What changed in this filing

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Item 1. Financial Statements

2022-08-15 compared with 2022-06-17 · 289 added, 267 removed, 296 unchanged (65% of the section changed)

1 unchanged sentence

INTELLICHECK,

(in thousands except share amounts)

thousands except share amounts)

Cash and cash equivalents

receivable, net of allowance of $ 13 and $ 3 at June 30, 2022 and December 31, 2021, respectively

current assets

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:

Accounts payable

Accrued expenses

Equity awards liability

current assets

AND EQUIPMENT, net

AND STOCKHOLDERS’ 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)

revenue, current portion

current liabilities

revenue, long-term portion

AND CONTINGENCIES (Note 9)

STOCKHOLDERS’

stock - $ .001 par value;

40,000,000 shares authorized;

and 18,660,369 shares issued and outstanding at June

30, 2022 and December 31, 2021, respectively

paid-in capital

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’

liabilities and stockholders’ equity

accompanying notes to financial statements.

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thousands except shares and per share amounts)

months ended March 31,

COST OF REVENUES

months ended June 30,

general and administrative

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on forgiveness of unsecured promissory note

and other income

PER SHARE INFORMATION

Loss per common share

Basic/Diluted

Weighted average

common shares used in computing per share amounts -

common shares used in computing per

share amounts -

Basic/Diluted

accompanying notes to financial statements.

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thousands except number of shares)

months ended March 31, 2022

Three months ended June 30, 2022

Stockholders’

March 31, 2022

$ ( 128,365 )

of shares for vested restricted stock grants

June 30, 2022

$ ( 129,463 )

Three months ended June 30, 2021

Stockholders’

March 31, 2021

$ ( 124,044 )

Exercise of stock

Exercise of warrants

of shares for vested restricted stock grants

June 30, 2021

$ ( 124,880 )

INTELLICHECK,

OF STOCKHOLDERS’ EQUITY

thousands except number of shares)

Six months ended June 30, 2022

Stockholders’

December 31, 2021

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of shares for vested restricted stock grants

BALANCE, March 31,

June 30, 2022

$ ( 129,463 )

months ended March 31, 2021

Six months ended June 30, 2021

Stockholders’

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Exercise of stock

options, net of cashless exercise of 58,122

shares and 92,634 shares withheld

options, net of cashless exercise of 58,122 shares and 92,634 shares withheld

Exercise of warrants

of shares for vested restricted stock grants

BALANCE, March 31,

June 30, 2021

$ ( 124,880 )

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OF CASH FLOWS

months ended March 31,

months ended June 30,

FLOWS FROM OPERATING ACTIVITIES:

to reconcile net loss to net cash used in operating activities

to reconcile net loss to net cash used

operating activities

and amortization

Bad debt expense

of unsecured promissory note

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in accounts receivable

in other current assets

in accounts payable and accrued expenses

increase in deferred revenue

(increase) in other current assets

increase in accounts payable and accrued expenses

in deferred revenue

cash used in operating activities

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of repayment on unsecured promissory note

proceeds from issuance of common stock from exercise of stock options

from issuance of common stock from exercise of warrants

cash provided by financing activities

decrease in cash

CASH, beginning of

CASH, end of period

beginning of period

end of period

disclosure of noncash investing and financing activities:

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patents pending.

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

the six months ended June 30, 2022, the Company incurred a net loss of $ 2,566

and used cash in operations of $ 1,538 .

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

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 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.

As of June 30, 2022, the Company had cash and cash equivalents of $ 11,957 ,

working capital of $ 9,121

and an accumulated deficit of $ 129,463 .

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

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

The Company’s total revenues

decreased for the six months ended June 30, 2022 compared to the same period of 2021, primarily due to lower equipment revenues in

the current period.

Though the Company has had an increase in SaaS revenues for the six months ended June 30, 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

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, especially given the emergence of more transmissible

variants such as Omicron BA.5.

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, but not limited to, the Delta, Omicron, BA.2 and BA.5 variants, and the widespread adoption of

vaccination measures including booster regimens and the effectiveness of preventing further spread or limiting acute sickness or

hospitalizations.

Part II, Item 1A for more information.

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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 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.

all adjustments necessary for a fair presentation of the Company’s financial position at June 30, 2022 and the results of operations,

stockholders’ equity and cash flows for the six months ended June 30, 2022 and 2021.

All such adjustments are of a normal and recurring

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.

of operations for the six-month period ended June 30, 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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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.

