Intellinetics, Inc. Reports First Quarter Results

Revenues Increase 117%; Earnings per share of $0.27

COLUMBUS, OH, May 17, 2021 (GLOBE NEWSWIRE) -- Intellinetics, Inc. (OTCQB: INLX), a cloud-based document solutions provider, announced financial results for the three months ended March 31, 2021.

2021 First Quarter Financial Highlights

  Total Revenue increased 117% from the same period in 2020.
  Software as a Service Revenue increased 43% from the same period in 2020.
  Net Income of $842,772, compared to Net Loss of $646,211 from the same period in 2020.
  Adjusted EBITDA of $356,165, compared to $7,785 from the same period in 2020.

Summary – 2021 First quarter Results

Revenues for the three months ended March 31, 2021 were $2,635,219 as compared with $1,213,664 for the same period in 2020. The increase in our professional services and storage and retrieval revenues is primarily due to the inclusion of a full quarter of revenues from our subsidiary acquired in 2020, Graphic Sciences, Inc., compared to the same quarter in 2020 that only included one month of acquisition revenues. Intellinetics reported a net income of $842,772 for the three months ended March 31, 2021 compared to a net loss of $646,211 for the same period in 2020. The improved net income was the result of improved operating results, no significant transaction costs in 2021, and a gain on extinguishment of debt of $845,083 from the full forgiveness of our PPP loan. Net income per basic and diluted share was $0.30 and $0.27, respectively, for the three months ended March 31, 2021. Net loss per basic and diluted share was ($0.54) for the three months ended March 31, 2020.

2021 Other Highlights

  Invested in new warehouse to support growth of our storage and retrieval services, which increases box storage capacity more than 120%.
  Signed a new three-year, revenue favorable agreement with our second-largest customer.
  Expanded K-12 footprint closing 20 new districts in the quarter, taking us to over 230 school districts at the time of this release.

James F. DeSocio, President & CEO of Intellinetics, stated, “Our employees continue to impress me with their focus. We have just celebrated the anniversaries our two 2020 acquisitions and I am pleased to say that the integrations have exceeded our expectations and our timeline. In all my career, these are two of the smoothest acquisitions in which I have been involved. The efforts are reflected in the results of our net income and cash flow, where our ‘net cash provided by operating activities’ improved significantly from Q1 2020 to $326,869 for the quarter.

“Similarly, we are making investments in our sales and marketing teams to enhance our ability to capture more of the market. We aligned the sales and marketing teams over the past two quarters, and we are cross selling our solutions and applications into our new and existing customer base. This is the synergy we strove for when we acquired the two companies. We’ve launched tactically focused email and telephone campaigns in the first quarter, and I am excited to see what our organization can deliver. All eyes are all forward on growing the business.

“We continue to expect, for this fiscal year, to build on the positive Adjusted EBITDA of 2020 and to drive revenue growth.”

About Intellinetics, Inc.

Intellinetics, Inc., located in Columbus, Ohio, is a cloud-based document services software provider. Its IntelliCloud™ suite of solutions serve a mission-critical role for organizations in highly regulated, risk and compliance-intensive markets in Healthcare, K-12, Public Safety, Public Sector, Risk Management, Financial Services and beyond. IntelliCloud solutions make content secure, compliant, and process-ready to drive innovation, efficiencies and growth. Through its Image Technology Group and production scanning department, hundreds of millions of images have been converted from paper to digital, paper to microfilm, and microfiche to microfilm for business and federal, county, and municipal governments. Its operations in Madison Heights, Michigan, also provides its clients with long-term paper and microfilm storage and retrieval options. For additional information, please visit

Cautionary Statement

Statements in this press release which are not purely historical, including statements regarding future business and growth, future revenues, including 2021 revenues and future revenue streams from new and existing customers, 2021 Adjusted EBITDA, future cash flow and other synergies associated with our 2020 acquisitions of Graphic Sciences and CEO Imaging and the success of our integration efforts, our other product and service offerings and marketing initiatives mentioned in this release, and in any other industry, market, initiative, service or innovation; cross-selling opportunities for Intellinetics’ future revenues, revenue consistency, growth and long-term value, including trends in revenue growth and mix; growth of software as a service, professional services, and maintenance revenue; market penetration; execution of Intellinetics’ business plan, strategy, direction and focus; and other intentions, beliefs, expectations, representations, projections, plans or strategies regarding future growth, financial results, and other future events are forward-looking statements. The forward-looking statements involve risks and uncertainties including, but not limited to, the risks associated with the effect of changing economic conditions, the impact of COVID-19 and related governmental actions and orders on customers, suppliers, employees and the economy and our industry, Intellinetics’ ability to execute on its business plan and strategy, customary risks attendant to acquisitions, trends in the products markets, variations in Intellinetics’ cash flow or adequacy of capital resources, market acceptance risks, the success of Intellinetics’ solutions providers, including human services, health care, and education, technical development risks, and other risks, uncertainties and other factors discussed from time to time in its reports filed with or furnished to the Securities and Exchange Commission, including in Intellinetics’ most recent annual report on Form 10-K as well as subsequently filed reports on Form 8-K. Intellinetics cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Intellinetics disclaims any obligation and does not undertake to update or revise any forward-looking statements in this press release. Expanded and historical information is made available to the public by Intellinetics on its website at or at


Joe Spain, CFO
Intellinetics, Inc.

