What changed in this filing

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Item 1. Financial Statements

2022-06-17 compared with 2021-11-12 · 384 added, 400 removed, 179 unchanged (81% of the section changed)

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INTELLICHECK,

receivable, net of allowance of $ 0 and $ 42,974 at September 30, 2021 and December 31, 2020, respectively

current assets

(in thousands except share amounts)

CURRENT ASSETS:

AND EQUIPMENT, net

LEASE RIGHT-OF-USE ASSET

AND STOCKHOLDERS’ EQUITY

lease liability, current portion

revenue, current portion

receivable, net of allowance of zero and $ 3 at March 31, 2022 and December 31, 2021, respectively

Other current assets

Total current assets

PROPERTY AND EQUIPMENT, net

INTANGIBLE ASSETS, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

revenue, long-term portion

AND CONTINGENCIES

STOCKHOLDERS’

001 par value;

40,000,000 shares authorized;

18,735,915 and 18,410,458 shares issued and outstanding at September 30, 2021

and December 31, 2020, respectively

paid-in capital

( 119,126,799 )

( 116,376,715 )

Accounts payable

Accrued expenses

Equity awards liability

for shares withheld

Deferred revenue, current

Total current liabilities

OTHER LIABILITIES:

Deferred revenue, long-term

Total liabilities

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS’ EQUITY:

liabilities and stockholders’ equity

stock - $ .001 par

40,000,000 shares

18,674,980 and

18,660,369 shares

issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

Accumulated deficit

Total stockholders’

Total liabilities and stockholders’

accompanying notes to financial statements.

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OF OPERATIONS

months ended September 30,

September 30,

thousands except shares and per share amounts)

months ended March 31,

COST OF REVENUES

( 1,510,590 )

( 3,199,834 )

( 1,196,528 )

OPERATING EXPENSES

Selling, general and administrative

Research and development

general and administrative

and development

operating expenses

Income from operations

( 2,765,424 )

OTHER INCOME (EXPENSE)

Gain on forgiveness of unsecured promissory

Interest and other income

(expense), net

Total other income (expense)

Net (loss) income

$ ( 952,233 )

$ ( 2,750,084 )

$ ( 701,259 )

from operations

on forgiveness of unsecured promissory note

PER SHARE INFORMATION

(Loss) Income per common share -

Weighted average common shares used in computing per share amounts

accompanying notes to financial statements.

INTELLICHECK,

OF STOCKHOLDERS’ EQUITY

months ended September 30, 2021

Stockholders’

BALANCE, June 30, 2021

$ 140,267,314

$ ( 118,174,566 )

Stock-based compensation expense

Issuance of common stock, net of costs

Issuance of common stock, net of costs, shares

Exercise of stock options, net of cashless exercise of 82,161 shares

Exercise of stock options, net of cashless exercise of 82,161

shares, shares

Exercise of stock options, net of cashless exercise of 58,122 shares

Exercise of stock options, net of cashless exercise of 58,122

shares, shares

Exercise of stock options, net of cashless exercise of 93,570 shares

Exercise of stock options, net of cashless exercise of 93,570 shares,shares

Exercise of warrants

Exercise of warrants, shares

Issuance of shares for restricted stock grants

Settlement of executive bonuses with issuance

of restricted stock units

Settlement of executive bonuses with issuance

of restricted stock units, shares

Shares forfeited in exchange for withholding

taxes, shares

BALANCE, September 30, 2021

$ 140,905,895

$ ( 119,126,799 )

months ended September 30, 2020

Stockholders’

BALANCE, June 30, 2020

$ 139,715,197

$ ( 117,668,783 )

Stock-based compensation expense

Exercise of stock options, net of cashless exercise of 82,161 shares

Exercise of warrants

Issuance of shares for restricted stock grants

Settlement of executive bonuses with issuance

of restricted stock units

Shares forfeited in exchange for withholding

( 1,462,415 )

( 1,462,594 )

BALANCE, September 30, 2020

$ 138,411,649

$ ( 117,636,371 )

Loss per common share

Weighted average

common shares used in computing per share amounts -

accompanying notes to financial statements.

