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FOR IMMEDIATE RELEASE
For further information, call
Bonnie Herron, Intelligent Systems
       770/564-5504

bherron@intelsys.com

 INTELLIGENT SYSTEMS ANNOUNCES FIRST QUARTER 2007 RESULTS

 Norcross, GA – May 15, 2007 – Intelligent Systems Corporation [AMEX:INS; www.intelsys.com] announced today the financial results for its first quarter ended March 31, 2007.  Net loss for the first quarter of 2007 was $133,000 ($0.03 per basic and diluted share) compared to a net loss of $445,000 ($0.10 per basic and diluted share) for the corresponding period in 2006. 

                 Revenue from product sales in the first quarter of 2007 was $3.1 million, a 67 percent increase over the first quarter of 2006, while revenue from services declined by 68 percent to $963,000 in the quarter ended March 31, 2007 compared to the first quarter of 2006.  Overall, the company reported total revenue of $4.0 million in the quarter ended March 31, 2007 compared to total revenue of $4.9 million in the quarter ended March 31, 2006.

                 The period-to-period increase in product revenue reflects growth in international sales of the ChemFree subsidiary products as well as new license revenue recognized by the CoreCard Software subsidiary.  The period-to-period decline in services revenue is mainly due to an unusually large multi-year software services contract that was recognized in the first quarter of 2006. Consolidated operating expenses declined by 15 percent in the first quarter of 2007, lowering the loss from operations to $274,000 compared to a loss from operations of $702,000 in the first quarter of 2006. 

                 As previously disclosed, as a result of the sale of the company’s QS Technologies business in July of 2006, the company classified the QS business as Discontinued Operations and the financial results for 2006 have been reclassified to conform to this presentation.  In the quarter ended March 31, 2007, the company reported an additional gain of $97,000 on the sale of the QS business following completion of an earn-out period in which there were no proposed adjustments by the buyer.

 About Intelligent Systems Corporation

For over thirty years, Intelligent Systems Corporation [AMEX: INS] has identified, created, operated and grown early stage technology companies.  The company has operations and investments in the information technology and industrial products industries.  The company’s consolidated subsidiaries include VISaer, Inc. (www.visaer.com), CoreCard Software, Inc. (www.corecard.com), (both software companies) and ChemFree Corporation (www.chemfree.com) (an industrial products company).  Further information is available on the company’s website at www.intelsys.com, or by calling the company at 770/381-2900.

 In addition to historical information, this news release may contain forward-looking statements relating to Intelligent Systems and its subsidiary and affiliated companies. These statements include all statements that are not statements of historical fact regarding the intent, belief or expectations of Intelligent Systems and its management with respect to, among other things, results of operations, product plans, and financial condition.  The words "may," "will," "anticipate," "believe," "intend," "expect," "estimate," "plan," "strategy" and similar expressions are intended to identify forward-looking statements.  Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those contemplated by such forward-looking statements. 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 from those indicated by such forward-looking statements are delays in product development, undetected software errors, competitive pressures, changes in customers’ requirements or financial condition, market acceptance of products and services, changes in financial markets, changes in the performance, financial condition or valuation of affiliate companies, the risks associated with investments in privately-held early stage companies, the impact of events such as rising gas prices that could impact the aviation industry, the price of certain plastics components and the company’s other worldwide market opportunities, other geopolitical or military actions, and general economic conditions, particularly those that cause businesses to delay or cancel purchase decisions.

 CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

 

 Three Months Ended March 31,

 

2007

2006

Revenue

 

 

   Products

 $ 3,086

$ 1,852

   Services

963

3,024

    Total revenue

4,049

4,876

Total cost of revenue

1,642

2,434

Expenses

 

 

    Marketing

437

521

    General & administrative

980

1,102

    Research & development

1,264

1,521

Loss from operations

(274)

(702)

    Interest income (expense), net

63

(28)

    Investment income (loss), net

(11)

5

    Equity in income of affiliate companies

1

72

    Other income (loss), net

(9)

34

Loss from continuing operations

(230)

(619)

Income from discontinued operations

-- 

174

Gain on sale of discontinued operations

97

-- 

Net loss

$ (133)

$ (445)

Loss per share - continuing  operations: basic and diluted

$ (0.05)

$ (0.14)

Income per share - discontinued operations: basic and diluted

  0.02

  0.04

Net loss per share: basic and diluted

$ (0.03)

$ (0.10)

Basic weighted average shares outstanding

4,478,971

4,478,971

Diluted weighted average shares outstanding

4,582,666

4,478,971

 

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

March 31, 2007

December 31, 2006

 

 

ASSETS

(Unaudited)

 

 

 

Current assets:

 

 

 

  Cash

$  3,576

$  2,136

 

  Accounts receivable, net

2,238

2,006

 

  Notes and interest receivable, current portion

538

3,445

 

  Inventories

934

904

 

  Other current assets

963

1,072

 

    Total current assets

8,249

9,563

 

Long-term investments

1,175

1,174

 

Notes receivable, net of current portion

722

841

 

 

Property and equipment, net

1,161

1,009

 

 

Goodwill, net

2,047

2,047

 

 

Other intangibles, net

347

359

 

 

Other assets, net

17

17

 

 

Total assets

$ 13,718

$ 15,010

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

  Accounts payable

$  1,156

$  1,558

 

 

  Deferred revenue

2,259

3,094

 

 

  Accrued payroll

953

974

 

 

  Accrued expenses and other current liabilities

1,233

1,088

 

 

    Total current liabilities

5,601

6,714

 

 

Other long-term liabilities

293

356

 

 

Minority interest

1,516

1,516

 

  Total stockholders’ equity

6,424

6,424

 

Total liabilities and stockholders’ equity

$ 13,718

$ 15,010

 

             

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