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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period from  to
 Commission file number 1-9330
 INTELLIGENT SYSTEMS CORPORATION
  Georgia
    
    58-1964787(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)4355 Shackleford Road, Norcross, Georgia
    
    30093(Address of principal executive offices)
    
    (Zip Code)
 (770) 381-2900
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, $.01 par value
    
    NYSE Alternext US
 Securities registered pursuant to Section 12(g) of the Act:
 o þ
 Yes o No þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ




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TABLE OF CONTENTS
 PAGEPart IItem 1. Business
    
    
    12. Properties
    
    
    63. Legal Proceedings
    
    
    64. Submission of Matters to a Vote of Security Holders
    
    
    6Part II5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases
of Equity Securities
    
    
    77. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    78. Financial Statements
    
    
    159. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    169A(T). Controls and Procedures
    
    
    16Part III10. Directors, Executive Officers and Corporate Governance
    
    
    1711. Executive Compensation
    
    
    1812. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    1813. Certain Relationships and Related Transactions, and Director Independence
    
    
    1814. Principal Accountant Fees and Services
    
    
    18Part IV15. Exhibits and Financial Statement Schedules
    
    
    19Signatures
    
    
    21Exhibit 10.9Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1




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PART I
 Forward-Looking Statements
 In addition to historical information, this Form 10-K may contain forward-looking
statements relating to Intelligent Systems Corporation (ISC). All statements,
trend analyses and other information contained in the following discussion
relative to markets for our products and trends in revenue, gross margins and
anticipated expense levels, as well as other statements including words such as
anticipate, believe, plan, estimate, expect, likely and intend, and
other similar expressions constitute 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. A number of the factors that we believe could impact
our future operations are discussed in Managements Discussion and Analysis in
Item 7 of this Form 10-K . ISC undertakes no obligation to update or revise its
forward-looking statements to reflect changed assumptions, the occurrence of
unanticipated events or changes in future operating results.
 
 ITEM 1. BUSINESS
 Overview
 www.intelsys.com
  Financial Reporting
  Intelligent Systems Corporation
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Industry Segments Overview
     Industrial Products Segment
 ChemFree Corporation  ® ® ® ® ®
 ®
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® ®
   Information Technology Products and Services Segment
 CoreCard Software, Inc.
 
    
    Credit/Debit Cards  involving revolving or non-revolving credit issued to consumer or
business accounts (with or without a physical card) that typically involve interest, fees,
settlement, collections, etc. Within this market, CoreCard offers software specifically
tailored to handle private label cards, network branded (i.e. MasterCard or VISA) bank
cards, fleet cards and short-term consumer loans.
 
    
    Prepaid Cards  involving pre-loaded funds drawn down for purchase or cash withdrawal
typically involving a variety of fees but no interest. Numerous examples exist including
gift cards, loyalty/reward cards, health benefit cards, payroll and benefits disbursement,
government assistance payments, and transit cards.
  Intelligent Systems Corporation
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Incubator Program
  Intelligent Systems Corporation
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Minority-Owned Partner Companies
  Research and Development
  Patents, Trademarks and Trade Secrets
 ® ® ® ® ®
 Personnel
  Financial Information About Geographic Areas
  Intelligent Systems Corporation
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ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
    
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Intelligent Systems Corporation
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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
  2008
    
    
    2007Year Ended December 31,
    
    High
    
    
    Low
    
    
    High
    
    
    Low1st Quarter
    
    $
    3.99
    
    
    $
    2.90
    
    
    $
    4.48
    
    
    $
    3.052nd Quarter
    
    
    3.75
    
    
    
    2.90
    
    
    
    4.46
    
    
    
    3.423rd Quarter
    
    
    3.60
    
    
    
    2.10
    
    
    
    3.75
    
    
    
    3.254th Quarter
    
    
    2.12
    
    
    
    0.66
    
    
    
    3.75
    
    
    
    2.85
   Equity Compensation Plan Information
  Recent Sales of Unregistered Securities
  Repurchases of Securities
  
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Critical Accounting Policies and Estimates
  Intelligent Systems Corporation
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Revenue Recognition
   
    
    an initial contract with the customer to license certain software modules, to provide
services to get the customer live on the software (such as training and customization) and
to provide maintenance and support (PCS) for a specified period of time thereafter
(typically 12-month periods).
 
    
    other optional standalone contracts, usually performed after the customer is live on the
software, for services such as new interfaces or custom features requested by the customer,
additional training and problem resolution not covered in annual maintenance contracts.
 
    
    purchase of additional licenses for new modules or for tier upgrades for a higher volume
of licensed accounts after the initial contract
   EITF 00-21 vendor-specific
   Intelligent Systems Corporation
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Valuation of Investments
 Valuation of Intangibles
   Overview
  
    
    A change in revenue level at one of our subsidiaries may impact consolidated revenue or
be offset by an opposing change at another subsidiary.
 
    
    Our software subsidiary has been involved in major new product development initiatives
for at least the past five years and has limited experience delivering and installing its
new product releases at customer sites, making it difficult to predict with certainty when
it will recognize revenue on individual software contracts.
 Intelligent Systems Corporation
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
    
    Software license revenue in a given period may consist of a relatively small number of
contracts. Consequently, even minor delays in delivery under a software contract (which may
be out of our control) could have a significant and unpredictable impact on the
consolidated revenue that we recognize in a given quarterly or annual period.
 
    
    Acquisitions or sales of subsidiaries may affect our revenue and expense levels, as
occurred in 2008 with the sale of our VISaer business.
 
