T Stamp Inc
For the period ended Mar 31, 2025. Filed May 15, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
IDAI$2.26+3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-15.
0001718939-24-000202
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001718939-25-000109
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 126 previous paragraphs and 135 current paragraphs.
58 unchanged; 25 reworded; 52 added; 39 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 23 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (52)
Current report
Trust Stamp was incorporated under the laws of the State of Delaware on April 11, 2016 as “T Stamp Inc.” T Stamp Inc. and its subsidiaries (“Trust Stamp”, “we”, or the “Company”) develop and market identity authentication software for enterprise and government partners and peer-to-peer markets.
Current report
•Expanding our IP portfolio to strengthen our existing position related to presentation attack detection and tokenization and include implementations such as:
Current report
i. Embedded ownership verification for cryptographic assets, a technology that we believe to have significant potential with the expansion in the ownership of crypto-assets including potential deregulation (or loosening or clarification of regulation) in the United States together with the global growth of stable coins including Central Government Digital Currencies.
Current report
ii. A simple user interaction utility called “Shape Overlay” that augments biometric verification and combats deepfakes and injection attacks by having the user interact in real-time with their captured image.
Current report
iii. Stable Key (or “Stable IT2”) which is a revolutionary technology that generates a “key” directly from the biometric of the user which key has a mathematical correlation to all of the user's passwords, PINS, and other “secrets” for every account and use case meaning that those secrets never need to be stored in their entirety.
Current report
iv. A patent for “Interoperable Biometric Representations” that potentially breaks vendor lock-in by allowing users of biometric technologies to compare like-modality templates from different sources.
Current report
•Strengthening our international 3rd party cybersecurity and data handling certifications by adding SOC2 certification to our NCSC Cyberessentials Plus certification and obtaining a renewed D-Seal certification (the world’s first certification that includes not just data security but also the ethical and responsible use of data).
Current report
•Opening an office in Tokyo (with funding from the City of Tokyo and the Japanese government) to pursue opportunities in the APAC region.
Current report
•Retaining an investment bank to explore strategic partnership and M&A opportunities across multiple sectors.
Current report
Equity Distribution Agreement with Maxim
Current report
On February 25, 2025, the Company entered into an Equity Distribution Agreement (the “Agreement”), with Maxim Group LLC (“Maxim”), pursuant to which the Company may offer and sell, from time to time, through Maxim, as sales agent or principal, shares of its common stock, $0.01 par value per share (the “Common Stock”).
Current report
Subject to the terms and conditions of the Agreement, Maxim will use commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations and the rules of the Nasdaq Capital Market to sell shares of the Company’s Common Stock from time to time based upon the Company’s instructions, including any minimum price, time or size limits specified by the Company. Under the Agreement, Maxim may sell shares by any method deemed to be an “at the market” offering as defined in Rule 415 under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any other method permitted by law, including in privately negotiated transactions. Maxim’s obligations to sell shares under the Agreement are subject to satisfaction of certain conditions, including customary closing conditions for transactions of this nature. The Company will pay Maxim a commission of 3.0% of the aggregate gross proceeds from each sale of shares and has agreed to reimburse Maxim for certain specified expenses of up to $40,000, aggregate, in addition to up to $3,000 quarterly for the Maxim’s counsel’s fees and any incidental expenses to be reimbursed by us. We have agreed to provide indemnification and contribution to Maxim against certain civil liabilities, including liabilities under the Securities Act.
Current report
The Company is not obligated to make any sales of its Common Stock under the Agreement and no assurance can be given that the Company will sell any shares under the Agreement, or, if it does, as to the price or amount of shares that the Company will sell, or the dates on which any such sales will take place. The Agreement will terminate upon the earlier of (i) the sale of all shares having an aggregate offering price of $6,196,000 pursuant to the Agreement, (ii) twelve (12) months from the date of the Agreement, (iii) mutual termination by both Maxim and the Company upon the provision of fifteen (15) days written notice, and (iv) termination of the Agreement as otherwise permitted therein.
Current report
Sales of shares of Common Stock under the Agreement will be made pursuant to the Company’s effective registration statement on Form S-3 (Registration No. 333-271091) (the “Registration Statement”) which was declared effective April 12, 2023 and a related prospectus supplement which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 25, 2025 (the “ATM Prospectus”). The ATM Prospectus relates to the offering of up to $6,196,000 worth of shares of the Company’s Common Stock from time to time. The issuance and sale, if any, of Common Stock under the Agreement is subject to the effectiveness of the Registration Statement and “baby shelf” limitations under General Instruction I.B.6. of Form S-3.
Current report
Appointment of New Chief Financial Officer
Current report
On January 17, 2025, the Board of Directors of the Company appointed Lance Wilson as the Company’s new Chief Financial Officer ("CFO"), to fill the vacancy in the position left after Alex Valdes’s resignation as Chief Financial Officer effective January 2, 2025.
Current report
Lance Wilson, a licensed Certified Public Accountant in Georgia, first joined the Company in 2021, serving in various financial capacities, most recently as the Senior Vice President of Accounting & Finance at Trust Stamp from July 2024 until being appointed to his role as CFO. Lance leads all external financial reporting, including SEC filings and technical accounting research and implementation. Lance has played a key role in multiple initiatives, including a successful public fundraising campaign that resulted in Trust Stamp’s NASDAQ listing in January 2022.
Current report
Prior to joining Trust Stamp, Lance served as the Financial Reporting Manager at Cousins Properties (NYSE: CUZ) from July 2020 to July 2021, where he managed all SEC filings, technical accounting projects, and audit engagements. Prior to that, he served in various accounting roles at The North Highland Company, Change Healthcare (formerly McKesson Technology Solutions), and BDO-USA, LLC. Lance holds a Master of Accountancy degree and a Bachelor of Science in Commerce and Business Administration from The University of Alabama.
Current report
Lance Wilson has no family relationships with any other director, executive officer, or person nominated or chosen by the Company to become a director or executive officer.
Current report
Lance Wilson and the Company entered into an Executive Employment Agreement (the “Agreement”), with an effective date of January 1, 2025, for his role as Chief Financial Officer (CFO) of the Company. The Agreement outlines Mr. Wilson’s ongoing responsibilities, including oversight of the Company’s financial integrity, regulatory compliance, and multicurrency financial reporting. It also details his leadership in investor relations and compliance with applicable SEC, Nasdaq, and Sarbanes-Oxley requirements.
