Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 21, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 000-31671 | ||
Entity Registrant Name | INTELLINETICS, INC. | ||
Entity Central Index Key | 0001081745 | ||
Entity Tax Identification Number | 87-0613716 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Address, Address Line One | 2190 Dividend Drive | ||
Entity Address, City or Town | Columbus | ||
Entity Address, State or Province | OH | ||
Entity Address, Postal Zip Code | 43228 | ||
City Area Code | (614) | ||
Local Phone Number | 921-8170 | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Trading Symbol | INLX | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 8,957,777 | ||
Entity Common Stock, Shares Outstanding | 2,831,169 | ||
Documents Incorporated by Reference | Portions of the registrant’s definitive Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2021, are incorporated by reference in Part III hereof. | ||
ICFR Auditor Attestation Flag | false | ||
Auditor Firm ID | 1808 | ||
Auditor Name | GBQ Partners LLC | ||
Auditor Location | Columbus, Ohio |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
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 |
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 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 2,823,072 | 2,810,865 |
Common stock, shares outstanding | 2,823,072 | 2,810,865 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues: | ||
Total revenues | $ 11,460,265 | $ 8,253,391 |
Cost of revenues: | ||
Total cost of revenues | 4,517,283 | 3,262,653 |
Gross profit | 6,942,982 | 4,990,738 |
Operating expenses: | ||
General and administrative | 4,044,296 | 3,499,440 |
Change in fair value of earnout liabilities | 141,414 | 1,554,800 |
Significant transaction costs | 636,440 | |
Sales and marketing | 1,378,352 | 1,041,367 |
Depreciation and amortization | 413,932 | 296,935 |
Total operating expenses | 5,977,994 | 7,028,982 |
Income (loss) from operations | 964,988 | (2,038,244) |
Other income (expense) | ||
Gain on extinguishment of debt | 845,083 | 287,426 |
Interest expense, net | (452,120) | (637,683) |
Total other income (expense), net | 392,963 | (350,257) |
Income (loss) before income taxes | 1,357,951 | (2,388,501) |
Income tax benefit | 188,300 | |
Net income (loss) | $ 1,357,951 | $ (2,200,201) |
Basic net income (loss) per share: | $ 0.48 | $ (0.91) |
Diluted net income (loss) per share: | $ 0.44 | $ (0.91) |
Weighted average number of common shares outstanding - basic | 2,822,972 | 2,406,830 |
Weighted average number of common shares outstanding - diluted | 3,104,820 | 2,406,830 |
Sale of Software [Member] | ||
Revenues: | ||
Total revenues | $ 78,450 | $ 194,787 |
Cost of revenues: | ||
Total cost of revenues | 14,828 | 56,664 |
Software as a Service [Member] | ||
Revenues: | ||
Total revenues | 1,441,683 | 1,055,016 |
Cost of revenues: | ||
Total cost of revenues | 333,001 | 273,368 |
Software Maintenance Services [Member] | ||
Revenues: | ||
Total revenues | 1,350,470 | 1,257,446 |
Cost of revenues: | ||
Total cost of revenues | 81,641 | 159,122 |
Professional Services [Member] | ||
Revenues: | ||
Total revenues | 7,468,716 | 5,007,617 |
Cost of revenues: | ||
Total cost of revenues | 3,709,348 | 2,553,053 |
Storageand Retrieval Services [Member] | ||
Revenues: | ||
Total revenues | 1,120,946 | 738,525 |
Cost of revenues: | ||
Total cost of revenues | $ 378,465 | $ 220,446 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 371 | $ 14,419,437 | $ (20,796,066) | $ (6,376,258) |
Beginning balance, shares at Dec. 31, 2019 | 370,497 | |||
Stock Issued to Directors | $ 16 | 57,484 | 57,500 | |
Stock Issued to Directors, shares | 16,429 | |||
Stock Option Compensation | 58,770 | 58,770 | ||
Stock Issued | $ 955 | 3,819,045 | 3,820,000 | |
Stock Issued, shares | 955,000 | |||
Stock Issued for Convertible Notes | $ 1,469 | 5,728,566 | 5,730,035 | |
Stock Issued for Convertible Notes, shares | 1,468,939 | |||
Equity Issuance Costs | (307,867) | (307,867) | ||
Note Offer Warrants | 372,053 | 372,053 | ||
Net Income | (2,200,201) | (2,200,201) | ||
Ending balance, value at Dec. 31, 2020 | $ 2,811 | 24,147,488 | (22,996,267) | 1,154,032 |
Ending balance, shares at Dec. 31, 2020 | 2,810,865 | |||
Stock Issued to Directors | $ 12 | 57,488 | 57,500 | |
Stock Issued to Directors, shares | 12,207 | |||
Stock Option Compensation | 92,253 | 92,253 | ||
Net Income | 1,357,951 | 1,357,951 | ||
Ending balance, value at Dec. 31, 2021 | $ 2,823 | $ 24,297,229 | $ (21,638,316) | $ 2,661,736 |
Ending balance, shares at Dec. 31, 2021 | 2,823,072 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 1,357,951 | $ (2,200,201) |
Adjustments to reconcile net income (loss) to net cash provided by 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 | 635,649 | 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 |
Accounts payable and accrued expenses | 141,562 | (645,596) |
Lease liabilities, current and long-term | (618,986) | (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 | 1,836,256 | |
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 |
Business Organization and Natur
Business Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Organization and Nature of Operations | 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, Inc., an Ohio corporation (“Intellinetics Ohio”), and Graphic Sciences, Inc., a Michigan corporation (“Graphic Sciences”). Intellinetics Ohio was incorporated in 1996, and on February 10, 2012, Intellinetics Ohio became our sole operating subsidiary as a result of a reverse merger and recapitalization. On March 2, 2020, we purchased all the outstanding capital stock of Graphic Sciences. Our digital transformation products and services are provided through two reporting segments: Document Management and Document Conversion. Our Document Management segment, which includes the CEO Imaging Systems, Inc. (“CEO Image”) asset acquisition in April 2020, consists primarily of solutions involving our software platform, allowing customers to capture and manage their documents across operations such as scanned hard-copy documents and digital documents including those from Microsoft Office 365, digital images, audio, video and emails. Our Document Conversion segment, which includes and primarily consists of the Graphic Sciences acquisition, provides assistance to customers as a part of their overall document strategy to convert documents from one medium to another, predominantly paper to digital, including migration to our software solutions, as well as long-term storage and retrieval services. Our solutions create value for customers by making it easy to connect business-critical documents to the people who need them by making those documents easy to find and access, while also being secure and compliant with the customers’ audit requirements. Solutions are sold both directly to end-users and through resellers. |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 2. Basis of Presentation The accompanying audited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). We have evaluated subsequent events through the issuance of this Form 10-K. |
Corporate Actions
Corporate Actions | 12 Months Ended |
Dec. 31, 2021 | |
Corporate Actions | |
Corporate Actions | 3. Corporate Actions On March 20, 2020, we effected a one-for-fifty (1-for-50) reverse stock split of our common stock. All share and per share amounts herein have been adjusted to reflect the reverse stock split. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 4. 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 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 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 valuation allowances related to receivables, accounts receivable -unbilled, the recoverability of long-term assets, depreciable lives of property and equipment, purchase price allocations for acquisitions, fair value for goodwill and intangibles, the 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. 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. 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 other 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 table presents changes in our contract assets during the years ended December 31, 2021, and 2020: Schedule of Changes in Contract Assets and Liabilities Balance at Addition Revenue Billings Balance at Year ended December 31, 2021 Accounts receivable, unbilled $ 523,522 $ - $ 4,213,550 $ (4,292,290 ) $ 444,782 Other contract assets $ 31,283 $ - $ 88,168 $ 40,895 $ 78,556 Year ended December 31, 2020 Accounts receivable, unbilled $ 23,371 $ 276,023 $ 917,361 $ (693,233 ) $ 523,522 Other contract assets $ 19,670 $ - $ 36,954 $ 25,341 $ 31,283 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 be 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 16,835 45,323 The following table presents changes in our contract liabilities during the years ended December 31, 2021 and 2020: Balance at Addition Billings Recognized Balance at Year ended December 31, 2021 Contract liabilities: Deferred revenue $ 996,131 $ - $ 3,700,828 $ (3,502,310 ) $ 1,194,649 Year ended December 31, 2020 Contract liabilities: Deferred revenue $ 754,073 $ 198,659 $ 3,038,446 $ (2,995,047 ) $ 996,131 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 contracts with customers generally do not include customer acceptance clauses. j) Reseller agreements We execute certain sales contracts through resellers. We recognize revenues relating to sales through resellers when all the recognition criteria have been met including passing of control. In addition, we assess the credit-worthiness of each reseller, and if the reseller is undercapitalized or in financial difficulty, any revenues expected to emanate from such resellers are deferred and recognized only when cash is received and all other revenue recognition criteria are met. k) Contract costs We capitalize the incremental costs of obtaining a contract with a customer. We have determined that certain sales commissions meet the requirement to be capitalized, and we amortize these costs on a consistent basis with the pattern of transfer of the goods and services in the contract. Total capitalized costs to obtain contracts are included in other contract assets on our consolidated balance sheets. l) Sales taxes Sales taxes charged to and collected from customers as part of our sales transactions are excluded from revenues, as well as the determination of transaction price for contracts with multiple performance obligations, and recorded as a liability to the applicable governmental taxing authority. m) Disaggregation of revenue We provide disaggregation of revenue based on product groupings in our consolidated statements of operations as we believes this best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Revenues from contracts are primarily within the United States. International revenues were not material to the consolidated financial statements for the years ended December 31, 2021 and 2020. n) Significant financing component Our customers typically do not pay in advance for goods or services to be transferred in excess of one year. As such, it is not necessary to determine if we benefit from the time value of money and should record a component of interest income related to the upfront payment due to the practical expedient of ASC 606-10-32-18. Concentrations of Credit Risk We maintain our cash with high credit quality financial institutions. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit. The number of customers that comprise our customer base, along with the different industries, governmental entities and geographic regions, in which our customers operate, limits concentrations of credit risk with respect to accounts receivable, with the exception of the State of Michigan. In the years ended December 31, 2021 and 2020, our sales to the State of Michigan totaled approximately 47 % of revenues. We have not experienced any losses, nor is not aware of any losses by Graphic Sciences, resulting from nonpayment by the State of Michigan. We do not generally require collateral or other security to support customer receivables; however, we may require customers to provide retainers, up-front deposits or irrevocable letters-of-credit when considered necessary to mitigate credit risks. We have established an allowance for doubtful accounts based upon facts surrounding the credit risk of specific customers and past collections history. Credit losses have been within management’s expectations. At December 31, 2021 and 2020, our allowance for doubtful accounts was $ 48,783 65,927 Parts and Supplies Parts and supplies are valued at the lower of cost or net realizable value. Costs are determined using the first-in, first-out method. Parts and supplies are used for scanning and document conversion services. A provision for potentially obsolete or slow-moving parts and supplies inventory is made based on parts and supplies levels, future sales forecasted and management’s judgment of potentially obsolete parts and supplies. We recorded an allowance of $ 24,000 15,000 Property and Equipment Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed over the estimated useful lives of the related assets on a straight-line basis. Furniture and fixtures, computer hardware and purchased software are depreciated over three to seven years . Leasehold improvements are amortized over the life of the lease or the asset, whichever is shorter, generally seven to ten years Intangible Assets All intangible assets have finite lives and are stated at cost, net of amortization. Amortization is computed over the useful life of the related assets on a straight-line method. Goodwill The carrying value of goodwill is not amortized, but is tested for impairment annually as of December 31, as well as on an interim basis whenever events or changes in circumstances indicate that the carrying amount of a reporting unity may not be recoverable. An impairment charge is recognized for the amount by which the carrying amount exceeds the recorded fair value. Impairment of Long-Lived Assets We account for the impairment and disposition of long-lived assets in accordance with ASC 360, “Property, Plant, and Equipment.” We tests long-lived assets or asset groups, such as property and equipment, for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed of before the end of its estimated useful life. Recoverability is assessed based on comparing the carrying amount of the asset to the aggregate pre-tax undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group. Impairment is recognized when the carrying amount is not recoverable and exceeds the fair value of the asset or asset group. The impairment loss, if any, is measured as the amount by which the carrying amount exceeds fair value, which for this purpose is based upon the discounted projected future cash flows of the asset or asset group. There was no Purchase Accounting Related Fair Value Measurements We allocate the purchase price, including contingent consideration, of our acquisitions to the assets and liabilities acquired, including identifiable intangible assets, based on their respective fair values at the date of acquisition. Such fair market value assessments are primarily based on third-party valuations using assumptions developed by management that require significant judgments and estimates that can change materially as additional information becomes available. The purchase price allocated to intangibles is based on unobservable factors, including but not limited to, projected revenues, expenses, customer attrition rates, a weighted average cost of capital, among others. The weighted average cost of capital uses a market participant’s cost of equity and after-tax cost of debt and reflects the risks inherent in the cash flows. The approach to valuing the initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected revenues and expenses over the term of the contingent earnout period, discounted for the period over which the initial contingent consideration is measured, and volatility rates. We finalize the purchase price allocation once certain initial accounting valuation estimates are finalized, and no later than 12 months following the acquisition date. Leases We determine if an arrangement is a lease at inception. Operating leases in which we are the lessee are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. We do not have any finance leases, as a lessee, and no long-term leases for which we are the lessor. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the reasonably certain lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and reduced by lease incentives, such as tenant improvement allowances. Our lease terms include options to extend or terminate the lease only when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Stock-Based Compensation We account for stock-based payments to employees in accordance with ASC 718, “Compensation - Stock Compensation.” Stock-based payments to employees include grants of stock that are recognized in the consolidated statement of operations based on their fair values at the date of grant. We account for stock-based payments to non-employees in accordance with ASC 718, “Compensation - Stock Compensation,” which requires that such equity instruments are recorded at their fair values on the grant date. The grant date fair value of stock option awards is recognized in earnings as stock-based compensation cost over the requisite service period of the award using the straight-line attribution method. We estimate the fair value of the stock option awards using the Black-Scholes-Merton option pricing model. The exercise price of options is specified in the stock option agreements. The expected volatility is based on the historical volatility of our stock for the previous period equal to the expected term of the options. The expected term of options granted is based on the midpoint between the vesting date and the end of the contractual term. The risk-free interest rate is based upon a U.S. Treasury instrument with a life that is similar to the expected term of the options. The expected dividend yield is based upon the yield expected on date of grant to occur over the term of the option. Software Development Costs We design, develop, test, market, license, and support new software products and enhancements of current products. We continuously monitor our software products and enhancements to remain compatible with standard platforms and file formats. In accordance with ASC 985-20 “Costs of Software to be Sold, Leased or Otherwise Marketed,” we expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached. Once technological feasibility has been established, certain software development costs incurred during the application development stage are eligible for capitalization. Based on our software development process, technical feasibility is established upon completion of a working model. Technological feasibility is typically reached shortly before the release of such products. No such costs were capitalized during the periods presented in this report. In accordance with ASC 350-40, “Internal-Use Software,” we capitalize purchase and implementation costs of internal use software. Once an application has reached development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. We also capitalize costs related to specific upgrades and enhancements when it is probable that the expenditure will result in additional functionality. Such costs in the amount of $ 38,305 were capitalized during 2021. No such costs were capitalized in 2020. Such capitalized costs are stated at cost less accumulated amortization. Amortization is computed over the estimated useful lives of the related assets on a straight-line basis, which is three years . At December 31, 2021 and 2020, our consolidated balance sheets included $ 38,305 and $ 0 in other long term assets. For the years ended December 31, 2021, and 2020, our expensed software development costs were $ 345,697 and $ 293,092 , respectively. Recently Issued Accounting Pronouncements Not Yet Effective Financial Instruments – Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which provides optional relief through specific exceptions and practical expedients for transitioning away from reference rates that are expected to be discontinued. The relief generally applies to eligible modifications of contractual terms that change (or have the potential to change) the amount or timing of contractual cash flows related to replacement of a reference rate. The relief allows such modifications to be accounted for as continuations of existing contracts without additional analysis. The optional relief is available from March 2020 through December 31, 2022. We do not anticipate any impact on our business from this standard. No other Accounting Standards Updates that have been issued but are not yet effective are expected to have a material effect on our future consolidated financial statements. Advertising We expense the cost of advertising as incurred. Advertising expense for the years ended December 31, 2021 and 2020 amounted to $ 10,237 and $ 7,362 , respectively. Earnings (Loss) Per Share Basic income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted income or loss per share is computed by dividing net income or loss by the diluted weighted average number of shares of common stock outstanding during the period. The diluted weighted average number of shares gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. Diluted earnings per share exclude all diluted potential shares if their effect is anti-dilutive, including warrants or options which are out-of-the-money and for those periods with a net loss. We reported a net income for 2021 and a net loss for 2020. Income Taxes Intellinetics and its subsidiaries file a consolidated federal income tax return. The provision for income taxes is computed by applying statutory rates to income before taxes. Deferred income taxes are recognized for the tax consequences in future years of temporary differences between the financial reporting and tax bases of assets and liabilities as of each period-end based on enacted tax laws and statutory rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. A 100 % valuation allowance has been established on deferred tax assets at December 31, 2021 and 2020, due to the uncertainty of our ability to realize future taxable income. For 2020 we recovered a net $ 179,400 of its valuation allowance in conjunction with the consolidation of the net deferred tax liability of our wholly owned subsidiary, Graphic Sciences. We account for uncertainty in income taxes in our financial statements as required under ASC 740, “Income Taxes.” The standard prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The standard also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition accounting. Management determined there were no material uncertain positions taken by us in our tax returns. Segment Information Operating segments are defined in the criteria established under the FASB ASC 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by our chief operating decision maker (“CODM”) in deciding how to assess performance and allocate resources. Our CODM assesses performance and allocates resources based on two The Document Management Segment provides cloud-based and premise-based content services software. Its modular suite of solutions complements existing operating and accounting systems to serve a mission-critical role for organizations to make content secure, compliant, and process-ready. This segment conducts its primary operations in the United States. Markets served include highly regulated, risk and compliance-intensive markets in healthcare, K-12 education, public safety, other public sector, risk management, financial services, and others. Solutions are sold both directly to end-users and through resellers. The Document Conversion Segment provides services for scanning and indexing, converting images from paper to digital, paper to microfilm, and microfiche to microfilm, as well as long-term physical document storage and retrieval. This segment conducts its primary operations in the United States. Markets served include business and federal, county, and municipal governments. Solutions are sold both directly to end-users and through a reseller distributor. Information by operating segment is as follows: Schedule of Segment Information Year ended Year ended Revenues Document Management $ 3,089,669 $ 2,816,848 Document Conversion 8,370,596 5,436,543 Total revenues $ 11,460,265 $ 8,253,391 Gross profit Document Management $ 2,542,135 $ 2,160,807 Document Conversion 4,400,847 2,829,931 Total gross profit $ 6,942,982 $ 4,990,738 Capital additions, net Document Management $ 44,052 $ 6,440 Document Conversion 546,433 70,414 Total capital additions, net $ 590,485 $ 76,854 December 31, 2021 December 31, 2020 Goodwill Document Management $ 522,711 $ 522,711 Document Conversion 1,800,176 1,800,176 Total goodwill $ 2,322,887 $ 2,322,887 December 31, 2021 December 31, 2020 Total assets Document Management $ 2,233,419 $ 2,295,165 Document Conversion 9,728,713 8,049,468 Total assets $ 11,962,132 $ 10,344,633 Statement of Cash Flows For purposes of reporting cash flows, cash includes cash on hand and demand deposits held by banks. Reclassifications Certain amounts reported in prior filings of the consolidated financial statements have been reclassified to conform to current presentation. |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Acquisitions | 5. Business Acquisitions On March 2, 2020, we acquired all of the issued and outstanding stock of Graphic Sciences. The purchase price paid for Graphic Sciences was $ 3,906,253 in cash plus potential contingent, or earnout, payments of up $ 833,000 annually over a three year period based on a gross profit level achieved by Graphic Sciences on an annual basis, for maximum total earnout payments over a three year period of $ 2,500,000 , and with no minimum earnout payments. At the time of this acquisition, management estimated a fair value of the contingent liability—earnout (“earnout liability”) of $ 686,200 based on the terms of the earnout, and accordingly, recorded this amount as our earnout liability at the acquisition date in accordance with GAAP. For the years ended December 31, 2021 and 2020 we recorded a change in fair value of our earnout liabilities in the amount of $ 123,377 and $ 1,554,800 , respectively. On June 8, 2021, we paid $ 769,733 for the first annual period. At December 31, 2021, our consolidated balance sheets reflected an earnout liability for Graphic Sciences in the amount of $ 1,463,644 . See Note 7 for the estimated fair value of the earnout liability as of December 31, 2021. On April 21, 2020, we acquired substantially all of the assets of CEO Image. The purchase price paid for the assets of CEO Image consisted of $ 128,832 in cash, $ 170,000 in installment payments paid during 2020, and potential contingent, or earnout, payments of up $ 185,000 annually over a two year period based on a sales revenue level achieved by certain customers of CEO Image on an annual basis, for maximum total earnout payments over a two year period of $ 370,000 , and with no minimum earnout payments. At the time of this acquisition, management estimated a fair value of the contingent liability—earnout (“earnout liability”) of $ 203,000 based on the terms of the earnout, and accordingly, recorded this amount as our earnout liability at the acquisition date in accordance with GAAP. For the year ended December 31, 2021 we recorded a change in fair value of our earnout liabilities in the amount of $ 18,038 and $ 0 , respectively. On June 10, 2021, we paid $ 185,000 for the first annual period. At December 31, 2021, our consolidated balance sheets reflected an earnout liability for CEO Image in the amount of $ 167,038 . See Note 7 for the estimated fair value of the earnout liability as of December 31, 2021. The purchase price was allocated to assets acquired and liabilities assumed based on the estimated fair value of such assets and liabilities at the date of acquisitions as follows: Schedule of Fair Value of Assets Acquired and Liabilities Assumed Total 2020 March 2, 2020 April 21, 2020 Assets acquired: Cash $ 17,269 $ 17,269 $ - Accounts receivable 1,122,737 1,071,770 50,967 Accounts receivable, unbilled 276,023 276,023 - Parts and supplies 91,396 91,396 - Prepaid expenses 73,116 73,116 - Other current assets 5,954 5,954 - Right of use assets 2,885,618 2,885,618 - Property and equipment 735,885 732,372 3,513 Intangible assets (see Note 6) 1,361,000 1,230,000 131,000 Assets 6,568,998 6,383,518 185,480 Liabilities assumed: Accounts payable 168,749 129,622 39,127 Accrued expenses 162,426 155,949 6,477 Lease liabilities 2,947,684 2,947,684 - Federal and state taxes payable 168,900 168,900 - Deferred revenue 198,659 39,186 159,473 Deferred tax liabilities - Net 149,900 149,900 - Liabilities 3,796,318 3,591,241 205,077 Total identifiable net assets/(liabilities) 2,772,680 2,792,277 (19,597 ) Purchase price 5,095,567 4,592,453 503,114 Goodwill - Excess of purchase price over fair value of net assets acquired $ 2,322,887 $ 1,800,176 $ 522,711 Acquisition costs which include legal and other professional fees of approximately $ 636,440 The following unaudited pro forma information presents a summary of our consolidated results of operations, as if the acquisitions of Graphic Sciences and CEO Image had occurred on January 1, 2020. Schedule of Pro Forma Information For the year ended December 31, 2020 (unaudited) December 31, 2020 Total revenues $ 9,686,354 Net loss $ (1,993,389 ) Basic and diluted net loss per share $ (0.70 ) The unaudited pro forma consolidated results are based on our historical financial statements and those of Graphic Sciences and CEO Image and do not necessarily indicate the results of operations that would have resulted had the acquisition actually been completed at the beginning of the applicable period presented. The pro forma financial information assumes that the companies were combined as of January 1, 2020. The following tables present the amounts of revenue and earnings of the acquirees since the acquisition date included in the consolidated income statement for the reporting period. Year ended December 31, 2021 2020 Graphic Sciences: Total revenues $ 7,995,600 $ 5,238,654 Net income $ 1,062,390 $ 645,042 Year ended December 31, 2021 2020 CEO Image: Total revenues $ 526,634 $ 375,863 Net income $ - (a) $ - (a) (a) Total earnings from the CEO Image acquisition are impracticable to disclose as they are not accounted for separately because its operations and financial reporting were merged with existing operations and financial reporting. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 6. Intangible Assets, Net At December 31, 2021, intangible assets consisted of the following: Schedule of Intangible Assets Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 119,000 $ (21,817 ) $ 97,183 Customer contracts 5 8 1,242,000 (370,687 ) 871,313 $ 1,361,000 $ (392,504 ) $ 968,496 At December 31, 2020, intangible assets consisted of the following: Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 119,000 $ (9,917 ) $ 109,083 Customer contracts 5 8 1,242,000 (166,112 ) 1,075,888 $ 1,361,000 $ (176,029 ) $ 1,184,971 Amortization expense for the years ended December 31, 2021 and 2020, amounted to $ 216,475 and $ 176,029 , respectively. The following table represents future amortization expense for intangible assets subject to amortization. Schedule of Amortization Expense for Intangible Assets For the Years Ending December 31, Amount 2022 $ 216,475 2023 216,475 2024 216,475 2025 199,008 2026 58,608 Thereafter 61,455 Intangible assets $ 968,496 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 7. Fair Value Measurements Under GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy consists of the following three levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs consist of quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The carrying values of cash and equivalents, accounts receivable, accounts payable, accrued expenses, and the PPP loan (prior to forgiveness) approximate fair value because of its short maturity. Management believes that the carrying value of the 2020 Notes approximate fair value given the March 2, 2020 transaction proximity to December 31, 2020 in conjunction with the absence of significant net change in the overall economic environment with regards to availability of credit to Company. We have earnout liabilities related to our two 2020 acquisitions which are measured on a recurring basis and recorded at fair value, measured using probability-weighted analysis and discounted using a rate that appropriately captures the risks associated with the obligation. The inputs used to calculate the fair value of the earnout liabilities are considered to be Level 3 inputs due to the lack of relevant market activity and significant management judgment. Key unobservable inputs include revenue growth rates, which ranged from 0% to 7%, and volatility rates, which were 20% for gross profits. A decrease in future revenues and gross profits may result in a lower estimated fair value of the earnout liabilities The following table provides a summary of the changes in fair value of the earnout liabilities for the years ended December 31, 2021 and 2020: Summary of Changes in Fair Value of Earnout Liabilities Year ended December 31, 2021 Fair value at January 1, 2021 $ 2,444,000 Payment (954,733 ) Additions - Change in fair value 141,414 Fair value at December 31, 2021 $ 1,630,681 Year ended December 31, 2020 Fair value at January 1, 2020 $ - Additions 889,200 Change in fair value 1,554,800 Fair value at December 31, 2020 $ 2,444,000 The fair values of amounts owed are recorded in the current and long-term portions of earnout liabilities in our consolidated balance sheets. Changes in fair value are recorded in change in fair value of earnout liabilities in our consolidated statements of operations. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 8. Property and Equipment Property and equipment are comprised of the following: Schedule of Property and Equipment December 31, 2021 December 31, 2020 Computer hardware and purchased software $ 1,494,918 $ 1,019,259 Leasehold improvements 295,230 275,106 Furniture and fixtures 71,325 82,056 Property and equipment, gross 1,861,473 1,376,421 Less: accumulated depreciation (769,693 ) (677,669 ) Property and equipment, net $ 1,091,780 $ 698,752 Total depreciation expense on our property and equipment for the years ended December 31, 2021 and 2020 amounted to $ 197,457 and $ 120,906 , respectively. |
Notes Payable _ Unrelated Parti
Notes Payable – Unrelated Parties | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Notes Payable – Unrelated Parties | 9. Notes Payable – Unrelated Parties Summary of Notes Payable to Unrelated Parties The table below summarizes all notes payable at December 31, 2021 and 2020, respectively. See also Note 10 “Notes Payable - Related Parties.” Schedule of Notes Payable to Unrelated Parties December 31, 2021 December 31, 2020 PPP Note (a) $ - $ 838,700 2020 Notes 2,000,000 2,000,000 Total notes payable $ 2,000,000 $ 2,838,700 Less unamortized debt issuance costs (121,029 ) (224,767 ) Less unamortized debt discount (124,444 ) (231,111 ) Less current portion - (580,638 ) Long-term portion of notes payable $ 1,754,527 $ 1,802,184 (a) The full amount of the principal and interest on the PPP Note was forgiven in its entirety in January 2021. Future minimum principal payments of the 2020 Notes are as follows: Schedule of Future Minimum Principal Payments of Notes Payable As of December 31, Amount 2023 $ 2,000,000 Total $ 2,000,000 As of December 31, 2021 and 2020, accrued interest for these notes payable with the exception of the related party notes in Note 10, “Notes Payable - Related Parties,” was $ 0 . As of December 31, 2021 and 2020, unamortized debt issuance costs and unamortized debt discount were reflected within long term liabilities on the consolidated balance sheets. With respect to all notes outstanding (other than the notes to related parties), interest expense, including the amortization of debt issuance costs and debt discount for the years ended December 31, 2021 and 2020 was $ 452,120 and $ 548,742 , respectively. We have evaluated the terms of our convertible notes payable in accordance with ASC 815 – 40, “Derivatives and Hedging - Contracts in Entity’s Own Stock” and determined that the underlying common stock is indexed to our common stock. We determined that the conversion feature did not meet the definition of a derivative and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. We evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared with the market price on the date of each note. If the conversion price was deemed to be less than the market value of the underlying common stock at the inception of the note, then we recognized a beneficial conversion feature resulting in a discount on the note payable, upon satisfaction of the contingency. The beneficial conversion features were amortized to interest expense over the life of the respective notes, starting from the date of recognition. 2016-18 Unrelated Party Notes and 2020 Note Conversion In 2016 through 2018, we issued convertible promissory notes to unrelated parties in an aggregate principal amount of $3,535,000. On March 2, 2020, we entered into amendments to these convertible promissory notes, as well as amendments to convertible promissory notes with related parties (see note 10), that permitted us to convert all of the outstanding principal and accrued and unpaid interest payable on all outstanding convertible promissory notes into shares of common stock at a reduced conversion rate equal to the purchase price of our common stock issued in the contemporaneous private placement offering. Pursuant thereto, we converted all of the outstanding principal and accrued and unpaid interest payable with respect to all convertible promissory notes, with related parties and with unrelated parties, into a total of 1,433,689 4.00 35,250 4.00 2020 Notes On March 2, 2020, we sold 2,000 units, at an offering price of $1,000 per unit, to accredited investors in a private placement offering, with each unit consisting of $1,000 in 12% Subordinated Notes (“2020 Notes”) and 40 shares of our common stock, for aggregate gross proceeds of $ 2,000,000 . The entire outstanding principal and accrued interest of the 2020 Notes are due and payable on February 28, 2023 . Interest on the 2020 Notes accrues at the rate of 12 % per annum, payable quarterly in cash, beginning on June 30, 2020. Any accrued but unpaid quarterly installment of interest will accrue interest at the rate of 14.0% per annum. Any overdue principal and accrued and unpaid interest at the maturity date will accrue a mandatory default penalty of 20 % of the outstanding principal balance and an interest rate of 14% per annum from the maturity date until paid in full. We used a portion of the net proceeds from the private placement offering to finance the acquisitions of Graphic Sciences and CEO Image and the remaining net proceeds for working capital and general corporate purposes. We recognized a debt discount of $ 320,000 for the 80,000 shares issued in conjunction with the units. The amortization of the debt discount, which will be recognized over the life of the 2020 Notes as interest expense, for the years ended December 31, 2021 and 2020 was $ 106,666 and $ 88,889 , respectively. PPP Note On April 15, 2020, we were issued an unsecured promissory note (“PPP Note”) for the PPP loan through PNC Bank with a principal amount of $ 838,700 . The term of the PPP Note Payable was two years, with an interest rate of 1.0 % per annum deferred for the first six months. We received notice on January 20, 2021 that the SBA had forgiven the full amount of principal and interest of the PPP Note, and we have recognized a gain on extinguishment of debt of $ 845,083 for the years ended December 31, 2021. |
Notes Payable - Related Parties
Notes Payable - Related Parties | 12 Months Ended |
Dec. 31, 2021 | |
Notes Payable - Related Parties | |
Notes Payable - Related Parties | 10. Notes Payable - Related Parties For the year ended December 31, 2021, there was no interest expense in connection with notes payable – related parties. For the year ended December 31, 2020, interest expense in connection with notes payable – related parties was $ 88,941 . 2016-19 Related Party Notes and 2020 Note Conversion In 2016 through 2019, we issued convertible promissory notes to related parties, including 5 % stockholders, executive officers and directors, in an aggregate principal amount of $ 1,562,728 . On March 2, 2020, we entered into amendments to these convertible promissory notes with related parties, as well as to convertible promissory notes with unrelated parties (see note 9), that permitted us to convert all of the outstanding principal and accrued and unpaid interest payable thereon into shares of common stock at a reduced conversion rate equal to the purchase price of our common stock issued in the contemporaneous private placement offering. Pursuant thereto, we converted all of the outstanding principal and accrued and unpaid interest payable with respect to all convertible promissory notes (with related parties as well as with unrelated parties) into a total of 1,433,689 shares of our common stock at a conversion rate of $ 4.00 per share, with the exception of the 2019 related party notes. On March 2, 2020, $ 350,000 of the 2019 related party notes were converted into equity. On May 15, 2020, we repaid the remaining balance of $ 47,728 in cash. |
Deferred Compensation
Deferred Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Compensation Related Costs [Abstract] | |
Deferred Compensation | 11. Deferred Compensation Pursuant to an employment agreement, we have accrued incentive compensation totaling $ 100,828 as of December 31, 2021 and 2020 for one of our founders. We deferred these payment obligations until we reasonably believe we have sufficient cash to make those payments in cash. We made no deferred incentive compensation payments during 2021. Following the retirement of founder A. Michael Chretien on December 8, 2017, we made bi-weekly payments until his deferred compensation had been fully paid, which occurred in May 2020. During the years ended December 31, 2021 and 2020, we paid $ 0 and $ 16,338 , respectively, in deferred incentive compensation, which amounts were reflected as a reduction in our deferred compensation liability. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies From time to time we are involved in legal proceedings, claims and litigation related to employee claims, contractual disputes and taxes in the ordinary course of business. Although we cannot predict the outcome of such matters, currently we have no reason to believe the disposition of any current matter could reasonably be expected to have a material adverse impact on our financial position, results of operations or the ability to carry on any of our business activities. Employment Agreements We have entered into employment agreements with three of our key executives, including one of our founders. Under their respective employment agreements, the executives are employed on an “at-will” basis and are bound by typical confidentiality, non-solicitation and non-competition provisions. Deferred compensation for one founder remains outstanding as of December 31, 2021. Operating Leases On January 1, 2010, we entered into an agreement to lease 6,000 rentable square feet of office space in Columbus, Ohio. The lease commenced on January 1, 2010 and, pursuant to a lease extension dated September 18, 2021 , the lease expires on December 31, 2028 . The monthly rental payment is $ 4,638 , with gradually higher annual increases each January up to $ 5,850 for the final year. Our subsidiary, Graphic Sciences, uses 36,000 square feet of leased space in Madison Heights, Michigan as its main facility. Graphic Sciences uses about 20,000 square feet for its records storage services, with the remainder of the space used for production, sales, and administration. 41,508 45,828 August 31, 2026 Graphic Sciences also leases and uses a separate 37,000 5,000 20,452 24,171 April 30, 2028 4,500 January 31, 2024 2,618 October 31, 2024 Graphic Sciences also leases and uses an additional temporary storage space in Madison Heights, with a monthly rental payment of $ 1,605 and a lease term on a month-to-month basis. We have made an accounting policy election to not record a right-of-use asset and lease liability for short-term leases, which are defined as leases with a lease term of 12 months or less. Instead, the lease payments are recognized as rent expense in the general and administrative expenses on the statement of operations. For each of the above listed leases, management has determined it will utilize the base rental period and have not considered any renewal periods. The following table sets forth the future minimum lease payments under these operating leases: Schedule of Future Rental Payments for Operating Leases For the period Ending December 31, Amount 2022 $ 931,853 2023 936,109 2024 879,142 2025 880,254 2026 713,362 Thereafter 522,856 Total $ 4,863,576 Lease costs charged to operations for the years ended December 31, 2021 and 2020 amounted to $ 1,043,980 and $ 743,373 , respectively. Included in the lease costs for the years ended December 31, 2021 and 2020 were short-term lease costs of $ 97,024 and $ 71,411 , respectively. The following table sets forth additional information pertaining to our leases: Schedule of Operating Lease Costs For the Year Ending December 31, 2021 2020 Operating cash flows from operating leases $ 729,549 $ 482,425 Weighted average remaining lease term – operating leases 5.4 5.1 Weighted average discount rate – operating leases 7.02 % 7.96 % Because these leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Stockholders’ Equity | 13. Stockholders’ Equity Description of Authorized Capital We are authorized to issue up to 25,000,000 shares of common stock with $ 0.001 par value. The holders of our common stock are entitled to one vote per share. The holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of legally available funds. However, the current policy of the Board of Directors is to retain earnings, if any, for the operation and expansion of the business. Upon liquidation, dissolution or winding-up of Intellinetics, the holders of common stock are entitled to share ratably in all assets legally available for distribution. Common Stock As of December 31, 2021, 2,823,072 131,700 497,330 On March 2, 2020, we sold 955,000 ● 875,000 4.00 3,500,000 ● 2,000 1,000 1,000 40 2,000,000 In connection with the private placement offering, we paid the placement agent $ 440,000 in cash, equal to 8 % of the gross proceeds of the offering, along with 95,500 warrants to purchase shares of our common stock and reimbursement for the placement agent’s reasonable out of pocket expenses, FINRA filing fees and related legal fees. The warrants are exercisable at an exercise price at $ 4.00 per share for a period of five years after issuance, contain customary cashless exercise provisions and anti-dilution protection and are entitled to limited piggyback registration rights. Underwriting expense of $ 236,761 and debt issuance costs of $ 135,291 were recorded for the issuance of the March 2, 2020 warrants, utilizing the Black-Scholes valuation model. The fair value of warrants issued was determined to be $ 3.90 . Underwriting expense of $ 307,867 and debt issuance costs of $ 175,924 was recorded for the placement agent cash fee and other related legal fees. For the years ended December 31, 2021 and 2020, interest expense of $ 103,739 and $ 86,449 , respectively, was recorded as amortization of the debt issuance costs for this private placement offering. Reverse Stock Split In February 2020, upon recommendation and authorization by our Board of Directors, our