Core Insights - authID has launched PrivacyKey, a unique solution designed to protect user biometric data while addressing compliance issues related to biometric information storage [2][5] - The introduction of PrivacyKey allows organizations to implement biometric solutions without concerns over liability or user privacy apprehensions [2][5] - authID's Proof™ and Verified™ solutions now operate without storing any biometric data, enhancing user privacy and regulatory compliance [3][5] Company Overview - authID is a leading provider of biometric identity verification and authentication solutions, ensuring enterprises can accurately verify user identities [7] - The company emphasizes speed and accuracy in its identity verification process, achieving processing speeds of 700 milliseconds and a false-match rate of one in one billion [5][8] - The platform integrates secure digital onboarding, biometric authentication, and account recovery to combat identity fraud and cyberattacks [8] Technology Features - PrivacyKey includes advanced key-management capabilities, allowing enterprises to easily rotate and revoke keys, ensuring authorized access only [4] - The technology eliminates the risk of biometric data breaches by not storing any biometric artifacts, thus enhancing data privacy protection [5][6] - During identity proofing, a public and private key pair is created using facial biometrics, with the private key destroyed immediately after creation [6] Market Context - The rise in biometric authentication usage is hindered by fears of data theft or misuse, which PrivacyKey aims to alleviate [5] - Increasing regulations in various states and countries regarding biometric data retention create additional legal burdens for companies, which PrivacyKey helps to mitigate [5] - By providing a solution that ensures no biometric data is stored, authID broadens the market for its biometric platform [5]

Company Overview - authID® (Nasdaq: AUID) is recognized as a leading provider of biometric identity verification and authentication solutions, achieving top rank in The Prism Project's 2024 Biometric Digital Identity Prism Flagship Report [1][3] - The company focuses on ensuring enterprises can accurately verify user identities, preventing cybercriminal activities and enhancing user experience through its patented biometric identity platform [7] Industry Insights - The global biometric digital identity industry is projected to generate over $315 billion in revenue, with biometric transactions expected to reach 5.6 trillion from 2024 to 2028 [5] - Biometrics are increasingly critical in reducing fraud, improving operational efficiency, preserving privacy, and enhancing user experience amid digital transformation [2][4] Product Differentiation - authID offers unique capabilities, including one-in-one-billion false-match accuracy and verification speeds of 700 milliseconds, ensuring a high level of trust and privacy protection for users [6] - The company's solutions are designed to integrate seamlessly into existing user infrastructures, providing a user-friendly experience while maintaining compliance with privacy regulations [6] Market Position - The Prism Project evaluated over 130 vendors in the biometric digital identity ecosystem, highlighting authID's leadership in deterministic solutions and its commitment to excellence in biometric authentication [3][5] - The report serves as a roadmap for decision-makers in the biometric digital identity ecosystem, emphasizing the importance of implementing effective biometric solutions like those offered by authID [4]

authID to champion global standards that will shape the future of digital credentials and biometric authentication DENVER, COLORADO, Dec. 23, 2024 (GLOBE NEWSWIRE) -- authID® (NASDAQ:AUID), a leading provider of biometric identity verification and authentication solutions, today announced it has become a member of the Accountable Digital Identity Association (ADIA), an open industry association created to drive the development of a standardized, interoperable framework for decentralized identity services to ...

The Verified platform's continuous authentication technology will revolutionize NGO operations by creating unprecedented transparency and accountability to donors, ultimately accelerating social impact initiatives DENVER, Dec. 19, 2024 (GLOBE NEWSWIRE) -- authID® (Nasdaq: AUID), a leading provider of biometric identity verification and authentication solutions, today announced the broad expansion of its services within the operations of the EinStrong Foundation, an organization dedicated to alleviating pove ...

Austin, Dec. 16, 2024 (GLOBE NEWSWIRE) -- TurboCheck, the #1 tool for digital identity verification and authID® (NASDAQ:AUID), a leading provider of biometric identity verification and authentication solutions, have announced a groundbreaking partnership to tackle the escalating challenges of hiring fraud in the digital age. To date, TurboCheck has identified over 200,000 fake candidates, demonstrating the scale of the problem and the critical need for advanced fraud detection solutions. This collaboration ...

authID Inc. (NASDAQ:AUID) Q3 2024 Earnings Conference Call November 7, 2024 5:00 PM ET Company Participants Graham Arad – General Counsel Rhon Daguro – Chief Executive Officer Ed Sellitto – Chief Financial Officer Conference Call Participants Ricky Solomon – Wilmot Advisors Gary Brode – Deep Knowledge Investing Operator Thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to the authID Third Quarter 2024 Earnings Call. All ...

| --- | --- | |-----------------------------------------|-------| | | | | | | | | | | | | | | | | | | | authID | | | | | | Q3 2024 Results | | | Conference Call | | | November 7, 2024 | | | | | | | | | | | | © 2024 authID Inc. All Rights Reserved. | | Disclaimer & Forward Looking Statements This Presentation and information provided at a webcast or meeting at which it is presented (the "Presentation") has been prepared on the basis of information furnished by the management of authID Inc. ("authID" or the " ...

[FORM 10-Q Information](index=1&type=section&id=FORM%2010-Q%20Information) This section details the company's quarterly report filing status for the period ended September 30, 2024, identifies authID Inc. as a Delaware corporation, and confirms its non-accelerated filer status, along with common shares outstanding - Filing Type: Quarterly Report on Form 10-Q for the period ended September 30, 2024[1](index=1&type=chunk) - Registrant: authID Inc., a Delaware corporation[1](index=1&type=chunk) - Filer Status: Non-accelerated filer[5](index=5&type=chunk) - Common Stock Outstanding: **10,920,909 shares** as of November 5, 2024[6](index=6&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This section warns that forward-looking statements in the report are subject to known and unknown risks, which may cause actual results to differ materially - The report includes forward-looking statements related to future events or the company's future financial performance, involving known and unknown risks, uncertainties, and other factors[7](index=7&type=chunk) - Key risk factors encompass lack of significant revenues, market acceptance, ability to raise capital, geopolitical impacts, and stock price volatility[8](index=8&type=chunk) - The company disclaims any obligation to publicly release revisions to forward-looking statements or report unanticipated events, except as required by Federal securities laws[9](index=9&type=chunk) [Other Pertinent Information](index=4&type=section&id=OTHER%20PERTINENT%20INFORMATION) This section clarifies that terms like 'authID' refer to authID Inc. and its subsidiaries, and information on the company's website is not part of this report - The terms 'authID,' 'Company,' 'we,' 'our,' 'us,' and similar terms refer to authID Inc., a Delaware corporation, and its subsidiaries[10](index=10&type=chunk) - Information on the company's website (www.authID.ai) is not part of this report[10](index=10&type=chunk) [PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, with explanatory notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased from **$15.41 million** to **$17.47 million** by September 30, 2024, driven by cash and additional paid-in capital, while liabilities decreased and equity rose | Metric | Sep 30, 2024 (Unaudited) | Dec 31, 2023 | Change ($) | Change (%) | | :-------------------------- | :----------------------- | :--------------------- | :--------- | :--------- | | Cash | $11,718,392 | $10,177,099 | $1,541,293 | 15.14% | | Total current assets | $13,073,091 | $10,901,680 | $2,171,411 | 19.92% | | Total assets | $17,469,696 | $15,411,913 | $2,057,783 | 13.35% | | Total current liabilities | $1,875,509 | $1,664,743 | $210,766 | 12.66% | | Total liabilities | $1,875,509 | $2,214,167 | $(338,658) | -15.30% | | Total stockholders' equity | $15,594,187 | $13,197,746 | $2,396,441 | 18.16% | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue significantly increased for both three and nine-month periods ending September 30, 2024, leading to a reduced net loss despite higher research and development costs | Metric (USD) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :----------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Revenues, net| 248,920 | 43,389 | 205,531 | 473.68% | | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :----------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Revenues, net| 686,736 | 118,387 | 568,349 | 480.09% | | Metric (USD) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :----------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Net loss | (3,364,801) | (3,717,618) | 352,817 | -9.49% | | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :----------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Net loss | (9,683,619) | (16,180,056) | 6,496,437 | -40.15% | | Metric (USD) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change ($) | | :----------- | :-------------------------- | :-------------------------- | :------------- | | Continuing operations | (0.31) | (0.47) | 0.16 | | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change ($) | | :----------- | :-------------------------- | :-------------------------- | :------------- | | Continuing operations | (0.97) | (3.05) | 2.08 | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss improved to **$3.36 million** for the three months and significantly decreased to **$9.69 million** for the nine months ended September 30, 2024, reflecting a reduced net loss | Metric (USD) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :----------------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Comprehensive loss | (3,363,834) | (3,705,026) | 341,192 | -9.21% | | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :----------------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Comprehensive loss | (9,689,168) | (16,323,601) | 6,634,433 | -40.64% | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to **$15.59 million** by September 30, 2024, primarily due to **$10.04 million** from common stock sales and stock-based compensation, partially offset by net loss | Metric (USD) | Sep 30, 2024 | Dec 31, 2023 | Change ($) | Change (%) | | :----------------------- | :----------- | :----------- | :--------- | :--------- | | Total stockholders' equity | 15,594,187 | 13,197,746 | 2,396,441 | 18.16% | - Key changes for the nine months ended September 30, 2024, include **$10,041,399** from the sale of common stock for cash (net of offering costs), **$2,044,210** in stock-based compensation, and a net loss of **$(9,683,619)**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to **$8.48 million**, while financing activities provided **$10.04 million**, resulting in a **$1.54 million** net cash increase and a **$11.72 million** cash balance by September 30, 2024 | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :------------------------------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Net