Document:

Exhibit 4.1

 

 

SUBSCRIPTION AGREEMENT

 

SUBSCRIPTION AGREEMENT (this
“Agreement”) made as of the last date set forth on the signature page hereof between Ipsidy Inc., a Delaware
corporation (the “Company”), and the undersigned (the “Subscriber”).

 

W I T N E S S E T H:

 

WHEREAS, the Company is conducting
a private offering (the “Offering”) consisting of up to 40,000,000 shares (the “Shares”)
of common stock, $0.0001 par value per share (“Common Stock”), pursuant to Section 4(a)(2) of the Securities
Act of 1933, as amended (the “Securities Act”) and Rule 506(b) promulgated thereunder;

 

WHEREAS, the Company, in its
sole discretion, may increase the Offering to consist of up to 65,000,000 Shares; and

 

WHEREAS, the Subscriber desires
to purchase that number of Shares set forth on the signature page hereof on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration
of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto do hereby agree as follows:

 

 I. SUBSCRIPTION FOR SHARES AND REPRESENTATIONS BY SUBSCRIBER

 

1.1
Subject to the terms and conditions hereinafter set forth, the Subscriber hereby irrevocably subscribes for and agrees to
purchase from the Company such number of Shares, and the Company agrees to sell to the Subscriber as is set forth on the signature
page hereof, at a per share price equal to $0.08 per Share. The purchase price is payable by wire transfer of immediately
available funds or check payable to the Company to the Company pursuant to the wire instructions set forth on Schedule 1.1.

 

1.2
The Subscriber recognizes that the purchase of the Shares involves a high degree of risk including, but not limited to,
the following: (a) the Company has limited operating history and requires substantial funds in addition to the proceeds of the
Offering; (b) an investment in the Company is highly speculative, and only investors who can afford the loss of their entire investment
should consider investing in the Company and the Shares; (c) the Subscriber may not be able to liquidate its investment; (d) transferability
of the Shares is extremely limited and the Shares will be restricted upon issuance, as more specifically described in Section
1.10 below; (e) in the event of a disposition, the Subscriber could sustain the loss of its entire investment; (f) the Company
has not paid any dividends since its inception and does not anticipate paying any dividends; and (g) the Company may issue additional
securities in the future which have rights and preferences that are senior to those of the Common Stock and will cause dilution
to the Subscriber. Without limiting the generality of the representations set forth in Section 1.5 below, the Subscriber represents
that the Subscriber has carefully reviewed the risk factors described in the Company’s filings made under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) and the risk factors, which have been separately delivered to the
Subscriber by the Company and are attached hereto as Exhibit A.

 

     

     

    

 

1.3
The Subscriber represents that the Subscriber is an “accredited investor” as such term is defined in Rule 501
of Regulation D (“Regulation D”) promulgated under the Securities Act, as indicated by the Subscriber’s
responses to the questions contained in Article VI hereof, and that the Subscriber is able to bear the economic risk of an investment
in the Shares.

 

1.4
The Subscriber hereby acknowledges and represents that (a) the Subscriber has knowledge and experience in business and financial
matters, prior investment experience, including investment in securities that are non-listed, unregistered and/or not traded on
a national securities exchange nor on the NASDAQ, or the Subscriber has employed the services of a “purchaser representative”
(as defined in Rule 501 of Regulation D), attorney and/or accountant to read all of the documents furnished or made available by
the Company both to the Subscriber and to all other prospective investors in the Shares to evaluate the merits and risks of such
an investment on the Subscriber’s behalf; (b) the Subscriber recognizes the highly speculative nature of this investment;
and (c) the Subscriber is able to bear the economic risk that the Subscriber hereby assumes.

 

1.5
The Subscriber hereby acknowledges receipt and careful review of this Agreement, including all exhibits thereto, and any
documents which may have been made available upon request as reflected therein (collectively referred to as the “Offering
Materials”) and hereby represents that the Subscriber has been furnished by the Company during the course of the Offering
with all information regarding the Company, the terms and conditions of the Offering and any additional information that the Subscriber
has requested or desired to know, and has been afforded the opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the Company and the terms and conditions of the Offering.

 

1.6
(a) In making the decision to invest in the Shares the Subscriber has relied solely upon the information provided by the
Company in the Offering Materials. To the extent necessary, the Subscriber has retained, at its own expense, and relied upon appropriate
professional advice regarding the investment, tax and legal merits and consequences of this Agreement and the purchase of the Shares
hereunder. The Subscriber disclaims reliance on any statements made or information provided by any person or entity in the course
of Subscriber’s consideration of an investment in the Shares other than the Offering Materials.

 

(b)
The Subscriber represents that (i) the Subscriber was contacted regarding the sale of the Shares by the Company (or an
authorized agent or representative thereof) with whom the Subscriber had a prior substantial pre-existing relationship and (ii)
no Shares were offered or sold to it by means of any form of general solicitation or general advertising, and in connection therewith,
the Subscriber did not (A) receive or review any advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio, whether closed circuit, or generally available; or (B) attend
any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising.

 

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1.7
The Subscriber hereby represents that the Subscriber, either by reason of the Subscriber’s business or financial experience
or the business or financial experience of the Subscriber’s professional advisors (who are unaffiliated with and not compensated
by the Company or any affiliate or selling agent of the Company, directly or indirectly), has the capacity to protect the Subscriber’s
own interests in connection with the transaction contemplated hereby.

 

1.8
The Subscriber hereby acknowledges that the Offering has not been reviewed by the United States Securities and Exchange
Commission (the “SEC”) nor any state regulatory authority since the Offering is intended to be exempt from the
registration requirements of Section 5 of the Securities Act, pursuant to Regulation D. The Subscriber understands that the Shares
have not been registered under the Securities Act or under any state securities or “blue sky” laws and agrees not to
sell, pledge, assign or otherwise transfer or dispose of the Shares unless they are registered under the Securities Act and under
any applicable state securities or “blue sky” laws or unless an exemption from such registration is available.

 

1.9
The Subscriber understands that the Shares have not been registered under the Securities Act by reason of a claimed exemption
under the provisions of the Securities Act that depends, in part, upon the Subscriber’s investment intention. In this connection,
the Subscriber hereby represents that the Subscriber is purchasing the Shares for the Subscriber’s own account for investment
and not with a view toward the resale or distribution to others. The Subscriber, if an entity, further represents that it was not
formed for the purpose of purchasing the Shares.

 

1.10
The Subscriber understands that the Common Stock is quoted on the OTC Markets and that there is a limited market for the
Common Stock. The Subscriber understands that even if a public market develops for the Common Stock, Rule 144 (“Rule 144”)
promulgated under the Securities Act requires for non-affiliates, among other conditions, a holding period prior to the resale
(in limited amounts) of securities acquired in a non-public offering without having to satisfy the registration requirements under
the Securities Act. The Subscriber understands and hereby acknowledges that while the Company is under an obligation to register
the Shares under the Securities Act or any state securities or “blue sky” laws, such registration statement may take
time and may be delayed or the Company may not be able to declare such registration statement effective. The Subscriber understands
that the Company must be current under the Exchange Act for the Subscriber to take advantage of Rule 144.

 

1.11
The Subscriber consents to the placement of a legend on any certificate or other document evidencing the Shares that such
securities have not been registered under the Securities Act or any state securities or “blue sky” laws and setting
forth or referring to the restrictions on transferability and sale thereof contained in this Agreement. The Subscriber is aware
that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability of such
Shares. The legend to be placed on each certificate shall be in form substantially similar to the following:

 

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“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE
SECURITIES OR “BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

1.12
The Subscriber understands that the Company will review this Agreement and is hereby given authority by the Subscriber to
call Subscriber’s bank or place of employment or otherwise review the financial standing of the Subscriber; and it is further
agreed that the Company, at its sole discretion, reserves the unrestricted right, without further documentation or agreement on
the part of the Subscriber, to reject or limit any subscription, to accept subscriptions for fractional Shares and to close the
Offering to the Subscriber at any time and that the Company will issue stop transfer instructions to its transfer agent with respect
to such Shares.

 

1.13
The Subscriber hereby represents that the address of the Subscriber furnished by Subscriber on the signature page hereof
is the Subscriber’s principal residence if Subscriber is an individual or its principal business address if it is a corporation
or other entity.

 

1.14
The Subscriber represents that the Subscriber has full power and authority (corporate, statutory and otherwise) to execute
and deliver this Agreement and to purchase the Shares. This Agreement constitutes the legal, valid and binding obligation of the
Subscriber, enforceable against the Subscriber in accordance with its terms.

 

1.15
If the Subscriber is a corporation, partnership, limited liability company, trust, employee benefit plan, individual retirement
account, Keogh Plan, or other tax-exempt entity, it is authorized and qualified to invest in the Company and the person signing
this Agreement on behalf of such entity has been duly authorized by such entity to do so.

 

1.16
The Subscriber acknowledges that he, she or it is not a member firm of Financial Industry Regulatory
Authority, Inc. (“FINRA”) or a registered representative of a FINRA member firm.

 

1.17
The Subscriber acknowledges that at such time, if ever, as the Shares are registered, sales of the Shares will be subject
to state securities laws.

 

1.18
(a) The Subscriber agrees not to issue any public statement with respect to the Subscriber’s investment or proposed
investment in the Company or the terms of any agreement or covenant between them and the Company without the Company’s prior
written consent, except such disclosures as may be required under applicable law or under any applicable order, rule or regulation.

 

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(b)
The Company agrees not to disclose the names, addresses or any other information about the Subscribers, except as required
by law; provided, that the Company may use the name of the Subscriber for any offering or in any registration statement filed.

 

1.19
The Subscriber acknowledges that the Company has engaged Wilmington Capital Securities, LLC., a broker dealer registered
with FINRA (“Wilmington”), as a finder in connection with the sale of the Common Stock and Wilmington shall
be entitled to a cash fee equal to six (6%) percent of the gross proceeds for all amounts up to $3,000,000 and eight (8%) percent
of the gross proceeds in excess of $3,000,000 and a common stock purchase warrant (the “Wilmington Warrant”)
equal to three (3%) percent of the gross proceeds for all amounts up to $3,000,000 and five (5%) percent of the gross proceeds
in excess of $3,000,000 (the “Warrant Fee”). The number of shares of Common Stock to be issuable under the Wilmington
Warrant shall be determined by dividing the Warrant Fee by the per share Purchase Price. The exercise price of the Wilmington Warrant
shall be equal to 110% of the per share Purchase Price.

