T Stamp Inc 10-Q/A, filed Jan 19, 2023
T Stamp Inc (IDAI)
About this 10-Q/A
T Stamp Inc filed this 10-Q/A on January 19, 2023, covering the quarter ended March 31, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
For the quarterly period ended
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T STAMP INC.
TABLE OF CONTENTS
| Page | ||
| PART I. | FINANCIAL INFORMATION | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 4. | Controls and Procedures | 17 |
| PART II. | OTHER INFORMATION | |
| Item 6. | Exhibits | 19 |
| Signatures | 21 |
| 2 |
EXPLANATORY NOTE
T Stamp Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to its Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2022 (the “Original Filing” and, together with this Amendment, the “Form 10-Q Filings”), which was filed with the Securities and Exchange Commission (the “SEC”) on May 12, 2022 (the “Original Filing Date”), to amend and restate Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, with respect to certain non-GAAP financial disclosures, and Part I, Item 4, “Controls and Procedures,” with respect to the conclusion of management regarding the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2021. Specifically, this Amendment removes non-GAAP financial disclosures of gross revenue which were determined to be individually tailored financial measurements, and amends management’s determination regarding its disclosure controls and procedures with the presence of material weaknesses in its internal controls over financial reporting, respectively.
In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is also including in this Amendment an amended and restated Part IV, Item 15 to include currently dated certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (“SOX”) from the Company’s principal executive officer and principal financial officer. Because no financial statements have been included in this Amendment, paragraph 3 of the certifications has been omitted. Similarly, the Company is not including certifications under Section 906 of SOX, as no financial statements are being filed with this Amendment.
This Amendment speaks as of the Original Filing Date of the Original Filing (unless otherwise noted or as the context otherwise requires) and reflects only the changes to the cover page, Item 7 of Part II, Item 9A of Part II, and the Exhibit Index in Item 15 of Part IV. No other information included in the Original Filing has been modified or updated in any way. The Original Filing continues to speak as of the Original Filing Date, and the Company has not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the Original Filing Date other than as expressly indicated in this Amendment. Accordingly, this Amendment should be read in conjunction with the Original Filing and the Company’s other SEC filings.
In this Amendment, T Stamp Inc. (together with its subsidiaries) is referred to as the “Company,” “Trust Stamp,” “we,” “us,” or “our.”
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs, involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future
Overview
T Stamp Inc. was incorporated on April 11, 2016 in the State of Delaware. T Stamp Inc. and its subsidiaries (“Trust Stamp”, “we”, or the “Company”) develops and markets identity authentication software solutions for enterprise partners and peer-to-peer markets as the Privacy-First Identity CompanyTM.
Trust Stamp develops proprietary artificial intelligence-powered identity and trust solutions at the intersection of biometrics, privacy, and cybersecurity, that enable organizations to protect themselves and their users, while empowering individuals to retain ownership of their data and prevent fraudulent activity using their identity.
Trust Stamp tackles industry challenges including data protection, regulatory compliance, and financial accessibility, with cutting edge technology including biometric science, cryptography, and machine learning. Our core technology irreversibly transforms identity information to create tokenized identifiers that enable accurate authentication without the need to store or share sensitive data. By retaining the usefulness of biometric data while minimizing the risk, we allow businesses to adopt biometrics and other anti-fraud initiatives while protecting personal information from hacks and leaks. Trust Stamp’s key sub-markets are identity authentication for the purpose of account opening, access and fraud detection and the creation of tokenized identities to facilitate financial and societal inclusion. Management has evaluated the market potential for its services in part by reviewing the following reports and articles, none of which were commissioned by the Company, and none are to be incorporated by reference:
Data security and fraud
| · | In 2021, 4,145 publicly disclosed breaches exposed over 22 billion records according to the 2021 Year End Data Breach QuickView Report. |
| · | eCommerce, airline ticketing, money transfer and banking services are estimated to cumulatively lose over $200 billion to online payment fraud between 2020 and 2024, according to a 2020 Juniper Research report on Online Payment Fraud. |
Biometric authentication
| · | Juniper research estimates that biometrics will annually authenticate over $3 trillion in payment transactions by 2025. |
| · | The global biometric system market is projected to grow from $24.1 billion in 2020 to $82.8 billion by 2027 according to a 2021 Global Industry Analysts, Inc report. |
Financial and societal inclusion
| · | 1.7 billion people lack basic financial services including a bank account, and 4 billion people are underbanked according to a September 2019 Forbes article. |
As biometric solutions proliferate, so does the need to protect biometric data. Stored biometric images and templates represent a growing and unquantified financial, security and PR liability and are the subject of growing governmental, media and public scrutiny, since biometric data cannot be "changed" once they are hacked, as they are intimately linked to the user’s physical features and/or behaviors. Privacy concerns around biometric technology have led to close attention from regulators, with multiple jurisdictions placing biometrics in a special or sensitive category of personal data and demanding much stronger safeguards around collection and safekeeping.
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To address this unprecedented danger and increased cross-industry need to quickly and securely establish trust in a virtual environment, Trust Stamp has developed its Irreversibly Transformed Identity Token, or IT2, solutions, which replace biometric templates and scans with meaningless numbers, letters and symbols in order to remove sensitive data from the reach of criminals using a proprietary process by which a deep neural network irreversibly converts biometric and other identifying data, from any source, into the secure tokenized identity.
