<SUBMISSION>
<ACCESSION-NUMBER>0000891092-01-500922
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20010930
<FILING-DATE>20011113
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>INTELLI CHECK INC
<CIK>0001040896
<ASSIGNED-SIC>7372
<IRS-NUMBER>113234779
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-15465
<FILM-NUMBER>1784639
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>775 PARK AVE
<CITY>HUNTINGTON
<STATE>NY
<ZIP>11743
<PHONE>5164212011
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>775 PARK AVENUE
<STREET2>SUITE 340
<CITY>HUNTINGTON
<STATE>NY
<ZIP>11743
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>file001.txt
<DESCRIPTION>FORM 10-Q
<TEXT>

                       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 September 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 November 09, 2001
             -----                              --------------------------------
Common Stock,  $.001 par value                             8,176,775

<PAGE>

                               Intelli-Check, Inc.

                                      Index

Part I                        Financial Information                         Page
                                                                            ----

      Item 1. Financial Statements

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

                Statements of Operations for the three and nine months
                ended September 30, 2001 (Unaudited) and
                September 30, 2000 (Unaudited)                               2

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

                Notes to Financial Statements                               4-6

      Item 2. Management's Discussion and Analysis of Financial
              Condition and Results of Operations                           6-10


Part II                       Other Information

      Item 1. Legal Proceedings                                              10

      Item 4. Submission of Matters to a Vote of Security Holders          10-11

      Item 6. Exhibits and Reports on Form 8                                 11

              Signatures                                                     11

<PAGE>

                               Intelli-Check, Inc.

                                 Balance Sheets

                                     ASSETS
                                                   September 30,   December 31,
                                                       2001            2000
                                                   -------------   ------------
                                                    (Unaudited)

CURRENT ASSETS:
    Cash and cash equivalents                      $  2,251,467    $  4,091,689
    Accounts receivable                                  91,879          44,795
    Inventory                                         2,340,226       2,536,338
    Deposits                                            200,000            --
    Other current assets                                142,548         511,638
                                                   ------------    ------------
      Total current assets                            5,026,120       7,184,460

CERTIFICATE OF DEPOSIT                                  266,456         250,000

PROPERTY AND EQUIPMENT, net                             403,730         438,021

PATENT COSTS, net                                        62,769          67,426
                                                   ------------    ------------
      Total assets                                 $  5,759,075    $  7,939,907
                                                   ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable                               $    217,451    $    180,792
    Accrued expenses                                    700,434         489,229
    Current portion of deferred revenue                 195,417         545,334
    Current portion of capital lease obligations         31,232          48,767
                                                   ------------    ------------
      Total current liabilities                       1,144,534       1,264,122
                                                   ------------    ------------

CAPITAL LEASE OBLIGATIONS                                22,974          42,738

DEFFERRED REVENUE                                        49,690            --
                                                   ------------    ------------
      Total liabilities                               1,217,198       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; 7,928,306 and 7,696,236
  shares issued and outstanding, respectively;
  10,000 shares held in the treasury                      7,928           7,696
  Additional paid-in capital                         15,311,647      13,561,362
  Accumulated deficit                               (10,777,698)     (6,936,011)
                                                   ------------    ------------
      Total stockholders' equity                      4,541,877       6,633,047
                                                   ------------    ------------
      Total liabilities and stockholders' equity   $  5,759,075    $  7,939,907
                                                   ============    ============

See accompanying notes to financial statements


                                                                               1
<PAGE>

                               Intelli-Check, Inc.

