<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Intelligent Systems Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[INTELLIGENT SYSTEMS LOGO]
4355 SHACKLEFORD ROAD
NORCROSS, GEORGIA 30093
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
YOU ARE INVITED TO attend the Annual Meeting of Shareholders of
Intelligent Systems Corporation on Friday, June 9, 2000 at 4:00 p.m., local
time, at our offices at 4355 Shackleford Road, Norcross, Georgia. At the Annual
Meeting, shareholders will consider and vote on:
1. The election of two directors to the Board of Directors to
serve until the 2003 Annual Meeting; and
2. Other matters that may properly come before the meeting or
any adjournment thereof.
Only shareholders of record at the close of business on Friday, April
7, 2000 will receive the notice and be entitled to vote at the meeting or any
adjournment thereof.
A Proxy Statement and a proxy solicited by the Board of Directors are
enclosed with this mailing. To ensure a quorum for the meeting, please sign,
date and return the proxy promptly in the enclosed business reply envelope. If
you attend the meeting, you may revoke your proxy and vote in person. Our 1999
Annual Report to Shareholders is enclosed.
By order of the Board of Directors,
/s/ Bonnie L. Herron
BONNIE L. HERRON
Secretary
April 14, 2000
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY SO THAT YOUR VOTE
MAY BE RECORDED.
<PAGE> 3
[INTELLIGENT SYSTEMS LOGO]
4355 SHACKLEFORD ROAD
NORCROSS, GEORGIA 30093
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 9, 2000
We are sending this Proxy Statement to the shareholders of Intelligent
Systems Corporation in connection with the solicitation of proxies by the Board
of Directors to be voted at the 2000 Annual Meeting of Shareholders of
Intelligent Systems Corporation and any adjournment thereof. The Annual Meeting
will be held on June 9, 2000 at our corporate offices located at 4355
Shackleford Road, Norcross, Georgia at 4:00 p.m. local time. We expect to mail
this Proxy Statement and the accompanying proxy to shareholders on or about
April 14, 2000.
VOTING
GENERAL
The securities that can be voted at the Annual Meeting consist of common
stock of Intelligent Systems Corporation, $.01 par value per share. Each share
entitles its owner to one vote on each matter submitted to the shareholders.
The record of shareholders entitled to vote at the Annual Meeting was taken as
of the close of business on Friday, April 7, 2000. On that date, we had
outstanding and entitled to vote 5,684,467 shares of common stock with each
share entitled to one vote.
QUORUM
A majority of the outstanding shares of our common stock must be present,
in person or by proxy, to constitute a quorum at the Annual Meeting. We will
treat shares that are withheld or abstain from voting as present at the Annual
Meeting for purposes of determining a quorum.
PROXIES
At the Annual Meeting, the persons named as proxies will vote all
properly executed proxy cards delivered in connection with this solicitation
and not revoked in accordance with the directions given. Shareholders should
specify their choices with regard to the proposal to be voted upon on the
accompanying proxy card. IF NO SPECIFIC INSTRUCTIONS ARE GIVEN WITH REGARD TO
THE MATTER TO BE VOTED UPON, THEN THE SHARES REPRESENTED BY A SIGNED PROXY CARD
WILL BE VOTED "FOR" THE ELECTION OF THE DIRECTOR NOMINEES. If any other matters
properly come before the Annual Meeting, the persons named as proxies will vote
upon such matters according to their judgment.
You may revoke your proxy card delivered in connection with this
solicitation at any time by:
- - giving written notice to the Secretary of the company at 4355 Shackleford
Road, Norcross, Georgia 30093, or
- - executing and delivering to the Secretary a later dated proxy, or
- - voting in person at the Annual Meeting
You cannot revoke your proxy as to any matter upon which, prior to such
revocation, a vote has been cast in accordance with the authority conferred by
such proxy.
We will pay all expenses incurred in connection with the solicitation of
proxies. Such costs include charges by brokers, fiduciaries and custodians for
forwarding proxy materials to beneficial owners of stock held in their names.
