Financial Data and Key Metrics Changes - Total revenue for Q3 2022 increased by 22% to $3.9 million compared to $3.2 million in Q3 2021 [13] - Adjusted EBITDA for Q3 2022 was $790,000, up 48% from Q3 2021, marking the eleventh consecutive positive quarter [12][19] - Net income for Q3 2022 was $218,000, a decrease from $296,000 in the same period last year, primarily due to increased interest expenses [17][18] Business Line Data and Key Metrics Changes - SaaS revenue grew 244% year-over-year, with organic growth at 42% [5][14] - Recurring revenue, including SaaS and software maintenance services, increased by 127% to $1.5 million [14] - Professional services revenue decreased by 7% to $2 million, representing 52% of total revenue compared to 68% in Q3 2021 [15] Market Data and Key Metrics Changes - The K-12 operations now serve over 530 districts, significantly increasing SaaS revenue and doubling the company's presence in this vertical market since the Yellow Folder acquisition [8] - Yellow Folder contributed $710,000 to the revenue increase, indicating strong performance in the K-12 sector [14] Company Strategy and Development Direction - The company is focused on cross-selling services and expanding into new markets, supported by investments in sales and marketing [7] - The acquisition of Yellow Folder is seen as a strategic move to enhance recurring SaaS revenue and EBITDA [9][12] - The company aims to broaden its product portfolio and addressable markets, particularly through the adoption of the new IPAS solution [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, highlighting a strong pipeline and successful integration of Yellow Folder [5][12] - The company expects to continue growing revenues and adjusted EBITDA on a year-over-year basis [22] - Management emphasized the shift towards a more predictable SaaS model as a key driver for sustainable profitability [25] Other Important Information - The company had cash of $3.8 million and total assets of $20.8 million as of September 30, 2022 [21] - Total liabilities were $12.5 million, including $5 million in debt principal [21] Q&A Session Summary Question: What is the visibility for internal growth in 2023? - Management did not provide specific forward-looking visibility but expressed bullish sentiments for continued growth in 2023 [27] Question: Can you provide more details on IPAS? - IPAS is an accounts payable automation solution that significantly reduces headcount requirements and improves processing efficiency, with successful collaborations with Constellation Software [29][30]

Intellinetics, Inc. (NYSE:INLX) Q2 2022 Earnings Conference Call August 15, 2022 4:30 PM ET Company Participants Joe Spain - Chief Financial Officer Jim DeSocio - President and Chief Executive Officer Conference Call Participants Howard Halpern - Taglich Brothers Joe Spain Thank you and good afternoon everyone. My name is Joe Spain and I am the Chief Financial Officer for Intellinetics, Inc. I am pleased to welcome you to our 2022 Second Quarter Conference Call. Before we begin, I would like to remind liste ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________to _________________________ Commission file number: 000-31671 INTELLINETICS, INC. (Exact name of registrant as specified in its charter) Nev ...

Financial Data and Key Metrics Changes - Revenue for Q1 2022 increased by 3% to $2.7 million compared to $2.6 million in Q1 2021 [11] - Adjusted EBITDA for Q1 2022 was $421,000, up 18% from $356,000 in Q1 2021, marking the ninth consecutive positive quarter [9][18] - Net loss for Q1 2022 was $20,000, a significant improvement from a net income of $843,000 in the same period last year [17] Business Line Data and Key Metrics Changes - SaaS revenue grew by 33% year-over-year, contributing to a total of 29% of total revenues after the acquisition of Yellow Folder [4][7] - Recurring revenue, including SaaS, increased by 16% to $768,000, while professional services revenue decreased by 4% to $1.6 million [12][13] - Software revenue increased by 572% to $64,000, reflecting the industry's shift towards cloud solutions [11] Market Data and Key Metrics Changes - The company closed 154 contracts year-to-date in 2022, an 18% increase from 131 contracts in the same period last year, with an estimated total contract value of $3.9 million, up 150% [5] - The acquisition of Yellow Folder added 240 K-12 customers, increasing the total customer base in this market to 500 [6] Company Strategy and Development Direction - The company is focused on expanding its marketing efforts and sales team, which has resulted in increased leads and a stronger sales pipeline [4][10] - The integration of Yellow Folder is seen as a positive move, with expectations for cross-selling opportunities and enhanced EBITDA from high-margin business [7][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that Q1 2022 