authID (AUID) - 2025 Q2 - Quarterly Report

Filing Information and Corporate Details Form 10-Q General Information This section details the filing as a Quarterly Report (Form 10-Q) for the period ended June 30, 2025, for authID Inc., a Delaware corporation. It specifies the company's filing status as a non-accelerated filer and smaller reporting company, and lists the common stock trading on NASDAQ - The filing is a Quarterly Report (Form 10-Q) for the period ended June 30, 2025[1] Metric | Value | :-------------------------------- | :-------------------- | | Registrant Name | authID Inc. | | State of Incorporation | Delaware | | Commission File Number | 001-40747 | | Trading Symbol | AUID | | Exchange | The NASDAQ Stock Market LLC | | Filer Status | Non-accelerated filer, Smaller reporting company | | Common Stock Outstanding (Aug 12, 2025) | 13,443,740 shares | Registrant Information This section provides the corporate contact details for authID Inc. and confirms its compliance with SEC filing requirements, including electronic submission of Interactive Data Files, and clarifies that it is not a shell company - The registrant's principal executive offices are located at 1580 North Logan Street, Suite 660, Unit 51767, Denver, CO 80203, with a telephone number of 516-274-8700[3] - The registrant has filed all required reports during the preceding 12 months and has been subject to filing requirements for the past 90 days (Yes)[4] - The registrant has submitted electronically every Interactive Data File required during the preceding 12 months (Yes)[5] - The registrant is not a shell company (No)[7] Forward-Looking Statements and Risk Factors This section includes a cautionary statement regarding forward-looking information, emphasizing that actual results may differ materially due to various known and unknown risks. It lists several key risk factors, such as lack of significant revenues, market acceptance, ability to raise capital, and macroeconomic conditions - Forward-looking statements are based on current expectations and future events, but actual results may differ materially due to known and unknown risks[11] - Key risk factors include: lack of significant revenues, positive cash flow and history of losses; market acceptance of products and competition; ability to attract and retain customers and key personnel; reliance on third-party software; security breaches; ability to raise capital; ability to maintain Nasdaq listing; intellectual property protection; ability to operate in non-US markets; impact of global conflicts; stock price volatility; legislation and government regulation; and general economic conditions, inflation and access to capital[17] Company Information and Definitions This section defines the terms 'authID,' 'Company,' 'we,' 'our,' 'us,' and similar terms as referring to authID Inc., a Delaware corporation, and its subsidiaries. It also clarifies that 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[15] - Information on the company's website (www.authID.ai) is not incorporated into this report[16] PART I – FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for authID Inc. and its subsidiaries, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with accompanying notes. These statements are prepared in accordance with Form 10-Q instructions and GAAP, with certain information condensed or omitted - The financial statements are unaudited and prepared in accordance with Form 10-Q instructions, including only normal recurring accruals[32] - Certain information and footnote disclosures normally included in GAAP consolidated financial statements have been condensed or omitted[32] - The consolidated financial statements include authID Inc. and its wholly-owned subsidiaries, with all significant intercompany balances and transactions eliminated[33] Condensed Consolidated Balance Sheets Metric | June 30, 2025 | December 31, 2024 | :-------------------------- | :-------------- | :---------------- | | ASSETS | | | | Cash | $8,300,280 | $8,471,561 | | Accounts receivable, net | $1,079,776 | $97,897 | | Contract assets | $564,070 | $426,859 | | Deferred contract costs | $697,304 | $617,918 | | Other current assets, net | $833,875 | $460,192 | | Total current assets | $11,475,305 | $10,074,427 | | Intangible Assets, net | $154,977 | $213,718 | | Goodwill | $4,183,232 | $4,183,232 | | Total assets | $15,813,514 | $14,471,377 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable and accrued expenses | $1,357,194 | $1,715,410 | | Commission liability | $308,194 | $459,657 | | Severance liability | $- | $325,000 | | Convertible debt, net | $- | $240,884 | | Deferred revenue | $1,154,402 | $215,237 | | Total current liabilities | $2,819,790 | $2,956,188 | | Total liabilities | $2,819,790 | $2,956,188 | | Common stock, par value $0.0001 | $1,344 | $1,092 | | Additional paid-in capital | $195,515,123 | $185,312,508 | | Accumulated deficit | $(182,532,775) | $(173,808,529) | | Accumulated comprehensive income | $10,032 | $10,118 | | Total stockholders' equity | $12,993,724 | $11,515,189 | | Total liabilities and stockholders' equity | $15,813,514 | $14,471,377 | Condensed Consolidated Statements of Operations Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | :---------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Revenues, net | $1,444,599 | $280,438 | $1,740,855 | $437,816 | | General and administrative | $3,906,933 | $2,169,160 | $6,552,633 | $4,231,521 | | Research and development | $1,978,871 | $1,392,103 | $3,977,534 | $2,597,071 | | Depreciation and amortization | $30,249 | $44,004 | $60,441 | $87,412 | | Total operating expenses | $5,916,053 | $3,605,267 | $10,590,608 | $6,916,004 | | Loss from continuing operations | $(4,471,454) | $(3,324,829) | $(8,849,753) | $(6,478,188) | | Interest expense, net | $(171) | $(10,369) | $(12,883) | $(23,507) | | Interest income | $86,846 | $73,957 | $138,390 | $182,877 | | Other income (expense), net | $86,675 | $63,588 | $125,507 | $159,370 | | Loss from continuing operations before income taxes | $(4,384,779) | $(3,261,241) | $(8,724,246) | $(6,318,818) | | Net loss | $(4,384,779) | $(3,261,241) | $(8,724,246) | $(6,318,818) | | Net Loss Per Share - Basic and Diluted | $(0.33) | $(0.34) | $(0.72) | $(0.67) | | Weighted Average Shares Outstanding - Basic and Diluted | 13,222,454 | 9,501,691 | 12,078,039 | 9,475,956 | Condensed Consolidated Statements of Comprehensive Loss Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(4,384,779) | $(3,261,241) | $(8,724,246) | $(6,318,818) | | Foreign currency translation loss | $122 | $(10,594) | $(86) | $(6,516) | | Comprehensive loss | $(4,384,657) | $(3,271,835) | $(8,724,332) | $(6,325,334) | Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity as of June 30, 2025, was $12,993,724, compared to $11,515,189 as of December 31, 2024[28] - During the six months ended June 30, 2025, the company issued common stock for cash, net of offering costs, totaling $8,464,327[28] - Stock-based compensation for the six months ended June 30, 2025, was $1,001,207[28] - The accumulated deficit increased to $(182,532,775) as of June 30, 2025, from $(173,808,529) at December 31, 2024, primarily due to a net loss of $(8,724,246)[28] Condensed Consolidated Statements of Cash Flows Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | :---------------------------------- | :----------------------------- | :----------------------------- | | Net cash flows from operating activities | $(8,388,822) | $(5,749,651) | | Net cash flows from investing activities | $(1,700) | $(15,582) | | Net cash flows from financing activities | $8,219,327 | $10,001,398 | | Effect of Foreign Currencies | $(86) | $(5,871) | | Net Change in Cash | $(171,281) | $4,230,294 | | Cash, Beginning of the Period | $8,471,561 | $10,177,099 | | Cash, End of the Period | $8,300,280 | $14,407,393 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed disclosures and explanations for the figures presented in the condensed consolidated financial statements, covering accounting policies, significant estimates, and specific financial line items NOTE 1 – BASIS OF PRESENTATION - As of June 30, 2025, the Company had an accumulated deficit of approximately $182.5 million and incurred a net loss of approximately $8.7 million for the six months ended June 30, 2025[34] - The Company used approximately $8.4 million to fund its operations for the six months ended June 30, 2025[34] - The continuation of the Company as a going concern is dependent upon financial support, additional financing, and generating sufficient cash flows, leading to substantial doubt about its ability to continue as a going concern[35][36] Potentially Dilutive Securities Excluded from Diluted Loss Per Share | Security | 2025 | 2024 | | :---------------------- | :----- | :----- | | Convertible notes payable | - | 8,277 | | Warrants | 719,965 | 697,446 | | Stock options | 2,249,454 | 1,852,819 | | Total | 2,969,419 | 2,558,542 | - Deferred revenue contract liabilities were approximately $1.15 million as of June 30, 2025, up from $0.22 million as of December 31, 2024, and are expected to be earned over the next twelve months[42] - The Company's Remaining Performance Obligation (RPO) was $13.77 million as of June 30, 2025, with approximately 39% expected to be recognized as revenue over the next twelve months[43] Changes