LONG BEACH, New York, March 15, 2018 /PRNewswire/ -- Ipsidy Inc. (www.ipsidy.com) (OTCQB: IDTY), (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 year ended December 31, 2017.
Financial Highlights for the Year Ended December 31, 2017
The combination of the above events resulted 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).
Operational Highlights
"2017 was a year of transformational change," said Philip Beck, Chairman and Chief Executive Officer of Ipsidy. "The Company was recapitalized, management was reorganized and the Ipsidy team strengthened. We continue to enhance our identity transaction platform, in order to create trusted transactions to approve everyday events. Our platform enables customers to choose the levels of friction and assurance that are appropriate to their business. We are looking forward to an exciting year of progress."
We are building upon our existing capabilities in biometric identification and multi-factor identity authentication and management solutions to develop an identity transaction platform for our business customers. The platform is being designed to enable the end users of our business customers to more easily authenticate their identity through a mobile phone or portable device of their choosing (as opposed to dedicated hardware). Our system enables participants to complete transactions with a digitally signed authentication response, including the underlying transaction data and embedded attributes of the participant's identity.
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 authenticated. We are continuing to enhance solutions to provide our customers with the next level of transaction security, control and certainty. Our platform uses biometric and multi-factor identity management solutions, which are intended to support a wide variety of electronic transactions. We define "electronic transactions" in the broadest sense to include not only financial transactions (i.e. exchanges of value in all of their forms), and legal transactions (e.g. approving the release of personal or other confidential data or the execution of documents), but also access control to physical environments (e.g. border crossings and secure areas at offices, data centers and other sensitive locations) and digital environments (e.g. accessing account information, voting systems, email systems and controlling data network log-ins).
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-K for the year ended December 31, 2017 filed at www.sec.gov and posted on the Company's investor relations website.
About Ipsidy:
Ipsidy Inc (OTCQB: IDTY) www.ipsidy.com (formerly known as ID Global Solutions Corporation OTC: IDGS) 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, www.multipay.com.co and Cards Plus in South Africa, www.cardsplus.co.za. Our identity transaction platform creates a trusted transaction, embedding authenticated identity and event details with a digital signature and using a participant's mobile device to approve everyday transactions. Our platform is being designed to use biometric and multi-factor identity management solutions, which are intended to support a wide variety of electronic transactions. 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 authenticated. We continue to enhance our solutions to provide our customers with the next level of transaction security, control and certainty over everyday transactions. Further information on Ipsidy can be found at www.ipsidy.com or contact us at [email protected].
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, future service launches with customers, the outcome of pilots 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, 2017 filed at 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.
IPSIDY INC AND SUBSIDIARIES | ||||
Reconciliation of Net Loss to Adjusted EBITDA | ||||
(Unaudited) |
||||
For the Year Ended | ||||
December 31, 2017 |
December 31, 2016 | |||
Net loss |
$ (17,481,629) |
$ (9,851,403) | ||
Add Back: |
||||
Interest expense |
1,337,081 |
3,625,984 | ||
Income taxes |
28,781 |
2,946 | ||
