Intelligent Systems Corporation

On May 24, 2019, Aurelius Value published a report alleging that the financial expert of the Company’s Audit Committee, Parker H. Petit (“Petit”), had engaged in improper accounting practices and that its Chief Executive Officer had engaged in many undisclosed related party transactions.

On this news, the Company’s share price fell $4.18, more than 10%, to close at $34.93 per share on May 24, 2019, thereby injuring investors.

Then, on May 30, 2019, Grizzly Research LLC published a report alleging that the Company’s employees take control of undisclosed shell companies in Asia, which then engage in undisclosed related party transactions “to either round-trip revenue back to [Intelligent Systems] or siphon money out of the company.”

On this news, the Company’s share price fell $6.82, or over 20%, to close at $26.99 per share on May 30, 2019, thereby injuring investors further.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Petit, the “financial expert” on Intelligent Systems’ Audit Committee engaged in accounting fraud as the CEO of MiMedx Group, Inc.; (2) that the Company’s CEO, Leland Strange, engaged in undisclosed related-party transactions with Petit and others and had an undisclosed personal relationship with the Company’s auditor; (3) that the Company had its employees set up or take control of shell companies in Asia so they could partake in undisclosed related-party transactions for the purpose of either fabricating revenue for the Company and/or siphoning money out of the Company; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.