authID Inc. 8-K

What Happened

• authID Inc. announced it closed a private placement on April 29, 2026, selling approximately $3,765,000 of senior secured debentures plus accompanying stock purchase warrants and fee shares to accredited investors. Madison Global Partners, LLC served as non‑exclusive placement agent on a best‑efforts basis.
• The debentures are six‑month, senior secured obligations (maturing October 2026), bear no interest, and are secured by a first‑priority lien on substantially all company assets. The filing also reports the resulting new financial obligation and the unregistered sale of these securities.

Key Details

• Debentures: ~$3,765,000 aggregate principal; mature six months from issuance; no interest; secured by first‑priority security interest; customary defaults that can make principal immediately due at holder election.
• Warrants: issuable to purchase shares equal to 100% of each investor’s principal amount at $1.50 per share; 5‑year term; exercisable after 6 months; cashless exercise allowed; anti‑dilution protections and beneficial‑ownership limits (4.99% or 9.99%, and 19.99% for one director where elected).
• Fee Shares & Registration: investors received “Fee Shares” equal to 15% of each investor’s principal divided by $1.00 (or Nasdaq closing bid if the investor is a director). The company agreed to register the registrable securities within 10 days after the 60‑day anniversary of the closing if no subsequent financing occurs (i.e., roughly by ~70 days).
• Other terms: most‑favored‑nation provision for subsequent financings and automatic conversion/exchange into securities of a later financing on substantially similar economic terms (subordinate to lead investor in that financing). Aggregate issuance from these instruments is subject to a Nasdaq 19.99% ownership limit absent shareholder approval. Securities were sold under exemptions (Section 4(a)(2) and Rule 506(b)); investors are accredited.

Why It Matters

• This transaction provides authID with near‑term cash (about $3.8M) but creates a short‑term debt obligation due in six months and potential future dilution if warrants are exercised or debentures convert in a later financing. The debentures are secured, giving holders priority on assets if default occurs.
• Investors should note the lack of interest (lower carrying cost for the company) and the sizable warrant and fee‑share components, which can dilute existing shareholders if exercised or issued. The Nasdaq 19.99% cap limits any single financing from immediately exceeding certain ownership thresholds without shareholder approval.