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Intellicheck, Inc.

Intellicheck, Inc.IDNEarnings & Financial Report

Nasdaq · Information Technology · Services-Prepackaged Software

Intellicheck, Inc. is a US-based technology company specializing in identity verification and fraud prevention solutions. It develops AI-powered tools to validate government-issued identification documents, streamline customer onboarding, and mitigate identity theft risks for clients across finance, retail, healthcare and public sector segments.

What changed in Intellicheck, Inc.'s 10-K — 2023 vs 2024

Top changes in Intellicheck, Inc.'s 2024 10-K

144 paragraphs added · 134 removed · 110 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

42 edited+3 added−5 removed57 unchanged
To date, our marketing efforts have been through direct sales by our sales and marketing personnel, through resellers through license agreements. W e are marketing our products through direct marketing approaches such as web marketing, a small number of select trade shows and well-known public interest and trade associations.
To date, our marketing efforts have been through direct sales by our sales and marketing personnel, through resellers and through license agreements. W e are marketing our products through direct marketing approaches such as web marketing, a small number of select trade shows and well-known public interest and trade associations.
We promote the advantages and ease of use of our products through: ■ Endorsements by nationally known public interest groups and trade associations; ■ Web seminars, as well as our own website; and ■ Trade publications; ■ Various conventions and industry specific seminars. ■ Trade shows; We intend to continue to develop and market other related software applications.
We promote the advantages and ease of use of our products through: ■ Endorsements by nationally known public interest groups and trade associations; ■ Web seminars, as well as our own website; ■ Trade publications; ■ Various conventions and industry specific seminars; and ■ Trade shows. We intend to continue to develop and market other related software applications.
Productivity Enhancement ■ Mass merchandisers and retailers ■ Auto dealerships and rental car agencies ■ Banks and other financial institutions ■ Casinos for enrollment of guests ■ Credit unions ■ Hospital patient admissions ■ Credit card issuers ■ Lodging Industry 8 Table of Contents ■ Check cashing services ■ Airlines Commercial fraud protection ■ Mass merchandisers and retailers ■ Auto dealerships and rental car agencies ■ Banks and other financial institutions ■ Casino cage operations ■ Credit unions ■ Hospitals, medical facilities and health plans ■ Credit card issuers ■ Lodging Industry ■ Check cashing services ■ Pharmacies Access control ■ Airports and airlines ■ Prisons ■ Departments of Motor Vehicles ■ Law enforcement agencies ■ Notable buildings ■ Military establishments ■ Court houses ■ College campuses ■ Nuclear facilities ■ Department of Homeland Security ■ Oil refineries and storage facilities ■ Bus, rail and port facilities Age verification ■ Bars and night clubs ■ Stadiums and arenas ■ Convenience stores ■ Casinos and gaming establishments ■ Grocery chains ■ Law Enforcement ■ Restaurants ■ Firearm dealers ■ Cannabis Industry Law Enforcement/Government ■ FBI ■ Drug Enforcement Administration ■ State & Local Police ■ Local Sheriffs ■ Bureau of Alcohol, Tobacco, Firearms, and Explosives ■ Intelligence Agencies ■ Customs ■ Department of Transportation ■ Department of Homeland Security ■ Border Patrol 9 Table of Contents MARKETING AND DISTRIBUTION Commercial Identity Systems Our objective is to become a leading developer and distributor of document and age verification software.
Productivity Enhancement ■ Mass merchandisers and retailers ■ Auto dealerships and rental car agencies ■ Banks and other financial institutions ■ Casinos for enrollment of guests ■ Credit unions ■ Hospital patient admissions ■ Credit card issuers ■ Lodging Industry ■ Check cashing services ■ Airlines Commercial fraud protection ■ Mass merchandisers and retailers ■ Auto dealerships and rental car agencies ■ Banks and other financial institutions ■ Casino cage operations ■ Credit unions ■ Hospitals, medical facilities and health plans ■ Credit card issuers ■ Lodging Industry ■ Check cashing services ■ Pharmacies 8 Table of Contents Access control ■ Airports and airlines ■ Prisons ■ Departments of Motor Vehicles ■ Law enforcement agencies ■ Notable buildings ■ Military establishments ■ Court houses ■ College campuses ■ Nuclear facilities ■ Department of Homeland Security ■ Oil refineries and storage facilities ■ Bus, rail and port facilities Age verification ■ Bars and night clubs ■ Stadiums and arenas ■ Convenience stores ■ Casinos and gaming establishments ■ Grocery chains ■ Law Enforcement ■ Restaurants ■ Firearm dealers ■ Cannabis Industry Law Enforcement/Government ■ FBI ■ Drug Enforcement Administration ■ State & Local Police ■ Local Sheriffs ■ Bureau of Alcohol, Tobacco, Firearms, and Explosives ■ Intelligence Agencies ■ Customs ■ Department of Transportation ■ Department of Homeland Security ■ Border Patrol MARKETING AND DISTRIBUTION Commercial Identity Systems Our objective is to become a leading developer and distributor of document and age verification software.
IDN-Portal provides the flexibility to allow the Intellicheck customer or their customer to perform the scan and enables the Intellicheck customer to manage their application online using the PC. • IDN-Portal+ • IDN-Portal+ has all the features of IDN-Portal and additionally includes the ability to perform a facial biometrics test to match the picture on the ID to a selfie of the user presenting the ID.
IDN-Mobile provides the flexibility to allow the Intellicheck customer or their customer to perform the scan and enables the Intellicheck customer to manage their application online using the PC. • IDN-Portal • IDN-Portal has all the features of IDN-Mobile and additionally includes the ability to perform a facial biometrics test to match the picture on the ID to a selfie of the user presenting the ID.
This capability is integrated into the Intellicheck platform to allow for fast deployment and is an option for platform subscribers. Determining the risk score The Intellicheck platform offers the ability to analyze data or signals to determine the risk of doing business with the person on the identity document.
This capability is integrated into the Intellicheck platform to allow for fast deployment and is an option for platform subscribers. Determining the risk score The Intellicheck Service offers the ability to analyze data or signals to determine the risk of doing business with the person on the identity document.
Our Intellicheck Platform can quickly determine if: • the format of the document is valid; • the document has been altered or is fake, by displaying the parsed, encoded data for comparison with the printed information; • the document has expired; or • the encoded data contains a date of birth equal to or greater than the legal age to purchase age restricted products, such as alcohol, vaping products, cannabis and tobacco.
Our Intellicheck Service can quickly determine if: • the format of the document is valid; • the document has been altered or is fake, by displaying the parsed, encoded data for comparison with the printed information; • the document has expired; or • the encoded data contains a date of birth equal to or greater than the legal age to purchase age restricted products, such as alcohol, vaping products, cannabis and tobacco.
It is designed to be used in online and retail settings using devices that can include a mobile phone or tablet, a PC or retail scanner. The Intellicheck Platform is designed to address the needs of users across a variety of use cases including account access, account openings, receipt-less returns, receipt of delivery, age restricted purchases and more.
It is designed to be used in online and retail settings using devices that can include a mobile phone or tablet, a PC or retail scanner. The Intellicheck Service is designed to address the needs of users across a variety of use cases including account access, account openings, receipt-less returns, receipt of delivery, age restricted purchases and more.
Additionally, Portal+ also adds global document validation, retail POS integration, additional data for analytics and analysis and online validation among other features. • IDN-Direct • IDN-Direct provides the capabilities of the Intellicheck platform within user's own apps and integrated with their systems. IDN-Direct is accessible through the Intellicheck API to aid integration into customer applications and systems.
Additionally, Portal also adds global document validation, retail POS integration, additional data for analytics and analysis and online validation among other features. • IDN-Direct • IDN-Direct provides the capabilities of the Intellicheck service within user's own apps and integrated with their systems. IDN-Direct is accessible through the Intellicheck API to aid integration into customer applications and systems.