We may solicit proxies by mail, telephone and personal contact by directors,
officers, and employees of the company without additional compensation.
<PAGE> 4
PRINCIPAL SHAREHOLDERS, DIRECTORS AND CERTAIN EXECUTIVE OFFICERS
The following table contains information concerning the only persons who
are known to us to be beneficial owners of more than 5 percent of our common
stock as of February 29, 2000, and the ownership of our common stock as of that
date by each director, each executive officer named in the Summary Compensation
Table and by all directors and officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
BENEFICIAL OWNER ADDRESS OWNED CLASS(A)
- ---------------------------------------------- ----------------------------------- ----------------- ---------------
<S> <C> <C> <C>
J. Leland Strange 4355 Shackleford Road 1,279,972(b) 22.5%
Chairman of the Board, President, CEO Norcross, GA 30093
Wallace R. Weitz & Company(c) 1125 South 103rd St., Suite 600 558,000 9.8%
Omaha, NE 68124
Artisan Partners L.P.(d) 1000 North Water Street, #1770 477,500 8.4%
Milwaukee, WI 53202
Donald A. McMahon 1,500 *
Director
James V. Napier 11,100 *
Director
John B. Peatman 1,280 *
Director
Parker H. Petit 14,200 *
Director
Francis A. Marks 205,000 3.6%
Vice President
Bonnie L. Herron 174,557 3.1%
Vice President, Chief Financial Officer
and Corporate Secretary
All Directors and Executive Officers 1,819,609(e) 31.5%
as a Group (8 persons)
</TABLE>
a. Except as otherwise noted, percentage is determined on the basis of
5,684,467 shares of common stock issued and outstanding plus securities
deemed outstanding pursuant to Rule 13 d - 3 (d)(1) of the Securities
Exchange Act of 1934, as amended. An asterisk indicates beneficial
ownership of less than 1 percent.
b. Includes (i) 130,104 shares owned by Jane H. Strange, Mr. Strange's wife.
Although Mr. Strange may be deemed to be the beneficial owner of the
shares owned by his wife, he disclaims any beneficial interest in the
shares.
c. In a Schedule 13G filed February 10, 1999, Wallace R. Weitz and Company,
an Investment Advisor registered under Section 203 of the Investment
Advisers Act of 1940, reported beneficial ownership of 559,200 shares of
common stock, all of which the firm has the sole power to vote and to
dispose of. Weitz and Company recently confirmed that as of February 29,
2000, they own 558,000 shares of common stock.
d. In Schedule 13G filed February 14, 2000, Artisan Partners L.P., an
Investment Advisor registered under Section 203 of the Investment
Advisors Act of 1940, reported beneficial ownership of 477,500 shares of
common stock. The firm's power to vote and dispose of the shares is
shared with Artisan Corp., the General Partner of Artisan Partners, and
Andrew Ziegler and Carlene Murphy Ziegler, both principal shareholders of
Artisan Corp.
e. Includes 85,000 shares reserved for issuance to an executive officer
pursuant to stock options that were exercisable at February 29, 2000 or
within sixty days of such date.
-2-
<PAGE> 5
ADDITIONAL INFORMATION
Any record or beneficial owner of our common stock as of April 7, 2000
may request a copy of our Annual Report on Form 10-K filed with the Securities
and Exchange Commission for the fiscal year ended December 31, 1999, including
financial statements and schedules. Any request for the Form 10-K should be in
writing addressed to: Bonnie L. Herron, Intelligent Systems Corporation, 4355
Shackleford Road, Norcross, Georgia 30093. If the person requesting the Form
10-K is not a shareholder of record on April 7, 2000, the person must state
that he or she is a beneficial owner of common stock of the company on that
date. We will provide copies of any exhibits to the Form 10-K upon request and
upon the payment of our expenses in furnishing such exhibits.
