Intellicheck, Inc. 10-K

Item 1. Business OVERVIEW We originally were incorporated in the state of New York in 1994 as Intelli-Check, Inc. In August 1999, we reincorporated in Delaware. On March 14, 2008, our corporation was renamed Intelli-Check - Mobilisa, Inc. after the consummation of the merger with Mobilisa, Inc. (“Mobilisa”) (references to “Intelli-Check” in this annual report refer to the Company prior to the merger with Mobilisa). At the closing of the merger, our headquarters were moved to Mobilisa’s offices in Port Townsend, Washington. On October 27, 2009, we made a further change in our name to Intellicheck Mobilisa, Inc. On May 4, 2017, with the approval of our shareholders, we changed our name to Intellicheck, Inc. (“Intellicheck,” “we,” “our,” “us,” or “the Company”). On August 31, 2009, the Company acquired 100% of the common stock of Positive Access Corporation (“Positive Access”), a developer of driver's license reading technology. The acquisition of Positive Access expanded the Company’s technology portfolio and related product offerings and allowed the Company to reach a larger number of customers through Positive Access’s extensive distribution network. On December 31, 2018, we formally merged the Mobilisa and Positive Access subsidiaries into one corporation under the name Intellicheck, Inc. We are a prominent technology company that delivers on-demand digital identity validation solutions for Know Your Customer ("KYC") fraud, and age verification needs. We validate both digital and physical identities for financial services, fintech companies, BNPL providers, e-commerce, retail commerce businesses, law enforcement and government agencies across North America. Our software solutions can be used through a mobile device, a browser, or a retail point-of-sale scanner. We plan to expand our business in the near term by continuing to pursue a strategy designed to increase market share in our existing markets and expand into new product markets that are expected to benefit from fraud prevention and identity validation. For example, we have extended our technologies into online applications to provide identity validation and fraud prevention for the billions of transactions that occur online each day. We also have incorporated biometric, facial recognition and other enhancements to several of our current product offerings in order to stay on the leading edge of technology. We plan to leverage our intellectual property in the markets we are targeting to strengthen our competitive position. Our primary businesses include Identity Systems products, which include commercial applications of identity card reading authentication. Our technologies address problems such as: ■ Commercial Fraud – financial institutions and merchants use our technology to prevent economic losses from check cashing, debit and credit card transactions, account take overs, and e-commerce as well as other types of fraud such as identity theft that principally use fraudulent identification documents as proof of identity; ■ Instant Credit Card Approval – retail stores and financial institutions use our technology to scan a driver's license at a kiosk or at the Point of Sale (POS) to confirm that an applicant is who they claim to be with additional certainty. Once confirmed that a driver's license is valid, the transaction can proceed to the underwriting stage where qualified applicants can get instant approval for a loyalty-branded credit card. This technique protects consumer data and is significantly more likely to result in a completed transaction compared to in-store personnel asking customers to fill out a paper form and then entering the data; ■ Age Restricted Product Access – products validate driver's licenses and other government forms of identification to confirm the age of customers purchasing age restricted products. Target industries include alcohol, cannabis, tobacco, gambling, bars and nightclubs. ■ Unauthorized Access – our systems and software are designed to increase security and deter terrorism at airports, shipping ports, rail and bus terminals, military installations, high profile buildings and infrastructure where security is a concern; 3 Table of Contents ■ Fraudulent Retail Purchase Returns – implementing our validation software solutions can prevent fraudulent retail returns in situations where customers are seeking store credit or cash compensation for items being returned without a receipt when the transaction requires a driver's license for identification; and ■ Inefficiencies Associated with Manual Data Entry – by reading encoded data contained in the bar code and magnetic stripe of an identification card with a quick swipe or scan of the card, where permitted by law, customers are capable of accurately and instantaneously inputting information into forms, applications and the like without the errors associated with manual data entry. IDENTITY CARD READING AND VERIFICATION SECTOR Background on Identification Documentation Driver's license The driver's license is the most widely used form of government issued photo identification in North America. The Real ID Act, which became federal law in May 2005, recognizes that the driver's license is also a quasi-identification card. In addition to its primary function, the driver license is used to verify identity for social services, firearm sales, check cashing, credit card issuance and use and other applications. Our technology can read the digitally stored barcode information