would be the low point for the year, with signs of improvement in the operating environment [22] - The company remains bullish on future growth, citing strong sales activity and lead generation as indicators of positive momentum [10][27] Other Important Information - Operating expenses increased to $1.54 million, primarily due to transaction costs related to the acquisition of Yellow Folder [15] - The company has maintained control over salary pressures for new hires despite a tight labor market [24] Q&A Session Summary Question: Are there signs that the headwinds from Michigan are starting to abate? - Management confirmed that the first quarter is expected to be the lowest point for the year and noted improvements in the operating environment [22] Question: How is the integration of Yellow Folder going? - Management reported no surprises in the integration process and highlighted the start of building a joint pipeline and campaigns into the Yellow Folder customer base [23] Question: Are there salary pressures for new hires? - Management indicated that they have been able to keep salary pressures under control, although hiring has been slower [24]

[PART I - FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) Presents Intellinetics' unaudited condensed consolidated financial statements and accompanying notes for Q1 2022 and 2021 [Financial Statements](index=6&type=section&id=ITEM%201%2E%20Financial%20Statements%2E) Presents Intellinetics' Q1 2022 and 2021 unaudited consolidated financial statements, covering balance sheets, operations, cash flows, and equity [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The March 31, 2022 balance sheet shows slight asset growth and reclassification of notes payable to current liabilities Condensed Consolidated Balance Sheet Highlights (in USD) | Balance Sheet Item | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $3,908,546 | $3,684,268 | | **Total Assets** | **$12,000,042** | **$11,962,132** | | **Total Current Liabilities** | $5,426,504 | $3,557,324 | | **Total Liabilities** | **$9,277,972** | **$9,300,396** | | **Total Stockholders' Equity** | $2,722,070 | $2,661,736 | - Notes payable of approximately **$1.8 million** were reclassified from long-term to current liabilities, reflecting the upcoming maturity of the 2020 Notes[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2022 net loss of $20,126 contrasts with Q1 2021 net income, primarily due to a prior-year debt extinguishment gain Statement of Operations Summary (in USD) | Metric | Q1 2022 | Q1 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Total Revenues | $2,703,512 | $2,635,219 | +2.6% | | Gross Profit | $1,631,837 | $1,604,904 | +1.7% | | Income from Operations | $92,475 | $110,733 | -16.5% | | Gain on Extinguishment of Debt | $0 | $845,083 | N/A | | **Net (Loss) Income** | **($20,126)** | **$842,772** | **-102.4%** | | Diluted EPS | ($0.01) | $0.27 | N/A | - The significant drop in net income year-over-year is primarily due to the **$845,083 gain on PPP loan forgiveness** recorded in Q1 2021, which was not present in Q1 2022[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Shows increased net cash from operating activities in Q1 2022, improved cash position, and no financing activities Cash Flow Summary (in USD) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $476,171 | $326,869 | | Net Cash from Investing Activities | ($56,043) | ($231,699) | | Net Cash from Financing Activities | $0 | $0 | | **Net Increase in Cash** | **$420,128** | **$95,170** | | **Cash - End of Period** | **$2,172,758** | **$2,003,052** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Discloses business segments, accounting policies, debt, customer concentration, and post-period acquisitions and offerings - The company operates through two reporting segments: Document Management (software platform solutions) and Document Conversion (paper-to-digital conversion and storage services)[27](index=27&type=chunk) Segment Performance for Three Months Ended March 31 (in USD) | Segment | Revenues 2022 | Revenues 2021 | Gross Profit 2022 | Gross Profit 2021 | | :--- | :--- | :--- | :--- | :--- | | Document Management | $914,950 | $735,818 | $734,906 | $587,500 | | Document Conversion | $1,788,562 | $1,899,401 | $896,931 | $1,017,404 | | **Total** | **$2,703,512** | **$2,635,219** | **$1,631,837** | **$1,604,904** | - The company has a significant revenue concentration, with its two largest customers, the State of Michigan and Rocket Mortgage, accounting for **40% and 10% of total revenues**, respectively, in Q1 2022[104](index=104&type=chunk) - Subsequent to the quarter end, on April 1, 2022, the company acquired Yellow Folder, LLC for approximately **$6.5 million in cash** and completed a private placement offering, raising aggregate gross proceeds of **$8.7 million** through the sale of common stock and subordinated