Revenues Increase 117%; Earnings per share of $0.27
COLUMBUS, OH, May 17, 2021 (GLOBE NEWSWIRE) -- Intellinetics, Inc. (OTCQB: INLX), a cloud-based document solutions provider, announced financial results for the three months ended March 31, 2021.
2021 First Quarter Financial Highlights
| ● | Total Revenue increased 117% from the same period in 2020. | |
| ● | Software as a Service Revenue increased 43% from the same period in 2020. | |
| ● | Net Income of $842,772, compared to Net Loss of $646,211 from the same period in 2020. | |
| ● | Adjusted EBITDA of $356,165, compared to $7,785 from the same period in 2020. |
Summary – 2021 First quarter Results
Revenues for the three months ended March 31, 2021 were $2,635,219 as compared with $1,213,664 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 quarter of revenues from our subsidiary acquired in 2020, Graphic Sciences, Inc., compared to the same quarter in 2020 that only included one month of acquisition revenues. Intellinetics reported a net income of $842,772 for the three months ended March 31, 2021 compared to a net loss of $646,211 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 $0.30 and $0.27, respectively, for the three months ended March 31, 2021. Net loss per basic and diluted share was ($0.54) for the three months ended March 31, 2020.
2021 Other Highlights
| ● | Invested in new warehouse to support growth of our storage and retrieval services, which increases box storage capacity more than 120%. | |
| ● | Signed a new three-year, revenue favorable agreement with our second-largest customer. | |
| ● | Expanded K-12 footprint closing 20 new districts in the quarter, taking us to over 230 school districts at the time of this release. |
James F. DeSocio, President & CEO of Intellinetics, stated, “Our employees continue to impress me with their focus. We have just celebrated the anniversaries our two 2020 acquisitions and I am pleased to say that the integrations have exceeded our expectations and our timeline. In all my career, these are two of the smoothest acquisitions in which I have been involved. The efforts are reflected in the results of our net income and cash flow, where our ‘net cash provided by operating activities’ improved significantly from Q1 2020 to $326,869 for the quarter.
“Similarly, we are making investments in our sales and marketing teams to enhance our ability to capture more of the market. We aligned the sales and marketing teams over the past two quarters, and we are cross selling our solutions and applications into our new and existing customer base. This is the synergy we strove for when we acquired the two companies. We’ve launched tactically focused email and telephone campaigns in the first quarter, and I am excited to see what our organization can deliver. All eyes are all forward on growing the business.
“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, is a cloud-based document 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. Through its Image Technology Group and production scanning department, hundreds of millions of images have been converted from paper to digital, paper to microfilm, and microfiche to microfilm for business and federal, county, and municipal governments. Its operations in Madison Heights, Michigan, also provides its clients with long-term paper and microfilm storage and retrieval options. 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, including 2021 revenues and future revenue streams from new and existing customers, 2021 Adjusted EBITDA, 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 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, 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 Loss to Adjusted EBITDA
| For the Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Net loss - GAAP | $ | 842,772 | ($ | 646,211 | ) | |||
| Interest expense, net | 113,044 | 290,430 | ||||||
| Income tax benefit, net | - | (188,300 | ) | |||||
| Depreciation and amortization | 94,884 | 28,091 | ||||||
| Stock-based compensation | 80,598 | 69,073 | ||||||
| Stock and warrant issue expense | - | 377,761 | ||||||