on all currently issued driver's licenses even those that do not comply with the standards of the American Association of Motor Vehicle Administrators (“AAMVA”), the American National Standards Institute (“ANSI”) and the International Standards Organization (“ISO”). Today, all 50 states, the District of Columbia, territories of the United States, United States Military, and all 13 Canadian provinces/territories digitally store information on their driver license. Non-driver identification card U.S. and Canadian jurisdictions also provide a non-driver identification cards as an alternative form of identification for those unable to acquire a driver's license. These identification cards are issued with most of the same data found on a driver's license. Military documents and passports also provide a means of identification and contain encoded data as well. Since driver's licenses are the most widely used form of legally acceptable government documentation, we refer to all these identification documents as “driver's licenses.” Our software can perform its function on all these forms of identification. Current Challenges Associated with Verifying Identification Documents The high-tech revolution, coupled with the staggering amount of personal information available from data breaches, has created a major problem for those who rely on identification documents. In an age where high-tech scanners, computers and color printers are commonplace, and where personal information is so cheap to purchase off of the 'dark web', fake IDs of the highest quality with the identity theft victim’s actual information on the document are easily obtainable from many locations including college campuses and from multiple sites on the Internet. These fakes appear so real, even law enforcement agencies have encountered difficulty distinguishing them from legally issued documents. Additionally, high-tech equipment easily can alter properly issued forms of ID. Therefore, anyone can gain access to a false identity that gives them the ability, in a commercial transaction, to present fake and stolen credit cards or checks that are supported by false identification. Additionally, starting with only a fraudulent driver's license, an individual may be able to create multiple credit accounts, commit fraud, and buy age restricted products such as alcohol, tobacco and cannabis while underage, evade law enforcement and engage in other criminal activities, such as: • committing identity theft • gaining entrance to high-profile buildings and sensitive infrastructures • improperly boarding airplanes • engaging in medical fraud • committing credit card, debit card and check cashing fraud • purchasing age-restricted products such as alcohol, cannabis, or tobacco while underage • illegally purchasing firearms • obtaining welfare or other government benefits. 4 Table of Contents • unlawfully committing pharmacy fraud, including false narcotic prescriptions; and • committing refund fraud Given the ease with which identification can be falsified, simply looking at a driver's license may not be sufficient to verify age or identity and determine if it is fraudulent. Since merchants and financial institutions are facing significant economic losses due to these frauds, we believe that a document authentication system that can accurately read the digitally stored information is needed. We possess patented technology that provides an analysis of the data contained on the encoded formats of these identification documents by reading and analyzing the encoded format on the bar code on the driver's license and comparing it against known standards. OUR PRODUCTS AND SERVICES Our Products and Services generally are sold as Software-as-a-Service (“SaaS”) where customers pay for our cloud-based service. Identity Systems Products and Services Our Identity Systems are marketed to the Commercial, Retail, Financial and Government identification sectors. Commercial Identification Intellicheck ® Service The Intellicheck Service is a complete identity solution that checks whether an ID is valid, matches the ID to the person presenting it, and provides a risk score to help determine the risk of doing business with that person. It is designed to be used online and in retail settings using devices that can include a mobile phone or tablet, a PC or retail scanner. The Intellicheck Service is designed to address the needs of users across a variety of use cases including account access, account openings, receiptless returns, receipt of delivery, age restricted purchases and more. Validating the ID Using its own proprietary technology, Intellicheck utilizes an iOS or Android phone, or a retail scanner to read and verify the encoded format contained on U.S. and Canadian driver's licenses, state issued non-driver identification cards, military IDs and passports. Our technology has the ability to verify the encoded formats on all currently encoded documents, even those that do not comply with the standards of the AAMVA, ANSI and ISO. Using integrated third-party technology, Intellicheck offers the ability, through certain platforms, to scan and verify more than 10,000 documents around the world including drivers licenses, state identity documents and passports. Our Intellicheck Service quickly can determine: • if the format of the document is valid; • if the document has been altered or is fake by displaying the parsed, encoded data for comparison with the printed information; • if the document has expired; or • if the encoded data contains a date of birth equal to or greater than the legal age to purchase age-restricted products, such as alcohol, vaping products, cannabis and tobacco. Matching the person to the ID Intellicheck integrates third-party software to provide the ability to match a selfie of a person to the picture on the driver's license. These facial biometrics capabilities allow the Intellicheck platform to check for likeness to ensure that static photos are not being used as a stand-in for the user on both ends of the match, in addition to the ability to match the 5 Table of Contents ID photo to the selfie and provide a match score. This capability is integrated into the Intellicheck platform to allow for fast deployment and is an option for platform subscribers. Determining the risk score The Intellicheck Service offers the ability to analyze data or signals to determine the risk of doing business with the person on the identity document. Intellicheck provides access to a wide variety of data signals including device fingerprinting, IP address, phone number, time zone, geographic location and more to analyze, using machine learning, the risk of doing business with that person. How Intellicheck Service is delivered The Intellicheck Service consists of the following elements: • IDN-Mobile • IDN-Mobile is an Intellicheck-branded identity validation application that typically can be set-up for a user in under an hour. It provides the ability to scan an ID using a mobile phone or tablet. IDN-Mobile provides the flexibility to allow the Intellicheck customer or their customer to perform the scan. This enables the Intellicheck customer to manage their application online using the PC. • IDN-Portal • IDN-Portal has all the features of IDN-Mobile and additionally includes the ability to perform a facial biometrics test to match the picture on the ID to a selfie of the user presenting the ID. Additionally, Portal also adds global document validation, retail POS integration, additional data for analytics and analysis and online validation among other features. • IDN-Direct • IDN-Direct provides the capabilities of the Intellicheck Service within the user's own apps and integrated with their systems. IDN-Direct is accessible through the Intellicheck API to aid integration into customer applications and systems. IDN-Direct provides a Software Development Kit ("SDK") to simplify integration into the user’s mobile applications. IDN-Direct also provides access to additional data along with the ability to use the platform’s Risk Score capability to help with decision making. • IDN-Capture • IDN-Capture provides the capabilities of the Intellicheck Service within a flexible custom white label experience. Advantages of the Service • Fast results • The Intellicheck Service provides results of an ID scan in under a second. Facial biometrics may add additional seconds to the process. • Fast deployment • With IDN-Mobile or IDN-Portal, customers typically can be up and running in under an hour. • Accurate ID validation • For North American documents, Intellicheck provides market-leading identity validation accuracy that can remove the need for manual review, as well as accuracy that leading businesses use to enable real-time processes. For the rest of the world, Intellicheck provides best of breed document accuracy. 6 Table of Contents Data Collection Devices Our software products are designed for use with multiple data collection devices, which are commercially available in various compact forms and may contain either one or both of 2-D bar code and magnetic stripe readers. These devices enable our software applications to be used on a variety of commercially available data processing devices, including credit card terminals, PDAs, tablets, laptops, desktops, mobile phones, and point-of-sale terminals. Many of these devices contain an electronic serial number (ESN) to prevent unauthorized use of our software. Instant Credit Application Kiosk Software Applications These are custom software applications that Intellicheck developed for a variety of major financial service companies and retail stores. The software installed on multiple kiosk devices provides the customers of the major financial service companies and retail stores with the ability to perform in-store instant credit approval. The hardware platforms, on which the software applications run, range from stationary devices to handhelds to tablet PCs. The process involves the swiping or scanning of the driver's license to verify the encoded format and after verification, the information parsed from the encoded data is populated into the proper fields on the application displayed at the kiosk. The applicant then completes the application by entering the remaining required information that is not encoded on the driver's license, such as social security number and telephone numbers. The software application then sends the data to the financial service company’s backend “decisioning” tool for credit approval. If approved, the applicant is granted instant credit which then can be used to make purchases. Upgrade Capability Our Intellicheck Service products and related databases are constantly updated to stay current with identification formats, new forms of ID and government regulations guiding use of digital information. STRATEGY Our objective is to be a leading identity verification company providing world-class solutions in the identity sector. These solutions include our commercial