Our Revenue Sources We derive our revenue primarily from the following sources: ■ Sales of our systems by both our own direct sales force and marketing partners; ■ Per transaction or fixed price (SaaS) revenue from the licensed use of our technology; ■ Extended warranties on equipment; and ■ Other subscription and Support Services, such as jurisdictional updates to certain commercial customers and support services.
Our Revenue Sources We derive our revenue primarily from the following sources: ■ Sales of our products and services by both our own direct sales force and marketing partners; ■ Per transaction or fixed price (SaaS) revenue from the licensed use of our technology; ■ Extended warranties on equipment; and ■ Other subscription and Support Services, such as jurisdictional updates to certain commercial customers and support services.
If approved, the applicant is granted instant credit which can then be used to make purchases. Upgrade Capability Our Intellicheck Platform products and related databases are constantly updated to stay current with identification formats, new forms of ID and government regulations guiding use of digital information.
If approved, the applicant is granted instant credit which can then be used to make purchases. Upgrade Capability Our Intellicheck Service products and related databases are constantly updated to stay current with identification formats, new forms of ID and government regulations guiding use of digital information.
Our proprietary Intellicheck Platform software can add functionality to virtually any given software application to automatically populate fields within a given form, when a government-issued photo ID is presented. Our ability to correctly read and authenticate in all U.S. jurisdictions, coupled with our proprietary technology, is a key differentiator from our competitors.
Our proprietary Intellicheck Service software can add functionality to virtually any given software application to automatically populate fields within a given form, when a government-issued photo ID is presented. Our ability to correctly read and authenticate in all U.S. jurisdictions, coupled with our proprietary technology, is a key differentiator from our competitors.
Today, all 50 states, the District of Columbia and all 13 Canadian provinces/territories digitally store information on their driver license. Non-driver identification card Each U.S. and Canadian Jurisdiction also provides a non-driver identification card as an alternative form of identification for those unable to acquire a driver license.
Today, all 50 states, the District of Columbia, territories of the United States, United States Military, and all 13 Canadian provinces/territories digitally store information on their driver license. Non-driver identification card Each U.S. and Canadian jurisdiction also provides a non-driver identification card as an alternative form of identification for those unable to acquire a driver license.
We are aware of several companies that are currently offering products that electronically read and calculate age from a driver license. We have tested and compared some of these products to the Intellicheck Platform and believe that our product is superior in quality and functionality.
We are aware of several companies that are currently offering products that electronically read and calculate age from a driver license. We have tested and compared some of these products to the Intellicheck Service and believe that our product is superior in quality and functionality.
REGULATION The sale and use of our Identity System products are subject to regulation, such as on data protection and storage, by government authorities. We work on an ongoing basis with our customers to facilitate their compliance with such regulations.
REGULATION The sale and use of our Identity Service products are subject to regulation, such as on data protection and storage, by government authorities. We work on an ongoing basis with our customers to facilitate their compliance with such regulations.
Commercial Identification Intellicheck ® Platform The Intellicheck Platform is a complete identity solution that checks whether an ID is valid, matches the ID to the person presenting it, and provides a risk score to help determine the risk of doing business with that person.
Commercial Identification Intellicheck ® Identity Service The Intellicheck Service is a complete identity solution that checks whether an ID is valid, matches the ID to the person presenting it, and provides a risk score to help determine the risk of doing business with that person.
As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. 12 Table of Contents
As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.
The automation resulting from the intelligence added to the form dramatically increases throughput and data integrity, and it significantly enhances the customer’s experience. Develop Additional Strategic Alliances with Providers of Security Solutions .
The automation resulting from the intelligence added to the form dramatically increases throughput and data integrity, and it significantly enhances the customer’s experience. Develop Additional Strategic Alliances with Solutions Providers .
How the Platform is Delivered The Intellicheck Platform consists of the following elements: • IDN-Portal • IDN-Portal is an Intellicheck-branded identity validation application that can be typically set-up for a user in under an hour. It provides the ability to scan an ID using a mobile phone or tablet.
How the Service is delivered The Intellicheck Service consists of the following elements: • IDN-Mobile • IDN-Mobile is an Intellicheck-branded identity validation application that can be typically set-up for a user in under an hour. It provides the ability to scan an ID using a mobile phone or tablet.
We believe that units unable to read bar codes are at a 10 Table of Contents significant disadvantage because all states and Canadian provinces currently utilize bar codes to encode their driver licenses, as well as all U.S. military IDs and uniformed services cards. We have experienced and expect to continue to experience increased competition in the document verification sector.
We believe that units unable to read bar codes are at a significant disadvantage because all states and Canadian provinces currently utilize bar codes to encode their driver licenses, as well as all U.S. military IDs and uniformed services cards. We have experienced and expect to continue to experience increased competition in the document verification sector.
The first patent is related to checking the validity of identification documents using a remote database. The second patent related to identification scanning in compliance with jurisdictional or other rules. In 2022, we were granted two patents that were a continuation of earlier filed applications.
We were granted two patents in 2019 that were continuations of earlier filed applications. The first patent is related to checking the validity of identification documents using a remote database. The second patent related to identification scanning in compliance with jurisdictional or other rules. In 2022, we were granted two patents that were continuations of earlier filed applications.
We possess patented technology that provides an analysis of the data contained on the encoded formats of these identification documents by reading and analyzing the encoded format on the magnetic stripe or bar code on the driver license and comparing it against known standards.
We possess patented technology that provides an analysis of the data contained on the encoded formats of these identification documents by reading and analyzing the encoded format on the bar code on the driver license and comparing it against known standards.
We are marketing our Intellicheck Platform technology to financial institutions, mass merchandisers, government, airlines, airports, high profile buildings or infrastructure, grocery, convenience and pharmacy chains, and casinos. We have developed a comprehensive marketing plan to build customer awareness and develop brand recognition in our target industry sectors.
We are marketing our Intellicheck Platform technology to financial institutions, mass merchandisers, 9 Table of Contents government, airlines, airports, high profile buildings or infrastructure, grocery, convenience and pharmacy chains, and casinos. We have developed a comprehensive marketing plan to build customer awareness and develop brand recognition in our target industry sectors.
Facial biometrics may add additional seconds to the process. • Fast deployment • With IDN-Portal or IDN-Portal+, customers can typically be up and running in under an hour. 6 Table of Contents • Accurate ID validation • For North American documents, Intellicheck provides market-leading identity validation accuracy.
Facial biometrics may add additional seconds to the process. • Fast deployment • With IDN-Mobile or IDN-Portal, customers can typically be up and running in under an hour. • Accurate ID validation • For North American documents, Intellicheck provides market-leading identity validation accuracy.
MAJOR CUSTOMERS Although the composition of our largest customers has changed from year to year, a significant portion of our revenues have been attributable to a limited number of major customers. In 2023, our top ten customers accounted for approximately 71% of total revenues. In 2022, our top ten customers accounted for approximately 72% of total revenues.
MAJOR CUSTOMERS Although the composition of our largest customers has changed from year to year, a significant portion of our revenues have been attributable to a limited number of major customers. In 2024 and 2023, our top ten customers accounted for approximately 71% of total revenues.
We have twenty-five employees in information technology including those participating in our research and development efforts, eleven employees in sales and marketing, five employees in customer and support integration, and seven employees in administration.
We have twenty-two employees in information technology including those participating in our research and development efforts, nine employees in sales and marketing, seven employees in customer and support integration, and nine employees in administration.
MANUFACTURING We do not manufacture readers or input devices but use products from several manufacturers. Some of these devices are private labeled and programmed by the supplier to work with our Intellicheck Platform technology. Most of our hardware consists of commercial off-the-shelf (“COTS”) products. We rely on a small number of suppliers to provide our COTS products.
MANUFACTURING We do not manufacture readers or input devices but use products from several manufacturers. Some of these devices are private labeled and programmed by the supplier to work with our Intellicheck Service technology. Most of our hardware consists of commercial off-the-shelf (“COTS”) products.
