SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

 

(Mark One)

☒

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

For the quarterly period ended June 30, 2015

 

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

 

ID GLOBAL SOLUTIONS CORPORATION

(Exact name of registrant as specified in its charter)

 

IIM GLOBAL CORPORATION

(Former Name of Registrant as Specified in its Charter)

 

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

 

160 E. Lake Brantley Drive
	Longwood, Florida 32779
(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   ☐   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.

 

☒   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       ☒
(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  ☒

 

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 June 30, 2015
Common Stock, par value $0.0001	173,284,806 shares
Documents incorporated by reference:	None
☐  No

 

 

  

TABLE OF CONTENTS
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		15
Item 3.	Quantative and Qualitative Disclosures About Market Risk.		18
Item 4.	Controls and Procedures.		18
	PART II - OTHER INFORMATION
Item 1. Legal Proceedings.			19
Item 1A. Risk Factors.			19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			19
Item 3. Defaults Upon Senior Securities.			19
Item 4. Mine Safety Disclosures.			19
Item 5. Other Information.			19
Item 6. Exhibits.			19

 

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 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, 2014 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 “ID Global,” the “Company,” “we,” “our,” “us,” and similar terms refers to ID Global Solutions Corporation, a Delaware corporation formerly known as IM Global Corporation and its subsidiaries..

 

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

 

 

FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014 (audited)		4
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2015 and 2014 (unaudited)		5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015  and 2014 (unaudited)		6
Notes to Unaudited Condensed Consolidated Financial Statements		7-15

ID Global Solution Corporation

(FORMERLY:IIM GLOBAL CORP.) 

CONDENSED CONSOLIDATED BALANCE SHEETS

  

		June 30, 2015				December 31, 2014
Current Assets:		(unaudited)				(audited)
Cash		$	525,541			$	159,296
Other Current Assets		$	237,311
Total Current Assets			762,852				159,296
Property and equipment, net			31,885				21,582
Other assets			240,636				174,387
Intangible assets, net			1,425,728				421,774
Total assets		$	2,461,101			$	777,039
Current liabilities:
Accounts payable and accrued expenses		$	5,068,893			$	150,228
Related party payables			83,838				60,200
Notes payable - related parties, current portion			588,908				48,417
Total current liabilities			5,741,639				258,845
Commitments
Stockholders’ Equity:
Common stock, $0.0001 par value, 300,000,000 shares authorized, 173,284,806 and 160,623,289 shares issued and authorized at June 30, 2015 and December 31, 2014, respectively			17,939				16,354
Additional paid-in capital			3,897,688				2,897,261
Accumulated deficit			-7,195,555				-2,395,421
Total stockholders’ equity			-3,280,538				518,195
Total liabilities and stockholders’ equity		$	2,491,101			$	777,040

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

ID Global Solution Corporation 

(FORMERLY:IIM GLOBAL CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

(unaudited)

  

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
Total Income		$	11,046			$	—			$	11,046			$	—
Operating Expenses
Depreciation and amortization			11,469			$	11,891				22,740				23,516
Research and development			853								24,853				—
General and administrative			4,250,996				149,495				4,723,833				250,154
Total operating expenses			4,263,318				161,386				4,771,426				273,670
Loss from operations			-4,252,272				-161,386				-4,760,380				-273,670
Loss on sale of property and equipment			—								—
Interest expense, net			-11,741				-22,500				-13,496				-32,050
Translation loss			-26,259								(26,259	)
Loss before income tax			-4,290,272				-183,886				-4,800,135				-305,720
Income tax expense			—
Net loss		($	4,290,272	)		($	183,886	)		($	4,800,135	)		($	305,720	)
Net loss per share: Basic and diluted		($	0.03	)		$	0.00			($	0.03	)		$	0.00
Weighted average shares outstanding: Basic and diluted			166,054,195				160,623,289				166,054,195				160,623,289

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

ID Global Solution Corporation 

(FORMERLY:IIM GLOBAL CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(unaudited)

