IntelliCheck Inc.
03/19/2026 | Press release | Distributed by Public on 03/19/2026 14:18
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations(All dollar amounts are rounded to thousands, except per share data)
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 including software development costs, 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.
Revenue Recognition and Deferred Revenue
SaaS fees and service revenues 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 our software. Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location to access our software. In certain instances, customization services are determined to be essential to the functionality of the delivered software. Under Accounting Standards Codification ("ASC") 606,
"Revenue from Contracts with Customers," 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. We measure revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. The Company adopted an additional revenue model where customers purchase a predetermined number of transactions for the term of the contract, where revenue for these transactions is recognized on a per transaction basis. The Company estimates the number of transactions that will be unused by the end of each contract period and recognized a portion of that revenue as breakage revenue each reporting period. Reference Note 2, "Significant Accounting Policies," in the Notes to Financial Statements for additional details on the Company's recognized and deferred revenue. The Company also has a 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.
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. Reference Note 9, "Stockholders' Equity," in the Notes to Financial Statements for details on the Company's stock-based compensation plans.
Valuation of long-lived assets
Our long-lived assets include property and equipment, goodwill, and intangible assets. As of December 31, 2025, the balances of property and equipment, goodwill and intangible assets, all net of accumulated depreciation and amortization, were $394, $8,102 and $2,077, respectively. As of December 31, 2024, the balances of property and equipment, goodwill and intangible assets, all net of accumulated depreciation and amortization, were $536, $8,102 and $2,374, respectively. Reference Note 2, "Significant Accounting Policies"; Note 4, "Property and Equipment"; and Note 5, "Goodwill and Intangible Assets" in the Notes to Financial Statements for details on the Company's valuations of our long-lived assets.
Internal Use Capitalized Software
We capitalize certain costs related to the development of our platform and other software applications for internal use. In accordance with authoritative guidance, we capitalize our costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. We stop capitalizing these costs when the software is substantially complete and ready for its intended use, including the completion of all significant testing. These costs are amortized on a straight-line basis over the estimated useful life of the related asset. We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditure will result in additional functionality and expense costs incurred for maintenance and minor upgrades and enhancements. Costs incurred prior to meeting these criteria together with costs incurred for training and maintenance are expensed as incurred and recorded within research and development expenses in the statements of operations. We exercise judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized.
Income Taxes and Valuation Allowance
We account for income taxes in accordance with ASC 740, Income Taxes. Under this standard, 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, as well as for net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
We establish a valuation allowance against deferred tax assets when, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In making this determination, we consider all available positive and negative evidence, including:
•Our cumulative results for the most recent three-year period, adjusted for permanent differences between book and taxable income;
•The nature, frequency, and magnitude of current and cumulative financial reporting income and losses;
•Our forecasts of future taxable income, considering the predictability and sustainability of recent operating trends;
•The length of time net operating loss and tax credit carryforwards remain available, including the distinction between carryforwards with definite expiration dates and those that carry forward indefinitely;
•The nature and timing of reversals of existing taxable and deductible temporary differences; and
•Available tax planning strategies that could be implemented, if necessary, to accelerate taxable income.
As of December 31, 2025, we maintained a full valuation allowance of approximately $6,677 against our net deferred tax assets. Our three-year cumulative result through December 31, 2025, after adjusting for permanent differences, remained in a loss position, which constitutes significant objective negative evidence under ASC 740. While we generated pre-tax income of approximately $1,331 during the year ended December 31, 2025, representing a meaningful improvement from prior-year losses of $2,042 in 2023 and $885 in 2024, we have not yet established a sustained pattern of profitability sufficient to overcome this negative evidence.
This assessment requires significant judgment. Should we continue to generate taxable income in future periods such that the three-year cumulative result transitions to a positive position, and should we conclude that the weight of positive evidence outweighs the negative evidence, we may determine that a partial or full release of the valuation allowance is appropriate. Any such release would be recorded as a non-cash deferred income tax benefit in the period the determination is made and could be material to our results of operations. Based on the gross deferred tax assets as of December 31, 2025, a full release of the valuation allowance would result in a tax benefit of approximately $6,677.
Results of Operations
COMPARISON OF THE YEAR ENDED DECEMBER 31, 2025
TO THE YEAR ENDED DECEMBER 31, 2024
REVENUES. Revenues for the year ended December 31, 2025 increased $2,669 or 13% to $22,666 compared to $19,997 for the year ended December 31, 2024. The increase in revenues is primarily the result of higher SaaS revenue for the current period. SaaS revenues, which consists of software licensed on a subscription basis, increased $2,626 or 13% to $22,436 for the year ended December 31, 2025 compared to $19,810 for the year ended December 31, 2024.
GROSS PROFIT. Gross profit increased by $2,334 or 13%, to $20,500 for the year ended December 31, 2025, compared to $18,166 in the year ended December 31, 2024. Our gross profit, as a percentage of revenues, was 90.4% and 90.8% for the years ended December 31, 2025 and 2024, respectively.
