Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 23, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 001-41495 | ||
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 | ||
Security Exchange Name | NYSEAMER | ||
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 | $ 10,269,489 | ||
Entity Common Stock, Shares Outstanding | 4,113,621 | ||
Documents Incorporated by Reference [Text Block] | Portions of the registrant’s definitive Proxy Statement for the 2024 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, 2023, are incorporated by reference in Part III hereof | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Auditor Firm ID | 1808 | ||
Auditor Name | GBQ Partners LLC | ||
Auditor Location | Columbus, Ohio |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 1,215,248 | $ 2,696,481 |
Accounts receivable, net | 1,850,375 | 1,121,083 |
Accounts receivable, unbilled | 1,320,837 | 596,410 |
Parts and supplies, net | 110,272 | 73,221 |
Contract assets | 140,165 | 80,378 |
Prepaid expenses and other current assets | 367,478 | 325,466 |
Total current assets | 5,004,375 | 4,893,039 |
Property and equipment, net | 924,257 | 1,068,706 |
Right of use assets, operating | 2,532,928 | 3,200,191 |
Right of use assets, finance | 219,777 | 154,282 |
Intangible assets, net | 3,909,338 | 4,419,646 |
Goodwill | 5,789,821 | 5,789,821 |
Other assets | 645,764 | 417,457 |
Total assets | 19,026,260 | 19,943,142 |
Current liabilities: | ||
Accounts payable | 194,454 | 370,300 |
Accrued compensation | 337,884 | 411,683 |
Accrued expenses | 164,103 | 114,902 |
Lease liabilities, operating - current | 712,607 | 692,074 |
Lease liabilities, finance - current | 49,926 | 22,493 |
Deferred revenues | 2,927,808 | 2,754,064 |
Earnout liabilities - current | 700,000 | |
Total current liabilities | 4,386,782 | 6,002,482 |
Long-term liabilities: | ||
Lease liabilities, operating - net of current portion | 1,942,970 | 2,624,608 |
Lease liabilities, finance - net of current portion | 175,943 | 133,131 |
Total long-term liabilities | 4,888,757 | 5,371,858 |
Total liabilities | 9,275,539 | 11,374,340 |
Stockholders’ equity: | ||
Common stock, $0.001 par value, 25,000,000 shares authorized; 4,113,621 and 4,073,757 shares issued and outstanding at December 31, 2023 and 2022, respectively | 4,114 | 4,074 |
Additional paid-in capital | 30,841,630 | 30,179,017 |
Accumulated deficit | (21,095,023) | (21,614,289) |
Total stockholders’ equity | 9,750,721 | 8,568,802 |
Total liabilities and stockholders’ equity | 19,026,260 | 19,943,142 |
Nonrelated Party [Member] | ||
Current liabilities: | ||
Notes payable - current | 936,966 | |
Long-term liabilities: | ||
Notes payable | 2,209,242 | 2,085,035 |
Related Party [Member] | ||
Long-term liabilities: | ||
Notes payable | $ 560,602 | $ 529,084 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
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 | 4,113,621 | 4,073,757 |
Common stock, shares outstanding | 4,113,621 | 4,073,757 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenues: | ||
Total revenues | $ 16,886,381 | $ 14,016,928 |
Cost of revenues: | ||
Total cost of revenues | 6,322,426 | 5,107,770 |
Gross profit | 10,563,955 | 8,909,158 |
Operating expenses: | ||
General and administrative | 6,455,088 | 4,945,214 |
Change in fair value of earnout liabilities | 87,652 | |
Transaction costs | 355,281 | |
Sales and marketing | 2,026,871 | 1,971,493 |
Depreciation and amortization | 974,527 | 722,197 |
Total operating expenses | 9,456,486 | 8,081,837 |
Income from operations | 1,107,469 | 827,321 |
Other (expense) income | ||
Interest expense, net | (588,203) | (803,294) |
Total other (expense) income, net | (588,203) | (803,294) |
Net income | $ 519,266 | $ 24,027 |
Basic net income per share: | $ 0.13 | $ 0.01 |
Diluted net income per share: | $ 0.11 | $ 0.01 |
Weighted average number of common shares outstanding - basic | 4,074,194 | 3,767,299 |
Weighted average number of common shares outstanding - diluted | 4,652,058 | 4,295,817 |
Sale Of Software [Member] | ||
Revenues: | ||
Total revenues | $ 100,260 | $ 159,084 |
Cost of revenues: | ||
Total cost of revenues | 25,736 | 64,577 |
Software As A Service [Member] | ||
Revenues: | ||
Total revenues | 5,133,215 | 4,017,409 |
Cost of revenues: | ||
Total cost of revenues | 889,135 | 701,433 |
Software Maintenance Services [Member] | ||
Revenues: | ||
Total revenues | 1,407,064 | 1,387,885 |
Cost of revenues: | ||
Total cost of revenues | 59,373 | 79,738 |
Professional Services [Member] | ||
Revenues: | ||
Total revenues | 9,167,428 | 7,357,937 |
Cost of revenues: | ||
Total cost of revenues | 4,992,826 | 3,908,205 |
Storageand Retrieval Services [Member] | ||
Revenues: | ||
Total revenues | 1,078,414 | 1,094,613 |
Cost of revenues: | ||
Total cost of revenues | $ 355,356 | $ 353,817 |
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, 2021 | $ 2,823 | $ 24,297,229 | $ (21,638,316) | $ 2,661,736 |
Beginning balance, shares at Dec. 31, 2021 | 2,823,072 | |||
Stock Issued to Directors | $ 8 | 57,492 | 57,500 | |
Stock Issued to Directors, shares | 8,097 | |||
Stock Option Compensation | 363,950 | 363,950 | ||
Stock Issued | $ 1,243 | 5,739,515 | 5,740,758 | |
Stock Issued, shares | 1,242,588 | |||
Equity Issuance Costs | (492,182) | (492,182) | ||
Note Offer Warrants | 213,013 | 213,013 | ||
Net Income | 24,027 | 24,027 | ||
Ending balance, value at Dec. 31, 2022 | $ 4,074 | 30,179,017 | (21,614,289) | 8,568,802 |
Ending balance, shares at Dec. 31, 2022 | 4,073,757 | |||
Stock Issued to Directors | $ 40 | 198,084 | 198,124 | |
Stock Issued to Directors, shares | 39,864 | |||
Stock Option Compensation | 464,529 | 464,529 | ||
Net Income | 519,266 | 519,266 | ||
Ending balance, value at Dec. 31, 2023 | $ 4,114 | $ 30,841,630 | $ (21,095,023) | $ 9,750,721 |
Ending balance, shares at Dec. 31, 2023 | 4,113,621 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 519,266 | $ 24,027 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 974,527 | 722,197 |
Bad debt expense | 77,211 | 42,129 |
Loss on disposal of fixed assets | 24,473 | |
Amortization of deferred financing costs | 177,164 | 216,381 |
Amortization of debt discount | 22,045 | 102,400 |
Amortization of right of use assets, financing | 42,115 | 6,708 |
Stock issued for services | 198,124 | 57,500 |
Stock option compensation | 464,529 | 363,950 |
Change in fair value of earnout liabilities | 87,652 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (806,503) | 81,227 |
Accounts receivable, unbilled | (724,427) | (151,628) |
Parts and supplies | (37,051) | 3,470 |
Prepaid expenses and other current assets | (101,799) | (176,596) |
Accounts payable and accrued expenses | (200,444) | 173,480 |
Operating lease assets and liabilities, net | 6,158 | 25,351 |
Deferred compensation | (100,828) | |
Deferred revenues | 173,744 | 486,885 |
Total adjustments | 265,393 | 1,964,751 |
Net cash provided by operating activities | 784,659 | 1,988,778 |
Cash flows from investing activities: | ||
Cash paid to acquire business, net | (6,383,269) | |
Capitalization of internal use software | (436,837) | (376,345) |
Purchases of property and equipment | (111,240) | (200,980) |
Net cash used in investing activities | (548,077) | (6,960,594) |
Cash flows from financing activities: | ||
Payment of earnout liabilities | (700,000) | (1,018,333) |
Proceeds from issuance of common stock | 5,740,758 | |
Offering costs paid on issuance of common stock and notes | (746,342) | |
Proceeds from notes payable | 2,364,500 | |
Proceeds from notes payable - related parties | 600,000 | |
Other net changes in finance lease assets and liabilities | (2,411) | |
Principal payments on financing lease liability | (34,954) | (5,366) |
Repayment of notes payable | (980,450) | (1,019,550) |
Net cash (used in) provided by financing activities | (1,717,815) | 5,915,667 |
Net (decrease) increase in cash | (1,481,233) | 943,851 |
Cash - beginning of period | 2,696,481 | 1,752,630 |
Cash - end of period | 1,215,248 | 2,696,481 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 418,790 | 496,805 |
Cash paid during the period for income taxes | 21,667 | 12,888 |
Supplemental disclosure of non-cash financing activities: | ||
Discount on notes payable for warrants | 169,900 | |
Discount on notes payable - related parties for warrants | 43,113 | |
Right-of-use asset obtained in exchange for finance lease liability | 107,610 | 160,990 |
Supplemental disclosure of non-cash investing activities relating to business acquisitions: | ||
Accounts receivable | 68,380 | |
Prepaid expenses | 38,913 | |
Property and equipment | 30,018 | |
Intangible assets | 3,888,000 | |
Goodwill | 3,466,934 | |
Accounts payable | (36,446) | |
Deferred revenues | (1,072,530) | |
Net assets acquired in acquisition | 6,383,269 | |
Cash used in business acquisition | $ 6,383,269 |
Business Organization and Natur
Business Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2023 | |
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 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2023 | |
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 (“GAAP”). We have evaluated subsequent events through the issuance of this Form 10-K. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements accompanying these notes include the accounts of Intellinetics and the accounts of all its subsidiaries in which it holds a controlling interest. Under GAAP, consolidation is generally required for investments of more than 50 Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses. By their nature, these estimates and assumptions are subject to an inherent degree of uncertainty. The impact of inflation, as well as COVID-19, has significantly increased economic and demand uncertainty. Because future events and their effects cannot be determined with precision, actual results could differ significantly from estimated amounts. Significant estimates and assumptions include 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 right-of-use assets and lease liabilities, estimates of fair value deferred taxes and related valuation allowances. Our management monitors these risks and assesses our business and financial risks on a quarterly basis. Revenue Recognition In accordance with ASC 606, “Revenue From Contracts With Customers,” we follow a five-step model to assess each contract of a sale or service to a customer: identify the legally binding contract, identify the performance obligations, determine the transaction price, allocate the transaction price, and determine whether revenue will be recognized at a point in time or over time. Revenue is recognized when a performance obligation is satisfied and the customer obtains control of promised goods and services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods and services. In addition, ASC 606 requires disclosures of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We categorize revenue as software, software as a service, software maintenance services, professional services, and storage and retrieval services. We earn the majority of our revenue from the sale of professional services, followed by the sale of software maintenance services and software as a service. We apply our revenue recognition policies as required in accordance with ASC 606 based on the facts and circumstances of each category of revenue. a) Sale of software Revenues included in this classification typically include sales of licenses with professional services to new customers, additional software licenses to existing customers, and sales of software with or without services to our resellers (See section j) - Reseller Agreements, below. Our software licenses are functional intellectual property and typically provide customers with the right to use our software in perpetuity as it exists when made available to the customer. We recognize revenue from software licenses at a point in time upon delivery, provided all other revenue recognition criteria are met. 