notes[112](index=112&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=28&type=section&id=ITEM%202%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%2E) Management discusses Q1 2022 financial performance, revenue, segment challenges, liquidity, and post-period capital events Key Financial Results Q1 2022 | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Revenues | $2,703,512 | +3% | | Income from Operations | $92,475 | -16% | | Net Loss | ($20,126) | N/A (vs. $842,772 income) | | Operating Cash Flow | $476,171 | +45.7% | - The COVID-19 Omicron variant outbreak in Q4 2021 and Q1 2022 caused workflow slowdowns and reduced revenues in the Document Conversion segment, particularly as the State of Michigan, a major customer, had not fully returned to on-site work[130](index=130&type=chunk) - On April 1, 2022, the company acquired Yellow Folder, a document solutions company specializing in the K-12 education market, for approximately **$6.5 million in cash**[125](index=125&type=chunk) - To fund the Yellow Folder acquisition and for general corporate purposes, the company raised **$8.7 million in gross proceeds** on April 1, 2022, through a private offering of common stock and 12% subordinated notes[126](index=126&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Analyzes Q1 2022 operational results, showing 3% revenue growth from Document Management and SaaS, despite a slight gross margin decline Revenues by Source (in USD) | Revenue Source | Q1 2022 | Q1 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Sale of software | $64,491 | $9,594 | +572% | | Software as a service | $431,221 | $323,726 | +33% | | Software maintenance services | $336,602 | $340,446 | -1% | | Professional services | $1,587,948 | $1,652,463 | -4% | | Storage and retrieval services | $283,250 | $308,990 | -8% | | **Total revenues** | **$2,703,512** | **$2,635,219** | **+3%** | - The **33% increase in Software as a Service (SaaS) revenue** was a primary growth driver, resulting from new customers choosing cloud solutions and existing customers expanding their services[138](index=138&type=chunk) - Professional services revenue, the largest component, decreased by **4%** due to the impact of the COVID-19 Omicron variant on Michigan-based operations[140](index=140&type=chunk) - Overall gross margin decreased from **61% to 60%** year-over-year, primarily due to unfavorable margin projects and inflationary pressures on labor costs within the Document Conversion segment[143](index=143&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Details March 31, 2022 liquidity, including a working capital deficit and subsequent capital raise improving financial flexibility - The company had a net working capital deficit of **$1,517,958** as of March 31, 2022, driven by the current portion of notes payable amounting to **$1,807,128**[158](index=158&type=chunk) - Liquidity and cash flows were significantly improved subsequent to the quarter-end through the acquisition of cash-flow positive Yellow Folder and raising approximately **$8.7 million in gross proceeds** from a private placement of stock and notes[159](index=159&type=chunk)[164](index=164&type=chunk) - Management believes that current capital resources, funds from operations, and potential financing options will be sufficient to meet anticipated cash needs for at least the next 12 months[161](index=161&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk%2E) This disclosure is not applicable as the company qualifies as a smaller reporting company - Not applicable to smaller reporting companies[170](index=170&type=chunk) [Controls and Procedures](index=38&type=section&id=ITEM%204%2E%20Controls%20and%20Procedures%2E) Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material internal control changes - Management concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective at a reasonable assurance level[172](index=172&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[174](index=174&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20OTHER%20INFORMATION) Presents other information, including legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits [Legal Proceedings](index=39&type=section&id=ITEM%201%2E%20Legal%20Proceedings%2E) The company reported no legal proceedings during the period - None[177](index=177&type=chunk) [Risk Factors](index=39&type=section&id=ITEM%201A%2E%20Risk%20Factors%2E) No material changes to risk factors from the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - No material changes to the risk factors from the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=ITEM%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%2E) Details the issuance of 8,097 restricted common shares to non-employee directors as part of their annual compensation - On January 6, 2022, the Company issued **8,097 shares of restricted common stock** to non-employee directors as part