PROPOSAL NO. 1 -- THE ELECTION OF TWO DIRECTORS
NOMINEES
At the Annual Meeting of Shareholders, shareholders will elect two
directors to the Board of Directors to serve a three-year term until the 2003
Annual Meeting of Shareholders. The other directors' terms expire at the Annual
Meeting of Shareholders listed below for each category of directors or until
their earlier death, resignation or removal from office. Directors are elected
by a plurality of the shares present and voting at the meeting. A "plurality"
means that the individuals who receive the largest number of votes cast are
elected as directors up to the maximum number of directors to be chosen at the
meeting. Therefore, shares that are withheld or abstain from voting will have
no effect on the outcome of the vote. Unless contrary instructions are given,
the persons named as proxies will vote the shares represented by a signed proxy
card "FOR" the nominees.
If a nominee withdraws or for any reason is not able to serve as a
director, the proxy will be voted for another person designated by the Board of
Directors as substitute nominee, but in no event will the proxy be voted for
more than two nominees. The Board of Directors has no reason to believe that
the nominees will not serve if elected.
The Board of Directors has nominated the persons named below to serve as
directors of the company. The nominees are currently directors of the company.
Each nominee gave us the following information concerning his current age,
other directorships, positions with the company, principal employment and
shares of our common stock beneficially owned as of February 29, 2000.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
PROPOSAL TO ELECT THE TWO NOMINEES LISTED BELOW AS DIRECTORS OF THE COMPANY.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
NAME AGE POSITION / PRINCIPAL OCCUPATION (PERCENT OF CLASS)
- ------------------------------ ------- ------------------------------------------------- ----------------------------
NOMINEES FOR ELECTION TO SERVE UNTIL THE 2003 ANNUAL MEETING
<S> <C> <C> <C> <C>
James V. Napier(1.2.) 63 Director, Chairman of the Board of 11,100 *
Scientific-Atlanta, Inc.
J. Leland Strange 58 Director, Chairman of the Board, President, 1,279,972 22.5%
Chief Executive Officer
INCUMBENT DIRECTORS ELECTED TO SERVE UNTIL THE 2002 ANNUAL MEETING
Donald A. McMahon(1.2.) 69 Director, Retired 1,500 *
Parker H. Petit(1.) 60 Chairman of the Board of Matria Healthcare, Inc. 14,200 *
INCUMBENT DIRECTOR ELECTED TO SERVE UNTIL THE 2001 ANNUAL MEETING
John B. Peatman(2.) 65 Director, Professor of Electrical Engineering 1,280 *
at Georgia Institute of Technology
</TABLE>
* Less than one percent.
1. Audit committee
2. Compensation committee
-3-
<PAGE> 6
Mr. McMahon has served as a director since 1981. He retired in 1984 from
the position of President and Chief Executive Officer of Royal Crown Companies
and serves as a director of Richton International Inc.
Mr. Napier has served as a director since 1982. Mr. Napier is Chairman of
the Board and a director of Scientific-Atlanta, Inc., a firm involved in cable
television electronics and satellite-based communication networks. He also
serves as a director of McKesson H.B.O., Vulcan Materials Company, Engelhard
Corporation, Personnel Group of America, Inc. and Westinghouse Air Brake
Company.
Dr. Peatman has served as a director since 1979 and has been a Professor
of Electrical Engineering at the Georgia Institute of Technology since 1964.
Mr. Petit has served as a director since 1996. Mr. Petit has served as
Chairman of the Board of Matria Healthcare, Inc., an obstetrical home care and
maternity management services company since March 1996. Mr. Petit was founder
and Chairman of the Board of Healthdyne, Inc., Matria's predecessor, from 1970
to March 1996. He also serves as Chairman of the Board of Healthdyne
Technologies, Inc. and Healthdyne Information Enterprises, Inc. and as a
director of Logility, Inc.
Mr. Strange has served as President since 1983 and Chief Executive
Officer and Chairman of the Board of Directors since 1985.
There are no family relationships among any of the company's directors
and executive officers.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met five times during the year ended December 31,
1999, and acted by unanimous consent one time. The Audit Committee of the Board
of Directors, which met once during the last fiscal year, consists of Messrs.
