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Intellicheck Announces Record Third Quarter Fiscal 2021 Financial Results

Revenue Climbed 79% to $4.8 Million

SaaS Revenue Grew 32% Reaching $3.2 Million

Intellicheck, Inc. (Nasdaq: IDN), an industry leader in identity verification and authentication solutions, today announced its financial results for the third quarter ended September 30, 2021. Revenue rose 79% to a record $4,831,000 versus $2,699,000 in the prior year comparable period. SaaS revenue for the third quarter ended September 30, 2021 increased 32% to $3,245,000 versus $2,451,000 in the prior year comparable period.

CEO Bryan Lewis pointed to a number of key developments including the expansion of Company capabilities beyond North America, the addition of a new product platform, and the addition of new channel partnerships. “Much of what we have been investing in and working on this year is focused on transforming the company to be a Digital Identity company, rather than purely an ID Validation company. We have expanded our client base far beyond just credit cards into banking, call centers, gambling, cannabis, stadiums as well as the digital world, which continues to become an increasing portion of our business. We believe this transformation will allow us to move into many more markets and become a powerhouse within Identity Validation and Digital Identity.”

Gross profit as a percentage of revenues was 68.7% for the three months ended September 30, 2021, versus 89.1% in the prior year comparable period. SaaS revenues represented 67.2% of total sales during the third quarter of 2021, compared to 90.8% of total sales in the prior year comparable period. The decline in gross margin reflects a sales mix that included approximately $1.5 million of hardware sales that carry lower gross margins than SaaS revenues. Excluding hardware sales and related costs in both periods, gross profit as a percentage of sales was 93.0% for the three months ended September 30, 2021, versus 92.6% in the prior year comparable period.

Net loss for the three months ended September 30, 2021 was ($952,000) or ($0.05) per diluted share versus net income of $32,000 or $0.00 per diluted share for the comparable prior year period. Non-cash expenses during the quarter included stock-based compensation costs that totaled $639,000.

Adjusted EBITDA (earnings before interest and other income (expense), income taxes, depreciation, amortization, stock-based compensation expense and certain non-recurring charges) was a loss of ($271,000) for the third quarter of 2021 as compared to a gain of $169,000 in the prior year comparable period. A reconciliation of adjusted EBITDA to net loss is provided elsewhere in this release.

Cash at September 30, 2021 totaled $13.3 million, and stockholders’ equity totaled $21.8 million at the end of the period.

The financial results reported today do not take into account 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 fiscal period ended September 30, 2021.

Conference Call Information

The Company will hold an earnings conference call on November 10 at 4:30 p.m. ET/1:30 p.m. PT to discuss operating results. To listen to the earnings conference call, please dial 888-428-7458. For callers outside the U.S., please dial 862-298-0702.

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 number 13724569. For callers outside the U.S., please dial 201-612-7415 and use conference identification number 13724569. The replay will be available beginning approximately two hours after the completion of the live event and will remain available until November 17, 2021.

INTELLICHECK, INC.

BALANCE SHEETS

ASSETS

 

September 30,

December 31,

2021

2020

(Unaudited)

CURRENT ASSETS:

Cash

$

13,266,031

$

13,121,392

Accounts receivable, net of allowance of $0 and $42,974 at September 30, 2021 and December 31, 2020, respectively

2,777,222

2,119,861

Other current assets

869,583

340,718

Total current assets

16,912,836

15,581,971

 

 

PROPERTY AND EQUIPMENT, net

430,341

138,870

GOODWILL

8,101,661

8,101,661

INTANGIBLE ASSETS, net

403,856

482,591

OPERATING LEASE RIGHT-OF-USE ASSET

 

 

-

 

 

31,131

OTHER ASSETS

8,500

4,250

Total assets

$

25,857,194

$

24,340,474

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

CURRENT LIABILITIES:

 

 

Accounts payable

$

231,780

$

46,171

Accrued expenses

2,445,534

1,638,798

Operating lease liability, current portion

 

 

-

 

 

32,620

Deferred revenue, current portion

1,372,311

402,782

Total current liabilities

4,049,625

2,120,371

 

 

OTHER LIABILITIES:

 

 

Deferred revenue, long-term portion

9,737

8,662

Total liabilities

4,059,362

2,129,033

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

Common stock - $.001 par value; 40,000,000 shares authorized; 18,735,915 and 18,410,458 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

18,736

18,410

Additional paid-in capital

140,905,895

138,569,746

Accumulated deficit

(119,126,799)

(116,376,715)

Total stockholders' equity

21,797,832

22,211,441

 

 

Total liabilities and stockholders' equity

$

25,857,194

$

24,340,474

INTELLICHECK, INC.

