What changed in this filing

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Item 9A. Controls and Procedures

2022-03-24 compared with 2021-03-29 · 726 added, 803 removed, 250 unchanged (86% of the section changed)

1 unchanged sentence

of Disclosure Controls and Procedures

Chief Executive Officer and our Chief Financial Officer evaluated, with the participation of our management, the effectiveness

of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.

As of December

31, 2020, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures, as

defined in Securities Exchange Act Rule 13a-15I, were effective.

disclosure controls and procedures have been formulated to ensure (i) that information that we are required to disclose in reports

that we file or submit under the Securities Exchange Act of 1934 were recorded, processed, summarized and reported within the

time periods specified in Securities and Exchange Commission rules and forms and (ii) that the information required to be disclosed

by us is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as

appropriate, to allow timely decisions regarding required disclosures.

Chief Executive Officer and our Chief Financial Officer evaluated, with the participation of our management, the effectiveness of our

disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.

As of December 31, 2021, our

Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e)

and 15d-15(e) under the Securities Exchange Act of 1934, were effective.

disclosure controls and procedures have been formulated to ensure (i) that information that we are required to disclose in reports that

we file or submit under the Securities Exchange Act of 1934 were recorded, processed, summarized and reported within the time periods

specified in Securities and Exchange Commission rules and forms and (ii) that the information required to be disclosed by us is accumulated

and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely

decisions regarding required disclosures.

in Internal Control over Financial Reporting

was no change in our internal control over financial reporting that occurred during our most recently completed fiscal quarter

that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange

Act) that occurred during our most recently completed fiscal quarter that has materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

Report of Management on Internal Control over Financial Reporting

is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 15d-15(f)

under the Exchange Act) for the Company.

is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and

15d-15(f) under the Exchange Act) for the Company.

Management, with the participation of our principal executive officer and our principal

financial officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2020 (the end

of our fiscal year), based on the framework and criteria established in the 2013 Internal Control Integrated Framework issued

by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that our

internal control over financial reporting was effective as of December 31, 2020.

financial officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2021 (the end of our

fiscal year), based on the framework and criteria established in the 2013 Internal Control Integrated Framework issued by the Committee

of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that our internal control over

financial reporting was effective as of December 31, 2021.

annual report does not include an attestation report of our registered public accounting firm on internal control over financial reporting.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

information required by this Item is incorporated herein by reference from our 2021 definitive Proxy Statement (which will be

filed with the SEC within 120 days after December 31, 2020 in connection with the solicitation of proxies for the Company’s

2021 annual meeting of stockholders) (“2021 Proxy Statement”) under the captions “Proposal 1 –

of Directors,”

“Other Information –

Executive Officers,”

and “Beneficial Ownership Reporting Compliance

under Section 16(a) of the Exchange Act.”

information required by this Item is incorporated herein by reference from our 2022 definitive Proxy Statement (which will be filed with

the SEC within 120 days after December 31, 2021 in connection with the solicitation of proxies for the Company’s 2022 annual meeting

of stockholders) (“2022 Proxy Statement”) under the captions “Proposal 1 – Election of Directors,” “Other

Information – Executive Officers,” and “Beneficial Ownership Reporting Compliance under Section 16(a) of the Exchange

Executive Compensation

information required by this Item is incorporated herein by reference from our 2021 Proxy Statement under the captions “Executive

Compensation”

and “Director Compensation.”

information required by this Item is incorporated herein by reference from our 2022 Proxy Statement under the captions “Executive

Compensation” and “Director Compensation.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

information required by this Item is incorporated herein by reference from our 2021 Proxy Statement under the captions “Other

Information—Security Ownership of Certain Beneficial Owners and Management”

and “Other Information –

Compensation Plan Information.”

information required by this Item is incorporated herein by reference from our 2022 Proxy Statement under the captions “Other Information—Security

Ownership of Certain Beneficial Owners and Management” and “Other Information – Equity Compensation Plan Information.”

Certain Relationships and Related Transactions, and Director Independence

information required by this Item is incorporated herein by reference from our 2021 Proxy Statement under the captions “Other

Information –

Related Party Transactions Overview,”

“Other Information –

Certain Transactions with Related

Persons”

and “Director Attributes and Independence.”

information required by this Item is incorporated herein by reference from our 2022 Proxy Statement under the captions “Other Information

– Related Party Transactions Overview,” “Other Information – Certain Transactions with Related Persons”

and “Director Attributes and Independence.”

Principal Accounting Fees and Services

information required by this Item is incorporated herein by reference from our 2021 Proxy Statement under the caption “Proposal

Ratification of the Selection of Independent Auditors.”

information required by this Item is incorporated herein by reference from our 2022 Proxy Statement under the caption “Proposal

2 – Ratification of the Selection of Independent Auditors.”

independent registered public accounting firm is EisnerAmper LLP, Iselin New Jersey, Auditor Firm ID:

Exhibits and Financial Statement Schedules

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of Operations for the years ended December 31, 2021 and 2020

of Stockholders’

Equity for the years ended December 31, 2020 and 2019

of Stockholders’ Equity for the years ended December 31, 2021 and 2020

of Cash Flows for the years ended December 31, 2021 and 2020

8 unchanged sentences

Bryan Lewis Employment Agreement (7) *

Garrett Gafke Employment Agreement***

Code of Business Conduct and Ethics (2)

9 unchanged sentences

Taxonomy Extension Presentation Linkbase **

Cover Page Interactive Data File (embedded within the Inline XBRL document)

a management contract or compensatory plan, contract or arrangement.

1 unchanged sentence

333-87797) filed September 24, 1999.

by reference to Registrant’s Annual Report on Form 10-K filed March 30, 2004.

by reference to Registrant’s Annual Report on Form 10-K filed March 21, 2019.

by reference to Registrant’s Current Report on Form 8-K filed August 13, 2014.

by reference to Registrant’s Current Report on Form 8-K filed May 9, 2017.

by reference to Registrant’s Current Report on Form 8-K filed December 4, 2020.

by reference to Registrant’s Current Report on Form 8-K filed October 28, 2009.

by reference to Registrant’s Current Report on Form 8-K filed August 14, 2007.

by reference to Registrant’s Proxy Statement on Schedule 14A filed April 3, 2020.

to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant had duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

INTELLICHECK,

Chief Executive Officer and Director

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the Registrant and in the capacities and on the dates indicated.

by reference to Registrant’s Annual Report on Form 10-K filed March 30, 2004.

by reference to Registrant’s Annual Report on Form 10-K filed March 21, 2019.

by reference to Registrant’s Current Report on Form 8-K filed August 13, 2014.

by reference to Registrant’s Current Report on Form 8-K filed May 9, 2017.

by reference to Registrant’s Current Report on Form 8-K filed December 4, 2020.

by reference to Registrant’s Current Report on Form 8-K filed October 28, 2009.

by reference to Registrant’s Current Report on Form 8-K filed August 14, 2007.

by reference to Registrant’s Proxy Statement on Schedule 14A filed March 26, 2021.

to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant had duly caused this report to be

signed on its behalf by the undersigned, thereunto duly authorized.

INTELLICHECK, INC.

Executive Officer and Director

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

Registrant and in the capacities and on the dates indicated.

INTELLICHECK,

Chief Executive Officer and Director

/s/ Bryan Lewis

Executive Officer and Director

Executive Officer)

/s/ Bill White

Financial Officer, Chief Operating Officer, Secretary and Treasurer

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Taxonomy Extension Presentation Linkbase *

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Cover Page Interactive Data File (embedded within the Inline XBRL document)

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID:

Balance Sheets as of December 31, 2021 and 2020

Statements of Operations for the Years Ended December 31, 2021 and 2020

Statements of Stockholders’

Equity for the Years Ended December 31, 2020 and 2019

Statements of Stockholders’ Equity for the Years Ended December 31, 2021 and 2020

Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

4 unchanged sentences

on the Financial Statements

have audited the accompanying balance sheets of Intellicheck (the “Company”) as of December 31, 2020 and 2019, and

the related statements of operations, stockholders’

equity, and cash flows for each of the years then ended, and the related

notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations

and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United

States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

have audited the accompanying balance sheets of Intellicheck (the “Company”) as of December 31, 2021 and 2020, and the related

statements of operations, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively

referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each

of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was

communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of

the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not,

by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts

or disclosures to which it relates.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated

or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Analysis

of December 31, 2021, the Company had goodwill of approximately $8.1 million.

As described in Notes 1 and 4 to the financial

statements, the Company performs its impairment test of goodwill annually, or whenever events or changes in circumstances

indicate that the carrying value of the Company exceeds its fair value.

The Company performed its annual impairment test of

goodwill in the fourth quarter of 2020.

As described in Notes 2 and 4 to the financial statements,

the Company performs its impairment test of goodwill annually, or whenever events or changes in circumstances indicate that the carrying

value of the Company exceeds its fair value.

The Company performed its annual impairment test of goodwill in the fourth quarter of 2021.

The Company operates as one reporting segment, operating segment and reporting unit.

The Company’s goodwill impairment test involves comparing the Company’s carrying value to its estimated fair

The fair value was determined using the weighting of certain valuation techniques, including both income and market

approaches, which include a discounted cash flow analysis, similar public company financial comparisons, along

capitalization.

The Company’s fair value estimates require management to make significant estimates and assumptions

including discount rates, projected revenue growth rates, operating margins and guideline public company

The Company’s goodwill impairment test

involves comparing the Company’s carrying value to its estimated fair value.

The fair value was determined using the weighting

of certain valuation techniques, including both income and market approaches, which include a discounted cash flow analysis, similar

public company financial comparisons, along with market capitalization.

The Company’s fair value estimates require management to

make significant estimates and assumptions including discount rates, projected revenue growth rates, operating margins and guideline

public company multiples.

identified the impairment test of goodwill as a critical audit matter due to the significant judgement by management in the estimates

and assumptions used in developing the fair value estimate of the Company.