 

1.20
The Subscriber agrees to hold the Company and its directors, officers, employees, affiliates, controlling persons and agents
and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs
and expenses incurred by them as a result of (a) any sale or distribution of the Shares by the Subscriber in violation of the Securities
Act or any applicable state securities or “blue sky” laws; or (b) any false representation or warranty or any breach
or failure by the Subscriber to comply with any covenant made by the Subscriber in this Agreement (including the Confidential Investor
Questionnaire contained in Article VI herein) or any other document furnished by the Subscriber to any of the foregoing in connection
with this transaction.

 

 II. REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

 

The Company hereby represents and warrants to the Subscriber that:

 

2.1 Organization and
Qualification. The Company and each of its Subsidiaries, if any, is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other)
to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and
conducted. “Subsidiary” shall mean any corporation or other entity of which at least a majority of the securities
or other ownership interests having ordinary voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other Subsidiaries.

 

2.2 Capitalization.
The capitalization of the Company is as set forth on Schedule 2.2 attached hereto. The authorized, issued and
outstanding capital stock of the Company is as set forth in the reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act, including material filed
pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including filings incorporated by reference
therein being referred to herein as the “Commission Documents”).

 

2.3 Authorization;
Enforcement. The Company has all requisite corporate power and authority to enter into and perform this Agreement.

 

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2.4 Acknowledgment
of Dilution. The Company understands and acknowledges the dilutive effect to the Common Stock upon the issuance of the Shares.

 

2.5 Bad Actor Representation.
None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company
participating in the Offering, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected
with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer
Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i)
to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered
by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject
to a Disqualification Event.

 

2.6 Shell Company Status.
During the previous twelve (12) months, the Company has not been a shell as such term is defined in Rule 144(i) under the Securities
Act.

 

2.7 Commission Documents.
The Company has filed all required Commission Documents.

 

2.8 No Material Adverse
Effect. Since December 31, 2018, neither the Company, nor any Subsidiary has experienced or suffered any Material Adverse
Effect which has not been disclosed in the Commission Documents. For the purposes of this Agreement, “Material Adverse
Effect” means any of (i) a material and adverse effect on the legality, validity or enforceability of this Agreement
or the other Offering Materials, (ii) a material adverse effect on the business, operations, properties, or financial condition
of the Company, its Subsidiaries, individually, or in the aggregate and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company to perform any of its obligations under this Agreement
or the other Offering Materials in any material respect or (iii) an adverse impairment to the Company’s ability to perform
on a timely basis its obligations under this Agreement or the other Transaction Document.

 

2.9 No Undisclosed Liabilities.
Other than as disclosed in the Commission Documents, to the knowledge of the Company, neither the Company, nor any Subsidiary
has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) other than those incurred in the ordinary course of the Company’s and any Subsidiary’s respective
businesses since December 31, 2018 and those which, individually or in the aggregate, do not have a Material Adverse Effect on
the Company and any Subsidiary.

 

2.10 No Undisclosed
Events or Circumstances. To the Company’s knowledge, no event or circumstance has occurred or exists with respect to
the Company or any Subsidiary or their respective businesses, properties, operations or financial condition, which, under applicable
law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced
or disclosed.

 

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2.11 Indebtedness.
The Commission Documents set forth all outstanding secured and unsecured Indebtedness of the Company, or for which the Company,
or any Subsidiary have commitments as of the date of each applicable Commission Document or any subsequent period that would require
disclosure. For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed
money or amounts owed (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements
and other contingent obligations in respect of Indebtedness of others, whether or not the same should be reflected in the Company’s
consolidated balance sheet (or the Securities thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments due
under leases required to be capitalized in accordance with GAAP (which shall be interpreted for all purposes in accordance with
the accounting standards applicable to the Company as of December 2018). Neither the Company, nor any Subsidiary is in default
with respect to any Indebtedness which, individually or in the aggregate, would have a Material Adverse Effect.

 

2.12 Actions
Pending. Except as disclosed in the Commission Documents, there is no action, suit, claim, investigation, arbitration,
alternate dispute resolution proceeding or any other proceeding pending or, to the knowledge of the Company, threatened
against or involving the Company, any Subsidiary (i) which questions the validity of this Agreement or any of the other
Offering Materials or the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or
thereto or (ii) involving any of their respective properties or assets. To the knowledge of the Company, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body
against the Company or any Subsidiary or any of their respective executive officers or directors in their capacities as
such.

 

2.13 Compliance with
Law. The Company and its Subsidiaries have all material franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct of their respective business as now being conducted by it unless
the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals,
individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

2.14 Compliance.
The Company: (i) is not in default under or in violation of (and no event has occurred that has not been waived that, with notice
or lapse of time or both, would result in a default by the Company), nor has the Company received notice of a claim that it is
in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or
has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result
in a Material Adverse Effect.

 

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2.15 No Violation.
The business of the Company and any Subsidiary is not being conducted in violation of any federal, state, local or foreign
governmental laws, or rules, regulations and ordinances of any governmental entity, except for possible violations which singularly
or in the aggregate could not reasonably be expected to have a Material Adverse Effect. The Company is not required under federal,
state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Offering
Materials, or issue and sell the Common Stock in accordance with the terms hereof or thereof (other than (x) any consent, authorization
or order that has been obtained as of the date hereof, (y) any filing or registration that has been made as of the date hereof
or (z) any filings which may be required to be made by the Company with the SEC or state securities administrators subsequent
to each closing).

 

2.16 No Conflicts.
The execution, delivery and performance of this Agreement and the Offering Materials by the Company and the consummation by the
Company of the transactions contemplated herein and therein do not and will not (i) violate any provision of the Articles or Bylaws,
(ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust,
indenture, note, bond, license, lease agreement, instrument or obligation to which the Company or any Subsidiary is a party or
by which it or its properties or assets are bound, (iii) create or impose a lien, mortgage, security interest, pledge, charge
or encumbrance (collectively, “Lien”) of any nature on any property of the Company or any Subsidiary under
any agreement or any commitment to which the Company or any Subsidiary is a party or by which the Company, or any Subsidiary is
bound or by which any of its respective properties or assets are bound, or (iv) result in a violation of any federal, state, local
or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations)
applicable to the Company or any Subsidiary or by which any property or asset of the Company, or any Subsidiary are bound or affected,
provided, however, that, excluded from the foregoing in all cases are such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect.

 

2.17 Taxes. Each
of the Company and any Subsidiary, to the extent its applicable, has accurately prepared and filed all federal, state and other
tax returns required by law to be filed by it, has paid or made provisions for the payment of all taxes shown to be due other
than payment being contested and all additional assessments, and adequate provisions have been and are reflected in the consolidated
financial statements of the Company for all current taxes and other charges to which the Company, or any Subsidiary, if any, is
subject and which are not currently due and payable. None of the federal income tax returns of the Company have been audited by
the Internal Revenue Service. The Company has no knowledge of any additional assessments, adjustments or contingent tax liability
(whether federal, state or foreign) of any nature whatsoever, whether pending or threatened against the Company or any Subsidiary
for any period, nor of any basis for any such assessment, adjustment or contingency.

 

2.18 Licenses.
Except as otherwise set forth in the Commission Documents, the Company has sufficient licenses, permits and other governmental
authorizations currently required for the conduct of its business or ownership of properties and is in all material respects in
compliance therewith.

 

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2.19 Litigation.
Except as set forth in the Commission Documents, there is no material action, suit, proceeding, or investigation (including without
limitation any suit, proceeding, or investigation involving the prior employment of any of the Company’s employees, their
use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers) pending or, to the best of the Company’s knowledge,
currently threatened before any court, administrative agency, or other governmental body. The Company is not a party or subject
to, and none of its assets is bound by, the provisions of any order, writ, injunction, judgment, or decree of any court or government
agency or instrumentality. There is no action, suit, or proceeding by the Company currently pending or that the Company intends
to initiate.

 

2.20 Disclosure.
The Company has fully provided each Subscriber with all the information that such Subscriber has requested for deciding whether
to purchase the Common Stock and all material information that the Company believes is reasonably necessary to enable a reasonable
Subscriber to make such decision. Neither this Agreement, nor any other agreements, statements or certificates made or delivered
to Subscriber in connection herewith or therewith contains any untrue statement of a material fact or, when taken together, omits
to state a material fact necessary to make the statements herein or therein, in light of the circumstances under which they were
made, not misleading.

 

2.21 Books and Records
Internal Accounting Controls. Except as may have otherwise been disclosed in the Commission Documents, the books and records
of the Company, and any Subsidiary accurately reflect in all material respects the information relating to the business of the
Company and any Subsidiary, the location and collection of their assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company, or any Subsidiary. Except as may have otherwise been disclosed in the Commission
Documents, the Company and any Subsidiary maintain a system of internal accounting controls sufficient, in the judgment of the
Company, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP
and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals
and appropriate actions are taken with respect to any differences.

 

2.22 Material Agreements.
Any and all written or oral contracts, instruments, agreements, commitments, obligations, plans or arrangements, the Company and
any Subsidiary is a party to, that a copy of which would be required to be filed with the SEC as an exhibit to a registration
statement (collectively, the “Material Agreements”) if the Company or any Subsidiary were registering securities
under the Securities Act has previously been publicly filed with the SEC in the Commission Documents. Each of the Company and
any Subsidiary has in all material respects performed all the obligations required to be performed by them to date under the foregoing
agreements, have received no notice of default and are not in default under any Material Agreement now in effect the result of
which would cause a Material Adverse Effect.

 

2.23 Transactions with
Affiliates. Except as set forth in the Commission Documents, there are no loans, leases, or royalty agreements between (a)
the Company, or any Subsidiary on the one hand, and (b) on the other hand, any officer, employee, consultant or director of the
Company or any Subsidiary, or any person owning more than 10% capital stock of the Company, or any Subsidiary, or any member of
the immediate family of such officer, employee, consultant, director or stockholder or any corporation or other entity controlled
by such officer, employee, consultant, director or stockholder, or a member of the immediate family of such officer, employee,
consultant, director or stockholder.

 

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2.24 Private Placement
and Solicitation. Assuming the accuracy of the Subscribers’ representations and warranties set forth in Section 1, no
registration under the Securities Act is required for the offer and sale of the Common Stock by the Company to the Subscribers
as contemplated hereby. Based in part on the accuracy of the representations of the Subscribers in Section 1, and subject to timely
applicable Form D filings pursuant to Regulation D of the Securities Act with the SEC and pursuant to applicable state securities
laws, the offer, sale and issuance of the Common Stock to be issued pursuant to and in conformity with the terms of this Agreement,
will be issued in compliance with all applicable federal and state securities laws. Neither the Company nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the Common Stock.

