Ipsidy Announces Results for Third Quarter 2017

LONG BEACH, New York,, Nov. 13, 2017 /PRNewswire/ -- Ipsidy Inc. (OTC: IDGS) (www.ipsidy.com) (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 September 30, 2017.

Financial Highlights for the Three and Nine Months Ended September 30, 2017

? Total revenue for the three and nine month periods was $0.6 million and $1.8 million respectively compared to $0.6 million and $1.4 million respectively for the three and nine months in 2016.

? Net loss for the three and nine months was $2.1 million and $14.6 million respectively compared to a net loss in the third quarter of 2016 of $4.3 million and net income of $2.5 million in the first nine months of 2016. In 2016, the derivative liability gave rise to a charge of $1.6 million in the third quarter and a benefit of $16.1 million in the nine months ended September 30, 2016. (The derivative liability was eliminated in the first quarter of 2017.)

? Basic net loss per share for the three and nine months in 2017 was $0.01 and $0.04 cents respectively compared to basic net loss per share of $0.02 cents in the quarter ended September 30, 2016 and net income per share of $0.01 for the nine months in 2016. Fully diluted net loss per share in the three and nine months ended September 30, 2107 was $0.01 and $0.04 respectively and in the three and nine months ended September 30, 2106 was $0.02 and $0.04 cents respectively.

? Adjusted EBITDA loss for the three and nine months in 2017 was $1.2 million and $4.1 million respectively compared to $0.9 million and $3.0 million respectively in 2016.

? Total liabilities reduced to $4.3 million as of September 30, 2017, compared to liabilities of $25.8 million as of December 31, 2016, and stockholders' equity increased to $10.5 million as of September 30, 2017, compared to a stockholders' deficit of $13.3 million as of December 31, 2016.

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

The Company continued to make progress on the development of its identity transaction platform to support both IdLok(TM) and mobile payment ecosystem pilots across several vertical and geographical markets:

    --  In August 2017, the Company initiated a soft pilot program with a United
        States financial institution using IdLok to provide enhanced credit card
        security.
    --  In September 2017, the Company signed a distributor agreement with a
        Brazilian software firm to market IdLok to its customer portfolio for
        managing identity authentication for a building's residents and
        visitors, verifying callers to contact centers and securing digital
        access and payment transactions for financial services companies.
    --  Also in September 2017, the Company signed a term sheet to provide a
        closed loop fuel card with a distributor in South Africa and is working
        towards the launch of the pilot.
    --  In October 2017, the Company began a three-month pilot with a major
        commercial real estate operator in the United States providing identity
        authentication for physical access control using IdLok. The operator's
        employees, contractors and visitors utilize the Idlok mobile-phone
        application in conjunction with a proximity beacon to enter corporate
        offices for which they have been authorized.

"Ipsidy is moving from planning and development to execution and rollout of its new suite of products," said Philip Beck, Chairman and Chief Executive Officer of Ipsidy. "We are starting to work with a number of customers on pilot programs, which are focused on proof of concept, with a view to moving into commercial production, once pilots have successfully concluded."

In order to align its public persona in the financial markets with its new branding and marketing strategy, the Company is in the process of updating its ticker symbol and expects to make a formal announcement of this change in the coming days.

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 September 30, 2017 filed at www.sec.gov and posted on the Company's investor relations website.

About Ipsidy:

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 www.multipay.com.co and Cards Plus in South Africa. 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 for everyday transactions. Further information on Ipsidy can be found at www.ipsidy.com or contact us at sales@ipsidy.com.

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 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.

Table 1


                         Reconciliation of Net Loss to Adjusted EBITDA

                                                                       (Unaudited)


                                Three Months  Ended                                          Nine Months Ended
                         -------------------                                        -----------------

                          September 30, 2017                                        September 30, 2016               September 30, 2017                 September 30, 2016
                          ------------------                                       ------------------                ------------------                ------------------

     Net (loss) gain                         $(2,110,019)                                              $(4,333,036)                    $(14,581,691)                         $2,526,783


     Add Back:


     Interest Expense                             230,698                                                    853,543                         1,125,880                           3,126,320

     Conversion of debt,
      derivative                                        -                                                 1,594,636                         4,106,652                        (16,082,616)
      liability, and
       modifications

     Depreciation and
      amortization                                 99,779                                                    127,473                           346,313                             388,233

     Write-off of asset                                 -                                                   225,862                                 -                            225,862

     Taxes                                              -                                                         -                                -                                  -

     Stock compensation                           624,581                                                    654,066                         4,891,251                           6,805,776
                                                  -------                                                    -------                         ---------                           ---------


     Adjusted EBITDA
      (Non-GAAP)                             $(1,154,961)                                                $(877,456)                     $(4,111,595)                       $(3,009,642)
                                              ===========                                                  =========                       ===========                         ===========