 

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

$

4,831,229

 

$

2,698,975

 

$

12,490,911

 

$

7,656,442

COST OF REVENUES

 

 

(1,510,590)

 

 

(293,699)

 

 

(3,199,834)

 

 

(1,196,528)

Gross profit

 

 

3,320,639

 

 

2,405,276

 

 

9,291,077

 

 

6,459,914

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

2,856,794

 

 

1,472,094

 

 

7,951,970

 

 

4,341,985

Research and development

 

 

1,415,666

 

 

907,763

 

 

4,104,531

 

 

2,837,374

Total operating expenses

 

 

4,272,460

 

 

2,379,857

 

 

12,056,501

 

 

7,179,359

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from operations

 

 

(951,821)

 

 

25,419

 

 

(2,765,424)

 

 

(719,445)

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

Gain on forgiveness of unsecured promissory note

 

 

-

 

 

-

 

 

10,000

 

 

-

Interest and other income (expense), net

 

 

(412)

 

 

6,993

 

 

5,340

 

 

18,186

Total other income (expense)

 

 

(412)

 

 

6,993

 

 

15,340

 

 

18,186

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(952,233)

 

$

32,412

 

$

(2,750,084)

 

$

(701,259)

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income per common share -

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.05)

 

$

0.00

 

$

(0.15)

 

$

(0.04)

Diluted

 

$

(0.05)

 

$

0.00

 

$

(0.15)

 

$

(0.04)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares used in computing per share amounts

Basic

 

 

18,735,097

 

 

18,336,107

 

 

18,653,823

 

 

16,960,770

Diluted

 

 

18,735,097

 

 

18,764,994

 

 

18,653,823

 

 

16,960,770

         

INTELLICHECK, INC.

 

STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

   

 

 

Three months ended September 30, 2021

 

 

 

 

 

 

Additional

 

 

 

 

Total

 

Common Stock

 

Paid-in

 

Accumulated

 

Stockholders’

 

Shares

 

Amount

 

Capital

 

Deficit

 

Equity

           

BALANCE, June 30, 2021

 

18,727,552

 

$

18,728

 

$

140,267,314

 

$

(118,174,566)

 

$

22,111,476

 

 

 

 

 

 

   

 

Stock-based compensation expense

 

-

 

 

-

 

 

638,589

 

 

-

 

 

638,589

Issuance of shares for restricted stock grants

 

8,363

 

 

8

 

 

(8)

 

 

-

 

 

-

Net loss

 

-

 

 

-

 

 

-

 

 

(952,233)

 

 

(952,233)

BALANCE, September 30, 2021

 

18,735,915

 

$

18,736

 

$

140,905,895

 

$

(119,126,799)

 

$

21,797,832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2020

 

 

 

 

 

 

Additional

 

 

 

 

Total

 

Common Stock

 

Paid-in

 

Accumulated

 

Stockholders’

 

Shares

 

Amount

 

Capital

 

Deficit

 

Equity

           

BALANCE, June 30, 2020

 

18,028,282

 

$

18,028

 

$

139,715,197

 

$

(117,668,783)

 

$

22,064,442

   

 

 

 

   

 

Stock-based compensation expense

 

-

 

 

-

 

 

97,157

 

 

-

 

 

97,157

Exercise of stock options, net of cashless exercise of 82,161 shares

 

527,214

 

 

527

 

 

28,823

 

 

-

 

 

29,350

Exercise of warrants

 

750

 

 

1

 

 

1,649

 

 

-

 

 

1,650

Issuance of shares for restricted stock grants

 

7,284

 

 

7

 

