T Stamp Inc 10-Q for FY2021 Q3

T Stamp Inc (IDAI)

10-Q 2022-03-21 For: 2021-09-30

Added on April 11, 2026

About this 10-Q

T Stamp Inc filed this 10-Q on March 21, 2022, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $330.1K; down 7.5% from $356.69K a year earlier
Net loss: $3.04M; compared with a net loss of $1.69M a year earlier
Diluted EPS: -$0.16; compared with -$0.15 a year earlier

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020	4
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and September 30, 2020 (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2021 and September 30, 2020 (Unaudited)	6
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2021 and September 30, 2020 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and September 30, 2020 (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40


PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
	Signatures	44

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, no par value per share	IDAI	The NASDAQ Stock Market LLC

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒


	September 30, 2021		December 31, 2020
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	173,879	$	1,469,952
Accounts receivable		184,022		140,853
Related party receivables		26,359		14,505
Prepaid expenses and other current assets		548,117		458,995
Total Current Assets		932,377		2,084,305
Capitalized internal-use software, net		1,162,630		1,131,484
Goodwill		1,248,664		1,248,664
Intangible assets, net		204,293		22,382
Property and equipment, net		124,136		127,975
Other assets		303,245		197,956
Total Assets	$	3,975,345	$	4,812,766
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	297,688	$	380,525
Related party payables		569,620		448,305
Accrued expenses		774,825		809,203
Deferred revenue		186,255		469,105
Non-convertible notes payable, current, plus accrued interest of $- and $19,730, less discount of $- and $25,511, respectively.		—		344,219
Total Current Liabilities		1,828,388		2,451,357

Warrant liabilities		342,122		287,750
Non-convertible notes payable, non-current, plus accrued interest of $8,171 and $-, respectively		866,760		—
Total Liabilities		3,037,270		2,739,107

Commitments and Contingencies, Note 14

Stockholders' Equity:
Series A Preferred Stock $.01 par value, 2,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020.		—		—
Common stock $.01 par value, 37,500,000 shares authorized, 19,140,900 and 17,695,985 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		191,409		176,965
Treasury stock, at cost: 282,565 shares held as of September 30, 2021 and December 31, 2020, respectively		—		—
Additional paid-in capital		26,030,969		20,306,495
Noncontrolling interest		161,878		163,182
Stockholders' notes receivable		(383,197)		(467,061)
Accumulated other comprehensive income		121,860		45,100
Accumulated deficit		(25,184,844)		(18,151,022)
Total Stockholders' Equity		938,075		2,073,659
Total Liabilities and Stockholders' Equity	$	3,975,345	$	4,812,766


		For the three months ended				For the nine months ended
		September 30,				September 30,
	2021		2020		2021		2020
Net sales	$	330,104	$	356,690	$	1,581,796	$	1,413,230
Operating Expenses:
Cost of services provided (exclusive of depreciation and amortization shown separately below)		249,357		130,882		853,370		467,377
Research and development		578,763		287,469		1,126,914		794,237
Selling, general, and administrative		2,292,182		1,488,089		6,102,937		3,372,817
Depreciation and amortization		149,103		101,538		422,727		294,610
Total Operating Expenses		3,269,405		2,007,978		8,505,948		4,929,041
Operating Loss		(2,939,301)		(1,651,288)		(6,924,152)		(3,515,811)
Non-Operating Income (Expense):
Interest expense		(3,801)		(29,737)		(43,850)		(152,128)
Change in fair value of warrant liability		(54,372)		—		(54,372)		—
Warrant expense		—		—		—		(1,413,273)
Grant income		10,308		—		61,601		—
Other income		—		—		10,865		56,255
Other expense		(49,178)		(8,252)		(85,217)		(8,420)
Total Other Expense, Net		(97,043)		(37,989)		(110,973)		(1,517,566)
Net Loss before Taxes		(3,036,344)		(1,689,277)		(7,035,125)		(5,033,377)
Income tax expense		—		—		—		—
Net loss including noncontrolling interest		(3,036,344)		(1,689,277)		(7,035,125)		(5,033,377)
Net loss attributable to noncontrolling interest		(440)		(15)		(1,304)		(47)
Net loss attributable to T Stamp Inc.	$	(3,035,904)	$	(1,689,262)	$	(7,033,821)	$	(5,033,330)
Basic and diluted net loss per share attributable to T Stamp Inc.	$	(0.16)	$	(0.15)	$	(0.37)	$	(0.49)
Weighted-average shares used to compute basic and diluted net loss per share		19,358,016		10,957,772		18,847,797		10,229,196


