idn-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

			For the transition period from ________________ to ________________

Commission File No.: 001-15465

Intellicheck, Inc.

(Exact name of Registrant as specified in its charter)


Delaware						11-3234779
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

200 Broadhollow Road, Suite 207, Melville, NY 11747
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (516) 992-1900

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, $0.001 par value per share

IDN

The Nasdaq Stock Market LLC

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 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 and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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 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 November 14, 2023, there were 19,354,335 shares of Common Stock, $0.001 par value, outstanding.

Index

INTELLICHECK, INC.

Index


			Page
PART I – FINANCIAL INFORMATION			3

Item 1. Unaudited Condensed Financial Statements			3

Condensed Balance Sheets – September 30, 2023 (Unaudited) and December 31, 2022			3

Unaudited Condensed Statements of Operations for the three and nine months ended September 30, 2023 and 2022			4

Unaudited Condensed Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022			6

Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2023 and 2022			7

Notes to Unaudited Condensed Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22

Item 3. Quantitative and Qualitative Disclosures About Market Risk			26

Item 4. Controls and Procedures			26

Part II – OTHER INFORMATION			27

Item 1. Legal Proceedings			27

Item 1A. Risk Factors			27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			27

Item 3. Defaults Upon Senior Securities			27

Item 4. Mine Safety Disclosures			28

Item 5. Other Information			28

Item 6. Exhibits			28

Signatures			29

Exhibits


31.1			Rule 13a-14(a) Certification of Chief Executive Officer
31.2			Rule 13a-14(a) Certification of Chief Financial Officer
32			U.S.C. Section 1350 Certifications
101.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Extension Schema
101.CAL			XBRL Taxonomy Extension Calculation Linkbase
101.DEF			XBRL Taxonomy Extension Definition Linkbase
101.LAB			XBRL Taxonomy Extension Label Linkbase
101.PRE			XBRL Taxonomy Extension Presentation Linkbase
104			Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

Index

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

INTELLICHECK, INC.

CONDENSED BALANCE SHEETS (in thousands except share amounts)


	September 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,962	$	5,196
Short-term investments	4,948		4,880
Accounts receivable, net of allowance of $43 and $20 at September 30, 2023 and December 31, 2022, respectively	3,898		2,637
Other current assets	577		608
Total current assets	13,385		13,321

PROPERTY AND EQUIPMENT, NET	686		749
GOODWILL	8,102		8,102
INTANGIBLE ASSETS, NET	194		273
OTHER ASSETS	9		8
Total assets	$	22,376	$	22,453

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	572	$	358
Accrued expenses	2,350		2,319
Income taxes payable	—		90
Equity awards liability	40		54
Liability for shares withheld	190		221
Deferred revenue, current portion	2,153		906
Total current liabilities	5,305		3,948

OTHER LIABILITIES:
Deferred revenue, long-term portion	—		1
Total liabilities	5,305		3,949

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS’ EQUITY:
Preferred stock - $0.01 par value; 30,000 shares authorized; Series A Convertible preferred stock, zero shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	—		—
Common stock - $.001 par value; 40,000,000 shares authorized; 19,299,547 and 18,957,366 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	19		19
Additional paid-in capital	150,537		149,233
Accumulated deficit	(133,485)		(130,748)
Total stockholders’ equity	17,071		18,504

Total liabilities and stockholders’ equity	$	22,376	$	22,453

See accompanying notes to unaudited condensed financial statements.

Index

INTELLICHECK, INC.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands except shares and per share amounts)

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022

REVENUES	$	4,760	$	4,012	$	13,730	$	11,415
COST OF REVENUES	(428)		(358)		(1,112)		(1,038)
Gross profit	4,332		3,654		12,618		10,377

OPERATING EXPENSES
Selling, general and administrative	3,597		2,917		11,382		8,985
Research and development	1,550		1,461		4,134		4,682
Total operating expenses	5,147		4,378		15,516		13,667

Loss from operations	(815)		(724)		(2,898)		(3,290)

OTHER INCOME
Interest and other income	179		—		181		—
Total other income	179		—		181		—

Net loss before provision for income taxes	(636)		(724)		(2,717)		(3,290)
Income tax expense	8		—		20		—

Net loss	$	(644)	$	(724)	$	(2,737)	$	(3,290)

PER SHARE INFORMATION
Loss per common share -
Basic/Diluted	$	(0.03)	$	(0.04)	$	(0.14)	$	(0.17)

Weighted average common shares used in computing per share amounts -
Basic/Diluted	19,278,295		18,918,596		19,209,620		18,802,892

See accompanying notes to unaudited condensed financial statements.

