Intellinetics, Inc. Reports First Quarter Results

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| Source: Intellinetics, Inc.

Modest Revenue Growth Over 4th Quarter
Consistent Software as a Service Growth

COLUMBUS, OH, May 15, 2018 (GLOBE NEWSWIRE) -- Intellinetics, Inc. (OTCQB: INLX), a cloud-based document solutions provider, announced financial results for the three months ended March 31, 2018.

First Quarter Financial Highlights

 Total Revenue increased 5% from Q4 2017
 Total Revenue decreased 26% from Q1 2017.
 Software as a Service Revenue increased 36% from Q1 2017.
 Net Loss increase of $188,316 from Q1 2017.
 Adjusted EBITDA Loss of $307,744.

Summary – First Quarter Results

Revenues for the three months ended March 31, 2018 were $525,374 as compared with $707,617 for the same period in 2017. Intellinetics reported a net loss of $(638,510) and $(450,194) for the three months ended March 31, 2018 and 2017, respectively, representing an increase in net loss of $188,316. 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 March 31, 2018 and 2017 was ($0.04) and ($0.03), respectively.

James F. DeSocio, President & CEO of Intellinetics, stated, “We have pulled together the components to enable us to better control how we scale revenues. This includes our new content, case studies, fact sheet, web site update, and other essential elements that provide the infrastructure for us to successfully grow our sales via campaigns targeted at our strategic markets. These markets include Human Service Providers, as well as state and local government and local education.”

DeSocio continued, “Our strategy is 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. This strategy will enable us to scale, provide greater revenue consistency and higher growth. I am bullish on our target market opportunities.”

First Quarter Highlights

 Strengthened support of existing partner channel with new messaging.
 Identified key strategic solutions partners who support our strategic vision.
 Implemented customer relationship management and lead management tools.
 Prepared and piloted a series of email campaigns for each target market which will launch in Q2 and continue on an ongoing basis.

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: 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 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 www.intellinetics.com or at www.sec.gov.

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

  Three Months Ended March 31, 
  2018  2017 
Net loss - GAAP $(638,510) $(450,194)
Interest expense, net  208,984   132,095 
Depreciation and amortization  2,194   3,006 
Share-based compensation  119,588   86,383 
Note issue warrant expense  -   52,951 
Adjusted EBITDA $(307,774) $(175,759)


INTELLINETICS, INC. and SUBSIDIARY

Condensed Consolidated Statements of Operations
(Unaudited)

  For the Three Months Ended
March 31,
 
  2018  2017 
Revenues:        
Sale of software $40,994  $162,984 
Software as a service  176,600   129,531 
Software maintenance services  243,568   249,922 
Professional services  58,951   107,604 
Third Party services  5,261   57,576 
         
Total revenues  525,374   707,617 
         
Cost of revenues:        
Sale of software  17,861   23,704 
Software as a service  77,093   94,357 
Software maintenance services  25,536   26,078 
Professional services  16,825   49,653 
Third Party services  10,245   13,088 
         
Total cost of revenues  147,560   206,880 
         
Gross profit  377,814   500,737 
         
Operating expenses:        
General and administrative  543,437   580,544 
Sales and marketing  261,709   235,286 
Depreciation  2,194   3,006 
         
Total operating expenses  807,340   818,836 
         
Loss from operations  (429,526)  (318,099)
         
Other income (expense)        
Interest expense, net  (208,984)  (132,095)
         
Total other income (expense)  (208,984)  (132,095)
         
Net loss $(638,510) $(450,194)
         
Basic and diluted net loss per share: $(0.04) $(0.03)
         
Weighted average number of common shares  outstanding - basic and diluted  17,719,220   17,354,619 


INTELLINETICS, INC. and SUBSIDIARY

Condensed Consolidated Balance Sheets

  (Unaudited)    
  March 31, 2018  December 31, 2017 
       
ASSETS        
Current assets:        
Cash $710,088  $1,125,921 
Accounts receivable, net  211,131   295,815 
Prepaid expenses and other current assets  181,752   162,450 
         
Total current assets  1,102,971   1,584,186 
         
Property and equipment, net  12,566   14,760 
Other assets  10,284   10,284 
         
Total assets $1,125,821  $1,609,230 
         
LIABILITIES AND STOCKHOLDERS’ DEFICIT        
         
Current liabilities:        
Accounts payable and accrued expenses $496,738  $475,459 
Deferred revenues  604,753   708,130 
Deferred compensation  202,089   213,166 
Notes payable - current  875,000   875,000 
Notes payable - related party - current  418,024   416,969 
Total current liabilities  2,596,604   2,688,724 
         
Long-term liabilities:        
Notes payable - net of current portion  1,321,326   1,221,384 
Notes payable - related party - net of current portion  328,060   312,680 
Other long-term liabilities - related parties  42,308   29,997 
         
Total long-term liabilities  1,691,694   1,564,061 
         
Total liabilities  4,288,298   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 March 31, 2018 and December 31, 2017, respectively  30,733   30,431 
Additional paid-in capital  13,767,805   13,648,519 
Accumulated deficit  (16,961,015)  (16,322,505)
Total stockholders’ deficit  (3,162,477)  (2,643,555)
Total liabilities and stockholders’ deficit $1,125,821  $1,609,230 


INTELLINETICS, INC. and SUBSIDIARY

Condensed Consolidated Statements of Cash Flows

  For the Three Months Ended
March 31,
 
  2018  2017 
       
Cash flows from operating activities:        
Net loss $(638,510) $(450,194)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  2,194   3,006 
Bad debt expense  (5,878)  2,976 
Amortization of deferred financing costs  62,216   18,992 
Amortization of beneficial conversion option  64,238   59,908 
Stock issued for services  57,500   57,500 
Stock options compensation  62,088   28,883 
Note offer warrant expense  -   52,951 
Changes in operating assets and liabilities:        
Accounts receivable  90,562   (110,009)
Prepaid expenses and other current assets  (19,302)  (61,333)
Accounts payable and accrued expenses  21,279   (30,509)
Deferred compensation  (11,077)  - 
Other long-term liabilities - related parties  12,311   5,484 
Deferred interest expense  -   (1,161)
Deferred revenues  (103,377)  (125,263)
Total adjustments  232,754   (98,575)
Net cash used in operating activities  (405,756)  (548,769)
         
Cash flows from investing activities:        
Purchases of property and equipment  -   (6,429)
Net cash used in investing activities  -   (6,429)
         
Cash flows from financing activities:        
Payment of deferred financing costs  -   (102,619)
Proceeds from notes payable  -   560,000 
Repayment of notes payable  -   (87,971)
Repayment of notes payable - related parties  (10,077)  (9,223)
Net cash used/provided by financing activities  (10,077)  360,187 
         
Net increase (decrease) in cash  (415,833)  (195,011)
Cash - beginning of period  1,125,921   689,946 
Cash - end of period $710,088  $494,935 
         
Supplemental disclosure of cash flow information:        
Cash paid during the period for interest and taxes $24,688  $36,956 
         
Supplemental disclosure of non-cash financing activities:        
Discount on notes payable for beneficial conversion feature $-  $248,522 

CONTACT:
Joe Spain, CFO
Intellinetics, Inc.
614.921.8170 investors@intellinetics.com