authID Inc. (NASDAQ: AUID) — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. authID sells a cloud-based biometric identity verification, authentication, account recovery and passkey-binding platform. The financial statements are unaudited and consolidate the company and its subsidiaries.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 or prior year-end |
|---|---|---|
| Revenue | $157,378 | $37,856 |
| Operating expenses | $3.311 million | $1.019 million |
| Net loss | $3.058 million | $1.784 million |
| Adjusted EBITDA, non-GAAP | Loss of $2.387 million | Loss of $2.201 million |
| Cash used in operating activities | $2.948 million | $2.170 million |
| Cash | $7.226 million | $10.177 million at Dec. 31, 2023 |
| Working capital | Approximately $6.7 million | — |
| Total liabilities | $1.851 million | $2.214 million at Dec. 31, 2023 |
| Convertible debt, net | $228,539, current | $224,424, non-current, at Dec. 31, 2023 |
The filing does not report gross profit or a gross margin. No income tax expense was recorded. There were no investing cash flows or financing cash flows in Q1 2024. The company reported 9,450,220 common shares outstanding at March 31 and May 10, 2024; weighted-average shares for Q1 2024 were 9,450,220.
Changes and notable items
- Revenue increased from a low prior-year base; management attributed the increase principally to revenue recognition from customer contracts signed in the second half of 2023.
- Net loss widened year over year, and operating cash use increased. Management said interest expense fell by about $0.8 million, principally because convertible notes were exchanged for common stock in May 2023.
- General and administrative expense rose about $1.2 million and R&D expense rose about $1.1 million. Management cited the absence in 2024 of Q1 2023 stock-compensation reversals related to employee terminations; it also cited about $1.3 million of cost savings from the 2023 restructuring in its G&A discussion.
- Stock-based compensation expense was $723,000 in Q1 2024. About $2.6 million of unrecognized option compensation remained, expected to be expensed through 2027. The company granted 100,000 options during the quarter.
- Remaining performance obligations were $4.03 million at quarter-end, including $308,000 of deferred revenue and $3.73 million of other non-cancellable contracted amounts. The company expects about 40% to be recognized over the next 12 months; timing depends partly on customer usage.
- The company had no remaining lease agreements as of July 2023. It reported no material off-balance-sheet arrangements and no subsequent events requiring disclosure.
Outlook, risks and contingencies
Going concern: Management states that substantial doubt exists about the company’s ability to continue as a going concern. The company reported an accumulated deficit of $162.6 million, Q1 operating cash use of about $2.9 million, and a Q1 net loss of about $3.1 million. Management plans to raise additional funds in 2024 and 2025 to support operations and investment, but financing may not be available on acceptable terms. Continued operations also depend on generating cash flows, customer growth and other sources of financial support.
Management’s business priorities include growing use by existing customers, winning new customers through direct sales and partners, and expanding into new markets. The filing provides no quantified revenue, profit or cash-flow guidance.
Risks discussed include limited revenue and ongoing losses, customer adoption and competition, access to capital, technology and third-party dependence, cybersecurity and fraud, key personnel, Nasdaq listing, intellectual property, international operations, economic uncertainty and geopolitical conflicts. Management noted that contractor disruption and diversification related to the wars in Ukraine and the Middle East could increase costs or delay product work, while market volatility could make fundraising more difficult. The company reported no material change in risk factors from its 2023 Form 10-K. Ordinary-course legal proceedings were disclosed, with management stating it did not expect a material adverse effect.
Disclosure controls and procedures were judged effective as of March 31, 2024; the company reported no material change in internal control over financial reporting during the quarter.
Investor facts to verify
- Cash burn and available financing: assess how long the $7.2 million quarter-end cash balance can support operations and whether planned 2024–2025 fundraising is achievable.
- Commercial traction: verify customer additions, usage, revenue conversion and the timing assumptions underlying the $4.03 million RPO, especially the estimated 40% expected within 12 months.
- Expense comparability: review the effect of prior-year stock-compensation reversals and restructuring savings when comparing operating costs and losses.
- Potential dilution: track outstanding options, warrants and any future equity or debt financing; diluted loss per share excludes securities deemed antidilutive.
- Related-party arrangement: review the services agreement with The Pipeline Group, whose founder and CEO is a company director; authID reported approximately $163,000 of related prepaid expenses at quarter-end.