Index

INTELLICHECK, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands except number of shares)

(Unaudited)


	Three months ended September 30, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount

BALANCE, June 30, 2023	19,251,920	$	19	$	150,159	$	(132,841)	$	17,337

Stock-based compensation	–	–		381		–		381
Issuance of shares for vested restricted stock grants	47,627	–		–		–		–
Shares forfeited in exchange for withholding taxes	–	–		(3)		–		(3)
Net loss	–	–		–		(644)		(644)
BALANCE, September 30, 2023	19,299,547	$	19	$	150,537	$	(133,485)	$	17,071


	Three months ended September 30, 2022
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount

BALANCE, June 30, 2022	18,875,580	$	19	$	147,804	$	(129,463)	$	18,360

Stock-based compensation	–	–		696		–		696
Issuance of shares for vested restricted stock grants	54,932	–		–		–		–
Net loss	–	–		–		(724)		(724)
BALANCE, September 30, 2022	18,930,512	$	19	$	148,500	$	(130,187)	$	18,332

See accompanying notes to unaudited condensed financial statements.

Index

INTELLICHECK, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands except number of shares)

(Unaudited)


	Nine months ended September 30, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount

BALANCE, December 31, 2022	18,957,366	$	19	$	149,233	$	(130,748)	$	18,504

Stock-based compensation	–	–		1,361		–		1,361
Issuance of common stock for vested restricted stock units and earned performance stock units	366,901	–		–		–		–
Shares forfeited in exchange for withholding taxes	(24,720)	–		(57)		–		(57)
Net loss	–	–		–		(2,737)		(2,737)
BALANCE, September 30, 2023	19,299,547	$	19	$	150,537	$	(133,485)	$	17,071


	Nine months ended September 30, 2022
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount

BALANCE, December 31, 2021	18,660,369	$	19	$	146,455	$	(126,897)	$	19,577

Stock-based compensation	–	–		2,045		–		2,045
Issuance of shares for vested restricted stock grants	270,143	–		–		–		–
Net loss	–	–		–		(3,290)		(3,290)
BALANCE, September 30, 2022	18,930,512	$	19	$	148,500	$	(130,187)	$	18,332

See accompanying notes to unaudited condensed financial statements


•Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. The Company's Level 1 assets consisted primarily of cash and cash equivalents as well as short-term investments totaling $8.9 and $10.1 million as of September 30, 2023 and December 31, 2022 respectively.
•Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies. The Company had $40 and $54 of Level 2 liabilities as of September 30, 2023 and December 31, 2022 respectively, for the liability-classified stock options. The fair value of these awards were determined by utilizing a Black-Scholes option pricing model.
•Level 3—Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when the fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Company had no Level 3 assets or liabilities as of September 30, 2023 and December 31, 2022.


	For the Three Months Ended September 30,
	2023		2022
Products and services

Software as a Service (SaaS)	$	4,635	$	3,970
Equipment	106		39
Other	19		3
	$	4,760	$	4,012

Timing of revenue recognition

Products transferred at a point in time	$	125	$	42
Services transferred over time	4,635		3,970
	$	4,760	$	4,012


	For the Nine Months Ended September 30,
	2023		2022
Products and services

Software as a Service (SaaS)	$	13,526	$	11,249
Equipment	152		155
Other	52		11
	$	13,730	$	11,415
Timing of revenue recognition

Products transferred at a point in time	$	204	$	166
Services transferred over time	13,526		11,249
	$	13,730	$	11,415


	Remainder 2023		2024		2025		Total

Software as a Service (SaaS)	$	427	$	1,721	$	—	$	2,148
Other	5		—		—		5
	$	432	$	1,721	$	—	$	2,153


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:

Net Loss	$	(644)	$	(724)	$	(2,737)	$	(3,290)

Denominator:
Weighted average common shares –
Basic/Diluted	19,278,295		18,918,596		19,209,620		18,802,892

Net Loss per share –
Basic/Diluted	$	(0.03)	$	(0.04)	$	(0.14)	$	(0.17)


	As of September 30, 2023
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value

