Virginia
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54-1167364
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
☐
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Accelerated filer
☐
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Non-accelerated filer
☐
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Smaller reporting company
☑
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(Do not check if a smaller reporting company)
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Emerging growth company
☐
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PART I.
FINANCIAL INFORMATION
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Page Number
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Item 1.
Financial Statements (unaudited except for the balance sheet as of
December 31, 2016)
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3
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Balance Sheets as of June 30, 2017 and December 31,
2016
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3
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Statements of Operations for the three months ended June 30, 2017
and 2016
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4
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Statements of Operations for the six months ended June 30, 2017 and
2016
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5
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Statements of Cash Flows for the six months ended June 30, 2017 and
2016
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6
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Notes to Financial Statements
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7
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Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
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13
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Item 4.
Controls and Procedures
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16
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PART II.
OTHER INFORMATION
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Item 1.
Legal Proceedings
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18
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Item 1A.
Risk Factors
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18
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Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds
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18
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Item 3.
Defaults Upon Senior Securities
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18
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Item 4.
Mine Safety Disclosures
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18
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Item 5.
Other Information
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18
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Item 6.
Exhibits
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18
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SIGNATURES
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19
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For the three months ended
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June
30
,
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2017
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2016
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Revenues:
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Professional
fees
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$
1,271,440
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$
928,464
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Software
sales
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2,784,676
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894,230
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Total
revenues
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4,056,116
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1,822,694
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Cost
of revenues:
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Cost
of professional fees
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679,233
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492,332
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Cost
of software sales
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2,739,543
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804,616
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Total
cost of revenues
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3,418,776
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1,296,948
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Gross
profit
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637,340
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525,746
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Selling,
general and administrative expenses
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426,148
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505,601
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Commissions
expense
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124,671
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168,262
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Income
(loss) from operations
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86,521
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(148,117
)
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Other
income
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2,197
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2,360
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Income
(loss) before provision for income taxes
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88,718
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(145,757
)
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Provision
for income taxes
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-
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-
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Net
income (loss)
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$
88,718
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$
(145,757
)
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Net
income (loss) per common share:
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Basic
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$
0.01
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$
(0.01
)
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Diluted
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$
0.01
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$
(0.01
)
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Weighted
average common shares outstanding:
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Basic
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11,201,760
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11,201,760
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Diluted
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11,544,756
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11,201,760
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For the six months ended
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June
30
,
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2017
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2016
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Revenues:
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Professional
fees
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$
2,291,473
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$
1,769,501
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Software
sales
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3,246,291
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1,521,519
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Total
revenues
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5,537,764
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3,291,020
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Cost
of revenues:
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Cost
of professional fees
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1,213,979
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1,040,725
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Cost
of software sales
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3,186,600
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1,366,876
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Total
cost of revenues
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4,400,579
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2,407,601
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Gross
profit
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1,137,185
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883,419
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Selling,
general and administrative expenses
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844,934
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1,022,571
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Commissions
expense
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239,304
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221,665
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Income
(loss) from operations
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52,947
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(360,817
)
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Other
income
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4,155
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4,790
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Income
(loss) before provision for income taxes
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57,102
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(356,027
)
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Provision
for income taxes
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-
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-
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Net
income (loss)
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$
57,102
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$
(356,027
)
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Net
income (loss) per common share:
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Basic
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$
0.01
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$
(0.03
)
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Diluted
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$
0.00
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$
(0.03
)
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Weighted
average common shares outstanding:
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Basic
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11,201,760
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11,201,760
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Diluted
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11,508,431
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11,201,760
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For the six months ended
June 30,
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2017
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2016
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Cash
flows from operating activities:
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Net
income (loss)
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$
57,102
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$
(356,027
)
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Adjustments
to reconcile net income (loss) to net cash
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provided
by operating activities:
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Depreciation
and amortization
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10,159
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15,301
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Stock-based
compensation, net of forfeitures
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(290
)
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5,472
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Bad
debts
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-
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1,811
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Changes
in operating assets and liabilities:
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Accounts
receivable
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421,629
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153,084
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Prepaid
expenses and other current assets
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436,005
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390,675
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Accounts
payable, accrued payroll and related
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liabilities, and other accrued liabilities
