                                  UNITED STATES
                       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, 2005

                                       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 Identification No.)
 incorporation or organization)

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

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

Indicate by check mark whether  registrant (1) has filed all reports required to
be filed by  Section  13 or 15(d) of the  Securities  Exchange  Act  during  the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.                                          Yes  |X|     No   |_|

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).                Yes  |_|     No   |X|

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.                                      Yes   |_|    No   |_|

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

         Class                                      Outstanding at May 11, 2005
         -----                                      ---------------------------

Common Stock, $.001 par value                                10,754,240


<PAGE>

                               Intelli-Check, Inc.

                                      Index
<TABLE>
<CAPTION>
<S>                                                                                     <C>
Part I                              Financial Information                               Page
                                                                                        ----
         Item 1.  Financial Statements

                  Balance Sheets - March 31, 2005 (Unaudited)
                  and December 31, 2004                                                 1

                  Statements of Operations for the three months ended
                  March 31, 2005 and 2004 (Unaudited)                                   2

                  Statements of Cash Flows for the three months ended
                  March 31, 2005 and 2004 (Unaudited)                                   3

                  Statements of Stockholders' Equity for the three months ended
                  March 31, 2005 (Unaudited)                                            4

                  Notes to Financial Statements                                         5-9

         Item 2.  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                                 9-14

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk            14

         Item 4.  Controls and Procedures                                               14-15

Part II                    Other Information

         Item 1.  Legal Matters                                                         15

         Item 6.  Exhibits                                                              15

                  Signatures                                                            16

                  Exhibits

                  31.1     Rule 13a-14(a) Certification of Chief Executive Officer
                  31.2     Rule 13a-14(a) Certification of Chief Financial Officer
                  32.      18 U.S.C. Section 1350 Certifications
</TABLE>

<PAGE>

                               Intelli-Check, Inc.

                                 Balance Sheets

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                        March 31,        December 31,
                                                                                          2005               2004
                                                                                      ------------       ------------
                                                                                      (Unaudited)
<S>                                                                                   <C>                <C>
CURRENT ASSETS:
   Cash and cash equivalents                                                          $  1,540,367       $  1,750,485
   Marketable securities and short-term investments                                      1,968,061          2,708,796
   Accounts receivable, net                                                                261,408            454,112
   Inventory                                                                                89,299            211,163
   Other current assets                                                                    325,453            314,466
                                                                                      ------------       ------------
                    Total current assets                                                 4,184,588          5,439,022

PROPERTY AND EQUIPMENT, net                                                                120,591            132,905

PATENT COSTS, net                                                                           41,036             42,589



DEFERRED FINANCING COSTS                                                                   109,695                 --
                                                                                      ------------       ------------
                    Total assets                                                      $  4,455,910       $  5,614,516
                                                                                      ============       ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                                   $    842,707       $    759,218
   Accrued expenses                                                                        682,788            574,043

   Deferred revenue                                                                        502,150            476,387
                                                                                      ------------       ------------
                    Total current liabilities                                            2,027,645          1,809,648
                                                                                      ------------       ------------


OTHER LIABILITIES                                                                           97,266             97,266
                                                                                      ------------       ------------

                    Total liabilities                                                    2,124,911          1,906,914
                                                                                      ------------       ------------

SERIES A 8% CONVERTIBLE REDEEMABLE PREFERRED STOCK,
   Net of beneficial conversion feature, warrants issued and issuance costs -
   $.01 par value;  1,000,000 shares authorized;  0 and 30,000 shares issued
   and outstanding as of March 31, 2005 and December 31, 2004,
   respectively                                                                                 --          2,839,278
                                                                                      ------------       ------------

STOCKHOLDERS' EQUITY:
   Common stock - $.001 par value; 20,000,000 shares authorized;
   10,744,963 and 10,290,418 shares issued and outstanding, respectively                    10,745             10,290
   Deferred compensation                                                                  (181,913)          (126,469)
   Additional paid-in capital                                                           39,940,693         36,655,882
   Accumulated deficit                                                                 (37,438,526)       (35,671,379)
                                                                                      ------------       ------------
                    Total stockholders' equity                                           2,330,999            868,324
                                                                                      ------------       ------------
                    Total liabilities and stockholders' equity                        $  4,455,910       $  5,614,516
                                                                                      ============       ============
</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, 2005           March 31, 2004
                                                               ------------             ------------
<S>                                                            <C>                      <C>
REVENUE                                                        $    296,832             $    298,259
COST OF REVENUE                                                    (102,632)                (103,364)
                                                               ------------             ------------
       Gross profit                                                 194,200                  194,895
                                                               ------------             ------------

OPERATING EXPENSES
   Selling                                                          320,802                  303,863
   General and administrative                                     1,225,105                  675,043
   Research and development                                         233,930                  322,308
                                                               ------------             ------------
       Total operating expenses                                   1,779,837                1,301,214
                                                               ------------             ------------

       Loss from operations                                      (1,585,637)              (1,106,319)
                                                               ------------             ------------


   Interest income                                                   16,034                   30,854
                                                               ------------             ------------

       Net loss                                                  (1,569,603)              (1,075,465)

Accretion of convertible redeemable preferred stock costs          (160,722)                 (66,180)
Dividend on convertible redeemable preferred stock                  (36,822)                 (59,178)
                                                               ------------             ------------

Net loss attributable to common shareholders                   $ (1,767,147)            $ (1,200,823)
                                                               ============             ============

PER SHARE INFORMATION
       Net loss per common share -
       Basic and diluted                                       $      (0.17)            $      (0.12)
                                                               ============             ============

