What changed in INTELLINETICS, INC.'s 10-K — 2024 vs 2025

Financial Statements INTELLINETICS, INC. and SUBSIDIARIES Consolidated Balance Sheets December 31, December 31, 2024 2023 ASSETS Current assets: Cash $ 2,489,236 $ 1,215,248 Accounts receivable, net 1,111,504 1,850,375 Accounts receivable, unbilled 1,296,524 1,320,837 Parts and supplies, net 100,561 110,272 Contract assets 139,696 140,165 Prepaid expenses and other current assets 337,035 367,478 Total current assets 5,474,556 5,004,375 Property and equipment, net 1,093,867 924,257 Right of use assets, operating 1,894,866 2,532,928 Right of use assets, finance 237,741 219,777 Intangible assets, net 3,399,029 3,909,338 Goodwill 5,789,821 5,789,821 Other assets 685,076 645,764 Total assets $ 18,574,956 $ 19,026,260 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 310,623 $ 194,454 Accrued compensation 493,700 337,884 Accrued expenses 172,421 164,103 Lease liabilities, operating - current 842,468 712,607 Lease liabilities, finance - current 69,261 49,926 Deferred revenues 3,411,852 2,927,808 Notes payable - current 781,936 - Notes payable - related party - current 515,512 - Notes payable current 515,512 - Total current liabilities 6,597,773 4,386,782 Long-term liabilities: Notes payable - 2,209,242 Notes payable - related party - 560,602 Notes payable - 560,602 Lease liabilities, operating - net of current portion 1,161,404 1,942,970 Lease liabilities, finance - net of current portion 184,024 175,943 Total long-term liabilities 1,345,428 4,888,757 Total liabilities 7,943,201 9,275,539 Stockholders’ equity: Common stock, $ 0.001 par value, 25,000,000 shares authorized; 4,249,735 and 4,113,621 shares issued and outstanding at December 31, 2024 and 2023, respectively 4,250 4,114 Additional paid-in capital 32,268,743 30,841,630 Accumulated deficit (21,641,238 ) (21,095,023 ) Total stockholders’ equity 10,631,755 9,750,721 Total liabilities and stockholders’ equity $ 18,574,956 $ 19,026,260 See Notes to these Consolidated financial statements F-2 INTELLINETICS, INC. and SUBSIDIARIES Consolidated Statements of Operations 2024 2023 For the Twelve Months Ended December 31, 2024 2023 Revenues: Sale of software $ 32,946 $ 100,260 Software as a service 5,688,936 5,133,215 Software maintenance services 1,410,387 1,407,064 Professional services 9,985,028 9,167,428 Storage and retrieval services 901,076 1,078,414 Total revenues 18,018,373 16,886,381 Cost of revenues: Sale of software 8,486 25,736 Software as a service 856,774 889,135 Software maintenance services 57,667 59,373 Professional services 5,222,517 4,992,826 Storage and retrieval services 348,003 355,356 Total cost of revenues 6,493,447 6,322,426 Gross profit 11,524,926 10,563,955 Operating expenses: General and administrative 8,166,567 6,455,088 Sales and marketing 2,403,251 2,026,871 Depreciation and amortization 1,128,613 974,527 Total operating expenses 11,698,431 9,456,486 (Loss) income from operations (173,505 ) 1,107,469 Interest expense, net (372,710 ) (588,203 ) Net (loss) income $ (546,215 ) $ 519,266 Basic net (loss) income per share: $ (0.13 ) $ 0.13 Diluted net (loss) income per share: $ (0.13 ) $ 0.11 Weighted average number of common shares outstanding - basic 4,201,401 4,074,194 Weighted average number of common shares outstanding - diluted 4,201,401 4,652,058 See Notes to these Consolidated financial statements F-3 INTELLINETICS, INC. and