AIFF
Firefly Neuroscience, INC
NASDAQ
10-K: WaveDancer Inc. Reports Full Year 2023 Results Amidst Strategic Shift
Sentiment:
Annual Results
20 March 2024 1:20 PM
WaveDancer Inc. reports a net loss for 2023, while undergoing a strategic shift including the sale of a subsidiary and a planned merger.
Worse than expected
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.
Capital raise
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.
Summary
- WaveDancer Inc. reported a net loss of $2.03 million for the year ended December 31, 2023, compared to a net loss of $17.75 million in 2022.
- Revenue decreased by 27.6% to $8.0 million in 2023, primarily due to a significant decline in software sales.
- Professional services revenue decreased by 6.6%, while software sales revenue decreased by 92.9%.
- Gross profit decreased by 8.7% to $2.6 million, but the gross profit percentage increased from 26.0% to 32.8%.
- Selling, general, and administrative expenses decreased by 29.1% to $5.8 million.
- The company recognized a gain of $1.4 million from a litigation settlement.
- The company sold its Gray Matters subsidiary in 2023, resulting in a gain on sale and settlement of contingent consideration of $382,525.
- As of December 31, 2023, the company had a working capital deficit of less than $0.1 million, including cash and cash equivalents of $0.7 million.
- The company has $0.5 million outstanding under its bank line of credit with no borrowing availability.
- The company is planning a merger with Firefly Neuroscience, Inc., which requires raising between $0.8 million and $1.1 million of additional capital.
- If the merger does not close, the company may face delisting from Nasdaq and will need to reduce expenses and raise capital to continue operations.
Sentiment
Score: 3
Explanation: The document presents a mixed picture with some positive developments (reduced losses, improved margins) but significant negative factors (revenue decline, working capital deficit, need for capital raise, going concern uncertainty). The overall sentiment is negative due to the company's precarious financial situation and dependence on a merger for its future.
Highlights
- WaveDancer's net loss decreased significantly from $17.75 million in 2022 to $2.03 million in 2023.
- Revenue declined by 27.6% year-over-year, with a notable decrease in software sales.
- The company's gross profit margin improved to 32.8% in 2023 from 26.0% in 2022.
- Selling, general, and administrative expenses were reduced by 29.1% in 2023.
- A gain of $1.4 million was recognized from a litigation settlement.
- The sale of the Gray Matters subsidiary resulted in a gain of $382,525.
- The company is pursuing a merger with Firefly Neuroscience, Inc., contingent on raising additional capital.
- The company's working capital is in deficit, and it has no borrowing availability under its line of credit.
Positives
- The net loss significantly decreased year-over-year, indicating improved financial performance.
- The gross profit margin improved, suggesting better cost management.
- Selling, general, and administrative expenses were substantially reduced.
- The company recognized a significant gain from a litigation settlement.
- The sale of the Gray Matters subsidiary generated a gain for the company.
Negatives
- Revenue decreased significantly, primarily due to a decline in software sales.
- The company has a working capital deficit and no borrowing availability under its line of credit.
- The company needs to raise additional capital to complete the merger with Firefly Neuroscience, Inc.
- If the merger does not close, the company may face delisting from Nasdaq and will need to reduce expenses and raise capital to continue operations.
Risks
- The company's ability to continue as a going concern is uncertain due to recurring losses and the need to raise additional capital.
- The merger with Firefly Neuroscience, Inc. is contingent on raising additional capital and may not be completed.
- If the merger does not close, the company may face delisting from Nasdaq.
- The company's reliance on a few key customer contracts poses a risk to future revenue.
- The company faces intense competition in the software development and IT services market.
- The company's dependence on third-party infrastructure and cloud services could lead to disruptions.
- The company is subject to the seasonality of U.S. government spending.
Future Outlook
The company's future is dependent on the successful completion of the merger with Firefly Neuroscience, Inc., which requires raising additional capital. If the merger does not close, the company will need to reduce expenses and raise capital to continue operations and may face delisting from Nasdaq.
Management Comments
- Management is focused on closing the merger with Firefly.
- If the merger does not close, the company will need to make fundamental decisions about the future of its business.
- The standalone business of Tellenger is profitable but cannot support the administrative expenses of being a public reporting company.
Industry Context
The company operates in the competitive IT services and software development market, facing challenges from larger, more established firms. The company's focus on government contracts exposes it to the seasonality of government spending and changes in government priorities. The planned merger with Firefly represents a strategic shift away from its traditional IT services business towards the medical technology sector.
Comparison to Industry Standards
- The company's revenue decline of 27.6% is significant and indicates a challenging year compared to industry averages, which typically show growth in the IT services sector.
- The improvement in gross profit margin to 32.8% suggests better cost management, but it is still below the average for high-margin software and IT services companies.
- The company's net loss of $2.03 million, while an improvement from the previous year, is still a concern and indicates a need for further financial restructuring.
- The company's working capital deficit and lack of borrowing availability are below industry standards for companies of its size and indicate a need for immediate capital infusion.
- The planned merger with Firefly is a significant strategic shift, moving the company away from its traditional IT services business, which is a departure from industry norms for companies in the IT services sector.
Stakeholder Impact
- Shareholders face uncertainty due to the company's financial situation and dependence on the merger.
- Employees may be affected by potential layoffs or restructuring if the merger does not close.
- Customers may experience disruptions if the company's financial situation worsens.
- Creditors face the risk of non-payment if the company is unable to raise additional capital.
Next Steps
- The company needs to raise between $0.8 million and $1.1 million to complete the merger with Firefly Neuroscience, Inc.
- The company needs to complete the merger with Firefly Neuroscience, Inc.
- If the merger does not close, the company will need to reduce expenses and raise capital to continue operations.
- The company may need to consider a sale of Tellenger to acquire the capital necessary to satisfy liabilities or attempt to achieve work-out arrangements with creditors.
Related Party Transactions
- The company sold 35,000 shares of common stock to G. James Benoit, Jr., Chairman and Chief Executive Officer, in a private placement offering for $175,000.
Key Dates
- 2021-12: WaveDancer converted from a Virginia corporation to a Delaware corporation.
- 2023-03-17: The company sold 75.1% of its Gray Matters, Inc. subsidiary.
- 2023-08-09: The company sold its remaining equity interest in GMDC.
- 2023-10-18: The company effected a one-for-ten reverse stock split.
- 2023-11-15: The company entered into a merger agreement with Firefly Neuroscience, Inc.
- 2024-03-14: The company received shareholder approval for the merger with Firefly.
- 2024-03-20: Date of the audit report.
Keywords
merger, financial results, software sales, professional services, capital raise, working capital, net loss, gross profit, operating expenses, litigation settlement, subsidiary sale, going concern, Nasdaq delisting, Firefly Neuroscience, Tellenger
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.
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
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
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.
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
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.
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.
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
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.
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
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.
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.
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.
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
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.
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.
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.
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.