authID Inc 10-K for FY2025
authID Inc. (AUID)
About this 10-K
authID Inc filed this 10-K on March 31, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.04M
- up 130.2% from $886.49K a year earlier
- Net loss
- $17.93M
- compared with a net loss of $14.28M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the fiscal year ended
For the transition period from to
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Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
| Class | Outstanding at March 25, 2026 | |
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| Documents incorporated by reference: |
TABLE OF CONTENTS
GENERAL INFORMATION
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FORWARD-LOOKING STATEMENTS
Certain statements discussed in Item 1 (Business), Item 1A (Risk Factors), Item 3 (Legal Proceedings), Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations), Item 7A (Quantitative and Qualitative Disclosures About Market Risk) and elsewhere in this Annual Report on Form 10-K as well as in other materials and oral statements that the Company releases from time to time to the public constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concerning management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters involve significant known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Such risks, uncertainties and other important factors are discussed in Item 1A (Risk Factors) and Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations. In addition, these statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995. It should be understood that it is not possible to predict or identify all such factors. Consequently, the following should not be considered to be a complete discussion of all potential risks or uncertainties. The words “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” and similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. It is advisable, however, to consult any further disclosures the Company makes on related subjects in its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.
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PART I
Item 1. Business
Overview
authID Inc. (the “Company”) ensures enterprises “Know Who’s Behind the Device”TM for every customer or employee login and transaction, through its easy-to-integrate, patented, biometric identity platform. authID powers biometric identity proofing, biometric authentication, and account recovery with a fast, accurate, user-friendly experience. With our PrivacyKey™ solution, authID provides highly accurate biometric authentication while storing no biometric data. authID’s goal is to stop fraud at onboarding, blocks deepfakes, prevents account takeover, and eliminates password risks and costs, through the faster, frictionless, and most accurate user identity experience demanded by today’s digital ecosystem.
Our Platform
Our cloud-based platform was developed with internally developed software as well as acquired and licensed technology and provides the following core services:
| ● | Biometric Identity Verification – ProofTM |
| ● | Biometric Identity Authentication - VerifiedTM |
| ● | PrivacyKeyTM Privacy Preserving Biometrics | |
| ● | Identity Exchange (IDX) Platform | |
| ● | authID Mandate Agentic AI Security |
Biometric Identity Verification - Proof
Biometric identity verification establishes the trusted identity of a user based on a variety of ground truth sources, including government-issued identity documents such as national IDs, driver’s licenses and passports or electronic machine-readable travel documents (or eMRTDs). Our VerifiedTM platform detects presentation attack and spoofing threats, evaluates the authenticity of security features present on a government-issued identity document, and biometrically matches the reference picture of the document with a live user’s selfie (a photograph that the user has taken of themselves). Usually occurring at account opening or onboarding, identity verification ensures that the enterprise knows that the person interacting with the enterprise is who they say they are, in real time. authID’s ProofTM identity verification product eliminates the need for costly and less accurate face-to-face, in-person ID checks and instead provides a verified identity in seconds. Additionally, authID’s PrivacyKeyTM technology enables customers to perform biometric verification through the use of Public/Private Keys that is performed without storing any biometric data, which ensures individual data privacy. In a digital, online world of increasing fraud and security threats, Proof speeds up onboarding and offers our customers confidence in the identities of consumers, employees or third-party vendors.
Biometric Identity Authentication - Verified
Biometric identity authentication provides any organization with a secure, convenient solution to validate that an individual is the verified account owner for various purposes including passwordless login and performing specific transactions, or functions. The authID Verified product allows users to confirm their identity with their facial biometric by simply taking a selfie on a mobile phone or device of their choosing (as opposed to dedicated hardware). The solution includes a patented audit trail created for each transaction, containing the digitally signed transaction details, with proof of identity authentication and consent. Verified allows users to recover, via a facial biometric, account access that is lost or blocked due to expired credentials, lockouts, lost or stolen devices, or compromised accounts. Because the account owner’s root of trust is established in the cloud, recovery is independent of any device or hardware. In this way, account recovery is instant, portable, and does not require the presence of or access to a previously provisioned device in order to secure access from a different device.
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PrivacyKey Privacy Preserving Biometrics
authID’s PrivacyKey solution provides biometric authentication without the requirement to store any biometric or derivative of biometric data. The technology transforms biometric verification into Public/Private Key cryptography whereby the facial image of the person is converted into an elliptical public/private key pair where only the public key is stored and the private key only exists during authentication and is deleted immediately after. The solution is compliant to the ISO30136 Privacy Biometric standard and provides a False Match Rate accuracy of 1:1 Billion at a False Rejection Rate of 0.3%, as confirmed by independent tests conducted by the Commonwealth Scientific and Industrial Research Organization (“CSRIO”).
Identity Exchange (IDXTM) Platform
authID’s Identity Exchange (IDX) is a next-generation platform purpose-built to allow authorized personnel to create or claim a central credential that can be leveraged across multiple subsidiaries of a large enterprise, simplifying and securing the management of workforce identities across distributed workforces that include employees, contractors, vendors, and other third parties. IDX modernizes identity management with centrally-managed, biometric-bound, passwordless, interoperable and reusable credentials that stop phishing attacks, ensuring only verified users can access sensitive systems and data. IDX is the first enterprise platform built on the Accountable Digital Identity Association (ADI Association) specification, ensuring it is aligned with global interoperability and data sovereignty standards as well as privacy regulations.
authID Mandate - Agentic AI Security Framework
authID Mandate is a framework for biometrically binding human sponsors to the AI agents they launched, ensuring that agentic activity is governed by the user’s own scope, while also providing an immutable audit trail of that sponsorship. This provides a level of governance far beyond machine IDs, or vulnerable tokens that are otherwise the basis for most agentic deployment of auditability.
Key Customer Benefits
Our solutions allow our enterprise customers to:
| ● | Verify and Authenticate users. Customers can use the authID platform not only to verify the identity of new users, but also to authenticate those users seamlessly on an ongoing basis to enable quick, secure logins and transaction authentications. |
| ● | Benefit from high-speed processing. Our solution returns a very low-latency response, key to enabling high-volume use cases (such as logins and high-value transactions) and providing a frictionless user experience. |
| ● | Precisely and accurately identify their consumers and employees. As a result, the enterprise gains complete confidence in who is accessing its digital assets. |
| ● |
Provide seamless user experience in terms of speed and self-guided flow. This allows users of all technical skill levels to easily complete identity verification and authentication. |
| ● | Support a wide variety of devices. Our cloud-based service is device agnostic and may be used to verify or authenticate users on any device with a camera, including shared devices, digital kiosks, etc. |
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| ● | Integrate quickly and easily. We offer pre-integrated OpenID Connect (“OIDC”) connections as well as integrations with several leading Identity and Access Management solutions. |
| ● | Offer broad identity document coverage. We can verify identities using a wide spectrum of government-issued documents from around the world. |
| ● | Perform secure biometric verification & authentication without the need to store biometric data. Our PrivacyKey technology removes the need to store any biometric data in order to perform verification or authentication transactions. PrivacyKey verification and authentication is seamlessly delivered thru either a web or mobile applications with a response time of less than 700ms. |
Corporate Information
The Company was incorporated in the State of Delaware on September 21, 2011. Our corporate headquarters is a virtual address located at 1580 North Logan Street, Suite 660, Unit 51767, Denver, CO 80203 and our main phone number is (516) 274-8700. Our website address is www.authid.ai. The information contained on, or that can be accessed through, our website is not incorporated by reference into this Form 10-K and you should not consider information on our website to be part of this Form 10-K.
Global Market Opportunity
The momentum towards a digital economy in recent years, accompanied by a massive growth in cyberattacks, fraud, and account takeovers fueled by Artificial Intelligence are driving the demand for more streamlined and more secure identity verification and authentication. The World Economic Forum estimates digitally enabled platform business models will drive 70% of new economic value created over the next ten years. Yet vast amounts of data have been compromised, and ransomware attacks have cost businesses hundreds of millions in remediation costs, lost revenue and brand equity. Passwords and device authentication alone no longer provide the security needed to fight today’s rampant cyber-attacks and account takeover schemes.
According to Statista, cybercrime costs in the United States alone are projected to increase to approximately $900 billion in 2026 and are projected to grow to over $3.4 trillion in 2030 (Statista: Annual Cost of Cybercrime in the U.S. 2017-2030). In the 2025 Verizon Data Breach Investigation Report, 78% of 3,300 financial data breaches studied involved external actors, while 74% of all breaches were attributed to some form of social engineering, stolen credentials, or human error. Verizon also found that Business Email Compromise (BEC) attacks now represent more than 50% of social engineering incidents, having almost doubled in recent years. Further it is predicted that Artificial Intelligence (AI) will almost certainly increase the volume and heighten the impact of cyberattacks.
Financial services, ecommerce, the sharing economy, and healthcare businesses, among other industry verticals, are confronted by the challenges of identifying their customers, patients and beneficiaries with ease and certainty in the digital world. Organizations across all sectors need to control access to their data and applications by their employees. Governments around the world are enacting new data privacy regulations and pushing for stronger authentication methods in commerce, which impose a “call to action” for many of these entities.
These factors have created a hyper-growth market for the identity verification and authentication industry as well as increased buyer demand for integrated identity platforms that can provide a range of identity solutions to address the full authentication lifecycle to govern the user journey. The Global Biometric Technology Market is estimated to reach a market size of over $50 billion by 2025, increasing at a 20% CAGR to reach over $150 billion by 2030 (Grand View Research, Biometric Technology Market Size, Share & Trends Analysis Report, 2023 - 2030).
Growth Strategy
We orient our business strategy and invest for future growth by focusing on the following key priorities:
| ● | Drive new customer growth. We intend to continue to build our customer base with a focus on key markets and verticals with the strongest need for high-assurance identity verification and authentication, including highly regulated sectors and organizations with high-risk transactions. This entails targeting less complex, less resource-intensive opportunities, as well as larger, higher revenue-generating brands. We concentrate on enhancing or complementing legacy platforms as a top-of-funnel, high-assurance provider where appropriate. |
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| ● | Accelerate onboarding and usage within our customer base. As we continue to acquire meaningful contracts, we intend to invest in bringing customers live on our platform quickly, ensuring that they realize the benefits of our platform and ramp up their usage, while speeding up time to revenue. |
| ● | Strategically develop our partner network. There are major cybersecurity and identity organizations with which we can partner to expand our customer reach quickly and efficiently. We are identifying and pursuing strategic reseller and similar partner opportunities to complement our direct sales team. |
| ● | Innovate and advance our platform. We intend to continue to invest in research and development and hiring top technical talent to meet the identity proofing and authentication needs of our existing and prospective customers, as well as support new use cases, diversify our product offerings, and continually improve our key differentiators of speed, accuracy, privacy, and user experience. |
| ● | Select Acquisitions. We intend to selectively pursue acquisitions that will help us achieve our strategic goals, enhance our technology capabilities and accelerate growth. We believe pursuing these types of acquisitions will increase our ability to work with existing customers, add new customers, enter new markets, develop new services and enhance our processing platform capabilities. However, we have no commitments with respect to any such acquisitions at this time. |
Sales and Marketing
authID provides its software as a service (SaaS) platform based on a subscription and usage-based model, with fees per transaction, enrolled or active users.
We sell our platform primarily through our direct sales team, which consists of inside sales and field sales professionals based in the United States. To power our efforts, we have built a team of subject matter experts in the identity space, and applied a regimented sales execution strategy, allowing us to win against competitors with comparable products but a sub-optimal approach to the market. We also use a lead generation service and digital marketing in order to carefully target potential customers and provide qualified leads for our sales representatives to develop.
We also work with partners such as cybersecurity and financial technology providers who provide our services to their customers through OEM or reseller arrangements and allow us to broaden our customer reach.
Competition
The market for our service offerings is highly competitive and rapidly evolving. We face competition from a broad range of providers with solutions across the identity management lifecycle, including:
| ● | Vendors providing identity verification or proofing through both biometric and non-biometric solutions (such as data-based verification using identity proxies, such as DMV records and addresses), both on-premise and cloud-based. |
| ● | Vendors of passwordless identity authentication using device-based and cloud-based biometrics. |
| ● | Larger companies providing identity and access management platforms, adding identity authentication services to their offering at low/no cost. |
| ● | New entrants seeking to develop and market competing technologies. |
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It is also possible that, as the digital identity market continues to grow and evolve, larger companies with significant resources may increase their presence in the market and develop competing solutions through internal efforts or partnerships with existing players.
Due to our ability to serve both identity verification and authentication needs, as well as the tendency for enterprises to acquire multiple digital identity solutions, we can and often do co-exist with competing products within our customer base.
Research and Development
Our research and development team is responsible for the design, development, testing and quality of our platform as well as any new technologies, features, integrations and improvements. The team includes specialists in software engineering, user experience, quality assurance, product management, infrastructure, and technical writing. Our employees are located primarily in the United States, with additional employees and sub-contractors based in Europe, India and Latin America. We intend to continue to invest in our technology to strengthen and expand our platform to stay ahead of our competition and meet the evolving needs of our current and prospective customers.
Intellectual Property
We rely on a combination of patents, trademarks, copyrights, trade secrets and contractual provisions to protect our proprietary technology. For example, we enter into confidentiality and invention assignment agreements with our employees, consultants and other third parties, and control access to software, services, documentation and other proprietary information. We believe the duration of our patents is adequate relative to the expected lives of our service offerings. We also purchase or license technology that we incorporate into our products or services. While it may be necessary in the future to seek or renew licenses relating to various aspects of our products, we believe, based upon past experience and industry practice, such licenses generally could be obtained on commercially reasonable terms.
Governmental Regulations
Due to the security applications and biometric technology associated with the Company’s products and platforms, the activities and operations of the Company are subject to license restrictions and other regulations, such as (without limitation) export controls and other security regulation by government agencies. Expansion of the Company’s activities in areas such as financial services may require government licensing in different jurisdictions and may subject it to additional regulation and oversight.
Data protection legislation in various US States and foreign countries in which the Company does business require it to comply with additional disclosure and consent requirements with regard to the collection, storage and use of personal information of individuals in those States and countries, as well as register its databases with governmental authorities in those countries. Several US states have adopted or are considering adopting a Biometric Information Privacy Act, or BIPA modelled on the Illinois statute, which governs the collection, processing, storage and distribution of biometric information such as facial biometric templates and fingerprints. Several of these new statutes give individuals rights of action to sue violators, which have resulted in several class action lawsuits. These regulations could have a significant impact on our business.
Human Capital
As of December 31, 2025, the Company had a total of 46 employees who are located in the United States, Latvia and Colombia as well as outsourced service providers. There are 30 employees in the United States who provide overall Company strategic, business and technological leadership, as well as engineering and customer support. Employees in the U.S. and Latvia receive health benefits on a cost-sharing basis and employees in Colombia are provided the respective Government required benefits.
Subsidiaries
Currently, the Company has four U.S. subsidiaries: Innovation in Motion Inc., Fin Holdings, Inc., ID Solutions Inc. and authID Gaming Inc. The Company had one subsidiary in Colombia: MultiPay S.A.S. which was dissolved as of August 2, 2024. The Company has one subsidiary in the United Kingdom: authID Enterprises Limited (formerly Ipsidy Enterprises Limited). The Company is the sole shareholder of all its subsidiaries.
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Available Information
Our Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendment to these reports are filed with the SEC. Such reports and other information filed by us with the SEC are available free of charge on our website at investors.authid.ai as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The information contained on the websites referenced in this Form 10-K is not incorporated by reference into this filing.
Recent Developments
None.
Item 1A. Risk Factors
Summary of Risk Factors The following summarizes the principal factors that make an investment in our company speculative or risky, all of which are more fully described in the Risk Factors section below. This summary should be read in conjunction with the Risk Factors section and should not be relied upon as an exhaustive summary of the material risks facing our business. The following factors could result in harm to our business, reputation, revenue, financial results, and prospects, among other impacts:
| ● | We have a history of losses and we may not be able to achieve profitability going forward. |
| ● | We have yet to achieve positive cash flow and, given our projected funding needs, our ability to generate positive cash flow is uncertain. |
| ● | 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. |
| ● | There can be no assurance that we will successfully commercialize our products that are currently in development or were recently launched, or that our existing products will sustain market acceptance. | |
| ● | If our technology and solutions are not adopted and used by customer organizations, we will not be able to grow our business and our operations will be negatively affected. |
| ● | We depend upon key personnel and need additional personnel. |
| ● | Government regulation, specifically that relating to data privacy protection could negatively impact the business. |
| ● | The market for our products is characterized by changing technology, requirements, standards and products, is impacted by the growing use of AI technologies and we may be adversely affected if we do not respond promptly and effectively to these changes. |
| ● | Issues relating to the development and use of AI, including generative AI, in our offerings may result in reputational harm, liability and adverse financial results. |
| ● | We have in the past entered into and may 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. |
| ● | We may have to seek business through a competitive bidding process. |
| ● | We rely in part on third-party software to develop and provide our solutions. |
| ● | We depend upon a small number of large sales with contractual commitments ranging from $500,000 to $2,000,000, which take longer to close and may result in a concentration of business and unpredictable quarterly revenue. |
| ● | 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. |
| ● | 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. |
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| ● | Cyber-attacks, breaches of network or information technology security, presentation attacks, natural disasters, pandemics, or terrorist attacks could have an adverse effect on our business. | |
| ● | Acquisitions present many risks that could have a material adverse effect on our business and results of operations. |
| ● | The wars in Ukraine and the Middle East may impact the business of the Company, the markets in which it operates and the financial markets, in which the Company needs to raise capital. |
| ● | Interruptions, delays in service or defects in our systems could impair the delivery of our services and harm our business. |
| ● | Third parties could obtain access to our proprietary information or could independently develop similar technologies. |
| ● | 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. |
| ● | Our officers, directors and holders of 5% of outstanding shares together beneficially own a significant portion of our Common Stock and, as a result, can exercise control over stockholder and corporate actions. |
| ● | 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. |
| ● | 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. |
| ● | Our amended and restated bylaws designate certain courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees. |
| ● | There can be no assurance that we will be able to comply with the continued listing standards of the Nasdaq Capital Market. Our failure to meet the continued listing requirements of the Nasdaq Capital Market could result in a de-listing of our Common Stock. |
| ● | Sales of a substantial number of shares of our Common Stock in the public market by our existing stockholders could cause our share price to fall. |
| ● | We may be subject to securities litigation, which is expensive and could divert management attention. |
| ● | If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative reports regarding our business or our Common Stock, our stock price and trading volume could decline. |
| ● | The market price of our common stock has been volatile and your investment in our stock could suffer a decline in value. |
| ● | We do not anticipate paying any cash dividends in the foreseeable future. |
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We have a history of losses and we may not be able to achieve profitability going forward.
We have an accumulated deficit of approximately $191.7 million as of December 31, 2025 and incurred an operating loss of approximately $17.9 million for the year ended December 31, 2025. We have had net losses in most of our quarters since our inception. We expect that we will continue to incur net losses in 2026. We may incur losses in the future for a number of reasons, including the other risks described in this report, 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. As there can be no assurance that the Company will be able to achieve positive cash flows (become cash flow positive) and raise sufficient capital to maintain operations, there is substantial doubt about the Company’s ability to continue as a going concern.
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 $15.0 million and approximately $11.6 million for the years ended December 31, 2025 and 2024, respectively. We anticipate that we will continue to have negative cash flows from operating activities through at least the next 12 months 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.
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. As a result of these factors, there is substantial doubt about the Company’s ability to continue as a going concern.
Our growth-oriented business plan to offer products to our customers will require continued capital investment. Our research and development activities will also require continued investment. We raised approximately $11.4 million and $10.0 million net proceeds after expenses in 2025 and 2024, respectively, through equity and debt financing at varying terms.
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 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 additional 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 were recently launched, or that our existing products will sustain market acceptance.
There is no assurance that we will ever successfully commercialize our platform and related solutions or that we will experience market reception for our products in development or increased market reception for our existing products. There is no guarantee that we will be able to successfully implement our new products utilizing the internally developed and licensed technology and products. There is no assurance that our existing or new products or solutions will achieve and sustain market acceptance. Further, there can be no guarantee that we will not lose business to our existing or potential new competitors.
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If our technology and solutions are not adopted and used by customer organizations, we will not be able to grow our business and our operations will be negatively affected.
Our ability to grow depends on whether organizations of various types and sizes adopt our technology and solutions as part of their business processes. If these organizations do not adopt our technology, we may not be able to increase revenues, penetrate some of the new markets we are targeting, or we may lose some of our existing customer base.
In order for us to achieve our growth objectives, our identity verification and authentication technologies and solutions must be adapted to and adopted in a variety of areas including, among others, computer and online systems access control, and identity verification for onboarding new workforce members or consumers and for transaction authentication purposes.
We cannot accurately predict the future growth rate, if any, or the ultimate size of these markets, or our penetration 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 depend upon key personnel and need additional personnel.
On March 23, 2023, Rhoniel A. Daguro was appointed as our Chief Executive Officer. Our success depends on the continued services of Mr. Daguro and of certain other members of the current management team. Our executive team is incentivized in part by stock compensation grants that align the interests of investors with the executive team and certain executives have employment retention agreements. 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.
Government regulation, specifically that relating to data privacy protection 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 or its customers do business 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 in those countries. To the extent that our contracts are with Governmental or regulated entities, 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. As indicated in, “We are exposed to risks in operating in foreign markets”below, 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.