Trust Stamp offers competitive end-to-end solutions for multi-factor biometric authentication for account access and recovery, KYC/AML compliance, customer onboarding, and more, which allow organizations to approve more genuine users, keep bad actors from accessing systems and services, and retain existing users with a superior user experience.
Trust Stamp’s data transformation and comparison technology is vendor and modality agnostic, allowing any organization including other biometric services providers to benefit from the increased protection, efficiency, and utility of our proprietary tokenization process. With online and offline functionality, Trust Stamp technology is effective in even the most remote locations in the world.
Our Customers and Business
During the three-months ended March 31, 2022, we continued to maintain and expand our services to existing customers such as the US Immigration and Customs Enforcement (“ICE”) and Fidelity Information Services, LLC (“FIS”) as well as long-standing customers such as Mastercard International and a S&P500 bank, including an important announcement that Trust Stamp’s proprietary tokenization technology is being utilized in FIS’ new global identification system.
On September 23, 2021, the Company was awarded a contract with ICE. Effective March 27, 2022, Trust Stamp agreed to a bilateral modification of that September 2021 contract. The modification (which has been amended to implement an up 90-day cessation of performance, as described further below) covers software development and services related to rapid enrolment in the ICE alternative to detention program increases the total contract award value to $7,176,364 from the original $3,920,764 and extends the delivery period until September 26, 2022.
In addition to growing the scope of its existing engagements, the Company has continued to onboard new customers such as VIVA Finance who are integrating the Company’s biometric verification, document validation and data protection services into VIVA’s platform, which allows individuals with thin credit histories to establish a framework for long-term financial health by enabling access to affordable credit with loans underwritten by employment history as opposed to a credit score.
During the three-months ended March 31, 2022, the Company unveiled its next-generation identity package, offering rapid deployment across devices and platforms, with custom workflows that seamlessly orchestrate trust across the identity lifecycle for a consistent user experience in processes for onboarding and KYC/AML, multi-factor authentication, account recovery, fraud prevention, compliance, and more. The orchestration layer that has been developed will facilitate no-code and low-code implementations of the Company’s technology making implementation faster and even more cost-effective for a broader range of potential customers.
Our software has applicability to numerous government use cases in the United States and overseas, addressing many of the common concerns related to legacy biometric systems, and in the three-months ended March 31, 2022 we have opened dialogs on such use cases with several overseas governments bodies. In order to accelerate government engagement, the Company has made a significant investment in expanding its government-facing business development team during the three months ended March 31, 2022.
The Company continues to develop a robust sales pipeline in key markets. Our pipeline included 39 commercial opportunities for potential revenue contracts and projects as of March 31, 2022. There is no guarantee that we will be able to convert each of these opportunities into revenue generating contract. However, we believe this demonstrates increased interest in our software and services.
Each commercial opportunity is confirmed by the Trust Stamp team by diligently identifying indicators of an enterprise’s willingness and ability to adopt Trust Stamp’s technology. The most fundamental indicators of an opportunity are that a qualified stakeholder in the enterprise clearly articulates an identity-related challenge causing economic loss or risk to their business. Because of the broad applicability of Trust Stamp’s technology, multiple opportunities may exist within a single institution.
Sales team members follow a process with the stakeholder to prioritize all key performance indicators impacted by the challenge and collaborate to identify the timeline, additional stakeholders, and resources needed to implement Trust Stamp technology.
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During the three months ended March 31, 2022, the Company continued working with a third-party software developer to meet the need for additional research and development resources over and above internal resources and the cost of those services was the largest single expense other than internal employment costs. We have continued scaling our development team in Malta and Rwanda. The expansion of our internal development teams has required additional hiring, onboarding, training, and equipment costs which going forward will allow us to substantially increase the percentage of contracts that are serviced internally with a reduction in our per-hour development costs versus contracted services.
Trust Stamp’s key sub-markets are identity authentication for the purpose of account opening, access, fraud detection, and the creation of tokenized identities to facilitate financial and societal inclusion.
Key Business Measures
In addition to the measures presented in our consolidated financial statements, we use the following key non-GAAP business measure to help us evaluate our business, identify trends affecting our business, formulate business plans and financial projections, and make strategic decisions.
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) changes in assets and liabilities, and (6) certain other items management believes affect the comparability of operating results.
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 should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are:
| o | Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments. |
| o | Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs. |
| o | 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. |
| o | 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. |
Due to 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.
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Reconciliation of Net Loss to Adjusted EBITDA
| For the three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net loss before taxes | $ | (1,692,062 | ) | $ | (2,031,893 | ) | ||
| Add: Other expense | 94,513 | 64,007 | ||||||
| Less: Other income | (6,941 | ) | — | |||||
| Add: Interest expense (income) | 3,958 | 32,220 | ||||||
| Add: Stock-based compensation | 287,786 | 172,111 | ||||||
| Add: Non-cash expenses for in-kind services | 27,930 | 27,930 | ||||||
| Add: Depreciation and amortization | 153,928 | 121,453 | ||||||
| Adjusted EBITDA loss (non-GAAP) | $ | (1,130,888 | ) | $ | (1,614,172 | ) | ||
Adjusted EBITDA (non-GAAP) loss for the three months ended March 31, 2022, decreased by 29.94%, to $1.13 million from $1.61 million for the three months ended March 31, 2021. The overall decrease in adjusted EBITDA loss was driven primarily by a $1.85 million increase in gross margin during the three months ended March 31, 2022, offset by an increase in selling, general and administrative expenses of $1.79 million during the three months ended March 31, 2022. See “Results of Operations” below for further discussion on the drivers behind the increase in gross margin and selling, general and administrative expenses during the three months ended March 31, 2022.