in Allowance for Credit Losses | Metric | June 30, 2025 | | :-------------------------- | :-------------- | | Balance at December 31, 2024 | $149,720 | | Provision for expected credit loss | $769,214 | | Write-offs, net | $(193,176) | | Balance at June 30, 2025 | $725,758 | - As of June 30, 2025, one customer accounted for 92% of gross accounts receivable, and two customers represented 73% of revenue for the six months ended June 30, 2025[48][49] - As of June 30, 2025, two customers accounted for 78% of the Company's Remaining Performance Obligation[51] NOTE 2 – OTHER CURRENT ASSETS Other Current Assets | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Prepaid third-party and related party services | $433,502 | $337,873 | | Prepaid insurance | $319,190 | $141,002 | | Commissions advances | $62,500 | $- | | Total Other Current Assets | $833,875 | $460,192 | NOTE 3 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) Intangible Assets Activity (Six Months Ended June 30, 2025) | Item | Acquired and Developed Software | Patents | Total | | :-------------------------- | :---------------------------- | :-------- | :-------- | | Carrying Value at Dec 31, 2024 | $99,819 | $113,899 | $213,718 | | Additions | $- | $1,700 | $1,700 | | Amortization | $(51,275) | $(9,166) | $(60,441) | | Carrying Value at June 30, 2025 | $48,544 | $106,433 | $154,977 | - Amortization expense totaled approximately $60,000 for the six months ended June 30, 2025, compared to $87,000 for the same period in 2024[55] Future Expected Amortization of Intangible Assets | Year | Amount | | :-------------------------- | :------- | | 2025 (Remainder of the Year) | $26,860 | | 2026 | $37,226 | | 2027 | $30,442 | | 2028 | $18,389 | | 2029 | $18,389 | | Thereafter | $23,671 | | Total | $154,977 | NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts Payable and Accrued Expenses | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Trade payables | $564,892 | $317,030 | | Accrued payroll and related obligations | $447,237 | $984,536 | | Other accrued expenses | $345,065 | $413,844 | | Total | $1,357,194 | $1,715,410 | NOTE 5 – CONVERTIBLE NOTES PAYABLE - The Company issued Senior Secured Convertible Notes with an initial principal amount of approximately $9.2 million and a conversion price of $3.70 per share on March 21, 2022[58] - The Convertible Notes matured on March 31, 2025, and accrued interest at an annual rate of 9.75%[59] - The outstanding Convertible Notes and accrued interest were paid in full on March 31, 2025[60] NOTE 6 – RELATED PARTY TRANSACTIONS - The Company has a services agreement with The Pipeline Group, Inc. (TPG), where Ken Jisser, a Company director, is the founder and CEO. TPG provides outsourced sales services for $70,000 per month[61] - Total expense incurred under the TPG contract was approximately $210,000 for the three months and $420,000 for the six months ended June 30, 2025[61] - Dale Daguro, the brother of CEO Rhon Daguro, is employed as VP Sales, earning approximately $97,000 (three months) and $151,000 (six months) in base salary and sales commission during the period ended June 30, 2025[62] NOTE 7 – STOCKHOLDERS' EQUITY - During the six months ended June 30, 2025, the Company issued 1,811,120 shares of common stock and pre-funded warrants for approximately $6.8 million net cash proceeds, and an additional 373,060 shares for approximately $1.6 million net cash proceeds through registered direct offerings[63] - 200,000 shares of common stock were issued under restricted stock awards (RSAs) to non-employee advisors, with a total grant-date fair value of $1,594,000[63][66] Warrant Activity (Six Months Ended June 30, 2025) | Metric | Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Life | | :-------------------------- | :----------------- | :------------------------------ | :------------------------------ | | Outstanding, December 31, 2024 | 697,446 | $11.20 | 3.2 Years | | Granted | 210,019 | $4.70 | 4.8 Years | | Exercised/Cancelled | (187,500) | $3.16 | - | | Outstanding, June 30, 2025 | 719,965 | $11.40 | 3.2 Years | - As of June 30, 2025, there was approximately $3.3 million of unrecognized compensation costs related to stock options outstanding, to be expensed through 2027[71] - Stockholders approved an increase of 295,000 shares allocated to the 2024 Equity Incentive Plan, with 322,872 shares available for issuance as of June 30, 2025[72] NOTE 8 – COMMITMENTS AND CONTINGENCIES - The Company is a party to various legal or administrative proceedings in the ordinary course of business, but management believes the outcome will not have a material adverse effect on financial condition or results of operations[73] NOTE 