Record Quarterly Software as a Service;
Continued Strong Cash Flow
COLUMBUS, OH, May 16, 2022 (GLOBE NEWSWIRE) -- Intellinetics, Inc. (OTCQB: INLX), a digital transformation solutions provider, announced financial results for the three months ended March 31, 2022.
2022 First Quarter Financial Highlights
- Total Revenue increased 3% from the same period in 2021.
- Software as a Service Revenue increased 33% from the same period in 2021.
- Net Loss of $20,126, compared to Net Income of $842,772 from the same period in 2021.
- Q1 2021 included other income of $845,083 for forgiveness of the PPP loan and interest.
- Q1 2022 included $70,051 of transaction costs.
- Adjusted EBITDA increased 18% to $421,300, compared to $356,165 from the same period in 2021.
Summary – 2022 First Quarter Results
Revenues for the three months ended March 31, 2022 were $2,703,512 as compared with $2,635,219 for the same period in 2021. The increase in our software and software-as-a-service revenues more than offset a decrease in professional services, primarily COVID driven, and a decrease in storage and retrieval revenues, due to unfavorable comparisons to one-time shredding projects in 2021. Intellinetics reported a net loss of $20,126 for the three months ended March 31, 2022 compared to a net income of $842,772 for the same period in 2021. The net loss was the result of transaction costs of $70,051 in 2022 (none in 2021), expended in support of our acquisition on April 1, 2022. In addition, the difference in first quarter year-over-year results was primarily because of the gain on extinguishment of debt of $845,083 from the full forgiveness of our PPP loan during the three months ended March 31, 2021. Correspondingly, net loss per basic and diluted share were both $0.01 for the three months ended March 31, 2022, compared to $0.30 and $0.27, respectively, for the three months ended March 31, 2021.
2022 Other Highlights
- On April 1, 2022 we completed the acquisition of Yellow Folder, LLC. This acquisition more than doubles our SAAS revenues, adds positive cash flow, and approximately doubles our customer count in the K-12 education market.
- Simultaneously, we completed $8.7 million in equity and debt financing.
James F. DeSocio, President & CEO of Intellinetics, stated, “We achieved our goal of improved revenue numbers from Q1 of 2021 to Q1 of 2022, despite the renewed COVID headwinds we faced in the fourth quarter of 2021 and first quarter of 2022. For the first quarter of 2022 we beat our software as a service goal. For the ninth straight quarter we showed positive Adjusted EBITDA and have surpassed $300,000 of positive Adjusted EBITDA for the seventh straight quarter. This has been a very good quarter for Intellinetics despite the many challenges we have faced with COVID, hiring employees and the onset of inflationary pressures.
“Our teams continue to perform at a high level. Year-to-date, our sales team and partner program have delivered record order entry levels. We have built the largest backlog in future contract value in company history. At the time of this press release, we have signed 154 new contracts since the beginning of the year, with an estimated Total Contract Value of approximately $3.9 million, recognizable in revenue over one year or less. Twenty-six percent of these contracts were new customer logos. Last year at this time we had closed 131 contracts with an estimated Total Contract Value of approximately $2.6 million. Our success validates both our go-to-market strategy and our M&A strategy.
“After our acquisition of Yellow Folder, we now have a very strong position in the K-12 education market with over 500 customers using our Enterprise Content Management solutions. I’m excited for all our other target markets as well. Further, we’ve already begun cross-selling initiatives, where we’ve secured a document conversion scanning project from a Yellow Folder hosted customer. We are positioned for 2022 better than ever in our history. Given our recent acquisition and our strong order entry year to date, we expect to continue to grow our revenues and Adjusted EBITDA.
Conference Call
Intellinetics is holding a conference call to discuss these results on Monday, May 16, 2022, at 4:30 p.m. Eastern Time. The conference call can be accessed by dialing +1 929 205 6099 and providing passcode 84709835261#. If you are unable to participate during the live call, a replay of the conference call will be available approximately two hours after the completion of the call through May 31, 2022. To listen to the replay, the call will be archived on the company's website at https://www.intellinetics.com/company-news/.
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 www.intellinetics.com.
Cautionary Statement
Statements in this press release which are not purely historical, including statements regarding future business and growth, future revenues, future contract values, including 2022 revenues and future revenue streams from new and existing customers, 2022 Adjusted EBITDA, future cash flow, cross-selling efforts and other synergies associated with our recent acquisition of Yellow Folder and the success of our integration efforts; 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 including inflationary pressures, 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 www.intellinetics.com or at www.sec.gov.