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 contract assets which are comprised of employee sales commissions paid in advance of contract periods ending. Our contract liabilities consisted of deferred (unearned) revenue, which is generally related to software as a service or software maintenance contracts. We classify deferred revenue as current based on the timing of when we expect to recognize revenue, which are disclosed on the consolidated balance sheets. The following tables present changes in our accounts receivable and contract assets during the years ended December 31, 2023, and 2022: Schedule of Changes in Contract Assets and Liabilities Balance at Addition Billings Payments Received Balance at Year ended December 31, 2023 Accounts receivable $ 1,121,083 $ - - - - $ 16,389,136 $ (15,659,844) $ 1,850,375 Year ended December 31, 2022 Accounts receivable $ 1,176,059 $ 68,380 $ 14,422,286 $ (14,545,641 ) $ 1,121,083 Balance at Beginning of Period Revenue Recognized in Advance of Billings Billings Balance at End of Period Year ended December 31, 2023 Accounts receivable, unbilled $ 596,410 $ 5,195,866 $ (4,471,439 ) $ 1,320,837 Year ended December 31, 2022 Accounts receivable, unbilled $ 444,782 $ 3,776,612 $ (3,624,984 ) $ 596,410 Balance at Beginning of Period Commissions Paid Commissions Recognized Balance at End of Period Year ended December 31, 2023 Contract assets $ 80,378 $ 194,455 $ (134,668 ) $ 140,165 Year ended December 31, 2022 Contract assets $ 78,556 $ 120,966 $ (119,144 ) $ 80,378 h) Deferred revenue Amounts that have been invoiced are recognized in accounts receivable, deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenues typically relate to maintenance and software as a service agreements which have been paid for by customers prior to the performance of those services, and payments received for professional services and license arrangements and software as a service performance obligations that have been deferred until fulfilled under our revenue recognition policy. Remaining performance obligations represent the transaction price from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately 98 72,212 74,448 The following table presents changes in our contract liabilities during the years ended December 31, 2023 and 2022: Balance at Addition Billings Recognized Balance at Year ended December 31, 2023 Contract liabilities: Deferred revenue $ 2,754,064 $ - $ 7,808,195 $ (7,634,451 ) $ 2,927,808 Year ended December 31, 2022 Contract liabilities: Deferred revenue $ 1,194,649 $ 860,456 $ 7,107,625 $ (6,408,666 ) $ 2,754,064 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 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 income as we believe 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, 2023 and 2022. 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. 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. The Company recognizes current estimated credit losses (“CECL”) for accounts receivable and accounts receivable-unbilled. The CECL for trade receivables are estimated based on the trade receivable aging category, credit risk of specific customers, past collection history, and management’s evaluation of accounts receivable. Provisions for CECL are classified within selling, general and administrative costs. Upon the adoption of FASB Accounting Standards Update No. 2016-13 (CECL model) effective January 1, 2023, Intellinetics, Inc. has revised its methodology for estimating expected credit losses on financial instruments, specifically trade receivables and unbilled receivables. This new model requires the recognition of lifetime expected credit losses at each reporting date, considering past events, current conditions, and reasonable forecasts. In assessing the credit quality of our portfolio, management utilizes a provision matrix that classifies trade receivables by customer type and age of receivable. Government and education sector receivables carry a low risk, while a higher risk is attributed to the remaining receivables as their aging progresses. For receivables with questionable collectability, a specific reserve is assigned. The estimated credit losses are a reflection of these factors, with the matrix applying percentages to the receivables based on their risk profile, adjusted for current and expected future conditions. During the reporting period, the estimate of credit losses may change due to several factors including payment patterns of customers, changes in customer creditworthiness, and broader economic conditions. Such changes are captured in the financial statements to ensure they accurately reflect the company’s assessment of credit risk and expected losses at the end of each reporting period. Credit losses have been within management’s expectations. At December 31, 2023 and 2022, our allowance for credit losses was $ 124,103 88,331 Changes in the allowance for credit losses for the period ended December 31, 2023 were as follows: Schedule of Allowance for Credit Losses Trade Receivables As of December 31, 2022 $ (88,331 ) (Provisions) reductions charged to operating results $ (50,018 ) Accounts write-offs $ 14,246 As of December 31, 2023 $ (124,103 ) 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 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 seven years seven 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 unit 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 test 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, with the exception of acquired contract assets and contract liabilities, which are measured under ASC 606. 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 earn-out 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. Finance leases in which we are the lessee are included in finance lease right-of-use (“ROU”) assets and finance lease liabilities in the consolidated balance sheets. We do not have any 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 in accordance with ASC 718, “Compensation - Stock Compensation,” which requires that such equity instruments be measured at their fair values on the grant date. Stock-based payments to employees include grants of stock that are recognized in the consolidated statements of income based on their fair values at the date of grant. 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 43,771 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 $ 436,837 were capitalized during 2023. Such costs in the amount of $ 376,345 were capitalized during 2022. 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, 2023 and 2022, our consolidated balance sheets included $ 630,979 402,673 For the years ended December 31, 2023, and 2022, our expensed software development costs were $ 558,976 253,797 Recently Issued Accounting Pronouncements Not Yet Effective No 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, 2023 and 2022 amounted to $ 26,404 25,830 Earnings 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. The twelve months ended December 31, 2023 and 2022 reported net income. Income Taxes We file a consolidated federal income tax return with our subsidiaries. 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 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 ASC 280, “Segment Reporting,” 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 operating segments: Document Management and Document Conversion. These segments contain individual business components that have been combined on the basis of common management, customers, solutions offered, service processes and other economic characteristics. We currently have immaterial intersegment sales. We evaluate the performance of our segments based on gross profits. The Document Management Segment provides cloud-based and premise-based content services software, including document management and payables automation. 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 K-12 education, public safety, other public sector, healthcare, 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 businesses and state, 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 $ 7,298,264 $ 5,999,726 Document Conversion 9,588,117 8,017,202 Total revenues $ 16,886,381 $ 14,016,928 Gross profit Document Management $ 6,133,130 $ 4,978,163 Document Conversion 4,430,825 3,930,995 Total gross profit $ 10,563,955 $ 8,909,158 Capital additions, net Document Management $ 441,990 $ 434,654 Document Conversion 106,087 186,442 Total capital additions, net $ 548,077 $ 621,096 December 31, 2023 December 31, 2022 Goodwill Document Management $ 3,989,645 $ 3,989,645 Document Conversion 1,800,176 1,800,176 Total goodwill $ 5,789,821 $ 5,789,821 December 31, 2023 December 31, 2022 Total assets Document Management $ 10,104,004 $ 10,284,143 Document Conversion 8,922,256 9,658,959 Total assets $ 19,026,260 $ 19,943,142 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, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Acquisitions | 4. Business Acquisitions On April 1, 2022, we entered into an asset purchase agreement to acquire substantially all of the assets of Yellow Folder. The acquisition was accounted for in accordance with GAAP and was made to expand our market share in the digital transformation industry and due to synergies of product lines and services between the Companies. The purchase price has been preliminarily 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 Assets acquired: Accounts receivable $ 68,380 Prepaid expenses 38,913 Property and equipment 30,018 Intangible assets (see Note 5) 3,888,000 Assets 4,025,311 Liabilities assumed: Accounts payable 36,446 Deferred revenue 1,072,530 Liabilities 1,108,976 Total identifiable net assets 2,916,335 Purchase price 6,383,269 Goodwill - Excess of purchase price over fair value of net assets acquired $ 3,466,934 The purchase price of $ 6,383,269 3,466,934 Acquisition costs which include legal and other professional fees of $ 355,281 The following unaudited pro forma information presents a summary of the consolidated results of operations for the Company as if the acquisition of Yellow Folder had occurred on January 1, 2022. Schedule of Pro Forma Information For the twelve months ended December 31, 2022 (unaudited) Total revenues $ 14,794,780 Net income $ 58,543 Basic net income per share $ 0.01 Diluted net income per share $ 0.01 The unaudited pro forma consolidated results are based on our historical financial statements and those of Yellow Folder 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, 2022. The following table presents the amounts of revenue and earnings of Yellow Folder since the acquisition date included in the consolidated income statement for the reporting period. For the For the Yellow Folder: Total revenues $ 3,613,764 $ 2,460,474 Net income $ 677,820 $ 520,186 |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 5. Intangible Assets, Net At December 31, 2023, intangible assets consisted of the following: Schedule of Intangible Assets Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 297,000 $ (76,767 ) $ 220,233 Proprietary technology 10 861,000 (150,675 ) 710,325 Customer relationships 5 15 4,091,000 (1,112,220 ) 2,978,780 $ 5,249,000 $ (1,339,662 ) $ 3,909,338 At December 31, 2022, intangible assets consisted of the following: Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 297,000 $ (47,067 ) $ 249,933 Proprietary technology 10 861,000 (64,575 ) 796,425 Customer relationships 5 15 4,091,000 (717,712 ) 3,373,288 $ 5,249,000 $ (829,354 ) $ 4,419,646 Amortization expense for the years ended December 31, 2023 and 2022, amounted to $ 510,308 436,850 Schedule of Amortization Expense for Intangible Assets For the Years Ending December 31, Amount 2024 $ 510,308 2025 492,841 2026 352,441 2027 326,108 2028 309,129 Thereafter 1,918,511 Intangible assets $ 3,909,338 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 6. 