Form 10-Q - Quarterly report [Sections 13 or 15(d)]

 

 

 

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 June 30, 2024

 

☐	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)

 

[phone]

 

(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 August 9, 2024, there were 4,230,806 shares of the issuer’s common stock outstanding, each with a par value of $0.001 per share.

 

 

 

 

INTELLINETICS, INC.

Form 10-Q

June 30, 2024

TABLE OF CONTENTS

 

		Page No.
PART I
FINANCIAL INFORMATION		4
ITEM 1.	Financial Statements.	4
	Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	4
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (Unaudited)	5
	Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	22
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

 

2

 

 

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 integrate our recent 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, 2023, filed on March 28, 2024, and those described in Part II, Item 1A, “Risk Factors,” of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, filed on May 14, 2024, 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.

 

3

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Balance Sheets

 

		(unaudited)
		June 30,				December 31,
		2024				2023
ASSETS
Current assets:
Cash		$	1,680,669			$	1,215,248
Accounts receivable, net			1,449,188				1,850,375
Accounts receivable, unbilled			1,483,313				1,320,837
Parts and supplies, net			93,926				110,272
Contract assets			141,214				140,165
Prepaid expenses and other current assets			335,380				367,478
Total current assets			5,183,690				5,004,375
Property and equipment, net			999,276				924,257
Right of use assets, operating			2,276,171				2,532,928
Right of use assets, finance			274,112				219,777
Intangible assets, net			3,654,183				3,909,338
Goodwill			5,789,821				5,789,821
Other assets			685,471				645,764
Total assets		$	18,862,724			$	19,026,260
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	340,298			$	194,454
Accrued compensation			540,237				337,884
Accrued expenses			160,947				164,103
Lease liabilities, operating - current			797,870				712,607
Lease liabilities, finance - current			66,000				49,926
Deferred revenues			2,755,185				2,927,808
Total current liabilities			4,660,537				4,386,782
Long-term liabilities:
Notes payable			1,467,312				2,209,242
Notes payable - related party			572,063				560,602
Lease liabilities, operating - net of current portion			1,596,960				1,942,970
Lease liabilities, finance - net of current portion			219,490				175,943
Total long-term liabilities			3,855,825				4,888,757
Total liabilities			8,516,362				9,275,539
Stockholders’ equity:
Common stock, $0.001 par value, 25,000,000 shares authorized; 4,230,806 and 4,113,621 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively			4,231				4,114
Additional paid-in capital			31,536,818				30,841,630
Accumulated deficit			(21,194,687	)			(21,095,023	)
Total stockholders’ equity			10,346,362				9,750,721
Total liabilities and stockholders’ equity		$	18,862,724			$	19,026,260

 

See Notes to these condensed consolidated financial statements

 

4

 

 

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)

 

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Revenues:
Sale of software		$	14,933			$	63,646			$	20,712			$	78,939
Software as a service			1,400,591				1,277,918				2,805,744				2,516,350
Software maintenance services			353,966				349,139				711,949				698,681
Professional services			2,662,358				2,298,316				5,142,036				4,597,605
Storage and retrieval services			209,745				269,411				468,236				553,688
Total revenues			4,641,593				4,258,430				9,148,677				8,445,263
Cost of revenues:
Sale of software			1,125				7,344				6,190				15,525
Software as a service			217,586				258,382				433,578				479,022
Software maintenance services			13,364				15,117				29,074				31,833
Professional services			1,344,541				1,307,341				2,628,604				2,494,457
Storage and retrieval services			61,998				79,813				148,608				188,154
Total cost of revenues			1,638,614				1,667,997				3,246,054				3,208,991
Gross profit			3,002,979				2,590,433				5,902,623				5,236,272
Operating expenses:
General and administrative			2,025,796				1,561,939				4,154,289				3,116,550
Sales and marketing			530,439				492,303				1,072,060				1,071,814
Depreciation and amortization			274,638				239,803				538,648				467,521
Total operating expenses			2,830,873				2,294,045				5,764,997				4,655,885
Income from operations			172,106				296,388				137,626				580,387
Interest expense, net			(97,056	)			(160,654	)			(237,290	)			(332,090	)
Net income (loss)		$	75,050			$	135,734			$	(99,664	)		$	248,297
Basic net income (loss) per share:		$	0.02			$	0.03			$	(0.02	)		$	0.06
Diluted net income (loss) per share:		$	0.02			$	0.03			$	(0.02	)		$	0.06
Weighted average number of common shares outstanding - basic			4,229,518				4,073,757				4,171,570				4,073,757
Weighted average number of common shares outstanding - diluted			4,722,063				4,073,757				4,171,570				4,073,757

 

See Notes to these condensed consolidated financial statements

 

5

 

 

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

For the Three and Six Months Ended June 30, 2024 and 2023

(unaudited)

 

		Common Stock								Additional Paid-in				Accumulated
		Shares				Amount				Capital				Deficit				Total
Balance, March 31, 2023			4,073,757			$	4,074			$	30,297,179			$	(21,501,726	)		$	8,799,527
Stock Option Compensation			-				-				115,455				-				115,455
Net Income			-				-				-				135,734				135,734
Balance, June 30, 2023			4,073,757			$	4,074			$	30,412,634			$	(21,365,992	)		$	9,050,716
Balance, March 31, 2024			4,113,621			$	4,114			$	31,285,462			$	(21,269,737	)		$	10,019,839
Stock Option Compensation			-				-				115,456				-				115,456
Restricted Share Issuance			117,185				117				135,900				-				136,017
Net Income			-				-				-				75,050				75,050
Balance, June 30, 2024			4,230,806			$	4,231			$	31,536,818			$	(21,194,687	)		$	10,346,362

 

		Common Stock								Additional Paid-in				Accumulated
		Shares				Amount				Capital				Deficit				Total
Balance, December 31, 2022			4,073,757			$	4,074			$	30,179,017			$	(21,614,289	)		$	8,568,802
Stock Option Compensation			-				-				233,617				-				233,617
Net Income			-				-				-				248,297				248,297
Balance, June 30, 2023			4,073,757			$	4,074			$	30,412,634			$	(21,365,992	)		$	9,050,716
Balance, December 31, 2023			4,113,621			$	4,114			$	30,841,630			$	(21,095,023	)		$	9,750,721
Stock Option Compensation			-				-				230,912				-				230,912
Restricted Share Issuance			117,185				117				464,276				-				464,393
Net Loss			-				-				-				(99,664	)			(99,664	)
Balance, June 30, 2024			4,230,806			$	4,231			$	31,536,818			$	(21,194,687	)		$	10,346,362

 

See Notes to these condensed consolidated financial statements

 

6

 

 

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

		For the Six Months Ended June 30,
		2024				2023
Cash flows from operating activities:
Net (loss) income		$	(99,664	)		$	248,297
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization			538,648				467,521
Bad debt (recovery) expense			(143	)			27,528
Loss on disposal of fixed assets			547				-
Amortization of deferred financing costs			94,531				95,152
Amortization of debt discount			-				17,778
Amortization of right of use assets, financing			34,954				14,959
Share based compensation			695,305				233,617
Changes in operating assets and liabilities:
Accounts receivable			401,330				(233,431	)
Accounts receivable, unbilled			(162,476	)			(441,603	)
Parts and supplies			16,346				652
Prepaid expenses and other current assets			31,049				(27,999	)
Accounts payable and accrued expenses			345,041				(22,062	)
Operating lease assets and liabilities, net			(3,990	)			6,280
Deferred revenues			(172,623	)			(686,320	)
Total adjustments			1,818,519				(547,928	)
Net cash provided by (used in) operating activities			1,718,855				(299,631	)
Cash flows from investing activities:
Capitalization of internal use software			(198,051	)			(208,417	)
Purchases of property and equipment			(200,715	)			(82,684	)
Net cash used in investing activities			(398,766	)			(291,101	)
Cash flows from financing activities:
Payment of earnout liabilities			-				(700,000	)
Principal payments on financing lease liability			(29,668	)			(12,312	)
Repayment of notes payable			(825,000	)			(262,950	)
Net cash used in financing activities			(854,668	)			(975,262	)
Net increase (decrease) in cash			465,421				(1,565,994	)
Cash - beginning of period			1,215,248				2,696,481
Cash - end of period		$	1,680,669			$	1,130,487
Supplemental disclosure of cash flow information:
Cash paid during the period for interest		$	160,813			$	226,570
Cash paid during the period for income taxes		$	12,999			$	7,708
Supplemental disclosure of non-cash financing activities:
Right-of-use asset obtained in exchange for finance lease liability		$	89,289			$	-

 

See Notes to these condensed consolidated financial statements

 

7

 

 

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, Inc., an Ohio corporation (“Intellinetics Ohio”), and Graphic Sciences, Inc., a Michigan corporation (“Graphic Sciences”). Intellinetics Ohio was incorporated in 1996, and on February 10, 2012, Intellinetics Ohio became our sole operating subsidiary as a result of a reverse merger and recapitalization. On March 2, 2020, we purchased all the outstanding capital stock of Graphic Sciences.

 

Our digital transformation products and services are provided through two reporting segments: Document Management and Document Conversion. Our Document Management segment, which includes the Yellow Folder, LLC (“Yellow Folder”) asset acquisition in April 2022 and the CEO Imaging Systems, Inc. (“CEO Image”) asset acquisition in April 2020, consists primarily of solutions involving our software platform, allowing customers to capture and manage their documents across operations such as scanned hard-copy documents and digital documents including those from Microsoft Office 365, digital images, audio, video and emails. Our Document Conversion segment, which includes and primarily consists of the Graphic Sciences acquisition, provides assistance to customers as a part of their overall document strategy to convert documents from one medium to another, predominantly paper to digital, including migration to our software solutions, as well as long-term storage and retrieval services. Our solutions create value for customers by making it easy to connect business-critical documents to the people who need them by making those documents easy to find and access, while also being secure and compliant with the customers’ audit requirements. Solutions are sold both directly to end-users and through resellers.

 

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 on March 28, 2024.

 

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.

 

8

 

 

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 losses (“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.

 

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 June 30, 2024 and December 31, 2023, our allowance for credit losses was $120,365 and $124,103, respectively.

 

Changes in the allowance for credit losses for the periods ended June 30, 2024 and 2023 were as follows:

 

		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	)

 

		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	)
(Provisions) Reductions charged to operating results		$	(5,786	)
Accounts write-offs		$	0
As of June 30, 2023		$	(114,219	)

 

9

 

 

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 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 on March 28, 2024.

 

Contract balances

 

The following table present changes in our contract assets during the six months ended June 30, 2024 and 2023:

 

		Balance at Beginning of Period				Billings				Payments Received				Balance at End of Period
Six months ended June 30, 2024
Accounts receivable		$	1,850,375			$	8,889,383			$	(9,290,570	)		$	1,449,188
Six months ended June 30, 2023
Accounts receivable		$	1,121,083			$	7,342,400			$	(7,136,497	)		$	1,326,986

 

		Balance at Beginning of Period				Revenue Recognized in Advance of Billings				Billings				Balance at End of Period
Six months ended June 30, 2024
Accounts receivable, unbilled		$	1,320,837			$	2,972,740			$	(2,810,264	)		$	1,483,313
Six months ended June 30, 2023
Accounts receivable, unbilled		$	596,410			$	2,703,932			$	(2,262,329	)		$	1,038,013

 

		Balance at Beginning of Period				Commissions Paid				Commissions Recognized				Balance at End of Period
Six months ended June 30, 2024
Other contract assets		$	140,165			$	48,483			$	(47,434	)		$	141,214
Six months ended June 30, 2023
Other contract assets		$	80,378			$	80,077			$	(63,985	)		$	96,470

 

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.

 

10

 

 

Remaining performance obligations represent the transaction price from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately 99% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter. As of June 30, 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 $35,657. As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations for software as a service and software maintenance contracts with a duration greater than one year was $72,212. This does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less.

 

The following table presents changes in our contract liabilities during the six months ended June 30, 2024 and 2023:

 

		Balance at												Balance at
		Beginning								Recognized				End of
		of Period				Billings				Revenue				Period
Six months ended June 30, 2024
Contract liabilities: Deferred revenue		$	2,927,808			$	3,953,386			$	(4,126,009	)		$	2,755,185
Six months ended June 30, 2023
Contract liabilities: Deferred revenue		$	2,754,064			$	3,522,274			$	(4,208,594	)		$	2,067,744

 

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 $88,430 and $198,051 were capitalized during the three and six months ended June 30, 2024. Such costs in the amount of $96,209 and $208,417 were capitalized during the three and six months ended June 30, 2023.

 

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 June 30, 2024 and December 31, 2023, our condensed consolidated balance sheets included $670,686 and $630,979, respectively, in other long-term assets.

 

For the three and six months ended June 30, 2024 and 2023, our expensed software development costs were $170,822 and $330,553, respectively, and $140,003 and $271,746, respectively.

 

11

 

 

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 and six months ended June 30, 2024 and 2023 amounted to $9,426 and $15,403, respectively, and $6,123 and $12,243, 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 first quarter 2024, certain options and warrants were in-the-money and others were not. For other periods presented, the six months ended June 30, 2024 and the three and six months ended 2023, we have outstanding warrants and stock options which have not been included in the calculation of diluted net loss per share because to do so would be anti-dilutive. The six months ended June 30, 2024 reported a net loss. For the first quarter and six months 2023, no options and warrants were in-the-money. Therefore, for the six months ended June 30,2024 and the three and six months ended June 30, 2023, 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.