 

(7)

 

 

-

 

 

-

Settlement of executive bonuses with issuance of restricted stock units

 

5,531

 

 

6

 

 

31,245

 

 

-

 

 

31,251

Shares forfeited in exchange for withholding taxes

 

(178,832)

 

 

(179)

 

 

(1,462,415)

 

 

-

 

 

(1,462,594)

Net income

 

-

 

 

-

 

 

-

 

 

32,412

 

 

32,412

BALANCE, September 30, 2020

 

18,390,229

 

$

18,390

 

$

138,411,649

 

$

(117,636,371)

 

$

20,793,668

INTELLICHECK, INC.

 

STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

Nine months ended September 30, 2021

 

 

 

 

 

 

Additional

 

 

 

 

Total

 

Common Stock

 

Paid-in

 

Accumulated

 

Stockholders’

 

Shares

 

Amount

 

Capital

 

Deficit

 

Equity

           

BALANCE, January 1, 2021

 

18,410,458

 

$

18,410

 

$

138,569,746

 

$

(116,376,715)

 

$

22,211,441

 

 

 

 

 

 

   

 

Stock-based compensation expense

 

-

 

 

-

 

 

2,270,205

 

 

-

 

 

2,270,205

Exercise of stock options, net of cashless exercise of 58,122 shares

 

299,179

 

 

299

 

 

46,171

 

 

-

 

 

46,470

Exercise of warrants

 

9,000

 

 

9

 

 

19,791

 

 

-

 

 

19,800

Issuance of shares for restricted stock grants

 

17,278

 

 

18

 

 

(18)

 

 

-

 

 

-

Net loss

 

-

 

 

-

 

 

-

 

 

(2,750,084)

 

 

(2,750,084)

BALANCE, September 30, 2021

 

18,735,915

 

$

18,736

 

$

140,905,895

 

$

(119,126,799)

 

$

21,797,832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2020

 

 

 

 

 

 

Additional

 

 

 

 

Total

 

Common Stock

 

Paid-in

 

Accumulated

 

Stockholders’

 

Shares

 

Amount

 

Capital

 

Deficit

 

Equity

           

BALANCE, January 1, 2020

 

16,041,650

 

$

16,042

 

$

128,668,583

 

$

(116,935,112)

 

$

11,749,513

     

 

   

 

Stock-based compensation expense

 

-

 

 

-

 

 

286,909

 

 

-

 

 

286,909

Issuance of common stock, net of costs

 

1,769,230

 

 

1,769

 

 

10,567,698

 

 

-

 

 

10,569,467

Exercise of stock options, net of cashless exercise of 93,570 shares

 

674,171

 

 

674

 

 

167,934

 

 

-

 

 

168,608

Exercise of warrants

 

50,750

 

 

51

 

 

111,599

 

 

-

 

 

111,650

Issuance of shares for restricted stock grants

 

20,279

 

 

20

 

 

(20)

 

 

-

 

 

-

Settlement of executive bonuses with issuance of restricted stock units

 

14,993

 

 

15

 

 

84,696

 

 

-

 

 

84,711

Shares forfeited in exchange for withholding taxes

 

(180,844)

 

 

(181)

 

 

(1,475,750)

 

 

-

 

 

(1,475,931)

Net loss

 

-

 

 

-

 

 

-

 

 

(701,259)

 

 

(701,259)

BALANCE, September 30, 2020

 

18,390,229

 

$

18,390

 

$

138,411,649

 

$

(117,636,371)

 

$

20,793,668

           

INTELLICHECK, INC.