Cash and cash equivalents	$	3,962	$	—	$	—	$	3,962
U.S. treasury notes (1)	4,948		—		(5)		4,943
Total cash, cash equivalents and short-term investments	$	8,910	$	—	$	(5)	$	8,905


	September 30, 2023		December 31, 2022
Computer equipment and software	$	1,865	$	1,796
Furniture and fixtures	139		139
Office equipment	614		614
	2,618		2,549
Less – Accumulated depreciation	(1,932)		(1,800)
	$	686	$	749


Net balance at December 31, 2022	$	273
Deduction: Amortization expense	(79)
Net balance at September 30, 2023	$	194


		As of September 30, 2023
	Estimated Useful Life	Adjusted Carrying Amount		Accumulated Amortization		Net

Patents and copyrights	2-17 years	$	375	$	(294)	$	81
Developed technology	5 years	400		(287)		113
		$	775	$	(581)	$	194


		As of December 31, 2022
	Estimated Useful Life	Adjusted Carrying Amount		Accumulated Amortization		Net

Patents and copyrights	2-17 years	$	375	$	(275)	$	100
Developed technology	5 years	400		(227)		173
		$	775	$	(502)	$	273


	Nine months ended September 30,
	2023		2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,737)	$	(3,290)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	210		209
Stock-based compensation	1,347		1,768
Allowance for credit losses	23		6
Change in accrued interest and accretion of discount on short-term investments	(154)		—
Changes in assets and liabilities:
(Increase) in accounts receivable	(1,284)		(449)
(Increase) decrease in other current assets and long-term assets	31		176
(Decrease) in accounts payable and accrued expenses	204		(588)
Increase in deferred revenue	1,246		457
Net cash used in operating activities	(1,114)		(1,711)


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(68)		(165)
Proceeds from maturity of short-term investments	5,000		—
Purchases of short-term investments	(4,914)		—
Net cash provided by (used in) investing activities	18		(165)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of insurance financing arrangement	49		—
Withholding taxes paid on RSU vesting	(54)		—
Repayment of insurance financing arrangements	(133)		—
Net cash used in financing activities	(138)		—

Net decrease in cash	(1,234)		(1,876)

CASH, beginning of period	5,196		13,651

CASH, end of period	$	3,962	$	11,775

Supplemental disclosures of cash flow information:
Cash paid for interest	$	2	$	—
Cash paid for income taxes	$	78	$	—


	September 30, 2023		December 31, 2022
Professional fees	$	110	$	259
Payroll and related	1,536		1,040
Incentive bonuses	617		846
Other	87		174
	$	2,350	$	2,319


	Number of Shares Subject to Issuance	Weighted- average Exercise Price		Weighted- average Remaining Contractual Term	Aggregate Intrinsic Value

Outstanding at December 31, 2022	1,120,244	$	3.68	3.50 years	$	84
Granted	627,507	2.91		–	–
Forfeited, cancelled, or expired	(516,846)	3.89		–	–
Outstanding at September 30, 2023	1,230,905	$	2.33	3.08 years	$	135

Exercisable at September 30, 2023	593,494	$	3.69	2.10 years	$	73


	Number of Shares	Weighted Average Grant Date Fair Value

Outstanding at December 31, 2022	214,892	$	8.43
Granted	207,306	2.43
Forfeited or surrendered	(70,959)	10.04
Vested and settled in shares	(278,057)	4.42

Outstanding at September 30, 2023	73,182	$	5.11


Exhibit No.						Description

31.1						Rule 13a-14(a) Certification of Chief Executive Officer
31.2						Rule 13a-14(a) Certification of Chief Financial Officer
32						18 U.S.C. Section 1350 Certifications
101.INS						XBRL Instance Document
101.SCH						XBRL Taxonomy Extension Schema
101.CAL						XBRL Taxonomy Extension Calculation Linkbase
101.DEF						XBRL Taxonomy Extension Definition Linkbase
101.LAB						XBRL Taxonomy Extension Label Linkbase
101.PRE						XBRL Taxonomy Extension Presentation Linkbase
104						Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)


Date:	November 14, 2023	INTELLICHECK, INC.

		By:	/s/ Bryan Lewis
			Bryan Lewis
			President and Chief Executive Officer
			(Principal Executive Officer)

		By:	/s/ Jeffrey Ishmael
			Jeffrey Ishmael
			Chief Financial Officer and Chief Operating Officer

SEC Form 10-Q filed by Intellicheck Inc.