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Intellicheck Announces Second Quarter 2022 Financial Results

IDN | August 11, 2022

SaaS Revenues Grew 21% as compared to the same period in 2021

Intellicheck, Inc. (Nasdaq: IDN) (the “Company”), an industry-leading identity company delivering on-demand digital and physical identity validation solutions, today announced its financial results for the second quarter ended June 30, 2022. Total revenue for the second quarter ended June 30, 2022 declined 16% to $4,008,000 compared to $4,797,000 in the same period of 2021. The decline can be attributed to the fact that in this quarter there were negligible non-core hardware sales compared to the prior year quarter which had an extraordinarily large, one-time hardware sale. Quarter-over-Quarter SaaS revenue grew 21% to a record $3,928,000 compared to $3,234,000 in the same period of 2021.

“New use cases, including expanded digital applications, and the growth of our customer base continues to drive increased revenues and transaction volume. We are proud of our success in providing customers and partners with the leading-edge technology and frictionless customer experience that delivers solutions to the challenges of physical and digital identity validation with near perfect certainty. We remain focused on providing our clients with best-in-class adaptable technology solutions as we continue to expand our presence across market verticals,” said Intellicheck CEO Bryan Lewis.

Gross profit as a percentage of revenues was 91% for the three months ended June 30, 2022 compared to 69% in the same period in 2021. The increase in gross profit percentage was driven by lower equipment revenues in the current period. Excluding equipment sales, gross profit as a percentage of revenue was 93% for both quarters ended June 30, 2022 and 2021.

Operating expenses for the three months ended June 30, 2022, which consist of selling, general and administrative expenses, marketing, and research and development expenses were $4,742,000 for the second quarter of 2022 compared to $4,165,000 for the same period of 2021. The increase in operating expenses was driven by higher personnel expenses, professional fees, and marketing expenses. Included within operating expenses for the second quarters of 2022 and 2021 were $446,000 and $749,000, respectively, of non-cash equity compensation expense.

Net loss for the three months ended June 30, 2022 was ($1,098,000) or ($0.06) per diluted share compared to a Net loss of ($836,000) or ($0.04) per diluted share for the same period in 2021.

Adjusted EBITDA (earnings before gains on debt forgiveness, other income, income taxes, depreciation, amortization, and equity compensation expense) was ($583,000) for the second quarter of 2022 as compared to ($47,000) for the same period of 2021. A reconciliation table of adjusted EBITDA to net loss is provided in this release.

As of June 30, 2022, Cash totaled $12.0 million, and stockholders’ equity totaled $18.4 million.

The financial results reported today do not consider any adjustments that may be required in connection with the completion of the Company’s review process and should be considered preliminary until the Company files its Form 10-Q for the three months ended June 30, 2022.

Conference Call Information

The Company will hold an earnings conference call on August 11 at 4:30 p.m. ET/1:30 p.m. PT to discuss operating results. To listen to the earnings conference call, please dial 877-407-8037. For callers outside the U.S., please dial 201-689-8037.

A replay of the conference call will be available shortly after completion of the live event. To listen to the replay, please dial 877-660-6853 and use conference identification number13731558. For callers outside the U.S., please dial 201-612-7415 and use conference identification number 13731558. The replay will be available beginning approximately three hours after the completion of the live event and will remain available until August 18, 2022.

INTELLICHECK, INC. BALANCE SHEETS (In thousands except share amounts)

ASSETS

		June 30		December 31,
		2022		2021
		(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	11,957	$	13,651
Accounts receivable, net of allowance of $13 and $3 at
June 30, 2022 and December 31, 2021, respectively		2,458		2,192
Other current assets		536		643
Total current assets		14,951		16,486

PROPERTY AND EQUIPMENT, net		807		737
GOODWILL		8,102		8,102
INTANGIBLE ASSETS, net		325		378
OTHER ASSETS		9		8
Total assets	$	24,194	$	25,711

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	420	$	368
Accrued expenses		2,321		2,870
Equity awards liability		67		378
Liability for shares withheld		1,244		1,244
Deferred revenue, current portion		1,778		1,266
Total current liabilities		5,830		6,126

OTHER LIABILITIES:
Deferred revenue, long-term portion		4		8
Total liabilities		5,834		6,134

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS’ EQUITY:
Common stock - $.001 par value; 40,000,000 shares authorized;
18,875,580 and 18,660,369 shares issued and outstanding at
June 30, 2022 and December 31, 2021, respectively		19		19
Additional paid-in capital		147,804		146,455
Accumulated deficit		(129,463)		(126,897)
Total stockholders’ equity		18,360		19,577