9 – SEGMENT INFORMATION - The Company operates in a single operating and reportable segment, with the Chief Executive Officer (CODM) assessing overall performance and allocating resources based on consolidated net income (loss)[74] NOTE 10 – SUBSEQUENT EVENTS - There are no subsequent events to report[75] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and future outlook, based on the unaudited financial statements. It discusses the business overview, platform, key trends, liquidity, and the impact of macro-economic conditions - The discussion is based on financial statements prepared in accordance with U.S. GAAP, requiring estimates and assumptions that affect reported amounts[76] - Management evaluates estimates and judgments on an ongoing basis, basing them on historical experience and reasonable factors[76] Overview of Business and Platform - authID Inc. provides a patented, biometric identity platform to ensure secure customer and employee logins and transactions, offering biometric identity verification (Proof), biometric identity authentication (Verified), and account/access recovery[78][79][81][83] - The PrivacyKey™ solution enables biometric authentication without storing biometric data, achieving a 1-to-1-billion false match rate at a 0.3% false rejection rate[82] - The platform aims to stop fraud at onboarding, block deepfakes, prevent account takeover, and eliminate password risks through a faster, frictionless, and accurate user identity experience[78] Key Customer Benefits - The authID platform allows enterprise customers to verify and authenticate users, benefit from high-speed processing (less than 700ms response time), and precisely identify consumers and employees[84] - It provides a seamless user experience, supports a wide variety of devices, integrates quickly and easily, offers broad identity document coverage, and performs secure biometric verification/authentication without storing biometric data via PrivacyKey technology[84] Key Trends and Growth Strategy - Financial results are impacted by market trends including growing concerns over identity theft, fraud (including AI-assisted fraud), the growth in the sharing economy, and the increase in electronic payments[85][92] - 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[86] Going Concern - As of June 30, 2025, the Company had an accumulated deficit of approximately $182.5 million, a net loss of approximately $8.7 million, and used approximately $8.4 million to fund operations for the six months ended June 30, 2025[89] - The Company's continuation as a going concern is dependent on financial support from stockholders, additional debt or equity financing, and generating sufficient cash flows, leading to substantial doubt about its ability to continue[90][91] - In April and May 2025, the Company raised approximately $8.5 million after expenses from existing and new stockholders through registered direct offerings[90] Adjusted EBITDA (Non-GAAP) - Adjusted EBITDA is a non-GAAP financial measure used by management to assess the performance of fundamental business activities, excluding items like interest, taxes, depreciation, amortization, and stock-based compensation[93] Reconciliation of Loss from Continuing Operations to Adjusted EBITDA | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Loss from continuing operations | $(4,384,779) | $(3,261,241) | $(8,724,246) | $(6,318,818) | | Addback: Interest expense, net | $171 | $10,369 | $12,883 | $23,507 | | Addback: Interest income | $(86,846) | $(73,957) | $(138,390) | $(182,877) | | Addback: Severance cost | $- | $8,638 | $- | $14,251 | | Addback: Depreciation and amortization | $30,249 | $44,004 | $60,441 | $87,412 | | Addback: Stock compensation | $1,078,201 | $725,704 | $1,532,540 | $1,448,675 | | Adjusted EBITDA continuing operations (Non-GAAP) | $(3,363,004) | $(2,546,483) | $(7,256,772) | $(4,927,850) | - Adjusted EBITDA has limitations as an analytical tool, as it does not reflect cash expenditures, working capital needs, or cash requirements for asset replacement[96] Results of Operations (Three and Six Months Ended June 30, 2025 and 2024) - Revenues, net, increased significantly to approximately $1.4 million for the three months ended June 30, 2025 (from $0.3 million in 2024), and to $1.7 million for the six months ended June 30, 2025 (from $0.4 million in 2024), primarily due to new customer contracts[97] - General and administrative expenses increased by approximately $1.6 million (three months) and $2.2 million (six months) due to employee-related expenses, shares issued to management advisors, and an $0.8 million provision for estimated credit loss[98] - Research and