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, and accrued expenses approximate fair value because of its short maturity. Management believes that the carrying value of the 2020 Notes and 2022 Notes approximate fair value given that, while there has been change in the overall economic environment, including a significant increase in interest rates, there has not been significant net availability of credit to the Company. We had earnout liabilities related to our two 2020 acquisitions which were 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 were considered to be Level 3 inputs due to the lack of relevant market activity and significant management judgment. Key unobservable inputs included revenue growth rates, which ranged from 0% to 7%, and volatility rates, which were 20% for gross profits. The following table provides a summary of the changes in fair value of the earnout liabilities for the years ended December 31, 2023 and 2022: Summary of Changes in Fair Value of Earnout Liabilities Year ended Fair value at January 1, 2023 $ 700,000 Fair value, beginning balance $ 700,000 Payments (700,000 ) Fair value at December 31, 2023 $ - Fair value, ending balance $ - Year ended Fair value at January 1, 2022 $ 1,630,681 Fair value, beginning balance $ 1,630,681 Payments (1,018,333 ) Change in fair value 87,652 Fair value at December 31, 2022 $ 700,000 Fair value , ending balance $ 700,000 The fair values of amounts owed are recorded in the current 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 income. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 7. Property and Equipment Property and equipment are comprised of the following: Schedule of Property and Equipment December 31, 2023 December 31, 2022 Computer hardware and purchased software $ 1,437,023 $ 1,352,581 Leasehold improvements 395,919 395,918 Furniture and fixtures 324,296 314,396 Property and equipment, gross 2,157,238 2,062,895 Less: accumulated depreciation (1,232,981 ) (994,189 ) Property and equipment, net $ 924,257 $ 1,068,706 Total depreciation expense on our property and equipment for the years ended December 31, 2023 and 2022 amounted to $ 255,689 229,599 |
Notes Payable _ Unrelated Parti
Notes Payable – Unrelated Parties | 12 Months Ended |
Dec. 31, 2023 | |
Nonrelated Party [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Notes Payable – Unrelated Parties | 8. Notes Payable – Unrelated Parties Summary of Notes Payable to Unrelated Parties The table below summarizes all notes payable at December 31, 2023 and 2022, respectively with the exception of related party notes disclosed in Note 9 “Notes Payable - Related Parties.” Schedule of Notes Payable December 31, 2023 December 31, 2022 2022 Unrelated Notes $ 2,364,500 $ 2,364,500 2020 Notes - 980,450 Total notes payable $ 2,364,500 $ 3,344,950 Less unamortized debt issuance costs (155,258 ) (300,904 ) Less unamortized debt discount - (22,045 ) Less current portion, net - (936,966 ) Long-term portion of notes payable $ 2,209,242 $ 2,085,035 Subordinated Notes Payable Issue Date Interest Rate Interest Due Principal Due 2022 Unrelated Notes April 1, 2022 12 Quarterly March 30, 2025 Future minimum principal payments of the Notes Payable to Unrelated Parties are as follows: Schedule of Future Minimum Principal Payments of Notes payable As of December 31, Amount 2025 $ 2,364,500 Total $ 2,364,500 As of December 31, 2023 and 2022, accrued interest for these notes payable with the exception of the related party notes in Note 9, “Notes Payable - Related Parties,” was $ 0 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, 2023 and 2022 was $ 514,480 737,949 2022 Unrelated Notes On April 1, 2022, we sold $ 2,364,500 . March 30, 2025 December 31, 2025 1,519,500 2,364,500 845,000 March 30, 2025 12 14.0 20 14 2020 Notes On March 2, 2020, we sold 2,000 1,000 1,000 40 2,000,000 . February 28, 2023 1,019,550 717,500 980,450 12 320,000 80,000 22,045 102,400 |
Notes Payable - Related Parties
Notes Payable - Related Parties | 12 Months Ended |
Dec. 31, 2023 | |
Related Party [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Notes Payable - Related Parties | 9. Notes Payable - Related Parties Summary of Notes Payable to Related Parties The table below summarizes all notes payable to related parties at December 31, 2023 and 2022: Schedule of Notes Payable December 31, 2023 December 31, 2022 Notes payable – “2022 Related Note” $ 600,000 $ 600,000 Less unamortized debt issuance costs (39,398 ) (70,916 ) Long-term portion of notes payable $ 560,602 $ 529,084 Future minimum principal payments of the 2022 Notes to related parties are as follows: Schedule of Future Minimum Principal Payments of Notes Payable As of December 31, Amount 2025 $ 600,000 Total $ 600,000 As of December 31, 2023 and 2022, accrued interest for these notes payable – related parties was $ 0 With respect to all notes payable – related parties outstanding, interest expense, including the amortization of debt issuance costs, for the years ended December 31, 2023 and 2022 was $ 103,518 77,638 2022 Related Note On April 1, 2022, we issued a 12% Subordinated Note with a principal amount of $ 600,000 12 14.0 20 14 |
Deferred Compensation
Deferred Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Compensation Related Costs [Abstract] | |
Deferred Compensation | 10. Deferred Compensation We made no deferred incentive compensation payments during 2023. Pursuant to an employment agreement, during the year ended December 31, 2022, we paid $ 100,828 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. 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. Leases For each of the below listed leases, management has determined it will utilize the base rental period and have not considered any renewal periods. Schedule of Operating Lease Location Square Feet Monthly Rent Lease Expiry Columbus, OH 6,000 $ 5,100 December 31, 2028 Madison Heights, MI 36,000 $ 44,049 August 31, 2026 Sterling Heights, MI 37,000 $ 21,692 April 30, 2028 Traverse City, MI 5,200 $ 4,500 January 31, 2024 Temporary space Madison Heights, MI 3,200 $ 1,605 month to month Vehicles various n/a $ 4,901 September 30, 2028 The following table sets forth the future minimum lease payments under our leases: Schedule of Future Rental Payment for Operating Lease For the Year Ending December 31, Finance Lease Operating Leases 2024 $ 67,358 $ 955,427 2025 67,358 956,826 2026 59,253 721,664 2027 47,028 355,972 2028 26,912 166,884 Less imputed interest (42,040 ) (496,382 ) Less short-term lease payments - (4,814 ) Total $ 225,869 $ 2,655,577 The following table summarizes the components of lease expense: Summary of Components of Lease Expense For the Year Ending December 31, 2023 2022 Finance lease expense: Amortization of ROU assets $ 42,115 $ 6,708 Interest on lease liabilities 16,514 2,933 Operating lease expense 954,040 952,270 Short-term lease expense 19,254 19,254 The following tables set forth additional information pertaining to our leases: Schedule of Additional Information Pertaining to Leases For the Year Ending December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases (interest) $ 16,514 $ 2,933 Financing cash flows from finance leases (principal) 34,954 5,366 Operating cash flows from operating leases 720,889 635,324 ROU assets obtained in exchange for new finance lease liabilities 107,610 160,990 Weighted average remaining lease term – finance leases 4.2 5.8 Weighted average remaining lease term – operating leases 3.5 4.5 Discount rate – finance leases 8.87 % 7.50 Weighted average discount rate – operating leases 7.01 % 6.97 % Schedule of Operating and Finance Leases December 31, 2023 December 31, 2022 Operating leases: Right-of-use assets, operating $ 2,532,928 $ 3,200,191 Lease liabilities, operating – current $ 712,607 $ 692,074 Lease liabilities, operating – net of current 1,942,970 2,624,608 Total operating lease liabilities $ 2,655,577 $ 3,316,682 Finance leases: Right-of-use assets, finance $ 268,600 $ 160,990 Accumulated amortization (48,823 ) (6,708 ) Right-of-use assets, finance, net 219,777 154,282 Lease liabilities, finance – current 49,926 22,493 Lease liabilities, finance – net of current 175,943 133,131 Total finance lease liabilities $ 255,869 $ 155,624 |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Stockholders’ Equity | 12. Stockholders’ Equity Description of Authorized Capital We are authorized to issue up to 25,000,000 0.001 Common Stock As of December 31, 2023, 4,113,621 255,958 497,330 Private Placement 2022 On April 1, 2022, we entered into a Securities Purchase Agreement with certain accredited investors, pursuant to which we issued and sold (i) 1,242,588 4.62 5,740,756 2,964,500 8,705,256 . We retained Taglich Brothers, Inc. as the exclusive placement agent for the private placement. In compensation, we paid the placement agent a cash payment of 8 696,420 124,258 4.62 165,406 3.91 47,607 3.30 3.97 492,181 254,160 155,724 116,793 Private Placement 2020 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 8 95,500 4.00 five years 236,761 135,291 3.90 307,867 175,924 21,439 99,589 Warrants The following sets forth the warrants to purchase our common stock that were outstanding as of December 31, 2023: ● Warrants to purchase 3,000 15.00 March 30, 2027 ● Warrants to purchase 17,200 12.50 March 30, 2027 ● Warrants to purchase 16,000 9.00 March 30, 2027 ● Warrants to purchase 95,500 4.00 March 30, 2027 ● Warrants to purchase 124,258 4.62 March 30, 2027 No 124,258 3.91 Schedule of Estimated Values of Warrants Valuation Assumptions Warrants Issued Risk-free interest rate 2.55 % Weighted average expected term 5 Expected volatility 116.32 % Expected dividend yield 0.00 % |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 13. 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 December 28, 2023 and January 6, 2022, we issued 39,864 8,097 147,500 57,500 Stock Options We did not make any stock option grants during 2023. On April 14, 2022, we granted employees stock options to purchase 220,587 6.08 1,152,470 The weighted-average grant date fair value of options granted during the year ended December 31, 2022 was $ 5.22 Schedule of Estimated Values of Stock Option Grants Valuation Assumptions Grant Date Risk-free interest rate 2.82 % Weighted average expected term 6 Expected volatility 116.60 % Expected dividend yield 0.00 % A summary of stock option activity during the years ended December 31, 2023 and 2022 is as follows: Schedule of Stock Option Activity Weighted- Weighted- Average Average Remaining Aggregate Shares Exercise Contractual Intrinsic Under Option Price Life Value Outstanding at January 1, 2023 365,447 $ 5.89 8 $ 19,200 Forfeited (7,560 ) 15.34 (19,200 ) Outstanding at December 31, 2023 357,887 $ 5.69 8 $ - Exercisable at December 31, 2023 186,594 $ 5.60 7 $ - Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2022 144,860 $ 5.61 8 $ 19,200 Granted 220,587 6.08 Outstanding at December 31, 2022 365,447 $ 5.89 8 $ 19,200 Exercisable at December 31, 2022 93,085 $ 6.44 7 $ 19,200 During the years ended December 31, 2023 and 2022, stock-based compensation for options was $ 464,529 363,950 As of December 31, 2023 and 2022, there was $ 547,981 1,019,140 467,771 91,913 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 Stock Options Grant Grant date Shares granted 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 April 14, 2022 220,587 6.08 April 14, 2025 1,152,470 (1) Represents incremental fair value of replacement shares compared to canceled shares. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