McMahon, Napier and Petit. The Audit Committee recommends the appointment of
our company's independent auditors and meets with the auditors to review their
report on the financial operations of the company. The Board has a Compensation
Committee consisting of Messrs. McMahon, Napier and Peatman which met once
during the last year. The Compensation Committee reviews and makes
recommendations concerning the appropriate compensation level for the officers
of the company and any changes in the company's various benefit plans. The Plan
Committee, which did not meet in 1999, is responsible for administering the
1991 Stock Option Plan. The Plan Committee has the same members as the
Compensation Committee. All directors attended all of the meetings of the
Committees of the Board on which they serve and at least 80 percent of the
meetings of the Board of Directors.
EXECUTIVE OFFICERS
The following information is provided about our non-director executive
officers as of February 29, 2000.
<TABLE>
<CAPTION>
NAME AGE POSITION / PRINCIPAL OCCUPATION
- ----------------------------- ------------------------- ------------------------------------------------------------
<S> <C> <C>
J. William Goodhew, III 62 Vice President
Bonnie L. Herron 52 Vice President, Chief Financial Officer and Secretary
Francis A. Marks 66 Vice President
</TABLE>
Mr. Goodhew joined the company in January 1997 as Vice President. He was
president of Peachtree Software, Inc. from 1985 through 1996. He is Chairman of
the Board of Navision Software A/S and serves as director of Ross Systems, Inc.
Mr. Marks joined the company in May 1982 as Vice President of Product
Line Programs after 26 years with IBM Corporation in a variety of managerial
and executive positions. He was appointed Vice President in 1983 and also
serves as President of our ChemFree subsidiary.
-4-
<PAGE> 7
Ms. Herron joined the company in 1982 as Director of Planning at one of
our subsidiaries and subsequently at the corporate level. She was elected
Corporate Secretary in 1987, Vice President in 1990, and Chief Financial
Officer in 1999.
The Board of Directors elects the executive officers to serve until they
are removed, replaced or resign.
EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE LONG TERM COMPENSATION
---------------------------
ANNUAL COMPENSATION AWARDS
- ------------------------------ ----------- ----------------------------- --------------------------- -----------------
(a) (b) (c) (d) (g) (i)
All Other
Name and Principal Position Year Salary Bonus Option/SARs Compensation *
$ $ # $
- ------------------------------ ----------- --------------- ------------- --------------------------- -----------------
<S> <C> <C> <C> <C> <C>
J. Leland Strange 1999 194,726 -- -- 1,974
President & CEO 1998 218,932 -- -- 2,344
1997 206,359 -- -- 2,375
Francis A. Marks 1999 130,040 2,500 -- 1,950
Vice President 1998 126,437 47,832 -- 2,320
1997 122,273 -- -- 1,834
Bonnie L. Herron 1999 103,297 -- -- 1,600
Vice Pres., CFO & Secretary 1998 96,028 4,783 -- 1,484
1997 85,039 -- -- 1,275
</TABLE>
* Includes contributions to the respective accounts of the executive officers
pursuant to the terms of our Tax-Deferred Savings and Protection Plan (the
"401(k) Plan"). Such amounts are fully vested.
OPTION EXERCISES AND YEAR-END VALUES TABLE
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
- ---------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
FY-End FY-End*
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
# $ # $
- --------------------------- ----------------- ------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
J. Leland Strange - 0 - - 0 - 230,000 / 0 540,000 / 0
Francis A. Marks - 0 - - 0 - 170,000 / 0 421,250 / 0
Bonnie L. Herron - 0 - - 0 - 170,000 / 0 421,250 / 0
</TABLE>
* Based on the difference between the exercise price and the closing sales
price per share for the Common Stock on December 31, 1999 of $4.00, as
reported by the American Stock Exchange.
