Basis of Presentation

–

Throughout this report, the terms “we”, “us”, “ours”, “ISC” and “company” refer to Intelligent Systems Corporation, including its wholly-owned and majority-owned subsidiaries. The unaudited Consolidated Financial Statements presented in this Form

-Q have been prepared in accordance with accounting principles generally accepted in the United States applicable to interim financial statements. Accordingly, they do

not

include all the information and notes required for complete financial statements. In the opinion of ISC management, these Consolidated Financial Statements contain all adjustments (which comprise only normal and recurring accruals) necessary to present fairly the financial position and results of operations as of and for the

three

and

nine

month periods ended

September 30, 2018

and

2017.

The interim results for the

three

and

nine

months ended

September 30, 2018

are

not

necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with our Consolidated Financial Statements and notes thereto for the fiscal year ended

December 31, 2017,

as filed in our Annual Report on Form

-K.

There have been

material changes in the Company’s significant accounting policies, other than the adoption of accounting pronouncement ASU

2014

09,

Revenue from Contracts with Customers (Topic

606

), in the

first

quarter of

2018

as described in Note

as compared to the significant accounting policies described in the Company’s Annual Report on Form

-K for the year ended

December

31,

2017.

As a result of the implementation of Topic

606,

certain revenue, and the associated cost of revenue, in the comparative periods, previously aggregated as product revenue has been reviewed and reclassified, based upon its performance obligations, from product revenue to service revenue. The impact to our fiscal quarters and the year ended

December 31, 2017

was as follows:

	Three Months Ended												Twelve Months Ended
(in thousands)	Dec. 31, 2017			Sept. 30 2017			June 30, 2017			Mar. 31, 2017			Dec. 31, 2017
R evenue
Services	$	166		$	162		$	159		$	149		$	636
Products		(166	)		(162	)		(159	)		(149	)		(636	)
Total net revenue		−			−			−			−			−
Cost of Revenue
Services		62			51			50			46			209
Products		(62	)		(51	)		(50	)		(46	)		(209	)
Total cost of revenue		−			−			−			−			−
Net Income	$	−		$	−		$	−		$	−		$	−