CoreCard (CCRD) 10-Q 5 May 20 2020 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Document Information [Line Items]
Entity Registrant Name	INTELLIGENT SYSTEMS CORP
Entity Central Index Key	0000320340
Trading Symbol	ins
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		8,924,988
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Title of 12(b) Security	Common Stock, $0.01 par value for the class

Consolidated Balance Sheets (Cu

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash	$ 30,538	$ 26,415
Accounts receivable, net	8,083	8,759
Other current assets	979	905
Total current assets	39,600	36,079
Investments	2,290	3,081
Notes and interest receivable, net of current portion	2,568	1,795
Property and equipment, at cost less accumulated depreciation	2,414	2,177
Other long-term assets	3,428	1,108
Total assets	50,300	44,240
Current liabilities:
Accounts payable	372	403
Deferred revenue, current portion	4,111	689
Accrued payroll	1,412	2,503
Accrued expenses	293	153
Income tax payable	1,440	1,100
Other current liabilities	1,783	1,345
Total current liabilities	9,411	6,193
Noncurrent liabilities:
Deferred revenue, net of current portion	15	23
Deferred tax liability	275	275
Long-term lease obligation	2,232	460
Total noncurrent liabilities	2,522	758
Intelligent Systems Corporation stockholders’ equity:
Common stock, $0.01 par value, 20,000,000 shares authorized, 8,924,988 issued and outstanding at March 31, 2020 and December 31, 2019, respectively	89	89
Additional paid-in capital	15,512	15,450
Accumulated other comprehensive loss	(125)	(94)
Accumulated income	22,891	21,844
Total Intelligent Systems Corporation stockholders’ equity	38,367	37,289
Total liabilities and stockholders’ equity	$ 50,300	$ 44,240

Consolidated Balance Sheets (_2

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	20,000,000	20,000,000
Common stock, issued (in shares)	8,924,988	8,924,988
Common stock, outstanding (in shares)	8,924,988	8,924,988

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue
Total net revenue	$ 7,893	$ 6,966
Cost of revenue
Total cost of revenue	3,506	2,534
Expenses
Marketing	32	38
General and administrative	1,058	594
Research and development	918	1,195
Income from operations	2,379	2,605
Investment (loss) income	(1,050)	24
Other income, net	136	102
Income before income taxes	1,465	2,731
Income taxes	418	659
Net income	$ 1,047	$ 2,072
Earnings per share attributable to Intelligent Systems Corporation:
Basic (in dollars per share)	$ 0.12	$ 0.23
Diluted (in dollars per share)	$ 0.12	$ 0.23
Basic weighted average common shares outstanding (in shares)	8,924,988	8,841,321
Diluted weighted average common shares outstanding (in shares)	9,021,754	8,990,438
Service [Member]
Revenue
Total net revenue	$ 7,893	$ 6,166
Cost of revenue
Total cost of revenue	3,506	2,534
Product [Member]
Revenue
Total net revenue		800
Cost of revenue
Total cost of revenue

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net income	$ 1,047	$ 2,072
Other comprehensive income (loss):
Foreign currency translation adjustments	(31)	(1)
Unrealized loss on available-for-sale marketable securities
Total comprehensive income	$ 1,016	$ 2,071

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2018	8,817,988
Balance at Dec. 31, 2018	$ 88	$ 15,050	$ (92)	$ 10,875	$ 25,921
Stock options exercised (in shares)	33,000
Stock options exercised	$ 1	58			59
Net income				2,072	2,072
Stock compensation expense		25			25
Foreign currency translation adjustment			(1)		(1)
Balance (in shares) at Mar. 31, 2019	8,850,988
Balance at Mar. 31, 2019	$ 89	15,133	(93)	12,947	28,076
Balance (in shares) at Dec. 31, 2019	8,924,988
Balance at Dec. 31, 2019	$ 89	15,450	(94)	21,844	37,289
Net income				1,047	1,047
Stock compensation expense		62			62
Foreign currency translation adjustment			(31)		(31)
Balance (in shares) at Mar. 31, 2020	8,924,988
Balance at Mar. 31, 2020	$ 89	$ 15,512	$ (125)	$ 22,891	$ 38,367