                            Statements of Operations
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                  Three Months Ended                      Nine Months Ended
                                                           Sept. 30, 2001      Sept.30, 2000      Sept. 30, 2001      Sept. 30, 2000
                                                           --------------      -------------      --------------      --------------
<S>                                                         <C>                 <C>                 <C>                 <C>
REVENUE                                                     $   280,266         $   109,676         $   755,113         $   156,996
COST OF REVENUE                                                 154,437              63,452             413,696              86,967
                                                            -----------         -----------         -----------         -----------
    Gross profit                                                125,829              46,224             341,417              70,029
                                                            -----------         -----------         -----------         -----------

OPERATING EXPENSES
  Selling                                                       156,707             158,176             531,560             379,941
  General and administrative                                    617,698             403,231           1,694,412           1,222,414
  Research and development                                      288,049             253,923             902,857             762,037
                                                            -----------         -----------         -----------         -----------
    Total operating expenses                                  1,062,454             815,330           3,128,829           2,364,392
                                                            -----------         -----------         -----------         -----------

      Loss from operations                                     (936,625)           (769,106)         (2,787,412)         (2,294,363)

OTHER INCOME (EXPENSES):
    Interest income                                              25,280              55,645             121,062             216,653
    Interest expense                                             (1,774)             (2,683)             (8,337)            (11,078)
                                                            -----------         -----------         -----------         -----------
                                                               (913,119)           (716,144)         (2,674,687)         (2,088,788)

INCOME TAX BENEFIT                                                   --                  --                  --                  --

      Net loss                                              $  (913,119)        $  (716,144)        $(2,674,687)        $(2,088,788)
                                                            ===========         ===========         ===========         ===========

PER SHARE INFORMATION:
  Net loss per common share -
Net loss                                                    $  (913,119)        $  (716,144)        $(2,674,687)        $(2,088,788)
Dividend on warrant modification                                (55,000)                 --            (140,000)                 --

Net loss attributable to common
  shareholders                                              $  (968,119)        $  (716,144)        $(2,814,687)        $(2,088,788)
                                                            ===========         ===========         ===========         ===========

  Basic and diluted                                         $      (.12)        $      (.11)        $      (.36)        $      (.32)

Common shares used
  in computing per share amounts -
  Basic and diluted                                           7,863,382           6,635,560           7,820,442           6,563,172
</TABLE>

See accompanying notes to financial statements


                                                                               2
<PAGE>

                               Intelli-Check, Inc.

                            Statements of Cash Flows
                                   (Unaudited)

                                          Nine months ended   Nine months ended
                                          September 30, 2001  September 30, 2000
                                          ------------------  ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                   $(2,674,687)        $(2,088,788)
  Adjustments to reconcile net loss
    to cash used in operating activities:
    Depreciation and amortization                 86,542              62,693
    Stock options issued for services                842                  --
    Changes in assets and liabilities-
    (Increase) in certificate of deposit         (16,456)                 --
    (Increase) in accounts receivable            (47,084)            (53,269)
    Decrease(Increase) in inventory              196,112          (1,712,276)
    Decrease (Increase) in other
      current assets                             369,090             (58,081)
    (Increase) in deposits                      (200,000)           (401,700)
    Increase in other assets                          --               8,766
    Increase in accounts payable and
      accrued expenses                           222,764             618,221
    (Decrease) Increase in
      deferred revenue                          (300,227)             18,121
                                             -----------         -----------
    Net cash used in operating
      activities                              (2,363,104)         (3,606,313)
                                             -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment              (47,594)            (76,156)
                                             -----------         -----------

    Net cash used in investing
      activities                                 (47,594)            (76,156)
                                             -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common
  stock                                          660,375             489,375
Purchase of treasury stock                       (52,600)                 --
Repayment of capital lease obligation            (37,299)            (27,587)
                                             -----------         -----------
    Net cash provided by financing
      activities                                 570,476             461,788
                                             -----------         -----------

    Net (decrease) in cash                    (1,840,222)         (3,220,681)

CASH AND CASH EQUIVALENTS, beginning
  of period                                    4,091,689           6,380,548
                                             -----------         -----------
CASH AND CASH EQUIVALENTS, end of
  period                                     $ 2,251,467         $ 3,159,867
                                             ===========         ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
  Cash paid during the period for
    interest                                 $     8,337         $    11,087
                                             ===========         ===========

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  earned 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.

