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FOR IMMEDIATE RELEASE

For further information, call
Bonnie Herron, 770/564-5504
or email to bherron@intelsys.com

INTELLIGENT SYSTEMS ANNOUNCES FIRST QUARTER 2002 RESULTS

 ***Earnings Conference Call and Webcast at 11:00 AM Today ***

 Norcross, GA – May 9, 2002 – Intelligent Systems Corporation [AMEX:INS; www.intelsys.com] announced today its financial results for the three month period ended March 31, 2002.

             For the first quarter of 2002, Intelligent Systems recorded revenue of $2,168,000, an increase of 28 percent compared to $1,694,000 in the first quarter of 2001.  Net loss in the first quarter of 2002 was $2,122,000 or $0.47 per basic share as compared to net income of $749,000 or $0.13 per basic share for the same period in 2001.

             The 2002 results are not directly comparable to the prior period because this year the company consolidates two information technology subsidiaries that were not consolidated in the first quarter of 2001.  As previously announced, the company acquired a controlling interest in VISaer, Inc., a software firm, in July 2001 and acquired control of Delos Payment Systems, Inc., a development stage software company, in early 2002. 

             Revenue grew 28 percent in the three month period in 2002, mainly due to the contribution of VISaer revenue in 2002.  As expected, the company’s loss from operations increased significantly in the first quarter of 2002 compared to last year’s first quarter.  The increased operating loss reflects the inclusion of expenses of VISaer and Delos Payments Systems in 2002, in particular significant software development expense at both new subsidiaries.  VISaer has a multi-million dollar software contract with United Parcel Services (UPS) for its new Web-native software product for which VISaer is incurring significant R&D expense, in large part funded under the contract.  At March 31, 2002, VISaer has accrued over $3 million in deferred revenue related to this contract that will be recognized when the completed software is delivered in 2003.  Delos, a pre-revenue company that was spun-off from PaySys International, Inc. in April 2001, is developing the first release of its software product.

             The company recognized $1.5 million in other income in the first quarter of 2002 compared to $983,000 in the first quarter last year.  In 2002, this income includes $797,000 in net investment income principally from the sale of shares of Atherogenics and Risk Labs held by the company as well as $751,000 in recognition of deferred gain related to a former VISaer affiliate.  By comparison, in the first quarter last year, the company recognized investment income of $845,000 mainly related to the sale of additional shares of Risk Labs, as well as $437,000 in interest income.

             At March 31, 2002, the company had cash of $10.2 million, total assets of $24.7 million and shareholders’ equity of $15.2 million. 

             The financial results reported today for the first quarter of 2002 have not been subject to a full quarterly review by the company’s independent auditor, in reliance upon the recent guidance provided by the Securities and Exchange Commission for auditing clients of Arthur Andersen LLP.

Conference Call and Webcast Information

             Intelligent Systems has scheduled a conference call for today at 11 AM EDT to discuss the results of the first quarter.  The call-in number is 1-800-967-7188.  A live webcast will be available at the same time by logging onto www.intelsys.com and clicking on the PR Newswire icon. An archived version of the webcast will be available for 30 days.

                   About Intelligent Systems Corporation

 For more than twenty-five years, Intelligent Systems Corporation [AMEX: INS] has identified, created, operated and grown early stage technology companies.  The company has operations and investments, principally in the information technology industry.  The company’s consolidated subsidiaries in 2002 include VISaer, QS Technologies, Delos Payment Systems (all software companies) and ChemFree (industrial products).  Since 1990, the company has operated the Intelligent Systems Incubator, an award-winning pioneer in privately sponsored incubators.  Further information is available on the company’s website at www.intelsys.com, or by calling the company’s headquarters at 770/381-2900.

 In addition to historical information, this news release contains forward-looking statements relating to Intelligent Systems and its affiliated companies.  Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements and the company does not undertake to update or revise any forward-looking statements whether as a result of new developments or otherwise.  Among the factors that could cause actual results to differ materially are changes in financial market conditions, actions of third parties, delays or changes of intent by third parties, delays in product development, competitive pressures, technical difficulties, changes in customer requirements, market acceptance of products and services, availability of capital, availability of qualified personnel, financial results and valuation of affiliate companies, and general economic conditions.

 

   SUMMARY OF RESULTS

 

Three Months Ended March 31,

                      2002

                    2001

Revenue

             $2,168,000

           $1,694,000

Loss From Operations

              (3,617,000)

              (234,000)

Other Income

               1,506,000a

               983,000b

Income Tax

                    11,000

      ---

Net Income (Loss)

            $(2,122,000)

             $749,000

Average Shares Outstanding – Basic

               4,495,530

            5,623,784

Average Shares Outstanding – Diluted

               4,495,530

            5,627,450

Basic and Diluted Share Income (Loss)

                    $(0.47)

                   $0.13

 

 

 

 a Includes principally net investment gains of $797,000 and $751,000 in recognition of deferred gain.

b. Includes principally net investment gains of $845,000, $437,000 interest income and $306,000 loss in equity of affiliates accounted for by the equity method.

 

 

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