investor presentation september 2020 · september 2020 forward looking/safe harbor statements in...
TRANSCRIPT
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Investor Presentation
September 2020
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Forward Looking/Safe Harbor Statements
In addition to historical information, this presentation may contain forward-looking statements relating toIntelligent Systems Corporation. All statements, trend analyses and other information contained in thefollowing discussion relative to markets for our products and trends in revenue, gross margins and anticipatedexpense levels, as well as other statements including words such as “may”, “will”, “anticipate”,“believe”, “intend”, “plan”, “estimate”, “expect”, ”strategy” and “likely”, and other similar expressionsconstitute forward-looking statements. Prospective investors and current shareholders are cautioned that anysuch forward-looking statements are not guarantees of future performance and involve risks anduncertainties, and that actual results may differ materially from those contemplated by such forward-lookingstatements. Intelligent Systems Corporation undertakes no obligation to update or revise its forward-lookingstatements to reflect changed assumptions, the occurrence of unanticipated events or changes in futureoperating results except as required by law.
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Who is Intelligent Systems?
3
Sales by SegmentFY19
17%
55%
22%
6%
LicenseProfessional ServicesProcessing and MantenanceThird Party
NYSE Listed: INS (1981)
Market Capitalization: $335.0M
Founded in:1973
Employees: ~530
Headquarters: Norcross, Georgia
Leading provider of technology solutions and processing services to the financial technology and services market
1 As of 8/31/2020
1
Core Offering
CoreCard Software, IncFinTech operations are conducted through our wholly owned CoreCard Software, Inc
CoreCard SRLWholly owned subsidiary in Romania
ISC Software in IndiaWholly owned subsidiary in India
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Intelligent Systems Management Bios
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Team Member Position Held since Biography
J. Leland StrangeChairman &
CEOJanuary 1985
Mr. Strange was appointed chairman and CEO in 1985. He is an inductee in the Georgia TechnologyHall of Fame and the Hall of Fame of the Georgia Tech College of Management. Mr. Strange is onthe Board of Trustees and past Chairman of the Georgia Tech Research Corporation and is on theadvisory board of Georgia Tech’s College of Management as well as a trustee emeritus of theGeorgia Tech Foundation. In the past, he has served on the board of publicly traded companies suchas Allied Automotive Group (NYSE:AHI), Great Plains Software, Matria Healthcare and IQSoftware. Mr. Strange founded Quadram Corporation in 1980. Quadram pioneered theenhancement products industry as one of the fastest growing electronics companies in the U.S inthe early years of the personal computer industry.
Matt White
CFO & Corporate Secretary
January 2019
Mr. White was appointed CFO and Corporate Secretary of Intelligent Systems in 2019 withresponsibility for financial and SEC reporting, legal and contract matters, corporate governance anddue diligence. Prior to this role he was CFO of CoreCard Software, Inc., Intelligent Systems’principal operating business. Mr. White remains the CFO for CoreCard, functioning in a dualcapacity on both the corporate and subsidiary management teams. Prior to joining CoreCard, hewas a Senior Director at Equifax, having held various positions in accounting and SEC reportingwhile at the company. Previously, Matt worked in an SEC reporting role at Humana and was aSenior Manager in the audit practice at Deloitte.
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Diverse, recurring revenue streams from existing and new customers
Unique market positioning with an agile business model, vetted software and a proven ability to scale
Strong long-term outlook in the payments space with significant, growing total addressable market
Resilient, account-based business supported by counter cyclical opportunities
Profitable business with strong ROIC profile
Strong balance sheet and favorable capital structure to support growth strategy
Why Invest in Intelligent Systems?
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Our History
6
2002-2003Obtained
majority interest in CoreCard Software.
2017Obtained 100%
ownership of CoreCard.
1973 Intelligent Systems is
founded
1981:IPO (AMEX:INS)
2006-2008Divested
ownership in three
companies
2015Sells Chemfree.