Concentrations | 14. Concentrations Revenues from a limited number of customers have accounted for a substantial percentage of our total revenues. During the years ended December 31, 2023 and 2022, our largest customer, the State of Michigan, accounted for 35 38 5 6 For the years ended December 31, 2023, and 2022, government contracts, including K-12 education, represented approximately 80 77 As of December 31, 2023, accounts receivable concentrations from our two largest customers were 62 3 44 7 |
Certain Relationships and Relat
Certain Relationships and Related Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Certain Relationships and Related Transactions | 15. 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 9 for a summary of notes issued to related parties. 2022 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 $ 4.62 Schedule of Related Party Transactions Name of Relationship to Intellinetics Number of Amount of Date of Michael N. Taglich Director; Beneficially owns more than 5% of the common stock of Intellinetics. 262,986 - 04/01/2022 Robert F. Taglich Beneficially owns more than 5% of the Common Stock of Intellinetics. 179,652 $ 600,000 04/01/2022 Promoters and Certain Control Persons William M. Cooke, chair of the board of directors of Intellinetics, retired from his position as Vice President of Investment Banking at Taglich Brothers, Inc. effective December 31, 2023. Robert F. Taglich and Michael N. Taglich, each beneficial owners of more than 5% of our common stock, are 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 Yellow Folder. Pursuant to an Engagement Agreement, dated May 1, 2020, we paid Taglich Brothers, Inc. a success fee of $ 200,000 We retained Taglich Brothers, Inc., as the exclusive placement agent for the 2022 private placement, as described above, pursuant to a Placement Agent Agreement. In connection with the 2022 private placement, we paid Taglich Brothers, Inc. $ 696,420 8 124,258 10 4.62 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events Amendment of 2022 Notes On March 13, 2024, we agreed with the note holders to amend the Unrelated Notes and Related Notes to extend the maturity date to December 31, 2025 1,519,500 2,364,500 600,000 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
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 inflation, as well as COVID-19, has significantly increased economic and demand uncertainty. Because future events and their effects cannot be determined with precision, actual results could differ significantly from estimated amounts. Significant estimates and assumptions include 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 right-of-use assets and lease liabilities, estimates of fair value deferred taxes and related valuation allowances. Our management monitors these risks and assesses our business and financial risks on a quarterly basis. |
Revenue Recognition | 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 contract assets which are comprised of employee sales commissions paid in advance of contract periods ending. Our contract liabilities consisted of deferred (unearned) revenue, which is generally related to software as a service or software maintenance contracts. We classify deferred revenue as current based on the timing of when we expect to recognize revenue, which are disclosed on the consolidated balance sheets. The following tables present changes in our accounts receivable and contract assets during the years ended December 31, 2023, and 2022: Schedule of Changes in Contract Assets and Liabilities Balance at Addition Billings Payments Received Balance at Year ended December 31, 2023 Accounts receivable $ 1,121,083 $ - - - - $ 16,389,136 $ (15,659,844) $ 1,850,375 Year ended December 31, 2022 Accounts receivable $ 1,176,059 $ 68,380 $ 14,422,286 $ (14,545,641 ) $ 1,121,083 Balance at Beginning of Period Revenue Recognized in Advance of Billings Billings Balance at End of Period Year ended December 31, 2023 Accounts receivable, unbilled $ 596,410 $ 5,195,866 $ (4,471,439 ) $ 1,320,837 Year ended December 31, 2022 Accounts receivable, unbilled $ 444,782 $ 3,776,612 $ (3,624,984 ) $ 596,410 Balance at Beginning of Period Commissions Paid Commissions Recognized Balance at End of Period Year ended December 31, 2023 Contract assets $ 80,378 $ 194,455 $ (134,668 ) $ 140,165 Year ended December 31, 2022 Contract assets $ 78,556 $ 120,966 $ (119,144 ) $ 80,378 h) Deferred revenue Amounts that have been invoiced are recognized in accounts receivable, deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenues typically relate to maintenance and software as a service agreements which have been paid for by customers prior to the performance of those services, and payments received for professional services and license arrangements and software as a service performance obligations that have been deferred until fulfilled under our revenue recognition policy. Remaining performance obligations represent the transaction price from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately 98 72,212 74,448 The following table presents changes in our contract liabilities during the years ended December 31, 2023 and 2022: Balance at Addition Billings Recognized Balance at Year ended December 31, 2023 Contract liabilities: Deferred revenue $ 2,754,064 $ - $ 7,808,195 $ (7,634,451 ) $ 2,927,808 Year ended December 31, 2022 Contract liabilities: Deferred revenue $ 1,194,649 $ 860,456 $ 7,107,625 $ (6,408,666 ) $ 2,754,064 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 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 income as we believe 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, 2023 and 2022. 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. 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. The Company recognizes current estimated credit losses (“CECL”) for accounts receivable and accounts receivable-unbilled. The CECL for trade receivables are estimated based on the trade receivable aging category, credit risk of specific customers, past collection history, and management’s evaluation of accounts receivable. Provisions for CECL are classified within selling, general and administrative costs. Upon the adoption of FASB Accounting Standards Update No. 2016-13 (CECL model) effective January 1, 2023, Intellinetics, Inc. has revised its methodology for estimating expected credit losses on financial instruments, specifically trade receivables and unbilled receivables. This new model requires the recognition of lifetime expected credit losses at each reporting date, considering past events, current conditions, and reasonable forecasts. In assessing the credit quality of our portfolio, management utilizes a provision matrix that classifies trade receivables by customer type and age of receivable. Government and education sector receivables carry a low risk, while a higher risk is attributed to the remaining receivables as their aging progresses. For receivables with questionable collectability, a specific reserve is assigned. The estimated credit losses are a reflection of these factors, with the matrix applying percentages to the receivables based on their risk profile, adjusted for current and expected future conditions. During the reporting period, the estimate of credit losses may change due to several factors including payment patterns of customers, changes in customer creditworthiness, and broader economic conditions. Such changes are captured in the financial statements to ensure they accurately reflect the company’s assessment of credit risk and expected losses at the end of each reporting period. Credit losses have been within management’s expectations. At December 31, 2023 and 2022, our allowance for credit losses was $ 124,103 88,331 Changes in the allowance for credit losses for the period ended December 31, 2023 were as follows: Schedule of Allowance for Credit Losses Trade Receivables As of December 31, 2022 $ (88,331 ) (Provisions) reductions charged to operating results $ (50,018 ) Accounts write-offs $ 14,246 As of December 31, 2023 $ (124,103 ) |
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 |
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 seven years seven 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 unit 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 test 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, with the exception of acquired contract assets and contract liabilities, which are measured under ASC 606. 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 earn-out 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. Finance leases in which we are the lessee are included in finance lease right-of-use (“ROU”) assets and finance lease liabilities in the consolidated balance sheets. We do not have any 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 in accordance with ASC 718, “Compensation - Stock Compensation,” which requires that such equity instruments be measured at their fair values on the grant date. Stock-based payments to employees include grants of stock that are recognized in the consolidated statements of income based on their fair values at the date of grant. 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 43,771 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 $ 436,837 were capitalized during 2023. Such costs in the amount of $ 376,345 were capitalized during 2022. 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, 2023 and 2022, our consolidated balance sheets included $ 630,979 402,673 For the years ended December 31, 2023, and 2022, our expensed software development costs were $ 558,976 253,797 |
