Intellinetics(US:INLX)2025-08-13 20:00PART I FINANCIAL INFORMATION Financial Statements Intellinetics' financial statements show decreased assets and liabilities, a widened net loss of $1.30 million, and a 9.7% revenue decline for H1 2025 Condensed Consolidated Balance Sheets Total assets decreased to $17.16 million, liabilities fell to $5.59 million due to debt repayment, and equity rose to $11.56 million Condensed Consolidated Balance Sheet Highlights (in USD) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $4,602,726 | $5,474,556 | ($871,830) | | Cash | $2,071,475 | $2,489,236 | ($417,761) | | Total Assets | $17,158,385 | $18,574,956 | ($1,416,571) | | Total Current Liabilities | $4,678,795 | $6,597,773 | ($1,918,978) | | Notes payable - current | $0 | $1,297,448 | ($1,297,448) | | Total Liabilities | $5,594,713 | $7,943,201 | ($2,348,488) | | Total Stockholders' Equity | $11,563,672 | $10,631,755 | $931,917 | Condensed Consolidated Statements of Operations Q2 2025 saw a net loss of $567,590 on 13.6% lower revenues, while H1 2025 net loss widened to $1.30 million with a 9.7% revenue drop Three Months Ended June 30, Performance (in USD) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $4,010,813 | $4,641,593 | -13.6% | | Gross Profit | $2,726,557 | $3,002,979 | -9.2% | | (Loss) Income from Operations | ($508,478) | $172,106 | -395.4% | | Net (Loss) Income | ($567,590) | $75,050 | -856.3% | | Diluted EPS | ($0.13) | $0.02 | -750.0% | Six Months Ended June 30, Performance (in USD) | Metric | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $8,258,158 | $9,148,677 | -9.7% | | Gross Profit | $5,595,757 | $5,902,623 | -5.2% | | (Loss) Income from Operations | ($1,193,037) | $137,626 | -966.9% | | Net (Loss) Income | ($1,295,155) | ($99,664) | -1200.0% | | Diluted EPS | ($0.31) | ($0.02) | -1450.0% | Condensed Consolidated Statements of Cash Flows H1 2025 operating cash flow significantly decreased to $112,521, leading to an overall cash decrease of $417,761 Six Months Ended June 30, Cash Flow Summary (in USD) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $112,521 | $1,788,381 | | Net cash used in investing activities | ($471,904) | ($398,766) | | Net cash used in financing activities | ($58,378) | ($924,194) | | Net (decrease) increase in cash | ($417,761) | $465,421 | Notes to Condensed Consolidated Financial Statements Notes detail segment operations, accounting policies, significant customer concentration, and the full repayment of all outstanding notes payable - The company operates through two reporting segments: Document Management (software solutions) and Document Conversion (services to convert documents, primarily paper to digital)24 - All outstanding notes payable to both unrelated and related parties were fully prepaid on June 18, 20256467 - The company has significant customer concentration risk, with the State of Michigan accounting for 40% of total revenues for the six months ended June 30, 2025, and 45% for the same period in 202483 Segment Revenue and Gross Profit (Six Months Ended June 30) | Segment | Revenue 2025 | Revenue 2024 | Gross Profit 2025 | Gross Profit 2024 | | :--- | :--- | :--- | :--- | :--- | | Document Management | $3,961,838 | $3,679,508 | $3,414,744 | $3,175,430 | | Document Conversion | $4,296,320 | $5,469,169 | $2,181,013 | $2,727,193 | | Total | $8,258,158 | $9,148,677 | $5,595,757 | $5,902,623 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses H1 2025 revenue decline due to customer volume and sales cycles, increased operating expenses, and debt repayment Executive Overview of Results H1 2025 revenues decreased 9.7% to $8.26 million, with SaaS growth offset by a $1.30 million net loss due to volume and sales cycle issues - Revenue decline was caused by a temporary volume reduction in the document conversion segment before a major contract renewal and longer sales lead times in the document management segment due to economic uncertainty94 Key Financial Results for Six-Month Period 2025 | Metric | H1 2025 | YoY Change | | :--- | :--- | :--- | | Revenues | $8,258,158 | -9.7% | | SaaS Revenues | $3,119,273 | +11.2% | | Cost of Revenues | $2,662,401 | -18.0% | | Operating Expenses | $6,788,794 | +17.8% | | Loss from Operations | ($1,193,037) | N/A (vs. income of $137,626) | | Net Loss | ($1,295,155) | N/A (vs. loss of $99,664) | Results of Operations H1 2025 revenues declined 9.7% due to professional services, offset by SaaS growth, while gross profit margin improved and operating expenses rose - SaaS revenues increased by 11.2% in H1 2025 compared to H1 2024, primarily due to new payables automation customers102 - Professional services revenues decreased by 21.4% in H1 2025, mainly from reduced scanning projects in the Document Conversion segment related to the timing of a contract renewal with its largest customer103 - Overall gross profit percentage increased from 64.5% in H1 2024 to 67.8% in H1 2025, attributed to a favorable revenue mix with a higher proportion of high-margin SaaS revenue107 - Operating expenses rose due to investments in scaling, including expanded SOC2 processes, a larger development team, and an expanded sales team112115 Liquidity and Capital Resources The company holds $2.1 million in cash, fully repaid debt in June 2025, and believes current capital resources are sufficient for 12 months - The company had $2.1 million in cash and cash equivalents as of June 30, 2025120 - All outstanding notes payable were repaid in full on June 18, 2025122 - The company initiated an 'at-the-market' (ATM) offering program, with approximately $8.2 million remaining available as of the filing date121 - Net cash provided by operating activities for H1 2025 was $112,521, a significant decrease from $1,788,381 in H1 2024124 Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as Intellinetics, Inc. is classified as a smaller reporting company - Not applicable to smaller reporting companies129 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective131 - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting133 PART II OTHER INFORMATION Legal Proceedings The company reported no legal proceedings during the period - None136 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors from the Annual Report on Form 10-K for the fiscal year ended December 31, 2024137 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None138 Other Information No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter141 Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including the At the Market Offering Agreement, the contract with the State of Michigan, and various officer certifications