 

12

 

 

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% valuation allowance has been established on deferred tax assets at June 30, 2024 and December 31, 2023, due to the uncertainty of our ability to realize future taxable income.

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

 

		June 30, 2024				December 31, 2023
Deferred tax assets
Reserves and accruals not currently deductible for tax purposes		$	105,879			$	69,676
Amortizable assets			133,544				109,612
Net operating loss carryforwards			4,649,089				4,771,762
			4,888,512				4,951,050
Deferred tax liabilities
Amortizable assets			(209,249	)			(197,579	)
Property and equipment			(214,390	)			(214,698	)
Net deferred tax assets			4,464,873				4,538,773
Valuation allowance			(4,464,873	)			(4,538,773	)
		$	-			$	-

 

As of June 30, 2024 and December 31, 2023, we had federal net operating loss carry forwards of approximately $15,477,000 and $15,972,479, respectively, which can be used to offset future federal income tax. A portion of the federal and state net operating loss carry forwards expire at various dates through 2040, and a portion of the net operating loss carry forwards have an indefinite carry forward period. We recorded a valuation allowance against all of our deferred tax assets as of both June 30, 2024, and December 31, 2023. 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 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.

 

13

 

 

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:

 

		For the three months ended June 30,								For the six months ended June 30,
		2024				2023				2024				2023
Revenues
Document Management		$	1,859,088			$	1,879,369			$	3,679,508			$	3,705,103
Document Conversion			2,782,505				2,379,061				5,469,169				4,740,160
Total revenues		$	4,641,593			$	4,258,430			$	9,148,677			$	8,445,263
Gross profit
Document Management		$	1,618,537			$	1,536,385			$	3,175,430			$	3,053,746
Document Conversion			1,384,442				1,054,048				2,727,193				2,182,526
Total gross profit		$	3,002,979			$	2,590,433			$	5,902,623			$	5,236,272
Capital additions, net
Document Management		$	104,421			$	96,209			$	215,040			$	212,250
Document Conversion			166,413				60,323				183,726				78,851
Total capital additions, net		$	270,834			$	156,532			$	398,766			$	291,101

 

		June 30, 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

 

		June 30, 2024				December 31, 2023
Total assets
Document Management		$	9,594,575			$	10,104,004
Document Conversion			9,268,149				8,922,256
Total assets		$	18,862,724			$	19,026,260

 

Statement of Cash Flows

 

For purposes of reporting cash flows, cash includes cash on hand and demand deposits held by banks.

 

14

 

 

Reclassifications

 

Certain amounts reported in prior filings of the condensed consolidated financial statements have been reclassified to conform to current presentation.

 

4. Intangible Assets, Net

 

At June 30, 2024, intangible assets consisted of the following:

 

		Estimated						Accumulated
		Useful Life		Costs				Amortization				Net
Trade names		10 years		$	297,000			$	(91,617	)		$	205,383
Proprietary technology		10 years			861,000				(193,725	)			667,275
Customer relationships		5-15 years			4,091,000				(1,309,475	)			2,781,525
				$	5,249,000			$	(1,594,817	)		$	3,654,183

 

At December 31, 2023, intangible assets consisted of the following:

 

		Estimated						Accumulated
		Useful Life		Costs				Amortization				Net
Trade names		10 years		$	297,000			$	(76,767	)		$	220,233
Proprietary technology		10 years			861,000				(150,675	)			710,325
Customer relationships		5-15 years			4,091,000				(1,112,220	)			2,978,780
				$	5,249,000			$	(1,339,662	)		$	3,909,338

 

Amortization expense for the three and six months ended June 30, 2024 and June 30, 2023, amounted to $127,578 and $255,155, respectively, and $127,577 and $255,154, respectively. The following table represents future amortization expense for intangible assets subject to amortization.

 

For the Twelve Months Ending June 30,		Amount
2024		$	505,941
2025			431,441
2026			326,108
2027			319,316
2028			305,733
Thereafter			1,765,644
		$	3,654,183

 

 

15

 

 

5. Fair Value Measurements

 

We paid our final earnout liability of $700,000 in January 2023 and as of June 30, 2024, there were no earnout liabilities remaining.

 

6. Property and Equipment

 

Property and equipment are comprised of the following:

 

		June 30, 2024				December 31, 2023
Computer hardware and purchased software		$	1,633,177			$	1,437,023
Leasehold improvements			395,919				395,919
Furniture and fixtures			324,296				324,296
			2,353,392				2,157,238
Less: accumulated depreciation			(1,354,116	)			(1,232,981	)
Property and equipment, net		$	999,276			$	924,257

 

Total depreciation expense on our property and equipment for the three and six months ended June 30, 2024 and 2023 amounted to $63,321 and $125,149, respectively, and $64,675 and $126,614, respectively.

 

7. Notes Payable – Unrelated Parties

 

Summary of Notes Payable to Unrelated Parties

 

The tables below summarize all notes payable at June 30, 2024 and December 31, 2023, respectively, with the exception of related party notes disclosed in Note 9 “Notes Payable - Related Parties.”

 

		June 30, 2024				December 31, 2023
Notes payable – “2022 Unrelated Notes”		$	1,539,500			$	2,364,500
Less unamortized debt issuance costs			(72,188	)			(155,258	)
Long-term portion of notes payable		$	1,467,312			$	2,209,242

 

Subordinated Notes Payable

Issue Date

Interest Rate

Interest Due

Principal Due

$

1,539,500

April 1, 2022

12

%

Quarterly

December 31, 2025

 

Future minimum principal payments of the Notes Payable to Unrelated Parties are $1,539,500 as of June 30, 2026. As of June 30, 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. As of June 30, 2024 and December 31, 2023, unamortized deferred financing costs and unamortized debt discount were reflected within long term liabilities on the condensed consolidated balance sheets, netted with the corresponding notes payable balance.

 

16

 

 

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 and six months ended June 30, 2024 and 2023 was $83,159 and $207,884, respectively, and $136,136 and $287,741, respectively.

 

8. Notes Payable - Related Parties

 

Summary of Notes Payable to Related Parties

 

The tables below summarize all notes payable to related parties at June 30, 2024 and December 31, 2023:

 

		June 30, 2024				December 31, 2023
Notes payable – “2022 Related Note”		$	600,000			$	600,000
Less unamortized debt issuance costs			(27,937	)			(39,398	)
Long-term portion of notes payable		$	572,063			$	560,602

 

Subordinated Notes Payable

Issue Date

Interest Rate

Interest Due

Principal Due

2022 Related Note

April 1, 2022

12

%

Quarterly

December 31, 2025

 

Future minimum principal payments of the 2022 Notes to related parties are $600,000 as of June 30, 2026. As of June 30, 2024 and December 31, 2023, accrued interest for these notes payable – related parties was $0. As of June 30, 2024 and December 31, 2023, unamortized deferred financing costs and unamortized debt discount were reflected within long term liabilities on the condensed consolidated balance sheets, netted with the corresponding notes payable balance.

 

With respect to all notes payable – related parties outstanding, interest expense, including the amortization of debt issuance costs, for the three and six months ended June 30, 2024 and 2023 was $22,656 and $47,461, and $25,880 and $51,759, respectively.

 

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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.

 

Operating 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.

 

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:

 

For the twelve months ending June 30,		Finance Leases				Operating Leases
2025		$	89,954			$	957,371
2026			89,954				936,852
2027			71,204				443,008
2028			63,855				311,010
2029			39,194				35,100
Thereafter			1,883				-
Less Imputed Interest			(70,554	)			(288,511	)
		$	285,490			$	2,394,830

 

18

 

 

The following table summarizes the components of lease expense:

 

For the three months ending June 30,		2024				2023
Finance lease expense:
Amortization of ROU asset		$	18,186			$	8,252
Interest on lease liabilities			6,958				3,594
Operating lease expense			235,039				238,864
Short-term lease expense			4,814				4,814

 

For the six months ending June 30,		2024				2023
Finance lease expense:
Amortization of ROU asset		$	34,954			$	14,959
Interest on lease liabilities			13,426				6,426
Operating lease expense			469,478				476,312
Short-term lease expense			9,627				9,627

 

The following tables set forth additional information pertaining to our leases:

 

For the six months ending June 30,		2024				2023
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases (interest)		$	13,426			$	6,426
Financing cash flows from finance leases (principal)			29,668				12,312
Operating cash flows from operating leases			380,661				348,284
ROU assets obtained in exchange for new finance lease liabilities			89,289				30,879
Weighted average remaining lease term – finance leases			4.1 years				5.2 years
Weighted average remaining lease term – operating leases			3.1 years				4.0 years
Weighted average discount rate – finance leases			9.73	%			8.25	%
Weighted average discount rate – operating leases			6.95	%			6.95	%

 

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10. Stockholders’ Equity

 

Common Stock

 

As of June 30, 2024, 4,230,806 shares of common stock were issued and outstanding, 255,958 shares of common stock were reserved for issuance upon the exercise of outstanding warrants, 612,952 shares of common stock were reserved for issuance under our 2015 and 2025 Equity Incentive Plans, as amended (the “2015 Plan” and “2025 Plan”), and 150,000 shares were reserved for issuance under our 2023 Non-Employee Director Compensation Plan.

 

The following table describes the shares and warrants issued as part of our 2022 and 2020 private placements:

 

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 $33,936 and $94,531 for the three and six months ended June 30, 2024, and at $6,224 and $17,290 for the three and six months ended June 30, 2023.

 

Warrants

 

The following sets forth the warrants to purchase our common stock that were outstanding as of June 30, 2024:

 

Warrants Outstanding		Warrant Exercise Price				Warranty Expiry
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

  

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 shares of restricted common stock to certain employees. The grants of restricted common stock were made in accordance with the 2015 Plan and were subject to vesting, as follows: 42,495 shares vested on March 19, 2024; 42,495 shares vest on April 2, 2025, and 42,510 shares vest on April 2, 2026. As of April 2, 2024, 10,315 shares, representing an amount of $69,525, were cancelled as part of a cashless grant, in accordance with the 2015 Plan, resulting in a net of 32,180 shares vested. Stock compensation of $136,018 and $533,919 was recorded on the issuance of the common stock for the three and six months ended June 30, 2024 respectively.

 

20

 

 

Stock Options

 

We did not make any stock option grants during the six months ended June 30, 2024 or 2023.

 

A summary of stock option activity during the six months ended June 30, 2024 and 2023 is as follows:

 

										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 years			$	-
Forfeited			(4,000	)			4.63
Outstanding at June 30, 2024			353,887			$	5.07				7 years			$	-
Exercisable at June 30, 2024			256,138			$	5.75				7 years			$	-

 

										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 years			$	19,200
Forfeited			(5,000	)			4.00
Outstanding at June 30, 2023			360,447			$	5.92				8 years			$	19,200
Exercisable at June 30, 2023			165,654			$	6.32				7 years			$	19,200

 

During the three and six months ended June 30, 2024 and 2023, stock-based compensation for options was $115,456 and $230,912, and $115,456 and $233,618, respectively.

 

As of June 30, 2024 and December 31, 2023, there were $317,069 and $547,981, respectively, of total unrecognized compensation costs related to stock options granted under our stock option agreements. The unrecognized compensation cost is expected to be recognized over a weighted-average period of one year. The total fair value of stock options that vested during the six months ended June 30, 2024 and 2023 was $379,985 and $390,221, respectively.

 

12. Concentrations

 

Revenues from a limited number of customers have accounted for a substantial percentage of our total revenues. During the three months ended June 30, 2024 and 2023, our largest customer, the State of Michigan, accounted for 41% and 36%, respectively, of our total revenues. During the six months ended June 30, 2024 and 2023, our largest customer, the State of Michigan, accounted for 45% and 35%, respectively, of our total revenues.

 

For the three months ended June 30, 2024 and 2023, government contracts, including K-12 education, represented approximately 87% and 79%, respectively, of our net revenues. For the six months ended June 30, 2024 and 2023, government contracts, including K-12 education, represented approximately 87% and 76%, respectively, of our net revenues. A significant portion of our sales to resellers represent ultimate sales to government or K-12 education.

 

As of June 30, 2024 and 2023, accounts receivable concentrations from our largest customer was 62% of our gross accounts receivable for each period.

 

13. Subsequent Events

 

Transfer of 2022 Notes

 

Effective July 19, 2024, a holder of our 2022 Unrelated Notes sold notes totaling $250,000 to related parties, including Robert F. Taglich and Michael N. Taglich, each beneficial owners of more than 5% of our common stock.  This results in a reclassification of $250,000 from unrelated notes to related notes.  There was no fee or premium or discount on the transaction. Additionally, all loan terms and the effective interest rate of the note remain unchanged. Robert F. Taglich and Michael N. Taglich are both principals of Taglich Brothers, Inc., and Michael N. Taglich is chairman of the board of directors of Intellinetics.

 

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ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial conditions and results of operations should be read together with our condensed consolidated financial statements and notes thereto included in Part I, Item 1, “Financial Statements,” of this Quarterly Report on Form 10-Q, and with the condensed consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods. Any forward-looking statements in this discussion and analysis should be read in conjunction with the information set forth in “Note Regarding Forward-Looking Statements” elsewhere herein. In this Quarterly Report, we sometimes refer to the three and six-month periods ended June 30, 2024 as the second quarter 2024 and the six-month period 2024 respectively, and to the three and six-month periods ended June 30, 2023 as the second quarter 2023 and the six-month period 2023.

