Exhibit 99.1

 

 

Intellinetics, Inc. Reports First Quarter Results

 

Revenues Increase 117%; Earnings per share of $0.27

 

COLUMBUS, OH – (May 17, 2021) – 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 www.intellinetics.com.

 

 

 

 

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 www.intellinetics.com or at www.sec.gov.

 

CONTACT:

 

Joe Spain, CFO

Intellinetics, Inc.

614.921.8170 investors@intellinetics.com

 

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)

 

 

 

 

INTELLINETICS, INC. and SUBSIDIARY

Condensed Consolidated Statements of Operations

(Unaudited)

 

   For the Three Months Ended March 31, 
   2021   2020 
         
Revenues:          
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 

 

 

 

 

INTELLINETICS, INC. and SUBSIDIARY

Condensed Consolidated Balance Sheets

 

   (unaudited)     
   March 31,   December 31, 
   2021   2020 
         
ASSETS        
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 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
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 

 

 

 

 

INTELLINETICS, INC. and SUBSIDIARY

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   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