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authID Inc. - Quarter Report: 2021 March (Form 10-Q)

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2021

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from               to               

 

Commission file number 000-54545

 

 

Ipsidy Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   46-2069547

(State or other jurisdiction of

incorporation or organization)

  (I.R.S. Employer
Identification No.)

 

670 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)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol   Name of each exchange on which registered
Not applicable.        

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.

☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
  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. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes ☐ No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

 

Class   Outstanding at April 30, 2021
Common Stock, par value $0.0001   604,308,061 shares
Documents incorporated by reference:   None

 

 

 

 

 

TABLE OF CONTENTS

 

    Page No.
PART I - FINANCIAL INFORMATION    
     
Item 1. Financial Statements.   1 - 5
     
Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020   1
     
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (unaudited)   2
     
Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020 (unaudited)   3
     
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020 (unaudited)   4
     
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (unaudited)   5
     
Notes to Unaudited Condensed Consolidated Financial Statements   6-18
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.   19-24
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk.   24
     
Item 4. Controls and Procedures.   24
     
PART II - OTHER INFORMATION    
     
Item 1. Legal Proceedings.   25
     
Item 1A. Risk Factors.   25
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.   25
     
Item 3. Defaults Upon Senior Securities.   25
     
Item 4. Mine Safety Disclosures.   25
     
Item 5. Other Information.   25
     
Item 6. Exhibits.   26-28

 

i

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs.

 

You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in this report, in Part I. Item 1A. Risk Factors also appear in our Annual Report on Form 10-K for the year ended December 31, 2020 and our other filings with the Securities and Exchange Commission. Some examples of risk factors which may affect our business are as follows:

 

our lack of significant revenues and history of losses,

 

our ability to continue as a going concern,

 

our ability to raise additional working capital as necessary,

 

our ability to satisfy our obligations as they become due,

 

the failure to successfully commercialize our product or sustain market acceptance,

 

the reliance on third party agreements and relationships for development of our business,

 

our operations in foreign markets,

 

breaches of network or information technology services,

 

the control exercised by our management,

 

the impact of government regulation on our business,

 

our ability to effectively compete,

 

the possible inability to effectively protect our intellectual property,

 

the lack of a public market for our securities and the impact of the penny stock rules on trading in our common stock should a public market ever be established, and

 

the impact of the Covid-19 Pandemic.

 

Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

 

OTHER PERTINENT INFORMATION

 

Unless specifically set forth to the contrary, when used in this report the terms “Ipsidy,” the “Company,” “we,” “our,” “us,” and similar terms refer to Ipsidy Inc., a Delaware corporation and its subsidiaries.

 

The information which appears on our website www.ipsidy.com is not part of this report.

 

ii

 

 

PART I – FINANCIAL INFORMATION

 

IPSIDY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31,   December 31, 
   2021   2020 
   (unaudited)     
ASSETS
Current Assets:        
Cash  $2,618,078   $3,765,277 
Accounts receivable, net   618,586    72,986 
Current portion of net investment in direct financing lease   74,645    72,682 
Inventory, net   123,495    254,951 
Other current assets   301,351    237,769 
Total current assets   3,736,155    4,403,665 
           
Property and Equipment, net   88,135    97,829 
Other Assets   221,378    240,223 
Intangible Assets, net   4,233,805    4,527,476 
Goodwill   4,183,232    4,183,232 
Net investment in direct financing lease, net of current portion   402,608    422,021 
Total assets  $12,865,313   $13,874,446 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current Liabilities:          
Accounts payable and accrued expenses  $2,537,461   $2,665,132 
Notes payable, current portion   6,098    5,947 
Convertible debt, net of discounts   5,812,650    - 
Finance lease obligation, current portion   40,421    39,232 

Contract liabilities

   556,882    237,690 
Total current liabilities   8,953,512    2,948,001 
           
Finance lease obligation, net of current portion   -    10,562 
Notes payable, net of current portion   971,520    487,339 
Convertible debt, net of discounts   -    5,800,976 
Other liabilities   59,506    47,809 
Total liabilities   9,984,538    9,294,687 
           
Commitments and Contingencies (Note 12)          
           
Stockholders’ Equity:          
Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 603,486,888 and 589,272,023 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively   60,348    58,927 
Additional paid in capital   103,343,579    102,594,341 
Accumulated deficit   (100,724,150)   (98,234,151)
Accumulated comprehensive income   200,998    160,642 
Total stockholders’ equity   2,880,775    4,579,759 
Total liabilities and stockholders’ equity  $12,865,313   $13,874,446 

 

See notes to condensed consolidated financial statements.

1

 

 

IPSIDY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months Ended March 31, 
   2021   2020 
         
Revenues:        
Products and services  $575,913   $778,938 
Lease income   13,086    14,851 
Total revenues, net   588,999    793,789 
           
Operating Expenses:          
Cost of sales   216,144    355,723 
General and administrative   1,927,926    1,504,255 
Research and development   322,010    430,401 
Impairment loss   -    871,807 
Depreciation and amortization   309,829    304,211 
Total operating expenses   2,775,909    3,466,397 
           
Loss from operations   (2,186,910)   (2,672,608)
           
Other Expense:          
Other income, net   1,537    9,953 
Debt extinguishment   -    (985,842)
Interest expense, net   (297,438)   (179,050)
Other expense, net   (295,901)   (1,154,939)
           
Loss before income taxes   (2,482,811)   (3,827,547)
           
Income Tax Expense   (7,188)   (8,874)
           
Net loss  $(2,489,999)  $(3,836,421)
           
Net Loss Per Share - Basic and Diluted  $(0.00)  $(0.01)
           
Weighted Average Shares Outstanding - Basic and Diluted   592,768,709    519,436,402 

 

See notes to condensed consolidated financial statements.

 

2

 

 

IPSIDY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

   Three Months Ended March 31, 
   2021   2020 
Net Loss  $(2,489,999)  $(3,836,421)
Foreign currency translation gain (loss)   40,356    (116,264)
Comprehensive loss  $(2,449,643)  $(3,952,685)

 

See notes to condensed consolidated financial statements.

 

3

 

 

IPSIDY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

                   Accumulated     
           Additional       Other     
   Common Stock   Paid-in   Accumulated   Comprehensive     
   Shares   Amount   Capital   Deficit   Income   Total 
Balances, December 31, 2020   589,272,023   $58,927   $102,594,341   $(98,234,151)  $160,642   $4,579,759 
Stock-based compensation   -    -    626,579    -    -    626,579 
Convertible note and accrued interest converted to common stock   988,500    99    123,981    -    -    124,080 
Cashless stock option exercises   5,343,599    534    (534)   -    -    - 
Cashless warrant exercises   7,882,766    788    (788)   -    -    - 
Net loss   -    -    -    (2,489,999)   -    (2,489,999)
Foreign currency translation   -    -    -    -    40,356    40,356 
Balances, March 31, 2021   603,486,888   $60,348   $103,343,579   $(100,724,150)  $200,998   $2,880,775 
                               
Balances, December 31, 2019   518,125,454   $51,812   $94,982,167   $(86,935,593)  $177,385   $8,275,771 
Modification of warrants issued with debt   -    -    95,223    -    -    95,223 
Stock-based compensation   4,500,000    450    168,660    -    -    169,110 
Issuance of common stock to settle accounts payable   106,192    11    8,259    -    -    8,270 
Net loss   -    -    -    (3,836,421)   -    (3,836,421)
Foreign currency translation   -    -    -    -    (116,264)   (116,264)
Balances, March 31, 2020   522,731,646   $52,273   $95,254,309   $(90,772,014)  $61,121   $4,595,689 

 

See notes to condensed consolidated financial statements.