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OF STOCKHOLDERS’ EQUITY

months ended September 30, 2021

thousands except number of shares)

months ended March 31, 2022

Stockholders’

BALANCE, January 1, 2021

$ 138,569,746

$ ( 116,376,715 )

Stock-based compensation expense

Exercise of stock options, net of cashless exercise of 58,122 shares

Exercise of warrants

Issuance of shares for restricted stock grants

( 2,750,084 )

BALANCE, September 30, 2021

December 31, 2021

$ ( 126,897 )

of shares for vested restricted stock grants

BALANCE, March 31,

$ ( 128,365 )

months ended September 30, 2020

months ended March 31, 2021

Stockholders’

BALANCE, January 1, 2020

$ 128,668,583

$ ( 116,935,112 )

Stock-based compensation expense

Issuance of common stock, net of costs

Exercise of stock options, net of cashless exercise of 93,570 shares

Exercise of stock options, net of cashless exercise of shares

Exercise of warrants

Issuance of shares for restricted stock grants

Settlement of executive bonuses with issuance

of restricted stock units

Shares forfeited in exchange for withholding

( 1,475,750 )

( 1,475,931 )

Net income (loss)

BALANCE, September 30, 2020

December 31, 2020

$ ( 119,419 )

Exercise of stock

options, net of cashless exercise of 58,122

shares and 92,634 shares withheld

of shares for vested restricted stock grants

BALANCE, March 31,

$ ( 124,043 )

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OF CASH FLOWS

months ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 2,750,084 )

$ ( 701,259 )

Adjustments to reconcile

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

Depreciation and amortization

Stock-based compensation

Forgiveness of unsecured

promissory note

Changes in assets and liabilities:

(Increase) in accounts

(Increase) in other current

(Increase) in other assets

Increase in accounts payable

and accrued expenses

(decrease) in deferred revenue

cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of software license

Capital expenditures

of note receivable

months ended March 31,

FLOWS FROM OPERATING ACTIVITIES:

to reconcile net loss to net cash used in operating activities

and amortization

of unsecured promissory note

in assets and liabilities:

in accounts receivable

in other current assets

in accounts payable and accrued expenses

increase in deferred revenue

cash used in operating activities

FLOWS FROM INVESTING ACTIVITIES:

of property and equipment

cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Return of repayment on

unsecured promissory note

Net proceeds from issuance

of common stock

Loan proceeds on unsecured

promissory note

Net proceeds from issuance of common stock

from exercise of stock options

Proceeds from issuance of common stock from

exercise of warrants

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

( 1,475,931 )

FLOWS FROM FINANCING ACTIVITIES:

of repayment on unsecured promissory note

cash provided by financing activities

Net increase in cash

CASH, beginning of period

decrease in cash

CASH, beginning of

CASH, end of period

Supplemental disclosure of noncash investing

and financing activities:

of executive bonuses with restricted stock units

disclosure of noncash investing and financing activities:

Reclassification

of stock option awards

accompanying notes to financial statements.

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TO FINANCIAL STATEMENTS

dollar amounts are rounded to thousands, except share data)

NATURE OF BUSINESS

Intellicheck,

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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 patents.

the nine months ended September 30, 2021, the Company incurred a net loss of $ 2,750,084 and had cash provided by operating activities

of $ 407,331 .

As of September 30, 2021, the Company had cash of $ 13,266,031 , working capital (defined as current assets minus current

liabilities) of $ 12,863,211 and an accumulated deficit of $ 119,126,799 .

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.

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 seventeen (18) U.S.

and one Canadian patents, as well as two U.S.

patents pending.

the three months ended March 31, 2022, the Company incurred a net loss of $ 1,468

and used cash in operations of $ 2,397 .

As of March 31, 2022, the Company had cash of $ 11,123 ,

working capital of $ 9,657 and

an accumulated deficit of $ 128,365 .

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-Q, the COVID-19 pandemic, which first began affecting the Company in the first quarter of 2020, has impacted

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Though the Company has had an increase in SaaS revenues

for the three and nine months ended September 30, 2021 over the respective periods in 2020, the COVID-19 pandemic may continue to impact

its 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 variant, and the widespread adoption of vaccination measures including recently approved

booster regimens.

for the three months ended March 31, 2022 compared to the same period of 2021, the COVID-19 pandemic may continue to impact our business

directly and/or indirectly for the foreseeable future.

Although many of the restrictions previously imposed by local and national governmental

authorities have been lifted or eased, should cases increase, these restrictions could be re-implemented.