    
    Customers may decide to postpone or cancel a planned implementation of our software for
any number of reasons, which may be unrelated to our software features or contract
performance, but which may affect the amount, timing and characterization of our deferred
and/or recognized revenue.
     Intelligent Systems Corporation
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Results of Operations
  2008 Compared to 2007
 Revenue
 Product revenue
 
    
    In 2008, total revenue at our ChemFree subsidiary was $12.8 million, 3 percent lower than
the record revenue level achieved in 2007. International sales grew by 5 percent in 2008,
continuing the positive growth trend of the past several years in the European market. Total
domestic sales were down approximately 6 percent in 2008 compared to the record setting growth
of 74 percent in the domestic market in 2007. In the second half of 2007 and the first
quarter of 2008, domestic sales increased significantly compared to prior periods mainly due
to the successful roll-out of a national sales program by a new ChemFree customer that
supplied SmartWasher® machines and fluid and filter replenishment to the customers installed
base of clients. As expected, the initial high volume of orders for SmartWasher® machines in
2007 and early 2008 declined to a lower monthly level in the second half of 2008 with steady
follow-on sales of fluid and filters to the installed base of machines. ChemFrees total
fluid and filters sales increased approximately 35 percent in 2008 as compared to 2007, due to
a larger installed base of customers that purchase such consumable supplies. In addition,
revenue from customers that lease SmartWasher® machines rose 18 percent in 2008 compared to
2007 due to an increase in the number of leased machines.
 
    
    License revenue generated by our Information Technology Products and Services segment was
$1.8 million in 2008, 32 percent higher than in 2007 mainly due to the completion of more new
customer implementations resulting in recognition of a greater number of software licenses in
2008. As we have frequently cautioned, a number of factors, some of which may be outside of
our control, can cause delays in delivery of our software and implementation by the customer,
thus delaying license revenue recognition. With mission-critical, complex software systems
such as those sold by CoreCard, customer requirements, available resources and testing cycles
may increase the scope and length of time to complete the project beyond our original
estimates.
 
    
    Due to general economic conditions and uncertainty about the impact of a slowing economy on
the automotive repair and supplies industry, ChemFree is planning for relatively flat or
perhaps slightly lower volume of machines sales in 2009 and is carefully managing costs and
inventory levels accordingly. We expect that sales of replenishment fluid and filters to the
installed base of customers and lease revenue will be relatively unaffected by the economic
downturn. Turmoil in the global financial markets could impact CoreCards revenue and
prospects for new customers in the foreseeable future if customers or prospects postpone
software purchases or implementations. We are carefully monitoring the evolving dynamics in
our markets and have proactively taken steps to lower expenses to ensure we have adequate
resources to support existing customers and contracts and to continue to add new customers as
opportunities arise in these uncertain times.
 Service revenue
 Intelligent Systems Corporation
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Cost of Revenue
 
    
    Cost of productrevenue in 2008 was $7.3 million (51 percent of total product revenue)
compared to $7.7 million (53 percent of total product revenue) in 2007. The improvement in
gross margin percent between 2008 and 2007 is due to the fact that our
software license revenue, which has a lower cost of sales than does our industrial product
revenue, increased in 2008 as a percentage of total product revenue. In addition, in 2008 a
greater proportion of industrial products revenue was derived from consumable fluid and filter
products which have a lower cost of sales than do the parts washer machines which made up a
proportionately greater component of product revenue in 2007. To offset an increase in the cost
of certain plastic components due to increases in the price of oil, the company implemented
price increases in the second half of 2008 and re-engineered its SmartWasher® design in 2007
which also contributed to improved margins.
 
    
    Cost of servicerevenue (which relates to the Information Technology Products and Services
segment only) was $873,000 (68 percent of service revenue) in 2008, as compared to $842,000
(95 percent of service revenue) in 2007. The increase in gross margin percentage between
periods reflects primarily a more efficient utilization of resources to deliver CoreCards
customer support and professional services activities in 2008 than in 2007.
 Operating Expenses
 Write-off of Goodwill
 Operating Loss
 Interest Income (Expense), net 
 Investment Income, net
 Equity Earnings (Loss) of Affiliate Company 
 Other Income (Expense), net 
 Income Taxes 
 Intelligent Systems Corporation
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Discontinued Operations
 Net Income from Discontinued Operations 
 Gain on Sale of Discontinued Operations 
 Liquidity and Capital Resources
    Intelligent Systems Corporation
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Off-Balance Sheet Arrangements
  Factors That May Affect Future Operations
   
    
    Turmoil in the global financial markets could have a serious negative impact on CoreCard
due to potential customers (most of whom are financial institutions or services firms)
delaying purchase or implementation decisions.
 
    
    Reluctance by financial institutions to act as sponsor banks for prospective customers
(such as issuers and processors of credit and prepaid cards) could increase CoreCards losses
and cash requirements.
 
    
    It is unclear to what extent the downturn in the domestic US economy could impact the
automotive parts and repair industry and reduce demand for ChemFrees SmartWasher® products.
 
    
    Delays in software development projects could cause our customers to delay implementations
or delay payments, which would increase our costs and reduce our revenue.
 
    
    Our CoreCard subsidiary could fail to deliver software products which meet the business and
technology requirements of its target markets within a reasonable time frame and at a price
point that supports a profitable, sustainable business model.
 
    
    One of ChemFrees customers represented approximately 37 percent of our consolidated
revenue in 2008 and any unplanned changes in the volume of orders or timeliness of payments
from such customer could have a negative impact on inventory levels and cash, at least in the
near-term.
 
    
    Failure by our ChemFree subsidiary to protect its intellectual property assets could
increase competition in the marketplace and result in greater price pressure and lower
margins, thus potentially impacting sales, profits and projected cash flows.
 
    
    Software errors or poor quality control may delay product releases, increase our costs,
result in non-acceptance of our software by customers or delay revenue recognition.
 
    
    Compliance with the internal control over financial reporting requirements of Section 404
of the Sarbanes-Oxley Act of 2002 could increase operating expenses and divert management and
staff resources.
 
    
    Competitive pressures (including pricing, changes in customer requirements and preferences,
and competitor product offerings) may cause prospective customers to choose an alternative
product solution, resulting in lower revenue and profits (or increased losses).
 
