10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended March 31, 2024

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________________ to ________________

Commission File No.: 001-15465

Intellicheck, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	11-3234779
(State or Other Jurisdiction of  Incorporation or Organization)	(I.R.S. Employer Identification No.)
200 Broadhollow Road, Suite 207, Melville, NY 11747
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (516) 992-1900

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value per share	IDN	The Nasdaq Stock Market LLC

Indicate by check mark whether the 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically 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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of May 14, 2024, there were 19,467,827 shares of Common Stock, $0.001 par value, outstanding.

INTELLICHECK, INC.

Index

	Page
PART I – FINANCIAL INFORMATION	3
Item 1. Unaudited Condensed Financial Statements	3
Condensed Balance Sheets – March 31, 2024 (Unaudited) and December 31, 2023	3
Unaudited Condensed Statements of Operations for the three months ended March 31, 2024 and 2023	4
Unaudited Condensed Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023	6
Unaudited Condensed Statements of Cash Flows for the three months ended March 31, 2024 and 2023	6
Notes to Unaudited Condensed Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	25
Item 4. Controls and Procedures	25
Part II – OTHER INFORMATION	26
Item 1. Legal Proceedings	26
Item 1A. Risk Factors	26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3. Defaults Upon Senior Securities	26
Item 4. Mine Safety Disclosures	26
Item 5. Other Information	26
Item 6. Exhibits	27
Signatures	28

Exhibits

10.1*	Jonathan Robins Employment Agreement
31.1	Rule 13a-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Financial Officer
32	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
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

*Denotes a management contract or compensatory plan, contract or agreement.

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PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

INTELLICHECK, INC.

CONDENSED BALANCE SHEETS

(in thousands except share and per share amounts)

	March 31, 2024		December 31, 2023
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	9,239	$	3,980
Short-term investments	—		5,000
Accounts receivable, net of allowance of $85 and $69 at March 31, 2024 and December 31, 2023, respectively	2,744		4,703
Other current assets	654		692
Total current assets	12,637		14,375
PROPERTY AND EQUIPMENT, NET	628		666
GOODWILL	8,102		8,102
INTANGIBLE ASSETS, NET	1,157		575
OTHER ASSETS	91		90
Total assets	$	22,615	$	23,808
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,121	$	884
Accrued expenses	2,657		3,245
Equity awards liability	—		4
Liability for shares withheld	190		190
Deferred revenue	1,469		2,209
Total current liabilities	5,437		6,532
Total liabilities	5,437		6,532
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS’ EQUITY:
Preferred stock - $0.01 par value; 30,000 shares authorized; Series A convertible preferred stock, zero shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		—
Common stock - $0.001 par value; 40,000,000 shares authorized; 19,404,561 and 19,354,335 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	19		19
Additional paid-in capital	151,166		150,822
Accumulated deficit	(134,007)		(133,565)
Total stockholders’ equity	17,178		17,276
Total liabilities and stockholders’ equity	$	22,615	$	23,808

See accompanying notes to unaudited condensed financial statements.

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INTELLICHECK, INC.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands except shares and per share amounts)

(Unaudited)

	Three months ended March 31,
	2024		2023
REVENUES	$	4,680	$	4,254
COST OF REVENUES	(435)		(332)
Gross profit	4,245		3,922
OPERATING EXPENSES
Selling, general and administrative	3,949		3,995
Research and development	819		1,308
Total operating expenses	4,768		5,303
Loss from operations	(523)		(1,381)
OTHER INCOME
Interest and other income	83		1
Total other income	83		1
Net loss before provision for income taxes	(440)		(1,380)
Provision for income taxes	2		7
Net loss	$	(442)	$	(1,387)
PER SHARE INFORMATION
Loss per common share -
Basic/Diluted	$	(0.02)	$	(0.07)
Weighted average common shares used in computing per share amounts -
Basic/Diluted	19,404,561		19,088,752

See accompanying notes to unaudited condensed financial statements.

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INTELLICHECK, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands except number of shares)

(Unaudited)

	Three months ended March 31, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
BALANCE, December 31, 2023	19,354,335	$	19	$	150,822	$	(133,565)	$	17,276
Stock-based compensation	–	–		344		–		344
Issuance of shares for vested restricted stock grants	50,226	–		–		–		–
Net loss	–	–		–		(442)		(442)
BALANCE, March 31, 2024	19,404,561	$	19	$	151,166	$	(134,007)	$	17,178

	Three months ended March 31, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
BALANCE, December 31, 2022	18,957,366	$	19	$	149,233	$	(131,585)	$	17,667
Stock-based compensation	–	–		642		–		642
Issuance of shares for vested restricted stock grants	258,497	–		–		–		–
Net loss	–	–		–		(1,387)		(1,387)
BALANCE, March 31, 2023	19,215,863	$	19	$	149,875	$	(132,972)	$	16,922

See accompanying notes to unaudited condensed financial statements.

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INTELLICHECK, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three months ended March 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(442)	$	(1,387)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization	72		70
Stock-based compensation	334		682
Allowance for credit losses	16		10
Change in accrued interest and accretion of discount on short-term investments	—		(1)
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable	1,944		(900)
Decrease (Increase) in other current assets and long-term assets	38		(145)
(Decrease) Increase in accounts payable and accrued expenses	(353)		783
(Decrease) Increase in deferred revenue	(740)		1,121
Net cash provided by operating activities	869		233
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(9)		(17)
Proceeds from maturity of short-term investments	5,000		—
Software development costs	(601)		—
Net cash provided by (used in) investing activities	4,390		(17)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of insurance financing arrangement	—		49
Repayment of insurance financing arrangements	—		(106)
Net cash provided by (used in) financing activities	—		(57)
Net increase in cash	5,259		159
CASH, beginning of period	3,980		5,196
CASH, end of period	$	9,239	$	5,355
Supplemental disclosures of cash flow information:
Cash paid for interest	$	—	$	1

See accompanying notes to unaudited condensed financial statements.

6

INTELLICHECK, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(All dollar amounts are rounded to thousands, except share and per share data)

(Unaudited)

1. NATURE OF BUSINESS

Business

Intellicheck, Inc. (the “Company” or “Intellicheck”) is a prominent technology company that is engaged in developing, integrating and marketing identity verification solutions to address challenges that include commercial retail and banking fraud prevention. Intellicheck’s products include solutions for preventing identity fraud across any industry delivered via smartphone, tablet, POS integration or other electronic devices. Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of eleven (11) U.S. and one Canadian patents.

Liquidity

For the three months ended March 31, 2024, the Company incurred a net loss of $(442) and generated cash from operations of $869. As of March 31, 2024, the Company had cash and cash equivalents of $9,239, working capital (defined as current assets minus current liabilities) of $7,200 and an accumulated deficit of $(134,007). Based on the Company’s business plan and cash resources, Intellicheck expects its existing and future resources and revenues generated from operations to satisfy its working capital requirements for at least the next 12 months from the date of filing.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") 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 GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Company’s financial position at March 31, 2024, the results of operations, and stockholders’ equity for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the three-month period ended March 31, 2024, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2024.

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

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

For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280. The enhanced disclosure requirements include: title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances. This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning

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after December 15, 2024. This change will apply retrospectively to all periods presented. The Company is currently evaluating the impact of this ASU on its financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid. This change is effective for annual periods beginning after December 15, 2024. This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. The Company is currently evaluating the impact of this ASU on its financial statements.

Use of Estimates

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets, capitalization of software development costs, revenue recognition (including breakage revenue) and the fair value of stock options under the Company’s stock-based compensation plan. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Research and Development

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

Allowance for Credit Losses

Effective January 1, 2023, Intellicheck applied the new standard ASU 2016-13, codified as ASC 326. This impacts how the allowance for credit losses is calculated. Prior to ASC-326, Intellicheck would not recognize bad debt expense until the loss from customer non-payment was probable of occurring. Under the new model, Intellicheck’s allowance for credit losses reflects the Company’s estimate of all expected future credit losses from its current customer balances. Under the new guidance, the Company has applied a loss rate method which takes historical data as the basis for calculating the allowance amount, along with accounting for other factors like current and forecasted market conditions, and potential future impacts to the industry. In estimating whether accounts receivable will be collected, the Company performs evaluations of customers and continuously monitors collections and payments and estimates an allowance for credit losses based on collections experience to date and any specific collection issues that have been identified. The allowance for credit losses is recorded in the period in which revenue is recorded or when collection risk is identified.

Cash and Cash Equivalents

We classify time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents. Our cash and cash equivalents consist primarily of both cash on deposits with banks, which are maintained with major financial institutions in the United States, and money market funds. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, however amounts may exceed FDIC insured limits. The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash bank accounts.

Short-term investments

Short-term investments include investments in U.S. treasury notes. Debt investments with original maturities at the date of purchase greater than approximately three months but less than a year are classified as short-term investments, as they represent the investment of cash available for current operations. All short-term investments that the Company

8

holds are classified as "held-to-maturity" as the Company has the intent and ability to hold these investments until maturity. See Note 3 for more detail and a breakdown of the Company's short-term investments.

Property and Equipment

Property and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three to seven years using the straight-line method. See Note 4.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC 350, Intangibles - Goodwill and Other, the Company tests goodwill for impairment on an annual basis in the fourth quarter on December 31st, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assesses qualitative factors to determine whether it is necessary to perform step one of the quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decreases in share price.

The Company performed its annual impairment test of goodwill in the fourth quarter for the year ended December 31, 2023. For the three months ended March 31, 2024 and 2023, the Company determined no triggering events existed and as such no impairment charge was required.

Intangible Assets

Intangible assets include patents, copyrights, developed technology and capitalized software development costs. The Company amortizes these assets on a straight-line basis over their estimated useful lives, as it represents the pattern of economic benefits consumed. There were no impairment charges recognized during the three-months ended March 31, 2024 and 2023. See Note 5.

We capitalize internal-use software costs which includes costs incurred in connection with the development of new software solutions and enhancements to existing software solutions that are expected to result in increased functionality. The costs incurred in the preliminary stages of development are expensed as incurred. Once the software has reached the application development stage, internal and external costs, if direct and incremental, are capitalized until the software is complete and available for its intended use. We evaluate the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. There were no impairments of capitalized software development costs for the three months ended March 31, 2024 and 2023.

Advertising Costs

Advertising costs, which are expensed as incurred, were $78 and $199 for the three months ended March 31, 2024 and 2023, respectively. These costs are recorded as a component of selling, general and administrative expenses within the Statements of Operations.

Retirement Plan

The Company has a retirement savings 401(k) plan ("Retirement Plan"). The Retirement Plan permits eligible employees to make voluntary contributions to a trust, up to a maximum of 35% of compensation, subject to certain limitations. The Company has elected to contribute a matching contribution equal to 50% of the first 6% of an eligible employee’s deferral election. The Company’s matching contributions were $0 and $27 for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, funds from the plan's forfeiture account were used to fund the matching contributions in accordance with the terms of the plan and as such, the Company took no expense during the current period related to its retirement plans. These costs were recorded as a component of selling, general and administrative expenses within the Statements of Operations.

9

Shipping Costs

The Company’s shipping and handling costs related to sales are included in cost of revenues for all periods presented. All other shipping and handling costs are included as a component of selling, general and administrative expenses within the Statements of Operations.

Loss Contingencies and Legal Costs

The Company accrues loss contingencies that are believed to be probable and can be reasonably estimated. As events evolve during the administration and litigation process and additional information becomes known, the Company reassesses its estimates related to loss contingencies. Legal costs are expensed in the period in which the costs are incurred.

Sales Taxes

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

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, 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 carryforwards. 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. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. The Company has recorded a full valuation allowance for its net deferred tax assets as of March 31, 2024 and December 31, 2023, as it is more likely than not these assets may not be fully realized due to the uncertainty of the realizability of those assets.

