10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission File No.: 001-15465

Intellicheck Mobilisa, Inc.
(Exact name of Registrant as specified in its charter)

Delaware	11-3234779
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)

191 Otto Street, Port Townsend, WA 98368

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code:                (360) 344-3233

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x               No ¨

Indicate by check mark whether registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)

Yes x               No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer  ¨ Accelerated filer  ¨ Non-accelerated filer  ¨ (Do not check if a smaller reporting company) Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Number of shares outstanding of the issuer’s Common Stock:

Class	Outstanding at November 5, 2013
Common Stock, $.001 par value	27,897,467

INTELLICHECK MOBILISA, INC.

Index

			Page
Part I		Financial Information
	Item 1.	Financial Statements
		Consolidated Balance Sheets – September 30, 2013 (Unaudited) and December 31, 2012	3
		Consolidated Statements of Operations for the three and nine months ended September 30, 2013 and 2012 (Unaudited)	4
		Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2013 (Unaudited)	5
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 (Unaudited)	6
		Notes to Consolidated Financial Statements (Unaudited)	7-13
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13-19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
	Item 4.	Controls and Procedures	19
Part II		Other Information
	Item 1.	Legal Proceedings	20
	Item 1A.	Risk Factors	20
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
	Item 3.	Defaults Upon Senior Securities	20
	Item 4.	Mine Safety Disclosures	20
	Item 5.	Other Information	20
	Item 6.	Exhibits	21
		Signatures	22
		Exhibits
		31.1                    Rule 13a-14(a) Certification of Chief Executive Officer
		31.2                    Rule 13a-14(a) Certification of Chief Financial Officer
		32                       18 U.S.C. Section 1350 Certifications
		101.INS              XBRL Instance Document
		101.SCH             XBRL Taxonomy Extension Schema
		101.CAL             XBRL Taxonomy Extension Calculation Linkbase
		101.DEF             XBRL Taxonomy Extension Definition Linkbase
		101.LAB             XBRL Taxonomy Extension Label Linkbase
		101.PRE              XBRL Taxonomy Extension Presentation Linkbase

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PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

INTELLICHECK MOBILISA, INC.

CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
	2013		2012
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	643,417	$	1,685,879
Accounts receivable, net of allowance of $1,613 and $1,613     as of September 30, 2013 and December 31, 2012, respectively		1,582,360		869,747
Inventory		54,275		337,559
Other current assets		101,451		105,881
Total current assets		2,381,503		2,999,066
PROPERTY AND EQUIPMENT, net		400,559		449,438
GOODWILL		12,308,661		12,308,661
INTANGIBLE ASSETS, net		3,951,160		4,631,577
OTHER ASSETS		72,006		72,006
Total assets	$	19,113,889	$	20,460,748
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	760,675	$	247,289
Accrued expenses		878,946		556,814
Deferred revenue, current portion		1,136,925		1,450,923
Total current liabilities		2,776,546		2,255,026
OTHER LIABILITIES
Deferred revenue, long-term portion		213,636		341,948
Deferred rent		170,649		185,339
Total liabilities		3,160,831		2,782,313
STOCKHOLDERS’ EQUITY:
Common stock - $.001 par value; 40,000,000 shares authorized;
27,897,467 and 27,724,267 shares issued and outstanding, respectively		27,897		27,724
Additional paid-in capital		100,980,276		100,882,019
Accumulated deficit		(85,055,115)		(83,231,308)
Total stockholders’ equity		15,953,058		17,678,435
Total liabilities and stockholders’ equity	$	19,113,889	$	20,460,748

See accompanying notes to consolidated financial statements

3

 

INTELLICHECK MOBILISA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
REVENUES	$	2,578,863	$	2,123,403	$	5,932,239	$	8,274,841
COST OF REVENUES		(797,488)		(556,265)		(2,295,871)		(2,519,753)
Gross profit		1,781,375		1,567,138		3,636,368		5,755,088
OPERATING EXPENSES
Selling		257,000		370,208		793,908		1,231,566
General and administrative		1,035,941		1,051,901		3,074,299		3,080,224
Research and development		472,711		526,325		1,592,056		1,748,597
Total operating expenses		1,765,652		1,948,434		5,460,263		6,060,387
Income (Loss) from operations		15,723		(381,296)		(1,823,895)		(305,299)
OTHER INCOME (EXPENSE)
Interest income		73		-		88		-
Net Income (Loss)	$	15,796	$	(381,296)	$	(1,823,807)	$	(305,299)
PER SHARE INFORMATION
Net Income (Loss) per common share -
Basic	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)
Diluted	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)
Weighted average common shares used     in computing per share amounts -
Basic		27,795,594		27,523,587		27,771,819		27,482,865
Diluted		27,841,357		27,523,587		27,771,819		27,482,865

See accompanying notes to consolidated financial statements

4

 

INTELLICHECK MOBILISA, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the nine months ended September 30, 2013

(Unaudited)

					Additional
	Common Stock				Paid-in		Accumulated
	Shares		Amount		Capital		Deficit		Total
BALANCE, January 1, 2013		27,724,267	$	27,724	$	100,882,019	$	(83,231,308)	$	17,678,435
Stock option compensation		-		-		15,358		-		15,358
Stock option exercises		153,200		153		70,319		-		70,472
Issuance of common stock		20,000		20		12,580		-		12,600
Net loss		-		-		-		(1,823,807)		(1,823,807)
BALANCE, September 30, 2013		27,897,467	$	27,897	$	100,980,276	$	(85,055,115)	$	15,953,058

See accompanying notes to consolidated financial statements

5

 

INTELLICHECK MOBILISA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	(1,823,807)	$	(305,299)
Adjustments to reconcile net income (loss) to net cash (used in)     provided by operating activities:
Depreciation and amortization		802,402		824,589
Noncash stock-based compensation expense		27,958		47,262
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable		(712,613)		1,175,746
Decrease (Increase) in inventory		283,284		(105,973)
Decrease (Increase) in other current assets		4,430		(7,599)
Increase (Decrease) in accounts payable, accrued expenses		835,518		(935)
(Decrease) in deferred revenue		(442,310)		(338,249)
(Decrease) in deferred rent		(14,690)		(5,608)
Net cash (used in) provided by operating activities		(1,039,828)		1,283,934
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(73,106)		(71,024)
Net cash used in investing activities		(73,106)		(71,024)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock from exercise of     stock options		70,472		130,448
Net cash provided by financing activities		70,472		130,448
(Decrease) increase in cash and cash equivalents		(1,042,462)		1,343,358
CASH AND CASH EQUIVALENTS, beginning of period		1,685,879		1,394,148
CASH AND CASH EQUIVALENTS, end of period	$	643,417	$	2,737,506
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes	$	-	$	6,000

See accompanying notes to consolidated financial statements

6

 

INTELLICHECK MOBILISA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. NATURE OF BUSINESS

Business

Intellicheck Mobilisa, Inc. (the “Company” or “Intellicheck”) is a leading technology company that is engaged in developing and marketing wireless technology and identity systems for various applications including mobile and handheld access control and security systems for the government, military and commercial markets. Products include the Defense ID and Fugitive Finder systems, advanced ID card access control products currently protecting military and federal locations, and ID-Check, a patented technology that instantly reads, analyzes, and verifies encoded data in magnetic stripes and barcodes on government-issue IDs from U.S. and Canadian jurisdictions designed to improve the Customer Experience for the financial, hospitality and retail sectors. Wireless products include enterprise wireless system installation in rural areas of the country.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Mobilisa, Inc. (“Mobilisa”) and Positive Access Corporation (“Positive Access”). All intercompany balances and transactions have been eliminated upon consolidation.

Liquidity

For the three and nine months ended September 30, 2013, the company incurred a net income of $16,000 and net loss of $1,824,000, respectively. As of September 30, 2013, the Company had cash and cash equivalents of $643,000, a working capital deficit of $395,000 and an accumulated deficit of $85,055,000. Based on our business plan, we expect our existing resources and revenues generated from operations to satisfy our working capital requirements for at least the next 12 months. Management of the Company is continually balancing operating expenses to satisfy its working capital requirements.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Company’s financial position at September 30, 2013 and the results of its operations for the three and nine months ended September 30, 2013 and 2012, stockholders’ equity for the nine months ended September 30, 2013 and cash flows for the nine months ended September 30, 2013 and 2012. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the nine month period ended September 30, 2013, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2013.

The balance sheet as of December 31, 2012 has been derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.