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Comparison of the Three Months Ended March 31, 2022 and 2021
The following table summarizes our condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021:
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net revenue | $ | 2,821,044 | $ | 532,283 | ||||
| Operating Expenses: | ||||||||
| Cost of services (exclusive of depreciation and amortization shown separately below) | 693,978 | 257,419 | ||||||
| Research and development | 493,686 | 755,036 | ||||||
| Selling, general, and administrative | 3,120,572 | 1,334,041 | ||||||
| Depreciation and amortization | 153,928 | 121,453 | ||||||
| Total Operating Expenses | 4,462,164 | 2,467,949 | ||||||
| Operating Loss | (1,641,120 | ) | (1,935,666 | ) | ||||
| Non-Operating Income (Expense): | ||||||||
| Interest income (expense) | (3,958 | ) | (32,220 | ) | ||||
| Change in fair value of warrant liability | 40,588 | — | ||||||
| Other income | 6,941 | — | ||||||
| Other expense | (94,513 | ) | (64,007 | ) | ||||
| Total Other Expense, Net | (50,942 | ) | (96,227 | ) | ||||
| Net Loss before Taxes | (1,692,062 | ) | (2,031,893 | ) | ||||
| Income tax expense | — | — | ||||||
| Net loss including noncontrolling interest | (1,692,062 | ) | (2,031,893 | ) | ||||
| Net loss attributable to noncontrolling interest | — | — | ||||||
| Net loss attributable to T Stamp Inc. | $ | (1,692,062 | ) | $ | (2,031,893 | ) | ||
| Basic and diluted net loss per share attributable to T Stamp Inc. | $ | (0.07 | ) | $ | (0.11 | ) | ||
| Weighted-average shares used to compute basic and diluted net loss per share | 22,748,432 | 17,813,081 | ||||||
Net revenue
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Net revenue | $ | 2,821,044 | $ | 532,283 | $ | 2,288,761 | 429.99 | % | ||||||||
During the three-months ended March 31, 2022, net revenue of $2.82 million consisted of revenue primarily from three customers which included $2.24 million from ICE, $276 thousand from a S&P500 bank, $177 thousand from Mastercard, and various other customers for the remaining $128 thousand.
Net revenue increased by $2.29 million, or 429.99%, for the three-months ended March 31, 2022, compared to the three months ended March 31, 2021. This increase was primarily due to revenue contracts executed by newly acquired and existing customers. Total net revenue from new contracts signed after the three-months ended March 31, 2021, produced $2.48 million in three-months ended March 31, 2022, consisting of $2.24 million from ICE, $40 thousand from a S&P500 bank, a statement of work (“SOW”) from Mastercard for $115 thousand, $76 thousand from FIS, and the remaining $12 thousand from various other new SOWs. Additionally, various SOWs that existed in the three-months ended March 31, 2021, subsequently ended prior to the end of 2021 and were replaced with new SOWs by the same customers in or before March 31, 2022.
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Cost of services
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Cost of services | $ | 693,978 | $ | 257,419 | $ | 436,559 | 169.59 | % | ||||||||
Cost of services (“COS”) increased by $437 thousand or 169.59% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase during this period was primarily driven by the costs related to servicing requirements from the September 2021 ICE contract. ICE related COS for the three months ended March 31, 2022, were 65.63% of the total COS during the period, including vendor and other miscellaneous costs as well as direct labor costs.
In parallel, significant growth in net revenue increased gross profit by 673.84% or $1.85 million compared to the three months ended March 31, 2021, and gross profit margins increased by 23.76% for the comparison periods. This results in part from the Company benefiting from its prior investment in research and development by utilizing existing technologies for new implementations.
Research and development
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Research and development | $ | 493,686 | $ | 755,036 | $ | (261,350 | ) | (34.61 | )% | |||||||
Research and development (“R&D”) decreased by $261 thousand, or 34.61% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The decrease in R&D expenses during the three months ended March 31,2022 was driven by the Company’s continued efforts to transition software development resources towards internal hires and away from external third-party software development companies. The expansion of our internal development teams has required additional hiring, onboarding, training, and equipment costs, however, going forward this will allow us to substantially increase the percentage of contracts that are serviced internally with an estimated 60% reduction in our per-hour development costs versus contracted services.
In comparing the three months ended March 31, 2021, to the three months ended March 31, 2022, the Company’s R&D subsidiary, Trust Stamp Malta, grew its headcount from 29 to 38 full-time equivalents (“FTE”). Additionally, the Company opened its R&D center in Rwanda, Africa in April 2021 resulting in the staffing of 12 FTE for the three months ended March 31, 2022, from 0 FTE for the comparison period.
