UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 (Mark One)

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year
ended December 31, 2024

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from to

 Commission file number 001-40747

 authID Inc.

 (Exact name of registrant as specified in its charter)

 Delaware

 46-2069547

 (State or other jurisdiction of

 (I.R.S. Employer

 incorporation or organization)

 Identification No.)

 1580 North Logan Street, Suite 660, Unit 51767

 Denver, CO 80203

 (Address of principal executive offices)

 Registrant's telephone number, including
area code: 516 - 274-8700

 Title of each class

 Trading Symbol:

 Name of each exchange on which registered

 Common Stock par value $0.0001 per share

 AUID

 The Nasdaq Stock Market, LLC

 Securities registered pursuant to Section 12(g)
of the Exchange Act:

 Common Stock, $.0001 par value per share

 (Title of class)

 Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act Yes No

 Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes No

 Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes
No

 Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes No

 Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company"
and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large Accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.

 Indicate by check mark whether the registrant
has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes
No

 If securities are registered pursuant to
Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements.
Yes No

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Yes No

 Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes
No

 As of June 28, 2024, the last business day of
the Registrant's most recently completed second fiscal quarter, the market value of our common stock held by non-affiliates was
$ 96,708,261 which is based on the average bid and ask price of such common equity, as of the last practical business day of the registrant's
most recently completed second fiscal quarter of $10.44.

 Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date.

 Class

 Outstanding at March10, 2025

 Common Stock, par value $0.0001

 10,920,909 shares

 Documents incorporated by reference:

 None

 GENERAL INFORMATION

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 Reserved

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspection

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accounting Fees and Services

 Item 15.

 Exhibits and Financial Statement Schedules

 SIGNATURES

 i

 FORWARD-LOOKING STATEMENTS

 Certain statements discussed in Item 1 (Business),
Item 1A (Risk Factors), Item 3 (Legal Proceedings), Item 7 (Management's Discussion and Analysis of Financial Condition and Results
of Operations), Item 7A (Quantitative and Qualitative Disclosures About Market Risk) and elsewhere in this Annual Report on Form 10-K
as well as in other materials and oral statements that the Company releases from time to time to the public constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concerning
management's expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and
other similar matters involve significant known and unknown risks, uncertainties and other important factors that could cause the actual
results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or
implied by such forward-looking statements. Such risks, uncertainties and other important factors are discussed in Item 1A (Risk Factors)
and Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations. In addition, these statements
constitute the Company's cautionary statements under the Private Securities Litigation Reform Act of 1995. It should be understood
that it is not possible to predict or identify all such factors. Consequently, the following should not be considered to be a complete
discussion of all potential risks or uncertainties. The words "anticipate," "estimate," "expect,"
"project," "intend," "believe," "plan," "target," "forecast" and
similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document
in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking
statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which the
forward-looking statement is based. It is advisable, however, to consult any further disclosures the Company makes on related subjects
in its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.

 ii

 Item 1. Business

 Overview

 authID Inc. (together with its subsidiaries, the
"Company", "authID", "we" or "our") ensures enterprises "Know Who's Behind
the Device" TM for every customer or employee login and transaction. Through its easy-to-integrate, patented, biometric
identity platform, authID quickly and accurately verifies a user's identity, eliminating any assumption of 'who' is
behind a device and preventing cybercriminals from taking over accounts. authID combines digital onboarding, biometric passwordless authentication
and account recovery, with a fast, accurate, user-friendly experience – delivering identity verification in 700ms. Establishing
a biometric root of trust for each user that is bound to their accounts, or provisioned devices, authID stops fraud at onboarding, eliminates
password risks and costs, and provides the faster, more accurate and privacy preserving user identity experience demanded by operators
of today's digital ecosystems.

 Our Platform

 Our cloud-based platform was developed with internally
developed software as well as acquired and licensed technology and provides the following core services:

 Biometric Identity Verification – Proof TM

 Biometric Identity Authentication - Verified TM

 PrivacyKey TM Privacy Preserving Biometrics

 Account / Access Recovery

 Biometric Identity Verification - Proof

 Biometric
identity verification establishes the trusted identity of a user based on a variety of ground truth sources, including
government-issued identity documents such as national IDs, driver's licenses and passports or electronic machine-readable
travel documents (or eMRTDs). Our Verified TM platform
detects presentation attack and spoofing threats, evaluates the authenticity of security features present on a government-issued
identity document, and biometrically matches the reference picture of the document with a live user's selfie (a photograph
that the user has taken of themselves). Usually occurring at account opening or onboarding, identity verification ensures that the
enterprise knows that the person interacting with the enterprise is who they say they are, in real time. authID's
Proof TM identity verification product eliminates the need for costly and less accurate face-to-face, in-person ID checks
and instead provides a verified identity in seconds. Additionally, authID's PrivacyKey technology enables customers to perform
biometric verification through the use of Public/Private Keys that is performed without storing any biometric data, which ensures
individual data privacy. In a digital, online world of increasing fraud and security threats, Proof speeds up onboarding and offers
our customers confidence in the identities of consumers, employees or third-party vendors.

 Biometric Identity Authentication - Verified

 Biometric identity authentication provides any
organization with a secure, convenient solution to validate that an individual is the verified account owner for various purposes including
passwordless login and performing specific transactions, or functions. The authID Verified product allows users to confirm their identity
with their facial biometric by simply taking a selfie on a mobile phone or device of their choosing (as opposed to dedicated hardware).
The solution includes a patented audit trail created for each transaction, containing the digitally signed transaction details, with proof
of identity authentication and consent.

 PrivacyKey Privacy Preserving Biometrics

 authID's PrivacyKey solution provides biometric authentication
without the requirement to store any biometric or derivative of biometric data. The technology transforms biometric verification into
Public/Private Key cryptography whereby the facial image of the person is converted into an elliptical public/private key pair where only
the public key is stored and the private key only exists during authentication and is deleted immediately after. The solution is compliant
to the ISO 30136 Privacy Biometric standard and provides a False Match Rate accuracy of 1:1 Billion at a False Rejection Rate of 0.3%,
as confirmed by independent tests conducted by the Commonwealth Scientific and Industrial Research Organization ("CSRIO").

 Account Access and Recovery

 authID's Verified biometric identity authentication
solution allows users to recover, via a facial biometric, account access that is lost or blocked due to expired credentials, lockouts,
lost or stolen devices, or compromised accounts. Because the account owner's root of trust is established in the cloud, recovery
is independent of any device or hardware. In this way, account recovery is instant, portable, and does not require the presence of or
access to a previously provisioned device in order to secure access from a different device.

 Key Customer Benefits

 Our solution allows our enterprise customers to:

 Verify and Authenticate users. Customers can use the
authID platform not only to verify the identity of new users, but also to authenticate those users seamlessly on an ongoing basis to
enable quick, secure logins and transaction authentications.

 Benefit from high-speed processing. Our solution returns
a very low-latency response, key to enabling high-volume use cases (such as logins and high-value transactions) and providing a frictionless
user experience.

 Precisely and accurately identify their consumers and
employees, giving the enterprise complete confidence in who is accessing their digital assets.

 Provide a seamless user experience in terms of speed and
self-guided flow, so that even users who are not tech-savvy are easily able to complete the identity verification and authentication
processes.

 Support a wide variety of devices. Our cloud-based
service is device agnostic and may be used to verify or authenticate users on any device with a camera, including shared devices, digital
kiosks, etc.

 Integrate quickly and easily. We offer pre-integrated
OIDC connections as well as integrations with several leading Identity and Access Management solutions.

 Offer broad identity document coverage. We can verify
identities using a wide spectrum of government-issued documents from around the world.

 Perform secure biometric verification & authentication
without the need to store biometric data. Our PrivacyKey technology removes the need to store any biometric data in order to perform
verification or authentication transactions. PrivacyKey verification and authentication is seamlessly delivered thru either a web or
mobile applications with a response time of less than 700ms.

 Discontinued Operations

 On May 4, 2022, the Board of Directors of authID (the "Board"
or the "Board of Directors") approved a plan to exit from certain non-core activities comprising the MultiPay correspondent
bank payments services in Colombia and the Cards Plus cards manufacturing and printing business in South Africa ("Cards Plus business").
On August 29, 2022 the Company executed and completed the sale of the Cards Plus business. On June 30, 2023, the Company completed the
sale of its legacy payments software by MultiPay, which was dissolved in August 2024. MultiPay S.A.S., and IDGS S.A.S. operations, together
with those of Cards Plus Pty Ltd., are presented as discontinued operations in the Consolidated Statements of Operations during the year
ended December 31, 2023, as they met the criteria for discontinued operations under applicable accounting guidance.

 Corporate Information

 The Company was incorporated in the State of Delaware on September
21, 2011. Our corporate headquarters is a virtual address located at 1580 North Logan Street, Suite 660, Unit 51767, Denver, CO 80203
and our main phone number is (516) 274-8700. Our website address is www.authid.ai. The information contained on, or that can be accessed
through, our website is not incorporated by reference into this Form 10-K and you should not consider information on our website to be
part of this Form 10-K.

 Global Market Opportunity

 The momentum towards a digital economy in recent
years, accompanied by a massive growth in cyberattacks, fraud, and account takeovers fueled by Artificial Intelligence are driving the
demand for more streamlined and more secure identity verification and authentication. The World Economic Forum estimates digitally enabled
platform business models will drive 70% of new economic value created over the next ten years. Yet vast amounts of data have been compromised,
and ransomware attacks have cost businesses hundreds of millions in remediation costs, lost revenue and brand equity. Passwords and device
authentication alone no longer provide the security needed to fight today's rampant cyber-attacks and account takeover schemes.

 According to Statista, cybercrime costs in the
United States alone increased to approximately $452 million in 2024 and are projected to increase to approximately $640 million in 2025
and continue rising to over $1.8 billion in 2028 (Statista: Annual Cost of Cybercrime in the U.S. 2017-2028). In the 2023 Verizon Data
Breach Investigation Report, 83% of 4,000 data breaches studied involved external actors, while 74% of all breaches were attributed to
some form of social engineering, stolen credentials, or human error. Verizon also found that Business Email Compromise (BEC) attacks now
represent more than 50% of social engineering incidents, having almost doubled in recent years. Further it is predicted that Artificial
Intelligence (AI) will almost certainly increase the volume and heighten the impact of cyberattacks over the next two years (NCSC Assessment,
Jan 1, 2024).

 Financial services, ecommerce, the sharing economy,
and healthcare businesses, among other industry verticals, are confronted by the challenges of identifying their customers, patients and
beneficiaries with ease and certainty in the digital world. Organizations across all sectors need to control access to their data and
applications by their employees. Governments around the world are enacting new data privacy regulations and pushing for stronger authentication
methods in commerce, which impose a "call to action" for many of these entities.

 These factors have created a hyper-growth market
for the identity verification and authentication industry as well as increased buyer demand for integrated identity platforms that can
provide a range of identity solutions to address the full authentication lifecycle of the user journey. The Global Biometric Technology
Market is estimated to reach a market size of $50 billion by 2024, increasing at a 20% CAGR to reach over $150 billion by 2030 (Grand
View Research, Biometric Technology Market Size, Share & Trends Analysis Report, 2023 - 2030).

 Growth Strategy

 We orient our business strategy and invest for future growth by focusing
on the following key priorities:

 Drive new customer growth. We intend to continue
to build our customer base with a focus on key markets and verticals with the strongest need for high-assurance identity verification
and authentication, including highly regulated sectors and organizations with high-risk transactions. This entails targeting less complex,
less resource-intensive opportunities, as well as larger, higher revenue-generating brands. We concentrate on enhancing or complementing
legacy platforms as a top-of-funnel, high-assurance provider where appropriate.

 Accelerate onboarding and usage within our customer
base. As we continue to acquire meaningful contracts, we intend to invest in bringing customers live on our platform quickly,
ensuring that they realize the benefits of our platform and ramp up their usage, while speeding up time to revenue.

 Strategically develop our partner network. There
are major cybersecurity and identity organizations with which we can partner to expand our customer reach quickly and efficiently. We
are identifying and pursuing strategic reseller and similar partner opportunities to complement our direct sales team.

 Innovate and advance our platform. We intend
to continue to invest in research and development and hiring top technical talent to meet the identity proofing and authentication needs
of our existing and prospective customers, as well as support new use cases, diversify our product offerings, and continually improve
our key differentiators of speed, accuracy, privacy, and user experience.

 Select Acquisitions. We intend to selectively pursue acquisitions that will help us achieve our strategic goals, enhance our technology capabilities
and accelerate growth. We believe pursuing these types of acquisitions will increase our ability to work with existing customers, add
new customers, enter new markets, develop new services and enhance our processing platform capabilities. However, we have no commitments
with respect to any such acquisitions at this time.

 Sales and Marketing

 authID provides its Verified platform based on a subscription and usage-based
model, with fees per transaction, enrolled or active users.

 We sell our platform primarily through our direct
sales team, which consists of inside sales and field sales professionals based in the United States. To power our efforts, we have built
a team of subject matter experts in the identity space, and applied a regimented sales execution strategy, allowing us to win against
competitors with comparable products but a sub-optimal approach to the market. Our leadership team significantly expanded our sales force
and technical sales support. We also use a lead generation service and digital marketing in order to carefully target potential
customers and provide qualified leads for our sales representatives to develop.

 We also work with partners such as banking infrastructure
or cybersecurity providers who provide our services to their customers through reseller arrangements and allow us to broaden our customer
reach.

 Competition

 The market for our service offerings is highly
competitive and rapidly evolving. We face competition from a broad range of providers with solutions across the identity management lifecycle,
including:

 Vendors providing identity verification or proofing through
both biometric and non-biometric solutions (such as data-based verification using identity proxies, such as DMV records and addresses),
both on-premise and cloud-based.

 Vendors of passwordless identity authentication using device-based
and cloud-based biometrics.

 Larger companies providing identity and access management
platforms, adding identity authentication services to their offering at low/no cost.

 New entrants seeking to develop and market competing technologies.

 It is also possible that, as the digital identity
market continues to grow and evolve, larger companies with significant resources may increase their presence in the market and develop
competing solutions through internal efforts or partnerships with existing players.

 Due to our ability to serve both identity verification
and authentication needs, as well as the tendency for enterprises to acquire multiple digital identity solutions, we can and often do
co-exist with competing products within our customer base.

 Research and Development

 Our research and development team is responsible
for the design, development, testing and quality of our platform as well as any new technologies, features, integrations and improvements.
The team includes specialists in software engineering, user experience, quality assurance, product management, infrastructure, and technical
writing. Our employees are located primarily in the United States, with additional sub-contractors based in Europe, India and the Caribbean.
We intend to continue to invest in our technology to strengthen and expand our platform to stay ahead of our competition and meet the
evolving needs of our current and prospective customers.

 Intellectual Property

 We rely on a combination of patents, trademarks,
copyrights, trade secrets and contractual provisions to protect our proprietary technology. For example, we enter into confidentiality
and invention assignment agreements with our employees, consultants and other third parties, and control access to software, services,
documentation and other proprietary information. We believe the duration of our patents is adequate relative to the expected lives of
our service offerings. We also purchase or license technology that we incorporate into our products or services. While it may be necessary
in the future to seek or renew licenses relating to various aspects of our products, we believe, based upon past experience and industry
practice, such licenses generally could be obtained on commercially reasonable terms.

 Governmental Regulations

 Due to the security applications and biometric
technology associated with the Company's products and platforms, the activities and operations of the Company are subject to license
restrictions and other regulations, such as (without limitation) export controls and other security regulation by government agencies.
Expansion of the Company's activities in areas such as financial services may require government licensing in different jurisdictions
and may subject it to additional regulation and oversight.

 Data protection legislation in various countries
in which the Company does business may require it to register its databases with governmental authorities in those countries and to comply
with additional disclosure and consent requirements with regard to the collection, storage and use of personal information of individuals
resident in those countries. Several US states have adopted or are considering adopting a Biometric Information Privacy Act, or BIPA modelled
on the Illinois statute, which governs the collection, processing, storage and distribution of biometric information such as facial biometric
templates and fingerprints. Several of these new statutes give individuals rights of action to sue violators, which have resulted in several
class action lawsuits. These regulations could have a significant impact on our business.

 Human Capital

 As of December 31, 2024, the Company had a total
of 46 employees who are located in the United States, Latvia and Colombia as well as outsourced service providers. There are 31 employees
in the United States who provide overall Company strategic, business and technological leadership. Employees in the U.S. and Latvia receive
health benefits on a cost-sharing basis and employees in Colombia are provided the respective Government required benefits.

 Subsidiaries

 Currently, the Company has four U.S. subsidiaries:
Innovation in Motion Inc., Fin Holdings, Inc., ID Solutions Inc. and authID Gaming Inc. The Company had one subsidiary in Colombia: MultiPay
S.A.S. which was dissolved as of August 2, 2024. The Company has one subsidiary in the United Kingdom: Ipsidy Enterprises Limited. The
Company is the sole shareholder of all its subsidiaries.

 Available Information

 Our Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and any amendment to these reports are filed with the SEC. Such reports and other information filed by us
with the SEC are available free of charge on our website at investors.authid.ai as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the SEC. The SEC maintains an internet site that contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC at www.sec.gov. The information contained on the
websites referenced in this Form 10-K is not incorporated by reference into this filing.

 Recent Developments

 None.

 Item 1A. Risk Factors

 Summary of Risk Factors The following summarizes
the principal factors that make an investment in our company speculative or risky, all of which are more fully described in the Risk Factors
section below. This summary should be read in conjunction with the Risk Factors section and should not be relied upon as an exhaustive
summary of the material risks facing our business. The following factors could result in harm to our business, reputation, revenue, financial
results, and prospects, among other impacts:

 We have a history of losses and we may not be able to achieve
profitability going forward.

 We have yet to achieve positive cash flow and, given our
projected funding needs, our ability to generate positive cash flow is uncertain.

 Our limited operating history makes it difficult for us to
evaluate our future business prospects and make decisions based on those estimates of our future performance.

 There can be no assurance that we will successfully commercialize
our products that are currently in development or that our existing products will sustain market acceptance.

 We depend upon key personnel and need additional personnel.

 Acquisitions present many risks that could have a material
adverse effect on our business and results of operations.

 The market for our products is characterized by changing
technology, requirements, standards and products, is impacted by the growing use of AI technologies and we may be adversely affected
if we do not respond promptly and effectively to these changes.

 Issues relating to the development and use of AI, including
generative AI, in our offerings may result in reputational harm, liability and adverse financial results.

 If our technology and solutions are not adopted and used
by customer organizations, we will not be able to grow our business and our operations will be negatively affected.

 We have in the past entered into and may seek in the future
to enter into contracts with governments, as well as state and local governmental agencies and municipalities, which subjects us to certain
risks associated with such types of contracts.

 We may have to seek business through a competitive bidding
process.

 We rely in part on third-party software to develop and provide
our solutions.

 We depend upon a small number of large sales with contractual
commitments ranging from $500,000 up to $10,000,000, which take longer to close and may result in a concentration of business and unpredictable
quarterly revenue.

 Our efforts to expand our international operations are subject
to a number of risks, any of which could adversely reduce our future international sales and increase our losses.

 We are exposed to risks in operating in foreign markets,
which may make operating in those markets difficult and thereby force us to curtail our business operations.

 Cyber-attacks, breaches of network or information technology
security, presentation attacks, natural disasters, pandemics, or terrorist attacks could have an adverse effect on our business.

 The wars in Ukraine and the Middle East may impact the business
of the Company, the markets in which it operates and the financial markets, in which the Company needs to raise capital.

 Interruptions, delays in service or defects in our systems
could impair the delivery of our services and harm our business.

 Third parties could obtain access to our proprietary information
or could independently develop similar technologies.

 Third parties may assert that we are infringing their intellectual
property rights; IP litigation could require us to incur substantial costs even when our efforts are successful.

 Our officers, directors and holders of 5% of outstanding
shares together beneficially own a significant portion of our Common Stock and, as a result, can exercise control over stockholder and
corporate actions.

 We face competition. Some of our competitors have greater
financial or other resources, longer operating histories and greater name recognition than we do and one or more of these competitors
could use their greater resources and/or name recognition to gain market share at our expense or could make it very difficult for us
to establish market share.

 Government regulation, specifically that relating to data
privacy protection could negatively impact the business.

 Our business is subject to changing regulations regarding
corporate governance, disclosure controls, internal control over financial reporting and other compliance areas that will increase both
our costs and the risk of noncompliance. If we fail to comply with these regulations, we could face difficulties in preparing and filing
timely and accurate financial reports.

 Our amended and restated bylaws designate certain courts
as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit
our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

 There can be no assurance that we will be able to comply
with the continued listing standards of the Nasdaq Capital Market. Our failure to meet the continued listing requirements of the Nasdaq
Capital Market could result in a de-listing of our Common Stock.

 Sales of a substantial number of shares of our Common Stock
in the public market by our existing stockholders could cause our share price to fall.

 We may be subject to securities litigation, which is expensive
and could divert management attention.

 If securities or industry analysts do not publish or cease
publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative
reports regarding our business or our Common Stock, our stock price and trading volume could decline.

 The market price of our common stock has been volatile and
your investment in our stock could suffer a decline in value.

 We do not anticipate paying any cash dividends in the foreseeable
future.

 We have a history of losses and we may not be able to achieve profitability
going forward.

 We have an accumulated deficit of approximately
$173.8 million as of December 31, 2024 and incurred an operating loss of approximately $14.3 million for the year ended December 31, 2024.
We have had net losses in most of our quarters since our inception. We expect that we will continue to incur net losses in 2025. We may
incur losses in the future for a number of reasons, including the other risks described in this report, and we may encounter unforeseen
expenses, difficulties, complications, delays and other unknown events. Accordingly, we may not be able to achieve or maintain profitability.
Our management is developing plans and executing certain programs to alleviate the negative trends and conditions described above, however
there is no guarantee that such plans will be successfully implemented. Our ability to curtail our operating losses or generate a profit
may be further impacted by the fact that our business plan is largely unproven. There is no assurance that even if we successfully implement
our business plan, that we will be able to curtail our losses. If we incur significant additional operating losses, our stock price may
decline, perhaps significantly and the Company will need to raise substantial additional capital in order to be able to continue to operate,
which will dilute the existing stockholders and such dilution may be significant. Additional capital may not be available on terms acceptable
to the Company, or at all. As there can be no assurance that the Company will be able to achieve positive cash flows (become cash flow
positive) and raise sufficient capital to maintain operations, there is substantial doubt about the Company's ability to continue
as a going concern.

 We have yet to achieve positive cash flow and, given our projected
funding needs, our ability to generate positive cash flow is uncertain.

 We have had negative cash flow from operating
activities of approximately $11.6 million and approximately $8.4 million for the years ended December 31, 2024 and 2023, respectively.
We anticipate that we will continue to have negative cash flows from operating activities through at least the next 12 months as we expect
to incur increased research and development, sales and marketing, and general and administrative expenses. Our business will require significant
amounts of working capital to support our growth, particularly as we seek to introduce our new offered products. An inability to generate
positive cash flow from operations may adversely affect our ability to raise needed capital for our business on reasonable terms, if at
all. It may also diminish supplier or customer willingness to enter into transactions with us, and have other adverse effects that may
impact our long-term viability. There can be no assurance we will achieve positive cash flows in the foreseeable future.

 We need access to additional financing, which
may not be available to us on acceptable terms, or at all. If we cannot access additional financing when we need it and on acceptable
terms, our business, prospects, financial condition, operating results and ability to continue as a going concern will be adversely affected.
As a result of these factors, there is substantial doubt about the Company's ability to continue as a going concern.

 Our growth-oriented business plan to offer products
to our customers will require continued capital investment. Our research and development activities will also require continued investment.
We raised approximately $10.0 million and $15.4 million net proceeds after expenses in 2024 and 2023, respectively, through equity and
debt financing at varying terms.

 Our limited operating history makes it difficult
for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.

 We have a limited operating history and have generated
limited revenue. As we look to further expand our existing products it is difficult, if not impossible, to forecast our future results
based upon our historical data. Because of the uncertainties related to our lack of historical operations, we may be hindered in our ability
to anticipate and timely adapt to increases or decreases in revenues or expenses. If we make poor budgetary decisions as a result of unreliable
historical data, we could be less profitable or incur additional losses, which may result in a decline in our stock price.

 There can be no assurance that we will successfully
commercialize our products that are currently in development or that our existing products will sustain market acceptance.

 There is no assurance that we will ever successfully
commercialize our platform and related solutions or that we will experience market reception for our products in development or increased
market reception for our existing products. There is no guarantee that we will be able to successfully implement our new products utilizing
the acquired and internally developed technology, products, and customer base. There is no assurance that our existing products or solutions
will achieve market acceptance or that our new products or solutions will achieve market acceptance. Further, there can be no guarantee
that we will not lose business to our existing or potential new competitors.

 We depend upon key personnel and need additional personnel.

 On March 23, 2023, Rhon Daguro was appointed as
our Chief Executive Officer. Our success depends on the continued services of Mr. Daguro and of certain other members of the current management
team. Our executive team is incentivized by stock compensation grants that align the interests of investors with the executive team and
certain executives have employment retention agreements. The loss of key management, engineering employees or third-party contractors
could have a material and adverse effect on our business operations. Additionally, the success of our operations will largely depend upon
our ability to successfully attract and maintain competent and qualified key management personnel. As with any company with limited resources,
there can be no guarantee that we will be able to attract such individuals or that the presence of such individuals will necessarily translate
into profitability for our company. If we are successful in attracting and retaining such individuals, it is likely that our payroll costs
and related expenses will increase significantly and that there will be additional dilution to existing stockholders as a result of equity
incentives that may need to be issued to such management personnel. Our inability to attract and retain key personnel may materially and
adversely affect our business operations. Any failure by our management to effectively anticipate, implement, and manage personnel required
to sustain our growth would have a material adverse effect on our business, financial condition, and results of operations.

 Acquisitions present many risks that could have a material adverse
effect on our business and results of operations.

 In the past we have closed acquisitions of various
companies. We may also pursue select acquisitions in the future. The success of our future growth strategy will depend on our ability
to integrate our existing operations, together with any future acquisition of which none are planned at this date. Integrating the operations
of our existing business with any future acquisitions, including anticipated cost savings and additional revenue opportunities, involves
a number of challenges. The failure to meet these integration challenges could seriously harm our results of operations and the market
price of our shares may decline as a result. Realizing the benefits of any future acquisition will depend in part on the integration of
intellectual property, products, operations, personnel and sales force and the completion of assignments of current and past contracts
and rights. These integration activities are complex and time-consuming, and we may encounter unexpected difficulties or incur unexpected
costs. We may not successfully integrate our existing and acquired operations, and may not realize the anticipated net reductions in costs
and expenses and other benefits and synergies of the acquisition to the extent, or in the timeframe, anticipated. In addition to the integration
risks, we could face numerous other risks, including, but not limited to, the following:

 diversion of our management's attention from normal
daily operations of our business;

 our inability to maintain the key business relationships
and the reputations of the businesses we acquire;

 dilution to stockholders resulting from any acquisitions,
which are paid for with Company securities;

 increased costs related to acquired operations and continuing
support and development of acquired products;

 our responsibility for the liabilities of the businesses
we acquire;

 changes in how we are required to account for our acquisitions
under accounting principles generally accepted in U.S.;

 our inability to apply and maintain our internal standards,
controls, procedures and policies to acquired businesses; and

 potential loss of key employees of the companies we acquire.

 The occurrence of any of these risks could have
a material adverse effect on our business, results of operations, financial condition or cash flows, particularly in the case of a larger
acquisition, or concurrent acquisitions.

 The market for our products is characterized
by changing technology, requirements, standards and products, is impacted by the growing use of AI technologies and we may be adversely
affected if we do not respond promptly and effectively to these changes.

 The market for our identity verification and authentication
products is characterized by evolving technologies, changing industry standards, changing political and regulatory environments, frequent
new product introductions and rapid changes in customer requirements. The introduction of products embodying new technologies and the
emergence of new industry standards and practices can render existing products obsolete and unmarketable. In addition, cyberattack attempts
are increasing in number, magnitude, and technical sophistication, and we expect emerging technologies to contribute to the increasing
sophistication of attacks and to lead to new threats. For example, threat actors are leveraging emerging artificial intelligence (or,
AI) technologies to develop new hacking tools and attack vectors, generate deep fake images, exploit vulnerabilities, obscure their activities,
and increase the difficulty of threat attribution. The use of AI by bad actors can increase both the sophistication and ease of production
and therefore proliferation of these new threats. Our future success will depend on our ability to enhance our existing products and to
develop, or acquire and introduce, on a timely and cost-effective basis, new products and product features that counter these AI threats,
keep pace with technological developments and emerging industry standards and address the increasingly sophisticated needs of our customers.
In the future:

 we may not be successful in developing and marketing new
products or product features that respond to new AI driven cyberattacks, technological change, or evolving industry standards;

 we may experience difficulties that could delay or prevent
the successful development, or acquisition, introduction and marketing of these new products and features; or

 our new products and product features may not adequately
meet the requirements of the marketplace and achieve market acceptance.

 If we are unable to respond promptly and effectively
to new cybersecurity threats and attacks, changing technologies and market requirements, we will be unable to compete effectively in the
future.

 There can be no assurance that we will successfully
identify new product opportunities and develop and bring new products to market in a timely manner, or that the products and technologies
developed by others will not render our products or technologies obsolete or noncompetitive. The failure of our new product development
efforts could have a material adverse effect on our business, results of operations and future growth.

 Issues relating to
the development and use of AI, including generative AI, in our offerings may result in reputational harm, liability and adverse financial
results.

 Social, ethical and operational
issues relating to the use of AI, including generative AI, in our offerings may result in reputational harm, liability and additional
costs. We are incorporating AI technologies, developed by third parties, into our offerings. If our AI development, deployment, data privacy
and product disclosures, or governance is ineffective or inadequate, it may result in incidents that impair the public acceptance of our
AI solutions, or cause harm to individuals, customers or society, or result in our offerings not working as intended or producing unexpected
outcomes.

 Jurisdictions around
the world are developing and passing new regulations that apply specifically to the use of AI. For example, the EU AI Act was adopted
in 2024 and will be implemented in phases through 2030, and other jurisdictions are considering similarly focused legislation. These regulations
and the evolving AI regulatory environment may, among other impacts, result in inconsistencies among AI regulations and frameworks across
jurisdictions, increase our compliance, governance and research and development costs, increase our exposure to claims related to our
AI models and increase liability related to the use of AI by our customers or users that are beyond our control. There can be no guarantee
that future AI regulations will not adversely impact us or conflict with our approach to AI, including affecting our ability to make our
offerings available without costly changes, delaying or halting development of our offerings, requiring us to change our development practices,
go to market strategies and indemnity protections and subjecting us to additional compliance requirements, regulatory action, competitive
harm, reputational harm and legal liability. To the extent we rely on third-party AI technologies in our products, services and solutions,
we will face risks inherent in how those technologies and their AI models have been developed and deployed.

