(Address of principal executive offices) | (Zip Code) |
N/A | ||
(Former name, former address and former fiscal year, if changed since last report) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | o | Accelerated filer | o | ||||||||
x | Smaller reporting company | ||||||||||
Emerging growth company |
Page | ||||||||
June 30, 2023 | December 31, 2022 | ||||||||||
(unaudited) | |||||||||||
ASSETS | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable (includes unbilled receivables of $ | |||||||||||
Related party receivables | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total Current Assets | |||||||||||
Capitalized internal-use software, net | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right of use assets | |||||||||||
Other assets | |||||||||||
Total Assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current Liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Related party payables | |||||||||||
Accrued expenses | |||||||||||
Deferred revenue | |||||||||||
Income tax payable | |||||||||||
Short-term operating lease liabilities | |||||||||||
Short-term financial liabilities | |||||||||||
Total Current Liabilities | |||||||||||
Warrant liabilities | |||||||||||
Notes payable, plus accrued interest of $ | |||||||||||
Long-term operating lease liabilities | |||||||||||
Long-term financial liabilities | |||||||||||
Total Liabilities | |||||||||||
Commitments, Note 10 | |||||||||||
Stockholders’ Equity: | |||||||||||
Common stock $ | |||||||||||
Treasury stock, at cost: | |||||||||||
Additional paid-in capital | |||||||||||
Stockholders’ notes receivable | ( | ||||||||||
Accumulated other comprehensive income | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Total T Stamp Inc. Stockholders’ Equity | |||||||||||
Non-controlling interest | |||||||||||
Total Stockholders’ Equity | |||||||||||
Total Liabilities and Stockholders’ Equity | $ | $ |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net revenue | $ | $ | $ | $ | |||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Cost of services (exclusive of depreciation and amortization shown separately below) | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Selling, general, and administrative | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Total Operating Expenses | |||||||||||||||||||||||
Operating Loss | ( | ( | ( | ( | |||||||||||||||||||
Non-Operating Income (Expense): | |||||||||||||||||||||||
Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
Change in fair value of warrant liability | |||||||||||||||||||||||
Impairment of digital assets | ( | ( | |||||||||||||||||||||
Other income | |||||||||||||||||||||||
Other expense | ( | ( | ( | ( | |||||||||||||||||||
Total Other Expense (Income), Net | ( | ||||||||||||||||||||||
Net Loss before Taxes | ( | ( | ( | ( | |||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Net loss including non-controlling interest | ( | ( | ( | ( | |||||||||||||||||||
Net loss attributable to non-controlling interest | |||||||||||||||||||||||
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 |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net loss including non-controlling interest | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other Comprehensive Income (Loss): | |||||||||||||||||||||||
Foreign currency translation adjustments | ( | ( | ( | ||||||||||||||||||||
Total Other Comprehensive Income (Loss) | ( | ( | ( | ||||||||||||||||||||
Comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive loss attributable to non-controlling interest | |||||||||||||||||||||||
Comprehensive loss attributable to T Stamp Inc. | $ | ( | $ | ( | $ | ( | $ | ( |
Common Stock | Additional Paid-In Capital | Treasury Stock | Stockholders’ Notes Receivable | Accumulated Other Comprehensive Income | Accumulated Deficit | Non-controlling Interest | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options to common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in relation to vested restricted stock units, net of shares forfeited to satisfy taxes | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repayment of shareholders loan through in-kind services | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to T Stamp Inc. | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ |
Common Stock | Additional Paid-In Capital | Treasury Stock | Stockholders’ Notes Receivable | Accumulated Other Comprehensive Income | Accumulated Deficit | Non-controlling Interest | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of prefunded warrants to common stock | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options to common stock | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, prefunded warrants, and common stock warrants, net of fees | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in relation to vested restricted stock units, to wholly owned subsidiary | ( | ( | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to T Stamp Inc. | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | $ |
Common Stock | Additional Paid-In Capital | Treasury Stock | Stockholders’ Notes Receivable | Accumulated Other Comprehensive Income | Accumulated Deficit | Non-controlling Interest | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2022 | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants to common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options to common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock warrants | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in relation to vested restricted stock units, net of shares forfeited to satisfy taxes | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repayment of shareholders loan through in-kind services | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to T Stamp Inc. | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ |
Common Stock | Additional Paid-In Capital | Treasury Stock | Stockholders’ Notes Receivable | Accumulated Other Comprehensive Income | Accumulated Deficit | Non-controlling Interest | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2023 | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants to common stock | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options to common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, prefunded warrants, and common stock warrants, net of fees | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in relation to vested restricted stock units, to wholly owned subsidiary | ( | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse stock split rounding | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Repayment of shareholders loan through in-kind services | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to T Stamp Inc. | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | $ |
For the six months ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss attributable to T Stamp Inc. | $ | ( | $ | ( | |||||||
Net loss attributable to non-controlling interest | |||||||||||
Adjustments to reconcile net loss to cash flows used in operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation | |||||||||||
Change in fair value of warrant liability | ( | ( | |||||||||
Repayment of shareholder loan through in-kind services | |||||||||||
Impairment of assets | |||||||||||
Gain on sale of property and equipment | ( | ||||||||||
Non-cash interest | |||||||||||
Non-cash lease expense | |||||||||||
Non-cash write off of mobile hardware | ( | ||||||||||
Loss on retirement of equipment | |||||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | |||||||||||
Related party receivables | ( | ( | |||||||||
Prepaid expenses and other current assets | |||||||||||
Other assets | ( | ||||||||||
Accounts payable | ( | ||||||||||
Accrued expense | ( | ( | |||||||||
Related party payables | ( | ( | |||||||||
Deferred revenue | ( | ||||||||||
Income tax payable | ( | ||||||||||
Operating lease liabilities | ( | ||||||||||
Customer deposit liabilities | ( | ||||||||||
Net cash flows from operating activities | ( | ( | |||||||||
Cash flows from investing activities: | |||||||||||
Sale of property and equipment | |||||||||||
Capitalized internally developed software costs | ( | ( | |||||||||
Patent application costs | ( | ( | |||||||||
Acquisition of Pixelpin intangible asset | |||||||||||
Purchases of property and equipment | ( | ||||||||||
Purchase of digital assets | ( | ||||||||||
Net cash flows from investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from common stock, prefunded warrants, and common stock warrants, net of fees | |||||||||||
Proceeds from exercise of warrants to common stock | |||||||||||
Proceeds from exercise of options to common stock | |||||||||||
Forfeited common stock shares to satisfy taxes | ( | ||||||||||
Proceeds from issuance of common stock warrants | |||||||||||
Principal payments on financial liabilities | ( | ( | |||||||||
Net cash flows from financing activities | $ | $ | |||||||||
Effect of foreign currency translation on cash | ( | ||||||||||
Net change in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents, beginning of period | |||||||||||
Cash and cash equivalents, end of period | $ | $ | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid during the period for interest | $ | $ | |||||||||
Supplemental disclosure of non-cash activities: | |||||||||||
Adjustment to operating lease right-of-use assets related to renewed leases | $ | $ | — | ||||||||
Adjustment to operating lease right of use assets related to terminated leases | $ | $ | — | ||||||||
Adjustment to operating lease operating lease liabilities related to renewed leases | $ | $ | — | ||||||||
Adjustment to operating lease liabilities related to terminated leases | $ | $ | — | ||||||||
Prepaid rent expense reclassified upon termination of leases | $ | $ | — | ||||||||
Property and equipment acquired under financial liability | $ | $ | ( |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Professional services (over time) | $ | $ | $ | $ | |||||||||||||||||||
License fees (over time) | |||||||||||||||||||||||
Total Revenue | $ | $ | $ | $ |
As of June 30, 2023 | As of December 31, 2022 | ||||||||||
Malta loan receipt 3 – June 3, 2022 | $ | $ | |||||||||
Malta loan receipt 2 – August 10, 2021 | |||||||||||
Malta loan receipt 1 – February 9, 2021 | |||||||||||
Interest added to principal | |||||||||||
Total principal outstanding | |||||||||||
Plus: accrued interest | |||||||||||
Total promissory notes payable | $ | $ |
Warrants ($) | |||||
Balance as of January 1, 2022 | $ | ||||
Additional warrants issued | |||||
Change in fair value | ( | ||||
Balance as of December 31, 2022 | $ | ||||
Additional warrants issued | |||||
Change in fair value | ( | ||||
Balance as of June 30, 2023 | $ |
Fair Value of Warrants | $ | ||||
Exercise price | $ | ||||
Risk free interest rate | |||||
Expected dividend yield | % | ||||
Expected volatility | |||||
Expected term |
As of June 30, | As of December 31, | |||||||||||||||||||
Warrant Issuance Date | Strike Price | 2023 | 2022 | |||||||||||||||||
November 9, 2016 | $ | |||||||||||||||||||
January 23, 2020 | $ | |||||||||||||||||||
January 23, 2020 | $ | |||||||||||||||||||
August – December 2021 | $ | |||||||||||||||||||
January – February 2022 | $ | |||||||||||||||||||
September 14, 2022 | $ | |||||||||||||||||||
April 18, 2023 | $ | |||||||||||||||||||
June 5, 2023 | $ | |||||||||||||||||||
Total warrants outstanding |
June 30, 2023 | December 31, 2022 | ||||||||||
Prepaid operating expenses | $ | $ | |||||||||
Rent deposit | |||||||||||
VAT receivable associated with SAIT | |||||||||||
Tax credit receivable (short-term) | |||||||||||
Miscellaneous receivable | |||||||||||
Prepaid expenses and other current assets | $ | $ |
Useful Lives | June 30, 2023 | December 31, 2022 | |||||||||||||||
Internally developed software | $ | $ | |||||||||||||||
Less accumulated depreciation | ( | ( | |||||||||||||||
Capitalized internal-use software, net | $ | $ |
Useful Lives | June 30, 2023 | December 31, 2022 | |||||||||||||||
Computer equipment | $ | $ | |||||||||||||||
Furniture and fixtures | |||||||||||||||||
Mobile hardware | |||||||||||||||||
Property and equipment, gross | |||||||||||||||||
Less accumulated depreciation | ( | ( | |||||||||||||||
Property and equipment, net | $ | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
Compensation payable | $ | $ | |||||||||
Commission liability | |||||||||||
Accrued employee taxes | |||||||||||
Accrued mobile expenses | |||||||||||
Other accrued liabilities | |||||||||||
Accrued expenses | $ | $ |
Useful Lives | June 30, 2023 | December 31, 2022 | |||||||||||||||
Patent application costs | $ | $ | |||||||||||||||
Trade name and trademarks | |||||||||||||||||
Intangible assets, gross | |||||||||||||||||
Less: Accumulated amortization | ( | ( | |||||||||||||||
Intangible assets, net | $ | $ |
Years Ending December 31, | Amount | |||||||
2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
$ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
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 | $ | ( | $ | ( | $ | ( | $ | ( |
June 30, 2023 | June 30, 2022 | ||||||||||
Options, RSUs, and grants | |||||||||||
Warrants | |||||||||||
Total |
Options Outstanding | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Balance as of January 1, 2022 | $ | $ | |||||||||||||||||||||
Options granted | |||||||||||||||||||||||
Options exercised | ( | ||||||||||||||||||||||
Options canceled and forfeited | ( | ||||||||||||||||||||||
Balance as of December 31, 2022 | $ | $ | |||||||||||||||||||||
Options granted | |||||||||||||||||||||||
Options exercised | ( | ||||||||||||||||||||||
Options canceled and forfeited | ( | ||||||||||||||||||||||
Balance as of March 31, 2023 | $ | $ | |||||||||||||||||||||
Options granted | |||||||||||||||||||||||
Options exercised | |||||||||||||||||||||||
Options canceled and forfeited | ( | ||||||||||||||||||||||
Balance as of June 30, 2023 | |||||||||||||||||||||||
Options vested and exercisable as of June 30, 2023 | $ | $ |
Options Outstanding | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Balance as of January 1, 2023 | $ | $ | |||||||||||||||||||||
Options granted | |||||||||||||||||||||||
Options exercised | ( | ||||||||||||||||||||||
Options canceled and forfeited | ( | ||||||||||||||||||||||
Balance as of June 30, 2023 | |||||||||||||||||||||||
Options vested and exercisable as of June 30, 2023 | $ |
RSU Outstanding Number of Shares | |||||
Balance as of January 1, 2022 | |||||
Granted | |||||
Vested (issued) | ( | ||||
Forfeited | |||||
Balance as of December 31, 2022 | |||||
Granted | |||||
Vested (issued) | ( | ||||
Forfeited | ( | ||||
Balance as of June 30, 2023 |
Fair value of Class A Common Stock | $ | ||||
Exercise price | $ | ||||
Risk free interest rate | |||||
Expected dividend yield | % | ||||
Expected volatility | |||||
Expected term |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Cost of services | $ | $ | $ | $ | |||||||||||||||||||
Research and development | |||||||||||||||||||||||
Selling, general, and administrative | |||||||||||||||||||||||
Total stock-based compensation expense | $ | $ | $ | $ |
Lease term and discount rate | June 30, 2023 | |||||||
Weighted average remaining lease term | ||||||||
Weighted average discount rate | % |
June 30, 2023 | |||||
Leases terminated | |||||
Lease termination fees | $ | ||||
Right-of-use assets derecognized upon lease termination | $ | ||||
Lease liabilities derecognized upon lease termination | $ | ||||
Loss recognized upon lease termination | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
Right-of-use assets | |||||||||||
Operating lease right-of-use assets | $ | $ | |||||||||
Operating lease liabilities | |||||||||||
Short-term operating lease liabilities | $ | $ | |||||||||
Long-term operating lease liabilities | |||||||||||
Total operating lease liabilities | $ | $ |
Principal Payments | Imputed Interest Payments | Total Payments | |||||||||||||||
2023 | $ | $ | $ | ||||||||||||||
2024 | |||||||||||||||||
2025 | |||||||||||||||||
2026 | — | ||||||||||||||||
Total future maturities | $ | $ | $ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Operating lease expense – fixed payments | $ | $ | $ | $ | |||||||||||||||||||
Short term lease expense | |||||||||||||||||||||||
Total lease expense | $ | $ | $ | $ |
Six Months Ended June 30, 2023 | ||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | ( |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net loss before taxes | $ | (2,170,368) | $ | (2,922,286) | $ | (4,717,818) | $ | (4,614,348) | |||||||||||||||
Add: Other expense | 2,726 | 272 | 3,144 | 94,785 | |||||||||||||||||||
Less: Other income | (4,723) | (5,673) | (48,665) | (12,614) | |||||||||||||||||||
Less: Gain on sale of mobile hardware | (212,882) | — | (212,882) | — | |||||||||||||||||||
Add: Interest expense, net | 9,793 | 2,354 | 19,994 | 6,312 | |||||||||||||||||||
Add: Stock-based compensation | 97,737 | 459,646 | 157,311 | 747,432 | |||||||||||||||||||
Add: Impairment loss of assets | 16,819 | 23,885 | 16,819 | 23,885 | |||||||||||||||||||
Add: Non-cash expenses for in-kind services | — | 27,930 | 18,547 | 55,860 | |||||||||||||||||||
Add: Depreciation and amortization | 187,272 | 190,703 | 406,454 | 344,631 | |||||||||||||||||||
Adjusted EBITDA loss (non-GAAP) | $ | (2,073,626) | $ | (2,223,169) | $ | (4,357,096) | $ | (3,354,057) |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net revenue | $ | 460,804 | $ | 708,288 | $ | 919,438 | $ | 3,529,333 | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Cost of services (exclusive of depreciation and amortization shown separately below) | 203,928 | 348,166 | 420,887 | 1,042,144 | |||||||||||||||||||
Research and development | 574,397 | 574,490 | 1,206,766 | 1,022,903 | |||||||||||||||||||
Selling, general, and administrative | 1,877,616 | 2,532,849 | 3,847,173 | 5,698,695 | |||||||||||||||||||
Depreciation and amortization | 187,272 | 190,703 | 406,454 | 344,631 | |||||||||||||||||||
Total Operating Expenses | 2,843,213 | 3,646,208 | 5,881,280 | 8,108,373 | |||||||||||||||||||
Operating Loss | (2,382,409) | (2,937,920) | (4,961,842) | (4,579,040) | |||||||||||||||||||
Non-Operating Income (Expense): | |||||||||||||||||||||||
Interest expense, net | (9,793) | (2,354) | (19,994) | (6,312) | |||||||||||||||||||
Change in fair value of warrant liability | 6,955 | 36,472 | 5,615 | 77,060 | |||||||||||||||||||
Impairment of digital assets | — | (23,885) | — | (23,885) | |||||||||||||||||||
Other income | 217,605 | 5,673 | 261,547 | 12,614 | |||||||||||||||||||
Other expense | (2,726) | (272) | (3,144) | (94,785) | |||||||||||||||||||
Total Other Expense (Income), Net | 212,041 | 15,634 | 244,024 | (35,308) | |||||||||||||||||||
Net Loss before Taxes | (2,170,368) | (2,922,286) | (4,717,818) | (4,614,348) | |||||||||||||||||||
Income tax expense | — | — | — | — | |||||||||||||||||||
Net loss including non-controlling interest | (2,170,368) | (2,922,286) | (4,717,818) | (4,614,348) | |||||||||||||||||||
Net loss attributable to non-controlling interest | — | — | — | — | |||||||||||||||||||
Net loss attributable to T Stamp Inc. | $ | (2,170,368) | $ | (2,922,286) | $ | (4,717,818) | $ | (4,614,348) | |||||||||||||||
Basic and diluted net loss per share attributable to T Stamp Inc. | $ | (0.32) | $ | (0.63) | $ | (0.80) | $ | (1.00) | |||||||||||||||
