Ipsidy Announces Results for Year Ended December 31, 2017
Ipsidy Announces Results for Year Ended December 31, 2017
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
-- Total revenue for the year ended December 31, 2017 was $2.3 million
compared to $1.9 million for the year ended December 31, 2016.
-- Net loss for the year ended December 31, 2017 was $17.5 million compared
to a net loss of $9.9 million for the year ended December 31, 2016. In
2017, there was a negative impact of $4.1 million from the elimination
of debt and modification of warrants, as compared to a positive impact
of $7.3 million in 2016 from the reduction in the derivative liability.
-- Basic and fully diluted net loss per share for the years ended December
31, 2017 and December 31, 2016 were both $0.05 cents.
-- Adjusted EBITDA loss for the year ended December 31, 2017 was $5.7
million compared to an Adjusted EBITDA loss of $4.3 million for the year
ended December 31, 2016, as the Company invested in infrastructure and
technology and engaged additional personnel 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 $9.0 million of additional equity and $3.0 million of debt
financing.
-- Total liabilities reduced to $4.1 million as of December 31, 2017,
compared to liabilities of $25.8 million as of December 31, 2016, and
stockholders' equity increased to $12.9 million as of December 31, 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
-- Announced the appointment of Philip Beck as Chairman of the Board of
Directors, Chief Executive and President and Stuart Stoller as Chief
Financial Officer on January 31, 2017.
-- Added Ted Stern to the Board of Directors on September 28, 2017.
-- Changed name to Ipsidy Inc. adopted the new ticker symbol "IDTY" and in
February 2018 Ipsidy was upgraded to the OTC Markets OTCQB tier. This is
a Venture Market for early stage and developing companies who are
current in their filings and undergo an annual verification and
management certification process.
-- Continued process improvements to the Company's MultiPay bill pay
transaction platform in Colombia.
-- Continued to enhance our identity transaction platform.
-- Initiated pilot programs in the United States using IdLok to provide
identity and transaction authentication, in order to test our products
in the market, gain customer and use feedback and ready the products for
commercial launch in the marketplace.
-- In December 2017, we won an international tender by the Zimbabwe
Electoral Commission for the provision of our IdSearch(TM) / IMS Voter
Registry Automated Fingerprint Identification System (AFIS) to provide
automated voter roll publication and ensure that no duplicate entries
exist in the voter roll for the forthcoming election.
"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 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, 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
PhilipBeck@ipsidy.com
+1 (516) 274-8700
Thomas Szoke, Chief Technology Officer
ThomasSzoke@ipsidy.com
Stuart P. Stoller, CFO
StuartStoller@ipsidy.com
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SOURCE Ipsidy Inc.