		June 30, 2015				June 30, 2014
Operating Activities
Net loss		($	509,861	)		($	305,720	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense			11,271				23,516
Share based payment for services			172,833				—
Changes in operating assets and liabilities:
Other assets			—				—
Accounts payable and accrued expenses			(12,393	)			(3,006	)
Security Deposit							112,000
Due to related parties			0
Net cash used in operating activities			(307,700	)			(173,210	)
Purchase of Fixed Assets							(419,266	)
Investing Activities
Investment in intangibles			(4,535	)			(77,694	)
Investment in other assets			(29,003	)			—
Net cash used in investing activities			(33,538	)			(496,960	)
Financing Activities
Proceeds from note payable to related parties			197,095				910,010
Payments of notes payable			(1,625	)			(224,625	)
Net cash provided by financing activities			195,470				685,385
Net change in cash			(145,768	)			15,205
Cash, beginning of the period			159,296				5,349
Cash, end of the period		$	13,528			$	20,554
Supplemental disclosure of cash flow information:
Cash Paid for Interest paid			—			$	22,500

  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

ID GLOBAL SOLUTIONS CORPORATION

(FORMLY IIM GLOBAL CORPORATION)
Notes to the Unaudited Condensed Consolidated Financial Statements

 

NOTE 1 – DESCRIPTION OF BUSINESS AND MERGER

 

ID Global Solutions Corporation (formerly IIM Global Corporation) (formerly Silverwood Acquisition Corporation) (“ID Global” or the “Company”) was incorporated on September 21, 2011 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. In addition to a change in control of its management and shareholders, the Company’s operations to date have been limited to issuing shares and filing a registration statement on Form 10 pursuant to the Securities Exchange Act of 1934. ID Global was formed to provide a method for a foreign or domestic private company to become a reporting company with a class of securities registered under the Securities Exchange Act of 1934.

 

The Company is developing biometric products and solutions for global Government, Enterprise, and Consumer markets.  The Company is planning to focus in two specific technology areas: biometric handheld identification and biometric mobile payment.  The Company’s objective is to focus on two distinct markets, one being the Government market requiring solutions for addressing its security and associated identity management needs and the other the Consumer Mobile Payment market which is looking to define non obtrusive but highly secure solutions used for credit and debit card payments that can incorporate biometric technologies.  To address these markets the Company has invested into patenting and developing both hardware and software platforms focused to address these specific market requirements.  

 

Management believes that one of the advantages of the Company’s platform approach is that the platforms could be leveraged to support a wide variety of vertical markets in both the Government and Mobile Payment space and could be easily adapted to new markets requiring low cost and configurable solutions.  These vertical markets are as an example border control, public safety, enterprise security and asset management, seaports, small business inventory management, military and banking (identity verification).  There are no assurances, however, that management’s beliefs are correct.

 

The Company, however, has not completed development of a marketable product and needs to raise substantial additional capital to complete these efforts.

 

On April 6, 2015 (the “Closing Date”), ID Global Solutions Corporation (the “Company”) and all of the shareholders (the “Multipay Shareholders”) of Multipay S.A., a Colombian corporation (“Multipay”), closed (the “Closing”) on the Share Purchase Agreement entered into between the parties on March 6, 2015. As a result of the Closing, the Company acquired 100% of the issued and outstanding shares of Multipay (the “Multipay Shares”) from the Multipay Shareholders on a fully diluted basis. In consideration for the Multipay Shares, the Company issued and sold to the Multipay Shareholders an aggregate of 7,600,000 shares of common stock of the Company. Within ten days of the Closing Date, the Company is required to issue 7,000,000 shares of common stock. Upon the Multipay Shareholders paying certain liabilities in the approximate amount of US $340,000, the Company is required to deliver the balance of 600,000 shares of common stock to the Multipay Shareholders. In the event the Multipay Shareholders do not pay the required amount by the 12-month anniversary of the Closing Date, the Company will not be required to deliver the remaining shares of common stock. On May 7, 2015, the Company and Multipay executed an amendment to the Share Purchase Agreement to amend the 7,000,000 shares to be issued within ten days of the Closing Date to 6,101,517 shares and the 600,000 shares to be delivered upon Multipay Shareholders paid off the required amount to 1,498,483 shares.

 

Multipay through the use of its own proprietary software platforms is engaged in providing an array of value added payment gateway services as well as complimentary mobile wallet applications and services to various customers in Colombia and Peru. The company was established in December of 2008 and has 14 full time employees based in Bogota, Colombia.  

