Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 28, 2020 | Jun. 28, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Ipsidy Inc. | ||
Entity Central Index Key | 0001534154 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filers | No | ||
Entity File Number | 000-54545 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Reporting Status Current | Yes | ||
Entity Interactive Data Current | No | ||
Entity Small Business | true | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth | true | ||
Entity Ex Transition Period | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 43,906,808 | ||
Entity Common Stock, Shares Outstanding | 518,125,454 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash | $ 567,081 | $ 4,972,331 |
Accounts receivable, net | 125,859 | 130,875 |
Current portion of net investment in direct financing lease | 65,333 | 58,727 |
Inventory, net | 173,575 | 133,541 |
Other current assets | 753,505 | 471,834 |
Total current assets | 1,685,353 | 5,767,308 |
Property and equipment, net | 161,820 | 204,000 |
Other Assets | 383,066 | 1,566,177 |
Intangible Assets, net | 5,593,612 | 3,310,184 |
Goodwill | 5,218,861 | 6,736,043 |
Net investment in direct financing lease, net of current portion | 494,703 | 560,036 |
Total assets | 13,537,415 | 18,143,748 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 2,215,912 | 1,302,226 |
Notes payable, current portion | 5,341 | |
Capital lease obligation, current portion | 34,816 | 30,898 |
Deferred revenue | 425,276 | 236,270 |
Total current liabilities | 2,681,345 | 1,569,394 |
Long-term liabilities: | ||
Notes payable, net | 1,970,937 | 1,853,648 |
Convertible debt | 428,000 | |
Capital lease obligation, net of current portion | 49,794 | 84,610 |
Other liabilities | 131,568 | 45,000 |
Total liabilities | 5,261,644 | 3,552,652 |
Commitments and Contingencies | ||
Stockholders' Equity: | ||
Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 518,125,454 and 478,950,996 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively | 51,812 | 47,895 |
Additional paid in capital | 94,982,167 | 90,770,682 |
Accumulated deficit | (86,935,593) | (76,435,235) |
Accumulated comprehensive income | 177,385 | 207,754 |
Total stockholders' equity | 8,275,771 | 14,591,096 |
Total liabilities and stockholders' equity | $ 13,537,415 | $ 18,143,748 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, issued | 518,125,454 | 478,950,996 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | ||
Products and services | $ 2,488,624 | $ 3,759,635 |
Lease income | 63,421 | 69,358 |
Total revenues, net | 2,552,045 | 3,828,993 |
Operating Expenses: | ||
Cost of Sales | 669,523 | 1,256,853 |
General and administrative | 7,892,046 | 10,358,186 |
Research and development | 1,614,054 | 894,849 |
Impairment loss | 1,671,804 | 148,627 |
Depreciation and amortization | 790,367 | 493,697 |
Total operating expenses | 12,637,794 | 13,152,212 |
Loss from operations | (10,085,749) | (9,323,219) |
Other Income (Expense): | ||
Other Income: | 23,920 | 83,649 |
Interest expense, net | (375,598) | (757,801) |
Other expense, net | (351,678) | (674,152) |
Income loss before income taxes | (10,437,427) | (9,997,371) |
Income Taxes | (62,931) | (30,242) |
Net loss | $ (10,500,358) | $ (10,027,613) |
Net Loss Per Share - Basic and Diluted | $ (0.02) | $ (0.02) |
Weighted Average Shares Outstanding - Basic and Diluted | 498,747,396 | 429,852,594 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Other Comprehensive Income [Abstract] | ||
Net Loss | $ (10,500,358) | $ (10,027,613) |
Foreign currency translation loss | (30,369) | (47,907) |
Comprehensive loss | $ (10,530,727) | $ (10,075,520) |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Balance, beginning at Dec. 31, 2017 | $ 40,331 | $ 79,053,339 | $ (66,407,622) | $ 254,851 | $ 12,940,899 |
Balance, beginning (in shares) at Dec. 31, 2017 | 403,311,988 | ||||
Issuance of common stock for cash | $ 6,407 | 8,945,522 | 8,951,929 | ||
Issuance of common stock for cash (in shares) | 64,072,001 | ||||
Restricted stock issued for services | $ 521 | 245,372 | 245,893 | ||
Restricted stock issued for services (in shares) | 5,206,334 | ||||
Common stock issued for services | $ 46 | 97,080 | 97,126 | ||
Common stock issued for services (in shares) | 456,735 | ||||
Stock-based compensation | 2,429,959 | 2,429,959 | |||
Cashless exercise of common stock warrants | $ 350 | (350) | |||
Cashless exercise of common stock warrants (in shares) | 3,498,943 | ||||
Cashless exercise of common stock options | $ 163 | (163) | |||
Cashless exercise of common stock options (in shares) | 1,633,443 | ||||
Common stock issued for loan extension | $ 150 | (150) | |||
Common stock issued for loan extension (in shares) | 1,500,000 | ||||
Cancellation of shares in settlement of amounts due from prior acquisition | $ (73) | 73 | |||
Cancellation of shares in settlement of amounts due from prior acquisition (in shares) | (728,448) | ||||
Net loss | (10,027,613) | (10,027,613) | |||
Foreign currency translation | (47,097) | (47,907) | |||
Balance, ending at Dec. 31, 2018 | $ 47,895 | 90,770,682 | (76,435,235) | 207,754 | 14,591,096 |
Balance, ending (in shares) at Dec. 31, 2018 | 478,950,996 | ||||
Issuance of common stock for cash | $ 3,876 | 2,924,436 | 2,928,312 | ||
Issuance of common stock for cash (in shares) | 38,763,750 | ||||
Common stock issued for services | $ 41 | 41,030 | 41,071 | ||
Common stock issued for services (in shares) | 410,708 | ||||
Stock-based compensation | 1,246,019 | 1,246,019 | |||
Net loss | (10,500,358) | (10,500,358) | |||
Foreign currency translation | (30,369) | (30,369) | |||
Balance, ending at Dec. 31, 2019 | $ 51,812 | $ 94,982,167 | $ (86,935,593) | $ 177,385 | $ 8,275,771 |
Balance, ending (in shares) at Dec. 31, 2019 | 518,125,454 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (10,500,358) | $ (10,027,613) |
Adjustments to reconcile net loss with cash used in operations: | ||
Depreciation and amortization expense | 790,367 | 493,697 |
Stock-based compensation | 1,246,019 | 2,429,959 |
Stock issued for services | 41,071 | 343,019 |
Inventory reserve | 348,302 | |
Amortization of debt discount and debt issuance costs, net | 109,764 | 477,928 |
Impairment loss | 1,671,804 | 148,627 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,770) | 20,762 |
Net investment in direct financing lease | 58,727 | 52,790 |
Other current assets | (18,834) | (265,624) |
Inventory | (50,647) | (1,519) |
Accounts payable and accrued expenses | 413,773 | (84,512) |
Deferred revenue | 189,006 | 113,759 |
Net cash flows from operating activities | (6,055,078) | (5,950,425) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (27,364) | (59,091) |
Investment in other assets including work in process | (1,604,152) | (1,319,932) |
Net cash flows from investing activities | (1,631,516) | (1,379,023) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of convertible note payable | 408,000 | |
Proceeds from the sale of common stock, net | 2,928,312 | 9,610,793 |
Payment of debt and equity issuance costs | (658,864) | |
Principal payments on capital lease obligations | (31,188) | (27,421) |
Principal payments on notes payable | (1,000,000) | |
Net cash flows from financing activities | 3,305,124 | 7,924,508 |
Effect of foreign currencies exchange on cash | (23,780) | (36,551) |
Net change in Cash | (4,405,250) | 558,509 |
Cash, Beginning of Period | 4,972,331 | 4,413,822 |
Cash, End of Period | 567,081 | 4,972,331 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 10,771 | 173,426 |
Cash paid for income taxes | 62,931 | 17,304 |
Non-cash Investing and Financing Activities: | ||
Purchase of vehicle with note payable | 16,510 | |
Recognition of right to use asset and obligation | 514,473 | |
Reclassification of software development costs included in other assets to intangible assets | $ 3,111,668 | $ 679,882 |
DESCRIPTION OF BUSINESS AMD SUM
DESCRIPTION OF BUSINESS AMD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS AMD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – DESCRIPTION OF BUSINESS AMD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Ipsidy Inc. (formerly ID Global Solutions Corporation) ("Ipsidy" or the "Company") was incorporated on September 21, 2011 under the laws of the State of Delaware. Ipsidy is a provider of an Identity as a Service (IDaaS) platform that delivers a suite of secure, mobile, biometric identity solutions. The Company provides its biometric identification services to government and private sector organizations and businesses, seeking to authenticate and manage identities for a variety of security purposes, including issuing identity cards, exercise of rights such as voting in elections and controlling access to digital and physical environments. The Company's platform supporting internally developed software as well as acquired and licensed technology is intended to provide solutions for multi modal biometric matching, multi-factor out of band identity and transaction authentication, and electronic transactions. Going Concern As of December 31, 2019, the Company had an accumulated deficit of approximately $86.9 million. For the year ended December 31, 2019, the Company earned revenue of approximately $2.6 million and incurred a loss from operations of approximately $10.1 million. These 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. As there can be no assurance that the Company will be able to achieve positive cash flows (become profitable) and raise sufficient capital to maintain operations there is substantial doubt about the Company's ability to continue as a going concern. These 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. Basis of Consolidation The consolidated financial statements include the accounts of Ipsidy Inc. and its wholly-owned subsidiaries Innovation in Motion Inc. MultiPay S.A.S., ID Global LATAM, IDGS S.A.S., ID Solutions, Inc., FIN Holdings, Inc., Cards Plus Pty Ltd., Ipsidy Perú S.A.C., and Ipsidy Enterprises Limited (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. The summary of significant accounting policies presented below is designed to assist in understanding the Company's consolidated financial statements. Such consolidated financial statements and accompanying notes are the representations of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America ("US GAAP") in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements. Use of Estimates In preparing these consolidated financial statements in conformity with US GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in our consolidated financial statements relate to the realizability of accounts receivable and inventory, valuation of long-lived assets, accruals for potential liabilities, and valuation assumptions related to derivative liabilities, equity instruments and share based payments. Revenue Recognition An entity recognizes revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Revenue from the sale of unique secure credential products and solutions to customers is recorded at the completion of the project unless the solution includes benefits to the end user in which additional resources or services are required to be provided. Revenue from cloud-based services arrangements that allow for the use of a hosted software product or service that are provided on a consumption basis (for example, the number of transactions processed over a period of time) is recognized commensurate with the customer utilization of such resources. Generally, the contract calls for a minimum number of transactions to be charged by the Company on a monthly basis. Accordingly, the Company records the minimum transactional fee based on the passage of a month's time as revenues. Amounts in excess of the monthly minimum, are charged to customers based on the actual number of transactions. Consulting services revenue is recognized as services are rendered, generally based on the negotiated hourly rate in the consulting arrangement and the number of hours worked during the period. Consulting revenue for fixed-price services arrangements is recognized as services are provided. The lease of equipment to customers that meet certain criteria are recognized as a direct financing lease. Direct financing lease arrangements are recognized as revenue over the term of the associated lease based on the effective interest method. As of December 31, 2019 and December 31, 2018, the Company has 78 kiosks financed under direct financing leases. The revenue associated with these arrangements is expected to be recognized through April 2026. The imputed interest rate in the arrangements approximates 10.7%. Accounts Receivable All customers are granted credit on a short-term basis and related credit risks are considered minimal. The Company routinely reviews its trade receivables and makes provisions for probable doubtful accounts; however, those provisions are estimates and actual results could differ from those estimates and those differences may be material. Trade receivables are deemed uncollectible and removed from accounts receivable and the allowance for doubtful accounts when collection efforts have been exhausted. At December 31, 2019 and 2018, management determined no allowance for doubtful accounts was required. Inventories 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. The kiosks provide electronic ticketing for transit systems. 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 at December 31, 2019 and 2018 consist of cards inventory and kiosks that have not been placed into service. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of December 31, 2019 and 2018, the Company recorded an inventory valuation allowance of approximately $236,000 and $353,000, respectively, to reflect net realizable value of kiosks that are being held for sale and the Company believes no valuation allowance was necessary regarding the cards inventory. Concentration of Credit Risk The Company's financial instruments that potentially expose the Company to a concentration of credit risk consist of cash and accounts receivable. Cash: 2019 Revenues and accounts receivable: 2018 Revenues and accounts receivable: Income Taxes The Company accounts for income taxes under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740 "Income Taxes." Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. Leases All leases are classified at the inception as direct finance leases or operating leases based on whether the lease transfers substantially all the risks and rewards of ownership. Leases that transfer to the leasee substantially all of the risks and rewards incidental to ownership of the asset are classified as direct finance leases. In February 2016, the FASB issued Accounting Standards Update ("ASU") ASU No. 2016-02 ("Topic 842"). Topic 842 amends several aspects of lease accounting, including requiring lessees to recognize leases with a term greater than one year as a right-of-use asset and corresponding liability, measured at the present value of the lease payments. In July 2018, the FASB issued supplemental adoption guidance and clarification to Topic 842 within ASU 2018-10 "Codification Improvements to Topic 842, Leases" and ASU 2018-11 "Leases (Topic 842): Targeted Improvements." The new guidance aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. A modified retrospective application is required with an option to not restate comparative periods in the period of adoption. The Company, effective January 1, 2019 has adopted the provisions of Topic 842. The Company decided to use the practical expedients available upon adoption of Topic 842 to aid the transition from former accounting to provisions of Topic 842. The package of expedients will effectively allow Ipsidy to run off existing leases, as initially classified as operating or financing, and classify new leases after implementation under the new standard as the business evolves. The practical expedients elected by the Company in transition permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs. Furthermore, we have elected the short-term lease recognition exemption for leases with a term of 12 or less months which are not reasonably certain of exercising any available renewal options that would extend past 12 months. Additionally, we will continue to account for the executory costs of the direct financing lease as previously concluded and the initial direct costs were not considered significant. The Company has operating leases principally for offices and some of the leases have renewal options. Management evaluates each lease independently to determine the purpose, necessity to its future operations in addition to other appropriate facts and circumstances. We adopted Topic 842 using a modified retrospective approach for all existing leases at January 1, 2019. The adoption of Topic 842 impacted our balance sheet by the recognition of the operating lease right-of-use assets and the liability for operating leases. The accounting for finance leases (capital leases) was substantially unchanged. Accordingly, upon adoption, leases that were classified as operating leases under the previous guidance were classified as operating leases under Topic 842. The lease liability is based on the present value of the remaining lease payments, discounted using a market based incremental borrowing rate as the effective date of January 1, 2019 using current estimates as to lease term including estimated renewals for each operating lease. As of January 1, 2019, the Company recorded an adjustment of approximately $514,000 to operating lease right-of-use assets ("ROU") and the related lease liability. See Note 12 for further information with respect to leases. See Notes 8, 11, 12 and 13 to Condensed Consolidated Financial Statements for additional information. Property and Equipment, net Property and equipment consist of furniture and fixtures and computer equipment, and are stated at cost. Property and equipment are depreciated using the straight-line method over the estimated useful service lives of three to five years. Maintenance and repairs are expensed as incurred and improvements are capitalized. Gains or losses on the disposition of property and equipment are recorded upon disposal. Other Assets – Software Development Costs Other assets consist primarily of costs associated with software development of new product offerings and enhancements to existing and new applications. Development costs of computer software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers. As of December 31, 2019 and 2018, the balance sheet "Other assets" are under further development and have not been placed in service. During the years ended December 31, 2019 and December 31, 2018, approximately $3.1 million and $0.7 million of software developed were placed into service. Upon completion, the amounts will be recorded in the appropriate asset category and amortized over their estimated useful lives. Intangible Assets Excluding goodwill, acquired intangible assets and internally developed software are amortized over their estimated useful lives. Acquired amortizing intangible assets are carried at cost, less accumulated amortization. Internally developed software costs are capitalized upon reaching technological feasibility. Amortization of acquired finite-lived intangible assets is computed over the estimated useful lives of the respective assets which is the shorter of the life of the asset or the period during which sales will be generated. Goodwill 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. The Company did not recognize any goodwill impairment for the year ended 2018. During the year ended December 31, 2019, the Company updated their projections associated with their reporting units and it indicated that the carrying value may not be recovered as revenue assumptions were not met. The fair value of the reporting unit was determined using discounted cash flow as well as future realizable value. The goodwill impairment loss for the year ended December 31, 2019 was approximately $1,517,000 across the three reporting units. Stock-based compensation The Company has accounted for stock-based compensation under the provisions of FASB ASC 718 – "Stock Compensation" which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). For employee awards, the fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. For non-employees, the fair value of each stock option award is estimated on the measurement date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. For non-employees, the Company utilizes the graded vesting attribution method under which the entity treats each separately vesting portion (tranche) as a separate award and recognizes compensation cost for each tranche over its separate vesting schedule. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. For employee awards, the expected term of options granted is derived using the "simplified method" which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The Company adopted as of January 1, 2019 the requirements of ASU 2018-07 which simplified the accounting for share-based payments granted to non-employees for share based payments granted to non-employees for goods and services. Under the ASU, most of the guidance on such payments to non-employees were aligned with the share-based payments granted to employees. The Company determined on the date of adoption that the impact was not significant. Impairment of Long-Lived Assets Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its undiscounted estimated future cash flows, an impairment review is performed. An impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Generally, fair value is determined using valuation techniques such as expected discounted cash flows or appraisals, as appropriate. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated or amortized. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. During the year ended December 31, 2019, the Company wrote-off intangible assets related to developed software of approximately $155,000 as the assets were no longer being utilized for commercial purposes and recorded a goodwill impairment loss of approximately $1,517,000 for reporting units where the carrying amount is in excess of its recoverable amount. The total of these charges is approximately $1,672,000. During the year ended December 31, 2018, the Company wrote-off net assets of approximately $149,000 as the assets were no longer being utilized or developed for commercial purposes and we do not anticipate any future realizable value. Research and Development Costs Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to incurred to perform research projects and develop technology for the Company's products. Research and development costs are expensed as incurred. The Company reclassified research and development costs of approximately $687,000 for the year ended December 31, 2018 to conform with the current presentation in the financial statements. 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 years ended December 31, 2019 and 2018 because their effect was antidilutive: 2019 2018 Stock Options 109,400,006 106,253,339 Warrants 47,453,227 46,201,477 Total 156,853,233 152,454,816 Foreign Currency Translation The assets, liabilities and results of operations of certain of Ipsidy's subsidiaries are measured using their functional currency which is the currency of the primary foreign economic environment in which they operate. Upon consolidating these subsidiaries with Ipsidy, the applicable assets and liabilities are translated to US dollars at currency exchange rates as of the applicable dates and their revenues and expenses are translated at the weighted average currency exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating these subsidiaries' financial statements are reported in other comprehensive loss in the accompanying consolidated statements of comprehensive loss. Fair Value Measurements ASC 820, "Fair Value Measurements", requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, inputs other than level one that are either directly or indirectly observable such as quoted prices for identical or similar assets or liabilities on markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Fair Value of Financial Instruments The Company is required to disclose fair value information about financial instruments when it is practicable to estimate that value. The carrying amounts of the Company's cash, accounts receivable, other receivables, accounts payable, accrued expenses, and other current liabilities approximate their estimated fair value due to the short-term maturities of these financial instruments and because related interest rates offered to the Company approximate current rates. The fair value of the Company's notes payable is approximately $2,013,000, which differs from the carrying value or reported amounts of approximately $1,976,000 at December 31, 2019 because of the debt discounts as discussed in Note 6. The convertible notes payable of $428,000 at December 31, 2019 reflects fair value. Revenue Recognition Cards Plus – The Company recognizes revenue for the design and production of cards over time when products are produced 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. Cards Plus had $288,000 of deferred revenue 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 deferred revenue contract liability of approximately $137,000 and $236,000 as of December 31, 2019 and 2018 for certain revenue that will be earned in future periods. The $236,000 of deferred revenue contract liability as of December 31, 2018 was earned in the year ended December 31, 2019. The deferred revenue relates to the service period of support services for two customers. As of December 31, 2019 majority of the deferred revenue contract liability will be recognized in the quarter March 31, 2020. We have allocated the selling price in the contract to one customer which has multiple performance obligations based on the contract selling price that we believe represents a fair market price for the service rendered. During the year ended December 31, 2019, the Company had revenues from operations in North America, South America and Africa of $0.6 million, $0.5 million and $1.5 million respectively compared to $1.9 million, $0.5 million, $1.4 million respectively in the year ended December 31, 2018. In 2018, the Company introduced its new IDaaS platform and products as well as its pay for performance plan for both internal and external salesforce, that is based on a percentage of the benefit derived by the Company. For the years ended December 31, 2019 and 2018, the Company recorded revenues of approximately $13,000 and $5,000 from the new platform. We will review each new contract for the related performance obligations and related revenue and expense recognition implications. We expect that the revenues derived from the new product offerings 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. Additionally, the Company will capitalize the incremental costs of acquiring and fulfilling a contract with a customer if the Company expects to recover those costs. The incremental costs of acquiring and fulfilling a contract are those that the Company incurs to acquire and fulfill a contract with a customer that it would not have incurred if the contract had not been acquired (for example, a sales commission or specific incremental costs associated with the contract). The Company capitalizes the costs incurred to acquire and fulfill a contract only if those costs meet all the following criteria: a. The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. b. The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. c. The costs are expected to be recovered. The Company will capitalize contract acquisition and fulfillment costs related to signing or renewing contracts that meet the above criteria, which will be classified as contract cost assets in the Company's Consolidated Balance Sheets. Contract cost assets will be amortized using the straight-line method over the expected period of benefit beginning at the time revenue begins to be realized. The amortization of contract fulfillment cost assets associated with facilitating transactions will be recorded as cost of services in the Company's Consolidated Statements of Operations. The amortization of contract acquisition cost assets associated with sales commissions that qualify for capitalization will be recorded as selling, general and administrative expense in the Company's Consolidated Statements of Operations. As of December 31, 2019, the Company had approximately $5,000 of accounts payable and accrued expenses related to the delivery of biometric identity system and services. The $5,000 was paid in February 2020. 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. As of December 31, 2019, there was a deferred commission of approximately $5,000 related to future delivery of an identity solutions system and services. Recently Issued Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued Accounting Standards Update 2017-04, "Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"). The standard simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the amendments of ASU 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, but the loss cannot exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for the calendar year ending December 31, 2020. The amendments require a prospective approach to adoption and early adoption is permitted for interim or annual goodwill impairment tests. The Company does not believe ASU 2017-04 will have a material impact on the consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. The standard requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the statement of operations will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard will be effective for the calendar year ending December 31, 2023. The Company is currently in the process of evaluating the impact of adoption of this ASU on the financial statements. See Notes 6 and 7 for additiona |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 2 – PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following as of December 31, 2019 and 2018: 2019 2018 Property and equipment $ 282,316 $ 238,442 Equipment under capital lease (see Note 11) 156,867 156,867 439,183 395,309 Less Accumulated depreciation 277,363 191,309 Property and equipment, net $ 161,820 $ 204,000 Depreciation expense totaled $86,054 and $64,810 for the years ended December 31, 2019 and 2018, respectively. |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
Other Assets [Abstract] | |
OTHER ASSETS | NOTE 3 – OTHER ASSETS The Company’s other assets consist of software being developed for new product offerings that have not been placed into service. Other assets consisted of the following at December 31, 2019 and 2018: 2019 2018 Software and development $ 128,005 $ 1,566,177 Operating Lease ROU Assets 171,141 — Other 83,920 — $ 383,066 $ 1.566,177 |
INTANGIBLE ASSETS, NET (OTHER T
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | NOTE 4 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) The Company's intangible assets consist of intellectual property acquired from Multi-Pay and FIN in addition to internally developed software that have been placed into service. They are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible assets for the years ended December 31, 2019 and 2018: Customer Acquired and Intellectual Non-Compete Patents Total Useful Lives 10 Years 5 Years 10 Years 10 Years N/A Carrying Value at December 31, 2017 $ 1,287,450 $ — $ 1,556,934 $ 5,250 $ 28,446 2,878,080 Additions — 959,882 — — 49,736 1,009,618 Write off of assets — — (148,627 ) — — (148,627 ) Amortization (158,716 ) (50,989 ) (216,365 ) (2,817 ) — (428,887 ) Carrying Value at December 31, 2018 1,128,734 908,893 1,191,942 2,433 78,182 3,310,184 Additions — 3,111,668 — — 30,695 3,142,363 Impairment loss — — (154,622 ) — — (154,622 ) Amortization (158,715 ) (368,637 ) (174,528 ) (2,433 ) — (704,313 ) Carrying Value at December 31, 2019 $ 970,019 $ 3,651,924 $ 862,792 $ - $ 108,877 $ 5,593,612 The following is a summary of intangible assets as of December 31, 2018: Customer Acquired and Intellectual Non-Compete Patents Total Cost $ 1,587,159 $ 959,882 $ 1,759,809 $ 14,087 $ 78,182 $ 4,399,119 Accumulated amortization (458,425 ) (50,989 ) (567,867 ) (11,654 ) — (1,088,935 ) Carrying Value at December 31, 2018 $ 1,128,734 $ 908,893 $ 1,191,942 $ 2,433 $ 78,182 $ 3,310,184 The following is a summary of intangible assets as of December 31, 2019: Customer Acquired and Intellectual Non-Compete Patents Total Cost $ 1,587,159 $ 4,071,550 $ 1,498,363 $ 14,087 $ 108,877 $ 7,280,036 Accumulated amortization (617,140 ) (419,626 ) (635,571 ) (14,087 ) — (1,686,424 ) Carrying Value at December 31, 2019 $ 970,019 $ 3,651,924 $ 862,792 $ — $ 108,877 $ 5,593,612 The following is the future amortization of intangible assets for the year ended December 31: 2020 $ 1,158,743 2021 1,158,743 2022 1,119,319 2023 1,014,421 2024 790,106 Thereafter 352,280 $ 5,593,612 |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following as of December 31, 2019 and 2018: 2019 2018 Trade payables $ 621,292 $ 401,272 Accrued interest 641,834 401,667 Accrued payroll and related expenses 386,165 260,153 Current portion of operating lease liabilities 242,650 — Other 323,971 239,134 Total $ 2,215,912 $ 1,302,226 |
