INTELLINETICS, INC.

Previous wording

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, 2024. 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, 2025 as the second quarter 2025 and the six-month period 2025 respectively, and to the three and six-month periods ended June 30, 2024 as the second quarter 2024 and the six-month period 2024.

Current wording

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, 2024. 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 nine-month periods ended September 30, 2025 as the third quarter 2025 and the nine-month period 2025 respectively, and to the three and nine-month periods ended September 30, 2024 as the third quarter 2024 and the nine-month period 2024.

Previous wording

There has been no material change during the six-month period 2025 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, 2024.

Current wording

There has been no material change during the nine-month period 2025 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, 2024.

Previous wording

Our 2025 results reflect the impact of two unrelated factors affecting our revenue. First, our document conversion segment was negatively impacted by a temporary reduction in volume prior to our June 1, 2025 contract renewal with our largest customer. We have since taken orders to refill the backlog and expect production to resume at more historical levels. Second and to a much lesser degree, our document management segment faced longer lead times to secure orders due to economic uncertainty, primarily in our homebuilder construction and K-12 education vertical markets, hindering the growth of our software as a service solutions in those markets. Our gross margins remained stable by revenue source, increasing overall for both the second quarter 2025 and the six-month period 2025 over the respective 2024 periods primarily from a favorable mix of revenues shift.

Current wording

Our 2025 results reflect the impact of two unrelated factors affecting our revenue. First, our document conversion segment was negatively impacted by a temporary reduction in volume prior to our June 1, 2025 contract renewal with our largest customer. We have since taken orders to refill the backlog and expect production to resume at more historical levels. Second and to a much lesser degree, our document management segment faced longer lead times to secure orders due to economic uncertainty, primarily in our homebuilder construction and K-12 education vertical markets, hindering the growth of our SaaS solutions in those markets. Our gross margins remained stable by revenue source, as well as increasing as percentage of revenue overall for both the third quarter 2025 and the nine-month period 2025 over the respective 2024 periods primarily from relatively more high-margin revenues, like SaaS.

Previous wording

Below are our key financial results for the second quarter 2025 (consolidated unless otherwise noted):

Current wording

Below are our key financial results for the third quarter 2025 (consolidated unless otherwise noted):

Previous wording

Below are our key financial results for the six-month period 2025 (consolidated unless otherwise noted):

Current wording

Below are our key financial results for the nine-month period 2025 (consolidated unless otherwise noted):

Previous wording

Our overall performance depends on economic conditions, and our continuing growth will be due in part to continued growth in the US economy and stability of state and local governmental spending in the US. We do not have direct risk exposure to federal spending levels, but we could face exposure indirectly if federal spending reductions have a corresponding effect on state and local budgets, particularly in the K-12 Education sector. Our performance will also continue to be affected by uncertainty with respect to wage inflation, as well as slowing-to-modest global growth rates.

Current wording

Our overall performance depends on economic conditions, and the level to which we can implement our growth plans will be due in part to continued growth in the US economy and stability of state and local governmental spending in the US. We do not have direct risk exposure to federal spending levels, but we could face exposure indirectly if federal spending reductions have a corresponding effect on state and local budgets, particularly in the K-12 Education sector. Our performance will also continue to be affected by uncertainty with respect to wage inflation, as well as slowing-to-modest global growth rates.

Previous wording

Volatility from increased trade protectionism is likely to have a minimal direct impact on us because we consume relatively little in raw materials. However, we have customers in industries that may be affected, such as homebuilding and construction. Additionally, the homebuilding and construction industries continue to be affected by a higher interest rate environment. Any industry-specific or macroeconomic downturn could affect our customers’ and potential customers’ budgets for technology procurement and stall our growth plans. 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 our focus on our strategic priorities.

Current wording

Volatility from increased trade protectionism is likely to have a minimal direct impact on us because we consume relatively little in raw materials. However, we have customers in industries that have been affected, such as homebuilding and construction. Additionally, the homebuilding and construction industries continue to be affected by a higher interest rate environment. Industry-specific or macroeconomic downturns affected and could continue to affect our customers’ and potential customers’ budgets for technology procurement and continue to stall our growth plans. Absent further 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 our focus on our strategic priorities.

Previous wording

Revenues were down for the second quarter and six-month period 2025 by $630,780, or 13.6%, and $890,519, or 9.7%, respectively, primarily driven by a reduction in professional services in our document conversion segment. Professional services were negatively impacted by a temporary reduction in volume prior to our June 1, 2025 contract renewal with our largest customer. This reduction more than offset our SaaS growth.

