Liquidity and Capital Resources
Our
beginning cash and cash equivalents balance, when combined with our
cash flow from operations, were sufficient to provide financing for
our operations. For 2017, net cash provided by operating and
investing activities was $836,138. Our net cash provided, when
added to a beginning balance of $1,895,372, yielded cash and cash
equivalents of $2,731,510 at December 31, 2017. Our accounts
receivable balances decreased $541,673 due to a combination of more
timely collections and to the timing of larger software sales
transactions. Our accounts payable and accrued expenses balances
increased $83,197 due largely to the additional payroll expenses we
incur to work on the contracts added in 2017. Our prepaid expenses
and other current assets accounts decreased $294,930, and our
deferred revenue accounts decreased $228,033. Our prepaid expenses
and deferred revenue accounts are largely composed of the costs and
revenue, respectively, of sales of software maintenance contracts
for which we recognize the costs and revenue ratably over the life
of the maintenance contract. We had no non-current liabilities at
December 31, 2017.
We have
a revolving line of credit with a bank providing for demand or
short-term borrowings of up to $1,000,000. The line became
effective December 20, 2005, and expires on May 31, 2018. As of
December 31, 2017, no amounts were outstanding under this line of
credit. We did not borrow against this line of credit in
2017.
Based
on our current cash position and operating plan, we anticipate that
we will be able to meet our cash requirements beyond twelve months
from the filing of this Annual Report on Form 10-K.
We
presently lease our corporate offices on a contractual basis with
certain timeframe commitments and obligations. We believe that our
existing offices will be sufficient to meet our foreseeable
facility requirement. Should we need additional space to
accommodate increased activities, management believes we can secure
such additional space on reasonable terms.
We have
no material commitments for capital expenditures.
Off-Balance Sheet Arrangements
We do
not have any off balance sheet arrangements that have or are likely
to have a material current or future effect on our financial
condition, or changes in financial condition, liquidity or capital
resources or expenditures.
Critical Accounting Policies and Estimates
Our
significant accounting policies are described in Note 1 to our
accompanying financial statements. We consider the accounting
policies related to revenue recognition to be critical to the
understanding of our results of operations. Our critical accounting
policies also include the areas where we have made what we consider
to be particularly difficult, subjective or complex judgments in
making estimates, and where these estimates can significantly
impact our financial results under different assumptions and
conditions. We prepare our financial statements in conformity with
accounting principles generally accepted in the United States. As
such, we are required to make certain estimates, judgments and
assumptions that we believe are reasonable based upon the
information available. These estimates, judgments and assumptions
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenue and
expenses during the periods presented. Actual results could be
different from these estimates.
Revenue Recognition
The
Company earns revenue from both professional services and sales of
software and related support. The Company recognizes revenue when a
contract has been executed, the contract price is fixed and
determinable, delivery of services or products has occurred, and
collectability of the contract price is considered probable and can
be reasonably estimated. Revenue from professional services is
earned under time and materials and fixed-price contracts. For
sales of third-party software products, revenue is recognized upon
product delivery, with any maintenance related revenues recognized
ratably over the maintenance period.
Revenue
on time and materials contracts is recognized based on direct labor
hours expended at contract billing rates and adding other billable
direct costs.
For
fixed-price contracts that are based on unit pricing, the Company
recognizes revenue for the number of units delivered in any given
reporting period.
For
fixed-price contracts in which the Company is paid a specific
amount to be available to provide a particular service for a stated
period of time, revenue is recognized ratably over the service
period. The Company applies this method of revenue recognition to
renewals of maintenance contracts on third-party software sales and
to separable maintenance elements of sales of third-party software
that include fixed terms of maintenance, such as Adobe and Micro
Focus software, for which the Company is responsible for
“first line support” to the customer and for serving as
a liaison between the customer and the third-party maintenance
provider for issues the Company is unable to resolve.
The
Company reports revenue on both gross and net bases on a
transaction by transaction analysis using authoritative guidance
issued by the Financial Accounting Standards Board (the
“FASB”). The Company considers the following factors to
determine the gross versus net presentation: if the Company (i)
acts as principal in the transaction; (ii) takes title to the
products; (iii) has risks and rewards of ownership, such as the
risk of loss for collection, delivery or return; and (iv) acts as
an agent or broker (including performing services, in substance, as
an agent or broker) with compensation on a commission or fee basis.
Generally, sales of third-party software products such as Adobe and
Micro Focus products are reported on a gross basis with the Company
acting as the principal in these arrangements. This determination
is based on the following: 1) the Company has inventory risk as
suppliers are not obligated to accept returns, 2) the Company has
reasonable latitude, within economic constraints, in establishing
price, 3) the Company, in its marketing efforts, frequently aids
the customer in determining product specifications, 4) the Company
has physical loss and inventory risk as title transfers at the
shipping point, 5) the Company bears full credit risk, and 6) the
amount the Company earns in the transaction is neither a fixed
dollar amount nor a fixed percentage. Generally, revenue derived
for facilitating a sales transaction of Adobe products in which a
customer introduced by the Company makes a purchase directly from
the Company’s supplier or another designated reseller is
recognized on a net basis when the commission payment is received
since the Company is merely acting as an agent in these
arrangements. Since the Company is not a direct party in the sales
transaction, payment by the supplier is the Company’s
confirmation that the sale occurred.
For
software and software-related multiple element arrangements, the
Company must: (1) determine whether and when each element has been
delivered; (2) determine whether undelivered products or services
are essential to the functionality of the delivered products and
services; (3) determine the fair value of each undelivered element
using vendor-specific objective evidence ("VSOE"), and (4) allocate
the total price among the various elements. Changes in assumptions
or judgments or changes to the elements in a software arrangement
could cause a material increase or decrease in the amount of
revenue that the Company reports in a particular
period.