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

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For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Recently Issued Accounting Pronouncements

On February 5, 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” The standard requires that entities present information about reclassification adjustments from accumulated other comprehensive income in their annual financial statements in a single note or on the face of the financial statements. Public companies will also have to provide this information in their interim financial statements. The standard requires that companies present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. If a component is not required to be reclassified to net income in its entirety, companies would instead cross reference to the related footnote for additional information. The Company adopted ASU 2013-02 on January 1, 2013, but has no components of comprehensive income. Accordingly, its net income (loss) is equal to its comprehensive income (loss).

Use of Estimates

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment of goodwill, valuation of intangible assets, deferred tax valuation allowances, allowance for doubtful accounts and the fair value of stock options granted under the Company’s stock-based compensation plans. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less when purchased. There were no cash equivalents held on September 30, 2013 and December 31, 2012.

Allowance for Doubtful Accounts

The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay.

Inventory

Inventory is stated at the lower of cost or market and cost is determined using the first-in, first-out method. Inventory is primarily comprised of finished goods.

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances, such as the occurrence of operating losses or a significant decline in earnings associated with the asset. The Company evaluates goodwill for impairment using guidance under ASU 2011-8, which allows the Company to complete a qualitative analysis to determine whether it is necessary to perform the two step quantitative impairment test.

8

Intangible Assets

              Acquired intangible assets include trade names, patents, developed technology and backlog from the acquisition of Mobilisa and Positive Access. The Company uses the straight line method to amortize these assets over their estimated useful lives. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC Topic 360. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. Impairment is measured at fair value. There were no impairment charges recognized during the nine months ended September 30, 2013 and 2012.

Financial Instruments

The Company adheres to the provisions of ASC Topic 820, which requires that the Company to calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value is different than the book value of those financial instruments. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. At September 30, 2013 and December 31, 2012, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

Revenue Recognition and Deferred Revenue

Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, collectability is probable, and there is no future Company involvement or commitment. The Company sells its commercial products directly through its sales force and through distributors. Revenue from direct sales of products is recognized when shipped to the customer and title has passed.

Under the provisions of ASC Topic 605-25, “Revenue Arrangements with Multiple Deliverables,” for multi-element arrangements that include tangible products containing software essential to the tangible product’s functionality and undelivered software elements relating to the tangible product’s essential software, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price and (iii) best estimate of the selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis.

The Company also recognizes revenues from licensing of its patented software to customers. The licensed software requires continuing service or post contractual customer support and performance; accordingly, a portion of the revenue is deferred based on its fair value and recognized ratably over the period in which the future service, support and performance are provided, which is generally one to three years. Royalties from the licensing of the Company’s technology are recognized as revenues in the period they are earned.

Revenue from research and development contracts are generally with government agencies under long-term cost-plus fixed-fee contracts, where revenue is based on time and material costs incurred. Revenue from these arrangements is recognized as time is spent on the contract and materials are purchased. Research and development costs are expensed as incurred.

The Company also performs consulting work for other companies. These services are billed based on time and materials. Revenue from these arrangements is also recognized as time is spent on the contract and materials are purchased.

Subscriptions to database information can be purchased for month-to-month, one, two, and three year periods. Revenue from subscriptions are deferred and recognized over the contractual period, which is typically three years.

9

The Company offers enhanced extended warranties for its sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.

Business Concentrations and Credit Risk

During the three and nine month periods ended September 30, 2013, the Company made sales to one customer that accounted for approximately 23% and 21% of total revenues. The revenue was associated with wireless network installations in Washington State. This customer represented 24% of total accounts receivable at September 30, 2013. During the three and nine month periods ended September 30, 2012, the Company made sales to four customers that accounted for approximately 37% and 49% of total revenues, respectively. These revenues resulted from a few large sales across our product mix, from commercial and government Defense ID to buoys. These customers represented 59% of total accounts receivable at September 30, 2012.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net income (loss) per share excludes all anti-dilutive shares.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Numerator:
Net Income (Loss)	$	15,796	$	(381,296)	$	(1,823,807)	$	(305,299)
Denominator:
Weighted average common shares – basic		27,795,594		27,523,587		27,771,819		27,482,865
Dilutive effect of equity incentive plans		45,763		-		-		-
Weighted average common shares – diluted		27,841,357		27,523,587		27,771,819		27,482,865
Net Income (Loss) per share
Basic	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)
Diluted	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)

The following table summarizes the common stock equivalents excluded from income (loss) per diluted share because their effect would be anti-dilutive because the exercise prices of these common stock equivalents exceeded the average market price of the Company’s common stock:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2013	2012	2013	2012
Stock options	1,130,977	935,635	1,014,731	935,635
	1,130,977	935,635	1,014,731	935,635

The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management's judgment in their application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result.

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3. INTANGIBLE ASSETS

The following summarizes amortization of acquisition related intangible assets included in the statement of operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013			2012	2013			2012
Cost of sales	$	192,854	$	192,853	$	578,562	$	578,562
General and administrative		33,952		36,896		101,855		114,203
	$	226,806	$	229,749	$	680,417	$	692,765

4. REVOLVING LINE OF CREDIT

On August 17, 2011, the Company entered into a revolving credit facility with Silicon Valley Bank. The maximum borrowing under the facility is $2 million. Borrowings under the facility are subject to certain limitations based on a percentage of accounts receivable, as defined in the agreement, and are secured by all of the Company’s assets. The facility bears interest at a rate of U.S. prime (3.25% at September 30, 2013) plus 1.25%. Interest is payable monthly and the principal is due upon maturity on October 15, 2014. At September 30, 2013, there were no amounts outstanding and unused availability under the facility was approximately $957,000.

5. INCOME TAXES

As of September 30, 2013, the Company had net operating loss carryforwards (NOL’s) for federal and New York state income tax purposes of approximately $43.0million. There can be no assurance that the Company will realize the entire benefit of the NOL’s. The federal and New York state NOL’s are available to offset future taxable income and expire from 2018 through 2030 if not utilized. Under Section 382 of the Internal Revenue Code, these NOL’s may be limited due to ownership changes. The Company has not yet completed its review to determine whether or not these NOL’s will be limited under Section 382 of the Internal Revenue Code due to the ownership change from the acquisition of Mobilisa, Inc.

The Company has recorded a full valuation allowance against its net deferred assets since management believes that it is more likely than not that these assets will not be realized.

The effective tax rate for the nine months ended September 30, 2013 and 2012 is different from the tax benefit that would result from applying the statutory tax rates primarily due to the recognition of valuation allowances.

6. SHARE BASED COMPENSATION

The Company accounts for the issuance of equity awards to employees in accordance with ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. These pronouncements establish fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees.

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

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2013	2012			2013	2012
Compensation cost recognized:
Stock options	$	5,299	$	5,986	$	15,358	$	47,262
Stock issued		-		-		12,600		-
	$	5,299	$	5,986	$	27,958	$	47,262

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Stock option activity under the 1998, 1999, 2001, 2003 and 2006 Stock Option Plans during the periods indicated below were as follows:

	Number of Shares Subject to Issuance	Weighted- average Exercise Price		Weighted- average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2012	746,635	$	2.06	1.66 years	$	32,217
Granted	135,000	$	0.39
Forfeited or expired	375,949	$	1.99
Exercised	153,200	$	0.46
Outstanding at September 30, 2013	352,486	$	2.18	2.84 years	$	27,000
Exercisable at September 30, 2013	212,236	$	3.33	1.82 years	$	-

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on September 30, 2013. This amount changes based upon the fair market value of the Company’s stock.

As of September 30, 2013, there was $45,396 of total unrecognized compensation expense, net of estimated forfeitures, related to all unvested stock options and restricted stock, which is expected to be recognized over a weighted-average period of 3.34years.

As of September 30, 2013, the Company had 1,759,754 options available for future grants under the Plans.

The Company uses the Black-Scholes option pricing model to value the options. The table below presents the weighted average expected life of the options in years. The expected life computation is based on the time to option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:

	Nine Months Ended
	September 30,
	2013			2012
Weighted average fair value of grants	$	0.39		$	0
Valuation assumptions:
Expected dividend yield		0			0
Expected volatility		100.4	%		0
Expected life (in years)		5.00			0
Risk-free interest rate		0.77	%		0

7. LEGAL PROCEEDINGS

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

The Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on its business.

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8. COMMITMENTS AND CONTINGENCIES

In March 2009, the Company entered into an agreement with an investor relations firm. The agreement is automatically renewed for successive twelve month periods unless either party gives written notice no later than 30 days prior to the expiration period. Afterwards, the fee may be subject to change by mutual agreement of the parties. As of April 1, 2011, the fee was reduced to $10,000 per month.

