Document

10-Q 1 idai-20230630x10q.htm 10-Q Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the quarterly period ended June 30, 2023

o 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: 001-41252

T Stamp Inc. (D/B/A Trust Stamp)

(Exact name of registrant as specified in its charter)


3017 Bolling Way NE, Floors 1 and 2, Atlanta, Georgia						30305
(Address of principal executive offices)						(Zip Code)

(404) 806-9906

(Registrant’s telephone number, including area code)


N/A
(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.01 par value per share

IDAI

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed 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 x No o

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 x No o

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

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. o

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

As of August 11, 2023, there were 7,972,244 shares of Class A Common Stock, par value $0.01 per share, of the registrant outstanding.

Table of Contents

T STAMP INC.

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and June 30, 2022 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2023 and June 30, 2022 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and June 30, 2022 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and June 30, 2022 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46


PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	48
Item 6.	Exhibits	48
	Signatures	51

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

T STAMP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2023		December 31, 2022
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	5,035,414	$	1,254,494
Accounts receivable (includes unbilled receivables of $104,043 and $109,475 as of June 30, 2023 and December 31, 2022, respectively)	486,690		1,008,375
Related party receivables	32,997		31,446
Prepaid expenses and other current assets	502,380		580,086
Total Current Assets	6,057,481		2,874,401
Capitalized internal-use software, net	1,479,724		1,418,672
Goodwill	1,248,664		1,248,664
Intangible assets, net	214,823		251,686
Property and equipment, net	71,586		300,664
Operating lease right of use assets	205,976		315,765
Other assets	11,129		2,066
Total Assets	$	9,289,383	$	6,411,918
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	773,979	$	945,162
Related party payables	138,352		273,176
Accrued expenses	662,459		1,099,824
Deferred revenue	2,698,898		1,811,680
Income tax payable	15,460		21,076
Short-term operating lease liabilities	139,056		177,795
Short-term financial liabilities	162,130		118,860
Total Current Liabilities	4,590,334		4,447,573

Warrant liabilities	255,954		261,569
Notes payable, plus accrued interest of $19,904 and $16,458, on June 30, 2023 and December 31, 2022, respectively	921,917		886,465
Long-term operating lease liabilities	41,978		102,407
Long-term financial liabilities	—		88,760
Total Liabilities	5,810,183		5,786,774

Commitments, Note 10

Stockholders’ Equity:
Common stock $0.01 par value, 50,000,000 shares authorized, 7,989,065 and 4,910,815 shares issued, and 7,972,244 and 4,854,302 outstanding at June 30, 2023 and December 31, 2022, respectively	79,722		48,543
Treasury stock, at cost: 16,821 and 56,513 shares held as of June 30, 2023 and December 31, 2022, respectively	—		—
Additional paid-in capital	47,067,377		39,496,183
Stockholders’ notes receivable	—		(18,547)
Accumulated other comprehensive income	188,206		237,252
Accumulated deficit	(44,017,544)		(39,299,726)
Total T Stamp Inc. Stockholders’ Equity	3,317,761		463,705
Non-controlling interest	161,439		161,439
Total Stockholders’ Equity	3,479,200		625,144
Total Liabilities and Stockholders’ Equity	$	9,289,383	$	6,411,918