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 and subsequently, for each quarter thereafter

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 failed to sell the shares surrendered and did not remit the equivalent amount of funds to the tax authorities

for the 2021 exercise.

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

withheld during 2021.

The Company is currently in the process of arranging payment to individuals, which is expected to be completed during

Accounting Pronouncements

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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.

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.

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.

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 statements.

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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

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

Research and Development

The Company’s research and

development efforts are mainly concentrated in the identity sector.

We develop new software solutions

and make improvements to existing software platforms, which are funded internally.

for Doubtful Accounts

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that may affect customers’ ability to pay.

Cash and Cash Equivalents

We classify as cash equivalents

time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase.

and cash equivalents consist primarily of cash on deposits with banks and is maintained with major financial institutions in the United

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.

and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three to seven 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.

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

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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.

For the six months

ended June 30, 2022 and 2021, the Company determined no impairment charge was required.

assets include patents, copyrights, and developed technology.

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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.

during either of the six months ended June 30, 2022 and 2021.

costs, which are charged to expense as incurred, were $ 390 and $ 241 for the six months ended June 30, 2022 and 2021, respectively.

costs were $ 241 and $ 148 for the three months ended June 30, 2022 and 2021, respectively.

These costs are recorded as

a component of selling, general and administrative expenses on the Statements of Operations.

Company has a retirement savings 401(k) plan.

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The Company’s matching contributions were $ 60 and $ 44 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.

the six months ended June 30, 2022 and 2021, respectively.

The Company’s matching contributions were $ 31 and $ 24 for the three

months ended June 30, 2022 and 2021, respectively.

These costs were recorded as a component of selling, general and administrative expenses

on the Statements of Operations.

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

All other shipping

and handling costs are included as a component of selling, general and administrative expenses

on the Statements of Operations.

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 March 31, 2022

and December 31, 2021, due to the uncertainty of the realizability of those assets.

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

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 and cash equivalents, accounts

receivable, other current assets, accounts payable and accrued expenses.

At June 30, 2022 and December 31, 2021, the carrying value

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

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).

three 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

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such as exchange-traded instruments and listed equities.

With the exception of the Company’s liability classified stock options,

all of the Company’s financial instruments are categorized as Level 1 within the fair value hierarchy.

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

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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.

The Company had $ 67 and $ 378 of Level 2 liabilities as of June 30, 2022 and December 31, 2021 respectively, for the

liability classified stock options.

3—Unobservable inputs for the asset or liability.

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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.

The Company had no Level 3 assets or liabilities as of June 30, 2022 and 2021.

Recognition and Deferred Revenue

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

The Company estimates the amount of transactions

The Company estimates the number 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.

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

Actual results could differ from estimates and as such differences may be material to the financial statements.

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.

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.

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SCHEDULE OF DISAGGREGATION OF REVENUE

the Three Months Ended

Products and services

Software as a Service (SaaS)

Timing of revenue recognition

Products transferred at a point in time

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.

the Three Months Ended June 30,

as a Service (SaaS)

of revenue recognition

transferred at a point in time

transferred over time

the Six Months Ended June 30,

as a Service (SaaS)

of revenue recognition

transferred at a point in time

transferred over time

current portion of deferred revenue at June 30, 2022, December 31, 2021 and January 1, 2020 was $ 1,778 ,

$ 1,266 and $ 572 , respectively,

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

changes in these balances are related to purchases of a predetermined number of transactions, partially offset by the satisfaction

or partial satisfaction of these contracts.

Of the December 31, 2021 balance, $ 313 and

recognized as revenue in the three and six months ended June 30, 2022, respectively.

The noncurrent deferred revenue balances were

and $ 13 as of June 30, 2022, December 31,

2021 and January 1, 2020, respectively.

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

in previous periods.

Receivable, net of allowance for doubtful accounts, at June 30, 2022, December 31, 2021 and January 1, 2020 was $ 2,445 , $ 2,189 , and $ 1,633 ,

respectively.

The allowance for doubtful accounts at June 30, 2022, December 31, 2021 and January 1, 2020 was $ 13 , $ 3 and $ 42 , respectively.

price allocated to the remaining performance obligations

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SCHEDULE OF REVENUE PERFORMANCE OBLIGATION

Software as a Service (SaaS)

as a Service (SaaS)

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

Concentrations and Credit Risk

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.

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.

the three and six-month period ended June 30, 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.

These three customers, in addition to one other customer, represented 70 %

of total accounts receivable at June 30, 2022.

