UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): May 7, 2018

 

 

 

Ipsidy Inc.

(Exact name of registrant as specified in its charter)

 

Delaware 000-54545 46-2069547
(State or Other Jurisdiction of
Incorporation)
(Commission File Number)  (IRS Employer Identification
Number)

 

780 Long Beach Boulevard, Long Beach, New York 11561

 (Address of principal executive offices) (zip code)

 

516-274-8700

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

☒   Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

 

 

  

Item 2.02Results of Operations and Financial Condition 

 

On May 7, 2018, Ipsidy Inc. (the “Company”) issued a press release regarding its financial results for the fiscal quarter ended March 31, 2018.  The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information contained in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01   Financial Statements and Exhibits

 

(d) Index of Exhibits

 

Exhibit
Number
  Description
     
99.1   Press Release dated May 7, 2018

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Ipsidy Inc.
   
Date: May 8, 2018 By: /s/ Stuart Stoller
  Name: Stuart Stoller
  Title: Chief Financial Officer

 

 

Exhibit 99.1

 

 

 

Ipsidy Announces Results for First Quarter 2018

 

LONG BEACH, N.Y., May 7, 2018 -- Ipsidy Inc. (www.ipsidy.com) [OTCQB:IDTY], a provider of secure, biometric identification, identity management and electronic transaction processing services, today announced its results for the quarter ended March 31, 2018. 

 

Financial Highlights for the Three Months Ended March 31, 2018

 

Total revenue for the three-month period ended March 31, 2018 was $0.5 million compared to $0.6 million for the three months ended March 31, 2017. 

 

Net loss before taxes for the three months ended March 31, 2018 was $2.8 million compared to a net loss in the first quarter of 2017 of $9.7 million. In 2017, the recapitalization, including the conversion of notes payable and the elimination of the derivative liability gave rise to a charge of $4.1 million in the first quarter ended March 31, 2017. 

 

Basic and diluted net loss per share for the three-month period ended March 31, 2018 was $0.01 cent compared to basic and diluted net loss per share of $0.03 cents in the quarter ended March 31, 2017. 

 

Adjusted EBITDA loss for the three months ended March 31, 2018 was $1.7 million compared to $1.6 million in 2017.

 

On April 30, 2018, the Company entered into a Note Modification Agreement with the Stern Trust, to extend to April 30, 2020, the maturity date of a Note in the amount of $3,000,000 issued in 2017, in consideration of the issuance of 1,500,000 shares of Common Stock.

 

Refer to Table 1 for reconciliation of net income to Adjusted EBITDA (a non-GAAP measure).

 

Operational Highlights

 

The Company continued to make substantial progress during the quarter as follows:

 

The Ipsidy App became available in the App Store and on Google Play and we published updated RESTful APIs and SDKs which allow for custom integration of our platform to third party systems.

 

Launched new AccessTM, out of the box identification solution for biometric authentication of residents, visitors attempting entry into a building or controlled area, using Bluetooth beacons to trigger the identity authentication event.

 

Launched new VerifyTM out of the box identification solution which includes an enterprise portal where agents can trigger biometric authentication of customers as well as everyday transactions such as account changes, account transfers and other service events.

 

Signed a contract with Ruta Amiga, a Colombian marketing company, to launch a new loyalty rewards program in Colombia.

 

Announced that we had agreed in principle with Datapro, to offer Ipsidy’s biometric, multi-factor, identity authentication service to Datapro’s financial institutions throughout the Latin American market.

 

Signed an agreement with the Zimbabwe Electoral Commission for the provision of our SearchTM / 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.

 

Ipsidy made significant progress in the last quarter launching our new products, signing new customers and substantially delivering our Search AFIS system for Zimbabwe” said Philip Beck, Chairman and Chief Executive Officer of Ipsidy. Mr. Beck added “We are executing our strategy of creating trusted transactions, embedding biometrically authenticated identity and event details with a digital signature and using a participant’s mobile device to approve everyday transactions.”

 

 

 

 

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, 2018 filed at www.sec.gov and posted on the Company’s investor relations website.

 

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.

 

Get the Ipsidy mobile app on your mobile phone: or

 

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 offers biometric and multi-factor identity management solutions which 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.

 

Contacts:

Ipsidy Inc.

Philip D. Beck, Chairman, CEO & President 

Stuart P. Stoller, CFO

PhilipBeck@ipsidy.com 

StuartStoller@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, 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.

