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STOCKHOLDERS’ EQUITY | 12 Months Ended
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Dec. 31, 2021
Equity [Abstract] |
STOCKHOLDERS’ EQUITY | 8. STOCKHOLDERS’ EQUITY Series A Convertible Preferred Stock In January 1997, the Board of Directors authorized the creation of a class of Series A Convertible Preferred Stock with a par value of $.01. The Series A Convertible Preferred Stock is convertible into an equal number of common shares at the holder’s option, subject to adjustment for anti-dilution. The holders of Series A Convertible Preferred Stock are entitled to receive dividends as and if declared by the Board of Directors. In the event of liquidation or dissolution of the Company, the holders of Series A Convertible Preferred Stock are entitled to receive all accrued dividends, if applicable, plus the liquidation price of $1.00 per share. As of December 31, 2021, and 2020, there were no outstanding shares of Series A Convertible Preferred Stock. Equity Compensation To retain and attract qualified personnel necessary for the success of the Company, the Company adopted the 2015 Omnibus Incentive Plan (the “Plan”) covering up to 4,000,000 of the Company’s common shares, pursuant to which officers, directors, key employees and consultants to the Company are eligible to receive incentive stock options, nonqualified stock options and restricted stock units. All the equity compensation plans prior to Company’s 2015 Omnibus Incentive Plan have been closed. The Compensation Committee of the Board of Directors administers this Plan and determines the terms and conditions of stock options granted, including the exercise price. This Plan generally provides that all stock options will expire within ten years of the date of grant. Incentive stock options granted under this Plan must be granted at an exercise price that is not less than the fair market value per share at the date of the grant and the exercise price must not be less than 110% of the fair market value per share at the date of the grant for grants to persons owning more than 10% of the voting stock of the Company. This Plan also entitles non-employee directors to receive grants of non-qualified stock options as approved by the Board of Directors. The Company uses the Black-Scholes option pricing model to value the options on the grant date. The table below presents the weighted average expected life of the stock options in years. The expected life computation is based on the time to stock option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect on the grant date. Options vest from one to four years. As discussed above, certain option awards no longer qualify as equity awards and instead are classified as liability awards. The fair values of these awards are determined at each reporting period utilizing a Black Scholes option pricing model, and the associated compensation expense for the reporting period is recorded. The Company recorded $3,331 of additional compensation expense in the year ended December 31, 2021 as a result of this award reclassification. The fair value of the Company’s stock options granted in 2021 that are being classified as equity awards were estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values: SCHEDULE OF FAIR VALUE OF SHARE BASED PAYMENT
|  | Year Ended December 31, 2021 |
Valuation assumptions: |  |  |  |
Grant price |  |  | $7.78 – $11.50 |
Exercise price |  |  | $7.78 – $11.50 |
Expected dividend yield |  |  | 0 | %
Expected volatility |  |  | 84.24% – 90.94 | %
Expected life (in years) |  |  | 5 |
Risk-free interest rate |  |  | 0.80% – 0.89 | %
INTELLICHECK, INC. NOTES TO FINANCIAL STATEMENTS (All dollar amounts are rounded to thousands, except share data) The fair value of the Company’s stock options granted in the years ended December 31, 2016, December 31, 2018 and December 31, 2019, that no longer qualify as equity awards and instead are being classified as liability awards were marked-to-market using the Black-Scholes option pricing model with the following assumptions and weighted average fair values: SCHEDULE OF FAIR VALUE OF SHARE BASED PAYMENT
|  | Year Ended December 31, 2021 |
Valuation assumptions: |  |  |  |
Exercise price range |  | $ | 2.68 – $2.87 |
Expected dividend yield |  |  | 0 | %
Expected volatility range for grants after mark-to-market adjustment |  |  | 81.66 | %
Expected life (in years) for grants after mark-to-market adjustment |  |  | 0.54 – 1.08 |
Risk-free interest rate range for grants after mark-to-market adjustment |  |  | 0.19% - 0.39 | %
Stock option activity during the periods indicated below was as follows: SCHEDULE OF STOCK OPTION ACTIVITY
|  | Number of Shares Subject to Issuance |  |  | Weighted- average Exercise Price |  |  | Weighted- average Remaining Contractual Term |  |  | Aggregate Intrinsic Value |
Outstanding at December 31, 2019 |  |  | 1,421,623 |  |  | $ | 1.78 |  |  |  | 1.96 years |  |  | $ | 8,113,777 |  |
Granted |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |
Forfeited |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |
Exercised |  |  | (783,741 | ) |  |  | 1.20 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2020 |  |  | 637,882 |  |  | $ | 2.50 |  |  |  | 2.55 years |  |  | $ | 5,686,421 |
Granted |  |  | 221,843 |  |  |  | 10.38 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (3,000 | ) |  |  | 2.79 |  |  |  |  |  |  |  |  |
Exercised |  |  | (360,301 | ) |  |  | 2.34 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2021 |  |  | 496,424 |  |  | $ | 6.13 |  |  |  | 3.03 years |  |  | $ | 527,937 |
Exercisable at December 31, 2021 |  |  | 129,859 |  |  | $ | 2.72 |  |  |  | 1.98 years |  |  | $ | 247,176 |
The following is a summary of stock options as of December 31, 2021: SUMMARY OF STOCK OPTIONS