CoreCard becomes the primary
business
1990-2000 Acquired interest in 12+ hardware
and software companies
2003-2005: Opened offices
in India and Romania
1985:Became the largest
shareholder of Peachtree software
1988: Sold Peachtree Software
2001 Sold Paysys to First Data
2003: Completed 7+ year technology reengineering effort at CoreCard
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7
UNIQUE GROWTH OPPORTUNITY
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Key Players in Digital Payment Industry
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ConsumerMerchant
(Store)Merchant Acquirer
Network IssuerIssuer
Processor
Payment Industry Makeup
Network InterchangeAcquirer/Processor
Intelligent Systems provides customized solutions for card management, payment and transaction processing products. Customers include: • Retailer based credit cards• Network based credit cards• Small business lenders
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Differentiated Portfolio
9(1) Although customization of licensed products is optional, nearly all customers use this service to modify the software to their specific business needs
Main Revenue Streams
Processing ServicesRevenue
Licensed SoftwareRevenue
Initial Implementation Fee:• Program and BIN set-up,
test and deployment
Processing Services• Recurring revenue
and generally per account per month
• Transaction/account based
Other Services• Various other program
related services such as monthly statements and card production
Professional Services• Customization of
unique program needs• Repeating but not
recurring revenue
Managed services• Low cost, high margin.
Roughly equates to the number of accounts
Initial Implementation & Customization fee
Tier Upgrade (adding more accounts beyond initial # licensed)
Professional Services• Customization of
software.• Technical/operational
support• Repeating but not
recurring revenue
Maintenance and License Support • Recurring revenue
and increases with certain professional service work
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10
What is CoreCard?CoreCard provides industry leading card management applications and payment solutions. The team has three decades of domain expertise in
building and managing payment systems. CoreCard operates a state-of-the-art processing facility providing program and card portfolio managers all the benefits of our feature rich solutions.
Lice
nsed
• Prepaid
• Closed Loop
• Revolving
• Fleet
• Open Loop
• Credit
• On Demand
• White Label
• Virtual Cards
• Flexible Payment
Options
• Low Start-up Costs
• Accounts
Receivable
• Retail Credit
• Loans
Soft
war
e
Plat
form
s
CoreCard Platform
White Label
CoreCard Front End or Website
Front End or Website
TransactionProcessing
Collections
New Account Processing
Card Management
Dispute
Self Service/Mobile
Program Manager Portal
APIs
APIs
Or
Or
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CoreCard Markets ServedCoreCard’s solutions address the unique needs of clients that issue or process across a variety of
financial services markets.
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Client End Market
Credit Cards (network branded bank cards) Mastercard Visa
Private Label Cards Retail Dealership
Fleet CardsO
pen
Loop
Clo
sed
Loop
Prepaid Cards Business (Corporate Card) GPR Prepaid Cards Rewards, Promotions & Incentives
Debit Cards Payroll & Benefits
Lend
ing
Prod
ucts
&O
ther
Prepaid Gift & Promotions Cards
Shopping & Loyalty Cards
Card Based
Non-Card Based
Credit Cards / Loans Prepaid / DebitCards
Short-Term Consumer Loans
POS Consumer Finance General Merchandise / Catalog Patient Finance
A/R Management (businesses) Manufacturing Commercial Lending Factoring
Collections / Debt Recovery
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Industry & Competitive Positioning
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Rapid Development
• CoreCard software is faster and more flexible and than legacy software
• Rapid development of software for unique offerings
• Intelligent Systems is industry known for fastest customer response
Complex Services
• Complex work solutions offered• Provides materials to end users in the most
customer friendly way• Proven choice for high margin complex work
Market Position
• Highly fragmented market• Intelligent Systems focuses on core capabilities
making it nimble and more efficient • Competitors are engaged in lower margin
business segments (such as POS) that Intelligent Systems is not
Customization
• Unique product offering (licensing and processing)• Work with customer to develop highly customizable
solutions• Full service outside provider• Generates repeat business
CoreCard’s unique offering of ease-of-use and flexibility solutions bolster competitive advantage in a large, underpenetrated, growing market.