The
Company determines VSOE for each element based on historical
stand-alone sales to third parties or from the stated renewal rate
for the elements contained in the initial arrangement. The Company
has established VSOE for its third-party software maintenance and
support services.
The
Company’s contracts with agencies of the U.S. federal
government are subject to periodic funding by the respective
contracting agency. Funding for a contract may be provided in full
at inception of the contract, ratably throughout the contract as
the services are provided, or subject to funds made available
incrementally by legislators. In evaluating the probability of
funding for purposes of assessing collectability of the contract
price, the Company considers its previous experiences with its
customers, communications with its customers regarding funding
status, and the Company’s knowledge of available funding for
the contract or program. If funding is not assessed as probable,
revenue recognition is deferred until realization is deemed
probable.
Payments received
in advance of services performed are recorded and reported as
deferred revenue. Services performed prior to invoicing customers
are recorded as unbilled accounts receivable and are presented on
the Company’s balance sheets in the aggregate with accounts
receivable.
Prompt
payment discounts taken and expected to be taken by customers in
conjunction with orders received under the Company’s General
Services Administration Multiple Award Schedule (“GSA
Schedule”) are reflected as a reduction in the
Company’s revenue.
Effects of Inflation
In the
opinion of management, inflation has not had a material effect on
our operations.
I
tem 8. Financial Statements and
Supplementary Data
|
|
|
|
|
|
|
Report of Independent Registered Public Accounting
Firm
|
16
|
|
Balance Sheets as of December 31, 2017 and 2016
|
17
|
|
Statements of Operations and Comprehensive Income
(loss)
|
|
|
|
for the years ended December 31, 2017 and 2016
|
18
|
|
Statements of Changes in Stockholders' Equity for the
|
|
|
|
years ended December 31, 2017 and 2016
|
19
|
|
Statements of Cash Flows for the years ended
|
|
|
|
December 31, 2017 and 2016
|
20
|
|
Notes to Financial Statements
|
21
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
Information
Analysis Incorporated
Opinion on the Financial Statements
We have
audited the accompanying balance sheets of Information Analysis
Incorporated (the “Company”) as of December 31, 2017
and 2016, and the related statements of operations and
comprehensive income (loss), changes in stockholders’ equity
and cash flows for the years then ended
and the related notes (collectively referred to as
the “financial statements”). In our opinion, the
financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of
December 31, 2017 and 2016, and the results of its operations and
its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United Stated of
America.
Basis for Opinion
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a
public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company's internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ CohnReznick LLP
We have served as the Company’s auditor since
2012.
Tysons,
Virginia
April
2, 2018
INFORMATION ANALYSIS INCORPORATED
BALANCE SHEETS
|
|
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash
and cash equivalents
|
$
2,731,510
|
$
1,895,372
|
Accounts
receivable, net
|
615,714
|
1,157,387
|
Prepaid
expenses and other current assets
|
368,626
|
663,556
|
Notes
receivable
|
1,719
|
2,630
|
Total
current assets
|
3,717,569
|
3,718,945
|
|
|
|
Property
and equipment, net of accumulated depreciation
|
|
|
and
amortization of $284,667 and $407,302
|
11,133
|
27,198
|
Other
assets
|
6,281
|
6,281
|
Total
assets
|
$
3,734,983
|
$
3,752,424
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$
47,658
|
$
48,974
|
Commissions
payable
|
712,829
|
853,340
|
Other
accrued liabilities
|
411,487
|
396,081
|
Deferred
revenue
|
387,002
|
615,035
|
Accrued
payroll and related liabilities
|
275,582
|
206,475
|
Franchise
taxes payable
|
6,400
|
-
|
Total
liabilities
|
1,840,958
|
2,119,905
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
Stockholders'
equity
|
|
|
Common
stock, $0.01 par value, 30,000,000 shares
|
|
|
authorized,
12,844,376 shares issued, 11,201,760 shares
|
|
|
outstanding
as of December 31, 2017 and 2016
|
128,443
|
128,443
|
Additional
paid-in capital
|
14,646,406
|
14,631,362
|
Accumulated
deficit
|
(11,950,613
)
|
(12,197,075
)
|
Treasury
stock, 1,642,616 shares at cost
|
|
|
at
December 31, 2017 and 2016
|
(930,211
)
|
(930,211
)
|
Total
stockholders' equity
|
1,894,025
|
1,632,519
|
|
|
|
Total
liabilities and stockholders' equity
|
$
3,734,983
|
$
3,752,424
|
The accompanying notes are an integral part of the financial
statements
INFORMATION ANALYSIS INCORPORATED
STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
|
For the years ended December 31,
|
|
|
|
Revenues
|
|
|
Professional
fees
|
$
5,003,908
|
$
3,392,358
|
Software
sales
|
5,636,695
|
3,336,435
|
Total
revenues
|
10,640,603
|
6,728,793
|
|
|
|
Cost
of revenues
|
|
|
Cost
of professional fees
|
2,723,501
|
1,894,898
|
Cost
of software sales
|
5,501,673
|
3,011,233
|
Total
cost of revenues
|
8,225,174
|
4,906,131
|
|
|
|
Gross
profit
|
2,415,429
|
1,822,662
|
|
|
|
Selling,
general and administrative expenses
|
1,673,762
|
1,879,208
|
Commissions
expense
|
503,893
|
506,908
|
|
|
|
Income
(loss) from operations
|
237,774
|
(563,454
)
|
|
|
|
Other
income
|
8,688
|
9,773
|
|
|
|
Income
(loss) before provision for income taxes
|
246,462
|
(553,681
)
|
|
|
|
Provision
for income taxes
|
-
|
-
|
|
|
|
Net
income (loss)
|
$
246,462
|
$
(553,681
)
|
|
|
|
Comprehensive
income (loss)
|
$
246,462
|
$
(553,681
)
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per commion share - basic
|
$
0.02
|
$
(0.05