cash flows from operating activities | (8,477,368) | (6,224,162) | (2,253,206) | 36.20% | | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :------------------------------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Proceeds from sale of common stock, net of offering costs | 10,041,399 | 6,321,492 | 3,719,907 | 58.84% | | Net cash flows from financing activities | 10,041,399 | 6,865,251 | 3,176,148 | 46.26% | | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :------------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Net Change in Cash | 1,541,293 | 571,204 | 970,089 | 169.83% | - Cash balance at the end of the period (September 30, 2024) was **$11,718,392**[19](index=19&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the financial statements, covering presentation basis, going concern, revenue recognition, and specifics on assets, liabilities, equity, and related party transactions [NOTE 1 – BASIS OF PRESENTATION](index=11&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION) This note outlines accounting principles, consolidation entities, and the company's going concern status due to accumulated deficits and losses, detailing policies for net loss per share, revenue recognition, and deferred contract costs - The unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q and U.S. GAAP[20](index=20&type=chunk) - As of September 30, 2024, the Company had an accumulated deficit of approximately **$169.2 million** and incurred a net loss of approximately **$9.7 million** for the nine months ended September 30, 2024[22](index=22&type=chunk) - The continuation of the Company as a going concern is dependent upon financial support, additional financing, and generating sufficient cash flows, with substantial doubt about its ability to continue as a going concern[23](index=23&type=chunk)[24](index=24&type=chunk) - In June 2024, the Company raised approximately **$10.0 million** after expenses from existing and new stockholders through the sale of Common Stock[23](index=23&type=chunk) - Revenue is recognized based on identified performance obligations over the performance period for fixed and/or variable fees, typically earned over time based on monthly users, transaction volumes, or a monthly flat fee rate[29](index=29&type=chunk) - Deferred revenue contract liabilities were approximately **$329,000** as of September 30, 2024, compared to **$132,000** as of December 31, 2023[32](index=32&type=chunk) - For the nine months ended September 30, 2024, two customers represented **64% of revenue**; as of September 30, 2024, three customers accounted for **71% of accounts receivable**[33](index=33&type=chunk) - Remaining Performance Obligation (RPO) was **$3.83 million** as of September 30, 2024, with approximately **27%** expected to be recognized as revenue over the twelve months ending September 30, 2025[34](index=34&type=chunk) | Metric | Value (USD) | | :----------------------------------- | :---------- | | Carrying Value at December 31, 2023 | $157,300 | | Additions | 32,572 | | Reversals | (71,500) | | Amortization | (16,205) | | Carrying Value at September 30, 2024 | $102,167 | [NOTE 2 – OTHER CURRENT ASSETS](index=14&type=section&id=NOTE%202%20%E2%80%93%20OTHER%20CURRENT%20ASSETS) Other current assets increased to **$686,382** by September 30, 2024, from **$476,004** at December 31, 2023, mainly due to higher prepaid insurance and third-party services | Metric | September 30, 2024 | December 31, 2023 | | :--------------------------------------- | :----------------- | :---------------- | | Prepaid insurance | $225,604 | $184,492 | | Prepaid third-party and related party services | $460,778 | $291,512 | | Total other current assets | $686,382 | $476,004 | [NOTE 3 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL)](index=14&type=section&id=NOTE%203%20%E2%80%93%20INTANGIBLE%20ASSETS%2C%20NET%20(OTHER%20THAN%20GOODWILL)) Intangible assets, net, decreased to **$213,373** by September 30, 2024, from **$327,001** at December 31, 2023, due to **$17,582** in patent additions and **$131,210** in amortization expense | Metric | September 30, 2024 | December 31, 2023 | | :----------------------------------- | :----------------- | :---------------- | | Carrying Value at Period End | $213,373 | $327,001 | | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------- | :-------------------------- | :-------------------------- | | Amortization expense | $131,000 | $212,000 | | Year | Expected Amortization (USD) | | :------------------- | :-------------------------- | | 2024 (Remainder) | $43,847 | | 2025 | $71,089 | | 2026 | $20,986 | | 2027 | $18,219 | | 2028 | $18,219 | | Thereafter | $41,013 | | Total | $213,373 | [NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES](index=16&type=section&id=NOTE%204%20%E2%80%93%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20EXPENSES) Accounts payable and accrued expenses decreased to **$984,397** by September 30, 2024, from **$1,408,965** at December 31, 2023, mainly due to reduced accrued payroll, partially offset by increased trade payables | Metric | September 30, 2024 | December 31, 2023 | | :-------------------------------------- | :----------------- | :---------------- | | Trade payables | $347,762 | $235,606 | | Accrued payroll and related obligations | $202,730 | $707,317 | | Insurance Premium Liability | $163,696 | $104,226 | | Other accrued expenses | $270,209 | $361,816 | | Total | $984,397 | $1,408,965 | [NOTE 5 – RELATED PARTY TRANSACTIONS](index=16&type=section&id=NOTE%205%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) This note details related party transactions, including Board changes, director option grants, a services agreement with The Pipeline Group, the CEO's brother's employment, and a director's common stock purchase - Mr. Joe Trelin resigned as Chairman and Director on February 15, 2024, with **6,511** unvested options accelerated[43](index=43&type=chunk) - Mr. Kunal Mehta was appointed as a Director on March 25, 2024, and granted options to purchase **13,282 shares** at **$7.78 per share**[44](index=44&type=chunk) - On August 13, 2024, **15,627 options each** were granted to Messrs. Michael Koehneman, Michael Thompson, Ken Jisser, Kunal Mehta, and Ms. Jacqueline White at an exercise price of **$8.67 per share**[45](index=45&type=chunk) - The Company renewed a services agreement with The Pipeline Group, Inc. (TPG), where director Ken Jisser is CEO, for an additional year at **$70,000 per month**; total expense incurred for the nine months ended September 30, 2024, was approximately **$752,000**[46](index=46&type=chunk) - Dale Daguro, brother of CEO Rhon Daguro, is employed as VP Sales and earned approximately **$201,000** in base salary and sales commission for the nine months ended September 30, 2024[47](index=47&type=chunk) - Michael Thompson, a Director, purchased **12,254 shares** of common stock for **$100,000** on June 27, 2024, as part of a Registered Direct Offering[48](index=48&type=chunk) [NOTE 6 – STOCKHOLDERS' EQUITY](index=17&type=section&id=NOTE%206%20%E2%80%93%20STOCKHOLDERS'%20EQUITY) This note details changes in stockholders' equity, including the issuance of common stock through a registered direct offering in June 2024, generating **$10.0 million** net proceeds. It also covers warrant and stock option activity, including new grants to directors and employees, and the acceleration of vesting for a departing director - On June 27, 2024, the Company issued **1,464,965 shares** of common stock for cash gross proceeds of approximately **$11.0 million** (or approximately **$10.0 million**, net of offering costs) in a Registered Direct Offering[49](index=49&type=chunk) | Metric | Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life | | :-------------------------- | :--------------- | :------------------------------ | :------------------------------ | | Outstanding, Dec 31, 2023 | 598,267 | $11.89 | 3.9 Years | | Granted | 102,547 | $7.50 | 4.8 Years | | Exercised/Cancelled | (3,368) | $21.12 | - | | Outstanding, Sep 30, 2024 | 697,446 | $11.20 | 3.6 Years | - During the nine months ended September 30, 2024, the Company granted directors a total of **91,417 options** (exercise prices **$7.78 to $8.67 per share**) and **220,000 options** to certain new employees (exercise prices **$7.99 to $9.61 per share**)[57](index=57&type=chunk) - Approximately **$2.1 million** of stock option-based compensation expense was recognized for the nine months ended September 30, 2024, with approximately **$2.6 million** of unrecognized costs remaining[60](index=60&type=chunk) - The 2024 Equity Incentive Plan was approved by stockholders on June 26, 2024, allocating **395,000 shares**, with **447,523 shares** available for issuance as of September 30, 2024[61](index=61&type=chunk) - The Company also issued **140,000 options** and agreed to grant **100,000 options** to newly hired employees as inducement grants under Nasdaq Listing Rule 5635(c)(4), which are not included in the 2024 Plan totals[62](index=62&type=chunk) [NOTE 7 – COMMITMENTS AND CONTINGENCIES](index=20&type=section&id=NOTE%207%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in ordinary course legal proceedings but does not anticipate a material adverse effect on its financial condition or results of operations from their outcomes - The Company is a party to various legal or administrative proceedings arising in the ordinary course of business, but does not believe the outcome will have a material adverse effect on its financial condition or results of operations[63](index=63&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition and operations, covering biometric identity business, market trends, going concern issues, GAAP net loss to Adjusted EBITDA reconciliation, and revenue and expense trends [Overview](index=21&type=section&id=Overview) authID Inc. offers a patented biometric identity platform for rapid, frictionless user verification and authentication, preventing cybercrime through digital onboarding, passwordless authentication, and account recovery in **700ms** - authID ensures cyber-savvy enterprises 'Know Who's Behind the Device' for every customer or employee login and transaction[67](index=67&type=chunk) - The company's patented, biometric identity platform verifies user identity, prevents cybercrime, and offers identity verification in **700ms**[67](index=67&type=chunk) [Our Platform](index=21&type=section&id=Our%20Platform) authID's Verified cloud platform provides Biometric Identity Verification (Proof), Biometric Identity Authentication (Verified), Account/Access Recovery, and FIDO Passkey binding for trusted identities, secure passwordless logins, and instant account recovery - The Verified cloud-based platform provides Biometric Identity Verification (Proof), Biometric Identity Authentication (Verified), Account/Access Recovery, and FIDO Passkey binding[68](index=68&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - Biometric Identity Verification (Proof) establishes trusted identity using government-issued documents and live user selfies, detecting presentation attacks and spoofing threats[68](index=68&type=chunk) - Biometric Identity Authentication (Verified) offers secure, convenient passwordless login and transaction validation via facial biometrics, creating a patented audit trail[70](index=70&type=chunk) - Account Access and Recovery allows users to recover lost or blocked account access instantly via facial biometric, independent of any specific device[71](index=71&type=chunk) - FIDO Passkey Binding enables enterprises to bind biometrically verified user identities to FIDO2 passkeys for strong, device-based passwordless authentication[72](index=72&type=chunk) [Key Customer