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, 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 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 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 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, 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.

Company Codes: OTC-PINK:IDTY, OTC-QX:IDTY, OtherOTC:IDTY

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