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
OPERATING ACTIVITIES:
Net income	$ 1,047	$ 2,072
Adjustments to reconcile net income from continuing operations to net cash used for operating activities:
Depreciation and amortization	302	180
Stock-based compensation expense	62	25
Non-cash investment expense	1,009
Non-cash interest income	(32)	(30)
Equity in loss of affiliate company	41
Changes in operating assets and liabilities:
Accounts receivable	676	42
Other current assets	(74)	110
Other long-term assets	(6)	(37)
Accounts payable	(31)
Accrued payroll	(1,091)	140
Deferred revenue, current portion	3,422	124
Accrued expenses	140	56
Other current liabilities	236	1,061
Deferred revenue, net of current portion	(8)	(37)
Net cash provided by operating activities	5,693	3,706
INVESTING ACTIVITIES:
Purchases of property and equipment	(539)	(112)
Advances of notes receivable	(1,000)	(500)
Net cash used for investing activities	(1,539)	(612)
FINANCING ACTIVITIES:
Sale of capital stock pursuant to exercise of option		59
Net cash provided by financing activities		59
Effects of exchange rate changes on cash	(31)	(1)
Net increase in cash	4,123	3,152
Cash at beginning of period	26,415	18,919
Cash at end of period	$ 30,538	$ 22,071

Note 1 - Summary of Significant

Note 1 - Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Notes to Financial Statements
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]	1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Throughout this report, the terms “we”, “us”, “ours”, “ISC” and “company” refer to Intelligent Systems Corporation, including its wholly-owned and majority-owned subsidiaries. The unaudited Consolidated Financial Statements presented in this Form 10 not three March 31, 2020 2019. three March 31, 2020 not December 31, 2019, 10 There have been no first 2020, 10 December 31, 2019. Recent Accounting Pronouncements Not Adopted In June 2016, No. 2016 13, No. 2018 19, 326, No. 2019 04, No. 2019 05, 2019 10 2019 11 December 15, 2022, January 1, 2023. not We have considered all other recently issued accounting pronouncements and do not

Note 2 - Revenue

Note 2 - Revenue	3 Months Ended
	Mar. 31, 2020
Notes to Financial Statements
Revenue from Contract with Customer [Text Block]	2. REVENUE Disaggregation of Revenue In the following table, revenue is disaggregated by type of revenue for the three March 31, 2020 2019: Three months ended March 31, (in thousands) 20 20 201 9 License $ -- $ 800 Professional services 5,279 3,964 Processing and maintenance 2,194 1,811 Third party 420 391 Total $ 7,893 $ 6,966 Foreign revenues are based on the location of the customer. Revenues from customers by geographic areas for the three March 31, 2020 2019 Three months ended March 31, (in thousands) 20 20 201 9 European Union $ 320 $ 1,219 United States 7,573 5,747 Total $ 7,893 $ 6,966 Concentration of Revenue The following table indicates the percentage of consolidated revenue represented by each customer that represented more than 10 three March 31, 2020 2019. Three Months Ended March 31, 20 20 201 9 Customer A 66 % 48 % Customer B 4 % 17 %

Note 3 - Notes Receivable

Note 3 - Notes Receivable	3 Months Ended
	Mar. 31, 2020
Notes to Financial Statements
Financing Receivables [Text Block]	3. Notes Receivable During the quarter ended September 30, 2017, $1,500,000 December 31, 2019. 2018, $550,000 three 2019, 4, 40 $1,000,000 6.0 June 2021. October 2019 January 2020, $500,000 $1,000,000, 6.0 October 2021 January 2022, In the quarter ended March 31, 2018, $435,000 $235,000. 5.0 third ten 19 not $259,000, March 31, 2020.

Note 4 - Investments

Note 4 - Investments	3 Months Ended
	Mar. 31, 2020
Notes to Financial Statements
Cost-method Investments, Description [Text Block]	4. INVESTMENTS Beginning in 2017, 3, June 2019, 40 $41,000 three March 31, 2020, $2,280,000 On December 30, 2016 $1,000,000 $500,000 January 4, 2017. June 30, 2018, $250,000 March 31, 2020, $0 $750,000, March 31, 2020.

Note 5 - Stock-based Compensati

Note 5 - Stock-based Compensation	3 Months Ended
	Mar. 31, 2020
Notes to Financial Statements
Share-based Payment Arrangement [Text Block]	5. Stock-based Compensation At March 31, 2020, three three March 31, 2020 2019 $62,000 $25,000 March 31, 2020 2019, As of March 31, 2020, $353,000 No three March 31, 2020. 30,000 three March 31, 2019. March 31, 2020: # of Shares Wgt Avg Exercise Price Wgt Avg Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding at March 31, 2020 126,500 $ 8.94 4.6 $ 3,209,875 Vested and exercisable at March 31, 2020 94,500 $ 4.09 2.9 $ 2,825,115 The estimated fair value of options granted is calculated using the Black-Scholes option pricing model with assumptions as previously disclosed in our 2019 10 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the company’s closing stock price on the last trading day of the first 2020 March 31, 2020.

Note 6 - Fair Value of Financia

Note 6 - Fair Value of Financial Instruments	3 Months Ended
	Mar. 31, 2020
Notes to Financial Statements
Fair Value, Option [Text Block]	6. Fair Value of Financial Instruments The carrying value of cash, marketable securities, accounts receivable, accounts payable and certain other financial instruments (such as accrued expenses, and other current liabilities) included in the accompanying consolidated balance sheets approximates their fair value principally due to the short-term maturity of these instruments. Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, marketable securities and trade accounts. Our available cash is held in accounts managed by third may no no not

Note 7 - Fair Value Measurement

Note 7 - Fair Value Measurements	3 Months Ended
	Mar. 31, 2020
Notes to Financial Statements
Fair Value Disclosures [Text Block]	7. Fair Value Measurements In determining fair value, the company uses quoted market prices in active markets. GAAP establishes a fair value measurement framework, provides a single definition of fair value, and requires expanded disclosure summarizing fair value measurements. GAAP emphasizes that fair value is a market-based measurement, not GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable input be used when available. Observable inputs are based on data obtained from sources independent of the company that market participants would use in pricing the asset or liability. Unobservable inputs are inputs that reflect the company’s assumptions about the estimates market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is measured in three • Level 1 Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not 1 • Level 2 Valuations based on quoted prices in less active, dealer or broker markets. Fair values are primarily obtained from third • Level 3 Valuations derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and not 3 not In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The fair value of equity method investments has not no 3

Note 8 - Commitments and Contin

Note 8 - Commitments and Contingencies	3 Months Ended
	Mar. 31, 2020
Notes to Financial Statements
Legal Matters and Contingencies [Text Block]	8. Commitments and Contingencies Leases We have noncancellable operating leases for offices and data centers expiring at various dates through March 2025. March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019 $3,261,000 $945,000 March 31, 2020 December 31, 2019, not 3.8% 5.5% March 31, 2020 December 31, 2019, March 31, 2020 December 31, 2019 4 1.1 $142,000 three March 31, 2020 $61,000 $52,000 $29,000 $130,000 three March 31, 2019 $54,000 $52,000 $24,000 Legal Matters On or about July 9, 2019, No. 1:19 03949 January 23, 2019, May 29, 2019, September 26, 2019, November 18, 2019, May 23, 2014 May 29, 2019, 10 20 January 2, 2020, March 3, 2020, not not March 31, 2020. On or about February 14, 2020, two 14 2017 2018 April 20, 2020, two No. 1:20 00832 June 19, 2020. not not March 31, 2020. There are no may

Note 9 - Income Taxes

Note 9 - Income Taxes	3 Months Ended
	Mar. 31, 2020
Notes to Financial Statements
Income Tax Disclosure [Text Block]	9. Income Taxes We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards. A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not not There were no March 31, 2020 December 31, 2019. no no We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds 80%, no 2016.