Non-GAAP Financial Measure

Intellinetics uses non-GAAP Adjusted EBITDA as a supplemental measure of our performance that is not required by, or presented in accordance with, accounting principles generally accepted in the United States (GAAP).

A non-GAAP financial measure is a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of a company. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income, operating income, or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or a measure of our liquidity. Intellinetics urges investors to review the reconciliation of non-GAAP Adjusted EBITDA to the comparable GAAP Net Loss, which is included in this press release, and not to rely on any single financial measure to evaluate Intellinetics’ financial performance.

We believe that Adjusted EBITDA is a useful performance measure and is used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone. We define “Adjusted EBITDA” as earnings before interest expense, any income taxes, depreciation and amortization expense, stock-based compensation, note conversion and note or equity offer warrant or stock expense, gain or loss on debt extinguishment, change in fair value of contingent consideration, and significant transaction costs.

Reconciliation of Net Loss to Adjusted EBITDA

    For the Three Months Ended March 31,  
    2021     2020  
Net loss - GAAP   $ 842,772     ($ 646,211 )
Interest expense, net     113,044       290,430  
Income tax benefit, net     -       (188,300 )
Depreciation and amortization     94,884       28,091  
Stock-based compensation     80,598       69,073  
Stock and warrant issue expense     -       377,761  
Significant transaction costs     -       364,367  
Change in fair value of earnout liabilities     69,950       -  
Gain on extinguishment of debt     (845,083 )     (287,426 )
Adjusted EBITDA   $ 356,165     ($ 7,785 )

Condensed Consolidated Statements of Operations

    For the Three Months Ended March 31,  
    2021     2020  
Sale of software   $ 9,594     $ 94,100  
Software as a service     323,726       225,994  
Software maintenance services     340,446       261,243  
Professional services     1,652,463       560,029  
Storage and retrieval services     308,990       72,298  
Total revenues     2,635,219       1,213,664  
Cost of revenues:                
Sale of software     4,237       38,302  
Software as a service     76,340       72,515  
Software maintenance services     24,388       46,516  
Professional services     834,238       272,505  
Storage and retrieval services     91,112       17,701  
Total cost of revenues     1,030,315       447,539  
Gross profit     1,604,904       766,125  
Operating expenses:                
General and administrative     1,039,026       865,085  
Change in fair value of earnout liabilities     69,950       -  
Significant transaction costs     -       460,767  
Sales and marketing     290,311       243,689  
Depreciation and amortization     94,884       28,091  
Total operating expenses     1,494,171       1,597,632  
Income/loss from operations     110,733       (831,507 )
Other income (expense)                
Gain on extinguishment of debt     845,083       287,426  
Interest expense, net     (113,044 )     (290,430 )
Total other income/expense     732,039       (3,004 )
Income/loss before income taxes     842,772       (834,511 )
Income tax benefit     -       188,300  
Net income/loss   $ 842,772     $ (646,211 )
Basic net income (loss) per share:   $ 0.30     $ (0.54 )
Diluted net income (loss) per share:   $ 0.27     $ (0.54 )
Weighted average number of common shares outstanding - basic     2,822,665       1,185,846  
Weighted average number of common shares outstanding - diluted     3,106,885       1,185,846  

Condensed Consolidated Balance Sheets

    March 31,     December 31,  
    2021     2020  
Current assets:                
Cash   $ 2,003,052     $ 1,907,882  
Accounts receivable, net     1,055,023       792,380  
Accounts receivable, unbilled     346,151       523,522  
Parts and supplies, net     75,877       79,784  
Prepaid expenses and other current assets     231,475       162,166  
Total current assets     3,711,578       3,465,734  
Property and equipment, net     889,686       698,752  
Right of use assets     2,511,445       2,641,005  
Intangible assets, net     1,130,852       1,184,971  
Goodwill     2,322,887       2,322,887  
Other assets     27,284       31,284  
Total assets   $ 10,593,732     $ 10,344,633  
Current liabilities:                
Accounts payable   $ 240,236     $ 141,823  
Accrued compensation     391,310       271,889  
Accrued expenses, other     141,748       131,685  
Lease liabilities - current     489,105       518,531  
Deferred revenues     945,812       996,131  
Deferred compensation     100,828       100,828  
Earnout liabilities - current     947,472       877,522  
Accrued interest payable - current     -       5,941  
Notes payable - current     -       580,638  
Total current liabilities     3,256,511       3,624,988  
Long-term liabilities:                
Notes payable - net of current portion     1,596,723       1,802,184  
Lease liabilities - net of current portion     2,096,618       2,196,951  
Earnout liabilities - net of current portion     1,566,478       1,566,478  
Total long-term liabilities     5,259,819       5,565,613  
Total liabilities     8,516,330       9,190,601  
Stockholders’ equity:                
Common stock, $0.001 par value, 25,000,000 shares authorized; 2,823,072 and 2,810,865 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively     2,823       2,811  
Additional paid-in capital     24,228,074       24,147,488  
Accumulated deficit     (22,153,495 )     (22,996,267 )
Total stockholders’ equity     2,077,402       1,154,032  
Total liabilities and stockholders’ equity   $ 10,593,732     $ 10,344,633  