Benefits](index=22&type=section&id=Key%20Customer%20Benefits) authID's solution provides enterprise customers with seamless user verification and authentication, high-speed processing, precise identification, a frictionless experience, broad device and document support, and easy integration - Customers can verify and authenticate users seamlessly for quick, secure logins and transaction authentications[73](index=73&type=chunk) - Benefits include high-speed processing with very low-latency responses, precise and accurate identification, a seamless self-guided user experience, device-agnostic support, quick and easy integration (OIDC, IAM solutions), and broad identity document coverage globally[74](index=74&type=chunk)[75](index=75&type=chunk) [Key Trends](index=23&type=section&id=Key%20Trends) Financial results are influenced by rising identity theft, fraud, and account takeover concerns, growth in the sharing economy, and electronic payments, while negative global economic trends could impact spending on identity verification services - Financial results are impacted by growing concerns over identity theft, fraud, and account takeover, including AI-assisted fraud, due to accelerating digital transformation[77](index=77&type=chunk) - Other influencing trends include the growth in the sharing economy and the increase in electronic payments and alternative money transfer solutions driven by consumer demands for safe, convenient, and frictionless transactions[77](index=77&type=chunk) - Negative trends in the global economy, political and economic uncertainty, and stock market volatility may negatively impact spending on identity verification, management, and security methods[78](index=78&type=chunk) - The company plans to grow its business by increasing existing customer usage, adding new customers through direct sales and channel partners, and expanding into new markets and innovation[79](index=79&type=chunk) [Going Concern](index=23&type=section&id=Going%20Concern%20(MD%26A)) Substantial doubt about the company's ability to continue as a going concern persists, with an accumulated deficit of **$169.2 million** and a **$9.6 million** net loss, necessitating further financial support and capital raises despite a recent **$10.0 million** offering - As of September 30, 2024, the Company had an accumulated deficit of approximately **$169.2 million** and incurred a net loss of approximately **$9.6 million** for the nine months ended September 30, 2024[83](index=83&type=chunk) - The continuation of the Company as a going concern is dependent upon financial support from stockholders, ability to obtain additional debt or equity financing, generating sufficient cash flows, and acquiring new clients[83](index=83&type=chunk) - In June 2024, the Company raised approximately **$10.0 million** after expenses through the sale of Common Stock[83](index=83&type=chunk) - There is substantial doubt about the Company's ability to continue as a going concern due to the lack of assurance of achieving positive cash flows and raising sufficient capital[84](index=84&type=chunk) [Adjusted EBITDA (Non-GAAP)](index=24&type=section&id=Adjusted%20EBITDA%20(Non-GAAP)) This section presents Adjusted EBITDA as a non-GAAP financial measure, reconciled from GAAP net loss, used by management to assess operating performance and provide investors with additional information, despite its inherent limitations - Adjusted EBITDA is a non-GAAP financial measure used by management to assess operating performance and provides additional information with respect to the performance of fundamental business activities[85](index=85&type=chunk) - Adjusted EBITDA has limitations as an analytical tool, as it does not reflect cash expenditures, capital expenditures, working capital needs, or cash requirements for asset replacements[85](index=85&type=chunk) | Metric (USD) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :----------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Loss from continuing operations | (3,364,801) | (3,715,703) | (9,683,619) | (16,397,649) | | Addback: Interest expense, net | 12,712 | 13,138 | 36,219 | 1,095,320 | | Addback: Other income | (161,308) | (29,511) | (344,185) | (30,671) | | Addback: Loss on debt extinguishment | - | - | - | 380,741 | | Addback: Conversion expense | - | - | - | 7,476,000 | | Addback: Severance cost | - | 49,390 | 14,251 | 878,348 | | Addback: Depreciation and amortization | 43,798 | 60,416 | 131,210 | 212,450 | | Addback: Non-cash recruiting fees | - | - | - | 438,000 | | Addback: Taxes | - | - | - | 3,255 | | Addback: Stock compensation | 595,536 | 1,519,952 | 2,044,210 | (22,949) | | **Adjusted EBITDA continuing operations** | **(2,874,063)** | **(2,102,318)** | **(7,801,914)** | **(5,967,155)** | [Revenues, net](index=25&type=section&id=Revenues%2C%20net) Net revenues significantly increased to **$249,000** and **$687,000** for the three and nine months ended September 30, 2024, respectively, primarily due to new customer contracts from late 2023 | Metric (USD) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :----------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Revenues, net| 249,000 | 43,000 | 206,000 | 479.07% | | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change ($) | YoY Change (%) | | :----------- | :-------------------------- | :-------------------------- | :------------- | :------------- | | Revenues, net| 687,000 | 118,000 | 569,000 | 482.20% | - The increase in revenues was principally due to the recognition of revenue from new customer contracts signed in the second half of 2023[89](index=89&type=chunk) [General and administrative expenses](index=25&type=section&id=General%20and%20administrative%20expenses) General and administrative expenses decreased by approximately **$0.9 million** for the three months due to lower stock-based compensation, but increased by **$0.5 million** for the nine months, reflecting