UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________to _________________________

Commission file number: 001-41495

INTELLINETICS, INC.

(Exact name of registrant as specified in its charter)

Nevada

87-0613716

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

2190 Dividend Drive Columbus, Ohio		43228
(Address of Principal Executive Offices)		(Zip Code)

(614) 921-8170

(Registrant’s telephone number, including area code)

(Former name and former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		INLX		NYSE American

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b- 2 of the Exchange Act.

Large accelerated filer	☐	(Do not check if a smaller reporting company)	Accelerated filer	☐
Non-accelerated filer	☐		Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of November 10, 2025, there were 4,479,123 shares of the issuer’s common stock outstanding, each with a par value of $0.001 per share.

INTELLINETICS, INC.

Form 10-Q

September 30, 2025

TABLE OF CONTENTS

		Page No.
PART I

FINANCIAL INFORMATION		4

ITEM 1.	Financial Statements.	4

	Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024	4

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (Unaudited)	5

	Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended September 30, 2025 and 2024 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	21

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk.	30

ITEM 4.	Controls and Procedures.	30

PART II

OTHER INFORMATION		31

ITEM 1.	Legal Proceedings.	31

ITEM 1A.	Risk Factors.	31

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	31

ITEM 3.	Defaults Upon Senior Securities.	31

ITEM 4.	Mine Safety Disclosures.	31

ITEM 5.	Other Information.	31

ITEM 6.	Exhibits.	31

SIGNATURES		32

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and the documents incorporated into this report by reference contain forward-looking statements. In addition, from time to time we may make additional forward-looking statements in presentations, at conferences, in press releases, in other reports and filings and otherwise. Forward-looking statements are all statements other than statements of historical facts, including statements that refer to plans, intentions, objectives, goals, targets, strategies, hopes, beliefs, projections, prospects, expectations or other characterizations of future events or performance, and assumptions underlying the foregoing. The words “may,” “could,” “should,” “would,” “will,” “project,” “intend,” “continue,” “believe,” “anticipate,” “estimate,” “forecast,” “expect,” “plan,” “potential,” “opportunity,” “scheduled,” “goal,” “target,” and “future,” variations of such words, and other comparable terminology and similar expressions and references to future periods are often, but not always, used to identify forward-looking statements. Examples of forward-looking statements include, among other things, statements about the following:

	●	the effects on our business, financial condition, and results of operations of current and future economic, business, market and regulatory conditions, including the current global inflation, economic downturn, and other economic and market conditions, and their effects on our customers and their capital spending and ability to finance purchases of our products, services, technologies and systems;

	●	our prospects, including our future business, revenues, recurring revenues, expenses, net income, earnings per share, margins, profitability, cash flow, cash position, liquidity, financial condition and results of operations, backlog of orders and revenue, our targeted growth rate, our goals for future revenues and earnings, and our expectations about realizing the revenues in our backlog and in our sales pipeline;

	●	our expectation that the shift from an offline to online world will continue to benefit our business;

	●	our ability to continue to integrate our acquisitions and any future acquisitions, grow their businesses and obtain the expected financial and operational benefits from those businesses;

	●	the effects of fluctuations in sales on our business, revenues, expenses, net income, earnings per share, margins, profitability, cash flow, capital expenditures, liquidity, financial condition and results of operations;

	●	our products, services, technologies and systems, including their quality and performance in absolute terms and as compared to competitive alternatives, their benefits to our customers and their ability to meet our customers’ requirements, and our ability to successfully develop and market new products, services, technologies and systems;

	●	our markets, including our market position and our market share;

	●	our ability to successfully develop, operate, grow and diversify our operations and businesses;

	●	our business plans, strategies, goals and objectives, and our ability to successfully achieve them;

	●	the sufficiency of our capital resources, including our cash and cash equivalents, funds generated from operations, availability credit and financing arrangements and other capital resources, to meet our future working capital, capital expenditure, lease and debt service and business growth needs;

	●	the value of our assets and businesses, including the revenues, profits and cash flow they are capable of delivering in the future;

	●	the amount and timing of revenue recognition from customer contracts with commitments for performance obligations, including our estimate of the remaining amount of commitments and when we expect to recognize revenues;

	●	industry trends and customer preferences and the demand for our products, services, technologies and systems; and

	●	the nature and intensity of our competition, and our ability to successfully compete in our markets.

