ins20240930_10q.htm

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, 2024 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 per share	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, 2024, 7,901,148 shares of Common Stock of the registrant were outstanding.

CoreCard Corporation

Index

Form 10-Q

		Page
Part I	Financial Information

Item 1	Financial Statements (unaudited)
	Consolidated Balance Sheets at September 30, 2024 and December 31, 2023	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023	4
	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023	4
	Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	6
	Notes to Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4	Controls and Procedures	17

Part II	Other Information

Item 1	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3	Defaults Upon Senior Securities	19
Item 4	Mine Safety Disclosures	19
Item 5	Other Information	19
Item 6	Exhibits	19
Signatures		19

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, 2024			December 31, 2023
	(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	22,498		$	26,918
Marketable securities		5,511			5,230
Accounts receivable, net		7,320			7,536
Other current assets		6,522			4,805
Total current assets		41,851			44,489
Investments		3,632			4,062
Property and equipment, at cost less accumulated depreciation		11,954			11,319
Other long-term assets		5,371			3,956
Total assets	$	62,808		$	63,826

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,628		$	1,557
Deferred revenue, current portion		1,264			2,310
Accrued payroll		2,459			2,172
Accrued expenses		1,050			971
Other current liabilities		2,143			2,530
Total current liabilities		8,544			9,540
Commitments and Contingencies (see Note 9)
Noncurrent liabilities:
Deferred revenue, net of current portion		161			265
Other long-term liabilities		372			196
Long-term lease obligation		2,044			1,121
Total noncurrent liabilities		2,577			1,582
Stockholders’ equity:
Common stock, $0.01 par value: Authorized shares - 20,000,000; Issued shares – 9,026,940 and 9,016,140 at September 30, 2024 and December 31, 2023, respectively;
Outstanding shares – 7,901,148 and 8,295,408 at September 30, 2024 and December 31, 2023, respectively		91			90
Additional paid-in capital		17,479			16,621
Treasury stock, 1,125,792 and 720,732 shares at September 30, 2024 and December 31, 2023, respectively, at cost		(25,825	)		(20,359	)
Accumulated other comprehensive income (loss)		100			32
Accumulated income		59,842			56,320
Total stockholders’ equity		51,687			52,704
Total liabilities and stockholders’ equity	$	62,808		$	63,826

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

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,
	2024			2023			2024			2023
Revenue
Services	$	14,283		$	13,399		$	41,156		$	42,053
Products		1,420			-			1,420			1,794
Total net revenue		15,703			13,399			42,576			43,847
Cost of revenue
Services		8,999			9,279			27,588			28,380
Products		-			-			-			-
Total cost of revenue		8,999			9,279			27,588			28,380
Expenses
Marketing		79			63			309			237
General and administrative		1,339			1,155			4,256			4,220
Development		2,501			2,489			5,961			6,094
Income from operations		2,785			413			4,462			4,916
Investment income (loss)		(90	)		(1,015	)		(528	)		(1,701	)
Other income (loss), net		233			308			758			653
Income (loss) before income taxes		2,928			(294	)		4,692			3,868
Income tax expense (benefit)		732			(72	)		1,170			959
Net income (loss)	$	2,196		$	(222	)	$	3,522		$	2,909
Earnings (loss) per share:
Basic	$	0.28		$	(0.03	)	$	0.44		$	0.34
Diluted	$	0.27		$	(0.03	)	$	0.43		$	0.34
Basic weighted average common shares outstanding		7,957,571			8,460,473			8,092,681			8,485,416
Diluted weighted average common shares outstanding		8,017,870			8,460,473			8,142,972			8,509,825

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Net (loss) income	$	2,196		$	(222	)	$	3,522		$	2,909
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities		111			11			133			36
Foreign currency translation adjustments		(15	)		15			(65	)		(32	)
Total comprehensive (loss) income	$	2,292		$	(196	)	$	3,590		$	2,913

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

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, 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