 

4

 

 

IPSIDY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Three Months Ended March 31, 
   2021   2020 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(2,489,999)  $(3,836,421)
Adjustments to reconcile net loss with cash flows from operations:          
Depreciation and amortization expense   309,829    304,211 
Stock-based compensation   626,579    169,110 
Extinguishment of note payable   -    985,842 
Amortization of debt discounts and issuance costs   131,674    95,948 
Impairment losses   -    871,807 
Changes in operating assets and liabilities:          
Accounts receivable   (543,955)   (450,291)
Net investment in direct financing lease   17,450    15,686 
Other current assets   (63,582)   355,880 
Inventory   129,863    37,714 
Accounts payable and accrued expenses   (124,665)   156,085 
Contract liabilities   319,192    121,719 
Other liabilities   11,697    - 
Net cash flows from operating activities   (1,675,917)   (1,172,710)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   -    (2,394)
Purchase of intangible assets   (4,424)   - 
Decrease (increase) in other assets   18,845    (128,676)
Net cash flows from  investing activities   14,421    (131,070)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of convertible note payable   -    1,510,000 
Payment of debt issuance costs   -    (104,800)
Proceeds from Paycheck Protection Program Loan   485,760    - 
Principal payments on finance lease obligation and notes payable   (10,801)   (9,600)
Net cash flows from financing activities   474,959    1,395,600 
           
Effect of Foreign Currencies   39,338    (96,653)
           
Net Change in Cash   (1,147,199)   (4,833)
Cash, Beginning of the Period   3,765,277    567,081 
Cash, End of the Period  $2,618,078   $562,248 
           
Supplemental Disclosure of Cash Flow Information:          
Cash paid for interest  $8,779   $2,792 
Cash paid for income taxes  $7,188   $8,874 
           
Modification of warrants issued with convertible debt  $-   $95,223 
Exchange of notes payable and accrued interest for convertible notes payable  $-   $2,662,000 
Settlement of accounts payable with issuance of common stock  $-   $8,270 
Conversion of convertible note payable and accrued interest to common stock  $124,080   $- 
Equity reclassification due to cashless option and warrant exercises  $1,322   $- 

 

See notes to condensed consolidated financial statements.

5

 

 

IPSIDY INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – BASIS OF PRESENTATION

 

In the opinion of Management, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for future periods or the full year.

 

The condensed consolidated financial statements include the accounts of Ipsidy Inc. and its wholly-owned subsidiaries MultiPay S.A.S., ID Global LATAM, IDGS S.A.S., ID Solutions, Inc., FIN Holdings Inc., Ipsidy Enterprises Limited, Cards Plus Pty Ltd. and Ipsidy Peru S.A.C. (collectively the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

 

Going Concern

 

As of March 31, 2021, the Company had an accumulated deficit of approximately $100.7 million. For the three months ended March 31, 2021 the Company earned revenue of approximately $0.6 million and incurred a loss from operations of approximately $2.2 million.

 

The reports of our independent registered public accounting firm on our consolidated financial statements for the years ended December 31, 2020 and 2019 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our net losses.

 

These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from the Company’s current shareholders, the ability of the Company to obtain additional financing to continue operations, the Company’s ability to generate sufficient cash flows from operations, successfully locating and negotiating with other business entities for potential acquisition and /or acquiring new clients to generate revenues and cash flows.

 

On October 30, 2020 and on November 6, 2020, the Company entered into Securities Purchase Agreements with several accredited investors (the “October 2020 Accredited Investors”) pursuant to which the October 2020 Accredited Investors agreed to purchase an aggregate of 52,435,000 shares of the Company’s common stock together with Warrants to acquire 26,217,500 shares of common stock for a term of five years at an exercise price of $0.15 per share for an aggregate purchase price of approximately $5.24 million. In January 2021, the Company received a second loan of approximately $486,000 under the Paycheck Protection Program (“PPP”) of the U.S. Small Business Association (“USSBA”) related to its U.S. operations.

 

There is no assurance that the Company will ever be profitable or be able to secure funding or generate sufficient revenues to sustain operations. As such, there is substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

6

 

 

Covid-19

 

A novel strain of coronavirus (“Covid-19”) emerged globally in December 2019 and has been declared a pandemic. The extent to which Covid-19 will impact our customers, business, results and financial condition will depend on current and future developments, which are highly uncertain and cannot be predicted at this time. The Company’s day-to-day operations beginning March 2020 have been impacted differently depending on geographic location and services that are being performed. The Cards Plus business located in South Africa did not have any operations in April 2020 and has had limitations on its operations thereafter as the Company is following the guidance and requirements of the South African government. Our operations in the United States and Colombia have suffered less immediate impact as most staff can work remotely and can continue to develop our product offerings.

 

That said we have seen our business opportunities develop more slowly as business partners and potential customers are dealing with Covid-19 issues, working remotely and these issues are causing delays in decision making and finalization of negotiations and agreements.

 

Net Loss per Common Share

 

The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. The following potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2021 and 2020 because their effect was antidilutive:

 

Security    
   2021   2020 
Convertible notes payable   34,047,500    35,476,705 
Warrants   42,339,235    47,453,227 
Stock options   162,305,394    109,823,340 
    238,692,129    192,753,272 

 

Inventories

 

Inventory of plastic/ID cards, digital printing material, which are held by Cards Plus Pty Ltd., are at the lower of cost (using the average method) or market. The Plastic/ID cards and digital printing material are used to provide plastic loyal ID and other types of cards. Inventories of kiosks held by IDGS S.A.S are stated at the lower of cost (using the first-in, first-out method) or net realizable value

 

Inventories at March 31, 2021 and December 31, 2020 consist of cards inventory. As of March 31, 2021 and December 31, 2020, the Company recorded an inventory valuation allowance of approximately $18,000 to reflect net realizable value of the cards inventory.

 

Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.

 

7

 

 

Revenue Recognition

 

Cards Plus – The Company recognizes revenue for the design and production of cards at the point in time when products are shipped, or services have been performed due to the short term nature of the contracts. Additionally, the cards produced by the Company have no alternative use and the Company has an enforceable right to payment for work performed should the contract be cancelled. As of March 31, 2021 and December 31, 2020, Cards Plus had approximately $24,000 and $88,000, respectively, of contract liability from payments received in advance that will be earned in future periods.

 

Payment Processing – The Company recognizes revenue for variable fees generated for payment processing solutions that are earned on a usage fee over time based on monthly transaction volumes or on a monthly flat fee rate. Additionally, the Company also sells certain equipment from time to time for which revenue is recognized upon delivery to the customer.

 

Identity Solutions Software – The Company recognizes revenue based on the identified performance obligations over the performance period for fixed consideration and for variable fees generated that are earned on a usage fee based over time based on monthly transaction volumes or on a monthly flat fee rate. The Company had a contract liability of approximately $530,000 and $150,000 as of March 31, 2021 and December 31, 2020 certain revenue that will be earned in future periods. The majority of the $150,000 of deferred revenue contract liability as of December 31, 2020 was earned in the first quarter of fiscal year 2021. As of March 31, 2021, the majority of the deferred revenue contract liability of $533,000 will be recognized in the ensuing four quarters. We have allocated the selling price in the contract to one customer; the contract has multiple performance obligations based on the contract selling price that we believe represents a standalone selling price for the service rendered.

 

All contracts are reviewed for their respective performance obligations and related revenue and expense recognition implications. Certain of the revenues are derived from identity services that could include multiple performance obligations. A performance obligation is defined as a promise to provide a “distinct” good or service to a customer. The Company has determined that one possible treatment under U.S. GAAP is that these services will represent a stand-ready series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Further, the Company has determined that the performance obligation to provide account access and facilitate transactions should meet the criteria for the “as invoiced” practical expedient, in that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. As a result, the Company anticipates it may recognize revenue in the amount to which the Company has a right to invoice, based on completed performance at the relevant date. Additionally, the contracts could include implementation services, or support on an “as needed” basis and we will review each contract and determine whether such performance obligations are separate and distinct and apply the new standard accordingly to the revenue and expense derived from or related to each such service.