SUBSIDIARIES Consolidated Statement of Stockholders’ Equity For the Twelve Months Ended December 31, 2024 and 2023 Shares Amount Capital Deficit Total Common Stock Additional Paid-in Accumulated Shares Amount Capital Deficit Total Balance, December 31, 2022 4,073,757 $ 4,074 $ 30,179,017 $ (21,614,289 ) $ 8,568,802 Stock Issued to Directors 39,864 40 198,084 - 198,124 Stock option compensation - - 464,529 - 464,529 Net income - - - 519,266 519,266 Balance, December 31, 2023 4,113,621 $ 4,114 $ 30,841,630 $ (21,095,023 ) $ 9,750,721 Balance, December 31, 2023 4,113,621 $ 4,114 $ 30,841,630 $ (21,095,023 ) $ 9,750,721 Balance 4,113,621 $ 4,114 $ 30,841,630 $ (21,095,023 ) $ 9,750,721 Stock option compensation - - 690,819 - 690,819 Stock option exercise 18,929 19 (19 ) - - Restricted share issuance 117,185 117 736,313 - 736,430 Net loss - - - (546,215 ) (546,215 ) Net (loss) income - - - (546,215 ) (546,215 ) Balance, December 31, 2024 4,249,735 $ 4,250 $ 32,268,743 $ (21,641,238 ) $ 10,631,755 Balance 4,249,735 $ 4,250 $ 32,268,743 $ (21,641,238 ) $ 10,631,755 See Notes to these Consolidated financial statements F-4 INTELLINETICS, INC. and SUBSIDIARIES Consolidated Statements of Cash Flows 2024 2023 For the Twelve Months Ended December 31, 2024 2023 Cash flows from operating activities: Net (loss) income $ (546,215 ) $ 519,266 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 1,128,613 974,527 Bad debt (recovery) expense (9,117 ) 77,211 Loss on disposal of fixed assets 547 - Amortization of deferred financing costs 152,604 177,164 Amortization of debt discount - 22,045 Amortization of right of use assets, financing 71,326 42,115 Stock issued for services - 198,124 Share-based compensation 1,496,774 464,529 Changes in operating assets and liabilities: Accounts receivable 747,988 (806,503 ) Accounts receivable, unbilled 24,313 (724,427 ) Parts and supplies 9,711 (37,051 ) Prepaid expenses and other current assets 30,912 (101,799 ) Accounts payable and accrued expenses 280,303 (200,444 ) Operating lease assets and liabilities, net (13,643 ) 6,158 Deferred revenues 484,044 173,744 Total adjustments 4,404,375 265,393 Net cash provided by operating activities 3,858,160 784,659 Cash flows from investing activities: Capitalization of internal use software (388,570 ) (436,837 ) Purchases of property and equipment (439,203 ) (111,240 ) Net cash used in investing activities (827,773 ) (548,077 ) Cash flows from financing activities: Payment of earnout liabilities - (700,000 ) Other net changes in finance lease assets and liabilities - (2,411 ) Principal payments on financing lease liability (61,874 ) (34,954 ) Payments to taxing authorities in connection with shares directly withheld from employees (69,525 ) - Repayment of notes payable (1,307,169 ) (980,450 ) Repayment of notes payable - related parties (317,831 ) - Net cash used in financing activities (1,756,399 ) (1,717,815 ) Net increase (decrease) in cash 1,273,988 (1,481,233 ) Cash - beginning of period 1,215,248 2,696,481 Cash - end of period $ 2,489,236 $ 1,215,248 Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 258,646 $ 418,790 Cash paid during the period for income taxes $ 20,259 $ 21,667 Supplemental disclosure of non-cash financing activities: Right-of-use asset obtained in exchange for finance lease liability $ 89,289 $ 107,610 See Notes to these Consolidated financial statements F-5 INTELLINETICS, INC.

