10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to

Commission file number 000-54545

 

Ipsidy Inc.

Exact name of registrant as specified in its charter)

Delaware	46-2069547
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

780 Long Beach Boulevard

Long Beach, New York

11561

(Address of principal executive offices) (zip code)

407-674-2651

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

¨    Yes x    No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.

x    Yes ¨    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated filer      ¨	Accelerated filer      ¨
Non-accelerated filer      ¨	Smaller reporting company      x
(do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨    No x

Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.

Class	Outstanding at April 7, 2017
Common Stock, par value $0.0001	341,386,104 shares
Documents incorporated by reference:	None

¨    No

TABLE OF CONTENTS

	Page No.
PART I - FINANCIAL INFORMATION
Item 1.    Financial Statements.	4 - 18
Condensed Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015 (audited)	4
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015 (unaudited) (2015 restated)	5
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2016 and 2015 (unaudited) (2015 restated)	6
Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the Six Months Ended June 30, 2016 (unaudited)	7
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015 (unaudited) (2015 restated)	8
Notes to Unaudited Condensed Consolidated Financial Statements	9-20
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.	21- 24
Item 3.    Quantitative and Qualitative Disclosures About Market Risk.	24
Item 4.    Controls and Procedures.	24-25
PART II - OTHER INFORMATION
Item 1.    Legal Proceedings.	25
Item 1A. Risk Factors.	25
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.	25
Item 3.    Defaults Upon Senior Securities.	26
Item 4.    Mine Safety Disclosures.	26
Item 5.    Other Information.	26
Item 6.    Exhibits.	27-31

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about:

· our lack of significant revenues and history of losses,

· our ability to continue as a going concern,

· our ability to raise additional working capital as necessary,

· our ability to satisfy our obligations as they become due,

· the failure to successfully commercialize our product or sustain market acceptance,

· the reliance on third party agreements and relationships for development of our business,

· the control exercised by our management,

· the impact of government regulation on our business,

· our ability to effectively compete,

· the possible inability to effectively protect our intellectual property,

· the lack of a public market for our securities and the impact of the penny stock rules on trading in our common stock should a public market ever be established.

You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in this report, in Part I. Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2015 and our other filings with the Securities and Exchange Commission. Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “Ipsidy” “ID Global,” the “Company,” “we,” “our,” “us,” and similar terms refers to Ipsidy Inc., a Delaware corporation formerly known as ID Global Solutions Corporation and its subsidiaries. As of January 31, 2017, the Company formally changed its name to Ipsidy Inc. from ID Global Solutions Corporation.

The information which appears on our website www.ipsidy.com is not part of this report.

3

ITEM 1. FINANCIAL STATEMENTS

IPSIDY INC. AND SUBSIDIARIES

(Formerly ID Global Solutions Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2016			2015
	(Unaudited)
ASSETS
Current Assets:
Cash	$	281,188		$	349,873
Accounts receivable, net		199,574			509,027
Current portion of net investment in direct financing lease		44,990			-
Inventory		122,667			516,663
Other current assets		58,647			134,224
Total current assets		707,066			1,509,787
Property and equipment, net		124,603			37,775
Other assets		195,483			319,592
Intangible assets, net		3,601,010			1,436,534
Goodwill		6,736,043			166,689
Net investment in direct financing lease, net of current portion		695,911			-
Total assets	$	12,060,116		$	3,470,377
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	998,123		$	717,500
Convertible notes payable, net		1,945,415			383,346
Derivative liability		7,724,379			25,445,645
Contingent purchase consideration (Note 12)		370,125			370,125
Deferred revenue		103,814			-
Notes payable, net		1,578,468			634,069
Total current liabilities		12,720,324			27,550,685
Commitments and Contingencies (Note 12)
Stockholders' Deficit:
Common stock, $0.0001 par value, 500,000,000 shares authorized; 214,196,550 and 187,854,139 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively		21,420			18,785
Additional paid in capital		31,360,539			14,923,936
Accumulated deficit		(32,214,771	)		(39,074,590	)
Accumulated comprehensive income		172,604			51,561
Total stockholders' deficit		(660,208	)		(24,080,308	)
Total liabilities and stockholders' deficit	$	12,060,116		$	3,470,377

See notes to condensed consolidated financial statements.

4

IPSIDY INC. AND SUBSIDIARIES

(Formerly ID Global Solutions Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
				(restated)						(restated)
Revenues
Products and services	$	476,680		$	11,046		$	797,426		$	11,046
Lease income		13,315			-			13,315			-
Revenues, net		489,995			11,046			810,741			11,046
Operating Expenses:
Cost of sales		114,548			-			232,658			-
General and administrative		4,147,408			456,360			8,540,314			929,197
Research and development		292,592			853			321,664			224,853
Depreciation and amortization		157,702			44,018			260,761			55,289
Total operating expenses		4,712,250			501,231			9,355,397			1,209,339
Loss from operations		(4,222,255	)		(490,185	)		(8,544,656	)		(1,198,293	)
Other Income (Expense):
Gain (loss) on derivative liabilities		4,735,589			(2,865,353	)		17,677,252			(2,865,353	)
Interest expense		(1,346,025	)		(33,974	)		(2,272,777	)		(35,729	)
Foreign currency translation loss		-			(26,259	)		-			(26,259	)
Other income (expense), net		3,389,564			(2,925,586	)		15,404,475			(2,927,341	)
(Loss)/income before income taxes		(832,691	)		(3,415,771	)		6,859,819			(4,125,634	)
Income Taxes		-			-			-			-
Net income (loss)	$	(832,691	)	$	(3,415,771	)	$	6,859,819		$	(4,125,634	)
Net Income (Loss) Per Share:
Basic	$	(0.00	)	$	(0.02	)	$	0.03		$	(0.02	)
Diluted	$	(0.00	)	$	(0.02	)	$	(0.04	)	$	(0.02	)
Weighted Average Shares Outstanding:
Basic		213,260,870			166,054,195			207,538,833			166,054,195
Diluted		213,260,870			166,054,195			275,753,266			166,054,195

See notes to condensed consolidated financial statements.

5

IPSIDY INC. AND SUBSIDIARIES

(Formerly ID Global Solutions Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016		2015
				(restated)					(restated)
Net income (loss)	$	(832,691	)	$	(3,415,771	)	$	6,859,819	$	(4,125,634	)
Foreign currency translation gains		216,670			-			121,043		-
Comprehensive income (loss)	$	(616,021	)	$	(3,415,771	)	$	6,980,862	$	(4,125,634	)

See notes to condensed consolidated financial statements.

6

IPSIDY INC. AND SUBSIDIARIES

(Formerly ID Global Solutions Corporation)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

Six months ended June 30, 2016

(Unaudited)

										Accumulated
					Additional					Other
	Common Stock				Paid-in		Accumulated			Comprehensive
	Shares		Amount		Capital		Deficit			Income		Total
Balance, December 31, 2015		187,854,139	$	18,785	$	14,923,936	$	(39,074,590	)	$	51,561	$	(24,080,308	)
Reclassification of derivative liabilities upon conversion of convertible debt		-		-		692,850		-			-		692,850
Issuance of common stock upon conversion of convertible debt and accrued interest		704,074		70		21,152		-			-		21,222
Stock-based compensation		-		-		6,152,490		-			-		6,152,490
Common stock issued for services		675,000		68		269,932		-			-		270,000
Common stock issued for debt issuance costs		1,430,000		144		168,981		-			-		169,125
Common stock issued with convertible debt		1,033,337		103		54,367		-			-		54,470
Common stock issued for acquisition of FIN Holdings		22,500,000		2,250		8,997,750		-			-		9,000,000
Warrants issued for inventory		-		-		79,081							79,081
Net income		-		-		-		6,859,819			-		6,859,819
Foreign currency translation		-		-		-		-			121,043		121,043
Balance, June 30, 2016		214,196,550	$	21,420	$	31,360,539	$	(32,214,771	)	$	172,604	$	(660,208	)

See notes to condensed consolidated financial statements.

7

IPSIDY INC. AND SUBSIDIARIES

(Formerly ID Global Solutions Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30,
	2016			2015
				(restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	6,859,819		$	(4,125,634	)
Adjustments to reconcile income (loss) with cash flows from operating activities:
Depreciation and amortization expense		260,761			55,289
Stock-based compensation		6,152,490			391,250
Common stock issued for services		270,000			-
Amortization of debt discounts and issuance costs, net		1,899,726			67,918
(Gain) loss on derivative liabilities		(17,677,252	)		2,865,353
Write-off of abondoned product		225,862
Changes in operating assets and inabilities:
Accounts receivable		5,606			-
Lease receivable		7,043			-
Other current assets		75,577			109,495
Inventory		(162,232	)		-
Accounts payable and accrued expenses		281,848			(43,593	)
Deferred revenue		(194,690	)		-
Net cash flows from operating activities		(1,995,444	)		(679,922	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(10,518	)		(51,120	)
Investment in other assets		(101,753	)		-
Cash acquired in acquisitions		419,042			37,876
Net cash cash flows from investing activities		306,771			(13,244	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes payable, warrants and common stock		1,550,000			850,000
Payment of debt issuance costs		(133,400	)		-
Proceeds from issuance of notes payable and warrants, related parties		100,000			185,773
Advances from related parties		-			23,638
Principal payments on notes payable		(17,655	)		-
Net cash flows from financing activities		1,498,945			1,059,411
Effect of foreign currencies		121,043			-
Net change in cash		(68,685	)		366,245
Cash, beginning of the period		349,873			159,296
Cash, end of the period	$	281,188		$	525,541
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Non-cash Investing and Financing Activities:
Issuance of common stock for conversion of convertible debt and accrued interest	$	21,222		$	-
Issuance of warrants for inventory costs	$	79,081		$	-
Reclassification of derivative liabilities upon conversion of convertible debt into common stock	$	692,850		$	-
Issuance of common stock for debt issuance costs	$	169,125		$	-
Issuance of common stock with convertible debt	$	54,470		$	-
Acquisition of FIN Holdings (2016) and Multi Pay (2015), respectively:
Issuance of common stock as consideration	$	9,000,000		$	610,151
Assumed liabilities		914,218			732,209
Inventory		(112,408	)		-
Accounts receivable		(311,867	)		(230,151	)
Property and equipment		(100,339	)		(20,000	)
Intangible assets		(8,970,562	)		(1,054,333	)
Cash acquired	$	419,042		$	37,876
Reclassification of inventory to net investment in direct financing lease	$	747,944		$	-

See notes to condensed consolidated financial statements.

8

IPSIDY INC. AND SUBSIDIARIES

NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, and include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for future periods or the full year.

The condensed consolidated financial statements include the accounts of Ipsidy Inc. and its wholly-owned subsidiaries MultiPay S.A.S., ID Global LATAM, IDGS S.A.S., ID Solutions, Inc., Fin Holdings, Inc. and Cards Plus Pty Ltd. (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.

Net Loss per Common Share

The Company computes net income or 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 income (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 table illustrates the computation of basic and diluted EPS:

	For the three-months ended June 30, 2016								For the three-months ended June 30, 2015								For the six-months ended June 30, 2016								For the six months ended June 30. 2015
						Per-Share								Per-Share								Per-Share								Per-Share
	Income			Shares		Amount			Income			Shares		Amount			Income			Shares		Amount			Income			Shares		Amount
Basic EPS
Income available to stockholders	$	(832,691	)		213,260,870	$	(0.00	)	$	(3,415,771	)		166,054,195	$	(0.02	)	$	6,859,819			207,538,833	$	0.03		$	(4,125,634	)		166,054,195	$	(0.00	)
Effect of Dilutive Securities
Stock Options		-			-					-			-					-			10,714,189					-			-
Warrants		-			-					-			-					-			25,634,957					-			-
Convertible Debt		-			-					-			-					(17,712,426	)		31,465,287					-			-
Diluted EPS
Income available to stockholders plus assumed conversions	$	(832,691	)		213,260,870	$	(0.00	)	$	(3,415,771	)		166,054,195	$	(0.02	)	$	(10,852,607	)		275,353,266	$	(0.04	)	$	(4,125,634	)		166,054,195	$	(0.00	)

Going concern

As of June 30, 2016, the Company has a working capital and accumulated deficit of approximately $12.0 million and $32.2 million, respectively. For the six months ended June 30, 2016 the Company earned revenue of approximately $811,000 and incurred an operating loss of approximately $8.5 million.

These condensed 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.

There is no assurance that the Company will ever be profitable. These condensed 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.

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 market. 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 stated at the lower of cost (using the average method) or market. The plastic/ID cards and digital printing material are used to provide plastic loyalty, ID and other types of cards. Inventories at June 30, 2016 consist solely of the Cards Plus inventory as the kiosks were deployed in the second quarter of 2016 subject to a direct financing lease.

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 deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. For the three and six months ended June 30, 2016 and 2015, there is no provision for income tax as the Company had a tax loss for United States and foreign activities. The Company’s gain on derivative liability during the three and six months ended June 30, 2016 and 2015, is not taxable.

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 lessee substantially all of the risks and rewards incidental to the ownership of the asset are classified as direct finance leases.

Revenue Recognition

The Company recognizes revenue when products are shipped or services have been performed. Financing revenue related to direct-financing leases is recognized over the term of the lease using the effective interest method.

9

NOTE 2 – FIN HOLDINGS ACQUISITION

On February 8, 2016, the Company entered into a Share Exchange Agreement with Fin Holdings, Inc., a Florida corporation ("FIN"), and all of the FIN shareholders (the "FIN Shareholders"), pursuant to which the Company acquired 100% of the issued and outstanding shares of FIN (the "FIN Shares") and FIN's two wholly-owned subsidiaries, ID Solutions, Inc. and Cards Plus Pty Ltd. (collectively, the "Subsidiaries"), from the FIN Shareholders. One of the FIN shareholders was the Company’s Chief Operating Officer and owned approximately 1.7% of the Company’s outstanding common stock at the acquisition date. In consideration for the FIN Shares, the Company issued and sold to the FIN Shareholders an aggregate of 22,500,000 shares of common stock of the Company (the "Purchase Shares") at a per share price of $0.40 or $9,000,000. The closing occurred on February 8, 2016.

In accordance with ASC 805, “Business Combinations”, the Company accounted for the acquisition of FIN as a business combination using the acquisition method of accounting. The purchase price was allocated to specific identifiable tangible and intangible assets at their respective fair values at the date of acquisition.

The following table summarizes the total fair value of the consideration transferred as well as the fair values of the assets and liabilities assumed.

Common stock consideration	$	9,000,000
Liabilities assumed		914,218
Total purchase consideration		9,914,218
Current assets		(843,317	)
Property and equipment		(100,339	)
Customer relationships		(1,587,159	)
Intellectual property		(814,049	)
Goodwill	$	6,569,354

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and benefits of the combined company. FIN was acquired on February 8, 2016 pursuant to a Share Exchange Agreement, at which time control was achieved through a restructuring of the reporting hierarchy to Company management.

The condensed consolidated financial statements for the six months ended June 30, 2016 include FIN’s results for the period from the date of acquisition to June 30, 2016. FIN Holdings Revenue and Operating Income included in the consolidated results of operations for the six months ended June 30, 2016, was approximately $670,000 and $89,000 respectively.

The following unaudited proforma financial information gives effect to the Company’s acquisition of FIN as if the acquisition had occurred on January 1, 2015 and had been included in the Company’s consolidated statement of operations for the six months ended June 30, 2016 and June 30, 2015.

	Six months ended June 30
	2016		2015
Proforma net revenues	$	932,297	$	1,088,960
Proforma net income (loss)	$	6,852,278	$	(3,944,838	)

NOTE 3 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL)

The Company’s intangible assets consist of intellectual property acquired from MultiPay in April 2015 and FIN and are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible assets for the six months ended June 30, 2016:

	Customer Relationships			Intellectual Property			Non- Compete
Useful Lives	10 Years			7 Years			5 Years			Total
Carrying Value at December 31, 2015	$	-		$	1,423,537		$	12,997		$	1,436,534
Additions		1,587,159			814,049			-			2,401,208
Amortization		(61,635	)		(173,689	)		(1,408	)		(236,732	)
Carrying Value at June 30, 2016	$	1,525,524		$	2,063,897		$	11,589		$	3,601,010

10

The following is a summary of intangible assets as of June 30, 2016:

	Customer Relationships			Intellectual Property			Non- Compete			Total
Cost	$	1,587,159		$	2,444,646		$	14,087		$	4,045,892
Accumulated amortization		(61,635	)		(380,749	)		(2,498	)		(444,882	)
Carrying Value at June 30, 2016	$	1,525,524		$	2,063,897		$	11,589		$	3,601,010

Future expected amortization of intangible assets is as follows:

Year Ending December 31,
2016	$	249,550
2017		494,950
2018		494,950
2019		494,950
2020		494,950
2021		496,631
Thereafter		875,029
	$	3,601,010

NOTE 4 – PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following as of June 30, 2016 and December 31, 2015:

	2016		2015
Computers and equipment	$	88,587	$	88,047
Furniture and fixtures		179,485		69,168
		268,072		157,215
Less Accumulated depreciation		143,469		119,440
Property and equipment, net	$	124,603	$	37,775

Depreciation expense totaled $24,029 and $12,505 for the six months ended June 30, 2016 and 2015, respectively.

NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following as of June 30, 2016 and December 31, 2015:

	2016		2015
Trade payables	$	334,192	$	301,455
Accrued interest		323,817		96,579
Accrued payroll and related		261,548		204,125
Other accrued expenses		78,566		115,341
Total	$	998,123	$	717,500

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NOTE 6 - NOTES PAYABLE, NET

The following is a summary of notes payable as of June 30, 2016 and December 31, 2015:

	2016		2015
In connection with the acquisition of MultiPay in 2015, the Company assumed three promissory notes.  At June 30, 2016, the remaining outstanding note carried an outstanding balance of $79,014. Payments of $6,300 including principal and interest are due monthly. The notes accrue interest at an annual rate of 15.47%. Total outstanding principal and interest is due on September 16, 2017.	$	79,014	$	96,669
The below notes payable were not initially convertible; except for the accrued interest portion which was convertible into common stock of the Company. Further, in January 2017, the below notes, which were being renegotiated, and related accrued interest were converted into common stock of the Company (see note 13).
In August 2015, the Company issued a 12% note in the amount of $27,000. The note is secured by the assets of the Company, matures in August 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of this note, the Company also issued warrants for the purchase of 180,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $148,160, which are presented as a discount against the note and amortized into interest expense over the term of the note.		27,000		27,000
In September 2015, the Company issued 12% notes in the amount of $973,000. The notes are secured by the assets of the Company, mature in September 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 6,486,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $77,480, which are presented as a discount against the note and amortized into interest expense over the term of the notes.		973,000		973,000
In October 2015, the Company issued 12% notes in the amount of $225,000. The notes are secured by the assets of the Company, mature in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of this note, the Company also issued warrants for the purchase of 1,500,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $36,400, which are presented as a discount against the note and amortized into interest expense over the term of the notes.		225,000		225,000
In November 2015, the Company issued a 12% note in the amount of $25,000. The note is secured by the assets of the Company, matures in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of this note, the Company also issued warrants for the purchase of 166,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $94,400, which are presented as a discount against the note and amortized into interest expense over the term of the note.		25,000		25,000
In December 2015, the Company issued 12% notes in the amount of $850,000. The notes are secured by the assets of the Company and mature in December 2016.  Any unpaid accrued interest on the note is convertible into common stock of the Company at a rate of $0.48 per share.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 1,770,834 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years.  The conversion rate on the accrued interest and the exercise price on the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8.		850,000		850,000

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(Continued)	2016			2015
In January 2016, the Company issued 12% notes in the amount of $100,000. The notes are secured by the assets of the Company, mature in January 2017, and accrued interest is convertible into common stock of the Company at a rate of $0.48 per share.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 208,332 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years.  The conversion rate on the accrued interest and the exercise price of the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8.		100,000			-
Total Principal Outstanding	$	2,279,014			2,196,669
Unamortized Deferred Debt Discounts		(482,943	)		(1,193,947	)
Unamortized Deferred Debt Issuance costs		(217,603	)		(368,653	)
Convertible Notes, Net	$	1,578,468		$	634,069

The following is a roll-forward of the Company’s notes payable and related discounts for the six months ended June 30, 2016:

	Principal Balance			Debt  Issuance Costs			Debt Discounts			Total
Balance at December 31, 2015	$	2,196,669			(368,653	)		(1,193,947	)	$	634,069
New issuances		100,000						(66,830	)		33,170
Payments		(17,655	)		-			-			(17,655	)
Amortization		-			151,050			777,834			928,884
Balance at June 30, 2016	$	2,279,014		$	(217,603	)	$	(482,943	)	$	1,578,468

NOTE 7 – CONVERTIBLE NOTES PAYABLE, NET

Convertible notes consisted of the following as of June 30, 2016 and December 31, 2015:

In January 2017, the below convertible notes payable, which were being renegotiated, and related accrued interest were converted into Common stock of the Company (Note 13).

