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Intellicheck Announces Fourth Quarter and Full-Year 2018 Financial Results

MELVILLE, N.Y.--(BUSINESS WIRE)--

Year over year fourth quarter revenues increased 37%

SaaS revenues increased 45%

Intellicheck, Inc. (NYSE American: IDN), an industry leader in identification authentication solutions, today announced its financial results for the fourth quarter and full-year ended December 31, 2018.

Revenue for the fourth quarter ended December 31, 2018 grew 37% to $1,330,393 versus $967,612 in the prior year comparable period. SaaS revenue in the fourth quarter grew 45% and totaled $826,000 versus $569,000 in the prior year comparable period. Gross profit as a percentage of revenues improved to 93.1% for the three months ended December 31, 2018 versus 89.4% in the prior year comparable period.

Intellicheck CEO Bryan Lewis said adoption of the company’s leading identity authentication technology solutions is strong and continues to grow. “We achieved significant milestones in 2018 and I am very pleased with the advances we have made. We are working with four banks and credit card issuers right now in addition to some 16 retailers of all sizes in various stages of product adoption. These merchants represent thousands of retail locations in which Retail ID will be used when fully rolled out. We are also in pilot with our latest new bank for its own credit cards and its retail bank branches. This as we continue to see growing adoption of Age ID at a time when there has been noteworthy market attention to issues surrounding underage access to vaping, cannabis and alcohol products,” said Intellicheck CEO Bryan Lewis.

“Together, we believe that our suite of identity authentication products are demonstrating their value and effectiveness in meeting multiple market needs. As we focus on our strategic objectives for 2019, we anticipate that as long as we continue to execute on the opportunities before us, we believe it will be a banner year,” Lewis concluded.

The net loss for the three months ended December 31, 2018 was ($664,025) or ($0.04) per diluted share versus ($2,910,350) or ($0.19) per diluted share in the comparable prior year period. The prior year loss includes a $500,000 expense attributable to the employment contract of the former CEO. Additionally, during the fourth quarter of 2017 the Company had an impairment charge on intangible assets of $1,375,422 for the year ended December 31, 2017. Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation expense and certain non-recurring charges that includes the prior year impairment charge) was a loss of ($632,674) for the fourth quarter of 2018 versus a loss of ($1,327,603) in the prior year comparable period. A reconciliation of adjusted EBITDA to net loss is provided elsewhere in this release.

Revenue for the full year ended December 31, 2018 was $4,433,454 versus $3,598,296 in the prior year comparable period. Gross profit as a percentage of revenue improved to 91.3% for the year ended December 31, 2018 versus 85.5% in the prior year comparable period.

The net loss for the fiscal year ended December 31, 2018 was ($3,963,576) or ($0.26) per diluted share versus a net loss of ($6,020,505) or (0.48) per diluted share that includes the $500,000 expense attributable to the employment contract of the former CEO and the $1,375,422 impairment charge. Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation expense and certain non-recurring charges that includes the prior year impairment charge) improved by $0.2 million to a loss of ($3,661,244) for fiscal 2018 versus a loss of ($3,856,894) for fiscal 2017. A reconciliation of adjusted EBITDA to net loss is provided elsewhere in this release.

Cash at the end of fiscal 2018 totaled $4.4 million versus $8.0 million in the prior year comparable period. Stockholders’ equity totaled $12.9 million at the end of the 2018 fiscal year versus $16.0 million at the end of the comparable prior year 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 Intellicheck files its Form 10-K for the fiscal year ended December 31, 2018.

Conference Call Information:

The Company will hold an earnings conference call today, March 21, 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 number 13688253. For callers outside the U.S., please dial 201-612-7415 and use conference identification number 13688253. The replay will be available beginning approximately two hours after the completion of the live event and will remain available until April 4, 2019.

     
INTELLICHECK, INC.
 
