Revenue Growth Over First Quarter

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

2019 Second Quarter Financial Highlights

-- Total Revenue increased 24% sequentially from Q1 2019. -- Total Revenue increased 17% from Q2 2018. -- Software as a Service Revenue increased 30% from Q2 2018. -- Net Loss of $473,662. -- Adjusted EBITDA Loss of $163,720, a decrease of 58% from Q2 2018.

2019 Six Month Financial Highlights

-- Total Revenue increased 8% from the same period in 2018. -- Software as a Service Revenue increased 21% from the same period in 2018. -- Net Loss of $1,143,515. -- Adjusted EBITDA Loss of $454,894, a decrease of 34% from the same period in 2018.

Summary – 2019 Second Quarter Results Revenues for the three months ended June 30, 2019 were $640,608 as compared with $549,678 for the same period in 2018, and as compared with $515,385 for Q1 2019. Intellinetics reported a net loss of $473,662 and $669,451 for the three months ended June 30, 2019 and 2018, respectively, representing a decrease in net loss of $195,789. The decreased net loss was a result of higher revenue, driven by higher professional services, software as a service, and maintenance compared to 2018, partially offset by lower software and third party software, as well as lower cost of revenues and lower operating expenses. Net loss per share for the three months ended June 30, 2019 and 2018 was ($0.03) and ($0.04), respectively.

Summary – 2019 Six-Month Results Revenues for the six months ended June 30, 2019 were $1,155,993 as compared with $1,075,052 for the same period in 2018. Intellinetics reported a net loss of $1,143,515 and $1,307,960 for the six months ended June 30, 2019 and 2018, respectively, representing a decrease in net loss of $164,445. The decreased net loss was a result of higher revenue, driven by higher professional services, software as a service, and maintenance compared to 2018, partially offset by lower software and third party software, as well as lower cost of revenues and lower operating expenses. Net loss per share for the six months ended June 30, 2019 and 2018 was ($0.06) and ($0.07), respectively.

2019 Highlights

-- Our commitment to the Human Services Provider market continued with the launch of 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. -- 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, “Both our revenues and margins increased in Q2, reflecting traction in a few areas. First, our focused market strategy has enabled our pipeline to grow, which we in turn were able to convert into orders and revenue. Further, a mix shift towards our own internal software and fewer third party solution integrations resulted in higher margins for us. Our backlog of orders is strong and I am excited to see our focus begin to yield results. Our commitment and expertise in the Human Service Provider, state and local government, and education markets is keeping our attention squarely on solutions for these organizations.”

“As an example, our value-add strengths include the workflow engines within our solutions, which we believe are superior to basic cloud storage products. Whether it is our unique AuditshieldTM function, which highlights documents which are missing, or the powerful, rules-based workflow engine driving our Incident Case Management System, the word is getting out that these tools are making a difference for our customers.” 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 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, initiative, or service; Intellinetics’ future revenues, revenue consistency, growth and long-term value, including in 2019; 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 www.intellinetics.com or at www.sec.gov.

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

Continued

Non-GAAP Financial MeasureIntellinetics 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 For the Three Months Ended June 30, 2019 2018 Net loss - GAAP ($ 473,662 ) ($ 669,450 ) Interest expense, net 239,347 219,352 Depreciation and amortization 2,099 2,384 Share-based compensation 68,496 62,222 -- ------- - -- ------- - Adjusted EBITDA ($ 163,720 ) ($ 385,492 )

Reconciliation of Net Loss to Adjusted EBITDA For the Six Months Ended June 30, 2019 2018 Net loss - GAAP ($ 1,143,515 ) ($ 1,307,960 ) Interest expense, net 472,494 428,336 Depreciation and amortization 4,007 4,578 Share-based compensation 212,120 181,810 -- --------- - -- --------- - Adjusted EBITDA ($ 454,894 ) ($ 693,236 )