Fair Value of Financial Instruments

The Company adheres to the provisions of ASC 820, Fair Value Measurement, which requires the Company to calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value of those financial instruments is different than the book value. The Company’s financial instruments include cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable and accrued expenses. At March 31, 2024 and December 31, 2023, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

FASB guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

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The three levels of the fair value hierarchy are as follows:

•Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. The Company's Level 1 assets consisted primarily of cash and cash equivalents as well as short-term investments totaling $9,239 and $8,980 as of March 31, 2024 and December 31, 2023, respectively.

•Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies. The Company had $0 and $4 of Level 2 liabilities as of March 31, 2024 and December 31, 2023, respectively, for the liability-classified stock options. The fair value of these awards were determined by utilizing a Black-Scholes option pricing model.

•Level 3—Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when the fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Company had no Level 3 assets or liabilities as of March 31, 2024 and December 31, 2023.

Revenue Recognition and Deferred Revenue

General

Most license fees and services revenue are generated from a combination of fixed-price and per-scan contracts. Under the per-scan revenue model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the Company’s software. Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location to access the Company’s software. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s services as they are performed. The Company's performance obligations are satisfied over time, and as a result, we may follow the right to invoice practical expedient meaning we may recognize revenue monthly as invoiced based on its contract terms.

The Company has an additional revenue model where customers purchase a predetermined number of transactions for the term of the contract. Customers are charged a fixed monthly fee for a set number of scans (fixed consideration), with any overages charged on a per scan basis (variable consideration). The Company estimates the amount of unused transactions at the end of each contract period and recognizes a portion of that revenue as breakage revenue each reporting period. If the Company expects the customer to use all transactions in the specified service period, the Company will recognize the transaction price as revenue in the specified service period as the promised units of service are transferred to the customer. Alternatively, if the Company expects that the customer cannot or will not use all transactions in the specified service period (referred to as “breakage”), the Company will recognize the estimated breakage amount as revenue ratably over the service period in proportion to the revenue that the Company will recognize for actual transactions used by the customer in the service period. We do not estimate the variable consideration at any point; rather we calculate and recognize the variable portion at the end of the contract term since these contracts are considered monthly due to the termination clauses included within them. The fixed and variable performance obligations are recognized monthly based on the contract terms.

Invoicing is based on schedules established in customer contracts. Payment terms are generally established from 30 to 60 days from the invoice date. Accordingly, the Company has determined that its contracts do not include a significant financing component. Product returns are estimated and recorded as a reduction to revenue, however, such amounts have been immaterial.

The Company has not capitalized any costs to obtain a contract as the period of amortization for these associated costs would have been recognized over a period that is one year or less and the Company elected the practical expedient to expense those costs as incurred.

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Nature of goods and services

The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each:

Software as a Service (SaaS)

Software as a service (SaaS) for hosted subscription services requires the Company to provide a stand-ready obligation and allows customers to access a set of data for a predetermined period of time. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the revenue should be recognized over time, under the fixed pricing model, based on the usage of the hosted subscription services, which can vary from month to month. Under the per-scan revenue model, the customer requires access to the Company's hosted subscription service but revenue is recognized over time as the customer scans an identity document.

Equipment Revenue

Revenue from the sale of equipment is recognized at a point in time. The point in time that the revenue is recognized is when the customer has control of the equipment which is when the customer receives the benefit and the Company’s performance obligation has been satisfied. Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the equipment is received.

Other Revenue

Other Revenues, which historically have not been material, consist primarily of revenues from other subscription and support services, and extended warranties. The Company’s revenues from other subscription and support services includes jurisdictional updates to certain commercial customers and support services particularly to its Defense ID® customers. These subscriptions require continuing service or post contractual customer support and performance. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. Accordingly, the revenue is recognized over time based on usage, which can vary from month to month. The revenue is typically based on a formula such as number of locations in a given month multiplied by a fee per location.

Extended warranty revenues are generated when a warranty is provided to the customer separately of other performance obligations when the equipment is sold. As the customer obtains access at a point in time and continues to have access for the remainder of the warranty term, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. The related revenue is recognized ratably over the specified term of the warranty period. The extended warranty is separate from the Company’s standard warranty that it receives from its vendor, which is typically one year.

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Disaggregation of revenue

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

	For the Three Months Ended March 31,
	2024		2023
Products and services
Software as a Service (SaaS)	$	4,609	$	4,228
Equipment	55		15
Other	16		11
	$	4,680	$	4,254
Timing of revenue recognition
Products transferred at a point in time	$	71	$	26
Services transferred over time	4,609		4,228
	$	4,680	$	4,254

Contract balances

The current portion of deferred revenue at March 31, 2024, December 31, 2023 and December 31, 2022 was $1,469, $2,209 and $906, respectively, and primarily consists of revenue recognized over time for software license contracts and hosted subscription services. The changes in these balances are related to purchases of a predetermined number of transactions, partially offset by the satisfaction or partial satisfaction of these contracts. Of the December 31, 2023 balance, $555 was recognized as revenue in the three months ended March 31, 2024. The noncurrent deferred revenue balances were $0 and $0 as of March 31, 2024 and December 31, 2023, respectively.

Accounts Receivable

Accounts receivable, net of allowance for credit losses, at March 31, 2024, December 31, 2023 was $2,744, and $4,703, respectively. The allowance for credit losses at March 31, 2024 and December 31, 2023 was $85 and $69, respectively.

Transaction price allocated to the remaining performance obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:

	Remainder 2024		2025		2026		Total
Software as a Service (SaaS)	$	1,408	$	60	$	—	$	1,468
Other	1		—		—		1
	$	1,409	$	60	$	—	$	1,469

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

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Business Concentrations and Credit Risk

Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company maintains cash with two financial institutions. The Company performs periodic evaluations of the relative credit standing of these institutions.

The Company’s sales are principally made to large retail customers, financial institutions concentrated in the United States of America and to U.S. government entities. The Company performs ongoing credit evaluations, generally does not require collateral, and establishes an allowance for credit losses based upon factors surrounding the credit risk of customers, historical trends, and other market and economic information.

During the three-month period ended March 31, 2024, the Company made sales to three customers that accounted for approximately 44% of total revenues, 19%, 13% and 12%, respectively for each customer. The revenue was primarily associated with commercial identity sales customers. These three customers, in addition with one other customer, represented 56% of total accounts receivable at March 31, 2024, 36%, 1%, 7%, and 12% respectively for each customer. During the three-month period ended March 31, 2023, the Company made sales to the same three customers that accounted for approximately 39% of total revenues, 16%, 13% and 10%, respectively. These three customers represented 54% of total accounts receivable at March 31, 2023, 28%, 16%, 10%, respectively.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock equivalents outstanding during the period. The dilutive effect of outstanding options, warrants, and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive shares. In periods of a net loss, all common stock equivalents are considered anti-dilutive.

	Three Months Ended March 31,
	2024		2023
Numerator:
Net Loss	$	(442)	$	(1,387)
Denominator:
Weighted average common shares –
Basic/Diluted	19,404,561		19,088,752
Net Loss per share –
Basic/Diluted	$	(0.02)	$	(0.07)

The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:

	Three Months Ended March 31,
	2024	2023
Stock options	1,487,882	1,500,284
Restricted stock	155,418	156,347
	1,643,300	1,656,631

Segment Information

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The Company adheres to the provisions of ASC 280, Segment Reporting, which establishes standards for the way public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in financial statements issued to shareholders. The Company’s Chief Operating Decision Maker, its Chief Executive Officer (“CEO”), reviews the financial information presented for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates in a single reportable segment. All of the Company’s long-lived assets are located in the United States. Since the Company operates in one operating segment, all required financial segment information can be found in the financial statements.

3.    CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Short-term investments include investments in U.S. treasury notes. Short-term investments with original maturities of approximately three months or less from the date of purchase are classified within cash and cash equivalents. Debt investments with original maturities at the date of purchase greater than approximately three months but less than one year are classified as short-term investments, as they represent the investment of cash available for current operations. All short-term investments that the Company holds are classified as "held-to-maturity". The Company has accounted for and disclosed the purchase of its short-term investments in accordance with ASC 320, Investments - Debt Securities. The following table summarizes the fair value of cash and cash equivalents, and short-term investments as well as any gross unrealized holding gains and losses as of March 31, 2024 and December 31, 2023. Due to the nature of these assets and the short-term nature of the U.S. treasury notes being held to maturity, both these cash and cash equivalents and short-term investments fall under the Level 1 fair value hierarchy as referenced in Note 2.

	As of March 31, 2024
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
Cash and cash equivalents	$	9,239	$	—	$	—	$	9,239
U.S. treasury notes	—		—		—		—
Total cash, cash equivalents and short-term investments	$	9,239	$	—	$	—	$	9,239

	As of December 31, 2023
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
Cash and cash equivalents	$	3,980	$	—	$	—	$	3,980
U.S. treasury notes (1)	5,000		—		—		5,000
Total cash, cash equivalents and short-term investments	$	8,980	$	—	$	—	$	8,980

(1) These U.S. treasury notes are classified as "held-to-maturity" as they were purchased in August 2023 and matured in January 2024.

The Company did not hold any securities that were in an unrealized loss position for more than 12 months as of March 31, 2024. There were no material realized gains or losses on these specific short-term investments during the three months ended March 31, 2024.

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4. PROPERTY AND EQUIPMENT

Property and equipment, net is summarized as follows:

	March 31, 2024		December 31, 2023
Computer equipment and software	$	1,894	$	1,886
Furniture and fixtures	139		139
Office equipment	618		618
	2,651		2,643
Less – Accumulated depreciation	(2,023)		(1,977)
	$	628	$	666

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

5. INTANGIBLE ASSETS

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

Net balance at December 31, 2023	$	575
Addition: Capitalized software costs	609
Deduction: Amortization expense	(27)
Net balance at March 31, 2024	$	1,157

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

		As of March 31, 2024
	Estimated Useful Life	Adjusted Carrying Amount		Accumulated Amortization		Net
Patents and copyrights	2-17 years	$	375	$	(307)	$	68
Developed technology	5 years	400		(327)		73
Software development	—	$	1,016	$	—	$	1,016
		$	1,791	$	(634)	$	1,157

The Company has capitalized $1,016 in software development costs as of March 31, 2024. The projects are still in development and not yet ready for their intended use and therefore no estimated useful life has been determined and these costs are not being amortized as of March 31, 2024.

		As of December 31, 2023
	Estimated Useful Life	Adjusted Carrying Amount		Accumulated Amortization		Net
Patents and copyrights	2-17 years	$	375	$	(300)	$	75
Developed technology	5 years	400		(307)		93
Software development	—	$	407	$	—	407
		$	1,182	$	(607)	$	575

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

	Three Months Ended March 31,
	2024		2023
Cost of revenues	$	24	$	24
General and administrative	3		3
	$	27	$	27

6. DEBT

Revolving Line of Credit

On February 6, 2019, the Company entered into a revolving credit facility with Citi Personal Wealth Management that allows for borrowings up to the lesser of (i) $2,000 or (ii) the collateralized balance in the Company’s existing fixed income investment account with Citi Personal Wealth Management subject to certain limitations. The facility bears interest at a rate consistent with Citi Personal Wealth Management’s Base Rate (8.50% and 8.50% at March 31, 2024 and December 31, 2023, respectively) minus 2%. Interest is payable monthly and as of March 31, 2024 and December 31, 2023, there were no amounts outstanding and unused availability under this facility was $2,000. The Company is not subject to any financial covenants related to this revolving line of credit. This line will remain open as long as the Company keeps a depository relationship with the financial institution.