	2016		2015
In June 2015, the Company issued 10% convertible notes with an   aggregate principal amount of $700,000.  The notes are secured by the assets of the Company, matured in June 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 15,400,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years.  The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8. The Company also incurred debt issuance costs of $124,500, which are presented as a discount against the note and amortized into interest expense over the term of the note. During the six months ended June 30, 2016, one note holder elected to convert principal and accrued interest totaling $21,222 into 704,074 shares of common stock.	$	680,000	$	700,000
In July 2015, the Company issued 10% convertible notes with in the aggregate principal amount of $190,000.  The notes are secured by the assets of the Company, matured in July 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 4,180,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8. The Company also incurred debt issuance costs of $16,200, which are presented as a discount against the note and amortized into interest expense over the term of the note.		166,000		166,000

(Continued on next page)

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(Continued)	2016			2015
In February 2016, the Company re-issued a 12% convertible note in the amount of $172,095. The note is secured by the assets of the Company, originally maturing in September 2016, and is convertible into common stock of the Company at a rate of $0.10 per share.		172,095			172,095
In April 2016, the Company issued 12% convertible notes in the amount of $1,550,000. The notes are secured by the assets of the Company, mature in October 2016, and are convertible into common stock of the Company at a rate of $0.25 per share.  In connection with the issuance of these notes, the Company also issued 1,033,337 shares of common stock and warrants for the purchase of 6,200,000 shares of the Company’s common stock at an exercise price of $0.25 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that require these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The portion of the remaining proceeds attributable to the notes and common stock were allocated to the instruments based on their relative fair values.  See Notes 8 and 10.  The Company also incurred debt issuance costs of $226,400, which are presented as a discount against the note and amortized into interest expense over the term of the note.		1,550,000			-
Total Principal Outstanding	$	2,568,095		$	1,038,095
Unamortized Deferred Debt Discounts		(442,097	)		(583,049	)
Unamortized Deferred Debt Issuance costs		(180,583	)		(71,700	)
Convertible Notes, Net	$	1,945,415		$	383,346

The following is a roll-forward of the Company’s convertible notes and related discounts for the six months ended June 30, 2016:

	Principal Balance			Debt Issuance Costs			Debt Discounts			Total
Balance at December 31, 2015	$	1,038,095		$	(71,700	)	$	(583,049	)	$	383,346
New issuances		1,550,000			(226,400	)		(636,373	)		687,227
Conversions		(20,000	)		-			-			(20,000	)
Amortization		-			117,517			777,325			894,842
Balance at June 30, 2016	$	2,568,095		$	(180,583	)	$	(442,097	)	$	1,945,415

NOTE 8 –DERIVATIVE LIABILITY

Due to the potential adjustment in the conversion price associated with certain of the convertible debentures and the potential adjustment in the exercise price of certain of the warrants, the Company has determined that certain conversion features and warrants are derivative liabilities.

The fair values of the embedded conversion features and the warrants are estimated and recorded as derivative liabilities on the date of issuance, offset by a discount on the related convertible note payable up to the face amount of the note, with any excess fair value recorded as derivative expense on the date of issuance. The Company’s convertible debt is convertible into common stock at conversion rates that vary based on the trading prices of the Company’s common stock. Accordingly, the conversion feature is required to be presented at fair value on the dates of issuance, settlement, and at each reporting date. The Company also has warrants to purchase common stock outstanding that provide for adjustments to the exercise prices upon the future dilutive issuances. The Company utilizes Monte Carlo simulations and stochastic forecasting to estimate the fair value of the warrants and conversion options. The ranges of assumptions utilized in estimating the fair value of the warrants and conversion options during the six months ended June 30, 2016, are as follows:

Expected Volatility	66% to 87%
Expected Term	0.4 to 5.0 Years
Risk Free Rate	0.36% to 1.21%
Dividend Rate	0.00%
Triggering Capital Raise Probabilities	50% - 75%

A summary of derivative activity for the six months ended June 30, 2016 is as follows:

Balance at December 31, 2015	$	25,445,645
New issuances		648,836
Conversion feature reclassified to equity upon conversion of related notes payable		(692,850	)
Change in fair value		(17,677,252	)
Balance at June 30, 2016	$	7,724,379

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NOTE 9 – RELATED PARTY TRANSACTIONS

Acquisition of FIN

As discussed in Note 2, the Company acquired all of the issued and outstanding shares of FIN in February 2017. The Company’s Chief Operating Officer and then 1.7% shareholder in the Company was also a significant shareholder in FIN at the time of the acquisition.

Convertible Notes Payable

As of June 30, 2016, the Company has outstanding convertible notes payable to certain members of the Company’s Board of Directors. Total amounts due to these related parties included in convertible notes payable amounted to $150,000 at June 30, 2016. See Note 7.

Other

In connection with the Company’s ability to secure third-party financing, the Company paid Network 1 Financial Securities, Inc. (“Network 1”), a registered broker-dealer, a cash fee of $124,000 and issued Network 1 1,430,000 shares of common stock of the Company in accordance with its agreement during the six months ended June 30, 2016. A member of the Company’s Board of Directors previously maintained a partnership with a key principal of Network 1. In addition to the cash fee paid, the agreement calls for Network 1 to receive an 8% commission of the total amount of proceeds from any financing it secures for the Company.

NOTE 10 – STOCKHOLDER’S DEFICIT

Common Stock

During the six months ended June 30, 2016, the Company issued 704,074 shares of common stock upon the conversion of principal and interest on convertible debt totaling $21,222.

During the six months ended June 30, 2016, the Company issued 675,000 shares of common stock as consideration for services related to its acquisition of FIN Holdings. The fair value of the shares, totaling $270,000, was estimated based on the publicly quoted trading price and recorded as an expense on the date of the acquisition.

During the six months ended June 30, 2016, the Company issued 1,430,000 shares of common stock as consideration for debt issuance costs. The fair value of the shares, totaling $169,125, was estimated based on publicly quoted trading prices and recorded as debt issuance costs to be amortized into interest expense over the terms of the respective debt agreements.

During the six months ended June 30, 2016, the Company issued 1,033,337 shares of common stock to investors in connection with the April 2016 Convertible notes (see Notes 7) of which $54,470 of the proceeds from the issuance of convertible notes was attributed to the common stock based on their relative fair value to that of the notes and recorded as a debt discount to be amortized into interest expense over the terms of the respective debt agreements.

During the six months ended June 30, 2016, the Company issued 22,500,000 shares of common stock as consideration for the acquisition of FIN. See Note 2.

Warrants

During the six months ended June 30, 2016, in connection with the issuance of debt, the Company issued warrants to acquire 6,408,332 shares of common stock over five-year terms. Warrants to acquire 208,332, and 6,200,000 shares of common stock are exercisable for an exercise price of $0.48 per share and $0.25 per share, respectively.

During the six months ended June 30, 2016, the Company issued warrants to acquire 258,621 shares as partial consideration for the purchase of inventory. The warrants are exercisable at $0.58 per share over a five-year term. The fair value of the warrants, totaling $79,081 and was estimated using the Black Scholes method and the following assumptions: volatility – 81%, Term – 5 Yeas, and Risk Free Rate – 1.57%, The warrants qualified for equity accounting.

15

The following is a summary of the Company’s warrant activity for the six months ended June 30, 2016:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at December 31, 2015		35,171,744	$	0.10	4.1 Years
Granted		6,666,953	$	0.27	4.8 Years
Outstanding at June 30, 2016		41,838,697	$	0.13	4.2 Years

Stock Options

During the six months ended June 30, 2016, the Company granted to employees, options to acquire 3,000,000 shares of common stock, of which 1,000,000 are exercisable at an exercise price of $0.45 per share vesting over two years, 1,000,000 are exercisable at an exercise price of $0.40 per share vesting on the date of grant, 500,000 are exercisable at an exercise price of $0.25 per share with 100,000 exercisable immediately and the balance vesting over two years, and 500,000 are exercisable at an exercise price of $0.10 per share vesting over two years. The options have a 5 year term. The Company determined the grant date fair value of the options granted during the six months ended June 30, 2016 using the Black Scholes Method and the following assumptions:

Expected Volatility – 80.0% to 93.0%

Expected Term – 2.5 – 3.1 Years

Risk Free Rate – 0.98%

Dividend Rate – 0.00%

Activity related to stock options for the six months ended June 30, 2016 is summarized as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Contractual Term (Yrs)		Aggregate Intrinsic Value
Outstanding as of December 31, 2015		47,800,000	$	0.32		4.24	$	924,650
Granted		3,000,000	$	0.34		5.41	$	25,000
Outstanding as of June 30, 2016		50,800,000	$	0.32		4.31	$	949,650
Exercisable as of June 30, 2016		40,016,667	$	0.37		4.27	$	493,575

The following table summarizes stock option information as of June 30, 2016:

Exercise Prices		Outstanding		Weighted Average Contractual Life	Exercisable
$	0.0001		3,500,000	4.25 Years		1,750,000
$	0.10		8,500,000	4.22 Years		4,625,000
$	0.15		6,300,000	4.25 Years		2,416,666
$	0.25		500,000	9.76 Years		100,000
$	0.40		1,000,000	4.67 Years		1,000,000
$	0.45		31,000,000	4.25 Years		30,125,000
	Total		50,800,000	4.31 Years		40,016,667

As discussed in Note 13, the term of all the options was extended to ten years in August 2016 from their original grant date and therefore the remaining contractual term in the table above would all increase to 9.25 years.

16

During the six months ended June 30, 2016, the Company recognized approximately $6,152,000 of stock-based compensation expense. As of June 30, 2016, there was approximately $2,357,000 of unrecognized compensation costs related to stock options outstanding which is expected to be recognized through 2019.

NOTE 11 – DIRECT FINANCING LEASE

In September 2015, 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 began in May 2016, when the kiosks were installed and operational. The term of the rental contract is ten years at an approximate monthly rate of $11,856. 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 economic life of the kiosks. 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 the investment in the lease and record income associated with the related amount due. Executory costs are estimated to be $1,677 per month and initial direct costs are not considered significant. The transaction resulted in incremental revenue for the three and six months ended June 30, 2016 of approximately $13,000.

The equipment subject to the direct financing lease is valued at approximately $748,000. At inception of the lease term, the aggregate minimum future lease payments to be received is approximately $1,423,000 before executory costs. Unearned income recorded at the inception of this lease was approximately $474,000 and will be recorded over the term of the lease using the effective interest rate method. Future minimum lease payments to be received under this lease for the next five years and thereafter are as follows:

Year Ending December 31,
2016	$	61,074
2017		122,148
2018		122,148
2019		122,148
2020		122,148
2021		122,148
Thereafter		529,308
		1,201,122
Less deferred income		(460,221	)
Net investment in lease	$	740,901

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Contingent Purchase Consideration

The Company has recorded a contingent liability of approximately $370,000 related to the acquisition of Multipay because of the contingency of the shares to be issued and debt to be released upon the payment of certain liabilities by the Multipay Shareholders.

Legal Matters

From time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods. The Company is not presently a party to any pending or threatened legal proceedings. 

NOTE 13 – SUBSEQUENT EVENTS

From August 10, 2016 through August 26, 2016, the Company entered into and closed Subscription Agreements with several accredited investors (the "August 2016 Accredited Investors") pursuant to which the August 2016 Accredited Investors purchased an aggregate of 25,000,000 shares of the Company's common stock (the "2016 Subscription Shares") for an aggregate purchase price of $1,250,000. In order to reduce the dilution to the other shareholders as a result of this private offering, certain shareholders of the Company including the Chief Executive Officer, directors and others agreed to return to the Company an aggregate of approximately 10,000,000 shares of common stock for cancellation. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of $100,000 and issued 2,000,000 shares of common stock of the Company (See Note 9).

On August 10, 2016, the Company issued to several of its employees and consultants stock options (the "Plan Options") under its Equity Compensation Plan to acquire an aggregate of 17,000,000 shares of common stock of the Company exercisable at $0.05 per share. The Plan Options contain vesting periods over 12 quarters commencing on October 1, 2016 as well as various vesting milestones. The Plan Options are exercisable for a period of ten years. Further, the Company amended existing stock options to acquire 50,800,000 shares of common stock under its Equity Compensation Plan to extend the term from five years to 10 years.

On August 10, 2016, the Company entered into an amended agreement (the "Amendment") with Parity Labs, LLC ("Parity") to amend the compensation section of an existing Advisory Agreement previously entered into between the Company and Parity on November 16, 2015 for the provision of strategic advisory services. The Amendment calls for the Company to issue to Parity the option (the "Parity Option") to acquire 20,000,000 shares of common stock of the Company, exercisable at $0.05 per share for a period of ten years. The Parity Option vests as to 10,000,000 options immediately and then in 12 equal tranches of 833,333 options per month commencing on September 1, 2016. The Parity option vested in entirety upon Mr. Beck becoming CEO of Ipsidy in January 2017. Mr. Beck is the manager of Parity Labs.

Form December 1, 2016 through December 27, 2016, the Company entered into and closed Securities Purchase Agreements with several accredited investors (the "December 2016 Accredited Investors") pursuant to which the December 2016 Accredited Investors invested an aggregate of $1,275,000 (the "Offering") into the Company in consideration of Promissory Notes (the "Notes") and an aggregate of 1,912,500 shares of common stock. The Notes are payable one year from the date of issuance and bear interest of 10% per annum for the initial six months of the term of the Notes and 15% per annum for the remaining six months of the term of the Notes. The Notes could be prepaid in whole or in part by the Company at any time without penalty; provided, that any partial payment of principal must be accompanied by payment of accrued interest to the date of prepayment. Any payment made to the December 2016 Accredited Investors which is not a full payment of all principal and interest on all of the Notes will be made pro rata to the December 2016 Accredited Investors based on the respective principal amounts of the Notes. The Notes were converted into shares of common stock on January 31, 2017 as more fully described below.

17

On December 30, 2016, ID Global LATAM S.A.S. (“IDG LATAM”), a wholly owned subsidiary of the Company, entered into a Contract for the Provision of Cash Collection Services (the "Contract") with Recaudo Bogota S.A.S. ("RB"), a Colombian company, pursuant to which the Company agreed to supply, maintain and provide platform services for 740 unattended payment collection and fare ticketing kiosks, in consideration of approximately $30 million dollars (excluding VAT) payable over the ten year period of the Contract. Pursuant to the contract IDG LATAM is required to obtain a performance bond from a financial institution in the amount of $6 million dollars.  In addition, IDG LATAM will need to obtain financing for the cost of the equipment to be supplied but has not as of the date hereof entered into a definitive agreement for such financing nor has the required performance bond been obtained. The parties are currently re-negotiating the terms of the Contract including a potential phased delivery and a reduction in the number of kiosks. If the negotiation is formalized in a definitive agreement, this would potentially result in a reduction in the consideration paid over the then year period of the Contract and reduce the required performance bond.

On January 31, 2017, the Company converted the outstanding debt and accrued interest amount of approximately $6.3 million into approximately 84.8 million shares of common stock, $.0001 par value per share (“Common Stock’), at a conversion price of $0.10 per share unless the debt conversion price was initially priced at less than the $0.10 per share.  Additionally, the exercise price of approximately 11.7 million warrants to acquire shares of Common Stock were reduced to $.10 per share and certain price protection and anti-dilution provisions were removed. See Notes 6 and 7 related to the Company’s convertible debt and outstanding notes payable.

On January 31, 2017, the Company entered into and closed a Securities Purchase Agreement with an accredited investor pursuant to which the Company borrowed $3,000,000 into the Company in consideration of a Senior Unsecured Note and an aggregate of 4,500,000 shares of Common Stock.  The Senior Unsecured Note matures in January 2019 and bears interest at a rate of 10%. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of $120,000 and issued 1,020,000 shares of common stock of the Company.

On January 31, 2017, the Company engaged Philip D. Beck as Chief Executive Officer, President and Chairman of the Board of Directors and Stuart P. Stoller as Chief Financial Officer. In addition, Andras Vago, David Jones and Charles Albanese resigned as directors of the Company and Mr. Albanese also resigned as Chief Financial Officer. Thomas Szoke resigned as Chief Executive Officer and was engaged as Chief Technology Officer.  Douglas Solomon resigned as Chief Operating Officer and was engaged as Executive Director, Government Relations and Enterprise Security. Mr. Szoke and Mr. Solomon continue to serve us directors.

In connection with the engagement of Philip D. Beck and Stuart P. Stoller, the Company granted Mr. Beck and Mr. Stoller, stock options to acquire 15 million shares and 5 million shares of common stock of the Company, respectively, at an exercise price of $0.10 per share for a period of ten years. Further, upon the Company being legally entitled to do so, the Company has agreed to enter into Restricted Stock Purchase Agreements with Mr. Beck and Mr. Stoller to sell 15 million shares and 5 million shares of common stock, respectively, at a per share price of $0.0001, which shares of common stock vest upon achieving a performance threshold.

Effective February 1, 2017, the Company amended its certificate of incorporation to change its legal name to “Ipsidy Inc.” from ID Global Solutions Corporation. The name change was effected pursuant to Section 242 of the Delaware Corporation Law (the “DGCL”). Under the DGCL, the amendment to the Company’s certificate of incorporation to effect the name change did not require stockholder approval. The name change does not affect the rights of the Company’s security holders. There were no other changes to the Company’s incorporation in connection with the name change.

On March 22, 2017, the Company entered into Subscription Agreements with several accredited investors (the "March 2017 Accredited Investors") pursuant to which the March 2017 Accredited Investors agreed to purchase an aggregate of 20,000,000 shares of the Company’s common stock for an aggregate purchase price of $4,000,000. The Company has received proceeds of $3,170,000 as of March 22, 2017. An individual March 2017 Accredited Investor has agreed to fund $830,000 by April 30, 2017. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc. (“Network”), a registered broker-dealer, a cash fee of $240,000 and agreed to issue Network 1,000,000 shares of common stock of the Company upon increasing its authorized shares of common stock.

18

NOTE 14 – RESTATEMENT FOR THE THREE AND SIX-MONTHS ENDED JUNE 30, 2015

During the preparation of its consolidated financial statements for the year ended December 31, 2015, the Company determined that for the three and six-months ended June 30, 2015 it had previously (1) used incorrect valuations for the fair value of intangible assets acquired; (2) capitalized internal use software, which should have been expensed in accordance with US GAAP; (3) used incorrect valuations for derivative liabilities; (4) used incorrect valuations for stock options issued for compensation; (5) recorded certain costs related to the issuance of its convertible and other notes payable incorrectly as general and administrative expenses; and (6) classified certain expenses and named certain accounts incorrectly. The Company has adjusted those intangible assets, derivative liabilities and compensation related to stock options using correct valuations. In addition and in accordance with US GAAP, the Company has now capitalized the costs related to the issuance of its convertible and other notes payable as debt issuance costs as a reduction of the debt principal and expensed the previously capitalized internal use software costs. The following summarizes the adjustments made to the Company’s previously reported amounts for the three and six months June 30, 2015.

Condensed Consolidated Statements of Operations:

	Three Months Ended June 30, 2015
	As Reported			Reclassifications			As Reclassified			Adjustments			As Restated
Revenue	$	11,046		$	-		$	11,046		$	-		$	11,046
Operating Expenses:
Depreciation and amortization		11,469			-			11,469	(1)		32,549			44,018
Research and development		853			-			853			-			853
General and administrative		570,622			(67,918	)		502,704	(4),(5)		(46,344	)		456,360
Total operating expenses		582,944			(67,918	)		515,026			(13,795	)		501,231
Loss from operations		(571,898	)		67,918			(503,980	)		13,795			(490,185	)
Derivative expense		(3,680,374	)		-			(3,680,374	)(3)		815,021			(2,865,353	)
Interest expense		(11,741	)		(67,918	)		(79,659	)(3)		45,685			(33,974	)
Translation loss		(26,259	)		-			(26,259	)		-			(26,259	)
Net loss	$	(4,290,272	)	$	-		$	(4,290,272	)	$	874,501		$	(3,415,771	)
Net loss per share: Basic and Diluted	$	(0.03	)	$	-		$	(0.03	)	$	0.01		$	(0.02	)

	Six Months Ended June 30, 2015
	As Reported			Reclassifications			As Reclassified			Adjustments			As Restated
Revenue	$	11,046		$	-		$	11,046		$	-		$	11,046
Operating Expenses:
Depreciation and amortization		22,740			-			22,740	(1)		32,549			55,289
Research and development		24,853			-			24,853	(2)		200,000			224,853
General and administrative		1,043,459			(67,918	)		975,541	(4),(5)		(46,344	)		929,197
Total operating expenses		1,091,052			(67,918	)		1,023,134			186,205			1,209,339
Loss from operations		(1,080,006	)		67,918			(1,012,088	)		(186,205	)		(1,198,293	)
Derivative expense		(3,680,374	)		-			(3,680,374	)(3)		815,021			(2,865,353	)
Interest expense		(13,496	)		(67,918	)		(81,414	)(3)		45,685			(35,729	)
Translation loss		(26,259	)		-			(26,259	)		-			(26,259	)
Net loss	$	(4,800,135	)	$	-		$	(4,800,135	)	$	674,501		$	(4,125,634	)
Net loss per share: Basic and Diluted	$	(0.03	)	$	-		$	(0.03	)	$	0.01		$	(0.02	)

(1) Fair Value of Intangible Assets In Connection with Business Acquisition. During the three months ended June 30, 2015, the Company accounted for the acquisition of Multipay as a business combination using the acquisition method of accounting utilizing an incorrect valuation. The adjustment to reflect the correct valuation, including the purchase price allocation of assets acquired, resulted in an increase of $166,689 to Goodwill, $200,986 to Intangible Assets (net of $32,549 additional amortization) and $370,125 to Contingent Purchase Consideration as of June 30, 2015. In addition, certain previously reported contingent assets and liabilities of $149,848 were eliminated.