)
|
|
|
|
Net
income (loss) per commion share - diluted
|
$
0.02
|
$
(0.05
)
|
|
|
|
Weighted
average common shares outstanding
|
|
|
Basic
|
11,201,760
|
11,201,760
|
Diluted
|
11,583,578
|
11,201,760
|
The accompanying notes are an integral part of the financial
statements
INFORMATION ANALYSIS INCORPORATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
December 31, 2015
|
12,844,376
|
$
128,443
|
$
14,622,352
|
$
(11,643,394
)
|
$
(930,211
)
|
$
2,177,190
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
(553,681
)
|
|
(553,681
)
|
|
|
|
|
|
|
|
Stock option compensation
|
|
|
9,010
|
|
|
9,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
December 31, 2016
|
12,844,376
|
128,443
|
14,631,362
|
(12,197,075
)
|
(930,211
)
|
1,632,519
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
246,462
|
|
246,462
|
|
|
|
|
|
|
|
Stock option compensation
|
|
|
15,044
|
|
|
15,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
December 31, 2017
|
12,844,376
|
$
128,443
|
$
14,646,406
|
$
(11,950,613
)
|
$
(930,211
)
|
$
1,894,025
|
The accompanying notes are an integral part of the financial
statements
INFORMATION ANALYSIS INCORPORATED
STATEMENTS OF CASH FLOWS
|
For the years ended December 31,
|
|
|
|
Cash
flows from operating activities:
|
|
|
Net
income (loss)
|
$
246,462
|
$
(553,681
)
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
provided
by (used in) operating activities:
|
|
|
Depreciation
and amortization
|
16,905
|
28,258
|
Stock
option compensation
|
15,044
|
9,010
|
Bad
debt expense
|
-
|
7,635
|
Changes
in operating assets and liabilities
|
|
|
Accounts
receivable
|
541,673
|
133,007
|
Prepaid
expenses and other current assets
|
294,930
|
(60,216
)
|
Accounts
payable, accrued payroll and related liabilities,
|
83,197
|
251,257
|
and
other accrued liabilities
|
|
|
Deferred
revenue
|
(228,033
)
|
33,933
|
Commissions
payable
|
(140,511
)
|
(105,712
)
|
Franchise
taxes payable
|
6,400
|
-
|
Net
cash provided by (used in) operating activities
|
836,067
|
(256,509
)
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
Acquisition
of property and equipment
|
(840
)
|
(13,417
)
|
Payments
received on notes receivable
|
3,411
|
3,138
|
Increase
in notes receivable
|
(2,500
)
|
(5,768
)
|
Net
cash provided by (used in) investing activities
|
71
|
(16,047
)
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
836,138
|
(272,556
)
|
|
|
|
Cash
and cash equivalents, beginning of the year
|
1,895,372
|
2,167,928
|
|
|
|
Cash
and cash equivalents, end of the year
|
$
2,731,510
|
$
1,895,372
|
|
|
|
Supplemental
cash flow Information
|
|
|
Interest
paid
|
$
-
|
$
-
|
|
|
|
Franchise
taxes paid
|
$
800
|
$
-
|
The accompanying notes are an integral part of the financial
statements
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
1.
Summary
of Significant Accounting Policies
Operations
Information
Analysis Incorporated (“the Company”) was incorporated
under the corporate laws of the Commonwealth of Virginia in 1979 to
develop and market computer applications software systems,
programming services, and related software products and automation
systems. The Company provides services to customers throughout the
United States, with a concentration in the Washington, D.C.
metropolitan area.
Use of Estimates
The
preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America
(“U.S. GAAP”) requires management to make estimates and
assumptions that affect certain reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results
can, and in many cases will, differ from those
estimates.
Revenue Recognition
The
Company earns revenue from both professional services and sales of
software and related support. The Company recognizes revenue when a
contract has been executed, the contract price is fixed and
determinable, delivery of services or products has occurred, and
collectability of the contract price is considered probable and can
be reasonably estimated. Revenue from professional services is
earned under time and materials and fixed-price contracts. For
sales of third-party software products, revenue is recognized upon
product delivery, with any maintenance related revenues recognized
ratably over the maintenance period.
Revenue
on time and materials contracts is recognized based on direct labor
hours expended at contract billing rates and adding other billable
direct costs.
For
fixed-price contracts that are based on unit pricing, the Company
recognizes revenue for the number of units delivered in any given
reporting period.
For
fixed-price contracts in which the Company is paid a specific
amount to be available to provide a particular service for a stated
period of time, revenue is recognized ratably over the service
period. The Company applies this method of revenue recognition to
renewals of maintenance contracts on third-party software sales and
to separable maintenance elements of sales of third-party software
that include fixed terms of maintenance, such as Adobe and Micro
Focus software, for which the Company is responsible for
“first line support” to the customer and for serving as
a liaison between the customer and the third-party maintenance
provider for issues the Company is unable to resolve.
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
The
Company reports revenue on both gross and net bases on a
transaction by transaction analysis using authoritative guidance
issued by the Financial Accounting Standards Board (the
“FASB”). The Company considers the following factors to
determine the gross versus net presentation: if the Company (i)
acts as principal in the transaction; (ii) takes title to the
products; (iii) has risks and rewards of ownership, such as the
risk of loss for collection, delivery or return; and (iv) acts as
an agent or broker (including performing services, in substance, as
an agent or broker) with compensation on a commission or fee basis.
