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Item 2. Management’s Discussion and Analysis

2026-05-12 compared with 2025-11-12 · 34 added, 61 removed, 100 unchanged (49% of the section changed)

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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.

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References made in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” “Intellicheck,” or the “Company,” refer to Intellicheck, Inc.

The following discussion and analysis of our financial condition and results of operations constitutes management’s review of the factors that affected our financial and operating performance for the three months and nine months ended September 30, 2025.

This discussion should be read in conjunction with the financial statements and notes thereto contained elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025.

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The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes.

Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets including software development costs, revenue recognition (including breakage revenue), and the fair value of stock options under our stock-based compensation plans.

Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets including software development costs, revenue recognition (including breakage revenue), the fair value of stock options under our stock-based compensation plans and the valuation allowance of our deferred tax assets.

Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) , which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.

The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid.

This change is effective for annual periods beginning after December 15, 2024.

This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date.

However, retrospective application in all prior periods presented is permitted.

The Company is currently evaluating the impact of this ASU on its financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets." This standard allows entities to apply a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, Revenue from Contracts with Customers .

The standard is effective for all the entities for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years.

Early adoption is permitted, and the standard is to be applied prospectively.

We adopted ASU 2025-05 in the first quarter of 2026.

The adoption did not have a material impact on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) :

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The Company is in the process of evaluating the effect that the adoption of these standards will have on its financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326):

The standard is effective for all the entities for fiscal years beginning after after December 15, 2025, including interim periods within those fiscal years.

Early adoption is permitted, and the standard is to be applied prospectively.

The Company is currently evaluating the impact of the adoption of this standard.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40):

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Our long-lived assets include property and equipment, goodwill, and intangible assets.

As of September 30, 2025, the balances of property and equipment, goodwill and intangible assets, all net of accumulated depreciation and amortization, were $436, $8,102 and $2,218, respectively.

As of March 31, 2026, the balances of property and equipment, goodwill and intangible assets, all net of accumulated depreciation and amortization, were $374, $8,102 and $1,937, respectively.

As of December 31, 2025, the balances of property and equipment, goodwill and intangible assets, all net of accumulated depreciation and amortization, were $394, $8,102 and 2,077, respectively.

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In accordance with authoritative guidance, we begin to capitalize our costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended.

We stop capitalizing these costs when the software is substantially complete and ready for its intended use, including the completion of all significant

We stop capitalizing these costs when the software is substantially complete and ready for its intended use, including the completion of all significant testing.

These costs are amortized on a straight-line basis over the estimated useful life of the related asset.

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(All dollar amounts are rounded to thousands, except share and per share data)

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2025

TO THE THREE MONTHS ENDED SEPTEMBER 30, 2024

Revenues for the three months ended September 30, 2025 increased $1,305, or 28%, to approximately $6,014 compared to $4,709 for the same period of 2024.

The increase in revenues is primarily the result of higher SaaS revenue for the current period.

SaaS revenue, which consists of software licensed on a subscription basis, increased $1,207 or 26% to $5,868 for the three months ended September 30, 2025 compared to $4,661 for the same period of 2024.

Gross profit increased $1,158, or 27%, to $5,443 for three months ended September 30, 2025 from $4,285 for the same period of 2024.

Our gross profit, as a percentage of revenues, was 91% for the three months ended September 30, 2025 and 2024.

Operating expenses, which consist of selling, general and administrative and research and development expenses, increased $10, or 0.2%, to $5,205 for the three months ended September 30, 2025 compared to $5,195 for the same period of 2024.

The increase in operating expenses is primarily the result of less capitalization of research and development costs related to software development.

As a result of the factors noted above, the Company had a net income of $290 for the three months ended September 30, 2025 as compared to a net loss of $(837) for the three months ended September 30, 2024.

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2025

TO THE NINE MONTHS ENDED SEPTEMBER 30, 2024

Revenues for the nine months ended September 30, 2025 increased $1,971, or 14%, to approximately $16,031 compared to $14,060 for the same period of 2024.

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2026

TO THE THREE MONTHS ENDED MARCH 31, 2025

Revenues for the three months ended March 31, 2026 increased $630, or 13%, to approximately $5,524 compared to $4,894 for the same period of 2025.

The increase in revenues is primarily the result of higher SaaS revenue for the current period.

SaaS revenue, which consists of software licensed as a service on a subscription basis, increased $1,920 or 14% to $15,816 for the nine months ended September 30, 2025 compared to $13,896 for the same period of 2024.

Gross profit increased $1,678, or 13%, to $14,435 for the nine months ended September 30, 2025 from $12,757 for the same period of 2024.

Our gross profit, as a percentage of revenues, was 90% and 91% for the nine months ended September 30, 2025 and 2024, respectively.

Operating expenses, which consist of selling, general and administrative and research and development expenses, increased $452, or 3%, to $14,843 for the nine months ended September 30, 2025 compared to $14,391 for the same period of 2024.

The increase in operating expenses is primarily the result of less capitalization of research and development costs related to software development.

As a result of the factors noted above, the Company had an improved net loss of $(279) for the nine months ended September 30, 2025 as compared to a net loss of $(1,406) for the nine months ended September 30, 2024.

As the Company strategically transitions customers from existing usage-based contracts to access based contracts we expect that our balance sheet accounts related to accounts receivable and deferred revenue will fluctuate with the related contract conversions.

This transition may also influence revenue trends, such as seasonality.

SaaS revenue, which consists of software licensed on a subscription basis, increased $646 or 13% to $5,514 for the three months ended March 31, 2026 compared to $4,868 for the same period of 2025.

Gross profit increased $633, or 14%, to $5,025 for three months ended March 31, 2026 from $4,392 for the same period of 2025.

