<SUBMISSION>
<ACCESSION-NUMBER>0000891092-02-000667
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20020331
<FILING-DATE>20020514
<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>02646646
</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>e13439_10q.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 March 31, 2002

                                       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 March 31, 2002
           -----                                   -----------------------------

Common Stock, $.001 par value                                8,578,788


<PAGE>

                               Intelli-Check, Inc.

                                      Index

Part I                       Financial Information
                                                                            Page

         Item 1.  Financial Statements

                    Balance Sheets - March 31, 2002 (Unaudited)
                    and December 31, 2001                                  1

                    Statements of Operations for the three months ended
                    March 31, 2002 (Unaudited) and March 31, 2001
                    (Unaudited)                                            2

                    Statements of Cash Flows for the three months ended
                    March 31, 2002 (Unaudited) and March 31, 2001
                    (Unaudited)                                            3

                    Notes to Financial Statements                          4 - 5

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                      6 - 9

         Item 3.  Quantitative and Qualitative Disclosures About
                  Market Risk                                              9

Part II                    Other Information

         Item 1.  Legal Matters                                            9

         Item 6.  Exhibits and Reports on Form 8-K                         9

                    Signatures                                             10


<PAGE>

                               Intelli-Check, Inc.

                                 Balance Sheets

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                March 31,            December 31,
                                                                                  2002                   2001
                                                                              (Unaudited)
<S>                                                                          <C>                     <C>
CURRENT ASSETS:
   Cash and cash equivalents                                                 $  4,322,733            $  4,061,235
   Accounts receivable                                                            172,908                  25,536
   Inventory                                                                    2,105,417               2,168,688
  Other current assets                                                            437,348                 370,880
                                                                             ------------            ------------
                  Total current assets                                          7,038,406               6,626,339

CERTIFICATE OF DEPOSIT                                                            270,216                 268,494

PROPERTY AND EQUIPMENT, net                                                       450,331                 466,576

ACQUIRED SOFTWARE, net                                                            390,973                 426,806

GOODWILL                                                                          181,447                 181,447

PATENT COSTS, net                                                                 282,123                 289,425

OTHER INTANGIBLES, net                                                            143,923                 164,132
                                                                             ------------            ------------
                  Total assets                                               $  8,757,419            $  8,423,219
                                                                             ============            ============

                                             LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                          $    581,948            $    254,171
   Accrued expenses                                                               729,553                 842,501
   Deferred revenue                                                               326,370                 200,953
   Current portion of capital lease obligations                                    24,788                  25,421
                                                                             ------------            ------------
                  Total current liabilities                                     1,662,659               1,323,046
                                                                             ------------            ------------

CAPITAL LEASE OBLIGATIONS                                                          14,491                  17,317
                                                                             ------------            ------------

OTHER LIABILITIES                                                                  58,505                  53,324
                                                                             ------------            ------------

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; 8,578,788 and 8,470,762 shares issued and
   outstanding, respectively                                                        8,578                   8,470
   Additional paid-in capital                                                  21,499,666              19,331,004
   Deferred compensation                                                         (941,237)               (189,000)
   Accumulated deficit                                                        (13,545,243)            (12,120,942)
                                                                             ------------            ------------
                  Total stockholders' equity                                    7,021,764               7,029,532
                                                                             ------------            ------------
                  Total liabilities and stockholders' equity                 $  8,757,419            $  8,423,219
                                                                             ============            ============
</TABLE>

See accompanying notes to financial statements


                                                                               1
<PAGE>

                               Intelli-Check, Inc.

                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        Three months ended       Three months ended
                                                                          March 31, 2002            March 31, 2001
<S>                                                                         <C>                      <C>
REVENUE                                                                     $   254,398              $   204,635

COST OF REVENUE                                                                 130,384                  117,795
                                                                            -----------              -----------
                  Gross profit                                                  124,014                   86,840
                                                                            -----------              -----------

OPERATING EXPENSES:
    Selling                                                                     423,419                  210,200
    General and administrative                                                1,155,353                  481,876
    Research and development                                                    317,187                  325,166
                                                                            -----------              -----------
                  Total operating expenses                                    1,895,959                 1,017,242
                                                                            -----------              -----------

                  Loss from operations                                       (1,771,945)                (930,402)
                                                                            -----------              -----------

