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Intellinetics, Inc. Reports Year-End Results Modest Revenue Growth including Consistent Software as a Service Growth

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COLUMBUS, OH, April 02, 2018 (GLOBE NEWSWIRE) --

Intellinetics, Inc. (OTCQB:INLX), a cloud-based document solutions provider, announced financial results for the twelve months ended December 31, 2017.

Year End Financial Highlights

  Total Revenue up 1% from 2016.
  Software as a Service Revenue increased 19% from 2016.
  Net Loss decrease of $216,974 from 2016.
  Adjusted EBITDA Loss of $884,749, an improvement of 3% from 2016.

Summary – Year-End Results

Revenues for the twelve months ended December 31, 2017 were $2,623,441 as compared with $2,601,733 for the same period in 2016. Intellinetics reported a net loss of $(1,359,337) and $(1,576,311) for the twelve months ended December 31, 2017 and 2016, respectively, representing a decrease (improvement) of $216,974. Net Loss in 2017 includes a $419,090 one-time gain on retirement of debt. Net loss per share for the twelve months ended December 31, 2017 and 2016 was ($0.08) and ($0.09), respectively.

James F. DeSocio, President & CEO of Intellinetics, stated, "We have begun implementation of our strategy focusing a core group of customers in the Human Services Provider space. We have a unique and differentiated product value proposition, including auditing, compliance and reporting. We have reallocated resources within the company to support this strategy, while at the same time investing in select tools to assist us in demand and lead generation, which will allow us to better control our destiny. These steps are essential for us to scale and grow."

"Looking forward, we plan on reaping the rewards of these focused initiatives during 2018 and beyond. As we continue to focus on increasing our SaaS-based revenues we recognize that short-term revenue recognition on subscription services is generally lower than upfront premise license sales and that the new programs will take some months to bear fruit. We believe this investment and strategic focus will provide greater revenue consistency, higher growth, and deliver the best long-term value to shareholders," DeSocio concluded.

2017 Highlights

  Hired lead generation expert to assist in creating and driving new outbound mailing campaigns.
  Built new content, white papers, case studies, fact sheets, and updated web site to reflect our solutions-focused message for our targeted verticals.
  Developed targeted email campaign process for our primary target industries.
  Educated partner channel with new strategy, and supported "through partner" marketing efforts.

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 organizations 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            
    Year Ended December 31,  
    2017     2016  
Net loss - GAAP   $ (1,359,337 )   $ (1,576,311 )
Interest expense, net     609,851       206,332  
Depreciation and amortization     11,831       10,687  
Share-based compensation     219,045       200,378  
Note issue/conversion warrant expense     52,951       235,405  
Note conversion underwriting expense     0       13,603  
Gain on retirement of debt     (419,090 )     0  
Adjusted EBITDA   $ (884,749 )   $ (909,906 )


INTELLINETICS, INC. and SUBSIDIARY
Consolidated Statements of Operations


    For the Year Ended December 31,  
    2017     2016  
             
Revenues:                
Sale of software   $ 452,238     $ 390,583  
Software as a service     625,557       525,282  
Software maintenance services     966,011       988,690  
Professional services     451,628       502,952  
Third Party services     128,007       194,226  
                 
Total revenues     2,623,441       2,601,733  
                 
Cost of revenues:                
Sale of software     97,899       73,566  
Software as a service     304,512       247,928  
Software maintenance services     120,422       127,805  
Professional services     198,133       135,486  
Third Party services     39,496       125,024  
                 
Total cost of revenues     760,462       709,809  
                 
Gross profit     1,862,979       1,891,924  
                 
Operating expenses:                
General and administrative     2,199,904       2,118,924  
Sales and marketing     819,820       1,132,292  
Depreciation     11,831       10,687  
                 
Total operating expenses     3,031,555       3,261,903  
                 
Loss from operations     (1,168,576 )     (1,369,979 )
                 
Other income (expense)                
Gain on retirement of debt     419,090       -  
Interest expense, net     (609,851 )     (206,332 )
                 
Total other income (expense)     (190,761 )     (206,332 )
                 
Net loss   $ (1,359,337 )   $ (1,576,311 )
                 
Basic and diluted net loss per share:   $ (0.08 )   $ (0.09 )
                 
Weighted average number of common shares outstanding - basic and diluted     17,372,595       16,650,085  