This in turn led to a high degree of auditor judgement,

subjectivity, and effort in performing procedures to evaluate the reasonableness of management’s significant estimates and

assumptions related to discount rates, projected revenue growth rates, operating margins and guideline public company multiples.

Additionally, the audit effort involved the use of professionals with specialized skill and knowledge.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the

financial statements.

We obtained an understanding and evaluated the design of controls over the Company’s impairment test

of goodwill, including developing the estimate of fair value.

This in turn led to a high degree of auditor judgement, subjectivity,

and effort in performing procedures to evaluate the reasonableness of management’s significant estimates and assumptions related

to discount rates, projected revenue growth rates, operating margins and guideline public company multiples.

Additionally, the audit

effort involved the use of professionals with specialized skill and knowledge.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial

We obtained an understanding and evaluated the design of controls over the Company’s impairment test of goodwill, including

developing the estimate of fair value.

Our procedures included, among others:

evaluated the forecasted

revenue growth rates and operating margins to the Company’s underlying business strategies and growth plans and considered

if they were consistent with evidence obtained in other areas of the audit;

evaluated management’s ability to accurately

forecast revenue growth rates and operating margins by comparing actual results to management’s historical forecasts;

performed sensitivity analyses over significant estimates and assumptions including discount rates and projected revenue growth

rates when assessing the overall impact on the estimate of fair value compared to the carrying value.

In addition, we utilized

our valuation specialists with specialized skills and knowledge, in evaluating the reasonableness of the Company’s methodology

for estimating fair value including both the income and market approaches;

evaluating the discount rates used by management by

comparing it to a range of discount rates developed using existing market information for comparable entities;

evaluating market

approaches including selected guideline company multiples for reasonableness and evaluating the mathematical accuracy of the calculations

included in both the income and market approaches.

have served as the Company’s auditor since 2010.

evaluated the forecasted revenue growth rates and operating

margins to the Company’s underlying business strategies and growth plans and considered if they were consistent with evidence obtained

in other areas of the audit;

evaluated management’s ability to accurately forecast revenue growth rates and operating margins by

comparing actual results to management’s historical forecasts;

and performed sensitivity analyses over significant estimates and

assumptions including discount rates and projected revenue growth rates when assessing the overall impact on the estimate of fair value

compared to the carrying value.

In addition, we utilized our valuation specialists with specialized skills and knowledge, in evaluating

the reasonableness of the Company’s methodology for estimating fair value including both the income and market approaches;

the discount rates used by management by comparing it to a range of discount rates developed using existing market information for comparable

evaluating market approaches including selected guideline company multiples for reasonableness and evaluating the mathematical

accuracy of the calculations included in both the income and market approaches.

have served as the Company’s auditor since 2010.

/s/ EisnerAmper

EISNERAMPER LLP

Iselin, New Jersey

March 24, 2022

INTELLICHECK,

31, 2021 and 2020

CURRENT ASSETS:

Accounts receivable, net of allowance

of $42,974 and $42,055 as of December 31, 2020, and 2019, respectively

(in thousands except share amounts)

CURRENT ASSETS:

Accounts receivable, net of allowance of $ 3 and $ 43 as of December 31, 2021, and 2020, respectively

Other current assets

Total current assets

2 unchanged sentences

OPERATING LEASE RIGHT-OF-USE ASSET

AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

1 unchanged sentence

Accrued expenses

Operating lease

liability, current portion

revenue, current portion

Operating lease liability, current portion

Deferred revenue, current portion

Total current liabilities

OTHER LIABILITIES

Deferred revenue,

long-term portion

lease liability, long-term portion

NONCURRENT LIABILITIES

Deferred revenue, long-term portion

Total liabilities

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS’

Common stock –

$.001 par value;

STOCKHOLDERS’ EQUITY:

Common stock – $ .001 par value;

40,000,000 shares authorized;

18,410,458 and 16,041,650 shares issued and outstanding as of December 31,

2020 and 2019, respectively

Additional paid-in

(116,376,715 )

(116,935,112 )

stockholders’

liabilities and stockholders’

18,753,003 and 18,410,458 shares issued and outstanding as of December 31, 2021 and 2020, respectively

Additional paid-in capital

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes are an integral part of these financial statements.

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THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(in thousands except shares and per share amounts)

COST OF REVENUES

OPERATING EXPENSES

Selling, general

and administrative

and development

operating expenses

from operations

Gain on forgiveness

of unsecured promissory note

and other income

Net income (loss)

$ (2,548,711 )

Selling, general and administrative

Research and development

Total operating expenses

Loss from operations

Gain on forgiveness of unsecured promissory note

Interest and other income

Total other income

Net (loss) income

PER SHARE INFORMATION:

Income (Loss) per common share -

Weighted average common shares used

in computing per share amounts -

(Loss) income per common share -

Weighted average common shares used in computing per share amounts -

accompanying notes are an integral part of these financial statements.

INTELLICHECK,

OF STOCKHOLDERS’

OF STOCKHOLDERS’ EQUITY

THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Stockholders’

thousands, except number of shares)

Additional Paid-in

Total Stockholders’

BALANCE, December 31, 2019

$ ( 116,935 )

$ (114,386,401 )

Stock-based compensation expense

Exercise of stock options, net of cashless exercise of 21,864

Issuance of shares for vested restricted

Equity compensation expense

Issuance of common stock, net of costs

Exercise of stock options, net of cashless exercise of 93,840 shares

Issuance of shares for vested restricted stock grants

Exercise of warrants

Settlement of executive bonuses with issuance of restricted stock units

Shares forfeited in exchange for withholding taxes

BALANCE, December 31, 2020

$ ( 116,377 )

$ (116,935,112 )

Stock-based compensation expense

Issuance of common stock, net of costs

Exercise of stock options, net of cashless exercise of 93,840

Issuance of shares for vested restricted

Equity compensation expense

Exercise of stock options, net of cashless exercise of 58,926 shares

Issuance of shares for vested restricted stock grants

Exercise of warrants

Settlement of executive bonuses with

issuance of restricted stock units

Shares forfeited in exchange for withholding

BALANCE, December 31, 2021

$ ( 120,523 )

$ (116,376,715 )

accompanying notes are an integral part of these financial statements.

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THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

income (loss)

$ (2,548,711 )

Adjustments to reconcile

net income (loss) to net cash used in operating activities:

Depreciation and

Stock-based compensation

Change in provision

for doubtful accounts

Forgiveness of unsecured

promissory note

Changes in assets

and liabilities:

(Increase) in accounts

(Increase) in other

current assets

Decrease in other

Increase in accounts

payable and accrued expenses

in deferred revenue

cash used in operating activities

FROM INVESTING activities:

Purchases of software

Purchases of property,

plant and equipment

on note receivable

cash (used in) provided by investing activities

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Depreciation and amortization

Equity compensation expense

Gain on forgiveness of unsecured promissory note

Changes in assets and liabilities:

Increase in accounts receivable

Increase in other current assets

(Increase) decrease in other assets

Increase in accounts payable and accrued expenses

Increase (decrease) in deferred revenue

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING activities:

Purchases of software license

Capital expenditures

Collection on note receivable

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from

issuance of common stock

Loan proceeds on

unsecured promissory note under Paycheck Protection Program

Loan proceeds on

unsecured promissory note under Economic Injury Disaster Loan program

Net proceeds from

issuance of common stock from exercise of stock options

Proceeds from issuance

of common stock from exercise of warrants

Withholding taxes

paid on exercise of stock options and vesting of restricted stock units

payments on unsecured promissory note

cash provided by financing activities

Net increase (decrease)

CASH, beginning

Supplemental disclosure of noncash investing

and financing activities:

of executive bonuses with restricted stock units

Return of repayment of unsecured promissory note

Net proceeds from issuance of common stock

Loan proceeds on unsecured promissory note under Paycheck Protection Program

Loan proceeds on unsecured promissory note under Economic Injury Disaster Loan program

Net proceeds from issuance of common stock from exercise of stock options

Proceeds from issuance of common stock from exercise of warrants

Withholding taxes paid on exercise of stock options and vesting of restricted stock units

Loan payments on unsecured promissory note

Net cash provided by financing activities

Net increase in cash

CASH, beginning of year

CASH, end of year

Supplemental disclosure of noncash investing and financing activities:

Settlement of executive bonuses with restricted stock units

accompanying notes are an integral part of these financial statements.

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TO FINANCIAL STATEMENTS

NATURE OF BUSINESS

dollar amounts are rounded to thousands, except share data )

Intellicheck,

(the “Company”

or “Intellicheck”) is a prominent technology company that is engaged in developing,

integrating and marketing identity verification solutions to address challenges that include commercial retail and banking fraud

Intellicheck’s products include ID Check®, a solution for preventing identity fraud across any industry

delivered via smartphone, tablet, POS integration or other electronic devices.

continues to develop and release innovative products based upon its rich patent portfolio consisting of nineteen issued patents

and four pending.

the year ended December 31, 2020, the Company generated net income of $558,397 and used cash in operations of $19,022.

As of December

31, 2020, the Company had cash of $13,121,392 and an accumulated deficit of $116,376,715.

On June 23, 2020, the Company completed

a public offering of 1,769,230 shares of its common stock, offered to the public at $6.50 per share resulting in net proceeds

to the Company of approximately $10,570,000 after deducting underwriters discounts and commissions paid by the Company and after

deducting direct offering costs.

Intellicheck intends to use these net proceeds for general corporate purposes and working capital.

This public offering is referenced in Note 10.

Based on the Company’s business plan and cash resources, Intellicheck expects

its existing and future resources and revenues generated from operations to satisfy its working capital requirements for at least

the next 12 months from the date of filing.

of the filing of this Form 10-K, the COVID-19 pandemic has impacted the Company’s business and will likely continue to impact

its business directly and/or indirectly for the foreseeable future.

