Business context and reporting period
The supplied filing is ID Global Solutions Corporation’s unaudited Form 10-Q for the quarter ended June 30, 2015; it identifies the company as formerly IIM Global Corporation. This does not match the request metadata naming Authid Inc., so verify the issuer before relying on this summary.
ID Global was developing biometric identification and mobile-payment products and had not completed a marketable product. In April 2015, it acquired 100% of Colombian payment-services company MultiPay S.A. The filing describes MultiPay as providing payment gateway and mobile-wallet services in Colombia and Peru.
Financial results and position
| Metric | Filing values and context |
|---|---|
| Revenue / income | The financial statements report total income of $11,046 for both the three and six months ended June 30, 2015, versus none in 2014. Elsewhere, management reports MultiPay revenue of $554,130 in 2015. The filing does not provide a clear, consistent consolidated revenue value. |
| Net loss | Financial statements report a $4,290,272 loss for Q2 and a $4,800,135 loss for the first six months of 2015, compared with $183,886 and $305,720, respectively, in 2014. MD&A gives different 2015 loss figures: $4,050,730 for Q2 and $4,778,211 for six months. |
| Operating costs | The financial statements report six-month operating expenses of $4,771,426, including general and administrative expense of $4,723,833. MD&A reports different expense figures. No reliable margin can be derived from the inconsistent revenue disclosures. |
| Cash flow and cash | The cash-flow statement reports $307,700 used in operating activities and ending cash of $13,528 for the first six months. The balance sheet reports cash of $525,541 at June 30; MD&A reports operating cash use of $865,793. These figures do not reconcile. |
| Assets, liabilities and liquidity | The balance sheet reports total assets of $2,461,101, current assets of $762,852, current liabilities of $5,741,639, and stockholders’ deficit of $3,280,538. Elsewhere, the filing reports different current-asset and current-liability totals. It states that available cash was insufficient to fund operations for the next 12 months. |
| Debt and financing | The company issued $850,000 of secured convertible debentures bearing 10% interest, generally due within one year or upon a qualifying financing. Conversion prices can reset downward. Related warrants cover 19,490,909 shares, also with reset provisions. The filing records a $4,530,375 derivative liability, including $3,180,124 charged as a financing cost; the debt is convertible at the investors’ option. |
| Shares | 173,284,806 common shares were outstanding at June 30, 2015. During Q2, the company reported issuing 6,101,517 shares for the MultiPay acquisition, 2,000,000 in connection with a capital raise, and 1,645,001 for services. |
Material changes versus the prior comparable period
- MultiPay became a wholly owned subsidiary in April 2015; the acquisition added payment-services operations and substantial intangible assets.
- Six-month losses and reported general and administrative expenses increased sharply from 2014. The filing attributes higher payroll costs to officer salaries and hiring a CFO, and cites legal, consulting, and financing-related costs.
- The company raised capital through convertible debentures and related warrants, creating significant potential dilution and a large derivative liability.
- Intangible assets increased to $1,425,728 from $421,774 at year-end 2014. Management said no impairment reserve was required.
Outlook, risks and unusual items
- Management disclosed substantial doubt about the company’s ability to continue as a going concern. It said additional capital was needed, no financing commitments were in place, and there was no assurance financing would be available or the company would become profitable.
- The next-generation HDR platform was expected to require about six more months and approximately $200,000 to become a product for government or enterprise customers. The company had not completed development of a marketable product.
- The filing identifies risks including limited revenue history, continuing losses, reliance on additional financing and third-party relationships, commercialization and market-acceptance uncertainty, competition, regulation, and intellectual-property protection.
- Disclosure controls and procedures were reported ineffective due to continuing weaknesses in internal control over financial reporting. No material control changes during the quarter were reported.
- The company reported no pending, threatened, or actual legal proceedings and no material off-balance-sheet arrangements. No specific financial guidance was provided.
Important facts for investors to verify
- Confirm the issuer: the filing names ID Global Solutions Corporation, not Authid Inc.
- Reconcile reported revenue, net loss, operating expenses, cash flows, cash balances, and current assets and liabilities across the financial statements, notes, and MD&A; several amounts conflict materially.
- Review the accounting and valuation of the $4.53 million derivative liability and financing costs, and the reset provisions, maturity terms, and potential dilution from the debentures and warrants.
- Verify the MultiPay acquisition consideration, contingent share issuance, and the approximately $340,000 of liabilities the sellers were to pay for the remaining shares.
- Assess the going-concern funding requirement, cash runway, and remediation of the disclosed control weaknesses.