NOTES PAYABLE, NET
NOTES PAYABLE, NET | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE, NET | NOTE 6 - NOTES PAYABLE, NET The following is a summary of notes payable as of December 31, 2019 and 2018: December 31, December 31, In January 2017, the Company issued a Senior Unsecured Note ("Note") a face value of $3,000,000, payable two years from issuance, along with an aggregate of 4,500,000 shares of Common Stock, with a fair value of $1,147,500. The Company allocated the proceeds to the note payable and common stock based on their relative fair value and recorded a discount of $830,018 to be amortized into interest expense over the two-year term of the note. The Company also paid debt issuance costs consisting of a cash fee of $120,000 and 1,020,000 shares of common stock of the Company with a fair value of $306,000. On April 30, 2018, the Company and the Noteholder agreed to extend the due date of the note until April 30, 2020 for an extension fee of 1,500,000 shares of the Common Stock issued to the Noteholder. The April 2018 change in terms of the Note payable has been determined to be a debt extinguishment in accordance with ASC 470. The reported amounts under the debt extinguishment are not significantly different than that of the Company's reported amounts. See below. $ 2,000,000 $ 2,000,000 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 12,866 — Total Principal Outstanding $ 2,012,866 $ 2,000,000 Unamortized Deferred Debt Discount (26,722 ) (106,886 ) Unamortized Deferred Debt Issuance Costs (9,866 ) (39,466 ) Notes Payable, Net $ 1,976,278 $ 1,853,648 Notes Payable, current portion, net of discount, issuance costs and current portion $ 1,970,937 $ — Notes Payable, Net of discounts and current portion 5,341 1,853,648 $ 1,976,278 $ 1,853,648 The Note was amended and restated in February 2020. See Note 16 "Subsequent Events". The following is a roll-forward of the Company's notes payable and related discounts for the years ended December 31, 2019 and 2018: Principal Debt Issuance Debt Balance Costs Discounts Total Balance at January 1, 2018 $ 3,000,000 $ (168,345 ) $ (455,935 ) $ 2,375,720 New issuances — — — — Payments (1,000,000 ) — — (1,000,000 ) Amortization — 128,879 349,049 477,928 Balance at December 31, 2018 2,000,000 (39,466 ) (106,886 ) 1,853,648 New issuances 16,510 — — 16,510 Payments (3,644 ) — — (3,644 ) Amortization — 29,600 80,164 109,764 Balance at December 31, 2019 $ 2,012,866 $ (9,866 ) $ (26,722 ) $ 1,976,278 Future maturities of notes payable are as follows for the calendar years 2020, 2021, and 2022: 2020 $ 5,340 2021 2,005,947 2022 1,579 $ 2,012,866 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | 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 Investors of 8% Convertible Notes in the aggregate amount of $428,000 (the "8% Notes"). The 8% Notes mature on November 30, 2021 and are 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 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 $0.08 per share. If the holders of the 8% Notes owning outstanding 8% 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. The 8% Notes were amended in February 2020 became a secured obligation of the Company and now mature in 2022. See Note 16 "Subsequent Events" |
OTHER LIABILITIES
OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities [Abstract] | |
OTHER LIABILITIES | NOTE 8 – OTHER LIABILITIES Other liabilities consist of the following as of December 31, 2019 and 2018: 2019 2018 Operating lease liabilities, long term $ 131,568 $ — Other — 45,000 $ 131,568 $ 45,000 The Company reclassified $45,000 from accounts payable and accrued expenses in 2018 to other liabilities. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 – RELATED PARTY TRANSACTIONS 2019 Transactions Notes Payable During the year ended December 31, 2019, the Company recorded approximately $240,000 of interest expense under the terms and conditions of the Stern Note (see Note 6) that is due to the Theodore Stern Revocable Trust, whose trustee Mr. Stern is a member of the Company's Board of Directors. Convertible Notes Payable In December 2019, the Chairman of the Board of Directors invested $25,000 in the 8% Notes offering. See Note 7. Purchase of Common Stock In June 2019, two of the Company's Directors and one Officer purchased 1,562,500 shares of common stock of the 2019 offering as described in Note 9. Other In connection with the 2019 offering of common stock, the Company incurred fees to Network 1 Financial Securities Inc. ("Network 1"), a registered broker dealer, one of the Company's financial advisors. The Network 1 fees were approximately $109,000 paid in cash and 858,000 common stock purchase warrants with a fair value of approximately $54,000 that are exercisable during a term of five years at a price of $0.088 cents per share. A member of the Company's Board of Director's maintains a partnership with a key principal of Network 1. Additionally, the Company rents office space in Long Beach, New York at a monthly cost of $7,425 (reduced to $5,000 per month as of January 1, 2020). 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 CEO, and his family. 2018 Transactions On August 9, 2018, the Company prepaid $1,000,000 of principal of the $3,000,000 Senior Unsecured Note dated February 1, 2017 held by the Stern Trust (Mr. Stern is a Company Board of Director) plus the related accrued interest of approximately $158,000. During the year ended December 31, 2019, the Company recorded approximately $284,000 of interest expense under the terms and conditions of the Note. Additionally, the Company and the Stern Trust agreed to extend the due date of the note until April 30, 2020 for an extension fee of 1,500,000 shares of Common Stock at a market value of $420,000 based on trading price. Purchase of Common Stock In August 2018, two of the Company's Directors, Mr. Stern and Mr. Selzer, respectively purchased an additional 6,666,667 and 666,667 shares of common stock of the 2018 offering as described in Note 10. Other In connection with the 2018 offering of common stock, the Company incurred fees to Network 1 Financial Securities, Inc. ("Network 1"), a registered broker-dealer. The Network 1 fees and expenses comprise of approximately $659,000 paid in cash and approximately 2,470,000 common stock purchase warrants for five years at a price of $0.165 cents per share. A member of the Company's Board of Director's maintains a partnership with a key principal of Network 1. The Company leases its Corporate headquarters from Bridgeworks LLC, ("Bridgeworks"), a company providing office facilities to emerging companies, principally owned by Mr. Beck and his family. Mr. Beck is Chairman, Chief Executive Officer and President of the Company. During 2018, the Company paid Bridgeworks $89,100. In connection with a Confidential Settlement Agreement and General Release Agreement with Mr. Solomon, a former director and officer, as described below, the Company paid approximately $160,000 during the year ended December 31, 2019. Additionally, Mr. Solomon and the Company entered into an Agency Agreement dated September 13, 2017 pursuant to which Mr. Solomon agreed to be engaged as a non- exclusive sales agent for the Company's products on an as needed basis for a term of three years in consideration of sales commissions. During the year ended December 31, 2019, the Company paid Mr. Solomon a sales commission of approximately $84,000. 2020 Transactions See Note 1 "Subsequent Events" for detailed disclosure of the participation of three directors in the 2020 Notes Offering and related transactions. |
STOCKHOLDER'S EQUITY
STOCKHOLDER'S EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
STOCKHOLDER'S EQUITY | NOTE 10 STOCKHOLDERS' EQUITY On September 28, 2017, the stockholders of the Company approved increasing the number of authorized shares of common stock from 500,000,000 to 1,000,000,000. The Company had 518,125,454 and 478,950,996 shares issued and outstanding as of December 31, 2019 and 2018, respectively. In addition, the Company is authorized to issue 20,000,000 shares of preferred stock. Common Stock 2019 Common Stock Transactions ● In June 2019, the Company entered into Subscription Agreements with accredited investors (the "2019 Accredited Investors") pursuant to which the 2019 Accredited Investors purchased an aggregate of approximately 38,764,000 shares of the Company's common stock for an aggregate purchase price of approximately $3,100,000. In connection with the private offering, the Company paid a cash fee of approximately $173,000 and issued 1,251,750 common stock purchase warrants with a fair value of approximately $79,000 that are exercisable during a term of five years at an exercise price of $0.088 per share. ● The Company also issued approximately 411,000 shares of common stock to two service providers in satisfaction of $41,000 due for services. 2018 Common Stock Transactions ● During the year ended 2018, the Company granted approximately 2,456,000 shares of restricted stock to the non-employee Directors in connection with their compensation to serve as Board Members. The shares were valued at the fair value at the date of grant and vest quarterly. The restricted shares granted to the Board Member for compensation is for the period November 1, 2017 to October 31, 2019. Additionally, during the year ended 2018, the Company granted 2,750,000 shares of restricted stock to employees of which 2,000,000 will be vested upon achieving certain performance criteria and 750,000 will vest over a three-year period. ● The Company also issued 456,735 shares of common stock to a service provider in satisfaction of $97,126 due for services. ● During the year ended December 31, 2018, investors exercised 4,433,333 warrants at an average price of $0.05 cents per share on a cashless exercise basis in exchange for approximately 3,500,000 shares of common stock of the Company. Additionally, option holders exercised approximately 3,200,000 vested options at an average price of $0.13 cents for approximately 1,600,000 shares of common stock. ● During the year ended December 31, 2018, the Company cancelled 728,448 shares of common stock in settlement of amounts due from the Multipay acquisition. ● In August 2018, the Company entered into Subscription Agreements with accredited investors (the "August 2018 Accredited Investors") pursuant to which the August 2018 Accredited Investors agree to purchase an aggregate of approximately 64,072,000 shares of the Company's common stock for an aggregate purchase price of approximately $9,611,000. In connection with this private offering, the Company paid Network 1, a registered broker-dealer, a cash fee of approximately $629,000 and issued approximately 2,470,000 common stock purchase warrants valued at approximately $314,000 that are exercisable for a term of five years at an exercise price of $0.165 per share. The criteria for the 2019 and 2018 performance based restricted stock have not been met as of December 31, 2019 Warrants ● During the year ended December 31, 2019, the Company issued 1,251,750 common stock warrants to its investment bankers in connection with the June 2019 private common stock offering at an exercise price of $0.088 cents for a period of five years. ● During the year ended December 31, 2018, the Company issued 2,470,267 common stock warrants to its investment banker in connection with the August 2018 private common stock offering at an exercise price of $0.14 cents for a period of five years. ● During the year ended 2018, investors exercised 4,433,333 warrants at an average price of $0.05 cents per share on a cashless exercise basis in exchange for shares of common stock of the Company. The following is a summary of the Company's warrant activity for the years ended December 31, 2019 and 2018: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at January 1, 2017 48,164,543 $ 0.11 2.8 Years Granted 2,470,267 $ 0.14 5.0 Years Exercised/Cancelled (4,433,333 ) $ 0.05 Outstanding at December 31, 2018 46,201,477 $ 0.11 2.9 Years Granted 1,251,750 $ 0.09 5.0 Years Exercised/Cancelled - $ — Outstanding at December 31, 2019 47,453,227 $ 0.09 1.9 Years Stock Options The Company has adopted the Ipsidy Inc. 2014 Equity Compensation Plan and the 2017 Incentive Stock Plan. The Company has no other stock options plans in effect as of December 31, 2019. On November 21, 2014, our Board of Directors authorized the Ipsidy Inc. Equity Compensation Plan (the "2014 Plan"). On September 28, 2017, the shareholders of the Company approved the 2017 Incentive Stock Plan ("2017 Incentive Plan"). The following is a summary of principal features of the 2014 Plan and the 2017 Incentive Plan. The summaries, however, does not purport to be a complete description of all the provisions of each plan. The 2014 Plan covers 25,000,000 shares of common stock and the 2017 Incentive Plan covers 70,000,000 shares of common stock. Both Plans are administered by the Compensation Committee. The terms of Awards granted under the plans shall be contained in an agreement between the participant and the Company and such terms shall be determined by the Compensation Committee consistent with the provisions of the applicable plan. The terms of Awards may or not require a performance condition in order to vest the equity comprised in the relevant Award. The terms of each Option granted shall be contained in a stock option agreement between the optionee and the Company and such terms shall be determined by the Compensation Committee consistent with the provisions of the applicable plan The Company has also granted equity awards that have not been approved by security holders. 2019 Stock Option Issuances ● During the year ended December 31, 2019, the Company granted options to acquire 3,600,000 shares of common stock to one member of the Board of Directors and three employees at fair market value on date of grant. Of the 3,600,000 stock options, 3,475,000 options vest over a three-year period and 125,000 options vest upon achieving certain performance thresholds. The options have a term of ten years and the approximate fair value of the options as of the grant date was $150,000. 2018 Stock Option Issuances ● During the year ended December 31, 2018, the Company granted options to acquire 6,220,000 shares of common stock to ten employees and one non-employee of which 970,000 are exercisable at an average price of $0.12, 3,250,000 options are exercisable at an average price of $0.22 per share, and 2,000,000 are exercisable at $0.25 per share. The options have a term of ten years, were granted at fair market value at the date of grant and vest over three years. The grant date fair value of the options totaled approximately $962,000, which will be charged to expense over the three-year vesting term of which approximately $231,000 was related to non-employees. The Company determined the grant date fair value of the options granted during the years ended December 31, 2019 and 2018 using the Black Scholes Method and the following assumptions: 2019 2018 Expected Volatility 75% to 80% 79.0% to 93.0% Expected Term 2.5 – 5.9 Years 2.5 – 5.9 Years Risk Free Rate 1.73% – 2.49% 2.42% – 3.00% Dividend Rate 0.00% 0.00% Activity related to stock options for the years ended December 31, 2019 and 2018 is summarized as follows: Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term (Yrs.) Aggregate Intrinsic Value Outstanding as of January 1, 2018 103,208,331 $ 0.19 9.5 $ 10,023,400 Granted 6,220,000 $ 0.22 10.0 $ 2,868.750 Exercised/Forfeited (3,174,992 ) $ 0.08 — $ — Outstanding as of December 31, 2018 106,253,339 $ 0.19 9.5 $ 11,457,291 Granted 3,600,000 $ 0.07 10.0 $ — Forfeited (453,333 ) $ 0.13 — $ — Outstanding as of December 31, 2019 109,400,006 $ 0.20 6.5 $ 280,000 Exercisable as of December 31, 2019 101,144,450 $ 0.19 7.4 $ 280,000 The following table summarizes stock option information as of December 31, 2019: Exercise Price Outstanding Weighted Average Exercisable $ 0.0001 3,500,000 5.8 3,500,000 $ 0.05 35,700,006 6.9 31,950,006 $ 0.10 27,200,000 6.8 27,061,110 $ 0.12 1,200,000 9.0 — $ 0.13 250,000 7.8 166,667 $ 0.15 2,800,000 5.9 2,800,000 $ 0.22 2,750,000 8.0 1,500,000 $ 0.25 2,500,000 7.9 1,166,667 $ 0.26 500,000 8.3 333.333 $ 0.29 1,000,000 7.3 666,667 $ 0.4 1,000,000 6.2 1,000,000 $ 0.45 31,000,000 5.9 31,000,000 6.5 109,400,006 101,144,450 As of December 31, 2019, there was approximately $446,000 and $27,000 of unrecognized compensation costs related to employee stock options and non-employee stock options, respectively, outstanding which will be recognized in 2020 through 2022. The company will recognize forfeitures as they occur. Stock compensation expense for the years ended December 31, 2019 and 2018 was approximately $1,246,000 and $2,430,000, respectively. The criteria for certain performance based stock options have not been achieved as of December 31, 2019. |
