Intellinetics, Inc. Reports Third Quarter and Nine-Month Results

Revenue Growth Over Second Quarter

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

2019 Third Quarter Financial Highlights

  • Highest third quarter Total Revenue since inception.
  • Total Revenue increased 18% sequentially from Q2 2019.
  • Total Revenue increased 12% from Q3 2018.
  • Software as a Service Revenue increased 23% from Q3 2018.
  • Net Loss of $398,753.
  • Adjusted EBITDA Loss of $92,833, a decrease of 55% from Q3 2018.

2019 Nine Month Financial Highlights

  • Total Revenue increased 9% from the same period in 2018.
  • Software as a Service Revenue increased 22% from the same period in 2018.
  • Net Loss of $1,542,268.
  • Adjusted EBITDA Loss of $547,727, a decrease of 39% from the same period in 2018.

Summary – 2019 Third Quarter Results
Revenues for the three months ended September 30, 2019 were $755,568 as compared with $673,111 for the same period in 2018, and as compared with $640,608 for Q2 2019. Intellinetics reported a net loss of $398,753 and $479,916 for the three months ended September 30, 2019 and 2018, respectively, representing a decrease in net loss of $81,163. The decreased net loss was a result of higher revenue, driven by higher software, software as a service, and professional services compared to 2018, partially offset by lower third party software, as well as lower cost of revenues partially offset by higher operating expenses. Net loss per share for the three months ended September 30, 2019 and 2018 was ($0.02) and ($0.03), respectively.

Summary – 2019 Nine-month Results
Revenues for the nine months ended September 30, 2019 were $1,911,561 as compared with $1,748,161 for the same period in 2018. Intellinetics reported a net loss of $1,542,268 and $1,787,877 for the nine months ended September 30, 2019 and 2018, respectively, representing a decrease in net loss of $245,609. The decreased net loss was a result of higher revenue, driven by higher professional services, software as a service, software, and maintenance compared to 2018, partially offset by lower third party software, as well as lower cost of revenues and slightly lower operating expenses. Net loss per share for the nine months ended September 30, 2019 and 2018 was ($0.08) and ($0.10), respectively.

2019 Highlights

  • The third quarter of 2019 was the strongest-ever third-quarter revenue for us, driven by software and professional services projects.
    1. The third quarter of 2019 was the second highest revenue quarter in company history, and the best since the fourth quarter of 2012.
    2. Additionally, the gross profit margins improved year over year. Along with the increased sales revenue, the profit contribution grew.
  • Our commitment to the Human Services Provider market continued with the launch of two solutions:
    1. 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.
    2. Our ground-breaking Electronic Visit Verification (EVV) solution module, built to take advantage of current mobile and voice technology and be compatible with any back-end agency management system, or with no back-end system at all.
  • 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, “I am pleased that our focused market strategy is beginning to be reflected in our results. Continuing from the prior quarter, our revenues grew the most recent quarter and the ongoing revenue mix shifted towards our own internal software and away from third party solution integrations resulting in higher margins for us. Our backlog of orders remains strong, which reflects our steady commitment to the Human Service Provider, state and local government, and education markets, where we not only maintain our exemplary customer service, but we also innovate, as reflected in the timely solutions we bring to market.”

“To illustrate our innovation, I can point to both our Incident Case Management System as well as our recently released EVV solution, which is superior to other offerings in the marketplace due to the value from its ease of use, transparency of information, and control. These sorts of innovations underscore our commitment to empowering our clients,” 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, market, initiative, service or innovation; 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, 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, share-based compensation, note conversion and note offer warrant expense, and gain or loss on debt retirement.

Reconciliation of Net Loss to Adjusted EBITDA
    For the Three Months Ended September 30,
    2019    2018 
Net loss - GAAP  ($398,753)  ($479,916)
Interest expense, net   245,156    206,642 
Depreciation and amortization   1,901    2,429 
Share-based compensation   58,863    62,358 
Adjusted EBITDA  ($92,833)  ($208,487)

Reconciliation of Net Loss to Adjusted EBITDA
    For the Nine months Ended September 30,
    2019    2018 
Net loss - GAAP  ($1,542,268)  ($1,787,877)
Interest expense, net   717,650    634,978 
Depreciation and amortization   5,908    7,007 
Share-based compensation   270,983    244,168 
Adjusted EBITDA  ($547,727)  ($901,724)

