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FOR IMMEDIATE RELEASE

For further information, call
Bonnie Herron ,
Vice President and Chief Financial Officer
770-564
-5504 or email to bherron@intelsys.com

INTELLIGENT SYSTEMS ANNOUNCES THIRD QUARTER 2009 RESULTS

Investor Conference Call at 10 A.M. ET November 12, 2009

Norcross, GA – November 12, 2009 – Intelligent Systems Corporation [NYSE Amex: INS; www.intelsys.com] announced today its financial results for the three and nine month periods ended September 30, 2009. 

             For the three month period ended September 30, 2009, the company recorded a net loss of $521,000 compared to a net loss of $978,000 in the third quarter of 2008.  Revenue was $3,415,000 in the third quarter of 2009, almost the same as the $3,426,000 recorded in the same quarter last year but an increase of nine percent compared to revenue recorded in the second quarter of 2009.

             For the nine month period ended September 30, 2009, the loss from continuing operations was $1,360,000 on revenue of $9,327,000 as compared to a loss from continuing operations of $3,366,000 on revenue of $11,861,000 in the year-to-date period in 2008.  The net loss reported for the nine months ended September 30, 2009 was $1,360,000 ($0.25 per basic and diluted share) compared to net loss of $921,000 ($0.20 per basic and diluted share) for the year-to-date period in 2008.  The year-to-date results are not directly comparable because the 2008 results include a one-time gain of $2,884,000 on the sale of the company’s VISaer business in April of 2008.

             The company’s ChemFree subsidiary reported total revenue growth for the third consecutive quarter of 2009.  Sales of ChemFree consumable supplies in the third quarter and year-to-date periods in 2009 were greater than in the same periods in 2008 due to a growing base of users of ChemFree’s SmartWasher® bioremediating parts washer.  This increase in consumable sales was offset in part by a decline in the number of parts washer machines sold in the domestic market in both the three and nine month periods of 2009.  The decline, which was anticipated, is due primarily to the fact that in the first half of 2008, one of ChemFree’s largest customers was in the middle of a national program to sell ChemFree products which resulted in a sharp spike in machine sales during the rollout period last year.  In the three and nine month periods ended September 30, 2009, the company’s CoreCard Software subsidiary reported growth in revenue due to an increase in the number of customers supported, new licenses recognized and projects completed.  

             The reduced loss from operations in both the three and nine month periods of 2009 as compared to the same periods last year is a result of a favorable mix of higher margin consumable and software revenue as well as expense reductions implemented in late 2008.

               As previously announced, the company successfully completed an over-subscribed stockholder rights offering on July 17, 2009. The net cash proceeds from the offering of $2,986,000 (net of transaction expenses), and the increase in shareholders’ equity and number of shares outstanding are reflected in the financial statements for the period ended September 30, 2009 included with this press release. 

             The company plans to hold an investor conference call on November 12, 2009 at 10 A.M. ET.  Investors are invited to listen to the call by dialing 1-877-819-3201 and entering conference ID code 41038245.  A recording of the call will be posted on the company’s website at www.intelsys.com as soon as available after the call.  The company intends to file its Form 10-Q for the period ended September 30, 2009 with the Securities and Exchange Commission on November 13, 2009.  For additional information about reported results, investors will be able to access the Form 10-Q on the company’s website at www.intelsys.com or on the SEC site, www.sec.gov

About Intelligent Systems Corporation

 For over thirty years, Intelligent Systems Corporation [NYSE 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 principal majority-owned subsidiaries are CoreCard Software, Inc. (www.corecard.com), a provider of software and services for prepaid and credit card processing, and ChemFree Corporation (www.chemfree.com), a leader in bioremediating parts washer equipment and supplies.  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 Corporation 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 instability in the financial markets, delays in product development, undetected software errors, competitive pressures, changes in customers’ requirements or financial condition, market acceptance of products and services,  changes in the performance, financial condition or valuation of affiliate companies, the risks associated with investments in privately-held early stage companies and further declines in general economic and financial market conditions, particularly those that cause businesses to delay or cancel purchase decisions.

 CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except share and per share amounts)

 

Three Months Ended Sept. 30,

Nine Months Ended Sept. 30,

 

2009

2008

2009

2008

Revenue

 

 

 

 

   Products

$ 3,147

$ 3,121

$ 8,215

$ 11,152

   Services

268

305

1,112

709

    Total revenue

3,415

3,426

9,327

11,861

Cost of revenue

 

 

 

 

   Products

1,616

1,810

4,285

6,459

   Services

202

185

743

606

    Total cost of revenue

1,818

1,995

5,028

7,065

Expenses

 

 

 

 

    Marketing

556

620

1,456

2,158

    General & administrative

972

907

2,662

3,429

    Research & development

620

902

1,630

2,615

Loss from operations

(551)

(998)

(1,449)

(3,406)

Other income (expense)

 

 

 

 

    Interest income (expense), net

26

5

57

(4)

    Equity in income of affiliate company

4

21

24

74

    Other income (expense)

6

(1)

18

(1)

Loss from continuing operations before              income taxes

(515)

(973)

(1,350)

(3,337)

Income taxes

6

12

10

29

Loss from continuing operations

(521)

(985)

(1,360)

(3,366)

Income (loss) from discontinued operations

-- 

7

-- 

(439)

Gain on sale of discontinued operations

-- 

-- 

--  

2,884

Net loss

$  (521)

$  (978)

$  (1,360)

$    (921)

Loss per share from continuing operations:

 

 

 

 

  Basic & diluted

$ (0.07)

$ (0.22)

$ (0.25)

$ (0.75)

Income per share from discon. operations:

 

 

 

 

  Basic

$   -- 

$   -- 

$   -- 

$ 0.55

  Diluted

$   -- 

$   -- 

$   -- 

$ 0.54

Loss per share:

 

 

 

 

  Basic & diluted

$ (0.07)

$ (0.22)

$ (0.25)

$ (0.20)

Basic weighted average common shares

7,465,023

4,478,971

5,474,350

4,478,971

Diluted weighted average common shares

7,465,023

4,545,837

5,474,350

4,545,764

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

 

September 30,

2009

December 31,

2008

 

 

ASSETS

(unaudited)

 

 

 

Current assets:

 

 

 

  Cash

$   3,271

$  1,074

 

  Accounts receivable, net

2,005

1,570

 

  Notes and interest receivable, current portion

--

353

 

  Inventories

804

1,051

 

  Other current assets

422

280

 

    Total current assets

6,502

4,328

 

Long-term investments

1,233

1,209

 

Notes and interest receivable, net of current portion

1,378

1,318

 

 

Property and equipment, at cost less accumulated depreciation

1,316

1,583

 

 

Other intangibles, net

234

268

 

 

Total assets

$  10,663

$  8,706

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

  Short-term borrowings

$        --

$     325

 

 

  Accounts payable

1,131

922

 

 

  Deferred revenue

1,496

983

 

 

  Accrued payroll

489

497

 

 

  Accrued expenses and other current liabilities

962

970

 

 

    Total current liabilities

4,078

3,697

 

 

 Long-term liabilities, net of current portion

175

249

 

Total stockholders’ equity

6,410

4,760

 

 

Total liabilities and stockholders’ equity

$  10,663

$  8,706

 

             

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