T Stamp Inc 10-Q for FY2022 Q2

T Stamp Inc (IDAI)

10-Q 2022-08-22 For: 2022-06-30

Added on April 11, 2026

About this 10-Q

T Stamp Inc filed this 10-Q on August 22, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $708.29K; down 1.5% from $719.41K a year earlier
Net loss: $2.92M; compared with a net loss of $1.97M a year earlier
Diluted EPS: -$0.13; compared with -$0.10 a year earlier

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and June 30, 2021 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2022 and June 30, 2021 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2022 and June 30, 2021 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and June 30, 2021 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48


PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
	Signatures	53

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


	June 30, 2022		December 31, 2021
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	2,827,563	$	3,475,695
Accounts receivable		738,516		1,278,286
Related party receivables		34,181		13,648
Prepaid expenses and other current assets		702,404		996,602
Total Current Assets		4,302,664		5,764,231
Capitalized internal-use software, net		1,309,394		1,160,044
Goodwill		1,248,664		1,248,664
Digital assets		6,115		—
Intangible assets, net		232,051		201,807
Property and equipment, net		368,602		111,768
Other assets		150,601		178,140
Total Assets	$	7,618,091	$	8,664,654
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	397,873	$	304,140
Related party payables		163,157		252,773
Accrued expenses		468,842		1,059,532
Deferred revenue		215,720		503,433
Customer deposit liabilities		—		280,108
Short-term financial liability		118,920		—
Total Current Liabilities		1,364,512		2,399,986

Warrant liabilities		297,634		374,694
Non-convertible notes payable, non-current, plus accrued interest of $19,189 and $12,252, respectively		857,939		856,258
Long-term financial liability		148,222		—
Total Liabilities		2,668,307		3,630,938

Commitments and Contingencies, Note 13

Stockholders’ Equity:
Series A Preferred Stock $0.01 par value, 2,000,000 shares authorized, no shares issued and outstanding at June 30, 2022 and December 31, 2021		—		—
Common stock $0.01 par value, 37,500,000 shares authorized, and 23,285,733 and 20,475,143 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		232,857		204,751
Treasury stock, at cost: 282,565 shares held as of June 30, 2022 and December 31, 2021, respectively		—		—
Additional paid-in capital		36,240,605		31,822,079
Noncontrolling interest		161,439		161,439
Stockholders’ notes receivable		(74,407)		(130,267)
Accumulated other comprehensive income		211,824		183,900
Accumulated deficit		(31,822,534)		(27,208,186)
Total Stockholders’ Equity		4,949,784		5,033,716
Total Liabilities and Stockholders’ Equity	$	7,618,091	$	8,664,654


		For the three months ended				For the six months ended
		June 30,				June 30,
	2022		2021		2022		2021
Net revenue	$	708,288	$	719,409	$	3,529,333	$	1,251,692
Operating Expenses:
Cost of services (exclusive of depreciation and amortization shown separately below)		348,166		346,594		1,042,144		604,013
Research and development		574,490		316,579		1,022,903		483,819
Selling, general, and administrative		2,532,849		1,953,047		5,698,695		3,874,884
Depreciation and amortization		190,703		152,171		344,631		273,623
Total Operating Expenses		3,646,208		2,768,391		8,108,373		5,236,339
Operating Loss		(2,937,920)		(2,048,982)		(4,579,040)		(3,984,647)
Non-Operating Income (Expense):
Interest income (expense)		(2,354)		(7,829)		(6,312)		(40,049)
Change in fair value of warrant liability		36,472		—		77,060		—
Grant Income		—		54,557		—		51,293
Impairment of digital assets		(23,885)		—		(23,885)		—
Other income		5,673		35,365		12,614		10,806
Other expense		(272)		—		(94,785)		(36,185)
Total Other Income (Expense), Net		15,634		82,093		(35,308)		(14,135)
Net Loss before Taxes		(2,922,286)		(1,966,889)		(4,614,348)		(3,998,782)
Income tax expense		—		—		—		—
Net loss including noncontrolling interest		(2,922,286)		(1,966,889)		(4,614,348)		(3,998,782)
Net loss attributable to noncontrolling interest		—		(864)		—		(864)
Net loss attributable to T Stamp Inc.	$	(2,922,286)	$	(1,966,025)	$	(4,614,348)	$	(3,997,918)
Basic and diluted net loss per share attributable to T Stamp Inc.	$	(0.13)	$	(0.10)	$	(0.20)	$	(0.22)
Weighted-average shares used to compute basic and diluted net loss per share		23,266,587		18,828,225		23,008,941		18,435,847