The Company is unable to accurately predict the full impact

that the COVID-19 pandemic will have on its results of operations or financial condition due to numerous factors that are not

within its control, including the duration and severity of the outbreak together with any potential statewide closures resulting

from the recent increases in cases nationwide.

SIGNIFICANT ACCOUNTING POLICIES

(the “Company” or “Intellicheck”) is a prominent technology company that is engaged in developing, integrating

and marketing identity verification solutions to address challenges that include commercial retail and banking fraud prevention.

Intellicheck’s

products include solutions for preventing identity fraud across any industry delivered via smartphone, tablet, POS integration or other

electronic devices.

Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting

of eighteen (18) U.S.

and one Canadian patents, as well as two patents pending.

the year ended December 31, 2021, the Company incurred a net loss of $ ( 4,146 ) and had cash provided by operating activities of $ 1,116 .

As of December 31, 2021, the Company had cash of $ 13,651 , working capital (defined as current assets minus current liabilities) of $ 11,982

and an accumulated deficit of $ 120,523 .

Based on the Company’s business plan and cash resources, Intellicheck expects its existing

and future resources and revenues generated from operations to satisfy its working capital requirements for at least the next 12 months

from the date of filing.

of the filing of this Form 10-K, the COVID-19 pandemic, which first began affecting the Company in the first quarter of 2020, has impacted

the Company’s business by a temporary decline in revenues from its customers.

Though the Company has had an increase in SaaS revenues

for the year ended December 31, 2021 compared to the same period of 2020, the COVID-19 pandemic may continue to impact our business directly

and/or indirectly for the foreseeable future.

The Company is further unable to accurately predict the full impact that the COVID-19 pandemic

will have on its results of operations or financial condition due to numerous factors that are not within its control, including the

duration and severity of the outbreak together with any potential statewide closures if cases increase, the spread of COVID-19 variants,

including the Delta and Omicron variants, and the widespread adoption of vaccination measures including booster regimens.

ACCOUNTING POLICIES

preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States

of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s 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, deferred tax valuation allowances, allowance for doubtful accounts, revenue

recognition (including breakage revenue) and the fair value of stock options granted under the Company’s Equity compensation plan.

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

for Doubtful Accounts

Company records its allowance for doubtful accounts based upon its assessment of various factors.

The Company considers historical

experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions

and other factors that may affect customers’

ability to pay.

The Company considers historical experience,

the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors

that may affect customers’ ability to pay.

Assets and Impairment of Long-Lived Assets

Company’s long-lived assets include property and equipment, goodwill, and intangible assets.

Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount

of these assets may not be fully recoverable in accordance with ASC topic 350 and ASC Topic 360 to determine recoverability of

its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges,

will be less than the carrying amount of the assets.

Impairment is measured at fair value.

and Equipment

and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three to ten-years using

the straight-line method.

Leasehold improvements are amortized utilizing the straight-line method over the lesser of the term

of the lease or estimated useful life of the asset.

Company’s long-lived assets include property and equipment, goodwill, and intangible assets.

INTELLICHECK,

TO FINANCIAL STATEMENTS

represents the excess of acquisition cost over the fair value of net assets acquired in business combinations.

Pursuant to ASC

Topic 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain

circumstances.

Under guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform

the two-step quantitative goodwill impairment test.

An entity is not required to calculate the fair value of a reporting unit

unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than

its carrying amount.

Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions,

industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease

in share price.

dollar amounts are rounded to thousands, except share data )

Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of

these assets may not be fully recoverable in accordance with Accounting Standards Codification (“ASC”) 350 (“Intangibles

– Goodwill and Other”) and ASC 360 (“Property, Plant and Equipment”) to determine recoverability of its long-lived

assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the

carrying amount of the assets.

Impairment is measured at fair value.

and Equipment

and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three to ten-years using the straight-line

Leasehold improvements are amortized utilizing the straight-line method over the lesser of the term of the lease or estimated

useful life of the asset.

represents the excess of purchase price over the fair value of net assets acquired in business combinations.

Pursuant to ASC 350, the

Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances.

authoritative guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform step one of the

quantitative goodwill impairment test.

An entity is not required to calculate the fair value of a reporting unit unless the entity determines,

based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.

Events or changes

in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors,

overall financial performance, other entity specific events and sustained decrease in share price.

Company performed its annual impairment test of goodwill in the fourth quarter for the years ended December 31, 2021 and 2020.

For the years ended December 31, 2020 and 2019, the Company determined no impairment charge was required.

assets include trade names, patents, and non-contractual customer relationships as described more fully in Note 4.

uses the straight-line method to amortize these assets over their estimated useful lives.

The Company reviews its long-lived assets

for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully

recoverable in accordance with ASC Topic 360.

To determine recoverability of its long-lived assets, the Company evaluates the

probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets.

There were no impairment charges recognized for the years ended December 31, 2020 and 2019.

years ended December 31, 2021 and 2020, the Company determined no impairment charge was required.

assets include patents, copyrights, and developed technology.

The Company amortizes these assets on a straight-line basis over their

estimated useful lives, as it represents the pattern of economic benefits consumed.

The Company reviews its long-lived assets for impairment

whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance

with ASC 360.

To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net

cash flows, without interest charges, will be less than the carrying amount of the assets.

There were no impairment charges recognized

for the years ended December 31, 2021 and 2020.

Recognition and Deferred Revenue

1 unchanged sentence

Under the per-scan revenue

model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the

Company’s software.

Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical

business location to access the Company’s software.

Under ASC 606, revenue is recognized when a customer obtains control

of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods

The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized

when the performance obligations in an arrangement are satisfied.

A performance obligation is a promise in a contract to transfer

a distinct service to the customer.

The transaction price of a contract is allocated to each distinct performance obligation and

recognized as revenue when or as, the customer receives the benefit of the performance obligation.

Customers typically receive

the benefit of the Company’s services as they are performed.

Substantially all customer contracts provide that the Company

is compensated for services performed to date.

model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the Company’s

Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location

to access the Company’s software.

Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services

in an amount that reflects the consideration expected to be received in exchange for those goods or services.

The Company measures revenue

based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement

are satisfied.

A performance obligation is a promise in a contract to transfer a distinct service to the customer.

The transaction price

of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit

of the performance obligation.

Customers typically receive the benefit of the Company’s services as they are performed.

Substantially

all customer contracts provide that the Company is compensated for services performed to date.

INTELLICHECK,

TO FINANCIAL STATEMENTS

dollar amounts are rounded to thousands, except share data )

2021, the Company adopted an additional revenue model where customers purchase a predetermined number of transactions for the term of

the contract.

Revenue for these transactions are recognized on a per transaction basis.

The Company estimates the amount of unused transactions

at the end of each contract period and recognizes a portion of that revenue as breakage revenue each reporting period.

If the Company

expects the customer to use all transactions in the specified service period, the Company will recognize the transaction price

as revenue in the specified service period as the promised units of service are transferred to the customer.

Alternatively, if the

Company expects that the customer cannot or will not use all transactions in the specified service period (referred to as “breakage”),

the Company will recognize the estimated breakage amount as revenue ratably over the service period in proportion to the revenue

that the Company will recognize for actual transactions used by the customer in the service period.

is based on schedules established in customer contracts.

Payment terms are generally established at 30 to 60 days from the invoice

Payment terms are generally established from 30 to 60 days from the invoice

Product returns are recorded as a reduction to revenue.

is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected

on behalf of third parties.

Revenues are recognized when control of the promised goods or services is transferred to the customer,

in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to

of goods and services

following is a description of the products and services from which the Company generates revenue, as well as the nature, timing

of satisfaction of performance obligations, and significant payment terms for each:

INTELLICHECK,

TO FINANCIAL STATEMENTS

following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction

of performance obligations, and significant payment terms for each:

as a Service (SaaS)

as a service (SaaS) for hosted subscription services and licensed software allows customers to access a set of data for a predetermined

length of time.

period of time.

As the customer obtains access at a point in time but continues to have access for the remainder of the subscription

period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance

as the entity performs.

Accordingly, the revenue should be recognized over time based on the usage of the hosted subscription

services and licensed software, which can vary from month to month.

The revenue is typically based either on a formula such as

number of locations using the service in a given month multiplied by a fee per location or the number of actual scans in a given

month multiplied by a set price per scan based on the contract with the customer.

period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the

entity performs.

Accordingly, the revenue should be recognized over time, under the fixed pricing model, based on the usage of

the hosted subscription services and licensed software, which can vary from month to month.

Under the per-scan revenue model,

revenue is recognized each time the customer scans an identity document.

Subscription and Support Services

Company also recognizes revenues from other subscription and support services, which includes jurisdictional updates to certain

commercial customers and support services particularly to its Defense ID®

These subscriptions require continuing

service or post contractual customer support and performance.

As the customer obtains access at a point in time but continues

to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume

the benefits provided by the entity’s performance as the entity performs.

Accordingly, the revenue should be recognized

over time based on usage, which can vary from month to month.

The revenue is typically based on a formula such as number of locations

in a given month multiplied by a fee per location.

Company also recognizes revenues from other subscription and support services, which includes jurisdictional updates to certain commercial

customers and support services particularly to its Defense ID® customers.

These subscriptions require continuing service or post

contractual customer support and performance.

As the customer obtains access at a point in time but continues to have access for the

remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s

performance as the entity performs.

Accordingly, the revenue should be recognized over time based on usage, which can vary from month

The revenue is typically based on a formula such as number of locations in a given month multiplied by a fee per location.

from the sale of equipment is recognized at a point in time.

The point in time that the revenue is recognized is when the customer

has control of the equipment which is when the customer receives the benefit and the Company’s performance obligation has

been satisfied.

Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the

equipment is received.

The point in time that the revenue is recognized is when the customer has

control of the equipment which is when the customer receives the benefit and the Company’s performance obligation has been satisfied.

Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the equipment is received.

Non-Recurring

1 unchanged sentence

non-recurring services include items such as training, installation, customization, and configuration.

The Company recognizes

revenue from non-recurring services contracts ratably over the service contract period as the customer consumes the benefit as

it is provided and the Company’s performance obligation has been satisfied.

warranty revenues are generated when a warranty is provided to the customer separately of other performance obligations when the

equipment is sold.

As the customer obtains access at a point in time and continues to have access for the remainder of the warranty

term, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance

as the Company performs.

The related revenue is recognized ratably over the specified term of the warranty period.

warranty is separate to the Company’s standard warranty of usually one year that it receives from its vendor.

The Company recognizes revenue

from non-recurring services contracts ratably over the service contract period as the customer consumes the benefit as it is provided

and the Company’s performance obligation has been satisfied.

INTELLICHECK,

TO FINANCIAL STATEMENTS

dollar amounts are rounded to thousands, except share data )

warranty revenues are generated when a warranty is provided to the customer separately of other performance obligations when the equipment

As the customer obtains access at a point in time and continues to have access for the remainder of the warranty term, the customer

is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs.

The related revenue is recognized ratably over the specified term of the warranty period.

The extended warranty is separate to the Company’s

standard warranty of usually one year that it receives from its vendor.

Disaggregation

2 unchanged sentences

a reconciliation of the disaggregated revenue.

the Years Ended December 31,

SCHEDULE OF DISAGGREGATION OF REVENUE

For the Years Ended December 31,

Products and services

3 unchanged sentences

Extended warranties on equipment

Timing of revenue

Timing of revenue recognition

Products transferred at a point in time

Services transferred

current portion of deferred revenue at December 31, 2020 and December 31, 2019 was $402,782 and $572,391, respectively, and primarily

consists of revenue that is recognized over time for one-year software license contracts and hosted subscription services.

changes in these balances are related to the satisfaction or partial satisfaction of these contracts.

Of these balances, as of

December 31, 2019, $574,444 was recognized as revenue for the year ended December 31, 2020.

The long-term portion of deferred

revenue is $8,662 and $13,322 as of December 31, 2020 and December 31, 2019, respectively.

Services transferred over time

current portion of deferred revenue at December 31, 2021 and December 31, 2020 was $ 1,266 and $ 403 , respectively, and primarily consists

of revenue that is recognized over time for software license contracts and hosted subscription services.

The changes in these balances

are related to the satisfaction or partial satisfaction of these contracts.

The entire December 31, 2020 current deferred revenue balance

was recognized as revenue in the year ended December 31, 2021.

The noncurrent deferred revenue balances were $ 8 and $ 9 as of December

31, 2021 and December 31, 2020, respectively.

Company did not recognize any material revenue in the current reporting period for performance obligations that were fully satisfied

1 unchanged sentence

price allocated to the remaining performance obligations

following table includes estimated revenue expected to be recognized in the future related to performance obligations that are

unsatisfied (or partially unsatisfied) at the end of the reporting period:

following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied

(or partially unsatisfied) at the end of the reporting period:

SCHEDULE OF REVENUE PERFORMANCE OBLIGATION

Software as a Service (SaaS)

Other subscription and support services

Extended warranties

Extended warranties on equipment

consideration from contracts with customers is included in the amounts presented above.

1 unchanged sentence

TO FINANCIAL STATEMENTS

and Development Costs

and development costs are charged to expense as incurred.

Company’s shipping and handling costs are included in cost of revenues for all periods presented.

Company accounts for income taxes under in accordance with ASC Topic 740, “Accounting for Income Taxes.”

tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial

statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards.

Deferred tax assets and liabilities are measured using expected tax rates in effect for the year in which those temporary differences

are expected to be recovered or settled.

Deferred tax assets are recognized subject to management’s judgment that realization

is more likely than not.

The Company has recorded a full valuation allowance for its net deferred tax assets as of December 31,

2020 and 2019, due to the uncertainty of the realizability of those assets.

dollar amounts are rounded to thousands, except share data )

costs, which are charged to expense as incurred, were $ 745 and $ 227 for the years ended December 31, 2021 and 2020, respectively.

Company’s shipping and handling costs are included in cost of revenues for all periods presented.

Company accounts for income taxes in accordance with ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized

for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets

and liabilities and their respective tax bases and net operating loss carryforwards.

Deferred tax assets and liabilities are measured

using expected tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

tax assets are recognized subject to management’s judgment that realization is more likely than not.

The Company has recorded a

full valuation allowance for its net deferred tax assets as of December 31, 2021 and 2020, due to the uncertainty of the realizability

of those assets.

Value of Financial Instruments

Company adheres to the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”.

This pronouncement

requires that the Company calculate the fair value of financial instruments and include this additional information in the notes

to financial statements when the fair value is different than the book value of those financial instruments.

The Company’s

financial instruments include cash, accounts receivable, note receivable, accounts payable and accrued expenses.

At December 31,

2020 and 2019, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term

Company adheres to the provisions of ASC 820, “Fair Value Measurement” which requires the Company to calculate the fair value

of financial instruments and include this additional information in the notes to financial statements when the fair value of those financial

instruments is different than the book value.

The Company’s financial instruments include cash, accounts receivable, other current

assets, accounts payable and accrued expenses.

At December 31, 2021 and 2020, the carrying value of the Company’s financial instruments

approximated fair value, due to their short-term nature.

All of the Company’s financial instruments are categorized as Level 1

within the fair value hierarchy.

Concentration and Credit Risk

instruments, which subject the Company to concentrations of credit risk, consist primarily of cash.

The Company maintains cash

with one financial institution.

The Company maintains cash with two

financial institutions.

The Company performs periodic evaluations of the relative credit standing of these institutions.

Company’s sales are principally made to large retail customers, financial institutions concentrated in the United States

of America and to U.S.

Company’s sales are principally made to large retail customers, financial institutions concentrated in the United States of America

government entities.

The Company performs ongoing credit evaluations, generally does not require collateral,

and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends,

and other information.

the year ended December 31, 2020, the Company had two customers that accounted for 41% of revenue.

The revenue was associated

with commercial identity sales customers.

These customers represented 52% of total accounts receivable as of December 31, 2020.

During the year ended December 31, 2019, the Company had three customers that accounted for 39% of revenue.

of December 31, 2020, the Company had three suppliers to produce its input devices.

The Company has modified its software to operate

in windows-based systems and can integrate with different hardware platforms that are readily available in the marketplace.

Company does not maintain a manufacturing facility of its own and is not dependent on maintaining its production relationships

due to the flexibility of its software to run on multiple existing platforms.

Income (Loss) Per Share

net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common

shares outstanding during the period.

Diluted net income (loss) per share is computed by dividing the net loss for the period

by the weighted average number of shares of common stock and potentially dilutive common stock equivalents outstanding during

The dilutive effect of these common stock equivalents comprising of outstanding options, warrants and restricted

stock is reflected in diluted earnings per share by application of the treasury stock method.

The calculation of diluted net income

(loss) per share excludes all anti-dilutive shares.

All shares were considered anti-dilutive due to the net income (loss) for

each of the respective years ended.

The Company performs ongoing credit evaluations, generally does not require collateral, and establishes

an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends, and other information.

the year ended December 31, 2021, the Company made sales to two customers that accounted for approximately 55 % of revenue.

was associated with commercial identity sales customers.

These two customers, in addition to one other customer, represented 65 % of the

Company’s December 31, 2021 accounts receivable balance.

During the year ended December 31, 2020, the Company had two customers

that accounted for 41 % of revenue and 52 % of its December 31, 2020 accounts receivable balance.

INTELLICHECK,

TO FINANCIAL STATEMENTS

Income (Loss)

$ (2,548,711 )

Weighted average common shares –

Dilutive effect

of equity incentive plans

dollar amounts are rounded to thousands, except share data )

of December 31, 2021, the Company had four suppliers to produce its input devices.

The Company has modified its software to operate in

windows-based systems and can integrate with different hardware platforms that are readily available in the marketplace.

does not maintain a manufacturing facility of its own and is not dependent on maintaining its production relationships due to the flexibility

of its software to run on multiple existing platforms.

Income (Loss) Per Share

net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares

outstanding during the period.

Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the

weighted average number of shares of common stock and potentially dilutive common stock equivalents outstanding during the period.

dilutive effect of these common stock equivalents comprising of outstanding options, warrants and restricted stock is reflected in diluted

earnings per share by application of the treasury stock method.

The calculation of diluted net income (loss) per share excludes all anti-dilutive

In a period of net loss, all common stock equivalents are considered anti-dilutive.

SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED

Net (Loss) Income

Weighted average common shares –

Net Income (Loss) per share –

following table summarizes the common stock equivalents excluded from income (loss) per diluted share because their effect would

be anti-dilutive:

Dilutive effect of equity compensation plans

Weighted average common shares –

Net (Loss) Income per share –

following table summarizes the common stock equivalents excluded from the 2021 loss per diluted share because their effect would be anti-dilutive:

SUMMARY OF COMMON STOCK EQUIVALENTS EXCLUDED FROM LOSS PER DILUTED SHARE

Stock options

Restricted stock

Performance stock

Based Compensation

Company accounts for the issuance of equity awards to employees in accordance ASC Topic 718 and 505, which requires that the cost

resulting from all share-based payment transactions be recognized in the financial statements.

This pronouncement establishes

fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply

a fair value-based measurement method in accounting for all share-based payment transactions with employees.

Period compensation

costs are included in selling, general and administrative and research and development expenses.

Company recognizes compensation expense related to stock option grants on a straight-line basis over the vesting period.

Comprehensive

Income (Loss)

Company’s comprehensive income (loss) is equal to its net income (loss) for the years ended December 31, 2020 and 2019.