Current wording

Revenues were down for the third quarter and nine-month period 2025 by $588,180, or 12.8%, and $1,478,699, or 10.8%, respectively, primarily driven by a reduction in professional services in our document conversion segment. Professional services were negatively impacted by a temporary reduction in volume prior to our June 1, 2025 contract renewal with our largest customer. This reduction more than offset our SaaS growth.

Previous wording

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 $176,513, or 12.6%, in the second quarter 2025 compared to the second quarter 2024 and increased by $313,529, or 11.2% in the six-month period 2025 compared to the six-month period 2024. This increase was primarily the result of new payables automation customers.

Current wording

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 $204,311, or 14.6%, in the third quarter 2025 compared to the third quarter 2024 and increased by $517,840, or 12.3% in the nine-month period 2025 compared to the nine-month period 2024. This increase was primarily the result of new payables automation customers.

Previous wording

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 2025 and six-month period 2025, $1,806,656 and $3,881,019, respectively, were derived from our Document Conversion operations and $92,963 and $176,915, respectively, were derived from our Document Management operations. Our overall professional services revenues decreased by $777,672, or 29.0%, in the second quarter 2025 compared to the second quarter 2024 and decreased by $1,104,814, or 21.4%, in the six-month period 2025 compared to the six-month period 2024. This decrease is the result of reduced scanning projects in our Document Conversion segment, due to timing of projects, which experienced an unusually low ebb in backlog that corresponded with the expiry of our prior contract with our largest customer, prior to the renewal on June 1, 2025. We have since taken orders to refill the backlog and expect production to resume at more historical levels.

Current wording

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 third quarter 2025 and nine-month period 2025, our Document Conversion operations contributed $1,783,285 and $5,664,304, respectively, and our Document Management operations contributed $98,690 and $275,605, respectively. Our overall professional services revenues decreased by $731,589, or 28.0%, in the third quarter 2025 compared to the third quarter 2024 and decreased by $1,836,403, or 23.6%, in the nine-month period 2025 compared to the nine-month period 2024. This decrease is the result of reduced scanning projects in our Document Conversion segment, due to timing of projects, which experienced an unusually low ebb in backlog that corresponded with the expiry of our prior contract with our largest customer, prior to the renewal on June 1, 2025. We have since taken orders to refill the backlog and expect production to begin to ramp up back to more historical levels in Q4 2025.

Previous wording

Our total cost of revenues during the second quarter 2025 decreased by $354,358, or 21.6%, from second quarter 2024 and decreased by $583,653, or 18.0%, during the six-month period 2025 from the six-month period 2024. Our cost of revenues for our Document Management segment increased by $48,698, or 20.3%, in the second quarter 2025 compared to the second quarter 2024 and increased $43,016, or 8.5%, in the six-month period 2025 compared to the six-month period 2024 increasing in line with expectations relative to the revenue growth. Our cost of revenues for our Document Conversion segment decreased by $403,056, or 28.8%, in the second quarter 2025 compared to the second quarter 2024 and decreased by $626,669, or 22.9%, during the six-month period 2025 compared to the six-month period 2024 in proportion to the decreased work volume.

Current wording

Our total cost of revenues during the third quarter 2025 decreased by $409,983, or 22.2%, over third quarter 2024 and decreased by $955,188, or 18.6%, during the nine-month period 2025 over the nine-month period 2024. Our cost of revenues for our Document Management segment increased by $3,815, or 1.4%, in the third quarter 2025 compared to the third quarter 2024 and increased 46,831, or 6.1%, in the nine-month period 2025 compared to the nine-month period 2024 increasing in line with expectations relative to the revenue growth in that segment. Our cost of revenues for our Document Conversion segment decreased by $413,798, or 26.3%, in the third quarter 2025 compared to the third quarter 2024 and decreased by $1,002,019, or 22.9%, during the nine-month period 2025 compared to the nine-month period 2024 corresponding to the decreased work volume.

Previous wording

Our overall gross profit increased to 68.0% in the second quarter 2025 from 64.7% in the second quarter 2024 and increased to 67.8% during the six-month period 2025 from 64.5% for the six-month period 2024. The mix of revenues by source contributed favorably; with more of the higher margin SaaS revenue relative to the lower margin professional services revenue compared to 2024. Within each revenue line item, margins were stable.

