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


Revenue Growth Over First Quarter

COLUMBUS, OH , Aug. 14, 2019 (GLOBE NEWSWIRE) --  – Intellinetics, Inc. (OTCQB: INLX), a cloud-based document solutions provider, announced financial results for the three and six months ended June 30, 2019.

2019 Second Quarter Financial Highlights

  • Total Revenue increased 24% sequentially from Q1 2019.
  • Total Revenue increased 17% from Q2 2018.
  • Software as a Service Revenue increased 30% from Q2 2018.
  • Net Loss of $473,662.
  • Adjusted EBITDA Loss of $163,720, a decrease of 58% from Q2 2018.

2019 Six Month Financial Highlights

  • Total Revenue increased 8% from the same period in 2018.
  • Software as a Service Revenue increased 21% from the same period in 2018.
  • Net Loss of $1,143,515.
  • Adjusted EBITDA Loss of $454,894, a decrease of 34% from the same period in 2018.

Summary – 2019 Second Quarter Results
Revenues for the three months ended June 30, 2019 were $640,608 as compared with $549,678 for the same period in 2018, and as compared with $515,385 for Q1 2019. Intellinetics reported a net loss of $473,662 and $669,451 for the three months ended June 30, 2019 and 2018, respectively, representing a decrease in net loss of $195,789. The decreased net loss was a result of higher revenue, driven by higher professional services, software as a service, and maintenance compared to 2018, partially offset by lower software and third party software, as well as lower cost of revenues and lower operating expenses. Net loss per share for the three months ended June 30, 2019 and 2018 was ($0.03) and ($0.04), respectively.

Summary – 2019 Six-Month Results
Revenues for the six months ended June 30, 2019 were $1,155,993 as compared with $1,075,052 for the same period in 2018. Intellinetics reported a net loss of $1,143,515 and $1,307,960 for the six months ended June 30, 2019 and 2018, respectively, representing a decrease in net loss of $164,445. The decreased net loss was a result of higher revenue, driven by higher professional services, software as a service, and maintenance compared to 2018, partially offset by lower software and third party software, as well as lower cost of revenues and lower operating expenses. Net loss per share for the six months ended June 30, 2019 and 2018 was ($0.06) and ($0.07), respectively.

2019 Highlights

  • Our commitment to the Human Services Provider market continued with the launch of our advanced Incident Case Management System, which vastly enhanced compliance and organization transparency regarding the status of incidents, enabling our customers to make better decisions in providing service to their consumers.
  • Our continued investment in enhancing the security of our platform for all users, as well as help our customers improved their systems through strategic collaboration.
  • We continue to expand and enhance our partnerships with solutions providers, including health care and education, as well as participation in relevant associations.

James F. DeSocio, President & CEO of Intellinetics, stated, “Both our revenues and margins increased in Q2, reflecting traction in a few areas. First, our focused market strategy has enabled our pipeline to grow, which we in turn were able to convert into orders and revenue. Further, a mix shift towards our own internal software and fewer third party solution integrations resulted in higher margins for us.  Our backlog of orders is strong and I am excited to see our focus begin to yield results.  Our commitment and expertise in the Human Service Provider, state and local government, and education markets is keeping our attention squarely on solutions for these organizations.”

“As an example, our value-add strengths include the workflow engines within our solutions, which we believe are superior to basic cloud storage products.  Whether it is our unique AuditshieldTM function, which highlights documents which are missing, or the powerful, rules-based workflow engine driving our Incident Case Management System, the word is getting out that these tools are making a difference for our customers.” DeSocio concluded.

About Intellinetics, Inc.
Intellinetics, Inc., located in Columbus, Ohio, is a cloud-based content 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. 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, initiative, or service; Intellinetics’ future revenues, revenue consistency, growth and long-term value, including in 2019; 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, 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 10-Q and 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, 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,
    2019    2018 
Net loss - GAAP  ($473,662)  ($669,450)
Interest expense, net   239,347    219,352 
Depreciation and amortization   2,099    2,384 
Share-based compensation   68,496    62,222 
Adjusted EBITDA  ($163,720)  ($385,492)

Reconciliation of Net Loss to Adjusted EBITDA
    For the Six Months Ended June 30,
    2019    2018 
Net loss - GAAP  ($1,143,515)  ($1,307,960)
Interest expense, net   472,494    428,336 
Depreciation and amortization   4,007    4,578 
Share-based compensation   212,120    181,810 
Adjusted EBITDA  ($454,894)  ($693,236)