On November 16, 2010, the Company entered into an Executive Severance Agreement with Mr. Mundy, the Company’s former Chief Financial Officer. Under the agreement, if Mr. Mundy was terminated without cause, if he resigned with “good reason” (as defined in the agreement), or if he was terminated as a result of a change of control, he would have been entitled to 1.99 years of his then base salary, a gross amount equal to any quarterly bonus target applicable during the quarter, accelerated vesting of all outstanding stock options and coverage of health benefits for a period of up to 12 months. The agreement had a term of two years.   On April 1, 2012, Mr. Mundy resigned from the Company. In lieu of the above mentioned agreement, the Company entered into a consulting agreement with Mr. Mundy which had a term of nine months at $15,250 per month. Pursuant to this agreement, the final payment was made January 4, 2013.

9. RELATED PARTY TRANSACTIONS

Mobilisa leases office space from a company that is wholly-owned by two directors, who are members of management. The Company entered into a 10-year lease for the office space ending in 2017. The annual rent for this facility is currently $85,498 and is subject to annual increases based on the increase in the CPI index plus 1%. The Company is a guarantor of the leased property. For the three and nine months ended September 30, 2013, total rental payments for this office space were $22,075 and $66,226 respectively. For the three and nine months ended September 30, 2012, total rental payments for this office space were $0 and $42,750, respectively, because the third quarter’s rent of $22,075 was accrued but not paid until October, 15, 2012.

As of September 30, 2013, the Company had $320,604 in accrued expenses related to board fees for the first three quarters of 2013 and the CEO’s salary for the second quarter of 2013.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

References made in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” “Intellicheck,” or the “Company,” refer to Intellicheck Mobilisa, Inc.

The following discussion and analysis of our financial condition and results of operations constitutes management’s review of the factors that affected our financial and operating performance for the nine month periods ended September 30, 2013 and 2012. This discussion should be read in conjunction with the financial statements and notes thereto contained elsewhere in this report and in our Annual Report on Form 10-K, for the year ended December 31, 2012. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Mobilisa, Inc. (“Mobilisa”) and Positive Access Corporation (“Positive Access”).

Overview

Intellicheck Mobilisa, Inc. (the “Company” or “Intellicheck”) is a leading technology company that is engaged in developing and marketing wireless technology and identity systems for various applications including mobile and handheld access control and security systems for the government, military and commercial markets. Products include the Defense ID and Fugitive Finder systems, advanced ID card access control products currently protecting military and federal locations, and ID-Check, a patented technology that instantly reads, analyzes, and verifies encoded data in magnetic stripes and barcodes on government-issue IDs from U.S. and Canadian jurisdictions designed to improve the Customer Experience for the financial, hospitality and retail sectors. Wireless products include enterprise wireless system installation in rural areas of the country.

13

Critical Accounting Policies and the Use of Estimates

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment of goodwill, valuation of intangible assets, deferred tax valuation allowances, allowance for doubtful accounts and the fair value of stock options granted under the Company’s stock-based compensation plans. 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. These significant accounting policies relate to revenue recognition, stock-based compensation, deferred taxes and commitments and contingencies. These policies and our procedures related to these policies are described in detail below.

Goodwill

For the year ended December 31, 2012, the Company performed a two-step quantitative analysis of its goodwill. From this analysis, the Company determined that the fair value of its reporting unit was higher than its carrying value, at 102%. The Company also believed that the stock price at December 31, 2012, was artificially deflated because of certain factors. Management’s evaluation determined that no goodwill impairment charge was required as of December 31, 2012.

Since December 31, 2012, and prior to the filing of this document, the Company’s closing stock price has ranged from a low of $0.28 to a high of $0.94. Market capitalization is a relevant and objective, but not conclusive, indicator of the Company’s fair value considered in its evaluation of potential indicators of goodwill impairment. The Company believes that recent fluctuations in its stock price do not represent an indication of goodwill impairment. The Company will, however, continue to monitor its stock price and operations for any potential indicators of impairment. The Company will conduct its 2013 annual test for goodwill impairment in the fourth quarter.

Revenue Recognition and Deferred Revenue

Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, collectability is probable, and there is no future Company involvement or commitment. The Company sells its commercial products directly through its sales force and through distributors. Revenue from direct sales of products is recognized when shipped to the customer and title has passed.

Under the provisions of ASC Topic 605-25, “Revenue Arrangements with Multiple Deliverables,” for multi-element arrangements that include tangible products containing software essential to the tangible product’s functionality and undelivered software elements relating to the tangible product’s essential software, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price and (iii) best estimate of the selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the  selling prices of elements would be if they were sold regularly on a stand-alone basis.

The Company also recognizes revenues from licensing of its patented software to customers. The licensed software requires continuing service or post contractual customer support and performance; accordingly, a portion of the revenue is deferred based on its fair value and recognized ratably over the period in which the future service, support and performance are provided, which is generally one to three years. Royalties from the licensing of the Company’s technology are recognized as revenues in the period they are earned.

Revenue from research and development contracts are generally with government agencies under long-term cost-plus fixed-fee contracts, where revenue is based on time and material costs incurred. Revenue from these arrangements is recognized as time is spent on the contract and materials are purchased. Research and development costs are expensed as incurred.

14

The Company also performs consulting work for other companies. These services are billed based on time and materials. Revenue from these arrangements is also recognized as time is spent on the contract and materials are purchased.

Subscriptions to database information can be purchased for month-to-month, one, two, and three year periods. Revenue from subscriptions are deferred and recognized over the contractual period, which is typically three years.

The Company offers enhanced extended warranties for its sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.

Stock-Based Compensation

The Company accounts for the issuance of equity awards to employees in accordance with ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees.

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. 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 September 30, 2013, due to the uncertainty of the our ability to realize those assets.

Commitments and Contingencies

We are not currently involved in any legal proceedings that we believe would have a material adverse effect on our financial position, results of operations or cash flows.

The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management's judgment in their application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result.

Results of Operations (All figures have been rounded to the nearest $1,000)

Comparison of the three months ended September 30, 2013 to the three months ended September 30, 2012

Revenues for quarter ended September 30, 2013 increased 21.5% to $2,579,000 compared to $2,123,000 for the previous year.

	Three months ended September 30,
	2013		2012		% Change
Identity Systems	$	1,641,000	$	1,572,000		4
Wireless/R&D		938,000		551,000		70
	$	2,579,000	$	2,123,000		21

15

The increase in Identity Systems revenues in the third quarter of 2013 is primarily the result of two large DID hardware sales in September, 2013, offset slightly by lower commercial hardware sales overall. The increase in Wireless revenue in the third quarter of 2013 is attributable to wireless network installations in Q3 of 2013 exceeding wireless buoy revenue in Q3 of 2012. The Company collected $250,000 and recognized $209,000 in Q3 of 2013 related to revenue for the 2012 buoy contract written off in Q4 of 2012. The Company collected and recognized an additional $135,000 related to clean-up of the project in Q3, 2013. Total booked orders were $1.5 million in the third quarter of 2013 compared to $1.4 million in the third quarter of 2012. As of September 30, 2013, our backlog, which represents non-cancelable sales orders for products not yet shipped and services to be performed, was approximately $0.4 million compared to $0.3 million at September 30, 2012. As of September 30, 2013, we expect $0.2 million of our backlog to be recognized in excess of one year. Backlog at December 31, 2012 was $1.2 million.

Our gross profit as a percentage of revenues was 69.1% for the three months ended September 30, 2013 compared to 73.8% for the three months ended September 30, 2012. The decrease in the percentage is primarily a result of a change in product mix: 23.7% of our Q3, 2013 revenue was generated by wireless network installation projects, which has lower overall margins than our other product offerings.

Operating expenses, which consist of selling, general and administrative and research and development expenses, decreased $183,000 or 9.4% to $1,766,000 for the three months ended September 30, 2013 compared to $1,948,000 for the three months ended September 30, 2012. Selling expenses for the quarter decreased by $113,000 resulting from a decrease in certain sales personnel. General and administrative expenses decreased by $16,000 largely due to a decrease in personnel. Research and development expenses decreased by $54,000 also because of the decrease in personnel.

Interest income and expense was insignificant in both periods presented.

As a result of the anticipated net loss for the full 2013 year, no provision for income tax has been made for the three months ended September 30, 2013.

As a result of the factors noted above, the Company generated net income of $16,000 for the three months ended September 30, 2013 as compared to a net loss of $381,000 for the three months ended September 30, 2012.

