U.S. Markets open in 3 hrs 47 mins

Intellinetics, Inc. Reports Q4 and Year-End Results

Total Annual Revenue $2,381,427
Q4 Total Revenue Growth over 2017
Consistent Software as a Service Growth

COLUMBUS, Ohio, April 01, 2019 (GLOBE NEWSWIRE) -- Intellinetics, Inc. (OTCQB: INLX), a cloud-based document solutions provider, announced financial results for the twelve months ended December 31, 2018.

2018 Fourth Quarter Financial Highlights

  • Total Revenue increased 26% from Q4 2017.
  • Software as a Service Revenue increased 33% from Q4 2017.
  • Net Loss increase of 74% from Q4 2017. 
  • Adjusted EBITDA Loss of $257,490, a decrease of 45% from 2017.

Year-End Financial Highlights

  • Total Revenue decreased 9% from 2017.
  • Software as a Service Revenue increased 20% from 2017.
  • Net Loss increase of 71% from 2017. 
  • Adjusted EBITDA Loss of $1,159,214, an increase of 30% from 2017.

Summary – 2018 Fourth Quarter Results
Revenues for the three months ended December 31, 2018 were $633,266 as compared with $503,770 for the same period in 2017. Intellinetics reported a net loss of $552,403 and $317,531 for the three months ended December 31, 2018 and 2017, respectively, representing an increase in net loss of $234,872. Net Loss in 2017 included a $419,090 one-time gain on retirement of debt. Net loss per share for the three months ended December 31, 2018 and 2017 was ($0.03) and ($0.02), respectively.

Summary – Year-End Results
Revenues for the twelve months ended December 31, 2018 were $2,381,427 as compared with $2,620,108 for the same period in 2017. Intellinetics reported a net loss of $2,340,280 and $1,365,364 for the twelve months ended December 31, 2018 and 2017, respectively, representing an increase of $974,916. Net Loss in 2017 included a $419,090 one-time gain on retirement of debt. Net loss per share for the twelve months ended December 31, 2018 and 2017 was ($0.13) and ($0.08), respectively.

2018 Highlights

  • Our commitment to the Human Services Provider market included launching our Provider Portal in 2018, which provides a cost-effective solution that allows Independent Providers to get up and running within 24 hours. An Independent Provider is a self-employed person who provides services to people with developmental disabilities and who must provide and fund their own technology solutions.
  • We launched our partnership with K-12 education partner Software Unlimited Inc. in 2018, which included completing fully integrated document management capabilities within their School Accounting System for K-12 school districts, as well as successfully implementing 11 pre-launch beta customers in December, 2018. 

James F. DeSocio, President & CEO of Intellinetics, stated, “The groundwork for our growth is laid with our focus on a core group of customers in the Human Services Provider and K-12 education space. Our unique and differentiated product value proposition, including auditing, compliance and reporting, is compelling. Excitingly, both our cost to acquire customers and effort to implement and on-board new customers is streamlined and accelerated with our focus. This course will provide greater revenue consistency, higher growth, and deliver the best long-term value to shareholders.”

“The improved results in the fourth quarter is a good indicator that our strategy to focus in key markets such as K-12 and align ourselves with strategic solution partners is the right path.  At the same time, our clients’ adoption of hosted solutions has accelerated, which impacts our total revenue with lower one-time software sales, but is exactly the conversion that needs to happen to build our recurring revenue base to give us more predictability and reliability in the future. In increasing our SaaS-based revenues we recognize that short-term revenue recognition on subscription services is generally lower than upfront premise license sales and that the new programs will take some months to bear fruit in our top line and this is exactly the track we need to be on to change and enable a breakthrough to the next level. We expect our results to be reflected in improved sales revenue overall, and growing recurring SaaS in particular, in 2019,” DeSocio concluded.

About Intellinetics, Inc.
Intellinetics, Inc., located in Columbus, Ohio, is a cloud-based document content services provider. Its flagship IntelliCloud™ platform provides easy to use, affordable, secure document management to organizations 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 any form, file, record or document, and our commitment to superior customer service ensures users can remain focused on their mission. 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 new revenues associated with any industry, channel partner, service, or business relationship; Intellinetics’ future revenues, revenue consistency, growth and long-term value, including in 2019; 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. 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, 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
        Year Ended December 31,
        2018         2017  
Net loss - GAAP       ($2,340,280 )       ($1,365,364 )
Interest expense, net       865,501         609,851  
Depreciation and amortization       9,040         11,831  
Share-based compensation       306,525         219,045  
Note issue/conversion warrant expense       -         52,951  
Gain on retirement of debt       -         (419,090 )
Adjusted EBITDA       ($1,159,214 )       ($890,776 )
             


 
Reconciliation of Net Loss to Adjusted EBITDA
        Three Months Ended December 31,
        2018         2017  
Net loss - GAAP       ($552,403 )       ($317,531 )
Interest expense, net       230,523         198,090  
Depreciation and amortization       2,033         2,815  
Share-based compensation       62,357         70,482  
Note issue/conversion warrant expense       -         (1,064 )
Gain on retirement of debt       -         (419,090 )
Adjusted EBITDA       ($257,490 )       ($466,298 )
             


INTELLINETICS, INC. and SUBSIDIARY
Consolidated Statements of Operations
               
  For the Three Months Ended
December 31,
    For the Year Ended
December 31,
    2018       2017       2018         2017  
Revenues:              
Sale of software $33,553     $77,232     $173,691     $452,238  
Software as a service   221,057       166,139       748,754       622,224  
Software maintenance services   254,643       233,851       995,170       966,011  
Professional services   121,113       14,651       289,962       451,628  
Third Party services   2,900       11,897       173,850       128,007  
Total revenues   633,266       503,770       2,381,427       2,620,108  
               