    
    CoreCard could fail to establish a base of reference customers for their new product
offerings, resulting in lower revenue and profits (or increased losses), increased cash needs
and possibly leading to restructuring or cutting back of the subsidiaries operations.
 
    
    In certain limited situations, ChemFree lease customers are permitted to terminate the
lease covering a SmartWasher® machine, requiring the unamortized balance of the original
machine cost to be written off which could reduce profits in that reporting period and result
in lower revenue in future periods.
 
    
    CoreCard could fail to retain key software developers and managers who have accumulated
years of know-how in our target markets and company products, or fail to attract and train a
sufficient number of new software developers and testers to support our product development
plans and customer requirements at projected cost levels.
 
    
    Delays in anticipated customer payments for any reason would increase our cash requirements
and possibly our losses.
 
    
    Declines in performance, financial condition or valuation of minority-owned companies could
cause us to write-down the carrying value of our investment or postpone an anticipated
liquidity event, which could negatively impact our earnings and cash.
 
    
    Failure to meet the continued listing standards of NYSE Alternext U.S. could result in
delisting of our common stock, with a potentially negative impact on market price and
liquidity of our common stock.
 
    
    Other general economic and political conditions could cause customers to delay or cancel
software purchases.
 Intelligent Systems Corporation
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Recent Accounting Pronouncements
    Determination of the Useful
Life of Intangible Assets. Business Combinations
  
 ITEM 8. FINANCIAL STATEMENTS
  Report of Independent Registered Public Accounting Firm  Habif, Arogeti & Wynne, LLP.Report of Independent Registered Public Accounting Firm  Tauber & Balser, P.C.Consolidated Balance Sheets at December 31, 2008 and 2007Consolidated Statements of Operations for the years ended December 31, 2008 and 2007Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss)
for the years ended December 31, 2008 and 2007Consolidated Statements of Cash Flows for the years ended December 31, 2008 and 2007Notes to Consolidated Financial Statements
 Intelligent Systems Corporation
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ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A(T). CONTROLS AND PROCEDURES
 Evaluation of disclosure controls and procedures
   Changes in internal control over financial reporting
   Managements report on internal control over financial reporting
  Intelligent Systems Corporation
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Internal Control  Integrated Framework.
   
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
   www.intelsys.com
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ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  Securities Authorized for Issuance Under Equity Compensation Plans
 (c) Number of securities remaining(a) Number of securities to be
    
    
    (b) Weighted-average
    
    
    available for future issuance underissued upon exercise of
    
    
    exercise price of
    
    
    equity compensation plansoutstanding options, warrants
    
    
    outstanding options,
    
    
    (excluding securities reflected inPlan category
    
    and rights
    
    
    warrants and rights
    
    
    column (a))Equity compensation
plans approved by
security holders
    
    
    111,000
    
    
    $
    1.78
    
    
    
    350,000Equity compensation
plans not approved
by security holders
    
    
    110,000
    
    
    $
    3.15
    
    
    
    84,000TotalTotal
    
    
    221,000
    
    
    $
    2.46
    
    
    
    434,000Total
   
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
   
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Intelligent Systems Corporation
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PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  2.1
    
    
    Asset Purchase Agreement among IBS Technics, Inc., Intelligent Systems Corporation, VISaer
(UK) Limited and VISaer, Inc. dated April 4, 2008 (Incorporated by reference to Exhibit 2.1 of
the Registrants Form 8-K dated April 16, 2008.)2.2
    
    
    Promissory Note of Netsmart Technologies, Inc. dated July 31, 2006. (Incorporated by
reference to Exhibit 2.2 to the Registrants Form 8-K dated July 31, 2006.)3
    (i)
    
    Amended and Restated Articles of Incorporation of the Registrant dated November 14, 1991, as
amended November 25, 1997
(Incorporated by reference to Exhibit 3.1 to the Registrants Annual Report on Form 10-K for
the year ended December 31, 1991 and to Exhibit 3.1 to the Registrants Report on Form 8-K
dated November 25, 1997.)3
    (ii)

    
    Bylaws of the Registrant dated December 7, 2007. (Incorporated by reference to Exhibit 3.2
of the Registrants Form 8-K dated December 7, 2007.)4.1
    
    
    Rights Agreement dated as of November 25, 1997 between the Registrant and American Stock
Transfer & Trust Company as Rights Agent. (Incorporated by reference to Exhibit 4.1 of the
Registrants Report on Form 8-K dated November 25, 1997 and filed on December 16, 1997.)4.2
    
    
    Form of Rights Certificate. (Incorporated by reference to Exhibit 4.2 of the Registrants
Report on Form 8-K dated November 25, 1997 and filed on December 16, 1997.)10.1
    
    
    Lease Agreement dated June 1, 2004, between the Registrant and ISC Properties, LLC.
(Incorporated by reference to Exhibit 10.1 of the Registrants Form 10-K for the year ended
December 31, 2004.)10.2
    
    
    Management Compensation Plans and Arrangements:(a)     Intelligent Systems Corporation 2003 Stock Incentive Plan(b)     Intelligent Systems Corporation Change in Control Plan for Officers(c)     Intelligent Systems Corporation Outside Directors Retirement Plan(d)     Non-Employee Directors Stock Option PlanExhibit 10.2(a) is incorporated by reference to Exhibit 10.2(a) to the Registrants Form 10-K
for the year ended December 31, 2003.Exhibits 10.2(b) and (c) are incorporated by reference to Exhibit 10.4 to the Registrants
Form 10-K for the year ended December 31, 1993.Exhibit 10.2(d) is incorporated by reference to Exhibit 10.3 to the Registrants Form 10-K for
the year ended December 31, 2000.10.3
    
    
    Loan Agreement by and among Intelligent Systems Corporation and Fidelity Bank dated October
1, 2003. (Incorporated by reference to Exhibit 10.3 to the Registrants Form 10-K for the
year ended December 31, 2003.)10.4
    
