Stockholder's Equity

9 Months Ended

Sep. 30, 2022

Stockholder's Equity [Abstract]

STOCKHOLDER’S EQUITY

NOTE 8 – STOCKHOLDER’S EQUITY

Common Stock

During the nine months ended September 30, 2022, shares of common stock were issued as a result of the following transactions:

● On March 18 and March 21, 2022, the Company entered into Subscription Agreements (the “Subscription Agreements”) with an accredited investor and certain members of authID’s management team (the “PIPE Investors”), and, pursuant to the Subscription Agreements, sold to the PIPE Investors a total of 1,063,514 shares of our common stock at prices of $3.03 per share for an outside investor and $3.70 per share for the management investors (the “PIPE”). The aggregate gross proceeds from the PIPE are approximately $3.3 million.

●	The Company issued total of 28,496 shares of our common stock to the Note Investors as an additional origination fee. Additionally, the Company issued 191,579 shares of common stock for approximately $474,000 of interest owed from the effective date of the Convertible Notes until September 30, 2022.
	On March 21, 2022, the Company entered into a Facility Agreement with a current shareholder and noteholder of the Company, pursuant to which the shareholder agreed to provide the Company a $10.0 million unsecured standby letter of credit facility. Pursuant to the Credit Facility, the Company paid a facility commitment fee of 100,000 shares of our common stock with a fair market value of $3.03 per share upon the effective date of the Credit Facility.
●	Certain warrant, stock option and convertible note holders exercised their respective warrants and stock options and conversion right and were issued approximately 236,805 shares of our common stock.

During the nine months ended September 30, 2021, shares of common stock were issued as a result of the following transactions:

● On August 26, 2021, the Company completed the Offering of 1,642,856 shares of its common stock at a public offering price of $7.00 per share, including 214,285 shares sold upon full exercise of the underwriter’s option to purchase additional shares, for gross proceeds of approximately $11.5 million, before deducting underwriting discounts and offering expenses.

● In the first quarter of 2021, convertible notes totaling $120,000 and a portion of their accrued interest at the option of the noteholders were converted into approximately 33,000 shares of common stock of the Company.

● Additionally, during the three and nine months ended September 30, 2021, the Company received conversion notices from (i) the Stern Trust converting the principal amount, repayment premium and interest in the amount of approximately $3.5 million payable under the Restated Stern Note into approximately 561,000 shares of common stock, (ii) the 8% Note Investors converting principal and interest in the amount of approximately $0.4 million into approximately 180,000 shares of common stock and (iii) the 2020 Note Investors converting principal, repayment premium and interest in the amount of approximately $2.5 million into approximately 398,000 shares of common stock. The Stern Trust is owed approximately $0.7 million in interest under the Restated Stern Note, which has not been converted and remains outstanding. As a result, a total of approximately $6.4 million of Company indebtedness was converted and the Company issued approximately 1,138,000 shares of common stock in the aggregate.

● Certain warrant and stock option holders exercised their respective warrants and stock options by means of the cashless exercise feature and were issued approximately 549,000 common shares of the Company.

Warrants

The following is a summary of the Company’s warrant activity for the nine months ended September 30, 2022:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at December 31, 2021		1,403,610		$	4.61		3.0 years
Granted		142,690		$	3.70		5.0 years
Exercised/cancelled		(278,612	)	$	4.13		0.1 years
Outstanding at September 30, 2022		1,267,688		$	4.61		3.1 years

Stock Options

The Company determined the grant date fair value of options granted for the nine months ended September 30, 2022, using the Black Scholes Method and the following assumptions:

Expected volatility	123-127	%
Expected term	5 years
Risk free rate	2.14-3.75	%
Dividend rate	0.00	%

Activity related to stock options for the nine months ended September 30, 2022, is summarized as follows: 

	Number of Shares			Weighted Average Exercise Price		Weighted Average Contractual Term (Yrs.)		Aggregate Intrinsic Value
Outstanding as of December 31, 2021		8,910,994		$	4.50		7.5	$	67,488,214
Granted		1,351,337		$	2.37		10.0		-
Exercised		(281,031	)	$	3.28		8.8		-
Forfeited/cancelled		(86,113	)	$	6.63		7.9		-
Outstanding as of September 30, 2022		9,895,187		$	6.07		6.5	$	2,516,245
Exercisable as of September 30, 2022		5,274,760		$	5.65		4.4	$	2,250,119

The following table summarizes stock option information as of September 30, 2022: 

Exercise Price	Outstanding		Contractual Life (Yrs.)	Exercisable
$.03 - $4.00		4,636,149	5.5		3,095,020
$4.01- $7.00		151,667	3.8		151,667
$7.01 - $10.00		3,416,135	8.6		808,907
$10.01 - $15.97		1,691,236	5.2		1,219,166
		9,895,187	6.5		5,274,760

During the nine months ended September 30, 2022, the Company recognized approximately $6,727,000 of stock option based compensation expense of which approximately $2,214,000 relates to market condition-based awards of directors and officers. As of September 30, 2022, there was approximately $11,835,000 of unrecognized compensation costs related to stock options outstanding that will be expensed through 2026.