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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. Specifically, several states are considering adopting a Biometric Information Privacy Act, or BIPA modelled on the Illinois statute, which governs the collection, processing, storage and distribution of biometric information such as facial biometric templates and fingerprints. Several of these new statutes give individuals rights of action to sue violators, which have resulted in a number of class action lawsuits. 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.
We are required to comply with stringent, complex, and evolving laws, rules, regulations, and standards in many jurisdictions, as well as contractual obligations, relating to cybersecurity and data privacy. Our compliance efforts are complicated by the fact that these requirements and obligations may be subject to uncertain or inconsistent interpretations and enforcement, and may conflict among various jurisdictions. Any failure or perceived failure by us to comply with applicable laws, rules, regulations, standards, certifications, or contractual obligations, or any compromise of security that results in unauthorized access to, or unauthorized loss, destruction, use, modification, acquisition, disclosure, release, or transfer of personal information, may result in outcomes such as: requirements to modify or cease certain operations or practices; the expenditure of substantial costs, time, and other resources; proceedings or actions against us; legal liability; governmental investigations; enforcement actions; claims; fines; judgments; awards; penalties; sanctions; and potentially costly litigation (including class actions).
The market for our products is characterized by changing technology, requirements, standards and products, is impacted by the growing use of AI technologies and we may be adversely affected if we do not respond promptly and effectively to these changes.
The market for our identity verification and authentication 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. In addition, cyberattack attempts are increasing in number, magnitude, and technical sophistication, and we expect emerging technologies to contribute to the increasing sophistication of attacks and to lead to new threats. For example, threat actors are leveraging emerging artificial intelligence (or, AI) technologies to develop new hacking tools and attack vectors, generate deep fake images, exploit vulnerabilities, obscure their activities, and increase the difficulty of threat attribution. The use of AI by bad actors can increase both the sophistication and ease of production and therefore proliferation of these new threats. Our future success will depend on our ability to enhance our existing products and to develop, or acquire and introduce, on a timely and cost-effective basis, new products and product features that counter these AI threats, 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 new AI driven cyberattacks, technological change, or evolving industry standards; |
| ● | we may experience difficulties that could delay or prevent the successful development, or acquisition, 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 new cybersecurity threats and attacks, changing technologies and market requirements, we will be unable to compete effectively in the future.
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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.
Issues relating to the development and use of AI, including generative AI, in our offerings may result in reputational harm, liability and adverse financial results.
Social, ethical and operational issues relating to the use of AI, including generative AI, in our offerings may result in reputational harm, liability and additional costs. We are incorporating AI technologies, developed by third parties, into our offerings. If our AI development, deployment, data privacy and product disclosures, or governance is ineffective or inadequate, it may result in incidents that impair the public acceptance of our AI solutions, or cause harm to individuals, customers or society, or result in our offerings not working as intended or producing unexpected outcomes.
Jurisdictions around the world are developing and passing new regulations that apply specifically to the use of AI. For example, the EU AI Act was adopted in 2024 and will be implemented in phases through 2030, and other jurisdictions are considering similarly focused legislation. These regulations and the evolving AI regulatory environment may, among other impacts, result in inconsistencies among AI regulations and frameworks across jurisdictions, increase our compliance, governance and research and development costs, increase our exposure to claims related to our AI models and increase liability related to the use of AI by our customers or users that are beyond our control. There can be no guarantee that future AI regulations, or customer requirements relating to AI will not adversely impact us or conflict with our approach to AI, including affecting our ability to make our offerings available without costly changes, delaying or halting development of our offerings, requiring us to change our development practices, go to market strategies and indemnity protections and subjecting us to additional compliance requirements, regulatory action, competitive harm, reputational harm and legal liability. To the extent we rely on third-party AI technologies in our products, services and solutions, we will face risks inherent in how those technologies and their AI models have been developed and deployed.
Uncertainty around new and evolving AI uses may require significant, additional investment. We may in the future experience, challenges accessing AI models, datasets or hardware. Developing, testing and deploying AI systems and countermeasures to AI threats outlined above, may also increase the cost of our offerings, including due to the nature of the computing costs.
We have in the past entered into and may 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 (See “We may have to seek business through a competitive bidding process” below).
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 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.
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.
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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 United States’, or foreign governments and their officials and political parties for the purpose of obtaining or retaining business. Our activities in the United States and elsewhere 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.
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 is likely to result in additional operational costs in performing such Governmental Contracts which may impact on 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 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 has occurred, for example the partial United States government shutdown in October - November 2025 and current congressional uncertainty over the debt ceiling which could lead to a further shutdown, which can be unpredictable; this may make it difficult to forecast our revenues on a quarter-by-quarter basis.
We may have to seek business through a competitive bidding process.
Competitive bidding, whether for contracts with governments or with private enterprises, 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. |
If we are unable to win particular contracts that are awarded through the competitive bidding process, we will incur expenses associated with such competitive bidding and 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.
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.
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We depend upon a small number of large sales with contractual commitments ranging from $500,000 to $2,000,000, which take longer to close and may result in a concentration of business and unpredictable quarterly revenue.
We derive a substantial portion of our revenues from a small number of sales with large contractual commitments ranging from $500,000 to $2,000,000. We have changed the product set of the business and have developed a new range of SaaS based products and solutions, which are in a lower price range and intended to generate recurring revenue from a large number of customers. We have at the same time changed our marketing focus to target major enterprises, which involve a longer sales cycle but if we are successful in securing contracts with multi-million dollar contractual commitments with such enterprises, we believe that such contracts will generate substantial, sustainable revenue growth. At the same time, we are also focusing our efforts in expanding our channel partner relationships, in the expectation that these will bring additional sales that will be quicker and easier to close. We are still endeavoring to enter into multi-year contracts for our new products with minimum commitments ranging in price and we may, or may not, be successful in achieving such sales. If we are successful in securing the major contractual commitments that we are targeting, that may result in concentration of our business amongst a small number of customers, the loss of any one of which could have significant adverse effects on our revenue and financial situation. Additionally, the longer sales and implementation cycle of major enterprises may delay the recognition of revenue and adversely affect our results of operations in the meantime. Some of our large contractual commitments are from enterprises, which are at an early stage of business development and the ramp in their business and processing volumes may be unpredictable. Accordingly, our quarterly results are difficult to predict because we cannot predict in which quarter, if any, substantial sales (whether measured in commitment volumes, or number of contracts) 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 sales are not a good indication of our future performance. In some future quarters, our sales may be below the expectations of securities analysts and investors, in which case the market price of our Common Stock may decrease significantly.
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 historically to date are attributable to sales and business operations in jurisdictions other than the United States. Although we are now focusing our efforts in generating more United States based revenues, we continue to pursue international sales, in particular in Asia and Europe. 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:
| ● | local Data Privacy and other regulations; |
| ● | trade restrictions; |
| ● | import 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; |
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| ● | difficulties in staffing, managing and supporting foreign operations; |
| ● | longer payment cycles; |
| ● | increased collection risks; |
| ● | impact of the Coronavirus or other pandemics; and |
| ● | impact of wars and terrorism |
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.
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. We could be exposed to fines and penalties in the event of breach any applicable sanctions legislation or orders. In addition, we 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 cash flows.
Cyber-attacks, breaches of network or information technology security, presentation attacks, natural disasters, pandemics, or terrorist attacks could have an adverse effect on our business.
Cyberattacks or other breaches of network or information technology (IT) security, natural disasters, pandemics such as Covid-19, 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, presentation attacks to biometric data capture systems, including deep fakes and other threats developed by use of AI driven technologies, malware, computer viruses and other means of unauthorized access. While we regularly review our security policies, protocols, controls and systems to determine their effectiveness for detection and prevention of such attacks, and to make improvements and fix any known vulnerabilities where necessary, new means and methods for such attacks are constantly being developed by bad actors, facilitated by the easy access to generative AI and we may not become aware of such new attacks or vulnerabilities prior to being subject to such an attack. There is no guarantee that we can prevent all such attacks, even if we become aware of their potential. 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 cyberattacks 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 governmental and other secured identification documents 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.
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Most recently, we have considered the impact of pandemics (e.g. COVID-19) on our overall operations. The impact of any disease which may give rise to a pandemic in the United States and worldwide are unknown, and the widespread growth in infections, or travel restrictions, quarantines or site closures imposed as a result of disease, among other things, may impact the ability of our employees, sub-contractors, or our customers’ employees and sub-contractors to attend places of work, to meet with potential customers, or undertake implementations at our customer’s locations. In addition, such a disease could lead to disruptions in our supply chain, causing shortages or unavailability of software updates, or necessary equipment. Any of these outcomes could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Acquisitions present many risks that could have a material adverse effect on our business and results of operations.
In the past we have closed acquisitions of various companies. 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 any future acquisition of which none are planned at this date. Integrating the operations of our existing business with any 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 any 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 our existing and acquired 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; |
| ● | dilution to stockholders resulting from any acquisitions, which are paid for with Company securities, or funded by equity capital raises; |
| ● | increased costs related to acquired operations and continuing support and development of acquired products; |
| ● | our responsibility for the liabilities of the businesses we acquire; |
| ● | 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 wars in Ukraine and the Middle East may impact the business of the Company, the markets in which it operates and the financial markets, in which the Company needs to raise capital.
The wars in Ukraine and the Middle East may impact the Company and its operations in a number of different ways, which are yet to be fully assessed and are therefore uncertain. The Company’s principal concern is for the safety of the personnel who support from those regions. The Company works with third party sub-contractors for outsourced services, including software engineering and development, some of whom are based in Eastern Europe. The Company also works with outsourced engineers and developers and third-party providers in other parts of the world, including the United States, Europe, India, and Latin America. While the continuing impact of this conflict and the response of the United States and other countries to it by means of trade and economic sanctions, or other actions is still unknown, it could disrupt our ability to work with certain contractors. The Company has taken steps to diversify its sub-contractor base, which may in the short term give rise to additional costs and delays in delivering software and product upgrades.
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The uncertainty impacting and potential interruption in energy and other supply chains resulting from military hostilities in Europe and the Middle East and the response of the United States and other countries to it by means of trade and economic sanctions, or other actions, may give rise to increases in costs of goods and services generally and may impact the market for our products as prospective customers reconsider additional capital expenditure, or other investment plans until the situation becomes clearer. On the other hand, the threat of increased cyber-attacks from multiple threat actors, including state-sponsored organizations may prompt enterprises to adopt additional security measures such as those offered by the Company.
For so long as the hostilities continue and perhaps even thereafter as the situation in Europe and the Middle East unfolds, we may see increased volatility in financial markets and a flight to safety by investors, which may impact our stock price and make it more difficult for the Company to raise additional capital at the time when it needs to do so, or for financing to be available upon acceptable terms. All or any of these risks separately, or in combination could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
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. All of our network systems are hosted “in the cloud” by internationally recognized third party service providers such as Microsoft Azure and Amazon Web Services. Our systems and host 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 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.
Our success depends in part on our ability to protect our core technology and intellectual property. To date, we have relied primarily on a combination of patents, patent applications, trade secret and copyright laws, as well as nondisclosure and other contractual restrictions on copying, reverse engineering and distribution to protect our proprietary technology. There can be no assurance that any of our patent applications will result in the issuance of a patent or that the examination process will not require us to narrow our claims in any application. In addition, any patents may be contested, circumvented, found unenforceable or invalid and we may not be able to prevent third parties from infringing on them.
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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.
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.
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 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, directors and holders of 5% of outstanding shares together beneficially own a significant portion of our Common Stock and, as a result, can exercise control over stockholder and corporate actions.
Our officers and directors and the holders of at least 5% of the outstanding shares of the Company currently beneficially own approximately 10% of our outstanding Common Stock, and 15% on a fully diluted basis assuming the exercise of both vested and unvested options and warrants. As such, they have a significant 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.
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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 market for our service offerings is highly competitive and rapidly evolving. We face competition from a broad range of providers with solutions across the identity management lifecycle, including:
| ● | Vendors providing identity verification or proofing through both biometric and non-biometric solutions (such as data-based verification using identity proxies, such as DMV records and addresses), both on-premise and cloud-based. |
| ● | Vendors of passwordless identity authentication using device-based and cloud-based biometrics. |
| ● | Larger companies providing identity and access management platforms, adding identity authentication services to their offering at low/no cost. |
| ● | New entrants seeking to develop and market competing technologies. |
It is also possible that, as the digital identity market continues to grow and evolve, larger companies with significant resources may increase their presence in the market and develop competing solutions through internal efforts or partnerships with existing players.
Due to our ability to serve both identity verification and authentication needs, as well as the tendency for enterprises to acquire multiple digital identity solutions, we can and often do co-exist with competing products within our customer base.
The resources available to our competitors to develop new products and introduce them into the marketplace exceed the resources currently available to us. Some of our competitors have 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. 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.
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. We are also subject to the corporate governance and other listing rules of the Nasdaq Stock Market LLC (“Nasdaq”). Maintaining compliance with these rules and regulations, particularly as we have ceased 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.
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The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and at the time we cease to be 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 a smaller reporting company, unless 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.
Our amended and restated bylaws designate certain courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our amended and restated bylaws provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Company; (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, or agent of ours to us or our stockholders; (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the Certificate of Incorporation, or the bylaws; and (iv) any action asserting a claim governed by the internal affairs doctrine (the “Delaware Forum Provision”). In addition, our amended and restated bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the Delaware Forum Provision.
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Section 27 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the Delaware Forum Provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
We recognize that the Delaware Forum Provision in our amended and restated bylaws may impose additional litigation costs on stockholders in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Delaware. Additionally, the Delaware Forum Provision may limit our stockholders’ ability to bring a claim in a forum that they find favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our directors, officers and employees even though an action, if successful, might benefit our stockholders. The Court of Chancery of the State of Delaware may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.
There can be no assurance that we will be able to comply with the continued listing standards of the Nasdaq Capital Market. Our failure to meet the continued listing requirements of the Nasdaq Capital Market could result in a de-listing of our Common Stock.
We cannot assure you that we will be able to comply with the continuing listing requirements that we are required to meet in order to maintain a listing of our Common Stock on the Nasdaq Capital Market. If we fail to satisfy the continued listing requirements of the Nasdaq Capital Market, such as the minimum bid price requirement, or the minimum stockholder’s equity requirement, the Nasdaq Capital Market may take steps to de-list our Common Stock. Such a de-listing would likely have a negative effect on the price of our Common Stock and would impair our stockholders’ ability to sell or purchase our Common Stock when they wish to do so. In the event of a de-listing, we would take actions to restore our compliance with the Nasdaq Capital Market’s listing requirements, but we can provide no assurance that any action taken by us would result in our Common Stock becoming listed again, or that any such action would stabilize the market price or improve the liquidity of our Common Stock.
Sales of a substantial number of shares of our Common Stock in the public market by our existing stockholders could cause our share price to fall.
Sales of a substantial number of shares of our Common Stock in the public market, or the perception that these sales might occur, including sales by our executive officers, directors and significant stockholders could depress the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our Common Stock.
We may be subject to securities litigation, which is expensive and could divert management attention.
In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative reports regarding our business or our Common Stock, our stock price and trading volume could decline.
The trading market for our Common Stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts and we cannot provide any assurance that analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding our shares, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analysts who may cover us were to cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
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The market price of our common stock has been volatile and your investment in our stock could suffer a decline in value.
The market price of our common stock has experienced significant price and volume fluctuations. For example, during the three-year period ended December 31, 2025, the closing price of our common stock ranged from $0.86 to $11.95. In addition, the stock market has from time-to-time experienced significant price and volume fluctuations that have particularly affected the market prices for the common stock of technology companies and that have often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of our common stock. You may not be able to resell your shares at or above the price you paid for them due to fluctuations in the market price of our stock caused by changes in our operating performance or prospects and other factors.
Some specific factors, in addition to the other risk factors identified above, that may have a significant effect on the price of our stock, many of which we cannot control, include but are not limited to:
| ● | our announcements or our competitors’ announcements of technological innovations; |
| ● | actual or anticipated quarterly variations in operating results; |
| ● | variance in our financial performance from our own financial guidance, or from expectations of securities analysts; |
| ● | changes in our product pricing policies or those of our competitors; |
| ● | our involvement in claims of infringement of intellectual property rights or other litigation; |
| ● | the public’s reaction to our press releases, our other public announcements and our filings with the SEC; |
| ● | changes in accounting standards, policies, guidance, interpretations or principles; |
| ● | changes in our growth rate or our competitors’ growth rates; |
| ● | developments regarding our patents or proprietary rights or those of our competitors; |
| ● | our inability to raise additional capital as needed; |
| ● | changes in financial markets or general economic conditions, or in market valuations of other technology companies; |
| ● | short sales, hedging and other derivative transactions and short selling campaigns involving our capital stock; |
| ● | sales of stock by the Company, or members of our management team or Board or significant stockholders; and |
| ● | changes in stock market analyst recommendations or earnings estimates regarding our stock, other comparable companies or our industry generally. |
We do not anticipate paying any cash dividends in the foreseeable future.
We have never declared or paid cash dividends, and we do not anticipate paying cash dividends in the foreseeable future. Therefore, investors should not rely on an investment in our Common Stock as a source for any future dividend income. Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors.
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Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cyber
criminals are becoming more sophisticated and effective every day, and they are increasingly targeting companies similar to ours operating
in the technology, software and identification space. All companies utilizing technology are subject to threats of breaches of their
cybersecurity programs. To mitigate the threat to our business, we take a comprehensive approach to cybersecurity risk management and
make securing the data customers and other stakeholders entrust to us a top priority. Our Board of directors and our management are actively
involved in the oversight of our risk management program, of which cybersecurity represents an important component. As described in more
detail below, we have established policies, standards, processes and practices for assessing, identifying, and managing material risks
from cybersecurity threats. We have devoted significant financial and personnel resources to implement and maintain security measures
to meet regulatory requirements and customer expectations, and we intend to continue to make significant investments to maintain the
security of our data and cybersecurity infrastructure. There can be no guarantee that our policies and procedures will be properly followed
in every instance or that those policies and procedures will be effective to prevent cyberattack incidents. Such incidents, whether or
not successful, could result in our incurring significant costs related to, for example, rebuilding our internal systems, implementing
additional threat protection measures, providing modifications or replacements to our products and services, defending against litigation,
responding to regulatory inquiries or actions, paying damages, providing customers with incentives to maintain a business relationship
with us, or taking other remedial steps with respect to third parties, as well as incurring significant reputational harm. In addition,
these threats are constantly evolving, thereby increasing the difficulty of successfully defending against them or implementing adequate
preventative measures. We have seen an increase in cyberattack volume, frequency, and sophistication.
Risk Management and Strategy
Our policies, standards, processes and practices for assessing, identifying, and managing material risks from cybersecurity threats are based on frameworks established by the International Organization for Standardization, specifically ISO/IEC 27001:2013 and other applicable industry standards. We have established comprehensive Information Security Management Systems (“ISMS”) policies, which are independently reviewed and audited annually for conformity and effectiveness under ISO/IEC 27001. In 2025, we also undertook an independent audit report on our System and Organization Controls 2 (“SOC2 Type 2”). Our cybersecurity program in particular focuses on the following key areas:
Collaboration
Our cybersecurity risks are identified and addressed through a comprehensive, cross-functional approach. Key security, risk, and compliance stakeholders, including a member of the Board meet at least monthly in our Security Steering Committee (the “Security Committee”) to develop strategies for preserving the confidentiality, integrity and availability of our company and customer information, identifying, preventing and mitigating cybersecurity threats, and effectively responding to cybersecurity incidents. We maintain controls and procedures that are designed to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding public disclosure and reporting of such incidents can be made by management and the Board in a timely manner.
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Risk Assessment
At least annually, we conduct a cybersecurity risk assessment that takes into account information from internal stakeholders, known information security vulnerabilities, and information from external sources (e.g., reported security incidents that have impacted other companies, industry trends, and evaluations by third parties and consultants). The results of the assessment are used to drive alignment on, and prioritization of, initiatives to enhance our security controls, make recommendations to improve processes, and inform a broader enterprise-level risk assessment that is presented to our Board and members of management. Risk assessment is integral to all engineering, business and operational decisions and in addition to the annual reviews, is an ongoing effort, as circumstances and facts arise.
Self Audit
At least annually we conduct a self-audit of our information security management systems (“ISMS”), in order to identify if there is any non-conformance with our ISMS policies and procedures. The results of the self-audit are reported to our Steering Committee and our external auditor for ISO/IEC 27001 compliance.
Technical Safeguards
We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats. Such safeguards are regularly evaluated and improved based on vulnerability assessments, cybersecurity threat intelligence and incident response experience.
Incident Response and Recovery Planning
We have established comprehensive incident response and recovery plans and continue to regularly test and evaluate the effectiveness of those plans. Our incident response and recovery plans address — and guide our employees, management and the Board on — our response to a cybersecurity incident.
Third-Party Risk Management
Education and Awareness
Our policies require each of our employees to contribute to our data security efforts. We regularly remind employees of the importance of handling and protecting customer and employee data, including through regular privacy and security training and testing to enhance employee awareness of how to detect and respond to cybersecurity threats.
External Assessments
Our cybersecurity policies, standards, processes and practices are regularly assessed by consultants and external independent auditors. These assessments include a variety of activities including information security assessments, audits and independent reviews of our ISMS, control environment and operating effectiveness. For example, in 2024 and 2025, we conducted independent audits to assess our ISMS against the ISO/IEC 27001:2022 standard and received certification of compliance with the standard, as well as an independent audit under SOC2 Type 2. We also undertake regular penetration testing of our systems. The results of significant assessments are reported to management and the Board. Cybersecurity processes are adjusted based on the information provided from these assessments. We have also obtained industry certifications and attestations that demonstrate our dedication to protecting the data our customers entrust to us.