    
    Security Agreement by and among Intelligent Systems Corporation and Fidelity Bank dated as of
October 1, 2003. (Incorporated by reference to Exhibit 10.4 to the Registrants Form 10-K for
the year ended December 31, 2003.)10.5
    
    
    Form of Security Agreement by and among majority owned subsidiary companies of Intelligent
Systems Corporation and Fidelity Bank as of October 1, 2003. (Incorporated by reference to
Exhibit 10.5 to the Registrants Form 10-K for the year ended December 31, 2003.)
 Intelligent Systems Corporation
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10.6
    
    
    Negative Pledge Agreement by and among Intelligent Systems Corporation and Fidelity Bank
dated October 1, 2003. (Incorporated by reference to Exhibit 10.6 to the Registrants Form
10-K for the year ended December 31, 2003.)10.7
    
    
    Commercial Promissory Note and Rider thereto of Intelligent Systems Corporation in favor of
Fidelity Bank dated October 1, 2004. (Incorporated by reference to Exhibit 10.7 to the
Registrants Form 10-K for the year ended December 31, 2003.)10.8
    
    
    Form of Guarantee of majority owned subsidiaries of Intelligent Systems Corporation in favor
of Fidelity Bank dated October 1, 2003. (Incorporated by reference to Exhibit 10.3 to the
Registrants Form 10-K for the year ended December 31, 2003.)10.9
    
    
    Seventh Modification to Loan Documents by and among Intelligent Systems Corporation and
Fidelity Bank dated December 1, 2008. *16.1
    
    
    Letter from Tauber & Balser, P.C. (Incorporated by reference to Exhibit 16.1 to the
Registrants Form 8-K dated November 1, 2008.)21.1
    
    
    List of subsidiaries of Registrant. *23.1
    
    
    Consent of Habif, Arogeti & Wynne, LLP. *23.2
    
    
    Consent of Tauber & Balser, P.C. *31.1
    
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *31.2
    
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *32.1
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. *
 *
    
    Filed herewith Intelligent Systems Corporation
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SIGNATURES
  INTELLIGENT SYSTEMS CORPORATION
RegistrantDate:  March 27, 2009
    By:
    /s/ J. Leland StrangeJ. Leland StrangeChairman of the Board, President
and Chief Executive Officer  Signature
    
    Capacity
    
    Date/s/ J. Leland Strange

J. Leland Strange
    
    Chairman of the Board, President, 
Chief Executive Officer and Director
(Principal Executive Officer)
    
    March 27, 2009/s/ Bonnie L. Herron

Bonnie L. Herron
    
    Chief Financial Officer
(Principal Accounting and Financial Officer)
    
    March 27, 2009/s/ James V. Napier

James V. Napier
    
    Director
    
    March 27, 2009/s/ John B. Peatman

John B. Peatman
    
    Director
    
    March 27, 2009/s/ Parker H. Petit

Parker H. Petit
    
    Director
    
    March 27, 2009
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INTELLIGENT SYSTEMS CORPORATION
INDEX TO FINANCIAL STATEMENTS
  Financial Statements:Report of Independent Registered Public Accounting Firm  Habif, Arogeti & Wynne, LLP
    
    
    F-2Report of Independent Registered Public Accounting Firm  Tauber & Balser, P.C.
    
    
    F-3Consolidated Balance Sheets  December 31, 2008 and 2007
    
    
    F-4Consolidated Statements of Operations  Years Ended December 31, 2008 and 2007
    
    
    F-5Consolidated Statements of Stockholders Equity and Comprehensive Loss 
Years Ended December 31, 2008 and 2007
    
    
    F-6Consolidated Statements of Cash Flows  Years Ended December 31, 2008 and 2007
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-9
  F-1




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    /s/ Habif, Arogeti & Wynne, LLPAtlanta, Georgia
March 25, 2009
  F-2




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    /s/ Tauber & Balser, P.C.Atlanta, Georgia
March 28, 2008
  F-3




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Intelligent Systems Corporation
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share amounts)
 As of December 31,
    
    2008
    
    
    2007ASSETSCurrent assets:Cash
    
    $
    1,074
    
    
    $
    554Accounts receivable, net
    
    
    1,570
    
    
    
    2,139Notes and interest receivable, current portion
    
    
    353
    
    
    
    540Inventories
    
    
    1,051
    
    
    
    1,424Other current assets
    
    
    280
    
    
    
    2,217Total current assets
    
    
    4,328
    
    
    
    6,874Long-term investments
    
    
    1,209
    
    
    
    1,127Notes and interest receivable, net of current portion
    
    
    1,318
    
    
    
    350Property and equipment, at cost less accumulated depreciation
    
    
    1,583
    
    
    
    1,894Goodwill, net
    
    
    
    
    
    
    2,047Other intangibles, net
    
    
    268
    
    
    
    313Other assets, net
    
    
    
    
    
    
    17Total assets
    
    $
    8,706
    
    
    $
    12,622LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term borrowings
    
    $
    325
    
    
    $
    593Accounts payable
    
    
    922
    
    
    
    1,482Deferred revenue
    
    
    983
    
    
    
    2,527Accrued payroll
    
    
    497
    
    
    
    1,162Accrued expenses and other current liabilities
    
    
    970
    
    
    
    1,235Total current liabilities
    
    
    3,697
    
    
    
    6,999Long-term liabilities
    
    
    249
    
    
    
    95Commitments and contingencies (Note 9)Minority interest
    
    
    1,516
    
    
    
    1,516Stockholders equity:Common stock, $0.01 par value, 20,000,000 shares authorized, 4,478,971
issued and outstanding at December 31, 2008 and 2007
    
    
    45
    
    
    
    45Additional paid-in capital
    
    
    18,457
    
    
    
    18,437Accumulated other comprehensive loss
    
    
    (92
    )
    
    
    (127
    )Accumulated deficit
    
    
    (15,166
    )
    