 

Company Overview

 

We are a document services and software solutions company serving both the small-to-medium business and governmental sectors with their digital transformation and process automation initiatives. 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 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 micrographics conversions and 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.

 

Our customers use our software by one of two methods: purchasing our software and installing it onto their own equipment, which we refer to as a “premise” model, or licensing and accessing our platform via the Internet, which we refer to as a “software as a service” or “SaaS” model and also as a “cloud-based” model. Licensing of our software through our SaaS model has become increasingly popular among our customers, especially in light of the increased deployment of remote workforce policies, and is a key ingredient in our revenue growth strategy. Our SaaS products are hosted with Amazon Web Services, Expedient, and Corespace, providing our customers with reliable hosting services that we believe are consistent with industry best practices in data security and performance.

 

We operate a U.S.-based business with concentrated sales to the State of Michigan for our Document Conversion segment, complemented by our diverse set of document management software solutions and services. We hold or compete for leading positions regionally in select markets and attribute this leadership to several factors including the strength of our brand name and reputation, our comprehensive offering of innovative solutions, and the quality of our service support. Net growth in sales of software as a service in recent years reflects market demand for these solutions over traditional sales of on-premise software. We expect to continue to benefit from our select niche leadership market positions, innovative product offerings, growing customer base, and the impact of our sales and marketing programs. Examples of these programs include identifying and investing in growth and expanded market penetration opportunities, more effective products and services pricing strategies, demonstrating superior value to customers, increasing our sales force effectiveness through improved guidance and measurement, and continuing to optimize our lead generation and lead nurturing processes.

 

For further information about our consolidated revenue and earnings, please see our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

 

How We Evaluate our Business Performance and Opportunities

 

There has been no material change during the six-month period 2024 to the major qualitative and quantitative factors we consider in the evaluation of our operating results as set forth in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — How We Evaluate our Business Performance and Opportunities” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

 

Executive Overview of Results

 

Revenues were up for the second quarter and six-month period 2024 by $383,163, or 9.0%, and $703,414, or 8.3%, respectively, primarily driven by software as a service and professional services more than offsetting expected weakness in storage and retrieval and sales of direct premise software. In expenses, for the six-month period 2024 we recorded $533,919 in stock compensation expense related to our restricted stock awards to employees, without which our operating expenses (excluding cost of revenues) would have increased 12.4% year over year, instead of 23.8%.

 

Below are our key financial results for the second quarter 2024 (consolidated unless otherwise noted):

 

	●	Revenues were $4,641,593, representing revenue growth of 9.0% year over year.
	●	Cost of revenues was $1,638,614, a decrease of 1.8% year over year.
	●	Operating expenses (excluding cost of revenues) were $2,830,873, an increase of 23.4% year over year. This amount includes a 2024 stock compensation expense of $136,018 related to restricted stock awards to employees.
	●	Income from operations was $172,106, compared to $296,388 in second quarter 2023.
	●	Net income was $75,050 with basic and diluted net income per share of $0.02, compared to net income of $135,734 in second quarter 2023.

 

	●	Operating cash generated was $1,107,089, compared to operating cash used of $125,274 in second quarter 2023.
	●	Investing activities, including both capitalization of internal use software and purchases of property and equipment, were $270,834, compared to $156,532 in second quarter 2023.

 

Below are our key financial results for the six-month period 2024 (consolidated unless otherwise noted):

 

	●	Revenues were $9,148,677, representing revenue growth of 8.3% year over year.
	●	Cost of revenues was $3,246,054, an increase of 1.2% year over year.
	●	Operating expenses (excluding cost of revenues) were $5,764,997, an increase of 23.8% year over year. This amount includes a 2024 stock compensation expense of $533,919 related to restricted stock awards to employees.

 

22

 

 

	●	Income from operations was $137,626, compared to $580,387 for the six-month period 2023.
	●	Net loss was $99,664 with basic and diluted net loss per share of $0.02, compared to net income of $248,297 with basic and diluted net income per share of $0.06 for the six-month period 2023.

 

	●	Net cash provided by operating activities was $1,718,855, compared to net cash used by operating activities of $299,631 for the six-month period 2023.
	●	Investing activities, including both capitalization of internal use software and purchases of property and equipment, were $398,766, compared to $291,101 for the six-month period 2023.
	●	As of June 30, 2024, we had 189 employees, including 38 part-time employees, compared to 170 employees, including 26 part-time employees, as of June 30, 2023.

 

Financial Impact of Current Economic Conditions

 

Our overall performance depends on economic conditions, and our continuing growth will be due in part to continued recovery and growth in the US economy and continued stability of state and local governmental spending in the US. Our performance will also continue to be affected by the recent inflationary environment, increased interest rates, and slowing-to-modest global growth rates.

 

Employee wages, our largest expense, have recently increased due to wage inflation. These increased labor costs have been mitigated by appropriately increasing customer renewal rates whenever we have the contractual ability to do so, as well as improved margins from growth in the software as a service revenue line. We anticipate that the inflationary effect on our wages has stabilized.

 

Other volatility, particularly from global supply chain disruptions, has had and are expected to continue to have a minimal impact on us as we consume relatively little in raw materials. Any macroeconomic downturn could affect our customers’ and potential customers’ budgets for technology procurement. However, absent economic disruptions, and based on the current trend of our business operations and our continued focus on strategic initiatives to grow our customer base, we believe in the strength of our brand and that our focus on our strategic priorities will deliver consistent growth.

 

Uncertainties, Trends, and Risks that can cause Fluctuations in our Operating Results

 

Our operating results have fluctuated significantly in the past and are expected to continue to fluctuate in the future due to a variety of factors, in addition to economic conditions, that are discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Uncertainties, Trends, and Risks that can cause Fluctuations in our Operating Results” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Due to all these factors and the other risks discussed Part I, Item IA, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and Part II, Item IA, “Risk Factors” of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, our past results of operations should not be relied upon as an indication of our future performance. Comparisons of our operating results with prior periods is not necessarily meaningful or indicative of future performance.

 

Reportable Segments

 

We have two reportable segments: Document Management and Document Conversion. These reportable segments are discussed above under “Company Overview.”

 

23

 

 

Results of Operations

 

Revenues

 

The following table sets forth our revenues by reportable segment for the periods indicated:

 

		For the three months ended								For the six months ended
		June 30,								June 30,
		2024				2023				2024				2023
Revenues by segment
Document Management		$	1,859,088			$	1,879,369			$	3,679,508			$	3,705,103
Document Conversion			2,782,505				2,379,061				5,469,169				4,740,160
Total revenues		$	4,641,593			$	4,258,430			$	9,148,677			$	8,445,263
Gross profit by segment
Document Management		$	1,618,537			$	1,536,385			$	3,175,430			$	3,053,746
Document Conversion			1,384,442				1,054,048				2,727,193				2,182,526
Total gross profit		$	3,002,979			$	2,590,433			$	5,902,623			$	5,236,272

 

The following table sets forth our revenues by revenue source for the periods indicated:

 

		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Revenues:
Sale of software		$	14,933			$	63,646			$	20,712			$	78,939
Software as a service			1,400,591				1,277,918				2,805,744				2,516,350
Software maintenance services			353,966				349,139				711,949				698,681
Professional services			2,662,358				2,298,316				5,142,036				4,597,605
Storage and retrieval services			209,745				269,411				468,236				553,688
Total revenues		$	4,641,593			$	4,258,430			$	9,148,677			$	8,445,263

 

The following table sets forth our revenues by revenue source and segment for the periods indicated:

 

		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Document management segment revenues:
Sale of software		$	14,933			$	63,646			$	20,712			$	78,939
Software as a service			1,400,591				1,277,918				2,805,744				2,516,350
Software maintenance services			353,966				349,139				711,949				698,681
Professional services			89,598				188,666				141,103				411,133
Total document management segment revenues		$	1,859,088			$	1,879,369			$	3,679,508			$	3,705,103

 

		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Document conversion segment revenues:
Professional services		$	2,572,760			$	2,109,650			$	5,000,933			$	4,186,472
Storage and retrieval services			209,745				269,411				468,236				553,688
Total document conversion segment revenues		$	2,782,505			$	2,379,061			$	5,469,169			$	4,740,160

 

Revenues were up for the second quarter and six-month period 2024 by $383,163, or 9.0%, and $703,414, or 8.3%, respectively, primarily driven by software as a service and professional services in the Document Conversion segment more than offsetting expected weakness in storage and retrieval and sales of direct premise software.

 

Software as a Service Revenues

 

We provide access to our software solutions as a service, accessible through the internet. Our customers typically enter into our software as a service agreement for periods of one year or more. Under these agreements, we generally provide access to the applicable software, data storage and related customer assistance and support. Revenues from the sale of software as a service, which are reported as part of our Document Management segment increased by $122,673, or 9.6%, in the second quarter 2024 compared to the second quarter 2023 and increased by $289,394, or 11.5% in the six-month period 2024 compared to the six-month period 2023. This increase was primarily the result of new cloud-based solution sales, primarily our IntelliCloud Payables Automation Solution, as well as expanded data storage, user seats, and hosting fees for existing customers.

 

Professional Services Revenues

 

Professional services revenues primarily consist of revenues from document scanning and conversion services, plus consulting, discovery, training, and advisory services to assist customers with document management needs. These revenues include arrangements that do not involve the sale of software. Of our professional services revenues during the second quarter 2024 and six-month period 2024, $2,572,760 and $5,000,933, respectively, were derived from our Document Conversion operations and $89,598 and $141,103, respectively, were derived from our Document Management operations. Our overall professional services revenues increased by $364,042, or 15.8%, in the second quarter 2024 compared to the second quarter 2023 and increased by $544,431, or 11.8%, in the six-month period 2024 compared to the six-month period 2023. This increase is the result of a strong pipeline in our Document Conversion segment, along with realized price increases in late 2023. However, we believe that our largest customer intends to renegotiate, and accordingly reduce, our pricing on a significant portion of our work for this customer, which could have a significant adverse impact on our future professional services revenues as well as our overall revenues, margins, net income and cash flows beginning near the end of this year.

 

24

 

 

Costs of Revenues and Gross Profits

 

The following table sets forth our cost of revenues by reportable segment for the periods indicated:

 

		For the three months ended								For the six months ended
		June 30,								June 30,
		2024				2023				2024				2023
Cost of revenues by segment
Document Management		$	240,551			$	342,984			$	504,078			$	651,357
Document Conversion			1,398,063				1,325,013				2,741,976				2,557,634
Total cost of revenues		$	1,638,614			$	1,667,997			$	3,246,054			$	3,208,991

 

The following table sets forth our cost of revenues, by revenue source, for the periods indicated:

 

		For the three months ended								For the six months ended
		June 30,								June 30,
		2024				2023				2024				2023
Cost of revenues:
Sale of software		$	1,125			$	7,344			$	6,190			$	15,525
Software as a service			217,586				258,382				433,578				479,022
Software maintenance services			13,364				15,117				29,074				31,833
Professional services			1,344,541				1,307,341				2,628,604				2,494,457
Storage and retrieval services			61,998				79,813				148,608				188,154
Total cost of revenues		$	1,638,614			$	1,667,997			$	3,246,054			$	3,208,991

 

The following table sets forth our cost of revenues, by revenue source and segment, for the periods indicated:

 

		For the three months ended								For the six months ended
		June 30,								June 30,
		2024				2023				2024				2023
Document management segment cost of revenues:
Sale of software		$	1,125			$	7,344			$	6,190			$	15,525
Software as a service			217,586				258,382				433,578				479,022
Software maintenance services			13,364				15,117				29,074				31,833
Professional services			8,076				62,991				35,236				124,977
Total document management segment cost of revenues		$	240,151			$	343,834			$	504,078			$	651,357

 

25

 

 

		For the three months ended								For the six months ended
		June 30,								June 30,
		2024				2023				2024				2023
Document conversion segment cost of revenues:
Professional services		$	1,336,465			$	1,244,350			$	2,593,368			$	2,369,480
Storage and retrieval services			61,998				79,813				148,608				188,154
Total document conversion segment cost of revenues		$	1,398,463			$	1,324,163			$	2,741,976			$	2,557,634

 

Our total cost of revenues during the second quarter 2024 decreased by $29,383, or 1.8%, over second quarter 2023 and increased by $37,063, or 1.2%, during the six-month period 2024 over the six-month period 2023. Our cost of revenues for our Document Management segment decreased by $103,683, or 30.2%, in the second quarter 2024 compared to the second quarter 2023 and decreased $147,279, or 22.6%, in the six-month period 2024 compared to the six-month period 2023 due to scale, efficiencies, and low support demands. Our cost of revenues for our Document Conversion segment increased by $74,300, or 5.6%, in the second quarter 2024 compared to the second quarter 2023 and increased by $184,342, or 7.2%, during the six-month period 2024 compared to the six-month period 2023 primarily due to the staffing ramp up to accommodate more work volume.

