UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
OF 1934
For the quarterly period ended
Or
ACT OF 1934
For the transition period from ______________ to _____________
Commission file number:
(Exact name of registrant as specified in its charter)
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(Registrant’s telephone number, including area code)
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(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 |
| Name of each exchange on which registered |
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.
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).
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 | ☐ |
☒ | 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, 2022, there were
T STAMP INC.
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
T STAMP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2022 |
| December 31, 2021 | |||
(unaudited) | ||||||
ASSETS |
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Current Assets: |
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Cash and cash equivalents | $ | | $ | | ||
Accounts receivable |
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Prepaid expenses and other current assets |
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Total Current Assets |
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Capitalized internal-use software, net |
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Goodwill |
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Intangible assets, net |
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Property and equipment, net |
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Other assets |
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Total Assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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Current Liabilities: |
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Accounts payable | $ | | $ | | ||
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Accrued expenses |
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Deferred revenue |
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Customer deposit liabilities | — | | ||||
Total Current Liabilities |
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Warrant liabilities |
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Non-convertible notes payable, non-current, plus accrued interest of $ |
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Total Liabilities |
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Commitments and Contingencies, Note 13 |
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Stockholders' Equity: |
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Series A Preferred Stock $ |
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Common stock $ |
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Treasury stock, at cost: |
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Additional paid-in capital |
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Noncontrolling interest |
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Stockholders' notes receivable |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Total Stockholders' Equity |
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Total Liabilities and Stockholders' Equity | $ | | $ | | ||
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
3
T STAMP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the three months ended | ||||||
| March 31, | |||||
| 2022 |
| 2021 | |||
Net revenue | $ | | $ | | ||
Operating Expenses: |
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Cost of services (exclusive of depreciation and amortization shown separately below) |
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Research and development |
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Selling, general, and administrative |
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Depreciation and amortization |
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Total Operating Expenses |
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Operating Loss |
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Non-Operating Income (Expense): |
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Interest income (expense) |
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Change in fair value of warrant liability |
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Other income |
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Other expense |
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Total Other Expense, Net |
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Net Loss before Taxes |
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Income tax expense |
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Net loss including noncontrolling interest |
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Net loss attributable to noncontrolling interest |
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Net loss attributable to T Stamp Inc. | $ | ( | $ | ( | ||
Basic and diluted net loss per share attributable to T Stamp Inc. | ( | ( | ||||
Weighted-average shares used to compute basic and diluted net loss per share |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
4
T STAMP INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
For the three months ended | ||||||
| March 31, | |||||
| 2022 |
| 2021 | |||
Net loss including noncontrolling interest | $ | ( | $ | ( | ||
Other Comprehensive Income: |
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Foreign currency translation adjustments |
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Total Other Comprehensive Income |
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Comprehensive loss |
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Comprehensive loss attributable to noncontrolling interest |
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Comprehensive loss attributable to T Stamp Inc. | $ | ( | $ | ( | ||
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
5
T STAMP INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
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Common Stock | Paid-In | Treasury Stock | Noncontrolling | Notes | Comprehensive | Accumulated |
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| Capital |
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| Interest |
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| Deficit |
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Balance, January 1, 2021 |
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Issuance of common stock |
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Stock-based compensation |
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Repayment of shareholders loan through in-kind services |
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Currency translation adjustment |
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Net loss attributable to T Stamp Inc. |
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Balance, March 31, 2021 |
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Common Stock | Paid-In | Treasury Stock | Noncontrolling | Notes |
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| Interest |
| Receivable |
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| Deficit |
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Balance, January 1, 2022 |
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Exercise of warrants to common stock |
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Exercise of options to common stock |
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Issuance of common stock |
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Issuance of common stock warrants |
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Issuance of common stock in relation to vested restricted stock units, net of shares forfeited to satisfy taxes |
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Repayment of shareholders loan through in-kind services |
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Stock-based compensation | — | — | | — | — | — | — | — | — | | ||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | | — | | ||||||||||||||||||
Net loss attributable to T Stamp Inc. |
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Balance, March 31, 2022 |
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6
T STAMP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| For the three months ended March 31, | |||||
| 2022 |
| 2021 | |||
Cash flows from operating activities: |
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Net loss attributable to T Stamp Inc. | $ | ( | $ | ( | ||
Net loss attributable to noncontrolling interest |
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Adjustments to reconcile net loss to cash flows used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Change in fair value of warrant liability |
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Repayment of shareholder loan through in-kind services |
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Changes in assets and liabilities: |
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Accounts receivable |
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Related party receivables |
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Prepaid expenses and other current assets |
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Other assets |
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Accounts payable and accrued expenses |
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Related party payables |
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Deferred revenue |
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Customer deposit liabilities | ( | — | ||||
Net cash flows from operating activities |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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Capitalized internally developed software costs |
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Acquisition of Pixelpin intangible asset |
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Patent application costs |
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Net cash flows from investing activities |
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Cash flows from financing activities: |
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Proceeds from exercise of warrants to common stock |
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Proceeds from exercise of options to common stock |
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Proceeds from issuance of common stock |
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Proceeds from issuance of common stock warrants |
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Proceeds from loan from Maltese government |
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Net cash flows from financing activities |
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Effect of foreign currency translation on cash |
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Net change in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period | $ | | $ | | ||
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Supplemental disclosure of cash flow information: |
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Cash paid during the period for interest | $ | — | $ | — | ||
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
7
T STAMP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Description of Business and Summary of Significant Accounting Policies
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 partners and peer-to-peer markets as the Privacy-First Identity CompanyTM.
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 cutting-edge power and agility of technologies such as GPU processing and neural networks to process and protect data faster and more effectively than has ever previously been possible, 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 |
| ● | Cryptocurrency and Digital Assets |
| ● | Biometrically Secured Email and Digital Communications |
| ● | P2P Transactions, Social Media, and Sharing Economy |
| ● | Real Estate, Travel and Healthcare |
Stock Split - On August 18, 2021, by written consent of the stockholders, the Company effected a
Regulation D Common Stock Offering - On March 12, 2021, the Company launched a Regulation D offering of its Class A Common Stock to accredited investors for $
Regulation CF, D, and S Common Stock and Warrant Offering - On August 25, 2021, the Company launched concurrent offerings under Regulation Crowdfunding (“Regulation CF”), Regulation D and Regulation S. The Company initially sought to raise up to $
On November 19, 2021, we closed the Regulation CF offering, having received binding commitments for
8
On January 7, 2022, we closed the public portion of the Regulation D offering and conducted an additional close on February 2, 2022. As of December 31, 2021, the Company received $
On January 7, 2022, we closed the Regulation S offering. We raised a final total of $
Liquidity - The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits, with a loss in the three months ended March 31, 2022 of $
The Company’s ability to continue as a going concern in the next twelve months following the date the consolidated financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Refer to Note 14 for an expanded discussion of the
Basis of Consolidation and Presentation - The accompanying consolidated financial statements reflect the activity of the Company and its subsidiaries, Trusted Mail Inc. (“Trusted Mail”), Sunflower Artificial Intelligence Technologies (“SAIT”), Finnovation LLC (“Finnovation”), Trust Stamp Malta Limited (Trust Stamp Malta), AIID Payments Limited, Biometric Innovations Limited (“Biometrics”), Trust Stamp Rwanda Limited, and Metapresence Limited. All significant intercompany transactions and accounts have been eliminated.
The Company has entered joint ventures with Biometric Innovations Limited (formerly Trust Stamp Fintech Limited) and Trust Stamp Cayman. Biometric Innovations Limited is a company incorporated in the United Kingdom by the Company's management. The purpose of this entity was to establish beachhead operations in the country in order to service a contract entered by the Company with the National Association of Realtors and Property Mark. This entity remains separate from the Company's operations and serves as a sales and marketing function for the product NAEA which was developed for the contract between the listed parties. Trust Stamp Cayman was established with the intention of taking advantage of enterprise grants which were offered by the Cayman National Government's Enterprise Zone. No operations were established. Due to common ownership of the Company and these two entities, the Company has funded all operating expenses since inception and as a result, the operations of these entities are included in the condensed consolidated financial statements. On June 11, 2020, the Company entered into a stock exchange with Biometric Innovations Limited, becoming a 100% owner. As of March 31, 2022, Biometric Innovations Limited is included as a consolidated entity within the March 31, 2022 financial statements.
Further, we continue to consolidate TStamp Incentive Holdings “TSIH” which we consider to be a variable interest entity.
Variable Interest Entity - On April 9, 2019, management created a new entity, TSIH. Furthermore, on April 25, 2019, the Company issued
The Company does not own any of the stock in TSIH; however, it is held by members of the Company’s management. 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.
