Business context and reporting period
The filing covers the quarter and nine months ended September 30, 2014. Although the request identifies Authid Inc., the filing names the registrant as ID Global Solutions Corporation (formerly IIM Global Corporation); verify the issuer identity. The company was developing biometric handheld identification and mobile-payment products for government, enterprise, and consumer markets. It reported no revenue and had not completed a marketable product.
Financial performance and position
| Metric | Q3 2014 / September 30, 2014 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $0 | $0 in Q3 2013; $0 for both nine-month periods |
| Operating loss | $111,149 for Q3; $385,916 for nine months | $294,719 for Q3 2013; $956,139 for nine months 2013 |
| Net loss | $144,324 for Q3; $451,141 for nine months | $294,719 for Q3 2013; $827,683 for nine months 2013 |
| Cash | $40,996 | $5,349 at December 31, 2013 |
| Working capital | Deficit of $11,277 | Deficit of $173,951 at December 31, 2013 |
| Total assets | $1,058,658 | $548,506 at December 31, 2013 |
| Total liabilities | $86,918 | $291,300 at December 31, 2013 |
With no revenue or cost of sales, the company had no gross profit or meaningful gross margin. Nine-month operating expenses were $385,916, including $350,511 of general and administrative costs and $35,405 of depreciation and amortization. The filing reports no income-tax expense.
For the first nine months, operating cash use was $262,472 and investing cash use was $587,266, including $416,542 for property and equipment and $170,724 for intangible assets. Financing provided $885,385, producing a $35,647 increase in cash. There was no related-party note balance at quarter-end; the company had converted $1,165,675 of principal and accrued interest into 2,915,000 shares at $0.40 per share.
Material changes versus comparable periods
- Nine-month net loss narrowed to $451,141 from $827,683. The prior-year period included a $128,456 gain from forgiveness of payroll liabilities; 2014 included $65,225 of interest expense.
- Nine-month general and administrative expense fell by $529,526, to $350,511. The filing attributes the decrease principally to lower payroll, occupancy, and merger-related professional fees.
- Property and equipment increased to $437,412, primarily after the May 2014 purchase of the company’s office building. Intangible assets rose to $545,605.
- Common shares outstanding increased to 163,538,289 from 160,623,289 at year-end, including shares issued in the related-party debt conversion.
Outlook, risks, and unusual items
- No financial guidance was provided. Management said cash was insufficient to fund operations at the current level for the next twelve months or achieve business goals; additional debt or equity financing was needed, with no formal financing commitments and no assurance of availability.
- The filing highlights substantial doubt about the company’s ability to continue as a going concern. It had an accumulated deficit of $1,941,875 and no assurance of future profitability.
- Management said the next-generation HDR platform was 30% complete and would require about six more months and approximately $200,000 to productize. The company had invested $130,981 in the project by September 30, 2014.
- The company advanced $34,000 to an executive officer and director under two notes bearing 8% interest and due December 31, 2014. The filing warns the advances could be viewed as violating Sarbanes-Oxley Act Section 402; nonpayment or an adverse determination could lead to investigation or litigation.
- Disclosure controls and procedures were deemed ineffective as of September 30, 2014 because of continuing internal-control weaknesses. No material change in internal control was reported during the quarter.
- The filing reports no pending or threatened legal proceedings and no material off-balance-sheet arrangements. The company changed its name to ID Global Solutions Corporation effective October 8, 2014.
Important facts for investors to verify
- Whether this filing corresponds to the requested company: it identifies ID Global Solutions Corporation, not Authid Inc.
- Current cash needs, financing availability, and the company’s ability to continue as a going concern.
- Repayment status of the $34,000 executive loan and any legal or regulatory developments concerning the potential Section 402 issue.
- Progress, remaining funding, and commercialization prospects for the HDR platform and other biometric products.
- Remediation of the disclosed ineffective controls and the accuracy of reported related-party transactions and debt conversion details.