 Uncertainty around new
and evolving AI uses may require significant, additional investment. We may in the future experience, challenges accessing AI models,
datasets or hardware. Developing, testing and deploying AI systems and countermeasures to AI threats outlined above, may also increase
the cost of our offerings, including due to the nature of the computing costs.

 If our technology and solutions are not adopted
and used by customer organizations, we will not be able to grow our business and our operations will be negatively affected.

 Our ability to grow depends significantly on whether
organizations of various types and sizes adopt our technology and solutions as part of their new standards. If these organizations do
not adopt our technology, we may not be able to penetrate some of the new markets we are targeting, or we may lose some of our existing
customer base.

 In order for us to achieve our growth objectives,
our identity verification and authentication technologies and solutions must be adapted to and adopted in a variety of areas including,
among others, computer and online systems access control, and identity verification for transaction authentication purposes.

 We cannot accurately predict the future growth
rate, if any, or the ultimate size of these markets. The growth of the market for our products and services depends on a number of factors
such as the cost, performance and reliability of our products and services compared to the products and services of our competitors, customer
perception of the benefits of our products and solutions, public perception of the intrusiveness of these solutions and the manner in
which organizations use the information collected, customer satisfaction with our products and services and marketing efforts and publicity
for our products and services. Our products and services may not adequately address market requirements and may not gain wide market acceptance.
If our solutions or our products and services do not gain wide market acceptance, our business and our financial results will suffer.

 We have in the past entered into and may seek
in the future to enter into contracts with governments, as well as state and local governmental agencies and municipalities, which subjects
us to certain risks associated with such types of contracts.

 Most contracts with governments or with state
or local agencies or municipalities, or Governmental Contracts, are awarded through a competitive bidding process, and some of the business
that we expect to seek in the future will likely be subject to a competitive bidding process (See "We may have to seek business
through a competitive bidding process" below).

 We may not be afforded the opportunity in the
future to bid on contracts that are held by other companies and are scheduled to expire, if the governments, or the applicable state or
local agency or municipality determines to extend the existing contract. If we are unable to win new contract awards or retain those contracts,
if any, that we are awarded over any extended period, our business, prospects, financial condition and results of operations will be adversely
affected.

 In addition, Governmental Contracts subject us
to risks associated with public budgetary restrictions and uncertainties, actual contracts that are less than awarded contract amounts,
the requirement for posting a performance bond and the related cost and cancellation at any time at the option of the governmental agency.
Any failure to comply with the terms of any Governmental Contracts could result in substantial civil and criminal fines and penalties,
as well as suspension from future contracts for a significant period of time, any of which could adversely affect our business by requiring
us to pay significant fines and penalties or prevent us from earning revenues from Governmental Contracts during the suspension period.

 Additionally, we are subject to the U.S. Foreign
Corrupt Practices Act, or the FCPA, and other laws in the United States and elsewhere that prohibit improper payments or offers of payments
to United States', or foreign governments and their officials and political parties for the purpose of obtaining or retaining business.
Our activities in the United States and elsewhere create the risk of unauthorized payments or offers of payments by one of our employees,
contractors or customers that could be in violation of various laws, including the FCPA, even though these parties are not always subject
to our control. We have implemented safeguards to discourage these practices by our employees, consultants and customers. However, our
existing safeguards and any future improvements may prove to be less than effective, and our employees, contractors or customers may engage
in conduct for which we might be held responsible. Violations of the FCPA or similar laws may result in severe criminal or civil sanctions
and we may be subject to other liabilities, which could adversely affect our business, financial condition and results of operations.

 Governments may be in a position to obtain greater
rights with respect to our intellectual property than we would grant to other entities. Governmental agencies also have the power, based
on financial difficulties or investigations of their contractors, to deem contractors unsuitable for new contract awards. Because we will
engage in the government contracting business, we will be subject to additional regulatory and legal compliance requirements, as well
as audits, and may be subject to investigation, by governmental entities. Compliance with such additional regulatory requirements is likely
to result in additional operational costs in performing such Governmental Contracts which may impact on our profitability. Failure to
comply with the terms of any Governmental Contract could result in substantial civil and criminal fines and penalties, as well as suspension
from future contracts for a significant period of time, any of which could adversely affect our business by requiring us to pay fines
and penalties and prohibiting us from earning revenues from Governmental Contracts during the suspension period.

 Furthermore, governmental programs can experience
delays or cancellation of funding and suspension of appropriations has occurred, for example the partial United States government shutdown
in 2018/19 and current congressional uncertainty over the debt ceiling which could lead to a further shutdown, which can be unpredictable;
this may make it difficult to forecast our revenues on a quarter-by-quarter basis.

 We may have to seek business through a competitive bidding process.

 Competitive bidding, whether for contracts with governments or with
private enterprises, presents a number of risks, including:

 the frequent need to compete against companies or teams of
companies with more financial and marketing resources and more experience than we have in bidding on and performing major contracts;

 the substantial cost and managerial time and effort necessary
to prepare bids and proposals for contracts that may not be awarded to us;

 the need to accurately estimate the resources and cost structure
that will be required to service any fixed-price contract that we are awarded; and

 the expense and delay that may arise if our competitors protest
or challenge new contract awards made to us pursuant to competitive bidding or subsequent contract modifications, and the risk that any
of these protests or challenges could result in the resubmission of bids on modified specifications, or in termination, reduction or
modification of the awarded contract.

 If we are unable to win particular contracts that
are awarded through the competitive bidding process, we will incur expenses associated with such competitive bidding and may not be able
to operate in the market for the products and services that are provided under those contracts for a number of years.

 We rely in part on third-party software to develop and provide our
solutions.

 We rely in part on software licensed from third
parties to develop and offer some of our solutions. Any loss of the right to use any such software or other intellectual property required
for the development and maintenance of our solutions, or any defects or other issues with such software could result in problems or delays
in the provision of our solutions until equivalent technology is either developed by us, or, if available from others, is identified,
obtained, and integrated, which could harm our business.

 We depend upon a small number of large sales
with contractual commitments ranging from $500,000 up to $10,000,000, which take longer to close and may result in a concentration of
business and unpredictable quarterly revenue.

 We derive a substantial portion of our revenues
from a small number of sales with large contractual commitments ranging from $500,000 up to $10,000,000. We have changed the product set
of the business and have developed a new range of software as a service (SaaS) based products and solutions, which are in a lower price
range and intended to generate recurring revenue from a large number of customers. We have at the same time changed our marketing focus
to target major enterprises, which involve a longer sales cycle but if we are successful in securing contracts with multi-million dollar
contractual commitments with such enterprises, we believe that such contracts will generate substantial, sustainable revenue growth. At
the same time, we are also focusing our efforts in expanding our channel partner relationships, in the expectation that these will bring
additional sales that will be quicker and easier to close. We are still endeavoring to enter into multi-year contracts for our new products
with minimum commitments ranging in price from $50,000 to $10,000,000 and we may, or may not, be successful in achieving such sales. If
we are successful in securing the major contractual commitments that we are targeting, that may result in concentration of our business
amongst a small number of customers, the loss of any one of which could have significant adverse effects on our revenue and financial
situation. Additionally, the longer sales and implementation cycle of major enterprises may delay the recognition of revenue and adversely
affect our results of operations in the meantime. Some of our large contractual commitments are from enterprises, which are at an early
stage of business development and the ramp in their business and processing volumes may be unpredictable. Accordingly, our quarterly results
are difficult to predict because we cannot predict in which quarter, if any, substantial sales (whether measured in commitment volumes,
or number of contracts) will occur in a given year, nor when (if at all), or at what rate the ramp in sales of new products will occur.
As a result, we believe that quarter-to-quarter comparisons of our sales are not a good indication of our future performance. In some
future quarters, our sales may be below the expectations of securities analysts and investors, in which case the market price of our Common
Stock may decrease significantly.

 Our efforts to expand our international operations are subject to
a number of risks, any of which could adversely reduce our future international sales and increase our losses.

 Most of our revenues historically to date are
attributable to sales and business operations in jurisdictions other than the United States. Although we are now focusing our efforts
in generating more United States based revenues, we continue to pursue international sales, in particular in Asia and Europe. Our international
operations could be subject to a number of risks, any of which could adversely affect our future international sales and operating results,
including:

 local Data Privacy and other regulations;

 trade restrictions;

 import duties and tariffs;

 export regulations or restrictions including sanctions;

 uncertain political, regulatory and economic developments;

 labor and social unrest;

 inability to protect our intellectual property rights;

 highly aggressive competitors;

 currency issues, including currency exchange risk;

 difficulties in staffing, managing and supporting foreign
operations;

 longer payment cycles;

 increased collection risks;

 impact of the Coronavirus or other pandemics; and

 impact of wars and terrorism

 Negative developments in any of these areas in
one or more countries could result in a reduction in demand for our products, the cancellation or delay of orders already placed, difficulty
in collecting receivables, and a higher cost of doing business, any of which could adversely affect our business, results of operations
or financial condition.

 We are exposed to risks in operating in foreign markets, which may
make operating in those markets difficult and thereby force us to curtail our business operations.

 In conducting our business in foreign countries,
we are subject to political, economic, legal, operational and other risks that are inherent in operating in other countries. Risks inherent
to operating in other countries range from difficulties in settling transactions in emerging markets to possible nationalization, expropriation,
price controls and other restrictive governmental actions. We also face the risk that exchange controls or similar restrictions imposed
by foreign governmental authorities may restrict our ability to convert local currency received or held by us in their countries into
U.S. dollars or other currencies, or to take those dollars or other currencies out of those countries.

 It is possible that countries in which we do or
intend to do business, or companies and their principals become subject to sanctions under U.S. law. This would prevent us from doing
business with those countries or with those entities or individuals. We could be exposed to fines and penalties in the event of breach
any applicable sanctions legislation or orders. In addition, we might be required to suspend or terminate existing contracts in order
to comply with such sanctions, legislation or orders, which would adversely impact our future revenues and cash flows.

 Cyber-attacks, breaches of network or information
technology security, presentation attacks, natural disasters, pandemics, or terrorist attacks could have an adverse effect on our business.

 Cyberattacks or other breaches of network or information
technology (IT) security, natural disasters, pandemics such as Covid-19, terrorist acts or acts of war may cause equipment failures or
disrupt our systems and operations. We may be subject to attempts to breach the security of our networks and IT infrastructure through
cyber-attack, presentation attacks to biometric data capture systems, including deep fakes and other threats developed by use of AI driven
technologies, malware, computer viruses and other means of unauthorized access. While we regularly review our security policies, protocols,
controls and systems to determine their effectiveness for detection and prevention of such attacks, and to make improvements and fix any
known vulnerabilities where necessary, new means and methods for such attacks are constantly being developed by bad actors, facilitated
by the easy access to generative AI and we may not become aware of such new attacks or vulnerabilities prior to being subject to such
an attack. There is no guarantee that we can prevent all such attacks, even if we become aware of their potential. While we maintain insurance
coverage for some of these events, the potential liabilities associated with these events could exceed the insurance coverage we maintain.
A failure to protect the privacy of customer and employee confidential data against breaches of network or IT security could result in
damage to our reputation. To date, we have not been subject to cyberattacks or other cyber incidents that we are aware of which, individually
or in the aggregate, resulted in a material impact to our operations or financial condition.

 For us to further penetrate the marketplace, the
marketplace must be confident that we provide effective security protection for governmental and other secured identification documents
and other personally identifiable information or protected personal information, or PII. Although we are not aware that we have experienced
any act of sabotage or unauthorized access by a third party of our software or technology to date, if an actual or perceived breach of
security occurs in our internal systems or those of our customers, regardless of whether we caused the breach, it could adversely affect
the market's perception of our products and services. This could cause us to lose customers, resellers, alliance partners or other
business partners, thereby causing our revenues to decline. If we or our customers were to experience a breach of our internal systems,
our business could be severely harmed by adversely affecting the market's perception of our products and services.

 Most recently, we have considered the impact of
pandemics (e.g. COVID-19) on our overall operations. The impact of any disease which may give rise to a pandemic in the United States
and worldwide are unknown, and the widespread growth in infections, or travel restrictions, quarantines or site closures imposed as a
result of disease, among other things, may impact the ability of our employees, sub-contractors, or our customers' employees and
sub-contractors to attend places of work, to meet with potential customers, or undertake implementations at our customer's locations.
In addition, such a disease could lead to disruptions in our supply chain, causing shortages or unavailability of software updates, or
necessary equipment. Any of these outcomes could have a material adverse effect on our business, financial condition, results of operations,
and cash flows.

 The wars in Ukraine and the Middle East may
impact the business of the Company, the markets in which it operates and the financial markets, in which the Company needs to raise capital.

 The wars in Ukraine and the Middle East may impact
the Company and its operations in a number of different ways, which are yet to be fully assessed and are therefore uncertain. The Company's
principal concern is for the safety of the personnel who support from those regions. The Company works with third party sub-contractors
for outsourced services, including software engineering and development, some of whom are based in Eastern Europe. The Company also works
with outsourced engineers and developers and third-party providers in other parts of the world, including the United States, Europe, India,
and Latin America. While the continuing impact of this conflict and the response of the United States and other countries to it by means
of trade and economic sanctions, or other actions is still unknown, it could disrupt our ability to work with certain contractors. The
Company has taken steps to diversify its sub-contractor base, which may in the short term give rise to additional costs and delays in
delivering software and product upgrades.

 The uncertainty impacting and potential interruption
in energy and other supply chains resulting from military hostilities in Europe and the Middle East and the response of the United States
and other countries to it by means of trade and economic sanctions, or other actions, may give rise to increases in costs of goods and
services generally and may impact the market for our products as prospective customers reconsider additional capital expenditure, or other
investment plans until the situation becomes clearer. On the other hand, the threat of increased cyber-attacks from multiple threat actors,
including state-sponsored organizations may prompt enterprises to adopt additional security measures such as those offered by the Company.

 For so long as the hostilities continue and perhaps
even thereafter as the situation in Europe and the Middle East unfolds, we may see increased volatility in financial markets and a flight
to safety by investors, which may impact our stock price and make it more difficult for the Company to raise additional capital at the
time when it needs to do so, or for financing to be available upon acceptable terms. All or any of these risks separately, or in combination
could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

 Interruptions, delays in service or defects in our systems could
impair the delivery of our services and harm our business.

 We depend on the efficient and uninterrupted operation
of our computer network systems, software, telecommunications networks, and processing centers, as well as the systems and services of
third parties, in order to provide services to our customers. All of our network systems are hosted "in the cloud" by internationally
recognized third party service providers such as Microsoft Azure and Amazon Web Services. Our systems and host data centers are vulnerable
to damage or interruption from, among other things, fire, natural disaster, power loss, telecommunications failure, terrorist acts, war,
unauthorized entry, human error, and computer viruses or other defects. They may also be subject to break-ins, sabotage, intentional acts
of vandalism and similar misconduct. We have security, backup and recovery systems in place, and business continuity plans that will be
designed to ensure our systems will not be inoperable. However, there is still a risk that a system outage or data loss may occur which
would not only damage our reputation but could also require the payment of penalties or damages to our clients if our systems do not meet
certain operating standards. Despite precautions taken at these facilities, the occurrence of a natural disaster or an act of sabotage
or terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result
in lengthy interruptions in our service. Our property and business interruption insurance may not be applicable or adequate to compensate
us for all losses or failures that may occur.

 Any damage to, failure of, or defects, bugs or
errors in our systems or those of third parties, errors or delays in the processing of payment or other transactions, telecommunications
failures or other difficulties could result in loss of revenue, loss of customers, loss of customer and consumer data, harm to our business
or reputation, exposure to fraud losses or other liabilities, negative publicity, additional operating and development costs, and diversion
of technical and other resources.

 Third parties could obtain access to our proprietary information
or could independently develop similar technologies.

 Our success depends in part on our ability to
protect our core technology and intellectual property. To date, we have relied primarily on a combination of patents, patent applications,
trade secret and copyright laws, as well as nondisclosure and other contractual restrictions on copying, reverse engineering and distribution
to protect our proprietary technology. There can be no assurance that any of our patent applications will result in the issuance of a
patent or that the examination process will not require us to narrow our claims in any application. In addition, any patents may be contested,
circumvented, found unenforceable or invalid and we may not be able to prevent third parties from infringing on them.

 Despite the precautions we take, third parties
may copy or obtain and use our technologies, ideas, know-how and other proprietary information without authorization or may independently
develop technologies similar or superior to our technologies. In addition, the confidentiality and non-competition agreements between
us and most of our employees, distributors and clients may not provide meaningful protection of our proprietary technologies or other
intellectual property in the event of unauthorized use or disclosure. If we are not able to successfully defend our industrial or intellectual
property rights, we may lose rights to technologies that we need to develop our business, which may cause us to lose potential revenues,
or we may be required to pay significant license fees for the use of such technologies.

 Our current patents and any patents that we may
register in the future may provide only limited protection for our technology and may not be sufficient to provide competitive advantages
to us. For example, competitors could be successful in challenging any issued patents or, alternatively, could develop similar or more
advantageous technologies on their own or design around our patents. Any inability to protect intellectual property rights in our technology
could enable third parties to compete more effectively with us.

 In addition, the laws of certain foreign countries
may not protect our intellectual property rights to the same extent as do the laws of the United States. Our means of protecting our intellectual
property rights in the United States or any other country in which we operate may not be adequate to fully protect our intellectual property
rights.

 Third parties may assert that we are infringing
their intellectual property rights; IP litigation could require us to incur substantial costs even when our efforts are successful.

 We may face intellectual property litigation,
which could be costly, harm our reputation, limit our ability to sell our products, force us to modify our products or obtain appropriate
licenses, and divert the attention of management and technical personnel. Our products employ technology that may infringe on the proprietary
rights of others, and, as a result, we could become liable for significant damages and suffer other harm to our business.

 We have not been subject to material intellectual
property litigation to date. Litigation may be necessary in the future to enforce any patents we have or may obtain and/or any other intellectual
property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against
claims of infringement or invalidity, and we may not prevail in any such future litigation. Litigation, whether or not determined in our
favor or settled, could be costly, could harm our reputation and could divert the efforts and attention of our management and technical
personnel from normal business operations. In addition, adverse determinations in litigation could result in the loss of our proprietary
rights, subject us to significant liabilities, require us to seek licenses from third parties, prevent us from licensing our technology
or selling or manufacturing our products, or require us to expend significant resources to modify our products or attempt to develop non-infringing
technology, any of which could seriously harm our business.

 Our products contain technology provided to us
by third parties. Because we did not develop such technology ourselves, we may have little or no ability to determine in advance whether
such technology infringes the intellectual property rights of any other party. Our suppliers and licensors may not be required to indemnify
us in the event that a claim of infringement is asserted against us, or they may be required to indemnify us only with respect to intellectual
property infringement claims in certain jurisdictions, and/or only up to a maximum amount, above which we would be responsible for any
further costs or damages. In addition, we have indemnification obligations to certain parties with respect to any infringement of third-party
patents and intellectual property rights by our products. If litigation were to be filed against these parties in connection with our
technology, we would be required to defend and indemnify such parties.

 Our officers, directors and holders of 5% of
outstanding shares together beneficially own a significant portion of our Common Stock and, as a result, can exercise control over stockholder
and corporate actions.

 Our officers and directors and the holders of
at least 5% of the outstanding shares of the Company currently beneficially own approximately 20% of our outstanding Common Stock, and
24% on a fully diluted basis assuming the exercise of both vested and unvested options and warrants. As such, they have a significant
influence over most matters requiring approval by stockholders, including the election of directors and approval of significant corporate
transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control, which in turn could
have a material adverse effect on the market price of the Company's Common Stock or prevent stockholders from realizing a premium
over the market price for their Shares.

 We face competition. Some of our competitors
have greater financial or other resources, longer operating histories and greater name recognition than we do and one or more of these
competitors could use their greater resources and/or name recognition to gain market share at our expense or could make it very difficult
for us to establish market share.

 The market for our service offerings is highly
competitive and rapidly evolving. We face competition from a broad range of providers with solutions across the identity management lifecycle,
including:

 Vendors providing identity verification or proofing through
both biometric and non-biometric solutions (such as data-based verification using identity proxies, such as DMV records and addresses),
both on-premise and cloud-based.

 Vendors of passwordless identity authentication using device-based
and cloud-based biometrics.

 Larger companies providing identity and access management
platforms, adding identity authentication services to their offering at low/no cost.

 New entrants seeking to develop and market competing technologies.

 It is also possible that, as the digital identity
market continues to grow and evolve, larger companies with significant resources may increase their presence in the market and develop
competing solutions through internal efforts or partnerships with existing players.

 Due to our ability to serve both identity verification
and authentication needs, as well as the tendency for enterprises to acquire multiple digital identity solutions, we can and often do
co-exist with competing products within our customer base.

 The resources available to our competitors to
develop new products and introduce them into the marketplace exceed the resources currently available to us. Some of our competitors have
longer operating histories and greater name recognition than we do and one or more of these competitors could use their greater resources
and/or name recognition to gain market share at our expense or could make it very difficult for us to establish market share. As a result,
our competitors may be able to compete more aggressively and sustain that competition over a longer period of time that we can. This intense
competitive environment may require us to make changes in our products, pricing, licensing, services, distribution, or marketing to develop
a market position. Each of these competitors has the potential to capture market share in our target markets, which could have an adverse
effect on our position in our industry and on our business and operating results.

 Government regulation, specifically that relating to data privacy
protection could negatively impact the business.

 We do not have or require any approval from government
authorities or agencies in order to operate our regular business and operations. However, data protection legislation in various countries
in which the Company does business (including India and the EEA) may require it to register its databases with governmental authorities
in those countries and to comply with additional disclosure and consent requirements with regard to the collection, storage and use of
personal information of individuals resident in those countries. To the extent that our contracts are with Governmental or regulated entities,
the relevant government authorities will need to approve us as a supplier and the terms of those contracts. However, it is possible that
any proposed expansion to our business and operations in the future would require government approvals. Due to the security applications
and biometric technology associated with our products and platforms the activities and operations of our company are or could become subject
to license restrictions and other regulations, such as (without limitation) export controls and other security regulation by government
agencies. As indicated in, "We are exposed to risks in operating in foreign markets" above, the imposition of sanctions on
particular countries, entities or individuals would prevent us from doing business with such countries, entities or individuals. If our
existing and proposed products become subject to licensing, export control and other regulations, we may incur increased costs necessary
to comply with existing and newly adopted or amended laws and regulations or penalties for any failure to comply. Our operations could
be adversely affected, directly or indirectly, by existing or future laws and regulations (and amendments thereto) relating to our business
or industry.

 Some states in the United States have adopted
legislation governing the collection, use of, and storage of biometric information and other states are considering such legislation.
Specifically, several states are considering adopting a Biometric Information Privacy Act, or BIPA modelled on the Illinois statute, which
governs the collection, processing, storage and distribution of biometric information such as facial biometric templates and fingerprints.
Several of these new statutes give individuals rights of action to sue violators, which have resulted in a number of class action lawsuits.
The widespread adoption of such legislation could result in restrictions on our current or proposed business activities, or we may incur
increased costs to comply with such regulations.

 We are required to comply with stringent, complex,
and evolving laws, rules, regulations, and standards in many jurisdictions, as well as contractual obligations, relating to cybersecurity
and data privacy. Our compliance efforts are complicated by the fact that these requirements and obligations may be subject to uncertain
or inconsistent interpretations and enforcement, and may conflict among various jurisdictions. Any failure or perceived failure by us
to comply with applicable laws, rules, regulations, standards, certifications, or contractual obligations, or any compromise of security
that results in unauthorized access to, or unauthorized loss, destruction, use, modification, acquisition, disclosure, release, or transfer
of personal information, may result in outcomes such as: requirements to modify or cease certain operations or practices; the expenditure
of substantial costs, time, and other resources; proceedings or actions against us; legal liability; governmental investigations; enforcement
actions; claims; fines; judgments; awards; penalties; sanctions; and potentially costly litigation (including class actions).

 Our business is subject to changing regulations
regarding corporate governance, disclosure controls, internal control over financial reporting and other compliance areas that will increase
both our costs and the risk of noncompliance. If we fail to comply with these regulations, we could face difficulties in preparing and
filing timely and accurate financial reports.

 We are subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act. We are also subject
to the corporate governance and other listing rules of the Nasdaq Stock Market LLC ("Nasdaq"). Maintaining compliance with
these rules and regulations, particularly as we have ceased to be an emerging growth company, will increase our legal, accounting and
financial compliance costs, will make some activities more difficult, time-consuming and costly and may also place increased strain on
our personnel, systems and resources.

 The Sarbanes-Oxley Act requires, among other things,
that we maintain effective disclosure controls and procedures and at the time we cease to be a smaller reporting company, we will be required
to provide attestation that we maintain effective disclosure controls and procedures by our registered public accounting firm. Any failure
to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating
results or cause us to fail to meet our reporting obligations. Any failure to implement and maintain effective internal control also could
adversely affect the results of periodic management evaluations regarding the effectiveness of our internal control over financial reporting
that are required to include in our periodic reports filed with the SEC, under Section 404(a) of the Sarbanes-Oxley Act or the annual
auditor attestation reports regarding effectiveness of our internal controls over financial reporting that we will be required to include
in our periodic reports filed with the SEC upon our ceasing to be a smaller reporting company, unless we meet certain criteria that would
require such reports to be included prior to then, under Section 404(b) of the Sarbanes-Oxley Act. Ineffective disclosure controls and
procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other
information, which would likely have a negative effect on the trading price of shares of our Common Stock.

 In order to maintain the effectiveness of our
disclosure controls and procedures and internal control over financial reporting going forward, we will need to expend significant resources
and provide significant management oversight. There is a substantial effort involved in continuing to implement appropriate processes,
document our system of internal control over relevant processes, assess their design, remediate any deficiencies identified and test their
operation. As a result, management's attention may be diverted from other business concerns, which could harm our business, operating
results and financial condition. These efforts will also involve substantial accounting-related costs. We may experience difficulty in
meeting these reporting requirements in a timely manner.

 As disclosed in our previous filings, we had a
material weakness in our control over financial reporting starting with the quarter ended June 30, 2023. Management has taken action to
remediate the various elements of this material weakness, with immediate effect in relation to the financial statements for the year ending
December 31, 2023. We remediated this material weakness and put in place a process to undertake an ongoing review of the Company's
activities during each quarter to identify the potential complex accounting matters and if necessary to engage a professional CPA advisory
firm to review the proposed accounting treatment on these complex accounting matters that may arise in the future.

 If we are unable to maintain key controls currently
in place or that we implement in the future and pending such implementation, or if any difficulties are encountered in their implementation
or improvement, (1) our management might not be able to certify, and our independent registered public accounting firm might not be able
to report on, the adequacy of our internal control over financial reporting, which would cause us to fail to meet our reporting obligations,
(2) misstatements in our financial statements may occur that may not be prevented or detected on a timely basis and (3) we may be deemed
to have significant deficiencies or material weaknesses, any of which could adversely affect our business, financial condition and results
of operations.

 Implementing any appropriate changes to our internal
controls may require specific compliance training of our directors, officers and employees, entail substantial costs in order to modify
our existing accounting systems, and take a significant period of time to complete. Such changes may not, however, be effective in maintaining
the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial
statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. In the
event that we are not able to demonstrate compliance with Section 404 of the Sarbanes-Oxley Act in a timely manner, our internal controls
are perceived as inadequate or that we are unable to produce timely or accurate financial statements, our stock price could decline and
we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial
and management resources.

 Our amended and restated bylaws designate certain
courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could
limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

 Our amended and restated bylaws provide that,
unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for:
(i) any derivative action or proceeding brought on behalf of the Company; (ii) any action asserting a claim for breach of a fiduciary
duty owed by any director, officer, employee, or agent of ours to us or our stockholders; (iii) any action asserting a claim arising pursuant
to any provision of the Delaware General Corporation Law, the Certificate of Incorporation, or the bylaws; and (iv) any action asserting
a claim governed by the internal affairs doctrine (the "Delaware Forum Provision"). In addition, our amended and restated
bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have
notice of and consented to the Delaware Forum Provision.

 Section 27 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability
created by the Exchange Act or the rules and regulations thereunder. As a result, the Delaware Forum Provision will not apply to suits
brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance
with the federal securities laws and the rules and regulations thereunder.

 We recognize that the Delaware Forum Provision
in our amended and restated bylaws may impose additional litigation costs on stockholders in pursuing any such claims, particularly if
the stockholders do not reside in or near the State of Delaware. Additionally, the Delaware Forum Provision may limit our stockholders'
ability to bring a claim in a forum that they find favorable for disputes with us or our directors, officers or employees, which may discourage
such lawsuits against us and our directors, officers and employees even though an action, if successful, might benefit our stockholders.
The Court of Chancery of the State of Delaware may also reach different judgments or results than would other courts, including courts
where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more
or less favorable to us than our stockholders.

 There can be no assurance that we will be able
to comply with the continued listing standards of the Nasdaq Capital Market. Our failure to meet the continued listing requirements of
the Nasdaq Capital Market could result in a de-listing of our Common Stock.

 We cannot assure you that we will be able to comply
with the continuing listing requirements that we are required to meet in order to maintain a listing of our Common Stock on the Nasdaq
Capital Market. If we fail to satisfy the continued listing requirements of the Nasdaq Capital Market, such as the minimum bid price requirement,
or the minimum stockholder's equity requirement, the Nasdaq Capital Market may take steps to de-list our Common Stock. Such a de-listing
would likely have a negative effect on the price of our Common Stock and would impair our stockholders' ability to sell or purchase
our Common Stock when they wish to do so. In the event of a de-listing, we would take actions to restore our compliance with the Nasdaq
Capital Market's listing requirements, but we can provide no assurance that any action taken by us would result in our Common Stock
becoming listed again, or that any such action would stabilize the market price or improve the liquidity of our Common Stock.

 Sales of a substantial number of shares of
our Common Stock in the public market by our existing stockholders could cause our share price to fall.

 Sales of a substantial number of shares of our
Common Stock in the public market, or the perception that these sales might occur, including sales by our executive officers, directors
and significant stockholders could depress the market price of our Common Stock and could impair our ability to raise capital through
the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our
Common Stock.

 We may be subject to securities litigation, which is expensive and
could divert management attention.

 In the past, companies that have experienced volatility
in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation
in the future. Litigation of this type could result in substantial costs and diversion of management's attention and resources,
which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.

 If securities or industry analysts do not publish
or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish
negative reports regarding our business or our Common Stock, our stock price and trading volume could decline.

 The trading market for our Common Stock will be
influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors.
We do not have any control over these analysts and we cannot provide any assurance that analysts will cover us or provide favorable coverage.
If any of the analysts who may cover us adversely change their recommendation regarding our shares, or provide more favorable relative
recommendations about our competitors, our stock price would likely decline. If any analysts who may cover us were to cease coverage of
the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our
stock price or trading volume to decline.

 The market price of our common stock has been volatile and your
investment in our stock could suffer a decline in value.

 The market price of our common stock has experienced
significant price and volume fluctuations. For example, during the three-year period ended December 31, 2024, the closing price of our
common stock ranged from $2.40 to $114.64. In addition, the stock market has from time-to-time experienced significant price and volume
fluctuations that have particularly affected the market prices for the common stock of technology companies and that have often been unrelated
to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of our common
stock. You may not be able to resell your shares at or above the price you paid for them due to fluctuations in the market price of our
stock caused by changes in our operating performance or prospects and other factors.

 Some specific factors, in addition to the other risk factors identified
above, that may have a significant effect on the price of our stock, many of which we cannot control, include but are not limited to:

 our announcements or our competitors' announcements
of technological innovations;

 actual or anticipated quarterly variations in operating results;

 variance in our financial performance from our own financial
guidance, or from expectations of securities analysts;

 changes in our product pricing policies or those of our competitors;

 our involvement in claims of infringement of intellectual
property rights or other litigation;

 the public's reaction to our press releases, our other
public announcements and our filings with the SEC;

 changes in accounting standards, policies, guidance, interpretations
or principles;

 changes in our growth rate or our competitors' growth
rates;

 developments regarding our patents or proprietary rights
or those of our competitors;

 our inability to raise additional capital as needed;

 changes in financial markets or general economic conditions,
or in market valuations of other technology companies;

 short sales, hedging and other derivative transactions and
short selling campaigns involving our capital stock;

 sales of stock by the Company, or members of our management team or Board or significant stockholders; and

 changes in stock market analyst recommendations or earnings
estimates regarding our stock, other comparable companies or our industry generally.

 We do not anticipate paying any cash dividends in the foreseeable
future.

 We have never declared or paid cash dividends,
and we do not anticipate paying cash dividends in the foreseeable future. Therefore, investors should not rely on an investment in our
Common Stock as a source for any future dividend income. Our board of directors has complete discretion as to whether to distribute dividends.
Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend
on our future results of operations and cash flow, our capital requirements and surplus, our financial condition, contractual restrictions
and other factors deemed relevant by our board of directors.

 Item 1B. Unresolved Staff Comments

 None.

 Item 1C. Cybersecurity

 Cyber criminals are becoming more sophisticated
and effective every day, and they are increasingly targeting companies similar to ours operating in the technology, software and identification
space. All companies utilizing technology are subject to threats of breaches of their cybersecurity programs. To mitigate the threat to
our business, we take a comprehensive approach to cybersecurity risk management and make securing the data customers and other stakeholders
entrust to us a top priority. Our Board of directors and our management are actively involved in the oversight of our risk management
program, of which cybersecurity represents an important component. As described in more detail below, we have established policies, standards,
processes and practices for assessing, identifying, and managing material risks from cybersecurity threats. We have devoted significant
financial and personnel resources to implement and maintain security measures to meet regulatory requirements and customer expectations,
and we intend to continue to make significant investments to maintain the security of our data and cybersecurity infrastructure. There
can be no guarantee that our policies and procedures will be properly followed in every instance or that those policies and procedures
will be effective to prevent cyberattack incidents. Such incidents, whether or not successful, could result in our incurring significant
costs related to, for example, rebuilding our internal systems, implementing additional threat protection measures, providing modifications
or replacements to our products and services, defending against litigation, responding to regulatory inquiries or actions, paying damages,
providing customers with incentives to maintain a business relationship with us, or taking other remedial steps with respect to third
parties, as well as incurring significant reputational harm. In addition, these threats are constantly evolving, thereby increasing the
difficulty of successfully defending against them or implementing adequate preventative measures. We have seen an increase in cyberattack
volume, frequency, and sophistication. Although our Risk Factors include further detail about the material cybersecurity risks we face,
we believe that as of the date of this Annual Report on Form 10-K, risks from prior cybersecurity threats, have not materially affected
our business to date. We can provide no assurance that there will not be incidents in the future or that they will not materially affect
us, including our business strategy, results of operations, or financial condition.

 Risk Management and Strategy

 Our policies, standards, processes and practices
for assessing, identifying, and managing material risks from cybersecurity threats are based on frameworks established by the International
Organization for Standardization, specifically ISO/IEC 27001:2013 and other applicable industry standards. We have established comprehensive
Information Security Management Systems ("ISMS") policies, which are independently reviewed and audited annually for conformity
and effectiveness under ISO/IEC 27001. Our cybersecurity program in particular focuses on the following key areas:

 Collaboration

 Our cybersecurity risks are identified and addressed
through a comprehensive, cross-functional approach. Key security, risk, and compliance stakeholders, including a member of the Board meet
at least monthly in our Security Steering Committee (the "Security Committee") to develop strategies for preserving the confidentiality,
integrity and availability of our company and customer information, identifying, preventing and mitigating cybersecurity threats, and
effectively responding to cybersecurity incidents. We maintain controls and procedures that are designed to ensure prompt escalation of
certain cybersecurity incidents so that decisions regarding public disclosure and reporting of such incidents can be made by management
and the Board in a timely manner.

 Risk Assessment

 At least annually, we conduct a cybersecurity
risk assessment that takes into account information from internal stakeholders, known information security vulnerabilities, and information
from external sources (e.g., reported security incidents that have impacted other companies, industry trends, and evaluations by third
parties and consultants). The results of the assessment are used to drive alignment on, and prioritization of, initiatives to enhance
our security controls, make recommendations to improve processes, and inform a broader enterprise-level risk assessment that is presented
to our Board and members of management. Risk assessment is integral to all engineering, business and operational decisions and in addition
to the annual reviews, is an ongoing effort, as circumstances and facts arise.

 Self Audit

 At least annually we conduct a self-audit of our
information security management systems ("ISMS"), in order to identify if there is any non-conformance with our ISMS policies
and procedures. The results of the self-audit are reported to our Steering Committee and our external auditor for ISO/IEC 27001 compliance.

 Technical Safeguards

 We regularly assess and deploy technical safeguards
designed to protect our information systems from cybersecurity threats. Such safeguards are regularly evaluated and improved based on
vulnerability assessments, cybersecurity threat intelligence and incident response experience.

 Incident Response and Recovery Planning

 We have established comprehensive incident response
and recovery plans and continue to regularly test and evaluate the effectiveness of those plans. Our incident response and recovery plans
address — and guide our employees, management and the Board on — our response to a cybersecurity incident.

 Third-Party Risk Management

 We have implemented controls designed to identify
and mitigate cybersecurity threats associated with our use of third-party service providers. Such providers are subject to security risk
assessments at the time of onboarding and contract renewal. We use a variety of inputs in such risk assessments, including information
supplied by providers and third parties. In addition, we require our providers to meet appropriate security requirements, controls and
responsibilities.

 Education and Awareness

 Our policies require each of our employees to
contribute to our data security efforts. We regularly remind employees of the importance of handling and protecting customer and employee
data, including through regular privacy and security training and testing to enhance employee awareness of how to detect and respond to
cybersecurity threats.

 External Assessments

 Our cybersecurity policies, standards, processes
and practices are regularly assessed by consultants and external independent auditors. These assessments include a variety of activities
including information security assessments, audits and independent reviews of our ISMS, control environment and operating effectiveness.
For example, in 2023 and 2024, we conducted independent audits to assess our ISMS against the ISO/IEC 27001:2013 standard and received
certification of compliance with the standard. We also undertake regular penetration testing of our systems. The results of significant
assessments are reported to management and the Board. Cybersecurity processes are adjusted based on the information provided from these
assessments. We have also obtained industry certifications and attestations that demonstrate our dedication to protecting the data our
customers entrust to us.

 Governance

 Board Oversight

 Our Board, in coordination with the Security Committee,
oversees our management of cybersecurity risk. They receive regular reports from management about the prevention, detection, mitigation,
and remediation of cybersecurity incidents, including material security risks and information security vulnerabilities. Our Security Committee
directly oversees our cybersecurity program. The Board receives periodic updates from management on cybersecurity risk resulting from
risk assessments, progress of risk reduction initiatives, external auditor feedback, control maturity assessments, and relevant internal
and industry cybersecurity incidents.

 Management's Role

 Our Chief Technology Officer ("CTO"),
Senior Vice President of Engineering ("SVP-Engineering"), Data Engineering and Security Director and General Counsel have
primary responsibility for assessing and managing material cybersecurity risks and are members of management's Security Committee,
which is a governing body that drives alignment on security decisions across our company. The Security Committee meets monthly to review
security performance metrics, identify security risks, and assess the status of approved security enhancements. The Security Committee
also considers and makes recommendations on security policies and procedures, security service requirements, and risk mitigation strategies.

 Our CTO has served in various roles in information
technology and information security for over 35 years, which have covered operations management experience in Government Security, Identity
Access Management and SaaS solutions industries. Our SVP-Engineering has over 30 years of experience in software development and engineering,
starting in the U.S. Marine Corps. Our Data Engineering and Security Director has over 10 years experience in information technology,
with a focus on data engineering and information security. Our General Counsel has over 12 years of experience managing risks, including
risks arising from cybersecurity threats, at several publicly-traded technology companies.

 Item 2. Properties

 The Company's Headquarters are now located
1580 North Logan Street, Suite 660, Unit 51767, Denver, CO 80203. This is a virtual office address, we do not have any physical offices
and all employees work remotely.

 Item 3. Legal Proceedings

 From time to time the Company is a party to various
legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty,
we have no reason to believe that the outcome of such proceedings will have a material adverse effect on the financial condition or results
of operations of the Company.

 Item 4. Mine Safety Disclosures

 Not applicable.

 Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities

 Market Information

 The high and low per share closing sales prices of the
Company's stock on the Nasdaq Market (ticker symbol AUID) for each quarter for the years ended December 31, 2024 and 2023 were
as follows:

 Quarter Ended

 High

 Low

 March 31, 2023

 $
 5.84

 $
 2.40

 June 30, 2023

 $
 7.12

 $
 2.80

 September 30, 2023

 $
 10.96

 $
 6.43

 December 31, 2023

 $
 9.94

 $
 5.78

 March 31, 2024

 $
 11.95

 $
 7.01

 June 30, 2024

 $
 11.79

 $
 7.16

 September 30, 2024

 $
 10.79

 $
 6.29

 December 31, 2024

 $
 8.12

 $
 5.21

 Holders of our Common Stock

 As of March 10, 2025, there were approximately
128 stockholders of record of our common stock. This number does not include shares held by brokerage clearing houses, depositories or others
in unregistered form. The stock transfer agent for our securities is Computershare Shareholder Services, PO Box 505000, Louisville, Kentucky
40233.

 Dividends

 The Company has never declared or paid any cash
dividends on its common stock. The Company currently intends to retain future earnings, if any, to finance the expansion of its business.
As a result, the Company does not anticipate paying any cash dividends in the foreseeable future.

 Securities Authorized for Issuance Under Equity Compensation Plans
as of December 31, 2024

 Plan

 Number
of

Securities

to be

issued upon

exercise of

outstanding

options,

awards and

rights

 average

 exercise

 price of

 outstanding

 options,

 awards and

 rights

 Number
 of

 securities

 remaining

 available for

 issuance

 under equity

 compensation

 plans

 (excluding)

 securities

 reflected in

 first column)

 Equity compensation plans approved by security holders - 2017 Incentive Stock Plan

 403,498

 32.52

 -

 Equity compensation plans approved by security holders - 2021 Equity Incentive Plan

 815,078

 6.64

 -

 Equity compensation plans approved by security holders - 2024 Equity Incentive Plan

 158,135

 8.67

 340,262

 Equity compensation plans not approved by security holders

 770,689

 32.38

 -

 The Company has adopted the authID Inc. 2017 Incentive
Stock Plan, 2021 Equity Incentive Plan, and 2024 Equity Incentive Plan. The Company has no other equity incentive plans in effect as of
December 31, 2024.

 On September 28, 2017, the shareholders of the
Company approved the 2017 Incentive Stock Plan ("2017 Incentive Plan"). On December 29, 2021 the shareholders of the Company
approved the 2021 Equity Incentive Plan ("2021 Plan"). On June 26, 2024, the shareholders of the Company approved the 2024
Equity Incentive Plan ("2024 Plan"). The following is a summary of principal features of the 2017 Incentive Plan, the 2021
Plan, and the 2024 Plan. The summaries, however, do not purport to be a complete description of all the provisions of each plan.

 The 2017 Incentive Plan initially authorized Awards
over 604,167 shares of common stock and at the Annual Meeting of Stockholders held on March 22, 2021, the stockholders approved and ratified
an increase of 312,500 shares allocated to the 2017 Incentive Plan. No further awards may be made under the 2017 Incentive Plan. The 2021
Plan initially authorized Awards over 156,250 shares as well as (a) the balance of the shares which were not allocated to awards under
the 2017 Incentive Plan and (b) any shares which are forfeited or cancelled under awards that lapse or expire under the prior plans. At
the Annual Meeting of Stockholders held on June 26, 2023, the stockholders approved and ratified an increase of 362,500 shares to the
2021 Plan. No further awards may be made under the 2021 Incentive Plan. The 2024 Plan initially authorized 395,000 shares as well as (a)
the balance of the shares which were not allocated to awards under the 2021 Incentive Plan and (b) any shares which are forfeited or cancelled
under awards that lapse or expire under the prior plans. All plans are administered by the Compensation Committee.

 Under each plan, options may be granted which
are intended to qualify as Incentive Stock Options ("ISOs") under Section 422 of the Internal Revenue Code of 1986 (the "Code")
or which are not ("Non-ISOs") intended to qualify as Incentive Stock Options thereunder. Other types of equity awards may
also be granted under each of the plans include but are not limited to restricted stock, restricted stock units, and stock appreciation
rights, which together with the ISOs and Non-ISOs are hereinafter collectively referred to as "Awards". Each
of the plans are not considered qualified deferred compensation plan under Section 401(a) of the Internal Revenue Code and are not subject
to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").

 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 may not require a performance condition in order to
vest the equity comprised in the relevant Award.

 Any option granted under any of the Plans must
provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise
price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair
market value on the date of the grant. The Plans further provide that with respect to ISOs the aggregate fair market value of the common
stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The term of each
Plan option and the manner in which it may be exercised is determined by the board of directors or the compensation committee, provided
that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an
eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. In the event of any stock
split of our outstanding common stock, the board of directors may adjust (a) the number of shares (i) reserved under the Plan and available
for awards, (ii) covered by outstanding awards, (b) the exercise prices related to outstanding awards and (c) the appropriate Fair Market
value and other price determinations for any awards in order to give effect to such stock split. Subject to the limitation on the aggregate
number of shares issuable under the Plan, there is no maximum or minimum number of shares as to which Award may be granted to any person.

 In addition, the Compensation Committee has from
time to time approved the grant of options to purchase shares of common stock by way of Inducement Grants to new employees, which are
outside the approved Plans, pursuant to Nasdaq Listing Rule 5635(c)(4). During 2024 the Company granted 300,000 such options. The options
so granted are Non-ISOs and the terms of the Inducement Grants are contained in an agreement between the participant and the Company
which are consistent with the Awards issued under the 2021 and 2024 Plans.

 The Company filed a Registration Statement on
Form S-8 on November 12, 2021, with respect to the 2017 Incentive Plan and all outstanding Awards set forth in the above table. The Company
filed a further Registration Statement on Form S-8 on February 1, 2022, with respect to the 2021 Plan.

 Unregistered Sales of Equity Securities

 Securities Purchase Agreement

 Between May 23 and June 7, 2023, the Company entered
into a securities purchase agreement with accredited investors (the "Purchase Agreement"), pursuant to which the Company agreed
to issue and sell, in a public offering an aggregate of 1,113,828 shares (the "Registered Shares") of the Company's
common stock and in a concurrent private placement 1,121,482 shares (the "PIPE Shares") of Common Stock (the "Offering")
at a price between $3.664 and $5.632 per share (or $4.00 if the purchaser is a director of the Company). The purchasers under the Purchase
Agreement included Stephen J. Garchik ("Garchik") and four directors of the Company, including the Chief Executive Officer
and Chairman of the Board of Directors.

 Garchik, who is a Holder (as defined below), the
collateral agent for the Convertible Notes and a shareholder of the Company, entered into that certain Amended and Restated Facility Agreement,
dated March 8, 2023 (the "A&R Facility Agreement"), with the Company and pursuant to the A&R Facility Agreement, loaned
$900,000 to the Company on March 9, 2023, pursuant to a promissory note in favor of Garchik (the "Initial Promissory Note").
In the Offering, the Company and Garchik agreed that the Company would offset the purchase price of certain shares that Garchik agreed
to purchase pursuant to the Purchase Agreement against the Company's obligations under, and the cancellation of, the A&R Facility
Agreement and the Initial Promissory Note and the related obligations of the Company's subsidiaries ID Solutions, Inc., FIN Holdings,
Inc. and Innovation in Motion, Inc. (the "Guarantors") under the guaranty that that the Guarantors had entered into as a condition
to Garchik lending under the Initial Promissory Note. Accordingly, Garchik agreed that upon the closing of the Offering, the A&R Facility
Agreement, the Initial Promissory Note and the Guaranty terminated.

 Exchange Agreement

 Between May 23 and June 7, 2023, the Company entered
into an exchange agreement with certain holders ("Holders") of the March 2022 Senior Secured Convertible Notes (the "Convertible
Notes") of the Company (the "Exchange Agreement"), pursuant to which the Company issued 2,382,700 shares (the "Exchange
Shares") of common stock to the Holders in exchange for the Holders' Convertible Notes principal balance and accrued interest
(the "Note Exchange") at a price between $3.776 and $5.80 per share or $4.12 if the Holder is a director, officer or insider
of the Company.

 Engagement Agreements

 On April 20, 2023, the Company entered into an
engagement agreement (the "Engagement Agreement") with Madison Global Partners, LLC ("Madison"), pursuant to which
Madison agreed to serve as non-exclusive exclusive placement agent for the issuance and sale of the Registered Shares and the PIPE Shares.
The Company paid Madison an aggregate cash fee equal to 7.0% of the gross proceeds received by the Company from the sale of the securities
in the Offering, $80,000 cash retainer fee and issued stock purchase warrants (the "Madison Warrants") to purchase up to 156,712
shares of common stock of the Company at an exercise price of $3.664 per share, which equal to 7.0% of the aggregate number of Shares
placed in the Offering. Pursuant to the Engagement Agreement, the Company reimbursed Madison $60,000 for fees and expenses of legal counsel
and other out-of-pocket expenses. The Engagement Agreement has indemnity and other customary provisions for transactions of this nature.
On May 12, 2023, in connection with certain recruitment services, the Company issued 187,500 common stock warrants to Madison III, LLC,
an affiliate of Madison with a term of 5 years and an exercise price of $3.164 per share.

 On November 3, 2023, the Company entered into
a further engagement agreement (the "November Engagement Agreement") with Madison, pursuant to which Madison agreed to serve
as non-exclusive exclusive placement agent for the issuance and sale in a public offering of an aggregate of 1,574,990 shares (the "November
Registered Shares"). The Company paid Madison an aggregate cash fee equal to 7.0% of the gross proceeds received by the Company
from the sale of the November Registered Shares, $80,000 cash retainer fee and issued stock purchase warrants (the "November Madison
Warrants") to purchase up to 110,249 shares of common stock of the Company with a term of 5 years at an exercise price of $6.00
per share, which equal to 7.0% of the aggregate number of Shares placed in the Offering. Pursuant to the November Engagement Agreement,
the Company reimbursed Madison $60,000 for fees and expenses of legal counsel and other out-of-pocket expenses. The November Engagement
Agreement has indemnity and other customary provisions for transactions of this nature.

 On June 12, 2024, the Company entered into a further
engagement agreement (the "June Engagement Agreement") with Madison, pursuant to which Madison agreed to serve as non-exclusive
exclusive placement agent for the issuance and sale in a public offering of an aggregate of 1,464,965 shares (the "June Registered
Shares"). The Company paid Madison an aggregate cash fee equal to 7.0% of the gross proceeds received by the Company from the sale
of the June Registered Shares, $80,000 cash retainer fee and issued stock purchase warrants (the "June Madison Warrants")
to purchase up to 102,547 shares of common stock of the Company with a term of 5 years at an exercise price of $7.50 per share, which
equal to 7.0% of the aggregate number of Shares placed in the Offering. Pursuant to the June Engagement Agreement, the Company reimbursed
Madison $60,000 for fees and expenses of legal counsel and other out-of-pocket expenses. The June Engagement Agreement has indemnity and
other customary provisions for transactions of this nature.

 Director & Executive Officer Stock Option Grants

 On June 28, 2023, the Company made a grant of
options to each of Messrs. Koehneman and Trelin and to Ms. White to acquire 15,625 shares of common stock and to each of Messrs. Jisser
and Thompson to acquire 3,125 shares of common stock. Each such option is at the exercise price of $5.48 per share, exercisable for a
period of ten years, vesting over a period of twelve months.

 On June 28, 2023, the Company made an additional
grant of options to Mr. Szoke to acquire 50,000 shares of common stock at the exercise price of $5.48 per share, exercisable for a period
of ten years, vesting subject to achievement of performance and service conditions.

 On June 28, 2023, the Company made an additional
grant of options to Mr. Daguro to acquire 183,125 shares of common stock at an exercise price of $5.48 per share, exercisable for a period
of ten years, vesting subject to achievement of performance and service conditions.

 On August 15, 2023, the Company made a grant of
options to Mr. Sellitto to acquire 50,000 shares of common stock at an exercise price of $8.87 per share, exercisable for a period of
ten years, vesting subject to achievement of performance and service conditions.

 On December 21, 2023, the Company made a grant
of options to Mr. Szoke and Mr. Sellitto to acquire 5,000 and 7,000 shares of common stock, respectively, at an exercise price of $9.25
per share, exercisable for a period of ten years, vesting over twelve months.

 On May 20, 2024, the Company made a grant of options
to Mr. Mehta to acquire 13,282 shares of common stock at the exercise price of $7.78 and exercisable for a period of ten years, subject
to achievement of service conditions.

 On August 13, 2024, the Company made a grant of
options to each of Messrs. Mehta, Jisser, Koehneman, Thompson and to Ms. White to acquire 15,627 shares of common stock. Each such option
is at the exercise price of $8.67 per share, exercisable for a period of ten years, vesting over a period of twelve months.

 On November 12, 2024, the Company made a grant
of options to Mr. Erick Soto to acquire 100,000 shares of common stock at an exercise price of $6.94, exercisable for a period of ten
years, vesting over a period of thirty-six months.

 Other Stock Option Grants

 In addition, the Company issued options by way of Inducement Grants
to new employees, which are outside the approved Plans, pursuant to Nasdaq Listing Rule 5635(c)(4).

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

 During the year ended December 31, 2024, the Company
granted a total of 200,000 such options to certain new employees at exercise prices ranging from $5.99 per share to $9.61 per share.

 All the offers and sales of securities listed
above were made to accredited investors. The issuance of the above securities is exempt from the registration requirements under Section
4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder.

 Item 6. Reserved.

 Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

 The discussion and analysis of our financial condition
and results of operations are based on our financial statements, which we have prepared in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP"). The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis,
we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience
and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

 As used in this "Management's Discussion
and Analysis of Financial Condition and Results of Operation," except where the context otherwise requires, the term "we,"
"us," "our," "authID" or "the Company," refers to the business of authID Inc.

 Overview

 authID Inc. (together with its subsidiaries, the
"Company", "authID", "we" or "our") ensures enterprises "Know Who's Behind
the Device" TM for every customer or employee login and transaction. Through its easy-to-integrate, patented, biometric
identity platform, authID quickly and accurately verifies a user's identity, eliminating any assumption of 'who' is
behind a device and preventing cybercriminals from taking over accounts. authID combines digital onboarding, biometric passwordless authentication
and account recovery, with a fast, accurate, user-friendly experience – delivering identity verification in 700ms. Establishing
a biometric root of trust for each user that is bound to their accounts, or provisioned devices, authID stops fraud at onboarding, eliminates
password risks and costs, and provides the faster, more accurate and privacy preserving user identity experience demanded by operators
of today's digital ecosystems.

 Our Platform

 Our cloud-based platform was developed with internally
developed software as well as acquired and licensed technology and provides the following core services:

 Biometric Identity Verification – Proof TM

 Biometric Identity Authentication - Verified TM

 PrivacyKey TM Privacy Preserving Biometrics

 Account / Access Recovery

 Biometric Identity Verification - Proof

 Biometric
identity verification establishes the trusted identity of a user based on a variety of ground truth sources, including
government-issued identity documents such as national IDs, driver's licenses and passports or electronic machine-readable
travel documents (or eMRTDs). Our Verified TM platform
detects presentation attack and spoofing threats, evaluates the authenticity of security features present on a government-issued
identity document, and biometrically matches the reference picture of the document with a live user's selfie (a photograph
that the user has taken of themselves). Usually occurring at account opening or onboarding, identity verification ensures that the
enterprise knows that the person interacting with the enterprise is who they say they are, in real time. authID's
Proof TM identity verification product eliminates the need for costly and less accurate face-to-face, in-person ID checks
and instead provides a verified identity in seconds. Additionally, authID's PrivacyKey technology enables customers to perform
biometric verification through the use of Public/Private Keys that is performed without storing any biometric data, which ensures
individual data privacy. In a digital, online world of increasing fraud and security threats, Proof speeds up onboarding and offers
our customers confidence in the identities of consumers, employees or third-party vendors.

 Biometric Identity Authentication - Verified

 Biometric identity authentication provides any
organization with a secure, convenient solution to validate that an individual is the verified account owner for various purposes including
passwordless login and performing specific transactions, or functions. The authID Verified product allows users to confirm their identity
with their facial biometric by simply taking a selfie on a mobile phone or device of their choosing (as opposed to dedicated hardware).
The solution includes a patented audit trail created for each transaction, containing the digitally signed transaction details, with proof
of identity authentication and consent.

 PrivacyKey Privacy Preserving Biometrics

 authID's PrivacyKey solution provides biometric authentication
without the requirement to store any biometric or derivative of biometric data. The technology transforms biometric verification into
Public/Private Key cryptography whereby the facial image of the person is converted into an elliptical public/private key pair where only
the public key is stored and the private key only exists during authentication and is deleted immediately after. The solution is compliant
to the ISO 30136 Privacy Biometric standard and provides a False Match Rate accuracy of 1:1 Billion at a False Rejection Rate of 0.3%,
as confirmed by independent tests conducted by The Commonwealth Scientific and Industrial Research Organization ("CSRIO").

 Account Access and Recovery

 authID's Verified biometric identity authentication
solution allows users to recover, via a facial biometric, account access that is lost or blocked due to expired credentials, lockouts,
lost or stolen devices, or compromised accounts. Because the account owner's root of trust is established in the cloud, recovery
is independent of any device or hardware. In this way, account recovery is instant, portable, and does not require the presence of or
access to a previously provisioned device in order to secure access from a different device.

 Key Customer Benefits

 Our solution allows our enterprise customers to:

 Verify and Authenticate users. Customers can use the
authID platform not only to verify the identity of new users, but also to authenticate those users seamlessly on an ongoing basis to
enable quick, secure logins and transaction authentications.

 Benefit from high-speed processing. Our solution returns
a very low-latency response, key to enabling high-volume use cases (such as logins and high-value transactions) and providing a frictionless
user experience.

 Precisely and accurately identify their consumers and
employees, giving the enterprise complete confidence in who is accessing their digital assets

 Provide a seamless user experience in terms of speed and
self-guided flow, so that even users who are not tech-savvy are easily able to complete the identity verification and authentication
processes

 Support a wide variety of devices. Our cloud-based
service is device agnostic and may be used to verify or authenticate users on any device with a camera, including shared devices, digital
kiosks, etc.

 Integrate quickly and easily. We offer pre-integrated
OIDC connections as well as integrations with several leading Identity and Access Management solutions.

 Offer broad identity document coverage. We can verify
identities using a wide spectrum of government-issued documents from around the world.

 Perform secure biometric verification & authentication
without the need to store biometric data. Our PrivacyKey technology removes the need to store any biometric data in order to perform
verification or authentication transactions. PrivacyKey verification and authentication is seamlessly delivered thru either a web or
mobile applications with a response time of less than 700ms.

 Discontinued Operations

 On May 4, 2022, the Board of Directors of authID
(the "Board" or the "Board of Directors") approved a plan to exit from certain non-core activities comprising
the MultiPay correspondent bank payments services in Colombia and the Cards Plus cards manufacturing and printing business in South Africa
("Cards Plus business"). On August 29, 2022 the Company executed and completed the sale of the Cards Plus business. On June
30, 2023, the Company completed the sale of its legacy payments software by MultiPay. MultiPay S.A.S., and IDGS S.A.S. operations, together
with those of Cards Plus Pty Ltd., are presented as discontinued operations in the Consolidated Statements of Operations during the year
ended December 31, 2023, as they met the criteria for discontinued operations under applicable accounting guidance.

 Key Trends

 We believe that our financial results will be
impacted by several market trends in the identity verification and authentication markets, as well as expanding digital transformation
efforts across a wide range of market segments. These trends include:

 growing concerns over identity theft, fraud and account takeover,
resulting from the acceleration of digital transformation, for example online shopping and remote working and the growth in AI-assisted
fraud;

 the growth in the sharing economy; and

 the increase in electronic payments and alternative money
transfer solutions provided by both bank and non-bank entities. The key drivers for these alternative payment methods are consumer demands
for safe, convenient payment transactions, with less friction.

 Our results are also impacted by the changes in
levels of spending on identity verification, management and security methods, and thus, negative trends in the global economy and other
factors which negatively impact such spending may negatively impact the growth in our revenue from those products. The global economy
has been undergoing a period of political and economic uncertainty and stock markets are experiencing high levels of volatility, and it
is difficult to predict how long this uncertainty and volatility will continue.

 We plan to grow our business by increasing the
use of our services by our existing customers, by adding new customers through our direct salesforce, channel partners and by expanding
into new markets and innovation. If we are successful in these efforts, we would expect our revenue to continue to grow.

 Going Concern

 The Company's consolidated financial statements
included in this Annual Report have been prepared in accordance with U.S. GAAP assuming the Company will continue on a going concern basis,
which implies the Company will continue to meet its obligations and continue its operations for the next year following the issuance date
of these financial statements.

 As of December 31, 2024, the Company had an accumulated
deficit of approximately $173.8 million. For the year ended December 31, 2024, the Company earned revenue of approximately $0.9 million,
used $11.6 million to fund its operations, and incurred a net loss from continuing operations of approximately $14.3 million.

 The continuation of the Company as a going concern
is dependent upon financial support from the Company's stockholders, the ability of the Company to obtain additional debt or equity
financing to continue operations, the Company's ability to generate sufficient revenues and cash flows from operations (both from
existing and new customers), and successfully locating and negotiating with cash generating business entities for potential acquisition
by the Company. In June 2024, the Company raised approximately $10.0 million after expenses from existing and new stockholders through
the sale of Common Stock pursuant to a registered direct offering. Going forward, the Company plans to raise additional funds to support
its operations and investments as it seeks to create a sustainable organization. Our growth-oriented business plan to offer products to
our customers will require continued capital investment and there is no guarantee that such financing will be available, or available
on acceptable terms.

 As discussed in "Liquidity and Capital Resources"
below, the Company secured additional financing during 2024 which provides funding for its current operations as it continues to invest
in its product, people, and technology. The Company projects that the investments will lead to revenue expansion, thereby reducing liquidity
needs. However, in order to further implement its business plan and satisfy its working capital requirements, the Company will need to
raise additional capital. There is no guarantee that the Company will be able to raise additional equity or debt financing at acceptable
terms, if at all.

 There is no assurance that the Company will ever
be profitable. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue
as a going concern. As there can be no assurance that the Company will be able to achieve positive cash flows (become cash flow positive)
and raise sufficient capital to maintain operations, there is substantial doubt about the Company's ability to continue as a going
concern.

 Subsequent Events

 Management of the Company has performed a review of all events and
transactions occurring after the condensed consolidated balance sheet date and determined there were no events or transactions requiring
adjustment to or disclosure in the accompanying condensed consolidated financial statements.

 Related Party Transactions

 On June 6, 2023, the Company entered into a services
agreement with The Pipeline Group, Inc. ("TPG"). Ken Jisser, a director of the Company, is the founder and CEO of TPG, a technology-enabled
services company that aims to deliver business results for companies looking to build a predictable and profitable pipeline. The agreement
provides that TPG will assist in providing outsourced sales including business development resources for outbound calling, provide support
for automated dialing technology, classify customer data and other sales related services for an initial term of one year. These services
and their contracted pricing has been evaluated by Management based on historical experience with similar providers and determined to
be priced at fair market rates. On October 25, 2023, on December 19, 2023 and on August 26, 2024, the Company entered into amendments
to the above services agreement, pursuant to which TPG will provide certain additional services to the Company. In consideration of the
services, the Company will pay TPG $70,000 per month during the current term ending in June 2025. The foregoing is only a summary of the
material terms of the agreements entered with TPG and does not purport to be a complete description of the rights and obligations of the
parties thereunder. The summary of the agreement entered with TPG is qualified in its entirety by reference to the forms of such agreements,
which were filed as exhibits to the Company's Current Report and are incorporated by reference herein (See "Exhibits").

 The Company has entered into various investment,
credit and funding agreements with Mr. Stephen Garchik, which are summarized in the following paragraphs. Mr. Garchik is now a holder
of more than 10% of the issued and outstanding common stock of the Company. Mr. Garchik's financial support for the Company has
been a material factor in the continued operation of the Company over the period covered by this Annual Report and its current financial
position. Full details of these transactions are set forth in Item 13 "Certain Relationships and Related Transactions and Director
Independence" and in Note 7 "Related Party Transactions" to the Audited Consolidated Financial Statements of the Company
as of and for the years ended December 31, 2024 and 2023, which are exhibited hereto (the "Consolidated Financial Statements").

 On March 21, 2022 the Company entered into the
Original Facility Agreement with Mr. Garchik, pursuant to which Mr. Garchik agreed to provide a $10.0 million unsecured standby line of
credit facility. On April 18, 2022, Joseph Trelin, as Garchik's designee under the Original Facility Agreement, was appointed as
a member of the Board of Directors of the Company. By virtue of such right of nomination Mr. Garchik considered himself a "director
by deputization".

 As described in Note 5 "Working Capital
Facility", the Original Facility Agreement was amended and restated effective March 8, 2023 pursuant to which amendment the amount
of the facility was reduced to $3.6 million, an initial advance of $900,000 was made and subsequent advances under the A&R Facility
Agreement are subject to various conditions including the granting of a security interest over substantially all the Company's assets.
Under the A&R Facility Agreement Garchik had a one-time right for the nomination of four designees specified in writing by Garchik
for appointment to our board of directors. On March 9, 2023, Rhoniel Daguro, Ken Jisser, Michael Thompson and Thomas Szoke as Garchik's
designees under the A&R Facility Agreement, were appointed as members of the Board of Directors of the Company.

 On May 25, 2023, the Company and Mr. Garchik agreed
to terminate the A&R Facility Agreement and satisfied and offset the outstanding balance of the Note and accrued interest in the amount
of $929,250 with the purchase price of 253,617 shares of common stock. In addition, Mr. Garchik invested a further $1,000,000 on the same
date. The purchase price of the shares issued in these two transactions was the same as the purchase price paid by all other investors
(who were not directors) in the same round and was the Nasdaq Official Closing Price in effect on the date of the transaction.

 Further, On May 23, 2023, pursuant to an Exchange
Agreement, Mr. Garchik, exchanged a Convertible Note and accrued interest in the amount of $1,014,625 for 268,705 shares of common stock.
The price of the shares issued to Mr. Garchik under the Exchange Agreement was the same as the purchase price paid by all other investors
(who were not directors) pursuant to the Exchange Agreement and was the Nasdaq Official Closing Price in effect on the date of the transaction.
As a result of such exchange, the issuance of shares in satisfaction of the Credit Facility and the purchase of additional shares of common
stock as referenced above (See Note 8 "Shareholders' Equity" to the Consolidated Financial Statements), Mr. Garchik
is now a holder of more than 10% of the outstanding shares of the Company's common stock.

 On November 20, 2023, Mr. Garchik, purchased 166,667
shares of Company's common stock at a price of $1,000,000. The purchase price of the shares issued in this transaction was the same
as the purchase price paid by all other investors in the same round and was higher than the Nasdaq Official Closing Price in effect on
the date of the transaction.

 On June 26, 2024, Mr. Garchik, purchased
150,000 shares of the Company's common stock at a price of $1,125,000. The purchase price of the shares issued in this
transaction was the same as the purchase price paid by all other investors in the same round and represented a 24% discount to the
Nasdaq Official Closing Price in effect on the date of the transaction.

 Since June 2023, the Company has employed Dale
Daguro, the brother of our CEO, Rhon Daguro as a VP Sales. Dale Daguro's employment is at will and may be terminated at any time,
with or without cause. Dale's compensation is commensurate with other executives employed by the Company at a similar level of seniority
and experience. During the year ended December 31, 2024, Dale Daguro earned approximately $255,000 in base salary and sales commission.

 As further described in Item 13 "Certain
Relationships and Related Transactions and Director Independence" and in Note 7 "Related Party Transactions" to the
Consolidated Financial Statements, the Company has entered into various equity investments and employment agreements with Directors and
Officers of the Company.

 Critical Accounting Policies and Estimates

 Our significant accounting policies are more fully
described in the notes to our consolidated financial statements. Those material accounting estimates that we believe are the most critical
to an investor's understanding of our financial results and condition are discussed immediately below and are particularly important
to the portrayal of our financial position and results of operations and require the application of significant judgment by our management
to determine the appropriate assumptions to be used in the determination of certain estimates.

 Use of Estimates

 In preparing these consolidated financial statements
in conformity with U.S. GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported
amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 Revenue Recognition

 Software License – The Company recognizes revenue
based on the identified performance obligations over the performance period for fixed consideration and / or variable fees generated.
Variable fees are typically earned over time based on monthly users and transaction volumes. We allocate the selling price in a contract
which has multiple performance obligations based on the contract selling price that we believe represents a fair market price for the
service rendered based on estimated standalone selling price. Transaction fees are billed monthly and are constrained to transactions
incurred within the month.

 For contracts with minimum annual fees, the Company generally recognizes
the amount of revenue ratably over the contract year and records contract assets for the amount in excess of monthly contract billings
relating to variable contract consideration. For certain contracts, the Company enters into an agreement which stipulates a minimum annual
fee which is generally due at the end of the contract year, in excess of the amount of monthly billings. The Company may also require
milestone payments of the minimum annual fee. The amount of any billed fees in excess of revenue recognized is recorded as deferred revenue.
The company accounts for any price concessions granted to a customer as reductions to consideration under each respective contract and
subsequently recognizes revenue up to the amount of the revised consideration after the concession is provided.

 Any usage-based fees in excess of the minimum
contract amount are charged to the customer and allocated to the annual period in which they are earned under the contract. At the beginning
of each annual period in the contract, the Company estimates the variable amounts for the annual period subject to the constrained variable
consideration (usage-based fees) and recognizes that amount on a time-elapsed basis over the annual period. At each reporting date within
an annual period, the Company reassesses its estimate of the excess variable amounts for the annual period and updates the amount recognized
on a time-elapsed basis over the remainder of the annual period.

 Stock-based compensation

 The Company has accounted for stock-based compensation
under the provisions of FASB ASC 718 – "Stock Compensation" which requires the use of the fair-value based method to
determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options
and common stock purchase warrants). For both employee and non-employee awards, the fair market value of each stock option award is estimated
on the date of grant using the Black-Scholes and/or Monte-Carlo valuation models as appropriate that uses assumptions for expected volatility,
expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of the Company's
stock and other factors estimated over the expected term of the stock options. For employee awards, the expected term of options granted
is derived based on exercise history. We continually monitor exercise activity from the date of grant and consider our short history and
certain stock price growth during various periods to determine if expected term should be modified. The risk-free rate is based on the
U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The Company accounts for forfeitures of
employee awards as they occur.

 Adjusted EBITDA

 This discussion includes information about Adjusted
EBITDA that is not prepared in accordance with U.S. GAAP. Adjusted EBITDA is not based on any standardized methodology prescribed by U.S.
GAAP and is not necessarily comparable to similar measures presented by other companies. A reconciliation of this non-GAAP measure is
included below.

 Adjusted EBITDA is a non-GAAP financial measure
that represents U.S. GAAP net income (loss) adjusted to exclude (1) interest expense, (2) interest income, (3) provision for income taxes,
(4) depreciation and amortization, (5) stock-based compensation expense (stock options) and (6) certain other items management believes
affect the comparability of operating results. Other items included the following:

 Conversion expense of $0 in 2024 and $7.5 million in 2023

 Severance cost of $0.01 million in 2024 and $0.9 million
in 2023

 Loss on debt extinguishment of $0 in 2024 and $0.4 million
in 2023

 Management believes that Adjusted EBITDA, when
viewed with our results under U.S. GAAP and the accompanying reconciliations, provides useful information about our period-over-period
results. Adjusted EBITDA is presented because management believes it provides additional information with respect to the performance of
our fundamental business activities and is also frequently used by securities analysts, investors and other interested parties in the
evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess the operating performance
of our company and our management, and it will be a focus as we invest in and grow the business.

 Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation from, or as a substitute for, analysis of our results as reported under GAAP.
Some of these limitations are:

 Adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual commitments;

 Adjusted EBITDA does not reflect changes in, or cash requirements
for, our working capital needs;

 Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash
requirements for such replacements;

 Adjusted EBITDA does not include the impact of certain charges
or gains resulting from matters we consider not to be indicative of our ongoing operations.

 Because of these limitations, adjusted EBITDA
should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for
these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only as a supplement to our U.S. GAAP results.

 For the Year Ended

 2024

 2023

 Loss from continuing operations

 $
 (14,227,994
)

 $
 (19,617,969
)

 Addback:

 Interest expense

 48,930

 1,108,458

 Other expense (income)

 (455,227
)

 (98,230
)

 Conversion expense

 7,476,000

 Loss on debt extinguishment

 380,741

 Severance cost

 14,251

 855,279

 Depreciation and amortization

 179,075

 255,858

 Non-Cash recruiting fees

 438,000

 Taxes

 2,864

 Stock compensation

 2,612,164

 487,398

 Adjusted EBITDA continuing operations (Non-GAAP)

 $
 (11,878,801
)

 $
 (8,711,601
)

 The increase in Adjusted EBITDA Loss From Continuing
Operations in 2024 compared to 2023 can be attributed to several factors. First, the Company took a strategic approach to increase funding
for its operations, resulting in an increase in its overall operating expenses. Additionally, the Company invested significantly in research
and development, and people.

 Results of Operations and Financial Condition
for the Year Ended December 31, 2024 as Compared to the Year Ended December 31, 2023

 Revenues, net

 During the year ended December 31, 2024,
the Company revenues were approximately $886,000 compared to approximately $190,000 for the year ended December 31, 2023. Revenue increased
as we acquired and went live with new customers.

 General and administrative expenses

 During the year ended December 31, 2024, general
and administrative expenses increased by approximately $1.1 million compared to the year ended December 31, 2023, principally due to higher
stock-based compensation expenses as well as the Company's increase in headcount costs and higher third-party vendor costs.

 Research and development expenses

 During the year ended December 31, 2024,
research and development expenses increased by approximately $3.7 million compared to the year ended December 31, 2023, principally due
to higher stock-based compensation expenses as well as the Company's increase in headcount costs and higher third-party vendor costs.

 Depreciation and amortization expense

 During the year ended December 31, 2024, depreciation
and amortization decreased by approximately $0.1 million compared to the year ended December 31, 2023, as the Company's intangible
assets useful life decreases.

 Interest expense

 Interest expense during the year ended December
31, 2024 compared to the year ended December 31, 2023 decreased by $1.1 million, principally due to the exchange of Convertible Notes
for common stock in May 2023.

 Macro-Economic Conditions

 The global economy has been undergoing a period of political and
economic uncertainty and stock markets are experiencing high levels of volatility, and it is difficult to predict how long this uncertainty
and volatility will continue. The continuing wars in Ukraine and the Middle East, inflationary pressures, rising energy prices and increases
in interest rates have impacted the United States and other major economies and have created uncertainty regarding a possible recession.
As a result, many businesses, especially in the technology sector, have made significant cut-backs in expenditure, including reductions
in force and investment freezes. Our sales and results are also impacted by the changes in levels of spending on identity verification,
management and security methods, and thus, negative trends in the global economy and other factors which negatively impact such spending
may negatively impact the growth of our revenue from those products.

 Liquidity and Capital Resources

 As of December 31, 2024, current assets
were $10.1 million and current liabilities outstanding amounted to $3.0 million which resulted in net working capital of $7.1 million.

 Net cash used by operating activities was $11.6
million for the year ended December 31, 2024 compared to $8.4 million in 2023. Cash used in operations for 2024 and 2023 was primarily
the result of funding the business operations as the Company invested in people and product.

 Net cash (used)/generated in investing activities
in 2024 and 2023 was approximately ($66,000) and $75,000 as the Company received certain proceeds from the sale of its discontinued businesses
in 2023.

 Net cash provided by financing activities
for 2024 was approximately $10.0 million, compared to $15.4 million in 2023. Cash provided by financing activities in 2024 consisted primarily
of proceeds from sale of Common Stock pursuant to a registered direct offering in June 2024. Cash provided by financing activities in
2023 consists of proceeds from the sale of common stock in May 2023 and November 2023 and a $0.5 million initial drawdown net of debt
issuance costs under the Company's A&R Facility Agreement.

 In 2025, the Company will continue to be opportunistic
and judicious in raising additional funds to support its operations and investments as it creates a sustainable organization. There is
no guarantee that such financing will be available if available on acceptable terms.

 Our growth-oriented business plan to offer products
to our customers will require continued capital investment. Research and development activities and technology deployment will require
continued investment.

 The Company projects that the current and past
investments in technology and systems will lead to revenue expansion, thereby reducing liquidity needs. However, to further implement
its business plan and satisfy its working capital requirements, the Company will need to raise more capital. There is no guarantee that
the Company will be able to raise additional equity or debt financing at acceptable terms, if at all.

 There is no guarantee that our current business
plan will not change, and because of such change, we will need additional capital to implement such business plan. Further, assuming we
achieve our expected growth plan, of which there is no guarantee, we will need additional capital to implement growth beyond our current
business plan. As a result of these factors, there is substantial doubt about the Company's ability to continue as a going concern.

 Description of Indebtedness

 As described in Item 1A (Risk Factors), the Company
has a history of losses and may not be able to achieve profitability in the near term. The Company has not been able to achieve positive
cash flows from operations and raised additional financing in 2024 and 2023 from the sale of equity and convertible notes.

 As of December 31, 2024, the Company has the remaining balance of a
series of Senior Secured Convertible Notes outstanding for $245,000 due in March 2025.

 See Notes 5 and 6 of the Consolidated Financial Statements for additional
information associated with the convertible notes payable.

 Equity Financing

 See Note 8 of the Consolidated Financial Statements for additional
information associated with equity financing in 2024 and 2023.

 2024 Common Stock Transactions

 On June 27, 2024, the Company entered into a securities purchase agreement
with accredited investors (the " June Purchase Agreement "), pursuant to which the Company agreed to issue and sell,
in a registered offering (the " June Offering ") an aggregate of 1,464,965 shares of the Company's common stock
at a per share price of $7.50 (or $8.61 if the purchaser is a director of the Company). The purchasers under the June Purchase Agreement
included Stephen J. Garchik and one director of the Company.

 2023 Common Stock Transactions

 Between May 23 and June 7, 2023, the Company entered into
a securities purchase agreement with accredited investors (the "Purchase Agreement"), pursuant to which the Company agreed
to issue and sell, in a public offering an aggregate of 1,113,828 shares (the "Registered Shares") of the Company's
common stock and in a concurrent private placement 1,121,482 shares (the "PIPE Shares") of Common Stock (the "May 2023
Offering") at a per share price between $3.664 and $5.632 per share (or $4.00 if the purchaser is a director of the Company). The
purchasers under the Purchase Agreement included Garchik and four directors of the Company, including the Chief Executive Officer and
Chairman of the Board of Directors.

 On May 23, 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.

 Between May 23 and June 7, 2023, the Company entered into
an exchange agreement with certain holders ("Holders") of the March 2022 Senior Secured Convertible Notes (the "Convertible
Notes") of the Company (the "Exchange Agreement"), pursuant to which the Company issued 2,348,347 shares (the "Exchange
Shares") of common stock to the Holders in exchange for the Holders' Convertible Notes (the "Note Exchange")
at a per share price between $3.776 and $5.80 per share (or $4.12 if the Holder is a director, officer or insider of the Company.

 On November 20, 2023, authID Inc. (the " Company ")
entered into a securities purchase agreement with accredited investors (the " November Purchase Agreement "), pursuant
to which the Company agreed to issue and sell, in a registered offering (the " November Offering ") an aggregate of
1,574,990 shares of the Company's common stock at a per share price of $6.00. The purchasers under the November Purchase Agreement
included Stephen J. Garchik and three directors of the Company, including the Chief Executive Officer and Chairman of the Board of Directors.

 The Company issued 111,516 shares of common stock for approximately
$388,000 of interest accrued under the Convertible Notes and Credit Facility.

 Off-Balance Sheet Arrangements

 We have no off-balance sheet financing arrangements.

 Contractual Obligations

 As of December 31, 2024, the Company had the following contractual
obligations.

 Payments due by period

 Less than

 More than

 Contractual Obligations

 Total

 1 year

 1-3 years

 3-5 years

 5 years

 Convertible Notes Payable

 $
 245,000

 $
 245,000

 $
 -

 $
 -

 $
 -

 Severance Payable

 -

 -

 $
 -

 $
 570,000

 $
 570,000

 $
 -

 $
 -

 $
 -

 Item 8. Financial Statements and Supplementary Data

 Our consolidated financial statements
and notes thereto and the report of our independent registered public accounting firm (PCOAB ID 00677), are set forth on pages F-1 through
F-28 of this report.

 Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure

 None

 Item 9A. Controls and Procedures

 Evaluation of Disclosure Controls and Procedures

 As of the end of the period covered by this Annual
Report, our Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of our disclosure controls
and procedures as defined in Rules 13a-15 and 15d-15(e) of the Exchange Act. Based on the evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that, as of December 31, 2024, the Company's disclosure controls and procedures are effective
to ensure that the information required to be disclosed by the Company in the report that it files or submits under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.

 Management's Report on Internal Control Over Financial Reporting

 The Company's management is responsible
for establishing and maintaining adequate internal control over financial reporting for the Company, as defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide
reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements in
accordance with U.S. accepted accounting principles. Our management, including the Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all
errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance
that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, have been detected and such evaluation is subject to the risks discussed in item 1A – Risk Factors
of this Report.

 The Company's management assessed the effectiveness
of the Company's internal control over financial reporting as of December 31, 2024, using the criteria established in Internal Control
- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management's
assessment using the above criteria, management concluded that the Company maintained effective internal control over financial reporting
as of December 31, 2024.

 Changes in Internal Control over Financial Reporting

 During the last fiscal year, there have been no
changes except as noted above in our internal control over financial reporting that occurred during our last fiscal year that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 Item 9B. Other Information

 During the quarter ended December 31, 2024, no
director or officer adopted or terminated (i) any contract, instruction or written plan for the purchase or sale of securities of the
Company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or (ii) any "non-Rule 10b5-1 trading arrangement"
as defined in paragraph (c) of item 408 of Regulation S-K.

 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections.

 Not applicable.

 Item 10. Directors, Executive Officers, and Corporate Governance;

 The current Directors and Officers of the Company are as follows:

 Name

 Age

 Position (s) and Offices Held

 Rhoniel A. Daguro (2)

 Director and Chief Executive Officer

 Edward C. Sellitto

 Chief Financial Officer

 Thomas R. Szoke

 Director, Chief Technology Officer

 Chief Product Officer

 Kunal Mehta (3)

 Michael L. Koehneman* (1)(2)

 Michael C. Thompson (1)(2)(3)

 Jacqueline L. White* (1)(3)

 *
 denotes Committee Chair

 (1)
 Audit Committee

 (2)
 Governance Committee

 (3)
 Compensation Committee

 Rhoniel A. Daguro

 Mr. Daguro joined our company as a director on
March 9, 2023 and was appointed CEO on March 23, 2023. He has over 20 years of sales, marketing, technology, and venture capital experience.
He has built multiple profitable software and professional services firms. Most recently, from 2018 to 2022, he served as the Chief Revenue
Officer of Socure Inc. Prior to that, Mr. Daguro held various executive sales positions with Persistent Systems, Hortonworks, and Oracle.

 Edward C. Sellitto

 Mr. Sellitto joined authID as Chief Financial
Officer of the Company on August 15, 2023. Mr. Sellitto has over 15 years of experience in Financial Management and Revenue Operations
roles supporting a wide range of industries and company sizes, from startups to Fortune 100 organizations. Most
recently, from December 2022 through present, he served as Vice President, Revenue Operations at Zero Hash, a Digital Asset-as-a-Service
infrastructure provider. From February 2022 through December 2022, Mr. Sellitto served as the Head of Go-To-Market Financial Planning
and Analysis for Sprinklr (NYSE: CXM) and held various roles including Director – Sales Operations and VP – Revenue Operations
with Source from May 2019 through February 2022. Further, from 2018 to 2019, Mr. Sellitto served as the Director – Sales Operations
for SmartSource Rentals. Ed holds an MBA in Corporate Finance and Strategy from the Stern School of Business at New York University.

 Thomas R. Szoke

 Mr. Szoke is a co-founder of authID and has over
35 years of executive management, solutions engineering, and operations management experience in Government Security, Identity Access
Management and SaaS solutions industries. He rejoined the Company as a Director on March 9, 2023 and in April 2023 became the Company's
Chief Technology Officer. Mr. Szoke previously served as a Director and the Company's Chief Solutions Architect and has held several
other executive positions since its inception, from 2013 through 2021. He has also expanded the Company's market presence and product
portfolio through technological innovation and global strategic partnerships. Mr. Szoke has been issued several US and international patents
focused on identity solutions and has pioneered the concept and development of different product lines for the Company including its Multi-Factor
Out-of-Band Identity and Transaction Authentication Platform. From 2021 to 2023, he was an independent consultant for the Company and
others.

 Mr. Soto joined authID as Chief Product Officer
of the Company on September 23, 2024. Mr. Soto is a seasoned product leader with over 15 years of experience in product management within
the fintech and identity industries. Mr. Soto most recently served as Chief Product Officer at Oxygen Health, a provider of health benefit
plans, from September 2023, through August 2024. From September 2022 to August 2023, Mr. Soto was Chief Product Officer – New Digital
Initiatives at BBVA, the global financial services group. Prior to that from April 2018 to July 2022, Erick was VP of Product at Socure,
a provider of identity verification and fraud prevention solutions.

 Mr. Jisser joined authID on March 9, 2023. He
is the Founder & CEO of The Pipeline Group, Inc., a technology-enabled services company that aims to deliver business results for
companies looking to build predictable and profitable pipeline. Mr. Jisser founded the company in his garage in 2017, and it reached #415
among the fastest growing private companies in America, according to Inc. Magazine rankings published in 2021. Prior to that, Mr. Jisser
served as GTM Advisor at Druva Inc., where he rebuilt the global inside sales team.

 Michael L. Koehneman

 Mr. Koehneman joined our company as a Director
on June 9, 2021. Mr. Koehneman previously held various positions at Pricewaterhouse Coopers, a global accounting firm, through 2020, including
the Global Advisory Chief Operating Officer and Human Capital Leader from 2016 through 2019, the U.S. Advisory Operations Leader from
2005 through 2016 responsible for the oversight of Advisory services for PwC, including business unit performance, finance, investments,
human resources, acquisitions, and administration, and the Lead Engagement Partner for Financial Statement Audits and Internal Control
and Security Reviews from 1993 through 2004 for several public and private company audits. Since 2020 he has also served as a director
and member of the Audit Committee of Aspen Group, Inc.

 Kunal Mehta

 Mr. Mehta became a Director of the Company on March 25, 2024. Mr. Mehta
has over 25 years of experience building value-creation programs for private equity firms and industry experience scaling global revenue
operations, marketing, and sales programs for several of the biggest names in the technology space. In January 2025, Mr. Mehta joined
LaunchQ Inc. (dba TPG Technologies), a go-to-market technology company, as CEO. From 2022-2024, he was an Expert Partner at Boston, Massachusetts-based
Bain & Company, working with a number of Private Equity firms to accelerate Go To Market (GTM) value creation. Between Sept 2019 and
March 2022, he built the Go To Market (GTM) Center of Excellence at Menlo Park, CA-based Technology Crossover Ventures (TCV). From September
2018 to March 2019, Mr. Mehta worked at Druva, a private equity backed portfolio company as VP of Sales Strategy and Operations. Mr. Mehta
began his management career at Hewlett-Packard, progressing through a series of solutions, marketing, and enablement roles with increasing
responsibility. Mr. Mehta earned his MBA in Management of Information Systems, BA in Economics from The George Washington University in
Washington, DC, and MHS in Health Finance & Management from Johns Hopkins.

 Michael C. Thompson

 Mr. Thompson joined the Company as a Director
on March 9, 2023. He has over 38 years of domestic and international experience in publicly traded and private equity backed consumer
and commercial businesses. Since 2022, Mr. Thompson has been a partner at Hemingway Capital, an operationally focused private equity firm.
Previously, he served as Chief Executive Officer for companies in the bedding (Corsicana Mattress from 2018 to 2022), polyurethane foam
and pet products industries and was an operating executive for two leading middle-market private equity firms. Mr. Thompson has also held
executive positions with Rubbermaid Commercial Products, Merillat Industries, a division of Masco Corporation, and Black+Decker, and began
his career with Sunbeam Appliance Company.

 Jacqueline L. White

 Ms. White joined our company as a Director on
June 9, 2021. Ms. White has been a leader in enterprise technology software and IT consulting for the past 25 years. Ms. White has held
global positions at SAP, Oracle, and Accenture, always leading diverse, high performing organizations around the world. In May 2023 Ms.
White became President of i2C Inc, which operates a global payments and digital banking platform. Prior to that, Ms. White joined the
Executive Management Team of Temenos AG (Six: TEMN), a company specializing in enterprise software for banks and financial services, as
the President of the Americas Region in January 2021. Ms. White led the Banking & Capital Markets line of business of DXC Technology
Co. (NYSE: DXC) as Senior Vice President and Practice Lead from September 2019 to January 2021. From January 2018 through September 2019,
Ms. White served as the Chief Revenue Officer of Saltstack, a VM Ware Company, and from January 2015 through January 2018 as Global Senior
Vice President Global FSI Consulting for SAP (NYSE: SAP). Prior to joining SAP, Ms. White held various positions with Accenture Services
Pvt. Ltd., Oracle, BearingPoint and Novell. Ms. White was named by Utah Business Magazine as "Top Executives to Watch" in
July 2020. Ms. White received a BA in Comparative Literature from Brigham Young University and a Leadership Certificate from Boston University.

 Board & Committees

 Board meetings during calendar year ended 2024

 During 2024, the Board of Directors held nine
meetings as well as committee meetings, as outlined below. Each director attended all of the meetings of the Board and all of the meetings
held by all committees on which such director served, apart from one Board meeting which one director was not able to attend. The Board
and the Pricing Committee that was formed for the purposes of approval of the funding transaction in June 2024 also approved certain actions
by unanimous written consent.

 Committees established by the Board

 The Board of Directors has standing Audit,
Compensation, and Governance Committees. Information concerning the function of each Board committee follows.

 Audit Committee

 The Audit Committee is responsible for overseeing
management's implementation of effective internal accounting and financial controls, supervising matters relating to audit functions,
reviewing and setting internal policies and procedures regarding audits, accounting and other financial controls, reviewing the results
of our audit performed by the independent public accountants, and evaluating and selecting the independent public accountants. The Audit
Committee has adopted an Audit Committee Charter which is posted on the Corporate Governance page under the tab labeled "Board Committees"
on our Investor Relations website at  The Board has designated the Chair of the Committee as the "audit
committee financial expert" as defined by the SEC. During 2024, the Audit Committee held four meetings. The Committee also approved
certain actions by unanimous written consent.

 Compensation Committee

 The Compensation Committee determines matters
pertaining to the compensation of our named executive officers and administers our stock option and incentive compensation plans. The
Compensation Committee has adopted a Compensation Committee Charter which is posted on the Corporate Governance page under the tab labeled
"Board Committees" on our Investor Relations website at  During 2024, the Compensation Committee
held two meetings and also approved certain actions by unanimous written consent.

 Governance Committee

 The Governance Committee is responsible for considering
potential Board members, nominating Directors for election to the Board, implementing the Company's corporate governance policies,
recommending compensation for the Board and for all other purposes outlined in the Governance Committee Charter, which is posted on the
Corporate Governance page under the tab labeled "Board Committees" on our Investor Relations website at
During 2024, the Governance Committee held one meeting.

 Nomination of Directors

 As provided in its charter, the Governance Committee
is responsible for identifying individuals qualified to become directors. The Governance Committee seeks to identify director candidates
based on input provided by a number of sources including (1) the Governance Committee members, (2) our other directors, (3) our stockholders,
(4) our Chief Executive Officer or Chair of the Board, and (5) third parties such as service providers. In evaluating potential candidates
for director, the Governance Committee considers the entirety of each candidate's credentials.

 Qualifications for consideration as a
director nominee may vary according to the particular areas of expertise being sought as a complement to the existing composition of the
Board of Directors. However, at a minimum, candidates for director must possess:

 high personal and professional ethics and integrity;

 the ability to exercise sound judgment;

 the ability to make independent analytical inquiries;

 a willingness and ability to devote adequate time and resources
to diligently perform Board and committee duties; and

 the appropriate and relevant business experience and acumen.

 Except as set forth below, during the year ended
December 31, 2024, there have been no material changes to the procedures by which security holders may recommend nominees to our board
of directors.

 Legal Proceedings

 There are currently no legal proceedings, and during the past 10 years
there have been no legal proceedings, that are material to the evaluation of the ability or integrity of any of our directors.

 Family Relationships

 There are no family relationships among our directors and executive
officers. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director
or officer was or is to be selected as a director or officer.

 Involvement in Certain Legal Proceedings

 To our knowledge, during the last ten years, none of our directors
and executive officers has:

 Had a bankruptcy petition filed by or against any business
of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that
time.

 Been convicted in a criminal proceeding or been subject to
a pending criminal proceeding, excluding traffic violations and other minor offenses.

 Been subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or banking activities.

 Been found by a court of competent jurisdiction (in a civil
action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and
the judgment has not been reversed, suspended or vacated.

 Been the subject to, or a party to, any sanction or order,
not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange,
association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 To our knowledge, none of our directors and executive officers
has at any time been subject to any proceedings:

 that were initiated by any regulatory, civil or criminal
agency

 in which claims alleging fraud were asserted and seeking
damages in excess of $100,000

 Code of Ethics

 We have adopted a Code of Business Conduct and
Ethics Policy (the "Code of Ethics") that applies to all directors and officers, which is posted on the Corporate Governance
page under the tab labeled "Board Committees" on our Investor Relations website at  The Code of
Ethics describes the legal, ethical and regulatory standards that must be followed by the directors and officers of the Company and sets
forth high standards of business conduct applicable to each director and officer. As adopted, the Code of Ethics sets forth written standards
that are designed to deter wrongdoing and to promote, among other things:

 honest and ethical conduct, including the ethical handling
of actual or apparent conflicts of interest between personal and professional relationships;

 compliance with applicable governmental laws, rules and regulations;

 the prompt internal reporting of violations of the Code of
Ethics to the appropriate person or persons identified in the code; and

 accountability for adherence to the Code of Ethics.

 Delinquent Section 16(a) Reports

 Section 16(a) of the Securities Exchange Act of
1934, as amended, requires our directors and executive officers and persons who own more than 10% of the issued and outstanding shares
of our common stock to file reports of initial ownership of common stock and other equity securities and subsequent changes in that ownership
with the SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of
all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written
representations that no other reports were required, during the fiscal year ended December 31, 2024 all Section 16(a) filing requirements
applicable to our officers, directors and greater than 10% beneficial owners were complied with, except that one director filed Form 3
late and another director filed two Forms 4 late.

 Equity Award Grant Practices

 Equity awards are made by the Compensation Committee,
are discretionary and are not granted to executive officers and employees at any specific time in the year. In April 2024 the Board adopted
a Policy on Granting Equity Awards ("Equity Policy"). Under the Equity Policy, awards to employees shall be made on a date
when the Company's insider trading window is "open" (i.e., when the Company is not in possession of material non-public
information), and which is at least three business days after the most recent release of the Company's quarterly or annual earnings,
or Form 8-K Current Report that discloses material non-public information. With respect to grants made to executive officers, and new
hires who will become executive officers the Company shall not grant and/or price of stock options or other incentive securities under
any securities-based compensation arrangement of the Company during the period beginning four (4) business days before and ending one
(1) business day after the filing by the Company of a Form 10-Q Quarterly Report, Form 10-K Annual Report or Form 8-K Current Report that
discloses material non-public information (other than a current report on Form 8–K disclosing a material new option award grant
under Item 5.02(e) of that form). Grants of stock options to new hires (other than those who will become Section 16 officers), will not
be subject to the same restrictions but will be made on the later of the date of approval of the grant by the Compensation Committee and
the date of commencement of employment.

 Annual grants of equity awards to members of the
Board shall be effective within three business days after the date of the Annual Stockholders Meeting at which such Director is elected
or re-elected (subject that being in an open period in accordance with the previous paragraph). For Directors appointed other than at
an Annual Stockholders Meeting, initial grants of equity awards shall be effective on the date the Director is appointed (subject that
being in an open period in accordance with the previous paragraph).

 In each case where applicable, the exercise/grant price for an award
will be equal to the closing market price of our common stock on the grant date.

 Item 11. Executive Compensation

 The below table sets forth information concerning
all cash and non-cash compensation awarded to, earned by or paid to (i) all individuals serving as the Company's principal executive
officers or acting in a similar capacity during the last completed fiscal year, regardless of compensation level, and (ii) the Company's
two most highly compensated executive officers other than the principal executive officers serving at the end of the last completed fiscal
year (collectively, the "Named Executive Officers").

 SUMMARY COMPENSATION TABLE

 Non-Equity

 All

 Option

 Incentive Plan

 Other

 Salary

 Bonus

 Awards

 Compensation

 Compensation

 Total

 Name and Title

 Year

 ($)

 ($)

 ($)

 ($)

 ($)

 ($)

 Rhoniel Daguro

 2024

 400,000

 -

 -

 300,000

 13,800

 713,800

 CEO (1)

 2023

 310,769

 -

 1,185,100

 225,000

 8,000

 1,728,869

 Edward Sellitto

 2024

 275,000

 165,000

 -

 -

 9,964

 449.964

 CFO (2)

 2023

 94,712

 57,123

 315,303

 -

 2,188

 469,326

 2024

 88,750

 17,760

 571,323

 -

 1,625

 679,458

 Chief Product Officer (3)

 2023

 -

 -

 -

 -

 -

 -

 (1)
 Mr. Rhoniel A. Daguro, a director of the Company, was hired as
Chief Executive Officer of the Company in consideration of an initial annual salary of $400,000. Mr. Daguro will be eligible for an annual
target bonus of up to $375,000 based on performance milestones. For the period beginning April 1, 2023, and ending March 31, 2025, a bonus
amount of $75,000 shall be payable upon the Company achieving increments of $1,000,000 in total contract value of all customer agreements
less claw backs ("Bookings") up to an aggregate of $5,000,000 in Bookings. Above $5,000,000 a bonus amount of $75,000 shall
be payable upon the Company achieving increments of $4,000,000 in total contract bookings up to an aggregate of $17,000,000. Mr. Daguro
has earned a bonus of $300,000 in 2024 for non-equity incentive compensation based on Bookings in 2024 and has earned $225,000 in 2023
based on bookings signed in 2023. For subsequent years, Mr. Daguro and the Compensation Committee of the Board will mutually agree as
to the performance targets to earn for the annual bonus. Additionally, the Company provided Mr. Daguro with an initial grant of options
("Initial Grant") to purchase 306,875 shares of common stock for a period of ten years vesting subject to achievement of performance
and service conditions, at an exercise price of $3.176 per share. Pursuant to his offer letter the Company granted Mr. Daguro additional
options to acquire 183,125 shares of common stock for a period of ten years vesting subject to achievement of performance and service
conditions (the "Additional Grant") at an exercise price of $5.48 per share. The aggregate grant date fair market value of
Mr. Daguro's stock options was $1,185,100. Mr. Daguro has not exercised or realized a gain on his vested stock options as of the
date of this report's submission. All other compensation is primarily the Company's 401(k) match.

 The Company also entered an Executive
Retention Agreement with Mr. Daguro, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate
the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the
agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Daguro is entitled to receive an
amount equal to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid
prior to the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse
Mr. Daguro for the cost of continuation of health coverage for Mr. Daguro and his eligible dependents pursuant to COBRA until the earlier
of 12 months following the termination date, the date Mr. Daguro and his dependents are eligible for health coverage from a new employer
or the date Mr. Daguro and his eligible dependents are no longer eligible for COBRA.

 Additionally, Mr. Daguro prior to being appointed as Chief
Executive Officer received $2,000 for Director's Compensation in 2023.

 (2)
 Mr. Edward Sellitto was hired as Chief Financial Officer of the Company on July 31, 2023 in consideration
of an annual salary of $250,000. As of January 1, 2024, Mr. Sellitto's annual salary was increased to $275,000. Mr. Sellitto will
be eligible for an annual target bonus of up to 60% of base salary based on achievement of performance milestones, as Mr. Sellitto and
the Compensation Committee of the Board, will mutually agree for each year. The target bonus for the 2024 year is $165,000 and the target
bonus for the 2023 year was pro-rated to be $57,123. At the outset of employment, Mr. Sellitto was provided with a grant of options to
purchase 50,000 shares of common stock vesting subject to achievement of performance and service conditions at an exercise price of $8.87,
with an exercise period of 10 years. The grant date fair market value of the option grant was $260,500. The employment of Mr. Sellitto
will be at will and may be terminated at any time, with or without formal cause. Additionally, on December 21, 2023, the Company granted
Mr. Sellitto options to acquire 7,000 shares of common stock at an exercise price of $9.25 for ten years, vesting over twelve months.
The grant date fair market value of the option grant was $54,803. Mr. Sellitto has not exercised or realized a gain on his vested stock
options as of the date of the submission of this report. All other compensation is primarily the Company's 401(k) match.

 (3)
 Mr. Erick Soto was hired as Chief Product Officer on September 23, 2024 in consideration of an annual
salary of $325,000. Mr. Soto will be eligible for an annual target bonus of up to 20% of base salary based on achievement of performance
milestones. The target bonus for the 2024 year was pro-rated and is $17,760. At the outset of employment, Mr. Soto was provided with a
grant of options to purchase 100,000 shares of common stock vesting subject to achievement of performance and service conditions at an
exercise price of $6.94, with an exercise period of 10 years. The grant date fair market value of the option grant was $571,323.

 The Company also
entered an Executive Retention Agreement with Mr. Soto, pursuant to which the Company agreed to provide specified severance and bonus
amounts and to accelerate the vesting on his equity awards upon termination upon a change of control or an involuntary termination, as
each term is defined in the agreement. In the event of a termination upon a change of control or an involuntary termination, Mr. Soto
is entitled to receive an amount equal to 100% of his base salary.

 The above references to stock option grants should be read with Note
8 of the Notes to Financial Statements – Stockholder's Equity – Stock Option Issuances.

 On October 6, 2023, the Board adopted the Company's
Policy for the Recovery of Erroneously Awarded Compensation, in accordance with Nasdaq Rule 5608 ("Clawback Policy"). The
Clawback Policy provides for the reasonably prompt recovery by the Company of Incentive Based Compensation paid to a Covered Person (an
executive officer and certain other specified senior employees), to the extent erroneously awarded, following an Accounting Restatement
by the Company. The Clawback Policy applies to all Incentive Based Compensation paid after the date of adoption of the Clawback Policy.
(All capitalized terms in this paragraph are as defined in the Clawback Policy). The foregoing description of the Clawback Policy is not
complete and is qualified in its entirety by reference to the full text of the Clawback Policy which was filed as an exhibit to the Quarterly
Report on Form 10-Q for the period ended September 30, 2023 and is incorporated by reference herein.

 Other than the 401(k) retirement plan which allows
employer match of 100% of up to 3% employee 401(k) payroll contribution and 50% of 3%-5% employee 401(k) payroll contribution, the Company
currently has no other retirement, pension, or profit-sharing plan covering its officers and directors. The Company provides medical benefits
on a cost sharing basis and has a dental plan which is fully paid by the employees. (See "Executive Agreements" below.)

 Grant of Plan-Based Awards

 During the calendar year ended December 31, 2024, the following grants
were made to named executive officers:

 The Company granted Mr. Soto stock options to acquire
100,000 shares of common stock that vest over a 3 year period. See above for additional disclosure.

 During the calendar year ended December 31, 2023, the following grants
were made to named executive officers:

 The Company granted Mr. Daguro stock options to acquire
490,000 shares of common stock that vest upon the achievement of performance and service conditions. See above for additional disclosure.

 The Company granted Mr. Sellitto stock options to acquire
50,000 shares of common stock that vest upon the achievement of performance and service conditions. Additionally, the Company granted
Mr. Sellitto stock options to acquire 7,000 shares of common stock that vest upon the achievement of service conditions over twelve months.
See above for additional disclosure.

 There were no other grants of plan-based awards or common stock
options, to other named executive officers during the years ended December 31, 2024, and December 31, 2023.

 Outstanding Equity Awards to Executive Officers

 The following table sets forth information with respect to outstanding
equity awards held by our named executive officers as of December 31, 2024.

 Plan Awards

 Securities

 Securities

 Securities

 Underlying

 Underlying

 Underlying

 Unexercised

 Unexercised

 Unexercised

 Option

 Option

 Options (#)

 Options (#)

 Unearned

 Exercise

 Expiration

 Exercisable

 Unexercisable

 Options (#)

 Price ($)

 Date

 (a)

 (b)

 (c)

 (d)

 (e)

 (f)

 Executive Officer

 Rhon Daguro

 229,134

 77,741

 -

 3.18

 4/10/33

 Rhon Daguro

 127,157

 55,968

 -

 5.48

 6/28/33

 Edward Sellitto

 22,208

 27,792

 -

 8.87

 8/15/33

 Edward Sellitto

 7,000

 -

 -

 9.25

 12/21/33

 8,333

 91,667

 -

 6.94

 11/29/34

 Option Exercises and Stock Vested Table

 There have been no option exercises and restricted stock vesting during
the year ended December 31, 2024 by any named executive officers

 Compensation of Directors

 Cash

 Option

 Compensation

 Awards

 Total

 Year

 ($)

 ($)

 ($)

 Joe Trelin

 2024

 -

 -

 -

 Former Chairman of the Board

 2023

 26,500

 73,000

 99,500

 Michael Koehneman

 2024

 10,000

 113,559

 123,559

 2023

 37,500

 73,000

 110,500

 Jacqueline White

 2024

 10,000

 113,559

 123,559

 2023

 37,500

 73,000

 110,500

 Michael Thompson

 2024

 8,000

 113,559

 121,559

 2023

 10,000

 42,000

 52,000

 2024

 8,000

 113,559

 121,559

 2023

 10,000

 42,000

 52,000

 Kunal Mehta

 2024

 6,151

 200,968

 207,119

 2023

 -

 -

 -

 Philip Kumnick

 2024

 -

 -

 -

 Former Chairman of the Board, CEO and President

 2023

 20,000

 -

 20,000

 Philip Broenniman

 2024

 -

 -

 -

 Former Board Member and President

 2023

 16,000

 -

 16,000

 Michael Gorriz

 2024

 -

 -

 -

 2023

 14,000

 -

 14,000

 Neepa Patel

 2024

 -

 -

 -

 2023

 17,500

 -

 17,500

 In August 2024, the Board approved that the compensation policy for
non-employee directors be amended as follows:

 That annual cash compensation payable to each non-employee
Director of $8,000 (or $10,000 for Committee chairs), paid quarterly; and

 That with respect to the year awards to be made following
the 2024 Annual Meeting, each non-employee director be awarded options to purchase shares of Common Stock ("Shares") equivalent
in value to $117,000 for the current year, to be granted following the Annual Meeting (and subject to the stockholder approval of the
2024 Plan).

 Executive Employment Agreements

 Mr. Rhoniel A. Daguro, a director of the Company,
was hired as Chief Executive Officer of the Company in consideration of an initial annual salary of $400,000. Mr. Daguro will be eligible
for an annual target bonus of up to $375,000 based on performance milestones. For the period beginning April 1, 2023 and ending March
31, 2025, a bonus amount of $75,000 shall be payable upon the Company achieving increments of $1,000,000 in total contract value of all
customer agreements less claw backs ("Bookings") up to an aggregate of $5,000,000 in Bookings. Above $5,000,000 a bonus amount
of $75,000 shall be payable upon the Company achieving increments of $4,000,000 in total contract bookings up to an aggregate of $17,000,000.
Mr. Daguro has earned a bonus of $300,000 in 2024 for non-equity incentive compensation based on Bookings in 2024 and has earned $225,000
in 2023 based on bookings signed in 2023. For subsequent years, Mr. Daguro and the Compensation Committee of the Board will mutually agree
as to the performance targets to earn for the annual bonus. Additionally, the Company provided Mr. Daguro with an initial grant of options
("Initial Grant") to purchase 306,875 shares of common stock for a period of ten years vesting subject to achievement of performance
and service conditions, at an exercise price of $3.176 per share. Pursuant to his offer letter the Company granted Mr. Daguro additional
options to acquire 183,125 shares of common stock for a period of ten years vesting subject to achievement of performance and service
conditions (the "Additional Grant") at an exercise price of $5.48 per share. The aggregate grant date fair market value of
the option grants was $1,185,100.

Agreement with Mr. Daguro, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the
vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement.
In the event of a termination upon a change of control or an involuntary termination, Mr. Daguro is entitled to receive an amount equal
to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to
the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr.
Daguro for the cost of continuation of health coverage for Mr. Daguro and his eligible dependents pursuant to COBRA until the earlier
of 12 months following the termination date, the date Mr. Daguro and his dependents are eligible for health coverage from a new employer
or the date Mr. Daguro and his eligible dependents are no longer eligible for COBRA.

 Mr. Thomas Thimot, the former Chief Executive
Officer resigned upon the appointment of Mr. Daguro as Chief Executive Officer on March 23, 2023. On March 23, 2023, the Company and Thomas
Thimot entered into a Confidential Separation Agreement and General Release for the purposes of separation of Mr. Thimot from the Company
as Chief Executive Officer and an employee by mutual consent and settling, compromising and resolving all claims between them. Mr. Thimot's
resignation was effective March 23, 2023. In addition to the Company paying all accrued but unpaid salary and providing reimbursement
for all outstanding expenses, the Company has agreed to pay Mr. Thimot $325,000 which shall be deferred until the earlier of April 1,
2025 and a change of control of the Company. Mr. Thimot was also eligible for certain health benefits. The exercise period with respect
to Mr. Thimot's stock option to acquire 32,813 shares of common stock at an exercise price of $62.40 per share was extended through
March 23, 2027. All unvested grants or other equity awards lapsed and are no longer exercisable as of the separation date.

 Mr. Thomas R. Szoke, a director of the Company
agreed to serve as Chief Technology Officer of the Company on April 12, 2023 in consideration of an initial annual salary of $250,000.
Mr. Szoke received an initial signing bonus of $20,833 and will be eligible for an annual target bonus of up to $200,000 based on performance
milestones. For the period ending March 31, 2024, a bonus amount of $40,000 shall be payable upon the Company achieving increments of
$1,000,000 in total contract value of all customer agreements less claw backs ("Bookings") up to an aggregate of $5,000,000
in Bookings. Mr. Szoke has earned a bonus of $120,000 in 2023 for non-equity incentive compensation based on Bookings in 2023. For subsequent
years, Mr. Szoke and the Compensation Committee of the Board will mutually agree as to the performance targets to earn for the annual
bonus.

 The vesting criteria of Mr. Szoke's Stock
Options to acquire 12,500 shares of common stock previously granted to Mr. Szoke on March 14, 2023 (the "Original Grant")
were amended pursuant to an Amended and Restated Stock Non-Statutory Option Agreement providing for vesting subject to achievement of
performance and service conditions. All other terms of the Original Grant were not changed. On June 28, 2023, the Company made an additional
grant of options to Mr. Szoke to acquire 50,000 shares of common stock at the exercise price of $5.48 per share for a period of ten years
vesting subject to achievement of performance and service conditions. The aggregate grant date fair market value of the option grants
was $182,000.

Agreement with Mr. Szoke, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the
vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement.
In the event of a termination upon a change of control or an involuntary termination, Mr. Szoke is entitled to receive an amount equal
to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to
the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr.
Szoke for the cost of continuation of health coverage for Mr. Szoke and his eligible dependents pursuant to COBRA until the earlier of
12 months following the termination date, the date Mr. Szoke and his dependents are eligible for health coverage from a new employer or
the date Mr. Szoke and his eligible dependents are no longer eligible for COBRA.

 Mr. Edward Sellitto was hired as Chief Financial
Officer of the Company on July 31, 2023 in consideration of an annual salary of $250,000. As of January 1, 2024, Mr. Sellitto's
annual salary was increased to $275,000. Mr. Sellitto will be eligible for an annual target bonus of up to 60% of base salary based on
achievement of performance milestones, as Mr. Sellitto and the Compensation Committee of the Board, will mutually agree for each year.
The target bonus for the 2024 year is $165,000 and the target bonus for the 2023 year was pro-rated to be $57,123. At the outset of employment,
Mr. Sellitto was provided with a grant of options to purchase 50,000 shares of common stock vesting subject to achievement of performance
and service conditions at an exercise price of $8.87, with an exercise period of 10 years. The fair market value of the option grant was
$260,500. The employment of Mr. Sellitto will be at will and may be terminated at any time, with or without formal cause.

 Ms. Annie Pham, the former Chief Financial Officer
was hired as Chief Financial Officer on April 25, 2022 and commenced employment on June 20, 2022. Ms. Pham resigned on August 15, 2023.
Ms. Pham and the Company entered an Offer Letter pursuant to which Ms. Pham received a signing bonus of $25,000 and earned an annual salary
of $275,000 with a bonus target at 40% of the base salary (pro-rated for 2022). In addition, Ms. Pham was granted an option to acquire
43,750 shares of common stock at an exercise price of $19.28 per share for a term of ten years of which half of the options vest monthly
over four years and the balance is subject to certain performance vesting requirements. The aggregate grant date fair market value of
Ms. Pham's stock options was $722,750. On May 11, 2023, the Company and Ms. Annie Pham, the CFO of the Company, entered a Retention
Agreement, pursuant to which the Company agreed to provide specified retention bonus amounts subject to certain performance conditions
in the aggregate amount of up to $240,625 and to accelerate the vesting on her equity awards upon termination. Mr. Pham also received
one-year of medical coverage for an aggregate cost $57,715. This Agreement replaces the previous Executive Retention Agreement dated April
25, 2022, which was terminated, and a release granted in relation thereto.

 Mr. Erick Soto was hired as Chief Product Officer
on September 23, 2024 in consideration of an annual salary of $325,000. Mr. Soto will be eligible for an annual target bonus of up to
20% of base salary based on achievement of performance milestones. The target bonus for the 2024 year was pro-rated and is 17,760. At
the outset of employment, Mr. Soto was provided with a grant of options to purchase 100,000 shares of common stock vesting subject to
achievement of performance and service conditions at an exercise price of $6.94, with an exercise period of 10 years. The grant date fair
market value of the option grant was $571,323.

Agreement with Mr. Soto, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting
on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement.
In the event of a termination upon a change of control or an involuntary termination, Mr. Soto is entitled to receive an amount equal
to 100% of his base salary.

 Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters

 The following table sets forth the number of shares
known to be beneficially owned by all persons who own at least 5% of authID's outstanding common stock, the Company's directors,
the Company's executive officers, and the directors and executive officers as a group as of March 10, 2025, unless otherwise noted.
Unless otherwise indicated, the stockholders listed in the table have sole voting and investment power with respect to the shares indicated.

 Name

 Position

 Shares of
 Common
 Stock

 Percentage of
 Common
 Stock (1)

 Officers and Directors

 Rhoniel A. Daguro

 Director, CEO

 441,879
 (2)

 3.9
 %

 Thomas R. Szoke

 Director, CTO

 130,563
 (3)

 1.2
 %

 Michael C. Thompson

 102,689
 (4)

 *

 70,487
 (5)

 *

 Michael L. Koehneman

 42,309
 (6)

 *

 Jacqueline L. White

 40,809
 (7)

 *

 Edward Sellitto

 CFO

 36,148
 (8)

 *

 CPO

 19,445
 (9)

 *

 Kunal Mehta

 16,669
 (10)

 *

 Total Officers and Directors

 900,999

 8.1
 %

 5% Stockholders

 Stephen J. Garchik

 Stockholder

 1,456,808
 (11)

 13.3
 %

 Philip R. Broenniman

 Stockholder

 609,311
 (12)

 5.6
 %

 Total Officers, Directors and 5% Stockholders

 2,967,118

 27.0
 %

 *
 Represents less than 1% of the Company's issued and
outstanding shares of common stock.

 (1)
 Applicable percentage ownership is based on 10,920,909 shares
of common stock outstanding as of March 10, 2025. Beneficial ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently
exercisable or exercisable within 60 days of the reference date of this table are deemed to be beneficially owned by the person holding
such securities for computing the percentage of ownership of such person, but are not treated as outstanding for computing the percentage
ownership of any other person. Options or warrants which are not vested, or expected to be vested as of May 14, 2024, are referenced
in the footnotes below for the sake of completeness, but are not included in the figures in the above table.

 (2)
 Includes (i) 24,833 shares of common stock, (ii) a stock
option to purchase 306,875 shares of common stock at an exercise price of $3.176 vesting subject to achievement of performance and service
conditions, and (iii) a stock option to purchase 183,125 shares of common stock at an exercise price of $5.48 vesting subject to achievement
of performance and service conditions. A total of 417,046 of the stock options will be vested as of May 9, 2025.

 (3)
 Includes (i) 15,518 shares of common stock, (ii) 12,500 shares
of common stock held by Mrs. Szoke, (iii) a stock option to acquire 41,667 shares of common stock at an exercise price of $108.00 per
share, (iv) a stock option to acquire 4,166 shares of common stock at an exercise price of $57.60 per share, (v) a stock option to acquire
12,500 shares of common stock at an exercise price of $2.64 per share vesting subject to achievement of performance and service conditions,
(vi) a stock option to acquire 50,000 shares of common stock at an exercise price of $5.48 per share vesting subject to achievement of
performance and service conditions, and (vii) a stock option to acquire 5,000 shares of common stock at an exercise price of $9.25 per
share. A total of 102,545 of the stock options will be vested as of May 9, 2025.

 (4)
 Includes (i) 83,667 shares of common stock, (ii) a stock
option to acquire 12,500 shares of common stock at an exercise price of $2.64 per share which vest over a three-year period after each
Annual Meeting subject to continued service, (iii) a stock option to acquire 3,125 shares of common stock at an exercise price of $5.48
per share, and (iv) a stock option to acquire 15,627 shares of common stock at an exercise price of $8.67 per share, which vest over
a period of 12 months. A total of 19,012 of the stock options will be vested as of May 9, 2025.

 (5)
 Includes (i) 51,475 shares of common stock, (ii) a stock
option to acquire 12,500 shares of common stock at an exercise price of $2.64 per share which vest over a three-year period after each
Annual Meeting subject to continued service, and (iii) a stock option to acquire 3,125 shares of common stock at an exercise price of
$5.48 per share, and (iv) a stock option to acquire 15,627 shares of common stock at an exercise price of $8.67 per share, which vest
over a period of 12 months. A total of 19,012 of the stock options will be vested as of May 9, 2025.

 (6)
 Includes (i) 1,471 shares of common stock, (ii) 29 shares
of common stock held by Mrs. Koehneman, (iii) a stock option to acquire 7,813 shares of common stock at an exercise price of $62.40 per
share, which vest over a three-year period after each Annual Meeting subject to continued service, (iv) a stock option to acquire 1,280
shares of common stock at $121.28 per share, (v) a stock option to acquire 4,371 shares of common stock at $24.24 per share, (vi) a stock
option to acquire 15,625 shares of common stock at an exercise price of $5.48 per share, and (vii) a stock option to acquire 15,627 shares
of common stock at an exercise price of $8.67 per share, which vest over a period of 12 months. A total of 40,809 of the stock options
will be vested as of May 9, 2025.

 (7)
 Includes (i) a stock option to acquire 7,813 shares of common
stock at an exercise price of $62.40 per share, which vest over a three-year period after each Annual Meeting subject to continued service,
(ii) a stock option to acquire 1,280 shares of common stock at $121.28 per share, and (iii) a stock option to acquire 4,371 shares of
common stock at $24.24 per share, and (iv) a stock option to acquire 15,625 shares of common stock at an exercise price of $5.48 per
share, and (v) a stock option to acquire 15,627 shares of common stock at an exercise price of $8.67 per share, which vest over a period
of 12 months. A total of 40,809 of the stock options will be vested as of May 9, 2025.

 (8)
 Includes (i) an option to purchase 50,000 shares of common
stock at an exercise price of $8.87 vesting subject to achievement of performance and service conditions, and (ii) a stock option to
acquire 7,000 shares of common stock at an exercise price of $9.25 per share. A total of 36,148 of the stock options will be vested as
of May 9, 2025.

 (9)
 Includes (i) 1 share of common stock, and (ii) a stock option
to acquire 100,000 shares of common stock at an exercise price of $6.94 per share, which vest over a period of 36 months. A total of
19,444 of the stock options will be vested as of May 9, 2025.

 (10)
 Includes (i) 4,167 shares of common stock, (ii) a stock option
to acquire 12,500 shares of common stock at an exercise price of $7.78 per share, which vest over a three-year period after each Annual
Meeting subject to continued service, (ii) a stock option to acquire 782 shares of common stock at an exercise price of $7.78 per share,
and (iii) a stock option to acquire 15,627 shares of common stock at an exercise price of $8.67 per share, which vest over a period of
12 months. A total of 12,502 of the stock options will be vested as of May 9, 2025.

 (11)
 Includes (i) 1,123,563 shares of common stock held by Mr.
Garchik personally, (ii) 170,834 shares of common stock held by the Garchik 2019 Irrevocable Trust ("2019 Trust") of which
Mr. Garchik is a trustee and beneficiary, (iii) 4,367 shares of common stock held by Garchik Universal Limited Partnership, which Mr.
Garchik jointly controls with his sister, (iv) 147,627 shares of common stock held by the Marla Garchik 2020 Irrevocable Trust (the "2020
Trust") of which Mr. Garchik is a beneficiary, and (v) a common stock purchase warrant to acquire 10,417 shares of common stock
at $36.00 per share held by the 2019 Trust.

 (12)
 Includes (i) 79,889 shares of common stock, (ii) a stock
option to purchase 69,445 shares of common stock at a price of $16.80 per share, (iii) a stock option to purchase 47,917 shares of common
stock at a price of $57.60 per share which vest upon meeting performance criteria. The performance criteria have not been met as of March
10, 2025 and the options are not expected to be vested by May 9, 2025 (iv) common stock purchase warrants to acquire 1,094 shares of
common stock at $21.12 per share, and (v) 458,883 shares of common stock held by Varana Capital Focused L.P. ("VCFLP"). Mr.
Broenniman is the Managing Partner of Varana Capital, LLC, which, in turn, is the investment manager of and has dispositive control over
the shares held by VCFLP. By virtue of these relationships, in addition to the shares he holds personally, Mr. Broenniman may be deemed
to beneficially own the shares held by VCFLP.

 See Item 5 for information pertaining to Securities Authorized for
Issuance under Equity Compensation Plans.

 Item 13. Certain Relationships and Related Transactions and Director
Independence

 Pursuant to Rule 4200 of The NASDAQ Stock Market
one of the definitions of an independent director is a person other than an executive officer or employee of a company. The Company's
board of directors has reviewed the materiality of any relationship that each of the directors has with the Company, either directly or
indirectly. Based on this review the board has determined that there are four independent directors, including all the members of the
Audit, Compensation and Governance Committees.

 Sale of Common Stock

 On May 23, 2023, Messrs. Rhoniel Daguro,
CEO, Ken Jisser, Michael Thompson, members of the Company's Board of Directors and Joseph Trelin, the Chairman of the Board, each
purchased 12,500 shares of the Company's common stock at a price of $50,000.

 On November 20, 2023, Messrs. Rhoniel Daguro,
CEO and Director, and Joseph Trelin, the Chairman of the Board, each purchased 8,333 shares of the Company's common stock at a price
of $50,000. Michael Thompson, also a Director purchased 16,667 shares of Company's common stock at a price of $100,000. Stephen
Garchik, a holder of more than 10% of the outstanding shares of the Company's common stock, purchased 166,667 shares of Company's
common stock at a price of $1,000,000.

 On June 27, 2024, Michael Thompson, a Director
of the Company purchased 12,254 shares of the Company's common stock at an aggregate price of $100,000, as part of the Company's
Registered Direct offering.

 Credit Facility

 On March 21, 2022 the Company entered into a facility
agreement (the "Original Facility Agreement") with Mr. Stephen Garchik, an accredited investor, who is both a shareholder
of the Company and was a Convertible Note Investor, pursuant to which Mr. Garchik agreed to provide a $10.0 million unsecured standby
line of credit facility that will rank behind the Convertible Notes and may be drawn down in several tranches, subject to certain conditions
described in the Original Facility Agreement. Pursuant to the Original Facility Agreement, the Company agreed to pay Mr. Garchik the Facility
Commitment Fee of 12,500 shares of our common stock upon the effective date of the Original Facility Agreement. Upon request by Mr. Garchik
and until the full amount due under the Original Agreement is repaid in full, the Company agreed to provide for the nomination of one
designee specified in writing by Garchik for appointment to our board directors and for subsequent election to our board of directors
and to recommend such nominee for election to our board of directors. On April 18, 2022, Joseph Trelin, as Garchik's designee under
the Original Facility Agreement, was appointed as a member of the Board of Directors of the Company. By virtue of such right of nomination
Mr. Garchik considered himself a "director by deputization".

 The Original Facility Agreement was amended and
restated effective March 8, 2023 (the "A&R Facility Agreement") pursuant to which amendment the amount of the facility
was reduced to $3.6 million, an initial advance of $900,000 was made (the "Initial Promissory Note") and subsequent advances
under the A&R Facility Agreement are subject to various conditions including the granting of a security interest over substantially
all the Company's assets. Under the A&R Facility Agreement Garchik had a one-time right for the nomination of four designees
specified in writing by Garchik for appointment to our board of directors. On March 9, 2023 Rhoniel Daguro, Ken Jisser, Michael Thompson
and Thomas Szoke as Garchik's designees under the A&R Facility Agreement, were appointed as members of the Board of Directors
of the Company.

 On May 25, 2023, the Company and Mr. Garchik
agreed to cancel the Initial Promissory Note, terminated the A&R Facility Agreement and satisfied and offset the outstanding balance
of the Initial Promissory Note in the principal amount of $900,000 and $29,250 accrued and unpaid interest with the purchase price of
245,634 and 7,983 shares of common stock, respectively.

 Convertible Notes Payable

 On March 21, 2022, the Company entered into a
Securities Purchase Agreement ("SPA") with certain accredited investors, including two directors, an affiliate of a director
and an executive officer of the Company (the "Related Note Investors"), and, pursuant to the SPA, sold to the Related Note
Investors Senior Secured Convertible Notes ("Convertible Notes") with an aggregate initial principal amount of approximately
$2.2 million and a conversion price of $3.70 per share. In connection with the issuance of the Convertible Notes a total of 3,883 shares
of common stock were issued by way of an origination fee. The Convertible Notes will accrue interest at the rate of 9.75% per annum, which
will be payable in cash or, for some or all of the first five interest payments, in shares of our common stock at the Company's
option, on the last day of each calendar quarter before the maturity date and on the maturity date. The maturity date of the Convertible
Notes is March 31, 2025. During the period ended December 31, 2022, in connection with the payment of interest on the Convertible Notes,
20,761 shares were issued to the Related Note Investors (excluding the executive officer who had retired by the first interest date).

 On May 23, 2023, pursuant to an Exchange Agreement,
Mr. Ken Jisser exchanged $100,000 of Convertible Notes payable and accrued interest of $1,463 for 24,628 shares of common stock.

 On May 23, 2023, pursuant to an Exchange Agreement, Mr. Stephen J.
Garchik, who is a shareholder of the Company, exchanged $1,000,000 of Convertible Notes payable and $14,625 of accrued interest for 264,831
and 3,874 shares of common stock, respectively. As a result of such exchange, the issuance of shares in satisfaction of the Credit Facility
referred to below and the purchase of additional shares of common stock in May 2023, Mr. Garchik is now a holder of more than 10% of the
outstanding shares of the Company's common stock.

 Director & Executive Compensation

 Ms. Annie Pham was hired as Chief Financial Officer
on April 25, 2022 and commenced employment on June 20, 2022. Ms. Pham and the Company entered an Offer Letter pursuant to which Ms. Pham
received a signing bonus of $25,000, an annual salary of $275,000, and a bonus target at 40% of the base salary (pro-rated for 2022).
In addition, Ms. Pham was granted an option to acquire 43,750 shares of common stock at an exercise price of $19.28 per share for a term
of ten years of which half of the options vest monthly over four years and the balance is subject to certain performance vesting requirements.
The aggregate grant date fair market value of Ms. Pham's stock options was $722,750. In December 2022, Ms. Pham was granted an option
to purchase 7,500 shares of common stock at an exercise price of $6.32 per share for a term of ten years which will vest over one year
period at the aggregate grant date fair market value of $45,000. Mr. Pham has not exercised or realized a gain on her vested stock options
as of the date of the submission of this report. All other compensation is primarily the Company's 401(k) match for the fiscal year
2023. On May 11, 2023, the Company and Ms. Annie Pham, the CFO of the Company, entered a Retention Agreement, pursuant to which the Company
agreed to provide specified retention bonus amounts subject to certain performance conditions in the aggregate amount of up to $240,625
and to accelerate the vesting on her equity awards upon termination. Mr. Pham also received one-year of medical coverage for an aggregate
cost $57,715. This Agreement replaces the previous Executive Retention Agreement dated April 25, 2022, which was terminated, and a release
granted in relation thereto. Ms. Pham resigned on August 15, 2023.

 Mr. Thomas Thimot and Mr. Cecil Smith, became
employed by the Company as Chief Executive Officer and President and Chief Technology Officer effective June 14, 2021. Mr. Thimot and
the Company entered into an Offer Letter pursuant to which Mr. Thimot received an annual salary of $325,000 with a bonus target at 50%
of the base salary (pro-rated for 2021) upon terms to be agreed with the Compensation Committee for 2021 and on the understanding that
the 2022 target will include a requirement of the Company achieving three times the annual revenue of 2021. Additionally, Mr. Thimot was
granted an option to acquire 150,000 shares of common stock at an exercise price of $7.80 per share for a term of ten years of which half
of the options vest monthly over four years and the balance is subject to certain performance vesting requirements.

 Mr. Thimot resigned upon the appointment of Mr.
Daguro as Chief Executive Officer on March 23, 2023. On March 23, 2023, the Company and Thomas Thimot entered into a Confidential Separation
Agreement and General Release for the purposes of separation of Mr. Thimot from the Company as Chief Executive Officer and an employee
by mutual consent and settling, compromising, and resolving all claims between them. Mr. Thimot's resignation was effective March
23, 2023. In addition to the Company paying all accrued but unpaid salary and providing reimbursement for all outstanding expenses, the
Company has agreed to pay Mr. Thimot $325,000 which shall be deferred until the earlier of April 1, 2025 and a change of control of the
Company. Mr. Thimot will also be eligible for certain health benefits. The exercise period with respect to Mr. Thimot's stock option
to acquire 32,812 shares of common stock at an exercise price of $62.40 per share was extended through March 23, 2027. All unvested grants
or other equity awards lapsed and are no longer exercisable as of the separation date.

 On June 14, 2021, Mr. Smith and the Company entered
an into an Offer Letter pursuant to which Mr. Smith received an annual salary of $275,000 with a bonus target at 50% of the base salary
(pro-rated for 2021) upon terms to be agreed with the Compensation Committee for 2021. In addition, Mr. Smith received a bonus of $50,000
after 90 days of service. Additionally. Mr. Smith was granted an option to acquire 75,000 shares of common stock at an exercise price
of $7.80 per share for a term of ten years of which half of the options vest monthly over four years and the balance is subject to certain
performance vesting requirements. On February 15, 2023, Mr. Smith ceased to be an employee, and the President and Chief Technology Officer
of the Company.

Agreement with Mr. Smith, pursuant to which the Company agreed to provide specified severance and bonus amounts and provide certain other
financial benefits and to extend the exercise period on his equity awards upon termination upon a change of control or an involuntary
termination, as each term is defined in the agreement. Following his separation from employment on April 19, 2023, the Company and Mr.
Smith entered into a General Release under the terms of his Executive Retention Agreement and separation payments in the aggregate amount
of $275,000 were duly paid, in accordance with its terms. All unvested grants or other equity awards lapsed and are no longer exercisable
as of the separation date.

 Mr. Rhoniel A. Daguro, a director of the Company,
was hired as Chief Executive Officer of the Company in consideration of an initial annual salary of $400,000. Mr. Daguro will be eligible
for an annual target bonus of up to $375,000 based on performance milestones. For the period beginning April 1, 2023 and ending March
31, 2025, a bonus amount of $75,000 shall be payable upon the Company achieving increments of $1,000,000 in total contract value of all
customer agreements less claw backs ("Bookings") up to an aggregate of $5,000,000 in Bookings. Above $5,000,000 a bonus amount
of $75,000 shall be payable upon the Company achieving increments of $4,000,000 in total contract bookings up to an aggregate of $17,000,000.
Mr. Daguro has earned a bonus of $300,000 in 2024 for non-equity incentive compensation based on Bookings in 2024 and has earned $225,000
in 2023 based on bookings signed in 2023. For subsequent years, Mr. Daguro and the Compensation Committee of the Board will mutually agree
as to the performance targets to earn for the annual bonus. Additionally, the Company provided Mr. Daguro with an initial grant of options
("Initial Grant") to purchase 306,875 shares of common stock for a period of ten years vesting subject to achievement of performance
and service conditions, at an exercise price of $3.176 per share. Pursuant to his offer letter the Company granted Mr. Daguro additional
options to acquire 183,125 shares of common stock for a period of ten years vesting subject to achievement of performance and service
conditions (the "Additional Grant") at an exercise price of $5.48 per share. The aggregate grant date fair market value of
the option grants was $1,185,100.

Agreement with Mr. Daguro, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the
vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement.
In the event of a termination upon a change of control or an involuntary termination, Mr. Daguro is entitled to receive an amount equal
to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to
the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr.
Daguro for the cost of continuation of health coverage for Mr. Daguro and his eligible dependents pursuant to COBRA until the earlier
of 12 months following the termination date, the date Mr. Daguro and his dependents are eligible for health coverage from a new employer
or the date Mr. Daguro and his eligible dependents are no longer eligible for COBRA.

 Thomas R. Szoke, a director of the Company agreed
to serve as Chief Technology Officer of the Company on April 12, 2023 in consideration of an initial annual salary of $250,000. Mr. Szoke
received an initial signing bonus of $20,833 and will be eligible for an annual target bonus of up to $200,000 based on performance milestones.
For the period beginning April 1, 2023 and ending March 31, 2025, a bonus amount of $40,000 shall be payable upon the Company achieving
increments of $1,000,000 in total contract value of all customer agreements less claw backs ("Bookings") up to an aggregate
of $5,000,000 in Bookings. Above $5,000,000 a bonus amount of $40,000 shall be payable upon the Company achieving increments of $4,000,000
in total contract bookings up to an aggregate of $17,000,000. Mr. Szoke has earned a bonus of $160,000 in 2024 for non-equity incentive
compensation based on Bookings in 2024 and has earned $120,000 in 2023 based on bookings signed in 2023. For subsequent years, Mr. Szoke
and the Compensation Committee of the Board will mutually agree as to the performance targets to earn for the annual bonus.

 The vesting criteria of Mr. Szoke's Stock
Options to acquire 12,500 shares of common stock previously granted to Mr. Szoke on March 14, 2023 (the "Original Grant")
were amended pursuant to an Amended and Restated Stock Non-Statutory Option Agreement providing for vesting subject to achievement of
performance and service conditions. All other terms of the Original Grant were not changed. On June 28, 2023, the Company made an additional
grant of options to Mr. Szoke to acquire 50,000 shares of common stock at the exercise price of $5.48 per share for a period of ten years
vesting subject to achievement of performance and service conditions. The aggregate grant date fair market value of the option grants
was $182,000.

Agreement with Mr. Szoke, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the
vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement.
In the event of a termination upon a change of control or an involuntary termination, Mr. Szoke is entitled to receive an amount equal
to 100% of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to
the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr.
Szoke for the cost of continuation of health coverage for Mr. Szoke and his eligible dependents pursuant to COBRA until the earlier of
12 months following the termination date, the date Mr. Szoke and his dependents are eligible for health coverage from a new employer or
the date Mr. Szoke and his eligible dependents are no longer eligible for COBRA.

 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 each at an exercise price of $24.24 per share, 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.

 In March 2023 Mr. Broenniman, Mr. Gorriz, Mr.
Kumnick. Ms. Patel and Mr. Thimot resigned as directors of the Company. Upon their resignation 6,327 of Mr. Broenniman's options
and 19,278 of Mr. Kumnick's options previously awarded to them for service as non-management directors were cancelled by agreement,
or lapsed in accordance with their terms. 5,154 and 4,981 options respectively previously granted to Mr. Gorriz and Ms. Patel lapsed on
their resignations, in accordance with their terms. Mr. Daguro, Mr. Jisser, Mr. Szoke and Mr. Thompson were appointed as additional directors
and the size of the Board was reduced to seven. The Company granted to each of Mr. Jisser, and Mr. Thompson options to acquire 12,500
shares of common stock at an exercise price of $2.64 per share for a term of ten years that vest one third per year after each Annual
Meeting.

 In June 2023, the Company made a grant of options
to each of Messrs. Koehneman and Trelin and to Ms. White to acquire 15,625 shares of common stock and to each of Messrs. Jisser and Thompson
to acquire 3,125 shares of common stock. Each such option is at the exercise price of $5.48 per share, exercisable for a period of ten
years, vesting over a period of twelve months.

 In December 2023 the Company made a grant of options
to Mr. Sellitto to acquire 7,000 shares of common stock and to Mr. Szoke to acquire 5,000 shares of common stock. Each such option is
at the exercise price of $9.25 per share, exercisable for a period of ten years, vesting over a period of twelve months.

 On March 25, 2024, Mr. Kunal Mehta was appointed
as a Director of the Company, upon the standard terms for non-employee Directors. On May 20, 2024, Mr. Mehta was granted an option to
purchase 13,282 shares of common stock at an exercise price of $7.78 per share. 12,500 of the shares vest annually in equal amounts over
a three-year period commencing in 2025 and 782 shares vested monthly in equal amounts over a three-month period commencing March 2024.

 On August 13, 2024, the Company granted 15,627
options each at the exercise price of $8.67 per share to Messrs. Michael Koehneman, Michael Thompson, Ken Jisser, Kunal Mehta and Ms.
Jacqueline White, in accordance with the Company's compensation policy for non-employee directors. Each such option vests over a
period of twelve months.

 Employment Agreements

 Since June 2023, the Company has employed Dale
Daguro, the brother of our CEO, Rhon Daguro as a VP Sales. Dale Daguro's employment is at will and may be terminated at any time,
with or without cause. Dale's compensation is commensurate with other executives employed by the Company at a similar level of seniority
and experience. During the year ended December 31, 2024, Dale Daguro earned approximately $255,000 in base salary and sales commission.

 Commercial Agreements

 On June 6, 2023, the Company entered into a services
agreement with The Pipeline Group, Inc. ("TPG"). Ken Jisser, a director of the Company, is the founder and CEO of TPG, a technology-enabled
services company that aims to deliver business results for companies looking to build a predictable and profitable pipeline. The agreement
provides that TPG will assist in providing outsourced sales including business development resources for outbound calling, provide support
for automated dialing technology, classify customer data and other sales related services for an initial term of one year. On October
25, 2023, on December 19, 2023 and on August 26, 2024, the Company entered into amendments to the above services agreement, pursuant to
which TPG will provide certain additional services to the Company. In consideration of the services, the Company will pay TPG $70,000
per month during the current term ending in June 2025. During the year ended December 31, 2024 the Company paid TPG a total of $994,000.
As of December 31, 2024 the Company had a balance of $70,000 in Accounts Payable related to amounts owed to TPG under the payment terms
of this agreement. The foregoing is only a summary of the material terms of the agreements entered with TPG and does not purport to be
a complete description of the rights and obligations of the parties thereunder. The summary of the agreement entered with TPG is qualified
in its entirety by reference to the forms of such agreements, which were filed as exhibits to the Company's Current Report and are
incorporated by reference herein (See "Exhibits").

 Item 14. Principal Accounting Fees and Services.

 The aggregate fees incurred for each of the last
two years for professional services rendered by Cherry Bekaert LLP, the independent registered public accounting firm (PCAOB ID 00677)
or the audit of the Company's annual financial statements included in the Company's Form 10-K and review of financial statements
for its quarterly reports (Form 10-Q) are reported below.

 The total fees billed by Cherry Bekaert, LLP in
2024 aggregated $202,682 which includes fees for the audit of financial statements and review of the quarterly financial statements for
2024. Additionally, the Company paid Cherry Bekaert, LLP $28,455 for services associated with the filing of the Company's S-3 and
Prospectus Supplements.

 The total fees billed by Cherry Bekaert, LLP in
2023 aggregated $243,164 which includes fees for the audit of financial statements and review of the quarterly financial statements for
2023. Additionally, the Company paid Cherry Bekaert, LLP $33,164 for services associated with the filing of the Company's S-1 and
Prospectus Supplements.

 The Audit Committee by its Charter pre-approves
all audit services to be provided to the Company, whether provided by the principal auditor or other firms, and all other services (review,
attest and non-audit) to be provided to the Company by the independent auditor. The Audit Committee approved the services rendered for
the audit of the financial statements for the year ended December 31, 2024 and December 31, 2023 in addition to the services rendered
for the filing of the quarterly financial statements on Form 10-Q in 2024 and 2023.

 $'s in 000's

 Audit

 Taxes

 Filings

 Accounting

 Total

 2024

 $
 174.2

 $
 -

 $
 28.4

 $
 -

 $
 202.6

 2023

 $
 210.0

 $
 -

 $
 33.2

 $
 -

 $
 243.2

 The current policy of the directors, acting via
the Audit Committee, is to approve the appointment of the principal auditing firm and any permissible audit-related services. The audit
and audit related fees include fees for the annual audit of the financial statements and review of financial statements included in 10K
and Q filings.

 PART
IV

 Item
15. Exhibits & Financial Statements Schedules

 Exhibit

Number

 Description

 3.1 (1)

 Amended & Restated Certificate of Incorporation

 3.2 (6)

 Amended & Restated Bylaws as of July 18, 2022

 3.3 (2)

 Certificate of Amendment dated June 1, 2021

 3.4 (6)

 Certificate of Amendment to Amended and Restated Certificate of Incorporation as of July 18, 2022

 3.5 (7)

 Certificate of Amendment to Amended and Restated Certificate of Incorporation as of September 21, 2022

 3.6 (14)

 Certificate of Amendment to the Amended and Restated Certificate of Incorporation dated June 26, 2023

 3.7(22)

 Certificate of Amendment to the Certificate of Incorporation

 4.1 (2)

 Form of Stock Option

 4.2 (10)

 Description of the Registrant's Securities

 10.1 (2)

 Form of Director Agreement

 10.2 (2)

 Form of Indemnification Agreement

 10.3 (3)

 2017 Incentive Stock Plan

 10.4 (2)

 Executive Retention Agreement entered between the Company and Thomas L. Thimot dated June 14, 2021

 10.5 (2)

 Executive Retention Agreement entered between the Company and Cecil N. Smith III dated June 14, 2021

 10.6 (4)

 AuthID Inc. 2021 Equity Incentive Plan

 10.7 (5)

 Letter Agreement between Annie Pham and AuthID Inc. dated April 25, 2022

 10.8 (8)

 Amended and Restated Facility Agreement between the Company and Stephen J. Garchik dated March 8, 2023.

 10.9 (8)

 Promissory Note between the Company and Stephen J. Garchik dated March 9, 2023.

 10.10 (8)

 Guaranty Agreement by FIN Holdings Inc., Innovation in Motion, Inc. and ID Solutions, Inc. in favor of Stephen J. Garchik dated March 9, 2023.

 10.11 (8)

 Release Agreement between the Company and Stephen J. Garchik dated March 9, 2023.

 10.12 (9)

 Letter Agreement between Rhoniel Daguro and AuthID Inc. dated March 23, 2023

 10.13 (9)

 Executive Retention Agreement between Rhoniel Daguro and AuthID Inc. dated March 23, 2023

 10.14 (9)

 Confidential Separation Agreement and General Release between Thomas Thimot and authID Inc. Dated March 23, 2023

 10.15 (11)

 Letter Agreement between Thomas Szoke and AuthID Inc. dated April 12, 2023

 10.16 (11)

 Executive Retention Agreement between Thomas Szoke and AuthID Inc. dated April 12, 2023

 10.17 (12)

 Executive Retention Agreement between Annie Pham and AuthID Inc. dated May 11, 2023

 10.18 (13)**

 Form of Securities Purchase Agreement dated as of May 23, 2023 between the Company and accredited investors

 10.19 (13)

 Engagement Agreement dated as of April 20, 2023 between the Company and Madison Global Partners LLC

 10.20 (13)

 Stock Purchase Warrant dated May 26, 2023 issued to Madison Global Partners LLC

 10.21 (13)**

 Form of Exchange Agreement dated as of May 23, 2023 between the Company and certain Holders

 10.22 (15)

 Letter Agreement between Edward Sellitto and authID Inc. dated July 31, 2023

 10.23 (16)

 Agreement dated October 25, 2023 between The Pipeline Group, Inc. and authID Inc.

 10.24 (18)

 Form of Securities Purchase Agreement dated as of November 20, 2023 between the Company and accredited investor

 10.25 (18)

 Engagement Agreement dated as of November 2, 2023 between the Company and Madison Global Partners, LLC

 10.26 (18)

 Stock Purchase Warrant dated November 22, 2023 issued to Madison Global Partners, LLC

 10.27 (19)**

 Agreement dated December 19, 2023 between The Pipeline Group, Inc and authID Inc.

 10.28(20)

 Letter Agreement between Kunal Mehta and authID Inc.

 10.29(22)**

 Form of Securities Purchase Agreement dated as of June 24, 2024 between the Company and accredited investors

 10.30(22)

 Engagement Agreement, dated as of June 12, 2024 between the Company and Madison Global Partners, LLC

 10.31(22)

 Stock Purchase Warrant issued to Madison Global Partners LLC

 10.32***

 Agreement dated August 26, 2024 between The Pipeline Group, Inc. and authID Inc.

 10.33(23)

 Letter Agreement between Erick Soto and authID Inc. dated September 10, 2024

 10.34(23)

 Executive Retention Agreement between Erick Soto and AuthID Inc. dated September 10, 2024

 14.1 (17)

 Code of Ethics

 19*

 Insider Trading Policy

 21.1*

 List of Subsidiaries

 23.1*

 Consent of Independent Public Accounting Firm

 31.1*

 Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act

 31.2*

 Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act

 32.1*

 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 97.1 (17)

 Policy for the Recovery of Erroneously Awarded Compensation adopted October 6, 2023

 99.1 (21)

 Policy on Granting Equity Awards

 101.INS*

 101.SCH*

 101.CAL*

 101.DEF*

 101.LAB*

 101.PRE*

 *
 Filed
herewith

 **
 Certain
confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential
portions (i) are not material and (ii) would be competitively harmful if publicly disclosed. A copy of any omitted portions will be furnished
to the SEC upon request.

 (1)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 23, 2021.

 (2)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 15, 2021.

 (3)

 Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on May 4, 2018.

 (4)

 Incorporated by reference to the Form S-8 Registration Statement filed with the Securities Exchange Commission on February 1, 2022.

 (5)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on April 27, 2022.

 (6)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on July 19, 2022.

 (7)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on September 21, 2022.

 (8)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 10, 2023.

 (9)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 28, 2023.

 (10)

 Incorporated by reference to the Form 10-K Annual Report filed with the Securities Exchange Commission on March 30, 2023.

 (11)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on April 18, 2023.

 (12)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on May 16, 2023.

 (13)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on May 26, 2023.

 (14)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 27, 2023.

 (15)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on August 3, 2023.

 (16)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on October 26, 2023.

 (17)

 Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on November 8, 2023.

 (18)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on November 27, 2023.

 (19)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on December 21, 2023.

 (20)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 26, 2024.

 (21)

 Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on May 15, 2024.

 (22)

 Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on June 27, 2024.

 (23)

 Incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities Exchange Commission on November 7, 2024.

 SIGNATURES

 Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 authID Inc.

 By:

 /s/ Rhoniel Daguro

 Rhoniel A. Daguro

 Chief Executive Officer

 (Principal Executive Officer)

 By:

 /s/ Ed Sellitto

 Ed Sellitto

 Chief Financial Officer,

 (Principal Financial and Accounting Officer)

 Dated: March 13, 2025

 In accordance with the Exchange Act, this report
has been signed below by the following persons on March 13, 2025 on behalf of the registrant and in the capacities indicated.

 Signature

 Title

 /s/ Rhoniel A. Daguro

 Chief Executive Officer

 Rhoniel A. Daguro

 (Principal Executive Officer)

 /s/ Ken Jisser

 /s/ Michael Koehneman

 Michael Koehneman

 /s/ Kunal Mehta

 Kunal Mehta

 /s/ Ed Sellitto

 Chief Financial Officer

 Ed Sellitto

 (Principal Financial and Accounting Officer)

 /s/ Thomas R. Szoke

 Thomas R. Szoke

 /s/ Michael Thompson

 Michael Thompson

 /s/ Jacqueline White

 Jacqueline White

 FINANCIAL STATEMENTS

 Report of Independent Registered Accounting Firm

 Consolidated Balance Sheets as of December 31, 2024
 and 2023

 Consolidated Statements of Operations for the Years
 Ended December 31, 2024 and 2023

 Consolidated Statements of Comprehensive Loss for the
 Years Ended December 31, 2024 and 2023

 Consolidated Statements of Stockholders' Equity
 for the Years Ended December 31, 2024 and 2023

 Consolidated Statements of Cash Flows for the Years
 Ended December 31, 2024 and 2023

 Notes to Consolidated Financial Statements

 F- 1

 Report of Independent Registered Public Accounting
Firm

 To the Board of Directors and Stockholders of

 authID Inc.

 Denver, Colorado

 Opinion on the Consolidated Financial Statements

 We have audited the accompanying consolidated
balance sheets of authID Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated
statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the years then ended, and the related
notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its
operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States
of America.

 Substantial Doubt about the Company's Ability to Continue
as a Going Concern

 The accompanying consolidated financial statements
have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as
a going concern. Management's evaluations of the events and conditions and management's plans regarding those matters are
described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide
a reasonable basis for our opinion.

 Critical Audit Matter – Revenue Recognition

 The critical audit matter communicated below is
a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated
to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

 Description of Matter

 The Company recognized approximately $886,000 in revenues for the
year ended December 31, 2024. As described further in Note 1 to the consolidated financial statements, the Company recognizes revenue
when control of the Company's services is transferred to its customers in an amount that reflects the consideration the Company
expects to receive from its customers in exchange for those services in a process that involves identifying the contract with the customer,
determining the performance obligation in the contract, determining the contract price, allocating the contract price to the distinct
performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied.

 F- 2

 Due to the nature of the Company's customer agreements, management
exercises judgment in the following areas in determining appropriate revenue recognition:

 Determination of which services are considered
distinct performance obligations that should be accounted for separately or combined;

 Determination of stand-alone selling prices for
each performance obligation;

 Estimation of contract price and allocation of
the transaction price to the performance obligations;

 The pattern and timing of delivery for each distinct
performance obligation; and

 The identification and treatment of contract
terms that may impact the timing and amount of revenue recognized.

 As a result, a degree of auditor judgment was required in performing
audit procedures to evaluate the reasonableness of management's judgments. Changes in these judgments can have a material effect
on the amount of revenue recognized.

 How the Critical Audit Matter Was Addressed in the Audit

 Based on our knowledge of the Company, we determined the nature and
extent of procedures to be performed over revenue as discussed above. Our audit procedures included the following for revenue:

 Obtained an understanding of the internal
controls and processes in place over the Company's revenue recognition processes;

 Analyzed the significant assumptions and estimates made by management as discussed above; and

 Assessed the recorded revenue by selecting
a sample of transactions, analyzing the related contract, testing management's identification of distinct performance obligations,
and comparing the amounts recognized for consistency with underlying documentation.

 /s/ Cherry Bekaert LLP

 We have served as the Company's auditor since 2015.

 Tampa, Florida

 March 13, 2025

 F- 3

 CONSOLIDATED BALANCE SHEETS

 2024

 2023

 ASSETS

 Current Assets:

 Cash

 $
 8,471,561

 $
 10,177,099

 Accounts receivable, net

 97,897

 91,277

 Contract assets

 426,859

 -

 Deferred contract costs

 617,918

 157,300

 Other current assets

 460,192

 476,004

 Total current assets

 10,074,427

 10,901,680

 Intangible assets, net

 213,718

 327,001

 Goodwill

 4,183,232

 4,183,232

 Total assets

 $
 14,471,377

 $
 15,411,913

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current Liabilities:

 Accounts payable and accrued expenses

 $
 1,715,410

 $
 1,408,965

 Commission liability

 459,657

 124,150

 Severance liability

 -

 Convertible debt, net

 240,884

 -

 Deferred revenue

 215,237

 131,628

 Total current liabilities

 2,956,188

 1,664,743

 Non-current Liabilities:

 Convertible debt, net

 -

 224,424

 Severance liability

 -

 Total liabilities

 2,956,188

 2,214,167

 Commitments and Contingencies (Note 11)

 Stockholders' Equity:

 Common stock, $ 0.0001 par value, 150,000,000 and 250,000,000 shares authorized as of December 31, 2024 and 2023, respectively; 10,920,909 and 9,450,220 shares issued and outstanding as of December 31, 2024 and 2023, respectively

 1,092

 Additional paid in capital

 185,312,508

 172,714,712

 Accumulated deficit

 ( 173,808,529
)

 ( 159,530,535
)

 Accumulated comprehensive income

 10,118

 12,624

 Total stockholders' equity

 11,515,189

 13,197,746

 Total liabilities and stockholders' equity

 $
 14,471,377

 $
 15,411,913

 F- 4

 CONSOLIDATED STATEMENTS OF OPERATIONS

 For the Year Ended

 2024

 2023

 Revenues

 886,485

 190,289

 Operating Expenses:

 General and administrative

 9,149,166

 8,094,352

 Research and development

 6,242,535

 2,588,215

 Depreciation and amortization

 179,075

 255,858

 Total operating expenses

 15,570,776

 10,938,425

 Loss from continuing operations

 ( 14,684,291
)

 ( 10,748,136
)

 Other (Expense) Income

 Interest income

 455,227

 98,230

 Interest expense, net

 ( 48,930
)

 ( 1,108,458
)

 Conversion expense

 -

 ( 7,476,000
)

 Loss on extinguishment of debt

 -

 ( 380,741
)

 Other income (expense), net

 406,297

 ( 8,866,969
)

 Loss from continuing operations before income taxes

)

 ( 19,615,105
)

 Income tax expense

 -

 ( 2,864
)

 Loss from continuing operations

)

 ( 19,617,969
)

 Gain from discontinued operations

 -

 1,524

 Gain on sale of discontinued operations

 -

 216,069

 Total gain from discontinued operations

 -

 217,593

 $
)

 $
)

 Net (Loss) Earnings Per Share - Basic and Diluted

 Continuing operations

 $
 ( 1.40
)

 $
 ( 3.19
)

 Discontinued operations

 $
 -

 $
 0.04

 Weighted Average Shares Outstanding - Basic and Diluted

 10,202,371

 6,153,881

 F- 5

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 For the Year Ended

 2024

 2023

 $
)

 $
)

 Foreign currency translation loss

 ( 2,506
)

 ( 143,305
)

 Comprehensive loss

 $
 ( 14,280,500
)

 $
 ( 19,543,681
)

 F- 6

 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY

 Accumulated

 Additional

 Other

 Common
 Stock

 Paid-in

 Accumulated

 Comprehensive

 Shares

 Amount

 Capital

 Deficit

 Income

 Total

 Balances, December 31, 2022

 3,179,789

 $

 $
 140,257,448

 $
 ( 140,130,159
)

 $
 155,929

 $
 283,536

 Conversion of convertible debt into common stock

 2,348,347

 15,331,776

 -

 -

 15,332,011

 Sale of common stock for cash, net of offering costs

 3,564,666

 14,912,547

 -

 -

 14,912,904

 Conversion of credit facility borrowings into common stock

 245,634

 899,976

 -

 -

 900,000

 Stock-based compensation

 -

 -

 487,398

 -

 -

 487,398

 Warrants for services with the sale of common stock

 -

 -

 438,000

 -

 -

 438,000

 Shares issued in lieu of interest

 111,516

 387,567

 -

 -

 387,578

 Cashless stock option exercise

 -

 -

 -

 -

 -

 -

 -

 -

)

 -

)

 Foreign currency translation

 ( 143,305
)

 ( 143,305
)

 Balances, December 31, 2023

 9,450,220

 $

 $
 172,714,712

 $
 ( 159,530,535
)

 $
 12,624

 $
 13,197,746

 Stock-based compensation

 -

 2,612,164

 -

 -

 2,612,164

 Sale of common stock for cash, net of offering costs

 1,464,965

 9,985,633

 -

 -

 9,985,779

 Cashless stock option exercise

 5,724

 ( 1
)

 -

 -

 -

 -

 -

 -

)

 -

)

 Foreign currency translation

 -

 -

 -

 -

 ( 2,506
)

 ( 2,506
)

 Balances, December 31, 2024

 10,920,909

 $
 1,092

 $
 185,312,508

 $
 ( 173,808,529
)

 $
 10,118

 $
 11,515,189

 F- 7

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 Year Ended December 31,

 2024

 2023

 CASH FLOWS FROM OPERATING ACTIVITIES:

 $
)

 $
)

 Adjustments to reconcile net loss with cash flows from operations:

 Conversion expense

 -

 7,476,000

 Stock-based compensation

 2,612,164

 487,398

 Amortization of debt discounts and issuance costs

 16,460

 711,269

 Warrants for services

 -

 438,000

 Shares issued in lieu of interest

 -

 387,578

 Loss on debt extinguishment

 -

 380,741

 Depreciation and amortization expense

 179,075

 255,858

 Provision for doubtful accounts

 149,720

 150,000

 Gain from sale of discontinued operation

 -

 ( 216,069
)

 Changes in operating assets and liabilities:

 Accounts receivable

 ( 156,340
)

 170,532

 Contract assets

 ( 426,859
)

 -

 Deferred contract cost

 ( 460,618
)

 ( 157,300
)

 Other current assets

 15,812

 88,068

 Commission liability

 335,507

 124,150

 Accounts payable and accrued expenses

 306,445

 245,932

 Deferred revenue

 83,609

 50,310

 Other liabilities

 -

 Adjustments relating to discontinued operations

 -

 110,064

 Net cash flows from operating activities

 ( 11,623,019
)

 ( 8,372,845
)

 CASH FLOWS FROM INVESTING ACTIVITIES:

 Proceeds from sale of discontinued operations, net of selling costs

 -

 91,751

 Purchase of intangible assets

 ( 65,792
)

 ( 16,600
)

 Net cash flows from investing activities

 ( 65,792
)

 75,151

 CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from sale of common stock, net of offering costs

 9,985,779

 14,912,904

 Credit facility drawdown, net of issuance costs

 -

 471,816

 Net cash flows from financing activities

 9,985,779

 15,384,720

 Effect of Foreign Currencies

 ( 2,506
)

 ( 149,736
)

 Net Change in Cash

 ( 1,705,538
)

 6,937,290

 Cash, Beginning of the Year

 10,177,099

 3,237,106

 Cash, Beginning of the Year- Discontinued Operations

 -

 2,703

 Cash, End of the Year - Discontinued Operations

 -

 -

 Cash, End of the Year

 $
 8,471,561

 $
 10,177,099

 Supplemental Disclosure of Cash Flow Information:

 Cash paid for interest

 $
 32,470

 23,345

 Cash paid for interest - discontinued operations

 $
 -

 Cash paid for income taxes

 $
 -

 2,864

 Cash paid for income taxes - discontinued operations

 $
 -

 1,254

 Schedule of Non-cash Investing and Financing Activities:

 Conversion of convertible note payable and accrued interest to common stock

 $
 -

 $
 7,856,011

 Conversion of credit facility borrowings into common stock

 $
 -

 $
 900,000

 Cashless option and warrant exercises

 $

 $
 -

 F- 8

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

 authID Inc. quickly and accurately verifies a
user's identity, through its easy-to-integrate, patented, biometric identity platform, eliminating any assumption of 'who'
is behind a device and preventing cybercriminals from taking over accounts. authID combines digital onboarding, biometric passwordless
authentication and account recovery, with a fast, accurate, user-friendly experience. Establishing a biometric root of trust for each
user that is bound to their accounts or provisioned devices, authID stops fraud at onboarding, eliminates password risks and costs, and
provides the faster, frictionless, and more accurate user identity experience demanded by operators of today's digital ecosystems.

 On May 4, 2022, the Board of Directors of authID
Inc. approved a plan to exit from certain non-core activities comprising the MultiPay correspondent bank payments services in Colombia.

 As of December 31, 2022, the Company exited the
MultiPay business in Colombia and all impacted employees had left the Company. On June 30, 2023, MultiPay finalized the sale of MultiPay's
proprietary software to its major customer for approximately $ 96,000 of sale consideration. The Company collected the cash from this customer
in September 2023, released foreign currency translation gain of approximately $ 155,000 and recognized a gain of approximately $ 216,000
from the transaction. See Discontinued Operations Note 10 for details.

 Going Concern

 These consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the United States ("US GAAP") assuming the Company
will continue on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for
the next year following the issuance date of these consolidated financial statements.

 As of December 31, 2024, the Company had an accumulated
deficit of approximately $ 173.8 million. For the year ended December 31, 2024, the Company earned revenue of approximately $ 0.9 million,
used $ 11.6 million to fund its operations, and incurred a net loss from continuing operations of approximately $ 14.3 million.

 The continuation of the Company as a going concern
is dependent upon financial support from the Company's stockholders, the ability of the Company to obtain additional debt or equity
financing to continue operations, the Company's ability to generate sufficient revenues and cash flows from operations (both from
existing and new customers), and successfully locating and negotiating with cash generating business entities for potential acquisition
by the Company. In June 2024, the Company raised approximately $ 10.0 million after expenses from existing and new stockholders through
the sale of Common Stock pursuant to a registered direct offering. Going forward, the Company plans to raise additional funds to support
its operations and investments as it seeks to create a sustainable organization. Our growth-oriented business plan to offer products to
our customers will require continued capital investment and there is no guarantee that such financing will be available, or available
on acceptable terms.

 The Company will require additional funding for
its current operations as it continues to invest in its product, people, and technology. The Company projects that the investments will
lead to revenue expansion, thereby reducing liquidity needs. However, in order to further implement its business plan and satisfy its
working capital requirements, the Company will need to raise additional capital. There is no guarantee that the Company will be able to
raise additional equity or debt financing at acceptable terms, if at all.

 There is no assurance that the Company will ever
be profitable. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue
as a going concern. As there can be no assurance that the Company will be able to achieve positive cash flows (become cash flow positive)
and raise sufficient capital to maintain operations, there is substantial doubt about the Company's ability to continue as a going
concern.

 Reclassification

 Certain prior year expenses have been reclassified
for consistency with the current year presentation. These reclassifications had no effect on the previously reported loss from continuing
operations and management does not believe that this reclassification is material to the consolidated financial statements taken as a
whole. Specifically, for the twelve months ended December 31, 2024, we reclassified approximately $ 212,000, in prior year expenses from
research and development expenses to general and administrative expenses.

 Subsequent Events

 Management of the Company has performed a review
of all events and transactions occurring after the condensed consolidated balance sheet date and determined there were no events or transactions
requiring adjustment to or disclosure in the accompanying condensed consolidated financial statements.

 Basis of Consolidation

 The consolidated financial statements include
the accounts of authID Inc. and its wholly-owned subsidiaries MultiPay S.A.S. (dissolved as of August 2, 2024), ID Solutions, Inc., FIN
Holdings Inc., Ipsidy Enterprises Limited, and authID Gaming Inc. (collectively the "Company"). All significant intercompany
balances and transactions have been eliminated in consolidation.

 F- 9

 Use of Estimates

 In preparing these consolidated financial statements
in conformity with US GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported
amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 Revenue Recognition

 Software License – The Company recognizes revenue
based on the identified performance obligations over the performance period for fixed consideration and / or variable fees generated.
Variable fees are typically earned over time based on monthly users and transaction volumes. We allocate the selling price in a contract
which has multiple performance obligations based on the contract selling price that we believe represents a fair market price for the
service rendered based on estimated standalone selling price. Transaction fees are billed monthly and are constrained to transactions
incurred within the month.

 For contracts with minimum annual fees, the Company generally recognizes
the amount of revenue ratably over the contract year and records contract assets for the amount in excess of monthly contract billings
relating to variable contract consideration. For certain contracts, the Company enters into an agreement which stipulates a minimum annual
fee which is generally due at the end of the contract year, in excess of the amount of monthly billings. The Company may also require
milestone payments of the minimum annual fee. The amount of any billed fees in excess of revenue recognized is recorded as deferred revenue.
The company accounts for any price concessions granted to a customer as reductions to consideration under each respective contract and
subsequently recognizes revenue up to the amount of the revised consideration after the concession is provided.

 Any usage-based fees in excess of the minimum
contract amount are charged to the customer and allocated to the annual period in which they are earned under the contract. At the beginning
of each annual period in the contract, the Company estimates the variable amounts for the annual period subject to the constrained variable
consideration (usage-based fees) and recognizes that amount on a time-elapsed basis over the annual period. At each reporting date within
an annual period, the Company reassesses its estimate of the excess variable amounts for the annual period and updates the amount recognized
on a time-elapsed basis over the remainder of the annual period.

 The Company had deferred revenue contract liabilities
of approximately $ 215,000 and $ 132,000 as of December 31, 2024 and December 31, 2023 respectively for certain revenue that will be earned
in future periods. All deferred revenue contract liabilities as of December 31, 2024 are expected to be earned over the next twelve months.

 Contract Balances

 The following table provides information about accounts receivable,
contract assets and contract liabilities from contracts with customers as of:

 2024

 2023

 Accounts receivable, net

 $
 97,897

 $
 91,277

 Contract assets

 426,859

 -

 Contract liabilities (deferred revenue)

 215,237

 131,628

 Remaining Performance Obligations

 As of December 31, 2024, the Company's Remaining Performance
Obligation (RPO) was $ 14.26 million, of which $ 0.22 million is recorded as deferred revenue and $ 14.04 million is related to other non-cancellable
contracted amounts. The Company expects approximately 33 % of the RPO to be recognized as revenue over the twelve months ending December
31, 2025, based on contractual commitments and expected usage patterns. However, the amount and timing of revenue recognition are generally
dependent upon customers' future consumption, which is inherently variable at customers' discretion. Furthermore, the Company
does not have sufficient historical information to estimate the recognition of revenue due to its current operations and has approximated
such amount based on discussions with the contracted parties.

 In 2024, the Company evaluated the rollout timelines
for several customers who have delayed go-live adoption dates due to their respective corporate processes and timelines. In December 2024,
the Company amended an agreement with a certain customer (who comprises $ 1.15 million of the Company's RPO and approximately $ 394,000
of contract assets as of December 31, 2024) to modify the terms of their contract and defer the timing of their minimum payment obligations.
This results in a reduction in the future periodic recognition of the revenue associated with this performance obligation through the
end of the modified contract period, December 31, 2027. The proposed modifications are not expected to affect the overall RPO associated
with the customer contract. Finally, the estimated RPO assumes that none of the signed customer contracts are terminated in advance of
their expiration, the customers do not experience a significant deterioration of credit, and that the customers do not cancel the go-live
adoption date.

 F- 10

 Deferred Contract Costs

 We defer the portion of sales commission that
is considered a cost of obtaining a new contract with a customer and amortize these deferred costs over the period of benefit. We expense
the remaining sales commissions as incurred. The following table summarizes deferred contract cost activity for the year ended December
31, 2024:

 Deferred Contract Costs

 Carrying Value at December 31, 2023

 $
 157,300

 Additions

 572,596

 Reductions

 ( 82,550
)

 Amortization

 ( 29,428
)

 Carrying Value at December 31, 2024

 $
 617,918

 Legacy Authentication Services –
The Company historically has sold certain legacy software licenses to customers and revenue is recognized when delivery occurs, and all
other revenue recognition criteria have been met. During both 2024 and 2023, the Company provided annual software maintenance support
services relating to previously licensed software on a stand-ready basis. These fees were billed in advance and recognized ratably over
the requisite service period as revenue.

 Accounts Receivable

 All customers are granted credit on a short-term
basis. The Company routinely reviews its trade receivables and makes provisions for probable doubtful accounts; however, those provisions
are estimates and actual results could differ from those estimates and those differences may be material. Trade receivables are deemed
uncollectible and removed from accounts receivable and the allowance for doubtful accounts when collection efforts have been exhausted.

 On August 29, 2022, the Company completed the
sale of Cards Plus for a price of $ 300,000 of which $ 150,000 was received and the remaining balance of $ 150,000 was recorded in other
current assets. While the Company and Cards Plus continued to actively pursue payment of the remaining balance, management re-evaluated
the likelihood of recovery and recorded an allowance for doubtful account in the year ended December 31, 2023 related to this receivable.
At December 31, 2024 the Company re-evaluated the likelihood of recovery of the balance of $ 150,000 and decided to remove the $ 150,000
from accounts receivable and allowance for doubtful accounts.

 At December 31, 2024 the Company's balance
in its allowance for doubtful accounts is $ 149,720.

 New Accounting Pronouncement

 Improvements to Reportable Segment Disclosures

 In November 2023, the Financial Accounting Standards
Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280), Improvements
to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant
segment expenses on an interim and annual basis. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable
segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for the fiscal years beginning
after December 15, 2024. We adopted this guidance during the year ended December 31, 2024, and the adoption did not have a material impact
on our consolidated financial statements.

 Recently Issued Accounting Pronouncements Not Yet Adopted

 Induced Conversions of Convertible Debt Instruments

 In November 2024, the FASB issued ASU No. 2024-04,
"Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments".
The amendments in the ASU require disclosures for determining whether certain settlements of convertible debt instruments should be accounted
for as an induced conversion. ASU 2024-04 is effective for fiscal years beginning after December 15, 2025, with early adoption allowed.
We are currently evaluating the impact of adoption on our financial disclosures.

 Disaggregation of Income Statement Expenses

 In November 2024, the FASB issued ASU No. 2024-03,
"Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation
of Income Statement Expenses". The amendments in the ASU require disclosures about specific types of expenses included in the expense
captions presented on the Consolidated Statements of Income, as well as disclosures about selling expenses. ASU 2024-03 is effective for
fiscal years beginning after December 15, 2026, with early adoption allowed. We are currently evaluating the impact of adoption on our
financial disclosures.

 Improvements to Income Tax Disclosures

 In December 2023, the FASB issued ASU No. 2023-09,
"Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The amendments in the ASU enhance income tax disclosures,
primarily through standardization, disaggregation of rate reconciliation categories, and income taxes paid by jurisdiction. ASU 2023-09
is effective for fiscal years beginning after December 15, 2024, with early adoption allowed. We are currently evaluating the impact of
adoption on our financial disclosures.

 F- 11

 Concentration of Risks

 The Company's financial instruments that potentially expose the
Company to a concentration of credit risk consist of cash and accounts receivable.

 The Company's cash is deposited at financial institutions and
cash balances held in United States ("US") bank accounts are insured by the Federal Deposit Insurance Corporation ("FDIC")
up to $ 250,000. Cash balances are generally in excess of the amounts insured by FDIC. At December 31, 2024, the Company had approximately
$ 8.5 million in funds in the United States which are approximately $ 8.2 million in excess of the insured amounts by the FDIC. For the
Company's foreign subsidiaries, no amounts are insured. At December 31, 2024, the Company held approximately $ 600 in cash maintained
in a British bank.

 For the years-ended December 31, 2024 and 2023,
two customers accounted for 64 % and 59 % of the Company's revenue respectively.

 As of December 31, 2024, one customer accounted
for 26 % of the Company's accounts receivable. As of December 31, 2023, two customers accounted for 67 % of the Company's accounts
receivable.

 As of December 31, 2024, one customer accounted
for 70 % of the Company's Remaining Performance Obligation. As of December 31, 2023, two customers accounted for 82 % of the Company's
Remaining Performance Obligation.

 Income Taxes

 The Company accounts for income taxes under Financial
Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740 "Income Taxes."
Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred
tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

 Leases

 In July 2022, the Company signed a lease agreement
for one year and moved its headquarters to Denver, Colorado. The office monthly lease cost was approximately $ 1,500 per month. The Company
did not renew the lease agreement after July 2023 and has no remaining lease agreements as of December 31, 2024.

 Property and Equipment, net

 Property and equipment consists of furniture and
fixtures and computer equipment and are stated at cost. Property and equipment are depreciated using the straight-line method over the
estimated useful service lives of three to five years. Maintenance and repairs are expensed as incurred and improvements are capitalized.
Gains or losses on the disposition of property and equipment are recorded upon disposal.

 Intangible Assets

 Intangible assets include when applicable, costs
associated with software development of new product offerings and significant enhancements to existing applications. Research & development
costs are expensed as incurred. Development costs of computer software to be sold, leased or otherwise marketed are subject to capitalization
beginning when a product's technological feasibility has been established and ending when a product is available for general release
to customers. As of December 31, 2024 and 2023, all assets are in service.

 Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected
to be generated by the asset.

 For the years ended December 31, 2024 and 2023,
the Company determined that all intangible assets would be recovered and therefore did not record impairment expense.

 Goodwill

 Goodwill is recorded when the purchase price paid
for an acquisition exceeds the fair market value of net identified tangible and intangible assets acquired. The Company performs an annual
impairment test of goodwill and further periodic tests to the extent indicators of impairment develop between annual impairment tests.
The Company's impairment review process compares the fair market value of the reporting unit to it carrying value, including the
goodwill related to the reporting unit utilizing qualitative considerations. To determine the fair market value of the reporting unit,
the Company may use various approaches including an asset or cost approach, market approach or income approach or any combination thereof.
These approaches may require the Company to make certain estimates and assumptions including future cash flows, revenue and expenses.
These estimates and assumptions are reviewed each time the Company tests goodwill for impairment and are typically developed as part of
the Company's routine business planning and forecasting process. While the Company believes its estimates and assumptions are reasonable,
variations from those estimates could produce materially different results.

 During the years ended December 31, 2024 and 2023,
the Company's assessment did not indicate that an impairment charge was required as its fair market value (as determined primarily
by the Company's market capitalization) was in excess of carrying value.

 F- 12

 Stock-based Compensation

 The Company has accounted for stock-based compensation
under the provisions of FASB ASC 718 – "Stock Compensation" which requires the use of the fair- value based method to
determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options
and common stock purchase warrants). For all awards, the fair market value of each stock option award is estimated on the date of grant
using the Black- Scholes or Monte-Carlo valuation models as appropriate that uses assumptions for expected volatility, expected dividends,
expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of the Company's stock
and other factors estimated over the expected term of the stock options. For employee awards, the expected term of options granted is
derived based on exercise history. We continually monitor exercise activity from the date of grant and consider our short history and
certain stock price growth during various periods. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time
of grant for the period of the expected term. The Company accounts for forfeitures of employee awards as they occur.

 General and Administrative Expense

 General and administrative expenses consist primarily of payroll, bonuses
and awards, stock-based compensation and other employee-related costs for executive management, sales, and finance and legal as well as
external professional services. General and administrative expenses also include incremental costs related to servicing the customer contracts,
such as payroll, consulting, hosting and software related expenses.

 Research and Development Costs

 Research and development costs consist of expenditures
for the research and development of new products and technology. These costs are primarily expenses incurred to perform research projects
and develop technology for the Company's products. Research and development costs are expensed as incurred.

 Net Loss per Common Share

 The Company computes net loss per share in accordance
with FASB ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share ("EPS")
on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common shareholders by the weighted
average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding
during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted
method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased
from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares
if their effect is anti-dilutive. The following potentially dilutive securities were excluded from the calculation of diluted loss per
share for the years ended December 31, 2024 and 2023 because their effect was antidilutive:

 2024

 2023

 Convertible notes payable

 8,277

 8,277

 Warrants

 697,446

 598,267

 Stock options

 2,147,402

 1,796,739

 2,853,125

 2,403,283

 Foreign Currency Translation

 The assets, liabilities and results of operations
of certain of authID's subsidiaries are measured using their functional currency which is the currency of the primary foreign economic
environment in which they operate. Upon consolidating these subsidiaries, the applicable assets and liabilities are translated to US dollars
at currency exchange rates as of the applicable dates and their revenues and expenses are translated at the weighted average currency
exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating these subsidiaries'
financial statements are reported in other comprehensive loss in the accompanying consolidated statements of comprehensive loss.

 NOTE 2 – OTHER CURRENT ASSETS AND OTHER
ASSETS

 Other current assets consisted
of the following at December 31, 2024 and 2023:

 2024

 2023

 Prepaid Insurance

 $
 141,002

 $
 184,492

 Prepaid Third Party Services

 319,190

 291,512

 $
 460,192

 $
 476,004

 F- 13

 NOTE 3 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL)

 The Company's intangible assets consist
of intellectual property acquired from FIN Holdings Inc. in addition to internally developed software that have been placed into service.
They are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible
assets for the years ended December 31, 2024, and 2023:

 Acquired and

 Developed

 Software

 Patents

 Total

 Useful Lives

 5 Years

 10 Years

 Carrying Value at December 31, 2022

 $
 435,595

 $
 130,664

 $
 566,259

 Additions

 16,600

 -

 16,600

 Amortization

 ( 239,397
)

 ( 16,461
)

 ( 255,858
)

 Carrying Value at December 31, 2023

 $
 212,798

 $
 114,203

 $
 327,001

 Additions

 48,210

 17,582

 65,792

 Amortization

 ( 161,189
)

 ( 17,886
)

 ( 179,075
)

 Carrying Value at December 31, 2024

 $
 99,819

 $
 113,899

 $
 213,718

 The
following is a summary of intangible assets as of December 31, 2024:

 Acquired and

 Developed

 Software

 Patents

 Total

 Cost

 1,782,872

 182,197

 1,965,069

 Accumulated amortization

 ( 1,683,053
)

 ( 68,298
)

 ( 1,751,351
)

 Carrying Value at December 31, 2024

 $
 99,819

 $
 113,899

 $
 213,718

 The
following is a summary of intangible assets as of December 31, 2023:

 Acquired and

 Developed

 Software

 Patents

 Total

 Cost

 1,734,662

 164,614

 1,899,276

 Accumulated amortization

 ( 1,521,864
)

 ( 50,411
)

 ( 1,572,275
)

 Carrying Value at December 31, 2023

 $
 212,798

 $
 114,203

 $
 327,001

 The
following is the future amortization of intangible assets for the years ended December 31:

 2025

 87,158

 2026

 37,056

 2027

 30,271

 2028

 18,219

 2029

 18,219

 Thereafter

 22,795

 $
 213,718

 F- 14

 NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 Accounts payable and accrued expenses consisted of the following as
of December 31, 2024 and 2023:

 2024

 2023

 Trade payables

 $
 317,030

 $
 339,832

 Accrued payroll and related expenses

 984,536

 707,317

 Other

 413,844

 361,816

 $
 1,715,410

 $
 1,408,965

 NOTE 5 – WORKING CAPITAL FACILITY

 On March 21, 2022, the Company entered into a
Facility Agreement with a current shareholder and noteholder of the Company ("Garchik"), pursuant to which the shareholder
agreed to provide to the Company a $ 10.0 million unsecured standby line of credit facility that will rank behind the Convertible Notes
(see Note 6) and may be drawn down in several tranches, subject to certain conditions described in the Facility Agreement (the "Credit
Facility"). Pursuant to the Credit Facility, the Company agreed to pay a facility commitment fee of 12,500 shares of our common
stock upon the effective date of the Credit Facility.

 On March 8, 2023, the Company entered into an
Amended and Restated Facility Agreement ("A&R Facility Agreement") with Garchik, pursuant to which the Company and Garchik
amended and restated the Original Facility Agreement in its entirety, to replace the credit facility contemplated by the Original Facility
Agreement with (i) an initial credit facility to the Company in an amount of $ 900,000 and (ii) the parties to use their reasonable best
efforts after the Initial Funding to negotiate the terms of a subsequent credit facility in the aggregate amount of $ 2,700,000 (the "Subsequent
Funding").

 On March 9, 2023, pursuant to the A&R Facility
Agreement, the Company entered into a promissory note (the "Initial Promissory Note") in favor of Garchik, pursuant to which
Garchik loaned the amount of $ 900,000 (the "Principal Amount") to the Company. In connection with the Company and Garchik
entering into the Initial Promissory Note, each of the principal United States based subsidiaries of the Company agreed to, for the benefit
and security of Garchik, guarantee the payment and performance all of the Company's obligations under the Initial Promissory Note
and the Guaranty. The Company and Garchik also entered into the Release Agreement, pursuant to which the Company and Garchik mutually
agreed to release any and all rights to make a claim against the other and any existing claims against the other arising out of or relating
to the Original Facility Agreement.

 The Company wrote-off approximately $ 373,000 of
the issuance costs related to the Original Credit Facility and capitalized $ 426,000 issuance costs related to the A&R Facility Agreement.

 On May 25, 2023, the Company and Garchik agreed
to cancel the Initial Promissory Note, terminate the A&R Facility Agreement and Guaranty and satisfy and offset the outstanding balance
of the Initial Promissory Note, plus accrued and unpaid interest in the aggregate amount of $ 929,250 against the purchase price of certain
shares of common stock of the Company.

 See Note 8 "Shareholders' Equity".
All remaining unamortized debt issuance costs of approximately $ 381,000 related to the Initial Promissory Note and the A&R Facility
Agreement were recorded as a loss on debt extinguishment in the year ended December 31, 2023.

 F- 15

 NOTE 6 – CONVERTIBLE NOTES PAYABLE

 On March 21, 2022, the Company entered into a
Securities Purchase Agreement ("SPA") with certain accredited investors, including certain directors of the Company or their
affiliates (the "Note Investors"), and, pursuant to the SPA, sold to the Note Investors Senior Secured Convertible Notes (the
"Convertible Notes") with an aggregate initial principal amount of approximately $ 9.2 million and a conversion price of $ 3.70.
The Convertible Notes were sold with an aggregate cash origination fee of approximately $ 200,000, and we issued a total of approximately
 3,562 shares of our common stock to the Note Investors as an additional origination fee. The Convertible Notes will accrue interest at
the rate of 9.75 % per annum, which will be payable in cash or, for some or all of the first five interest payments, in shares of our common
stock at the Company's option, on the last day of each calendar quarter before the maturity date and on the maturity date. The maturity
date of the Convertible Notes is March 31, 2025.

 Between May 23 and June 7, 2023, the Company entered
into an exchange agreement with certain holders ("Holders") of the Convertible Notes of the Company, pursuant to which the
Company agreed to issue 2,348,347 shares of common stock to the Holders in exchange for approximately $ 8.9 million (or approximately $ 7.9
million, net of debt issuance costs and discount) of the principal amount of Holders' Convertible Notes at a price between $ 3.78
and $ 5.80 per share (or $ 4.12 if the Holder is a director, officer or insider of the Company). The Company also recognized an expense
on conversion of convertible notes of approximately $ 7.5 million, representing the market value of the additional shares issued by the
Company in exchange for the Convertible Notes, above the number of shares that the Holders would have received upon conversion at the
original conversion price under the Convertible Notes.

 On May 23, 2023, the Company solicited the consent
of the Convertible Notes Holders to eliminate substantially all of the restrictive covenants and a related event of default in the Convertible
Notes. The Company received consent from Holders representing over the necessary 66.67 % of the outstanding principal amount under the
Convertible Notes

 During the years ended December 31, 2024 and 2023,
the Company issued 0 and 103,533 shares of common stock for approximately $ 0 and $ 358,000 of interest expense, respectively. The number
of shares issued to each Note Investor was based on the Volume-Weighted Average Price of the common stock as of the relevant interest
payment date, as defined in the Convertible Notes.

 In connection with the issuance of the Convertible
Notes during 2022, the Company issued 17,836 common stock warrants to a broker and its representatives with an estimated grant date fair
market value of approximately $ 449,000 which was recorded as a reduction in the carrying value of the Convertible Notes.