    
    (14,343
    )Total stockholders equity
    
    
    3,244
    
    
    
    4,012Total liabilities and stockholders equity
    
    $
    8,706
    
    
    $
    12,622
 The accompanying notes are an integral part of these consolidated financial statements.
  F-4




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##### Table of Contents



Intelligent Systems Corporation
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share amounts)
 Year Ended December 31,
    
    2008
    
    
    2007RevenueProducts
    
    $
    14,522
    
    
    $
    14,527Services
    
    
    1,278
    
    
    
    884Total revenue
    
    
    15,800
    
    
    
    15,411Cost of revenueProducts
    
    
    7,346
    
    
    
    7,746Services
    
    
    873
    
    
    
    842Total cost of revenue
    
    
    8,219
    
    
    
    8,588ExpensesMarketing
    
    
    2,655
    
    
    
    2,711General and administrative
    
    
    4,275
    
    
    
    3,934Research and development
    
    
    3,487
    
    
    
    3,311Goodwill impairment loss
    
    
    369
    
    
    
    Loss from operations
    
    
    (3,205
    )
    
    
    (3,133
    )Other income (expense)Interest income (expense), net
    
    
    (3
    )
    
    
    164Investment income, net
    
    
    7
    
    
    
    81Equity in income (loss) of affiliate company
    
    
    37
    
    
    
    (13
    )Other income (expense), net
    
    
    6
    
    
    
    (37
    )Loss from continuing operations before taxes
    
    
    (3,158
    )
    
    
    (2,938
    )Income taxes
    
    
    28
    
    
    
    10Loss from continuing operations
    
    
    (3,186
    )
    
    
    (2,948
    )Loss from discontinued operations, no tax effect
    
    
    (489
    )
    
    
    (776
    )Gain on sale of discontinued operations, no tax effect
    
    
    2,852
    
    
    
    1,300Net loss
    
    $
    (823
    )
    
    $
    (2,424
    )Loss per share from continuing operations: Basic and diluted
    
    $
    (0.71
    )
    
    $
    (0.66
    )Income per share from discontinued operations: Basic and diluted
    
    
    0.53
    
    
    
    0.12Loss per share: Basic and diluted
    
    $
    (0.18
    )
    
    $
    (0.54
    )Basic weighted average common shares outstanding
    
    
    4,478,971
    
    
    
    4,478,971Diluted weighted average common shares outstanding
    
    
    4,478,971
    
    
    
    4,478,971
 The accompanying notes are an integral part of these consolidated financial statements.
  F-5




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##### Table of Contents



Intelligent Systems Corporation
 
 CONSOLIDATED STATEMENTS OF
STOCKHOLDERS EQUITY AND COMPREHENSIVE LOSS
 (in thousands, except share amounts)
 Year Ended December 31,2008
    
    
    2007STOCKHOLDERS EQUITYCommon stock, number of shares,beginning and end of year
    
    
    4,478,971
    
    
    
    4,478,971Common stock, amount,beginning and end of year
    
    $
    45
    
    
    $
    45Additional paid-in capital,beginning of year
    
    
    18,437
    
    
    
    18,425Additions during year
    
    
    20
    
    
    
    12End of year
    
    
    18,457
    
    
    
    18,437Accumulated other comprehensive loss,beginning of year
    
    
    (127
    )
    
    
    (127
    )Foreign currency translation adjustment
    
    
    35
    
    
    
    (12
    )Change in unrealized loss on marketable securities
    
    
    
    
    
    
    12End of year
    
    
    (92
    )
    
    
    (127
    )Accumulated deficit,beginning of year
    
    
    (14,343
    )
    
    
    (11,919
    )Net loss
    
    
    (823
    )
    
    
    (2,424
    )End of year
    
    
    (15,166
    )
    
    
    (14,343
    )Total stockholders equity
    
    $
    3,244
    
    
    $
    4,012COMPREHENSIVE LOSSNet loss
    
    $
    (823
    )
    
    $
    (2,424
    )Other comprehensive income (loss):Foreign currency translation adjustments
    
    
    35
    
    
    
    (12
    )Change in unrealized loss on marketable securities
    
    
    
    
    
    
    12Total comprehensive loss
    
    $
    (788
    )
    
    $
    (2,424
    )
 The accompanying notes are an integral part of these consolidated financial statements.
  F-6




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##### Table of Contents



Intelligent Systems Corporation
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Year Ended December 31,2008
    
    
    2007OPERATING ACTIVITIES:Net loss
    
    $
    (823
    )
    
    $
    (2,424
    )Adjustments to reconcile net loss to net cash used
for operating activities:Depreciation and amortization
    
    
    511
    
    
    
    485Loss on disposal of equipment
    
    
    
    
    
    
    30Stock-based compensation expense
    
    
    20
    
    
    
    13Gain on sale of discontinued operations
    
    
    (2,852
    )
    
    
    (1,300
    )Non-cash interest income
    
    
    (51
    )
    
    
    Goodwill impairment loss
    
    
    369
    
    
    
    Investment income, net
    
    
    
    
    
    
    (81
    )Equity in (income) loss of affiliate company
    
    
    (37
    )
    
    
    13Changes in operating assets and liabilities,
net of effect of sale of discontinued operationsAccounts receivable
    
    
    569
    
    
    
    (133
    )Accrued interest receivable
    
    
    7
    
    
    
    94Inventories
    
    
    372
    
    
    
    (519
    )Other current assets
    
    
    53
    
    
    
    79Accounts payable
    
    
    (124
    )
    
    
    (76
    )Accrued payroll
    
    
    (406
    )
    
    
    188Deferred revenue
    
    
    (960
    )
    
    
    (567
    )Accrued expenses and other current liabilities
    
    
    (424
    )
    
    
    116Other liabilities
    
    
    14
    
    
    
    (93
    )Net cash used for operating activities
    
    
    (3,762
    )
    