Generally, sales of third-party software products such as Adobe and
Micro Focus products are reported on a gross basis with the Company
acting as the principal in these arrangements. This determination
is based on the following: 1) the Company has inventory risk as
suppliers are not obligated to accept returns, 2) the Company has
reasonable latitude, within economic constraints, in establishing
price, 3) the Company, in its marketing efforts, frequently aids
the customer in determining product specifications, 4) the Company
has physical loss and inventory risk as title transfers at the
shipping point, 5) the Company bears full credit risk, and 6) the
amount the Company earns in the transaction is neither a fixed
dollar amount nor a fixed percentage. Generally, revenue derived
for facilitating a sales transaction of Adobe products in which a
customer introduced by the Company makes a purchase directly from
the Company’s supplier or another designated reseller is
recognized on a net basis when the commission payment is received
since the Company is merely acting as an agent in these
arrangements. Since the Company is not a direct party in the sales
transaction, payment by the supplier is the Company’s
confirmation that the sale occurred.
For
software and software-related multiple element arrangements, the
Company must: (1) determine whether and when each element has been
delivered; (2) determine whether undelivered products or services
are essential to the functionality of the delivered products and
services; (3) determine the fair value of each undelivered element
using vendor-specific objective evidence ("VSOE"), and (4) allocate
the total price among the various elements. Changes in assumptions
or judgments or changes to the elements in a software arrangement
could cause a material increase or decrease in the amount of
revenue that the Company reports in a particular
period.
The
Company determines VSOE for each element based on historical
stand-alone sales to third parties or from the stated renewal rate
for the elements contained in the initial arrangement. The Company
has established VSOE for its third-party software maintenance and
support services.
The
Company’s contracts with agencies of the U.S. federal
government are subject to periodic funding by the respective
contracting agency. Funding for a contract may be provided in full
at inception of the contract, ratably throughout the contract as
the services are provided, or subject to funds made available
incrementally by legislators. In evaluating the probability of
funding for purposes of assessing collectability of the contract
price, the Company considers its previous experiences with its
customers, communications with its customers regarding funding
status, and the Company’s knowledge of available funding for
the contract or program. If funding is not assessed as probable,
revenue recognition is deferred until realization is deemed
probable.
Payments received
in advance of services performed are recorded and reported as
deferred revenue. Services performed prior to invoicing customers
are recorded as unbilled accounts receivable and are presented on
the Company’s balance sheets in the aggregate with accounts
receivable.
Prompt
payment discounts taken and expected to be taken by customers in
conjunction with orders received under the Company’s General
Services Administration Multiple Award Schedule (“GSA
Schedule”) are reflected as a reduction in the
Company’s revenue.
Segment Reporting
The
Company has concluded that it operates in one business segment,
providing products and services to modernize client information
systems.
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
Cash and Cash Equivalents
The
Company considers all highly liquid investments with maturities of
ninety days or less at the time of purchase to be cash equivalents.
Deposits are maintained with a federally insured bank. Balances at
times exceed federally insured limits, but management does not
consider this to be a significant concentration of credit
risk.
Accounts Receivable
Accounts receivable
consist of trade accounts receivable and do not bear interest. The
Company typically does not require collateral from its customers.
The allowance for doubtful accounts is the Company’s best
estimate of the amount of probable credit losses in the
Company’s existing accounts receivable. The Company reviews
its allowance for doubtful accounts monthly. Accounts with
receivable balances past due over 90 days are reviewed individually
for collectability. Account balances are charged off against the
allowance after all means of collection have been exhausted and the
potential for recovery is considered remote. The Company does not
have any off-balance sheet credit exposure related to its
customers. The Company has recorded an allowance for doubtful
accounts of $0 at December 31, 2017 and 2016. Prompt payment
discounts offered and expected to be taken by customers in
conjunction with orders received under the Company’s GSA
Schedule are reflected as a reduction in the Company’s
accounts receivable.
Notes Receivable
The
Company has an outstanding note receivable and accrued interest
from one non-officer employee at December 31, 2017. It bears
interest at 3.5% and is payable semi-monthly in 18 installments
through September 24, 2018.
The
Company had outstanding notes receivable and accrued interest from
two non-officer employees at December 31, 2016. The first bore
interest at 3.5% and was payable semi-monthly in 36 installments
through August 10, 2017. The second bore interest at 3.5% and was
payable semi-monthly in 36 installments through September 22,
2017.
Property and Equipment
Property and
equipment are stated at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets.
Furniture and fixtures are depreciated over the lesser of the
useful life or five years, off-the-shelf software is depreciated
over the lesser of three years or the term of the license, custom
software is depreciated over the least of five years, the useful
life, or the term of the license, and computer equipment is
depreciated over three years. Leasehold improvements are amortized
over the estimated term of the lease or the estimated life of the
improvement, whichever is shorter. Maintenance and minor repairs
are charged to operations as incurred. Gains and losses on
dispositions are recorded in operations.
Stock-Based Compensation
At
December 31, 2017, the Company had the stock-based compensation
plans described in Note 9 below. Total compensation expense related
to these plans was $15,044 and $9,010 for the years ended December
31, 2017 and 2016, respectively. The Company estimates the fair
value of options granted using a Black-Scholes valuation model to
establish the expense. When stock-based compensation is awarded to
employees, the expense is recognized ratably over the vesting
period. When stock-based compensation is awarded to non-employees,
the expense is recognized over the period of
performance.
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
Income Taxes
Deferred tax assets
and liabilities are computed based on the difference between the
financial statement and tax basis of assets and liabilities and are
measured by applying enacted tax rates and laws for the taxable
years in which those differences are expected to reverse. In
addition, a valuation allowance is required to be recognized if it
is believed more likely than not that a deferred tax asset will not
be fully realized. Authoritative guidance prescribes a recognition
threshold of more likely than not, and a measurement attribute for
all tax positions taken or expected to be taken on a tax return, in
order for those positions to be recognized in the financial
statements. The Company continually reviews tax laws, regulations
and related guidance in order to properly record any uncertain tax
liabilities.