 The
following is a summary of convertible notes outstanding as of December 31, 2024 and 2023:

 2024

 2023

 9.75 % convertible notes due March 31, 2025

 245,000

 245,000

 less

 Unamortized debt discount expense

 ( 652
)

 ( 3,256
)

 Unamortized debt issuance expense

 ( 3,464
)

 ( 17,320
)

 $
 240,884

 $
 224,424

 F- 16

 NOTE 7 – RELATED PARTY TRANSACTIONS

 Convertible Notes Payable

 On May 23, 2023, pursuant to an Exchange Agreement,
Mr. Ken Jisser, who became a director of the Company on March 9, 2023, exchanged $ 100,000 of Convertible Notes payable and accrued interest
of $ 1,463 for 24,628 shares of common stock.

 On May 23, 2023, pursuant to an Exchange Agreement,
Mr. Stephen J. Garchik, who is a shareholder of the Company, exchanged $ 1,000,000 of Convertible Notes payable and $ 14,625 of accrued
interest for 264,831 and 3,874 shares of common stock, respectively. As a result of such exchange, the issuance of shares in satisfaction
of the Credit Facility referred to below and the purchase of additional shares of common stock in May 2023, (See Note 8 "Shareholders'
Equity"), Mr. Garchik is now a holder of more than 10 % of the outstanding shares of the Company's common stock.

 Issuance of Common Stock

 On May 23, 2023, Messrs. Rhoniel Daguro, CEO,
Ken Jisser, Michael Thompson, members of the Company's Board of Directors and Joseph Trelin, the Chairman of the Board, each purchased
 12,500 shares of Company's common stock at a price of $ 50,000.

 On November 20, 2023, Messrs. Rhoniel Daguro,
CEO and Director, and Joseph Trelin, the Chairman of the Board, each purchased 8,333 shares of the Company's common stock at a price
of $ 50,000. Michael Thompson, also a Director purchased 16,667 shares of Company's common stock at a price of $ 100,000. Stephen
Garchik, a holder of more than 10 % of the outstanding shares of the Company's common stock, purchased 166,667 shares of Company's
common stock at a price of $ 1,000,000.

 On June 27, 2024, Michael Thompson, a Director
of the Company purchased 12,254 shares of the Company's common stock at an aggregate price of $ 100,000, as part of the Company's
Registered Direct offering.

 Credit Facility

 On March 21, 2022, the Company entered into the
Original Facility Agreement with Mr. Stephen Garchik, which was subsequently amended and then on May 25, 2023 was terminated and all outstanding
liability thereunder was satisfied. See Note 5 "Working Capital Facility" for details regarding the Credit Facility.

 F- 17

 Executive Officers

 On March 23, 2023, the Company and Thomas Thimot
entered into a Confidential Separation Agreement and General Release for the purposes of separation of Mr. Thimot from the Company as
Chief Executive Officer and an employee by mutual consent and settling, compromising and resolving all claims between them. Mr. Thimot's
resignation was effective March 23, 2023. In addition to the Company paying all accrued but unpaid salary and providing reimbursement
for all outstanding expenses, the Company has agreed to pay Mr. Thimot $ 325,000 which shall be deferred until the earlier of April 1,
2025 and a change of control of the Company. Mr. Thimot will also be eligible for certain health benefits. The exercise period with respect
to Mr. Thimot's stock option to acquire 32,812 shares of common stock at an exercise price of $ 62.40 per share was extended through
March 23, 2027. All unvested grants or other equity awards lapsed and are no longer exercisable as of the separation date.

 Mr. Rhoniel A. Daguro, a director of the Company,
was hired as Chief Executive Officer of the Company in consideration of an initial annual salary of $ 400,000. Mr. Daguro will be eligible
for an annual target bonus of up to $ 375,000 based on performance milestones. For the period beginning April 1, 2023 and ending March
31, 2025, a bonus amount of $ 75,000 shall be payable upon the Company achieving increments of $ 1,000,000 in total contract value of all
customer agreements less claw backs ("Bookings") up to an aggregate of $ 5,000,000 in Bookings. Above $ 5,000,000 a bonus amount
of $ 75,000 shall be payable upon the Company achieving increments of $ 4,000,000 in total contract bookings up to an aggregate of $ 17,000,000.
For subsequent years, Mr. Daguro and the Compensation Committee of the Board will mutually agree as to the performance targets to earn
for the annual bonus. Additionally, the Company provided Mr. Daguro with an initial grant of options ("Initial Grant") to
purchase 306,875 shares of common stock for a period of ten years vesting subject to achievement of performance and service conditions,
at an exercise price of $ 3.176 per share. Pursuant to his offer letter the Company granted Mr. Daguro additional options to acquire 183,125
shares of common stock for a period of ten years vesting subject to achievement of performance and service conditions (the "Additional
Grant") at an exercise price of $ 5.48 per share. The aggregate grant date fair market value of the option grants was $ 1,185,100.

Agreement with Mr. Daguro, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the
vesting on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement.
In the event of a termination upon a change of control or an involuntary termination, Mr. Daguro is entitled to receive an amount equal
to 100 % of his base salary, the actual bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to
the termination date. Further, upon termination upon a change of control or an involuntary termination, the Company will reimburse Mr.
Daguro for the cost of continuation of health coverage for Mr. Daguro and his eligible dependents pursuant to COBRA until the earlier
of 12 months following the termination date, the date Mr. Daguro and his dependents are eligible for health coverage from a new employer
or the date Mr. Daguro and his eligible dependents are no longer eligible for COBRA.

 On April 12, 2023, the Company entered an Offer
Letter with Thomas R. Szoke, a director of the Company, pursuant to which Mr. Szoke agreed to serve as Chief Technology Officer in consideration
of an initial annual salary of $ 250,000. Mr. Szoke received an initial signing bonus of $ 20,833 and will be eligible for an annual target
bonus of up to $ 200,000 based on performance milestones. For the period beginning April 1, 2023 and ending March 31, 2025, a bonus amount
of $ 40,000 shall be payable upon the Company achieving increments of $ 1,000,000 in total contract value of all customer agreements less
claw backs ("Bookings") up to an aggregate of $ 5,000,000 in Bookings. Above $ 5,000,000 a bonus amount of $ 40,000 shall be
payable upon the Company achieving increments of $ 4,000,000 in total contract bookings up to an aggregate of $ 17,000,000. For subsequent
years, Mr. Szoke and the Compensation Committee of the Board will mutually agree as to the performance targets to be achieved, to earn
the annual bonus. The vesting criteria of Mr. Szoke's Stock Options to acquire 12,500 shares of common stock previously granted
to Mr. Szoke on March 14, 2023 (the "Original Grant") were amended pursuant to an Amended and Restated Stock Non-Statutory
Option Agreement providing for vesting subject to achievement of performance and service conditions. All other terms of the Original Grant
were not changed. On June 28, 2023, the Company made an additional grant of options to Mr. Szoke to acquire 50,000 shares of common stock
at the exercise price of $ 5.48 per share for a period of ten years vesting subject to achievement of performance and service conditions.
Additionally, on December 21, 2023, the Company granted Mr. Szoke options to acquire 5,000 shares of common stock at an exercise price
of $ 9.25 for ten years, vesting over twelve months.

 F- 18

 The employment of Mr. Szoke is at will and may
be terminated at any time, with or without formal cause. The Company also entered an Executive Retention Agreement with Mr. Szoke, pursuant
to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting on his equity awards upon termination
upon a change of control or an involuntary termination, as each term is defined in the agreement. In the event of a termination upon a
change of control or an involuntary termination, Mr. Szoke is entitled to receive an amount equal to 100 % of his base salary, the actual
bonus earned but unpaid for the previous year and any bonus that was earned but unpaid prior to the termination date. Further, upon termination
upon a change of control or an involuntary termination, the Company will reimburse Mr. Szoke for the cost of continuation of health coverage
for Mr. Szoke and his eligible dependents pursuant to COBRA until the earlier of 12 months following the termination date, the date Mr.
Szoke and his dependents are eligible for health coverage from a new employer or the date Mr. Szoke and his eligible dependents are no
longer eligible for COBRA.

 On May 11, 2023, the Company entered a Retention
Agreement with Hang Pham, pursuant to which the Company agreed to provide specified retention bonus amounts subject to certain performance
conditions in the aggregate amount of up to $ 240,625 and to accelerate the vesting on her equity awards upon termination. This Agreement
replaces the previous Executive Retention Agreement dated April 25, 2022, which was terminated and a release granted in relation thereto.
Ms. Pham resigned as Chief Financial Officer effective August 15, 2023.

 On July 31, 2023, the Company and Edward Sellitto
entered an Offer Letter pursuant to which Mr. Sellitto agreed to serve as Chief Financial Officer of the Company commencing August 15,
2023 in consideration of an annual salary of $ 250,000. As of January 1, 2024, Mr. Sellitto's annual salary was increased to $ 275,000.
Mr. Sellitto will be eligible for an annual target bonus of up to 60 % of base salary based on achievement of performance milestones, as
Mr. Sellitto and the Compensation Committee of the Board, will mutually agree for each year. The bonus was pro-rated for the year 2023.
At the outset of employment, Mr. Sellitto was provided with a grant of options to purchase 50,000 shares of common stock vesting subject
to achievement of performance and service conditions at an exercise price of $ 8.87, with an exercise period of 10 years. Additionally,
on December 21, 2023, the Company granted Mr. Sellitto options to acquire 7,000 shares of common stock at an exercise price of $ 9.25 for
 ten years, vesting over twelve months. The employment of Mr. Sellitto will be at will and may be terminated at any time, with or without
formal cause.

 On September 23, 2024, Mr. Erick Soto
was hired as Chief Product Officer, in consideration of an annual salary of $ 325,000. Mr. Soto will be eligible for an annual target bonus
of up to 20 % of base salary based on achievement of performance milestones. The target bonus for the 2024 year was pro-rated and is $ 17,760.
At the outset of employment, Mr. Soto was provided with a grant of options to purchase 100,000 shares of common stock vesting subject
to achievement of performance and service conditions at an exercise price of $ 6.94, with an exercise period of 10 years. The grant date
fair market value of the option grant was $ 571,323.

Agreement with Mr. Soto, pursuant to which the Company agreed to provide specified severance and bonus amounts and to accelerate the vesting
on his equity awards upon termination upon a change of control or an involuntary termination, as each term is defined in the agreement.
In the event of a termination upon a change of control or an involuntary termination, Mr. Soto is entitled to receive an amount equal
to 100 % of his base salary.

 Board of Directors

 Messrs. Thomas Thimot, Phillip L. Kumnick, Philip
R. Broenniman, Michael A. Gorriz and Ms. Neepa Patel tendered their resignations from the Board of Directors of the Company on March 9,
2023. The Board of Directors appointed Joseph Trelin to the Company's Compensation and Audit Committees. On March 9, 2023, the Board
of Directors appointed Rhon Daguro, Ken Jisser, Michael Thompson and Thomas Szoke as additional directors of the Company and reduced the
size of the Board of Directors from 8 directors to 7 directors. The Company granted Messrs. Jisser, Thompson and Szoke 12,500 options
each at the exercise price of $ 2.64 per share.

 On March 16, 2023, the Company appointed Joseph
Trelin as the Chairman of the Board, Michael Koehneman as Chairman of the Governance Committee and appointed Michael Thompson to the Company's
Compensation and Governance Committees.

 On June 28, 2023, the Company granted 15,625 options
each at the exercise price of $ 5.48 per share to Messrs. Joseph Trelin, Michael Koehneman and Ms. Jacqueline White and 3,125 options each
at the exercise price of $ 5.48 to Messrs. Jisser and Thompson, in accordance with the Company's compensation policy for non-employee
directors. Each such option vests over a period of twelve months. Mr. Trelin retired from the Board effective February 20, 2024 and the
Board vested the unvested portion of these options, amounting to 6,511 shares.

 F- 19

 On February 15, 2024, Mr. Joe Trelin tendered
his resignation as Chairman and a Director of the Company, effective immediately. On February 20, 2024, the board of directors of the
Company (the "Board") accepted his resignation and agreed to vest the unvested portion of an option granted to Mr. Trelin
on June 28, 2023, amounting to 6,511 shares.

 On March 25, 2024, Mr. Kunal Mehta was appointed
as a Director of the Company, upon the standard terms for non-employee Directors. On May 20, 2024, Mr. Mehta was granted an option to
purchase 13,282 shares of common stock at an exercise price of $ 7.78 per share. 12,500 of the shares vest annually in equal amounts over
a three-year period commencing in 2025 and 782 shares vested monthly in equal amounts over a three-month period commencing March 2024.

 On August 13, 2024, the Company granted 15,627
options each at the exercise price of $ 8.67 per share to Messrs. Michael Koehneman, Michael Thompson, Ken Jisser, Kunal Mehta and Ms.
Jacqueline White, in accordance with the Company's compensation policy for non-employee directors. Each such option vests over a
period of twelve months.

 Employment Agreements

 Since June 2023, the Company has employed Dale
Daguro, the brother of our CEO, Rhon Daguro as a VP Sales. Dale Daguro's employment is at will and may be terminated at any time,
with or without cause. Dale's compensation is commensurate with other executives employed by the Company at a similar level of seniority
and experience. During the year ended December 31, 2024, Dale Daguro earned approximately $ 255,000 in base salary and sales commission.

 Commercial Agreements

 On June 6, 2023, the Company entered into a services
agreement with The Pipeline Group, Inc. ("TPG"). Ken Jisser, a director of the Company, is the founder and CEO of TPG, a technology-enabled
services company that aims to deliver business results for companies looking to build a predictable and profitable pipeline. The agreement
provides that TPG will assist in providing outsourced sales including business development resources for outbound calling, provide support
for automated dialing technology, classify customer data and other sales related services for an initial term of one year. On October
25, 2023, on December 19, 2023 and on August 26, 2024, the Company entered into amendments to the above services agreement, pursuant to
which TPG will provide certain additional services to the Company. In consideration of the services, the Company will pay TPG $ 70,000
per month during the current term ending in June 2025. During the years ended December 31, 2024 and 2023, the Company paid TPG a total
of approximately $ 994,000 and $ 398,000, respectively under this agreement. As of December 31, 2024 and 2023 the Company had a balance
of $ 70,000 and $ 84,000 in Accounts Payable related to amounts owed to TPG under the payment terms of this agreement. The Company held
a balance in prepaid expenses of approximately $ 70,000 and $ 84,000 in December 31, 2024 and 2023 respectively. Total expense incurred
under this contract during the years ended 2024 and 2023 respectively was approximately $ 974,000 and $ 371,000, respectively. The foregoing
is only a summary of the material terms of the agreements entered with TPG and does not purport to be a complete description of the rights
and obligations of the parties thereunder. The summary of the agreement entered with TPG is qualified in its entirety by reference to
the forms of such agreements, which were filed as exhibits to the Company's Current Report and are incorporated by reference herein
(See "Exhibits").

 F- 20

 NOTE 8 – STOCKHOLDERS' EQUITY

 The Company is authorized to issue 150,000,000
shares of common stock. The Company had 10,920,909 and 9,450,220 shares of common stock issued and outstanding as of December 31, 2024
and 2023, 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 affect 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

 During
the year ended December 31, 2024, the Company issued 5,724 shares of common stock, upon the cashless exercise of stock options

 On June 27, 2024, pursuant to Securities Purchase Agreements in a Registered Direct Offering, the Company issued 1,464,965 shares
of common stock for cash gross proceeds of approximately $ 11.0 million (or approximately $ 10.0 million, net of offering costs).

 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.

 During the year ended December 31, 2023, the Company issued 111,516 shares of common stock for approximately $ 388,000 of interest
accrued under the Convertible Notes and Credit Facility.

 During
the year ended December 31, 2023, a stock option holder exercised their stock options and was issued approximately 268 shares of our
common stock.

 F- 21

 Warrants

 On June 27, 2024, in connection with their placement agent services, the Company issued 102,547 common stock warrants to the placement
agent, with a term of 5 years and an exercise price of $ 7.50 per share.

 On May 26, 2023, in connection with their placement agent services, the Company issued 156,712 common stock warrants to the placement
agent, 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 the placement
agent with a term of 5 years and an exercise price of $ 3.164 per share.

 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.

 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, 2024 and 2023:

 Average

 Average

 Exercise

 Remaining

 Shares

 Price

 Life

 Outstanding, January 1, 2023

 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

 Granted

 102,547

 $
 7.50

 4.5 Years

 Exercised/Cancelled

 ( 3,368
)

 $
 21.12

 -

 Outstanding, December 31, 2024

 697,446

 $
 11.20

 3.2 Years

 F- 22

 Stock Options

 The Company has adopted the authID 2017 Incentive
Stock Plan, the 2021 Equity Incentive Plan, and the 2024 Equity Incentive Plan. The Company has no other stockholder approved stock incentive
plans in effect as of December 31, 2024.

 On September 28, 2017, the shareholders of the
Company approved the 2017 Incentive Stock Plan ("2017 Incentive Plan"). On December 29, 2021 the shareholders of the Company
approved the 2021 Equity Incentive Plan ("2021 Plan"). On June 26, 2024, the shareholders of the Company approved the 2024
Equity Incentive Plan ("2024 Plan"). The following is a summary of principal features of the 2017 Incentive Plan, the 2021
Plan, and the 2024 Plan. The summaries, however, do not purport to be a complete description of all the provisions of each plan.

 On May 24, 2024, the Board of Directors adopted
the 2024 Equity Incentive Plan (the "2024 Plan"). On June 26, 2024, the stockholders approved and ratified the 2024 Plan and
the allocation of 395,000 shares of Common Stock to the 2024 Plan, in addition to the remaining shares not allocated to awards under the
2021 Equity Incentive Plan and any shares, which become available as a result of the forfeiture, or cancellation of any previous awards.
As of December 31, 2024, there were 447,523 shares allocated to and available for issuance of awards under the 2024 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.

 In addition, the Compensation Committee has from
time to time approved the grant of options to purchase shares of common stock by way of Inducement Grants to new employees, which are
outside the approved Plans, pursuant to Nasdaq Listing Rule 5635(c)(4). During 2024 the Company granted 300,000 such options. The options
so granted are Non-ISO's and the terms of the Inducement Grants are contained in agreements between the participant and the Company
which are consistent with the Awards issued under the 2021 and 2024 Plans.

 2024 Stock Option Activity

 During the year the Company granted directors a total of 91,417 options at exercise prices ranging from $ 7.78 to $ 8.67 per share.

 During the year the Company also granted 380,000 options to certain new employees at exercise prices ranging from $ 5.99 to $ 9.61 per
share.

 During the year the Company agreed to accelerate the vesting of 6,511 options for Mr. Joe Trelin under the terms of his resignation
with an exercise price of $ 5.48 per share. These accelerated options would not otherwise have vested prior to termination of service according
to their Service conditions. Therefore, the Company recalculated the fair value of these options as of his resignation date of February
20, 2024 using the Black Scholes method.

 Certain stock option holders exercised their stock options and were issued approximately 5,724 shares of our common stock.

 2023 Stock Option Activity

 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.

 F- 23

 The Company determined the grant date fair market
value of the options granted during the years-ended December 31, 2024 and 2023 using the Black Scholes and Monte-Carlo Method as appropriate
and the following assumptions:

 2024

 2023

 Expected volatility

 113 – 123
 %

 112 – 125
 %

 Expected term

 5 Years

 1.04 – 5 Years

 Risk free rate

 3.49 – 4.46
 %

 3.52 – 4.92
 %

 Dividend rate

 0.00
 %

 0.00
 %

 Activity related to stock options for the years ended December
31, 2024, and 2023 is summarized as follows:

 Average

 Average

 Aggregate

 Exercise

 Contractual

 Intrinsic

 Shares

 Price

 Life (Yrs.)

 Value

 Outstanding, January 1, 2023

 1,291,597

 $
 6.48

 6.7

 $
 3,576,759

 Granted

 877,250

 $
 5.38

 10.0

 $
 -

 Exercised

 ( 938
)

 $
 6.32

 -

 $
 -

 Forfeited/cancelled

 ( 371,166
)

 $
 52.39

 6.3

 $
 -

 Outstanding, December 31, 2023

 1,796,743

 $
 25.20

 6.5

 $
 3,630,733

 Granted

 471,417

 $
 8.01

 10.0

 $
 -

 Exercised

 ( 15,875
)

 $
 5.49

 -

 $
 -

 Forfeited/cancelled

 ( 104,883
)

 $
 39.30

 7.2

 $
 -

 Outstanding, December 31, 2024

 2,147,402

 $
 20.89

 6.3

 $
 1,146,540

 Exercisable, December 31, 2024

 1,348,260

 $
 25.82

 5.0

 $
 788,701

 The following table summarizes stock option information as of December
31, 2024:

 Contractual

 Exercise Price

 Outstanding

 Life (Yrs.)

 Exercisable

 $2.64 – $5.00

 344,375

 8.5

 237,811

 $5.01 – $10.00

 987,235

 9.1

 383,825

 $10.01 – $15.00

 43,078

 2.1

 43,078

 $15.01 – $20.00

 252,084

 1.0

 252,084

 $20.01 – $121.28

 520,630

 3.3

 431,462

 2,147,402

 6.3

 1,348,260

 As of December 31, 2024, there was approximately
$ 2.9 million of unrecognized compensation costs related to employee stock options outstanding which will be recognized in 2025 through
2027. The company will recognize forfeitures as they occur. Stock compensation expense for the years ended December 31, 2024 and 2023
was approximately $ 2.6 million, and $ 0.5 million, respectively.

 F- 24

 NOTE 9 – INCOME TAXES

 The asset and liability method is used in accounting for Income taxes.
Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported
amounts in the consolidated financial statements using the statutory tax rates in effect for the year in which the differences are expected
to reverse. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recorded in the results of operations
in the period that includes the enactment date under the law. We record Global Intangible Low Tax Income (GILTI) as a current period expense
when incurred.

 We establish valuation allowances for deferred
tax assets based on a more likely than not standard. Deferred income tax assets are evaluated quarterly to determine if valuation allowances
are required or should be adjusted. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income
within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The assessment regarding
whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence factors. It
is difficult to conclude a valuation allowance is not required when there is significant objective and verifiable negative evidence, such
as cumulative losses in recent years. We utilize a rolling three years of actual and current year results as the primary measure of cumulative
losses in recent years.

 We record uncertain tax positions on the basis
of a two-step process whereby we determine whether it is more likely than not that the tax positions will be sustained based on the technical
merits of the position, and for those tax positions that meet the more likely than not criteria, we recognize the largest amount of tax
benefit that is greater than 50 % likely to be realized upon ultimate settlement with the related tax authority. We record interest and
penalties on uncertain tax positions in Income tax expense. There were no unrecognized tax benefits as of December 31, 2024 and 2023

 The Company's loss before income taxes from US and Foreign sources
for the years ended December 31, 2024 and 2023, are as follows:

 2024

 2023

 United States

 ( 14,163,648
)

 ( 19,417,471
)

 Outside United States

 ( 112,246
)

 12,356

 Loss before income taxes

 ( 14,275,894
)

 ( 19,405,115
)

 The following table summarizes the significant
differences between the U.S. Federal statutory tax rate and the Company's effective tax rate for financial statement purposes for
the years ended December 31, 2024 and 2023:

 2024

 2023

 US Federal statutory federal income tax

 21.00
 %

 21.00
 %

 State taxes

 19.84
 %

 1.96
 %

 Foreign taxes

 0.03
 %

 0.00
 %

 Loss on debt extinguishment

 0.00
 %

 - 8.09
 %

 Other deferred adjustments

 - 6.35
 %

 - 0.53
 %

 R&D credit

 3.12
 %

 1.75
 %

 Change in valuation allowance

 - 37.64
 %

 - 16.09
 %

 Total income tax provision

 0.00
 %

 0.00
 %

 The tax effects of temporary differences that give rise to deferred
tax assets and liabilities as of December 31, 2024 and 2023 are summarized as follows:

 2024

 2023

 Deferred tax assets

 Net operating loss

 19,980,310

 17,231,979

 Stock options

 8,607,020

 7,529,725

 Federal tax credits

 1,121,640

 676,539

 Basis difference in intangible and fixed assets

 2,328,429

 1,273,449

 Accrued payroll

 106,511

 136,961

 Accounting reserves

 40,211

 33,599

 Capital loss

 420,158

 350,418

 Valuation allowance

 ( 32,604,279
)

 ( 27,232,670
)

 Deferred tax assets, net

 -

 -

 F- 25

 As of December 31, 2024, the Company has available federal net operating
loss carry forward of $ 81.9 million and state net operating loss carry forwards of $ 47.4 million. Federal net operating loss carryforwards
of approximately $ 14.4 million will expire through 2037 and the balance of $ 67.5 million have an indefinite life. Additionally, the Company
has income tax net operating loss carryforwards related to our international operations which have an indefinite life..

 The Company assess the recoverability of its net operating loss carry
forwards and other deferred tax assets and records a valuation allowance to the extent recoverability does not satisfy the "more
likely than not" recognition criteria. The Company continues to maintain the valuation allowance until sufficient positive evidence
exists to support full or partial reversal. As of December 31, 2024 and 2023 the Company had a valuation allowance of approximately $ 32.6
million and $ 27.2 million against its deferred tax assets, net of deferred tax liabilities, due to insufficient positive evidence, primarily
consisting of losses within the taxing jurisdictions that have tax attributes and deferred tax assets.

 NOTE 10 – DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

 The Board of Directors of authID considers it
in the best interests of the Company to focus its business activities on providing biometric authentication products and services by means
of our proprietary identity verification and authentication platform. Accordingly, on May 4, 2022, the Board approved a plan to exit from
certain non-core activities comprising the MultiPay correspondent bank, payments services in Colombia.

 MultiPay business in Colombia

 The Company has exited the MultiPay business in
Colombia in an orderly fashion, honoring our obligations to employees, customers and under applicable laws and regulations. We maintain
our customer support and operations team in Bogota, which performs essential functions to support the global operations of our identity
platform.

 As of December 31, 2022, all impacted employees
had left the Company. MultiPay finalized the sale of the Company's proprietary software to its major customer on June 30, 2023 for
approximately $ 96,000 of sale consideration. The Company recorded the receivable under the sale in Other current assets, released foreign
currency translation gain of approximately $ 155,000 and recognized a gain of $ 216,000 from the transaction. This receivable was collected
in September 2023.

 The following table summarizes the assets and liabilities of the MultiPay
sale and the consideration received:

 Amount

 Carrying value of net assets sold:

 Property and equipment write-off

 19,528

 Net assets write-off

 19,528

 Sale consideration on disposition of net assets:

 Sale consideration

 95,852

 Less: Value added tax

 ( 15,304
)

 Net Consideration

 80,548

 Foreign currency translation:

 155,049

 Net gain on sale of a discontinued operation

 $
 216,069

 F- 26

 The operations of MultiPay for the years
ended December 31, 2024 and 2023 on a consolidated basis are below:

 For the Year Ended

 2024

 2023

 MultiPay

 Total Revenues, net

 $
 -

 $
 29,354

 Operating Expenses:

 General and administrative

 -

 12,267

 Depreciation and amortization

 -

 8,067

 Total operating expenses

 -

 20,334

 Income (Loss) from operations

 -

 9,020

 Other Income:

 Other income, net

 -

 -

 Other income

 -

 -

 Income (Loss) before income taxes

 -

 9,020

 Income tax expense

 -

 ( 7,496
)

 Income (Loss) from discontinued operations

 -

 1,524

 Gain from sale of discontinued operations

 -

 216,069

 Total Income (Loss) from discontinued operations

 $
 -

 $
 217,593

 As a result of meeting the discontinued operations/assets
held for sale criteria for the MultiPay operations, the cash flow activity related to discontinued operations is presented separately
on the statement of cash flows as summarized below:

 Year Ended December 31,

 2024

 2023

 CASH FLOWS FROM OPERATING ACTIVITIES:

 Net Income (Loss)

 $
 -

 $
 1,524

 Adjustments to reconcile net loss with cash flows from operations:

 Depreciation and amortization expense

 -

 8,067

 Changes in operating assets and liabilities:

 Accounts receivable

 -

 105,194

 Other current assets

 -

 10,562

 Accounts payable and accrued expenses

 -

 ( 13,759
)

 Adjustments relating to discontinued operations

 -

 110,064

 Net cash flows from discontinued operations

 $
 -

 $
 111,588

 Notes to Financial Statements – Discontinued Operations

 Revenue Recognition

 MultiPay recognized revenue for variable fees
generated for payment processing solutions that are earned on a usage fee over time based on monthly transaction volumes or on a monthly
flat fee rate. Additionally, MultiPay also sold certain equipment from time to time for which revenue is recognized upon delivery to the
customer.

 F- 27

 NOTE 11 – COMMITMENTS AND CONTINGENCIES

 Legal Matters

 From time to time the Company is a party to various
legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty,
we have no reason to believe that the outcome of such proceedings will have a material adverse effect on the financial condition or results
of operations of the Company.

 Executive Compensation

 As of December 31, 2024, the Company had employment
agreements with members of the management team providing base salary amounts and provisions for stock compensation, cash bonuses and other
benefits to be granted at the discretion of the Board of Directors. Additionally, certain employment agreements include provisions for
base salary, bonus amounts upon meeting certain performance milestones, severance benefits for involuntary termination from a change in
control or other events as defined in their respective agreements. Additionally, the vesting of certain awards could be accelerated upon
a change in control (as defined) or by action of the Board of Directors.

 On March 23, 2023, the Company and Thomas Thimot
entered into a Confidential Separation Agreement and General Release for the purposes of separation of Mr. Thimot from the Company as
Chief Executive Officer and an employee by mutual consent and settling, compromising and resolving all claims between them. The Company
has agreed to pay Mr. Thimot $ 325,000 which shall be deferred until the earlier of April 1, 2025 and a change of control of the Company.

 Starting in fiscal year 2022 the Company adopted a 401(k) plan
where employer matches 100 % of the employees contribution up to 3 % of their salaries and 50 % of the employee's contribution (including
both executives and other employees) between 3 % and 5 % of their salaries. Total employer contributions for the years ended December 31,
2024 and 2023 were approximately $ 25,000 and $ 23,000, respectively.

 Leases

 In July 2022, the Company signed a lease agreement
for one year and moved its headquarters to Denver, Colorado. The Company did not renew the lease agreement after July 2023 and has no
remaining lease agreements as of December 31, 2023.

 Rent expense included in general and administrative
on the Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 was approximately $ 0 and $ 10,000, respectively.
Rent expense included in loss from discontinued operations on the Consolidated Statements of Operations for the years ended December 31,
2023 was approximately $ 2,000.

 NOTE 12 – SEGMENT INFORMATION

 Operating segments are defined as components of
an enterprise for which separate financial information is available and which is evaluated regularly by the chief operating decision maker
("CODM") in deciding how to allocate resources and in assessing performance. The Company's chief operating decision
maker ("CODM") is the Chief Executive Officer. The CODM is the highest level of management responsible for assessing the Company's
overall performance, and making operational decisions such as resource allocations related to operations, product prioritization and delegations
of authority. The CODM has determined that the Company operates in a single operating and reportable segment and manages segment profit
(loss) based upon consolidated net income (loss). The measure of segment assets is reported on the consolidated balance sheet as total
consolidated assets.

 F- 28

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