a non-recurring **$2.5 million** reversal in Q1 2023 and 2023 restructuring savings - General and administrative expense decreased by approximately **$0.9 million** for the three months ended September 30, 2024, compared to the prior year, driven by lower stock-based compensation expense[90](index=90&type=chunk) - For the nine months ended September 30, 2024, general and administrative expense increased by **$0.5 million**, reflecting a one-time **$2.5 million** reversal of stock-based compensation in Q1 2023 that was not repeated in 2024, partially offset by reduced employee-related expense from the 2023 restructuring[90](index=90&type=chunk) [Research and development expenses](index=25&type=section&id=Research%20and%20development%20expenses) Research and development expenses increased by **$0.9 million** for three months and **$2.7 million** for nine months ended September 30, 2024, due to re-investment in personnel post-2023 restructuring and the absence of a Q1 2023 stock-based compensation reversal - Research and development expenses increased by approximately **$0.9 million** for the three months and **$2.7 million** for the nine months ended September 30, 2024, compared to the prior year periods[91](index=91&type=chunk) - The increase was comprised of re-investment in employees and contractors following the 2023 restructuring, as well as **$0.8 million** from a one-time reversal of stock-based compensation in Q1 2023 that was not repeated in 2024[91](index=91&type=chunk) [Depreciation and amortization expense](index=25&type=section&id=Depreciation%20and%20amortization%20expense) Depreciation and amortization expense decreased by approximately **$0.02 million** for three months and **$0.08 million** for nine months ended September 30, 2024, due to a reduction in legacy business asset values - Depreciation and amortization expense was approximately **$0.02 million** less for the three months and **$0.08 million** less for the nine months ended September 30, 2024, compared to the prior year periods[92](index=92&type=chunk) - The reduction was due to the Company reducing the value of certain legacy business asset values[92](index=92&type=chunk) [Interest expense](index=25&type=section&id=Interest%20expense) Interest expense remained flat for the three months but increased by **$1.1 million** for the nine months ended September 30, 2024, primarily due to the exchange of Convertible Notes for common stock in May 2023 - Interest expense remained flat for the three months ended September 30, 2024, compared to the prior year[93](index=93&type=chunk) - Interest expense increased by **$1.1 million** for the nine months ended September 30, 2024, compared to the prior year, principally due to the exchange of Convertible Notes for common stock in May 2023[93](index=93&type=chunk) [Three and Nine Months Ended September 30, 2024 and September 30, 2023 – Discontinued Operations](index=25&type=section&id=Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202024%20and%20September%2030%2C%202023%20%E2%80%93%20Discontinued%20Operations) This section reports on the discontinued MultiPay business in Colombia, including the **$216,000** gain from software sale in June 2023 and the dissolution of the MultiPay entity as of August 2, 2024 - The Board approved a plan to exit from certain non-core activities comprising the MultiPay correspondent bank, payments services in Colombia, on May 4, 2022[94](index=94&type=chunk) - In June 2023, MultiPay finalized the sale of the Company's proprietary software for approximately **$96,000**, recognizing a gain of approximately **$216,000**[95](index=95&type=chunk) - The MultiPay entity was dissolved as of August 2, 2024, but an authID customer support and operations team remains in Bogota to support global operations[96](index=96&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2024, the company held **$11.7 million** in cash and **$11.2 million** in working capital, with **$8.5 million** cash used in operations and **$10.0 million** provided by financing, anticipating further capital needs in 2025 - As of September 30, 2024, the Company had approximately **$11.7 million** of cash on hand and approximately **$11.2 million** of working capital[97](index=97&type=chunk) | Metric (USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------- | :-------------------------- | :-------------------------- | | Cash used in operating activities | $(8,477,368) | $(6,224,162) | - Cash provided by financing activities in the nine months ended September 30, 2024, consisted of approximately **$10.0 million** in proceeds from the sale of common stock, net of offering costs[98](index=98&type=chunk) - The Company will need to raise additional funds in 2025 to support its operations and investments, with no guarantee that such financing will be available or on acceptable terms[100](index=100&type=chunk) [Ukraine and the Middle East (Impact)](index=27&type=section&id=Ukraine%20and%20the%20Middle%20East%20(Impact)) Ongoing conflicts in Ukraine and the Middle East create uncertainties, potentially disrupting outsourced services, increasing costs, affecting market demand, and causing financial market volatility, making capital raising more challenging - The wars in Ukraine and the Middle East may disrupt the company's ability to work with certain third-party sub-contractors for outsourced services, including software engineering and development, some of whom are based in Eastern Europe[102](index=102&type=chunk) - The uncertainty may lead to increases in costs of goods and services, impact the market for products as prospective customers reconsider capital expenditure, and cause increased volatility in financial markets, making it more difficult to raise additional capital[104](index=104&type=chunk)[105](index=105&type=chunk) - The threat of increased cyber-attacks from multiple threat actors may prompt