10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023 OR

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to ____________

Commission file number 1-9330

CORECARD CORPORATION

(Exact name of registrant as specified in its charter)

Georgia	58-1964787
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Meca Way, Norcross, Georgia	30093
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (770) 381-2900

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value for the class	CCRD	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer         ☐	Accelerated filer                          ☐
Non-accelerated filer           ☐	Smaller reporting company         ☑
	Emerging growth company         ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.         ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 31, 2023, 8,440,356 shares of Common Stock of the issuer were outstanding.

CoreCard Corporation

Index

Form 10-Q

		Page
Part I	Financial Information
Item 1	Financial Statements (unaudited)
	Consolidated Balance Sheets at September 30, 2023 and December 31, 2022	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022	4
	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022	4
	Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	6
	Notes to Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 4	Controls and Procedures	17
Part II	Other Information
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 6	Exhibits	19
Signatures		19

2

Part I          FINANCIAL INFORMATION

Item 1. Financial Statements

CoreCard Corporation

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

As of	September 30, 2023			December 31, 2022
ASSETS	(unaudited)			(audited)
Current assets:
Cash and cash equivalents	$	31,614		$	20,399
Marketable securities		5,147			4,973
Accounts receivable, net		5,875			13,220
Other current assets		5,887			3,729
Total current assets		48,523			42,321
Investments		3,634			5,180
Property and equipment, at cost less accumulated depreciation		11,681			12,006
Other long-term assets		2,947			3,725
Total assets	$	66,785		$	63,232
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,708		$	2,011
Deferred revenue, current portion		3,743			1,094
Accrued payroll		1,941			1,888
Accrued expenses		806			525
Other current liabilities		2,043			2,025
Total current liabilities		10,241			7,543
Commitments and Contingencies (see Note 9)
Noncurrent liabilities:
Deferred revenue, net of current portion		361			473
Deferred tax liability		541			472
Long-term lease obligation		1,367			1,981
Total noncurrent liabilities		2,269			2,926
Stockholders’ equity:
Common stock, $0.01 par value: Authorized shares - 20,000,000;
Issued shares – 9,016,140 and 9,010,119 at September 30, 2023 and December 31, 2022, respectively;
Outstanding shares – 8,440,356 and 8,502,735 at September 30, 2023 and December 31, 2022, respectively		90			90
Additional paid-in capital		16,621			16,471
Treasury stock, 575,784 and 507,384 shares at September 30, 2023 and December 31, 2022, respectively, at cost		(18,213	)		(16,662	)
Accumulated other comprehensive income (loss)		(57	)		(61	)
Accumulated income		55,834			52,925
Total stockholders’ equity		54,275			52,763
Total liabilities and stockholders’ equity	$	66,785		$	63,232

The accompanying notes are an integral part of these Consolidated Financial Statements.

3

CoreCard Corporation

CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Three Months Ended September 30,					Nine Months Ended September 30,
	2023			2022		2023			2022
Revenue
Services	$	13,399		$	14,450	$	42,053		$	39,657
Products		−			−		1,794			14,283
Total net revenue		13,399			14,450		43,847			53,940
Cost of revenue
Services		9,279			8,431		28,380			23,824
Products		−			−		−			−
Total cost of revenue		9,279			8,431		28,380			23,824
Expenses
Marketing		63			80		237			231
General and administrative		1,155			1,107		4,220			4,048
Development		2,489			3,129		6,094			8,916
Income from operations		413			1,703		4,916			16,921
Investment income (loss)		(1,015	)		39		(1,701	)		196
Other income (loss), net		308			60		653			126
(Loss) income before income taxes		(294	)		1,802		3,868			17,243
Income tax expense (benefit)		(72	)		443		959			4,358
Net (loss) income	$	(222	)	$	1,359	$	2,909		$	12,885
Earnings (loss) per share:
Basic	$	(0.03	)	$	0.16	$	0.34		$	1.50
Diluted	$	(0.03	)	$	0.16	$	0.34		$	1.49
Basic weighted average common shares outstanding		8,460,473			8,538,954		8,485,416			8,596,654
Diluted weighted average common shares outstanding		8,460,473			8,559,665		8,509,825			8,621,388

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Net (loss) income	$	(222	)	$	1,359		$	2,909		$	12,885
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities		11			(6	)		36			(6	)
Foreign currency translation adjustments		15			120			(32	)		364
Total comprehensive (loss) income	$	(196	)	$	1,473		$	2,913		$	13,243

The accompanying notes are an integral part of these Consolidated Financial Statements.

4

CoreCard Corporation

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands, except share amounts)

	Common Stock					Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Accumulated Earnings			Stockholders’ Equity
	Shares			Amount
Balance at December 31, 2021		8,689,815		$	90	$	16,261	$	(11,327	)	$	(194	)	$	39,044		$	43,874
Common stock repurchased*		(70,864	)						(2,332	)								(2,332	)
Net income															8,670			8,670
Stock compensation expense							10											10
Foreign currency translation adjustment												1						1
Balance at March 31, 2022		8,618,951		$	90	$	16,271	$	(13,659	)	$	(193	)	$	47,714		$	50,223
Common stock repurchased*		(58,447	)						(1,347	)								(1,347	)
Net income															2,856			2,856
Stock compensation expense		6,504					150											150
Foreign currency translation adjustment												243						243
Balance at June 30, 2022		8,567,008		$	90	$	16,421	$	(15,006	)	$	50		$	50,570		$	52,125
Common stock repurchased*		(56,443	)						(1,363	)								(1,363	)
Net income															1,359			1,359
Foreign currency translation adjustment												120						120
Unrealized gain (loss) on marketable securities												(6	)					(6	)
Balance at September 30, 2022		8,510,565		$	90	$	16,421	$	(16,369	)	$	164		$	51,929		$	52,235
Balance at December 31, 2022		8,502,735		$	90	$	16,471	$	(16,662	)	$	(61	)	$	52,925		$	52,763
Net income															1,256			1,256
Unrealized gain (loss) on marketable securities												37						37
Foreign currency translation adjustment												(53	)					(53	)
Balance at March 31, 2023		8,502,735		$	90	$	16,471	$	(16,662	)	$	(77	)	$	54,181		$	54,003
Common stock repurchased, including excise tax*		(18,075	)						(443	)								(443	)
Net income															1,875			1,875
Stock compensation expense		6,021			-		150											150
Unrealized gain (loss) on marketable securities												(12	)					(12	)
Foreign currency translation adjustment												6						6
Balance at June 30, 2023		8,490,681		$	90	$	16,621	$	(17,105	)	$	(83	)	$	56,056		$	55,579
Common stock repurchased*		(50,325	)						(1,108	)								(1,108	)
Net loss															(222	)		(222	)
Unrealized gain (loss) on marketable securities												11						11
Foreign currency translation adjustment												15						15
Balance at September 30, 2023		8,440,356		$	90	$	16,621	$	(18,213	)	$	(57	)	$	55,834		$	54,275

*At September 30, 2023, approximately $16.8 million was authorized for future repurchases of our common stock.

The accompanying notes are an integral part of these Consolidated Financial Statements.

5

CoreCard Corporation

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine Months Ended September 30,
CASH PROVIDED BY (USED FOR):	2023			2022
OPERATING ACTIVITIES:
Net income	$	2,909		$	12,885
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,011			3,636
Stock-based compensation expense		150			160
Deferred income taxes		69			312
Non-cash investment loss (income)		1,000			(18	)
Equity in loss (gain) of affiliate company		701			(195	)
Changes in operating assets and liabilities:
Accounts receivable, net		7,345			(2,268	)
Other current assets		(2,329	)		(2,620	)
Other long-term assets		563			(41	)
Accounts payable		(78	)		600
Accrued payroll		53			336
Deferred revenue, current portion		2,649			(1,134	)
Accrued expenses		281			(54	)
Other current liabilities		40			(1,052	)
Deferred revenue, net of current portion		(112	)		310
Net cash provided by operating activities		18,252			10,857
INVESTING ACTIVITIES:
Purchases of property and equipment		(4,845	)		(7,532	)
Advances on notes and interest receivable		(450	)		−
Proceeds from payments on notes receivable		147			165
Purchases of marketable securities		(1,776	)		(988	)
Maturities of marketable securities		1,602			−
Purchase of long-term investment		(155	)		−
Net cash used for investing activities		(5,477	)		(8,355	)
FINANCING ACTIVITIES:
Repurchases of common stock		(1,528	)		(5,042	)
Net cash used for financing activities		(1,528	)		(5,042	)
Effects of exchange rate changes on cash		(32	)		364
Net increase (decrease) in cash		11,215			(2,176	)
Cash at beginning of period		20,399			29,244
Cash at end of period	$	31,614		$	27,068
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes	$	168		$	5,330
Purchases of property and equipment, accrued but not paid	$	−		$	207

The accompanying notes are an integral part of these Consolidated Financial Statements.

6

CoreCard Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Basis of Presentation

Throughout this report, the terms “we”, “us”, “ours”, “CoreCard” and “Company” refer to CoreCard Corporation, including its wholly-owned and majority-owned subsidiaries. The unaudited Consolidated Financial Statements presented in this Form 10-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 of the information and notes required for complete financial statements. In the opinion of CoreCard 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, 2023 and 2022. The interim results for the three and nine months ended September 30, 2023 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, 2022, as filed in our Annual Report on Form 10-K.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements Adopted

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, to require financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. Subsequently, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables arising from operating leases are within the scope of lease accounting standards. Further, the FASB issued ASU No. 2019-04, ASU No. 2019-05, ASU 2019-10 and ASU 2019-11 to provide additional guidance on the credit losses standard. The ASUs are effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. Adoption of the ASUs is on a modified retrospective basis. We adopted the ASUs on January 1, 2023, which did not have a material impact on our consolidated financial statements.

In March 2022, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2022-02 "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures" (ASU 2022-02), which eliminates the accounting guidance for troubled debt restructurings (TDRs) by creditors that have adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and enhances certain disclosure requirements. The ASU is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. Adoption of the ASUs is on a modified retrospective basis. We adopted the ASUs on January 1, 2023, which did not have a material impact on our Consolidated Financial Statements.

We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our Consolidated Financial Statements.