identity systems focusing on workflow, productivity enhancement, fraud protection and risk management segments. Key elements of our strategy are as follows: Commercial Systems Enhance Productivity. We market our technology as a key productivity enhancement tool. Our proprietary Intellicheck Service software can add functionality to virtually any given software application to automatically populate fields within a given form, when a government-issued photo ID is presented. Our ability to correctly read and authenticate in all U.S. jurisdictions, coupled with our proprietary technology, is a key differentiator from our competitors. The automation resulting from the intelligence added to the form dramatically increases throughput and data integrity, and it significantly enhances the customer’s experience. Develop Additional Strategic Alliances . We have entered strategic alliances to utilize our systems and software as the proposed or potential enrollment application for their technologies and to jointly market these security applications. We are an associate member of AAMVA and a member of AAMVA’s Industry Advisory Board. We believe these relationships will broaden our marketing reach through their sales efforts and we intend to develop additional strategic alliances with additional providers of security solutions. Strengthen Sales and Marketing Efforts . We intend to capitalize on the growth in demand for document verification and productivity enhancement by continuing to market and support our systems and software. Our sales and marketing departments are organized by region and specifically named accounts to provide focus and proximity to build solid long-term relationships. Our recent focus has been on SaaS license arrangements in the financial services, retail, and hospitality services industries. Enter into Additional Licensing Agreements . We intend to continue to license our software for use with a customer’s system. We currently are licensing our SDK software product for Windows, iOS, Android and other operating system platforms and intend to similarly continue to license our PC software solutions. Our software is intended to be used with a compatible hardware device. We have entered into multiple licensing agreements to date. 7 Table of Contents Protect Intellectual Property . We intend to protect our intellectual property portfolio to preserve value and obtain favorable settlements where warranted. Our Revenue Sources We derive our revenue primarily from the following sources: ■ Sales of our products and services by both our own direct sales force and marketing partners; ■ Per transaction or fixed price (SaaS) revenue from the licensed use of our technology; ■ Extended warranties on equipment; and ■ Other subscription and Support Services, such as jurisdictional updates to certain commercial customers and support services. Our Target Industry Sectors Commercial Identity Systems The use of false identification cards, primarily driver's licenses and non-driver identification cards, to engage in commercial fraud, to gain access to unauthorized areas and to gain entry to critical infrastructure is all too common and the problem is growing with each passing day. Given the ease with which identification can be falsified, we believe that simply looking at a driver's license is not sufficient to verify identity and determine if such an identification card is fraudulent. Since merchants and financial institutions are facing significant economic losses due to these frauds, we believe that what they need is a document authentication system that can accurately read the digitally stored information. We target the industry sectors that we believe would benefit most from our systems and software. We also market our products to businesses where there are opportunities for our Intellicheck Platform technology to enhance productivity. We have made significant progress in the sectors for the retail issuance of instant credit. We believe there are financial benefits and compelling business models for customers in the below sectors to utilize our technology. Productivity Enhancement ■ Mass merchandisers and retailers ■ Auto dealerships and rental car agencies ■ Banks and other financial institutions ■ Casinos for enrollment of guests ■ Credit unions ■ Hospital patient admissions ■ Credit card issuers ■ Lodging Industry ■ Check cashing services ■ Airlines Commercial Fraud Protection ■ Mass merchandisers and retailers ■ Auto dealerships and rental car agencies ■ Banks and other financial institutions ■ Casino cage operations ■ Credit unions ■ Hospitals, medical facilities and health plans ■ Credit card issuers ■ Lodging Industry ■ Check cashing services ■ Pharmacies 8 Table of Contents Access Control ■ Airports and airlines ■ Prisons ■ Departments of Motor Vehicles ■ Law enforcement agencies ■ Notable buildings ■ Military establishments ■ Court houses ■ College campuses ■ Nuclear facilities ■ Department of Homeland Security ■ Oil refineries and storage facilities ■ Bus, rail and port facilities Age Verification ■ Bars and night clubs ■ Stadiums and arenas ■ Convenience stores ■ Casinos and gaming establishments ■ Grocery chains ■ Law enforcement ■ Restaurants ■ Firearm dealers ■ Cannabis industry Law Enforcement/Government ■ FBI ■ Drug Enforcement Administration ■ State & Local Police ■ Local Sheriffs ■ Bureau of Alcohol, Tobacco, Firearms, and Explosives ■ Intelligence Agencies ■ Customs ■ Department of Transportation ■ Department of Homeland