Weighted-average shares used to compute basic and diluted net loss per share | 6,757,320 | 4,653,317 | 5,897,089 | 4,601,788 |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Net revenue | $ | 460,804 | $ | 708,288 | $ | (247,484) | (34.94) | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Cost of services | $ | 203,928 | $ | 348,166 | $ | (144,238) | (41.43) | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Research and development | $ | 574,397 | $ | 574,490 | $ | (93) | (0.02) | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Selling, general, and administrative | $ | 1,877,616 | $ | 2,532,849 | $ | (655,233) | (25.87) | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Depreciation and amortization | $ | 187,272 | $ | 190,703 | $ | (3,431) | (1.80) | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Operating loss | $ | (2,382,409) | $ | (2,937,920) | $ | 555,511 | (18.91) | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Interest expense, net | $ | (9,793) | $ | (2,354) | $ | (7,439) | 316.02 | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Change in fair value of warrant liability | $ | 6,955 | $ | 36,472 | $ | (29,517) | (80.93) | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Impairment of digital assets | $ | — | $ | (23,885) | $ | 23,885 | (100.00) | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Other income | $ | 217,605 | $ | 5,673 | $ | 211,932 | 3,735.80 | % |
Three months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Other expense | $ | (2,726) | $ | (272) | $ | (2,454) | 902.21 | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Net revenue | $ | 919,438 | $ | 3,529,333 | $ | (2,609,895) | (73.95) | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Cost of services | $ | 420,887 | $ | 1,042,144 | $ | (621,257) | (59.61) | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Research and development | $ | 1,206,766 | $ | 1,022,903 | $ | 183,863 | 17.97 | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Selling, general, and administrative | $ | 3,847,173 | $ | 5,698,695 | $ | (1,851,522) | (32.49) | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Depreciation and amortization | $ | 406,454 | $ | 344,631 | $ | 61,823 | 17.94 | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Operating loss | $ | (4,961,842) | $ | (4,579,040) | $ | (382,802) | 8.36 | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Interest expense, net | $ | (19,994) | $ | (6,312) | $ | (13,682) | 216.76 | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Change in fair value of warrant liability | $ | 5,615 | $ | 77,060 | $ | (71,445) | (92.71) | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Impairment of digital assets | $ | — | $ | (23,885) | $ | 23,885 | (100.00) | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Other income | $ | 261,547 | $ | 12,614 | $ | 248,933 | 1,973.47 | % |
Six months ended June 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Other expense | $ | (3,144) | $ | (94,785) | $ | 91,641 | (96.68) | % |
For the six months ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Net cash flows from operating activities | $ | (3,581,369) | $ | (3,858,860) | |||||||
Net cash flows from investing activities | $ | (17,249) | $ | (524,252) | |||||||
Net cash flows from financing activities | $ | 7,415,347 | $ | 3,686,706 |
Exhibit No. | Exhibit Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
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4.8 | ||||||||
4.9 | ||||||||
4.10 | ||||||||
4.11 | ||||||||
4.12 | ||||||||
10.1 | ||||||||
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10.19 | ||||||||
32.1* | ||||||||
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. |
T STAMP INC. | |||||
/s/ Gareth Genner | |||||
Gareth Genner, Chief Executive Officer | |||||
Trust Stamp |
/s/ Gareth Genner | |||||
Gareth Genner, Principal Executive Officer, Chief Executive Officer, Director | |||||
Date: August 22, 2023 | |||||
/s/ Alex Valdes | |||||
Alex Valdes, Principal Financial Officer, Principal Accounting Officer | |||||
Date: August 22, 2023 | |||||
/s/ Gareth Genner | |||||
Gareth Genner | |||||
Chief Executive Officer (Principal Executive Officer) |
/s/ Alex Valdes | |||||
Alex Valdes | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) |
/s/ Gareth Genner | |||||
Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
/s/ Alex Valdes | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) |
Cover Page - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Aug. 21, 2023 |
|
Cover [Abstract] | ||
Document Type | 10-Q/A | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-41252 | |
Entity Registrant Name | T Stamp Inc | |
Entity Address, Address Line One | 3017 Bolling Way NE, Floors 1 and 2 | |
Entity Address, City or Town | Atlanta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30305 | |
City Area Code | 404 | |
Local Phone Number | 806-9906 | |
Title of 12(b) Security | Class A Common Stock, $0.01 par value per share | |
Trading Symbol | IDAI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,242,244 | |
Entity Central Index Key | 0001718939 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | true | |
Entity Tax Identification Number | 81-3777260 | |
Entity Incorporation, State or Country Code | DE | |
Amendment Description | This Amendment No. 1 to the Quarterly Report on Form 10-Q is being filed solely to furnish the Interactive Data files as Exhibit 101, in accordance with Rule 405 of Regulation S-T. This Amendment speaks as of the Original Filing Date of the Original Filing (unless otherwise noted or as the context otherwise requires) and reflects only the changes to the cover page and Subsequent Events in Item 1 of Part I. No other changes have been made to the Form 10-Q, as originally filed on August 14, 2023.In this Amendment, T Stamp Inc. (together with its subsidiaries) is referred to as the “Company,” “Trust Stamp,” “we,” “us,” or “our.” |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Unbilled receivables | $ 104,043 | $ 109,475 |
Non-convertible notes payable, current accrued interest | $ 19,904 | $ 16,458 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 7,989,065 | 4,910,815 |
Common stock, shares outstanding (in shares) | 7,972,244 | 4,854,302 |
Treasury stock, at cost, shares held (in shares) | 16,821 | 56,513 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Income Statement [Abstract] | ||||
Net revenue | $ 460,804 | $ 708,288 | $ 919,438 | $ 3,529,333 |
Operating Expenses: | ||||
Cost of services (exclusive of depreciation and amortization shown separately below) | 203,928 | 348,166 | 420,887 | 1,042,144 |
Research and development | 574,397 | 574,490 | 1,206,766 | 1,022,903 |
Selling, general, and administrative | 1,877,616 | 2,532,849 | 3,847,173 | 5,698,695 |
Depreciation and amortization | 187,272 | 190,703 | 406,454 | 344,631 |
Total Operating Expenses | 2,843,213 | 3,646,208 | 5,881,280 | 8,108,373 |
Operating Loss | (2,382,409) | (2,937,920) | (4,961,842) | (4,579,040) |
Non-Operating Income (Expense): | ||||
Interest expense, net | (9,793) | (2,354) | (19,994) | (6,312) |
Change in fair value of warrant liability | 6,955 | 36,472 | 5,615 | 77,060 |
Impairment of digital assets | 0 | (23,885) | 0 | (23,885) |
Other income | 217,605 | 5,673 | 261,547 | 12,614 |
Other expense | (2,726) | (272) | (3,144) | (94,785) |
Total Other Expense (Income), Net | 212,041 | 15,634 | 244,024 | (35,308) |
Net Loss before Taxes | (2,170,368) | (2,922,286) | (4,717,818) | (4,614,348) |
Income tax expense | 0 | 0 | 0 | 0 |
Net loss including non-controlling interest | (2,170,368) | (2,922,286) | (4,717,818) | (4,614,348) |
Net loss attributable to non-controlling interest | 0 | 0 | 0 | 0 |
Net loss attributable to T Stamp Inc. | $ (2,170,368) | $ (2,922,286) | $ (4,717,818) | $ (4,614,348) |
Basic net loss per share attributable to T Stamp Inc. (in dollars per share) | $ (0.32) | $ (0.63) | $ (0.80) | $ (1.00) |
Diluted net loss per share attributable to T Stamp Inc. (in dollars per share) | $ (0.32) | $ (0.63) | $ (0.80) | $ (1.00) |
Weighted-average shares used to compute basic net loss per share (in shares) | 6,757,320 | 4,653,317 | 5,897,089 | 4,601,788 |
Weighted-average shares used to compute diluted net loss per share (in shares) | 6,757,320 | 4,653,317 | 5,897,089 | 4,601,788 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss including non-controlling interest | $ (2,170,368) | $ (2,922,286) | $ (4,717,818) | $ (4,614,348) |
Other Comprehensive Income (Loss): | ||||
Foreign currency translation adjustments | (7,604) | (34,726) | (49,046) | 27,924 |
Total Other Comprehensive Income (Loss) | (7,604) | (34,726) | (49,046) | 27,924 |
Comprehensive loss | (2,177,972) | (2,957,012) | (4,766,864) | (4,586,424) |
Comprehensive loss attributable to non-controlling interest | 0 | 0 | 0 | 0 |
Comprehensive loss attributable to T Stamp Inc. | $ (2,177,972) | $ (2,957,012) | $ (4,766,864) | $ (4,586,424) |
Description of Business and Summary of Significant Accounting Policies And Going Concern |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of Business and Summary of Significant Accounting Policies And Going Concern | Description of Business and Summary of Significant Accounting Policies And Going Concern Description of Business — T Stamp Inc. was incorporated on April 11, 2016 in the State of Delaware. T Stamp Inc. and its subsidiaries (“Trust Stamp”, “we”, “us”, “our” or the “Company”) develops and markets identity authentication software solutions for enterprise and government partners and peer-to-peer markets. Trust Stamp develops proprietary artificial intelligence-powered solutions, researching and leveraging machine learning, artificial intelligence, biometric science, cryptography, and data mining, to deliver insightful identity and trust predictions that identify and defend against fraudulent identity attacks, protect sensitive user information, and extend the reach of digital services through global accessibility. We utilize the power and agility of technologies such as GPU processing, edge-computing, neural networks, and large language models to process and protect data faster and more effectively than has ever previously been possible in order to deliver results at a disruptively low cost for usage across multiple industries, including: •Banking/FinTech •KYC/AML Compliance •Humanitarian and Development Services •Government and Law Enforcement, including Alternative to Detention programs •Cryptocurrency and Digital Assets •Biometrically Secured Email and Digital Communications •P2P Transactions, Social Media, and Sharing Economy •Real Estate, Travel, and Healthcare Reverse Split — On February 15, 2023 our Board of Directors approved and, as of February 20, 2023, the holders of a majority of our voting capital stock approved an amendment (the “Certificate of Amendment”) to the Company’s Amended and Restated Certificate of Incorporation and approved to effect a reverse split of our issued and outstanding shares of Class A Common Stock at a ratio of one share for every five shares currently held, rounded up to the nearest whole share – whereby every five (5) outstanding shares of Class A Common Stock was combined and became one (1) share of Class A Common Stock, rounding up to the nearest whole number of shares (the “Reverse Split”). All share and per share amounts in these unaudited condensed consolidated financial statements have been retroactively restated to reflect the Reverse Split. The Reverse Split was effective for trading on the market opening of Nasdaq on March 23, 2023. The Reverse Stock Split effective March 23, 2023, was ratified by the Company’s stockholders by written consent pursuant to a definitive proxy statement filed with the Securities and Exchange Commission on April 13, 2023. Written consent from the majority of stockholders was received as of May 13, 2023. Amended and Restated Certificate of Incorporation — On July 6, 2023, the Company received confirmation of the acceptance of its Third Amended and Restated Certificate of Incorporation (the "Third Restated Certificate") from the Secretary of State of Delaware. The Third Restated Certificate was approved by the Company’s stockholders by written consent pursuant to a definitive proxy statement filed with the Securities and Exchange Commission on April 13, 2023. Written consent from the majority of stockholders was received as of May 13, 2023. The Third Restated Certificate maintained the 50,000,000 authorized shares of Common Stock and eliminated the authorized Preferred Stock. The Third Restated Certificate also created a classified Board of Directors of the Company with three classes of directors who will stand for election in staggered years. Going Concern — The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits, with a loss in the six months ended June 30, 2023 of $4.72 million, negative operating cash outflows of $3.58 million for the same period, working capital of $1.47 million and an accumulated deficit of $44.02 million as of June 30, 2023. The Company’s ability to continue as a going concern in the next twelve months following the date the unaudited condensed consolidated financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and plans to generate revenue and raise capital as needed to satisfy the Company’s capital needs. While the negotiation of significant additional revenue is well advanced, it has not reached a stage that allows it to be factored into a going concern evaluation. In addition, although the Company has previously been successful in raising capital as needed and has already made plans to do so as well as restructuring expenses to meet the Company’s cash needs, no assurance can be given that the Company will be successful in its capital raising efforts. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period. On April 18, 2023, the Company sold 563,380 shares of Class A Common Stock to the institutional investor for total proceeds of $1,859,154 and on same date, the institutional investor purchased and exercised the 1,009,950 pre-funded warrants, for total proceeds to the Company of $3,332,835, resulting in an aggregate issuance by the Company of 1,573,330 shares of Class A Common Stock for net proceeds of $4.78 million from the registered direct offering after deducting placement fee and legal expense of $363 thousand and $50 thousand, respectively. On June 5, 2023, the Company sold 736,400 shares of Class A Common Stock to the institutional investor for total proceeds of $1,693,720 and on same date, the institutional investor purchased 543,300 pre-funded warrants that were subsequently exercised during the three months ended June 30, 2023, for total proceeds to the Company of $1,249,590, resulting in an aggregate issuance by the Company of 1,279,700 shares of Class A Common Stock for net proceeds of $2,686,773 from the registered direct offering after deducting placement fee and legal expense of $205,994 and $50,000, respectively. See Note 3 to the financial statements provided under Item 1 of this report for more details. Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with US Generally Accepted Accounting Principles (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Unaudited Interim Results — These unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP, pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. In management’s opinion, these unaudited condensed consolidated financial statements and accompanying notes have been prepared on the same basis as the annual financial statements and reflect all the adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of June 30, 2023, the results of operations for the six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. Certain information and note disclosures have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated balance sheet as of June 30, 2023 was derived from the audited financial statements as of that December 31, 2022 but does not include all of the disclosures required by U.S. GAAP. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes for the year ended December 31, 2022 included in the Company’s Annual Report. The Company’s significant accounting policies are described in Note 1 to those audited financial statements. Basis of Consolidation — The accompanying unaudited condensed consolidated financial statements reflect the activity of the Company and its subsidiaries, Trusted Mail Inc. (“Trusted Mail”), Finnovation LLC (“Finnovation”), Trust Stamp Malta Limited (“Trust Stamp Malta”), AIID Payments Limited, Biometric Innovations Limited (“Biometrics”), Trust Stamp Rwanda Limited, Metapresence Limited, and Trust Stamp Denmark ApS. All significant intercompany transactions and accounts have been eliminated. On February 28, 2023, the Company received the Certificate of Termination from the State of Georgia, which represents the completion of administratively dissolving T Avatar LLC. As there were no operations established under the entity, there is a limited impact to Trust Stamp. The dissolution of T Avatar LLC was effective February 28, 2023. On June 2, 2023, the Company received the termination resolution from the Polish National Court Register, which represents the completion of administratively dissolving Sunflower AI Technologies (“SAIT”). As there were no operations established under the entity, there is a limited impact to Trust Stamp. The dissolution of SAIT was effective May 10, 2023. 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 320,513 shares of Class A Common Stock to TSIH, for the purpose of providing a pool of shares of Class A Common Stock of the Company that the Company’s Board of Directors (the “Board”) could use for employee stock awards and were recorded initially as treasury stock. Since establishing TSIH, 264,000 shares were transferred to various employees as a stock award that were earned and outstanding. On February 15, 2023 Trust Stamp issued 206,033 shares of Class A Common Stock to TSIH to be used to satisfy vested employee stock awards. As of June 30, 2023, TSIH held 16,821 treasury stock earmarked for future employee RSU bonuses. The Company does not own any of the shares of Class A Common Stock of the Company held by TSIH. The Company considers this entity to be a variable interest entity (“VIE”) because it is thinly capitalized and holds no cash. Because the Company does not own shares in TSIH, management believes that this gives the Company a variable interest. Further, management of the Company also acts as management of TSIH and is the decision-maker as management grants shares held by TSIH to employees of the Company. As this VIE owns only shares in the Company and no other liabilities or assets, the Company is the primary beneficiary of TSIH and will consolidate the VIE. Use of Estimates — The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates their estimates that include, but are not limited to, percentage of completion related to revenue contracts that are not fully complete at the end of a fiscal quarter, capitalization and estimated useful life of internal-use software, the allowance for doubtful accounts, the fair value of financial assets and liabilities, the recoverability of goodwill, stock-based compensation including the determination of the fair value of our common stock, impairment of long-lived assets, the valuation of deferred tax assets and uncertain tax positions, and warrant liabilities. We base our estimates on assumptions, both historical and forward-looking trends, and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Segment Information — The Company has a single operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. Risks and Uncertainties — The Company is dependent upon additional capital resources for its planned full-scale operations, and is subject to significant risks and uncertainties, including failing to secure funding to continue to operationalize the Company’s plans or failing to profitably operate the business. Major Customers and Concentration of Risks — Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. We maintain our cash and cash equivalents with high-quality financial institutions, mainly in the United States; the composition of which are regularly monitored by us. The Federal Deposit Insurance Corporation covers $250 thousand for substantially all depository accounts. The Company from time to time may have amounts on deposit in excess of the insured limits. As of June 30, 2023 and December 31, 2022, the Company had $4.24 million and $71 thousand in U.S. bank accounts, respectively, which exceeded these insured amounts. Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts. For accounts receivable, we are exposed to credit risk in the event of nonpayment by customers to the extent the amounts are recorded in the consolidated balance sheets. We extend different levels of credit and maintain reserves for potential credit losses based upon the expected collectability of accounts receivable. We manage credit risk related to our customers by performing periodic evaluations of credit worthiness and applying other credit risk monitoring procedures. Three customers represented 92.71% or 60.29%, 25.55%, and 6.87% of the balance of total accounts receivable as of June 30, 2023 and three customers represented 95.37% or 36.90%, 32.69%, and 25.78% of the balance of total accounts receivable as of December 31, 2022. The Company seeks to mitigate its credit risk with respect to accounts receivable by contracting with large commercial customers and government agencies, and regularly monitoring the aging of accounts receivable balances. As of June 30, 2023 and December 31, 2022, the Company had not experienced any significant losses on its accounts receivable. During the three months ended June 30, 2023, the Company sold to primarily three customers which made up approximately 90.67% of total Net revenue, and consisted of 48.97%, 31.33%, and 10.37% from an S&P 500 Bank, Mastercard, and Triton, respectively. Additionally, during the three months ended June 30, 2022, the Company sold to primarily three customers which made up approximately 88.57% of total Net revenue, and consisted of 38.14%, 28.45%, and 21.98% from an S&P 500 Bank, ICE, and Mastercard. During the six months ended June 30, 2023, the Company sold to primarily four customers which made up approximately 92.73% of total Net revenue, and consisted of 44.57%, 28.21%, 10.22%, and 9.73% from an S&P 500 Bank, Mastercard, FIS, and Triton, respectively. Additionally, during the six months ended June 30, 2022, the Company sold to primarily four customers which made up approximately 97.57% of total Net revenue, and consisted of 69.19%, 15.59%, 9.56%, and 3.23% from ICE, an S&P 500 Bank, Mastercard, and FIS. Foreign Currencies — The functional currencies of the Company’s foreign subsidiaries are the local currencies. For those subsidiaries, the assets and liabilities are translated into U.S. dollars at the exchange rate method at the unaudited condensed consolidated balance sheet date. The Company’s other comprehensive (loss) is comprised of foreign currency translation adjustments related to the Company’s foreign subsidiaries. Income and expenses are translated at the average exchange rates for the period. Foreign currency transaction gains and losses are included in other income or other expense in the unaudited condensed consolidated statements of operations. Cash and Cash Equivalents — Cash and cash equivalents consist of cash in banks and bank deposits. The Company considers all highly liquid instruments purchased with an original maturity of three months or less when purchased as cash equivalents. Accounts Receivable and Allowance for Credit Losses — Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses, if any. The Company’s trade receivables primarily arise from the sale of our products to customers through contracts for software licenses and subscriptions, software usage, web hosting fees, and software development with payment terms of 60 days. The Company evaluates the credit risk of a customer when extending credit based on a combination of various financial and qualitative factors that may affect the customers’ ability to pay. These factors include the customers’ financial condition and past payment experience. The Company maintains an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The Company measures expected credit losses on its trade receivables on an customer basis. The estimate of expected credit losses considers any historical losses, delinquency trends, collection experience, and/or economic risk where appropriate. Additionally, management develops a specific allowance for trade receivables known to have a high risk of expected future credit loss. The Company has historically experienced immaterial write-offs given the nature of the customers and contracts. As of June 30, 2023, the Company had gross receivables of $495 thousand and an allowance for credit losses of $8 thousand. As of June 30, 2023 and December 31, 2022, accounts receivable includes unbilled receivables of $104 thousand and $109 thousand, respectively. Property and Equipment, Net — Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is recognized using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs that do not improve or extend the useful lives of the assets are expensed when incurred, whereas additions and major improvements are capitalized. Upon sale or retirement of assets, the cost and related accumulated depreciation are derecognized from the unaudited condensed consolidated balance sheet and any resulting gain or loss is recorded in the unaudited condensed consolidated statements of operations in the period realized. Capitalized Internal-Use Software, Net — Costs related to software acquired, developed, or modified solely to meet our internal requirements, with no substantive plans to market such software at the time of development are capitalized. The Company capitalizes eligible costs to develop internal-use software that are incurred subsequent to the preliminary project stage through the development stage. These costs consist of personnel costs (including related benefits and stock-based compensation) that are incurred during the application development stage. Costs incurred during the preliminary project stage and during the post-implementation operational stage are expensed as incurred. Maintenance costs are expensed as incurred. The estimated useful life of costs capitalized is evaluated for each specific project that is generally five years. Actual economic lives may differ from estimated useful lives. Periodic reviews could result in a change in estimated useful lives and therefore changes in amortization expense in future periods. Accounting for Impairment of Long-Lived Assets — Long-lived assets with finite lives include property and equipment, capitalized internal-use software, right of use assets, and intangible assets subject to amortization. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company determined that as of June 30, 2023, $17 thousand of capitalized internal-use software was impaired. The impaired capitalized internal-use software was expensed during the six months ended June 30, 2023. As of December 31, 2022, the Company determined that no long-lived assets with finite lives were impaired. Goodwill — Goodwill is accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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 quarterly or more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. In assessing goodwill for impairment, the Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. In the qualitative assessment, the Company considers factors including economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Should the Company conclude that it is more likely than not that the recorded goodwill amounts have been impaired, the Company would perform the impairment test. Goodwill impairment exists when a reporting unit’s carrying value exceeds its fair value. Significant judgment is applied when goodwill is assessed for impairment. There were no impairment charges to goodwill during the six months ended June 30, 2023 and year ended December 31, 2022. Fair Value of Assets and Liabilities — The Company follows the relevant U.S. GAAP guidance regarding the determination and measurement of the fair value of assets/liabilities; in which fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction valuation hierarchy which requires an entity to maximize the use of observable inputs when measuring fair value. The guidance describes the following three levels of inputs that may be used in the methodology to measure fair value: Level 1 – Quoted prices available in active markets for identical investments as of the reporting date; Level 2 – Inputs other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date; and Level 3 – Unobservable inputs, which are to be used in situations where there is little or no market activity for the asset or liability and wherein the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The estimated fair values of cash, accounts receivable, related party receivables, prepaid expenses and other current assets, other assets, accounts payable, related party payables, accrued expenses, deferred revenue, customer deposit liabilities, and nonconvertible notes payable approximate their carrying values. The fair values of warrant liabilities issued in connection with equity or debt issuance are determined using the Black-Scholes valuation model, a “Level 3” fair value measurement, based on the estimated fair value of the underlying common stock, volatility based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities, the expected life based on the remaining contractual term of the conversion option and warrant liabilities and the risk free interest rate based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the warrant liability’s contractual life. The Company accounts for its financial assets and liabilities at fair value regularly. The Company evaluates the fair value of its non-financial assets and liabilities on a nonrecurring basis. Revenue Recognition — The Company derives its revenue primarily from professional services. Revenue is recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, the Company includes an estimate of the amount it expects to receive or the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur. The Company determines the amount of revenue to be recognized through the application of the following steps: •Identification of the contract, or contracts with a customer; •Identification of the performance obligations in the contract; •Determination of the transaction price; •Allocation of the transaction price to the performance obligations in the contract; and •Recognition of revenue when or as the Company satisfies the performance obligations. At contract inception, the Company will assess the services agreed upon within each contract and assess whether each service is distinct and determine those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. In general, each contract with a customer consists of a single performance obligation to perform services in which revenue is recognized when the service has been delivered. Remaining Performance Obligations — The Company’s arrangements with its customers often have terms that span over multiple years. However, the Company generally allows its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Revenue allocated to remaining performance obligations represents non-cancelable 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. Cancellable contracted revenue, which includes customer deposit liabilities, is not considered a remaining performance obligation. As of June 30, 2023, and December 31, 2022, the Company did not have any related performance obligations for contracts with terms exceeding twelve months. Disaggregation of Revenue
Contract Balances — The timing of customer billing and payment relative to the start of the service period varies from contract to contract; however, the Company bills many of its customers in advance of the provision of services under its contracts, resulting in liabilities consisting of either deferred revenue (a “contract liability”) or customer deposit liabilities. Deferred revenue represents billings under non-cancelable contracts before the related product or service is transferred to the customer. Such amounts are recognized by the Company over the life of the contract upon meeting the revenue recognition criteria, but generally within one year. Customer deposit liabilities consist of billings or payments received in advance of the start of the contractual term or for anticipated revenue-generating activities for the portion of a contract term that is subject to cancellation for convenience. Certain of the Company’s arrangements generally include terms that allow the customer to terminate the contract for convenience and receive a refund of the amount of the customer deposit for the percentage of the work not performed prior to the notice of termination. In these arrangements, the Company concluded there are no enforceable rights and obligations after such notice period and therefore, the consideration received or due from the customer that is subject to termination for convenience is recorded as customer deposit liabilities. The payment terms and conditions vary by contract; however, the Company’s terms generally require payment within 30 to 60 days from the invoice date. In instances where the timing of revenue recognition differs from the timing of payment, the Company elected to apply the practical expedient in accordance with ASC 606 to not adjust contract consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when promised goods and services are transferred to the customer and when the customer pays for those goods and services will be one year or less. As such, the Company determined its contracts do not generally contain a significant financing component. Costs to Obtain and Fulfill Contracts — Incremental costs of obtaining a contract include only those costs that are directly related to the acquisition of contracts, including sales commissions, and that would not have been incurred if the contract had not been obtained. In alignment with ASC 340, Other Assets and Deferred Costs ("ASC 340"), the Company recognizes an asset for the incremental costs of obtaining a contract with a customer if we expect to recover the costs. The Company elected to apply the practical expedient in accordance with ASC 340 which allows the Company to expense commissions as incurred when the contract term is twelve months or less in total. Costs to obtain contracts and costs to fulfill contracts were not material in the periods presented. Warrants — The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”), depending on the specific terms of the warrant agreement. Cost of Services Provided — Cost of services generally consists of the cost of hosting fees, materials, and cost of labor associated with professional services rendered. Depreciation and amortization expense is not included in cost of services. Research and Development — Research and development costs are expensed as incurred and consist primarily of personnel costs such as salaries and benefits and relate primarily to time spent during the preliminary project stage, post implementation maintenance, bug fixes associated with capitalized internal-use software activities, and front-end application development in which technological feasibility has not been established. Depreciation and amortization expense is not included in research and development. Advertising — Advertising costs are expensed as incurred. Advertising and marketing expense totaled $56 thousand and $65 thousand for the three months ended June 30, 2023 and 2022, respectively, and $108 thousand and $124 thousand for the six months ended June 30, 2023 and 2022, respectively. Stock- Based Compensation — The Company accounts for its stock-based compensation arrangements at fair value. Fair value of each stock-based award is estimated on the date of grant using either the Black-Scholes-Merton Model for stock options granted or using the fair value of a common stock for stock grants and restricted stock units. The Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including the fair value of the underlying common shares, the expected term of the share option, the expected volatility of the price of our common shares, risk-free interest rates, and the expected dividend yield of common shares. The assumptions used to determine the fair value of the option awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. The calculated fair value is recognized as expense over the requisite service period using the straight-line method. Forfeitures are accounted for in the period in which they occur. Trust Stamp offers the indirect repurchase of shares through a net-settlement feature upon the vesting of RSU awards to satisfy minimum statutory tax-withholding requirements for the recipient. Income Taxes — The Company records income tax provisions for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts for financial reporting purposes and the tax bases of assets and liabilities, as well as for loss and tax credit carryforwards. The deferred assets and liabilities are measured using the statutorily enacted tax rates anticipated to be in effect when those tax assets and liabilities are expected to be realized or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income in assessing the need for a valuation allowance. The Company’s tax positions are subject to income tax audits by multiple tax jurisdictions. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not the position will be sustainable upon examination by the taxing authority, including resolution of any related appeals or litigation processes. This evaluation is based on all available evidence and assumes that the tax authorities have full knowledge of all relevant information concerning the tax position. The tax benefit recognized is measured as the largest amount of benefit which is more likely than not (greater than 50% likely) to be realized upon ultimate settlement with the taxing authority. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense. The Company adjusts these reserves in accordance with the income tax guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences may affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s financial condition and operating results. The Company computes its tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date pre-tax income from recurring operations and adjusting for discrete tax items arising in that quarter. There were no discrete items that impacted the effective tax rate for the three and six months ended June 30, 2023 and June 30, 2022, respectively. The rate remained consistent over the period due to the full valuation allowance recorded in the period. The Company had an effective tax rate of 0% for the three and six months ended June 30, 2023 and 2022, respectively. The Company has incurred U.S. operating losses and has minimal profits in foreign jurisdictions. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In making this determination, management considers all available positive and negative evidence affecting specific deferred tax assets, including the Company’s past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry-back and carry-forward periods, and the implementation of tax planning strategies. The Company had no unrecognized tax benefits as of June 30, 2023 and December 31, 2022. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. The Company has not accrued any penalties related to uncertain tax positions due to offsetting tax attributes as of June 30, 2023 and December 31, 2022. The Company files U.S. federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitation. The only material jurisdiction where the Company is subject to potential examination by tax authorities is the U.S. (federal and state) for tax years 2016 through 2022. Leases — The Company determines if a contract is a lease or contains a lease at the inception of the contract in accordance with ASC 842. All leases are assessed for classification as an operating lease or a finance lease. The lease term begins on the commencement date, the date the Company takes possession of the property, and the commencement date is used to calculate straight-line expense for operating leases. The lease may include options to extend or terminate the lease. When it is reasonably certain that the option will be exercised, the Company reassess our conclusions to account for the modified contract. Operating lease right-of-use assets represent the Company’s right to use an underlying asset during a lease term and are included in non-current assets on our unaudited condensed consolidated balance sheet. Operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities are divided into two classifications on our unaudited condensed consolidated balance sheet as a current liability, short-term operating lease liabilities, and a non-current liability, long-term operating lease liabilities. The Company does not have any finance lease right-of-use assets or finance lease liabilities. The Company’s operating lease liabilities are recognized at the applicable lease commencement date based on the present value of the lease payments required to be paid over the lease term. The interest rate implicit in the lease is not readily determinable, therefore, the Company uses an estimated incremental borrowing rate to discount the lease payments to present value. The estimated incremental borrowing rate is derived from information available at the lease commencement date. The Company’s right-of-use assets are also recognized at the applicable lease commencement date. The right-of-use asset equals the carrying amount of the related operating lease liability, adjusted for any lease payments made prior to lease commencement and lease incentives provided by the lessor. Variable lease payments are expensed as incurred and do not factor into the measurement of the applicable right-of-use asset or operating lease liability. The term of our leases equals the non-cancellable period of the lease, including any rent-free periods provided by the lessor, and also include options to renew or extend the lease (including by not terminating the lease) that we are reasonably certain to exercise. We establish the term of each lease at lease commencement and reassess that term in subsequent periods if a triggering event occurs. Operating lease cost for lease payments is recognized on a straight-line basis over the lease term. Some lease contracts include lease and non-lease components. Trust Stamp elected the practical expedient offered by ASC 842 to not separate the lease components from non-lease components. As a result, the Company accounts for leases as a single lease component. In addition, the Company elected not to recognize right-of-use assets and operating lease liabilities for leases term of twelve months or less. The short-term lease expenses are recognized on a straight-line basis over the lease term. Commitments and Contingencies — Liabilities for loss contingencies arising from claims, disputes, legal proceedings, fines and penalties, and other sources are recorded when it is probable that a liability has been or will be incurred and the amount of the liability can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Recoveries of such legal costs from insurance policies are recorded as an offset to legal expenses in the period they are received. Treasury Stock — Repurchased treasury stock is recorded at cost. When treasury stock is resold at a price different than its historical acquisition cost, the difference is recorded as a component of additional paid-in capital in the unaudited condensed consolidated balance sheets. Net Loss per Share Attributable to Common Stockholders — Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potentially dilutive Class A Common Stock equivalents for the period. For the purposes of this calculation, stock-based awards, warrants, and the conversion option of convertible notes are considered to be potential common shares outstanding. Since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s potential common shares outstanding were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. Recent Accounting Pronouncements Not Yet Adopted — In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this ASU clarify that an entity should measure the fair value of an equity security subject to contractual sale restriction the same way it measures an identical equity security that is not subject to such a restriction. The FASB said the contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, should not affect its fair value. The ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect this guidance to have a material impact to its unaudited condensed consolidated financial statements or related disclosures. Recently Adopted Accounting Pronouncement — In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” (“ASU 2016-13”). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. In November 2019, FASB issued ASU 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this standard as of January 1, 2023, and the guidance did not have a material impact on its unaudited condensed consolidated financial statements or related disclosures.
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Borrowings | Borrowings 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 potentially repayable advance of up to €800 thousand or $858 thousand to assist in covering the costs of 75% of the first 24 months of payroll costs for any employee who begins 36 months from the execution of the agreement on July 8, 2020. On February 9, 2021, the Company began receiving funds and as of June 30, 2023, the balance received was $873 thousand which includes changes in foreign currency rates. The Company will pay an annual interest rate of 2% over the European Central Banks (ECB) base rate as set on the beginning of the year in review. If the ECB rate is below negative 1%, the interest rate shall be fixed at 1%. The Company will repay a minimum of 10% of Trust Stamp Malta Limited’s pre-tax profits per annum capped at 15% of the amount due to the Corporation until the disbursed funds are repaid. At this time, Trust Stamp Malta Limited does not have any revenue-generating contracts and therefore, we do not believe any amounts shall be classified as current.
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Warrants and Rights Note Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants | Warrants Liability Classified Warrants The following table presents the change in the liability balance associated with the liability classified warrants, which are classified in Level 3 of the fair value hierarchy from January 1, 2022 to June 30, 2023:
As of June 30, 2023, the Company has issued a customer a warrant to purchase up to $1.00 million of capital stock in a future round of financing at a 20% discount of the lowest price paid by another investor. The warrant was issued on November 9, 2016. There is no vesting period, and the warrant expires on November 30, 2026. The Company evaluated the provisions of ASC 480, Distinguishing Liabilities from Equity, noting the warrant should be classified as a liability due to its settlement being for a variable number of shares and potentially for a class of shares not yet authorized. The warrant was determined to have a fair value of $250 thousand which was recorded as a deferred contract acquisition asset and to a warrant liability during the year ended December 31, 2016 and was amortized as a revenue discount prior to the current periods presented. The fair value of the warrant was estimated on the date of grant by estimating the warrant’s intrinsic value on issuance using the estimated fair value of the Company as a whole and has a balance of $250 thousand as of June 30, 2023. On December 16, 2016, the Company issued an investor warrant to purchase $50 thousand worth of shares of our Class A Common Stock. The warrants have no vesting period and expires on December 16, 2026. The warrant agreement states that the investor is entitled to the “number of shares of Common Stock with a Fair Market Value as of the Determination Date of $50,000”. The determination date is defined as the “date that is the earlier of (A) the conversion of the investor’s Note into the equity interests of the Company or (B) the maturity date of the Note.” The investor converted the referenced Note on June 30, 2020, therefore, defining the determination date. The number of shares to be purchased is settled as 6,418 shares as of June 30, 2020. The exercise price of the warrants is variable until the exercise date. The Company used a Black-Scholes-Merton pricing model to determine the fair value of the warrants and uses this model to assess the fair value of the warrant liability. As of June 30, 2023, the warrant liability is recorded at $6 thousand which is a $6 thousand decrease, recorded to change in fair value of warrant liability, from the balance of $12 thousand as of December 31, 2022.
Equity Classified Warrants
The Company has issued a customer a warrant to purchase 80,128 shares of Class A Common Stock with an exercise price of $3.12 per share. The warrant was issued on November 9, 2016. There is no vesting period, and the warrant expires on November 30, 2026. In January 2020, the Company issued REach®, a related party, a warrant to purchase 186,442 shares of the Company’s Class A Common Stock at an exercise of $8.00 per share in exchange for the cancellation of a $100 thousand SAFE issued on August 18, 2017 by the Company’s affiliate Trusted Mail Inc. with a value of $125 thousand. The warrants were issued on January 23, 2020. There is no vesting period, and the warrants expire on December 20, 2024. In January 2020, the Company issued SCV, a related party, a warrant to purchase 932,111 shares of the Company’s Class A Common Stock at a strike price of $8.00 per share in exchange for $300 thousand in cash and “Premium” sponsorship status with a credited value of $100 thousand per year for 3 years totaling $300 thousand. This “premium” sponsorship status provides the Company with certain benefits in marketing and networking, such as the Company being listed on the investor’s website, as well as providing the Company certain other promotional opportunities organized by the investor. The warrants were issued on January 23, 2020. There is no vesting period, and the warrants expire on December 20, 2024. On December 21, 2021, SCV executed a Notice of Exercise for certain of its warrants to purchase 407,512 shares of Class A Common Stock at an exercise price of $8.00 per share for a total purchase price of $3.26 million. The closing occurred on January 10, 2022 and resulted in total cash proceeds of $3.26 million to the Company for the warrant exercise. The warrants to purchase the remaining 524,599 shares of the Company’s Class A Common Stock remain outstanding as of June 30, 2023. The Company issued 271,593 warrants from August 2021 to December 2021 and 15,421 warrants from January 2022 to February 2022 related to the Regulation CF, D, and S common stock and warrant offering. These warrants became exercisable on January 26, 2022 when the Company received SEC qualification of its offering statement on Form 1-A. These warrants expire as of the earlier of: (a) January 26, 2023, (b) the acquisition of the Company by another entity, or (c) immediately prior to the closing of a firm commitment underwritten public offering. On August 25, 2022, we refunded $5,000 in Regulation CF Units to two investors resulting in the cancellation of 250 warrants. During the quarter ended June 30, 2022, investors exercised 2,850 warrants at an exercise price of $20.00 per share, resulting in total cash proceeds of $57 thousand to the Company for the warrant exercises. The warrants to purchase the remaining 283,914 shares of the Company’s Class A Common Stock expired on January 26, 2023 and are no longer outstanding as of June 30, 2023. On September 11, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with Armistice Capital Master Fund Ltd. Pursuant to the terms of the SPA, the Company agreed, at the closing of the SPA, to sell and issue to the Armistice Capital Master Fund Ltd. in a private placement 195,000 shares of Class A Common Stock of the Company and warrants to purchase 390,000 shares of Class A Common Stock of the Company at an exercise price of $8.85 for a total purchase price of $1,511,250. The Company incurred offering costs of $90,675 from this transaction that were recorded as a reduction of the gross proceeds. The 390,000 warrants may be exercised at any time by the Selling Stockholder starting on the issuance date, September 14, 2022, until the five year and six-month anniversary thereafter. The warrants also allow for a “cashless exercise” if, at any time after the six (6) month anniversary of the issue date of the warrants there is no effective registration statement registering the resale of the Class A Common Stock issuable pursuant to the warrants. In such a case, then warrants may also be exercised, in whole or in part, by means of a cashless exercise in which the Selling Stockholder will be entitled to receive a number of shares of Class A Common Stock as described in the warrants. Trust Stamp filed the registration statement on September 30, 2022 and received the notice of effectiveness on January 26, 2023. On June 5, 2023, the Company entered into an Amendment to Existing Warrants agreement with Armistice Capital Master Fund Ltd. Pursuant to the terms of the Amendment to Existing Warrants, the exercise price for the warrants to purchase 390,000 shares of Class A Common Stock of the Company is reduced to $2.30 for a total purchase price of $897,000. In addition, the expiration date for the 390,000 warrants is amended allowing the exercise of the warrant at any time by the Selling Stockholder starting on the closing of the offering, June 5, 2023, until the five year anniversary thereafter. The warrants to purchase 390,000 shares of the Company’s Class A Common Stock remain outstanding as of June 30, 2023. On April 14, 2023, the Company entered into a securities purchase agreement (“SPA”) with Armistice Capital Master Fund Ltd. Pursuant to which the Company agreed to issue and sell to the investor (i) in a registered direct offering, 563,380 shares of Class A Common Stock, par value $0.01 per share of the Company at a price of $3.30 per share, and pre-funded warrants to purchase up to 1,009,950 shares of Class A Common Stock, at a price of $3.299 per prefunded warrant, at an exercise price of $0.001 per share of Class A Common Stock, and (ii) in a concurrent private placement, common stock purchase warrants, exercisable for an aggregate of up to 1,573,330 shares of Class A Common Stock, at an exercise price of $3.30 per share. On April 18, 2023, the Company sold 563,380 shares of Class A Common Stock to the institutional investor at a price of $3.30 per share for total proceeds $1,859,154. Additionally, on same date, the institutional investor purchased and exercised the 1,009,950 pre-funded warrants, for total proceeds to the Company of $3,332,835, resulting in an aggregate issuance by the Company of 1,573,330 shares of Class A Common Stock for net proceeds of $4,778,550 from the registered direct offering after deducting placement fee and legal expense of $363,439 and $50,000, respectively. The common stock purchase warrants to purchase 1,573,330 shares of the Company’s Class A Common Stock remain outstanding as of June 30, 2023. On June 1, 2023, the Company entered into a securities purchase agreement (“SPA”) with an Armistice Capital Master Fund Ltd. Pursuant to which the Company agreed to issue and sell to the investor (i) in a registered direct offering, 736,400 shares of Class A Common Stock, par value $0.01 per share of the Company at a price of $2.30 per share, and pre-funded warrants to purchase up to 543,300 shares of Class A Common Stock, at a price of $2.299 per prefunded warrant, at an exercise price of $0.001 per share of Class A Common Stock, and (ii) in a concurrent private placement, common stock purchase warrants, exercisable for an aggregate of up to 1,279,700 shares of Class A Common Stock, at an exercise price of $2.30 per share. On June 5, 2023, the Company sold 736,400 shares of Class A Common Stock to the institutional investor at a price of $2.30 per share for total proceeds of $1,693,720. Additionally, on same date, the institutional investor purchased the 543,300 pre-funded warrants at a price of $2.299 per prefunded warrant, for total proceeds to the Company of $1,249,047, resulting in an issuance by the Company of 736,400 shares of Class A Common Stock for net proceeds of $2,686,773 from the registered direct offering after deducting placement fee and legal expense of $205,994 and $50,000, respectively. On June 12, 2023, the institutional investor exercised 322,300 pre-funded warrants at a price of $0.001 per prefunded warrant, resulting in an issuance by the Company of 322,300 shares of Class A Common Stock for total proceeds of $322. Additionally, on June 23, 2023, the institutional investor exercised 221,000 pre-funded warrants at a price of $0.001 per prefunded warrant, resulting in an issuance by the Company of 221,000 shares of Class A Common Stock for total proceeds of $221. The common stock purchase warrants to purchase 1,279,700 shares of the Company’s Class A Common Stock remain outstanding as of June 30, 2023.