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 further outbreaks together with any potential

statewide or local closures or restrictions if cases increase, the spread of COVID-19 variants, including the Delta,Omicron and BA.2

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

Part II, Item 1A for more information.

ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

of Presentation

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In the opinion of management, the unaudited interim financial statements furnished herein include

all adjustments necessary for a fair presentation of the Company’s financial position at September 30, 2021 and the results of

operations, stockholders’ equity and cash flows for the nine months ended September 30, 2021 and 2020.

All such adjustments are

of a normal and recurring nature.

Interim financial statements are prepared on a basis consistent with the Company’s annual financial

Results of operations for the nine-month period ended September 30, 2021, are not necessarily indicative of the operating

results that may be expected for the year ending December 31, 2021.

all adjustments necessary for a fair presentation of the Company’s financial position at March 31, 2022 and the results of operations,

stockholders’ equity and cash flows for the three months ended March 31, 2022 and 2021.

All such adjustments are of a normal and

recurring nature.

Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements.

Results of operations for the three-month period ended March 31, 2022, are not necessarily indicative of the operating results that may

be expected for the year ending December 31, 2022.

balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all of

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Financial Accounting Standards Board (“FASB”).

further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for

the year ended December 31, 2020.

further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K/A

for the year ended December 31, 2021.

Compensation Accounting

On May 16, 2022,

management in concurrence with the Company’s Audit Committee of our Board of Directors (the “Audit Committee”), concluded

that that the financial statements previously issued for the third quarter of 2020, for each quarter ended 2021 and for the years ended

December 31, 2021 and 2020 should no longer be relied upon due to errors in accounting for certain option awards.

Accordingly, we have

restated our Balance Sheets, Statements of Operations, Statements of Stockholders’ Equity, Statements of Cash Flows and the related

notes for the third quarter of 2020, for each quarter ended 2021, and as of and for the years ended December 31, 2021 and 2020.

Specifically,

the Company determined that a cashless withholding to satisfy personal income tax obligations from certain option awards exercised commencing

in the third quarter of 2020 and the first quarter of 2021, caused the underlying options to no longer qualify as equity awards and should

have instead been classified as liability awards commencing on the date of exercise.

The change in the classification of the awards to

liability classified awards requires the Company to remeasure the fair value of the awards at the end of each reporting period they remain

outstanding, with the increase or decrease in fair value correspondingly charged or credited to selling, general and administrative expenses

in arriving at net income.

Furthermore, the Company, due to an administrative error, failed to sell the shares surrendered in 2021 and

did not remit the equivalent amount of funds to the tax authorities.

To date, the Company has not returned the shares or otherwise reimbursed

the effected individuals for the shares withheld.

The Company is currently in the process of arranging payment to individuals, which

is expected to be completed during 2022.

Accounting Pronouncements

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 Company has adopted this standard and did

not have a material impact on its financial statements.

June 2016, the FASB issued ASU No.

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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, and the fair value of stock options

granted under the Company’s stock-based compensation plan.

Due to the inherent uncertainties involved in making estimates, actual

results reported in future periods may be different from those estimates.

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 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

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that may affect customers’ ability to pay.

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 (December 31, 2021), or between annual tests,

in certain circumstances.

Under authoritative 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.

There were no impairment charges recognized during either of the nine months ended September 30, 2021 and 2020.

assets include patents, copyrights, intellectual property rights and licensed software.

The Company uses the straight-line method to

amortize these assets over their estimated useful lives, as it represents the pattern of economic benefits consumed.

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 during either of the nine months ended September 30, 2021 and 2020.

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 year ended December 31, 2021.

For the three

months ended March 31, 2022 and 2021, 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

during either of the three months ended March 31, 2022 and 2021.

costs, which are charged to expense as incurred, were $ 149 and $ 93 for the three months ended March 31, 2022 and 2021, respectively.

These costs are recorded as a component of selling, general and administrative expenses on the

Statement of Operations.

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’s matching contributions were $ 29 and $ 20 for

the three months ended March 31, 2022 and 2021, respectively, which are recorded as a component of selling, general and administrative

expenses on the Statement of Operations.

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.” Deferred tax assets

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to be recovered or settled.

The Company has recorded a full valuation allowance for its net deferred tax assets as of September 30, 2021

The Company has recorded a full valuation allowance for its net deferred tax assets as of March 31, 2022

and December 31, 2021, 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, accounts payable and accrued expenses.

