# T Stamp Inc: Form 10-Q for the period ended Jun 30, 2024

- Company: [T Stamp Inc](/companies/idai.md) (CIK 1718939)
- Form: 10-Q
- Filed: 2024-08-13
- Accepted by EDGAR: Aug 13, 2024, 17:12 ET
- Period: 2024-06-30
- Accession: 0001718939-24-000135
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1718939/000171893924000135/idai-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1718939/000171893924000135/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $500.4k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $1.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2024-04-01 to 2024-06-30 | $564.7k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-01-01 to 2024-06-30 | $1.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-04-01 to 2024-06-30 | $2.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-01-01 to 2024-06-30 | $4.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | −$2.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | −$5.5m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | −$2.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | −$5.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | −$0.21 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | −$0.47 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | −$0.21 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | −$0.47 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 12,227,476 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 11,169,735 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | −$3.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $9.1k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-06-30 | $659.5k | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $1.9m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $5.2m | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $3.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $4.3m | us-gaap:Liabilities |
| Long-term debt | at 2024-06-30 | $953.8k | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2024-06-30 | $750.4k | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 54,988 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and the accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, as previously filed with the Commission. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs, involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.*

### Overview

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

Trust Stamp develops proprietary artificial intelligence-powered identity and trust solutions at the intersection of biometrics, privacy, and cybersecurity. These solutions enable organizations to protect themselves and their users while empowering individuals to retain ownership of their identity data and prevent fraudulent activity using their identity.

Trust Stamp tackles industry challenges including data protection, regulatory compliance, and financial accessibility, with cutting-edge technology including biometric science, cryptography, and machine learning. Our core technology irreversibly transforms identity information to create tokenized identifiers that enable accurate authentication without storing or sharing sensitive data. By retaining the usefulness of biometric-derived data while minimizing the risk, we allow businesses to adopt biometrics and other anti-fraud initiatives while protecting personal information from hacks and leaks.

Trust Stamp’s key sub-markets are identity authentication for account opening, access, and fraud detection, tokenized digital identities to facilitate financial and societal inclusion, and in-community case management software for alternatives to detention and other governmental uses.

As biometric solutions proliferate, so does the need to protect biometric data. Stored biometric images and templates represent a growing and unquantified financial, security, and PR liability and are the subject of governmental, media, and public scrutiny since biometric data cannot be “changed” once they are hacked, as they are directly linked to the user’s physical features and/or behaviors. Privacy concerns around biometric technology have led to close attention from regulators, with multiple jurisdictions placing biometrics in a special or sensitive category of personal data and demanding much stronger safeguards around collection and safekeeping.

To address this unprecedented danger and increased cross-industry need to establish trust quickly and securely in virtual environments, Trust Stamp has developed its Irreversibly Transformed Identity Token, or IT2 TM, solutions. These solutions replace biometric templates with a cryptographic hash that can never be rebuilt into the original data and cannot be used to identify the subject outside the environment for which it is designed.

Trust Stamp’s data transformation and comparison technology is vendor and modality-agnostic, allowing organizations including other biometric services providers to benefit from our proprietary tokenization process's increased protection, efficiency, utility. With online and offline functionality, Trust Stamp technology is effective in even the most remote locations in the world.

Trust Stamp also offers end-to-end solutions for multi-factor biometric authentication for account access and recovery, KYC/AML compliance, customer onboarding, and more, which allow organizations to approve more genuine users, keep bad actors from accessing systems and services and retain existing users with a superior user experience.

### Markets

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

### Data Security and Fraud

- According to the “2021 Year End Report: Data Breach QuickView” published by Flashpoint, 4,145 publicly disclosed breaches exposed over 22 billion records in 2022.
- The cumulative merchant losses to online payment fraud between 2023 and 2027 will exceed $343 billion globally according to a 2022 report titled “Fighting Online Payment Fraud in 2022 & Beyond” published by Juniper Research.

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

The Company recently announced the development of a biometric authentication process for wire transfers and other high value transactions, a product of particular and immediate relevance to financial institutions concerned about the potential of deep fake attacks on existing authentication systems. The Company currently has three new banking clients who have indicated willingness to participate in a trial of the product scheduled for Q3 of 2024.

### Biometric Authentication

- According to a 2022 report titled “Mobile Payment Biometrics,” published by Juniper Research, the value of biometrically authenticated remote mobile payments will reach $1.2 trillion globally by 2027.
- The global biometric system market size is valued at $41.1 billion per annum in 2023, with a forecast compound growth of 20.4% from 2023 to 2030 with a 2030 revenue forecast of $150.6 billion according to the 2023 report titled “Biometric Technology Market Size, Share & Trends Analysis Report By Component, By Offering, By Authentication Type, By Application, By End-use, By Region, And Segment Forecasts, 2023 — 2030” published by Grand View Research.