2. REVENUE 

Disaggregation of Revenue

In the following table, revenue is disaggregated by type of revenue for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
License	$	−	$	−	$	1,794	$	14,283
Professional services		6,432		7,776		22,127		21,943
Processing and maintenance		5,814		5,267		16,933		13,837
Third party		1,153		1,407		2,993		3,877
Total	$	13,399	$	14,450	$	43,847	$	53,940

7

Foreign revenues are based on the location of the customer. Revenues from customers by geographic area for the three and nine months ended September 30, 2023 and 2022 are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
United States	$	12,777	$	13,973	$	42,307	$	52,836
Middle East		588		451		1,452		1,030
European Union		34		26		88		74
Total	$	13,399	$	14,450	$	43,847	$	53,940

Concentration of Revenue

The following table indicates the percentage of consolidated revenue represented by each customer that represented more than 10 percent of consolidated revenue in the three and nine month periods ended September 30, 2023 and 2022. Most of our customers have multi-year contracts with recurring revenue as well as professional services fees that vary by period depending on their business needs.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Customer A		62	%		70	%		68	%		77	%

3. NOTES RECEIVABLE

In February 2021, we entered into and advanced a $550,000 Promissory Note with a privately held technology company and program manager in the FinTech industry. The note had an interest rate of 4.6 percent annually and was paid in full in August 2023. In September 2023, we entered into and advanced a $450,000 Promissory Note with a maturity date of October 2025 and an annual interest rate of 5.25 percent. The carrying value of the current portion of our note receivable of $240,000 at September 30, 2023 is included in other current assets on the Consolidated Balance Sheets. The carrying value of the noncurrent portion of our note receivable of $210,000 at September 30, 2023 is included in other long-term assets on the Consolidated Balance Sheets.

4. INVESTMENTS

We hold a 28 percent ownership interest in a privately held identity and professional services company with ties to the FinTech industry. The carrying value of our investment was $3,479,000 at September 30, 2023, included in investments on the Consolidated Balance Sheets. We account for this investment using the equity method of accounting which resulted in losses of $15,000 and $701,000 for the three and nine months ended September 30, 2023, respectively, and income of $38,000 and $195,000 for the three and nine months ended September 30, 2022, respectively, included in investment income (loss) on the Consolidated Statement of Operations. 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 as of September 30, 2023, variations from current expectations could result in future impairment charges.

In the second quarter of 2021, we invested $1,000,000 in a privately held company that provides supply chain and receivables financing. During the third quarter of 2023, due to the failure of the business to successfully monetize its product offerings, we recorded an impairment charge of $1,000,000 included in investment income (loss) on the Consolidated Statement of Operations, to reduce the carrying value of the investee company to $0 as of September 30, 2023.

5. STOCK-BASED COMPENSATION

At September 30, 2023, we have two stock-based compensation plans in effect. We record compensation cost related to unvested stock awards by recognizing the unamortized grant date fair value on a straight-line basis over the vesting periods of each award. We have estimated forfeiture rates based on our historical experience. Stock option compensation expense for the three and nine month periods ended September 30, 2023 and 2022 has been recognized as a component of general and administrative expenses in the accompanying Consolidated Financial Statements. We recorded $0 of stock-based compensation expense for the three months ended September 30, 2023 and 2022 and $150,000 and $160,000 for the nine months ended September 30, 2023 and 2022, respectively.

8

As of September 30, 2023, there is no unrecognized compensation cost related to stock options. There were no options exercised during the three and nine months ended September 30, 2023. No options expired unexercised during the quarter. The following table summarizes options as of September 30, 2023:

Options Outstanding and Exercisable:
Range of Exercise Price			Number Outstanding		Wgt. Avg. Contractual Life Remaining (in years)		Wgt. Avg. Exercise Price		Aggregate Intrinsic Value
$3.50	-	$3.86		13,000		3.5	$	3.75	$	211,260
	$7.80			8,000		4.7	$	7.80	$	97,600
	$19.99			30,000		5.3	$	19.99	$	300
	$39.11			8,000		5.7	$	39.11	$	−
$3.50	-	$39.11		59,000		4.9	$	17.35	$	309,160

The estimated fair value of options granted is calculated using the Black-Scholes option pricing model with assumptions as previously disclosed in our 2022 Form 10-K.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the company’s closing stock price on the last trading day of the third quarter of 2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2023. The amount of aggregate intrinsic value will change based on the market value of the company’s stock.

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, marketable securities, accounts receivable, notes receivable, accounts payable and certain other financial instruments (such as accrued expenses, and other current liabilities) included in the accompanying Consolidated Balance Sheets approximates their fair value principally due to the short-term maturity of these instruments.

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, marketable securities, trade accounts and notes receivable. Our available cash is held in accounts managed by third-party financial institutions. Cash may exceed the Federal Deposit Insurance Corporation, or FDIC, insurance limits. While we monitor cash balances on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash; however, we can provide no assurances that access to our cash will not be impacted by adverse conditions in the financial markets.

7. FAIR VALUE MEASUREMENTS

In determining fair value, the Company uses quoted market prices in active markets. GAAP establishes a fair value measurement framework, provides a single definition of fair value, and requires expanded disclosure summarizing fair value measurements. GAAP emphasizes that fair value is a market-based measurement, not an entity specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability.

GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable input be used when available. Observable inputs are based on data obtained from sources independent of the Company that market participants would use in pricing the asset or liability. Unobservable inputs are inputs that reflect the company’s assumptions about the estimates market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. 

9

The hierarchy is measured in three levels based on the reliability of inputs:

• Level 1

Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments.

• Level 2

Valuations based on quoted prices in less active, dealer or broker markets.  Fair values are primarily obtained from third party pricing services for identical or comparable assets or liabilities.

• Level 3

Valuations derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and not based on market, exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market and significant professional judgment is needed in determining the fair value assigned to such assets or liabilities.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The fair value of equity method investments has not been determined as it was impracticable to do so due to the fact that the investee companies are relatively small, early stage private companies for which there is no comparable valuation data available without unreasonable time and expense.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value:

	September 30, 2023
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents
Money market accounts	$	25,947	$	−	$	−	$	25,947
Marketable securities
Corporate, municipal debt and treasury securities		5,147		−		−		5,147
Total assets	$	31,094	$	−	$	−	$	31,094

The Company classifies money market funds, commercial paper, U.S. government securities, asset-backed securities and corporate securities within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

There were no transfers of financial instruments between the fair value hierarchy levels during the nine months ended September 30, 2023.

8. MARKETABLE SECURITIES

The amortized cost, unrealized gain (loss), and estimated fair value of the Company's investments in securities available for sale consisted of the following:

	September 30, 2023
(In thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Marketable securities
Corporate, municipal debt and treasury securities	$	5,109	$	56	$	(18	)	$	5,147

The Company had fifteen marketable securities in an unrealized loss position as of September 30, 2023. The Company did not identify any marketable securities that were other-than-temporarily impaired as of September 30, 2023 and 2022. The Company does not intend to sell any marketable securities that have an unrealized loss at September 30, 2023 and it is not more likely than not that the Company will be required to sell such securities before any anticipated recovery.

10

The following table summarizes the stated maturities of the Company’s marketable securities:

	September 30, 2023				December 31, 2022
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	2,012	$	2,048	$	1,594	$	1,602
Due after one year through three years		3,097		3,099		3,356		3,371
Total	$	5,109	$	5,147	$	4,950	$	4,973

9. COMMITMENTS AND CONTINGENCIES

Leases

We have noncancelable operating leases for offices and data centers expiring at various dates through February 2027. These operating leases are included in other long-term assets on the Company's September 30, 2023 and December 31, 2022 Consolidated Balance Sheets and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are included in other current liabilities and long-term lease obligation on the Company's September 30, 2023 and December 31, 2022 Consolidated Balance Sheets. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

Supplemental Information–Leases

Supplemental information related to our right-of-use assets and related lease liabilities is as follows:

	September 30, 2023			December 31, 2022
Right-of-use asset, net and lease liabilities (in thousands)	$	2,342		$	3,373
Weighted average remaining lease term (years)		2.7			3.2
Weighted average discount rate		3.4	%		3.4	%

For the nine-months ended September 30, 2023 and 2022, cash paid for operating leases included in operating cash flows was $1,005,000 and $994,000, respectively.

Maturities of our operating lease liabilities as of September 30, 2023 is as follows:

	Operating Leases
	(in thousands)
2023	$	362
2024		1,017
2025		635
2026		523
2027		68
Total lease liabilities	$	2,605

Lease expense for the three and nine months ended September 30, 2023 and 2022 consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Cost of Revenue	$	187	$	183	$	557	$	595
General and Administrative		116		105		339		259
Development		28		47		109		140
Total	$	331	$	335	$	1,005	$	994

Legal Matters

There are no pending or threatened legal proceedings. However, in the ordinary course of business, from time to time we may be involved in various pending or threatened legal actions. The litigation process is inherently uncertain, and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. We accrue for unpaid legal fees for services performed to date.

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10. INCOME TAXES

We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards. A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not that some or all deferred tax assets will not be realized.

There were no unrecognized tax benefits at September 30, 2023 and December 31, 2022. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the periods presented. We have determined we have no uncertain tax positions.

We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds 80%, as well as individual subsidiary returns in various states and foreign jurisdictions. With few exceptions we are no longer subject to U.S. federal, state and local or foreign income tax examinations by taxing authorities for returns filed more than three years ago.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to historical information, this Form 10-Q may contain forward-looking statements relating to CoreCard. All statements, trend analyses and other information 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”, “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 including those factors described below under “Factors That May Affect Future Operations”, and that actual results may differ materially from those contemplated by such forward-looking statements. CoreCard undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.

For purposes of this discussion and analysis, we are assuming and relying upon the reader’s familiarity with the information contained in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Form 10- K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission.

Overview

CoreCard Corporation, a Georgia corporation, and its predecessor companies have operated since 1973 and its securities have been publicly traded since 1980. In this report, sometimes we use the terms “Company”, “us”, “ours”, “we”, “Registrant” and similar words to refer to CoreCard Corporation and subsidiaries. Our executive offices are located in Norcross, Georgia and our website is www.corecard.com.

We are primarily engaged in the business of providing technology solutions and processing services to the financial technology and services market, commonly referred to as the FinTech industry. Our operations are conducted through our affiliate companies located in Romania, India, the United Arab Emirates and Colombia, as well as the corporate office in Norcross, Georgia which provides significant administrative, human resources and executive management support. Corecard’s foreign subsidiaries are CoreCard SRL in Romania, CoreCard Software Pvt Ltd in India, CoreCard Colombia SAS in Colombia and Corecard Software DMCC in the United Arab Emirates, that perform software development and testing as well as processing operations support.

Our results vary in part depending on the size and number of software licenses recognized as well as the value and number of professional services contracts recognized in a particular period. As we continue to grow our Processing Services business, we continue to gain economies of scale on the investments we have made in the infrastructure, resources, processes and software features developed over the past number of years to support this growing side of our business. We are adding new processing customers at a faster pace than we are adding new license customers, resulting in steady growth in the processing revenue stream. However, we also receive license revenue and professional services revenue from our largest customer, Goldman Sachs Group, Inc. (“Goldman”), referred to as “Customer A” in the Notes to Consolidated Financial Statements. In total, this customer represented 68% and 77% of our consolidated revenues in the first nine months of 2023 and 2022, respectively.

On July 20, 2023, we executed an Omnibus Amendment with Goldman covering the following agreements between the Company and Goldman:

● Software License and Support Agreement, dated as of October 16, 2018 (the “SLSA”);

● Master Professional Services Agreement, dated as of August 1, 2019 (the “MPSA”, and together with the SLSA, the “Agreements”);

● Schedule of Work No. 1 to Professional Services Agreement, dated as of August 1, 2019, and Amendment No. 2 to Schedule of Work No. 1, dated as of January 13, 2021 (“SOW 1”); and

● Schedule of Work No. 2 to Professional Services Agreement, dated as of August 1, 2019, and Amendment No. 2 to Schedule of Work No. 2, dated as of January 13, 2021 (“SOW 2”, and together with SOW 1, the “SOWs”).

The Amendment, which was effective as of July 1, 2023, extends the Support Services term of the SLSA through June 30, 2026, and extends the term of the SOWs through June 30, 2025. Among other things, the Amendment also (i) converts the payment terms under SOW 2 from a time and materials basis to a fixed monthly fee with annual adjustments based on changes to the Consumer Price Index, resulting in recurring rather than variable revenue for the Company, and (ii) modifies the service level agreements and related service level credits and recoveries related to defined performance metrics, under the Agreements and SOWs. All other material terms of the Agreements and SOWs, as amended, remain unchanged.

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The amount and timing of future revenues from Goldman will be dependent on various factors not in our control such as the number of accounts on file and the level of customization needed by the customer. Our professional services revenue decreased in the third quarter of 2023 primarily due to lower demand from Goldman for our development personnel. We expect a lower level of professional services for the remainder of 2023 and into 2024. License revenue from this customer, similar to other license arrangements, is tiered based on the number of active accounts on the system. Once the customer achieves each tier level, they receive a perpetual license up to that number of accounts; inactive accounts do not count toward the license tier. The customer receives an unlimited perpetual license at a maximum tier level that allows them to utilize the software for any number of active accounts. They previously used the software for a single institution. In the first quarter of 2022 they added an additional customer, resulting in additional one-time license fees. Support and maintenance fees are charged based on the tier level achieved and increase at new tier levels.

The infrastructure of our multi customer environment is scalable for the future. A significant portion of our expense is related to personnel, including approximately 1,100 employees located in India, Romania, the United Arab Emirates and Colombia. In October 2020, we opened a new office in Dubai, United Arab Emirates to support CoreCard’s expansion of processing services into new markets in the Asia Pacific, Middle East, Africa and European regions. In October 2021, we opened a new location in Bogotá, Colombia where we are hiring technical personnel to support existing customers and continued growth. Our ability to hire and train employees on our processes and software impacts our ability to onboard new customers and deliver professional services for software customizations. In addition, we have certain corporate office expenses associated with being a public company that impact our operating results.

Our revenue fluctuates from period to period and our results are not necessarily indicative of the results to be expected in future periods. It is difficult to predict the level of consolidated revenue on a quarterly or annual basis for a number of reasons, including the following:

● Software license revenue in a given period may consist of a relatively small number of contracts and contract values can vary considerably depending on the software product and scope of the license sold. 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.

● 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 or contract performance, but which may affect the amount, timing and characterization of our deferred and/or recognized revenue.

● Customers typically require our professional services to modify or enhance their CoreCard software implementation based on their specific business strategy and operational requirements, which vary from customer to customer and period to period.

● The timing of new processing customer implementations is often dependent on third party approvals or processes which are typically not under our direct control.

We continue to maintain a strong cash position. We intend to use cash balances to support the domestic and international operations associated with our CoreCard business and to expand our operations in the FinTech industry through financing the growth of CoreCard and, if appropriate opportunities become available, through acquisitions of businesses in this industry. In April 2021, the Board authorized $10 million for our share repurchase program, all of which has been utilized. We made share repurchases of approximately $1.5 million for the nine months ended September 30, 2023, and $5 million in share repurchases in the nine month period ended September 30, 2022. In May 2022, the Board authorized an additional $20 million for our share repurchase program. We have approximately $16.8 million of authorized share repurchases remaining at September 30, 2023.

Results of Operations

The following discussion should be read in conjunction with the unaudited Consolidated Financial Statements and the Notes to Consolidated Financial Statements presented in this quarterly report.

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Revenue – Total revenue in the three and nine month periods ended September 30, 2023 was $13,399,000 and $43,847,000, respectively, which represents decreases of 7% percent and 19% percent compared to the respective periods in 2022.

● Revenue from services was $13,399,000 and $42,053,000 in the three and nine month periods ended September 30, 2023, respectively, which represents a decrease of 7% percent and an increase of 6% percent compared to the respective periods in 2022. Revenue for the third quarter of 2023 was lower compared to the third quarter of 2022 due to a decrease in the number and value of professional services contracts completed during the third quarter of 2023, primarily related to lower professional services revenue from our largest customer, Goldman Sachs Group, Inc. This decline was partially offset by increased revenue from transaction processing services and software maintenance and support services in the third quarter of 2023 as compared to the third quarter of 2022 due to an increase in the number of customers and accounts on file. Revenue from transaction processing services, software maintenance and support services, and professional services were greater in the first nine months of 2023 as compared to the first nine months of 2022 due to an increase in the number of customers and accounts on file and an increase in the number and value of professional services contracts completed during the first nine months of 2023. We expect that processing services will continue to grow as our customer base increases; however, the time required to implement new customer programs could be delayed due to third party integration and approval processes and other factors. It is difficult to predict with accuracy the number and value of professional services contracts that our customers will require in a given period. Customers typically request our professional services to modify or enhance their CoreCard software implementation based on their specific business strategy and operational requirements, which vary from customer to customer and period to period.

● Revenue from products, which is primarily software license fees, was $0 and $1,794,000 in the three and nine month periods ended September 30, 2023, respectively, compared to $0 and $14,283,000 in the respective comparable periods of 2022. No new license tiers were achieved in the third quarter of 2023 or 2022. In the first quarter of 2022 our largest customer added a new institution to our platform, resulting in one-time license fees, as discussed above, and multiple new tiers due to the additional active accounts added from a conversion completed in the first quarter of 2022 and account growth from existing customers.

Cost of Revenue – Total cost of revenue was 69 percent and 65 percent of total revenue in the three and nine month periods ended September 30, 2023, respectively, compared to 58 percent and 44 percent of total revenue in the corresponding periods of 2022. For the three month period ended September 30, 2023, the increase in cost of revenue as a percentage of revenue is primarily driven by hiring offshore technical personnel in India and investments made in our processing infrastructure in 2023, 2022 and previous years  including hardware and software purchases and additional space in our data centers. For the nine month period ended September 30, 2023, the increase as a percentage of revenue is primarily driven by lower license revenue in addition to hiring offshore technical personnel in India and investments in our infrastructure. Cost of revenue includes costs to provide annual maintenance and support services to our installed base of licensed customers, costs to provide professional services, and costs to provide our financial transaction processing services. The cost and gross margins on such revenues can vary considerably from period to period depending on the customer mix, customer requirements and project complexity as well as the mix of our U.S. and offshore employees working on the various aspects of services provided. In addition, we continue to devote the resources necessary to support our growing processing business, including direct costs for regulatory compliance, infrastructure, network certifications and customer support. Investments in our infrastructure in 2023, 2022 and previous years are in anticipation of adding customers in future periods. As such, we will not experience economies of scale unless we add additional customers, as anticipated. This may be subject to change in the future if new regulations or processing standards are implemented causing us to incur additional costs to comply.

Operating Expenses – In the three month and nine month period ended September 30, 2023, total operating expenses from consolidated operations were lower by 14% and 20% compared to the corresponding period in 2022, respectively. In the three and nine month periods ended September 30, 2023, total operating expenses from consolidated operations were lower than in the corresponding period in 2022 primarily due to lower development expenses. Development expenses were 20 percent and 32 percent lower in the three and nine month periods in 2023, respectively, as compared to the same periods in 2022. In the three and nine month periods ended September 30, 2023, development expenses were lower mainly due to lower bonus accruals, partially offset by hiring of additional offshore technical personnel. Additionally, we hired onshore and offshore technical personnel to work on the development of an updated platform, a portion of which is capitalized, however amounts not eligible for capitalization result in higher development expenses. General and administrative expenses were 4 percent higher in the three and nine month periods ended September 30, 2023. Marketing expenses decreased 21 percent and increased 3 percent for the three and nine month periods in 2023, respectively. Our client base continues to increase with minimal marketing efforts as we continue to have prospects contact us via online searches; however, we will continue to re-evaluate our marketing expenditures as needed to competitively position the Processing Services business. We added sales personnel in the fourth quarter of 2023 that will result in increased future marketing expenses.

Investment Income (Loss) – In the three and nine months ended September 30, 2023, we recorded $1,015,000 and $1,701,000 of investment loss, respectively, compared to investment income of $39,000 and $196,000 for the three and nine months ended September 30, 2022, respectively. The investment losses in 2023 relate to a third quarter impairment charge on a cost method investment and losses on our equity method investment. Investment income in 2022 relates to income on our equity method investments. Our investments are discussed further in Note 4.

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Other Income (Loss) – In the three and nine months ended September 30, 2023, we recorded income of $309,000 and $653,000, respectively, compared to income of $60,000 and $126,000 for the comparable 2022 periods. The increase results from higher interest rates and higher cash balances in the 2023 period.

Income Taxes – Our effective tax rates for the three and nine months ended September 30, 2023 were 24.5 percent and 24.8 percent compared to effective tax rates of 24.6 percent and 25.3 percent for the respective periods in 2022.

Liquidity and Capital Resources

Our cash and cash equivalent balance at September 30, 2023 was $31,614,000 compared to $20,399,000 at December 31, 2022. During the nine months ended September 30, 2023, cash provided by operations was $18,252,000 compared to cash provided by operations of $10,857,000 for the nine months ended September 30, 2022. The increase is primarily due to a lower accounts receivable balance, higher deferred revenue, higher depreciation and amortization and a non-cash impairment charge, partially offset by lower net income and lower accounts payable balances.

During the nine months ended September 30, 2023, we used $4,845,000 of cash to acquire computer equipment primarily for continued investments in our existing processing environment in the U.S., a new data center in India for international operations and technical resources added in our India office.

We expect to have sufficient liquidity from cash on hand as well as projected customer payments to support our operations and capital equipment purchases in the foreseeable future. Currently we expect to use cash in excess of what is required for our current operations for share repurchases and opportunities we believe will expand our FinTech business, as exemplified in transactions described in Notes 3 and 4, although there can be no assurance that appropriate opportunities will arise. In April 2021, the Board authorized $10 million for our share repurchase program, all of which has been utilized. In May 2022, the Board authorized an additional $20 million for share repurchases. We made share repurchases of approximately $1.5 million for the nine months ended September 30, 2023, and $5 million of share repurchases in the nine month period ended September 30, 2022. We have approximately $16.8 million of authorized share repurchases remaining at September 30, 2023.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, liquidity or results of operations.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues, and expenses. We consider certain accounting policies related to revenue recognition and valuation of investments to be critical policies due to the estimation processes involved in each. Management discusses its estimates and judgments with the Audit Committee of the Board of Directors. For a detailed description on the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Reference is also made to the discussion of the application of these critical accounting policies and estimates contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for 2022. During the nine-month period ended September 30, 2023, there were no significant or material changes in the application of critical accounting policies.

