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Note 7 - Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Legal Matters and Contingencies [Text Block] |
7. | COMMITMENTS AND CONTINGENCIES
Leases We have noncancelable operating leases for offices and data centers expiring at various dates through March 2025. These operating leases are included in other long-term assets on the Company's 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 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:
Year Ended December 31, |  | 2020 |  |  | 2019 |
Right-of-use asset, net and lease liabilities (in thousands) |  | $ | 2,889 |  |  | $ | 945 |
Cash paid for operating lease liabilities (in thousands) |  | $ | 1,033 |  |  | $ | 563 |
Weighted average remaining lease term (years) |  |  | 3.5 |  |  |  | 1.1 |
Weighted average discount rate |  |  | 3.8 | % |  |  | 5.5 | %
Maturities of our operating lease liabilities as of December 31, 2020 is as follows:
|  | Operating Leases |
|  | (In thousands) |
2021 |  | $ | 983 |
2022 |  |  | 795 |
2023 |  |  | 718 |
2024 |  |  | 495 |
Thereafter |  |  | 108 |
Total lease liabilities |  | $ | 3,099 |
Lease expense for the years ended December 31, 2020 and 2019 consisted of the following:
Year Ended December 31, (in thousands) |  | 2020 |  |  | 2019 |
Cost of revenue |  | $ | 725 |  |  | $ | 230 |
General and administrative |  |  | 214 |  |  |  | 210 |
Research and development |  |  | 113 |  |  |  | 123 |
Total |  | $ | 1,052 |  |  | $ | 563 |
Legal Matters On or about July 9, 2019, a securities class action complaint was filed in the United States District Court for the Eastern District of New York (Case No. 1:19 -cv- 03949 ) by Michael Skrzeczkoski, individually and on behalf of all others similarly situated, against the company, and certain current and former directors and officers. The complaint alleges, among other things, that certain of our press releases and SEC filings were misleading as a result of the failure to disclose alleged related party transactions affecting revenue recognition and the absence of disclosure regarding certain allegations against former director Parker H. Petit in connection with his former position with MiMedx, Inc. The complaint seeks to recover attorney's fees and costs and unspecified damages on behalf of purchasers who acquired our stock during the period from January 23, 2019, through May 29, 2019, and purportedly suffered financial harm as a result of the alleged misleading statements. On September 26, 2019, the Court appointed Edgardo Canez as lead plaintiff (“Lead Plaintiff”) on behalf of the putative class. On November 18, 2019, Lead Plaintiff, individually and on behalf of a putative class of persons or entities who purchased or otherwise acquired publicly traded company securities from May 23, 2014 through May 29, 2019, filed an amended class action complaint against the company, and certain current and former directors and officers (the “Amended Complaint”). The Amended Complaint alleges similar allegations in violation of Sections 10 (b) and 20 (a) of the Securities Exchange Act as the previously filed complaint. The Amended Complaint seeks to recover attorney's fees and costs and unspecified damages. On January 2, 2020, Defendants submitted a motion to dismiss, and on March 3, 2020, briefing on the motion to dismiss was completed. The motion to dismiss is currently pending. We dispute these claims and intend to defend the matter vigorously. On or about February 14, 2020, two purported shareholders, derivatively and on behalf of the Company, filed substantially similar shareholder derivative actions in the Eastern District of New York against certain current and former directors and officers (the “Individual Defendants”), and the Company as a nominal defendant (together with the Individual Defendants, the “Defendants”). The complaints assert a claim against Messrs. Strange, Moise, Petit, Fuzzell and Chandler for a violation of Section 14 (a) of the Securities Exchange Act by issuing purportedly misleading statements in the Company's 2017 and 2018 Proxies. The complaints also assert claims against the Individual Defendants for breaches of fiduciary duty, waste of corporate assets, and unjust enrichment arising out of, among other things, purportedly undisclosed related party transactions, other relationships, and certain allegations against former director Parker H. Petit in connection with his former position with MiMedx, Inc. and other companies. The relief sought in the complaints includes changes to the Company's corporate governance procedures, unspecified damages, equitable relief, restitution, and attorney's fees and costs. On April 20, 2020, the two derivative actions were consolidated and captioned, In re Intelligent Systems Corporation Stockholder Derivative Litigation , Lead Case No. 1:20 -cv- 00832, in the Eastern District of New York (the “Derivative Matter”). On June 19, 2020, Defendants filed their motion to dismiss, and briefing was subsequently completed. After a conference held on August 24, 2020, the parties agreed that Defendants' motion to dismiss would be temporarily withdrawn without prejudice to refile after the conclusion of any discovery permitted by further Court order. On September 8, 2020, Plaintiffs moved for leave to conduct limited discovery (“Plaintiffs' Motion for Discovery”). On December 23, 2020, the Court entered a stipulation among the parties whereby Plaintiffs' Motion for Discovery shall be withdrawn, the Company will engage in limited discovery, and the parties agree that the Derivative Matter shall be stayed pending resolution of the motion to dismiss in the related above-mentioned securities litigation matter, among other things.

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