
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
     SECURITIES AND EXCHANGE ACT OF 1934

     For the quarterly period ended June 30, 2001

                                       OR

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE
     ACT OF 1934

     For the transition period from          to

                          Commission File No. 001-15465

                               Intelli-Check, Inc.
             (Exact name of the issuer as specified in its charter)
             ------------------------------------------------------

         Delaware                                                11-3234779
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

246 Crossways Park West, Woodbury, New York                        11797
(address of principal executive offices)                         (Zip Code)

Issuer's Telephone number, including area code:               (516) 992-1900

Check whether Issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the Issuer was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                           Yes   X                   No ___

Number of shares outstanding of the issuer's Common Stock:

            Class                                  Outstanding at August 9, 2001
            -----                                  -----------------------------

Common Stock,  $.001 par value                               7,857,829


<PAGE>
                               Intelli-Check, Inc.

                                      Index

Part I                        Financial Information                         Page
                                                                            ----

  Item 1. Financial Statements

    Balance Sheets -June 30, 2001 (Unaudited)
    and December 31, 2000                                                     1

    Statements of Operations for the three and six month
    periods ended June 30, 2001 (Unaudited) and
    June 30, 2000 (Unaudited)                                                 2

    Statements of Cash Flows for the six months ended June 30, 2001
    (Unaudited) and June 30, 2000 (Unaudited)                                 3

    Notes to Financial Statements                                            4-5

  Item 2. Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                          5-8

Part II Other Information

  Item 6.

    Exhibits and Reports on Form 8                                            9

    Signatures                                                                9

<PAGE>

                               Intelli-Check, Inc.

                                 Balance Sheets

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                  June 30,           December 31,
                                                                                    2001                 2000
                                                                                    ----                 ----
                                                                                 (Unaudited)
<S>                                                                             <C>                  <C>
CURRENT ASSETS:
         Cash and cash equivalents                                              $  3,005,935         $  4,091,689
         Accounts receivable                                                          76,698               44,795
         Inventory                                                                 2,428,193            2,536,338
         Other current assets                                                        235,385              511,638
                                                                                ------------         ------------
                  Total current assets                                             5,746,211            7,184,460

CERTIFICATE OF DEPOSIT                                                               263,591              250,000

PROPERTY AND EQUIPMENT,  net                                                         405,624              438,021

PATENT COSTS                                                                          64,322               67,426
                                                                                ------------         ------------
                  Total assets                                                  $  6,479,748         $  7,939,907
                                                                                ============         ============

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
         Accounts payable                                                       $    271,393         $    180,792
         Accrued expenses                                                            508,598              489,229
         Current portion of deferred revenue                                         319,760              545,334
         Current portion of capital lease obligations                                 38,375               48,767
                                                                                ------------         ------------
                  Total current liabilities                                        1,138,126            1,264,122
                                                                                ------------         ------------

CAPITAL LEASE OBLIGATIONS                                                             28,841               42,738

DEFFERRED REVENUE                                                                     39,385                   --
                                                                                ------------         ------------
                  Total liabilities                                                1,206,352            1,306,860

STOCKHOLDERS' EQUITY:
   Series A convertible preferred stock - $.01 par value;
   250,000 shares authorized; 0 shares issued and outstanding                             --                   --
   Common stock-$.001 par value; 20,000,000 shares
   authorized; 7,844,523 and 7,696,236 shares issued and
   outstanding, respectively; 10,000 shares held in the treasury                       7,844                7,696
   Additional paid-in capital                                                     15,130,131           13,561,362
   Accumulated deficit                                                            (9,864,579)          (6,936,011)
                                                                                ------------         ------------
                  Total stockholders' equity                                       5,273,396            6,633,047
                                                                                ------------         ------------
                  Total liabilities and stockholders' equity                    $  6,479,748         $  7,939,907
                                                                                ============         ============
</TABLE>

See accompanying notes to financial statements


                                                                               1
<PAGE>

                               Intelli-Check, Inc.