In July 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial Accounting  Standards No. 141, Business  Combinations ("SFAS 141") and
No. 142,  Goodwill and Other Intangible  Assets ("SFAS 142").  SFAS 141 requires
all business  combinations  initiated  after June 30, 2001 to be  accounted  for
using the purchase method.  Under FAS 142,  goodwill and intangible  assets with
indefinite  lives are no longer  amortized  but are  reviewed  annually (or more
frequently if impairment indicators arise) for impairment.  Separable intangible
assets  that  are not  deemed  to have  indefinite  lives  will  continue  to be
amortized over their useful lives (but with no maximum life).  The  amortization
provisions of SFAS 142 apply to goodwill and  intangible  assets  acquired after
June 30, 2001. With respect to goodwill and intangible  assets acquired prior to
July 1, 2001,  the Company is required  to adopt SFAS 142  effective  January 1,
2002.  The  Company is  currently  evaluating  the effect  that  adoption of the
provisions  of SFAS 142 that are  effective  January  1,  2002  will have on its
results of operations and financial position.

In August 2001, the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  144,  Accounting  for the  Impairment  or
Disposal of Long-Lived Assets ("SFAS 144"). This statement  addresses  financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
SFAS 144 will be effective  for financial  statements of fiscal years  beginning
after  December  15,  2001.  We do not  anticipate  that it will have a material
impact on the Company's financial results.

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.


                                                                               4
<PAGE>

The following table  summarizes the equivalent  number of common shares assuming
the related  securities that were  outstanding as of September 30, 2001 and 2000
had been converted:

                                           2001             2000
                                           ----             ----
  Stock options                         1,584,269        1,466,750
  Warrants                                310,975          479,600
                                        ---------        ---------
  Total dilutive securities             1,913,244        1,946,350
                                        ---------        ---------

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 on October 4, 2002,  which is one year after the
effective  date of the  registration  statement  related to the shares of common
stock  underlying the rights.  As a result of certain  conditions being met, 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  offering.  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 using 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.  During the three months ended March 31,  2001,  the Company  recorded the
$85,000  difference  between the fair value of the warrants prior and subsequent
to this extension as a dividend. In September 2001, the Company further extended
the expiration of these warrants until October 31, 2001 and recorded the $55,000
difference  between the fair value of the warrants  prior and subsequent to this
extension as a dividend during the three months ended September 30, 2001.  These
dividends  were  calculated  using the  Black-Scholes  valuation  method and are
included in net loss attributable to common shareholders.

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 November 12, 2001, we purchased 10,000 shares totaling approximately $53,000.

Note 4. Letters 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 in  exchange  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.

In September  2001,  the Company signed a letter of intent to acquire all of the
assets of the  IDentiScan  Company,  a privately  held  company that designs and
sells age  verification  terminals in exchange for  $1,000,000  of the Company's
restricted  common stock,  plus additional  contingent  incentives over the next
three years. The letter of intent  originally due to expire October 31, 2001 was
extended to November 30, 2001.

Note 5. Employment agreements

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 the payment of salary and
incentives, ceased as of this date.

On September 7, 2001, the Company renewed the employment agreement of its Senior
Executive  Vice President and Chief  Financial  Officer.  The  agreement,  which
expires  December 31, 2004,  provides for a base salary of $135,000  with annual
increases of 5% per annum. In addition, the Company granted 75,000 stock options
at an exercise price of $8.04 vesting on September 7, 2006 with earlier  vesting
incentives.

On October 25,  2001,  the Company  renewed the  employment  agreement  with its
Senior  Executive  Vice  President of Sales under the same terms and  conditions
until October 24, 2003.


