What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-14 · 135 added, 79 removed, 423 unchanged (34% of the section changed)

7 unchanged sentences

Short-term investments — 5,000

Accounts receivable, net of allowance of $ 85 and $ 69 at March 31, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance for credit losses of $ 87 and $ 69 at June 30, 2024 and December 31, 2023, respectively

Other current assets 645 692

18 unchanged sentences

30,000 shares authorized;

Series A convertible preferred stock, zero shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Series A convertible preferred stock, zero shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Common stock - $ 0.001 par value;

40,000,000 shares authorized;

19,404,561 and 19,354,335 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

19,492,702 and 19,354,335 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 151,422 150,822

6 unchanged sentences

(In thousands except shares and per share amounts)

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

REVENUES $ 4,672 $ 4,716 $ 9,352 $ 8,970

20 unchanged sentences

(In thousands except number of shares)

Three months ended March 31, 2024

Three months ended June 30, 2024

Common Stock Additional

3 unchanged sentences

Shares Amount

BALANCE, December 31, 2023 19,354,335 $ 19 $ 150,822 $ ( 133,565 ) $ 17,276

BALANCE, March 31, 2024 19,404,561 $ 19 $ 151,166 $ ( 134,007 ) $ 17,178

Stock-based compensation – – 256 – 256

Stock option exercises, net of cashless exercises

4,875 – – – —

Issuance of shares for vested restricted stock grants 83,266 – – – –

Net loss – – – ( 127 ) ( 127 )

BALANCE, March 31, 2024 19,404,561 $ 19 $ 151,166 $ ( 134,007 ) $ 17,178

Three months ended March 31, 2023

BALANCE, June 30, 2024 19,492,702 $ 19 $ 151,422 $ ( 134,134 ) $ 17,307

Three months ended June 30, 2023

Common Stock Additional

3 unchanged sentences

Shares Amount

BALANCE, December 31, 2022 18,957,366 $ 19 $ 149,233 $ ( 131,585 ) $ 17,667

BALANCE, March 31, 2023 19,215,863 $ 19 $ 149,875 $ ( 132,972 ) $ 16,922

Stock-based compensation – – 338 – 338

Issuance of shares for vested restricted stock grants 60,777 – – – –

Shares forfeited in exchange for withholding taxes ( 24,720 ) – ( 54 ) — ( 54 )

Net loss – – – ( 853 ) ( 853 )

BALANCE, March 31, 2023 19,215,863 $ 19 $ 149,875 $ ( 132,972 ) $ 16,922

BALANCE, June 30, 2023 19,251,920 $ 19 $ 150,159 $ ( 133,825 ) $ 16,353

See accompanying notes to unaudited condensed financial statements.

Six months ended June 30, 2024

Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Shares Amount

BALANCE, December 31, 2023 19,354,335 $ 19 $ 150,822 $ ( 133,565 ) $ 17,276

Stock-based compensation – – 600 – 600

Stock option exercises, net of cashless exercises 4,875 – – – —

Issuance of common stock for vested restricted stock units and earned performance stock units 133,492 – – – –

Net loss – – – ( 569 ) ( 569 )

BALANCE, June 30, 2024 19,492,702 $ 19 $ 151,422 $ ( 134,134 ) $ 17,307

Six months ended June 30, 2023

Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Shares Amount

BALANCE, December 31, 2022 18,957,366 $ 19 $ 149,233 $ ( 131,585 ) $ 17,667

Stock-based compensation – – 980 – 980

Issuance of common stock for vested restricted stock units and earned performance stock units 319,274 – – – –

Shares forfeited in exchange for withholding taxes ( 24,720 ) – ( 54 ) – ( 54 )

Net loss – – – ( 2,240 ) ( 2,240 )

BALANCE, June 30, 2023 19,251,920 $ 19 $ 150,159 $ ( 133,825 ) $ 16,353

INTELLICHECK, INC.