 

		For the three months ended								For the six months ended
		June 30,								June 30,
		2024				2023				2024				2023
Gross profit:
Sale of software		$	13,808			$	56,302			$	14,522			$	63,414
Software as a service			1,183,005				1,019,536				2,372,166				2,037,328
Software maintenance services			340,602				334,022				682,875				666,848
Professional services			1,317,817				990,975				2,513,432				2,103,148
Storage and retrieval services			147,747				189,598				319,628				365,534
Total gross profit		$	3,002,979			$	2,590,433			$	5,902,623			$	5,236,272
Gross profit percentage:
Sale of software			92.5	%			88.5	%			70.1	%			80.3	%
Software as a service			84.5	%			79.8	%			84.5	%			81.0	%
Software maintenance services			96.2	%			95.7	%			95.9	%			95.4	%
Professional services			49.5	%			43.1	%			48.9	%			45.7	%
Storage and retrieval services			70.4	%			70.4	%			68.3	%			66.0	%
Total gross profit percentage			64.7	%			60.8	%			64.5	%			62.0	%

 

26

 

 

Our overall gross profit increased to 64.7% in the second quarter 2024 from 60.8% in the second quarter 2023 and increased to 64.5% during the six-month period 2024 from 62.0% for the six-month period 2023. The mix of revenues by source was relatively stable; the professional services gross profit margins benefited from stable wages, price increase impact year over year, and a favorable comparison in the Document Conversion segment against weaker margin projects in 2023.

 

Cost of Software as a Service

 

Cost of software as a service, or SaaS, consists primarily of technical support personnel, hosting services, and related costs. Cost of software as a service during the second quarter 2024 decreased by $40,796, or 15.8%, from the second quarter 2023 and decreased by $45,444, or 9.5%, during the six-month period 2024 from the six-month period 2023. This decrease in the cost of SaaS was due to increased staffing allocations in 2023, affecting that quarter and six-month period. Gross profit in 2024 returned to more historical levels, improving slightly on those, where our gross margin in the second quarter 2024 increased to 84.5% compared to 79.8% in the second quarter 2023 and to 84.5% in the six-month period 2023 compared to 81.0% during the six-month period 2023.

 

Cost of Professional Services

 

Cost of professional services consists primarily of compensation for employees performing the document conversion services, compensation of our software engineers and implementation consultants and related third-party costs. Cost of professional services during the second quarter 2024 increased by $37,200, or 2.8%, over the second quarter 2023 and increased in the six-month period 2024 by $134,147, or 5.4%, over the six-month period 2023. The growth in cost of sales was less than the growth in revenues due to stabilization of wages, price increases, and favorable project profitability year over year in our Document Conversion segment. Gross margins related to consulting services in Document Management and digital transformation services in Document Conversion may vary widely, depending upon the nature of the project and the amount of labor required to complete a project. Our gross margins in professional services increased to 49.5% in the second quarter 2024 compared to 43.1% in the second quarter 2023 and increased to 48.9% during the six-month period 2024 compared to 45.7% in the six-month period 2023.

 

27

 

 

Operating Expenses

 

The following table sets forth our operating expenses for the periods indicated:

 

		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Operating expenses:
General and administrative		$	2,025,796			$	1,561,939			$	4,154,289			$	3,116,550
Sales and marketing			530,439				492,303				1,072,060				1,071,814
Depreciation and amortization			274,638				239,803				538,648				467,521
Total operating expenses		$	2,830,873			$	2,294,045			$	5,764,997			$	4,655,885

 

General and Administrative Expenses

 

General and administrative expenses during the second quarter 2024 increased by $463,857, or 29.7%, over the second quarter 2023, and increased in the six-month period 2024 by $1,037,739, or 33.3%, over the six-month period 2023, primarily related to $136,018 and $533,919 in expense related to our restricted stock award grant to employees in the second quarter and six-month period 2024, respectively. Excluding the restricted stock award expense, total expenses increased by $503,820, or 16.2% in the six-month period 2024 over 2023, related to investments made in order to scale, such as development, finance, and our SOC2 process, as well as wage increases. This was primarily reflected in our Document Management segment, in which, including the restricted stock grant expense, our general and administrative expenses increased to $1,204,509 and $2,349,541 in the second quarter 2024 and the six-month period 2024, respectively, from $794,718 and $1,597,846 in the second quarter 2023 and the six-month period 2023, respectively. In our Document Conversion segment, our general and administrative expenses increased to $821,287 in the second quarter 2024 compared to $767,221 in the second quarter 2023, and increased to $1,804,748 in the six-month period 2024 compared to $1,518,704 in the six-month period 2023.

 

Sales and Marketing Expenses

 

Sales and marketing expenses during the second quarter 2024 increased by $38,136, or 7.7%, from the second quarter 2023 and increased by $246, or 0.0%, during the six-month period 2024 over the six-month period 2023. The second quarter increase more appropriately reflects our investments in sales and marketing, including an open sales rep position filled.

 

Depreciation and Amortization

 

Depreciation and amortization during the second quarter 2024 increased by $34,835, or 14.5%, over the second quarter 2023 and increased by $71,127, or 15.2%, during the six-month period 2024 over the six-month period 2023, primarily as a result of increased amortization of capitalized software costs.

 

Other Items of Income and Expense

 

Interest Expense, Net

 

Interest expense decreased by $63,598, or 39.6%, in the second quarter 2024 as compared to the second quarter 2023, and decreased by $94,800, or 28.5% during the six-month period 2024 as compared to the six-month period 2023. The decrease resulted from reduced interest resulting from principal repayments as follows: the 2020 Notes on February 28, 2023 and August 31, 2023, and the 2022 Notes principal repayment of $500,000 on March 30, 2024. The 2022 Notes principal prepayment of $325,000 on June 30, 2024 had a negligible impact on interest expense in the six-month period 2024.

 

28

 

 

Liquidity and Capital Resources

 

We have financed our operations primarily through a combination of cash on hand, cash generated from operations, borrowings from third parties and related parties, and proceeds from private sales of equity. Since 2012, we have raised a net total of approximately $23.7 million in cash through issuances of debt and equity securities, net of $2.8 million in debt repayments. As of June 30, 2024, we had approximately $1.7 million in cash and cash equivalents, net working capital of $0.5 million, and an accumulated deficit of $21.2 million. In March and June 2024, we prepaid $0.5 million and $0.35 million in principal of the 2022 Notes, respectively.

 

In 2024 and 2023, we engaged in several actions that significantly improved our liquidity and cash flows, including (i) effective October 1, 2023 through September 30, 2024, securing a renewal contract with our largest customer, containing an estimated net rate increase for all non-fixed pricing projects of approximately 21%, compared to the current rates in effect for the contract period commencing June 1, 2018, and (ii) on March 13, 2024, we agreed with the note holders to amend the Unrelated Notes and Related Notes to extend the maturity date to December 31, 2025, for the remaining $1,539,500 in 2022 Unrelated Notes and all $600,000 of the 2022 Related Notes. However, we believe that our largest customer intends to renegotiate our pricing on a significant portion of our work for this customer, which could have an adverse impact on our overall revenues, cash flows, liquidity and capital resources.

 

Our existing debt as of June 30, 2024 is comprised of approximately $2.1 million due December 31, 2025. Our operating cash flow alone may be insufficient to meet the debt obligations in full in 2025. We believe we could seek additional debt or equity financing on acceptable terms. We believe that our balance sheet and financial statements would support a full or partial refinancing or other appropriate modification of the current promissory notes, such as an extension or conversion to equity. We are confident in our ability to prudently manage our current debt on terms acceptable to us.

 

Our ability to meet our capital needs in the short term will depend on many factors, including maintaining and enhancing our operating cash flow and successfully retaining and growing our client base in the midst of continuing global inflation and generally slow economic growth.

 

Based on our current plans and assumptions, we believe our capital resources, including our cash and cash equivalents, along with funds expected to be generated from our operations and potential financing options, will be sufficient to meet our anticipated cash needs arising in the ordinary course of business for at least the next 12 months, including to satisfy our expected working capital needs and capital and debt service commitments.

 

Our ability to meet our capital needs further into the future will depend primarily on strategically managing the business and successfully retaining our client base.

 

Indebtedness

 

As of June 30, 2024, our outstanding long-term indebtedness consisted of the 2022 Notes issued to accredited investors on April 1, 2022, with an aggregate outstanding principal balance of $2,139,500 and accrued interest of $0.

 

See Note 7 and Note 8 to our condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report for further information on the 2022 notes.

 

Capital Expenditures

 

There were no material commitments for capital expenditures at June 30, 2024.

 

Cash Provided by and Used in Operating Activities

 

Net cash provided by operating activities during the six-month period 2024 was $1,718,855, primarily attributable to the net income adjusted for non-cash expenses of $1,363,842, a decrease in operating assets of $286,249 and an increase in operating liabilities of $168,428. Net cash used in operating activities during the six-month period 2023 was 299,631, primarily attributable to the net income adjusted for non-cash expenses of $856,555, an increase in operating assets of $702,381 and a decrease in operating liabilities of $702,102.

 

Cash Used in Investing Activities

 

Net cash used in investing activities in the six-month period 2024 was $398,766, including $198,051 in capitalized software. Net cash used in investing activities in the six-month period 2023 was $291,101, including $208,417 in capitalized software.

 

29

 

 

Cash Used in Financing Activities

 

Net cash used by financing activities during the six-month period 2024 amounted to $825,000 in repayment of notes payable, and $29,668 in the principal portion of a finance lease liability. Net cash used by financing activities during the six-month period 2023 amounted to $700,000 in earnout liability payments, $262,950 in repayment of notes payable, and $12,312 in the principal portion of a finance lease liability.

 

Critical Accounting Policies and Estimates

 

The preparation of our condensed consolidated financial statements in accordance GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. We monitor and analyze these items for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. The actual results experienced by us may differ materially from our estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.

 

Our critical accounting policies and estimates are set forth in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. There were no material changes to our critical accounting policies and estimates during the second quarter 2024.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable to smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) at the end of the period covered by this this Quarterly Report.

 

Based on this evaluation, we concluded that, as of June 30, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls system, no matter how well designed and operated, can provide only reasonable assurance of achieving its desired objectives. In addition, the design of disclosure controls and procedures must reflect resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

 

We regularly review our internal control over financial reporting and, from time to time, we have made changes as we deemed appropriate to maintain and enhance the effectiveness of our internal controls over financial reporting, although these changes do not have a material effect on our overall internal control.

 

30

 

 

PART II — OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

None.

 

ITEM 1A. RISK FACTORS.

 

Our business and operating results are subject to many risks, uncertainties and other factors. If any of these risks were to occur, our business, affairs, assets, financial condition, results of operations, cash flows and prospects could be materially and adversely affected. There have been no material changes to the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, except as set forth in Part II, Item IA, “Risk Factors,” of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3. DEFAULT UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION.

 

During the second fiscal quarter ended June 30, 2024, no Section 16 director or officer adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K of the Exchange Act).

 

There were no “non-Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted, modified, or terminated during the fiscal quarter ended June 30, 2024, by our directors and Section 16 officers.

 

ITEM 6. EXHIBITS.

 

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q.

 

				Incorporation by reference
Exhibit No.		Description of Exhibit		Form		Date		Exhibit
31.1*		Certification of Principal Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document (The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.).
101.SCH*		XBRL Taxonomy Schema.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

* Filed herewith.

 

31

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

INTELLINETICS, INC.
Dated:	August 13, 2024
By:	/s/ James F. DeSocio
	James F. DeSocio
	President and Chief Executive Officer
Dated:	August 13, 2024
By:	/s/ Joseph D. Spain
	Joseph D. Spain
	Chief Financial Officer

 

32

 

 

Exhibit 31.1

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, James F. DeSocio, certify that:

 

1.	I have reviewed this Quarterly Report on Form 10-Q of Intellinetics, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 13, 2024

 

By:	/s/ James F. DeSocio
	President and Chief Executive Officer

 

 

 

Exhibit 31.2

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Joseph D. Spain, certify that:

 

1.	I have reviewed this Quarterly Report on Form 10-Q of Intellinetics, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 13, 2024

 

By:	/s/ Joseph D. Spain
	Chief Financial Officer

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Intellinetics, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James F. DeSocio, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 13, 2024

 

/s/ James F. DeSocio
President and Chief Executive Officer

 

This Certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.

 

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Intellinetics, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, Joseph D. Spain, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 13, 2024

 

/s/ Joseph D. Spain
Chief Financial Officer

 

This Certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.