enterprises to adopt additional security measures, potentially benefiting the Company[104](index=104&type=chunk) [Off-Balance Sheet Arrangements](index=28&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no material off-balance sheet arrangements likely to significantly affect its financial condition, results of operations, or liquidity, currently or in the future - The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources[106](index=106&type=chunk) [Recent Accounting Policies](index=28&type=section&id=Recent%20Accounting%20Policies) This section refers to Note 1 of the unaudited financial statements for a discussion of recent material accounting policies crucial for understanding financial results and conditions - Recent material accounting policies critical to understanding the financial results and conditions are discussed in Note 1 of the unaudited financial statements[107](index=107&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, authID Inc. is not required to provide quantitative and qualitative disclosures about market risk in this report - As a smaller reporting company, authID Inc. is not required to include disclosure under this item[108](index=108&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control over financial reporting during the nine-month period [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2024 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024[109](index=109&type=chunk) [Changes in Internal Control over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in the company's internal control over financial reporting during the nine months ended September 30, 2024 - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the nine months ended September 30, 2024[110](index=110&type=chunk) [PART II – OTHER INFORMATION](index=29&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal or administrative proceedings but does not anticipate any material adverse effect on its financial condition or results of operations - The Company is a party to various legal or administrative proceedings arising in the ordinary course of business, but has no reason to believe the outcome will have a material adverse effect on its financial condition or results of operations[112](index=112&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Annual Report on Form 10-K for a comprehensive discussion of risk factors, confirming no material changes from those previously disclosed - Risk factors describing major risks to the business can be found under Item 1A, 'Risk Factors', in the Annual Report on Form 10-K for the year ended December 31, 2023[113](index=113&type=chunk) - There has been no material change in risk factors from those previously discussed in the Annual Report on Form 10-K[113](index=113&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details unregistered equity sales, including **220,000** stock options to new employees, **13,282** to a new director, **15,627** to other non-employee directors, and **5,724** shares from cashless option exercises, all exempt from registration - During the nine months ended September 30, 2024, the Company granted a total of **220,000 options** to certain new employees at exercise prices ranging from **$6.29 to $9.61 per share**[114](index=114&type=chunk) - Mr. Mehta, a director, was granted an option to purchase **13,282 shares** of common stock at an exercise price of **$7.78 per share**, with **12,500 shares** vesting annually over three years and **782 shares** vesting monthly over three months[115](index=115&type=chunk) - Each non-employee director received an option grant of **15,627 shares** on August 13, 2024, at an exercise price of **$8.67**[116](index=116&type=chunk) - The Company issued **5,724 shares** of common stock in connection with the cashless exercise of stock options by employees[116](index=116&type=chunk) - The issuance of these securities is exempt from registration requirements under Rule 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 as promulgated under Regulation D[117](index=117&type=chunk) [Item 3. Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[117](index=117&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is not applicable to the company's operations[118](index=118&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) This section details the new compensation policy for non-employee directors, including cash and equity, and the appointment of Mr. Erick Soto as Chief Product Officer, outlining his compensation and retention agreement [Compensation for Non-employee Directors](index=29&type=section&id=Compensation%20for%20Non-employee%20Directors) In August 2024, the Board adopted a new policy for non-employee directors, setting total annual compensation at **$125,000** (cash and equity), including **$8,000** annual cash (or **$10,000** for committee chairs) and **$117,000** in equity via monthly vesting stock options - In August 2024, the Board adopted a new policy for non-employee director compensation, setting total annual compensation at **$125,000**, payable in cash and equity[119](index=119&type=chunk) - Annual cash compensation is **$8,000** (**$10,000** for committee chairs), payable quarterly in arrear[119](index=119&type=chunk) - Annual equity compensation of **$117,000** is provided via an option grant to purchase common stock, vesting monthly over a 12-month period, with a 10-year term and an exercise price equal to the closing price on the grant date[121](index=121&type=chunk) - In accordance with this policy, each non-employee director received an option grant of **15,627 shares** on August 13, 2024, at an exercise price of **$8.67**[122](index=122&type=chunk) [Appointment of Mr. Soto](index=30&type=section&id=Appointment%20of%20Mr.