Comparison of the nine months ended September 30, 2013 to the nine months ended September 30, 2012

Revenues decreased by 28.3%, to $5,932,000 for the nine months ended September 30, 2013 from $8,275,000 for the nine months ended September 30, 2012.

	Nine months ended September 30,
	2013		2012		% Change
Identity Systems	$	4,326,000	$	6,341,000		(32)
Wireless/R&D		1,606,000		1,934,000		(17)
	$	5,932,000	$	8,275,000		(28)

The decrease in Identity Systems revenues in 2013 is primarily the result of lower hardware sales, driven by two sales in the second quarter of 2012 for $1.0 million and $447,000. The remainder was driven mainly by lower overall hardware sales to existing commercial customers. The decrease in Wireless revenue is attributable to work on buoys in 2012 exceeding wireless installations in 2013.

Our gross profit as a percentage of revenues was 61.3% for the nine months ended September 30, 2013 compared to 69.5% for the nine months ended September 30, 2012. The decrease in the percentage is primarily a result of a change in product mix: 21.6% of our 2013 revenue was generated by wireless network installation projects, which has lower overall margins than our other product offerings.

Operating expenses, which consist of selling, general and administrative and research and development expenses, decreased $600,000 or 9.9% to $5,460,000 for the nine months ended September 30, 2013 from $6,060,000 for the nine months ended September 30, 2012. Selling expenses decreased by $438,000 principally due to a decrease in certain sales personnel. General and administrative expenses decreased by $6,000 primarily due to the decrease in personnel. Research and development costs decreased by $156,000 due to the decrease in personnel, and this expense decreased further because of the shifting of some R&D salary expense to G&A.

16

Interest income and expense was insignificant in both periods presented.

As a result of the anticipated net loss for the full 2013 year, no provision for income tax has been made for the nine months ended September 30, 2013.

As a result of the factors noted above, the Company generated a net loss of $1,824,000 for the nine months ended September 30, 2013 as compared to a net loss of $305,000 for the nine months ended September 30, 2012.

Intangible Assets

As of September 30, 2013, the Company had no indication of impairment of goodwill or any of its definite-lived intangible assets.

Liquidity and Capital Resources (All figures have been rounded to the nearest $1,000)

As of September 30, 2013, the Company had cash and cash equivalents of $643,000, working capital (defined as current assets minus current liabilities) deficit of $395,000, total assets of $19,114,000 and stockholders’ equity of $15,953,000.

During the nine months ended September 30, 2013, the Company used net cash from operating activities of $1,040,000 compared to generating net cash from operating activities of $1,284,000 in the nine months ended September 30, 2012. Cash used by investing activities was $73,000 for the nine months ended September 30, 2013 compared to $71,000 for the nine months ended September 30, 2012. Cash provided by financing activities was $70,000 during the period ended September 30, 2013 compared to $130,000 in the same period last year.

As discussed in Note 9, Related Party Transactions, as of September 30, 2013, the Company has $321,000 in accrued expenses related to board fees for the first three quarters of 2013 and the CEO’s salary for the second quarter of 2013.

On August 17, 2011, the Company entered into a revolving credit facility with Silicon Valley Bank. The maximum borrowing under the facility is $2 million. Borrowings under the facility are subject to certain limitations based on a percentage of accounts receivable, as defined in the agreement, and are secured by all of the Company’s assets. The facility bears interest at a rate of U.S. prime (3.25% at September 30, 2013) plus 1.25%. Interest is payable monthly and the principal is due upon maturity on October 15, 2014. At September 30, 2013, there were no amounts outstanding and unused availability under the facility was approximately $957,000.

We currently anticipate that our available cash, as well as expected cash from operations and availability under the current credit facility with Silicon Valley Bank, will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months. The Company has already implemented some cost-cutting measures, some of which took effect in the third quarter of 2013. We continue to monitor cash levels and consider other necessary cost cuts that will not interfere with our roll out of new products and into new markets.

We keep the option open to raise additional funds to respond to business contingencies which may include the need to fund more rapid expansion, fund additional marketing expenditures, develop new markets for our technology, enhance our operating infrastructure, respond to competitive pressures, or acquire complementary businesses or necessary technologies. There can be no assurance that the Company will be able to secure the additional funds when needed or obtain such on terms satisfactory to the Company, if at all.

The Company filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”), which became effective July 6, 2010. Under the shelf registration statement, the Company may offer and sell, from time to time in the future in one or more public offerings, its common stock, preferred stock, warrants, and units. The aggregate initial offering price of all securities sold by the Company will not exceed $25,000,000, and, pursuant to SEC rules, the Company may only sell up to one-third of the market cap held by non-affiliate stockholders in any 12-month period. The Company renewed its registration with the SEC on July 31, 2013.

17

The specific terms of any future offering, including the prices and use of proceeds, will be determined at the time of any such offering and will be described in detail in a prospectus supplement which will be filed with the SEC at the time of the offering.

The shelf registration statement is designed to give the Company the flexibility to access additional capital at some point in the future when market conditions are appropriate.

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.

Net Operating Loss Carry Forwards

As of September 30, 2013, the Company had net operating loss carryforwards (“NOL’s”) for federal and New York state income tax purposes of approximately $43.0 million. There can be no assurance that the Company will realize the entire benefit of the NOL’s. The federal and New York state NOL’s are available to offset future taxable income and expire from 2018 to 2030, if not utilized. The Company has not yet completed its review to determine whether or not these NOL’s will be limited under Section 382 of the Internal Revenue Code due to the ownership change from the acquisition of Mobilisa, Inc.

Adjusted EBITDA

The Company uses Adjusted EBITDA as a non-GAAP financial performance measurement. Adjusted EBITDA is calculated by adding back to net income (loss) interest, income taxes, impairments of long-lived assets and goodwill, depreciation, amortization and stock-based compensation expense. Adjusted EBITDA is provided to investors to supplement the results of operations reported in accordance with GAAP. Management believes that Adjusted EBITDA provides an additional tool for investors to use in comparing Intellicheck Mobilisa financial results with other companies that also use Adjusted EBITDA in their communications to investors. By excluding non-cash charges such as impairments of long-lived assets and goodwill, amortization, depreciation and stock-based compensation, as well as non-operating charges for interest and income taxes, investors can evaluate the Company's operations and can compare its results on a more consistent basis to the results of other companies. In addition, Adjusted EBITDA is one of the primary measures management uses to monitor and evaluate financial and operating results.

Intellicheck Mobilisa considers Adjusted EBITDA to be an important indicator of the Company's operational strength and performance of its business and a useful measure of the Company's historical operating trends. However, there are significant limitations to the use of Adjusted EBITDA since it excludes interest income and expense, impairments of long lived assets and goodwill, stock based compensation expense, all of which impact the Company's profitability, as well as depreciation and amortization related to the use of long term assets which benefit multiple periods. The Company believes 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. Adjusted EBITDA as defined by the Company may not be comparable with similarly named measures provided by other entities.

A reconciliation of GAAP net income (loss) to Adjusted EBITDA follows:

18

 

	(Unaudited)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Net Income (Loss)	$	15,796	$	(381,296)	$	(1,823,807)	$	(305,299)
Reconciling items:
Interest – net		(73)		-		(88)		-
Depreciation and amortization		265,943		273,125		802,402		824,589
Stock-based compensation costs		5,299		5,986		27,958		47,262
Adjusted EBITDA	$	286,965	$	(102,185)	$	(993,535)	$	566,552

Off-Balance Sheet Arrangements

We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. Other than Mobilisa’s guarantee on the mortgage of the property it leases from a related party as disclosed in Note 9, we have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Forward Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, particularly statements anticipating future growth in revenues, loss from operations and cash flow. Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. These forward-looking statements are based on management’s current expectations and beliefs about future events. 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company maintains cash in one financial institution. The Company performs periodic evaluations of the relative credit standing of this institution.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and our Chief Financial Officer evaluated, with the participation of our management, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. As of September 30, 2013, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures, as defined in Securities Exchange Act Rule 13a-15(e) and 15d-15(e), were effective.

Our disclosure controls and procedures have been formulated to ensure (i) that information that we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 were recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) that the information required to be disclosed by us is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

19

Changes in Internal Controls over Financial Reporting

There was no change in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the third quarter of 2013 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Part II - Other Information

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. Risk Factors

Current economic conditions may cause a decline in business and consumer spending which could adversely affect our business and financial performance.