Significant Accounting Policies

Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Basis of Accounting, Policy [Policy Text Block]	Basis of Presentation Throughout this report, the terms “we”, “us”, “ours”, “ISC” and “company” refer to Intelligent Systems Corporation, including its wholly-owned and majority-owned subsidiaries. The unaudited Consolidated Financial Statements presented in this Form 10 not three March 31, 2020 2019. three March 31, 2020 not December 31, 2019, 10 There have been no first 2020, 10 December 31, 2019.
New Accounting Pronouncements, Policy [Policy Text Block]	Recent Accounting Pronouncements Not Adopted In June 2016, No. 2016 13, No. 2018 19, 326, No. 2019 04, No. 2019 05, 2019 10 2019 11 December 15, 2022, January 1, 2023. not We have considered all other recently issued accounting pronouncements and do not

Note 2 - Revenue (Tables)

Note 2 - Revenue (Tables)	3 Months Ended
	Mar. 31, 2020
Notes Tables
Disaggregation of Revenue [Table Text Block]	Three months ended March 31, (in thousands) 20 20 201 9 License $ -- $ 800 Professional services 5,279 3,964 Processing and maintenance 2,194 1,811 Third party 420 391 Total $ 7,893 $ 6,966 Three months ended March 31, (in thousands) 20 20 201 9 European Union $ 320 $ 1,219 United States 7,573 5,747 Total $ 7,893 $ 6,966
Schedules of Concentration of Risk, by Risk Factor [Table Text Block]	Three Months Ended March 31, 20 20 201 9 Customer A 66 % 48 % Customer B 4 % 17 %

Note 5 - Stock-based Compensa_2

Note 5 - Stock-based Compensation (Tables)	3 Months Ended
	Mar. 31, 2020
Notes Tables
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block]	# of Shares Wgt Avg Exercise Price Wgt Avg Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding at March 31, 2020 126,500 $ 8.94 4.6 $ 3,209,875 Vested and exercisable at March 31, 2020 94,500 $ 4.09 2.9 $ 2,825,115

Note 2 - Revenue - Disaggregati

Note 2 - Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue	$ 7,893	$ 6,966
European Union [Member]
Revenue	320	1,219
UNITED STATES
Revenue	7,573	5,747
License [Member]
Revenue		800
Professional Services [Member]
Revenue	5,279	3,964
Processing and Maintenance [Member]
Revenue	2,194	1,811
Third party [Member]
Revenue	$ 420	$ 391

Note 2 - Revenue - Concentratio

Note 2 - Revenue - Concentration of Revenue (Details) - Revenue Benchmark [Member] - Customer Concentration Risk [Member]	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Customer A [Member]
Concentration	66.00%	48.00%
Customer B [Member]
Concentration	4.00%	17.00%

Note 3 - Notes Receivable (Deta

Note 3 - Notes Receivable (Details Textual) - USD ($)	1 Months Ended		3 Months Ended	12 Months Ended
	Jan. 31, 2020	Oct. 31, 2019	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Mar. 31, 2020	Sep. 30, 2017
Privately-Held Identity and Professional Services Company With Ties to the FinTech Industry [Member]
Receivable Commitment to Lend							$ 1,500,000
Payments to Acquire Notes Receivable					$ 550,000
Equity Method Investment, Ownership Percentage				40.00%
Privately-Held Identity and Professional Services Company With Ties to the FinTech Industry [Member] | Loan Agreement, Six Percent, Maturing June 2021 [Member]
Payments to Acquire Notes Receivable				$ 1,000,000
Notes Receivable, Stated Interest Rate				6.00%
Privately-Held Identity and Professional Services Company With Ties to the FinTech Industry [Member] | Loan Agreement, Six Percent, Maturing October 2021 [Member]
Payments to Acquire Notes Receivable	$ 1,000,000	$ 500,000
Notes Receivable, Stated Interest Rate		6.00%
Private Limited India Based Company in the FinTech Industry [Member]
Receivable Commitment to Lend			$ 435,000
Payments to Acquire Notes Receivable			$ 235,000
Notes Receivable, Stated Interest Rate			5.00%
Private Limited India Based Company in the FinTech Industry [Member] | Maximum [Member]
Notes Receivable, Conversion, Percentage			10.00%
Private Limited India Based Company in the FinTech Industry [Member] | Notes Receivable [Member]
Financing Receivable, Allowance for Credit Loss, Ending Balance						$ 259,000

