Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 11, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
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, $0.001 par value | |
Trading Symbol | INLX | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 4,113,621 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash | $ 1,184,944 | $ 1,215,248 |
Accounts receivable, net | 1,931,342 | 1,850,375 |
Accounts receivable, unbilled | 1,286,457 | 1,320,837 |
Parts and supplies, net | 93,090 | 110,272 |
Contract assets | 130,829 | 140,165 |
Prepaid expenses and other current assets | 402,444 | 367,478 |
Total current assets | 5,029,106 | 5,004,375 |
Property and equipment, net | 880,740 | 924,257 |
Right of use assets, operating | 2,461,680 | 2,532,928 |
Right of use assets, finance | 292,298 | 219,777 |
Intangible assets, net | 3,781,761 | 3,909,338 |
Goodwill | 5,789,821 | 5,789,821 |
Other assets | 680,780 | 645,764 |
Total assets | 18,916,186 | 19,026,260 |
Current liabilities: | ||
Accounts payable | 278,486 | 194,454 |
Accrued compensation | 558,191 | 337,884 |
Accrued expenses | 262,050 | 164,103 |
Lease liabilities, operating - current | 779,741 | 712,607 |
Lease liabilities, finance - current | 64,429 | 49,926 |
Deferred revenues | 2,583,207 | 2,927,808 |
Total current liabilities | 4,851,104 | 4,386,782 |
Long-term liabilities: | ||
Lease liabilities, operating - net of current portion | 1,803,213 | 1,942,970 |
Lease liabilities, finance - net of current portion | 236,591 | 175,943 |
Total long-term liabilities | 4,045,243 | 4,888,757 |
Total liabilities | 8,896,347 | 9,275,539 |
Stockholders’ equity: | ||
Common stock, $0.001 par value, 25,000,000 shares authorized; 4,113,621 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 4,114 | 4,114 |
Additional paid-in capital | 31,285,462 | 30,841,630 |
Accumulated deficit | (21,269,737) | (21,095,023) |
Total stockholders’ equity | 10,019,839 | 9,750,721 |
Total liabilities and stockholders’ equity | 18,916,186 | 19,026,260 |
Nonrelated Party [Member] | ||
Current liabilities: | ||
Notes payable - current | 325,000 | |
Long-term liabilities: | ||
Notes payable | 1,438,032 | 2,209,242 |
Related Party [Member] | ||
Long-term liabilities: | ||
Notes payable | $ 567,407 | $ 560,602 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
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 | 4,113,621 |
Common stock, shares outstanding | 4,113,621 | 4,113,621 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenues: | ||
Total revenues | $ 4,507,084 | $ 4,186,833 |
Cost of revenues: | ||
Total cost of revenues | 1,607,440 | 1,540,994 |
Gross profit | 2,899,644 | 2,645,839 |
Operating expenses: | ||
General and administrative | 2,128,493 | 1,554,611 |
Sales and marketing | 541,621 | 579,511 |
Depreciation and amortization | 264,010 | 227,718 |
Total operating expenses | 2,934,124 | 2,361,840 |
(Loss) income from operations | (34,480) | 283,999 |
Interest expense, net | (140,234) | (171,436) |
Net (loss) income | $ (174,714) | $ 112,563 |
Basic net (loss) income per share: | $ (0.04) | $ 0.03 |
Diluted net (loss) income per share: | $ (0.04) | $ 0.03 |
Weighted average number of common shares outstanding - basic | 4,113,621 | 4,073,757 |
Weighted average number of common shares outstanding - diluted | 4,113,621 | 4,392,459 |
Sale of Software [Member] | ||
Revenues: | ||
Total revenues | $ 5,779 | $ 15,293 |
Cost of revenues: | ||
Total cost of revenues | 5,065 | 8,181 |
Software as a Service [Member] | ||
Revenues: | ||
Total revenues | 1,405,153 | 1,238,432 |
Cost of revenues: | ||
Total cost of revenues | 215,992 | 220,640 |
Software Maintenance Services [Member] | ||
Revenues: | ||
Total revenues | 357,983 | 349,542 |
Cost of revenues: | ||
Total cost of revenues | 15,710 | 16,716 |
Professional Services [Member] | ||
Revenues: | ||
Total revenues | 2,479,678 | 2,299,289 |
Cost of revenues: | ||
Total cost of revenues | 1,284,063 | 1,187,116 |
Storage and Retrieval Services [Member] | ||
Revenues: | ||
Total revenues | 258,491 | 284,277 |
Cost of revenues: | ||
Total cost of revenues | $ 86,610 | $ 108,341 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2022 | $ 4,074 | $ 30,179,017 | $ (21,614,289) | $ 8,568,802 |
Balance, shares at Dec. 31, 2022 | 4,073,757 | |||
Stock Option Compensation | 118,162 | 118,162 | ||
Net Income/Loss | 112,563 | 112,563 | ||
Balance at Mar. 31, 2023 | $ 4,074 | 30,297,179 | (21,501,726) | 8,799,527 |
Balance, shares at Mar. 31, 2023 | 4,073,757 | |||
Balance at Dec. 31, 2023 | $ 4,114 | 30,841,630 | (21,095,023) | 9,750,721 |
Balance, shares at Dec. 31, 2023 | 4,113,621 | |||
Stock Option Compensation | 115,456 | 115,456 | ||
Net Income/Loss | (174,714) | (174,714) | ||
Restricted Share Issuance | 328,376 | 328,376 | ||
Balance at Mar. 31, 2024 | $ 4,114 | $ 31,285,462 | $ (21,269,737) | $ 10,019,839 |
Balance, shares at Mar. 31, 2024 | 4,113,621 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (174,714) | $ 112,563 |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 264,010 | 227,718 |
Bad debt (recovery) expense | (14,588) | 20,102 |
Amortization of deferred financing costs | 60,595 | 49,997 |
Amortization of debt discount | 11,378 | |
Amortization of right of use assets, financing | 16,768 | 6,709 |
Share based compensation | 443,832 | 118,162 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (66,379) | (81,542) |
Accounts receivable, unbilled | 34,380 | (291,332) |
Parts and supplies | 17,182 | (8,234) |
Prepaid expenses and other current assets | (25,630) | (1,931) |
Accounts payable and accrued expenses | 402,286 | 229,849 |
Operating lease assets and liabilities, net | (1,375) | 3,992 |
Deferred revenues | (344,601) | (571,788) |
Total adjustments | 786,480 | (286,920) |
Net cash provided by (used in) operating activities | 611,766 | (174,357) |
Cash flows from investing activities: | ||
Capitalization of internal use software | (109,621) | (112,208) |
Purchases of property and equipment | (18,311) | (22,361) |
Net cash used in investing activities | (127,932) | (134,569) |
Cash flows from financing activities: | ||
Payment of earnout liabilities | (700,000) | |
Principal payments on financing lease liability | (14,138) | (5,467) |
Repayment of notes payable | (500,000) | (262,950) |
Net cash used in financing activities | (514,138) | (968,417) |
Net decrease in cash | (30,304) | (1,277,343) |
Cash - beginning of period | 1,215,248 | 2,696,481 |
Cash - end of period | 1,184,944 | 1,419,138 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 88,935 | 116,110 |
Cash paid during the period for income taxes | 956 | 2,499 |
Supplemental disclosure of non-cash financing activities: | ||
Right-of-use asset obtained in exchange for finance lease liability | $ 89,289 |
Business Organization and Natur
Business Organization and Nature of Operations | 3 Months Ended |
Mar. 31, 2024 | |