 

STATEMENTS OF CASH FLOWS

(Unaudited)

   

 

 

Nine months ended September 30,

 

 

2021

 

2020

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(2,750,084)

 

$

(701,259)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation and amortization

 

 

126,226

 

 

127,143

Stock-based compensation expense

 

 

2,270,205

 

 

286,909

Forgiveness of unsecured promissory note

 

 

(10,000)

 

 

-

Changes in assets and liabilities:

 

 

 

 

 

 

(Increase) in accounts receivable

 

 

(657,361)

 

 

(64,228)

(Increase) in other current assets

 

 

(528,865)

 

 

(192,103)

(Increase) in other assets

 

 

(4,250)

 

 

-

Increase in accounts payable and accrued expenses

 

 

990,856

 

 

361,395

Increase (decrease) in deferred revenue

 

 

970,604

 

 

(128,779)

Net cash provided by (used in) operating activities

 

 

407,331

 

 

(310,922)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchase of software license

 

 

-

 

 

(400,000)

Capital expenditures

 

 

(338,962)

 

 

(36,520)

Collection of note receivable

 

 

-

 

 

29,017

Net cash used in investing activities

 

 

(338,962)

 

 

(407,503)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Return of repayment on unsecured promissory note

 

 

10,000

 

 

-

Net proceeds from issuance of common stock

 

 

-

 

 

10,569,467

Loan proceeds on unsecured promissory note

 

 

-

 

 

806,100

Net proceeds from issuance of common stock from exercise of stock options

 

46,470

 

168,608

Proceeds from issuance of common stock from exercise of warrants

 

19,800

 

111,650

Withholding taxes paid on exercise of stock options and vesting of restricted stock units

 

 

-

 

 

(1,475,931)

Net cash provided by financing activities

 

 

76,270

 

 

10,179,894

 

 

 

 

 

 

 

Net increase in cash

 

 

144,639

 

 

9,461,469

 

 

 

 

 

 

 

CASH, beginning of period

 

 

13,121,392

 

 

3,350,853

 

 

 

 

 

 

 

CASH, end of period

 

$

13,266,031

 

$

12,812,322

 

 

 

 

 

 

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

Settlement of executive bonuses with restricted stock units

 

$

-

 

$

84,710

 

 

 

 

 

 

 

Adjusted EBITDA

We use Adjusted EBITDA as a non-GAAP financial performance measurement. Adjusted EBITDA is calculated by adjusting net (loss) income for certain reductions such gains on debt forgiveness and interest and other income (expense) and certain addbacks such as income taxes, impairments of long-lived assets and goodwill, depreciation, amortization, and stock-based compensation expense. Adjusted EBITDA is provided to investors to supplement the results of operations reported in accordance with GAAP. Management believes that Adjusted EBITDA provides an additional tool for investors to use in comparing our financial results with other companies that also use Adjusted EBITDA in their communications to investors. By excluding non-cash charges such as impairments of long-lived assets and goodwill, amortization, depreciation, and stock-based compensation, as well as non-operating charges for interest and 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, interest and other income (expense), impairments of long-lived assets and goodwill, stock-based compensation expense, all of which impact our profitability, as well as depreciation and amortization related to the use of long-term assets which benefit multiple periods. We believe that these limitations are compensated by providing Adjusted EBITDA only with GAAP net (loss) income 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) income 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) income to Non-GAAP Adjusted EBITDA follows:

 

 

 

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

Net (loss) income

 

$

(952,233)

 

$

32,412

 

$

(2,750,084)

 

$

(701,259)

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

Gain on forgiveness of unsecured promissory note

 

 

-

 

 

-

 

 

(10,000)

 

 

-

Interest and other income (expense), net

 

 

412

 

 

(6,993)

 

 

(5,340)

 

 

(18,186)

Depreciation and amortization

 

 

42,237

 

 

46,387

 

 

126,226

 

 

127,143

Stock-based compensation expense

 

 

638,589

 

 

97,157

 

 

2,270,205

 

 

286,909

Adjusted EBITDA

 

$

(270,995)

 

$

168,963

 

$

(368,993)

 

$

(305,393)

 

About Intellicheck Nasdaq: IDN

Intellicheck (Nasdaq: IDN) is a trusted industry leader in technology solutions that stop identity theft and fraud with real-time identification authentication and age verification. We make it possible for our clients to increase revenues, improve customer service, and increase operational efficiencies. The company is focused on partnering with banks, credit card issuers and retailers to prevent fraud. Intellicheck also serves law enforcement agencies, national defense clients and diverse state and federal government agencies. 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 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.

Contacts

Investor Relations: Gar Jackson (949) 873-2789

Media and Public Relations: Sharon Schultz (302) 539-3747

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