 

2.25 Governmental Approvals.
Except for the filing of any notice prior or subsequent to each closing that may be required under applicable state and/or federal
securities laws (which if required, shall be filed on a timely basis), including the filing of a Form D, no authorization, consent,
approval, license, exemption of, filing or registration with any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, is or will be necessary for, or in connection with, the execution or delivery
of the Common Stock, or for the performance by the Company of its obligations under this Agreement and the Offering Materials.

 

2.26 Employees.
The Company does not have a collective bargaining arrangement covering any of its employees. A description of the employment contracts
with executive officers are set forth in the Commission Documents. Except as disclosed in the Commission Documents, since March
31, 2019, no officer, consultant or key employee of the Company or any Subsidiary whose termination, either individually or in
the aggregate, would have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention
of terminating his or her employment or engagement with the Company or any Subsidiary.

 

2.27 Investment Company.
The Company is not an “investment company” within the meaning of such term under the Investment Company Act of 1940,
as amended, and the rules and regulations of the SEC thereunder.

 

2.28 Intellectual Property.
Each of the Company and any Subsidiary, owns or has the lawful right to use all patents, trademarks, domain names (whether or
not registered) and any patentable improvements or copyrightable derivative works thereof, websites and intellectual property
rights relating thereto, service marks, trade names, copyrights, licenses and authorizations, if any, and all rights with respect
to the foregoing, if any, which are necessary for the conduct of their respective business as now conducted without any conflict
with the rights of others, except where the failure to so own or possess would not have a Material Adverse Effect

 

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2.29
Title to Assets. Except as set forth in the Commission Documents, the Company has good and marketable title in fee simple
to all real property owned by it and good and marketable title in all personal property owned by it that is material to the business
of the Company, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of such property by the Company and (ii) Liens for the
payment of federal, state or other taxes, for which appropriate reserves have been made therefore in accordance with GAAP and,
the payment of which is neither delinquent nor subject to penalties (liens referenced in subsection (i) and (ii) above are collectively
referred to as “Permitted Liens”). Any real property and facilities held under lease by the Company are held
by it under valid, subsisting and enforceable leases with which the Company is in compliance.

 

2.30
Blue Sky Laws. The Company shall take such action as the Company shall reasonably determine is necessary to qualify the
Common Stock for sale to the Subscribers at the applicable closing pursuant to this Agreement under applicable securities or “blue
sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence
of any such action so taken to each Subscriber.

 

2.31
Use of Proceeds. The Company shall use the proceeds from the sale of the Common Stock in this Offering for working capital
purposes, operations and further development of its identity transaction platform and shall not, directly or indirectly, use such
proceeds for any distribution or dividend to any shareholder of the Company. The use of proceeds may change as management deems
fit. As is the case with any business, particularly one without a proven business model, it should be expected that certain expenses
unforeseeable to management at this juncture will arise in the future. There can be no assurance that management’s use of
proceeds generated through this Offering will prove optimal or translate into revenue or profitability for the Company.

 

2.32
Securities Compliance. The Company shall notify the SEC in accordance with its rules and regulations, of the transactions
contemplated by this Agreement and the Offering Materials, including filing a Form D with respect to the Common Stock, as required
under Regulation D and applicable “blue sky” laws if such Common Stock is offered pursuant to Rule 506 of Regulation
D and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation,
for the legal and valid issuance of the Common Stock to the Subscribers.

 

2.33
Registration Statement; Re-Sale of Common Stock. The Company shall use its commercially reasonable efforts to prepare and
file no later than June 30, 2019 a resale registration statement on Form S-1 under the Securities Act for the resale of the Shares
(it being agreed that such registration statement shall be a registration statement filed for an offering to be made on a delayed
or continuous basis pursuant to Rule 415 (or any successor rule)), including any post-effective amendment thereto, if then available
to the Company, and if such Form S-1 is not then available to the Company, such resale registration statement shall be any successor
to such form under the Securities Act. The Company shall pay the costs of filing such registration statement. Pending or failing
the effectiveness of such registration statement the Company will take such further action as the Subscribers may reasonably request,
all to the extent required from time to time to enable the Subscribers to sell the Common Stock without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act, as amended.

 

    11

     

    

 

2.34
Keeping of Records and Books of Account. The Company shall keep and cause each Subsidiary to keep adequate records and
books of account, in which complete entries will be reported in accordance with GAAP consistently applied, reflecting all financial
transactions of the Company and its Subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made.

 

2.35
Reporting Status. So long as a Subscriber beneficially owns any of the Common Stock, the Company shall timely file all
reports required to be filed with the SEC pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit
such termination.

 

2.36
Disclosure of Transaction. The Company shall file with the SEC, a Current Report on Form 8-K describing the material terms
of the transactions contemplated hereby and all material non-public information disclosed to the Subscribers prior to the filing
as soon as practicable after each closing but in no event later than 5:30 P.M. (EDT) on the fourth Business Day following each
closing. “Business Day” means any day during which the NASDAQ (or other principal exchange) shall be open for
trading.

 

2.37
Sarbanes-Oxley Act. The Company shall be in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002,
and the rules and regulations promulgated thereunder, as required under such Act.

 

2.38
No Integrated Offerings. The Company shall not make any offers or sales of any security (other than the securities being
offered or sold hereunder) under circumstances that would require registration of the securities being offered or sold hereunder
under the Securities Act.

 

2.39
Up-listing. The Company represents that it intends to prepare the Company for an up-listing to a national securities exchange
no later than March 31, 2020, subject to market conditions. Subscribers acknowledge that there is no guarantee that the Company
will be successful in achieving such an up-listing.

 

III.
TERMS OF SUBSCRIPTION

 

3.1
All funds shall be submitted directly to the Company’s account identified in Schedule 1.1 hereof.

 

3.2
Certificates representing the Common Stock purchased by the Subscriber pursuant to this Agreement will be prepared for delivery
to the Subscriber within 15 business days following the closing, the timing of which is at the Company’s sole discretion,
at which such purchase takes place. The Subscriber hereby authorizes and directs the Company to deliver the certificates representing
the Common Stock purchased by the Subscriber pursuant to this Agreement directly to the Subscriber’s residential or business
address indicated on the signature page hereto.

 

    12

     

    

 

IV.
CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS

 

4.1
The Subscriber’s obligation to purchase the Shares at the closing at which such purchase is to be consummated is subject
to the fulfillment on or prior to such closing of the following conditions, which conditions may be waived at the option of each
Subscriber to the extent permitted by law:

 

(a)
Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior
to the date of such closing shall have been performed or complied with in all material respects.

 

(b)
No Legal Order Pending. There shall not then be in effect any legal or other order enjoining or restraining the transactions
contemplated by this Agreement.

 

(c)
No Law Prohibiting or Restricting Such Sale. There shall not be in effect any law, rule or regulation prohibiting or restricting
such sale or requiring any consent or approval of any person, which shall not have been obtained, to issue the Shares (except
as otherwise provided in this Agreement).

 

V.
MISCELLANEOUS

 

5.1
Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified
mail, return receipt requested, or delivered by hand against written receipt therefor, addressed as follows:

 

if
to the Company, to it at:

 

	 	Ipsidy
    Inc.
	 	670
    Long Beach Blvd.
	 	Long
    Beach, NY 11561
	 	Attention:
        Stuart P. Stoller, CFO
	 	Email:
        stuartstoller@ipsidy.com
	 	Facsimile:
    516-274-0573

 

with
a copy to:

 

Stephen
M. Fleming, Esq.

Fleming PLLC

30
Wall Street, 8th Floor

New York, NY 10005

Facsimile: 516-977-1209

 

if
to the Subscriber, to the Subscriber’s address indicated on the signature page of this Agreement.

 

    13

     

    

 

Notices
shall be deemed to have been given or delivered on the date of mailing, except notices of change of address, which shall be deemed
to have been given or delivered when received.

 

5.2
Except as otherwise provided herein, this Agreement shall not be changed, modified or amended except by a writing signed by the
parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.

 

5.3
Subject to the provisions of Section 5.10, this Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and assigns. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements
and understandings of any and every nature among them.

 

5.4
Upon the execution and delivery of this Agreement by the Subscriber, this Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Shares as herein provided, subject, however, to the right hereby reserved by the Company to enter
into the same agreements with other subscribers and to add and/or delete other persons as subscribers.

 

5.5
NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT
ALL THE TERMS AND PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO SUCH STATE’S PRINCIPLES OF CONFLICTS OF LAW. IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM
FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE COURTS STATE OF NEW YORK IN AND FOR THE COUNTY OF NASSAU
OR THE EASTERN DISTRICT OF NEW YORK, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION
OF SUCH COURTS AND AGREE TO SAID VENUE.

 

5.6
In order to discourage frivolous claims the parties agree that unless a claimant in any proceeding arising out of this Agreement
succeeds in establishing his claim and recovering a judgment against another party (regardless of whether such claimant succeeds
against one of the other parties to the action), then the other party shall be entitled to recover from such claimant all of its/their
reasonable legal costs and expenses relating to such proceeding and/or incurred in preparation therefor.

 

5.7
The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Agreement, which shall remain in full force and effect. If any provision of this Agreement shall be
declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such
provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and
the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable
to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision
unless so expressed herein.

 

    14

     

    

 

5.8
It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed,
as a waiver of any subsequent breach by that same party.

 

5.9
The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

 

5.10
This Agreement may be executed in two or more counterparts each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument.

 

5.11
Nothing in this Agreement shall create or be deemed to create any rights in any person or entity not a party to this Agreement.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

    15

     

    

 

VI.
CONFIDENTIAL INVESTOR QUESTIONNAIRE

 

6.1
The Subscriber represents and warrants that he, she or it comes within one category marked below, and that for any category marked,
he, she or it has truthfully set forth, where applicable, the factual basis or reason the Subscriber comes within that category.
ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish any additional
information which the Company deems necessary in order to verify the answers set forth below.

 

		Category
                          A	The
undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or
her spouse, presently exceeds $1,000,000.

 

Explanation.
In calculating net worth you may include equity in personal property and real estate (excluding your principal residence), cash,
short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value
of such property less debt secured by such property.

 

		Category
                          B	The
undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two
most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including
foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members
and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.

 

		Category
                          C	The
undersigned is a director or executive officer of the Company which is issuing and selling the Shares.

