Intellicheck, Inc.

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NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

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

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 ten(10) U.S. and one (1) Canadian patent.

Liquidity

For the six months ended June 30, 2026, the Company realized a net income of $1,299 and generated cash from operations of $2,242. As of June 30, 2026, the Company had cash and cash equivalents of $11,837, working capital (defined as current assets minus current liabilities) of $12,237 and an accumulated deficit of $(131,911). Based on the Company’s business plan and cash resources, Intellicheck expects its existing cash and future resources and revenues generated from operations to satisfy its working capital requirements for at least the next 12 months from the date of issuance of these unaudited condensed financial statements.

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 June 30, 2026, the results of operations, and stockholders’ equity for the three and six months ended June 30, 2026 and 2025 and cash flows for the six months ended June 30, 2026 and 2025. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the three and six months periods ended June 30, 2026, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2026.

The condensed balance sheet as of December 31, 2025 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, 2025.

Recently Adopted Accounting Pronouncements

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This standard allows entities to apply a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, Revenue from Contracts with Customers. The standard is effective for all the entities for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted, and the standard is to be applied prospectively. We adopted ASU 2025-05 in the first quarter of 2026

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and elected to apply the practical expedient provided in ASC 326-20-30-10C. The adoption did not have a material impact on our condensed financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendment requires new financial statement disclosures to provide disaggregated information for certain types of expenses, including employee compensation, depreciation, and amortization in commonly presented expense captions such as cost of revenue, sales and marketing, and general and administrative expenses. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is in the process of evaluating the effect that the adoption of these standards will have on its financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software by replacing the previous stage-based model and aligning the capitalization process with current development practices, especially agile and iterative methods. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and may be applied prospectively, retrospectively, or using a modified transition approach. The Company is in process of evaluating the impact of the adoption of this ASU on its financial statements.

Use of Estimates

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

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

Cash and Cash Equivalents

The Company classifies time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents. Our cash and cash equivalents consist primarily of both cash on deposits with banks, which are maintained with major financial institutions in the United States, and money market funds. These money market funds are invested in cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Treasury, and repurchase agreements secured by such obligations or cash. These money market funds are rated AAAm by S&P Global Ratings. Deposit 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 other investments and believes it is not exposed to any risk of loss on its cash bank accounts or other investments.

Accounts Receivable, Net

Accounts receivable are reported on the balance sheets at the outstanding principal amount adjusted for an allowance for credit losses and any charge offs. The Company has applied a loss rate method which takes historical data as the basis for calculating the allowance amount, along with the aging out outstanding receivables. In estimating whether

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accounts receivable will be collected, the Company performs evaluations of customers and continuously monitors collections and payments and estimates an allowance for credit losses.

Property and Equipment, Net

Property and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three toseven 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 31, 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, 2025. For the three and six months ended June 30, 2026 and 2025, the Company did not recognize any impairment charges. The Company also evaluated whether the expected volume reductions constituted a triggering event requiring an interim assessment of goodwill for impairment under ASC 350 as of June 30, 2026, and concluded that no such triggering event had occurred.

Intangible assets, net

Intangible assets include patents, copyrights, developed technology and capitalized software development costs. The Company amortizes these assets on a straight-line basis over their estimated useful lives, as it represents the pattern of economic benefits consumed. There wereno impairment charges recognized during the three and six months ended June 30, 2026 and 2025. See Note 5.

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

Long-Lived Assets and Impairment of Long-Lived Assets

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

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC 350, Intangibles – Goodwill and Other, and ASC 360, Property, Plant and Equipment. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. Impairment is measured at fair value. There were no impairments of long-lived assets for the periods presented.

Advertising Costs

Advertising costs, which are expensed as incurred, were $161 and $46 for the six months ended June 30, 2026 and 2025, respectively. Advertising costs were $97 and $21 for the three months ended June 30, 2026 and 2025, respectively. These costs are recorded as a component of selling, general and administrative expenses within the condensed Statements of Operations.

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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 100% of the first 3% and 50% of the next 2% of an eligible employee’s deferral election. The Company’s matching contributions were $106 and $29 for the six months ended June 30, 2026 and 2025, respectively. The Company’s matching contributions were $58 and $29 for the three months ended June 30, 2026 and 2025, respectively. During the three and six months ended June 30, 2025, funds from the Retirement Plan's forfeiture account were used to fund matching contributions in accordance with the terms of the Retirement Plan and as such, the Company recorded no expense in certain periods related to its retirement plans. These costs are recorded as a component of selling, general and administrative expenses within the condensed Statements of Operations.

