Note 4 - Investments

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Cost-method Investments, Description [Text Block]

4.

         INVESTMENTS

Beginning in

2017,

and in subsequent periods we entered into a Loan Agreement and various Promissory Notes, as discussed in more detail in Note

3,

with a privately held identity and professional services company with ties to the FinTech industry. In

June 2019,

we converted the Loan Agreement and all Promissory Notes into equity resulting in ownership of

40

percent of the company. We account for our investment using the equity method of accounting which resulted in losses of

$92,000

and

$268,000

for the

three

and

nine

months ended

September 30, 2020,

respectively, included in investment loss on the Consolidated Statement of Operations. The carrying value of

$2,053,000

is included in long-term investments. A portion of the company's business has been negatively impacted by the pandemic while other portions of its business have improved. We evaluate on a continuing basis whether any impairment indicators are present that would require additional analysis or write-downs of the investment. While we have

not

recorded an impairment related to this investment or determined that an impairment trigger existed at

September 30, 2020,

significant variations from current expectations could impact future assessments resulting in future impairment charges.

On

December 30, 2016

we signed an agreement to invest

$1,000,000

in a privately held technology company and program manager in the FinTech industry, with

$500,000

of the investment held in escrow to pay future fees to CoreCard pursuant to a Processing Agreement entered into by the parties. The investment was funded on

January 4, 2017.

In the quarter ended

June 30, 2018,

we recorded an impairment charge of

$250,000

to reduce the carrying value due to the investee's limited funding to support its operation and sales and marketing efforts. In the quarter ended

March 31, 2020,

due to the uncertainty from the economic downturn resulting from the recent pandemic, we determined that the fair value of our investment was

$0

and therefore we recorded an impairment charge of

$750,000,

included in investment loss on the Consolidated Statement of Operations for the quarter ended

March 31, 2020.

CoreCard remains in an ongoing business relationship with the company pursuant to a Processing Agreement and a Program Management Services Agreement. CoreCard is positioned to assume the program management aspects of the investee company if the need should arise to ensure their program(s) ongoing viability and the completion of the Processing Agreement with CoreCard.