 

 

Cover - $ / shares	6 Months Ended
	Jun. 30, 2024	Aug. 09, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
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		4,230,806
Entity Listing, Par Value Per Share	$ 0.001

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash	$ 1,680,669	$ 1,215,248
Accounts receivable, net	1,449,188	1,850,375
Accounts receivable, unbilled	1,483,313	1,320,837
Parts and supplies, net	93,926	110,272
Contract assets	141,214	140,165
Prepaid expenses and other current assets	335,380	367,478
Total current assets	5,183,690	5,004,375
Property and equipment, net	999,276	924,257
Right of use assets, operating	2,276,171	2,532,928
Right of use assets, finance	274,112	219,777
Intangible assets, net	3,654,183	3,909,338
Goodwill	5,789,821	5,789,821
Other assets	685,471	645,764
Total assets	18,862,724	19,026,260
Current liabilities:
Accounts payable	340,298	194,454
Accrued compensation	540,237	337,884
Accrued expenses	160,947	164,103
Lease liabilities, operating - current	797,870	712,607
Lease liabilities, finance - current	66,000	49,926
Deferred revenues	2,755,185	2,927,808
Total current liabilities	4,660,537	4,386,782
Long-term liabilities:
Lease liabilities, operating - net of current portion	1,596,960	1,942,970
Lease liabilities, finance - net of current portion	219,490	175,943
Total long-term liabilities	3,855,825	4,888,757
Total liabilities	8,516,362	9,275,539
Stockholders’ equity:
Common stock, $0.001 par value, 25,000,000 shares authorized; 4,230,806 and 4,113,621 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	4,231	4,114
Additional paid-in capital	31,536,818	30,841,630
Accumulated deficit	(21,194,687)	(21,095,023)
Total stockholders’ equity	10,346,362	9,750,721
Total liabilities and stockholders’ equity	18,862,724	19,026,260
Nonrelated Party [Member]
Long-term liabilities:
Notes payable - related party	1,467,312	2,209,242
Related Party [Member]
Long-term liabilities:
Notes payable - related party	$ 572,063	$ 560,602

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 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	4,230,806	4,113,621
Common stock, shares outstanding	4,230,806	4,113,621

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues:
Total revenues	$ 4,641,593	$ 4,258,430	$ 9,148,677	$ 8,445,263
Cost of revenues:
Total cost of revenues	1,638,614	1,667,997	3,246,054	3,208,991
Gross profit	3,002,979	2,590,433	5,902,623	5,236,272
Operating expenses:
General and administrative	2,025,796	1,561,939	4,154,289	3,116,550
Sales and marketing	530,439	492,303	1,072,060	1,071,814
Depreciation and amortization	274,638	239,803	538,648	467,521
Total operating expenses	2,830,873	2,294,045	5,764,997	4,655,885
Income from operations	172,106	296,388	137,626	580,387
Interest expense, net	(97,056)	(160,654)	(237,290)	(332,090)
Net income (loss)	$ 75,050	$ 135,734	$ (99,664)	$ 248,297
Basic net income (loss) per share:	$ 0.02	$ 0.03	$ (0.02)	$ 0.06
Diluted net income (loss) per share:	$ 0.02	$ 0.03	$ (0.02)	$ 0.06
Weighted average number of common shares outstanding - basic	4,229,518	4,073,757	4,171,570	4,073,757
Weighted average number of common shares outstanding - diluted	4,722,063	4,073,757	4,171,570	4,073,757
Sale of Software [Member]
Revenues:
Total revenues	$ 14,933	$ 63,646	$ 20,712	$ 78,939
Cost of revenues:
Total cost of revenues	1,125	7,344	6,190	15,525
Software as a Service [Member]
Revenues:
Total revenues	1,400,591	1,277,918	2,805,744	2,516,350
Cost of revenues:
Total cost of revenues	217,586	258,382	433,578	479,022
Software Maintenance Services [Member]
Revenues:
Total revenues	353,966	349,139	711,949	698,681
Cost of revenues:
Total cost of revenues	13,364	15,117	29,074	31,833
Professional Services [Member]
Revenues:
Total revenues	2,662,358	2,298,316	5,142,036	4,597,605
Cost of revenues:
Total cost of revenues	1,344,541	1,307,341	2,628,604	2,494,457
Storage and Retrieval Services [Member]
Revenues:
Total revenues	209,745	269,411	468,236	553,688
Cost of revenues:
Total cost of revenues	$ 61,998	$ 79,813	$ 148,608	$ 188,154

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		233,617		233,617
Net Income Loss			248,297	248,297
Balance at Jun. 30, 2023	$ 4,074	30,412,634	(21,365,992)	9,050,716
Balance, shares at Jun. 30, 2023	4,073,757
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
Stock Option Compensation		115,455		115,455
Net Income Loss			135,734	135,734
Balance at Jun. 30, 2023	$ 4,074	30,412,634	(21,365,992)	9,050,716
Balance, shares at Jun. 30, 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		230,912		230,912
Net Income Loss			(99,664)	(99,664)
Restricted Share Issuance	$ 117	464,276		464,393
Restricted Share Issuance, shares	117,185
Balance at Jun. 30, 2024	$ 4,231	31,536,818	(21,194,687)	10,346,362
Balance, shares at Jun. 30, 2024	4,230,806
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
Stock Option Compensation		115,456		115,456
Net Income Loss			75,050	75,050
Restricted Share Issuance	$ 117	135,900		136,017
Restricted Share Issuance, shares	117,185
Balance at Jun. 30, 2024	$ 4,231	$ 31,536,818	$ (21,194,687)	$ 10,346,362
Balance, shares at Jun. 30, 2024	4,230,806

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash flows from operating activities:
Net (loss) income	$ (99,664)	$ 248,297
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	538,648	467,521
Bad debt (recovery) expense	(143)	27,528
Loss on disposal of fixed assets	547
Amortization of deferred financing costs	94,531	95,152
Amortization of debt discount		17,778
Amortization of right of use assets, financing	34,954	14,959
Share based compensation	695,305	233,617
Changes in operating assets and liabilities:
Accounts receivable	401,330	(233,431)
Accounts receivable, unbilled	(162,476)	(441,603)
Parts and supplies	16,346	652
Prepaid expenses and other current assets	31,049	(27,999)
Accounts payable and accrued expenses	345,041	(22,062)
Operating lease assets and liabilities, net	(3,990)	6,280
Deferred revenues	(172,623)	(686,320)
Total adjustments	1,818,519	(547,928)
Net cash provided by (used in) operating activities	1,718,855	(299,631)
Cash flows from investing activities:
Capitalization of internal use software	(198,051)	(208,417)
Purchases of property and equipment	(200,715)	(82,684)
Net cash used in investing activities	(398,766)	(291,101)
Cash flows from financing activities:
Payment of earnout liabilities		(700,000)
Principal payments on financing lease liability	(29,668)	(12,312)
Repayment of notes payable	(825,000)	(262,950)
Net cash used in financing activities	(854,668)	(975,262)
Net increase (decrease) in cash	465,421	(1,565,994)
Cash - beginning of period	1,215,248	2,696,481
Cash - end of period	1,680,669	1,130,487
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	160,813	226,570
Cash paid during the period for income taxes	12,999	7,708
Supplemental disclosure of non-cash financing activities:
Right-of-use asset obtained in exchange for finance lease liability	$ 89,289

Pay vs Performance Disclosure - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ 75,050	$ 135,734	$ (99,664)	$ 248,297

Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Business Organization and Nature of Operations	6 Months Ended
	Jun. 30, 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 reporting segments: Document Management and Document Conversion. Our Document Management segment, which includes the Yellow Folder, LLC (“Yellow Folder”) asset acquisition in April 2022 and the CEO Imaging Systems, Inc. (“CEO Image”) asset acquisition in April 2020, consists primarily of solutions involving our software platform, allowing customers to capture and manage their documents across operations such as scanned hard-copy documents and digital documents including those from Microsoft Office 365, digital images, audio, video and emails. Our Document Conversion segment, which includes and primarily consists of the Graphic Sciences acquisition, provides assistance to customers as a part of their overall document strategy to convert documents from one medium to another, predominantly paper to digital, including migration to our software solutions, as well as long-term storage and retrieval services. Our solutions create value for customers by making it easy to connect business-critical documents to the people who need them by making those documents easy to find and access, while also being secure and compliant with the customers’ audit requirements. Solutions are sold both directly to end-users and through resellers.

Basis of Presentation	6 Months Ended
	Jun. 30, 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 on March 28, 2024.

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 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% 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 losses (“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.   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 June 30, 2024 and December 31, 2023, our allowance for credit losses was $120,365 and $124,103, respectively.   Changes in the allowance for credit losses for the periods ended June 30, 2024 and 2023 were as follows:       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 )       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 ) (Provisions) Reductions charged to operating results   $ (5,786 ) Accounts write-offs   $ 0   As of June 30, 2023   $ (114,219 )     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 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 on March 28, 2024.   Contract balances   The following table present changes in our contract assets during the six months ended June 30, 2024 and 2023:       Balance at Beginning of Period     Billings     Payments Received     Balance at End of Period   Six months ended June 30, 2024                                 Accounts receivable   $ 1,850,375     $ 8,889,383 $ (9,290,570 )   $ 1,449,188                                     Six months ended June 30, 2023                                 Accounts receivable   $ 1,121,083     $ 7,342,400     $ (7,136,497 )   $ 1,326,986         Balance at Beginning of Period     Revenue Recognized in Advance of Billings     Billings     Balance at End of Period   Six months ended June 30, 2024                                 Accounts receivable, unbilled   $ 1,320,837     $ 2,972,740     $ (2,810,264 )   $ 1,483,313                                     Six months ended June 30, 2023                                 Accounts receivable, unbilled   $ 596,410     $ 2,703,932     $ (2,262,329 )   $ 1,038,013         Balance at Beginning of Period     Commissions Paid     Commissions Recognized     Balance at End of Period   Six months ended June 30, 2024                                 Other contract assets   $ 140,165     $ 48,483     $ (47,434 )   $ 141,214                                     Six months ended June 30, 2023                                 Other contract assets   $ 80,378     $ 80,077     $ (63,985 )   $ 96,470     Deferred revenue   Amounts that have been invoiced are recognized in accounts receivable, deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenues typically relate to maintenance and software-as-a-service agreements which have been paid for by customers prior to the performance of those services, and payments received for professional services and license arrangements and software-as-a-service performance obligations that have been deferred until fulfilled under our revenue recognition policy.     Remaining performance obligations represent the transaction price from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately 99% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter. As of June 30, 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 $35,657. As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations for software as a service and software maintenance contracts with a duration greater than one year was $72,212. This does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less.   The following table presents changes in our contract liabilities during the six months ended June 30, 2024 and 2023:       Balance at                 Balance at       Beginning           Recognized     End of       of Period     Billings     Revenue     Period   Six months ended June 30, 2024                                 Contract liabilities: Deferred revenue   $ 2,927,808     $ 3,953,386     $ (4,126,009 )   $ 2,755,185                                     Six months ended June 30, 2023                                 Contract liabilities: Deferred revenue   $ 2,754,064     $ 3,522,274     $ (4,208,594 )   $ 2,067,744     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 $88,430 and $198,051 were capitalized during the three and six months ended June 30, 2024. Such costs in the amount of $96,209 and $208,417 were capitalized during the three and six months ended June 30, 2023.   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 June 30, 2024 and December 31, 2023, our condensed consolidated balance sheets included $670,686 and $630,979, respectively, in other long-term assets.   For the three and six months ended June 30, 2024 and 2023, our expensed software development costs were $170,822 and $330,553, respectively, and $140,003 and $271,746, respectively.     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 and six months ended June 30, 2024 and 2023 amounted to $9,426 and $15,403, respectively, and $6,123 and $12,243, 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 first quarter 2024, certain options and warrants were in-the-money and others were not. For other periods presented, the six months ended June 30, 2024 and the three and six months ended 2023, we have outstanding warrants and stock options which have not been included in the calculation of diluted net loss per share because to do so would be anti-dilutive. The six months ended June 30, 2024 reported a net loss. For the first quarter and six months 2023, no options and warrants were in-the-money. Therefore, for the six months ended June 30,2024 and the three and six months ended June 30, 2023, 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% valuation allowance has been established on deferred tax assets at June 30, 2024 and December 31, 2023, due to the uncertainty of our ability to realize future taxable income.   The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:       June 30, 2024     December 31, 2023   Deferred tax assets                 Reserves and accruals not currently deductible for tax purposes   $ 105,879     $ 69,676   Amortizable assets     133,544       109,612   Net operating loss carryforwards     4,649,089       4,771,762       4,888,512       4,951,050   Deferred tax liabilities                 Amortizable assets     (209,249 )     (197,579 ) Property and equipment     (214,390 )     (214,698 ) Net deferred tax assets     4,464,873       4,538,773   Valuation allowance     (4,464,873 )     (4,538,773 )   $ -     $ -     As of June 30, 2024 and December 31, 2023, we had federal net operating loss carry forwards of approximately $15,477,000 and $15,972,479, respectively, which can be used to offset future federal income tax. A portion of the federal and state net operating loss carry forwards expire at various dates through 2040, and a portion of the net operating loss carry forwards have an indefinite carry forward period. We recorded a valuation allowance against all of our deferred tax assets as of both June 30, 2024, and December 31, 2023. 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 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:       For the three months ended June 30,     For the six months ended June 30,       2024     2023     2024     2023   Revenues                         Document Management   $ 1,859,088     $ 1,879,369     $ 3,679,508     $ 3,705,103   Document Conversion     2,782,505       2,379,061       5,469,169       4,740,160   Total revenues   $ 4,641,593     $ 4,258,430     $ 9,148,677     $ 8,445,263                                     Gross profit                                 Document Management   $ 1,618,537     $ 1,536,385     $ 3,175,430     $ 3,053,746   Document Conversion     1,384,442       1,054,048       2,727,193       2,182,526   Total gross profit   $ 3,002,979     $ 2,590,433     $ 5,902,623     $ 5,236,272                                     Capital additions, net                                 Document Management   $ 104,421     $ 96,209     $ 215,040     $ 212,250   Document Conversion     166,413       60,323       183,726       78,851   Total capital additions, net   $ 270,834     $ 156,532     $ 398,766     $ 291,101         June 30, 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         June 30, 2024     December 31, 2023   Total assets                 Document Management   $ 9,594,575     $ 10,104,004   Document Conversion     9,268,149       8,922,256   Total assets   $ 18,862,724     $ 19,026,260     Statement of Cash Flows   For purposes of reporting cash flows, cash includes cash on hand and demand deposits held by banks.     Reclassifications   Certain amounts reported in prior filings of the condensed consolidated financial statements have been reclassified to conform to current presentation.

