idn-20240930

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, 2024


☐			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 12, 2024, there were 19,762,311 shares of Common Stock, $0.001 par value, outstanding.


			Page
PART I – FINANCIAL INFORMATION			3

Item 1. Unaudited Condensed Financial Statements			3

Condensed Balance Sheets – September 30, 2024 (Unaudited) and December 31, 2023			3

Unaudited Condensed Statements of Operations for the three and nine months ended September 30, 2024 and 2023			4

Unaudited Condensed Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023			6

Unaudited Condensed Statements of Cash Flows for the nine months ended S eptember 30, 2024 and 2023			7

Notes to Unaudited Condensed Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23

Item 3. Quantitative and Qualitative Disclosures About Market Risk			27

Item 4. Controls and Procedures			27

Part II – OTHER INFORMATION			28

Item 1. Legal Proceedings			28

Item 1A. Risk Factors			28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			28

Item 3. Defaults Upon Senior Securities			28

Item 4. Mine Safety Disclosures			29

Item 5. Other Information			29

Item 6. Exhibits			29

Signatures			30


10.1			Separation Agreement dated as of July 12, 2024 by and between the Registrant and Jeffrey Ishmael
10.2			Employment Agreement dated as of July 31, 2024 by and between the Registrant and Adam Sragovicz
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)


	September 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5,747	$	3,980
Short-term investments	—		5,000
Accounts receivable, net of allowance for credit losses of $100 and $69 at September 30, 2024 and December 31, 2023, respectively	3,374		4,703
Other current assets	525		692
Total current assets	9,646		14,375

PROPERTY AND EQUIPMENT, NET	573		666
GOODWILL	8,102		8,102
INTANGIBLE ASSETS, NET	2,271		575
OTHER ASSETS	90		90
Total assets	$	20,682	$	23,808

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	848	$	884
Accrued expenses	1,787		3,245
Equity awards liability	—		4
Liability for shares withheld	—		190
Deferred revenue	1,312		2,209
Total current liabilities	3,947		6,532

Total liabilities	3,947		6,532

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, 2024 and December 31, 2023, respectively	—		—
Common stock - $0.001 par value; 40,000,000 shares authorized;19,550,965 and 19,354,335 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	19		19
Additional paid-in capital	151,687		150,822
Accumulated deficit	(134,971)		(133,565)
Total stockholders’ equity	16,735		17,276

Total liabilities and stockholders’ equity	$	20,682	$	23,808


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023

REVENUES	$	4,709	$	4,760	$	14,060	$	13,730
COST OF REVENUES	(424)		(428)		(1,303)		(1,112)
Gross profit	4,285		4,332		12,757		12,618

OPERATING EXPENSES
Selling, general and administrative	4,018		3,677		11,562		11,609
Research and development	1,177		1,550		2,829		4,134
Total operating expenses	5,195		5,227		14,391		15,743

Loss from operations	(910)		(895)		(1,634)		(3,125)

OTHER INCOME
Interest and other income	73		179		230		181
Total other income	73		179		230		181

Net loss before provision for income taxes	(837)		(716)		(1,404)		(2,944)
Provision for income taxes	—		8		2		20

Net loss	$	(837)	$	(724)	$	(1,406)	$	(2,964)

PER SHARE INFORMATION
Loss per common share -
Basic/Diluted	$	(0.04)	$	(0.04)	$	(0.07)	$	(0.15)

Weighted average common shares used in computing per share amounts -
Basic/Diluted	19,499,174		19,278,295		19,390,258		19,209,620


	Three months ended September 30, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount

BALANCE, June 30, 2024	19,492,702	$	19	$	151,422	$	(134,134)	$	17,307

Stock-based compensation	–	–		265		–		265
Stock option exercises, net of cashless exercises	7,064	–		–		–		—
Issuance of shares for vested restricted stock grants	51,199	–		–		–		–
Net loss	–	–		–		(837)		(837)
BALANCE, September 30, 2024	19,550,965	$	19	$	151,687	$	(134,971)	$	16,735


	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	$	(133,825)	$	16,353

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	–	–		–		(724)		(724)
BALANCE, September 30, 2023	19,299,547	$	19	$	150,537	$	(134,549)	$	16,007


	Nine months ended September 30, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount

BALANCE, December 31, 2023	19,354,335	$	19	$	150,822	$	(133,565)	$	17,276

Stock-based compensation	–	–		865		–		865
Stock option exercises, net of cashless exercises	11,939	–		–		–		—
Issuance of common stock for vested restricted stock units and earned performance stock units	184,691	–		–		–		–
Net loss	–	–		–		(1,406)		(1,406)
BALANCE, September 30, 2024	19,550,965	$	19	$	151,687	$	(134,971)	$	16,735


	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	$	(131,585)	$	17,667

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	–	–		–		(2,964)		(2,964)
BALANCE, September 30, 2023	19,299,547	$	19	$	150,537	$	(134,549)	$	16,007


•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 $5,747 and $8,980 as of September 30, 2024 and December 31, 2023, 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 $0 and $4 of Level 2 liabilities as of September 30, 2024 and December 31, 2023, 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, 2024 and December 31, 2023.


