Stockholders' Equity

12 Months Ended

Dec. 31, 2023

Stockholders' Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 9 – STOCKHOLDERS’ EQUITY

The Company is authorized to issue 250,000,000 shares of common stock. The Company had 9,450,220 and 3,179,789 shares of common stock issued and outstanding as of December 31, 2023 and 2022, respectively. In addition, the Company is authorized to issue 20,000,000 shares of preferred stock but no shares of preferred stock have been issued.

On June 26, 2023, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to effect a one-for-eight (1-for-8 reverse split (the “Reverse Split”) of the shares of the Company’s common stock. The Reverse Split became effective on July 7, 2023. As a result of the Reverse Split, every eight shares of the Company’s issued and outstanding common stock automatically converted into one share of common stock, without any change in the par value per share, and began trading on a post-split basis under the Company’s existing trading symbol, “AUID”, when the market opened on July 10, 2023. The Reverse Split affected all holders of common stock uniformly and did not affect any common stockholder’s percentage ownership interest in the Company, except for de minimis changes as a result of the elimination of fractional shares. A total of 62,816,330 shares of common stock were issued and outstanding immediately prior to the Reverse Split, and 7,874,962 shares of common stock were issued and outstanding immediately after the Reverse Split. No fractional shares will be outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock received an additional fraction of a share of common stock to round up their holding to the next whole share. In addition, effective as of the Reverse Split, proportionate adjustments were made to all then-outstanding options and warrants with respect to the number of shares of common stock subject to such options or warrants and the exercise prices thereof, as well as to the conversion price under the remaining Convertible Notes. The impact of this change in capital structure has been retroactively applied to all periods presented herein.

Common Stock

2023 Common Stock Transactions

● On November 27, 2023, pursuant to Securities Purchase Agreements, the Company issued 1,574,990 shares of common stock for cash gross proceeds of approximately $9.4 million (or approximately $8.6 million, net of offering costs).

● On May 26, 2023, pursuant to Securities Purchase Agreements, the Company issued 1,989,676 shares of common stock for cash gross proceeds of approximately $7.3 million (or approximately $6.4 million, net of offering costs).

● On May 26, 2023, pursuant to a Securities Purchase Agreement, Mr. Garchik capitalized the outstanding principal balance of $900,000 under the Initial Promissory Note, into 245,634 shares of common stock, respectively.

● On May 26, 2023, pursuant to an exchange agreement with Holders of Convertible Notes payable, the Company issued 2,348,347 shares of common stock in exchange for Convertible Notes in the gross principal amount of approximately $8.9 million (approximately $7.9 million, net of debt issuance costs and discount). In addition, the Company recorded approximately $7.5 million of expense on conversion of convertible notes.

● The Company issued 111,516 shares of common stock for approximately $388,000 of interest accrued under the Convertible Notes and Credit Facility. See Note 7 “Convertible Notes Payable”.

● A stock option holder exercised their stock options and were issued approximately 268 shares of our common stock.

2022 Common Stock 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 132,940 shares of our common stock at prices of $24.24 per share for an outside investor and $29.60 per share for the management investors (the “PIPE”). The aggregate gross proceeds from the PIPE are approximately $3.3 million.

● The Company issued a total of 3,562 shares of our common stock to the Note Investors as an additional origination fee.

● 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 12,500 shares of our common stock with a fair market value of $24.24 per share upon the effective date of the Credit Facility.

● During the year ended December 31, 2022, the Company issued 59,980 shares of common stock for approximately $696,000 of interest related to the Convertible Notes. See Note 9 for details.

● Certain warrant, stock option and convertible note holders exercised their respective warrants and stock options and conversion right and were issued approximately 44,152 shares of our common stock.

Warrants

● On November 22, 2023, in connection with their placement agent services, the Company issued 110,249 common stock warrants to Madison Global Partners, LLC, with a term of 5 years and an exercise price of $6.000 per share.

● On May 26, 2023, in connection with their placement agent services, the Company issued 156,712 common stock warrants to Madison Global Partners, LLC, with a term of 5 years and an exercise price of $3.664 per share.

● On May 12, 2023, in connection with certain recruitment services, the Company issued 187,500 common stock warrants to Madison III, LLC with a term of 5 years and an exercise price of $3.164 per share.

● On March 21, 2022, the Company issued 17,837 common stock warrants in connection with Subscription Agreements and Convertible Notes referenced above with a term of five years and exercise price of $29.60 per share.

See Common Stock Transaction above for a further description of the warrant issuances.

The following is a summary of the Company’s warrant activity for the years ended December 31, 2023 and 2022:

				Weighted		Weighted
				Average		Average
	Number of			Exercise		Remaining
	Shares			Price		Life
Outstanding, January 1, 2022		175,482		$	36.88		3.0 Years
Granted		17,837		$	29.60		5.0 Years
Exercised/Cancelled		(39,636	)	$	33.20		-
Outstanding, December 31, 2022		153,683		$	36.96		2.0 Years
Granted		454,461		$	4.02		4.5 Years
Exercised/Cancelled		(9,877	)	$	39.60		-
Outstanding, December 31, 2023		598,267		$	11.89		3.9 Years

Stock Options

The Company has adopted the authID 2017 Incentive Stock Plan, and the 2021 Equity Incentive Plan. The Company has no other stockholder approved stock incentive plans in effect as of December 31, 2023.

On September 28, 2017, the shareholders of the Company approved the 2017 Incentive Stock Plan (“2017 Incentive Plan”) and on December 29, 2021, the shareholders of the Company approved the 2021 Equity Incentive Plan. (“2021 Plan”). The following is a summary of principal features of the 2017 Incentive Plan, and the 2021 Plan. The summary, however, does not purport to be a complete description of all the provisions of each plan. 

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 a performance condition 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.

The Company has also granted equity awards that have not been approved by security holders. On December 21, 2023 the Compensation Committee of the Company adopted an Inducement Grant Plan (the “Inducement Plan”), and allocated up to 185,000 shares of common stock of the Company to be subject to option awards under the Inducement Plan. The Inducement Plan is intended for the grant of options as an inducement to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). No options were granted under the Inducement Plan during the year ended December 31, 2023

2023 Stock Option Issuances

● During the year ended December 31, 2023, the Company granted directors a total of 78,125 options at exercise prices ranging from $2.64 to $5.48 per share.

● During the year ended December 31, 2023, the Company granted a total of 614,500 options to the Chief Executive Officer, Chief Technology Officer and Chief Financial Officer at exercise prices ranging from $2.64 to $9.25 per share.

● During the year ended December 31, 2023 the Company also granted a total of 100,000 options to certain new employees at exercise prices ranging from $6.13 to $9.85 per share.

● On December 21, 2023, the Company granted 84,625 options to certain existing employees at an exercise price of $9.25 per share.

● During the year ended December 31, 2023 the Company agreed to accelerate the vesting of 45,190 options for Annie Pham under her Retention Agreement with exercise prices ranging from $6.32 to $19.28 per share. These accelerated options would not otherwise have vested prior to termination of employment according to their Market and Service conditions. Therefore, the Company recalculated the fair market value of these options as of her termination date of August 15, 2023 using the Black Scholes method.

2022 Stock Option Issuances

● In April 2022, the Company appointed Joe Trelin as an additional independent director. The Company granted Mr. Trelin options to acquire 12,612 shares of common stock or a total of $270,000 at an exercise price of $25.04 per share for a term of ten years that vest one third per year after each Annual Meeting.

● In September 2022 the Company granted additional options to acquire 4,371 shares of common stock valued at $90,000 to each to six of the non-employee Directors, by way of annual compensation under the Company’s compensation policy for non-employee directors, which vest monthly over a one-year-period.

● Additionally, the Company granted 209,331 options to acquire common stock to employees. The options for the majority will vest annually over a one year period, 21,875 options vest monthly over a four-year period, and 21,875 performance-based and market-based options vest upon the achievement of certain market capitalization thresholds or performance conditions. 

The Company determined the grant date fair market value of the options granted during the years ended December 31, 2023 and 2022 using the Black Scholes and Monte-Carlo Method as appropriate and the following assumptions:

	2023			2022
Expected volatility		112–125	%		123–127	%
Expected term		1.04–5 Years			5 Years
Risk free rate		3.52–4.92	%		2.14–3.75	%
Dividend rate		0.00	%		0.00	%

Activity related to stock options for the years ended December 31, 2023, and 2022 is summarized as follows:

				Weighted		Weighted
				Average		Average		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Life (Yrs.)		Value
Outstanding, January 1, 2022		1,113,904		$	51.84		6.7	$	67,488,214
Granted		248,169		$	12.88		10.0	$	-
Exercised		(49,712	)	$	18.56		8.8		$
Forfeited/cancelled		(20,764	)	$	52.96		7.9	$	-
Outstanding, December 31, 2022		1,291,597		$	6.48		6.7	$	-
Granted		877,250		$	5.38		10.0	$	3,576,759
Exercised		(938	)	$	6.32		0.0	$	-
Forfeited/cancelled		(371,166	)	$	52.39		6.3	$	-
Outstanding, December 31, 2023		1,796,743		$	25.20		6.5	$	3,630,733
Exercisable, December 31, 2023		1,073,349		$	32.86		4.9	$	1,502,214

The following table summarizes stock option information as of December 31, 2023:

			Contractual
Exercise Price	Outstanding		Life (Yrs.)		Exercisable
$2.64 – $5.00		354,375		9.0		148,867
$5.01 – $10.00		561,189		9.5		154,603
$10.01 – $15.00		43,703		2.9		43,703
$15.01 – $20.00		252,084		1.8		252,084
$20.01 – $121.28		585,392		5.1		474,092
		1,796,743		6.5		1,073,349

As of December 31, 2023, there was approximately $2.7 million of unrecognized compensation costs related to employee stock options outstanding which will be recognized in 2024 through 2026. The company will recognize forfeitures as they occur. Stock compensation expense for the years ended December 31, 2023 and 2022 was approximately $0.5 million, and $8.9 million, respectively.