Investments

–

In the quarter ended

June 30, 2018,

we recorded an impairment charge of

$250,000

to reduce the carrying value of our minority equity ownership in

one

of our investee companies, a privately held technology company and program manager in the FinTech industry. Given the investee’s limited funding to support its operation and sales and marketing efforts, we are

not

comfortable assigning a higher realizable value to our investment at this point and therefore believe an impairment charge is prudent and required. CoreCard remains in an ongoing business relationship with the company pursuant to a Processing Agreement and a Program Management Services Agreement. CoreCard is positioned to assume the program management aspects of the investee company if the need should arise to ensure their program(s) ongoing viability and the completion of the Processing Agreement with CoreCard.

In the quarter ended

June 30, 2017,

we recorded an impairment charge of

$90,000

to reduce the carrying value of our minority equity ownership in an investee company, a privately-held technology company in the FinTech industry. During the quarter ended

June 30, 2017,

the investee closed on a Series A preferred stock financing with higher preference to our Series Seed preferred stock which resulted in substantial dilution to our investment. Subsequently, in the quarter ended

December 31, 2017,

the investee sold its intellectual property and is winding down its operations. As such, we recorded an additional impairment charge of

$10,000

to fully write-down our minority equity ownership in the investee company to zero. Given the operational and contractual wind-down costs of the investee coupled with the Series A preferred stock preference to our Series Seed preferred stock, we believe a full write-down was warranted. CoreCard remains in an ongoing contractual business relationship with the company through the wind-down period pursuant to a Processing Agreement and anticipates receiving liquidated damages as contractually allowed per the Processing Agreement. CoreCard has recognized processing services revenue from the investee company greater than our investment.

In the quarter ended

September 30, 2017,

the remaining cash held in escrow from the sale of

one

of our investee companies to Cisco, Inc. in the

fourth

quarter of

2015,

was released. Since we had

reasonable way to estimate the amount of escrow, if any, to be released to us at the initial time of the sale,

provision was previously recorded in the financial statements. We received cash of

$372,000,

which was recognized as a gain in the

third

quarter of

2017.

In the quarter ended

September 30, 2017,

we sold shares in a tender offer for stock of

one

of our investee companies, a privately-held technology company in the FinTech industry. We sold approximately

ninety-one

percent of our shares. We recognized a gain of

$1,466,000

over our carrying value of

$98,000.

We retained a small equity stake in the investee and CoreCard remains in an ongoing business relationship with the company pursuant to a Processing Agreement previously entered into by the parties.