 

Going Concern

 

The Company has an accumulated deficit of $7,173,631 as of June 30, 2015. Which has increased by $4,778,211 since December 31, 2014 due to the booking of a derivative liability resulting from a capital raise of $850,000 in the form of a convertible debenture. Which was backed by stock at $0.03 per share and warrants at $0.05 per share. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or obtain additional financing from its stockholders and/or other third parties.

 

These 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 its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, successfully locating and negotiating with other business entities for potential acquisition and /or acquiring new clients to generate revenues.

 

 

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

 

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. Such consolidated financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements. These unaudited condensed consolidated financial statements and the related notes should be read in conjunction with our audited consolidated financial statements and notes for the year ended December 31, 2014 which are included in our current report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2015.

 

Use of Estimates

 

In preparing these consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in our consolidated financial statements relate to the valuation of long-lived assets, accruals for potential liabilities, and valuation assumptions related to equity instruments and share based payments.

 

Principles of Consolidation 

 

The condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. Inter-Company items and transactions have been eliminated in consolidation.

 

Concentration of Credit Risk

 

The Company’s financial instruments that potentially expose the Company to a concentration of credit risk consist of cash, accounts payable, accrued expense and a related party payable. The Company’s cash is deposited at a financial institution and insured by the Federal Deposit Insurance Corporation (“FDIC”). At various times during the year, the Company may have exceeded this amount insured by the FDIC.

 

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.

 

Accounts Receivable and Revenue

 

Revenue is recognized on the sale of a product when the product is shipped, which is when the risk of loss transfers to our customers, the fee is fixed and determinable, and collection of the sale is reasonably assured. A product is not shipped without an order from the customer and the completion of credit acceptance procedures. Accounts receivable are reviewed periodically for collectability.

 

Property and Equipment, net

 

Property and equipment consisted of furniture and fixtures and computer equipment, and are stated at cost. Property and equipment are depreciated using the straight-line method over the estimated service lives of three to five years. Maintenance and repairs are expensed as incurred and improvements are capitalized. Gains or losses on the disposition of property equipment are recorded upon disposal. All property and equipment were purchased by one of the Company’s officers and shareholder and were recorded as additional capital contribution in the accompanying balance sheet.

 

 

Derivative financial instruments

 

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

 

Other Assets

 

Other assets consist primarily of costs associated with the construction of HDR mobile biometric devises. As of June 30, 2015, the devises are still under construction and have not been placed in service. Upon completion, the amounts will be recorded as property and equipment and depreciated over their estimated useful lives.

 

Intangible Assets

 

Acquired intangible assets are amortized over their useful lives unless the lives are determined to be indefinite. Acquired intangible assets are carried at cost, less accumulated amortization. Amortization of finite-lived intangible assets is computed over the useful lives of the respective assets. The Company amortizes intangible assets over ten years.

 

Impairment of Long-Lived Assets

 

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

 

If the carrying amount of an asset exceeds its undiscounted estimated future cash flows, an impairment review is performed. An impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. There were no impairment charges during the three months period ended June 30, 2015 and for the year ended December 31, 2014.

 

Research and Development Costs

 

Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to vendors contracted to perform research projects and develop technology for the Company’s products.  Research and development costs are expensed as incurred.

 

Net Loss per Common Share

 

The Company computes net loss per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. 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 preferred stock, 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 or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.

 

 

Fair Value Measurements

 

ASC 820, “Fair Value Measurements”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, inputs other than level one that are either directly or indirectly observable such as quoted prices for identical or similar assets or liabilities on markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company had no assets or liabilities required to be recorded at fair value on a recurring basis at June 30, 2015 and December 31, 2014.

 

Recent Accounting Pronouncements

 

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the ASC thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP.  In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements from the Company.

 

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40). ASU 2014-15 defines management’s responsibilities to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern. The amendments in ASU 2014-15 will be effectively prospectively for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-15 for the year ended December 31, 2014.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

NOTE 3 – INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

 

		June 30,				December 31,
		2015				2014
		(unaudited)				(audited)
HDR		$	175,211			$	170,394
SRIO			124,636				121,730
New product development			10,818				10,818
Software			1,212,846				200,000
			1,523,511				502,942
Less: accumulated depreciation			97,783				81,169
Intangible Assets, Net		$	1,425,728			$	421,774

 

Intangible assets consist of legal and global patent registration costs related to the Company’s technology HDR (Handheld biometric mobile devices) and SRIO (Biometric wallet devices). Intangible assets are amortized over ten years.