Performance stock units

Company accounts for the issuance of equity awards to employees in accordance ASC 718 (“Stock Compensation”) and ASC 505

(“Equity”), which requires that the cost resulting from all share-based payment transactions be recognized in the financial

This pronouncement establishes fair value as the measurement objective in accounting for share-based payment arrangements

and requires all companies to apply a fair value-based measurement method in accounting for all share-based payment transactions with

All equity compensation expenses are included in operating expenses.

The Company recognizes compensation expense related to

stock option grants on a straight-line basis over the vesting period.

INTELLICHECK,

TO FINANCIAL STATEMENTS

Company adheres to the provisions of ASC Topic 280, which establishes standards for the way public business enterprises report

information about operating segments in annual financial statements and requires that those enterprises report selected information

about operating segments in financial statements issued to shareholders.

dollar amounts are rounded to thousands, except share data )

Comprehensive

Income (Loss)

Company’s comprehensive income (loss) is equal to its net income (loss) for the years ended December 31, 2021 and 2020.

Company adheres to the provisions of ASC 280 (“Segment Reporting”), which establishes standards for the way public business

enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected

information about operating segments in financial statements issued to shareholders.

Management has determined that it has only one reporting

preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United

States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s

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, deferred tax valuation allowances,

allowances for doubtful accounts, revenue allocation of multi-element arrangements and the fair value of options granted under

the Company’s share-based compensation plans.

Due to the inherent uncertainties involved in making estimates, actual results

reported in future periods may be different from those estimates.

Accounting Pronouncements

December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, “Income Taxes (Topic

Simplifying the Accounting for Income Taxes”

as part of its initiative to reduce complexity in the accounting

The standard eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology

for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The standard also clarifies and simplifies other aspects of the accounting for income taxes.

The standard is effective for fiscal

years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted.

does not expect this standard will have a material impact its financial statements.

January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Accounting for

Goodwill Impairment (“ASU 2017-04”).

ASU 2017-04 removes the requirement to perform a hypothetical purchase price

allocation to measure goodwill impairment.

A goodwill impairment will now be the amount by which a reporting unit’s carrying

value exceeds its fair value, not to exceed the carrying amount of goodwill.

ASU 2017-04 is effective for annual periods and interim

periods within those annual periods beginning after December 15, 2019, and early adoption is permitted.

The Company has determined

this standard did not have a material impact on its financial statements.

June 2016, the FASB issued ASU No.

2016-13, Financial Instruments –

Credit Losses (Topic 326):

Measurement of Credit

Losses on Financial Instruments to measure credit losses on financial instruments, including trade receivables.

eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial

The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses.

December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes” as part of its initiative to reduce complexity in the accounting standards.

standard eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income

taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The standard also clarifies

and simplifies other aspects of the accounting for income taxes.

The standard is effective for fiscal years, and interim periods within

those fiscal years, beginning after December 15, 2020 and early adoption is permitted.

The adoption of this standard did not have a material

impact on the Company’s financial statements.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit

Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments to measure credit losses on financial instruments, including

trade receivables.

The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing

a credit loss on financial instruments.

The credit loss estimate can now reflect an entity’s current estimate of all future expected

credit losses.

Under the previous guidance, an entity only considered past events and current conditions.

The guidance is effective for smaller

reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the

remaining amendments must be applied on a prospective basis.

The Company does not expect this standard will have a material impact

on its financial statements.

The guidance is effective for

smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining

amendments must be applied on a prospective basis.

The Company does not expect this standard will have a material impact on its financial

INTELLICHECK,

TO FINANCIAL STATEMENTS

PROPERTY AND EQUIPMENT

dollar amounts are rounded to thousands, except share data )

AND EQUIPMENT

and equipment are comprised of the following as of December 31, 2021 and 2020:

Computer equipment

SCHEDULE OF PROPERTY AND EQUIPMENT

Computer equipment and software

Furniture and fixtures

1 unchanged sentence

Office equipment

Accumulated depreciation and amortization

and amortization expense for the years ended December 31, 2020 and 2019 amounted to $87,759 and $117,557, respectively.

GOODWILL AND INTANGIBLE ASSETS

Less – Accumulated depreciation

expense for the years ended December 31, 2021 and 2020 amounted to $ 64 and $ 88 respectively.

AND INTANGIBLE ASSETS

intangible assets

changes in the carrying amount of intangible assets for the year ended December 31, 2020 and 2019 were as follows:

Balance at beginning of

Acquisition of software license

(See Note 11)

Balance at end

following tables set forth the components of intangible assets as of December 31, 2021 and 2020:

of December 31, 2020

SCHEDULE OF INTANGIBLE ASSETS AND GOODWILL

As of December 31, 2021

Patents and copyrights

Developed technology

of December 31, 2019

and copyrights

INTELLICHECK,

TO FINANCIAL STATEMENTS

As of December 31, 2020

Patents and copyrights

Developed technology

following summarizes amortization of acquisition related intangible assets included in the statement of operations:

Ended December 31,

Cost of sales

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS AMORTIZATION EXPENSE

Years Ended December 31,

Cost of revenues

General and administrative

Company expects that amortization expense for the next five succeeding years, and thereafter, will be as follows:

amounts are subject to change based upon the review of recoverability and useful lives that are performed at least annually.

excess of the purchase consideration over the fair value of the assets of acquired businesses is considered goodwill.

Under authoritative

guidance, purchased goodwill is not amortized, but rather it is periodically reviewed for impairment.

The Company had goodwill

of $8,101,661 as of December 31, 2020 and 2019.

This goodwill resulted from the acquisition of Mobilisa, Inc.

and Positive Access

the years ended December 31, 2020 and 2019, the Company performed its annual impairment test of goodwill in the fourth

Under authoritative guidance, the Company can use industry and Company specific qualitative factors to determine

whether it is more likely than not that impairment exists, before using a two-step quantitative analysis.

Events or changes

in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions,

cost factors, overall financial performance, other entity specific events and sustained decrease in share price.

performed the first step of the goodwill impairment test to identify potential impairment by comparing fair value of the

Company to its carrying amount, including goodwill.

The fair value was determined using the weighting of certain valuation

techniques, including both income and market approaches which include a discounted cash flow analysis, similar public

company financial comparisons, along with market capitalization.

The market capitalization is

sensitive to the volatility of the Company’s stock price.

Although the Company believes that the factors considered in

the impairment analysis are reasonable, changes in any one of the assumptions used could have produced a different result

which may have led to an impairment charge.

Any future impairment loss could have a material adverse effect on our long-term

assets and operating expenses in the period in which impairment is determined to exist.

the years ended December 31, 2020 and 2019, the Company determined that the fair value was more than its carrying amount and therefore

the second step of the goodwill impairment test was not required.

impairment charges on goodwill through December 31, 2020 were $30,085,862.

NOTE RECEIVABLE

August 31, 2015, the Company sold its wireless enterprise assets to the Jamestown S’Klallam Tribe (the “Buyer”)

for total consideration of $350,000 which consists of an upfront cash payment of $30,000, the issuance of a promissory note totaling

$200,000 and contingent consideration up to a maximum of $120,000 based on future earnings until the time the note has been paid

Any gain on contingent consideration would be recognized as it is earned.

Amortization of intangible assets

INTELLICHECK,

TO FINANCIAL STATEMENTS

the terms of the promissory note, monthly payments in the amount of $3,683 including principal and interest at 4%, were made over

a 60-month term expiring in August 2020.

At December 31, 2020, the promissory note was paid in full.

At December 31, 2019, the

total note receivable was $29,017, which is included in Other Current Assets on the Balance Sheets.

April 9, 2020 the Company entered into an unsecured promissory note in the amount of $796,100 (the “Note”) with First

Bank (the “Loan Servicer”) under the Paycheck Protection Program (“PPP”) administered by the U.S.

Business Administration (“SBA”) and established as part of the Coronavirus Aid, Relief, and Economic Security Act

(the “CARES Act”).

The Company received these proceeds on April 14, 2020 plus an additional $10,000 advance under

the Economic Injury Disaster Loan program (“EIDL”) on April 15, 2020.

Under the terms of the Note, the Company can

apply for forgiveness on this Note with the Loan Servicer if certain conditions including the use of the Note proceeds are met

over a 24-week period commencing from the date of the Note.

dollar amounts are rounded to thousands, except share data )

Company expects amortization expense for the next five succeeding years, and thereafter, will be as follows:

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

Finite-lived intangible assets, net

amounts are subject to change based upon the review of recoverability and useful lives that are performed at least annually.

represents the excess of purchase price over the fair value of the assets acquired in businesses combinations.

Under ASC 350, purchased

goodwill is not amortized, but rather is tested for impairment.

The Company’s goodwill balance was $ 8,102 as of December 31, 2021

This goodwill resulted from the acquisitions of Mobilisa, Inc.

and Positive Access Corporation.

the years ended December 31, 2021 and 2020, the Company performed its annual impairment test of goodwill in the fourth quarter.

authoritative guidance, the Company can use industry and Company specific qualitative factors to determine whether it is more likely

than not that impairment exists before performing step one of the quantitative goodwill impairment test.

An entity is not required to

calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely

than not that its fair value is less than its carrying amount.

Events or changes in circumstances which could trigger an impairment review

include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific

events and sustained decrease in share price.

Company performed the first step of the goodwill impairment test to identify potential impairment by comparing fair value of the Company

to its carrying amount, including goodwill.

The fair value was determined using the weighting of certain valuation techniques, including

both income and market approaches which include a discounted cash flow analysis, an analysis of similar public company financial information,

and an analysis of our market capitalization, which is sensitive to the volatility of the Company’s stock price.

Although the Company

believes that the factors considered in the impairment analysis are reasonable, changes in any one of the assumptions used could have

produced a different result which may have led to an impairment charge.