We own multiple copyrights in the United States, which are effective in Canada and in other major industrial countries. The copyright protection covers software source codes and supporting graphics relating to the operation of the Intellicheck Platform and other software products. We also have several trademarks relating to our company, its product names, and logos.
We own multiple copyrights in the United States, which are effective in Canada and in other major industrial countries. The copyright protection covers software source codes and supporting graphics relating to the operation of the Intellicheck Platform and other software products.
We have entered into multiple licensing agreements to date. Protect Intellectual Property . We intend to protect our intellectual property portfolio to preserve value and obtain favorable settlements where warranted.
We intend to protect our intellectual property portfolio to preserve value and obtain favorable settlements where warranted.
Accuracy that can remove the need for manual review, and accuracy that leading businesses use to enable real time processes. For the rest of the world, Intellicheck provides best of breed document accuracy.
Accuracy that can remove the need for manual review, and accuracy that leading businesses use to enable real time processes.
We intend to continue to license our software for use with a customer’s system. We are currently licensing our SDK software product for Windows, iOS, Android and other operating system platforms and intend to similarly continue to license our PC software solutions. Our software is intended to be used with a compatible hardware device.
We are currently licensing our SDK software product for Windows, iOS, Android and other operating system platforms and intend to similarly continue to license our PC software solutions. Our software is intended to be used with a compatible hardware device. We have entered into multiple licensing agreements to date. 7 Table of Contents Protect Intellectual Property .
We have entered strategic alliances to utilize our systems and software as the proposed or potential enrollment application for their technologies and to jointly market these security applications with multiple biometric companies.
We have entered strategic alliances to utilize our systems and software as the proposed or potential enrollment application for their technologies and to jointly market these security applications with multiple solution providers. Some of these companies have included Accio Data, Doma Title Insurance, and Dealer SafeGuard Solutions.
It is used to get a registration key for the parser that is based on the unique internal ID of one mobile device. The Mobile Key Manager communicates with the mobile device, reading its ID, and then requests a registration key specific for that ID from Intellicheck's server.
The Mobile Key Manager communicates with the mobile device, reading its ID, and then requests a registration key specific for that ID from Intellicheck's server.
IDN-Direct also provides an SDK to simplify integration into the user’s mobile applications. IDN-Direct provides access to additional data and also provides the ability to use the platform’s Risk Score capability to help with decision-making. • Intellicheck Mobile • Intellicheck Mobile is the pre-build iOS and Android application for use by purchasers of IDN-Portal and IDN-Portal+.
IDN-Direct also provides an SDK to simplify integration into the user’s mobile applications. IDN-Direct provides access to additional data and also provides the ability to use the platform’s Risk Score capability to help with decision-making. • IDN-Capture • IDN-Capture provides the capabilities of the Intellicheck service within a flexible custom white label experience.
Upon our acquisition of the assets of IDentiScan, we received equitable ownership and sole ownership rights to its intellectual property, including other patents and patent applications relating to age verification technology. During 2010, we were granted two additional patents. The first patent was for a software key control for mobile devices.
In October 2002 and July 2005, we were granted additional patents that are a continuation of our patents relating to our document authentication and age verification technology. Upon our acquisition of the assets of IDentiScan, we received equitable ownership and sole ownership rights to its intellectual property, including other patents and patent applications relating to age verification technology.
State Aware Software incorporates each state’s requirements around electronic capture of ID barcode data directly into hosted Intellicheck Platform. Data Collection Devices Our software products are designed for use with multiple data collection devices, which are commercially available in various compact forms and may contain either one or both of 2-D bar code and magnetic stripe readers.
For the rest of the world, Intellicheck provides best of breed document accuracy. 6 Table of Contents Data Collection Devices Our software products are designed for use with multiple data collection devices, which are commercially available in various compact forms and may contain either one or both of 2-D bar code and magnetic stripe readers.
In 2016 we were granted one patent in Canada that was a continuation of an earlier filed application and is related to identity matching in response to threat levels. 11 Table of Contents We were granted two patents in 2019 that were a continuation of earlier filed applications.
As an example, a passport is compared to a boarding pass to determine if “like information” matches, for instance name and birthdate. In 2016, we were granted one patent in Canada that was a continuation of an earlier filed application and is related to identity matching in response to threat levels.
EMPLOYEES AND HUMAN CAPITAL RESOURCES As of April 1, 2024, we had 51 full-time employees. Three are engaged in executive management — our Chief Executive Officer, Chief Financial Officer and Chief Technology Officer.
We also have several trademarks relating to our company, its product names, and logos. 11 Table of Contents EMPLOYEES AND HUMAN CAPITAL RESOURCES As of March 31, 2025, we had 47 full-time employees. Three are engaged in executive management — our Chief Executive Officer, Chief Financial Officer and Chief Technology Officer.
We believe these relationships will broaden our marketing reach through their sales efforts and we intend to develop additional strategic alliances with additional providers of security solutions. Strengthen Sales and Marketing Efforts . We intend to capitalize on the growth in demand for document verification and productivity enhancement by continuing to market and support our systems and software.
We are an associate member of AAMVA and a member of AAMVA’s Industry Advisory Board. We believe these relationships will broaden our marketing reach through their sales efforts and we intend to develop additional strategic alliances with additional providers of security solutions. Strengthen Sales and Marketing Efforts .
INTELLECTUAL PROPERTY We currently hold ten (10) U.S. patents and one (1) Canadian patent. These patents cover commercially important aspects of our capabilities relating to the authentication and verification of identification documents. We will continue to pursue patents for all our new technologies arising from our research and development efforts. In January 1999, the U.S.
Research and development expenses also include consulting fees, software and subscription services, and a portion of our third-party cloud infrastructure expenses incurred in maintaining our platform. INTELLECTUAL PROPERTY We currently hold thirteen (13) U.S. patents and one (1) Canadian patent. These patents cover commercially important aspects of our capabilities relating to the authentication and verification of identification documents.
RESEARCH AND DEVELOPMENT Our research and development efforts are mainly concentrated in the area of identity verification. Research and development expenses consist primarily of employee salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include consulting fees, software and subscription services, and a portion of our third-party cloud infrastructure expenses incurred in maintaining our platform.
We rely on a small number of suppliers to provide our COTS products. 10 Table of Contents RESEARCH AND DEVELOPMENT Our research and development efforts are mainly concentrated in the area of identity verification. Research and development expenses consist primarily of employee salaries, benefits, bonuses, and stock-based compensation.
Our sales and marketing departments are organized by region and specifically named accounts to provide focus and proximity to build solid long-term relationships. Our recent focus has been on SaaS license arrangements in the financial services, retail, and hospitality services industries. Enter into Additional Licensing Agreements .
Our recent focus has been on SaaS license arrangements in the financial services, retail, and hospitality services industries. Enter into Additional Licensing Agreements . We intend to continue to license our software for use with a customer’s system.
The Intellicheck Mobile app provides that the ability to login and scan an ID. The app also, depending on the level of Intellicheck service purchased has access to additional data once the document has been analyzed. Advantages of the Platform • Fast results • The Intellicheck platform provides results of an ID scan in under a second.
Advantages of the Service • Fast results • The Intellicheck Service provides results of an ID scan in under a second.
Removed
State Aware Software Our patented State Aware Software solution provides or restricts information that is electronically scanned from an ID based on the electronic reading laws according to the state in which the ID is scanned.
Added
We intend to capitalize on the growth in demand for document verification and productivity enhancement by continuing to market and support our systems and software. Our sales and marketing departments are organized by region and specifically named accounts to provide focus and proximity to build solid long-term relationships.
Removed
For example, scanning an ID in New Hampshire for law enforcement purposes is allowed, whereas electronically scanning an ID for a mailing list is not allowed. With all the various uses of scanning and verifying an ID, it is important for responsible users to be aware of the different state laws.
Added
We will continue to pursue patents for all our new technologies arising from our research and development efforts. In January 1999, the U.S. Patent and Trademark Office granted us a patent on our ID Check ® software technology.
