On multiple occasions, I’ve reported the errors in facts and reasoning being made by authID short sellers. This accounting has included cataloging some of the irrational, incendiary, and defamatory personal attacks they’ve made on company executives, shareholders, financers, and me. They’ve never been bound by the truth as they attempt to push the stock price down through sleazy posts on social media. Today, short seller White Diamond escalated its wrongdoing.

 

The firm posted to Twitter/X that they filed a whistleblower complaint with the SEC regarding Monday’s press release announcing a new big customer. This Indian customer has agreed to purchase a minimum of $10MM of $AUID services over the next three years. Let’s go through the claims being made by White Diamond and correct the record.

 

WD claims that former execs of authID have said that the maximum size of a written contract would somehow only be $500k – so this new $10MM contract must be fraudulent.

• WD’s unsupported premise makes no sense. Why would the $10MM contract be limited to $500k? Moreover, I believe that authID is likely in discussions with other customers who could sign contracts with the company that would also be a multiple of that $500k figure.
• I’ve spent dozens of hours doing research calls with people in the biometric security space and people who have been associated with $AUID for years. One thing that keeps coming up in my research is that prior management was unable to properly identify an end market. The fact that prior contracts were for smaller amounts doesn’t mean authID can’t improve its position and land more and larger contracts; rather, it suggests strongly that prior management couldn’t sell more.
• I’ve used this example before, but just because I can’t hit a major league curveball doesn’t mean it can’t be done. The limitations of prior management explain why they didn’t succeed. Their prior failures don’t restrict current management which appear to be a far more effective group.
• The new Indian customer plans to use authID’s biometric security solution for their own customers. That’s multiple end customers being served. This contract means authID will be providing biometric security for many companies, not just one.

 

WD contends that authID “struggles” to get $200k of revenue a quarter.

• I’ll go them one better. The company struggled to get to $200k of revenue last YEAR.
• In my initial report on $AUID, I described it as a public venture capital company. These kinds of companies typically have very little revenue until they get traction and start to post very high growth rates. Having low sales in 2023 and 1H 2024 doesn’t preclude the company from signing new contracts now as I note above. authID’s genuine progress achieved with a much more effective team doesn’t mean that its new contracts are fraudulent. WD’s contention is unsupported and defamatory.
• I’m willing to bet that when $AUID shows impressive sales growth in the future, WD will claim that those sales are too low and the company is still worthless. Whether the sales are high or low, I think WD will insist their unsupported claims are correct – despite the truth. That’s not what honest investors do. It is what stock manipulators do.

 

WD complains that authID didn’t name the Indian company.

• They have a signed contract for a material amount with a customer and reported it in an SEC filing as they are legally required to do. That’s not fraud, nor any form of misconduct.
• Many companies don’t disclose the exact security solutions they use, especially pre-launch. They want to ensure the new security system is up and running successfully and don’t want to give criminals and fraudsters a road map for how to attack those same security systems.
• I have an alarm system in my home, but don’t have one of those “home security provided by…” signs on my lawn. There’s no reason to give anyone information on which security system I’m using. Is it so surprising that some authID customers would take the same approach?

 

This last one is so silly that I will directly quote WD verbatim: “AUID isn’t even working in India and has no partners or sales force there.”

• authID is a digital service company. They don’t need to build a factory in India to serve companies there. They just need to upload the appropriate code to customers’ servers. Sure, there’s implementation required, but in the age of the internet, people can and do routinely work together and collaborate from all over the world without being in physical proximity to each other. (Do we really need to explain this to the people at White Diamond? Do they not understand this, or are they just making sensational claims in an attempt to manipulate the $AUID stock price?)
• WD is correct that authID doesn’t have a sales force in India. The company does have shareholders, friends, financers, and other contacts who know people all over the world. Someone made an introduction.

 

White Diamond claims that the new contract is “clearly fraud”. Yet, they’ve offered us NO supporting facts – because there are none. If I were the SEC and chose to investigate this, the entire case could be resolved with one phone call. Just call the new customer and ask if the contract is valid and if the minimum commitment is actually $10MM. Better yet, instead of reporting this to the SEC, why isn’t WD attempting to do this research themselves?

 

If you want to know more about the new contract and my analysis of the implications for authID, please check out this piece: “authID ($AUID) – New Customer Press Release is Better Thank it Seems”.

 

And if you want continuing entertainment, feel free to follow this story. The authID management team has been traveling all over the country meeting with potential new customers. I’ll be looking forward to whatever wild claims White Diamond makes up the next time $AUID announces a new big customer.

 

 

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