Factors That May Affect Future Operations

Future operations are subject to risks and uncertainties that may negatively impact our future results of operations or projected cash requirements. It is difficult to predict future quarterly and annual results with certainty.

Among the numerous factors that may affect our consolidated results of operations or financial condition are the following:

● Goldman Sachs Group, Inc., our largest customer, represented 68% of our consolidated revenues for the nine months ended September 30, 2023. In the event of material failures to meet contract obligations related to the services provided, there is risk of breach of contract and loss of the customer and related future revenues. Additionally, loss of the customer and related future revenues or a reduction in revenues could result if they or their customers choose an alternative service provider, build an in-house solution, or decide to exit the business or service line that falls under the services that we provide for them.

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● Weakness or instability in the global financial markets could have a negative impact due to potential customers (most of whom perform some type of financial services) delaying decisions to purchase software or initiate processing services.

● Increased federal and state regulations and reluctance by financial institutions to act as sponsor banks for prospective customers could result in losses and additional cash requirements.

● Delays in software development projects could cause our customers to postpone implementations or delay payments, which would increase our costs and reduce our revenue and cash.

● We could fail to deliver software products which meet the business and technology requirements of our target markets within a reasonable time frame and at a price point that supports a profitable, sustainable business model.

● Our processing business is impacted, directly or indirectly, by more regulations than our licensed software business. If we fail to provide services that comply with (or allow our customers to comply with) applicable regulations or processing standards, we could be subject to financial or other penalties that could negatively impact our business.

● A security breach in our platform could expose confidential information of our customers’ account holders, hackers could seize our digital infrastructure and hold it for ransom or other cyber risk events could occur and create material losses in excess of our insurance coverage.

● 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.

● We could fail to expand our base of customers as quickly as anticipated, resulting in lower revenue and profits and increased cash needs.

● We 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.

● Increasing and changing government regulations in the United States and foreign countries related to such issues as data privacy, financial and credit transactions could require changes to our products and services which could increase our costs and could affect our existing customer relationships or prevent us from getting new customers.

● Delays in anticipated customer payments for any reason would increase our cash requirements and could adversely impact our profits.

● 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 losses).

● Our future capital needs are uncertain and depend on a number of factors; additional capital may not be available on acceptable terms, if at all.

● Volatility in the markets, including as a result of political instability, civil unrest, war or terrorism, or pandemics or other natural disasters, such as the recent outbreak of coronavirus, could adversely affect future results of operations and could negatively impact the valuation of our investments.

● Other general economic and political conditions could cause customers to delay or cancel purchases.

Item 4. Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective. There were no significant changes in the company’s internal control over financial reporting or in other factors identified in connection with this evaluation that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

Part II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Securities

In April 2021, the Board authorized $10 million for our share repurchase program, of which all has been utilized. In May 2022, the Board authorized an additional $20 million for our share repurchase program. Under this program, which was publicly announced in November 2018, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The repurchase program does not have an expiration date and may be suspended or discontinued at any time. We have approximately $16.8 million of authorized share repurchases remaining at September 30, 2023.

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The following table sets forth information regarding our purchases of shares of our common stock during the three months ended September 30, 2023:

	Total Number of Shares Purchased		Average Price Paid per Share1		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 1, 2023 to July 31, 2023		−	$	−		−	$	17,899,000
August 1, 2023 to August 31, 2023		40,298		22.05		40,298		17,011,000
September 1, 2023 to September 30, 2023		10,027		20.76		10,027		16,803,000
Total		50,325	$	21.63		50,325	$	16,803,000

¹ This price includes per share commissions paid.

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Item 6. Exhibits

The following exhibits are filed or furnished with this report:

3.1	Restated Articles of Incorporation of the Registrant dated August 3, 2022. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 10-Q dated November 2, 2022.)
3.2	Amended and Restated Bylaws of the Registrant dated December 15, 2021. (Incorporated by reference to Exhibit 3.2 of the Registrant’s Form 8-K dated December 15, 2021.)
10.1	Omnibus Amendment to GS-CoreCard Agreements
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 of Chief Executive Officer and Chief Financial Officer furnished as required by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	Inline XBRL Instance
101.SCH**	Inline XBRL Taxonomy Extension Schema
101.CAL**	Inline XBRL Taxonomy Extension Calculation
101.DEF**	Inline XBRL Taxonomy Extension Definitions
101.LAB**	Inline XBRL Taxonomy Extension Labels
101.PRE**	Inline XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	CORECARD CORPORATION
	Registrant
Date: November 1, 2023	By:	/s/ J. Leland Strange
		J. Leland Strange
		Chief Executive Officer, President
Date: November 1, 2023	By:	/s/ Matthew A. White
		Matthew A. White
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit  No.		Descriptions
	3.1	Restated Articles of Incorporation of the Registrant dated August 3, 2022. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 10-Q dated November 2, 2022.)
	3.2	Amended and Restated Bylaws of the Registrant dated December 15, 2021. (Incorporated by reference to Exhibit 3.2 of the Registrant’s Form 8-K dated December 15, 2021.)
	10.1	Omnibus Amendment to GS-CoreCard Agreements
	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 of Chief Executive Officer and Chief Financial Officer furnished as required by Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS**	Inline XBRL Instance
	101.SCH**	Inline XBRL Taxonomy Extension Schema
	101.CAL**	Inline XBRL Taxonomy Extension Calculations
	101.DEF**	Inline XBRL Taxonomy Extension Definitions
	101.LAB**	Inline XBRL Taxonomy Extension Labels
	101.PRE**	Inline XBRL Taxonomy Extension Presentation
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

**  XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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EX-10.1

Exhibit 10.1

[***] Certain portions of this exhibit have been omitted because they are not material and the registrant customarily and actually treats that information as private or confidential.

OMNIBUS AMENDMENT TO GS-CORECARD AGREEMENTS

This Omnibus Amendment to GS-CoreCard Agreements (this “Amendment”) is entered into effective as of July 1, 2023 (the “Amendment Effective Date”), by and between The Goldman Sachs Group, Inc. (“GS”), and CoreCard Software, Inc. (“CoreCard”) (each, a “Party” and together, the “Parties”).

GS and CoreCard hereby agree as follows:

1. BACKGROUND AND DEFINED TERMS

(a) GS-CoreCard Agreements. GS and CoreCard are parties to the following agreements, as they may have been previously amended:

(i) Software License and Support Agreement effective as of October 16, 2018 (the “SLSA”);

(ii) Master Professional Services Agreement effective as of August 1, 2019 (the “MPSA”);

(iii) Schedule of Work No. 1 (Schedule of Work for Ongoing Services (Development)) effective as of August 1, 2019 and entered into pursuant to the MPSA (the “Development SOW”); and

(iv) Schedule of Work No. 2 (Schedule of Work for Ongoing Services (Managed Services)) effective as of August 1, 2019 and entered into pursuant to the MPSA (the “Managed Services SOW”).

The agreements listed in the foregoing subsections (i) through (iv) are collectively the “GS-CoreCard Agreements”.

(b) Amendment. Pursuant to Section 10.5 of the SLSA and Section 10.5 of the MPSA, the Parties desire to amend the GS-CoreCard Agreements as set forth in this Amendment. This Amendment hereby amends and revises the GS-CoreCard Agreements to incorporate the terms and conditions set forth in this Amendment. If there is a conflict between the terms of this Amendment and the terms of any GS-CoreCard Agreement, the terms of this Amendment will control. The relationship of the Parties will continue to be governed by the terms of the GS-CoreCard Agreements, as amended hereby.

(c) Defined Terms. Capitalized terms used herein will have the meanings ascribed to them in the GS-CoreCard Agreements unless expressly defined herein. For clarity, references in this Amendment to “CoreCard” mean, as applicable, Licensor under the SLSA and Consultant under the MPSA, the Development SOW and the Managed Services SOW.

GS-CoreCard Confidential

Omnibus Amendment to GS-CoreCard Agreements

Page 1

2. AMENDMENTS

(a) Term Extensions.

(i) SLSA. The Initial Support Services Term of the SLSA is extended until and through June 30, 2026.

(A) Development SOW. The SOW Term of the Development SOW is extended until and through June 30, 2025. Thereafter, the SOW Term of the Development SOW will automatically renew for successive renewal terms of one (1) year each unless either Party provides the other Party with written notice of non-renewal at least nine (9) months prior to the end of the then-current term.

(B) Managed Services SOW. The SOW Term of the Managed Services SOW is extended until and through June 30, 2025. Thereafter, the SOW Term of the Managed Services SOW will automatically renew for successive renewal terms of one (1) year each unless either Party provides the other Party with written notice of non-renewal at least nine (9) months prior to the end of the then-current term.

(b) Code Base Access and Development. [***]

(c) SLAs and Special SLAs.

(i) Defined Terms.

(A) “Contract Year” means each consecutive twelve (12) month period that commences on the Amendment Effective Date and each anniversary of the Amendment Effective Date.

(B) “SLAs” means those performance standards and service levels set out in Attachment 1 to this Amendment.

(C) “Special SLA Breach” means a circumstance where CoreCard fails to meet a Special SLA in a given month.

(D) “Special SLA Surplus” means a circumstance where CoreCard meets or exceeds a Special SLA in a given month.

(E) “Special SLA Value” means, for each Special SLA, the dollar value designated in Attachment 1 to this Amendment that will be used to calculate Special SLA Credits and Special SLA Payments for such Special SLA (which dollar value the Parties may change upon mutual written agreement, provided that the sum of all Special SLA Values will not exceed[***]).

(F) “Special SLAs” means those SLAs in Attachment 1 to this Amendment that are designated as “Special SLAs”.

(ii) SLAs.

(A) Commencing on the Amendment Effective Date, and for the remainder of the Support Services Term of the SLSA and the SOW Term of the Managed Services SOW, as applicable, the SLAs in Attachment 1 to this Amendment supersede and replace: (1) the Service Levels set out in Exhibit B to the SLSA; and (2) the System KPIs and the Identification KPI set out in the Managed Services SOW.

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(B) Subject to Section 2(c)(ii)(A) above, CoreCard will perform in accordance with the SLAs and the Special SLAs pursuant to this Amendment(including with respect to the calculation and provision of service level credits).

(C) CoreCard will measure and provide formal reporting to GS on its performance against the SLAs on a monthly basis. CoreCard may rely on performance metrics from GS systems depending on the SLA type.

(iii) Special SLAs Commencement; Measurement and Reporting. CoreCard will commence meeting the Special SLAs on the Amendment Effective Date. CoreCard will measure and provide formal reporting to GS on its performance against the Special SLAs on a monthly basis.

(iv) Special SLA Breaches.

(A) Upon the occurrence of a Special SLA Breach, CoreCard will: (1) investigate, assemble, and preserve pertinent information with respect to, and report on the causes of, the problem, including performing a root cause analysis of the problem(s) except to the extent i) otherwise excused by GS or ii) [***] (2) advise GS, as and to the extent requested by GS, of the status of remedial efforts being undertaken with respect to such problem; (3) minimize the impact of and correct the problem(s) and begin meeting the Special SLA; and (4) take appropriate preventive measures so that the problem does not recur.