 

 

The Company decided to refocus its research and development on its next generation of HDR Intelligent Accessory platform instead of developing the new HDR+.  To achieve this it has contracted a Mechanical Designer and H/W and Embedded S/W Engineer to complete this task.  The project will require an additional 6 months and approximately $200,000 to productize into a device that can be sold to Government, or Enterprise customers.  The costs associated with the development of this new product are recorded in intangible assets in the accompanying consolidated balance sheet and are reflected as new product development above. 

 

NOTE 4 – PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

 

		June 30,				December 31,
		2015				2014
Computer equipment		$	35,820			$	35,820
Furniture and fixtures			114,342				54,016
			150,162				89,836
Less: accumulated depreciation			118,277				68,253
Property and Equipment, Net		$	31,885			$	21,582

 

Property and equipment consist of furniture and fixtures and computer equipment.  The furniture and computer equipment are being depreciated over a period of from three to five years.

In May 2014, the Company acquired an office building for a purchase price of $430,000, which was sold in December 2014 for $240,000. The Company recorded a loss on sale of the building of $71,616 in the accompanying consolidated statement of operations for the year ended December 31, 2014. The Company amortized the non-refundable deposit $100,000 to expense in 2014.

 

Depreciation expense for ID Global and MultiPay for the six months ended June 30, 2015 was $12,505.

 

 

NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

 

		June 30,				December 31,
		2015				2014
Derivative Liability		$	4,530,375			$
Accounts payable			589,406			$	40,486
Payroll related liabilities			225,335				109,740
Loans			586,310				46,792
Other current liabilities			11,435				0
		$	5,942,861			$	197,019
Related party payables		$	83,838			$	60,200
Total Current Liabilities		$	6,026,699			$	257,219

 

The related party payable was owned to a company wholly owned by a major shareholder of the Company and owned to a service provider for services performed.

 

NOTE 6 – PROMISSORY NOTES – RELATED PARTY
Promissory notes – related party outstanding totaled $389,190 as of June 30, 2015:

 

		June 30,				December 31,
		2015				2014
Short-term borrowings from a company owned by one of the stockholders.  The borrowings are due on demand and are non-interest bearing.  In January 2015, the amounts have been paid in full.		$	—			$	1,625
Promissory note issued to a company owned by a stockholder of the Company in December 2014 bearing interest rate of 15% per annum. This promissory note is due on June 30, 2015.			37,095				46,792
Promissory note issued to a company owned by a stockholder of the Company in March 2015 bearing interest rate of 15% per annum. This promissory note is due on September 30, 2015.			10,095				—
Promissory note issued to a company owned by a stockholder of the Company in March 2015 bearing interest rate of 15% per annum. This promissory note is due on September 30, 2015.			15,000				—
Promissory note issued to a company owned by a stockholder of the Company in March 2015 bearing interest rate of 15% per annum. This promissory note is due on September 30, 2015.			32,000				—
Promissory note issued to a company owned by a stockholder of the Company in March 2015 bearing interest rate of 15% per annum. This promissory note is due on September 30, 2015.			10,000				—
Promissory note issued to a company owned by a stockholder of the Company in March 2015 bearing interest rate of 15% per annum. This promissory note is due on September 30, 2015.			130,000
Promissory note issued to a company owned by a stockholder of the Company in May 2015 bearing interest rate of 10% per annum. This promissory note is due on September 15, 2015.			55,000
Promissory note issued to a company owned by a stockholder of the Company in May 2015 bearing interest rate of 10% per annum. This promissory note is due on September 15, 2015.			100,000
		$	389,190			$	48,417

 

 

NOTE 7 – ACQUISITION OF MULTI-PAY

 