INTELLINETICS, INC. and SUBSIDIARY
Consolidated Balance Sheets


    December 31, 2017     December 31, 2016  
ASSETS                
                 
Current assets:                
Cash   $ 1,125,921     $ 689,946  
Accounts receivable, net     295,815       259,497  
Prepaid expenses and other current assets     162,450       150,620  
                 
Total current assets     1,584,186       1,100,063  
                 
Property and equipment, net     14,760       18,783  
Other assets     10,284       10,285  
                 
Total assets   $ 1,609,230     $ 1,129,131  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
                 
Current liabilities:                
Accounts payable and accrued expenses   $ 471,200     $ 767,197  
Deferred revenues     703,971       665,460  
Deferred compensation     213,166       215,012  
Notes payable - current     875,000       360,496  
Notes payable - related party - current     416,969       38,307  
Total current liabilities     2,680,306       2,046,472  
                 
Long-term liabilities:                
Notes payable - net of current portion     1,221,384       585,782  
Notes payable - related party - net of current portion     312,680       299,447  
Deferred interest expense     -       158,062  
Other long-term liabilities - related parties     29,997       1,125  
                 
Total long-term liabilities     1,564,061       1,044,416  
                 
Total liabilities     4,244,367       3,090,888  
                 
Stockholders' deficit:                
Common stock, $0.001 par value, 50,000,000 shares authorized; 17,426,792 and 16,815,850 shares issued and outstanding at December 31, 2017 and 2016, respectively     30,431       26,816  
Additional paid-in capital     13,648,519       12,966,177  
Accumulated deficit     (16,314,087 )     (14,954,750 )
Total stockholders' deficit     (2,635,137 )     (1,961,757 )
Total liabilities and stockholders' deficit   $ 1,609,230     $ 1,129,131  


INTELLINETICS, INC. and SUBSIDIARY
Consolidated Statements of Cash Flows


    For the Twelve Months Ended December 31,  
    2017     2016  
Cash flows from operating activities:                
Net loss   $ (1,359,337 )   $ (1,576,311 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     11,831       10,687  
Bad debt expense     4,221       23,244  
Loss on disposal of fixed assets     4,816       -  
Amortization of deferred financing costs     132,296       2,832  
Amortization of beneficial conversion option     252,623       -  
Stock issued for services     65,625       62,500  
Stock options compensation     153,420       137,878  
Note conversion warrant expense     -       137,970  
Note offer warrant expense     52,951       97,435  
Gain on retirement of debt     (419,090 )     -  
Changes in operating assets and liabilities:                
Accounts receivable     (40,539 )     (65,713 )
Prepaid expenses and other current assets     (11,829 )     (104,099 )
Accounts payable and accrued expenses     (31,427 )     (24,628 )
Deferred compensation     (1,846 )     -  
Other long-term liabilities - related parties     28,872       (11,727 )
Deferred interest expense     (3,542 )     21,984  
Deferred revenues     38,511       27,267  
Total adjustments     236,893       315,630  
Net cash used in operating activities     (1,122,444 )     (1,260,681 )
                 
Cash flows from investing activities:                
Purchases of property and equipment     (12,624 )     (6,867 )
Net cash used in investing activities     (12,624 )     (6,867 )
                 
Cash flows from financing activities:                
Sale of Common Stock     -       559,285  
Exercise of stock options     -       3,499  
Payment of deferred financing costs     (317,527 )     (53,029 )
Proceeds from notes payable     2,320,000       315,000  
Proceeds from notes payable - related parties     390,000       375,000  
Repayment of notes payable     (786,461 )     (266,573 )
Repayment of notes payable - related parties     (34,969 )     (92,806 )
Net cash provided by financing activities     1,571,043       840,376  
                 
Net increase (decrease) in cash     435,975       (427,172 )
Cash - beginning of period     689,946       1,117,118  
Cash - end of period   $ 1,125,921     $ 689,946  
                 
Supplemental disclosure of cash flow information:                
Cash paid during the period for interest and taxes   $ 170,889     $ 56,702  
                 
Supplemental disclosure of non-cash financing activities:                
Accrued interest notes payable converted to equity   $ -     $ 35,039  
Discount on notes payable for beneficial conversion feature     248,523       121,154  
Discount on notes payable - related parties for beneficial conversion feature     -       144,231  
Discount on notes payable for warrants     103,637       -  
Discount on notes payable - related parties for warrants     61,801       -  
Notes payable conversion warrant expense     -       113,762  
Notes payable conversion underwriting warrant expense     -       24,207  
Notes payable converted to equity     -       135,000  

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

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