 

		Category
                          D	The
undersigned is a bank; a savings and loan association; insurance company; registered investment company; registered business development
company; licensed small business investment company (“SBIC”); or employee benefit plan within the meaning of
Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary which is either a bank, savings and loan association,
insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or (c) is a self
directed plan with investment decisions made solely by persons that are accredited investors. (describe entity)
	 	 	 
	 	 	 
	 	 	 

 

		Category
                          E	The
undersigned is a private business development company as defined in section 202(a) (22) of the Investment Advisors Act of 1940.
(describe entity)
	 	 	 
	 	 	 
	 	 	 

 

    16

     

    

 

		Category
                          F	The
undersigned is either a corporation, partnership, Massachusetts business trust, or non-profit organization within the meaning
of Section 501(c) (3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Shares and
with total assets in excess of $5,000,000. (describe entity)
	 	 	 
	 	 	 
	 	 	 

 

		Category
                          G	The
undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares,
where the purchase is directed by a “sophisticated investor” as defined in Regulation 506(b)(2)(ii) under the Act.

 

		Category
                          H	The
undersigned is an entity (other than a trust) in which all of the equity owners are “accredited investors” within
one or more of the above categories. If relying upon this Category alone, each equity owner must complete a separate copy of this
Agreement. (describe entity)
	 	 	 
	 	 	 
	 	 	 

 

		Category
                          I	The
undersigned is not within any of the categories above and is therefore not an accredited investor.

 

The
undersigned agrees that the undersigned will notify the Company at any time on or prior to the closing in the event that the representations
and warranties in this Agreement shall cease to be true, accurate and complete.

 

6.2
SUITABILITY (please answer each question)

 

(a)
For an individual Subscriber, please describe your current employment, including the company by which you are employed and its
principal business:

 

 

 

 

 

 

 

 

 

(b)
For an individual Subscriber, please describe any college or graduate degrees held by you:

 

 

 

 

 

 

 

 

 

(c)
For all Subscribers, please list types of prior investments:

 

 

 

 

 

 

 

 

 

    17

     

    

 

(d)
For all Subscribers, please state whether you have participated in other private placements before:

 

YES _________                             
NO _________

 

(e)
If your answer to question (d) above was “YES”, please indicate frequency of such prior participation in private
placements of:

 

	Public
Companies	 	Private
Companies	 	Public
    or Private Companies with no, or insignificant, assets and operations
	 	 	 	 	 
	Frequently 	 	 	 	 	 	 	 
	Occasionally 		 	 	 	 	 	 
	Never 		 	 	 	 	 	 

 

(f)
For individual Subscribers, do you expect your current level of income to significantly decrease in the foreseeable future:

 

YES _________                             
NO _________

 

(g)
For trust, corporate, partnership and other institutional Subscribers, do you expect your total assets to significantly decrease
in the foreseeable future:

 

YES _________                             
NO _________

 

(h)
For all Subscribers, do you have any other investments or contingent liabilities which you reasonably anticipate could cause you
to need sudden cash requirements in excess of cash readily available to you:

 

YES _________                             
NO _________

 

(i)
For all Subscribers, are you familiar with the risk aspects and the non-liquidity of investments such as the securities for which
you seek to subscribe?

 

YES _________                             
NO _________

 

(j)
For all Subscribers, do you understand that there is no guarantee of financial return on this investment and that you run the
risk of losing your entire investment?

 

YES _________                             
NO _________

 

6.3
MANNER IN WHICH TITLE IS TO BE HELD. (circle one)

 

		(a)	Individual
Ownership

		(b)	Community
Property

		(c)	Joint
Tenant with Right of Survivorship (both parties must sign)

		(d)	Partnership*

		(e)	Tenants
in Common

		(f)	Company*

		(g)	Trust*

		(h)	Other*

 

*If
Securities are being subscribed for by an entity, the attached Certificate of Signatory must also be completed.

 

6.4
The undersigned is informed of the significance to the Company of the foregoing representations and answers contained in the Confidential
Investor Questionnaire contained in this Article VI and such answers have been provided under the assumption that the Company
will rely on them.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

    18

     

    

 

NUMBER OF SHARES                    X
$0.08 = $                   (the
“Purchase Price”)

 

	 	 	 
	Signature	 	Signature (if purchasing jointly)
	 	 	 
	 	 	 
	Name Typed or Printed	 	Name Typed or Printed
	 	 	 
	 	 	 
	Title (if Subscriber is an Entity)	 	Title (if Subscriber is an Entity)
	 	 	 
	 	 	 
	Entity Name (if applicable)	 	Entity Name (if applicable
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Address	 	Address
	 	 	 
	 	 	 
	City, State and Zip Code	 	City, State and Zip Code
	 	 	 
	 	 	 
	Telephone-Business	 	Telephone-Business
	 	 	 
	 	 	 
	Telephone-Residence	 	Telephone-Residence
	 	 	 
	 	 	 
	Facsimile-Business	 	Facsimile-Business
	 	 	 
	 	 	 
	Facsimile-Residence	 	Facsimile-Residence
	 	 	 
	 	 	 
	Tax ID # or Social Security #	 	Tax ID # or Social Security #
	 	 	 
	Name in which securities should be issued:	 	 

 

Dated:          
                         ,
2019

 

This Subscription Agreement is agreed to and accepted as of
                               ,
2019.

 

	 	IPSIDY INC.
	 	 	 
	 	By:	 
	 	Name: 	 
	 	Title:	 

 

    19

     

    

 

CERTIFICATE OF SIGNATORY

 

(To be completed if Securities are being
subscribed for by an entity)

 

I,                                                     ,
am the                                                        of                                                                             
(the “Entity”).

 

I certify that I am empowered and duly
authorized by the Entity to execute and carry out the terms of the Subscription Agreement and to purchase and hold the shares of
Common Stock, and certify further that the Subscription Agreement has been duly and validly executed on behalf of the Entity and
constitutes a legal and binding obligation of the Entity.

 

IN WITNESS WHEREOF, I have set my hand
this                   day of                        ,
2019

 

	 	 
	 	(Signature)

 

    20

     

    

 

SCHEDULES TO SECURITIES PURCHASE AGREEMENT

 

Schedule 1.1

 

	Account Name:	Ipsidy Inc.
	Account #:	4830 4364 4231
	ABA #:	026009593 (wire)
	Bank:	Bank of America
	Address:	PO Box 25118, Tampa, Florida 33622-5118

 

Schedule 2.2 Capitalization

 

	Capitalization Table – May 31, 2019
	 	 	 	 
	Common Shares Outstanding*	 	 	478,950,996	 
	Stock Options	 	 	106,253,339	 
	Warrants	 	 	46,201,477	 
	 	 	 	631,405,812	 

 

The weighted average exercise price of
the stock options is approximately $0.20. The weighted average exercise price of the warrants is approximately $0.08.

 

*Does not include shares which may arise
on conversion of interest payable under that certain Senior Unsecured Note in the outstanding principal amount of $2,000,000, issued
as of February 1, 2017 to the Theodore Stern Revocable Trust (“Lender”), which at the option of the Lender may be converted
to common stock at the subscription price under this Agreement, in respect of all interest accrued through the date of repayment.
Such conversion right does not apply to the principal amount.

 

    21

     

    

 

Exhibit A

 

 

In connection with
that certain Subscription Agreement to be entered between Ipsidy Inc. and yourself pertaining to the private offering consisting
of up to 40,000,000 shares of common stock, $0.0001 par value per share, which may be increased up to 65,000,000 pursuant to Section
4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) promulgated thereunder, below are the Risk Factors applicable
to the business, the securities of the Company and this Offering in addition to the Risk Factors set forth in the Commission Documents.
All terms not defined herein shall have the meaning as set forth in the Subscription Agreement.

 

Risks Relating to Our Business

 

We have a history
of losses and we may not be able to achieve profitability going forward.

 

We have an accumulated
deficit of approximately $76.4 million as of December 31, 2018 and $78.7 million as of March 31, 2019 and incurred an operating
loss of approximately $9.3 million for the year ended December 31, 2018 and $2.2 million for the quarter ended March 31, 2019.
We have had net losses in most of our quarters since our inception. We expect that we will continue to incur net losses in 2019.
We may incur losses in the future for a number of reasons, including the other risks described in the Commission Documents, and
we may encounter unforeseen expenses, difficulties, complications, delays and other unknown events. Accordingly, we may not be
able to achieve or maintain profitability. Our management is developing plans and executing certain programs to alleviate the negative
trends and conditions described above, however there is no guarantee that such plans will be successfully implemented. Our ability
to curtail our operating losses or generate a profit may be further impacted by the fact that our business plan is largely unproven.
There is no assurance that even if we successfully implement our business plan, that we will be able to curtail our losses. If
we incur significant additional operating losses, our stock price may decline, perhaps significantly and the Company will need
to raise substantial additional capital in order to be able to continue to operate, which will dilute the existing stockholders
and such dilution may be significant. Additional capital may not be available on terms acceptable to the Company, or at all.

 

We have yet
to achieve positive cash flow and, given our projected funding needs, our ability to generate positive cash flow is uncertain.

 

We have had negative
cash flow from operating activities of approximately $6.0 million and approximately $6.5 million for the years ended December 31,
2018 and 2017, respectively. We have had negative cash flow from operating activities of approximately $1.7 million and approximately
$1.8 million for the three months ended March 31, 2019 and 2018, respectively. We anticipate that we will continue to have negative
cash flows from operating activities for the foreseeable future as we expect to incur increased research and development, sales
and marketing, and general and administrative expenses. Our business will require significant amounts of working capital to support
our growth, particularly as we seek to introduce our new offered products. An inability to generate positive cash flow from operations
may adversely affect our ability to raise needed capital for our business on reasonable terms, if at all. It may also diminish
supplier or customer willingness to enter into transactions with us, and have other adverse effects that may impact our long-term
viability. There can be no assurance we will achieve positive cash flows in the foreseeable future.

 

    A-1

     

    

 

We need access
to additional financing, which may not be available to us on acceptable terms, or at all. If we cannot access additional financing
when we need it and on acceptable terms, our business, prospects, financial condition, operating results and ability to continue
as a going concern will be adversely affected.

 

Our growth-oriented
business plan to offer products to our customers will require continued capital investment. Our research and development activities
will require continued investment. We raised $9.6 million and $12.0 million in 2018 and 2017, respectively, through debt and equity
financing at varying terms. In order to implement and grow our operations through December 31, 2019 and achieve an expected annual
revenue stream from the introduction of new products which commenced in 2018 and as we expect to continue in 2019 as contemplated
in our current business plan, we expect that we will need to raise approximately $5 to $7.5 million. During 2019 and thereafter,
we may sell equity, debt or convertible debt securities as part of a private placement, registered offering or such other vehicle
available to us. As required, the Company intends to file a Form S-1 Registration Statement with the SEC registering the Shares
sold in this Offering. As part of this Form S-1 Registration Statement, we intend to register shares of common stock providing
the Company with flexibility to sell registered shares of common stock as outlined in such registration statement if required as
part of future fund raising efforts. There is no guarantee that our current business plan will not change, and as a result of such
change, that we will need additional capital to implement such business plan. Further, assuming we achieve our expected growth
plan, of which there is no guarantee, we will need additional capital to implement growth beyond our current business plan.

 

Our limited
operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates
of our future performance.

 

We have been an
emerging growth company since beginning operations. We have a limited operating history and have generated limited revenue. As
we look to further expand our existing products it is difficult, if not impossible, to forecast our future results based upon our
historical data. Because of the uncertainties related to our lack of historical operations, we may be hindered in our ability to
anticipate and timely adapt to increases or decreases in revenues or expenses. If we make poor budgetary decisions as a result
of unreliable historical data, we could be less profitable or incur losses, which may result in a decline in our stock price.

 

There can be
no assurance that we will successfully commercialize our products that are currently in development or that our existing products
will sustain market acceptance.

 

There is no assurance
that we will ever successfully commercialize our platform and related solutions that are under development or that we will experience
market reception for our products in development or increased market reception for our existing products. Although our acquisitions
have generated revenue, there is no guarantee that we will be able to successfully implement our new products utilizing the acquired
technology, products, and customer base. There is no assurance that our existing products or solutions will achieve market acceptance
or that our new products or solutions will achieve market acceptance. Further, there can be no guarantee that we will not lose
business to our existing or potential new competitors.

 

    A-2

     

    

 

We depend upon
key personnel and need additional personnel.

 

Our success depends
on the continuing services of Philip D. Beck, CEO, as well as certain other members of the current management team and in 2017
we entered into new employment retention agreements with certain senior executives, including Mr. Beck and certain members of the
management team in order to incentivize them and retain their services. The loss of key management, engineering employees or third
party contractors could have a material and adverse effect on our business operations. Additionally, the success of our operations
will largely depend upon our ability to successfully attract and maintain competent and qualified key management personnel. As
with any company with limited resources, there can be no guarantee that we will be able to attract such individuals or that the
presence of such individuals will necessarily translate into profitability for our company. If we are successful in attracting
and retaining such individuals, it is likely that our payroll costs and related expenses will increase significantly and that there
will be additional dilution to existing stockholders as a result of equity incentives that may need to be issued to such management
personnel. Our inability to attract and retain key personnel may materially and adversely affect our business operations. Any failure
by our management to effectively anticipate, implement, and manage personnel required to sustain our growth would have a material
adverse effect on our business, financial condition, and results of operations.

 

Acquisitions
present many risks that could have a material adverse effect on our business and results of operations.

 

Since 2013, we
have closed various acquisitions. We may also pursue select acquisitions in the future. The success of our future growth strategy
will depend on our ability to integrate our existing operations together with the operations of our acquisitions that we have closed
to date as well as any future acquisition of which none are planned at this date. Integrating the operations of our existing operations
with our past or future acquisitions, including anticipated cost savings and additional revenue opportunities, involves a number
of challenges. The failure to meet these integration challenges could seriously harm our results of operations and the market price
of our shares may decline as a result. Realizing the benefits of our past or future acquisition will depend in part on the integration
of intellectual property, products, operations, personnel and sales force and the completion of assignments of current and past
contracts and rights. These integration activities are complex and time - consuming, and we may encounter unexpected difficulties
or incur unexpected costs. We may not successfully integrate the operations of our existing operations, and may not realize the
anticipated net reductions in costs and expenses and other benefits and synergies of the acquisition to the extent, or in the timeframe,
anticipated. In addition to the integration risks, we could face numerous other risks, including, but not limited to, the following:

 

	 	●	diversion of our management’s attention from normal daily operations of our business;
	 	●	our inability to maintain the key business relationships and the reputations of the businesses we acquire;
	 	●	increased costs related to acquired operations and continuing support and development of acquired products;
	 	●	our responsibility for the liabilities of the businesses we acquire;

 

    A-3

     

    

 

	 	●	changes in how we are required to account for our acquisitions under accounting principles generally accepted in U.S.;
	 	●	our inability to apply and maintain our internal standards, controls, procedures and policies to acquired businesses; and
	 	●	potential loss of key employees of the companies we acquire.

 

The occurrence
of any of these risks could have a material adverse effect on our business, results of operations, financial condition or cash
flows, particularly in the case of a larger acquisition or concurrent acquisitions.

 

The market
for our products is characterized by changing technology, requirements, standards and products, and we may be adversely affected
if we do not respond promptly and effectively to these changes.

 

The market for
our payment processing and identity management products is characterized by evolving technologies, changing industry standards,
changing political and regulatory environments, frequent new product introductions and rapid changes in customer requirements.
The introduction of products embodying new technologies and the emergence of new industry standards and practices can render existing
products obsolete and unmarketable. Our future success will depend on our ability to enhance our existing products and to develop
and introduce, on a timely and cost-effective basis, new products and product features that keep pace with technological developments
and emerging industry standards and address the increasingly sophisticated needs of our customers. In the future:

 

		●	we
                                         may not be successful in developing and marketing new products or product features that
                                         respond to technological change or evolving industry standards;
		●	we
                                         may experience difficulties that could delay or prevent the successful development, introduction
                                         and marketing of these new products and features; or
		●	our
                                         new products and product features may not adequately meet the requirements of the marketplace
                                         and achieve market acceptance.

 

If we are unable
to respond promptly and effectively to changing technologies and market requirements, we will be unable to compete effectively
in the future.

 

There can be no
assurance that we will successfully identify new product opportunities and develop and bring new products to market in a timely
manner, or that the products and technologies developed by others will not render our products or technologies obsolete or noncompetitive.
The failure of our new product development efforts could have a material adverse effect on our business, results of operations
and future growth.

 

If our technology
and solutions cease to be adopted and used by government and public and private organizations, we may lose some of our existing
customers and our operations will be negatively affected.

 

Our ability to
grow depends significantly on whether governmental and public and private organizations adopt our technology and solutions as part
of their new standards and whether we will be able to leverage our expertise in governmental solutions into commercial solutions.
If these organizations do not adopt our technology, we may not be able to penetrate some of the new markets we are targeting, or
we may lose some of our existing customer base.

 

    A-4

     

    

 

In order for us
to achieve our growth objectives, our identity management technologies and solutions must be adapted to and adopted in a variety
of areas including, among others, physical access control, computer access control, biometric fingerprint matching and identity
card issuance and verification. Further, our payment processing technologies and solutions will need to be adopted by financial
institutions, merchants and consumers.

 

We cannot accurately
predict the future growth rate, if any, or the ultimate size of these markets. The growth of the market for our products and services
depends on a number of factors such as the cost, performance and reliability of our products and services compared to the products
and services of our competitors, customer perception of the benefits of our products and solutions, public perception of the intrusiveness
of these solutions and the manner in which organizations use the information collected, customer satisfaction with our products
and services and marketing efforts and publicity for our products and services. Our products and services may not adequately address
market requirements and may not gain wide market acceptance. If our solutions or our products and services do not gain wide market
acceptance, our business and our financial results will suffer.

 

We have sought
in the past and will seek in the future to enter into contracts with governments, as well as state and local governmental agencies
and municipalities, which subjects us to certain risks associated with such types of contracts.

 

Most contracts
with governments or with state or local agencies or municipalities, or Governmental Contracts, are awarded through a competitive
bidding process, and some of the business that we expect to seek in the future will likely be subject to a competitive bidding
process. Competitive bidding presents a number of risks, including:

 

		●	the
                                         frequent need to compete against companies or teams of companies with more financial
                                         and marketing resources and more experience than we have in bidding on and performing
                                         major contracts;
		●	the
                                         substantial cost and managerial time and effort necessary to prepare bids and proposals
                                         for contracts that may not be awarded to us;
		●	the
                                         need to accurately estimate the resources and cost structure that will be required to
                                         service any fixed-price contract that we are awarded; and
		●	the
                                         expense and delay that may arise if our competitors protest or challenge new contract
                                         awards made to us pursuant to competitive bidding or subsequent contract modifications,
                                         and the risk that any of these protests or challenges could result in the resubmission
                                         of bids on modified specifications, or in termination, reduction or modification of the
                                         awarded contract.

 

We may not be afforded
the opportunity in the future to bid on contracts that are held by other companies and are scheduled to expire, if the governments,
or the applicable state or local agency or municipality determines to extend the existing contract. If we are unable to win particular
contracts that are awarded through the competitive bidding process, we may not be able to operate in the market for the products
and services that are provided under those contracts for a number of years. If we are unable to win new contract awards or retain
those contracts, if any, that we are awarded over any extended period, our business, prospects, financial condition and results
of operations will be adversely affected.

 

    A-5

     

    

 

In addition, Governmental
Contracts subject us to risks associated with public budgetary restrictions and uncertainties, actual contracts that are less than
awarded contract amounts, the requirement for posting a performance bond and the related cost and cancellation at any time at the
option of the governmental agency. Any failure to comply with the terms of any Governmental Contracts could result in substantial
civil and criminal fines and penalties, as well as suspension from future contracts for a significant period of time, any of which
could adversely affect our business by requiring us to pay significant fines and penalties or prevent us from earning revenues
from Governmental Contracts during the suspension period. Cancellation of any one of our major Governmental Contracts could have
a material adverse effect on our financial condition.

 

Governments may
be in a position to obtain greater rights with respect to our intellectual property than we would grant to other entities. Governmental
agencies also have the power, based on financial difficulties or investigations of their contractors, to deem contractors unsuitable
for new contract awards. Because we will engage in the government contracting business, we will be subject to additional regulatory
and legal compliance requirements, as well as audits, and may be subject to investigation, by governmental entities. Compliance
with such additional regulatory requirements are likely to result in additional operational costs in performing such Governmental
Contracts which may impact our profitability. Failure to comply with the terms of any Governmental Contract could result in substantial
civil and criminal fines and penalties, as well as suspension from future contracts for a significant period of time, any of which
could adversely affect our business by requiring us to pay the fines and penalties and prohibiting us from earning revenues from
Governmental Contracts during the suspension period.

 

Furthermore, governmental
programs can experience delays or cancellation of funding and suspension of appropriations for example as occurred with the recent
partial United States government , which can be unpredictable; this may make it difficult to forecast our revenues on a quarter-by-quarter
basis.

 

We rely in
part on third-party software to develop and provide our solutions.

 

We rely in part
on software licensed from third parties to develop and offer some of our solutions. Any loss of the right to use any such software
or other intellectual property required for the development and maintenance of our solutions, or any defects or other issues with
such software could result in problems or delays in the provision of our solutions until equivalent technology is either developed
by us, or, if available from others, is identified, obtained, and integrated, which could harm our business.

