Intellinetics, Inc. Reports Fourth Quarter and Year-End


Record Annual Software as a Service and Overall Revenue;
Record Operating Cash Flow

COLUMBUS, OH, March 24, 2022 (GLOBE NEWSWIRE) — Intellinetics, Inc. (OTCQB: INLX), a cloud-based document solutions provider, announced financial results for the three and twelve months ended December 31, 2021.

2021 Fourth Quarter Financial Highlights

  • Total Revenue increased 2% from the same period in 2020.
  • Software as a Service Revenue increased 31% from the same period in 2020.
  • Net Income of $26,295, compared to Net Loss of $1,427,307 from the same period in 2020.
    • Q4 2021 includes expense of $64,203 of change in fair value of earnout liabilities expense, compared to expense of $1,552,800 in 2020.
  • Adjusted EBITDA of $337,925 compared to an adjusted EBITDA of $361,188 from the same period in 2020.

2021 Twelve Month Financial Highlights

  • Total Revenue increased 39% from the same period in 2020.
  • Software as a Service Revenue increased 37% from the same period in 2020.
  • Net Income of $1,357,951, compared to Net Loss of $2,200,201 from the same period in 2020.
    • 2021 includes expense of $141,414 of change in fair value of earnout liabilities expense, compared to expense of $1,554,800 in 2020.
    • 2021 includes gain on retirement of debt of $845,083 from PPP loan forgiveness.
  • Adjusted EBITDA of $1,670,087, an improvement of $867,125 compared to adjusted EBITDA of $802,962 from the same period in 2020.

Summary – 2021 Fourth Quarter Results

Revenues for the three months ended December 31, 2021 were $2,744,038 as compared with $2,695,805 for the same period in 2020. The increase in our software as a service and storage and retrieval more than offset slight reductions in sale of software and professional services. Professional services were impacted by the COVID resurgence in November and December 2021. Intellinetics reported net income of $26,295 and a net loss $1,427,307 for the three months ended December 31, 2021 and 2020, respectively, representing an improvement of $1,453,602. The net loss in 2020 was primarily a result of a charge taken due to a change in fair value of earnout liabilities of $1,554,800 relating to our 2020 acquisitions. Basic and diluted net income per share for the three months ended December 31, 2021 was $0.01. Basic and diluted net loss per share for the three months ended December 31, 2020 was $0.51. Our adjusted EBITDA improved year over year by $867,125, which was driven by improved operations and demonstrates the value of the 2020 acquisitions.

Summary – 2021 Twelve Month Results

Revenues for the twelve months ended December 31, 2021 were $11,460,265 as compared with $8,253,391 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 twelve months of revenues from our Graphic Sciences, Inc. subsidiary acquired in 2020, compared to the same period in 2020 that only included approximately ten months of revenues from that business. The year-over-year increase is amplified by the weak second quarter of 2020, due to the stay-at-home orders and resulting curtailment of revenue in that period, as well as the continued strong growth of our software as a sales revenues. We reported a net income of $1,357,951 and a net loss of $2,200,201 for the twelve months ended December 31, 2021 and 2020, respectively, representing an improvement of $3,558,152. The improved net income was the result of improved operating results, no significant transaction costs in 2021, a gain on extinguishment of debt of $845,083 from the full forgiveness of our PPP loan, and change in fair value of earnout of $141,414 in 2021 compared to $1,554,800 in 2020.

2021 Operational Highlights

  Positive operating cash flow of $1,389,996 for the twelve months ended December 31, 2021.
  Positive net income and positive adjusted EBITDA for all four quarters of 2021.
  Integrations of acquisitions of Graphic Sciences (March 2, 2020) and CEO Imaging Systems (April 24, 2020) substantially complete despite pandemic challenges.
  Invested in new warehouse to support growth of our storage and retrieval services, which increases box storage capacity more than 120%, and completed consolidation of warehouses from four to two for more logistics efficiency.
  Expanded K-12 footprint, bringing us to over 250 school districts at the time of this release.

