Intellinetics, Inc. Reports Third Quarter and Nine Month Results


Record Quarterly Revenues;
Revenues Increase 26%; Earnings per share of $0.11

COLUMBUS, OH, Nov. 15, 2021 (GLOBE NEWSWIRE) -- Intellinetics, Inc. (OTCQB: INLX), a cloud-based document solutions provider, announced financial results for the three and nine months ended September 30, 2021.

2021 Third Quarter Financial Highlights

  • Total Revenues increased 26% compared to the same period in 2020.
  • Software as a Service Revenues increased 25% compared to the same period in 2020.
  • Net Income of $296,437 increased 90% compared to the same period in 2020.
  • Adjusted EBITDA of $538,488, compared to $374,615 from the same period in 2020.
  • Net income per basic share of $0.11, compared to $0.06 from the same period in 2020.

2021 Nine Month Financial Highlights

  • Total Revenues increased 57% compared to the same period in 2020.
  • Software as a Service Revenues increased 39% compared to the same period in 2020.
  • Net Income of $1,331,656, compared to Net Loss of $772,894 from the same period in 2020.
  • Adjusted EBITDA of $1,332,162, compared to $441,774 from the same period in 2020.
  • Net income per basic share of $0.47, including $0.30 cents positive impact from PPP forgiveness, compared to a net loss of $0.34 from the same period in 2020.

Summary – 2021 Third Quarter Results
Revenues for the three months ended September 30, 2021 were $3,171,362 as compared with $2,511,282 for the same period in 2020. This constituted a record in our quarterly overall revenues, driven particularly by our document conversion segment. We reported a net income of $296,437 for the three months ended September 30, 2021 compared to $155,673 for the same period in 2020. The improved net income was the result of improved operating results, driven primarily by our record revenue quarter. Net income per basic and diluted share was $0.11 and $0.10, respectively, for the three months ended September 30, 2021, compared to net income per basic and diluted share of $0.06 for the three months ended September 30, 2020.

Summary – 2021 Nine Month Results
Revenues for the nine months ended September 30, 2021 were $8,716,227 as compared with $5,557,586 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 nine months of revenues from our Graphic Sciences, Inc. subsidiary acquired in 2020, compared to the same period in 2020 that only included approximately seven months of revenues from that business. The year-over-year increase is amplified by the weak second quarter of 2020, due to the stay-at-home orders and resulting curtailment of revenue in that period. Intellinetics reported a net income of $1,331,656 for the nine months ended September 30, 2021 compared to a net loss of $772,894 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 $0.47 and $0.43, respectively, for the nine months ended September 30, 2021, compared to net loss per basic and diluted share of ($0.34) for the nine months ended September 30, 2020.

2021 Other Highlights

  • Cash flow increased by $1,447,378 net cash provided by operating activities for the nine months ended September 30, 2021.
  • Invested in new warehouse to support growth of our storage and retrieval services, which increases box storage capacity more than 120%, and completed consolidation of warehouses from four to two for more logistics efficiency.
  • Expanded K-12 footprint, closing 35 new districts in the nine months ended September 30, 2021, bringing us to about 250 school districts at the time of this release.

James F. DeSocio, President & CEO of Intellinetics, stated, “In addition to beating our record quarterly revenue for the 2nd time in a row, this is the sixth consecutive positive Adjusted EBITDA quarter and fifth consecutive quarter exceeding $300,000. We continue to take several positive steps to increase our opportunities for growth. We’ve fully transitioned to our new warehouse, which expands both storage and our production capabilities with office space at that location. We’ve launched our enhanced Business Process Outsourcing (BPO) service, which is an additional recurring revenue stream. We are expanding our partner channel to build on the current success of our ERP partner program. We are strengthening our marketing initiatives to support cross-selling and net-new business sales targets, and at the same time we’re investing in increasing our sales team.

I am very happy with our Q3 results. In addition to an integrated sales team that have cross-selling targets now, we expect to have more opportunities for projects with new and existing customers with the increased amount of lead generation initiatives and continued promotion of our vastly expanded product offerings. 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, empowers organizations to manage, store and protect their important documents and data. The company offers its IntelliCloudTM content management platform, in addition to business process outsourcing (BPO), document and micrographics scanning services, and records storage. Intellinetics guides companies through the digital transformation process to reduce risk, strengthen compliance and enable anytime, anywhere access to mission critical forms and documents. From highly regulated industries like Healthcare/Human Service Providers, K-12, Public Safety, and State and Local Governments, to businesses looking to move away from paper-based processes, Intellinetics is the all-in-one, compliant, document management solution. For additional information, please visit