Cost of revenues:              
Sale of software   5,464       26,384       69,754       97,899  
Software as a service   79,282       76,358       300,235       304,512  
Software maintenance services   25,810       32,959       100,205       120,422  
Professional services   61,976       15,000       120,421       198,133  
Third Party services   953       5,789       151,790       39,496  
Total cost of revenues   173,485       156,490       742,405       760,462  
               
Gross profit   459,781       347,280       1,639,022       1,859,646  
               
Operating expenses:              
General and administrative   523,792       628,720       2,106,851       2,199,904  
Sales and marketing   255,836       254,276       997,910       822,514  
Depreciation   2,033       2,815       9,040       11,831  
Total operating expenses   781,661       885,811       3,113,801       3,034,249  
               
Loss from operations   (321,880 )     (538,531 )     (1,474,779 )     (1,174,603 )
               
Other income (expense)              
Gain on retirement of debt   0       419,090       0       419,090  
Interest expense, net   (230,523 )     (198,090 )     (865,501 )     (609,851 )
Total other income (expense)   (230,523 )     221,000       (865,501 )     (190,761 )
               
Net loss   ($552,403 )     ($317,531 )     ($2,340,280 )     ($1,365,364 )
               
Basic and diluted net loss per share:   ($0.03 )     ($0.02 )     ($0.13 )     ($0.08 )
               
Weighted average number of common shares outstanding - basic and              
diluted   17,729,421       17,383,266       17,726,927       17,369,012  


INTELLINETICS, INC. and SUBSIDIARY
Consolidated Balance Sheets
               
ASSETS
          December 31,   December 31,
            2018       2017  
Current assets:            
  Cash       $1,088,630       $1,125,921  
  Accounts receivable, net   135,739       295,815  
  Prepaid expenses and other current assets   162,495       162,450  
      Total current assets   1,386,864       1,584,186  
               
Property and equipment, net   9,131       14,760  
Other assets     10,284       10,284  
      Total assets   $1,406,279       $1,609,230  
               
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
Current liabilities:            
  Accounts payable and accrued expenses   $308,121       $405,155  
  Deferred revenues   723,619       708,130  
  Deferred compensation   165,166       213,166  
  Notes payable - current         875,000  
  Notes payable - related party - current   46,807       416,969  
      Total current liabilities   1,243,713       2,618,420  
Long-term liabilities:      
  Notes payable - net of current portion   3,144,926       1,221,384  
  Notes payable - related party - net of current portion   1,045,937       312,680  
  Other long-term liabilities   502,295       100,301  
               
      Total long-term liabilities   4,693,158       1,634,365  
               
      Total liabilities   5,936,871       4,252,785  
               
Stockholders' deficit:      
  Common stock, $0.001 par value, 75,000,000 shares authorized; 17,729,421 and 17,426,792 shares issued and outstanding at December 31, 2018      
  and 2017, respectively   30,733       30,431  
  Additional paid-in capital   14,101,460       13,648,519  
  Accumulated deficit    (18,662,785 )      (16,322,505 )
      Total stockholders' deficit    (4,530,592 )      (2,643,555 )
      Total liabilities and stockholders' deficit   $1,406,279       $1,609,230  


INTELLINETICS, INC. and SUBSIDIARY
Consolidated Statements of Cash Flows
 
       For the Twelve Months Ended
December 31,
        2018       2017  
Cash flows from operating activities:        
Net loss     $ (2,340,280 )     $ (1,365,364 )
Adjustments to reconcile net loss to net cash        
  used in operating activities:        
  Depreciation and amortization     9,039       11,831  
  Bad debt expense      (7,223 )     4,221  
  Loss on disposal of fixed assets           4,816  
  Amortization of deferred financing costs     232,609       132,296  
  Amortization of beneficial conversion option     202,220       252,623  
  Stock issued for services     57,500       65,625  
  Stock options compensation     249,025       153,420  
  Note offer warrant expense           52,951  
  Gain on retirement of debt            (419,090 )
Changes in operating assets and liabilities:        
  Accounts receivable     167,299        (40,539 )
  Prepaid expenses and other current assets      (45 )      (11,829 )
  Accounts payable and accrued expenses      (97,034 )      (95,704 )
  Deferred compensation      (48,000 )      (1,846 )
  Other long-term liabilities     401,994       99,176  
  Deferred interest expense            (3,542 )
  Deferred revenues     15,489       38,511  
  Total adjustments     1,182,873       242,920  
  Net cash used in operating activities      (1,157,407 )      (1,122,444 )
           
Cash flows from investing activities:        
  Purchases of property and equipment      (3,410 )      (12,624 )
  Net cash used in investing activities      (3,410 )      (12,624 )
           
Cash flows from financing activities:        
  Payment of deferred financing costs      (130,841 )      (317,527 )
  Proceeds from notes payable     900,000       2,320,000  
  Proceeds from notes payable - related parties     400,000       390,000  
  Repayment of notes payable            (786,461 )
  Repayment of notes payable - related parties      (45,633 )      (34,969 )
  Net cash provided by financing activities     1,123,526       1,571,043  
           
Net increase (decrease) in cash      (37,291 )     435,975  
Cash - beginning of period     1,125,921       689,946  
Cash - end of period     $1,088,630       $1,125,921  
           
Supplemental disclosure of cash flow information:        
  Cash paid during the period for interest and taxes     $34,852       $170,889  
           
Supplemental disclosure of non-cash financing activities:        
  Discount on notes payable for beneficial conversion feature     $57,661       $248,522  
  Discount on notes payable - related parties for beneficial conversion feature   24,710        
  Discount on notes payable for warrants     44,548       103,637  
  Discount on notes payable - related parties for warrants     19,799       61,801