DIRECT FINANCING LEASE
DIRECT FINANCING LEASE | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
DIRECT FINANCING LEASE | NOTE 11 – DIRECT FINANCING LEASE In September 2016, 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 commenced in May 2017 when the kiosks were installed and operational. The term of the rental contract is ten years at an approximate monthly rental of $11,900. The lessee 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. As such, the lease was accounted for as a direct financing lease. The Company has recorded the transaction at 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 month and initial direct costs are not considered significant. The transaction resulted in incremental revenue in the years ended December 31, 2019 and 2018 of approximately $63,400 and $69,400, respectively. The equipment under the capital lease is 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 is 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, 2020 $ 122,148 2021 122,148 2022 122,148 2023 122,148 2024 122,148 Thereafter 162,864 773,604 Less deferred revenue (213,568 ) Net investment in lease $ 560,036 |
LEASE OBLIGATION PAYABLE
LEASE OBLIGATION PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
LEASE OBLIGATION PAYABLE | NOTE 12 – 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 capital 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. Total amortization related to the lease equipment as of December 31, 2019 is $91,079. The following is a schedule showing the future minimum lease payments under capital lease by year and the present value of the minimum lease payments as of December 31, 2019. The interest rate related to the lease obligation is 12% and the maturity date is March 31, 2022. Future cash payment related to this capital lease are as follow for the calendar years ending from 2020-2022. 2020 $ 43,096 2021 43,096 2022 10,774 Total minimum lease payments 96,966 Less: Amount representing interest (12,356 ) Present value of minimum lease payments $ 84,610 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 13 INCOME TAXES The Company accounts for income taxes in accordance with ASC 740 which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition. There were no unrecognized tax benefits as of December 31, 2019 and 2018. The Company's loss before income taxes from US and Foreign sources for the years ended December 31, 2019 and 2018, are as follows: 2019 2018 United States $ (8,548,570 ) $ (8,775,452 ) Outside United States (1,888,857 ) (1,221,919 ) Loss before income taxes $ (10,437,427 ) $ (9,997,371 ) The following table summarizes the significant differences between the U.S. Federal statutory tax rate and the Company's effective tax rate for financial statement purposes for the years ended December 31, 2019 and 2018: 2019 2018 US Federal Statutory Tax Rate 21.00 % 21.00 % State taxes 4.35 % 4.35 % NOL True-Ups 5.27 % 2.47 % Change in valuation allowance (30.62 %) (27.82 %) 0.00 % 0.00 % The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2019 and 2018 are summarized as follows: 2019 2018 Deferred Tax Assets Net Operating Loss $ 7,681,718 $ 5,981,004 Stock Options 6,632,746 5,890,565 Charitable Contributions 1,267 1,267 Basis Difference in Intangible Assets 7,405 99,296 Basis Difference Fixed Assets — 5,096 Accrued Payroll 51,907 42,939 Valuation Allowance (14,365,195 ) (11,938,078 ) Total Deferred Tax Asset 9,848 37,089 Debt Discounts (6,769 ) (27,086 ) Debt Issuance Costs (2,501 ) (10,003 ) Basis Difference Fixed Assets (578 ) — Total Deferred Tax Liability (9,848 ) (37,089 ) Net Deferred Tax Asset $ — $ — As of December 31, 2019, the Company has available federal net operating loss carry forward of $25.9 million and state net operating loss carry forwards of $25.9 million. Operating loss carryforwards of approximately $25.9 million expire through 2039. Additionally, the Company has income tax net operating loss carryforwards related to our international operations which have an indefinite life. The Company assess the recoverability of its net operating loss carry forwards and other deferred tax assets and records a valuation allowance to the extent recoverability does not satisfy the "more likely than not" recognition criteria. The Company continues to maintain the valuation allowance until sufficient positive evidence exists to support full or partial reversal. As of December 31, 2019, the Company had a valuation allowance of approximately $14.4 million against its deferred tax assets, net of deferred tax liabilities, due to insufficient positive evidence, primarily consisting of losses within the taxing jurisdictions that have tax attributes and deferred tax assets. The Tax Cuts and Jobs Act of 2017 was signed into law on December 22, 2017. The law included significant changes to the US Corporate income tax system, including a Federal corporate rate reduction from 35% to 21%, limitations on the deductibility of interest expense and executive compensation and the transition of US international taxation from a worldwide tax system to a territorial tax system. As the Company is not currently a taxpayer due to ongoing operating losses, the impact on the financial statements is not material. We have reflected the lower rates in the calculation above in the information presented. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 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 that the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company. Executive Compensation As of December 31, 2019, the Company had employment agreements with four members of the management team providing base salary amounts and provisions for stock compensation, cash bonuses and other benefits to be granted at the discretion of the Board of Directors. Additionally, the employment agreements include provisions for base salary, bonus amounts upon meeting certain performance milestones, severance benefits for involuntary termination from a change in control or other events as defined in their respective agreements. Additionally, the vesting of certain awards could be accelerated upon a change in control (as defined). Leases The lease related balances included in the Condensed Consolidated Balance Sheet as of December 31, 2019 were as follows: Assets: Current portion of operating lease ROU assets - included in other current assets $ 254,919 Operating lease ROU assets – included in Other Assets 171,141 Total operating lease assets $ 426,060 Liabilities: Current portion of ROU liabilities – included in Accounts payable and accrued expenses $ 242,650 Long-term portion of ROU liabilities – included in Other liabilities 131,568 Total operating lease liabilities $ 374,218 The weighted average lease term remining is 1.2 years and weighted average discount rate is 13.55%. The following table presents the maturity of the Company's operating lease liabilities as of December 31, 2019: 2020 $ 277,961 2021 96,606 2022 49,716 Total operating lease payments 424,283 Less: Imputed interest (50,065 ) Total operating lease liabilities $ 374,218 The Company leases approximately 2,100 square feet of office space in Plantation, Florida. Monthly rental is approximately $2,700 per month with a 3% increase on each annual anniversary. The Company will be responsible for their respective share of building expenses. The lease term is through August 2020. Additionally, the Company rents office space in Long Beach, New York at a monthly cost of $7,425. 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 CEO and his family. In October 2018, the Company a entered into an office lease in Alpharetta, Georgia, for approximately $3,800 per month through March 31, 2020 or through the termination of the master lease. The Company leases an office location in Bogota, Colombia. In April 2017, MultiPay S.A.S. entered an office lease beginning April 22, 2017 for two years. The new lease cost is approximately $8,500 per month with an inflation adjustment after one year. The lease was extended for one additional year through April 22, 2021 and extends annually unless written notice to the contrary is provided at least six months in advance. Furthermore, the Company leases an apartment at approximately $2,000 a month for one of the management team through April 2020. 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. Rent expense for the years ended December 31, 2019 and 2018 was approximately $439,000 and $381,000 respectively. The following is a schedule, by years, of the future minimum lease payments required under non-convertible operating leases as of December 31, 2019. 2020 $ 276,000 2021 97,000 2022 50,000 Total $ 423,000 The Company has entered an agreement with a facial recognition software company for the grant of a perpetual license for commercial use (unless terminated for breach by either party). The initial payment under the license of $160,000 was paid in 2018 with two additional installments due on the first and second anniversary of the Effective Date of the arrangement amounting to $80,000 and $40,000, respectively. The Company is in discussion with the provider with respect to functionality as well as the remaining financial obligation. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 15 – 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 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 is earned in South America which are the three geographic regions of the Company. We have included the lease income in payment processing are the leases are related to unattended ticking 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 $9.1 million, $0.4 million and $1.4 million, respectively, of which $4.2 million, $0.0 million and $1.2 million related to goodwill as of December 31, 2019. 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. Year Ended December 31, 2019 2018 Net Revenues: North America $ 642,313 $ 1,941,866 South America 455,475 476,234 Africa 1,454,257 1,410,893 2,552,045 3,828,993 Identity Management 2,096,570 3,352,759 Payment Processing 455,475 476,234 2,552,045 3,828,993 Loss From Operations North America (3,536,664 ) (1,959,125 ) South America (5,186,550 ) (6,540,029 ) Africa (1,362,535 ) (824,065 ) (10,085,749 ) (9,323,219 ) Identity Management (4,899,199 ) (2,783,190 ) Payment Processing (5,186,550 ) (6,540,029 ) (10,085,749 ) (9,323,219 ) Interest Expense (375,598 ) (757,801 ) Other income/(expense) 23,920 83,649 Loss before income taxes (10,437,427 ) (9,997,371 ) Income tax expense (62,931 ) (30,242 ) Net loss $ (10,500,358 ) $ (10,027,613 ) |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 16 – SUBSEQUENT EVENTS Convertible Notes Payable 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 payable 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 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 has agreed to provide the balance of the funding on or prior to April 30, 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. If the Company prepays all or a portion of the 2020 Note prior to the one-year anniversary of the 2020 Note issuance date (the ("2020 Note Anniversary"), then the Company will be required to pay interest on the principal prepaid through the 2020 Note Anniversary. Further, upon maturity or in the event of default and/or bankruptcy of the 2020 Notes, the Company will be required to pay 150% of the principal due under the 2020 Notes. At the option of the 2020 Note Investors, they may at any time convert the 2020 Notes. The amount 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. Following the 2020 Note Anniversary, 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. Subject to the aggregate principal amount of all the 2020 Notes being not less than $1,500,000, 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 the holders of the 8% Convertible Notes in the principal amount of $428,000 issued December 2019 (the "8% Notes") and the Promissory Note in the principal amount of $2,000,000 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 A securities purchase agreement for $50,000 in 8% Notes was cancelled by mutual consent reducing the principal amount of the 8% Notes from $478,000 to $428,000. 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. In February 2020, the Company offered all warrant holders holding warrants to purchase shares of Company common stock issued in July 2015 ("2015 Warrants") the right to extend the term of the 2015 Warrants for a period of two years, subject to an increase in the Exercise Price (as defined therein) to $0.06 per share, providing that such warrant holders invested a minimum $100,000 in the 2020 Note private offering. As a result, a portion of the 2015 Warrant holders participated in the 2020 Note offering and the Company extended the exercise period until February 2022 of 2015 Warrants representing the right to acquire 6,385,000 shares of common stock. Mr. Selzer holds 880,000 2015 Warrants, which were also extended as a result of his investment. Covid 19 In December 2019, a novel strain of coronavirus ("Covid 19") emerged globally 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. |
DESCRIPTION OF BUSINESS AMD S_2
DESCRIPTION OF BUSINESS AMD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Going concern | Going Concern As of December 31, 2019, the Company had an accumulated deficit of approximately $86.1 million. For the year ended December 31, 2019, the Company earned revenue of approximately $2.6 million and incurred a loss from operations of approximately $9.2 million. These 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. As there can be no assurance that the Company will be able to achieve positive cash flows (become profitable) and raise sufficient capital to maintain operations there is substantial doubt about the Company’s ability to continue as a going concern. These 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. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of Ipsidy Inc. and its wholly-owned subsidiaries Innovation in Motion Inc. MultiPay S.A.S., ID Global LATAM, IDGS S.A.S., ID Solutions, Inc., FIN Holdings, Inc., Cards Plus Pty Ltd., Ipsidy Perú S.A.C., and Ipsidy Enterprises Limited (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. The summary of significant accounting policies presented below is designed to assist in understanding the Company's consolidated financial statements. Such consolidated financial statements and accompanying notes are the representations of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America ("US GAAP") in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements. |
Use of Estimates | Use of Estimates In preparing these consolidated financial statements in conformity with US GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in our consolidated financial statements relate to the realizability of accounts receivable and inventory, valuation of long-lived assets, accruals for potential liabilities, and valuation assumptions related to derivative liabilities, equity instruments and share based payments. |