Any forward-looking statements we make are based on our current plans, intentions, objectives, strategies, projections and expectations, as well as assumptions made by and information currently available to management. Forward-looking statements are not guarantees of future performance or events, but are subject to and qualified by substantial risks, uncertainties and other factors, which are difficult to predict and are often beyond our control. Forward-looking statements will be affected by assumptions and expectations we might make that do not materialize or that prove to be incorrect and by known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed, anticipated or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, those described in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on March 24, 2025, as well as other risks, uncertainties and factors discussed elsewhere in this Quarterly Report, in documents that we include as exhibits to or incorporate by reference in this report, and in other reports and documents we from time to time file with or furnish to the Securities and Exchange Commission (the “SEC”). In light of these risks and uncertainties, you are cautioned not to place undue reliance on any forward-looking statements that we make.

Any forward-looking statements contained in this report speak only as of the date of this report, and any other forward-looking statements we make from time to time in the future speak only as of the date they are made. We undertake no duty or obligation to update or revise any forward-looking statement or to publicly disclose any update or revision for any reason, whether as a result of changes in our expectations or the underlying assumptions, the receipt of new information, the occurrence of future or unanticipated events, circumstances or conditions or otherwise

As used in this Quarterly Report, unless the context indicates otherwise:

	●	the terms “Intellinetics,” “Company,” “the company” “us,” “we,” “our,” and similar terms refer to Intellinetics, Inc., a Nevada corporation, and its subsidiaries;

	●	“Intellinetics Ohio” refers to Intellinetics, Inc., an Ohio corporation and a wholly-owned subsidiary of Intellinetics; and

	●	“Graphic Sciences” refers to Graphic Sciences, Inc., a Michigan corporation and a wholly-owned subsidiary of Intellinetics.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Balance Sheets

	(Unaudited)
	September 30,			December 31,
	2025			2024
ASSETS
Current assets:
Cash	$	3,222,179		$	2,489,236
Accounts receivable, net		951,490			1,111,504
Accounts receivable, unbilled		715,773			1,296,524
Parts and supplies, net		110,077			100,561
Prepaid expenses and other current assets		500,461			476,731
Total current assets		5,499,980			5,474,556

Property and equipment, net		1,179,365			1,093,867
Right of use assets, operating		1,601,482			1,894,866
Right of use assets, finance		183,183			237,741
Intangible assets, net		3,027,215			3,399,029
Goodwill		5,789,821			5,789,821
Other assets		708,485			685,076
Total assets	$	17,989,531		$	18,574,956

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	260,714		$	310,623
Accrued compensation		551,393			493,700
Accrued expenses		215,638			172,421
Lease liabilities, operating - current		844,277			842,468
Lease liabilities, finance - current		70,343			69,261
Deferred revenues		3,635,648			3,411,852
Notes payable - current		-			781,936
Notes payable - related party - current		-			515,512
Notes payable- current		-			515,512
Total current liabilities		5,578,013			6,597,773

Long-term liabilities:
Lease liabilities, operating - net of current portion		843,250			1,161,404
Lease liabilities, finance - net of current portion		131,628			184,024
Total long-term liabilities		974,878			1,345,428
Total liabilities		6,552,891			7,943,201

Stockholders’ equity:
Common stock, $0.001 par value, 25,000,000 shares authorized; 4,479,123 and 4,249,735 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		4,479			4,250
Additional paid-in capital		34,738,319			32,268,743
Accumulated deficit		(23,306,158	)		(21,641,238	)
Total stockholders’ equity		11,436,640			10,631,755
Total liabilities and stockholders’ equity	$	17,989,531		$	18,574,956