stockholders holding a majority in interest of the issued and outstanding shares of our common stock, acting by written consent, adopted an amendment to our Articles of Incorporation to effectuate a reverse split of our issued and outstanding shares of common stock at a ratio of one-for-fifty (1-for-50) (the “Reverse Split”), and reduce the number of authorized shares of our common stock to 25,000,000 shares (the “25,000,000 Share Amendment”). The Reverse Split and the 25,000,000 Share Amendment became effective on March 20, 2020 Effective March 2, 2020, before the Reverse Split and the 25,000,000 160,000,000 3,200,000 75,000,000 1,500,000 25,000,000 25,000,000 The Reverse Split did not cause an adjustment to the par value of the common stock. Pursuant to the Reverse Split, we adjusted the amounts for shares reserved for issuance upon the exercise of outstanding warrants, outstanding stock options, and shares reserved for the 2015 Plan. All references to shares of common stock and per share data in the accompanying consolidated financial statements and in these notes related thereto have been adjusted to reflect the Reverse Split for all periods presented. Warrants The following sets forth the warrants to purchase our common stock that were outstanding as of December 31, 2021: ● Warrants to purchase 3,000 15.00 September 22, 2022 ● Warrants to purchase 17,200 12.50 November 30, 2022 ● Warrants to purchase 16,000 9.00 September 26, 2023 ● Warrants to purchase 95,500 4.00 February 28, 2025 No warrants were issued during 2021. Warrants to purchase 95,500 shares of common stock were issued during the 2020 at a fair value determined to be $ 3.90 per warrant utilizing the Black-Scholes valuation model. The estimated value of the warrants issued during 2020, as well as the assumptions that were used in calculating such values, were based on estimates at the issuance date as follows: Schedule of Estimated Values of Warrants Valuation Assumptions Warrants Issued Risk-free interest rate 0.88 % Weighted average expected term 5 Expected volatility 130.12 % Expected dividend yield 0.00 % |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 14. Stock-Based Compensation From time to time, we issue stock options and restricted stock as compensation for services rendered by our directors and employees. Restricted Stock On February 15, 2021 and January 2, 2020, we issued 12,207 shares and 16,429 shares, respectively, of restricted common stock to our directors as part of their annual compensation plan. The grants of restricted common stock were made outside the 2015 Plan and were not subject to any vesting conditions. Stock compensation of $ 57,500 was recorded for the years ended December 31, 2021 and 2020. Stock Options We did not make any stock option grants during 2021. The weighted-average grant date fair value of options granted during 2020 was $ 3.30 . Stock-based compensation for options was $ 92,253 and $ 58,770 , during the years ended December 31, 2021 and 2020, respectively. A summary of stock option activity during the years ended December 31, 2021 and 2020 is as follows: Schedule of Stock Option Activity Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2021 145,360 $ 5.61 9 $ 19,200 Granted - - Forfeited and expired (500 ) 6.50 Outstanding at December 31, 2021 144,860 $ 5.61 8 $ 19,200 Exercisable at December 31, 2021 66,060 $ 7.35 8 $ 19,200 Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2020 46,860 $ 9.02 9 19,200 Granted 99,000 4.00 Forfeited and expired (500 ) 6.50 Outstanding at December 31, 2020 145,360 $ 5.61 9 $ 19,200 Exercisable at December 31, 2020 39,160 $ 9.51 8 $ 19,200 As of December 31, 2021 and 2020, there was $ 230,620 and $ 322,874 , respectively, of total unrecognized compensation costs related to stock options granted under our stock option agreements. The unrecognized compensation cost is expected to be recognized over a weighted-average period of three years . The total fair value of stock options that vested during the years ended December 31, 2021, and 2020 was $ 91,913 and $ 16,650 , respectively. Issues of Stock-Based Compensation The following represent grants of stock options, including the fair value recognized or to be recognized over the requisite service period: Schedule of Grants of Stock Options Over Requisite Service Period Grant date Shares granted (canceled) Exercise price Date fully vested Fair value February 10, 2016 4,200 $ 48.00 February 10, 2020 $ 174,748 December 6, 2016 2,000 38.00 December 6, 2020 63,937 September 25, 2017 15,000 15.00 September 25, 2019 194,149 September 25, 2017 10,000 19.00 September 25, 2019 126,862 January 30, 2019 250 45.00 January 30, 2019 885 March 11, 2019 (33,200 ) - - - March 11, 2019 33,200 6.50 December 6, 2020 24,898 (1) March 11, 2019 10,100 6.50 March 11, 2023 44,591 September 2, 2020 99,000 4.00 September 2, 2024 327,181 (1) Represents incremental fair value of replacement shares compared to canceled shares. The weighted average estimated values of director and employee stock option grants, as well as the weighted average assumptions that were used in calculating such values during the years ended December 31, 2021 and 2020, were based on estimates at the date of grant as follows: Schedule of Estimated Values of Stock Option Grants Valuation Assumptions April 30, January 1, February 10, 2015 Grant 2016 Grant 2016 Grant Risk-free interest rate 1.43 % 1.76 % 1.15 % Weighted average expected term 5 5 5 Expected volatility 143.10 % 134.18 % 132.97 % Expected dividend yield 0.00 % 0.00 % 0.00 % December 6, September 25, January 30, 2016 Grant 2017 Grant 2019 Grant Risk-free interest rate 1.84 % 1.85 % 2.54 % Weighted average expected term 5 5 5 Expected volatility 123.82 % 130.79 % 115.80 % Expected dividend yield 0.00 % 0.00 % 0.00 % March 11, September 2, 2019 Grant 2020 Grant Risk-free interest rate 2.44 % 0.26 % Weighted average expected term 5 5 Expected volatility 116.46 % 121.33 % Expected dividend yield 0.00 % 0.00 % |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Concentrations | 15. Concentrations Revenues from a limited number of customers have accounted for a substantial percentage of our total revenues. During the years ended December 31, 2021 and 2020, our largest customer, the State of Michigan, accounted for 47 % of our total revenues for each period, and our second largest customer, Rocket Mortgage (formerly Quicken Loans), accounted for 9 % and 8 %, respectively, of our total revenues. For the years ended December 31, 2021, and 2020, government contracts represented approximately 62 % and 64 % of our net revenues, respectively. A significant portion of our sales to resellers represent ultimate sales to government agencies. As of December 31, 2021, accounts receivable concentrations from our two largest customers were 65 7 54 16 |
Provision For Income Taxes
Provision For Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Provision For Income Taxes | 16. Provision For Income Taxes We file income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. For the years ended December 31, 2021, and 2020, we have recognized the minimum amount of state income tax as required by the states in which we are required to file taxes. We are not currently subject to further federal or state tax since we have incurred losses since our inception. Income tax benefit consists of the following Federal, deferred components for the years ended December 31, 2021 and 2020: Summary of Income Tax Benefits December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Use of (benefit of) net operating losses $ 91,781 $ (72,541 ) Other timing differences 108,042 (91,770 ) Change in valuation allowance, including $ 188,000 (199,823 ) (23,989 ) Tax benefit $ - $ (188,300 ) A reconciliation is provided below of the U.S. Federal income tax expense at a statutory rate of 21% for the years ended December 31, 2021 and 2020: Summary of Reconciliation of Income Tax Expense December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 U.S. statutory rate 21 % 21 % U.S. Federal income tax at statutory rate $ 285,170 $ (501,690 ) Increase (decrease) in income taxes due to: Non-deductible earnout expense 25,909 299,040 Non-deductible goodwill amortization 39,958 33,390 Other differences 26,253 4,949 Non-taxable PPP loan and interest recovery (177,467 ) - Benefit of acquisition-date purchased deferred tax liability - (188,300 ) Other change in valuation allowance - 164,311 Income tax benefit $ - $ (188,300 ) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below: Summary of Deferred Tax Assets and Liabilities December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Deferred tax assets Reserves and accruals not currently deductible for tax purposes $ 50,558 $ 51,906 Amortizable assets 32,615 72,893 Net operating loss carryforwards 3,942,488 4,017,875 Deferred tax assets 4,025,661 4,142,674 Deferred tax liabilities Property and equipment (225,484 ) (142,674 ) Net Deferred tax assets 3,800,177 4,000,000 Valuation allowance (3,800,177 ) (4,000,000 ) Deferred tax assets and liabilities $ - $ - As of December 31, 2021 and 2020, we had federal net operating loss carry forwards of approximately $ 18,762,000 19,129,000 , respectively, which can be used to offset future federal income tax. A portion of the federal and state net operating loss carry forwards expire at various dates through 2040, and a portion of the net operating loss carry forwards have an indefinite carry forward period . We recorded a valuation allowance against all of our deferred tax assets as of both December 31, 2021, and December 31, 2020. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve. |
Certain Relationships and Relat
Certain Relationships and Related Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Certain Relationships and Related Transactions | 17. Certain Relationships and Related Transactions Certain Relationships and Related Transactions The following is a summary of the related person transactions that Intellinetics has participated in at any time during the reporting period. Notes Payable – Related Parties See Note 10 for a summary of notes issued to related parties and the subsequent conversion of such related party notes into shares of our common stock on March 2, 2020. 2020 Private Placement The following related persons participated as investors a private placement of our securities, on the same terms as all other investors participating in the offering. We issued and sold (i) shares of common stock, at a price of $ 4.00 per share and (ii) units, with each unit consisting of $1,000 in 12% subordinated notes and 40 shares. The principal amount of the 12% subordinated notes, together with any accrued and unpaid interest thereon, become due and payable on February 28, 2023. Schedule of Related Party Transactions Name of Investor Relationship to Intellinetics Number of Date of Michael N. Taglich Beneficially owns more than 5% of the common stock of Intellinetics. 148,750 03/02/2020 Robert F. Taglich Beneficially owns more than 5% of the Common Stock of Intellinetics. 118,750 03/02/2020 Robert C. Schroeder Former Director and Former Chairman of the Board of Intellinetics 5,000 03/02/2020 James F. DeSocio President and Chief Executive Officer; Director of Intellinetics 7,500 03/02/2020 Joseph D. Spain Chief Financial Officer of Intellinetics 2,000 03/02/2020 Promoters and Certain Control Persons William M. Cooke, a director of Intellinetics, is the Vice President of Investment Banking at Taglich Brothers, Inc. Robert F. Taglich and Michael N. Taglich, each beneficial owners of more than 5% of our common stock, are also both principals of Taglich Brothers, Inc. We retained Taglich Brothers, Inc. on an exclusive basis to render financial advisory and investment banking services to us in connection with our acquisition of Graphic Sciences. Pursuant to an Engagement Agreement, dated April 15, 2019, we paid Taglich Brothers, Inc. a success fee of $ 300,000 We retained Taglich Brothers, Inc., as the exclusive placement agent for the 2020 private placement, as described above, pursuant to a Placement Agent Agreement. In connection with the 2020 private placement, we paid Taglich Brothers, Inc. $ 440,000 8 95,500 10 4.00 We retained Taglich Brothers, Inc. as the exclusive placement agent for the 2020 note conversion, as described above in Note 10 (Notes Payable – Related Parties), pursuant to the Placement Agent Agreement. In connection with the 2020 note conversion, we issued 35,250 shares of common stock to Taglich Brothers, Inc., which, based on the conversion price of $ 4.00 per share, was equal to 3 % of the original principal amount of the converted notes. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 18. Subsequent Events Issuance of Restricted Common Stock to Directors On January 6, 2022, we issued 8,097 new Shares of restricted common stock to our directors in accordance with our director compensation policy. Stock compensation of $ 57,500 was recorded on the issuance of the common stock. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | 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 |
Use of Estimates | 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 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 valuation allowances related to receivables, accounts receivable -unbilled, the recoverability of long-term assets, depreciable lives of property and equipment, purchase price allocations for acquisitions, fair value for goodwill and intangibles, the 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 | 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. 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. 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 other 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 table presents changes in our contract assets during the years ended December 31, 2021, and 2020: Schedule of Changes in Contract Assets and Liabilities Balance at Addition Revenue Billings Balance at Year ended December 31, 2021 Accounts receivable, unbilled $ 523,522 $ - $ 4,213,550 $ (4,292,290 ) $ 444,782 Other contract assets $ 31,283 $ - $ 88,168 $ 40,895 $ 78,556 Year ended December 31, 2020 Accounts receivable, unbilled $ 23,371 $ 276,023 $ 917,361 $ (693,233 ) $ 523,522 Other contract assets $ 19,670 $ - $ 36,954 $ 25,341 $ 31,283 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 be 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 16,835 45,323 The following table presents changes in our contract liabilities during the years ended December 31, 2021 and 2020: Balance at Addition Billings Recognized Balance at Year ended December 31, 2021 Contract liabilities: Deferred revenue $ 996,131 $ - $ 3,700,828 $ (3,502,310 ) $ 1,194,649 Year ended December 31, 2020 Contract liabilities: Deferred revenue $ 754,073 $ 198,659 $ 3,038,446 $ (2,995,047 ) $ 996,131 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 contracts with customers generally do not include customer acceptance clauses. j) Reseller agreements We execute certain sales contracts through resellers. We recognize revenues relating to sales through resellers when all the recognition criteria have been met including passing of control. In addition, we assess the credit-worthiness of each reseller, and if the reseller is undercapitalized or in financial difficulty, any revenues expected to emanate from such resellers are deferred and recognized only when cash is received and all other revenue recognition criteria are met. k) Contract costs We capitalize the incremental costs of obtaining a contract with a customer. We have determined that certain sales commissions meet the requirement to be capitalized, and we amortize these costs on a consistent basis with the pattern of transfer of the goods and services in the contract. Total capitalized costs to obtain contracts are included in other contract assets on our consolidated balance sheets. l) Sales taxes Sales taxes charged to and collected from customers as part of our sales transactions are excluded from revenues, as well as the determination of transaction price for contracts with multiple performance obligations, and recorded as a liability to the applicable governmental taxing authority. m) Disaggregation of revenue We provide disaggregation of revenue based on product groupings in our consolidated statements of operations as we believes this best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Revenues from contracts are primarily within the United States. International revenues were not material to the consolidated financial statements for the years ended December 31, 2021 and 2020. n) Significant financing component Our customers typically do not pay in advance for goods or services to be transferred in excess of one year. As such, it is not necessary to determine if we benefit from the time value of money and should record a component of interest income related to the upfront payment due to the practical expedient of ASC 606-10-32-18. |