COMPENSATION OF DIRECTORS
Non-employee directors earn $8,000 per year plus a fee of $2,000 per
meeting day. Total compensation is capped at $16,000 annually. Effective
January 1, 1992, the company adopted the Outside Directors' Retirement Plan
which provides for each nonemployee director, upon resignation from the Board
after reaching the age of 65, to receive a lump sum cash payment equal to
$5,000 for each full year of service as a director of the company (and its
predecessors and successors) up to $50,000.
-5-
<PAGE> 8
CHANGE-IN-CONTROL ARRANGEMENTS
Effective January 1, 1992, we adopted the Change in Control Plan for
Officers so that if control of the company changes in the future, management
would be free to act on behalf of the company and its shareholders without
undue concern for the possible loss of future compensation. A "change in
control" means either: (i) the accumulation by an unrelated person of
beneficial ownership of more than 25 percent of the company's common stock,
(ii) the sale of all or substantially all of the company's assets to an
unrelated person, in a merger or otherwise, or (iii) a change of control within
the meaning of the rules promulgated by the Securities and Exchange Commission.
Under the Change in Control Plan, if an officer terminates after a change
in control, the officer would receive a lump sum cash payment in an amount
equal to twice the total of (i) such officer's base annual salary at the time
of termination, (ii) the cash value of annual benefits, and (iii) such
officer's bonus for the most recent year, if any. Additionally, upon a change
in control, all options shall vest and the exercise period for all options
becomes the longer of (i) one year after the date of termination or (ii) the
exercise period specified in the officer's option agreement. The right to such
benefits would lapse one year after the occurrence of the last change in
control event to occur if there were no actual termination during that period.
Currently, J. Leland Strange, Francis A. Marks and Bonnie L. Herron are the
only officers designated by the Board to participate in the Change in Control
Plan.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors reviews and approves
compensation paid by the company to its executive officers. The Compensation
Committee reviews compensation of the executive officers annually, with input
from the Chief Executive Officer. The 1991 Stock Plan Committee is responsible
for administering the 1991 Stock Incentive Plan, including selecting
individuals who will receive stock option grants and determining the timing,
pricing and amounts of the options granted. The Plan Committee reviewed and
granted stock options to executive officers in 1991, 1995 and 1996. Both
committees are comprised of three nonemployee directors of the company.
The Securities and Exchange Commission requires that all compensation
committees discuss how the companies that they serve intend to deal with the
cap on the deductibility of compensation over $1 million for proxy-named
executive officers. Given our current level of executive compensation, it is
not now necessary to consider this issue.
The basic goal of our compensation program for executive officers is to:
- fairly compensate executive officers in line with their
responsibilities and contribution to the company
- reward management for achievement of financial or other measurable
goals of the company and specified subsidiaries, where the
contribution of the executive can be tied to operations under
his/her control
- align management's compensation with shareholder interests as
measured by stock price appreciation
In 1999, the compensation of executive officers consisted of a base
salary and long-term compensation consisting of previously granted stock
options. In 1998 and 1997, the compensation of executive officers consisted of
a base salary, a cash incentive, and long-term compensation consisting of
previously granted stock options. Because the company is not a traditional
operating company with readily identifiable comparative companies, the
Compensation Committee determines the base salary. The Committee intends the
base salary to be in the median range for persons with similar experience and
scope of responsibility. The Committee considers a number of subjective factors
including the nature, scope and variety of responsibilities of each executive
as well as the company's financial results and condition. The Committee
considers an individual executive's performance in a variety of functions which
may include line responsibility for established as well as start-up companies,
corporate development activities (including acquisitions and investments),
completion of significant transactions, contribution to and management of the
company's minority-owned businesses and other corporate functions.
-6-
<PAGE> 9
Cash incentives, when included in the compensation plan, are earned by
the named executives based on achievement of specified goals of the company as
a whole or those subsidiaries or projects for which the named executive has
management responsibility. In 1999, there were no cash incentives included in
the compensation plan. In 1998, two executives earned cash incentives for
achievement of a specific subsidiary transaction. In 1997, cash incentives were
part of the total compensation plan but none were earned by the named
executives.