AND SUBSIDIARY Notes to Consolidated Financial Statements 1. Business Organization and Nature of Operations Intellinetics, Inc., formerly known as GlobalWise Investments, Inc., is a Nevada corporation incorporated in 1997, with two wholly-owned subsidiaries: Intellinetics Ohio and Graphic Sciences.

Basis of Presentation The accompanying audited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). We have evaluated subsequent events through the issuance of this Form 10-K. 3.

Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements accompanying these notes include the accounts of Intellinetics and the accounts of all its subsidiaries in which it holds a controlling interest.

Under GAAP, consolidation is generally required for investments of more than 50 % of the outstanding voting stock of an investee, except when control is not held by the majority owner. We have two subsidiaries: Intellinetics Ohio and Graphic Sciences.

We consider the criteria established under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810, “Consolidations” in the consolidation process. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions.

Such estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses. By their nature, these estimates and assumptions are subject to an inherent degree of uncertainty.

The impact of inflation, as well as COVID-19, has significantly increased economic and demand uncertainty. Because future events and their effects cannot be determined with precision, actual results could differ significantly from estimated amounts.

Significant estimates and assumptions include credit loss allowances related to receivables, accounts receivable -unbilled, the recoverability of long-term assets, depreciable lives of property and equipment, fair value for goodwill and intangibles, right-of-use assets and lease liabilities, estimates of fair value deferred taxes and related valuation allowances.

Our management monitors these risks and assesses our business and financial risks on a quarterly basis.

Revenue Recognition In accordance with ASC 606, “Revenue From Contracts With Customers,” we follow a five-step model to assess each contract of a sale or service to a customer: identify the legally binding contract, identify the performance obligations, determine the transaction price, allocate the transaction price, and determine whether revenue will be recognized at a point in time or over time.

Revenue is recognized when a performance obligation is satisfied and the customer obtains control of promised goods and services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods and services.

In addition, ASC 606 requires disclosures of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We categorize revenue as software, software as a service, software maintenance services, professional services, and storage and retrieval services.

We earn the majority of our revenue from the sale of professional services, followed by the sale of software maintenance services and software as a service.

We apply our revenue recognition policies as required in accordance with ASC 606 based on the facts and circumstances of each category of revenue. a) Sale of software Revenues included in this classification typically include sales of licenses with professional services to new customers, additional software licenses to existing customers, and sales of software with or without services to our resellers (See section j) - Reseller Agreements, below.

Our software licenses are functional intellectual property and typically provide customers with the right to use our software in perpetuity as it exists when made available to the customer. We recognize revenue from software licenses at a point in time upon delivery, provided all other revenue recognition criteria are met.

F-6 b) Sale of software as a service Sale of software as a service (“SaaS”) consists of revenues from arrangements that provide customers the use of our software applications, as a service, typically billed on a monthly or annual basis.

Advance billings of these services are not recorded to the extent that the term of the arrangement has not commenced and payment has not been received.

Revenue on these services is recognized over the contract period. c) Sale of software maintenance services Software maintenance services revenues consist of revenues derived from arrangements that provide post-contract support (“PCS”), including software support and bug fixes, to our software license holders.

Advance billings of PCS are not recorded to the extent that the term of the PCS has not commenced and payment has not been received. PCS are considered distinct services.

However, these distinct services are considered a single performance obligation consisting of a series of services that are substantially the same and have the same pattern of transfer to the customer.

These revenues are recognized over the term of the maintenance contract. d) Sale of professional services Professional services revenues consist of revenues from document scanning and conversion services, consulting, discovery, training, and advisory services to assist customers with document management needs, as well as repair and maintenance services for customer equipment.

We recognize professional services revenue over time as the services are delivered using an input or output method (e.g., labor hours incurred as a percentage of total labor hours budgeted, images scanned, or similar milestones), as appropriate for the contract, provided all other revenue recognition criteria are met. e) Sale of storage and retrieval services Sale of document storage and retrieval services consist principally of secured warehouse storage of customer documents, which are typically retained for many years, as well as retrieval per agreement terms and certified destruction if desired.

We recognize revenue from document storage and retrieval services over the term of the contract for storage and for the retrieval and destructions components, as the services are delivered.

Customers are generally billed monthly based upon contractually agreed-upon terms. f) Arrangements with multiple performance obligations In addition to selling software licenses, software as a service, software maintenance services, professional services, and storage and retrieval services on a stand-alone basis, a portion of our contracts include multiple performance obligations.

For contracts with multiple performance obligations, we allocate the transaction price of the contract to each distinct performance obligation, on a relative basis using its standalone selling price. We determine the standalone selling price based on the price charged for the deliverable when sold separately.

F-7 g) Contract balances When the timing of our delivery of goods or services is different from the timing of payments made by customers, we recognize either a contract asset (performance precedes contractual due date) or a contract liability (customer payment precedes performance). Customers that prepay are represented by deferred revenue until the performance obligation is satisfied.

Contract assets represent arrangements in which the good or service has been delivered but payment is not yet due. Our contract assets consisted of accounts receivable, unbilled, which are disclosed on the consolidated balance sheets, as well as contract assets which are comprised of employee sales commissions paid in advance of contract periods ending.