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Governance
Board Oversight
Management’s Role
Item 2. Properties
The Company’s Headquarters is now located 1580 North Logan Street, Suite 660, Unit 51767, Denver, CO 80203. This is a virtual office address, we do not have any physical offices and all employees work remotely.
Item 3. Legal Proceedings
From time to time the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty, we have no reason to believe that the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
The high and low per share closing sales prices of the Company’s stock on the Nasdaq Market (ticker symbol AUID) for each quarter for the years ended December 31, 2025 and 2024 were as follows:
| Quarter Ended | High | Low | ||||||
| March 31, 2024 | $ | 11.95 | $ | 7.01 | ||||
| June 30, 2024 | $ | 11.79 | $ | 7.16 | ||||
| September 30, 2024 | $ | 10.79 | $ | 6.29 | ||||
| December 31, 2024 | $ | 8.12 | $ | 5.21 | ||||
| March 31, 2025 | $ | 7.38 | $ | 4.38 | ||||
| June 30, 2025 | $ | 8.66 | $ | 4.40 | ||||
| September 30, 2025 | $ | 5.42 | $ | 2.47 | ||||
| December 31, 2025 | $ | 2.99 | $ | 0.86 | ||||
Holders of our Common Stock
As of March 6, 2026, there were approximately 128 stockholders of record of our common stock. This number does not include shares held by brokerage clearing houses, depositories or others in unregistered form. The stock transfer agent for our securities is Computershare Shareholder Services, PO Box 505000, Louisville, Kentucky 40233.
Dividends
The Company has never declared or paid any cash dividends on its common stock. The Company currently intends to retain future earnings, if any, to finance the expansion of its business. As a result, the Company does not anticipate paying any cash dividends in the foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans as of December 31, 2025
| Plan | Number
of Securities to be issued upon exercise of outstanding options, awards and rights | Weighted average exercise price of outstanding options, awards and rights | Number of securities remaining available for issuance under equity compensation plans (excluding) securities reflected in first column) | |||||||||
| Equity compensation plans approved by security holders - 2017 Incentive Stock Plan | 188,745 | 49.63 | - | |||||||||
| Equity compensation plans approved by security holders - 2021 Equity Incentive Plan | 705,114 | 6.64 | - | |||||||||
| Equity compensation plans approved by security holders - 2024 Equity Incentive Plan | 951,716 | 5.16 | 193,147 | |||||||||
| Equity compensation plans not approved by security holders | 546,102 | 16.22 | - | |||||||||
The Company has adopted the authID Inc. 2017 Incentive Stock Plan, 2021 Equity Incentive Plan, and 2024 Equity Incentive Plan. The Company has no other equity incentive plans in effect as of December 31, 2025.
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On September 28, 2017, the shareholders of the Company approved the 2017 Incentive Stock Plan (“2017 Incentive Plan”). On December 29, 2021 the shareholders of the Company approved the 2021 Equity Incentive Plan (“2021 Plan”). On June 26, 2024, the shareholders of the Company approved the 2024 Equity Incentive Plan (“2024 Plan”). The following is a summary of principal features of the 2017 Incentive Plan, the 2021 Plan, and the 2024 Plan. The summaries, however, do not purport to be a complete description of all the provisions of each plan.
The 2017 Incentive Plan initially authorized Awards over 604,167 shares of common stock and at the Annual Meeting of Stockholders held on March 22, 2021, the stockholders approved and ratified an increase of 312,500 shares allocated to the 2017 Incentive Plan. No further awards may be made under the 2017 Incentive Plan. The 2021 Plan initially authorized Awards over 156,250 shares as well as (a) the balance of the shares which were not allocated to awards under the 2017 Incentive Plan and (b) any shares which are forfeited or cancelled under awards that lapse or expire under the prior plans. At the Annual Meeting of Stockholders held on June 26, 2023, the stockholders approved and ratified an increase of 362,500 shares to the 2021 Plan. No further awards may be made under the 2021 Incentive Plan. The 2024 Plan initially authorized 395,000 shares as well as (a) the balance of the shares which were not allocated to awards under the 2021 Incentive Plan and (b) any shares which are forfeited or cancelled under awards that lapse or expire under the prior plans. At the Annual Meeting of Stockholders held on June 26, 2025, the stockholders approved and ratified an increase of 295,000 shares to the 2024 Plan. All plans are administered by the Compensation Committee.
Under each plan, options may be granted which are intended to qualify as Incentive Stock Options (“ISOs”) under Section 422 of the Internal Revenue Code of 1986 (the “Code”) or which are not (“Non-ISOs”) intended to qualify as Incentive Stock Options thereunder. Other types of equity awards may also be granted under each of the plans include but are not limited to restricted stock, restricted stock units, and stock appreciation rights, which together with the ISOs and Non-ISOs are hereinafter collectively referred to as “Awards”. Each of the plans are not considered qualified deferred compensation plan under Section 401(a) of the Internal Revenue Code and are not subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
The terms of Awards granted under the Plans shall be contained in an agreement between the participant and the Company and such terms shall be determined by the Compensation Committee consistent with the provisions of the applicable Plan. The terms of Awards may or may not require a performance condition in order to vest the equity comprised in the relevant Award.
Any option granted under any of the Plans must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The Plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The term of each Plan option and the manner in which it may be exercised is determined by the board of directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. In the event of any stock split of our outstanding common stock, the board of directors may adjust (a) the number of shares (i) reserved under the Plan and available for awards, (ii) covered by outstanding awards, (b) the exercise prices related to outstanding awards and (c) the appropriate Fair Market value and other price determinations for any awards in order to give effect to such stock split. Subject to the limitation on the aggregate number of shares issuable under the Plan, there is no maximum or minimum number of shares as to which Award may be granted to any person.
In addition, the Compensation Committee has from time to time approved the grant of options to purchase shares of common stock by way of Inducement Grants to new employees, which are outside the approved Plans, pursuant to Nasdaq Listing Rule 5635(c)(4). During 2025 the Company granted 30,000 such options. The options so granted are Non-ISOs and the terms of the Inducement Grants are contained in an agreement between the participant and the Company which are consistent with the Awards issued under the 2021 and 2024 Plans.
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The Company filed a Registration Statement on Form S-8 on November 12, 2021, with respect to the 2017 Incentive Plan and all outstanding Awards set forth in the above table. The Company filed further Registration Statements on Form S-8 on February 1, 2022 and April 25, 2025 with respect to the 2021 Plan and 2024 Plan, respectively.
Unregistered Sales of Equity Securities
Engagement Agreements
On June 12, 2024, the Company entered into an engagement agreement (the “Madison Engagement Agreement”) with Madison Global Partners, LLC (“Madison”), pursuant to which Madison agreed to serve as non-exclusive placement agent for the issuance and sale in a public offering of an aggregate of 1,464,965 shares (the “June Registered Shares”). The Company paid Madison cash fees and issued stock purchase warrants (the “June Madison Warrants”) to purchase up to 102,547 shares of common stock of the Company with a term of 5 years at an exercise price of $7.50 per share, which equal to 7.0% of the aggregate number of June Registered Shares placed in the offering.
On March 12, 2025, the Company entered into a further engagement agreement (the “March Madison Engagement Agreement”) with Madison which was amended as of March 26, 2025. Pursuant to the amended March Madison Engagement Agreement, Madison agreed to serve as co-placement agent for the issuance and sale in a public offering of an aggregate of 666,666 shares (the “April Madison Registered Shares”) and an aggregate of 694,444 shares and 450,000 pre-funded warrants from Dominari Securities LLC (the “April Dominari Registered Shares”). The Company paid Madison cash fees and issued stock purchase warrants (the “April Madison Warrants”) to purchase up to 80,999 shares of common stock of the Company with a term of 5 years at an exercise price of $4.50 per share, which equal 7.0% of the aggregate number of April Madison Registered Shares placed in the offering to Madison investors and 3.0% of the aggregate number of April Dominari Registered Shares placed in the offering to Dominari investors.
On March 25, 2025, the Company entered into an engagement agreement (the “Dominari Engagement Agreement”) with Dominari Securities LLC (“Dominari”), pursuant to which Dominari agreed to serve as exclusive placement agent for the issuance and sale in a public offering of an aggregate of 694,444 shares and 450,000 pre-funded warrants (the “April Dominari Registered Shares”). The Company paid Dominari cash fees and issued stock purchase warrants (the “April Dominari Warrants”) to purchase up to 91,556 shares of common stock of the Company with a term of 5 years at an exercise price of $4.50 per share, which equal 8.0% of the aggregate number of April Dominari Registered Shares placed in the offering.
On May 7, 2025, Madison agreed to serve as co-placement agent for the issuance and sale in a public offering of an aggregate of 89,285 shares (the “May Madison Registered Shares”) and an aggregate of 283,775 shares from Dominari (the “May Dominari Registered Shares”). The Company paid Madison cash fees and issued stock purchase warrants (the “May Madison Warrants”) to purchase up to 14,762 shares of common stock of the Company with a term of 5 years at an exercise price of $5.60 per share, which equal 7.0% of the aggregate number of May Madison Registered Shares placed in the offering to Madison investors and 3.0% of the aggregate number of May Dominari Registered Shares placed in the offering to Dominari investors.
On May 7, 2025, Dominari also served as exclusive placement agent for the issuance and sale in a public offering of an aggregate of 283,775 shares (the “May Dominari Registered Shares”). The Company paid Dominari cash fees and issued stock purchase warrants (the “May Dominari Warrants”) to purchase up to 22,702 shares of common stock of the Company with a term of 5 years at an exercise price of $5.60 per share, which equal 8.0% of the aggregate number of May Dominari Registered Shares placed in the offering.
On November 20, 2025, the Company entered into a further engagement agreement (the “November Madison Engagement Agreement”) with Madison, pursuant to which Madison agreed to serve as co-placement agent for the issuance and sale in a public offering of an aggregate of 284,757 shares (the “November Madison Registered Shares”) and an aggregate of 1,341,684 shares and 1,062,306 pre-funded warrants from Dominari (the “November Dominari Registered Shares”). The Company paid Madison cash fees and issued stock purchase warrants (the “November Madison Warrants”) to purchase up to 92,051 shares of common stock of the Company with a term of 5 years at an exercise price of $1.35 per share, which equal 7.0% of the aggregate number of November Madison Registered Shares placed in the offering to Madison investors and 3.0% of the aggregate number of November Dominari Registered Shares placed in the offering to Dominari investors. The Company also issued stock purchase warrants (the “November Strategic Advisor Madison Warrants”) to purchase up to 250,000 shares of common stock of the Company with a term of 5 years at an exercise price of $1.62.
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On November 24, 2025, Dominari also served as exclusive placement agent for the issuance and sale in a public offering of an aggregate of 1,341,684 shares and 1,062,306 pre-funded warrants (the “November Dominari Registered Shares”). The Company paid Dominari cash fees and issued stock purchase warrants (the “November Dominari Warrants”) to purchase up to 192,319 shares of common stock of the Company with a term of 5 years at an exercise price of $1.35 per share, which equal 8.0% of the aggregate number of November Dominari Registered Shares placed in the offering.
Director & Executive Officer Stock Option Grants
On May 20, 2024, the Company made a grant of options to Mr. Mehta to acquire 13,282 shares of common stock at the exercise price of $7.78 and exercisable for a period of ten years, subject to achievement of service conditions.
On August 13, 2024, the Company made a grant of options to each of Messrs. Mehta, Jisser, Koehneman, Thompson and to Ms. White to acquire 15,627 shares of common stock. Each such option is at the exercise price of $8.67 per share, exercisable for a period of ten years, vesting over a period of twelve months.
On November 12, 2024, the Company made a grant of options to Mr. Erick Soto to acquire 100,000 shares of common stock at an exercise price of $6.94, exercisable for a period of ten years, vesting over a period of thirty-six months.
On June 4, 2025, the Company made grants of options to Mr. Edward Sellitto to acquire 45,000 shares of common stock, to Mr. Thomas Szoke to acquire 33,000 shares of common stock, to Mr. Rhoniel Daguro to acquire 10,000 shares of common stock and to Mr. Erick Soto to acquire 1,000 shares of common stock. All grants were made at the exercise price of $5.35 and are exercisable for a period of ten years, vesting over a period of twelve months.
On September 4, 2025, the Company made a grant of options to each of Messrs. Mehta, Jisser, Koehneman, Garchik, Venkataraman, Shevelyov, Menghani and to Ms. White to acquire 38,024 shares each of common stock. Each such option is at the exercise price of $3.90 per share, exercisable for a period of ten years, vesting over a period of twelve months.
On September 4, 2025, the Company made a grant of options to each of Messrs. Garchik, Venkataraman, Shevelyov, Menghani to acquire 12,500 shares of common stock at the exercise price of $3.90 and exercisable for a period of ten years, vesting over a period of three years.
Other Stock Option Grants
In addition, the Company issued options by way of Inducement Grants to new employees, which are outside the approved Plans, pursuant to Nasdaq Listing Rule 5635(c)(4).
During the year ended December 31, 2024, the Company granted a total of 200,000 such options to certain new employees at exercise prices ranging from $5.99 per share to $9.61 per share.
During the year ended December 31, 2025, the Company granted a total of 30,000 such options to a new employee at an exercise price of $5.89 per share.
All the offers and sales of securities listed above were made to accredited investors. The issuance of the above securities is exempt from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder.
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Item 6. Reserved.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
As used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” except where the context otherwise requires, the term “we,” “us,” “our,” “authID” or “the Company,” refers to the business of authID Inc.
Overview
authID ensures enterprises “Know Who’s Behind the Device”TM for every customer or employee login and transaction, through its easy-to-integrate, patented, biometric identity platform. authID powers biometric identity proofing, biometric authentication, and account recovery with a fast, accurate, user-friendly experience. With our PrivacyKey™ solution, authID provides a highly accurate biometric authentication, while storing no biometric data. authID stops fraud at onboarding, blocks deepfakes, prevents account takeover, and eliminates password risks and costs, through the faster, frictionless, and most accurate user identity experience demanded by today’s digital ecosystem.
Our Platform
Our cloud-based platform was developed with internally developed software as well as acquired and licensed technology and provides the following core services:
| ● | Biometric Identity Verification – ProofTM |
| ● | Biometric Identity Authentication – VerifiedTM |
| ● | PrivacyKeyTM Privacy Preserving Biometrics |
| ● | Account / Access Recovery |
| ● | Identity Exchange (IDX) Platform |
| ● | authID Mandate Agentic AI Security |
Biometric Identity Verification - Proof
Biometric identity verification establishes the trusted identity of a user based on a variety of ground truth sources, including government-issued identity documents such as national IDs, driver’s licenses and passports or electronic machine-readable travel documents (or eMRTDs). Our VerifiedTM platform detects presentation attack and spoofing threats, evaluates the authenticity of security features present on a government-issued identity document, and biometrically matches the reference picture of the document with a live user’s selfie (a photograph that the user has taken of themselves). Usually occurring at account opening or onboarding, identity verification ensures that the enterprise knows that the person interacting with the enterprise is who they say they are, in real time. authID’s ProofTM identity verification product eliminates the need for costly and less accurate face-to-face, in-person ID checks and instead provides a verified identity in seconds. Additionally, authID’s PrivacyKeyTM technology enables customers to perform biometric verification through the use of Public/Private Keys that is performed without storing any biometric data, which ensures individual data privacy. In a digital, online world of increasing fraud and security threats, Proof speeds up onboarding and offers our customers confidence in the identities of consumers, employees or third-party vendors.
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Biometric Identity Authentication - Verified
Biometric identity authentication provides any organization with a secure, convenient solution to validate that an individual is the verified account owner for various purposes including passwordless login and performing specific transactions, or functions. The authID Verified product allows users to confirm their identity with their facial biometric by simply taking a selfie on a mobile phone or device of their choosing (as opposed to dedicated hardware). The solution includes a patented audit trail created for each transaction, containing the digitally signed transaction details, with proof of identity authentication and consent. Verified allows users to recover, via a facial biometric, account access that is lost or blocked due to expired credentials, lockouts, lost or stolen devices, or compromised accounts. Because the account owner’s root of trust is established in the cloud, recovery is independent of any device or hardware. In this way, account recovery is instant, portable, and does not require the presence of or access to a previously provisioned device in order to secure access from a different device.
PrivacyKey Privacy Preserving Biometrics
authID’s PrivacyKey solution provides biometric authentication without the requirement to store any biometric or derivative of biometric data. The technology transforms biometric verification into Public/Private Key cryptography whereby the facial image of the person is converted into an elliptical public/private key pair where only the public key is stored and the private key only exists during authentication and is deleted immediately after. The solution is compliant to the ISO30136 Privacy Biometric standard and provides a False Match Rate accuracy of 1:1 Billion at a False Rejection Rate of 0.3%, as confirmed by independent tests conducted by the Commonwealth Scientific and Industrial Research Organization (“CSRIO”).
Identity Exchange (IDXTM) Platform
authID’s Identity Exchange (IDX) is a next-generation platform purpose-built to allow authorized personnel to create or claim a central credential that can be leveraged across multiple subsidiaries of a large enterprise, simplifying and securing the management of workforce identities across distributed workforces that include employees, contractors, vendors, and other third parties. IDX modernizes identity management with centrally-managed, biometric-bound, passwordless, interoperable and reusable credentials that stop phishing attacks, ensuring only verified users can access sensitive systems and data. IDX is the first enterprise platform built on the Accountable Digital Identity Association (ADI Association) specification, ensuring it is aligned with global interoperability and data sovereignty standards as well as privacy regulations.
authID Mandate- Agentic AI Security Framework
authID Mandate is a framework for biometrically binding human sponsors to the AI agents they launched, ensuring that agentic activity is governed by the user’s own scope, while also providing an immutable audit trail of that sponsorship. This provides a level of governance far beyond machine IDs or vulnerable tokens that are otherwise the basis for most agentic deployment of auditability.
Key Customer Benefits
Our solution allows our enterprise customers to:
| ● | Verify and Authenticate users. Customers can use the authID platform not only to verify the identity of new users, but also to authenticate those users seamlessly on an ongoing basis to enable quick, secure logins and transaction authentications. |
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| ● | Benefit from high-speed processing. Our solution returns a very low-latency response, key to enabling high-volume use cases (such as logins and high-value transactions) and providing a frictionless user experience. |
| ● | Precisely and accurately identify their consumers and employees, giving the enterprise complete confidence in who is accessing their digital assets. |
| ● | Provide a seamless user experience in terms of speed and self-guided flow, so that even users who are not tech-savvy are easily able to complete the identity verification and authentication processes. |
| ● | Support a wide variety of devices. Our cloud-based service is device agnostic and may be used to verify or authenticate users on any device with a camera, including shared devices, digital kiosks, etc. |
| ● | Integrate quickly and easily. We offer pre-integrated OIDC connections as well as integrations with several leading Identity and Access Management solutions. |
| ● | Offer broad identity document coverage. We can verify identities using a wide spectrum of government-issued documents from around the world. |
| ● | Perform secure biometric verification & authentication without the need to store biometric data. Our PrivacyKey technology removes the need to store any biometric data in order to perform verification or authentication transactions. PrivacyKey verification and authentication is seamlessly delivered thru either a web or mobile applications with a response time of less than 700ms. |
Key Trends
We believe that our financial results will be impacted by several market trends in the identity verification and authentication markets, as well as expanding digital transformation efforts across a wide range of market segments. These trends include:
| ● | growing concerns over identity theft, fraud and account takeover, resulting from the acceleration of digital transformation, for example online shopping and remote working and the growth in AI-assisted fraud; |
| ● | the growth in the sharing economy; and |
| ● | the increase in electronic payments and alternative money transfer solutions provided by both bank and non-bank entities. The key drivers for these alternative payment methods are consumer demands for safe, convenient payment transactions, with less friction. |
Our results are also impacted by the changes in levels of spending on identity verification, management and security methods, and thus, negative trends in the global economy and other factors which negatively impact such spending may negatively impact the growth in our revenue from those products. The global economy has been undergoing a period of political and economic uncertainty and stock markets are experiencing high levels of volatility, and it is difficult to predict how long this uncertainty and volatility will continue.
We plan to grow our business by increasing the use of our services by our existing customers, by adding new customers through our direct salesforce, channel partners and by expanding into new markets and innovation. If we are successful in these efforts, we would expect our revenue to continue to grow.
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Going Concern
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) assuming the Company will continue on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next year following the issuance date of these consolidated financial statements.
As of December 31, 2025, the Company had an accumulated deficit of approximately $191.7 million. For the year ended December 31, 2025, the Company earned net revenue of approximately $2.0 million, used $15.0 million to fund its operations, and incurred a net loss from operations of approximately $17.9 million.
The continuation of the Company as a going concern is dependent upon financial support from the Company’s stockholders, the ability of the Company to obtain additional debt or equity financing to continue operations, the Company’s ability to generate sufficient cash flows from operations, successfully locating and negotiating with other business entities for potential acquisition and acquiring new clients to generate revenues and cash flows. In April, May and November 2025, the Company raised a total of approximately $11.4 million after expenses from existing and new stockholders through the sale of Common Stock pursuant to registered direct offerings. Going forward, the Company plans to raise additional funds to support its operations and investments as it seeks to create a sustainable organization. Our growth-oriented business plan to offer products to our customers will require continued capital investment and there is no guarantee that such financing will be available, or available on acceptable terms.
There is no assurance that the Company will ever be profitable. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. As there can be no assurance that the Company will be able to achieve positive cash flows (become cash flow positive) and raise sufficient capital to maintain operations, there is substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of these consolidated financial statements were issued.