OPERATING EXPENSES. Operating expenses, which consist of selling, general and administrative expenses and research and development expenses, increased by $80, or 0.4% to $19,414 for the year ended December 31, 2025 from $19,334 for the year ended December 31, 2024. Selling, general and administrative expenses decreased by $(1,377), or 9%, to $14,100 for the year ended December 31, 2025, compared to $15,477 for the year ended December 31, 2024. This decrease was primarily driven by lower general and administrative costs, specifically headcount-related expenses tied to severance expenses. Research and development expenses increased $1,457, or 38%, to $5,314 for the year ended December 31, 2025, compared to $3,857 for the year ended December 31, 2024. This increase was primarily due to less capitalization of certain software development expenses, as well as higher personnel costs and their related stock-compensation expenses.
OTHER INCOME AND EXPENSE. Interest and other income, net, was $245 for the year ended December 31, 2025, compared to interest income of $283 during the year ended December 31, 2024.
INCOME TAXES. Our provision for income taxes was $58 for the year ended December 31, 2025, compared to $33 during the year ended December 31, 2024.
NET INCOME. As a result of the factors noted above, we had net income of $1,273, or $0.07 per share, for the year ended December 31, 2025 as compared to a net loss of $(918), or $(0.05) per share, for the year ended December 31, 2024.
Liquidity and Capital Resources
As of December 31, 2025, we had cash and cash equivalents of $9,650, working capital (defined as current assets minus current liabilities) of $10,123, total assets of $24,481 and stockholders' equity of $20,697.
For the year ended December 31, 2025, our cash increased by $4,984. Cash provided by operating activities was $4,541 for the year ended December 31, 2025 as compared to cash used in operating activities of $(2,694) for the year ended December 31, 2024. Cash used in investing activities for the year ended December 31, 2025 was $(265) as compared to cash provided by investing activities of $2,895 for the year ended December 31, 2024. Cash provided by financing activities was $708 for the year ended December 31, 2025 as compared to cash provided by financing activities of $485 for the year ended December 31, 2024.
We currently anticipate that our available cash and expected cash from operations 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 of these financial statements.
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. In August 2025, we filed an S-3, also know as a Shelf Registration, that would allow us to sell shares in the market if the need arises. 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.
Use of Non-GAAP Measures
Adjusted Gross Profit
We use Adjusted Gross Profit as a non-GAAP financial performance measurement. Adjusted Gross Profit is calculated by adjusting gross profit for the reduction of amortization expense. Adjusted Gross Profit is provided to investors to supplement the results of operations reported in accordance with GAAP. We believe Adjusted Gross Profit is important because it focuses on the current operating performance, as amortization expense does not accurately reflect the current costs required to maintain the operational usage of our service. Rather, amortization expense reflects the allocation of historical software development costs over their estimated useful lives.
As an indicator of our operating performance, Adjusted Gross Profit should not be considered an alternative to, or more meaningful than, gross profit as determined in accordance with GAAP. Our Adjusted Gross Profit may not be
comparable to a similarly titled measure of another company because other entities may not calculate Adjusted Gross Profit in the same manner.
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenues | $ | 22,666 | $ | 19,997 | |||||||
| Cost of revenues, exclusive of amortization | 1,667 | 1,650 | |||||||||
| Amortization allocable to cost of revenues | 499 | 181 | |||||||||
| Gross profit | 20,500 | 18,166 | |||||||||
| Add: | |||||||||||
| Amortization allocable to cost of revenues | 499 | 181 | |||||||||
| Adjusted gross profit | 20,999 | 18,347 | |||||||||
| Gross profit as a percentage of revenues | 90.4 | % | 90.8 | % | |||||||
| Adjusted gross profit as a percentage of revenues | 92.6 | % | 91.7 | % | |||||||
Adjusted EBITDA
We use Adjusted EBITDA as a non-GAAP financial performance measurement. Adjusted EBITDA is calculated by adjusting net income (loss) for certain reductions such as restructuring severance expenses, interest and other income, 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 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 that 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 restructuring severance expenses, interest and other income, provisions for income taxes, 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 income (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 income (loss) presented in accordance with GAAP. Adjusted EBITDA as defined by us may not be comparable with similarly named measures provided by other companies.
The reconciliation of GAAP net income (loss) to Non-GAAP Adjusted EBITDA is as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net income (loss) | $ | 1,273 | $ | (918) | |||||||
| Reconciling items: | |||||||||||
| Restructuring severance expenses | - | 376 | |||||||||
| Provision for income taxes | 58 | 33 | |||||||||
| Other income, net | (245) | (283) | |||||||||
| Depreciation and amortization | 703 | 436 | |||||||||
|
Stock-based compensation
|
777 | 876 | |||||||||
| Adjusted EBITDA | $ | 2,566 | $ | 520 | |||||||
Net Operating Loss Carry Forwards
Our available net operating loss ("NOL") as of December 31, 2025 was approximately $30,520, of which $10,892 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 $19,628 will not expire, but are subject to 80% limitation on utilization. In addition to the NOLs, the Company has approximately $682 of research and development credits.
Recently Adopted Accounting Pronouncements
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. The Company adopted this standard effective January 1, 2025 and was applied retrospectively. The adoption of this new standard did not have a material impact on the Company's consolidated financial statements.
Recently Issued Accounting Pronouncements
Except as discussed below, we do not expect the impact of the future adoption of recently issued accounting pronouncements to have a material impact on our financial statements.
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 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. The Company will adopt this ASU in the first quarter of 2026 and adoption is not expected to have a material impact on our consolidated 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.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities nor entered into any option agreements on non-financial assets.
IntelliCheck Inc. published this content on March 19, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 19, 2026 at 20:18 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]