GlobeNewswire Inc | Nov 9, 2020 08:00AM EST

November 09, 2020

LONG BEACH, N.Y., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Ipsidy Inc. (www.ipsidy.com) [OTCQB:IDTY] a leading provider of secure, mobile biometric identity solutions, including Identity as a Service (IDaaS),today announced its results for the third quarter ended September 30, 2020.

Financial Results for the Three Months and NineMonths EndedSeptember 30, 2020

-- Total revenue for the three and nine-month periods in 2020 was $0.5 million and $1.6 million respectively compared to $0.6 million and $1.9 million respectively for the three and nine months in 2019. The decrease was principally due to the impact of the Covid-19 pandemic. -- Net loss before taxes for the three and nine months ended September 30, 2020 was $1.9 million and $9.2 million respectively, compared to a net loss before taxes for the three and nine months ended September 30, 2019 of $2.4 million and $6.8 Million, respectively. -- The decrease in the net loss for the three-month period reflects lower general and administrative expenses. The increase in the net loss in the nine-month period resulted primarily from non-cash charges relating to the convertible note financing, warrant exercise and impairment charges arising out of the Covid-19 pandemic, offset by lower general and administrative expenses. -- Basic and diluted net loss per share was $0.00 cents and $0.02 in the three and nine months ended September 30, 2020, respectively, compared to basic and diluted net loss per share of $0.00 cents and $0.01 cents in the three and nine months ended September 30, 2019, respectively. -- Adjusted EBITDA loss for the three and nine-month periods ended September 30, 2020 was $1.3 million and $4.1 million respectively compared to $1.7 million and $5.2 million respectively in 2019, representing decreases of approximately 22% in each period related to lower overall expenses. -- Secured over $5 million of additional funding from existing and new investors in October 2020, through the issuance of common stock and warrants.

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

The last quarter has seen continued progress for Ipsidy, said Phillip Kumnick, CEO & Chairman of Ipsidy. We started to roll out our products to customers,secured new customers in the financial services sector and operated a successful pilot with a major financial institution. We are excited by the prospects for growth into 2021 that appear in our robust new business pipeline, supported by the recent injection of capital from our existing as well as new stockholders. We greatly appreciate their confidence in our ability to execute our plan.

The following highlights of our activities during the first nine months of 2020 demonstrate execution of our strategy to expand the Ipsidy Partner Network with identity industry and technology professionals, that can effectively deliver our identity services to a range of markets and verticals that are demanding increased security and trust.

-- Launched a strategic partnership with LoginID Inc. to offer new tools in the fight against fraud in online activities. By integrating Ipsidys biometric identity verification platform with the LoginID FIDO as a Service platform, both companies will now offer seamless FIDO2 authentication and login services, delivered with enhanced security and the highest level of identity trust. -- Joined the FIDO Alliance, a cross-industry coalition developing open, interoperable authentication standards that reduce reliance on passwords. Ipsidys vision is to establish and bind a rooted, trusted identity to a user. Strong identity verification removes any uncertainty of a users identity, thereby enhancing FIDO strong authentication and facilitating FIDOs mission of eliminating the reliance on passwords. -- Signed an agreement with an international bank pursuant to our membership in the Temenos Marketplace, to deploy Ipsidys biometric identity verification and FIDO compliant strong authentication services for remote digital onboarding, elimination of account passwords, and combating of identity fraud for their international banking customers. -- Implemented and launched our technology with Intellicheck, Inc. (NASDAQ: IDN), a provider of identification authentication and age verification technology for North America that is being deployed for use with US financial institutions and payment providers. -- Entered into reseller agreements with IECISA, a Gfi group company, which provides information technology services in 11 European countries and the Latin America Caribbean region, and ATOS Origin FZ LLC (a part of the ATOS Middle East, Turkey & Africa region), a global leader in digital transformation. These partners are offering our identity verification and authentication services to build trust in todays online, digital world across these international markets in the telecom, media, utilities, and financial services sectors. -- Launched our web browser applications, in order to make it easier for more clients to deliver the solution to their users as well as simplify the user experience for both our ProofTM onboarding and account takeover fraud prevention application and our VerifiedTM mobile multi-factor authentication solution. -- Appointed Phillip L. Kumnick as CEO in May 2020 and he became Chairman of the Board in October 2020. Mr. Kumnick was previously SVP Global Acquirer Processing at Visa and an experienced industry executive and joined our Board of Directors in December 2019. -- Appointed Philip R. Broenniman as President & COO in May 2020. Mr. Broenniman is an experienced investment manager with business operating and analytical skills and joined our Board of Directors in March 2020.

The identity solutions market is rapidly developing and increasing demand for verifying digital identity during remote onboarding and digital transactions can be seen in our expanding pipeline and recent agreements. While remote access to a broad range of services and networks is not new, the COVID-19 pandemic is accelerating demand for verifying identity seamlessly during remote onboarding as well securing touchless interaction. Our mobile biometric services are designed to help organizations thwart identity fraud and account takeover, by knowing the identity of their users with speed and accuracy. We believe Ipsidys solutions substantially enhance how they can confidently onboard new users and authenticate their access and services across the customer engagement.