Removed
Some of these companies have included Lenel, 7 Table of Contents AMAG Technology, Inc., in the defense industry; hardware manufacturers Zebra Technologies; Idemia Identity & Security USA; and facial biometrics companies Ipsidy and Applied Recognition. We are an associate member of AAMVA and a member of AAMVA’s Industry Advisory Board.
Added
During 2010, we were granted two additional patents. The first patent was for a software key control for mobile devices. It is used to get a registration key for the parser that is based on the unique internal ID of one mobile device.
Removed
Patent and Trademark Office granted us a patent on our ID Check ® software technology. In October 2002 and July 2005, we were granted additional patents that are a continuation of our patents relating to our document authentication and age verification technology.
Removed
As an example, a passport is compared to a boarding pass to determine if “like information” matches, for instance name and birthdate.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

28 edited+16 added−8 removed46 unchanged
Many factors may cause the market price for our common stock to decline, including: ■ shortfalls in revenues, cash flows, cash balances or continued losses from operations; ■ delays in development or roll-out of any of our products; ■ overall decrease of US stock prices as a result of rising inflation experienced in the United States, the accompanying increases in the benchmark lending rate by the Federal Reserve, and each of their effects on the economy; ■ economic and social effects of the COVID-19 virus or other pandemics; ■ short selling or other market manipulation activities; and ■ announcements by one or more competitors of new product acquisitions or technological innovations; ■ unfavorable outcomes from outstanding litigation.
Many factors may cause the market price for our common stock to decline, including: ■ shortfalls in revenues, cash flows, cash balances or continued losses from operations; ■ delays in development or roll-out of any of our products; ■ unfavorable outcomes from outstanding litigation; ■ overall decrease of US stock prices as a result of rising inflation experienced in the United States, the accompanying increases in the benchmark lending rate by the Federal Reserve, and each of their effects on the economy; ■ short selling or other market manipulation activities; and ■ announcements by one or more competitors of new product acquisitions or technological innovations.
Decreases in the price of our common stock may also lead to de-listing of our common stock. 17 Table of Contents Future capital requirements may require incurring debt or dilution of existing stockholders. Acquisition and development opportunities and other contingencies may arise, which could require us to raise additional capital or incur debt.
Decreases in the price of our common stock may also lead to de-listing of our common stock. Future capital requirements may require incurring debt or dilution of existing stockholders. Acquisition and development opportunities and other contingencies may arise, which could require us to raise additional capital or incur debt.
These processes include: ■ including provisions for nondisclosure of proprietary information in our contractual arrangements; ■ maintaining and enforcing issued patents and filing patent applications on innovative solutions to commercially important problems; ■ protecting trade secrets; ■ protecting copyrights and trademarks by registration and other appropriate means; ■ establishing internal processes for identifying and appropriately protecting new and innovative technologies; and ■ establishing practices for identifying unauthorized use of intellectual property.
These processes include: ■ including provisions for nondisclosure of proprietary information in our contractual arrangements; ■ maintaining and enforcing issued patents and filing patent applications on innovative solutions to commercially important problems; ■ protecting trade secrets, including software source code; ■ protecting trademarks by registration and other appropriate means; ■ establishing internal processes for identifying and appropriately protecting new and innovative technologies; and ■ establishing practices for identifying unauthorized use of intellectual property.
If we can grow our business but do not manage our growth successfully, we may experience increased operating expenses, loss of customers, distributors, or suppliers and declining or slowed growth of revenues. Failure to protect our proprietary technology may impair our competitive position.
If we can grow our business but do not manage our growth successfully, we may experience increased operating expenses, loss of customers, distributors, or suppliers and declining or slowed growth of revenues. 13 Table of Contents Failure to protect our proprietary technology may impair our competitive position.
The failure of foreign laws or judicial systems to adequately protect our proprietary rights or intellectual property, including 14 Table of Contents intellectual property developed on our behalf by foreign contractors or subcontractors, may have a material adverse effect on our business, operations, and financial results.
The failure of foreign laws or judicial systems to adequately protect our proprietary rights or intellectual property, including intellectual property developed on our behalf by foreign contractors or subcontractors, may have a material adverse effect on our business, operations, and financial results.
As such, those funds in bank deposit accounts in excess of the standard FDIC insurance limits are uninsured and subject to the risk of bank failure. Currently, we have full access to all funds in deposit accounts or other money management arrangements.
As such, those funds in bank deposit accounts in excess of the standard FDIC insurance limits are uninsured and subject to the risk of bank failure. 18 Table of Contents Currently, we have full access to all funds in deposit accounts or other money management arrangements.
If we can expand our operations, particularly through multiple sales to large retailers and government agencies in the document verification industry, the expansion will place significant strain on our management, financial controls, operating systems, personnel and other resources.
Failure to manage our operations if they expand could impair our future growth. If we can expand our operations, particularly through multiple sales to large retailers and government agencies in the document verification industry, the expansion will place significant strain on our management, financial controls, operating systems, personnel and other resources.
From January 1, 2002 to April 1, 2024, the intra-day trading price of our common stock has varied from a high of $145.52 to a low of $0.75 per share, as reported on The Nasdaq Stock Market.
From January 1, 2002 to March 31, 2025, the intra-day trading price of our common stock has 17 Table of Contents varied from a high of $145.52 to a low of $0.75 per share, as reported on The Nasdaq Stock Market.
It may take several months to locate alternative suppliers, if required. We cannot predict whether we will be able to obtain replacement hardware within the required time frames at affordable costs, or at all.
As a result, we may be required to incur additional development, manufacturing, and other costs to establish alternative supply sources. It may take several months to locate alternative suppliers, if required. We cannot predict whether we will be able to obtain replacement hardware within the required time frames at affordable costs, or at all.
We incurred net losses of $(1,980) and $(4,159) for the fiscal years ended December 31, 2023 and 2022, respectively. Our accumulated deficit was $(133,565) as of December 31, 2023.
We incurred net losses of $(918) and $(1,980) for the fiscal years ended December 31, 2024 and 2023, respectively. Our accumulated deficit was $(134,483) as of December 31, 2024.
Any delays resulting from suppliers failing to deliver hardware or delays in obtaining alternative hardware, in sufficient quantities and of sufficient quality, or any significant increase in the cost of hardware from existing or alternative suppliers could result in delays on the shipment of product which, in turn, could result in the loss of customers we may not be able to successfully complete.
Any delays resulting from suppliers failing to deliver hardware or delays in obtaining alternative hardware, in sufficient quantities and of sufficient quality, or any significant increase in the cost of hardware from existing or alternative suppliers could result in delays on the shipment of product which, in turn, could result in the loss of customers we may not be able to successfully complete. 15 Table of Contents Security breaches and other disruptions could potentially compromise our information and expose us to liability, which would be harmful to our business.
The commercial sector can develop faster than the government sector, but it is also subject to a higher level of uncertainty because of potential uncertainty in the continued financial health of our commercial customers, as well as long sales cycles.
The commercial sector can develop faster than the government sector, but it is also subject to a higher level of uncertainty because of potential uncertainty in the continued financial health of our commercial customers, as well as long sales cycles. Our business may suffer if the industry develops more slowly than anticipated and does not sustain industry acceptance.
If we are unable to successfully respond to these developments, or do not respond in a cost-effective manner, our business, financial condition, and results of operations will be materially adversely affected. Our percentage of revenues and customer concentration is significant.
The sectors for all our products are characterized by rapid technological advancements. Significant technological change could render existing technology obsolete. If we are unable to successfully respond to these developments, or do not respond in a cost-effective manner, our business, financial condition, and results of operations will be materially adversely affected. Our percentage of revenues and customer concentration is significant.
Long lead times for the components used in certain products creates uncertainty in our supply chain and may prevent us from making required deliveries to our customers on time. We rely exclusively on COTS technology in manufacturing our products. The lead-time for ordering certain components used in our products and the production of products can be lengthy.