                                                                               5
<PAGE>

Note 6. Legal Matters

On October 18, 2001,  the Company was  informed  that an action was filed in the
United  State  District  Court of New Jersey on behalf of a  purported  class of
short-sellers of the securities of  Intelli-Check,  Inc. against the Company and
certain of its officers and directors and a former officer/director. As outlined
in a press release issued by the  plaintiff's  attorney,  the complaint  alleges
violations of Sections 10 (b) and 20 (a) of the  Securities  and Exchange Act of
1934 and Rule 10 (b)-5. The Company has not been served with the complaint.  The
Company believes that the allegations are without merit and it has complied with
all applicable securities laws.

On October  19,  2001,  a former  officer and  director  of the Company  filed a
lawsuit  against  the  Company  to force the  Company  to permit him to sell his
restricted shares. The complaint also seeks damages of $29,350 for miscellaneous
compensation  and punitive  damages of  $3,000,000.  The Company  considers this
former  officer an  "insider"  subject  to the rules  under  Section  144 of the
Securities and Exchange Act of 1934. The Company feels it is acting properly and
will defend  itself  vigorously.  In  addition,  the  Company  intends to file a
counter claim.

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 over 50 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.  During 2001,  sales were limited due to
the refocus of our marketing  efforts towards the larger customers in 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.  However,  after the tragic events that
occurred  on  September  11,  2001,  there has been a  significant  increase  in
awareness  and demand for our  technology to help improve  security  across many
industries,  including airlines,  rail transportation and high profile buildings
and  facilities.  Since  inception,  we have  incurred  significant  losses  and
negative cash flow from  operating  activities,  and as of September 30, 2001 we
had an accumulated  deficit of  approximately  $10,780,000.  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,  military  establishments,  high profile  buildings and has
placed test units in some of the largest  military  bases,  State Motor  Vehicle
Bureaus, a major railroad, a major grocery chain, a major hospital complex and a
large tobacco company. In addition,  our ID-Check unit will play a key role in a
program  organized by Mothers  Against Drunk Driving  (MADD) to deter the use of
fake ID's used for the purchase of alcoholic beverages.

      (b) Results of Operations


                                                                               6
<PAGE>

      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  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 nine months ended  September 30, 2001 to the nine months
ended September 30, 2000.

      Revenues  increased  $598,117 from  $156,996  recorded for the nine months
ended  September  30,  2000 to  $755,113  recorded  for the  nine  months  ended
September 30, 2001.  Revenues from  distributors  totaled  $659,318 and revenues
from direct customers  totaled $95,795.  Revenues for the period ended September
30, 2000 included initial sales of a limited number of ID-Check  terminals prior
to the  return of our  inventory  of these  terminals  to the  manufacturer  for
upgrading.  Sales for the period  ended  September  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, resulting in decisions for
capital  expenditures 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 32.3% from $2,364,392 for the
nine months ended  September  30, 2000 to  $3,128,829  for the nine months ended
September 30, 2001.  Selling  expenses,  which consist primarily of salaries and
related costs for marketing,  increased  40.0% from $379,941 for the nine months
ended  September  30, 2000 to $531,560 for the nine months ended  September  30,
2001  primarily  due to the hiring of a Director  of  Corporate  sales  totaling
approximately  $85,000 and increased travel expenses of  approximately  $50,000.
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 38.6% from
$1,222,414  for the nine months ended  September 30, 2000 to $1,694,412  for the
nine months ended  September  30, 2001,  primarily as a result of an increase in
rent  expense  of  approximately  $97,000 as we moved to a larger  facility  and
increased  professional  fees for  accounting  and public  relations  counsel of
approximately  $106,000  and  increased  legal fees of  approximately  $250,000,
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  18.5% from $762,037 for the nine months
ended  September  30, 2000 to $902,857 for the nine months ended  September  30,
2001.  This increase is primarily  attributable to net increases in salaries and
related expenses in hiring additional  programmers totaling $148,000. 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.
Should the Company successfully complete the acquisition of IDentiScan, expenses
would further increase.