                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          Three Months Ended                  Six Months Ended
                                                   une 30, 2001      June 30, 2000      June 30, 2001      June 30, 2000
                                                   ------------      -------------      -------------      -------------
<S>                                                <C>                <C>                <C>                <C>
REVENUE                                            $   270,211        $    17,102        $   474,846        $    47,320
COST OF REVENUE                                        141,464              8,344            259,259             23,515
                                                   -----------        -----------        -----------        -----------
                   Gross profit                        128,747              8,758            215,587             23,805
                                                   -----------        -----------        -----------        -----------

OPERATING EXPENSES

    Selling                                            158,710            125,666            368,910            221,765
    General and administrative                         600,380            407,344          1,082,256            819,183
    Research and development                           290,043            258,147            615,209            508,114
                                                   -----------        -----------        -----------        -----------
           Total Operating Expenses                  1,049,133            791,157          2,066,375          1,549,062
                                                   -----------        -----------        -----------        -----------

                   Loss from operations               (920,386)          (782,399)        (1,850,788)        (1,525,257)


OTHER INCOME (EXPENSES):

    Interest income                                     40,695             75,739             95,782            161,008
    Interest expense                                    (3,002)            (2,981)            (6,562)            (8,395)
                                                   -----------        -----------        -----------        -----------
                                                      (882,693)          (709,641)        (1,761,568)        (1,372,644)

INCOME TAX BENEFIT                                          --                 --                 --                 --

                   Net loss                        $  (882,693)       $  (709,641)       $(1,761,569)       $(1,372,644)
                                                   ===========        ===========        ===========        ===========

PER SHARE INFORMATION:
     Net loss per common share -
Net loss                                           $  (882,693)       $  (709,641)       $(1,761,569)       $(1,372,644)
Dividend on warrant modification                            --                 --            (85,000)                --
                                                   -----------        -----------        -----------        -----------

Net loss attributable to common
   shareholders                                    $  (882,693)       $  (709,641)       $(1,846,569)       $(1,372,644)
                                                   ===========        ===========        ===========        ===========

     Basic and diluted                                   $(.11)             $(.11)             $(.24)             $(.21)

Common shares used in
   computing per share amounts -
   Basic and diluted                                 7,826,220          6,538,009          7,827,067          6,526,581
</TABLE>

See accompanying notes to financial statements


                                                                               2
<PAGE>

                               Intelli-Check, Inc.

                            Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     Six months ended      Six months ended
                                                                                       June 30, 2001         June 30, 2000
                                                                                     ----------------      ----------------
<S>                                                                                      <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                                           $(1,761,568)         $(1,372,644)
      Adjustments to reconcile net loss to cash used
           in operating activities:
           Depreciation and amortization                                                      56,296               41,365
           Stock options issued for services                                                     842
           Changes in assets and liabilities-
           (Increase) in certificate of deposit                                              (13,591)
           (Increase) in accounts receivable                                                 (31,903)              (1,403)
           Decrease (Increase) in inventory                                                  108,145               (8,867)
           Decrease in other current assets                                                  276,253
           (Increase) in deposits                                                           (172,100)
           (Increase) in other assets                                                        (52,838)
           Increase (Decrease) in accounts payable and accrued expenses                      109,970             (220,415)
           (Decrease) in deferred revenue                                                   (186,189)
                                                                                         -----------          -----------
                       Net cash used in operating activities                              (1,441,745)          (1,786,902)
                                                                                         -----------          -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                                          (20,795)             (30,940)
                                                                                         -----------          -----------

                       Net cash used in investing activities                                 (20,795)             (30,940)
                                                                                         -----------          -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock                                                   453,675               91,875
(Purchase of) Treasury Stock                                                                 (52,600)
Repayment of capital lease obligation                                                        (24,289)             (17,953)
                                                                                         -----------          -----------
                       Net cash provided by financing activities                             376,786               73,922
                                                                                         -----------          -----------

                       Net (decrease) in cash                                             (1,085,754)          (1,743,920)

CASH AND CASH EQUIVALENTS, beginning of period                                             4,091,689            6,380,548
                                                                                         -----------          -----------
CASH AND CASH EQUIVALENTS, end of period                                                 $ 3,005,935          $ 4,636,628
                                                                                         ===========          ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
      Cash paid during the period for interest                                           $     6,562          $     8,395
                                                                                         ===========          ===========
</TABLE>

See accompanying notes to financial statements


                                                                               3
<PAGE>

                               Intelli-Check, Inc.