CONTACT:
Joe Spain, CFO
Intellinetics, Inc.
614.921.8170 investors@intellinetics.com
Non-GAAP Financial Measures
Intellinetics uses non-GAAP Adjusted EBITDA and Total Contract Value as supplemental measures of our performance that are 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: 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, 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 transaction costs.
Reconciliation of Net Loss to Adjusted EBITDA
| For the Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net (loss) income - GAAP | $ | (20,126 | ) | $ | 842,772 | |||
| Interest expense, net | 112,601 | 113,044 | ||||||
| Depreciation and amortization | 114,110 | 94,884 | ||||||
| Stock-based compensation | 80,460 | 80,598 | ||||||
| Transaction costs | 70,051 | - | ||||||
| Change in fair value of earnout liabilities | 64,204 | 69,950 | ||||||
| Gain on extinguishment of debt | - | (845,083 | ) | |||||
| Adjusted EBITDA | $ | 421,300 | $ | 356,165 | ||||
Total Contract Value: Total Contract Value is a performance measure that the Company believes provides useful information to its management and investors as it allows the Company to better track the Company’s current sales performance, without any adjustment to exclude revenues that will not be earned, received, or recognized until future periods. Total Contract Value is not a substitute for total revenue. There is no GAAP measure that is comparable to Total Contract Value, so the Company has not reconciled the Total Contract Value to any GAAP measure.
We define Total Contract Value as the estimated total future revenues from contracts signed during the period. This refers to deals that have been awarded by our government and commercial customers. It presumes the future provision of all software, subscription services, and/or professional services without any termination of the contracts by either party. There can be no guarantee that all work will be completed, during any fiscal period, or that the contracts will not be terminated before all the estimated future revenues are earned, received, and/or recognized.
INTELLINETICS, INC. and SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues: | ||||||||
| Sale of software | $ | 64,491 | $ | 9,594 | ||||
| Software as a service | 431,221 | 323,726 | ||||||
| Software maintenance services | 336,602 | 340,446 | ||||||
| Professional services | 1,587,948 | 1,652,463 | ||||||
| Storage and retrieval services | 283,250 | 308,990 | ||||||
| Total revenues | 2,703,512 | 2,635,219 | ||||||
| Cost of revenues: | ||||||||
| Sale of software | 26,193 | 4,237 | ||||||
| Software as a service | 91,249 | 76,340 | ||||||
| Software maintenance services | 18,300 | 24,388 | ||||||
| Professional services | 848,167 | 834,238 | ||||||
| Storage and retrieval services | 87,766 | 91,112 | ||||||
| Total cost of revenues | 1,071,675 | 1,030,315 | ||||||
| Gross profit | 1,631,837 | 1,604,904 | ||||||
| Operating expenses: | ||||||||
| General and administrative | 938,883 | 1,039,026 | ||||||
| Change in fair value of earnout liabilities | 64,204 | 69,950 | ||||||
| Transaction costs | 70,051 | - | ||||||
| Sales and marketing | 352,114 | 290,311 | ||||||
| Depreciation and amortization | 114,110 | 94,884 | ||||||
| Total operating expenses | 1,539,362 | 1,494,171 | ||||||
| Income from operations | 92,475 | 110,733 | ||||||
| Other income (expense) | ||||||||
| Gain on extinguishment of debt | - | 845,083 | ||||||
| Interest expense, net | (112,601 | ) | (113,044 | ) | ||||
| Total other (expense) income | (112,601 | ) | 732,039 | |||||
| (Loss) income before income taxes | (20,126 | ) | 842,772 | |||||
| Income tax benefit | - | - | ||||||
| Net (loss) income | $ | (20,126 | ) | $ | 842,772 | |||
| Basic net (loss) income per share: | $ | (0.01 | ) | $ | 0.30 | |||
| Diluted net (loss) income per share: | $ | (0.01 | ) | $ | 0.27 | |||
| Weighted average number of common shares outstanding - basic | 2,830,899 | 2,822,665 | ||||||
| Weighted average number of common shares outstanding - diluted | 2,830,899 | 3,106,885 | ||||||
INTELLINETICS, INC. and SUBSIDIARY
Unaudited Condensed Consolidated Balance Sheets