 

Revenue related to direct financing leases is outside the scope of Topic 606 and is recognized over the term of the lease using the effective interest method.

 

NOTE 2 – PROPERTY AND EQUIPMENT, NET

 

Property and equipment consisted of the following as of March 31, 2021 and December 31, 2020:

 

   March 31,
2021
   December 31,
2020
 
Property and equipment  $297,839   $297,839 
Equipment under finance lease (see Note 10)   163,407    163,407 
    461,246    461,246 
Less Accumulated depreciation   (373,111)   (363,417)
Property and equipment, net  $88,135   $97,829 

 

Depreciation expense totaled $11,734 and $14,525 for the three months ended March 31, 2021 and 2020, respectively.

 

8

 

 

NOTE 3 – OTHER ASSETS

 

Other assets consisted of the following at March 31, 2021 and December 31, 2020:

 

   March 31,
2021
   December 31,
2020
 
         
Operating lease right of use assets  $44,489   $49,856 
Other   176,889    190,367 
   $221,378   $240,223 

 

NOTE 4 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL)

 

The Company’s intangible assets consist of intellectual property acquired from MultiPay and FIN and are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible assets for the three months ended March 31, 2021:

 

   Customer
Relationships
   Acquired and
Developed
Software
   Intellectual
Property
   Patents   Total 
                     
Useful Lives  10 Years   5 Years   10 Years   N/A     
                     
Carrying Value at December 31, 2020  $811,303   $3,171,394   $416,471   $128,308   $4,527,476 
Additions   -    -    -    4,424    4,424 
Amortization   (41,196)   (233,220)   (20,351)   (3,328)   (298,095)
Carrying Value at March 31, 2021  $770,107   $2,938,174   $396,120   $129,404   $4,233,805 

 

The following is a summary of intangible assets as of March 31, 2021

 

   Customer
Relationships
   Acquired and
Developed
Software
   Intellectual
Property
   Patents   Total 
                     
Cost  $1,587,159   $4,476,271   $828,580   $136,022   $7,028,032 
Accumulated amortization   (817,052)   (1,538,097)   (432,460)   (6,618)   (2,794,227)
Carrying Value at March 31, 2021  $770,107   $2,938,174   $396,120   $129,404   $4,233,805 

 

Amortization expense totaled $298,095 and $289,686 for the three months ended March 31, 2021 and 2020, respectively.

 

Future expected amortization of intangible assets is as follows:

 

Fiscal Year Ending December 31,    
Remainder of 2021  $1,162,977 
2022   1,092,977 
2023   1,007,995 
2024   662,007 
2025   246,454 
Thereafter   61,395 
   $4,233,805 

 

9

 

 

NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accounts payable and accrued expenses consisted of the following as of March 31, 2021 and December 31, 2020:

 

   March 31,
2021
   December 31,
2020
 
Trade payables  $183,450   $311,024 
Accrued interest   704,624    554,755 
Accrued payroll and related obligations   799,377    891,790 
Current portion of operating lease liabilities   52,858    117,414 
Other*   797,152    790,149 
Total  $2,537,461   $2,665,132 

 

*Included in Other expenses is accrued non-employee Directors’ Compensation of approximately $392,000 and $349,000 as of March 31, 2021 and December 31, 2020, respectively. In May 2021, the Non-employee Directors were compensated for their service through a grant of stock options. See Note 9.

 

NOTE 6 - NOTES PAYABLE, NET

 

The following is a summary of notes payable as of March 31, 2021 and December 31, 2020:

 

   March 31,
2021
   December 31,
2020
 
         
Paycheck Protection Program Loans  $971,520    485,760 
Installment loan payable related to a vehicle acquisition payable in monthly payments of $539 per month at an interest rate of 10.8% per annum payable for 36 months   6,098    7,526 
Notes Payable, Net  $977,618   $493,286 
Notes Payable, current portion,  $6,098   $5,947 
Notes Payable, net of current portion   971,520    487,339 
   $977,618   $493,286 

 

Paycheck Protection Program Loans

 

In May 2020, the Company received a loan of approximately $486,000 under the Paycheck Protection Program (“PPP”) as part of the CARES Act which is administered by the U.S. Small Business Association (“USSBA”) related to its U.S. Operations. The Company anticipates subject to approval by the Small Business Administration, if certain requirements are met, the loan proceeds may be forgiven. Any amounts not forgiven will be required to be repaid. The loan bears interest at an annual rate 1% per annum and matures on May 5, 2022.

 

In January 2021, the Company received a second loan of approximately $486,000 under the PPP related to its U.S. Operations. The Company anticipates subject to approval by USSBA, if certain requirements are met the second loan will be forgiven. Any amounts not forgiven will be required to be repaid. The loan bears interest at an annual rate 1% per annum and matures on January 31, 2023.

 

If the USSBA determines that either PPP loan was not properly obtained and/or expenditures supporting forgiveness were not appropriate, the Company would need to repay some or all of the PPP loans and record additional expense which could have a material adverse effect on the Company’s financial condition and results of operations in a future period.

 

10

 

 

NOTE 7 – CONVERTIBLE NOTES PAYABLE

 

On December 13, 2019, the Company entered into Securities Purchase Agreements with several accredited investors (the “8% Note Investors”) providing for the sale by the Company to the 8% Note Investors of 8% Convertible Notes in the aggregate amount of $428,000 (the “8% Notes”). The 8% Notes were to mature on November 30, 2021 and were a general unsecured obligation of the Company. The Company can prepay all or a portion of the 8% Notes at any time. The Company shall pay any interest on the 8% Notes at the rate of 8.0% per annum payable at the earlier of the maturity date or conversion date, in cash or, at the holder’s option, shares of common stock of the Company. At the option of the 8% Note investors, all or a portion of the 8% Notes may be converted into shares of common stock of the Company at a conversion price of $0.08 per share. If the holders of the 8% Notes owning outstanding 8.0% Notes representing in excess of half of the aggregate outstanding principal amount of all 8% Notes provide notice to the Company of their intent to convert their 8% Notes, then all 8% Notes plus unpaid interest and other amounts owing to each of the holders shall be automatically converted.

 

In February 2020, the Company and the holders of the 8% Notes entered into an amendment agreement pursuant to which the principal and interest due under the 8% Notes will remain due and payable on the same terms as exist in the 8% Notes prior to modification, that the maturity shall be extended to the same maturity date as the 2020 Notes, namely February 28, 2022, and the 8% Notes became a secured obligation of the Company.

 

On February 14, 2020 the Company, entered into Securities Purchase Agreements with several accredited investors (the “2020 Note Investors”) providing for the sale by the Company to the 2020 Note Investors of 15% Senior Secured Convertible Notes in the aggregate amount of $1,510,000 (the “2020 Notes”). Philip D. Beck, Chief Executive Officer and Chairman of the Board, invested $50,000 in consideration of a 2020 Note in the principal amount of $50,000 paid by a deduction from his salary. Theodore Stern, a director of the Company, invested $50,000 in consideration of a 2020 Note in the principal amount of $50,000. Herbert Selzer, a director of the Company invested $100,000 in consideration of a 2020 Note in the principal amount of $100,000. Mr. Selzer provided $50,000 on the closing date and provided the balance of the funding in April 2020.

 

The 2020 Notes mature February 28, 2022 and are a secured obligation of the Company. The Company can prepay all or a portion of the 2020 Notes at any time provided that such amount prepaid shall be equal to 150% of the principal due. The Company shall pay interest on the 2020 Notes at the rate of 15% per annum payable at the earlier of the maturity date or conversion date, in cash or, at the investor’s option, shares of common stock of the Company.