	For the three months ended					For the six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Net loss including noncontrolling interest	$	(2,922,286)	$	(1,966,889)	$	(4,614,348)	$	(3,998,782)
Other Comprehensive Income:
Foreign currency translation adjustments		(34,726)		106		27,924		44,728
Total Other Comprehensive Income		(34,726)		106		27,924		44,728
Comprehensive loss		(2,957,012)		(1,966,783)		(4,586,424)		(3,954,054)
Comprehensive loss attributable to noncontrolling interest		—		(864)		—		(864)
Comprehensive loss attributable to T Stamp Inc.	$	(2,957,012)	$	(1,965,919)	$	(4,586,424)	$	(3,953,190)


													Accumulated
				Additional							Stockholders’		Other
	Common Stock			Paid-In		Treasury Stock			Noncontrolling		Notes		Comprehensive		Accumulated
	Shares	Amount		Capital		Shares	Amount		Interest		Receivable		Income		Deficit		Total
Balance, March 31, 2021	18,501,650	$	185,016	$	22,877,048	282,565	$	—	$	163,182	$	(439,131)	$	89,722	$	(20,182,916)	$	2,692,921
Exercise of warrants to common stock	75,000		750		—	—		—		—		—		—		—		750
Issuance of common stock	524,060		5,241		1,560,856	—		—		—		—		—		—		1,566,097
Repayment of shareholders loan through in-kind services	—		—		—	—		—		—		28,004		—		—		28,004
Stock-based compensation	—		—		657,928	—		—		—		—		—		—		657,928
Currency translation adjustment	—		—		—	—		—		—		—		106		—		106
Net loss attributable to non-controlling interest	—		—		—	—		—		(864)		—		—		—		(864)
Net loss attributable to T Stamp Inc.	—		—		—	—		—		—		—		—		(1,966,025)		(1,966,025)
Balance, June 30, 2021	19,100,710	$	191,007	$	25,095,832	282,565	$	—	$	162,318	$	(411,127)	$	89,828	$	(22,148,941)	$	2,978,917


3017 Bolling Way NE, Floors 1 and 2, Atlanta, Georgia,		30305


Class A Common Stock, $0.01 par value per share		IDAI		The NASDAQ Stock Market LLC


	For the six months ended June 30,
	2022		2021
Cash flows from operating activities:
Net loss attributable to T Stamp Inc.	$	(4,614,348)	$	(3,997,918)
Net loss attributable to noncontrolling interest		—		(864)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization		344,631		273,623
Stock-based compensation		747,432		830,039
Change in fair value of warrant liability		(77,060)		—
Repayment of shareholder loan through in-kind services		55,860		55,934
Impairment of digital assets		23,885		—
Changes in assets and liabilities:
Accounts receivable		539,770		(278,629)
Related party receivables		(20,533)		11,229
Prepaid expenses and other current assets		294,198		(124,899)
Other assets		27,539		(30,183)
Accounts payable and accrued expenses		(522,797)		(369,952)
Related party payables		(89,616)		(174,468)
Deferred revenue		(287,713)		(175,270)
Customer deposit liabilities		(280,108)		—
Net cash flows from operating activities		(3,858,860)		(3,981,358)

Cash flows from investing activities:
Purchases of property and equipment		(18,117)		(31,256)
Capitalized internally developed software costs		(395,748)		(254,919)
Acquisition of Pixelpin intangible asset		13,362		(90,621)
Purchase of digital assets		(30,000)		—
Patent application costs		(93,749)		(107,521)
Net cash flows from investing activities		(524,252)		(484,317)
Cash flows from financing activities:
Proceeds from exercise of warrants to common stock		3,385,935		—
Proceeds from exercise of options to common stock		71,592		—
Proceeds from issuance of common stock		203,439		3,973,339
Proceeds from issuance of common stock warrants		55,838		—
Principal payment on financial liability		(30,098)		—
Repayment of debt		—		(344,219)
Proceeds from loan from Maltese government		—		548,070
Net cash flows from financing activities		3,686,706		4,177,190
Effect of foreign currency translation on cash		48,274		44,727
Net change in cash and cash equivalents		(648,132)		(243,758)
Cash and cash equivalents, beginning of period		3,475,695		1,469,952
Cash and cash equivalents, end of period	$	2,827,563	$	1,226,194

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	8	$	29,053

Supplemental disclosure of non-cash activity:
Property and equipment acquired under financial liability	$	(297,240)	$


	Fair Value
Trade name and trademarks	$	90,621
Foreign currency translation		1,133
Total acquisition	$	91,754


	As of June 30,		As of December 31,
	2022		2021
Malta loan receipt 3 – June 3, 2022	$	60,956	$	—
Malta loan receipt 2 – August 10, 2021		296,914		322,190
Malta loan receipt 1 – February 9, 2021		480,880		521,816
Total principal outstanding		838,750		844,006
Plus accrued interest		19,189		12,252
Total promissory notes payable	$	857,939	$	856,258


	Warrants ($)
Balance as of January 1, 2021	$	287,750
Additional warrants issued		—
Change in fair value		86,944
Balance as of December 31, 2021	$	374,694
Additional warrants issued		—
Change in fair value		(77,060)
Balance as of June 30, 2022	$	297,634


			As of June 30,	As of December 31,
Warrant Issuance Date	Strike Price		2022	2021
September 30, 2016	$	0.1664	—	400,641
November 9, 2016	$	0.6240	400,640	400,640
January 23, 2020	$	1.6000	932,210	932,210
January 23, 2020	$	1.6000	2,622,995	4,660,555
August – December 2021	$	4.0000	1,343,713	1,357,963
January – February 2022	$	4.0000	77,105	—
Total warrants outstanding			5,376,663	7,752,009


	June 30,		December 31,
	2022		2021
Prepaid operating expenses	$	301,988	$	319,996
Rent deposit		88,755		100,425
VAT receivable associated with SAIT		62,789		68,798
Prepaid Sponsorship		50,000		100,000
Tax credit receivable		90,501		75,106
Miscellaneous receivable		108,371		332,277
Prepaid expenses and other current assets	$	702,404	$	996,602


			June 30,	December 31,
	Useful Lives	2022		2021
Internally developed software	5 Years	$	2,934,143	$	2,538,395
Less accumulated depreciation			(1,624,749)		(1,378,351)
Capitalized internal-use software, net		$	1,309,394	$	1,160,044


Years Ending December 31,	Amount
2022	$	57,329
2023		112,950
2024		53,929
2025		7,843
	$	232,051


	June 30,	June 30,
	2022	2021
Options, RSUs, and grants	3,591,755	2,532,665
Warrants	6,390,767	7,222,001
Total	9,982,522	9,754,666


	Three months ended					Six months ended
	June 30,					June 30,
	2022		2021		2022		2021
Numerator:
Net loss attributable to common stockholders	$	(2,922,286)	$	(1,966,025)	$	(4,614,348)	$	(3,997,918)

Denominator:
Weighted average shares used in computing net loss per share attributable to common stockholders		23,266,587		18,828,225		23,008,941		18,435,847

Net loss per share attributable to common stockholders	$	(0.13)	$	(0.10)	$	(0.20)	$	(0.22)


				Weighted
		Weighted		Average
		Average		Remaining
	Options	Exercise Price		Contractual	Aggregate
	Outstanding	Per Share		Life (years)	Intrinsic Value
Balance as of March 31, 2022	1,940,222	$	1.28	2.16	$	1,932,566
Options granted	9,308		0.64
Options exercised	(16,757)		1.21
Options canceled and forfeited	—		—
Balance as of June 30, 2022	1,932,773		1.28	1.90		787,384
Options vested and exercisable as of June 30, 2022	1,932,773	$	1.28	1.90	$	787,384


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Cost of services	$	1,220	$	80,252	$	3,394	$	80,252
Research and development		50,440		203,175		110,300		246,668
Selling, general, and administrative		407,986		374,501		633,738		503,119
Total stock-based compensation expense	$	459,646	$	657,928	$	747,432	$	830,039


Future minimum lease obligations
Remainder of 2022	$	249,415
2023		316,907
2024		109,295
2025		51,466
2026		2,598
Total	$	729,681


Future purchase obligations
Remainder of 2022	$	59,460
2023		118,920
2024		88,762
Total	$	267,142


	(Unaudited)				(Unaudited)
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net revenue	$	708,288	$	719,409	$	3,529,333	$	1,251,692
Add back:
Third party costs rebilled to clients		62,500		50,000		125,000		100,000

Gross revenue (non-GAAP)	$	770,788	$	769,409	$	3,654,333	$	1,351,692


Payments Due by Period
			Less Than
	Total		1 Year		1-3 Years		3-5 Years
Operating lease obligations	$	729,681	$	249,415	$	477,668	$	2,598
Purchase obligations		267,142		59,460		207,682		—

Total contractual obligations	$	996,823	$	308,875	$	685,350	$	2,598


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)

10.7		Emergent Agreement dated June 11, 2020 (incorporated by reference to Exhibit 6.11 to the Company’s Form 1-SA for the six months ended June 30, 2020 filed with the SEC on September 28, 2020). (incorporated by reference to Exhibit 6.10 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.9		Executive Employment Agreements of Gareth Genner and Andrew Gowasack, effective as of December 8, 2020 (incorporated by reference to Exhibit 6.13 to the Company’s Form 1-K for the year ended December 31, 2020 filed with the SEC on April 30, 2021).

10.11		Malta Enterprise Letter dated July 8, 2020 sent to the Company (Repayable Advance of €800,000) (incorporated by reference to Exhibit 6.14 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.12		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).

10.13		Letter of Appointment effective December 1, 2021 sent by the Company to Berta Pappenheim (as non-executive director appointee) (incorporated by reference to Exhibit 6.16 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.14		Letter of Appointment effective December 1, 2021 sent by the Company to Kristin Stafford (as non-executive director appointee) (incorporated by reference to Exhibit 6.17 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.15		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).

10.16		Mutual Channel Agreement dated November 15, 2020 between the Company and Vital4Data, Inc. (incorporated by reference to Exhibit 6.19 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.18		Warrant to Purchase Common Stock between the Company and Second Century Ventures, LLC dated April 22, 2020 (incorporated by reference to Exhibit 6.9 to the Company’s Form 1-A/A filed with the SEC on April 30, 2020).

10.19		Settlement Agreement dated July 1, 2019 between Emergent Technology Holdings, LP and the Company (Included as Exhibit 6.1 to the Company’s Form 1-A filed with the SEC on March 12, 2020). (incorporated by reference to Exhibit 6.1 to the Company’s Form 1-A/A filed with the SEC on January 12, 2022).

10.20		Amendment dated April 15, 2022 to Purchase Order executed September 23, 2021 issued by U.S. Immigration and Customs Enforcement to the Company (as Contractor) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 21, 2022).


10.21		Amendment dated July 15, 2022 to Purchase Order executed September 23, 2021 issued by U.S. Immigration and Customs Enforcement to the Company (as Contractor) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed within)

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: August 22, 2022


/s/ Alex Valdes
Alex Valdes, Principal Financial Officer, Principal Accounting Officer
Date: August 22, 2022


/s/ Andrew Gowasack
Andrew Gowasack, President, Director
Date: August 22, 2022


/s/ William McClintock
William McClintock, Director
Date: August 22, 2022


/s/ Mark Birschbach
Mark Birschbach, Director
Date: August 22, 2022


/s/ Joshua Allen
Joshua Allen, Director
Date: August 22, 2022


/s/ Kristin Stafford
Kristin Stafford, Director
Date: August 22, 2022


/s/ Berta Pappenheim
Berta Pappenheim, Director
Date: August 22, 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)