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13
GROWTH STRATEGY
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Efficient Strategy
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Our strategy centers on a results-driven approach to prudently investing in the development of superior technology and people
($ in millions)
FTE Count by Year
Marketing Spend by Year
High return go to market strategy Top-line growth Minimal need for overhead spend Known industry leading provider (CoreCard) Investing in Product Development & Technology Winning new business with little marketing spend due
to the strength of our solutions CoreCard has zero dedicated salespeople
2015 2016 2017 2018 2019Development, Testing, & Ops FTE Corporate FTE 252
530
252286
350
430
$0.24
$0.35
$0.26 $0.26
$0.15
2015 2016 2017 2018 2019
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Pillars for Growth
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The issuer solutions market is estimated to be ~$7 billion with a CAGR of 3% between 2017-2021Large addressable market
Intelligent Systems Corporation’s proven ability to handle large quantities of transactions has expanded their brand image, caught the attention of large companies and is a key inflection point in its transition to growth
Proven ability to scale CoreCard software
CoreCards’s flexible parameter-driven software enables them to preform customizable, complex and high value-add work for their customers
High value-add services
Intelligent System Corporation focuses on areas that their competitors can not or will not do
Excellent customer service results in high levels of customer retentionLoyal customers
Niche market position
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Key Performance Indicators
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$ In millions
$ In millions
$ In millions
$ In millions
4.88.2 9.3
20.1
34.3
0
5
10
15
20
25
30
35
40
2015 2016 2017 2018 2019
Total Revenue
4.2 7.08.5
18.8
28.6
0.6
1.1 0.8
1.3
5.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2015 2016 2017 2018 2019
Revenue Composition
Services Products
2.2
4.2 4.8
11.6
22.5
0
5
10
15
20
25
2015 2016 2017 2018 2019
Gross Profit
-2.8
0.7
-1.4
6.1
13.4
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2015 2016 2017 2018 2019
Operating Income
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APPENDIX
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Balance Sheet
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As of December 31, 2019 2018ASSETSCurrent assets:Cash 26,415$ 18,919$ Marketable securities - 349Accounts receivable, net 8,759 3,731Notes and interest receivable, current portion - 581Other current assets 905 1,202Total current assets 36,079 24,782Investments 3,081 760Notes and interest receivable, net of current portion 1,795 1,745Property and equipment, at cost less accumulateddepreciation 2,177 1,513Other long-term assets 1,108 504Total assets 44,240$ 29,304$
LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable 403$ 272$ Deferred revenue, current portion 689 781Accrued payroll 2,503 1,145Accrued expenses 153 71Income tax payable 1,100 284Other current liabilities 1,345 719Total current liabilities 6,193 3,272Deferred revenue, net of current portion 23 111Long-term lease obligation 460 - Deferred tax liability 275 - Total long-term liabilities 758 111Commitments and contingencies (Note 9)Intelligent Systems Corporation stockholders' equity:Common stock, $0.01 par value, 20,000,000 sharesauthorized, and 8,924,988 and 8,817,988 issued andoutstanding at December 31, 2019 and 2018, respectively 89 88Additional paid-in capital 15,450 15,050Accumulated other comprehensive loss (94) (92)Accumulated income 21,844 10,875Total stockholders' equity 37,289 25,921Total liabilities and stockholders' equity 44,240$ 29,304$
Intelligent Systems CorporationCONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
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Income Statement
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Year Ended December 31, 2019 2018RevenueProducts 5,725$ 1,349$ Services 28,578 18,751 Total net revenue 34,303 20,100Cost of revenueProducts - 136Services 11,759 8,388 Total cost of revenue 11,759 8,524Expenses Marketing 151 255 General and administrative 3,495 1,826 Research and development 5,516 3,353Income from operations 13,382 6,142Investment income (loss) 34 (363)Other income, net 99 469Income before income taxes 13,515 6,248Income taxes 2,546 4Net income 10,969$ 6,244$ Earnings per share: Basic 1.24$ 0.71$ Diluted 1.22$ 0.70$ Basic weighted average common shares outstanding 8,873,071 8,796,321Diluted weighted average common shares outstanding 8,967,901 8,948,518