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(2) Intangible Assets—Capitalized Software. The Company determined that previously capitalized software should have been expensed in accordance with US GAAP. Accordingly, a reduction of $200,000 to Intangible Assets and an increase to Research and Development Expenses is made as of and for the six months ended June 30, 2015.

(3) Derivative Liability. The fair value of the derivative liabilities related to convertible and other notes payable have now been estimated based on the Monte Carlo Simulation Model because it considers the effect of the down round feature (probability of a triggering capital raise) along with the other assumptions associated with the Black-Scholes option pricing model. The previously used methodology by the Company incorrectly did not take into consideration the probability of a financing at a price that would trigger the instruments down round provision. The adjusted fair value of the Company’s derivatives associated with its Convertible and other Notes Payable resulted in a decrease of $907,123 to the Derivative Liability as of June 30, 2015. For the three and six months ended June 30, 2015, the Company’s derivative expense is reduced by $815,021. In addition, the finalized fair value analysis of the Company’s derivatives associated with its Convertible and other Notes Payable required a reduction to the previously recorded Debt Discount and interest expense by $45,685 for the three and six months ended June 30, 2015.

(4) Stock-Based Compensation. The adjusted fair value of the Company’s stock-based compensation resulted in an increase to general and administrative expenses of $13,656 for the three and six months ended June 30, 2015.

(5) Debt Issuance Costs. The capitalization of debt issuance costs as a reduction of the debt principal resulted in a reduction to convertible notes payable of $60,000 and a corresponding decrease to general and administrative for the three and six months ended June 30, 2015. The decrease to General and Administrative expenses, after considering the increase of $13,656 related to stock-based compensation in (4) above and the capitalization of debt issuance costs of $60,000 is $46,344 for the three and six months ended June 30, 2015.

(6) Reclassifications. During the preparation of its consolidated financial statements for the year ended December 31, 2015, the Company changed or renamed the classification/description of certain accounts and related amounts. Accordingly, certain of the previously stated classifications/descriptions and related amounts required adjustment for the three and six months ended June 30, 2015. The reclassifications and description changes relate to General and Administrative and Interest expenses associated with the recording of the Debt Discount amortization.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Ipsidy Inc., together with its subsidiaries (the “Company”, “we” or “our”), is a provider of secure, biometric identification, identity management and electronic transaction processing services. Founded to pioneer innovative digital identification solutions, the Company is focused on addressing the growing need for highly secure and convenient methods for identity management during a variety of electronic transactions. The Company provides its biometric identification services to government and public sector organizations, seeking to verify and manage identities for a variety of security purposes, including issuing identity cards and exercise of rights such as voting in elections. With the acquisition of MultiPay S.A., or MultiPay, the Company acquired a transaction processing platform that offers secure multifunctional payment gateway services to merchants and financial institutions. With the development of the OnePay^TM electronic payment solution the Company believes it will be able to combine its core technologies and use its platform to power a solution that will provide cost effective and secure means of financial inclusion for the un-banked and under banked population around the globe.

With the acquisition of FIN, the Company acquired a proven cutting-edge biometric fingerprint software technology and algorithms, as well as Cards Plus Pty, a South African company which provides unique secure credit products and solutions to government customers in Africa. The acquisitions enhances the Company’s Transaction Security and Financial Inclusion platforms with highly accurate, fully integrated biometric fingerprint verification and backend matching capabilities in addition to Cards Plus portfolio of physical card and card personalization solutions which allow for delivery to its customers a complete solution for identity programs and financial payment systems.

The Company is continuing to develop secure biometric identity management and electronic transaction solutions for international and domestic government, enterprise, and consumer markets. The Company’s products focus on two distinct yet complementary requirements, for which the Company believes there is significant market demand. One is the broad requirement for identity, access and transaction verification and associated identity management needs. The other is for providing cost effective and secure methods of conversion of cash and paper to electronic payments for the un-banked and under banked population, to enable them to participate in the digital economy there by facilitating financial inclusion. The Company has invested in developing, patenting and acquiring both hardware and software platforms, which are intended to address these specific market requirements.  

Management believes that one of the advantages of the Company’s platform approach is the ability to leverage the platform to support a variety of vertical markets in both the identity management and payment processing sectors and could be easily adapted to new markets requiring low cost, secure, and configurable solutions.  These vertical markets include but are not limited to border security, public safety, enterprise security, payment transactions and banking. The Company’s recent launch of unattended kiosks providing electronic ticketing for public transportation in Colombia, is a further example of the innovative solutions that the Company can offer. In addition, if the OnePay, closed loop, electronic payment service is successfully launched, the Company believes that it can be a cost effective solution for providing the un-banked access to secure electronic payment solutions. In this way the Company believes that the various technologies that the Company is developing and has acquired can be combined into a single offering, which at its core can facilitate the processing of electronic transactions, be they payments, votes, or identity verification.

The Company has solutions for fingerprint based identity management and electronic transaction processing in the market today. However, it is still in the process of integrating the technologies, which it has developed with those acquired via MultiPay and transactions completed in the last year and expanding these solutions to be able to better service our target markets. In order to achieve this integration and development, the Company needs to raise substantial additional capital. 

The Company was incorporated in the State of Delaware on September 21, 2011, and our common stock is traded on the OTC Markets under the trading symbol “IDGS”. Our corporate headquarters is located at 780 Long Beach Boulevard, Long Beach, New York 11561 and our main phone number is (407) 951-8640.

Going concern

As of June 30, 2016, the Company has a working capital and accumulated deficit of approximately $12.0 million and $32.2 million, respectively. The working capital deficit includes the convertible debt and notes payable, net as well as the derivative liability of approximately $7.7 million. For the six months ended June 30, 2016 the Company earned revenue of approximately $811,000 and had an operating loss of $8.5 million.

The reports of our independent registered public accounting firms on our consolidated financial statements for the years ended December 31, 2015 and 2014 contained an explanatory paragraph regarding uncertainty in our ability to continue as a going concern based upon our net losses.

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These condensed 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 year from the date of issuance of the condensed consolidated financial statements. 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, none of which can be assured.

There is no assurance that the Company will ever be profitable. These condensed 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.

Three and Six Month Periods Ended June 30, 2016 and June 30, 2015

Revenues, net

During the three-month and six months ended June 30, 2016, the Company had approximately $490,000 and $811,000 of revenue of which Cardsplus was $273,000 and $470,000, ID solutions were $125,000 and $201,000, and the Colombian operations was $91,000 and $139,000 for the three and six months ended June 30, 2016, respectively. The Company had revenue of $11,000 for the three and six months ended June 30, 2015. The Company began leasing Kiosks in the second quarter of 2016 and recorded lease income of approximately $13,000.

Cost of sales

During the three and six months ended June 30, 2016, cost of sales were higher than the cost of sales in the three month and six months ended June 30, 2015 due to the incremental revenue. Cost of sales is principally attributable to the Cards Plus business acquired as part of FIN. The revenue increases were principally related to the acquisition of Multipay in 2015 and FIN in 2016.

Operating Expenses

During the three and six month period ended June 30, 2016 compared to the similar period ended June 30, 2015, general and administrative expense increased approximately $3.7 million and $7.6 million dollars, respectively, due in part to higher compensation expense as staff was added in the three and six months ended June 30, 2016 to support the current and future operations, and certain executives did not draw a salary for a portion of the three and six months ended June 30, 2015.

During the three and six months ended June 30, 2016, the Company recorded approximately $2.9 million and $6.1 million, respectively, for stock option compensation expense. During the three and six months ended June 30, 2015, the Company recorded $21,000 of stock compensation expense due to options being granted in latter part of the second quarter in 2015.

Depreciation and amortization expense increased in the quarter and six months ended June 30, 2016 compared to similar periods in June 30, 2015 as a result of the acquisitions of FIN and Multipay.

During the second quarter and six months ended June 30, 2016, the Company wrote-off an asset for product testing that was no longer viable. The asset cost approximately $226,000.

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Other Income (Expense)

Derivative Liability

During 2015, the Company recorded an expense of approximately $2.9 million for three and six months ended June 30, 2015 for the fair value of the derivative liability associated with potential adjustments in the conversion price associated with certain convertible debentures and warrants that were used to finance the business. As a result of the valuation of these derivatives in 2016, the Company experienced a reduction in derivative liability and recorded a benefit of approximately $4.7 million and $17.7 million, respectively, in the three and six months ended June 30, 2016. The decline in the derivative liability is primarily associated with the Company's lower stock price.

Interest expense

Interest expense increased in the three and six months ended June 30, 2016 compared to the three and six months ended June 30, 2016 due to higher levels of debt outstanding.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. As of June 30, 2016, the Company had approximately $0.7 million and $12.7 million of current assets and current liabilities, respectively. Cumulative to date the Company has an accumulated deficit of approximately $32.2 million.

Cash used in operating activities was approximately $2.0 million and $.7 million during the six months ended June 30, 2016 and 2015, respectively.

The Company raised $1,650,000 of additional financing in the first six months of 2016 and issued common stock to conserve cash to fund operations.

As of June 30, 2016 and the date of this report, we expect our current cash position will not be sufficient to support ongoing expenditures related to developing the technology and services we will offer. The success of our business plan is contingent upon us obtaining additional financing.

We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. Our current investors and interested parties have provided financing to support the business. See subsequent events in the June 30, 2016 condensed consolidated financial statements.

We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time other than the amounts detailed in the subsequent events in our June 30, 2016 condensed consolidated financial statements. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all. Our failure to obtain financing would have a material adverse effect on our ability to execute our business plan.

Subsequent events

On January 31, 2017, the Company converted the outstanding debt and accrued interest amount of approximately $6.3 million into approximately 84.8 million shares of common stock, $.0001 par value per share (“Common Stock’), at a conversion price of $0.10 per share unless such shares were initially priced at less than the $0.10 per share.  Additionally, the exercise price of approximately 11.7 million warrants to acquire shares of Common Stock were reduced to $.10 per share and certain price protection and anti-dilution provisions were removed. See Notes 6 and 7 to our condensed consolidated financial statements related to the Company’s convertible debt and outstanding note payable.

Additionally, on January 31, 2017, the Company entered into and closed a Securities Purchase Agreement with an accredited investor pursuant to which the Company borrowed $3,000,000 into the Company in consideration of a Senior Unsecured Note and an aggregate of 4,500,000 shares of Common Stock.  The Senior Unsecured Note matures in January 2019 and bears interest at a rate of 10%.

Furthermore on March 22, 2017, Ipsidy Inc. (the “Company”) entered into Subscription Agreements with several accredited investors (the "March 2017 Accredited Investors") pursuant to which the March 2017 Accredited Investors agreed to purchase an aggregate of 20,000,000 shares of the Company’s common stock for an aggregate purchase price of $4,000,000. The Company has received proceeds of $3,170,000 as of March 22, 2017. An individual March 2017 Accredited Investor has agreed to fund $830,000 by April 30, 2017.

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The combination of the above events effectively refinanced the Company’s financial position in the first quarter of 2017 and provided near-term financing requirements. The Company anticipates additional financing will be required beyond the current actions and the amounts will be dependent on current operations and investments the Company may pursure.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management to be material to investors.

Recent Accounting Policies

The recent material accounting policies that may be the most critical to understanding of the financial results and conditions are discussed in Note 2 of our audited financial statements included in our annual report on form 10K for the year ended December 31, 2015.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, we are not required to include disclosure under this item.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Pursuant to Rules 13a-15(b) and 15-d-15(b) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s former Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures”, as defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based upon the evaluation of the disclosure controls and procedures at the end of the period covered by this report, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as a result of continuing weaknesses in its internal control over financial reporting initially identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 which are as follows:

- The Company has not established adequate financial reporting monitoring activities to mitigate the risk of management override, specifically because there are few employees and only two officers with management functions and therefore there is lack of segregation of duties.

- There is a strong reliance on outside consultants to review and adjust the annual and quarterly financial statements, to monitor new accounting principles, and to ensure compliance with GAAP and SEC disclosure requirements.

- There is a strong reliance on the external attorneys to review and edit the annual and quarterly filings and to ensure compliance with SEC disclosure requirements.

- A formal audit committee has not been formed.

In order to address the above material weaknesses, Philip D. Beck, the Chief Executive Officer and President of the Company, and Stuart P. Stoller, the Chief Financial Officer of the Company, which were appointed to such offices on January 31, 2017, a date subsequent to the relevant filing period disclosed herein, have initiated the following actions to remediate the material weaknesses:

- In addition to the engagement of Mr. Beck and Mr. Stoller, who are both experienced public company executives, the Company is evaluating its personnel resources and is considering engaging additional permanent skilled finance and accounting resources.

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- The Company has engaged independent consultants to assist with certain areas of the reconciliation and accounting functions and may continue such engagement or hire additional consultants as needed.

- The Company will seek to enhance its control environment to promote the adherence to appropriate internal control policies and procedures. These efforts will be focused on assessing the capabilities of the financial staff, reviewing systems and ensuring appropriate levels of analytical reviews among other appropriate steps.

- The Company has and is continuing to reassess and revise key policies and procedures, including the general ledger, general ledger reconciliation, capital expenditure and accounts payable, to develop and deploy effective policies and procedures and reinforced compliance in an effort to constantly improve the Company’s internal control environment.

- The Company intends to enhance its internal governance and compliance function. The Company intends to form appropriate committees and periodic and regular meetings will be held with the internal governance and compliance functions to discuss and coordinate operational, compliance and financial matters as well as the progress of the Company’s plan to remediate its material weaknesses.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2016 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II 

ITEM 1. LEGAL PROCEEDINGS

We are currently not a party to any material legal or administrative proceedings and are not aware of any pending or threatened material legal or administrative proceedings arising in the ordinary course of business.  We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.

ITEM 1A. RISK FACTORS

Risk factors describing the major risks to our business can be found under Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2015. There has been no material change in our risk factors from those previously discussed in the Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 19, 2016, the Company entered into and closed Securities Purchase Agreements with several accredited investors (the "April 2016 Accredited Investors") pursuant to which the April 2016 Accredited Investors invested an aggregate of $1,550,000 into the Company in consideration of Secured Convertible Debentures and common stock purchase warrants to acquire an aggregate of 6,200,000 shares of common stock exercisable for a period of five years at an exercise price of $0.25 subject to antidilution protection. However, the exercise price shall be adjusted to equal the conversion price or the per share purchase price of Company's next offering in the minimum amount of $5,000,000 if such price is less than $0.25 (the "Adjustment Price") and the number of shares of common stock issuable upon exercise of the warrants shall be adjusted to equal the consideration paid by the April 2016 Accredited Investors by the Adjustment Price. The Secured Convertible Debentures bear interest of 12% and are payable on the six (6) month anniversary of the Secured Convertible Debentures. The Secured Convertible Debentures are convertible into shares of common stock at $0.25 per share subject to antidilution protection. The conversion price shall be adjusted to equal the Adjustment Price less a 20% discount if such Adjustment Price is less than $0.25 per share. The Secured Convertible Debentures are secured by 18,235,295 issued and outstanding shares of common stock of the Company held by certain shareholders of the Company (the "Pledgors") pursuant to stock pledge agreements entered into between the April 2016 Accredited Investors and the Pledgors. Each of the April 2016 Accredited Investors have individually agreed to restrict their ability to convert the Secured Convertible Debentures or exercise their Common Stock Purchase Warrants and receive shares of common stock such that the number of shares of common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.

The above offers and sales of the securities were made to accredited investors and the Company relied upon the exemptions contained in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D promulgated there under with regards to the sales. No advertising or general solicitation was employed in offerings the securities. The offers and sales were made to accredited investors and transfer of the securities was restricted by the Company in accordance with the requirements of the Securities Act of 1933.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable to our operations. 

ITEM 5. OTHER INFORMATION

We have missed a number of deadlines for filing of financial statements for certain acquisitions as well as our annual report for December 31, 2015 and our quarterly reports for March 31, 2016, June 30, 2016 and September 30, 2016. As of the date hereof and inclusive of this report, we have filed the financial statements for the acquisitions and our quarterly reports for March 31, 2016 and June 30, 2016. The SEC has advised that it of the Company does not become current in it filings under the Securities and Exchange Act of 1934 (the “1934 Act”), the Company may be subject, without further notice, to an administrative proceedings by the Division of Enforcement under Section 12(j) of the 1934 Act to revoke its registration under the 1934 Act and potentially suspend its trading under Section 12(k) of the 1934 Act.

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ITEM 6. EXHIBITS

2.1	(2)	Agreement and Plan of Reorganization
3.1	(1)	Certificate of Incorporation
3.2	(1)	By-laws
3.3	(7)	Certificate of Ownership and Merger
4.1	(13)	Stock Option dated May 28, 2015 issued to Ricky Solomon
4.2	(14)	Stock Option dated May 28, 2015 issued to Charles D. Albanese
4.3	(17)	Form of Securities Purchase Agreement by and between ID Global Solutions Corporation and the June 2015 Investors
4.4	(18)	Form of Security Agreement by and between ID Global Solutions Corporation and the June 2015 Investors
4.5	(19)	Form of Secured Convertible Debenture issued to the June 2015 Investors
4.6	(20)	Form of Common Stock Purchase Warrant issued to the June 2015 Investors
4.7	(21)	Securities Purchase Agreement by and between ID Global Solutions Corporation and Ricky Solomon
4.8	(22)	Security Agreement by and between ID Global Solutions Corporation and Ricky Solomon
4.9	(23)	Secured 10% Secured Promissory Note issued to Ricky Solomon
4.10	(24)	Common Stock Purchase Warrant issued to Ricky Solomon
4.11	(25)	Form of Securities Purchase Agreement by and between ID Global Solutions Corporation and the 2015 Accredited Investors
4.12	(26)	Form of Security Agreement by and between ID Global Solutions Corporation and the 2015 Accredited Investors
4.13	(27)	Form of Secured 12% Secured Promissory Note issued to the 2015 Accredited Investors
4.14	(28)	Form of Common Stock Purchase Warrant issued to the 2015 Accredited Investors
4.15	(29)	Stock Option dated September 25, 2015 issued to Herbert M. Seltzer
4.16	(30)	Letter Agreement by and between ID Global Solutions Corporation and ID Solutions Inc.
4.17	(31)	Secured 12% Convertible Promissory Note issued to ID Solutions Inc.
4.18	(32)	Common Stock Purchase Warrant issued to ID Solutions Inc.
4.19	(33)	Stock Option issued to Thomas Szoke dated September 25, 2015
4.20	(34)	Stock Option issued to Douglas Solomon dated September 25, 2015
4.21	(35)	Stock Option issued to Maksim Umarov dated September 25, 2015
4.22	(43)	Form of Securities Purchase Agreement by and between ID Global Solutions Corporation and the 2015 Accredited Investors
4.23	(44)	Form of Stock Pledge Agreement by and between ID Global Solutions Corporation and the 2015 Accredited Investors
4.24	(45)	Form of 12% Promissory Note issued to the 2015 Accredited Investors
4.25	(46)	Form of Common Stock Purchase Warrant issued to the 2015 Accredited Investors
4.26	(49)	Form of Securities Purchase Agreement by and between ID Global Solutions Corporation and the April 2016 Accredited Investors
4.27	(50)	Form of Stock Pledge Agreement by and between the Affiliates and the April 2016 Accredited Investors
4.28	(51)	Form of Secured Convertible Debenture issued to the April 2016 Accredited Investors
4.29	(52)	Form of Common Stock Purchase Warrant issued to the April 2016 Accredited Investors
4.30	(53)	Form of Securities Purchase Agreement by and between ID Global Solutions Corporation and the December 2016 Accredited Investors
4.31	(54)	Form of Promissory Note issued to the December 2016 Accredited Investors
4.32	(56)	Form of Subscription Agreement by and between ID Global Solutions Corporation and the August 2016 Accredited Investors
4.33	(56)	Form of Letter Agreement entered with the April 2016 Accredited Investors
4.34	(56)	Stock Option issued to Parity Labs, LLC
4.35	(57)	Stock Option Agreement entered between the Company and Stuart P. Stoller dated January 31, 2017
4.36	(58)	Securities Purchase Agreement entered between the Company and the Theodore Stern Revocable Trust dated January 31, 2017
4.37	(58)	Promissory Note in the principal amount of $3,000,000 payable to the Theodore Stern Revocable Trust
4.38	(58)	Stock Option Agreement entered between the Company and Philip D. Beck dated January 31 2017
4.39	(59)	Form of Subscription Agreement by and between Ipsidy Inc. and the March 2017 Accredited Investors
10.1	(3)	Assignment of Patents
10.2	(3)	Assignment of Patents
10.3	(3)	Assignment of Patents
10.4	(3)	Employment Agreement of David Jones
10.5	(3)	Employment Agreement of Douglas Solomon
10.6	(3)	Employment Agreement of Thomas Szoke
10.7	(3)	Promissory Note
10.8	(3)	Flextronics Manufacturing Services Agreement
10.9	(4)	Agreement with Tiber Creek Corporation
10.10	(4)	Adjusted Compensation Agreement David S. Jones through September 30, 2013
10.11	(4)	Adjusted Compensation Agreement David S. Jones from October 1, 2013
10.12	(5)	Agreement extending due date of $600,000 Penn Investments Note
10.13	(5)	Agreement extending due date of $310,000 Penn Investments Note
10.14	(5)	Promissory Note for $20,000 payable to Penn Investments
10.15	(5)	Promissory Note for $180,000 payable to Penn Investments