                          Notes to Financial Statements

                                   (Unaudited)

Note 1. Significant Accounting Policies

Basis of Presentation

The  financial  information  provided  herein  was  prepared  from the books and
records of the Company  without audit.  The information  furnished  reflects all
normal  recurring  adjustments,  which,  in  the  opinion  of the  Company,  are
necessary for a fair statement of the balance  sheets,  statement of operations,
and statements of cash flows, as of the dates and for the periods presented. The
Notes to Financial  Statements  included in the Company's  2000 Annual Report on
Form 10-KSB should be read in conjunction with these financial statements.

Revenue Recognition

The  Company  sells its  product  directly  through  its sales force and through
distributors.  Revenue from direct sales of the Company's  product is recognized
upon shipment to the customer. The Company's product requires continuing service
or  post  contract  customer  support  and  performance  by  the  Company,   and
accordingly  a portion of the  revenue is  deferred  based on its fair value and
recognized  ratably  over the period in which the future  service,  support  and
performance are provided,  which is generally one year. Currently,  with respect
to sales to  distributors,  the  Company  does not  have  enough  experience  to
identify  the fair value of each  element and the full amount of the revenue and
related gross margin is deferred and recognized ratably over the one-year period
in which the future service, support and performance are provided.

Reclassifications

Certain prior period  amounts have been  reclassified  to conform to the current
period presentation.

Note 2. Net Loss Per Common Share

Basic and diluted  net loss per common  share was  computed by dividing  the net
loss  attributable  to common  shareholders  by the weighted  average  number of
shares of Common Stock.  In  accordance  with the  requirements  of Statement of
Financial  Accounting  Standards  No. 128,  common stock  equivalents  have been
excluded from the calculation as their inclusion would be antidilutive.

Note 3. Stockholders' Equity

In  March  2001,   the  Company   declared  a  dividend   distribution   of  one
non-transferable  right to purchase one share of the Company's  common stock for
every 10 outstanding  shares of common stock  continuously  held from the record
date to the date of exercise,  as well as common stock  underlying  vested stock
options and warrants,  held of record on March 30, 2001, at an exercise price of
$8.50.  The  rights  will  expire  one  year  after  the  date  of an  effective
registration  statement  (which is now in  process)  relating  to the  shares of
common stock underlying the rights. If certain conditions occur, the Company has
the right to redeem  the  outstanding  rights for $.01 per  right.  The  Company
reserved  970,076  shares of common stock for future  issuance under this rights
agreement.  The Company has recorded the fair value of the rights of  $1,082,000
as a dividend  during the quarter  ended March 31,  2001,  which was  calculated
under  the  Black-Scholes  valuation  method  and  recorded  as an  increase  in
additional paid-in capital and a reduction in accumulated deficit.

 In March 2001, the Company  extended the  expiration  date of its warrants that
were due to expire on various dates through June 30, 2001,  until  September 30,
2001.  As such,  the Company  recorded the  difference  in the fair value of the
warrants  prior to the extension and subsequent to the extension of $85,000 as a
dividend during the quarter ended March 31, 2001, which was calculated under the
Black-Scholes  valuation method,  and it is included in net loss attributable to
common shareholders.


                                                                               4
<PAGE>

In March 2001, the Board of Directors  authorized,  subject to certain  business
and market conditions,  the purchase of up to $1,000,000 of our common stock. As
of August 10, 2001, we purchased 10,000 shares totaling approximately $53,000.

Note 4. Letter of Intent

In  February  2001,  the  Company  signed a letter of intent to acquire  certain
assets of NeoTilt Corp., a Canadian  developer of software for hand held age and
document  verification  units for 50,000  shares of the  Company's  common stock
valued  at the  closing  price  on the day  prior  to  closing  plus  additional
incentives.  The  letter of intent  expired on March 31,  2001 and the  Company,
subsequently, terminated negotiations with NeoTilt Corporation.