We continue to carefully watch developments related to COVID-19. 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. Beginning March 2020, the Companys day-to-day operations have been impacted differently depending on geographic location and services that are being performed. We have seen our business opportunities develop more slowly as business partners and potential customers are dealing with Covid-19 issues and working remotely. These issues have caused delays in decision making and finalization of negotiations and agreements but at the same time we have seen an uptick in interest in our solutions, and we are optimistic that these will start to bear fruit. We appreciate the support of our employees, partners and customers in these difficult times.

Additional analysis of the Companys performance can be found in Managements Discussion and Analysis of Financial Condition and Results of Operations included in the Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2020 filed at www.sec.govand posted on the Companys investor relations website.

About Ipsidy:Ipsidy Inc. (OTCQB:IDTY) www.ipsidy.com,is Digital Identity. Ipsidys mission is to ensure our customers know the identity of their users with biometric certainty. Our Identity as a Service (IDaaS) platform delivers a suite of secure, mobile, facial biometric identity solutions, available to any vertical, anywhere. Our robust identity verification and authentication solutions work great on their own but even better together to help answer everyday questions: Who is applying for a loan? Who is sending money? Who is requesting an account change? Ipsidy is committed to providing seamless, accurate and speedy identity solutions that establish security and trust in todays digital world.

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; Ipsidy Enterprises in the U.K. and Ipsidy Per S.A.C. Further information on Ipsidy can be found at www.ipsidy.com or contact us at sales@ipsidy.com.

Contacts:

Ipsidy Inc. Phillip Kumnick, CEO and Chairman phillipkumnick@ipsidy.comStuart Stoller, CFO stuartstoller@ipsidy.com +1 (516) 274-8700

Notice Regarding Forward-Looking Statements.Information contained in this announcement may include forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding the financial position, business strategy, plans and objectives of management for future operations of both Ipsidy and its business partners, future service launches with customers, the outcome of pilots and new initiatives and customer pipeline are forward-looking statements. Such forward-looking statements are based on a number of assumptions regarding Ipsidy present and future business strategies, and the environment in which Ipsidy expects to operate in the future, which assumptions may or may not be fulfilled in practice. Implementation of some or all of the new services referred to is subject to regulatory or other third party approvals. Actual results may vary materially from the results anticipated by these forward-looking statements as a result of a variety of risk factors, including the risk that implementation, adoption and offering of the service by customers, consumers and others may take longer than anticipated, or may not occur at all; changes in laws, regulations and practices; changes in domestic and international economic and political conditions, the as yet uncertain impact of the Covid-19 pandemic 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 Companys Annual Report Form 10-K for the Fiscal Year ended December 31, 2019 filed at www.sec.govfor 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 (stock options and restricted stock) and (6) certain other items management believes affect the comparability of operating results. Please see Table 1 below for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.

Reconciliation of Net Loss to Adjusted EBITDA (Unaudited)

Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2020 2019 2020 2019Net Loss $ (1,918,239 ) $ (2,358,236 ) $ (9,217,108 ) $ (6,796,766 ) Add Back: Interest 212,658 93,260 701,861 290,804 expenseOther(income) (16,779 ) (6,271 ) 1,301,192 (23,565 )expenseSeverance - - 426,175 - costDepreciationand 276,232 202,235 923,563 529,931 amortizationTaxes 11,074 10,902 23,540 28,867 Impairment - - 1,035,629 - lossStock 112,125 372,341 741,668 787,720 compensationAdjustedEBITDA $ (1,322,929 ) $ (1,685,769 ) $ (4,063,480 ) $ (5,183,009 )(Non-GAAP)

IPSIDY INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenues: Products and $ 501,700 $ 537,097 $ 1,587,330 $ 1,889,943 servicesLease income 13,992 15,664 43,270 48,157 Total 515,692 552,761 1,630,600 1,938,100 revenues, net Operating Expenses:Cost of sales 114,985 142,992 532,506 508,716 General and 1,527,723 2,097,993 5,400,639 6,440,042 administrativeResearch and 308,038 357,289 928,778 960,071 developmentImpairment - - 1,035,629 - lossDepreciationand 276,232 202,235 923,563 529,931 amortizationTotaloperating 2,226,978 2,800,509 8,821,115 8,438,760 expenses Loss from (1,711,286 ) (2,247,748 ) (7,190,515 ) (6,500,660 )operations Other Income (Expense):Interest (212,658 ) (110,654 ) (701,861 ) (290,804 )expenseDebt - - (985,842 ) - extinguishmentWarrantexercise - - (366,795 ) - inducementexpenseOther income, 16,779 11,068 51,445 23,565 netOther expense, (195,879 ) (99,586 ) (2,003,053 ) (267,239 )net Loss before (1,907,165 ) (2,347,334 ) (9,193,568 ) (6,767,899 )income taxes Income tax (11,074 ) (10,902 ) (23,540 ) (28,867 )expense Net loss $ (1,918,239 ) $ (2,358,236 ) $ (9,217,108 ) $ (6,796,766 ) Net loss pershare - Basic $ (0.00 ) $ (0.00 ) $ (0.02 ) $ (0.01 )and Diluted WeightedAverage SharesOutstanding - 547,129,400 518,125,454 529,933,365 492,288,043 Basic andDiluted

See notes to condensed consolidated financial statements.