Revenue Recognition | Revenue Recognition An entity recognizes revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Revenue from the sale of unique secure credential products and solutions to customers is recorded at the completion of the project unless the solution includes benefits to the end user in which additional resources or services are required to be provided. Revenue from cloud-based services arrangements that allow for the use of a hosted software product or service that are provided on a consumption basis (for example, the number of transactions processed over a period of time) is recognized commensurate with the customer utilization of such resources. Generally, the contract calls for a minimum number of transactions to be charged by the Company on a monthly basis. Accordingly, the Company records the minimum transactional fee based on the passage of a month's time as revenues. Amounts in excess of the monthly minimum, are charged to customers based on the actual number of transactions. Consulting services revenue is recognized as services are rendered, generally based on the negotiated hourly rate in the consulting arrangement and the number of hours worked during the period. Consulting revenue for fixed-price services arrangements is recognized as services are provided. The lease of equipment to customers that meet certain criteria are recognized as a direct financing lease. Direct financing lease arrangements are recognized as revenue over the term of the associated lease based on the effective interest method. As of December 31, 2019 and December 31, 2018, the Company has 78 kiosks financed under direct financing leases. The revenue associated with these arrangements is expected to be recognized through April 2026. The imputed interest rate in the arrangements approximates 10.7%. |
Accounts Receivable | Accounts Receivable All customers are granted credit on a short-term basis and related credit risks are considered minimal. The Company routinely reviews its trade receivables and makes provisions for probable doubtful accounts; however, those provisions are estimates and actual results could differ from those estimates and those differences may be material. Trade receivables are deemed uncollectible and removed from accounts receivable and the allowance for doubtful accounts when collection efforts have been exhausted. At December 31, 2019 and 2018, management determined no allowance for doubtful accounts was required. |
Inventories | Inventories 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. The kiosks provide electronic ticketing for transit systems. 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 at December 31, 2019 and 2018 consist of cards inventory and kiosks that have not been placed into service. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of December 31, 2019 and 2018, the Company recorded an inventory valuation allowance of approximately $236,000 and $353,000, respectively, to reflect net realizable value of kiosks that are being held for sale and the Company believes no valuation allowance was necessary regarding the cards inventory. |
Concentration of Credit Risk | Concentration of Credit Risk The Company's financial instruments that potentially expose the Company to a concentration of credit risk consist of cash and accounts receivable. Cash: 2019 Revenues and accounts receivable: 2018 Revenues and accounts receivable: |
Income Taxes | Income Taxes The Company accounts for income taxes under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740 "Income Taxes." Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. |
Leases | Leases All leases are classified at the inception as direct finance leases or operating leases based on whether the lease transfers substantially all the risks and rewards of ownership. Leases that transfer to the leasee substantially all of the risks and rewards incidental to ownership of the asset are classified as direct finance leases. In February 2016, the FASB issued Accounting Standards Update ("ASU") ASU No. 2016-02 ("Topic 842"). Topic 842 amends several aspects of lease accounting, including requiring lessees to recognize leases with a term greater than one year as a right-of-use asset and corresponding liability, measured at the present value of the lease payments. In July 2018, the FASB issued supplemental adoption guidance and clarification to Topic 842 within ASU 2018-10 "Codification Improvements to Topic 842, Leases" and ASU 2018-11 "Leases (Topic 842): Targeted Improvements." The new guidance aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. A modified retrospective application is required with an option to not restate comparative periods in the period of adoption. The Company, effective January 1, 2019 has adopted the provisions of Topic 842. The Company decided to use the practical expedients available upon adoption of Topic 842 to aid the transition from former accounting to provisions of Topic 842. The package of expedients will effectively allow Ipsidy to run off existing leases, as initially classified as operating or financing, and classify new leases after implementation under the new standard as the business evolves. The practical expedients elected by the Company in transition permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs. Furthermore, we have elected the short-term lease recognition exemption for leases with a term of 12 or less months which are not reasonably certain of exercising any available renewal options that would extend past 12 months. Additionally, we will continue to account for the executory costs of the direct financing lease as previously concluded and the initial direct costs were not considered significant. The Company has operating leases principally for offices and some of the leases have renewal options. Management evaluates each lease independently to determine the purpose, necessity to its future operations in addition to other appropriate facts and circumstances. We adopted Topic 842 using a modified retrospective approach for all existing leases at January 1, 2019. The adoption of Topic 842 impacted our balance sheet by the recognition of the operating lease right-of-use assets and the liability for operating leases. The accounting for finance leases (capital leases) was substantially unchanged. Accordingly, upon adoption, leases that were classified as operating leases under the previous guidance were classified as operating leases under Topic 842. The lease liability is based on the present value of the remaining lease payments, discounted using a market based incremental borrowing rate as the effective date of January 1, 2019 using current estimates as to lease term including estimated renewals for each operating lease. As of January 1, 2019, the Company recorded an adjustment of approximately $514,000 to operating lease right-of-use assets ("ROU") and the related lease liability. See Note 12 for further information with respect to leases. See Notes 8, 11, 12 and 13 to Condensed Consolidated Financial Statements for additional information. |
Property and Equipment, net | Property and Equipment, net Property and equipment consist of furniture and fixtures and computer equipment, and are stated at cost. Property and equipment are depreciated using the straight-line method over the estimated useful service lives of three to five years. Maintenance and repairs are expensed as incurred and improvements are capitalized. Gains or losses on the disposition of property and equipment are recorded upon disposal. |
Other Assets - Software Development Costs | Other Assets – Software Development Costs Other assets consist primarily of costs associated with software development of new product offerings and enhancements to existing and new applications. Development costs of computer software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers. As of December 31, 2019 and 2018, the balance sheet "Other assets" are under further development and have not been placed in service. During the years ended December 31, 2019 and December 31, 2018, approximately $3.1 million and $0.7 million of software developed were placed into service. Upon completion, the amounts will be recorded in the appropriate asset category and amortized over their estimated useful lives. |
Intangible Assets | Intangible Assets Excluding goodwill, acquired intangible assets and internally developed software are amortized over their estimated useful lives. Acquired amortizing intangible assets are carried at cost, less accumulated amortization. Internally developed software costs are capitalized upon reaching technological feasibility. Amortization of acquired finite-lived intangible assets is computed over the estimated useful lives of the respective assets which is the shorter of the life of the asset or the period during which sales will be generated. |
Goodwill | Goodwill 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. The Company did not recognize a goodwill impairment for the year ended December 31, 2018. During the year ended December 31, 2019, the Company updated their projections associated with their reporting units and it indicated that the carrying value may not be recovered as revenue assumptions were not met. The fair value of the reporting unit was determined using discounted cash flow as well as future realizable value. The goodwill impairment loss for the year ended December 31, 2019 was approximately $1,517,000 across the three reporting units. |
Stock-based compensation | Stock-based compensation The Company has accounted for stock-based compensation under the provisions of FASB ASC 718 – "Stock Compensation" which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). For employee awards, the fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. For non-employees, the fair value of each stock option award is estimated on the measurement date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. For non-employees, the Company utilizes the graded vesting attribution method under which the entity treats each separately vesting portion (tranche) as a separate award and recognizes compensation cost for each tranche over its separate vesting schedule. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. For employee awards, the expected term of options granted is derived using the "simplified method" which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The Company adopted as of January 1, 2019 the requirements of ASU 2018-07 which simplified the accounting for share-based payments granted to non-employees for share based payments granted to non-employees for goods and services. Under the ASU, most of the guidance on such payments to non-employees were aligned with the share-based payments granted to employees. The Company determined on the date of adoption that the impact was not significant. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its undiscounted estimated future cash flows, an impairment review is performed. An impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Generally fair value is determined using valuations techniques such as expected discounted cash flows or appraisals, as appropriate. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell,and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. During the year ended December 31, 2019, the Company wrote-off intangible assets related to developed software of approximately $155,000 as the net assets were no longer being used for commercial purposes and recorded a goodwill impairment loss of approximately $1,517,000 for reporting units where the carrying amount is in excess of its recoverable amount. The total of these charges is approximately $1,672,000. |
Research and Development Costs | Research and Development Costs Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to incurred to perform research projects and develop technology for the Company's products. Research and development costs are expensed as incurred. The Company reclassified research and development costs of approximately $687,000 for the year ended December 31, 2018 to conform with the current presentation in the financial statements. |
Net Loss per Common Share | 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 years ended December 31, 2019 and 2018 because their effect was antidilutive: 2019 2018 Stock Options 109,400,006 106,253,339 Warrants 47,453,227 46,201,477 Total 156,853,233 152,454,816 |
Foreign Currency Translation | Foreign Currency Translation The assets, liabilities and results of operations of certain of Ipsidy's subsidiaries are measured using their functional currency which is the currency of the primary foreign economic environment in which they operate. Upon consolidating these subsidiaries with Ipsidy, the applicable assets and liabilities are translated to US dollars at currency exchange rates as of the applicable dates and their revenues and expenses are translated at the weighted average currency exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating these subsidiaries' financial statements are reported in other comprehensive loss in the accompanying consolidated statements of comprehensive loss. |
Fair Value Measurements | Fair Value Measurements ASC 820, "Fair Value Measurements", requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, inputs other than level one that are either directly or indirectly observable such as quoted prices for identical or similar assets or liabilities on markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company is required to disclose fair value information about financial instruments when it is practicable to estimate that value. The carrying amounts of the Company's cash, accounts receivable, other receivables, accounts payable, accrued expenses, and other current liabilities approximate their estimated fair value due to the short-term maturities of these financial instruments and because related interest rates offered to the Company approximate current rates. The fair value of the Company's notes payable is approximately $2,013,000, which differs from the carrying value or reported amounts of approximately $1,976,000 at December 31, 2019 because of the debt discounts as discussed in Note 6. The convertible notes payable of $428,000 at December 31, 2019 reflects fair value. |