      Interest  expense  decreased  from  $11,078  for  the  nine  months  ended
September 30, 2000 to $8,337 for the nine months ended  September 30, 2001 as we
have paid down certain capital leases which had higher interest rates than those
currently prevailing.

      Interest  income  decreased  from  $216,653  for  the  nine  months  ended
September  30, 2000 to $121,062  for the nine months ended  September  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.


                                                                               7
<PAGE>

      As a result  of the  factors  noted  above,  our net loss  increased  from
$2,088,788  for the nine months ended  September 30, 2000 to $2,674,687  for the
nine months ended September 30, 2001.

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

      Revenues  increased  $170,590 from $109,676  recorded for the three months
ended  September  30,  2000 to  $280,266  recorded  for the three  months  ended
September 30, 2001.  Revenues from  distributors  totaled  $243,014 and revenues
from direct customers  totaled $37,252.  Revenues for the period ended September
30, 2000 included limited sales from the initial release of our enhanced product
during the later part of this  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  30.3% from $815,330 for the
three months ended  September 30, 2000 to $1,062,454  for the three months ended
September 30, 2001.  Selling  expenses,  which consist primarily of salaries and
related costs for  marketing,  decreased 1.0% from $158,176 for the three months
ended  September  30, 2000 to $156,707 for the three months ended  September 30,
2001  primarily  due to the hiring of a Director  of  Corporate  sales  totaling
approximately  $29,000 and increased travel expenses of  approximately  $25,000,
offset by a decrease in advertising expenses of approximately  $67,000.  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 53.2% from
$403,231 for the three months ended September 30, 2000 to $617,698 for the three
months ended  September  30, 2001,  primarily as a result of an increase in rent
expense of approximately  $33,000 as we moved to a larger facility and increased
professional  fees for accounting and public relations  counsel of approximately
$57,000 and increased legal fees of  approximately  $108,000  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  13.4% from $253,923 for the three months ended  September 30, 2000 to
$288,049  for the three  months  ended  September  30,  2001.  This  increase is
primarily  attributable to increases in salaries and related  expenses in hiring
additional  programmers totaling  approximately $35,000. 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.  Should  the  Company
successfully  complete the  acquisition  of  IDentiScan,  expenses would further
increase.

      Interest  expense,  which  totaled  $2,683  for  the  three  months  ended
September 30, 2000  compared to $1,774 for the three months ended  September 30,
2001, did not materially change.

      Interest  income  decreased  from  $55,645  for  the  three  months  ended
September  30, 2000 to $25,280 for the three  months ended  September  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
$716,144 for the three months ended September 30, 2000 to $913,119 for the three
months ended September 30, 2001.

(c) Liquidity and Capital Resources


                                                                               8
<PAGE>

      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 three quarters of 2001, we received  $3,426,374 and $660,375,
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 nine months ended September 30,
2001 of $2,363,104 was primarily attributable to the net loss of $2,674,687,  an
increase in deposits of $200,000 for future  purchases  of  inventory  and a net
decrease  in deferred  revenues of  $300,227,  which was  primarily  offset by a
decrease of inventory of $196,112,  an increase in accounts  payable and accrued
expenses of  $222,764,  and a net decrease in other  current  assets of $369,090
primarily  consisting of the related  deferred  costs of revenues.  Cash used in
operating  activities for the nine months ended September 30, 2000 of $3,606,313
resulted  primarily from the net loss of $2,088,788,an  increase in inventory of
$1,712,276,  an increase in deposits on hardware purchases of $401,700 which was
partially  offset by an  increase in  accounts  payable and accrued  expenses of
$618,221.  This  increase in accounts  payable  and  accrued  expenses  resulted
primarily  from our  increased  inventory,  which was received at the end of the
quarter ended September 30, 2000. Cash used in investing  activities was $47,594
for the nine  months  ended  September  30, 2001 and $76,156 for the nine months
ended September 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 $570,476 for the nine
months ended  September  30, 2001 and was  primarily  related to the exercise of
outstanding  warrants and stock options.  Cash provided by financing  activities
was  $461,788  for the nine months ended  September  30, 2000 and was  primarily
related to the exercise of outstanding warrants and stock options.