Security ■ Border Patrol MARKETING AND DISTRIBUTION Commercial Identity Systems Our objective is to become a leading developer and distributor of document and age verification software. To date, our marketing efforts have been through direct sales by our sales and marketing personnel, through resellers and through license agreements. W e are marketing our products through direct marketing approaches such as web marketing, a small number of select trade shows and well-known public interest and trade associations. We generate revenues from the licensing of our software, and to a much lesser extent, the selling of bundled solutions that contain hardware and software. Depending on the specific needs of our clients, we tailor the solution for them. Our Intellicheck Platform software is available to customers via the cloud (SaaS) and is available for Microsoft Windows, Android and iOS platforms in addition to devices such as credit card terminals and other operating systems such as Linux. We are marketing our Intellicheck Platform technology to financial institutions, mass merchandisers, 9 Table of Contents government, airlines, airports, high-profile buildings or infrastructure, grocery, convenience and pharmacy chains, and casinos. We have developed a comprehensive marketing plan to build customer awareness and develop brand recognition in our target industry sectors. We promote the advantages and ease of use of our products through: ■ Endorsements by nationally known public interest groups and trade associations; ■ Web seminars, as well as our own website; ■ Trade publications; ■ Various conventions and industry-specific seminars; and ■ Trade shows. We intend to continue to develop and market other related software applications. MAJOR CUSTOMERS Although the composition of our largest customers has changed from year to year, a significant portion of our revenues has been attributable to a limited number of major customers. In 2025 and 2024, our top ten customers accounted for approximately 77% and 71%, respectively, of total revenues. While we believe that one or more major customers could account for a significant portion of our sales for at least the next two years, we anticipate that our customer base will continue to expand and that in the future we will be less dependent on major customers. REGULATION The sale and use of our products are subject to regulation, such as on data protection and storage, by government authorities. We work on an ongoing basis with our customers to facilitate their compliance with such regulations. Additionally, we believe that we currently are in compliance with applicable United States federal laws, state and local laws and regulations relating to the protection of the environment. COMPETITION Commercial Identity Systems We compete in an industry that is intensely competitive and rapidly changing. Unless a device can read, decode and analyze all the information that is legally permitted to be analyzed, which is digitally stored within the barcode on a driver's license, the user may not obtain accurate and reliable confirmation that a driver's license is valid and has not been altered or tampered with. We are aware of several companies that currently are offering products that electronically read and calculate age from a driver's license. We have tested and compared some of these products to the Intellicheck Service and believe that our product is superior in quality and functionality. We believe that units unable to read bar codes are at a significant disadvantage because all states and Canadian provinces currently utilize bar codes to encode their driver's licenses, as well as all U.S. military IDs and uniformed services cards. We have experienced and expect to continue to experience increased competition in the document verification sector. If any of our competitors were to become the industry standard or were to enter or expand relationships with significantly larger companies through mergers, acquisitions or otherwise, our business and operating results could be seriously harmed. In addition, potential competitors could bundle their products or incorporate functionality into existing products in a manner that discourages users from purchasing our products. MANUFACTURING We do not manufacture readers or input devices but use products from several manufacturers. Some of these devices are private labeled and programmed by the supplier to work with our Intellicheck Service technology. Most of our hardware consists of commercial off-the-shelf (“COTS”) products. We rely on a small number of suppliers to provide our COTS products. 10 Table of Contents RESEARCH AND DEVELOPMENT Our research and development efforts mainly are concentrated in the area of identity verification. Research and development expenses consist primarily of employee salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include consulting fees, software and subscription services, and a portion of our third-party cloud infrastructure expenses incurred in maintaining our platform. INTELLECTUAL PROPERTY We currently hold ten (10) U.S. patents and one (1) Canadian patent. These patents cover commercially important aspects of our capabilities relating to the authentication and verification of identification documents. We will continue to pursue patents for all our new technologies arising from our research and development efforts. In January 1999, the U.S. Patent and Trademark Office granted us a patent on our ID Check ® software