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LONG BEACH, New York, August 7, 2017 /PRNewswire/ --
Ipsidy Inc. (http://www.ipsidy.com) [OTC:IDGS], (formerly known as ID Global Solutions Corporation), a provider of secure, biometric identification, identity management and electronic transaction processing services, today announced its results for the quarter ended March 31, 2017.
Financial Highlights for the Quarter Ended March 31, 2017
● Total revenue for the quarter was $0.6 million, compared to $0.3 million for the quarter in 2016.
● Net loss for the quarter was $8.7 million, compared to net income of $7.7 million for 2016 (The net income in 2016 was driven by a $12.9 million gain on the reduction of the derivative liability).
● Basic and diluted net loss per share for the quarter was $0.03 cents, compared to basic net income per share of $0.04 cents and diluted net loss per share of $0.02 cents for 2016.
● Adjusted EBITDA loss for the quarter was $1.6 million, compared to $1.0 million in 2016, as the Company invested in people, infrastructure and technology to support on-going and future operations.
● Converted outstanding debt and accrued interest in the amount of approximately $6.3 million into approximately 84.8 million shares of common stock.
● Repaid an additional $0.3 million of outstanding debt, cancelled 3.6 million warrants and cancelled 2.5 million shares of the Company's common stock.
● Secured $7.0 million of additional debt and equity financing.
● Total liabilities reduced to $4.5 million compared to liabilities of $25.8 million as of December 31, 2016 and stockholders' equity increased to $12.9 million compared to a stockholders' deficit of $13.3 million as of December 31, 2016.
The combination of the above events is reflected in the substantial improvement in the Company's balance sheet and provided near-term working capital.
Refer to Table 1 for reconciliation of net income to Adjusted EBITDA (a non-GAAP measure).
"Ipsidy is redefining identity as a transaction so that it can be managed as easily and securely as a payment transaction," said Philip Beck, Chairman and Chief Executive Officer of Ipsidy. "We are enabling our identity transaction platform to provide our customers with reimagined solutions that let a user authenticate their identity to their own device. Our platform facilitates the processing of diverse electronic transactions, be they payments, votes, or physical or digital access, embedded with the participant's identity."
In a world that is increasingly digital and mobile, but also fraught with account breaches and stolen identity information, our vision is to offer solutions that provide pre-transaction verification of identity as well as embed identity verification within every electronic transaction message processed through our platform, or other electronic systems. We believe that it is essential that businesses and consumers know who is on the other side of an electronic transaction and have an audit trail, proving that the identity of the other party was duly verified. Ipsidy is therefore developing solutions intended to provide our customers with the next level of transaction security, control and certainty operating in both physical and digital environments leveraging mobile eco-systems.
We are building upon our existing capabilities in biometric identification and multi-factor identity management solutions to develop an identity transaction platform for our customers. The platform enables mobile users to easily authenticate their identity to a mobile phone or portable device of their choosing (as opposed to other identity solutions requiring dedicated hardware). Our system allows participants to complete transactions with a digitally signed authentication response, including the underlying transaction data and embedded attributes of the participant's identity, accessible to the business.
Our strategy is to leverage our identity transaction platform to support a variety of vertical markets. These vertical markets include but are not limited to border security, public safety, public transportation, enterprise security, electronic payments transactions and banking. In addition, our platform is designed to be highly available and language agnostic thereby accessible to customers around the world. We believe that the various technologies that Ipsidy is developing and has acquired can be combined into a unified offering.
Ipsidy's digital mobile wallet application, or electronic account holder, will contain different services and accounts that enable users to conveniently and securely authenticate and authorize a variety of electronic transactions, using their identity. For example, our closed-loop payment account and digital issuance platform is intended to offer secure and cost-effective methods of conversion of cash and paper to electronic payments. Consumers accessing this system, using their mobile phones, electronic devices, or smart card payment tokens will be able to participate in the digital economy thereby facilitating financial inclusion for the un-banked and under banked population around the globe. Another example is for consumers and employees to use their mobile application to verify identity, in order to access secure, digital or physical environments.
Additional analysis of the Company's performance can be found in 'Management's Discussion and Analysis of Financial Condition and Results of Operations' included in the Quarterly Report on Form 10-Q for the Quarter ended March 31, 2017 filed at http://www.sec.gov and posted on the Company's investor relations website.