During the three and six-month periods ended June 31, 2021, the Company made sales to

two customers that accounted for approximately 62 % and 57 % of total revenues, respectively.

That revenue was associated with commercial

identity sales customers.

Loss Per Share

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SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED

average common shares – Basic and Diluted

Weighted average

common shares –

Basic/Diluted

Loss per share –

Basic/Diluted

following table summarizes the common stock equivalents excluded from 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 units

securities excluded from computation of earnings per share amount

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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.

equipment and software

– Accumulated depreciation

expense for the six months ended June 30, 2022 and 2021 amounted to $ 86 and $ 31 respectively.

INTANGIBLE ASSETS

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

changes in the carrying amount of intangible assets for the six months ended June 30, 2022 were as follows:

OF FINITE LIVED INTANGIBLE ASSETS

Net balance at December 31, 2021

at December 31, 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:

balance at June 30, 2022

following tables set forth the components of intangible assets as of June 30, 2022 and December 31, 2021:

SCHEDULE OF INTANGIBLE ASSETS AND GOODWILL

of March 31, 2022

Patents and copyrights

Developed technology

of June 30, 2022

and copyrights

of December 31, 2021

Patents and copyrights

Developed technology

and copyrights

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

OF FINITE LIVED INTANGIBLE ASSETS AMORTIZATION EXPENSE

Cost of sales

General and administrative

Amortization of intangible assets

and administrative

of intangible assets

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

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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 .

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.

The facility bears interest at a rate consistent of Citi Personal Wealth

Management’s Base Rate (6.25% and 4.75% at June 30, 2022 and December 31, 2021, respectively) minus 2%.

Interest is payable monthly

and as of June 30, 2022 and December 31, 2021, there were no amounts outstanding and unused availability under this facility was $ 2,000 .

ACCRUED EXPENSES

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SCHEDULE OF ACCRUED EXPENSES

Professional fees

Payroll and related

Incentive bonuses

Accrued expenses

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 .

available net operating loss (“NOL”) at December 31, 2021 was approximately $ 18.0 million.

The federal and state NOLs are

available to offset future taxable income and began to expire in 2021.

EQUITY COMPENSATION

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from all equity payment transactions be recognized in the financial statements.

This pronouncement establishes fair value as the

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:

This pronouncement establishes fair value as the 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 as follows:

SCHEDULE OF EQUITY COMPENSATION

Three Months Ended

Compensation cost recognized:

Selling, general & administrative

Research & development

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.

cost recognized:

general & administrative

& development

The Company uses the Black-Scholes

option pricing model to value the stock options on the grant date.

The table below presents the weighted average expected life of the

stock options in years.

The Company uses the simplified

method for all grants to estimate the expected life of the option and assumes that stock options will be exercised evenly over the

period from vesting until the awards expire.

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.

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.

Options, generally,

vest from one to four years.

The compensation expense is recognized over the service period on a straight-line basis and reduced by forfeitures

when they occur.

noted in Note 2, certain 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 recorded.

The Company reduced equity compensation expense by approximately $ 74 and $ 311

for the three and six months ended June 30, 2022 and increased equity compensation by approximately $99 and $ 3,663

the three and six months ended June 31, 2021 as a result of the change in fair value of these awards.

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

SCHEDULE OF STOCK OPTION ACTIVITY

Number of Shares

Subject to Issuance

average Remaining Contractual Term

Aggregate Intrinsic

Outstanding at December 31, 2021

Outstanding at March 31, 2022

Exercisable at March 31, 2022

at December 31, 2021

at June 30, 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 March 31, 2022.

would have been received by the option holders had they all exercised their options on June 30, 2022.

This amount changes based upon

2 unchanged sentences

stock of the Company.

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

During the six months ended June 30, 2022, the Company issued RSUs 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.

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.

increase to additional paid-in capital, reduced by forfeitures when they occur.

SCHEDULE OF RESTRICTED STOCK UNITS OUTSTANDING

Outstanding at December 31, 2021

Vested and settled in shares

Outstanding at March 31, 2022

at December 31, 2021

and settled in shares

at June 30, 2022

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

1 unchanged sentence

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.

November 4, 2021, the Company amended its PSU Plan so that 100 %

of the PSUs will be subject to vesting 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, reduced by forfeitures when they occur.

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

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.

at December 31, 2021

at June 30, 2022

of June 30, 2022, total unrecognized compensation cost was $ 3,419 , 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 1.81 years.

Company had 1,322,729 shares available for future grants under the Plan at June 30, 2022.

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

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