| (unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 2,172,758 | $ | 1,752,630 | ||||
| Accounts receivable, net | 898,399 | 1,176,059 | ||||||
| Accounts receivable, unbilled | 473,986 | 444,782 | ||||||
| Parts and supplies, net | 65,713 | 76,691 | ||||||
| Other contract assets | 86,603 | 78,556 | ||||||
| Prepaid expenses and other current assets | 211,087 | 155,550 | ||||||
| Total current assets | 3,908,546 | 3,684,268 | ||||||
| Property and equipment, net | 1,087,832 | 1,091,780 | ||||||
| Right of use assets | 3,687,107 | 3,841,612 | ||||||
| Intangible assets, net | 914,377 | 968,496 | ||||||
| Goodwill | 2,322,887 | 2,322,887 | ||||||
| Other assets | 79,293 | 53,089 | ||||||
| Total assets | $ | 12,000,042 | $ | 11,962,132 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 330,270 | $ | 181,521 | ||||
| Accrued compensation | 287,044 | 343,576 | ||||||
| Accrued expenses, other | 155,384 | 161,862 | ||||||
| Lease liabilities - current | 635,423 | 616,070 | ||||||
| Deferred revenues | 1,136,066 | 1,194,649 | ||||||
| Deferred compensation | 80,662 | 100,828 | ||||||
| Earnout liabilities - current | 994,527 | 958,818 | ||||||
| Notes payable - current | 1,807,128 | - | ||||||
| Total current liabilities | 5,426,504 | 3,557,324 | ||||||
| Long-term liabilities: | ||||||||
| Notes payable - net of current portion | - | 1,754,527 | ||||||
| Lease liabilities - net of current portion | 3,151,110 | 3,316,682 | ||||||
| Earnout liabilities - net of current portion | 700,358 | 671,863 | ||||||
| Total long-term liabilities | 3,851,468 | 5,743,072 | ||||||
| Total liabilities | 9,277,972 | 9,300,396 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock, $0.001 par value, 25,000,000 shares authorized; 2,831,169 and 2,823,072 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 2,831 | 2,823 | ||||||
| Additional paid-in capital | 24,377,681 | 24,297,229 | ||||||
| Accumulated deficit | (21,658,442 | ) | (21,638,316 | ) | ||||
| Total stockholders’ equity | 2,722,070 | 2,661,736 | ||||||
| Total liabilities and stockholders’ equity | $ | 12,000,042 | $ | 11,962,132 | ||||
INTELLINETICS, INC. and SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the Three Months Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net (income) income | $ | (20,126 | ) | $ | 842,772 | |||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 114,110 | 94,884 | ||||||
| Bad debt (recovery) expense | (2,097 | ) | (2,634 | ) | ||||
| Parts and supplies reserve change | - | 4,500 | ||||||
| Amortization of deferred financing costs | 25,935 | 25,935 | ||||||
| Amortization of debt discount | 26,666 | 26,666 | ||||||
| Amortization of right of use asset | 154,505 | 129,560 | ||||||
| Stock issued for services | 57,500 | 57,500 | ||||||
| Stock options compensation | 22,960 | 23,098 | ||||||
| Gain on extinguishment of debt | - | (845,083 | ) | |||||
| Change in fair value of earnout liabilities | 64,204 | 69,950 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 279,757 | (260,009 | ) | |||||
| Accounts receivable, unbilled | (29,204 | ) | 177,371 | |||||
| Parts and supplies | 10,978 | (593 | ) | |||||
| Prepaid expenses and other current assets | (89,788 | ) | (65,309 | ) | ||||
| Accounts payable and accrued expenses | 85,739 | 227,897 | ||||||
| Lease liabilities, current and long-term | (146,219 | ) | (129,759 | ) | ||||
| Deferred compensation | (20,166 | ) | - | |||||
| Accrued interest, current and long-term | - | 442 | ||||||
| Deferred revenues | (58,583 | ) | (50,319 | ) | ||||
| Total adjustments | 496,297 | (515,903 | ) | |||||
| Net cash provided by operating activities | 476,171 | 326,869 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (56,043 | ) | (231,699 | ) | ||||
| Net cash used in investing activities | (56,043 | ) | (231,699 | ) | ||||
| Net increase in cash | 420,128 | 95,170 | ||||||
| Cash - beginning of period | 1,752,630 | 1,907,882 | ||||||
| Cash - end of period | $ | 2,172,758 | $ | 2,003,052 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the period for interest | $ | 60,000 | $ | 60,000 | ||||
| Cash paid during the period for income taxes | $ | 1,303 | $ | 913 | ||||