Intelligent Systems CorporationCONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except share and per share amounts)
Table_Of_Contents
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
Table_Of_Contents
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Table Of Contents
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TABLE1
TABLE2
TABLE3
TABLE4
BALANCE SHEET
BALANCE SHEET2
INCOME STATEMENT
TABLE5
STOCKHOLDERS EQUITY
CASH FLOW
TABLE6
TABLE7
TABLE8
TABLE9
TABLE10
TABLE11
TABLE12
TABLE13
TABLE14
TABLE15
TABLE16
TABLE17
TABLE18
TABLE19
Table Of Contents
TABLE1
TABLE2
TABLE3
TABLE4
BALANCE SHEET
BALANCE SHEET2
INCOME STATEMENT
TABLE5
STOCKHOLDERS EQUITY
CASH FLOW
TABLE6
TABLE7
TABLE8
TABLE9
TABLE10
TABLE11
TABLE12
TABLE13
TABLE14
TABLE15
TABLE16
TABLE17
TABLE18
TABLE19
TABLE1
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE1
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
INTELLIGENT SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Georgia58-1964787
(State or other jurisdiction of(I.R.S. Employer Identification No.)
incorporation or organization)
4355 Shackleford Road, Norcross, Georgia30093
(Address of principal executive offices)(Zip Code)
Table Of Contents
TABLE2
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE2
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which
registered
Common Stock, $.01 par valueINSNYSE American
Table Of Contents
TABLE3
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE3
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Securities Authorized for Issuance Under Equity Compensation Plans
(a) Number of(b)(c) Number of
securities toWeighted-averagesecurities
be issued uponexercise price ofremaining
exercise ofoutstandingavailable for
outstandingoptions, warrantsfuture issuance
options,and rightsunder equity
warrants andcompensation
rightsplans
(excluding
securities
reflected in
Plan categorycolumn (a))
Equity compensation plans approved
by security holders126,500$ 8.94763,000
Equity compensation plans not
approved by security holders- 0- 0- 0
Total126,500$ 8.94763,000
Table Of Contents
TABLE4
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE4
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Financial Statements:
Report of Independent Registered Public Accounting Firm - Nichols, Cauley &F-2
Associates, LLC
Consolidated Balance Sheets at December 31, 2019 and 2018F-4
Consolidated Statements of Operations for the years ended December 31, 2019F-5
and 2018
Consolidated Statements of Comprehensive Income (Loss) for the years endedF-5
December 31, 2019 and 2018
Consolidated Statements of Stockholders' Equity for the years ended DecemberF-6
31, 2019 and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2019F-7
and 2018
Notes to Consolidated Financial StatementsF-8
Table Of Contents
BALANCE_SHEET
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
BALANCE_SHEET
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Intelligent Systems Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
As of December 31,20192018
ASSETS
Current assets:
Cash$ 26,415$ 18,919
Marketable securities- 0349
Accounts receivable, net8,7593,731
Notes and interest receivable, current portion- 0581
Other current assets9051,202
Total current assets36,07924,782
Investments3,081760
Notes and interest receivable, net of current portion1,7951,745
Property and equipment, at cost less accumulated
depreciation2,1771,513
Other long-term assets1,108504
Total assets$ 44,240$ 29,304
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$ 403$ 272
Deferred revenue, current portion689781
Accrued payroll2,5031,145
Accrued expenses15371
Income tax payable1,100284
Other current liabilities1,345719
Total current liabilities6,1933,272
Deferred revenue, net of current portion23111
Long-term lease obligation460- 0
Deferred tax liability275- 0
Total long-term liabilities758111
Commitments and contingencies (Note 9)
Intelligent Systems Corporation stockholders' equity:
Common stock, $0.01 par value, 20,000,000 shares
authorized, and 8,924,988 and 8,817,988 issued and
outstanding at December 31, 2019 and 2018, respectively8988
Additional paid-in capital15,45015,050
Accumulated other comprehensive loss(94)(92)
Accumulated income21,84410,875
Total stockholders' equity37,28925,921
Total liabilities and stockholders' equity$ 44,240$ 29,304
Table Of Contents
BALANCE_SHEET2
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
BALANCE_SHEET2
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$ 403$ 272
Deferred revenue, current portion689781
Accrued payroll2,5031,145
Accrued expenses15371
Income tax payable1,100284
Other current liabilities1,345719
Total current liabilities6,1933,272