Concentrations of Credit Risk | Concentrations of Credit Risk We maintain our cash with high credit quality financial institutions. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit. The number of customers that comprise our customer base, along with the different industries, governmental entities and geographic regions, in which our customers operate, limits concentrations of credit risk with respect to accounts receivable, with the exception of the State of Michigan. In the years ended December 31, 2021 and 2020, our sales to the State of Michigan totaled approximately 47 % of revenues. We have not experienced any losses, nor is not aware of any losses by Graphic Sciences, resulting from nonpayment by the State of Michigan. We do not generally require collateral or other security to support customer receivables; however, we may require customers to provide retainers, up-front deposits or irrevocable letters-of-credit when considered necessary to mitigate credit risks. We have established an allowance for doubtful accounts based upon facts surrounding the credit risk of specific customers and past collections history. Credit losses have been within management’s expectations. At December 31, 2021 and 2020, our allowance for doubtful accounts was $ 48,783 65,927 |
Parts and Supplies | Parts and Supplies Parts and supplies are valued at the lower of cost or net realizable value. Costs are determined using the first-in, first-out method. Parts and supplies are used for scanning and document conversion services. A provision for potentially obsolete or slow-moving parts and supplies inventory is made based on parts and supplies levels, future sales forecasted and management’s judgment of potentially obsolete parts and supplies. We recorded an allowance of $ 24,000 15,000 |
Property and Equipment | Property and Equipment Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed over the estimated useful lives of the related assets on a straight-line basis. Furniture and fixtures, computer hardware and purchased software are depreciated over three to seven years . Leasehold improvements are amortized over the life of the lease or the asset, whichever is shorter, generally seven to ten years |
Intangible Assets | Intangible Assets All intangible assets have finite lives and are stated at cost, net of amortization. Amortization is computed over the useful life of the related assets on a straight-line method. |
Goodwill | Goodwill The carrying value of goodwill is not amortized, but is tested for impairment annually as of December 31, as well as on an interim basis whenever events or changes in circumstances indicate that the carrying amount of a reporting unity may not be recoverable. An impairment charge is recognized for the amount by which the carrying amount exceeds the recorded fair value. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We account for the impairment and disposition of long-lived assets in accordance with ASC 360, “Property, Plant, and Equipment.” We tests long-lived assets or asset groups, such as property and equipment, for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed of before the end of its estimated useful life. Recoverability is assessed based on comparing the carrying amount of the asset to the aggregate pre-tax undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group. Impairment is recognized when the carrying amount is not recoverable and exceeds the fair value of the asset or asset group. The impairment loss, if any, is measured as the amount by which the carrying amount exceeds fair value, which for this purpose is based upon the discounted projected future cash flows of the asset or asset group. There was no |
Purchase Accounting Related Fair Value Measurements | Purchase Accounting Related Fair Value Measurements We allocate the purchase price, including contingent consideration, of our acquisitions to the assets and liabilities acquired, including identifiable intangible assets, based on their respective fair values at the date of acquisition. Such fair market value assessments are primarily based on third-party valuations using assumptions developed by management that require significant judgments and estimates that can change materially as additional information becomes available. The purchase price allocated to intangibles is based on unobservable factors, including but not limited to, projected revenues, expenses, customer attrition rates, a weighted average cost of capital, among others. The weighted average cost of capital uses a market participant’s cost of equity and after-tax cost of debt and reflects the risks inherent in the cash flows. The approach to valuing the initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected revenues and expenses over the term of the contingent earnout period, discounted for the period over which the initial contingent consideration is measured, and volatility rates. We finalize the purchase price allocation once certain initial accounting valuation estimates are finalized, and no later than 12 months following the acquisition date. |
Leases | Leases We determine if an arrangement is a lease at inception. Operating leases in which we are the lessee are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. We do not have any finance leases, as a lessee, and no long-term leases for which we are the lessor. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the reasonably certain lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and reduced by lease incentives, such as tenant improvement allowances. Our lease terms include options to extend or terminate the lease only when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. |
Stock-Based Compensation | Stock-Based Compensation We account for stock-based payments to employees in accordance with ASC 718, “Compensation - Stock Compensation.” Stock-based payments to employees include grants of stock that are recognized in the consolidated statement of operations based on their fair values at the date of grant. We account for stock-based payments to non-employees in accordance with ASC 718, “Compensation - Stock Compensation,” which requires that such equity instruments are recorded at their fair values on the grant date. The grant date fair value of stock option awards is recognized in earnings as stock-based compensation cost over the requisite service period of the award using the straight-line attribution method. We estimate the fair value of the stock option awards using the Black-Scholes-Merton option pricing model. The exercise price of options is specified in the stock option agreements. The expected volatility is based on the historical volatility of our stock for the previous period equal to the expected term of the options. The expected term of options granted is based on the midpoint between the vesting date and the end of the contractual term. The risk-free interest rate is based upon a U.S. Treasury instrument with a life that is similar to the expected term of the options. The expected dividend yield is based upon the yield expected on date of grant to occur over the term of the option. |
Software Development Costs | Software Development Costs We design, develop, test, market, license, and support new software products and enhancements of current products. We continuously monitor our software products and enhancements to remain compatible with standard platforms and file formats. In accordance with ASC 985-20 “Costs of Software to be Sold, Leased or Otherwise Marketed,” we expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached. Once technological feasibility has been established, certain software development costs incurred during the application development stage are eligible for capitalization. Based on our software development process, technical feasibility is established upon completion of a working model. Technological feasibility is typically reached shortly before the release of such products. No such costs were capitalized during the periods presented in this report. In accordance with ASC 350-40, “Internal-Use Software,” we capitalize purchase and implementation costs of internal use software. Once an application has reached development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. We also capitalize costs related to specific upgrades and enhancements when it is probable that the expenditure will result in additional functionality. Such costs in the amount of $ 38,305 were capitalized during 2021. No such costs were capitalized in 2020. Such capitalized costs are stated at cost less accumulated amortization. Amortization is computed over the estimated useful lives of the related assets on a straight-line basis, which is three years . At December 31, 2021 and 2020, our consolidated balance sheets included $ 38,305 and $ 0 in other long term assets. For the years ended December 31, 2021, and 2020, our expensed software development costs were $ 345,697 and $ 293,092 , respectively. |
Recently Issued Accounting Pronouncements Not Yet Effective | Recently Issued Accounting Pronouncements Not Yet Effective Financial Instruments – Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which provides optional relief through specific exceptions and practical expedients for transitioning away from reference rates that are expected to be discontinued. The relief generally applies to eligible modifications of contractual terms that change (or have the potential to change) the amount or timing of contractual cash flows related to replacement of a reference rate. The relief allows such modifications to be accounted for as continuations of existing contracts without additional analysis. The optional relief is available from March 2020 through December 31, 2022. We do not anticipate any impact on our business from this standard. No other Accounting Standards Updates that have been issued but are not yet effective are expected to have a material effect on our future consolidated financial statements. |
Advertising | Advertising We expense the cost of advertising as incurred. Advertising expense for the years ended December 31, 2021 and 2020 amounted to $ 10,237 and $ 7,362 , respectively. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted income or loss per share is computed by dividing net income or loss by the diluted weighted average number of shares of common stock outstanding during the period. The diluted weighted average number of shares gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. Diluted earnings per share exclude all diluted potential shares if their effect is anti-dilutive, including warrants or options which are out-of-the-money and for those periods with a net loss. We reported a net income for 2021 and a net loss for 2020. |
Income Taxes | Income Taxes Intellinetics and its subsidiaries file a consolidated federal income tax return. The provision for income taxes is computed by applying statutory rates to income before taxes. Deferred income taxes are recognized for the tax consequences in future years of temporary differences between the financial reporting and tax bases of assets and liabilities as of each period-end based on enacted tax laws and statutory rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. A 100 % valuation allowance has been established on deferred tax assets at December 31, 2021 and 2020, due to the uncertainty of our ability to realize future taxable income. For 2020 we recovered a net $ 179,400 of its valuation allowance in conjunction with the consolidation of the net deferred tax liability of our wholly owned subsidiary, Graphic Sciences. We account for uncertainty in income taxes in our financial statements as required under ASC 740, “Income Taxes.” The standard prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The standard also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition accounting. Management determined there were no material uncertain positions taken by us in our tax returns. |
Segment Information | Segment Information Operating segments are defined in the criteria established under the FASB ASC 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by our chief operating decision maker (“CODM”) in deciding how to assess performance and allocate resources. Our CODM assesses performance and allocates resources based on two The Document Management Segment provides cloud-based and premise-based content services software. Its modular suite of solutions complements existing operating and accounting systems to serve a mission-critical role for organizations to make content secure, compliant, and process-ready. This segment conducts its primary operations in the United States. Markets served include highly regulated, risk and compliance-intensive markets in healthcare, K-12 education, public safety, other public sector, risk management, financial services, and others. Solutions are sold both directly to end-users and through resellers. The Document Conversion Segment provides services for scanning and indexing, converting images from paper to digital, paper to microfilm, and microfiche to microfilm, as well as long-term physical document storage and retrieval. This segment conducts its primary operations in the United States. Markets served include business and federal, county, and municipal governments. Solutions are sold both directly to end-users and through a reseller distributor. Information by operating segment is as follows: Schedule of Segment Information Year ended Year ended Revenues Document Management $ 3,089,669 $ 2,816,848 Document Conversion 8,370,596 5,436,543 Total revenues $ 11,460,265 $ 8,253,391 Gross profit Document Management $ 2,542,135 $ 2,160,807 Document Conversion 4,400,847 2,829,931 Total gross profit $ 6,942,982 $ 4,990,738 Capital additions, net Document Management $ 44,052 $ 6,440 Document Conversion 546,433 70,414 Total capital additions, net $ 590,485 $ 76,854 December 31, 2021 December 31, 2020 Goodwill Document Management $ 522,711 $ 522,711 Document Conversion 1,800,176 1,800,176 Total goodwill $ 2,322,887 $ 2,322,887 December 31, 2021 December 31, 2020 Total assets Document Management $ 2,233,419 $ 2,295,165 Document Conversion 9,728,713 8,049,468 Total assets $ 11,962,132 $ 10,344,633 |
Statement of Cash Flows | Statement of Cash Flows For purposes of reporting cash flows, cash includes cash on hand and demand deposits held by banks. |
Reclassifications | Reclassifications Certain amounts reported in prior filings of the consolidated financial statements have been reclassified to conform to current presentation. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Changes in Contract Assets and Liabilities | The following table presents changes in our contract assets during the years ended December 31, 2021, and 2020: Schedule of Changes in Contract Assets and Liabilities Balance at Addition Revenue Billings Balance at Year ended December 31, 2021 Accounts receivable, unbilled $ 523,522 $ - $ 4,213,550 $ (4,292,290 ) $ 444,782 Other contract assets $ 31,283 $ - $ 88,168 $ 40,895 $ 78,556 Year ended December 31, 2020 Accounts receivable, unbilled $ 23,371 $ 276,023 $ 917,361 $ (693,233 ) $ 523,522 Other contract assets $ 19,670 $ - $ 36,954 $ 25,341 $ 31,283 Balance at Addition Billings Recognized Balance at Year ended December 31, 2021 Contract liabilities: Deferred revenue $ 996,131 $ - $ 3,700,828 $ (3,502,310 ) $ 1,194,649 Year ended December 31, 2020 Contract liabilities: Deferred revenue $ 754,073 $ 198,659 $ 3,038,446 $ (2,995,047 ) $ 996,131 |