7. ACCRUED EXPENSES

Accrued expenses are comprised of the following:

	March 31, 2024		December 31, 2023
Professional fees	$	20	$	1
Payroll and related	600		1,159
Incentive bonuses	1,275		824
Sales tax accrual	727		1,064
Other	35		197
	$	2,657	$	3,245

8. INCOME TAXES

Our available net operating loss (“NOL”) as of December 31, 2023 was approximately $26,300, of which $10,900 expires between 2035 and 2037. In accordance with the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), U.S. NOLs arising in a tax year ending after 2017 in the amount of $15,400 will not expire, but are subject to 80% limitation on utilization. In addition to the NOLs, the Company has approximately $708 of research and development credits.

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

9. STOCKHOLDERS' EQUITY

Stock-based Compensation

To retain and attract qualified personnel necessary for the success of the Company, the Company adopted the 2015 Omnibus Incentive Plan (the “Plan”) covering up to 5,236,000 of the Company’s common shares, pursuant to which officers, directors, key employees and consultants to the Company are eligible to receive incentive stock options, nonqualified stock options and restricted stock units. All the equity compensation plans prior to Company’s 2015 Omnibus Incentive Plan have been closed. The Compensation Committee of the Board of Directors administers this Plan and

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determines the terms and conditions of stock options granted, including the exercise price. This Plan generally provides that all stock options will expire within ten years of the date of grant. Incentive stock options granted under this Plan must be granted at an exercise price that is not less than the fair market value per share at the date of the grant and the exercise price must not be less than 110% of the fair market value per share at the date of the grant for grants to persons owning more than 10% of the voting stock of the Company. This Plan also entitles non-employee directors to receive grants of non-qualified stock options as approved by the Board of Directors.

The Company accounts for the issuance of stock-based awards to employees in accordance with ASC Topic 718, Compensation - Stock Compensation, which requires that the cost resulting from all stock-based compensation payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for stock-based compensation payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all stock-based compensation payment transactions with employees. All stock-based compensation is included in operating expenses as follows:

	Three Months Ended March 31,
	2024		2023
Compensation cost recognized:
Selling, general & administrative	$	324	$	595
Research & development	10		87
	$	334	$	682

Stock Options

The Company uses the Black-Scholes option pricing model to value the options on the grant date. The table below presents the weighted average expected life of the stock options in years. The Company uses the simplified method for all restricted stock units and stock options to estimate the expected life of the option and assumes that stock options will be exercised evenly over the period from vesting until the awards expire. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on U.S. Treasury yield curve in effect on the grant date. Options, generally, vest from one year to four years. The compensation expense is recognized over the requisite service period on a straight-line basis, reduced by forfeitures as they occur.

Certain option awards are classified as liability awards. The fair value of these awards are determined at each reporting period utilizing a Black-Scholes option pricing model, and the associated compensation expense (credit) for the reporting period is recorded. The Company decreased stock-based compensation expense by approximately $(4) for the three-months ended March 31, 2024, as a result of the change in fair value of these awards. The Company increased stock-based compensation expense by approximately $40 for the three-months ended March 31, 2023, as a result of the change in fair value of these awards.

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

	Number of Shares Subject to Issuance	Weighted- average Exercise Price		Weighted- average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2023	1,152,714	$	3.07	3.18 years	$	38
Granted	519,750	1.92		–	–
Forfeited, cancelled, or expired	(184,582)	2.68		–	–
Outstanding at March 31, 2024	1,487,882	$	2.05	2.28 years	$	883
Exercisable at March 31, 2024	484,004	$	3.66	3.28 years	$	471

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on March 31, 2024. This amount changes based upon the fair market value of the Company’s stock.

Restricted Stock Units

The Company periodically issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. The Company issues RSUs to certain directors as compensation which vest with the passage of time. The vesting of all RSUs is contingent on continued board and employment services.

The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant, is amortized on a straight-line basis over the requisite service period and charged to operating expenses with a corresponding increase to additional paid-in capital, reduced by forfeitures when they occur.

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

	Number of Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2023	60,500	$	4.23
Granted	145,144	2.04
Vested and settled in shares	(50,226)	3.45
Outstanding at March 31, 2024	155,418	$	2.41

As of March 31, 2024, there was approximately $1,399 of total unrecognized compensation costs, related to all unvested stock options and RSUs. These costs are expected to be recognized as compensation expense over a weighted-average period of approximately 2.42 years.

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

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10. COMMITMENTS AND CONTINGENCIES

Leases

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

The Company determines if an arrangement is a lease at lease inception. The arrangement is a lease if it conveys the right to the Company to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company did not have an Operating Lease ROU or Operating Lease Liability as of March 31, 2024, as its office lease is on a month-to-month term and allows for either party to terminate the lease without a significant penalty.

Legal Proceedings

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

From time to time, the Company may be involved in lawsuits, claims, investigations and proceedings, consisting of intellectual property, commercial, employment and other matters, which arise in the ordinary course of business. In accordance with GAAP, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, ruling, advice of legal counsel and other information and events pertaining to a particular case. Litigation is inherently unpredictable. If any unfavorable ruling was to occur in any specific period or if a loss becomes probable and estimable, there exists the possibility of a material adverse impact on the Company’s results of operations, financial position or cash flows. As of March 31, 2024, no material amounts are recorded related to legal proceedings on the balance sheets.

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

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (All dollar amounts are rounded to thousands, except shares and per share data)

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. References made in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” “Intellicheck,” or the “Company,” refer to Intellicheck, 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 three months ended March 31, 2024. 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, 2023.

Overview

We are a prominent technology company engaged in developing, integrating and marketing identity verification solutions to address challenges that include commercial retail and banking fraud prevention. Our products include solutions for preventing identity fraud across any industry delivered via smartphone, tablet, POS integration or other electronic devices.

Critical Accounting Policies and the Use of Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets, deferred tax valuation allowances, allowance for credit losses, revenue recognition (including breakage revenue), and the fair value of stock options under our stock-based compensation plans. 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, goodwill and intangible asset valuation and impairment, and commitments and contingencies. These policies and our procedures related to these policies are summarized below and described in further detail in the Notes to Financial Statements.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280. The enhanced disclosure requirements include: title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances. This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. This change will apply retrospectively to all periods presented. The Company is currently evaluating the impact of this ASU on its financial statements.

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

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The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid. This change is effective for annual periods beginning after December 15, 2024. This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. The Company is currently evaluating the impact of this ASU on its financial statements.

Goodwill

The excess of the purchase consideration over the fair value of the assets of acquired businesses is considered goodwill. Under authoritative guidance, goodwill is not amortized, but rather it is periodically reviewed for impairment. We had goodwill of $8,102 as of March 31, 2024.

For the year ended December 31, 2023, the Company performed its annual impairment test of goodwill in the fourth quarter of the fiscal year. Under authoritative guidance, the Company can use industry and Company specific qualitative factors to determine whether it is more likely than not that impairment exists before performing step one of the quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.

We determined that no events occurred or circumstances changed during the three months ended March 31, 2024 that would more likely than not reduce the fair value of the Company below its carrying amounts. We will, however, continue to monitor our stock price and operations for any potential indicators of impairment. We will conduct the 2024 annual test for goodwill impairment in the fourth quarter, or at such time where an indicator of impairment appears to exist.

Intangible Assets

Our intangible assets consist of patents and a software license. We determined that no events occurred, or circumstances changed during the three months ended March 31, 2024 that would more likely than not reduce our intangible assets below our carrying amounts. We will, however, continue to monitor any potential indicators of impairment. See Note 5, “Intangible Assets,” in the Notes to Financial Statements for details on the Company’s intangible assets.

Revenue Recognition and Deferred Revenue

Most license fees and services revenue are generated from a combination of fixed-price and per-scan contracts. Under the per-scan revenue model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the Company’s software. Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location to access the Company’s software. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s services as they are performed. The Company's performance obligations are satisfied over time, and as a result, we may follow the right to invoice practical expedient meaning we recognize revenue monthly as invoiced based on our contract terms. Reference Note 2, “Significant Accounting Policies,” in the Notes to Financial Statements for additional details on the Company’s recognized and deferred revenue.

Stock-Based Compensation

We account for the issuance of stock-based compensation awards to employees in accordance with ASC 718, “Compensation – Stock Compensation”, which requires that the cost resulting from all stock-based compensation payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for stock-based compensation payment arrangements and requires all companies to apply a fair value-based measurement method in accounting for all stock-based compensation payment transactions with employees.

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Reference Note 9, “Stockholders' Equity,” in the Notes to Financial Statements for details on the Company’s stock-based compensation plans.

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 enacted 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 March 31, 2024, due to the uncertainty of our ability to realize those assets. Reference Note 8, “Income Taxes,” in the Notes to Financial Statements for details on the Company’s income taxes.

Commitments and Contingencies

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.

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 dollar amounts are rounded to thousands, except shares and per share data)

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2024

TO THE THREE MONTHS ENDED MARCH 31, 2023

Revenues for the three months ended March 31, 2024 increased $426, or 10%, to approximately $4,680 compared to $4,254 for the same period of 2023. The increase in revenues is primarily the result of higher SaaS revenue growth for the current period. SaaS revenue, which consists of software licensed as a service on a subscription basis, increased $381 or 9% to $4,609 for the three months ended March 31, 2024 compared to $4,228 for the same period of 2023.

Gross profit increased $323, or 8%, to $4,245 for three months ended March 31, 2024 from $3,922 for the same period of 2023. Our gross profit, as a percentage of revenues, was 91% and 92% for the three months ended March 31, 2024 and 2023, respectively.

Operating expenses, which consist of selling, general and administrative and research and development expenses, decreased $535, or 10%, to $4,768 for the three months ended March 31, 2024 compared to $5,303 for the same period of 2023. This decrease was primarily driven by lower research and development costs specifically headcount-related expenses.

As a result of the factors noted above, the Company had a net loss of $(442) for the three months ended March 31, 2024 as compared to a net loss of $(1,387) for the three months ended March 31, 2023.

Liquidity and Capital Resources

As of March 31, 2024, we had cash and cash equivalents of $9,239, working capital (defined as current assets minus current liabilities) of $7,200, total assets of $22,615 and stockholders’ equity of $17,178.

During the three months ended March 31, 2024, we generated net cash of $869 in operating activities as compared to net cash of $233 provided by operating activities in the three months ended March 31, 2023. Cash provided by investing activities was $4,390 for the three months ended March 31, 2024 compared to cash used in investing activities of $(17) for the three months ended March 31, 2023. Cash used in financing activities was zero for the three months ended March 31, 2024 compared to net cash of $(57) used in financing activities for the three months ended March 31, 2023.

We currently anticipate that our available cash, expected cash from operations and availability under the revolving line of credit, will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the

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next 12 months from the date of filing. Reference Note 6, “Debt,” in the Notes to Financial Statements for details on the Company’s revolving line of credit.

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 we will be able to secure the additional funds when needed or obtain such on terms satisfactory to us, if at all.

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.

We are not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material effect on our business.

Net Operating Loss Carry Forwards

Our available net operating loss (“NOL”) as of December 31, 2023 was approximately $26.3 million, of which $10.9 million expires between 2035 and 2037. In accordance with the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), U.S. NOLs arising in a tax year ending after 2017 in the amount of $15.4 million will not expire, but are subject to 80% limitation on utilization. In addition to the NOLs, the Company has approximately $708 thousand of research and development credits.

Adjusted EBITDA and Use of a Non-GAAP Measure

We use Adjusted EBITDA as a non-GAAP financial performance measurement. Adjusted EBITDA is calculated by adjusting net loss for certain reductions such as interest and other income (expense), provisions for income taxes, 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 our 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 provisions for income taxes, investors can evaluate our operations and can compare the 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.