Note 5.  Termination of Employment agreement

On May 7, 2001,  The Board of Directors  accepted the  resignation of its Senior
Executive Vice President and Chief Technology Officer.  Accordingly,  all of the
obligations  under the  employment  agreement  including  salary and  incentives
ceased as of this date.

Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations

     (a) Overview

      Our  company  was formed in 1994 to address a growing  need for a reliable
document and age verification  system to detect  fraudulent  driver licenses and
other widely accepted forms of government-issued  identification  documents. Our
sales  through  September  30, 2000 had been minimal  since  through 1998 we had
previously produced only a limited pre-production run of our product for testing
and market  acceptance.  In late 1999, we received a limited  number of ID-Check
terminals,  which  were then  available  for  sale.  Shortly  thereafter,  these
terminals  were  returned  to the  manufacturer  to be  upgraded  to  contain an
advanced  imager/scanner,  which  allows  our  software  to  currently  read the
encoding on 56  jurisdictions  as opposed to 32  jurisdictions  on the  original
scanner.  During the fourth quarter of 2000, we experienced a material  increase
in sales as a result of product  availability  and  establishing  marketing  and
distributor  agreements  with  resellers.  Since  inception,  we  have  incurred
significant losses and negative cash flow from operating  activities,  and as of
June 30, 2001 we had an accumulated deficit of approximately $9,865,000. We will
continue to fund  operating  and capital  expenditures  from  proceeds  that the
company  received  from  its  initial  public  offering  ("IPO")  as well as the
exercising of warrants and options.  In view of the rapidly  evolving  nature of
our business and our limited operating history, we believe that period-to-period
comparisons of revenues and operating results are not necessarily meaningful and
should not be relied upon as indications of future performance.

      The Company's  initial  marketing focus was targeted towards  retailers of
age-restricted  products  such as alcohol and tobacco.  Because of the Company's
enhanced  ability to verify the validity of military ID's,  driver  licenses and
State  issued ID cards,  containing  either  magnetic  stripes or bar codes that
conform to  AAMVA/ANSI/ISO  standards,  the Company has  refocused its marketing
efforts  to  address  the  market  being  affected  by the cost to  industry  of
"Identity  Theft."  Additionally,  during  2000,  it  entered  into a  marketing
agreement  with  Sensormatic  Electronics  Corporation,  a leading  supplier  of
electronic  security  systems.  As a result of the  Company's  ID-Check  product
having the  ability to verify the  encoded  formats of the  documents  described
above, it has already sold its ID-Check unit to some of the largest companies in
the gaming  industry  and has begun to place  test units in some of the  largest
pharmacy and grocery chains in addition to a large tobacco company.

      (b) Results of Operations

      The Company sells its product directly through its sales force and through
distributors.  Revenue from direct sales of the Company's  product is recognized
upon shipment to the customer. The Company's product requires continuing service
or  post  contract  customer  support  and  performance  by  the  Company,   and
accordingly  a portion of the revenue  based on its fair value is  deferred  and
recognized  ratably  over the period in which the future  service,  support  and
performance are provided,  which is generally one year. Currently,  with respect
to sales to


                                                                               5
<PAGE>

      distributors,  the Company does not have enough experience to identify the
fair value of each element and the full amount of the revenue and related  gross
margin is deferred and recognized  ratably over the one-year period in which the
future service, support and performance are provided.

      Comparison  of the six months  ended June 30, 2001 to the six months ended
June 30, 2000.

      Revenues  increased  substantially  from  $47,320 for the six months ended
June 30,  2000 to  $474,846  recorded  for the six months  ended June 30,  2001.
Revenues from  distributors  totaled $416,009 and revenues from direct customers
totaled  $58,837.  Revenues for the period ended June 30, 2000 included  initial
sales of a limited number of ID-Check terminals prior to the early return of our
inventory of these terminals to the manufacturer for upgrading. Revenues for the
six months ended June 30, 2001 includes  $219,625 of sales  deferred  during the
prior 12-month period.  Sales for the period ended June 30, 2001 were limited by
the recent refocus of our marketing  efforts towards the larger customers within
the retail market,  in which the sales cycle normally  requires an extended time
frame involving  multiple meetings,  presentations and a test period,  which has
been further extended by the rapid slowing of the economy, whereby decisions for
capital   expenditures  are  being  delayed.   In  addition,   the  roll-out  of
Sensormatic's sales and marketing initiatives first began in April 2001.