technology. In October 2002 and July 2005, we were granted additional patents that are a continuation of our patents relating to our document authentication and age verification technology. Upon our acquisition of the assets of IDentiScan, we received equitable ownership and sole ownership rights to its intellectual property, including other patents and patent applications relating to age verification technology. During 2010, we were granted two additional patents. The first patent was for a software key control for mobile devices. It is used to get a registration key for the parser that is based on the unique internal ID of one mobile device. The Mobile Key Manager communicates with the mobile device, reading its ID, and then requests a registration key specific for that ID from Intellicheck's server. This server maintains a database of all customers using IDecode Mobile Parsers, including the number of licenses they have purchased, the latest software version for which they have paid support, and the registration keys and unique device IDs associated with those licenses. The server generates a new registration key unique to the device ID and returns it to the Mobile Key Manager to register that device. In this way, the customer can deploy the IDecode Mobile Parser to only one mobile device for each parser purchased. The second patent was related to a document comparison system and reinforces the innovative nature of Intellicheck’s security solutions involving documents. The technology described in the patent relates to a system and method for comparing information contained in at least two documents. For example, information on at least two different documents can be compared to determine whether the information is the same on each document. For instance, a name contained on an individual’s driver’s license is automatically compared with a name contained on the individual’s airline boarding pass. In 2012, we were granted a patent relating to a system and method for comparing information contained in at least two documents, but not limited to just a driver's license and passport. This patent compares “like information” on different documents to determine whether the information is the same on each document. As an example, a passport is compared to a boarding pass to determine if “like information” matches, for instance name and birthdate. In 2016, we were granted one patent in Canada that was a continuation of an earlier filed application and is related to identity matching in response to threat levels. We were granted two patents in 2019 that were continuations of earlier filed applications. The first patent is related to checking the validity of identification documents using a remote database. The second patent related to identification scanning in compliance with jurisdictional or other rules. In 2022, we were granted two patents that were continuations of earlier filed applications. The first patent is related to using a mobile device to perform verification of a selfie to a photo on an identification document. The second patent is related to a system and method for document comparison that compares information contained in multiple documents. We own multiple copyrights in the United States, which are effective in Canada and in other major industrial countries. The copyright protection covers software source codes and supporting graphics relating to the operation of the Intellicheck Platform and other software products. We also have several trademarks relating to our company, its product names, and logos. 11 Table of Contents EMPLOYEES AND HUMAN CAPITAL RESOURCES As of March 19, 2026, we had 38 full-time employees. Four are engaged in executive management — our Chief Executive Officer, Chief Financial Officer, Chief Technology Officer, and Chief Commercial Officer. We have twenty employees in information technology including those participating in our research and development efforts, four employees in sales and marketing, seven employees in customer and support integration, and seven employees in administration. All employees are employed “at will.” We believe our relations with our employees are generally positive and we have no collective bargaining agreements with any labor unions. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees. The principal purposes of our equity compensation and cash incentive plans are to attract, retain and reward personnel, whether existing employees or new hires, through the granting of equity and cash-based compensation awards. We believe that this increases value to our stockholders and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives. As the success of our business is fundamentally connected to the well-being of our employees, we are committed to their health, safety and wellness. We provide our employees and their families with access to convenient health and wellness programs, including benefits that provide protection and security giving them peace of mind concerning events that may require time away from work or that impact their financial well-being; and that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families. Forward Looking Statements This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, particularly statements anticipating future growth in revenues, loss from operations and cash flow. Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. These forward-looking statements are based on management’s current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.