| Significant transaction costs | - | 364,367 | ||||||
| Change in fair value of earnout liabilities | 69,950 | - | ||||||
| Gain on extinguishment of debt | (845,083 | ) | (287,426 | ) | ||||
| Adjusted EBITDA | $ | 356,165 | ($ | 7,785 | ) | |||
INTELLINETICS, INC. and SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Revenues: | ||||||||
| Sale of software | $ | 9,594 | $ | 94,100 | ||||
| Software as a service | 323,726 | 225,994 | ||||||
| Software maintenance services | 340,446 | 261,243 | ||||||
| Professional services | 1,652,463 | 560,029 | ||||||
| Storage and retrieval services | 308,990 | 72,298 | ||||||
| Total revenues | 2,635,219 | 1,213,664 | ||||||
| Cost of revenues: | ||||||||
| Sale of software | 4,237 | 38,302 | ||||||
| Software as a service | 76,340 | 72,515 | ||||||
| Software maintenance services | 24,388 | 46,516 | ||||||
| Professional services | 834,238 | 272,505 | ||||||
| Storage and retrieval services | 91,112 | 17,701 | ||||||
| Total cost of revenues | 1,030,315 | 447,539 | ||||||
| Gross profit | 1,604,904 | 766,125 | ||||||
| Operating expenses: | ||||||||
| General and administrative | 1,039,026 | 865,085 | ||||||
| Change in fair value of earnout liabilities | 69,950 | - | ||||||
| Significant transaction costs | - | 460,767 | ||||||
| Sales and marketing | 290,311 | 243,689 | ||||||
| Depreciation and amortization | 94,884 | 28,091 | ||||||
| Total operating expenses | 1,494,171 | 1,597,632 | ||||||
| Income/loss from operations | 110,733 | (831,507 | ) | |||||
| Other income (expense) | ||||||||
| Gain on extinguishment of debt | 845,083 | 287,426 | ||||||
| Interest expense, net | (113,044 | ) | (290,430 | ) | ||||
| Total other income/expense | 732,039 | (3,004 | ) | |||||
| Income/loss before income taxes | 842,772 | (834,511 | ) | |||||
| Income tax benefit | - | 188,300 | ||||||
| Net income/loss | $ | 842,772 | $ | (646,211 | ) | |||
| Basic net income (loss) per share: | $ | 0.30 | $ | (0.54 | ) | |||
| Diluted net income (loss) per share: | $ | 0.27 | $ | (0.54 | ) | |||
| Weighted average number of common shares outstanding - basic | 2,822,665 | 1,185,846 | ||||||
| Weighted average number of common shares outstanding - diluted | 3,106,885 | 1,185,846 | ||||||
INTELLINETICS, INC. and SUBSIDIARY
Condensed Consolidated Balance Sheets
| (unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 2,003,052 | $ | 1,907,882 | ||||
| Accounts receivable, net | 1,055,023 | 792,380 | ||||||
| Accounts receivable, unbilled | 346,151 | 523,522 | ||||||
| Parts and supplies, net | 75,877 | 79,784 | ||||||
| Prepaid expenses and other current assets | 231,475 | 162,166 | ||||||
| Total current assets | 3,711,578 | 3,465,734 | ||||||
| Property and equipment, net | 889,686 | 698,752 | ||||||
| Right of use assets | 2,511,445 | 2,641,005 | ||||||
| Intangible assets, net | 1,130,852 | 1,184,971 | ||||||
| Goodwill | 2,322,887 | 2,322,887 | ||||||
| Other assets | 27,284 | 31,284 | ||||||
| Total assets | $ | 10,593,732 | $ | 10,344,633 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 240,236 | $ | 141,823 | ||||
| Accrued compensation | 391,310 | 271,889 | ||||||
| Accrued expenses, other | 141,748 | 131,685 | ||||||
| Lease liabilities - current | 489,105 | 518,531 | ||||||
| Deferred revenues | 945,812 | 996,131 | ||||||
| Deferred compensation | 100,828 | 100,828 | ||||||
| Earnout liabilities - current | 947,472 | 877,522 | ||||||
| Accrued interest payable - current | - | 5,941 | ||||||
| Notes payable - current | - | 580,638 | ||||||
| Total current liabilities | 3,256,511 | 3,624,988 | ||||||
| Long-term liabilities: | ||||||||
| Notes payable - net of current portion | 1,596,723 | 1,802,184 | ||||||
| Lease liabilities - net of current portion | 2,096,618 | 2,196,951 | ||||||
| Earnout liabilities - net of current portion | 1,566,478 | 1,566,478 | ||||||
| Total long-term liabilities | 5,259,819 | 5,565,613 | ||||||
| Total liabilities | 8,516,330 | 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 March 31, 2021 and December 31, 2020, respectively | 2,823 | 2,811 | ||||||
| Additional paid-in capital | 24,228,074 | 24,147,488 | ||||||