Deferred revenue, net of current portion23111
Long-term lease obligation460- 0
Deferred tax liability275- 0
Total long-term liabilities758111
Commitments and contingencies (Note 9)
Intelligent Systems Corporation stockholders' equity:
Common stock, $0.01 par value, 20,000,000 shares
authorized, and 8,924,988 and 8,817,988 issued and
outstanding at December 31, 2019 and 2018, respectively8988
Additional paid-in capital15,45015,050
Accumulated other comprehensive loss(94)(92)
Accumulated income21,84410,875
Total stockholders' equity37,28925,921
Total liabilities and stockholders' equity$ 44,240$ 29,304
Table Of Contents
INCOME_STATEMENT
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
INCOME_STATEMENT
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Intelligent Systems Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Year Ended December 31,20192018
Revenue
Products$ 5,725$ 1,349
Services28,57818,751
Total net revenue34,30320,100
Cost of revenue
Products- 0136
Services11,7598,388
Total cost of revenue11,7598,524
Expenses
Marketing151255
General and administrative3,4951,826
Research and development5,5163,353
Income from operations13,3826,142
Investment income (loss)34(363)
Other income, net99469
Income before income taxes13,5156,248
Income taxes2,5464
Net income$ 10,969$ 6,244
Earnings per share:
Basic$ 1.24$ 0.71
Diluted$ 1.22$ 0.70
Basic weighted average common shares outstanding8,873,0718,796,321
Diluted weighted average common shares outstanding8,967,9018,948,518
Table Of Contents
TABLE5
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE5
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
Year Ended December 31,20192018
Net income$ 10,969$ 6,244
Other comprehensive income (loss):
Foreign currency translation adjustments(2)28
Unrealized gain/loss on available-for-sale marketable
securities- 023
Comprehensive income$ 10,967$ 6,295
Table Of Contents
STOCKHOLDERS_EQUITY
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
STOCKHOLDERS_EQUITY
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Intelligent Systems Corporation
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
Additional
(in thousands, exceptPaid-InAccumulated OtherAccumulatedStockholders'
share amounts)Common StockCapitalComprehensive LossEarningsEquity
Shares
Balance at December 31,
20178,777,988$ 88$ 14,877$ (143)$ 4,631$ 19,453
Stock options exercised40,000111111
Net income6,2446,244
Stock compensation
expense6262
Foreign currency
translation adjustment2828
Unrealized loss on
marketable securities2323
Balance at December 31,
20188,817,988$ 88$ 15,050$ (92)$ 10,875$ 25,921
Stock options exercised107,0001209210
Net income10,96910,969
Stock compensation
expense191191
Foreign currency
translation adjustment(2)(2)
Balance at December 31,
20198,924,988$ 89$ 15,450$ (94)$ 21,844$ 37,289
Table Of Contents
CASH_FLOW
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
CASH_FLOW
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Intelligent Systems Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
20192018
OPERATING ACTIVITIES:
Net income$ 10,969$ 6,244
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization1,012614
Stock-based compensation expense19162
Gain on sale of investment(34)- 0
Provision (benefit) for deferred income taxes555(280)
Non-cash investment expense363
Non-cash interest income(49)(59)
Equity in loss of affiliate company33225
Changes in operating assets and liabilities:
Accounts receivable, net(5,028)(2,523)
Other current assets2241,171
Other long-term assets61(18)
Accounts payable131(49)
Accrued payroll1,358550
Deferred revenue, current portion(92)(72)
Accrued expenses82(27)
Other current liabilities961595
Deferred revenue, net of current portion(88)60
Other long-term liabilities- 0- 0
Net cash provided by operating activities10,5856,656
INVESTING ACTIVITIES:
Purchases of property and equipment(1,676)(865)
Advances on note and interest receivable(2,000)(1,035)
Proceeds from sale of investments379- 0
Net cash used for investing activities(3,297)(1,900)
FINANCING ACTIVITIES:
Sale of capital stock pursuant to exercise of option210111
Net cash provided by financing activities210111
Effects of exchange rate changes on cash(2)28
Net increase in cash7,4964,895
Cash at beginning of year18,91914,024
Cash at end of year$ 26,415$ 18,919
Supplemental disclosure of cash flow information:
Cash paid for income taxes$ 1,159$ - 0
Table Of Contents
TABLE6
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE6
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
ClassificationUseful life in years
Machinery and equipment3- 05
Furniture and fixtures5- 07
Building39
Table Of Contents
TABLE7
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE7