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 | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). The financial statements presented in this Quarterly Report on Form 10-Q are unaudited. However, in the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with GAAP applicable to interim periods. The financial data and other financial information disclosed in these notes to the accompanying condensed consolidated financial statements are also unaudited. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations thereunder. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2024 or any other future period. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC filed on March 28, 2024. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Principles of Consolidation The condensed 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 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 ASU 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. 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 March 31, 2024 and December 31, 2023, our allowance for credit losses was $ 109,515 124,103 Changes in the allowance for credit losses for the period ended March 31, 2024 and 2023 were as follows: Schedule of Allowance for Credit Losses Trade Receivables As of December 31, 2023 $ (124,103 ) (Provisions) Reductions charged to operating results $ 14,588 Accounts write-offs 1,640 As of March 31, 2024 $ (109,515 ) Trade Receivables As of December 31, 2022 $ (88,331 ) (Provisions) Reductions charged to operating results $ (21,742 ) Accounts write-offs $ 1,640 As of March 31, 2023 $ (108,433 ) Revenue Recognition 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. More detail regarding each category of revenue is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC filed on March 28, 2024. Contract balances The following tables present changes in our contract assets during the three months ended March 31, 2024 and 2023: Schedule of Changes in Contract Assets and Liabilities Balance at Billings Payments Balance at Three months ended March 31, 2024 Accounts receivable $ 1,850,375 - $ 4,242,590 - $ (4,161,623 ) - - - $ 1,931,342 Three months ended March 31, 2023 Accounts receivable $ 1,121,083 $ 3,341,583 $ (3,280,143 ) $ 1,182,523 Balance at Revenue Billings Balance at Three months ended March 31, 2024 Accounts receivable, unbilled $ 1,320,837 $ 1,380,300 $ (1,414,680 ) $ 1,286,457 Three months ended March 31, 2023 Accounts receivable, unbilled $ 596,410 $ 1,336,851 $ (1,045,519 ) $ 887,742 Balance at Commissions Commissions Balance at Three months ended March 31, 2024 Other contract assets $ 140,165 $ 1,336,851 $ (37,518 ) $ 130,829 Three months ended March 31, 2023 Other contract assets $ 80,378 $ 27,792 $ (27,593 ) $ 80,577 Deferred revenue Amounts that have been invoiced are recognized in accounts receivable, deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenues typically relate to maintenance and software-as-a-service agreements which have been paid for by customers prior to the performance of those services, and payments received for professional services and license arrangements and software-as-a-service performance obligations that have been deferred until fulfilled under our revenue recognition policy. Remaining performance obligations represent the transaction price from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately 99 35,095 72,212 The following table presents changes in our contract liabilities during the three months ended March 31, 2024 and 2023: Balance at Billings Recognized Balance at Three months ended March 31, 2024 Contract liabilities: deferred revenue $ 2,927,808 $ 1,200,998 $ (1,545,599 ) $ 2,583,207 Three months ended March 31, 2023 Contract liabilities: deferred revenue $ 2,754,064 $ 1,146,380 $ (1,718,168 ) $ 2,182,276 Software Development Costs We design, develop, test, market, license, and support new software products and enhancements of current products. We continuously monitor our software products and enhancements to remain compatible with standard platforms and file formats. In accordance with ASC 985-20 “Costs of Software to be Sold, Leased or Otherwise Marketed,” we expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached. Once technological feasibility has been established, certain software development costs incurred during the application development stage are eligible for capitalization. Based on our software development process, technical feasibility is established upon completion of a working model. Technological feasibility is typically reached shortly before the release of such products. No such costs were capitalized during the periods presented in this report. In accordance with ASC 350-40, “Internal-Use Software,” we capitalize purchase and implementation costs of internal use software. Once an application has reached development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. We also capitalize costs related to specific upgrades and enhancements when it is probable that the expenditure will result in additional functionality. Such costs in the amount of $ 109,621 112,208 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 March 31, 2024 and December 31, 2023, our condensed consolidated balance sheets included $ 665,995 630,979 For the three months ended March 31, 2024 and 2023, our expensed software development costs were $ 159,731 131,743 Recently Issued Accounting Pronouncements Not Yet Effective In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves financial reporting by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included with each reported measure of significant profit or loss on an annual and interim basis. This ASU also requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU is required to be applied retrospectively for all prior periods presented in the financial statements. We are evaluating the adoption impact of this ASU on our condensed consolidated financial statements and related disclosures but do not expect any material impact upon adoption. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes. The ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” We are currently evaluating the impact of this ASU but do not expect any material impact upon adoption. There are no other accounting standards that have been issued but not yet adopted that we believe could have a material impact on our consolidated financial statements. Advertising We expense the cost of advertising as incurred. Advertising expense for the three months ended March 31, 2024 and 2023 amounted to $ 5,977 6,120 Earnings (Loss) Per Share Basic income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted income or loss per share is computed by dividing net income or loss by the diluted weighted average number of shares of common stock outstanding during the period. The diluted weighted average number of shares gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. Diluted earnings per share exclude all diluted potential shares if their effect is anti-dilutive, including warrants or options which are out-of-the-money and for those periods with a net loss. We have outstanding warrants and stock options which have not been included in the calculation of diluted net loss per share for the three months ended March 31, 2024 and 2023 because to do so would be anti-dilutive. For the first quarter 2024 and 2023, certain options and warrants were in-the-money and others were not. The three months ended March 31, 2024 reported a net loss, while the three months ended March 31, 2023 reported net income. For the first quarter 2024, the numerator and the denominator used in computing both basic and diluted net loss per share are the same. 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. 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. 