Intangible Assets, Net	6 Months Ended
	Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets, Net	4. Intangible Assets, Net   At June 30, 2024, intangible assets consisted of the following:       Estimated         Accumulated             Useful Life   Costs     Amortization     Net   Trade names   10 years   $ 297,000     $ (91,617 )   $ 205,383   Proprietary technology   10 years     861,000       (193,725 )     667,275   Customer relationships   5-15 years     4,091,000       (1,309,475 )     2,781,525           $ 5,249,000     $ (1,594,817 )   $ 3,654,183     At December 31, 2023, intangible assets consisted of the following:       Estimated         Accumulated             Useful Life   Costs     Amortization     Net   Trade names   10 years   $ 297,000     $ (76,767 )   $ 220,233   Proprietary technology   10 years     861,000       (150,675 )     710,325   Customer relationships   5-15 years     4,091,000       (1,112,220 )     2,978,780           $ 5,249,000     $ (1,339,662 )   $ 3,909,338     Amortization expense for the three and six months ended June 30, 2024 and June 30, 2023, amounted to $127,578 and $255,155, respectively, and $127,577 and $255,154, respectively. The following table represents future amortization expense for intangible assets subject to amortization.   For the Twelve Months Ending June 30,   Amount   2024   $ 505,941   2025     431,441   2026     326,108   2027     319,316   2028     305,733   Thereafter     1,765,644     $ 3,654,183

Fair Value Measurements	6 Months Ended
	Jun. 30, 2024
Fair Value Disclosures [Abstract]
Fair Value Measurements	5. Fair Value Measurements   We paid our final earnout liability of $700,000 in January 2023 and as of June 30, 2024, there were no earnout liabilities remaining.

Property and Equipment	6 Months Ended
	Jun. 30, 2024
Property, Plant and Equipment [Abstract]
Property and Equipment	6. Property and Equipment   Property and equipment are comprised of the following:       June 30, 2024     December 31, 2023   Computer hardware and purchased software   $ 1,633,177     $ 1,437,023   Leasehold improvements     395,919       395,919   Furniture and fixtures     324,296       324,296       2,353,392       2,157,238   Less: accumulated depreciation     (1,354,116 )     (1,232,981 ) Property and equipment, net   $ 999,276     $ 924,257     Total depreciation expense on our property and equipment for the three and six months ended June 30, 2024 and 2023 amounted to $63,321 and $125,149, respectively, and $64,675 and $126,614, respectively.

Notes Payable – Unrelated Parties	6 Months Ended
	Jun. 30, 2024
Nonrelated Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Notes Payable – Unrelated Parties	7. Notes Payable – Unrelated Parties   Summary of Notes Payable to Unrelated Parties   The tables below summarize all notes payable at June 30, 2024 and December 31, 2023, respectively, with the exception of related party notes disclosed in Note 9 “Notes Payable - Related Parties.”       June 30, 2024     December 31, 2023   Notes payable – “2022 Unrelated Notes”   $ 1,539,500     $ 2,364,500   Less unamortized debt issuance costs     (72,188 )     (155,258 ) Long-term portion of notes payable   $ 1,467,312     $ 2,209,242     Subordinated Notes Payable   Issue Date     Interest Rate     Interest Due     Principal Due   $ 1,539,500     April 1, 2022       12 %     Quarterly       December 31, 2025     Future minimum principal payments of the Notes Payable to Unrelated Parties are $1,539,500 as of June 30, 2026. As of June 30, 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. As of June 30, 2024 and December 31, 2023, unamortized deferred financing costs and unamortized debt discount were reflected within long term liabilities on the condensed consolidated balance sheets, netted with the corresponding notes payable balance.     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 and six months ended June 30, 2024 and 2023 was $83,159 and $207,884, respectively, and $136,136 and $287,741, respectively.

Notes Payable - Related Parties	6 Months Ended
	Jun. 30, 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 tables below summarize all notes payable to related parties at June 30, 2024 and December 31, 2023:       June 30, 2024     December 31, 2023   Notes payable – “2022 Related Note”   $ 600,000     $ 600,000                     Less unamortized debt issuance costs     (27,937 )     (39,398 ) Long-term portion of notes payable   $ 572,063     $ 560,602     Subordinated Notes Payable   Issue Date     Interest Rate     Interest Due     Principal Due   2022 Related Note     April 1, 2022       12 %     Quarterly       December 31, 2025     Future minimum principal payments of the 2022 Notes to related parties are $600,000 as of June 30, 2026. As of June 30, 2024 and December 31, 2023, accrued interest for these notes payable – related parties was $0. As of June 30, 2024 and December 31, 2023, unamortized deferred financing costs and unamortized debt discount were reflected within long term liabilities on the condensed consolidated balance sheets, netted with the corresponding notes payable balance.   With respect to all notes payable – related parties outstanding, interest expense, including the amortization of debt issuance costs, for the three and six months ended June 30, 2024 and 2023 was $22,656 and $47,461, and $25,880 and $51,759, respectively.

Commitments and Contingencies	6 Months Ended
	Jun. 30, 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.   Operating 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.   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:   For the twelve months ending June 30,   Finance Leases     Operating Leases   2025   $ 89,954     $ 957,371   2026     89,954       936,852   2027     71,204       443,008   2028     63,855       311,010   2029     39,194       35,100   Thereafter     1,883       -   Less Imputed Interest     (70,554 )     (288,511 )     $ 285,490     $ 2,394,830       The following table summarizes the components of lease expense:   For the three months ending June 30,   2024     2023   Finance lease expense:                 Amortization of ROU asset   $ 18,186     $ 8,252   Interest on lease liabilities     6,958       3,594   Operating lease expense     235,039       238,864   Short-term lease expense     4,814       4,814     For the six months ending June 30,   2024     2023   Finance lease expense:                 Amortization of ROU asset   $ 34,954     $ 14,959   Interest on lease liabilities     13,426       6,426   Operating lease expense     469,478       476,312   Short-term lease expense     9,627       9,627     The following tables set forth additional information pertaining to our leases:   For the six months ending June 30,   2024     2023   Cash paid for amounts included in the measurement of lease liabilities:                 Financing cash flows from finance leases (interest)   $ 13,426     $ 6,426   Financing cash flows from finance leases (principal)     29,668       12,312   Operating cash flows from operating leases     380,661       348,284   ROU assets obtained in exchange for new finance lease liabilities     89,289       30,879   Weighted average remaining lease term – finance leases     4.1 years       5.2 years   Weighted average remaining lease term – operating leases     3.1 years       4.0 years   Weighted average discount rate – finance leases     9.73 %     8.25 % Weighted average discount rate – operating leases     6.95 %     6.95 %

Stockholders’ Equity	6 Months Ended
	Jun. 30, 2024
Equity [Abstract]
Stockholders’ Equity	10. Stockholders’ Equity   Common Stock   As of June 30, 2024, 4,230,806 shares of common stock were issued and outstanding, 255,958 shares of common stock were reserved for issuance upon the exercise of outstanding warrants, 612,952 shares of common stock were reserved for issuance under our 2015 and 2025 Equity Incentive Plans, as amended (the “2015 Plan” and “2025 Plan”), and 150,000 shares were reserved for issuance under our 2023 Non-Employee Director Compensation Plan.   The following table describes the shares and warrants issued as part of our 2022 and 2020 private placements:   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 $33,936 and $94,531 for the three and six months ended June 30, 2024, and at $6,224 and $17,290 for the three and six months ended June 30, 2023.   Warrants   The following sets forth the warrants to purchase our common stock that were outstanding as of June 30, 2024:   Warrants Outstanding   Warrant Exercise Price     Warranty Expiry 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	6 Months Ended
	Jun. 30, 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 shares of restricted common stock to certain employees. The grants of restricted common stock were made in accordance with the 2015 Plan and were subject to vesting, as follows: 42,495 shares vested on March 19, 2024; 42,495 shares vest on April 2, 2025, and 42,510 shares vest on April 2, 2026. As of April 2, 2024, 10,315 shares, representing an amount of $69,525, were cancelled as part of a cashless grant, in accordance with the 2015 Plan, resulting in a net of 32,180 shares vested. Stock compensation of $136,018 and $533,919 was recorded on the issuance of the common stock for the three and six months ended June 30, 2024 respectively.     Stock Options   We did not make any stock option grants during the six months ended June 30, 2024 or 2023.   A summary of stock option activity during the six months ended June 30, 2024 and 2023 is as follows:                   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 years     $           -   Forfeited     (4,000 )     4.63                   Outstanding at June 30, 2024     353,887     $ 5.07       7 years     $ -                                     Exercisable at June 30, 2024     256,138     $ 5.75       7 years     $ -                     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 years     $ 19,200   Forfeited     (5,000 )     4.00                   Outstanding at June 30, 2023     360,447     $ 5.92       8 years     $ 19,200                                     Exercisable at June 30, 2023     165,654     $ 6.32       7 years     $ 19,200     During the three and six months ended June 30, 2024 and 2023, stock-based compensation for options was $115,456 and $230,912, and $115,456 and $233,618, respectively.   As of June 30, 2024 and December 31, 2023, there were $317,069 and $547,981, respectively, of total unrecognized compensation costs related to stock options granted under our stock option agreements. The unrecognized compensation cost is expected to be recognized over a weighted-average period of one year. The total fair value of stock options that vested during the six months ended June 30, 2024 and 2023 was $379,985 and $390,221, respectively.

Concentrations	6 Months Ended
	Jun. 30, 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 June 30, 2024 and 2023, our largest customer, the State of Michigan, accounted for 41% and 36%, respectively, of our total revenues. During the six months ended June 30, 2024 and 2023, our largest customer, the State of Michigan, accounted for 45% and 35%, respectively, of our total revenues.   For the three months ended June 30, 2024 and 2023, government contracts, including K-12 education, represented approximately 87% and 79%, respectively, of our net revenues. For the six months ended June 30, 2024 and 2023, government contracts, including K-12 education, represented approximately 87% and 76%, respectively, of our net revenues. A significant portion of our sales to resellers represent ultimate sales to government or K-12 education.   As of June 30, 2024 and 2023, accounts receivable concentrations from our largest customer was 62% of our gross accounts receivable for each period.

Subsequent Events	6 Months Ended
	Jun. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	13. Subsequent Events   Transfer of 2022 Notes   Effective July 19, 2024, a holder of our 2022 Unrelated Notes sold notes totaling $250,000 to related parties, including Robert F. Taglich and Michael N. Taglich, each beneficial owners of more than 5% of our common stock.  This results in a reclassification of $250,000 from unrelated notes to related notes.  There was no fee or premium or discount on the transaction. Additionally, all loan terms and the effective interest rate of the note remain unchanged. Robert F. Taglich and Michael N. Taglich are both principals of Taglich Brothers, Inc., and Michael N. Taglich is chairman of the board of directors of Intellinetics.