Schedule of Segment Information | Information by operating segment is as follows: Schedule of Segment Information Year ended Year ended Revenues Document Management $ 3,089,669 $ 2,816,848 Document Conversion 8,370,596 5,436,543 Total revenues $ 11,460,265 $ 8,253,391 Gross profit Document Management $ 2,542,135 $ 2,160,807 Document Conversion 4,400,847 2,829,931 Total gross profit $ 6,942,982 $ 4,990,738 Capital additions, net Document Management $ 44,052 $ 6,440 Document Conversion 546,433 70,414 Total capital additions, net $ 590,485 $ 76,854 December 31, 2021 December 31, 2020 Goodwill Document Management $ 522,711 $ 522,711 Document Conversion 1,800,176 1,800,176 Total goodwill $ 2,322,887 $ 2,322,887 December 31, 2021 December 31, 2020 Total assets Document Management $ 2,233,419 $ 2,295,165 Document Conversion 9,728,713 8,049,468 Total assets $ 11,962,132 $ 10,344,633 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Fair Value of Assets Acquired and Liabilities Assumed | The purchase price was allocated to assets acquired and liabilities assumed based on the estimated fair value of such assets and liabilities at the date of acquisitions as follows: Schedule of Fair Value of Assets Acquired and Liabilities Assumed Total 2020 March 2, 2020 April 21, 2020 Assets acquired: Cash $ 17,269 $ 17,269 $ - Accounts receivable 1,122,737 1,071,770 50,967 Accounts receivable, unbilled 276,023 276,023 - Parts and supplies 91,396 91,396 - Prepaid expenses 73,116 73,116 - Other current assets 5,954 5,954 - Right of use assets 2,885,618 2,885,618 - Property and equipment 735,885 732,372 3,513 Intangible assets (see Note 6) 1,361,000 1,230,000 131,000 Assets 6,568,998 6,383,518 185,480 Liabilities assumed: Accounts payable 168,749 129,622 39,127 Accrued expenses 162,426 155,949 6,477 Lease liabilities 2,947,684 2,947,684 - Federal and state taxes payable 168,900 168,900 - Deferred revenue 198,659 39,186 159,473 Deferred tax liabilities - Net 149,900 149,900 - Liabilities 3,796,318 3,591,241 205,077 Total identifiable net assets/(liabilities) 2,772,680 2,792,277 (19,597 ) Purchase price 5,095,567 4,592,453 503,114 Goodwill - Excess of purchase price over fair value of net assets acquired $ 2,322,887 $ 1,800,176 $ 522,711 |
Schedule of Pro Forma Information | The following unaudited pro forma information presents a summary of our consolidated results of operations, as if the acquisitions of Graphic Sciences and CEO Image had occurred on January 1, 2020. Schedule of Pro Forma Information For the year ended December 31, 2020 (unaudited) December 31, 2020 Total revenues $ 9,686,354 Net loss $ (1,993,389 ) Basic and diluted net loss per share $ (0.70 ) The following tables present the amounts of revenue and earnings of the acquirees since the acquisition date included in the consolidated income statement for the reporting period. Year ended December 31, 2021 2020 Graphic Sciences: Total revenues $ 7,995,600 $ 5,238,654 Net income $ 1,062,390 $ 645,042 Year ended December 31, 2021 2020 CEO Image: Total revenues $ 526,634 $ 375,863 Net income $ - (a) $ - (a) (a) Total earnings from the CEO Image acquisition are impracticable to disclose as they are not accounted for separately because its operations and financial reporting were merged with existing operations and financial reporting. |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | At December 31, 2021, intangible assets consisted of the following: Schedule of Intangible Assets Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 119,000 $ (21,817 ) $ 97,183 Customer contracts 5 8 1,242,000 (370,687 ) 871,313 $ 1,361,000 $ (392,504 ) $ 968,496 At December 31, 2020, intangible assets consisted of the following: Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 119,000 $ (9,917 ) $ 109,083 Customer contracts 5 8 1,242,000 (166,112 ) 1,075,888 $ 1,361,000 $ (176,029 ) $ 1,184,971 |
Schedule of Amortization Expense for Intangible Assets | Schedule of Amortization Expense for Intangible Assets For the Years Ending December 31, Amount 2022 $ 216,475 2023 216,475 2024 216,475 2025 199,008 2026 58,608 Thereafter 61,455 Intangible assets $ 968,496 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Summary of Changes in Fair Value of Earnout Liabilities | The following table provides a summary of the changes in fair value of the earnout liabilities for the years ended December 31, 2021 and 2020: Summary of Changes in Fair Value of Earnout Liabilities Year ended December 31, 2021 Fair value at January 1, 2021 $ 2,444,000 Payment (954,733 ) Additions - Change in fair value 141,414 Fair value at December 31, 2021 $ 1,630,681 Year ended December 31, 2020 Fair value at January 1, 2020 $ - Additions 889,200 Change in fair value 1,554,800 Fair value at December 31, 2020 $ 2,444,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment are comprised of the following: Schedule of Property and Equipment December 31, 2021 December 31, 2020 Computer hardware and purchased software $ 1,494,918 $ 1,019,259 Leasehold improvements 295,230 275,106 Furniture and fixtures 71,325 82,056 Property and equipment, gross 1,861,473 1,376,421 Less: accumulated depreciation (769,693 ) (677,669 ) Property and equipment, net $ 1,091,780 $ 698,752 |
Notes Payable _ Unrelated Par_2
Notes Payable – Unrelated Parties (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable to Unrelated Parties | The table below summarizes all notes payable at December 31, 2021 and 2020, respectively. See also Note 10 “Notes Payable - Related Parties.” Schedule of Notes Payable to Unrelated Parties December 31, 2021 December 31, 2020 PPP Note (a) $ - $ 838,700 2020 Notes 2,000,000 2,000,000 Total notes payable $ 2,000,000 $ 2,838,700 Less unamortized debt issuance costs (121,029 ) (224,767 ) Less unamortized debt discount (124,444 ) (231,111 ) Less current portion - (580,638 ) Long-term portion of notes payable $ 1,754,527 $ 1,802,184 (a) The full amount of the principal and interest on the PPP Note was forgiven in its entirety in January 2021. |
Schedule of Future Minimum Principal Payments of Notes Payable | Future minimum principal payments of the 2020 Notes are as follows: Schedule of Future Minimum Principal Payments of Notes Payable As of December 31, Amount 2023 $ 2,000,000 Total $ 2,000,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Rental Payments for Operating Leases | The following table sets forth the future minimum lease payments under these operating leases: Schedule of Future Rental Payments for Operating Leases For the period Ending December 31, Amount 2022 $ 931,853 2023 936,109 2024 879,142 2025 880,254 2026 713,362 Thereafter 522,856 Total $ 4,863,576 |
Schedule of Operating Lease Costs | Schedule of Operating Lease Costs For the Year Ending December 31, 2021 2020 Operating cash flows from operating leases $ 729,549 $ 482,425 Weighted average remaining lease term – operating leases 5.4 5.1 Weighted average discount rate – operating leases 7.02 % 7.96 % |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Schedule of Estimated Values of Warrants Valuation Assumptions | Schedule of Estimated Values of Warrants Valuation Assumptions Warrants Issued Risk-free interest rate 0.88 % Weighted average expected term 5 Expected volatility 130.12 % Expected dividend yield 0.00 % |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | A summary of stock option activity during the years ended December 31, 2021 and 2020 is as follows: Schedule of Stock Option Activity Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2021 145,360 $ 5.61 9 $ 19,200 Granted - - Forfeited and expired (500 ) 6.50 Outstanding at December 31, 2021 144,860 $ 5.61 8 $ 19,200 Exercisable at December 31, 2021 66,060 $ 7.35 8 $ 19,200 Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2020 46,860 $ 9.02 9 19,200 Granted 99,000 4.00 Forfeited and expired (500 ) 6.50 Outstanding at December 31, 2020 145,360 $ 5.61 9 $ 19,200 Exercisable at December 31, 2020 39,160 $ 9.51 8 $ 19,200 |
Schedule of Grants of Stock Options Over Requisite Service Period | The following represent grants of stock options, including the fair value recognized or to be recognized over the requisite service period: Schedule of Grants of Stock Options Over Requisite Service Period Grant date Shares granted (canceled) Exercise price Date fully vested Fair value February 10, 2016 4,200 $ 48.00 February 10, 2020 $ 174,748 December 6, 2016 2,000 38.00 December 6, 2020 63,937 September 25, 2017 15,000 15.00 September 25, 2019 194,149 September 25, 2017 10,000 19.00 September 25, 2019 126,862 January 30, 2019 250 45.00 January 30, 2019 885 March 11, 2019 (33,200 ) - - - March 11, 2019 33,200 6.50 December 6, 2020 24,898 (1) March 11, 2019 10,100 6.50 March 11, 2023 44,591 September 2, 2020 99,000 4.00 September 2, 2024 327,181 (1) Represents incremental fair value of replacement shares compared to canceled shares. |
Schedule of Estimated Values of Stock Option Grants Valuation Assumptions | The weighted average estimated values of director and employee stock option grants, as well as the weighted average assumptions that were used in calculating such values during the years ended December 31, 2021 and 2020, were based on estimates at the date of grant as follows: Schedule of Estimated Values of Stock Option Grants Valuation Assumptions April 30, January 1, February 10, 2015 Grant 2016 Grant 2016 Grant Risk-free interest rate 1.43 % 1.76 % 1.15 % Weighted average expected term 5 5 5 Expected volatility 143.10 % 134.18 % 132.97 % Expected dividend yield 0.00 % 0.00 % 0.00 % December 6, September 25, January 30, 2016 Grant 2017 Grant 2019 Grant Risk-free interest rate 1.84 % 1.85 % 2.54 % Weighted average expected term 5 5 5 Expected volatility 123.82 % 130.79 % 115.80 % Expected dividend yield 0.00 % 0.00 % 0.00 % March 11, September 2, 2019 Grant 2020 Grant Risk-free interest rate 2.44 % 0.26 % Weighted average expected term 5 5 Expected volatility 116.46 % 121.33 % Expected dividend yield 0.00 % 0.00 % |
Provision For Income Taxes (Tab
Provision For Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Tax Benefits | Income tax benefit consists of the following Federal, deferred components for the years ended December 31, 2021 and 2020: Summary of Income Tax Benefits December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Use of (benefit of) net operating losses $ 91,781 $ (72,541 ) Other timing differences 108,042 (91,770 ) Change in valuation allowance, including $ 188,000 (199,823 ) (23,989 ) Tax benefit $ - $ (188,300 ) |
Summary of Reconciliation of Income Tax Expense | A reconciliation is provided below of the U.S. Federal income tax expense at a statutory rate of 21% for the years ended December 31, 2021 and 2020: Summary of Reconciliation of Income Tax Expense December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 U.S. statutory rate 21 % 21 % U.S. Federal income tax at statutory rate $ 285,170 $ (501,690 ) Increase (decrease) in income taxes due to: Non-deductible earnout expense 25,909 299,040 Non-deductible goodwill amortization 39,958 33,390 Other differences 26,253 4,949 Non-taxable PPP loan and interest recovery (177,467 ) - Benefit of acquisition-date purchased deferred tax liability - (188,300 ) Other change in valuation allowance - 164,311 Income tax benefit $ - $ (188,300 ) |
Summary of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below: Summary of Deferred Tax Assets and Liabilities December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Deferred tax assets Reserves and accruals not currently deductible for tax purposes $ 50,558 $ 51,906 Amortizable assets 32,615 72,893 Net operating loss carryforwards 3,942,488 4,017,875 Deferred tax assets 4,025,661 4,142,674 Deferred tax liabilities Property and equipment (225,484 ) (142,674 ) Net Deferred tax assets 3,800,177 4,000,000 Valuation allowance (3,800,177 ) (4,000,000 ) Deferred tax assets and liabilities $ - $ - |
Certain Relationships and Rel_2
Certain Relationships and Related Transactions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Schedule of Related Party Transactions Name of Investor Relationship to Intellinetics Number of Date of Michael N. Taglich Beneficially owns more than 5% of the common stock of Intellinetics. 148,750 03/02/2020 Robert F. Taglich Beneficially owns more than 5% of the Common Stock of Intellinetics. 118,750 03/02/2020 Robert C. Schroeder Former Director and Former Chairman of the Board of Intellinetics 5,000 03/02/2020 James F. DeSocio President and Chief Executive Officer; Director of Intellinetics 7,500 03/02/2020 Joseph D. Spain Chief Financial Officer of Intellinetics 2,000 03/02/2020 |
Corporate Actions (Details Narr
Corporate Actions (Details Narrative) | Mar. 20, 2020 |
Corporate Actions | |
Stockholders' Equity, Reverse Stock Split | one-for-fifty (1-for-50) reverse stock split |
Schedule of Changes in Contract
Schedule of Changes in Contract Assets and Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Offsetting Assets [Line Items] | ||
Deferred revenue, balance at beginning of period | $ 996,131 | $ 754,073 |
Deferred revenue, Addition from acquisition | 198,659 | |
Deferred revenue, billings | 3,700,828 | 3,038,446 |
Deferred revenue, recognized revenue | (3,502,310) | (2,995,047) |
Deferred revenue, balance at end of period | 1,194,649 | 996,131 |
Accounts Receivable [Member] | ||
Offsetting Assets [Line Items] | ||
Unbilled Accounts receivables, balance at beginning of period | 523,522 | 23,371 |
Unbilled Accounts receivables, Addition from acquisition | 276,023 | |
Unbilled Accounts receivables, revenue recognized in advance of billings | 4,213,550 | 917,361 |
Unbilled Accounts receivables, billings | (4,292,290) | (693,233) |
Unbilled Accounts receivables, balance at end of period | 444,782 | 523,522 |
Other Contract [Member] | ||
Offsetting Assets [Line Items] | ||
Unbilled Accounts receivables, balance at beginning of period | 31,283 | 19,670 |
Unbilled Accounts receivables, Addition from acquisition | ||
Unbilled Accounts receivables, revenue recognized in advance of billings | 88,168 | 36,954 |
Unbilled Accounts receivables, billings | 40,895 | 25,341 |
Unbilled Accounts receivables, balance at end of period | $ 78,556 | $ 31,283 |
Schedule of Segment Information
Schedule of Segment Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Total revenues | $ 11,460,265 | $ 8,253,391 |
Total gross profit | 6,942,982 | 4,990,738 |
Total capital additions, net | 590,485 | 76,854 |
Total goodwill | 2,322,887 | 2,322,887 |
Total assets | 11,962,132 | 10,344,633 |
Document Management [Member] | ||
Total revenues | 3,089,669 | 2,816,848 |
Total gross profit | 2,542,135 | 2,160,807 |
Total capital additions, net | 44,052 | 6,440 |
Total goodwill | 522,711 | 522,711 |
Total assets | 2,233,419 | 2,295,165 |
Document Conversion [Member] | ||
Total revenues | 8,370,596 | 5,436,543 |
Total gross profit | 4,400,847 | 2,829,931 |
Total capital additions, net | 546,433 | 70,414 |
Total goodwill | 1,800,176 | 1,800,176 |
Total assets | $ 9,728,713 | $ 8,049,468 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended | |
Dec. 31, 2021USD ($)Segment | Dec. 31, 2020USD ($) | |
Product Information [Line Items] | ||
Revenue performance obligations percentage | 99.00% | |
Revenue, Remaining Performance Obligation, Amount | $ 16,835 | $ 45,323 |
Allowance for doubtful accounts receivable | 48,783 | 65,927 |
Inventory allowances | 24,000 | 15,000 |
Impairment of long lived assets | 0 | 0 |
Capitalized Computer Software, Net | 38,305 | 0 |
Advertising Expense | 10,237 | $ 7,362 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | 100.00% | |
Deferred Tax Assets, Net of Valuation Allowance | $ 3,800,177 | $ 4,000,000 |
Number of operating segments | Segment | 2 | |
Graphic Sciences [Member] | ||