Weighted average common shares used in computing per
share amounts -
       Basic and diluted                                         10,467,186               10,153,158
                                                               ============             ============
</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, 2005           March 31, 2004
                                                                                -----------              -----------
<S>                                                                             <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                   $(1,569,603)             $(1,075,465)
Adjustments to reconcile net loss to net cash used in
   operating activities:
         Depreciation and amortization                                               16,580                   31,344
         Noncash stock based compensation expense                                   176,000                       --
         Amortization of deferred compensation                                       53,822                   23,553
   Changes in assets and liabilities-
         Decrease  in certificates of deposit, restricted                                --                1,098,465
         Decrease  in accounts receivable                                           192,704                   74,100
         Decrease (increase) in inventory                                           121,864                  (27,234)
         (Increase) decrease in other current assets                                (10,987)                  40,071
         Increase in accounts payable and accrued expenses                          252,727                   91,417
         Decrease in litigation settlement payable                                       --                 (921,700)
         Increase (decrease) in deferred revenue                                     25,763                  (26,409)
         Decrease in other liabilities                                                   --                   (5,248)
                                                                                -----------              -----------
               Net cash used in operating activities                               (741,130)                (697,106)
                                                                                -----------              -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Investment of marketable securities and short term investments                (300,000)                (590,379)
     Sales of marketable securities and short term investments                    1,040,735                       --
     Purchases of property and equipment                                             (2,713)                  (4,659)
                                                                                -----------              -----------

               Net cash provided by (used in) investing activities                  738,022                 (595,038)
                                                                                -----------              -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net proceeds from issuance of common stock                                          --                    1,280
     Payment of deferred financing costs                                           (109,695)                      --
     Payment of dividend to preferred stockholder                                   (97,315)                (119,671)
     Repayment of capital lease obligation                                               --                     (427)
     Purchase and retirement of common stock                                             --                  (50,303)
                                                                                -----------              -----------
          Net cash used in financing activities                                    (207,010)                (169,121)
                                                                                -----------              -----------

               Decrease in cash and cash equivalents                               (210,118)              (1,461,265)

CASH AND CASH EQUIVALENTS, beginning of period                                    1,750,485                3,306,991
                                                                                -----------              -----------

CASH AND CASH EQUIVALENTS, end of period                                        $ 1,540,367              $ 1,845,726
                                                                                ===========              ===========

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
    Conversion of convertible redeemable preferred stock
       into Common Stock                                                        $ 3,000,000              $        --
                                                                                ===========              ===========
    Accretion of convertible redeemable preferred stock cost                    $   160,722              $    66,180
                                                                                ===========              ===========
    Stock options issued for services rendered                                  $    84,774              $   542,648
                                                                                ===========              ===========
</TABLE>

See accompanying notes to financial statements


                                       3
<PAGE>

                               Intelli-Check, Inc.

                  Statement of Stockholders' Equity (Unaudited)
                    For the Three Months Ended March 31, 2005

<TABLE>
<CAPTION>
                                                Common Stock           Additional
                                                ------------            Paid-in        Deferred      Accumulated
                                           Shares         Amount        Capital      Compensation      Deficit          Total
                                        ------------   ------------   ------------   ------------    ------------    ------------
<S>                                       <C>          <C>            <C>            <C>             <C>             <C>
BALANCE, December 31, 2004                10,290,418   $     10,290   $ 36,655,882   $   (126,469)   $(35,671,379)   $    868,324

Conversion of Convertible Redeemable
Preferred Stock                              454,545            455      2,999,545             --              --       3,000,000
Extension of options                              --             --        176,000             --              --         176,000
Amortization of deferred compensation             --             --             --         53,822              --          53,822
Dividend on convertible redeemable
preferred stock                                   --             --             --             --         (36,822)        (36,822)
Recognition of deferred compensation              --             --         84,774        (84,774)             --              --
Accretion of convertible redeemable
preferred stock                                   --             --             --             --        (160,722)       (160,722)
Valuation adjustment of deferred
compensation                                      --             --         24,492        (24,492)             --              --

Net loss                                          --             --             --             --      (1,569,603)     (1,569,603)
                                        ------------   ------------   ------------   ------------    ------------    ------------

BALANCE, March 31, 2005                   10,744,963   $     10,745   $ 39,940,693   $   (181,913)   $(37,438,526)   $  2,330,999
                                        ============   ============   ============   ============    ============    ============
</TABLE>

See accompanying notes to financial statements


                                       4
<PAGE>

                               Intelli-Check, Inc.

                          Notes to Financial Statements

                                   (Unaudited)

Note 1.  Basis of Presentation and Significant Accounting Policies

Basis of Presentation

      The  accompanying  unaudited  financial  statements  have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly,  they do not include all of the information and notes required
by generally accepted accounting  principles for complete financial  statements.
In the  opinion  of  management,  the  unaudited  interim  financial  statements
furnished  herein include all adjustments  necessary for a fair  presentation of
the  Company's  financial  position  at March 31,  2005 and the  results  of its
operations  for the three  months  ended March 31, 2005 and 2004,  stockholders'
equity for the three  months  ended  March 31, 2005 and cash flows for the three
months ended March 31, 2005 and 2004. All such  adjustments  are of a normal and
recurring  nature.   Interim  financial  statements  are  prepared  on  a  basis
consistent with the Company's annual financial statements. Results of operations
for the three month period ending March 31, 2005 are not necessarily  indicative
of the operating  results that may be expected for the year ending  December 31,
2005.

      The  balance  sheet as of  December  31,  2004 has been  derived  from the
audited  financial  statements  at that  date but does  not  include  all of the
information and notes required by accounting  principles  generally  accepted in
the United States of America for complete financial statements.

      For  further  information,  refer to the  financial  statements  and notes
thereto  included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2004.

Liquidity

      The Company anticipates that its cash on hand,  marketable  securities and
cash  resources  from expected  revenues from the sale of the units in inventory
and the licensing of its technology  will be sufficient to meet its  anticipated
working  capital  and  capital  expenditure  requirements  for at least the next
twelve  months.  These  requirements  are  expected to include  the  purchase of
inventory,  product development,  sales and marketing expenses,  working capital
requirements and other general corporate purposes. The Company may need to raise
additional funds to respond to business contingencies which may include the need
to fund more rapid expansion,  fund additional marketing  expenditures,  develop
new markets for its ID-Check technology,  enhance its operating  infrastructure,
respond  to  competitive  pressures,  or  acquire  complementary  businesses  or
necessary technologies.