1 unchanged sentence

(In thousands)

Three months ended March 31,

Six months ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 569 ) $ ( 2,240 )

Adjustments to reconcile net loss to net cash provided by operating activities

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation and amortization 145 139

7 unchanged sentences

(Decrease) Increase in deferred revenue ( 411 ) 412

Net cash provided by operating activities 869 233

Net cash used in operating activities ( 312 ) ( 856 )

CASH FLOWS FROM INVESTING ACTIVITIES:

5 unchanged sentences

Proceeds of insurance financing arrangement — 49

Withholding taxes paid on RSU vesting — ( 54 )

Repayment of insurance financing arrangements — ( 119 )

Net cash provided by (used in) financing activities — ( 57 )

Net increase in cash 5,259 159

Net cash used in financing activities — ( 124 )

Net increase (decrease) in cash 3,280 ( 1,011 )

CASH, beginning of period 3,980 5,196

2 unchanged sentences

Cash paid for interest $ — $ 2

Cash paid for income taxes $ — $ 87

See accompanying notes to unaudited condensed financial statements.

8 unchanged sentences

and one Canadian patents.

For the three months ended March 31, 2024, the Company incurred a net loss of $( 442 ) and generated cash from operations of $ 869 .

As of March 31, 2024, the Company had cash and cash equivalents of $ 9,239 , working capital (defined as current assets minus current liabilities) of $ 7,200 and an accumulated deficit of $( 134,007 ).

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.

For the six months ended June 30, 2024, the Company incurred a net loss of $( 569 ) and used cash in operations of $( 312 ).

As of June 30, 2024, the Company had cash and cash equivalents of $ 7,260 , working capital (defined as current assets minus current liabilities) of $ 6,611 and an accumulated deficit of $( 134,134 ).

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

SIGNIFICANT ACCOUNTING POLICIES

2 unchanged sentences

Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.

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, 2024, the results of operations, and stockholders’ equity for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023.

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 June 30, 2024, the results of operations, and stockholders’ equity for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 2024 and 2023.

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, 2024, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2024.

Results of operations for the three and six-month periods ended June 30, 2024, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2024.

The balance sheet as of December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements.

18 unchanged sentences

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes.

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

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, capitalization of software development costs, revenue recognition (including breakage revenue), allowance for credit losses, and the fair value of stock options 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.

29 unchanged sentences

The Company performed its annual impairment test of goodwill in the fourth quarter for the year ended December 31, 2023.

For the three months ended March 31, 2024 and 2023, the Company determined no triggering events existed and as such no impairment charge was required.

For the six months ended June 30, 2024 and 2023, the Company determined no triggering events existed and as such no impairment charge was required.

Intangible Assets

1 unchanged sentence

The Company amortizes these assets on a straight-line basis over their estimated useful lives, as it represents the pattern of economic benefits consumed.

There were no impairment charges recognized during the three-months ended March 31, 2024 and 2023.

We capitalize internal-use software costs which includes costs incurred in connection with the development of new software solutions and enhancements to existing software solutions that are expected to result in increased functionality.

There were no impairment charges recognized during the three and six-months ended June 30, 2024 and 2023.

We capitalize internal-use software costs which includes costs incurred in connection with the development of new internal-use software solutions and enhancements to existing software solutions that are expected to result in increased functionality.

The costs incurred in the preliminary stages of development are expensed as incurred.

1 unchanged sentence

We evaluate the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

There were no impairments of capitalized software development costs for the three months ended March 31, 2024 and 2023.

There were no impairments of capitalized software development costs for the six months ended June 30, 2024 and 2023.

Advertising Costs

Advertising costs, which are expensed as incurred, were $ 78 and $ 199 for the three months ended March 31, 2024 and 2023, respectively.

Advertising costs, which are expensed as incurred, were $ 183 and $ 371 for the six months ended June 30, 2024 and 2023, respectively.

Advertising costs were $ 105 and $ 172 for the three months ended June 30, 2024 and 2023, respectively.

These costs are recorded as a component of selling, general and administrative expenses within the Statements of Operations.

3 unchanged sentences

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 $ 0 and $ 27 for the three months ended March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024, funds from the plan's forfeiture account were used to fund the matching contributions in accordance with the terms of the plan and as such, the Company took no expense during the current period related to its retirement plans.

These costs were recorded as a component of selling, general and administrative expenses within the Statements of Operations.