9
Use of Estimates — The preparation of the consolidated financial statements in conformity with United States generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our 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 year, capitalization and estimated useful life of internal-use software, the allowance for doubtful accounts, the fair value of financial assets and liabilities, the useful lives of property and equipment and intangible assets, 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.
Impacts of COVID-19 — The World Health Organization declared in March 2020 that the outbreak of the novel coronavirus disease (“COVID-19”) constituted a pandemic. The COVID-19 pandemic has caused general business disruption worldwide, beginning in January 2020. The Company assessed the impacts of the coronavirus pandemic on its various accounting estimates and significant judgments, including those that require consideration of forecasted financial information in the context of the unknown future impacts of COVID-19, using information that is reasonably available at this time. The accounting estimates and other matters assessed included, but were not limited to, capitalized internal-use software, the recoverability of goodwill, long-lived assets and investments recorded at cost, useful lives associated with intangible assets and capitalized internal-use software, and the valuation and assumptions underlying stock-based compensation and warrant liabilities. Based on the Company’s current assessment of these estimates, there was not a material impact to the condensed consolidated financial statements as of and for the three months ended March 31, 2022. As additional information becomes available, the Company’s future assessment of these estimates, including updated expectations at the time regarding the duration, scope and severity of the pandemic, could materially and adversely impact its consolidated financial statements in future reporting periods.
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 condensed 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 $250,000 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, 2022 and December 31, 2021, the Company had $
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.
During the three months ended March 31, 2022, the Company sold to primarily four customers which made up approximately
10
During the three months ended March 31, 2021, the Company sold to primarily three customers which made up approximately
The loss of, or substantial reduction, in statements of work from the Company’s major customers could have a material effect on the consolidated financial statements.
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 condensed consolidated balance sheet date. The Company’s other comprehensive income (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 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 to be 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, 2022 and December 31, 2021, accounts receivable includes unbilled receivables of $
Property and Equipment, Net — Property and equipment, net are 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 consolidated balance sheet and any resulting gain or loss is recorded in the 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. 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.
Business and Asset Acquisitions — When the Company acquires a business, the purchase price is allocated to the tangible and identifiable intangible assets, net of liabilities assumed. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable. During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of operations.
11
The Company accounts for a transaction as an asset acquisition pursuant to the provisions of ASU No. 2017-01, Clarifying the Definition of a Business, when substantially all of the fair value of the gross assets acquired is concentrated into a single identifiable asset or group of similar identifiable assets, or otherwise does not meet the definition of a business. Asset acquisition-related costs are capitalized as part of the asset or assets acquired.
Accounting for Impairment of Long-Lived Assets — Long-lived assets with finite lives include property and equipment, capitalized internal-use software, and intangible assets. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset 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, 2022 and December 31, 2021, no property and equipment, capitalized internal-use software, and intangible assets, 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 assets, is recorded as goodwill. Goodwill is tested for impairment at the reporting unit level at least annually 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, 2022 and March 31, 2021.
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. 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.
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Revenue Recognition — The Company derives its revenue primarily from professional services. Revenue is recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, the Company includes an estimate of the amount it expects to receive or the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur. The Company determines the amount of revenue to be recognized through the application of the following steps:
| ● | Identification of the contract, or contracts with a customer; |
| ● | Identification of the performance obligations in the contract; |
| ● | Determination of the transaction price; |
| ● | Allocation of the transaction price to the performance obligations in the contract; and |
| ● | Recognition of revenue when or as the Company satisfies the performance obligations. |
At contract inception, the Company will assess the services agreed upon within each contract and assess whether each service is distinct and determine those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. In general, each contract with a customer consists of a single performance obligation to perform services in which revenue is recognized when the service has been delivered.
During the year ended December 31, 2021, the Company entered into a significant contract with U.S. Immigration and Customs Enforcement (“ICE”) that contained multiple performance obligations, including software application development, phones, and services to assist ICE. The Company allocates the transaction price for this contract based on the stand-alone selling price of each performance obligation. The Company uses the expected cost-plus margin approach for determining the stand-alone selling prices of the phones and services to assist ICE, as this is believed to be the most accurate method of allocating the transaction price to these performance obligations, maximizing the use of observable inputs. As the Company does not have a similar software application that has been sold to another customer, the Company uses the residual approach for determining the stand-alone selling price of the software application development by subtracting the sum of the stand-alone selling prices for the phones and services to assist ICE from the total transaction price.
Contract Balances — The timing of customer billing and payment relative to the start of the service period varies from contract to contract; however, the Company bills many of its customers in advance of the provision of services under its contracts, resulting in contract liabilities consisting of either deferred revenue (a “contract liability”) or customer deposit liabilities. Deferred revenue represents billings under noncancelable contracts before the related product or service is transferred to the customer. Such amounts are recognized by the Company over the life of the contract upon meeting the revenue recognition criteria, but generally within one year. Customer deposit liabilities consist of billings or payments received in advance of the start of the contractual term or for anticipated revenue generating activities for the portion of a contract term that is subject to cancellation for convenience. Certain of the Company’s arrangements generally include terms that allow the customer to terminate the contract for convenience and receive a refund of the amount of the customer deposit for the percentage of the work not performed prior to the notice of termination. In these arrangements, the Company concluded there are no enforceable rights and obligations after such notice period and therefore, the consideration received or due from the customer that is subject to termination for convenience is recorded as customer deposit liabilities.
The payment terms and conditions vary by contract; however, the Company’s terms generally require payment within 30 to 60 days from the invoice date. In instances where the timing of revenue recognition differs from the timing of payment, the Company elected to apply the practical expedient in accordance with ASC 606 to not adjust contract consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when promised goods and services are transferred to the customer and when the customer pays for those goods and services will be one year or less. As such, the Company determined its contracts do not generally contain a significant financing component.
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
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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.
Cost of Services — 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 and post implementation maintenance and 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 $
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 in order 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 makes adjustments to these reserves in accordance with the income tax guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences may affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s financial condition and operating results.
We continue to record a full valuation allowance on all deferred tax assets given our continued history of operating losses and have an effective tax rate of
Leases — Leases are reviewed and classified as either capital or operating leases at their inception. In certain lease agreements, we may receive renewal or expansion options, rent holidays, and other incentives. For operating leases, we recognize lease costs on a straight-
14
line basis once we take control of the space, without regard to deferred payment terms such as rent holidays that defer the commencement date of required payments. Additionally, incentives received are treated as a reduction of costs over the term of the agreement.
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 consolidated balance sheets.
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 Shares of Common Stock equivalents for the period. For 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 February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases. The standard requires all leases with lease terms over twelve months to be capitalized as a right-of-use asset and lease liability on the balance sheet at the date of lease commencement. Leases will be classified as either financial or operating. This distinction will be relevant for the pattern of expense recognition in the income statement. The guidance is effective for reporting periods beginning after December 15, 2021, and interim periods beginning after December 15, 2022. The Company is adopting the new guidance during the current annual period and will reflect the effects of such adoption, including the additional required disclosures, in our Annual Report on Form 10-K for the year ended December 31, 2022.
Recently Adopted Accounting Pronouncement — As of January 1, 2020, the Company has adopted, on a prospective basis, ASU 2018-07, Improvements to Nonemployee Share-based Payment Accounting, which results in ASC 505-50, Equity Based Payments to Non-Employees, no longer being applicable to those awards. As a result, non-employee awards will initially be measured consistent with employee awards and revaluation will no longer be required until a counterparty’s performance is complete. The Company did not have a material amount of non-employee awards at adoption and therefore the impact of the adoption of this standard was immaterial.
In March 2021, the FASB issued ASU No. 2021-03, Intangibles—Goodwill and Other (Topic 350): Accounting Alternative for Evaluating Triggering Events, an amendment of the FASB Accounting Standards Codification. The amendments in this ASU allow companies to elect not to monitor for goodwill impairment triggering events during the reporting period and instead, to evaluate the facts and circumstances as of the end of the reporting period to determine whether it is more likely than not that goodwill is impaired. This aligns the triggering event evaluation date with the reporting date, whether that date is an interim or annual reporting date. The amendments in this update are effective for fiscal years beginning after December 15, 2019, with early adoption permitted for both interim and annual financial statements that have not yet been issued or made available for issuance as of March 30, 2021. The Company adopted this standard as of January 1, 2022 and the guidance did not have a material impact to its condensed consolidated financial statements or related disclosures.
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, 2022, the results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021. Certain information and note disclosures have been condensed or omitted pursuant to such rules and regulations. The accompanying condensed consolidated balance sheet as of December 31, 2021 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, 2022 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.
15
These 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, 2021 included in the Company’s Annual Report. The Company’s significant accounting policies are described in Note 1 to those audited financial statements.
