What changed in this filing

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Item 1. Financial Statements

2025-05-13 compared with 2024-11-14 · 134 added, 210 removed, 365 unchanged (49% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

2025 December 31,

1 unchanged sentence

Cash and cash equivalents $ 5,148 $ 4,666

Short-term investments — 5,000

Accounts receivable, net of allowance for credit losses of $ 100 and $ 69 at September 30, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance for credit losses of $ 100 at March 31, 2025 and December 31, 2024

Other current assets 873 571

9 unchanged sentences

Accrued expenses 1,825 1,742

Equity awards liability — 4

Liability for shares withheld — 190

Deferred revenue 4,518 1,001

5 unchanged sentences

30,000 shares authorized;

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

Series A convertible preferred stock, zero shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Common stock - $ 0.001 par value;

40,000,000 shares authorized;

19,550,965 and 19,354,335 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

19,816,043 and 19,782,311 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 152,390 152,211

6 unchanged sentences

(In thousands, except shares and per share amounts)

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

Three months ended March 31,

REVENUES $ 4,894 $ 4,680

6 unchanged sentences

Loss from operations ( 348 ) ( 523 )

Interest and other income 73 179 230 181

Total other income 73 179 230 181

OTHER INCOME AND EXPENSE

Other income and expense, net 30 83

Total other income and (expense), net 30 83

Net loss before provision for income taxes ( 318 ) ( 440 )

10 unchanged sentences

(In thousands, except number of shares)

Three months ended September 30, 2024

Three months ended March 31, 2025

Common Stock Additional

3 unchanged sentences

Shares Amount

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

BALANCE, December 31, 2024 19,782,311 $ 19 $ 152,211 $ ( 134,483 ) $ 17,747

Stock-based compensation – – 179 – 179

Stock option exercises, net of

cashless exercises

7,064 – – – —

Issuance of shares for vested

1 unchanged sentence

Net loss – – – ( 318 ) ( 318 )

BALANCE, September 30, 2024 19,550,965 $ 19 $ 151,687 $ ( 134,971 ) $ 16,735

Three months ended September 30, 2023

BALANCE, March 31, 2025 19,816,043 $ 19 $ 152,390 $ ( 134,801 ) $ 17,608

Three months ended March 31, 2024

Common Stock Additional

3 unchanged sentences

Shares Amount

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

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

Stock-based compensation – – 344 – 344

1 unchanged sentence

restricted stock grants 50,226 – – – –

Shares forfeited in exchange for

withholding taxes — – ( 3 ) — ( 3 )

Net loss – – – ( 442 ) ( 442 )

BALANCE, September 30, 2023 19,299,547 $ 19 $ 150,537 $ ( 134,549 ) $ 16,007

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

See accompanying notes to unaudited condensed financial statements.

Nine months ended September 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 – – 865 – 865

Stock option exercises, net of

cashless exercises 11,939 – – – —

Issuance of common stock for vested

restricted stock units and earned

performance stock units 184,691 – – – –

Net loss – – – ( 1,406 ) ( 1,406 )

BALANCE, September 30, 2024 19,550,965 $ 19 $ 151,687 $ ( 134,971 ) $ 16,735

Nine months ended September 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 – – 1,361 – 1,361

Issuance of common stock for vested

restricted stock units and earned

performance stock units 366,901 – – – –

Shares forfeited in exchange for

withholding taxes ( 24,720 ) – ( 57 ) – ( 57 )

Net loss – – – ( 2,964 ) ( 2,964 )

BALANCE, September 30, 2023 19,299,547 $ 19 $ 150,537 $ ( 134,549 ) $ 16,007

INTELLICHECK, INC.

