SEC Filing Summary: Information Systems Associates, Inc. (10-Q)
Business Context and Reporting Period
This is a Quarterly Report (Form 10-Q) for Information Systems Associates, Inc. (also referenced as Duos Technologies Group, Inc. in metadata, but the filing text identifies the issuer as Information Systems Associates, Inc.), a smaller reporting company incorporated in Florida. The report covers the quarterly period ended September 30, 2009, and the nine-month period ended on the same date. The company provides asset management software solutions and consulting services, primarily acting as a Value Added Reseller (VAR) for third-party software and developing its own proprietary data collection software, "On Site Physical Inventory" (OSPI).
Key Financial Metrics
| Metric | 3 Months Ended Sep 30, 2009 | 9 Months Ended Sep 30, 2009 | 9 Months Ended Sep 30, 2008 |
|---|---|---|---|
| Revenue | $271,533 | $606,865 | $1,062,499 |
| Net Loss | $(145,696) | $(656,592) | $(301,038) |
| Operating Expenses | $416,606 | $1,228,614 | $1,320,360 |
| Cash and Equivalents (Sep 30, 2009) | $54,240 | ||
| Working Capital (Sep 30, 2009) | $431,642 | ||
| Notes Payable | $5,242 | ||
| Shares Outstanding | 17,966,084 |
Material Changes vs. Prior Period
- Revenue Decline: Revenue for the nine months ended September 30, 2009, decreased by approximately 43% ($455,634) compared to the same period in 2008. Management attributes this to the economic environment, clients reducing business levels, and a 15% price reduction on data discovery services to attract new clients.
- Net Loss Increase: The net loss for the nine-month period increased from $301,038 in 2008 to $656,592 in 2009. This was driven by the revenue decline and a $138,316 increase in professional fees due to new consulting agreements entered in late 2008.
- Expense Reductions (Quarterly): For the three-month period, operating expenses decreased by $227,692 compared to the prior year, primarily due to reductions in administrative/general expenses and professional fees.
- Investing Activities: The company utilized $211,496 in cash for investing activities in the first nine months of 2009, primarily for software development costs ($128,389) and the purchase of an investment in Rubicon Software Group, plc ($73,958).
Guidance, Outlook, and Risks
- Outlook: Management expects the trend of reduced pricing and revenue challenges to continue through 2009. They anticipate long-term benefits from a strategic alliance with Rubicon Software Group, plc, which aims to open the European market and facilitate the development of OSPI version 2.
- Liquidity: The company reported cash on hand of $54,240 and believes it has sufficient capital to fund operations for the next year based on current financing and projected revenues. However, they noted that if projected revenues fall short, they may need to obtain additional equity or debt financing.
- Risks:
- Customer Concentration: Two major customers accounted for 91% of revenue for the nine months ended September 30, 2009.
- Legal Proceedings: The company is defending a lawsuit filed by Phuture World, Inc., alleging breach of a software development contract with damages sought in excess of $15,000. Management believes the claims are frivolous and intends to vigorously defend.
- Capital Needs: Failure to raise additional capital if needed could result in lower revenues and market share.
Key Facts for Investor Verification
- Revenue Concentration: Verify the stability of the two major customers representing 91% of revenue, as their continued business is critical to operations.
- Cash Burn Rate: Confirm the company's ability to sustain operations with only $54,240 in cash, given the net loss of $656,592 for the nine-month period.
- Stock Issuance for Services: Note that a significant portion of expenses ($517,188 for the nine months) was offset by issuing stock for services rather than cash, which impacts cash flow but increases share count.
- Legal Exposure: Monitor the status of the Phuture World, Inc. lawsuit and any potential counter-claims.
- Investment Valuation: Review the valuation and performance of the $73,958 investment in Rubicon Software Group, plc, which showed an unrealized gain of $1,242 as of September 30, 2009.