Annual report pursuant to Section 13 and 15(d)

Significant Accounting Policies (Policies)

v3.21.1
Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Organization and Business [Policy Text Block]
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, Policy [Policy Text Block]
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 from Contract with Customer [Policy Text Block]
Revenue Recognition
 
See Note
2
for a detailed description of revenue recognition under ASC
606
Accounting Standards Update
No.
2014
-
09,
Revenue from Contracts with Customers (Topic
606
) (“ASU
2014
-
09”
). The Company adopted ASU
2014
-
09
and its related amendments (collectively known as “ASC
606”
).
Segment Reporting, Policy [Policy Text Block]
Segment Reporting
 
The Company has concluded that it operates in
one
business segment, providing products and services to modernize client information systems.
Cash and Cash Equivalents, Policy [Policy Text Block]
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 [Policy Text Block]
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.
No
allowance for doubtful accounts has been recorded at
December 31, 2020
and
2019.
Property, Plant and Equipment, Policy [Policy Text Block]
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.
Share-based Payment Arrangement [Policy Text Block]
Stock-Based Compensation
 
At
December 31, 2020,
the Company had the stock-based compensation plans described in Note
11
below. Total compensation expense related to these plans was
$27,628
and
$6,031
for the years ended
December 31, 2020
and
2019,
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.
Income Tax, Policy [Policy Text Block]
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.
Earnings Per Share, Policy [Policy Text Block]
Income (Loss) Per Share
 
The Company's income (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 income per share, except for periods when the Company reports a net loss, in which case the inclusion of such equity instruments would be antidilutive. See Note
12
for more details.
Concentration Risk, Credit Risk, Policy [Policy Text Block]
Concentration of Credit Risk
 
During the year ended
December 31, 2020,
the Company's prime contracts with U.S. government agencies represented
58.3%
of revenue, subcontracts under federal procurements represented
40.6%
of revenue, and
1.1%
of 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,
one
individual contract represented
13.9%
of revenue. Three subcontracts under federal procurements represented
17.9%,
10.3%
and
8.7%
of revenue, respectively. One prime contractor under which the Company has multiple subcontracts represented
28.7%
of revenue in aggregate.
 
During the year ended
December 31, 2019,
the Company's prime contracts with U.S. government agencies represented
76.8%
of revenue, subcontracts under federal procurements represented
23.0%
of revenue, and
0.2%
of 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,
one
individual contract represented
19.0%
of revenue. One subcontract under a federal procurement represented
17.2%
of revenue.
 
The Company sold
third
-party software and maintenance contracts under agreements with
one
major supplier in
2020
and
2019,
accounting for
58.4%
and
67.1%
of total revenue, respectively.
 
At
December 31, 2020,
the Company's accounts receivable included receivables from prime contracts with
one
U.S. government agency that represented
16.4%
of the Company's outstanding accounts receivable, and receivables from
two
subcontracts under federal procurements that represented
56.8%
and
14.4%
of the Company's outstanding accounts receivable, respectively. Receivables from
one
prime contractor under which the Company has multiple subcontracts represented
71.2%
of the Company's outstanding accounts receivable in aggregate.
 
At
December 31, 2019,
the Company's accounts receivable included receivables from prime contracts with
two
U.S. government agencies that represented
13.0%
and
10.7%
of the Company's outstanding accounts receivable, respectively, and receivables from
one
subcontract under a federal procurement that represented
43.2%
of the Company's outstanding accounts receivable.
Related Party Transactions, Policy [Policy Text Block]
Related Party Transactions
 
The Company's Director of Human Resources is the spouse of Stan Reese, who served as the Senior Vice President and Chief Operating Officer of the Company through
December 31, 2020,
and now serves as Chief Executive Officer and President. During the years ended
December 31, 2020
and
2019,
the Director of Human Resources received wages and paid leave distributions totaling
$140,400
and
$131,552,
respectively, as an employee of the Company.
COVID-19 [Policy Text Block]
COVID-
19
 
The COVID-
19
(coronavirus) outbreak has had a notable impact on general economic conditions, including, but
not
limited to, the temporary closures of many businesses, “shelter in place” and other governmental regulations, and “work from home” directives. There are many unknowns, and many regional inconsistencies. Notable potential effects on the Company include U.S. government procurements
may
be delayed or cancelled, work on new or existing contracts that require personal interactions
may
be suspended, payment processing for customer invoices
may
be delayed, employees and customers or their families
may
become infected, and personal business development meetings
may
not
be able to take place. The Company continues to monitor the impact of the COVID-
19
outbreak closely.
 
To date, the COVID-
19
impact on the Company's existing business has been minimal.  The Company had previously implemented the necessary infrastructure for its employees to work remotely, so it did
not
experience material issues supporting its customers.  The Company rapidly adapted to the challenges presented to its administration, including challenges to management, accounting, and information technology infrastructure.  The extent to which business development efforts have been hampered by the inability to meet with potential customers in person is indeterminable.  The full extent to which the COVID-
19
outbreak will impact the Company's business, results of operations, financial condition, and cash flows over time is uncertain.