 

Table 1

 

Reconciliation of Net Loss to Adjusted EBITDA
   Quarter Ended 
   March 31, 2018   March 31, 2017 
         
         
Net Loss   (2,752,925)   (9,669,092)
           
Add Back:          
           
Interest Expense   239,169    604,015 
Conversion of debt, etc.       4,106,652 
Depreciation and amortization   110,676    109,534 
Taxes   4,561    4,170 
Stock-based compensation equity plans   738,212    3,294,160 
           
Adjusted EBITDA   (1,660,307)   (1,550,561)

 

 

 

 

IPSIDY INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

         
   March 31,   December 31, 
   2018   2017 
   (unaudited)     
ASSETS
Current Assets:          
Cash  $2,412,363   $4,413,822 
Accounts receivable, net   676,628    165,929 
Current portion of net investment in direct financing lease   54,215    52,790 
Inventory   475,541    492,030 
Other current assets   560,721    218,537 
Total current assets   4,179,468    5,343,108 
           
Property and equipment, net   202,926    209,719 
Other Assets   1,446,732    1,243,531 
Intangible Assets, net   2,794,600    2,878,080 
Goodwill   6,736,043    6,736,043 
Net investment in direct financing lease, net of current portion   604,663    618,763 
Total assets  $15,964,432   $17,029,244 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
 
Current Liabilities:          
Accounts payable and accrued expenses  $1,816,982   $1,447,185 
Capital lease obligation, current portion   28,251    27,420 
Deferred revenue   538,812    122,511 
Total current liabilities   2,384,045    1,597,116 
           
Long-term liabilities:          
Notes payable, net   2,519,785    2,375,720 
Capital lease obligation, net of current portion   108,127    115,509 
Total long-term liabilities   2,627,912    2,491,229 
        Total liabilities   5,011,957    4,088,345 
           
Commitments and Contingencies          
           
Stockholders’ Equity:          
Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 405,708,228 and 403,311,988 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively   40,571    40,331 
Additional paid in capital   79,791,311    79,053,339 
Accumulated deficit   (69,160,547)   (66,407,622)
Accumulated comprehensive income   281,140    254,851 
Total stockholders’ equity   10,952,475    12,940,899 
Total liabilities and stockholders’ equity  $15,964,432   $17,029,244 

 

 

 

 

IPSIDY INC  AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 (Unaudited)

 

   Three Month Ended 
   March 31, 
   2018   2017 
         
Revenues:          
Products and services  $507,927   $565,545 
Lease income   17,862    19,144 
Total revenues, net   525,789    584,689 
           
Operating Expenses:          
Cost of Sales   120,248    149,129 
General and administrative   2,798,699    5,251,212 
Research and development   5,361    29,070 
Depreciation and amortization   110,676    109,534 
Total operating expenses   3,034,984    5,538,945 
           
Loss from operations   (2,509,195)   (4,954,256)
           
Other Income (Expense):          
(Loss) gain on derivative liabilities       (452,146)
 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 settlement of notes payable       (5,978,643)
Interest expense   (239,169)   (604,015)
Other income (expense), net   (239,169)   (4,710,666)
           
Loss before income taxes   (2,748,364)   (9,664,922)
           
Income tax expense   (4,561)   (4,170)
           
 Net Loss  $(2,752,925)  $(9,669,092)
           
Net Loss Per Share - Basic and Diluted  $(0.01)  $(0.03)
           
Weighted Average Shares Outstanding - Basic and Diluted   404,254,263    295,596,151 

 

 

 

 

 

IPSIDY INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2018   2017 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net(loss) income  $(2,752,925)  $(9,669,092)
Adjustments to reconcile net loss with cash used in operations:          
Depreciation and amortization expense   110,676    109,534 
Stock-based compensation   738,212    3,294,160 
Common stock issued for services       42,376 
Amortization of debt discount and debt issuance costs, net   144,065    504,939 
Loss on derivative liability       452,146 
Gain on settlement 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   (514,722)   25,725 
Net investment in direct financing lease   12,675    11,394 
Other current assets   (169,973)   (226,174)
Inventory   (196,655)   2,863 
Accounts payable and accrued expenses   381,730    736,535 
Deferred revenue   416,301    (143,012)
Net cash flows from operating activities   (1,830,616)   (1,204,101)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   (10,474)   (4,563)
Investment in other assets including work in process   (182,140)   (343,655)
Net cash flows from investing activities   (192,614)   (348,218)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of notes payable and common stock       3,000,000 
Proceeds from issuance of converible notes payable, common stock and warrants        
Proceeds from the sale of common stock, net       2,880,710 
Payment of debt issuance costs       (86,331)
Principal payments on capital lease obligations   (7,382)   (1,957)
Principal payments on notes payable       (14,173)
Net cash flows from financing activities   (7,382)   5,778,249 
           
Effect of foreign currencies exchange on cash   29,153    30,977 
           
Net change in Cash   (2,001,459)   4,256,907 
Cash, Beginning of Period   4,413,822    689,105 
Cash, End of Period  $2,412,363   $4,946,012 
           
Supplemental Disclosure of Cash Flow Information:          
Cash paid for interest  $3,392   $1,634 
Cash paid for income taxes  $4,561   $4,170 
           
Non-cash Investing and Financing Activities:          
Issuance of common stock for conversion of debt and related interest  $   $21,609,673 
Issuance of common stock for debt issuance 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