|  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  | Number of Options |  |  | Weighted- average Remaining Life |  | Weighted- average Exercise Price |  |  | Number of Options |  |  | Weighted- average Exercise Price |
$1.75 to $2.87 |  |  | 249,581 |  |  | 1.09 years |  | $ | 2.68 |  |  |  | 104,859 |  |  | $ | 2.68 |
$7.78 to $11.50 |  |  | 246,843 |  |  | 1.94 years |  | $ | 9.62 |  |  |  | 25,000 |  |  | $ | 2.87 |
|  |  | 496,424 |  |  | 3.03 years |  | $ | 6.13 |  |  |  | 129,859 |  |  | $ | 2.72 |
The weighted-average fair value of the options granted during the year ended December 31, 2021 is $7.13. All stock options have been issued with an exercise price that is equal or above the fair market value of the Company’s Common Stock on the date of grant. Restricted Stock Units The Company periodically issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. The Company issues RSUs to certain directors as compensation which vest with the passage of time. The vesting of all RSUs is contingent on continued board services. The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant, is amortized on a straight-line basis over the requisite service period and charged to operating expenses with a corresponding increase to additional paid-in capital. INTELLICHECK, INC. NOTES TO FINANCIAL STATEMENTS (All dollar amounts are rounded to thousands, except share data) Restricted stock unit activity during the periods indicated below is as follows: SCHEDULE OF RESTRICTED STOCK UNITS OUTSTANDING
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Outstanding at December 31, 2019 |  |  | 2,670 |  |  | $ | 7.49 |
Granted |  |  | 38,855 |  |  |  | 5.78 |
Forfeited |  |  | - |  |  |  | - |
Vested and Settled in shares |  |  | (39,771 | ) |  |  | 5.65 |
Outstanding at December 31, 2020 |  |  | 1,754 |  |  | $ | 11.40 |
Granted |  |  | 443,442 |  |  |  | 10.30 |
Forfeited |  |  | (4,650 | ) |  |  | 11.50 |
Vested and Settled in shares |  |  | (32,170 | ) |  |  | 8.47 |
Outstanding December 31, 2021 |  |  | 408,376 |  |  | $ | 10.43 |
Performance Stock Units On August 7, 2020, the Company issued 265,942 Performance Stock Units (PSUs) to its officers and certain employees as compensation (“PSU Plan”). 50% of the PSUs were to vest based on the Company’s market price and 50% were to vest based on the Company’s Adjusted EBITDA. Both the conditions were to occur over a specified time and were contingent on continued employment services. On November 4, 2021, the Company amended its PSU Plan so that 100% of the PSUs will vest based on the Company’s market price as the sole vesting criteria. As a result of this amendment, the adjusted EBITDA performance metric from the previous plan is no longer a criteria performance metric. The Company recorded additional equity compensation expense of $164 in the fourth quarter of 2021 resulting from the amendment to the PSU Plan. Compensation expense is based on a Geometric Brownian Motion valuation model based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite period. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for this performance metric is amortized over the anticipated service period. If these criteria are not met, no compensation cost is recognized, and any previously recognized compensation cost would be reversed. Compensation expense is charged to operating expenses with a corresponding increase to additional paid-in capital. SCHEDULE OF PERFORMANCE STOCK UNITS OUTSTANDING
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Outstanding at December 31, 2019 |  |  | - |  |  | $ | - |
Granted |  |  | 265,942 |  |  |  | 7.91 |
Forfeited |  |  | - |  |  |  | - |
Outstanding at December 31, 2020 |  |  | 265,942 |  |  | $ | 7.91 |
Forfeited |  |  | (37,444 | ) |  |  | 7.91 |
Outstanding at December 31, 2021 |  |  | 228,498 |  |  | $ | 7.91 |
INTELLICHECK, INC. NOTES TO FINANCIAL STATEMENTS (All dollar amounts are rounded to thousands, except share data) As of December 31, 2021, there was $4,740 of total unrecognized compensation cost, net of estimated forfeitures, related to all unvested stock options, restricted stock units and performance stock units. These costs are expected to be recognized as compensation expense over a weighted average period of approximately 1.86 years. Equity compensation expense for the years ended December 31, 2021 and 2020 is as follows: SCHEDULE OF EQUITY COMPENSATION EXPENSE
|  | Years Ended December 31, |
|  | 2021 |  |  | 2020 |
Stock options |  | $ | 4,143 |  |  | $ | 3,240 |
Restricted stock units |  |  | 1,956 |  |  |  | 140 |
Performance stock units |  |  | 301 |  |  |  | 71 |
Equity Compensation, Total |  | $ | 6,400 |  |  | $ | 3,451 |
Equity compensation is included in operating expenses as follows: SCHEDULE OF EQUITY COMPENSATION
|  | Years Ended December 31, |
|  | 2021 |  |  | 2020 |
Selling, general and administrative |  | $ | 5,782 |  |  | $ | 3,408 |
Research and development |  |  | 618 |  |  |  | 43 |
|  | $ | 6,400 |  |  | $ | 3,451 |
The Company has a net operating loss carry-forward as of December 31, 2021, and no excess tax benefits for the tax deductions related to equity compensation awards were recognized in the statements of operations. Additionally, no incremental tax benefits were recognized from stock options exercised in 2021 that would have resulted in a reclassification to reduce net cash provided by operating activities with an offsetting increase in net cash provided by financing activities. As of December 31, 2021, the Company had 1,456,747 shares available for future grants under the Company’s equity compensation plans. Warrants All previously granted warrants were issued with an exercise price that was equal to or above the fair market value of the Company’s common stock on the date of grant. As of December 31, 2021, the Company had no remaining warrants available to exercise. There were 9,000 warrants exercised at a price of $2.20 during the year ended December 31, 2021.

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