We consider Adjusted EBITDA to be an important indicator of our operational strength and performance of our business and a useful measure of our historical operating trends. However, there are significant limitations to the use of Adjusted EBITDA since it excludes non-restructuring severance expenses, provisions for income taxes, interest and other (expense) income, impairments of long-lived assets and goodwill, stock-based compensation expense, all of which impact our profitability, as well as depreciation and amortization related to the use of long-term assets which benefit multiple periods. We believe that these limitations are compensated by providing Adjusted EBITDA only with GAAP net loss and clearly identifying the difference between the two measures. Consequently, Adjusted EBITDA should not be considered in isolation or as a substitute for net loss presented in accordance with GAAP. Adjusted EBITDA as defined by us may not be comparable with similarly named measures provided by other companies.

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The reconciliation of GAAP net loss to Non-GAAP Adjusted EBITDA is as follows:

	Three Months Ended March 31,
	2024		2023
Net loss	$	(442)	$	(1,387)
Reconciling items:
Provision for income taxes	2		7
Interest and other income	(83)		(1)
Sales tax accrual	—		71
Depreciation and amortization	72		70
Stock-based compensation including liability classified awards	334		682
Adjusted EBITDA	$	(117)	$	(558)

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet financing arrangements and have not established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2024 based on the guidelines established in the "Internal Control—Integrated Framework" (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment, management concluded that the Company's internal control over financial reporting was not effective as of March 31, 2024 due to a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The Company did not design and maintain effective controls to periodically reassess whether nexus was achieved in the states we do business. This caused us not to be able to collect sales tax from our customers and subsequently remitting those sales tax to the appropriate state tax agency. During our assessment in 2023, it was determined that we had prior period sales tax obligations on certain states, in which we failed to collect and remit the sales tax.

Remediation of Material Weakness existing as of March 31, 2024

Management, under the guidance of the Audit Committee, is committed to developing and implementing a comprehensive remediation plan. Management formalized a process and will now review the Company’s revenue and whether nexus is triggered in the states in which the Company has revenues on a quarterly basis. If a new state or jurisdiction triggers nexus, our accounting system is updated accordingly. The analysis and accounting system configuration will be reviewed and approved by the Accounting and Finance department leadership.

The material weakness will be considered remediated when management concludes that, through testing, the applicable remedial controls are operating effectively.

Changes in Internal Control over Financial Reporting

25

Other than described above under "Remediation of Material Weakness existing as of March 31, 2024", there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2024 that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II - Other Information

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. Risk Factors

In addition to the other information set forth in this report, investors should carefully consider the factors discussed under Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2023 (the “2023 Annual Report”). These factors could have a material adverse effect on our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report.
There have been no material changes to the risk factors described in Part I, Item 1A, “Risk Factors,” included in our 2023 Annual Report.

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

Insider Adoption or Termination of Trading Arrangements:

During the three months ended March 31, 2024, none of our directors or officers informed us of the adoption, modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

26

Item 6. EXHIBITS

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

Exhibit No.	Description
10.1*	Jonathan Robins Employment Agreement
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
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

*Denotes a management contract or compensatory plan, contract or agreement.

27

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:	May 14, 2024	INTELLICHECK, INC.
		By:	/s/ Bryan Lewis
			Bryan Lewis
			President and Chief Executive Officer
			(Principal Executive Officer)
		By:	/s/ Jeffrey Ishmael
			Jeffrey Ishmael
			Chief Financial Officer and Chief Operating Officer

28

EX-10.1

EX-31.1

Exhibit 31.1

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

I, Bryan Lewis, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Intellicheck, 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-15I and 15d-15I) 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, 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:	May 14, 2024	/s/ Bryan Lewis
		Name:	Bryan Lewis
		Title:	President and 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, Jeffrey Ishmael, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Intellicheck, 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-15I and 15d-15I) 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, 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:	May 14, 2024	/s/Jeffrey Ishmael
		Name:	Jeffrey Ishmael
		Title:	Chief Financial Officer and Chief Operating 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, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the period ended March 31, 2024 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:	May 14, 2024	/s/ Bryan Lewis
		Name:	Bryan Lewis
		Title:	President and Chief Executive Officer
			(Principal Executive Officer)
Dated:	May 14, 2024	/s/ Jeffrey Ishmael
		Name:	Jeffrey Ishmael
		Title:	Chief Financial Officer and Chief Operating 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.

XML

Cover - shares	3 Months Ended
	Mar. 31, 2024	May 14, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-15465
Entity Registrant Name	Intellicheck, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	11-3234779
Entity Address, Address Line One	200 Broadhollow Road
Entity Address, Address Line Two	Suite 207
Entity Address, City or Town	Melville
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11747
City Area Code	(516)
Local Phone Number	992-1900
Title of 12(b) Security	Common stock, $0.001 par value per share
Trading Symbol	IDN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		19,467,827
Amendment Flag	false
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001040896

XML

CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
CURRENT ASSETS:
Cash and cash equivalents	$ 9,239	$ 3,980
Short-term investments	0	5,000
Accounts receivable, net of allowance of $85 and $69 at March 31, 2024 and December 31, 2023, respectively	2,744	4,703
Other current assets	654	692
Total current assets	12,637	14,375
PROPERTY AND EQUIPMENT, NET	628	666
GOODWILL	8,102	8,102
INTANGIBLE ASSETS, NET	1,157	575
OTHER ASSETS	91	90
Total assets	22,615	23,808
CURRENT LIABILITIES:
Accounts payable	1,121	884
Accrued expenses	2,657	3,245
Equity awards liability	0	4
Liability for shares withheld	190	190
Deferred revenue	1,469	2,209
Total current liabilities	5,437	6,532
Total liabilities	5,437	6,532
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS’ EQUITY:
Preferred stock - $0.01 par value; 30,000 shares authorized; Series A convertible preferred stock, zero shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	0	0
Common stock - $0.001 par value; 40,000,000 shares authorized; 19,404,561 and 19,354,335 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	19	19
Additional paid-in capital	151,166	150,822
Accumulated deficit	(134,007)	(133,565)
Total stockholders’ equity	17,178	17,276
Total liabilities and stockholders’ equity	$ 22,615	$ 23,808

XML

CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Accounts receivable, allowance	$ 85	$ 69
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	30,000	30,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	19,404,561	19,354,335
Common stock, shares outstanding (in shares)	19,404,561	19,354,335

XML

CONDENSED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
REVENUES	$ 4,680	$ 4,254
COST OF REVENUES	(435)	(332)
Gross profit	4,245	3,922
OPERATING EXPENSES
Selling, general and administrative	3,949	3,995
Research and development	819	1,308
Total operating expenses	4,768	5,303
Loss from operations	(523)	(1,381)
OTHER INCOME
Interest and other income	83	1
Total other income	83	1
Net loss before provision for income taxes	(440)	(1,380)
Provision for income taxes	2	7
Net loss	$ (442)	$ (1,387)
Loss per common share -
Basic (in dollars per share)	$ (0.02)	$ (0.07)
Diluted (in dollars per share)	$ (0.02)	$ (0.07)
Weighted average common shares used in computing per share amounts -
Basic (in shares)	19,404,561	19,088,752
Diluted (in shares)	19,404,561	19,088,752

XML

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2022		18,957,366
Beginning balance at Dec. 31, 2022	$ 17,667	$ 19	$ 149,233	$ (131,585)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	642		642
Issuance of shares for vested restricted stock grants (in shares)		258,497
Net loss	(1,387)			(1,387)
Ending balance (in shares) at Mar. 31, 2023		19,215,863
Ending balance at Mar. 31, 2023	16,922	$ 19	149,875	(132,972)
Beginning balance (in shares) at Dec. 31, 2023		19,354,335
Beginning balance at Dec. 31, 2023	17,276	$ 19	150,822	(133,565)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	344		344
Issuance of shares for vested restricted stock grants (in shares)		50,226
Net loss	(442)			(442)
Ending balance (in shares) at Mar. 31, 2024		19,404,561
Ending balance at Mar. 31, 2024	$ 17,178	$ 19	$ 151,166	$ (134,007)

XML

CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (442)	$ (1,387)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization	72	70
Stock-based compensation	334	682
Allowance for credit losses	16	10
Change in accrued interest and accretion of discount on short-term investments	0	(1)
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable	1,944	(900)
Decrease (Increase) in other current assets and long-term assets	38	(145)
(Decrease) Increase in accounts payable and accrued expenses	(353)	783
(Decrease) Increase in deferred revenue	(740)	1,121
Net cash provided by operating activities	869	233
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(9)	(17)
Proceeds from maturity of short-term investments	5,000	0
Software development costs	(601)	0
Net cash provided by (used in) investing activities	4,390	(17)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of insurance financing arrangement	0	49
Repayment of insurance financing arrangements	0	(106)
Net cash provided by (used in) financing activities	0	(57)
Net increase in cash	5,259	159
CASH, beginning of period	3,980	5,196
CASH, end of period	9,239	5,355
Supplemental disclosures of cash flow information:
Cash paid for interest	$ 0	$ 1

XML

NATURE OF BUSINESS

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS

NATURE OF BUSINESS

Business

Intellicheck, Inc. (the “Company” or “Intellicheck”) is a prominent technology company that is engaged in developing, integrating and marketing identity verification solutions to address challenges that include commercial retail and banking fraud prevention. Intellicheck’s products include solutions for preventing identity fraud across any industry delivered via smartphone, tablet, POS integration or other electronic devices. Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of eleven (11) U.S. and one Canadian patents.

Liquidity

For the three months ended March 31, 2024, the Company incurred a net loss of $(442) and generated cash from operations of $869. As of March 31, 2024, the Company had cash and cash equivalents of $9,239, working capital (defined as current assets minus current liabilities) of $7,200 and an accumulated deficit of $(134,007). Based on the Company’s business plan and cash resources, Intellicheck expects its existing and future resources and revenues generated from operations to satisfy its working capital requirements for at least the next 12 months from the date of filing.

XML

SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") 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 GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Company’s financial position at March 31, 2024, the results of operations, and stockholders’ equity for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the three-month period ended March 31, 2024, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2024.

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

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

For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280. The enhanced disclosure requirements include: title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances. This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning

after December 15, 2024. This change will apply retrospectively to all periods presented. The Company is currently evaluating the impact of this ASU on its financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid. This change is effective for annual periods beginning after December 15, 2024. This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. The Company is currently evaluating the impact of this ASU on its financial statements.

Use of Estimates

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets, capitalization of software development costs, revenue recognition (including breakage revenue) and the fair value of stock options under the Company’s stock-based compensation plan. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Research and Development

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

Allowance for Credit Losses

Effective January 1, 2023, Intellicheck applied the new standard ASU 2016-13, codified as ASC 326. This impacts how the allowance for credit losses is calculated. Prior to ASC-326, Intellicheck would not recognize bad debt expense until the loss from customer non-payment was probable of occurring. Under the new model, Intellicheck’s allowance for credit losses reflects the Company’s estimate of all expected future credit losses from its current customer balances. Under the new guidance, the Company has applied a loss rate method which takes historical data as the basis for calculating the allowance amount, along with accounting for other factors like current and forecasted market conditions, and potential future impacts to the industry. In estimating whether accounts receivable will be collected, the Company performs evaluations of customers and continuously monitors collections and payments and estimates an allowance for credit losses based on collections experience to date and any specific collection issues that have been identified. The allowance for credit losses is recorded in the period in which revenue is recorded or when collection risk is identified.

Cash and Cash Equivalents

We classify time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents. Our cash and cash equivalents consist primarily of both cash on deposits with banks, which are maintained with major financial institutions in the United States, and money market funds. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, however amounts may exceed FDIC insured limits. The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash bank accounts.

Short-term investments

Short-term investments include investments in U.S. treasury notes. Debt investments with original maturities at the date of purchase greater than approximately three months but less than a year are classified as short-term investments, as they represent the investment of cash available for current operations. All short-term investments that the Company

holds are classified as "held-to-maturity" as the Company has the intent and ability to hold these investments until maturity. See Note 3 for more detail and a breakdown of the Company's short-term investments.

