray Matters, Inc. subsidiary to Gray Matters Data Corporation.
- 2023-08-09: WaveDancer sold its remaining equity interest in Gray Matters Data Corporation.
- 2023-10-18: WaveDancer effected a one-for-ten reverse stock split.
- 2023-11-15: WaveDancer entered into a merger agreement with Firefly Neuroscience, Inc.
- 2024-03-31: End of the first quarter of 2024, the period covered by this report.
- 2024-05-16: Expiration date of the company's revolving line of credit.
- 2024-05/06: Expected closing of the merger with Firefly Neuroscience, Inc.
Keywords
merger, WaveDancer, Firefly Neuroscience, financial results, net loss, revenue, professional services, operating loss, working capital, line of credit, Tellenger, Nasdaq, government contracts, software sales
AIFF
Firefly Neuroscience, INC
NASDAQ
Sector: TBD
Filings with Classifications
Worse than expected
3 April 2025 6:01 AM
Annual Report (Form 10-K)
- The company's revenue decreased significantly compared to the previous year.
- The company's operating expenses increased substantially.
- The company's auditor expressed substantial doubt about its ability to continue as a going concern.
Capital raise
3 April 2025 6:01 AM
Annual Report (Form 10-K)
- The company is actively pursuing additional capital through equity or debt financings.
- The company entered into an ELOC Purchase Agreement with Arena, pursuant to which Arena has committed to purchase up to $10 million of the company's common stock.
- The company completed a private placement of units for $547,737 on March 28, 2025.
Capital raise
14 February 2025 4:49 PM
8-K Filing
- The document references the issuance of common stock pursuant to purchase agreements with Helena Special Opportunities LLC and Arena Business Solutions Global SPC II, Ltd.
- The issuance includes the conversion of a convertible note and the exercise of a warrant issued to Helena.
Capital raise
7 February 2025 4:50 PM
S-1 Filing
- The company may receive proceeds from the cash exercise of the December 2024 Warrant.
- The company may receive up to US$10,000,000 in aggregate gross proceeds under the ELOC Purchase Agreement from sales of its Common Stock it may elect to make to Arena pursuant to the ELOC Purchase Agreement after the date of this prospectus.
Capital raise
29 January 2025 6:19 AM
Registration Statement Amendment
- The company has entered into an equity line of credit agreement with Arena Business Solutions Global SPC II, Ltd, which allows the company to direct Arena to purchase up to $10,000,000 in shares of common stock.
- The company has also issued a convertible promissory note to Helena Special Opportunities LLC in the principal amount of $2,400,000.
Capital raise
21 January 2025 9:10 AM
Proxy Statement
- The company is seeking approval to issue more than 20% of its common stock to Helena Special Opportunities LLC, including upon conversion of a convertible note and exercise of a warrant.
- The company is also seeking approval to issue more than 20% of its common stock to Arena Business Solutions Global SPC II, Ltd, under a Purchase Agreement.
- The company entered into a Securities Purchase Agreement with Helena for a convertible promissory note of $2,400,000, including a $360,000 original issue discount, and a warrant to purchase 800,000 shares at $4.00 per share.
- The company also entered into a Purchase Agreement with Arena for an equity line of credit of up to $10,000,000, with a commitment fee of $300,000.
Capital raise
23 December 2024 4:30 PM
Financing Announcement
- The company has secured a $2.4 million convertible note from Helena Special Opportunities LLC.
- The company has also entered into a $10 million equity line of credit agreement with Arena Business Solutions Global SPC II, Ltd.
Worse than expected
4 December 2024 6:16 AM
S-1/A Filing
- The company has a negative stockholders equity of $2,776,000 as of September 30, 2024.
- The company has incurred significant losses from operations.
- The company's financial statement footnotes include disclosure regarding the substantial doubt about its ability to continue as a going concern.
Capital raise
4 December 2024 6:16 AM
S-1/A Filing
- The company has raised approximately $3.5 million in a private placement.
- The company has raised $3,039,000 in a Series C financing.
- The company expects to receive proceeds from the exercise of warrants.
- The company may need to raise additional capital in the future.
Worse than expected
14 November 2024 5:26 PM
Quarterly Report
- The company's net loss increased significantly compared to the same periods in the previous year.
- The company's revenue decreased significantly for the nine months ended September 30, 2024, compared to the same period in 2023.
- The company's operating expenses increased substantially due to the merger and related costs.
Capital raise
14 November 2024 5:26 PM
Quarterly Report
- The company has been negotiating further funding with existing and new investors to raise additional capital.
- The company completed a private placement transaction (the PIPE) on August 12, 2024, raising approximately $3.5 million.
- The company issued 86,953 Series C Units and received aggregate gross proceeds of $1,070 during the nine months period ended September 30, 2024.
Capital raise
27 September 2024 6:22 AM
S-1 Filing
- The company may be unable to raise additional capital, which could harm its ability to compete.
- The company expects to expend significant capital to launch its commercialization program for the BNA Platform, build its brand, and continue to improve its product offerings.
Worse than expected
27 September 2024 6:22 AM
S-1 Filing
- The company is in the development stage with minimum revenues and has no operating history in the broad commercialization of medical devices or platforms for consumer use.
- The financial statement footnotes include disclosure regarding the substantial doubt about the company's ability to continue as a going concern.
Worse than expected
16 September 2024 9:11 AM
8-K/A Amendment
- The company's net loss of $2.603 million in 2023 and $3.904 million in 2022 is worse than expected.