Balance at December 31, 2023		8,295,408		$	90	$	16,621	$	(20,359	)	$	32		$	56,320		$	52,704
Common stock repurchased, including excise tax*		(134,650	)						(1,647	)								(1,647	)
Net income															430			430
Stock compensation expense							160											160
Unrealized gain (loss) on marketable securities												5						5
Foreign currency translation adjustment												(2	)					(2	)
Balance at March 31, 2024		8,160,758		$	90	$	16,781	$	(22,006	)	$	35		$	56,750		$	51,650
Common stock repurchased, including excise tax*		(147,040	)						(2,091	)								(2,091	)
Net income															896			896
Stock compensation expense		10,800			1		424											425
Unrealized gain (loss) on marketable securities												17						17
Foreign currency translation adjustment												(48	)					(48	)
Balance at June 30, 2024		8,024,518		$	91	$	17,205	$	(24,097	)	$	4		$	57,646		$	50,849
Common stock repurchased*		(123,370	)						(1,728	)								(1,728	)
Net income															2,196			2,196
Stock compensation expense							274											274
Unrealized gain (loss) on marketable securities												111						111
Foreign currency translation adjustment												(15	)					(15	)
Balance at September 30, 2024		7,901,148		$	91	$	17,479	$	(25,825	)	$	100		$	59,842		$	51,687

*At September 30, 2024, approximately $9.3 million was authorized for future repurchases of our common stock.

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

CoreCard Corporation

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine Months Ended September 30,
CASH PROVIDED BY (USED FOR):	2024			2023

OPERATING ACTIVITIES:
Net income	$	3,522		$	2,909
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,776			5,011
Stock-based compensation expense		859			150
Deferred income taxes		(260	)		69
Non-cash investment loss (income)		-			1,000
Equity in loss of affiliate company		528			701
Changes in operating assets and liabilities:
Accounts receivable, net		216			7,345
Other current assets		(1,717	)		(2,329	)
Other long-term assets		17			563
Accounts payable		388			(78	)
Accrued payroll		287			53
Deferred revenue, current portion		(1,046	)		2,649
Accrued expenses		79			281
Other current liabilities		(506	)		40
Deferred revenue, net of current portion		(104	)		(112	)
Net cash provided by operating activities		5,039			18,252

INVESTING ACTIVITIES:
Purchases of property and equipment		(3,733	)		(4,845	)
Advances on notes and interest receivable		(200	)		(450	)
Proceeds from payments on notes receivable		152			147
Purchases of marketable securities		(1,831	)		(1,776	)
Maturities of marketable securities		1,728			1,602
Purchase of long-term investment		(98	)		(155	)
Net cash used for investing activities		(3,982	)		(5,477	)

FINANCING ACTIVITIES:
Repurchases of common stock		(5,412	)		(1,528	)
Net cash used for financing activities		(5,412	)		(1,528	)
Effects of exchange rate changes on cash		(65	)		(32	)
Net increase (decrease) in cash		(4,420	)		11,215
Cash at beginning of period		26,918			20,399
Cash at end of period	$	22,498		$	31,614

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes	$	1,070		$	168
Purchases of property and equipment, accrued but not paid	$	144		$	-

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

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 (“GAAP”) 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, 2024 and 2023. The interim results for the three and nine months ended September 30, 2024 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, 2023, as filed in our Annual Report on Form 10-K.

There have been no material changes in the Company’s significant accounting policies during the first nine months of 2024 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Amendments to Topic 280). This standard was issued to improve the disclosures about reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses by requiring disclosure of incremental segment information on an annual and interim basis to enable investors to develop more decision-useful financial analyses. Topic 280 currently requires certain information about its reportable segments. The amendments in the ASU do not change or remove those disclosure requirements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of the ASU is on a retrospective basis. We will adopt the updated accounting guidance in our Annual Report on Form 10-K for the year ended December 31, 2024. We are currently evaluating the impact the adoption of the new accounting guidance will have on our segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This standard was issued to enhance the transparency and decision usefulness of income tax disclosures to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The amendments in this ASU address transparency about income tax information through disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. The ASU should be applied on a prospective basis. Retrospective application is permitted. We will adopt the updated accounting guidance in our Annual Report on Form 10-K for the year ended December 31, 2025. We are currently evaluating the impact the adoption of the new accounting guidance will have on our income tax disclosures.

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, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
License	$	1,420	$	-	$	1,420	$	1,794
Professional services		7,006		6,432		19,805		22,127
Processing and maintenance		6,067		5,814		17,912		16,933
Third party		1,210		1,153		3,439		2,993
Total	$	15,703	$	13,399	$	42,576	$	43,847

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, 2024 and 2023 are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
United States	$	14,997	$	12,777	$	40,754	$	42,307
Middle East		678		588		1,740		1,452
European Union		28		34		82		88
Total	$	15,703	$	13,399	$	42,576	$	43,847

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, 2024 and 2023. 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,
	2024			2023			2024			2023
Customer A		64	%		62	%		62	%		68	%

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 2023, we entered into and advanced $650,000 on a Promissory Note with a maturity date of October 2025 and an annual interest rate of 5.25 percent. In the first quarter of 2024, we entered into and advanced a $200,000 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 notes receivable of $240,000 at September 30, 2024, is included in other current assets on the Consolidated Balance Sheets. The carrying value of the noncurrent portion of our note receivable of $403,000 as of September 30, 2024 is included in other long-term assets on the Consolidated Balance Sheets.