Revenue Recognition | Revenue Recognition Cards Plus – The Company recognizes revenue for the design and production of cards over time when products are produced 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. Cards Plus had $288,000 of deferred revenue 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 deferred revenue contract liability of approximately $137,000 and $236,000 as of December 31, 2019 and 2018 for certain revenue that will be earned in future periods. The $236,000 of deferred revenue contract liability as of December 31, 2018 was earned in the year ended December 31, 2019. The deferred revenue relates to the service period of support services for two customers. As of December 31, 2019 majority of the deferred revenue contract liability will be recognized in the quarter March 31, 2020. We have allocated the selling price in the contract to one customer which has multiple performance obligations based on the contract selling price that we believe represents a fair market price for the service rendered. During the year ended December 31, 2019, the Company had revenues from operations in North America, South America and Africa of $0.6 million, $0.5 million and $1.5 million respectively compared to $1.9 million, $0.5 million, $1.4 million respectively in the year ended December 31, 2018. In 2018, the Company introduced its new IDaaS platform and products as well as its pay for performance plan for both internal and external salesforce, that is based on a percentage of the benefit derived by the Company. For the years ended December 31, 2019 and 2018, the Company recorded revenues of approximately $13,000 and $5,000 from the new platform. We will review each new contract for the related performance obligations and related revenue and expense recognition implications. We expect that the revenues derived from the new product offerings 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. Additionally, the Company will capitalize the incremental costs of acquiring and fulfilling a contract with a customer if the Company expects to recover those costs. The incremental costs of acquiring and fulfilling a contract are those that the Company incurs to acquire and fulfill a contract with a customer that it would not have incurred if the contract had not been acquired (for example, a sales commission or specific incremental costs associated with the contract). The Company capitalizes the costs incurred to acquire and fulfill a contract only if those costs meet all the following criteria: a. The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. b. The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. c. The costs are expected to be recovered. The Company will capitalize contract acquisition and fulfillment costs related to signing or renewing contracts that meet the above criteria, which will be classified as contract cost assets in the Company's Consolidated Balance Sheets. Contract cost assets will be amortized using the straight-line method over the expected period of benefit beginning at the time revenue begins to be realized. The amortization of contract fulfillment cost assets associated with facilitating transactions will be recorded as cost of services in the Company's Consolidated Statements of Operations. The amortization of contract acquisition cost assets associated with sales commissions that qualify for capitalization will be recorded as selling, general and administrative expense in the Company's Consolidated Statements of Operations. As of December 31, 2019, the Company had approximately $5,000 of accounts payable and accrued expenses related to the delivery of biometric identity system and services. The $5,000 was paid in February 2020. 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. As of December 31, 2019, there was a deferred commission of approximately $5,000 related to future delivery of an identity solutions system and services. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued Accounting Standards Update 2017-04, "Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"). The standard simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the amendments of ASU 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, but the loss cannot exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for the calendar year ending December 31, 2020. The amendments require a prospective approach to adoption and early adoption is permitted for interim or annual goodwill impairment tests. The Company does not believe ASU 2017-04 will have a material impact on the consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. The standard requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the statement of operations will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard will be effective for the calendar year ending December 31, 2023. The Company is currently in the process of evaluating the impact of adoption of this ASU on the financial statements. See Notes 6 and 7 for additional information on indebtedness outstanding as of December 31, 2019. |
DESCRIPTION OF BUSINESS AMD S_3
DESCRIPTION OF BUSINESS AMD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of potentially dilutive securities | 2019 2018 Stock Options 109,400,006 106,253,339 Warrants 47,453,227 46,201,477 Total 156,853,233 152,454,816 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | 2019 2018 Property and equipment $ 282,316 $ 238,442 Equipment under capital lease (see Note 11) 156,867 156,867 439,183 395,309 Less Accumulated depreciation 277,363 191,309 Property and equipment, net $ 161,820 $ 204,000 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Assets [Abstract] | |
Schedule of other assets | 2019 2018 Software and development $ 128,005 $ 1,566,177 Operating Lease ROU Assets 171,141 — Other 83,920 — $ 383,066 $ 1.566,177 |
INTANGIBLE ASSETS, NET (OTHER_2
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets, net (other than goodwill) | Customer Acquired and Intellectual Non-Compete Patents Total Useful Lives 10 Years 5 Years 10 Years 10 Years N/A Carrying Value at December 31, 2017 $ 1,287,450 $ — $ 1,556,934 $ 5,250 $ 28,446 2,878,080 Additions — 959,882 — — 49,736 1,009,618 Write off of assets — — (148,627 ) — — (148,627 ) Amortization (158,716 ) (50,989 ) (216,365 ) (2,817 ) — (428,887 ) Carrying Value at December 31, 2018 1,128,734 908,893 1,191,942 2,433 78,182 3,310,184 Additions — 3,111,668 — — 30,695 3,142,363 Impairment loss — — (154,622 ) — — (154,622 ) Amortization (158,715 ) (368,637 ) (174,528 ) (2,433 ) — (704,313 ) Carrying Value at December 31, 2019 $ 970,019 $ 3,651,924 $ 862,792 $ - $ 108,877 $ 5,593,612 The following is a summary of intangible assets as of December 31, 2018: Customer Acquired and Intellectual Non-Compete Patents Total Cost $ 1,587,159 $ 959,882 $ 1,759,809 $ 14,087 $ 78,182 $ 4,399,119 Accumulated amortization (458,425 ) (50,989 ) (567,867 ) (11,654 ) — (1,088,935 ) Carrying Value at December 31, 2018 $ 1,128,734 $ 908,893 $ 1,191,942 $ 2,433 $ 78,182 $ 3,310,184 The following is a summary of intangible assets as of December 31, 2019: Customer Acquired and Intellectual Non-Compete Patents Total Cost $ 1,587,159 $ 4,071,550 $ 1,498,363 $ 14,087 $ 108,877 $ 7,280,036 Accumulated amortization (617,140 ) (419,626 ) (635,571 ) (14,087 ) — (1,686,424 ) Carrying Value at December 31, 2019 $ 970,019 $ 3,651,924 $ 862,792 $ — $ 108,877 $ 5,593,612 |
Schedule of future amortization expense of intangible assets | The following is the future amortization of intangible assets for the year ended December 31: 2020 $ 1,158,743 2021 1,158,743 2022 1,119,319 2023 1,014,421 2024 790,106 Thereafter 352,280 $ 5,593,612 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | 2019 2018 Trade payables $ 621,292 $ 401,272 Accrued interest 641,834 401,667 Accrued payroll and related expenses 386,165 260,153 Current portion of operating lease liabilities 242,650 — Other 323,971 239,134 Total $ 2,215,912 $ 1,302,226 |
NOTES PAYABLE, NET (Tables)
NOTES PAYABLE, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | December 31, December 31, In January 2017, the Company issued a Senior Unsecured Note ("Note") a face value of $3,000,000, payable two years from issuance, along with an aggregate of 4,500,000 shares of Common Stock, with a fair value of $1,147,500. The Company allocated the proceeds to the note payable and common stock based on their relative fair value and recorded a discount of $830,018 to be amortized into interest expense over the two-year term of the note. The Company also paid debt issuance costs consisting of a cash fee of $120,000 and 1,020,000 shares of common stock of the Company with a fair value of $306,000. On April 30, 2018, the Company and the Noteholder agreed to extend the due date of the note until April 30, 2020 for an extension fee of 1,500,000 shares of the Common Stock issued to the Noteholder. The April 2018 change in terms of the Note payable has been determined to be a debt extinguishment in accordance with ASC 470. The reported amounts under the debt extinguishment are not significantly different than that of the Company's reported amounts. See below. $ 2,000,000 $ 2,000,000 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 12,866 — Total Principal Outstanding $ 2,012,866 $ 2,000,000 Unamortized Deferred Debt Discount (26,722 ) (106,886 ) Unamortized Deferred Debt Issuance Costs (9,866 ) (39,466 ) Notes Payable, Net $ 1,976,278 $ 1,853,648 Notes Payable, current portion, net of discount, issuance costs and current portion $ 1,970,937 $ — Notes Payable, Net of discounts and current portion 5,341 1,853,648 $ 1,976,278 $ 1,853,648 |
Schedule of notes payable and related discounts | Principal Debt Issuance Debt Balance Costs Discounts Total Balance at January 1, 2018 $ 3,000,000 $ (168,345 ) $ (455,935 ) $ 2,375,720 New issuances — — — — Payments (1,000,000 ) — — (1,000,000 ) Amortization — 128,879 349,049 477,928 Balance at December 31, 2018 2,000,000 (39,466 ) (106,886 ) 1,853,648 New issuances 16,510 — — 16,510 Payments (3,644 ) — — (3,644 ) Amortization — 29,600 80,164 109,764 Balance at December 31, 2019 $ 2,012,866 $ (9,866 ) $ (26,722 ) $ 1,976,278 |
Schedule of future maturities of notes payable | 2020 $ 5,340 2021 2,005,947 2022 1,579 $ 2,012,866 |
OTHER LIABILITIES (Tables)
OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities [Abstract] | |
Schedule of other liabilities | 2019 2018 Operating lease liabilities, long term $ 131,568 $ — Other — 45,000 $ 131,568 $ 45,000 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of granted warrants | Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at January 1, 2017 48,164,543 $ 0.11 2.8 Years Granted 2,470,267 $ 0.14 5.0 Years Exercised/Cancelled (4,433,333 ) $ 0.05 Outstanding at December 31, 2018 46,201,477 $ 0.11 2.9 Years Granted 1,251,750 $ 0.09 5.0 Years Exercised/Cancelled - $ — Outstanding at December 31, 2019 47,453,227 $ 0.09 1.9 Years |
Schedule of black - scholes option-pricing model valuation assumption | 2019 2018 Expected Volatility 75% to 80% 79.0% to 93.0% Expected Term 2.5 – 5.9 Years 2.5 – 5.9 Years Risk Free Rate 1.73% – 2.49% 2.42% – 3.00% Dividend Rate 0.00% 0.00% |
Schedule of outstanding stock options | Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term (Yrs.) Aggregate Intrinsic Value Outstanding as of January 1, 2018 103,208,331 $ 0.19 9.5 $ 10,023,400 Granted 6,220,000 $ 0.22 10.0 $ 2,868.750 Exercised/Forfeited (3,174,992 ) $ 0.08 — $ — Outstanding as of December 31, 2018 106,253,339 $ 0.19 9.5 $ 11,457,291 Granted 3,600,000 $ 0.07 10.0 $ — Forfeited (453,333 ) $ 0.13 — $ — Outstanding as of December 31, 2019 109,400,006 $ 0.20 6.5 $ 280,000 Exercisable as of December 31, 2019 101,144,450 $ 0.19 7.4 $ 280,000 |
Schedule of stock option | Exercise Price Outstanding Weighted Average Exercisable $ 0.0001 3,500,000 5.8 3,500,000 $ 0.05 35,700,006 6.9 31,950,006 $ 0.10 27,200,000 6.8 27,061,110 $ 0.12 1,200,000 9.0 — $ 0.13 250,000 7.8 166,667 $ 0.15 2,800,000 5.9 2,800,000 $ 0.22 2,750,000 8.0 1,500,000 $ 0.25 2,500,000 7.9 1,166,667 $ 0.26 500,000 8.3 333.333 $ 0.29 1,000,000 7.3 666,667 $ 0.4 1,000,000 6.2 1,000,000 $ 0.45 31,000,000 5.9 31,000,000 6.5 109,400,006 101,144,450 |
DIRECT FINANCING LEASE (Tables)
DIRECT FINANCING LEASE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of future minimum lease payments to be received | Year Ending December 31, 2020 $ 122,148 2021 122,148 2022 122,148 2023 122,148 2024 122,148 Thereafter 162,864 773,604 Less deferred revenue (213,568 ) Net investment in lease $ 560,036 |
LEASE OBLIGATION PAYABLE (Table
LEASE OBLIGATION PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of lease obligation payable | 2020 $ 43,096 2021 43,096 2022 10,774 Total minimum lease payments 96,966 Less: Amount representing interest (12,356 ) Present value of minimum lease payments $ 84,610 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of income taxes | 2019 2018 United States $ (8,548,570 ) $ (8,775,452 ) Outside United States (1,888,857 ) (1,221,919 ) Loss before income taxes $ (10,437,427 ) $ (9,997,371 ) |
Schedule of components of deferred tax assets and liabilities | 2019 2018 US Federal Statutory Tax Rate 21.00 % 21.00 % State taxes 4.35 % 4.35 % NOL True-Ups 5.27 % 2.47 % Change in valuation allowance (30.62 %) (27.82 %) 0.00 % 0.00 % |
Schedule of reconciliation from the U.S. Federal statutory income rate | 2019 2018 Deferred Tax Assets Net Operating Loss $ 7,681,718 $ 5,981,004 Stock Options 6,632,746 5,890,565 Charitable Contributions 1,267 1,267 Basis Difference in Intangible Assets 7,405 99,296 Basis Difference Fixed Assets — 5,096 Accrued Payroll 51,907 42,939 Valuation Allowance (14,365,195 ) (11,938,078 ) Total Deferred Tax Asset 9,848 37,089 Debt Discounts (6,769 ) (27,086 ) Debt Issuance Costs (2,501 ) (10,003 ) Basis Difference Fixed Assets (578 ) — Total Deferred Tax Liability (9,848 ) (37,089 ) Net Deferred Tax Asset $ — $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of related lease balance | The lease related balances included in the Condensed Consolidated Balance Sheet as of December 31, 2019 were as follows: Assets: Current portion of operating lease ROU assets - included in other current assets $ 254,919 Operating lease ROU assets – included in Other Assets 171,141 Total operating lease assets $ 426,060 Liabilities: Current portion of ROU liabilities – included in Accounts payable and accrued expenses $ 242,650 Long-term portion of ROU liabilities – included in Other liabilities 131,568 Total operating lease liabilities $ 374,218 |
Schedule of future minimum lease payments required under convertible operating leases | The following table presents the maturity of the Company's operating lease liabilities as of December 31, 2019: 2020 $ 277,961 2021 96,606 2022 49,716 Total operating lease payments 424,283 Less: Imputed interest (50,065 ) Total operating lease liabilities $ 374,218 |
Schedule of future minimum lease payments required under non convertible operating leases | 2020 $ 276,000 2021 97,000 2022 50,000 Total $ 423,000 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of geographic region | Year Ended December 31, 2019 2018 Net Revenues: North America $ 642,313 $ 1,941,866 South America 455,475 476,234 Africa 1,454,257 1,410,893 2,552,045 3,828,993 Identity Management 2,096,570 3,352,759 Payment Processing 455,475 476,234 2,552,045 3,828,993 Loss From Operations North America (3,536,664 ) (1,959,125 ) South America (5,186,550 ) (6,540,029 ) Africa (1,362,535 ) (824,065 ) (10,085,749 ) (9,323,219 ) Identity Management (4,899,199 ) (2,783,190 ) Payment Processing (5,186,550 ) (6,540,029 ) (10,085,749 ) (9,323,219 ) Interest Expense (375,598 ) (757,801 ) Other income/(expense) 23,920 83,649 Loss before income taxes (10,437,427 ) (9,997,371 ) Income tax expense (62,931 ) (30,242 ) Net loss $ (10,500,358 ) $ (10,027,613 ) |
DESCRIPTION OF BUSINESS AMD S_4
DESCRIPTION OF BUSINESS AMD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of shares | 156,853,233 | 152,454,816 |
Stock Option [Member] | ||
Number of shares | 109,400,006 | 106,253,339 |
Warrants [Member] | ||
Number of shares | 47,453,227 | 46,201,477 |
DESCRIPTION OF BUSINESS AMD S_5
DESCRIPTION OF BUSINESS AMD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2019USD ($)Kiosks | Dec. 31, 2018USD ($)Kiosks | Jan. 02, 2019USD ($) | |
Cash, FDIC insured amount | $ 250,000 | ||
Revenue | 2,488,624 | $ 3,759,635 | |
Accumulated deficit | (86,935,593) | (76,435,235) | |
Loss from operations | (10,085,749) | (9,323,219) | |
Impairment of long lived assets | 149,000 | ||
Inventory valuation allowance | 236,000 | 353,000 | |
Deferred revenue contract liability | 137,000 | 236,000 | |
Revenue from new platform | 13,000 | 5,000 | |
Deferred commission | 5,000 | ||
Operating lease right-of-use assets | 426,060 | $ 514,000 | |
Deferred revenue payments received in advance | 288,000 | ||
Research and development cost | 687,000 | ||
Accounts payable and accrued expenses | $ 5,000 | ||
Subsequent event, description | If the Company prepays all or a portion of the 2020 Note prior to the one-year anniversary of the 2020 Note issuance date (the ("2020 Note Anniversary"), then the Company will be required to pay interest on the principal prepaid through the 2020 Note Anniversary. Further, upon maturity or in the event of default and/or bankruptcy of the 2020 Notes, the Company will be required to pay 150% of the principal due under the 2020 Notes. | ||
Notes payable percentage | 15.00% | ||
Software developed | $ 3,100,000 | $ 700,000 | |
Net assets | 155,000 | ||
Good will mpairment loss | 1,517,000 | ||
Assets and Impairment loss total | 1,672,000 | ||
Goodwill impairment loss | $ 1,517,000 | ||
Notes Mature February 28, 2022 [Member] | |||
Notes payable percentage | 150.00% | ||
Notes Payable [Member] | |||
Fair value of notes payable | $ 2,013,000 | ||
Carrying value | 1,976,000 | ||
Convertible notes payable | $ 428,000 | ||
Principal converted amount | 150.00% | ||
Aggregate principal amount | $ 1,500,000 | ||
Convertible Notes the principal amount, description | The aggregate principal amount of all the 2020 Notes being not less than $1,500,000, 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, the holders of the 8% Convertible Notes in the principal amount of $428,000 issued December 2019 (the "8% Notes") and the Theodore Stern Revocable Trust (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 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 Company and the holders of the 8% Notes entered into an amendment agreement pursuant to which that 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, save that the maturity shall be extended to the same maturity date as the 2020 Notes. A securities purchase agreement for $50,000 in 8% Notes was cancelled by mutual consent reducing the principal amount of the 8% Notes from $478,000 to $428,000. 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. In February 2020, the Company offered all warrant holders holding warrants to purchase shares of Company common stock issued in July 2015 ("2015 Warrants") the right to extend the term of the 2015 Warrants for a period of two years, subject to an increase in the Exercise Price (as defined therein) to $0.06 per share, providing that such warrant holders invested a minimum $100,000 in the 2020 Note private offering. As a result, a portion of the 2015 Warrant holders participated in the 2020 Note offering and the Company extended the exercise period until February 2022 of 2015 Warrants representing the right to acquire 6,385,000 shares of common stock. Mr. Selzer holds 880,000 2015 Warrants, which were also extended as a result of his investment. | ||