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 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below: Schedule of Deferred Tax Assets and Liabilities March 31, 2024 December 31, 2023 Deferred tax assets Reserves and accruals not currently deductible for tax purposes $ 84,441 $ 69,676 Amortizable assets 120,946 109,612 Net operating loss carryforwards 4,655,024 4,771,762 Deferred tax assets, gross 4,860,411 4,951,050 Deferred tax liabilities Amortizable assets (203,414 ) (197,579 ) Property and equipment (202,219 ) (214,698 ) Net Deferred tax assets 4,454,778 4,538,773 Valuation allowance (4,454,778 ) (4,538,773 ) Deferred tax assets, net $ - $ - As of March 31, 2024 and December 31, 2023, we had federal net operating loss carry forwards of approximately $ 15,498,000 15,972,479 federal and state net operating loss carry forwards expire at various dates through 2040, and a portion of the net operating loss carry forwards have an indefinite carry forward period 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. Its modular suite of solutions complements existing operating and accounting systems to serve a mission-critical role for organizations to make content secure, compliant, and process-ready. This segment conducts its primary operations in the United States. Markets served include highly regulated, risk and compliance-intensive markets in healthcare, K-12 education, public safety, other public sector, risk management, financial services, and others. Solutions are sold both directly to end-users and through resellers. The Document Conversion Segment provides services for scanning and indexing, converting images from paper to digital, paper to microfilm, and microfiche to microfilm, as well as long-term physical document storage and retrieval. This segment conducts its primary operations in the United States. Markets served include businesses and federal, county, and municipal governments. Solutions are sold both directly to end-users and through a reseller distributor. Information by operating segment is as follows: Schedule of Segment Information Three months Three months Revenues Document Management $ 1,820,420 $ 1,769,483 Document Conversion 2,686,664 2,417,350 Total revenues $ 4,507,084 $ 4,186,833 Gross profit Document Management $ 1,556,893 $ 1,483,108 Document Conversion 1,342,751 1,162,731 Total gross profit $ 2,899,644 $ 2,645,839 Capital additions, net Document Management $ 110,619 $ 116,041 Document Conversion 17,313 18,528 Total capital additions, net $ 127,932 $ 134,569 March 31, 2024 December 31, 2023 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 March 31, 2024 December 31, 2023 Total assets Document Management $ 9,618,219 $ 10,104,004 Document Conversion 9,297,967 8,922,256 Total assets $ 18,916,186 $ 19,026,260 Statement of Cash Flows For purposes of reporting cash flows, cash includes cash on hand and demand deposits held by banks. |
Intangible Assets, Net
Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 4. Intangible Assets, Net At March 31, 2024, intangible assets consisted of the following: Schedule of Intangible Assets Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 297,000 $ (84,192 ) $ 212,808 Proprietary technology 10 861,000 (172,200 ) 688,800 Customer relationships 5 15 4,091,000 (1,210,847 ) 2,880,153 $ 5,249,000 $ (1,467,239 ) $ 3,781,761 At December 31, 2023, intangible assets consisted of the following: 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 Amortization expense for the three months ended March 31, 2024 and 2023 amounted to $ 127,577 Schedule of Amortization Expense for Intangible Assets For the Twelve Months Ending March 31, Amount 2025 $ 510,308 2026 473,125 2027 326,108 2028 324,410 2029 305,733 Thereafter 1,842,077 Intangible assets $ 3,781,761 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 5. Fair Value Measurements We paid our final earnout liability of $ 700,000 no |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 6. Property and Equipment Property and equipment are comprised of the following: Schedule of Property and Equipment March 31, 2024 December 31, 2023 Computer hardware and purchased software $ 1,455,334 $ 1,437,023 Leasehold improvements 395,919 395,919 Furniture and fixtures 324,296 324,296 Property and equipment, gross 2,175,549 2,157,238 Less: accumulated depreciation (1,294,809 ) (1,232,981 ) Property and equipment, net $ 880,740 $ 924,257 Total depreciation expense on our property and equipment for the three months ended March 31, 2024 and 2023 amounted to $ 61,828 61,939 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2024 | |
Nonrelated Party [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Notes Payable | 7. Notes Payable Summary of Notes Payable to Unrelated Parties The table below summarizes all notes payable at March 31, 2024 and December 31, 2023, respectively with the exception of related party notes disclosed in Note 8 “Notes Payable - Related Parties.” Schedule of Notes Payable March 31, 2024 December 31, 2023 Notes payable – “2022 Unrelated Notes” $ 1,864,500 $ 2,364,500 Less unamortized debt issuance costs (101,468 ) (155,258 ) Less current portion (325,000 ) - Long-term portion of notes payable $ 1,438,032 $ 2,209,242 Subordinated Notes Payable Issue Date Interest Rate Interest Due Principal Due $ 325,000 April 1, 2022 12 % Quarterly March 30, 2025 $ 1,539,500 April 1, 2022 12 % Quarterly December 31, 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 March 31, Amount 2025 $ 325,000 2026 1,539,500 Total $ 1,864,500 As of March 31, 2024 and December 31, 2023, accrued interest for these notes payable with the exception of the related party notes in Note 8, “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 three months ended March 31, 2024 and 2023 was $ 124,725 151,605 |
Notes Payable - Related Parties
Notes Payable - Related Parties | 3 Months Ended |
Mar. 31, 2024 | |
Related Party [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Notes Payable - Related Parties | 8. Notes Payable - Related Parties Summary of Notes Payable to Related Parties The table below summarizes all notes payable to related parties at March 31, 2024 and December 31, 2023: Schedule of Notes Payable March 31, 2024 December 31, 2023 Notes payable – “2022 Related Note” $ 600,000 $ 600,000 Less unamortized debt issuance costs (32,593 ) (39,398 ) Long-term portion of notes payable $ 567,407 $ 560,602 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 March 31, Amount 2026 $ 600,000 Total $ 600,000 As of March 31, 2024 and December 31, 2023, accrued interest for these notes payable – related parties were $ 0 With respect to all notes payable – related parties outstanding, interest expense, including the amortization of debt issuance costs, for the three months ended March 31, 2024 and 2023 and was $ 24,805 25,879 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. 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. 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 $ 5,250 December 31, 2028 Madison Heights, MI 36,000 $ 44,048 August 31, 2026 Sterling Heights, MI 37,000 $ 21,692 April 30, 2028 Traverse City, MI 5,200 $ 5,100 January 31, 2026 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 twelve months ending March 31, Finance Leases Operating Leases 2025 $ 89,954 $ 951,885 2026 89,954 950,991 2027 71,204 578,184 2028 63,855 358,282 2029 39,194 76,821 Thereafter 1,883 - Less Imputed Interest (55,024 ) (333,209 ) $ 301,020 $ 2,582,954 The following table summarizes the components of lease expense: Summary of Components of Lease Expense For the three months ending March 31, 2024 2023 Finance lease expense: Amortization of ROU asset $ 16,768 $ 6,709 Interest on lease liabilities 6,468 2,832 Operating lease expense 234,439 237,449 Short-term lease expense 4,814 4,814 The following tables set forth additional information pertaining to our leases: Schedule of Additional Information Pertaining to Leases For the three months ending March 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases (interest) $ 6,468 $ 2,832 Financing cash flows from finance leases (principal) 14,138 5,467 Operating cash flows from operating leases 187,724 170,759 ROU assets obtained in exchange for new finance lease liabilities 89,289 40,529 Weighted average remaining lease term – finance leases 4.3 5.5 Weighted average remaining lease term – operating leases 3.3 4.2 Weighted average discount rate – finance leases 9.75 % 7.50 % Weighted average discount rate – operating leases 6.98 % 6.97 % |
Stockholders_ Equity