While a significant portion of our business is with the U.S. government, our operating results may be impacted by the overall health of the North American economy. Our business and financial performance, including collection of our accounts receivable, realization of inventory, recoverability of assets including investments, may be adversely affected by current and future economic conditions, such as a reduction in the availability of credit, financial market volatility, recession, etc.

Our operations and financial results are subject to various other risks and uncertainties that could adversely affect our business, financial condition, results of operations, and trading price of our common stock. Please refer to our annual report on Form 10-K for fiscal year 2012 for information concerning other risks and uncertainties that could negatively impact us.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

Item 3. DEFAULTS UPON SENIOR SECURITIES

None

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None

20

Item 6.    Exhibits

(a) The following exhibits are filed as part of the Quarterly Report on Form 10-Q:

Exhibit No.	Description
31.1	Rule 13a-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Financial Officer
32	18 U.S.C. Section 1350 Certifications
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	XBRL Taxonomy Extension Label Linkbase
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase

*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

21

 

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:    November 5, 2013	Intellicheck Mobilisa, Inc.
	By:	/s/ Nelson Ludlow
		Nelson Ludlow, PhD
		Chief Executive Officer
	By:	/s/ Bill White
		Bill White
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

22

 

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Nelson Ludlow, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Intellicheck Mobilisa, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 5, 2013

/s/ Nelson Ludlow
Name:	Nelson Ludlow, PhD
Title:	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bill White, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Intellicheck Mobilisa, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 5, 2013

/s/ Bill White
Name:	Bill White
Title:	Chief Financial Officer
	(Principal Financial and Accounting Officer)

 

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Intellicheck Mobilisa, Inc. (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the period ended September 30, 2013 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	November 5, 2013	/s/ Nelson Ludlow
		Name:    Nelson Ludlow, PhD
		Title:      Chief Executive Officer
		(Principal Executive Officer)
Dated:	November 5, 2013	/s/ Bill White
		Name:    Bill White
		Title:      Chief Financial Officer
		(Principal Financial and Accounting Officer)

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

 

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The calculation of diluted net income (loss) per share excludes all anti-dilutive shares.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Numerator:
Net Income (Loss)	$	15,796	$	(381,296)	$	(1,823,807)	$	(305,299)
Denominator:
Weighted average common shares – basic		27,795,594		27,523,587		27,771,819		27,482,865
Dilutive effect of equity incentive plans		45,763		-		-		-
Weighted average common shares – diluted		27,841,357		27,523,587		27,771,819		27,482,865
Net Income (Loss) per share
Basic	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)
Diluted	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)

Schedule of Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Table Text Block]

The following table summarizes the common stock equivalents excluded from income (loss) per diluted share because their effect would be anti-dilutive because the exercise prices of these common stock equivalents exceeded the average market price of the Company’s common stock:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2013	2012	2013	2012
Stock options	1,130,977	935,635	1,014,731	935,635
	1,130,977	935,635	1,014,731	935,635

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
REVENUES	$ 2,578,863	$ 2,123,403	$ 5,932,239	$ 8,274,841
COST OF REVENUES	(797,488)	(556,265)	(2,295,871)	(2,519,753)
Gross profit	1,781,375	1,567,138	3,636,368	5,755,088
OPERATING EXPENSES
Selling	257,000	370,208	793,908	1,231,566
General and administrative	1,035,941	1,051,901	3,074,299	3,080,224
Research and development	472,711	526,325	1,592,056	1,748,597
Total operating expenses	1,765,652	1,948,434	5,460,263	6,060,387
Income (Loss) from operations	15,723	(381,296)	(1,823,895)	(305,299)
OTHER INCOME (EXPENSE)
Interest income	73	0	88	0
Net Income (Loss)	$ 15,796	$ (381,296)	$ (1,823,807)	$ (305,299)
Net Income (Loss) per common share -
Basic (in dollars per share)	$ 0.00	$ (0.01)	$ (0.07)	$ (0.01)
Diluted (in dollars per share)	$ 0.00	$ (0.01)	$ (0.07)	$ (0.01)
Weighted average common shares used in computing per share amounts -
Basic (in shares)	27,795,594	27,523,587	27,771,819	27,482,865
Diluted (in shares)	27,841,357	27,523,587	27,771,819	27,482,865

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REVOLVING LINE OF CREDIT

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

4. REVOLVING LINE OF CREDIT

On August 17, 2011, the Company entered into a revolving credit facility with Silicon Valley Bank. The maximum borrowing under the facility is $2 million. Borrowings under the facility are subject to certain limitations based on a percentage of accounts receivable, as defined in the agreement, and are secured by all of the Company’s assets. The facility bears interest at a rate of U.S. prime (3.25% at September 30, 2013) plus 1.25%. Interest is payable monthly and the principal is due upon maturity on October 15, 2014. At September 30, 2013, there were no amounts outstanding and unused availability under the facility was approximately $957,000.

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INTANGIBLE ASSETS (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Amortization of Acquired Intangible Assets	$ 226,806	$ 229,749	$ 680,417	$ 692,765
Cost of Sales [Member]
Amortization of Acquired Intangible Assets	192,854	192,853	578,562	578,562
General and Administrative Expense [Member]
Amortization of Acquired Intangible Assets	$ 33,952	$ 36,896	$ 101,855	$ 114,203

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INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The following summarizes amortization of acquisition related intangible assets included in the statement of operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013			2012	2013			2012
Cost of sales	$	192,854	$	192,853	$	578,562	$	578,562
General and administrative		33,952		36,896		101,855		114,203
	$	226,806	$	229,749	$	680,417	$	692,765

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SHARE BASED COMPENSATION (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Compensation cost recognized:
Allocated Share-based Compensation Expense	$ 5,299	$ 5,986	$ 27,958	$ 47,262
Common Stock [Member]
Compensation cost recognized:
Allocated Share-based Compensation Expense	0	0	12,600	0
Employee Stock Option [Member]
Compensation cost recognized:
Allocated Share-based Compensation Expense	$ 5,299	$ 5,986	$ 15,358	$ 47,262

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INCOME TAXES (Details Textual) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Operating Loss Carryforwards	$ 43
Operating Loss Carryforwards Expiration Term	from 2018 through 2030

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COMMITMENTS AND CONTINGENCIES (Details Textual) (USD $)	1 Months Ended		9 Months Ended
	Apr. 30, 2012	Nov. 30, 2010	Sep. 30, 2013	Apr. 01, 2011
Granted Stock Restricted Period			2 years
Long-term Purchase Commitment, Time Period			30 days
Fees Reduced				$ 10,000
Severance Agreement Commitments Description	On April 1, 2012, Mr. Mundy resigned from the Company.  In lieu of the above mentioned agreement, the Company entered into a consulting agreement with Mr. Mundy which had a term of nine months at $15,250 per month.  Pursuant to this agreement, the final payment was made January 4, 2013.	On November 16, 2010, the Company entered into an Executive Severance Agreement with Mr. Mundy, the Company’s former Chief Financial Officer. Under the agreement, if Mr. Mundy was terminated without cause, if he resigned with “good reason” (as defined in the agreement), or if he was terminated as a result of a change of control, he would have been entitled to 1.99 years of his then base salary, a gross amount equal to any quarterly bonus target applicable during the quarter, accelerated vesting of all outstanding stock options and coverage of health benefits for a period of up to 12 months. The agreement had a term of two years.

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REVOLVING LINE OF CREDIT (Details Textual) (USD $)	1 Months Ended
	Aug. 31, 2011	Sep. 30, 2013	Aug. 17, 2011
Line of Credit Facility, Initiation Date	Aug. 17, 2011
Line of Credit Facility, Maximum Borrowing Capacity			$ 2,000,000
Line of Credit Facility, Interest Rate Description	The facility bears interest at a rate of U.S. prime (3.25% atSeptember 30, 2013) plus 1.25%
Line Of Credit Facility, Expiration Date	Oct. 15, 2014
Line of Credit Facility, Remaining Borrowing Capacity		$ 957,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$ (1,823,807)	$ (305,299)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization	802,402	824,589
Noncash stock-based compensation expense	27,958	47,262
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable	(712,613)	1,175,746
Decrease (Increase) in inventory	283,284	(105,973)
Decrease (Increase) in other current assets	4,430	(7,599)
Increase (Decrease) in accounts payable, accrued expenses	835,518	(935)
(Decrease) in deferred revenue	(442,310)	(338,249)
(Decrease) in deferred rent	(14,690)	(5,608)
Net cash (used in) provided by operating activities	(1,039,828)	1,283,934
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(73,106)	(71,024)
Net cash used in investing activities	(73,106)	(71,024)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock from exercise of stock options	70,472	130,448
Net cash provided by financing activities	70,472	130,448
(Decrease) increase in cash and cash equivalents	(1,042,462)	1,343,358
CASH AND CASH EQUIVALENTS, beginning of period	1,685,879	1,394,148
CASH AND CASH EQUIVALENTS, end of period	643,417	2,737,506
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes	$ 0	$ 6,000

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SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Company’s financial position at September 30, 2013 and the results of its operations for the three and nine months ended September 30, 2013 and 2012, stockholders’ equity for the nine months ended September 30, 2013 and cash flows for the nine months ended September 30, 2013 and 2012. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the nine month period ended September 30, 2013, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2013.