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10.16	(6)	Note Conversion Agreement dated September 24, 2014 by and between ID Global Corporation and Penn Investments, Inc.
10.17	(8)	Promissory Note in the principal amount of $17,000 dated August 7, 2014 from Thomas Szoke
10.18	(8)	Promissory Note in the principal amount of $17,000 dated August 28, 2014 from Thomas Szoke
10.19	(9)	The ID Global Solutions Corporation Equity Compensation Plan
10.20	(10)	Real Estate Purchase Agreement dated December 12, 2014 by and between ID Global Solutions Corporation and Megan DeVault and Jeffrey DeLeon
10.21	(10)	Commercial Lease Agreement dated December 19, 2014 by and between ID Global Solutions Corporation and DeLeon-Costa Investments, LLC
10.22	(11)	Share Purchase Agreement by and between ID Global Solutions Corporation and the Multipay S.A. Shareholders
10.23	(12)	Form of Share Purchase Agreement by and between ID GLobal Solutions Corporation and the Multipay S.A. Shareholders
10.24	(15)	Director Agreement by and between ID Global Solutions Corporation and Ricky Solomon dated May 28, 2015
10.25	(16)	Executive Employment Agreement by and between ID Global Solutions Corporation and Charles D. Albanese dated May 28, 2015
10.26	(25)	Rental Contract with Purchase Option by and between ID Global Solutions Corporation and Basetek S.A.S., a Colombian company, dated September 15, 2015
10.27	(36)	Director Agreement by and between ID Global Solutions Corporation and Herbert M. Seltzer dated September 25, 2015
10.28	(37)	Director Agreement by and between ID Global Solutions Corporation and Charles Albanese dated September 25, 2015
10.29	(38)	Employment Agreement between ID Global Solutions Corporation and Maksim Umarov dated July 1, 2015
10.30	(39)	Letter Agreement entered between ID Global Solutions Corporation and Maksim Umarov dated September 25, 2015
10.31	(40)	Letter Agreement entered between ID Global Solutions Corporation and Douglas Solomon dated September 25, 2015
10.32	(41)	Letter Agreement entered between ID Global Solutions Corporation and Thomas Szoke dated September 25, 2015
10.33	(48)	Share Exchange Agreement by and between ID Global Solutions Corporation, Fin Holdings, Inc. and the Fin Holdings, Inc. shareholders
10.34	(55)	Contract for the Provision of Cash Collection Services entered into by and between ID Global LATAM S.A.S. and Recaudo Bogota S.A.S. dated December 30, 2016
10.35	(57)	Confidential Settlement Agreement and General Release between ID Global Solutions Corporation and Charles D. Albanese dated January 26, 2017
10.36	(57)	Executive Retention Agreement entered between the Company and Stuart P. Stoller dated January 31, 2017
10.37	(58)	Indemnification  Agreement entered between the Company and Stuart P. Stoller dated January 31, 2017
10.38	(58)	Executive Retention Agreement entered between the Company and Philip D. Beck dated January 31 2017
10.39	(58)	Executive Retention Agreement entered between the Company and Thomas Szoke dated January 31 2017
10.40	(58)	Executive Retention Agreement entered between the Company and Douglas Solomon dated January 31, 2017
10.41	(58)	Form of Conversion Agreement dated January 31, 2017
10.42	(58)	Stand-Off Agreement dated January 31, 2017 entered between Philip Beck, Stuart Stoller, Thomas Szoke, Douglas Solomon, Herbert Selzer, Ricky Solomon and the Company
10.43	(60)	Amendment No. 1 to the Share Purchase Agreement by and between ID Global Solutions Corporation and the Multipay S.A. Shareholders dated May 7, 2015 to the March 31, 2016 10Q.
16.1	(47)	Letter from Anton & Chia, LLP

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act*
31.2	Certification of Chief Financial Officer  pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act*
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

28

101.INS	XBRL Instance Document *
101.SCH	XBRL Taxonomy Extension Schema Document *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB	XBRL Taxonomy Extension Label Linkbase Document *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document *

*     Filed herein

(1)         Previously filed on Form 10-12G on November 9, 2011 (File No.: 000-54545) as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference.

(2)         Previously filed on Form 8-K on August 13, 2013 (File No.: 000-54545) as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference.

(3)         Previously filed on Form S-1 on February 13, 2014 (File No.: 333-193924), as amended, as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference.

(4)         Previously filed on Form S-1 on June 26, 2014 (File No.: 333-193924), as amended, as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference

(5)         Previously filed on Form S-1 on August 12, 2014 (File No.: 333-193924), as amended, as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference

(6)         Previously filed on Form 8-K on September 25, 2014 (File No.: 000-54545) as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference.

(7)         Previously filed on Form 8-K on October 9, 2014 (File No.: 000-54545) as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference.

(8)         Previously filed on Form 10-Q on November 14, 2014 (File No.: 000-54545) as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference.

(9)         Previously filed on Form 8-K on November 28, 2014 (File No.: 000-54545) as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference.

(10)       Previously filed on Form 8-K on December 22, 2014 (File No.: 000-54545) as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference.

(11)       Previously filed on Form 8-K on March 12, 2015 (File No.: 000-54545) and incorporated herein by this reference.

(12)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 12, 2015.

(13)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 1, 2015.

(14)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 1, 2015.

(15)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 1, 2015.

(16)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 1, 2015.

(17)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on July 2, 2015.

(18)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on July 2, 2015.

(19)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on July 2, 2015.

(20)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on July 2, 2015.

(21)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on September 9, 2015.

29

(22)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on September 9, 2015.

(23)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on September 9, 2015.

(24)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on September 9, 2015.

(25)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on September 22, 2015.

(26)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(27)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(28)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(29)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(30)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(31)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(32)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(33)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(34)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(35)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(36)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(37)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(38)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(39)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(40)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(41)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

30

(42)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 1, 2015.

(43)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on December 29, 2015.

(44)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on December 29, 2015.

(45)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on December 29, 2015.

(46)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on December 29, 2015.

(47)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on January 8, 2016.

(48)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on February 12, 2016.

(49)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on April 25, 2016.

(50)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on April 25, 2016.

(51)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on April 25, 2016.

(52)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on April 25, 2016.

(53)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on December 28, 2016.

(54)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on December 28, 2016.

(55)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on January 6, 2017.

(56)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on August 16, 2016.

(57)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on February 1, 2017.

(58)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on February 6, 2017.

(59)       Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 23,

              2017

(60)       Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on March 29, 2017.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	IPSIDY, INC.
	By: /s/ Philip Beck
	Philip Beck, Chairman of the Board of Directors, Chief Executive Officer, and President
	Principal Executive Officer
	By: /s/ Stuart Stoller
	Chief Financial Officer,
	Principal Financial and Accounting Officer
Dated: April 12, 2017

32

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Philip Beck, Chairman of the Board of Directors, Chief Executive Officer and President certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ipsidy Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant) and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:  April 12, 2017	/s/Philip Beck
	Philip Beck
	Chairman of the Board of Directors,
	Chief Executive Officer and President
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Stuart Stoller Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ipsidy Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant) and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:  April 12, 2017	/s/ Stuart Stoller
	Stuart Stoller
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ipsidy Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2016 as filed with the Securities and Exchange Commission (the “Report”), I, Philip Beck, Chairman of the Board of Directors, Chief Executive Officer and President of the Company, and, Stuart Stoller, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

1.         The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.         The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Philip Beck

Philip Beck, Chairman of the Board of Directors, Chief Executive Officer and President

(principal executive officer)

April 12, 2017	/s/ Stuart Stoller
	Stuart Stoller, Chief Financial Officer
	(principal financial and accounting officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Apr. 07, 2017
Document And Entity Information
Entity Registrant Name	Ipsidy Inc.
Entity Central Index Key	0001534154
Document Type	10-Q
Trading Symbol	IDGS
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		341,386,104
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2016

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current Assets:
Cash	$ 281,188	$ 349,873
Accounts receivable, net	199,574	509,027
Current portion of net investment in direct financing lease	44,990
Inventory	122,667	516,663
Other current assets	58,647	134,224
Total current assets	707,066	1,509,787
Property and equipment, net	124,603	37,775
Other assets	195,483	319,592
Intangible assets, net	3,601,010	1,436,534
Goodwill	6,736,043	166,689
Net investment in direct financing lease, net of current portion	695,911
Total assets	12,060,116	3,470,377
Current Liabilities:
Accounts payable and accrued expenses	998,123	717,500
Convertible notes payable, net	1,945,415	383,346
Derivative liability	7,724,379	25,445,645
Contingent purchase consideration (Note 12)	370,125	370,125
Deferred revenue	103,814
Notes payable, net	1,578,468	634,069
Total current liabilities	12,720,324	27,550,685
Commitments and Contingencies (Note 12)
Stockholders' Deficit:
Common stock, $0.0001 par value, 500,000,000 shares authorized; 214,196,550 and 187,854,139 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively	21,420	18,785
Additional paid in capital	31,360,539	14,923,936
Accumulated deficit	(32,214,771)	(39,074,590)
Accumulated comprehensive income	172,604	51,561
Total stockholders' deficit	(660,208)	(24,080,308)
Total liabilities and stockholders' deficit	$ 12,060,116	$ 3,470,377

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized	500,000,000	500,000,000
Common stock, issued	214,196,550	187,854,139
Common stock, outstanding	214,196,550	187,854,139

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015		Jun. 30, 2016	Jun. 30, 2015
Revenues
Products and services	$ 476,680	$ 11,046	[1]	$ 797,426	$ 11,046	[1]
Lease income	13,315			13,315
Revenues, net	489,995	11,046	[1]	810,741	11,046	[1]
Operating Expenses:
Cost of sales	114,548			232,658
General and administrative	4,147,408	456,360	[1]	8,540,314	929,197	[1]
Research and development	292,592	853	[1]	321,664	224,853	[1]
Depreciation and amortization	157,702	44,018	[1]	260,761	55,289	[1]
Total operating expenses	4,712,250	501,231	[1]	9,355,397	1,209,339	[1]
Loss from operations	(4,222,255)	(490,185)	[1]	(8,544,656)	(1,198,293)	[1]
Other Income (Expense):
Gain (loss) on derivative liabilities	4,735,589	(2,865,353)	[1]	17,677,252	(2,865,353)	[1]
Interest expense	(1,346,025)	(33,974)	[1]	(2,272,777)	(35,729)	[1]
Foreign currency translation loss		(26,259)			(26,259)
Other income (expense), net	3,389,564	(2,925,586)	[1]	15,404,475	(2,927,341)	[1]
(Loss)/income before income taxes	(832,691)	(3,415,771)	[1]	6,859,819	(4,125,634)	[1]
Income Taxes
Net income (loss)	$ (832,691)	$ (3,415,771)	[1]	$ 6,859,819	$ (4,125,634)	[1]
Net Income (Loss) Per Share:
Basic	$ (0.00)	$ (0.02)		$ 0.03	$ (0.02)
Diluted	$ (0.00)	$ (0.02)	[1]	$ (0.04)	$ (0.02)	[1]
Weighted Average Shares Outstanding:
Basic	213,260,870	166,054,195		207,538,833	166,054,195
Diluted	213,260,870	166,054,195		275,753,266	166,054,195

[1] Restated

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	[1]	Jun. 30, 2016	Jun. 30, 2015	[1]
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (832,691)	$ (3,415,771)		$ 6,859,819	$ (4,125,634)
Foreign currency translation gains	216,670			121,043
Comprehensive income (loss)	$ (616,021)	$ (3,415,771)		$ 6,980,862	$ (4,125,634)

[1] Restated

XML

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income [Member]	Total
Balance, beginning at Dec. 31, 2015	$ 18,785	$ 14,923,936	$ (39,074,590)	$ 51,561	$ (24,080,308)
Balance, beginning (in shares) at Dec. 31, 2015	187,854,139				187,854,139
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Reclassification of derivative liabilites upon conversion of convertible debt		692,850			$ 692,850
Issuance of common stock upon conversion of convertible debt and accrued interest	$ 70	21,152			21,222
Issuance of common stock upon conversion of convertible debt and accrued interest (in shares)	704,074
Stock-based compensation		6,152,490			6,152,490
Common stock issued for services	$ 68	269,932			270,000
Common stock issued for services (in shares)	675,000
Common stock issued for debt issuance costs	$ 144	168,981			$ 169,125
Common stock issued for debt issuance costs (in shares)	1,430,000				1,430,000
Common stock issued with convertible debt	$ 103	54,367			$ 54,470
Common stock issued with convertible debt (in shares)	1,033,337
Common stock issued for acquisition of FIN Holdings	$ 2,250	8,997,750			9,000,000
Common stock issued for acquisition of FIN Holdings (in shares)	22,500,000
Warrants issued for inventory		79,081			79,081
Net income			6,859,819		6,859,819
Foreign currency translation				121,043	121,043
Balance, ending at Jun. 30, 2016	$ 21,420	$ 31,360,539	$ (32,214,771)	$ 172,604	$ (660,208)
Balance, ending (in shares) at Jun. 30, 2016	214,196,550				214,196,550

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 6,859,819	$ (4,125,634)	[1]
Adjustments to reconcile income (loss) with cash flows from operating activities:
Depreciation and amortization expense	260,761	55,289	[1]
Stock-based compensation	6,152,490	391,250	[1]
Common stock issued for services	270,000
Amortization of debt discounts and issuance costs, net	1,899,726	67,918	[1]
(Gain) loss on derivative liabilities	(17,677,252)	2,865,353	[1]
Write-off of abondoned product	225,862
Changes in operating assets and inabilities:
Accounts receivable	5,606
Lease receivable	7,043
Other current assets	75,577	109,495	[1]
Inventory	(162,232)
Accounts payable and accrued expenses	281,848	(43,593)	[1]
Deferred revenue	(194,690)
Net cash flows from operating activities	(1,995,444)	(679,922)	[1]
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(10,518)	(51,120)	[1]
Investment in other assets	(101,753)
Cash acquired in acquisitions	419,042	37,876	[1]
Net cash cash flows from investing activities	306,771	(13,244)	[1]
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes payable, warrants and common stock	1,550,000	850,000	[1]
Payment of debt issuance costs	(133,400)
Proceeds from issuance of notes payable and warrants, related parties	100,000	185,773	[1]
Advances from related parties		23,638	[1]
Principal payments on notes payable	(17,655)
Net cash flows from financing activities	1,498,945	1,059,411	[1]
Effect of foreign currencies	121,043
Net change in cash	(68,685)	366,245	[1]
Cash, beginning of the period	349,873	159,296	[1]
Cash, end of the period	281,188	525,541	[1]
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest
Cash paid for income taxes
Non-cash Investing and Financing Activities:
Issuance of common stock for conversion of convertible debt and accrued interest	21,222
Issuance of warrants for inventory costs	79,081
Reclassification of derivative liabilities upon conversion of convertible debt into common stock	692,850
Issuance of common stock for debt issuance costs	169,125
Issuance of common stock with convertible debt	54,470
Acquisition of FIN Holdings (2016) and Multi Pay (2015), respectively:
Issuance of common stock as consideration	9,000,000	610,151	[1]
Assumed liabilities	914,218	732,209	[1]
Inventory	(112,408)
Accounts receivable	(311,867)	(230,151)	[1]
Property and equipment	(100,339)	(20,000)	[1]
Intangible assets	(8,970,562)	(1,054,333)	[1]
Cash acquired	419,042	37,876	[1]
Reclassification of inventory to net investment in direct financing lease	$ 747,944

[1] Restated

XML

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

NOTE 1 – BASIS OF PRESENTATION

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, and include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for future periods or the full year.

The condensed consolidated financial statements include the accounts of Ipsidy Inc. and its wholly-owned subsidiaries MultiPay S.A.S., ID Global LATAM, IDGS S.A.S., ID Solutions, Inc., Fin Holdings, Inc. and Cards Plus Pty Ltd. (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.

Net Loss per Common Share 

The Company computes net income or 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 income (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 table illustrates the computation of basic and diluted EPS:

	For the three-months ended June 30, 2016								For the three-months ended June 30, 2015								For the six-months ended June 30, 2016								For the six months ended June 30. 2015
						Per-Share								Per-Share								Per-Share								Per-Share
	Income			Shares		Amount			Income			Shares		Amount			Income			Shares		Amount			Income			Shares		Amount
Basic EPS
Income available to stockholders	$	(832,691	)		213,260,870	$	(0.00	)	$	(3,415,771	)		166,054,195	$	(0.02	)	$	6,859,819			207,538,833	$	0.03		$	(4,125,634	)		166,054,195	$	(0.00	)
Effect of Dilutive Securities
Stock Options		-			-					-			-					-			10,714,189					-			-
Warrants		-			-					-			-					-			25,634,957					-			-
Convertible Debt		-			-					-			-					(17,712,426	)		31,465,287					-			-
Diluted EPS
Income available to stockholders plus assumed conversions	$	(832,691	)		213,260,870	$	(0.00	)	$	(3,415,771	)		166,054,195	$	(0.02	)	$	(10,852,607	)		275,353,266	$	(0.04	)	$	(4,125,634	)		166,054,195	$	(0.00	)

Going concern 

As of June 30, 2016, the Company has a working capital and accumulated deficit of approximately $12.0 million and $32.2 million, respectively. For the six months ended June 30, 2016 the Company earned revenue of approximately $811,000 and incurred an operating loss of approximately $8.5 million.

These condensed 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.

There is no assurance that the Company will ever be profitable. These condensed 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.

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 market. 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 stated at the lower of cost (using the average method) or market. The plastic/ID cards and digital printing material are used to provide plastic loyalty, ID and other types of cards. Inventories at June 30, 2016 consist solely of the Cards Plus inventory as the kiosks were deployed in the second quarter of 2016 subject to a direct financing lease.

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 deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. For the three and six months ended June 30, 2016 and 2015, there is no provision for income tax as the Company had a tax loss for United States and foreign activities. The Company’s gain on derivative liability during the three and six months ended June 30, 2016 and 2015, is not taxable.

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 lessee substantially all of the risks and rewards incidental to the ownership of the asset are classified as direct finance leases.

Revenue Recognition

The Company recognizes revenue when products are shipped or services have been performed. Financing revenue related to direct-financing leases is recognized over the term of the lease using the effective interest method. 

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FIN HOLDINGS ACQUISITION

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

FIN HOLDINGS ACQUISITION

NOTE 2 – FIN HOLDINGS ACQUISITION

On February 8, 2016, the Company entered into a Share Exchange Agreement with Fin Holdings, Inc., a Florida corporation ("FIN"), and all of the FIN shareholders (the "FIN Shareholders"), pursuant to which the Company acquired 100% of the issued and outstanding shares of FIN (the "FIN Shares") and FIN's two wholly-owned subsidiaries, ID Solutions, Inc. and Cards Plus Pty Ltd. (collectively, the "Subsidiaries"), from the FIN Shareholders. One of the FIN shareholders was the Company’s Chief Operating Officer and owned approximately 1.7% of the Company’s outstanding common stock at the acquisition date. In consideration for the FIN Shares, the Company issued and sold to the FIN Shareholders an aggregate of 22,500,000 shares of common stock of the Company (the "Purchase Shares") at a per share price of $0.40 or $9,000,000. The closing occurred on February 8, 2016.

In accordance with ASC 805, “Business Combinations”, the Company accounted for the acquisition of FIN as a business combination using the acquisition method of accounting. The purchase price was allocated to specific identifiable tangible and intangible assets at their respective fair values at the date of acquisition.

The following table summarizes the total fair value of the consideration transferred as well as the fair values of the assets and liabilities assumed.

Common stock consideration	$	9,000,000
Liabilities assumed		914,218
Total purchase consideration		9,914,218
Current assets		(843,317	)
Property and equipment		(100,339	)
Customer relationships		(1,587,159	)
Intellectual property		(814,049	)
Goodwill	$	6,569,354

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and benefits of the combined company. FIN was acquired on February 8, 2016 pursuant to a Share Exchange Agreement, at which time control was achieved through a restructuring of the reporting hierarchy to Company management.

The condensed consolidated financial statements for the six months ended June 30, 2016 include FIN’s results for the period from the date of acquisition to June 30, 2016. FIN Holdings Revenue and Operating Income included in the consolidated results of operations for the six months ended June 30, 2016, was approximately $670,000 and $89,000 respectively.

The following unaudited proforma financial information gives effect to the Company’s acquisition of FIN as if the acquisition had occurred on January 1, 2015 and had been included in the Company’s consolidated statement of operations for the six months ended June 30, 2016 and June 30, 2015.

	Six months ended June 30
	2016		2015
Proforma net revenues	$	932,297	$	1,088,960
Proforma net income (loss)	$	6,852,278	$	(3,944,838	)

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INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL)

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL)

NOTE 3 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL)

The Company’s intangible assets consist of intellectual property acquired from MultiPay in April 2015 and FIN and are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible assets for the six months ended June 30, 2016:

	Customer Relationships			Intellectual Property			Non- Compete
Useful Lives	10 Years			7 Years			5 Years			Total
Carrying Value at December 31, 2015	$	-		$	1,423,537		$	12,997		$	1,436,534
Additions		1,587,159			814,049			-			2,401,208
Amortization		(61,635	)		(173,689	)		(1,408	)		(236,732	)
Carrying Value at June 30, 2016	$	1,525,524		$	2,063,897		$	11,589		$	3,601,010

The following is a summary of intangible assets as of June 30, 2016:

	Customer Relationships			Intellectual Property			Non- Compete			Total
Cost	$	1,587,159		$	2,444,646		$	14,087		$	4,045,892
Accumulated amortization		(61,635	)		(380,749	)		(2,498	)		(444,882	)
Carrying Value at June 30, 2016	$	1,525,524		$	2,063,897		$	11,589		$	3,601,010

Future expected amortization of intangible assets is as follows:

Year Ending December 31,
2016	$	249,550
2017		494,950
2018		494,950
2019		494,950
2020		494,950
2021		496,631
Thereafter		875,029
	$	3,601,010

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PROPERTY AND EQUIPMENT, NET

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

NOTE 4 – PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following as of June 30, 2016 and December 31, 2015:

	2016		2015
Computers and equipment	$	88,587	$	88,047
Furniture and fixtures		179,485		69,168
		268,072		157,215
Less Accumulated depreciation		143,469		119,440
Property and equipment, net	$	124,603	$	37,775

Depreciation expense totaled $24,029 and $12,505 for the six months ended June 30, 2016 and 2015, respectively.