      Operating expenses,  which consist of selling,  general and administrative
and research and development  expenses,  increased 33.4% from $1,549,062 for the
six months  ended June 30,2000 to  $2,066,375  for the six months ended June 30,
2001.  Selling  expenses,  which consist primarily of salaries and related costs
for marketing,  increased  66.4% from $221,765 for the six months ended June 30,
2000 to $368,910  for the six months  ended June 30, 2001  primarily  due to the
hiring of a director  of  national  sales  totaling  approximately  $54,000  and
increased  travel  expenses of  approximately  $31,000 as well as  increases  in
advertising  and  marketing  expenses  of $48,000.  General  and  administrative
expenses,  which  consist  primarily of salaries  and related  costs for general
corporate functions,  including executive,  accounting,  facilities and fees for
legal and  professional  services,  increased  32.1% from  $819,183  for the six
months ended June 30, 2000 to $1,082,256 for the six months ended June 30, 2001,
primarily as a result of an increase in rent expense of approximately $57,000 as
we moved to a larger facility and increased professional fees for accounting and
public relations  counsel of  approximately  $70,000 and increased legal fees of
approximately  $141,000,  resulting  from the  defense  of our  patent law suit.
Research  and  development  expenses,  which  consist  primarily of salaries and
related costs for the development of our products, increased 21.1% from $508,114
for the six months ended June 30, 2000 to $615,209 for the six months ended June
30, 2001.  This increase is primarily  attributable to increases in salaries and
related expenses in hiring additional  programmers totaling $113,000. We believe
that we  will  require  additional  investments  in  development  and  operating
infrastructure. Therefore, we expect that expenses will continue to increase for
the foreseeable  future as we may increase  expenditures for advertising,  brand
promotion,  public relations and other marketing  activities.  We expect that we
will incur additional general and administrative expenses as we continue to hire
personnel  and incur  incremental  costs  related to the growth of the business.
Research  and  development  expenses  will  also  increase  as we  complete  and
introduce additional products based upon our patented ID-Check technology.

      Interest  expense  decreased from $8,395 for the six months ended June 30,
2000 to  $6,562  for the six  months  ended  June 30,  2001 as we have paid down
certain capital leases which had higher interest rates.

      Interest income  decreased from $161,008 for the six months ended June 30,
2000 to $95,782 for the six months ended June 30,  2001,  which is a result of a
decrease in our cash and cash  equivalents  available for  investment  and lower
interest rates in effect during this period.

      We have incurred net losses to date, therefore we have paid nominal income
taxes.

      As a result  of the  factors  noted  above,  our net loss  increased  from
$1,372,644  for the six months  ended June 30,  2000 to  $1,761,568  for the six
months ended June 30, 2001.

      Comparison  of the three  months  ended June 30, 2001 to the three  months
ended June 30, 2000.

      Revenues  increased  substantially from $17,102 for the three months ended
June 30, 2000 to $270,211  recorded  for the three  months  ended June 30, 2001.
Revenues from  distributors  totaled $228,243 and revenues from direct customers
totaled  $41,968.  Revenues for the period ended June 30, 2000 included  initial
sales of a limited


                                                                               6
<PAGE>

number of ID-Check terminals prior to the early return of our inventory of these
terminals to the manufacturer for upgrading.  Revenues for the period ended June
30, 2001 includes  $80,640 of sales deferred  during the prior 12-month  period.
Sales for the period were limited by the recent refocus of our marketing efforts
towards the larger retail market,  in which the sales cycle normally requires an
extended  time  frame  involving  multiple  meetings,  presentations  and a test
period,  which has been  further  extended by the rapid  slowing of the economy,
whereby decisions for capital  expenditures are being delayed. In addition,  the
roll out of Sensormatic's  sales and marketing  initiatives first began in April
2001.