Stockholders’ Equity | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Stockholders’ Equity | 10. Stockholders’ Equity Common Stock As of March 31, 2024, 4,113,621 255,958 497,330 150,000 The following table describes the shares and warrants issued as part of our 2022 and 2020 private placements: Schedule of Shares and Warrants Issued Issuance of Common Stock Issue Date Shares Issued Price per share Warrants Issued Warrant Exercise Price Warrant Fair Value Private Placement 2022 April 1, 2022 1,242,588 $ 4.62 124,258 $ 4.62 $ 3.91 Private Placement 2020 March 2, 2020 955,000 $ 4.00 95,500 $ 4.00 $ 3.90 Amortization of the debt issuance costs for the Private Placement 2022 offering was recorded at $ 60,595 38,931 11,065 Warrants The following sets forth the warrants to purchase our common stock that were outstanding as of March 31, 2024: Schedule of Warrants to Purchase Common Stock Warrants Warrant Warranty 124,258 $ 4.62 March 30, 2027 95,500 $ 4.00 March 30, 2027 16,000 $ 9.00 March 30, 2027 17,200 $ 12.50 March 30, 2027 3,000 $ 15.00 March 30, 2027 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 11. 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 March 19, 2024, we granted 127,500 42,495 42,495 42,510 397,901 Stock Options We did not make any stock option grants during the three months ended March 31, 2024 or 2023. A summary of stock option activity during the three months ended March 31, 2024 and 2023 is as follows: Schedule of Stock Options Activity Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2024 357,887 $ 5.69 8 $ - Forfeited (5,000 4.00 Outstanding at March 31, 2024 357,887 $ 5.69 7 $ - Exercisable at March 31, 2024 186,594 $ 5.60 7 $ - Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2023 365,447 $ 5.89 8 $ 19,200 Forfeited (5,000 ) 4.00 Outstanding at March 31, 2023 360,447 $ 5.92 8 $ 19,200 Exercisable at March 31, 2023 92,860 $ 6.50 7 $ 19,200 During the three months ended March 31, 2024 and 2023, stock-based compensation for options was $ 115,456 118,162 As of March 31, 2024 and December 31, 2023, there was $ 432,525 547,981 0 10,238 |
Concentrations
Concentrations | 3 Months Ended |
Mar. 31, 2024 | |
Risks and Uncertainties [Abstract] | |
Concentrations | 12. Concentrations Revenues from a limited number of customers have accounted for a substantial percentage of our total revenues. During the three months ended March 31, 2024 and 2023, our largest customer, the State of Michigan, accounted for 48 34 4 10 For the three months ended March 31, 2024 and 2023, government contracts, including K-12 education, represented approximately 86 72 As of March 31, 2024, accounts receivable concentrations from our two largest customers were 60 8 62 3 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The condensed 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 |
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 ASU 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. 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 March 31, 2024 and December 31, 2023, our allowance for credit losses was $ 109,515 124,103 Changes in the allowance for credit losses for the period ended March 31, 2024 and 2023 were as follows: Schedule of Allowance for Credit Losses Trade Receivables As of December 31, 2023 $ (124,103 ) (Provisions) Reductions charged to operating results $ 14,588 Accounts write-offs 1,640 As of March 31, 2024 $ (109,515 ) Trade Receivables As of December 31, 2022 $ (88,331 ) (Provisions) Reductions charged to operating results $ (21,742 ) Accounts write-offs $ 1,640 As of March 31, 2023 $ (108,433 ) |
Revenue Recognition | Revenue Recognition 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. More detail regarding each category of revenue is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC filed on March 28, 2024. Contract balances The following tables present changes in our contract assets during the three months ended March 31, 2024 and 2023: Schedule of Changes in Contract Assets and Liabilities Balance at Billings Payments Balance at Three months ended March 31, 2024 Accounts receivable $ 1,850,375 - $ 4,242,590 - $ (4,161,623 ) - - - $ 1,931,342 Three months ended March 31, 2023 Accounts receivable $ 1,121,083 $ 3,341,583 $ (3,280,143 ) $ 1,182,523 Balance at Revenue Billings Balance at Three months ended March 31, 2024 Accounts receivable, unbilled $ 1,320,837 $ 1,380,300 $ (1,414,680 ) $ 1,286,457 Three months ended March 31, 2023 Accounts receivable, unbilled $ 596,410 $ 1,336,851 $ (1,045,519 ) $ 887,742 Balance at Commissions Commissions Balance at Three months ended March 31, 2024 Other contract assets $ 140,165 $ 1,336,851 $ (37,518 ) $ 130,829 Three months ended March 31, 2023 Other contract assets $ 80,378 $ 27,792 $ (27,593 ) $ 80,577 Deferred revenue Amounts that have been invoiced are recognized in accounts receivable, deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenues typically relate to maintenance and software-as-a-service agreements which have been paid for by customers prior to the performance of those services, and payments received for professional services and license arrangements and software-as-a-service performance obligations that have been deferred until fulfilled under our revenue recognition policy. Remaining performance obligations represent the transaction price from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately 99 35,095 72,212 The following table presents changes in our contract liabilities during the three months ended March 31, 2024 and 2023: Balance at Billings Recognized Balance at Three months ended March 31, 2024 Contract liabilities: deferred revenue $ 2,927,808 $ 1,200,998 $ (1,545,599 ) $ 2,583,207 Three months ended March 31, 2023 Contract liabilities: deferred revenue $ 2,754,064 $ 1,146,380 $ (1,718,168 ) $ 2,182,276 |
Software Development Costs | Software Development Costs We design, develop, test, market, license, and support new software products and enhancements of current products. We continuously monitor our software products and enhancements to remain compatible with standard platforms and file formats. In accordance with ASC 985-20 “Costs of Software to be Sold, Leased or Otherwise Marketed,” we expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached. Once technological feasibility has been established, certain software development costs incurred during the application development stage are eligible for capitalization. Based on our software development process, technical feasibility is established upon completion of a working model. Technological feasibility is typically reached shortly before the release of such products. No such costs were capitalized during the periods presented in this report. In accordance with ASC 350-40, “Internal-Use Software,” we capitalize purchase and implementation costs of internal use software. Once an application has reached development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. We also capitalize costs related to specific upgrades and enhancements when it is probable that the expenditure will result in additional functionality. Such costs in the amount of $ 109,621 112,208 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 March 31, 2024 and December 31, 2023, our condensed consolidated balance sheets included $ 665,995 630,979 For the three months ended March 31, 2024 and 2023, our expensed software development costs were $ 159,731 131,743 |