Further, these outcomes could damage investor confidence in the accuracy and reliability of our financial statements. Long lead times for the components used in certain products creates uncertainty in our supply chain and may prevent us from making required deliveries to our customers on time. We rely exclusively on COTS technology in manufacturing our products.
If any third party prevails in an action against us for infringement of its proprietary rights, we could be required to pay damages and either enter costly licensing arrangements or redesign our products so as to exclude any infringing use.
If any third party prevails in an action against us for infringement of its proprietary rights, we could be required to pay damages and either enter costly licensing arrangements or redesign our products so as to exclude any infringing use. 14 Table of Contents As a result, we would incur substantial costs, delays in product development, sales and shipments, and our revenues may decline substantially.
As a result, we would incur substantial costs, delays in product development, sales and shipments, and our revenues may decline substantially. Additionally, we may not be able to achieve the growth necessary for our continued success. Failure to attract and retain management and other personnel may damage our operations and financial results and cause our stock price to decline.
Additionally, we may not be able to achieve the growth necessary for our continued success. Failure to attract and retain management and other personnel may damage our operations and financial results and cause our stock price to decline.
The failure of our products to perform as promised could result in increased costs, lower margins, liquidated damage payment obligations and harm to our reputation. We may not be able to keep up with rapid technological change. The sectors for all our products are characterized by rapid technological advancements. Significant technological change could render existing technology obsolete.
We carry product liability insurance, but existing coverage may not be adequate to cover potential claims. The failure of our products to perform as promised could result in increased costs, lower margins, liquidated damage payment obligations and harm to our reputation. We may not be able to keep up with rapid technological change.
As a result of the COVID-19 pandemic, or other similar pandemics, we may in the future experience disruptions that could severely impact our business, including government shutdowns, stay-at-home orders, travel restrictions, business closures, cancellations of public gatherings, and other measures.
Public health crises, such as COVID-19 or other similar pandemics in the future, can adversely impact our business. Public health crises, such as the COVID-19 pandemic, could lead to government shutdowns, stay-at-home orders, travel restrictions, business closures, cancellations of public gatherings, and other measures, which may have material adverse effects on our business.
We obtain certain hardware and services, as well as some software applications, from a limited group of suppliers, and our reliance on these suppliers involves significant risks, including reduced control over quality and delivery schedules. Any financial instability of our suppliers could result in having to find new suppliers.
Conversely, if demand exceeds forecasts, we may not have enough products to meet our obligations to our customers. We obtain certain hardware and services, as well as some software applications, from a limited group of suppliers, and our reliance on these suppliers involves significant risks, including reduced control over quality and delivery schedules.
While many of the original restrictions levied by governments in 2020 have been removed, additional variants, or similar pandemics in the future, could cause governments to reinstitute some or all of the previously implemented restrictive measures. Such restrictions could lead to the cancellation of industry events which could limit our ability to meet with existing and potential new customers.
While many of the original restrictions levied by governments in response to COVID-19 have been removed, additional variants, or similar pandemics in the future, could cause governments to reinstitute some or all of the previously implemented restrictive measures.
As a result, we must, from time to time, order products based on forecasted demand. If demand for products lags significantly behind forecasts, we may purchase more product than we can sell. Conversely, if demand exceeds forecasts, we may not have enough products to meet our obligations to our customers.
The lead-time for ordering certain components used in our products and the production of products can be lengthy. As a result, we must, from time to time, order products based on forecasted demand. If demand for products lags significantly behind forecasts, we may purchase more product than we can sell.
These initiatives have costs associated with them, and we cannot assure you that they ultimately will prove successful, or result in, an increase to our revenues or profitability. We could be negatively impacted by COVID-19, or other similar pandemics.
These initiatives have costs associated with them, and we cannot assure you that they ultimately will prove successful, or result in, an increase to our revenues or profitability. The industry for our systems and software is evolving and its growth is uncertain.
The industry for our systems and software is evolving and its growth is uncertain. Demand and industry acceptance for recently introduced and existing systems, and software and sales from such systems, are subject to a high level of uncertainty and risk.
Demand and industry acceptance for recently introduced and existing systems, and software and sales from such systems, are subject to a high level of uncertainty and risk. With changing administration in government, changes in government budgets, and slowly evolving government standards on use of identity products, the government sector is slowly developing.
We may experience significant delays in manufacturing and deliveries of products and services to customers if we lose our sources or if supplies and services delivered from these sources are delayed. As a result, we may be required to incur additional development, manufacturing, and other costs to establish alternative supply sources.
Any financial instability of our suppliers could result in having to find new suppliers. We may experience significant delays in manufacturing and deliveries of products and services to customers if we lose our sources or if supplies and services delivered from these sources are delayed.
The loss of one or more significant customers could have a significant adverse impact on our business, financial condition, and results of operations. Risks Related to Our Common Stock and the Market for Our Common Stock Our share price may be volatile and could decline substantially.
The loss of one or more significant customers could have a significant adverse impact on our business, financial condition, and results of operations. We are subject to risks related to data privacy and the storage of biometric information.
There is a risk that in certain contracts and circumstances we may not be successful in adequately minimizing product and related liabilities or that the protections negotiated will not ultimately be deemed enforceable. We carry product liability insurance, but existing coverage may not be adequate to cover potential claims.
Because of the risk of undetected error, we may be compelled to accept liability provisions that vary from our preferred contracting model in certain critical transactions. There is a risk that in certain contracts and circumstances we may not be successful in adequately minimizing product and related liabilities or that the protections negotiated will not ultimately be deemed enforceable.
Revenues from our ten largest customers accounted for 71% of total revenues in 2023 and 72% of total revenues in 2022. Three customers accounted for 47% of revenues in 2023 and three customers accounted for 52% of revenues in 2022.
We have a concentration of revenues with our ten largest customers which accounted for 71% of total revenues in 2024 and 2023. Three customers accounted for 50% of revenues in 2024 and three customers accounted for 47% of revenues in 2023.
If one or more of these jurisdictions do not continue to provide this reference data, the utility of our proprietary software may be diminished in those jurisdictions. Our business strategy exposes us to long sales and implementation cycles for our products.
If one or more of these jurisdictions do not continue to provide this reference data, the utility of our proprietary software may be diminished in those jurisdictions. 12 Table of Contents Disruptions at federal governmental agencies that we interact with, due to a reduction in workforce and/or inadequate funding, could prevent such agencies from performing normal functions on which our business relies, which could negatively impact our business.
Removed
With changing administration in government, changes in government budgets, and slowly evolving government standards on use of identity products, the government sector is slowly developing.
Added
The current President Trump administration (the “Trump Administration”) recently established the Department of Government Efficiency, which implemented a federal government hiring freeze and announced certain additional efforts to reduce federal government employee headcount and the size of the federal government.
Removed
Our business may suffer if the industry develops more slowly than anticipated and does not sustain industry acceptance. 13 Table of Contents Failure to manage our operations if they expand could impair our future growth.
Added
It is unclear how these executive actions or other potential actions by the Trump Administration or other parts of the federal government will impact the regulatory authorities that oversee our business and the governmental and quasi-governmental agencies that we interact with.
Removed
Further, these outcomes could damage investor confidence in the accuracy and reliability of our financial statements. 15 Table of Contents Our management has concluded that our internal controls over financial reporting were ineffective, as of December 31, 2023 as a result of the following: The Company did not design and maintain effective controls to periodically reassess whether Nexus was achieved in the states we do business.
Added
These budgetary pressures may reduce the ability of certain governmental agencies to perform their responsibilities, which could have a material adverse effect on our business. Our business strategy exposes us to long sales and implementation cycles for our products.
Removed
This caused us not to be able to collect sales tax from our customer and subsequently remitting those sales tax to the appropriate state tax agency. During our assessment in 2023, it was determined that we had prior period sales tax obligation on certain states, in which we failed to collect and remit the sales tax..
Added
With the growing use of biometric data in identity verification, Intellicheck faces increased risks related to the usage and protection of this highly sensitive information. Biometric data, such as facial recognition patterns, are uniquely vulnerable as they cannot be changed if compromised.