The Company’s matching contributions were $ 0 and $ 54 for the six months ended June 30, 2024 and 2023, respectively.

The Company’s matching contributions were $ 0 and $ 27 for the three months ended June 30, 2024 and 2023, respectively.

During the three months ended June 30, 2024, funds from the plan's forfeiture account were used to fund the matching contributions in accordance with the terms of the plan and as such, the Company recorded no expense during the current period related to its retirement plans.

These costs are recorded as a component of selling, general and administrative expenses within the Statements of Operations.

Shipping Costs

10 unchanged sentences

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

The Company has recorded a full valuation allowance for its net deferred tax assets as of March 31, 2024 and December 31, 2023, as it is more likely than not these assets may not be fully realized due to the uncertainty of the realizability of those assets.

The Company has recorded a full valuation allowance against its net deferred tax assets as of June 30, 2024 and December 31, 2023, as it is more likely than not these assets may not be fully realized due to the uncertainty of the realizability of those assets.

Fair Value of Financial Instruments

1 unchanged sentence

The Company’s financial instruments include cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable and accrued expenses.

At March 31, 2024 and December 31, 2023, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

At June 30, 2024 and December 31, 2023, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

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

4 unchanged sentences

Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

The Company's Level 1 assets consisted primarily of cash and cash equivalents as well as short-term investments totaling $ 9,239 and $ 8,980 as of March 31, 2024 and December 31, 2023, respectively.

The Company's Level 1 assets consisted primarily of cash and cash equivalents as well as short-term investments totaling $ 7,260 and $ 8,980 as of June 30, 2024 and December 31, 2023, respectively.

• Level 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 $ 0 and $ 4 of Level 2 liabilities as of March 31, 2024 and December 31, 2023, respectively, for the liability-classified stock options.

The Company had $ 0 and $ 4 of Level 2 liabilities as of June 30, 2024 and December 31, 2023, respectively, for the liability-classified stock options.

The fair value of these awards were determined by utilizing a Black-Scholes option pricing model.

1 unchanged sentence

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, 2024 and December 31, 2023.

The Company had no Level 3 assets or liabilities as of June 30, 2024 and December 31, 2023.

Revenue Recognition and Deferred Revenue

7 unchanged sentences

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

The Company's performance obligations are satisfied over time, and as a result, we may follow the right to invoice practical expedient meaning we may recognize revenue monthly as invoiced based on its contract terms.

The Company's performance obligations are satisfied over time, and as a result, we follow the right to invoice practical expedient meaning we may recognize revenue monthly as invoiced based on its contract terms.

The Company has an additional revenue model where customers purchase a predetermined number of transactions for the term of the contract.

35 unchanged sentences

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

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Products and services

6 unchanged sentences

$ 4,672 $ 4,716

For the Six Months Ended June 30,

Products and services

Software as a Service (SaaS) $ 9,236 $ 8,891

Equipment 95 46

$ 9,352 $ 8,970

Timing of revenue recognition

Products transferred at a point in time $ 116 $ 79

Services transferred over time 9,236 8,891

$ 9,352 $ 8,970

Contract balances

The current portion of deferred revenue at March 31, 2024, December 31, 2023 and December 31, 2022 was $ 1,469 , $ 2,209 and $ 906 , respectively, and primarily consists of revenue recognized over time for software license contracts and hosted subscription services.

The current portion of deferred revenue at June 30, 2024 and December 31, 2023 was $ 1,798 and $ 2,209 , respectively, and primarily consists of revenue recognized over time for software license contracts and hosted subscription services.

The 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, 2023 balance, $ 555 was recognized as revenue in the three months ended March 31, 2024.

The noncurrent deferred revenue balances were $ 0 and $ 0 as of March 31, 2024 and December 31, 2023, respectively.

Of the December 31, 2023 balance, $ 2,130 was recognized as revenue in the six months ended June 30, 2024.

Accounts Receivable

Accounts receivable, net of allowance for credit losses, at March 31, 2024, December 31, 2023 was $ 2,744 , and $ 4,703 , respectively.

The allowance for credit losses at March 31, 2024 and December 31, 2023 was $ 85 and $ 69 , respectively.