 

11

 

 

At the option of the 2020 Note Investors, they may at any time convert the 2020 Notes. The number of shares delivered shall be equal to 150% of the amount of the principal converted divided by the conversion price of $0.20 per share. The Company may require that the 2020 Note Investors convert all or a portion of the 2020 Notes, if the Company’s volume weighted average price for any preceding 20-day period is equal to or greater than $0.30.

 

The 2020 Note Investors are entitled to nominate, and the Company will not unreasonably reject the appointment of a new member to the Company’s Board of Directors.

 

The Company and FIN Holdings, Inc. and ID Solutions, Inc., two of the Company’s subsidiaries, entered into a security agreement with the 2020 Note Investors (“Security Agreement”), the holders of the 8% Notes and the Stern Trust, which is the holder of the Promissory Note in the principal amount of $2,000,000 (the “Stern Note”). The Security Agreement provides that until the principal and accrued but unpaid interest under the 2020 Notes, 8% Notes and Stern Note is paid in full or converted pursuant to their terms, the Company’s obligations under the 2020 Notes, 8% Notes and Stern Note will be secured by a lien on all assets of the Company. The security interest granted to the holders of the 2020 Notes, 8% Notes and Stern Note ranks pari passu. The Security Agreement permits sales of assets up to a value of $1,000,000 which proceeds may be used for working capital purposes and the secured parties will take such steps as may be reasonably necessary to release its security interest and enable such sales in such circumstances. Each of the secured parties appointed Mr. Stern and a third-party investor as joint collateral agents. Mr. Stern, a director of the Company, is the trustee of the Stern Trust.

 

Further, the Company and the Stern Trust entered an Amended and Restated Promissory Note (the “Restated Stern Note”) providing that the $2,000,000 principal of the Stern Note will be due and payable on the same terms (bearing interest at 15% per annum) and on the same maturity date as the 2020 Notes. The interest due under the Stern Note as of January 31, 2020 in the amount of $662,000 has been capitalized and will earn interest at 10% per annum, which at the election of the Stern Trust can be paid in shares of common stock at a conversion price of $0.20 and the maturity of such interest shall be extended to the same maturity date as the 2020 Notes.

 

In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of approximately $104,800.

 

During the quarter ended March 31, 2021, convertible notes totaling $120,000 and a portion of their accrued interest at the option of the noteholders were converted into approximately 989,000 shares of common stock of the Company.

 

The following is a summary of the convertible notes payable outstanding at March 31, 2021:

 

8% convertible notes payable issued December 2019  $383,000 
15% convertible notes payable issued February 2020   5,190,000 
10% convertible notes payable issued February 2020   662,000 
Unamortized discount on convertible notes   (376,876)
Unamortized debt issuance costs   (45,474)
      
   $5,812,650 

 

Future maturities of convertible notes payable are as follows:

 

2021  $- 
2022   6,235,000 
      
   $6,235,000 

 

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NOTE 8 – RELATED PARTY TRANSACTIONS

 

Convertible Notes Payable

 

Theodore Stern and Philip Beck, members of the board of directors of the Company at that time, invested $50,000 each in consideration of the 2020 Notes. Another director, Herbert Selzer invested $100,000 in consideration of a 2020 Note in the principal amount of $100,000. See Note 7

 

Further, the Company and the Stern Trust entered the Restated Stern Note providing that the $2,000,000 principal of the Stern Note will be due and payable on the same terms (bearing interest at 15% per annum) and on the same maturity date as the 2020 Notes and subject to the same Security Agreement and that the interest due under the Stern Note as of January 31, 2020 in the amount of $662,000 will remain due and payable on the same terms as exist in the Stern Note prior to modification provided that the maturity of such interest shall be extended to the same maturity date as the 2020 Notes. The Restated Stern Note includes a 50% repayment premium. Mr. Stern, the Trustee of the Stern Trust also entered into the Security Agreement as one of the joint collateral agents.

 

Issuance of Common Stock

 

During the quarter ended March 31, 2020, the Company granted 1,500,000 shares of Restricted Common Stock to each of Phillip Kumnick and Philip Broenniman, new members of our Board of Directors, in connection with their compensation for service as Board Members. The restricted stock vests upon the achievement of certain performance criteria. The performance criteria have not been met as of March 31, 2020.

 

Other

 

In connection with the offering of the 2020 Notes, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer (“Network 1”), a cash fee of approximately $104,800. A former member of the Company’s Board of Directors maintains a partnership with a principal of Network 1.

 

NOTE 9STOCKHOLDER’S EQUITY

 

Common Stock

 

During the quarter ended March 31, 2021, shares of common stock were issued as a result of the following non-cash transactions:

 

Convertible notes totaling $120,000 and a portion of their accrued interest at the option of the noteholders were converted into approximately 989,000 shares of common stock of the Company.

 

Certain warrant and stock option holders exercised their respective warrants and stock options by means of the cashless exercise feature and were issued approximately 13,226,000 common shares of the Company.

 

During the quarter ended March 31, 2020, shares of common stock were issued as a result of the following transactions:

 

The Company granted 4,500,000 shares of Restricted Common Stock of which 3,000,000 shares were granted to two new members of our Board of Directors in connection with their compensation for service as Board Members and 1,500,000 shares to an employee in connection with his employment compensation. The shares were valued at the fair market value at the date of grant. The restricted stock vests upon the achievement of certain performance criteria.

 

The Company issued approximately 106,000 shares of common stock to a third-party provider of services in lieu of cash compensation.

 

13

 

 

Warrants

 

The following is a summary of the Company’s warrant activity for the three months ended March 31, 2021:

 

   Number of
Shares
   Weighted
Average
Exercise
Price
   Weighted
Average
Remaining
Life
 
Outstanding at December 31, 2020   54,697,021   $0.14    3.4 Years 
Exercised/cancelled   (12,357,786)   0.10    - 
Outstanding at March 31, 2021   42,339,235   $0.15    4.0 Years 

 

Stock Options

 

The Company did not grant any stock options in the first quarter of 2021.

 

Activity related to stock options for the three months ended March 31, 2021 is summarized as follows:

 

       Weighted
Average
   Weighted
Average
   Aggregate 
   Number of   Exercise   Contractual   Intrinsic 
   Shares   Price   Term (Yrs.)   Value 
Outstanding as of December 31, 2020   169,374,061   $0.15    7.5   $8,283,639 
Granted   -    -    -    - 
Exercised/cancelled   (7,068,667)   0.05           
Outstanding as of March 31, 2021   162,305,394    0.15    7.2   $29,442,247 
Exercisable as of March 31, 2021   123,108,727   $0.18    6.7   $20,362,319 

 

The following table summarizes stock option information as of March 31, 2021:

 

Exercise Price   Outstanding   Weighted Average
Contractual Life (Yrs).
   Exercisable 
$0.0001    3,500,000    5.3    3,500,000 
 0.05    26,700,006    6.2    23,950,006 
 0.06    1,042,054    9.2    1,042,054 
 0.07    50,000,000    9.2    26,000,000 
 0.09    11,630,000    9.5    - 
 0.10    27,200,000    6.3    27,200,000 
 0.12    933,334    8.5    616,667 
 0.13    250,000    7.4    250,000 
 0.15    2,800,000    5.4    2,800,000 
 0.22    2,583,333    7.6    2,083,333 
 0.25    2,500,000    7.4    2,500,000 
 0.26    166,667    7.9    166,667 
 0.29    1,000,000    6.9    1,000,000 
 0.40    1,000,000    5.7    1,000,000 
 0.45    31,000,000    5.4    31,000,000 
      162,305,394    7.2    123,108,727 

 

14

 

 

During the three months ended March 31, 2021, the Company recognized approximately $614,000 of stock option based compensation expense of which approximately $452,000 relates to performance-based awards of director/officers. As of March 31, 2021, there was approximately $1,154,000 of unrecognized compensation costs related to stock options outstanding that will be expensed through 2023. Additionally, the Company recorded approximately $13,000 for restricted stock expense.