Recently Issued Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123 (revised 2004) ("123(R)"),  "Share-Based  Payment." SFAS No. 123(R)
will  provide  investors  and  other  users of  financial  statements  with more
complete and neutral  financial  information by requiring that the  compensation
cost  relating to share based  payment  transactions  be recognized in financial
statements.  That cost will be measured based on the fair value of the equity or
liability instruments issued. SFAS No. 123(R) covers a wide range of share-based
compensation  arrangements  including  share  options,  restricted  share plans,
performance-based  awards, share appreciation rights and employee share purchase
plans.  SFAS No.  123(R)  replaces  SFAS No.  123,  "Accounting  for Stock Based
Compensation,"  and supersedes APB Opinion No. 25,  "Accounting for Stock Issued
to  Employees."  SFAS No.  123, as  originally  issued in 1995,  established  as
preferable a  fair-value-based  method of  accounting  for  share-based  payment
transactions  with employees.  However,  that Statement  permitted  entities the
option of continuing to apply the guidance in APB Opinion No. 25, as long as the
footnotes to financial  statements disclosed what net income would have been had
the preferable  fair-value  based method been used.  Public entities (other than
those  filing as small  business  issuers)  will be  required  to apply SFAS No.
123(R) as of the first  interim or annual  reporting  period of the first fiscal
year  beginning on or after June 15, 2005.  We are in the process of  evaluating
whether the adoption of SFAS No.  123(R) will have a  significant  impact on our
overall results of operations or financial position.


                                       5
<PAGE>

      In November  2004,  the FASB issued SFAS No.  151,  "Inventory  Costs,  an
Amendment of ARB No. 43," Chapter 4 ("SFAS No.  151").  The  amendments  made by
SFAS No. 151 clarify that abnormal  amounts of idle facility  expense,  freight,
handling  costs,  and  wasted  materials  (spoilage)  should  be  recognized  as
current-period  charges and require the allocation of fixed production overheads
to inventory based on the normal capacity of the production facilities. SFAS No.
151 will  become  effective  beginning  in fiscal  2006.  The  adoption  of this
Statement  will not have a  significant  impact on our  financial  condition  or
results of operations.

      In December 2004,  the FASB issued SFAS No. 153,  "Exchange of Nonmonetary
Assets"  an  amendment  of APB  Opinion  No.  29,  "Accounting  for  Nonmonetary
Transactions" ("SFAS No. 153"). The amendments made by SFAS No. 153 are based on
the principle that  exchanges on nonmonetary  assets should be measured based on
the fair value of the assets exchanged.  Further,  the amendments  eliminate the
narrow  exception for  nonmonetary  exchanges of similar  productive  assets and
replace it with a broader exception for exchanges of nonmonetary  assets that do
not have commercial  substance.  SFAS No. 153 is effective for nonmonetary asset
exchanges  occurring in fiscal periods  beginning  after June 15, 2005.  Earlier
application is permitted for  nonmonetary  asset  exchanges  occurring in fiscal
periods  after the date of  issuance.  The  provisions  of SFAS No. 153 shall be
applied  prospectively.   The  adoption  of  this  Statement  will  not  have  a
significant impact on our financial condition or results of operations.

Use of Estimates

      The preparation of the Company's  financial  statements in conformity with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and  assumptions  that affect the amounts
reported in the Company's  financial  statements and accompanying  notes. Actual
results could differ materially from those estimates.

Cash and Cash Equivalents

      Cash and cash equivalents  include cash and highly liquid investments with
original  maturities  of three  months or less when  purchased.  As of March 31,
2005, cash equivalents  included money market funds,  commercial paper and other
liquid short-term debt instruments (with maturities at date of purchase of three
months or less) of $1,510,469.

Marketable Securities

      The Company has classified its marketable  securities as  held-to-maturity
because  the  Company  has the intent and  ability to hold these  securities  to
maturity.  The  securities  are  carried at  amortized  cost using the  specific
identification  method.  Interest income is recorded using an effective interest
rate, with the associated  premium or discount amortized to interest income. All
of the Company's marketable  securities have maturities of less than 1 year with
a weighted  average interest rate of 2.36%. The carrying value of the marketable
securities  as of March 31, 2005 of  $1,968,061  approximated  their fair market
value.

Revenue Recognition

      We sell  our  products  directly  through  our  sales  force  and  through
distributors.  Revenue  from  direct  sales of our  product is  recognized  when
shipped to the customer and title has passed.  Our products  require  continuing
service or post contract customer support and performance by us; accordingly,  a
portion of the revenue  pertaining to the service and support 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 of certain  of our  products,  we do not have
enough experience to identify the fair value of each element, 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.


                                       6
<PAGE>

      In addition, we recognize sales from licensing of our patented software to
customers.  Our licensed software requires  continuing  service or post contract
customer support and performance by us; 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.

      During the second  quarter of fiscal 2003,  we began  receiving  royalties
from the licensing of our  technology,  which are  recognized as revenues in the
period they are earned.

Inventory Valuation

      Our inventory  consists  primarily of our ID-Check  terminals that run our
patented  software  and  input  devices  purchased  in 2004.  We  acquired  such
inventory  in December  1999 and,  shortly  thereafter;  it was  returned to the
manufacturer  for upgrade and became available for sale in the fourth quarter of
2000. We periodically evaluate the current market value of our inventory, taking
into  account any  technological  obsolescence  that may occur due to changes in
hardware technology and the acceptance of the product in the marketplace.  Based
on ongoing evaluation of our inventory,  prior to January 1, 2005, we recorded a
cumulative inventory write down of $1,347,332. The manufacturer discontinued the
production  of the ID-Check  terminals in 2003.  The ID-Check  terminal is fully
capable  of  running  our  patented  software  as it  utilizes  a  high  quality
imager/scanner  and magnetic  stripe reader and is currently  being marketed for
sale.

      The above listing is not intended to be a comprehensive list of all of our
accounting  policies.  In many cases,  the accounting  treatment of a particular
transaction  is   specifically   dictated  by  generally   accepted   accounting
principles,  with no need for management's judgment in their application.  There
are  also  areas in which  management's  judgment  in  selecting  any  available
alternative would not produce a materially different result.