                                                       IPSIDY INC AND SUBSIDIARIES

                                                       CONSOLIDATED BALANCE SHEETS



                                                             September 30,                 December 31,

                                                                                  2017                           2016
                                                                                  ----                           ----

                                                              (Unaudited)

                                                                ASSETS

    Current Assets:

    Cash                                                                    $1,440,179                       $689,105

    Accounts receivable, net                                                   216,921                        138,359

    Current portion of net
     investment in direct
     financing lease                                                            51,402                         44,990

    Inventory                                                                  853,647                        150,679

    Other current assets                                                       207,938                        166,479
                                                                               -------                        -------

    Total current assets                                                     2,770,087                      1,189,612


    Property and equipment,
     net                                                                       242,290                        115,682

    Other Assets                                                             1,270,876                        358,343

    Intangible Assets, net                                                   3,185,416                      3,474,291

    Goodwill                                                                 6,736,043                      6,736,043

    Net investment in direct
     financing lease, net of
     current portion                                                           632,492                        674,015
                                                                               -------                        -------

    Total assets                                                           $14,837,204                    $12,547,986
                                                                           ===========                    ===========


                                            LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

    Current Liabilities:

    Accounts payable and
     accrued expenses                                                       $1,684,377                     $1,687,900

    Convertible notes
     payable, net                                                                    -                       250,000

    Derivative liability                                                             -                     8,388,355

    Capital lease obligation,
     current portion                                                            26,614                              -

    Notes payable, net,
     current portion                                                                 -                       109,819

    Deferred revenue                                                           277,287                        398,680
                                                                               -------                        -------

    Total current liabilities                                                1,988,278                     10,834,754
                                                                             ---------                     ----------


    Long-term liabilities:

    Convertible notes
     payable, net, less
     current maturities                                                              -                     3,051,603

    Notes payable, net, less
     current maturities                                                      2,231,648                      2,245,596

    Capital lease obligation,
     net of current portion                                                    122,674                              -

    Derivative liability, net
     of current portion                                                              -                     9,668,276
                                                                                   ---                     ---------

    Total long-term
     liabilities                                                             2,354,322                     14,965,475
                                                                             ---------                     ----------

            Total liabilities                                                4,342,600                     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; 364,320,216 and 234,704,655 shares issued

    and outstanding as of
     September 30, 2017 and
     December 31, 2016,
     respectively                                                               36,432                         23,470

    Additional paid in
     capital                                                                73,646,880                     35,341,669

    Accumulated deficit                                                   (63,507,684)                  (48,925,993)

    Accumulated comprehensive
     income                                                                    318,976                        308,611
                                                                               -------                        -------

    Total stockholders'
     equity (deficit)                                                       10,494,604                   (13,252,243)
                                                                            ----------                    -----------

    Total liabilities and
     stockholders' equity
     (deficit)                                                             $14,837,204                    $12,547,986
                                                                           ===========                    ===========


                                     IPSIDY INC  AND SUBSIDIARIES

                                CONSOLIDATED STATEMENTS OF OPERATIONS

                                              (Unaudited)


                                                     Three months ended                  Nine months ended
                                                     ------------------                 -----------------

                                                     September 30,                      September 30,

                                                      2017                  2016            2017                2016
                                                      ----                  ----            ----                ----


    Revenues:

    Products and
     services                                     $589,576              $576,466      $1,695,737          $1,373,892

    Lease income                                    18,070                19,735          56,050              33,050
                                                    ------                ------          ------              ------

    Total revenues, net                            607,646               596,201       1,751,787           1,406,942
                                                   -------               -------       ---------           ---------


    Operating Expenses:

    Cost of Sales                                  144,367               116,376         448,637             349,034

    General and
     administrative                              2,236,543             2,171,627      10,242,880          10,711,942

    Research and
     development                                     6,278                65,582          63,116             387,246

    Depreciation and
     amortization                                   99,779               127,473         346,313             388,233
                                                    ------               -------         -------             -------

    Total operating
     expenses                                    2,486,967             2,481,058      11,100,946          11,836,455
                                                 ---------             ---------      ----------          ----------


    Loss from operations                       (1,879,321)          (1,884,857)    (9,349,159)       (10,429,513)
                                                ----------            ----------      ----------         -----------


    Other Income (Expense):

    (Loss) gain on
     derivative
     liability                                           -          (1,594,636)      (452,146)         16,082,616

    Interest expense                             (230,698)            (853,543)    (1,125,880)        (3,126,320)

    Other income (expense), net                          -          (3,654,506)              -
                                                       ---           ----------             ---

    Other income
     (expense), net                              (230,698)          (2,448,179)    (5,232,532)         12,956,296
                                                  --------            ----------      ----------          ----------