Conversion of debt, derivative liability, and modifications |
4,106,652 |
(7,345,000) | ||
Depreciation and amortization |
475,211 |
421,694 | ||
Write-off of asset |
212,862 |
225,862 | ||
Stock compensation |
5,650,072 |
8,648,212 | ||
Adjusted EBITDA (Non-GAAP) |
$ (5,670,970) |
$ (4,271,705) |
IPSIDY INC AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) |
||||||
December 31, |
December 31, | |||||
2017 |
2016 | |||||
ASSETS | ||||||
Current Assets: |
||||||
Cash |
$ 4,413,822 |
$ 689,105 | ||||
Accounts receivable, net |
165,929 |
138,359 | ||||
Current portion of net investment in direct financing lease |
52,790 |
44,990 | ||||
Inventory, net |
492,030 |
150,679 | ||||
Other current assets |
218,537 |
166,479 | ||||
Total current assets |
5,343,108 |
1,189,612 | ||||
Property and equipment, net |
209,719 |
115,682 | ||||
Other Assets |
1,243,531 |
358,343 | ||||
Intangible Assets, net |
2,878,080 |
3,474,291 | ||||
Goodwill |
6,736,043 |
6,736,043 | ||||
Net investment in direct financing lease, net of current portion |
618,763 |
674,015 | ||||
Total assets |
$ 17,029,244 |
$ 12,547,986 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||
Current Liabilities: |
||||||
Accounts payable and accrued expenses |
$ 1,447,185 |
$ 1,687,900 | ||||
Convertible notes payable, net |
- |
250,000 | ||||
Derivative liability |
- |
8,388,355 | ||||
Capital lease obligation, current portion |
27,420 |
- | ||||
Notes payable, net, current portion |
- |
109,819 | ||||
Deferred revenue |
122,511 |
398,680 | ||||
Total current liabilities |
1,597,116 |
10,834,754 | ||||
Long-term liabilities: |
||||||
Convertible notes payable, net, less current maturities |
- |
3,051,603 | ||||
Notes payable, net, less current maturities |
2,375,720 |
2,245,596 | ||||
Capital lease obligation, net of current portion |
115,509 |
- | ||||
Derivative liability, net of current portion |
- |
9,668,276 | ||||
Total long-term liabilities |
2,491,229 |
14,965,475 | ||||
Total liabilities |
4,088,345 |
25,800,229 | ||||
Commitments and Contingencies |
||||||
Stockholders' Equity (Deficit): |
||||||
Common stock, $0.0001 par value, 1,000,000,000 and 500,000,000 shares |
||||||
authorized; 403,311,988 and 234,704,655 shares issued |
||||||
and outstanding as of September 30, 2017 and December 31, 2016, respectively |
40,331 |
23,470 | ||||
Additional paid in capital |
79,053,339 |
35,341,669 | ||||
Accumulated deficit |
(66,407,622) |
(48,925,993) | ||||
Accumulated comprehensive income |
254,851 |
308,611 | ||||
Total stockholders' equity (deficit) |
12,940,899 |
(13,252,243) | ||||
Total liabilities and stockholders' equity (deficit) |
$ 17,029,244 |
$ 12,547,986 |
IPSIDY INC AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Unaudited) | ||||||||
Year Ended | ||||||||
December 31, | ||||||||
2017 |
2016 | |||||||
Revenues: |
||||||||
Products and services |
$ 2,228,910 |
$ 1,877,446 | ||||||
Lease income |
74,696 |
52,492 | ||||||
Total revenues, net |
2,303,606 |
1,929,938 | ||||||
Operating Expenses: |
||||||||
Cost of sales |
589,254 |
492,237 | ||||||
General and administrative |
13,026,188 |
14,243,363 | ||||||
Research and development |
222,068 |
340,317 | ||||||
Depreciation and amortization |
475,211 |
421,494 | ||||||
Total operating expenses |
14,312,721 |
15,497,411 | ||||||
Loss from operations |
(12,009,115) |
(13,567,473) | ||||||
Other Income (Expense): |
||||||||
(Loss) gain on derivative liabilities |
(452,146) |
7,345,000 | ||||||
Gain on extinguishment of notes payable |
2,802,234 |
- | ||||||
Loss on modification of derivatives |
(319,770) |
- | ||||||
Loss on modification of warrants |
(158,327) |
- | ||||||
Loss on settlement of notes payable |
(5,978,643) |
- | ||||||
Interest expense |
(1,337,081) |
(3,625,984) | ||||||
Other income (expense), net |
(5,443,733) |
3,719,016 | ||||||
Loss before income taxes |
(17,452,848) |
(9,848,457) | ||||||
Income tax expense |
28,781 |
2,946 | ||||||
Net loss |
$ (17,481,629) |
$ (9,851,403) | ||||||
Net Loss Per Share - Basic and Diluted |
$ (0.05) |
$ (0.05) | ||||||