See Notes to these condensed consolidated financial statements

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

	2025			2024			2025			2024
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024

Revenues:
Software as a service	$	1,608,253		$	1,403,942		$	4,727,526		$	4,209,686
Software maintenance services		310,144			352,066			975,794			1,064,015
Professional services		1,881,975			2,613,564			5,939,909			7,776,312
Storage and retrieval services		201,073			220,053			616,374			688,289
Total revenues		4,001,445			4,589,625			12,259,603			13,738,302

Cost of revenues:
Software as a service		242,409			228,923			704,589			662,501
Software maintenance services		13,504			13,743			42,847			42,817
Professional services		1,119,255			1,492,131			3,214,568			4,179,336
Storage and retrieval services		58,373			108,727			224,797			257,335
Total cost of revenues		1,433,541			1,843,524			4,186,801			5,141,989

Gross profit		2,567,904			2,746,101			8,072,802			8,596,313

Operating expenses:
General and administrative		2,015,713			2,054,089			6,629,109			6,155,967
Sales and marketing		615,969			702,500			2,085,381			1,774,560
Depreciation and amortization		315,446			287,723			930,573			826,371

Total operating expenses		2,947,128			3,044,312			9,645,063			8,756,898

(Loss) income from operations		(379,224	)		(298,211	)		(1,572,261	)		(160,585	)

Interest income (expense), net		9,459			(94,639	)		(92,659	)		(331,929	)

Net loss	$	(369,765	)	$	(392,850	)	$	(1,664,920	)	$	(492,514	)

Basic net loss per share:	$	(0.08	)	$	(0.09	)	$	(0.39	)	$	(0.12	)
Diluted net loss per share:	$	(0.08	)	$	(0.09	)	$	(0.39	)	$	(0.12	)

Weighted average number of common shares outstanding - basic		4,386,943			4,230,806			4,271,877			4,191,459
Weighted average number of common shares outstanding - diluted		4,386,943			4,230,806			4,271,877			4,191,459

See Notes to these condensed consolidated financial statements

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2025 and 2024

(Unaudited)

	Shares		Amount		Capital		Deficit			Total
	Common Stock				Additional Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total

Balance, June 30, 2024		4,230,806	$	4,231	$	31,536,818	$	(21,194,687	)	$	10,346,362

Stock compensation - stock options		-		-		354,006		-			354,006

Stock compensation - restricted shares		-		-		136,019		-			136,019

Net loss		-		-		-		(392,850	)		(392,850	)

Balance, September 30, 2024		4,230,806	$	4,231	$	32,026,843	$	(21,587,537	)	$	10,443,537

Balance, June 30, 2025		4,473,130	$	4,473	$	34,495,592	$	(22,936,393	)	$	11,563,672

Stock compensation - stock options		-		-		9,862		-			9,862

Stock compensation - restricted shares		-		-		156,558		-			156,558

Equity issue, net of issuance costs of $3,835		5,993		6		76,307		-			76,313

Net loss		-		-		-		(369,765	)		(369,765	)

Balance, September 30, 2025		4,479,123	$	4,479	$	34,738,319	$	(23,306,158	)	$	11,436,640

	Common Stock				Additional Paid-in			Accumulated
	Shares		Amount		Capital			Deficit			Total

Balance, December 31, 2023		4,113,621	$	4,114	$	30,841,630		$	(21,095,023	)	$	9,750,721

Stock compensation - stock options		-		-		584,918			-			584,918

Stock compensation - restricted shares		117,185		117		600,295			-			600,412

Net loss		-		-		-			(492,514	)		(492,514	)

Balance, September 30, 2024		4,230,806	$	4,231	$	32,026,843		$	(21,587,537	)	$	10,443,537

Balance, December 31, 2024		4,249,735	$	4,250	$	32,268,743		$	(21,641,238	)	$	10,631,755
Balance		4,249,735	$	4,250	$	32,268,743		$	(21,641,238	)	$	10,631,755

