authID Inc.

Hello, and thank you for standing by. Welcome to AuthID's second quarter 2023 earnings conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, Please press start, run one again. I would now like to turn the conference over to Graham Aratt. You may begin.

Thank you, operator. Good afternoon, everyone. With me on today's call are our CEO, Ron DeGuro, and our CFO, Annie Pham. By now, you should have access to today's press release announcing our second quarter 2023 results. If you have not received this, the release can be found on our website at www. dot authid.ai under the investor relations section. Turn to slide two. Throughout this conference call, we will be presenting certain non-GAAP financial information. This information is not calculated in accordance with GAAP and may be calculated differently from other companies similarly titled non-GAAP information. Quantitative reconciliations of our non-GAAP adjusted EBITDA information to the most directly comparable GAAP financial information appear in today's press release. Before we begin our formal remarks, let me remind everyone that part of our discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these results Some of these risks are mentioned in today's press release. Others are discussed in our Form 10-K and other filings which are made available at www.sec.gov. We will have a question and answer session following our presentation. To participate in the Q&A, you must be registered on the telephone. You can find the link for telephone registration on the Investor Relations section of the AuthID website. I'd now like to introduce our CFO, Annie Phan.

Thank you, Graham. Turning to slide number three. The following highlights compare results from continuing operation for the quarter and six months ended June 30, 2023, with the quarter and six months ended June 30, 2022, unless specified otherwise. Total revenue was 0.04 million for the second quarter compared with 0.07 million a year ago. For the six-month period ended June 30, 2023, total revenue was $0.07 million compared with $0.2 million a year ago. The reduction was primarily attributed to revenue from a legacy authentication product that was discontinued in April 2022. Operating expenses declined to $2.8 million for Q2 compared with $6 million a year ago. 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 reduction was primarily due to the company's cost savings measure, resulting in lower headcount and third-party vendor costs. Loss was $10.9 million for the second quarter, with non-cash charges of $9.2 million compared with a loss of 6.4 million a year ago with non-cash charges of 3.3 million. For the six-month period in 2023, loss was 16.1 million with non-cash and one-time seven charges of 12.2 million compared with a loss for the same period last year of 11.5 million with non-cash and one-time seven charges of 5.6 million. The increase in non-cash charges in the second quarter and six month period this year was primarily due to the one-time conversion expense of 7.5 million related to the exchange of convertible notes for shares of our common stock that the company executed in May, 2023. Net loss per share was $2.15 for the second quarter compared with $2.06 a year ago For the six-month period in 2023, net loss per share was $3.91 compared with $3.80 for the same period last year. Turning to slide four, our non-GAAP results. Adjusted EBITDA loss improved to $1.7 million for Q2 compared with $3 million a year ago. primarily due to cost savings from our Q1 2023 restructuring plan. For the six-month period in 2023, adjusted EBITDA loss improved to $3.9 million compared with $5.9 million for the same period last year. The company defines book annual recurring revenue, or BAR, as the amount of annual recurring revenue represented by the estimated amounts of annual recurring revenue we believe will be earned under such contracted orders, looking out 18 months from the date of signing of each customer contract. The net amount of bar reflects the deduction of the bar of contract previously included in reported bar, which was subject to attrition during the quarter. The gross amount of bar from contract side in the second quarter of 2023 was $239,000. The net amount of bar was 221,000 after attrition compared to 32,000 a bar signed in the second quarter of 2022. The company defined annual recurring revenue or ARR as the amount of recurring revenue derived from sales of all 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 four. The amount of ARR as of June 30, 2023 was approximately 144,000 compared to approximately 118,000 in the second quarter of 2022. Turning to slide five. Over the last quarter, we have made significant progress on our efforts to improve our balance sheet and financial position. In May, the Alt-ID team and Medicine Global partners, our financial advisors, and sole placement agents executed a successful fundraise of $8.2 million in gross proceeds before expenses. The effort also included the cancellation of a $0.9 million note, including interest held by Stephen Gachik. Simultaneously with the fundraise, our team worked with our note holders to capitalize nearly all of the company convertible notes totaling approximately $8.9 million by exchanging the debt for shares of common stock. We are pleased to see the continued confidence in the future of the company as shown by our existing investors, board members, and the interest from new shareholders. Following the approval by shareholders at our most recent annual shareholder meeting, we completed a 148 reverse stock split of our common stock on Monday, July 10, 2023. As a result, every eight ECU shares of common stock will automatically combine into one share of common stock. These efforts were critical to improving our balance sheet reducing our cash requirements for a 12-month operating budget, and regaining compliance with NASDAQ listing requirements. Finally, as this will be my last quarterly earnings conference call with the company, I want to thank the investors, our board of directors, our CEO, Ron DeGuro, and my colleagues for this experience. I also want to welcome Ed Salito as he prepares to take over the CFO role. It had been a great honor to serve as a CFO, and I have every confidence in the company's continued success and wish all of you the best for the future. With that, I'd like now to turn the call over to our CEO, Ron DeGuro.