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 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% 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	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 losses (“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.   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 June 30, 2024 and December 31, 2023, our allowance for credit losses was $120,365 and $124,103, respectively.   Changes in the allowance for credit losses for the periods ended June 30, 2024 and 2023 were as follows:       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 )       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 ) (Provisions) Reductions charged to operating results   $ (5,786 ) Accounts write-offs   $ 0   As of June 30, 2023   $ (114,219 )
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 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 on March 28, 2024.   Contract balances   The following table present changes in our contract assets during the six months ended June 30, 2024 and 2023:       Balance at Beginning of Period     Billings     Payments Received     Balance at End of Period   Six months ended June 30, 2024                                 Accounts receivable   $ 1,850,375     $ 8,889,383 $ (9,290,570 )   $ 1,449,188                                     Six months ended June 30, 2023                                 Accounts receivable   $ 1,121,083     $ 7,342,400     $ (7,136,497 )   $ 1,326,986         Balance at Beginning of Period     Revenue Recognized in Advance of Billings     Billings     Balance at End of Period   Six months ended June 30, 2024                                 Accounts receivable, unbilled   $ 1,320,837     $ 2,972,740     $ (2,810,264 )   $ 1,483,313                                     Six months ended June 30, 2023                                 Accounts receivable, unbilled   $ 596,410     $ 2,703,932     $ (2,262,329 )   $ 1,038,013         Balance at Beginning of Period     Commissions Paid     Commissions Recognized     Balance at End of Period   Six months ended June 30, 2024                                 Other contract assets   $ 140,165     $ 48,483     $ (47,434 )   $ 141,214                                     Six months ended June 30, 2023                                 Other contract assets   $ 80,378     $ 80,077     $ (63,985 )   $ 96,470     Deferred revenue   Amounts that have been invoiced are recognized in accounts receivable, deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenues typically relate to maintenance and software-as-a-service agreements which have been paid for by customers prior to the performance of those services, and payments received for professional services and license arrangements and software-as-a-service performance obligations that have been deferred until fulfilled under our revenue recognition policy.     Remaining performance obligations represent the transaction price from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately 99% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter. As of June 30, 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 $35,657. As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations for software as a service and software maintenance contracts with a duration greater than one year was $72,212. This does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less.   The following table presents changes in our contract liabilities during the six months ended June 30, 2024 and 2023:       Balance at                 Balance at       Beginning           Recognized     End of       of Period     Billings     Revenue     Period   Six months ended June 30, 2024                                 Contract liabilities: Deferred revenue   $ 2,927,808     $ 3,953,386     $ (4,126,009 )   $ 2,755,185                                     Six months ended June 30, 2023                                 Contract liabilities: Deferred revenue   $ 2,754,064     $ 3,522,274     $ (4,208,594 )   $ 2,067,744
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 $88,430 and $198,051 were capitalized during the three and six months ended June 30, 2024. Such costs in the amount of $96,209 and $208,417 were capitalized during the three and six months ended June 30, 2023.   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 June 30, 2024 and December 31, 2023, our condensed consolidated balance sheets included $670,686 and $630,979, respectively, in other long-term assets.   For the three and six months ended June 30, 2024 and 2023, our expensed software development costs were $170,822 and $330,553, respectively, and $140,003 and $271,746, respectively.
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 and six months ended June 30, 2024 and 2023 amounted to $9,426 and $15,403, respectively, and $6,123 and $12,243, respectively.
Earnings (Loss) Per Share	Earnings (Loss) Per Share   Basic income or loss per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted income or loss per share is computed by dividing net income or loss by the diluted weighted average number of shares of common stock outstanding during the period. The diluted weighted average number of shares gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. Diluted earnings per share exclude all diluted potential shares if their effect is anti-dilutive, including warrants or options which are out-of-the-money and for those periods with a net loss.   For the first quarter 2024, certain options and warrants were in-the-money and others were not. For other periods presented, the six months ended June 30, 2024 and the three and six months ended 2023, we have outstanding warrants and stock options which have not been included in the calculation of diluted net loss per share because to do so would be anti-dilutive. The six months ended June 30, 2024 reported a net loss. For the first quarter and six months 2023, no options and warrants were in-the-money. Therefore, for the six months ended June 30,2024 and the three and six months ended June 30, 2023, 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% valuation allowance has been established on deferred tax assets at June 30, 2024 and December 31, 2023, due to the uncertainty of our ability to realize future taxable income.   The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:       June 30, 2024     December 31, 2023   Deferred tax assets                 Reserves and accruals not currently deductible for tax purposes   $ 105,879     $ 69,676   Amortizable assets     133,544       109,612   Net operating loss carryforwards     4,649,089       4,771,762       4,888,512       4,951,050   Deferred tax liabilities                 Amortizable assets     (209,249 )     (197,579 ) Property and equipment     (214,390 )     (214,698 ) Net deferred tax assets     4,464,873       4,538,773   Valuation allowance     (4,464,873 )     (4,538,773 )   $ -     $ -     As of June 30, 2024 and December 31, 2023, we had federal net operating loss carry forwards of approximately $15,477,000 and $15,972,479, respectively, which can be used to offset future federal income tax. A portion of the federal and state net operating loss carry forwards expire at various dates through 2040, and a portion of the net operating loss carry forwards have an indefinite carry forward period. We recorded a valuation allowance against all of our deferred tax assets as of both June 30, 2024, and December 31, 2023. 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	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:       For the three months ended June 30,     For the six months ended June 30,       2024     2023     2024     2023   Revenues                         Document Management   $ 1,859,088     $ 1,879,369     $ 3,679,508     $ 3,705,103   Document Conversion     2,782,505       2,379,061       5,469,169       4,740,160   Total revenues   $ 4,641,593     $ 4,258,430     $ 9,148,677     $ 8,445,263                                     Gross profit                                 Document Management   $ 1,618,537     $ 1,536,385     $ 3,175,430     $ 3,053,746   Document Conversion     1,384,442       1,054,048       2,727,193       2,182,526   Total gross profit   $ 3,002,979     $ 2,590,433     $ 5,902,623     $ 5,236,272                                     Capital additions, net                                 Document Management   $ 104,421     $ 96,209     $ 215,040     $ 212,250   Document Conversion     166,413       60,323       183,726       78,851   Total capital additions, net   $ 270,834     $ 156,532     $ 398,766     $ 291,101         June 30, 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         June 30, 2024     December 31, 2023   Total assets                 Document Management   $ 9,594,575     $ 10,104,004   Document Conversion     9,268,149       8,922,256   Total assets   $ 18,862,724     $ 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.
Reclassifications	Reclassifications   Certain amounts reported in prior filings of the condensed consolidated financial statements have been reclassified to conform to current presentation.

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2024
Accounting Policies [Abstract]
Schedule of Allowance for Credit Losses	Changes in the allowance for credit losses for the periods ended June 30, 2024 and 2023 were as follows:       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 )       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 ) (Provisions) Reductions charged to operating results   $ (5,786 ) Accounts write-offs   $ 0   As of June 30, 2023   $ (114,219 )
Schedule of Changes in Contract Assets and Liabilities	The following table present changes in our contract assets during the six months ended June 30, 2024 and 2023:       Balance at Beginning of Period     Billings     Payments Received     Balance at End of Period   Six months ended June 30, 2024                                 Accounts receivable   $ 1,850,375     $ 8,889,383 $ (9,290,570 )   $ 1,449,188                                     Six months ended June 30, 2023                                 Accounts receivable   $ 1,121,083     $ 7,342,400     $ (7,136,497 )   $ 1,326,986         Balance at Beginning of Period     Revenue Recognized in Advance of Billings     Billings     Balance at End of Period   Six months ended June 30, 2024                                 Accounts receivable, unbilled   $ 1,320,837     $ 2,972,740     $ (2,810,264 )   $ 1,483,313                                     Six months ended June 30, 2023                                 Accounts receivable, unbilled   $ 596,410     $ 2,703,932     $ (2,262,329 )   $ 1,038,013         Balance at Beginning of Period     Commissions Paid     Commissions Recognized     Balance at End of Period   Six months ended June 30, 2024                                 Other contract assets   $ 140,165     $ 48,483     $ (47,434 )   $ 141,214                                     Six months ended June 30, 2023                                 Other contract assets   $ 80,378     $ 80,077     $ (63,985 )   $ 96,470     The following table presents changes in our contract liabilities during the six months ended June 30, 2024 and 2023:       Balance at                 Balance at       Beginning           Recognized     End of       of Period     Billings     Revenue     Period   Six months ended June 30, 2024                                 Contract liabilities: Deferred revenue   $ 2,927,808     $ 3,953,386     $ (4,126,009 )   $ 2,755,185                                     Six months ended June 30, 2023                                 Contract liabilities: Deferred revenue   $ 2,754,064     $ 3,522,274     $ (4,208,594 )   $ 2,067,744
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:       June 30, 2024     December 31, 2023   Deferred tax assets                 Reserves and accruals not currently deductible for tax purposes   $ 105,879     $ 69,676   Amortizable assets     133,544       109,612   Net operating loss carryforwards     4,649,089       4,771,762       4,888,512       4,951,050   Deferred tax liabilities                 Amortizable assets     (209,249 )     (197,579 ) Property and equipment     (214,390 )     (214,698 ) Net deferred tax assets     4,464,873       4,538,773   Valuation allowance     (4,464,873 )     (4,538,773 )   $ -     $ -
Schedule of Segment Information	Information by operating segment is as follows:       For the three months ended June 30,     For the six months ended June 30,       2024     2023     2024     2023   Revenues                         Document Management   $ 1,859,088     $ 1,879,369     $ 3,679,508     $ 3,705,103   Document Conversion     2,782,505       2,379,061       5,469,169       4,740,160   Total revenues   $ 4,641,593     $ 4,258,430     $ 9,148,677     $ 8,445,263                                     Gross profit                                 Document Management   $ 1,618,537     $ 1,536,385     $ 3,175,430     $ 3,053,746   Document Conversion     1,384,442       1,054,048       2,727,193       2,182,526   Total gross profit   $ 3,002,979     $ 2,590,433     $ 5,902,623     $ 5,236,272                                     Capital additions, net                                 Document Management   $ 104,421     $ 96,209     $ 215,040     $ 212,250   Document Conversion     166,413       60,323       183,726       78,851   Total capital additions, net   $ 270,834     $ 156,532     $ 398,766     $ 291,101         June 30, 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         June 30, 2024     December 31, 2023   Total assets                 Document Management   $ 9,594,575     $ 10,104,004   Document Conversion     9,268,149       8,922,256   Total assets   $ 18,862,724     $ 19,026,260

Intangible Assets, Net (Tables)	6 Months Ended
	Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Intangible Assets	At June 30, 2024, intangible assets consisted of the following:       Estimated         Accumulated             Useful Life   Costs     Amortization     Net   Trade names   10 years   $ 297,000     $ (91,617 )   $ 205,383   Proprietary technology   10 years     861,000       (193,725 )     667,275   Customer relationships   5-15 years     4,091,000       (1,309,475 )     2,781,525           $ 5,249,000     $ (1,594,817 )   $ 3,654,183     At December 31, 2023, intangible assets consisted of the following:       Estimated         Accumulated             Useful Life   Costs     Amortization     Net   Trade names   10 years   $ 297,000     $ (76,767 )   $ 220,233   Proprietary technology   10 years     861,000       (150,675 )     710,325   Customer relationships   5-15 years     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	For the Twelve Months Ending June 30,   Amount   2024   $ 505,941   2025     431,441   2026     326,108   2027     319,316   2028     305,733   Thereafter     1,765,644     $ 3,654,183

Property and Equipment (Tables)	6 Months Ended
	Jun. 30, 2024
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment	Property and equipment are comprised of the following:       June 30, 2024     December 31, 2023   Computer hardware and purchased software   $ 1,633,177     $ 1,437,023   Leasehold improvements     395,919       395,919   Furniture and fixtures     324,296       324,296       2,353,392       2,157,238   Less: accumulated depreciation     (1,354,116 )     (1,232,981 ) Property and equipment, net   $ 999,276     $ 924,257

Notes Payable – Unrelated Parties (Tables)	6 Months Ended
	Jun. 30, 2024
Nonrelated Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Schedule of Notes Payable	The tables below summarize all notes payable at June 30, 2024 and December 31, 2023, respectively, with the exception of related party notes disclosed in Note 9 “Notes Payable - Related Parties.”       June 30, 2024     December 31, 2023   Notes payable – “2022 Unrelated Notes”   $ 1,539,500     $ 2,364,500   Less unamortized debt issuance costs     (72,188 )     (155,258 ) Long-term portion of notes payable   $ 1,467,312     $ 2,209,242     Subordinated Notes Payable   Issue Date     Interest Rate     Interest Due     Principal Due   $ 1,539,500     April 1, 2022       12 %     Quarterly       December 31, 2025

Notes Payable - Related Parties (Tables)	6 Months Ended
	Jun. 30, 2024
Related Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Schedule of Notes Payable	The tables below summarize all notes payable to related parties at June 30, 2024 and December 31, 2023:       June 30, 2024     December 31, 2023   Notes payable – “2022 Related Note”   $ 600,000     $ 600,000                     Less unamortized debt issuance costs     (27,937 )     (39,398 ) Long-term portion of notes payable   $ 572,063     $ 560,602     Subordinated Notes Payable   Issue Date     Interest Rate     Interest Due     Principal Due   2022 Related Note     April 1, 2022       12 %     Quarterly       December 31, 2025

Commitments and Contingencies (Tables)	6 Months Ended
	Jun. 30, 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.   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:   For the twelve months ending June 30,   Finance Leases     Operating Leases   2025   $ 89,954     $ 957,371   2026     89,954       936,852   2027     71,204       443,008   2028     63,855       311,010   2029     39,194       35,100   Thereafter     1,883       -   Less Imputed Interest     (70,554 )     (288,511 )     $ 285,490     $ 2,394,830
Summary of Components of Lease Expense	The following table summarizes the components of lease expense:   For the three months ending June 30,   2024     2023   Finance lease expense:                 Amortization of ROU asset   $ 18,186     $ 8,252   Interest on lease liabilities     6,958       3,594   Operating lease expense     235,039       238,864   Short-term lease expense     4,814       4,814     For the six months ending June 30,   2024     2023   Finance lease expense:                 Amortization of ROU asset   $ 34,954     $ 14,959   Interest on lease liabilities     13,426       6,426   Operating lease expense     469,478       476,312   Short-term lease expense     9,627       9,627
Schedule of Additional Information Pertaining to Leases	The following tables set forth additional information pertaining to our leases:   For the six months ending June 30,   2024     2023   Cash paid for amounts included in the measurement of lease liabilities:                 Financing cash flows from finance leases (interest)   $ 13,426     $ 6,426   Financing cash flows from finance leases (principal)     29,668       12,312   Operating cash flows from operating leases     380,661       348,284   ROU assets obtained in exchange for new finance lease liabilities     89,289       30,879   Weighted average remaining lease term – finance leases     4.1 years       5.2 years   Weighted average remaining lease term – operating leases     3.1 years       4.0 years   Weighted average discount rate – finance leases     9.73 %     8.25 % Weighted average discount rate – operating leases     6.95 %     6.95 %

Stockholders’ Equity (Tables)	6 Months Ended
	Jun. 30, 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:   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 June 30, 2024:   Warrants Outstanding   Warrant Exercise Price     Warranty Expiry 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 (Tables)	6 Months Ended
	Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]
Schedule of Stock Options Activity	A summary of stock option activity during the six months ended June 30, 2024 and 2023 is as follows:                   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 years     $           -   Forfeited     (4,000 )     4.63                   Outstanding at June 30, 2024     353,887     $ 5.07       7 years     $ -                                     Exercisable at June 30, 2024     256,138     $ 5.75       7 years     $ -                     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 years     $ 19,200   Forfeited     (5,000 )     4.00                   Outstanding at June 30, 2023     360,447     $ 5.92       8 years     $ 19,200                                     Exercisable at June 30, 2023     165,654     $ 6.32       7 years     $ 19,200

Business Organization and Nature of Operations (Details Narrative)	6 Months Ended
	Jun. 30, 2024 Segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments	2