 

At the Annual Meeting of Stockholders held on March 22, 2021, the stockholders approved and ratified an increase of 75,000,000 shares of common stock allocated to the Company’s 2017 Incentive Stock Plan.

 

Subsequent event

 

On May 5, 2021, the Company granted options to acquire shares of common stock (“Stock Options”) at an exercise price equivalent to fair market value on the date of grant with an exercise period of ten years, as follows:

 

17,500,000 Stock Options to each of Mr. Kumnick and Mr. Broenniman subject to tranche vesting upon achieving certain corporate performance measures.
11,500,000 Stock Options to certain officers and employees that vest over a three-year period, subject to continued service.
Approximately 2,700,000 fully vested Stock Options for present and former non-employees Directors compensation for services from 2019 through April 30, 2021.
Approximately 1,300,000 Stock Options to two present non-employee Director that vest over a twelve-month period.

 

See Note 5 for additional information regarding accrued Directors’ compensation.    

 

NOTE 10 – DIRECT FINANCING LEASE

 

The Company and an entity in Colombia entered into a rental contract for the rental of 78 kiosks to provide cash collection and fare services at transportation stations. The lease term began in May 2016 when the kiosk was installed and operational and when the lease commenced. The term of the rental contract is ten years at an approximate monthly rental of $11,900. The lease has the option at the end of the lease term to purchase each unit for approximately $40. The term of the lease approximates the expected economic life of the kiosks. The lease was accounted for as a direct financing lease.

 

The Company has recorded the transaction as its net investment in the lease and will receive monthly payments of $11,856 before estimated executory costs, or $142,272, annually, to reduce investment in the lease and record income associated with the related amount due. Executory costs are estimated to be $1,677 per month and initial direct costs are not considered significant. The transaction resulted in incremental revenue in the quarter ended March 31, 2021 of approximately $13,000.

 

The equipment is subject to a direct lease valued at approximately $748,000. At the inception of the lease term, the aggregate minimum future lease payments to be received is approximately $1,422,000 before executory cost. Unearned income recorded at the inception of this lease was approximately $474,000 and will be recorded over the term of the lease using the effective income rate method. Future minimum lease payments to be received under the lease for the next five years and thereafter are as follows:

 

Year ending December 31    
Remainder of 2021   91,611 
2022   122,148 
2023   122,148 
2024   122,148 
2025   122,148 
Thereafter   40,716 
Sub-total   620,919 
Less deferred revenue   (143,666)
Net investment in lease  $477,253 

15

 

 

NOTE 11 – LEASE OBLIGATION PAYABLE

 

The Company entered into a lease in March 2017 for the rental of its printer for its secured plastic and credential card products business under an arrangement that is classified as a finance lease. The leased equipment is amortized on a straight-line basis over its lease term including the last payment (61 payments) which would transfer ownership to the Company. The cost basis of the lease equipment is $163,407 and the accumulated amortization as of March 31, 2021 is $131,261. The following is a schedule showing the future minimum lease payments under finance lease by year and the present value of the minimum lease payments as of March 31, 2021. The interest rate related to the lease obligation is 12% and the maturity date is March 31, 2022.

 

Year ending December 31    
2021  $32,322 
2022   10,774 
Total minimum lease payments   43,096 
Less: Amount representing interest   (2,675)
Present value of minimum lease payments  $40,421 

 

NOTE 12 – COMMITMENTS AND CONTINGENCIES

 

Legal Matters

 

From time to time, the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty, we have no reason to believe the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company.

 

Leases

 

For the three months ended March 31, 2021, lease expense was approximately $63,000 inclusive of short-term leases.

 

The lease related balances included in the Condensed Consolidated Balance Sheet as of March 31, 2021 were as follows:

 

Assets:    
     
Current portion of operating lease ROU assets - included in other current assets  $63,325 
      
Operating lease ROU assets – included in Other Assets  $44,489 
      
Total operating lease assets  $107,814 

 

Liabilities:    
     
Current portion of ROU liabilities – included in Accounts payable and accrued expenses  $52,858 
      
Long-term portion of ROU liabilities – included in Other liabilities   59,506 
      
Total operating lease liabilities  $112,364 

 

16

 

 

The weighted average lease term is 1.8 years and weighted average discount rate used in the calculations were 13.55%.

 

The following table presents the maturity of the Company’s operating lease liabilities as of March 31, 2021:

 

Remainder of 2021  $72,455 
2022   49,716 
Total operating lease payments   122,171 
Less: Imputed interest   (9,807)
Total operating lease liabilities  $112,364 

 

The Company rents office space in Long Beach, New York at a monthly cost of $2,500. The agreement is month to month and can be terminated on 30 days’ notice. The agreement is between the Company and Bridgeworks LLC, an entity principally owned by Mr. Beck, our former CEO and Board Member along with his family.

 

The Company leases an office location in Bogota, Colombia. In April 2017, MultiPay S.A.S. entered an office lease beginning April 22, 2017. The lease cost is approximately $8,500 per month with an inflation adjustment after one year. The lease is automatically extended for one additional year unless written notice to the contrary is provided at least six months in advance. Multipay extended the lease through April 2021. In April 2021, Multipay entered into a six-month lease for a monthly rental of approximately $1,375.

 

The Company also leases space for its operation in South Africa. The current lease is through June 30, 2022 and the approximate monthly rent is $8,000.

 

NOTE 13 – IMPAIRMENT LOSS

 

Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of net identified tangible and intangible assets acquired. The Company performs an annual impairment test of goodwill and further periodic tests to the extent indicators of impairment develop between annual impairment tests. The Company’s impairment review process compares the fair value of the reporting unit to its carrying value, including the goodwill related to the reporting unit utilizing qualitative considerations. To determine the fair value of the reporting unit, the Company may use various approaches including an asset or cost approach, market approach or income approach or any combination thereof. These approaches may require the Company to make certain estimates and assumptions including future cash flows, revenue and expenses. These estimates and assumptions are reviewed each time the Company tests goodwill for impairment and are typically developed as part of the Company’s routine business planning and forecasting process. While the Company believes its estimates and assumptions are reasonable, variations from those estimates could produce materially different results.

 

During the quarter ended March 31, 2020, the Company recorded an impairment loss of approximately $0.9 million, associated with goodwill at Cards Plus as the carrying value may not be recovered as revenue assumptions and related profitability were revised downward. The Company reviews its projections as a result of the current pandemic and its potential impact on future results. The fair value of the reporting unit was determined using a discounted cash flow analysis.

 

17

 

 

NOTE 14 – SEGMENT INFORMATION

 

General information

 

The segment and geographic information provided in the table below is being reported consistent with the Company’s method of internal reporting. Operating segments are defined as components of an enterprise for which separate financial information is available and which is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM regularly reviews net revenue and gross profit by geographic regions. The Company’s products and services operate in two reportable segments; identity management and payment processing.

 

Information about revenue, profit/loss and assets

 

The CODM evaluates performance and allocates resources based on net revenue and operating results of the geographic region as the current operations of each geography are either primarily identity management or payment processing. Identity management revenue is generated in North America and Africa and payment processing revenue is earned in South America which are the three geographic regions of the Company. We have included the lease income in payment processing as the leases are related to unattended ticketing kiosks.

 

Long lived assets are in North America, South America and Africa. Most assets are intangible assets recorded from the acquisition of MultiPay (South America) in 2015 and FIN Holdings (North America and Africa) in 2016. Assets for North America, South America and Africa amounted to approximately $7.3 million, $0.7 million and $1.3 million.