Subsequent Events
Management of the Company has performed a review of all events and transactions occurring after the condensed consolidated balance sheet date and determined there were no events or transactions requiring adjustment to or disclosure in the accompanying condensed consolidated financial statements.
Related Party Transactions
Commercial Agreements
On June 6, 2023, the Company entered into a services agreement with The Pipeline Group, Inc. (“TPG”). Ken Jisser, a director of the Company, is the founder and CEO of TPG, a technology-enabled services company that aims to deliver business results for companies looking to build a predictable and profitable pipeline. The agreement provides that TPG will assist in providing outsourced sales including business development resources for outbound calling, provide support for automated dialing technology, classify customer data and other sales related services for an initial term of one year. On October 25, 2023, on December 19, 2023 and on August 26, 2024, the Company entered into amendments to the above services agreement, pursuant to which TPG will provide certain additional services to the Company. In consideration of the services, the Company paid TPG $70,000 per month. On September 26, 2025, the Company signed another amendment with TPG to reduce the monthly fees to $42,000. The amendment is effective October 1, 2025. On September 30, 2025, the Company entered into a services agreement with TPG. The agreement provides that the Company will provide biometric authentication services to TPG for an initial term of two years, with an annual license fee of $2,500 and monthly minimum fees ramping to $1,000 per month. The summary of the agreement entered with TPG is qualified in its entirety by reference to the forms of such agreements, which were filed as exhibits to certain of the Company’s filings with the SEC and are incorporated by reference herein (See “Exhibits”).
On June 27, 2024, Stephen Garchik, a holder of 10% of the outstanding shares, purchased 150,000 shares of the Company’s common stock at a price of $1,125,000. The purchase price of the shares issued in this transaction was the same as the purchase price paid by all other investors in the same round and represented a 24% discount to the Nasdaq Official Closing Price in effect on the date of the transaction.
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On June 26, 2025 Mr Garchik was elected as a Director of the Company. On November 24, 2025, Mr. Garchik, purchased 126,609 shares of the Company’s common stock at a price of $216,500. The purchase price of the shares issued in this transaction was equal to the Nasdaq Consolidated Closing Bid Price in effect on the date of the transaction.
Since June 2023, the Company has employed Dale Daguro, the brother of our CEO, Rhoniel Daguro as a VP Sales. Dale Daguro’s employment is at will and may be terminated at any time, with or without cause. Dale’s compensation is commensurate with other executives employed by the Company at a similar level of seniority and experience. During the year ended December 31, 2025, Dale Daguro earned approximately $283,000 in base salary and sales commission.
As further described in Item 13 “Certain Relationships and Related Transactions and Director Independence” and in Note 6 “Related Party Transactions” to the Consolidated Financial Statements, the Company has entered into various equity investments and employment agreements with Directors and Officers of the Company.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our consolidated financial statements. Those material accounting estimates that we believe are the most critical to an investor’s understanding of our financial results and condition are discussed immediately below and are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.
Use of Estimates
In preparing these consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Revenue Recognition
Revenues, net is defined as gross revenues, less discounts and sales concessions.
Software License – The Company recognizes revenue based on the identified performance obligations over the performance period for fixed consideration and / or variable fees generated. Variable fees are typically earned over time based on monthly users, transaction volumes or a monthly flat fee rate. We allocate the selling price in a contract which has multiple performance obligations based on the contract selling price that we believe represents a fair market price for the service rendered based on estimated standalone selling price. Transaction fees are billed monthly and are constrained to transactions incurred within the month.
For contracts with minimum annual fees, the Company generally recognizes the amount of revenue ratably over the contract year and records contract assets for the amount in excess of monthly contract billings relating to variable contract consideration. For certain contracts, the Company enters into an agreement which stipulates a minimum annual fee which is due at the end of the contract year, in excess of the amount of monthly billings. The Company may also require pre-payment or milestone payments of the minimum annual fee. The amount of any billed fees in excess of revenue recognized is recorded as deferred revenue. The Company accounts for price concessions as reductions to the transaction price under ASC 606. Price concessions represent implied or estimated future reductions in consideration that the Company expects to grant, based on known facts and circumstances, including customer usage patterns and strategic considerations. These concessions are treated as variable consideration and are included in the transaction price only to the extent that it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty is resolved. For the years-ended December 31, 2025 and 2024 the Company granted approximately $0.9 million and $0 in concessions respectively.
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Any usage-based fees in excess of the minimum contract amount are charged to the customer and allocated to the annual period in which they are earned under the contract. At the beginning of each annual period in the contract, the Company estimates the variable amounts for the annual period subject to the constrained variable consideration (usage-based fees) and recognizes that amount on a time-elapsed basis over the annual period. At each reporting date within an annual period, the Company reassesses its estimate of the excess variable amounts for the annual period and updates the amount recognized on a time-elapsed basis over the remainder of the annual period.
Stock-based compensation
The Company has accounted for stock-based compensation under the provisions of FASB ASC 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). For both employee and non-employee awards, the fair market value of each stock option award is estimated on the date of grant using the Black-Scholes and/or Monte-Carlo valuation models as appropriate that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of the Company’s stock and other factors estimated over the expected term of the stock options. For employee awards, the expected term of options granted is derived based on exercise history. We continually monitor exercise activity from the date of grant and consider our short history and certain stock price growth during various periods to determine if expected term should be modified. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The Company accounts for forfeitures of employee awards as they occur.
Adjusted EBITDA
This discussion includes information about Adjusted EBITDA that is not prepared in accordance with GAAP. Adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. A reconciliation of this non-GAAP measure is included below. Adjusted EBITDA is a non-GAAP financial measure that represents GAAP net income (loss) adjusted to exclude (1) interest expense and debt discount and debt issuance costs amortization expense, (2) interest income, (3) provision for income taxes, (4) Amortization, (5) stock-based compensation expense and certain other items management believes affect the comparability of operating results.
Management believes that Adjusted EBITDA, when viewed with our results under GAAP and the accompanying reconciliations, provides useful information about our period-over-period results. Adjusted EBITDA is presented because management believes it provides additional information with respect to the performance of our fundamental business activities and is also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess the operating performance of our company and our management, and it will be a focus as we invest in and grow the business.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation from, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are:
| ● | Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; |
| ● | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
| ● | Although amortization are non-cash charges, the assets being amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; |
| ● | Adjusted EBITDA does not include the impact of certain charges or gains resulting from matters we consider not to be indicative of our ongoing operations. |
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Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as a supplement to our GAAP results.
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net Loss | $ | (17,932,880 | ) | $ | (14,277,994 | ) | ||
| Addback: | ||||||||
| Interest expense | 15,494 | 48,930 | ||||||
| Other expense (income) | (263,134 | ) | (455,227 | ) | ||||
| Severance cost | - | 14,251 | ||||||
| Amortization | 88,428 | 179,075 | ||||||
| Stock compensation | 3,700,275 | 2,612,164 | ||||||
| Adjusted EBITDA Loss from operations (Non-GAAP) | $ | (14,364,817 | ) | $ | (11,878,801 | ) | ||
The increase in Adjusted EBITDA Loss From Operations in 2025 compared to 2024 can be attributed to several factors. The Company invested significantly in research and development, and people as well as incurred credit loss expense related to certain customer contracts resulting in an increase in its overall operating expenses.
Results of Operations and Financial Condition for the Year Ended December 31, 2025 as Compared to the Year Ended December 31, 2024
Revenues, net
During the year ended December 31, 2025, the Company’s net revenues were approximately $2.0 million compared to approximately $0.9 million for the year ended December 31, 2024. Revenue increased as we acquired and went live with new customers.
During the year ended December 31, 2025, the Company recorded approximately $0.9 million in estimated concessions related to two customer contracts, one of which included an annual minimum usage fee payable on December 31, 2025. The customers’ usage declined unexpectedly and remained significantly below the minimum commitment, despite consistent communication from the customers that their usage would increase. Given the strategic importance of these customers to the Company, as well as management’s expectations regarding their future usage growth and ongoing new business development opportunities, the Company elected to provide concessions on the annual minimum fees and unpaid balances in order to preserve and strengthen the customer relationships.
General and administrative expenses
During the year ended December 31, 2025, general and administrative expenses increased by approximately $3.3 million compared to the year ended December 31, 2024. The increase was driven by increases in employee related expenses, shares issued to management advisors, as well as credit loss expense related to certain customer contracts of approximately $0.8 million
Research and development expenses
During the year ended December 31, 2025, research and development expenses increased by approximately $1.4 million compared to the year ended December 31, 2024. The increase was due to continued investment in employees and contractors to deliver required product capabilities and performance for existing customers and sales prospects.
Amortization expense
During the year ended December 31, 2025, Amortization decreased by approximately $0.1 million compared to the year ended December 31, 2024, as the Company’s assets remaining useful life decreases.
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Interest expense
Interest expense includes interest expense, debt issuance and discount amortization expense. Interest expense remained flat during the years ended December 31, 2025 and December 31, 2024.
Interest income
Interest income comprises bank interest earned on the Company’s cash balances. Interest income decreased during the year ended December 31, 2025, by approximately $0.2 million compared to the year ended December 31, 2024.
Macro-Economic Conditions
The global economy has been undergoing a period of political and economic uncertainty and stock markets are experiencing high levels of volatility, and it is difficult to predict how long this uncertainty and volatility will continue. The frequent and sudden changes in international trade negotiations and tariffs, continuing wars in Ukraine and the Middle East, inflationary pressures, and rising energy prices have impacted the United States and other major economies and have created uncertainty in the markets. As a result, many businesses, especially in the technology sector, have made significant reductions in expenditure, including reductions in force and investment freezes. Our sales and results are also impacted by the changes in levels of spending on identity verification, management and security methods, and thus, negative trends in the global economy and other factors which negatively impact such spending may negatively impact the growth of our revenue from those products.
Liquidity and Capital Resources
As of December 31, 2025, current assets were $5.7 million and current liabilities outstanding amounted to $1.4 million which resulted in net working capital of $4.3 million.
Net cash used by operating activities was $14.7 million for the year ended December 31, 2025 compared to $11.6 million in 2024. Cash used in operations for 2025 and 2024 was primarily the result of funding the business operations as the Company invested in people and product.
Net cash used in investing activities in 2025 and 2024 was approximately $0.0 million and $0.1 million for the payment of patent fees and purchases of intangible assets.
Net cash provided by financing activities for 2025 and 2024 consisted of approximately $11.2 million and $10.0 million in proceeds from the sale of common stock, net of offering costs.
In 2026, the Company will continue to be opportunistic and judicious in raising additional funds to support its operations and investments as it creates a sustainable organization. There is no guarantee that such financing will be available, or if available that it will be on acceptable terms.
Our growth-oriented business plan to offer products to our customers will require continued capital investment. Research and development activities and technology deployment will require continued investment.
The Company projects that the current and past investments in technology and systems will lead to revenue expansion, thereby reducing liquidity needs. However, to further implement its business plan and satisfy its working capital requirements, the Company will need to raise more capital. There is no guarantee that the Company will be able to raise additional equity or debt financing at acceptable terms, if at all.
There is no guarantee that our current business plan will not change, and because of such change, 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. As a result of these factors, there is substantial doubt about the Company’s ability to continue as a going concern.
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Description of Indebtedness
As of December 31, 2025, the Company has fully repaid all Senior Secured Convertible Notes outstanding and discharged the security interests.
See Note 5 of the Consolidated Financial Statements for additional information associated with the convertible notes payable.
Equity Financing
See Note 7 of the Consolidated Financial Statements for additional information associated with equity financing in 2025 and 2024.
2025 Common Stock Transactions
| ● | On April 1, 2025, pursuant to a securities purchase agreement with accredited investors (the “April Purchase Agreement”), the Company agreed to issue and sell, in a registered offering (the “April Offering”) an aggregate of 1,811,120 shares of common stock and pre-funded warrants at a per share price of $4.50. |
| ● | On May 7, 2025, pursuant to a securities purchase agreement with accredited investors (the “May Purchase Agreement”), the Company agreed to issue and sell, in a registered offering (the “May Offering”) an aggregate of 373,060 shares of common stock at a per share price of $5.60. |
| ● | On November 24, 2025, pursuant to a securities purchase agreement with accredited investors (the “November Purchase Agreement”), the Company agreed to issue and sell, in a registered offering (the “November Offering”) an aggregate of 2,688,747 shares of common stock and pre-funded warrants at a per share price of $1.35 (or $1.71 if the purchaser is a director of the Company). The purchasers under the November Purchase Agreement included Stephen J. Garchik. |
2024 Common Stock Transactions
| ● | On June 27, 2024, the Company entered into a securities purchase agreement with accredited investors (the “June Purchase Agreement”), pursuant to which the Company agreed to issue and sell, in a registered offering (the “June Offering”) an aggregate of 1,464,965 shares of the Company’s common stock at a per share price of $7.50 (or $8.61 if the purchaser is a director of the Company). The purchasers under the June Purchase Agreement included Stephen J. Garchik and one director of the Company. |
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management to be material to investors.
Contractual Obligations
As of December 31, 2025, the Company had no outstanding long-term contractual obligations.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, we are not required to provide the information required by this Item 7A.
Item 8. Financial Statements and Supplementary Data
Our consolidated financial statements and notes thereto and the report of our independent registered public accounting firm (PCAOB ID 00677), are set forth on pages F-1 through F-26 of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Annual Report, our Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 and 15d-15(e) of the Exchange Act. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, the Company’s disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in the report that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. accepted accounting principles. Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected and such evaluation is subject to the risks discussed in item 1A – Risk Factors of this Report.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, using the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s assessment using the above criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2025.
This Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal controls over financial reporting. Management’s report was not subject to attestation by our independent registered accounting firm in accordance with SEC rules.
Item 9B. Other Information
During
the quarter ended December 31, 2025, no director or officer
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
Item 10. Directors, Executive Officers, and Corporate Governance;
The current Directors and Officers of the Company are as follows:
| Name | Age | Position (s) and Offices Held | ||
| Rhoniel A. Daguro (2) | 51 | Director and Chief Executive Officer | ||
| Edward C. Sellitto | 41 | Chief Financial Officer | ||
| Thomas R. Szoke | 61 | Chief Technology Officer | ||
| Erick Soto | 38 | Chief Product Officer | ||
| Stephen J. Garchik | 71 | Director | ||
| Ken Jisser | 48 | Director | ||
| Michael L. Koehneman*(1)(2) | 65 | Director | ||
| Kunal Mehta (3) | 57 | Director | ||
| Ram Menghani | 64 | Director | ||
| Nicholas Shevelyov | 53 | Director | ||
| Shrikrishna Venkataraman(1)(3) | 49 | Director | ||
| Jacqueline L. White*(1)(3) | 61 | Director | ||
| * | denotes Committee Chair |
| (1) | Audit Committee |
| (2) | Governance Committee |
| (3) | Compensation Committee |
Rhoniel A. Daguro
Mr. Daguro joined our company as a director on March 9, 2023 and was appointed CEO on March 23, 2023. He has over 20 years of sales, marketing, technology, and venture capital experience. He has built multiple profitable software and professional services firms. Most recently, from 2018 to 2022, he served as the Chief Revenue Officer of Socure Inc. Prior to that, Mr. Daguro held various executive sales positions with Persistent Systems, Hortonworks, and Oracle.
Edward C. Sellitto
Mr. Sellitto joined authID as Chief Financial Officer of the Company on August 15, 2023. Mr. Sellitto has over 15 years of experience in Financial Management and Revenue Operations roles supporting a wide range of industries and company sizes, from startups to Fortune 100 organizations. Most recently, from December 2022 through present, he served as Vice President, Revenue Operations at Zero Hash, a Digital Asset-as-a-Service infrastructure provider. From February 2022 through December 2022, Mr. Sellitto served as the Head of Go-To-Market Financial Planning and Analysis for Sprinklr (NYSE: CXM) and held various roles including Director – Sales Operations and VP – Revenue Operations with Source from May 2019 through February 2022. Further, from 2018 to 2019, Mr. Sellitto served as the Director – Sales Operations for SmartSource Rentals. Ed holds an MBA in Corporate Finance and Strategy from the Stern School of Business at New York University.
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Thomas R. Szoke
Mr. Szoke is a co-founder of authID and has over 35 years of executive management, solutions engineering, and operations management experience in Government Security, Identity Access Management and SaaS solutions industries. He rejoined the Company on March 9, 2023 and in April 2023 became the Company’s Chief Technology Officer and was a director from March 2023 until June 2025. Mr. Szoke previously served as a Director and the Company’s Chief Solutions Architect and has held several other executive positions since its inception, from 2013 through 2021. He has also expanded the Company’s market presence and product portfolio through technological innovation and global strategic partnerships. Mr. Szoke has been issued several US and international patents focused on identity solutions and has pioneered the concept and development of different product lines for the Company including its Multi-Factor Out-of-Band Identity and Transaction Authentication Platform. From 2021 to 2023, he was an independent consultant for the Company and others.
Erick Soto
Mr. Soto joined authID as Chief Product Officer of the Company on September 23, 2024. Mr. Soto is a seasoned product leader with over 15 years of experience in product management within the fintech and identity industries. Mr. Soto most recently served as Chief Product Officer at Oxygen Health, a provider of health benefit plans, from September 2023, through August 2024. From September 2022 to August 2023, Mr. Soto was Chief Product Officer – New Digital Initiatives at BBVA, the global financial services group. Prior to that from April 2018 to July 2022, Erick was VP of Product at Socure, a provider of identity verification and fraud prevention solutions.
Stephen J. Garchik
Mr. Garchik has been associated with the Company for approximately 10 years as a major investor and supporter and now holder of 10% of the outstanding common stock. Mr. Garchik has since 1997 been President of SJM Partners, a real estate development, design and construction, leasing and management company. SJM Partners owns over 40 retail, commercial and residential properties. Mr. Garchik serves on the board of several non-profit institutions. He holds a Bachelor of Science and M.B.A. degree from the Wharton School at the University of Pennsylvania.
Ken Jisser
Mr. Jisser joined authID on March 9, 2023. He is the Founder & CEO of The Pipeline Group, Inc., a technology-enabled services company that aims to deliver business results for companies looking to build predictable and profitable pipeline. Mr. Jisser founded the company in his garage in 2017, and it reached #415 among the fastest growing private companies in America, according to Inc. Magazine rankings published in 2021. Prior to that, Mr. Jisser served as GTM Advisor at Druva Inc., where he rebuilt the global inside sales team.
Michael L. Koehneman
Mr. Koehneman joined our company as a Director on June 9, 2021. Mr. Koehneman previously held various positions at PricewaterhouseCoopers LLP, a global accounting firm, through 2020, including the Global Advisory Chief Operating Officer and Human Capital Leader from 2016 through 2019, the U.S. Advisory Operations Leader from 2005 through 2016 responsible for the oversight of Advisory services for PwC, including business unit performance, finance, investments, human resources, acquisitions, and administration, and the Lead Engagement Partner for Financial Statement Audits and Internal Control and Security Reviews from 1993 through 2004 for several public and private company audits. Since 2020 he has also served as a director and member of the Audit Committee of Aspen Group, Inc.
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Kunal Mehta
Mr. Mehta became a Director of the Company on March 25, 2024. Mr. Mehta has over 25 years of experience building value-creation programs for private equity firms and industry experience scaling global revenue operations, marketing, and sales programs for several of the biggest names in the technology space. In January 2025, Mr. Mehta joined LaunchQ Inc. (dba TPG Technologies), a go-to-market technology company, as CEO. From 2022-2024, he was an Expert Partner at Boston, Massachusetts-based Bain & Company, working with a number of Private Equity firms to accelerate Go To Market (GTM) value creation. Between Sept 2019 and March 2022, he built the Go To Market (GTM) Center of Excellence at Menlo Park, CA-based Technology Crossover Ventures (TCV). From September 2018 to March 2019, Mr. Mehta worked at Druva, a private equity backed portfolio company as VP of Sales Strategy and Operations. Mr. Mehta began his management career at Hewlett-Packard, progressing through a series of solutions, marketing, and enablement roles with increasing responsibility. Mr. Mehta earned his MBA in Management of Information Systems, BA in Economics from The George Washington University in Washington, DC, and MHS in Health Finance & Management from Johns Hopkins.
Ram Menghani
Mr. Menghani has been President of NEC Enterprise Communication Technologies, Inc. since 2020, having joined NEC Corporation of America in 2001, serving in various roles in product management and development. He has over 30 years of global leadership experience in unified communications, product innovation, and digital transformation.
Mr. Menghani’s track record includes forging partnerships with major tech players like Microsoft and Oracle, modernizing legacy systems into cloud-based models, and guiding startups to successful exits.
Nicholas Shevelyov
Mr. Shevelyov is a cybersecurity executive with 30 years of experience who served as Chief Security and Privacy Officer and later as Chief Information Officer at Silicon Valley Bank from 2007 to 2021. He led key initiatives in cybersecurity strategy, cloud transformation, and modern software delivery there. Nick Shevelyov was an early design partner to industry leaders like Palo Alto Networks, Zscaler, and FireEye. In 2021, he published “Cyber War…and Peace” and founded and serves as CEO of vCSO.ai, a cybersecurity advisory firm supporting organizations such as Group 42, the Audubon Society, and multiple cybersecurity product companies. Nick also serves on the Bay Area CSO Council and Cofense boards. Mr. Shevelyov has a Bachelor’s degree in Economics from San Francisco State University and an MBA from University of San Francisco School of Management.