OTHER INCOME (EXPENSES):
    Interest income                                                              17,330                   55,087
    Interest expense                                                             (1,494)                  (3,560)
    Other income (note 3)                                                       331,808                       --
                                                                            -----------              -----------
                                                                                347,644                   51,527
                                                                            -----------              -----------

                  Net loss                                                  $(1,424,301)             $  (878,875)
                                                                            ===========              ===========

PER SHARE INFORMATION:
    Net loss per common share-
Net loss                                                                    $(1,424,301)             $  (878,875)
Dividend on warrant modification                                                     --                  (85,000)
                                                                            -----------              -----------

Net loss attributable to common shareholders                                $(1,424,301)             $  (963,875)
                                                                            ===========              ===========

        Basic and diluted                                                        ($0.17)                  ($0.12)
                                                                                 ======                   ======

    Common shares used in computing per share amounts-
              Basic and diluted                                               8,530,807                7,770,707
                                                                            ===========              ===========
</TABLE>

See accompanying notes to financial statements


                                                                               2
<PAGE>

                               Intelli-Check, Inc.

                            Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                             Three months ended     Three months ended
                                                                               March 31, 2002         March 31, 2001
<S>                                                                             <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                    $(1,424,301)           $  (878,875)
Adjustments to reconcile net loss to net cash used in
    operating activities:
          Depreciation and amortization                                              98,489                 28,207
          Amortization of deferred compensation                                     580,763
          Changes in assets and liabilities-
          (Increase) in certificate of deposit, restricted                           (1,722)                (8,709)
          (Increase) in accounts receivable                                        (147,372)                   (95)
          Decrease (Increase) in inventory                                           63,271                 (6,343)
          (Increase) Decrease in other current assets                               (66,468)               196,890
          Increase in accounts payable and accrued expenses                         214,828                 43,403
          Increase (Decrease) in deferred revenue                                   125,417               (133,617)
          Increase in other liabilities                                               5,181                     --
                                                                                -----------            -----------
                           Net cash used in operating activities                   (551,914)              (759,139)
                                                                                -----------            -----------

CASH FLOWS FROM INVESTING ACTITIVIES:
    Purchases of property and equipment                                             (18,899)               (15,514)
                                                                                -----------            -----------

                           Net cash used in investing activities                    (18,899)               (15,514)
                                                                                -----------            -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from issuance of common stock                                      835,770                373,875
    Repayment of capital lease obligation                                            (3,459)               (11,864)
                                                                                -----------            -----------
Net cash provided by financing activities                                           832,311                362,011
                                                                                -----------            -----------

                           Net increase (decrease) in cash                          261,498               (412,642)

CASH AND CASH EQUIVALENTS, beginning of period                                    4,061,235              4,091,689
                                                                                -----------            -----------

CASH AND CASH EQUIVALENTS, end of period                                        $ 4,322,733            $ 3,679,047
                                                                                ===========            ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
      Cash paid during the period for interest                                  $     1,494            $     3,560
                                                                                ===========            ===========
</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  2001 Annual Report on
Form 10-K 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.

Recently Issued Accounting Standards

In July 2001,  the  Financial  Accounting  Standard  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 Company has
adopted SFAS 142 effective January 1, 2002. Pursuant to the adoption the Company
has  evaluated  its  goodwill to  identify  additional  separately  identifiable
intangibles;  no adjustment was warranted.  Intangible assets that will continue
to be classified  as goodwill will no longer be amortized.  This resulted in the
exclusion of approximately  $2,500 in amortization expense for the quarter ended
March  31,  2002.  In  accordance  with SFAS 142,  purchased  goodwill,  will be
evaluated  periodically  for  impairment.  Based on the results of the Company's
transitional  impairment  testing,  there  has been no  material  impact  on the
Company's  results of  operations  and its  financial  condition  related to its
purchased goodwill.

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.  The Company has adopted SFAS 144 effective  January 1,
2002,  which  did not  have an  effect  on its  results  of  operations  and its
financial condition.

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  summarized the equivalent  number of common shares assuming
the related  securities that were  outstanding as of March 31, 2002 and 2001 had
been converted.