Condensed Consolidated Statements of Operations
 For the Three Months Ended June 30, For the Six Months Ended June 30,
  2019   2018   2019   2018 
Sale of software$ 7,102  $ 34,158  $ 8,852  $ 75,152 
Software as a service 229,982   177,583   429,165   354,183 
Software maintenance services 252,713   245,299   505,349   488,867 
Professional services 142,738   52,605   194,405   111,556 
Third Party services 8,073   40,033   18,222   45,294 
Total revenues 640,608   549,678   1,155,993   1,075,052 
Cost of revenues:       
Sale of software 1,164   12,672   3,010   30,533 
Software as a service 60,579   68,594   128,268   145,687 
Software maintenance services 20,541   25,064   49,919   50,601 
Professional services 39,814   19,317   73,320   36,143 
Third Party services 8,006   33,954   18,052   44,199 
Total cost of revenues 130,104   159,601   272,569   307,163 
Gross profit 510,504   390,077   883,424   767,889 
Operating expenses:       
General and administrative 521,057   593,400   1,060,018   1,136,835 
Sales and marketing 221,663   244,391   490,420   506,100 
Depreciation 2,099   2,384   4,007   4,578 
Total operating expenses 744,819   840,175   1,554,445   1,647,513 
Loss from operations  (234,315)   (450,098)   (671,021)   (879,624)
Other income (expense)       
Interest expense, net  (239,347)   (219,353)   (472,494)   (428,336)
Total other income (expense)  (239,347)   (219,353)   (472,494)   (428,336)
Net loss$(473,662) $ (669,451) $(1,143,515) $(1,307,960)
Basic and diluted net loss per share:$  (0.03) $  (0.04) $  (0.06) $  (0.07)
Weighted average number of common shares outstanding - basic and diluted 18,524,878   17,729,421   18,502,782   17,724,377 

Condensed Consolidated Balance Sheets
     June 30, December 31,
      2019   2018 
Current assets:      
 Cash  $ 412,224  $ 1,088,630 
 Accounts receivable, net 173,898   135,739 
 Prepaid expenses and other current assets 143,571   162,495 
   Total current assets 729,693   1,386,864 
Property and equipment, net 10,613   9,131 
Right of use asset  117,894    
Other assets   10,284   10,284 
   Total assets$ 868,484  $ 1,406,279 
Current liabilities:      
 Accounts payable and accrued expenses $ 292,073  $ 308,121 
 Lease liability - current  21,523    
 Deferred revenues  587,970   723,619 
 Deferred compensation 141,166   165,166 
 Notes payable - related party - current 24,014   46,807 
   Total current liabilities 1,066,746   1,243,713 
Long-term liabilities:    
 Notes payable 3,242,445   3,144,926 
 Notes payable - related party - net of current portion 1,075,703   1,045,937 
 Lease liability - net of current portion 100,715    
 Other long-term liabilities 844,862   502,295 
   Total long-term liabilities 5,263,725   4,693,158 
   Total liabilities 6,330,471   5,936,871 
Stockholders' deficit:    
 Common stock, $0.001 par value, 75,000,000 shares authorized; 18,524,878 and 17,729,421 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively 31,528   30,733 
 Additional paid-in capital 14,312,785   14,101,460 
 Accumulated deficit  (19,806,300)   (18,662,785)
   Total stockholders' deficit  (5,461,987)   (4,530,592)
   Total liabilities and stockholders' deficit$ 868,484  $ 1,406,279 

Condensed Consolidated Statements of Cash Flows
   For the Six Months Ended June 30,
    2019   2018 
Cash flows from operating activities:    
Net loss $  (1,143,515) $  (1,307,960)
Adjustments to reconcile net loss to net cash    
 used in operating activities:    
 Depreciation and amortization  4,007   4,578 
 Bad debt expense  4,121    (3,834)
 Amortization of deferred financing costs  91,925   124,431 
 Amortization of beneficial conversion option  35,360   128,477 
 Amortization of right of use asset  20,655    
 Stock issued for services  87,500   57,500 
 Stock options compensation  124,620   124,310 
Changes in operating assets and liabilities:    
 Accounts receivable   (42,280)  100,247 
 Prepaid expenses and other current assets  18,924    (61,445)
 Right of use asset   (138,549)   
 Accounts payable and accrued expenses   (16,048)   (10,068)
 Lease liability, current and long-term  122,238    
 Deferred compensation   (24,000)   (24,000)
 Other long-term liabilities  342,567   150,311 
 Deferred revenues   (135,649)   (100,139)
 Total adjustments  495,391   490,368 
 Net cash used in operating activities   (648,124)   (817,592)
Cash flows from investing activities:    
 Purchases of property and equipment   (5,489)   (3,410)
 Net cash used in investing activities   (5,489)   (3,410)
Cash flows from financing activities:    
 Repayment of notes payable - related parties   (22,793)   (23,947)
 Net cash used in/provided by financing activities   (22,793)   (23,947)
Net increase (decrease) in cash   (676,406)   (844,949)
Cash - beginning of period  1,088,630   1,125,921 
Cash - end of period $ 412,224  $ 280,972 
Supplemental disclosure of cash flow information:    
 Cash paid during the period for interest and taxes $ 4,405  $ 28,973