Stock-Based Compensation

      At March 31, 2005, the Company has stock based  compensation  plans, which
are described more fully in Note 8 to the Financial  Statements  included in the
Company's  2004 Annual  Report on Form 10-K.  As  permitted by the SFAS No. 123,
"Accounting for Stock Based  Compensation," the Company accounts for stock-based
compensation  arrangements  with  employees in  accordance  with  provisions  of
Accounting  Principles Board ("APB") Opinion No. 25 "Accounting for Stock Issued
to  Employees."  Compensation  expense for stock options  issued to employees is
based on the  difference  on the date of grant,  between  the fair  value of the
Company's  common  stock and the  exercise  price of the option.  No stock based
employee  compensation  cost is  reflected in net loss,  as all options  granted
under  those  plans  had an  exercise  price  equal to the  market  value of the
underlying  common stock at the date of grant.  The Company  accounts for equity
instruments  issued to  non-employees  in accordance with the provisions of SFAS
No. 123 and Emerging Issues Task Force ("EITF") Issue No. 96-18, "Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring,  or in
Conjunction  With Selling Goods or Services." All transactions in which goods or
services are the consideration  received for the issuance of equity  instruments
are accounted for based on the fair value of the  consideration  received or the
fair  value  of  the  equity  instrument  issued,  whichever  is  more  reliably
measurable.

      In   accordance   with   SFAS   No.148   "Accounting   for   Stock   Based
Compensation-Transition  and  Disclosure,"  the following table  illustrates the
effect on net loss and loss per share if the  Company had applied the fair value
recognition provisions of SFAS No. 123 to employee stock based compensation:

<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                                         ------------------
                                                                 March 31, 2005    March 31, 2004
                                                                   -----------       -----------
<S>                                                                <C>               <C>
      Net loss attributable to common stockholders,
      as reported                                                  $(1,767,147)      $(1,200,823)

      Add:
      Total stock based employee compensation expense
      determined under fair value based method for all awards         (379,895)         (343,146)
                                                                   -----------       -----------

      Net loss, pro forma                                          $(2,147,042)      $(1,543,969)

      Basic and diluted loss per share, as reported                $     (0.17)      $     (0.12)

      Basic and diluted loss per share, pro forma                  $     (0.21)      $     (0.15)
</TABLE>


                                       7
<PAGE>

Note 2.  Net Loss Per Common Share

      The Company computes net loss per common share in accordance with SFAS No.
128,  "Earnings Per Share." Under the provisions of SFAS No. 128, basic net loss
per common share  ("Basic EPS") is computed by dividing net loss by the weighted
average number of common shares  outstanding.  Diluted net loss per common share
("Diluted EPS") is computed by dividing net loss by the weighted  average number
of common shares and dilutive common share  equivalents then  outstanding.  SFAS
No. 128 requires the  presentation of both Basic EPS and Diluted EPS on the face
of the  statements  of  operations.  Diluted EPS for the periods ended March 31,
2005 and 2004  does not  include  the  impact  of stock  options,  warrants  and
convertible  preferred stock then outstanding,  as the effect of their inclusion
would be antidilutive.

      The following  table  summarizes  the  equivalent  number of common shares
assuming the related  securities that were  outstanding as of March 31, 2005 and
2004 had been converted:

                                                        2005        2004
                                                     ---------   ---------
            Stock options                            2,746,949   2,689,040
            Convertible redeemable preferred stock          --     454,545
            Warrants                                   328,061     238,061
                                                     ---------   ---------

                    Total                            3,075,010   3,381,646
                                                     =========   =========

Note 3.  Conversion of Redeemable Convertible Preferred Stock

      On February 25, 2005,  Gryphon Master Fund, L.P. converted their Preferred
Stock into 454,545 shares of our common stock at a conversion price of $6.60 per
share.  A final  dividend  payment of $97,315  was paid for the period up to the
date of  conversion.  As a result  of this  conversion,  the  period  we used in
estimating the accretion of all of the costs associated with the issuance of the
Preferred Stock changed from 5 years to 1.9166 years. Accordingly, the accretion
was  increased in the first quarter of 2005 by $119,956 and amounted to $160,722
for the  quarter  ended  March  31,  2005.  Additionally,  as a  result  of this
conversion,  we retired the 30,000  shares of preferred  stock,  issued  454,545
shares  of  our  common  stock  and  recorded   $3,000,000  as  an  increase  to
stockholders equity.

Note 4.  Investment Firm Relationships

      On January 1, 2005, we renewed our agreement with Alexandros  Partners LLC
to act as consultants in advising us in financial and investor relation matters.
We  agreed  to pay a  consulting  fee of  $50,000  payable  in 12 equal  monthly
installments.   The  agreement   terminates  on  December  31,  2005.  Mr.  John
Hatsopoulos,  a principal of  Alexandros  Partners LLC, is currently a member of
our Board of Directors.  This transaction was approved by all of the independent
directors of our Board of Directors.

      On  December  7,  2004,  we  entered  into  a one  year  agreement  with a
consulting firm to help with our investor relations activities. We agreed to pay
a consulting fee of $100,000  payable in 12 monthly  installments.  In addition,
the  Company  issued  11,500  restricted  shares  of  its  common  stock  to the
consulting  firm.  However,  as a result of  certain  conditions  not being met,
effective April 6, 2005, we cancelled all of those shares  previously issued but
have  agreed to  continued  paying the  consulting  fee of $8,000 per month on a
month to month basis.

      On  November  2, 2004,  we entered  into an  exclusive  agreement  with an
investment  banking firm for the purpose of investigating  the  opportunities in
raising  additional  capital for us. On May 3, 2005,  we modified the  agreement
eliminating  the  provision of  exclusivity  and are in  discussions  with other
investment  banking firms.  There can be no assurances  that the Company will be
successful in raising additional capital on acceptable terms.