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

T STAMP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Net revenue	$	460,804	$	708,288	$	919,438	$	3,529,333
Operating Expenses:
Cost of services (exclusive of depreciation and amortization shown separately below)	203,928		348,166		420,887		1,042,144
Research and development	574,397		574,490		1,206,766		1,022,903
Selling, general, and administrative	1,877,616		2,532,849		3,847,173		5,698,695
Depreciation and amortization	187,272		190,703		406,454		344,631
Total Operating Expenses	2,843,213		3,646,208		5,881,280		8,108,373
Operating Loss	(2,382,409)		(2,937,920)		(4,961,842)		(4,579,040)
Non-Operating Income (Expense):
Interest expense, net	(9,793)		(2,354)		(19,994)		(6,312)
Change in fair value of warrant liability	6,955		36,472		5,615		77,060
Impairment of digital assets	—		(23,885)		—		(23,885)
Other income	217,605		5,673		261,547		12,614
Other expense	(2,726)		(272)		(3,144)		(94,785)
Total Other Expense (Income), Net	212,041		15,634		244,024		(35,308)
Net Loss before Taxes	(2,170,368)		(2,922,286)		(4,717,818)		(4,614,348)
Income tax expense	—		—		—		—
Net loss including non-controlling interest	(2,170,368)		(2,922,286)		(4,717,818)		(4,614,348)
Net loss attributable to non-controlling interest	—		—		—		—
Net loss attributable to T Stamp Inc.	$	(2,170,368)	$	(2,922,286)	$	(4,717,818)	$	(4,614,348)
Basic and diluted net loss per share attributable to T Stamp Inc.	$	(0.32)	$	(0.63)	$	(0.80)	$	(1.00)
Weighted-average shares used to compute basic and diluted net loss per share	6,757,320		4,653,317		5,897,089		4,601,788

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

T STAMP INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Net loss including non-controlling interest	$	(2,170,368)	$	(2,922,286)	$	(4,717,818)	$	(4,614,348)
Other Comprehensive Income (Loss):
Foreign currency translation adjustments	(7,604)		(34,726)		(49,046)		27,924
Total Other Comprehensive Income (Loss)	(7,604)		(34,726)		(49,046)		27,924
Comprehensive loss	(2,177,972)		(2,957,012)		(4,766,864)		(4,586,424)
Comprehensive loss attributable to non-controlling interest	—		—		—		—
Comprehensive loss attributable to T Stamp Inc.	$	(2,177,972)	$	(2,957,012)	$	(4,766,864)	$	(4,586,424)

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

T STAMP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022


	Common Stock			Additional Paid-In Capital		Treasury Stock			Stockholders’ Notes Receivable		Accumulated Other Comprehensive Income		Accumulated Deficit		Non-controlling Interest		Total
	Shares	Amount				Shares	Amount
Balance, March 31, 2022	4,649,492	$	46,495	$	35,964,473	56,513	$	—	$	(102,337)	$	246,550	$	(28,900,248)	$	161,439	$	7,416,372
Exercise of options to common stock	3,351	33		18,245		—	—		—		—		—		—		18,278
Issuance of common stock in relation to vested restricted stock units, net of shares forfeited to satisfy taxes	4,304	43		(15,473)		—	—		—		—		—		—		(15,430)
Repayment of shareholders loan through in-kind services	—	—		—		—	—		27,930		—		—		—		27,930
Stock-based compensation	—	—		459,646		—	—		—		—		—		—		459,646
Currency translation adjustment	—	—		—		—	—		—		(34,726)		—		—		(34,726)
Net loss attributable to T Stamp Inc.	—	—		—		—	—		—		—		(2,922,286)		—		(2,922,286)
Balance, June 30, 2022	4,657,147	$	46,571	$	36,426,891	56,513	$	—	$	(74,407)	$	211,824	$	(31,822,534)	$	161,439	$	4,949,784


	Common Stock			Additional Paid-In Capital		Treasury Stock			Stockholders’ Notes Receivable		Accumulated Other Comprehensive Income		Accumulated Deficit		Non-controlling Interest		Total
	Shares	Amount				Shares	Amount
Balance, March 31, 2023	5,121,607	$	51,216	$	39,479,741	—	$	—	$	—	$	195,810	$	(41,847,176)	$	161,439	$	(1,958,970)
Exercise of prefunded warrants to common stock	1,553,250	15,533		(13,979)		—	—		—		—		—		—		1,554
Exercise of options to common stock	1,740	17		(17)		—	—		—		—		—		—		—
Issuance of common stock, prefunded warrants, and common stock warrants, net of fees	1,312,468	13,124		7,451,188		—	—		—		—		—		—		7,464,312
Issuance of common stock in relation to vested restricted stock units, to wholly owned subsidiary	(16,821)	(168)		52,707		16,821	—		—		—		—		—		52,539
Stock-based compensation	—	—		97,737		—	—		—		—		—		—		97,737
Currency translation adjustment	—	—		—		—	—		—		(7,604)		—		—		(7,604)
Net loss attributable to T Stamp Inc.	—	—		—		—	—		—		—		(2,170,368)		—		(2,170,368)
Balance, June 30, 2023	7,972,244	$	79,722	$	47,067,377	16,821	$	—	$	—	$	188,206	$	(44,017,544)	$	161,439	$	3,479,200

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

T STAMP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022


	Common Stock			Additional Paid-In Capital		Treasury Stock			Stockholders’ Notes Receivable		Accumulated Other Comprehensive Income		Accumulated Deficit		Non-controlling Interest		Total
	Shares	Amount				Shares	Amount
Balance, January 1, 2022	4,095,029	$	40,950	$	31,985,880	56,513	$	—	$	(130,267)	$	183,900	$	(27,208,186)	$	161,439	$	5,033,716
Exercise of warrants to common stock	490,490	4,905		3,378,857		—	—		—		—		—		—		3,383,762
Exercise of options to common stock	12,071	120		71,472		—	—		—		—		—		—		71,592
Issuance of common stock	16,086	161		203,277		—	—		—		—		—		—		203,438
Issuance of common stock warrants	—	—		55,838		—	—		—		—		—		—		55,838
Issuance of common stock in relation to vested restricted stock units, net of shares forfeited to satisfy taxes	43,471	435		(15,865)		—	—		—		—		—		—		(15,430)
Repayment of shareholders loan through in-kind services	—	—		—		—	—		55,860		—		—		—		55,860
Stock-based compensation	—	—		747,432		—	—		—		—		—		—		747,432
Currency translation adjustment	—	—		—		—	—		—		27,924		—		—		27,924
Net loss attributable to T Stamp Inc.	—	—		—		—	—		—		—		(4,614,348)		—		(4,614,348)
Balance, June 30, 2022	4,657,147	$	46,571	$	36,426,891	56,513	$	—	$	(74,407)	$	211,824	$	(31,822,534)	$	161,439	$	4,949,784


	Common Stock			Additional Paid-In Capital		Treasury Stock			Stockholders’ Notes Receivable		Accumulated Other Comprehensive Income		Accumulated Deficit		Non-controlling Interest		Total
	Shares	Amount				Shares	Amount
Balance, January 1, 2023	4,854,302	$	48,543	$	39,496,183	56,513	$	—	$	(18,547)	$	237,252	$	(39,299,726)	$	161,439	$	625,144
Exercise of warrants to common stock	1,553,250	15,533		(13,979)		—	—		—		—		—		—		1,554
Exercise of options to common stock	1,740	17		1,983		—	—		—		—		—		—		2,000
Issuance of common stock, prefunded warrants, and common stock warrants, net of fees	1,312,468	13,124		7,451,188		—	—		—		—		—		—		7,464,312
Issuance of common stock in relation to vested restricted stock units, to wholly owned subsidiary	245,725	2,457		(25,261)		(39,692)	—		—		—		—		—		(22,804)
Reverse stock split rounding	4,759	48		(48)		—	—		—		—		—		—		—
Repayment of shareholders loan through in-kind services	—	—		—		—	—		18,547		—		—		—		18,547
Stock-based compensation	—	—		157,311		—	—		—		—		—		—		157,311
Currency translation adjustment	—	—		—		—	—		—		(49,046)		—		—		(49,046)
Net loss attributable to T Stamp Inc.	—	—		—		—	—		—		—		(4,717,818)		—		(4,717,818)
Balance, June 30, 2023	7,972,244	$	79,722	$	47,067,377	16,821	$	—	$	—	$	188,206	$	(44,017,544)	$	161,439	$	3,479,200

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

T STAMP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	For the six months ended June 30,
	2023		2022
Cash flows from operating activities:
Net loss attributable to T Stamp Inc.	$	(4,717,818)	$	(4,614,348)
Net loss attributable to non-controlling interest	—		—
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization	406,454

SEC Form 10-Q filed by T Stamp Inc.