Note 4 - Investments (Details T

Note 4 - Investments (Details Textual) - USD ($)	1 Months Ended	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2018
Cost-method Investments, Other than Temporary Impairment		$ 1,009,000
Equity Method Investments		0
Long-term Investments [Member]
Loan Agreements, Notes Receivable		2,280,000
Investment Income (Expense) [Member] | Equity Method Investments [Member]
Gain (Loss) on Investments, Total		(41,000)
Privately-Held Identity and Professional Services Company With Ties to the FinTech Industry [Member]
Equity Method Investment, Ownership Percentage	40.00%
Privately-Held Identity and Professional Services Company With Ties to the FinTech Industry [Member] | Loan Agreement, Six Percent, Maturing June 2021 [Member]
Payments to Acquire Notes Receivable	$ 1,000,000
Privately-Held Identity and Professional Services Company With Ties to the FinTech Industry [Member] | Loan Agreement, Six Percent, Maturing November 2021 [Member]
Payments to Acquire Notes Receivable	$ 500,000
Lumense Inc. [Member]
Cost-method Investments, Other than Temporary Impairment		$ 750,000		$ 250,000

Note 5 - Stock-based Compensa_3

Note 5 - Stock-based Compensation (Details Textual)	3 Months Ended
	Mar. 31, 2020USD ($)shares	Mar. 31, 2019USD ($)shares
Number of Stock-based Compensation Plans in Effect	3
Share-based Payment Arrangement, Expense	$ 62,000	$ 25,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 353,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares) | shares	0	30,000

Note 5 - Stock-based Compensa_4

Note 5 - Stock-based Compensation - Summary of Stock Options (Details)	3 Months Ended
	Mar. 31, 2020USD ($)$ / sharesshares
Shares outstanding (in shares) | shares	126,500
Shares outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 8.94
Shares outstanding, weighted average remaining contractual life (Year)	4 years 219 days
Shares outstanding, aggregate intrinsic value | $	$ 3,209,875
Shares vested and exercisable (in shares) | shares	94,500
Shares vested and exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 4.09
Shares vested and exercisable, weighted average remaining contractual life (Year)	2 years 328 days
Shares vested and exercisable, aggregate intrinsic value | $	$ 2,825,115

Note 8 - Commitments and Cont_2

Note 8 - Commitments and Contingencies (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating Lease, Weighted Average Discount Rate, Percent	3.80%	5.50%
Operating Lease, Weighted Average Remaining Lease Term (Year)	4 years	1 year 36 days
Operating Lease, Expense	$ 142,000	$ 130,000
Cost of Sales [Member]
Operating Lease, Expense	61,000	54,000
General and Administrative Expense [Member]
Operating Lease, Expense	52,000	52,000
Research and Development Expense [Member]
Operating Lease, Expense	29,000	$ 24,000
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset	3,261,000
Operating Lease, Liability, Total	$ 945,000

Note 9 - Income Taxes (Details

Note 9 - Income Taxes (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Unrecognized Tax Benefits, Ending Balance	$ 0	$ 0
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total	0	0
Liability for Uncertainty in Income Taxes, Current	$ 0	$ 0