                                       8
<PAGE>

Note 5.  Legal Matters

      On August 1, 2003,  we filed a summons and complaint  against  Tricom Card
Technologies,  Inc. alleging  infringement on our patent and seeking  injunctive
and monetary  relief.  On October 23, 2003,  we amended our complaint to include
infringement on an additional patent. On May 18, 2004, we filed a Second Amended
Complaint  alleging  infringement  and  inducement to infringe  against  certain
principals of Tricom in their  personal  capacities,  as well as alleging in the
alternative  false  advertising  claims  under the  Lanham Act  against  all the
defendants.  These principals have moved to dismiss the claims against them, and
Tricom  has moved to dismiss  the false  advertising  claims.  The  Company  has
opposed the motions. We filed a Joint Pretrial Order on November 19, 2004, which
has not  yet  been  executed.  The  parties  appeared  before  the  court  for a
settlement conference on March 17, 2005.

      We are not aware of any  infringement by our products or technology on the
proprietary rights of others.

         Other than as set forth  above,  we are not  currently  involved in any
legal or regulatory proceeding, or arbitration,  the outcome of which would have
a material adverse effect on our business.

Note 6.  Extension of Stock Options

      On March 22, 2005, the board of directors  extended the expiration date of
124,500  stock  options  for  one  of our  directors  originally  due to  expire
September 8, 2005 until June 8, 2006. As a result, we recorded the fair value of
the  extension of $176,000 as a non cash expense  during the first quarter ended
March 31, 2005, which was calculated in accordance with financial interpretation
44 "Accounting for Certain Transactions involving stock compensation".

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

      (a) Overview

      Intelli-Check  was formed in 1994 to address a growing need for a reliable
document  and age  verification  system that could be used to detect  fraudulent
driver   licenses  and  other  widely   accepted   forms  of   government-issued
identification documents.  Since then, our technology has been further developed
for  application  in  the  commercial  fraud  protection,   access  control  and
governmental  security  markets.  Additionally,  it is  currently  being used to
address  inefficiencies and inaccuracies  associated with manual data entry. The
core of Intelli-Check's product offerings is our proprietary software technology
that verifies the authenticity of driver licenses,  state issued  non-driver and
military   identification  cards  used  as  proof  of  identity.   Our  patented
ID-Check(R)  software  technology  instantly reads,  analyzes,  and verifies the
encoded  data in magnetic  stripes and  barcodes  on  government-issue  IDs from
approximately  60  jurisdictions  in the U.S.  and  Canada to  determine  if the
content and format is valid. We have served as the national  testing  laboratory
for the American Association of Motor Vehicle  Administrators (AAMVA) since 1999
and have access to all the currently  encoded driver license formats.  After the
tragic  events that  occurred on September 11, 2001, we believe there has been a
significant  increase in awareness of our  software  technology  to help improve
security across many industries,  including  airlines,  rail  transportation and
high profile  buildings  and  infrastructure,  which we believe  should  enhance
future  demand  for our  technology.  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,  2005,  we had an
accumulated  deficit of  $37,438,526.  We will  continue to fund  operating  and
capital  expenditures  from  proceeds  that we received from sales of our equity
securities.  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.

      Our  ID-Check's  unique  technology  provides  the  ability  to verify the
validity of military ID's,  driver licenses and state issued non-driver ID cards
that  contain  magnetic  stripes,  bar codes and SMART  chips that in most cases
conform to AAMVA/ANSI/ISO  standards,  which enables us to target three distinct
markets.  The original target market was focused on resellers of  age-restricted
products, such as alcohol and tobacco, where the proliferation of high-tech fake
IDs expose  merchants to fines and penalties for the  inadvertent  sale of these
products to underage  purchasers.  We now also target  commercial  fraud,  which


                                       9
<PAGE>

includes  identity theft,  and our technology is designed to help prevent losses
from these frauds. We are also marketing our products for security  applications
involving access control.  As a result of its applicability in these markets, we
have sold our products to some of the largest  companies in the gaming industry,
a state port authority, military establishments,  airports, nuclear power plants
and  high  profile  buildings  and  have  successfully  completed  tests  of our
technology in one of the largest mass  merchandisers  in the United  States.  We
currently  are testing our products  with some large public  companies.  We have
entered into strategic alliances with several biometric companies; Lenel Systems
International, a provider of integrated security solutions; and Northrop Grumman
and  Anteon,  integrators  in the defense  industry,  to utilize our systems and
software  as  the  proposed  or  potential  enrollment   application  for  their
technologies and to jointly market these security applications.  In addition, we
have executed agreements with some high profile organizations to promote the use
of our  technology  and  our  products.  We  believe  these  relationships  have
broadened  our  marketing  reach  through  their sales  efforts and we intend to
develop   additional   strategic   alliances   with   additional   high  profile
organizations and providers of security solutions.

      We have developed  additional  software products that utilize our patented
software  technology.  Our latest products include ID-Traveler and ID-Prove.  ID
Traveler electronically verifies and matches two forms of government issued ID's
instantaneously  while the ID Prove  product  offering  provides "out of wallet"
questions to assist in proving a users  claimed  identity.  Additional  software
solutions  include  ID-Check(R)  PC and  ID-Check(R)  PDA,  which  replicate the
features of ID-Check. These products are designed to be platform-independent and
compatible with both stationary and mobile  hardware  applications.  Another new
application is an enhanced version of C-Link(R), the company's net workable data
management software. Additionally, ID-Check(R) PC and the most recent release of
C-Link are  designed to read the smart chip  contained  on the  military  Common
Access Card (CAC). These products are all designed for use with  Intelli-Check's
new DCM, a compact,  self-contained two-dimensional bar code and magnetic stripe
reader. The DCM enables the new software applications to be used on a variety of
commercially  available  data  processing  devices,   including  PDAs,  Tablets,
Laptops,  Desktops and Point-of-Sale  Computers,  therefore negating the need to
replace the ID-Check terminal.  Our C-Link(R) software product,  which runs on a
personal  computer and was created to work in conjunction with the ID-Check unit
allows a user to instantly  first  analyze the data,  then view the encoded data
for further verification and to generate various reports where permitted by law.
To date,  we have entered into  thirteen (13)  licensing  agreements  and are in
discussions  with  additional  companies  to license our software to be utilized
within  other  existing  systems.  The  revenue  received  from  such  licensing
agreements has not been significant through the period ended March 31, 2005.