Property and Equipment

Property and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three to seven years using the straight-line method. See Note 4.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC 350, Intangibles - Goodwill and Other, the Company tests goodwill for impairment on an annual basis in the fourth quarter on December 31st, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assesses qualitative factors to determine whether it is necessary to perform step one of the quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decreases in share price.

The Company performed its annual impairment test of goodwill in the fourth quarter for the year ended December 31, 2023. For the three months ended March 31, 2024 and 2023, the Company determined no triggering events existed and as such no impairment charge was required.

Intangible Assets

Intangible assets include patents, copyrights, developed technology and capitalized software development costs. The Company amortizes these assets on a straight-line basis over their estimated useful lives, as it represents the pattern of economic benefits consumed. There were no impairment charges recognized during the three-months ended March 31, 2024 and 2023. See Note 5.

We capitalize internal-use software costs which includes costs incurred in connection with the development of new software solutions and enhancements to existing software solutions that are expected to result in increased functionality. The costs incurred in the preliminary stages of development are expensed as incurred. Once the software has reached the application development stage, internal and external costs, if direct and incremental, are capitalized until the software is complete and available for its intended use. We evaluate the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. There were no impairments of capitalized software development costs for the three months ended March 31, 2024 and 2023.

Advertising Costs

Advertising costs, which are expensed as incurred, were $78 and $199 for the three months ended March 31, 2024 and 2023, respectively. These costs are recorded as a component of selling, general and administrative expenses within the Statements of Operations.

Retirement Plan

The Company has a retirement savings 401(k) plan ("Retirement Plan"). The Retirement Plan permits eligible employees to make voluntary contributions to a trust, up to a maximum of 35% of compensation, subject to certain limitations. The Company has elected to contribute a matching contribution equal to 50% of the first 6% of an eligible employee’s deferral election. The Company’s matching contributions were $0 and $27 for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, funds from the plan's forfeiture account were used to fund the matching contributions in accordance with the terms of the plan and as such, the Company took no expense during the current period related to its retirement plans. These costs were recorded as a component of selling, general and administrative expenses within the Statements of Operations.

Shipping Costs

The Company’s shipping and handling costs related to sales are included in cost of revenues for all periods presented. All other shipping and handling costs are included as a component of selling, general and administrative expenses within the Statements of Operations.

Loss Contingencies and Legal Costs

The Company accrues loss contingencies that are believed to be probable and can be reasonably estimated. As events evolve during the administration and litigation process and additional information becomes known, the Company reassesses its estimates related to loss contingencies. Legal costs are expensed in the period in which the costs are incurred.

Sales Taxes

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

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, 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 carryforwards. 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. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. The Company has recorded a full valuation allowance for its net deferred tax assets as of March 31, 2024 and December 31, 2023, as it is more likely than not these assets may not be fully realized due to the uncertainty of the realizability of those assets.

Fair Value of Financial Instruments

The Company adheres to the provisions of ASC 820, Fair Value Measurement, which requires the Company to calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value of those financial instruments is different than the book value. The Company’s financial instruments include cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable and accrued expenses. At March 31, 2024 and December 31, 2023, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

FASB guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

•Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. The Company's Level 1 assets consisted primarily of cash and cash equivalents as well as short-term investments totaling $9,239 and $8,980 as of March 31, 2024 and December 31, 2023, respectively.

•Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies. The Company had $0 and $4 of Level 2 liabilities as of March 31, 2024 and December 31, 2023, respectively, for the liability-classified stock options. The fair value of these awards were determined by utilizing a Black-Scholes option pricing model.

•Level 3—Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when the fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Company had no Level 3 assets or liabilities as of March 31, 2024 and December 31, 2023.

Revenue Recognition and Deferred Revenue

General

Most license fees and services revenue are generated from a combination of fixed-price and per-scan contracts. Under the per-scan revenue model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the Company’s software. Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location to access the Company’s software. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s services as they are performed. The Company's performance obligations are satisfied over time, and as a result, we may follow the right to invoice practical expedient meaning we may recognize revenue monthly as invoiced based on its contract terms.

The Company has an additional revenue model where customers purchase a predetermined number of transactions for the term of the contract. Customers are charged a fixed monthly fee for a set number of scans (fixed consideration), with any overages charged on a per scan basis (variable consideration). The Company estimates the amount of unused transactions at the end of each contract period and recognizes a portion of that revenue as breakage revenue each reporting period. If the Company expects the customer to use all transactions in the specified service period, the Company will recognize the transaction price as revenue in the specified service period as the promised units of service are transferred to the customer. Alternatively, if the Company expects that the customer cannot or will not use all transactions in the specified service period (referred to as “breakage”), the Company will recognize the estimated breakage amount as revenue ratably over the service period in proportion to the revenue that the Company will recognize for actual transactions used by the customer in the service period. We do not estimate the variable consideration at any point; rather we calculate and recognize the variable portion at the end of the contract term since these contracts are considered monthly due to the termination clauses included within them. The fixed and variable performance obligations are recognized monthly based on the contract terms.

Invoicing is based on schedules established in customer contracts. Payment terms are generally established from 30 to 60 days from the invoice date. Accordingly, the Company has determined that its contracts do not include a significant financing component. Product returns are estimated and recorded as a reduction to revenue, however, such amounts have been immaterial.

The Company has not capitalized any costs to obtain a contract as the period of amortization for these associated costs would have been recognized over a period that is one year or less and the Company elected the practical expedient to expense those costs as incurred.

Nature of goods and services

The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each:

Software as a Service (SaaS)

Software as a service (SaaS) for hosted subscription services requires the Company to provide a stand-ready obligation and allows customers to access a set of data for a predetermined period of time. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the revenue should be recognized over time, under the fixed pricing model, based on the usage of the hosted subscription services, which can vary from month to month. Under the per-scan revenue model, the customer requires access to the Company's hosted subscription service but revenue is recognized over time as the customer scans an identity document.

Equipment Revenue

Revenue from the sale of equipment is recognized at a point in time. The point in time that the revenue is recognized is when the customer has control of the equipment which is when the customer receives the benefit and the Company’s performance obligation has been satisfied. Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the equipment is received.

Other Revenue

Other Revenues, which historically have not been material, consist primarily of revenues from other subscription and support services, and extended warranties. The Company’s revenues from other subscription and support services includes jurisdictional updates to certain commercial customers and support services particularly to its Defense ID® customers. These subscriptions require continuing service or post contractual customer support and performance. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. Accordingly, the revenue is recognized over time based on usage, which can vary from month to month. The revenue is typically based on a formula such as number of locations in a given month multiplied by a fee per location.

Extended warranty revenues are generated when a warranty is provided to the customer separately of other performance obligations when the equipment is sold. As the customer obtains access at a point in time and continues to have access for the remainder of the warranty term, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. The related revenue is recognized ratably over the specified term of the warranty period. The extended warranty is separate from the Company’s standard warranty that it receives from its vendor, which is typically one year.

Disaggregation of revenue

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

	For the Three Months Ended March 31,
	2024		2023
Products and services
Software as a Service (SaaS)	$	4,609	$	4,228
Equipment	55		15
Other	16		11
	$	4,680	$	4,254
Timing of revenue recognition
Products transferred at a point in time	$	71	$	26
Services transferred over time	4,609		4,228
	$	4,680	$	4,254

Contract balances

The current portion of deferred revenue at March 31, 2024, December 31, 2023 and December 31, 2022 was $1,469, $2,209 and $906, respectively, and primarily consists of revenue recognized over time for software license contracts and hosted subscription services. The changes in these balances are related to purchases of a predetermined number of transactions, partially offset by the satisfaction or partial satisfaction of these contracts. Of the December 31, 2023 balance, $555 was recognized as revenue in the three months ended March 31, 2024. The noncurrent deferred revenue balances were $0 and $0 as of March 31, 2024 and December 31, 2023, respectively.

Accounts Receivable

Accounts receivable, net of allowance for credit losses, at March 31, 2024, December 31, 2023 was $2,744, and $4,703, respectively. The allowance for credit losses at March 31, 2024 and December 31, 2023 was $85 and $69, respectively.

Transaction price allocated to the remaining performance obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:

	Remainder 2024		2025		2026		Total
Software as a Service (SaaS)	$	1,408	$	60	$	—	$	1,468
Other	1		—		—		1
	$	1,409	$	60	$	—	$	1,469

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

Business Concentrations and Credit Risk

Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company maintains cash with two financial institutions. The Company performs periodic evaluations of the relative credit standing of these institutions.

The Company’s sales are principally made to large retail customers, financial institutions concentrated in the United States of America and to U.S. government entities. The Company performs ongoing credit evaluations, generally does not require collateral, and establishes an allowance for credit losses based upon factors surrounding the credit risk of customers, historical trends, and other market and economic information.

During the three-month period ended March 31, 2024, the Company made sales to three customers that accounted for approximately 44% of total revenues, 19%, 13% and 12%, respectively for each customer. The revenue was primarily associated with commercial identity sales customers. These three customers, in addition with one other customer, represented 56% of total accounts receivable at March 31, 2024, 36%, 1%, 7%, and 12% respectively for each customer. During the three-month period ended March 31, 2023, the Company made sales to the same three customers that accounted for approximately 39% of total revenues, 16%, 13% and 10%, respectively. These three customers represented 54% of total accounts receivable at March 31, 2023, 28%, 16%, 10%, respectively.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock equivalents outstanding during the period. The dilutive effect of outstanding options, warrants, and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive shares. In periods of a net loss, all common stock equivalents are considered anti-dilutive.

	Three Months Ended March 31,
	2024		2023
Numerator:
Net Loss	$	(442)	$	(1,387)
Denominator:
Weighted average common shares –
Basic/Diluted	19,404,561		19,088,752
Net Loss per share –
Basic/Diluted	$	(0.02)	$	(0.07)

The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:

	Three Months Ended March 31,
	2024	2023
Stock options	1,487,882	1,500,284
Restricted stock	155,418	156,347
	1,643,300	1,656,631

Segment Information

The Company adheres to the provisions of ASC 280, Segment Reporting, which establishes standards for the way public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in financial statements issued to shareholders. The Company’s Chief Operating Decision Maker, its Chief Executive Officer (“CEO”), reviews the financial information presented for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates in a single reportable segment. All of the Company’s long-lived assets are located in the United States. Since the Company operates in one operating segment, all required financial segment information can be found in the financial statements.

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CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Short-term investments include investments in U.S. treasury notes. Short-term investments with original maturities of approximately three months or less from the date of purchase are classified within cash and cash equivalents. Debt investments with original maturities at the date of purchase greater than approximately three months but less than one year are classified as short-term investments, as they represent the investment of cash available for current operations. All short-term investments that the Company holds are classified as "held-to-maturity". The Company has accounted for and disclosed the purchase of its short-term investments in accordance with ASC 320, Investments - Debt Securities. The following table summarizes the fair value of cash and cash equivalents, and short-term investments as well as any gross unrealized holding gains and losses as of March 31, 2024 and December 31, 2023. Due to the nature of these assets and the short-term nature of the U.S. treasury notes being held to maturity, both these cash and cash equivalents and short-term investments fall under the Level 1 fair value hierarchy as referenced in Note 2.

	As of March 31, 2024
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
Cash and cash equivalents	$	9,239	$	—	$	—	$	9,239
U.S. treasury notes	—		—		—		—
Total cash, cash equivalents and short-term investments	$	9,239	$	—	$	—	$	9,239

	As of December 31, 2023
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
Cash and cash equivalents	$	3,980	$	—	$	—	$	3,980
U.S. treasury notes (1)	5,000		—		—		5,000
Total cash, cash equivalents and short-term investments	$	8,980	$	—	$	—	$	8,980

(1) These U.S. treasury notes are classified as "held-to-maturity" as they were purchased in August 2023 and matured in January 2024.