Any future impairment loss could have a material adverse effect

on our long-term assets and operating expenses in the period in which impairment is determined to exist.

the years ended December 31, 2021 and 2020, the Company determined that the fair value of the Company was greater than its carrying amount

and therefore the second step of the goodwill impairment test was not required.

April 9, 2020 the Company entered into an unsecured promissory note in the amount of $ 796 (the “Note”) with First Bank (the

“Loan Servicer”) under the Paycheck Protection Program (“PPP”) administered by the U.S.

Small Business Administration

(“SBA”) and established as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The Company received these proceeds on April 14, 2020.

Under the terms of the Note, the Company can apply for forgiveness on this Note

with the Loan Servicer if certain conditions including the use of the Note proceeds are met over a 24-week period commencing from the

date of the Note.

The Note has an interest rate of 1 %.

The Company has not imputed interest

on the Note as the rate is determined to be a below-market rate due to the scope exception in ASC 835-30-15-3(e) for government-mandated

interest rates.

In November 2020, the Company received notification from the Loan Servicer that the Note was fully forgiven and

recorded income from the extinguishment of its obligation as the Company was legally released from being the primary obligor in

accordance with ASC 405-20-40-1.

Company repaid its EIDL advance on December 7, 2020.

27, 2020, Congress passed the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (“the Economic Aid Act”)

which relieves companies of their obligations to repay EIDL advances.

As a result of this ruling, the SBA returned this

advance, plus interest to the Loan Servicer on February 18, 2021, which was immediately returned to the Company.

The Company has not imputed interest on the Note as the rate is determined to

be a below-market rate due to the scope exception in ASC 835-30-15-3(e) for government-mandated interest rates.

In November 2020, the

Company received notification from the Loan Servicer that the Note was fully forgiven and recorded income from the extinguishment of

its obligation as the Company was legally released from being the primary obligor in accordance with ASC 405-20-40-1.

INTELLICHECK,

TO FINANCIAL STATEMENTS

dollar amounts are rounded to thousands, except share data )

April 15, 2020, the Company received a $ 10 advance from the U.S.

Small Business Administration (“SBA”) as part of the Coronavirus

Aid, Relief, and Economic Security Act (the “CARES Act”).

The Company repaid this EIDL advance on December 7, 2020.

had not imputed interest on this advance as the rate was determined to be a below-market rate due to the scope exception in ASC 835-30-15-3(e)

for government-mandated interest rates.

On December 27, 2020, Congress passed the Economic Aid to Hard-Hit Small Businesses, Nonprofits

and Venues Act (“the Economic Aid Act”) which relieves companies of their obligations to repay EIDL advances.

of this ruling, the SBA returned this advance, plus interest to the Loan Servicer on February 18, 2021, which was immediately returned

to the Company and included in Other Income on the Statements of Operations.

Line of Credit

February 6, 2019, the Company entered into a revolving credit facility with Citibank that allows for borrowings up to the lesser

of (i) $2,000,000 or (ii) the collateralized balance in the Company’s existing fixed income investment account with Citibank

subject to certain limitations.

The facility bears interest at a rate consistent of Citibank’s Base Rate (4.75% at December

31, 2020) minus 2%.

Interest is payable monthly and as of December 31, 2020, there were no amounts outstanding under this facility

and unused availability under this facility was $2,000,000.

February 6, 2019, the Company entered into a revolving credit facility with Citibank that allows for borrowings up to the lesser of (i)

$ 2,000 or (ii) the collateralized balance in the Company’s existing fixed income investment account with Citibank subject to certain

The facility bears interest at a rate consistent of Citibank’s Base Rate (4.75% at December 31, 2021) minus 2%.

is payable monthly and as of December 31, 2021 and 2020, there were no amounts outstanding under this facility and unused availability

under this facility was $ 2,000 .

ACCRUED EXPENSES

expenses are comprised of the following as of December 31, 2021 and 2020:

SCHEDULE OF ACCRUED EXPENSES

Professional fees

1 unchanged sentence

Incentive bonuses

INTELLICHECK,

TO FINANCIAL STATEMENTS

December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was enacted into law which significantly modified U.S.

income tax law.

The TCJA contains significant changes to corporate income taxation, including but not limited to the reduction

of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21% in 2018.

Notwithstanding the reduction

in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, including to what extent various

states will conform to the newly enacted federal tax law.

The deferred tax assets and liabilities are measured using the enacted

tax rates that the Company believes will apply in the years in which the temporary differences are expected to be recovered or

As a result, the Company remeasured the deferred tax assets and deferred tax liabilities to reflect the reduction in the

corporate income tax rate.

Company is subject to federal and state income taxes as regular (Subchapter C) corporation.

As a result of continuing losses for

tax purposes, the Company has historically not paid income taxes and has recorded a full valuation allowance against the net deferred

Company’s deferred tax assets are primarily the result of net operating losses (or NOLs).

Accrued expenses

Company’s deferred tax assets and liabilities are measured using the enacted tax rates that the Company believes will apply in

the years in which temporary differences are expected to be recovered or paid.

The Company is subject to federal and state income taxes

as a Subchapter C corporation.

As a result of continuing losses for tax purposes, the Company has historically not paid income taxes

and has recorded a full valuation allowance against its net deferred tax asset.

Company’s deferred tax assets are primarily the result of net operating losses (or NOLs).

The Company has recorded a valuation

allowance against its net deferred tax assets at December 31, 2020 as it is more likely than not that not all of the deferred

tax assets will be realized.

The valuation is based on management’s assessment that it is more likely than not the NOL carryforwards

may not be realized in the foreseeable future due to objective negative evidence that the Company would not generate sufficient

taxable income to realize the deferred tax assets.

allowance against its net deferred tax assets at December 31, 2021 as it is more likely than not that not all of the deferred tax assets

will be realized.

The valuation is based on management’s assessment that it is more likely than not the NOL carryforwards may not

be realized in the foreseeable future due to objective negative evidence that the Company would not generate sufficient taxable income

to realize the deferred tax assets.

income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial

reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets

for federal and state income taxes as of December 31, 2020 and 2019 are as follows:

Significant components of the Company’s deferred tax assets for

federal and state income taxes as of December 31, 2021 and 2020 are as follows:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets:

operating loss carryforwards

Payroll related

Stock-based compensation

Net operating loss carryforwards

Payroll related accruals

Equity compensation

Intangible assets

and development tax credits

Total deferred tax

Deferred tax liabilities:

Research and development tax credits

Total deferred tax assets

Deferred tax liabilities:

tax assets, net of allowance

Total deferred tax liabilities

Net deferred tax assets

Valuation allowance

Deferred tax assets, net of allowance

INTELLICHECK,

TO FINANCIAL STATEMENTS

dollar amounts are rounded to thousands, except share data )

were no tax interest or penalties recorded in the financial statements for the years ended December 31, 2021 and 2020.

Company’s available NOL at December 31, 2020 was approximately $17 million.

The federal and state NOL’s incurred in

all years through 2020 are available to offset future taxable income and expire from 2021 through 2040 if not utilized.

Company’s available NOL at December 31, 2021 was approximately $ 17,999 .

The federal and state NOL’s are available to offset

future taxable income and began to expire in 2021.

Company files numerous tax returns in various jurisdictions.

The Company is not currently under examination by any taxing

authority, nor has the Company signed any waiver of the statute of limitations with any taxing authority.

The Company remains

open to examination by major taxing jurisdictions from 2017 to date.

ASC Topic 740-10 requires evaluation of uncertain tax

As of December 31, 2020, the Company has no material uncertain tax positions.

effective tax rate for the years ended December 31, 2020 and 2019 is different from the tax benefit that would result from applying

the statutory tax rates primarily due to the recognition of valuation allowances.

The Company is not currently under examination by any taxing authority,

nor has the Company signed any waiver of the statute of limitations with any taxing authority.

The Company remains open to examination

by major taxing jurisdictions from 2018 to date.

ASC 740 requires evaluation of uncertain tax positions and as of December 31, 2021,

the Company has no material uncertain tax positions.

effective tax rate for the years ended December 31, 2021 and 2020 is different from the tax benefit that would result from applying the

statutory tax rates primarily due to the recognition of valuation allowances.

In 2021, the valuation allowance increased approximately

$374,000 primarily related to the timing of payroll related costs and an increase of the Company’s NOLs.

The Company had

book income in 2020 and a tax NOL was generated primarily due to permanent differences that occurred during the year.

INTELLICHECK,

TO FINANCIAL STATEMENTS

STOCKHOLDERS’

$ 717 primarily related to an increase of the Company’s NOLs.

The Company had book loss in 2021 and a tax NOL was generated primarily

due to permanent differences that occurred during the year.

STOCKHOLDERS’ EQUITY

A Convertible Preferred Stock

January 1997, the Board of Directors authorized the creation of a class of Series A Convertible Preferred Stock with a par value

The Series A Convertible Preferred Stock is convertible into an equal number of common shares at the holder’s option,

subject to adjustment for anti-dilution.

The holders of Series A Convertible Preferred Stock are entitled to receive dividends

as and if declared by the Board of Directors.

In the event of liquidation or dissolution of the Company, the holders of Series

A Convertible Preferred Stock are entitled to receive all accrued dividends, if applicable, plus the liquidation price of $1.00

As of December 31, 2020, and 2019, there were no outstanding shares of Series A Convertible Preferred Stock.

Options and Share Based Compensation

retain and attract qualified personnel necessary for the success of the Company, the Company adopted the 2015 Omnibus Incentive

Plan (the “Plan”) covering up to 4,000,000 of the Company’s common shares, pursuant to which officers, directors,

key employees and consultants to the Company are eligible to receive incentive stock options, nonqualified stock options and restricted

All the Plans prior to Company’s 2015 Omnibus Incentive Plan have been closed.

January 1997, the Board of Directors authorized the creation of a class of Series A Convertible Preferred Stock with a par value of $ .01 .

The Series A Convertible Preferred Stock is convertible into an equal number of common shares at the holder’s option, subject to

adjustment for anti-dilution.