%20Soto) Mr. Erick Soto was appointed Chief Product Officer on September 23, 2024, with an annual salary of **$325,000**, a **20%** bonus potential, **100,000** stock options, and an executive retention agreement providing 12 months' base salary and accelerated equity vesting upon specific termination events - Mr. Erick Soto was hired as Chief Product Officer on September 23, 2024, with an initial annual salary of **$325,000**[123](index=123&type=chunk) - Mr. Soto is eligible for an annual bonus of up to **20%** of his annual base salary and received a grant of options to purchase **100,000 shares** of common stock, vesting monthly over 36 months[123](index=123&type=chunk) - His Executive Retention Agreement provides for an amount equal to **12 months** of his base salary and accelerated vesting on his equity awards upon termination due to a change of control or an involuntary termination[124](index=124&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with Form 10-Q, including corporate documents, securities forms, agreements, and certifications, with references to prior SEC filings - The exhibits include corporate documents (e.g., Amended & Restated Certificate of Incorporation, Bylaws), forms of securities (e.g., Stock Option, Convertible Note), various agreements (e.g., Director Agreement, Indemnification Agreement, Securities Purchase Agreement, Engagement Agreement, Executive Retention Agreement), and certifications (CEO, CFO)[126](index=126&type=chunk)[128](index=128&type=chunk) - Many exhibits are incorporated by reference to previous Form 8-K, 10-Q, or 10-K Current Reports and Registration Statements filed with the Securities Exchange Commission[129](index=129&type=chunk)[131](index=131&type=chunk) [SIGNATURES](index=34&type=section&id=SIGNATURES) The report is duly signed on behalf of authID Inc. by Rhoniel A. Daguro, CEO, and Ed Sellitto, CFO, on November 7, 2024 - The report is signed by Rhoniel A. Daguro, Chief Executive Officer (Principal Executive Officer), and Ed Sellitto, Chief Financial Officer (Principal Financial and Accounting Officer)[134](index=134&type=chunk) - The report was dated November 7, 2024[134](index=134&type=chunk)

DENVER, Sept. 24, 2024 (GLOBE NEWSWIRE) -- authID Inc. (Nasdaq: AUID), a leading provider of biometric identity verification and authentication solutions, today announced the appointment of Erick Soto as Chief Product Officer. Mr. Soto, a seasoned product leader with over 15 years of industry experience, comes to authID after serving as a Chief Product Officer and adviser to successful identity verification providers, financial technology businesses, and neobanks. In his new role, Soto will oversee the evol ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $0.28 million, a 75% increase from $0.16 million in Q1 2024 and compared to $0.04 million a year ago [23][20] - For the six months ended June 30, 2024, total revenue was $0.44 million, up from $0.07 million in the same period last year [23] - Net loss for Q2 2024 was $3.3 million, significantly improved from a net loss of $10.9 million a year ago [24] - Adjusted EBITDA loss was $2.5 million for Q2 2024, compared to a loss of $1.7 million for the same period last year [28] Business Line Data and Key Metrics Changes - The company signed six new committed partners in Q2 2024, expanding its sales reach significantly [8] - The sales pipeline grew to over $25 million, a 20% increase from $21 million in Q1 2024 [20][21] - Booked Annual Recurring Revenue (BARR) in Q2 was over $630,000, approximately triple the amount from Q2 2023 [21] Market Data and Key Metrics Changes - The Remaining Performance Obligation (RPO) as of June 30, 2024, was $4.24 million, an increase from approximately $0.4 million a year ago [25][26] - The current pipeline includes 71 opportunities valued at over $100,000 and 12 deals valued at over $500,000 [21] Company Strategy and Development Direction - The company focuses on enhancing its biometric authentication technology, emphasizing speed, accuracy, and privacy [10][13] - A new biometric privacy option was introduced, allowing facial images to be converted into a public-private key pair, eliminating the need to store biometric data [15][16] - The company aims to achieve $9 million in BARR for 2024, representing a 3x year-over-year growth [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on its mission to eliminate authentication fraud and achieve growth targets [22][34] - The urgency for biometric solutions is driven by the increasing threat of AI-generated attacks, which is a key focus for the company [19] Other Important Information - The company raised approximately $10 million in a fund raise in June 2024, which will be used to expand sales and partnerships [27] - The company has improved its balance sheet and continues to post strong metrics reflecting growth [34] Q&A Session Summary Question: How does the company plan to convert the $25 million pipeline into $9 million in bookings? - The company categorizes deals into three buckets: Fast 100, strategic large enterprise accounts (FAT 100), and channel partner deals, with expectations for bookings to materialize in the second half of the year [36][39] Question: What is the activity level for existing customers? - Existing customers are ramping up significantly, with new onboardings converting into monthly active users [44] Question: What are the biggest challenges currently faced by the company? - The challenge lies in balancing the development of additional capabilities requested by FAT 100 accounts while ensuring customer retention [48] Question: Will the recent accuracy improvements lead to increased activity? - The company has received interest from key customers regarding the new accuracy capabilities, and plans to market these advancements soon [50] Question: What is the strategy for channel partners moving forward? - The company emphasizes a mutual business plan with channel partners to ensure profitability and commitment, differentiating its approach from past experiences [56]