The Company did not hold any securities that were in an unrealized loss position for more than 12 months as of March 31, 2024. There were no material realized gains or losses on these specific short-term investments during the three months ended March 31, 2024.

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PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

Property and equipment, net is summarized as follows:

	March 31, 2024		December 31, 2023
Computer equipment and software	$	1,894	$	1,886
Furniture and fixtures	139		139
Office equipment	618		618
	2,651		2,643
Less – Accumulated depreciation	(2,023)		(1,977)
	$	628	$	666

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

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INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

INTANGIBLE ASSETS

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

Net balance at December 31, 2023	$	575
Addition: Capitalized software costs	609
Deduction: Amortization expense	(27)
Net balance at March 31, 2024	$	1,157

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

		As of March 31, 2024
	Estimated Useful Life	Adjusted Carrying Amount		Accumulated Amortization		Net
Patents and copyrights	2-17 years	$	375	$	(307)	$	68
Developed technology	5 years	400		(327)		73
Software development	—	$	1,016	$	—	$	1,016
		$	1,791	$	(634)	$	1,157

The Company has capitalized $1,016 in software development costs as of March 31, 2024. The projects are still in development and not yet ready for their intended use and therefore no estimated useful life has been determined and these costs are not being amortized as of March 31, 2024.

		As of December 31, 2023
	Estimated Useful Life	Adjusted Carrying Amount		Accumulated Amortization		Net
Patents and copyrights	2-17 years	$	375	$	(300)	$	75
Developed technology	5 years	400		(307)		93
Software development	—	$	407	$	—	407
		$	1,182	$	(607)	$	575

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

	Three Months Ended March 31,
	2024		2023
Cost of revenues	$	24	$	24
General and administrative	3		3
	$	27	$	27

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DEBT

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

DEBT

DEBT

Revolving Line of Credit

On February 6, 2019, the Company entered into a revolving credit facility with Citi Personal Wealth Management that allows for borrowings up to the lesser of (i) $2,000 or (ii) the collateralized balance in the Company’s existing fixed income investment account with Citi Personal Wealth Management subject to certain limitations. The facility bears interest at a rate consistent with Citi Personal Wealth Management’s Base Rate (8.50% and 8.50% at March 31, 2024 and December 31, 2023, respectively) minus 2%. Interest is payable monthly and as of March 31, 2024 and December 31, 2023, there were no amounts outstanding and unused availability under this facility was $2,000. The Company is not subject to any financial covenants related to this revolving line of credit. This line will remain open as long as the Company keeps a depository relationship with the financial institution.

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ACCRUED EXPENSES

3 Months Ended

Mar. 31, 2024

Payables and Accruals [Abstract]

ACCRUED EXPENSES

ACCRUED EXPENSES

Accrued expenses are comprised of the following:

	March 31, 2024		December 31, 2023
Professional fees	$	20	$	1
Payroll and related	600		1,159
Incentive bonuses	1,275		824
Sales tax accrual	727		1,064
Other	35		197
	$	2,657	$	3,245

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INCOME TAXES

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Our available net operating loss (“NOL”) as of December 31, 2023 was approximately $26,300, of which $10,900 expires between 2035 and 2037. In accordance with the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), U.S. NOLs arising in a tax year ending after 2017 in the amount of $15,400 will not expire, but are subject to 80% limitation on utilization. In addition to the NOLs, the Company has approximately $708 of research and development credits.

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

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STOCKHOLDERS’ EQUITY

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

Stock-based Compensation

To retain and attract qualified personnel necessary for the success of the Company, the Company adopted the 2015 Omnibus Incentive Plan (the “Plan”) covering up to 5,236,000 of the Company’s common shares, pursuant to which officers, directors, key employees and consultants to the Company are eligible to receive incentive stock options, nonqualified stock options and restricted stock units. All the equity compensation plans prior to Company’s 2015 Omnibus Incentive Plan have been closed. The Compensation Committee of the Board of Directors administers this Plan and

determines the terms and conditions of stock options granted, including the exercise price. This Plan generally provides that all stock options will expire within ten years of the date of grant. Incentive stock options granted under this Plan must be granted at an exercise price that is not less than the fair market value per share at the date of the grant and the exercise price must not be less than 110% of the fair market value per share at the date of the grant for grants to persons owning more than 10% of the voting stock of the Company. This Plan also entitles non-employee directors to receive grants of non-qualified stock options as approved by the Board of Directors.

The Company accounts for the issuance of stock-based awards to employees in accordance with ASC Topic 718, Compensation - Stock Compensation, which requires that the cost resulting from all stock-based compensation payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for stock-based compensation payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all stock-based compensation payment transactions with employees. All stock-based compensation is included in operating expenses as follows:

	Three Months Ended March 31,
	2024		2023
Compensation cost recognized:
Selling, general & administrative	$	324	$	595
Research & development	10		87
	$	334	$	682

Stock Options

The Company uses the Black-Scholes option pricing model to value the options on the grant date. The table below presents the weighted average expected life of the stock options in years. The Company uses the simplified method for all restricted stock units and stock options to estimate the expected life of the option and assumes that stock options will be exercised evenly over the period from vesting until the awards expire. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on U.S. Treasury yield curve in effect on the grant date. Options, generally, vest from one year to four years. The compensation expense is recognized over the requisite service period on a straight-line basis, reduced by forfeitures as they occur.

Certain option awards are classified as liability awards. The fair value of these awards are determined at each reporting period utilizing a Black-Scholes option pricing model, and the associated compensation expense (credit) for the reporting period is recorded. The Company decreased stock-based compensation expense by approximately $(4) for the three-months ended March 31, 2024, as a result of the change in fair value of these awards. The Company increased stock-based compensation expense by approximately $40 for the three-months ended March 31, 2023, as a result of the change in fair value of these awards.

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

	Number of Shares Subject to Issuance	Weighted- average Exercise Price		Weighted- average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2023	1,152,714	$	3.07	3.18 years	$	38
Granted	519,750	1.92		–	–
Forfeited, cancelled, or expired	(184,582)	2.68		–	–
Outstanding at March 31, 2024	1,487,882	$	2.05	2.28 years	$	883
Exercisable at March 31, 2024	484,004	$	3.66	3.28 years	$	471

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on March 31, 2024. This amount changes based upon the fair market value of the Company’s stock.

Restricted Stock Units

The Company periodically issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. The Company issues RSUs to certain directors as compensation which vest with the passage of time. The vesting of all RSUs is contingent on continued board and employment services.

The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant, is amortized on a straight-line basis over the requisite service period and charged to operating expenses with a corresponding increase to additional paid-in capital, reduced by forfeitures when they occur.

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

	Number of Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2023	60,500	$	4.23
Granted	145,144	2.04
Vested and settled in shares	(50,226)	3.45
Outstanding at March 31, 2024	155,418	$	2.41

As of March 31, 2024, there was approximately $1,399 of total unrecognized compensation costs, related to all unvested stock options and RSUs. These costs are expected to be recognized as compensation expense over a weighted-average period of approximately 2.42 years.

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

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Leases

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

The Company determines if an arrangement is a lease at lease inception. The arrangement is a lease if it conveys the right to the Company to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company did not have an Operating Lease ROU or Operating Lease Liability as of March 31, 2024, as its office lease is on a month-to-month term and allows for either party to terminate the lease without a significant penalty.

Legal Proceedings

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

From time to time, the Company may be involved in lawsuits, claims, investigations and proceedings, consisting of intellectual property, commercial, employment and other matters, which arise in the ordinary course of business. In accordance with GAAP, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, ruling, advice of legal counsel and other information and events pertaining to a particular case. Litigation is inherently unpredictable. If any unfavorable ruling was to occur in any specific period or if a loss becomes probable and estimable, there exists the possibility of a material adverse impact on the Company’s results of operations, financial position or cash flows. As of March 31, 2024, no material amounts are recorded related to legal proceedings on the balance sheets.

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

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net loss	$ (442)	$ (1,387)

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Insider Trading Arrangements	3 Months Ended
	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") 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 GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Company’s financial position at March 31, 2024, the results of operations, and stockholders’ equity for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the three-month period ended March 31, 2024, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2024.

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

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

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280. The enhanced disclosure requirements include: title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances. This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning

after December 15, 2024. This change will apply retrospectively to all periods presented. The Company is currently evaluating the impact of this ASU on its financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid. This change is effective for annual periods beginning after December 15, 2024. This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. The Company is currently evaluating the impact of this ASU on its financial statements.

Use of Estimates

Use of Estimates

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets, capitalization of software development costs, revenue recognition (including breakage revenue) and the fair value of stock options under the Company’s stock-based compensation plan. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Research and Development

Research and Development

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

Allowance for Credit Losses

Allowance for Credit Losses

Effective January 1, 2023, Intellicheck applied the new standard ASU 2016-13, codified as ASC 326. This impacts how the allowance for credit losses is calculated. Prior to ASC-326, Intellicheck would not recognize bad debt expense until the loss from customer non-payment was probable of occurring. Under the new model, Intellicheck’s allowance for credit losses reflects the Company’s estimate of all expected future credit losses from its current customer balances. Under the new guidance, the Company has applied a loss rate method which takes historical data as the basis for calculating the allowance amount, along with accounting for other factors like current and forecasted market conditions, and potential future impacts to the industry. In estimating whether accounts receivable will be collected, the Company performs evaluations of customers and continuously monitors collections and payments and estimates an allowance for credit losses based on collections experience to date and any specific collection issues that have been identified. The allowance for credit losses is recorded in the period in which revenue is recorded or when collection risk is identified.

Cash and Cash Equivalents

Cash and Cash Equivalents

We classify time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents. Our cash and cash equivalents consist primarily of both cash on deposits with banks, which are maintained with major financial institutions in the United States, and money market funds. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, however amounts may exceed FDIC insured limits. The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash bank accounts.

Short-term investments

Short-term investments

Short-term investments include investments in U.S. treasury notes. Debt investments with original maturities at the date of purchase greater than approximately three months but less than a year are classified as short-term investments, as they represent the investment of cash available for current operations. All short-term investments that the Company

holds are classified as "held-to-maturity" as the Company has the intent and ability to hold these investments until maturity. See Note 3 for more detail and a breakdown of the Company's short-term investments.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three to seven years using the straight-line method.

Goodwill

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations. Pursuant to ASC 350, Intangibles - Goodwill and Other, the Company tests goodwill for impairment on an annual basis in the fourth quarter on December 31st, or between annual tests, in certain circumstances. Under authoritative guidance, the Company first assesses qualitative factors to determine whether it is necessary to perform step one of the quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decreases in share price.

Intangible Assets

Intangible Assets

Intangible assets include patents, copyrights, developed technology and capitalized software development costs. The Company amortizes these assets on a straight-line basis over their estimated useful lives, as it represents the pattern of economic benefits consumed. There were no impairment charges recognized during the three-months ended March 31, 2024 and 2023. See Note 5.

We capitalize internal-use software costs which includes costs incurred in connection with the development of new software solutions and enhancements to existing software solutions that are expected to result in increased functionality. The costs incurred in the preliminary stages of development are expensed as incurred. Once the software has reached the application development stage, internal and external costs, if direct and incremental, are capitalized until the software is complete and available for its intended use. We evaluate the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Advertising Costs

Advertising Costs

Advertising costs, which are expensed as incurred, were $78 and $199 for the three months ended March 31, 2024 and 2023, respectively. These costs are recorded as a component of selling, general and administrative expenses within the Statements of Operations.