Direct Financing Lease Arrangements [Member] | |||
Number of kiosks | Kiosks | 78 | 78 | |
Direct financing lease, imputed interest rate | 0.107 | 0.107 | |
Minimum [Member] | |||
Property and equipment, estimated useful life | 3 years | ||
Maximum [Member] | |||
Property and equipment, estimated useful life | 5 years | ||
COLOMBIA [Member] | |||
Cash held by acquiry | $ 94,000 | ||
COLOMBIA [Member] | Revenues [Member] | Customer [Member] | |||
Percentage of concentration risk | 18.00% | 12.00% | |
COLOMBIA [Member] | Revenues [Member] | Four Customers [Member] | |||
Percentage of concentration risk | 89.00% | 89.00% | |
COLOMBIA [Member] | Accounts Receivable [Member] | Customer [Member] | |||
Percentage of concentration risk | 51.00% | 20.00% | |
North American [Member] | |||
Revenue from operations | $ 600,000 | $ 1,900,000 | |
South African [Member] | |||
Revenue from operations | 500,000 | 500,000 | |
South Africa [Member] | |||
Cash held by acquiry | 279,000 | ||
Revenue from operations | $ 1,500,000 | $ 1,400,000 | |
South Africa [Member] | Revenues [Member] | Customer [Member] | |||
Percentage of concentration risk | 37.00% | ||
South Africa [Member] | Accounts Receivable [Member] | Customer [Member] | |||
Percentage of concentration risk | 46.00% | 70.00% | |
British Banks [Member] | |||
Cash held by acquiry | $ 2,000 | ||
United States [Member] | |||
Percentage of concentration risk | 25.00% | ||
United States [Member] | Revenues [Member] | Customer [Member] | |||
Percentage of concentration risk | 57.00% | 14.00% | |
United States [Member] | Accounts Receivable [Member] | Customer [Member] | |||
Percentage of concentration risk | 3.00% | 4.00% | |
ZIMBABWE [Member] | Revenues [Member] | Customer [Member] | |||
Percentage of concentration risk | 5.00% | 37.00% |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 439,183 | $ 395,309 |
Less Accumulated depreciation | 277,363 | 191,309 |
Property and equipment, net | 161,820 | 204,000 |
Property and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 282,316 | 238,442 |
Equipment under capital lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 156,867 | $ 156,867 |
PROPERTY AND EQUIPMENT, NET (_2
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 86,054 | $ 64,810 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Other Assets [Abstract] | ||
Software and development | $ 128,005 | $ 1,566,177 |
Operating Lease ROU Assets | 171,141 | |
Other | 83,920 | |
Other assets | $ 383,066 | $ 1,566,177 |
INTANGIBLE ASSETS, NET (OTHER_3
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Carrying Value at beginning | $ 3,310,184 | $ 2,878,080 |
Additions | 3,142,363 | 1,009,618 |
Impairment loss | (1,671,804) | (148,627) |
Amortization | (704,313) | (428,887) |
Carrying Value at ending | $ 5,593,612 | 3,310,184 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 10 years | |
Carrying Value at beginning | $ 1,128,734 | 1,287,450 |
Additions | ||
Impairment loss | ||
Amortization | (158,715) | (158,716) |
Carrying Value at ending | $ 970,019 | 1,128,734 |
Acquired and Developed Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 5 years | |
Carrying Value at beginning | $ 908,893 | |
Additions | 3,111,668 | 959,882 |
Impairment loss | ||
Amortization | (368,637) | (50,989) |
Carrying Value at ending | $ 3,651,924 | 908,893 |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 10 years | |
Carrying Value at beginning | $ 1,191,942 | 1,556,934 |
Additions | ||
Impairment loss | (154,622) | 148,627 |
Amortization | (174,528) | (216,365) |
Carrying Value at ending | $ 862,532 | 1,191,942 |
Non-Compete [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 10 years | |
Carrying Value at beginning | $ 2,433 | 5,250 |
Additions | ||
Impairment loss | ||
Amortization | (2,433) | (2,817) |
Carrying Value at ending | 2,433 | |
Patents Pending [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Carrying Value at beginning | 78,182 | 28,446 |
Additions | 30,695 | 49,736 |
Impairment loss | ||
Amortization | ||
Carrying Value at ending | $ 108,877 | $ 78,182 |
INTANGIBLE ASSETS, NET (OTHER_4
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | |||
Cost | $ 7,280,036 | $ 4,399,119 | |
Accumulated amortization | (1,686,424) | (1,088,935) | |
Carrying Value | 5,593,612 | 3,310,184 | $ 2,878,080 |
Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cost | 1,587,159 | 1,587,159 | |
Accumulated amortization | (617,140) | (458,425) | |
Carrying Value | 970,019 | 1,128,734 | 1,287,450 |
Acquired and Developed Software [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cost | 4,071,550 | 959,882 | |
Accumulated amortization | (419,626) | (50,989) | |
Carrying Value | 3,651,924 | 908,893 | |
Intellectual Property [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cost | 1,498,363 | 1,759,809 | |
Accumulated amortization | (635,571) | (567,867) | |
Carrying Value | 862,532 | 1,191,942 | 1,556,934 |
Non-Compete [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cost | 14,087 | 14,087 | |
Accumulated amortization | (14,087) | (11,654) | |
Carrying Value | 2,433 | 5,250 | |
Patents Pending [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cost | 108,877 | 78,182 | |
Accumulated amortization | |||
Carrying Value | $ 108,877 | $ 78,182 | $ 28,446 |
INTANGIBLE ASSETS, NET (OTHER_5
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 2) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
2020 | $ 1,158,743 | ||
2021 | 1,158,743 | ||
2022 | 1,119,319 | ||
2023 | 1,014,421 | ||
2024 | 790,106 | ||
Thereafter | 352,280 | ||
Total | $ 5,593,612 | $ 3,310,184 | $ 2,878,080 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Trade payables | $ 621,292 | $ 401,272 |
Accrued interest | 641,834 | 401,667 |
Accrued payroll and related expenses | 386,165 | 260,153 |
Current portion of operating lease liabilities | 242,650 | |
Other | 323,971 | 239,134 |
Total | $ 2,215,912 | $ 1,302,226 |
NOTES PAYABLE, NET (Details)
NOTES PAYABLE, NET (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | |||
Unamortized Deferred Debt Discount | $ (26,722) | $ (106,886) | $ (455,935) |
Unamortized Deferred Debt Issuance Costs | (9,866) | (39,466) | (168,345) |
Notes Payable, Net | 1,976,278 | 1,853,648 | |
Notes Payable, current portion, net of discount, issuance costs and current portion | 1,970,937 | ||
Notes Payable, Net of discounts and current portion | 5,341 | 1,853,649 | |
Total | 1,976,278 | 1,853,648 | $ 2,375,720 |
Senior Unsecured Note [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | 2,000,000 | 2,000,000 | |
Vehicle [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | $ 12,866 |
NOTES PAYABLE, NET (Details 1)
NOTES PAYABLE, NET (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Principal Balance | ||
Beginning Balance | $ 2,000,000 | $ 3,000,000 |
New issuances | 16,510 | |
Payments | (3,644) | (1,000,000) |
Amortization | ||
Ending Balance | 2,012,866 | 2,000,000 |
Debt Issuance Costs | ||
Beginning Balance | (39,466) | (168,345) |
New issuances | ||
Payments | ||
Amortization | 29,600 | 128,879 |
Ending Balance | (9,866) | (39,466) |
Debt Discounts | ||
Beginning Balance | (106,886) | (455,935) |
New issuances | ||
Payments | ||
Amortization | 80,164 | 349,049 |
Ending Balance | (26,722) | (106,886) |
Total | ||
Beginning Balance | 1,853,648 | 2,375,720 |
New issuances | 16,510 | |
Payments | (3,644) | (1,000,000) |
Amortization | 109,764 | 477,928 |
Ending Balance | $ 1,976,278 | $ 1,853,648 |
NOTES PAYABLE, NET (Details 2)
NOTES PAYABLE, NET (Details 2) | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 5,340 |
2021 | 2,005,947 |
2022 | 1,579 |
Total | $ 2,012,866 |
NOTES PAYABLE, NET (Details Nar
NOTES PAYABLE, NET (Details Narrative) - USD ($) | Apr. 30, 2018 | Jan. 31, 2017 | Aug. 09, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Short-term Debt [Line Items] | |||||
Common stock issues value | $ 2,928,312 | $ 8,951,929 | |||
Senior Unsecured Note [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt term | 2 years | ||||
Debt discount | $ 830,018 | ||||
Debt issuance costs consisting value | $ 306,000 | ||||
Debt issuance costs consisting shares | 1,020,000 | ||||
Common stock issued to the noteholder | $ 1,500,000 | ||||
Face amount | $ 3,000,000 | $ 3,000,000 | |||
Cash fee | 120,000 | ||||
Common stock issues value | $ 1,147,500 | $ 1,000,000 | $ 420,000 | ||
Common stock issues shares | 4,500,000 | ||||
Vehicle [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt term | 36 months | ||||
Interest rate | 10.80% | ||||
Monthly payments | $ 539 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details Narrative) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Convertible notes payable, description | The Company, entered into Securities Purchase Agreements with several accredited investors (the "8% Note Investors") providing for the sale by the Company to the Investors of 8% Convertible Notes in the aggregate amount of $428,000 (the "8% Notes"). The 8% Notes mature on November 30, 2021 and are 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 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 $0.08 per share. If the holders of the 8% Notes owning outstanding 8% Notes representing in excess of half of the aggregate outstanding principal amount of all 8% Notes provide notice to the Company of their intent to convert their 8% Notes, then all 8% Notes plus unpaid interest and other amounts owing to each of the holders shall be automatically converted. The 8% Notes were amended in February 2020 became a secured obligation of the Company and now mature in 2022. See Note 1 "Subsequent Event" |
OTHER LIABILITIES (Details)
OTHER LIABILITIES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Other Liabilities [Abstract] | ||
Operating lease liabilities, long term | $ 131,568 | |
Other | 45,000 | |
Total other liabilities | $ 131,568 | $ 45,000 |
OTHER LIABILITIES (Details Narr
OTHER LIABILITIES (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Other Liabilities [Abstract] | ||
Other liabilities | $ 131,568 | $ 45,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Jan. 31, 2017 | Jun. 30, 2019 | Aug. 31, 2018 | Aug. 09, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Due to related parties paid | $ 66,825 | $ 66,825 | |||||
Common stock issues value | 2,928,312 | $ 8,951,929 | |||||
Confidential Settlement Agreement and General Release [Member] | |||||||
Professional fees | 160,000 | ||||||
Agency Agreement [Member] | |||||||
Professional fees | 84,000 | ||||||
Mr. Stern [Member] | |||||||
Number of shares issued | 6,666,667 | ||||||
Mr. Selzer [Member] | |||||||
Number of shares issued | 666,667 | ||||||
Senior Unsecured Note [Member] | |||||||
Interest expenses | $ 158,000 | 240,000 | |||||
Number of common stock purchased, shares | 4,500,000 | ||||||
Chairman of board of directors | 25,000 | ||||||
Face amount | $ 3,000,000 | 3,000,000 | |||||
Loan interest expense | $ 284,000 | ||||||
Number of shares issued | 1,500,000 | ||||||
Common stock issues value | $ 1,147,500 | $ 1,000,000 | $ 420,000 | ||||
New Office Facilities [Member] | Long Beach, New York [Member] | |||||||
Additional monthly rental payments | $ 7,425 | ||||||
Agreement term | 30 days | ||||||
Common Stock [Member] | |||||||
Number of common stock purchased, shares | 1,562,500 | ||||||
Number of shares issued for brokerage | 410,708 | 456,735 | |||||
Warrants [Member] | Network 1 Financial Securities Inc [Member] | |||||||
Fair value of warrants | $ 54,000 | ||||||
Fees incurred | $ 109,000 | ||||||
Warrant term | 5 years | ||||||
Share price (in dollars per share) | $ 0.088 | ||||||
Number of shares issued | 2,470,000 | ||||||
Common stock issues value | $ 659,000 | ||||||
Exercise price | $ 0.165 | ||||||
Lease expenses | $ 89,100 |
STOCKHOLDER'S EQUITY (Details)
STOCKHOLDER'S EQUITY (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding balance at beginning | 46,201,477 | 48,164,543 |
Granted | 1,251,750 | 2,470,267 |
Exercised/Cancelled | (433,333) | |
Outstanding balance at ending | 47,453,227 | 46,201,477 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Exercise Price [Roll Forward] | ||
Beginning Balance Outstanding | $ 0.11 | $ 0.11 |
Granted | 0.09 | 0.14 |
Exercised/Cancelled | 0.05 | |
Ending Balance Outstanding | $ 0.09 | $ 0.11 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Remaining Life [Roll Forward] | ||
Beginning Balance Outstanding | 2 years 1 month 2 days | 2 years 29 days |
Granted | 5 years | 5 years |
Ending Balance Outstanding | 1 year 1 month 2 days | 2 years 1 month 2 days |
STOCKHOLDER'S EQUITY (Details 1
STOCKHOLDER'S EQUITY (Details 1) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend Rate | 0.00% | 0.00% |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected Volatility | 75.00% | 79.00% |
Expected Term | 2 years 6 months | 2 years 6 months |
Risk Free Rate | 1.73% | 2.42% |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected Volatility | 80.00% | 93.00% |
Expected Term | 5 years 10 months 25 days | 5 years 10 months 25 days |
Risk Free Rate | 2.49% | 3.00% |
STOCKHOLDER'S EQUITY (Details 2
STOCKHOLDER'S EQUITY (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Shares [Roll Forward] | ||
Outstanding at beginning | 106,253,339 | 103,208,331 |
Granted | 3,600,000 | 6,220,000 |
Exercised/Forfeited | (453,333) | (3,174,992) |
Outstanding at ending | 109,400,006 | 106,253,339 |
Exercisable at ending | 101,144,450 | |
Weighted Average Exercise Price [Roll Forward] | ||
Outstanding at beginning | $ 0.19 | $ 0.19 |
Granted | 0.07 | 0.22 |
Forfeited | 0.13 | 0.08 |
Outstanding at ending | 0.20 | $ 0.19 |
Exercisable at ending | $ 0.19 | |
Weighted Average Contractual Term [Roll Forward] | ||
Outstanding at beginning | 9 years 6 months | 9 years 6 months |
Granted | 10 years | 10 years |
Outstanding at ending | 6 years 6 months | 9 years 6 months |
Exercisable at ending | 7 years 4 months 24 days | |
Aggregate Intrinsic Value [Roll Forward] | ||
Outstanding at beginning | $ 11,457,291 | $ 10,023,400 |
Granted | 2,868,750 | |
Forfeited | ||
Outstanding at ending | 10,023,400 | $ 11,457,291 |
Exercisable at ending | $ 280,000 |
STOCKHOLDER'S EQUITY (Details 3
STOCKHOLDER'S EQUITY (Details 3) | 12 Months Ended |
Dec. 31, 2019shares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 109,400,006 |
Exercisable | 101,144,450 |
Exercise Price $0.00001 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 3,500,000 |
Weighted Average Contractual Life (Yrs.) | 5 years 9 months 18 days |
Exercisable | 3,500,000 |
Exercise Price $0.05 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 35,700,006 |
Weighted Average Contractual Life (Yrs.) | 6 years 10 months 25 days |
Exercisable | 31,950,006 |
Exercise Price $0.10 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 27,200,000 |
Weighted Average Contractual Life (Yrs.) | 6 years 9 months 18 days |
Exercisable | 27,061,110 |
Exercise Price $0.12 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 1,200,000 |
Weighted Average Contractual Life (Yrs.) | 9 years |
Exercisable | |
Exercise Price $0.13 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 250,000 |
Weighted Average Contractual Life (Yrs.) | 7 years 9 months 18 days |
Exercisable | 166,667 |
Exercise Price $0.15 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 2,800,000 |
Weighted Average Contractual Life (Yrs.) | 5 years 10 months 25 days |
Exercisable | 2,800,000 |
Exercise Price $0.22 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 2,750,000 |
Weighted Average Contractual Life (Yrs.) | 8 years |
Exercisable | 1,500,000 |
Exercise Price $0.25 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 2,500,000 |