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
(in thousands)20192018
Machinery and equipment$ 4,995$ 3,321
Furniture and fixtures203194
Building301313
Subtotal5,4993,828
Accumulated depreciation(3,322)(2,315)
Property and equipment, net$ 2,177$ 1,513
Table Of Contents
TABLE8
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE8
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Year ended December 31,20192018
Risk free interest rate2.58%1.91%
Expected life of option in years1010
Expected dividend yield rate0%0%
Expected volatility51%52%
Table Of Contents
TABLE9
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE9
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Disaggregation of Revenue
In the following table, revenue is disaggregated by type of revenue for the
years ended December 31, 2019 and 2018:
Year ended December 31, (in thousands)20192018
License$ 5,725$ 1,349
Professional services19,20311,041
Processing and maintenance7,6506,394
Third party1,7251,316
Total$ 34,303$ 20,100
Table Of Contents
TABLE10
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE10
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Year ended December 31, (in thousands)20192018
European Union$ 3,834$ 2,745
United States30,46917,355
Total$ 34,303$ 20,100
Table Of Contents
TABLE11
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE11
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
RevenueAccounts Receivable
2019201820192018
Customer A60%40%80%53%
Customer B11%13.20%11%14%
Table Of Contents
TABLE12
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE12
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
6. INCOME TAXES
The income tax provision from operations consists of the following:
Year ended December 31, (in thousands)20192018
Current$ 1,991$ 284
Deferred555(280)
Total$ 2,546$4
Table Of Contents
TABLE13
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE13
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Year ended December 31,20192018
Statutory rate21%21%
State and local taxes, net of federal benefit3.70- 0
Equity compensation(5.70)- 0
Other(0.20)(21%)
Effective rate18.80%-- %
Table Of Contents
TABLE14
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE14
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
(in thousands)20192018
Deferred tax assets:
Unrealized loss on investments$ 582$ 475
Federal and state tax credits- 0294
Fixed assets(370)(185)
Other95171
Total deferred tax asset307755
Less valuation allowance(582)(475)
Net deferred tax (liability) asset$ (275)$ 280
Table Of Contents
TABLE15
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE15
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
Table Of Contents
Year ended December 31, (in thousands)
2020531
2021310
202290
202326
20246
Table Of Contents
TABLE16
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE16
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
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20192018
Options outstanding at January 1207,500243,500
Options cancelled(16,000)(8,000)
Options exercised(107,000)(40,000)
Options granted42,00012,000
Options outstanding at December 31126,500207,500
Options available for grant at December 31763,000805,000
Options exercisable at December 3184,500179,000
Exercise price ranges per share:
Granted$ 19.99- 0$ 39.11$ 7.80
Exercised$ 0.69- 0$ 7.80$ 0.69- 0$ 3.89
Outstanding$ 1.52- 0$ 39.11$ 0.69- 0$ 7.80
Weighted average exercise price per share:
Granted$ 25.45$ 7.80
Exercised$ 1.97$ 2.79
Outstanding at December 31$ 8.94$ 2.33
Exercisable at December 31$ 2.21$ 1.82
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TABLE17
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE17
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
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Options Outstanding:
Wgt. Avg. Contractual
Range ofNumberLife RemainingWgt. Avg.Aggregate
Exercise PriceOutstanding(in years)Exercise PriceIntrinsic Value
$ 1.52- 0$ 1.7267,5001.50$ 1.59$ 2,588,850
$ 3.50- 0$ 39.1159,0008.60$ 17.35$ 1,332,740
$ 1.52- 0$ 39.11126,5004.80$ 8.94$ 3,921,590
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TABLE18
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE18
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
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Options Exercisable:
Wgt. Avg. Contractual
Range ofNumberLife RemainingWgt. Avg.Aggregate
Exercise PriceExercisable(in years)Exercise PriceIntrinsic Value
$ 1.52- 0$ 1.7267,5001.50$ 1.59$ 2,588,850
$ 3.50- 0$ 7.8017,0007.50$ 4.70$ 599,040
$ 1.52- 0$ 7.8084,5002.70$ 2.21$ 3,187,890
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TABLE19
Created by EDGAR Online, Inc.