Recently Issued Accounting Pronouncements Not Yet Effective | Recently Issued Accounting Pronouncements Not Yet Effective In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves financial reporting by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included with each reported measure of significant profit or loss on an annual and interim basis. This ASU also requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU is required to be applied retrospectively for all prior periods presented in the financial statements. We are evaluating the adoption impact of this ASU on our condensed consolidated financial statements and related disclosures but do not expect any material impact upon adoption. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes. The ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” We are currently evaluating the impact of this ASU but do not expect any material impact upon adoption. There are no other accounting standards that have been issued but not yet adopted that we believe could have a material impact on our consolidated financial statements. |
Advertising | Advertising We expense the cost of advertising as incurred. Advertising expense for the three months ended March 31, 2024 and 2023 amounted to $ 5,977 6,120 |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted income or loss per share is computed by dividing net income or loss by the diluted weighted average number of shares of common stock outstanding during the period. The diluted weighted average number of shares gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. Diluted earnings per share exclude all diluted potential shares if their effect is anti-dilutive, including warrants or options which are out-of-the-money and for those periods with a net loss. We have outstanding warrants and stock options which have not been included in the calculation of diluted net loss per share for the three months ended March 31, 2024 and 2023 because to do so would be anti-dilutive. For the first quarter 2024 and 2023, certain options and warrants were in-the-money and others were not. The three months ended March 31, 2024 reported a net loss, while the three months ended March 31, 2023 reported net income. For the first quarter 2024, the numerator and the denominator used in computing both basic and diluted net loss per share are the same. |
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. 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. 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 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below: Schedule of Deferred Tax Assets and Liabilities March 31, 2024 December 31, 2023 Deferred tax assets Reserves and accruals not currently deductible for tax purposes $ 84,441 $ 69,676 Amortizable assets 120,946 109,612 Net operating loss carryforwards 4,655,024 4,771,762 Deferred tax assets, gross 4,860,411 4,951,050 Deferred tax liabilities Amortizable assets (203,414 ) (197,579 ) Property and equipment (202,219 ) (214,698 ) Net Deferred tax assets 4,454,778 4,538,773 Valuation allowance (4,454,778 ) (4,538,773 ) Deferred tax assets, net $ - $ - As of March 31, 2024 and December 31, 2023, we had federal net operating loss carry forwards of approximately $ 15,498,000 15,972,479 federal and state net operating loss carry forwards expire at various dates through 2040, and a portion of the net operating loss carry forwards have an indefinite carry forward period |
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. Its modular suite of solutions complements existing operating and accounting systems to serve a mission-critical role for organizations to make content secure, compliant, and process-ready. This segment conducts its primary operations in the United States. Markets served include highly regulated, risk and compliance-intensive markets in healthcare, K-12 education, public safety, other public sector, risk management, financial services, and others. Solutions are sold both directly to end-users and through resellers. The Document Conversion Segment provides services for scanning and indexing, converting images from paper to digital, paper to microfilm, and microfiche to microfilm, as well as long-term physical document storage and retrieval. This segment conducts its primary operations in the United States. Markets served include businesses and federal, county, and municipal governments. Solutions are sold both directly to end-users and through a reseller distributor. Information by operating segment is as follows: Schedule of Segment Information Three months Three months Revenues Document Management $ 1,820,420 $ 1,769,483 Document Conversion 2,686,664 2,417,350 Total revenues $ 4,507,084 $ 4,186,833 Gross profit Document Management $ 1,556,893 $ 1,483,108 Document Conversion 1,342,751 1,162,731 Total gross profit $ 2,899,644 $ 2,645,839 Capital additions, net Document Management $ 110,619 $ 116,041 Document Conversion 17,313 18,528 Total capital additions, net $ 127,932 $ 134,569 March 31, 2024 December 31, 2023 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 March 31, 2024 December 31, 2023 Total assets Document Management $ 9,618,219 $ 10,104,004 Document Conversion 9,297,967 8,922,256 Total assets $ 18,916,186 $ 19,026,260 |
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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of Allowance for Credit Losses | Changes in the allowance for credit losses for the period ended March 31, 2024 and 2023 were as follows: Schedule of Allowance for Credit Losses Trade Receivables As of December 31, 2023 $ (124,103 ) (Provisions) Reductions charged to operating results $ 14,588 Accounts write-offs 1,640 As of March 31, 2024 $ (109,515 ) Trade Receivables As of December 31, 2022 $ (88,331 ) (Provisions) Reductions charged to operating results $ (21,742 ) Accounts write-offs $ 1,640 As of March 31, 2023 $ (108,433 ) |
Schedule of Changes in Contract Assets and Liabilities | The following tables present changes in our contract assets during the three months ended March 31, 2024 and 2023: Schedule of Changes in Contract Assets and Liabilities Balance at Billings Payments Balance at Three months ended March 31, 2024 Accounts receivable $ 1,850,375 - $ 4,242,590 - $ (4,161,623 ) - - - $ 1,931,342 Three months ended March 31, 2023 Accounts receivable $ 1,121,083 $ 3,341,583 $ (3,280,143 ) $ 1,182,523 Balance at Revenue Billings Balance at Three months ended March 31, 2024 Accounts receivable, unbilled $ 1,320,837 $ 1,380,300 $ (1,414,680 ) $ 1,286,457 Three months ended March 31, 2023 Accounts receivable, unbilled $ 596,410 $ 1,336,851 $ (1,045,519 ) $ 887,742 Balance at Commissions Commissions Balance at Three months ended March 31, 2024 Other contract assets $ 140,165 $ 1,336,851 $ (37,518 ) $ 130,829 Three months ended March 31, 2023 Other contract assets $ 80,378 $ 27,792 $ (27,593 ) $ 80,577 The following table presents changes in our contract liabilities during the three months ended March 31, 2024 and 2023: Balance at Billings Recognized Balance at Three months ended March 31, 2024 Contract liabilities: deferred revenue $ 2,927,808 $ 1,200,998 $ (1,545,599 ) $ 2,583,207 Three months ended March 31, 2023 Contract liabilities: deferred revenue $ 2,754,064 $ 1,146,380 $ (1,718,168 ) $ 2,182,276 |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below: Schedule of Deferred Tax Assets and Liabilities March 31, 2024 December 31, 2023 Deferred tax assets Reserves and accruals not currently deductible for tax purposes $ 84,441 $ 69,676 Amortizable assets 120,946 109,612 Net operating loss carryforwards 4,655,024 4,771,762 Deferred tax assets, gross 4,860,411 4,951,050 Deferred tax liabilities Amortizable assets (203,414 ) (197,579 ) Property and equipment (202,219 ) (214,698 ) Net Deferred tax assets 4,454,778 4,538,773 Valuation allowance (4,454,778 ) (4,538,773 ) Deferred tax assets, net $ - $ - |