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Balance Sheet Components |
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Balance Sheet Components | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Components | Balance Sheet Components Prepaid expenses and other current assets Prepaid expenses and other current assets as of June 30, 2023 and December 31, 2022 consisted of the following:
Capitalized internal-use software, net Capitalized internal-use software, net as of June 30, 2023 and December 31, 2022 consisted of the following:
Amortization expense is recognized on a straight-line basis and for the three months ended June 30, 2023 and 2022 totaled $138 thousand and $127 thousand, respectively. Amortization expense is recognized on a straight-line basis and for the six months ended June 30, 2023 and 2022 totaled $279 thousand and $246 thousand, respectively. The Company determined that as of June 30, 2023, $17 thousand of capitalized internal-use software was impaired. The impaired capitalized internal-use software was expensed to Research and development during the six months ended June 30, 2023. Property and equipment, net Property and equipment, net as of June 30, 2023 and December 31, 2022 consisted of the following:
Depreciation expense is recognized on a straight-line basis and for the three months ended June 30, 2023 and 2022 totaled $11 thousand and $42 thousand, respectively. Depreciation expense is recognized on a straight-line basis and for the six months ended June 30, 2023 and 2022 totaled $53 thousand and $52 thousand, respectively. On April 26, 2023, the Company sold a portion of the mobile hardware for a gross sales price of $180 thousand and a gain of $108 thousand. On May 26, 2023, the Company sold another portion of the mobile hardware for a gross sales price of $197 thousand and a gain of $108 thousand. Accrued expenses Accrued expenses as of June 30, 2023 and December 31, 2022 consisted of the following:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets There were no changes in the carrying amount of goodwill for the periods ended June 30, 2023 and December 31, 2022. Intangible assets as of June 30, 2023 and December 31, 2022 consisted of the following:
Intangible asset amortization expense is recognized on a straight-line basis and intangible asset amortization expense for the three months ended June 30, 2023 and 2022 totaled $38 thousand and $22 thousand, respectively. Intangible asset amortization expense is recognized on a straight-line basis and intangible asset amortization expense for the six months ended June 30, 2023 and 2022 totaled $75 thousand and $46 thousand, respectively. Estimated future amortization expense of intangible assets is as follows:
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Net Loss per Share Attributable to Common Stockholders |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss per Share Attributable to Common Stockholders | Net Loss per Share Attributable to Common Stockholders The following table presents the calculation of basic and diluted net loss per share:
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:
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Stock Awards and Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Awards and Stock-Based Compensation | Stock Awards and Stock-Based Compensation From time to time, the Company may issue stock awards in the form of Class A Common Stock grants, Restricted Stock Units (RSUs), or Class A Common Stock options with vesting/service terms. Stock awards are valued on the grant date using the Company’s common stock share price quoted on an active market. Stock options are valued using the Black-Scholes-Merton pricing model to determine the fair value of the options. We generally issue our awards in terms of a fixed monthly value, resulting in a variable number of shares being issued, or in terms of a fixed monthly share number. During the three and six months ended June 30, 2023 and 2022, the Company entered into agreements with advisory board members and other external advisors to issue cash payments and stock awards in exchange for services rendered to the Company monthly. The total granted stock-based awards to advisory board members and other external advisors during the three months ended June 30, 2023 and 2022 included grants totaling, $0 and $1 thousand, respectively, options totaling $0, and RSUs totaling $6 thousand and $37 thousand, respectively. The total granted stock-based awards to advisory board members and other external advisors during the six months ended June 30, 2023 and 2022 included grants totaling, $0 and $4 thousand, respectively, options totaling $0, and RSUs totaling $9 thousand and $54 thousand, respectively. In addition to issuing stock awards to advisory board members and other external advisors, during the three and six months ended June 30, 2023 and 2022, the Company granted stock-based awards to multiple employees. The total granted stock-based awards to employees during the three months ended June 30, 2023 and 2022 included grants totaling, $21 thousand and $73 thousand, respectively, options totaling $3 thousand and $14 thousand, respectively, and RSUs totaling $68 thousand and $335 thousand, respectively. The total granted stock-based awards to employees during the six months ended June 30, 2023 and 2022 included grants totaling, $47 thousand and $221 thousand, respectively, options totaling $7 thousand and $43 thousand, respectively, and RSUs totaling $95 thousand and $424 thousand, respectively. The following table summarizes stock option activity for the three and six months ended June 30, 2023:
The aggregate intrinsic value of options outstanding, exercisable, and vested 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 six months ended June 30, 2023 and 2022 is $0 and $19 thousand, respectively. The weighted average grant-date fair value of options granted during the six months ended June 30, 2023 and 2022 was $1.48 and $11.95 per share, respectively. The total grant-date fair value of options that vested during the six months ended June 30, 2023 and 2022 was $7 thousand and $44 thousand, respectively. As of June 30, 2023, the Company had 389,508 stock options outstanding of which all are fully vested options. As of June 30, 2023, the Company had 66,630 common stock grants outstanding of which 58,135 were vested but not issued and 8,495 were not yet vested. All granted and outstanding common stock grants will fully vest by June 30, 2024. The Company had unrecognized stock-based compensation related to common stock grants of $11 thousand as of June 30, 2023. As of June 30, 2023, the Company had 186,789 RSUs outstanding of which 147,518 were vested but not issued and 39,271 were not yet vested. All granted and outstanding RSUs will fully vest by January 2, 2024. The Company had unrecognized stock-based compensation related to RSUs of $97 thousand as of June 30, 2023. A summary of outstanding RSU activity is as follows:
The following assumptions were used to calculate the fair value of options granted during the six months ended June 30, 2023:
Stock-based compensation expense Our consolidated statements of operations include stock-based compensation expense as follows:
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Related Party Transactions |
6 Months Ended |
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Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party TransactionsRelated party payables of $138 thousand and $273 thousand as of June 30, 2023 and December 31, 2022, respectively, primarily relate to amounts owed to 10Clouds, the Company’s contractor for software development and investor in the Company, and smaller amounts payable to members of management as expense reimbursements. Total costs incurred in relation to 10Clouds for the three months ended June 30, 2023 and 2022, totaled approximately $242 thousand and $219 thousand, respectively. Total costs incurred in relation to 10Clouds for the six months ended June 30, 2023 and 2022, totaled approximately $535 thousand and $434 thousand, respectively. Legal Services A member of management provides legal services to the Company from a law firm privately owned and separate from the Company. Certain services are provided to the Company through this law firm. Total expenses incurred by the Company in relation to these services totaled $0 and $34 thousand during the three months ended June 30, 2023 and 2022, respectively. Total expenses incurred by the Company in relation to these services totaled $0 and $63 thousand during the six months ended June 30, 2023 and 2022, respectively. Amounts payable as of June 30, 2023 and December 31, 2022 were $0. Options Agreement The Company has agreed, with effect from November 13, 2020, to grant a three-year loan in the amount of $335 thousand with an abated interest rate of 0.25% per annum to an advisory contractor to purchase 281,648 options. The options provide for the right to acquire shares of Class A Common Stock at a strike price of $6.00 per share. The options have no vesting period and will expire in November 2023. The loan was repaid with in-kind services from the contractor at a rate of $9 thousand per month for 36 months with the first payment receipt in April 2020 and the final payment received in February 2023. As of June 30, 2023 and December 31, 2022, the shareholder loan balances were $0 and $19 thousand, respectively. Mutual Channel Agreement On November 15, 2020, the Company entered into a Mutual Channel Agreement with Vital4Data, Inc., a company at which Kristin Stafford serves as Chief Executive Officer, who is a current Director of the Company. Pursuant to the agreement, the Company engaged Vita4Data, Inc. as a non-exclusive sales representative for the Company’s products and services. Vital4Data, Inc. is entitled to compensation in the form of commissions, receiving a 20% of commission-eligible on net revenue from sales generated by Vital4Data, Inc. in the first year of the contract term, which is reduced to 10% in the second year, and 5% in the third year. The Company has not earned or expensed any commissions pursuant to the Vital4Data, Inc. agreement to date. As of June 30, 2023 and December 31, 2022, the Vital4Data, Inc. commission due was $0.
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Malta Grant |
6 Months Ended |
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Jun. 30, 2023 | |
Malta Grant | |
Malta Grant | Malta Grant During July 2020 the Company entered into an agreement with the Republic of Malta that would provide for a grant of up to €200 thousand or $251 thousand as reimbursement for operating expenses over the first twelve months following Trust Stamp Malta’s incorporation in the Republic of Malta. The Company must provide an initial capital amount of €50 thousand or $62 thousand, which is matched with a €50 thousand or $62 thousand grant. The remaining €150 thousand or $190 thousand are provided as reimbursement of operating expenses twelve months following incorporation. U.S. GAAP does not provide authoritative guidance regarding the receipt of economic benefits from government entities in return for compliance with certain conditions. Therefore, based on ASC 105-10-05-2, non-authoritative accounting guidance from other sources was considered by analogy in determining the appropriate accounting treatment, the Company elected to apply International Accounting Standards 20 – Accounting for Government Grants and Disclosure of Government Assistance and recognizes the expected reimbursements from the Republic of Malta as deferred income. As reimbursable operating expenses are incurred, a receivable is recognized (reflected within “prepaid expenses and other current assets” in the unaudited condensed consolidated balance sheets) and income is recognized in a similar systematic basis over the same periods in the unaudited condensed consolidated statements of operations. During the six months ended June 30, 2023 and 2022, the Company incurred $0 in expenses that are reimbursable under the grant. As of June 30, 2023, all amounts provided for under this grant were received. On January 25, 2022, the Company entered into an additional agreement with the government of Malta for a grant of up to €100 thousand or $107 thousand, in terms of the ‘Investment Aid to produce the COVID-19 Relevant Product’ program, to support the proposed investment. The estimated value of the grant is €136,568 or $146,493, at an aid intensity of 75% to cover eligible wage costs incurred after February 1, 2022 in relation to new employees engaged specifically for the implementation of the project. On September 22, 2022, the Company entered into an amendment agreement that enables the Company to submit eligible employee expenses for reimbursement by October 31, 2022. During the six months ended June 30, 2023 and 2022, the Company incurred $0, respectively, in expenses that are reimbursable under the grant. As of June 30, 2023, no amounts provided under this grant were received.
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Leases and Commitments |
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Leases and Commitments | Leases and Commitments Operating Leases — The Company leases office space in Atlanta, Georgia, which serves as its corporate headquarters, office space in Malta, which serves as its research and development facility, and vehicles in Malta that are considered operating lease arrangements under ASC 842 guidance. In addition. the Company contracts for month-to-month coworking arrangements in other office spaces in North Carolina, Denmark, Poland, and Rwanda to support its dispersed workforce. As of June 30, 2023, there were no minimum lease commitments related to month-to-month lease arrangements. Initial lease terms are determined at commencement date, the date the Company takes possession of the property, and the commencement date is used to calculate straight-line expense for operating leases. Certain leases contain renewal options for varying periods, which are at the Company’s sole discretion. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in the determination of the Company’s right-of-use assets and lease liabilities. The Company’s leases have remaining terms of 1 to 3 years. As the Company’s leases do not provide an implicit rate, the present value of future lease payments is determined using the Company’s incremental borrowing rate based on information available at the commencement date.
During the six months ended June 30, 2023, the Company terminated four leases including two offices in Malta and two vehicles in Malta. The terminated leases were operating leases. As a result of the terminations, the Company incurred $11 thousand in lease termination fees and recorded a loss of $178 related to this lease termination for the six months ended June 30, 2023.
On April 28, 2023, the Company extended the Malta office lease agreement, which would have ended on July 28, 2023, for a term of one additional year. The lease extension increased the right-of-use asset by $82 thousand and the operating lease liability by $83 thousand. The Company classified the amended lease as an operating lease under ASC 842. Balance sheet information related to leases as of June 30, 2023 and December 31, 2022 was as follows:
Future maturities of ASC 842 lease liabilities as of June 30, 2023 are as follows:
Total lease expense, under ASC 842, was included in selling, general, and administrative expenses in our consolidated statement of operations for the three and six months ended June 30, 2023 as follows:
Supplemental cash flows information related to leases was as follow:
During the six months ended June 30, 2023, the Company did not incur variable lease expense. Financial Liability Obligation — As of June 30, 2023, the Company’s financial liability totaled $162 thousand for an executed agreement with a telecommunications company for acquiring mobile hardware. On March 3, 2023, the Company provided a 30-day termination notice to the telecommunications company which terminates the mobile hardware data service. Under the contract terms with the telecommunications company, upon termination of the data service the Company must pay the remaining financial liability during the final data service billing period. The remaining financial liability will be paid within the year ending December 31, 2023. Litigation — The Company is not currently involved with and does not know of any pending or threatening litigation against the Company or any of its officers or directors in connection with its business.
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Subsequent events have been evaluated through August 22, 2023, the date these unaudited condensed consolidated financial statements were available to be issued. Amended and Restated Certificate of Incorporation — On July 6, 2023, the Company received confirmation of the acceptance of its Third Amended and Restated Certificate of Incorporation (the "Third Restated Certificate") from the Secretary of State of Delaware. The Third Restated Certificate was approved by the Company’s stockholders by written consent pursuant to a definitive proxy statement filed with the Securities and Exchange Commission on April 13, 2023. Written consent from the majority of stockholders was received as of May 13, 2023. The Third Restated Certificate maintained the 50,000,000 authorized shares of Common Stock and eliminated the authorized Preferred Stock. The Third Restated Certificate also created a classified Board of Directors of the Company with three classes of directors who will stand for election in staggered years. Warrant Exercise — On August 18, 2023, Armistice Capital Master Fund Ltd. executed a Notice of Exercise to purchase 270,000 shares of Class A Common Stock pursuant to the terms of the September 11, 2022 Securities Purchase Agreement between the Company and Armistice Capital Master Fund Ltd.. Armistice Capital Master Fund Ltd. agreed to purchase each warrant for $2.30 for a total purchase price of $621,000.
