Authid Inc. (metadata) — Q1 2015 Form 10-Q summary
Entity discrepancy: The supplied filing is for ID Global Solutions Corporation, formerly IIM Global Corporation, not Authid Inc. Confirm the issuer and filing before relying on this summary. The reporting period ended March 31, 2015; statements are unaudited unless noted otherwise.
Business context and results
ID Global was developing biometric handheld identification and mobile-payment products for government, enterprise, and consumer markets. It reported no revenue in either Q1 2015 or Q1 2014 and had not completed a marketable product.
- Q1 2015 net loss was $509,862, compared with $121,824 in Q1 2014. Basic and diluted loss per share was reported as $0.00, rounded.
- Operating expenses increased to $508,107 from $112,274. General and administrative expense rose to $472,836 from $98,176, primarily due to higher payroll and professional fees; R&D expense was $24,000 versus $2,474.
- With no revenue or cost of sales, the filing provides no meaningful gross margin or operating margin.
- Operating cash use was $307,700, versus $150,384 in Q1 2014. Investing activities used $33,538; financing activities provided $195,470, including $197,095 in related-party note proceeds.
Financial position and liquidity
- At March 31, 2015, cash was $13,528, down from $159,296 at December 31, 2014. Total assets were $653,536.
- Current liabilities were $472,370, including $243,887 of current related-party notes and $90,650 of related-party payables. Working capital deficit was $458,842, versus a $74,839 surplus at year-end 2014.
- Stockholders’ equity was $181,166, down from $518,194. Accumulated deficit was $2,905,283.
- The company stated it lacked sufficient cash to operate at its current level for the next 12 months and had no formal financing commitments. Management said continued operations depended on additional financing and other support; the filing raises substantial doubt about the company’s ability to continue as a going concern.
Material changes, outlook, and risks
- Management refocused product development on a next-generation HDR Intelligent Accessory platform. It estimated another six months and approximately $200,000 would be needed to productize the device; the filing gives no committed funding or revenue forecast.
- After quarter-end, ID Global acquired 100% of Colombian payment-services company Multipay S.A. on April 6, 2015, in exchange for shares. The agreement was amended May 7: 6,101,517 shares were scheduled for issuance, with 1,498,483 additional shares conditional on the sellers paying approximately $340,000 of specified liabilities. The company said it could not yet provide pro forma financial information because acquisition accounting and audits were incomplete.
- On May 13, 2015, the company entered into a $150,000 secured convertible-debenture financing: $100,000 from an accredited investor and $50,000 from an executive/director. The 10% debentures are due upon a financing exceeding $500,000 or September 15, 2015, whichever comes first, and are convertible at $0.055 per share, subject to anti-dilution provisions. The filing also describes warrants and potentially substantial share-based liquidated damages if the debt is unpaid at maturity.
- Disclosure controls were deemed ineffective at March 31, 2015 due to continuing internal-control weaknesses. Management reported no material change in internal control during the quarter.
- The filing identifies risks including lack of revenue, ongoing losses, dependence on additional financing, product-development and commercialization uncertainty, and reliance on third parties. It reports no pending or threatened legal proceedings and no material off-balance-sheet arrangements.
Key facts investors should verify
- Whether this ID Global filing is relevant to the requested Authid Inc. issuer.
- Multipay’s audited financials, acquisition accounting, liabilities, and eventual pro forma contribution to revenue and cash needs.
- Cash runway, availability and terms of further financing, and repayment or conversion outcomes for related-party and May 2015 debt.
- Whether the HDR platform was completed and commercialized, and whether the estimated additional $200,000 was funded.
- Remediation of the disclosed ineffective controls and the dilution implications of acquisition shares, debenture conversion, warrants, and any default damages.