 

Analysis of revenue by segment and geographic region and reconciliation to consolidated revenue, gross profit, and net loss are provided below. The Company has included in the schedule below an allocation of corporate overhead based on management’s estimate of resource requirements.

 

   (unaudited)
Three Months Ended
 
   March 31,
2021
   March 31,
2020
 
Net Revenues:        
North America  $148,060   $133,554 
South America   96,183    113,624 
Africa   344,756    546,611 
    588,999    793,789 
           
Identity Management   492,816    680,165 
Payment Processing   96,183    113,624 
    588,999    793,789 
           
Loss From Operations:          
North America   (1,270,403)   (407,392)
South America   (731,688)   (1,212,152)
Africa   (184,819)   (1,053,064)
    (2,186,910)   (2,672,608)
           
Identity Management   (1,455,222)   (1,460,456)
Payment Processing   (731,688)   (1,212,152)
    (2,186,910)   (2,672,608)
           
Interest Expense   (297,438)   (179,050)
Other income/(expense)   1,537    (975,889)
           
Loss before income taxes   (2,482,811)   (3,827,547)
           
Income tax expense   (7,188)   (8,874)
           
Net loss  $(2,489,999)  $(3,836,421)

18

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Going concern

 

As of March 31, 2021, the Company had an accumulated deficit of approximately $100.7 million. For the three months ended March 31, 2021 the Company earned revenue of approximately $0.6 million and incurred a loss from operations of approximately $2.2 million.

 

The reports of our independent registered public accounting firm on our consolidated financial statements for the years ended December 31, 2020 and 2019 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our net losses.

 

These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from the Company’s current shareholders, the ability of the Company to obtain additional equity financing to continue operations, the Company’s ability to generate sufficient cash flows from operations, successfully locating and negotiating with other business entities for potential acquisition and /or acquiring new clients to generate revenues and cash flows.

 

On October 30, 2020 and on November 6, 2020, the Company entered into Securities Purchase Agreements with several accredited investors (the “October 2020 Accredited Investors”) pursuant to which the October 2020 Accredited Investors agreed to purchase an aggregate of 52,435,000 shares of the Company’s common stock together Warrants to acquire 26,217,500 shares of common stock for a term of five years at an exercise price of $0.15 per share for an aggregate purchase price of approximately $5.24 million. In January 2021, the Company received a second loan of approximately $486,000 under the PPP of the USSBA related to its U.S. operations.

 

There is no assurance that the Company will ever be profitable or be able to secure funding or generate sufficient revenues to sustain operations. As such, there is substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

Overview

 

Ipsidy Inc. (together with its subsidiaries, the “Company”, “we” or “our”) is a leading provider of an Identity as a Service (IDaaS) platform delivering a suite of secure, mobile, biometric identity verification solutions. In a world that is increasingly digital and mobile, our mission is to help our customers know with biometric certainty the identity of the people with whom they are engaging. We provide solutions to everyday problems: Who is applying for a loan? Who is accessing the computer system? Who is sending money? Who is requesting an account change?

 

Ipsidy provides secure, biometric identification, identity verification and electronic transaction authentication and processing services. We have developed an IDaaS platform for our customers, be they businesses, governments, or other organizations, to enable their users to verify and authenticate their identity more easily through a mobile phone or portable device of their choosing (as opposed to dedicated hardware). Our system enables participants to consent to transactions using their biometric information with a digitally signed authentication response, including the underlying transaction data. In this way our systems can provide pre-transaction authentication of identity as well as embed each user’s identity attributes, within every electronic transaction message processed through our platform, or other electronic systems.

 

19

 

 

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. Our solutions are intended to provide our customers with the next level of transaction security, control and certainty. Our platform uses biometric and multi-factor identity solutions, which are intended to verify and authenticate identity during 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), but also access control to both digital environments (e.g. accessing financial accounts, voting systems, email systems, healthcare records and controlling data network log-ins) and physical environments (e.g. entrances to offices, public buildings, data centers and other sensitive locations).

 

The Company’s products focus on the broad requirement for identity verification and multi-factor authentication. Organizations of all descriptions require cost-effective and secure means of mitigating identity fraud - whether that fraud takes place during a new account onboarding, or an attempt to takeover an existing account by the misuse of the account holder’s personal information, or access credentials. We aim to offer our customers solutions that can be easily integrated into each customer’s business and organizational operations in order to facilitate their use and enhance the end user customer experience.

 

ProofTM our mobile identity onboarding and verification application, establishes the trusted identity of users based on a variety of ground truth sources, such as chip based electronic machine readable travel documents, or eMRTDs, national IDs, drivers licenses, as well as by means of direct verification by national ID databases in Peru and in the future, South Africa. The application uses these sources to obtain trusted demographic information and the reference facial biometric images that are matched against the user’s captured live selfie. Proof enables the remote onboarding of people in services associated with fintech, telecom, healthcare, government services or benefits and other online industries.

 

Our identity authentication solution, Verified by Ipsidy, can be delivered seamlessly via mobile web browser, by Ipsidy’s mobile application or into a customer’s mobile app, using our SDK’s. Verified helps our customers gain identity certainty of their users (customers and employees) who can conveniently and securely consent to a variety of electronic transactions, using their biometrics.

 

In 2020 we added a FIDO2 strong authentication solution, AuthentifIDTM. AuthentifID by Ipsidy delivers trusted FIDO2 strong authentication for passwordless login and transaction authentication tied to a trusted identity. During user registration, AuthentifID leverages Ipsidy’s seamless biometric identity verification service to scan an identity document and take a selfie, to establish a digital chain of trust between biometrically verified individuals, their accounts, and their devices. For example, an international financial bank entered into an agreement with us to use AuthentifID in order to provide added security to users of its banking systems.

 

The Company’s solutions for fingerprint-based identity management and electronic payment transaction processing have been in the market for several years. For example, in December 2017, we won an international competitive tender to provide our SearchTM Automated Fingerprint Identification de-duplication system (AFIS) to the Zimbabwe Electoral Commission, for them to ensure that no duplicate entries existed in the voter roll for the 2018 election. The AFIS system was delivered under tight deadlines and within budget, in order to enable the voter roll to be published and the election to occur as planned.

 

Management believes that some of the advantages of the Company’s IDaaS Platform approach are the ability to leverage the platform to support a variety of vertical markets including the identity solutions and transaction processing sectors and the adaptability of the platform to the requirements of new markets and new products requiring low cost, secure, and configurable mobile solutions. These vertical markets include but are not limited to banking and payment transactions, elections, schools, public transportation, government and enterprise security. At its core, the Company’s offering, combining its proprietary biometric technologies, with those acquired is intended to facilitate the processing of diverse electronic transactions, be they payments, votes, or digital access, all of which can include identity verification, authentication and identity transaction recording. The Company continues to invest in developing, patenting and acquiring the various elements necessary to enhance the platform, which is intended to allow us to achieve our goals.

 

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The Company was incorporated in the State of Delaware on September 21, 2011 and changed its name to Ipsidy Inc. on February 1, 2017, and our common stock is traded on the OTCQB U.S. Market under the trading symbol “IDTY”. Our corporate headquarters is located at 670 Long Beach Blvd., Long Beach, NY 11561 and our main phone number is (516) 274-8700. We maintain a website at www.ipsidy.com. The contents of our website are not incorporated into, or otherwise to be regarded as part of, this Quarterly Report on Form 10-Q

 

Adjusted EBITDA

 

This discussion includes information about Adjusted EBITDA that is not prepared in accordance with GAAP. Adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. A reconciliation of this non-GAAP measure is included below.

 

Adjusted EBITDA is a non-GAAP financial measure that represents GAAP net income (loss) adjusted to exclude (1) interest expense, (2) interest income, (3) provision for income taxes, (4) depreciation and amortization, (5) stock-based compensation expense (stock options and restricted stock) and (6) certain other items management believes affect the comparability of operating results.