      As of September  30, 2001,  there were  warrants  outstanding  to purchase
310,975  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.  As of November 12, 2001,  the conditions for redeeming
the warrants have been met. Of these warrants,  279,100 originally due to expire
on September  30, 2001 were extended to October 31, 2001.  During  October 2001,
189,100 warrants were exercised and the Company received  $567,300 as of October
31, 2001.  90,000 warrants  expired and the remaining  31,875 warrants expire on
various dates up to November 2004.

      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 on October 4, 2002,  which is one year after the  effective
date of the  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.  These  conditions have been met and
the  Company  has the right to redeem the rights at any time with 30 days notice
to the rights holders.

      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 November 12, 2001, we purchased 10,000 shares totaling $53,000.

      We currently  anticipate  that our available  cash resources from the IPO,
expected  revenues  from the sale of the units in inventory  and the exercise of
the warrants  combined  with either the exercise of  outstanding  rights  before
expiration  or the exercise of  outstanding  rights if we decide 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 2,850  terminals,  which would  complete
the initial  purchase  order of 7000  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


                                                                               9
<PAGE>

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 September  30, 2001,  we had a net  operating  loss carry forward of
approximately $9,200,000, 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.

Part II Other Information

      Item 1. Legal Proceedings

On October 18, 2001,  the Company was  informed  that an action was filed in the
United  State  District  Court of New Jersey on behalf of a  purported  class of
short-sellers of the securities of  Intelli-Check,  Inc. against the Company and
certain of its officers and directors and a former officer/director. As outlined
in a press release issued by the  plaintiff's  attorney,  the complaint  alleges
violations of Sections 10 (b) and 20 (a) of the  Securities  and Exchange Act of
1934 and Rule 10 (b)-5. The Company has not been served with the complaint.  The
Company believes that the allegations are without merit and it has complied with
all applicable securities laws.

On October  19,  2001,  a former  officer and  director  of the Company  filed a
lawsuit  against  the  Company  to force the  Company  to permit him to sell his
restricted shares. The complaint also seeks damages of $29,350 for miscellaneous
compensation  and punitive  damages of  $3,000,000.  The Company  considers this
former  officer an  "insider"  subject  to the rules  under  Section  144 of the
Securities and Exchange Act of 1934. The Company feels it is acting properly and
will defend  itself  vigorously.  In  addition,  the  Company  intends to file a
counter claim.

      Item 4. Submission of Matters to a Vote of Security Holders

The annual meeting of stockholders was held on July 11, 2001.

A proposal to elect two (2) directors to serve for a three-year term and one (1)
director  to serve for a two-year  term was  approved by the  stockholders.  The
nominees received the following votes:

             Name                                     Votes For    Votes Against
             ----                                     ---------    -------------
Frank Mandelbaum (three-year term)                    5,805,089       983,500
Charles McQuinn (three-year term)                     5,805,089       983,500
Howard Davis (two-year term)                          5,805,089       983,500

A proposal was introduced to approve the  Intelli-Check,  Inc. 2001 Stock Option
Plan,  which authorizes the issuance of options to purchase up to 500,000 of our
common shares. The proposal was approved with the following votes:

   For            Against           Abstain          Not Voted
   ---            -------           -------          ---------
4,650,717         40,974            18,400           2,078,498


                                                                              10
<PAGE>

In addition, stockholders ratified the appointment of Arthur Andersen LLP as the
independent  public  accountants for the Company for the year ended December 31,
2001. This proposal received the following votes:

   For            Against           Abstain
   ---            -------           -------
6,761,989         24,100             2,500

      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 - November 12, 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


                                                                              11


</TEXT>
</DOCUMENT>
</SUBMISSION>