The holders of Series A Convertible Preferred Stock are entitled to receive dividends as and if declared

by the Board of Directors.

In the event of liquidation or dissolution of the Company, the holders of Series A Convertible Preferred Stock

are entitled to receive all accrued dividends, if applicable, plus the liquidation price of $ 1.00 per share.

As of December 31, 2021,

and 2020, there were no outstanding shares of Series A Convertible Preferred Stock.

retain and attract qualified personnel necessary for the success of the Company, the Company adopted the 2015 Omnibus Incentive Plan

(the “Plan”) covering up to 4,000,000 of the Company’s common shares, pursuant to which officers, directors, key employees

and consultants to the Company are eligible to receive incentive stock options, nonqualified stock options and restricted stock units.

All the equity compensation plans prior to Company’s 2015 Omnibus Incentive Plan have been closed.

The Compensation Committee of

the Board of Directors administers this Plan and determines the terms and conditions of options granted, including the exercise

the Board of Directors administers this Plan and determines the terms and conditions of stock options granted, including the exercise

This Plan generally provides that all stock options will expire within ten years of the date of grant.

Incentive stock

options granted under this Plan must be granted at an exercise price that is not less than the fair market value per share at

the date of the grant and the exercise price must not be less than 110% of the fair market value per share at the date of the

grant for grants to persons owning more than 10% of the voting stock of the Company.

This Plan also entitles non-employee directors

to receive grants of non-qualified stock options as approved by the Board of Directors.

Company uses the Black-Scholes option pricing model to value the options.

Incentive stock options

granted under this Plan must be granted at an exercise price that is not less than the fair market value per share at the date of the

grant and the exercise price must not be less than 110 % of the fair market value per share at the date of the grant for grants to persons

owning more than 10 % of the voting stock of the Company.

This Plan also entitles non-employee directors to receive grants of non-qualified

stock options as approved by the Board of Directors.

Company uses the Black-Scholes option pricing model to value its stock options.

The table below presents the weighted average expected

life of the options in years.

The expected life computation is based on the time to option expiration.

life of the stock options in years.

The expected life computation is based on the time to stock option expiration.

Volatility is determined

using changes in historical stock prices.

The interest rate for periods within the expected life of the award is based on the

Treasury yield curve in effect at the time of grant.

fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions

and weighted average fair values as follows:

Ended December 31, 2019

The interest rate for periods within the expected life of the award is based on the U.S.

yield curve in effect on the grant date.

Options vest from one to four years.

fair value of the Company’s stock options granted in 2021 was estimated using the Black-Scholes option pricing model with the following

assumptions and weighted average fair values:

SCHEDULE OF FAIR VALUE OF SHARE BASED PAYMENT

December 31, 2021

Valuation assumptions:

$ 7.78 – $ 11.50

Exercise price

$ 7.78 – $ 11.50

Expected dividend yield

Expected volatility

84.24 % – 90.94 %

Expected life (in years)

Risk-free interest rate

were no stock options granted during the year ended December

INTELLICHECK,

TO FINANCIAL STATEMENTS

option activity under the Plans during the periods indicated below is as follows:

dollar amounts are rounded to thousands, except share data )

option activity during the periods indicated below was as follows:

SCHEDULE OF STOCK OPTION ACTIVITY

Weighted- average Exercise Price

Weighted- average Remaining Contractual Term

Aggregate Intrinsic Value

Outstanding at December 31, 2019

3 unchanged sentences

following is a summary of stock options as of December 31, 2021:

of Exercise Prices

SUMMARY OF STOCK OPTIONS

Options Outstanding

Options Exercisable

Range of Exercise Prices

Remaining Life

2 unchanged sentences

weighted-average fair value of the options granted during the year ended December 31, 2021 is $ 7.13 .

of December 31, 2020, the Company had 1,191,445 shares available for future grants under the Plans.

Company issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of

common stock of the Company.

All stock options have been issued

with an exercise price that is equal or above the fair market value of the Company’s Common Stock on the date of grant.

Company periodically issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares

of common stock of the Company.

The Company issues RSUs to certain directors as compensation which vest with the passage of time.

The vesting of all RSUs is contingent on continued board services.

compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock

on the date of grant and is amortized ratably on a straight-line basis over the requisite service period and charged to general

and administrative expense with a corresponding increase to additional paid-in capital.

vesting of all RSUs is contingent on continued board services.

compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the

date of grant, is amortized on a straight-line basis over the requisite service period and charged to operating expenses with a corresponding

increase to additional paid-in capital.

INTELLICHECK,

TO FINANCIAL STATEMENTS

stock unit activity under the Plans during the periods indicated below is as follows:

dollar amounts are rounded to thousands, except share data )

stock unit activity during the periods indicated below is as follows:

SCHEDULE OF RESTRICTED STOCK UNITS OUTSTANDING

Outstanding at December 31, 2019

and Settled in shares

Vested and Settled in shares

Outstanding at December 31, 2020

and Settled in shares

Vested and Settled in shares

Outstanding December 31, 2021

August 7, 2020, the Company issued 265,942 Performance Stock Units (PSUs) to its officers and certain employees as compensation.

For these PSU agreements, 50% vest based on the Company’s market price and 50% vest based on its Adjusted EBITDA performance

Both the conditions are to occur over a passage of a specified time and is contingent on continued employment services.

the market condition, compensation expense is based on a Geometric Brownian Motion valuation model based on the closing market

price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite

For the performance condition, the Company reviews the probability of achieving this goal on a periodic basis.

Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived

for this performance metric is amortized over the anticipated service period.

If these criteria are not met, no compensation cost

is recognized and any previously recognized compensation cost would be reversed.

For both conditions, compensation expense is

charged to selling, general and administrative and research and development expense with a corresponding increase to additional

August 7, 2020, the Company issued 265,942 Performance Stock Units (PSUs) to its officers and certain employees as compensation (“PSU

50 % of the PSUs were to vest based on the Company’s market price and 50 % were to vest based on the Company’s

Adjusted EBITDA.

Both the conditions were to occur over a specified time and were contingent on continued employment services.

November 4, 2021, the Company amended its PSU Plan so that 100 % of the PSUs will vest based on the Company’s market price as the

sole vesting criteria.

As a result of this amendment, the adjusted EBITDA performance metric from the previous plan is no longer a criteria

performance metric.

The Company recorded additional share-based compensation expense of $ 164 in the fourth quarter of 2021 resulting

from the amendment to the PSU Plan.

expense is based on a Geometric Brownian Motion valuation model based on the closing market price of the Company’s common stock

on the date of grant and is amortized ratably on a straight-line basis over the requisite period.

If the Company determines that it is

probable that the performance criteria will be achieved, the amount of compensation cost derived for this performance metric is amortized

over the anticipated service period.

If these criteria are not met, no compensation cost is recognized, and any previously recognized

compensation cost would be reversed.

Compensation expense is charged to operating expenses with a corresponding increase to additional

paid-in capital.

SCHEDULE OF PERFORMANCE STOCK UNITS OUTSTANDING

Outstanding at December 31, 2019

Outstanding at December 31, 2020

of December 31, 2020, there was $627,842 of total unrecognized compensation cost, net of estimated forfeitures, related to all

unvested stock options and restricted stock units, which is expected to be recognized over a weighted average period of approximately

Outstanding at December 31, 2021

INTELLICHECK,

TO FINANCIAL STATEMENTS

based compensation expense for the years ended December 31, 2020 and 2019 is as follows:

Ended December 31,

Compensation cost recognized:

Restricted stock

based compensation is included in operating expenses as follows:

Ended December 31,

general and administrative

and development

Company has a net operating loss carry-forward as of December 31, 2020, and no excess tax benefits for the tax deductions related

to share-based awards were recognized in the statements of operations.

dollar amounts are rounded to thousands, except share data )

of December 31, 2021, there was $ 4,692 of total unrecognized compensation cost, net of estimated forfeitures, related to all unvested

stock options, restricted stock units and performance stock units.

These costs are expected to be recognized as compensation expense

over a weighted average period of approximately 1.86 years.

compensation expense for the years ended December 31, 2021 and 2020 is as follows:

SCHEDULE OF EQUITY COMPENSATION EXPENSE

Years Ended December 31,

Stock options

Restricted stock units

Performance stock units

Equity Compensation, Total

compensation is included in operating expenses as follows:

SCHEDULE OF EQUITY COMPENSATION

Years Ended December 31,

Selling, general and administrative

Research and development

Company has a net operating loss carry-forward as of December 31, 2021, and no excess tax benefits for the tax deductions related to

equity compensation awards were recognized in the statements of operations.

Additionally, no incremental tax benefits were recognized

1 unchanged sentence

with an offsetting increase in net cash provided by financing activities.

stock options have been issued with an exercise price that is equal or above the fair market value of the Company’s Common

Stock on the date of grant.

previously granted warrants were issued with an exercise price that was equal to or above the fair market value of the Company’s

of December 31, 2021, the Company had 1,360,830 shares available for future grants under the Company’s equity compensation plans.

previously granted warrants were issued with an exercise price that was equal to or above the fair market value of the Company’s

common stock on the date of grant.

As of December 31, 2020, the Company had 12,680 remaining warrants outstanding at an exercise

price of $2.20 through 2021.

There were 50,750 warrants exercised at a price of $2.20 during the year ended December 31, 2020.

There were 320,070 warrants exercised at a price of $2.20 during the year ended December 31, 2019.

As of December 31, 2021, the Company had no remaining warrants available to exercise.

There were 9,000

warrants exercised at a price of $ 2.20 during the year ended December 31, 2021.

ISSUANCE OF COMMON STOCK

June 23, 2020, the Company completed a public offering of 1,769,230 shares of its common stock, offered to the public at $6.50

Net proceeds to the Company from this offering were approximately $10,710,000 after deducting underwriting discounts

and commissions paid by the Company.