Shrikrishna Venkataraman
Krish Venkataraman is a seasoned technology and Wall Street executive with a strong track record of leading IPOs, strategic sales, and large-scale corporate transformations. Krish represents a new generation of multi-disciplinary executives, having served in roles including President, CFO, COO, CAO, and public/private board member. Beyond traditional finance responsibilities — treasury, controllership, M&A, and investor relations — he has led sales, HR, IT, legal, and operations teams with a strong focus on IT and cybersecurity governance. Mr. Venkataraman served as President of Daitaku a leading AI firm, from 2023 to April 2025. Prior to that from 2022 to 2023 he was the Chief Financial Officer of Socure Inc. Mr. Venkataraman served as Co-President and Chief Financial Officer of KnowBe4 Inc (Formerly Nasdaq: KNBE) a global security platform offering human risk management, from 2018 to 2022 and for a subsequent year as a Board member. Earlier in his career, he held leadership roles at Dealogic Lehman Brothers, NYSE Euronext, American Express, and Deloitte Consulting. Krish holds a B.S. from Carnegie Mellon University and an MBA from Cornell University’s Johnson Graduate School of Management.
Jacqueline L. White
Ms. White joined our company as a Director on June 9, 2021. Ms. White has been a leader in enterprise technology software and IT consulting for the past 25 years. Ms. White has held global positions at SAP, Oracle, and Accenture, always leading diverse, high performing organizations around the world. In May 2023 Ms. White became President of i2C Inc, which operates a global payments and digital banking platform. Prior to that, Ms. White joined the Executive Management Team of Temenos AG (Six: TEMN), a company specializing in enterprise software for banks and financial services, as the President of the Americas Region in January 2021. Ms. White led the Banking & Capital Markets line of business of DXC Technology Co. (NYSE: DXC) as Senior Vice President and Practice Lead from September 2019 to January 2021. From January 2018 through September 2019, Ms. White served as the Chief Revenue Officer of Saltstack, a VM Ware Company, and from January 2015 through January 2018 as Global Senior Vice President Global FSI Consulting for SAP (NYSE: SAP). Prior to joining SAP, Ms. White held various positions with Accenture Services Pvt. Ltd., Oracle, BearingPoint and Novell. Ms. White was named by Utah Business Magazine as “Top Executives to Watch” in July 2020. Ms. White received a BA in Comparative Literature from Brigham Young University and a Leadership Certificate from Boston University.
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Board & Committees
Board meetings during calendar year ended 2025
During 2025, the Board of Directors held eleven meetings as well as committee meetings, as outlined below. Each director attended all of the meetings of the Board and all of the meetings held by all committees on which such director served, except that three directors each missed one Board meeting which they were not able to attend. The Board and the Pricing Committees that were formed for the purposes of approval of the funding transactions in April, and May 2025 also approved certain actions by unanimous written consent.
Committees established by the Board
The Board of Directors has standing Audit, Compensation, and Governance Committees. Information concerning the function of each Board committee follows.
Audit Committee
The Audit Committee is responsible for overseeing management’s implementation of effective internal accounting and financial controls, supervising matters relating to audit functions, reviewing and setting internal policies and procedures regarding audits, accounting and other financial controls, reviewing the results of our audit performed by the independent public accountants, and evaluating and selecting the independent public accountants. The Audit Committee has adopted an Audit Committee Charter which is posted on the Corporate Governance page under the tab labeled “Board Committees” on our Investor Relations website at https://investors.authid.ai. The Board has designated the Chair of the Committee as the “audit committee financial expert” as defined by the SEC. During 2025, the Audit Committee held six meetings. The Committee also approved certain actions by unanimous written consent.
Compensation Committee
The Compensation Committee determines matters pertaining to the compensation of our named executive officers and administers our stock option and incentive compensation plans. The Compensation Committee has adopted a Compensation Committee Charter which is posted on the Corporate Governance page under the tab labeled “Board Committees” on our Investor Relations website at https://investors.authid.ai. During 2025, the Compensation Committee held one meeting and also approved certain actions by unanimous written consent.
Governance Committee
The Governance Committee is responsible for considering potential Board members, nominating Directors for election to the Board, implementing the Company’s corporate governance policies, recommending compensation for the Board and for all other purposes outlined in the Governance Committee Charter, which is posted on the Corporate Governance page under the tab labeled “Board Committees” on our Investor Relations website at https://investors.authid.ai. During 2025, the Governance Committee held one meeting.
Nomination of Directors
As provided in its charter, the Governance Committee is responsible for identifying individuals qualified to become directors. The Governance Committee seeks to identify director candidates based on input provided by a number of sources including (1) the Governance Committee members, (2) our other directors, (3) our stockholders, (4) our Chief Executive Officer or Chair of the Board, and (5) third parties such as service providers. In evaluating potential candidates for director, the Governance Committee considers the entirety of each candidate’s credentials.
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Qualifications for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing composition of the Board of Directors. However, at a minimum, candidates for director must possess:
| ● | high personal and professional ethics and integrity; |
| ● | the ability to exercise sound judgment; |
| ● | the ability to make independent analytical inquiries; |
| ● | a willingness and ability to devote adequate time and resources to diligently perform Board and committee duties; and |
| ● | the appropriate and relevant business experience and acumen. |
Except as set forth below, during the year ended December 31, 2025, there have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.
Legal Proceedings
There are currently no legal proceedings, and during the past 10 years there have been no legal proceedings, that are material to the evaluation of the ability or integrity of any of our directors.
Family Relationships
There are no family relationships among our directors and executive officers. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer.
Involvement in Certain Legal Proceedings
To our knowledge, during the last ten years, none of our directors and executive officers has:
| ● | Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. |
| ● | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. |
| ● | Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. |
| ● | Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. |
| ● | Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
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To our knowledge, none of our directors and executive officers has at any time been subject to any proceedings:
| ● | that were initiated by any regulatory, civil or criminal agency |
| ● | in which claims alleging fraud were asserted and seeking damages in excess of $100,000 |
Code of Ethics
We have adopted a Code of Business Conduct and Ethics Policy (the “Code of Ethics”) that applies to all directors and officers, which is posted on the Corporate Governance page under the tab labeled “Board Committees” on our Investor Relations website at https://investors.authid.ai. The Code of Ethics describes the legal, ethical and regulatory standards that must be followed by the directors and officers of the Company and sets forth high standards of business conduct applicable to each director and officer. As adopted, the Code of Ethics sets forth written standards that are designed to deter wrongdoing and to promote, among other things:
| ● | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| ● | compliance with applicable governmental laws, rules and regulations; |
| ● | the prompt internal reporting of violations of the Code of Ethics to the appropriate person or persons identified in the code; and |
| ● | accountability for adherence to the Code of Ethics. |
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and persons who own more than 10% of the issued and outstanding shares of our common stock to file reports of initial ownership of common stock and other equity securities and subsequent changes in that ownership with the SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2025 all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with, except that three directors filed Form 3 late.
Equity Award Grant Practices
Equity awards are made by the Compensation Committee, are discretionary and are not granted to executive officers and employees at any specific time in the year. In April 2024 the Board adopted a Policy on Granting Equity Awards (“Equity Policy”). Under the Equity Policy, awards to employees shall be made on a date when the Company’s insider trading window is “open” (i.e., when the Company is not in possession of material non-public information), and which is at least three business days after the most recent release of the Company’s quarterly or annual earnings, or Form 8-K Current Report that discloses material non-public information. With respect to grants made to executive officers, and new hires who will become executive officers the Company shall not grant and/or price of stock options or other incentive securities under any securities-based compensation arrangement of the Company during the period beginning four (4) business days before and ending one (1) business day after the filing by the Company of a Form 10-Q Quarterly Report, Form 10-K Annual Report or Form 8-K Current Report that discloses material non-public information (other than a current report on Form 8–K disclosing a material new option award grant under Item 5.02(e) of that form). Grants of stock options to new hires (other than those who will become Section 16 officers), will not be subject to the same restrictions but will be made on the later of the date of approval of the grant by the Compensation Committee and the date of commencement of employment.
Annual grants of equity awards to members of the Board shall be effective within three business days after the date of the Annual Stockholders Meeting at which such Director is elected or re-elected (subject that being in an open period in accordance with the previous paragraph). For Directors appointed other than at an Annual Stockholders Meeting, initial grants of equity awards shall be effective on the date the Director is appointed (subject that being in an open period in accordance with the previous paragraph).
In each case where applicable, the exercise/grant price for an award will be equal to the closing market price of our common stock on the grant date.
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Item 11. Executive Compensation
The below table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to (i) all individuals serving as the Company’s principal executive officers or acting in a similar capacity during the last completed fiscal year, regardless of compensation level, and (ii) the Company’s two most highly compensated executive officers other than the principal executive officers serving at the end of the last completed fiscal year (collectively, the “Named Executive Officers”).
SUMMARY COMPENSATION TABLE
| Salary | Bonus | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | |||||||||||||||||||||
| Name and Title | Year | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||
| Rhoniel Daguro | 2025 | 400,000 | - | (107,770 | ) | 225,000 | 14,000 | 531,230 | ||||||||||||||||||
| CEO (1) | 2024 | 400,000 | - | - | 300,000 | 13,800 | 713,800 | |||||||||||||||||||
| Edward Sellitto | 2025 | 275,000 | 54,450 | 190,035 | - | 13,200 | 532,685 | |||||||||||||||||||
| CFO (2) | 2024 | 275,000 | 165,000 | - | - | 9,964 | 449.964 | |||||||||||||||||||
| Erick Soto | 2025 | 325,000 | 21,450 | 4,223 | - | 10,279 | 360,952 | |||||||||||||||||||
| Chief Product Officer (3) | 2024 | 88,750 | 17,760 | 571,323 | - | 1,625 | 679,458 | |||||||||||||||||||
| (1) | Mr. Rhoniel A. Daguro, a director of the Company, was hired as Chief Executive Officer of the Company in consideration of an initial annual salary of $400,000. Mr. Daguro will be eligible for an annual target bonus of up to $375,000 based on performance milestones. For the period beginning April 1, 2023 bonus amount of $75,000 shall be payable upon the Company achieving increments of $1,000,000 in total contract value of all customer agreements less claw backs (“Bookings”) up to an aggregate of $5,000,000 in Bookings. Above $5,000,000 a bonus amount of $75,000 shall be payable upon the Company achieving increments of $4,000,000 in total contract bookings up to an aggregate of $17,000,000. Mr. Daguro has earned a bonus of $75,000 in 2025 for non-equity incentive compensation based on Bookings in 2025. He also earned $300,000 in 2024 for non-equity incentive compensation based on Bookings in 2024, of which a $225,000 adjustment was assessed in September 2025 based on revised performance metrics. The adjustment of $225,000, net of $75,000 in 2025 earnings, or a total of $150,000, was repaid in December 2025 by way of a surrender of 71,977 stock options having a Black Scholes value equal to the amount of the adjustment. For subsequent years, Mr. Daguro and the Compensation Committee of the Board will mutually agree as to the performance targets to earn for the annual bonus. Additionally, the Company provided Mr. Daguro with an initial grant of options (“Initial Grant”) to purchase 306,875 shares of common stock for a period of ten years vesting subject to achievement of performance and service conditions, at an exercise price of $3.176 per share. Pursuant to his offer letter the Company granted Mr. Daguro additional options to acquire 183,125 shares of common stock for a period of ten years vesting subject to achievement of performance and service conditions (the “Additional Grant”) at an exercise price of $5.48 per share. The aggregate grant date fair market value of Mr. Daguro’s stock options was $1,185,100. Additionally, on June 4, 2025, the Company granted Mr. Daguro options to acquire 10,000 shares of common stock at an exercise price of $5.35 for ten years, vesting over twelve months. The grant date fair market value of the option grant was $42,230. Mr. Daguro has not exercised or realized a gain on his vested stock options as of the date of this report’s submission. All other compensation is primarily the Company’s 401(k) match. |
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The Company also entered an Executive Retention Agreement with Mr. Daguro, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Daguro is entitled to receive an amount equal to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr. Daguro for the cost of continuation of health coverage for Mr. Daguro and his eligible dependents pursuant to COBRA until the earlier of 12 months following the termination date, the date Mr. Daguro and his dependents are eligible for health coverage from a new employer or the date Mr. Daguro and his eligible dependents are no longer eligible for COBRA.
Additionally, Mr. Daguro prior to being appointed as Chief Executive Officer received $2,000 for Director’s Compensation in 2023.
| (2) | Mr. Edward Sellitto was hired as Chief Financial Officer of the Company on July 31, 2023 in consideration of an annual salary of $250,000. As of January 1, 2024, Mr. Sellitto’s annual salary was increased to $275,000. Mr. Sellitto will be eligible for an annual target bonus of up to 60% of base salary based on achievement of performance milestones, as Mr. Sellitto and the Compensation Committee of the Board, will mutually agree for each year. The accrued expected bonus for the 2025 year is $54,450 and the bonus earned for the 2024 year was $165,000. At the outset of employment, Mr. Sellitto was provided with a grant of options to purchase 50,000 shares of common stock vesting subject to achievement of performance and service conditions at an exercise price of $8.87, with an exercise period of 10 years. The grant date fair market value of the option grant was $260,500. The employment of Mr. Sellitto will be at will and may be terminated at any time, with or without formal cause. Additionally, on December 21, 2023, the Company granted Mr. Sellitto options to acquire 7,000 shares of common stock at an exercise price of $9.25 for ten years, vesting over twelve months. The grant date fair market value of the option grant was $54,803. On June 4, 2025, the Company also granted Mr. Sellitto options to acquire 45,000 shares of common stock at an exercise price of $5.35 for ten years, vesting over twelve months. The grant date fair market value of the option grant was $190,035. Mr. Sellitto has not exercised or realized a gain on his vested stock options as of the date of the submission of this report. All other compensation is primarily the Company’s 401(k) match. |
| (3) | Mr. Erick Soto was hired as Chief Product Officer on September 23, 2024 in consideration of an annual salary of $325,000. Mr. Soto will be eligible for an annual target bonus of up to 20% of base salary based on achievement of performance milestones. The accrued expected bonus for 2025 is $21,450 and the bonus earned for the 2024 year was pro-rated to $17,760. At the outset of employment, Mr. Soto was provided with a grant of options to purchase 100,000 shares of common stock vesting subject to achievement of performance and service conditions at an exercise price of $6.94, with an exercise period of 10 years. The grant date fair market value of the option grant was $571,323. On June 4, 2025, the Company also granted Mr. Soto options to acquire 1,000 shares of common stock at an exercise price of $5.35 for ten years, vesting over twelve months. The grant date fair market value of the option grant was $4,223. Mr. Soto has not exercised or realized a gain on his vested stock options as of the date of the submission of this report. All other compensation is primarily the Company’s 401(k) match. |
The Company also entered an Executive Retention Agreement with Mr. Soto, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Soto is entitled to receive an amount equal to 100% of his base salary.
The above references to stock option grants should be read with Note 7 of the Notes to Financial Statements – Stockholder’s Equity – Stock Option Issuances.
On October 6, 2023, the Board adopted the Company’s Policy for the Recovery of Erroneously Awarded Compensation, in accordance with Nasdaq Rule 5608 (“Clawback Policy”). The Clawback Policy provides for the reasonably prompt recovery by the Company of Incentive Based Compensation paid to a Covered Person (an executive officer and certain other specified senior employees), to the extent erroneously awarded, following an Accounting Restatement by the Company. The Clawback Policy applies to all Incentive Based Compensation paid after the date of adoption of the Clawback Policy. (All capitalized terms in this paragraph are as defined in the Clawback Policy). The foregoing description of the Clawback Policy is not complete and is qualified in its entirety by reference to the full text of the Clawback Policy which was filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended September 30, 2023 and is incorporated by reference herein.
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Other than the 401(k) retirement plan which allows employer match of 100% of up to 3% employee 401(k) payroll contribution and 50% of 3%-5% employee 401(k) payroll contribution, the Company currently has no other retirement, pension, or profit-sharing plan covering its officers and directors. The Company provides medical benefits on a cost sharing basis and has a dental plan which is fully paid by the employees. (See “Executive Agreements” below.)
Grant of Plan-Based Awards
During the calendar year ended December 31, 2025, the following grants were made to named executive officers:
| ● | Company granted Mr. Daguro stock options to acquire 10,000 shares of common stock that vest over a twelve month period. See above for additional disclosure. |
| ● | Company granted Mr. Sellitto stock options to acquire 45,000 shares of common stock that vest over a twelve month period. See above for additional disclosure. |
| ● | The Company granted Mr. Soto stock options to acquire 1,000 shares of common stock that vest over a 12 month period. See above for additional disclosure. |
During the calendar year ended December 31, 2024, the following grants were made to named executive officers:
| ● | The Company granted Mr. Soto stock options to acquire 100,000 shares of common stock that vest over a 3 year period. See above for additional disclosure. |
There were no other grants of plan-based awards or common stock options, to other named executive officers during the years ended December 31, 2025, and December 31, 2024.
Outstanding Equity Awards to Executive Officers
The following table sets forth information with respect to outstanding equity awards held by our named executive officers as of December 31, 2025.
Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Plan Awards Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | ||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||
| Executive Officer | ||||||||||||||||||
| Rhoniel Daguro | 306,875 | - | - | 3.18 | 4/10/33 | |||||||||||||
| Rhoniel Daguro | 111,148 | - | - | 5.48 | 6/28/33 | |||||||||||||
| Rhoniel Daguro | 5,000 | 5,000 | - | 5.35 | 6/4/35 | |||||||||||||
| Edward Sellitto | 38,888 | 11,112 | - | 8.87 | 8/15/33 | |||||||||||||
| Edward Sellitto | 7,000 | - | - | 9.25 | 12/21/33 | |||||||||||||
| Edward Sellitto | 26,250 | 18,750 | - | 5.35 | 6/4/35 | |||||||||||||
| Erick Soto | 41,666 | 58,334 | - | 6.94 | 11/29/34 | |||||||||||||
| Erick Soto | 583 | 417 | - | 5.35 | 6/4/35 | |||||||||||||
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Option Exercises and Stock Vested Table
There have been no option exercises and restricted stock vesting during the year ended December 31, 2025 by any named executive officers
| Compensation of Directors | |||||||||||||||
| Cash | Option | ||||||||||||||
| Compensation | Awards | Total | |||||||||||||
| Year | ($) | ($) | ($) | ||||||||||||
| Michael Koehneman | 2025 | 10,000 | 117,000 | 127,000 | |||||||||||
| Board Member | 2024 | 10,000 | 113,559 | 123,559 | |||||||||||
| Jacqueline White | 2025 | 10,000 | 117,000 | 127,000 | |||||||||||
| Board Member | 2024 | 10,000 | 113,559 | 123,559 | |||||||||||
| Michael Thompson* | 2025 | 6,000 | 9,750 | 15,750 | |||||||||||
| Board Member | 2024 | 8,000 | 113,559 | 121,559 | |||||||||||
| Ken Jisser | 2025 | 8,000 | 117,000 | 125,000 | |||||||||||
| Board Member | 2024 | 8,000 | 113,559 | 121,559 | |||||||||||
| Kunal Mehta | 2025 | 8,000 | 117,000 | 125,000 | |||||||||||
| Board Member | 2024 | 6,151 | 200,968 | 207,119 | |||||||||||
| Stephen J. Garchik** | 2025 | 2,000 | 155,463 | 157,463 | |||||||||||
| Board Member | 2024 | - | - | - | |||||||||||
| Shrikrishna Venkataraman** | 2025 | 2,000 | 155,463 | 157,463 | |||||||||||
| Board Member | 2024 | - | - | - | |||||||||||
| Nicholas Shevelyov** | 2025 | 2,000 | 155,463 | 157,463 | |||||||||||
| Board Member | 2024 | - | - | - | |||||||||||
| Ram Menghani** | 2025 | 2,000 | 155,463 | 157,463 | |||||||||||
| Board Member | 2024 | - | - | - | |||||||||||
| * | Resigned August 18, 2025. |
| ** | Elected June 26, 2025. |
In May 2025, the Board approved that the compensation policy for non-employee directors will continue as previously adopted in August 2024 as follows:
| ● | That annual cash compensation payable to each non-employee Director of $8,000 (or $10,000 for Committee chairs), paid quarterly; and |
| ● | That with respect to the year awards to be made following the 2025 Annual Meeting, each non-employee director be awarded options to purchase shares of Common Stock (“Shares”) equivalent in value to $117,000 for the current year, to be granted following the Annual Meeting. |
Executive Employment Agreements
Mr. Rhoniel A. Daguro, a director of the Company, was hired as Chief Executive Officer of the Company in consideration of an initial annual salary of $400,000. Mr. Daguro will be eligible for an annual target bonus of up to $375,000 based on performance milestones. For the period beginning April 1, 2023, a bonus amount of $75,000 shall be payable upon the Company achieving increments of $1,000,000 in total contract value of all customer agreements less claw backs (“Bookings”) up to an aggregate of $5,000,000 in Bookings. Above $5,000,000 a bonus amount of $75,000 shall be payable upon the Company achieving increments of $4,000,000 in total contract bookings up to an aggregate of $17,000,000. Mr. Daguro has earned a bonus of $75,000 in 2025 for non-equity incentive compensation based on Bookings in 2025. He also earned $300,000 in 2024 for non-equity incentive compensation based on Bookings in 2024, of which a $225,000 adjustment was assessed in September 2025 based on revised performance metrics. The adjustment of $225,000, net of $75,000 in 2025 earnings, or a total of $150,000, was repaid in December 2025 with a surrender of 71,977 stock options having a Black Scholes value equal to the amount of the adjustment. For subsequent years, Mr. Daguro and the Compensation Committee of the Board will mutually agree as to the performance targets to earn for the annual bonus. Additionally, the Company provided Mr. Daguro with an initial grant of options (“Initial Grant”) to purchase 306,875 shares of common stock for a period of ten years vesting subject to achievement of performance and service conditions, at an exercise price of $3.176 per share. Pursuant to his offer letter the Company granted Mr. Daguro additional options to acquire 183,125 shares of common stock for a period of ten years vesting subject to achievement of performance and service conditions (the “Additional Grant”) at an exercise price of $5.48 per share. The aggregate grant date fair market value of the option grants was $1,185,100.
