Intellinetics, Inc. Reports First Quarter Results

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Revenue and Channel Growth Accelerating

COLUMBUS, Ohio--(BUSINESS WIRE)-- Intellinetics, Inc. (OTCQB: INLX), an Enterprise Content Management (ECM) software company focused on cloud-based document solutions for the Small to Medium Business (SMB) market, announced financial results for the first quarter ended March 31, 2016.

First Quarter Highlights

1.

 

Late in the quarter we expanded our channel sales team from one to three members and focused on in-field sales training and sales support to grow revenue.

2.

Launched an automatic training portal for our channel partners for a Q2 go-live which includes:

a. IntelliCloud™ sales rep certification

b. Mobile sales and marketing tools

c. Reporting and best practice feed to reps

3.

Entered into a material agreement with a leading office supply company to become a reseller with a phased rollout expected to begin in Q3 after appropriate training. An experienced executive was hired to oversee that key initiative.

4.

Raised $559,285 through the sale of common stock and warrants and converted $170,038 of principal and interest of convertible promissory notes into equity. We utilized the proceeds to reduce other debt by $261,500 and current payables by $181,707. The reduction in debt will reduce debt interest costs in the future periods.

Matthew L. Chretien, President and CEO of Intellinetics, noted that, “The Q1 numbers do not yet reflect the progress we have made and the foundation that was laid during the quarter to position the Company for accelerated growth during the balance of the year.”

Summary - First Quarter Results

Revenues for the three months ended March 31, 2016 were $603,391 as compared with $583,775 for the same period in 2015. The increase is primarily attributed to a significant increase in revenues from the sale of software as a service, software maintenance services, professional services, and third-party services offset by a planned reduction in our legacy software sales. Net income loss was ($535,765) for the March 31, 2016 quarter compared with ($208,857) for last year’s March quarter. Adjusted EBITDA was virtually flat at ($112,875). Net loss per share for the first quarter 2016 was ($0.03) when compared with the first quarter 2015 loss per share of ($0.03).

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, income taxes, depreciation and amortization expense, and other non-cash expenses such as share-based compensation, note conversion warrant expense and other financing related transaction costs.

 
Reconciliation of Net Loss to Adjusted EBITDA
 
      For the Three Months Ended March 31,
2016       2015
Net Loss - GAAP ($535,765 ) ($208,857 )
Interest expense, net 138,668 95,900
Depreciation and Amortization 2,956 3,378
Share-based compensation 129,693 -
Note conversion warrant expense 137,970 -
Note conversion underwriting expense 13,603   -  
Adjusted EBITDA ($112,875 ) ($109,579 )
 

IntelliCloud™ – Powered by the Intel® NUC

The Intellinetics IntelliCloud Program provides turnkey document workflow solutions for SMB’s through a growing network of partners who already serve them. Our partners simply attach IntelliCloud to the software, hardware, and/or services they already sell to existing customers and deliver more value to the customer and create new / recurring revenue streams for themselves…and us, all without the sales or technical complexity of other less effective options in the market.

Targeted Channel Strategy

Intellinetics is focused on IntelliCloud Program growth within three specific partner profiles:

  • Office Equipment Dealers (OED) - Copier dealers who also provide value added software, service and technology services
  • ECM Value Added Reseller (VAR) - Expert ECM software, hardware and service providers
  • Software Solution Providers - Enterprise Resource Planning (ERP) or other software applications with proprietary IntelliCloud Integration.

About Intellinetics, Inc.

Intellinetics, Inc. is a Columbus, Ohio-based ECM software company. Intellinetics partnered with Intel to create the IntelliCloud Channel Program that makes it easy to add turnkey document workflow solutions to the copiers, productivity software and services they already provide. IntelliCloud provides dealers a “deploy once, use many” innovation where one IntelliCloud customer sale/activation creates endless possibilities to add other software applications that deliver more value and increase revenue. For additional information, please visit: www.intellinetics.com.

Cautionary Statement

Statements in this press release which are not purely historical, including statements regarding Intellinetics’ intentions, beliefs, expectations, representations, projections, plans or strategies regarding the future 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, trends in the products markets, variations in the company’s cash flow or adequacy of capital resources, market acceptance risks, technical development risks, and other risk factors. The company 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 and its Affiliates on its website or at www.intellinetics.com or at www.sec.gov.

 
INTELLINETICS, INC. and SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
 
      For the Three Months Ended March 31,
2016       2015
 
Revenues:
Sale of software $ 90,874 $ 190,037
Software as a service 110,156 56,539
Software maintenance services 246,596 228,671
Professional services 98,176 82,238
Third Party services   57,589     26,290  
 
Total revenues   603,391     583,775  
 
Cost of revenues:
Sale of software 19,518 47,522
Software as a service 24,587 10,910
Software maintenance services 46,558 31,008
Professional services 31,355 20,518
Third Party services   27,442     3,579  
 
Total cost of revenues   149,460     113,537  
 
Gross profit   453,931     470,238  
 
Operating expenses:
General and administrative 660,564 365,840
Sales and marketing 187,508 213,977
Depreciation   2,956     3,378  
 
Total operating expenses   851,028     583,195  
 
Loss from operations (397,097 ) (112,957 )
 
Other income (expense)
Interest expense, net   (138,668 )   (95,900 )
 
Total other income (expense) (138,668 ) (95,900 )
 
Net loss $ (535,765 ) $ (208,857 )
 
 
INTELLINETICS, INC. and SUBSIDIARY
Condensed Consolidated Balance Sheets
 
ASSETS
      (Unaudited)      
March 31, December 31,
2016 2015
 
Current assets:
Cash $ 1,004,441 $ 1,117,118
Accounts receivable, net 271,324 217,028
Prepaid expenses and other current assets   76,100     46,521  
 
Total current assets 1,351,865 1,380,667
 
Property and equipment, net 19,647 22,603
Other assets   10,285     10,285  
 
Total assets $ 1,381,797   $ 1,413,555  
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
 
Current liabilities:
Accounts payable and accrued expenses $ 723,337 $ 826,864
Deferred revenues 510,687 638,193
Deferred compensation 215,012 215,012
Notes payable - current 294,543 401,573
Notes payable - related party - current   35,552     92,805  
Total current liabilities 1,779,131 2,174,447
 
Long-term liabilities:
Notes payable - net of current portion 694,944 782,206
Notes payable - related party 118,161 127,409
Deferred interest expense 144,276 136,078
Other long-term liabilities - related parties   -     12,852  
 
Total long-term liabilities   957,381     1,058,545  
 
Total liabilities 2,736,512 3,232,992
 
 
Stockholders' deficit:

Common stock, $0.001 par value, 50,000,000 shares authorized; 16,794,992 and 14,908,712 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively

26,795 21,909
Additional paid-in capital 12,532,694 11,537,093
Accumulated deficit   (13,914,204 )   (13,378,439 )
Total stockholders' deficit   (1,354,715 )   (1,819,437 )
Total liabilities and stockholders' deficit $ 1,381,797   $ 1,413,555  
 

Bibicoff + MacInnis, Inc.
Terri MacInnis, 818-379-8500
VP of Investor Relations
terri@bibimac.com

Source: Intellinetics, Inc.

Released May 16, 2016