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Description of Business and Summary of Significant Accounting Policies And Going Concern (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of Business | Description of Business — T Stamp Inc. was incorporated on April 11, 2016 in the State of Delaware. T Stamp Inc. and its subsidiaries (“Trust Stamp”, “we”, “us”, “our” or the “Company”) develops and markets identity authentication software solutions for enterprise and government partners and peer-to-peer markets. Trust Stamp develops proprietary artificial intelligence-powered solutions, researching and leveraging machine learning, artificial intelligence, biometric science, cryptography, and data mining, to deliver insightful identity and trust predictions that identify and defend against fraudulent identity attacks, protect sensitive user information, and extend the reach of digital services through global accessibility. We utilize the power and agility of technologies such as GPU processing, edge-computing, neural networks, and large language models to process and protect data faster and more effectively than has ever previously been possible in order to deliver results at a disruptively low cost for usage across multiple industries, including: •Banking/FinTech •KYC/AML Compliance •Humanitarian and Development Services •Government and Law Enforcement, including Alternative to Detention programs •Cryptocurrency and Digital Assets •Biometrically Secured Email and Digital Communications •P2P Transactions, Social Media, and Sharing Economy •Real Estate, Travel, and Healthcare
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Reverse Split | Reverse Split — On February 15, 2023 our Board of Directors approved and, as of February 20, 2023, the holders of a majority of our voting capital stock approved an amendment (the “Certificate of Amendment”) to the Company’s Amended and Restated Certificate of Incorporation and approved to effect a reverse split of our issued and outstanding shares of Class A Common Stock at a ratio of one share for every five shares currently held, rounded up to the nearest whole share – whereby every five (5) outstanding shares of Class A Common Stock was combined and became one (1) share of Class A Common Stock, rounding up to the nearest whole number of shares (the “Reverse Split”). All share and per share amounts in these unaudited condensed consolidated financial statements have been retroactively restated to reflect the Reverse Split. The Reverse Split was effective for trading on the market opening of Nasdaq on March 23, 2023. The Reverse Stock Split effective March 23, 2023, was ratified by the Company’s stockholders by written consent pursuant to a definitive proxy statement filed with the Securities and Exchange Commission on April 13, 2023. Written consent from the majority of stockholders was received as of May 13, 2023.Amended and Restated Certificate of Incorporation — On July 6, 2023, the Company received confirmation of the acceptance of its Third Amended and Restated Certificate of Incorporation (the "Third Restated Certificate") from the Secretary of State of Delaware. The Third Restated Certificate was approved by the Company’s stockholders by written consent pursuant to a definitive proxy statement filed with the Securities and Exchange Commission on April 13, 2023. Written consent from the majority of stockholders was received as of May 13, 2023. The Third Restated Certificate maintained the 50,000,000 authorized shares of Common Stock and eliminated the authorized Preferred Stock. The Third Restated Certificate also created a classified Board of Directors of the Company with three classes of directors who will stand for election in staggered years. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Going Concern | Going Concern — The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits, with a loss in the six months ended June 30, 2023 of $4.72 million, negative operating cash outflows of $3.58 million for the same period, working capital of $1.47 million and an accumulated deficit of $44.02 million as of June 30, 2023.The Company’s ability to continue as a going concern in the next twelve months following the date the unaudited condensed consolidated financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and plans to generate revenue and raise capital as needed to satisfy the Company’s capital needs. While the negotiation of significant additional revenue is well advanced, it has not reached a stage that allows it to be factored into a going concern evaluation. In addition, although the Company has previously been successful in raising capital as needed and has already made plans to do so as well as restructuring expenses to meet the Company’s cash needs, no assurance can be given that the Company will be successful in its capital raising efforts. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period. On April 18, 2023, the Company sold 563,380 shares of Class A Common Stock to the institutional investor for total proceeds of $1,859,154 and on same date, the institutional investor purchased and exercised the 1,009,950 pre-funded warrants, for total proceeds to the Company of $3,332,835, resulting in an aggregate issuance by the Company of 1,573,330 shares of Class A Common Stock for net proceeds of $4.78 million from the registered direct offering after deducting placement fee and legal expense of $363 thousand and $50 thousand, respectively. On June 5, 2023, the Company sold 736,400 shares of Class A Common Stock to the institutional investor for total proceeds of $1,693,720 and on same date, the institutional investor purchased 543,300 pre-funded warrants that were subsequently exercised during the three months ended June 30, 2023, for total proceeds to the Company of $1,249,590, resulting in an aggregate issuance by the Company of 1,279,700 shares of Class A Common Stock for net proceeds of $2,686,773 from the registered direct offering after deducting placement fee and legal expense of $205,994 and $50,000, respectively. See Note 3 to the financial statements provided under Item 1 of this report for more details. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with US Generally Accepted Accounting Principles (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Interim Results | 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 June 30, 2023, the results of operations for the six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. Certain information and note disclosures have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated balance sheet as of June 30, 2023 was derived from the audited financial statements as of that December 31, 2022 but does not include all of the disclosures required by U.S. GAAP. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes for the year ended December 31, 2022 included in the Company’s Annual Report. The Company’s significant accounting policies are described in Note 1 to those audited financial statements.
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Basis of Consolidation | Basis of Consolidation — The accompanying unaudited condensed consolidated financial statements reflect the activity of the Company and its subsidiaries, Trusted Mail Inc. (“Trusted Mail”), Finnovation LLC (“Finnovation”), Trust Stamp Malta Limited (“Trust Stamp Malta”), AIID Payments Limited, Biometric Innovations Limited (“Biometrics”), Trust Stamp Rwanda Limited, Metapresence Limited, and Trust Stamp Denmark ApS. All significant intercompany transactions and accounts have been eliminated. On February 28, 2023, the Company received the Certificate of Termination from the State of Georgia, which represents the completion of administratively dissolving T Avatar LLC. As there were no operations established under the entity, there is a limited impact to Trust Stamp. The dissolution of T Avatar LLC was effective February 28, 2023. On June 2, 2023, the Company received the termination resolution from the Polish National Court Register, which represents the completion of administratively dissolving Sunflower AI Technologies (“SAIT”). As there were no operations established under the entity, there is a limited impact to Trust Stamp. The dissolution of SAIT was effective May 10, 2023. Further, we continue to consolidate Tstamp Incentive Holdings (“TSIH”) which we consider to be a variable interest entity.
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Variable Interest Entity | Variable Interest Entity — On April 9, 2019, management created a new entity, TSIH. Furthermore, on April 25, 2019, the Company issued 320,513 shares of Class A Common Stock to TSIH, for the purpose of providing a pool of shares of Class A Common Stock of the Company that the Company’s Board of Directors (the “Board”) could use for employee stock awards and were recorded initially as treasury stock. Since establishing TSIH, 264,000 shares were transferred to various employees as a stock award that were earned and outstanding. On February 15, 2023 Trust Stamp issued 206,033 shares of Class A Common Stock to TSIH to be used to satisfy vested employee stock awards. As of June 30, 2023, TSIH held 16,821 treasury stock earmarked for future employee RSU bonuses. The Company does not own any of the shares of Class A Common Stock of the Company held by TSIH. The Company considers this entity to be a variable interest entity (“VIE”) because it is thinly capitalized and holds no cash. Because the Company does not own shares in TSIH, management believes that this gives the Company a variable interest. Further, management of the Company also acts as management of TSIH and is the decision-maker as management grants shares held by TSIH to employees of the Company. As this VIE owns only shares in the Company and no other liabilities or assets, the Company is the primary beneficiary of TSIH and will consolidate the VIE.
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Use of Estimates | Use of Estimates — The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates their estimates that include, but are not limited to, percentage of completion related to revenue contracts that are not fully complete at the end of a fiscal quarter, capitalization and estimated useful life of internal-use software, the allowance for doubtful accounts, the fair value of financial assets and liabilities, the recoverability of goodwill, stock-based compensation including the determination of the fair value of our common stock, impairment of long-lived assets, the valuation of deferred tax assets and uncertain tax positions, and warrant liabilities. We base our estimates on assumptions, both historical and forward-looking trends, and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information — The Company has a single operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties | 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 | Major Customers and Concentration of Risks — Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. We maintain our cash and cash equivalents with high-quality financial institutions, mainly in the United States; the composition of which are regularly monitored by us. The Federal Deposit Insurance Corporation covers $250 thousand for substantially all depository accounts. The Company from time to time may have amounts on deposit in excess of the insured limits. As of June 30, 2023 and December 31, 2022, the Company had $4.24 million and $71 thousand in U.S. bank accounts, respectively, which exceeded these insured amounts. Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts. For accounts receivable, we are exposed to credit risk in the event of nonpayment by customers to the extent the amounts are recorded in the consolidated balance sheets. We extend different levels of credit and maintain reserves for potential credit losses based upon the expected collectability of accounts receivable. We manage credit risk related to our customers by performing periodic evaluations of credit worthiness and applying other credit risk monitoring procedures. Three customers represented 92.71% or 60.29%, 25.55%, and 6.87% of the balance of total accounts receivable as of June 30, 2023 and three customers represented 95.37% or 36.90%, 32.69%, and 25.78% of the balance of total accounts receivable as of December 31, 2022. The Company seeks to mitigate its credit risk with respect to accounts receivable by contracting with large commercial customers and government agencies, and regularly monitoring the aging of accounts receivable balances. As of June 30, 2023 and December 31, 2022, the Company had not experienced any significant losses on its accounts receivable. During the three months ended June 30, 2023, the Company sold to primarily three customers which made up approximately 90.67% of total Net revenue, and consisted of 48.97%, 31.33%, and 10.37% from an S&P 500 Bank, Mastercard, and Triton, respectively. Additionally, during the three months ended June 30, 2022, the Company sold to primarily three customers which made up approximately 88.57% of total Net revenue, and consisted of 38.14%, 28.45%, and 21.98% from an S&P 500 Bank, ICE, and Mastercard. During the six months ended June 30, 2023, the Company sold to primarily four customers which made up approximately 92.73% of total Net revenue, and consisted of 44.57%, 28.21%, 10.22%, and 9.73% from an S&P 500 Bank, Mastercard, FIS, and Triton, respectively. Additionally, during the six months ended June 30, 2022, the Company sold to primarily four customers which made up approximately 97.57% of total Net revenue, and consisted of 69.19%, 15.59%, 9.56%, and 3.23% from ICE, an S&P 500 Bank, Mastercard, and FIS.
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Foreign Currencies | Foreign Currencies — The functional currencies of the Company’s foreign subsidiaries are the local currencies. For those subsidiaries, the assets and liabilities are translated into U.S. dollars at the exchange rate method at the unaudited condensed consolidated balance sheet date. The Company’s other comprehensive (loss) is comprised of foreign currency translation adjustments related to the Company’s foreign subsidiaries. Income and expenses are translated at the average exchange rates for the period. Foreign currency transaction gains and losses are included in other income or other expense in the unaudited condensed consolidated statements of operations. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents — Cash and cash equivalents consist of cash in banks and bank deposits. The Company considers all highly liquid instruments purchased with an original maturity of three months or less when purchased as cash equivalents. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Credit Losses — Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses, if any. The Company’s trade receivables primarily arise from the sale of our products to customers through contracts for software licenses and subscriptions, software usage, web hosting fees, and software development with payment terms of 60 days. The Company evaluates the credit risk of a customer when extending credit based on a combination of various financial and qualitative factors that may affect the customers’ ability to pay. These factors include the customers’ financial condition and past payment experience. The Company maintains an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The Company measures expected credit losses on its trade receivables on an customer basis. The estimate of expected credit losses considers any historical losses, delinquency trends, collection experience, and/or economic risk where appropriate. Additionally, management develops a specific allowance for trade receivables known to have a high risk of expected future credit loss. The Company has historically experienced immaterial write-offs given the nature of the customers and contracts. As of June 30, 2023, the Company had gross receivables of $495 thousand and an allowance for credit losses of $8 thousand.
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Property and Equipment, Net | Property and Equipment, Net — Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is recognized using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs that do not improve or extend the useful lives of the assets are expensed when incurred, whereas additions and major improvements are capitalized. Upon sale or retirement of assets, the cost and related accumulated depreciation are derecognized from the unaudited condensed consolidated balance sheet and any resulting gain or loss is recorded in the unaudited condensed consolidated statements of operations in the period realized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Internal-Use Software, Net | Capitalized Internal-Use Software, Net — Costs related to software acquired, developed, or modified solely to meet our internal requirements, with no substantive plans to market such software at the time of development are capitalized. The Company capitalizes eligible costs to develop internal-use software that are incurred subsequent to the preliminary project stage through the development stage. These costs consist of personnel costs (including related benefits and stock-based compensation) that are incurred during the application development stage. Costs incurred during the preliminary project stage and during the post-implementation operational stage are expensed as incurred. Maintenance costs are expensed as incurred. The estimated useful life of costs capitalized is evaluated for each specific project that is generally five years. Actual economic lives may differ from estimated useful lives. Periodic reviews could result in a change in estimated useful lives and therefore changes in amortization expense in future periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting for Impairment of Long-Lived Assets | Accounting for Impairment of Long-Lived Assets — Long-lived assets with finite lives include property and equipment, capitalized internal-use software, right of use assets, and intangible assets subject to amortization. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company determined that as of June 30, 2023, $17 thousand of capitalized internal-use software was impaired. The impaired capitalized internal-use software was expensed during the six months ended June 30, 2023. As of December 31, 2022, the Company determined that no long-lived assets with finite lives were impaired.
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Goodwill | Goodwill — Goodwill is accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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 quarterly or more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. In assessing goodwill for impairment, the Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. In the qualitative assessment, the Company considers factors including economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Should the Company conclude that it is more likely than not that the recorded goodwill amounts have been impaired, the Company would perform the impairment test. Goodwill impairment exists when a reporting unit’s carrying value exceeds its fair value. Significant judgment is applied when goodwill is assessed for impairment. There were no impairment charges to goodwill during the six months ended June 30, 2023 and year ended December 31, 2022. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities — The Company follows the relevant U.S. GAAP guidance regarding the determination and measurement of the fair value of assets/liabilities; in which fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction valuation hierarchy which requires an entity to maximize the use of observable inputs when measuring fair value. The guidance describes the following three levels of inputs that may be used in the methodology to measure fair value: Level 1 – Quoted prices available in active markets for identical investments as of the reporting date; Level 2 – Inputs other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date; and Level 3 – Unobservable inputs, which are to be used in situations where there is little or no market activity for the asset or liability and wherein the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The estimated fair values of cash, accounts receivable, related party receivables, prepaid expenses and other current assets, other assets, accounts payable, related party payables, accrued expenses, deferred revenue, customer deposit liabilities, and nonconvertible notes payable approximate their carrying values. The fair values of warrant liabilities issued in connection with equity or debt issuance are determined using the Black-Scholes valuation model, a “Level 3” fair value measurement, based on the estimated fair value of the underlying common stock, volatility based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities, the expected life based on the remaining contractual term of the conversion option and warrant liabilities and the risk free interest rate based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the warrant liability’s contractual life. The Company accounts for its financial assets and liabilities at fair value regularly. The Company evaluates the fair value of its non-financial assets and liabilities on a nonrecurring basis.