Stock compensation - stock options		-		-		387,914			-			387,914

Stock option exercise		20,380		20		(20,205	)		-			(20,185	)

Stock compensation - restricted shares		53,529		54		480,709			-			480,763

Warrant exercise		9,541		9		(21	)		-			(12	)

Equity issue, net of issuance costs of $175,781		145,938		146		1,621,179			-			1,621,325

Net loss		-		-		-			(1,664,920	)		(1,664,920	)
Net income (loss)		-		-		-			(1,664,920	)		(1,664,920	)

Balance, September 30, 2025		4,479,123	$	4,479	$	34,738,319		$	(23,306,158	)	$	11,436,640
Balance		4,479,123	$	4,479	$	34,738,319		$	(23,306,158	)	$	11,436,640

See Notes to these condensed consolidated financial statements

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	2025			2024
	For the Nine Months Ended September 30,
	2025			2024

Cash flows from operating activities:
Net loss	$	(1,664,920	)	$	(492,514	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		930,573			826,371
Bad debt expense (recovery)		74,976			(3,780	)
Loss on disposal of fixed assets		10,202			547
Amortization of deferred financing costs		42,052			142,091
Amortization of right of use assets, financing		54,558			53,140
Share-based compensation		1,131,891			1,254,856
Changes in operating assets and liabilities:
Accounts receivable		85,038			594,664
Accounts receivable, unbilled		580,751			171,600
Parts and supplies		(9,516	)		21,243
Prepaid expenses and other current assets		(23,730	)		(7,496	)
Accounts payable and accrued expenses		51,001			628,685
Operating lease assets and liabilities, net		(22,961	)		(7,765	)
Deferred revenues		223,796			540,301
Total adjustments		3,128,631			4,214,457
Net cash provided by operating activities		1,463,711			3,721,943

Cash flows from investing activities:
Capitalization of internal use software		(344,075	)		(302,396	)
Purchases of property and equipment		(333,793	)		(392,963	)
Net cash used in investing activities		(677,868	)		(695,359	)

Cash flows from financing activities:
Proceeds from issuance of common stock		1,797,106			-
Offering costs paid on issuance of common stock		(175,781	)		-
Principal payments on financing lease liability		(51,314	)		(45,577	)
Payments to taxing authorities in connection with shares directly withheld from employees		(283,399	)		(69,526	)
Exercise of stock warrants		(12	)		-
Repayment of notes payable		(807,331	)		(1,307,169	)
Repayment of notes payable - related parties		(532,169	)		(317,831	)
Net cash used in financing activities		(52,900	)		(1,740,103	)

Net increase in cash		732,943			1,286,481
Cash - beginning of period		2,489,236			1,215,248
Cash - end of period	$	3,222,179		$	2,501,729

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	74,425		$	218,461
Cash paid during the period for income taxes	$	19,563		$	19,077

Supplemental disclosure of non-cash financing activities:
Right-of-use asset obtained in exchange for operating lease liability	$	311,368		$	-
Right-of-use asset obtained in exchange for finance lease liability	$	-		$	89,289

See Notes to these condensed consolidated financial statements

INTELLINETICS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Business Organization and Nature of Operations

Intellinetics, Inc., formerly known as GlobalWise Investments, Inc., is a Nevada corporation incorporated in 1997, with two wholly-owned subsidiaries: “Intellinetics Ohio” and Graphic Sciences. Intellinetics Ohio was incorporated in 1996, and on February 10, 2012, Intellinetics Ohio became our sole operating subsidiary as a result of a reverse merger and recapitalization. On March 2, 2020, we purchased all the outstanding capital stock of Graphic Sciences.

Our digital transformation products and services are provided through two reporting segments: Document Management and Document Conversion. Our Document Management segment, consists primarily of solutions involving our software platform, allowing customers to capture and manage their documents across operations such as scanned hard-copy documents and digital documents including those from Microsoft Office 365, digital images, audio, video and emails. Our Document Conversion segment, which includes and primarily consists of the Graphic Sciences acquisition, provides assistance to customers as a part of their overall document strategy to convert documents from one medium to another, predominantly paper to digital, including migration to our software solutions, as well as long-term storage and retrieval services. Our solutions create value for customers by making it easy to connect business-critical documents to the people who need them by making those documents easy to find and access, while also being secure and compliant with the customers’ audit requirements. Solutions are sold both directly to end-users and through resellers.

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, 2025 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, 2024 filed with the SEC on March 24, 2025.

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% of the outstanding voting stock of an investee, except when control is not held by the majority owner. We have two subsidiaries: Intellinetics Ohio and Graphic Sciences. We consider the criteria established under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810, “Consolidations” in the consolidation process. All significant intercompany balances and transactions have been eliminated in consolidation.

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 estimates a current estimated credit loss (“CECL”) for accounts receivable and accounts receivable-unbilled. The CECL for receivables are estimated based on the receivable aging category, credit risk of specific customers, past collection history, and management’s evaluation of collectability. Provisions for CECL are classified within selling, general and administrative costs.

The CECL 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 September 30, 2025 and December 31, 2024, our allowance for credit losses was $98,071 and $55,907, respectively.

Changes in the allowance for credit losses for the periods ended September 30, 2025 and 2024 were as follows:

	Trade Receivables
As of December 31, 2024	$	(55,907	)
(Provisions) Reductions charged to operating results		(44,189	)
Account write-offs		15,063
As of March 31, 2025		(85,033	)
(Provisions) Reductions charged to operating results		11,223
Account write-offs		2,293
As of June 30, 2025		(71,517	)
(Provisions) Reductions charged to operating results		(42,010	)
Account write-offs		15,456
As of September 30, 2025	$	(98,071	)

	Trade Receivables
As of December 31, 2023	$	(124,103	)
(Provisions) Reductions charged to operating results		14,588
As of March 31, 2024		(109,515	)
(Provisions) Reductions charged to operating results		(10,850	)
As of June 30, 2024		(120,365	)
(Provisions) Reductions charged to operating results		3,637
As of September 30, 2024	$	(116,728	)

Revenue Recognition

We categorize revenue as 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 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, 2024 filed with the SEC on March 24, 2025.

Contract balances

The following tables present changes in our contract assets during the nine months ended September 30, 2025 and 2024:

	Balance at								Balance at
	Beginning					Payments			End of
	of Period			Billings		Received			Period
Nine months ended September 30, 2025
Accounts receivable	$	1,111,504	3,502,308	$	13,077,000	$	(13,237,014	)	$	951,490

Nine months ended September 30, 2024
Accounts receivable	$	1,850,375		$	14,580,399	$	(15,171,283	)	$	1,259,491

	Balance at Beginning of Period		Revenue Recognized in Advance of Billings		Billings			Balance at End of Period
Nine months ended September 30, 2025
Accounts receivable, unbilled	$	1,296,524	$	3,502,308	$	(4,083,059	)	$	715,773

Nine months ended September 30, 2024
Accounts receivable, unbilled	$	1,320,837	$	4,523,087	$	(4,694,687	)	$	1,149,237

Deferred contract costs

Sales commissions earned by our sales force on new business is considered an incremental and recoverable cost of obtaining a contract with a customer. Sales commissions for new contracts and incremental sales to existing customers are deferred and then amortized on a straight-line basis over an estimated period of benefit of two years. This period of benefit was determined by taking into consideration term lengths of customer contracts, renewals, changes and enhancements in course offerings, and other factors. As of September 30, 2025 and December 31, 2024, deferred contract costs were $124,183 and $139,696, respectively, and are included in prepaid expenses and other current assets on our condensed consolidated balance sheets.

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% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter. As of September 30, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations for software as a service and software maintenance contracts with a duration greater than one year was $59,701. As of December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations for software as a service and software maintenance contracts with a duration greater than one year was $44,971. This does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less.