Removed
While management intends to remediate the material weakness, there is no assurance that such changes, when economically feasible and sustainable, will remediate the identified material weaknesses or that the controls will prevent or detect future material weaknesses.
Added
The company must implement robust security measures to protect this data from breaches, as any leak could lead to severe reputational damage, legal consequences, and loss of customer 16 Table of Contents trust. Additionally, evolving privacy laws and regulations specifically targeting biometric data could impose new compliance burdens on the company.
Removed
If we are not able to maintain effective internal control over financial reporting, our financial statements, including related disclosures, may be inaccurate, which could have a material adverse effect on our business.
Added
We are subject to regulation and other legal obligations relating to data privacy and protection. Compliance with these requirements is complex and costly. The actual or perceived failure to comply with such obligations could materially harm our business .
Removed
Security breaches and other disruptions could potentially compromise our information and expose us to liability, which would be harmful to our business.
Added
We are or may become subject to numerous state, federal and foreign laws, requirements and regulations governing the collection, use, access to, confidentiality, disclosure, storage, processing, retention and security of personal information. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.
Removed
Because of the risk of undetected error, we may be compelled to accept liability provisions that vary from our preferred contracting model in certain critical 16 Table of Contents transactions.
Added
As an example, the California Privacy Rights Ace (the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things: provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
Added
Similar laws have been passed in other states and are continuing to be proposed at the state and the federal level, reflecting a trend toward more stringent privacy legislation in the United States. The CCPA and other domestic privacy and data protection laws and regulations may increase our compliance costs and potential liability.
Added
Although we work to comply with applicable laws, regulations and standards, as well as our contractual obligations and other legal obligations, relating to data privacy and security, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction and/or organization to another, and may conflict with one another or other legal obligations with which we must comply.
Added
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy data and security concerns, even if unfounded, could result in additional costs, claims by and liability to third parties, government investigations and enforcement actions, damage to our reputation, and other adverse effects on our business, financial condition and results of operations.
Added
The expansion of the use of artificial intelligence ("AI") within our business will pose ethical and bias mitigation challenges. As Intellicheck incorporates AI in its identity verification processes, the company faces risks related to AI ethics and potential biases in its algorithms. There's a growing concern about AI systems perpetuating or amplifying existing biases, particularly in identity verification contexts.
Added
Intellicheck must ensure its AI models are fair, transparent, and free from discriminatory outcomes across diverse demographic groups. Failure to address these ethical concerns could result in regulatory scrutiny, legal challenges, and damage to the company's reputation, potentially leading to loss of business and market share.
Added
Additionally, the models used in those processes may produce output or take action that is incorrect, expose private or confidential information, infringe on the intellectual property rights of others, or be otherwise harmful. Any of these risks could expose Intellicheck to liability or adverse legal or regulatory consequences.
Added
The level and nature of the disruption caused by a public health crisis is unpredictable, may be cyclical and long-lasting and vary from location to location.
Added
Such restrictions could lead to the cancellation of industry events which could limit our ability to meet with existing and potential new customers. Risks Related to Our Common Stock and the Market for Our Common Stock Our share price may be volatile and could decline substantially.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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We adhere to a risk management framework based on applicable laws and regulations, incorporating industry standards and recognized practices to handle cybersecurity risks across our products, services, infrastructure and corporate 18 Table of Contents assets. To evaluate and address cybersecurity threats, we analyze factors such as threat intelligence, first- and third-party vulnerabilities, changing regulatory requirements and observed incidents.
We adhere to a risk management framework based on applicable laws and regulations, incorporating industry standards and recognized practices to handle cybersecurity risks across our products, services, infrastructure and corporate assets. To evaluate and address cybersecurity threats, we analyze factors such as threat intelligence, first- and third-party vulnerabilities, changing regulatory requirements and observed incidents.
For additional information about these risks, see Part I, Item 1A, "Risk Factors" in this Annual Report on Form 10-K.
For additional information about these risks, see Part I, Item 1A, "Risk Factors" in this Annual Report on Form 10-K. 19 Table of Contents
However, we cannot guarantee that our efforts will prevent any cybersecurity incident from occurring. In 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats.
In 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats.
Added
Our VP of Technology Operations and Information Security serves as the Company’s designated Chief Information Security Officer and is responsible for developing and implementing the cybersecurity risk management program, including reporting on cybersecurity matters to the Board of Directors. The VP of Technology Operations and Information Security has more than 19 years of experience leading cybersecurity oversight.
Added
In addition, the Board of Directors oversees the Company’s cybersecurity risk exposures and the steps taken by management and the Chief Information Security Officer to monitor and mitigate cybersecurity risks. However, we cannot guarantee that our efforts will prevent any cybersecurity incident from occurring.

Item 2. Properties

Properties — owned and leased real estate

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Legal Proceedings We are not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on our business. Item 4. Mine Safety Disclosures None 19 Table of Contents PART II
Legal Proceedings We are not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on our business. Item 4. Mine Safety Disclosures None 20 Table of Contents PART II
Item 2. Properties Our corporate headquarters is currently located in Melville, New York, where we occupy approximately 700 square feet of office space pursuant to a month-to-month lease. While all personnel currently operate out of their individual home offices throughout the country, this facility will be primarily used for employee use and for necessary physical meetings.
Item 2. Properties Our corporate headquarters is currently located in Melville, New York, where we occupy approximately 135 square feet of office space pursuant to a month-to-month lease. While all personnel currently operate out of their individual home offices throughout the country, this facility is primarily used for periodic, necessary in-person meetings.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Our common stock is traded on The Nasdaq Stock Market under the symbol “IDN.” (b) As of April 1, 2024, there were 28 shareholders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Our common stock is traded on The Nasdaq Stock Market under the symbol “IDN.” (b) As of March 31, 2025, there were 28 shareholders of record of our common stock.
(e) Recent Sales of Unregistered Securities None. (f) Repurchases of Equity Securities There were no shares repurchased during 2023. Item 6. [Reserved]
(e) Recent Sales of Unregistered Securities None. (f) Issuer Purchases of Equity Securities There were no shares repurchased during 2024. Item 6. [Reserved]
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders (1) 1,213,214 $ 3.13 1,138,925 Equity compensation plans not approved by security holders N/A N/A Total 1,213,214 $ 3.13 1,138,925 (1) Represents 1,152,714 options, 60,500 restricted stock units and zero performance stock units under the 2015 Omnibus Incentive Plan.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders (1) 1,186,991 $ 2.94 736,175 Equity compensation plans not approved by security holders N/A N/A Total 1,186,991 $ 2.94 736,175 (1) Represents 1,151,104 options, 35,887 restricted stock units and zero performance stock units under the 2015 Omnibus Incentive Plan.
It is anticipated that cash dividends will not be paid to the holders of our common stock in the foreseeable future. (d) Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of December 31, 2023, with respect to the shares of our common stock that may be issued under our existing equity compensation plans.
(d) Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of December 31, 2024, with respect to the shares of our common stock that may be issued under our existing equity compensation plans.
(c) No cash dividends or other cash distributions were made by us during the fiscal year ended December 31, 2023. Future dividend policy will be determined by our Board of Directors based on our earnings, financial condition, capital requirements and other then existing conditions.
Future dividend policy will be determined by our Board of Directors based on our earnings, financial condition, capital requirements and other then existing conditions. It is anticipated that cash dividends will not be paid to the holders of our common stock in the foreseeable future.
Added
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. (c) No cash dividends or other cash distributions were made by us during the fiscal year ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

27 edited+12 added−11 removed20 unchanged
This change is effective for annual periods beginning after December 15, 2024. This change will apply on a prospective basis to annual financial statements for periods beginning after the 24 Table of Contents effective date. However, retrospective application in all prior periods presented is permitted. The Company is currently evaluating the impact of this ASU on its financial statements.
This change is effective for annual periods beginning after December 15, 2024. This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. The Company is currently evaluating the impact of this ASU on its financial statements.