development expenses increased by approximately $0.6 million (three months) and $1.4 million (six months) due to continued investment in employees and contractors for product capabilities[99] - Depreciation and amortization expenses, and interest expense, net, remained flat compared to the prior year periods[100][101] Liquidity and Capital Resources - As of June 30, 2025, the Company had approximately $8.3 million of cash on hand and $8.7 million of working capital[102] - Cash used in operating activities was approximately $8.4 million for the six months ended June 30, 2025, compared to $5.7 million in the prior year[102] - Cash provided by financing activities was approximately $8.2 million for the six months ended June 30, 2025, primarily from the sale of common stock, net of offering costs[103] - The Company will need to raise additional funds in 2025 to support operations and investments, with no guarantee that such financing will be available on acceptable terms[104] Macro-Economic Conditions and Off-Balance Sheet Arrangements - The global economy's political and economic uncertainty, including wars, inflation, and rising interest rates, impacts spending on identity verification and security, potentially affecting revenue growth[106] - The Company has no off-balance sheet arrangements that are reasonably likely to have a material adverse effect on its financial condition or results of operations[107] Recent Accounting Policies - Recent material accounting policies critical to understanding financial results and conditions are discussed in Note 1 of the financial statements[108] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, authID Inc. is not required to include disclosures under this item - As a smaller reporting company, authID Inc. is not required to include disclosure under this item[109] Item 4. Controls and Procedures The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025. There were no material changes in internal control over financial reporting during the six months ended June 30, 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[110] - There were no material changes in internal control over financial reporting during the six months ended June 30, 2025[111] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal or administrative proceedings in the ordinary course of business but does not anticipate any material adverse effect on its financial condition or results of operations from these matters - The Company is a party to various legal or administrative proceedings arising in the ordinary course of business[113] - Management has no reason to believe the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations[113] Item 1A. Risk Factors This section refers to the risk factors previously discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, stating that there have been no material changes - Risk factors describing major risks to the business are found in Item 1A, 'Risk Factors', of the Annual Report on Form 10-K for the year ended December 31, 2024[114] - There has been no material change in risk factors from those previously discussed in the Annual Report on Form 10-K[114] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the six months ended June 30, 2025, the company granted 30,000 options to a new employee, exempt from registration requirements under Rule 4(a)(2) and/or Rule 506 of Regulation D - During the six months ended June 30, 2025, the Company granted 30,000 options to a new employee at an exercise price of $5.89 per share[115] - 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[115] Item 3. Defaults Upon Senior Securities This section states that there are no defaults upon senior securities to report - There are no defaults upon senior securities to report[115] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - This item is not applicable to the Company's operations[116] Item 5. Other Information This section states that no director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the six months ended June 30, 2025 - No director or officer of the Company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the six months ended June 30, 2025[117] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate documents, agreements, and certifications, with references to previous filings where applicable - The report includes a comprehensive list of exhibits, such as the Amended & Restated Certificate of Incorporation, Bylaws, various agreements (e.g., Securities Purchase Agreements, Engagement Agreements), and certifications (e.g., CEO/CFO certifications)[118] - Many exhibits are incorporated by reference from previous Form 8-K, 10-Q, and 10-K filings with the SEC[119][121]