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2016

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 June 30, 2016 and December 31, 2015:

	2016		2015
Trade payables	$	334,192	$	301,455
Accrued interest		323,817		96,579
Accrued payroll and related		261,548		204,125
Other accrued expenses		78,566		115,341
Total	$	998,123	$	717,500

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NOTES PAYABLE, NET

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

NOTES PAYABLE, NET

NOTE 6 - NOTES PAYABLE, NET

The following is a summary of notes payable as of June 30, 2016 and December 31, 2015:

	2016		2015
In connection with the acquisition of MultiPay in 2015, the Company assumed three promissory notes.  At June 30, 2016, the remaining outstanding note carried an outstanding balance of $79,014. Payments of $6,300 including principal and interest are due monthly. The notes accrue interest at an annual rate of 15.47%. Total outstanding principal and interest is due on September 16, 2017.	$	79,014	$	96,669
The below notes payable were not initially convertible; except for the accrued interest portion which was convertible into common stock of the Company. Further, in January 2017, the below notes, which were being renegotiated, and related accrued interest were converted into common stock of the Company (see note 13).
In August 2015, the Company issued a 12% note in the amount of $27,000. The note is secured by the assets of the Company, matures in August 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of this note, the Company also issued warrants for the purchase of 180,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $148,160, which are presented as a discount against the note and amortized into interest expense over the term of the note.		27,000		27,000
In September 2015, the Company issued 12% notes in the amount of $973,000. The notes are secured by the assets of the Company, mature in September 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 6,486,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $77,480, which are presented as a discount against the note and amortized into interest expense over the term of the notes.		973,000		973,000
In October 2015, the Company issued 12% notes in the amount of $225,000. The notes are secured by the assets of the Company, mature in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of this note, the Company also issued warrants for the purchase of 1,500,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $36,400, which are presented as a discount against the note and amortized into interest expense over the term of the notes.		225,000		225,000
In November 2015, the Company issued a 12% note in the amount of $25,000. The note is secured by the assets of the Company, matures in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of this note, the Company also issued warrants for the purchase of 166,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $94,400, which are presented as a discount against the note and amortized into interest expense over the term of the note.		25,000		25,000
In December 2015, the Company issued 12% notes in the amount of $850,000. The notes are secured by the assets of the Company and mature in December 2016.  Any unpaid accrued interest on the note is convertible into common stock of the Company at a rate of $0.48 per share.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 1,770,834 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years.  The conversion rate on the accrued interest and the exercise price on the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8.		850,000		850,000

(Continued)	2016			2015
In January 2016, the Company issued 12% notes in the amount of $100,000. The notes are secured by the assets of the Company, mature in January 2017, and accrued interest is convertible into common stock of the Company at a rate of $0.48 per share.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 208,332 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years.  The conversion rate on the accrued interest and the exercise price of the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8.		100,000			-
Total Principal Outstanding	$	2,279,014			2,196,669
Unamortized Deferred Debt Discounts		(482,943	)		(1,193,947	)
Unamortized Deferred Debt Issuance costs		(217,603	)		(368,653	)
Convertible Notes, Net	$	1,578,468		$	634,069

The following is a roll-forward of the Company’s notes payable and related discounts for the six months ended June 30, 2016:

	Principal Balance			Debt  Issuance Costs			Debt Discounts			Total
Balance at December 31, 2015	$	2,196,669			(368,653	)		(1,193,947	)	$	634,069
New issuances		100,000						(66,830	)		33,170
Payments		(17,655	)		-			-			(17,655	)
Amortization		-			151,050			777,834			928,884
Balance at June 30, 2016	$	2,279,014		$	(217,603	)	$	(482,943	)	$	1,578,468

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CONVERTIBLE NOTES PAYABLE, NET

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

CONVERTIBLE NOTES PAYABLE, NET

NOTE 7 – CONVERTIBLE NOTES PAYABLE, NET

Convertible notes consisted of the following as of June 30, 2016 and December 31, 2015:

In January 2017, the below convertible notes payable, which were being renegotiated, and related accrued interest were converted into Common stock of the Company (Note 13).

	2016		2015
In June 2015, the Company issued 10% convertible notes with an   aggregate principal amount of $700,000.  The notes are secured by the assets of the Company, matured in June 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 15,400,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years.  The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8. The Company also incurred debt issuance costs of $124,500, which are presented as a discount against the note and amortized into interest expense over the term of the note. During the six months ended June 30, 2016, one note holder elected to convert principal and accrued interest totaling $21,222 into 704,074 shares of common stock.	$	680,000	$	700,000
In July 2015, the Company issued 10% convertible notes with in the aggregate principal amount of $190,000.  The notes are secured by the assets of the Company, matured in July 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 4,180,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8. The Company also incurred debt issuance costs of $16,200, which are presented as a discount against the note and amortized into interest expense over the term of the note.		166,000		166,000

In February 2016, the Company re-issued a 12% convertible note in the amount of $172,095. The note is secured by the assets of the Company, originally maturing in September 2016, and is convertible into common stock of the Company at a rate of $0.10 per share.		172,095			172,095
In April 2016, the Company issued 12% convertible notes in the amount of $1,550,000. The notes are secured by the assets of the Company, mature in October 2016, and are convertible into common stock of the Company at a rate of $0.25 per share.  In connection with the issuance of these notes, the Company also issued 1,033,337 shares of common stock and warrants for the purchase of 6,200,000 shares of the Company’s common stock at an exercise price of $0.25 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that require these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The portion of the remaining proceeds attributable to the notes and common stock were allocated to the instruments based on their relative fair values.  See Notes 8 and 10.  The Company also incurred debt issuance costs of $226,400, which are presented as a discount against the note and amortized into interest expense over the term of the note.		1,550,000			-
Total Principal Outstanding	$	2,568,095		$	1,038,095
Unamortized Deferred Debt Discounts		(442,097	)		(583,049	)
Unamortized Deferred Debt Issuance costs		(180,583	)		(71,700	)
Convertible Notes, Net	$	1,945,415		$	383,346

The following is a roll-forward of the Company’s convertible notes and related discounts for the six months ended June 30, 2016:

	Principal Balance			Debt Issuance Costs			Debt Discounts			Total
Balance at December 31, 2015	$	1,038,095		$	(71,700	)	$	(583,049	)	$	383,346
New issuances		1,550,000			(226,400	)		(636,373	)		687,227
Conversions		(20,000	)		-			-			(20,000	)
Amortization		-			117,517			777,325			894,842
Balance at June 30, 2016	$	2,568,095		$	(180,583	)	$	(442,097	)	$	1,945,415

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DERIVATIVE LIABILITY

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITY

NOTE 8 –DERIVATIVE LIABILITY

Due to the potential adjustment in the conversion price associated with certain of the convertible debentures and the potential adjustment in the exercise price of certain of the warrants, the Company has determined that certain conversion features and warrants are derivative liabilities.

The fair values of the embedded conversion features and the warrants are estimated and recorded as derivative liabilities on the date of issuance, offset by a discount on the related convertible note payable up to the face amount of the note, with any excess fair value recorded as derivative expense on the date of issuance. The Company’s convertible debt is convertible into common stock at conversion rates that vary based on the trading prices of the Company’s common stock. Accordingly, the conversion feature is required to be presented at fair value on the dates of issuance, settlement, and at each reporting date. The Company also has warrants to purchase common stock outstanding that provide for adjustments to the exercise prices upon the future dilutive issuances. The Company utilizes Monte Carlo simulations and stochastic forecasting to estimate the fair value of the warrants and conversion options. The ranges of assumptions utilized in estimating the fair value of the warrants and conversion options during the six months ended June 30, 2016, are as follows:

Expected Volatility	66% to 87%
Expected Term	0.4 to 5.0 Years
Risk Free Rate	0.36% to 1.21%
Dividend Rate	0.00%
Triggering Capital Raise Probabilities	50% - 75%

A summary of derivative activity for the six months ended June 30, 2016 is as follows:

Balance at December 31, 2015	$	25,445,645
New issuances		648,836
Conversion feature reclassified to equity upon conversion of related notes payable		(692,850	)
Change in fair value		(17,677,252	)
Balance at June 30, 2016	$	7,724,379

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 9 – RELATED PARTY TRANSACTIONS

Acquisition of FIN

As discussed in Note 2, the Company acquired all of the issued and outstanding shares of FIN in February 2017. The Company’s Chief Operating Officer and then _______% shareholder in the Company was also a significant shareholder in FIN at the time of the acquisition

Convertible Notes Payable

As of June 30, 2016, the Company has outstanding convertible notes payable to certain members of the Company’s Board of Directors. Total amounts due to these related parties included in convertible notes payable amounted to $150,000 at June 30, 2016. See Note 7.

Other

In connection with the Company’s ability to secure third-party financing, the Company paid Network 1 Financial Securities, Inc. (“Network 1”), a registered broker-dealer, a cash fee of $124,000 and issued Network 1 1,430,000 shares of common stock of the Company in accordance with its agreement during the six months ended June 30, 2016. A member of the Company’s Board of Directors previously maintained a partnership with a key principal of Network 1. In addition to the cash fee paid, the agreement calls for Network 1 to receive an 8% commission of the total amount of proceeds from any financing it secures for the Company.

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STOCKHOLDER'S EQUITY

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

STOCKHOLDER'S EQUITY

NOTE 10 – STOCKHOLDER’S DEFICIT

Common Stock

During the six months ended June 30, 2016, the Company issued 704,074 shares of common stock upon the conversion of principal and interest on convertible debt totaling $21,222.

During the six months ended June 30, 2016, the Company issued 675,000 shares of common stock as consideration for services related to its acquisition of FIN Holdings. The fair value of the shares, totaling $270,000, was estimated based on the publicly quoted trading price and recorded as an expense on the date of the acquisition.

During the six months ended June 30, 2016, the Company issued 1,430,000 shares of common stock as consideration for debt issuance costs. The fair value of the shares, totaling $169,125, was estimated based on publicly quoted trading prices and recorded as debt issuance costs to be amortized into interest expense over the terms of the respective debt agreements.

During the six months ended June 30, 2016, the Company issued 1,033,337 shares of common stock to investors in connection with the April 2016 Convertible notes (see Notes 7) of which $54,470 of the proceeds from the issuance of convertible notes was attributed to the common stock based on their relative fair value to that of the notes and recorded as a debt discount to be amortized into interest expense over the terms of the respective debt agreements.

During the six months ended June 30, 2016, the Company issued 22,500,000 shares of common stock as consideration for the acquisition of FIN. See Note 2.

Warrants

During the six months ended June 30, 2016, in connection with the issuance of debt, the Company issued warrants to acquire 6,408,332 shares of common stock over five-year terms. Warrants to acquire 208,332, and 6,200,000 shares of common stock are exercisable for an exercise price of $0.48 per share and $0.25 per share, respectively.

During the six months ended June 30, 2016, the Company issued warrants to acquire 258,621 shares as partial consideration for the purchase of inventory. The warrants are exercisable at $0.58 per share over a five-year term. The fair value of the warrants, totaling $79,081 and was estimated using the Black Scholes method and the following assumptions: volatility – 81%, Term – 5 Yeas, and Risk Free Rate – 1.57%, The warrants qualified for equity accounting.

The following is a summary of the Company’s warrant activity for the six months ended June 30, 2016:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at December 31, 2015		35,171,744	$	0.10	4.1 Years
Granted		6,666,953	$	0.27	4.8 Years
Outstanding at June 30, 2016		41,838,697	$	0.13	4.2 Years

Stock Options

During the six months ended June 30, 2016, the Company granted to employees, options to acquire 3,000,000 shares of common stock, of which 1,000,000 are exercisable at an exercise price of $0.45 per share vesting over two years, 1,000,000 are exercisable at an exercise price of $0.40 per share vesting on the date of grant, 500,000 are exercisable at an exercise price of $0.25 per share with 100,000 exercisable immediately and the balance vesting over two years, and 500,000 are exercisable at an exercise price of $0.10 per share vesting over two years. The options have a 5 year term. The Company determined the grant date fair value of the options granted during the six months ended June 30, 2016 using the Black Scholes Method and the following assumptions:

Expected Volatility – 80.0% to 93.0%

Expected Term – 2.5 – 3.1 Years

Risk Free Rate – 0.98%

Dividend Rate – 0.00%

Activity related to stock options for the six months ended June 30, 2016 is summarized as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Contractual Term (Yrs)		Aggregate Intrinsic Value
Outstanding as of December 31, 2015		47,800,000	$	0.32		4.24	$	924,650
Granted		3,000,000	$	0.34		5.41	$	25,000
Outstanding as of June 30, 2016		50,800,000	$	0.32		4.31	$	949,650
Exercisable as of June 30, 2016		40,016,667	$	0.37		4.27	$	493,575

The following table summarizes stock option information as of June 30, 2016:

Exercise Prices		Outstanding		Weighted Average Contractual Life	Exercisable
$	0.0001		3,500,000	4.25 Years		1,750,000
$	0.10		8,500,000	4.22 Years		4,625,000
$	0.15		6,300,000	4.25 Years		2,416,666
$	0.25		500,000	9.76 Years		100,000
$	0.40		1,000,000	4.67 Years		1,000,000
$	0.45		31,000,000	4.25 Years		30,125,000
	Total		50,800,000	4.31 Years		40,016,667

As discussed in Note 13, the term of all the options was extended to ten years in August 2016 from their original grant date and therefore the remaining contractual term in the table above would all increase to 9.25 years.

During the six months ended June 30, 2016, the Company recognized approximately $6,152,000 of stock-based compensation expense. As of June 30, 2016, there was approximately $2,357,000 of unrecognized compensation costs related to stock options outstanding which is expected to be recognized through 2019.

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DIRECT FINANCING LEASE

6 Months Ended

Jun. 30, 2016

Capital Leases of Lessor [Abstract]

DIRECT FINANCING LEASE

NOTE 11 – DIRECT FINANCING LEASE

In September 2015, 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 began in May 2016, when the kiosks were installed and operational. The term of the rental contract is ten years at an approximate monthly rate of $11,856. 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 economic life of the kiosks. 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 the investment in the lease and record income associated with the related amount due. Executory costs are estimated to be $1,677 per month and initial direct costs are not considered significant. The transaction resulted in incremental revenue for the three and six months ended June 30, 2016 of approximately $13,000.

The equipment subject to the direct financing lease is valued at approximately $748,000. At inception of the lease term, the aggregate minimum future lease payments to be received is approximately $1,423,000 before executory costs. Unearned income recorded at the inception of this lease was approximately $474,000 and will be recorded over the term of the lease using the effective interest rate method. Future minimum lease payments to be received under this lease for the next five years and thereafter are as follows:

Year Ending December 31,
2016	$	61,074
2017		122,148
2018		122,148
2019		122,148
2020		122,148
2021		122,148
Thereafter		529,308
		1,201,122
Less deferred income		(460,221	)
Net investment in lease	$	740,901

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Contingent Purchase Consideration

The Company has recorded a contingent liability of approximately $370,000 related to the acquisition of Multipay because of the contingency of the shares to be issued and debt to be released upon the payment of certain liabilities by the Multipay Shareholders.

Legal Matters

From time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods. The Company is not presently a party to any pending or threatened legal proceedings. 

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 13 – SUBSEQUENT EVENTS

From August 10, 2016 through August 26, 2016, the Company entered into and closed Subscription Agreements with several accredited investors (the "August 2016 Accredited Investors") pursuant to which the August 2016 Accredited Investors purchased an aggregate of 25,000,000 shares of the Company's common stock (the "2016 Subscription Shares") for an aggregate purchase price of $1,250,000. In order to reduce the dilution to the other shareholders as a result of this private offering, certain shareholders of the Company including the Chief Executive Officer, directors and others agreed to return to the Company an aggregate of approximately 10,000,000 shares of common stock for cancellation. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of $100,000 and issued 2,000,000 shares of common stock of the Company (See Note 9).

On August 10, 2016, the Company issued to several of its employees and consultants stock options (the "Plan Options") under its Equity Compensation Plan to acquire an aggregate of 17,000,000 shares of common stock of the Company exercisable at $0.05 per share. The Plan Options contain vesting periods over 12 quarters commencing on October 1, 2016 as well as various vesting milestones. The Plan Options are exercisable for a period of ten years. Further, the Company amended existing stock options to acquire 50,800,000 shares of common stock under its Equity Compensation Plan to extend the term from five years to 10 years.

On August 10, 2016, the Company entered into an amended agreement (the "Amendment") with Parity Labs, LLC ("Parity") to amend the compensation section of an existing Advisory Agreement previously entered into between the Company and Parity on November 16, 2015 for the provision of strategic advisory services. The Amendment calls for the Company to issue to Parity the option (the "Parity Option") to acquire 20,000,000 shares of common stock of the Company, exercisable at $0.05 per share for a period of ten years. The Parity Option vests as to 10,000,000 options immediately and then in 12 equal tranches of 833,333 options per month commencing on September 1, 2016. The Parity option vested in entirety upon Mr. Beck becoming CEO of Ipsidy in January 2017. Mr. Beck is the manager of Parity Labs.

Form December 1, 2016 through December 27, 2016, the Company entered into and closed Securities Purchase Agreements with several accredited investors (the "December 2016 Accredited Investors") pursuant to which the December 2016 Accredited Investors invested an aggregate of $1,275,000 (the "Offering") into the Company in consideration of Promissory Notes (the "Notes") and an aggregate of 1,912,500 shares of common stock. The Notes are payable one year from the date of issuance and bear interest of 10% per annum for the initial six months of the term of the Notes and 15% per annum for the remaining six months of the term of the Notes. The Notes could be prepaid in whole or in part by the Company at any time without penalty; provided, that any partial payment of principal must be accompanied by payment of accrued interest to the date of prepayment. Any payment made to the December 2016 Accredited Investors which is not a full payment of all principal and interest on all of the Notes will be made pro rata to the December 2016 Accredited Investors based on the respective principal amounts of the Notes. The Notes were converted into shares of common stock on January 31, 2017 as more fully described below.

On December 30, 2016, ID Global LATAM S.A.S. (“IDG LATAM”), a wholly owned subsidiary of the Company, entered into a Contract for the Provision of Cash Collection Services (the "Contract") with Recaudo Bogota S.A.S. ("RB"), a Colombian company, pursuant to which the Company agreed to supply, maintain and provide platform services for 740 unattended payment collection and fare ticketing kiosks, in consideration of approximately $30 million dollars (excluding VAT) payable over the ten year period of the Contract. Pursuant to the contract IDG LATAM is required to obtain a performance bond from a financial institution in the amount of $6 million dollars.  In addition, IDG LATAM will need to obtain financing for the cost of the equipment to be supplied but has not as of the date hereof entered into a definitive agreement for such financing nor has the required performance bond been obtained. The parties are currently re-negotiating the terms of the Contract including a potential phased delivery and a reduction in the number of kiosks. If the negotiation is formalized in a definitive agreement, this would potentially result in a reduction in the consideration paid over the then year period of the Contract and reduce the required performance bond.

On January 31, 2017, the Company converted the outstanding debt and accrued interest amount of approximately $6.3 million into approximately 84.8 million shares of common stock, $.0001 par value per share (“Common Stock’), at a conversion price of $0.10 per share unless the debt conversion price was initially priced at less than the $0.10 per share.  Additionally, the exercise price of approximately 11.7 million warrants to acquire shares of Common Stock were reduced to $.10 per share and certain price protection and anti-dilution provisions were removed. See Notes 6 and 7 related to the Company’s convertible debt and outstanding notes payable.

On January 31, 2017, the Company entered into and closed a Securities Purchase Agreement with an accredited investor pursuant to which the Company borrowed $3,000,000 into the Company in consideration of a Senior Unsecured Note and an aggregate of 4,500,000 shares of Common Stock.  The Senior Unsecured Note matures in January 2019 and bears interest at a rate of 10%. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of $120,000 and issued 1,020,000 shares of common stock of the Company.

On January 31, 2017, the Company engaged Philip D. Beck as Chief Executive Officer, President and Chairman of the Board of Directors and Stuart P. Stoller as Chief Financial Officer. In addition, Andras Vago, David Jones and Charles Albanese resigned as directors of the Company and Mr. Albanese also resigned as Chief Financial Officer. Thomas Szoke resigned as Chief Executive Officer and was engaged as Chief Technology Officer.  Douglas Solomon resigned as Chief Operating Officer and was engaged as Executive Director, Government Relations and Enterprise Security. Mr. Szoke and Mr. Solomon continue to serve us directors.