Selling, general, and administrative
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Selling, general, and administrative | $ | 3,120,572 | $ | 1,334,041 | $ | 1,786,531 | 133.92 | % | ||||||||
Selling, general, and administrative expense (“SG&A”) increased by $1.79 million, or 133.92% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase in SG&A expenses during the period ended March 31, 2022, was driven mostly by to the growth in headcount and associated overhead resulting in an increase of $606 thousand for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Global headcount grew by 42.86%; from 70 to 100 team members for the three months ended March 31, 2021 compared to the three months ended March 31, 2022. Additionally, there were $414 thousand in sales commission fees included in SG&A expenses related to our various sales commission contracts with members of our sales teams during the three months ended March 31, 2022. Of the total sales commissions, $347 thousand is related to the initial contract with ICE.
The increase in SG&A for the three months ended March 31, 2022 also related legal and professional services fees and other listing fees related to the listing of the Company’s Class A Common stock on the Nasdaq Capital Market, for which trading commenced on January 31, 2022. Legal and professional fees during the three months ended March 31, 2022, totaled $585 thousand and included $79 thousand for the Nasdaq direct listing fee, and $185 thousand for legal, accounting, and advisory fees related to the listing.
Finally, a notable increase in SG&A resulted from corporate travel costs which totaled $101 thousand during the three months ended March 31, 2022. This is up from $32 thousand from the three months ended March 31, 2021, as COVID-19 travel restrictions have since been reduced, freeing up executive and sales staff to travel to, among others, events, industry and investor conferences. Comparatively, in the three months ended March 31, 2021, the only travel costs related to the relocation of some executive staff as part of the opening of the Malta office.
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Depreciation and amortization
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Depreciation and amortization | $ | 153,928 | $ | 121,453 | $ | 32,475 | 26.74 | % | ||||||||
Depreciation and amortization (“D&A”) increased by $32 thousand, or 26.74% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase was primarily due to the growth in patent amortization which increased by 294.6% during the three months ended March 31, 2022 as a result of the Company's continued R&D investment in discovering and securing protection for future technologies. During the three months ended March 31, 2022, these efforts produced nine new pending patent applications and five issued patents with the United States Patent and Trademark Office.
Additionally, capitalized internal-use software increased by $207 thousand during the three months ended March 31, 2022, compared to $98 thousand during the three months ended March 31, 2021. While the amounts of capitalized internal-use software vary from period to period, we do see a trend of increasing software capitalization which has driven the growth in software amortization. Overall, this is a further result of newly issued patents producing internal-use software or microservices that have reached technical feasibility at which point the Company begins to capitalize the related costs.
Operating loss
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Operating loss | $ | (1,641,120 | ) | $ | (1,935,666 | ) | $ | 294,546 | 15.22 | % | ||||||
The Operating loss decreased by $295 thousand or 15.22% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The primary reason for the decrease in operating loss was the growth in net revenue of 429.99% for the three-months ended March 31, 2022, compared to the three months ended March 31, 2021, which outpaced the growth in operating costs by a factor of 5.32. Adjusting for additional non-cash and non-recurring activities results in an even more impressive improvement to the operating margin.
While total operating costs increased by 80.80% or $1.99 million, it took only $1.58 to produce $1.00 in net revenue in the three months ended March 31, 2022, versus $4.64 in total operating expense to produce $1.00 in net revenue in the three months ended March 31, 2021; an improvement of 65.89%.
Interest income (expense)
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Interest income (expense) | $ | (3,958 | ) | $ | (32,220 | ) | $ | 28,262 | 87.72 | % | ||||||
Interest income (expense) decreased by $28 thousand, or 87.72% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The decrease was driven due to the Company paying off its venture loan with Second Century Ventures (“SCV”) in April 2021. The remaining net interest expense relates to various immaterial interest-bearing and interest-earning accounts.
Change in fair value of warrant liability
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Change in fair value of warrant liability | $ | 40,588 | $ | — | $ | 40,588 | — | |||||||||
The Company recognized a change in fair value of warrant liability during the three months ended March 31, 2022, of $41 thousand based on the fair value assessment and adjustment for one warrant liability as described in Note 4 to the financial statements provided under Item 1 of this report.
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Other income
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Other income | $ | 6,941 | $ | — | $ | 6,941 | — | % | ||||||||
Other income increased by $7 thousand for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase was primarily due to ancillary fees from investments in the 2021 public raise received during the three months ended March 31, 2022.
Other expense
| Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Other expense | $ | (94,513 | ) | $ | (64,007 | ) | $ | (30,506 | ) | (47.66 | )% | |||||
Other expense increased by $31 thousand for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase was primarily due to net realized loss related to foreign exchange differences in the Company’s currency balances. Those currencies include USD, EUR, GBP, and RWF.
Liquidity and Capital Resources
As of March 31, 2022, and December 31, 2021, we had approximately $5.84 million and $3.48 million cash in our banking accounts, respectively. The increase in cash during the comparative periods was a result of the net positive cash inflow from the combination of financing and operating activities. In the three months ended March 31, 2022, the Company received $1.95 million related to the ICE revenue contract and closed $3.32 million from a warrant exercise with SCV and REach® Ventures, and $365 thousand in units sold and warrants exercised in connection to the Company's 2022 fundraising efforts under Regulation CF, Regulation D, and Regulation S in preparation for its Nasdaq listing. See below for more details on these offerings.
These cash inflows from operating and financing activities were offset by the Company's working capital needs, which, for the three months ended March 31, 2022, included $79 thousand for Nasdaq direct listing fees, $130 thousand for the Company's commitment to pay the taxes on the 2019 stock bonuses, $279 thousand for sales commissions, and $135 thousand for fees to the Disney Institute for executive and employee training.
Total current assets for the comparative periods increased by 40.37% or $2.33 million from $5.76 million as of December 31, 2021, to $8.09 million during the three months ended March 31, 2022. Additionally, we have experienced a decrease in current liabilities of 2.71% or $2.40 million at December 31, 2021 compared to $2.46 million as of March 31, 2022. In effect, the Company’s current ratio, that is, the ratio of the Company’s total current assets as a multiple of total current liabilities or the Company’s ability to service its near-term liabilities with its near-to-cash assets, grew from 2.40 as of December 31, 2021 to 3.28 or 36.67% in the three months ended March 31, 2022. This is, in part, a result of the net positive cash inflow and timing of financing activities as mentioned above.
Reductions in customer deposit liabilities and deferred revenue were the primarily drivers for the decrease in current liabilities as of March 31, 2022, compared to December 31, 2021. Various SOWs that existed as deferred revenue as of December 31, 2021, included $250 thousand received in cash in relation to the 2023 Mastercard License fee, $127 thousand for FIS, $105 thousand for IJM, and $19 thousand for our S&P500 customer. As of March 31, 2022, deferred revenue decreased as the Company recognized $63 thousand for Mastercard license fees, $50 thousand for FIS, and $79 thousand for a S&P500 customer. Additionally, customer deposit liabilities as of December 31, 2021, included deferred revenue related to the ICE contract. Since there is a provision in government contracts which provides for termination on convenience, the Company reclassed this amount to customer deposit liabilities. During the three months ended March 31, 2021, the Company converted this entire balance to recognized revenue.
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Effective September 3, 2019, the Company entered into a software license agreement with a customer pursuant to which the Company received total fees of $150 thousand in 2020 and will receive minimum total fees of $200 thousand in 2021, and $250 thousand in 2022, rising by 15% in each subsequent year beginning in 2023 with a cap of $1.0 million. The Company has recognized $63 thousand of the software license agreement fees for the three months ended March 31, 2022.
On March 12, 2021, the Company launched a Regulation D raise limited to accredited investors for a maximum of $5.00 million or 1,633,986 shares. The raise was marketed only to the Company’s existing investor email list with an initial minimum investment of $25 thousand and a share price of $3.06 per share. The initial tranche of the round closed on April 5, 2021, with $3.9 million of reserved investment with the contracted sale of 1,279,825 shares of Class A Common Stock. After the initial tranche, on April 6, 2021, the Company then offered up to $700 thousand or 182,291 of additional shares, again only to accredited investors, with a $5 thousand minimum investment and at a share price of $3.84 per share. The second tranche of the round closed on June 4, 2021 with $82 thousand of reserved investment at $3.84 per share with the contracted sale of 21,400 shares of Class A Common Stock.
On August 25, 2021, the Company launched concurrent offerings under Regulation Crowdfunding (“Regulation CF”), Regulation D and Regulation S. The Company initially sought to raise up to $5.00 million in the aggregate between the three offerings through the sale of units but had the discretion to accept up to $5.00 million in each offering. Each unit consists of 1 share of the Company’s Class A Common Stock, par value $0.01 per share, and 1 warrant to purchase 1 share of Class A Common Stock of the Company in a future registered or exempt offering of the Company (i.e. a Regulation CF, Regulation D, or Regulation S Warrant, as applicable). The minimum target amount under the Regulation CF offering was $100 thousand, which the Company achieved.
On November 19, 2021, we closed the Regulation CF offering, having received binding commitments for 1,250,000 units at $4.00 per unit for a total of $5,000,000 in gross proceeds. We continued to hold closings on investments from investors who subscribed prior to November 19, 2021. We raised a final total of $4,551,900 in gross proceeds from the issuance of 1,137,975 Regulation CF units to investors in this offering.
On January 7, 2022, we closed on an initial tranche of investments from the Regulation D offering. We raised a final total of $863,956 in gross proceeds from the issuance of 215,989 Regulation D units to investors in this offering. We conducted an additional close on February 2, 2022, receiving gross proceeds of $100,000 and issuing 25,000 Regulation D units to that investor.
On January 7, 2022, we closed the Regulation S offering. We raised a final total of $224,416 in gross proceeds from the issuance of 56,104 Regulation S units to investors in this offering.
On January 26, 2022, we initially qualified an offering with the Securities and Exchange Commission under Regulation A to allow for the exercise of warrants issued pursuant to the Regulation CF, Regulation D, and Regulation S unit offerings. As of May 12, 2022, warrants for 14,250 shares have been exercised by investors.
On September 23, 2021, the Company was awarded a $3,920,764 contract with ICE. Alongside the revenue implications of this specific contract, it is believed that a successful execution will lead to extended and additional contracts of the same nature with ICE.