Direct offering costs totaling approximately $141,000 were recorded as a reduction to the

net proceeds and included in additional paid-in-capital on the statement of stockholders’

June 23, 2020, the Company completed a public offering of 1,769,230 shares of its common stock, offered to the public at $ 6.50 per share.

Net proceeds to the Company from this offering were approximately $ 10,710 after deducting underwriting discounts and commissions paid

by the Company.

Direct offering costs totaling approximately $ 141 were recorded as a reduction to the net proceeds and included in additional

paid-in-capital on the statement of stockholders’ equity.

COMMITMENTS AND CONTINGENCIES

Company leases offices in Melville, New York which require monthly payments of $10,334 and expires March 31, 2021 under an operating

The Company determines if an arrangement is a lease at inception.

The arrangement is a lease if it conveys the right to

the Company to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

This operating lease is included in Operating Lease Right-of-Use (ROU) Asset, Operating Lease Liability, current portion and Operating

Lease Liability, long-term portion on the Balance Sheets.

The Company recognizes rent and utilities expense for this lease on

a straight-line basis over the lease term.

ROU assets represent the right to use an underlying asset for the lease term and operating

lease liabilities represent the obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities

are recognized at the commencement date based on the present value of lease payments over the lease term.

As the Company’s

lease does not provide an implicit rate, it uses its incremental borrowing rate of 5% based on the commencement date in determining

the present value of these lease payments.

The Company considers instruments with similar characteristics when calculating this

incremental borrowing rate.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that

the Company will exercise that option.

Rent expense which includes utilities was $125,616 for the years ended December 31, 2020

and 2019, and cash payments for rent and utilities was $130,611and $126,496 for the years ended December 31, 2020 and 2019, respectively.

Company leases an office in Melville, New York.

Rent expense, which includes utilities, was $ 79 and $ 126 for the years ended December

31, 2021 and 2020 and is included in Selling, general and administrative expenses on the Statement of Operations.

INTELLICHECK,

TO FINANCIAL STATEMENTS

dollar amounts are rounded to thousands, except share data )

Company determines if an arrangement is a lease at lease inception.

The arrangement is a lease if it conveys the right to the Company

to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

This operating lease

is included in Operating Lease Right-of-Use (ROU) Asset and Operating Lease Liability, current portion on the Balance Sheets.

As of December

31, 2020, the Company’s Operating Lease ROU was $ 31 and its Operating Lease liability was $ 33 .

The Company did not have an Operating

Lease ROU or Operating Lease Liability as of December 31, 2021, as its office lease is on a month-to-month term.

Company recognizes rent and utilities expense for this lease on a straight-line basis over the lease term.

ROU assets represent the right

to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments arising

from the lease.

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease

payments over the lease term.

As the Company’s lease does not provide an implicit rate, it uses its incremental borrowing rate

of 5 % based on the commencement date in determining the present value of these lease payments.

The Company considers instruments with

similar characteristics when calculating this incremental borrowing rate.

Lease terms may include options to extend or terminate the

lease when it is reasonably certain that the Company will exercise that option.

License Agreement

February 26, 2020, the Company entered into a license agreement with a third party (the “Licensor”) to purchase certain

intellectual property rights and licensed software subject to certain restrictions.

February 26, 2020, the Company entered into a license agreement with a third party (the “Licensor”) to purchase certain intellectual

property rights and licensed software subject to certain restrictions.

The purchase price of this license totaled $ 400 .

The Company has an option to pay the Licensor an annual fee of $35,000 for maintenance and updates to be distributed

from the Licensor.

The Company has

an option to pay the Licensor an annual fee of $ 35 for maintenance and updates to be distributed from the Licensor.

Company is not aware of any infringement by our products or technology on the proprietary rights of others.

Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have

a material adverse effect on its business.

and Change-in-Control Agreements

November 25, 2020, Bill White, the Chief Financial Officer Chief Operating Officer entered into a severance agreement with the

Company (the “Agreement”).

The Agreement provides that in consideration of his services and pursuant to the Agreement,

in the event that Mr.

White’s employment is terminated without “cause”

(as such term is defined in the Agreement),

White will receive a 24-month continuation of salary payments, continuation of certain eligible medical benefits under the

COBRA program, and a lump sum payment equal to any quarterly bonus target applicable during the quarter of termination plus any

prior completed quarterly bonus which has not yet been determined (if any).

In addition, the Agreement provides that upon such

termination without cause, the Company will accelerate the vesting of all of Mr.

White’s outstanding but unvested

stock options or other equity incentives.

This Agreement expires on November 29, 2023 and replaces an amended severance agreement

previously executed by Mr.

White and the Company on November 29, 2017.

The Company’s employment agreement

dated February 1, 2018 (the “Agreement”) with Bryan Lewis, the Chief Executive Officer provides for certain severance

payments in the event Mr.

Lewis is terminated without cause including pay for six (6) months if Mr.

Lewis is terminated without

cause less than 12 months after February 1, 2018, pay for twelve (12) months if Mr.

Lewis is terminated without cause between

one (1) and five (5) years after February 1, 2018, and pay for eighteen (18) months if Mr.

Lewis is terminated without cause after

the fifth anniversary of this Agreement, in addition to reimbursement for certain living expenses and relocation advances and

expenses in certain situations.

October 4, 2017, Dr.

William Roof, the Company’s President and Chief Executive Officer retired from the Company at the

request of the board of directors (the “Board”).

The parties have entered into a separation and consulting

agreement dated as of November 2, 2017 (the “Agreement”).

Pursuant to the Agreement, the Company would

Roof to provide consulting services and he would provide consulting services at the Company’s

request to ensure a smooth and effective transition of management and business affairs.

In consideration of these services

and to fulfill the Company’s obligations under Dr.

Roof’s employment agreement with the Company, Dr.

Roof received

aggregate cash payments of $500,000 over a 20-month period together with reimbursement of certain vision and dental benefit

At December 31, 2019, the total severance liability was fully paid.

of the agreements requires the executive to devote substantially all his time and efforts to our business and contains non-competition

and nondisclosure covenants of the officer for the term of his employment and for a one-year period thereafter.

Each agreement

provides that we may terminate the agreement for cause.

INTELLICHECK,

TO FINANCIAL STATEMENTS

May 2020, the Board entered into a 2020 separate executive incentive bonus plan (“the 2020 Bonus Plan”) with four

members of the Company’s executive management team.

Each agreement, under the 2020 Bonus Plan, is based on certain goals

achieved by the Company plus individual achievements by each executive.

The bonus is to be paid in the form of cash.

31, 2020, this bonus liability was approximately $655,560 which is included in Accrued Expenses on the Balance Sheets.

June 2020, the Company’s executive management team created a 2020 Employee Incentive Plan for all the Company’s non-executives

Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material

effect on its business.

Incentive Plans

May 2020, the Board entered into a 2020 separate executive incentive bonus plan (“the 2020 Bonus Plan”) with the Company’s

executive management team.

Each agreement, under the 2020 Bonus Plan, is based on certain goals achieved by the Company plus individual

achievements by each executive.

At December 31, 2021, this bonus liability was approximately $ 1,237 which is included in Accrued Expenses

on the Balance Sheets.

June 2020, the Company’s executive management team created a 2020 Employee Incentive Plan for all the Company’s non-executives

and non-sales personnel.

The incentive payment is based on the Company attaining certain revenue goals for the calendar year 2020

and is based as a percentage of the employee’s salary.

At December 31, 2020 this bonus liability was $179,350 and is included

in Accrued Expenses on the Balance Sheets.

The incentive payment is based on the Company attaining certain revenue goals for the calendar year 2021 and

is based as a percentage of the employee’s salary.

At December 31, 2021 this bonus liability was $ 328 and is included in Accrued

Expenses on the Balance Sheets.

RETIREMENT PLAN

Company has a retirement savings 401(k) plan.

The plan permits eligible employees to make voluntary contributions to a trust,

up to a maximum of 35% of compensation, subject to certain limitations.

The Company has elected to contribute a matching contribution

equal to 50% of the first 6% of an eligible employee’s deferral election.

The Company may also make discretionary contributions,

subject to certain conditions, as defined in the plan.

The Company’s matching contributions were $69,681 and $62,786 for

2020 and 2019, respectively.

The plan assets were approximately $3.0 million and $2.4 million at December 31, 2020 and 2019, respectively.

Subsequent Appointment of New President

The Board has appointed Garrett Gafke as

the Company’s President.

Gafke’s first day of employment as President was March 23, 2021.

With the appointment

Gafke as President, Bryan Lewis will continue as the Company’s Chief Executive Officer.

In connection with becoming

the Company’s President, Mr.

Gafke and the Company have entered into an employment agreement, dated March 23, 2021 (the

“Agreement”).

Gafke, on his first day of employment

as President, was granted a restricted stock unit award of 90,000 shares and an option to purchase 60,000 shares of the Company’s

common stock, both of which are subject to a three-year vesting schedule under the Company’s 2015 Omnibus Incentive Plan,

The Company’s agreement with Mr.

Gafke also provides for certain severance payments in the event Mr.

Gafke is terminated without cause including pay for six (6)

months if Mr.

Gafke is terminated without cause less than 12 months after March 23, 2021 and pay for twelve (12) months if Mr.

Gafke is terminated without cause after March 23, 2022.

The plan permits eligible employees to make voluntary contributions to a trust, up to a

maximum of 35 %

of compensation, subject to certain limitations.

The Company has elected to contribute a matching contribution equal to 50 %

of the first 6 %

of an eligible employee’s deferral election.

The Company may also make discretionary contributions, subject to certain conditions,

as defined in the plan.

The Company’s matching contributions were $ 98

for 2021 and 2020, respectively.

The plan assets

were approximately $ 3.7

million and $ 3.0

million at December 31, 2021 and 2020, respectively.

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-K

Item 9A. Controls and Procedures