IPSIDY INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

September 30, December 31, 2020 2019 (unaudited) ASSETS Current Assets: Cash $ 569,597 $ 567,081 Accounts receivable, net 70,238 125,859 Current portion of net investment in direct 70,770 65,333 financing leaseInventory 245,775 173,575 Other current assets 302,750 753,505 Total current assets 1,259,130 1,685,353 Property and Equipment, net 130,232 161,820 Other Assets 222,697 383,066 Intangible Assets, net 5,043,529 5,593,612 Goodwill 4,183,232 5,218,861 Net investment in direct financing lease, net 440,925 494,703 of current portionTotal assets $ 11,279,745 $ 13,537,415 LIABILITIES AND STOCKHOLDERS? EQUITY Current Liabilities: Accounts payable and accrued expenses $ 2,872,384 $ 2,215,912 Capital lease obligation, current portion 38,078 34,816 Note payable, current portion 5,789 5,341 Deferred revenue 388,374 425,276 Total current liabilities 3,304,625 2,681,345 Notes payable, net of discounts and current 488,886 1,970,937 portionConvertible debt, net of discounts 5,682,258 428,000 Capital lease obligation, net of current 20,814 49,794 portionOther liabilities 70,532 131,568 Total liabilities 9,567,115 5,261,644 Commitments and Contingencies (Note 12) Stockholders? Equity: Common stock, $0.0001 par value,1,000,000,000 shares authorized; 547,986,424and 518,125,454 shares issued and outstanding 54,798 51,812 as of September 30, 2020 and December 31,2019, respectivelyAdditional paid in capital 97,640,120 94,982,167 Accumulated deficit (96,152,701 ) (86,935,593 )Accumulated comprehensive income 170,413 177,385 Total stockholders? equity 1,712,630 8,275,771 Total liabilities and stockholders? equity $ 11,279,745 $ 13,537,415

See notes to condensed consolidated financial statements.

IPSIDY INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

Nine Months Ended September 30, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (9,217,108 ) $ (6,796,766 )Adjustments to reconcile net loss with cash flows from operations:Depreciation and amortization expense 923,563 527,498 Stock-based compensation 741,668 1,066,270 Stock issued for services - 41,112 Amortization of debt discounts and 333,388 82,323 issuance costsImpairment loss 1,035,629 - Loss on extinguishment of debt 985,482 - Warrant exercise inducement expense 366,795 - Changes in operating assets and liabilities:Accounts receivable 73,442 (66,815 )Net investment in direct financing lease 48,341 43,453 Inventory (70,040 ) (60,930 )Other current assets 450,755 (110,792 )Accounts payable and accrued expenses 1,233,258 200,117 Deferred revenue (36,902 ) 46,334 Net cash flows from operating activities (3,131,729 ) (5,028,196 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (8,643 ) (32,277 )Increasein other assets, including (172,880 ) (1,035,635 )work in processNet cash flows frominvesting (181,523 ) (1,067,912 )activities CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of convertible 1,510,000 - notesPayment of debt issuance costs (104,800 ) - Proceeds from the sale of common stock, 200,000 2,928,271 net of offering costsProceeds from the exercise of warrants 1,248,983 - Proceeds from paycheck protection program 485,760 - Principal payments on capital lease (29,669 ) (22,824 )obligation and notes payableNet cash flows from financing activities 3,310,274 2,905,447 Effect of Foreign Currencies 5,494 (6,413 ) Net Change in Cash 2,516 (3,197,074 )Cash, Beginning of the Period 567,081 4,972,331 Cash, End of the Period $ 569,597 $ 1,775,257 Supplemental Disclosure of Cash Flow Information:Cash paid for interest $ 7,505 $ 10,771 Cash paid for income taxes $ 23,540 $ 28,867 Non-cash Investing and Financing Activities:Purchase of vehicle with note payable $ - $ 16,510 Recognition of right to use asset and $ - $ 514,473 obligationModification of warrants issued with $ 95,223 $ - convertible debtExchange of notes payable for convertible $ 2,662,000 $ - notes payableSettlement of accounts payable with $ 8,270 $ - issuance of common stockReclass from other assets to intangible $ 327,020 $ 2,021,810 assets

See notes to condensed consolidated financial statements.