Intellicheck Inc

Previous wording

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.

Current wording

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, capitalization of software development costs, revenue recognition (including breakage revenue), allowance for credit losses, and the fair value of stock options under the Company’s stock-based compensation plan. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

We determined that no events occurred or circumstances changed during the three and six-months ended June 30, 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.

Previous wording

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.

Current wording

Our intangible assets consist of patents, a software license, and capitalized software development costs. We determined that no events occurred, or circumstances changed during the three months ended June 30, 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.

Previous wording

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.

Current wording

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

Previous wording

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

Current wording

value-based measurement method in accounting for all stock-based compensation payment transactions with employees. Reference Note 9, “Stockholders' Equity,” in the Notes to Financial Statements for details on the Company’s stock-based compensation plans.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

Gross profit decreased $136, or 3%, to $4,228 for three months ended June 30, 2024 from $4,364 for the same period of 2023. Our gross profit, as a percentage of revenues, was 91% and 93% for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

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.

Current wording

Operating expenses, which consist of selling, general and administrative and research and development expenses, decreased $770, or 15%, to $4,443 for the three months ended June 30, 2024 compared to $5,213 for the same period of 2023. This decrease was primarily driven by lower research and development costs, and more specifically headcount-related expenses.

Previous wording

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.

Current wording

As a result of the factors noted above, the Company had a net loss of $(127) for the three months ended June 30, 2024 as compared to a net loss of $(853) for the three months ended June 30, 2023.

Previous wording

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.

Current wording

Revenues for the six months ended June 30, 2024 increased $382, or 4%, to approximately $9,352 compared to $8,970 for the same period of 2023. The increase in revenues is primarily the result of higher transaction volumes for SaaS for the current period. SaaS revenue, which consists of software licensed as a service on a subscription basis, increased $345 or 4% to $9,236 for the six months ended June 30, 2024 compared to $8,891 for the same period of 2023.

Previous wording

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.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $7,260, working capital (defined as current assets minus current liabilities) of $6,611, total assets of $21,916 and stockholders’ equity of $17,307.

Previous wording

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.

Current wording

During the six months ended June 30, 2024, we used net cash of $(312) in operating activities as compared to net cash of $(856) used by operating activities in the six months ended June 30, 2023. Cash provided by investing activities was $3,592 for the six months ended June 30, 2024 compared to cash used in investing activities of $(31) for the six months ended June 30, 2023. Cash used in financing activities was zero for the six months ended June 30, 2024 compared to net cash of $(124) used in financing activities for the six months ended June 30, 2023.

Previous wording

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

Current wording

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 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.