Intellinetics, Inc. Reports Second Quarter and Six-Month Results

Revenue Growth Over First Quarter
 Consistent Software as a Service Growth

COLUMBUS, OH, Aug. 14, 2018 (GLOBE NEWSWIRE) -- Intellinetics, Inc. (OTCQB: INLX), a cloud-based document solutions provider, announced financial results for the three and six months ended June 30, 2018.

2018 Second Quarter Financial Highlights

  • Total Revenue increased 5% from Q1 2018.
  • Total Revenue decreased 25% from Q2 2017.
  • Software as a Service Revenue increased 19% from Q2 2017.
  • Net Loss of $669,450. 
  • Adjusted EBITDA Loss of $385,492.

Summary – 2018 Second Quarter Results
Revenues for the three months ended June 30, 2018 were $549,678 as compared with $737,269 for the same period in 2017. Intellinetics reported a net loss of $(669,451) and $(302,519) for the three months ended June 30, 2018 and 2017, respectively, representing an increase in net loss of $336,932. The increased net loss was a result of lower revenue, driven by lower one-time software and professional services sales compared to 2017. Net loss per share for the three months ended June 30, 2018 and 2017 was ($0.04) and ($0.02), respectively.

Summary – 2018 Six-Month Results
Revenues for the six months ended June 30, 2018 were $1,075,052 as compared with $1,444,886 for the same period in 2017. Intellinetics reported a net loss of $(1,307,960) and $(752,712) for the six months ended June 30, 2018 and 2017, respectively, representing an increase in net loss of $555,248. The increased net loss was a result of lower revenue, driven by lower one-time software and professional services sales compared to 2017. Net loss per share for the six months ended June 30, 2018 and 2017 was ($0.07) and ($0.04), respectively.

James F. DeSocio, President & CEO of Intellinetics, stated, “Our strategy to accelerate our sales through strategic solutions partners, and continue to grow our subscription sales so that we are less reliant on one-time sales, is taking hold. While our steady growth in Software as a Service is encouraging, our real optimism comes from seeing the improved sales pipeline build in our targeted markets.  This includes making inroads in the K-12 education space with our new solutions partner in that market. We’ve already secured our first two orders from this initiative.  Our campaigns targeted at our strategic markets, including K-12 as well as Human Service Providers, are expected to bear fruit in the second half of this year.” 

DeSocio continued, “This strategy, enabling us to provide greater revenue consistency and higher growth, will be a difference-maker for us. I am excited to see these roots take hold.”

IntelliCloudTM – Powered by the Intel® NUC
IntelliCloud™ is a cloud-based document management platform that is optimized for work teams within organizations of any size with business-critical processes. Thousands and thousands of people at any given moment depend upon IntelliCloud to perform their work. IntelliCloud, which is strategically packaged with Intel® technology, provides Law Enforcement Grade security and compliance tools and is supported by a growing network of market-leading reseller partners. Resellers often attach IntelliCloud to the software, hardware, and/or services they already sell, without the sales or technical complexity of other less effective options in the market.

About Intellinetics, Inc.
Intellinetics, Inc. is a Columbus, Ohio-based content services software company. Its flagship IntelliCloudTM platform provides easy to use, affordable, secure document management to organization s that have critical document requirements and must always be audit-ready, including health and human services, education and law enforcement.  Our customers save valuable time by immediately locating and form, file, record or document, and our superhuman customer service ensures users can remain focused on their mission. For additional information, please visit:

Cautionary Statement 
Statements in this press release which are not purely historical, including statements regarding future business and new revenues associated with any industry, channel partner, service, or business relationship; Intellinetics’ future revenues and growth in 2018 and beyond; growth of software as a service revenue; market penetration; execution of Intellinetics’ business plan, strategy, 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, trends in the products markets, variations in Intellinetics’ cash flow or adequacy of capital resources, market acceptance risks, the success of Intellinetics’ channel partners and distribution partners, technical development risks, and other risks and uncertainties discussed in Intellinetics’ most recent annual report on Form 10-K and subsequently filed Form 10-Qs and Form 8-Ks. 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

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, 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 June 30,
    2018    2017 
Net loss - GAAP  $(669,450)  $(302,519)
Interest expense, net   219,352    138,183 
Depreciation and amortization   2,384    2,779 
Share-based compensation   62,222    37,303 
Adjusted EBITDA  $(385,492)  $(124,254)