    
    (4,175
    )INVESTING ACTIVITIES:Proceeds from sale of investments or marketable securities
    
    
    7
    
    
    
    39Proceeds from sale of discontinued operations
    
    
    4,250
    
    
    
    Investment in subsidiary
    
    
    (182
    )
    
    
    Distributions from long-term investments
    
    
    
    
    
    
    92Proceeds from notes receivable
    
    
    497
    
    
    
    3,396Purchases of property and equipment
    
    
    (171
    )
    
    
    (1,355
    )Net cash provided by investing activities
    
    
    4,401
    
    
    
    2,027FINANCING ACTIVITIES:Borrowings under line of credit
    
    
    2,022
    
    
    
    928Repayments made on line of credit
    
    
    (2,112
    )
    
    
    (350
    )Borrowing under notes payable
    
    
    124
    
    
    
    Payments on notes payable
    
    
    (188
    )
    
    
    (145
    )Net cash provided by (used for) financing activities
    
    
    (154
    )
    
    
    578Effects of exchange rate changes on cash
    
    
    35
    
    
    
    (12
    )Net increase (decrease) in cash
    
    
    520
    
    
    
    (1,582
    )Cash at beginning of year
    
    
    554
    
    
    
    2,136Cash at end of year
    
    $
    1,074
    
    
    $
    554SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    51
    
    
    $
    13Cash paid for income taxes
    
    
    38
    
    
    
    19
 The accompanying notes are an integral part of these consolidated financial statements.
  F-7




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##### Table of Contents



Intelligent Systems Corporation
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 (in thousands)
 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES IN 2008:
 Sale of VISaer Business:
  (in thousands)Proceeds from sale:Cash
    
    $
    3,025Note receivable, net of discount
    
    
    1,261Liabilities assumed by (assets transferred to) buyer:Other current assets
    
    
    (660
    )Property and equipment, net
    
    
    (15
    )Intangible assets
    
    
    (1,835
    )Other assets
    
    
    (17
    )Accrued payroll
    
    
    258Accounts payable
    
    
    437Deferred revenue
    
    
    584Other liability
    
    
    (126
    )Accrued transaction related expenses
    
    
    (60
    )Gain on sale of VISaer business
    
    $
    2,852
 The accompanying notes are an integral part of these consolidated financial statements.
  F-8




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##### Table of Contents



1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Organization
 Nature of Operations
 Use of Estimates
 Consolidation
 Translation of Foreign Currencies
 Accounts Receivable and Allowance for Doubtful Accounts
  Inventories
 (in thousands)
    
    2008
    
    
    2007Raw materials
    
    $
    876
    
    
    $
    1,323Finished goods
    
    
    175
    
    
    
    101Total inventories
    
    $
    1,051
    
    
    $
    1,424
  F-9




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##### Table of Contents



Property and Equipment
 Classification
    
    Useful life in yearsMachinery and equipment
    
    3  5Furniture and fixtures
    
    5  7Leasehold improvements
    
    1  5Building
    
    39
  (in thousands)
    
    2008
    
    
    2007Machinery and equipment
    
    $
    3,773
    
    
    $
    4,716Furniture and fixtures
    
    
    163
    
    
    
    232Leasehold improvements
    
    
    295
    
    
    
    300Building
    
    
    413
    
    
    
    413Subtotal
    
    
    4,644
    
    
    
    5,661Accumulated depreciation
    
    
    (3,061
    )
    
    
    (3,767
    )Property and equipment, net
    
    $
    1,583
    
    
    $
    1,894
  Leased Equipment
 (in thousands)
    
    2008
    
    
    2007Cost of leased equipment
    
    $
    1,341
    
    
    $
    1,263Accumulated depreciation
    
    
    (949
    )
    
    
    (809
    )Carrying value of leased equipment
    
    $
    392
    
    
    $
    454
  Investments
  F-10




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##### Table of Contents



Other Intangibles and Goodwill
  (in thousands)
    
    2008
    
    
    2007Beginning balance, net
    
    $
    2,047
    
    
    $
    2,047Additions during year
    
    
    157
    
    
    
    Derecognition related to VISaer sale
    
    
    (1,835
    )
    
    
    Goodwill impairment loss
    
    
    (369
    )
    
    
    Ending balance, net
    
    $
    
    
    
    $
    2,047
  (in thousands)
    
    2008
    
    
    2007Patents
    
    $
    464
    
    
    $
    464Accumulated amortization
    
    
    (196
    )
    
    
    (151
    )Intangible assets, net
    
    $
    268
    
    
    $
    313
  (in thousands)2009
    
    $
    452010
    
    
    452011
    
    
    452012
    
    
    452013
    
    
    45Thereafter
    
    
    43Total amortization expense
    
    $
    268
 Deferred Revenue 
  F-11




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##### Table of Contents



Fair Value of Financial Instruments
   ChemFree:
    
    Industrial services companies, automotive parts distributors and equipment rental depotsCoreCard:
    
    Financial services companies
   Revenue Recognition
   
    
    an initial contract with the customer to license certain software modules, to provide
services to get the customer live on the software (such as training and customization) and
to provide PCS for a specified period of time thereafter (typically 12-month periods)
 
    
    other optional standalone contracts, usually performed after the customer is live on the
software, for services such as new interfaces or custom features requested by the customer,
additional training and problem resolution not covered in annual maintenance contracts
 
    
    purchase of additional licenses for new modules or for tier upgrades for a higher volume
of licensed accounts after the initial contract
  F-12




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##### Table of Contents



Cost of Revenue
 Software Development Expense .
   Warranty Costs
  F-13




---



##### Table of Contents



Legal Expense
 Research and Development
 Stock Based Compensation
   Year ended December 31,
    
    2008
    
    
    2007Risk free interest rate
    
    
    2
    %
    
    
    4
    %Expected life of option in years
    
    
    6.6
    
    
    
    6.6Expected dividend yield rate
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    50
    %
    