Recently Issued Accounting Pronouncements Not Yet Effective | Recently Issued Accounting Pronouncements Not Yet Effective No 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, 2023 and 2022 amounted to $ 26,404 25,830 |
Earnings Per Share | Earnings 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. The twelve months ended December 31, 2023 and 2022 reported net income. |
Income Taxes | Income Taxes We file a consolidated federal income tax return with our subsidiaries. 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 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 ASC 280, “Segment Reporting,” 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 operating segments: Document Management and Document Conversion. These segments contain individual business components that have been combined on the basis of common management, customers, solutions offered, service processes and other economic characteristics. We currently have immaterial intersegment sales. We evaluate the performance of our segments based on gross profits. The Document Management Segment provides cloud-based and premise-based content services software, including document management and payables automation. 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 K-12 education, public safety, other public sector, healthcare, 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 businesses and state, 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 $ 7,298,264 $ 5,999,726 Document Conversion 9,588,117 8,017,202 Total revenues $ 16,886,381 $ 14,016,928 Gross profit Document Management $ 6,133,130 $ 4,978,163 Document Conversion 4,430,825 3,930,995 Total gross profit $ 10,563,955 $ 8,909,158 Capital additions, net Document Management $ 441,990 $ 434,654 Document Conversion 106,087 186,442 Total capital additions, net $ 548,077 $ 621,096 December 31, 2023 December 31, 2022 Goodwill Document Management $ 3,989,645 $ 3,989,645 Document Conversion 1,800,176 1,800,176 Total goodwill $ 5,789,821 $ 5,789,821 December 31, 2023 December 31, 2022 Total assets Document Management $ 10,104,004 $ 10,284,143 Document Conversion 8,922,256 9,658,959 Total assets $ 19,026,260 $ 19,943,142 |
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, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Changes in Contract Assets and Liabilities | The following tables present changes in our accounts receivable and contract assets during the years ended December 31, 2023, and 2022: Schedule of Changes in Contract Assets and Liabilities Balance at Addition Billings Payments Received Balance at Year ended December 31, 2023 Accounts receivable $ 1,121,083 $ - - - - $ 16,389,136 $ (15,659,844) $ 1,850,375 Year ended December 31, 2022 Accounts receivable $ 1,176,059 $ 68,380 $ 14,422,286 $ (14,545,641 ) $ 1,121,083 Balance at Beginning of Period Revenue Recognized in Advance of Billings Billings Balance at End of Period Year ended December 31, 2023 Accounts receivable, unbilled $ 596,410 $ 5,195,866 $ (4,471,439 ) $ 1,320,837 Year ended December 31, 2022 Accounts receivable, unbilled $ 444,782 $ 3,776,612 $ (3,624,984 ) $ 596,410 Balance at Beginning of Period Commissions Paid Commissions Recognized Balance at End of Period Year ended December 31, 2023 Contract assets $ 80,378 $ 194,455 $ (134,668 ) $ 140,165 Year ended December 31, 2022 Contract assets $ 78,556 $ 120,966 $ (119,144 ) $ 80,378 The following table presents changes in our contract liabilities during the years ended December 31, 2023 and 2022: Balance at Addition Billings Recognized Balance at Year ended December 31, 2023 Contract liabilities: Deferred revenue $ 2,754,064 $ - $ 7,808,195 $ (7,634,451 ) $ 2,927,808 Year ended December 31, 2022 Contract liabilities: Deferred revenue $ 1,194,649 $ 860,456 $ 7,107,625 $ (6,408,666 ) $ 2,754,064 |
Schedule of Allowance for Credit Losses | Changes in the allowance for credit losses for the period ended December 31, 2023 were as follows: Schedule of Allowance for Credit Losses Trade Receivables As of December 31, 2022 $ (88,331 ) (Provisions) reductions charged to operating results $ (50,018 ) Accounts write-offs $ 14,246 As of December 31, 2023 $ (124,103 ) |
Schedule of Segment Information | Information by operating segment is as follows: Schedule of Segment Information Year ended Year ended Revenues Document Management $ 7,298,264 $ 5,999,726 Document Conversion 9,588,117 8,017,202 Total revenues $ 16,886,381 $ 14,016,928 Gross profit Document Management $ 6,133,130 $ 4,978,163 Document Conversion 4,430,825 3,930,995 Total gross profit $ 10,563,955 $ 8,909,158 Capital additions, net Document Management $ 441,990 $ 434,654 Document Conversion 106,087 186,442 Total capital additions, net $ 548,077 $ 621,096 December 31, 2023 December 31, 2022 Goodwill Document Management $ 3,989,645 $ 3,989,645 Document Conversion 1,800,176 1,800,176 Total goodwill $ 5,789,821 $ 5,789,821 December 31, 2023 December 31, 2022 Total assets Document Management $ 10,104,004 $ 10,284,143 Document Conversion 8,922,256 9,658,959 Total assets $ 19,026,260 $ 19,943,142 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Fair Value of Assets Acquired and Liabilities Assumed | The purchase price has been preliminarily 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 Assets acquired: Accounts receivable $ 68,380 Prepaid expenses 38,913 Property and equipment 30,018 Intangible assets (see Note 5) 3,888,000 Assets 4,025,311 Liabilities assumed: Accounts payable 36,446 Deferred revenue 1,072,530 Liabilities 1,108,976 Total identifiable net assets 2,916,335 Purchase price 6,383,269 Goodwill - Excess of purchase price over fair value of net assets acquired $ 3,466,934 |
Schedule of Pro Forma Information | The following unaudited pro forma information presents a summary of the consolidated results of operations for the Company as if the acquisition of Yellow Folder had occurred on January 1, 2022. Schedule of Pro Forma Information For the twelve months ended December 31, 2022 (unaudited) Total revenues $ 14,794,780 Net income $ 58,543 Basic net income per share $ 0.01 Diluted net income per share $ 0.01 The following table presents the amounts of revenue and earnings of Yellow Folder since the acquisition date included in the consolidated income statement for the reporting period. For the For the Yellow Folder: Total revenues $ 3,613,764 $ 2,460,474 Net income $ 677,820 $ 520,186 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | At December 31, 2023, intangible assets consisted of the following: Schedule of Intangible Assets Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 297,000 $ (76,767 ) $ 220,233 Proprietary technology 10 861,000 (150,675 ) 710,325 Customer relationships 5 15 4,091,000 (1,112,220 ) 2,978,780 $ 5,249,000 $ (1,339,662 ) $ 3,909,338 At December 31, 2022, intangible assets consisted of the following: Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 297,000 $ (47,067 ) $ 249,933 Proprietary technology 10 861,000 (64,575 ) 796,425 Customer relationships 5 15 4,091,000 (717,712 ) 3,373,288 $ 5,249,000 $ (829,354 ) $ 4,419,646 |
Schedule of Amortization Expense for Intangible Assets | Amortization expense for the years ended December 31, 2023 and 2022, amounted to $ 510,308 436,850 Schedule of Amortization Expense for Intangible Assets For the Years Ending December 31, Amount 2024 $ 510,308 2025 492,841 2026 352,441 2027 326,108 2028 309,129 Thereafter 1,918,511 Intangible assets $ 3,909,338 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 and 2022: Summary of Changes in Fair Value of Earnout Liabilities Year ended Fair value at January 1, 2023 $ 700,000 Fair value, beginning balance $ 700,000 Payments (700,000 ) Fair value at December 31, 2023 $ - Fair value, ending balance $ - Year ended Fair value at January 1, 2022 $ 1,630,681 Fair value, beginning balance $ 1,630,681 Payments (1,018,333 ) Change in fair value 87,652 Fair value at December 31, 2022 $ 700,000 Fair value , ending balance $ 700,000 The fair values of amounts owed are recorded in the current 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 income. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 December 31, 2022 Computer hardware and purchased software $ 1,437,023 $ 1,352,581 Leasehold improvements 395,919 395,918 Furniture and fixtures 324,296 314,396 Property and equipment, gross 2,157,238 2,062,895 Less: accumulated depreciation (1,232,981 ) (994,189 ) Property and equipment, net $ 924,257 $ 1,068,706 |
Notes Payable _ Unrelated Par_2
Notes Payable – Unrelated Parties (Tables) - Nonrelated Party [Member] | 12 Months Ended |
Dec. 31, 2023 | |
Defined Benefit Plan Disclosure [Line Items] | |
Schedule of Notes Payable | The table below summarizes all notes payable at December 31, 2023 and 2022, respectively with the exception of related party notes disclosed in Note 9 “Notes Payable - Related Parties.” Schedule of Notes Payable December 31, 2023 December 31, 2022 2022 Unrelated Notes $ 2,364,500 $ 2,364,500 2020 Notes - 980,450 Total notes payable $ 2,364,500 $ 3,344,950 Less unamortized debt issuance costs (155,258 ) (300,904 ) Less unamortized debt discount - (22,045 ) Less current portion, net - (936,966 ) Long-term portion of notes payable $ 2,209,242 $ 2,085,035 Subordinated Notes Payable Issue Date Interest Rate Interest Due Principal Due 2022 Unrelated Notes April 1, 2022 12 Quarterly March 30, 2025 |
Schedule of Future Minimum Principal Payments of Notes payable | Future minimum principal payments of the Notes Payable to Unrelated Parties are as follows: Schedule of Future Minimum Principal Payments of Notes payable As of December 31, Amount 2025 $ 2,364,500 Total $ 2,364,500 |
Notes Payable - Related Parti_2
Notes Payable - Related Parties (Tables) - Related Party [Member] | 12 Months Ended |
Dec. 31, 2023 | |
Defined Benefit Plan Disclosure [Line Items] | |
Schedule of Notes Payable | The table below summarizes all notes payable to related parties at December 31, 2023 and 2022: Schedule of Notes Payable December 31, 2023 December 31, 2022 Notes payable – “2022 Related Note” $ 600,000 $ 600,000 Less unamortized debt issuance costs (39,398 ) (70,916 ) Long-term portion of notes payable $ 560,602 $ 529,084 |
Schedule of Future Minimum Principal Payments of Notes Payable | Future minimum principal payments of the 2022 Notes to related parties are as follows: Schedule of Future Minimum Principal Payments of Notes Payable As of December 31, Amount 2025 $ 600,000 Total $ 600,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Lease | For each of the below listed leases, management has determined it will utilize the base rental period and have not considered any renewal periods. Schedule of Operating Lease Location Square Feet Monthly Rent Lease Expiry Columbus, OH 6,000 $ 5,100 December 31, 2028 Madison Heights, MI 36,000 $ 44,049 August 31, 2026 Sterling Heights, MI 37,000 $ 21,692 April 30, 2028 Traverse City, MI 5,200 $ 4,500 January 31, 2024 Temporary space Madison Heights, MI 3,200 $ 1,605 month to month Vehicles various n/a $ 4,901 September 30, 2028 |