The balance sheet as of December 31, 2012 has been derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.

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

For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Recently Issued Accounting Pronouncements

On February 5, 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” The standard requires that entities present information about reclassification adjustments from accumulated other comprehensive income in their annual financial statements in a single note or on the face of the financial statements. Public companies will also have to provide this information in their interim financial statements. The standard requires that companies present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. If a component is not required to be reclassified to net income in its entirety, companies would instead cross reference to the related footnote for additional information.  The Company adopted ASU 2013-02 on January 1, 2013, but has no components of comprehensive income. Accordingly, its net income (loss) is equal to its comprehensive income (loss).

Use of Estimates

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment of goodwill, valuation of intangible assets, deferred tax valuation allowances, allowance for doubtful accounts and the fair value of stock options granted under the Company’s stock-based compensation plans. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less when purchased. There were no cash equivalents held on September 30, 2013 and December 31, 2012.

Allowance for Doubtful Accounts

The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay.

Inventory

Inventory is stated at the lower of cost or market and cost is determined using the first-in, first-out method. Inventory is primarily comprised of finished goods.

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances, such as the occurrence of operating losses or a significant decline in earnings associated with the asset. The Company evaluates goodwill for impairment using guidance under ASU 2011-8, which allows the Company to complete a qualitative analysis to determine whether it is necessary to perform the two step quantitative impairment test.

Intangible Assets

               Acquired intangible assets include trade names, patents, developed technology and backlog from the acquisition of Mobilisa and Positive Access. The Company uses the straight line method to amortize these assets over their estimated useful lives. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC Topic 360.  To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets.  Impairment is measured at fair value.  There were no impairment charges recognized during the nine months ended September 30, 2013 and 2012.

Financial Instruments

The Company adheres to the provisions of ASC Topic 820, which requires that the Company to calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value is different than the book value of those financial instruments. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. At September 30, 2013 and December 31, 2012, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

Revenue Recognition and Deferred Revenue

Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, collectability is probable, and there is no future Company involvement or commitment. The Company sells its commercial products directly through its sales force and through distributors. Revenue from direct sales of products is recognized when shipped to the customer and title has passed.

Under the provisions of ASC Topic 605-25, “Revenue Arrangements with Multiple Deliverables,” for multi-element arrangements that include tangible products containing software essential to the tangible product’s functionality and undelivered software elements relating to the tangible product’s essential software, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price and (iii) best estimate of the selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis.

The Company also recognizes revenues from licensing of its patented software to customers. The licensed software requires continuing service or post contractual customer support and performance; accordingly, a portion of the revenue is deferred based on its fair value and recognized ratably over the period in which the future service, support and performance are provided, which is generally one to three years. Royalties from the licensing of the Company’s technology are recognized as revenues in the period they are earned.

Revenue from research and development contracts are generally with government agencies under long-term cost-plus fixed-fee contracts, where revenue is based on time and material costs incurred. Revenue from these arrangements is recognized as time is spent on the contract and materials are purchased. Research and development costs are expensed as incurred.

The Company also performs consulting work for other companies. These services are billed based on time and materials. Revenue from these arrangements is also recognized as time is spent on the contract and materials are purchased.

Subscriptions to database information can be purchased for month-to-month, one, two, and three year periods. Revenue from subscriptions are deferred and recognized over the contractual period, which is typically three years.

The Company offers enhanced extended warranties for its sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.

Business Concentrations and Credit Risk

During the three and nine month periods ended September 30, 2013, the Company made sales to one customer that accounted for approximately 23% and 21% of total revenues. The revenue was associated with wireless network installations in Washington State. This customer represented 24% of total accounts receivable at September 30, 2013. During the three and nine month periods ended September 30, 2012, the Company made sales to four customers that accounted for approximately 37% and 49% of total revenues, respectively. These revenues resulted from a few large sales across our product mix, from commercial and government Defense ID to buoys. These customers represented 59% of total accounts receivable at September 30, 2012.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net income (loss) per share excludes all anti-dilutive shares.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Numerator:
Net Income (Loss)	$	15,796	$	(381,296)	$	(1,823,807)	$	(305,299)
Denominator:
Weighted average common shares – basic		27,795,594		27,523,587		27,771,819		27,482,865
Dilutive effect of equity incentive plans		45,763		-		-		-
Weighted average common shares – diluted		27,841,357		27,523,587		27,771,819		27,482,865
Net Income (Loss) per share
Basic	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)
Diluted	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)

The following table summarizes the common stock equivalents excluded from income (loss) per diluted share because their effect would be anti-dilutive because the exercise prices of these common stock equivalents exceeded the average market price of the Company’s common stock:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2013	2012	2013	2012
Stock options	1,130,977	935,635	1,014,731	935,635
	1,130,977	935,635	1,014,731	935,635

The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management's judgment in their application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result.

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INCOME TAXES

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

5. INCOME TAXES

As of September 30, 2013, the Company had net operating loss carryforwards (NOL’s) for federal and New York state income tax purposes of approximately $43.0million. There can be no assurance that the Company will realize the entire benefit of the NOL’s. The federal and New York state NOL’s are available to offset future taxable income and expire from 2018 through 2030 if not utilized. Under Section 382 of the Internal Revenue Code, these NOL’s may be limited due to ownership changes. The Company has not yet completed its review to determine whether or not these NOL’s will be limited under Section 382 of the Internal Revenue Code due to the ownership change from the acquisition of Mobilisa, Inc.

The Company has recorded a full valuation allowance against its net deferred assets since management believes that it is more likely than not that these assets will not be realized.

The effective tax rate for the nine months ended September 30, 2013 and 2012 is different from the tax benefit that would result from applying the statutory tax rates primarily due to the recognition of valuation allowances.

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INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

3. INTANGIBLE ASSETS

The following summarizes amortization of acquisition related intangible assets included in the statement of operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013			2012	2013			2012
Cost of sales	$	192,854	$	192,853	$	578,562	$	578,562
General and administrative		33,952		36,896		101,855		114,203
	$	226,806	$	229,749	$	680,417	$	692,765

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SHARE BASED COMPENSATION (Details 1) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Number of Shares Subject to Issuance, Outstanding	746,635
Number of Shares Subject to Issuance, Granted	135,000
Number of Shares Subject to Issuance, Forfeited or expired	375,949
Number of Shares Subject to Issuance, Exercised	153,200
Number of Shares Subject to Issuance, Outstanding	352,486	746,635
Number of Shares Subject to Issuance, Exercisable	212,236
Weighted-average Exercise Price, Outstanding	$ 2.06
Weighted-average Exercise Price, Granted	$ 0.39
Weighted-average Exercise Price, Forfeited or expired	$ 1.99
Weighted-average Exercise Price, Exercised	$ 0.46
Weighted-average Exercise Price, Outstanding	$ 2.18	$ 2.06
Weighted-average Exercise Price, Exercisable	$ 3.33
Weighted-average Remaining Contractual Term, Outstanding	2 years 10 months 2 days	1 year 7 months 28 days
Weighted-average Remaining Contractual Term, Exercisable	1 year 9 months 25 days
Aggregate Intrinsic Value, Outstanding	$ 32,217
Aggregate Intrinsic Value, Outstanding	27,000	32,217
Aggregate Intrinsic Value, Exercisable	$ 0

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RELATED PARTY TRANSACTIONS (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Lease Term			10 years
Lease Expiration			2017
Related Party Transaction, Amounts of Transaction			$ 85,498
Payments for Rent	22,075	0	66,226	42,750
Rent Annual Increase Basis			based on the increase in the CPI index plus 1%
Accrued Rent	22,075		22,075
Accrued Board Fee And salary Expenses	$ 320,604		$ 320,604

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CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Sep. 30, 2013	Dec. 31, 2012
Allowance for accounts receivable (in dollars)	$ 1,613	$ 1,613
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	27,897,467	27,724,267
Common stock, shares outstanding	27,897,467	27,724,267

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

8. COMMITMENTS AND CONTINGENCIES

In March 2009, the Company entered into an agreement with an investor relations firm. The agreement is automatically renewed for successive twelve month periods unless either party gives written notice no later than 30 days prior to the expiration period. Afterwards, the fee may be subject to change by mutual agreement of the parties. As of April 1, 2011, the fee was reduced to $10,000 per month.