    
    49
    %
  Income Taxes 
 Comprehensive Loss
 New Accounting Pronouncements 
  F-14




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##### Table of Contents



Determination of the Useful
Life of Intangible Assets. Business Combinations
  2. DISCONTINUED OPERATIONS
 Sale of VISaer Business
    F-15




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##### Table of Contents



Year Ended December 31,(in thousands)
    
    2008*
    
    
    2007Net sales
    
    $
    760
    
    
    $
    3,594Operating loss
    
    
    (479
    )
    
    
    (730
    )Net loss before tax
    
    
    (489
    )
    
    
    (770
    )Income tax
    
    
    
    
    
    
    6Net loss from discontinued operations
    
    $
    (489
    )
    
    $
    (776
    )
 *
    
    through April 15, 2008. Sale of QS Business
 3. SALE OF ASSET
 Horizon Software 
 4. INVESTMENTS
  At December 31,
    
    Carrying Value
    
    
    Original(in thousands)
    
    2008
    
    
    2007
    
    
    InvestmentNKD Enterprises
    
    $
    934
    
    
    $
    897
    
    
    $
    1,286
  As of and for the year ended December 31,(in thousands)
    
    2008
    
    
    2007Revenues
    
    $
    2,142
    
    
    $
    1,906Operating income
    
    
    146
    
    
    
    24Net income
    
    
    146
    
    
    
    24Current assets
    
    $
    318
    
    
    $
    338Non-current assets
    
    
    3,028
    
    
    
    3,041Current liabilities
    
    
    316
    
    
    
    474Non-current liabilities
    
    
    
    
    
    
    Stockholders equity
    
    
    3,030
    
    
    
    2,905
  F-16




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##### Table of Contents



5. ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE
   Revenue
    
    
    Accounts Receivable2008
    
    
    2007
    
    
    2008
    
    
    2007ChemFreeCustomer A
    
    
    12
    %
    
    
    12
    %
    
    
    14
    %
    
    
    18
    %Customer B
    
    
    10
    %
    
    
    
    
    
    
    18
    %
    
    
    20
    %Customer C
    
    
    37
    %
    
    
    40
    %
    
    
    19
    %
    
    
    18
    %Customer D
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    %Customer E
    
    
    
    
    
    
    
    
    
    
    17
    %
    
    
    CoreCardCustomer F
    
    
    10
    %
    
    
    
    
    
    
    
    
    
    
    
    F-17




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##### Table of Contents



6. SHORT-TERM BORROWINGS
  Year ended December 31,(in thousands)
    
    2008
    
    
    2007Maximum outstanding (month-end)
    
    $
    1,815
    
    
    $
    415Outstanding at year end
    
    
    325
    
    
    
    415Interest rate at year end
    
    
    6.75
    %
    
    
    8.75
    %Average interest rate
    
    
    7.0
    %
    
    
    9.25
    %
   7. NOTE PAYABLE
  8. INCOME TAXES
  Year ended December 31,(in thousands)
    
    2008
    
    
    2007Current
    
    $
    28
    
    
    $
    10
  F-18




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##### Table of Contents



Year ended December 31,
    
    2008
    
    
    2007Statutory rate, blended
    
    
    38
    %
    
    
    38
    %Change in valuation allowance
    
    
    (38
    %)
    
    
    (38
    %)Other
    
    
    1
    %
    
    
    0
    %Effective rate
    
    
    1
    %
    
    
    0
    %
  (in thousands)
    
    2008
    
    
    2007Deferred tax assets:Federal, state and foreign loss carryforwards
    
    $
    5,734
    
    
    $
    5,052Capitalized research and development
    
    
    3,126
    
    
    
    3,711Accrued interest
    
    
    
    
    
    
    1,758Deferred revenue
    
    
    (611
    )
    
    
    (203
    )Federal and state tax credits
    
    
    3,103
    
    
    
    3,109Long-term investments
    
    
    
    
    
    
    (521
    )Other
    
    
    254
    
    
    
    438Total deferred tax asset
    
    
    11,606
    
    
    
    13,344Less valuation allowance
    
    
    (11,606
    )
    
    
    (13,344
    )Net deferred tax asset
    
    $
    
    
    
    $
    
    (in thousands)
    
    2008
    
    
    20072017
    
    $
    1,038
    
    
    $
    1,0382019
    
    
    2,901
    
    
    
    2,9012021
    
    
    495
    
    
    
    4952022
    
    
    234
    
    
    
    2342023
    
    
    1,778
    
    
    
    1,778Thereafter
    
    
    8,408
    
    
    
    6,550Total
    
    $
    14,854
    
    
    $
    12,996
  F-19




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##### Table of Contents



9. COMMITMENTS AND CONTINGENCIES
 Leases 
 Year ended December 31,(in thousands)2009
    
    $
    194Total minimum lease payments
    
    $
    194
   Legal Matters 
 VISaer Stock Purchase Transaction 
  F-20




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##### Table of Contents



10. POST-RETIREMENT BENEFITS
  11. DEFINED CONTRIBUTION PLANS
  12. RELATED PARTY TRANSACTION
  13. STOCKHOLDERS EQUITY
  14. STOCK OPTION PLANS
    F-21




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##### Table of Contents



2008
    
    
    2007Options outstanding at January 1
    
    
    209,000
    
    
    
    203,666Options granted
    
    
    12,000
    
    
    
    12,000Options exercised
    
    
    
    
    
    
    Options canceled
    
    
    
    
    
    
    6,666Options outstanding at December 31
    
    
    221,000
    
    
    
    209,000Options available for grant at December 31
    
    
    434,000
    
    
    
    446,000Options exercisable at December 31
    
    
    203,000
    
    
    
    197,000Exercise price ranges per share:Granted
    
    $
    3.30
    
    
    $
    3.84Canceled
    
    
    
    
    
    $
    4.25Outstanding
    
    $
    1.51  $4.26
    
    
    $
    1.51  $4.26Weighted average exercise price per share:Granted
    
    $
    3.30
    
    
    $
    3.84Canceled
    
    
    
    
    
    $
    4.25Outstanding at December 31
    
    $
    2.46
    
    
    $
    2.42Exercisable at December 31
    
    $
    2.37
    
    
    $
    2.33
  Options Outstanding:
 Wgt. Avg.Range of
    
    Number
    
    
    Contractual
    
    
    Wgt. Avg.
    