of their annual compensation[180](index=180&type=chunk) [Defaults Upon Senior Securities](index=39&type=section&id=ITEM%203%2E%20Defaults%20Upon%20Senior%20Securities%2E) The company reported no defaults upon senior securities - None[181](index=181&type=chunk) [Mine Safety Disclosures](index=39&type=section&id=ITEM%204%2E%20Mine%20Safety%20Disclosures%2E) This item is not applicable to the company - Not Applicable[182](index=182&type=chunk) [Other Information](index=39&type=section&id=ITEM%205%2E%20Other%20Information%2E) The company reported no other information - None[183](index=183&type=chunk) [Exhibits](index=39&type=section&id=ITEM%206%2E%20Exhibits%2E) Lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and Inline XBRL documents

Revenue Sources and Risks - The company's two largest clients accounted for approximately 47% and 9% of total revenues for the year ending December 31, 2021, with government contracts representing about 62% of net revenues[87]. - A significant portion of revenues comes from government contracts, which are subject to early termination and funding authorizations, posing risks to financial stability[89]. - Revenue recognition from subscription agreements is ratable over typically one-year terms, meaning a decline in new subscriptions may not be immediately reflected in current revenue[88]. - The company anticipates that adverse economic conditions may lead to delayed or reduced technology purchases by customers[111]. - Any disruptions in service at data centers could lead to revenue reductions and potential customer terminations[117]. Legal and Compliance Risks - Compliance with federal securities laws results in higher expenses compared to privately held companies, impacting resource allocation for growth[90]. - The company may face substantial expenditures due to indemnification obligations for directors and officers, potentially discouraging legal actions against them[91]. - The company is subject to increased litigation risks, which could materially adversely affect its financial condition and operating results[97]. - Claims of intellectual property infringement could lead to increased costs and harm future revenue generation capabilities[98]. Operational Risks - Security breaches could lead to loss of confidential information and significant liabilities, affecting the company's reputation and business operations[92]. - The company is vulnerable to disruptions at third-party data centers, which could harm its business and affect service availability[113]. - The company may incur significant costs and service interruptions if it cannot renew agreements with data center owners on commercially reasonable terms[115]. - The company faces risks related to the recruitment and retention of key personnel, which is critical for its competitive position[118]. - The company relies on the stability of infrastructure software, and weaknesses in this area could negatively impact its products and reputation[119]. Financial Position and Shareholder Impact - The company does not expect to pay any dividends on its common stock for the foreseeable future, as it plans to retain earnings to maintain and expand operations[110]. - The company may need to issue additional securities, which could dilute existing shareholders' ownership and affect stock value[99]. - The common stock is quoted on the OTCQB, leading to limited trading and higher volatility, which may not reflect the actual value of the stock[102]. - The company is subject to loan covenants that may restrict its ability to pay dividends until certain loans are repaid[110]. Economic Conditions - Global economic conditions, including uncertainty and inflation, are likely to adversely affect the company's operating results and financing[111].

Financial Data and Key Metrics Changes - Total revenue for Q3 2021 increased by 26% to $3.2 million compared to $2.5 million in Q3 2020 [18] - Adjusted EBITDA for Q3 2021 was $538,000, marking the sixth consecutive positive quarter and exceeding $300,000 for the fifth consecutive quarter [12][30] - Net income for Q3 2021 was $296,000, up from $156,000 in the same period last year [30] Business Line Data and Key Metrics Changes - Software revenue increased by 9% to $59,000 in Q3 2021 from $54,000 in Q3 2020 [20] - Recurring revenue, which includes SaaS and software maintenance, grew by 11% to $689,000 from $622,000 year-over-year, with SaaS growing at 25% [21][22] - Professional services revenue surged by 34% to $2.2 million, accounting for 68% of total revenue, up from 64% in the same period last year [24] Market Data and Key Metrics Changes - Storage and retrieval services revenue increased by 17% to $259,000 in Q3 2021 compared to $220,000 in Q3 2020 [26] - The company noted a shift in customer preferences from on-premise solutions to cloud solutions, impacting software maintenance revenue negatively by 