Ipsidy is a provider of secure, biometric identification, identity management and electronic transaction processing services. Ipsidy is headquartered in New York and has operating subsidiaries: MultiPay in Colombia http://www.multipay.com.co and Cards Plus in South Africa. http://www.cardsplus.co.za. In a world that is increasingly digital and mobile, our vision is to enable solutions that provide pre-transaction verification of identity as well as embed identity verification within every electronic transaction message processed through our platform, or other electronic systems. We believe that it is essential that businesses and consumers know who is on the other side of an electronic transaction and have an audit trail, proving that the identity of the other party was duly verified. We are therefore developing solutions intended to provide our customers with the next level of transaction security, control and certainty. Further information on Ipsidy can be found at http://www.ipsidy.com or contact us at firstname.lastname@example.org.
Notice Regarding Forward-Looking Statements.
Information contained in this announcement may include "forward-looking statements." All statements other than statements of historical facts included herein, including, without limitation, those regarding the financial position, business strategy, plans and objectives of management for future operations of both Ipsidy and its business partners, net revenue, net income, Adjusted EBITDA, diluted earnings per share, future service launches with customers and new initiatives and customer pipeline are forward-looking statements. Such forward-looking statements are based on a number of assumptions regarding Ipsidy present and future business strategies, and the environment in which Ipsidy expects to operate in the future, which assumptions may or may not be fulfilled in practice. Implementation of some or all of the new services referred to is subject to regulatory or other third party approvals. Actual results may vary materially from the results anticipated by these forward-looking statements as a result of a variety of risk factors, including the risk that implementation, adoption and offering of the service by customers, consumers and others may take longer than anticipated, or may not occur at all; changes in laws, regulations and practices; changes in domestic and international economic and political conditions and others. Additional risks may arise with respect to commencing operations in new countries and regions, of which Ipsidy is not fully aware at this time. See the Company's Annual Report Form 10-K for the Fiscal Year ended December 31, 2016 filed at http://www.sec.gov for other risk factors which investors should consider. These forward-looking statements speak only as to the date of this announcement and cannot be relied upon as a guide to future performance. Ipsidy expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in its expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
Non-GAAP Financial Information.
The Company provides certain non-GAAP financial measures in this statement. Management believes that Adjusted EBITDA, when viewed with our results under GAAP and the accompanying reconciliations, provides useful information about our period-over-period results. Adjusted EBITDA is presented because management believes it provides additional information with respect to the performance of our fundamental business activities and is also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess the operating performance of our company and our management team in connection with our executive compensation. These non-GAAP key business indicators, which include Adjusted EBITDA, should not be considered replacements for and should be read in conjunction with the GAAP financial measures.
We define Adjusted EBITDA as GAAP net loss adjusted to exclude: (1) interest expense, (2) interest income, (3) provision for income taxes, (4) depreciation and amortization, (5) stock-based compensation expense (5) derivative income (expense) and (6) certain other items management believes affect the comparability of operating results. Please see "Adjusted EBITDA" below for more information and for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.
Reconciliation of Net Loss to Adjusted EBITDA Quarter Ended March 31, 2017 2016 Net Loss $ (8,669,092) $ (7,692,510) Interest Expense 604,015 926,752 Conversion of debt, etc. 4,106,651 - Gain on derivative liability - (12,941,663) Depreciation and amortization 109,534 147,052 Taxes - - Stock compensation 2,294,160 3,214,732 Adjusted EBITDA $ (1,554,732) $ (960,617)
IPSIDY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 2017 2016 ASSETS