2. Pixelpin Acquisition and Patent Approvals
On February 23, 2021, Trust Stamp Malta completed an agreement to acquire Pixelpin, an image-based Pin-on-Glass account access solution that alleviates pain-points of traditional login methods while ensuring the security of authentication. The Company paid thousand in cash as consideration for the asset purchase of software intellectual property. The asset acquisition was recorded at
| Fair Value | ||
Trade name and trademarks | $ | | |
Foreign currency translation |
| | |
Total | $ | | |
In addition to the acquisition, the Company experienced continued growth in its robust intellectual property portfolio adding a total of $
3. Borrowings
Non-Convertible Promissory Notes Payable
| As of March 31, |
| As of December 31, | |||
| 2022 |
| 2021 | |||
Malta loan receipt 2 – August 10, 2021 | $ | | $ | | ||
Malta loan receipt 1 – February 9, 2021 |
| |
| | ||
Total principal outstanding |
| |
| | ||
Plus accrued interest |
| |
| | ||
Total promissory notes payable | $ | | $ | | ||
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 potential repayable advance of up to €
The Company will pay an annual interest rate of
16
4. 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, 2021 to March 31, 2022:
Warrants ($) | |||
Balance as of January 1, 2021 | $ | | |
Additional warrants issued |
| — | |
Change in fair value | | ||
Balance as of December 31, 2021 | $ | | |
Additional warrants issued | — | ||
Change in fair value | ( | ||
Balance as of March 31, 2022 | $ | ||
As of March 31, 2022, the Company has issued a customer a warrant to purchase up to $
The Company has issued an investor warrant to purchase $
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, 2022, the warrant liability is recorded at $
Equity Classified Warrants
|
| As of March 31, |
| As of December 31, | |||
Warrant Issuance Date |
| Strike Price |
| 2022 |
| 2021 | |
September 30, 2016 | $ | |
| — |
| | |
November 9, 2016 | $ | |
| |
| | |
January 23, 2020 | $ | |
| |
| | |
January 23, 2020 | $ | |
| |
| | |
August – December 2021 | $ | |
| |
| | |
January – February 2022 | $ | |
| |
| — | |
Total warrants outstanding |
|
| |
| | ||
On September 30, 2016, the Company issued REach® a warrant to purchase
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On December 21, 2021, REach® executed a Notice of Exercise for its warrants to purchase
The Company has issued a customer a warrant to purchase
These warrants remain outstanding as of March 31, 2022.
In January 2020, the Company has issued REach® a warrant to purchase
These warrants remain outstanding as of March 31, 2022.
In January 2020, the Company has issued SCV a warrant to purchase
On December 21, 2021, SCV executed a Notice of Exercise for certain of its warrants to purchase
The warrants to purchase the remaining
The Company issued
During the three months ended March 31, 2022, investors exercised
The warrants to purchase the remaining
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5. Balance Sheet Components
Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following:
| March 31, |
| December 31, | |||
2022 | 2021 | |||||
Prepaid operating expenses | $ | | $ | | ||
Rent deposit |
| |
| | ||
VAT receivable associated with SAIT |
| |
| | ||
Prepaid Sponsorship |
| |
| | ||
Tax credit receivable | | | ||||
Deferred cost to obtain contract | — | — | ||||
Miscellaneous receivable |
| |
| | ||
Prepaid expenses and other current assets | $ | | $ | | ||
Capitalized internal-use software, net
Capitalized internal-use software, net consisted of the following:
|
| March 31, |
| December 31, | ||||
Useful Lives | 2022 | 2021 | ||||||
Internally developed software |
|
| $ | | $ | | ||
Less accumulated depreciation |
|
| ( |
| ( | |||
Capitalized internal-use software, net | $ | | $ | | ||||
Amortization expense is recognized on a straight-line basis and for the three months ended March 31, 2022 and 2021 totaled $
Property and equipment, net
Property and equipment, net consisted of the following:
|
| March 31, |
| December 31, | ||||
Useful Lives | 2022 | 2021 | ||||||
Computer equipment |
| - | $ | | $ | | ||
Furniture and fixtures |
|
| |
| | |||
Property and equipment, gross |
| |
| | ||||
Less accumulated depreciation |
| ( |
| ( | ||||
Property and equipment, net | $ | | $ | | ||||
Depreciation expense is recognized on a straight-line basis and for the three months ended March 31, 2022 and 2021 totaled $
Other assets
Other assets consisted of the following:
| March 31, |
| December 31, | |||
2022 | 2021 | |||||
Tax credit receivable | $ | | $ | | ||
Other assets | $ | | $ | | ||
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Accrued expenses
Accrued expenses consisted of the following:
| March 31, |
| December 31, | |||
2022 | 2021 | |||||
Compensation payable | $ | | $ | | ||
Commission liability |
| |
| — | ||
Accrued employee taxes |
| |
| | ||
Other accrued liabilities |
| |
| | ||
Accrued expenses | $ | | $ | | ||
6. Goodwill and Intangible Assets
There were no changes in the carrying amount of goodwill for the periods ended March 31, 2022 and December 31, 2021.
Intangible assets consisted of the following:
|
| March 30, |
| December 31, | ||||
Useful Lives | 2022 | 2021 | ||||||
Patent application costs |
| $ | | $ | | |||
Trade name and trademarks |
|
| |
| | |||
Intangible assets, gross |
|
| |
| | |||
Less: Accumulated amortization |
| ( | ( | |||||
Intangible assets, net | $ | | $ | | ||||
Amortization expense for the three months ended March 31, 2022 and 2021 totaled $
Estimated future amortization expense of intangible assets is as follows:
Years Ending December 31, |
| Amount | |
2022 | $ | | |
2023 |
| | |
2024 |
| | |
2025 | | ||
$ | | ||
7. Revenue Recognition
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, 2022 and December 31, 2021 the Company does not have any related performance obligations for contracts with terms exceeding twelve months.
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Disaggregation of Revenue
For the three months ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
Professional services (over time) | $ | | $ | | ||
License fees (over time) |
| |
| | ||
Total Revenue | $ | | $ | | ||
8. Income Taxes
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.
The Company had an effective tax rate of
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 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
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, 2022 and December 31, 2021.
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 2021.
9. 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, | ||||||
| 2022 |
| 2021 | |||
Numerator: |
|
|
|
| ||
Net loss attributable to common stockholders | $ | ( | $ | ( | ||
Denominator: |
|
|
| |||
Weighted average shares used in computing net loss per share attributable to common stockholders |
| |
| | ||
Net loss per share attributable to common stockholders | ( | ( | ||||
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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, | |||
| 2022 |
| 2021 | |
Options, RSUs, and grants | | | ||
Warrants | | | ||
Total | | |
10. Stock Awards and Stock-Based Compensation
From time to time, the Company may issue stock awards in the form of Class A Shares of Common Stock grants, Restricted Stock Units (RSUs), or Class A Shares of 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, 2022 and 2021, 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 on a monthly basis. The total granted stock-based awards to advisory board members and other external advisors during the three months ended March 31, 2022 and 2021 included grants totaling, $
In addition to issuing stock awards to advisory board members and other external advisors, during the three months ended March 31, 2022 and 2021, the Company granted stock-based awards to multiple employees. The total granted stock-based awards to employees during the three months ended March 31, 2022 and 2021 included grants totaling, $
The following table summarizes stock option activity for the three months ended March 31, 2022:
|
|
| Weighted |
| ||||||||
Weighted | Average | |||||||||||
Average | Remaining | |||||||||||
Options | Exercise Price | Contractual | Aggregate | |||||||||
Outstanding | Per Share | Life (years) | Intrinsic Value | |||||||||
Balance as of January 1, 2022 | | $ | |
| $ | | ||||||
Options granted | | |
|
|
| |||||||
Options exercised | ( | |
|
|
| |||||||
Options canceled and forfeited | — | — |
|
|
| |||||||
Balance as of March 31, 2022 | | |
| | ||||||||
Options vested and exercisable as of March 31, 2022 | | $ | |
| $ | | ||||||
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, 2022 and 2021 was $
The weighted average grant-date fair value of options granted during the three months ended March 31, 2022 and 2021 was $
As of March 31, 2022, the Company had
22
stock-based compensation related to common stock grants of $
The following assumptions were used to calculate the fair value of options granted during the three months ended March 31, 2022:
Fair value of Class A Shares of Common Stock | $ | |||
Exercise price | $ | |||
Risk free interest rate |
| % | ||
Expected dividend yield |
| % | ||
Expected volatility |
| % | ||
Expected term |
|
Stock-based compensation expense
Our consolidated statements of operations include stock-based compensation expense as follows:
| Three months ended March 31, | |||||
| 2022 |
| 2021 | |||
Cost of services | $ | | $ | — | ||
Research and development |
| |
| | ||
Selling, general, and administrative |
| |
| | ||
Total stock-based compensation expense | $ | | $ | | ||
11. Related Party Transactions
Related party payables of $
The Company has agreed, with effect from November 13, 2020, to grant a
On August 16, 2017, the Company entered into three shareholder loan agreements with three related parties for $
23
12. 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 €
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 consolidated balance sheets) and income is recognized in a similar systematic basis over the same periods in the consolidated statements of operations. During the three months ended March 31, 2022 and 2021, the Company incurred $
On January 25, 2022, the Company entered into an additional agreement with the government of Malta for a grant of up to €
13. Commitments and Contingencies
Operating Leases – The Company leased office space in Georgia and certain other states in the U.S. under various operating lease arrangements, some of which are month-to-month leases arrangements. The Company also has several vehicle leases and corporate apartment leases in Malta requiring monthly payments. As of March 31, 2022, there were no minimum lease commitments related to month-to-month lease arrangements.
The following are the future minimum lease obligations on the Company’s lease agreements as of March 31, 2022:
Future minimum lease obligations |
| ||
Remainder of 2022 | $ | | |
2023 |
| | |
2024 |
| | |
2025 |
| | |
2026 |
| | |
Total | $ | |
Rental expense totaled $
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
14. Subsequent Events
Subsequent events have been evaluated through May 12, 2022, the date these condensed consolidated financial statements were available to be issued.
U.S. Immigration and Customs Enforcement (“ICE”) Services Contract – Effective March 27, 2022, Trust Stamp agreed to a modification of this contract with ICE, increasing the total contract award value to $
24
extending the delivery period until September 26, 2022 (subject to a right of early termination by ICE). However, due to a recent change in legislation (enacted through H.R. 2471: Consolidated Appropriations Act, 2022) which requires a Congressional notification in order for ICE to award a contract or subcontract to a particular entity for any pilot or demonstration program that uses more than 5 full-time equivalents or costs in excess of $
25
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs, involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future
Overview
T Stamp Inc. was incorporated on April 11, 2016 in the State of Delaware. T Stamp Inc. and its subsidiaries (“Trust Stamp”, “we”, or the “Company”) develops and markets identity authentication software solutions for enterprise partners and peer-to-peer markets as the Privacy-First Identity CompanyTM.
Trust Stamp develops proprietary artificial intelligence-powered identity and trust solutions at the intersection of biometrics, privacy, and cybersecurity, that enable organizations to protect themselves and their users, while empowering individuals to retain ownership of their data and prevent fraudulent activity using their identity.
Trust Stamp tackles industry challenges including data protection, regulatory compliance, and financial accessibility, with cutting edge technology including biometric science, cryptography, and machine learning. Our core technology irreversibly transforms identity information to create tokenized identifiers that enable accurate authentication without the need to store or share sensitive data. By retaining the usefulness of biometric data while minimizing the risk, we allow businesses to adopt biometrics and other anti-fraud initiatives while protecting personal information from hacks and leaks. Trust Stamp’s key sub-markets are identity authentication for the purpose of account opening, access and fraud detection and the creation of tokenized identities to facilitate financial and societal inclusion. Management has evaluated the market potential for its services in part by reviewing the following reports and articles, none of which were commissioned by the Company, and none are to be incorporated by reference:
Data security and fraud
| ● | In 2021, 4,145 publicly disclosed breaches exposed over 22 billion records according to the 2021 Year End Data Breach QuickView Report. |
| ● | eCommerce, airline ticketing, money transfer and banking services are estimated to cumulatively lose over $200 billion to online payment fraud between 2020 and 2024, according to a 2020 Juniper Research report on Online Payment Fraud. |
Biometric authentication
| ● | Juniper research estimates that biometrics will annually authenticate over $3 trillion in payment transactions by 2025. |
| ● | The global biometric system market is projected to grow from $24.1 billion in 2020 to $82.8 billion by 2027 according to a 2021 Global Industry Analysts, Inc report. |
Financial and societal inclusion
| ● | 1.7 billion people lack basic financial services including a bank account, and 4 billion people are underbanked according to a September 2019 Forbes article. |
As biometric solutions proliferate, so does the need to protect biometric data. Stored biometric images and templates represent a growing and unquantified financial, security and PR liability and are the subject of growing governmental, media and public scrutiny, since biometric data cannot be changed once they are hacked, as they are intimately linked to the user’s physical features and/or behaviors. Privacy concerns around biometric technology have led to close attention from regulators, with multiple jurisdictions placing biometrics in a special or sensitive category of personal data and demanding much stronger safeguards around collection and safekeeping.
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To address this unprecedented danger and increased cross-industry need to quickly and securely establish trust in a virtual environment, Trust Stamp has developed its Irreversibly Transformed Identity Token, or IT2, solutions, which replace biometric templates and scans with meaningless numbers, letters and symbols in order to remove sensitive data from the reach of criminals using a proprietary process by which a deep neural network irreversibly converts biometric and other identifying data, from any source, into the secure tokenized identity.
Trust Stamp offers competitive end-to-end solutions for multi-factor biometric authentication for account access and recovery, KYC/AML compliance, customer onboarding, and more, which allow organizations to approve more genuine users, keep bad actors from accessing systems and services, and retain existing users with a superior user experience.
Trust Stamp’s data transformation and comparison technology is vendor and modality agnostic, allowing any organization including other biometric services providers to benefit from the increased protection, efficiency, and utility of our proprietary tokenization process. With online and offline functionality, Trust Stamp technology is effective in even the most remote locations in the world.
Our Customers and Business
During the three-months ended March 31, 2022, we continued to maintain and expand our services to existing customers such as the US Immigration and Customs Enforcement (“ICE”) and Fidelity Information Services, LLC (“FIS”) as well as long-standing customers such as Mastercard International and a SP500 bank, including an important announcement that Trust Stamp’s proprietary tokenization technology is being utilized in FIS’ new global identification system.
On September 23, 2021, the Company was awarded a contract with ICE. Effective March 27, 2022, Trust Stamp agreed to a bilateral modification of that September 2021 contract. The modification (which has been amended to implement an up 90-day cessation of performance, as described further below) covers software development and services related to rapid enrolment in the ICE alternative to detention program increases the total contract award value to $7,176,364 from the original $3,920,764 and extends the delivery period until September 26, 2022.
In addition to growing the scope of its existing engagements, the Company has continued to onboard new customers such as VIVA Finance who are integrating the Company’s biometric verification, document validation and data protection services into VIVA’s platform, which allows individuals with thin credit histories to establish a framework for long-term financial health by enabling access to affordable credit with loans underwritten by employment history as opposed to a credit score.
During the three-months ended March 31, 2022, the Company unveiled its next-generation identity package, offering rapid deployment across devices and platforms, with custom workflows that seamlessly orchestrate trust across the identity lifecycle for a consistent user experience in processes for onboarding and KYC/AML, multi-factor authentication, account recovery, fraud prevention, compliance, and more. The orchestration layer that has been developed will facilitate no-code and low-code implementations of the Company’s technology making implementation faster and even more cost-effective for a broader range of potential customers.
Our software has applicability to numerous government use cases in the United States and overseas, addressing many of the common concerns related to legacy biometric systems, and in the three-months ended March 31, 2022 we have opened dialogs on such use cases with several overseas governments bodies. In order to accelerate government engagement, the Company has made a significant investment in expanding its government-facing business development team during the three months ended March 31, 2022.
The Company continues to develop a robust sales pipeline in key markets. Our pipeline included 39 commercial opportunities for potential revenue contracts and projects as of March 31, 2022. There is no guarantee that we will be able to convert each of these opportunities into revenue generating contract. However, we believe this demonstrates increased interest in our software and services.
Each commercial opportunity is confirmed by the Trust Stamp team by diligently identifying indicators of an enterprise’s willingness and ability to adopt Trust Stamp’s technology. The most fundamental indicators of an opportunity are that a qualified stakeholder in the enterprise clearly articulates an identity-related challenge causing economic loss or risk to their business. Because of the broad applicability of Trust Stamp’s technology, multiple opportunities may exist within a single institution.
Sales team members follow a process with the stakeholder to prioritize all key performance indicators impacted by the challenge and collaborate to identify the timeline, additional stakeholders, and resources needed to implement Trust Stamp technology.
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During the three months ended March 31, 2022, the Company continued working with a third-party software developer to meet the need for additional research and development resources over and above internal resources and the cost of those services was the largest single expense other than internal employment costs. We have continued scaling our development team in Malta and Rwanda. The expansion of our internal development teams has required additional hiring, onboarding, training, and equipment costs which going forward will allow us to substantially increase the percentage of contracts that are serviced internally with a reduction in our per-hour development costs versus contracted services.
Trust Stamp’s key sub-markets are identity authentication for the purpose of account opening, access, fraud detection, and the creation of tokenized identities to facilitate financial and societal inclusion.
Key Business Measures
In addition to the measures presented in our consolidated financial statements, we use the following key non-GAAP business measure to help us evaluate our business, identify trends affecting our business, formulate business plans and financial projections, and make strategic decisions.
Adjusted EBITDA
This discussion includes information about Adjusted EBITDA that is not prepared in accordance with U.S. GAAP. Adjusted EBITDA is not based on any standardized methodology prescribed by U.S. GAAP and is not necessarily comparable to similar measures presented by other companies. A reconciliation of this non-GAAP measure is included below.
Adjusted EBITDA is a non-GAAP financial measure that represents U.S. GAAP net income (loss) adjusted to exclude (1) interest expense, (2) interest income, (3) provision for income taxes, (4) depreciation and amortization, (5) changes in assets and liabilities, and (6) certain other items management believes affect the comparability of operating results.
Management believes that Adjusted EBITDA, when viewed with our results under U.S. GAAP and the accompanying reconciliations, provides useful information about our period-over-period results. Adjusted EBITDA is presented because management believes it provides additional information with respect to the performance of our fundamental business activities and is also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess the operating performance of our Company and our management, and it will be a focus as we invest in and grow the business.
Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are:
o | Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments. |
o | Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs. |
o | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements. |
o | Adjusted EBITDA does not include the impact of certain charges or gains resulting from matters we consider not to be indicative of our ongoing operations. |
Due to these limitations, adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only as a supplement to our U.S. GAAP results.
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Reconciliation of Net Loss to Adjusted EBITDA
For the three months ended March 31, | ||||||
| 2022 |
| 2021 | |||
Net loss before taxes | $ | (1,692,062) | $ | (2,031,893) | ||
Add: Other expense |
| 94,513 |
| 64,007 | ||
Less: Other income |
| (6,941) |
| — | ||
Add: Interest expense (income) |
| 3,958 |
| 32,220 | ||
Add: Stock-based compensation |
| 287,786 |
| 172,111 | ||
Add: Non-cash expenses for in-kind services |
| 27,930 |
| 27,930 | ||
Add: Depreciation and amortization |
| 153,928 |
| 121,453 | ||
Adjusted EBITDA loss (non-GAAP) | $ | (1,130,888) | $ | (1,614,172) | ||
Adjusted EBITDA (non-GAAP) loss for the three months ended March 31, 2022, decreased by 29.94%, to $1.13 million from $1.61 million for the three months ended March 31, 2021. The overall decrease in adjusted EBITDA loss was driven primarily by a $1.85 million increase in gross margin during the three months ended March 31, 2022, offset by an increase in selling, general and administrative expenses of $1.79 million during the three months ended March 31, 2022. See “Results of Operations” below for further discussion on the drivers behind the increase in gross margin and selling, general and administrative expenses during the three months ended March 31, 2022.
Gross revenue (non-GAAP)
This discussion includes information about gross revenue that is not prepared in accordance with U.S. GAAP. Gross revenue 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.
Gross revenue for the three months ended March 31, 2022, increased 379.28% to $2.89 million compared to $604 thousand for the three-months ended March 31, 2021. The increase of gross revenue in the three-months ended March 31, 2022 included $73 thousand for the sale of outsourced web hosting services. Due to GAAP requirements, we did not include the third-party costs for web hosting in net revenue, but instead, reduced cost of services.
(Unaudited) | ||||||
For the three months ended March 31, | ||||||
| 2022 |
| 2021 | |||
Net revenue | $ | 2,821,044 | $ | 532,283 | ||
Add back: |
|
|
| |||
Third party costs rebilled to clients |
| 73,772 |
| 71,715 | ||
| ||||||
Gross revenue (non-GAAP) | $ | 2,894,816 | $ | 603,998 | ||
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Comparison of the Three Months Ended March 31, 2022 and 2021
The following table summarizes our condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021:
For the three months ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
Net revenue | $ | 2,821,044 | $ | 532,283 | ||
Operating Expenses: |
|
| ||||
Cost of services (exclusive of depreciation and amortization shown separately below) |
| 693,978 |
| 257,419 | ||
Research and development |
| 493,686 |
| 755,036 | ||
Selling, general, and administrative |
| 3,120,572 |
| 1,334,041 | ||
Depreciation and amortization |
| 153,928 |
| 121,453 | ||
Total Operating Expenses |
| 4,462,164 |
| 2,467,949 | ||
Operating Loss |
| (1,641,120) |
| (1,935,666) | ||
Non-Operating Income (Expense): |
|
|
|
| ||
Interest income (expense) |
| (3,958) |
| (32,220) | ||
Change in fair value of warrant liability |
| 40,588 |
| — | ||
Other income |
| 6,941 |
| — | ||
Other expense |
| (94,513) |
| (64,007) | ||
Total Other Expense, Net |
| (50,942) |
| (96,227) | ||
Net Loss before Taxes |
| (1,692,062) |
| (2,031,893) | ||
Income tax expense |
| — |
| — | ||
Net loss including noncontrolling interest |
| (1,692,062) |
| (2,031,893) | ||
Net loss attributable to noncontrolling interest |
| — |
| — | ||
Net loss attributable to T Stamp Inc. | $ | (1,692,062) | $ | (2,031,893) | ||
Basic and diluted net loss per share attributable to T Stamp Inc. | $ | (0.07) | $ | (0.11) | ||
Weighted-average shares used to compute basic and diluted net loss per share |
| 22,748,432 |
| 17,813,081 | ||
Net revenue
Three months ended March 31, |
| |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
Net revenue | $ | 2,821,044 | $ | 532,283 | $ | 2,288,761 |
| 429.99 | % | |||
During the three-months ended March 31, 2022, net revenue of $2.82 million consisted of revenue primarily from three customers which included $2.24 million from ICE, $276 thousand from a SP500 bank, $177 thousand from Mastercard, and various other customers for the remaining $128 thousand.
Net revenue increased by $2.29 million, or 429.99%, for the three-months ended March 31, 2022, compared to the three months ended March 31, 2021. This increase was primarily due to revenue contracts executed by newly acquired and existing customers. Total net revenue from new contracts signed after the three-months ended March 31, 2021, produced $2.48 million in three-months ended March 31, 2022, consisting of $2.24 million from ICE, $40 thousand from a SP500 bank, a statement of work (“SOW”) from Mastercard for $115 thousand, $76 thousand from FIS, and the remaining $12 thousand from various other new SOWs. Additionally, various SOWs that existed in the three-months ended March 31, 2021, subsequently ended prior to the end of 2021 and were replaced with new SOWs by the same customers in or before March 31, 2022.
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Cost of services
Three months ended March 31, |
| |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
Cost of services | $ | 693,978 | $ | 257,419 | $ | 436,559 | 169.59 | % | ||||
Cost of services (“COS”) increased by $437 thousand or 169.59% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase during this period was primarily driven by the costs related to servicing requirements from the September 2021 ICE contract. ICE related COS for the three months ended March 31, 2022, were 65.63% of the total COS during the period, including vendor and other miscellaneous costs as well as direct labor costs.
In parallel, significant growth in net revenue increased gross profit by 673.84% or $1.85 million compared to the three months ended March 31, 2021, and gross profit margins increased by 23.76% for the comparison periods. This results in part from the Company benefiting from its prior investment in research and development by utilizing existing technologies for new implementations.
Research and development
Three months ended March 31, |
| |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
Research and development | $ | 493,686 | $ | 755,036 | $ | (261,350) |
| (34.61) | % | |||
Research and development (“RD”) decreased by $261 thousand, or 34.61% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The decrease in RD expenses during the three months ended March 31,2022 was driven by the Company’s continued efforts to transition software development resources towards internal hires and away from external third-party software development companies. The expansion of our internal development teams has required additional hiring, onboarding, training, and equipment costs, however, going forward this will allow us to substantially increase the percentage of contracts that are serviced internally with an estimated 60% reduction in our per-hour development costs versus contracted services.
In comparing the three months ended March 31, 2021, to the three months ended March 31, 2022, the Company’s RD subsidiary, Trust Stamp Malta, grew its headcount from 29 to 38 full-time equivalents (“FTE”). Additionally, the Company opened its RD center in Rwanda, Africa in April 2021 resulting in the staffing of 12 FTE for the three months ended March 31, 2022, from 0 FTE for the comparison period.
Selling, general, and administrative
Three months ended March 31, |
| |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
Selling, general, and administrative | $ | 3,120,572 | $ | 1,334,041 | $ | 1,786,531 |
| 133.92 | % | |||
Selling, general, and administrative expense (“SGA”) increased by $1.79 million, or 133.92% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase in SGA expenses during the period ended March 31, 2022, was driven mostly by to the growth in headcount and associated overhead resulting in an increase of $606 thousand for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Global headcount grew by 42.86%; from 70 to 100 team members for the three months ended March 31, 2021 compared to the three months ended March 31, 2022. Additionally, there were $414 thousand in sales commission fees included in SGA expenses related to our various sales commission contracts with members of our sales teams during the three months ended March 31, 2022. Of the total sales commissions, $347 thousand is related to the initial contract with ICE.
The increase in SGA for the three months ended March 31, 2022 also related legal and professional services fees and other listing fees related to the listing of the Company’s Class A Common stock on the Nasdaq Capital Market, for which trading commenced on January 31, 2022. Legal and professional fees during the three months ended March 31, 2022, totaled $585 thousand and included $79 thousand for the Nasdaq direct listing fee, and $185 thousand for legal, accounting, and advisory fees related to the listing.
Finally, a notable increase in SGA resulted from corporate travel costs which totaled $101 thousand during the three months ended March 31, 2022. This is up from $32 thousand from the three months ended March 31, 2021, as COVID-19 travel restrictions have since
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been reduced, freeing up executive and sales staff to travel to, among others, events, industry and investor conferences. Comparatively, in the three months ended March 31, 2021, the only travel costs related to the relocation of some executive staff as part of the opening of the Malta office.
Depreciation and amortization
Three months ended March 31, |
| |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
Depreciation and amortization | $ | 153,928 | $ | 121,453 | $ | 32,475 |
| 26.74 | % | |||
Depreciation and amortization (“DA”) increased by $32 thousand, or 26.74% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase was primarily due to the growth in patent amortization which increased by 294.6% during the three months ended March 31, 2022 as a result of the Company's continued RD investment in discovering and securing protection for future technologies. During the three months ended March 31, 2022, these efforts produced nine new pending patent applications and five issued patents with the United States Patent and Trademark Office.
Additionally, capitalized internal-use software increased by $207 thousand during the three months ended March 31, 2022, compared to $98 thousand during the three months ended March 31, 2021. While the amounts of capitalized internal-use software vary from period to period, we do see a trend of increasing software capitalization which has driven the growth in software amortization. Overall, this is a further result of newly issued patents producing internal-use software or microservices that have reached technical feasibility at which point the Company begins to capitalize the related costs.
Operating loss
Three months ended March 31, |
| |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
Operating loss | $ | (1,641,120) | $ | (1,935,666) | $ | 294,546 |
| 15.22 | % | |||
The Operating loss decreased by $295 thousand or 15.22% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The primary reason for the decrease in operating loss was the growth in net revenue of 429.99% for the three-months ended March 31, 2022, compared to the three months ended March 31, 2021, which outpaced the growth in operating costs by a factor of 5.32. Adjusting for additional non-cash and non-recurring activities results in an even more impressive improvement to the operating margin.
While total operating costs increased by 80.80% or $1.99 million, it took only $1.58 to produce $1.00 in net revenue in the three months ended March 31, 2022, versus $4.64 in total operating expense to produce $1.00 in net revenue in the three months ended March 31, 2021; an improvement of 65.89%.
Interest income (expense)
Three months ended March 31, |
| |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
Interest income (expense) | $ | (3,958) | $ | (32,220) | $ | 28,262 |
| 87.72 | % | |||
Interest income (expense) decreased by $28 thousand, or 87.72% for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The decrease was driven due to the Company paying off its venture loan with Second Century Ventures (“SCV”) in April 2021. The remaining net interest expense relates to various immaterial interest-bearing and interest-earning accounts.
Change in fair value of warrant liability
Three months ended March 31, | |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change | ||||
Change in fair value of warrant liability | $ | 40,588 | $ | — | $ | 40,588 |
| — | |||
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The Company recognized a change in fair value of warrant liability during the three months ended March 31, 2022, of $41 thousand based on the fair value assessment and adjustment for one warrant liability as described in Note 4 to the financial statements provided under Item 1 of this report.
Other income
Three months ended March 31, |
| |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
Other income | $ | 6,941 | $ | — | $ | 6,941 |
| — | % | |||
Other income increased by $7 thousand for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase was primarily due to ancillary fees from investments in the 2021 public raise received during the three months ended March 31, 2022.
Other expense
Three months ended March 31, |
| |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
Other expense | $ | (94,513) | $ | (64,007) | $ | (30,506) |
| (47.66) | % | |||
Other expense increased by $31 thousand for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase was primarily due to net realized loss related to foreign exchange differences in the Company’s currency balances. Those currencies include USD, EUR, GBP, and RWF.
Liquidity and Capital Resources
As of March 31, 2022, and December 31, 2021, we had approximately $5.84 million and $3.48 million cash in our banking accounts, respectively. The increase in cash during the comparative periods was a result of the net positive cash inflow from the combination of financing and operating activities. In the three months ended March 31, 2022, the Company received $1.95 million related to the ICE revenue contract and closed $3.32 million from a warrant exercise with SCV and REach® Ventures, and $365 thousand in units sold and warrants exercised in connection to the Company's 2022 fundraising efforts under Regulation CF, Regulation D, and Regulation S in preparation for its Nasdaq listing. See below for more details on these offerings.
These cash inflows from operating and financing activities were offset by the Company's working capital needs, which, for the three months ended March 31, 2022, included $79 thousand for Nasdaq direct listing fees, $130 thousand for the Company's commitment to pay the taxes on the 2019 stock bonuses, $279 thousand for sales commissions, and $135 thousand for fees to the Disney Institute for executive and employee training.
Total current assets for the comparative periods increased by 40.37% or $2.33 million from $5.76 million as of December 31, 2021, to $8.09 million during the three months ended March 31, 2022. Additionally, we have experienced a decrease in current liabilities of 2.71% or $2.40 million at December 31, 2021 compared to $2.46 million as of March 31, 2022. In effect, the Company’s current ratio, that is, the ratio of the Company’s total current assets as a multiple of total current liabilities or the Company’s ability to service its near-term liabilities with its near-to-cash assets, grew from 2.40 as of December 31, 2021 to 3.28 or 36.67% in the three months ended March 31, 2022. This is, in part, a result of the net positive cash inflow and timing of financing activities as mentioned above.
Reductions in customer deposit liabilities and deferred revenue were the primarily drivers for the decrease in current liabilities as of March 31, 2022, compared to December 31, 2021. Various SOWs that existed as deferred revenue as of December 31, 2021, included $250 thousand received in cash in relation to the 2023 Mastercard License fee, $127 thousand for FIS, $105 thousand for IJM, and $19 thousand for our SP500 customer. As of March 31, 2022, deferred revenue decreased as the Company recognized $63 thousand for Mastercard license fees, $50 thousand for FIS, and $79 thousand for a SP500 customer. Additionally, customer deposit liabilities as of December 31, 2021, included deferred revenue related to the ICE contract. Since there is a provision in government contracts which provides for termination on convenience, the Company reclassed this amount to customer deposit liabilities. During the three months ended March 31, 2021, the Company converted this entire balance to recognized revenue.
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Effective September 3, 2019, the Company entered into a software license agreement with a customer pursuant to which the Company received total fees of $150 thousand in 2020 and will receive minimum total fees of $200 thousand in 2021, and $250 thousand in 2022, rising by 15% in each subsequent year beginning in 2023 with a cap of $1.0 million. The Company has recognized $63 thousand of the software license agreement fees for the three months ended March 31, 2022.
On March 12, 2021, the Company launched a Regulation D raise limited to accredited investors for a maximum of $5.00 million or 1,633,986 shares. The raise was marketed only to the Company’s existing investor email list with an initial minimum investment of $25 thousand and a share price of $3.06 per share. The initial tranche of the round closed on April 5, 2021, with $3.9 million of reserved investment with the contracted sale of 1,279,825 shares of Class A Common Stock. After the initial tranche, on April 6, 2021, the Company then offered up to $700 thousand or 182,291 of additional shares, again only to accredited investors, with a $5 thousand minimum investment and at a share price of $3.84 per share. The second tranche of the round closed on June 4, 2021 with $82 thousand of reserved investment at $3.84 per share with the contracted sale of 21,400 shares of Class A Common Stock.
On August 25, 2021, the Company launched concurrent offerings under Regulation Crowdfunding (“Regulation CF”), Regulation D and Regulation S. The Company initially sought to raise up to $5.00 million in the aggregate between the three offerings through the sale of units but had the discretion to accept up to $5.00 million in each offering. Each unit consists of 1 share of the Company’s Class A Common Stock, par value $0.01 per share, and 1 warrant to purchase 1 share of Class A Common Stock of the Company in a future registered or exempt offering of the Company (i.e. a Regulation CF, Regulation D, or Regulation S Warrant, as applicable). The minimum target amount under the Regulation CF offering was $100 thousand, which the Company achieved.
On November 19, 2021, we closed the Regulation CF offering, having received binding commitments for 1,250,000 units at $4.00 per unit for a total of $5,000,000 in gross proceeds. We continued to hold closings on investments from investors who subscribed prior to November 19, 2021. We raised a final total of $4,551,900 in gross proceeds from the issuance of 1,137,975 Regulation CF units to investors in this offering.
On January 7, 2022, we closed on an initial tranche of investments from the Regulation D offering. We raised a final total of $863,956 in gross proceeds from the issuance of 215,989 Regulation D units to investors in this offering. We conducted an additional close on February 2, 2022, receiving gross proceeds of $100,000 and issuing 25,000 Regulation D units to that investor.
On January 7, 2022, we closed the Regulation S offering. We raised a final total of $224,416 in gross proceeds from the issuance of 56,104 Regulation S units to investors in this offering.
On January 26, 2022, we initially qualified an offering with the Securities and Exchange Commission under Regulation A to allow for the exercise of warrants issued pursuant to the Regulation CF, Regulation D, and Regulation S unit offerings. As of May 12, 2022, warrants for 14,250 shares have been exercised by investors.
On September 23, 2021, the Company was awarded a $3,920,764 contract with ICE. Alongside the revenue implications of this specific contract, it is believed that a successful execution will lead to extended and additional contracts of the same nature with ICE.
Effective March 27, 2022, Trust Stamp agreed to a modification of this contract with ICE, increasing the total contract award value to $7,176,364 from the original $3,920,764 and extending the delivery period until September 26, 2022 (subject to a right of early termination by ICE). However, due to a recent change in legislation (enacted through H.R. 2471: Consolidated Appropriations Act, 2022) which requires a Congressional notification in order for ICE to award a contract or subcontract to a particular entity for any pilot or demonstration program that uses more than 5 full-time equivalents or costs in excess of $1,000,000, effective April 15, 2022, the Company entered into an the Amendment with ICE to amend the terms of the Company’s Services Contract Extension with ICE, implementing an up to 90-day cessation of performance of the Company’s and ICE’s obligations. This change in legislation was retroactively applied to the March 27, 2022, modification to the ICE Contract. The up to 90-day cessation of the ICE Contract provided by the Amendment is intended to allow ICE ample time to obtain a Congressional notification for the modification of the ICE Contract, so that the Company can continue to provide services to ICE under the ICE Contract.
On December 21, 2021, REach® executed a Notice of Exercise for its warrants to purchase 400,641 shares of Class A Common Stock at an exercise price of $0.1664 per share for a total purchase price of $67 thousand.
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On December 21, 2021, a SCV executed a Notice of Exercise for certain of its warrants to purchase 2,037,560 shares of Class A Common Stock at an exercise price of $1.60 per share for a total purchase price of $3.3 million.
The Company believes that revenues from its existing clients, without any new contracts (i.e. a renewal of the ICE contract described above) or proceeds from the Company’s current capital raising efforts, will provide it with adequate amounts of cash to meet the Company’s needs in the short-term (i.e., the next twelve months) and in the long-term (i.e., beyond the next twelve months).
The Company expects that human resources costs – i.e., compensation for new and existing officers, directors, and employees – will be the largest material cash obligation for the Company within the next twelve months, with projected human resources costs totaling approximately $750,000 per month. The Company believes, as described above, that revenues from its existing operations will be sufficient to cover these costs, and that any funds from new client contracts or offerings would provide additional operational capacity for the Company going forward.
Liquidity
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits with a loss in the three months period ended March 31, 2022, of $1.69 million, operating cash outflows of $1.14 million for the same period, and an accumulated deficit of $28.90 million as of March 31, 2022.
The Company’s ability to continue as a going concern in the next twelve months following the date the consolidated financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and, due to the capital raise as discussed in Note 1 to the financial statements included under Item 1 of this report, we believe that we have sufficient liquidity to support the planned operations of our business for twelve months from the date these financials are issued.
Equity, Notes, and Warrants
Regulation D, Regulation S and Regulation CF Offerings. See more information on Regulation D, Regulation S, and Regulation CF fundraising efforts in the Liquidity and Capital Resources subsection above.
Operating Activities
Net cash used in operating activities reduced by 46.48% from $2.13 million to $1.14 million for the three months ended March 31, 2022, compared the three months ended March 31, 2021. The increase during the three months ended March 31, 2022, is related primarily to an increase in cash from revenue to cover the Company’s working capital needs and a reduction of non-cash expenses compared to the three months ended March 31, 2021. Of the $1.69 million net loss for the three months ended March 31, 2022, there was a non-cash expense of $288 thousand related to an accounting estimate used to calculate stock-based compensation, decrease in warrant liability of $41 thousand, repayment of shareholder loan through in-kind services of $28 thousand, and $154 thousand for depreciation and amortization that was added back to Net loss. Additionally, $122 thousand from the timing of accrual was subtracted from Net loss to arrive at a $1.14 million cash outflow from operating activities.
Investing Activities
Net cash used in investing activities for the three months ended March 31, 2022, was $245 thousand, compared to net cash of $233 thousand used in the three months ended March 31, 2021. These related primarily to continued investments to develop future technologies that we intend to capitalize and monetize over time. During the three months ended March 31, 2022, capitalized internal-use software increased by 111.69% compared the three months ended March 31, 2021. This is also a result of the Company’s investments in RD, which, during the period, produced nine new pending patent applications and five issued patents with the United States Patent and Trademark Office. An additional variance resulted from the acquisition of Pixelpin Ltd that we completed on March 18, 2021, in exchange for $91 thousand in cash. Pixelpin Ltd is an image-based Pin-on-Glass account access solution that alleviates pain-points of traditional login methods while ensuring the security of authentication. This acquisition further enhances Trust Stamp’s innovative portfolio of technology solutions that enable improved customer experiences and reputation while broadening the scope of internal risk-management strategies and providing additional options for multi-factor authentication. Overall, net cash used in investing activities as
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a percentage of net cash used in operating activities increased by a factor of 1.95 from the three months ended March 31, 2021, compared to the three months ended March 31, 2022. This demonstrates the Company’s ability to invest more of its resources in future technology development versus other operating activities.
Financing Activities
For the three months ended March 31, 2022, net cash provided by financing activities was $3.70 million, compared to net cash of $2.95 million for the three months ended March 31, 2021. During the three months ended March 31, 2021, cash received primarily related to our private fundraise under SEC Regulations D and S, from which the Company closed $3.41 million in net proceeds. Additionally, the Company received $541 thousand in proceeds from a soft loan from the government of Malta. During the three months ended March 31, 2022, cash received included the $3.38 million from a warrant exercise with SCV and REach® Ventures, $53 thousand from the exercise of options, and $259 thousand in units sold and warrants exercised in connection to the Company's 2021 raises under Regulation CF, Regulation D, and Regulation S in preparation for its Nasdaq listing.
Contractual Obligations and Commitments
The following table summarizes our non-cancellable contractual obligations as of March 31, 2022:
Payments Due by Period | ||||||||||||
|
| Less Than |
|
| ||||||||
Total |
| 1 Year | 1-3 Years | 3-5 Years | ||||||||
Operating lease obligations | $ | 460,731 | $ | 216,540 | $ | 241,372 | $ | 2,819 | ||||
Purchase obligations |
| — |
| — |
| — |
| — | ||||
Total contractual obligations | $ | 460,731 | $ | 216,540 | $ | 241,372 | $ | 2,819 | ||||
The contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding. Obligations under contracts that we can cancel without a significant penalty are not included in the table above.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
The critical accounting policies and estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.
Capitalized Internal-Use Software, Net
Costs related to software acquired, developed, or modified solely to meet our internal requirements, with no substantive plans to market such software at the time of development are capitalized. The Company capitalizes eligible costs to develop internal-use software that are incurred subsequent to the preliminary project stage through the development stage. These costs consist of personnel costs (including related benefits and stock-based compensation) that are incurred during the application development stage. Costs incurred during the preliminary project stage and during the post-implementation operational stage are expensed as incurred. Maintenance costs are expensed as incurred. The estimated useful life of costs capitalized is evaluated for each specific project. Actual economic lives may differ from estimated useful lives. Periodic reviews could result in a change in estimated useful lives and therefore changes in amortization expense in future periods.
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Revenue Recognition
The Company derives its revenue primarily from professional services. Revenue is recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, the Company includes an estimate of the amount it expects to receive or the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.
The Company determines the amount of revenue to be recognized through the application of the following steps:
| ● | Identification of the contract, or contracts with a customer; |
| ● | Identification of the performance obligations in the contract; |
| ● | Determination of the transaction price; |
| ● | Allocation of the transaction price to the performance obligations in the contract; and |
| ● | Recognition of revenue when or as the Company satisfies the performance obligations. |
At contract inception, the Company will assess the services agreed upon within each contract and assess whether each service is distinct and determine those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. In general, each contract with a customer consists of a single performance obligation to perform services in which revenue is recognized when the service has been delivered.
During the year ended December 31, 2021, the Company entered into a significant contract with ICE that contained multiple performance obligations, including software application development, phones, and services to assist ICE. The Company allocates the transaction price for this contract based on the stand-alone selling price of each performance obligation. The Company uses the expected cost-plus margin approach for determining the stand-alone selling prices of the phones and services to assist ICE, as this is believed to be the most accurate method of allocating the transaction price to these performance obligations, maximizing the use of observable inputs. As the Company does not have a similar software application that has been sold to another customer, the Company uses the residual approach for determining the stand-alone selling price of the software application development by subtracting the sum of the stand-alone selling prices for the phones and services to assist ICE from the total transaction price.
Contract Balances
The timing of customer billing and payment relative to the start of the service period varies from contract to contract; however, the Company bills many of its customers in advance of the provision of services under its contracts, resulting in contract liabilities consisting of either deferred revenue (a “contract liability”) or customer deposit liabilities. Deferred revenue represents billings under noncancelable contracts before the related product or service is transferred to the customer. Such amounts are recognized by the Company over the life of the contract upon meeting the revenue recognition criteria, but generally within one year. Customer deposit liabilities consist of billings or payments received in advance of the start of the contractual term or for anticipated revenue generating activities for the portion of a contract term that is subject to cancellation for convenience. Certain of the Company’s arrangements generally include terms that allow the customer to terminate the contract for convenience and receive a refund of the amount of the customer deposit for the percentage of the work not performed prior to the notice of termination. In these arrangements, the Company concluded there are no enforceable rights and obligations after such notice period and therefore the consideration received or due from the customer that is subject to termination for convenience is recorded as customer deposit liabilities.
The payment terms and conditions vary by contract; however, the Company’s terms generally require payment within 30 to 60 days from the invoice date. In instances where the timing of revenue recognition differs from the timing of payment, the Company elected to apply the practical expedient in accordance with ASC 606 to not adjust contract consideration for the effects of a significant financing component, as the Company expects, at contract inception, that the period between when promised goods and services are transferred to the customer and when the customer pays for those goods and services will be one year or less. As such, the Company determined its contracts do not generally contain a significant financing component.
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Costs to Obtain and Fulfill Contracts
Incremental costs of obtaining a contract include only those costs that are directly related to the acquisition of contracts, including sales commissions, and that would not have been incurred if the contract had not been obtained. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it is expected that the economic benefit and amortization period will be longer than one year. Costs to obtain contracts were not material in the periods presented. The Company recognizes an asset for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. Costs to fulfill contracts were not material in the periods presented. The Company elected to apply the practical expedient in accordance with ASC 340, which allows the Company to expense commissions as incurred when the contract term is twelve months or less in total.
Remaining Performance Obligation
Our remaining performance obligations are comprised of product and services revenue not yet delivered.
Stock- Based Compensation
The Company accounts for its stock-based compensation arrangements at fair value. Fair value of each option grant is estimated on the date of grant using either the Black-Scholes-Merton Model for stock options granted or using the fair value of a common stock for grants and restricted stock units. The calculated fair value is recognized as an expense over the requisite service period, net of estimated forfeitures, using the straight-line method.
Income Taxes
The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts for financial reporting purposes and the tax bases of assets and liabilities, as well as for loss and tax credit carryforwards. The deferred assets and liabilities are measured using the statutorily enacted tax rates anticipated to be in effect when those tax assets and liabilities are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.
A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income in assessing the need for a valuation allowance.
The Company’s tax positions are subject to income tax audits by multiple tax jurisdictions. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not, that the position will be sustainable upon examination by the taxing authority, including resolution of any related appeals or litigation processes. This evaluation is based on all available evidence and assumes that the tax authorities have full knowledge of all relevant information concerning the tax position. The tax benefit recognized is measured as the largest amount of benefit which is more likely than not (greater than 50% likely) to be realized upon ultimate settlement with the taxing authority. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense. The Company makes adjustments to these reserves in accordance with the income tax guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences may affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s financial condition and operating results.
Recent Accounting Pronouncements
For information on recently issued accounting pronouncements, refer to Note 1. Description of Business and Summary of Significant Accounting Policies in our condensed consolidated financial statements included elsewhere under Item 1 in this report.
As a Nasdaq listed public reporting company, we are required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an “emerging growth company”, we may take advantage of certain exemptions from
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various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies”, including but not limited to:
| ● | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; |
| ● | taking advantage of extensions of time to comply with certain new or revised financial accounting standards; |
| ● | being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and |
| ● | being exempt from the requirement to hold a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. |
We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We may remain an “emerging growth company” for up to five years, beginning January 26, 2022, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an “emerging growth company” as of the following December 31.
In summary, we are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies” and therefore, our shareholders could receive less information than they might expect to receive from more mature public companies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company, and thus, this section is not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving their desired control objectives. Based on the evaluation Company’s disclosure controls and procedures as of the end of the period covered by this report, its Chief Executive Officer and Chief Financial Officer concluded that, as of such date, its disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
In connection with the audit of our financial statements for the year ended December 31, 2021, our independent auditor identified material weaknesses in our internal control over financial reporting. The material weaknesses related to certain corporate finance and accounting oversight functions residing over the detection of errors that were present within the Company’s calculation of stock-based awards as well as the financial reporting close process.
During the three months ended March 31, 2022 covered by this report, there have been no changes in Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.
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Notwithstanding this material weakness, management has concluded that our financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in accordance with GAAP.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we are involved in various claims and legal actions arising in the ordinary course of business. To the knowledge of our management, there are no legal proceedings currently pending against us which we believe would have a material effect on our business, financial position, or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened.
Item 1A. Risk Factors.
Not applicable.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended March 31, 2022, the Company sold the following securities in transactions not registered under the Securities Act:
|
| Number of |
|
|
|
|
|
|
| Date Closed | |||||
Offering | Date | shares | Class of | Proceeds | Use of | (if Open, | |||||||||
Type |
| Intermediary |
| Commenced |
| issued |
| Securities |
| Raised |
| Proceeds |
| N/A) | |
2021 Reg CF |
| Dalmore Group LLC |
| 8/25/2021 |
| 1,137,975 |
| Units comprised of Class A Common Stock and Warrants to acquire Class A Common Stock | $ | 4.6 million |
| Product development, marketing, and working capital |
| 2/18/2022 | |
2021 Reg D |
| n/a |
| 8/25/2021 |
| 240,989 |
| Units comprised of Class A Common Stock and Warrants to acquire Class A Common Stock | $ | 1.0 million |
| Product development, marketing, and working capital |
| 2/1/2022 | |
2021 Reg S |
| n/a |
| 8/25/2021 |
| 56,104 |
| Units comprised of Class A Common Stock and Warrants to acquire Class A Common Stock | $ | 0.2 million |
| Product development, marketing, and working capital |
| 1/7/2022 | |
2022 Reg A | n/a | 01/26/2022 | 14,250 | Shares of Class A Common Stock issuable upon exercise of Reg CF, Reg D, and Reg S Warrants | $ | 57,000 | Product development, marketing, and working capital | N/A | |||||||
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Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.
3.1 |
| |
3.2 | ||
3.3 | ||
3.4 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
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10.13 | ||
10.14 | ||
10.15 | ||
10.16 | ||
10.17 | ||
10.18 | ||
10.19 | ||
31.1* | ||
31.2* | ||
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 12, 2022 | |
/s/ Alex Valdes | |
Alex Valdes, Principal Financial Officer, Principal Accounting Officer | |
Date: May 12, 2022 |
/s/ Andrew Gowasack | |
Andrew Gowasack, President, Director | |
Date: May 2008 12, 2022 |
/s/ David Story | |
David Story, Director | |
Date: May 12, 2022 |
/s/ William McClintock | |
William McClintock, Director | |
Date: May 12, 2022 |
/s/ Mark Birschbach | |
Mark Birschbach, Director | |
Date: May 12, 2022 |
/s/ Joshua Allen | |
Joshua Allen, Director | |
Date: May 12, 2022 |
/s/ Kristin Stafford | |
Kristin Stafford, Director | |
Date: May 12, 2022 |
/s/ Berta Pappenheim | |
Berta Pappenheim, Director | |
Date: May 12, 2022 |
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