On April 6, 2015 (the “Closing Date”), the Company and all of the shareholders (the “Multipay Shareholders”) of Multipay S.A., a Colombian corporation (“Multipay”), closed (the “Closing”) on the Share Purchase Agreement entered into between the parties on March 6, 2015. As a result of the Closing, the Company acquired 100% of the issued and outstanding shares of Multipay (the “Multipay Shares”) from the Multipay Shareholders on a fully diluted basis. In consideration for the Multipay Shares, the Company issued and sold to the Multipay Shareholders an aggregate of 7,600,000 shares of common stock of the Company. Within ten days of the Closing Date, the Company is required to issue 7,000,000 shares of common stock. Upon the Multipay Shareholders paying certain liabilities in the approximate amount of US $340,000, the Company is required to deliver the balance of 600,000 shares of common stock to the Multipay Shareholders. In the event the Multipay Shareholders do not pay the required amount by the 12-month anniversary of the Closing Date, the Company will not be required to deliver the remaining shares of common stock. On May 7, 2015, the Company and Multipay executed an amendment to the Share Purchase Agreement to 1) amend the number of shares to be issued within ten days of the Closing Date from 7,000,000 shares to 6,101,517 shares; and 2) to amend the balance of shares to be delivered from 600,000 shares to 1,498,483 shares, upon the payment of certain liabilities by the Multipay Shareholders. The 6,101,517 shares will be issued on May 18, 2015. The Company has recorded contingent assets and related contingent liability from the acquisition 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.

The purchase price was allocated to specific identifiable tangible and intangible assets at their fair value at the date of the purchase in accordance with Accounting Standards Codification 805, “Business Combinations”, as follows:

 

Allocation
Assets		$	288,027
Intangible assets			1,054,333
Total			(299,628	)
Less fair value of liabilities			(732,209	)
Purchase price		$	610,151

 

NOTE 8 – DERIVATIVE LIABILITY

 

In April 2008, the FASB issued a pronouncement that provides guidance on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in the pronouncement on accounting for derivatives. This pronouncement was effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of these requirements can affect the accounting for warrants and many convertible instruments with provisions that protect holders from a decline in the stock price (or “down-round” provisions). For example, warrants or conversion features with such provisions are no longer recorded in equity. Down-round provisions reduce the exercise price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price.

 

 

As of June 30, 2015, the Company had outstanding convertible notes for $850,000 and warrants of 19,490,909 that the Company determined were a derivative liability due to the “reset” clause associated with the note and warrant’s conversion price. The Company had valued the derivative liability of these notes at $4,530,375 using the Black-Scholes-Merton option pricing model.

 

The Company uses a weighted average Black-Scholes-Merton option pricing model with the following assumptions to measure the fair value of derivative liability at June 30, 2015:

 

Stock price		$0.10
Risk free rate		0.28% - 1.63%
Volatility		325%
Conversion/ Exercise price		$0.03 - $0.05
Dividend rate		0%
Term (years)		0.42 to 5.0

 

The following table represents the Company’s derivative liability activity for the period ended June 30, 2015:  

 

				Amount
	Derivative liability balance, December 31, 2014			$	—
	Issuance of derivative liability during the period ended June 30, 2015				4,030,124
	Change in derivative liability during the nine months ended June 30, 2015				500,251
	Derivative liability balance, June 30, 2015			$	4,530,375

 

NOTE 9 – CONVERTIBLE DEBT

 

During the quarter ended June 30, 2015, the Company issued convertible debentures to investors in the aggregate principal amount of $850,000. The convertible debentures (i) are secured, (ii) bear interest at the rate of 10% per annum, and (iii) are due the earlier of one year from the date of issuance or upon the closing of a debt or equity financing in excess of $2,000,000. The convertible debentures are convertible at any time at the option of the investor into shares of the Company’s common stock that is determined by dividing the amount to be converted by $0.03. However, the conversion prices ranging from $0.03 to $0.055 can be adjusted downward if certain conditions take place such as the Company issuing securities for a price less than the conversion price.

 

In connection with the issuance of these convertible debentures, the Company also issued to each investor an aggregate of 19,490,909 warrants to purchase shares of the Company common stock. The warrants have an exercise prices ranging from $0.05 to $0.055 per share and expire five years from the date of issuance. However, the exercise price can be adjusted downward if certain conditions take place such as the Company issuing securities for a price less than the exercise price.