Critical Accounting Policies and the Use of Estimates

      The preparation of our financial  statements in conformity with accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the amounts reported in
our financial  statements and  accompanying  notes.  Actual results could differ
materially from those estimates.

      We believe that there are several accounting policies that are critical to
understanding  our historical and future  performance,  as these policies affect
the  reported  amounts  of  revenue  and the more  significant  areas  involving
management's  judgments and estimates.  These  significant  accounting  policies
relate to revenue recognition, valuation of inventory, stock based compensation,
deferred  taxes  and  commitments  and  contingencies.  These  policies  and our
procedures related to these policies are described in detail below.

A. Revenue Recognition

      We sell  our  products  directly  through  our  sales  force  and  through
distributors.  Revenue  from  direct  sales of our  product is  recognized  when
shipped to the customer and title has passed.  Our products  require  continuing
service or post contract customer support and performance by us; accordingly,  a
portion of the revenue  pertaining to the service and support 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 of certain  of our  products,  we do 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.


                                       10
<PAGE>

      In addition, we recognize sales from licensing of our patented software to
customers.  Our licensed software requires  continuing  service or post contract
customer support and performance by us; 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.

      During the second  quarter of fiscal 2003,  we began  receiving  royalties
from  licensing our  technology,  which are recognized as revenues in the period
they are earned.

B. Inventory Valuation

      Our inventory  consists  primarily of our ID-Check  terminals that run our
patented  software  and  input  devices  purchased  in 2004.  We  acquired  such
inventory  in December  1999 and,  shortly  thereafter;  it was  returned to the
manufacturer  for upgrade and became available for sale in the fourth quarter of
2000. We periodically evaluate the current market value of our inventory, taking
into  account any  technological  obsolescence  that may occur due to changes in
hardware technology and the acceptance of the product in the marketplace.  Based
on ongoing evaluation of our inventory,  prior to January 1, 2005, we recorded a
cumulative inventory write down of $1,347,332. The manufacturer discontinued the
production  of the ID-Check  terminals in 2003.  The ID-Check  terminal is fully
capable  of  running  our  patented  software  as it  utilizes  a  high  quality
imager/scanner  and magnetic  stripe reader and is currently  being marketed for
sale.

C. Stock-Based Compensation

         Options,   warrants  and  stock  awards  issued  to  non-employees  and
consultants  are recorded at their fair value as determined  in accordance  with
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation,"  and EITF No. 96-18,  "Accounting for Equity  Instrument That are
Issued to Other Than  Employees for Acquiring,  or in Conjunction  with Selling,
Goods or Services" and recognized as expense over the related vesting period.

D. Deferred Income Taxes

      Deferred  tax assets and  liabilities  are  recognized  for the  estimated
future tax  consequences  attributable  to  differences  between  the  financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective tax bases and net operating loss  carryforwards.  Deferred tax assets
and  liabilities are measured using expected tax rates in effect for the year in
which those temporary  differences  are expected to be recovered or settled.  We
have recorded a full  valuation  allowance for our net deferred tax assets as of
March 31, 2005, due to the uncertainty of the realizability of those assets.

E. Commitments and Contingencies

      We are currently involved in certain legal proceedings as discussed in the
"Commitments and  Contingencies"  note in the Notes to the Financial  Statements
filed in our Form 10-K for the year  ended  December  31,  2004.  Other  than as
described in footnote 5 above,  we do not believe these legal  proceedings  will
have a material adverse effect on our financial position,  results of operations
or cash flows.

      The above listing is not intended to be a comprehensive list of all of our
accounting  policies.  In many cases,  the accounting  treatment of a particular
transaction  is   specifically   dictated  by  generally   accepted   accounting
principles,  with no need for management's judgment in their application.  There
are  also  areas in which  management's  judgment  in  selecting  any  available
alternative would not produce a materially different result.

(b) Results of Operations

      Comparison  of the three  months  ended March 31, 2005 to the three months
ended March 31, 2004.

      Revenues remained relatively  unchanged from the $298,259 recorded for the
three  months  ended March 31, 2004  compared to the  $296,832  recorded for the
three months ended March 31, 2005.  Revenues for the period ended March 31, 2005
consisted of revenues from distributors of $113,776,  revenues from direct sales


                                       11
<PAGE>

to customers of $167,596 and royalty payments of $15,460. Sales, which represent
shipments of products and contracted  services,  increased from $274,571 for the
period ended March 31, 2004 to $350,179 for the period ended March 31, 2005. Our
sales growth has been limited due to our change in marketing  focus from smaller
customers to large commercial customers and government agencies which require an
extended sales cycle. We believe that the extended time frame of the sales cycle
associated with the refocus of our marketing efforts will continue to impact our
sales. We are optimistic that sales opportunities should increase as a result of
certain of our recent  marketing  tests and agreements and our  introduction  of
additional  products in 2004, the fact that over 90% of the issued  licenses now
contain encoded and verifiable  data, as well as legislative  efforts to enhance
security and deal with the problem of under-age access to alcohol products.

      Gross profit did not materially  change from the $194,895 recorded for the
three  months  ended March 31, 2004  compared to the  $194,200  recorded for the
three months ended March 31, 2005.  Our gross profit as a percentage of revenues
did not materially change and amounted to 65.4% for the three months ended March
31, 2005 compared to 65.3% for the three months ended March 31, 2004.