Condensed Consolidated Statements of Operations
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2019   2018   2019   2018  
Sale of software$ 170,738  $ 64,986  $ 179,590  $ 140,138  
Software as a service 214,237   173,515   643,402   527,697  
Software maintenance services  248,343   251,660   753,692   740,527  
Professional services 116,696   57,294   311,101   168,849  
Third Party services 5,554   125,656   23,776   170,950  
Total revenues 755,568   673,111   1,911,561   1,748,161  
Cost of revenues:        
Sale of software 1,469   33,757   4,479   64,290  
Software as a service 67,643   75,266   195,911   220,953  
Software maintenance services 17,894   23,794   67,813   74,395  
Professional services 56,207   22,303   129,527   58,445  
Third Party services 4,477   106,638   22,529   150,837  
Total cost of revenues 147,690   261,758   420,259   568,920  
Gross profit 607,878   411,353   1,491,302   1,179,241  
Operating expenses:        
General and administrative 510,817   446,224   1,570,835   1,583,059  
Sales and marketing 248,757   235,974   739,177   742,074  
Depreciation 1,901   2,429   5,908   7,007  
Total operating expenses 761,475   684,627   2,315,920   2,332,140  
Loss from operations  (153,597)   (273,274)   (824,618)   (1,152,899) 
Interest expense, net  (245,156)   (206,642)   (717,650)   (634,978) 
Net loss$(398,753) $(479,916) $(1,542,268) $(1,787,877) 
Basic and diluted net loss per share:$ (0.02) $ (0.03) $ (0.08) $ (0.10) 
Weighted average number of common shares outstanding - basic and diluted 18,524,878   17,729,421   18,510,256   17,726,083  

Condensed Consolidated Balance Sheets
     September 30, December 31,
      2019   2018 
Current assets:      
 Cash  $ 303,080  $ 1,088,630 
 Accounts receivable, net 348,993   135,739 
 Prepaid expenses and other current assets 127,041   162,495 
   Total current assets 779,114   1,386,864 
Property and equipment, net 8,712   9,131 
Right of use asset  107,567   - 
Other assets   10,284   10,284 
   Total assets$ 905,677  $1,406,279 
Current liabilities:      
 Accounts payable and accrued expenses$ 373,919  $ 308,121 
 Lease liability - current 46,309   - 
 Deferred revenues 672,716   723,619 
 Deferred compensation 130,089   165,166 
 Notes payable - related party - current 12,185   46,807 
   Total current liabilities 1,235,218   1,243,713 
Long-term liabilities:    
 Notes payable  3,291,204   3,144,926 
 Notes payable - related party - net of current portion 1,090,585   1,045,937 
 Lease liability - net of current portion 65,167   - 
 Other long-term liabilities 1,025,380   502,295 
   Total long-term liabilities 5,472,336   4,693,158 
   Total liabilities 6,707,554   5,936,871 
Stockholders' deficit:    
 Common stock, $0.001 par value, 75,000,000 shares authorized; 18,524,878 and 17,729,421 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively 31,528   30,733 
 Additional paid-in capital 14,371,648   14,101,460 
 Accumulated deficit (20,205,053)   (18,662,785)
   Total stockholders' deficit  (5,801,877)   (4,530,592)
   Total liabilities and stockholders' deficit$ 905,677  $ 1,406,279 

Condensed Consolidated Statements of Cash Flows
    For the Nine Months Ended September 30,
    2019   2018 
Cash flows from operating activities:    
Net loss $ (1,542,268) $ (1,787,877)
Adjustments to reconcile net loss to net cash    
 used in operating activities:    
 Depreciation and amortization  5,908   7,007 
 Bad debt expense  14,340   2,398 
 Amortization of deferred financing costs  137,888   186,646 
 Amortization of beneficial conversion option  53,038   184,541 
 Amortization of right of use asset  30,982   - 
 Stock issued for services  87,500   57,500 
 Stock options compensation  183,483   186,668 
Changes in operating assets and liabilities:    
 Accounts receivable   (227,594)  100,848 
 Prepaid expenses and other current assets  35,454    (37,899)
 Right of use asset   (138,549)  - 
 Accounts payable and accrued expenses  65,798    (10,194)
 Lease liability, current and long-term  111,476   - 
 Deferred compensation   (35,077)   (35,077)
 Other long-term liabilities  523,085   236,634 
 Deferred revenues   (50,903)   (14,932)
 Total adjustments  796,829   864,140 
 Net cash used in operating activities   (745,439)   (923,737)
Cash flows from investing activities:    
 Purchases of property and equipment   (5,489)   (3,410)
Cash flows from financing activities:    
 Payment of deferred financing costs  -    (130,841)
 Proceeds from notes payable  -   900,000 
 Proceeds from notes payable - related parties  -   400,000 
 Repayment of notes payable - related parties   (34,622)   (34,655)
 Net cash (used in)/provided by financing activities   (34,622)  1,134,504 
Net (decrease) increase in cash   (785,550)  207,357 
Cash - beginning of period  1,088,630   1,125,921 
Cash - end of period $ 303,080  $ 1,333,278 
Supplemental disclosure of cash flow information:    
 Cash paid during the period for interest and taxes $ 6,241  $ 32,207 
Supplemental disclosure of non-cash financing activities:    
 Discount on notes payable for warrants  -   44,548 
 Discount on notes payable - related parties for warrants  -   19,799