The following table presents changes in our contract liabilities during the nine months ended September 30, 2025 and 2024:

	Balance at							Balance at
	Beginning				Recognized			End of
	of Period		Billings		Revenue			Period
Nine months ended September 30, 2025
Contract liabilities: Deferred revenue	$	3,411,852	$	5,961,069	$	(5,737,273	)	$	3,635,648

Nine months ended September 30, 2024
Contract liabilities: Deferred revenue	$	2,927,808	$	6,185,445	$	(5,645,144	)	$	3,468,109

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, technological 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 $134,905 and $344,075 were capitalized during the three and nine months ended September 30, 2025. Such costs in the amount of $104,345 and $302,396 were capitalized during the three and nine months ended September 30, 2024.

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 September 30, 2025 and December 31, 2024, our condensed consolidated balance sheets included $693,701 and $670,292, respectively, in other long-term assets.

For the three and nine months ended September 30, 2025 and 2024, our expensed software development costs were $188,694 and $548,211, respectively, and $179,813 and $510,366, respectively.

Recently Issued Accounting Pronouncements Not Yet Effective

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. ASU 2023-09 is effective for us for the period ending December 31, 2025. We do not expect a material impact upon adoption.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40), which updates its internal-use software guidance. The ASU is intended to introduce targeted improvements to enhance clarity, reduce compliance burdens, and align financial reporting with modern software development practices. The guidance does not apply to software developed for sale, lease, or external marketing. ASU 2025-06 is effective for us for the period ending March 31, 2028. We are currently evaluating the impact of this ASU but do not expect a 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 and nine months ended September 30, 2025 and 2024 amounted to $21,069 and $74,154, respectively, and $17,019 and $32,422, respectively.

Earnings (Loss) Per Share

Basic income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted income or loss per share is computed by dividing net income or loss by the diluted weighted average number of shares of common stock outstanding during the period. The diluted weighted average number of shares gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. Diluted earnings per share exclude all diluted potential shares if their effect is anti-dilutive, including warrants or options which are out-of-the-money and for those periods with a net loss.

For the periods presented, certain options and warrants were in-the-money and others were not. For all periods presented, we have reported a net loss, therefore, the numerator and the denominator used in computing both basic and diluted net loss per share are the same, as to include dilutive shares would have an anti-dilutive effect.

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 or benefits in future years of temporary differences between the financial reporting and tax basis 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.

As of September 30, 2025 and December 31, 2024, we had federal net operating loss carry forwards, which can be utilized to offset future federal income tax of approximately $17.3 million and $15.2 million, respectively. Section 382 of the Internal Revenue Code limits the utilization of net operating losses during certain ownership changes. We have performed an analysis of our ownership changes and have determined that approximately $7.1 million of our net operating losses are subject to an annual limitation. We do not expect that Section 382 will limit the utilization of the net operating loss carry forwards in 2025. A portion of the federal and state net operating loss carry forwards expire at various dates through 2037, and a portion of the net operating loss carry forwards have an indefinite carry forward period. We recorded a valuation allowance against all of our deferred tax assets as of both September 30, 2025 and December 31, 2024. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

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, the President and Chief Executive Officer, assesses performance and allocates resources based on two operating segments: Document Management and Document Conversion.

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 resellers.

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, as well as how our CODM reviews our operating results in assessing performance and allocating resources. We currently have immaterial intersegment sales. Our CODM evaluates the performance of our segments based on revenues and gross profits. Historically, our selling, general and administrative expenses have been stable and predictable, and further, our CODM primarily considers such expenses in consolidation. Accordingly, our CODM has focused on growing the business while preserving or growing our gross margins, with revenues and gross profits evaluated by segment against targets set by management and the board of directors.

Information by operating segment is as follows:

	2025		2024		2025		2024
	For the three months ended September 30,				For the nine months ended September 30,
	2025		2024		2025		2024
Revenues
Document Management	$	2,017,087	$	1,913,116	$	5,978,925	$	5,592,624
Document Conversion		1,984,358		2,676,509		6,280,678		8,145,678

SEC Form 10-Q filed by Intellinetics Inc.