As of September 30, 2021 and December 31, 2020, the carrying

value of the Company’s financial instruments approximated fair value, due to their short-term nature.

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 March 31, 2022 and December 31, 2021, 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.

Financial Accounting Standards Board (“FASB”)

guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions.

The hierarchy

gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and

the lowest priority to unobservable inputs (Level 3 measurement).

levels of the fair value hierarchy are as follows:

1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability

to access at the measurement date.

Level 1 primarily consists of financial instruments whose value is based on quoted market prices

such as exchange-traded instruments and listed equities.

2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or

indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets

or liabilities in markets that are not active).

Level 2 includes financial instruments that are valued using models or other valuation

methodologies.

The Company had $ 141 and $ 378 of Level 2 liabilities as of March 31, 2022 and December 31, 2021 respectively, for

the liability classified stock options.

3—Unobservable inputs for the asset or liability.

Financial instruments are considered Level 3 when the fair values are determined

using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The Company had no Level 3 assets or liabilities as of March 31, 2022 and 2021.

Recognition and Deferred Revenue

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

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 is recognized on a per transaction basis.

The Company estimates the amount of transactions

that will be unused by 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.

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Product returns are recorded as a reduction to revenue.

is measured based on the 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 a customer.

of goods and services

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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.

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® 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.

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.

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

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

Revenues consist primarily of revenues from other subscription and support services, non-recurring services, and extended warranties.

The Company’s revenues from other subscription and support services 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.

Non-recurring

Services Revenue

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.

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

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the following tables, revenue is disaggregated by product and service and the timing of revenue recognition.

The table also includes

a reconciliation of the disaggregated revenue.

OF DISAGGREGATION OF REVENUE

SCHEDULE OF DISAGGREGATION OF REVENUE

the Three Months Ended

September 30,

Products and services

Software as a Service (SaaS)

Other subscription and support services

Non-recurring services

Extended warranties on equipment

Timing of revenue recognition

Products transferred at a point in time

Services transferred

the Nine Months Ended

September 30,

Products and services

Software as a Service (SaaS)

Other subscription and support services

Non-recurring services

Extended warranties on equipment

Timing of revenue recognition

Products transferred at a point in time

Services transferred

current portion of deferred revenue at September 30, 2021 and December 31, 2020 was $ 1,372,311 and $ 402,782 , 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.

Of this balance, at December 31, 2020, $ 48,378 and

$ 383,162 was recognized as revenue for the three and nine months ended September 30, 2021, respectively.

The long-term portion of deferred

revenue was $ 9,737 and $ 8,662 as of September 30, 2021 and December 31, 2020, respectively.

Services transferred over time

current portion of deferred revenue at March 31, 2022 and December 31, 2021 was $ 1,032 and $ 1,266 , 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.

Of the December 31, 2021 balance, $ 811 was recognized as

revenue in the three months ended March 31, 2022.

The noncurrent deferred revenue balances were $ 6 and $ 8 as of March 31, 2022 and December

31, 2021, respectively.

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

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

OF REVENUE PERFORMANCE OBLIGATION

SCHEDULE OF REVENUE PERFORMANCE OBLIGATION

Software as a Service (SaaS)

Other subscription and support services

Extended warranties

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

Concentrations and Credit Risk

the three and nine-month periods ended September 30, 2021, the Company made sales to two customers that accounted for approximately 60 %

and 58 % of total revenues, respectively.

The revenue was associated with commercial identity sales customers.

These customers represented

28 % of total accounts receivable at September 30, 2021.

During the three and nine month periods ended September 30, 2020, the Company

made sales to two customers that accounted for approximately 46 % and 37 % of total revenues, respectively.

The revenue was associated

the three-month period ended March 31, 2022, the Company made sales to three customers that accounted for approximately 53 %

of total revenues.

The revenue was primarily associated

with commercial identity sales customers.

(Loss) Income Per Share

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

outstanding during the period.

Diluted net (loss) income per share is computed by dividing the net (loss) income 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 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 (loss) income per share excludes all anti-dilutive shares.

In the periods of a

net loss, all common stock equivalents are considered anti-dilutive.

SCHEDULE OF EARNINGS PER

SHARE BASIC AND DILUTED

$ ( 952,233 )

$ ( 2,750,084 )

$ ( 701,259 )

Weighted average common shares – Basic

effect of equity incentive plans

Weighted average common

shares –Diluted

Net (Loss) Income per share –

These three customers, in addition to another customer, represented 63 %

of total accounts receivable at March 31, 2022.