    
    AggregateExercise Price
    
    Outstanding
    
    
    Life Remaining
    
    
    Exercise Price
    
    
    Intrinsic Value$1.51  $2.08
    
    
    136,000
    
    
    4.6 yrs
    
    
    $
    1.62
    
    
    
    $3.15  $4.26
    
    
    85,000
    
    
    4.2 yrs
    
    
    $
    3.82
    
    
    
    $1.51  $4.26
    
    
    221,000
    
    
    4.4 yrs
    
    
    $
    2.46
    
    
    
    
 Options Exercisable:
 Wgt. Avg.Range of
    
    Number
    
    
    Contractual
    
    
    Wgt. Avg.Exercise Price
    
    Exercisable
    
    
    Life Remaining
    
    
    Exercise Price$1.51  $2.08
    
    
    136,000
    
    
    4.6 yrs
    
    
    $
    1.62$3.15  $4.26
    
    
    67,000
    
    
    2.8 yrs
    
    
    $
    3.91$1.51  $4.26
    
    
    203,000
    
    
    4.0 yrs
    
    
    $
    2.37
   F-22




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##### Table of Contents



15. FOREIGN REVENUES AND OPERATIONS
  Year ended December 31,(in thousands)
    
    2008
    
    
    2007Foreign Countries:United Kingdom
    
    $
    1,591
    
    
    $
    1,426Chile
    
    
    19
    
    
    
    17Pacific Rim *
    
    
    144
    
    
    
    232China
    
    
    13
    
    
    
    Other
    
    
    44
    
    
    
    28Subtotal
    
    
    1,811
    
    
    
    1,703United States
    
    
    13,989
    
    
    
    13,708Total
    
    $
    15,800
    
    
    $
    15,411
 *
    16. INDUSTRY SEGMENTS
   F-23




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##### Table of Contents



Year ended December 31,(in thousands)
    
    2008
    
    
    2007Information TechnologyRevenue
    
    $
    3,042
    
    
    $
    2,223Operating loss
    
    
    (2,619
    )
    
    
    (2,565
    )Depreciation and amortization
    
    
    86
    
    
    
    140Capital expenditures
    
    
    16
    
    
    
    567Identifiable assets
    
    
    2,600
    
    
    
    4,171Goodwill
    
    
    
    
    
    
    2,047Industrial ProductsRevenue
    
    $
    12,758
    
    
    $
    13,188Operating income
    
    
    399
    
    
    
    533Depreciation and amortization
    
    
    395
    
    
    
    271Capital expenditures
    
    
    143
    
    
    
    776Identifiable assets
    
    
    4,415
    
    
    
    4,932Goodwill
    
    
    
    
    
    
    Consolidated SegmentsRevenue
    
    $
    15,800
    
    
    $
    15,411Operating loss
    
    
    (2,220
    )
    
    
    (2,032
    )Depreciation and amortization
    
    
    481
    
    
    
    412Capital expenditures
    
    
    159
    
    
    
    1,343Identifiable assets
    
    
    7,015
    
    
    
    9,103Goodwill
    
    
    
    
    
    
    2,047
  Year ended December 31,(in thousands)
    
    2008
    
    
    2007Consolidated segments operating loss
    
    $
    (2,220
    )
    
    $
    (2,032
    )Corporate expenses
    
    
    (985
    )
    
    
    (1,101
    )Consolidated loss from continuing operations
    
    $
    (3,205
    )
    
    $
    (3,133
    )Depreciation and amortizationConsolidated segments
    
    $
    481
    
    
    $
    412Corporate
    
    
    30
    
    
    
    22Consolidated
    
    $
    511
    
    
    $
    434Capital expendituresConsolidated segments
    
    $
    159
    
    
    $
    1,343Corporate
    
    
    12
    
    
    
    10Consolidated
    
    $
    171
    
    
    $
    1,353
 As of December 31,(in thousands)
    
    2008
    
    
    2007AssetsConsolidated segments identifiable assets
    
    $
    7,015
    
    
    $
    9,103Corporate
    
    
    1,691
    
    
    
    3,519Consolidated
    
    $
    8,706
    
    
    $
    12,622
  F-24




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##### Table of Contents



17. INCOME (LOSS) PER SHARE
   Year ended December 31,(in thousands except per share data)
    
    2008
    
    
    2007BasicNet loss
    
    $
    (823
    )
    
    $
    (2,424
    )Weighted average common shares outstanding
    
    
    4,479
    
    
    
    4,479Net loss per share
    
    $
    (0.18
    )
    
    $
    (0.54
    )DilutedNet loss
    
    $
    (823
    )
    
    $
    (2,424
    )Weighted average common shares outstanding
    
    
    4,479
    
    
    
    4,479Effect of dilutive potential common shares: stock options
    
    
    
    
    
    
    Total
    
    
    4,479
    
    
    
    4,479Net loss per share
    
    $
    (0.18
    )
    
    $
    (0.54
    )
   F-25




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##### Table of Contents



Exhibit Index
 Exhibit Number
    
    Description10.9
    
    
    Seventh Modification to Loan Documents by and among Intelligent Systems Corporation and
Fidelity Bank dated December 1, 2008.21.1
    
    
    List of subsidiaries of Registrant.23.1
    
    
    Consent of Habif, Arogeti & Wynne, LLP23.2
    
    
    Consent of Tauber & Balser, P.C.31.1
    
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 Intelligent Systems Corporation