Schedule of Future Rental Payment for Operating Lease | The following table sets forth the future minimum lease payments under our leases: Schedule of Future Rental Payment for Operating Lease For the Year Ending December 31, Finance Lease Operating Leases 2024 $ 67,358 $ 955,427 2025 67,358 956,826 2026 59,253 721,664 2027 47,028 355,972 2028 26,912 166,884 Less imputed interest (42,040 ) (496,382 ) Less short-term lease payments - (4,814 ) Total $ 225,869 $ 2,655,577 |
Summary of Components of Lease Expense | The following table summarizes the components of lease expense: Summary of Components of Lease Expense For the Year Ending December 31, 2023 2022 Finance lease expense: Amortization of ROU assets $ 42,115 $ 6,708 Interest on lease liabilities 16,514 2,933 Operating lease expense 954,040 952,270 Short-term lease expense 19,254 19,254 |
Schedule of Additional Information Pertaining to Leases | The following tables set forth additional information pertaining to our leases: Schedule of Additional Information Pertaining to Leases For the Year Ending December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases (interest) $ 16,514 $ 2,933 Financing cash flows from finance leases (principal) 34,954 5,366 Operating cash flows from operating leases 720,889 635,324 ROU assets obtained in exchange for new finance lease liabilities 107,610 160,990 Weighted average remaining lease term – finance leases 4.2 5.8 Weighted average remaining lease term – operating leases 3.5 4.5 Discount rate – finance leases 8.87 % 7.50 Weighted average discount rate – operating leases 7.01 % 6.97 % |
Schedule of Operating and Finance Leases | Schedule of Operating and Finance Leases December 31, 2023 December 31, 2022 Operating leases: Right-of-use assets, operating $ 2,532,928 $ 3,200,191 Lease liabilities, operating – current $ 712,607 $ 692,074 Lease liabilities, operating – net of current 1,942,970 2,624,608 Total operating lease liabilities $ 2,655,577 $ 3,316,682 Finance leases: Right-of-use assets, finance $ 268,600 $ 160,990 Accumulated amortization (48,823 ) (6,708 ) Right-of-use assets, finance, net 219,777 154,282 Lease liabilities, finance – current 49,926 22,493 Lease liabilities, finance – net of current 175,943 133,131 Total finance lease liabilities $ 255,869 $ 155,624 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Schedule of Estimated Values of Warrants Valuation Assumptions | Schedule of Estimated Values of Warrants Valuation Assumptions Warrants Issued Risk-free interest rate 2.55 % Weighted average expected term 5 Expected volatility 116.32 % Expected dividend yield 0.00 % |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Estimated Values of Stock Option Grants Valuation Assumptions | Schedule of Estimated Values of Stock Option Grants Valuation Assumptions Grant Date Risk-free interest rate 2.82 % Weighted average expected term 6 Expected volatility 116.60 % Expected dividend yield 0.00 % |
Schedule of Stock Option Activity | A summary of stock option activity during the years ended December 31, 2023 and 2022 is as follows: Schedule of Stock Option Activity Weighted- Weighted- Average Average Remaining Aggregate Shares Exercise Contractual Intrinsic Under Option Price Life Value Outstanding at January 1, 2023 365,447 $ 5.89 8 $ 19,200 Forfeited (7,560 ) 15.34 (19,200 ) Outstanding at December 31, 2023 357,887 $ 5.69 8 $ - Exercisable at December 31, 2023 186,594 $ 5.60 7 $ - Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2022 144,860 $ 5.61 8 $ 19,200 Granted 220,587 6.08 Outstanding at December 31, 2022 365,447 $ 5.89 8 $ 19,200 Exercisable at December 31, 2022 93,085 $ 6.44 7 $ 19,200 |
Schedule of Stock Options Grant | The following represent grants of stock options, including the fair value recognized or to be recognized over the requisite service period: Schedule of Stock Options Grant Grant date Shares granted 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 April 14, 2022 220,587 6.08 April 14, 2025 1,152,470 (1) Represents incremental fair value of replacement shares compared to canceled shares. |
Certain Relationships and Rel_2
Certain Relationships and Related Transactions (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Schedule of Related Party Transactions Name of Relationship to Intellinetics Number of Amount of Date of Michael N. Taglich Director; Beneficially owns more than 5% of the common stock of Intellinetics. 262,986 - 04/01/2022 Robert F. Taglich Beneficially owns more than 5% of the Common Stock of Intellinetics. 179,652 $ 600,000 04/01/2022 |
Business Organization and Nat_2
Business Organization and Nature of Operations (Details Narrative) | 12 Months Ended |
Dec. 31, 2023 Segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||
Revenue performance obligations percentage | 98% | |
Revenue, remaining performance obligation, amount | $ 72,212 | $ 74,448 |
Allowance for doubtful accounts receivable | 124,103 | 88,331 |
Inventory allowances | 24,000 | 24,000 |
Impairment of long lived assets | 0 | 0 |
Other long-term assets | 630,979 | 402,673 |
Advertising expense | $ 26,404 | $ 25,830 |
Effective income tax rate reconciliation, change in deferred tax assets valuation allowance, percent | 100% | 100% |
Furniture and Fixtures [Member] | Minimum [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Property, plant and equipment, estimated useful live | 3 years | |
Furniture and Fixtures [Member] | Maximum [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Property, plant and equipment, estimated useful live | 7 years | |
Leasehold Improvements [Member] | Minimum [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Property, plant and equipment, estimated useful live | 7 years | |
Leasehold Improvements [Member] | Maximum [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Property, plant and equipment, estimated useful live | 10 years | |
Software Development [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Software development cost capiatlized | $ 0 | $ 43,771 |
Capitalized Computer Software, Additions | 436,837 | 376,345 |
Research and development expense | $ 558,976 | $ 253,797 |
Intellinetics Ohio and Graphic Sciences [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Percentage of voting rights outstanding | 50% |
Schedule of Changes in Contract
Schedule of Changes in Contract Assets and Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Offsetting Assets [Line Items] | ||
Balance at Beginning of Period | $ 80,378 | |
Revenue Recognized in Advance of Billings | ||
Commissions Paid | ||
Commissions Recognized | ||
Balance at Ending of Period | 140,165 | $ 80,378 |
Balance at Beginning of Period | 2,754,064 | 1,194,649 |
Addition from acquisition | 860,456 | |
Billings | 7,808,195 | 7,107,625 |
Recognized revenue | (7,634,451) | (6,408,666) |
Balance at End of Period | 2,927,808 | 2,754,064 |
Accounts Receivable [Member] | ||
Offsetting Assets [Line Items] | ||
Balance at Beginning of Period | 1,121,083 | 1,176,059 |
Addition from acquisition | 68,380 | |
Billings | 16,389,136 | 14,422,286 |
Payments Received | (15,659,844) | (14,545,641) |
Balance at Ending of Period | 1,850,375 | 1,121,083 |
Accounts Receivable Unbilled [Member] | ||
Offsetting Assets [Line Items] | ||
Balance at Beginning of Period | 596,410 | 444,782 |
Revenue Recognized in Advance of Billings | 5,195,866 | 3,776,612 |
Billings | (4,471,439) | (3,624,984) |
Balance at Ending of Period | 1,320,837 | 596,410 |
Contract Assests [Member] | ||
Offsetting Assets [Line Items] | ||
Balance at Beginning of Period | 80,378 | 78,556 |
Commissions Paid | 194,455 | 120,966 |
Commissions Recognized | (134,668) | (119,144) |
Balance at Ending of Period | $ 140,165 | $ 80,378 |
Schedule of Allowance for Credi
Schedule of Allowance for Credit Losses (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Accounting Policies [Abstract] | |
Balance | $ (88,331) |
Provisions reductions charged to operating results | (50,018) |
Accounts write-offs | 14,246 |
Balance | $ (124,103) |
Schedule of Segment Information
Schedule of Segment Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Total revenues | $ 16,886,381 | $ 14,016,928 |
Total gross profit | 10,563,955 | 8,909,158 |
Total capital additions, net | 548,077 | 621,096 |
Total goodwill | 5,789,821 | 5,789,821 |
Total assets | 19,026,260 | 19,943,142 |
Document Management [Member] | ||
Total revenues | 7,298,264 | 5,999,726 |
Total gross profit | 6,133,130 | 4,978,163 |
Total capital additions, net | 441,990 | 434,654 |
Total goodwill | 3,989,645 | 3,989,645 |
Total assets | 10,104,004 | 10,284,143 |
Document Conversion [Member] | ||
Total revenues | 9,588,117 | 8,017,202 |
Total gross profit | 4,430,825 | 3,930,995 |
Total capital additions, net | 106,087 | 186,442 |
Total goodwill | 1,800,176 | 1,800,176 |
Total assets | $ 8,922,256 | $ 9,658,959 |
Schedule of Fair Value of Asset
Schedule of Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) | Apr. 02, 2022 | Apr. 01, 2022 |
Business Combination and Asset Acquisition [Abstract] | ||
Accounts receivable | $ 68,380 | |
Prepaid expenses | 38,913 | |
Property and equipment | 30,018 | |
Intangible assets (see Note 5) | 3,888,000 | |
Assets | 4,025,311 | |
Accounts payable | 36,446 | |
Deferred revenue | 1,072,530 | |
Liabilities | 1,108,976 | |
Total identifiable net assets | 2,916,335 | |
Purchase price | $ 6,383,269 | 6,383,269 |
Goodwill - Excess of purchase price over fair value of net assets acquired | $ 3,466,934 | $ 3,466,934 |
Schedule of Pro Forma Informati
Schedule of Pro Forma Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | ||
Total revenues | $ 14,794,780 | |
Net income | $ 58,543 | |
Basic net income per share | $ 0.01 | |
Diluted net income per share | $ 0.01 | |
Yellow Folder [Member] | ||
Business Acquisition [Line Items] | ||
Total revenues | $ 3,613,764 | $ 2,460,474 |
Net income | $ 677,820 | $ 520,186 |
Business Acquisitions (Details
Business Acquisitions (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Apr. 02, 2022 | Apr. 01, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |||
Purchase price | $ 6,383,269 | $ 6,383,269 | |
Goodwill | $ 3,466,934 | $ 3,466,934 | |
Acquisition costs | $ 355,281 |
Schedule of Intangible Assets (
Schedule of Intangible Assets (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, cost | $ 5,249,000 | $ 5,249,000 |
Intangible assets, accumulated amortization | (1,339,662) | (829,354) |
Intangible assets, net | $ 3,909,338 | $ 4,419,646 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 10 years | 10 years |
Intangible assets, cost | $ 297,000 | $ 297,000 |
Intangible assets, accumulated amortization | (76,767) | (47,067) |
Intangible assets, net | $ 220,233 | $ 249,933 |
Proprietary Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 10 years | 10 years |
Intangible assets, cost | $ 861,000 | $ 861,000 |
Intangible assets, accumulated amortization | (150,675) | (64,575) |
Intangible assets, net | 710,325 | 796,425 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, cost | 4,091,000 | 4,091,000 |
Intangible assets, accumulated amortization | (1,112,220) | (717,712) |
Intangible assets, net | $ 2,978,780 | $ 3,373,288 |
Customer Relationships [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 5 years | 5 years |
Customer Relationships [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 15 years | 15 years |