Schedule of Allowance for Credit Losses (Details) - USD ($)	3 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023
Accounting Policies [Abstract]
Trade receivables, beginning balance	$ (109,515)	$ (124,103)	$ (108,433)	$ (88,331)
Provisions reductions charged to operating results	(10,850)	14,588	(5,786)	(21,742)
Accounts write-offs	0		0	1,640
Trade receivables, ending balance	$ (120,365)	$ (109,515)	$ (114,219)	$ (108,433)

Schedule of Changes in Contract Assets and Liabilities (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Offsetting Assets [Line Items]
Balance at beginning of period	$ 140,165
Commissions paid
Commissions recognized
Balance at ending of period	141,214
Deferred revenue, balance at beginning of period	2,927,808	$ 2,754,064
Billings	3,953,386	3,522,274
Recognized revenue	(4,126,009)	(4,208,594)
Deferred revenue, balance at end of period	2,755,185	2,067,744
Accounts Receivable [Member]
Offsetting Assets [Line Items]
Balance at beginning of period	1,850,375	1,121,083
Billings	8,889,383	7,342,400
Payments Received	(9,290,570)	(7,136,497)
Balance at ending of period	1,449,188	1,326,986
Accounts Receivable Unbilled [Member]
Offsetting Assets [Line Items]
Balance at beginning of period	1,320,837	596,410
Billings	(2,810,264)	(2,262,329)
Balance at ending of period	1,483,313	1,038,013
Revenue recognized in advance of billings	2,972,740	2,703,932
Othe Contract Assests [Member]
Offsetting Assets [Line Items]
Balance at beginning of period	140,165	80,378
Commissions paid	48,483	80,077
Commissions recognized	(47,434)	(63,985)
Balance at ending of period	$ 141,214	$ 96,470

Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Deferred tax assets
Reserves and accruals not currently deductible for tax purposes	$ 105,879	$ 69,676
Amortizable assets	133,544	109,612
Net operating loss carryforwards	4,649,089	4,771,762
Deferred tax assets, gross	4,888,512	4,951,050
Deferred tax liabilities
Amortizable assets	(209,249)	(197,579)
Property and equipment	(214,390)	(214,698)
Net deferred tax assets	4,464,873	4,538,773
Valuation allowance	(4,464,873)	(4,538,773)
Deferred tax assets, net

Schedule of Segment Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Total revenues	$ 4,641,593	$ 4,258,430	$ 9,148,677	$ 8,445,263
Total gross profit	3,002,979	2,590,433	5,902,623	5,236,272
Total capital additions, net	270,834	156,532	398,766	291,101
Total goodwill	5,789,821		5,789,821		$ 5,789,821
Total assets	18,862,724		18,862,724		19,026,260
Document Management [Member]
Total revenues	1,859,088	1,879,369	3,679,508	3,705,103
Total gross profit	1,618,537	1,536,385	3,175,430	3,053,746
Total capital additions, net	104,421	96,209	215,040	212,250
Total goodwill	3,989,645		3,989,645		3,989,645
Total assets	9,594,575		9,594,575		10,104,004
Document Conversion [Member]
Total revenues	2,782,505	2,379,061	5,469,169	4,740,160
Total gross profit	1,384,442	1,054,048	2,727,193	2,182,526
Total capital additions, net	166,413	$ 60,323	183,726	$ 78,851
Total goodwill	1,800,176		1,800,176		1,800,176
Total assets	$ 9,268,149		$ 9,268,149		$ 8,922,256

Summary of Significant Accounting Policies (Details Narrative)	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) Segment	Jun. 30, 2023 USD ($)	Mar. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Property, Plant and Equipment [Line Items]
Allowance for doubtful accounts receivable	$ 120,365	$ 114,219	$ 120,365	$ 114,219	$ 109,515	$ 124,103	$ 108,433	$ 88,331
Revenue performance obligations percentage	99.00%		99.00%
Revenue, remaining performance obligation, amount	$ 35,657		$ 35,657			72,212
Other long-term assets	670,686		670,686			630,979
Advertising expense	9,426	6,123	$ 15,403	12,243
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
Number of operating segments | Segment			2
Domestic Tax Jurisdiction [Member]
Property, Plant and Equipment [Line Items]
Federal net operating loss carry forwards	15,477,000		$ 15,477,000			$ 15,972,479
Software Development [Member]
Property, Plant and Equipment [Line Items]
Capitalized computer software, additions	88,430	96,209	198,051	208,417
Research and development expense	$ 170,822	$ 140,003	$ 330,553	$ 271,746
Intellinetics Ohio and Graphic Sciences [Member]
Property, Plant and Equipment [Line Items]
Percentage of voting rights outstanding	50.00%		50.00%

Schedule of Intangible Assets (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Intangible assets, cost	$ 5,249,000	$ 5,249,000
Intangible assets, accumulated amortization	(1,594,817)	(1,339,662)
Intangible assets, net	$ 3,654,183	$ 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	(91,617)	(76,767)
Intangible assets, net	$ 205,383	$ 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	(193,725)	(150,675)
Intangible assets, net	667,275	710,325
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, cost	4,091,000	4,091,000
Intangible assets, accumulated amortization	(1,309,475)	(1,112,220)
Intangible assets, net	$ 2,781,525	$ 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 Expense for Intangible Assets (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
2024	$ 505,941
2025	431,441
2026	326,108
2027	319,316
2028	305,733
Thereafter	1,765,644
Intangible assets	$ 3,654,183	$ 3,909,338

Intangible Assets, Net (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 127,578	$ 127,577	$ 255,155	$ 255,154

Fair Value Measurements (Details Narrative) - USD ($)		1 Months Ended	6 Months Ended
	Jun. 30, 2024	Jan. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Fair Value Disclosures [Abstract]
Final earnout liability	$ 0	$ 700,000		$ 700,000

Schedule of Property and Equipment (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Abstract]
Computer hardware and purchased software	$ 1,633,177	$ 1,437,023
Leasehold improvements	395,919	395,919
Furniture and fixtures	324,296	324,296
Property and equipment, gross	2,353,392	2,157,238
Less: accumulated depreciation	(1,354,116)	(1,232,981)
Property and equipment, net	$ 999,276	$ 924,257

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Property, Plant and Equipment [Abstract]
Depreciation	$ 63,321	$ 64,675	$ 125,149	$ 126,614

Schedule of Notes Payable (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Nonrelated Party [Member]
Short-Term Debt [Line Items]
Long-term portion of notes payable	$ 1,467,312	$ 2,209,242
Related Party [Member]
Short-Term Debt [Line Items]
Long-term portion of notes payable	572,063	560,602
2022 Unrelated Notes [Member] | Nonrelated Party [Member]
Short-Term Debt [Line Items]
Notes payable – “2022 Related Note”	1,539,500	2,364,500
Less unamortized debt issuance costs	(72,188)	(155,258)
Long-term portion of notes payable	1,467,312	2,209,242
Subordinated notes payable	$ 1,539,500
Issue date	Apr. 01, 2022
Interest rate	12.00%
Interest due	Quarterly
Principal due	Dec. 31, 2025
2022 Related Notes [Member] | Related Party [Member]
Short-Term Debt [Line Items]
Notes payable – “2022 Related Note”	$ 600,000	600,000
Less unamortized debt issuance costs	(27,937)	(39,398)
Long-term portion of notes payable	$ 572,063	$ 560,602
Issue date	Apr. 01, 2022
Interest rate	12.00%
Interest due	Quarterly
Principal due	Dec. 31, 2025

Notes Payable – Unrelated Parties (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Defined Benefit Plan Disclosure [Line Items]
Accrued interest	$ 0		$ 0		$ 0
Nonrelated Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Future minimum payments, unrelated party Jun 30, 2026	1,539,500		1,539,500
Interest expense	$ 83,159	$ 136,136	$ 207,884	$ 287,741

Notes Payable - Related Parties (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Defined Benefit Plan Disclosure [Line Items]
Accrued interest	$ 0		$ 0		$ 0
Related Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Accrued interest	0		0		$ 0
Related Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Future minimum payments, related party June 30, 2026	600,000		600,000
Interest expense	$ 22,656	$ 25,880	$ 47,461	$ 51,759

Schedule of Operating Lease (Details)	6 Months Ended
	Jun. 30, 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 MI [Member]
Product Liability Contingency [Line Items]
Land | ft²	36,000
Vehichle rent expense	$ 44,048
Lease expiry	August 31, 2026
Sterling Heights MI [Member]
Product Liability Contingency [Line Items]
Land | ft²	37,000
Vehichle rent expense	$ 21,692
Lease expiry	April 30, 2028
Traverse City MI [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 Payment for Operating Lease (Details)	Jun. 30, 2024 USD ($)
Finance Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
Finance lease, 2025	$ 89,954
Finance lease, 2026	89,954
Finance lease, 2027	71,204
Finance lease, 2028	63,855
Finance lease, 2029	39,194
Thereafter	1,883
Finance lease, Less Imputed interest	(70,554)
Finance Lease	285,490
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
Operating leases, 2025	957,371
Operating leases, 2026	936,852
Operating leases, 2027	443,008
Operating leases, 2028	311,010
Operating leases, 2029	35,100
Thereafter
Operating Lease, less imputed interest	(288,511)
Operating Leases	$ 2,394,830

Summary of Components of Lease Expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Amortization of ROU asset	$ 18,186	$ 8,252	$ 34,954	$ 14,959
Interest on lease liabilities	6,958	3,594	13,426	6,426
Operating lease expense	235,039	238,864	469,478	476,312
Short-term lease expense	$ 4,814	$ 4,814	$ 9,627	$ 9,627

Schedule of Additional Information Pertaining to Leases (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Financing cash flows from finance leases (interest)	$ 13,426	$ 6,426
Financing cash flows from finance leases (principal)	29,668	12,312
Operating cash flows from operating leases	380,661	348,284
ROU assets obtained in exchange for new finance lease liability	$ 89,289	$ 30,879
Weighted average remaining lease term - finance leases	4 years 1 month 6 days	5 years 2 months 12 days
Weighted average remaining lease term - operating leases	3 years 1 month 6 days	4 years
Weighted average discount rate - finance leases	9.73%	8.25%
Weighted average discount rate - operating leases	6.95%	6.95%

Schedule of Shares and Warrants Issued (Details)	6 Months Ended
	Jun. 30, 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	$ 4.00
Warrants issued | shares	95,500
Warrants exercise price	$ 4.00
Warrants Fair value	$ 3.90

Schedule of Warrants to Purchase Common Stock (Details)	6 Months Ended
	Jun. 30, 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	$ 4.00
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	$ 9.00
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	$ 15.00
Warrants expiry	Mar. 30, 2027

Stockholders’ Equity (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares issued	4,230,806		4,230,806		4,113,621
Common stock, shares outstanding	4,230,806		4,230,806		4,113,621
Amortization of debt issuance costs			$ 94,531	$ 95,152
Private Placement 2022 [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amortization of debt issuance costs	$ 33,936	$ 6,224	$ 94,531	$ 17,290
2015 and 2025 Equity Incentive Plans [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock capital shares reserved for future issuance	612,952		612,952
2023 Non-Employee Director Compensation Plan [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock capital shares reserved for future issuance	150,000		150,000
Exercise of Outstanding Warrants [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock capital shares reserved for future issuance	255,958		255,958

Schedule of Stock Options Activity (Details) - Equity Option [Member] - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 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	(4,000)	(5,000)
Weighted- Average Exercise Price, Forfeited	$ 4.63	$ 4.00
Shares Under Option, Outstanding ending balance	353,887	360,447	357,887
Weighted- Average Exercise Price, Outstanding ending balance	$ 5.07	$ 5.92	$ 5.69
Aggregate Intrinsic Value, Outstanding ending balance		$ 19,200
Shares Under Option, Exercisable ending balance	256,138	165,654
Weighted- Average Exercise Price, Exercisable ending balance	$ 5.75	$ 6.32
Weighted Average Remaining Contractual Life Outstanding, beginning	7 years	7 years
Aggregate Intrinsic Value, Exercisable ending balance		$ 19,200

Stock-Based Compensation (Details Narrative) - USD ($)					3 Months Ended		6 Months Ended
	Apr. 02, 2026	Apr. 02, 2025	Apr. 02, 2024	Mar. 19, 2024	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Issuance of the common stock					$ 136,018		$ 533,919
Stock-based compensation for options					115,456	$ 115,456	230,912	$ 233,618
Unrecognized compensation costs					$ 317,069		317,069		$ 547,981
Fair value of stock options							$ 379,985	$ 390,221
2015 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares, vested			32,180
Number of shares, cancelled			10,315
Number of value, cancelled			$ 69,525
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 Narrative) - Customer Concentration Risk [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
State of Michigan [Member] | Revenue from Contract with Customer Benchmark [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	41.00%	36.00%	45.00%	35.00%
Government Contracts [Member] | Revenue from Contract with Customer Benchmark [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	87.00%	79.00%	87.00%	76.00%
Customer One [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			62.00%

Subsequent Events (Details Narrative) - Subsequent Event [Member]	Jul. 19, 2024 USD ($)
Robert F. Taglich and Michael N. Taglich [Member] | Minimum [Member]
Subsequent Event [Line Items]
Ownership percentage	5.00%
Robert F. Taglich and Michael N. Taglich [Member]
Subsequent Event [Line Items]
Sales of notes	$ 250,000
Conversion of notes	$ 250,000

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