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Revenue Recognition | 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. 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 non-cancelable 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. Cancellable contracted revenue, which includes customer deposit liabilities, is not considered a remaining performance obligation. As of June 30, 2023, and December 31, 2022, the Company did not have any related performance obligations for contracts with terms exceeding twelve months. Disaggregation of Revenue
Contract Balances — The timing of customer billing and payment relative to the start of the service period varies from contract to contract; however, the Company bills many of its customers in advance of the provision of services under its contracts, resulting in liabilities consisting of either deferred revenue (a “contract liability”) or customer deposit liabilities. Deferred revenue represents billings under non-cancelable contracts before the related product or service is transferred to the customer. Such amounts are recognized by the Company over the life of the contract upon meeting the revenue recognition criteria, but generally within one year. Customer deposit liabilities consist of billings or payments received in advance of the start of the contractual term or for anticipated revenue-generating activities for the portion of a contract term that is subject to cancellation for convenience. Certain of the Company’s arrangements generally include terms that allow the customer to terminate the contract for convenience and receive a refund of the amount of the customer deposit for the percentage of the work not performed prior to the notice of termination. In these arrangements, the Company concluded there are no enforceable rights and obligations after such notice period and therefore, the consideration received or due from the customer that is subject to termination for convenience is recorded as customer deposit liabilities. The payment terms and conditions vary by contract; however, the Company’s terms generally require payment within 30 to 60 days from the invoice date. In instances where the timing of revenue recognition differs from the timing of payment, the Company elected to apply the practical expedient in accordance with ASC 606 to not adjust contract consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when promised goods and services are transferred to the customer and when the customer pays for those goods and services will be one year or less. As such, the Company determined its contracts do not generally contain a significant financing component. Costs to Obtain and Fulfill Contracts — Incremental costs of obtaining a contract include only those costs that are directly related to the acquisition of contracts, including sales commissions, and that would not have been incurred if the contract had not been obtained. In alignment with ASC 340, Other Assets and Deferred Costs ("ASC 340"), the Company recognizes an asset for the incremental costs of obtaining a contract with a customer if we expect to recover the costs. The Company elected to apply the practical expedient in accordance with ASC 340 which allows the Company to expense commissions as incurred when the contract term is twelve months or less in total. Costs to obtain contracts and costs to fulfill contracts were not material in the periods presented.
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Warrants | Warrants — The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”), depending on the specific terms of the warrant agreement. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of Services Provided | Cost of Services Provided — Cost of services generally consists of the cost of hosting fees, materials, and cost of labor associated with professional services rendered. Depreciation and amortization expense is not included in cost of services. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research and Development | Research and Development — Research and development costs are expensed as incurred and consist primarily of personnel costs such as salaries and benefits and relate primarily to time spent during the preliminary project stage, post implementation maintenance, bug fixes associated with capitalized internal-use software activities, and front-end application development in which technological feasibility has not been established. Depreciation and amortization expense is not included in research and development. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising | Advertising — Advertising costs are expensed as incurred. Advertising and marketing expense totaled $56 thousand and $65 thousand for the three months ended June 30, 2023 and 2022, respectively, and $108 thousand and $124 thousand for the six months ended June 30, 2023 and 2022, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock- Based Compensation | Stock- Based Compensation — The Company accounts for its stock-based compensation arrangements at fair value. Fair value of each stock-based award is estimated on the date of grant using either the Black-Scholes-Merton Model for stock options granted or using the fair value of a common stock for stock grants and restricted stock units. The Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including the fair value of the underlying common shares, the expected term of the share option, the expected volatility of the price of our common shares, risk-free interest rates, and the expected dividend yield of common shares. The assumptions used to determine the fair value of the option awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. The calculated fair value is recognized as expense over the requisite service period using the straight-line method. Forfeitures are accounted for in the period in which they occur. Trust Stamp offers the indirect repurchase of shares through a net-settlement feature upon the vesting of RSU awards to satisfy minimum statutory tax-withholding requirements for the recipient. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes — The Company records income tax provisions for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts for financial reporting purposes and the tax bases of assets and liabilities, as well as for loss and tax credit carryforwards. The deferred assets and liabilities are measured using the statutorily enacted tax rates anticipated to be in effect when those tax assets and liabilities are expected to be realized or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income in assessing the need for a valuation allowance. The Company’s tax positions are subject to income tax audits by multiple tax jurisdictions. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not the position will be sustainable upon examination by the taxing authority, including resolution of any related appeals or litigation processes. This evaluation is based on all available evidence and assumes that the tax authorities have full knowledge of all relevant information concerning the tax position. The tax benefit recognized is measured as the largest amount of benefit which is more likely than not (greater than 50% likely) to be realized upon ultimate settlement with the taxing authority. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense. The Company adjusts these reserves in accordance with the income tax guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences may affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s financial condition and operating results. The Company computes its tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date pre-tax income from recurring operations and adjusting for discrete tax items arising in that quarter. There were no discrete items that impacted the effective tax rate for the three and six months ended June 30, 2023 and June 30, 2022, respectively. The rate remained consistent over the period due to the full valuation allowance recorded in the period. The Company had an effective tax rate of 0% for the three and six months ended June 30, 2023 and 2022, respectively. The Company has incurred U.S. operating losses and has minimal profits in foreign jurisdictions. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In making this determination, management considers all available positive and negative evidence affecting specific deferred tax assets, including the Company’s past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry-back and carry-forward periods, and the implementation of tax planning strategies. The Company had no unrecognized tax benefits as of June 30, 2023 and December 31, 2022. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. The Company has not accrued any penalties related to uncertain tax positions due to offsetting tax attributes as of June 30, 2023 and December 31, 2022. The Company files U.S. federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitation. The only material jurisdiction where the Company is subject to potential examination by tax authorities is the U.S. (federal and state) for tax years 2016 through 2022.
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Leases | Leases — The Company determines if a contract is a lease or contains a lease at the inception of the contract in accordance with ASC 842. All leases are assessed for classification as an operating lease or a finance lease. The lease term begins on the commencement date, the date the Company takes possession of the property, and the commencement date is used to calculate straight-line expense for operating leases. The lease may include options to extend or terminate the lease. When it is reasonably certain that the option will be exercised, the Company reassess our conclusions to account for the modified contract. Operating lease right-of-use assets represent the Company’s right to use an underlying asset during a lease term and are included in non-current assets on our unaudited condensed consolidated balance sheet. Operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities are divided into two classifications on our unaudited condensed consolidated balance sheet as a current liability, short-term operating lease liabilities, and a non-current liability, long-term operating lease liabilities. The Company does not have any finance lease right-of-use assets or finance lease liabilities. The Company’s operating lease liabilities are recognized at the applicable lease commencement date based on the present value of the lease payments required to be paid over the lease term. The interest rate implicit in the lease is not readily determinable, therefore, the Company uses an estimated incremental borrowing rate to discount the lease payments to present value. The estimated incremental borrowing rate is derived from information available at the lease commencement date. The Company’s right-of-use assets are also recognized at the applicable lease commencement date. The right-of-use asset equals the carrying amount of the related operating lease liability, adjusted for any lease payments made prior to lease commencement and lease incentives provided by the lessor. Variable lease payments are expensed as incurred and do not factor into the measurement of the applicable right-of-use asset or operating lease liability. The term of our leases equals the non-cancellable period of the lease, including any rent-free periods provided by the lessor, and also include options to renew or extend the lease (including by not terminating the lease) that we are reasonably certain to exercise. We establish the term of each lease at lease commencement and reassess that term in subsequent periods if a triggering event occurs. Operating lease cost for lease payments is recognized on a straight-line basis over the lease term. Some lease contracts include lease and non-lease components. Trust Stamp elected the practical expedient offered by ASC 842 to not separate the lease components from non-lease components. As a result, the Company accounts for leases as a single lease component. In addition, the Company elected not to recognize right-of-use assets and operating lease liabilities for leases term of twelve months or less. The short-term lease expenses are recognized on a straight-line basis over the lease term.
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Commitments and Contingencies | 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 | Treasury Stock — Repurchased treasury stock is recorded at cost. When treasury stock is resold at a price different than its historical acquisition cost, the difference is recorded as a component of additional paid-in capital in the unaudited condensed consolidated balance sheets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss per Share Attributable to Common Stockholders | Net Loss per Share Attributable to Common Stockholders — Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potentially dilutive Class A Common Stock equivalents for the period. For the purposes of this calculation, stock-based awards, warrants, and the conversion option of convertible notes are considered to be potential common shares outstanding. Since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s potential common shares outstanding were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted — In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this ASU clarify that an entity should measure the fair value of an equity security subject to contractual sale restriction the same way it measures an identical equity security that is not subject to such a restriction. The FASB said the contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, should not affect its fair value. The ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect this guidance to have a material impact to its unaudited condensed consolidated financial statements or related disclosures. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recently Adopted Accounting Pronouncement | Recently Adopted Accounting Pronouncement — In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” (“ASU 2016-13”). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. In November 2019, FASB issued ASU 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this standard as of January 1, 2023, and the guidance did not have a material impact on its unaudited condensed consolidated financial statements or related disclosures. |
Description of Business and Summary of Significant Accounting Policies And Going Concern (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue |
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Borrowings (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Non-Convertible Promissory Notes Payable |
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Warrants (Tables) |
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Warrants and Rights Note Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Warrant Liability | The following table presents the change in the liability balance associated with the liability classified warrants, which are classified in Level 3 of the fair value hierarchy from January 1, 2022 to June 30, 2023:
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Schedule of Fair Value of Warrants Liabilities |
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Schedule of Warrant Issuance Date |
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Balance Sheet Components (Tables) |
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Balance Sheet Components | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets as of June 30, 2023 and December 31, 2022 consisted of the following:
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Schedule of Capitalized Internal-Use Software, Net | Capitalized internal-use software, net as of June 30, 2023 and December 31, 2022 consisted of the following:
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Schedule of Property and Equipment, Net | Property and equipment, net as of June 30, 2023 and December 31, 2022 consisted of the following:
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Schedule of Accrued Expenses | Accrued expenses as of June 30, 2023 and December 31, 2022 consisted of the following:
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | Intangible assets as of June 30, 2023 and December 31, 2022 consisted of the following:
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Schedule of Estimated Future Amortization Expense of Intangible Assets | Estimated future amortization expense of intangible assets is as follows:
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Net Loss per Share Attributable to Common Stockholders (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Loss Per Share Attributable to Common Stockholders | The following table presents the calculation of basic and diluted net loss per share:
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Schedule of Anti-Dilutive Securities Excluded From Computation of Diluted Net Loss Per Share | 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:
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Stock Awards and Stock-Based Compensation (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Activity | The following table summarizes stock option activity for the three and six months ended June 30, 2023:
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Schedule of Outstanding RSU Activity | A summary of outstanding RSU activity is as follows:
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Schedule of Stock Options Valuation Assumptions | The following assumptions were used to calculate the fair value of options granted during the six months ended June 30, 2023:
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Schedule of Stock-Based Compensation Expense | Our consolidated statements of operations include stock-based compensation expense as follows:
|
Leases and Commitments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases and Commitments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Lease Term and Discount Rate |
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Summary of Lease Termination |