Shipping Costs

The Company’s shipping and handling costs related to equipment 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 condensed 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.

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 against its net deferred tax assets as of June 30, 2026 and December 31, 2025, as it is not more likely than not that these assets will be realized due to the uncertainty of the realizability of those assets. Management continues to evaluate positive and negative evidence related to the realizability of deferred tax assets, including recent operating results and forecasts of future taxable income.

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, accounts receivable, other current assets, accounts payable and accrued expenses. At June 30, 2026 and December 31, 2025, 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 totaling $11,837 and $9,650 as of June 30, 2026 and December 31, 2025, 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 no Level 2 assets or liabilities as of June 30, 2026 and December 31, 2025.

•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 June 30, 2026 and December 31, 2025.

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 good or 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, the Company follows the right to invoice practical expedient meaning the Company may recognize revenue monthly as invoiced based on our 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.

The Company has an additional revenue model where customers purchase access to the Company's platform that includes a fixed, non-refundable annual access fee associated with a spend commitment that grants the customers stand-ready access to the platform. Revenue for this access is recognized ratably over the contract term, consistent with the nature of the stand-ready service.

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

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significant financing component. Product returns are estimated and recorded as a reduction to revenue, however, such amounts have been immaterial.

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)

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. 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 typicallyone 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.

Contract balances

The deferred revenue at June 30, 2026 and December 31, 2025 was $1,195 and $1,661, respectively, and primarily consists of revenue to be earned that is 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, 2025 balance, $1,541 was recognized as revenue in the six months ended June 30, 2026. Accounts receivable, net of allowance for credit losses, at June 30, 2026 and December 31, 2025 was $2,660 and $3,365, respectively. The allowance for credit losses at June 30, 2026 and December 31, 2025 was $157.

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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:

All consideration from contracts with customers is included in the amounts presented above and is classified as a short term liability.

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 three 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 six-month period ended June 30, 2026, the Company made sales to three customers that accounted for approximately 56% of total revenues,29%,16% and 11%, respectively, for each customer. The revenue was primarily associated with commercial identity sales customers. These three customers represented 55% of total accounts receivable at June 30, 2026,0%,37%, and 18%, respectively, for each customer. During the six-month period ended June 30, 2025, the Company made sales to three customers that accounted for approximately 58% of total revenues,31%,18% and 9%, respectively for each customer. These three customers represented 42% of total accounts receivable at June 30, 2025,2%,34%, and 6%, respectively, for each customer.

The Company was recently informed by its customer representing 29% of revenue for the six months ending June 30, 2026, as part of a vendor-resilience initiative, the customer is transitioning certain identity verification use cases to an alternative vendor under a primary/secondary vendor architecture in which the Company will remain the primary provider for certain use cases and will retain secondary or failover roles for certain of the transitioned use cases. The first phase of the transition commenced June 30, 2026 and did not materially affect the results for the periods presented. The customer’s communicated plans indicate a reduction of approximately 70%–75% in its transaction volumes with the Company during the second half of 2026 relative to the baseline reflected in those plans; the customer has indicated its plans are dependent on the alternative vendor’s performance and may be adjusted. The Company’s agreement with this customer is transaction-based and does not contain minimum purchase commitments. This customer accounted for approximately 30% of total revenue for the three months ended June 30, 2026, and approximately 31% for the year ended December 31, 2025, and approximately none of accounts receivable at June 30, 2026. The Company assessed whether the expected volume reductions constituted an indicator that the carrying amount of its long-lived assets, including capitalized software development costs, may not be recoverable as of June 30, 2026, and concluded that no such indicator was present. The Company expects the transition to materially reduce its revenue in future periods; the Company’s expectations assume the customer implements its current plan as communicated and that no volumes are added above the levels reflected in that plan. See Part I, Item 2. As of August 13, 2026, the transition was underway and transaction volumes with this customer had declined from prior-year levels; however, the reductions observed through that date were less than the pace and magnitude contemplated by the customer’s communicated plan.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock and potentially

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dilutive common stock equivalents outstanding during the period. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The 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.

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

Segment Information

The Company adheres to the provisions of ASC 280, Segment Reporting. The Chief Executive Officer, as the chief operating decision maker ("CODM"), reviews the financial information presented for purposes of allocating resources and evaluating its financial performance. The key measure that the CODM uses to allocate resources and in assessing performance is the Company's net income (loss). Accordingly, the Company has determined that it operates in a single reportable segment. All of the Company’s assets are located in the United States. Since the Company operates inone operating segment, all required financial segment information can be found in the financial statements.

3. CASH AND CASH EQUIVALENTS

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

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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.