Retirement Plan

Retirement Plan

The Company has a retirement savings 401(k) plan ("Retirement Plan"). The Retirement Plan permits eligible employees to make voluntary contributions to a trust, up to a maximum of 35% of compensation, subject to certain limitations. The Company has elected to contribute a matching contribution equal to 50% of the first 6% of an eligible employee’s deferral election. The Company’s matching contributions were $0 and $27 for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, funds from the plan's forfeiture account were used to fund the matching contributions in accordance with the terms of the plan and as such, the Company took no expense during the current period related to its retirement plans. These costs were recorded as a component of selling, general and administrative expenses within the Statements of Operations.

Shipping Costs and Sales Taxes and Revenue Recognition and Deferred Revenue

Shipping Costs

The Company’s shipping and handling costs related to sales are included in cost of revenues for all periods presented. All other shipping and handling costs are included as a component of selling, general and administrative expenses within the Statements of Operations.

Sales Taxes

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

Revenue Recognition and Deferred Revenue

General

Most license fees and services revenue are generated from a combination of fixed-price and per-scan contracts. Under the per-scan revenue model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the Company’s software. Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location to access the Company’s software. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s services as they are performed. The Company's performance obligations are satisfied over time, and as a result, we may follow the right to invoice practical expedient meaning we may recognize revenue monthly as invoiced based on its contract terms.

The Company has an additional revenue model where customers purchase a predetermined number of transactions for the term of the contract. Customers are charged a fixed monthly fee for a set number of scans (fixed consideration), with any overages charged on a per scan basis (variable consideration). The Company estimates the amount of unused transactions at the end of each contract period and recognizes a portion of that revenue as breakage revenue each reporting period. If the Company expects the customer to use all transactions in the specified service period, the Company will recognize the transaction price as revenue in the specified service period as the promised units of service are transferred to the customer. Alternatively, if the Company expects that the customer cannot or will not use all transactions in the specified service period (referred to as “breakage”), the Company will recognize the estimated breakage amount as revenue ratably over the service period in proportion to the revenue that the Company will recognize for actual transactions used by the customer in the service period. We do not estimate the variable consideration at any point; rather we calculate and recognize the variable portion at the end of the contract term since these contracts are considered monthly due to the termination clauses included within them. The fixed and variable performance obligations are recognized monthly based on the contract terms.

Invoicing is based on schedules established in customer contracts. Payment terms are generally established from 30 to 60 days from the invoice date. Accordingly, the Company has determined that its contracts do not include a significant financing component. Product returns are estimated and recorded as a reduction to revenue, however, such amounts have been immaterial.

The Company has not capitalized any costs to obtain a contract as the period of amortization for these associated costs would have been recognized over a period that is one year or less and the Company elected the practical expedient to expense those costs as incurred.

Nature of goods and services

The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each:

Software as a Service (SaaS)

Software as a service (SaaS) for hosted subscription services requires the Company to provide a stand-ready obligation and allows customers to access a set of data for a predetermined period of time. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the revenue should be recognized over time, under the fixed pricing model, based on the usage of the hosted subscription services, which can vary from month to month. Under the per-scan revenue model, the customer requires access to the Company's hosted subscription service but revenue is recognized over time as the customer scans an identity document.

Equipment Revenue

Revenue from the sale of equipment is recognized at a point in time. The point in time that the revenue is recognized is when the customer has control of the equipment which is when the customer receives the benefit and the Company’s performance obligation has been satisfied. Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the equipment is received.

Other Revenue

Other Revenues, which historically have not been material, consist primarily of revenues from other subscription and support services, and extended warranties. The Company’s revenues from other subscription and support services includes jurisdictional updates to certain commercial customers and support services particularly to its Defense ID® customers. These subscriptions require continuing service or post contractual customer support and performance. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. Accordingly, the revenue is recognized over time based on usage, which can vary from month to month. The revenue is typically based on a formula such as number of locations in a given month multiplied by a fee per location.

Extended warranty revenues are generated when a warranty is provided to the customer separately of other performance obligations when the equipment is sold. As the customer obtains access at a point in time and continues to have access for the remainder of the warranty term, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. The related revenue is recognized ratably over the specified term of the warranty period. The extended warranty is separate from the Company’s standard warranty that it receives from its vendor, which is typically one year.

Loss Contingencies and Legal Costs

Loss Contingencies and Legal Costs

The Company accrues loss contingencies that are believed to be probable and can be reasonably estimated. As events evolve during the administration and litigation process and additional information becomes known, the Company reassesses its estimates related to loss contingencies. Legal costs are expensed in the period in which the costs are incurred.

Income Taxes

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, 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 carryforwards. 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. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company adheres to the provisions of ASC 820, Fair Value Measurement, which requires the Company to calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value of those financial instruments is different than the book value. The Company’s financial instruments include cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable and accrued expenses. At March 31, 2024 and December 31, 2023, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

FASB guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

•Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. The Company's Level 1 assets consisted primarily of cash and cash equivalents as well as short-term investments totaling $9,239 and $8,980 as of March 31, 2024 and December 31, 2023, respectively.

•Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies. The Company had $0 and $4 of Level 2 liabilities as of March 31, 2024 and December 31, 2023, respectively, for the liability-classified stock options. The fair value of these awards were determined by utilizing a Black-Scholes option pricing model.

•Level 3—Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when the fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Company had no Level 3 assets or liabilities as of March 31, 2024 and December 31, 2023.

Business Concentrations and Credit Risk

Business Concentrations and Credit Risk

Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company maintains cash with two financial institutions. The Company performs periodic evaluations of the relative credit standing of these institutions.

The Company’s sales are principally made to large retail customers, financial institutions concentrated in the United States of America and to U.S. government entities. The Company performs ongoing credit evaluations, generally does not require collateral, and establishes an allowance for credit losses based upon factors surrounding the credit risk of customers, historical trends, and other market and economic information.

Net Loss Per Share

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock equivalents outstanding during the period. The dilutive effect of outstanding options, warrants, and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive shares. In periods of a net loss, all common stock equivalents are considered anti-dilutive.

Segment Information

Segment Information

The Company adheres to the provisions of ASC 280, Segment Reporting, which establishes standards for the way public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in financial statements issued to shareholders. The Company’s Chief Operating Decision Maker, its Chief Executive Officer (“CEO”), reviews the financial information presented for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates in a single reportable segment. All of the Company’s long-lived assets are located in the United States. Since the Company operates in one operating segment, all required financial segment information can be found in the financial statements.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Schedule of Revenue Disaggregated by Product and Service and Timing of Revenue Recognition

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

	For the Three Months Ended March 31,
	2024		2023
Products and services
Software as a Service (SaaS)	$	4,609	$	4,228
Equipment	55		15
Other	16		11
	$	4,680	$	4,254
Timing of revenue recognition
Products transferred at a point in time	$	71	$	26
Services transferred over time	4,609		4,228
	$	4,680	$	4,254

Scheduled of Revenue Expected to be Recognized Related to Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:

	Remainder 2024		2025		2026		Total
Software as a Service (SaaS)	$	1,408	$	60	$	—	$	1,468
Other	1		—		—		1
	$	1,409	$	60	$	—	$	1,469

Schedule of Basic and Diluted Earnings Per Share

	Three Months Ended March 31,
	2024		2023
Numerator:
Net Loss	$	(442)	$	(1,387)
Denominator:
Weighted average common shares –
Basic/Diluted	19,404,561		19,088,752
Net Loss per share –
Basic/Diluted	$	(0.02)	$	(0.07)

Summary of Common Stock Equivalents Excluded from Loss Per Diluted Share

The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:

	Three Months Ended March 31,
	2024	2023
Stock options	1,487,882	1,500,284
Restricted stock	155,418	156,347
	1,643,300	1,656,631

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CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Schedule of Cash and Cash Equivalents and Short-Term Investments

The following table summarizes the fair value of cash and cash equivalents, and short-term investments as well as any gross unrealized holding gains and losses as of March 31, 2024 and December 31, 2023. Due to the nature of these assets and the short-term nature of the U.S. treasury notes being held to maturity, both these cash and cash equivalents and short-term investments fall under the Level 1 fair value hierarchy as referenced in Note 2.

	As of March 31, 2024
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
Cash and cash equivalents	$	9,239	$	—	$	—	$	9,239
U.S. treasury notes	—		—		—		—
Total cash, cash equivalents and short-term investments	$	9,239	$	—	$	—	$	9,239

	As of December 31, 2023
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
Cash and cash equivalents	$	3,980	$	—	$	—	$	3,980
U.S. treasury notes (1)	5,000		—		—		5,000
Total cash, cash equivalents and short-term investments	$	8,980	$	—	$	—	$	8,980

(1) These U.S. treasury notes are classified as "held-to-maturity" as they were purchased in August 2023 and matured in January 2024.

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PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net is summarized as follows:

	March 31, 2024		December 31, 2023
Computer equipment and software	$	1,894	$	1,886
Furniture and fixtures	139		139
Office equipment	618		618
	2,651		2,643
Less – Accumulated depreciation	(2,023)		(1,977)
	$	628	$	666

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INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Intangible Assets, Net

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

Net balance at December 31, 2023	$	575
Addition: Capitalized software costs	609
Deduction: Amortization expense	(27)
Net balance at March 31, 2024	$	1,157

Schedule of Components of Intangible Assets

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

		As of March 31, 2024
	Estimated Useful Life	Adjusted Carrying Amount		Accumulated Amortization		Net
Patents and copyrights	2-17 years	$	375	$	(307)	$	68
Developed technology	5 years	400		(327)		73
Software development	—	$	1,016	$	—	$	1,016
		$	1,791	$	(634)	$	1,157

The Company has capitalized $1,016 in software development costs as of March 31, 2024. The projects are still in development and not yet ready for their intended use and therefore no estimated useful life has been determined and these costs are not being amortized as of March 31, 2024.

		As of December 31, 2023
	Estimated Useful Life	Adjusted Carrying Amount		Accumulated Amortization		Net
Patents and copyrights	2-17 years	$	375	$	(300)	$	75
Developed technology	5 years	400		(307)		93
Software development	—	$	407	$	—	407
		$	1,182	$	(607)	$	575

Schedule of Amortization Expense of Intangible Assets

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

	Three Months Ended March 31,
	2024		2023
Cost of revenues	$	24	$	24
General and administrative	3		3
	$	27	$	27

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ACCRUED EXPENSES (Tables)

3 Months Ended

Mar. 31, 2024

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses are comprised of the following:

	March 31, 2024		December 31, 2023
Professional fees	$	20	$	1
Payroll and related	600		1,159
Incentive bonuses	1,275		824
Sales tax accrual	727		1,064
Other	35		197
	$	2,657	$	3,245

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STOCKHOLDERS’ EQUITY (Tables)

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Schedule of Stock-Based Compensation Included in Operating Expenses

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

	Three Months Ended March 31,
	2024		2023
Compensation cost recognized:
Selling, general & administrative	$	324	$	595
Research & development	10		87
	$	334	$	682

Schedule of Stock Option Activity

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

	Number of Shares Subject to Issuance	Weighted- average Exercise Price		Weighted- average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2023	1,152,714	$	3.07	3.18 years	$	38
Granted	519,750	1.92		–	–
Forfeited, cancelled, or expired	(184,582)	2.68		–	–
Outstanding at March 31, 2024	1,487,882	$	2.05	2.28 years	$	883
Exercisable at March 31, 2024	484,004	$	3.66	3.28 years	$	471

Schedule of Restricted Stock Unit (RSU) Activity

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

	Number of Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2023	60,500	$	4.23
Granted	145,144	2.04
Vested and settled in shares	(50,226)	3.45
Outstanding at March 31, 2024	155,418	$	2.41

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NATURE OF BUSINESS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss	$ (442)	$ (1,387)
Net cash provided by operations	869	$ 233
Cash and cash equivalents	9,239		$ 3,980
Working capital	7,200
Accumulated deficit	$ (134,007)		$ (133,565)