In connection with the engagement of Philip D. Beck and Stuart P. Stoller, the Company granted Mr. Beck and Mr. Stoller, stock options to acquire 15 million shares and 5 million shares of common stock of the Company, respectively, at an exercise price of $0.10 per share for a period of ten years. Further, upon the Company being legally entitled to do so, the Company has agreed to enter into Restricted Stock Purchase Agreements with Mr. Beck and Mr. Stoller to sell 15 million shares and 5 million shares of common stock, respectively, at a per share price of $0.0001, which shares of common stock vest upon achieving a performance threshold.

Effective February 1, 2017, the Company amended its certificate of incorporation to change its legal name to “Ipsidy Inc.” from ID Global Solutions Corporation. The name change was effected pursuant to Section 242 of the Delaware Corporation Law (the “DGCL”). Under the DGCL, the amendment to the Company’s certificate of incorporation to effect the name change did not require stockholder approval. The name change does not affect the rights of the Company’s security holders. There were no other changes to the Company’s incorporation in connection with the name change.

On March 22, 2017, the Company entered into Subscription Agreements with several accredited investors (the "March 2017 Accredited Investors") pursuant to which the March 2017 Accredited Investors agreed to purchase an aggregate of 20,000,000 shares of the Company’s common stock for an aggregate purchase price of $4,000,000. The Company has received proceeds of $3,170,000 as of March 22, 2017. An individual March 2017 Accredited Investor has agreed to fund $830,000 by April 30, 2017. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc. (“Network”), a registered broker-dealer, a cash fee of $240,000 and agreed to issue Network 1,000,000 shares of common stock of the Company upon increasing its authorized shares of common stock.

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RESTATEMENT FOR THE THREE AND SIX-MONTHS ENDED JUNE 30, 2015

6 Months Ended

Jun. 30, 2016

Accounting Changes and Error Corrections [Abstract]

RESTATEMENT FOR THE THREE AND SIX-MONTHS ENDED JUNE 30, 2015

NOTE 14 – RESTATEMENT FOR THE THREE AND SIX-MONTHS ENDED JUNE 30, 2015

During the preparation of its consolidated financial statements for the year ended December 31, 2015, the Company determined that for the three and six-months ended June 30, 2015 it had previously (1) used incorrect valuations for the fair value of intangible assets acquired; (2) capitalized internal use software, which should have been expensed in accordance with US GAAP; (3) used incorrect valuations for derivative liabilities; (4) used incorrect valuations for stock options issued for compensation; (5) recorded certain costs related to the issuance of its convertible and other notes payable incorrectly as general and administrative expenses; and (6) classified certain expenses and named certain accounts incorrectly. The Company has adjusted those intangible assets, derivative liabilities and compensation related to stock options using correct valuations. In addition and in accordance with US GAAP, the Company has now capitalized the costs related to the issuance of its convertible and other notes payable as debt issuance costs as a reduction of the debt principal and expensed the previously capitalized internal use software costs. The following summarizes the adjustments made to the Company’s previously reported amounts for the three and six months June 30, 2015. 

Condensed Consolidated Statements of Operations:

	Three Months Ended June 30, 2015
	As Reported			Reclassifications			As Reclassified			Adjustments			As Restated
Revenue	$	11,046		$	-		$	11,046		$	-		$	11,046
Operating Expenses:
Depreciation and amortization		11,469			-			11,469	(1)		32,549			44,018
Research and development		853			-			853			-			853
General and administrative		570,622			(67,918	)		502,704	(4),(5)		(46,344	)		456,360
Total operating expenses		582,944			(67,918	)		515,026			(13,795	)		501,231
Loss from operations		(571,898	)		67,918			(503,980	)		13,795			(490,185	)
Derivative expense		(3,680,374	)		-			(3,680,374	)(3)		815,021			(2,865,353	)
Interest expense		(11,741	)		(67,918	)		(79,659	)(3)		45,685			(33,974	)
Translation loss		(26,259	)		-			(26,259	)		-			(26,259	)
Net loss	$	(4,290,272	)	$	-		$	(4,290,272	)	$	874,501		$	(3,415,771	)
Net loss per share: Basic and Diluted	$	(0.03	)	$	-		$	(0.03	)	$	0.01		$	(0.02	)

	Six Months Ended June 30, 2015
	As Reported			Reclassifications			As Reclassified			Adjustments			As Restated
Revenue	$	11,046		$	-		$	11,046		$	-		$	11,046
Operating Expenses:
Depreciation and amortization		22,740			-			22,740	(1)		32,549			55,289
Research and development		24,853			-			24,853	(2)		200,000			224,853
General and administrative		1,043,459			(67,918	)		975,541	(4),(5)		(46,344	)		929,197
Total operating expenses		1,091,052			(67,918	)		1,023,134			186,205			1,209,339
Loss from operations		(1,080,006	)		67,918			(1,012,088	)		(186,205	)		(1,198,293	)
Derivative expense		(3,680,374	)		-			(3,680,374	)(3)		815,021			(2,865,353	)
Interest expense		(13,496	)		(67,918	)		(81,414	)(3)		45,685			(35,729	)
Translation loss		(26,259	)		-			(26,259	)		-			(26,259	)
Net loss	$	(4,800,135	)	$	-		$	(4,800,135	)	$	674,501		$	(4,125,634	)
Net loss per share: Basic and Diluted	$	(0.03	)	$	-		$	(0.03	)	$	0.01		$	(0.02	)

(1) Fair Value of Intangible Assets In Connection with Business Acquisition. During the three months ended June 30, 2015, the Company accounted for the acquisition of Multipay as a business combination using the acquisition method of accounting utilizing an incorrect valuation. The adjustment to reflect the correct valuation, including the purchase price allocation of assets acquired, resulted in an increase of $166,689 to Goodwill, $200,986 to Intangible Assets (net of $32,549 additional amortization) and $370,125 to Contingent Purchase Consideration as of June 30, 2015. In addition, certain previously reported contingent assets and liabilities of $149,848 were eliminated.

(2) Intangible Assets—Capitalized Software. The Company determined that previously capitalized software should have been expensed in accordance with US GAAP. Accordingly, a reduction of $200,000 to Intangible Assets and an increase to Research and Development Expenses is made as of and for the six months ended June 30, 2015.

(3) Derivative Liability. The fair value of the derivative liabilities related to convertible and other notes payable have now been estimated based on the Monte Carlo Simulation Model because it considers the effect of the down round feature (probability of a triggering capital raise) along with the other assumptions associated with the Black-Scholes option pricing model. The previously used methodology by the Company incorrectly did not take into consideration the probability of a financing at a price that would trigger the instruments down round provision. The adjusted fair value of the Company’s derivatives associated with its Convertible and other Notes Payable resulted in a decrease of $907,123 to the Derivative Liability as of June 30, 2015. For the three and six months ended June 30, 2015, the Company’s derivative expense is reduced by $815,021. In addition, the finalized fair value analysis of the Company’s derivatives associated with its Convertible and other Notes Payable required a reduction to the previously recorded Debt Discount and interest expense by $45,685 for the three and six months ended June 30, 2015.

(4) Stock-Based Compensation. The adjusted fair value of the Company’s stock-based compensation resulted in an increase to general and administrative expenses of $13,656 for the three and six months ended June 30, 2015. 

(5) Debt Issuance Costs. The capitalization of debt issuance costs as a reduction of the debt principal resulted in a reduction to convertible notes payable of $60,000 and a corresponding decrease to general and administrative for the three and six months ended June 30, 2015. The decrease to General and Administrative expenses, after considering the increase of $13,656 related to stock-based compensation in (4) above and the capitalization of debt issuance costs of $60,000 is $46,344 for the three and six months ended June 30, 2015. 

(6) Reclassifications. During the preparation of its consolidated financial statements for the year ended December 31, 2015, the Company changed or renamed the classification/description of certain accounts and related amounts. Accordingly, certain of the previously stated classifications/descriptions and related amounts required adjustment for the three and six months ended June 30, 2015. The reclassifications and description changes relate to General and Administrative and Interest expenses associated with the recording of the Debt Discount amortization.

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Net Loss per Common Share

Net Loss per Common Share

The Company computes net income or 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 income (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 table illustrates the computation of basic and diluted EPS:

	For the three-months ended June 30, 2016								For the three-months ended June 30, 2015								For the six-months ended June 30, 2016								For the six months ended June 30. 2015
						Per-Share								Per-Share								Per-Share								Per-Share
	Income			Shares		Amount			Income			Shares		Amount			Income			Shares		Amount			Income			Shares		Amount
Basic EPS
Income available to stockholders	$	(832,691	)		213,260,870	$	(0.00	)	$	(3,415,771	)		166,054,195	$	(0.02	)	$	6,859,819			207,538,833	$	0.03		$	(4,125,634	)		166,054,195	$	(0.00	)
Effect of Dilutive Securities
Stock Options		-			-					-			-					-			10,714,189					-			-
Warrants		-			-					-			-					-			25,634,957					-			-
Convertible Debt		-			-					-			-					(17,712,426	)		31,465,287					-			-
Diluted EPS
Income available to stockholders plus assumed conversions	$	(832,691	)		213,260,870	$	(0.00	)	$	(3,415,771	)		166,054,195	$	(0.02	)	$	(10,852,607	)		275,353,266	$	(0.04	)	$	(4,125,634	)		166,054,195	$	(0.00	)

Going concern

Going concern

As of June 30, 2016, the Company has a working capital and accumulated deficit of approximately $12.0 million and $32.2 million, respectively. For the six months ended June 30, 2016 the Company earned revenue of approximately $811,000 and incurred an operating loss of approximately $8.5 million.

These condensed 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.

There is no assurance that the Company will ever be profitable. These condensed 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.

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 market. 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 stated at the lower of cost (using the average method) or market. The plastic/ID cards and digital printing material are used to provide plastic loyalty, ID and other types of cards. Inventories at June 30, 2016 consist solely of the Cards Plus inventory as the kiosks were deployed in the second quarter of 2016 subject to a direct financing lease.

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. For the three and six months ended June 30, 2016 and 2015, there is no provision for income tax as the Company had a tax loss for United States and foreign activities. The Company’s gain on derivative liability during the three and six months June, 30, 2016 and 2015, is not taxable.

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 lessee substantially all of the risks and rewards incidental to the ownership of the asset are classified as direct finance leases.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when products are shipped or services have been performed. Financing revenue related to direct-financing leases is recognized over the term of the lease using the effective interest method.

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BASIS OF PRESENTATION (Tables)

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of potentially dilutive securities

The following table illustrates the computation of basic and diluted EPS:

	For the three-months ended June 30, 2016								For the three-months ended June 30, 2015								For the six-months ended June 30, 2016								For the six months ended June 30. 2015
						Per-Share								Per-Share								Per-Share								Per-Share
	Income			Shares		Amount			Income			Shares		Amount			Income			Shares		Amount			Income			Shares		Amount
Basic EPS
Income available to stockholders	$	(832,691	)		213,260,870	$	(0.00	)	$	(3,415,771	)		166,054,195	$	(0.02	)	$	6,859,819			207,538,833	$	0.03		$	(4,125,634	)		166,054,195	$	(0.00	)
Effect of Dilutive Securities
Stock Options		-			-					-			-					-			10,714,189					-			-
Warrants		-			-					-			-					-			25,634,957					-			-
Convertible Debt		-			-					-			-					(17,712,426	)		31,465,287					-			-
Diluted EPS
Income available to stockholders plus assumed conversions	$	(832,691	)		213,260,870	$	(0.00	)	$	(3,415,771	)		166,054,195	$	(0.02	)	$	(10,852,607	)		275,353,266	$	(0.04	)	$	(4,125,634	)		166,054,195	$	(0.00	)

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FIN HOLDINGS ACQUISITION (Tables)

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Schedule of fair values of the assets and liabilities

The following table summarizes the total fair value of the consideration transferred as well as the fair values of the assets and liabilities assumed.

Common stock consideration	$	9,000,000
Liabilities assumed		914,218
Total purchase consideration		9,914,218
Current assets		(843,317	)
Property and equipment		(100,339	)
Customer relationships		(1,587,159	)
Intellectual property		(814,049	)
Goodwill	$	6,569,354

Schedule of pro forma financial information

The following unaudited proforma financial information gives effect to the Company’s acquisition of FIN as if the acquisition had occurred on January 1, 2015 and had been included in the Company’s consolidated statement of operations for the six months ended June 30, 2016 and June 30, 2015.

	Six months ended June 30
	2016		2015
Proforma net revenues	$	932,297	$	1,088,960
Proforma net income (loss)	$	6,852,278	$	(3,944,838	)

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INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Tables)

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets

The following is a summary of activity related to intangible assets for the six months ended June 30, 2016:

	Customer Relationships			Intellectual Property			Non- Compete
Useful Lives	10 Years			7 Years			5 Years			Total
Carrying Value at December 31, 2015	$	-		$	1,423,537		$	12,997		$	1,436,534
Additions		1,587,159			814,049			-			2,401,208
Amortization		(61,635	)		(173,689	)		(1,408	)		(236,732	)
Carrying Value at June 30, 2016	$	1,525,524		$	2,063,897		$	11,589		$	3,601,010

The following is a summary of intangible assets as of June 30, 2016:

	Customer Relationships			Intellectual Property			Non- Compete			Total
Cost	$	1,587,159		$	2,444,646		$	14,087		$	4,045,892
Accumulated amortization		(61,635	)		(380,749	)		(2,498	)		(444,882	)
Carrying Value at June 30, 2016	$	1,525,524		$	2,063,897		$	11,589		$	3,601,010

Schedule of future amortization expense of intangible assets

Future expected amortization of intangible assets is as follows:

Year Ending December 31,
2016	$	249,550
2017		494,950
2018		494,950
2019		494,950
2020		494,950
2021		496,631
Thereafter		875,029
	$	3,601,010

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PROPERTY AND EQUIPMENT, NET (Tables)

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

Property and equipment consisted of the following as of June 30, 2016 and December 31, 2015:

	2016		2015
Computers and equipment	$	88,587	$	88,047
Furniture and fixtures		179,485		69,168
		268,072		157,215
Less Accumulated depreciation		143,469		119,440
Property and equipment, net	$	124,603	$	37,775

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)

6 Months Ended

Jun. 30, 2016

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued expenses

Accounts payable and accrued expenses consisted of the following as of June 30, 2016 and December 31, 2015:

	2016		2015
Trade payables	$	334,192	$	301,455
Accrued interest		323,817		96,579
Accrued payroll and related		261,548		204,125
Other accrued expenses		78,566		115,341
Total	$	998,123	$	717,500

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NOTES PAYABLE, NET (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of the notes payable

The following is a summary of notes payable as of June 30, 2016 and December 31, 2015:

	2016		2015
In connection with the acquisition of MultiPay in 2015, the Company assumed three promissory notes.  At June 30, 2016, the remaining outstanding note carried an outstanding balance of $79,014. Payments of $6,300 including principal and interest are due monthly. The notes accrue interest at an annual rate of 15.47%. Total outstanding principal and interest is due on September 16, 2017.	$	79,014	$	96,669
The below notes payable were not initially convertible; except for the accrued interest portion which was convertible into common stock of the Company. Further, in January 2017, the below notes, which were being renegotiated, and related accrued interest were converted into common stock of the Company (see note 13).
In August 2015, the Company issued a 12% note in the amount of $27,000. The note is secured by the assets of the Company, matures in August 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of this note, the Company also issued warrants for the purchase of 180,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $148,160, which are presented as a discount against the note and amortized into interest expense over the term of the note.		27,000		27,000
In September 2015, the Company issued 12% notes in the amount of $973,000. The notes are secured by the assets of the Company, mature in September 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 6,486,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $77,480, which are presented as a discount against the note and amortized into interest expense over the term of the notes.		973,000		973,000
In October 2015, the Company issued 12% notes in the amount of $225,000. The notes are secured by the assets of the Company, mature in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of this note, the Company also issued warrants for the purchase of 1,500,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $36,400, which are presented as a discount against the note and amortized into interest expense over the term of the notes.		225,000		225,000
In November 2015, the Company issued a 12% note in the amount of $25,000. The note is secured by the assets of the Company, matures in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share.  In connection with the issuance of this note, the Company also issued warrants for the purchase of 166,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years.  The Company also incurred debt issuance costs of $94,400, which are presented as a discount against the note and amortized into interest expense over the term of the note.		25,000		25,000
In December 2015, the Company issued 12% notes in the amount of $850,000. The notes are secured by the assets of the Company and mature in December 2016.  Any unpaid accrued interest on the note is convertible into common stock of the Company at a rate of $0.48 per share.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 1,770,834 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years.  The conversion rate on the accrued interest and the exercise price on the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8.		850,000		850,000

In January 2016, the Company issued 12% notes in the amount of $100,000. The notes are secured by the assets of the Company, mature in January 2017, and accrued interest is convertible into common stock of the Company at a rate of $0.48 per share.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 208,332 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years.  The conversion rate on the accrued interest and the exercise price of the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8.		100,000			-
Total Principal Outstanding	$	2,279,014			2,196,669
Unamortized Deferred Debt Discounts		(482,943	)		(1,193,947	)
Unamortized Deferred Debt Issuance costs		(217,603	)		(368,653	)
Convertible Notes, Net	$	1,578,468		$	634,069

Schedule of notes payable and related discounts

The following is a roll-forward of the Company’s notes payable and related discounts for the six months ended June 30, 2016:

	Principal Balance			Debt  Issuance Costs			Debt Discounts			Total
Balance at December 31, 2015	$	2,196,669			(368,653	)		(1,193,947	)	$	634,069
New issuances		100,000						(66,830	)		33,170
Payments		(17,655	)		-			-			(17,655	)
Amortization		-			151,050			777,834			928,884
Balance at June 30, 2016	$	2,279,014		$	(217,603	)	$	(482,943	)	$	1,578,468

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CONVERTIBLE NOTES PAYABLE, NET (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of the convertible notes payable outstanding

Convertible notes consisted of the following as of June 30, 2016 and December 31, 2015:

	2016		2015
In June 2015, the Company issued 10% convertible notes with an   aggregate principal amount of $700,000.  The notes are secured by the assets of the Company, matured in June 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 15,400,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years.  The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8. The Company also incurred debt issuance costs of $124,500, which are presented as a discount against the note and amortized into interest expense over the term of the note. During the six months ended June 30, 2016, one note holder elected to convert principal and accrued interest totaling $21,222 into 704,074 shares of common stock.	$	680,000	$	700,000
In July 2015, the Company issued 10% convertible notes with in the aggregate principal amount of $190,000.  The notes are secured by the assets of the Company, matured in July 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 4,180,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8. The Company also incurred debt issuance costs of $16,200, which are presented as a discount against the note and amortized into interest expense over the term of the note.		166,000		166,000

In February 2016, the Company re-issued a 12% convertible note in the amount of $172,095. The note is secured by the assets of the Company, originally maturing in September 2016, and is convertible into common stock of the Company at a rate of $0.10 per share.		172,095			172,095
In April 2016, the Company issued 12% convertible notes in the amount of $1,550,000. The notes are secured by the assets of the Company, mature in October 2016, and are convertible into common stock of the Company at a rate of $0.25 per share.  In connection with the issuance of these notes, the Company also issued 1,033,337 shares of common stock and warrants for the purchase of 6,200,000 shares of the Company’s common stock at an exercise price of $0.25 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that require these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The portion of the remaining proceeds attributable to the notes and common stock were allocated to the instruments based on their relative fair values.  See Notes 8 and 10.  The Company also incurred debt issuance costs of $226,400, which are presented as a discount against the note and amortized into interest expense over the term of the note.		1,550,000			-
Total Principal Outstanding	$	2,568,095		$	1,038,095
Unamortized Deferred Debt Discounts		(442,097	)		(583,049	)
Unamortized Deferred Debt Issuance costs		(180,583	)		(71,700	)
Convertible Notes, Net	$	1,945,415		$	383,346

Schedule of convertible notes and related discounts

The following is a roll-forward of the Company’s convertible notes and related discounts for the six months ended June 30, 2016:

	Principal Balance			Debt Issuance Costs			Debt Discounts			Total
Balance at December 31, 2015	$	1,038,095		$	(71,700	)	$	(583,049	)	$	383,346
New issuances		1,550,000			(226,400	)		(636,373	)		687,227
Conversions		(20,000	)		-			-			(20,000	)
Amortization		-			117,517			777,325			894,842
Balance at June 30, 2016	$	2,568,095		$	(180,583	)	$	(442,097	)	$	1,945,415

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DERIVATIVE LIABLITY (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of ranges of assumptions utilized in estimating the fair value of the conversion options and warrants

The ranges of assumptions utilized in estimating the fair value of the warrants and conversion options during the six months ended June 30, 2016, are as follows:

Expected Volatility	66% to 87%
Expected Term	0.4 to 5.0 Years
Risk Free Rate	0.36% to 1.21%
Dividend Rate	0.00%
Triggering Capital Raise Probabilities	50% - 75%

Schedule of of derivative activity

A summary of derivative activity for the six months ended June 30, 2016 is as follows:

Balance at December 31, 2015	$	25,445,645
New issuances		648,836
Conversion feature reclassified to equity upon conversion of related notes payable		(692,850	)
Change in fair value		(17,677,252	)
Balance at June 30, 2016	$	7,724,379

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STOCKHOLDER'S EQUITY (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Schedule of the warrant activity

The following is a summary of the Company’s warrant activity for the six months ended June 30, 2016:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at December 31, 2015		35,171,744	$	0.10	4.1 Years
Granted		6,666,953	$	0.27	4.8 Years
Outstanding at June 30, 2016		41,838,697	$	0.13	4.2 Years

Schedule of black - scholes option-pricing model valuation assumption

The Company determined the grant date fair value of the options granted during the six months ended June 30, 2016 using the Black Scholes Method and the following assumptions:

Expected Volatility – 80.0% to 93.0%

Expected Term – 2.5 – 3.1 Years

Risk Free Rate – 0.98%

Dividend Rate – 0.00%

Schedule of outstanding stock options

Activity related to stock options for the six months ended June 30, 2016 is summarized as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Contractual Term (Yrs)		Aggregate Intrinsic Value
Outstanding as of December 31, 2015		47,800,000	$	0.32		4.24	$	924,650
Granted		3,000,000	$	0.34		5.41	$	25,000
Outstanding as of June 30, 2016		50,800,000	$	0.32		4.31	$	949,650
Exercisable as of June 30, 2016		40,016,667	$	0.37		4.27	$	493,575

Schedule of stock option

The following table summarizes stock option information as of June 30, 2016:

Exercise Prices		Outstanding		Weighted Average Contractual Life	Exercisable
$	0.0001		3,500,000	4.25 Years		1,750,000
$	0.10		8,500,000	4.22 Years		4,625,000
$	0.15		6,300,000	4.25 Years		2,416,666
$	0.25		500,000	9.76 Years		100,000
$	0.40		1,000,000	4.67 Years		1,000,000
$	0.45		31,000,000	4.25 Years		30,125,000
	Total		50,800,000	4.31 Years		40,016,667

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DIRECT FINANCING LEASE (Tables)

6 Months Ended

Jun. 30, 2016

Capital Leases of Lessor [Abstract]

Schedule of future minimum lease payment

Future minimum lease payments to be received under this lease for the next five years and thereafter are as follows:

Year Ending December 31,
2016	$	61,074
2017		122,148
2018		122,148
2019		122,148
2020		122,148
2021		122,148
Thereafter		529,308
		1,201,122
Less deferred income		(460,221	)
Net investment in lease	$	740,901

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RESTATEMENT FOR THE THREE AND SIX-MONTHS ENDED JUNE 30, 2015 (Tables)

6 Months Ended

Jun. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Schedule of restatement of consolidated financial statements

The following summarizes the adjustments made to the Company’s previously reported amounts for the three and six months June 30, 2015. 