 

We have historically
depended upon a small number of large system sales ranging from $100,000 to $2,000,000 and we may fail to achieve one or more large
system sales in the future, or fail to successfully transition to new products generating recurring revenues.

 

Historically, we
have derived a substantial portion of our revenues from a small number of sales of large, relatively expensive systems, typically
ranging in price from $100,000 to $2,000,000. If we fail to receive orders for these large systems in a given sales cycle on a
consistent basis, our business could be significantly harmed. We are trying to reduce such dependence by developing a range of
products and solutions, which are in a lower price range and intended to generate recurring revenue from a large number of customers.
The Company has invested heavily in developing and launching such products but there is no guarantee that such efforts will be
successful and that a satisfactory return on such investment will be achieved. Further, our quarterly results are difficult to
predict because we cannot predict in which quarter, if any, large system sales will occur in a given year, nor when (if at all),
or at what rate the ramp in sales of new products will occur. As a result, we believe that quarter-to-quarter comparisons of our
results of operations are not a good indication of our future performance. In some future quarters, our operating results may be
below the expectations of securities analysts and investors, in which case the market price of our Common Stock may decrease significantly.

 

    A-6

     

    

 

Our efforts
to expand our international operations are subject to a number of risks, any of which could adversely reduce our future international
sales and increase our losses.

 

Most of our revenues
to date are attributable to sales and business operations in jurisdictions other than the United States. Our international operations
could be subject to a number of risks, any of which could adversely affect our future international sales and operating results,
including:

 

		●	trade
                                         restrictions;

		●	export
                                         duties and tariffs;

		●	export
                                         regulations or restrictions including sanctions;

		●	uncertain
                                         political, regulatory and economic developments;

		●	labor
                                         and social unrest;

		●	inability
                                         to protect our intellectual property rights;

		●	highly
                                         aggressive competitors;

		●	currency
                                         issues, including currency exchange risk;

		●	difficulties
                                         in staffing, managing and supporting foreign operations;

		●	longer
                                         payment cycles; and

		●	increased
                                         collection risks;

 

Negative developments
in any of these areas in one or more countries could result in a reduction in demand for our products, the cancellation or delay
of orders already placed, difficulty in collecting receivables, and a higher cost of doing business, any of which could adversely
affect our business, results of operations or financial condition.

 

We are exposed
to risks in operating in foreign markets, which may make operating in those markets difficult and thereby force us to curtail our
business operations.

 

In conducting our
business in foreign countries, we are subject to political, economic, legal, operational and other risks that are inherent in operating
in other countries. Risks inherent to operating in other countries range from difficulties in settling transactions in emerging
markets to possible nationalization, expropriation, price controls and other restrictive governmental actions. We also face the
risk that exchange controls or similar restrictions imposed by foreign governmental authorities may restrict our ability to convert
local currency received or held by us in their countries into U.S. dollars or other currencies, or to take those dollars or other
currencies out of those countries.

 

    A-7

     

    

 

It is possible
that countries in which we do or intend to do business, or companies and their principals become subject to sanctions under U.S.
law. This would prevent us from doing business with those countries or with those entities or individuals. The Company could be
exposed to fines and penalties in the event of breach any applicable sanctions legislation or orders. In addition, the Company
might be required to suspend or terminate existing contracts in order to comply with such sanctions legislation or orders, which
would adversely impact our future revenues and cashflows.

 

Additionally, we
are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, and other laws in the United States and elsewhere that prohibit
improper payments or offers of payments to foreign governments and their officials and political parties for the purpose of obtaining
or retaining business. We have operations in and deal with governments and officials in foreign countries. Our activities in these
countries create the risk of unauthorized payments or offers of payments by one of our employees, contractors or customers that
could be in violation of various laws, including the FCPA, even though these parties are not always subject to our control. We
have implemented safeguards to discourage these practices by our employees, consultants and customers. However, our existing safeguards
and any future improvements may prove to be less than effective, and our employees, contractors or customers may engage in conduct
for which we might be held responsible. Violations of the FCPA or similar laws may result in severe criminal or civil sanctions
and we may be subject to other liabilities, which could adversely affect our business, financial condition and results of operations.

 

Breaches of
network or information technology security, natural disasters or terrorist attacks could have an adverse effect on our business.

 

Cyber-attacks or
other breaches of network or information technology (IT) security, natural disasters, terrorist acts or acts of war may cause equipment
failures or disrupt our systems and operations. We may be subject to attempts to breach the security of our networks and IT infrastructure
through cyber-attack, malware, computer viruses and other means of unauthorized access. While we maintain insurance coverage for
some of these events, the potential liabilities associated with these events could exceed the insurance coverage we maintain. A
failure to protect the privacy of customer and employee confidential data against breaches of network or IT security could result
in damage to our reputation. To date, we have not been subject to cyber-attacks or other cyber incidents that we are aware of which,
individually or in the aggregate, resulted in a material impact to our operations or financial condition.

 

For us to further
penetrate the marketplace, the marketplace must be confident that we provide effective security protection for national and other
secured identification documents and cards and other personally identifiable information or protected personal information, or
PII. Although we are not aware that we have experienced any act of sabotage or unauthorized access by a third party of our software
or technology to date, if an actual or perceived breach of security occurs in our internal systems or those of our customers, regardless
of whether we caused the breach, it could adversely affect the market’s perception of our products and services. This could
cause us to lose customers, resellers, alliance partners or other business partners, thereby causing our revenues to decline. If
we or our customers were to experience a breach of our internal systems, our business could be severely harmed by adversely affecting
the market’s perception of our products and services.

 

    A-8

     

    

 

Interruptions,
delays in service or defects in our systems could impair the delivery of our services and harm our business.

 

We depend on the
efficient and uninterrupted operation of our computer network systems, software, telecommunications networks, and processing centers,
as well as the systems and services of third parties, in order to provide services to our customers. Almost all of our network
systems are hosted “in the cloud” by internationally recognized third party service providers such as Amazon Web Services
and Microsoft Azure. Our systems and data centers are vulnerable to damage or interruption from, among other things, fire, natural
disaster, power loss, telecommunications failure, terrorist acts, war, unauthorized entry, human error, and computer viruses or
other defects. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct. We have security,
backup and recovery systems in place, and we are in the process of implementing business continuity plans that will be designed
to ensure our systems will not be inoperable. However, there is still a risk that a system outage or data loss may occur which
would not only damage our reputation but could also require the payment of penalties or damages to our clients if our systems do
not meet certain operating standards. Despite precautions taken at these facilities, the occurrence of a natural disaster or an
act of sabotage or terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these
facilities could result in lengthy interruptions in our service. Our property and business interruption insurance may not be applicable
or adequate to compensate us for all losses or failures that may occur.

 

Any damage to,
failure of, or defects, bugs or errors in our systems or those of third parties, errors or delays in the processing of payment
or other transactions, telecommunications failures or other difficulties could result in loss of revenue, loss of customers, loss
of customer and consumer data, harm to our business or reputation, exposure to fraud losses or other liabilities, negative publicity,
additional operating and development costs, and diversion of technical and other resources.

 

Third parties
could obtain access to our proprietary information or could independently develop similar technologies.

 

Despite the precautions
we take, third parties may copy or obtain and use our technologies, ideas, know-how and other proprietary information without authorization
or may independently develop technologies similar or superior to our technologies. In addition, the confidentiality and non-competition
agreements between us and most of our employees, distributors and clients may not provide meaningful protection of our proprietary
technologies or other intellectual property in the event of unauthorized use or disclosure. If we are not able to successfully
defend our industrial or intellectual property rights, we may lose rights to technologies that we need to develop our business,
which may cause us to lose potential revenues, or we may be required to pay significant license fees for the use of such technologies.
To date, we have relied primarily on a combination of patents, trade secret and copyright laws, as well as nondisclosure and other
contractual restrictions on copying, reverse engineering and distribution to protect our proprietary technology.

 

Our current patents
and any patents that we may register in the future may provide only limited protection for our technology and may not be sufficient
to provide competitive advantages to us. For example, competitors could be successful in challenging any issued patents or, alternatively,
could develop similar or more advantageous technologies on their own or design around our patents. Any inability to protect intellectual
property rights in our technology could enable third parties to compete more effectively with us.

 

    A-9

     

    

 

In addition, the
laws of certain foreign countries may not protect our intellectual property rights to the same extent as do the laws of the United
States. Our means of protecting our intellectual property rights in the United States or any other country in which we operate
may not be adequate to fully protect our intellectual property rights.

 

Third parties
may assert that we are infringing their intellectual property rights; IP litigation could require us to incur substantial costs
even when our efforts are successful.

 

We may face intellectual
property litigation, which could be costly, harm our reputation, limit our ability to sell our products, force us to modify our
products or obtain appropriate licenses, and divert the attention of management and technical personnel. Our products employ technology
that may infringe on the proprietary rights of others, and, as a result, we could become liable for significant damages and suffer
other harm to our business.

 

We have not been
subject to material intellectual property litigation to date. Litigation may be necessary in the future to enforce any patents
we have or may obtain and/or any other intellectual property rights, to protect our trade secrets, to determine the validity and
scope of the proprietary rights of others, or to defend against claims of infringement or invalidity, and we may not prevail in
any such future litigation. Litigation, whether or not determined in our favor or settled, could be costly, could harm our reputation
and could divert the efforts and attention of our management and technical personnel from normal business operations. In addition,
adverse determinations in litigation could result in the loss of our proprietary rights, subject us to significant liabilities,
require us to seek licenses from third parties, prevent us from licensing our technology or selling or manufacturing our products,
or require us to expend significant resources to modify our products or attempt to develop non-infringing technology, any of which
could seriously harm our business.

 

Our products may
contain technology provided to us by third parties. Because we did not develop such technology ourselves, we may have little or
no ability to determine in advance whether such technology infringes the intellectual property rights of any other party. Our suppliers
and licensors may not be required to indemnify us in the event that a claim of infringement is asserted against us, or they may
be required to indemnify us only with respect to intellectual property infringement claims in certain jurisdictions, and/or only
up to a maximum amount, above which we would be responsible for any further costs or damages. In addition, we have indemnification
obligations to certain parties with respect to any infringement of third-party patents and intellectual property rights by our
products. If litigation were to be filed against these parties in connection with our technology, we would be required to defend
and indemnify such parties.

 

Our officers
and directors beneficially own a significant portion of our common stock and, as a result, can exert substantial influence over
stockholder and corporate actions.