Condensed Consolidated Statements of Operations
 For the Three Months Ended June 30, For the Six Months Ended June 30,
  2018   2017   2018   2017 
Sale of software$ 34,158  $ 77,291  $ 75,152  $ 240,275 
Software as a service 177,583   148,825   354,183   278,356 
Software maintenance services 245,299   240,881   488,867   490,802 
Professional services 52,605   247,622   111,556   355,227 
Third Party services 40,033   22,650   45,294   80,226 
Total revenues 549,678   737,269   1,075,052   1,444,886 
Cost of revenues:       
Sale of software 12,672   15,097   30,533   38,801 
Software as a service 68,594   54,883   145,687   149,239 
Software maintenance services 25,064   30,952   50,601   57,030 
Professional services 19,317   96,792   36,143   146,445 
Third Party services 33,954   15,410   44,199   28,498 
Total cost of revenues 159,601   213,134   307,163   420,013 
Gross profit 390,077   524,135   767,889   1,024,873 
Operating expenses:       
General and administrative 593,400   499,695   1,136,835   1,080,240 
Sales and marketing 244,391   185,996   506,100   421,282 
Depreciation 2,384   2,780   4,578   5,785 
Total operating expenses 840,175   688,471   1,647,513   1,507,307 
Loss from operations  (450,098)   (164,336)   (879,624)   (482,434)
Other income (expense)       
Interest expense, net  (219,353)   (138,183)   (428,336)   (270,278)
Total other income (expense)   (219,353)    (138,183)    (428,336)    (270,278)
Net loss$ (669,451) $  (302,519) $(1,307,960) $  (752,712)
Basic and diluted net loss per share:$  (0.04) $  (0.02) $  (0.07) $  (0.04)
Weighted average number of common shares outstanding - basic and diluted   17,729,421     17,376,012     17,724,377     17,365,434 

Condensed Consolidated Balance Sheets
     June 30, December 31,
      2018   2017 
Current assets:      
 Cash  $ 280,972  $ 1,125,921 
 Accounts receivable, net 199,402   295,815 
 Prepaid expenses and other current assets 223,895   162,450 
   Total current assets 704,269   1,584,186 
Property and equipment, net 13,592   14,760 
Other assets   10,284   10,284 
   Total assets$ 728,145  $ 1,609,230 
Current liabilities:      
 Accounts payable and accrued expenses $ 582,528  $ 475,459 
 Deferred revenues  607,991   708,130 
 Deferred compensation 189,166   213,166 
 Notes payable - current 875,000   875,000 
 Notes payable - related party - current 419,476   416,969 
   Total current liabilities 2,674,161   2,688,724 
Long-term liabilities:    
 Notes payable - net of current portion 1,421,268   1,221,384 
 Notes payable - related party - net of current portion 339,250   312,680 
 Other long-term liabilities - related parties 63,171   29,997 
   Total long-term liabilities 1,823,689   1,564,061 
   Total liabilities 4,497,850   4,252,785 
Stockholders' deficit:    
 Common stock, $0.001 par value, 50,000,000 shares authorized; 17,729,421 and 17,426,792 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively  


 Additional paid-in capital 13,830,027   13,648,519 
 Accumulated deficit  (17,630,465)   (16,322,505)
   Total stockholders' deficit  (3,769,705)   (2,643,555)
   Total liabilities and stockholders' deficit$ 728,145  $ 1,609,230 

Condensed Consolidated Statements of Cash Flows
   For the Six Months Ended June 30,
    2018   2017 
Cash flows from operating activities:    
Net loss $  (1,307,960) $  (752,712)
Adjustments to reconcile net loss to net cash    
 used in operating activities:    
 Depreciation and amortization  4,578   5,786 
 Bad debt expense   (3,834)  6,727 
 Amortization of deferred financing costs  124,431   40,030 
 Amortization of beneficial conversion option  128,477   124,147 
 Stock issued for services  57,500   57,500 
 Stock options compensation  124,310   66,186 
 Note offer warrant expense     52,951 
Changes in operating assets and liabilities:    
 Accounts receivable  100,247    (62,596)
 Prepaid expenses and other current assets   (61,445)   (42,093)
 Accounts payable and accrued expenses  107,069    (59,052)
 Deferred compensation   (24,000)   
 Other long-term liabilities - related parties  33,174   10,969 
 Deferred interest expense      (2,238)
 Deferred revenues   (100,139)   (84,137)
 Total adjustments  490,368   114,180 
 Net cash used in operating activities   (817,592)   (638,532)
Cash flows from investing activities:    
 Purchases of property and equipment   (3,410)   (6,429)
 Net cash used in investing activities   (3,410)   (6,429)
Cash flows from financing activities:    
 Payment of deferred financing costs      (103,328)
 Proceeds from notes payable     560,000 
 Repayment of notes payable      (177,362)
 Repayment of notes payable - related parties   (23,947)   (18,678)
 Net cash used/provided by financing activities   (23,947)  260,632 
Net increase (decrease) in cash   (844,949)   (384,329)
Cash - beginning of period  1,125,921   689,946 
Cash - end of period $ 280,972  $ 305,617 
Supplemental disclosure of cash flow information:    
 Cash paid during the period for interest and taxes $ 28,973  $ 75,658 
Supplemental disclosure of non-cash financing activities:    
 Discount on notes payable for beneficial conversion feature     248,522 


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