      Operating expenses,  which consist of selling,  general and administrative
and research and  development  expenses,  increased  32.6% from $791,157 for the
three months ended June 30, 2000 to  $1,049,133  for the three months ended June
30, 2001.  Selling  expenses,  which  consist  primarily of salaries and related
costs for  marketing,  increased  26.3% from $125,666 for the three months ended
June 30, 2000 to $158,710 for the three months ended June 30, 2001 primarily due
to the hiring of a director of national sales totaling approximately $27,000 and
increased travel expenses of approximately  $11,000.  General and administrative
expenses,  which  consist  primarily of salaries  and related  costs for general
corporate functions,  including executive,  accounting,  facilities and fees for
legal and  professional  services,  increased  47.4% from $407,344 for the three
months ended June 30, 2000 to $600,380 for the three months ended June 30, 2001,
primarily as a result of an increase in rent expense of approximately $31,000 as
we moved to a larger facility and increased professional fees for accounting and
public relations  counsel of  approximately  $40,000 and increased legal fees of
approximately  $110,000  resulting  from the  defense  of our  patent  law suit.
Research  and  development  expenses,  which  consist  primarily of salaries and
related costs for the development of our products, increased 12.4% from $258,147
for the three  months ended June 30, 2000 to $290,043 for the three months ended
June 30, 2001. This increase is primarily  attributable to increases in salaries
and related expenses in hiring  additional  programmers  totaling  approximately
$26,000.  We believe that we will require additional  investments in development
and operating  infrastructure.  Therefore, we expect that expenses will continue
to increase  for the  foreseeable  future as we may  increase  expenditures  for
advertising,  brand promotion,  public relations and other marketing activities.
We expect that we will incur additional general and  administrative  expenses as
we continue to hire personnel and incur  incremental costs related to the growth
of the  business.  Research and  development  expenses  will also increase as we
complete and  introduce  additional  products  based upon our patented  ID-Check
technology.

      Interest  expense  totaled $2,981 for the three months ended June 30, 2000
compared to $3,002 for the three months  ended June 30, 2001 did not  materially
change.

      Interest income decreased from $75,739 for the three months ended June 30,
2000 to $40,695 for the three months ended June 30, 2001, which is a result of a
decrease in our cash and cash  equivalents  available for  investment  and lower
interest rates in effect during this period.

      We have incurred net losses to date; therefore we have paid nominal income
taxes.

      As a result  of the  factors  noted  above,  our net loss  increased  from
$709,641  for the three  months  ended June 30, 2000 to  $882,693  for the three
months ended June 30, 2001.

      (c) Liquidity and Capital Resources

      Prior to our IPO, which became effective on November 18, 1999, we financed
our operations  primarily  through several private  placements of stock and debt
financings. We used the net proceeds of these financings for the primary purpose
of funding working capital and general  corporate  purposes and for the purchase
of hardware terminals.  As a result of our IPO and the underwriters  exercise of
their  over  allotment  option,  we  received  approximately  $6,907,000  in net
proceeds after deducting underwriters commissions and offering expenses.  During
2000 and the  first  quarter  of 2001,  we  received  $3,426,374  and  $373,875,
respectively,  from the  issuance of common  stock from the exercise of warrants
and stock options.  We funded the purchase of hardware  terminals for resale and
working  capital  primarily from these  proceeds.  We will continue to use these
proceeds to fund working capital until we reach profitability.

      Cash used in operating  activities  for the six months ended June 30, 2001
of $1,441,745 was primarily  attributable  to the net loss of $1,761,568,  and a
net decrease in deferred  revenues of $186,189,  which was primarily


                                                                               7
<PAGE>

offset by a decrease of inventory of $108,145,  an increase in accounts  payable
and accrued expenses of $109,970,  and a net decrease in other current assets of
$276,253  primarily  consisting of the related deferred costs of revenues.  Cash
used  in  operating  activities  for the  six  months  ended  June  30,  2000 of
$1,786,902  resulted  primarily from the net loss of $1,372,644,  an increase in
deposits on hardware  purchases of $172,100  and a decrease in accounts  payable
and accrued expenses of $220,415.  Cash used in investing activities was $20,795
for the six months ended June 30, 2001 and $30,940 for the six months ended June
30, 2000.  Net cash used in  investing  activities  for both  periods  consisted
primarily of capital  expenditures  for computer  equipment  and  furniture  and
fixtures.  Cash provided by financing activities was $376,786 for the six months
ended June 30, 2001 and was  primarily  related to the  exercise of  outstanding
warrants and stock  options.  Cash provided by financing  activities was $73,922
for the six months ended June 30, 2000 and was primarily related to the exercise
of outstanding warrants.