Current report
Under the Agreement, Mr. Wilson will receive an annual base salary of $182,250, subject to periodic review, and will be eligible for an annual equity bonus of at least 10% of his base salary in the form of restricted stock units. The Agreement also includes provisions for reimbursement of business expenses, participation in Company benefit plans, and relocation assistance if applicable.
Current report
The Agreement has an open-ended term, continuing until either party provides 120 days’ written notice of termination. It also specifies termination provisions, including compensation and in the event of termination by the Company without cause or by Mr. Wilson for good reason, such as severance equal to up to 36 months of base salary and accelerated vesting of equity awards in certain circumstances, including a change in control. Termination for cause or voluntary resignation without good reason would result in payment of only accrued compensation and benefits through the termination date.
Current report
The Agreement contains customary confidentiality and non-disclosure provisions related to the Company’s trade secrets and other sensitive information.
Current report
The foregoing description of the Agreement is intended to be a summary, and is qualified in its entirety by reference to the Agreement itself, a copy of which was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on January 21, 2025.
Current report
Securities Purchase Agreement dated January 6, 2025
Current report
On January 6, 2025, the Company entered into a securities purchase agreement (the “January 2025 SPA”) with an institutional investor (the “Selling Stockholder”), pursuant to which the Company agreed to issue and sell to the Selling Stockholder (i) in a registered direct offering, (a) 175,000 shares of Class A Common Stock (the “January 2025 Shares”); and (b) Pre-Funded Warrants (the "January 2025 Pre-Funded Warrants") to purchase 239,202 shares of the Company’s Class A Common Stock at an exercise price of $0.001 per share and (ii) in a concurrent private placement, common stock purchase warrants consisting of Series A common warrants exercisable for up to 414,202 shares of Class A Common Stock at an exercise price of $8.45 per share of Class A Common Stock (the “January 2025 Series A Warrants”), and Series B common warrants exercisable for up to 207,101 shares of Class A Common Stock at an exercise price of $8.45 per share (the “January 2025 Series B Warrants”, and collectively with the January 2025 Series A Warrants, the “January 2025 Private Placement Warrants”). The offering price per January 2025 Share and respective January 2025 Private Placement Warrants was $8.45, and the offering price per Pre-Funded Warrant was $8.449.
Current report
The securities to be issued in the registered direct offering were offered pursuant to the Company’s shelf registration statement on Form S-3 (File 333-271091) (the “Shelf Registration Statement”), initially filed by the Company with the SEC under the Securities Act on April 3, 2023 and declared effective on April 12, 2023. The January 2025 Pre-Funded Warrants are immediately exercisable upon issuance and will remain exercisable until all of the January 2025 Pre-Funded Warrants are exercised in full.
Current report
The terms of the Series A and January 2025 Series B Warrants that comprise the January 2025 Private Placement Warrants are identical, except that the January 2025 Series A Warrants provide for additional protections for the Selling Stockholder in the event of a “Fundamental Transaction” while the January 2025 Series A Warrants are outstanding (which includes, but is not limited to, merger transactions or a sale of substantially all of the Company’s assets). In such an event, then if holders of the Company’s Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Selling Stockholder will be given the same choice as to the consideration it receives upon any exercise of either the Series A or January 2025 Series B Warrants following such Fundamental Transaction. Notwithstanding anything to the contrary, for the January 2025 Series A Warrants, in the event of a Fundamental Transaction, the Selling Stockholder may require the Company or its successor to repurchase the January 2025 Series A Warrants for its Black-Scholes Value (as defined in the Series A Warrant) in cash. This right can be exercised concurrently with, or within 30 days following, the consummation or public announcement of the transaction. If the Fundamental Transaction occurs outside the Company’s control, such as in a hostile takeover or an unapproved transaction, the holder is entitled to receive consideration equivalent in type and proportion to that offered to common stockholders, also calculated based on the Black-Scholes model. Additionally, if no consideration is offered to the Company’s stockholders in the transaction, the holder is deemed to receive common stock of the successor entity, preserving the January 2025 Series A Warrants’ value.
Current report
The January 2025 Private Placement Warrants are immediately exercisable upon issuance, and will expire five years thereafter, and in certain circumstances may be exercised on a cashless basis. If we fail for any reason to deliver shares of Class A Common Stock upon the valid exercise of the January 2025 Private Placement Warrants, subject to our receipt of a valid exercise notice and the aggregate exercise price, by the time period set forth in the January 2025 Private Placement Warrants, we are required to pay the applicable holder, in cash, as liquidated damages as set forth in the January 2025 Private Placement Warrants. The January 2025 Pre-Funded Warrants and January 2025 Private Placement Warrants also include customary buy-in rights in the event we fail to deliver shares of common stock upon exercise thereof within the time periods set forth in the January 2025 Pre-Funded Warrants and January 2025 Private Placement Warrants.
Current report
On January 8, 2025, the Company closed the registered direct offering and the private placement offering (collectively, the “January 2025 Offering”), raising gross proceeds of approximately $3.50 million before deducting placement agent fees and other offering expenses payable by the Company. In the event that all January 2025 Private Placement Warrants are exercised for cash, the Company will receive additional gross proceeds of approximately $5,250,250. The Company’s primary use of the net proceeds will be for working capital, capital expenditures and other general corporate purposes.
Current report
Pursuant to the terms of the January 2025 SPA, the Company is required within 30 days of January 6, 2025 to file a registration statement on Form S-1 or other appropriate form if the Company is not then S-1 eligible registering the resale of the shares of Class A Common Stock issued and issuable upon the exercise of the January 2025 Private Placement Warrants. The Company is required to use commercially reasonable efforts to cause such registration to become effective within 91 days of the closing of the January 2025 Offering, and to keep the registration statement effective at all times until no investor owns any January 2025 Private Placement Warrants or shares issuable upon exercise thereof.
Current report
Pursuant to the terms of the January 2025 SPA, from January 6, 2025 until 30 days after closing, subject to certain exceptions, we may not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents, or file any registration statement or any amendment or supplement thereto, other than a prospectus supplement for the Shelf Registration Statement. In addition, from January 6, 2025 until 45 days after closing, we are prohibited from effecting or entering into an agreement to effect any issuance of common stock or common stock equivalents involving a variable rate transaction (as defined in the January 2025 SPA).
Current report
The foregoing description of the January 2025 SPA, January 2025 Pre-Funded Warrants, January 2025 Series A Warrants, and January 2025 Series B Warrants is intended to be a summary, and is qualified by reference to the full text of each of these documents, which were filed as exhibits 10.1, 4.1, 4.2, and 4.3, respectively to the Company's Current Report on Form 8-K filed with the SEC on January 10, 2025.
Current report
In December 2024 we announced a go-to-market agreement with a leading provider of software solutions to the U.S. Federal Government and we are currently pursuing a revised go-to-market strategy based on the priorities of the administration.
Current report
Africa
Current report
The African Continental Free Trade Area (AfCFTA) is a landmark agreement that binds 54 African nations and an estimated 1.47 billion people into the world’s largest free trade area. AfCFTA has significant economic potential for Africa, as it aims to create a single market for goods and services across 55 countries, representing over 1.3 billion people with a combined GDP of approximately $3.4 trillion. By reducing trade barriers, the agreement could contribute an additional $450 billion to Africa’s GDP by 2035, lifting 30 million people out of extreme poverty and increasing the incomes of 68 million people, according to the World Bank. Over the next decade, Africa’s share of the world population is projected to reach 21%, up from 13% in 2000. More than 50% of young people entering the workforce will be in sub-Saharan Africa. By 2050, the region’s working-age population will still be rising while it is falling virtually everywhere else, and Africa will be home to an estimated 2.5 billion people, or 25% of all humanity.
Current report
Globally, 850 million people did not have identity documents in 2023, with 542 million in Africa. Of that 542 million, 95 million are children who have never had their birth recorded, and 120 million are children without a birth certificate. The single initiative of implementing universal tokenized identity in African countries has the potential to significantly boost the implementing countries' economies. According to the United Nations Economic Commission for Africa (UNECA), countries adopting digital ID programs could unlock economic value equivalent to 3% and 13% of their GDP by 2030.
Current report
A transition to digital records for births, marriages, deaths, and electronic identity documents represents a transformative opportunity for developing nations and builds a foundation for economic growth. Establishing a robust digital infrastructure for vital records enhances administrative efficiency, fosters inclusive development, strengthens governance, and unlocks economic potential. Yet, developing African countries are often unable or unwilling to fund the initial capital expenditure required to make the transition.
Current report
Trust Stamp has participated in financial inclusion projects in Africa for a number of years through Mastercard’s implementation of our technology and we established a regional R&D center in Rwanda in 2021 to focus on ensuring equity in the development and implementation of biometric technology in Africa. In 2023 we started direct outreach to African countries to initiate national-level digital identity programs and we are in serious and extended dialog with two countries as well as a pilot with Africa’s largest provider of mobile telecommunications services. With the assistance of the Mastercard Lighthouse MASSIV program, we intend to build upon this work to maximize the opportunities to meet the critical need for secure identity programs for both governments and NGOs.
Current report
Trust Stamp develops proprietary artificial intelligence-based technology solutions that utilize machine learning, computer vision, cryptography, and data analysis to protect sensitive data and support identity verification. The Company’s products are designed to prevent fraud, enhance privacy, enable automated decision-making, and improve access to digital services across global markets.
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Removed paragraphs (39)
Previous report
Negotiating the sale of certain assets that have resulted in continuous operating losses to raise operating capital and eliminate the cash flow deficits associated with the assets. This will allow a sharpened focus on and investment in products with the best promise for profitable revenue generation. The negotiations are very advanced, and an announcement will be made when appropriate.
Previous report
Securities Purchase Agreement and Registration Rights Agreement with DQI Holdings, Inc.
Previous report
On October 27, 2024, the Company entered into a Securities Purchase Agreement the (“SPA”) with DQI Holdings, Inc. (“DQI”). Pursuant to the terms of the SPA, the Company agreed to sell, and DQI agreed to purchase from, at the closing of the SPA (the “Closing”) and upon the terms and subject to the conditions set forth in the SPA, 1,363,636.36 shares of Class A Common Stock, par value $0.01 of the Company (the “Class A Common Stock”) at $0.22 per share, subject to adjustment in certain circumstances. On October 28, 2024 (the “Closing Date”), the Closing of the SPA occurred, and the Company awarded 1,363,636.36 shares of Class A Common Stock to DQI (the “Shares”) in exchange for a cash payment of $300,000. The Closing of the SPA was subject to a number of customary closing conditions, including, but not limited to, the Company’s entry into a Registration Rights Agreement, the execution of which were conditions to the Closing of the SPA.
Previous report
Pursuant to the SPA, the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with DQI on October 27, 2024, pursuant to which the Company must file a registration statement on Form S-3 (or, if the Company is ineligible to use a Form S-3, another appropriate form) with the Securities and Exchange Commission (the “SEC”) to register for resale by DQI of the Shares, with such registration statement becoming effective 5 days after the date the stockholders of the Company ratify, by vote, the approval of that certain Securities Purchase Agreement dated July 13, 2024 between our Company and DQI and all transactions contemplated thereunder, including, but not limited to, the sale of 4,597,701 shares of our Class A Common Stock to DQI.
Previous report
Once the registration statement is filed, the Company must obtain SEC effectiveness of the registration statement within 45 days of the filing date – however, in the event of a “full review” by the SEC of the registration statement, the Company will have 75 days to obtain SEC effectiveness of the registration statement.
Previous report
The foregoing summary of the Registration Rights Agreement is not complete, and is qualified by reference to a copy of the Registration Rights Agreement included as Exhibit 10.33 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.
Previous report
Election of New Board Member
Previous report
On November 2, 2024, the Board of Directors of the Company elected Andrew Scott Francis, the current Chief Technology Officer of the Company, to the Board of Directors, effective immediately, to fill a vacancy on the Board of Directors left from the resignation of Joshua Allen from the Company's Board of Directors on September 26, 2024. Andrew Scott Francis will be a member of the “Class III” directors of the Company.
Previous report
Adjusted EBITDA income (loss) (non-GAAP) for the three months ended September 30, 2024, decreased to a $2.14 million loss from a $316 thousand gain for the three months ended September 30, 2023. During the three months ended September 30, 2024, the Company signed a license agreement with Boumarang valued at $5.00 million and accounted for under other income. This figure was deducted from the Net income to arrive at the Adjusted EBITDA loss (non-GAAP), which is the primary driver for the significant change in Adjusted EBITDA income (loss) (non-GAAP) for the three months ended September 30, 2024 compared to the prior period. The $5.00 million was partially offset by other expense including a $1.17 million loss related to the difference in the cash paid for the warrants and the FMV of the warrants issued on September 3, 2024 and a loss of $360 thousand related to the difference in the cash paid for the warrants and the FMV of the warrants issued on September 10, 2024. Additionally, during the three months ended September 30, 2023, the Company recognized non-refundable license revenue advances from Interactive Global Solutions (“IGS”) for the provision of software of $2.51 million. This was a one-time occurrence which significantly improved our net revenues during the three months ended September 30, 2023 - and because there was no similar transaction during the three months ended September 30, 2024, was a contributor to the significant change in Adjusted EBITDA income (loss) (non-GAAP) for the three months ended September 30, 2024. See “Results of Operations” below for further discussion on the drivers behind the increase in Adjusted EBITDA income (loss) (non-GAAP) during the three months ended September 30, 2024.
Previous report
Adjusted EBITDA income (loss) (non-GAAP) for the nine months ended September 30, 2024, increased by 64.25%, to a $6.65 million loss from a $4.05 million loss for the nine months ended September 30, 2023. The overall increase in Adjusted EBITDA income (loss) (non-GAAP) was driven primarily by the license agreement with Boumarang valued at $5.00 million and accounted for under other income. This figure got deducted from the Net loss before taxes to arrive at the adjusted EBITDA loss. The $5.00 million was partially offset by other expense including a $1.17 million loss related to the difference in the cash paid the warrants and the FMV of the warrants issued on September 3, 2024 and a loss of $360 thousand related to the difference in the cash paid for the warrants and the FMV of the warrants issued on September 10, 2024. Additionally, the decrease of $2.40 million or 60.22% in Net revenue as a result of recognizing the IGS non-refundable license revenue advances for the provision of software of $2.51 million during the nine months ended September 30, 2023 also is a factor in increase in Adjusted EBITDA loss during the nine months ended September 30, 2024 compared to the prior period, as there was no similar one-time transaction that occurred during the nine months ended September 30, 2024 that significantly increased net revenues. See “Results of Operations” below for further discussion on the drivers behind the increase in Adjusted EBITDA loss (non-GAAP) during the nine months ended September 30, 2024.
Previous report
During the three months ended September 30, 2024, Net revenue decreased to $511 thousand, or an 83.33% decrease from the Net revenue of $3.07 million for the three months ended September 30, 2023. During the three months ended September 30, 2024, the $511 thousand in Net revenue consisted of $339 thousand from an S&P 500 bank, $90 thousand from Mastercard, and various other customers for the remaining $82 thousand. The majority of the decrease in net revenue compared to the three months ended September 30, 2023 relates to the termination of the September 15, 2022 Master Services Agreement with IGS ("IGS Contract") which caused the Company to recognize non-refundable license revenue advances from IGS under the IGS Contract for the provision of software of $2.51 million. This was a one-time occurrence which significantly improved our net revenues during the three months ended September 30, 2023 and therefore is the primary reason for the stark decrease in net revenues of the Company during the three months ended September 30, 2024.
Previous report
During the three months ended September 30, 2024, the Company generated $314 thousand total revenue from customers using the Orchestration Layer. This includes implementing the Orchestration Layer platform for 6 new enterprise customers through FIS on the Software-as-a-Service (SaaS) platform during the three months ended September 30, 2024. In comparison, during the three months ended September 30, 2023, the Company generated $139 thousand total revenue from Orchestration Layer customers. Since its launch in the third quarter of 2022, there have been 73 enterprise customers on the Orchestration Layer platform, including 60 financial institutions, as of September 30, 2024. Additionally, revenue from the Orchestration Layer's flagship enterprise customer grew 0.51% between the comparative periods as a result of transitioning and launching the customer on the Orchestration Layer platform. Orchestration Layer's flagship enterprise customer is already in full production and generating monthly recurring revenue with gross margins in excess of 79.64%. Finally, the Company S&P 500 bank customer completed its transition to an augmented version of the SaaS platform during the three months ended September 30, 2024.
Previous report
In both periods, SG&A expenses were primarily comprised of payroll and other compensation expenses to our Company's workforce.
Previous report
The Company’s Operating loss increased by $2.65 million or 12131.29% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in Operating loss was mainly related to a decrease in net revenue. This decrease related to the termination of the September 15, 2022 Master Services Agreement with IGS ("IGS Contract") which resulted in $2.51 million in Net revenue during the three months ended September 30, 2023 and the release from future contractual obligations for maintenance and upgrades as a result of the termination of the IGS Contract.
Previous report
Other income increased by $5.00 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily due to the Company agreeing to grant a non-exclusive license to Boumarang to exploit certain of the Company’s patents for the purpose of producing, selling, marketing, and distributing drones. As consideration for the grant of the non-exclusive license, Boumarang agreed to pay the Company a non-refundable license fee of $5.00 million in the form of a prepaid warrant issued by Boumarang to the Company for 5,000,000 shares of common stock of Boumarang at $1.00 per share.
Previous report
Other expense increased by $1.53 million for the three months ended September 30, 2024, compared to thethree months ended September 30, 2023. The Company incurred$1.17 million duringthe three months ended September 30, 2024 due tothe Company entering into a Termination and Release Agreement under which the transaction entered into between the Company andinstitutional investor that terminated the remaining 2,000,000 stock purchase warrants in Warrant Band 1,600,000 stock purchase warrants in Warrant C. In consideration of the termination of the Transaction Documents, the Company made a$1,650,000 payment to the institutional investor. In addition, the Company recorded a $360 thousand inducement expense during thethree months ended September 30, 2024 as a result of the Company entering into a securities purchase agreement on September 10, 2024 as an inducement to an a previously executed securities purchase agreement dated July 13, 2024.
Previous report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Previous report
Net revenue
Previous report
During the nine months ended September 30, 2024, Net revenue decreased by $2.40 million, or a 60.22% decrease from the Net revenue of $3.99 million for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, the $1.59 million in Net revenue consisted of $991 thousand from an S&P 500 bank, $324 thousand from Mastercard, and various other customers for the remaining $269 thousand. The majority of the decrease in net revenue during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was due to the termination of the September 15, 2022 Master Services Agreement with IGS ("IGS Contract"), which caused Company to recognize non-refundable license revenue advances from IGS under the IGS Contract for the provision of software of $2.51 million. This was a one-time occurrence which significantly improved our net revenues during the nine months ended September 30, 2023, and therefore is the primary reason for the stark decrease in net revenues of the Company during the nine months ended September 30, 2024.
Previous report
On the other hand, during the nine months ended September 30, 2024, the Company generated $922 thousand total revenue from customers using the Orchestration Layer including implementing the Orchestration Layer platform for 20 new enterprise customers added during the nine months ended September 30, 2024 through FIS on the Software-as-a-Service (SaaS) platform. In comparison, during the nine months ended September 30, 2023, the Company generated $346 thousand total revenue from Orchestration Layer customers. Since its launch in the third quarter of 2022, there have been 73 enterprise customers on the Orchestration Layer platform, including 60 financial institutions, as of September 30, 2024. Additionally, revenue from the Orchestration Layer's flagship enterprise customer grew 15.32% between the comparative periods as a result of transitioning and launching the customer on the Orchestration Layer platform. Orchestration Layer's flagship enterprise customer is already in full production and generating monthly recurring revenue with gross margins in excess of 82.32%. Finally, the Company's S&P 500 bank customer completed its transition to an augmented version of the SaaS platform during the nine months ended September 30, 2024.
Previous report
Cost of services
Previous report
Cost of services (“COS”) increased by $137 thousand or 20.71% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase during this period was primarily driven by costs of $194 thousand for the expansion of our proof of identity solutions using a third-party as required for proof of identity contracts. The solution was not considered a cost of sale until the fourth quarter of 2023, thus, there were no expenses for this solution during the nine months ended September 30, 2023. Furthermore, an AWS Advanced Consulting Partner was not present during thenine months ended September 30, 2023 and this incurred an expense of$28 thousand during the three months ended September 30, 2024.
Previous report
On the other hand, the Company saw a slight decrease in service requests during the nine months ended September 30, 2024 resulting in an decrease of $62 thousand when compared to the nine months ended September 30, 2023. Apart from a decrease in service requests, less development hours were charged directly to cost of sales for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023.
Previous report
Research and development
Previous report
Selling, general, and administrative
Previous report
Selling, general, and administrative expense (“SG&A”) increased by $905 thousand, or 15.34%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase in SG&A expense was driven by a $1.30 million increase in salaries, stock-based compensation, payroll costs, and sales commissions during the nine months ended September 30, 2024. Included in the $1.30 million increase in salaries, stock-based compensation, payroll costs, and sales commissions is an increase of $702 thousand in SG&A during the nine months ended September 30, 2024 due to the timing of stock-based compensation awards.
Previous report
The Company also incurred a $141 thousand increase in IT services during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase is due to an AWS billing for usage not applied to a contract or used by the R&D team during the nine months ended September 30, 2024. Furthermore, there was a $109 thousand increase in SG&A when comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023 resulting from the reversal of out-of-period costs incurred during the nine months ended September 30, 2023 associated with carrying mobile hardware assets, reversed due to the cancellation of the related mobile hardware subscription. In addition, the Company had an increase in dues and subscriptions, due to continued business development and growth, of $70 thousand during the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. Other notable increases in SG&A for the nine months ended September 30, 2024 included a total increase of $93 thousand in travel costs and accounting and audit fees.
Previous report
The increases in SG&A were partially offset by notable reductions in SG&A for the nine months ended September 30, 2024 including a total reduction of $810 thousand in professional fees, management consulting and training, and office rent as direct result of the Company's recent non-personnel cost cutting initiative.
Previous report
In both periods, SG&A expenses were primarily comprised of payroll and other compensation expenses to our Company's workforce.
Previous report
Depreciation and amortization
Previous report
Depreciation and amortization (“D&A”) decreased by $49 thousand, or 8.16% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The primary driver for the decrease in D&A relates to the Company selling mobile hardware in April 2023. As a result of the sale, there is no expense for mobile hardware depreciation during the nine months ended September 30, 2024 and $30 thousand of expense for mobile hardware depreciation during the nine months ended September 30, 2023. Additionally, there was a decrease in D&A during the nine months ended September 30, 2024 due to fully depreciating the Pixelpin (a company we acquired in March 2021) intangible asset during the nine months ended September 30, 2024. There was amortization expense of $17 thousand during the nine months ended September 30, 2023 compared to $2 thousand during the nine months ended September 30, 2024.
Previous report
Operating loss
Previous report
The Company’s Operating loss increased by $3.17 million or 63.56% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase in Operating loss was mostly related to the termination of the September 15, 2022 Master Services Agreement with IGS ("IGS Contract") which resulted in $2.51 million decrease in Net revenue when comparing the nine months ended September 30, 2024 with the nine months ended September 30, 2023 and the release from future contractual obligations for maintenance and upgrades as a result of the termination of the IGS Contract.
Previous report
The Company also noted an increase of $767 thousand or 8.56% rise in operating expenses as a result of bolstering our sales resources and bringing in-house technical positions which led to increases in our SG&A expenses that outpaced Net revenue growth.
Previous report
Interest expense, net
Previous report
Interest expense, net increased by $120 thousand, or 402.95% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase in interest expense is primarily due to an increase of $88 thousand as a result of TSI entering into two subordinated business loans and security agreements during the nine months ended September 30, 2024.
Previous report
Furthermore, interest expense was also increased by a further $15 thousand as a result of the Malta loan interest rate increasing from 4.5% for the nine months ended September 30, 2023 to 6.5% for the nine months ended September 30, 2024. Additionally, the Company recorded $12 thousand in interest expense during the nine months ended September 30, 2024 for interest accrued on Malta's tax obligations. Interest earned decreased by $165 to $305 for the nine months ended September 30, 2024 from $470 for the nine months ended September 30, 2023.
Previous report
Other income increased by $4.97 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily due to the Company agreeing to grant a non-exclusive license to Boumarang to exploit certain of the Company’s patents for the purpose of producing, selling, marketing, and distributing drones. As consideration for the grant of the non-exclusive license, Boumarang agreed to pay the Company a non-refundable license fee of $5.00 million in the form of a prepaid warrant issued by Boumarang to the Company for 5,000,000 shares of common stock of Boumarang at $1.00 per share. In addition, there was an increase of $187 thousand for the gain from a settlement of a mobile hardware bill that was outstanding as of September 30, 2023, which we negotiated for a lower payment, and paid during the nine months ended September 30, 2024.
Previous report
Other expense increased by $1.53 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The Company incurred $1.17 million in unrealized loss due to the difference in the carrying value of the warrants and the fair market value of the warrants for the nine months ended September 30, 2024. In addition, the Company recorded a $360 thousand inducement expense as a result of the Company entering into a securities purchase agreement on September 10, 2024 as an inducement to an a previously executed securities purchase agreement dated July 13, 2024.
Reworded paragraphs (25)
Previous wording
Over the last 6-months, the Company has undertaken a multi-pronged process to position itself better to leverage the growing opportunities offered by the expanded use and acceptance of AI technologies. This process has included:
Current wording
Over the last year, while maintaining our strong emphasis on identity authentication for financial services, the Company has undertaken a multi-pronged process to position itself better to leverage the growing opportunities offered by the expanded capabilities, use, and acceptance of AI technologies. This process has included:
Previous wording
Reducing the size of the non-production-focused executive and consulting teams to reduce overhead for the 2025 calendar year.
Current wording
•Reducing the size of the non-production-focused executive and consulting teams to reduce overhead.
Previous wording
The foregoing description of the SPA does not purport to be complete and is qualified in its entirety by reference to the full text of the SPA, a copy of which is filed as Exhibit 10.32 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.
Current wording
The foregoing summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, which was filed as Exhibit 1.1 to the Company's Current Report on Form 8-K filed with the SEC on February 26, 2025.
Previous wording
The Shares were not registered under the Securities Act of 1933, as amended (the “Securities Act”), and were offered pursuant to an exemption from the registration requirements of the Securities Act provided under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.
Current wording
The January 2025 Private Placement Warrants (and the shares of Class A Common Stock issuable upon the exercise of the January 2025 Private Placement Warrants) were not registered under the Securities Act, and were offered pursuant to an exemption from the registration requirements of the Securities Act provided under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.
Previous wording
•The global market for Microfinance is estimated at $157 Billion in the year 2020, and is projected to reach $342 billion by 2026 according to the 2022 report titled “Microfinance - Global Market Trajectory & Analytics” published by Global Industry Analysts, Inc.
Current wording
•The global market for Microfinance is estimated at $157 Billion in the year 2020 and is projected to reach $342 billion by 2026 according to the 2022 report titled “Microfinance - Global Market Trajectory & Analytics” published by Global Industry Analysts, Inc. To accelerate our work in this market, the Company has joined the Mastercard Lighthouse MASSIV program designed to empower sustainability and social impact through strategic partnerships aiming to assist participants to scale on a global level.
Previous wording
The Company is developing products and working with partners and industry organizations in other sectors that offer significant market opportunities and has entered into go-to-market or licensing agreements, including global data location services, healthcare, IoT, automotive dealer services, and computer vision for UAV operations. We anticipate licensing our technology in numerous fields, typically through established partners who will integrate our technology into field-specific applications.
Current wording
The Company is developing products and working with partners and industry organizations in other sectors that offer significant market opportunities for our existing and pipeline IP and has entered into go-to-market or licensing agreements, including global data location services, healthcare, IoT, access control, smart home systems, and computer vision for UAV operations. We anticipate licensing our technology in numerous fields, typically through established partners who will integrate our technology into field-specific applications.
Previous wording
The Company’s initial business consisted of developing proprietary privacy-first identity solutions and implementing them through custom applications built and maintained for a few key customers. In 2022, the Company added to its product offerings a modular and highly scalable SaaS model with low-code or no implementation (“the Orchestration Layer”).
Current wording
The Company’s initial business consisted of developing proprietary privacy-first identity solutions and implementing them through custom applications built and maintained for a few key customers. In the fourth quarter of 2022, the Company added to its product offerings a modular SaaS model intended for low-code or no implementation (“the Orchestration Layer”). The Orchestration Layer has been successful in attracting interested customers with over sixty financial institutions onboarded as of the date of this report, but those institutions have been slow to go into full production which has impacted revenue expectations. An analysis of the slow adoption revealed that many of the institutions would need some level of customization and in fourth quarter of 2024 and first quarter of 2025, the Company has invested in modification of the modules to meet the broader range of needs and preferences identified by the enrolled institutions. Orchestration Layer 2.0 will be “relaunched” in the second quarter of 2025.
Previous wording
The Orchestration Layer is designed to be a one-stop-shop for Trust Stamp services and provides for easy integration to our products; chargeable on a per-use basis and is accelerating the Company’s evolution from being exclusively a custom solutions provider to also offering a modular and highly scalable SaaS model with low-code implementation.
Current wording
The Orchestration Layer is a low-code platform that is designed to be a one-stop shop for Trust Stamp services and provides easy integration to our products; chargeable on a per-use basis. The Orchestration Layer utilizes the Company’s 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 facilitates no-code and low-code implementations of the Company’s technology making adoption and updating faster and cost-effective for a broader range of potential customers.
Previous wording
The following table summarizes our consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023:
Current wording
The following table summarizes our unaudited condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024:
Previous wording
Cost of services (“COS”) increased by $16 thousand or 6.51% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase during this period was primarily driven by costs of $91 thousand for the expansion of our proof of identity solutions using a third-party as required for proof of identity contracts. The solution was not considered a cost of sale until the fourth quarter of 2023, thus, there were no expenses for this solution during the three months ended September 30, 2023. This increase was partially offset by a decrease of $79 thousand in internal development cost of sales for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Current wording
Cost of services (“COS”) increased by $6 thousand or 2.07% for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase during the three months ended March 31, 2025 was primarily driven by a $20 thousand increase in Cost of services related to the QID Master Services Agreement. This increase was partially offset by a decrease of $14 thousand in internal development cost of sales for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to decrease in service requests resulting from the Mastercard Software License reductions.
Previous wording
Research and development (“R&D”) expenses decreased by $36 thousand, or 5.90% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease in R&D expense during the three months ended September 30, 2024 was primarily driven by the decrease in outsourced software development with 10Clouds as the Company continued to transition this work internally which results in cost savings as internal work is more cost effective. Comparatively, outsourced software development costs decreased by 99.21% when comparing the three months ended September 30, 2024 to the three months ended September 30, 2023. In both periods, R&D expenses mainly were related to R&D payroll and other R&D compensation expenses.
Current wording
Research and development (“R&D”) expenses decreased by $15 thousand, or 3.23% for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in R&D expense during the three months ended March 31, 2025 was primarily driven by the decrease in outsourced software development with 10Clouds as the Company continued to transition this work internally which results in cost savings as internal work is more cost effective. Comparatively, outsourced software development costs decreased by 99.21% when comparing the three months ended March 31, 2025 to the three months ended March 31, 2024. In both periods, R&D expenses mainly were related to R&D payroll and other R&D compensation expenses.