 

Our officers and
directors of the Company currently beneficially own approximately 14.0% of our outstanding common stock, and 20.6% on a fully diluted
basis assuming the exercise of both vested and unvested options as well as warrants. As such, they have a substantial influence
over most matters requiring approval by stockholders, including the election of directors and approval of significant corporate
transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control, which in
turn could have a material adverse effect on the market price of the Company’s common stock or prevent stockholders from
realizing a premium over the market price for their Shares.

 

    A-10

     

    

 

We face competition.
Some of our competitors have greater financial or other resources, longer operating histories and greater name recognition than
we do and one or more of these competitors could use their greater resources and/or name recognition to gain market share at our
expense or could make it very difficult for us to establish market share.

 

The Company has
created an identity transaction platform allowing it to onboard customers who wish to deploy Ipsidy’s services and solutions
in order to know with biometric certainty who is engaging with them. Ipsidy’s solutions include the ability to verify the
identity of a user, via remote identity proofing, then provide physical and digital access, as well as transaction and device authentication,
all digitally signed by the user using their identity. The Company’s platform utilizes commodity, consumer grade tablets
for customer deployment with users engaging the platform via a corresponding Android or iOS smartphone app.

 

The Company also
offers certain payment processing solutions and smart card products manufacturing and printing. The industry sectors in which these
products compete are characterized by rapid change and new entrants. The Company will need to consistently develop and improve
its products in order to remain competitive. 

 

In reviewing the
competitors that exist for the Company’s current and planned products and platform services relating to biometric identity
solutions, the Company considers a number of factors. Ipsidy’s platform approach offers an Identity as a Service (IDaaS)
approach which seeks to combine a number of different elements into a single platform. Ipsidy believes that its full stack platform
is exceptional in that it provides a combination of SaaS based identity verification and identification services which cover both
physical and digital identity access use cases. The competitive landscape includes several companies that mainly address only one
or other area, with some addressing multiple areas independently. However, it is believed that some companies are attempting to
create combined identity offerings, similar to Ipsidy’s. 

 

In looking at our
competition, the Company does not consider providers who do not offer a consumer application solution for smartphones, such as
the Ipsidy App. Neither do we consider competitors, which are major conglomerates with vertically integrated cybersecurity companies,
due to the vast array of services which they offer. Furthermore, some of the competitors which do offer solutions for both digital
and physical use cases, are major legacy providers offering hardware heavy solutions principally for governmental users. These
include IDEMIA, Gemalto and Supercom. This is in contrast to Ipsidy’s approach which is based on offering apps which are
usable on mobile devices with minimal hardware requirements. Furthermore, our identity solutions are designed to address the requirements
of private, commercial and governmental uses for enrolled users. 

 

To further analyze
the competitive landscape, the market must be segmented into authentication solution vendors and biometric identification &
verification solution providers. Major competitors offering solutions in both areas include IDEMIA, Gemalto, ID.ME, HID Global,
Yoti and Aware. Major competitors offering only authentication, include Twillio/Authy, HYPR, Datacard, Duo, Daon, and Trusona.
Companies offering only biometric identification & verification include NEC, Imageware, Element, and Veridium.

  

    A-11

     

    

 

The Ipsidy identity
transaction platform is based on a patent-pending methodology, which combines digital signature authentication and biometric identity
verification into a single out-of-band transaction. This provides functionality for our customers to have real-time control over
their electronic transactions and every-day events through a mobile application, with a detailed audit trail created for each event,
containing the digitally signed transaction details and biometric identity of the user. This patent-pending approach of combining
transaction details and identity into a single, digitally signed message could allow the Ipsidy platform to be a complimentary
solution to many of its competitors and hence differentiate itself in the market. 

 

Companies that
focused on offerings for ID proofing, include Jumio and Mitek. Companies that provide a single solution may be seeking to combine
with authentication and biometric verification technology providers to expand their ID proofing solutions’ capabilities.
The Ipsidy platform now offers its own identity proofing service for use in digital onboarding solutions, in conjunction with our
biometric authentication and verification solutions. 

 

Another aspect
of the competitive landscape for platform service arises from market demand for SaaS based identity services that are both high
assurance and low friction. This combination is the ideal balance that Ipsidy and its competitors are trying to achieve. Companies
that are believed to be competing with Ipsidy with their offerings today are Callsign, Gemalto, Danal (acquired by Boku in 2018),
Datacard/Entrust, and IDEMIA (Formerly Morpho and Obertur). Ipsidy is seeking to improve its position with respect to these competitors
in part through the new facial recognition solution which is currently under development, as part of the technology partnership
announced with Ayonix. This is intended to reduce friction in Ipsidy’s Access product by the use of IP cameras to obtain
the live capture facial images. In addition, Ipsidy offers its customers the flexibility to adapt its solutions to their specific
use cases for either high assurance or to decrease friction. 

 

With respect to
SaaS based services for physical identity access management, the competitive landscape for Ipsidy also includes companies such
as HID Global, NEC, and IDEMIA. All of these companies offer a broad range of solutions from complete biometric access control
systems to complex biometric e-gate and passenger flow management solutions. Ipsidy’s offering focuses on the SaaS based
biometric identity solutions portion of this market, using mobile apps but also offers API integration with hardware suppliers
to create competitive solutions. 

 

There are new entrants
into each of these markets continually. Each competitor may have a different offering or approach to solve similar problems, which
overlap with those of the Company. Some competitors also include manufacturers who provide systems, or platform solutions to third
party operators and, therefore, do not directly compete with the Company, which operates its own systems.

 

The Cards Plus
business faces competition both locally in South Africa and internationally. China has become a source of imports of card products
at highly competitive pricing and some local suppliers are reliant on Chinese card manufacturers. Local competitors include Card
Technology Services, Easy Card and Open Gate, Cardz Group and XH Smart Technology (Africa). That said, we believe that we are the
only significant manufacturer in South Africa using digital print technology. 

 

    A-12

     

    

 

The payment processing
industry has many competitors who provide gateway services, closed loop end-to-end solutions, payment processing, peer-to-peer
payments and bill payments. As these types of services are usually supplied by regional or country specific companies, the following
summary of this competitive landscape, is focused on those countries or regions the Company is actively pursuing business in today.
In Colombia and elsewhere in Latin America where the Company is focused, major competitors include PayU, Credibanco, Redeban, Mercado
Pago, Nequi, and QPagos. Some of these companies may on the other hand be potential customers for our identify transaction platform
and biometric authentication services. Companies in this region that also compete in those sectors include Veritran, Certicamaras,
Olimpia IT, Evertec-Processa and Indra.

 

The resources available
to our competitors to develop new products and introduce them into the marketplace exceed the resources currently available to
us. As a result, our competitors may be able to compete more aggressively and sustain that competition over a longer period of
time that we can. This intense competitive environment may require us to make changes in our products, pricing, licensing, services,
distribution, or marketing to develop a market position. Each of these competitors has the potential to capture market share in
our target markets which could have an adverse effect on our position in our industry and on our business and operating results.

 

Government
regulation could negatively impact the business.

 

We do not have
or require any approval from government authorities or agencies in order to operate our regular business and operations. However,
data protection legislation in various countries in which the Company does business (including Columbia and the United Kingdom)
may require it to register its databases with governmental authorities in those countries and to comply with additional disclosure
and consent requirements with regard to the collection, storage and use of personal information of individuals resident in those
countries. To the extent that our business is based on Governmental Contracts, the relevant government authorities will need to
approve us as a supplier and the terms of those contracts. However, it is possible that any proposed expansion to our business
and operations in the future would require government approvals. Due to the security applications and biometric technology associated
with our products and platforms the activities and operations of our company are, or could become subject to license restrictions
and other regulations, such as (without limitation) export controls and other security regulation by government agencies. Expansion
of our activities in payment processing may in due course require government licensing in different jurisdictions and may subject
us to additional regulation and oversight. Aspects of payment processing and related financial services are already subject to
legislation and regulations in various jurisdictions. As indicated, “We are exposed to risks in operating in foreign markets”
above, the imposition of sanctions on particular countries, entities or individuals would prevent us from doing business with such
countries, entities or individuals. If our existing and proposed products become subject to licensing, export control and other
regulations, we may incur increased costs necessary to comply with existing and newly adopted or amended laws and regulations or
penalties for any failure to comply. Our operations could be adversely affected, directly or indirectly, by existing or future
laws and regulations (and amendments thereto) relating to our business or industry.

 

Some states in
the United States have adopted legislation governing the collection, use of, and storage of biometric information and other states
are considering such legislation. The widespread adoption of such legislation could result in restrictions on our current or proposed
business activities or we may incur increased costs to comply with such regulations.

 

    A-13

     

    

 

Our common
stock is thinly traded, so you may be unable to sell at or near asking prices or at all if you need to sell your shares to raise
money or otherwise desire to liquidate your shares.

  

Currently, our
common stock is quoted on the OTC and future trading volume may be limited by the fact that many major institutional investment
funds, including mutual funds, as well as individual investors follow a policy of not investing in OTC stocks and certain major
brokerage firms restrict their brokers from recommending OTC stocks because they are considered speculative, volatile and thinly
traded. The OTC market is an inter-dealer market much less regulated than the major exchanges and our common stock is subject to
abuses, volatility and shorting. Thus, there is currently no broadly followed and established trading market for our common stock.
An established trading market may never develop or, if developed, be maintained. Active trading markets generally result in lower
price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity
of the shares traded there.

 

Our stock is
considered a penny stock and any investment in our stock will be considered a high-risk investment and subject to restrictions
on marketability.

 

The trading price
of our common stock is below $5.00 per share. If the price of the common stock is below such level, trading in our common stock
would be subject to the requirements of certain rules promulgated under the Securities Exchange Act of 1934, as amended. These
rules require additional disclosure by broker-dealers in connection with any trades generally involving any non-NASDAQ equity security
that has a market price of less than $5.00 per share, subject to certain exceptions. Such rules require the delivery, before any
penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith, and impose
various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited
investors (generally institutions). For these types of transactions, the broker-dealer must determine the suitability of the penny
stock for the purchaser and receive the purchaser’s written consent to the transactions before sale. The additional burdens
imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our common stock,
which could impact the liquidity of our common stock.

 

Our business
is subject to changing regulations regarding corporate governance, disclosure controls, internal control over financial reporting
and other compliance areas that will increase both our costs and the risk of noncompliance. If we fail to comply with these regulations
we could face difficulties in preparing and filing timely and accurate financial reports.

 

We are subject
to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act and
the Dodd-Frank Act. Maintaining compliance with these rules and regulations, particularly after we cease to be an emerging growth
company, will increase our legal, accounting and financial compliance costs, will make some activities more difficult, time-consuming
and costly and may also place increased strain on our personnel, systems and resources.