| Accumulated deficit | (22,153,495 | ) | (22,996,267 | ) | ||||
| Total stockholders’ equity | 2,077,402 | 1,154,032 | ||||||
| Total liabilities and stockholders’ equity | $ | 10,593,732 | $ | 10,344,633 | ||||
INTELLINETICS, INC. and SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income/loss | $ | 842,772 | $ | (646,211 | ) | |||
| Adjustments to reconcile net income/loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 94,884 | 28,091 | ||||||
| Bad debt expense | (2,634 | ) | 23,287 | |||||
| Parts and supplies reserve change | 4,500 | 1,500 | ||||||
| Amortization of deferred financing costs | 25,935 | 39,287 | ||||||
| Amortization of beneficial conversion option | - | 11,786 | ||||||
| Amortization of debt discount | 26,666 | 8,889 | ||||||
| Amortization of right of use asset | 129,560 | 45,197 | ||||||
| Stock issued for services | 57,500 | 57,500 | ||||||
| Stock options compensation | 23,098 | 11,573 | ||||||
| Note conversion stock issue expense | - | 141,000 | ||||||
| Warrant issue expense | - | 236,761 | ||||||
| Interest on converted debt | - | 176,105 | ||||||
| Amortization of original issue discount on notes | - | 16,864 | ||||||
| Gain on extinguishment of debt | (845,083 | ) | (287,426 | ) | ||||
| Change in fair value of earnout liabilities | 69,950 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (260,009 | ) | 294,853 | |||||
| Accounts receivable, unbilled | 177,371 | 8,423 | ||||||
| Parts and supplies | (593 | ) | (11,506 | ) | ||||
| Prepaid expenses and other current assets | (65,309 | ) | (82,390 | ) | ||||
| Accounts payable and accrued expenses | 227,897 | (90,718 | ) | |||||
| Lease liabilities, current and long-term | (129,759 | ) | (43,908 | ) | ||||
| Deferred compensation | - | (13,046 | ) | |||||
| Accrued interest, current and long-term | 442 | 20,000 | ||||||
| Deferred revenues | (50,319 | ) | (89,862 | ) | ||||
| Total adjustments | (515,903 | ) | 502,260 | |||||
| Net cash provided by/(used in) operating activities | 326,869 | (143,951 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Cash paid to acquire business, net of cash acquired | - | (3,888,984 | ) | |||||
| Purchases of property and equipment | (231,699 | ) | (7,742 | ) | ||||
| Net cash used in investing activities | (231,699 | ) | (3,896,726 | ) | ||||
| Cash flows from financing activities: | ||||||||
| 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 | - | 2,000,000 | ||||||
| Net cash provided by financing activities | - | 4,683,709 | ||||||
| Net increase in cash | 95,170 | 643,032 | ||||||
| Cash - beginning of period | 1,907,882 | 404,165 | ||||||
| Cash - end of period | $ | 2,003,052 | $ | 1,047,197 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the period for interest | $ | 60,000 | $ | 2,154 | ||||
| Cash paid during the period for income taxes | $ | 913 | $ | - | ||||
| 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 | ||||||
| Supplemental disclosure of non-cash investing activities relating to business acquisitions: | ||||||||
| Cash | $ | - | $ | 17,269 | ||||
| Accounts receivable | - | 1,071,770 | ||||||
| Accounts receivable, unbilled | - | 266,403 | ||||||
| Parts and supplies | - | 101,016 | ||||||
| Prepaid expenses | - | 73,116 | ||||||
| Other current assets | - | 5,954 | ||||||
| Right of use assets | - | 2,885,618 | ||||||
| Property and equipment | - | 732,372 | ||||||
| Intangible assets | - | 1,230,000 | ||||||
| Accounts payable | - | (129,622 | ) | |||||
| Accrued expenses | - | (155,949 | ) | |||||
| Lease liabilities | - | (2,947,684 | ) | |||||
| Federal and state taxes payable | - | (168,900 | ) | |||||
| Deferred revenues | - | (39,186 | ) | |||||
| Deferred tax liabilities, net | - | (149,900 | ) | |||||
| Net assets acquired in acquisition | - | 2,792,277 | ||||||
| Total goodwill acquired in acquisition | - | 1,800,176 | ||||||
| Total purchase price of acquisition | - | 4,592,453 | ||||||
| Purchase price of business acquisition financed with earnout liability | - | (686,200 | ) | |||||
| Cash used in business acquisition | $ | - | $ | 3,906,253 | ||||