 

Due to the potential adjustment in the conversion price associated with these convertible debentures and the potential adjustment in the exercise price of the warrants, the Company has determined that the conversion feature and warrants are considered derivative liabilities. The embedded conversion feature and the fair value of the warrants was initially calculated to be $2,408,670 and $1,621,454, respectively, which are recorded as a derivative liability as of the date of issuance. The derivative liability was first recorded as a debt discount up to the face amount of the convertible debentures of $850,000 with the remaining $3,180,124 begin charge as a financing cost during the quarter ended June 30, 2015. The debt discount is being amortized over the five months to one year terms of the convertible debentures. The Company recognized interest expense of $62,819 during the quarter ended June 30, 2015 related to the amortization of the debt discount.

 

NOTE 10 – RESEARCH AND DEVELOPMENT

 

On April 1, 2013, the Company entered into an engineering contract for the hardware and software development of its next generation HDR device called the HDR+.  The device is to be used by government and enterprise customers to capture all forms of machine-readable data as well as the facial and fingerprint biometric information of persons. As of December 31, 2013, the Company had paid $44,000 in cash, which has been recorded as research and development expense.  Due to slippages in the development deliverables and lack of proper documentation being supplied the Company terminated this agreement on November 11, 2013.

 

 

The Company in 2014 has also started to utilize the services of a Kiosk manufacturer, Slabb Inc., for the production of its new Multi-modal Biometric Enrolment and Verification Kiosk.  No formal agreement is in place, beyond a standard Non-Disclosure Agreement and the Company can utilize these services on an as needed basis.

 

NOTE 11 – STOCKHOLDER’S EQUITY (DEFICIT)

 

The Company has 300,000,000 shares authorized and 173,284,806 issued and outstanding as of June 30, 2015.

 

In the second quarter, the Company issued a total of 9,746,518 common shares at a weighted average of $0.18 per shares. There were 6,101,517 shares issued in conjunction with the MultiPay Acquisition, 2,000,000 shares issued in relation to the $700,000 capital raise and 1,645,001 shares for services provided to the company.

 

On September 24, 2014, the Company issued a total of 2,915,000 common shares to Penn Investments, Inc. for the conversion of outstanding debt and interest.

 

NOTE 12 – COMMITMENTS AND CONTINGENCIES

 

Operating Leases

 

The Company leased its building under a six months term lease with an option to buy at the end of the term. During the lease term, the Company is required to make a monthly lease payment of $3,000 per month.

 

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. 

  

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

 

As of June 30, 2015, ID Global in conjunction with MutliPay generated revenues of $554,130 in 2015 and had accumulated a net loss of $7,226,236 since inception.

 

In August 2013 ID Global officially entered into a business combination with Innovation in Motion, Inc., a private company operating in two technology fields: the handheld identification market and mobile payment market. Innovation In Motion, Inc. brought a range of state-of-the-art products in these fields and has begun serious market penetration with the sale and placement of units.

 

The Company is developing biometric products and solutions for global Government, Enterprise, and Consumer markets.  The Company is planning to focus in two specific technology areas: biometric handheld identification and biometric mobile payment.  The Company’s objective is to focus on two distinct markets, one being the Government market requiring solutions for addressing its security and associated identity management needs and the other the Consumer Mobile Payment market which is looking to define non obtrusive but highly secure solutions used for credit and debit card payments that can incorporate biometric technologies. To address these markets the Company has invested into patenting and developing both hardware and software platforms focused to address these specific market requirements.  

  

Management believes that one of the advantages of the Company’s platform approach is that the platforms could be leveraged to support a wide variety of vertical markets in both the Government and Mobile Payment space and could be easily adapted to new markets requiring low cost and configurable solutions. These vertical markets are as an example border control, public safety, enterprise security and asset management, seaports, small business inventory management, military and banking (identity verification).  There are no assurances, however, that management’s beliefs are correct.

 

 

The Company, however, has not completed development of a marketable product and needs to raise substantial additional capital to complete these efforts.

  

Going concern

 

We have not reported revenues in ID Global during 2015 and have an accumulated deficit of approximately $7.2 million at June 30, 2015. MultiPay has reported revenues in the amount of $554,130.00 in 2015. The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2014 and 2013 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our net losses. These factors, among others, raised substantial doubt about our ability to continue as a going concern. Our consolidated financial statements appearing elsewhere in this report do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to report revenues or to continue as a going concern, in which event investors would lose their entire investment in our company.