Accounts receivable, net of allowance for credit losses, at June 30, 2024 and December 31, 2023 was $ 3,315 and $ 4,703 , respectively.

The allowance for credit losses at June 30, 2024 and December 31, 2023 was $ 87 and $ 69 , respectively.

Transaction price allocated to the remaining performance obligations

12 unchanged sentences

The Company performs ongoing credit evaluations, generally does not require collateral, and establishes an allowance for credit losses based upon factors surrounding the credit risk of customers, historical trends, and other market and economic information.

During the three-month period ended March 31, 2024, the Company made sales to three customers that accounted for approximately 44 % of total revenues, 19 %, 13 % and 12 %, respectively for each customer.

During the six-month period ended June 30, 2024, the Company made sales to three customers that accounted for approximately 45 % of total revenues, 19 %, 14 % and 12 %, respectively for each customer.

The revenue was primarily associated with commercial identity sales customers.

These three customers, in addition with one other customer, represented 56 % of total accounts receivable at March 31, 2024, 36 %, 1 %, 7 %, and 12 % respectively for each customer.

During the three-month period ended March 31, 2023, the Company made sales to the same three customers that accounted for approximately 39 % of total revenues, 16 %, 13 % and 10 %, respectively.

These three customers represented 54 % of total accounts receivable at March 31, 2023, 28 %, 16 %, 10 %, respectively.

These three customers, in addition with one other customer, represented 61 % of total accounts receivable at June 30, 2024, 37 %, 1 %, 12 %, and 11 % respectively for each customer.

During the six-month period ended June 30, 2023, the Company made sales to the same three customers that accounted for approximately 48 % of total revenues, 22 %, 13 % and 13 %, respectively.

These three customers represented 46 % of total accounts receivable at June 30, 2023, 37 %, 8 %, 1 %, respectively.

Net Loss Per Share

1 unchanged sentence

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 dilutive effect of outstanding options 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.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net Loss $ ( 127 ) $ ( 853 ) $ ( 569 ) $ ( 2,240 )

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Stock options 1,483,007 1,202,044 1,483,007 1,202,044

Restricted stock 155,418 156,347

Restricted stock units 93,351 129,982 93,351 129,982

1,576,358 1,332,026 1,576,358 1,332,026

12 unchanged sentences

The Company has accounted for and disclosed the purchase of its short-term investments in accordance with ASC 320, Investments - Debt Securities .

The following table summarizes the fair value of cash and cash equivalents, and short-term investments as well as any gross unrealized holding gains and losses as of March 31, 2024 and December 31, 2023.

Due to the nature of these assets and the short-term nature of the U.S.

The following table summarizes the fair value of cash and cash equivalents, and short-term investments as well as any gross unrealized holding gains and losses as of June 30, 2024 and December 31, 2023.

Due to the nature of these assets and the

short-term nature of the U.S.

treasury notes being held to maturity, both these cash and cash equivalents and short-term investments fall under the Level 1 fair value hierarchy as referenced in Note 2.

As of March 31, 2024

As of June 30, 2024

Amortized cost Gross unrealized holding gains Gross unrealized holding losses Estimated fair value

10 unchanged sentences

treasury notes are classified as "held-to-maturity" as they were purchased in August 2023 and matured in January 2024.

The Company did no t hold any securities that were in an unrealized loss position for more than 12 months as of March 31, 2024.

There were no material realized gains or losses on these specific short-term investments during the three months ended March 31, 2024.

The Company did no t hold any securities that were in an unrealized loss position for more than 12 months as of June 30, 2024.

There were no material realized gains or losses on these specific short-term investments during the three months ended June 30, 2024.

PROPERTY AND EQUIPMENT

5 unchanged sentences

Less – Accumulated depreciation ( 2,069 ) ( 1,977 )

Depreciation expense for the three months ended March 31, 2024 and 2023 amounted to $ 45 and $ 43 , respectively.

Depreciation expense for the six months ended June, 2024 and 2023 amounted to $ 92 and $ 86 , respectively.

Depreciation expense for the three months ended June 30, 2024 and 2023 amounted to $ 46 and $ 43 , respectively.