 

Other items included the following in the quarter ended March 31, 2020:

 

Extinguishment of debt of $1.0 million

 

Impairment loss of $0.9 million

 

 

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, and it will be a focus as we invest in and grow the business. Additionally, we will continue to use Adjusted EBITDA in connection with our executive performance-based compensation in 2021.

 

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation from, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are:

 

Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

 

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

 

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

 

Adjusted EBITDA does not include the impact of certain charges or gains resulting from matters we consider not to be indicative of our ongoing operations.

 

Because of these limitations, adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as a supplement to our GAAP results.

 

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Reconciliation of Net Loss to Adjusted EBITDA

 

   For the Quarter Ended 
   March 31,
2021
   March 31,
2020
 
Net loss  $(2,489,999)  $(3,836,421)
           
Add Back:          
           
Interest Expense   297,438    179,050 
Debt extinguishment   -    985,842 
Other expense/(income)   (1,537)   (9,953)
Depreciation and amortization   309,829    325,344 
Taxes   7,188    8,874 
Impairment loss   -    871,807 
Stock compensation   626,579    169,110 
           
Adjusted EBITDA (Non-GAAP)  $(1,250,502)  $(1,306,347)

 

Adjusted EBITDA loss for the quarter ended March 31, 2021 decreased approximately $0.1 million due to a decrease in overall spending while focusing costs on key products.

 

Three Months Ended March 31, 2021 and March 31, 2020

 

Revenues, net

 

During the three months ended March 31, 2021, the Company had revenues of approximately $589,000 compared to $794,000 in the three months ended March 31, 2020. The decrease in revenue is principally related to a reduction in revenue at Cards Plus and our Colombian business due to the impact of Covid-19 offset by higher income at Ipsidy resulting from adding new customers for identity services.

 

Cost of sales

 

During the three months ended March 31, 2021, cost of sales was less than the cost of sales in the three months ended March 31, 2020 principally due to lower margin revenue at Cards Plus.

 

General and administrative expenses

 

During the three-month period ended March 31, 2021 compared to March 31, 2020, general and administrative expense increased by approximately $0.4 million principally due to higher non-cash stock compensation charges.

 

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Research and development expenses

 

During the three-month period ended March 31, 2021 compared to March 31, 2020, research and development expenses decreased by approximately $0.1 million as the Company reduced overall spend including lower staff levels while focusing its resources on key products initiatives.

 

Impairment loss

 

During the three months ended March 31, 2020, the Company recorded an impairment loss of approximately $872,000 associated with goodwill of one of its reporting units.

 

As a result of the current pandemic and its potential impact on future results, the Company updated its reporting unit projections, and it indicated a goodwill impairment as the carrying value was in excess of its estimated recoverable value. The fair value of the reporting unit was determined using a discounted cash flow analysis.

 

Depreciation and amortization expense

 

During the three-month period ended March 31, 2021 compared to March 31, 2020, depreciation and amortization expense was approximately the same in both periods.

 

Other Income (Expense)

 

During the three-month period ended March 31, 2020, the Company recorded a charge of approximately $986,000 related to an extinguishment of a note payable.

 

Interest expense

 

Interest expense increased during the three-month period ended March 31, 2021 compared to March 31, 2020, principally due to the convertible debt offerings in February 2020 and the increased amount of debt discount.

 

Liquidity and Capital Resources

 

The Company has approximately $2.6 million of cash on hand and has a deficiency in working capital of approximately $5.2 million as its convertible debt has been reclassified to a current liability as it is due in February 2022.

 

Cash used in operating activities was approximately $1.7 million and $1.2 million in the three months ended March 31, 2021 and March 31, 2020, respectively.

 

In January 2021, the Company received a second loan of approximately $486,000 under the Paycheck Protection Program of the U.S. Small Business Association (“USSBA”) related to its U.S. operations. The Company anticipates, subject to approval by the USSBA, if certain requirements are met, the loan will be forgiven. Any amount not forgiven will be required to be repaid.

 

In 2021, the Company will continue to be opportunistic as well as judicious in raising additional funds to support its operations and investments as it creates a sustainable organization. There is no guarantee that such financing will be available or available on acceptable terms. In order to implement and grow our operations through December 31, 2022, achieve an expected revenue stream from our products and repay our outstanding convertible debt obligations (to the extent that the same are not converted to common stock), we expect that we will need to raise approximately $12.5 to $15.0 million. There is no guarantee that our current business plan will not change and, as a result of such change, that we will need additional capital to implement such business plan.

 

Covid 19

 

A novel strain of coronavirus (“Covid-19”) emerged globally in December 2019 and has been declared a pandemic. The extent to which Covid-19 will impact our customers, business, results and financial condition will depend on current and future developments, which are highly uncertain and cannot be predicted at this time. The Company’s day-to-day operations beginning March 2020 have been impacted differently depending on geographic location and services that are being performed. The Cards Plus business located in South Africa did not have any operations in April 2020 and has had limitations on its operations thereafter as the Company is following the guidance and requirements of the South African government. Our operations in the United States and Colombia have suffered less immediate impact as most staff can work remotely and can continue to develop our product offerings.

 

23

 

 

That said we have seen our business opportunities develop more slowly as business partners and potential customers are dealing with Covid-19 issues, working remotely and these issues are causing delays in decision making and finalization of negotiations and agreements.

 

See above – Impairment loss and Note 13 to the unaudited financial statements.

 

Subsequent Event

 

On May 5, 2021, the Company granted options to acquire shares of common stock (“Stock Options”) at an exercise price equivalent to fair market value on the date of grant with an exercise period of ten years, as follows:

 

17,500,000 Stock Options to each of Mr. Kumnick and Mr. Broenniman subject to tranche vesting upon achieving certain corporate performance measures.
11,500,000 Stock Options to certain officers and employees that vest over a three-year period, subject to continued service.
Approximately 2,700,000 fully vested Stock Options for present and former non-employees Directors compensation for services from 2019 through April 30, 2021.
Approximately 1,300,000 Stock Options to two present non-employee Director that vest over a twelve-month period.

 

See Note 5 for additional information regarding accrued Directors’ compensation.

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management to be material to investors.

 

Recent Accounting Policies

 

The recent material accounting policies that may be the most critical to understanding of the financial results and conditions are discussed in Note 1 of the unaudited financial statements.

 

In August the FASB issued a new standard (ASU 2020-06) to reduce the complexity of accounting for convertible debt and other equity-linked instruments. For certain convertible debt instruments with a cash conversion feature, the changes are a trade-off between simplifications in the accounting model (no separation of an “equity” component to impute a market interest rate, and simpler analysis of embedded equity features) and a potentially adverse impact to diluted EPS by requiring the use of the if-converted method. The new standard will also impact other financial instruments commonly issued by both public and private companies. For example, the separation model for beneficial conversion features is eliminated simplifying the analysis for issuers of convertible debt and convertible preferred stock. Also, certain specific requirements to achieve equity classification and/ or qualify for the derivative scope exception for contracts indexed to an entity’s own equity are removed, enabling more freestanding instruments and embedded features to avoid mark-to-market accounting. The new standard is effective for companies that are SEC filers (except for Smaller Reporting Companies) for fiscal years beginning after December 15, 2021 and interim periods within that year, and two years later for other companies. Companies can early adopt the standard at the start of a fiscal year beginning after December 15, 2020. The standard can either be adopted on a modified retrospective or a full retrospective basis. The Company is currently reviewing the newly issued standard and does not believe it will materially impact the Company.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company, we are not required to include disclosure under this item.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this Quarterly Report, our Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2021, the Company’s disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in the report that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

24

 

 

PART II

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time, the Company is a party to various legal or administrative proceedings arising in the ordinary course of business. While any litigation contains an element of uncertainty, we have no reason to believe the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company.