	For the Three Months Ended September 30,
	2024		2023
Products and services

SaaS	$	4,661	$	4,635
Equipment	13		106
Other	35		19
	$	4,709	$	4,760

Timing of revenue recognition

Products transferred at a point in time	$	48	$	125
Services transferred over time	4,661		4,635
	$	4,709	$	4,760


	Nine months ended September 30,
	2024		2023

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,406)	$	(2,964)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	275		210
Stock-based compensation	842		1,347
Allowance for credit losses	(31)		23
Change in accrued interest and accretion of discount on short-term investments	—		(154)
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable	1,360		(1,284)
Decrease in other current assets and long-term assets	167		31
(Decrease) Increase in accounts payable and accrued expenses	(1,493)		431
(Decrease) Increase in deferred revenue	(897)		1,246
(Decrease) in liability for shares surrendered	(190)		—
Net cash used in operating activities	(1,373)		(1,114)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(47)		(68)
Proceeds from maturity of short-term investments	5,000		5,000
Purchases of short-term investments	—		(4,914)
Software development costs	(1,833)		—
Net cash provided by investing activities	3,120		18

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercises of stock options	20		—
Proceeds of insurance financing arrangement	—		49
Withholding taxes paid on RSU vesting	—		(54)
Repayment of insurance financing arrangements	—		(133)
Net cash provided by (used in) financing activities	20		(138)

Net increase (decrease) in cash	1,767		(1,234)

CASH, beginning of period	3,980		5,196

CASH, end of period	$	5,747	$	3,962

Supplemental disclosures of cash flow information:


	Remainder 2024		2025		2026		Total

SaaS	$	615	$	697	$	—	$	1,312
	$	615	$	697	$	—	$	1,312


	September 30, 2024		December 31, 2023
Computer equipment and software	$	1,919	$	1,886
Furniture and fixtures	139		139
Office equipment	631		618
	2,689		2,643
Less – Accumulated depreciation	(2,116)		(1,977)
	$	573	$	666


Net balance at December 31, 2023	$	575
Addition: Capitalized software costs	1,832
Deduction: Amortization expense	(136)
Net balance at September 30, 2024	$	2,271


	For the Nine Months Ended September 30,
	2024		2023
Products and services

SaaS	$	13,896	$	13,526
Equipment	109		152
Other	55		52
	$	14,060	$	13,730

Timing of revenue recognition

Products transferred at a point in time	$	164	$	204
Services transferred over time	13,896		13,526
	$	14,060	$	13,730


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:
Net loss	$	(837)	$	(724)	$	(1,406)	$	(2,964)

Denominator:
Weighted average common shares –
Basic/Diluted	19,499,174		19,278,295		19,390,258		19,209,620

Loss per common share
Basic/Diluted	$	(0.04)	$	(0.04)	$	(0.07)	$	(0.15)


	As of September 30, 2024
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value

Cash and cash equivalents	$	5,747	$	—	$	—	$	5,747
U.S. treasury notes	—		—		—		—
Total cash, cash equivalents and short-term investments	$	5,747	$	—	$	—	$	5,747


	As of December 31, 2023
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value

Cash and cash equivalents	$	3,980	$	—	$	—	$	3,980
U.S. treasury notes (1)	5,000		—		—		5,000
Total cash, cash equivalents and short-term investments	$	8,980	$	—	$	—	$	8,980


		As of September 30, 2024
	Estimated Useful Life	Adjusted Carrying Amount		Accumulated Amortization		Net

Patents and copyrights	2-17 years	$	375	$	(319)	$	56
Developed technology	5 years	400		(367)		33
Software development	5 years	$	2,239	$	(57)	$	2,182
		$	3,014	$	(743)	$	2,271


	September 30, 2024		December 31, 2023
Professional fees	$	75	$	1
Payroll and related	969		1,159
Incentive bonuses	300		824
Sales tax accrual	387		1,064
Other	56		197
	$	1,787	$	3,245


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

Outstanding at December 31, 2023	1,152,714	$	3.07	3.18 years	$	38
Granted	620,978	1.86		–	–
Forfeited, cancelled, or expired	(184,582)	2.68		–	–
Exercised	(11,939)	$	1.87	—	—
Outstanding at September 30, 2024	1,577,171	$	2.04	1.98 years	$	181

Exercisable at September 30, 2024	478,337	$	3.68	2.78 years	$	72


	Number of RSUs	Weighted Average Grant Date Fair Value

Outstanding at December 31, 2023	60,500	$	4.23
Granted	202,057	2.21
Vested and settled in shares	(184,688)	3.16

Outstanding at September 30, 2024	77,869	$	1.75


	Three Months Ended September 30				Nine Months Ended September 30
	2024		2023		2024		2023

Net loss	$	(837)	$	(724)	$	(1,406)	$	(2,964)
Reconciling items:
Restructuring severance expenses	376		131		376		548
Provision for income taxes	—		8		2		20
Interest and other income	(73)		(179)		(230)		(181)
Sales tax accrual	—		80		—		227
Depreciation and amortization	130		71		275		210
Stock-based compensation, including liability classified awards	237		342		642		1,347

Adjusted EBITDA	$	(167)	$	(271)	$	(341)	$	(793)


Exhibit No.						Description

10.1						Separation Agreement dated as of July 12, 2024 by and between the Registrant and Jeffrey Ishmael
10.2						Employment Agreement dated as of July 31, 2024 by and between the Registrant and Adam Sragovicz
31.1						Rule 13a-14(a) Certification of Chief Executive Officer
31.2						Rule 13a-14(a) Certification of Chief Financial Officer
32

SEC Form 10-Q filed by Intellicheck Inc.