Our long-term incentive compensation plan is based on the 1991 Stock
Incentive Plan which is designed to reward executives for increases in the
market price of our stock, thus linking the interest of executives and
shareholders. The Plan Committee, in its sole discretion, grants options to
those individuals whose contribution is most likely to have an impact on our
overall performance and price of the company's common stock. The Committee
intends for the number of options granted to an individual executive to provide
an adequate financial incentive over a three to five year time frame and to
provide the executives with an equity interest in the company. The number of
options granted to an executive officer depends upon a subjective evaluation of
the individual's contribution to the company. The Committee did not award any
options in 1997, 1998 or 1999.
It is our policy to provide executives with the same benefits provided to
all other employees with respect to medical, dental, life insurance and 401(k)
plans.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee reviews the compensation of the Chief
Executive Officer annually. Mr. Strange, the largest shareholder of the
company, does not have an employment agreement with the company. Since there
have not been directly comparable peer group companies, the Committee considers
a number of subjective factors in setting Mr. Strange's compensation. Some
factors considered are the nature, scope and variety of his responsibilities;
his contribution to increasing the value of the company's minority-owned
companies; the trading price of our common stock and the company's financial
results and condition. The Compensation Committee believes Mr. Strange's
compensation is appropriate in consideration of the scope of his position and
the performance of the company. In late 1998, Mr. Strange voluntarily asked the
Board to reduce his base salary by approximately 13 percent effective in
January 1999. In 1997, the increase in Mr. Strange's total compensation was in
part due to his contribution to increasing the value of one of the company's
investments. Mr. Strange was awarded stock options in 1991 and 1996 under the
same conditions as described above for all executive officers. In determining
the number of options granted, the Plan Committee considered his base salary,
the number of shares owned by Mr. Strange, and the number of options granted to
other executives. The Plan Committee believes the options provide a reasonable
financial incentive and directly tie increases in Mr. Strange's total
compensation to increases in shareholder value.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE PLAN COMMITTEE
<S> <C>
Donald A. McMahon Donald A. McMahon
James V. Napier James V. Napier
John B. Peatman John B. Peatman
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. McMahon, Napier and Peatman served as members of the Compensation
Committee and the Plan Committee in 1999. None of these individuals is a
present or former officer or employee of the company.
PERFORMANCE GRAPH
The following line graph compares the cumulative total shareholder return
on our common stock, based on the market price of the common stock, with the
cumulative total return of the companies on the AMEX Market Value Index and the
S&P Technology Sector Index.
-7-
<PAGE> 10
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG INTELLIGENT SYSTEMS, THE S&P TECHNOLOGY SECTOR INDEX AND
THE AMEX MARKET VALUE INDEX
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
<S> <C> <C> <C> <C> <C> <C>
INTELLIGENT SYSTEMS CORPORATION 100.00 100.00 141.18 229.41 79.41 188.24
AMEX MARKET VALUE 100.00 126.42 134.50 163.13 165.96 214.80
S & P TECHNOLOGY SECTOR 100.00 144.04 204.35 257.67 445.72 780.60
</TABLE>
* $100 INVESTED ON 12/31/94 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
regulations of the Securities and Exchange Commission thereunder require our
executive officers and directors and persons who own more than ten percent of
our common stock, as well as certain affiliates of these persons, to file
initial reports of ownership of our common stock and changes in such ownership
with the Securities and Exchange Commission and the American Stock Exchange.
The Securities and Exchange Commission also requires executive officers,
directors and persons owning more than ten percent of our common stock to
furnish us with copies of all Section 16(a) forms they file. Based solely on
our review of the copies of such forms received by us, we believe that, during
the fiscal year ended December 31, 1999, our executive officers, directors, and
owners of more than ten percent of our common stock complied with all
applicable filing requirements in a timely manner.