Current wording

Our overall gross profit percentage increased to 64.2% in the third quarter 2025 from 59.8% in the third quarter 2024, and increased to 65.8% for the nine-month period 2025 from 62.6% for the nine-month period 2024. The mix of revenues by source contributed favorably; with more of the higher margin SaaS revenue relative to the lower margin professional services revenue compared to 2024. Within each revenue line item, margins were stable, other than professional services, which realized unusually low margins on a significant project in the third quarter 2025. The single, significant project was from our expanding revenue through a partner and our acceptance of this project with atypical parameters which was not scoped correctly.

Previous wording

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 2025 increased by $29,465, or 13.5%, from the second quarter 2024 and increased by $28,602, or 6.6%, during the six-month period 2025 from the six-month period 2024. This increase in the cost of SaaS is in line with the revenue growth, with normal fluctuations based on support demand volumes. Gross profit in the second quarter 2025 decreased to 84.3% compared to 84.5% in the second quarter 2024 and increased to 85.2% during the six-month period 2025 compared to 84.5% during the six-month period 2024.

Current wording

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 third quarter 2025 increased by $13,486, or 5.9%, from the third quarter 2024 and increased by $42,088, or 6.4%, during the nine-month period 2025 over the nine-month period 2024. This increase in the cost of SaaS is in line with the revenue growth, with normal fluctuations based on support demand volumes. Our gross margin in the third quarter 2025 increased to 84.9% compared to 83.7% in the third quarter 2024 and increased to 85.1% in the nine-month period 2025 compared to 84.3% during the nine-month period 2024.

Previous wording

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 2025 decreased by $381,218, or 28.3%, from the second quarter 2024 and decreased in the six-month period 2025 by $630,340, or 23.9%, over the six-month period 2024. The decrease in cost of sales was in line with the decrease in revenues, driven by 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, but remained stable for the periods reported. Our gross margins in professional services decreased to 49.2% in the second quarter 2025 compared to 49.5% in the second quarter 2024 and increased to 50.6% during the six-month period 2025 compared to 48.9% in the six-month period 2024.

Current wording

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 third quarter 2025 decreased by $372,876, or 25.0%, from the third quarter 2024 and decreased in the nine-month period 2025 by $964,768, or 23.1%, from the nine-month period 2024. The decrease in cost of sales was in line with the decrease in revenues, driven by our Document Conversion segment. Gross margins related to both 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, but remained stable for the periods reported, except for the third quarter 2025, where a significant project delivered unusually low margins due to atypical parameters which were not scoped correctly. Our gross margins in professional services decreased to 40.5% in the third quarter 2025 compared to 42.9% in the third quarter 2024 and slightly decreased to 45.9% during the nine-month period 2025 compared to 46.3% in the nine-month period 2024.

Previous wording

General and administrative expenses during the second quarter 2025 increased by $246,425, or 12.2%, over the second quarter 2024, and increased in the six-month period 2025 by $549,966, or 13.2%, over the six-month period 2024, primarily related to incremental share-based compensation expense of $200,641 over the six-month period 2024 and investments made in order to scale, including: our expanded System and Organization Controls 2 (SOC2) process with additional monitoring and controls, expanding our development team in order to accelerate SaaS solution enhancements, and some one-time items such as recruiting fees as we expand our team.

Current wording

General and administrative expenses during the third quarter 2025 decreased by 38,376, or 1.9%, from the third quarter 2024, and increased in the nine-month period 2025 by $473,142, or 7.7%, over the nine-month period 2024. The increase over the nine-month period 2024 is primarily related to investments made in order to scale, including our expanded System and Organization Controls 2 (SOC2) process with additional monitoring and controls, expanding our development team in order to accelerate SaaS solution enhancements, and some one-time items such as recruiting fees as we expand our team, all which are partially offset by reduced bonus expense and reduced share-based compensation expense in the nine-month period 2025 from 2024.

Previous wording

Additionally, share-based compensation expense in total continues to be a significant portion of general and administrative expenses, amounting to $965,471 in the six-month period 2025 and $764,830 in the six-month period 2024. A portion of share-based compensation expense pertains to payments to taxing authorities in connection with shares directly withheld from employees, and is reported in our condensed consolidated statements of cash flow under cash flows from financing activities.

Current wording

Additionally, share-based compensation expense in total continues to be a significant portion of general and administrative expenses, amounting to $1,131,891 in the nine-month period 2025 and $1,254,856 in the nine-month period 2024. A portion of share-based compensation expense pertains to payments to taxing authorities in connection with shares directly withheld from employees, and is reported in our condensed consolidated statements of cash flow under cash flows from financing activities.