- The auditor's report expressing substantial doubt about the company's ability to continue as a going concern is worse than expected.
Capital raise
16 September 2024 9:11 AM
8-K/A Amendment
- The company completed a private placement on August 12, 2024, raising approximately $3.5 million.
- The company is negotiating further funding with existing and new investors to raise additional capital.
Capital raise
20 August 2024 6:01 AM
Corporate Governance Update
- The Executive Chairman's performance bonus is directly tied to the success of a capital raise.
- The document mentions a 'Successful Financing' as a condition for the performance bonus, indicating a potential capital raise is being planned.
Worse than expected
19 August 2024 5:17 PM
Quarterly Report
- The company's operating loss increased compared to the same period last year, primarily due to the absence of a litigation settlement gain that occurred in the prior year.
- The company's revenue decreased compared to the same period last year, indicating a decline in business activity.
- The company's cash position is weak, and it is dependent on raising additional capital to continue operations.
Capital raise
19 August 2024 5:17 PM
Quarterly Report
- The company is negotiating further funding with existing and new investors to raise additional capital.
- On July 26, 2024, Firefly 2023 entered into a securities purchase agreement for a private placement of shares and warrants for gross proceeds of approximately $3.5 million.
- The private placement closed on August 12, 2024, substantially contemporaneous with the consummation of the Merger.
Capital raise
14 August 2024 5:24 PM
8-K Filing
- The company completed a private placement on August 12, 2024, raising approximately $3.5 million in gross proceeds.
- The company issued 3,069,287 shares of common stock and pre-funded warrants to purchase up to 4,849,265 shares of common stock.
- The company also issued warrants to purchase up to 7,918,552 shares of common stock in the private placement.
- The company may need to raise additional capital in the future to support its operations.
Worse than expected
14 August 2024 5:24 PM
8-K Filing
- The company's revenue was significantly lower than the previous year, indicating a decline in sales.
- The company's net losses increased substantially compared to the previous year, indicating a worsening financial situation.
- The company's operating expenses increased significantly, further contributing to the increased losses.
Better than expected
12 August 2024 4:50 PM
Merger Announcement
- The merger provides Firefly with access to public markets and additional capital, which is better than the company's previous position.
Capital raise
12 August 2024 4:50 PM
Merger Announcement
- A private placement offering with certain institutional investors of common stock (or common stock equivalents) and five-year common stock purchase warrants closed substantially contemporaneously with the merger.
- The gross proceeds to the Company from the offering were approximately $3.5 million, before deducting offering expenses payable by the Company.
Capital raise
29 July 2024 9:22 AM
Merger Financing Announcement
- The company is raising approximately $3.5 million through a private placement.
- The private placement involves the issuance of common stock or pre-funded warrants and warrants to purchase common stock.
- The purchase price is $0.442 per share and accompanying warrant, or $0.4419 per pre-funded warrant.
Delay expected
21 June 2024 6:13 AM
Merger Amendment
- The merger deadline has been extended from the original date to July 15, 2024, with a possible further extension to August 15, 2024.
Capital raise
21 June 2024 6:13 AM
Merger Amendment
- Parent anticipates issuing shares and warrants in consideration of funds the Company intends to raise to consummate the Merger.
- The Company intends to raise funds to complete the merger.
Delay expected
13 June 2024 12:39 PM
Debt Agreement
- The maturity date of the loan was extended from May 16, 2024, to July 16, 2024.
Worse than expected
22 May 2024 4:00 PM
8-K Filing
- The resignation of an auditor is generally viewed negatively by the market.
- The going concern qualification in previous audit reports indicates potential financial instability.
Worse than expected
14 May 2024 4:00 PM
Quarterly Report
- The company's revenue decreased by 11.3% year-over-year, indicating a decline in business activity.
- The company has a net working capital deficit and is facing potential liquidity issues.
- The company's line of credit is expiring, and there is no guarantee of an extension.
Capital raise
14 May 2024 4:00 PM
Quarterly Report
- The company may need to raise additional capital if the merger with Firefly does not close.
- The company is considering raising capital through private placement, which could be highly dilutive.
Capital raise
20 March 2024 5:40 PM
Merger Announcement
- The closing of the merger is contingent upon Firefly being listed on the Nasdaq Stock Market.
- Nasdaq listing requires Firefly to raise additional capital.
Capital raise
20 March 2024 1:20 PM
Annual Results
- The company needs to raise between $0.8 million and $1.1 million to complete the merger with Firefly Neuroscience, Inc.
- The company intends to conduct a private placement to raise the required capital.
- The funding of the private placement is contingent on the merger closing.
Worse than expected
20 March 2024 1:20 PM
Annual Results
- The company's revenue declined significantly, indicating worse than expected performance.
- The company's working capital is in deficit, indicating worse than expected financial health.
- The company's need to raise additional capital to complete the merger indicates worse than expected financial stability.
Better than expected
8 March 2024 4:50 PM
Press Release
- The BNA platform shows better than expected results in treatment adherence.
- The BNA platform shows better than expected results in medication optimization.
- The BNA platform shows better than expected results in antidepressant response rates.
- The BNA platform shows better than expected results in reducing treatment resistance.
Better than expected
8 March 2024 4:50 PM
Press Release
- The BNA platform demonstrated better than expected results in treatment adherence, medication management, and overall patient functioning.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.