Total liabilities and stockholders’ equity	$	24,194	$	25,711

INTELLICHECK, INC. STATEMENTS OF OPERATIONS (In thousands except shares and per share amounts) (Unaudited)

	Three months ended June 30,				Six months ended June 30,
		2022		2021		2022		2021

REVENUES	$	4,008	$	4,797	$	7,403	$	7,660
COST OF REVENUES		(364)		(1,469)		(680)		(1,689)
Gross profit		3,644		3,328		6,723		5,971

OPERATING EXPENSES
Selling, general and administrative		3,124		2,813		6,068		8,758
Research and development		1,618		1,352		3,221		2,689
Total operating expenses		4,742		4,165		9,289		11,447

Loss from operations		(1,098)		(837)		(2,566)		(5,476)

OTHER INCOME
Gain on forgiveness of unsecured promissory note		-		-		-		10
Interest and other income		-		1		-		5
Total other income		-		1		-		15

Net loss	$	(1,098)	$	(836)	$	(2,566)	$	(5,461)

PER SHARE INFORMATION
Loss per common share -
Basic/Diluted	$	(0.06)	$	(0.04)	$	(0.14)	$	(0.29)

Weighted average common shares used
in computing per share amounts -
Basic/Diluted		18,812,418		18,615,775		18,736,736		18,548,342

INTELLICHECK, INC. STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands except number of shares) (Unaudited)

		Three months ended June 30, 2022
					Additional				Total
	Common Stock				Paid-in		Accumulated		Stockholders’
	Shares		Amount		Capital		Deficit		Equity

BALANCE, March 31, 2022	18,674,980	$	19	$	147,284	$	(128,365)	$	18,938

Equity compensation	-		-		520		-		520
Issuance of shares for vested restricted stock grants	200,600		-		-		-		-
Net loss	-		-		-		(1,098)		(1,098)
BALANCE, June 30, 2022	18,875,580	$	19	$	147,804	$	(129,463)	$	18,360


		Three months ended June 30, 2021
					Additional				Total
	Common Stock				Paid-in		Accumulated		Stockholders’
	Shares		Amount		Capital		Deficit		Equity

BALANCE, March 31, 2021	18,593,757	$	18	$	144,302	$	(124,044)	$	20,276

Equity compensation	-		-		651		-		651
Exercise of stock options	25,000		1		46		-		47
Exercise of warrants	9,000		-		20		-		20
Issuance of shares for vested restricted stock grants	7,161		-		-		-		-
Net loss	-		-		-		(836)		(836)
BALANCE, June 30, 2021	18,634,918	$	19	$	145,019	$	(124,880)	$	20,158

INTELLICHECK, INC. STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands except number of shares) (Unaudited)


		Six months ended June 30, 2022
					Additional				Total
	Common Stock				Paid-in		Accumulated		Stockholders’
	Shares		Amount		Capital		Deficit		Equity

BALANCE, December 31, 2021	18,660,369	$	19	$	146,455	$	(126,897)	$	19,577

Equity compensation	-		-		1,349		-		1,349
Issuance of shares for vested restricted stock grants	215,211		-		-		-		-
Net loss	-		-		-		(2,566)		(2,566)
BALANCE, June 30, 2022	18,875,580	$	19	$	147,804	$	(129,463)	$	18,360


		Six months ended June 30, 2021
					Additional				Total
	Common Stock				Paid-in		Accumulated		Stockholders’
	Shares		Amount		Capital		Deficit		Equity

BALANCE, December 31, 2020	18,410,458	$	18	$	141,612	$	(119,419)	$	22,211

Equity compensation	-		-		1,632		-		1,632
Exercise of stock options, net of cashless exercise of 58,122 shares and 92,634 shares withheld	206,545		1		1,755		-		1,756
Exercise of warrants	9,000		-		20		-		20
Issuance of shares for vested restricted stock grants	8,915		-		-		-		-
Net loss	-		-		-		(5,461)		(5,461)
BALANCE, June 30, 2021	18,634,918	$	19	$	145,019	$	(124,880)	$	20,158

INTELLICHECK, INC. STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

	Six months ended June 30,
		2022		2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,566)	$	(5,461)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation and amortization		139		84
Equity compensation		1,038		5,294
Change in provision for doubtful accounts		13		-
Forgiveness of unsecured promissory note		-		(10)
Changes in assets and liabilities:
Increase in accounts receivable		(279)		(1,287)
Decrease (increase) in other current assets		107		(871)
(Decrease) increase in accounts payable and accrued expenses		(497)		1,042
Increase in deferred revenue		507		134
Net cash used in operating activities		(1,538)		(1,075)