Previous wording

In total, our general and administrative expenses in our Document Management segment increased to $1,225,057 in the second quarter 2025 compared to $1,204,509 in the second quarter 2024, and increased to $2,572,778 in the six-month period 2025 compared to $2,349,541 in the six-month period 2024. In our Document Conversion segment, our general and administrative expenses increased to $1,047,164 in the second quarter 2025 compared to $821,287 in the second quarter 2024,and increased to $2,131,477 in the six-month period 2025 compared to $1,804,748 in the six-month period 2024.

Current wording

In our Document Management segment, our general and administrative expenses decreased to $1,041,845 in the third quarter 2025 compared to $1,189,789 in the third quarter 2024, and increased to $3,614,622 in the nine-month period 2025 compared to $3,539,330 in the nine-month period 2024. In our Document Conversion segment, our general and administrative expenses increased to $973,868 in the third quarter 2025 compared to $864,300 in the third quarter 2024, and increased to $3,014,487 in the nine-month period 2025 compared to $2,616,637 in the nine-month period 2024.

Previous wording

Sales and marketing expenses during the second quarter 2025 increased by $124,933, or 23.6%, from the second quarter 2024 and increased by $397,352, or 37.1%, during the six-month period 2025 over the six-month period 2024. The increases are driven by the expansion of our sales team as part of our investments intended to accelerate our sales revenues.

Current wording

Sales and marketing expenses during the third quarter 2025 decreased by $86,531, or 12.3%, from the third quarter 2024 and increased by $310,821, or 17.5%, during the nine-month period 2025 compared to the nine-month period 2024. The reduced third quarter expense is driven primarily by timing of reduced bonus and commission expense, corresponding to lower sales revenues. The nine-month increase is driven by the expansion of our sales team and marketing expenditures as part of our investments intended to accelerate our sales revenues.

Previous wording

Depreciation and amortization during the second quarter 2025 increased by $32,804, or 11.9%, over the second quarter 2024 and increased by $76,479, or 14.2%, during the six-month period 2025 over the six-month period 2024, as a result of increased amortization of capitalized software costs and depreciation on upgraded system infrastructure assets.

Current wording

Depreciation and amortization during the third quarter 2025 increased by $27,723, or 9.6%, over the third quarter 2024 and increased by $104,202, or 12.6%, during the nine-month period 2025 over the nine-month period 2024 as a result of increased amortization of capitalized software costs and increased depreciation on upgraded system infrastructure assets.

Previous wording

Interest expense decreased by $37,944, or 39.1%, in the second quarter 2025 as compared to the second quarter 2024, and decreased by $135,172, or 57.0% during the six-month period 2025 as compared to the six-month period 2024. The decrease resulted from reduced interest resulting from principal repayments in March, June, and August 2024 and culminating in June 2025 with full repayment of notes payable.

Current wording

Interest income in the third quarter 2025 was $9,459 compared to interest expense of $94,639 in the third quarter 2024. During the nine-month period 2025, interest expense decreased by $239,270, or 72.1% as compared to the nine-month period 2024. The decrease resulted from reduced interest resulting from principal repayments in March, June, and August 2024 and culminating in June 2025 with full repayment of notes payable.

Previous wording

In recent years we engaged in several actions that significantly improved our liquidity and cash flows, including (i) effective June 1, 2025 through May 31, 2030, securing a renewal contract with our largest customer, (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 $807,331 in 2022 Unrelated Notes and $532,169 of the 2022 Related Notes, and (iii) on May 28, 2025, we commenced an at-the-market offering, discussed below.

Current wording

In recent years we engaged in several actions that significantly improved our liquidity and cash flows, including (i) effective June 1, 2025 through May 31, 2030, securing a renewal contract with our largest customer, (ii) on May 28, 2025, commencing an at-the-market offering, discussed below, and (iii) repaying all of our debt securities as of June 18, 2025.

Previous wording

At June 30, 2025, we had $2.1 million in cash and cash equivalents, working capital deficit of $0.1 million, of which the largest liabilities include $2.6 million in deferred revenues. Additionally, at June 30, 2025 and December 31, 2024 we had approximately $1.1 million and $1.3 million, respectively, in unbilled accounts receivable. Due to certain customer terms regarding acceptance for certain projects, we have a number of projects where all of the document conversion work is completed, and the associated revenue has been recognized, but we are unable to invoice until the customer has received and approved the images. The balance is also affected by the timing of completion of major projects. We have initiatives in place to further improve process efficiencies and invoice more promptly. 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 flow needs for at least the next 12 months. However, our future cash resources and capital requirements may vary materially from those now planned.