      As of June 30, 2001,  there were warrants  outstanding to purchase 363,350
shares of our  common  stock at an  exercise  price of $3.00,  except for 10,000
underwriter's  warrants  that  carry an  exercise  price of  $8.40.  If  certain
conditions  occur, we have the right to redeem the  outstanding  warrants on not
less  than  20 days  written  notice  for  $0.01  per  warrant,  except  for the
Underwriter's  warrants.  319,600 of these warrants expire on September 30, 2001
and the balance of the warrants  expire on various dates up to November 2004. As
of August 10, 2001, the conditions for redeeming the warrants have been met.

      In March 2001, we declared a dividend distribution of one non-transferable
right to purchase one share of our common stock for every 10 outstanding  shares
of common stock  continuously held from the record date to the exercise date, as
well as common stock  underlying  vested  stock  options and  warrants,  held of
record on March 30, 2001, at an exercise price of $8.50.  The rights entitle the
holders to acquire  up to  approximately  970,076  shares of common  stock.  The
rights  will  expire  one  year  after  the  date of an  effective  registration
statement  relating to the shares of common  stock  underlying  the  rights.  If
certain conditions occur, we have the right to redeem the outstanding rights for
$.01 per right.

      In March  2001,  the Board of  Directors  authorized,  subject  to certain
business and market  conditions,  the purchase of up to $1,000,000 of our common
stock. As of August 10, 2001, we purchased 10,000 shares totaling $53,000.

      We currently anticipate that our available cash resources from the IPO and
expected  revenues from the sale of the units in inventory  combined with either
the  exercise of  outstanding  warrants  before  expiration  or the  exercise of
outstanding  warrants  should we be able to redeem them,  will be  sufficient to
meet our anticipated working capital and capital expenditure requirements for at
least the next twelve  months.  These  requirements  are expected to include the
purchase of the balance of the 7,000  terminals  to run our  patented  software,
product development, sales and marketing, working capital requirements and other
general corporate purposes.  We may need to raise additional funds,  however, to
respond to business  contingencies which may include the need to fund more rapid
expansion,  fund additional marketing expenditures,  develop new markets for our
ID-Check   technology,   enhance  our  operating   infrastructure,   respond  to
competitive  pressures,   or  acquire  complementary   businesses  or  necessary
technologies.

      (d) Net Operating Loss Carry forwards

      As of  June  30,  2001,  we had a net  operating  loss  carry  forward  of
approximately $8,300,000, which expires beginning in the year 2013. The issuance
of equity securities in the future,  together with our recent financings and our
IPO,  could result in an ownership  change and,  thus could limit our use of our
prior net operating losses. If we achieve profitable operations, any significant
limitation on the utilization of our net operating  losses would have the effect
of  increasing  our tax  liability  and reducing net income and  available  cash
reserves.  We are unable to determine the  availability  of these  net-operating
losses since this availability is dependent upon profitable operations, which we
have not achieved in prior periods.

      The foregoing contains certain forward-looking statements. Due to the fact
that the Company could face intense  competition in a business  characterized by
rapidly changing  technology and high capital  requirements,  actual results and
outcomes may differ materially from any such forward looking  statements and, in
general are difficult to forecast.


                                                                               8
<PAGE>

Part II Other Information

Item 6. Exhibits and Reports on Form 8-K

      None

                                   Signatures

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to he  signed  on its  behalf by the
undersigned thereunto duly authorized.

Date - August 10, 2001

                                             Intelli-Check, Inc.
                                             (Registrant)

                                             By: /s/ Frank Mandelbaum
                                             -----------------------------------
                                             Frank Mandelbaum
                                             Chairman/CEO

                                             By: /s/ Edwin Winiarz
                                             -----------------------------------
                                             Edwin Winiarz
                                             Senior Executive Vice President/CFO
                                             Principal Accounting Officer