James F. DeSocio, President & CEO of Intellinetics, stated, “We achieved our goal of improved revenue numbers from Q4 of 2020 to Q4 of 2021, including 31% SAAS revenue growth, despite the renewed Omicron headwinds we faced in the fourth quarter of 2021. For the eighth straight quarter we showed positive Adjusted EBITDA and have surpassed $300,000 of positive Adjusted EBITDA for the sixth straight quarter. For fiscal year 2021 we not only beat our 2021 revenue goals including software as a service and all recurring revenue goals, we have also surpassed our 2020 revenue numbers by $3.2 million. This has been a great year for Intellinetics despite the many challenges we have faced with COVID and the onset of inflationary pressures.

“Our teams continue to perform at a high level. In 2021, we invested in our new records center and our sales and marketing teams. Our development team continues to deliver industry and customer requested enhancements. We closed 342 orders in 2021, 31% of which were new customer logos for close to $5.9 million in order value, most of which will be recognized over the next one to two years. Our success validates our strategy of both winning new logos and continuing to cross sell to our existing customer base.

“I’m excited for all our target markets as well. We are positioned for 2022 better than ever in our history, and expect to build on the positive Adjusted EBITDA of 2021 while we’re executing on our plan to drive revenue growth in 2022.”

Conference Call

Intellinetics is holding a conference call to discuss these results on Thursday, March 24, 2022, at 4:30 p.m. Eastern Time. The conference call can be accessed by dialing +1 929 205 6099 and providing passcode 83687945879#. 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 April 30, 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, including 2022 revenues and future revenue streams from new and existing customers, 2022 Adjusted EBITDA, future cash flow and other synergies associated with our recent acquisitions of Graphic Sciences and CEO Imaging and the success of our integration efforts, our other and service offerings and partnerships, and in any other industry, market, initiative, service or innovation; cross-selling opportunities Intellinetics’ future revenues, revenue consistency, growth and long-term value, including trends in revenue growth; 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 and Form 10-Q. 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 Income (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 Income (Loss) to Adjusted EBITDA

    For the Three Months Ended
December 31,
 
    2021     2020  
Net income (loss) – GAAP   $ 26,295     $ (1,427,307 )
Change in fair value of earnout liabilities     64,203       1,554,800  
Interest expense, net     112,775       114,959  
Depreciation and amortization     111,693       92,618  
Stock-based compensation     22,959       26,118  
Adjusted EBITDA   $ 337,925     $ 361,188  
    For the Twelve months Ended
December 31,
 
    2021     2020  
Net income (loss) – GAAP   $ 1,357,951     $ (2,200,201 )
Change in fair value of earnout liabilities     141,414       1,554,800  
Interest expense, net     452,120       637,683  
Significant transaction costs           495,440  
Stock and warrant issue expense           377,761  
Depreciation and amortization     413,932       296,935  
Stock-based compensation     149,753       116,270  
Income tax benefit, net           (188,300 )
Gain on extinguishment of debt     (845,083 )     (287,426 )
Adjusted EBITDA   $ 1,670,087     $ 802,962  

INTELLINETICS, INC. and SUBSIDIARY
Consolidated Statements of Operations

    For the Three Months Ended December 31,     For the Twelve Months Ended December 31,  
    2021     2020     2021     2020  
                         
Revenues:                                
Sale of software   $ 4,479     $ 40,788     $ 78,450     $ 194,787  
Software as a service     389,611       298,519       1,441,683       1,055,016  
Software maintenance services     338,219       341,963       1,350,470       1,257,446  
Professional services     1,753,443       1,786,463       7,468,716       5,007,617  
Storage and retrieval services     258,286       228,072       1,120,946       738,525  
Total revenues     2,744,038       2,695,805       11,460,265       8,253,391  
                                 