                                                           2002           2001
                                                           ----           ----

Stock options                                            1,744,294     1,132,250
Warrants                                                    17,500       363,350
                                                         ---------     ---------
         Total dilutive securities assuming the
         Company was in an income position               1,761,794     1,495,600
                                                         =========     =========

Note 3. Distributor Agreement Termination

Effective  January 30,  2002,  the  Company  mutually  agreed  with  Sensormatic
Electronics  Corporation  not to  renew  its  non-exclusive  Master  Distributor
agreement  which  was due to  expire on March 31,  2002.  The  Company  received
$412,000 and additionally  Sensormatic agreed to return to the Company all units
previously  purchased  and  unsold  in  their  inventory  as  settlement  of its
obligations  under the agreement.  The Company  recognized  $331,808 recorded in
other  income,  net of  refurbishment  costs during the quarter  ended March 31,
2002.

Note 4. Supplier Agreement

During 2001, the Company agreed to provide the manufacturer of its ID Check unit
with  advance  deposits   totaling  $600,000  towards  the  fulfillment  of  its
obligation on its purchase order. The Company  satisfied its obligation and paid
the remaining payment of $400,000 on April 1, 2002.

Note 5. Compensation Agreements

On  February 1, 2002,  the  Company  entered  into a new  three-year  employment
contract with its Chairman and Chief Executive  Officer,  the agreement provides
for an annual base salary of  $250,000.  In  addition,  the Company  granted the
Chairman and Chief  Executive  Officer an option to purchase  350,000  shares of
common  stock  exercisable  at $12.10  per share of which  125,000  options  are
immediately  exercisable  and 225,000  options  become  exercisable at a rate of
75,000 per year on December 31, 2002, 2003 and 2004.

During the period ended March 31, 2002, the Company  granted options to purchase
135,000 shares of common stock at $12.10 per share to consultants  under various
agreements.  The fair market  value of each option was  estimated on the date of
grant  using  the  Black-Scholes  option  pricing  model.  Accordingly,  we have
recorded  $1,333,000  as deferred  compensation  for these  services  during the
period  ended  March 31,  2002 of which  $487,000  was  recognized  in the first
quarter of 2002 for the above options.

Note 6.  Investment Banking Relationship

Effective  March 28,  2002,  the Company  entered  into an  agreement  with KPMG
Corporate  Finance LLC to act as an exclusive  financial advisor to the Company.
The fee for such services was $100,000 of which $50,000 was paid as of March 31,
2002. This amount will be expensed in the second quarter of 2002 as services are
rendered.  Should KPMG secure funding from a private  placement of the Company's
securities,  the  Company  will  also pay 3.5% of  proceeds  received  from such
funding.  Additionally,  other fees are  required  to be paid as a result of any
acquisition by the Company and merger of or sale of the Company.

Note 7. Legal Matter

On May 3, 2002,  the Company  settled the lawsuit  initiated by its former Chief
Technology  Officer in October  2001.  All claims and  counter  claims have been
settled by mutual  agreement on non-monetary  terms and a stipulation to dismiss
with prejudice has been submitted to the Court.


                                                                               5
<PAGE>

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 and through the quarter ended
March 31, 2002,  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  have been
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.  We have also begun to
market to various  government and state  agencies,  which have long sales cycles
including extended test periods.  Since inception,  we have incurred significant
losses and negative  cash flow from  operating  activities,  and as of March 31,
2002  we had an  accumulated  deficit  of  approximately  $13,000,000.  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
exercise of warrants, options and rights. 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  unique  ability to verify the  validity of military  ID's,
driver licenses and state issued ID cards,  that contain magnetic stripes or bar
codes that conform to  AAMVA/ANSI/ISO  standards,  enables the Company to target
three distinct  markets.  The original target market was focused on resellers of
aged-restricted products, such as alcohol and tobacco, whereby the proliferation
of  high-tech  fake  Ids  exposed  merchants  to  fines  and  penalties  for the
inadvertent sale of these products to underage purchasers. "Identity Theft", the
fastest  growing  crime in America  has  additionally  exposed  industry to huge
economic  losses  through  various frauds that utilize fake Ids to support these
transactions, which the Company's technology can help prevent. The tragic events
that  occurred on  September  11, 2001 has created  increased  awareness  of the
Company's  technology in security  applications  involving access control.  As a
result of its  applicability in these markets,  the Company has already sold its
products  to some of the  largest  companies  in the  gaming  industry,  a large
petroleum  Company,  a large tobacco Company,  a State Port Authority,  military
establishments and high profile buildings. Some of these sales were made as part
of a test of the Company's technology. Additionally, the Company has placed test
units in some of the largest  military  bases,  two commercial  airports,  State
Motor Vehicle Bureaus,  a major railroad and a major grocery chain. In addition,
our  ID-Check  unit has  played 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.