Schedule of Amortization Expens
Schedule of Amortization Expense for Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 510,308 | $ 436,850 |
2024 | 510,308 | |
2025 | 492,841 | |
2026 | 352,441 | |
2027 | 326,108 | |
2028 | 309,129 | |
Thereafter | 1,918,511 | |
Intangible assets | $ 3,909,338 | $ 4,419,646 |
Summary of Changes in Fair Valu
Summary of Changes in Fair Value of Earnout Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | ||
Fair value, beginning balance | $ 700,000 | $ 1,630,681 |
Payments | (700,000) | (1,018,333) |
Fair value , ending balance | 700,000 | |
Change in fair value | $ 87,652 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Narrative) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Unobservable Measurement Input, Uncertainty, Description | Key unobservable inputs included revenue growth rates, which ranged from 0% to 7%, and volatility rates, which were 20% for gross profits. |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Abstract] | ||
Computer hardware and purchased software | $ 1,437,023 | $ 1,352,581 |
Leasehold improvements | 395,919 | 395,918 |
Furniture and fixtures | 324,296 | 314,396 |
Property and equipment, gross | 2,157,238 | 2,062,895 |
Less: accumulated depreciation | (1,232,981) | (994,189) |
Property and equipment, net | $ 924,257 | $ 1,068,706 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 255,689 | $ 229,599 |
Schedule of Notes Payable (Deta
Schedule of Notes Payable (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Apr. 02, 2022 | |
Nonrelated Party [Member] | |||
Debt Instrument [Line Items] | |||
Notes payable – “2022 Related Note” | $ 2,364,500 | $ 3,344,950 | |
Less unamortized debt issuance costs | (155,258) | (300,904) | |
Less unamortized debt discount | (22,045) | ||
Less current portion, net | (936,966) | ||
Long-term portion of notes payable | $ 2,209,242 | 2,085,035 | |
Nonrelated Party [Member] | 2022 Unrelated Notes [Member] | |||
Debt Instrument [Line Items] | |||
Issue Date | Apr. 01, 2022 | ||
Interest Date | 12% | ||
Interest Due | Quarterly | ||
Principal Due | Mar. 30, 2025 | ||
Nonrelated Party [Member] | 2022 Unrelated Notes [Member] | |||
Debt Instrument [Line Items] | |||
Notes payable – “2022 Related Note” | $ 2,364,500 | 2,364,500 | |
Nonrelated Party [Member] | Two Thousand Twenty Notes [Member] | |||
Debt Instrument [Line Items] | |||
Notes payable – “2022 Related Note” | 980,450 | ||
Related Party [Member] | |||
Debt Instrument [Line Items] | |||
Less unamortized debt issuance costs | (39,398) | (70,916) | |
Long-term portion of notes payable | 560,602 | 529,084 | |
Related Party [Member] | 2022 Related Notes [Member] | |||
Debt Instrument [Line Items] | |||
Notes payable – “2022 Related Note” | $ 600,000 | $ 600,000 | |
Interest Date | 12% | 14% |
Schedule of Future Minimum Prin
Schedule of Future Minimum Principal Payments of Notes payable (Details) - Nonrelated Party [Member] | Dec. 31, 2023 USD ($) |
Defined Benefit Plan Disclosure [Line Items] | |
2025 | $ 2,364,500 |
Total | $ 2,364,500 |
Schedule of Future Minimum Pr_2
Schedule of Future Minimum Principal Payments of Notes Payable (Details) - Related Party [Member] | Dec. 31, 2023 USD ($) |
Defined Benefit Plan Disclosure [Line Items] | |
2025 | $ 600,000 |
Total | $ 600,000 |
Notes Payable _ Unrelated Par_3
Notes Payable – Unrelated Parties (Details Narrative) - USD ($) | 12 Months Ended | ||||||
Mar. 13, 2024 | Dec. 02, 2022 | Apr. 02, 2022 | Apr. 01, 2022 | Mar. 02, 2020 | Dec. 31, 2023 | Dec. 31, 2022 | |
Short-Term Debt [Line Items] | |||||||
Accrued interest | $ 0 | $ 0 | |||||
Amortization of debt discount | 22,045 | 102,400 | |||||
12% Subordinated Notes [Member] | Accredited Investors [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Number of shares sold | 2,000 | ||||||
Sale of stock price per share | $ 1,000 | ||||||
Value of stock sold | $ 1,000 | ||||||
Stock issued during conversion | 40 | ||||||
Conversion of units | $ 2,000,000 | ||||||
Nonrelated Party [Member] | 2022 Unrelated Notes [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Notes payable | $ 2,364,500 | ||||||
Debt instrument, interest rate | 14% | ||||||
Principal amount percentage | 20% | ||||||
Nonrelated Party [Member] | 2022 Unrelated Notes [Member] | Subsequent Event [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Notes payable | $ 2,364,500 | ||||||
Notes payable due | 845,000 | ||||||
Nonrelated Party [Member] | Amendment Of Twenty Twenty Two Notes [Member] | Subsequent Event [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Notes payable | $ 1,519,500 | ||||||
Debt instrument, maturity date | Dec. 31, 2025 | ||||||
Nonrelated Party [Member] | 2022 Related Notes [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Debt instrument, interest rate | 12% | ||||||
Unrelated Party [Member] | 2022 Unrelated Notes [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Debt instrument, maturity date | Mar. 30, 2025 | ||||||
Unrelated Party [Member] | Amendment Of Twenty Twenty Two Notes [Member] | Subsequent Event [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Debt instrument, maturity date | Dec. 31, 2025 | ||||||
Nonrelated Party [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Interest Expense, Debt | 514,480 | 737,949 | |||||
Notes payable | $ 2,364,500 | 3,344,950 | |||||
Nonrelated Party [Member] | 2022 Unrelated Notes [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Debt instrument, maturity date | Mar. 30, 2025 | ||||||
Debt instrument, interest rate | 12% | ||||||
Nonrelated Party [Member] | 12% Subordinated Notes [Member] | Accredited Investors [Member] | |||||||
Short-Term Debt [Line Items] | |||||||
Notes payable | 717,500 | ||||||
Debt instrument, maturity date | Feb. 28, 2023 | ||||||
Debt instrument, interest rate | 12% | ||||||
Number of shares sold | 2,000 | ||||||
Sale of stock price per share | $ 1,000 | ||||||
Value of stock sold | $ 1,000 | ||||||
Stock issued during conversion | 40 | ||||||
Conversion of units | $ 2,000,000 | ||||||
Repayments of debt | $ 1,019,550 | ||||||
Remaining notes payable | 980,450 | ||||||
Amortization of debt discount | $ 320,000 | $ 22,045 | $ 102,400 | ||||
New issues, shares | 80,000 |
Notes Payable - Related Parti_3
Notes Payable - Related Parties (Details Narrative) - USD ($) | 12 Months Ended | ||
Apr. 02, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Short-Term Debt [Line Items] | |||
Accrued interest | $ 0 | $ 0 | |
Related Party [Member] | |||
Short-Term Debt [Line Items] | |||
Accrued interest | 0 | ||
Related Party [Member] | |||
Short-Term Debt [Line Items] | |||
Accrued interest | 0 | ||
Interest expense | $ 103,518 | $ 77,638 | |
Related Party [Member] | 2022 Related Notes [Member] | |||
Short-Term Debt [Line Items] | |||
Principal amount | $ 600,000 | ||
Debt instrument interest rate stated percentage | 14% | 12% | |
Principal amount percentage | 20% |
Deferred Compensation (Details
Deferred Compensation (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Compensation Related Costs [Abstract] | ||
Deferred incentive compensation | $ 100,828 |
Schedule of Operating Lease (De
Schedule of Operating Lease (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) ft² | |
Product Liability Contingency [Line Items] | |
Vehichle rent expense | $ 4,901 |
Lease Expiry | September 30, 2028 |
Columbus O H [Member] | |
Product Liability Contingency [Line Items] | |
Land | ft² | 6,000 |
Vehichle rent expense | $ 5,100 |
Lease Expiry | December 31, 2028 |
Madison Heights M I [Member] | |
Product Liability Contingency [Line Items] | |
Land | ft² | 36,000 |
Vehichle rent expense | $ 44,049 |
Lease Expiry | August 31, 2026 |
Sterling Heights M I [Member] | |
Product Liability Contingency [Line Items] | |
Land | ft² | 37,000 |
Vehichle rent expense | $ 21,692 |
Lease Expiry | April 30, 2028 |
Traverse City M I [Member] | |
Product Liability Contingency [Line Items] | |
Land | ft² | 5,200 |
Vehichle rent expense | $ 4,500 |
Lease Expiry | January 31, 2024 |
Madison Heights M I Temporary Space [Member] | |
Product Liability Contingency [Line Items] | |
Land | ft² | 3,200 |
Vehichle rent expense | $ 1,605 |
Lease Expiry | month to month |
Schedule of Future Rental Payme
Schedule of Future Rental Payment for Operating Lease (Details) | Dec. 31, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Finance lease, 2024 | $ 67,358 |
Operating Leases, 2024 | 955,427 |
Finance lease, 2025 | 67,358 |
Operating Leases, 2025 | 956,826 |
Finance lease, 2026 | 59,253 |
Operating Leases, 2026 | 721,664 |
Finance lease, 2027 | 47,028 |
Operating Leases, 2027 | 355,972 |
Finance lease, 2028 | 26,912 |
Thereafter | 166,884 |
Finance lease, Less Imputed interest | (42,040) |
Operating Lease, less imputed interest | (496,382) |
Operating Lease, short-term lease payments | (4,814) |
Finance Lease | 225,869 |
Operating Leases | $ 2,655,577 |
Summary of Components of Lease
Summary of Components of Lease Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finance lease expense: | ||
Amortization of ROU assets | $ 42,115 | $ 6,708 |
Interest on lease liabilities | 16,514 | 2,933 |
Operating lease expense | 954,040 | 952,270 |
Short-term lease expense | $ 19,254 | $ 19,254 |
Schedule of Additional Informat
Schedule of Additional Information Pertaining to Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Financing cash flows from finance leases (interest) | $ 16,514 | $ 2,933 |
Financing cash flows from finance leases (prinicipal) | 34,954 | 5,366 |
Operating cash flows from operating leases | 720,889 | 635,324 |
ROU assets obtained in exchange for new finance lease liability | $ 107,610 | $ 160,990 |
Weighted average remaining lease term - finance leases | 4 years 2 months 12 days | 5 years 9 months 18 days |
Weighted average remaining lease term - operating leases | 3 years 6 months | 4 years 6 months |
Weighted average discount rate - finance leases | 8.87% | 7.50% |
Weighted average discount rate - operating leases | 7.01% | 6.97% |
Schedule of Operating and Finan
Schedule of Operating and Finance Leases (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
Right-of-use assets, operating | $ 2,532,928 | $ 3,200,191 |
Lease liabilities, operating – current | 712,607 | 692,074 |
Lease liabilities, operating – net of current | 1,942,970 | 2,624,608 |
Total operating lease liabilities | 2,655,577 | 3,316,682 |
Right-of-use assets, finance | 268,600 | 160,990 |
Accumulated amortization | (48,823) | (6,708) |
Right-of-use assets, finance, net | 219,777 | 154,282 |
Lease liabilities, finance – current | 49,926 | 22,493 |
Lease liabilities, finance – net of current | 175,943 | 133,131 |
Total finance lease liabilities | $ 255,869 | $ 155,624 |
Schedule of Estimated Values of
Schedule of Estimated Values of Warrants Valuation Assumptions (Details) - Placement Agent [Member] | Apr. 01, 2022 |
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 | 2.55 |
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 | 116.32 |
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 ($) | 12 Months Ended | ||||
Apr. 02, 2022 | Apr. 01, 2022 | Mar. 02, 2020 | Dec. 31, 2023 | Dec. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Common stock, shares authorized | 25,000,000 | 25,000,000 | |||