Weighted Average Contractual Life (Yrs.) | 7 years 10 months 25 days |
Exercisable | 1,166,667 |
Exercise Price $0.26 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 500,000 |
Weighted Average Contractual Life (Yrs.) | 8 years 3 months 19 days |
Exercisable | 333.333 |
Exercise Price $0.29 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 1,000,000 |
Weighted Average Contractual Life (Yrs.) | 7 years 3 months 19 days |
Exercisable | 666,667 |
Exercise Price $0.40 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 1,000,000 |
Weighted Average Contractual Life (Yrs.) | 6 years 2 months 12 days |
Exercisable | 1,000,000 |
Exercise Price $0.45 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 31,000,000 |
Weighted Average Contractual Life (Yrs.) | 5 years 10 months 25 days |
Exercisable | 31,000,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jun. 30, 2019 | Aug. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 28, 2017 | |
Stock based compensation | $ 1,246,019 | $ 2,429,959 | ||||
Number of common shares issued, amount | 2,928,312 | 8,951,929 | ||||
Number of common shares issued for services, amount | $ 41,071 | $ 97,126 | ||||
Number of options granted | 3,600,000 | 6,220,000 | ||||
Vesting term | 3 years | |||||
Vesting rights description | Of the 3,600,000 stock options, 3,475,000 options vest over a three-year period and 125,000 options vest upon achieving certain performance thresholds. | |||||
Common stock, authorized | 1,000,000,000 | 1,000,000,000 | 500,000,000 | |||
Common stock, issued | 518,125,454 | 478,950,996 | ||||
Preferred stock, authorized | 20,000,000 | |||||
Number of stock granted | 1,251,750 | 2,470,267 | ||||
Number of options exercisable | 101,144,450 | |||||
Exercise price of option | $ 0.19 | |||||
Stock options term | 7 years 4 months 24 days | |||||
Ten Employees And One Non-Employee [Member] | ||||||
Number of options granted | 231,000 | |||||
Options fair value | $ 962,000 | |||||
Vesting term | 3 years | |||||
Vesting period, description | The options have a term of ten years. | |||||
Ten Employees And One Non-Employee [Member] | Tranche One [Member] | ||||||
Number of options exercisable | 3,250,000 | |||||
Exercise price of option | $ 0.22 | |||||
Ten Employees And One Non-Employee [Member] | Tranche Two [Member] | ||||||
Number of options exercisable | 2,000,000 | |||||
Exercise price of option | $ 0.25 | |||||
2014 Equity Compensation Plan [Member] | ||||||
Number of shares authorized | 25,000,000 | |||||
2017 Incentive Stock Plan [Member] | ||||||
Number of shares authorized | 70,000,000 | |||||
MultiPay S.A.S [Member] | ||||||
Cancellation of common stock | 728,448 | |||||
Warrant 1 [Member] | Subscription Agreements [Member] | ||||||
Number of common stock purchased, shares | 2,470,000 | |||||
Number of common shares issued, amount | $ 314,000 | |||||
Warrant term | 5 years | |||||
Shares issued price per share | $ 0.165 | |||||
Common Stock [Member] | ||||||
Number of common stock purchased, shares | 1,562,500 | |||||
Number of common shares issued for services, shares | 410,708 | 456,735 | ||||
Number of common shares issued for services, amount | $ 41 | $ 46 | ||||
Common stock, outstanding | 518,125,454 | 478,950,996 | 403,311,988 | |||
Warrant [Member] | Subscription Agreements [Member] | ||||||
Unrecognized compensation costs | $ 4,433,333 | |||||
Exercise price | $ 0.05 | |||||
Service Provider [Member] | ||||||
Number of common shares issued for services, shares | 456,735 | |||||
Number of common shares issued for services, amount | $ 97,126 | |||||
Investors [Member] | Subscription Agreements [Member] | ||||||
Number of common stock purchased, shares | 64,072,000 | |||||
Number of common shares issued, amount | $ 9,611,000 | |||||
Investors [Member] | Warrant 1 [Member] | ||||||
Share price (in dollars per share) | $ 0.13 | |||||
Number of stock vested | 3,200,000 | |||||
Common stock issued upon exercise of warrants | 4,433,333 | |||||
Exercise price | $ 0.05 | |||||
Number of shares issued on conversion | 3,500,000 | |||||
Investors [Member] | Common Stock [Member] | ||||||
Number of shares issued on conversion | 1,600,000 | |||||
Network1 Financial Securities Inc. [Member] | Subscription Agreements [Member] | ||||||
Cash fee | $ 629,000 | |||||
Accredited Investors June 2019 [Member] | Warrant [Member] | Subscription Agreements [Member] | ||||||
Unrecognized compensation costs | $ 1,251,750 | |||||
Warrant term | 5 years | |||||
Exercise price | $ 0.088 | |||||
Accredited Investors August 2019 [Member] | Warrant [Member] | Subscription Agreements [Member] | ||||||
Unrecognized compensation costs | $ 2,470,267 | |||||
Warrant term | 5 years | |||||
Exercise price | $ 0.14 | |||||
Accredited Investors 2019 [Member] | Subscription Agreements [Member] | ||||||
Fees paid | $ 173,000 | |||||
Share price (in dollars per share) | $ 0.088 | |||||
Accredited Investors 2019 [Member] | Subscription Agreements [Member] | Two Service Providers [Member] | ||||||
Number of common shares issued for services, shares | 411,000 | |||||
Number of common shares issued for services, amount | $ 41,000 | |||||
Accredited Investors 2019 [Member] | Common Stock [Member] | Subscription Agreements [Member] | ||||||
Number of common stock purchased, shares | 38,764,000 | |||||
Number of common shares issued, amount | $ 3,100,000 | |||||
Accredited Investors 2019 [Member] | Warrant [Member] | Subscription Agreements [Member] | ||||||
Number of common stock purchased, shares | 1,251,750 | |||||
Warrant term | 5 years | |||||
Fair value of warrants | $ 79,000 | |||||
Restricted Stock [Member] | ||||||
Warrant term | 3 years | |||||
Number of stock granted | 2,750,000 | |||||
Number of stock vested | 2,000,000 | |||||
Restricted Stock [Member] | Non Employee Directors [Member] | ||||||
Number of stock granted | 2,456,000 | |||||
Non Employee Stock Option [Member] | ||||||
Stock based compensation | $ 2,430,000 | |||||
Unrecognized compensation costs | $ 27,000 | |||||
Number of options exercisable | 970,000 | |||||
Exercise price of option | $ 0.12 | |||||
Employee Stock Option [Member] | ||||||
Stock based compensation | 1,246,000 | $ 2,430,000 | ||||
Unrecognized compensation costs | $ 446,000 | |||||
Number of options granted | 150,000 | 6,220,000 | ||||
Vesting term | 10 years | |||||
Number of stock vested | 750,000 |
DIRECT FINANCING LEASE (Details
DIRECT FINANCING LEASE (Details) | Dec. 31, 2019USD ($) |
Year Ending December 31, | |
2020 | $ 122,148 |
2021 | 122,148 |
2022 | 122,148 |
2023 | 122,148 |
2024 | 122,148 |
Thereafter | 162,864 |
Sub-total | 773,604 |
Less deferred revenue | (213,568) |
Net investment in lease | $ 560,036 |
DIRECT FINANCING LEASE (Detai_2
DIRECT FINANCING LEASE (Details Narrative) | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2016USD ($)Kiosks$ / shares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Revenue | $ 2,552,045 | $ 3,828,993 | |
Equipment under capital lease | 748,000 | ||
Aggregate minimum future lease payments | 1,422,000 | ||
Unearned income | $ 474,000 | ||
Cash Collection and Services [Member] | |||
Number of kiosks | Kiosks | 78 | ||
Lease contract term | 10 years | ||
Lease monthly rental | $ 11,900 | ||
Lease rent expense | 142,272 | ||
Estimated executory costs | $ 1,677 | ||
Purchase price at the end of lease term (in dollars per unit) | $ / shares | $ 40 | ||
Receive monthly payments | $ 11,856 |
LEASE OBLIGATION PAYABLE (Detai
LEASE OBLIGATION PAYABLE (Details) | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 43,096 |
2021 | 43,096 |
2022 | 10,774 |
Total minimum lease payments | 96,966 |
Less: Amount representing interest | (12,356) |
Present value of minimum lease payments | $ 84,610 |
LEASE OBLIGATION PAYABLE (Det_2
LEASE OBLIGATION PAYABLE (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases [Abstract] | |
Amortization of lease equipment | $ 91,079 |
Lease obligation interest rate | 12.00% |
Lease obligation maturity date | Mar. 31, 2022 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Loss before income taxes | $ (10,437,427) | $ (9,997,371) |
United States [Member] | ||
Loss before income taxes | (8,548,570) | (8,775,452) |
Outside United States [Member] | ||
Loss before income taxes | $ (1,888,857) | $ (1,221,919) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
US Federal Statutory Tax Rate | 21.00% | 21.00% |
State taxes | 4.35% | 4.35% |
NOL True-Ups | 5.27% | 2.47% |
Change in valuation allowance | (30.62%) | (27.82%) |
Total | 0.00% | 0.00% |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Tax Assets: | ||
Net Operating Loss | $ 7,681,718 | $ 5,981,004 |
Stock Options | 6,632,746 | 5,890,565 |
Charitable Contributions | 1,267 | 1,267 |
Basis Difference in Intangible Assets | 7,405 | 99,296 |
Basis Difference Fixed Assets | 5,096 | |
Accrued Payroll | 51,907 | 42,939 |
Valuation Allowance | (14,365,195) | (11,938,078) |
Total Deferred Tax Asset | 9,848 | 37,089 |
Debt Discounts | (6,769) | (27,086) |
Debt Issuance Costs | (2,501) | (10,003) |
Basis Difference Fixed Assets | (578) | |
Total Deferred Tax Liability | (9,848) | (37,089) |
Net Deferred Tax Asset |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Federal operating loss carryforward | $ 25,900,000 | |
State operating loss carryforward | 25,900,000 | |
Operating loss carry forwards | $ 25,900,000 | |
Expiration Year | 2039 | |
Valuation allowance | $ 14,365,195 | $ 11,938,078 |
Minimum [Member] | ||
Federal corporate rate reduction | 21.00% | |
Maximum [Member] | ||
Federal corporate rate reduction | 35.00% |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2019USD ($) |
Assets: | |
Current portion of operating lease ROU assets - included in other current assets | $ 254,919 |
Operating lease ROU assets - included in Other Assets | 171,141 |
Total operating lease assets | 426,060 |
Liabilities: | |
Current portion of ROU liabilities - included in Accounts payable and accrued expenses | 242,650 |
Long-term portion of ROU liabilities - included in Other liabilities | 131,568 |
Total operating lease liabilities | $ 374,218 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) | Dec. 31, 2019USD ($) |
Operating Leases Year Ending December 31: | |
2020 | $ 277,961 |
2021 | 96,606 |
2022 | 49,716 |
Total operating lease payments | 424,283 |
Less: Imputed interest | (50,065) |
Total operating lease liabilities | 374,218 |
Non-Convertible Operating Leases [Member] | |
Operating Leases Year Ending December 31: | |
2020 | 276,000 |
2021 | 97,000 |
2022 | 50,000 |
Total operating lease payments | $ 423,000 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2018USD ($) | Apr. 30, 2017USD ($) | Dec. 31, 2019USD ($)ft² | Dec. 31, 2018USD ($) | |
Weighted average lease term | 1 year 2 months 12 days | |||
Weighted average discount rate | 13.55% | |||
Rent expense | $ 439,000 | $ 381,000 | ||
Agreement,description | The Company has entered an agreement with a facial recognition software company for the grant of a perpetual license for commercial use (unless terminated for breach by either party). The initial payment under the license of $160,000 was paid in 2018 with two additional installments due on the first and second anniversary of the Effective Date of the arrangement amounting to $80,000 and $40,000, respectively. The Company is in discussion with the provider with respect to functionality as well as the remaining financial obligation. | |||
COLOMBIA [Member] | Apartment [Member] | ||||
Monthly rental payments | $ 2,000 | |||
Alpharetta Georgia [Member] | New Office Facilities [Member] | ||||
Monthly rental payments | $ 3,800 | |||
Plantation [Member] | New Office Facilities [Member] | ||||
Monthly rental payments | $ 2,700 | |||
Area of land for rent | ft² | 2,100 | |||
South Africa [Member] | New Office Facilities [Member] | ||||
Monthly rental payments | $ 8,000 | |||
Long Beach, New York [Member] | New Office Facilities [Member] | ||||
Additional monthly rental payments | $ 7,425 | |||
Agreement term | 30 days | |||
MultiPay S.A.S [Member] | COLOMBIA [Member] | New Office Facilities [Member] | ||||
Monthly rental payments | $ 8,500 | |||
Agreement term | 2 years |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues, net | $ 2,552,045 | $ 3,828,993 |
Loss From Operations | (10,085,749) | (9,323,219) |
Interest Expense | (375,598) | (757,801) |
Other income/(expense) | 23,920 | 83,649 |
Loss before income taxes | (10,437,427) | (9,997,371) |
Income tax expense | (62,931) | (30,242) |
Net loss | (10,500,358) | (10,027,613) |
North America [Member] | ||
Revenues, net | 642,313 | 1,941,866 |
Loss From Operations | (3,536,664) | (1,959,125) |
South America [Member] | ||
Revenues, net | 455,475 | 476,234 |
Loss From Operations | (5,186,550) | (6,540,029) |
Africa [Member] | ||
Revenues, net | 1,454,257 | 1,410,893 |
Loss From Operations | (1,362,535) | (824,065) |
Payment Processing [Member] | ||
Revenues, net | 455,475 | 476,234 |
Loss From Operations | (5,186,550) | (6,540,029) |
Identity Management [Member] | ||
Revenues, net | 2,096,570 | 3,352,759 |
Loss From Operations | $ (4,899,199) | $ (2,783,190) |
SEGMENT INFORMATION (Details Na
SEGMENT INFORMATION (Details Narrative) | 12 Months Ended | |
Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | |
Number of reportable segments | Segment | 2 | |
Goodwill | $ 5,218,861 | $ 6,736,043 |
North America [Member] | ||
Gross long lived assets | 9,100,000 | |
Goodwill | 4,200,000 | |
South America [Member] | ||
Gross long lived assets | 400,000 | |
Goodwill | 0 | |
Africa [Member] | ||
Gross long lived assets | 1,400,000 | |
Goodwill | $ 1,200,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Feb. 14, 2020 | Dec. 31, 2019 | |
Subsequent event, description | If the Company prepays all or a portion of the 2020 Note prior to the one-year anniversary of the 2020 Note issuance date (the ("2020 Note Anniversary"), then the Company will be required to pay interest on the principal prepaid through the 2020 Note Anniversary. Further, upon maturity or in the event of default and/or bankruptcy of the 2020 Notes, the Company will be required to pay 150% of the principal due under the 2020 Notes. | |
Notes payable percentage | 15.00% | |
Notes Payable [Member] | ||
Principal converted amount | 150.00% | |
Convertible notes payable | $ 428,000 | |
Convertible Notes the principal amount, description | The aggregate principal amount of all the 2020 Notes being not less than $1,500,000, 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, the holders of the 8% Convertible Notes in the principal amount of $428,000 issued December 2019 (the "8% Notes") and the Theodore Stern Revocable Trust (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 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 Company and the holders of the 8% Notes entered into an amendment agreement pursuant to which that 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, save that the maturity shall be extended to the same maturity date as the 2020 Notes. A securities purchase agreement for $50,000 in 8% Notes was cancelled by mutual consent reducing the principal amount of the 8% Notes from $478,000 to $428,000. 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. In February 2020, the Company offered all warrant holders holding warrants to purchase shares of Company common stock issued in July 2015 ("2015 Warrants") the right to extend the term of the 2015 Warrants for a period of two years, subject to an increase in the Exercise Price (as defined therein) to $0.06 per share, providing that such warrant holders invested a minimum $100,000 in the 2020 Note private offering. As a result, a portion of the 2015 Warrant holders participated in the 2020 Note offering and the Company extended the exercise period until February 2022 of 2015 Warrants representing the right to acquire 6,385,000 shares of common stock. Mr. Selzer holds 880,000 2015 Warrants, which were also extended as a result of his investment. | |
Aggregate principal amount | $ 1,500,000 | |
Notes Mature February 28,2022 [Member] | ||
Notes payable percentage | 150.00% | |
Subsequent Event [Member] | ||
Subsequent event, description | 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 payable 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 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 has agreed to provide the balance of the funding on or prior to April 30, 2020. |