Weighted Average Shares Outstanding - Basic and Diluted |
338,485,301 |
217,570,666 |
IPSIDY INC AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) |
||||||||
Year Ended | ||||||||
December 31, | ||||||||
2017 |
2016 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net(loss) income |
$ (17,481,629) |
$ (9,851,403) | ||||||
Adjustments to reconcile net loss with cash used in operations: |
||||||||
Depreciation and amortization expense |
475,211 |
421,494 | ||||||
Stock-based compensation |
5,650,072 |
8,648,212 | ||||||
Common stock issued for services |
140,151 |
311,103 | ||||||
Amortization of debt discount and debt issuance costs, net |
937,133 |
3,165,079 | ||||||
Loss (gain) on derivative liability |
452,146 |
(7,345,000) | ||||||
Gain on settlement of notes payable |
(2,802,234) |
- | ||||||
Loss on modification of derivatives |
319,770 |
- | ||||||
Loss on modification of warrants |
158,327 |
- | ||||||
Loss on conversion of debt |
5,978,643 |
|||||||
Write off of abandoned property |
212,862 |
225,862 | ||||||
Gain on sale of property |
(3,681) | |||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(36,963) |
674,952 | ||||||
Net investment in direct financing lease |
47,452 |
28,939 | ||||||
Other current assets |
(52,058) |
(32,255) | ||||||
Inventory |
(354,227) |
(194,473) | ||||||
Accounts payable and accrued expenses |
90,353 |
(254,560) | ||||||
Deferred revenue |
(276,169) |
398,680 | ||||||
Net cash flows from operating activities |
(6,541,160) |
(3,807,051) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchase of property and equipment |
(13,246) |
(23,565) | ||||||
Proceeds from sale of property and equipment |
8,007 | |||||||
Investment in other assets including work in process |
(894,435) |
(283,813) | ||||||
Cash acquired in acquisitions |
- |
419,042 | ||||||
Net cash flows from investing activities |
(907,681) |
119,671 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Proceeds from issuance of notes payable and common stock |
3,000,000 |
1,550,000 | ||||||
Proceeds from issuance of converible notes payable, common stock and warrants |
- |
1,375,000 | ||||||
Proceeds from issuance of notes payable, related parties |
- |
13,609 | ||||||
Proceeds from the sale of common stock and other |
9,002,290 |
1,250,000 | ||||||
Proceeds from exercise of common stock warrants |
26,400 |
- | ||||||
Payment of debt and equity issuance cost |
(750,975) |
(229,423) | ||||||
Principal payments on capital lease obligations |
(59,819) |
(120,242) | ||||||
Principal payments on notes payable |
(30,842) |
(89,569) | ||||||
Net cash flows from financing activities |
11,187,054 |
3,749,375 | ||||||
Effect of foreign currencies |
(13,496) |
277,237 | ||||||
Net change in Cash |
3,724,717 |
339,232 | ||||||
Cash, Beginning of Period |
689,105 |
349,873 | ||||||
Cash, End of Period |
$ 4,413,822 |
$ 689,105 | ||||||
Supplemental Disclosure of Cash Flow Information: |
||||||||
Cash paid for interest |
$ 22,192 |
$ 11,051 | ||||||
Cash paid for income taxes |
$ 28,781 |
$ 2,946 | ||||||
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 in settlement of liability |
$ - |
$ 59,681 | ||||||
Issuance of common stock for debt issuance costs |
$ 224,460 |
$ 257,696 | ||||||
Issuance of common stock with debt |
$ - |
$ 222,815 | ||||||
Issuance of warrants for inventory costs |
$ - |
$ 79,081 | ||||||
Reclassification of derivatives upon removal of price protection in warrants |
$ 7,614,974 |
$ 692,850 | ||||||
Debt discount for fair value of warrants issued in connection with debt |
$ - |
$ 358,411 | ||||||
Debt disocunt for fair value of embedded conversion features |
$ - |
$ 290,425 | ||||||
Reclassification of inventory to net investment in direct financing lease |
$ - |
$ 747,944 | ||||||
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 |
Ipsidy Inc.
Contacts:
Ipsidy Inc.
Philip D. Beck, Chairman, CEO & President
[email protected]
+1 (516) 274-8700
Thomas Szoke, Chief Technology Officer
[email protected]
Stuart P. Stoller, CFO
[email protected]
SOURCE Ipsidy Inc.
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