(B) If, for a given Special SLA, a Special SLA Breach occurs in a month, then CoreCard will provide GS with a service level credit on the next monthly invoice for CoreCard’s fees under the MPSA equal to the Special SLA Value for such Special SLA (the “Special SLA Credit”). Under no circumstances will the Special SLA Credits across all Special SLAs exceed [***] per any given month and [***]per any given Contract Year.

(C) Special SLA Credits provided in a given Contract Year will reduce GS Claims Pool for such Contract Year.

(D) If the Parties mutually determine that i) a Special SLA Breach occurred as a result of events or factors beyond the reasonable control of CoreCard, or ii) if a Special SLA Breach root cause is unknown at the time of measurement, or iii) a Special SLA is not measurable, [***] or (vii) a valid measurement of the SLA cannot be made, no Special SLA Credit will be due to GS for such Special SLA.

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(v) Special SLA Surpluses. If, for a given Special SLA, a Special SLA Surplus occurs in each month during a rolling consecutive three (3) month period, then CoreCard may charge GS with an incentive amount on the next monthly invoice for CoreCard’s fees under the MPSA equal to the Special SLA Value for such Special SLA for each of the given consecutive months the Special SLA Surplus occurs (the “Special SLA Payment”). Under no circumstances will the Special SLA Payments across all Special SLAs exceed [***]per month and [***]per any given Contract Year.

(d) Recovery of GS Direct Damages.

(i) Defined Terms.

(A) “GS Direct Damages” means any (1) fees paid to third parties [***], in each case incurred by GS or its Affiliates as a direct result of CoreCard’s failure to perform in accordance with any of the GS-CoreCard Agreements; [***]to perform in accordance with any of the GS-CoreCard Agreements.  For the avoidance of doubt, GS Direct Damages do not include either (i) time spent by GS employees or contractors in connection with the events giving rise to such GS Direct Damages, or [***].

(B) “GS Claims Pool” means an aggregate amount equal to [***]per Contract Year.

(ii) Recovery by GS. If GS or its Affiliates incur any GS Direct Damages, GS may, upon written notice and demand to CoreCard within one hundred twenty (120) days, recover from CoreCard amounts equal to such GS Direct Damages, less any Special SLA Credits provided to GS for the same event that gave rise to such GS Direct Damages. GS shall not seek such recovery with respect to any events causing GS Direct Damages of less than [***]; provided, however, GS shall have the right to seek recovery in connection with a series of related such events that equal an amount greater than [***] in the aggregate.  Such notice and demand will (A) provide a reasonable level of detail about the nature of the GS Direct Damages and how they are the direct result of CoreCard’s failures; and (B) specify whether the GS Direct Damages were incurred under the SLSA or the MPSA. CoreCard may dispute in good faith any such notice and demand in accordance with, as applicable, Section 10.7 of the SLSA or Section 10.7 of the MPSA. CoreCard otherwise will promptly pay GS amounts equal to such GS Direct Damages (the “Recovered GS Direct Damages”).

(iii) Additional Terms. Any Recovered GS Direct Damages: (A) will reduce and will not exceed the GS Claims Pool for the relevant Contract Year; and (B) will reduce CoreCard’s aggregate liability to GS as set out in, as applicable, Section 7.6(a) of the SLSA or Section 7.6(a) of the MPSA. For clarity, the terms of this Section 2(d) are not intended to expand CoreCard’s liability obligations to GS under the SLSA and the MPSA or to limit any remedies available to GS under the SLSA or the MPSA.

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(e) Fees.

(i) Development SOW.

(A) For clarity, during the SOW Term of the Development SOW, CoreCard will invoice all fees and charges under the Development SOW on a monthly basis in arrears only for Services actually performed during the relevant month.

(B) For Services performed under the Development SOW on a time-and-materials basis, unless expressly authorized in writing by GS, CoreCard may not charge GS for more than [***] hours per day per each Consultant Personnel performing such Services (even if the individual performs in excess of [***] hours.

(C) The additional Support Fees for existing and any future functional changes to Licensed Software developed under the Development SOW (“Development Support Fees”) will be capped at [***] per Contract Year and subject to an Annual Inflation Adjustment.

(ii) Managed Services SOW. With respect to the Managed Services SOW:

(A) Commencing on the Amendment Effective Date and for the remainder of the SOW Term for the Managed Services SOW, the fees and “time-and-materials” charging model described in Section III.A of the Managed Services SOW will no longer be in effect.

(B) Commencing on the Amendment Effective Date and for the remainder of the SOW Term for the Managed Services SOW, CoreCard will invoice on a monthly basis, and GS will pay pursuant to the payment provisions of the GTC of the MPSA, the Fixed Managed Services Fee.

(C) In consideration of GS’s payment of the Fixed Managed Services Fee, CoreCard will perform those managed Services that: (1) are described in the Managed Services SOW; (2) CoreCard is performing as of the Amendment Effective Date; (3) identifying, diagnosing, and correcting any Defects in the Licensed Software and remediating any Accounts adversely impacted by such Defects; and (4) are described in Attachment 2 to this Amendment (collectively, the “Managed Services Scope”). For clarity, Attachment 2 to this Amendment sets out certain functions that are expressly included and other functions that are expressly excluded from the Managed Services Scope.

(D) “Fixed Managed Services Fee” means an amount equal to [***] per month, subject to an Annual Inflation Adjustment.

(E) As described in Section 6(b) of the MPSA, CoreCard will continue to require its personnel to record time and hours worked on the Managed Services Scope in CoreCard’s time tracking system (the “Managed Services Tracked Hours”). CoreCard will not be required to share the Managed Services Tracked Hours with GS except as described in subsection (F)(3) below.

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(F) If there is a material increase or a material decrease to the Managed Services Scope that is expected to continue on a sustained and ongoing basis, the following terms will apply:

(1)        For any such material increase, CoreCard will use commercially reasonable efforts to perform the increased scope by using existing CoreCard personnel and resources such that an increase in the Fixed Managed Services Fee is either not necessary or as minimal as practicable;

(2)         Subject to the foregoing subsection (F)(1), the Parties will agree to an increase or decrease, as applicable, to the Fixed Managed Services Fee on a going-forward basis pursuant to the change management terms of Section 2.6 of the MPSA and the terms of the following subsection (F)(3).

(3)         Such increase or decrease to the Fixed Managed Services Fee will be calculated with reference to: (a) the increased or decreased labor activity of CoreCard personnel (including with respect to changes in personnel mix and hours worked) as reflected in changes to the Managed Services Tracked Hours; and (b) the value of such change in labor activity as determined by applying the time-and-materials rates for Managed Services under the MPSA that are in effect as of the Amendment Effective Date (and for clarity, such rates will have no other purpose under the GS-CoreCard Agreements). Based on the foregoing, CoreCard will propose for GS’s view and comment CoreCard’s proposed changes to the Managed Services Scope and the Fixed Managed Services Fee, which proposal will include a breakdown of increased or decreased hours and related information reflected in the Managed Services Tracked Hours.

(4)         All such changes to the Managed Services Scope and the Fixed Managed Services Fee will be documented by the Parties in an amendment executed by the Parties.

(G) Unless otherwise agreed upon by the Parties in connection with renewal discussions, subject to Section 2(e)(ii)(F) above and otherwise notwithstanding anything to the contrary in this Amendment or the GS-CoreCard Agreements, the Parties agree that (1) the Fixed Managed Services Fee, the Development Support Fees, and the Support Fee under the SLSA fully compensate CoreCard for its support, maintenance and operational management of the Licensed Software and the Licensed Software’s operating environment, including with respect to the correction of all Defects, code fixes, and non-code-related incidents (i.e., those related to equipment and related systems) as described in the GS-CoreCard Agreements, inclusive of Attachment 2 (Managed Services) to this Amendment; and (2) CoreCard will not seek additional amounts from GS with respect to such support, maintenance and management. The Parties acknowledge and agree that the foregoing does not affect GS’s obligations to pay CoreCard (i) the Installment Loan Amount pursuant to Section 3(b)(vi) of Exhibit A to the SLSA, (ii) the Network Compliance Fee pursuant to Section 6 of Exhibit A to the SLSA, (iii) any fees owed pursuant to the Development SOW, or (iv) any preapproved pass-through expenses.

(f) Data Protection. The Data Protection Addendums in both the SLSA and the MPSA are hereby replaced by the Data Protection Addendum set forth in Attachment 3 to this Amendment.

(g) [***]

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(h) Terms upon Change of Control of CoreCard. Upon a Change of Control (as defined in both the SLSA and the MPSA), CoreCard will use commercially reasonable efforts to maintain on the GS account for a period of [***] months after such Change of Control all CoreCard personnel who are designated as Key Personnel under any of the GS-CoreCard Agreements.

(i) Transition Assistance. Section 9.4(b)(iii) of the MPSA is hereby deleted in its entirety and replaced with the following:

Consultant shall, at GS’s cost and expense, and at the rates in effect at the time of termination or expiration, work with GS and any replacement vendor(s) or other third parties as directed by GS, to ensure a smooth transition of Services to GS or a third party [***]

(j)	[***]
(k)	Notice Prior to Assignment. GS shall use commercially reasonable efforts to provide CoreCard ninety (90) days’ notice prior to exercising its rights to assign the GS-CoreCard Agreements, in whole or in part, pursuant to Section 10.1(a) of the SLSA or Section 10.1 of the MPSA.

(l) Issue Tracking System.

(i) Section 2(b)(i) of Exhibit B to the SLSA is hereby deleted in its entirety and replaced with the following:

Via GS’s issue tracking system: [***]

(ii) All references to “CoreTrack” in Exhibit B to the SLSA are hereby replaced with [***]

3. ENTIRE AGREEMENT

This Amendment and the GS-CoreCard Agreements constitute the entire agreement between the Parties in connection with the subject matter of this Amendment and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties related to the subject-matter hereof.

[Remainder of page intentionally blank. Signature page follows.]

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IN WITNESS WHEREOF, GS and CoreCard have caused this Amendment to be executed by their duly authorized representatives, effective as of the Amendment Effective Date.