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SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2024 USD ($) segment financial_institution	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Product Information [Line Items]
Goodwill, impairment charges	$ 0	$ 0
Intangible assets, impairment charges	0	0
Capitalized software development costs, impairment charges	0	0
Advertising costs	78,000	$ 199,000
Equity awards liability	0		$ 4,000
Deferred revenue	1,469,000		2,209,000	$ 906,000
Revenue recognized			555,000
Noncurrent deferred revenue balance	0		0
Accounts receivable, net of allowance for doubtful accounts	2,744,000		4,703,000
Accounts receivable, allowance for doubtful accounts	$ 85,000		69,000
Number of financial institutions | financial_institution	2
Number of reportable segments | segment	1
Number of operating segments | segment	1
Three Customers | Revenue from Contract with Customer Benchmark | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent	44.00%	39.00%
Three Customers | Accounts Receivable | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent		54.00%
Customer One | Revenue from Contract with Customer Benchmark | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent	19.00%	16.00%
Customer One | Accounts Receivable | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent	36.00%	28.00%
Customer Two | Revenue from Contract with Customer Benchmark | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent	13.00%	13.00%
Customer Two | Accounts Receivable | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent	1.00%	16.00%
Customer Three | Revenue from Contract with Customer Benchmark | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent	12.00%	10.00%
Customer Three | Accounts Receivable | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent	7.00%	10.00%
Four Customers | Accounts Receivable | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent	56.00%
Customer Four | Accounts Receivable | Customer Concentration Risk
Product Information [Line Items]
Business concentration risk, percent	12.00%
Fair Value, Inputs, Level 1
Product Information [Line Items]
Cash, cash equivalents and short-term investments	$ 9,239,000		8,980,000
Fair Value, Inputs, Level 2
Product Information [Line Items]
Equity awards liability	$ 0		$ 4,000
Retirement Savings 401k Plan
Product Information [Line Items]
Retirement plan, maximum employee contribution, percent	35.00%
Retirement plan, employer matching contribution, percent of match	50.00%
Retirement plan, employer matching contribution, percent of employees' gross pay	6.00%
Retirement plan, matching contributions	$ 0	$ 27,000
Minimum
Product Information [Line Items]
Property and equipment, useful life	3 years
Maximum
Product Information [Line Items]
Property and equipment, useful life	7 years

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SIGNIFICANT ACCOUNTING POLICIES - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Product Information [Line Items]
Revenue	$ 4,680	$ 4,254
Products transferred at a point in time
Product Information [Line Items]
Revenue	71	26
Services transferred over time
Product Information [Line Items]
Revenue	4,609	4,228
Software as a Service (SaaS)
Product Information [Line Items]
Revenue	4,609	4,228
Equipment
Product Information [Line Items]
Revenue	55	15
Other
Product Information [Line Items]
Revenue	$ 16	$ 11

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SIGNIFICANT ACCOUNTING POLICIES - Schedule of Revenue Performance Obligations (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 1,469
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 1,409
Revenue, remaining performance obligation, period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 60
Revenue, remaining performance obligation, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0
Revenue, remaining performance obligation, period	12 months
Software as a Service (SaaS)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 1,468
Software as a Service (SaaS) | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 1,408
Revenue, remaining performance obligation, period	9 months
Software as a Service (SaaS) | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 60
Revenue, remaining performance obligation, period	12 months
Software as a Service (SaaS) | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0
Revenue, remaining performance obligation, period	12 months
Other
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 1
Other | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 1
Revenue, remaining performance obligation, period	9 months
Other | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0
Revenue, remaining performance obligation, period	12 months
Other | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0
Revenue, remaining performance obligation, period	12 months

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SIGNIFICANT ACCOUNTING POLICIES - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Numerator:
Net Loss	$ (442)	$ (1,387)
Weighted average common shares –
Basic (in shares)	19,404,561	19,088,752
Diluted (in shares)	19,404,561	19,088,752
Net Loss per share –
Basic (in dollars per share)	$ (0.02)	$ (0.07)
Diluted (in dollars per share)	$ (0.02)	$ (0.07)

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SIGNIFICANT ACCOUNTING POLICIES - Summary of Common Stock Equivalents Excluded from Loss Per Diluted Share (Details) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from loss per diluted share (in shares)	1,643,300	1,656,631
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from loss per diluted share (in shares)	1,487,882	1,500,284
Restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from loss per diluted share (in shares)	155,418	156,347

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CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS - Schedule of Cash and Cash Equivalents and Short Term Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Amortized cost
Cash and cash equivalents	$ 9,239	$ 3,980
Fair Value, Inputs, Level 1
Amortized cost
Cash and cash equivalents	9,239	3,980
Total cash, cash equivalents and short-term investments	9,239	8,980
Gross unrealized holding gains
Total cash, cash equivalents and short-term investments	0	0
Gross unrealized holding losses
Total cash, cash equivalents and short-term investments	0	0
Estimated fair value
Cash and cash equivalents	9,239	3,980
Total cash, cash equivalents and short-term investments	9,239	8,980
U.S. treasury notes | Fair Value, Inputs, Level 1
Amortized cost
U.S. treasury notes	0	5,000
Gross unrealized holding gains
Total cash, cash equivalents and short-term investments	0	0
Gross unrealized holding losses
Total cash, cash equivalents and short-term investments	0	0
Estimated fair value
U.S. treasury notes	$ 0	$ 5,000

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CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS - Narrative (Details) - U.S. treasury notes - Fair Value, Inputs, Level 1	3 Months Ended
	Mar. 31, 2024 USD ($) number_security
Schedule of Held-to-Maturity Securities [Line Items]
Number of securities in unrealized loss position for more than 12 months | number_security	0
Short-term investments, realized gains or losses | $	$ 0

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PROPERTY AND EQUIPMENT - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,651	$ 2,643
Less – Accumulated depreciation	(2,023)	(1,977)
Property and equipment, net	628	666
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,894	1,886
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	139	139
Office equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 618	$ 618

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PROPERTY AND EQUIPMENT - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 45	$ 43

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INTANGIBLE ASSETS - Schedule of Changes in Carrying Amount of Intangible Assets, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Goodwill [Roll Forward]
Beginning balance	$ 575
Addition: Capitalized software costs	609
Deduction: Amortization expense	(27)	$ (27)
Ending balance	$ 1,157

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INTANGIBLE ASSETS - Schedule of Intangible Asset Components (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Adjusted Carrying Amount	$ 1,791	$ 1,182
Accumulated Amortization	(634)	(607)
Net	1,157	575
Patents and copyrights
Finite-Lived Intangible Assets [Line Items]
Adjusted Carrying Amount	375	375
Accumulated Amortization	(307)	(300)
Net	$ 68	$ 75
Patents and copyrights | Minimum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	2 years	2 years
Patents and copyrights | Maximum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	17 years	17 years
Developed technology
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	5 years	5 years
Adjusted Carrying Amount	$ 400	$ 400
Accumulated Amortization	(327)	(307)
Net	73	93
Software development
Finite-Lived Intangible Assets [Line Items]
Adjusted Carrying Amount	1,016	407
Accumulated Amortization	0	0
Net	$ 1,016	$ 407

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INTANGIBLE ASSETS - Narrative (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Capitalized computer software costs	$ 1,016

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INTANGIBLE ASSETS - Schedule of Intangible Assets Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Goodwill [Line Items]
Amortization expense	$ 27	$ 27
Cost of revenues
Goodwill [Line Items]
Amortization expense	24	24
General and administrative
Goodwill [Line Items]
Amortization expense	$ 3	$ 3

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DEBT (Details) - Citi Personal Wealth Management - Revolving Credit Facility - Line of Credit - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023	Feb. 06, 2019
Line of Credit Facility [Line Items]
Maximum borrowing capacity (up to)			$ 2,000,000
Amount outstanding	$ 0	$ 0
Unused availability	$ 2,000,000	$ 2,000,000
Base Rate | Variable Rate Component One
Line of Credit Facility [Line Items]
Interest rate, basis spread	8.50%	8.50%
Base Rate | Variable Rate Component Two
Line of Credit Facility [Line Items]
Interest rate, basis spread	(2.00%)	(2.00%)

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ACCRUED EXPENSES - Schedule of Components of Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Professional fees	$ 20	$ 1
Payroll and related	600	1,159
Incentive bonuses	1,275	824
Sales tax accrual	727	1,064
Other	35	197
Accrued expenses	$ 2,657	$ 3,245

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INCOME TAXES (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Income Tax Disclosure [Abstract]
Available net operating loss	$ 26,300
Available net operating loss, expires between 2035 and 2037	10,900
Net operating loss carryforwards, not subject to expiration	15,400
Research and development tax credits	$ 708

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STOCKHOLDERS’ EQUITY - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Class of Stock [Line Items]
Shares available for future grants (in shares)	658,613
Unvested Employee Stock Options and RSUs
Class of Stock [Line Items]
Unrecognized compensation cost	$ 1,399
Weighted average period of recognition	2 years 5 months 1 day
2015 Omnibus Incentive Plan
Class of Stock [Line Items]
Increased (decrease) in stock-based compensation	$ (4)	$ 40
2015 Omnibus Incentive Plan | Maximum
Class of Stock [Line Items]
Shares authorized (up to) (in shares)	5,236,000
2015 Omnibus Incentive Plan | Stock options
Class of Stock [Line Items]
Expiration period	10 years
2015 Omnibus Incentive Plan | Stock options | Maximum
Class of Stock [Line Items]
Vesting period	4 years
2015 Omnibus Incentive Plan | Stock options | Minimum
Class of Stock [Line Items]
Percentage of fair value per share granted (not less than)	110.00%
Percentage of grants owning more than voting stock	10.00%
Vesting period	1 year

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STOCKHOLDERS’ EQUITY - Schedule of Stock-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Compensation cost recognized	$ 334	$ 682
Selling, general & administrative
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Compensation cost recognized	324	595
Research & development
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Compensation cost recognized	$ 10	$ 87

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STOCKHOLDERS' EQUITY - Schedule of Stock Option Activity (Details) - Stock Option Plans - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Number of Shares Subject to Issuance
Outstanding, beginning balance (in shares)	1,152,714
Granted (in shares)	519,750
Forfeited, cancelled, or expired (in shares)	(184,582)
Outstanding, ending balance (in shares)	1,487,882	1,152,714
Exercisable at end of period (in shares)	484,004
Weighted- average Exercise Price
Outstanding, beginning balance (in dollars per share)	$ 3.07
Granted (in dollars per share)	1.92
Forfeited, cancelled, or expired (in dollars per share)	2.68
Outstanding, ending balance (in dollars per share)	2.05	$ 3.07
Exercisable at end of period (in dollars per share)	$ 3.66
Weighted- average Remaining Contractual Term
Outstanding	2 years 3 months 10 days	3 years 2 months 4 days
Exercisable at end of period	3 years 3 months 10 days
Aggregate Intrinsic Value
Outstanding	$ 883	$ 38
Exercisable at end of period	$ 471

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STOCKHOLDERS' EQUITY - Schedule of Restricted Stock Unit (RSU) Activity (Details) - Restricted Stock Units (RSUs)	3 Months Ended
	Mar. 31, 2024 $ / shares shares
Number of Shares
Outstanding, beginning balance (in shares) | shares	60,500
Granted (in shares) | shares	145,144
Vested and settled in shares (in shares) | shares	(50,226)
Outstanding, ending balance (in shares) | shares	155,418
Weighted Average Grant Date Fair Value
Outstanding, beginning of period (in dollars per share) | $ / shares	$ 4.23
Granted (in dollars per share) | $ / shares	2.04
Vested and settled in shares (in dollars per share) | $ / shares	3.45
Outstanding, end of period (in dollars per share) | $ / shares	$ 2.41

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 4,000	$ 21,000
Operating lease, right of use asset	0
Operating lease, liability	$ 0