      During 2001,  the Company  developed  additional  software  products  that
utilize its patented software technology.  C-Link(R) runs on a personal computer
and was created to work in conjunction with the ID-Check unit that allows a user
to instantly  view the encoded data for further  verification,  analyze data and
generate  various reports where permitted by law. The Company also has developed
software  containing  its  patented  technology  that can be  integrated  onto a
Windows  platform  that will  enable a user of the  software  to perform all the
functions  of the  ID-Check  terminal.  To date,  the  Company  has  executed  2
licensing  agreements and is in discussions with additional companies to license
our software to be utilized within other existing systems.

      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


                                                                               6
<PAGE>

results  and  outcomes  may  differ  materially  from any such  forward  looking
statements and, in general are difficult to forecast.

      (b) Results of Operations

      Comparison  of the three  months  ended March 31, 2002 to the three months
ended March 31, 2001.

      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.

      Revenues  increased  by $49,763  from  $204,638 for the three months ended
March 31, 2001 to $254,398  recorded  for the three months ended March 31, 2002.
Revenues  for the  period  ended  March 31,  2002  consisted  of  revenues  from
distributors  of  $131,942  and  revenues  from  direct  sales to  customers  of
$122,456. Sales of $393,952 and $89,302 for the periods ended March 31, 2002 and
2001,  respectively,  were  minimal due to the recent  refocus of our  marketing
efforts  towards the larger retail market,  in which the sales cycle requires an
extended  time  frame  involving  multiple  meetings,  presentations  and a test
period.  In addition,  during 2001 and  continuing in 2002,  the sales cycle has
been  further  extended  by the  rapid  slowing  of the  economy,  resulting  in
decisions for capital  expenditures being delayed.  We have also begun to market
to various government and state agencies, which have long sales cycles including
extended test periods.

      Operating expenses,  which consist of selling,  general and administrative
and research and  development  expenses,  increased 87% from  $1,017,242 for the
three months ended March 31, 2001 to $1,895,959 for the three months ended March
31, 2002.  Selling  expenses,  which  consist  primarily of salaries and related
costs for  marketing,  increased  101% from  $210,200 for the three months ended
March 31, 2001 to $423,419 for the three  months ended March 31, 2002  primarily
due to increases in salaries and related  expenses from hiring  additional sales
personnel  totaling  approximately  $38,000  and  increased  travel  expenses of
approximately $34,000 and hiring professional consultants to promote our product
totaling approximately $158,000 partially offset by decreases in advertising and
marketing expenses totaling  approximately  $36,000.  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  140% from  $481,876 for the three
months ended March 31, 2001 to  $1,155,353  for the three months ended March 31,
2002,  primarily  as a result of an  increase in rent  expense of  approximately
$10,000,  increased fees for investment  relations  consultants of approximately
$546,000 relating to the recognized non-cash expense of the granting of options,
increases in depreciation  and amortization  expenses of  approximately  $70,000
from additional  purchases of equipment and acquired  intangible assets from the
acquisition of IDentiScan  and increased  legal fees of  approximately  $20,000.
Research  and  development  expenses,  which  consist  primarily of salaries and
related  costs for the  development  and  testing of our  products,  amounted to
$325,166  for the three  months  ended March 31, 2001 and $317,187 for the three
months ended March 31, 2002, which has not materially  changed.  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 $3,560 for the three months ended March
31,  2001 to $1,494 for the three  months  ended  March 31, 2002 as we have paid
down certain capital leases which had higher interest rates than those currently
prevailing.


                                                                               7
<PAGE>

      Interest  income  decreased  from $55,087 for the three months ended March
31, 2001 to $17,330 for the three months ended March 31, 2002, 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 taxes.

      As a result  of the  factors  noted  above,  our net loss  increased  from
$878,875 for the three months ended March 31, 2001 to  $1,424,301  for the three
months ended March 31, 2002.