      Operating expenses,  which consist of selling,  general and administrative
and research and development  expenses,  increased 36.8% from $1,301,214 for the
three months ended March 31, 2004 to $1,779,837 for the three months ended March
31, 2005.  Selling  expenses,  which  consist  primarily of salaries and related
costs for  marketing,  increased  5.6% from  $303,863 for the three months ended
March 31, 2004 to $320,802 for the three months ended March 31, 2005,  primarily
due to increases in expenses  recorded,  including  non cash charges for options
issued in 2005 to  professional  consultants  to promote  our  product  totaling
approximately $64,000,  partially offset by a decrease in marketing expenses and
convention  and trade  show  expenses  of  approximately  $39,000.  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 81.5% from $675,043 for the
three months ended March 31, 2004 to $1,225,105 for the three months ended March
31,  2005,  primarily as a result of an increase in non-cash  expenses  from the
extension of stock  options  totaling  $176,000 and an increase in legal fees of
approximately  $525,000 relating to patent infringement  litigation,  which were
partially  offset by  decreases  in  employee  costs  and  related  expenses  of
approximately $36,000, a decrease of consulting expense of approximately $16,000
and a decrease in depreciation  expense of approximately  $15,000 as a result of
the  discontinuance  of our  IDentiScan  division  in 2004  and  certain  assets
becoming fully  depreciated.  Research and development  expenses,  which consist
primarily of salaries and related costs for the  development  and testing of our
products,  decreased  27.4% from  $322,308  for the three months ended March 31,
2004 to $233,930 for the three months ended March 31, 2005 primarily as a result
of  decreases  in salaries  and related  expenses of  approximately  $77,000 and
decreases in development  costs of approximately  $10,000,  which were partially
offset  by an  increase  in  consulting  expenses  for  product  development  of
approximately  $16,000.  As the Company experiences sales growth, we expect that
we will incur additional operating expenses to support this growth. Research and
development  expenses  may  increase as we  integrate  additional  products  and
technologies with our patented ID-Check technology.

      Interest  income  decreased  from $30,854 for the three months ended March
31, 2004 to $16,034 for the three months ended March 31, 2005,  as a result of a
decrease in our average  cash and cash  equivalents  and  marketable  securities
balances available for investment 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
$1,075,465 for the three months ended March 31, 2004 to $1,569,603 for the three
months ended March 31, 2005.

(c) Liquidity and Capital Resources

      Cash used in  operating  activities  for the three  months ended March 31,
2005 of $741,130 resulted  primarily from the net loss of $1,569,603,  which was
primarily  offset by  recognition  of noncash stock based  compensation  expense
resulting  from the  extension  of stock  options of  $176,000,  a  decrease  in
accounts  receivable of $192,704 from the collection of  significant  sales made
towards the end of 2004 and an increase in accounts payable and accrued expenses
of $252,727 primarily from litigation expenses incurred from our patent lawsuit.
Cash used in operating  activities  for the three months ended March 31, 2004 of
$697,106  resulted  primarily  from the net loss of $1,075,465 and a decrease in
litigation   settlement  payable  of  $921,700  resulting  from  payout  of  the


                                       12
<PAGE>

settlement,  which  was  primarily  offset  by a  decrease  in  certificates  of
deposits,  restricted of $1,098,465 primarily from the payment of the litigation
settlement.  Cash  provided by investing  activities  for the three months ended
March 31, 2005 of $738,022 resulted  primarily from the net sales over purchases
of  marketable  securities  and short term  investments.  Cash used in investing
activities  for the three  months  ended  March 31,  2004 of  $595,038  resulted
primarily from the purchase of marketable  securities and short term investments
from available cash and cash equivalents.  Cash used in financing activities was
$207,010 for the three months ended March 31, 2005 and was primarily  related to
costs associated with our investigating the opportunities in raising  additional
capital of $109,695 and the payment of dividends  to preferred  stockholders  of
$97,315.  Cash used in  financing  activities  was $169,121 for the three months
ended March 31, 2004 and was primarily  related to the purchase of 10,000 shares
of common stock totaling $50,303 in the open market and the payment of dividends
to preferred stockholders of $119,671.

      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 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 were due to
expire on October 4, 2002,  which was one year after the  effective  date of the
registration  statement  related to the shares of common  stock  underlying  the
rights.  We extended the expiration date until April 4, 2003,  further  extended
the rights until December 31, 2003,  June 30, 2004, and,  finally,  extended the
expiration  date  again  to June 30,  2005.  We have the  right  to  redeem  the
outstanding rights for $.01 per right under certain  conditions,  which were not
met as of May 10, 2005.  We reserved  970,076  shares of common stock for future
issuance  under  this  rights  offering.  However,  to  date,  we have  received
$2,482,009  before expenses from the exercise of 292,001 of these rights,  which
has reduced the amount of shares available for future issuance.

      In March  2001,  our 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 March 31, 2005, we cumulatively  purchased  40,200 shares totaling
approximately  $222,000 and  subsequently  retired these  shares.  None of these
shares  were  purchased  during  the  first  quarter  of 2005.  We may  purchase
additional shares when warranted by certain conditions.

      On February 25, 2005,  Gryphon Master Fund, L.P. converted their Preferred
Stock into 454,545 shares of our common stock at a conversion price of $6.60 per
share.  A final  dividend  payment of $97,315  was paid for the period up to the
date of  conversion.  As a result  of this  conversion,  the  period  we used in
estimating the accretion of all of the costs associated with the issuance of the
Preferred Stock changed from 5 years to 1.9166 years. Accordingly, the accretion
was  increased in the first quarter of 2005 by $119,956 and amounted to $160,722
for the  quarter  ended  March  31,  2005.  Additionally,  as a  result  of this
conversion,  we retired the 30,000  shares of preferred  stock,  issued  454,545
shares of our common stock and recorded $3,000,000 as an increase to equity. The
investors were originally  issued five year warrants to purchase  113,636 shares
of common stock at an exercise  price of $6.78,  which will expire on October 3,
2008.

      We currently  anticipate  that our available  cash in hand and  marketable
securities and cash resources from expected  revenues from the sale of the units
in inventory and the licensing of our technology  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  inventory,  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.  Therefore, we are currently
in the  process  of  investigating  various  opportunities  to raise  additional
capital.