Current wording

At September 30, 2025, we had $3.2 million in cash and cash equivalents and a working capital deficit of $0.1 million, of which the largest liability was $3.6 million in deferred revenues. Additionally, at September 30, 2025 and December 31, 2024 we had approximately $0.7 million and $1.3 million, respectively, in unbilled accounts receivable. Due to certain customer terms regarding acceptance for certain projects, we have a number of projects for which all of the document conversion work is completed, and the associated revenue has been recognized, but we are unable to invoice until the customer has received and approved the images. The unbilled accounts receivable balance is also affected by the timing of completion of major projects. 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 flow needs for at least the next 12 months. However, our future cash resources and capital requirements may vary materially from those now planned.

Previous wording

We maintain an effective registration statement (the “Registration Statement”) covering up to $12.9 million of common stock, warrants, and units. The Registration Statement includes a prospectus covering the offer, issuance and sale of up to $10.0 million in our common stock from time to time in “at-the-market offerings” pursuant to an At the Market Agreement (the “ATM Program”) with Lucid Capital Markets, LLC (“Lucid”) as our sales agent. We have sold 139,945 and 5,993 shares of our common stock pursuant to the ATM Program during the second quarter and the period of July 1, 2025 through the filing date of this Quarterly Report, respectively, and received aggregate net proceeds totaling $174,350. As of the filing date of this Quarterly Report, 2025, approximately $8.2 million remained available under the ATM Program.

Current wording

We maintain an effective registration statement (the “Registration Statement”) covering up to $12.9 million of common stock, warrants, and units. The Registration Statement includes a prospectus covering the offer, issuance and sale of up to $10.0 million in our common stock from time to time in “at-the-market offerings” pursuant to an At the Market Agreement (the “ATM Program”) with Lucid Capital Markets, LLC (“Lucid”) as our sales agent. We have sold 139,945 and 5,993 shares of our common stock pursuant to the ATM Program during the second and third quarters 2025, respectively, and received aggregate net proceeds totaling $1,621,325. As of the filing date of this Quarterly Report, 2025, approximately $8.2 million remained available under the ATM Program.

Previous wording

Net cash provided by operating activities during the six-month period 2025 was $112,521, primarily attributable to the net income adjusted for non-cash expenses of $1,698,350, a decrease in operating assets of $424,943 and a decrease in operating liabilities of $715,617. Net cash provided by operating activities during the six-month period 2024 was $1,788,381, primarily attributable to the net income adjusted for non-cash expenses of $1,433,368, a decrease in operating assets of $286,249 and an increase in operating liabilities of $168,428.

Current wording

Net cash provided by operating activities during the nine-month period 2025 was $1,463,711, primarily attributable to the net income adjusted for non-cash expenses of $2,198,402, a decrease in operating assets of $678,393 and an increase in operating liabilities of $251,836. Net cash provided by operating activities during the nine-month period 2024 was $3,721,943, primarily attributable to the net income adjusted for non-cash expenses of $2,273,225, a decrease in operating assets of $780,011 and an increase in operating liabilities of $1,161,221.

Previous wording

Net cash used in investing activities in the six-month period 2025 was $471,904, including $209,171 in capitalized software. Net cash used in investing activities in the six-month period 2024 was $398,766, including $198,051 in capitalized software.

Current wording

Net cash used in investing activities in the nine-month period 2025 was $677,868, including $344,075 in capitalized software. Net cash used in investing activities in the nine-month period 2024 was $695,359, including $302,396 in capitalized software.

Previous wording

Net cash used in financing activities during the six-month period 2025 amounted to $58,378, including $1,716,957 in gross proceeds from the issuance of common stock, offset by $118,629 in costs paid for issuance of common stock, $1,339,500 in repayment of notes payable, $283,411 related to the exercise of share-based compensation and warrants, and $33,795 in the principal portion of payments on the finance lease liabilities. 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 payments on the finance lease liabilities.

Current wording

Net cash used by financing activities during the nine-month period 2025 amounted $52,900, including $1,797,106 in gross proceeds from the issuance of common stock, offset by $51,314 in the principal portion of payments on the finance lease liabilities, $175,781 in costs paid for issuance of common stock, $1,339,500 in repayment of notes payable, and $283,411 related to share-based compensation and warrants, primarily withholdings on vesting of restricted stock awards. Net cash used by financing activities during the nine-month period 2024 amounted to $1,625,000 in repayment of notes payable, $69,526 related to share-based compensation and warrants, and $45,577 in the principal portion of a finance lease liability.

Previous wording

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, 2024. There were no material changes to our critical accounting policies and estimates during the second quarter 2025.

Current wording

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, 2024. There were no material changes to our critical accounting policies and estimates during the third quarter 2025.