During the three-month period ended March 31, 2021, the Company made sales to three customers

that accounted for approximately 59 %

of total revenues.

The revenue was associated with commercial identity sales customers.

Loss Per Share

net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during

Diluted net 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 period.

The dilutive effect 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 loss per share excludes all anti-dilutive shares.

In periods of a net loss, all common stock equivalents are considered

anti-dilutive.

SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED

average common shares – Basic and Diluted

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

to the net loss:

OF COMMON STOCK EQUIVALENTS EXCLUDED FROM LOSS PER DILUTED SHARE

SUMMARY OF COMMON STOCK EQUIVALENTS EXCLUDED FROM LOSS PER DILUTED SHARE

Stock options

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Performance stock units

Antidilutive securities

excluded from computation of earnings per share amount

securities excluded from computation of earnings per share amount

PROPERTY AND EQUIPMENT

and equipment is summarized as follows:

SCHEDULE OF PROPERTY AND EQUIPMENT

Computer equipment and software

Furniture and fixtures

Leasehold improvements

Office equipment

Less – Accumulated depreciation

expense for the three months ended March 31, 2022 and 2021 amounted to $ 42

respectively.

INTANGIBLE ASSETS

changes in the carrying amount of intangible assets for the nine months ended September 30, 2021 were as follows:

changes in the carrying amount of intangible assets for the three months ended March 31, 2022 were as follows:

OF FINITE LIVED INTANGIBLE ASSETS

Net balance at December 31, 2021

Net balance at September 30, 2021

Amortization expense

Net balance at March 31, 2022

following tables set forth the components of intangible assets as of March 31, 2022 and December 31, 2021:

SCHEDULE OF INTANGIBLE ASSETS AND GOODWILL

of March 31, 2022

Patents and copyrights

Developed technology

of December 31, 2021

Patents and copyrights

Developed technology

following summarizes amortization of intangible assets included in the accompanying statements of operations:

2 unchanged sentences

General and administrative

Amortization of intangible

April 15, 2020, the Company received an advance of $ 10,000

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

Amortization of intangible assets

April 15, 2020 the Company received an advance of $ 10 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 Economic Injury Disaster Loan

program (“EIDL”) advance on December 7, 2020.

The Company has 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,

The Company 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.

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 and included in Other Income on the Statements of Operations.

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 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 September 30, 2021) minus

Interest is payable monthly and as of September 30, 2021, there were no amounts outstanding and unused availability under this facility

was $ 2,000,000 .

February 6, 2019, the Company entered into a revolving credit facility with Citi Personal Wealth Management 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 Citi Personal Wealth Management subject to certain limitations.

facility bears interest at a rate consistent of Citi Personal Wealth Management’s Base Rate (5.00% and 4.75% at March 31,

2022 and December 31, 2021, respectively) minus 2%.

is payable monthly and as of March 31, 2022 and December 31, 2021, there were no amounts outstanding and unused availability under this

facility was $ 2,000 .

ACCRUED EXPENSES

expenses are comprised of the following:

OF ACCRUED EXPENSES

SCHEDULE OF ACCRUED EXPENSES

Professional fees

2 unchanged sentences

Accrued expenses

Company’s available net operating loss (“NOL”) at December 31, 2020 was approximately $ 17 million.

The federal and

state NOLs are available to offset future taxable income and begin to expire in 2021.

SHARE BASED COMPENSATION

available net operating loss (“NOL”) at March 31, 2022 was approximately $ 18.0

federal and state NOLs are available to offset future taxable income and begin to expire in 2021 .

EQUITY COMPENSATION

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

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

from all equity 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.

All stock-based compensation is included in operating expenses

measurement objective in accounting for equity payment arrangements and requires all companies to apply a fair value based measurement

method in accounting for all equity payment transactions with employees.

All equity compensation is included in operating expenses

for the periods as follows:

SCHEDULE OF STOCK BASED COMPENSATION

SCHEDULE OF EQUITY COMPENSATION

Three Months Ended

Compensation cost recognized:

1 unchanged sentence

Research & development

Share-based compensation

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

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 U.S.

Treasury yield curve

in effect at the time of grant.

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

The table below presents the

weighted average expected 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 U.S.