THE GOLDMAN SACHS GROUP, INC.		CORECARD SOFTWARE, INC.
By:	/s/ Elizabeth Overbay	By:	/s/ J. Leland Strange
Name:	Elizabeth Overbay	Name:	J. Leland Strange
Title:	Authorized Signatory	Title:	CEO
Date:	July 17, 2023	Date:	July 20, 2023

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ATTACHMENT 1

SLAS

[***]

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ATTACHMENT 2

MANAGED SERVICES

[***]

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ATTACHMENT 3

DATA PROTECTION ADDENDUM

[***]

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SCHEDULE 1 TO ATTACHMENT 3

TECHNICAL AND ORGANIZATIONAL MEASURES ADDENDUM

[***]

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Leland Strange, certify that:

1. I have reviewed this report on Form 10-Q of CoreCard Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2023

/s/	J. Leland Strange
	J. Leland Strange
	Chairman of the Board, President
	and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew A. White, certify that:

1. I have reviewed this report on Form 10-Q of CoreCard Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2023

/s/	Matthew A. White
	Matthew A. White
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned officers of CoreCard Corporation (the “Company”) hereby certifies to his or her knowledge that the Company’s report on Form 10-Q for the period ended September 30, 2023 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 1, 2023	/s/ J. Leland Strange
	J. Leland Strange
	Chief Executive Officer
	/s/ Matthew A. White
	Matthew A. White
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to CoreCard Corporation and will be retained by CoreCard Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Oct. 31, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	1-9330
Entity Registrant Name	CORECARD CORPORATION
Entity Incorporation, State or Country Code	GA
Entity Tax Identification Number	58-1964787
Entity Address, Address Line One	One Meca Way
Entity Address, City or Town	Norcross
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30093
City Area Code	770
Local Phone Number	381-2900
Title of 12(b) Security	Common Stock, $0.01 par value for the class
Trading Symbol	CCRD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		8,440,356
Entity Central Index Key	0000320340
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash	$ 31,614	$ 20,399
Marketable securities	5,147	4,973
Accounts receivable, net	5,875	13,220
Other current assets	5,887	3,729
Total current assets	48,523	42,321
Investments	3,634	5,180
Property and equipment, at cost less accumulated depreciation	11,681	12,006
Other long-term assets	2,947	3,725
Total assets	66,785	63,232
Current liabilities:
Accounts payable	1,708	2,011
Deferred revenue, current portion	3,743	1,094
Accrued payroll	1,941	1,888
Accrued expenses	806	525
Other current liabilities	2,043	2,025
Total current liabilities	10,241	7,543
Commitments and Contingencies (see Note 8)
Commitments and Contingencies
Deferred revenue, net of current portion	361	473
Deferred tax liability	541	472
Long-term lease obligation	1,367	1,981
Total noncurrent liabilities	2,269	2,926
Stockholders’ equity:
Outstanding shares – 8,440,356 and 8,502,735 at September 30, 2023 and December 31, 2022, respectively	90	90
Additional paid-in capital	16,621	16,471
Treasury stock, 575,784 and 507,384 shares at September 30, 2023 and December 31, 2022, respectively, at cost	(18,213)	(16,662)
Accumulated other comprehensive income (loss)	(57)	(61)
Accumulated income	55,834	52,925
Total stockholders’ equity	54,275	52,763
Total liabilities and stockholders’ equity	$ 66,785	$ 63,232

XML

Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, issued (in shares)	9,016,140	9,010,119
Common stock, shares outstanding (in shares)	8,440,356	8,502,735
Treasury Stock, Common, Shares (in shares)	575,784	507,384

XML

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue
Total net revenue	$ 13,399	$ 14,450	$ 43,847	$ 53,940
Cost of revenue
Total cost of revenue	9,279	8,431	28,380	23,824
Expenses
Marketing	63	80	237	231
General and administrative	1,155	1,107	4,220	4,048
Development	2,489	3,129	6,094	8,916
Income from operations	413	1,703	4,916	16,921
Investment income (loss)	(1,015)	39	(1,701)	196
Other income (loss), net	308	60	653	126
(Loss) income before income taxes	(294)	1,802	3,868	17,243
Income taxes	(72)	443	959	4,358
Net (loss) income	$ (222)	$ 1,359	$ 2,909	$ 12,885
us-gaap_EarningsPerShareAbstract
Basic (in dollars per share)	$ (0.03)	$ 0.16	$ 0.34	$ 1.50
Diluted (in dollars per share)	$ (0.03)	$ 0.16	$ 0.34	$ 1.49
Basic weighted average common shares outstanding (in shares)	8,460,473	8,538,954	8,485,416	8,596,654
Diluted weighted average common shares outstanding (in shares)	8,460,473	8,559,665	8,509,825	8,621,388
Service [Member]
Revenue
Total net revenue	$ 13,399	$ 14,450	$ 42,053	$ 39,657
Cost of revenue
Total cost of revenue	9,279	8,431	28,380	23,824
Product [Member]
Revenue
Total net revenue	$ 0	$ 0	$ 1,794	$ 14,283

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Net (loss) income	$ (222)	$ 1,359	$ 2,909	$ 12,885
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities	11	(6)	36	(6)
Foreign currency translation adjustments	15	120	(32)	364
Total comprehensive (loss) income	$ (196)	$ 1,473	$ 2,913	$ 13,243

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock Outstanding [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock, Common [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2021	8,689,815
Balance at Dec. 31, 2021		$ 90	$ 16,261	$ (11,327)	$ (194)	$ 39,044	$ 43,874
Common stock repurchased* (in shares)	(70,864)
Common stock repurchased*							(2,332)
Net (loss) income						8,670	8,670
Stock compensation expense			10				10
Foreign currency translation adjustment					1		1
Balance (in shares) at Mar. 31, 2022	8,618,951
Balance at Mar. 31, 2022		90	16,271	(13,659)	(193)	47,714	50,223
Balance (in shares) at Dec. 31, 2021	8,689,815
Balance at Dec. 31, 2021		90	16,261	(11,327)	(194)	39,044	43,874
Net (loss) income							12,885
Unrealized gain (loss) on marketable securities							(6)
Balance (in shares) at Sep. 30, 2022	8,510,565
Balance at Sep. 30, 2022		90	16,421	(16,369)	164	51,929	52,235
Common stock repurchased*				(2,332)
Balance (in shares) at Mar. 31, 2022	8,618,951
Balance at Mar. 31, 2022		90	16,271	(13,659)	(193)	47,714	50,223
Common stock repurchased* (in shares)	(58,447)
Common stock repurchased*				(1,347)			(1,347)
Net (loss) income						2,856	2,856
Stock compensation expense			150				150
Foreign currency translation adjustment					243		243
Stock compensation expense (in shares)	6,504
Balance (in shares) at Jun. 30, 2022	8,567,008
Balance at Jun. 30, 2022		90	16,421	(15,006)	50	50,570	52,125
Common stock repurchased* (in shares)	(56,443)
Common stock repurchased*				(1,363)			(1,363)
Net (loss) income						1,359	1,359
Foreign currency translation adjustment					120		120
Unrealized gain (loss) on marketable securities					(6)		(6)
Balance (in shares) at Sep. 30, 2022	8,510,565
Balance at Sep. 30, 2022		90	16,421	(16,369)	164	51,929	52,235
Balance (in shares) at Dec. 31, 2022	8,502,735
Balance at Dec. 31, 2022		90	16,471	(16,662)	(61)	52,925	52,763
Net (loss) income						1,256	1,256
Foreign currency translation adjustment					(53)		(53)
Unrealized gain (loss) on marketable securities					37		37
Balance (in shares) at Mar. 31, 2023	8,502,735
Balance at Mar. 31, 2023		90	16,471	(16,662)	(77)	54,181	54,003
Balance (in shares) at Dec. 31, 2022	8,502,735
Balance at Dec. 31, 2022		90	16,471	(16,662)	(61)	52,925	52,763
Net (loss) income							2,909
Unrealized gain (loss) on marketable securities							36
Balance (in shares) at Sep. 30, 2023	8,440,356
Balance at Sep. 30, 2023		90	16,621	(18,213)	(57)	55,834	54,275
Balance (in shares) at Mar. 31, 2023	8,502,735
Balance at Mar. 31, 2023		90	16,471	(16,662)	(77)	54,181	54,003
Common stock repurchased* (in shares)	(18,075)
Common stock repurchased*				(443)			(443)
Net (loss) income						1,875	1,875
Stock compensation expense		0	150				150
Foreign currency translation adjustment					6		6
Stock compensation expense (in shares)	6,021
Unrealized gain (loss) on marketable securities					(12)		(12)
Balance (in shares) at Jun. 30, 2023	8,490,681
Balance at Jun. 30, 2023		90	16,621	(17,105)	(83)	56,056	55,579
Common stock repurchased* (in shares)	(50,325)
Common stock repurchased*				(1,108)			(1,108)
Net (loss) income						(222)	(222)
Foreign currency translation adjustment					15		15
Unrealized gain (loss) on marketable securities					11		11
Balance (in shares) at Sep. 30, 2023	8,440,356
Balance at Sep. 30, 2023		$ 90	$ 16,621	$ (18,213)	$ (57)	$ 55,834	$ 54,275

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
OPERATING ACTIVITIES:
Net (loss) income	$ 2,909,000	$ 12,885,000
us-gaap_AdjustmentsToReconcileNetIncomeLossToCashProvidedByUsedInOperatingActivitiesAbstract
Depreciation and amortization	5,011,000	3,636,000
Stock-based compensation expense	150,000	160,000
Deferred income taxes	69,000	312,000
Non-cash investment loss (income)	1,000,000	(18,000)
Equity in loss (gain) of affiliate company	701,000	(195,000)
Changes in operating assets and liabilities:
Accounts receivable, net	7,345,000	(2,268,000)
Other current assets	(2,329,000)	(2,620,000)
Other long-term assets	563,000	(41,000)
Accounts payable	(78,000)	600,000
Accrued payroll	53,000	336,000
Deferred revenue, current portion	2,649,000	(1,134,000)
Accrued expenses	281,000	(54,000)
Other current liabilities	40,000	(1,052,000)
Deferred revenue, net of current portion	(112,000)	310,000
Net cash provided by operating activities	18,252,000	10,857,000
INVESTING ACTIVITIES:
Purchases of property and equipment	(4,845,000)	(7,532,000)
Advances on notes and interest receivable	450,000
Proceeds from payments on notes receivable	147,000	165,000
Purchase of marketable securities	(1,776,000)	(988,000)
Maturities of marketable securities	1,602,000
Purchase of long-term investment	(155,000)
Net cash used for investing activities	(5,477,000)	(8,355,000)
FINANCING ACTIVITIES:
Repurchases of common stock	(1,528,000)	(5,042,000)
Net cash used for financing activities	(1,528,000)	(5,042,000)
Effects of exchange rate changes on cash	(32,000)	364,000
Net increase (decrease) in cash	11,215,000	(2,176,000)
Cash at beginning of period	20,399,000	29,244,000
Cash at end of period	31,614,000	27,068,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes	$ 168,000	5,330,000
Purchases of property and equipment, accrued but not paid		$ 207,000

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Note 1 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Basis of Presentation

Throughout this report, the terms “we”, “us”, “ours”, “CoreCard” and “Company” refer to CoreCard Corporation, including its wholly-owned and majority-owned subsidiaries. The unaudited Consolidated Financial Statements presented in this Form 10-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 of the information and notes required for complete financial statements. In the opinion of CoreCard 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, 2023 and 2022. The interim results for the three and nine months ended September 30, 2023 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, 2022, as filed in our Annual Report on Form 10-K.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements Adopted

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, to require financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. Subsequently, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables arising from operating leases are within the scope of lease accounting standards. Further, the FASB issued ASU No. 2019-04, ASU No. 2019-05, ASU 2019-10 and ASU 2019-11 to provide additional guidance on the credit losses standard. The ASUs are effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. Adoption of the ASUs is on a modified retrospective basis. We adopted the ASUs on January 1, 2023, which did not have a material impact on our consolidated financial statements.