INTELLINETICS, INC. and SUBSIDIARY Condensed Consolidated Statements of Operations (Unaudited) For the Three Months Ended For the Six Months Ended June June 30, 30, 2019 2018 2019 2018 Revenues: Sale of software $ 7,102 $ 34,158 $ 8,852 $ 75,152 Software as a service 229,982 177,583 429,165 354,183 Software maintenance services 252,713 245,299 505,349 488,867 Professional services 142,738 52,605 194,405 111,556 Third Party services 8,073 40,033 18,222 45,294 -------------- -------------- -------------- -------------- Total revenues 640,608 549,678 1,155,993 1,075,052 Cost of revenues: Sale of software 1,164 12,672 3,010 30,533 Software as a service 60,579 68,594 128,268 145,687 Software maintenance services 20,541 25,064 49,919 50,601 Professional services 39,814 19,317 73,320 36,143 Third Party services 8,006 33,954 18,052 44,199 -------------- -------------- -------------- -------------- Total cost of revenues 130,104 159,601 272,569 307,163 -------------- -------------- -------------- -------------- Gross profit 510,504 390,077 883,424 767,889 Operating expenses: General and administrative 521,057 593,400 1,060,018 1,136,835 Sales and marketing 221,663 244,391 490,420 506,100 Depreciation 2,099 2,384 4,007 4,578 -------------- -------------- -------------- -------------- Total operating expenses 744,819 840,175 1,554,445 1,647,513 Loss from operations (234,315 ) (450,098 ) (671,021 ) (879,624 ) Other income (expense) Interest expense, net (239,347 ) (219,353 ) (472,494 ) (428,336 ) -------------- -------------- -------------- -------------- Total other income (expense) (239,347 ) (219,353 ) (472,494 ) (428,336 ) Net loss $ (473,662 ) $ (669,451 ) $ (1,143,515 ) $ (1,307,960 ) - ---------- - - ---------- - - ---------- - - ---------- - Basic and diluted net loss per share: $ (0.03 ) $ (0.04 ) $ (0.06 ) $ (0.07 ) Weighted average number of common shares 18,524,878 17,729,421 18,502,782 17,724,377 outstanding - basic and diluted

INTELLINETICS, INC. and SUBSIDIARY Condensed Consolidated Balance Sheets ASSETS (Unaudited) June 30, December 31, 2019 2018 Current assets: Cash $ 412,224 $ 1,088,630 Accounts receivable, net 173,898 135,739 Prepaid expenses and other current assets 143,571 162,495 Total current assets 729,693 1,386,864 - ----------- - - ----------- - Property and equipment, net 10,613 9,131 Right of use asset 117,894 - Other assets 10,284 10,284 - ----------- - - ----------- - Total assets $ 868,484 $ 1,406,279 - ----------- - - ----------- - LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued expenses $ 292,073 $ 308,121 Lease liability - current 21,523 - Deferred revenues 587,970 723,619 Deferred compensation 141,166 165,166 Notes payable - related party - current 24,014 46,807 - ----------- - - ----------- - Total current liabilities 1,066,746 1,243,713 Long-term liabilities: Notes payable 3,242,445 3,144,926 Notes payable - related party - net of current portion 1,075,703 1,045,937 Lease liability - net of current portion 100,715 - Other long-term liabilities 844,862 502,295 - ----------- - - ----------- - Total long-term liabilities 5,263,725 4,693,158 --------------- --------------- Total liabilities 6,330,471 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 June 30, 2019 and December 31, 31,528 30,733 2018, respectively Additional paid-in capital 14,312,785 14,101,460 Accumulated deficit (19,806,300 ) (18,662,785 ) - ----------- - - ----------- - Total stockholders' deficit (5,461,987 ) (4,530,592 ) - ----------- - - ----------- - Total liabilities and stockholders' deficit $ 868,484 $ 1,406,279 - ----------- - - ----------- -

INTELLINETICS, INC. and SUBSIDIARY Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2019 2018 Cash flows from operating activities: Net loss $ (1,143,515 ) $ (1,307,960 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 4,007 4,578 Bad debt expense 4,121 (3,834 ) Amortization of deferred financing costs 91,925 124,431 Amortization of beneficial conversion option 35,360 128,477 Amortization of right of use asset 20,655 - Stock issued for services 87,500 57,500 Stock options compensation 124,620 124,310 Changes in operating assets and liabilities: Accounts receivable (42,280 ) 100,247 Prepaid expenses and other current assets 18,924 (61,445 ) Right of use asset (138,549 ) - Accounts payable and accrued expenses (16,048 ) (10,068 ) Lease liability, current and long-term 122,238 - Deferred compensation (24,000 ) (24,000 ) Other long-term liabilities 342,567 150,311 Deferred revenues (135,649 ) (100,139 ) - ---------- - - ---------- - Total adjustments 495,391 490,368 - ---------- - - ---------- - Net cash used in operating activities (648,124 ) (817,592 ) Cash flows from investing activities: Purchases of property and equipment (5,489 ) (3,410 ) - ---------- - - ---------- - Net cash used in investing activities (5,489 ) (3,410 ) Cash flows from financing activities: Repayment of notes payable - related parties (22,793 ) (23,947 ) - ---------- - - ---------- - Net cash used in/provided by financing activities (22,793 ) (23,947 ) Net increase (decrease) in cash (676,406 ) (844,949 ) - ---------- - - ---------- - Cash - beginning of period 1,088,630 1,125,921 - ---------- - - ---------- - Cash - end of period $ 412,224 $ 280,972 - ---------- - - ---------- - Supplemental disclosure of cash flow information: Cash paid during the period for interest and taxes $ 4,405 $ 28,973 - ---------- - - ---------- -

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