Product Information [Line Items] | ||
Deferred Tax Assets, Net of Valuation Allowance | 179,400 | |
Furniture and Fixtures [Member] | ||
Product Information [Line Items] | ||
Property, plant and equipment, estimated useful lives | three to seven years | |
Leasehold Improvements [Member] | ||
Product Information [Line Items] | ||
Property, plant and equipment, estimated useful lives | seven to ten years | |
Software Development [Member] | ||
Product Information [Line Items] | ||
Capitalized Computer Software, Additions | $ 38,305 | |
Finite-Lived Intangible Asset, Useful Life | 3 years | |
Research and Development Expense | $ 345,697 | $ 293,092 |
Revenue Benchmark [Member] | Geographic Concentration Risk [Member] | MICHIGAN | ||
Product Information [Line Items] | ||
Concentration Risk, Percentage | 47.00% | |
Intellinetics Ohio and Graphic Sciences [Member] | ||
Product Information [Line Items] | ||
Percentage of voting rights outstanding | 50.00% |
Schedule of Fair Value of Asset
Schedule of Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) | Dec. 31, 2020 | Apr. 21, 2020 | Mar. 02, 2020 |
Business Combination and Asset Acquisition [Abstract] | |||
Cash | $ 17,269 | $ 17,269 | |
Accounts receivable | 1,122,737 | 50,967 | 1,071,770 |
Accounts receivable, unbilled | 276,023 | 276,023 | |
Parts and supplies | 91,396 | 91,396 | |
Prepaid expenses | 73,116 | 73,116 | |
Other current assets | 5,954 | 5,954 | |
Right of use assets | 2,885,618 | 2,885,618 | |
Property and equipment | 735,885 | 3,513 | 732,372 |
Intangible assets (see Note 6) | 1,361,000 | 131,000 | 1,230,000 |
Assets | 6,568,998 | 185,480 | 6,383,518 |
Accounts payable | 168,749 | 39,127 | 129,622 |
Accrued expenses | 162,426 | 6,477 | 155,949 |
Lease liabilities | 2,947,684 | 2,947,684 | |
Federal and state taxes payable | 168,900 | 168,900 | |
Deferred revenue | 198,659 | 159,473 | 39,186 |
Deferred tax liabilities - Net | 149,900 | 149,900 | |
Liabilities | 3,796,318 | 205,077 | 3,591,241 |
Total identifiable net assets/(liabilities) | 2,772,680 | (19,597) | 2,792,277 |
Purchase price | 5,095,567 | 503,114 | 4,592,453 |
Goodwill - Excess of purchase price over fair value of net assets acquired | $ 2,322,887 | $ 522,711 | $ 1,800,176 |
Schedule of Pro Forma Informati
Schedule of Pro Forma Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Business Acquisition [Line Items] | |||
Total revenues | $ 9,686,354 | ||
Net income (loss) | $ (1,993,389) | ||
Basic and diluted net loss per share | $ (0.70) | ||
Graphic Sciences [Member] | |||
Business Acquisition [Line Items] | |||
Total revenues | $ 7,995,600 | $ 5,238,654 | |
Net income (loss) | 1,062,390 | 645,042 | |
CEO Image [Member] | |||
Business Acquisition [Line Items] | |||
Total revenues | 526,634 | 375,863 | |
Net income (loss) | [1] | ||
[1] | Total earnings from the CEO Image acquisition are impracticable to disclose as they are not accounted for separately because its operations and financial reporting were merged with existing operations and financial reporting. |
Business Acquisitions (Details
Business Acquisitions (Details Narrative) - USD ($) | Jun. 10, 2021 | Jun. 08, 2021 | Apr. 21, 2020 | Mar. 02, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Earnout liability | $ 1,630,681 | $ 2,444,000 | |||||
Change in fair value of earnout liabilities | (141,414) | (1,554,800) | |||||
Professional fees | 636,440 | ||||||
Graphic Sciences, Inc. [Member] | |||||||
Business Combination, Consideration Transferred | $ 3,906,253 | ||||||
Earnout liability | 686,200 | 1,463,644 | |||||
Change in fair value of earnout liabilities | 123,377 | 1,554,800 | |||||
Graphic Sciences, Inc. [Member] | Three Year Period [Member] | Seller [Member] | |||||||
Earnout liability | 833,000 | ||||||
Maximum payout | $ 2,500,000 | ||||||
Graphic Sciences, Inc. [Member] | First Annual Period [Member] | |||||||
Business Combination, Consideration Transferred | $ 769,733 | ||||||
CEO Image Systems [Member[ | |||||||
Business Combination, Consideration Transferred | $ 128,832 | ||||||
Earnout liability | 203,000 | 167,038 | |||||
Change in fair value of earnout liabilities | $ 18,038 | $ 0 | |||||
Business Combination Contingent Consideration Liability Installment Payments | 170,000 | ||||||
CEO Image Systems [Member[ | First Annual Period [Member] | |||||||
Business Combination, Consideration Transferred | $ 185,000 | ||||||
CEO Image Systems [Member[ | Two Year Period [Member] | Seller [Member] | |||||||
Earnout liability | 185,000 | ||||||
Maximum payout | $ 370,000 |
Schedule of Intangible Assets (
Schedule of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, cost | $ 1,361,000 | $ 1,361,000 |
intangible assets, accumulated amortization | (392,504) | (176,029) |
Intangible assets, net | $ 968,496 | $ 1,184,971 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Estimated Useful Life | 10 years | 10 years |
Intangible assets, cost | $ 119,000 | $ 119,000 |
intangible assets, accumulated amortization | (21,817) | (9,917) |
Intangible assets, net | 97,183 | 109,083 |
Customer Contracts [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, cost | 1,242,000 | 1,242,000 |
intangible assets, accumulated amortization | (370,687) | (166,112) |
Intangible assets, net | $ 871,313 | $ 1,075,888 |
Customer Contracts [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Estimated Useful Life | 5 years | 5 years |
Customer Contracts [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Estimated Useful Life | 8 years | 8 years |
Schedule of Amortization Expens
Schedule of Amortization Expense for Intangible Assets (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 | $ 216,475 | |
2023 | 216,475 | |
2024 | 216,475 | |
2025 | 199,008 | |
2026 | 58,608 | |
Thereafter | 61,455 | |
Intangible assets | $ 968,496 | $ 1,184,971 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 216,475 | $ 176,029 |
Summary of Changes in Fair Valu
Summary of Changes in Fair Value of Earnout Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | ||
Fair value at January 1, 2020 | $ 2,444,000 | |
Payment | (954,733) | |
Additions | 889,200 | |
Change in fair value | 141,414 | 1,554,800 |
Fair value at December 31, 2020 | $ 1,630,681 | $ 2,444,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Narrative) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair value measurement, valuation description | Key unobservable inputs include revenue growth rates, which ranged from 0% to 7%, and volatility rates, which were 20% for gross profits. A decrease in future revenues and gross profits may result in a lower estimated fair value of the earnout liabilities |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Abstract] | ||
Computer hardware and purchased software | $ 1,494,918 | $ 1,019,259 |
Leasehold improvements | 295,230 | 275,106 |
Furniture and fixtures | 71,325 | 82,056 |
Property and equipment, gross | 1,861,473 | 1,376,421 |
Less: accumulated depreciation | (769,693) | (677,669) |
Property and equipment, net | $ 1,091,780 | $ 698,752 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 197,457 | $ 120,906 |
Schedule of Notes Payable to Un
Schedule of Notes Payable to Unrelated Parties (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||
Total notes payable | $ 2,000,000 | $ 2,838,700 | |
Less unamortized debt issuance costs | (121,029) | (224,767) | |
Less unamortized debt discount | (124,444) | (231,111) | |
Less current portion | (580,638) | ||
Long-term portion of notes payable | 1,754,527 | 1,802,184 | |
PPP Note Payable [Member] | |||
Debt Instrument [Line Items] | |||
Total notes payable | 838,700 | [1] | |
2020 Notes [Member] | |||
Debt Instrument [Line Items] | |||
Total notes payable | $ 2,000,000 | $ 2,000,000 | |
[1] | The full amount of the principal and interest on the PPP Note was forgiven in its entirety in January 2021. |
Schedule of Future Minimum Prin
Schedule of Future Minimum Principal Payments of Notes Payable (Details) | Dec. 31, 2021USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 2,000,000 |
Total | 2,000,000 |
Total | $ 2,000,000 |
Notes Payable _ Unrelated Par_3
Notes Payable – Unrelated Parties (Details Narrative) - USD ($) | Mar. 02, 2020 | Mar. 02, 2020 | Mar. 02, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 15, 2020 |
Short-term Debt [Line Items] | ||||||
Interest Payable | $ 0 | |||||
Interest Expense, Debt | 452,120 | $ 548,742 | ||||
Amortization of Debt Discount (Premium) | 18,296 | |||||
Notes Payable | 2,000,000 | 2,838,700 | ||||
Gain (Loss) on Extinguishment of Debt | 845,083 | 287,426 | ||||
Accredited Investors [Member] | Securities Purchase Agreement [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | 12.00% | 12.00% | |||
Default penalty percentage | 20.00% | |||||
Amortization of Debt Discount (Premium) | $ 320,000 | $ 106,666 | $ 88,889 | |||
Stock Issued During Period, Shares, New Issues | 80,000 | |||||
PNC Bank [Member] | Paycheck Protection Program [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.00% | |||||
Notes Payable | $ 838,700 | |||||
Convertible Promissory Notes [Member] | Taglich Brothers, Inc.[Member] | ||||||
Short-term Debt [Line Items] | ||||||
Sale of stock price per share | $ 4 | $ 4 | $ 4 | |||
Number of common stock share earned fees | 35,250 | |||||
12% Subordinated Notes [Member] | Accredited Investors [Member] | Securities Purchase Agreement [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Sale of stock price per share | $ 1,000 | $ 1,000 | $ 1,000 | |||
Sale of Stock, Number of Shares Issued in Transaction | 2,000 | |||||
Stock Issued During Period, Shares, Conversion of Units | 40 | |||||
Proceeds from Issuance of Debt | $ 2,000,000 | |||||
Debt Instrument, Maturity Date | Feb. 28, 2023 | |||||
Stock Issued During Period, Shares, New Issues | 40 | |||||
Two Thousand Sixteen To Two Thousand Eighteen [Member] | Convertible Promissory Notes [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | 1,433,689 | |||||
Sale of stock price per share | $ 4 | $ 4 | $ 4 |
Notes Payable - Related Parti_2
Notes Payable - Related Parties (Details Narrative) - USD ($) | May 15, 2020 | Mar. 02, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Short-term Debt [Line Items] | ||||
Interest Expense, Debt | $ 452,120 | $ 548,742 | ||
Repayments of Related Party Debt | 47,728 | |||
Convertible Promissory Notes [Member] | 2019 Related Notes [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Conversion, Converted Instrument, Amount | $ 350,000 | |||
Repayments of Related Party Debt | $ 47,728 | |||
2016-2019 [Member] | Convertible Promissory Notes [Member] | Related Party [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | |||
Debt Instrument, Face Amount | $ 1,562,728 | |||
Debt Conversion, Converted Instrument, Amount | $ 1,433,689 | |||
Debt Instrument, Convertible, Conversion Price | $ 4 | |||
Notes Payable - Related Parties [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Expense, Debt | $ 88,941 |
Deferred Compensation (Details
Deferred Compensation (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Deferred Compensation Liability, Current | $ 100,828 | $ 100,828 |
Increase (Decrease) in Deferred Compensation | 16,338 | |
Employment Agreements [Member] | Founders [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Deferred Compensation Liability, Current | $ 100,828 |
Schedule of Future Rental Payme
Schedule of Future Rental Payments for Operating Leases (Details) | Dec. 31, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2022 | $ 931,853 |
2023 | 936,109 |
2024 | 879,142 |
2025 | 880,254 |
2026 | 713,362 |
Thereafter | 522,856 |
Total | $ 4,863,576 |
Schedule of Operating Lease Cos
Schedule of Operating Lease Costs (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 729,549 | $ 482,425 |
Weighted average remaining lease term - operating leases | 5 years 4 months 24 days | 5 years 1 month 6 days |
Weighted average discount rate - operating leases | 7.02% | 7.96% |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Jan. 02, 2010USD ($) | Jan. 01, 2010USD ($)ft² | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Loss Contingencies [Line Items] | ||||
Area of Land | ft² | 6,000 | |||
Date of lease commenced | Jan. 1, 2010 | |||
Lease extension date | Sep. 18, 2021 | |||
Lease Expiration Date | Dec. 31, 2028 | |||
Monthly rental payment | $ 4,638 | |||
Operating Lease, Cost | $ 1,043,980 | $ 743,373 | ||
Short-term Lease, Cost | $ 97,024 | $ 71,411 | ||
Sterling Heights, Michigan [Member] | ||||
Loss Contingencies [Line Items] | ||||
Area of Land | ft² | 37,000 | |||
Lease Expiration Date | Apr. 30, 2028 | |||
Monthly rental payment | $ 24,171 | |||
Travers City [Member] | ||||
Loss Contingencies [Line Items] | ||||
Area of Land | ft² | 5,000 | |||
Graphic Sciences, Inc. [Member] | Vehicles [Member] | ||||
Loss Contingencies [Line Items] | ||||
Lease extension date | Oct. 31, 2024 | |||
Monthly rental payment | $ 2,618 | |||
Graphic Sciences, Inc. [Member] | Traverse City [Member] | ||||
Loss Contingencies [Line Items] | ||||
Lease extension date | Jan. 31, 2024 | |||
Monthly rental payment | $ 4,500 | |||
Graphic Sciences, Inc. [Member] | Madison Heights [Member] | ||||
Loss Contingencies [Line Items] | ||||
Monthly rental payment | $ 1,605 | |||
Graphic Sciences, Inc. [Member] | Madison Heights [Member] | ||||
Loss Contingencies [Line Items] | ||||
Lease extension date | Aug. 31, 2026 | |||
Monthly rental payment | $ 41,508 | |||
Lessor, operating lease, description | Our subsidiary, Graphic Sciences, uses 36,000 square feet of leased space in Madison Heights, Michigan as its main facility. Graphic Sciences uses about 20,000 square feet for its records storage services, with the remainder of the space used for production, sales, and administration. | |||
Graphic Sciences, Inc. [Member] | Highland Park, MI, and a Satellite Office [Member] | ||||
Loss Contingencies [Line Items] | ||||
Monthly rental payment | $ 20,452 | |||
Lessor, operating lease, description | Graphic Sciences also leases and uses a separate 37,000 square foot building in Sterling Heights, Michigan for document storage, except approximately 5,000 square feet for production, and a satellite office in Traverse City, Michigan for production | |||
Maximum [Member] | Graphic Sciences, Inc. [Member] | Madison Heights [Member] | ||||
Loss Contingencies [Line Items] | ||||
Monthly rental payment | $ 45,828 | |||
Lease Agreements [Member] | Maximum [Member] | ||||
Loss Contingencies [Line Items] | ||||
Monthly rental payment | $ 5,850 |
Schedule of Estimated Values of
Schedule of Estimated Values of Warrants Valuation Assumptions (Details) - Placement Agent [Member] | Mar. 02, 2020 |
Measurement Input, Risk Free Interest Rate [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Warrants, measurement input percentage | 0.88 |
Measurement Input, Expected Term [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Warrants, term | 5 years |
Measurement Input, Price Volatility [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Warrants, measurement input percentage | 130.12 |
Measurement Input, Expected Dividend Rate [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Warrants, measurement input percentage | 0 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | Mar. 20, 2020 | Mar. 02, 2020 | Feb. 29, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Common stock authorized shares | 25,000,000 | 25,000,000 | |||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |||
Common stock, shares issued | 2,823,072 | 2,810,865 | |||
Common stock, shares outstanding | 2,823,072 | 2,810,865 | |||
Warrant to purchase of shares of common stock | 95,500 | ||||
Fair value of warrants issued price per share | $ 3.90 | ||||
Interest Expense, Debt | $ 452,120 | $ 548,742 | |||
Reverse stock split, description | one-for-fifty (1-for-50) reverse stock split | ||||
Private Placement [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Interest Expense, Debt | $ 103,739 | $ 86,449 | |||
Placement Agent [Member] | Private Placement [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Payment to placement agent on private placement offering | $ 440,000 | ||||