In March 2022, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2022-02 "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures" (ASU 2022-02), which eliminates the accounting guidance for troubled debt restructurings (TDRs) by creditors that have adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and enhances certain disclosure requirements. The ASU is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. Adoption of the ASUs is on a modified retrospective basis. We adopted the ASUs on January 1, 2023, which did not have a material impact on our Consolidated Financial Statements.

We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our Consolidated Financial Statements.

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Note 2 - Revenue

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

2. REVENUE 

Disaggregation of Revenue

In the following table, revenue is disaggregated by type of revenue for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
License	$	−	$	−	$	1,794	$	14,283
Professional services		6,432		7,776		22,127		21,943
Processing and maintenance		5,814		5,267		16,933		13,837
Third party		1,153		1,407		2,993		3,877
Total	$	13,399	$	14,450	$	43,847	$	53,940

Foreign revenues are based on the location of the customer. Revenues from customers by geographic area for the three and nine months ended September 30, 2023 and 2022 are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
United States	$	12,777	$	13,973	$	42,307	$	52,836
Middle East		588		451		1,452		1,030
European Union		34		26		88		74
Total	$	13,399	$	14,450	$	43,847	$	53,940

Concentration of Revenue

The following table indicates the percentage of consolidated revenue represented by each customer that represented more than 10 percent of consolidated revenue in the three and nine month periods ended September 30, 2023 and 2022. Most of our customers have multi-year contracts with recurring revenue as well as professional services fees that vary by period depending on their business needs.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Customer A		62	%		70	%		68	%		77	%

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Note 3 - Note Receivable

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Financing Receivables [Text Block]

3. NOTES RECEIVABLE

In February 2021, we entered into and advanced a $550,000 Promissory Note with a privately held technology company and program manager in the FinTech industry. The note had an interest rate of 4.6 percent annually and was paid in full in August 2023. In September 2023, we entered into and advanced a $450,000 Promissory Note with a maturity date of October 2025 and an annual interest rate of 5.25 percent. The carrying value of the current portion of our note receivable of $240,000 at September 30, 2023 is included in other current assets on the Consolidated Balance Sheets. The carrying value of the noncurrent portion of our note receivable of $210,000 at September 30, 2023 is included in other long-term assets on the Consolidated Balance Sheets.

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Note 4 - Investments

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Investment [Text Block]

4. INVESTMENTS

We hold a 28 percent ownership interest in a privately held identity and professional services company with ties to the FinTech industry. The carrying value of our investment was $3,479,000 at September 30, 2023, included in investments on the Consolidated Balance Sheets. We account for this investment using the equity method of accounting which resulted in losses of $15,000 and $701,000 for the three and nine months ended September 30, 2023, respectively, and income of $38,000 and $195,000 for the three and nine months ended September 30, 2022, respectively, included in investment income (loss) on the Consolidated Statement of Operations. 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 as of September 30, 2023, variations from current expectations could result in future impairment charges.

In the second quarter of 2021, we invested $1,000,000 in a privately held company that provides supply chain and receivables financing. During the third quarter of 2023, due to the failure of the business to successfully monetize its product offerings, we recorded an impairment charge of $1,000,000 included in investment income (loss) on the Consolidated Statement of Operations, to reduce the carrying value of the investee company to $0 as of September 30, 2023.

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Note 5 - Stock-based Compensation

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

5. STOCK-BASED COMPENSATION

At September 30, 2023, we have two stock-based compensation plans in effect. We record compensation cost related to unvested stock awards by recognizing the unamortized grant date fair value on a straight-line basis over the vesting periods of each award. We have estimated forfeiture rates based on our historical experience. Stock option compensation expense for the three and nine month periods ended September 30, 2023 and 2022 has been recognized as a component of general and administrative expenses in the accompanying Consolidated Financial Statements. We recorded $0 of stock-based compensation expense for the three months ended September 30, 2023 and 2022 and $150,000 and $160,000 for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, there is no unrecognized compensation cost related to stock options. There were no options exercised during the three and nine months ended September 30, 2023. No options expired unexercised during the quarter. The following table summarizes options as of September 30, 2023:

Options Outstanding and Exercisable:
Range of Exercise Price			Number Outstanding		Wgt. Avg. Contractual Life Remaining (in years)		Wgt. Avg. Exercise Price		Aggregate Intrinsic Value
$3.50	-	$3.86		13,000		3.5	$	3.75	$	211,260
	$7.80			8,000		4.7	$	7.80	$	97,600
	$19.99			30,000		5.3	$	19.99	$	300
	$39.11			8,000		5.7	$	39.11	$	−
$3.50	-	$39.11		59,000		4.9	$	17.35	$	309,160

The estimated fair value of options granted is calculated using the Black-Scholes option pricing model with assumptions as previously disclosed in our 2022 Form 10-K.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the company’s closing stock price on the last trading day of the third quarter of 2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2023. The amount of aggregate intrinsic value will change based on the market value of the company’s stock.

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Note 6 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Fair Value, Option [Text Block]

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, marketable securities, accounts receivable, notes receivable, accounts payable and certain other financial instruments (such as accrued expenses, and other current liabilities) included in the accompanying Consolidated Balance Sheets approximates their fair value principally due to the short-term maturity of these instruments.

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, marketable securities, trade accounts and notes receivable. Our available cash is held in accounts managed by third-party financial institutions. Cash may exceed the Federal Deposit Insurance Corporation, or FDIC, insurance limits. While we monitor cash balances on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash; however, we can provide no assurances that access to our cash will not be impacted by adverse conditions in the financial markets.

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Note 7 - Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

7. FAIR VALUE MEASUREMENTS

In determining fair value, the Company uses quoted market prices in active markets. GAAP establishes a fair value measurement framework, provides a single definition of fair value, and requires expanded disclosure summarizing fair value measurements. GAAP emphasizes that fair value is a market-based measurement, not an entity specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability.

GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable input be used when available. Observable inputs are based on data obtained from sources independent of the Company that market participants would use in pricing the asset or liability. Unobservable inputs are inputs that reflect the company’s assumptions about the estimates market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. 

The hierarchy is measured in three levels based on the reliability of inputs:

• Level 1

Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments.

• Level 2

Valuations based on quoted prices in less active, dealer or broker markets.  Fair values are primarily obtained from third party pricing services for identical or comparable assets or liabilities.

• Level 3

Valuations derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and not based on market, exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market and significant professional judgment is needed in determining the fair value assigned to such assets or liabilities.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The fair value of equity method investments has not been determined as it was impracticable to do so due to the fact that the investee companies are relatively small, early stage private companies for which there is no comparable valuation data available without unreasonable time and expense.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value:

	September 30, 2023
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents
Money market accounts	$	25,947	$	−	$	−	$	25,947
Marketable securities
Corporate, municipal debt and treasury securities		5,147		−		−		5,147
Total assets	$	31,094	$	−	$	−	$	31,094

The Company classifies money market funds, commercial paper, U.S. government securities, asset-backed securities and corporate securities within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

There were no transfers of financial instruments between the fair value hierarchy levels during the nine months ended September 30, 2023.

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Note 8 - Marketable Securities

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

8. MARKETABLE SECURITIES

The amortized cost, unrealized gain (loss), and estimated fair value of the Company's investments in securities available for sale consisted of the following:

	September 30, 2023
(In thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Marketable securities
Corporate, municipal debt and treasury securities	$	5,109	$	56	$	(18	)	$	5,147

The Company had fifteen marketable securities in an unrealized loss position as of September 30, 2023. The Company did not identify any marketable securities that were other-than-temporarily impaired as of September 30, 2023 and 2022. The Company does not intend to sell any marketable securities that have an unrealized loss at September 30, 2023 and it is not more likely than not that the Company will be required to sell such securities before any anticipated recovery.

The following table summarizes the stated maturities of the Company’s marketable securities:

	September 30, 2023				December 31, 2022
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	2,012	$	2,048	$	1,594	$	1,602
Due after one year through three years		3,097		3,099		3,356		3,371
Total	$	5,109	$	5,147	$	4,950	$	4,973

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Note 9 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Legal Matters and Contingencies [Text Block]

9. COMMITMENTS AND CONTINGENCIES

Leases

We have noncancelable operating leases for offices and data centers expiring at various dates through February 2027. These operating leases are included in other long-term assets on the Company's September 30, 2023 and December 31, 2022 Consolidated Balance Sheets and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are included in other current liabilities and long-term lease obligation on the Company's September 30, 2023 and December 31, 2022 Consolidated Balance Sheets. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

Supplemental Information–Leases

Supplemental information related to our right-of-use assets and related lease liabilities is as follows:

	September 30, 2023			December 31, 2022
Right-of-use asset, net and lease liabilities (in thousands)	$	2,342		$	3,373
Weighted average remaining lease term (years)		2.7			3.2
Weighted average discount rate		3.4	%		3.4	%

For the nine-months ended September 30, 2023 and 2022, cash paid for operating leases included in operating cash flows was $1,005,000 and $994,000, respectively.

Maturities of our operating lease liabilities as of September 30, 2023 is as follows:

	Operating Leases
	(in thousands)
2023	$	362
2024		1,017
2025		635
2026		523
2027		68
Total lease liabilities	$	2,605

Lease expense for the three and nine months ended September 30, 2023 and 2022 consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Cost of Revenue	$	187	$	183	$	557	$	595
General and Administrative		116		105		339		259
Development		28		47		109		140
Total	$	331	$	335	$	1,005	$	994

Legal Matters

There are no pending or threatened legal proceedings. However, in the ordinary course of business, from time to time we may be involved in various pending or threatened legal actions. The litigation process is inherently uncertain, and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. We accrue for unpaid legal fees for services performed to date.

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Note 10 - Income Taxes

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

10. INCOME TAXES

We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards. A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not that some or all deferred tax assets will not be realized.

There were no unrecognized tax benefits at September 30, 2023 and December 31, 2022. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the periods presented. We have determined we have no uncertain tax positions.

We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds 80%, as well as individual subsidiary returns in various states and foreign jurisdictions. With few exceptions we are no longer subject to U.S. federal, state and local or foreign income tax examinations by taxing authorities for returns filed more than three years ago.

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

Throughout this report, the terms “we”, “us”, “ours”, “CoreCard” and “Company” refer to CoreCard Corporation, including its wholly-owned and majority-owned subsidiaries. The unaudited Consolidated Financial Statements presented in this Form 10-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 of the information and notes required for complete financial statements. In the opinion of CoreCard 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, 2023 and 2022. The interim results for the three and nine months ended September 30, 2023 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, 2022, as filed in our Annual Report on Form 10-K.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements Adopted

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, to require financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. Subsequently, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables arising from operating leases are within the scope of lease accounting standards. Further, the FASB issued ASU No. 2019-04, ASU No. 2019-05, ASU 2019-10 and ASU 2019-11 to provide additional guidance on the credit losses standard. The ASUs are effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. Adoption of the ASUs is on a modified retrospective basis. We adopted the ASUs on January 1, 2023, which did not have a material impact on our consolidated financial statements.