INTANGIBLE ASSETS

The changes in the carrying amount of intangible assets, net for the three months ended March 31, 2024 were as follows:

The changes in the carrying amount of intangible assets, net for the six months ended June 30, 2024 were as follows:

Net balance at December 31, 2023 $ 575

1 unchanged sentence

Amortization expense ( 52 )

Net balance at March 31, 2024 $ 1,157

The following tables set forth the components of intangible assets as of March 31, 2024 and December 31, 2023:

As of March 31, 2024

Net balance at June 30, 2024 $ 1,912

The following tables set forth the components of intangible assets as of June 30, 2024 and December 31, 2023:

As of June 30, 2024

Life Adjusted

6 unchanged sentences

$ 2,572 $ ( 660 ) $ 1,912

The Company has capitalized $ 1,016 in software development costs as of March 31, 2024.

The projects are still in development and not yet ready for their intended use and therefore no estimated useful life has been determined and these costs are not being amortized as of March 31, 2024.

The Company has capitalized $ 1,797 in software development costs as of June 30, 2024.

The projects are still in development and not yet ready for their intended use, and therefore no estimated useful life has been determined and these costs are not being amortized as of June 30, 2024.

As of December 31, 2023

9 unchanged sentences

Three Months Ended

June 30, For the Six Months Ended June 30,

2024 2023 2024 2023

Cost of revenues $ 23 $ 23 $ 47 $ 47

General and administrative 2 3 5 6

$ 25 $ 26 $ 52 $ 53

Revolving Line of Credit

On 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.

The facility bears interest at a rate consistent with Citi Personal Wealth Management’s Base Rate ( 8.50 % and 8.50 % at March 31, 2024 and December 31, 2023, respectively) minus 2 %.

Interest is payable monthly and as of March 31, 2024 and December 31, 2023, there were no amounts outstanding and unused availability under this facility was $ 2,000 .

The facility bears interest at a rate consistent with Citi Personal Wealth Management’s Base Rate ( 8.00 % and 8.50 % at June 30, 2024 and December 31, 2023, respectively) minus 2 %.

Interest is payable monthly and as of June 30, 2024 and December 31, 2023, there were no amounts outstanding and unused availability under this facility was $ 2,000 .

The Company is not subject to any financial covenants related to this revolving line of credit.

12 unchanged sentences

In addition to the NOLs, the Company has approximately $ 708 of research and development credits.

ASC 740 requires evaluation of uncertain tax positions and as of March 31, 2024, the Company has no material uncertain tax positions.

ASC 740 requires evaluation of uncertain tax positions and as of June 30, 2024, the Company has no material uncertain tax positions.

STOCKHOLDERS' EQUITY

2 unchanged sentences

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

The Compensation Committee of the Board of Directors administers this Plan and

determines the terms and conditions of stock options granted, including the exercise price.

The Compensation Committee of the Board of Directors administers this Plan and determines the terms and conditions of stock options granted, including the exercise price.

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

2 unchanged sentences

The Company accounts for the issuance of stock-based awards to employees in accordance with ASC Topic 718, Compensation - Stock Compensation, which requires that the cost resulting from all stock-based compensation payment transactions be recognized in the financial statements.

This pronouncement establishes fair value as the measurement objective in accounting for stock-based compensation payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all stock-based compensation payment transactions with employees.

This pronouncement establishes fair value as the measurement objective in accounting for stock-based compensation payment arrangements and requires all companies to apply a fair

value based measurement method in accounting for all stock-based compensation payment transactions with employees.

All stock-based compensation is included in operating expenses as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Compensation cost recognized:

1 unchanged sentence

Research & development 14 94 23 181

$ 72 $ 323 $ 405 $ 1,005

Stock Options

9 unchanged sentences

The fair value of these awards are determined at each reporting period utilizing a Black-Scholes option pricing model, and the associated compensation expense (credit) for the reporting period is recorded.

The Company decreased stock-based compensation expense by approximately $( 4 ) for the three-months ended March 31, 2024, as a result of the change in fair value of these awards.