Condensed Consolidated Statements of Cash Flows

    For the Three Months Ended March 31,  
    2021     2020  
Cash flows from operating activities:                
Net income/loss   $ 842,772     $ (646,211 )
Adjustments to reconcile net income/loss to net cash used in operating activities:                
Depreciation and amortization     94,884       28,091  
Bad debt expense     (2,634 )     23,287  
Parts and supplies reserve change     4,500       1,500  
Amortization of deferred financing costs     25,935       39,287  
Amortization of beneficial conversion option     -       11,786  
Amortization of debt discount     26,666       8,889  
Amortization of right of use asset     129,560       45,197  
Stock issued for services     57,500       57,500  
Stock options compensation     23,098       11,573  
Note conversion stock issue expense     -       141,000  
Warrant issue expense     -       236,761  
Interest on converted debt     -       176,105  
Amortization of original issue discount on notes     -       16,864  
Gain on extinguishment of debt     (845,083 )     (287,426 )
Change in fair value of earnout liabilities     69,950       -  
Changes in operating assets and liabilities:                
Accounts receivable     (260,009 )     294,853  
Accounts receivable, unbilled     177,371       8,423  
Parts and supplies     (593 )     (11,506 )
Prepaid expenses and other current assets     (65,309 )     (82,390 )
Accounts payable and accrued expenses     227,897       (90,718 )
Lease liabilities, current and long-term     (129,759 )     (43,908 )
Deferred compensation     -       (13,046 )
Accrued interest, current and long-term     442       20,000  
Deferred revenues     (50,319 )     (89,862 )
Total adjustments     (515,903 )     502,260  
Net cash provided by/(used in) operating activities     326,869       (143,951 )
Cash flows from investing activities:                
Cash paid to acquire business, net of cash acquired     -       (3,888,984 )
Purchases of property and equipment     (231,699 )     (7,742 )
Net cash used in investing activities     (231,699 )     (3,896,726 )
Cash flows from financing activities:                
Proceeds from issuance of common stock     -       3,167,500  
Offering costs paid on issuance of common stock     -       (307,867 )
Payment of deferred financing costs     -       (175,924 )
Proceeds from notes payable     -       2,000,000  
Net cash provided by financing activities     -       4,683,709  
Net increase in cash     95,170       643,032  
Cash - beginning of period     1,907,882       404,165  
Cash - end of period   $ 2,003,052     $ 1,047,197  
Supplemental disclosure of cash flow information:                
Cash paid during the period for interest   $ 60,000     $ 2,154  
Cash paid during the period for income taxes   $ 913     $ -  
Supplemental disclosure of non-cash financing activities:                
Accrued interest notes payable converted to equity   $ -     $ 796,074  
Accrued interest notes payable related parties converted to equity     -       238,883  
Discount on notes payable for beneficial conversion feature     -       320,000  
Discount on notes payable for warrants     -       135,292  
Notes payable converted to equity     -       3,421,063  
Notes payable converted to equity - related parties     -       1,465,515  
Supplemental disclosure of non-cash investing activities relating to business acquisitions:                
Cash   $ -     $ 17,269  
Accounts receivable     -       1,071,770  
Accounts receivable, unbilled     -       266,403  
Parts and supplies     -       101,016  
Prepaid expenses     -       73,116  
Other current assets     -       5,954  
Right of use assets     -       2,885,618  
Property and equipment     -       732,372  
Intangible assets     -       1,230,000  
Accounts payable     -       (129,622 )
Accrued expenses     -       (155,949 )
Lease liabilities     -       (2,947,684 )
Federal and state taxes payable     -       (168,900 )
Deferred revenues     -       (39,186 )
Deferred tax liabilities, net     -       (149,900 )
Net assets acquired in acquisition     -       2,792,277  
Total goodwill acquired in acquisition     -       1,800,176  
Total purchase price of acquisition     -       4,592,453  
Purchase price of business acquisition financed with earnout liability     -       (686,200 )
Cash used in business acquisition   $ -     $ 3,906,253  

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Source: Intellinetics, Inc.