Common stock, par value | $ 0.001 | $ 0.001 | |||
Common stock, shares outstanding | 4,113,621 | 4,073,757 | |||
Stock issued during period shares new issues | $ 5,740,758 | ||||
Warrant to purchase of shares of common stock | 0 | 124,258 | |||
Fair value of warrants issued price per share | $ 3.91 | ||||
Amortization of deferred financing costs | $ 177,164 | $ 216,381 | |||
Taglich Brothers Inc [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Warrant to purchase of shares of common stock | 124,258 | ||||
Class of warrant or right, exercise price of warrants or rights | $ 4.62 | ||||
Private Placement [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Private placement agent | 8% | 8% | |||
Debt issuance costs | $ 175,924 | ||||
Underwriting expense | 307,867 | ||||
Amortization of deferred financing costs | $ 21,439 | 99,589 | |||
Private placement offering | $ 440,000 | ||||
Accredited Investors [Member] | 12% Subordinated Notes [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Number of shares sold | 2,000 | ||||
Sale of stock price per share | $ 1,000 | ||||
Value of stock sold | $ 1,000 | ||||
Conversion of units, shares | 40 | ||||
Conversion of units | $ 2,000,000 | ||||
Accredited Investors [Member] | Private Placement [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Number of stock issued during period, shares | 875,000 | ||||
Price per share | $ 4 | ||||
Number of shares sold | 955,000 | ||||
Proceeds from private placement | $ 3,500,000 | ||||
Securities Purchase Agreement [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Placement agent cash | 254,160 | ||||
Underwriting expense | 492,181 | ||||
Securities Purchase Agreement [Member] | Taglich Brothers Inc [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Placement agent cash | $ 696,420 | ||||
Warrant to purchase of shares of common stock | 124,258 | ||||
Class of warrant or right, exercise price of warrants or rights | $ 4.62 | ||||
Debt issuance costs | $ 165,406 | $ 47,607 | |||
Fair value of warrants issued price per share | $ 3.91 | ||||
Amortization of deferred financing costs | $ 155,724 | $ 116,793 | |||
Securities Purchase Agreement [Member] | Taglich Brothers Inc [Member] | Minimum [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Class of warrant or right, exercise price of warrants or rights | $ 3.30 | ||||
Securities Purchase Agreement [Member] | Taglich Brothers Inc [Member] | Maximum [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Class of warrant or right, exercise price of warrants or rights | $ 3.97 | ||||
Securities Purchase Agreement [Member] | Private Placement [Member] | 12% Subordinated Notes [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Number of stock issued during period, shares | 2,964,500 | ||||
Stock issued during period shares new issues | $ 8,705,256 | ||||
Securities Purchase Agreement [Member] | Accredited Investors [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Number of stock issued during period, shares | 1,242,588 | ||||
Price per share | $ 4.62 | ||||
Stock issued during period shares new issues | $ 5,740,756 | ||||
2015 Equity Incentive 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 | 255,958 | ||||
Warrant [Member] | Private Placement [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 | ||||
Debt issuance costs | $ 135,291 | ||||
Fair value of warrants issued price per share | $ 3.90 | ||||
Underwriting expense | $ 236,761 | ||||
Warrants term | 5 years | ||||
Warrant One [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 exercisable date | Mar. 30, 2027 | ||||
Warrant Two [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 exercisable date | Mar. 30, 2027 | ||||
Warrant Three [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 exercisable date | Mar. 30, 2027 | ||||
Warrant Four [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 exercisable date | Mar. 30, 2027 | ||||
Warrant Five [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Warrant to purchase of shares of common stock | 124,258 | ||||
Class of warrant or right, exercise price of warrants or rights | $ 4.62 | ||||
Warrant exercisable date | Mar. 30, 2027 |
Schedule of Estimated Values _2
Schedule of Estimated Values of Stock Option Grants Valuation Assumptions (Details) - April 14, 2022 Grant [Member] | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Risk-free interest rate | 2.82% |
Weighted average expected term | 6 years |
Expected volatility | 116.60% |
Expected dividend yield | 0% |
Schedule of Stock Option Activi
Schedule of Stock Option Activity (Details) - Equity Option [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares Under Option, Outstanding beginning balance | 365,447 | 144,860 |
Weighted- Average Exercise Price, Outstanding beginning balance | $ 5.89 | $ 5.61 |
Weighted Average Remaining Contractual Life Outstanding, beginning | 8 years | 8 years |
Aggregate Intrinsic Value, Outstanding, beginning balance | $ 19,200 | $ 19,200 |
Shares Under Option, Forfeited and expired | (7,560) | |
Weighted- Average Exercise Price, Forfeited and expired | $ 15.34 | |
Weighted- Average Exercise Price, Forfeited and expired | $ (19,200) | |
Shares Under Option, Outstanding ending balance | 357,887 | 365,447 |
Weighted- Average Exercise Price, Outstanding ending balance | $ 5.69 | $ 5.89 |
Aggregate Intrinsic Value, Outstanding ending balance | $ 19,200 | |
Shares Under Option, Exercisable ending balance | 186,594 | 93,085 |
Weighted- Average Exercise Price, Exercisable ending balance | $ 5.60 | $ 6.44 |
Weighted Average Remaining Contractual Life Outstanding, beginning | 7 years | 7 years |
Aggregate Intrinsic Value, Exercisable ending balance | $ 19,200 | |
Shares Under Option, Granted | 220,587 | |
Weighted- Average Exercise Price, Granted | $ 6.08 | |
Weighted Average Remaining Contractual Life Outstanding, beginning | 8 years |
Schedule of Stock Options Grant
Schedule of Stock Options Grant (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Fair value | $ 467,771 | $ 91,913 | |
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. 06, 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) | 33,200 | ||
Exercise price | $ 6.50 | ||
Date fully vested | Dec. 06, 2020 | ||
Fair value | [1] | $ 24,898 | |
Shares granted (canceled) | (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. 02, 2024 | ||
Fair value | $ 327,181 | ||
Shares granted (canceled) | (99,000) | ||
April 14, 2022 [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Shares granted (canceled) | 220,587 | ||
Exercise price | $ 6.08 | ||
Date fully vested | Apr. 14, 2025 | ||
Fair value | $ 1,152,470 | ||
Shares granted (canceled) | (220,587) | ||
[1]Represents incremental fair value of replacement shares compared to canceled shares. |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 12 Months Ended | ||||
Dec. 28, 2023 | Apr. 14, 2022 | Jan. 06, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Allocated share based compensation expense | $ 464,529 | $ 363,950 | |||
Fair value of stock options | 467,771 | $ 91,913 | |||
Weighted-average grant date fair value of options granted | $ 5.22 | ||||
Unrecognized compensation costs | 547,981 | $ 1,019,140 | |||
Employee [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock option granted | 220,587 | ||||
Stock option exercise price | $ 6.08 | ||||
Fair value of stock options | $ 1,152,470 | ||||
Restricted Stock [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock issued during period, shares, restricted stock award | 39,864 | 8,097 | |||
Allocated share based compensation expense | $ 147,500 | $ 57,500 |
Concentrations (Details Narrati
Concentrations (Details Narrative) - Customer Concentration Risk [Member] | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
State of Michigan [Member] | Revenue Benchmark [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 35% | 38% |
Rocket Mortgage [Member] | Revenue Benchmark [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 5% | 6% |
Government Contracts [Member] | Revenue Benchmark [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 80% | 77% |
Customer One [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 62% | 44% |
Customer Two [Member] | Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 3% | 7% |
Schedule of Related Party Trans
Schedule of Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Amounts of notes purchased | $ 5,740,758 | |
Michael N. Taglich [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship to the Company | Director; Beneficially owns more than 5% of the common stock of Intellinetics. | |
Stock Issued, shares | 262,986 | |
Amounts of notes purchased | ||
Date of Transaction | Apr. 01, 2022 | |
Robert F. Taglich [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship to the Company | Beneficially owns more than 5% of the Common Stock of Intellinetics. | |
Stock Issued, shares | 179,652 | |
Amounts of notes purchased | $ 600,000 | |
Date of Transaction | Apr. 01, 2022 |
Certain Relationships and Rel_3
Certain Relationships and Related Transactions (Details Narrative) - USD ($) | 12 Months Ended | ||
May 01, 2020 | Dec. 31, 2023 | Dec. 31, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Number of warrants to purchase common stock | 0 | 124,258 | |
Taglich Brothers Inc [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Payments to private placement | $ 696,420 | ||
Number of warrants to purchase common stock | 124,258 | ||
Warrants exercise price, per share | $ 4.62 | ||
2020 Private Placement [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Shares issued, price per share | $ 4.62 | ||
Equity, beneficial ownership, description | William M. Cooke, chair of the board of directors of Intellinetics, retired from his position as Vice President of Investment Banking at Taglich Brothers, Inc. effective December 31, 2023. Robert F. Taglich and Michael N. Taglich, each beneficial owners of more than 5% of our common stock, are both principals of Taglich Brothers, Inc | ||
Engagement Agreement [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Payment of success fee | $ 200,000 | ||
2022 Private Placement [Member] | Taglich Brothers Inc [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Commission percentage | 8% | ||
Share sold percentage | 10% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Mar. 13, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Apr. 02, 2022 | Apr. 01, 2022 |
2022 Unrelated Notes [Member] | Nonrelated Party [Member] | |||||
Subsequent Event [Line Items] | |||||
Notes payable | $ 2,364,500 | ||||
2022 Related Notes [Member] | Related Party [Member] | |||||
Subsequent Event [Line Items] | |||||
Notes payable | $ 600,000 | $ 600,000 | |||
Principal amount | $ 600,000 | ||||
Subsequent Event [Member] | Amendment Of Twenty Twenty Two Notes [Member] | Nonrelated Party [Member] | |||||
Subsequent Event [Line Items] | |||||
Extend maturity date | Dec. 31, 2025 | ||||
Notes payable | $ 1,519,500 | ||||
Subsequent Event [Member] | 2022 Unrelated Notes [Member] | Nonrelated Party [Member] | |||||
Subsequent Event [Line Items] | |||||
Notes payable | 2,364,500 | ||||
Subsequent Event [Member] | 2022 Related Notes [Member] | Related Party [Member] | |||||
Subsequent Event [Line Items] | |||||
Principal amount | $ 600,000 |