The Company increased stock-based compensation expense by approximately $ 40 for the three-months ended March 31, 2023, as a result of the change in fair value of these awards.

The Company decreased stock-based compensation expense by approximately $ 0 and $( 4 ) for the three and six-months ended June 30, 2024, respectively, as a result of the change in fair value of these awards.

The Company increased stock-based compensation expense by approximately $ 15 and decreased stock-based compensation expense by approximately $( 25 ) for the three and six-months ended June 30, 2023, respectively, as a result of the change in fair value of these awards.

Stock option activity under the 2015 Plan during the period indicated below is as follows:

6 unchanged sentences

Forfeited, cancelled, or expired ( 184,582 ) 2.68 – –

Outstanding at March 31, 2024 1,487,882 $ 2.05 2.28 years $ 883

Exercisable at March 31, 2024 484,004 $ 3.66 3.28 years $ 471

The 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, 2024.

Exercised ( 4,875 ) $ 2.02 — —

Outstanding at June 30, 2024 1,483,007 $ 2.05 2.10 years $ 852

Exercisable at June 30, 2024 479,129 $ 3.68 3.03 years $ 453

This amount changes based upon the fair market value of the Company’s stock.

5 unchanged sentences

Restricted stock unit activity during the period indicated below is as follows:

Shares Weighted

RSUs Weighted

Outstanding at December 31, 2023 60,500 $ 4.23

1 unchanged sentence

Vested and settled in shares ( 133,492 ) 3.31

Outstanding at March 31, 2024 155,418 $ 2.41

As of March 31, 2024, there was approximately $ 1,399 of total unrecognized compensation costs, related to all unvested stock options and RSUs.

Outstanding at June 30, 2024 93,351 $ 1.96

As of June 30, 2024, there was approximately $ 1,218 of total unrecognized compensation costs, related to all unvested stock options and RSUs.

These costs are expected to be recognized as compensation expense over a weighted-average period of approximately 2.22 years.

The Company had 658,613 shares available for future grants under the Company's equity compensation plans at March 31, 2024.

The Company had 637,414 shares available for future grants under the Company's equity compensation plans at June 30, 2024.

COMMITMENTS AND CONTINGENCIES

The Company leases an office in Melville, New York.

Rent expense, which includes utilities, was $ 4 and $ 21 for the three months ended March 31, 2024 and 2023, respectively and is included in Selling, general and administrative expenses on the Statements of Operations.

Rent expense, which includes utilities, was $ 11 and $ 14 for the three months ended June 30, 2024 and 2023, respectively, and $ 15 and $ 35 for the six months ended June 30, 2024 and 2023 and is included in Selling, general and administrative expenses on the condensed Statements of Operations.

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

The arrangement is a lease if it conveys the right to the Company to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

The Company did no t have an Operating Lease ROU or Operating Lease Liability as of March 31, 2024, as its office lease is on a month-to-month term and allows for either party to terminate the lease without a significant penalty.

The Company did no t have an Operating Lease ROU or Operating Lease Liability as of June 30, 2024, as its office lease is on a month-to-month term and allows for either party to terminate the lease without a significant penalty.

Legal Proceedings

4 unchanged sentences

Litigation is inherently unpredictable.

If any unfavorable ruling was to occur in any specific period or if a loss becomes probable and estimable, there exists the possibility of a material adverse impact on the Company’s results of operations, financial position or cash flows.

As of March 31, 2024, no material amounts are recorded related to legal proceedings on the balance sheets.

The Company recently received a class action complaint in March 2024, and while we are unable to fully assess the probability and outcome of the matter due to recency of the filing, the Company does not currently believe that a material loss is probable.

If any unfavorable ruling was to occur in any specific period or if a

loss becomes probable and estimable, there exists the possibility of a material adverse impact on the Company’s results of operations, financial position or cash flows.

As of June 30, 2024, no material amounts are recorded related to legal proceedings on the balance sheets.

The Company was served a class action complaint in March 2024 alleging violations of the Illinois Biometric Information Privacy Act.

The litigation is currently in its early stage and the Company does not currently believe that a material loss is probable.

As such, the Company has not recognized a liability and intends to fully defend the matter.

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