 

THREE AND SIX MONTHS ENDED JUNE 30, 2015 COMPARED TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2014

 

		Three months ended June 30,								Six months ended June 30,
		2015				2014				2015				2014
Net Revenues		$	554,130			$	—			$	0.02
Cost of sales			—				—				—
Operating Expenses:
Depreciation and amortization			19,413				11,891				22,647				23,516
Research and development			853								24,853
General and administrative			4,526,346				149,495				4,717,938				250,154
Total operating expenses			4,546,612				161,386				4,765,437				273,670
Loss from operation			(3,992,482	)			(161,386	)			(4,765,437	)			(273,670	)
Total other income (expense)			(58,248	)			(22,500	)			(12,774	)			(32,050	)
Net income (loss)		$	(4,050,730	)		$	(183,886	)		$	(4,778,211	)		$	(305,720	)

 

Three and Six Month Periods Ended June 30, 2015 and 2014

 

Revenues

 

During the three and six month periods ended June 30, 2015 and 2014, no revenues were generated by ID Global, however MultiPay has generated $554,130 since December 31, 2014.

 

Expenses

 

Research and Development Expense. For the six months ended June 30, 2015, the Company incurred $24,853 in research and development primarily for the Colombia Transit Kiosk Project which was a 100% increase from the six months ended June 30, 2014.

 

 

Depreciation and Amortization expense. For the six months ended June 30, 2015, depreciation and amortization expense remained relatively constant as compared to the six months ended June 30, 2014. 

 

		Six Months Ended				Six Months Ended
		June 30, 2015				June 30, 2014
Occupancy		$	9,300			$	22,899
Payroll and related			369,788				65,913
Professional fees			302,369				125,956
Internet/Phone			4,006				8,715
Travel/Entertainment			13,827				5,104
Marketing			0				8,143
Other			3,827,057				13,424
Total General and Administrative		$	4,526,346			$	250,154

 

For the six months ended June 30, 2015, Occupancy expenses were reduced by $13,599.

 

For the six months ended June 30, 2015, Payroll and Related expenses increased due to Company’s officers beginning to take salaries and the hire of a Chief Financial Officer.

 

For the six months ended June 30, 2015, Professional fee expense increased due to Legal and Consulting Fee expense that were incurred in 2014 due to the acquisition of MultiPay on March 6, 2015 and a capital raise of $850,000.

 

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, 2015, we had total current assets of $695,571 and we had total current liabilities of $6,026,699.

 

On a cash basis operating activities used $865,793 and $307,365 in cash for the six months ended June 30, 2015 and 2014, respectively.

 

As of June 30, 2015 and the date of this report, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. 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. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. 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 business.

 

As of June 30, 2015 our Intangible Assets which consist of SRIO (Biometric wallet devices), HDR (Handheld biometric mobile devices) and software, continue to be viable. It has been confirmed during the preparation of the 10K that an impairment reserve is not required.

 

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 the unaudited financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Information not required to be filed by Smaller Reporting Companies.

  

ITEM 4. CONTROLS AND PROCEDURES.

  

Evaluation of Disclosure Controls and Procedures.

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company’s management, under the supervision and with the participation of the Chief Executive Officer who also serves as our principal financial and accounting officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of June 30, 2015, the end of the period covered by this Quarterly Report on Form 10-Q.

 

Based upon that evaluation, the Chief Financial Officer who also serves as our principal financial and accounting officer concluded that, as of June 30, 2015, the disclosure controls and procedures were not effective as a result of continuing weaknesses in its internal control over financial reporting as identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including the principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There was no change in the Company’s internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

 PART II 

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no pending, threatened or actual legal proceedings in which the Company or any subsidiary is a party.

 

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, 2014. There has been no material change in our risk factors from those previously discussed in the Annual Report on Form 10-K, except as follows:

 

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

 

None except as previously reported. 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable to our operations. 

 

ITEM 5. OTHER INFORMATION

 

See ITEM 1A above.

 

ITEM 6. EXHIBITS 

3.3	Certificate of Ownership and Merger (incorporated by reference to the Current Report on Form 8-K as filed on October 9, 2014)
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 principal financial and accounting officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act*
32.1	Certification of Chief Executive Officer and principal financial and accounting officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
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

  

 

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. 

IIM GLOBAL CORPORATION
	By: /s/ Thomas R. Szoke
	Thomas R. Szoke, Chief Executive Officer,
	Principal financial and accounting officer
Dated: August 19, 2015