1% [22] Company Strategy and Development Direction - The company has transitioned to a new warehouse facility in Michigan, increasing capacity while maintaining operating costs [8] - Plans to expand the sales team and enhance marketing initiatives to support growth in key markets and verticals [10] - The business process outsourcing (BPO) service is expected to provide a recurring revenue stream and is a focus for future growth [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory, highlighting a strong pipeline and the ability to meet sales goals for six consecutive quarters [17] - The management team is focused on filling backlogs and ensuring continuous revenue flow from existing and new projects [39] - The company maintains its prior guidance for 2021, expecting to build on positive adjusted EBITDA while driving revenue growth [32] Other Important Information - The company has successfully integrated acquisitions made in early 2020, contributing to revenue stability and growth [12] - Operating expenses increased by 24% to $1.5 million, reflecting higher revenue and expanded sales and marketing efforts [28] Q&A Session Summary Question: Were there any one-time projects that boosted professional services revenue? - Management indicated that while there are always one-time projects, the majority of professional services revenue comes from ongoing contracts, particularly in document conversion [35][36] Question: What are the hiring plans for the sales team? - The company is actively hiring, with plans to add more sales representatives in the coming months to support growth and cross-selling initiatives [40][41] Question: What impact has the new Director of Marketing had on operations? - The Director has successfully integrated the company's websites and is ramping up marketing campaigns, leading to increased website traffic and service inquiries [43][44] Question: What is the pipeline for SaaS in school districts? - The company has a strong partnership with Software Unlimited, which continues to deliver new customers, contributing significantly to revenue [45][46] Question: How much revenue is anticipated from existing customers through cross-selling? - Management expects a meaningful amount of revenue from existing customers, although specific quantifiable numbers were not provided [49]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Former name and former address, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | None. | N/A | N/A | For the Quarterly Period Ended September 30, 2021 ☐ TRANSITION REPORT PURSUA ...

Financial Performance - Revenues for Q2 2021 were $2,909,646, representing a 58% year-over-year growth, while revenues for the six-month period were $5,544,865, reflecting an 82% increase year-over-year [141]. - The Document Management segment generated $791,004 in Q2 2021 and $1,526,822 for the six-month period, while the Document Conversion segment contributed $2,118,642 in Q2 2021 and $4,018,043 for the six-month period [142]. - Software as a Service (SaaS) revenues increased by $127,461, or 51%, in Q2 2021 compared to Q2 2020, and by $225,093, or 47%, for the six-month period [145]. - The company reported a net income of $192,447 for Q2 2021, with basic and diluted net income per share of $0.07 and $0.06, respectively [141]. - Professional services revenues increased by $852,101, or 81%, in Q2 2021 compared to Q2 2020, and increased by $1,944,534, or 121%, in the six-month period 2021 compared to the same period in 2020 [147]. - Storage and retrieval services revenues increased by $77,016, or 35%, in Q2 2021 compared to Q1 2020, and increased by $313,709, or 108%, during the six-month period 2021 compared to the same period in 2020 [148]. - Total cost of revenues increased by $430,790, or 65%, in Q2 2021 compared to Q2 2020, and increased by $992,685, or 88%, during the six-month period 2021 compared to the same period in 2020 [150]. - Overall gross profit decreased to 62% in Q2 2021 from 63% in Q2 2020, and decreased to 62% for the six-month period 2021 from 63% during the same period in 2020 [151]. Expenses and Cash Flow - General and administrative expenses increased by $213,404, or 25%, in Q2 2021 compared to Q2 2020, and increased by $408,227, or 24%, in the six-month period 2021 compared to the same period in 2020 [159]. - Sales and marketing expenses increased by $111,722, or 49%, in Q2 2021 compared to Q2 2020, and increased by $158,344, or 33%, during the six-month period 2021 compared to the same period in 2020 [162]. - Operating cash flow for the six-month period 2021 was $587,120, with capital expenditures amounting to $399,638 [141]. - Net cash provided by operating activities during the first half of 2021 was $587,120, compared to a net cash used of $132,287 in the same period of 2020 [174]. - Net cash used in investing activities in the first half of 2021 was $399,638, primarily