We currently anticipate that our available cash, expected cash from operations and availability under the revolving credit agreement will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months from the date of filing.
We currently anticipate that our available cash, expected cash from operations and availability under the revolving credit agreement will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months from the date of filing of these financial statements.
We believe that these limitations are compensated by providing Adjusted EBITDA only with GAAP net loss and clearly identifying the difference between the two measures. Consequently, Adjusted EBITDA should 23 Table of Contents not be considered in isolation or as a substitute for net loss presented in accordance with GAAP.
We believe that these limitations are compensated by providing Adjusted EBITDA only with GAAP net loss and clearly identifying the difference between the two measures. Consequently, Adjusted EBITDA should not be considered in isolation or as a substitute for net loss presented in accordance with GAAP.
In accordance with the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), U.S. NOLs arising in a tax year ending after 2017 in the amount of $15.4 million will not expire, but are subject to 80% limitation on utilization. In addition to the NOLs, the Company has approximately $700 thousand of research and development credits.
In accordance with the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), U.S. NOLs arising in a tax year ending after 2017 in the amount of $17,600 will not expire, but are subject to 80% limitation on utilization. In addition to the NOLs, the Company has approximately $700 of research and development credits.
Off-Balance Sheet Arrangements We have never entered any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered any options on non-financial assets.
Off-Balance Sheet Arrangements We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities nor entered into any option agreements on non-financial assets.
The facility bears interest at a rate consistent of Citi Personal Wealth Management’s Base Rate (8.50% and 7.50% at December 31, 2023 and December 31, 2022) minus 2% subject to certain limitations.
The facility bears interest at a rate consistent of Citi Personal Wealth Management’s Base Rate (9.00% and 8.50% at December 31, 2024 and December 31, 2023, respectively) minus 2% subject to certain limitations.
Valuation of long-lived assets Our long-lived assets include property and equipment, goodwill, and intangible assets. As of December 31, 2023, the balances of property and equipment, goodwill and intangible assets, all net of accumulated depreciation and amortization and impairments, were $666, $8,102 and $575, respectively.
As of December 31, 2023, the balances of property and equipment, goodwill and intangible assets, all net of accumulated depreciation and amortization, were $666, $8,102 and $575, respectively.
Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets, deferred tax valuation allowances, allowance for credit losses, revenue recognition (including breakage revenue), and the fair value of stock options under our stock-based compensation plans.
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 under our stock-based compensation plans.
Research and development expenses decreased $1,334, or 22%, to $4,680 for the year ended December 31, 2023, compared to $6,014 for the year ended December 31, 2022. This decrease was primarily due to the capitalization of certain software development expenses, as well as lower personnel costs and their related stock-compensation expenses. INTEREST INCOME (EXPENSE) AND OTHER INCOME (EXPENSE) .
Research and development expenses decreased $823, or 18%, to $3,857 for the year ended December 31, 2024, compared to $4,680 for the year ended December 31, 2023. This decrease was primarily due to the capitalization of certain software development expenses, as well as lower personnel costs and their related stock-compensation expenses. INTEREST AND OTHER INCOME .
Interest is payable monthly and as of December 31, 2023, there were no amounts outstanding under this facility 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. This line will remain open as long as the Company keeps a depository relationship with the financial institution.
Interest is payable monthly and as of December 31, 2023, there were no amounts outstanding 23 Table of Contents under this facility 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.
Cash used in investing activities for the year ended December 31, 2023 was $(414) compared to $(5,072) for the year ended December 31, 2022. Cash used in financing activities was $(155) for the year ended December 31, 2023 as compared to cash provided by financing activities of $97 for the year ended December 31, 2022.
Cash provided by financing activities was $485 for the year ended December 31, 2024 as compared to cash used in financing activities of $(155) for the year ended December 31, 2023.
SaaS revenues, which consists of software licensed on a subscription basis, increased $2,867 or 18% to $18,595 for the year ended December 31, 2023 compared to $15,728 for the year ended December 31, 2022. GROSS PROFIT .
SaaS revenues, which consists of software licensed on a subscription basis, increased $1,215 or 7% to $19,810 for the year ended December 31, 2024 compared to $18,595 for the year ended December 31, 2023. GROSS PROFIT .
Revenues for the year ended December 31, 2023 increased $2,940 or 18% to $18,906 compared to $15,966 for the year ended December 31, 2022. The increase in revenues is primarily the result of higher SaaS revenue for the current period.
Revenues for the year ended December 31, 2024 increased $1,091 or 6% to $19,997 compared to $18,906 for the year ended December 31, 2023. The increase in revenues is primarily the result of higher SaaS revenue for the current period.
Gross profit increased by $2,840 or 19%, to $17,531 for the year ended December 31, 2023, compared to $14,691 in the year ended December 31, 2022. Our gross profit, as a percentage of revenues, was 92.7% and 92.0% for the years ended December 31, 2023 and 2022, respectively. OPERATING EXPENSES.
Gross profit increased by $635 or 4%, to $18,166 for the year ended December 31, 2024, compared to $17,531 in the year ended December 31, 2023. Our gross profit, as a percentage of revenues, was 90.8% and 92.7% for the years ended December 31, 2024 and 2023, respectively. OPERATING EXPENSES .
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. Reference Note 9, “Stockholders' Equity,” in the Notes to Financial Statements for details on the Company’s stock-based compensation plans.
Interest income was $234 for the year ended December 31, 2023, compared to interest expense of $(5) during the year ended December 31, 2022. INCOME TAXES . Our provision (benefit) for income taxes was $(62) for the year ended December 31, 2023, compared to a provision for income taxes of $124 during the year ended December 31, 2022.
Interest income was $283 for the year ended December 31, 2024, compared to interest income of $234 during the year ended December 31, 2023. INCOME TAXES . Our provision for income taxes was $33 for the year ended December 31, 2024, compared to a benefit from income taxes of $(62) during the year ended December 31, 2023. NET LOSS .
The reconciliation of GAAP net loss to Non-GAAP Adjusted EBITDA is as follows: Year Ended December 31, 2023 2022 Net loss $ (1,980) $ (4,159) Reconciling items: Non-restructuring severance expenses 548 58 Provision for income taxes (62) 124 Sales tax accrual 227 308 Interest and other expense (income) (234) 5 Depreciation and amortization 282 285 Stock-based compensation including liability classified awards 1,596 2,455 Adjusted EBITDA $ 377 $ (924) Net Operating Loss Carry Forwards Our available net operating loss (“NOL”) as of December 31, 2023 was approximately $26.3 million, of which $10.9 million expires between 2035 and 2037.
The reconciliation of GAAP net loss to Non-GAAP Adjusted EBITDA is as follows: Year Ended December 31, 2024 2023 Net loss $ (918) $ (1,980) Reconciling items: Restructuring severance expenses 376 548 Provision for income taxes 33 (62) Sales tax accrual — 227 Interest income (283) (234) Depreciation and amortization 436 282 Stock-based compensation including liability classified awards 876 1,596 Adjusted EBITDA $ 520 $ 377 24 Table of Contents Net Operating Loss Carry Forwards Our available net operating loss (“NOL”) as of December 31, 2024 was approximately $28,500, of which $10,900 expires between 2035 and 2037.
Operating expenses, which consist of selling, general and administrative expenses and research and development expenses, increased by $1,086, or 6% to $19,807 for the year ended December 31, 2023 from $18,721 for the year ended December 31, 2022.
Operating expenses, which consist of selling, general and administrative expenses and research and development expenses, decreased by $(473), or (2.4)% to $19,334 for the year ended December 31, 2024 from $19,807 for the year ended December 31, 2023.
Selling, general and administrative expenses increased by $2,420, or 19%, to $15,127 for the year ended December 31, 2023, compared to $12,707 for the year ended December 31, 2022. This increase was primarily driven by higher general and administrative costs, specifically a sales tax accrual that the company evaluated as well as headcount-related expenses tied to non-restructuring severance expenses.