	Series A															Accumulated
	Convertible						Additional							Stockholders'		Other
	Preferred Stock			Common Stock			Paid-In		Treasury Stock			Noncontrolling		Notes		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Shares	Amount		Interest		Receivable		Loss		Deficit		Total
Balance, June 30, 2020	608,734	$	3,751,971	10,409,380	$	104,095	$	8,914,731	1,111,610	$	—	$	163,213	$	(225,000)	$	1,502	$	(10,811,530)	$	1,898,982
Issuance of common stock	—		—	22,500		225		34,775	(22,500)		—		—		—		—		—		35,000
Conversion of convertible notes to Series A preferred stock	31,514		245,486	—																	245,486
Issuance of Series A preferred stock	624,204		4,301,718	—		—															4,301,718
Conversion of Series A preferred stock to common stock	(1,264,452)		(8,299,175)	6,322,260		63,223		8,235,952	—		—		—		—		—		—		—
Common stock collateral returned	—		—	(400,000)		(4,000)		4,000	400,000		—		—		—		—		—		—
Share-based compensation	—		—	15,000		150		99,234	(15,000)		—		—		—		—		—		99,384
Currency translation adjustment	—		—	—		—		—	—		—		—		—		5,942		—		5,942
Net loss attributable to noncontrolling interest	—		—	—		—		—	—		—		(15)		—		—		—		(15)
Net loss attributable to T Stamp Inc.	—		—	—		—		—	—		—		—		—		—		(1,689,262)		(1,689,262)
Balance, September 30, 2020	—	$	—	16,369,140	$	163,693	$	17,288,692	1,474,110	$	—	$	163,198	$	(225,000)	$	7,444	$	(12,500,792)	$	4,897,235


	For the nine months ended September 30,
	2021		2020
Cash flows from operating activities:
Net loss attributable to T Stamp Inc.	$	(7,033,821)	$	(5,033,330)
Net loss attributable to noncontrolling interest		(1,304)		(47)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization		422,727		294,610
Noncash payment to Ridgegrowth		—		47,672
Stock-based compensation		1,722,936		273,917
Noncash interest expense		—		154,787
Noncash warrant expense		—		1,413,273
Change in fair value of warrant liability		54,372		—
Repayment of shareholder loan through in-kind services		83,864		—
Changes in assets and liabilities:
Accounts receivable		(43,169)		(280,297)
Related party receivables		(11,854)		(5,454)
Prepaid expenses and other current assets		(89,122)		(430,774)
Other assets		(105,289)		(100,000)
Accounts payable and accrued expenses		(108,263)		23,935
Related party payables		121,315		66,589
Deferred revenue		(282,850)		103,005
Net cash flows from operating activities		(5,270,458)		(3,472,114)

Cash flows from investing activities:
Purchases of property and equipment		(33,901)		(59,216)
Capitalized internally developed software costs		(368,643)		(241,398)
Acquisition of Pixelpin Intangible asset		(90,621)		—
Patent application costs		(138,780)		(3,050)
Net cash flows from investing activities		(631,945)		(303,664)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		3,996,472		219,376
Proceeds from issuance of common stock warrants		19,509		300,000
Proceeds from loan from Maltese government		858,589		—
Proceeds from issuance of Series A convertible preferred stock		—		6,789,300
Issuance costs of Series A convertible preferred stock		—		(1,003,111)
Repayment of SAFE note		—		(607,176)
Proceeds from debt, net of issuance cost		(345,000)		345,000
Net cash flows from financing activities		4,529,570		6,043,389
Effect of foreign currency translation on cash		76,760		7,477
Net change in cash and cash equivalents		(1,296,073)		2,275,088
Cash and cash equivalents, beginning of period		1,469,952		331,761
Cash and cash equivalents, end of period	$	173,879	$	2,606,849

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	29,053	$	128

Supplemental disclosure of noncash activities:
Conversion of convertible notes payable and SAFE to Series A preferred stock	$	—	$	1,062,983
Extinguishment of SAFE for common stock warrants	$	—	$	125,000
Issuance of common stock warrants for a prepaid sponsorship	$	—	$	300,000
Extinguishment of Emergent SAFE note for common stock, short term note, and deferred revenue in the amounts of $400 thousand, $387 thousand, and $905 thousand, respectively	$	—	$	1,691,953
Assignment of Emergent SAFE note to 10Clouds	$	—	$	200,000
Preferred Stock conversion to common stock	$	—	$	8,299,175


	Fair Value
Intangible Assets - Intellectual Property Rights	$	90,621
Foreign Currency Translation		1,133
Total	$	91,754


	September 30,		December 31,
Date Issued	2021		2020
August 10, 2021	$	316,600	$	—
February 9, 2021		541,989		—
April 22, 2020		—		350,000
Total principal outstanding		858,589		350,000
Less discount		—		(25,511)
Debt net of discount		858,589		324,489
Plus accrued interest		8,171		19,730
Total promissory notes payable	$	866,760	$	344,219


	September 30,		December 31,
Liability Classified Warrants	2021		2020
Balance, beginning of period	$	287,750	$	287,750
Change of fair value during the period		54,372		—
Balance, end of period	$	342,122	$	287,750


			September 30,	December 31,
	Useful Lives	2021		2020
Internally developed software	5 Years		2,424,819		2,056,178
Less accumulated depreciation			(1,262,189)		(924,694)
Capitalized Internal-use Software, net		$	1,162,630	$	1,131,484


Years Ending December 31,	Amount
2021	$	21,856
2022		83,643
2023		81,935
2024		16,857
	$	204,293


	Three months ended					Nine months ended
	September 30,					September 30,
	2021		2020		2021		2020
Numerator:
Net loss attributable to common stockholders	$	(3,035,904)	$	(1,689,262)	$	(7,033,821)	$	(5,033,330)

Denominator:
Weighted average shares used in computing net loss per share attributable to common stockholders		19,358,016		10,957,772		18,847,797		10,229,196

Net loss per share attributable to common stockholders	$	(0.16)	$	(0.15)	$	(0.37)	$	(0.49)


				Weighted
			Weighted	Average
			Average	Remaining
	Options		Exercise Price	Contractual		Aggregate
	Outstanding		Per Share	Life (years)		Intrinsic Value
Balance as of June 30, 2021	1,877,858	$	1.28	2.84	$	2,948,275
Options granted	67,902		1.55
Options exercised	—
Options canceled and forfeited	(12,972)		0.77
Balance as of September 30, 2021	1,932,788		1.29	2.64		3,787,654
Options vested and exercisable as of September 30, 2021	1,932,788	$	1.29	2.64	$	3,787,654


Future minimum lease obligations
Remainder of 2021	$	151,102
2022		351,145
2023		69,186
2024		69,186
2025		57,794
2026		2,919
Total	$	701,332


	September 30,		December 31,
	2021		2020
R&D credit receivable against payroll taxes	$	178,140	$	97,956
Prepaid Sponsorship		50,000		100,000
Tax Receivable		75,105		—
Other Assets	$	303,245	$	197,956


	For the three months ended
	September 30,
	2021		2020
Revenue Type
Professional Services (over time)	$	280,104	$	319,190
License Fees (over time)		50,000		37,500
Total Revenue	$	330,104	$	356,690


	For the nine months ended
	September 30,
	2021		2020
Revenue Type
Professional Services (over time)	$	1,431,796	$	1,300,730
License Fees (over time)		150,000		112,500
Total Revenue	$	1,581,796	$	1,413,230


	Three months ended		Nine months ended
	September 30,		September 30,
	2021	2020	2021	2020
Dilutive Securities
Options and Grants	2,701,098	312,859	2,701,098	312,859
Warrants	7,274,108	7,170,131	7,274,108	7,170,131
Total Dilutive Securities	9,975,206	7,482,990	9,975,206	7,482,990


	(Unaudited)
	For the nine months ended September 30,
	2021		2020
Net Sales	$	1,581,796	$	1,413,230
Add Back:
Third Party Costs Rebilled to Clients		224,440		73,243

Gross Sales (non-GAAP)	$	1,806,236	$	1,486,473


	Three Months Ended September 30,
	2021		2020		$ Change		% Change
Net sales	$	330,104	$	356,690	$	(26,586)	(7.5)	%


	Nine Months Ended September 30,
	2021		2020		$ Change		% Change
Net sales	$	1,581,796	$	1,413,230	$	168,566	11.9	%


Payments Due by Period
			Less Than
	Total		1 Year		1-3 Years		3-5 Years
Operating lease obligations	$	701,332	$	151,102	$	489,518	$	60,712
Purchase obligations		—		—		—		—

Total contractual obligations	$	701,332	$	151,102	$	489,518	$	60,712


3.1		Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 2.1 to the Company’s Form DOS filed with the SEC on December 30, 2019).

3.2		Bylaws (incorporated by reference to Exhibit 2.2 to the Company’s Form DOS filed with the SEC on December 30, 2019).

3.3		Certificate of Amendment to Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 2.3 to the Company’s Form 1-A/A filed with the SEC on April 6, 2020).

3.4		Certificate of Amendment to Amended and Restated Certificate of Incorporation, as amended (Incorporated by reference to Exhibit 2.3 of the Company’s Form 1-U filed with the SEC on August 20, 2021)

10.3		Secured Loan Agreement dated August 16, 2017 between Alex Valdes and the Company (incorporated by reference to Exhibit 6.3 to the Company’s Form DOS filed with the SEC on December 30, 2019).

10.4		Extension to August 16, 2017 Secured Loan Agreement between Alex Valdes and the Company dated August 16, 2021. (incorporated by reference to Exhibit 6.4 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.5		Secured Loan Agreement dated August 16, 2017 between Andrew Scott Francis and the Company (incorporated by reference to Exhibit 6.4 to the Company’s Form DOS filed with the SEC on December 30, 2019).

10.6		Extension to August 16, 2017 Secured Loan Agreement between Andrew Scott Francis and the Company dated August 16, 2021 (incorporated by reference to Exhibit 6.6 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.7		Secured Loan Agreement dated August 17, 2017 between David Story the Company (incorporated by reference to Exhibit 6.7 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.8		Extension to August 17, 2017 Secured Loan Agreement between David Story and the Company dated August 17, 2021. ((incorporated by reference to Exhibit 6.8 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.9		Purchase Order executed September 23, 2021 issued by U.S. Immigration and Customs Enforcement to the Company (as Contractor). (incorporated by reference to Exhibit 6.15 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.10		Warrant Agency Agreement between the Company and Colonial Stock Transfer Company, Inc. dated August 20, 2021. (incorporated by reference to Exhibit 6.18 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

31.1*		Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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T STAMP INC.


/s/ Gareth Genner
Gareth Genner, Chief Executive Officer
Trust Stamp

The following persons in the capacities and on the dates indicated have signed this report.


/s/ Gareth Genner
Gareth Genner, Principal Executive Officer, Chief Executive Officer, Director
Date: March 21, 2022


/s/ Alex Valdes
Alex Valdes, Principal Financial Officer, Principal Accounting Officer
Date: March 21, 2022


/s/ Andrew Gowasack
Andrew Gowasack, President, Director
Date: March 21, 2022


/s/ Joshua Allen
Joshua Allen, Director
Date: March 21, 2022


/s/ Kristin Stafford
Kristin Stafford, Director
Date: March 21, 2022


/s/ Berta Pappenheim
Berta Pappenheim, Director
Date: March 21, 2022

/s/ Alex Valdes
Alex Valdes
Chief Financial Officer
(principal financial officer)

/s/ Gareth Genner
Chief Executive Officer
(principal executive officer)

/s/ Alex Valdes
Chief Financial Officer
(principal financial officer)