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 and from Software as a Service sales, 2021 Adjusted EBITDA, cross-selling opportunities, future projects, new customers, expanded product offerings, the ability of our production capabilities to meet growing demand, 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 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 Income/(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 Income (Loss) to Adjusted EBITDA

  For the Three months ended September 30, 
  2021  2020 
Net income (loss) - GAAP $296,437  $155,673 
Interest expense, net  113,030   115,498 
Depreciation and amortization  105,923   89,475 
Stock-based compensation  23,098   13,969 
Adjusted EBITDA $538,488  $374,615 

  For the Nine months ended September 30, 
  2021  2020 
Net income (loss) - GAAP $1,331,656  $(772,894)
Interest expense, net  339,345   522,724 
Depreciation and amortization  302,239   204,317 
Stock-based compensation  126,794   90,152 
Stock and warrant issue expense  -   377,761 
Significant transaction costs  -   495,440 
Change in fair value of earnout liabilities  77,211   - 
Income tax benefit, net  -   (188,300)
Gain on extinguishment of debt  (845,083)  (287,426)
Adjusted EBITDA $1,332,162  $441,774 

Condensed Consolidated Statements of Operations

  For the Three Months Ended September 30,   For the Nine Months Ended September 30,
  2021   2020   2021   2020 
Sale of software$58,779  $53,767  $73,971  $153,999 
Software as a service 352,192   281,810   1,052,072   756,497 
Software maintenance services 336,732   340,129   1,012,251   915,483 
Professional services 2,165,030   1,615,445   5,715,273   3,221,154 
Storage and retrieval services 258,629   220,131   862,660   510,453 
Total revenues 3,171,362   2,511,282   8,716,227   5,557,586 
Cost of revenues:       
Sale of software 3,691   -   10,050   40,117 
Software as a service 73,596   65,712   241,717   209,508 
Software maintenance services 18,270   49,354   64,930   127,439 
Professional services 1,042,249   841,016   2,765,241   1,637,308 
Storage and retrieval services 117,835   64,906   299,597   136,283 
Total cost of revenues 1,255,641   1,020,988   3,381,535   2,150,655 
Gross profit 1,915,721   1,490,294   5,334,692   3,406,931 
Operating expenses:       
General and administrative 1,027,932   844,186   3,125,019   2,533,046 
Change in fair value of earnout liabilities -   -   77,211   - 
Significant transaction costs -   -   -   636,440 
Sales and marketing 372,399   285,462   1,004,305   759,024 
Depreciation and amortization 105,923   89,475   302,239   204,317 
Total operating expenses 1,506,254   1,219,123   4,508,774   4,132,827 
Income (loss) from operations 409,467   271,171   825,918   (725,896)
Other income (expense)       
Gain on extinguishment of debt -   -   845,083   287,426 
Interest expense, net (113,030)  (115,498)  (339,345)  (522,724)
Total other income (expense) (113,030)  (115,498)  505,738   (235,298)
Income (loss) before income taxes 296,437   155,673   1,331,656   (961,194)
Income tax benefit -   -   -   188,300 
Net income (loss)$296,437  $155,673  $1,331,656  $(772,894)
Basic net income (loss) per share:$0.11  $0.06  $0.47  $(0.34)
Diluted net income (loss) per share:$0.10  $0.06  $0.43  $(0.34)
Weighted average number of common shares outstanding - basic 2,823,072   2,810,865   2,822,938   2,271,169 
Weighted average number of common shares outstanding - diluted 3,104,334   2,810,865   3,105,175   2,271,169 

Condensed Consolidated Balance Sheets

     September 30, December 31,
      2021   2020 
Current assets:      
 Cash  $1,829,247  $1,907,882 
 Accounts receivable, net 948,508   792,380 
 Accounts receivable, unbilled 653,075   523,522 
 Parts and supplies, net 58,427   79,784 
 Other contract assets 70,412   31,283 
 Prepaid expenses and other current assets 190,134   130,883 
   Total current assets 3,749,803   3,465,734 
Property and equipment, net 1,091,020   698,752 
Right of use assets 4,005,709   2,641,005 
Intangible assets, net 1,022,615   1,184,971 
Goodwill   2,322,887   2,322,887 
Other assets  14,784   31,284 
   Total assets$12,206,818  $10,344,633 
Current liabilities:      
 Accounts payable$121,525  $141,823 
 Accrued compensation 525,013   271,889 
 Accrued expenses, other 153,643   131,685 
 Lease liabilities - current 596,295   518,531 
 Deferred revenues 1,336,863   996,131 
 Deferred compensation 100,828   100,828 
 Earnout liabilities - current 923,109   877,522 
 Accrued interest payable - current -   5,941 
 Notes payable - current -   580,638 
   Total current liabilities 3,757,276   3,624,988 
Long-term liabilities:   
 Notes payable - net of current portion 1,701,926   1,802,184 
 Lease liabilities - net of current portion 3,491,765   2,196,951 
 Earnout liabilities - net of current portion 643,369   1,566,478 
   Total long-term liabilities 5,837,060   5,565,613 
   Total liabilities 9,594,336   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 September 30, 2021 and December 31, 2020, respectively 2,823   2,811 
 Additional paid-in capital 24,274,270   24,147,488 
 Accumulated deficit (21,664,611)  (22,996,267)
   Total stockholders' equity 2,612,482   1,154,032 
   Total liabilities and stockholders' equity$12,206,818  $10,344,633 

