Intellicheck(IDN) - 2020 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements The financial statements for the period ended September 30, 2020, reflect significant revenue growth, a shift to profitability, and a strengthened balance sheet with $12.8 million in cash from a public offering and PPP loan Condensed Balance Sheet Data (Unaudited) | Account | September 30, 2020 ($) | December 31, 2019 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $12,812,322 | $3,350,853 | | Total current assets | $15,076,659 | $5,380,096 | | Goodwill | $8,101,661 | $8,101,661 | | Total assets | $23,905,523 | $13,997,171 | | Liabilities & Equity | | | | Total current liabilities | $2,339,700 | $2,201,716 | | Total liabilities | $3,111,855 | $2,247,658 | | Total stockholders' equity | $20,793,668 | $11,749,513 | Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Sep 30, 2020 ($) | Three Months Ended Sep 30, 2019 ($) | Nine Months Ended Sep 30, 2020 ($) | Nine Months Ended Sep 30, 2019 ($) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $2,698,975 | $1,930,201 | $7,656,442 | $4,767,186 | | Gross Profit | $2,405,276 | $1,671,148 | $6,459,914 | $4,096,848 | | Income (loss) from operations | $25,419 | ($580,524) | ($719,445) | ($2,719,276) | | Net Income (Loss) | $32,412 | ($568,230) | ($701,259) | ($2,654,898) | | Diluted EPS | $0.00 | ($0.04) | ($0.04) | ($0.17) | Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity (Nine months ended Sep 30) | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($310,922) | ($2,089,687) | | Net cash (used in) provided by investing activities | ($407,503) | $14,893 | | Net cash provided by financing activities | $10,179,894 | $456,104 | | Net increase (decrease) in cash | $9,461,469 | ($1,618,690) | | Cash, end of period | $12,812,322 | $2,757,327 | - In June 2020, the company completed a public offering of 1,769,230 common stock shares at $6.50 per share, resulting in net proceeds of approximately $10.57 million after costs. These funds are intended for general corporate purposes and working capital[22][71] - The company received an unsecured promissory note of $796,100 and a $10,000 advance under the Paycheck Protection Program (PPP) in April 2020. The loan has a 1% interest rate and may be forgiven if certain conditions are met[56] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong performance to significant SaaS revenue growth, enhanced liquidity from a $10.6 million public offering and PPP loan, and believes current cash is sufficient for the next 12 months despite COVID-19 uncertainties Revenue and Gross Profit Comparison | Period | Metric | 2020 ($) | 2019 ($) | Change ($) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | | 3 Months | Revenue | $2,699,000 | $1,930,000 | +$769,000 | +40% | | | Gross Profit | $2,405,000 | $1,671,000 | +$734,000 | +44% | | 9 Months | Revenue | $7,656,000 | $4,767,000 | +$2,889,000 | +61% | | | Gross Profit | $6,460,000 | $4,097,000 | +$2,363,000 | +58% | - The primary driver of revenue growth was the Software as a Service (SaaS) segment. SaaS revenue increased by 57% to $2.45 million for the three months ended September 30, 2020, and by 79% to $6.36 million for the nine-month period[94][99] - The company's liquidity position improved significantly, with cash increasing to $12.8 million and working capital to $12.7 million as of September 30, 2020. This was primarily due to net proceeds of approximately $10.6 million from a public stock offering in June 2020[104][106] Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA | | Three Months Ended Sep 30, ($) | Nine Months Ended Sep 30, ($) | | :--- | :--- | :--- | | | 2020 | 2019 | 2020 | 2019 | | Net income (loss) | $32,412 | ($568,230) | ($701,259) | ($2,654,898) | | Interest and other income | ($6,993) | ($12,294) | ($18,186) | ($64,378) | | Depreciation and amortization | $46,387 | $52,542 | $127,143 | $176,034 | | Stock-based compensation expense | $97,157 | $71,043 | $286,909 | $513,824 | | Adjusted EBITDA | $168,963 | ($456,939) | ($305,393) | ($2,029,418) | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is credit concentration from cash deposits, mitigated by holding funds in two financial institutions and periodic evaluations - The company's main financial instruments subject to credit risk are its cash balances, which are held at two financial institutions[123] Controls and Procedures As of September 30, 2020, the CEO and CFO concluded the company's disclosure controls and procedures were effective, with no material changes to internal controls despite remote work - The CEO and CFO evaluated and concluded that the company's disclosure controls and procedures were effective as of September 30, 2020[124] - No changes in internal controls over financial reporting occurred during the third quarter of 2020 that have materially affected, or are reasonably likely to materially affect, these controls[126] Part II – OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to materially affect its business - The company is not currently involved in any material legal or regulatory proceedings[72][128] Risk Factors The company highlights significant risks from the ongoing COVID-19 pandemic, including potential adverse effects on business, financial performance, liquidity, and stock price due to unpredictable duration and severity - The COVID-19 pandemic has impacted the business and is expected to continue to do so, with the full impact being unpredictable due to factors beyond the company's control[131] - Pandemic-related measures like stay-at-home orders and business closures disrupt normal operations. The company has transitioned to remote work and virtual events, which may delay sales and harm productivity[133] - A widespread pandemic could lead to significant disruption of global financial markets, potentially reducing the company's ability to access capital and negatively affecting its liquidity and stock value[134] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[136] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[136] Mine Safety Disclosures This item is not applicable to the company - Not applicable[136] Other Information The company reported no other information for this period - None[137] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data - Exhibits filed include Rule 13a-14(a) certifications for the CEO and CFO, Section 1350 certifications, and XBRL instance and taxonomy documents[137]