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.