Cost of revenues:                                
Sale of software     4,778       16,547       14,828       56,664  
Software as a service     91,284       63,860       333,001       273,368  
Software maintenance services     16,711       31,683       81,641       159,122  
Professional services     944,107       915,745       3,709,348       2,553,053  
Storage and retrieval services     78,868       84,163       378,465       220,446  
Total cost of revenues     1,135,748       1,111,998       4,517,283       3,262,653  
                                 
Gross profit     1,608,290       1,583,807       6,942,982       4,990,738  
                                 
Operating expenses:                                
General and administrative     919,277       966,394       4,044,296       3,499,440  
Change in fair value of earnout liabilities     64,203       1,554,800       141,414       1,554,800  
Significant transaction costs                       636,440  
Sales and marketing     374,047       282,343       1,378,352       1,041,367  
Depreciation and amortization     111,693       92,618       413,932       296,935  
Total operating expenses     1,469,220       2,896,155       5,977,994       7,028,982  
                                 
Income (loss) from operations     139,070       (1,312,348 )     964,988       (2,038,244 )
                                 
Other income (expense)                                
Gain on extinguishment of debt                 845,083       287,426  
Interest expense, net     (112,775 )     (114,959 )     (452,120 )     (637,683 )
Total other income (expense)     (112,775 )     (114,959 )     392,963       (350,257 )
                                 
Income (loss) before income taxes     26,295       (1,427,307 )     1,357,951       (2,388,501 )
                                 
Income tax benefit                       188,300  
                                 
Net income (loss)   $ 26,295     $ (1,427,307 )   $ 1,357,951     $ (2,200,201 )
                                 
Basic net income (loss) per share:   $ 0.01     $ (0.51 )   $ 0.48     $ (0.91 )
Diluted net income (loss) per share:   $ 0.01     $ (0.51 )   $ 0.44     $ (0.91 )
                                 
Weighted average number of common shares outstanding – basic     2,823,072       2,810,865       2,822,972       2,406,830  
Weighted average number of common shares outstanding – diluted     3,103,905       2,810,865       3,104,820       2,406,830  

INTELLINETICS, INC. and SUBSIDIARY
Consolidated Balance Sheets

    December 31,     December 31,  
    2021     2020  
ASSETS            
             
Current assets:                
Cash   $ 1,752,630     $ 1,907,882  
Accounts receivable, net     1,176,059       792,380  
Accounts receivable, unbilled     444,782       523,522  
Parts and supplies, net     76,691       79,784  
Other contract assets     78,556       31,283  
Prepaid expenses and other current assets     155,550       130,883  
Total current assets     3,684,268       3,465,734  
                 
Property and equipment, net     1,091,780       698,752  
Right of use assets     3,841,612       2,641,005  
Intangible assets, net     968,496       1,184,971  
Goodwill     2,322,887       2,322,887  
Other assets     53,089       31,284  
Total assets   $ 11,962,132     $ 10,344,633  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                 
Current liabilities:                
Accounts payable   $ 181,521     $ 141,823  
Accrued compensation     343,576       271,889  
Accrued expenses, other     161,862       131,685  
Lease liabilities – current     616,070       518,531  
Deferred revenues     1,194,649       996,131  
Deferred compensation     100,828       100,828  
Earnout liabilities – current     958,818       877,522  
Accrued interest payable – current           5,941  
Notes payable – current           580,638  
Total current liabilities     3,557,324       3,624,988  
                 
Long-term liabilities:                
Notes payable – net of current portion     1,754,527       1,802,184  
Lease liabilities – net of current portion     3,316,682       2,196,951  
Earnout liabilities – net of current portion     671,863       1,566,478  
Total long-term liabilities     5,743,072       5,565,613  
Total liabilities     9,300,396       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 December 31, 2021 and 2020, respectively     2,823       2,811  
Additional paid-in capital     24,297,229       24,147,488  
Accumulated deficit     (21,638,316 )     (22,996,267 )
Total stockholders’ equity     2,661,736       1,154,032  
Total liabilities and stockholders’ equity   $ 11,962,132     $ 10,344,633  

INTELLINETICS, INC. and SUBSIDIARY
Consolidated Statements of Cash Flows

    For the Twelve Months Ended
December 31,
 
    2021     2020  
             
Cash flows from operating activities:                
Net income (loss)   $ 1,357,951     $ (2,200,201 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:                
Depreciation and amortization     413,932       296,935  
Bad debt (recovery) expense     (11,187 )     54,834  
Parts and supplies reserve change     9,000       15,000  
Amortization of deferred financing costs     103,739       117,091  
Amortization of beneficial conversion option           11,786  
Amortization of debt discount     106,666       88,889  
Amortization of right of use asset     614,154       405,227  
Stock issued for services     57,500       57,500  
Stock options compensation     92,253       58,770  
Note conversion stock issue expense           141,000  
Warrant issue expense           236,761  
Interest on converted debt           176,106  
Amortization of original issue discount on notes           18,296  
Gain on extinguishment of debt     (845,083 )     (287,426 )
Change in fair value of earnout liabilities     141,414       1,554,800  
Changes in operating assets and liabilities:                
Accounts receivable     (372,492 )     605,094  
Accounts receivable, unbilled     78,740       (224,128 )
Parts and supplies     (5,907 )     796  
Prepaid expenses and other current assets     (93,745 )     6,745  
Right of use assets            
Accounts payable and accrued expenses     141,562       (645,596 )
Lease liabilities, current and long-term     (597,491 )     (396,292 )
Deferred compensation           (16,338 )
Accrued interest, current and long-term     442       5,940  
Deferred revenues     198,518       43,399  
Total adjustments     32,015       2,325,189  
Net cash provided by operating activities     1,389,966       124,988  
                 
Cash flows from investing activities:                
Cash paid to acquire business, net of cash acquired           (4,019,098 )
Purchases of property and equipment     (590,485 )     (76,854 )
Net cash used in investing activities     (590,485 )     (4,095,952 )
                 
Cash flows from financing activities:                
Payment of earnout liabilities     (954,733 )      
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           3,008,700  
Repayment of notes payable           (170,000 )
Repayment of notes payable – related parties           (47,728 )
Net cash (used in) provided by financing activities     (954,733 )     5,474,681  
                 
Net (decrease) increase in cash     (155,252 )     1,503,717  
Cash – beginning of period     1,907,882       404,165  
Cash – end of period   $ 1,752,630     $ 1,907,882  
                 
Supplemental disclosure of cash flow information:                
Cash paid during the period for interest   $ 242,545     $ 202,291  
Cash paid during the period for income taxes   $ 4,595     $ 117,072  
                 
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  
Right-of-use asset obtained in exchange for operating lease liability     1,814,761        
                 
Supplemental disclosure of non-cash investing activities relating to business acquisitions:                
Cash   $     $ 17,269  
Accounts receivable           1,122,737  
Accounts receivable, unbilled           276,023  
Parts and supplies           91,396  
Prepaid expenses           73,116  
Other current assets           5,954  
Right of use assets           2,885,618  
Property and equipment           735,885  
Intangible assets           1,361,000  
Accounts payable           (168,749 )
Accrued expenses           (162,426 )
Lease liabilities           (2,947,684 )
Federal and state taxes payable           (168,900 )
Deferred revenues           (198,659 )
Deferred tax liabilities, net           (149,900 )
Net assets acquired in acquisition           2,772,680  
Total goodwill acquired in acquisition           2,322,887  
Total purchase price of acquisition           5,095,567  
Purchase price of business acquisition financed with earnout liability           (889,200 )
Purchase price of business acquisition financed with installment payments           (170,000 )
Cash used in business acquisition   $     $ 4,036,367  

Intellinetics Inc



Source link

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy