authID® [Nasdaq: AUID] a leading provider of secure identity
verification and authentication solutions today reported financial
and operating results for the second quarter and six months ended
June 30, 2023.
“In the second quarter, the authID team executed a successful
fund raise, debt capitalization, and cost-savings plan that helped
improve our balance sheet, allowing us to focus on our mission to
eliminate authentication fraud and deliver 100% Zero Trust Identity
Protection,” said CEO Rhon Daguro.
“We also secured new contracts with several customers including
ABM, a Fortune 500 company with over 100,000 employees. These
customer wins validate strong market demand and fit for our
identity verification and authentication products and represent the
highest total gross BARR in sales that authID has achieved in a
single quarter to date,” continued Daguro. “The authID team
continues to be laser focused on achieving strong market momentum
by delivering the faster, frictionless, and accurate user identity
solutions on which highly secure enterprises and digital commerce
will be built.”
Financial Results for the Second Quarter Ended June 30,
2023
The following highlights comprise results from continuing
operations.
- Total revenue for
the three months ended June 30, 2023 was $0.04 million, compared
with total revenue of $0.07 million for the three months ended June
30, 2022. For the six months ended June 30, 2023, total revenue was
$0.07 million, compared with total revenue for the six months ended
June 30, 2022 of $0.2 million. The reduction was primarily
attributed to revenue from a legacy authentication product that was
discontinued in April 2022.
- Operating expenses
for the three months ended June 30, 2023 declined to $2.8 million,
compared with $6.0 million for the comparable period in 2022. For
the six-month period in 2023, operating expenses declined to $7.2
million, compared with $11.2 million for the same period last year.
The reduced expenditure reflects the Company’s cost-saving measures
resulting in lower headcount costs and lower third-party vendor
costs.
- Loss for the three
months ended June 30, 2023 was $10.9 million, of which non-cash
charges were $9.2 million, compared with a loss of $6.4 million of
which non-cash charges were $3.3 million, for the comparable period
in 2022. For the six-month period in 2023, Loss was $16.1 million,
of which non-cash and one-time severance charges were $12.2
million, compared with a loss of $11.5 million of which non-cash
and one-time severance charges were $5.6 million, for the same
period last year.
- Net loss per share
for the three months ended June 30, 2023 was $2.15, compared with
$2.06 for the three months ended June 30, 2022. For the six months
ended June 30, 2023, net loss per share was $3.91, compared with
$3.80 for the same period last year.
- Adjusted EBITDA loss
improved to $1.7 million for the quarter ended June 30, 2023,
compared with an Adjusted EBITDA loss of $3.0 million for the
quarter ended June 30, 2022. For the six months ended June 30,
2023, Adjusted EBITDA loss was $3.9 million, compared with an
Adjusted EBITDA loss of $5.9 million, for the same period last
year, primarily due to cost savings from the restructuring plan
executed in the first quarter of 2023.
- In May, the Company secured $8.2
million dollars in financing before expenses that included the
offset of principal and accrued interest and cancellation of a $0.9
million dollar note entered into with Stephen Garchik in March
2023. The Company also improved its balance sheet and reduced cash
requirements by capitalizing convertible debt totaling
approximately $8.9 million dollars and exchanging it for shares of
common stock.
- Subsequent to the period, in July
the Company completed a complete a 1-for-8 reverse stock split of
its common stock. The impact of this change in capital structure
has been retroactively applied to all periods presented
herein.
- The financing, debt restructure, and
reverse stock split enabled the Company to regain compliance with
Nasdaq listing rules.
Please refer to Table 1 for reconciliation of net loss to
Adjusted EBITDA (a non-GAAP measure).
Operational Highlights for the Second Quarter of
2023
- Signed an agreement with ABM, one of
the world's largest providers of facility services and solutions,
with over 100,000 employees, to deploy authID’s identity
authentication solutions to optimize facilities’ operations and
secure employee access across shared devices. authID’s strong
biometric authentication services will allow ABM to deploy
next-generation security, while delivering a cost-effective and
intuitive user authentication experience to critical workforce
applications.
- Continued to onboard new FinServ
customers with the deployment of our biometric identity and
document verification services to streamline customer onboarding
and weed out imposters for a U.S. financial institution.
- Signed an agreement with an
international recruitment platform who need our services to verify
identity of new hires and automate document collection, in order to
deliver trusted candidates to their corporate customers.
- Through US channel partners, added
several enterprise customers to reduce identity fraud in digital
customer onboarding.
- In July, appointed Greg Manship,
Dale Daguro, and Jeff Scheidel as Vice Presidents of Sales who will
bring their deep understanding of the identity market and
impressive track records of developing high-performing sales teams
to capitalize on the strong demand for secure and reliable
biometric authentication solutions.
- On August 3rd, announced the
appointment of Ed Sellitto as CFO. Sellitto will succeed Annie Pham
effective August 15, 2023. Ed brings over fifteen years of
experience in revenue optimization and financial operations roles
supporting high-growth B2B, SaaS organizations to build and
optimize their go-to-market operations.
About authID Inc.
At authID (Nasdaq: AUID), We Are Digital Identity®.
authID provides secure identity verification
and authentication through Verified™, an
easy-to-integrate strong authentication platform.
Verified combines document-based identity verification with
strong FIDO2 passwordless device authentication and cloud
facial biometrics to deliver identity-first
cybersecurity for both workforce and consumer applications.
Powered by sophisticated biometric and artificial intelligence
technologies, authID establishes trusted digital identities,
binds an identity to provisioned devices, and eliminates the risks
of passwords to deliver the faster, frictionless, and accurate
user identity solutions demanded by today’s digital ecosystem. For
more information, go to www.authID.ai.
authID Media ContactGraham N. AradGeneral
CounselInvestorRelations@authid.ai
Forward-Looking StatementsThis Press Release includes
“forward-looking statements.” All statements other than statements
of historical facts included herein, including, without limitation,
those regarding the future results of operations, cash flow, cash
position and financial position, business strategy, plans and
objectives of management for future operations of both authID Inc.
and its business partners, are forward-looking statements. Such
forward-looking statements are based on a number of assumptions
regarding authID’s present and future business strategies, and the
environment in which authID expects to operate in the future, which
assumptions may or may not be fulfilled in practice. Actual results
may vary materially from the results anticipated by these
forward-looking statements as a result of a variety of risk
factors, including the Company’s ability to attract and retain
customers; successful implementation of the services to be provided
under new customer contracts; the Company’s ability to compete
effectively; changes in laws, regulations and practices; changes in
domestic and international economic and political conditions, the
as yet uncertain impact of the war in Ukraine, inflationary
pressures, increases in interest rates, and others. See the
Company’s Annual Report on Form 10-K for the Fiscal Year ended
December 31, 2022 filed at www.sec.gov and other documents filed
with the SEC for other risk factors which investors should
consider. These forward-looking statements speak only as to the
date of this release and cannot be relied upon as a guide to future
performance. authID expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained in this release to reflect any
changes in its expectations with regard thereto or any change in
events, conditions, or circumstances on which any statement is
based.
Non-GAAP Financial Information.
The Company provides certain non-GAAP financial measures in this
statement. Please note that certain definitions of these non-GAAP
financial measures have changed as compared to the non-GAAP
financial measures reported in previous periods. Management
believes that Adjusted EBITDA, when viewed with our results under
GAAP and the accompanying reconciliations, as well as BARR and ARR
provide 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. BARR and ARR are presented
because management believes they provide additional information
with respect to the trends in the performance of our fundamental
business activities. We also rely on Adjusted EBITDA as a primary
measure to review and assess the operating performance of our
company and our management. These non-GAAP key business indicators,
which include Adjusted EBITDA, BARR and ARR should not be
considered replacements for and should be read in conjunction with
the GAAP financial measures.
We define Adjusted EBITDA as GAAP net loss adjusted to exclude:
(1) interest expense, (2) interest income, (3) income tax expense,
(4) depreciation and amortization, (5) stock-based compensation
expense and (6) loss on debt extinguishment, conversion
expense on exchange of Convertible Notes, and certain other items
management believes affect the comparability of operating results.
Please see Table 1 below for a reconciliation of Adjusted EBITDA –
continuing operations to net loss – continuing operations, the most
directly comparable financial measure calculated and presented in
accordance with GAAP.
TABLE 1
Reconciliation of Loss from Continuing Operations to
Adjusted EBITDA Continuing Operations.
|
|
For the Three Months Ended |
|
|
For theSix Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(10,900,320 |
) |
|
$ |
(6,366,520 |
) |
|
$ |
(16,120,559 |
) |
|
$ |
(11,466,525 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addback: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
282,109 |
|
|
|
459,262 |
|
|
|
1,082,182 |
|
|
|
493,904 |
|
Other income |
|
|
(1,160 |
) |
|
|
- |
|
|
|
(1,160 |
) |
|
|
(3,240 |
) |
Loss on debt
extinguishment |
|
|
380,741 |
|
|
|
- |
|
|
|
380,741 |
|
|
|
- |
|
Conversion expense |
|
|
7,476,000 |
|
|
|
- |
|
|
|
7,476,000 |
|
|
|
- |
|
Severance cost |
|
|
- |
|
|
|
- |
|
|
|
811,041 |
|
|
|
150,000 |
|
Depreciation and
amortization |
|
|
76,019 |
|
|
|
244,448 |
|
|
|
152,036 |
|
|
|
460,833 |
|
Taxes |
|
|
3,255 |
|
|
|
7,316 |
|
|
|
3,255 |
|
|
|
8,100 |
|
Non-cash recruiting fees |
|
|
(54,000 |
) |
|
|
- |
|
|
|
438,000 |
|
|
|
- |
|
Stock compensation |
|
|
1,055,690 |
|
|
|
2,632,118 |
|
|
|
1,895,711 |
|
|
|
4,499,107 |
|
Adjusted EBITDA continuing
operations (Non-GAAP) |
|
$ |
(1,681,666 |
) |
|
$ |
(3,023,376 |
) |
|
$ |
(3,882,753 |
) |
|
$ |
(5,857,821 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The company defines Booked Annual Recurring Revenue or BARR, as
the amount of annual recurring revenue represented by the estimated
amounts of annual recurring revenue we believe will be earned under
contracted orders, looking out eighteen months from the date of
signing of each customer contract. The net amount of BARR reflects
the deduction of the BARR of contracts previously included in
reported BARR, which were subject to attrition during the quarter.
The gross amount of BARR from contracts signed in the second
quarter of 2023 was $239,000 and the net amount of BARR was
$221,000 (after attrition), compared to $32,000 signed in the
second quarter of 2022.
The company defines Annual Recurring Revenue or ARR, as the
amount of recurring revenue derived from sales of our Verified
products during the last three months of the relevant period (in
this case the three months ended June 2023) as determined in
accordance with GAAP, multiplied by 4. The amount of ARR as of June
30, 2023 is approximately $144,000, compared to approximately
$118,000 as of June 30, 2022.
BARR may be distinguished from ARR, as BARR does not take into
account the time to implement any contract for Verified, nor for
any ramp in adoption, or seasonality of usage of the Verified
products. BARR and ARR have limitations as analytical tools, and
you should not consider them in isolation from, or as a substitute
for, analysis of our results as reported under GAAP. Some of these
limitations are:
- BARR & ARR should not be considered as predictors of future
revenues but only as indicators of the direction in which revenues
may be trending. Actual revenue results in the future as determined
in accordance with GAAP may be significantly different to the
amounts indicated as BARR or ARR at any time.
- BARR and ARR are to be considered “forward looking statements”
and subject to the same risks, as other such statements (see note
on “Forward Looking Statements” above).
- BARR & ARR only include revenues from sale of our Verified
products and not other revenues.
- BARR & ARR do not include amounts we consider as
non-recurring revenues (for example one-off implementation
fees).
authID INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Verified software license |
|
$ |
36,122 |
|
|
$ |
51,409 |
|
|
$ |
71,900 |
|
|
$ |
86,902 |
|
Legacy authentication services |
|
|
1,020 |
|
|
|
15,000 |
|
|
|
3,098 |
|
|
|
144,559 |
|
Total revenues, net |
|
|
37,142 |
|
|
|
66,409 |
|
|
|
74,998 |
|
|
|
231,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
1,924,203 |
|
|
|
4,026,382 |
|
|
|
5,200,394 |
|
|
|
7,669,366 |
|
Research and development |
|
|
796,295 |
|
|
|
1,695,521 |
|
|
|
1,902,109 |
|
|
|
3,069,023 |
|
Depreciation and amortization |
|
|
76,019 |
|
|
|
244,448 |
|
|
|
152,036 |
|
|
|
460,833 |
|
Total operating expenses |
|
|
2,796,517 |
|
|
|
5,966,351 |
|
|
|
7,254,539 |
|
|
|
11,199,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
|
(2,759,375 |
) |
|
|
(5,899,942 |
) |
|
|
(7,179,541 |
) |
|
|
(10,967,761 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
1,160 |
|
|
|
- |
|
|
|
1,160 |
|
|
|
3,240 |
|
Interest expense, net |
|
|
(282,109 |
) |
|
|
(459,262 |
) |
|
|
(1,082,182 |
) |
|
|
(493,904 |
) |
Loss on debt extinguishment |
|
|
(380,741 |
) |
|
|
- |
|
|
|
(380,741 |
) |
|
|
- |
|
Conversion expense |
|
|
(7,476,000 |
) |
|
|
- |
|
|
|
(7,476,000 |
) |
|
|
- |
|
Other expense, net |
|
|
(8,137,690 |
) |
|
|
(459,262 |
) |
|
|
(8,937,763 |
) |
|
|
(490,664 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations before income taxes |
|
|
(10,897,065 |
) |
|
|
(6,359,204 |
) |
|
|
(16,117,304 |
) |
|
|
(11,458,425 |
) |
Income tax expense |
|
|
(3,255 |
) |
|
|
(7,316 |
) |
|
|
(3,255 |
) |
|
|
(8,100 |
) |
Loss from continuing
operations |
|
|
(10,900,320 |
) |
|
|
(6,366,520 |
) |
|
|
(16,120,559 |
) |
|
|
(11,466,525 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) from discontinued operations |
|
|
5,694 |
|
|
|
(206,307 |
) |
|
|
3,439 |
|
|
|
(407,030 |
) |
Gain on sale of discontinued operations |
|
|
216,069 |
|
|
|
- |
|
|
|
216,069 |
|
|
|
- |
|
Total gain (loss) from
discontinued operations |
|
|
221,763 |
|
|
|
(206,307 |
) |
|
|
219,508 |
|
|
|
(407,030 |
) |
Net loss |
|
$ |
(10,678,557 |
) |
|
$ |
(6,572,827 |
) |
|
$ |
(15,901,051 |
) |
|
$ |
(11,873,555 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Share –
Basic and Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(2.15 |
) |
|
$ |
(2.06 |
) |
|
$ |
(3.91 |
) |
|
$ |
(3.80 |
) |
Discontinued operations |
|
$ |
0.04 |
|
|
$ |
(0.07 |
) |
|
$ |
0.05 |
|
|
$ |
(0.14 |
) |
Weighted Average Shares
Outstanding – Basic and Diluted: |
|
|
5,065,556 |
|
|
|
3,084,226 |
|
|
|
4,120,849 |
|
|
|
3,014,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
authID INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
June 30, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
Current Assets: |
|
|
|
|
|
|
Cash |
|
$ |
5,981,774 |
|
|
$ |
3,237,106 |
|
Accounts receivable, net |
|
|
42,125 |
|
|
|
261,809 |
|
Other current assets |
|
|
772,943 |
|
|
|
729,342 |
|
Current assets held for sale |
|
|
- |
|
|
|
118,459 |
|
Total current assets |
|
|
6,796,842 |
|
|
|
4,346,716 |
|
|
|
|
|
|
|
|
|
|
Other Assets |
|
|
- |
|
|
|
250,383 |
|
Intangible Assets, net |
|
|
414,223 |
|
|
|
566,259 |
|
Goodwill |
|
|
4,183,232 |
|
|
|
4,183,232 |
|
Non-current assets held for
sale |
|
|
- |
|
|
|
27,595 |
|
Total assets |
|
$ |
11,394,297 |
|
|
$ |
9,374,185 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
1,230,707 |
|
|
$ |
1,154,072 |
|
Deferred revenue |
|
|
59,107 |
|
|
|
81,318 |
|
Current liabilities held for sale |
|
|
- |
|
|
|
13,759 |
|
Total current liabilities |
|
|
1,289,814 |
|
|
|
1,249,149 |
|
Non-current Liabilities: |
|
|
|
|
|
|
|
|
Convertible debt |
|
|
216,194 |
|
|
|
7,841,500 |
|
Accrued severance liability |
|
|
325,000 |
|
|
|
- |
|
Total liabilities |
|
|
1,831,008 |
|
|
|
9,090,649 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
(Note 10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity : |
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 250,000,000 shares authorized;
7,874,962 and 3,179,789 shares issued and outstanding as of June
30, 2023 and December 31, 2022, respectively |
|
|
786 |
|
|
|
318 |
|
Additional paid in capital |
|
|
165,593,921 |
|
|
|
140,257,448 |
|
Accumulated deficit |
|
|
(156,031,210 |
) |
|
|
(140,130,159 |
) |
Accumulated comprehensive (loss) income |
|
|
(208 |
) |
|
|
155,929 |
|
Total stockholders’ equity |
|
|
9,563,289 |
|
|
|
283,536 |
|
Total liabilities and stockholders’ equity |
|
$ |
11,394,297 |
|
|
$ |
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authID (NASDAQ:AUID)
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From Apr 2024 to May 2024
authID (NASDAQ:AUID)
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From May 2023 to May 2024