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(156)		(182)
Net cash used in investing activities		(156)		(182)

CASH FLOWS FROM FINANCING ACTIVITIES:
Return of repayment on unsecured promissory note		-		10
Net proceeds from issuance of common stock from exercise of stock options		-		46
Proceeds from issuance of common stock from exercise of warrants		-		20
Net cash provided by financing activities		-		76

Net decrease in cash		(1,694)		(1,181)

CASH, beginning of period		13,651		13,121

CASH, end of period	$	11,957	$	11,940

Supplemental disclosure of noncash investing and financing activities:
Reclassification of stock option awards	$	-	$	1,411

Adjusted EBITDA

We use Adjusted EBITDA as a non-GAAP financial performance measurement. Adjusted EBITDA is calculated by adjusting net loss for certain items such gains on debt forgiveness and other income and certain addbacks such as income taxes, depreciation, amortization, and equity 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 equity compensation, as well as non-operating charges for interest and 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 gains on debt forgiveness, other income, impairments of long-lived assets and goodwill, and equity compensation, 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 entities.

A reconciliation of GAAP net loss to Non-GAAP Adjusted EBITDA follows:

		(Unaudited) (In thousands)

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2022		2021		2022		2021
Net loss	$	(1,098)	$	(836)	$	(2,566)	$	(5,461)
Reconciling items:
Gain on forgiveness of unsecured promissory note		-		-		-		(10)
Interest and other income		-		(1)		-		(5)
Depreciation and amortization		69		41		139		84
Equity compensation including liability classified awards		446		749		1,038		5,294
Adjusted EBITDA	$	(583)	$	(47)	$	(1,389)	$	(98)

About Intellicheck

Intellicheck (Nasdaq: IDN) is an identity company that delivers on-demand digital identity validation solutions for KYC, fraud, and age verification needs. Intellicheck validates both digital and physical identities for financial services, fintech companies, BNPL providers, e-commerce, and retail commerce businesses, law enforcement and government agencies across North America. Intellicheck can be used through a mobile device, a browser, or a retail point-of-scale scanner. For more information on Intellicheck, visit us on the web and follow us on follow us on LinkedIn,Twitter, Facebook, and YouTube.

Safe Harbor Statement

Statements in this news release about Intellicheck’s future expectations, including: the advantages of our products, future demand for Intellicheck’s existing and future products, whether revenue and other financial metrics will improve in future periods, whether Intellicheck will be able to execute its turn-around plan or whether successful execution of the plan will result in increased revenues, whether sales of our products will continue at historic levels or increase, whether brand value and market awareness will grow, whether the Company can leverage existing partnerships or enter into new ones, whether there will be any impact on sales and revenues due to an epidemic, pandemic or other public health issue and all other statements in this release, other than historical facts, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). These statements, which express management’s current views concerning future events, trends, contingencies or results, appear at various places in this release and use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “potential,” “predict,” “project,” “sense”, “strategy,” “target” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would” are forward-looking statements within the meaning of the PSLRA. This statement is included for the express purpose of availing Intellicheck, Inc. of the protections of the safe harbor provisions of the PSLRA. It is important to note that actual results and ultimate corporate actions could differ materially from those in such forward-looking statements based on such factors as: market acceptance of our products and the presently anticipated growth in the commercial adoption of our products and services; our ability to successfully transition pilot programs into formal commercial scale programs; continued adoption of our SaaS product offerings; changing levels of demand for our current and future products; our ability to reduce or maintain expenses while increasing sales; our ability to successfully expand the sales of our products and services into new areas including health care and auto dealerships; customer results achieved using our products in both the short and long term; success of future research and development activities; uncertainties around the duration and severity of the COVID-19 outbreak including the continued emergence of variants to the COVID-19 strain such as the Omicron BA.5 strain and its ultimate impact on our business and results of operations; our ability to successfully market and sell our products, any delays or difficulties in our supply chain coupled with the typically long sales and implementation cycle for our products; our ability to enforce our intellectual property rights; changes in laws and regulations applicable to the our products; our continued ability to access government-provided data; the risks inherent in doing business with the government including audits and contract cancellations; liability resulting from any security breaches or product failure, together with other risks detailed from time to time in our reports filed with the SEC. We do not assume any obligation to update the forward-looking information.