    (Loss) income loss
     before income taxes                       (2,110,019)          (4,333,036)   (14,581,691)          2,526,783
                                                ----------            ----------     -----------           ---------


    Income Taxes                                         -                    -              -                  -
                                                       ---                  ---            ---                ---


    Net (loss) income                         $(2,110,019)         $(4,333,036)  $(14,581,691)         $2,526,783
                                               ===========           ===========    ============          ==========


    Net (loss) income
     per share -Basic                              $(0.01)              $(0.02)        $(0.04)              $0.01
                                                    ======                ======          ======               =====


    Net (loss) income
     per share -Diluted                            $(0.01)              $(0.02)        $(0.04)            $(0.04)
                                                    ======                ======          ======              ======


    Weighted Average
     Shares Outstanding
     -Basic                                    344,658,454           226,796,302     328,131,720         212,790,554
                                               ===========           ===========     ===========         ===========


    Weighted Average
     Shares Outstanding
     -Diluted                                  344,658,454           226,796,302     328,131,720         289,858,911
                                               ===========           ===========     ===========         ===========


                              IPSIDY INC AND SUBSIDIARIES

                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                   (Unaudited)

                                                                  Nine Months Ended

                                                                    September 30,

                                                                        2017                2016
                                                                        ----                ----

    CASH FLOWS FROM OPERATING ACTIVITIES:

     Net(loss)
     income                                                    $(14,581,691)         $2,526,783

    Adjustments to reconcile net loss with cash used in
     operations:

     Depreciation
     and
     amortization
     expense                                                         346,313             388,233

    Stock-
     based
     compensation                                                  4,891,251           6,805,776

    Common
     stock
     issued
     for
     services                                                        140,151             285,227

     Amortization
     of debt
     discount
     and
     debt
     issuance
     costs,
     net                                                             793,061           2,741,653

    Loss
     (gain)
     on
     derivative
     liability                                                       452,146        (16,082,616)

    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                                                             -            225,862

    Changes in operating assets and liabilities:

    Accounts
     receivable                                                     (75,806)            125,814

    Net
     investment
     in
     direct
     financing
     lease                                                            35,111              17,845

    Other
     current
     assets                                                         (41,459)           (12,929)

    Inventory                                                      (704,326)          (159,494)

    Accounts
     payable
     and
     accrued
     expenses                                                        319,814           (401,465)

    Deferred
     revenue                                                       (121,395)            476,457
                                                                    --------             -------

    Net cash
     flows
     from
     operating
     activities                                                  (4,892,324)        (3,062,854)
                                                                  ----------          ----------


    CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchase
     of
     property
     and
     equipment                                                      (11,392)           (23,309)

     Investment
     in
     other
     assets
     including
     work in
     process                                                       (921,780)          (136,162)

    Cash
     acquired
     in
     acquisitions                                                          -            419,042
                                                                         ---            -------

    Net cash
     flows
     from
     investing
     activities                                                    (933,172)            259,571
                                                                    --------             -------


                                  IPSIDY INC AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

                                   (Unaudited)

                                                                  Nine Months Ended

                                                                    September 30,

                                                                               2017                          2016
                                                                               ----                          ----

    CASH FLOWS FROM FINANCING ACTIVITIES:

    Proceeds from issuance
     of notes payable and
     common stock                                                         3,000,000                     1,650,000

    Proceeds from the sale
     of common stock and
     other                                                                4,002,000                     1,250,000

    Payment of debt and
     equity issuance cost                                                 (375,821)                    (253,642)

    Principal payments on
     capital lease
     obligations                                                           (59,819)                     (60,875)

    Principal payments on
     notes payable                                                         (14,119)                            -
                                                                            -------                           ---

    Net cash flows from
     financing activities                                                 6,552,241                     2,585,483
                                                                          ---------                     ---------


    Effect of foreign
     currencies                                                              24,329                       102,739
                                                                             ------                       -------


    Net change in Cash                                                      751,074                     (115,061)

    Cash, Beginning of
     Period                                                                 689,105                       349,873
                                                                            -------                       -------

    Cash, End of Period                                                  $1,440,179                      $234,812
                                                                         ==========                      ========


    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                      $169,125
                                                                           ========                      ========

    Issuance of warrants
     for inventory costs                                 $                        -                      $79,081
                                                         ==========================                      =======

    Reclassification of
     derivatives upon
     removal of price
     protection in
     warrants                                                            $7,614,974                      $692,850
                                                                         ==========                      ========

    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
                                                         ==========================                     ========

Contacts:
Ipsidy Inc.
Philip D. Beck, Chairman, CEO & President
PhilipBeck@ipsidy.com

Stuart P. Stoller, CFO
StuartStoller@ipsidy.com
+1-407-951-8640

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SOURCE Ipsidy Inc.