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2018 and 2017
(Unaudited)
 
2018 2017
 

ASSETS

CURRENT ASSETS:
Cash $ 4,376,017 $ 8,010,161
Accounts receivable, net of allowance of $24,675 and $18,750
as of December 31, 2018, and 2017, respectively 1,019,434 652,627
Inventory 82,337 85,321
Other current assets   271,415   218,835
Total current assets 5,749,203 8,966,944
 
NOTE RECEIVABLE, net of current portion 29,017 71,138
PROPERTY AND EQUIPMENT, net 264,583 211,602
GOODWILL 8,101,661 8,101,661
INTANGIBLE ASSETS, net 306,575 463,578
OTHER ASSETS   9,742   67,181
 
Total assets $ 14,460,781 $ 17,882,104
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 
CURRENT LIABILITIES:
Accounts payable $ 73,334 $ 71,578
Accrued expenses 726,918 815,350
Deferred revenue, current portion   704,536   739,980
Total current liabilities 1,504,788 1,626,908
 
OTHER LIABILITIES
Deferred revenue, long-term portion 29,486 87,736
Other long-term liabilities   6,802   158,407
 
Total liabilities 1,541,076 1,873,051
 

COMMITMENTS AND CONTINGENCIES

 
STOCKHOLDERS’ EQUITY:
Common stock – $.001 par value; 40,000,000 shares authorized; 15,638,765 and 15,009,246 shares issued and outstanding as of December 31, 2018 and 2017, respectively 15,639 15,009
Additional paid-in capital 127,290,467 126,416,869
Accumulated deficit   (114,386,401)   (110,422,825)
Total stockholders’ equity   12,919,705   16,009,053
 
Total liabilities and stockholders’ equity $ 14,460,781 $ 17,882,104
     
INTELLICHECK, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(Unaudited)
 
2018 2017
 
REVENUES $ 4,433,454 $ 3,598,296
COST OF REVENUES   (386,617)   (521,835 )
Gross profit 4,046,837 3,076,461
 
OPERATING EXPENSES
Selling, general and administrative 5,236,170 5,865,278
Research and development 2,904,166 1,916,107
Impairment of intangible assets   -   1,375,422
 
Total operating expenses   8,140,336   9,156,807
 
Loss from operations (4,093,499) (6,080,346 )
 
OTHER INCOME
Interest and other income   129,923   59,841
 
Net loss $ (3,963,576) $ (6,020,505 )
 
PER SHARE INFORMATION:
Loss per common share -
Basic/Diluted $ (0.26) $ (0.48 )
 
Weighted average common shares used in computing per share amounts -
Basic/Diluted   15,542,480   12,428,652
         
INTELLICHECK, INC.
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(Unaudited)
 
Additional Total
Common Stock Paid-in Accumulated Stockholders’
Shares Amount Capital Deficit Equity
 
BALANCE, December 31, 2016   10,718,553 $ 10,719 $ 117,293,158 $ (104,368,426 ) $ 12,935,451
 
Cumulative adjustment upon modified retrospective adoption of ASU 2016-09 -   - 33,894 (33,894) -
 
Balance after adoption of recent accounting pronouncement 10,718,553 10,719 117,327,052 (104,402,320) 12,935,451
Stock-based compensation expense (employees and directors) - - 435,679 - 435,679
Issuance of common stock, net of costs 4,168,750 4,169 8,508,692 - 8,512,861
Exercise of stock options 10,000 10 10,090 - 10,100
Exercise of warrants 63,500 63 139,637 - 139,700
Vesting of restricted stock 50,207 50 (50 ) - -
Shares forfeited in exchange for payment of withholding taxes (1,764 ) (2 ) (4,231 ) - (4,233 )
Net loss   -   -   -   (6,020,505 )   (6,020,505 )
 
BALANCE, December 31, 2017 15,009,246 $ 15,009 $ 126,416,869 $ (110,422,825 ) $ 16,009,053
 
Stock-based compensation expense (employees and directors) - - 186,707 - 186,707
Exercise of stock options 593,838 594 686,927 - 687,521
Vesting of restricted stock 35,681 36 (36) - -
Net loss -   -   -   (3,963,576)   (3,963,576)
 
BALANCE, December 31, 2018 15,638,765 $ 15,639 $ 127,290,467 $ (114,386,401)   $ 12,919,705
     