On November 16, 2010, the Company entered into an Executive Severance Agreement with Mr. Mundy, the Company’s former Chief Financial Officer. Under the agreement, if Mr. Mundy was terminated without cause, if he resigned with “good reason” (as defined in the agreement), or if he was terminated as a result of a change of control, he would have been entitled to 1.99 years of his then base salary, a gross amount equal to any quarterly bonus target applicable during the quarter, accelerated vesting of all outstanding stock options and coverage of health benefits for a period of up to 12 months. The agreement had a term of two years.   On April 1, 2012, Mr. Mundy resigned from the Company.  In lieu of the above mentioned agreement, the Company entered into a consulting agreement with Mr. Mundy which had a term of nine months at $15,250 per month.  Pursuant to this agreement, the final payment was made January 4, 2013.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]
BALANCE at Dec. 31, 2012	$ 17,678,435	$ 27,724	$ 100,882,019	$ (83,231,308)
BALANCE (in shares) at Dec. 31, 2012		27,724,267
Stock option compensation	15,358	0	15,358	0
Stock option compensation (in shares)		0
Stock option exercises	70,472	153	70,319	0
Stock option exercises (in shares)	153,200	153,200
Issuance of common stock	12,600	20	12,580	0
Issuance of common stock (in shares)		20,000
Net loss	(1,823,807)	0	0	(1,823,807)
BALANCE at Sep. 30, 2013	$ 15,953,058	$ 27,897	$ 100,980,276	$ (85,055,115)
BALANCE (in shares) at Sep. 30, 2013		27,897,467

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CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 643,417	$ 1,685,879
Accounts receivable, net of allowance of $1,613 and $1,613 as of September 30, 2013 and December 31, 2012, respectively	1,582,360	869,747
Inventory	54,275	337,559
Other current assets	101,451	105,881
Total current assets	2,381,503	2,999,066
PROPERTY AND EQUIPMENT, net	400,559	449,438
GOODWILL	12,308,661	12,308,661
INTANGIBLE ASSETS, net	3,951,160	4,631,577
OTHER ASSETS	72,006	72,006
Total assets	19,113,889	20,460,748
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	760,675	247,289
Accrued expenses	878,946	556,814
Deferred revenue, current portion	1,136,925	1,450,923
Total current liabilities	2,776,546	2,255,026
OTHER LIABILITIES
Deferred revenue, long-term portion	213,636	341,948
Deferred rent	170,649	185,339
Total liabilities	3,160,831	2,782,313
STOCKHOLDERS' EQUITY:
Common stock - $.001 par value; 40,000,000 shares authorized; 27,897,467 and 27,724,267 shares issued and outstanding, respectively	27,897	27,724
Additional paid-in capital	100,980,276	100,882,019
Accumulated deficit	(85,055,115)	(83,231,308)
Total stockholders' equity	15,953,058	17,678,435
Total liabilities and stockholders' equity	$ 19,113,889	$ 20,460,748

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SHARE BASED COMPENSATION (Details 2) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Weighted average fair value of grants	$ 0.39	$ 0
Valuation assumptions:
Expected dividend yield	0.00%	0.00%
Expected volatility	100.40%	0.00%
Expected life (in years)	5 years	0 years
Risk-free interest rate	0.77%	0.00%

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SIGNIFICANT ACCOUNTING POLICIES (Details Textual)	3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2012 Customer A [Member]	Sep. 30, 2012 Customer A [Member]	Sep. 30, 2012 Customer B [Member]	Sep. 30, 2012 Customer B [Member]	Sep. 30, 2012 Customer C [Member]	Sep. 30, 2012 Customer C [Member]	Sep. 30, 2012 Customer D [Member]	Sep. 30, 2012 Customer D [Member]
Entity-Wide Revenue, Major Customer, Percentage	23.00%	21.00%		37.00%	49.00%	37.00%	49.00%	37.00%	49.00%	37.00%	49.00%
Entity Wide Accounts Receivable Major Customer Percentage		24.00%	59.00%
Deferred Revenue, Description		Subscriptions to database information can be purchased for month-to-month, one, two, and three year periods. Revenue from subscriptions are deferred and recognized over the contractual period, which is typically three years.

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LEGAL PROCEEDINGS

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Legal Matters and Contingencies [Text Block]

7. LEGAL PROCEEDINGS

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

The Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on its business.

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SHARE BASED COMPENSATION (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2013
Unrecognized compensation expense	$ 45,396
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	3 years 4 months 2 days
Share based Compensation Arrangement By Share based Payment Award Options Available For Future Grants	1,759,754

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Company’s financial position at September 30, 2013 and the results of its operations for the three and nine months ended September 30, 2013 and 2012, stockholders’ equity for the nine months ended September 30, 2013 and cash flows for the nine months ended September 30, 2013 and 2012. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the nine month period ended September 30, 2013, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2013.

The balance sheet as of December 31, 2012 has been derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.

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

For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

New Accounting Pronouncements Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

On February 5, 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” The standard requires that entities present information about reclassification adjustments from accumulated other comprehensive income in their annual financial statements in a single note or on the face of the financial statements. Public companies will also have to provide this information in their interim financial statements. The standard requires that companies present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. If a component is not required to be reclassified to net income in its entirety, companies would instead cross reference to the related footnote for additional information.  The Company adopted ASU 2013-02 on January 1, 2013, but has no components of comprehensive income. Accordingly, its net income (loss) is equal to its comprehensive income (loss).

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment of goodwill, valuation of intangible assets, deferred tax valuation allowances, allowance for doubtful accounts and the fair value of stock options granted under the Company’s stock-based compensation plans. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less when purchased. There were no cash equivalents held on September 30, 2013 and December 31, 2012.

Accounts Receivable Allowance For Doubtful Accounts Policy [Policy Text Block]

Allowance for Doubtful Accounts

The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay.

Inventory, Policy [Policy Text Block]

Inventory

Inventory is stated at the lower of cost or market and cost is determined using the first-in, first-out method. Inventory is primarily comprised of finished goods.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances, such as the occurrence of operating losses or a significant decline in earnings associated with the asset. The Company evaluates goodwill for impairment using guidance under ASU 2011-8, which allows the Company to complete a qualitative analysis to determine whether it is necessary to perform the two step quantitative impairment test.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets

               Acquired intangible assets include trade names, patents, developed technology and backlog from the acquisition of Mobilisa and Positive Access. The Company uses the straight line method to amortize these assets over their estimated useful lives. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC Topic 360.  To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets.  Impairment is measured at fair value.  There were no impairment charges recognized during the nine months ended September 30, 2013 and 2012.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Financial Instruments

The Company adheres to the provisions of ASC Topic 820, which requires that the Company to calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value is different than the book value of those financial instruments. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. At September 30, 2013 and December 31, 2012, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

Revenue Recognition, Deferred Revenue [Policy Text Block]

Revenue Recognition and Deferred Revenue

Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, collectability is probable, and there is no future Company involvement or commitment. The Company sells its commercial products directly through its sales force and through distributors. Revenue from direct sales of products is recognized when shipped to the customer and title has passed.

Under the provisions of ASC Topic 605-25, “Revenue Arrangements with Multiple Deliverables,” for multi-element arrangements that include tangible products containing software essential to the tangible product’s functionality and undelivered software elements relating to the tangible product’s essential software, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price and (iii) best estimate of the selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis.

The Company also recognizes revenues from licensing of its patented software to customers. The licensed software requires continuing service or post contractual customer support and performance; accordingly, a portion of the revenue is deferred based on its fair value and recognized ratably over the period in which the future service, support and performance are provided, which is generally one to three years. Royalties from the licensing of the Company’s technology are recognized as revenues in the period they are earned.

Revenue from research and development contracts are generally with government agencies under long-term cost-plus fixed-fee contracts, where revenue is based on time and material costs incurred. Revenue from these arrangements is recognized as time is spent on the contract and materials are purchased. Research and development costs are expensed as incurred.

The Company also performs consulting work for other companies. These services are billed based on time and materials. Revenue from these arrangements is also recognized as time is spent on the contract and materials are purchased.