Condensed Consolidated Statements of Cash Flows

    For the Nine Months Ended September 30,
    2021   2020 
Cash flows from operating activities:    
Net income (loss) $1,331,656  $(772,894)
Adjustments to reconcile net income (loss) to net cash    
 used in operating activities:    
 Depreciation and amortization  302,239   204,317 
 Bad debt (recovery) expense  (10,304)  40,325 
 Parts and supplies reserve change  9,000   10,500 
 Amortization of deferred financing costs  77,804   91,156 
 Amortization of beneficial conversion option  -   11,786 
 Amortization of debt discount  80,000   62,222 
 Amortization of right of use asset  472,402   278,879 
 Stock issued for services  57,500   57,500 
 Stock options compensation  69,294   32,652 
 Note conversion stock issue expense  -   141,000 
 Warrant issue expense  -   236,761 
 Interest on converted debt  -   176,106 
 Amortization of original issue discount on notes  -   18,296 
 Gain on extinguishment of debt  (845,083)  (287,426)
 Change in fair value of earnout liabilities  77,211   - 
Changes in operating assets and liabilities:    
 Accounts receivable  (145,824)  333,121 
 Accounts receivable, unbilled  (129,553)  (204,248)
 Parts and supplies  12,357   5,105 
 Prepaid expenses and other current assets  (42,751)  (25,790)
 Accounts payable and accrued expenses  254,784   (589,461)
 Lease liabilities, current and long-term  (464,528)  (269,748)
 Deferred compensation  -   (16,338)
 Accrued interest, current and long-term  442   4,504 
 Deferred revenues  340,732   69,520 
 Total adjustments  115,722   380,739 
 Net cash provided by (used in) operating activities  1,447,378   (392,155)
Cash flows from investing activities:    
 Cash paid to acquire business, net of cash acquired  -   (4,019,098)
 Purchases of property and equipment  (532,151)  (55,603)
 Net cash used in investing activities  (532,151)  (4,074,701)
Cash flows from financing activities:    
 Payment of earnout liabilities  (954,733)  - 
 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  -   3,008,700 
 Repayment of notes payable  -   (70,000)
 Repayment of notes payable - related parties  -   (47,728)
 Net cash (used in) provided by financing activities  (954,733)  5,574,681 
Net (decrease) increase in cash  (39,506)  1,107,825 
Cash - beginning of period  1,907,882   404,165 
Cash - end of period $1,868,376  $1,511,990 
Supplemental disclosure of cash flow information:    
 Cash paid during the period for interest $182,198  $142,018 
 Cash paid during the period for income taxes $2,106  $112,954 
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 
 Right-of-use asset obtained in exchange for operating lease liability  1,837,106   - 
Supplemental disclosure of non-cash investing activities relating to business acquisitions:    
 Cash $-  $17,269 
 Accounts receivable  -   1,122,737 
 Accounts receivable, unbilled  -   276,023 
 Parts and supplies  -   91,396 
 Prepaid expenses  -   73,116 
 Other current assets  -   5,954 
 Right of use assets  -   2,885,618 
 Property and equipment  -   735,885 
 Intangible assets  -   1,361,000 
 Accounts payable  -   (168,749)
 Accrued expenses  -   (162,426)
 Lease liabilities  -   (2,947,684)
 Federal and state taxes payable  -   (168,900)
 Deferred revenues  -   (198,659)
 Deferred tax liabilities, net  -   (149,900)
 Net assets acquired in acquisition  -   2,772,680 
 Total goodwill acquired in acquisition  -   2,322,887 
 Total purchase price of acquisition  -   5,095,567 
 Purchase price of business acquisition financed with earnout liability  -   (889,200)
 Purchase price of business acquisition financed with installment payments  -   (170,000)
 Cash used in business acquisition $-  $4,036,367