Our contract liabilities consisted of deferred (unearned) revenue, which is generally related to software as a service or software maintenance contracts. We classify deferred revenue as current based on the timing of when we expect to recognize revenue, which are disclosed on the consolidated balance sheets.

The following tables present changes in our accounts receivable and contract assets during the years ended December 31, 2024, and 2023: Schedule of Changes in Contract Assets and Liabilities Balance at Beginning of Period Billings Payments Received Balance at End of Period Year ended December 31, 2024 Accounts receivable $ 1,850,375 $ 18,712,905 $ (19,451,776 ) $ 1,111,504 Year ended December 31, 2023 Accounts receivable $ 1,121,083 $ 16,389,136 $ (15,659,844 ) $ 1,850,375 Balance at Beginning of Period Revenue Recognized in Advance of Billings Billings Balance at End of Period Year ended December 31, 2024 Accounts receivable, unbilled $ 1,320,837 $ 5,812,863 $ (5,837,176 ) $ 1,296,524 Year ended December 31, 2023 Accounts receivable, unbilled $ 596,410 $ 5,195,866 $ (4,471,439 ) $ 1,320,837 Balance at Beginning of Period Commissions Paid Commissions Recognized Balance at End of Period Year ended December 31, 2024 Other contract assets $ 140,165 $ 173,417 $ (173,886 ) $ 139,696 Year ended December 31, 2023 Other contract assets $ 80,378 $ 194,455 $ (134,668 ) $ 140,165 h) Deferred revenue Amounts that have been invoiced are recognized in accounts receivable, deferred revenue or revenue, depending on whether the revenue recognition criteria have been met.

Deferred revenue represents amounts billed for which revenue has not yet been recognized.

Deferred revenues typically relate to maintenance and software as a service agreements which have been paid for by customers prior to the performance of those services, and payments received for professional services and license arrangements and software as a service performance obligations that have been deferred until fulfilled under our revenue recognition policy.

Remaining performance obligations represent the transaction price from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately 99 % of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter.

As of December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations for software as a service and software maintenance contracts with a duration greater than one year was $ 44,971 .

As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations for software as a service and software maintenance contracts with a duration greater than one year was $ 72,212 .

This does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less.

The following table presents changes in our contract liabilities during the years ended December 31, 2024 and 2023: Balance at Beginning of Period Billings Recognized Revenue Balance at End of Period Year ended December 31, 2024 Contract liabilities: Deferred revenue $ 2,927,808 $ 8,071,221 $ (7,587,177 ) $ 3,411,852 Year ended December 31, 2023 Contract liabilities: Deferred revenue $ 2,754,064 $ 7,808,195 $ (7,634,451 ) $ 2,927,808 i) Rights of return and customer acceptance We do not generally offer variable consideration, financing components, rights of return or any other incentives such as concessions, product rotation, or price protection and, therefore, does not provide for or make estimates of rights of return and similar incentives.

Our largest customer awards long-term contracts through a competitive bidding process that is open as of the date of this Report.

We believe we are well suited to continue to provide services to this client, but there can be no assurance that we will be awarded continuing contracts or that our work volumes with this customer will continue at their current levels and/or pricing. Revenues from a limited number of customers have accounted for a substantial percentage of our total revenues.

Our ability to make scheduled payments on or to refinance any debt or contingent transaction obligations that we have or may incur depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, and other factors beyond our control.

We currently have approximately $1.3 million in principal amount of debt maturing in December of 2025. In addition, prior to 2021, we operated with a history of losses. For 2024, we had net loss of approximately $0.5 million, including $1.4 million in total non-cash share-based compensation expense, an increase of $0.8 million from 2023.

For 2023, we had net income of approximately $0.5 million. For 2022, we had a net income of approximately zero (break-even). For 2021, we had a net income of $1.4 million, including $0.8 million of PPP forgiveness income. For 2020, we had a net loss of $2.2 million, including a change in fair value of earnout liabilities of $1.6 million.

During adverse economic conditions, many customers delay or reduce technology purchases.

The monthly rental payment is $44,929, with gradually higher annual increases each September up to $45,828 for the final year, and with a lease term continuing until August 31, 2026.