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The Company also entered an Executive Retention Agreement with Mr. Daguro, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Daguro is entitled to receive an amount equal to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr. Daguro for the cost of continuation of health coverage for Mr. Daguro and his eligible dependents pursuant to COBRA until the earlier of 12 months following the termination date, the date Mr. Daguro and his dependents are eligible for health coverage from a new employer or the date Mr. Daguro and his eligible dependents are no longer eligible for COBRA.
Mr. Thomas R. Szoke, a director of the Company agreed to serve as Chief Technology Officer of the Company on April 12, 2023 in consideration of an initial annual salary of $250,000. Mr. Szoke received an initial signing bonus of $20,833 and will be eligible for an annual target bonus of up to $200,000 based on performance milestones. For the period beginning April 1, 2023, a bonus amount of $40,000 shall be payable upon the Company achieving increments of $1,000,000 in total contract value of all customer agreements less claw backs (“Bookings”) up to an aggregate of $5,000,000 in Bookings. Above $5,000,000 a bonus amount of $40,000 shall be payable upon the Company achieving increments of $4,000,000 in total contract bookings up to an aggregate of $17,000,000. Mr. Szoke has earned a bonus of $40,000 in 2025 for non-equity incentive compensation based on Bookings in 2025. He also earned $160,000 in 2024 for non-equity incentive compensation based on Bookings in 2024, of which a $120,000 adjustment was assessed in September 2025 based on revised performance metrics. The adjustment of $160,000, net of $40,000 in 2025 earnings, or a total of $80,000, was repaid in December 2025 with a surrender of 42,154 stock options having a Black Scholes value equal to the amount of the adjustment. For subsequent years, Mr. Szoke and the Compensation Committee of the Board will mutually agree as to the performance targets to earn for the annual bonus.
The vesting criteria of Mr. Szoke’s Stock Options to acquire 12,500 shares of common stock previously granted to Mr. Szoke on March 14, 2023 (the “Original Grant”) were amended pursuant to an Amended and Restated Stock Non-Statutory Option Agreement providing for vesting subject to achievement of performance and service conditions. All other terms of the Original Grant were not changed. On June 28, 2023, the Company made an additional grant of options to Mr. Szoke to acquire 50,000 shares of common stock at the exercise price of $5.48 per share for a period of ten years vesting subject to achievement of performance and service conditions. The aggregate grant date fair market value of the option grants was $182,000.
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The Company also entered an Executive Retention Agreement with Mr. Szoke, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Szoke is entitled to receive an amount equal to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr. Szoke for the cost of continuation of health coverage for Mr. Szoke and his eligible dependents pursuant to COBRA until the earlier of 12 months following the termination date, the date Mr. Szoke and his dependents are eligible for health coverage from a new employer or the date Mr. Szoke and his eligible dependents are no longer eligible for COBRA.
Mr. Edward Sellitto was hired as Chief Financial Officer of the Company on July 31, 2023 in consideration of an annual salary of $250,000. As of January 1, 2024, Mr. Sellitto’s annual salary was increased to $275,000. Mr. Sellitto will be eligible for an annual target bonus of up to 60% of base salary based on achievement of performance milestones, as Mr. Sellitto and the Compensation Committee of the Board, will mutually agree for each year. The accrued expected bonus for the 2025 year is $54,450 and the bonus earned for the 2024 year was $165,000. At the outset of employment, Mr. Sellitto was provided with a grant of options to purchase 50,000 shares of common stock vesting subject to achievement of performance and service conditions at an exercise price of $8.87, with an exercise period of 10 years. The fair market value of the option grant was $260,500. The employment of Mr. Sellitto will be at will and may be terminated at any time, with or without formal cause.
Mr. Erick Soto was hired as Chief Product Officer on September 23, 2024 in consideration of an annual salary of $325,000. Mr. Soto will be eligible for an annual target bonus of up to 20% of base salary based on achievement of performance milestones. The accrued expected bonus for 2025 is $21,450 and the bonus earned for the 2024 year was pro-rated to $17,760. At the outset of employment, Mr. Soto was provided with a grant of options to purchase 100,000 shares of common stock vesting subject to achievement of performance and service conditions at an exercise price of $6.94, with an exercise period of 10 years. The grant date fair market value of the option grant was $571,323.
The Company also entered an Executive Retention Agreement with Mr. Soto, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Soto is entitled to receive an amount equal to 100% of his base salary.
Mr. Thomas Thimot, the former Chief Executive Officer resigned upon the appointment of Mr. Daguro as Chief Executive Officer on March 23, 2023. On March 23, 2023, the Company and Thomas Thimot entered into a Confidential Separation Agreement and General Release for the purposes of separation of Mr. Thimot from the Company as Chief Executive Officer and an employee by mutual consent and settling, compromising and resolving all claims between them. Mr. Thimot’s resignation was effective March 23, 2023. In addition to the Company paying all accrued but unpaid salary and providing reimbursement for all outstanding expenses, the Company has agreed to pay Mr. Thimot $325,000 which shall be deferred until the earlier of April 1, 2025 and a change of control of the Company. In April 2025, the Company and Mr. Thimot mutually agreed to a settlement payment comprised of $95,000 in cash, $206,000 in common stock and $24,000 in stock options. All such payments to Mr. Thimot were made in April 2025.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the number of shares known to be beneficially owned by all persons who own at least 5% of authID’s outstanding common stock, the Company’s directors, the Company’s executive officers, and the directors and executive officers as a group as of March 6, 2026, unless otherwise noted. Unless otherwise indicated, the stockholders listed in the table have sole voting and investment power with respect to the shares indicated.
| Name | Position | Number of Shares of Common Stock | Percentage of Common Stock (1) | |||||||
| Officers and Directors | ||||||||||
| Stephen J. Garchik | Director | 1,548,348 | (2) | 9.6 | % | |||||
| Rhoniel A. Daguro | Director, CEO | 452,023 | (3) | 2.7 | % | |||||
| Ken Jisser | Director | 148,726 | (4) | * | ||||||
| Edward Sellitto | CFO | 92,666 | (5) | * | ||||||
| Thomas R. Szoke | CTO | 77,532 | (6) | * | ||||||
| Michael L. Koehneman | Director | 71,565 | (7) | * | ||||||
| Jacqueline L. White | Director | 70,065 | (8) | * | ||||||
| Erick Soto | CPO | 53,223 | (9) | * | ||||||
| Kunal Mehta | Director | 50,092 | (10) | * | ||||||
| Shrikrishna Venkataraman | Director | 25,349 | (11) | * | ||||||
| Nicholas Shevelyov | Director | 25,349 | (12) | * | ||||||
| Ram Menghani | Director | 25,349 | (13) | * | ||||||
| Total Officers and Directors | 2,640,289 | 16.2 | % | |||||||
| Total Officers, Directors and 5% Stockholders | 2,640,289 | 16.2 | % | |||||||
| * | Represents less than 1% of the Company’s issued and outstanding shares of common stock. |
| (1) | Applicable percentage ownership is based on 16,132,487 shares of common stock outstanding as of March 6, 2026. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of the reference date of this table are deemed to be beneficially owned by the person holding such securities for computing the percentage of ownership of such person, but are not treated as outstanding for computing the percentage ownership of any other person. Options or warrants which are not vested, or expected to be vested as of May 6, 2026, are referenced in the footnotes below for the sake of completeness, but are not included in the figures in the above table. |
| (2) | Includes (i) 1,073,563 shares of common stock held by Mr. Garchik personally, (ii) 170,834 shares of common stock held by the Garchik 2019 Irrevocable Trust (“2019 Trust”) of which Mr. Garchik is a trustee and beneficiary, (iii) 4,367 shares of common stock held by Garchik Universal Limited Partnership, which Mr. Garchik jointly controls with his sister, (iv) 147,627 shares of common stock held by the Marla Garchik 2020 Irrevocable Trust (the “2020 Trust”) of which Mr. Garchik is a beneficiary, (v) a stock option held by Mr. Garchik to acquire 12,500 shares of common stock at an exercise price of $3.90 per share, which vest over a three-year period after each Annual Meeting subject to continued service, and (vi) a stock option held by Mr. Garchik to acquire 38,024 shares of common stock at an exercise price of $3.90 per share, which vest over a period of 12 months. A total of 25,349 of the stock options will be vested as of May 6, 2026. |
| (3) | Includes (i) 24,833 shares of common stock, (ii) a stock option to purchase 306,875 shares of common stock at an exercise price of $3.176 vesting subject to achievement of performance and service conditions, (iii) a stock option to purchase 111,148 shares of common stock at an exercise price of $5.48 vesting subject to achievement of performance and service conditions, and (iv) a stock option to acquire 10,000 shares of common stock at an exercise price of $5.35 per share, which vest over a period of 12 months. A total of 427,190 of the stock options will be vested as of May 6, 2026. |
| (4) | Includes (i) 92,125 shares of common stock, (ii) a stock option to acquire 12,500 shares of common stock at an exercise price of $2.64 per share which vest over a three-year period after each Annual Meeting subject to continued service, and (iii) a stock option to acquire 3,125 shares of common stock at an exercise price of $5.48 per share, (iv) a stock option to acquire 15,627 shares of common stock at an exercise price of $8.67 per share, and (v) a stock option to acquire 38,024 shares of common stock at an exercise price of $3.90 per share, which vest over a period of 12 months. A total of 56,601 of the stock options will be vested as of May 6, 2026. |
| (5) | Includes (i) a stock option to acquire 50,000 shares of common stock at an exercise price of $8.87 vesting subject to achievement of performance and service conditions, (ii) a stock option to acquire 7,000 shares of common stock at an exercise price of $9.25 per share, and (iii) a stock option to acquire 45,000 shares of common stock at an exercise price of $5.35 per share, which vest over a period of 12 months. A total of 92,666 of the stock options will be vested as of May 6, 2026. |
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| (6) | Includes (i) 5,269 shares of common stock, (ii) 12,500 shares of common stock held by Mrs. Szoke, (iii) a stock option to acquire 12,500 shares of common stock at an exercise price of $2.64 per share, (iv) a stock option to acquire 17,013 shares of common stock at an exercise price of $5.48 per share, and (v) a stock option to acquire 33,000 shares of common stock at an exercise price of $5.35 per share, which vest over a period of 12 months. A total of 59,763 of the stock options will be vested as of May 6, 2026. |
| (7) | Includes (i) 1,471 shares of common stock, (ii) 29 shares of common stock held by Mrs. Koehneman, (iii) a stock option to acquire 7,813 shares of common stock at an exercise price of $62.40 per share, (iv) a stock option to acquire 1,280 shares of common stock at $121.28 per share, (v) a stock option to acquire 4,371 shares of common stock at $24.24 per share, (vi) a stock option to acquire 15,625 shares of common stock at an exercise price of $5.48 per share, (vii) a stock option to acquire 15,627 shares of common stock at an exercise price of $8.67 per share, and (viii) a stock option to acquire 38,024 shares of common stock at an exercise price of $3.90 per share, which vest over a period of 12 months. A total of 70,065 of the stock options will be vested as of May 6, 2026. |
| (8) | Includes (i) a stock option to acquire 7,813 shares of common stock at an exercise price of $62.40 per share, (ii) a stock option to acquire 1,280 shares of common stock at $121.28 per share, and (iii) a stock option to acquire 4,371 shares of common stock at $24.24 per share, and (iv) a stock option to acquire 15,625 shares of common stock at an exercise price of $5.48 per share, (v) a stock option to acquire 15,627 shares of common stock at an exercise price of $8.67 per share, and (vi) a stock option to acquire 38,024 shares of common stock at an exercise price of $3.90 per share, which vest over a period of 12 months. A total of 70,065 of the stock options will be vested as of May 6, 2026. |
| (9) | Includes (i) 1 share of common stock, (ii) a stock option to acquire 100,000 shares of common stock at an exercise price of $6.94 per share, which vest over a period of 36 months, and (iii) a stock option to acquire 1,000 shares of common stock at an exercise price of $5.35 per share, which vest over a period of 12 months. A total of 53,222 of the stock options will be vested as of May 6, 2026. |
| (10) | Includes (i) 4,167 shares of common stock, (ii) a stock option to acquire 12,500 shares of common stock at an exercise price of $7.78 per share, which vest over a three-year period after each Annual Meeting subject to continued service, (ii) a stock option to acquire 782 shares of common stock at an exercise price of $7.78 per share, (iii) a stock option to acquire 15,627 shares of common stock at an exercise price of $8.67 per share, and (iv) a stock option to acquire 38,024 shares of common stock at an exercise price of $3.90 per share, which vest over a period of 12 months. A total of 45,925 of the stock options will be vested as of May 6, 2026. |
| (11) | Includes (i) a stock option to acquire 12,500 shares of common stock at an exercise price of $3.90 per share, which vest over a three-year period after each Annual Meeting subject to continued service, and (ii) a stock option to acquire 38,024 shares of common stock at an exercise price of $3.90 per share, which vest over a period of 12 months. A total of 25,349 of the stock options will be vested as of May 6, 2026. |
| (12) | Includes (i) a stock option to acquire 12,500 shares of common stock at an exercise price of $3.90 per share, which vest over a three-year period after each Annual Meeting subject to continued service, and (ii) a stock option to acquire 38,024 shares of common stock at an exercise price of $3.90 per share, which vest over a period of 12 months. A total of 25,349 of the stock options will be vested as of May 6, 2026. |
| (13) | Includes (i) a stock option to acquire 12,500 shares of common stock at an exercise price of $3.90 per share, which vest over a three-year period after each Annual Meeting subject to continued service, and (ii) a stock option to acquire 38,024 shares of common stock at an exercise price of $3.90 per share, which vest over a period of 12 months. A total of 25,349 of the stock options will be vested as of May 6, 2026. |
See Item 5 for information pertaining to Securities Authorized for Issuance under Equity Compensation Plans.
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Item 13. Certain Relationships and Related Transactions and Director Independence
Pursuant to Rule 4200 of The NASDAQ Stock Market one of the definitions of an independent director is a person other than an executive officer or employee of a company. The Company’s board of directors has reviewed the materiality of any relationship that each of the directors has with the Company, either directly or indirectly. Based on this review the board has determined that there are seven independent directors, including all the members of the Audit, Compensation and Governance Committees.
Sale of Common Stock
On June 27, 2024, Stephen Garchik, a holder of 10% of the outstanding shares, purchased 150,000 shares of the Company’s common stock at a price of $1,125,000. The purchase price of the shares issued in this transaction was the same as the purchase price paid by all other investors in the same round and represented a 24% discount to the Nasdaq Official Closing Price in effect on the date of the transaction.
Also on June 27, 2024, Michael Thompson, a former Director of the Company purchased 12,254 shares of the Company’s common stock at an aggregate price of $100,000, as part of the Company’s Registered Direct offering.
On November 24, 2025, Stephen Garchik, a Director of the Company purchased 126,609 shares of the Company’s common stock at an aggregate price of $216,500, as part of the Company’s Registered Direct offering.
Director & Executive Compensation
Mr. Rhoniel A. Daguro, a director of the Company, was hired as Chief Executive Officer of the Company in consideration of an initial annual salary of $400,000. Mr. Daguro will be eligible for an annual target bonus of up to $375,000 based on performance milestones. For the period beginning April 1, 2023, a bonus amount of $75,000 shall be payable upon the Company achieving increments of $1,000,000 in total contract value of all customer agreements less claw backs (“Bookings”) up to an aggregate of $5,000,000 in Bookings. Above $5,000,000 a bonus amount of $75,000 shall be payable upon the Company achieving increments of $4,000,000 in total contract bookings up to an aggregate of $17,000,000. Mr. Daguro has earned a bonus of $75,000 in 2025 for non-equity incentive compensation based on Bookings in 2025. He also earned $300,000 in 2024 for non-equity incentive compensation based on Bookings in 2024, of which a $225,000 adjustment was assessed in September 2025 based on revised performance metrics. The adjustment of $225,000, net of $75,000 in 2025 earnings, or a total of $150,000, was repaid in December 2025 with a surrender of 71,977 stock options having a Black Scholes value equal to the amount of the adjustment. For subsequent years, Mr. Daguro and the Compensation Committee of the Board will mutually agree as to the performance targets to earn for the annual bonus. Additionally, the Company provided Mr. Daguro with an initial grant of options (“Initial Grant”) to purchase 306,875 shares of common stock for a period of ten years vesting subject to achievement of performance and service conditions, at an exercise price of $3.176 per share. Pursuant to his offer letter the Company granted Mr. Daguro additional options to acquire 183,125 shares of common stock for a period of ten years vesting subject to achievement of performance and service conditions (the “Additional Grant”) at an exercise price of $5.48 per share. The aggregate grant date fair market value of the option grants was $1,185,100. Additionally, on June 4, 2025, the Company granted Mr. Daguro options to acquire 10,000 shares of common stock at an exercise price of $5.35 for ten years, vesting over twelve months. The grant date fair market value of the option grant was $42,230.
The Company also entered an Executive Retention Agreement with Mr. Daguro, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Daguro is entitled to receive an amount equal to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr. Daguro for the cost of continuation of health coverage for Mr. Daguro and his eligible dependents pursuant to COBRA until the earlier of 12 months following the termination date, the date Mr. Daguro and his dependents are eligible for health coverage from a new employer or the date Mr. Daguro and his eligible dependents are no longer eligible for COBRA.
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Thomas R. Szoke, a former director of the Company, agreed to serve as Chief Technology Officer of the Company on April 12, 2023 in consideration of an initial annual salary of $250,000. Mr. Szoke received an initial signing bonus of $20,833 and will be eligible for an annual target bonus of up to $200,000 based on performance milestones. For the period beginning April 1, 2023, a bonus amount of $40,000 shall be payable upon the Company achieving increments of $1,000,000 in total contract value of all customer agreements less claw backs (“Bookings”) up to an aggregate of $5,000,000 in Bookings. Above $5,000,000 a bonus amount of $40,000 shall be payable upon the Company achieving increments of $4,000,000 in total contract bookings up to an aggregate of $17,000,000. Mr. Szoke has earned a bonus of $40,000 in 2025 for non-equity incentive compensation based on Bookings in 2025. He also earned $160,000 in 2024 for non-equity incentive compensation based on Bookings in 2024, of which a $120,000 adjustment was assessed in September 2025 based on revised performance metrics. The adjustment of $160,000, net of $40,000 in 2025 earnings, or a total of $80,000, was repaid in December 2025 with a surrender of 42,154 stock options having a Black Scholes value equal to the amount of the adjustment. For subsequent years, Mr. Szoke and the Compensation Committee of the Board will mutually agree as to the performance targets to earn for the annual bonus.
The vesting criteria of Mr. Szoke’s Stock Options to acquire 12,500 shares of common stock previously granted to Mr. Szoke on March 14, 2023 (the “Original Grant”) were amended pursuant to an Amended and Restated Stock Non-Statutory Option Agreement providing for vesting subject to achievement of performance and service conditions. All other terms of the Original Grant were not changed. On June 28, 2023, the Company made an additional grant of options to Mr. Szoke to acquire 50,000 shares of common stock at the exercise price of $5.48 per share for a period of ten years vesting subject to achievement of performance and service conditions. The aggregate grant date fair market value of the option grants was $182,000. On December 21, 2023, the Company made an additional grant of options to Mr. Szoke to acquire 5,000 shares of common stock at the exercise price of $9.25 per share for a period of ten years vesting subject to achievement of performance and service conditions. The aggregate grant date fair market value of the option grants was $39,145. On June 4, 2025, the Company made an additional grant of options to Mr. Szoke to acquire 33,000 shares of common stock at the exercise price of $5.35 per share for a period of ten years vesting subject to achievement of performance and service conditions. The aggregate grant date fair market value of the option grants was $139,359.
The Company also entered an Executive Retention Agreement with Mr. Szoke, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Szoke is entitled to receive an amount equal to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr. Szoke for the cost of continuation of health coverage for Mr. Szoke and his eligible dependents pursuant to COBRA until the earlier of 12 months following the termination date, the date Mr. Szoke and his dependents are eligible for health coverage from a new employer or the date Mr. Szoke and his eligible dependents are no longer eligible for COBRA.
In March 2023 Mr. Daguro, Mr. Jisser, Mr. Szoke and Mr. Thompson were appointed as additional directors and the size of the Board to fill certain vacancies resulting from the resignation of former directors.
On March 25, 2024, Mr. Kunal Mehta was appointed as a Director of the Company, upon the standard terms for non-employee Directors. On May 20, 2024, Mr. Mehta was granted an option to purchase 13,282 shares of common stock at an exercise price of $7.78 per share. 12,500 of the shares vest annually in equal amounts over a three-year period commencing in 2025 and 782 shares vested monthly in equal amounts over a three-month period commencing March 2024.
On August 13, 2024, the Company granted 15,627 options each at the exercise price of $8.67 per share to Messrs. Michael Koehneman, Michael Thompson, Ken Jisser, Kunal Mehta and Ms. Jacqueline White, in accordance with the Company’s compensation policy for non-employee directors. Each such option vests over a period of twelve months.
