{"url_path":"/sec/auid/10-q/2026/item-2","section_key":"item-2","section_title":"Item 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-14","source_url":"https://www.sec.gov/Archives/edgar/data/1534154/0001213900-26-056639-index.html","accession_number":"0001213900-26-056639","cik":"0001534154","ticker":"AUID","issuer_name":"authID Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1534154/0001213900-26-056639-index.html","primary_entity_key":"0001534154","primary_entity_name":"authID Inc."},"word_count":619,"has_tables":true,"body_markdown":"**ITEM\n2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**\n\n \n\nOn April 29, 2026, the Company closed a private\nplacement (the “April 2026 Offering”) pursuant to a Securities Purchase Agreement dated April 29, 2026 (the “April 2026\nPurchase Agreement”) with certain accredited investors (the “April 2026 Investors”). The Company issued and sold an\naggregate of $4,165,000 principal amount of its Senior Secured Debentures (the “April 2026 Debentures”) together with accompanying\nStock Purchase Warrants (the “April 2026 Warrants”).\n\n \n\nThe April 2026 Offering was conducted on a best-efforts\nbasis with Madison Global Partners, LLC acting as the non-exclusive placement agent.\n\n** **\n\n*Material Terms of the Debentures*\n\n \n\nThe April 2026 Debentures are senior secured obligations\nof the Company, maturing six months from issuance (October 2026). The Debentures do not bear interest. The obligations under the Debentures\nare secured by a first-priority security interest in substantially all of the Company’s assets pursuant to a Security Agreement\ndated as of April 29, 2026, subject only to customary permitted liens.\n\n \n\nThe April 2026 Debentures contain customary events\nof default, including failure to pay principal at maturity, bankruptcy events, and material breaches of the Transaction Documents. Upon\nan event of default, the principal amount becomes immediately due and payable at the Holder’s election.\n\n** **\n\n21\n\n \n\n** **\n\n*Material Terms of the Warrants*\n\n \n\nThe Company issued April 2026 Warrants to purchase\na number of shares of the Company’s common stock equal to 100% of the principal amount invested by each investor, at an exercise\nprice of $1.50 per share. The April 2026 Warrants have a five-year term from issuance, are exercisable beginning six months after issuance,\nand include a cashless exercise provision. The April 2026 Warrants are subject to standard anti-dilution adjustments and contain a beneficial\nownership limitation of 4.99% or 9.99% (or 19.99 % in the case of one Director) as elected by each individual April 2026 Investor.\n\n** **\n\n*Fee Shares*\n\n \n\nIn addition to the April 2026 Debentures and April\n2026 Warrants, the Company issued to the April 2026 Investors “Fee Shares” equal to 15% of the principal amount invested by\neach investor divided by $1.00 (or the Nasdaq Consolidated Closing Bid Price if the April 2026 Investor is a director of the Company).\n\n \n\n*Registration Rights*\n\n \n\nThe Company entered into a Registration Rights\nAgreement with the April 2026 Investors pursuant to which the Company agreed to register for resale the shares of common stock issuable\nupon exercise of the Warrants and the Fee Shares (the “Registrable Securities”) within ten days of the 60 day anniversary\nof the closing date in the event the Company does not consummate a subsequent financing before then. The Company has also granted the\nApril 2026 Investors standard piggyback registration rights.\n\n** **\n\n*Most Favored Nation and Conversion/Exchange\nFeature*\n\n \n\nThe April 2026 Debentures contain a most-favored-nation\nprovision with respect to subsequent financings and provide for automatic conversion/exchange into securities issued in a subsequent financing\non substantially similar economic terms (subordinate in right of payment and priority to the security issued to the lead investor in the\nsubsequent financing).\n\n** **\n\n*Nasdaq 19.99% Limitation*\n\n \n\nThe aggregate shares of common stock issuable\npursuant to the April 2026 Debentures (upon conversion/exchange) and the Fee Shares, together with the Warrant Shares (if applicable),\nshall not exceed 19.99% of the Company’s outstanding common stock immediately prior to the date of the April 2026 Purchase Agreement\nwithout stockholder approval, in accordance with Nasdaq Listing Rule 5635.\n\n \n\nThe securities offered and sold in the April\n2026 Offering were issued and sold in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of\n1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder. The April 2026 Investors represented that they are accredited\ninvestors within the meaning of Rule 501(a) of Regulation D."}