Subscriptions to database information can be purchased for month-to-month, one, two, and three year periods. Revenue from subscriptions are deferred and recognized over the contractual period, which is typically three years.

The Company offers enhanced extended warranties for its sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.

Concentration Risk Credit Risk [Policy Text Block]

Business Concentrations and Credit Risk

During the three and nine month periods ended September 30, 2013, the Company made sales to one customer that accounted for approximately 23% and 21% of total revenues. The revenue was associated with wireless network installations in Washington State. This customer represented 24% of total accounts receivable at September 30, 2013. During the three and nine month periods ended September 30, 2012, the Company made sales to four customers that accounted for approximately 37% and 49% of total revenues, respectively. These revenues resulted from a few large sales across our product mix, from commercial and government Defense ID to buoys. These customers represented 59% of total accounts receivable at September 30, 2012.

Earnings Per Share, Policy [Policy Text Block]

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net income (loss) per share excludes all anti-dilutive shares.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Numerator:
Net Income (Loss)	$	15,796	$	(381,296)	$	(1,823,807)	$	(305,299)
Denominator:
Weighted average common shares – basic		27,795,594		27,523,587		27,771,819		27,482,865
Dilutive effect of equity incentive plans		45,763		-		-		-
Weighted average common shares – diluted		27,841,357		27,523,587		27,771,819		27,482,865
Net Income (Loss) per share
Basic	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)
Diluted	$	0.00	$	(0.01)	$	(0.07)	$	(0.01)

The following table summarizes the common stock equivalents excluded from income (loss) per diluted share because their effect would be anti-dilutive because the exercise prices of these common stock equivalents exceeded the average market price of the Company’s common stock:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2013	2012	2013	2012
Stock options	1,130,977	935,635	1,014,731	935,635
	1,130,977	935,635	1,014,731	935,635

The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management's judgment in their application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result.

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SHARE BASED COMPENSATION

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

6. SHARE BASED COMPENSATION

The Company accounts for the issuance of equity awards to employees in accordance with ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. These pronouncements establish fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees.

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

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2013	2012			2013	2012
Compensation cost recognized:
Stock options	$	5,299	$	5,986	$	15,358	$	47,262
Stock issued		-		-		12,600		-
	$	5,299	$	5,986	$	27,958	$	47,262

Stock option activity under the 1998, 1999, 2001, 2003 and 2006 Stock Option Plans during the periods indicated below were as follows:

	Number of Shares Subject to Issuance	Weighted- average Exercise Price		Weighted- average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2012	746,635	$	2.06	1.66 years	$	32,217
Granted	135,000	$	0.39
Forfeited or expired	375,949	$	1.99
Exercised	153,200	$	0.46
Outstanding at September 30, 2013	352,486	$	2.18	2.84 years	$	27,000
Exercisable at September 30, 2013	212,236	$	3.33	1.82 years	$	-

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on September 30, 2013. This amount changes based upon the fair market value of the Company’s stock.

As of September 30, 2013, there was $45,396 of total unrecognized compensation expense, net of estimated forfeitures, related to all unvested stock options and restricted stock, which is expected to be recognized over a weighted-average period of 3.34years.

As of September 30, 2013, the Company had 1,759,754 options available for future grants under the Plans.

The Company uses the Black-Scholes option pricing model to value the options. The table below presents the weighted average expected life of the options in years. The expected life computation is based on the time to option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:

	Nine Months Ended
	September 30,
	2013			2012
Weighted average fair value of grants	$	0.39		$	0
Valuation assumptions:
Expected dividend yield		0			0
Expected volatility		100.4	%		0
Expected life (in years)		5.00			0
Risk-free interest rate		0.77	%		0

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NATURE OF BUSINESS

9 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations [Text Block]

1. NATURE OF BUSINESS

Business

Intellicheck Mobilisa, Inc. (the “Company” or “Intellicheck”) is a leading technology company that is engaged in developing and marketing wireless technology and identity systems for various applications including mobile and handheld access control and security systems for the government, military and commercial markets. Products include the Defense ID and Fugitive Finder systems, advanced ID card access control products currently protecting military and federal locations, and ID-Check, a patented technology that instantly reads, analyzes, and verifies encoded data in magnetic stripes and barcodes on government-issue IDs from U.S. and Canadian jurisdictions designed to improve the Customer Experience for the financial, hospitality and retail sectors. Wireless products include enterprise wireless system installation in rural areas of the country.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Mobilisa, Inc. (“Mobilisa”) and Positive Access Corporation (“Positive Access”). All intercompany balances and transactions have been eliminated upon consolidation.

Liquidity

For the three and nine months ended September 30, 2013, the company incurred a net income of $16,000 and net loss of $1,824,000, respectively. As of September 30, 2013, the Company had cash and cash equivalents of $643,000, a working capital deficit of $395,000 and an accumulated deficit of $85,055,000. Based on our business plan, we expect our existing resources and revenues generated from operations to satisfy our working capital requirements for at least the next 12 months. Management of the Company is continually balancing operating expenses to satisfy its working capital requirements.

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SHARE BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule Of Share Based Compensation Included Operating Expense [Table Text Block]

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

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2013	2012			2013	2012
Compensation cost recognized:
Stock options	$	5,299	$	5,986	$	15,358	$	47,262
Stock issued		-		-		12,600		-
	$	5,299	$	5,986	$	27,958	$	47,262

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

Stock option activity under the 1998, 1999, 2001, 2003 and 2006 Stock Option Plans during the periods indicated below were as follows:

	Number of Shares Subject to Issuance	Weighted- average Exercise Price		Weighted- average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2012	746,635	$	2.06	1.66 years	$	32,217
Granted	135,000	$	0.39
Forfeited or expired	375,949	$	1.99
Exercised	153,200	$	0.46
Outstanding at September 30, 2013	352,486	$	2.18	2.84 years	$	27,000
Exercisable at September 30, 2013	212,236	$	3.33	1.82 years	$	-

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:

	Nine Months Ended
	September 30,
	2013			2012
Weighted average fair value of grants	$	0.39		$	0
Valuation assumptions:
Expected dividend yield		0			0
Expected volatility		100.4	%		0
Expected life (in years)		5.00			0
Risk-free interest rate		0.77	%		0

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2013

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

9. RELATED PARTY TRANSACTIONS

Mobilisa leases office space from a company that is wholly-owned by two directors, who are members of management. The Company entered into a 10-year lease for the office space ending in 2017. The annual rent for this facility is currently $85,498 and is subject to annual increases based on the increase in the CPI index plus 1%. The Company is a guarantor of the leased property. For the three and nine months ended September 30, 2013, total rental payments for this office space were $22,075 and $66,226 respectively. For the three and nine months ended September 30, 2012, total rental payments for this office space were $0 and $42,750, respectively, because the third quarter’s rent of $22,075 was accrued but not paid until October, 15, 2012.

As of September 30, 2013, the Company had $320,604 in accrued expenses related to board fees for the first three quarters of 2013 and the CEO’s salary for the second quarter of 2013.

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SIGNIFICANT ACCOUNTING POLICIES (Details 1)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount	1,130,977	935,635	1,014,731	935,635
Employee Stock Option [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share Amount	1,130,977	935,635	1,014,731	935,635

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NATURE OF BUSINESS (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2011
Net Income (Loss) Attributable to Parent, Total	$ 15,796	$ (381,296)	$ (1,823,807)	$ (305,299)
Cash and Cash Equivalents, at Carrying Value, Total	643,417	2,737,506	643,417	2,737,506	1,685,879	1,394,148
Working Capital Deficit	395,000		395,000
Retained Earnings (Accumulated Deficit), Total	$ (85,055,115)		$ (85,055,115)		$ (83,231,308)

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Document And Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 05, 2013
Document Information [Line Items]
Entity Registrant Name	Intellicheck Mobilisa, Inc.
Entity Central Index Key	0001040896
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	IDN
Entity Common Stock, Shares Outstanding		27,897,467
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2013

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SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Numerator:
Net Income (Loss)	$ 15,796	$ (381,296)	$ (1,823,807)	$ (305,299)
Denominator:
Weighted average common shares - basic (in shares)	27,795,594	27,523,587	27,771,819	27,482,865
Dilutive effect of equity incentive plans	45,763	0	0	0
Weighted average common shares - diluted (in shares)	27,841,357	27,523,587	27,771,819	27,482,865
Net Income (Loss) per share
Basic (in dollars per share)	$ 0.00	$ (0.01)	$ (0.07)	$ (0.01)
Diluted (in dollars per share)	$ 0.00	$ (0.01)	$ (0.07)	$ (0.01)