Previous wording
Selling, general, and administrative expense (“SG&A”) increased by $128 thousand, or 6.25%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in SG&A expense was driven by a $270 thousand increase in salaries, stock-based compensation, payroll costs, and sales commissions during the three months ended September 30, 2024. Included in the $270 thousand was an increase of $236 thousand during the three months ended September 30, 2024 due to the timing of stock-based compensation awards. In addition, the Company incurred a $145 thousand increase in IT services costs during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase is due to an AWS billing for usage not applied to a contract or used by the R&D team during the three months ended September 30, 2024.
Current wording
Selling, general, and administrative expense (“SG&A”) decreased by $704 thousand, or 28.26%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in SG&A expense was driven by a $664 thousand decrease in salaries, stock-based compensation, payroll costs, and sales commissions during the three months ended March 31, 2025 compared to the prior period. The $664 thousand decrease includes a $161 thousand reduction in stock-based compensation awards during the three months ended March 31, 2025. Additionally, the sales team was reduced from 9 team members during the three months ended March 31, 2024 to 0 team members during the three months ended March 31, 2025. Similarly, the EVP of Mergers and Acquisitions left the Company in December 2024 and was not subsequently replaced and the CFO role was vacated in January 2025 and filled internally while the vacant role left was not subsequently replaced.
Previous wording
The increases in SG&A were offset by net variance reductions in SG&A for the three months ended September 30, 2024 including a total reduction of $305 thousand in professional fees, marketing, travel costs, dues and subscription, office rent, and taxes.
Current wording
The decreases in SG&A were partially offset by net variance increases for accounting and audit fees, rent and taxes amounting to $91 thousand for the three months ended March 31, 2025.
Previous wording
Depreciation and amortization (“D&A”) decreased by $8 thousand, or 4.31% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The primary driver for the decrease in D&A is due to fully depreciating the Pixelpin (a company we acquired in March 2021) intangible asset during the three months ended September 30, 2024. There was $0 of Pixelpin amortization expense during the three months ended September 30, 2024 compared to $6 thousand during the three months ended September 30, 2023.
Current wording
Depreciation and amortization (“D&A”) decreased by $2 thousand, or 1.02% for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The primary driver for the decrease in D&A is due to fully depreciating the Pixelpin (an asset acquired in March 2021) intangible asset during the three months ended March 31, 2024. There was $0 of Pixelpin amortization expense during the three months ended March 31, 2025 compared to $6 thousand during the three months ended March 31, 2024. The Pixelpin asset balance was fully depreciated in February 2024.
Previous wording
Interest expense, net increased by $105 thousand, or 1071.43% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in interest expense is primarily due to $88 thousand of interest expense incurred with respect to interest due to two subordinated business loans and security agreements that the Company entered into during the three months ended September 30, 2024. The Company also recorded $8 thousand in interest expense during the three months ended September 30, 2024 for interest accrued on Malta's tax obligations. Separately, the Company also had an increase of $5 thousand as a result of the Malta loan interest rate increasing from 4.5% for the three months ended September 30, 2023 to 6.5% for the three months ended September 30, 2024.
Current wording
Interest expense, net increased by $5 thousand, or 27.20% for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in interest expense is primarily due to $13 thousand of interest expense incurred with respect to interest due to the Sentilink loan that the Company entered into on November 13, 2024 and was fully paid in January 2025. This increase was partially offset by the decrease of $8 thousand as a result of the Malta loan interest rate decreasing from 6.5% for the three months ended March 31, 2024 to 5.15% for the three months ended March 31, 2025.
Previous wording
The Company recognized a gain in Change in fair value of warrant liability during the three months ended September 30, 2024 of $1 thousand compared to a loss of $2 thousand during the three months ended September 30, 2023. This change is based on the fair value assessment and adjustment for one warrant liability as described in Note 3 to the unaudited condensed consolidated financial statements provided under Item 1 of this report.
Current wording
The Company recognized a gain in Change in fair value of warrant liability during the three months ended March 31, 2025 of $5 thousand compared to a gain of $2 thousand during the three months ended March 31, 2024. This change is based on the fair value assessment and adjustment for one warrant liability as described in Note 3 to the unaudited condensed consolidated financial statements provided under Item 1 of this report.
Previous wording
As of September 30, 2024, the Company had approximately $598 thousand cash in its banking accounts. The Company is generating revenues, but has not yet generated profits, with a net loss for the nine months ended September 30, 2024 of $4.59 million, Net operating cash outflows of $6.18 million for the same period, and an accumulated deficit of $55.45 million as of September 30, 2024. The Company is not currently generating sufficient amounts of cash to meet its requirements for the next 12 months. The Company anticipates that it will need to raise capital from equity and/or debt financings within the next six (6) months in order to fund its operations.
Current wording
As of March 31, 2025, the Company had approximately $1.14 million cash in its banking accounts. The Company is generating revenues, but has not yet generated profits, with a net loss for the three months ended March 31, 2025 of $2.16 million, Net operating cash outflows of $1.54 million for the same period, and an accumulated deficit of $63.62 million as of March 31, 2025. The Company is not currently generating sufficient amounts of cash to meet its requirements for the next 12 months. The Company anticipates that it will need to raise capital from equity and/or debt financings within the next six (6) months in order to fund its operations. The Company has not yet made any sales under its Equity Distribution Agreement with Maxim pursuant to which the Company may offer and sell, from time to time, through Maxim, as sales agent or principal, up to $6,196,000 worth of its shares of Common Stock, which the Company believes can be utilized to supplement its cash requirements going forward.
Previous wording
On November 13, 2024, the Company entered into a secured promissory note, which provides for a term loan to the Company with the principal amount of $3.00 million and interest rate of 14% per annum. Principal and any accrued but unpaid interest under this Note shall be due and payable upon demand of the Holder at any time after January 12, 2025. The note is secured by all of the Borrower’s assets, including receivables.
Current wording
On November 13, 2024, the Company entered into a secured promissory note, which provides for a term loan to the Company with the principal amount of $3.00 million and interest rate of 14% per annum. Principal and any accrued but unpaid interest under this note shall be due and payable upon demand of the noteholder at any time after January 12, 2025. The note is secured by all of the Borrower’s assets, including receivables. The secured promissory note was fully repaid on January 10, 2025.
Previous wording
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits, with a Net loss for the nine months ended September 30, 2024 of $4.59 million, Net operating cash outflows of $6.18 million for the same period, and an Accumulated deficit of $55.45 million as of September 30, 2024.
Current wording
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits, with a net loss for the three months ended March 31, 2025 of $2.16 million, net operating cash outflows of $1.54 million for the same period, and an accumulated deficit of $63.62 million as of March 31, 2025.
Previous wording
The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023:
Current wording
The following table summarizes our cash flows for the three months ended March 31, 2025 and 2024:
Previous wording
Net cash flows from operating activities increased by 5.08% from $5.88 million during the nine months ended September 30, 2023, compared to $6.18 million during the nine months ended September 30, 2024. Of the $4.59 million net loss for the nine months ended September 30, 2024, there were various cash and non-cash adjustments that were added back to the Net loss to arrive at $6.18 million cash used for operating activities for the nine months ended September 30, 2024.
Current wording
Net cash flows used in operating activities decreased by 28.60% from $2.16 million during the three ended March 31, 2024, compared to $1.54 million during the three months ended March 31, 2025. Of the $2.16 million net loss for thethree months ended March 31, 2024, there were various cash and non-cash adjustments that were added back to the Net loss to arrive at $1.54 million cash used for operating activities for the three months ended March 31, 2025.
Previous wording
Those adjustments included the add back of $5.00 million related to non-cash investment gain, $360 thousand from loss on inducement agreements, $1.17 million due to the termination of a common stock warrant agreement, $957 thousand related to stock-based compensation mainly due to the timing of stock-based compensation awards. There was a $651 thousand increase in stock-based compensation during the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023 due to the timing of stock-based compensation awards. Additionally, there is an add back of $85 thousand in Deferred revenue mainly comprised of a Mastercard annual license fee that will be recognized over the remaining months in the current year in alignment with the service period. Cash and noncash add backs also included $547 thousand for non-cash Depreciation and amortization, and $311 thousand for cash received on Accounts receivable.
Current wording
Those adjustments included the add back of $61 thousand related to stock-based compensation mainly due to the timing of stock-based compensation awards. There was a $164 thousand decrease in stock-based compensation during the three months ended March 31, 2025 when compared to the three ended March 31, 2024 due to the reduction stock-based compensation awards. Another add back of $600 thousand is included for note receivable payments received from a license agreement with QID entered into on November 12, 2024. Additionally, there is an add back of $197 thousand in deferred revenue primarily related to QID revenue billed during the three months ended March 31, 2025 that will be recognized by the end of the current year, $119 thousand for prepaid expenses, and $183 thousand for non-cash depreciation and amortization.
Previous wording
The add backs were offset by reductions in certain cash and noncash adjustments including $162 thousand for the noncash settlement of mobile hardware liabilities, $387 thousand for Prepaid expenses, and $368 thousand from the increase in accruals.
Current wording
The add backs were offset by reductions in certain cash and noncash adjustments including $368 thousand for cash received on accounts receivable, and $187 thousand from the increase in accruals.
Previous wording
Net cash used in investing activities during the nine months ended September 30, 2024 was $687 thousand, compared to net cash of $180 thousand used in the nine months ended September 30, 2023. Cash used in investing activities during the nine months ended September 30, 2024 related primarily to continued investments in technologies intended to be capitalized and monetized over time. In addition, the Company continued to prioritize intellectual property, which produced seven (7) new pending patent applications and six (6) issued patents with the United States Patent and Trademark Office during the nine months ended September 30, 2024. Furthermore, on August 6, 2024, the Company made an investment in Boumarang, purchasing 100,000 shares of Boumarang's common stock at a price per share of $1.00 for a total investment amount of $100 thousand.
Current wording
Net cash used in investing activities during the three months ended March 31, 2025 was $230 thousand, compared to net cash of $156 thousand used in the three months ended March 31, 2024. Cash used in investing activities during the three months ended March 31, 2025 related primarily to continued investments in technologies intended to be capitalized and monetized over time.
Previous wording
During the nine months ended September 30, 2024, Net cash flows from financing activities was $4.37 million, compared to Net cash flows from financing activities of $8.03 million for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, the Company raised $3.99 million in net proceeds from a securities purchase agreement with institutional investors for the issuance of Class A Common Stock, pre-funded warrants, and common stock warrants. The Company also received $1.54 million from the exercise of warrants to common stock. See Note 3 to the unaudited condensed consolidated financial statements provided under Item 1 of this report for more details. In addition, the Company took out $845 thousand in loans payable and repaid $287 thousand during the nine months ended September 30, 2024. The increase to financing activities were offset by $1.65 million due the termination of a warrant agreement (also discussed in Note 3 to the unaudited condensed consolidated financial statements) and there was a $57 thousand in tax withholding payments for net issuances on employee equity compensation issued during the nine months ended September 30, 2024.
Current wording
During the three months ended March 31, 2025, Net cash flows from financing activities was $126 thousand, compared to Net cash flows from financing activities of $22 thousand for the three months ended March 31, 2024. During the three months ended March 31, 2025, the Company raised $3.21 million in net proceeds from a securities purchase agreement with an institutional investor for the issuance of Class A Common Stock, pre-funded warrants, and common stock warrants. In addition, the Company repaid the Sentilink secured promissory note payable in full including the principal balance of $3 million and interest of $69 thousand.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The Orchestration Layer is designed to be a one-stop-shop for Trust Stamp services and provides for easy integration to our products; chargeable on a per-use basis and is accelerating the Company’s evolution from being exclusively a custom solutions provider to also offering a modular and highly scalable SaaS model with low-code implementation.
Previous report — wording carried elsewhere
Research and development (“R&D”) expenses decreased by $226 thousand, or 12.47% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease in R&D expense during the nine months ended September 30, 2024 was primarily driven by the decrease in outsourced software development as the Company continued to transition this work internally which results in cost savings as internal work is more cost effective. Comparatively, outsourced software development costs decreased by 83.99% when comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023. In both periods, R&D expenses mainly were related to R&D payroll and other R&D compensation expenses.
Previous report — wording carried elsewhere
Change in fair value of warrant liability
Previous report — wording carried elsewhere
The Company recognized a gain in Change in fair value of warrant liability during the nine months ended September 30, 2024 of $6 thousand compared to a gain of $3 thousand during the nine months ended September 30, 2023. This change is based on the fair value assessment and adjustment for one warrant liability as described in Note 3 to the unaudited condensed consolidated financial statements provided under Item 1 of this report.