In March 2022, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2022-02 "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures" (ASU 2022-02), which eliminates the accounting guidance for troubled debt restructurings (TDRs) by creditors that have adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and enhances certain disclosure requirements. The ASU is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. Adoption of the ASUs is on a modified retrospective basis. We adopted the ASUs on January 1, 2023, which did not have a material impact on our Consolidated Financial Statements.

We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our Consolidated Financial Statements.

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Note 2 - Revenue (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
License	$	−	$	−	$	1,794	$	14,283
Professional services		6,432		7,776		22,127		21,943
Processing and maintenance		5,814		5,267		16,933		13,837
Third party		1,153		1,407		2,993		3,877
Total	$	13,399	$	14,450	$	43,847	$	53,940

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
United States	$	12,777	$	13,973	$	42,307	$	52,836
Middle East		588		451		1,452		1,030
European Union		34		26		88		74
Total	$	13,399	$	14,450	$	43,847	$	53,940

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Customer A		62	%		70	%		68	%		77	%

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Note 5 - Stock-based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Share-Based Payment Arrangement, Option, Exercise Price Range [Table Text Block]

Options Outstanding and Exercisable:
Range of Exercise Price			Number Outstanding		Wgt. Avg. Contractual Life Remaining (in years)		Wgt. Avg. Exercise Price		Aggregate Intrinsic Value
$3.50	-	$3.86		13,000		3.5	$	3.75	$	211,260
	$7.80			8,000		4.7	$	7.80	$	97,600
	$19.99			30,000		5.3	$	19.99	$	300
	$39.11			8,000		5.7	$	39.11	$	−
$3.50	-	$39.11		59,000		4.9	$	17.35	$	309,160

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Note 7 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Table Text Block]

	September 30, 2023
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents
Money market accounts	$	25,947	$	−	$	−	$	25,947
Marketable securities
Corporate, municipal debt and treasury securities		5,147		−		−		5,147
Total assets	$	31,094	$	−	$	−	$	31,094

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Note 8 - Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Marketable Securities [Table Text Block]

	September 30, 2023
(In thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Marketable securities
Corporate, municipal debt and treasury securities	$	5,109	$	56	$	(18	)	$	5,147

Investments Classified by Contractual Maturity Date [Table Text Block]

	September 30, 2023				December 31, 2022
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	2,012	$	2,048	$	1,594	$	1,602
Due after one year through three years		3,097		3,099		3,356		3,371
Total	$	5,109	$	5,147	$	4,950	$	4,973

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Note 9 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Lease, Cost [Table Text Block]

	September 30, 2023			December 31, 2022
Right-of-use asset, net and lease liabilities (in thousands)	$	2,342		$	3,373
Weighted average remaining lease term (years)		2.7			3.2
Weighted average discount rate		3.4	%		3.4	%

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Cost of Revenue	$	187	$	183	$	557	$	595
General and Administrative		116		105		339		259
Development		28		47		109		140
Total	$	331	$	335	$	1,005	$	994

Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

	Operating Leases
	(in thousands)
2023	$	362
2024		1,017
2025		635
2026		523
2027		68
Total lease liabilities	$	2,605

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Note 2 - Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue	$ 13,399	$ 14,450	$ 43,847	$ 53,940
UNITED STATES
Revenue	12,777	13,973	42,307	52,836
Middle East [Member]
Revenue	588	451	1,452	1,030
European Union [Member]
Revenue	34	26	88	74
License [Member]
Revenue	0	0	1,794	14,283
Professional Services [Member]
Revenue	6,432	7,776	22,127	21,943
Processing and Maintenance [Member]
Revenue	5,814	5,267	16,933	13,837
Third party [Member]
Revenue	$ 1,153	$ 1,407	$ 2,993	$ 3,877

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Note 2 - Revenue - Concentration of Revenue (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration	62.00%	70.00%	68.00%	77.00%

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Note 3 - Note Receivable (Details Textual) - USD ($)	1 Months Ended		9 Months Ended
	Sep. 30, 2023	Feb. 28, 2021	Sep. 30, 2023
Payments to Acquire Notes Receivable	$ 450,000		$ 450,000
Notes Receivable, Stated Interest Rate	5.25%		5.25%
Financing Receivable, after Allowance for Credit Loss, Current	$ 240,000		$ 240,000
Financing Receivable, after Allowance for Credit Loss, Noncurrent	$ 210,000		$ 210,000
Privately-Held Identity and Professional Services Company With Ties to the FinTech Industry [Member]
Payments to Acquire Notes Receivable		$ 550,000
Notes Receivable, Stated Interest Rate		4.60%

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Note 4 - Investments (Details Textual) - USD ($)	3 Months Ended				9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022	Jun. 30, 2021	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Equity Method Investments	$ 3,479,000				$ 3,479,000
Gain (Loss) on Investments	15,000		$ (38,000)		701,000	$ (195,000)
Gain (Loss) on Investments	(15,000)		$ 38,000		(701,000)	$ 195,000
Payments to Acquire Investments, Total					155,000
Long-Term Investments	$ 3,634,000				$ 3,634,000		$ 5,180,000
Privately-Held Identity and Professional Services Company With Ties to the FinTech Industry [Member]
Equity Method Investment, Ownership Percentage	28.00%				28.00%
Privately Held Company Providing Supply Chain and Receivables Financing [Member]
Payments to Acquire Investments, Total				$ 1,000,000
Asset Impairment Charges		$ 1,000,000
Long-Term Investments	$ 0				$ 0

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Note 5 - Stock-based Compensation (Details Textual) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) shares	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) shares	Sep. 30, 2022 USD ($)
Number of Stock-based Compensation Plans in Effect	2		2
Share-Based Payment Arrangement, Expense | $	$ 0	$ 0	$ 150,000	$ 160,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $	$ 0		$ 0
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period (in shares) | shares	0		0
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Expirations in Period (in shares) | shares	0

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Note 5 - Stock-based Compensation - Stock Options Outstanding and Exercisable (Details)	9 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares
Lower Range of Exercise Price (in dollars per share)	$ 3.50
Upper Range of Exercise Price (in dollars per share)	$ 39.11
Number Outstanding (in shares) | shares	59,000
Outstanding Weighted Average Contractual Life Remaining (Year)	4 years 10 months 24 days
Outstanding Weighted Average Exercise Price (in dollars per share)	$ 17.35
Outstanding Aggregate Intrinsic Value | $	$ 309,160
Options Outstanding Exercise Price Range1 [Member]
Lower Range of Exercise Price (in dollars per share)	$ 3.50
Upper Range of Exercise Price (in dollars per share)	$ 3.86
Number Outstanding (in shares) | shares	13,000
Outstanding Weighted Average Contractual Life Remaining (Year)	3 years 6 months
Outstanding Weighted Average Exercise Price (in dollars per share)	$ 3.75
Outstanding Aggregate Intrinsic Value | $	$ 211,260
Options Outstanding Exercise Price Range2 [Member]
Upper Range of Exercise Price (in dollars per share)	$ 7.80
Number Outstanding (in shares) | shares	8,000
Outstanding Weighted Average Contractual Life Remaining (Year)	4 years 8 months 12 days
Outstanding Weighted Average Exercise Price (in dollars per share)	$ 7.80
Outstanding Aggregate Intrinsic Value | $	$ 97,600
Options Outstanding Exercise Price Range 3 [Member]
Upper Range of Exercise Price (in dollars per share)	$ 19.99
Number Outstanding (in shares) | shares	30,000
Outstanding Weighted Average Contractual Life Remaining (Year)	5 years 3 months 18 days
Outstanding Weighted Average Exercise Price (in dollars per share)	$ 19.99
Outstanding Aggregate Intrinsic Value | $	$ 300
Options Outstanding Exercise Price Range 4 [Member]
Upper Range of Exercise Price (in dollars per share)	$ 39.11
Number Outstanding (in shares) | shares	8,000
Outstanding Weighted Average Contractual Life Remaining (Year)	5 years 8 months 12 days
Outstanding Weighted Average Exercise Price (in dollars per share)	$ 39.11

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Note 7 - Fair Value Measurements - Fair Value Hierarchy for Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Corporate, municipal debt and treasury securities	$ 5,147	$ 4,973
Total assets	31,094
Corporate Debt Securities [Member]
Corporate, municipal debt and treasury securities	5,147
Money Market Funds [Member]
Money market accounts	25,947
Fair Value, Inputs, Level 1 [Member]
Total assets	31,094
Fair Value, Inputs, Level 1 [Member] | Corporate Debt Securities [Member]
Corporate, municipal debt and treasury securities	5,147
Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member]
Money market accounts	$ 25,947

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Note 8 - Marketable Securities (Details Textual) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)
Debt Securities, Available-for-Sale, Unrealized Loss Position, Number of Positions	15
Other-than-temporary Impairment Loss, Debt Securities, Available-for-Sale	$ 0	$ 0

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Note 8 - Marketable Securities - Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Amortized Cost	$ 5,109	$ 4,950
Estimated Fair Value	5,147	$ 4,973
Corporate and Municipal Debt Securities [Member]
Amortized Cost	5,109
Unrealized Gain	56
Unrealized Loss	(18)
Estimated Fair Value	$ 5,147

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Note 8 - Marketable Securities - Maturity of Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Due within one year, Amortized cost	$ 2,012	$ 1,594
Due within one year, Fair Value	2,048	1,602
Due after one year through three years, Amortized cost	3,097	3,356
Due after one year through three years, Fair Value	3,099	3,371
Amortized Cost	5,109	4,950
Estimated Fair Value	$ 5,147	$ 4,973

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Note 9 - Commitments and Contingencies (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating Lease, Payments	$ 1,005,000	$ 994,000

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Note 9 - Commitments and Contingencies - Supplemental Lease Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Right-of-use asset, net and lease liabilities (in thousands)	$ 2,342		$ 2,342		$ 3,373
Lease expense	$ 331	$ 335	$ 1,005	$ 994
Weighted average remaining lease term (years) (Year)	2 years 8 months 12 days		2 years 8 months 12 days		3 years 2 months 12 days
Weighted average discount rate	3.40%		3.40%		3.40%
Cost of Sales [Member]
Lease expense	$ 187	183	$ 557	595
General and Administrative Expense [Member]
Lease expense	116	105	339	259
Research and Development Expense [Member]
Lease expense	$ 28	$ 47	$ 109	$ 140

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Note 9 - Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands	Sep. 30, 2023 USD ($)
2023	$ 362
2024	1,017
2025	635
2026	523
2027	68
Total lease liabilities	$ 2,605

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Note 10 - Income Taxes (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Unrecognized Tax Benefits, Ending Balance	$ 0	$ 0