Schedule of Segment Information | Information by operating segment is as follows: Schedule of Segment Information Three months Three months Revenues Document Management $ 1,820,420 $ 1,769,483 Document Conversion 2,686,664 2,417,350 Total revenues $ 4,507,084 $ 4,186,833 Gross profit Document Management $ 1,556,893 $ 1,483,108 Document Conversion 1,342,751 1,162,731 Total gross profit $ 2,899,644 $ 2,645,839 Capital additions, net Document Management $ 110,619 $ 116,041 Document Conversion 17,313 18,528 Total capital additions, net $ 127,932 $ 134,569 March 31, 2024 December 31, 2023 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 March 31, 2024 December 31, 2023 Total assets Document Management $ 9,618,219 $ 10,104,004 Document Conversion 9,297,967 8,922,256 Total assets $ 18,916,186 $ 19,026,260 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | At March 31, 2024, intangible assets consisted of the following: Schedule of Intangible Assets Estimated Accumulated Useful Life Costs Amortization Net Trade names 10 $ 297,000 $ (84,192 ) $ 212,808 Proprietary technology 10 861,000 (172,200 ) 688,800 Customer relationships 5 15 4,091,000 (1,210,847 ) 2,880,153 $ 5,249,000 $ (1,467,239 ) $ 3,781,761 At December 31, 2023, intangible assets consisted of the following: 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 |
Schedule of Amortization Expense for Intangible Assets | Schedule of Amortization Expense for Intangible Assets For the Twelve Months Ending March 31, Amount 2025 $ 510,308 2026 473,125 2027 326,108 2028 324,410 2029 305,733 Thereafter 1,842,077 Intangible assets $ 3,781,761 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment are comprised of the following: Schedule of Property and Equipment March 31, 2024 December 31, 2023 Computer hardware and purchased software $ 1,455,334 $ 1,437,023 Leasehold improvements 395,919 395,919 Furniture and fixtures 324,296 324,296 Property and equipment, gross 2,175,549 2,157,238 Less: accumulated depreciation (1,294,809 ) (1,232,981 ) Property and equipment, net $ 880,740 $ 924,257 |
Notes Payable (Tables)
Notes Payable (Tables) - Nonrelated Party [Member] | 3 Months Ended |
Mar. 31, 2024 | |
Defined Benefit Plan Disclosure [Line Items] | |
Schedule of Notes Payable | The table below summarizes all notes payable at March 31, 2024 and December 31, 2023, respectively with the exception of related party notes disclosed in Note 8 “Notes Payable - Related Parties.” Schedule of Notes Payable March 31, 2024 December 31, 2023 Notes payable – “2022 Unrelated Notes” $ 1,864,500 $ 2,364,500 Less unamortized debt issuance costs (101,468 ) (155,258 ) Less current portion (325,000 ) - Long-term portion of notes payable $ 1,438,032 $ 2,209,242 Subordinated Notes Payable Issue Date Interest Rate Interest Due Principal Due $ 325,000 April 1, 2022 12 % Quarterly March 30, 2025 $ 1,539,500 April 1, 2022 12 % Quarterly December 31, 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 March 31, Amount 2025 $ 325,000 2026 1,539,500 Total $ 1,864,500 |
Notes Payable - Related Parti_2
Notes Payable - Related Parties (Tables) - Related Party [Member] | 3 Months Ended |
Mar. 31, 2024 | |
Defined Benefit Plan Disclosure [Line Items] | |
Schedule of Notes Payable | The table below summarizes all notes payable to related parties at March 31, 2024 and December 31, 2023: Schedule of Notes Payable March 31, 2024 December 31, 2023 Notes payable – “2022 Related Note” $ 600,000 $ 600,000 Less unamortized debt issuance costs (32,593 ) (39,398 ) Long-term portion of notes payable $ 567,407 $ 560,602 |
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 March 31, Amount 2026 $ 600,000 Total $ 600,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 $ 5,250 December 31, 2028 Madison Heights, MI 36,000 $ 44,048 August 31, 2026 Sterling Heights, MI 37,000 $ 21,692 April 30, 2028 Traverse City, MI 5,200 $ 5,100 January 31, 2026 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 twelve months ending March 31, Finance Leases Operating Leases 2025 $ 89,954 $ 951,885 2026 89,954 950,991 2027 71,204 578,184 2028 63,855 358,282 2029 39,194 76,821 Thereafter 1,883 - Less Imputed Interest (55,024 ) (333,209 ) $ 301,020 $ 2,582,954 |
Summary of Components of Lease Expense | The following table summarizes the components of lease expense: Summary of Components of Lease Expense For the three months ending March 31, 2024 2023 Finance lease expense: Amortization of ROU asset $ 16,768 $ 6,709 Interest on lease liabilities 6,468 2,832 Operating lease expense 234,439 237,449 Short-term lease expense 4,814 4,814 |
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 three months ending March 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases (interest) $ 6,468 $ 2,832 Financing cash flows from finance leases (principal) 14,138 5,467 Operating cash flows from operating leases 187,724 170,759 ROU assets obtained in exchange for new finance lease liabilities 89,289 40,529 Weighted average remaining lease term – finance leases 4.3 5.5 Weighted average remaining lease term – operating leases 3.3 4.2 Weighted average discount rate – finance leases 9.75 % 7.50 % Weighted average discount rate – operating leases 6.98 % 6.97 % |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Schedule of Shares and Warrants Issued | The following table describes the shares and warrants issued as part of our 2022 and 2020 private placements: Schedule of Shares and Warrants Issued Issuance of Common Stock Issue Date Shares Issued Price per share Warrants Issued Warrant Exercise Price Warrant Fair Value Private Placement 2022 April 1, 2022 1,242,588 $ 4.62 124,258 $ 4.62 $ 3.91 Private Placement 2020 March 2, 2020 955,000 $ 4.00 95,500 $ 4.00 $ 3.90 |
Schedule of Warrants to Purchase Common Stock | The following sets forth the warrants to purchase our common stock that were outstanding as of March 31, 2024: Schedule of Warrants to Purchase Common Stock Warrants Warrant Warranty 124,258 $ 4.62 March 30, 2027 95,500 $ 4.00 March 30, 2027 16,000 $ 9.00 March 30, 2027 17,200 $ 12.50 March 30, 2027 3,000 $ 15.00 March 30, 2027 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Options Activity | A summary of stock option activity during the three months ended March 31, 2024 and 2023 is as follows: Schedule of Stock Options Activity Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2024 357,887 $ 5.69 8 $ - Forfeited (5,000 4.00 Outstanding at March 31, 2024 357,887 $ 5.69 7 $ - Exercisable at March 31, 2024 186,594 $ 5.60 7 $ - Weighted- Weighted- Average Shares Average Remaining Aggregate Under Exercise Contractual Intrinsic Option Price Life Value Outstanding at January 1, 2023 365,447 $ 5.89 8 $ 19,200 Forfeited (5,000 ) 4.00 Outstanding at March 31, 2023 360,447 $ 5.92 8 $ 19,200 Exercisable at March 31, 2023 92,860 $ 6.50 7 $ 19,200 |
Business Organization and Nat_2
Business Organization and Nature of Operations (Details Narrative) | 3 Months Ended |
Mar. 31, 2024 Segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
Schedule of Allowance for Credi
Schedule of Allowance for Credit Losses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Accounting Policies [Abstract] | ||
Trade receivables, beginning balance | $ (124,103) | $ (88,331) |
Provisions reductions charged to operating results | 14,588 | (21,742) |
Accounts write-offs | 1,640 | |
Trade receivables, ending balance | $ (109,515) | $ (108,433) |
Schedule of Changes in Contract
Schedule of Changes in Contract Assets and Liabilities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Offsetting Assets [Line Items] | ||
Balance at beginning of period | $ 140,165 | |
Billings | ||
Payments recevied | ||
Revenue recognized in advance of billings | ||
Commissions paid | ||
Commissions recognized | ||
Balance at ending of period | 130,829 | |
Deferred revenue, balance at beginning of period | 2,927,808 | 2,754,064 |
Addition from acquisition | 1,200,998 | 1,146,380 |
Recognized revenue | (1,545,599) | (1,718,168) |
Deferred revenue, balance at end of period | 2,583,207 | 2,182,276 |