Treasury yield curve in effect on the grant date.

Options, generally, vest from one to four years.

As noted in Note 2, option awards no

longer qualify as equity awards and instead are classified as liability awards.

The fair value of these awards are determined at each

reporting period utilizing a Black-Scholes option pricing model, and the associated compensation expense for the reporting period is

The Company reduced equity compensation by approximately $ 237 in the three months ended March 31, 2022 and increased equity

compensation by approximately $ 3,564 for the three months ended March 31, 2021 as a result of this award reclassification.

option activity under the 2015 Stock Option Plan (the “Plan”) during the period indicated below were as follows:

OF STOCK OPTION ACTIVITY

of Shares Subject to Issuance

Weighted-average

Exercise Price

Weighted-average

Remaining Contractual Term

Intrinsic Value

SCHEDULE OF STOCK OPTION ACTIVITY

Number of Shares

Subject to Issuance

average Remaining Contractual Term

Aggregate Intrinsic

Outstanding at December 31, 2021

Outstanding at September 30, 2021

Exercisable at September 30, 2021

Outstanding at March 31, 2022

Exercisable at March 31, 2022

aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s

closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that

would have been received by the option holders had they all exercised their options on September 30, 2021.

This amount changes based

upon the fair market value of the Company’s stock.

would have been received by the option holders had they all exercised their options on March 31, 2022.

This amount changes based upon

the fair market value of the Company’s stock.

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

stock of the Company.

During the nine months ended September 30, 2021, the Company issued RSUs to its officers and certain employees

and to certain directors as compensation.

RSU agreements can vest immediately or with the passage of time.

The vesting of all RSUs is

contingent on continued board and employment services.

During the three months ended March 31, 2022, the Company issued RSUs to certain directors as compensation.

agreements can vest immediately or with the passage of time.

The vesting of all RSUs is contingent on continued board and employment

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.

OF RESTRICTED STOCK UNITS OUTSTANDING

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.

SCHEDULE OF RESTRICTED STOCK UNITS OUTSTANDING

Outstanding at December 31, 2021

Vested and settled in shares

Outstanding at September 30, 2021

Outstanding at March 31, 2022

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

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

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 period.

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

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.

For both conditions, compensation expense is charged to selling, general and administrative

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

OF PERFORMANCE STOCK UNITS

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.

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, 2021

Outstanding at September 30, 2021

of September 30, 2021, there was $ 4,436,416 of total unrecognized compensation cost, net of estimated forfeitures, related to all unvested

stock options, RSUs and PSUs, which is expected to be recognized over a weighted average period of approximately 2.25 years.

Company had 1,371,637 shares available for future grants under the Plan at September 30, 2021.

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 September 30, 2021, the Company had no

remaining warrants available to exercise.

the nine months ended September 30, 2021, there were 9,000 warrants exercised at an exercise price of $ 2.20 per share.

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 $ 10,710,000 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’ equity.

Granted and Vested

Outstanding at March 31, 2022

of March 31, 2022, total unrecognized compensation cost was $ 3,865 ,

net of estimated forfeitures, related to all unvested

stock options, RSUs and PSUs, which is expected to be recognized over a weighted average period of approximately 1.67

Company had 1,425,570

shares available for future grants under

the Plan at March 31, 2022.

COMMITMENTS AND CONTINGENCIES

Legal Proceedings

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

1 unchanged sentence

effect on its business.

SUBSEQUENT EVENTS

of Jeffrey Ishmael as Chief Financial Officer

May 9, 2022, the Board of Directors appointed Jeffrey Ishmael as Chief Financial Officer effective close of business May 13.

CFO Bill White is pursuing a role at another company outside the identity space.

Receives Notice from the Nasdaq Stock Market Relating to delinquent Filing of 10-Q for the Quarter Ended March 31, 2022

May 24, 2022, Intellicheck, Inc.

(the “Company”) received correspondence from The Nasdaq Stock Market LLC (“Nasdaq”)

notifying the Company that it is not currently in compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing of periodic

financial reports with the Securities and Exchange Commission, as a result of not filing the Company’s Form 10-Q for the period

ended March 31, 2022 on a timely basis.

May 31, 2022, the Company issued a press release as required by Nasdaq rules and filed an Item 3.01 Form 8-K.

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

What changed 10-Q

Item 1. Financial Statements