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On June 26, 2025, Messrs. Stephen Garchik, Ram Menghani, Nicholas Shevelyov and Shrikrishna Venkataraman were elected as directors by the stockholders at the 2025 Annual Meeting. On September 4, 2025, the Company made a grant of options to each of Messrs. Garchik, Venkataraman, Shevelyov, Menghani to acquire 12,500 shares of common stock at the exercise price of $3.90. The shares vest annually in equal amounts over a three-year period commencing in 2026.
On September 4, 2025, the Company made a grant of options to each of Messrs. Mehta, Jisser, Koehneman, Garchik, Venkataraman, Shevelyov, Menghani and to Ms. White to acquire 38,024 shares each of common stock at the exercise price of $3.90 per share, in accordance with the Company’s compensation policy for non-employee directors. Each such option vests over a period of twelve months.
On August 18, 2025, Michael C. Thompson resigned as a director of the Company. On September 4, 2025, the Company made a grant of options to Mr. Thompson to acquire 3,169 shares of common stock at the exercise price of $3.90 per share, exercisable for a period of three years from his date of resignation, vesting immediately to reflect his service as a member of the Board through the date of his resignation. On September 16, 2025, the board of directors of the Company (the “Board”) agreed to vest the unvested portion of an option granted to Mr. Thompson on March 14, 2023, amounting to 4,167 shares. The Board also agreed to extend the expiration Mr. Thompson’s vested options to a period of three years after the date of his resignation.
Mr. Thomas Thimot, a former director and CEO of the Company resigned upon the appointment of Mr. Daguro as Chief Executive Officer on March 23, 2023. On March 23, 2023, the Company and Thomas Thimot entered into a Confidential Separation Agreement and General Release for the purposes of separation of Mr. Thimot from the Company as Chief Executive Officer and an employee by mutual consent and settling, compromising, and resolving all claims between them. Mr. Thimot’s resignation was effective March 23, 2023. In addition to the Company paying all accrued but unpaid salary and providing reimbursement for all outstanding expenses, the Company agreed to pay Mr. Thimot $325,000 which was deferred until the earlier of April 1, 2025 and a change of control of the Company. In April 2025, the Company and Mr. Thimot mutually agreed to a settlement payment comprised of $95,000 in cash, $206,000 in common stock and $24,000 in stock options. All such payments to Mr. Thimot were made in April 2025.
Employment Agreements
Since June 2023, the Company has employed Dale Daguro, the brother of our CEO, Rhoniel Daguro as a VP Sales. Dale Daguro’s employment is at will and may be terminated at any time, with or without cause. Dale’s compensation is commensurate with other executives employed by the Company at a similar level of seniority and experience. During the year ended December 31, 2025, Dale Daguro earned approximately $283,000 in base salary and sales commission.
Commercial Agreements
On June 6, 2023, the Company entered into a services agreement with The Pipeline Group, Inc. (“TPG”). Ken Jisser, a director of the Company, is the founder and CEO of TPG, a technology-enabled services company that aims to deliver business results for companies looking to build a predictable and profitable pipeline. The agreement provides that TPG will assist in providing outsourced sales including business development resources for outbound calling, provide support for automated dialing technology, classify customer data and other sales related services for an initial term of one year. On October 25, 2023, on December 19, 2023 and on August 26, 2024, the Company entered into amendments to the above services agreement, pursuant to which TPG will provide certain additional services to the Company. In consideration of the services, the Company paid TPG $70,000 per month. On September 26, 2025, the Company signed another amendment with TPG to reduce the monthly fees to $42,000. The amendment is effective October 1, 2025. On September 30, 2025, the Company entered into a services agreement with TPG. The agreement provides that the Company will provide biometric authentication services to TPG for an initial term of two years, with an annual license fee of $2,500 and monthly minimum fees ramping to $1,000 per month. The summary of the agreement entered with TPG is qualified in its entirety by reference to the forms of such agreements, which were filed as exhibits to certain of the Company’s filings with the SEC and are incorporated by reference herein (See “Exhibits”).
55
Item 14. Principal Accounting Fees and Services.
The aggregate fees incurred for each of the last two years for professional services rendered by Cherry Bekaert LLP, the independent registered public accounting firm (PCAOB ID 00677) or the audit of the Company’s annual financial statements included in the Company’s Form 10-K and review of financial statements for its quarterly reports (Form 10-Q) are reported below.
The total fees billed by Cherry Bekaert, LLP in 2025 aggregated $277,258 which includes fees for the audit of financial statements and review of the quarterly financial statements for 2025. Additionally, the Company paid Cherry Bekaert, LLP $38,908 for services associated with the filing of the Company’s S-3 and Prospectus Supplements.
The total fees billed by Cherry Bekaert, LLP in 2024 aggregated $202,682 which includes fees for the audit of financial statements and review of the quarterly financial statements for 2024. Additionally, the Company paid Cherry Bekaert, LLP $28,455 for services associated with the filing of the Company’s S-1 and Prospectus Supplements.
The Audit Committee by its Charter pre-approves all audit services to be provided to the Company, whether provided by the principal auditor or other firms, and all other services (review, attest and non-audit) to be provided to the Company by the independent auditor. The Audit Committee approved the services rendered for the audit of the financial statements for the year ended December 31, 2025 and December 31, 2024 in addition to the services rendered for the filing of the quarterly financial statements on Form 10-Q in 2025 and 2024.
The following table sets forth the fees billed by Cherry Bekaert, LLP for audit, audit-related, tax and all other services rendered for 2025 and 2024 (in thousands):
| 2025 | 2024 | |||||||
| Audit Fees | $ | 238.4 | $ | 174.2 | ||||
| Audit-Related Fees | $ | - | $ | - | ||||
| Tax Fees | $ | - | $ | - | ||||
| Other Fees | $ | 38.9 | $ | 28.4 | ||||
| Total Fees | $ | 277.3 | $ | 202.6 | ||||
The current policy of the directors, acting via the Audit Committee, is to approve the appointment of the principal auditing firm and any permissible audit-related services. The audit and audit related fees include fees for the annual audit of the financial statements and review of financial statements included in 10K and Q filings.
56
PART IV
Item 15. Exhibits & Financial Statements Schedules
57
| * | Filed herewith |
| ** | Certain confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed. A copy of any omitted portions will be furnished to the SEC upon request. |
| (1) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 23, 2021. |
58
| (2) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 15, 2021. |
| (3) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on May 4, 2018. |
| (4) | Incorporated by reference to the Form S-8 Registration Statement filed with the Securities Exchange Commission on February 1, 2022. |
| (5) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on April 27, 2022. |
| (6) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on July 19, 2022. |
| (7) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on September 21, 2022. |
| (8) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 10, 2023. |
| (9) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 28, 2023. |
| (10) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on April 18, 2023. |
| (11) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on May 16, 2023. |
| (12) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on May 26, 2023. |
| (13) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 27, 2023. |
| (14) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on August 3, 2023. |
| (15) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 26, 2023. |
| (16) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on November 8, 2023. |
| (17) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on November 27, 2023. |
| (18) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on December 21, 2023. |
| (19) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 26, 2024. |
| (20) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on May 15, 2024. |
| (21) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 27, 2024. |
| (22) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on November 7, 2024. |
| (23) | Incorporated by reference to the Form 10-K Annual Report filed with the Securities Exchange Commission on March 13, 2025. |
| (24) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on April 2, 2025. |
| (25) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on May 7, 2025 |
| (26) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on August 14, 2025 |
| (27) | Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on November 12, 2025 |
| (28) | Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on November 24, 2025 |
59
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| authID Inc. | ||
| By: | /s/ Rhoniel Daguro | |
| Rhoniel A. Daguro | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| By: | /s/ Ed Sellitto | |
| Ed Sellitto | ||
| Chief Financial Officer, | ||
| (Principal Financial and Accounting Officer) | ||
Dated: March 31, 2026
In accordance with the Exchange Act, this report has been signed below by the following persons on March 31, 2026 on behalf of the registrant and in the capacities indicated.
| Signature | Title | |
| /s/ Rhoniel A. Daguro | Chief Executive Officer | |
| Rhoniel A. Daguro | (Principal Executive Officer) | |
| /s/ Stephen J. Garchik | Director | |
| Stephen J. Garchik | ||
| /s/ Ken Jisser | Director | |
| Ken Jisser | ||
| /s/ Michael Koehneman | Director | |
| Michael Koehneman | ||
| /s/ Kunal Mehta | Director | |
| Kunal Mehta | ||
| /s/ Ram Menghani | Director | |
| Ram Menghani | ||
| /s/ Ed Sellitto | Chief Financial Officer | |
| Ed Sellitto | (Principal Financial and Accounting Officer) | |
| /s/ Nicholas Shevelyov | Director | |
| Nicholas Shevelyov | ||
| /s/ Shrikrishna Venkataraman | Director | |
| Shrikrishna Venkataraman | ||
| /s/ Jacqueline White | Director | |
| Jacqueline White |
60
FINANCIAL STATEMENTS
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
authID Inc.
Denver, Colorado
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of authID Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s evaluations of the events and conditions and management’s plans regarding those matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
F-2
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/s/
We have served as the Company’s auditor since 2015.
March 31, 2026
F-3
authID INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Contract assets | ||||||||
| Deferred contract costs | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Commission liability | ||||||||
| Severance liability | ||||||||
| Convertible debt, net | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and Contingencies (Note 9) | ||||||||
| Stockholders’ Equity: | ||||||||
| Common stock, $ | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated comprehensive income | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See notes to consolidated financial statements.
F-4
authID INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues: | ||||||||
| Revenues | $ | |||||||
| Discounts and concessions | ( | ) | ||||||
| Total revenues, net | ||||||||
| Operating Expenses: | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Amortization | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other Income (Expense): | ||||||||
| Interest income | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Other income, net | ||||||||
| Loss from operations before income taxes | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss Per Share - Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Shares Outstanding - Basic and Diluted | ||||||||
See notes to consolidated financial statements.
F-5
authID INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation loss | ( | ) | ( | ) | ||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
See notes to consolidated financial statements.
F-6
authID INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income | Total | |||||||||||||||||||
| Balances, December 31, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Sale of common stock for cash, net of offering costs | ||||||||||||||||||||||||
| Cashless stock option exercise | ( | ) | ||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Balances, December 31, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||
| Sale of common stock for cash, net of offering costs | ||||||||||||||||||||||||
| Cashless warrants exercise | ( | ) | ||||||||||||||||||||||
| Issuance of Common Stock for Settlement | ||||||||||||||||||||||||
| Restricted Stock Award Issuance | ||||||||||||||||||||||||
| Restricted Stock Award Vesting | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Balances, December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
See notes to consolidated financial statements.
F-7
authID INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss with cash flows from operations: | ||||||||
| Stock-based compensation | ||||||||
| Amortization of debt discounts and issuance costs | ||||||||
| Non-cash settlement expense | ||||||||
| Amortization expense | ||||||||
| Provision for doubtful accounts | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Contract assets | ( | ) | ||||||
| Deferred contract cost | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Commission liability | ( | ) | ||||||
| Deferred revenue | ||||||||
| Net cash flows from operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||
| Net cash flows from investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of common stock | ||||||||
| Offering costs from sale of common stock | ( | ) | ( | ) | ||||
| Repayment of convertible note | ( | ) | ||||||
| Net cash flows from financing activities | ||||||||
| Effect of Foreign Currencies | ( | ) | ( | ) | ||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash, Beginning of the Year | ||||||||
| Cash, End of the Year | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for interest | $ | |||||||
| Warrants issued as offering costs | $ | |||||||
| Cashless option and warrant exercises | $ | |||||||
See notes to consolidated financial statements.
F-8
authID INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
authID Inc. (together with its consolidated subsidiaries, the “Company”) operates within the biometric identity verification and authentication market, delivering Software as a Service that leverages advanced biometric technologies in digital ecosystems. The Company’s technology quickly and accurately verifies a user’s identity, through its easy-to-integrate, patented, biometric identity platform, eliminating any assumption of ‘who’ is behind a device and preventing cybercriminals from taking over accounts. authID combines digital onboarding, biometric passwordless authentication and account recovery, with a fast, accurate, user-friendly experience. Establishing a biometric root of trust for each user that is bound to their accounts or provisioned devices, authID stops fraud at onboarding, eliminates password risks and costs, and provides the faster, frictionless, and more accurate user identity experience demanded by operators of today’s digital ecosystems. The Company was incorporated in the State of Delaware on September 21, 2011.
Going Concern
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) assuming the Company will continue on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next year following the issuance date of these consolidated financial statements.
As of December 31, 2025, the Company had an accumulated
deficit of approximately $
The
continuation of the Company as a going concern is dependent upon financial support from the Company’s stockholders, the ability
of the Company to obtain additional debt or equity financing to continue operations, the Company’s ability to generate sufficient
cash flows from operations, successfully locating and negotiating with other business entities for potential acquisition and acquiring
new clients to generate revenues and cash flows. In April, May and November 2025, the Company raised a total of approximately $
There is no assurance that the Company will ever be profitable. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. As there can be no assurance that the Company will be able to achieve positive cash flows (become cash flow positive) and raise sufficient capital to maintain operations, there is substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these consolidated financial statements were issued.
Subsequent Events
Management of the Company has performed a review of all events and transactions occurring after the condensed consolidated balance sheet date and determined there were no events or transactions requiring adjustment to or disclosure in the accompanying condensed consolidated financial statements.
Basis of Consolidation
The consolidated financial statements include the accounts of authID Inc. and its wholly-owned subsidiaries MultiPay S.A.S. (dissolved as of August 2, 2024), ID Solutions, Inc., Innovation in Motion Inc., FIN Holdings Inc., authID Enterprises Limited (formerly Ipsidy Enterprises Limited), and authID Gaming Inc. (collectively the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.
F-9
Use of Estimates
In preparing these consolidated financial statements in conformity with US GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Revenue Recognition
Revenues, net is defined as gross revenues, less discounts and sales concessions.
Software License – The Company recognizes revenue based on the identified performance obligations over the performance period for fixed consideration and / or variable fees generated. Variable fees are typically earned over time based on monthly users, transaction volumes or a monthly flat fee rate. We allocate the selling price in a contract which has multiple performance obligations based on the contract selling price that we believe represents a fair market price for the service rendered based on estimated standalone selling price. Transaction fees are billed monthly and are constrained to transactions incurred within the month.
For contracts with minimum annual fees, the Company
generally recognizes the amount of revenue ratably over the contract year and records contract assets for the amount in excess of monthly
contract billings relating to variable contract consideration. For certain contracts, the Company enters into an agreement which stipulates
a minimum annual fee which is generally due at the end of the contract year, in excess of the amount of monthly billings. The Company
may also require milestone payments of the minimum annual fee. The amount of any billed fees in excess of revenue recognized is recorded
as deferred revenue. The Company accounts for price concessions as reductions to the transaction price under ASC 606. Price concessions
represent implied or estimated future reductions in consideration that the Company expects to grant, based on known facts and circumstances,
including customer usage patterns and strategic considerations. These concessions are treated as variable consideration and are included
in the transaction price only to the extent that it is probable that a significant reversal of cumulative revenue will not occur when
the uncertainty is resolved. For the years-ended December 31 2025 and 2024 the Company granted approximately $
Any usage-based fees in excess of the minimum contract amount are charged to the customer and allocated to the annual period in which they are earned under the contract. At the beginning of each annual period in the contract, the Company estimates the variable amounts for the annual period subject to the constrained variable consideration (usage-based fees) and recognizes that amount on a time-elapsed basis over the annual period. At each reporting date within an annual period, the Company reassesses its estimate of the excess variable amounts for the annual period and updates the amount recognized on a time-elapsed basis over the remainder of the annual period.
The Company had deferred revenue contract liabilities
of approximately $
Contract Balances
The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers as of:
December 31, 2025 | December 31, 2024 | |||||||
| Accounts receivable, net | $ | $ | ||||||
| Contract assets | ||||||||
| Contract liabilities (deferred revenue) | ||||||||
F-10
Remaining Performance Obligations
As
of December 31, 2025, the Company’s Remaining Performance Obligation (RPO) was $
Deferred Contract Costs
We defer the portion of sales commission that
is considered a cost of obtaining a new contract with a customer and amortize these deferred costs over the period of benefit. We expense
the remaining sales commissions as incurred.
| Deferred Contract Costs | ||||
| Carrying Value at December 31, 2023 | $ | |||
| Additions | ||||
| Reductions | ( |
) | ||
| Amortization | ( |
) | ||
| Carrying Value at December 31, 2024 | $ | |||
| Additions | ||||
| Reductions | ( |
) | ||
| Amortization | ( |
) | ||
| Carrying Value at December 31, 2025 | $ | |||
Accounts Receivable
All customers are granted credit on a short-term basis. Accounts receivable, net is stated net of the allowance for credit losses.
The Company maintains an allowance for its doubtful accounts receivable for estimated credit losses. This allowance is based upon historical loss patterns, the number of days that billings are past due, and evaluation of the potential risk of loss associated with delinquent accounts, current market conditions and reasonable and supportable forecasts of future billable product usage compared with contracted minimums. The Company records the allowance against bad debt expense through the condensed consolidated statement of operations, included in general and administrative expense, up to the amount of revenue recognized to date. Any incremental allowance is recorded as an offset to unearned revenue on the condensed consolidated balance sheet. Receivables are written off and charged against recorded allowance when the Company has exhausted collection efforts without success.
The Company evaluates its accounts receivable and contract assets balances using the Current Expected Credit Loss (“CECL”) model in accordance with ASC 326. The Company routinely reviews its accounts receivables and contract assets and uses a risk-based probability-weighted approach to record provisions. However, those provisions are estimates and actual results could differ from those estimates, and those differences may be material.
F-11
The following table summarizes changes in the allowance for credit losses for the years ended December 31, 2025 and 2024:
| Balance at December 31, 2023 | ||||
| Provision for expected credit loss | ||||
| Credit loss write-offs | ( | ) | ||
| Balance at December 31, 2024 | ||||
| Provision for expected credit loss | ||||
| Credit loss write-offs | ( | ) | ||
| Balance at December 31, 2025 | $ |
New Accounting Pronouncement
Improvements to Income Tax Disclosures
Recently Issued Accounting Pronouncements Not Yet Adopted
Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, which provides targeted improvements to the accounting for internal-use software, including clarifications around capitalization and implementation cost assessments. The amendments are effective for all entities for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”. The amendments in the ASU require disclosures about specific types of expenses included in the expense captions presented on the Consolidated Statements of Income, as well as disclosures about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption allowed. We are currently evaluating the impact of adoption on our financial disclosures.
Concentration of Risks
The Company’s financial instruments that potentially expose the Company to a concentration of credit risk consist of cash and accounts receivable.
The Company’s cash is deposited at financial
institutions and cash balances held in United States (“US”) bank accounts are insured by the Federal Deposit Insurance Corporation
(“FDIC”) up to $
The Company’s revenue is also exposed to concentration risk:
For
the year ended December 31, 2025, three customers represented
For
the year ended December 31, 2024, two customers represented
F-12
As
of December 31, 2025, two customers accounted for
As of December 31, 2024, three customers accounted
for
As
of December 31, 2025, two customers accounted for
As
of December 31, 2024, one customer accounted for
Income Taxes
The Company accounts for income taxes under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Taxes.” Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
We record uncertain tax positions on the basis of a two-step process whereby we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and for those tax positions that meet the more likely than not criteria, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on uncertain tax positions in income tax expense. There were no unrecognized tax benefits as of December 31, 2025 and 2024.
On July 4, 2025, the United States enacted budget reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act ("OBBBA"). The Act includes a broad range of tax reform provisions, including extending and modifying various provisions of the Tax Cuts and Jobs Act and expanding certain incentives in the Inflation Reduction Act while accelerating the phase-out of other incentives. The legislation has multiple effective dates, with certain provisions effective in 2025 and other provisions effective in 2026 and subsequent years. OBBBA provisions include the restoration of the current deductibility for domestic research expenditures beginning in 2025, with transition options for previously capitalized amounts. OBBBA’s changes did not have a material impact on our consolidated financial statements. For additional information, see Note 8 — Income Taxes.
Leases
The Company has no outstanding lease agreements for the years ended December 31, 2025 and 2024, respectively.
Property and Equipment, net
The Company’s property and equipment as of December 31, 2025 consists primarily of computer equipment. Given the low cost and short useful life of these assets, as well as the immateriality of the related balances, the Company expenses purchases of computer equipment as incurred. As a result, no amounts related to property and equipment were recorded on the consolidated balance sheets for any of the periods presented.
Intangible Assets
Intangible assets include when applicable, costs associated with software development of new product offerings and significant enhancements to existing applications. Research & development costs are expensed as incurred. Costs incurred for the development of software that will be sold, leased or otherwise marketed are capitalized when technological feasibility has been established. Amortization expense of capitalized development costs would be included in research and development in the consolidated statements of operations. When management concludes that a software project is not expected to provide future economic benefits, or when such benefits are no longer considered probable, all related costs are expensed as incurred.
F-13
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.
For
the years ended December 31, 2025 and 2024, the Company determined that all intangible assets would be recovered and therefore did
Goodwill
Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair market value of net identified tangible and intangible assets acquired. The Company performs an annual impairment test of goodwill and further periodic tests to the extent indicators of impairment develop between annual impairment tests. The Company’s impairment review process compares the fair market value of the reporting unit to it carrying value, including the goodwill related to the reporting unit utilizing qualitative considerations. To determine the fair market value of the reporting unit, the Company may use various approaches including an asset or cost approach, market approach or income approach or any combination thereof. These approaches may require the Company to make certain estimates and assumptions including future cash flows, revenue and expenses. These estimates and assumptions are reviewed each time the Company tests goodwill for impairment and are typically developed as part of the Company’s routine business planning and forecasting process. While the Company believes its estimates and assumptions are reasonable, variations from those estimates could produce materially different results.