The Company didnot hold any securities that were in an unrealized loss position for more than 12 months as of June 30, 2026. There wereno material realized gains or losses on these specific short-term investments during the six months ended June 30, 2026.

4. PROPERTY AND EQUIPMENT, NET

Property and equipment, net is summarized as follows:

Depreciation expense for the six months ended June 30, 2026 and 2025 amounted to $102 and $95, respectively. Depreciation expense for the three months ended June 30, 2026 and 2025 amounted to $49 and $47, respectively.

5. INTANGIBLE ASSETS, NET

The changes in the carrying amount of intangible assets, net for the six months ended June 30, 2026 were as follows:

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The following tables set forth the components of intangible assets as of June 30, 2026 and December 31, 2025:

The following summarizes amortization of intangible assets included in the accompanying condensed Statements of Operations:

The Company's estimated future amortization expense for intangible assets as of June 30, 2026 was as follows:

6. DEBT

As of June 30, 2026 and December 31, 2025, the Company had no outstanding debt, borrowings, or credit facilities. As of June 30, 2026 and December 31, 2025, the Company had no revolving credit facility or term loan in place.

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7. ACCRUED EXPENSES

Accrued expenses are comprised of the following:

8. INCOME TAXES

The Company maintains a full valuation allowance against its deferred tax assets, as management has concluded that it is not more‑likely‑than‑not that such assets will be realized. Although the Company generated pretax income during the current quarter, no income tax expense has been recognized, as the tax effect of current‑period taxable income is fully offset by the valuation allowance. The Company evaluates the realizability of its deferred tax assets each reporting period based on all available positive and negative evidence, including historical operating results and expectations of future taxable income. Although the Company has returned to profitability, management has concluded that a full valuation allowance against its deferred tax assets continues to be appropriate as of June 30, 2026. If the Company continues to generate sustained profitability and sufficient positive evidence becomes available, management may conclude in a future period that some or all of the valuation allowance is no longer necessary. Any such release would result in the recognition of a non-cash income tax benefit that could be material to the Company's results of operations in the period of release. Our available net operating loss (“NOL”) as of December 31, 2025 was approximately $30,520, of which $10,892 expires between 2035 and 2037. The remaining $19,628 was generated after 2017 and may be carried forward indefinitely, subject to an annual limitation of 80% of taxable income under the Tax Cuts and Jobs Act of 2017.

The Company also had state NOL carryforwards of approximately $3,670 as of December 31, 2025, which expire at various dates depending on the jurisdiction.

The Company had federal research and development tax credit carryforwards of approximately $682 as of December 31, 2025, which expire at various dates through 2041 if not utilized.

ASC 740 requires evaluation of uncertain tax positions and as of June 30, 2026, there were no material changes to the 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 2025 Omnibus Incentive Plan (the “Plan”) covering up to 2,000,000 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 the Plan have been closed. The Compensation Committee of the Board of Directors administers this Plan and determines the terms and conditions of stock options granted, including the exercise price. The Plan generally provides that all stock options will expire withinten years of the date of grant. Incentive stock options granted under the 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. The Plan also entitles non-employee directors to receive grants of non-qualified stock options and restricted stock units as approved by the Board of Directors.

The Company accounts for the issuance of stock-based awards to employees and non-employee directors 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

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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:

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

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

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 June 30, 2026. This amount changes based upon the fair market value of the Company’s stock.

Restricted Stock Units (RSUs)

The Company periodically issues RSUs which are equity-based instruments that are settled in shares of common stock of the Company. The Company issues RSUs to certain directors as compensation.

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

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

RSU activity during the period indicated below is as follows:

As of June 30, 2026, there was approximately $2,520 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 2.37 years.

The Company had 1,397,202 shares available for future grants under the Company's equity compensation plans at June 30, 2026.

10. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases an office in Melville, New York, on a month-to-month basis. Rent expense, which includes utilities, was $4 and $7 for the three months ended June 30, 2026 and 2025, respectively, and $10 and $14 for the six months ended June 30, 2026 and 2025, respectively, and is included in selling, general and administrative expenses on the condensed Statements of Operations.

Loss Contingencies and Legal Costs

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

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 June 30, 2026, no material amounts are recorded related to legal proceedings on the balance sheets.

The Company received a class action complaint on January 8, 2026 alleging that the Company collected biometric information from users in Illinois in violation of the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq. (“BIPA”). The Company is not able to fully assess the probability and outcome of the matter due to the need to conduct further investigation. However, the Company does not currently believe that a material loss is probable nor estimable. As such, the Company has not recognized a liability and intends to fully defend the matter.