1 unchanged sentence

(In thousands)

Nine months ended September 30,

Three months ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 318 ) $ ( 442 )

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

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

Depreciation and amortization 154 72

Stock-based compensation 177 334

Allowance for credit losses ( 31 ) 23

Change in accrued interest and accretion of discount on short-term investments — ( 154 )

Credit loss expense 14 16

Changes in assets and liabilities:

Decrease (Increase) in accounts receivable 1,360 ( 1,284 )

Decrease in other current assets and long-term assets 167 31

(Decrease) Increase in accounts payable and accrued expenses ( 1,493 ) 431

(Decrease) Increase in deferred revenue ( 897 ) 1,246

(Decrease) in liability for shares surrendered

Net cash used in operating activities ( 1,373 ) ( 1,114 )

(Increase) Decrease in accounts receivable ( 2,846 ) 1,944

(Increase) Decrease in other current assets and long-term assets ( 200 ) 38

Increase (Decrease) in accounts payable and accrued expenses 251 ( 353 )

Increase (Decrease) in deferred revenue 3,518 ( 740 )

Net cash provided by operating activities 750 869

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Proceeds from maturity of short-term investments — 5,000

Purchases of short-term investments

Software development costs ( 164 ) ( 601 )

Net cash provided by investing activities 3,120 18

Net cash (used in) provided by investing activities ( 173 ) 4,390

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercises of stock options

Proceeds of insurance financing arrangement — 49

Withholding taxes paid on RSU vesting — ( 54 )

Repayment of insurance financing arrangements ( 95 ) —

Net cash provided by (used in) financing activities 20 ( 138 )

Net increase (decrease) in cash 1,767 ( 1,234 )

Net cash (used in) financing activities ( 95 ) —

Net increase in cash 482 5,259

CASH, beginning of period 4,666 3,980

11 unchanged sentences

Intellicheck’s products include solutions for preventing identity fraud across any industry delivered via smartphone, tablet, POS integration or other electronic devices.

Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of eleven ( 11) U.S.

Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of ten ( 10) U.S.

and one Canadian patents.

For the nine months ended September 30, 2024, the Company incurred a net loss of $( 1,406 ) and used cash in operations of $( 1,373 ).

As of September 30, 2024, the Company had cash and cash equivalents of $ 5,747 , working capital (defined as current assets minus current liabilities) of $ 5,699 and an accumulated deficit of $( 134,971 ).

For the three months ended March 31, 2025, the Company incurred a net loss of $( 318 ) and generated cash from operations of $ 750 .

As of March 31, 2025, the Company had cash and cash equivalents of $ 5,148 , working capital (defined as current assets minus current liabilities) of $ 6,574 and an accumulated deficit of $( 134,801 ).

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.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current quarter presentation.

There was no impact to the statement of operations as result of the change in presentation.

SIGNIFICANT ACCOUNTING POLICIES

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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 September 30, 2024, the results of operations, and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023 and cash flows for the nine months ended September 30, 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 March 31, 2025, the results of operations, and stockholders’ equity for the three months ended March 31, 2025 and 2024 and cash flows for the three months ended March 31, 2025 and 2024.

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 and nine-month periods ended September 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.

Results of operations for the three-month period ended March 31, 2025, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2025.

The condensed balance sheet as of December 31, 2024 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.

References in this Quarterly Report on Form 10-Q to “authoritative guidance” is to the Accounting Standards Codification ("ASC") issued by the Financial Accounting Standards Board (“FASB”).

For 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, 2024.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280.

The enhanced disclosure requirements include:

title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances.

This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning

after December 15, 2024.

This change will apply retrospectively to all periods presented.

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

Recently Issued Accounting Pronouncements

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

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

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

Disaggregation of Income Statement Expenses.

The amendment requires new financial statement disclosures to provide disaggregated information for certain types of expenses, including employee compensation, depreciation, and amortization in commonly presented expense captions such as cost of revenue, sales and marketing, and general and administrative expenses.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

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

Use of Estimates

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, 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.

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

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

1 unchanged sentence

Research and development expenses are expensed as incurred and consist primarily of employee-related expenses (such as salaries, taxes, benefits and stock-based compensation), allocated overhead costs and outside services costs related to the development and improvement of the Company's SaaS applications.

Allowance for Credit Losses

Effective January 1, 2023, Intellicheck applied the new standard ASU 2016-13, codified as ASC 326.

This impacts how the allowance for credit losses is calculated.

Prior to ASC-326, Intellicheck would not recognize bad debt expense until the loss from customer non-payment was probable of occurring.

Under the new model, Intellicheck’s allowance for credit losses reflects the Company’s estimate of all expected future credit losses from its current customer balances.

Under the new guidance, the Company has applied a loss rate method which takes historical data as the basis for calculating the allowance amount, along with accounting for other factors like current and forecasted market conditions, and potential future impacts to the industry.

In estimating whether accounts receivable will be collected, the Company performs evaluations of customers and continuously monitors collections and payments and estimates an allowance for credit losses based on collections experience to date and any specific collection issues that have been identified.

The allowance for credit losses is recorded in the period in which revenue is recorded or when collection risk is identified.

Cash and Cash Equivalents

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

The Company classifies time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents.

Our cash and cash equivalents consist primarily of both cash on deposits with banks, which are maintained with major financial institutions in the United States, and money market funds.

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, however amounts may exceed FDIC insured limits.

The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash bank accounts.

Short-term investments

Short-term investments include investments in U.S.

treasury notes.

Debt investments with original maturities at the date of purchase greater than approximately three months but less than a year are classified as short-term investments, as they represent the investment of cash available for current operations.

All short-term investments that the Company

holds are classified as "held-to-maturity" as the Company has the intent and ability to hold these investments until maturity.

See Note 3 for more detail and a breakdown of the Company's short-term investments.

Property and Equipment

The Company has not experienced any losses with regard to its bank accounts and other investments and believes it is not exposed to any risk of loss on its cash bank accounts or other investments.

Accounts Receivable

Accounts receivable are reported on the balance sheets at the outstanding principal amount adjusted for an allowance for credit losses and any charge offs.

Effective January 1, 2023, Intellicheck adopted ASU 2016-13, codified as Accounting Standards Codification ("ASC 326").

This impacts how the allowance for credit losses is calculated.

The Company has applied a loss rate method which takes historical data as the basis for calculating the allowance amount, along with the aging out outstanding receivables and other factors like current and forecasted market conditions, and potential future impacts to the industry.

The allowance for credit losses is recorded in the period in which revenue is recorded or when collection risk is identified.

Property and Equipment, Net

Property 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.

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The Company performed its annual impairment test of goodwill in the fourth quarter for the year ended December 31, 2024.

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

Intangible Assets

For the three months ended March 31, 2025 and 2024, the Company determined no triggering events existed and as such no impairment charge was required.

Intangible Assets, net

Intangible assets include patents, copyrights, developed technology and capitalized software development costs.

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 and nine-months ended September 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.

There were no impairment charges recognized during the three months ended March 31, 2025 and 2024.

The Company capitalizes 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.

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

Once the software has reached the application development stage, internal and external costs, if direct and incremental, are capitalized until the software is complete and available for its intended use.

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 and nine months ended September 30, 2024 and 2023.

The Company evaluates the useful lives of these assets and tests 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, 2025 and 2024.

Long-Lived Assets and Impairment of Long-Lived Assets

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

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 350, Intangibles – Goodwill and Other , and ASC 360, Property, Plant and Equipment.

To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets.

Impairment is measured at fair value.

There were no impairments of long-lived assets for the periods presented.

Advertising Costs

Advertising costs, which are expensed as incurred, were $ 327 and $ 470 for the nine months ended September 30, 2024 and 2023, respectively.

Advertising costs were $ 144 and $ 99 for the three months ended September 30, 2024 and 2023, respectively.

Advertising costs, which are expensed as incurred, were $ 25 and $ 78 for the three months ended March 31, 2025 and 2024, respectively.

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

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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 $ 85 for the nine months ended September 30, 2024 and 2023, respectively.

The Company’s matching contributions were $ 0 and $ 31 for the three months ended September 30, 2024 and 2023, respectively.

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

The Company’s matching contributions were $ 0 for the three months ended March 31, 2025 and 2024.

During the three months ended March 30, 2025 and 2024, funds from the Retirement Plan's forfeiture account were used to fund the matching contributions in accordance with the terms of the Retirement 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 condensed Statements of Operations..

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All other shipping and handling costs are included as a component of selling, general and administrative expenses within the condensed Statements of Operations.

Loss Contingencies and Legal Costs

The Company accrues loss contingencies that are believed to be probable and can be reasonably estimated.

As events evolve during the administration and litigation process and additional information becomes known, the Company reassesses its estimates related to loss contingencies.

Legal costs are expensed in the period in which the costs are incurred.

Sales and other taxes collected from customers and remitted to governmental authorities are presented on a net basis and thus excluded from revenues.

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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 against its net deferred tax assets as of September 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.

The Company has recorded a full valuation allowance against its net deferred tax assets as of March 31, 2025 and December 31, 2024, 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

The 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, short-term investments, accounts receivable, other current assets, accounts payable and accrued expenses.

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

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

At March 31, 2025 and December 31, 2024, 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.

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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 $ 5,747 and $ 8,980 as of September 30, 2024 and December 31, 2023, respectively.

The Company's Level 1 assets consisted primarily of cash and cash equivalents totaling $ 5,148 and $ 4,666 as of March 31, 2025 and December 31, 2024, 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 September 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.

The Company had no Level 2 assets or liabilities as of March 31, 2025 and December 31, 2024.

• Level 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 September 30, 2024 and December 31, 2023.

The Company had no Level 3 assets or liabilities as of March 31, 2025 and December 31, 2024.

Revenue Recognition and Deferred Revenue

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Software-as-a-Service (SaaS)

Software as a service (SaaS) for hosted subscription services requires the Company to provide a stand-ready obligation and allows customers to access a set of data for a predetermined period of time.

SaaS for hosted subscription services requires the Company to provide a stand-ready obligation and allows customers to access a set of data for a predetermined period of time.

As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs.

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Other Revenues, which historically have not been material, consist primarily of revenues from other subscription and support 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.

The Company’s revenues from other subscription and support services includes jurisdictional updates to certain commercial customers and support services.

These subscriptions require continuing service or post contractual customer support and performance.

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

For the Three Months Ended September 30,

Products and services

SaaS $ 4,661 $ 4,635

Equipment 13 106

$ 4,709 $ 4,760

Timing of revenue recognition

Products transferred at a point in time $ 48 $ 125

Services transferred over time 4,661 4,635

$ 4,709 $ 4,760

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Products and services

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Contract balances

The current portion of deferred revenue at September 30, 2024 and December 31, 2023 was $ 1,312 and $ 2,209 , respectively, and primarily consists of revenue recognized over time for software license contracts and hosted subscription services.

The current portion of deferred revenue at March 31, 2025 and December 31, 2024 was $ 4,518 and $ 1,001 , respectively, and primarily consists of revenue recognized over time for software license contracts and hosted subscription

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, $ 2,106 was recognized as revenue in the nine months ended September 30, 2024.

Accounts receivable

Accounts receivable, net of allowance for credit losses, at September 30, 2024 and December 31, 2023 was $ 3,374 and $ 4,703 , respectively.

The allowance for credit losses at September 30, 2024 and December 31, 2023 was $ 100 and $ 69 , respectively.

Of the December 31, 2024 balance, $ 780 was recognized as revenue in the three months ended March 31, 2025.

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

Accounts receivable, net of allowance for credit losses, at March 31, 2025 and December 31, 2024 was $ 7,506 and $ 4,675 , respectively.

The allowance for credit losses at March 31, 2025 and December 31, 2024 was $ 100 and $ 100 , respectively.

Transaction price allocated to the remaining performance obligations

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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 nine-month period ended September 30, 2024, the Company made sales to three customers that accounted for approximately 46 % of total revenues, 19 %, 15 % and 12 %, respectively, for each customer.

During the three-month period ended March 31, 2025, the Company made sales to three customers that accounted for approximately 56 % of total revenues, 28 %, 19 % and 9 %, respectively, for each customer.

The revenue was primarily associated with commercial identity sales customers.

These three customers, in addition with one other customer, represented 47 % of total accounts receivable at September 30, 2024, 30 %, 1 %, 6 %, and 10 %, respectively, for each customer.

During the nine-month period ended September 30, 2023, the Company made sales to the same three customers that accounted for approximately 49 % of total revenues, 21 %, 14 % and 14 %, respectively.

These three customers represented 46 % of total accounts receivable at September 30, 2023, 38 %, 3 %, 5 %, respectively.

These three customers represented 81 % of total accounts receivable at March 31, 2025, 64 %, 13 %, and 4 %, respectively, for each customer.

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

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.

Net Loss Per Share

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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 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.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net loss $ ( 318 ) $ ( 442 )

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Stock options 1,136,854 1,487,882

2 unchanged sentences

Segment Information

The Company adheres to the provisions of ASC 280, Segment Reporting, which establishes standards for the way public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in financial statements issued to shareholders.

The Company’s Chief Operating Decision Maker, its Chief Executive Officer (CEO), reviews the financial information presented for purposes of allocating resources and evaluating its financial performance.

The Company adheres to the provisions of ASC 280, “Segment Reporting”.

The Chief Executive Officer, as the chief operating decision maker (CODM), reviews the financial information presented for purposes of allocating resources and evaluating its financial performance.

The key measure that the CODM uses to allocate resources and in assessing performance is the Company's net loss.

Accordingly, the Company has determined that it operates in a single reportable segment.

All of the Company’s long-lived assets are located in the United States.

Since the Company operates in one operating segment, all required financial segment information can be found in the condensed financial statements.

CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

All of the Company’s assets are located in the United States.

Since the Company operates in one operating segment, all required financial segment information can be found in the financial statements.

CASH EQUIVALENTS

Short-term investments include investments in U.S.

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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 September 30, 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 March 31, 2025 and December 31, 2024.

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 September 30, 2024

As of March 31, 2025

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

Cash and cash equivalents $ 5,148 $ — $ — $ 5,148

treasury notes — — — —

Total cash, cash equivalents and short-term investments $ 5,747 $ — $ — $ 5,747

Total cash and cash equivalents

$ 5,148 $ — $ — $ 5,148

As of December 31, 2024

1 unchanged sentence

Cash and cash equivalents $ 4,666 $ — $ — $ 4,666

treasury notes (1)

Total cash and cash equivalents

$ 4,666 $ — $ — $ 4,666

Total cash, cash equivalents and short-term investments $ 8,980 $ — $ — $ 8,980

(1) These U.S.

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 September 30, 2024.

There were no material realized gains or losses on these specific short-term investments during the three months ended September 30, 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, 2025.

There were no material realized gains or losses on these specific short-term investments during the three months ended March 31, 2025.

PROPERTY AND EQUIPMENT

Property and equipment, net is summarized as follows:

September 30,

2025 December 31,

3 unchanged sentences

Less – Accumulated depreciation ( 2,211 ) ( 2,164 )

Depreciation expense for the nine months ended September 30, 2024 and 2023 amounted to $ 139 and $ 131 , respectively.

Depreciation expense for the three months ended September 30, 2024 and 2023 amounted to $ 47 and $ 45 , respectively.

Depreciation expense for the three months ended March 31, 2025 and 2024 amounted to $ 47 and $ 45 , respectively.

INTANGIBLE ASSETS

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

The changes in the carrying amount of intangible assets, net for the three months ended March 31, 2025 were as follows:

Net balance at December 31, 2024 $ 2,374

1 unchanged sentence

Amortization expense ( 106 )

Net balance at September 30, 2024 $ 2,271

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

As of September 30, 2024

Net balance at March 31, 2025 $ 2,434

The following tables set forth the components of intangible assets as of March 31, 2025 and December 31, 2024:

As of March 31, 2025

Life Adjusted

6 unchanged sentences

$ 3,395 $ ( 961 ) $ 2,434

The Company has capitalized $ 1,833 in software development costs as of September 30, 2024.

The Company has capitalized $ 2,620 in software development costs as of March 31, 2025.

As of December 31, 2024

9 unchanged sentences

Three Months Ended

September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

Cost of revenues $ 103 $ 24

Selling, general and administrative $ 3 $ 3

Research and development $ 57 $ — $ 57 $ —

$ 84 $ 27 $ 136 $ 79

The Company's estimated future amortization expense for intangible assets as of March 31, 2025 was as follows:

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 ( 7.50 % and 8.50 % at September 30, 2024 and December 31, 2023, respectively) minus 2 %.

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

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 ( 9.00 % at March 31, 2025 and December 31, 2024) minus 2 %.

Interest is payable monthly and as of March 31, 2025 and December 31, 2024, 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.

2 unchanged sentences

Accrued expenses are comprised of the following:

September 30,

2025 December 31,

3 unchanged sentences

Sales tax accrual 113 251

Insurance financing 90 178

$ 1,825 $ 1,742

3 unchanged sentences

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

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

ASC 740 requires evaluation of uncertain tax positions and as of March 31, 2025, the Company has no material uncertain tax positions.

STOCKHOLDERS' EQUITY

11 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Compensation cost recognized:

1 unchanged sentence

Research and development 10 10

$ 237 $ 342 $ 642 $ 1,347

Stock Options

7 unchanged sentences

The compensation expense is recognized over the requisite service period on a straight-line basis, reduced by forfeitures as they occur.

Certain option awards 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 (credit) for the reporting period is recorded.

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

The Company decreased stock-based compensation expense by approximately $( 39 ) and decreased stock-based compensation expense by approximately $( 14 ) for the three and nine-months ended September 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:

7 unchanged sentences

Exercised — $ — — —

Outstanding at September 30, 2024 1,577,171 $ 2.04 1.98 years $ 181

Exercisable at September 30, 2024 478,337 $ 3.68 2.78 years $ 72

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 September 30, 2024.

Outstanding at March 31, 2025 1,136,854 $ 2.95 3.63 years $ 665

Exercisable at March 31, 2025 632,919 $ 3.50 3.09 years $ 297

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

3 unchanged sentences

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

The 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, reduced by forfeitures when they occur.

charged to operating expenses with a corresponding increase to additional paid-in capital, reduced by forfeitures when they occur.

RSU activity during the period indicated below is as follows:

3 unchanged sentences

Vested and settled in shares ( 33,989 ) 2.51

Outstanding at September 30, 2024 77,869 $ 1.75

As of September 30, 2024, there was approximately $ 871 of total unrecognized compensation costs, related to all unvested stock options and RSUs.

Outstanding at March 31, 2025 28,544 $ 2.89

As of March 31, 2025, there was approximately $ 605 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 2.00 years.

The Company had 506,097 shares available for future grants under the Company's equity compensation plans at September 30, 2024.

The Company had 829,077 shares available for future grants under the Company's equity compensation plans at March 31, 2025.

COMMITMENTS AND CONTINGENCIES

The Company leases an office in Melville, New York.

Rent expense, which includes utilities, was $ 8 and $ 19 for the three months ended September 30, 2024 and 2023, respectively, and $ 23 and $ 54 for the nine months ended September 30, 2024 and 2023, respectively, and is included in selling, general and administrative expenses on the condensed Statements of Operations.

The Company leases an office in Melville, New York on a month-to-month basis.

Rent expense, which includes utilities, was $ 7 and $ 4 for the three months ended March 31, 2025 and 2024, respectively, 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 September 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.

The Company did no t have an Operating Lease ROU or Operating Lease Liability as of March 31, 2025, as its office lease is on a month-to-month term and allows for either party to terminate the lease without a significant penalty.

Loss Contingencies and Legal Costs

The Company accrues loss contingencies that are believed to be probable and can be reasonably estimated.

As events evolve during the administration and litigation process and additional information becomes known, the Company reassesses its estimates related to loss contingencies.

Legal costs are expensed in the period in which the costs are incurred.

Legal Proceedings

2 unchanged sentences

In accordance with GAAP, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

These provisions are reviewed at least quarterly and adjusted to reflect the

impact of negotiations, settlements, ruling, advice of legal counsel and other information and events pertaining to a particular case.

These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, ruling, advice of legal counsel and other information and events pertaining to a particular case.

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

As of March 31, 2025, 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.

The litigation was dismissed in April 2025.

As such, the Company has not recognized a liability in regards to this matter.

Subsequent Events

The Company has evaluated subsequent events through the date these financial statements were issued and determined there are no subsequent events that require disclosure.

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