During the years ended December 31, 2025 and 2024, the Company’s assessment did not indicate that an impairment charge was required as its fair market value (as determined primarily by the Company’s market capitalization) was in excess of carrying value.
Stock-based Compensation
The Company has accounted for stock-based compensation under the provisions of FASB ASC 718 – “Stock Compensation” which requires the use of the fair- value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). For all awards, the fair market value of each stock option award is estimated on the date of grant using the Black- Scholes or Monte-Carlo valuation models as appropriate that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of the Company’s stock and other factors estimated over the expected term of the stock options. For employee awards, the expected term of options granted is derived based on exercise history. We continually monitor exercise activity from the date of grant and consider our short history and certain stock price growth during various periods. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The Company accounts for forfeitures of employee awards as they occur.
General and Administrative Expense
General and administrative expenses consist primarily of payroll, bonuses and awards, stock-based compensation and other employee-related costs for executive management, sales, and finance and legal as well as external professional services and incremental costs related to servicing the customer contracts, such as payroll, consulting, hosting and software related expenses. General and administrative expenses also include bad debt expense recorded under CECL.
Research and Development and Software Development Costs
Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses incurred to perform research projects and develop technology for the Company’s products. Research and development costs are expensed as incurred. Costs incurred for the development of software that will be sold, leased or otherwise marketed are capitalized when technological feasibility has been established.
F-14
Net Loss per Common Share
The
Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share”. ASC 260 requires presentation
of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by
dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock
method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for
the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion
of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
| 2025 | 2024 | |||||||
| Convertible notes payable | ||||||||
| Warrants | ||||||||
| Stock options | ||||||||
Foreign Currency Translation
The assets, liabilities and results of operations of certain of authID’s subsidiaries are measured using their functional currency which is the currency of the primary foreign economic environment in which they operate. Upon consolidating these subsidiaries, the applicable assets and liabilities are translated to US dollars at currency exchange rates as of the applicable dates and their revenues and expenses are translated at the weighted average currency exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating these subsidiaries’ financial statements are reported in other comprehensive loss in the accompanying consolidated statements of comprehensive loss.
NOTE 2 – OTHER CURRENT ASSETS
Other current assets consisted of the following at December 31, 2025 and 2024:
| 2025 | 2024 | |||||||
| Prepaid third-party and related party services | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Commissions advances | ||||||||
| $ | $ | |||||||
F-15
NOTE 3 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL)
The Company’s intangible assets consist of intellectual property acquired from FIN Holdings Inc. in addition to internally developed software that have been placed into service. They are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible assets for the years ended December 31, 2025, and 2024:
| Acquired and | ||||||||||||
| Developed | ||||||||||||
| Software | Patents | Total | ||||||||||
| Useful Lives | ||||||||||||
| Carrying Value at December 31, 2023 | $ | $ | $ | |||||||||
| Additions | ||||||||||||
| Amortization | ( | ) | ( | ) | ( | ) | ||||||
| Carrying Value at December 31, 2024 | $ | $ | $ | |||||||||
| Additions | ||||||||||||
| Amortization | ( | ) | ( | ) | ( | ) | ||||||
| Carrying Value at December 31, 2025 | $ | |||||||||||
The following is a summary of intangible assets as of December 31, 2025:
| Acquired and | ||||||||||||
| Developed | ||||||||||||
| Software | Patents | Total | ||||||||||
| Cost | ||||||||||||
| Accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||
| Carrying Value at December 31, 2025 | $ | $ | $ | |||||||||
The following is a summary of intangible assets as of December 31, 2024:
| Acquired and | ||||||||||||
| Developed | ||||||||||||
| Software | Patents | Total | ||||||||||
| Cost | ||||||||||||
| Accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||
| Carrying Value at December 31, 2024 | $ | $ | $ | |||||||||
The following is the future amortization of intangible assets for the years ended December 31:
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| $ |
NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following as of December 31, 2025 and 2024:
| 2025 | 2024 | |||||||
| Trade payables | $ | $ | ||||||
| Accrued payroll and related expenses | ||||||||
| Other accrued expenses | ||||||||
| $ | $ | |||||||
F-16
NOTE 5 – CONVERTIBLE NOTES PAYABLE
On
March 21, 2022, the Company entered into a Securities Purchase Agreement (“SPA”) with certain accredited investors, which
included certain Company directors or their affiliates (the “Note Investors”). Under the SPA, the Company issued Senior Secured
Convertible Notes (the “Convertible Notes”) to the Note Investors, with a total initial principal amount of approximately
$
The
Convertible Notes carried an aggregate cash origination fee of approximately $
The following is a summary of convertible notes outstanding as of December 31, 2025 and 2024:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Less | ||||||||
| Unamortized debt discount expense | ( | ) | ||||||
| Unamortized debt issuance expense | ( | ) | ||||||
| $ | $ | |||||||
NOTE 6 – RELATED PARTY TRANSACTIONS
Executive Officers
Mr.
Rhoniel A. Daguro, a director of the Company, was hired as Chief Executive Officer of the Company in consideration of an initial annual
salary of $
F-17
The
employment of Mr. Daguro is at will and may be terminated at any time, with or without formal cause. The Company also entered an Executive
Retention Agreement with Mr. Daguro, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate
the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in
the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Daguro is entitled to receive
an amount equal to
On
April 12, 2023, the Company entered an Offer Letter with Thomas R. Szoke, a director of the Company, pursuant to which Mr. Szoke agreed
to serve as Chief Technology Officer in consideration of an initial annual salary of $
The
employment of Mr. Szoke is at will and may be terminated at any time, with or without formal cause. The Company also entered an Executive
Retention Agreement with Mr. Szoke, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate
the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in
the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Szoke is entitled to receive
an amount equal to
On
July 31, 2023, the Company and Edward Sellitto entered an Offer Letter pursuant to which Mr. Sellitto agreed to serve as Chief Financial
Officer of the Company commencing August 15, 2023 in consideration of an annual salary of $
F-18
On
September 23, 2024, Mr. Erick Soto was hired as Chief Product Officer, in consideration of an annual salary of $
The
employment of Mr. Soto is at will and may be terminated at any time, with or without formal cause. The Company also entered an Executive
Retention Agreement with Mr. Soto, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate
the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in
the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Soto is entitled to receive
an amount equal to
On March 23, 2023, the Company and Thomas Thimot entered into a Confidential
Separation Agreement and General Release for the purposes of separation of Mr. Thimot from the Company as Chief Executive Officer and
an employee by mutual consent and settling, compromising and resolving all claims between them. Mr. Thimot’s resignation was effective
March 23, 2023. In addition to the Company paying all accrued but unpaid salary and providing reimbursement for all outstanding expenses,
the Company has agreed to pay Mr. Thimot $
Board of Directors
On
February 15, 2024, Mr. Joe Trelin tendered his resignation as Chairman and a Director of the Company, effective immediately. On February
20, 2024, the board of directors of the Company (the “Board”) accepted his resignation and agreed to vest the unvested portion
of an option granted to Mr. Trelin on June 28, 2023, amounting to
On
March 25, 2024, Mr. Kunal Mehta was appointed as a Director of the Company, upon the standard terms for non-employee Directors. On May
20, 2024, Mr. Mehta was granted an option to purchase
On
August 13, 2024, the Company granted
F-19
On
September 4, 2025, the Company made a grant of options to Mr. Thompson to acquire
On
September 16, 2025, the board of directors of the Company (the “Board”) agreed to vest the unvested portion of an option
granted to Mr. Thompson on March 14, 2023, amounting to
On
September 4, 2025, the Company made a grant of options to each of Messrs. Mehta, Jisser, Koehneman, Garchik, Venkataraman, Shevelyov,
Menghani and to Ms. White to acquire
On
September 4, 2025, the Company made a grant of options to each of Messrs. Garchik, Venkataraman, Shevelyov, Menghani to acquire
On
November 24, 2025, Mr. Garchik, purchased
Employment Agreement
Since
June 2023, the Company has employed Daguro, the brother of our CEO, Rhoniel Daguro as a VP Sales. Dale Daguro’s employment is at
will and may be terminated at any time, with or without cause. Dale’s compensation is commensurate with other executives employed
by the Company at a similar level of seniority and experience. During the years ended December 31, 2025 and 2024, Dale Daguro earned
approximately $
Commercial Agreements
On
June 6, 2023, the Company entered into a services agreement with The Pipeline Group, Inc. (“TPG”). Ken Jisser, a director
of the Company, is the founder and CEO of TPG, a technology-enabled services company that aims to deliver business results for companies
looking to build a predictable and profitable pipeline. The agreement provides that TPG will assist in providing outsourced sales including
business development resources for outbound calling, provide support for automated dialing technology, classify customer data and other
sales related services for an initial term of one year. On October 25, 2023, on December 19, 2023 and on August 26, 2024, the Company
entered into amendments to the above services agreement, pursuant to which TPG will provide certain additional services to the Company.
In consideration of the services, the Company paid TPG $
Total
expense incurred under this contract during the years ended December 31, 2025 and 2024 was approximately $
F-20
NOTE 7 – STOCKHOLDERS’ EQUITY
The
Company is authorized to issue
Common Stock
| ● | During the year ended December 31, 2024, the Company issued |
| ● | On June 27, 2024, pursuant to Securities Purchase Agreements in a Registered Direct Offering, the Company issued |
| ● | On April 1, 2025, pursuant to Securities Purchase Agreements in a registered direct offering, the Company issued |
| ● | On April 16, 2025, the Company issued |
| ● | On May 7, 2025, pursuant to Securities Purchase Agreements in a registered direct offering, the Company issued | |
| ● | On November 24, 2025, pursuant to Securities Purchase Agreements in a registered direct offering, the Company issued |
| ● | During the year ended December 31, 2025, the Company issued |
| ● | During the year ended December 31, 2025, the Company issued |
Warrants
| ● | On June 27, 2024, in connection with their placement agent services, the Company issued |
| ● | On April 1, 2025, in connection with their placement agent services, the Company issued |
| ● | On April 1, 2025, in connection with their placement agent services, the Company issued |
| ● | On May 7, 2025, in connection with their placement agent services, the Company issued |
| ● | On May 7, 2025, in connection with their placement agent services, the Company issued |
| ● | On November 24, 2025, in connection with their advisory services, the Company issued |
| ● | On November 24, 2025, in connection with their placement agent services, the Company issued |
| ● | On November 24, 2025, in connection with their placement agent services, the Company issued |
F-21
The following is a summary of the Company’s warrant activity for the years ended December 31, 2025 and 2024:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life | ||||||||
| Outstanding, December 31, 2023 | $ | |||||||||
| Granted | $ | | ||||||||
| Exercised/Cancelled | ( | ) | $ | |||||||
| Outstanding, December 31, 2024 | $ | | ||||||||
| Granted | $ | | ||||||||
| Exercised/Cancelled | ( | ) | $ | |||||||
| Outstanding, December 31, 2025 | $ | | ||||||||
Stock Options
The Company has adopted the authID 2017 Incentive Stock Plan, the 2021 Equity Incentive Plan, and the 2024 Equity Incentive Plan. The Company has no other stockholder approved stock incentive plans in effect as of December 31, 2024.
On September 28, 2017, the shareholders of the Company approved the 2017 Incentive Stock Plan (“2017 Incentive Plan”). On December 29, 2021 the shareholders of the Company approved the 2021 Equity Incentive Plan (“2021 Plan”). On June 26, 2024, the shareholders of the Company approved the 2024 Equity Incentive Plan (“2024 Plan”). The following is a summary of principal features of the 2017 Incentive Plan, the 2021 Plan, and the 2024 Plan. The summaries, however, do not purport to be a complete description of all the provisions of each plan.
On
May 24, 2024, the Board of Directors adopted the 2024 Equity Incentive Plan (the “2024 Plan”). On June 26, 2024, the stockholders
approved and ratified the 2024 Plan and the allocation of
The terms of Awards granted under the plans shall be contained in an agreement between the participant and the Company and such terms shall be determined by the Compensation Committee consistent with the provisions of the applicable plan. The terms of Awards may or not require performance conditions in order to vest the equity comprised in the relevant Award. The terms of each Option granted shall be contained in a stock option agreement between the optionee and the Company and such terms shall be determined by the Compensation Committee consistent with the provisions of the applicable plan.
In addition, the Compensation Committee has from
time to time approved the grant of options to purchase shares of common stock by way of Inducement Grants to new employees, which are
outside the approved Plans, pursuant to Nasdaq Listing Rule 5635(c)(4). During 2025 and 2024, the Company granted
2025 Stock Option Activity
| ● | During the year ended December 31, 2025, the Company granted directors a total of |
| ● | During the year ended December 31, 2025, the Company also granted a total of |
| ● | During the year ended December 31, 2025, the Company granted a former employee |
F-22
2024 Stock Option Activity
| ● | During the year ended December 31, 2024, the Company granted directors a total of |
| ● | During the year ended December 31, 2024, the Company also granted |
| ● | During the year ended December 31, 2024, the Company agreed to accelerate the vesting of |
| ● | During the year ended December 31, 2024, Certain stock option holders exercised their stock options and were issued approximately |
The Company determined the grant date fair market value of the options granted during the years-ended December 31, 2025 and 2024 using the Black Scholes and Monte-Carlo Method as appropriate and the following assumptions:
| 2025 | 2024 | |||||||
| Expected volatility | % | % | ||||||
| Expected term | ||||||||
| Risk free rate | % | % | ||||||
| Dividend rate | % | % | ||||||
Activity related to stock options for the years ended December 31, 2025, and 2024 is summarized as follows:
| Weighted | Weighted | |||||||||||||||
| Average | Average | Aggregate | ||||||||||||||
| Number of | Exercise | Contractual | Intrinsic | |||||||||||||
| Shares | Price | Life (Yrs.) | Value | |||||||||||||
| Outstanding, December 31, 2023 | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Exercised | ( | ) | $ | $ | ||||||||||||
| Forfeited/cancelled | ( | ) | $ | $ | ||||||||||||
| Outstanding, December 31, 2024 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited/cancelled | ( | ) | ||||||||||||||
| Outstanding, December 31, 2025 | ||||||||||||||||
| Exercisable, December 31, 2025 |
The following table summarizes stock option information as of December 31, 2025:
| Contractual | ||||||||||||
| Exercise Price | Outstanding | Life (Yrs.) | Exercisable | |||||||||
| $2.64 – $5.00 | | |||||||||||
| $5.01 – $10.00 | ||||||||||||
| $10.01 – $15.00 | ||||||||||||
| $15.01 – $20.00 | ||||||||||||
| $20.01 – $121.28 | ||||||||||||
As
of December 31, 2025, there was approximately $
F-23
NOTE 8 – INCOME TAXES
The Company accounts for income taxes under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Taxes.” Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. We record Global Intangible Low Tax Income (GILTI) as a current period expense when incurred. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
We record uncertain tax positions on the basis of a two-step process whereby we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and for those tax positions that meet the more likely than not criteria, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on uncertain tax positions in Income tax expense. There were no unrecognized tax benefits as of December 31, 2025 and 2024
The Company’s loss before income taxes from US and sources for the years ended December 31, 2025 and 2024, are as follows:
| 2025 | 2024 | |||||||
| United States | ( | ) | ( | ) | ||||
| Outside United States | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
The income tax provision consisted of the following for the years ended December 31, 2025 and December 31, 2024
| 2025 | 2024 | |||||||
| Current | - | - | ||||||
| Federal | ||||||||
| State & Local | ||||||||
| Foreign | ||||||||
| Deferred Tax Expense | - | - | ||||||
| Federal | ||||||||
| State & Local | ||||||||
| Foreign | ||||||||
| Net Income Tax Expense | ||||||||
A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective tax rate for the year ended December 31, 2024 is as follows:
| 2024 | ||||
| US Federal statutory federal income tax | % | |||
| State taxes | % | |||
| Foreign taxes | % | |||
| Other deferred adjustments | - | % | ||
| R&D credit | % | |||
| Change in valuation allowance | - | % | ||
| Total income tax provision | % | |||
F-24
A
reconciliation of the provision for income taxes to the amount computed by applying the
| 2025 | ||||||||
| Amount | Percentage | |||||||
| US Federal income tax statutory rate | ( | ) | % | |||||
| State taxes and local income tax, net of federal benefit | % | |||||||
| Foreign taxes effects | - | % | ||||||
| Effect of changes in tax laws and rates enacted in the current period | % | |||||||
| Effect of cross border tax laws | % | |||||||
| Tax credits | ( | ) | % | |||||
| Change in valuation allowance | - | % | ||||||
| Nontaxable or nondeductible items | % | |||||||
| Changes in share-based compensation | - | % | ||||||
| Changes in unrecognized tax benefits | % | |||||||
| Other | - | % | ||||||
| Effective tax rate | % | |||||||
Deferred Tax Assets at December 31, 2025 and December 31, 2024 are related to the following:
| 2025 | 2024 | |||||||
| Net operating loss | ||||||||
| Stock options | ||||||||
| Federal tax credits | ||||||||
| Basis difference in intangible and fixed assets | ||||||||
| Accrued payroll | ||||||||
| Accounting reserves | ||||||||
| Capital loss | ||||||||
| Valuation allowance | ( |
) | ( |
) | ||||
| Deferred tax assets, net | ||||||||
We
establish valuation allowances for deferred tax assets based on a more likely than not standard. Deferred income tax assets are evaluated
quarterly to determine if valuation allowances are required or should be adjusted. The ability to realize deferred tax assets depends
on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each
applicable tax jurisdiction. The assessment regarding whether a valuation allowance is required or should be adjusted also considers
all available positive and negative evidence factors. It is difficult to conclude a valuation allowance is not required when there is
significant objective and verifiable negative evidence, such as cumulative losses in recent years. We utilize a rolling three years of
actual and current year results as the primary measure of cumulative losses in recent years. The valuation allowance increased by approximately
$
At December 31, 2025, the Company had federal research and development
credit carryforwards of approximately $
F-25
Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2025 there were no uncertain positions. The Company’s U.S. federal and state net operating losses have occurred since its inception in 2009 and as such, tax years subject to potential tax examination could apply from that date. This is because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. The Company did not have any unrecognized tax benefits and has not accrued any interest or penalties for the 12 months ended December 31, 2025 and 2024.
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is probable that a liability has been incurred, and the amount of the loss can be reasonably estimated. No such provision has been recorded as of December 31, 2025 and 2024.
On January 29, 2026, the Company was served with a Summons and Complaint
in the matter of Perez v. Intellicheck, Inc. and authID Inc., filed in the U.S. District Court for the Northern District of Illinois.
The Complaint alleges that one of the Company’s partners (Intellicheck, Inc., a reseller of the Company’s services) and the
Company collected, stored and used biometric information from the Plaintiff and similarly situated individuals in Illinois in violation
of the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq. (“BIPA”). BIPA provides for statutory damages of
$
Executive Compensation
As of December 31, 2025, the Company had employment agreements with members of the management team providing base salary amounts and provisions for stock compensation, cash bonuses and other benefits to be granted at the discretion of the Board of Directors. Additionally, certain employment agreements include provisions for base salary, bonus amounts upon meeting certain performance milestones, severance benefits for involuntary termination from a change in control or other events as defined in their respective agreements. Additionally, the vesting of certain awards could be accelerated upon a change in control (as defined) or by action of the Board of Directors.
Starting
in fiscal year 2022 the Company adopted a 401(k) plan where employer matches
NOTE 10 – SEGMENT INFORMATION
Operating
segments are defined as components of an enterprise for which separate financial information is available and which is evaluated regularly
by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s
chief operating decision maker (“CODM”) is the .
F-26
Exhibit 21.1
authID Inc. – List of Subsidiaries
authID Enterprises Limited, a company incorporated in England & Wales (formerly Ipsidy Enterprises Limited)
authID Gaming Inc. a Delaware company
FIN Holdings, Inc., a Florida company
ID Solutions Inc., a Delaware company
Innovation in Motion Inc., a Florida company
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-283580) and Form S-8 (Nos. 333-261042; 333-262454; 333-286764), of the report dated March 31, 2026 included in this Annual Report on Form 10-K of authID Inc. and Subsidiaries (the “Company”), relating to the consolidated financial statements of the Company and its subsidiaries as of and for the year ended December 31, 2025 (collectively referred to as, “Audit Report on the 2025 Form 10-K”) and inclusion therein of the audit report on the 2025 Form 10-K filed March 31, 2026 with the Securities Exchange Commission.
/s/ Cherry Bekaert LLP
Tampa, Florida
March 31, 2026
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Rhoniel A. Daguro, Chief Executive Officer certify that:
| 1. | I have reviewed this annual report on Form 10-K of authID Inc; |
| 2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant) and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal annual period that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
| Date: March 31, 2026 |
/s/ Rhoniel A. Daguro |
| Rhoniel A. Daguro | |
|
Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Edward Sellitto, Chief Financial Officer, certify that:
| 1. | I have reviewed this annual report on Form 10-K of authID Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant) and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal annual period that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
| Date: March 31, 2026 |
/s/ Ed Sellitto |
| Ed Sellitto | |
|
Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of authID Inc. (the “Company”) on Form 10-K for the period ended December 31, 2025 as filed with the Securities and Exchange Commission (the “Report”), We, Rhoniel A. Daguro, Chief Executive Officer of the Company, and, Edward Sellitto, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
March 31, 2026 |
/s/ Rhoniel A. Daguro |
|
Rhoniel A. Daguro | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
March 31, 2026 |
/s/ Ed Sellitto |
| Ed Sellitto, Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |