Ipsidy Announces Results for Second Quarter 2018 and Common Equity Funding of $9.6 Million
LONG BEACH, New York, Aug. 7, 2018 /PRNewswire/ -- Ipsidy Inc. (www.ipsidy.com) (OTCQX: IDTY), a provider of secure, biometric identification, identity management and electronic transaction processing services, today announced its results for the quarter ended June 30, 2018 and that it has received subscriptions for common stock in an equity fund raising of approximately $9.6 million.
Financial Highlights for the Three and Six Months Ended June 30, 2018
-- Total revenue for the three and six-month periods was $1.8 million and
$2.4 million respectively compared to $0.6 million and $1.1 million
respectively for the three and six months in 2017.
-- The increase in revenue for the period reflected the successful
completion of the supply of Search(TM), our Automated Fingerprint
Identification System and related services to the Zimbabwe Electoral
Commission ("ZEC").
-- Net loss for the three and six months was $2.5 million and $5.2 million
respectively compared to a net loss of $2.8 million and $12.5 million
respectively for the three and six months in 2017. In 2017, the
satisfaction of notes payable in the first quarter resulted in a charge
of approximately $4.1 million.
-- Basic and fully diluted net loss per share for the three and six months
in 2018 was $0.01 and $0.01 cents respectively compared to basic net
loss per share of $0.01 and $0.04 cents respectively for the three and
six months in 2017.
-- Adjusted EBITDA loss for the three and six months in 2018 was $1.6
million and $3.3 million respectively compared to $1.4 million and $3.0
million respectively in 2017. Adjusted EBITDA loss for the six-month
period increased approximately $0.3 million due to the increased
investment in salary and technology expense, as the Company expanded its
infrastructure to support future operations and in addition incurred a
$0.5 million charge principally for the write-down in the value of
legacy kiosks, offset by the revenue earned from the sale of our
Search(TM) system to ZEC.
Subsequent Events
-- As of August 7, 2018, the Company has received subscriptions, for
aggregate gross proceeds of approximately $9.6 million, by the issuance
of approximately 63.9 million shares of Common Stock at $0.15 per share.
The Theodore Stern Revocable Trust (the "Stern Trust") has agreed to
invest $1 million in this round. Mr. Theodore Stern, one of the
directors of our Company, is the trustee of the Stern Trust.
-- On August 6, 2018, the Company gave notice to the Stern Trust that it
will partially prepay $1,000,000 of principal and approximately $158,000
of accrued interest, out of the $3,000,000 Note dated February 1, 2017
held by the Stern Trust.
"Our flexible suite of Identity-as-a-Service solutions, makes biometrically authenticated identity core to the user experience in approving everyday transactions," said Philip Beck Chairman and Chief Executive Officer of Ipsidy. "Our low cost IDaaS solutions can be delivered out of the box or easily integrated with our RESTful API's. The recent fund-raising will help us execute on the large number of physical and virtual use cases for our solutions, in different markets and countries around the world."
Operational Highlights
The Company continued to make progress enhancing our identity transaction platform to support the launch of our new identity solutions across several vertical and international markets:
-- Established Ipsidy Enterprises Ltd in England and hired Jonathan Ellis
as our Managing Director, Europe, Middle East and Africa (EMEA) Sales.
-- In May 2018 we delivered and installed our Search technology for the
ZEC. This important project was delivered on time and on budget.
-- In May 2018 we also announced the availability of the new Ipsidy App for
iPhone and Android, in the App Store and on Google Play, providing
mobile biometric, multi-factor identity authentication for a broad range
of everyday transactions.
-- In June 2018, the Company began production service of Access(TM) with a
major commercial real estate operator at the first location in the
United States providing identity authentication for physical access
control. The operator's employees, contractors and visitors can utilize
the Ipsidy mobile identity authentication application in conjunction
with a proximity beacon to enter corporate offices for which they have
been authorized.
-- In June 2018 the Company signed a contract with Skypatrol, Miami based
provider of innovative GPS-tracking and fleet-management software tools,
for the provision of Skyguru(TM) our joint mobile wallet payment
solution and expense management software for trucking fleets. Skypatrol
currently operates in 25 countries. We are currently working to launch
the product to Skypatrol's fleet operators in Latin America and the
Caribbean where its customers and end users operate in excess of
1,000,000 vehicles.
-- Launch of Access(TM), our out-of-the-box Identity as a Service solution
for access management. Using just a tablet and a Bluetooth beacon and
requiring no integration or expensive hardware, Access delivers a highly
secure, yet low-cost, biometric access solution to protect the perimeter
and create a trusted environment.
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 June 30, 2018 filed at www.sec.gov and posted on the Company's investor relations website.
Get the Ipsidy mobile app at: App Store or GooglePlay
Visit the Ipsidy website today at https://www.ipsidy.com/developers where you can create a demo account and run test authentications using the Ipsidy mobile app.
About Ipsidy:
Ipsidy Inc (OTCQX: IDTY) www.ipsidy.com 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, Cards Plus in South Africa, www.cardsplus.co.za and Ipsidy Enterprises in the UK. 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 offers 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, net revenue, net income, Adjusted EBITDA, earnings per share, future product and 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's 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.
Reconciliation of Net Loss to Adjusted EBITDA
(Unaudited)
Three Months Ended Six Months Ended
------------------- ----------------
June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
------------- ------------- ------------- -------------
Net loss $(2,473,050) $(2,802,578) $(5,225,975) $(12,471,672)
Add Back:
Interest Expense 246,928 291,168 485,467 895,182
Conversion of debt, derivative liability, and modifications/other (77,734) - (77,734) 4,106,652
Depreciation and amortization 113,768 137,000 224,140 246,534
Taxes 9,856 1,600 14,417 5,770
Stock compensation 624,581 972,510 1,292,900 4,266,670
------- ------- --------- ---------
Adjusted EBITDA (Non-GAAP) $(1,555,651) $(1,400,300) $(3,286,785) $(2,950,864)
=========== =========== =========== ===========
IPSIDY INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2018 2017
---- ----
(unaudited)
ASSETS
Current Assets:
Cash $1,312,667 $4,413,822
Accounts receivable, net 775,730 165,929
Current portion of net investment in direct financing lease 55,679 52,790
Inventory 167,649 492,030
Other current assets 481,702 218,537
------- -------
Total current assets 2,793,427 5,343,108
Property and equipment, net 190,218 209,719
Other Assets 1,610,996 1,243,531
Intangible Assets, net 2,711,129 2,878,080
Goodwill 6,736,043 6,736,043
Net investment in direct financing lease, net of current portion 590,182 618,763
------- -------
Total assets $14,631,995 $17,029,244
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $1,944,356 $1,447,185
Capital lease obligation, current portion 29,107 27,420
Deferred revenue 657,945 122,511
------- -------
Total current liabilities 2,631,408 1,597,116
Long-term liabilities:
Notes payable, net 2,698,834 2,375,720
Capital lease obligation, net of current portion 100,521 115,509
------- -------
Total liabilities 5,430,763 4,088,345
--------- ---------
Commitments and Contingencies
Stockholders' Equity:
Common stock, $0.0001 par value, 1,000,000,000 shares
authorized; 412,344,956 and 403,311,988 shares issued
and outstanding as of June 30, 2018 and December 31, 2017, respectively 41,234 40,331
Additional paid in capital 80,541,473 79,053,339
Accumulated deficit (71,633,597) (66,407,622)
Accumulated comprehensive income 252,122 254,851
------- -------
Total stockholders' equity 9,201,232 12,940,899
--------- ----------
Total liabilities and stockholders' equity $14,631,995 $17,029,244
=========== ===========
See notes to condensed consolidated financial statements.