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(273,909
)
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499,573
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Deferred
revenue
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(507,219
)
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(414,508
)
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Commissions
payable
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(70,695
)
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(86.936
)
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Net
cash provided by operating activities
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72,782
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208,445
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Cash
flows from investing activities:
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Acquisition
of property and equipment
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-
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(9,707
)
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Increase
in notes receivable - employees
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(2,500
)
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(5,768
)
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Payments
received on notes receivable - employees
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1,904
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1,227
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Net
cash used in investing activities
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(596
)
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(14,248
)
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Net
increase in cash and cash equivalents
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72,186
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194,197
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Cash
and cash equivalents, beginning of the period
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1,895,372
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2,167,928
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Cash
and cash equivalents, end of the period
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$
1,967,558
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$
2,362,125
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Supplemental
cash flow information
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Interest
paid
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$
-
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$
-
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Income
taxes paid
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$
-
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$
-
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Incentive
Options
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Shares
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Weighted-Average
Exercise Price
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Weighted-Average
Remaining Contractual Term
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Aggregate
Intrinsic
Value
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Outstanding at
January 1, 2017
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1,313,000
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$
0.22
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Granted
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-
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-
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Exercised
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-
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-
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Expired
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(220,500
)
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0.40
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Forfeited
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(20,000
)
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0.13
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Outstanding at June
30, 2017
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1,072,500
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$
0.18
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5.6
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$
128,198
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Exercisable at June
30, 2017
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1,062,500
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$
0.18
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5.6
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$
126,598
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Shares
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Weighted average
grant date fair value
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Nonvested at
January 1, 2017
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45,000
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$
0.07
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Granted
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-
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Vested
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(15,000
)
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0.06
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Forfeited
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(20,000
)
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0.04
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Nonvested at June
30, 2017
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10,000
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$
0.05
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Net income (loss)
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Shares
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Per Share Amount
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Basic
net income per common share for the three months ended June 30,
2017:
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Income
available to common stockholders
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$
88,718
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11,201,760
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$
0.01
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Effect
of dilutive stock options
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-
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342,996
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-
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Diluted
net income per common share for the three months ended June 30,
2017
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$
88,718
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11,544,756
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$
0.01
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Basic
net loss per common share for the three months ended June 30,
2016:
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Loss
available to common stockholders
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$
(145,757
)
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11,201,760
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$
(0.01
)
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Effect
of dilutive stock options
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-
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-
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-
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Diluted
net loss per common share for the three months ended June 30,
2016
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$
(145,757
)
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11,201,760
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$
(0.01
)
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Basic
net income per common share for the six months ended June 30,
2017:
|
|
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Income
available to common stockholders
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$
57,102
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11,201,760
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$
0.01
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Effect
of dilutive stock options
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-
|
306,671
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-
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Diluted
net income per common share for the six months ended June 30,
2017
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$
57,102
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11,508,431
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$
0.00
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|
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Basic
net loss per common share for the six months ended June 30,
2016:
|
|
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Loss
available to common stockholders
|
$
(356,027
)
|
11,201,760
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$
(0.03
)
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Effect
of dilutive stock options
|
-
|
-
|
-
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Diluted
net loss per common share for the six months ended June 30,
2016
|
$
(356,027
)
|
11,201,760
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$
(0.03
)
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10.16
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Eighth
Amendment to Loan Agreement regarding Line of Credit Agreement with
TD Bank, N.A., successor to Commerce Bank, N.A., dated May 28,
2017.
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Certification
of Chief Executive Officer Pursuant to Rules 13a-14(a) and
15d-14(a) of the Securities Exchange Act of 1934
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Certification
of Chief Financial Officer Pursuant to Rules 13a-14(a) and
15d-14(a) of the Securities Exchange Act of 1934
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Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
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Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
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Information Analysis
Incorporated
(Registrant)
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Date: August 14,
2017
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By:
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/s/ Sandor
Rosenberg
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Sandor Rosenberg,
Chairman of the
Board, Chief
Executive Officer,
and
President
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Date: August 14,
2017
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By:
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/s/
Richard S. DeRose
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Richard
S. DeRose, Executive Vice
President,
Treasurer, and Chief
Financial
Officer
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BORROWER:
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Information Analysis Incorporated |
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By:
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/s/
Sandor
Rosenberg
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Name: Sandor Rosenberg |
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Title:
Chief Executive Officer
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LENDER: |
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Information Analysis Incorporated |
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By:
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/s/
Maria Almeida Josephs
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Name:
Maria
Almeida Josephs
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Title: Vice
President
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Date: August 14,
2017
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By:
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/s/
Sandor
Rosenberg
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Sandor
Rosenberg, Chairman of the Board,
Chief Executive
Officer and President
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Date: August 14,
2017
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By:
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/s/
Richard S. DeRose
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Richard
S. DeRose, Executive Vice
President,
Treasurer, and Chief
Financial
Officer
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Date: August 14,
2017
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By:
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/s/
Sandor
Rosenberg
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Sandor
Rosenberg, Chairman of the Board,
Chief Executive
Officer and President
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Date: August 14,
2017
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By:
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/s/
Richard S. DeRose
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Richard
S. DeRose, Executive Vice
President,
Treasurer, and Chief
Financial
Officer
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