Accounts Receivable [Member] | ||
Offsetting Assets [Line Items] | ||
Balance at beginning of period | 1,850,375 | 1,121,083 |
Billings | 4,242,590 | 3,341,583 |
Payments recevied | (4,161,623) | (3,280,143) |
Balance at ending of period | 1,931,342 | 1,182,523 |
Accounts Receivable Unbilled [Member] | ||
Offsetting Assets [Line Items] | ||
Balance at beginning of period | 1,320,837 | 596,410 |
Billings | (1,414,680) | (1,045,519) |
Revenue recognized in advance of billings | 1,380,300 | 1,336,851 |
Balance at ending of period | 1,286,457 | 887,742 |
Othe Contract Assests [Member] | ||
Offsetting Assets [Line Items] | ||
Balance at beginning of period | 140,165 | 80,378 |
Commissions paid | 1,336,851 | 27,792 |
Commissions recognized | (37,518) | (27,593) |
Balance at ending of period | $ 130,829 | $ 80,577 |
Schedule of Deferred Tax Assets
Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Deferred tax assets | ||
Reserves and accruals not currently deductible for tax purposes | $ 84,441 | $ 69,676 |
Amortizable assets | 120,946 | 109,612 |
Net operating loss carryforwards | 4,655,024 | 4,771,762 |
Deferred tax assets, gross | 4,860,411 | 4,951,050 |
Deferred tax liabilities | ||
Amortizable assets | (203,414) | (197,579) |
Property and equipment | (202,219) | (214,698) |
Net Deferred tax assets | 4,454,778 | 4,538,773 |
Valuation allowance | (4,454,778) | (4,538,773) |
Deferred tax assets, net |
Schedule of Segment Information
Schedule of Segment Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Total revenues | $ 4,507,084 | $ 4,186,833 | |
Total gross profit | 2,899,644 | 2,645,839 | |
Total capital additions, net | 127,932 | 134,569 | |
Total goodwill | 5,789,821 | $ 5,789,821 | |
Total assets | 18,916,186 | 19,026,260 | |
Document Management [Member] | |||
Total revenues | 1,820,420 | 1,769,483 | |
Total gross profit | 1,556,893 | 1,483,108 | |
Total capital additions, net | 110,619 | 116,041 | |
Total goodwill | 3,989,645 | 3,989,645 | |
Total assets | 9,618,219 | 10,104,004 | |
Document Conversion [Member] | |||
Total revenues | 2,686,664 | 2,417,350 | |
Total gross profit | 1,342,751 | 1,162,731 | |
Total capital additions, net | 17,313 | $ 18,528 | |
Total goodwill | 1,800,176 | 1,800,176 | |
Total assets | $ 9,297,967 | $ 8,922,256 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||||
Allowance for doubtful accounts receivable | $ 109,515 | $ 108,433 | $ 124,103 | $ 88,331 |
Revenue performance obligations percentage | 99% | |||
Revenue, remaining performance obligation, amount | $ 35,095 | 72,212 | ||
Other long-term assets | 665,995 | $ 630,979 | ||
Advertising expense | $ 5,977 | 6,120 | ||
Effective income tax rate reconciliation, change in deferred tax assets valuation allowance, percent | 100% | 100% | ||
Operating loss carryforwards, limitations on use | federal and state net operating loss carry forwards expire at various dates through 2040, and a portion of the net operating loss carry forwards have an indefinite carry forward period | |||
Domestic Tax Jurisdiction [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Federal net operating loss carry forwards | $ 15,498,000 | $ 15,972,479 | ||
Software Development [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Capitalized computer software, additions | 109,621 | 112,208 | ||
Research and development expense | $ 159,731 | $ 131,743 | ||
Intellinetics Ohio and Graphic Sciences [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Percentage of voting rights outstanding | 50% |
Schedule of Intangible Assets (
Schedule of Intangible Assets (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, cost | $ 5,249,000 | $ 5,249,000 |
Intangible assets, accumulated amortization | (1,467,239) | (1,339,662) |
Intangible assets, net | $ 3,781,761 | $ 3,909,338 |
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 | (84,192) | (76,767) |
Intangible assets, net | $ 212,808 | $ 220,233 |
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 | (172,200) | (150,675) |
Intangible assets, net | 688,800 | 710,325 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, cost | 4,091,000 | 4,091,000 |
Intangible assets, accumulated amortization | (1,210,847) | (1,112,220) |
Intangible assets, net | $ 2,880,153 | $ 2,978,780 |
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 ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2025 | $ 510,308 | |
2026 | 473,125 | |
2027 | 326,108 | |
2028 | 324,410 | |
2029 | 305,733 | |
Thereafter | 1,842,077 | |
Intangible assets | $ 3,781,761 | $ 3,909,338 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 127,577 | $ 127,577 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2024 | Jan. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | ||||
Final earnout liability | $ 0 | $ 700,000 | $ 700,000 |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment [Abstract] | ||
Computer hardware and purchased software | $ 1,455,334 | $ 1,437,023 |
Leasehold improvements | 395,919 | 395,919 |
Furniture and fixtures | 324,296 | 324,296 |
Property and equipment, gross | 2,175,549 | 2,157,238 |
Less: accumulated depreciation | (1,294,809) | (1,232,981) |
Property and equipment, net | $ 880,740 | $ 924,257 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 61,828 | $ 61,939 |
Schedule of Notes Payable (Deta
Schedule of Notes Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Nonrelated Party [Member] | ||
Debt Instrument [Line Items] | ||
Less unamortized debt issuance costs | $ (101,468) | $ (155,258) |
Less current portion | (325,000) | |
Long-term portion of notes payable | 1,438,032 | 2,209,242 |
Nonrelated Party [Member] | 2022 Unrelated Notes [Member] | ||
Debt Instrument [Line Items] | ||
Subordinated notes payable | $ 325,000 | |
Issue date | Apr. 01, 2022 | |
Interest rate | 12% | |
Interest due | Quarterly | |
Principal due | Mar. 30, 2025 | |
Nonrelated Party [Member] | 2022 Unrelated Notes One [Member] | ||
Debt Instrument [Line Items] | ||
Subordinated notes payable | $ 1,539,500 | |
Issue date | Apr. 01, 2022 | |
Interest rate | 12% | |
Interest due | Quarterly | |
Principal due | Dec. 31, 2025 | |
Nonrelated Party [Member] | 2022 Unrelated Notes [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable – “2022 Related Note” | $ 1,864,500 | 2,364,500 |
Related Party [Member] | ||
Debt Instrument [Line Items] | ||
Less unamortized debt issuance costs | (32,593) | (39,398) |
Long-term portion of notes payable | 567,407 | 560,602 |
Related Party [Member] | 2022 Related Notes [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable – “2022 Related Note” | $ 600,000 | $ 600,000 |
Schedule of Future Minimum Prin
Schedule of Future Minimum Principal Payments of Notes payable (Details) - Nonrelated Party [Member] | Mar. 31, 2024 USD ($) |
Defined Benefit Plan Disclosure [Line Items] | |
2025 | $ 325,000 |
2026 | 1,539,500 |
Total | $ 1,864,500 |
Schedule of Future Minimum Pr_2
Schedule of Future Minimum Principal Payments of Notes Payable (Details) - Related Party [Member] | Mar. 31, 2024 USD ($) |
Defined Benefit Plan Disclosure [Line Items] | |
2026 | $ 600,000 |
Total | $ 600,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Accrued interest | $ 0 | $ 0 | |
Nonrelated Party [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Interest expense | $ 124,725 | $ 151,605 |
Notes Payable - Related Parti_3
Notes Payable - Related Parties (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Related Party Transaction [Line Items] | |||
Accrued interest | $ 0 | $ 0 | |
Related Party [Member] | |||
Related Party Transaction [Line Items] | |||
Interest expense | 24,805 | $ 25,879 | |
Related Party [Member] | |||
Related Party Transaction [Line Items] | |||
Accrued interest | $ 0 | $ 0 |
Schedule of Operating Lease (De