IPSIDY INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
------------------ ----------------
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Revenues:
Products and services $1,821,807 $540,616 2,329,734 1,106,161
Lease income 17,520 18,836 35,382 37,980
------ ------ ------ ------
Total revenues, net 1,839,327 559,452 2,365,116 1,144,141
--------- ------- --------- ---------
Operating Expenses:
Cost of Sales 743,709 155,141 863,957 304,270
General and administrative 3,256,150 2,749,355 6,055,153 8,000,567
Research and development 20,330 27,766 25,691 56,838
Depreciation and amortization 113,768 137,000 224,140 246,534
------- ------- ------- -------
Total operating expenses 4,133,957 3,069,262 7,168,941 8,608,209
--------- --------- --------- ---------
Loss from operations (2,294,630) (2,509,810) (4,803,825) (7,464,068)
---------- ---------- ---------- ----------
Other Income (Expense):
Loss on derivative liability - - - (452,146)
Gain on extinguishment of note 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 (246,298) (291,168) (485,467) (895,182)
Other income 77,734 - 77,734 -
------ --- ------ ---
Other (expense), net (168,564) (291,168) (407,733) (5,001,834)
-------- -------- -------- ----------
Loss before income taxes (2,463,194) (2,800,978) (5,211,558) (12,465,902)
---------- ---------- ---------- -----------
Income Taxes (9,856) (1,600) (14,417) (5,770)
------ ------ ------- ------
Net loss $(2,473,050) $(2,802,578) $(5,225,975) $(12,471,672)
=========== =========== =========== ============
Net loss per share - Basic $(0.01) $(0.01) $(0.01) $(0.04)
====== ====== ====== ======
Net loss per share - Diluted $(0.01) $(0.01) $(0.01) $(0.04)
====== ====== ====== ======
Weighted Average Shares Outstanding - Basic 407,490,811 344,140,554 405,872,537 319,868,353
=========== =========== =========== ===========
Weighted Average Shares Outstanding - Diluted 407,490,811 344,140,554 405,872,537 319,868,353
=========== =========== =========== ===========
IPSIDY INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
2018 2017
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(5,225,975) $(12,471,672)
Adjustments to reconcile net loss with cash flow from operations:
Depreciation and amortization expense 224,140 246,534
Stock-based compensation 1,292,900 4,266,670
Stock issued for services 196,138 62,805
Inventory reserve 348,308 -
Amortization of debt discounts and issuance costs 323,114 648,996
Loss on derivative liability - 452,146
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
Changes in operating assets and liabilities:
Accounts receivable (620,817) (16,913)
Net investment in direct financing lease 25,692 23,094
Other current assets (263,165) (21,763)
Inventory (41,435) (705,579)
Accounts payable and accrued expenses 525,977 240,218
Deferred revenue 535,434 (277,992)
------- --------
Net cash flows from operating activities (2,679,689) (3,898,950)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (15,690) (8,194)
Investment in other assets (389,767) (536,184)
-------- --------
Net cash flows from investing activities (405,457) (544,378)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable and common stock - 3,000,000
Proceeds from the sale of common stock, net - 3,570,100
Payment of debt and equity issuance costs - (375,821)
Principal payments on notes payable - (44,599)
Principal payments on capital lease obligations (14,988) (9,904)
------- ------
Net cash flows from financing activities (14,988) 6,139,776
------- ---------
Effect of foreign currencies (1,021) (9,356)
------ ------
Net change in Cash (3,101,155) 1,687,092
Cash, Beginning of Period 4,413,822 689,105
--------- -------
Cash, End of Period $1,312,667 $2,376,197
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $8,247 $6,418
====== ======
Cash paid for income taxes $14,417 $5,770
======= ======
Non-cash Investing and Financing Activities:
Issuance of common stock for conversion of debt and accrued interest $ - $21,609,673
======================= ===========
Issuance of warrants for inventory costs $ - $224,460
======================= ========
Reclassification of derivatives upon removal of price protection in warrants $ - $7,614,974
======================= ==========
Acquisition of equipment due to a capital lease $ - $163,407
======================= ========
Contacts:
Ipsidy Inc.
Philip D. Beck, Chairman, CEO & President, PhilipBeck@ipsidy.com
Stuart P. Stoller, CFO, StuartStoller@ipsidy.com, +1(516)274-8700
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SOURCE Ipsidy Inc.