Condensed Consolidated Statements of Operations:

	Three Months Ended June 30, 2015
	As Reported			Reclassifications			As Reclassified			Adjustments			As Restated
Revenue	$	11,046		$	-		$	11,046		$	-		$	11,046
Operating Expenses:
Depreciation and amortization		11,469			-			11,469	(1)		32,549			44,018
Research and development		853			-			853			-			853
General and administrative		570,622			(67,918	)		502,704	(4),(5)		(46,344	)		456,360
Total operating expenses		582,944			(67,918	)		515,026			(13,795	)		501,231
Loss from operations		(571,898	)		67,918			(503,980	)		13,795			(490,185	)
Derivative expense		(3,680,374	)		-			(3,680,374	)(3)		815,021			(2,865,353	)
Interest expense		(11,741	)		(67,918	)		(79,659	)(3)		45,685			(33,974	)
Translation loss		(26,259	)		-			(26,259	)		-			(26,259	)
Net loss	$	(4,290,272	)	$	-		$	(4,290,272	)	$	874,501		$	(3,415,771	)
Net loss per share: Basic and Diluted	$	(0.03	)	$	-		$	(0.03	)	$	0.01		$	(0.02	)

	Six Months Ended June 30, 2015
	As Reported			Reclassifications			As Reclassified			Adjustments			As Restated
Revenue	$	11,046		$	-		$	11,046		$	-		$	11,046
Operating Expenses:
Depreciation and amortization		22,740			-			22,740	(1)		32,549			55,289
Research and development		24,853			-			24,853	(2)		200,000			224,853
General and administrative		1,043,459			(67,918	)		975,541	(4),(5)		(46,344	)		929,197
Total operating expenses		1,091,052			(67,918	)		1,023,134			186,205			1,209,339
Loss from operations		(1,080,006	)		67,918			(1,012,088	)		(186,205	)		(1,198,293	)
Derivative expense		(3,680,374	)		-			(3,680,374	)(3)		815,021			(2,865,353	)
Interest expense		(13,496	)		(67,918	)		(81,414	)(3)		45,685			(35,729	)
Translation loss		(26,259	)		-			(26,259	)		-			(26,259	)
Net loss	$	(4,800,135	)	$	-		$	(4,800,135	)	$	674,501		$	(4,125,634	)
Net loss per share: Basic and Diluted	$	(0.03	)	$	-		$	(0.03	)	$	0.01		$	(0.02	)

(1) Fair Value of Intangible Assets In Connection with Business Acquisition. During the three months ended June 30, 2015, the Company accounted for the acquisition of Multipay as a business combination using the acquisition method of accounting utilizing an incorrect valuation. The adjustment to reflect the correct valuation, including the purchase price allocation of assets acquired, resulted in an increase of $166,689 to Goodwill, $200,986 to Intangible Assets (net of $32,549 additional amortization) and $370,125 to Contingent Purchase Consideration as of June 30, 2015. In addition, certain previously reported contingent assets and liabilities of $149,848 were eliminated.

(2) Intangible Assets—Capitalized Software. The Company determined that previously capitalized software should have been expensed in accordance with US GAAP. Accordingly, a reduction of $200,000 to Intangible Assets and an increase to Research and Development Expenses is made as of and for the six months ended June 30, 2015.

(3) Derivative Liability. The fair value of the derivative liabilities related to convertible and other notes payable have now been estimated based on the Monte Carlo Simulation Model because it considers the effect of the down round feature (probability of a triggering capital raise) along with the other assumptions associated with the Black-Scholes option pricing model. The previously used methodology by the Company incorrectly did not take into consideration the probability of a financing at a price that would trigger the instruments down round provision. The adjusted fair value of the Company’s derivatives associated with its Convertible and other Notes Payable resulted in a decrease of $907,123 to the Derivative Liability as of June 30, 2015. For the three and six months ended June 30, 2015, the Company’s derivative expense is reduced by $815,021. In addition, the finalized fair value analysis of the Company’s derivatives associated with its Convertible and other Notes Payable required a reduction to the previously recorded Debt Discount and interest expense by $45,685 for the three and six months ended June 30, 2015.

(4) Stock-Based Compensation. The adjusted fair value of the Company’s stock-based compensation resulted in an increase to general and administrative expenses of $13,656 for the three and six months ended June 30, 2015. 

(5) Debt Issuance Costs. The capitalization of debt issuance costs as a reduction of the debt principal resulted in a reduction to convertible notes payable of $60,000 and a corresponding decrease to general and administrative for the three and six months ended June 30, 2015. The decrease to General and Administrative expenses, after considering the increase of $13,656 related to stock-based compensation in (4) above and the capitalization of debt issuance costs of $60,000 is $46,344 for the three and six months ended June 30, 2015. 

(6) Reclassifications. During the preparation of its consolidated financial statements for the year ended December 31, 2015, the Company changed or renamed the classification/description of certain accounts and related amounts. Accordingly, certain of the previously stated classifications/descriptions and related amounts required adjustment for the three and six months ended June 30, 2015. The reclassifications and description changes relate to General and Administrative and Interest expenses associated with the recording of the Debt Discount amortization.

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BASIS OF PRESENTATION (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Basic EPS
Income available to stockholders, Income	$ (832,691)	$ (3,415,771)	$ 6,859,819	$ (4,125,634)
Income available to stockholders, Shares	213,260,870	166,054,195	207,538,833	166,054,195
Income available to stockholders, Per-Share Amount	$ (0.00)	$ (0.02)	$ 0.03	$ (0.00)
Diluted EPS
Income available to stockholders plus assumed conversions, Income	$ (832,691)	$ (3,415,771)	$ (10,852,607)	$ (4,125,634)
Income available to stockholders plus assumed conversions, Shares	213,260,870	166,054,195	275,353,266	166,054,195
Income available to stockholders plus assumed conversions, Per-Share Amount	$ 0.00	$ (0.02)	$ (0.04)	$ 0.00
Stock Options [Member]
Effect of Dilutive Securities
Antidilutive securities, Income
Antidilutive securities, Shares			10,714,189
Warrant [Member]
Effect of Dilutive Securities
Antidilutive securities, Income
Antidilutive securities, Shares			25,634,957
Convertible Debt [Member]
Effect of Dilutive Securities
Antidilutive securities, Income			$ (17,712,426)
Antidilutive securities, Shares			31,465,287

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BASIS OF PRESENTATION (Details Narrative) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	[1]	Jun. 30, 2016	Jun. 30, 2015	[1]	Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Working capital deficit	$ (120,000,000)			$ (120,000,000)
Accumulated deficit	(32,214,771)			(32,214,771)			$ (39,074,590)
Revenue	489,995	$ 11,046		810,741	$ 11,046
Loss from operations	$ (4,222,255)	$ (490,185)		$ (8,544,656)	$ (1,198,293)

[1] Restated

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FIN HOLDINGS ACQUISITION (Details) - USD ($)	Feb. 08, 2016	Jun. 30, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Goodwill		$ 6,736,043	$ 166,689
Fin Holdings, Inc. [Member]
Business Acquisition [Line Items]
Common stock consideration	$ 9,000,000
Liabilities assumed	914,218
Total purchase consideration	9,914,218
Current assets	(843,317)
Property and equipment	(100,339)
Customer relationships	(1,587,159)
Intellectual property	(814,049)
Goodwill	$ 6,569,354

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FIN HOLDINGS ACQUISITION (Details 1) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Business Combinations [Abstract]
Pro forma net revenues	$ 932,297	$ 1,088,960
Pro forma net income (loss)	$ 6,852,278	$ (3,944,838)

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FIN HOLDINGS ACQUISITION (Details Narrative) - USD ($)		3 Months Ended			6 Months Ended
	Feb. 08, 2016	Jun. 30, 2016	Jun. 30, 2015	[1]	Jun. 30, 2016	Jun. 30, 2015	[1]
Business Acquisition [Line Items]
Revenues		$ 489,995	$ 11,046		$ 810,741	$ 11,046
Operating Income		$ (4,222,255)	$ (490,185)		(8,544,656)	$ (1,198,293)
Fin Holdings, Inc. [Member]
Business Acquisition [Line Items]
Revenues					670,000
Operating Income					$ 89,000
Fin Holdings, Inc. [Member] | Share Exchange Agreement [Member]
Business Acquisition [Line Items]
Percentage of common stock acquired	100.00%
Number of shares issued	22,500,000
Share issued price per share	$ 0.40
Value for number of shares issued	$ 9,000,000
Fin Holdings, Inc. [Member] | Douglas Solomon [Member]
Business Acquisition [Line Items]
Percentage of common stock acquired	1.70%

[1] Restated

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INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details)	6 Months Ended
	Jun. 30, 2016 USD ($)
Finite-Lived Intangible Assets [Line Items]
Carrying Value at beginning	$ 1,436,534
Additions	2,401,208
Amortization	(236,732)
Carrying Value at June 30, 2016	$ 3,601,010
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Lives	10 years
Carrying Value at beginning
Additions	1,587,159
Amortization	(61,635)
Carrying Value at June 30, 2016	$ 1,525,524
Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Lives	7 years
Carrying Value at beginning	$ 1,423,537
Additions	814,049
Amortization	(173,689)
Carrying Value at June 30, 2016	$ 2,063,897
Non-Compete [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Lives	5 years
Carrying Value at beginning	$ 12,997
Additions
Amortization	(1,408)
Carrying Value at June 30, 2016	$ 11,589

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INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 1) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Cost	$ 4,045,892
Accumulated amortization	(444,882)
Carrying Value	3,601,010	$ 1,436,534
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	1,587,159
Accumulated amortization	(61,635)
Carrying Value	1,525,524
Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	2,444,646
Accumulated amortization	(380,749)
Carrying Value	2,063,897
Non-Compete [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	14,087
Accumulated amortization	(2,498)
Carrying Value	$ 11,589

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INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 2) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
2016	$ 249,550
2017	494,950
2018	494,950
2019	494,950
2020	494,950
2021	496,631
Thereafter	875,029
Carrying Value	$ 3,601,010	$ 1,436,534

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PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 268,072	$ 157,215
Less Accumulated depreciation	143,469	119,440
Property and equipment, net	124,603	37,775
Computer and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	88,587	88,047
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 179,485	$ 69,168

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PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 24,029	$ 12,505

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Trade payables	$ 334,192	$ 301,455
Accrued interest	323,817	96,579
Accrued payroll and related	261,548	204,125
Other accrued expenses	78,566	115,341
Total	$ 998,123	$ 717,500

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NOTES PAYABLE, NET (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Short-term Debt [Line Items]
Total Principal Outstanding	$ 2,279,014	$ 2,196,669
Unamortized Deferred Debt Discounts	(482,943)	(1,193,947)
Unamortized Deferred Debt Issuance costs	(217,603)	(368,653)
Convertible Notes, Net	1,578,468	634,069
15.47% Promissory Note [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	79,014	96,669
12% Note Due August 2016 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	27,000	27,000
12% Note Due September 2016 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	973,000	973,000
12% Note Due October 2016 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	225,000	225,000
12% Note Due October 2016 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	25,000	25,000
12% Note Due December 2016 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	850,000	850,000
12% Note Due January 2017 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	$ 100,000

XML

NOTES PAYABLE, NET (Details 1)	6 Months Ended
	Jun. 30, 2016 USD ($)
Principal Balance [Roll Forward]
Balance at beginning	$ 2,196,669
New issuances	100,000
Payments	(17,655)
Amortization
Balance at end	2,279,014
Debt Issuance Costs [Roll Forward]
Balance at beginning	(368,653)
New issuances
Payments
Amortization	151,050
Balance at end	(217,603)
Debt Discounts [Roll Forward]
Balance at beginning	(1,193,947)
New issuances	(66,830)
Payments
Amortization	777,834
Balance at end	(482,943)
Total [Roll Forward]
Balance at beginning	634,069
New issuances	33,170
Payments	(17,655)
Amortization	928,884
Balance at end	$ 1,578,468

XML

NOTES PAYABLE, NET (Details Narrative)

1 Months Ended

6 Months Ended

Jan. 31, 2016

USD ($)

$ / shares

shares

Dec. 31, 2015

USD ($)

$ / shares

shares

Nov. 30, 2015

USD ($)

$ / shares

shares

Oct. 31, 2015

USD ($)

$ / shares

shares

Sep. 30, 2015

USD ($)

$ / shares

shares

Aug. 31, 2015

USD ($)

$ / shares

shares

Jun. 30, 2016

USD ($)

Note

$ / shares

shares

Short-term Debt [Line Items]

Total Principal Outstanding

$ 2,196,669

$ 2,279,014

Warrant [Member]

Short-term Debt [Line Items]

Exercise price (in dollars per share) | $ / shares

$ 0.58

Warrant term

5 years

15.47% Promissory Note [Member]

Short-term Debt [Line Items]

Number of notes issued | Note

3

Total Principal Outstanding

96,669

$ 79,014

Amount of principal and interest payment

$ 6,300

Interest rate

15.47%

12% Note Due August 2016 [Member]

Short-term Debt [Line Items]

Face amount

$ 27,000

Total Principal Outstanding

27,000

$ 27,000

Interest rate

12.00%

Description of collateral

assets of the Company

Conversion price (in dollars per share) | $ / shares

$ 0.10

Debt issuance costs

$ 148,160

12% Note Due August 2016 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased | shares

180,000

Exercise price (in dollars per share) | $ / shares

$ 0.15

Warrant term

5 years

12% Note Due September 2016 [Member]

Short-term Debt [Line Items]

Face amount

$ 973,000

Total Principal Outstanding

973,000

973,000

Interest rate

12.00%

Description of collateral

assets of the Company

Conversion price (in dollars per share) | $ / shares

$ 0.10

Debt issuance costs

$ 77,480

12% Note Due September 2016 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased | shares

6,486,667

Exercise price (in dollars per share) | $ / shares

$ 0.15

Warrant term

5 years

12% Note Due October 2016 [Member]

Short-term Debt [Line Items]

Face amount

$ 225,000

Total Principal Outstanding

225,000

225,000

Interest rate

12.00%

Description of collateral

assets of the Company

Conversion price (in dollars per share) | $ / shares

$ 0.10

Debt issuance costs

$ 36,400

12% Note Due October 2016 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased | shares

1,500,000

Exercise price (in dollars per share) | $ / shares

$ 0.15

Warrant term

5 years

12% Note Due October 2016 [Member]

Short-term Debt [Line Items]

Face amount

$ 25,000

Total Principal Outstanding

25,000

25,000

Interest rate

12.00%

Description of collateral

assets of the Company

Conversion price (in dollars per share) | $ / shares

$ 0.10

Debt issuance costs

$ 94,400

12% Note Due October 2016 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased | shares

166,667

Exercise price (in dollars per share) | $ / shares

$ 0.15

Warrant term

5 years

12% Note Due December 2016 [Member]

Short-term Debt [Line Items]

Face amount

850,000

Total Principal Outstanding

$ 850,000

850,000

Interest rate

12.00%

Description of collateral

assets of the Company

Conversion price (in dollars per share) | $ / shares

$ 0.48

12% Note Due December 2016 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased | shares

1,770,834

Exercise price (in dollars per share) | $ / shares

$ 0.48

Warrant term

5 years

12% Note Due January 2017 [Member]

Short-term Debt [Line Items]

Face amount

$ 100,000

Total Principal Outstanding

$ 100,000

Interest rate

12.00%

Description of collateral

assets of the Company

Conversion price (in dollars per share) | $ / shares

$ 0.48

12% Note Due January 2017 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased | shares

208,332

6,408,332

Exercise price (in dollars per share) | $ / shares

$ 0.48

Warrant term

5 years

5 years

XML

CONVERTIBLE NOTES PAYABLE, NET (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Short-term Debt [Line Items]
Total Principal Outstanding	$ 2,568,095	$ 1,038,095
Unamortized Deferred Debt Discounts	(442,097)	(583,049)
Unamortized Deferred Debt Issuance costs	(180,583)	(71,700)
Convertible Notes, Net	1,945,415	383,346
10% Convertible Notes Due June 2016 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	680,000	700,000
10% Convertible Notes Due July 2016 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	166,000	166,000
12% Convertible Notes Due September 2016 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	172,095	172,095
12% Convertible Notes Due October 2016 [Member]
Short-term Debt [Line Items]
Total Principal Outstanding	$ 1,550,000

XML

CONVERTIBLE NOTES PAYABLE, NET (Details 1)	6 Months Ended
	Jun. 30, 2016 USD ($)
Principal Balance [Roll Forward]
Balance at beginning	$ 1,038,095
New issuances	1,550,000
Conversions	(20,000)
Amortization
Balance at end	2,568,095
Debt Issuance Costs [Roll Forward]
Balance at beginning	(71,700)
New issuances	(226,400)
Conversions
Amortization	117,517
Balance at end	(180,583)
Debt Discounts [Roll Forward]
Balance at beginning	(583,049)
New issuances	(636,373)
Conversions
Amortization	777,325
Balance at end	(442,097)
Total [Roll Forward]
Balance at beginning	383,346
New issuances	687,227
Conversions	(20,000)
Amortization	894,842
Balance at end	$ 1,945,415

XML

CONVERTIBLE NOTES PAYABLE, NET (Details Narrative) - USD ($)

1 Months Ended

6 Months Ended

Apr. 30, 2016

Feb. 29, 2016

Jul. 31, 2015

Jun. 30, 2015

Jun. 30, 2016

Short-term Debt [Line Items]

Amount of note converted

$ 21,222

Number of shares issued on conversion

704,074

Warrant [Member]

Short-term Debt [Line Items]

Exercise price (in dollars per share)

$ 0.58

Warrant term

5 years

10% Convertible Notes Due June 2016 [Member]

Short-term Debt [Line Items]

Face amount

$ 700,000

Interest rate

10.00%

Description of collateral

The note are secured by the assets of the Company.

Conversion price (in dollars per share)

$ 0.03

Debt issuance costs

$ 124,500

Amount of note converted

$ 21,222

Number of shares issued on conversion

704,074

10% Convertible Notes Due June 2016 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased

15,400,000

Exercise price (in dollars per share)

$ 0.05

Warrant term

5 years

10% Convertible Notes Due July 2016 [Member]

Short-term Debt [Line Items]

Face amount

$ 190,000

Interest rate

10.00%

Description of collateral

The note are secured by the assets of the Company.

Conversion price (in dollars per share)

$ 0.03

Debt issuance costs

$ 16,200

10% Convertible Notes Due July 2016 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased

4,180,000

Exercise price (in dollars per share)

$ 0.05

Warrant term

5 years

12% Convertible Notes Due September 2016 [Member]

Short-term Debt [Line Items]

Face amount

$ 172,095

Interest rate

12.00%

Description of collateral

The note is secured by the assets of the Company.

Conversion price (in dollars per share)

$ 0.10

12% Convertible Notes Due October 2016 [Member]

Short-term Debt [Line Items]

Face amount

$ 1,550,000

Interest rate

12.00%

Description of collateral

The note is secured by the assets of the Company.