 

    A-14

     

    

 

The Sarbanes-Oxley
Act requires, among other things, that we maintain effective disclosure controls and procedures and at the time we cease to be
an emerging growth company and a smaller reporting company, we will be required to provide attestation that we maintain effective
disclosure controls and procedures by our registered public accounting firm. Any failure to develop or maintain effective controls,
or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to
meet our reporting obligations. Any failure to implement and maintain effective internal control also could adversely affect the
results of periodic management evaluations regarding the effectiveness of our internal control over financial reporting that are
required to include in our periodic reports filed with the SEC, under Section 404(a) of the Sarbanes-Oxley Act or the annual auditor
attestation reports regarding effectiveness of our internal controls over financial reporting that we will be required to include
in our periodic reports filed with the SEC upon our ceasing to be an emerging growth company and a smaller reporting company, unless,
under the JOBS Act, we meet certain criteria that would require such reports to be included prior to then, under Section 404(b)
of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also
cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on
the trading price of shares of our common stock.

 

In order to maintain
the effectiveness of our disclosure controls and procedures and internal control over financial reporting going forward, we will
need to expend significant resources and provide significant management oversight. There is a substantial effort involved in continuing
to implement appropriate processes, document our system of internal control over relevant processes, assess their design, remediate
any deficiencies identified and test their operation. As a result, management’s attention may be diverted from other business
concerns, which could harm our business, operating results and financial condition. These efforts will also involve substantial
accounting-related costs. We may experience difficulty in meeting these reporting requirements in a timely manner.

 

If we are unable
to maintain key controls currently in place or that we implement in the future and pending such implementation, or if any difficulties
are encountered in their implementation or improvement, (1) our management might not be able to certify, and our independent registered
public accounting firm might not be able to report on, the adequacy of our internal control over financial reporting, which would
cause us to fail to meet our reporting obligations, (2) misstatements in our financial statements may occur that may not be prevented
or detected on a timely basis and (3) we may be deemed to have significant deficiencies or material weaknesses, any of which could
adversely affect our business, financial condition and results of operations.

 

Implementing any
appropriate changes to our internal controls may require specific compliance training of our directors, officers and employees,
entail substantial costs in order to modify our existing accounting systems, and take a significant period of time to complete.
Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that
adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs
and could materially impair our ability to operate our business. In the event that we are not able to demonstrate compliance with
Section 404 of the Sarbanes-Oxley Act in a timely manner, our internal controls are perceived as inadequate or that we are unable
to produce timely or accurate financial statements, our stock price could decline and we could be subject to sanctions or investigations
by the SEC or other regulatory authorities, which would require additional financial and management resources.

 

    A-15

     

    

 

We are an “emerging
growth company” and we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies”
will make our common stock less attractive to investors.

 

We are an “emerging
growth company,” as defined in the JOBS Act, and we expect to take advantage of certain exemptions and relief from various
reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular,
while we are an “emerging growth company” (1) we will not be required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act, (2) we will be exempt from any rules that may be adopted by the Public Company Accounting
Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements,
(3) we will be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements
and (4) we will not be required to hold nonbinding advisory votes on executive compensation or stockholder approval of any golden
parachute payments not previously approved.

 

In addition, we
are eligible to delay the adoption of new or revised accounting standards applicable to public companies until those standards
apply to private companies, and as a result, we may not comply with new or revised accounting standards on the relevant dates on
which adoption of such standards is required for non-emerging growth companies. The Company has adopted and will be adopting all
standards as they have become effective for public companies.

 

We also take advantage
of reduced disclosure requirements, including regarding executive compensation. If we remain an “emerging growth company”
in the future, we may take advantage of other exemptions, including the exemptions from the advisory vote requirements and executive
compensation disclosures under the Dodd-Frank Wall Street Reform and Customer Protection Act, and the exemption from the provisions
of Section 404(b) of the Sarbanes-Oxley Act. We may remain an “emerging growth company” until (1) the market value
of our common stock that is held by non-affiliates exceeds $700 million as of any June 30, in which case we would cease to be an
“emerging growth company” as of the following December 31, (2) our gross revenue exceeds $1 billion in any fiscal year,
(3) we issue more than $1 billion in nonconvertible notes in any three-year period or (4) the last day of the fiscal year following
the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement.
If we sell common equity securities pursuant to the registration statement that we intend to file immediately following this offering
that five-year period will commence upon such sale.

 

The exact implications
of the JOBS Act are still subject to interpretations and guidance by the SEC and other regulatory agencies, and we cannot assure
that we will be able to take advantage of all of the benefits of the JOBS Act. In addition, investors may find our common stock
less attractive if we rely on the exemptions and relief granted by the JOBS Act. If some investors find our common stock less attractive
as a result, there may be a less active trading market for our common stock and our stock price may decline and/or become more
volatile.

 

    A-16

     

    

 

Risks Relating to our Securities

 

If
the Shares you purchase are not registered for resale under the Securities Act, you will be limited as to your ability to resell
your Shares under Rule 144.

 

Under
Rule 144 as promulgated under the Securities Act, a person who has beneficially owned restricted shares of our common stock for
at least six months would be entitled to sell their securities provided that: (i) such person is not deemed to have been one of
our affiliates at the time of, or at any time during the three months preceding a sale, (ii) we are subject to the Exchange Act
periodic reporting requirements at all times and (iii) if the sale occurs prior to satisfaction of a one-year holding period, we
provide current information at the time of sale.

 

Persons
who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time
of, or at all times, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month
period only a number of securities that does not exceed the greater of either of the following:

 

	 	●	1%
    of the total number of securities of the same class then outstanding; or
	 	●	the
    average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144
    with respect to the sale;

 

provided,
in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale.
Such sales by affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144.
As such, investors in this offering will be required to hold the Shares for a period of six months if a registration statement
is not declared effective. Further, if we fail to file our reports under the Exchange Act, you will not be able to utilize Rule
144 for resales.

 

We may not be
able to attract the attention of brokerage firms because we became a public company by means of a reverse acquisition.

 

Because we became
public through a “reverse acquisition,” securities analysts of brokerage firms may not provide coverage of us since
there is little incentive to brokerage firms to recommend the purchase of our common stock. No assurance can be given that brokerage
firms will want to conduct any secondary offerings on behalf of the Company in the future.

 

Our certificate
of incorporation allows for our board to create new series of preferred stock without further approval by our stockholders, which
could adversely affect the rights of the holders of our Common Stock.

 

Our Board of Directors
has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors have the
authority to issue up to 10,000,000 shares of our preferred stock terms of which may be determined by the Board without further
stockholder approval. As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would
grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are
distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the
redemption of our common stock. In addition, our Board of Directors could authorize the issuance of a series of preferred stock
that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative
voting power of our common stock or result in dilution to our existing stockholders. Although we have no present intention to issue
any additional shares of preferred stock or to create any additional series of preferred stock, we may issue such shares in the
future.

 

    A-17

     

    

 

You may experience
dilution of your ownership interests because of the future issuance of additional common shares.

 

In the future,
we may issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownership interests
of our shareholders. We may also issue additional shares of our securities that are convertible into or exercisable for ordinary
shares, as the case may be, in connection with hiring or retaining employees, future acquisitions, future sales of its securities
for capital raising purposes, or for other business purposes. The future issuance of any such additional shares may create downward
pressure on the value of our securities. There can be no assurance that we will not be required to issue additional shares, warrants
or other convertible securities in the future in conjunction with any capital raising efforts, including at a price (or exercise
prices) below the price at which our shares may be valued or are trading in a public market.

 

We have not
paid dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value
of our common stock

 

We have never
paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends
on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time
as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return
on your investment will only occur if its stock price appreciates.

 

Risks Related to this Offering

 

The offering
price for the Common Stock has been determined by the Company. 

 

The price at which
the Common Stock is being offered has been determined by us based on current sales, sales forecasts and standard corporate valuation
estimation methods. There is no direct relationship between the offering price and our assets, book value, net worth, or any other
economic or recognized criteria of value.

 

An investment
in the Shares is speculative and there can be no assurance of any return on any such investment. 

 

An investment
in the Shares is speculative and there is no assurance that investors will obtain any return on their investment. Investors will
be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.

 

We have significant
discretion over use of the net proceeds. 

 

The maximum gross
proceeds to us from the sale of the Shares will be $3.2 million; provided, however, we may increase the maximum offering to $5.2
million in our sole discretion. The Company shall use the proceeds from the sale of the Common Stock in this Offering for working
capital purposes, operations and further development of its identity transaction platform, repayment of principal and/or interest
of debt and shall not, directly or indirectly, use such proceeds for any distribution or dividend to any shareholder of the Company.
The use of proceeds may change as management deems fit. As is the case with any business, particularly one without a proven business
model, it should be expected that certain expenses unforeseeable to management at this juncture will arise in the future. There
can be no assurance that management’s use of proceeds generated through this Offering will prove optimal or translate into
revenue or profitability for the Company. Investors are urged to consult with their attorneys, accountants and personal investment
advisors prior to making any decision to invest in the Company.

 

The Offering
will be offered by on a “Best Efforts” basis, and we may not raise the Maximum offering. 

 

We are offering
the shares with respect to the Offering on a “Best Efforts” basis. In a “Best Efforts” offering, there
is no assurance that we will sell the maximum Offering. Accordingly, we may close upon amounts less than the maximum Offering which
may not provide us with sufficient funds to fully implement our business plan.

 

 

A-18EX-4.5

 Exhibit 4.5 

FOURTH AMENDMENT TO 

AMENDED AND RESTATED 

ORAGENICS, INC. 
 2012
EQUITY INCENTIVE PLAN 
 This Fourth Amendment to the Amended and Restated 2012 Equity Incentive Plan (the “2012 Incentive Plan” ) is made
pursuant to Section 12 of the 2012 Incentive Plan. 
 Recitals: 

WHEREAS, the 2012 Incentive Plan was originally adopted by the Company on August 6, 2012 and approved by the shareholders on October 23,
2012; and 
 WHEREAS, the Board of Directors believes it would be in the best interest of the Company and its shareholders to increase the authorized
shares available under the 2012 Incentive Plan. 
 NOW THEREFORE, Section 4 titled “SHARES SUBJECT TO PLAN” is hereby amended as
follows: 
 The reference to “2,250,000” is replaced with “8,250,000”, to reflect an increase in the shares reserved for use under the
2012 Incentive Plan. 
 All other terms and conditions of the 2012 Incentive Plan not otherwise modified hereby shall remain in full force and effect. The
Amendment was approved by the Board of Directors on April 25, 2019 and submitted to the Company’s shareholders for approval in connection with the Company’s June 20, 2019 Annual Meeting of Shareholders.

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