Percentage of gross proceeds paid to private placement agent | 8.00% | ||||
Warrant to purchase of shares of common stock | 95,500 | ||||
Class of warrant or right, exercise price of warrants or rights | $ 4 | ||||
Warrants and Rights Outstanding, Term | 5 years | ||||
Board of Directors [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Common stock authorized shares | 25,000,000 | 75,000,000 | 25,000,000 | ||
Reverse stock split, description | effectuate a reverse split of our issued and outstanding shares of common stock at a ratio of one-for-fifty (1-for-50) (the “Reverse Split”), and reduce the number of authorized shares of our common stock to 25,000,000 shares (the “25,000,000 Share Amendment”). The Reverse Split and the 25,000,000 Share Amendment became effective on March 20, 2020 | ||||
Board of Directors [Member] | Post-split Basis [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Common stock authorized shares | 1,500,000 | ||||
Board of Directors [Member] | Maximum [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Common stock authorized shares | 160,000,000 | ||||
Board of Directors [Member] | Maximum [Member] | Post-split Basis [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Common stock authorized shares | 3,200,000 | ||||
Securities Purchase Agreement [Member] | Accredited Investors [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Number of shares of common stock | 80,000 | ||||
Securities Purchase Agreement [Member] | Accredited Investors [Member] | 12% Subordinated Notes [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Number of sale of stock transaction | 2,000 | ||||
Number of shares of common stock | 40 | ||||
Sale of stock price per share | $ 1,000 | ||||
Proceeds from private placement | $ 2,000,000 | ||||
Common stock purchase price shares | 2,000 | ||||
Number of convertible units, value | $ 1,000 | ||||
Securities Purchase Agreement [Member] | Accredited Investors [Member] | Private Placement [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Number of sale of stock transaction | 955,000 | ||||
Number of shares of common stock | 875,000 | ||||
Sale of stock price per share | $ 4 | ||||
Proceeds from private placement | $ 3,500,000 | ||||
2015 Plan [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Common stock, capital shares reserved for future issuance | 497,330 | ||||
Exercise of Outstanding Warrants [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Common stock, capital shares reserved for future issuance | 131,700 | ||||
Warrants [Member] | Private Placement [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Underwriting expenses | 236,761 | ||||
Debt Issuance Costs, Net | $ 135,291 | ||||
Fair value of warrants issued price per share | $ 3.90 | ||||
Warrants [Member] | Placement Agent [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Underwriting expenses | $ 307,867 | ||||
Debt Issuance Costs, Net | $ 175,924 | ||||
Warrant One [Member] | Placement Agent [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Warrant to purchase of shares of common stock | 3,000 | ||||
Class of warrant or right, exercise price of warrants or rights | $ 15 | ||||
Warrant maturity date | Sep. 22, 2022 | ||||
Warrant Two [Member] | Placement Agent [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Warrant to purchase of shares of common stock | 17,200 | ||||
Class of warrant or right, exercise price of warrants or rights | $ 12.50 | ||||
Warrant maturity date | Nov. 30, 2022 | ||||
Warrant Three [Member] | Placement Agent [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Warrant to purchase of shares of common stock | 16,000 | ||||
Class of warrant or right, exercise price of warrants or rights | $ 9 | ||||
Warrant maturity date | Sep. 26, 2023 | ||||
Warrant Four [Member] | Placement Agent [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Warrant to purchase of shares of common stock | 95,500 | ||||
Class of warrant or right, exercise price of warrants or rights | $ 4 | ||||
Warrant maturity date | Feb. 28, 2025 |
Schedule of Stock Option Activi
Schedule of Stock Option Activity (Details) - Equity Option [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares Under Option, Outstanding beginning balance | 145,360 | 46,860 |
Weighted- Average Exercise Price, Outstanding beginning balance | $ 5.61 | $ 9.02 |
Weighted Average Remaining Contractual Life Outstanding, beginning | 9 years | 9 years |
Aggregate Intrinsic Value, Outstanding, beginning balance | $ 19,200 | $ 19,200 |
Shares Under Option, Granted | 99,000 | |
Weighted- Average Exercise Price, Granted | $ 4 | |
Shares Under Option, Forfeited and expired | (500) | (500) |
Weighted- Average Exercise Price, Forfeited and expired | $ 6.50 | $ 6.50 |
Shares Under Option, Outstanding ending balance | 144,860 | 145,360 |
Weighted- Average Exercise Price, Outstanding ending balance | $ 5.61 | $ 5.61 |
Weighted Average Remaining Contractual Life Outstanding, ending | 8 years | 9 years |
Aggregate Intrinsic Value, Outstanding ending balance | $ 19,200 | $ 19,200 |
Shares Under Option, Exercisable ending balance | 66,060 | 39,160 |
Weighted- Average Exercise Price, Exercisable ending balance | $ 7.35 | $ 9.51 |
Weighted Average Remaining Contractual Life, Exercisable, ending | 8 years | 8 years |
Aggregate Intrinsic Value, Exercisable ending balance | $ 19,200 | $ 19,200 |
Schedule of Grants of Stock Opt
Schedule of Grants of Stock Options Over Requisite Service Period (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value | $ 91,913 | $ 16,650 | |
February 10, 2016 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (canceled) | 4,200 | ||
Exercise price | $ 48 | ||
Date fully vested | Feb. 10, 2020 | ||
Fair value | $ 174,748 | ||
Shares granted (canceled) | (4,200) | ||
December 6, 2016 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (canceled) | 2,000 | ||
Exercise price | $ 38 | ||
Date fully vested | Dec. 6, 2020 | ||
Fair value | $ 63,937 | ||
Shares granted (canceled) | (2,000) | ||
September 25, 2017 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (canceled) | 15,000 | ||
Exercise price | $ 15 | ||
Date fully vested | Sep. 25, 2019 | ||
Fair value | $ 194,149 | ||
Shares granted (canceled) | (15,000) | ||
September 25, 2017 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (canceled) | 10,000 | ||
Exercise price | $ 19 | ||
Date fully vested | Sep. 25, 2019 | ||
Fair value | $ 126,862 | ||
Shares granted (canceled) | (10,000) | ||
January 30, 2019 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (canceled) | 250 | ||
Exercise price | $ 45 | ||
Date fully vested | Jan. 30, 2019 | ||
Fair value | $ 885 | ||
Shares granted (canceled) | (250) | ||
March 11, 2019 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (canceled) | 33,200 | ||
Exercise price | |||
Fair value | |||
Shares granted (canceled) | (33,200) | ||
March 11, 2019, Grant one [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (canceled) | [1] | 33,200 | |
Exercise price | [1] | $ 6.50 | |
Date fully vested | Dec. 6, 2020 | ||
Fair value | [1] | $ 24,898 | |
Shares granted (canceled) | [1] | (33,200) | |
March 11, 2019, Grant two [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (canceled) | 10,100 | ||
Exercise price | $ 6.50 | ||
Date fully vested | Mar. 11, 2023 | ||
Fair value | $ 44,591 | ||
Shares granted (canceled) | (10,100) | ||
September 2, 2020 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted (canceled) | 99,000 | ||
Exercise price | $ 4 | ||
Date fully vested | Sep. 2, 2024 | ||
Fair value | $ 327,181 | ||
Shares granted (canceled) | (99,000) | ||
[1] | Represents incremental fair value of replacement shares compared to canceled shares. |
Schedule of Estimated Values _2
Schedule of Estimated Values of Stock Option Grants Valuation Assumptions (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
April 30, 2015 Grant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.43% | 1.43% |
Weighted average expected term | 5 years | 5 years |
Expected volatility | 143.10% | 143.10% |
Expected dividend yield | 0.00% | 0.00% |
January 1, 2016 Grant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.76% | 1.76% |
Weighted average expected term | 5 years | 5 years |
Expected volatility | 134.18% | 134.18% |
Expected dividend yield | 0.00% | 0.00% |
February 10, 2016 Grant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.15% | 1.15% |
Weighted average expected term | 5 years | 5 years |
Expected volatility | 132.97% | 132.97% |
Expected dividend yield | 0.00% | 0.00% |
December 6, 2016 Grant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.84% | 1.84% |
Weighted average expected term | 5 years | 5 years |
Expected volatility | 123.82% | 123.82% |
Expected dividend yield | 0.00% | 0.00% |
September 25, 2017 Grant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.85% | 1.85% |
Weighted average expected term | 5 years | 5 years |
Expected volatility | 130.79% | 130.79% |
Expected dividend yield | 0.00% | 0.00% |
January 30, 2019 Grant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 2.54% | 2.54% |
Weighted average expected term | 5 years | 5 years |
Expected volatility | 115.80% | 115.80% |
Expected dividend yield | 0.00% | 0.00% |
March 11, 2019 Grant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 2.44% | 2.44% |
Weighted average expected term | 5 years | 5 years |
Expected volatility | 116.46% | 116.46% |
Expected dividend yield | 0.00% | 0.00% |
September 2, 2020 Grant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 0.26% | 0.26% |
Weighted average expected term | 5 years | 5 years |
Expected volatility | 121.33% | 121.33% |
Expected dividend yield | 0.00% | 0.00% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | Feb. 15, 2021 | Jan. 02, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 3.30 | |||
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $ 230,620 | $ 322,874 | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 3 years | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | $ 91,913 | 16,650 | ||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 12,207 | 16,429 | ||
Share-based Payment Arrangement, Expense | 57,500 | 57,500 | ||
Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Payment Arrangement, Expense | $ 92,253 | $ 58,770 |
Concentrations (Details Narrati
Concentrations (Details Narrative) - Customer Concentration Risk [Member] | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Largest Customer State of Michigan [Member] | Revenue Benchmark [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 47.00% | |
Rocket Mortage [Member] | Revenue Benchmark [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 9.00% | 8.00% |
Government Contracts [Member] | Revenue Benchmark [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 62.00% | 64.00% |
Customer One [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 65.00% | 54.00% |
Customer Two [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 7.00% | 16.00% |
Summary of Income Tax Benefits
Summary of Income Tax Benefits (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Use of (benefit of) net operating losses | $ 91,781 | $ (72,541) |
Other timing differences | 108,042 | (91,770) |
Change in valuation allowance, including $188,000 reduction in valuation allowance due to purchased deferred tax liability in 2020 | (199,823) | (23,989) |
Tax benefit | $ (188,300) |
Summary of Income Tax Benefit_2
Summary of Income Tax Benefits (Details) (Parenthetical) | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Income Tax Disclosure [Abstract] | |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 188,000 |
Summary of Reconciliation of In
Summary of Reconciliation of Income Tax Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
U.S. statutory rate | 21.00% | 21.00% |
U.S. Federal income tax at statutory rate | $ 285,170 | $ (501,690) |
Non-deductible earnout expense | 25,909 | 299,040 |
Non-deductible goodwill amortization | 39,958 | 33,390 |
Other differences | 26,253 | 4,949 |
Non-taxable PPP loan and interest recovery | (177,467) | |
Benefit of acquisition-date purchased deferred tax liability | (188,300) | |
Other change in valuation allowance | 164,311 | |
Tax benefit | $ (188,300) |
Summary of Deferred Tax Assets
Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Reserves and accruals not currently deductible for tax purposes | $ 50,558 | $ 51,906 |
Amortizable assets | 32,615 | 72,893 |
Net operating loss carryforwards | 3,942,488 | 4,017,875 |
Deferred tax assets | 4,025,661 | 4,142,674 |
Property and equipment | (225,484) | (142,674) |
Net Deferred tax assets | 3,800,177 | 4,000,000 |
Valuation allowance | (3,800,177) | (4,000,000) |
Deferred tax assets and liabilities |
Provision For Income Taxes (Det
Provision For Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Operating loss carryforwards | $ 18,762,000 | $ 19,129,000 |
Operating loss carry forwards expiration period | 2040, and a portion of the net operating loss carry forwards have an indefinite carry forward period |
Schedule of Related Party Trans
Schedule of Related Party Transactions (Details) | Mar. 02, 2020shares |
Michael N. Taglich [Member] | |
Related Party Transaction [Line Items] | |
Relationship to the Company | Beneficially owns more than 5% of the common stock of Intellinetics. |
Number of Shares Purchased | 148,750 |
Date of Transaction | Mar. 2, 2020 |
Robert F. Taglich [Member] | |
Related Party Transaction [Line Items] | |
Relationship to the Company | Beneficially owns more than 5% of the Common Stock of Intellinetics. |
Number of Shares Purchased | 118,750 |
Date of Transaction | Mar. 2, 2020 |
Robert C. Schroeder [Member] | |
Related Party Transaction [Line Items] | |
Relationship to the Company | Former Director and Former Chairman of the Board of Intellinetics |
Number of Shares Purchased | 5,000 |
Date of Transaction | Mar. 2, 2020 |
James F. DeSocio [Member] | |
Related Party Transaction [Line Items] | |
Relationship to the Company | President and Chief Executive Officer; Director of Intellinetics |
Number of Shares Purchased | 7,500 |
Date of Transaction | Mar. 2, 2020 |
Joseph D. Spain [Member] | |
Related Party Transaction [Line Items] | |
Relationship to the Company | Chief Financial Officer of Intellinetics |
Number of Shares Purchased | 2,000 |
Date of Transaction | Mar. 2, 2020 |
Certain Relationships and Rel_3
Certain Relationships and Related Transactions (Details Narrative) - USD ($) | Mar. 02, 2020 | Apr. 15, 2019 | Dec. 31, 2020 |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Number of warrants to purchase common stock | 95,500 | ||
Taglich Brothers, Inc.[Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Payments to private placement | $ 440,000 | ||
Number of warrants to purchase common stock | 95,500 | ||
Warrants exercise price, per share | $ 4 | ||
2020 Private Placement [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Debt Instrument, Description | We issued and sold (i) shares of common stock, at a price of $ | ||
Shares Issued, Price Per Share | $ 4 | ||
Equity, beneficial ownership, description | William M. Cooke, a director of Intellinetics, is the Vice President of Investment Banking at Taglich Brothers, Inc. Robert F. Taglich and Michael N. Taglich, each beneficial owners of more than 5% of our common stock, are also both principals of Taglich Brothers, Inc. | ||
2020 Private Placement [Member] | Taglich Brothers, Inc.[Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Commission percentage | 8.00% | ||
Share sold percentage | 10.00% | ||
Stock Issued During Period, Shares, Other | 35,250 | ||
Debt Instrument, Convertible, Conversion Price | $ 4 | ||
Original principal amount, percentage | 3.00% | ||
Engagement Agreement [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Payment of success fee | $ 300,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - Director [Member] | Jan. 06, 2022USD ($)shares |
Subsequent Event [Line Items] | |
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures | shares | 8,097 |
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | $ | $ 57,500 |