Our gross profit, as a percentage of revenues, was 91% and 90% for the three months ended March 31, 2026 and 2025, respectively.

Operating expenses, which consist of selling, general and administrative and research and development expenses, decreased $257, or 5%, to $4,483 for the three months ended March 31, 2026 compared to $4,740 for the same period of 2025.

The decrease in operating expenses is primarily the result of a lower headcount in the three-month period ended March 31, 2026.

As a result of the factors noted above, the Company had a net income of $636 for the three months ended March 31, 2026 as compared to a net loss of $(318) for the three months ended March 31, 2025.

Liquidity and Capital Resources

As of September 30, 2025, we had cash and cash equivalents of $7,223, working capital (defined as current assets minus current liabilities) of $8,150, total assets of $25,257 and stockholders’ equity of $18,907.

During the nine months ended September 30, 2025, we generated cash of $2,147 in operating activities as compared to net cash of $(1,373) used in operating activities in the nine months ended September 30, 2024.

Cash used in investing activities was $(254) for the nine months ended September 30, 2025 compared to cash provided by investing activities of $3,120 for the nine months ended September 30, 2024.

Cash provided by financing activities was $664 for the nine months ended September 30, 2025 compared to net cash of $20 provided by financing activities for the nine months ended September 30, 2024.

We currently anticipate that our available cash, expected cash from operations and availability under the revolving line of credit, will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months from the date of this report.

Reference Note 6, “Debt,” in the Notes to Unaudited Condensed Financial Statements for details on the Company’s revolving line of credit.

As of March 31, 2026, we had cash and cash equivalents of $10,062, working capital (defined as current assets minus current liabilities) of $11,119, total assets of $27,109 and stockholders’ equity of $21,533.

During the three months ended March 31, 2026, we generated cash of $445 in operating activities as compared to net cash of $750 generated from operating activities in the three months ended March 31, 2025.

Cash used in investing activities was $(33) for the three months ended March 31, 2026 compared to cash used in investing activities of $(173) for the three months ended March 31, 2025.

Cash provided by financing activities was $0 for the three months ended March 31, 2026 compared to net cash of $(95) used in financing activities for the three months ended March 31, 2025.

We currently anticipate that our available cash and expected cash from operations will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months from the date of this report.

We keep the option open to raise additional funds to respond to business contingencies which may include the need to fund more rapid expansion, fund additional marketing expenditures, develop new markets for our technology, enhance our operating infrastructure, respond to competitive pressures, or acquire complementary businesses or necessary technologies.

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Our available net operating loss (“NOL”) as of December 31, 2025 was approximately $30,520, of which $10,892 expires between 2035 and 2037.

In accordance with the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), U.S.

NOLs arising in a tax year ending after 2017 in the amount of $17,600 will not expire, but are subject to 80% limitation on utilization.

In addition to the NOLs, the Company has approximately $700 of research and development credits.

The remaining $19,628 was generated after 2017 and may be carried forward indefinitely, subject to an annual limitation of 80% of taxable income under the Tax Cuts and Jobs Act of 2017.

Use of Non-GAAP Measures

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The reconciliation of GAAP gross profit to Non-GAAP Adjusted Gross Profit is as follows:

Three Months Ended September 30 Nine Months Ended September 30

2025 2024 2025 2024

Three Months Ended March 31,

$ 5,524 $ 4,894

Cost of revenues, exclusive of amortization

434 400 1,234 1,232

Amortization allocable to cost of revenues 137 103

5,443 4,285 14,435 12,757

Amortization allocable to cost of revenues 137 103

Adjusted gross profit

5,580 4,309 14,797 12,828

Gross profit as a percentage of revenues 91.0 % 89.7 %

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We use Adjusted EBITDA as a non-GAAP financial performance measurement.

Adjusted EBITDA is calculated by adjusting net loss for certain reductions such as restructuring severance expenses, interest and other income, provisions for income taxes, depreciation, amortization and stock-based compensation expense.

Adjusted EBITDA is calculated by adjusting net income (loss) for certain reductions such as restructuring severance expenses, interest and other income, provisions for income taxes, depreciation, amortization and stock-based compensation expense.

Adjusted EBITDA is provided to investors to supplement the results of operations reported in accordance with GAAP.

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We consider Adjusted EBITDA to be an important indicator of our operational strength and performance of our business and a useful measure of our historical operating trends.

However, there are significant limitations to the use of Adjusted EBITDA since it excludes restructuring severance expenses, interest and other income, provisions for income taxes, stock-based compensation expense, all of which impact our profitability, as well as depreciation and amortization related to the use of long-term assets which benefit multiple periods.

We believe that these limitations are compensated by providing Adjusted EBITDA only with GAAP net loss and clearly identifying the difference between the two measures.

Consequently, Adjusted EBITDA should not be considered in isolation or as a substitute for net loss presented in accordance with GAAP.

related to the use of long-term assets which benefit multiple periods.

We believe that these limitations are compensated by providing Adjusted EBITDA only with GAAP net income (loss) and clearly identifying the difference between the two measures.

Consequently, Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss) presented in accordance with GAAP.

Adjusted EBITDA as defined by us may not be comparable with similarly named measures provided by other companies.

The reconciliation of GAAP net income (loss) to Non-GAAP Adjusted EBITDA is as follows:

Three Months Ended September 30 Nine Months Ended September 30

2025 2024 2025 2024

Three Months Ended March 31,

Net income (loss) $ 636 $ (318)

Reconciling items:

Restructuring severance expenses — 376 — 376

Provision for income taxes — — — 2

Other income, net

(52) (73) (129) (230)

Depreciation and amortization 193 154

Stock-based compensation, including liability classified awards 204 237 583 642

Stock-based compensation 200 177

Adjusted EBITDA $ 935 $ (17)

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis