UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from ______________ to _____________

Commission file number: 001-41252

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

(Exact name of registrant as specified in its charter)


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

(404) 806-9906

(Registrant’s telephone number, including area code)

N/A

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	IDAI	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of May 12, 2023, there were 6,696,677 shares of Class A Common Stock, par value $0.01 per share, of the registrant issued and outstanding.

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T STAMP INC.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and March 31, 2022 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2023 and March 31, 2022 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March 31, 2023 and March 31, 2022 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and March 31, 2022 (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41


PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
	Signatures	46

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

T STAMP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	March 31, 2023		December 31, 2022
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	773,114	$	1,254,494
Accounts receivable (includes unbilled receivables of $89,749 and $109,475 as of March 31, 2023 and December 31, 2022, respectively)		533,464		1,008,375
Related party receivables		30,750		31,446
Prepaid expenses and other current assets		462,244		580,086
Total Current Assets		1,799,572		2,874,401
Capitalized internal-use software, net		1,445,663		1,418,672
Goodwill		1,248,664		1,248,664
Intangible assets, net		238,810		251,686
Property and equipment, net		82,109		300,664
Held for sale equipment, net		177,910		—
Operating lease right of use assets		166,024		315,765
Other assets		2,066		2,066
Total Assets	$	5,160,818	$	6,411,918
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	1,365,049	$	945,162
Related party payables		311,138		273,176
Accrued expenses		1,191,118		1,099,824
Deferred revenue		2,746,969		1,811,680
Income tax payable		21,076		21,076
Short-term operating lease liabilities		79,269		177,795
Short-term financial liabilities		—		118,860
Held for sale financial liabilities		177,905		—
Total Current Liabilities		5,892,524		4,447,573

Warrant liabilities		262,909		261,569
Non-convertible notes payable plus accrued interest of $9,904 and $16,458, respectively		907,616		886,465
Long-term operating lease liabilities		56,739		102,407
Long-term financial liabilities		—		88,760
Total Liabilities		7,119,788		5,786,774

Commitments, Note 10

Stockholders’ Equity (Deficit):
Series A Preferred Stock $0.01 par value, 2,000,000 shares authorized, no shares issued and outstanding at March 31, 2023 and December 31, 2022		—		—
Common stock $0.01 par value, 50,000,000 shares authorized, 5,121,607 and 4,910,815 shares issued, and 5,121,607 and 4,854,302 outstanding at March 31, 2023 and December 31, 2022, respectively		51,216		48,543
Treasury stock, at cost: 0 and 56,513 shares held as of March 31, 2023 and December 31, 2022, respectively		—		—
Additional paid-in capital		39,479,741		39,496,183
Stockholders’ notes receivable		—		(18,547)
Accumulated other comprehensive income		195,810		237,252
Accumulated deficit		(41,847,176)		(39,299,726)
Total T Stamp Inc. Stockholders’ Equity (Deficit)		(2,120,409)		463,705
Noncontrolling interest		161,439		161,439
Total Stockholders’ Equity (Deficit)		(1,958,970)		625,144
Total Liabilities and Stockholders’ Equity (Deficit)	$	5,160,818	$	6,411,918

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

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T STAMP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	For the three months ended
	March 31,
	2023		2022
Net revenue	$	458,633	$	2,821,044
Operating Expenses:
Cost of services (exclusive of depreciation and amortization shown separately below)		216,958		693,978
Research and development		632,369		493,686
Selling, general, and administrative		1,969,875		3,120,572
Depreciation and amortization		219,181		153,928
Total Operating Expenses		3,038,383		4,462,164
Operating Loss		(2,579,750)		(1,641,120)
Non-Operating Income (Expense):
Interest income (expense)		(10,231)		(3,958)
Change in fair value of warrant liability		(1,340)		40,588
Other income		44,614		6,941
Other expense		(743)		(94,513)
Total Other Expense (Income), Net		32,300		(50,942)
Net Loss before Taxes		(2,547,450)		(1,692,062)
Income tax expense		—		—
Net loss including noncontrolling interest		(2,547,450)		(1,692,062)
Net loss attributable to noncontrolling interest		—		—
Net loss attributable to T Stamp Inc.	$	(2,547,450)	$	(1,692,062)
Basic and diluted net loss per share attributable to T Stamp Inc.	$	(0.50)	$	(0.37)
Weighted-average shares used to compute basic and diluted net loss per share		5,044,775		4,549,686

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

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T STAMP INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)


	For the three months ended
	March 31,
	2023		2022
Net loss including noncontrolling interest	$	(2,547,450)	$	(1,692,062)
Other Comprehensive Income (Loss):
Foreign currency translation adjustments		(41,442)		62,650
Total Other Comprehensive Income (Loss)		(41,442)		62,650
Comprehensive loss		(2,588,892)		(1,629,412)
Comprehensive loss attributable to noncontrolling interest		—		—
Comprehensive loss attributable to T Stamp Inc.	$	(2,588,892)	$	(1,629,412)

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

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T STAMP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited)

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022


											Accumulated
				Additional					Stockholders’		Other
	Common Stock			Paid-In		Treasury Stock			Notes		Comprehensive		Accumulated		Noncontrolling
	Shares	Amount		Capital		Shares	Amount		Receivable		Income		Deficit		Interest		Total
Balance, January 1, 2022	4,095,029	$	40,950	$	31,985,880	56,513	$	—	$	(130,267)	$	183,900	$	(27,208,186)	$	161,439	$	5,033,716
Exercise of warrants to common stock	490,490		4,905		3,378,857	—		—		—		—		—		—		3,383,762
Exercise of options to common stock	8,720		87		53,227	—		—		—		—		—		—		53,314
Issuance of common stock	16,086		161		203,277	—		—		—		—		—		—		203,438
Issuance of common stock warrants	—		—		55,838	—		—		—		—		—		—		55,838
Issuance of common stock in relation to vested restricted stock units, net of shares forfeited to satisfy taxes	39,167		392		(392)	—		—		—		—		—		—		—
Repayment of shareholders loan through in-kind services	—		—		—	—		—		27,930		—		—		—		27,930
Stock-based compensation	—		—		287,786	—		—		—		—		—		—		287,786
Currency translation adjustment	—		—		—	—		—		—		62,650		—		—		62,650
Net loss attributable to T Stamp Inc.	—		—		—	—		—		—		—		(1,692,062)		—		(1,692,062)
Balance, March 31, 2022	4,649,492	$	46,495	$	35,964,473	56,513	$	—	$	(102,337)	$	246,550	$	(28,900,248)	$	161,439	$	7,416,372


											Accumulated
				Additional					Stockholders’		Other
	Common Stock			Paid-In		Treasury Stock			Notes		Comprehensive		Accumulated		Noncontrolling
	Shares	Amount		Capital		Shares	Amount		Receivable		Income		Deficit		Interest		Total
Balance, January 1, 2023	4,854,302	$	48,543	$	39,496,183	56,513	$	—	$	(18,547)	$	237,252	$	(39,299,726)	$	161,439	$	625,144
Exercise of options to common stock	—		—		2,000	—		—		—		—		—		—		2,000
Issuance of common stock in relation to vested restricted stock units, to wholly owned subsidiary	—		—		—	206,033		—		—		—		—		—		—
Issuance of treasury stock to employees in relation to vested restricted stock units, net of taxes	262,546		2,625		(77,968)	(262,546)		—		—		—		—		—		(75,343)
Reverse stock split rounding	4,759		48		(48)	—		—		—		—		—		—		—
Repayment of shareholders loan through in-kind services	—		—		—	—		—		18,547		—		—		—		18,547
Stock-based compensation	—		—		59,574	—		—		—		—		—		—		59,574
Currency translation adjustment	—		—		—	—		—		—		(41,442)		—		—		(41,442)
Net loss attributable to T Stamp Inc.	—		—		—	—		—		—		—		(2,547,450)		—		(2,547,450)
Balance, March 31, 2023	5,121,607	$	51,216	$	39,479,741	—	$	—	$	—	$	195,810	$	(41,847,176)	$	161,439	$	(1,958,970)

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

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T STAMP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	For the three months ended March 31,
	2023		2022
Cash flows from operating activities:
Net loss attributable to T Stamp Inc.	$	(2,547,450)	$	(1,692,062)
Net loss attributable to noncontrolling interest				—
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization		219,181		153,928
Stock-based compensation		59,574		287,786
Change in fair value of warrant liability		1,340		(40,588)
Repayment of shareholder loan through in-kind services		18,547		27,930
Non-cash interest		9,904		—
Non-cash lease expense		66,759		—
Loss on retirement of equipment		897		—
Changes in assets and liabilities:
Accounts receivable		474,911		244,927
Related party receivables		696		13,394
Prepaid expenses and other current assets		123,177		(224,939)
Other assets		—		27,539
Accounts payable		419,887		349,640
Accrued expense		91,294		254,738
Related party payables		37,962		(81,552)
Deferred revenue		935,289		(181,943)
Operating lease liabilities		(66,546)		—
Customer deposit liabilities		—		(280,108)
Net cash flows from operating activities		(154,578)		(1,141,310)

Cash flows from investing activities:
Purchases of property and equipment		—		(10,059)
Capitalized internally developed software costs		(167,668)		(206,523)
Patent application costs		(23,563)		(28,173)
Net cash flows from investing activities		(191,231)		(244,755)
Cash flows from financing activities:
Proceeds from exercise of warrants to common stock		—		3,383,762
Proceeds from exercise of options to common stock		2,000		53,314
Forfeited common stock shares to satisfy taxes		(75,343)		—
Proceeds from issuance of common stock		—		203,438
Proceeds from issuance of common stock warrants		—		55,838
Principal payments on financial liabilities		(29,715)		—
Net cash flows from financing activities	$	(103,058)	$	3,696,352
Effect of foreign currency translation on cash		(32,513)		50,169
Net change in cash and cash equivalents		(481,380)		2,360,456
Cash and cash equivalents, beginning of period		1,254,494		3,475,695
Cash and cash equivalents, end of period	$	773,114	$	5,836,151

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	570	$	8

Supplemental disclosure of non-cash activities:
Adjustment to operating lease right of use assets related to terminated leases	$	82,982	$	—
Adjustment to operating lease liabilities related to terminated leases	$	77,648	$	—
Prepaid rent expense reclassified upon termination of leases	$	5,335	$	—

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

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T STAMP INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of Business and Summary of Significant Accounting Policies And Going Concern

Description of Business — T Stamp Inc. was incorporated on April 11, 2016 in the State of Delaware. T Stamp Inc. and its subsidiaries (“Trust Stamp”, “we”, “us”, “our” or the “Company”) develops and markets identity authentication software solutions for enterprise and government partners and peer-to-peer markets.

Trust Stamp develops proprietary artificial intelligence-powered solutions, researching and leveraging biometric science, cryptography, and data mining, to deliver insightful identity and trust predictions that identify and defend against fraudulent identity attacks, protect sensitive user information, and extend the reach of digital services through global accessibility. We utilize the power and agility of technologies such as GPU processing, edge-computing, and neural networks to process and protect data faster and more effectively than has ever previously been possible in order to deliver results at a disruptively low cost for usage across multiple industries, including:

●

Banking/FinTech

●

KYC/AML Compliance

●

Humanitarian and Development Services

●

Government and Law Enforcement, including Alternative to Detention programs

●

Cryptocurrency and Digital Assets

●

Biometrically Secured Email and Digital Communications

●

P2P Transactions, Social Media, and Sharing Economy

●

Real Estate, Travel, and Healthcare

Reverse Split — On February 15, 2023 our Board of Directors approved and, as of February 20, 2023, the holders of a majority of our voting capital stock approved an amendment (the “Certificate of Amendment”) to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse split of our issued and outstanding shares of Class A Common Stock at a ratio of one share for every five shares currently held, rounded up to the nearest whole share – whereby every five (5) outstanding shares of Class A Common Stock will be combined and become one (1) share of Class A Common Stock, rounding up to the nearest whole number of shares (the “Reverse Split”). All share and per share amounts in these unaudited condensed consolidated financial statements have been retroactively restated to reflect the Reverse Split. The Reverse Split was effective for trading on the market opening of Nasdaq on March 23, 2023. We are seeking ratification of the Reverse Split because, although we filed an Information Statement on Schedule 14C with the SEC on March 3, 2023 and provided such information statement to stockholders, we did not file a proxy statement on Schedule 14A to solicit stockholder approval. On May 13 2023, we received sufficient stockholder votes to ratify the Reverse Split.

Going Concern — The accompanying unaudited 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 ended March 31, 2023 of $2.55 million, negative operating cash outflows of $155 thousand for the same period, negative working capital of $4.09 million and an accumulated deficit of $41.85 million as of March 31, 2023.

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additional revenue is well advanced, it has not reached a stage that allows it to be factored into a going concern evaluation. In addition, although the Company has previously been successful in raising capital as needed and has already made plans to do so as well as restructuring expenses to meet the Company’s cash needs, no assurance can be given that the Company will be successful in its capital raising efforts. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period.

On April 14, 2023, the Company entered into a securities purchase agreement (“SPA”) with an institutional investor, pursuant to which the Company agreed to issue and sell to the investor (i) in a registered direct offering, 563,380 shares of Class A Common Stock, par value $0.01 per share of the Company at a price of $3.30 per share, and pre-funded warrants to purchase up to 1,009,950 shares of Class A Common Stock, at a price of $3.299 per pre-funded warrant, at an exercise price of $0.001 per share of Class A Common Stock, and (ii) in a concurrent private placement, common stock purchase warrants, exercisable for an aggregate of up to 1,573,330 shares of Class A Common Stock, at an exercise price of $3.30 per share. On April 18, 2023, the Company sold 563,380 shares of Class A Common Stock to the institutional investor for total proceeds of $3.30 for $1,859,154. Additionally, on same date, the institutional investor purchased and exercised the 1,009,950 pre-funded warrants, for total proceeds to the Company of $3,332,835, resulting in an aggregate issuance by the Company of 1,573,330 shares of Class A Common Stock for net proceeds of $4.78 million from the registered direct offering after deducting placement fee and legal expense of $363 thousand and $50 thousand, respectively. Maxim Group LLC is the sole placement agent for the registered direct offering on Form S-3, which was initially declared effective by the U.S. Securities and Exchange Commission on April 12, 2023.

Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with US Generally Accepted Accounting Principles (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

Unaudited Interim Results — These unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP, pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. In management’s opinion, these unaudited condensed consolidated financial statements and accompanying notes have been prepared on the same basis as the annual financial statements and reflect all the adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, 2023, the results of operations for the three months ended March 31, 2023 and 2022, and cash flows for the three months ended March 31, 2023 and 2022. Certain information and note disclosures have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated balance sheet as of December 31, 2022 was derived from the audited financial statements as of that date but does not include all of the disclosures required by U.S. GAAP. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes for the year ended December 31, 2022 included in the Company’s Annual Report. The Company’s significant accounting policies are described in Note 1 to those audited financial statements.

Basis of Consolidation — The accompanying unaudited condensed consolidated financial statements reflect the activity of the Company and its subsidiaries, Trusted Mail Inc. (“Trusted Mail”), Sunflower AI Technologies (“SAIT”), Finnovation LLC (“Finnovation”), Trust Stamp Malta Limited (“Trust Stamp Malta”), AIID Payments Limited, Biometric Innovations Limited (“Biometrics”), Trust Stamp Rwanda Limited, Metapresence Limited, and Trust Stamp Denmark ApS. All significant intercompany transactions and accounts have been eliminated.

On February 28, 2023, the Company received the Certificate of Termination from the State of Georgia, which represents the completion of administratively dissolving T Avatar LLC. As there were no operations established under the entity, there is a limited impact to Trust Stamp. The dissolution of T Avatar LLC was effective February 28, 2023.

Further, we continue to consolidate Tstamp Incentive Holdings (“TSIH”) which we consider to be a variable interest entity.

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Variable Interest Entity — On April 9, 2019, management created a new entity, TSIH. Furthermore, on April 25, 2019, the Company issued 320,513 shares of Class A Common Stock to TSIH, for the purpose of providing a pool of shares of Class A Common Stock of the Company that the Company’s Board of Directors (the “Board”) could use for employee stock awards and were recorded initially as treasury stock. Since establishing TSIH, 264,000 shares were transferred to various employees as a stock award that were earned and outstanding. On February 15, 2023 Trust Stamp issued 206,033 shares of Class A Common Stock to TSIH to be used to satisfy vested employee stock awards.

The Company does not own any of the shares of Class A Common Stock of the Company held by TSIH. The Company considers this entity to be a variable interest entity (“VIE”) because it is thinly capitalized and holds no cash. Because the Company does not own shares in TSIH, management believes that this gives the Company a variable interest. Further, management of the Company also acts as management of TSIH and is the decision-maker as management grants shares held by TSIH to employees of the Company. As this VIE owns only shares in the Company and no other liabilities or assets, the Company is the primary beneficiary of TSIH and will consolidate the VIE.

Use of Estimates — The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates their estimates that include, but are not limited to, percentage of completion related to revenue contracts that are not fully complete at the end of a fiscal quarter, capitalization and estimated useful life of internal-use software, the allowance for doubtful accounts, the fair value of financial assets and liabilities, the recoverability of goodwill, stock-based compensation including the determination of the fair value of our common stock, impairment of long-lived assets, the valuation of deferred tax assets and uncertain tax positions, and warrant liabilities. We base our estimates on assumptions, both historical and forward-looking trends, and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Segment Information — The Company has a single operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources.

Risks and Uncertainties — The Company is dependent upon additional capital resources for its planned full-scale operations, and is subject to significant risks and uncertainties, including failing to secure funding to continue to operationalize the Company’s plans or failing to profitably operate the business.

Major Customers and Concentration of Risks — Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. We maintain our cash and cash equivalents with high-quality financial institutions, mainly in the United States; the composition of which are regularly monitored by us. The Federal Deposit Insurance Corporation covers $250 thousand for substantially all depository accounts. The Company from time to time may have amounts on deposit in excess of the insured limits. As of March 31, 2023 and December 31, 2022, the Company had $284 thousand and $71 thousand in U.S. bank accounts, respectively, which exceeded these insured amounts. Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts.

For accounts receivable, we are exposed to credit risk in the event of nonpayment by customers to the extent the amounts are recorded in the consolidated balance sheets. We extend different levels of credit and maintain reserves for potential credit losses based upon the expected collectability of accounts receivable. We manage credit risk related to our customers by performing periodic evaluations of credit worthiness and applying other credit risk monitoring procedures.

Three customers represented 93.21% or 62.04%, 15.94%, and 15.23% of the balance of total accounts receivable as of March 31, 2023 and three customers represented 95.37% or 36.90%, 32.69%, and 25.78% of the balance of total accounts receivable as of December 31, 2022. The Company seeks to mitigate its credit risk with respect to accounts receivable by contracting with large commercial customers and government agencies, and regularly monitoring the aging of accounts receivable balances. As of March 31, 2023 and December 31, 2022, the Company had not experienced any significant losses on its accounts receivable.

During the three months ended March 31, 2023, the Company sold to primarily three customers which made up approximately 78.77% of total Net revenue, and consisted of 40.14%, 25.08%, and 13.55% from an S&P 500 Bank, Mastercard, and FIS, respectively.

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Additionally, during the three months ended March 31, 2022, the Company sold to primarily one customer, ICE, which made up approximately 79.42% of total Net revenue.

Foreign Currencies — The functional currencies of the Company’s foreign subsidiaries are the local currencies. For those subsidiaries, the assets and liabilities are translated into U.S. dollars at the exchange rate method at the unaudited condensed consolidated balance sheet date. The Company’s other comprehensive (loss) is comprised of foreign currency translation adjustments related to the Company’s foreign subsidiaries. Income and expenses are translated at the average exchange rates for the period. Foreign currency transaction gains and losses are included in other income or other expense in the unaudited condensed consolidated statements of operations.

Cash and Cash Equivalents — Cash and cash equivalents consist of cash in banks and bank deposits. The Company considers all highly liquid instruments purchased with an original maturity of three months or less when purchased as cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts, if any. Allowance for doubtful accounts is based on the Company’s best estimate of probable losses inherent in its accounts receivable portfolio and is determined based on expectations of the customer’s ability to pay by considering factors such as historical experience, financial position of the customer, age of the accounts receivable, current economic conditions, including the ongoing COVID-19 pandemic, and as well as reasonable and supportable forward-looking factors about its portfolio and future economic conditions. Accounts receivables are written-off and charged against an allowance for doubtful accounts when the Company has exhausted collection efforts without success. No allowance for bad debts has been established. Bad debts are recognized when they are deemed uncollectible, and management considers all present receivables fully collectible.

As of March 31, 2023 and December 31, 2022, accounts receivable includes unbilled receivables of $90 thousand and $109 thousand, respectively.

Property and Equipment, Net — Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is recognized using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs that do not improve or extend the useful lives of the assets are expensed when incurred, whereas additions and major improvements are capitalized. Upon sale or retirement of assets, the cost and related accumulated depreciation are derecognized from the unaudited condensed consolidated balance sheet and any resulting gain or loss is recorded in the unaudited condensed consolidated statements of operations in the period realized.

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 that is generally five years. 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.

Accounting for Impairment of Long-Lived Assets — Long-lived assets with finite lives include property and equipment, capitalized internal-use software, right of use assets, and intangible assets subject to amortization. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company determined that as of March 31, 2023, and December 31, 2022, no long-lived assets with finite lives were impaired.

Goodwill — Goodwill is accounted for in accordance with FASB ASC 350, Intangibles—Goodwill and Other. The Company allocates the cost of an acquired business to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase consideration transferred over the fair value of the net assets acquired, including other intangible

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assets, is recorded as goodwill. Goodwill is tested for impairment at the reporting unit level at least quarterly or more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. In assessing goodwill for impairment, the Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. In the qualitative assessment, the Company considers factors including economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Should the Company conclude that it is more likely than not that the recorded goodwill amounts have been impaired, the Company would perform the impairment test. Goodwill impairment exists when a reporting unit’s carrying value exceeds its fair value. Significant judgment is applied when goodwill is assessed for impairment. There were no impairment charges to goodwill during the three months ended March 31, 2023 and year ended December 31, 2022.

Fair Value of Assets and Liabilities — The Company follows the relevant U.S. GAAP guidance regarding the determination and measurement of the fair value of assets/liabilities; in which fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction valuation hierarchy which requires an entity to maximize the use of observable inputs when measuring fair value. The guidance describes the following three levels of inputs that may be used in the methodology to measure fair value:

Level 1 – Quoted prices available in active markets for identical investments as of the reporting date;

Level 2 – Inputs other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date; and

Level 3 – Unobservable inputs, which are to be used in situations where there is little or no market activity for the asset or liability and wherein the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The estimated fair values of cash, accounts receivable, related party receivables, prepaid expenses and other current assets, other assets, accounts payable, related party payables, accrued expenses, deferred revenue, customer deposit liabilities, and nonconvertible notes payable approximate their carrying values. The fair values of warrant liabilities issued in connection with equity or debt issuance are determined using the Black-Scholes valuation model, a “Level 3” fair value measurement, based on the estimated fair value of the underlying common stock, volatility based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities, the expected life based on the remaining contractual term of the conversion option and warrant liabilities and the risk free interest rate based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the warrant liability’s contractual life. The Company accounts for its financial assets and liabilities at fair value regularly. The Company evaluates the fair value of its non-financial assets and liabilities on a nonrecurring basis.

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.

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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.

Remaining Performance Obligations — The Company’s arrangements with its customers often have terms that span over multiple years. However, the Company generally allows its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Revenue allocated to remaining performance obligations represents noncancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. The Company has elected the practical expedient allowing the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less. Cancelable contracted revenue, which includes customer deposit liabilities, is not considered a remaining performance obligation. As of March 31, 2023, and December 31, 2022, the Company did not have any related performance obligations for contracts with terms exceeding twelve months.

Disaggregation of Revenue


	For the three months ended
	March 31,
	2023		2022
Professional services (over time)	$	383,633	$	2,758,544
License fees (over time)		75,000		62,500
Total Revenue	$	458,633	$	2,821,044

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 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.

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. In alignment with ASC 340, the Company recognizes an asset for the incremental costs of obtaining a contract with a customer if we expect to recover the costs. 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. Costs to obtain contracts and costs to fulfill contracts were not material in the periods presented.

Warrants — The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”), depending on the specific terms of the warrant agreement.

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Cost of Services Provided — Cost of services generally consists of the cost of hosting fees, materials, and cost of labor associated with professional services rendered. Depreciation and amortization expense is not included in cost of services.

Research and Development — Research and development costs are expensed as incurred and consist primarily of personnel costs such as salaries and benefits and relate primarily to time spent during the preliminary project stage, post implementation maintenance, bug fixes associated with capitalized internal-use software activities, and front-end application development in which technological feasibility has not been established. Depreciation and amortization expense is not included in research and development.

Advertising — Advertising costs are expensed as incurred. Advertising and marketing expense totaled $52 thousand and $58 thousand for the three months ended March 31, 2023 and 2022, respectively.

Stock- Based Compensation — The Company accounts for its stock-based compensation arrangements at fair value. Fair value of each stock-based award 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 stock grants and restricted stock units. The Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including the fair value of the underlying common shares, the expected term of the share option, the expected volatility of the price of our common shares, risk-free interest rates, and the expected dividend yield of common shares. The assumptions used to determine the fair value of the option awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. The calculated fair value is recognized as expense over the requisite service period using the straight-line method. Forfeitures are accounted for in the period in which they occur. Trust Stamp offers the indirect repurchase of shares through a net-settlement feature upon the vesting of RSU awards to satisfy minimum statutory tax-withholding requirements for the recipient.

Income Taxes — The Company records income tax provisions 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 of a change in tax rates on deferred tax assets and liabilities 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 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 adjusts 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.

The Company computes its tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date pre-tax income from recurring operations and adjusting for discrete tax items arising in that quarter. There were no discrete items that impacted the effective tax rate for the three months ended March 31, 2023 and March 31, 2022, respectively. The rate remained consistent over the period due to the full valuation allowance recorded in the period.

The Company had an effective tax rate of 0% for the three months ended March 31, 2023 and 2022, respectively. The Company has incurred U.S. operating losses and has minimal profits in foreign jurisdictions.

Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the

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periods in which those temporary differences are deductible. In making this determination, management considers all available positive and negative evidence affecting specific deferred tax assets, including the Company’s past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry-back and carry-forward periods, and the implementation of tax planning strategies.

The Company had no unrecognized tax benefits as of March 31, 2023 and December 31, 2022.

It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. The Company has not accrued any penalties related to uncertain tax positions due to offsetting tax attributes as of March 31, 2023 and December 31, 2022.

The Company files U.S. federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitation. The only material jurisdiction where the Company is subject to potential examination by tax authorities is the U.S. (federal and state) for tax years 2016 through 2022.

Leases — The Company determines if a contract is a lease or contains a lease at the inception of the contract in accordance with ASC 842. All leases are assessed for classification as an operating lease or a finance lease. The lease term begins on the commencement date, the date the Company takes possession of the property, and the commencement date is used to calculate straight-line expense for operating leases. The lease may include options to extend or terminate the lease. When it is reasonably certain that the option will be exercised, the Company reassess our conclusions to account for the modified contract.

Operating lease right-of-use assets represent the Company’s right to use an underlying asset during a lease term and are included in non-current assets on our unaudited condensed consolidated balance sheet. Operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities are divided into two classifications on our unaudited condensed consolidated balance sheet as a current liability, short-term operating lease liabilities, and a non-current liability, long-term operating lease liabilities. The Company does not have any finance lease right-of-use assets or finance lease liabilities.

The Company’s operating lease liabilities are recognized at the applicable lease commencement date based on the present value of the lease payments required to be paid over the lease term. The interest rate implicit in the lease is not readily determinable, therefore, the Company uses an estimated incremental borrowing rate to discount the lease payments to present value. The estimated incremental borrowing rate is derived from information available at the lease commencement date. The Company’s right-of-use assets are also recognized at the applicable lease commencement date. The right-of-use asset equals the carrying amount of the related operating lease liability, adjusted for any lease payments made prior to lease commencement and lease incentives provided by the lessor. Variable lease payments are expensed as incurred and do not factor into the measurement of the applicable right-of-use asset or operating lease liability.

The term of our leases equals the non-cancellable period of the lease, including any rent-free periods provided by the lessor, and also include options to renew or extend the lease (including by not terminating the lease) that we are reasonably certain to exercise. We establish the term of each lease at lease commencement and reassess that term in subsequent periods if a triggering event occurs. Operating lease cost for lease payments is recognized on a straight-line basis over the lease term.

Some lease contracts include lease and non-lease components. Trust Stamp elected the practical expedient offered by ASC 842 to not separate the lease components from non-lease components. As a result, the Company accounts for leases as a single lease component.

In addition, the Company elected not to recognize right-of-use assets and operating lease liabilities for leases term of twelve months or less. The short-term lease expenses are recognized on a straight-line basis over the lease term.

Commitments and Contingencies — Liabilities for loss contingencies arising from claims, disputes, legal proceedings, fines and penalties, and other sources are recorded when it is probable that a liability has been or will be incurred and the amount of the liability can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Recoveries of such legal costs from insurance policies are recorded as an offset to legal expenses in the period they are received.

Treasury Stock — Repurchased treasury stock is recorded at cost. When treasury stock is resold at a price different than its historical acquisition cost, the difference is recorded as a component of additional paid-in capital in the unaudited condensed consolidated balance sheets.

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Net Loss per Share Attributable to Common Stockholders — Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potentially dilutive Class A Common Stock equivalents for the period. For the purposes of this calculation, stock-based awards, warrants, and the conversion option of convertible notes are considered to be potential common shares outstanding. Since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s potential common shares outstanding were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive.

Recent Accounting Pronouncements Not Yet Adopted — In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this ASU clarify that an entity should measure the fair value of an equity security subject to contractual sale restriction the same way it measures an identical equity security that is not subject to such a restriction. The FASB said the contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, should not affect its fair value. The ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect this guidance to have a material impact to its unaudited condensed consolidated financial statements or related disclosures.

Recently Adopted Accounting Pronouncement — In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” (“ASU 2016-13”). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. In November 2019, FASB issued ASU 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this standard as of January 1, 2023, and the guidance did not have a material impact on its unaudited condensed consolidated financial statements or related disclosures.

2. Borrowings

Non-Convertible Promissory Notes Payable


	As of March 31,		As of December 31,
	2023		2022
Malta loan receipt 3 – June 3, 2022	$	63,156	$	62,365
Malta loan receipt 2 – August 10, 2021		307,632		303,778
Malta loan receipt 1 – February 9, 2021		498,239		491,996
Interest added to principal		28,685		11,551
Total principal outstanding		897,712		869,690
Plus accrued interest		9,904		16,775
Total promissory notes payable	$	907,616	$	886,465

In May 2020, the Company formed a subsidiary in the Republic of Malta, Trust Stamp Malta Limited, with the intent to establish a research and development center with the assistance of potential grants and loans from the Maltese government. As part of the creation of this entity, we entered into an agreement with the government of Malta for a potentially repayable advance of up to €800 thousand or $858 thousand to assist in covering the costs of 75% of the first 24 months of payroll costs for any employee who begins 36 months from the execution of the agreement on July 8, 2020. On February 9, 2021, the Company began receiving funds and as of March 31, 2023, the balance received was $869 thousand which includes changes in foreign currency rates.

The Company will pay an annual interest rate of 2% over the European Central Banks (ECB) base rate as set on the beginning of the year in review. If the ECB rate is below negative 1%, the interest rate shall be fixed at 1%. The Company will repay a minimum of 10% of Trust Stamp Malta Limited’s pre-tax profits per annum capped at 15% of the amount due to the Corporation until the disbursed funds are repaid. At this time, Trust Stamp Malta Limited does not have any revenue-generating contracts and therefore, we do not believe any amounts shall be classified as current.

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3. Warrants

Liability Classified Warrants

The following table presents the change in the liability balance associated with the liability classified warrants, which are classified in Level 3 of the fair value hierarchy from January 1, 2022 to March 31, 2023:


	Warrants ($)
Balance as of January 1, 2022	$	374,694
Additional warrants issued		—
Change in fair value		(113,125)
Balance as of December 31, 2022	$	261,569
Additional warrants issued		—
Change in fair value		1,340
Balance as of March 31, 2023	$	262,909

As of March 31, 2023, the Company has issued a customer a warrant to purchase up to $1.00 million of capital stock in a future round of financing at a 20% discount of the lowest price paid by another investor. The warrant was issued on November 9, 2016. There is no vesting period, and the warrant expires on November 30, 2026. The Company evaluated the provisions of ASC 480, Distinguishing Liabilities from Equity, noting the warrant should be classified as a liability due to its settlement being for a variable number of shares and potentially for a class of shares not yet authorized. The warrant was determined to have a fair value of $250 thousand which was recorded as a deferred contract acquisition asset and to a warrant liability during the year ended December 31, 2016 and was amortized as a revenue discount prior to the current periods presented. The fair value of the warrant was estimated on the date of grant by estimating the warrant’s intrinsic value on issuance using the estimated fair value of the Company as a whole and has a balance of $250 thousand as of March 31, 2023.

On December 16, 2016, the Company issued an investor warrant to purchase $50 thousand worth of shares of our Class A Common Stock. The warrants have no vesting period and expires on December 16, 2026. The warrant agreement states that the investor is entitled to the “number of shares of Common Stock with a Fair Market Value as of the Determination Date of $50,000”. The determination date is defined as the “date that is the earlier of (A) the conversion of the investor’s Note into the equity interests of the Company or (B) the maturity date of the Note.” The investor converted the referenced Note on June 30, 2020, therefore, defining the determination date. The number of shares to be purchased is settled as 6,418 shares as of June 30, 2020. The exercise price of the warrants is variable until the exercise date.

The Company used a Black-Scholes-Merton pricing model to determine the fair value of the warrants and uses this model to assess the fair value of the warrant liability. As of March 31, 2023, the warrant liability is recorded at $13 thousand which is a $1 thousand increase, recorded to change in fair value of warrant liability, from the balance of $12 thousand as of December 31, 2022.


Fair Value of Warrants	$	2.57
Exercise price	$	0.96
Risk free interest rate		4.09	%
Expected dividend yield		—	%
Expected volatility		92.90	%
Expected term		3 years

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Equity Classified Warrants


			As of March 31,	As of December 31,
Warrant Issuance Date	Strike Price		2023	2022
November 9, 2016	$	3.12	80,128	80,128
January 23, 2020	$	8.00	186,442	186,442
January 23, 2020	$	8.00	524,599	524,599
August – December 2021	$	20.00	—	268,743
January – February 2022	$	20.00	—	15,171
September 14, 2022	$	8.85	390,000	390,000
Total warrants outstanding			1,181,169	1,465,083

The Company has issued a customer a warrant to purchase 80,128 shares of Class A Common Stock with an exercise price of $3.12 per share. The warrant was issued on November 9, 2016. There is no vesting period, and the warrant expires on November 30, 2026.

In January 2020, the Company issued REach®, a related party, a warrant to purchase 186,442 shares of the Company’s Class A Common Stock at an exercise of $8.00 per share in exchange for the cancellation of a $100 thousand SAFE issued on August 18, 2017 by the Company’s affiliate Trusted Mail Inc. with a value of $125 thousand. The warrants were issued on January 23, 2020. There is no vesting period, and the warrants expire on December 20, 2024.

In January 2020, the Company issued SCV, a related party, a warrant to purchase 932,111 shares of the Company’s Class A Common Stock at a strike price of $8.00 per share in exchange for $300 thousand in cash and “Premium” sponsorship status with a credited value of $100 thousand per year for 3 years totaling $300 thousand. This “premium” sponsorship status provides the Company with certain benefits in marketing and networking, such as the Company being listed on the investor’s website, as well as providing the Company certain other promotional opportunities organized by the investor. The warrants were issued on January 23, 2020. There is no vesting period, and the warrants expire on December 20, 2024.

On December 21, 2021, SCV executed a Notice of Exercise for certain of its warrants to purchase 407,512 shares of Class A Common Stock at an exercise price of $8.00 per share for a total purchase price of $3.26 million. The closing occurred on January 10, 2022 and resulted in total cash proceeds of $3.26 million to the Company for the warrant exercise.

The warrants to purchase the remaining 524,599 shares of the Company’s Class A Common Stock remain outstanding as of March 31, 2023.

The Company issued 271,593 warrants from August 2021 to December 2021 and 15,421 warrants from January 2022 to February 2022 related to the Regulation CF, D, and S common stock and warrant offering. These warrants became exercisable on January 26, 2022 when the Company received SEC qualification of its offering statement on Form 1-A. These warrants expire as of the earlier of: (a) January 26, 2023, (b) the acquisition of the Company by another entity, or (c) immediately prior to the closing of a firm commitment underwritten public offering. On August 25, 2022, we refunded $5,000 in Regulation CF Units to two investors resulting in the cancellation of 250 warrants.

During the quarter ended March 31, 2022, investors exercised 2,850 warrants at an exercise price of $20.00 per share, resulting in total cash proceeds of $57 thousand to the Company for the warrant exercises.

The warrants to purchase the remaining 283,914 shares of the Company’s Class A Common Stock expired on January 26, 2023 and are no longer outstanding as of March 31, 2023.

On September 11, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with Armistice Capital Master Fund Ltd. Pursuant to the terms of the SPA, the Company agreed, at the closing of the SPA, to sell and issue to the Armistice Capital Master Fund Ltd. in a private placement 195,000 shares of Class A Common Stock of the Company and warrants to purchase 390,000 shares of Class A Common Stock of the Company for a total purchase price of $1,511,250. The Company incurred offering costs of $90,675 from this transaction that were recorded as a reduction of the gross proceeds.

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The warrants also allow for a “cashless exercise” if, at any time after the six (6) month anniversary of the issue date of the warrants there is no effective registration statement registering the resale of the Class A Common Stock issuable pursuant to the warrants. In such a case, then warrants may also be exercised, in whole or in part, by means of a cashless exercise in which the Selling Stockholder will be entitled to receive a number of shares of Class A Common Stock as described in the warrants. Trust Stamp filed the registration statement on September 30, 2022 and received the notice of effectiveness on January 26, 2023.

The 390,000 warrants have an exercise price of $8.85 and may be exercised at any time by the Selling Stockholder starting on the issuance date, September 14, 2022, until the five year and six-month anniversary thereafter.

4. Balance Sheet Components

Prepaid expenses and other current assets

Prepaid expenses and other current assets as of March 31, 2023 and December 31, 2022 consisted of the following:


	March 31,		December 31,
	2023		2022
Prepaid operating expenses	$	236,470	$	225,756
Rent deposit		61,412		55,981
VAT receivable associated with SAIT		82,423		71,742
Tax credit receivable (short-term)		66,135		218,239
Miscellaneous receivable		15,804		8,368
Prepaid expenses and other current assets	$	462,244	$	580,086

Capitalized internal-use software, net

Capitalized internal-use software, net as of March 31, 2023 and December 31, 2022 consisted of the following:


		March 31,		December 31,
	Useful Lives	2023		2022
Internally developed software	5 Years	$	3,482,118	$	3,314,450
Less accumulated depreciation			(2,036,455)		(1,895,778)
Capitalized internal-use software, net		$	1,445,663	$	1,418,672

Amortization expense is recognized on a straight-line basis and for the three months ended March 31, 2023 and 2022 totaled $141 thousand and $120 thousand, respectively.

Property and equipment, net

Property and equipment, net as of March 31, 2023 and December 31, 2022 consisted of the following:


			March 31,	December 31,
	Useful Lives	2023		2022
Computer equipment	3-4 Years	$	148,690	$	148,832
Furniture and fixtures	10 Years		27,565		27,220
Phone- equipment	2.5 years		—		297,150
Property and equipment, gross			176,255		473,202
Less accumulated depreciation			(94,146)		(172,538)
Property and equipment, net		$	82,109	$	300,664

Depreciation expense is recognized on a straight-line basis and for the three months ended March 31, 2023 and 2022 totaled $42 thousand and $10 thousand, respectively.

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Held for sale equipment, net

The Company’s phone equipment was classified as held for sale as of March 31, 2023 as the result of the Company accepting an offer for the sale of the phone equipment in the second quarter of 2023. The major classes of assets and liabilities of the phone equipment held for sale were as follows:


	March 31, 2023
Equipment assets held for sale
Phone equipment	$	297,150
Accumulated depreciation		(119,240)
Total equipment assets held for sale	$	177,910

Liabilities of equipment assets held for sale
Short-term financial liabilities	$	177,905
Total liabilities of equipment assets held for sale	$	177,905

Subsequent to March 31, 2023, on April 26, 2023, the Company sold a portion of the property and equipment for a gross sales price of $451 thousand and an estimated gain of $287 thousand.

Accrued expenses

Accrued expenses as of March 31, 2023 and December 31, 2022 consisted of the following:


	March 31,		December 31,
	2023		2022
Compensation payable	$	224,812	$	171,851
Commission liability		78,176		58,771
Accrued employee taxes		791,534		591,992
Accrued mobile expenses		10,000		177,099
Other accrued liabilities		86,596		100,111
Accrued expenses	$	1,191,118	$	1,099,824

5. Goodwill and Intangible Assets

There were no changes in the carrying amount of goodwill for the periods ended March 31, 2023 and December 31, 2022.

Intangible assets as of March 31, 2023 and December 31, 2022 consisted of the following:


		March 31,		December 31,
	Useful Lives	2023		2022
Patent application costs	3 Years	$	405,848	$	382,285
Trade name and trademarks	3 Years		69,223		68,356
Intangible assets, gross			475,071		450,641
Less: Accumulated amortization			(236,261)		(198,955)
Intangible assets, net		$	238,810	$	251,686

Intangible asset amortization expense is recognized on a straight-line basis and intangible asset amortization expense for the three months ended March 31, 2023 and 2022 totaled $37 thousand and $24 thousand, respectively.

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Estimated future amortization expense of intangible assets is as follows:


Years Ending December 31,	Amount
2023	$	111,006
2024		88,818
2025		38,166
2026		820
	$	238,810

6. Net Loss per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted net loss per share:


	Three months ended
	March 31,
	2023		2022
Numerator:
Net loss attributable to common stockholders	$	(2,547,450)	$	(1,692,062)

Denominator:
Weighted average shares used in computing net loss per share attributable to common stockholders		5,044,775		4,549,686

Net loss per share attributable to common stockholders	$	(0.50)	$	(0.37)

The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations for the periods presented because the impact of including them would have been anti-dilutive:


	March 31,	March 31,
	2023	2022
Options, RSUs, and grants	735,001	521,932
Warrants	1,673,968	1,277,834
Total	2,408,969	1,799,766

7. Stock Awards and Stock-Based Compensation

From time to time, the Company may issue stock awards in the form of Class A Common Stock grants, Restricted Stock Units (RSUs), or Class A Common Stock options with vesting/service terms. Stock awards are valued on the grant date using the Company’s common stock share price quoted on an active market. Stock options are valued using the Black-Scholes-Merton pricing model to determine the fair value of the options. We generally issue our awards in terms of a fixed monthly value, resulting in a variable number of shares being issued, or in terms of a fixed monthly share number.

During the three months ended March 31, 2023 and 2022, the Company entered into agreements with advisory board members and other external advisors to issue cash payments and stock awards in exchange for services rendered to the Company monthly. The total granted stock-based awards to advisory board members and other external advisors during the three months ended March 31, 2023 and 2022 included grants totaling, $0 and $3 thousand, respectively, options totaling $0, and RSUs totaling $3 thousand and $17 thousand, respectively.

In addition to issuing stock awards to advisory board members and other external advisors, during the three months ended March 31, 2023 and 2022, the Company granted stock-based awards to multiple employees. The total granted stock-based awards to employees during the three months ended March 31, 2023 and 2022 included grants totaling, $26 thousand and $149 thousand, respectively, options totaling $4 thousand and $29 thousand, respectively, and RSUs totaling $29 thousand and $89 thousand, respectively.

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The following table summarizes stock option activity for the three months ended March 31, 2023:


				Weighted
		Weighted		Average
		Average		Remaining
	Options	Exercise Price		Contractual	Aggregate
	Outstanding	Per Share		Life (years)	Intrinsic Value
Balance as of January 1, 2022	395,002	$	6.40	2.42	$	5,365,737
Options granted	7,443		3.20
Options exercised	(15,121)		6.30
Options canceled and forfeited	(215)		4.40
Balance as of December 31, 2022	387,109		6.40	1.45		0
Options granted	2,647		3.01
Options exercised	(1,230)		3.25
Options canceled and forfeited	(756)		7.94
Balance as of March 31, 2023	387,770		6.37	1.21		0
Options vested and exercisable as of March 31, 2023	387,770	$	6.37	1.21	$	0

The aggregate intrinsic value of options outstanding, exercisable, and vested and exercisable is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock. The aggregate intrinsic value of options exercised during the three months ended March 31, 2023 and 2022 is $0 and $37 thousand, respectively.

The weighted average grant-date fair value of options granted during the three months ended March 31, 2023 and 2022 was $2.00 and $16.72 per share, respectively. The total grant-date fair value of options that vested during the three months ended March 31, 2023 and 2022 was $4 thousand and $29 thousand, respectively.

As of March 31, 2023, the Company had 387,770 stock options outstanding of which all are fully vested options. As of March 31, 2023, the Company had 70,641 common stock grants outstanding of which 62,965 were vested but not issued and 7,676 were not yet vested. All granted and outstanding common stock grants will fully vest by March 31, 2024. The Company had unrecognized stock-based compensation related to common stock grants of $15 thousand as of March 31, 2023. As of March 31, 2023, the Company had 276,590 RSUs outstanding of which 241,945 were vested but not issued and 34,645 were not yet vested. All granted and outstanding RSUs will fully vest by January 2, 2024. The Company had unrecognized stock-based compensation related to RSUs of $22 thousand as of March 31, 2023.

A summary of outstanding RSU activity is as follows:


		RSU Outstanding Number of Shares
Balance as of January 1, 2022		126,900
Granted		211,700
Vested (issued)		(46,036)
Forfeited		—
Balance as of December 31, 2022		292,564
Granted		4,627
Vested (issued)		—
Forfeited		(20,601)
Balance as of March 31, 2023		276,590

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The following assumptions were used to calculate the fair value of options granted during the three months ended March 31, 2023:


Fair value of Class A Common Stock	$	2.65—3.57
Exercise price	$	2.93 — 3.09
Risk free interest rate		3.91 — 4.23	%
Expected dividend yield		0.00	%
Expected volatility		92.90 — 96.45	%
Expected term		3 Years

Stock-based compensation expense

Our consolidated statements of operations include stock-based compensation expense as follows:


	Three months ended March 31,
	2023		2022
Cost of services	$	494	$	2,174
Research and development		18,855		59,860
Selling, general, and administrative		40,225		225,752
Total stock-based compensation expense	$	59,574	$	287,786

8. Related Party Transactions

Related party payables of $311 thousand and $273 thousand as of March 31, 2023 and December 31, 2022, respectively, primarily relate to amounts owed to 10Clouds, the Company’s contractor for software development and investor in the Company, and smaller amounts payable to members of management as expense reimbursements. Total costs incurred in relation to 10Clouds for the three months ended March 31, 2023 and 2022, totaled approximately $294 thousand and $215 thousand, respectively.

Legal Services

A member of management provides legal services to the Company from a law firm privately owned and separate from the Company. Certain services are provided to the Company through this law firm. Total expenses incurred by the Company in relation to these services totaled $0 and $29 thousand during the three months ended March 31, 2023 and 2022, respectively. Amounts payable as of March 31, 2023 and December 31, 2022 were $0.

Options Agreement

The Company has agreed, with effect from November 13, 2020, to grant a three-year loan in the amount of $335 thousand with an abated interest rate of 0.25% per annum to an advisory contractor to purchase 281,648 options. The options provide for the right to acquire shares of Class A Common Stock at a strike price of $6.00 per share. The options have no vesting period and will expire in November 2023. The loan was repaid with in-kind services from the contractor at a rate of $9 thousand per month for 36 months with the first payment receipt in April 2020 and the final payment received in February 2023. As of March 31, 2023 and December 31, 2022, the shareholder loan balances were $0 and $19 thousand, respectively.

Mutual Channel Agreement

On November 15, 2020, the Company entered into a Mutual Channel Agreement with Vital4Data, Inc., a company at which Kristin Stafford serves as Chief Executive Officer, who is a current Director of the Company. Pursuant to the agreement, the Company engaged Vita4Data, Inc. as a non-exclusive sales representative for the Company’s products and services. Vital4Data, Inc. is entitled to compensation in the form of commissions, receiving a 20% of commission-eligible on net revenue from sales generated by Vital4Data, Inc. in the first year of the contract term, which is reduced to 10% in the second year, and 5% in the third year. The Company has not earned or expensed any commissions pursuant to the Vital4Data, Inc. agreement to date. As of March 31, 2023 and December 31, 2022, the Vital4Data, Inc. commission due was $0.

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9. Malta Grant

During July 2020 the Company entered into an agreement with the Republic of Malta that would provide for a grant of up to €200 thousand or $251 thousand as reimbursement for operating expenses over the first twelve months following Trust Stamp Malta’s incorporation in the Republic of Malta. The Company must provide an initial capital amount of €50 thousand or $62 thousand, which is matched with a €50 thousand or $62 thousand grant. The remaining €150 thousand or $190 thousand are provided as reimbursement of operating expenses twelve months following incorporation.

U.S. GAAP does not provide authoritative guidance regarding the receipt of economic benefits from government entities in return for compliance with certain conditions. Therefore, based on ASC 105-10-05-2, non-authoritative accounting guidance from other sources was considered by analogy in determining the appropriate accounting treatment, the Company elected to apply International Accounting Standards 20 – Accounting for Government Grants and Disclosure of Government Assistance and recognizes the expected reimbursements from the Republic of Malta as deferred income. As reimbursable operating expenses are incurred, a receivable is recognized (reflected within “prepaid expenses and other current assets” in the unaudited condensed consolidated balance sheets) and income is recognized in a similar systematic basis over the same periods in the unaudited condensed consolidated statements of operations. During the three months ended March 31, 2023 and 2022, the Company incurred $0 in expenses that are reimbursable under the grant. As of March 31, 2023, all amounts provided for under this grant were received.

On January 25, 2022, the Company entered into an additional agreement with the government of Malta for a grant of up to €100 thousand or $107 thousand, in terms of the ‘Investment Aid to produce the COVID-19 Relevant Product’ program, to support the proposed investment. The estimated value of the grant is €136,568 or $146,493, at an aid intensity of 75% to cover eligible wage costs incurred after February 1, 2022 in relation to new employees engaged specifically for the implementation of the project. On September 22, 2022, the Company entered into an amendment agreement that enables the Company to submit eligible employee expenses for reimbursement by October 31, 2022. During the three months ended March 31, 2023 and 2022, the Company incurred $0, respectively, in expenses that are reimbursable under the grant. As of March 31, 2023, no amounts provided under this grant were received.

10. Leases and Commitments

Operating Leases — The Company leases office space in Atlanta, Georgia, which serves as its corporate headquarters, office space in Malta, which serves as its research and development facility, and vehicles in Malta that are considered operating lease arrangements under ASC 842 guidance. In addition. the Company contracts for month-to-month coworking arrangements in other office spaces in North Carolina, Denmark, Poland, and Rwanda to support its dispersed workforce. As of March 31, 2023, there were no minimum lease commitments related to month-to-month lease arrangements.

Initial lease terms are determined at commencement date, the date the Company takes possession of the property, and the commencement date is used to calculate straight-line expense for operating leases. Certain leases contain renewal options for varying periods, which are at the Company’s sole discretion. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in the determination of the Company’s right-of-use assets and lease liabilities. The Company’s leases have remaining terms of 1 to 4 years. As the Company’s leases do not provide an implicit rate, the present value of future lease payments is determined using the Company’s incremental borrowing rate based on information available at the commencement date.


Lease term and discount rate	March 31, 2023
Weighted average remaining lease term	1.86 years
Weighted average discount rate	5.0	%

The most significant impact of the adoption of the standard was the recognition of right-of-use assets and lease liabilities for operating leases on our unaudited condensed consolidated balance sheet. As of January 1, 2022, the Company had operating right-of-use assets of $323 thousand and operating lease liabilities of $303 thousand comprised of $162 thousand of current lease liabilities and $141 thousand of non-current lease liabilities. Upon adoption, the difference between the right-of-use asset and operating lease liability was due to prepaid rent of $20 thousand. Adoption of the standard did not have a material impact on our consolidated statements of operations or cash flows.

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During the three months ended March 31, 2023, the Company terminated four leases including two offices in Malta and two vehicles in Malta. The terminated leases were operating leases. As a result of the terminations, the Company incurred $11 thousand in lease termination fees and recorded a loss of $187 related to this lease termination for the three months ended March 31, 2023.


	March 31, 2023
Leases terminated		4
Lease termination fees	$	10,932
Right-of-use assets derecognized upon lease termination	$	82,982
Lease liabilities derecognized upon lease termination	$	77,648
Loss recognized upon lease termination	$	187

Balance sheet information related to leases as of March 31, 2023 and December 31, 2022 was as follows:


	March 31, 2023		December 31, 2022
Right-of-use assets
Operating lease right-of-use assets	$	166,024	$	315,765

Operating lease liabilities
Short-term operating lease liabilities	$	79,269	$	177,795
Long-term operating lease liabilities		56,739		102,407
Total operating lease liabilities	$	136,008	$	280,202

Future maturities of ASC 842 lease liabilities as of March 31, 2023 are as follows:


			Imputed
	Principal Payments		Interest Payments		Total Payments
2023	$	62,004	$	3,742	$	65,746
2024		50,610		2,075		52,685
2025		22,800		390		23,190
2026		594		—		594
Total future maturities	$	136,008	$	6,207	$	142,215

Total lease expense, under ASC 842, was included in selling, general, and administrative expenses in our consolidated statement of operations for the three months ended March 31, 2023 as follows:


	Three Months Ended
	March 31, 2023
Operating lease expense – fixed payments	$	83,034
Short term lease expense		21,935
Total lease expense	$	104,969

Supplemental cash flows information related to leases was as follow:


	Three Months Ended
	March 31, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	66,546

During the three months ended March 31, 2023, the Company did not incur variable lease expense.

Financial Liability Obligation — As of March 31, 2023, the Company’s financial liability totaled $178 thousand for an executed agreement with a telecommunications company for acquiring mobile hardware. On March 3, 2023, the Company provided a 30-day termination notice to the telecommunications company which terminates the mobile hardware data service. Under the contract terms

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with the telecommunications company, upon termination of the data service the Company must pay the remaining financial liability during the final data service billing period. The remaining financial liability will be paid within the year ending December 31, 2023.

Litigation — The Company is not currently involved with and does not know of any pending or threatening litigation against the Company or any of its officers or directors in connection with its business.

11. Subsequent Events

Subsequent events have been evaluated through May 15, 2023, the date these unaudited condensed consolidated financial statements were available to be issued.

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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 unaudited 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

Trust Stamp was incorporated under the laws of the State of Delaware on April 11, 2016 as “T Stamp Inc.” T Stamp Inc. and its subsidiaries (“Trust Stamp”, “we”, or the “Company”) develop and market identity authentication software for enterprise and government partners and peer-to-peer markets.

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 identity 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-derived 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, the creation of tokenized digital identities to facilitate financial and societal inclusion, and in-community case management software for alternatives to detention and other governmental uses.

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 governmental, media and public scrutiny, since biometric data cannot be “changed” once they are hacked, as they are directly 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.

To address this unprecedented danger and increased cross-industry need to establish trust quickly and securely in virtual environments, Trust Stamp has developed its Irreversibly Transformed Identity Token, or IT^2TM, solutions, which replace biometric templates with a cryptographic hash that can never be rebuilt into the original data and cannot be used to identify the subject outside the environment for which it is designed.

Trust Stamp’s data transformation and comparison technology is vendor and modality agnostic, allowing organizations 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.

Trust Stamp also offers 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.

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Our Markets

Trust Stamp has evaluated the market potential for its services in part by reviewing the following reports, articles, and data sources, none of which were commissioned by the Company, and none of which are to be incorporated by reference:

Data security and fraud

●

In 2022, 4,145 publicly disclosed breaches exposed over 22 billion records according to the “2021 Year End Report: Data Breach QuickView” published by Flashpoint.

●

The cumulative merchant losses to online payment fraud between 2023 and 2027 will exceed $343 billion globally according to a 2022 report titled “Fighting Online Payment Fraud in 2022 & Beyond” published by Juniper Research.

Trust Stamp addresses this market with biometric identity verification and biometric authentication - which utilizes Trust Stamp’s proprietary irreversible identity token to perform biometric matching in a secure and tokenized domain, matching tokenized personally identifiable information and liveness detection.

Biometric authentication

●

By 2027, the value of biometrically authenticated remote mobile payments will reach $1.2 trillion globally, according to a 2022 report titled “Mobile Payment Biometrics” published by Juniper Research.

●

The global biometric system market size is valued at $41.1 billion per annum in 2023, with a forecast compound growth of 20.4% from 2023 to 2030 with a 2030 revenue forecast of $150.6 billion according to the 2023 report titled “Biometric Technology Market Size, Share & Trends Analysis Report By Component, By Offering, By Authentication Type, By Application, By End-use, By Region, And Segment Forecasts, 2023 – 2030” published by Grand View Research.

Trust Stamp addresses this market through its biometric authentication and liveness detection - which utilizes Trust Stamp’s proprietary irreversible identity token to perform biometric matching in a secure and tokenized domain. This permits biometric authentication without the risk of storing pictures and biometric templates.

Financial and societal inclusion

●

As of 2021, 1.4 billion people were unbanked according to the “Global Findex Database 2021” published by The World Bank.

●

131 million small and medium-sized enterprises in emerging markets lack access to finance, limiting their ability to grow and thrive (UNSGSA Financial Inclusion Webpage, Accessed March 2023)

●

The global market for Microfinance is estimated at $157 Billion in the year 2020, and is projected to reach $342 billion by 2026 according to the 2022 report titled “Microfinance - Global Market Trajectory & Analytics” published by Global Industry Analysts, Inc.

Trust Stamp’s biometric authentication, liveness detection, and information tokenization enable individuals to verify and establish their identities using biometrics. While individuals in this market lack traditional means of identity verification, Trust Stamp provides a means to authenticate identity that preserves an individual’s privacy and control over that identity.

Alternatives to Detention (“ATD”)

●

The ATD market includes Federal, State and Municipal agencies for both criminal justice and immigration purposes and there is an accelerating interest in technology-based solutions that the Company is able to offer.

●

Amongst the use cases, a large and growing market is for the provision of alternatives to detention for immigrants that are awaiting a final disposition of their processing. Addressing the House Appropriations Subcommittee for Homeland Security

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on May 17, 2022, ICE Acting Director stated that the financial year 2023 Budget submitted by ICE for approval included an additional $75,000,000 for the Alternatives to Detention (“ATD”) program over and above the present appropriation and that ICE is “focusing on ATD” instead of more expensive physical detention programs; both because of the threat of COVID and because ATD is less expensive and more humane. On that same day, the Ranking Member of the Subcommittee shared that 230,000 participants were then in the ICE ATD program with a planned increase to 600,000 participants.

Trust Stamp addresses the ATD market with an application built on Trust Stamp’s privacy-preserving biometrics. Trust Stamp provides hardware and software that provides for the ethical and human tracking of individuals to comply with ATD requirements.

Trust Stamp’s key sub-markets are:

i) Identity authentication for the purpose of account opening, access and fraud detection;

ii) The creation of tokenized digital identities to facilitate financial and societal inclusion; and

iii) In-community case-management services for governmental agencies.

In addition to its key sub-markets, the Company is developing products and working with partners and industry organizations in other sectors that offer significant market opportunities, in particular, the travel, healthcare, Metaverse platform and cryptographic key and account credential safekeeping sectors. For example, the Company has developed a “crypto key vault” solution that leverages proven facial biometric authentication and irreversible data transformation technology to protect private keys for digital assets while ensuring long-term data protection and access credential availability.

Our Principal Products and Services

Trust Stamp’s most important technology is the Irreversibly Transformed Identity Token^TM (also known as the IT^2TM, Evergreen Hash^TM, EgHash^TM and MyHash^TM) combined with a data architecture that can use one or multiple sources of biometric or other identifying data. Once a “hash translation” algorithm is created, like-modality hashes are comparable regardless of their origin. The IT² protects against system and data redundancy, providing a lifelong “digital-DNA” that can store (or pivot to) any type of KYC or relationship data with fields individually hashed or (salted and) encrypted, facilitating selective data sharing. Products utilizing the IT² are Trust Stamp’s primary products, accounting for the majority of its revenues during the three months ended March 31, 2023.

We adhere to the best practices outlined in the National Institute of Standards and Technology (“NIST”) and International Organization for Standardization (“ISO”) frameworks, and our policies and procedures in managing personally identifiable information (“PII”) are in compliance with General Data Protection Regulation (“GDPR”) requirements.

Our Key Customers

Historically, the Company generated most of its income through a relationship with an S&P 500 bank, in which services were provided pursuant to a Master Software Agreement and statements of work. The scope of services provided to the S&P 500 bank has grown throughout the relationship and additional growth was seen in 2022 and 2023. In recent years, the Company has also expanded its customer base to include relationships with Mastercard International (“Mastercard”), Fidelity Information Services, LLC (“FIS”), and other customers.

With respect to FIS, we continued to expand our work with our proprietary tokenization technology being utilized in FIS’ new global identity authentication system. In 2022, the Company implemented its “Orchestration Layer” platform – a low-code platform solution which streamlines delivery and implementation of the Company’s technologies. In the third quarter of 2022, the Company acquired its first 2 customers on the Orchestration Layer platform through its partnership with FIS. In the fourth quarter of 2022, 4 additional customers onboarded. In 2023 thus far, 22 new customers have been onboarded, bringing the total Orchestration Layer platform customers to 28 customers, 25 customers gained through FIS, including 25 financial institutions with over $50 billion in assets, as of the date of this Quarterly Report on Form 10-Q. The Orchestration Layer platform is designed to be a one-stop shop for Trust Stamp services and provides for easy integration to our products; chargeable on a per-use basis and is accelerating the Company’s evolution from being exclusively a custom solutions provider to also offering a modular and highly scalable Software-as-a-Service (SaaS) model with low-code implementation. The Orchestration Layer utilizes the Company’s next-generation identity package, offering rapid

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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 facilitates no-code and low-code implementations of the Company’s technology making adoption faster and even more cost-effective for a broader range of potential customers.

Under a ten-year technology services agreement (“the TSA”) with Mastercard International entered into in March 2019, the Company’s IT² technology is being implemented by Mastercard for Humanitarian & Development purposes as a core element of its Community Pass and Inclusive Identity offerings. Use cases include not only financial services for individuals and businesses but also empowering people and communities to meet basic needs, such as nutritious food, clean water, housing, education, and healthcare including Ethiopia’s implementation of Mastercard’s Wellness Pass within Ethiopia’s health information system to promote efficiency in healthcare tracking and offline portability of health records. Under the TSA, the Company is paid to develop and host software solutions utilizing the IT2 and to support Mastercard’s implementations. In addition, the Company is paid on a “per use” basis for all transactions utilizing its technology. To date the Company has received guaranteed minimum annual payments on account of usage. In December of 2022, the Company entered into a modification of the agreed pricing schedule with Mastercard to move from a per-use to a per-user-year model to broaden the range of potential use cases. Under that agreement, Trust Stamp currently receives minimum annual payments on account of usage, and we anticipate use-based revenue starting in 2023 and growing year-on-year thereafter. The TSA may be terminated by either party in the event of a material breach by the other party that remains uncured within thirty days after notice is received of such a breach. Either party may terminate the TSA if the other party becomes, including but not limited to, insolvent, subject to a bankruptcy, dissolved or liquidated. Unless the TSA is terminated, the TSA will automatically renew for additional one year-periods unless either party provides written notice within ninety days of intent not to renew.

As we grow, we intend to continue to expand the number of customers from which we generate revenues including through the development of channel partnerships, such as our relationship with FIS. In the opinion of our management, we would be able to continue operations without our current customers (including our channel partnership with FIS). However, the unanticipated loss of the Company’s current customers could have an adverse effect on the company’s financial position.

Key Business Measures

In addition to the measures presented in our unaudited condensed 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:

●

Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments.

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●

Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs.

●

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.

●

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.

Reconciliation of Net Loss to Adjusted EBITDA


	For the three months ended March 31,
	2023		2022
Net loss before taxes	$	(2,547,450)	$	(1,692,062)
Add: Other expense		743		94,513
Less: Other income		(44,613)		(6,941)
Add: Interest expense		10,231		3,958
Add: Stock-based compensation		59,574		287,786
Add: Non-cash expenses for in-kind services		18,547		27,930
Add: Depreciation and amortization		219,181		153,928
Adjusted EBITDA loss (non-GAAP)	$	(2,283,787)	$	(1,130,888)

Adjusted EBITDA (non-GAAP) loss for the three months ended March 31, 2023, decreased by 101.95%, to $2.28 million from $1.13 million for the three months ended March 31, 2022. The overall decrease in adjusted EBITDA loss was driven primarily by a $1.85 million decrease in gross margin during the three months ended March 31, 2023, offset by a decrease in selling, general and administrative expenses of $1.15 million during the three months ended March 31, 2023. 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, 2023.

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Comparison of the Three Months Ended March 31, 2023 and 2022

The following table summarizes our condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022:


	For the three months ended
	March 31,
	2023		2022
Net revenue	$	458,633	$	2,821,044
Operating Expenses:
Cost of services (exclusive of depreciation and amortization shown separately below)		216,958		693,978
Research and development		632,369		493,686
Selling, general, and administrative		1,969,875		3,120,572
Depreciation and amortization		219,181		153,928
Total Operating Expenses		3,038,383		4,462,164
Operating Loss		(2,579,750)		(1,641,120)
Non-Operating Income (Expense):
Interest income (expense)		(10,231)		(3,958)
Change in fair value of warrant liability		(1,340)		40,588
Other income		44,614		6,941
Other expense		(743)		(94,513)
Total Other Expense, Net		32,300		(50,942)
Net Loss before Taxes		(2,547,450)		(1,692,062)
Income tax expense		—		—
Net loss including noncontrolling interest		(2,547,450)		(1,692,062)
Net loss attributable to noncontrolling interest		—		—
Net loss attributable to T Stamp Inc.	$	(2,547,450)	$	(1,692,062)
Basic and diluted net loss per share attributable to T Stamp Inc.	$	(0.50)	$	(0.37)
Weighted-average shares used to compute basic and diluted net loss per share		5,044,775		4,549,686

Net revenue


	Three months ended March 31,
	2023		2022		$ Change		% Change
Net revenue	$	458,633	$	2,821,044	$	(2,362,411)	(83.74)	%

During the three months ended March 31, 2023, Net revenue decreased to $459 thousand, or 83.74% from Net revenue of $2.82 million for the three months ended March 31, 2023. During the three months ended March 31, 2023, the $459 thousand in Net revenue consisted of $184 thousand from a S&P500 bank, $115 thousand from Mastercard, and various other customers for the remaining $160 thousand. The majority of the decrease in the comparative periods relates to the September 23, 2021 U.S. Immigration and Customs Enforcement contract (“ICE Contract”) which produced $2.24 million in Net revenue during the three months ended March 31, 2022 and was subsequently terminated during fiscal year 2022.

During the three months ended March 31, 2023, the Company generated $58 thousand by implementing the Orchestration Layer platform for 28 enterprise customers on the Software-as-a-Service (SaaS) platform at $3 thousand per implementation. Since its launch in the third quarter of 2022, there have been 28 enterprise customers on the Orchestration Layer platform, including 25 financial institutions, as of March 31, 2023.

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The Orchestration Layer is designed to be a one-stop-shop for Trust Stamp services and provides for easy integration to our products; chargeable on a per-use basis and is accelerating the Company’s evolution from being exclusively a custom solutions provider to also offering a modular and highly scalable SaaS model with low-code implementation.

Cost of services


	Three months ended March 31,
	2023		2022		$ Change		% Change
Cost of services	$	216,958	$	693,978	$	(477,020)	(68.74)	%

Cost of services (“COS”) decreased by $477 thousand or 68.74% for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. The decrease during this period was primarily driven by the costs related to servicing requirements from the ICE Contract. ICE Contract-related COS for the three months ended March 31, 2022, were $456 thousand, including vendor and other miscellaneous costs as well as direct labor costs, versus $0 during the three months ended March 31, 2023 (as a result of the ICE Contract being terminated in 2022).

After adjusting the comparative periods’ COS for ICE Contract related costs, COS reduced by $46 thousand despite onboarding 23 new enterprise customers during the three months ended March 31, 2023, and is a result of the high margins feature that is inherent in SaaS platforms such as the Orchestration Layer.

Research and development


	Three months ended March 31,
	2023		2022		$ Change		% Change
Research and development	$	632,369	$	493,686	$	138,683	28.09	%

Research and development (“R&D”) expenses increased by $139 thousand, or 28.09% for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. The increase in R&D expense during the three months ended March 31, 2023 was driven by a 30% increase in 10Clouds billing rates that became effective in January 2023. The 10Clouds expense increase was offset by a decrease in the Company’s R&D team which decreased from 64 full-time equivalents (“FTE”) for the three months ended March 31, 2022 to 48 FTE for the three months ended March 31, 2023.

Selling, general, and administrative


	Three months ended March 31,
	2023		2022		$ Change		% Change
Selling, general, and administrative	$	1,969,875	$	3,120,572	$	(1,150,697)	(36.87)	%

Selling, general, and administrative expense (“SG&A”) decreased by $1.15 million, or 36.87%, for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. The decrease in SG&A expenses was driven mostly by the reductions in headcount and associated overhead, sales commissions, as well as annual cash and stock bonuses which were earned during the three month ended March 31, 2022, but were not earned during the three months ended March 31, 2023, resulting in a decrease of $773 thousand for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. Global headcount reduced by 39% from 100 FTE for the three months ended March 31, 2022 compared to 83 FTE for the three months ended March 31, 2023.

Other notable decreases in SG&A for the three months ended March 31, 2023 included a $320 thousand reduction between corporate travel, management consulting, legal and professional services fees, and other 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.

Depreciation and amortization


	Three months ended March 31,
	2023		2022		$ Change		% Change
Depreciation and amortization	$	219,181	$	153,928	$	65,253	42.39	%

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Depreciation and amortization (“D&A”) increased by $65 thousand, or 42.39% for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. The primary increase in D&A expense during the year was the $30 thousand for the depreciation of mobile hardware assets related to the ICE Contract. There were no mobile hardware assets or related depreciation expenses during the months ended March 31, 2022.

Also driving the $21 thousand increase in D&A expense is the total balance of capitalized internal-use software. While the amounts of capitalized internal-use software vary from period to period, we do see a trend of increasing software amortization which has driven the growth in software capitalization. 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.

In addition, patent amortization increased during the three months ended March 31, 2023 as a result of new pending patent applications and issued patents with the United States Patent and Trademark Office. During the three months ended March 31, 2023, the Company made one new patent filing and one new trademark registered.

Operating loss


	Three months ended March 31,
	2023		2022		$ Change		% Change
Operating loss	$	(2,579,750)	$	(1,641,120)	$	(938,630)	(57.19)	%

The Company’s operating loss increased by $939 thousand or 57.19% for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. The primary reason for the increase in operating loss was the $2.36 million, or 83.74%, decrease in Net revenue, as a result of the termination in the ICE Contract. The increase in Operating loss for the three-months ended March 31, 2023, compared to the three months ended March 31, 2022 was offset by the $477 thousand and $1.15 million, or 68.74% and 36.87%, decreases in COS and SG&A, respectively.

Interest income (expense)


	Three months ended March 31,
	2023		2022		$ Change		% Change
Interest income (expense)	$	(10,231)	$	(3,958)	$	(6,273)	(158.49)	%

Interest income (expense) increased by $6 thousand, or 158.49% for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. During the three months ended March 31, 2023, there was $160 and $10 thousand of interest income and interest expense, respectively. During the three months ended March 31, 2022, there was $216 and $4 thousand of interest income and interest expense, respectively. All interest earned and expensed during the comparative periods were a result of normal operating activities within various immaterial interest-bearing and interest-earning accounts.

Change in fair value of warrant liability


	Three months ended March 31,
	2023		2022		$ Change		% Change
Change in fair value of warrant liability	$	(1,340)	$	40,588	$	(41,928)	(103.30)	%

The Company recognized a loss in change in fair value of warrant liability during the three months ended March 31, 2023 of $1 thousand compared to a gain of $41 thousand during the three months ended March 31, 2022. This change is based on the fair value assessment and adjustment for one warrant liability as described in Note 3 to the financial statements provided under Item 1 of this report.

Other income


	Three months ended March 31,
	2023		2022		$ Change		% Change
Other income	$	44,614	$	6,941	$	37,673	542.76	%

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Other income increased by $38 thousand for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. The increase was primarily due to $20 thousand of educational service fees received from participants in a startup accelerator program conducted by the Company in Malta with the objective of strengthening the innovation platform and startup ecosystem in Malta.

Other expense


	Three months ended March 31,
	2023		2022		$ Change		% Change
Other expense	$	(743)	$	(94,513)	$	93,770	99.21	%

Other expense decreased by $94 thousand for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. The Company incurred $95 thousand in unrealized loss on foreign currency translation expense for the three months ended March 31, 2022 for intercompany transactions between the parent company, T Stamp Inc., and its subsidiaries, Trust Stamp Malta Limited, Biometric Innovations Limited, and Trust Stamp Rwanda Limited with currencies denominated in United States Dollars, European Union Euros, Pound Sterling, and Rwandan Franc, respectively. As of June 30, 2022, the Company determined that there was currently no intention to settle intercompany accounts in the foreseeable future; therefore, beginning in June 30, 2022, future fluctuations in foreign currencies between the Company and its subsidiaries are recorded to accumulated other comprehensive income on the balance sheet instead of other expense.

Liquidity and Capital Resources

As of March 31, 2023, and December 31, 2022, we had approximately $773 thousand and $1.25 million cash in our banking accounts, respectively. One of those bank accounts is with Silicon Valley Bank. On March 13, 2023, the Company began transferring its cash held with Silicon Valley Bank to JP Morgan Chase, where the majority of the Company’s cash deposits are held as of the date of this report. The Company does still hold material balances at Silicon Valley Bank but did not incur any impairment or loss of cash as a result of the failure of Silicon Valley Bank.

The decrease of $481 thousand in cash from December 31, 2022 to March 31, 2023 was a result of the net negative cash flow which consisted of $155 thousand, $190 thousand, and $103 thousand, in operating, financing, and investing activities, respectively. Additionally, there was a $33 thousand cash inflow for a foreign currency transaction adjustment. See the “Cash Flows” subsection below for more details on cash activities during the quarter ended March 31, 2023.

Total current assets for the comparative periods decreased by 37.39% or $1.07 million from $2.87 million as of December 31, 2022, to $1.80 million as of March 31, 2023. The decrease in current assets was primarily driven by the decrease in cash (discussed above). Additionally, there was a $475 thousand decrease in accounts receivable mostly due to the timing of collections on receivables.

Total current liabilities increased by 32.49% or $1.45 million from $4.45 million as of December 31, 2022 compared to $5.89 million as of March 31, 2023. This increase is primarily attributable to the $935 thousand increase in deferred revenue driven mostly by the $750 thousand paid by Interactive Global Solutions (“IGS”) which will be used as credits for future services (discussed below), and $225 thousand increase in deferred license fee revenue from Mastercard International. Additionally, accounts payable increased by $400 thousand mostly due to the timing of payables.

In effect, the Company’s current ratio (i.e., 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) decreased from 0.65 as of December 31, 2022 to 0.31 or 52.75% in the three months ended March 31, 2023. This is, in part, a result of the net cash outflow and timing of operating activities as mentioned above.

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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, $200 thousand in 2021, and $250 thousand in 2022. On December 31, 2022, the software license agreement was amended. The Company will receive minimum total fees of $300 thousand in 2023 which will continue to rise by 15% in each subsequent year after 2023 with a cap of $1.00 million. The Company has recognized $75 thousand in fees from this software license agreement during the three months ended March 31, 2023.

On September 15, 2022, the Company entered into a Master Services Agreement (“the MSA”) with Innovative Government Solutions (“IGS”) under which the Company and IGS agreed to jointly offer services and IGS was granted a 12-year (renewable) license (“the license”) to resell the Company’s technology subject to payment by IGS of agreed revenue advances and end user license fees. On execution of the MSA, IGS agreed to pay $1.5 million to the Company as a non-refundable revenue advance, an additional $1.5 million non-refundable revenue advance on the first anniversary of the MSA, and $1 million on each of the next two anniversaries of the MSA as additional non-refundable revenue advances. IGS has the right to terminate the MSA for convenience before the additional non-refundable revenue advances become due in which case the unpaid additional non-refundable revenue advances will not be payable and the license will terminate. During the three months ended March 31, 2023, Trust Stamp has received $750 thousand, recorded the non-refundable revenue advance to deferred revenue, and recognized no IGS revenue.

Subsequent Investment and Pro Forma Balance Sheet

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The following table sets forth our consolidated cash and cash equivalents and capitalization as of March 31, 2023 on an actual basis and as adjusted basis to reflect the sale of (i) 563,380 shares of Class A Common Stock by us at the public offering price of $3.30 per share, and (ii) pre-funded warrants to purchase 1,009,950 shares of our Class A Common Stock at $3.299 per share.


			March 31, 2023
			(Pro Forma
			As Adjusted,
			Assuming sale of
			563,380 shares
			of Class A
			Common Stock, and
			pre-funded
			warrants to purchase
			1,009,950 shares
			of our Class A
	March 31, 2023		Common Stock)
Assets
Cash	$	773,114	$	4,105,949

Total Current Liabilities		5,892,524		5,892,524
Warrant liabilities		262,909		262,909
Non-convertible notes plus accrued interest		907,616		907,616
Long-term operating lease liabilities		56,739		56,739
Total Liabilities		7,119,788		7,119,788

Class A Common Stock		51,216		61,316
Additional paid-in capital		39,479,741		44,195,057
Stockholders’ notes receivable		—		—
Accumulated other comprehensive loss		195,810		195,810
Accumulated deficit		(41,847,176)		(41,847,176)
Total T Stamp Inc. Stockholders’ Equity (Deficit)		(2,120,409)		2,605,007
Noncontrolling interest		161,439		161,439
Tota1 Stockholders’ Equity (Deficit)		(1,958,970)		2,766,446
Total Liabilities and Stockholders’ Equity (Deficit)	$	5,160,818	$	9,886,234

Going Concern

The accompanying unaudited 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 year ended March 31, 2023 of $2.54 million, operating cash outflows of $155 thousand for the same period, and an accumulated deficit of $41.84 million as of March 31, 2023.

The Company’s ability to continue as a going concern in the next twelve months following the date the unaudited condensed 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 plans to generate revenue and raise capital as needed to satisfy its capital needs. While the negotiation of significant additional revenue is well advanced, it has not reached a stage that allows it to be factored into a going concern evaluation. In addition, although the Company has previously been successful in raising capital as needed and has already made plans to do so as well as restructuring expenses to meet the Company’s cash needs, no assurance can be given that the Company will be successful in its capital raising efforts. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period.

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Cash Flows

The following table summarizes our cash flows for the three months ended March 31, 2023 and 2022:


	For the three months ended March 31,
	2023		2022
Net cash flows from operating activities	$	(154,578)	$	(1,141,310)
Net cash flows from investing activities	$	(191,231)	$	(244,755)
Net cash flows from financing activities	$	(103,058)	$	3,696,352

Operating Activities

Net cash used in operating activities decreased by 86.46% from $1.14 million during the three months ended March 31, 2022, compared to $155 thousand during the three months ended March 31, 2023. Of the $2.55 million net loss for the three months ended March 31, 2023, there were various large cash and non-cash adjustments that were added back to the Net loss to arrive at $155 thousand cash used for operating activities for the three months ended March 31, 2023. Those adjustments included $935 thousand for cash received and booked as Deferred revenue driven primarily by the IGS revenue contract for service credits and Mastercard license fees, $219 thousand for non-cash depreciation and amortization, $475 thousand for cash received on account receivables, and $420 thousand for accounts payables.

Investing Activities

Net cash used in investing activities during the three months ended March 31, 2023, was $191 thousand, compared to net cash of $245 thousand used in the three months ended March 31, 2022. Cash used in investing activities for the three months ended March 31, 2023 and 2022 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, 2023, capitalized internal-use software decreased by 18.81% compared the three months ended March 31, 2022, as a result of the increased capitalization of internally developed software related to the ICE Contract during the three months ended March 31, 2022.

Financing Activities

During the three months ended March 31, 2023, net cash from financing activities was $103 thousand, compared to net cash of $3.70 million for the three months ended March 31, 2022. During the three months ended March 31, 2022, the Company received $3.33 million from a warrant exercise in December 2021 from SCV and REach® Ventures, a related party. Additionally, was $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. During the three months ended March 31, 2023, there was a $75 thousand tax withholding accrual for net issuances on employee equity compensation and $30 thousand for payments on financial liabilities.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated 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 unaudited condensed 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

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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.

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.

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 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

The Company’s arrangements with its customers often have terms that span over multiple years. However, the Company generally allows its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Revenue allocated to remaining performance obligations represents noncancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. The Company has elected the practical expedient allowing the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less. Cancelable contracted revenue, which includes customer deposit liabilities, is not considered a remaining performance obligation. As of March 31, 2023 and December 31, 2022 the Company did not have any related performance obligations for contracts with terms exceeding twelve months.

Warrants

The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”), depending on the specific terms of the warrant agreement.

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 unaudited condensed consolidated financial statements included elsewhere under Item 1 in this report.

Emerging Growth Company

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

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is held by non-affiliates exceeds $700 million as of June 30th, before that time, we would cease to be an “emerging growth company” as of the following December 31st.

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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports 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 decisions regarding required disclosure. Management necessarily applied judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding our control objectives.

As of March 31, 2023, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer along with the Chief Financial Officer, of the effectiveness, design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). This determination is based on the previously reported material weakness management previously identified in our internal control over financial reporting, as described below. We are in the process of remediating the material weakness in our internal control, as described below. We believe the completion of these processes should remedy our disclosure controls and procedures. We will continue to monitor this issue.

Notwithstanding the identified material weaknesses, management has concluded that the consolidated financial statements present fairly, in all material respects, the Company’s financial position, results of operations, and cash flows as of the dates, and for the periods presented, in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Previously Reported Material Weakness in Internal Control Over Financial Reporting

In our Annual Report for the year ended December 31, 2022, filed with the SEC on March 30, 2023, management concluded that our internal controls over financial reporting were not effective. Management identified certain material weaknesses relating to insufficient management review and approval of each journal entry prior to its posting for preparation of the financial statements and disclosures as well as inadequate controls over the management information systems related to program changes, segregation of duties, and access controls.

Remediation Plan for Previous Existing Material Weaknesses

Management is committed to the remediation of the material weakness described above. As such, controls will be added to ensure precision of management’s review and approval of each journal entry prior to its posting for preparation of the financial statements and disclosures and controls will be added to ensure adequate controls over management information systems related to program changes, segregation of duties, and access controls.

It is our belief that these added controls will effectively remediate the previous existing material weakness.

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Change in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company may be involved in a variety of legal matters that arise in the normal course of business. The Company is not currently involved in any litigation, and its management is not aware of any pending or threatened legal actions relating to its intellectual property, conduct of its business activities, or otherwise. See “Risk Factors” for a summary of risks our Company may face in relation to litigation against our Company.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended March 31, 2023, the Company did not sell any securities in transactions not registered under the Securities Act.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

As of May 13, 2023, the Company received approval from the majority of all outstanding shares for each of the proposals submitted to the stockholders by written consent on April 13, 2023.

The two proposals submitted for stockholder written consent were as follows:


Proposal		Vote Received
(1) To approve the Second Amended and Restated Certificate of Incorporation of the Company to consolidate previous amendments and remove provisions no longer having any effect		Majority of outstanding shares FOR
(2) To ratify by a vote of all the stockholders, the approval of the reverse stock split effected on March 23, 2023		Majority of outstanding shares FOR

The Second Amended and Restated Certificate of Incorporation is not yet in effect, and will only be in effect once it is filed, and accepted by the Delaware Secretary of State. The Company will file a current report at that time.

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Item 6. Exhibits.


Exhibit No.		Exhibit Description
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)

3.5		Certificate of Amendment to Amended and Restated Certificate of Incorporation, as amended (Incorporated by reference to Exhibit 3.5 of the Company’s Form 8-K filed with the SEC on February 8, 2023)

3.6		Certificate of Amendment to Amended and Restated Certificate of Incorporation, as amended (Incorporated by reference to Exhibit 3.6 of the Company’s Form 8-K filed with the SEC on March 22, 2023)

4.1		Warrant issued to the Armistice Capital Master Fund Ltd. dated September 14, 2022 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 15, 2022).

4.2		Form of Warrant dated November 9, 2016 ($5,000 per share) (incorporated by reference to Exhibit 3.9 to the Company’s Form DOS filed with the SEC on December 30, 2019).

4.3		Form of Warrant dated November 9, 2016 ($1,000,000) (incorporated by reference to Exhibit 3.10 to the Company’s Form DOS filed with the SEC on December 30, 2019).

4.4		Form of Warrant dated September 30, 2016 (incorporated by reference to Exhibit 3.11 to the Company’s Form DOS filed with the SEC on December 30, 2019).

4.5		Form of Warrant dated December 16, 2016 (incorporated by reference to Exhibit 3.12 to the Company’s Form DOS filed with the SEC on December 30, 2019).

4.6		Warrant issued by the Company to Reach® Ventures 2017 LP (incorporated by reference to Exhibit 3.14 to the Company’s Form 1-A filed with the SEC on March 12. 2020).

4.7		Warrant issued by the Company to Second Century Ventures, LLC (incorporated by reference to Exhibit 3.15 to the Company’s Form 1-A filed with the SEC on March 12. 2020).

4.8		Form of Regulation Crowdfunding Offering Warrant (or Reg CF Warrant) (incorporated by reference to Exhibit 3.8 the Company’s Form 1-A POS filed with the SEC on April 28, 2022)

4.9		Form of Regulation D Offering Warrant (or Reg D Warrant) (incorporated by reference to Exhibit 3.9 the Company’s Form 1-A POS filed with the SEC on April 28, 2022)

4.10		Form of Regulation S Offering Warrant (or Reg S Warrant) (incorporated by reference to Exhibit 3.10 the Company’s Form 1-A POS filed with the SEC on April 28, 2022).

4.11		Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 18, 2023).

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4.12		Form of Private Placement Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 18, 2023).

10.1		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).

10.2		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).

10.3		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).

10.4		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).

10.5		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).

10.6		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).

10.7		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).

10.8		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).

10.9		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).

10.10		Settlement Agreement dated July 1, 2019 between Emergent Technology Holdings, LP and the Company . (Incorporated by reference to Exhibit 6.1 to the Company’s Form 1-A filed with the SEC on March 12, 2020).

10.11		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).

10.12		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 with the SEC on July 21, 2022).

10.13		Securities Purchase Agreement, dated September 11, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 15, 2022).

10.14		Registration Rights Agreement, dated September 11, 2022 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on September 15, 2022).

10.15		Form of Lock-Up Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on September 15, 2022).

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10.16		Placement Agent Agreement dated September 11, 2022 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on September 15, 2022).

10.17		Executive Employment Agreement of Alex Valdes, effective as of December 8, 2020 (incorporated by reference to Exhibit 6.12 to the Company’s Form 1-K for the year ended December 31, 2020 filed with the SEC on April 30, 2021).

10.18		Executive Employment Agreement of Andrew Scott Francis, effective as of December 8, 2020 (incorporated by reference to Exhibit 6.13 to the Company’s offering statement on Form 1-A filed with the SEC on November 19, 2021).

10.19		Form of Securities Purchase Agreement by and between the Company and a certain institutional investor dated April 14, 2023 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 18, 2023).

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.

101.INS*		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase

104		Cover Page Interactive Data File—the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

* Filed herewith.

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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: May 15, 2023


/s/ Alex Valdes
Alex Valdes, Principal Financial Officer, Principal Accounting Officer
Date: May 15, 2023


/s/ Andrew Gowasack
Andrew Gowasack, President, Director
Date: May 15, 2023


/s/ William McClintock
William McClintock, Director
Date: May 15, 2023


/s/ Mark Birschbach
Mark Birschbach, Director
Date: May 15, 2023


/s/ Joshua Allen
Joshua Allen, Director
Date: May 15, 2023


/s/ Kristin Stafford
Kristin Stafford, Director
Date: May 15, 2023


/s/ Berta Pappenheim
Berta Pappenheim, Director
Date: May 15, 2023