      (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 2001, we received $6,657,548 from the issuance of common stock from the
exercise  of  warrants,  rights 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 three  months ended March 31,
2002 of  $551,914  resulted  primarily  from the net loss of  $1,424,301  and an
increase in accounts  receivable of $147,372,  which was primarily  offset by an
increase in amortization of deferred  compensation of $580,763 from the granting
of stock  options to  consultants,  an increase in accounts  payable and accrued
expenses of $214,828 and an increase in deferred revenues of $125,417. Cash used
in  operating  activities  for the three months ended March 31, 2001 of $759,139
was  primarily  attributable  to the net loss of $878,875  and a net decrease in
deferred  revenues of $133,617,  which was primarily offset by a net increase in
other current assets of $196,890  primarily  consisting of the related  deferred
costs of revenues.  Cash used in investing  activities was $18,899 for the three
months  ended March 31, 2002 and  $15,514 for the three  months  ended March 31,
2001. 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 $832,311 for the three months ended March
31,  2002 and  $362,011  for the three  months  ended  March 31,  2001.  and was
primarily  related to the exercise of  outstanding  rights and stock options for
the period ended March 31, 2002 and for the period ended March 31, 2001 was from
the exercise of warrants and stock options.

      As of March 31, 2002,  there were warrants  outstanding  to purchase 7,500
shares  of  our  common  stock  at an  exercise  price  of  $3.00,  plus  10,000
underwriter's  warrants  that carry an  exercise  price of $8.40.  As of May 10,
2002, 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.

      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. As of December 31, 2001, 180,198 of these rights were exercised
and the Company received $1,531,683 before expenses. In addition, 106,845 rights
were also  exercised  through May 1, 2002 and the Company  received  proceeds of
$908,182.

      In March  2001,  the Board of  Directors  authorized,  subject  to certain
business  and market  conditions,  the purchase of up to  $1,000,000  of the our
common  stock.  As of March  31,  2002,  we  purchased  10,000  shares  totaling
approximately $53,000 and subsequently retired these shares. We do not expect to
purchase additional shares unless certain conditions warrant it.


                                                                               8
<PAGE>

      We currently  anticipate  that our available  cash resources from expected
revenues  from the sale of the  units in  inventory  combined  with  either  the
exercise  of  expiring  rights  by our  shareholders  before  expiration  or the
exercise of rights by our shareholders should we 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  additional  inventory  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.

Below is a table, which presents our contractual  obligations and commitments at
March 31, 2002:

                             Payments Due by Period

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
  Contractual Obligations            Total        Less than     1-3 years    4-5 years  After 5 years
                                                  One Year
-----------------------------------------------------------------------------------------------------
<S>                                 <C>          <C>          <C>          <C>           <C>
Capital Lease Obligations           $   39,279   $   24,788   $   14,491           --           --
-----------------------------------------------------------------------------------------------------
Operating Leases                     2,325,418      249,812      749,614      519,963      806,029
-----------------------------------------------------------------------------------------------------
Purchase commitments (1)               400,000      400,000           --           --           --
-----------------------------------------------------------------------------------------------------
Employment contracts                 1,344,167      574,583      769,584           --           --
                                    ----------   ----------   ----------   ----------   ----------
-----------------------------------------------------------------------------------------------------
Total Contractual Cash Obligation   $4,108,864   $1,249,183   $1,533,689   $  519,963   $  806,029
-----------------------------------------------------------------------------------------------------
</TABLE>

      (1)   The Company paid this amount on April 1, 2002.

      (d) Net Operating Loss Carry forwards

      As of March  31,  2002,  we had a net  operating  loss  carry  forward  of
approximately  $12,500,000,  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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      None

Part II Other Information

Item 1. Legal Matters

      On May 3, 2002,  the Company  settled the lawsuit  initiated by its former
Chief  Technology  Officer in October 2001.  All claims and counter  claims have
been settled by mutual  agreement on  non-monetary  terms and a  stipulation  to
dismiss with prejudice has been submitted to the Court.

Item 6. Exhibits and Reports on Form 8-K

      None


                                                                               9
<PAGE>

                                   Signatures

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

Date - May 10, 2002
                                                Intelli-Check, Inc.

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

                                                By: /s/ Edwin Winiarz
                                                    ----------------------------
                                                Edwin Winiarz
                                                Senior Executive Vice President,
                                                Treasurer/CFO

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