Selling, general and administrative expenses increased by $350, or 2%, to $15,477 for the year ended December 31, 2024, compared to $15,127 for the year ended December 31, 2023. This increase was primarily driven by higher general and administrative costs, specifically headcount-related expenses tied to severance expenses.
For the year ended December 31, 2023, our cash decreased by $1,216. Cash used in operating activities was $(647) for the year ended December 31, 2023 as compared to cash used in operating activities of $(3,480) for the year ended December 31, 2022.
Cash used in operating activities was $(2,694) for the year ended December 31, 2024 as compared to cash used in operating activities of $(647) for the year ended December 31, 2023.
As of December 31, 2022, the balances of property and equipment, goodwill and intangible assets, all net of accumulated depreciation and amortization and impairments, were $749, $8,102 and $273, respectively.
Valuation of long-lived assets Our long-lived assets include property and equipment, goodwill, and intangible assets. As of December 31, 2024, the balances of property and equipment, goodwill and intangible assets, all net of accumulated depreciation and amortization, were $536, $8,102 and $2,374, respectively.
Our products include solutions for preventing identity fraud across any industry delivered via smartphone, tablet, POS integration or other electronic devices. 20 Table of Contents Critical Accounting Policies and the Use of Estimates The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes.
Critical Accounting Policies and the Use of Estimates The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes.
Reference Note 2, “Significant Accounting Policies”; Note 4, “Property and Equipment”; and Note 5, “Goodwill and Intangible Assets” in the Notes to Financial Statements for details on the Company’s valuations of our long-lived assets. Revenue Recognition and Deferred Revenue SaaS fees and service revenues are generated from a combination of fixed-price and per-scan contracts.
Reference Note 2, “Significant Accounting Policies”; Note 4, “Property and Equipment”; and Note 5, “Goodwill and Intangible Assets” in the Notes to Financial Statements for details on the Company’s valuations of our long-lived assets. Internal Use Capitalized Software We capitalize certain costs related to the development of our platform and other software applications for internal use.
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.
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.
As a result of the factors noted above, we had net losses of $(1,980), or $(0.10) per share, for the year ended December 31, 2023 as compared to a net loss of $(4,159), or $(0.22) per share, for the year ended December 31, 2022. 22 Table of Contents Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $3,980 short-term investments of $5,000, working capital (defined as current assets minus current liabilities) of $7,843, total assets of $23,808 and stockholders’ equity of $17,276.
As a result of the factors noted above, we had net losses of $(918), or $(0.05) per share, for the year ended December 31, 2024 as compared to a net loss of $(1,980), or $(0.10) per share, for the year ended December 31, 2023.
We reviewed our business processes and controls to support the recognition and disclosure as required under the new standard. The adoption of this new standard did not have a material impact on our consolidated financial statements. 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.
Recently Adopted 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.
Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates. We believe that there are several accounting policies that are critical to understanding our historical and future performance, as these policies affect the reported amounts of revenue and the more significant areas involving management’s judgments and estimates.
Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates. Revenue Recognition and Deferred Revenue SaaS fees and service revenues are generated from a combination of fixed-price and per-scan contracts.
Removed
These significant accounting policies relate to revenue recognition, stock-based compensation, deferred taxes, goodwill and intangible asset valuation and impairment, and commitments and contingencies. These policies and our procedures related to these policies are summarized below and described in further detail in the Notes to Financial Statements.
Added
Our products include solutions 21 Table of Contents for preventing identity fraud across any industry delivered via smartphone, tablet, POS integration or other electronic devices.
Removed
Reference Note 9, “Stockholders' Equity,” in the Notes to Financial Statements for details on the Company’s stock-based compensation plans. 21 Table of Contents Deferred Income Taxes Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carry forwards.
Added
In accordance with authoritative guidance, we begin to capitalize our costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended.
Removed
Deferred tax assets and liabilities are measured using expected tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We have recorded a full valuation allowance for our net deferred tax assets as of December 31, 2023 and 2022, due to the uncertainty of the realizability of those assets.
Added
We stop capitalizing these costs when the software is substantially complete and ready for its intended use, including the completion of all significant testing. These costs are amortized on a straight-line basis over the estimated useful life of the related asset.
Removed
Reference Note 8, “Income Taxes,” in the Notes to Financial Statements for details on the Company’s deferred income taxes. Commitments and Contingencies From time to time, the Company may be involved in lawsuits, claims, investigations and proceedings, consisting of intellectual property, commercial, employment and other matters, which arise in the ordinary course of business.
Added
We also 22 Table of Contents capitalize costs related to specific upgrades and enhancements when it is probable the expenditure will result in additional functionality and expense costs incurred for maintenance and minor upgrades and enhancements.
Removed
Reference Note 10, “Commitments and Contingencies,” in the Notes to Financial Statements for details on the Company’s commitments and contingencies. As of December 31, 2023, we determined we have a historical state sales and use tax liability related to prior years. The Company is subject to sales and use taxes in jurisdictions where it has economic nexus.
Added
Costs incurred prior to meeting these criteria together with costs incurred for training and maintenance are expensed as incurred and recorded within research and development expenses in the statements of operations.
Removed
We have reviewed nexus in the various states, along with having conversations with state taxing authorities, and legal counsel in assessing our historical tax obligation. During the year ended December 31, 2023, the Company determined that a sales tax liability related to the periods of 2018 through 2023 was probable and determined an estimated liability.
Added
We exercise judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized. Results of Operations COMPARISON OF THE YEAR ENDED DECEMBER 31, 2024 TO THE YEAR ENDED DECEMBER 31, 2023 REVENUES .
Removed
The estimated liability was $1.1 million as of December 31, 2023. See Note 12 in the Notes to Financial Statements for more details. Results of Operations COMPARISON OF THE YEAR ENDED DECEMBER 31, 2023 TO THE YEAR ENDED DECEMBER 31, 2022 REVENUES .
Added
Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $4,666, working capital (defined as current assets minus current liabilities) of $6,726, total assets of $20,933 and stockholders’ equity of $17,747. For the year ended December 31, 2024, our cash increased by $686.
Removed
In February 2023, the Company entered into a financing arrangement related to insurance premiums totaling $49 with an interest rate of 9.47%. The monthly loan payments of $5 were to be paid to a financing company over a period of 11 months.
Added
Cash provided by investing activities for the year ended December 31, 2024 was $2,895 as compared to cash used in investing activities of $(414) for the year ended December 31, 2023.
Removed
As of December 31, 2023, the Company had no remaining commitments related to this financing arrangement.The Company was not subject to any financial covenants related to this insurance financing arrangement.
Added
This line will remain open as long as the Company keeps a depository relationship with the financial institution.
Removed
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments to measure credit losses on financial instruments, including trade receivables. The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments.
Added
The Company adopted this standard effective January 1, 2024 and was applied retrospectively. The adoption of this new standard did not have a material impact on the Company's consolidated financial statements.
Removed
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. We adopted the new standard on January 1, 2023 and was applied prospectively.
Added
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 .
Added
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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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We do not enter into investments for trading or speculative purposes. Due to the short-term nature of our investment portfolio, the effect of a hypothetical 100 basis point change in interest rates would not have an effect on the fair market value of our portfolio as of December 31, 2023.
We do not enter into investments for trading or speculative purposes. Due to the short-term nature of our investment portfolio, the effect of a hypothetical 100 basis point change in interest rates would not have a material effect on the fair market value of our portfolio as of December 31, 2024.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of December 31, 2023, we had cash and cash equivalents of $3,980 and $5,000 in short-term investments. The primary objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs, and the fiduciary control of cash and investments.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of December 31, 2024, we had cash and cash equivalents of $4,666. The primary objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs, and the fiduciary control of cash and investments.
We therefore do not expect our results of operations or cash flows to be materially affected by a sudden change in market interest rates. Item 8. Financial Statements and Supplementary Data Our financial statements and supplementary data are attached hereto beginning on Page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None.
We therefore do not expect our results of operations or cash flows to be materially affected by a sudden change in market interest rates.

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