4.	INVESTMENTS

We hold a 26.5 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 $3,378,000 at September 30, 2024, included in investments on the Consolidated Balance Sheets. We account for this investment using the equity method of accounting which resulted in losses of $90,000 and $528,000 for the three and nine months ended September 30, 2024, respectively, and losses of $15,000 and $701,000 for the three and nine months ended September 30, 2023, 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, 2024, variations from current expectations could result in future impairment charges. At September 30, 2024, the carrying value of this investment exceeded our share of the investee’s net assets by approximately $2.8 million. Substantially all of this difference is comprised of goodwill and other intangible assets.

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. In the third quarter of 2024, after the investee company signed its first revenue contracts, we invested an additional $98,000 as part of a Series A-2 financing.

5.	STOCK-BASED COMPENSATION

At September 30, 2024, we had 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, 2024 and 2023 has been recognized as a component of general and administrative expenses and development expenses in the accompanying Consolidated Financial Statements. We recorded $274,000 and $0 of stock-based compensation expense for the three months ended September 30, 2024 and 2023, respectively, and $859,000 and $150,000 for the nine months ended September 30, 2024 and 2023, respectively.

Stock Options

As of September 30, 2024, there was no unrecognized compensation cost related to stock options. There were no options exercised during the three and nine months ended September 30, 2024. No options expired unexercised during the quarter. The following table summarizes options as of September 30, 2024:

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		2.5	$	3.75	$	140,020
$7.80				8,000		3.7	$	7.80	$	53,760
$19.99				30,000		4.3	$	19.99	$	-
$39.11				8,000		4.7	$	39.11	$	-
$3.50	-	$39.11		59,000		3.9	$	17.35	$	193,780

The estimated fair value of options granted is calculated using the Black-Scholes option pricing model with assumptions as previously disclosed in our 2023 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 2024 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, 2024. The amount of aggregate intrinsic value will change based on the market value of the Company’s stock.

Restricted Stock Units

Restricted Stock Units, or RSUs, generally vest at the end of a three-year vesting period. A summary of the Company’s RSU activity was as follows:

	Number of Restricted Stock Units			Weighted-average grant date fair value per share
Balance as of December 31, 2023		-		$	-
Granted		287,485			12.34
Vested		-			-
Canceled and forfeited		(2,473	)		12.34
Balance as of September 30, 2024		285,012		$	12.34

As of September 30, 2024, unrecognized compensation costs related to unvested RSUs was $2.6 million, which we expect to recognize over a weighted-average period of 2.4 years. In October 2024, we granted an additional 198,912 RSUs to long-term employees at a grant date fair value of $2.6 million that vest at the end of a three-year vesting period.

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.

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, 2024
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents
Money market accounts	$	16,805	$	−	$	−	$	16,805
Marketable securities
Corporate, municipal debt and treasury securities		5,511		−		−		5,511
Total assets	$	22,316	$	−	$	−	$	22,316

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, 2024 or 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, 2024
(In thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Marketable securities
Corporate, municipal debt and treasury securities	$	5,321	$	190	$	−	$	5,511

The Company had one marketable security in an unrealized loss position as of September 30, 2024. The Company did not identify any marketable securities that were other-than-temporarily impaired as of September 30, 2024 and 2023. The Company does not intend to sell any marketable securities that have an unrealized loss at September 30, 2024 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, 2024				December 31, 2023
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	1,229	$	1,271	$	1,506	$	1,556
Due after one year through three years		4,092		4,240		3,607		3,674
Total	$	5,321	$	5,511	$	5,113	$	5,230

9.	COMMITMENTS AND CONTINGENCIES

Leases

We have noncancelable operating leases for offices and data centers expiring at various dates through March 2029. These operating leases are included in other long-term assets on the Company’s September 30, 2024 and December 31, 2023 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, 2024 and December 31, 2023 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, 2024			December 31, 2023
Right-of-use asset, net and lease liabilities (in thousands)	$	3,049		$	2,003
Weighted average remaining lease term (years)		3.4			2.8
Weighted average discount rate		6.4	%		3.4	%

For the nine-months ended September 30, 2024 and 2023, 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, 2024 is as follows:

SEC Form 10-Q filed by CoreCard Corporation