In
December 2017, the U.S. government enacted comprehensive tax
legislation commonly referred to as the Tax Cuts and Jobs Act (the
"Tax Act"). The Tax Act makes broad and complex changes to
the U.S. tax code, including, but not limited to: (i) reducing the
U.S. federal corporate tax rate from 35 percent to 21 percent; (ii)
eliminating the corporate alternative minimum tax (AMT) and
changing how existing AMT credits can be realized; (iii) creating a
new limitation on deductible interest expense; and (iv) changing
rules related to uses and limitations of net operating
carryforwards created in tax years beginning after December 31,
2017; and (v) changing the U.S. federal taxation of earnings of
foreign subsidiaries.
As a
result, the Company believes the most significant impact on its
financial statements will be the reduction of approximately
$1,870,800 of the deferred tax assets related to net operating
losses and other deferred tax assets. Such reduction is offset by a
change in the Company’s valuation allowance.
Earnings (Loss) Per Share
The
Company’s earnings (loss) per share calculations are based
upon the weighted average number of shares of common stock
outstanding. The dilutive effect of stock options, warrants and
other equity instruments are included for purposes of calculating
diluted earnings (loss) per share, except for periods when the
Company reports a net loss, in which case the inclusion of such
equity instruments would be antidilutive. 381,818 shares
representing the dilutive effect of stock options were included in
diluted earnings per share for the year ended December 31, 2017.
27,568 shares representing the dilutive effect of stock options
were excluded from diluted earnings (loss) per share for the year
ended December 31, 2016, due to the net loss reported for the
period.
Concentration of Credit Risk
In the
year ended December 31, 2017, our prime contracts with U.S.
government agencies generated 70.9% of our revenue, subcontracts
under federal procurements generated 23.2% of our revenue, and 5.9%
of our revenue came from commercial contracts. The terms of these
contracts and subcontracts vary from single transactions to five
years. Within this group of prime contracts with U.S. government
agencies, three individual contracts generated 15.8% 12.4%, and
8.1% of our revenue, respectively. One subcontract under a federal
procurement generated 18.8% of our revenue.
In the
year ended December 31, 2016, our prime contracts with U.S.
government agencies generated 75.0% of our revenue, subcontracts
under federal procurements generated 12.0% of our revenue, and
13.0% of our revenue came from commercial contracts. The terms of
these contracts and subcontracts vary from single transactions to
five years. Within this group of prime contracts with U.S.
government agencies, three individual contracts generated 19.5%,
10.3% and 9.0% of our revenue, respectively. One commercial
customer generated 8.3% of our revenue.
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
The
Company sold third party software and maintenance contracts under
agreements with one major supplier in 2017, accounting for 52.7% of
total revenue. In 2016, the Company sold third party software and
maintenance contracts under agreements with two major suppliers,
accounting for 49.6% of total revenue.
At
December 31, 2017, the Company’s accounts receivable included
receivables from prime contracts with one U.S. government agency
that represented 17.8% of the Company’s outstanding accounts
receivable, and receivables from two subcontracts under federal
procurements that represented 35.2% and 10.6% of the
Company’s outstanding accounts receivable,
respectively.
At
December 31, 2016, the Company’s accounts receivable included
receivables from prime contracts with two U.S. government agencies
that represented 39.1% and 30.0% of the Company’s outstanding
accounts receivable, respectively.
Related Party Transactions
The
Company’s Director of Human Resources is the spouse of the
Senior Vice President and Chief Operating Officer of the Company.
During the years ended December 31, 2017 and 2016, she earned wages
of $136,705 and $133,309, respectively, as an employee of the
Company.
Mark T.
Krial, a member of the Company's Board of Directors, currently
serves as president of Marathon TS, Inc. (“Marathon”),
an IT and professional services firm which serves the federal
government and commercial markets. Revenues from Marathon totaled
$14,271 and $11,349 during the years ended December 31, 2017 and
2016, respectively.
Recent Accounting Pronouncements
From
time to time, new accounting pronouncements are issued by the FASB,
or other standard setting bodies, that the Company adopts as of the
specified effective date.
In May 2014, the FASB issued Accounting Standards
Update ("ASU") No. 2014-09,
"Revenue from Contracts with
Customers (Topic 606)"
(“ASU 2014-09”)
.
In subsequent ASU’s, the FASB issued ASU
2015-14
“Revenue from Contracts
with Customers: Topic 606
”, ASU 2016-08 "
Principal versus Agent
Considerations (Reporting Revenue Gross Versus
Net)
, ASU 2016-10
"Identifying
Performance Obligations and Licensing",
ASU 2016-12
"Revenue from Contracts with
Customers - Narrow Scope Improvements and Practical
Expedients"
, and ASU
2016-20
“Technical Corrections
and Improvements to Topic 606, Revenue from Contracts with
Customers”
(collectively
“Topic 606”) to amend and clarify ASU 2014-09. This new
set of standards will supersede nearly all existing revenue
recognition guidance in GAAP. The core principle of Topic 606 is
that an entity should recognize revenue for the transfer of goods
or services equal to the amount it expects to receive for those
goods and services. The standard defines a five step process to
achieve this core principle and, in doing so, it is possible more
judgment and estimates may be required within the revenue
recognition process than are required under existing GAAP,
including identifying performance obligations in the contract,
estimating the amount of variable consideration to include in the
transaction price and allocating the transaction price to each
separate performance obligation. The standard allows entities to
apply either of two adoption methods: (a) retrospective application
to each prior reporting period presented with the option to elect
certain practical expedients as defined within Topic 606
(“Retrospective Transition;” or (b) retrospective
application with the cumulative effect of initially applying the
standard recognized at the date of initial application and
providing certain additional disclosures as defined per Topic 606.
The effective date for Topic 606 is for annual reporting periods
beginning after December 15, 2017, including interim reporting
periods within that reporting period.
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
We
will adopt the requirements of Topic 606 effective January 1, 2018,
using the Retrospective Transition method, whereby Topic 606 will
be applied to the prior year as presented with the use of certain
applicable practical expedients, and any effects on periods
preceding the periods reported will appear as an adjustment to
retained earnings as of the beginning of the earliest period
reported. As the ASU supersedes substantially all existing revenue
guidance affecting us under current GAAP, it will impact revenue
and cost recognition across the whole of our business, as well as
our business processes and our information technology
systems.