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Summary of Balance Sheet Information Related to Leases | Balance sheet information related to leases as of June 30, 2023 and December 31, 2022 was as follows:
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Summary of Future Maturities of ASC 842 Lease Liabilities | Future maturities of ASC 842 lease liabilities as of June 30, 2023 are as follows:
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Summary of Total Lease Expense, Under ASC 842, was Included in Selling, General, and Administrative Expenses in Consolidated Statement of Operations | Total lease expense, under ASC 842, was included in selling, general, and administrative expenses in our consolidated statement of operations for the three and six months ended June 30, 2023 as follows:
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Summary of Supplemental Cash Flows Information Related to Leases | Supplemental cash flows information related to leases was as follow:
|
Description of Business and Summary of Significant Accounting Policies And Going Concern - Schedule of Disaggregation of Revenue (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Disaggregation of Revenue | ||||
Total Revenue | $ 460,804 | $ 708,288 | $ 919,438 | $ 3,529,333 |
Professional services (over time) | ||||
Disaggregation of Revenue | ||||
Total Revenue | 385,804 | 645,788 | 769,438 | 3,404,333 |
License fees (over time) | ||||
Disaggregation of Revenue | ||||
Total Revenue | $ 75,000 | $ 62,500 | $ 150,000 | $ 125,000 |
Borrowings - Non Convertible Promissory Notes Payable (Details) - Non-Convertible Promissory Notes Payable - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
Apr. 22, 2020 |
---|---|---|---|
Borrowings | |||
Total principal outstanding | $ 869,690 | $ 902,013 | |
Interest added to principal | $ 28,822 | 11,551 | |
Plus: accrued interest | 19,904 | 16,775 | |
Total promissory notes payable | 921,917 | 886,465 | |
Malta loan receipt 3 | |||
Borrowings | |||
Total principal outstanding | 63,459 | 62,365 | |
Malta loan receipt 2 | |||
Borrowings | |||
Total principal outstanding | 309,106 | 303,778 | |
Malta loan receipt 1 | |||
Borrowings | |||
Total principal outstanding | $ 500,626 | $ 491,996 |
Borrowings - Narrative (Details) € in Thousands, $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
May 01, 2021 |
Jul. 08, 2020
EUR (€)
|
Jun. 30, 2023
USD ($)
|
Jul. 08, 2020
USD ($)
|
|
Base Rate | ||||
Borrowings | ||||
Minimum base rate for interest | 1.00% | |||
Fixed interest rate percentage | 1.00% | |||
Loans from Maltese government | Trust Stamp Malta Limited | ||||
Borrowings | ||||
Potential repayable advance | € 800 | $ 858 | ||
Percentage of payroll cost covered by advance | 75.00% | |||
Term of payroll costs covered by advance | 24 months | |||
Employment term for receiving advances | 36 months | |||
Proceeds from non-convertible notes | $ 873 | |||
Loans from Maltese government | Trust Stamp Malta Limited | Base Rate | ||||
Borrowings | ||||
Spread on variable rate | 2.00% | |||
Loans from Maltese government | Trust Stamp Malta Limited | Base Rate | Minimum | ||||
Borrowings | ||||
Percentage of pre-tax profits per annum to be repaid | 10.00% | |||
Loans from Maltese government | Trust Stamp Malta Limited | Base Rate | Maximum | ||||
Borrowings | ||||
Percentage of pre-tax profits per annum to be repaid | 15.00% |
Warrants - Schedule of Changes in Warrant Liability (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
Change In Financial Instruments [Roll Forward] | ||
Balance, beginning of period | $ 261,569 | |
Balance, end of period | 255,954 | $ 261,569 |
Fair Value, Inputs, Level 3 | ||
Change In Financial Instruments [Roll Forward] | ||
Balance, beginning of period | 261,569 | 374,694 |
Additional warrants issued | 0 | 0 |
Change in fair value | (5,615) | (113,125) |
Balance, end of period | $ 255,954 | $ 261,569 |
Warrants - Schedule of Fair Value of Warrants Liabilities (Details) |
Jun. 30, 2023
yr
|
---|---|
Fair Value of Warrants | Minimum | |
Warrants | |
Warrants measurement input | 1.28 |
Fair Value of Warrants | Maximum | |
Warrants | |
Warrants measurement input | 2.57 |
Exercise price | Minimum | |
Warrants | |
Warrants measurement input | 0.61 |
Exercise price | Maximum | |
Warrants | |
Warrants measurement input | 0.96 |
Risk free interest rate | Minimum | |
Warrants | |
Warrants measurement input | 0.0409 |
Risk free interest rate | Maximum | |
Warrants | |
Warrants measurement input | 0.0449 |
Expected dividend yield | |
Warrants | |
Warrants measurement input | 0 |
Expected volatility | Minimum | |
Warrants | |
Warrants measurement input | 0.8588 |
Expected volatility | Maximum | |
Warrants | |
Warrants measurement input | 0.9290 |
Expected term | |
Warrants | |
Warrants measurement input | 3 |
Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Balance Sheet Components | ||
Prepaid operating expenses | $ 257,851 | $ 225,756 |
Rent deposit | 54,826 | 55,981 |
VAT receivable associated with SAIT | 94,739 | 71,742 |
Tax credit receivable (short-term) | 66,135 | 218,239 |
Miscellaneous receivable | 28,829 | 8,368 |
Prepaid expenses and other current assets | $ 502,380 | $ 580,086 |
Balance Sheet Components - Schedule of Capitalized Internal-Use Software, Net (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Balance Sheet Components | |||||
Internally developed software | $ 3,633,451 | $ 3,633,451 | $ 3,314,450 | ||
Less accumulated depreciation | (2,153,727) | (2,153,727) | (1,895,778) | ||
Capitalized internal-use software, net | 1,479,724 | $ 1,479,724 | $ 1,418,672 | ||
Useful Lives | 5 years | ||||
Amortization of capitalized Internal-use Software | $ 138,000 | $ 127,000 | $ 279,000 | $ 246,000 | |
Impaired capitalized internal-use software | $ 17,000 |
Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Property and Equipment, Net | |||||
Property and equipment, gross | $ 175,676 | $ 175,676 | $ 473,202 | ||
Less accumulated depreciation | (104,090) | (104,090) | (172,538) | ||
Property and equipment, net | 71,586 | 71,586 | 300,664 | ||
Depreciation | 11,000 | $ 42,000 | 53,000 | $ 52,000 | |
Computer equipment | |||||
Property and Equipment, Net | |||||
Property and equipment, gross | $ 147,978 | $ 147,978 | 148,832 | ||
Computer equipment | Minimum | |||||
Property and Equipment, Net | |||||
Useful Lives | 3 years | 3 years | |||
Computer equipment | Maximum | |||||
Property and Equipment, Net | |||||
Useful Lives | 4 years | 4 years | |||
Furniture and fixtures | |||||
Property and Equipment, Net | |||||
Property and equipment, gross | $ 27,698 | $ 27,698 | 27,220 | ||
Useful Lives | 10 years | 10 years | |||
Mobile hardware | |||||
Property and Equipment, Net | |||||
Property and equipment, gross | $ 0 | $ 0 | $ 297,150 | ||
Useful Lives | 2 years 6 months | 2 years 6 months |
Balance Sheet Components - Property and equipment, net (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
May 26, 2023 |
Apr. 26, 2023 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Balance Sheet Components | ||||||
Depreciation | $ 11,000 | $ 42,000 | $ 53,000 | $ 52,000 | ||
Property and equipment gross sales price | $ 197,000 | $ 180,000 | $ 377,360 | $ 0 | ||
Gain on property and equipment | $ 108,000 | $ 108,000 |
Balance Sheet Components - Schedule of Accrued Expenses (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Balance Sheet Components | ||
Compensation payable | $ 312,328 | $ 171,851 |
Commission liability | 33,299 | 58,771 |
Accrued employee taxes | 282,641 | 591,992 |
Accrued mobile expenses | 0 | 177,099 |
Other accrued liabilities | 34,191 | 100,111 |
Accrued expenses | $ 662,459 | $ 1,099,824 |
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Intangible assets | |||||
Intangible assets, gross | $ 489,558 | $ 489,558 | $ 450,641 | ||
Less: Accumulated amortization | (274,735) | (274,735) | (198,955) | ||
Intangible assets, net | 214,823 | 214,823 | 251,686 | ||
Amortization expense | $ 38,000 | $ 22,000 | $ 75,000 | $ 46,000 | |
Patents | |||||
Intangible assets | |||||
Useful Lives | 3 years | 3 years | |||
Intangible assets, gross | $ 420,002 | $ 420,002 | 382,285 | ||
Trademarks and Trade Names | |||||
Intangible assets | |||||
Useful Lives | 3 years | 3 years | |||
Intangible assets, gross | $ 69,556 | $ 69,556 | $ 68,356 |
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense of Intangible Assets (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Estimated future amortization expense of intangible assets | ||
2023 | $ 76,048 | |
2024 | 93,545 | |
2025 | 42,884 | |
2026 | 2,346 | |
Total | $ 214,823 | $ 251,686 |
Net Loss per Share Attributable to Common Stockholders - Schedule of Basic and Diluted Loss Per Share Attributable to Common Stockholders (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Numerator: | ||||
Net loss attributable to common stockholders | $ (2,170,368) | $ (2,922,286) | $ (4,717,818) | $ (4,614,348) |
Denominator: | ||||
Weighted average shares used in computing net loss per share attributable to common stockholders, basic (in shares) | 6,757,320 | 4,653,317 | 5,897,089 | 4,601,788 |
Weighted average shares used in computing net loss per share attributable to common stockholders, diluted (in shares) | 6,757,320 | 4,653,317 | 5,897,089 | 4,601,788 |
Net loss per share attributable to common stockholders, basic (in dollars per share) | $ (0.32) | $ (0.63) | $ (0.80) | $ (1.00) |
Net loss per share attributable to common stockholders, diluted (in dollars per share) | $ (0.32) | $ (0.63) | $ (0.80) | $ (1.00) |
Net Loss per Share Attributable to Common Stockholders - Schedule of Dilutive Securities Excluded From Computation of Diluted Net Loss Per Share (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Net Loss per Share Attributable to Common Stockholders | ||
Total | $ 5,660,107 | $ 1,996,504 |
Options, RSUs, and grants | ||
Net Loss per Share Attributable to Common Stockholders | ||
Total | 642,927 | 718,351 |
Warrants | ||
Net Loss per Share Attributable to Common Stockholders | ||
Total | $ 5,017,180 | $ 1,278,153 |
Stock Awards and Stock-Based Compensation - Schedule of Stock Options Activity (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Options Outstanding | |||||
Beginning balance (in shares) | 387,770 | 387,109 | 387,109 | 395,002 | |
Options granted (in shares) | 2,675 | 2,647 | 5,322 | 7,443 | |
Options exercised (in shares) | 0 | (1,230) | (1,230) | (15,121) | |
Options canceled and forfeited (in shares) | (937) | (756) | (1,693) | (215) | |
Ending balance (in shares) | 389,508 | 387,770 | 389,508 | 387,109 | 395,002 |
Options vested and exercisable (in shares) | 389,508 | 389,508 | |||
Weighted Average Exercise Price Per Share | |||||
Beginning balance (in dollars per share) | $ 6.37 | $ 6.40 | $ 6.40 | $ 6.40 | |
Options granted (in dollars per share) | 2.24 | 3.01 | 2.57 | 3.20 | |
Options exercised (in dollars per share) | 0 | 3.25 | 3.25 | 6.30 | |
Options canceled and forfeited (in dollars per share) | 6.40 | 7.94 | 7.09 | 4.40 | |
Ending balance (in dollars per share) | 6.34 | $ 6.37 | 6.34 | $ 6.40 | $ 6.40 |
Options vested and exercisable (in dollars per share) | $ 6.34 | $ 6.34 | |||
Weighted Average Remaining Contractual Life (years) | |||||
Outstanding | 11 months 23 days | 1 year 2 months 15 days | 11 months 23 days | 1 year 5 months 12 days | 2 years 5 months 1 day |
Options vested and exercisable | 11 months 23 days | 11 months 23 days | |||
Aggregate Intrinsic Value | |||||
Outstanding | $ 0 | $ 0 | $ 0 | $ 0 | $ 5,365,737 |
Options vested and exercisable | $ 0 | $ 0 |
Stock Awards and Stock-Based Compensation - Schedule of Outstanding RSU Activity (Details) - Restricted Stock Units (RSUs) - shares |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Balance at the beginning (in shares) | 292,564 | 126,900 |
Granted (in shares) | 9,253 | 211,700 |
Vested (issued) (in shares) | (98,193) | (46,036) |
Forfeited (in shares) | (16,835) | 0 |
Balance at the end (in shares) | 186,789 | 292,564 |
Stock Awards and Stock-Based Compensation - Schedule of Stock Options Valuation Assumptions (Details) - Share-Based Payment Arrangement, Option |
6 Months Ended |
---|---|
Jun. 30, 2023
$ / shares
| |
Stock Awards and Stock-Based Compensation | |
Expected dividend yield | 0.00% |
Expected term | 3 years |
Minimum | |
Stock Awards and Stock-Based Compensation | |
Fair value of Class A Shares of Common Stock (in dollars per share) | $ 1.60 |
Exercise Price (in dollars per share) | $ 1.99 |
Risk free interest rate | 3.82% |
Expected volatility | 85.88% |
Maximum | |
Stock Awards and Stock-Based Compensation | |
Fair value of Class A Shares of Common Stock (in dollars per share) | $ 3.57 |
Exercise Price (in dollars per share) | $ 3.09 |
Risk free interest rate | 4.27% |
Expected volatility | 96.45% |
Stock Awards and Stock-Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Stock Awards and Stock-Based Compensation | ||||
Total stock-based compensation expense | $ 97,737 | $ 459,646 | $ 157,311 | $ 747,432 |
Cost of services | ||||
Stock Awards and Stock-Based Compensation | ||||
Total stock-based compensation expense | 161 | 1,220 | 656 | 3,394 |
Research and development | ||||
Stock Awards and Stock-Based Compensation | ||||
Total stock-based compensation expense | 12,766 | 50,440 | 31,620 | 110,300 |
Selling, general, and administrative | ||||
Stock Awards and Stock-Based Compensation | ||||
Total stock-based compensation expense | $ 84,810 | $ 407,986 | $ 125,035 | $ 633,738 |
Malta Grant (Details) - Malta Grant Agreement |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Jan. 25, 2022
EUR (€)
|
Jun. 30, 2023
USD ($)
|
Jun. 30, 2022
USD ($)
|
Jan. 25, 2022
USD ($)
|
Jul. 31, 2020
EUR (€)
|
Jul. 31, 2020
USD ($)
|
|
Malta Grant | ||||||
Maximum amount grant | € 100,000 | $ 107,000 | € 200,000 | $ 251,000 | ||
Requirement of initial capital amount | 50,000 | 62,000 | ||||
Reimbursement of grant for initial capital amount | 50,000 | 62,000 | ||||
Remaining reimbursement amount of grant for operating expenses incurred up to 12 Months from incorporation | € 150,000 | $ 190,000 | ||||
Expenses incurred for grant | $ 0 | $ 0 | ||||
Estimated amount of grant | € 136,568 | $ 146,493 | ||||
Percentage of aid intensity to cover eligible wage cost | 75.00% | |||||
Amounts received from grants | $ 0 |
Leases and Commitments - Narrative (Details) |
6 Months Ended | |
---|---|---|
Mar. 03, 2023 |
Jun. 30, 2023
USD ($)
lease
|
|
Leases and Commitments | ||
Minimum lease commitments related to month-to-month lease arrangements | $ 0 | |
Number of leases terminated | lease | 4 | |
Number of office lease terminated | lease | 2 | |
Number of vehicle lease terminated | lease | 2 | |
Lease termination fees | $ 10,932 | |
Loss related to lease termination | 178 | |
Termination notice term | 30 days | |
Purchase obligation | $ 162,000 | |
Minimum | ||
Leases and Commitments | ||
Remaining lease term | 1 year | |
Maximum | ||
Leases and Commitments | ||
Remaining lease term | 3 years |
Leases and Commitments - Summary of Lease Term and Discount Rate (Details) |
Jun. 30, 2023 |
---|---|
Leases and Commitments | |
Weighted average remaining lease term | 1 year 5 months 26 days |
Weighted average discount rate | 5.00% |
Leases and Commitments - Summary of Lease Termination (Details) |
6 Months Ended |
---|---|
Jun. 30, 2023
USD ($)
lease
| |
Leases and Commitments | |
Leases terminated | lease | 4 |
Lease termination fees | $ 10,932 |
Right-of-use assets derecognized upon lease termination | 82,095 |
Lease liabilities derecognized upon lease termination | 77,648 |
Loss recognized upon lease termination | $ 178 |
Leases and Commitments - Summary of Balance Sheet Information Related to Leases (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Balance sheet information related to leases | ||
Operating lease right-of-use assets | $ 205,976 | $ 315,765 |
Operating lease liabilities | ||
Short-term operating lease liabilities | 139,056 | 177,795 |
Long-term operating lease liabilities | 41,978 | 102,407 |
Total operating lease liabilities | $ 181,034 | $ 280,202 |
Leases and Commitments - Summary of Future Maturities of ASC 842 Lease Liabilities (Details) |
Jun. 30, 2023
USD ($)
|
---|---|
Principal Payments | |
2023 | $ 76,285 |
2024 | 81,243 |
2025 | 22,909 |
2026 | 598 |
Total future maturities | 181,035 |
Imputed Interest Payments | |
2023 | 3,545 |
2024 | 2,418 |
2025 | 392 |
Total future maturities | 6,355 |
Total Payments | |
2023 | 79,830 |
2024 | 83,661 |
2025 | 23,301 |
2026 | 598 |
Total future maturities | $ 187,390 |
Leases and Commitments - Summary of Total Lease Expense, Under ASC 842, was Included in Selling, General, and Administrative Expenses in Consolidated Statement of Operations (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Total lease expense | ||||
Operating lease expense – fixed payments | $ 46,402 | $ 0 | $ 129,436 | $ 0 |
Short term lease expense | 15,620 | 0 | 37,552 | 0 |
Total lease expense | $ 62,022 | $ 0 | 166,988 | $ 0 |
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ (104,817) |
Subsequent Events - Narrative (Details) - USD ($) |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Aug. 18, 2023 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jul. 06, 2023 |
Dec. 31, 2022 |
Sep. 11, 2022 |
Jun. 30, 2020 |
|
Subsequent Events | |||||||
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | |||||
Number of warrants exercised for issuance of shares (in shares) | 4,034,199 | 1,465,083 | 6,418 | ||||
Exercise price of warrants (in dollars per share) | $ 8.85 | ||||||
Proceeds from issuance of Common Stock warrants | $ 0 | $ 55,838 | |||||
Subsequent Event | Common Class A | |||||||
Subsequent Events | |||||||
Number of warrants exercised for issuance of shares (in shares) | 270,000 | ||||||
Exercise price of warrants (in dollars per share) | $ 2.30 | ||||||
Proceeds from issuance of Common Stock warrants | $ 621,000 | ||||||
Third Restated Certificate | Subsequent Event | |||||||
Subsequent Events | |||||||
Common stock, shares authorized (in shares) | 50,000,000 |
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