Current Assets: Cash $ 4,946,012 $ 689,105 Accounts receivable, net 112,634 138,359 Current portion of net investment in direct financing lease 48,734 44,990 Inventory 147,816 150,679 Other current assets 388,200 166,479 Total current assets 5,643,396 1,189,612 Property and Equipment, net 268,386 115,682 Other Assets 693,872 358,343 Intangible Assets, net 3,388,149 3,474,291 Goodwill 6,736,043 6,736,043 Net investment in direct financing lease, net of current 658,877 674,015 Total assets $ 17,388,723 $ 12,547,986 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 2,089,020 $ 1,687,900 Convertible notes payable, net - 250,000 Derivative liability - 8,388,355 Capital lease obligation, current portion 25,071 - Notes payable, net, current portion 45,646 109,819 Deferred revenue 255,657 398,680 Total current liabilities 2,415,394 10,834,754 Long-term Liabilities: Convertible notes payable, net, less current maturities - 2,245,596 Notes payable, net, less current maturities 1,943,526 3,051,603 Capital lease obligation, net of current portion 136,379 Derivative liability, net of current portion - 9,668,276 Total long-term liabilities 2,079,905 14,965,475 Total liabilities 4,495,299 25,800,229 Commitments and Contingencies Stockholders' Equity (Deficit): Common stock, $0.0001 par value, 500,000,000 shares authorized; 344,093,411 and 234,704,655 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively 34,409 23,470 Additional paid in capital 70,952,037 35,341,669 Stock subscription receivable (830,000) - Accumulated deficit (57,595,085) (48,925,993) Accumulated comprehensive income 332,063 308,611 Total stockholders' equity (deficit) 12,893,424 (13,252,243) Total liabilities and stockholders' equity (deficit) $ 17,388,723 $ 12,547,986
IPSIDY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended March 31, 2017 2016
Revenues: Products and services $ 565,545 $ 320,746 Lease income 19,144 - Total revenues, net 584,689 320,746 Operating Expenses: Cost of Sales 149,129 118,110 General and administrative 4,255,382 4,392,886 Research and development 28,948 29,072 Depreciation and amortization 109,534 103,079 Total operating expenses 4,543,115 4,643,147 Loss from operations (3,958,422) (4,322,401) Other Income (Expense): (Loss) gain on derivative liability (452,146) 12,941,663 Gain on extinguishment of debt 2,802,235 - (Loss) on conversion of debt (5,978,643) - (Loss) on modification of warrant(s) (158,327) - (Loss) on modification of derivatives (319,770) - Interest expense (604,015) (926,752) Other income (expense), net (4,710,666) 12,014,911 Income loss before income taxes (8,669,092) 7,692,510 Income Taxes - - Net (loss) $ (8,669,092) $ 7,692,510 Net (loss) income per share - Basic $ (0.03) $ 0.04 Net (loss) income per share - Diluted $ (0.03) $ (0.02) Weighted Average Shares Outstanding - Basic 295,596,151 210,816,797 Weighted Average Shares Outstanding - Diluted 295,596,151 270,712,051
IPSIDY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2017 2016
CASH FLOWS FROM OPERATING: Net loss $ (8,669,092) $ 7,692,510 Adjustments to reconcile net loss with cash used in operations: Depreciation and amortization expense 109,534 103,079 Stock-based compensation 2,294,160 3,214,732 Common stock issued for services 42,376 270,000 Amortization of debt discount 235,985 655,817 655,817 Amortization of debt issuance costs 268,954 167,700 Loss (gain) on derivative liability 452,146 (12,941,663) Gain on extinguishment of notes payable (2,802,235) - Loss on modification of derivatives 319,770 - Loss on modification of warrants 158,327 - Loss on conversion of debt 5,978,643 - Changes in operating assets and liabilities: Accounts receivable 25,725 731,004 Lease receivable 11,394 - Other current assets (226,174) (32,200) Inventory 2,863 (74,261) Accounts payable and accrued expenses 736,535 (284,877) Deferred revenue (143,012) (70,116) Net cash flows from operating activities (1,204,101) (568,275) CASH FLOWS FROM INVESTING: Purchase of property and equipment (4,563) (11,307) Investment in other assets including work in process (343,655) (20,157) Cash acquired in acquisitions - 419,042 Net cash flows from investing activities (348,218) 387,578 CASH FLOWS FROM FINANCING: Proceeds from issuance of notes payable and common stock 3,000,000 100,000 Payment of debt issuance cost (86,331) - Proceeds from sale of common stock 2,880,710 - Principal payments on capital lease obligations (1,957) Principal payments on notes payable (14,173) (16,372) Net cash flows from financing activities 5,778,249 83,628 Effect of foreign currencies 30,977 57,229 Net Change in Cash 4,256,907 (39,840) Cash, Beginning of Period 689,105 349,873 Cash, End of Period $ 4,946,012 $ 310,033 Supplemental Disclosure of Cash Flow Information: Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - Non-cash Investing and Financing Activities: Issuance of common stock for conversion of debt and related interest $ 21,609,673 $ 21,122 Issuance of common stock for debt issuance costs $ 224,460 $ 76,000 Reclassification of derivatives upon removal of price protection in warrants $ 7,614,974 $- Reclassification of derivative liabilities upon conversion into common stock $ - $ 316,734 Acquisition of equipment due to a capital lease $ 163,407 $ - Acquisition of FIN Holdings (2016): Issuance of common stock as consideration $ - $ 9,000,000 Assumed liabilities - 914,218 Inventory - (112,408) Accounts receivable - (311,867) Property and equipment - (100,339) Intangible assets - (8,970,562) Cash acquired $ - $ 419,042
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