Effective March 27, 2022, Trust Stamp agreed to a modification of this contract with ICE, increasing the total contract award value to $7,176,364 from the original $3,920,764 and extending the delivery period until September 26, 2022 (subject to a right of early termination by ICE). However, due to a recent change in legislation (enacted through H.R. 2471: Consolidated Appropriations Act, 2022) which requires a Congressional notification in order for ICE to award a contract or subcontract to a particular entity for any pilot or demonstration program that uses more than 5 full-time equivalents or costs in excess of $1,000,000, effective April 15, 2022, the Company entered into an the Amendment with ICE to amend the terms of the Company’s Services Contract Extension with ICE, implementing an up to 90-day cessation of performance of the Company’s and ICE’s obligations. This change in legislation was retroactively applied to the March 27, 2022, modification to the ICE Contract. The up to 90-day cessation of the ICE Contract provided by the Amendment is intended to allow ICE ample time to obtain a Congressional notification for the modification of the ICE Contract, so that the Company can continue to provide services to ICE under the ICE Contract.
On December 21, 2021, REach® executed a Notice of Exercise for its warrants to purchase 400,641 shares of Class A Common Stock at an exercise price of $0.1664 per share for a total purchase price of $67 thousand.
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On December 21, 2021, a SCV executed a Notice of Exercise for certain of its warrants to purchase 2,037,560 shares of Class A Common Stock at an exercise price of $1.60 per share for a total purchase price of $3.3 million.
The Company believes that revenues from its existing clients, without any new contracts (i.e. a renewal of the ICE contract described above) or proceeds from the Company’s current capital raising efforts, will provide it with adequate amounts of cash to meet the Company’s needs in the short-term (i.e., the next twelve months) and in the long-term (i.e., beyond the next twelve months).
The Company expects that human resources costs – i.e., compensation for new and existing officers, directors, and employees – will be the largest material cash obligation for the Company within the next twelve months, with projected human resources costs totaling approximately $750,000 per month. The Company believes, as described above, that revenues from its existing operations will be sufficient to cover these costs, and that any funds from new client contracts or offerings would provide additional operational capacity for the Company going forward.
Liquidity
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits with a loss in the three months period ended March 31, 2022, of $1.69 million, operating cash outflows of $1.14 million for the same period, and an accumulated deficit of $28.90 million as of March 31, 2022.
The Company’s ability to continue as a going concern in the next twelve months following the date the consolidated financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and, due to the capital raise as discussed in Note 1 to the financial statements included under Item 1 of this report, we believe that we have sufficient liquidity to support the planned operations of our business for twelve months from the date these financials are issued.
Equity, Notes, and Warrants
Regulation D, Regulation S and Regulation CF Offerings. See more information on Regulation D, Regulation S, and Regulation CF fundraising efforts in the Liquidity and Capital Resources subsection above.
Operating Activities
Net cash used in operating activities reduced by 46.48% from $2.13 million to $1.14 million for the three months ended March 31, 2022, compared the three months ended March 31, 2021. The increase during the three months ended March 31, 2022, is related primarily to an increase in cash from revenue to cover the Company’s working capital needs and a reduction of non-cash expenses compared to the three months ended March 31, 2021. Of the $1.69 million net loss for the three months ended March 31, 2022, there was a non-cash expense of $288 thousand related to an accounting estimate used to calculate stock-based compensation, decrease in warrant liability of $41 thousand, repayment of shareholder loan through in-kind services of $28 thousand, and $154 thousand for depreciation and amortization that was added back to Net loss. Additionally, $122 thousand from the timing of accrual was subtracted from Net loss to arrive at a $1.14 million cash outflow from operating activities.
Investing Activities
Net cash used in investing activities for the three months ended March 31, 2022, was $245 thousand, compared to net cash of $233 thousand used in the three months ended March 31, 2021. These related primarily to continued investments to develop future technologies that we intend to capitalize and monetize over time. During the three months ended March 31, 2022, capitalized internal-use software increased by 111.69% compared the three months ended March 31, 2021. This is also a result of the Company’s investments in R&D, which, during the period, produced nine new pending patent applications and five issued patents with the United States Patent and Trademark Office. An additional variance resulted from the acquisition of Pixelpin Ltd that we completed on March 18, 2021, in exchange for $91 thousand in cash. Pixelpin Ltd is an image-based "Pin-on-Glass" account access solution that alleviates pain-points of traditional login methods while ensuring the security of authentication. This acquisition further enhances Trust Stamp’s innovative portfolio of technology solutions that enable improved customer experiences and reputation while broadening the scope of internal risk-management strategies and providing additional options for multi-factor authentication. Overall, net cash used in investing activities as a percentage of net cash used in operating activities increased by a factor of 1.95 from the three months ended March 31, 2021, compared to the three months ended March 31, 2022. This demonstrates the Company’s ability to invest more of its resources in future technology development versus other operating activities.
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Financing Activities
For the three months ended March 31, 2022, net cash provided by financing activities was $3.70 million, compared to net cash of $2.95 million for the three months ended March 31, 2021. During the three months ended March 31, 2021, cash received primarily related to our private fundraise under SEC Regulations D and S, from which the Company closed $3.41 million in net proceeds. Additionally, the Company received $541 thousand in proceeds from a soft loan from the government of Malta. During the three months ended March 31, 2022, cash received included the $3.38 million from a warrant exercise with SCV and REach® Ventures, $53 thousand from the exercise of options, and $259 thousand in units sold and warrants exercised in connection to the Company's 2021 raises under Regulation CF, Regulation D, and Regulation S in preparation for its Nasdaq listing.
Contractual Obligations and Commitments
The following table summarizes our non-cancellable contractual obligations as of March 31, 2022:
| Payments Due by Period | ||||||||||||||||
| Less Than | ||||||||||||||||
| Total | 1 Year | 1-3 Years | 3-5 Years | |||||||||||||
| Operating lease obligations | $ | 460,731 | $ | 216,540 | $ | 241,372 | $ | 2,819 | ||||||||
| Purchase obligations | — | — | — | — | ||||||||||||
| Total contractual obligations | $ | 460,731 | $ | 216,540 | $ | 241,372 | $ | 2,819 | ||||||||
The contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding. Obligations under contracts that we can cancel without a significant penalty are not included in the table above.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
The critical accounting policies and estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.
Capitalized Internal-Use Software, Net
Costs related to software acquired, developed, or modified solely to meet our internal requirements, with no substantive plans to market such software at the time of development are capitalized. The Company capitalizes eligible costs to develop internal-use software that are incurred subsequent to the preliminary project stage through the development stage. These costs consist of personnel costs (including related benefits and stock-based compensation) that are incurred during the application development stage. Costs incurred during the preliminary project stage and during the post-implementation operational stage are expensed as incurred. Maintenance costs are expensed as incurred. The estimated useful life of costs capitalized is evaluated for each specific project. Actual economic lives may differ from estimated useful lives. Periodic reviews could result in a change in estimated useful lives and therefore changes in amortization expense in future periods.
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Revenue Recognition
The Company derives its revenue primarily from professional services. Revenue is recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, the Company includes an estimate of the amount it expects to receive or the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.
The Company determines the amount of revenue to be recognized through the application of the following steps:
| · | Identification of the contract, or contracts with a customer; |
| · | Identification of the performance obligations in the contract; |
| · | Determination of the transaction price; |
| · | Allocation of the transaction price to the performance obligations in the contract; and |
| · | Recognition of revenue when or as the Company satisfies the performance obligations. |
At contract inception, the Company will assess the services agreed upon within each contract and assess whether each service is distinct and determine those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. In general, each contract with a customer consists of a single performance obligation to perform services in which revenue is recognized when the service has been delivered.
During the year ended December 31, 2021, the Company entered into a significant contract with ICE that contained multiple performance obligations, including software application development, phones, and services to assist ICE. The Company allocates the transaction price for this contract based on the stand-alone selling price of each performance obligation. The Company uses the expected cost-plus margin approach for determining the stand-alone selling prices of the phones and services to assist ICE, as this is believed to be the most accurate method of allocating the transaction price to these performance obligations, maximizing the use of observable inputs. As the Company does not have a similar software application that has been sold to another customer, the Company uses the residual approach for determining the stand-alone selling price of the software application development by subtracting the sum of the stand-alone selling prices for the phones and services to assist ICE from the total transaction price.
Contract Balances
The timing of customer billing and payment relative to the start of the service period varies from contract to contract; however, the Company bills many of its customers in advance of the provision of services under its contracts, resulting in contract liabilities consisting of either deferred revenue (a “contract liability”) or customer deposit liabilities. Deferred revenue represents billings under noncancelable contracts before the related product or service is transferred to the customer. Such amounts are recognized by the Company over the life of the contract upon meeting the revenue recognition criteria, but generally within one year. Customer deposit liabilities consist of billings or payments received in advance of the start of the contractual term or for anticipated revenue generating activities for the portion of a contract term that is subject to cancellation for convenience. Certain of the Company’s arrangements generally include terms that allow the customer to terminate the contract for convenience and receive a refund of the amount of the customer deposit for the percentage of the work not performed prior to the notice of termination. In these arrangements, the Company concluded there are no enforceable rights and obligations after such notice period and therefore the consideration received or due from the customer that is subject to termination for convenience is recorded as customer deposit liabilities.
The payment terms and conditions vary by contract; however, the Company’s terms generally require payment within 30 to 60 days from the invoice date. In instances where the timing of revenue recognition differs from the timing of payment, the Company elected to apply the practical expedient in accordance with ASC 606 to not adjust contract consideration for the effects of a significant financing component, as the Company expects, at contract inception, that the period between when promised goods and services are transferred to the customer and when the customer pays for those goods and services will be one year or less. As such, the Company determined its contracts do not generally contain a significant financing component.
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Costs to Obtain and Fulfill Contracts
Incremental costs of obtaining a contract include only those costs that are directly related to the acquisition of contracts, including sales commissions, and that would not have been incurred if the contract had not been obtained. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it is expected that the economic benefit and amortization period will be longer than one year. Costs to obtain contracts were not material in the periods presented. The Company recognizes an asset for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. Costs to fulfill contracts were not material in the periods presented. The Company elected to apply the practical expedient in accordance with ASC 340, which allows the Company to expense commissions as incurred when the contract term is twelve months or less in total.
Remaining Performance Obligation
Our remaining performance obligations are comprised of product and services revenue not yet delivered.
Stock- Based Compensation
The Company accounts for its stock-based compensation arrangements at fair value. Fair value of each option grant is estimated on the date of grant using either the Black-Scholes-Merton Model for stock options granted or using the fair value of a common stock for grants and restricted stock units. The calculated fair value is recognized as an expense over the requisite service period, net of estimated forfeitures, using the straight-line method.
Income Taxes
The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts for financial reporting purposes and the tax bases of assets and liabilities, as well as for loss and tax credit carryforwards. The deferred assets and liabilities are measured using the statutorily enacted tax rates anticipated to be in effect when those tax assets and liabilities are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.
A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income in assessing the need for a valuation allowance.
The Company’s tax positions are subject to income tax audits by multiple tax jurisdictions. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not, that the position will be sustainable upon examination by the taxing authority, including resolution of any related appeals or litigation processes. This evaluation is based on all available evidence and assumes that the tax authorities have full knowledge of all relevant information concerning the tax position. The tax benefit recognized is measured as the largest amount of benefit which is more likely than not (greater than 50% likely) to be realized upon ultimate settlement with the taxing authority. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense. The Company makes adjustments to these reserves in accordance with the income tax guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences may affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s financial condition and operating results.
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Recent Accounting Pronouncements
For information on recently issued accounting pronouncements, refer to Note 1. Description of Business and Summary of Significant Accounting Policies in our condensed consolidated financial statements included elsewhere under Item 1 in this report.
As a Nasdaq listed public reporting company, we are required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an “emerging growth company”, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies”, including but not limited to:
| · | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; |
| · | taking advantage of extensions of time to comply with certain new or revised financial accounting standards; |
| · | being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and |
| · | being exempt from the requirement to hold a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. |
We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We may remain an “emerging growth company” for up to five years, beginning January 26, 2022, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an “emerging growth company” as of the following December 31.
In summary, we are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies” and therefore, our shareholders could receive less information than they might expect to receive from more mature public companies.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving their desired control objectives. Based on the evaluation Company’s disclosure controls and procedures as of the end of the period covered by this report, its Chief Executive Officer and Chief Financial Officer concluded that, as of such date, its disclosure controls and procedures were not effective based on material weaknesses in our internal control over financial reporting described below.
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Changes in Internal Control Over Financial Reporting
In connection with the audit of our financial statements for the year ended December 31, 2021, our independent auditor identified material weaknesses in our internal control over financial reporting. The material weaknesses related to certain corporate finance and accounting oversight functions residing over the detection of errors that were present within the Company’s calculation of stock-based awards as well as the financial reporting close process.
During the three months ended March 31, 2022 covered by this report, in response to these identified material weaknesses, the Company established additional operational processes to prevent the incorrect recording of stock-based awards, as well as to address weaknesses in its financial reporting close process. Such additional operational processes that the Company established during this period include, but are not limited to:
Financial Reporting:
| · | Employed a specialized person solely responsible for assisting with our Company’s SEC filings. |
| · | Contracted with third party professional accounting firms with whom we consult regarding complex accounting applications and issues. |
| · | Implemented bank account reconciliations prepared by our accountants and reviewed and approved by our financial controller. | |
| · |
Established automated controls, such as processing controls, and automated calculations, utilizing software that keeps track of accounting transactions, accounting deadlines, task ownership, SEC reporting calendar, and other important financial reporting matters.
| |
| · | Addressed material presentation errors in the Company’s equity section in the consolidated financial statements |
Calculation of Stock-Based Awards
| · | Regular check between our legal and accounting staff to ensure that new award agreement do not go unaccounted for. On a monthly basis, we also review all active agreements to check for expirations, so that they are properly accounted for and recorded. |
The Company’s management did not have the opportunity to test the effectiveness of the above internal control processes during the preparation and filing of the Original Filing, and there is no guarantee that these actions have fully remediated the material weaknesses described further above. Further, there is no guarantee that the Company will not again fail to establish effective internal controls over financial accounting and reporting at some point in the future. Finally, we note that these efforts have not been evaluated by our independent auditor for effectiveness.
Notwithstanding this material weakness, management has concluded that our financial statements included in the Original Filing present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in accordance with GAAP.
| 18 |
PART II - OTHER INFORMATION
Item 6. Exhibits.
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.
| 19 |
* Filed herewith.
** Previously filed
| 20 |
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.
| 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: January 18, 2023 | |
| /s/ Alex Valdes | |
| Alex Valdes, Principal Financial Officer, Principal Accounting Officer | |
| Date: January 18, 2023 |
| /s/ Andrew Gowasack | |
| Andrew Gowasack, President, Director | |
| Date: January 18, 2023 |
| /s/ David Story | |
| David Story, Director | |
| Date: January 18, 2023 |
| /s/ William McClintock | |
| William McClintock, Director | |
| Date: January 18, 2023 |
| /s/ Mark Birschbach | |
| Mark Birschbach, Director | |
| Date: January 18, 2023 |
| /s/ Joshua Allen | |
| Joshua Allen, Director | |
| Date: January 18, 2023 |
| /s/ Kristin Stafford | |
| Kristin Stafford, Director | |
| Date: January 18, 2023 |
| /s/ Berta Pappenheim | |
| Berta Pappenheim, Director | |
| Date: January 18, 2023 |
| 21 |
Exhibit 31.1
CERTIFICATIONS
I, Gareth Genner, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 of T Stamp Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. [Omitted];
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: January 18, 2023
| /s/ Gareth Genner | |
| Gareth Genner | |
| Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, Alex Valdes, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 of T Stamp Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. [Omitted];
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: January 18, 2023
| /s/ Alex Valdes | |
| Alex Valdes | |
| Chief Financial Officer | |
| (Principal Financial Officer) |