We began our evaluation of the impact of Topic 606
in early 2017 by evaluating its impact on selected contracts of
each type under which we operate. With this baseline understanding,
we developed a project plan to evaluate the remainder of our
contracts, develop processes and tools to dual-report financial
results under both current GAAP and Topic 606, and assess the
internal control structure in order to adopt Topic 606 on January
1, 2018. We have briefed our Audit Committee on our progress made
towards adoption.
Adoption of
Topic 606 will not have a material impact on our financial
statements.
We
currently operate under time-and-materials, fixed-price,
fixed-price-per-unit, and fixed-term third-party software license
and/or third-party software maintenance contracts. Some of these
contracts involve more than one type of deliverable, which adds
complexity to the application of Topic 606.
Under
Topic 606, revenue will be recognized as the customer obtains
control of the goods and services promised in the contract (i.e.,
performance obligations). Given the nature of our professional
services and the terms and conditions in our contracts, the
customer generally obtains control as we perform work under the
contract. Therefore, we expect to recognize revenue over time for
substantially all of our professional services contracts, while we
expect to recognize revenue over time, at a point in time, or some
of each for our software sales contracts, based on what was sold
and whether we have any continuing performance obligations, such as
the obligation to provide first-line support under a maintenance
contract supporting third-party software.
Under
Topic 606, guidance related to principal versus agent
considerations rely heavily on control of an asset before delivery
over some of the considerations used under previous guidance,
including the negotiation of selling price and credit risk of the
seller. This will likely lead to the reclassification of a
percentage of our software sales transactions to be reported on a
net sales basis, rather than on a gross sales basis, as Topic 606
guidance shifts our responsibility from a principal seller to an
agent. This reclassification will not affect the Company’s
net operating results.
In February 2016, the FASB issued ASU 2016-02,
“
Leases: Topic
842,”
which provided
updated guidance on lease accounting. ASU 2016-02 is effective for
annual reporting periods beginning after December 15, 2018,
including interim periods within that annual period, with early
adoption permitted. The Company does not expect the adoption of
this new standard will have a material impact on its financial
statements. When adopted, the Company’s operating lease for
office space will be presented as a right-of-use asset and as an
offsetting liability for the present value of the contractual cash
flows. The Company does not currently have any other material lease
obligations.
In August 2016, the FASB issued ASU 2016-15,
“
Classification of Certain Cash
Receipts and Cash Payments,
” to provide additional guidance and reduce
diversity in practice in how certain cash receipts and cash
payments are presented and classified in the statement of cash
flows. This guidance is effective for fiscal years beginning after
December 15, 2017 and early adoption is permitted, including
adoption in an interim period. The Company does not expect the
adoption of this guidance will have a material impact on its
financial statements.
Accounts receivable
at December 31, 2017 and 2016, consist of the
following:
|
|
|
Billed
federal government
|
$
560,942
|
$
693,321
|
Billed
commercial and other
|
49,240
|
67,201
|
Total
billed
|
610,182
|
760,522
|
Unbilled
|
5,532
|
396,865
|
Allowance
for doubtful accounts
|
-
|
-
|
Accounts
receivable, net
|
$
615,714
|
$
1,157,387
|
Billed
receivables from the federal government include amounts due from
both prime contracts and subcontracts where the federal government
is the end customer. Unbilled receivables are for services provided
through the balance sheet date that are expected to be billed and
collected within one year.
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
3.
Fair
Value Measurements
The
Company defines fair value as the exchange price that would be
received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants
on the measurement date. Valuation techniques used to measure fair
value must maximize the use of observable inputs and minimize the
use of unobservable inputs. The standard describes a fair value
hierarchy based on three levels of inputs, of which the first two
are considered observable and the last unobservable, that may be
used to measure fair value which are the following:
●
Level
1—Quoted prices in active markets for identical assets or
liabilities;
●
Level
2—Inputs other than Level 1 that are observable, either
directly or indirectly, such as quoted prices for similar assets or
liabilities, quoted prices in markets that are not active or other
inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or
liabilities; and
●
Level
3—Unobservable inputs that are supported by little or no
market activity and that are significant to the fair value of the
assets or liabilities.
The
following table represents the fair value hierarchy for our
financial assets (cash equivalents) measured at fair value on a
recurring basis as of December 31, 2017 and 2016:
|
|
|
|
December
31, 2017
|
|
|
|
Money
market funds
|
$
2,120,269
|
$
-
|
$
-
|
Total
|
$
2,120,269
|
$
-
|
$
-
|
|
|
|
|
December
31, 2016
|
|
|
|
Money
market funds
|
$
1,611,799
|
$
-
|
$
-
|
Total
|
$
1,611,799
|
$
-
|
$
-
|
Money
market funds are highly liquid investments. The pricing information
on these investment instruments are readily available and can be
independently validated as of the measurement date. This approach
results in the classification of these securities as Level 1 of the
fair value hierarchy.
The
carrying amount of financial instruments such as accounts
receivable, accounts payable, and accrued liabilities approximate
the related fair value due to the short-term maturities of these
instruments.
4.
Property
and Equipment
A
summary of fixed assets and equipment at December 31, 2017 and
2016, consist of the following:
|
|
|
Furniture
and equipment
|
$
75,747
|
$
110,042
|
Computer
equipment and software
|
213,239
|
317,644
|
Leasehold
improvements
|
6,814
|
6,814
|
Subtotal
|
295,800
|
434,500
|
Less:
accumulated depreciation and amortization
|
(284,667
)
|
(407,302
)
|
Total
|
$
11,133
|
$
27,198
|
|
|
|
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
Depreciation and
amortization expense for the years ended December 31, 2017 and
2016, was $16,905 and $28,258, respectively.
5.
Revolving
Line of Credit
On
December 20, 2005, the Company entered into a revolving line of
credit agreement with TD Bank providing for demand or short-term
borrowings up to $1,000,000. The credit agreement includes an
interest rate indexed to 3.00% above the Intercontinental Exchange
Benchmark Administration Ltd. London Interbank Offered Rate
(“ICE LIBOR”). The line of credit will next expire on
May 31, 2018. The draws against the line are limited by varying
percentages of the Company’s eligible accounts receivable.
The draw limit at December 31, 2017 was $489,627. The bank is
granted a security interest in all of the Company’s assets if
there are borrowings under the line of credit. Interest on
outstanding balances is payable monthly. The effective rate at
December 31, 2017 was 4.511%. At December 31, 2016, the effective
rate was 3.744%.
The
bank has a first priority security interest in the Company’s
receivables and a direct assignment of its U.S. federal government
contracts. Under the line of credit agreement, the Company is bound
by certain covenants, including maintaining a minimum tangible net
worth and producing a number of periodic financial reports for the
benefit of the bank. There was no outstanding balance on the line
of credit at December 31, 2017 or 2016.
6.
Commitments
and Contingencies
Operating Leases
The
Company leases its facility under a long-term operating lease
agreement through May 2021. Rent expense was $103,007 and $99,994
for the years ended December 31, 2017 and 2016,
respectively.
The
future minimum rental payments to be made under long-term operating
leases are as follows:
Year
ending December 31,:
|
2018
|
$
103,512
|
|
2019
|
106,617
|
|
2020
|
109,846
|
|
2021
|
55,719
|
Total
minimum rent payments
|
|
$
375,694
|
The
above minimum lease payments reflect the base rent under the lease
agreements. However, these base rents can be adjusted each year to
reflect the Company’s proportionate share of increases in the
building’s operating costs and the Company’s
proportionate share of real estate tax increases on the leased
property.
The tax
effects of significant temporary differences representing deferred
tax assets at
December 31, 2017
and 2016, are as follows:
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
|
|
|
Deferred
tax assets (liabilities)
|
|
|
Net
operating loss carryforwards
|
$
3,889,200
|
$
5,702,400
|
Accrued
commissions
|
154,400
|
285,900
|
Accrued
vacation
|
29,400
|
32,500
|
AMT
tax credit carryforward
|
-
|
6,600
|
Fixed
assets
|
(25,500
)
|
(2,100
)
|
Other
|
6,000
|
6,000
|
Subtotal
|
4,053,500
|
6,031,300
|
Valuation
allowance
|
(4,053,500
)
|
(6,031,300
)
|
Total
|
$
-
|
$
-
|
The
provision for income taxes is at an effective rate different from
the federal statutory rate due principally to the
following:
|
|
|
|
|
Income
(loss) before taxes
|
$
246,462
|
$
(553,681
)
|
Income
tax expense (benefit) on above
|
|
|
amount
at federal statutory rate
|
$
83,800
|
$
(188,300
)
|
State
income tax expense (benefit), net of
|
|
|
federal
expense (benefit)
|
9,900
|
(22,100
)
|
Permanent
differences
|
7,500
|
6,000
|
Other
|
5,800
|
49,600
|
Tax
Cuts & Jobs Act of 2017
|
1,870,800
|
-
|
Change
in valuation allowance
|
(1,977,800
)
|
154,800
|
Provision
for income taxes
|
$
-
|
$
-
|
Income
tax expense for the years ended December 31, 2017 and 2016 consists
of the following:
|
|
Current
income taxes
|
|
|
Federal
|
$
16,300
|
$
-
|
State
|
2,400
|
-
|
Alternative
minimum tax
|
-
|
-
|
Benefit
from utilization of net operating losses
|
(18,700
)
|
-
|
Subtotal
|
-
|
-
|
Deferred
taxes
|
-
|
-
|
Provision
for income taxes
|
$
-
|
$
-
|
The
Company has recorded a valuation allowance to the full extent of
its currently available net deferred tax assets which the Company
determined to be not more-likely-than-not realizable. The Company
has net operating loss carryforwards of approximately $15.0
million, which expire, if unused, between the years 2018 and
2036.
The
Company may have been deemed to have experienced changes in
ownership which may impose limitations on its ability to utilize
net operating loss carryforwards under Section 382 of the Internal
Revenue Code. However, as the deferred tax asset is fully offset by
a valuation allowance, the Company has not yet conducted a Section
382 study to determine the extent of any such
limitations.
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
The Company has analyzed its income tax positions
using the criteria required by U.S. GAAP and concluded that as of
December 31, 2017 and 2016, it has no material uncertain tax
positions and no interest or penalties have been accrued.
The Company has elected to recognize any estimated penalties and
interest on its income tax liabilities as a component of its
provision for income taxes.
The
income tax returns of the Company for 2014, 2015, and 2016 are
subject to examination by income taxing authorities, generally for
three years after each was filed.
The
Company has a Cash or Deferred Arrangement Agreement
(“CODA”), which satisfies the requirements of Section
401(k) of the Internal Revenue Code. This defined contribution
retirement plan covers substantially all employees. Participants
can elect to have up to the maximum percentage allowable of their
salaries reduced and contributed to the plan. The Company may make
matching contributions equal to a discretionary percentage of the
participants’ elective deferrals. In 2017 and in 2016, the
Company matched 25% of the first 6% of the participants’
elective deferrals. The balance of funds forfeited by former
employees from unvested employer matching contribution accounts may
be used to offset current and future employer matching
contributions. The Company may also make additional contributions
to all eligible employees at its discretion. The Company did not
make additional contributions during 2017 or 2016. Expenses for
matching contributions for the years ended December 31, 2017 and
2016 were $31,116 and $27,463, respectively.