-8-
<PAGE> 11
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, Atlanta, Georgia, acted as our principal independent
public accountants for the fiscal year ended December 31, 1999. We expect that
representatives of Arthur Andersen LLP will be present at the shareholders'
meeting. They will have the opportunity to make a statement if they desire to
do so and to respond to appropriate questions.
CERTAIN TRANSACTIONS
In 1999, J. William Goodhew, Vice President of the company, invested $100,000
in Risk Laboratories, LLC, a business in which Intelligent Systems Corporation
owned an equity interest. The terms of the transaction were negotiated between
Mr. Goodhew and Risk Laboratories at arm's length on terms similar to those
offered to other third parties. On March 21, 2000, as part of the transaction
in which the company sold the majority of its interest in Risk Laboratories,
Mr. Goodhew sold part of his interest for the same valuation as other
shareholders of Risk Laboratories.
On January 5, 2000, three officers of the company exercised stock options and
issued to the company promissory notes in payment of the exercise price. J.
Leland Strange, President and Chief Executive Officer, exercised options to
acquire 230,000 shares of common stock and issued the company a promissory note
for $380,000 representing the total exercise price of the options. Bonnie L.
Herron, Vice President and Chief Financial Officer, and Francis A. Marks, Vice
President, each exercised options to acquire 170,000 shares of common stock and
each issued the company a promissory note for $258,750 representing the total
exercise price of their respective options. Each of the notes is secured by a
pledge of the common stock acquired upon exercise of the option, has a term of
one year and bears interest at the rate of seven percent (7%) per annum.
SHAREHOLDERS' PROPOSALS FOR ANNUAL MEETING IN 2001
Shareholders intending to present proposals at the Annual Meeting of
Shareholders in 2001 should submit these proposals to the Secretary of the
company by certified mail, return receipt requested, at our offices in
Norcross, Georgia on or before December 15, 2000 to be eligible for inclusion
in the proxy statement and form of proxy for the Annual Meeting of Shareholders
in 2001. Our bylaws contain an advance notice provision that states that, among
other things, in order for business to be brought properly before an annual
meeting of shareholders by a shareholder, the shareholder must have given
timely notice of the business in writing to the Secretary of the company. To be
timely under the Bylaws, a shareholder's notice must be received at our
principal offices by December 15, 2000.
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors is not aware of any matter other than those stated
above that are to be brought before the meeting. However, if any other matter
should be presented for consideration and voting, the persons named in the
enclosed form of proxy intend to vote the proxy in accordance with their
judgment of what is in the best interest of the company.
By order of the Board of Directors
/s/ Bonnie L. Herron
BONNIE L. HERRON
Secretary
Norcross, Georgia
April 14, 2000
-9-
<PAGE> 12
INTELLIGENT SYSTEMS CORPORATION
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned, a shareholder of common stock, $.01 par value (the "Common
Stock") of Intelligent Systems Corporation, a Georgia corporation (the
"Company") hereby appoints J. Leland Strange and Bonnie L. Herron, and each
of them with full power of substitution, proxies to vote at the Annual Meeting
of Stockholders of the Company to be held on June 9, 2000 at 4:00 p.m., local
time, and at any adjournment or adjournments thereof, hereby revoking any
proxies heretofore given, to vote all shares of Common Stock of the Company
held or owned by the undersigned as of the record date, April 7, 2000 as
directed on the reverse, and in their discretion, upon such other matters as
may come before the meeting.
(TO BE SIGNED ON REVERSE SIDE)
SEE REVERSE
SIDE
<PAGE> 13
[X] Please mark your
votes as in this
example.
1. ELECTION FOR WITHHELD NOMINEE: James V. Napier
OF [ ] [ ] J. Leland Strange
DIRECTOR:
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS
ARE SPECIFIED, THE PROXY WILL BE VOTED "FOR" PROPOSAL 1.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
SIGNATURE(S) _____________ DATE _______ SIGNATURE(S) ______________ DATE _______
NOTE: Please sign exactly as your name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or guardian,
please give full title as such. If the signer is a corporation, the full
corporate name should be signed by a duly authorized officer.