INTELLIGENT SYSTEMS CORP
TABLE19
Form Type: 10-K
Period End: Dec 31, 2019
Date Filed: Mar 16, 2020
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Year ended December 31, (in thousands, except per share data)20192018
Basic
Net income attributable to Intelligent Systems Corporation$ 10,969$ 6,244
Weighted average common shares outstanding8,8738,796
Earnings per share$ 1.24$ 0.71
Diluted
Net income attributable to Intelligent Systems Corporation$ 10,969$ 6,244
Weighted average common shares outstanding8,8738,796
Effect of dilutive potential common shares: stock options95152
Total8,9688,948
Earnings per share$ 1.22$ 0.70
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Cash Flow
20
2019 2018OPERATING ACTIVITIES:Net income 10,969$ 6,244$ Adjustments to reconcile net income to net cash providedby operating activities: Depreciation and amortization 1,012 614 Stock-based compensation expense 191 62 Gain on sale of investment (34) - Provision (benefit) for deferred income taxes 555 (280) Non-cash investment expense 363 Non-cash interest income (49) (59)Equity in loss of affiliate company 332 25Changes in operating assets and liabilities: Accounts receivable, net (5,028) (2,523) Other current assets 224 1,171 Other long-term assets 61 (18) Accounts payable 131 (49) Accrued payroll 1,358 550 Deferred revenue, current portion (92) (72) Accrued expenses 82 (27) Other current liabilities 961 595 Deferred revenue, net of current portion (88) 60 Other long-term liabilities - - Net cash provided by operating activities 10,585 6,656
INVESTING ACTIVITIES: Purchases of property and equipment (1,676) (865) Advances on note and interest receivable (2,000) (1,035) Proceeds from sale of investments 379 - Net cash used for investing activities (3,297) (1,900)
FINANCING ACTIVITIES: Sale of capital stock pursuant to exercise of option 210 111Net cash provided by financing activities 210 111Effects of exchange rate changes on cash (2) 28Net increase in cash 7,496 4,895Cash at beginning of year 18,919 14,024Cash at end of year 26,415$ 18,919$ Supplemental disclosure of cash flow information:Cash paid for income taxes 1,159$ -$
(in thousands)
Year Ended December 31,
Intelligent Systems CorporationCONSOLIDATED STATEMENTS OF CASH FLOWS
Slide Number 1Forward Looking/Safe Harbor Statements Who is Intelligent Systems?Intelligent Systems Management BiosWhy Invest in Intelligent Systems?Our HistorySlide Number 7Key Players in Digital Payment IndustryDifferentiated PortfolioWhat is CoreCard?CoreCard Markets ServedIndustry & Competitive PositioningSlide Number 13Efficient StrategyPillars for GrowthKey Performance IndicatorsSlide Number 17Balance SheetIncome StatementCash Flow