9.
Stock
Options and Warrants
During
the year ended December 31, 2017, the Company had two stock-based
compensation plans. The 2006 Stock Incentive Plan was adopted in
2006 (“2006 Plan”) and had options granted under it
through April 12, 2016. On June 1, 2016, the shareholders ratified
the IAI 2016 Stock Incentive Plan (“2016 Plan”), which
had been approved by the Board of Directors on April 4,
2016.
The
Company recognizes compensation costs only for those shares
expected to vest on a straight-line basis over the requisite
service period of the awards. Generally such options vest over
periods of six months to two years. The fair values of option
awards granted in 2017 and 2016 were estimated using the
Black-Sholes option pricing model under the following
assumptions:
|
|
2017
|
|
2016
|
Risk-free interest rate
|
|
1.87% - 2.06%
|
|
0.70%- 1.73%
|
Dividend yield
|
|
0%
|
|
0%
|
Expected term
|
|
5 years
|
|
2-10 years
|
Expected volatility
|
|
44.6% - 47.0%
|
|
34.9% - 50.4%
|
2016 Stock Incentive Plan
The
2016 Plan became effective June 1, 2016, and expires April 4, 2026.
The 2016 Plan provides for the granting of equity awards to key
employees, including officers and directors. The maximum number of
shares for which equity awards may be granted under the 2016 Plan
is 1,000,000. Options under the 2016 Plan expire no later than ten
years from the date of grant or when employment ceases, whichever
comes first, and vest over periods determined by the Board of
Directors. The minimum exercise price of each option is the quoted
market price of the Company’s stock on the date of grant. At
December 31, 2017, there were 222,000 options issued under the 2016
Plan, none of which were yet exercisable.
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
2006 Stock Incentive Plan
The
2006 Plan became effective May 18, 2006, and expired April 12,
2016. The 2006 Plan provides for the granting of equity awards to
key employees, including officers and directors. The maximum number
of shares for which equity awards could be granted under the 2006
Plan was 1,950,000. Options under the 2006 Plan expire no later
than ten years from the date of grant or when employment ceases,
whichever comes first, and vest over periods determined by the
Board of Directors. There were 1,056,000 and 1,268,000 unexpired
exercisable options remaining from the 2006 Plan at December 31,
2017 and 2016, respectively.
The
status of the options issued under the foregoing option plans as of
December 31, 2017, and changes during the year ended December 31,
2017, was as follows:
|
|
|
|
Weighted average
|
|
|
|
remaining
|
Incentive
Options
|
|
|
contractual term
|
Outstanding
at January 1, 2017
|
1,313,000
|
$
0.22
|
|
Options
granted
|
222,000
|
0.35
|
|
Options
exercised
|
-
|
-
|
|
Options
expired
|
(222,000
)
|
0.40
|
|
Options
forfeited
|
(25,000
)
|
0.14
|
|
Outstanding
at December 31, 2017
|
1,288,000
|
$
0.21
|
5 years, 1 month
|
Exercisable
at December 31, 2017
|
1,056,000
|
$
0.18
|
5
years, 1 month
|
Nonvested stock
option awards as of December 31, 2017, and changes during the year
ended December 31, 2017, were as follows:
|
|
|
|
|
|
|
|
|
|
|
Nonvested
at January 1, 2017
|
45,000
|
$
0.07
|
Granted
|
222,000
|
0.10
|
Vested
|
(15,000
)
|
0.06
|
Forfeited
|
(25,000
)
|
0.05
|
Nonvested
at December 31, 2017
|
227,000
|
$
0.10
|
As of December 31, 2017, unrecognized compensation
cost
associated with non-vested share based employee and
non-employee compensation totaled $7,103, which is expected to be
recognized over a weighted average period of 4 months.
INFORMATION ANALYSIS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
10.
Earnings
(Loss) Per Share
Basic
earnings per share excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average
number of shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised
or converted into common stock, except for periods when the Company
reports a net loss because the inclusion of such items would be
antidilutive.
The
following is a reconciliation of the amounts used in calculating
basic and diluted net income (loss) per common share.
|
|
|
|
|
|
|
|
Basic
net income per common share for the
|
|
|
|
y
ear
ended December 31, 2017:
|
|
|
|
Income
available to common shareholders
|
$
246,462
|
11,201,760
|
$
0.02
|
Effect
of dilutive stock options
|
-
|
381,818
|
-
|
Diluted
net income per common share for the
|
|
|
|
year
ended December 31, 2017:
|
$
246,462
|
11,583,578
|
$
0.02
|
|
|
|
|
Basic
net loss per common share for the
|
|
|
|
year
ended December 31, 2016:
|
|
|
|
Loss
available to common shareholders
|
$
(553,681
)
|
11,201,760
|
$
(0.05
)
|
Effect
of dilutive stock options
|
-
|
-
|
-
|
Diluted
net loss per common share for the
|
|
|
|
year
ended December 31, 2016:
|
$
(553,681
)
|
11,201,760
|
$
(0.05
)
|
11.
Financial
Statement Captions
The
following table summarizes the Company’s prepaid expenses and
other current assets as of December 31, 2017 and 2016:
|
|
|
Deferred
costs of software sales
|
$
300,558
|
$
596,724
|
ISO
9001
|
15,427
|
18,166
|
Prepaid
insurance
|
14,500
|
13,774
|
Prepaid
rent
|
8,499
|
8,883
|
Other
|
29,642
|
26,009
|
Total
|
$
368,626
|
$
663,556
|
The
following table summarizes the Company’s other current
liabilities as of December 31, 2017 and 2016:
|
|
|
Accrued
costs of software sales
|
$
337,560
|
$
337,560
|
Accrued
accounting and auditing expense
|
49,500
|
46,500
|
Other
|
24,427
|
12,021
|
Total
|
$
411,487
|
$
396,081
|