INTELLICHECK, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(Unaudited)
 
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 
Net loss $ (3,963,576) $ (6,020,505 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 245,548 412,351
Stock-based compensation expense 186,707 435,679
Change in provision for doubtful accounts 5,925 -
Deferred rent (5,202) (47,628 )
Impairment of intangible assets - 1,375,422
Changes in assets and liabilities:
(Increase) in accounts receivable (372,732) (150,501 )
Decrease (increase) in inventory 2,984 (14,774 )
(Increase) in other current assets (50,931) (52,051 )
Decrease (increase) in other assets 57,439 (5,883 )
(Decrease) increase in accounts payable and accrued expenses (74,672) 339,326
(Decrease) in deferred revenue (93,694) (175,128 )
(Decrease) increase in other long-term liabilities   (158,407)   158,407
Net cash used in operating activities   (4,220,611)   (3,745,285 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
Purchases of property and equipment (141,526) (37,614 )
Collection on note receivable   40,472   42,460
Net cash (used in) provided by investing activities   (101,054)   4,846
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of common stock - 8,512,861
Net proceeds from issuance of common stock from exercise of stock options 687,521 10,100
Net proceeds from the issuance of common stock from exercise of warrants - 139,700
Withholding taxes paid on vesting of restricted stock units   -   (4,233 )
Net cash provided by financing activities   687,521   8,658,428
 
Net (decrease) increase in cash (3,634,144) 4,917,989
 
CASH, beginning of year   8,010,161   3,092,172
 
CASH, end of year $ 4,376,017 $ 8,010,161

Adjusted EBITDA

We use Adjusted EBITDA as a non-GAAP financial performance measurement. Adjusted EBITDA is calculated by adding back to net loss interest and other income, 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 its 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 interest income, 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 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 us may not be comparable with similarly named measures provided by other entities.

A reconciliation of GAAP net loss to Adjusted EBITDA follows:

(Unaudited)
Three Months Ended  
December 31, Years Ended December 31,
2018   2017 2018   2017
Net loss $ (664,025) $ (2,910,350) $ (3,963,576) $ (6,020,505)
Reconciling items:
Interest and other income (49,667) (46,504) (129,923) (59,841)
Depreciation and amortization 62,471 100,480 245,548 412,351
Stock-based compensation expense 18,547 153,349 186,707 435,679
Impairment of intangible assets - 1,375,422 - 1,375,422
Adjusted EBITDA $ (632,674) $ (1,327,603) $ (3,661,244) $ (3,856,894)

About Intellicheck NYSE American: IDN Intellicheck is a trusted industry leader in technology solutions that provide real-time identification authentication and age verification. We make it possible for our clients to enhance safety and awareness, increase revenues, improve customer service, and increase operational efficiencies. Founded in 1994, Intellicheck has grown to serve dozens of Fortune 500 companies including retail and financial industry clients, police departments, national defense clients at agencies, major seaports, and military bases, and diverse state and federal government agencies. For more information on Intellicheck, visit http://www.intellicheck.com/ and follow Intellicheck on Twitter @IntellicheckIDN, on Facebook https://www.facebook.com/intellicheckidn/, on Instagram @IntellicheckIDN, on LinkedIn https://www.linkedin.com/company/intellicheck-inc- and on YouTube https://www.youtube.com/user/ICMOBIL.

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, 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 website and use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “potential,” “predict,” “project,” “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 Intellicheck’s products and the presently anticipated growth in the commercial adoption of the Company’s products and services; our ability to successfully transition pilot programs into formal commercial scale programs; changing levels of demand for Intellicheck’s current and future products; Intellicheck’s ability to reduce or maintain expenses while increasing sales; customer results achieved using our products in both the short and long term; success of future research and development activities; Intellicheck’s ability to successfully market and sell its products, any delays or difficulties in the Company’s supply chain coupled with the typically long sales and implementation cycle for its products; Intellicheck’s ability to enforce its intellectual property rights; changes in laws and regulations applicable to the Company’s products; the Company’s 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 Intellicheck’s reports filed with the SEC. We do not assume any obligation to update the forward-looking information.

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