 

ITEM 1A. RISK FACTORS

 

Risk factors describing the major risks to our business can be found under Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2020. There has been no material change in our risk factors from those previously discussed in the Annual Report on Form 10-K.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable to our operations.

 

ITEM 5. OTHER INFORMATION

 

At the Annual Meeting of stockholders of the Company held on March 22, 2021, in addition to the re-election of all the directors and the ratification of the appointment of Cherry Bekaert, LLP as the auditors of the Company for the year ended 2020, the stockholders approved a number of additional resolutions, summarized as follows:

 

Approved an amendment to our certificate of incorporation to effect a reverse stock split at a ratio not less than 1-for-2 and not greater than 1-for-50, with the exact ratio to be set within that range at the discretion of our board of directors before December 31, 2021.

 

Approved the adoption of an amended and restated certificate of incorporation, which has since been duly filed with the Secretary of State of Delaware.

 

Approved and ratified an increase in the shares allocated to the 2017 Incentive Stock Plan by an additional 75 million shares of common stock.

 

25

 

 

ITEM 6. EXHIBITS

 

Exhibit
Number 
  Description
2.1 (1) Agreement and Plan of Reorganization
     
3.1 (25) Amended & Restated Certificate of Incorporation
     
3.2 (23) Amended & Restated By-laws
     
4.1 (4) Stock Option dated September 25, 2015 issued to Herbert M. Seltzer
     
4.2 (5) Stock Option issued to Thomas Szoke dated September 25, 2015
     
4.3 (6) Stock Option issued to Parity Labs, LLC
     
4.4 (7) Stock Option Agreement entered between the Company and Stuart P. Stoller dated January 31, 2017
     
4.5 (3) Stock Option Agreement entered between the Company and Philip D. Beck dated January 31 2017
     
4.6 (15) Letter Agreement between Ipsidy Inc. and Theodore Stern Revocable Trust dated April 30, 2018.
     
4.7 (16) Form of Subscription Agreement by and between Ipsidy Inc. and the August 2018 Accredited Investors
     
4.8 (17) Form of Subscription Agreement by and between Ipsidy Inc. and the June 2019 Accredited Investors
     
4.9 (18) Letter Agreement between The Theodore Stern Revocable Trust and Ipsidy Inc. dated December 13, 2019
     
4.10 (18) Form of Securities Purchase Agreement entered between Ipsidy Inc. and the 8% Note Investors
     
4.11 (18) Form of 8% Convertible Note
     
4.12 (19) Form of 15.0% Convertible Note
     
4.13 (19) Amended and Restated Promissory Note issued to The Theodore Stern Revocable Trust
     
4.14 (21) Paycheck Protection Program Term Note dated May 6, 2020
     
4.15*   Paycheck Protection Program Term Note dated February 1, 2021
     
10.1 (8) Assignment of Patents
     
10.2 (8) Assignment of Patents
     
10.3 (8) Assignment of Patents

 

26

 

 

10.4 (9) The ID Global Solutions Corporation Equity Compensation Plan
     
10.5 (10) Share Purchase Agreement by and between ID Global Solutions Corporation and the Multipay S.A. Shareholders
     
10.6 (11) Director Agreement by and between ID Global Solutions Corporation and Herbert M. Seltzer dated September 25, 2015
     
10.7 (12) Share Exchange Agreement by and between ID Global Solutions Corporation, Fin Holdings, Inc. and the Fin Holdings, Inc. shareholders
     
10.8 (7) Executive Retention Agreement entered between the Company and Stuart P. Stoller dated January 31, 2017
     
10.9 (3) Indemnification Agreement entered between the Company and Stuart P. Stoller dated January 31, 2017
     
10.10 (3) Executive Retention Agreement entered between the Company and Philip D. Beck dated January 31 2017
     
10.11 (3) Executive Retention Agreement entered between the Company and Thomas Szoke dated January 31 2017
     
10.12 (3) Executive Retention Agreement entered between the Company and Douglas Solomon dated January 31, 2017
     
10.13 (3) Form of Conversion Agreement dated January 31, 2017
     
10.14 (3) Stand-Off Agreement dated January 31, 2017 entered between Philip Beck, Stuart Stoller, Thomas Szoke, Douglas Solomon, Herbert Selzer, Ricky Solomon and the Company
     
10.15 (3) Form of Indemnity Agreement
     
10.16 (13) Restricted Stock Agreement dated September 29, 2017 between Stuart P. Stoller and Ipsidy Inc.
     
10.17 (15)  2017 Incentive Stock Plan
     
10.18  (15) Letter from Ipsidy Inc. to Philip Beck dated May 3, 2018
     
10.19 (15) Letter from Ipsidy Inc. to Stuart Stoller dated May 3, 2018
     
10.20 (15) Letter from Ipsidy Inc. to Thomas Szoke dated May 3, 2018
     
10.21 (18) Letter Agreement between Phillip L. Kumnick and Ipsidy Inc.
     
10.22 (19) Form of Securities Purchase Agreement – 2020 Notes
     
10.23 (19) Form of Security Agreement – 2020 Notes
     
10.24 (19) Form of Letter Agreement between Ipsidy Inc. and the 8% Convertible Note Holders
     
10.25 (20) Letter Agreement between Phillip R. Broenniman and Ipsidy Inc.
     
10.26 (22) Letter Agreement between Philip D. Beck and Ipsidy Inc. dated May 22, 2020
     
10.27 (22) Offer Letter between Ipsidy Inc. and Phillip K. Kumnick dated December 31, 2020
   
10.28 (24) Offer Letter between Ipsidy inc. and Philip R. Broenniman dated December 31, 2020

 

27

 

 

14.1 (14) Code of Ethics
     
21.1 (14) List of Subsidiaries
     
31.1*   Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
     
31.2*   Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
     
32.1*   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101.INS   XBRL Instance Document *
101.SCH   XBRL Taxonomy Extension Schema Document *
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB   XBRL Taxonomy Extension Label Linkbase Document *
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document *

 

*Filed herewith

 

(1) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on August 13, 2013.

 

(2) Incorporated by reference to the Form 10-12G Registration Statement filed with the Securities Exchange Commission on November 9, 2011.

 

(3) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on February 6, 2017.

 

(4) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

 

(5) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

 

(6) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on August 16, 2016.

 

(7) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on February 1, 2017.

 

(8) Incorporated by reference to the Form S-1 Registration Statement filed with the Securities Exchange Commission on February 13, 2014.

 

(9) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on November 28, 2014.

 

(10) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 12, 2015.

 

(11) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

 

(12) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on February 12, 2016.

 

(13) Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on November 13, 2017.

 

(14) Incorporated by reference to the Form 10-K Annual Report filed with the Securities Exchange Commission on July 12, 2017.
   
(15) Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on May 4, 2018.
   
(16) Incorporated by reference to the Form 10-K Annual Report filed with the Securities Exchange Commission on August 17, 2018.
   
(17) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 21, 2019.
   
(18) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on December 16, 2019.
   
(19) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on February 18, 2020.
   
(20) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 10, 2020.
   
(21) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on May 13, 2020.
   
(22) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on May 29, 2020. 
   
(23) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on January 22, 2021.
   
(24) Incorporated by reference to the Form 10-K Annual Report filed with the Securities Exchange Commission on March 8, 2021.
   
(25) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 23, 2021.

28

 

 

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 thereunto duly authorized.

 

  IPSIDY INC.
     
  By: /s/ Phillip Kumnick
    Phillip Kumnick, Chairman of the Board of Directors and Chief Executive Officer   
    Principal Executive Officer
     
  By: /s/ Stuart Stoller
    Chief Financial Officer,
    Principal Financial and Accounting Officer
     
Dated: May 6, 2021    

 

 

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