for purchases related to the new warehouse, compared to $4,039,743 in the same period of 2020 for acquisitions [175]. - Net cash used by financing activities during the first half of 2021 amounted to $954,733 due to earnout liabilities payments, compared to $5,644,681 provided in the same period of 2020 [176]. Debt and Capital Resources - The company reported a gain on extinguishment of debt of $845,083 during the six-month period 2021, reflecting the full forgiveness of the principal and interest on the PPP Note [164]. - Interest expense decreased by $3,525, or 3%, in Q2 2021 compared to Q2 2020, and decreased by $180,911, or 44% during the first half of 2021 compared to the same period in 2020 [166]. - The company reduced its outstanding debt by approximately $3 million during 2020 and has not incurred any new debt in 2021 [168]. - The only outstanding long-term indebtedness as of June 30, 2021, consisted of $2,000,000 in 2020 notes with no accrued interest [171]. - The company expects its capital resources will be sufficient to meet anticipated cash needs for at least the next 12 months [170]. - The company committed to purchase warehouse racking for $351,854 during the first half of 2021, with $300,276 purchased as of June 30, 2021 [172]. - The company received aggregate gross proceeds of $3.5 million from a private placement of common stock [173]. Employee and Operational Impact - The company had 115 employees as of June 30, 2021, including 10 part-time employees [141]. - The majority of employees in Ohio continue to work remotely, affecting client operations across various states [137]. - The impact of COVID-19 resulted in an estimated $655,000 reduction in revenue for the Document Conversion segment in Q2 2020 [142]. - The company expects continued weakened demand due to reduced governmental and small-business spending amid economic uncertainty [137]. - The acquisition of Graphic Sciences accounted for $1,843,221 of revenues in Q1 2021, compared to $556,254 in Q1 2020, constituting 91% of the revenue increase [142]. - Income tax benefit was $0 during the six-month period 2021 compared to $188,300 during the same period in 2020 [165].

Revenue Growth - Revenues for Q1 2021 were $2,635,219, representing a 117% year-over-year growth[143]. - Document Management segment revenues were $735,818, while Document Conversion segment revenues were $1,899,401 for Q1 2021[145]. - Professional services revenues increased by $1,092,434, or 195%, in Q1 2021 compared to Q1 2020, largely due to the acquisition of Graphic Sciences[149]. - Storage and retrieval services revenues saw a significant increase of $236,692, or 327%, in Q1 2021 compared to Q1 2020[150]. - The acquisition of Graphic Sciences accounted for $1,843,221 of total revenues in Q1 2021, contributing 91% to the revenue increase[145]. - Software as a service revenues increased by $97,732, or 43%, in Q1 2021 compared to Q1 2020, driven by customer preference for cloud-based solutions[147]. Profitability and Income - Net income for Q1 2021 was $842,772, with basic and diluted net income per share of $0.30[143]. - Overall gross margin increased to 77% in Q1 2021 from 69% in Q1 2020, excluding Graphic Sciences, driven by a favorable product mix[152]. - Gross margin for software as a service (SaaS) increased to 76% in Q1 2021 from 68% in Q1 2020, due to improved implementation efficiencies[154]. Expenses and Costs - Total cost of revenues increased by $582,776, or 130%, in Q1 2021 compared to Q1 2020, primarily due to the acquisition of Graphic Sciences[151]. - Cost of professional services rose by $559,733, or 204%, in Q1 2021 compared to Q1 2020, mainly due to the acquisition of Graphic Sciences[156]. - General and administrative expenses increased by $173,941, or 20%, in Q1 2021, largely reflecting the addition of Graphic Sciences expenses[159]. - Cost of storage and retrieval services increased by $75,411, or 480%, in Q1 2021 compared to Q1 2020, attributed to the full inclusion of Graphic Sciences services[157]. Cash Flow and Financial Position - Operating cash flow for Q1 2021 was $326,869, while capital expenditures were $231,699[143]. - Net cash provided by operating activities was $326,869 in Q1 2021, compared to a net cash used of $143,951 in Q1 2020[174]. - Net cash used in investing activities was $231,699 in Q1 2021, significantly lower than $3,896,726 in Q1 2020, which was primarily for acquiring Graphic Sciences[175]. - Cash and cash equivalents as of March 31, 2021, were $2,003,052, with net working capital of $455,067[167]. Debt and Financing - The company received full forgiveness of a PPP loan amounting to $838,700 on January 20, 2021[136]. - Interest expense decreased by $177,386, or 61%, in Q1 2021 compared to Q1 2020, due to lower net debt[166]. Workforce - As of March 31, 2021, the company had 100 employees, including 10 part-time employees[144].