Schedule of Operating Lease (Details) | 3 Months Ended |
Mar. 31, 2024 USD ($) ft² | |
Product Liability Contingency [Line Items] | |
Vehichle rent expense | $ 4,901 |
Lease expiry | September 30, 2028 |
Columbus OH [Member] | |
Product Liability Contingency [Line Items] | |
Land | ft² | 6,000 |
Vehichle rent expense | $ 5,250 |
Lease expiry | December 31, 2028 |
Madison Heights M I [Member] | |
Product Liability Contingency [Line Items] | |
Land | ft² | 36,000 |
Vehichle rent expense | $ 44,048 |
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 | $ 5,100 |
Lease expiry | January 31, 2026 |
Madison Heights MI 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) | Mar. 31, 2024 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Finance lease, 2025 | $ 89,954 |
Operating leases, 2025 | 951,885 |
Finance lease, 2026 | 89,954 |
Operating leases, 2026 | 950,991 |
Finance lease, 2027 | 71,204 |
Operating leases, 2027 | 578,184 |
Finance lease, 2028 | 63,855 |
Operating leases, 2028 | 358,282 |
Finance lease, 2029 | 39,194 |
Operating leases, 2029 | 76,821 |
Thereafter | 1,883 |
Thereafter | |
Finance lease, Less Imputed interest | (55,024) |
Operating Lease, less imputed interest | (333,209) |
Finance Lease | 301,020 |
Operating Leases | $ 2,582,954 |
Summary of Components of Lease
Summary of Components of Lease Expense (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Finance lease expense: | ||
Amortization of ROU asset | $ 16,768 | $ 6,709 |
Interest on lease liabilities | 6,468 | 2,832 |
Operating lease expense | 234,439 | 237,449 |
Short-term lease expense | $ 4,814 | $ 4,814 |
Schedule of Additional Informat
Schedule of Additional Information Pertaining to Leases (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Financing cash flows from finance leases (interest) | $ 6,468 | $ 2,832 |
Financing cash flows from finance leases (principal) | 14,138 | 5,467 |
Operating cash flows from operating leases | 187,724 | 170,759 |
ROU assets obtained in exchange for new finance lease liability | $ 89,289 | $ 40,529 |
Weighted average remaining lease term - finance leases | 4 years 3 months 18 days | 5 years 6 months |
Weighted average remaining lease term - operating leases | 3 years 3 months 18 days | 4 years 2 months 12 days |
Weighted average discount rate - finance leases | 9.75% | 7.50% |
Weighted average discount rate - operating leases | 6.98% | 6.97% |
Schedule of Shares and Warrants
Schedule of Shares and Warrants Issued (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Private Placement 2022 [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
Issue Date | Apr. 01, 2022 |
Shares issued | shares | 1,242,588 |
Share price | $ 4.62 |
Warrants issued | shares | 124,258 |
Warrants exercise price | $ 4.62 |
Warrants Fair value | $ 3.91 |
Private Placement 2020 [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
Issue Date | Mar. 02, 2020 |
Shares issued | shares | 955,000 |
Share price | $ 4 |
Warrants issued | shares | 95,500 |
Warrants exercise price | $ 4 |
Warrants Fair value | $ 3.90 |
Schedule of Warrants to Purchas
Schedule of Warrants to Purchase Common Stock (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Warrant Exercise Price One [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Warrants outstanding | shares | 124,258 |
Warrants exercise price | $ / shares | $ 4.62 |
Warrants expiry | Mar. 30, 2027 |
Warrant Exercise Price Two [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Warrants outstanding | shares | 95,500 |
Warrants exercise price | $ / shares | $ 4 |
Warrants expiry | Mar. 30, 2027 |
Warrant Exercise Price Three [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Warrants outstanding | shares | 16,000 |
Warrants exercise price | $ / shares | $ 9 |
Warrants expiry | Mar. 30, 2027 |
Warrant Exercise Price Four [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Warrants outstanding | shares | 17,200 |
Warrants exercise price | $ / shares | $ 12.50 |
Warrants expiry | Mar. 30, 2027 |
Warrant Exercise Price Five [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Warrants outstanding | shares | 3,000 |
Warrants exercise price | $ / shares | $ 15 |
Warrants expiry | Mar. 30, 2027 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Common stock, shares outstanding | 4,113,621 | 4,113,621 | |
Amortization of debt issuance costs | $ 60,595 | $ 49,997 | |
Private Placement 2022 [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Amortization of debt issuance costs | $ 60,595 | 38,931 | |
Private Placement 2020 [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Amortization of debt issuance costs | $ 11,065 | ||
2015 Equity Incentive Plan [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Common stock capital shares reserved for future issuance | 497,330 | ||
2023 Non-Employee Director Compensation Plan [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Common stock capital shares reserved for future issuance | 150,000 | ||
Exercise of Outstanding Warrants [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Common stock capital shares reserved for future issuance | 255,958 |
Schedule of Stock Options Activ
Schedule of Stock Options Activity (Details) - Equity Option [Member] - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Shares Under Option, Outstanding beginning balance | 357,887 | 365,447 | 365,447 |
Weighted- Average Exercise Price, Outstanding beginning balance | $ 5.69 | $ 5.89 | $ 5.89 |
Weighted Average Remaining Contractual Life Outstanding, beginning | 7 years | 8 years | 8 years |
Aggregate Intrinsic Value, Outstanding, beginning balance | $ 19,200 | $ 19,200 | |
Shares Under Option, Forfeited | (5,000) | ||
Weighted- Average Exercise Price, Forfeited | $ 4 | ||
Shares Under Option, Outstanding ending balance | 357,887 | 360,447 | 357,887 |
Weighted- Average Exercise Price, Outstanding ending balance | $ 5.69 | $ 5.92 | $ 5.69 |
Aggregate Intrinsic Value, Outstanding ending balance | $ 19,200 | ||
Shares Under Option, Exercisable ending balance | 186,594 | 92,860 | |
Weighted- Average Exercise Price, Exercisable ending balance | $ 5.60 | $ 6.50 | |
Weighted Average Remaining Contractual Life Outstanding, beginning | 7 years | 7 years | |
Aggregate Intrinsic Value, Exercisable ending balance | $ 19,200 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | |||||
Apr. 02, 2026 | Apr. 02, 2025 | Mar. 19, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Issuance of the common stock | $ 397,901 | |||||
Stock-based compensation for options | 115,456 | $ 118,162 | ||||
Unrecognized compensation costs | 432,525 | $ 547,981 | ||||
Fair value of stock options | $ 0 | $ 10,238 | ||||
Forecast [Member] | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Number of shares, vested | 42,510 | |||||
Restricted Stock [Member] | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Granted number of restricted common stock | 127,500 | |||||
Number of shares, vested | 42,495 | |||||
Restricted Stock [Member] | Forecast [Member] | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Number of shares, vested | 42,495 |
Concentrations (Details Narrati
Concentrations (Details Narrative) - Customer Concentration Risk [Member] | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
State of Michigan [Member] | Revenue Benchmark [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 48% | 34% | |
Rocket Mortgage [Member] | Revenue Benchmark [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 4% | 10% | |
Government Contracts [Member] | Revenue Benchmark [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 86% | 72% | |
Customer One [Member] | Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 60% | 62% | |
Customer Two [Member] | Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 8% | 3% |