(d) Net Operating Loss Carry forwards

      As of March 31,  2005 the Company had net  operating  loss carry  forwards
(NOL's) for federal income tax purposes of  approximately  $28.3 million.  There
can be no assurance that the Company will realize the benefit of the NOL's.  The
federal  NOL's are  available to offset  future  taxable  income  which  expires
beginning in the year 2013 if not  utilized.  Under  Section 382 of the Internal
Revenue Code, these NOL's may be limited in the event of an ownership changes.


                                       13
<PAGE>

Contractual Obligations

         Below  is a table,  which  presents  our  contractual  obligations  and
commitments at March 31, 2005:

                             Payments Due by Period
<TABLE>
<CAPTION>
                                                  Less than
                                       Total       One Year      1-3 years     4-5 years  After 5 years
                                    ----------    ----------    ----------    ----------    ----------
<S>                                 <C>           <C>           <C>           <C>           <C>
Operating Leases                    $1,561,305    $  256,133    $  522,161    $  562,919    $  220,092

Consulting Contracts                    37,500        37,500            --            --            --

Employment contracts                   471,151       349,586       121,565            --            --
                                    ----------    ----------    ----------    ----------    ----------

Total Contractual Cash Obligation   $2,069,956    $  643,219    $  643,726    $  562,919    $  220,092
                                    ----------    ----------    ----------    ----------    ----------
</TABLE>

Off-Balance Sheet Arrangements

      We have never entered into any off-balance  sheet  financing  arrangements
and have never established any special purpose entities.  We have not guaranteed
any debt or  commitments  of other  entities  or  entered  into any  options  on
non-financial assets.

Forward Looking Statements

      The foregoing contains certain forward-looking statements. Due to the fact
that our business is characterized by rapidly changing technology,  high capital
requirements  and an  influx of new  companies  trying to  respond  to  enhanced
security  needs as a result of current  events,  actual results and outcomes may
differ materially from any such forward looking statements and, in general,  are
difficult to forecast.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

      None

Item 4.  Controls and Procedures

Internal Controls

      We maintain disclosure controls and procedures (as defined in Exchange Act
Rules  13a-15(e) and 15d-15(e)) that are designed (i) to collect the information
we are  required to  disclose  in the reports we file with the SEC,  and (ii) to
process,  summarize  and  disclose  this  information  within  the time  periods
specified  in the  rules  of  the  SEC.  Under  the  supervision  and  with  the
participation of our management, including our Chief Executive Officer and Chief
Financial  Officer,  we have  evaluated  the  effectiveness  of the  design  and
operation  of our  disclosure  controls  and  procedures.  Such  evaluation  was
conducted  as of the end of the  period  covered by this  report.  Based on such
evaluation,  our Chief Executive and Chief Financial Officer have concluded that
these procedures are effective.

      Additionally,  there were no significant  changes in our internal controls
or in other factors that could significantly affect these controls subsequent to
the end of the  period  covered  by this  report.  We have  not  identified  any
significant  deficiencies or material  weaknesses in our internal controls,  and
therefore there were no corrective actions taken.

Compliance with Section 404 of the Sarbanes-Oxley Act of 2002

      Pursuant  to  Section  404 of the  Sarbanes-Oxley  Act of 2002 (the  Act),
beginning  with our  Annual  Report  on Form  10-K for the  fiscal  year  ending
December 31, 2006, we will be required to furnish a report by our  management on
our internal control over financial reporting.  This report will contain,  among
other matters,  an assessment of the  effectiveness of our internal control over
financial  reporting as of the end of our fiscal year,  including a statement as


                                       14
<PAGE>

to whether or not our internal  control over  financial  reporting is effective.
This  assessment  must  include  disclosure  of any material  weaknesses  in our
internal  control over  financial  reporting  identified  by  management.  If we
identify one or more material  weaknesses in our internal control over financial
reporting,  we will be unable to assert that our internal control over financial
reporting  is  effective.  This  report will also  contain a statement  that our
independent  registered public  accountants have issued an attestation report on
management's  assessment  of  such  internal  controls  and  conclusion  on  the
operating effectiveness of those controls.


      Management  acknowledges  its  responsibility  for internal  controls over
financial reporting and seeks to continually improve those controls. In order to
achieve  compliance with Section 404 of the Act within the prescribed period, we
are currently  performing  the system and process  documentation  and evaluation
needed to comply with  Section  404,  which is both costly and  challenging.  We
believe  our  process,  which  will  begin  in 2005  and  continue  in 2006  for
documenting,  evaluating  and  monitoring  our internal  control over  financial
reporting is consistent with the objectives of Section 404 of the Act.

Part II  Other Information

Item 1.  Legal Matters

      On August 1, 2003,  we filed a summons and complaint  against  Tricom Card
Technologies,  Inc. alleging  infringement on our patent and seeking  injunctive
and monetary  relief.  On October 23, 2003,  we amended our complaint to include
infringement on an additional patent. On May 18, 2004, we filed a Second Amended
Complaint  alleging  infringement  and  inducement to infringe  against  certain
principals of Tricom in their  personal  capacities,  as well as alleging in the
alternative  false  advertising  claims  under the  Lanham Act  against  all the
defendants.  These principals have moved to dismiss the claims against them, and
Tricom  has moved to dismiss  the false  advertising  claims.  The  Company  has
opposed the motions. We filed a Joint Pretrial Order on November 19, 2004, which
has not  yet  been  executed.  The  parties  appeared  before  the  court  for a
settlement conference on March 17, 2005.

      We are not aware of any  infringement by our products or technology on the
proprietary rights of others.

      Other than as set forth above, we are not currently  involved in any legal
or regulatory  proceeding,  or arbitration,  the outcome of which is expected to
have a material adverse effect on our business.

Item 6.  Exhibits

      The following  exhibits are filed as part of the Quarterly  Report on Form
10-Q:

      Exhibit No.        Description
      -----------        -----------

         31.1            Rule 13a-14(a) Certification of Chief Executive Officer
         31.2            Rule 13a-14(a) Certification of Chief Financial Officer
         32.             18 U.S.C. Section 1350 Certifications


                                       15
<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 13, 2005                        Intelli-Check, Inc.
                                           (Registrant)


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


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


                                       16