Conversion price (in dollars per share)

$ 0.25

Debt issuance costs

$ 226,400

12% Convertible Notes Due October 2016 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased

6,200,000

Exercise price (in dollars per share)

$ 0.25

Warrant term

5 years

12% Convertible Notes Due October 2016 [Member] | Common Stock [Member]

Short-term Debt [Line Items]

Number of shares issued

1,033,337

XML

DERIVATIVE LIABILITY (Details)	6 Months Ended
	Jun. 30, 2016
Dividend Rate	0.00%
Minimum [Member]
Expected Volatility	66.00%
Expected Term	4 months 24 days
Risk Free Rate	0.36%
Triggering Capital Raise Probabilities	50.00%
Maximum [Member]
Expected Volatility	87.00%
Expected Term	5 years
Risk Free Rate	1.21%
Triggering Capital Raise Probabilities	75.00%

XML

DERIVATIVE LIABILITY (Details 1)	6 Months Ended
	Jun. 30, 2016 USD ($)
Derivative Liability [Roll Forward]
Balance at beginning	$ 25,445,645
New issuances	648,836
Conversion feature reclassified to equity upon conversion of related notes payable	(692,850)
Change in fair value	(17,677,252)
Balance at ending	$ 7,724,379

XML

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2016	Feb. 08, 2016
Fin Holdings, Inc. [Member]
Short-term Debt [Line Items]
Number of shares issued for brokerage	675,000
Board of Director [Member] | Convertible Notes Payable [Member]
Short-term Debt [Line Items]
Convertible notes payable	$ 150,000
Network 1 Financial Securities, Inc. [Member]
Short-term Debt [Line Items]
Number of shares issued for brokerage	1,430,000
Commission rate	8.00%
Network 1 Financial Securities, Inc. [Member] | Securities Purchase Agreements [Member]
Short-term Debt [Line Items]
Cash fee	$ 124,000
Douglas Solomon [Member] | Fin Holdings, Inc. [Member]
Short-term Debt [Line Items]
Percentage of common stock acquired		1.70%

XML

STOCKHOLDER'S EQUITY (Details) - Warrant [Member]	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Outstanding at beginning | shares	35,171,744
Granted | shares	6,666,953
Outstanding at ending | shares	41,838,697
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning | $ / shares	$ 0.10
Granted | $ / shares	0.27
Outstanding at ending | $ / shares	$ 0.13
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Remaining Life [Roll Forward]
Outstanding at beginning	4 years 1 month 6 days
Granted	4 years 9 months 18 days
Outstanding at end	4 years 2 months 12 days

XML

STOCKHOLDER'S EQUITY (Details 1)	6 Months Ended
	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk Free Rate	0.98%
Dividend Rate	0.00%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Volatility	80.00%
Expected Term	2 years 6 months
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Volatility	93.00%
Expected Term	3 years 1 month 6 days

XML

STOCKHOLDER'S EQUITY (Details 2)	6 Months Ended
	Jun. 30, 2016 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning | shares	47,800,000
Granted | shares	3,000,000
Outstanding at end | shares	50,800,000
Exercisable at end | shares	40,016,667
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning | $ / shares	$ 0.32
Granted | $ / shares	0.34
Outstanding at end | $ / shares	0.32
Exercisable at end | $ / shares	$ 0.37
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Contractual Term [Roll Forward]
Outstanding at beginning	4 years 2 months 26 days
Granted	5 years 4 months 28 days
Outstanding at end	4 years 3 months 22 days
Exercisable at end	4 years 3 months 27 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Aggregate Intrinsic Value [Roll Forward]
Outstanding at beginning | $	$ 924,650
Granted | $	25,000
Outstanding at end | $	949,650
Exercisable at end | $	$ 493,575

XML

STOCKHOLDER'S EQUITY (Details 3)	6 Months Ended
	Jun. 30, 2016 shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding	50,800,000
Weighted Average Contractual Life	4 years 3 months 22 days
Exercisable	40,016,667
Exercise Price $0.0001 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding	3,500,000
Weighted Average Contractual Life	4 years 3 months
Exercisable	1,750,000
Exercise Price $0.10 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding	8,500,000
Weighted Average Contractual Life	4 years 2 months 19 days
Exercisable	4,625,000
Exercise Price $0.15 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding	6,300,000
Weighted Average Contractual Life	4 years 3 months
Exercisable	2,416,666
Exercise Price $0.25 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding	500,000
Weighted Average Contractual Life	9 years 9 months 4 days
Exercisable	100,000
Exercise Price $0.40 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding	1,000,000
Weighted Average Contractual Life	4 years 8 months 1 day
Exercisable	1,000,000
Exercise Price $0.45 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding	31,000,000
Weighted Average Contractual Life	4 years 3 months
Exercisable	30,125,000

XML

STOCKHOLDER'S EQUITY (Details Narative) - USD ($)

1 Months Ended

6 Months Ended

Jan. 31, 2017

Aug. 10, 2016

Apr. 30, 2016

Jan. 31, 2016

Jun. 30, 2016

Jun. 30, 2015

^[1]

Short-term Debt [Line Items]

Amount of note converted

$ 21,222

Number of shares issued on conversion

704,074

Value of shares issued for debt issuance costs

$ 169,125

Number of shares issued for debt issuance costs

1,430,000

Number of options granted

3,000,000

Number of options exercisable

40,016,667

Exercise price of option (in dollars per share)

$ 0.37

Expiration term

5 years

Weighted average contractual life

4 years 3 months 22 days

Stock based compensation

$ 6,152,490

$ 391,250

Unrecognized compensation costs

$ 2,357,000

Subsequent Event [Member]

Short-term Debt [Line Items]

Amount of note converted

$ 84,800,000

Number of shares issued on conversion

6,300,000

Expiration term

10 years

Weighted average contractual life

9 years 3 months

Tranche One [Member]

Short-term Debt [Line Items]

Number of options exercisable

1,000,000

Exercise price of option (in dollars per share)

$ 0.45

Description of vesting

Vesting over two years

Tranche Two [Member]

Short-term Debt [Line Items]

Number of options exercisable

1,000,000

Exercise price of option (in dollars per share)

$ 0.40

Description of vesting

Vesting on the date of grant

Tranche Three [Member]

Short-term Debt [Line Items]

Description of vesting

500,000 are exercisable at an exercise price of $0.25 per share with 100,000 exercisable immediately and the balance over vesting over two years, and 500,000 are exercisable at an exercise price of $0.10 per share vesting over two years.

Warrant [Member]

Short-term Debt [Line Items]

Exercise price (in dollars per share)

$ 0.58

Warrant term

5 years

Number of warrants issued for purchase of inventory

258,621

Fair value of warrant

$ 79,081

Volatility

81.00%

Term

5 years

Risk Free Rate

1.57%

Warrant [Member] | Subsequent Event [Member]

Short-term Debt [Line Items]

Number of common shares purchased

11,700,000

12% Convertible Notes Due October 2016 [Member]

Short-term Debt [Line Items]

Debt issuance costs

$ 226,400

12% Convertible Notes Due October 2016 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased

6,200,000

Exercise price (in dollars per share)

$ 0.25

Warrant term

5 years

12% Note Due January 2017 [Member] | Warrant [Member]

Short-term Debt [Line Items]

Number of common shares purchased

208,332

6,408,332

Exercise price (in dollars per share)

$ 0.48

Warrant term

5 years

5 years

12% Note Due January 2017 [Member] | Warrant #2 [Member]

Short-term Debt [Line Items]

Number of common shares purchased

208,332

Exercise price (in dollars per share)

$ 0.48

12% Note Due January 2017 [Member] | Warrant #1 [Member]

Short-term Debt [Line Items]

Number of common shares purchased

6,200,000

Exercise price (in dollars per share)

$ 0.25

Accredited Investor [Member] | 12% Convertible Notes Due October 2016 [Member]

Short-term Debt [Line Items]

Number of shares issued

1,033,337

Debt issuance costs

$ 54,470

Fin Holdings, Inc. [Member]

Short-term Debt [Line Items]

Number of shares issued for aquisition

22,500,000

Number of shares issued for services

675,000

Shares issued for services, value

$ 270,000

[1] Restated

XML

DIRECT FINANCING LEASE (Details)	Jun. 30, 2016 USD ($)
Capital Leases of Lessor [Abstract]
2016	$ 61,074
2017	122,148
2018	122,148
2019	122,148
2020	122,148
2021	122,148
Thereafter	529,308
Total	1,201,122
Less deferred income	(460,221)
Net investment in lease	$ 740,901

XML

DIRECT FINANCING LEASE (Details Narrative)	1 Months Ended	3 Months Ended	6 Months Ended
	Sep. 30, 2015 USD ($) Kiosks $ / Units	Jun. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)
Aggregate minimum future lease payments before executory costs		$ 1,201,122	$ 1,201,122
Cash Collection Services (the "Contract") [Member] | Recaudo Bogota S.A.S. [Member]
Number of kiosks | Kiosks	78
Contract term	10 years
Monthly rental before executory costs	$ 11,856
Rent expense	$ 142,272
Purchase price at the end of lease term (in dollars per unit) | $ / Units	40
Revenues		13,000	13,000
Executory costs	$ 1,677
Assets Held under Capital Leases [Member]
Equipment under capital lease		748,000	748,000
Aggregate minimum future lease payments before executory costs		$ 1,423,000	1,423,000
Unearned income			$ 474,000

XML

COMMITMENTS AND CONTINGENCIES (Details Narrative)	Jun. 30, 2016 USD ($)
Multipay S.A., a Colombian Corporation [Member]
Business Acquisition [Line Items]
Contingent liability	$ 370,000

XML

SUBSEQUENT EVENTS (Details Narrative)

1 Months Ended

3 Months Ended

6 Months Ended

Mar. 22, 2017

USD ($)

shares

Jan. 31, 2017

USD ($)

$ / shares

shares

Dec. 30, 2016

USD ($)

Kiosks

Aug. 10, 2016

USD ($)

$ / shares

shares

Dec. 27, 2016

USD ($)

shares

Aug. 26, 2016

USD ($)

shares

Jan. 31, 2016

USD ($)

$ / shares

shares

Sep. 30, 2015

Jun. 30, 2016

USD ($)

$ / shares

shares

Jun. 30, 2016

USD ($)

$ / shares

shares

Dec. 31, 2015

$ / shares

Number of option granted

3,000,000

Exercise price option (in dollars per share) | $ / shares

$ 0.34

Expiration term

5 years

Amount of debt converted | $

$ 21,222

Number of shares issued on conversion

704,074

Common stock, par value (in dollars per share) | $ / shares

$ 0.0001

$ 0.0001

$ 0.0001

12% Note Due January 2017 [Member]

Debt face amount | $

$ 100,000

Description of collateral

assets of the Company

Conversion price (in dollars per share) | $ / shares

$ 0.48

Warrant [Member]

Exercise price (in dollars per share) | $ / shares

$ 0.58

$ 0.58

Warrant [Member] | 12% Note Due January 2017 [Member]

Exercise price (in dollars per share) | $ / shares

$ 0.48

Number of common shares purchased

208,332

6,408,332

6,408,332

Securities Purchase Agreements [Member] | Network 1 Financial Securities, Inc. [Member]

Cash fee | $

$ 124,000

Cash Collection Services (the "Contract") [Member] | Recaudo Bogota S.A.S. [Member]

Revenues | $

$ 13,000

$ 13,000

Contract term

10 years

Subsequent Event [Member]

Expiration term

10 years

Amount of debt converted | $

$ 84,800,000

Number of shares issued on conversion

6,300,000

Conversion price (in dollars per share) | $ / shares

$ 0.10

Common stock, par value (in dollars per share) | $ / shares

$ 0.0001

Subsequent Event [Member] | Equity Compensation Plan [Member]

Exercise price (in dollars per share) | $ / shares

$ 0.05

Number of option granted

17,000,000

Amendment number of common shares granted

50,800,000

Description Vesting period

The Plan Options contain vesting periods of 12 quarters commencing on October 1, 2016 as well as various vesting milestones. The Plan Options are exercisable for a period of ten years. Further, the Company amended existing stock options to acquire 50,800,000 shares of common stock under its Equity Compensation Plan to extend the term from five years to 10 years.

Subsequent Event [Member] | Warrant [Member]

Number of common shares purchased

11,700,000

Subsequent Event [Member] | Mr. Philip D. Beck [Member]

Number of option granted

15,000,000

Exercise price option (in dollars per share) | $ / shares

$ 0.10

Expiration term

10 years

Subsequent Event [Member] | Mr. Stuart P. Stoller [Member]

Number of option granted

5,000,000

Exercise price option (in dollars per share) | $ / shares

$ 0.10

Expiration term

10 years

Subsequent Event [Member] | Subscription Agreements [Member] | Several Accredited Investors (the "April 2016 Accredited Investors") [Member]

Number of shares issued

25,000,000

Number of shares issued, value | $

$ 1,250,000

Subsequent Event [Member] | Subscription Agreements [Member] | Network 1 Financial Securities, Inc. [Member]

Cancellation of common stock

10,000,000

Cash fee | $

$ 240,000

$ 100,000

Number of shares issued

1,000,000

2,000,000

Subsequent Event [Member] | Subscription Agreements [Member] | Accredited Investor [Member]

Debt face amount | $

$ 830,000

Subsequent Event [Member] | Subscription Agreements [Member] | Several Accredited Investors (the "March 2017 Accredited Investors") [Member]

Number of shares issued

20,000,000

Number of shares issued, value | $

$ 4,000,000

Proceeds from issuance of shares | $

$ 3,170,000

Subsequent Event [Member] | Amended Agreement [Member]

Exercise price (in dollars per share) | $ / shares

$ 0.05

Subsequent Event [Member] | Amended Agreement [Member] | Parity Labs LLC [Member]

Number of shares issued

20,000,000

Exercise price (in dollars per share) | $ / shares

$ 0.05

Number of shares option vest

10,000,000

Vesting term

10 years

Description Vesting period

12 equal tranches of 833,333 shares per month commencing on September 1, 2016.

Subsequent Event [Member] | Securities Purchase Agreements [Member] | Several Accredited Investors (the "December 2016 Accredited Investors") [Member] | 12% Note Due January 2017 [Member]

Number of shares issued

1,912,500

Debt face amount | $

$ 1,275,000

Description of interest rate terms

Interest of 10% per annum for the initial six months of the term of the Notes and 15% per annum for the remaining six months of the term of the Notes.

Subsequent Event [Member] | Cash Collection Services (the "Contract") [Member] | ID Global LATAM S.A.S [Member] | Recaudo Bogota S.A.S. [Member]

Revenues | $

$ 30,000,000

Number of payments | Kiosks

740

Contract term

10 years

Amount of performance bond | $

$ 6,000,000

Subsequent Event [Member] | Securities Purchase Agreement [Member] | Network 1 Financial Securities, Inc. [Member]

Cash fee | $

$ 120,000

Number of shares issued

1,020,000

Subsequent Event [Member] | Securities Purchase Agreement [Member] | Accredited Investor [Member] | 10% Senior Unsecured Note Due January 2019 [Member]

Number of shares issued

4,500,000

Number of shares issued, value | $

$ 3,000,000

Subsequent Event [Member] | Restricted Stock Purchase Agreements [Member] | Mr. Philip D. Beck [Member]

Number of option granted

15,000,000

Subsequent Event [Member] | Restricted Stock Purchase Agreements [Member] | Mr. Stuart P. Stoller [Member]

Number of option granted

5,000,000

XML

RESTATEMENT FOR THE THREE AND SIX-MONTHS ENDED JUNE 30, 2015 (Details) - USD ($)		3 Months Ended			6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015		Jun. 30, 2016	Jun. 30, 2015
Revenues, net		$ 489,995	$ 11,046	[1]	$ 810,741	$ 11,046	[1]
Operating Expenses:
Depreciation and amortization		157,702	44,018	[1]	260,761	55,289	[1]
Research and development		292,592	853	[1]	321,664	224,853	[1]
General and administrative		4,147,408	456,360	[1]	8,540,314	929,197	[1]
Total operating expenses		4,712,250	501,231	[1]	9,355,397	1,209,339	[1]
Loss from operations		(4,222,255)	(490,185)	[1]	(8,544,656)	(1,198,293)	[1]
Derivative expense		4,735,589	(2,865,353)	[1]	17,677,252	(2,865,353)	[1]
Interest expense		(1,346,025)	(33,974)	[1]	(2,272,777)	(35,729)	[1]
Translation loss			(26,259)			(26,259)
Net income (loss)		$ (832,691)	$ (3,415,771)	[1]	$ 6,859,819	$ (4,125,634)	[1]
Net loss per share: Basic and Diluted (in dollars per share)			$ (0.02)			$ (0.02)
As Reported [Member]
Revenues, net			$ 11,046			$ 11,046
Operating Expenses:
Depreciation and amortization			11,469			22,740	[2]
Research and development			853			24,853	[3]
General and administrative			570,622			1,043,459
Total operating expenses			582,944			1,091,052
Loss from operations			(571,898)			(1,080,006)
Derivative expense			(3,680,374)			(3,680,374)
Interest expense			(11,741)			(13,496)
Translation loss			(26,259)			(26,259)
Net income (loss)			$ (4,290,272)			$ (4,800,135)
Net loss per share: Basic and Diluted (in dollars per share)			$ (0.03)			$ (0.03)
Reclassifications [Member]
Revenues, net
Operating Expenses:
Depreciation and amortization
Research and development
General and administrative			(67,918)			(67,918)
Total operating expenses			(67,918)			(67,918)
Loss from operations			67,918			67,918
Derivative expense
Interest expense			(67,918)			(67,918)
Translation loss
Net income (loss)
Net loss per share: Basic and Diluted (in dollars per share)
As Reclassified [Member]
Revenues, net			$ 11,046			$ 11,046
Operating Expenses:
Depreciation and amortization	[2]		11,469			22,740
Research and development			853			24,853	[3]
General and administrative	[4],[5]		502,704			975,541
Total operating expenses			515,026			1,023,134
Loss from operations			(503,980)			(1,012,088)
Derivative expense	[6]		(3,680,374)			(3,680,374)
Interest expense	[6]		(79,659)			(81,414)
Translation loss			(26,259)			(26,259)
Net income (loss)			$ (4,290,272)			$ (4,800,135)
Net loss per share: Basic and Diluted (in dollars per share)			$ (0.03)			$ (0.03)
Adjustments [Member]
Revenues, net
Operating Expenses:
Depreciation and amortization			32,549			32,549
Research and development						200,000
General and administrative			(46,344)			(46,344)
Total operating expenses			(13,795)			186,205
Loss from operations			13,795			(186,205)
Derivative expense			815,021			815,021
Interest expense			45,685			45,685
Translation loss
Net income (loss)			$ 874,501			$ 674,501
Net loss per share: Basic and Diluted (in dollars per share)			$ 0.01			$ 0.01

[1] Restated

[2] Fair Value of Intangible Assets In Connection with Business Acquisition. During the three months ended June 30, 2015, the Company accounted for the acquisition of Multipay as a business combination using the acquisition method of accounting utilizing an incorrect valuation. The adjustment to reflect the correct valuation, including the purchase price allocation of assets acquired, resulted in an increase of $166,689 to Goodwill, $200,986 to Intangible Assets (net of $32,549 additional amortization) and $370,125 to Contingent Purchase Consideration as of June 30, 2015. In addition, certain previously reported contingent assets and liabilities of $149,848 were eliminated.

[3] Intangible Assets-Capitalized Software. The Company determined that previously capitalized software should have been expensed in accordance with US GAAP. Accordingly, a reduction of $200,000 to Intangible Assets and an increase to Research and Development Expenses is made as of and for the six months ended June 30, 2015.

[4] Debt Issuance Costs. The capitalization of debt issuance costs as a reduction of the debt principal resulted in a reduction to convertible notes payable of $60,000 and a corresponding decrease to general and administrative for the three and six months ended June 30, 2015. The decrease to General and Administrative expenses, after considering the increase of $13,656 related to stock-based compensation in (4) above and the capitalization of debt issuance costs of $60,000 is $46,344 for the three and six months ended June 30, 2015.

[5] Stock-Based Compensation. The adjusted fair value of the Company's stock-based compensation resulted in an increase to general and administrative expenses of $13,656 for the three and six months ended June 30, 2015.

[6] Derivative Liability. The fair value of the derivative liabilities related to convertible and other notes payable have now been estimated based on the Monte Carlo Simulation Model because it considers the effect of the down round feature (probability of a triggering capital raise) along with the other assumptions associated with the Black-Scholes option pricing model. The previously used methodology by the Company incorrectly did not take into consideration the probability of a financing at a price that would trigger the instruments down round provision. The adjusted fair value of the Company's derivatives associated with its Convertible and other Notes Payable resulted in a decrease of $907,123 to the Derivative Liability as of June 30, 2015. For the three and six months ended June 30, 2015, the Company's derivative expense is reduced by $815,021. In addition, the finalized fair value analysis of the Company's derivatives associated with its Convertible and other Notes Payable required a reduction to the previously recorded Debt Discount and interest expense by $45,685 for the three and six months ended June 30, 2015.

XML

RESTATEMENT FOR THE THREE AND SIX-MONTHS ENDED JUNE 30, 2015 (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2016	Dec. 31, 2015	Mar. 31, 2015
Intangible Assets			$ 3,601,010	$ 1,436,534
Additional amortization			$ 444,882
Adjustments [Member]
Intangible Assets					$ (200,000)
Multipay S.A., a Colombian Corporation [Member] | Adjustments [Member]
Intangible Assets	$ 200,986	$ 200,986
Additional amortization	32,549	32,549
General and Administrative Expense [Member]
Debt issuance costs	60,000	60,000
Allocated stock based compensation	$ 13,656	$ 13,656