Trust Stamp addresses this market through its biometric authentication and liveness detection products. These products offer our proprietary IT2 token to perform biometric matching in a secure and tokenized domain. This permits biometric authentication without the risk of storing pictures and biometric templates.

In addition to identity authentication, the Company’s deep learning algorithms can be used to identify specific criteria from facial biometric captures and it has been developing and testing age-estimation software for the rapidly growing age verification market. The new age estimation software is expected to go live with a first commercial client in Q3 of 2024.

### Financial and Societal Inclusion

- According to the “Global Findex Database 2021,” published by the World Bank, 1.4 billion people were unbanked as of 2021.
- 131 million small and medium-sized enterprises in emerging markets lack access to finance, limiting their ability to grow and thrive (UNSGSA Financial Inclusion Webpage, Accessed March 2023).
- The global market for Microfinance is estimated at $157 Billion in the year 2020, and is projected to reach $342 billion by 2026 according to the 2022 report titled “Microfinance - Global Market Trajectory & Analytics” published by Global Industry Analysts, Inc.

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

### Alternatives to Detention (“ATD”)

- The ATD market includes Federal, State, and Municipal agencies for both criminal justice and immigration purposes. Trust Stamp addresses the ATD market with applications built on Trust Stamp’s privacy-preserving solutions allowing individuals to comply with ATD requirements using ethical and humane technology methodologies. Trust Stamp has developed innovative patented technologies for use in the ATD market encompassing biometrics, geolocation, and tokenization as well as a proprietary, tamper-resistant, battery-free “Tap-In-Band” that can complement or replace biometric check-in requirements and provide a lower-cost and more humane alternative to traditional “ankle bracelet” technology.

### Other Markets

The Company is developing products and working with partners and industry organizations in other sectors that offer significant market opportunities and has entered into go-to-market or licensing agreements, including global data location services, healthcare, IoT, automotive dealer services, and computer vision for UAV operations. We anticipate licensing our technology in numerous fields, typically through established partners who will integrate our technology into field-specific applications.

### Principal Products and Services

Trust Stamp’s most important technology is the Irreversibly Transformed Identity Token or IT2, which is combined with a data architecture that can use one or multiple sources of biometric or other identifying data. Once a “hash translation” algorithm is created, like-modality hashes are comparable regardless of their origin. The IT2 protects against system and data redundancy, providing a lifelong “digital-DNA” that can store (or pivot to) any type of KYC or relationship data with fields individually hashed or (salted and) encrypted, facilitating selective data sharing. Products utilizing the IT2 are Trust Stamp’s primary products, accounting for the majority of its revenues during the six months ended June 30, 2024.

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

### Key Customers

The Company’s initial business consisted of developing proprietary privacy-first identity solutions and implementing them through custom applications built and maintained for a few key customers. In 2022, the Company added to its product offerings a modular and highly scalable SaaS model with low-code or no implementation (“the Orchestration Layer”). Although the Company remains open to significant opportunities to deliver custom solutions, sales of Orchestration Layer products are the primary focus of the Company’s sales and development initiatives. This strategic pivot in the Company’s go-to-market approach negatively impacted revenue in 2023 but we believe it will substantially increase potential revenue.

Historically, the Company generated most of its income through long-term partnerships, comprising a relationship with an S&P 500 bank with services provided pursuant to a Master Software Agreement entered into in 2017, together with a relationship with Mastercard International (“Mastercard”) with services provided under the terms of a five-year technology services agreement entered into in March 2019 and extended in March 2024 to April 2027 (the "TSA”). Both of those relationships remain strong, and the Company anticipates future revenue growth from the two relationships.

Under the TSA, IT2 technology is being implemented by Mastercard for Humanitarian & Development purposes as a core element of its Community Pass and Inclusive Identity offerings. Use cases include financial services for individuals and businesses and empowering people and communities to meet basic needs, such as nutritious food, clean water, housing, education, and healthcare. The Company is paid to develop and host software solutions utilizing the IT2 and to support Mastercard’s implementations. In addition, the Company is paid on a “per user per year” basis for all transactions utilizing its technology. In December of 2022, the Company entered into a modification of the agreed pricing schedule with Mastercard to move from a per-use to a per-user-year model to broaden the range of potential use cases. The TSA may be terminated by either party in the event of a material breach by the other party that remains uncured within thirty days after notice is received of such a breach. Either party may terminate the TSA if the other party becomes, including, but not limited to, insolvent, subject to bankruptcy, dissolved, or liquidated. Unless the TSA is terminated, the TSA will automatically renew for additional one-year periods in perpetuity unless either party provides ninety days' written notice of intent not to renew. To date, the Company has received guaranteed minimum annual payments on account of usage. According to the October 2023 interview of Mastercard Executive Vice President and Founder of the Community Pass from the article titled “Mastercard’s Community Pass founder says digital ID platform improving lives, digital inclusion,” published by Biometric Update. Mastercard’s Community Pass program currently serves approximately 3.5 million users and is targeting 30 million users by 2027. Based on information provided to us by Mastercard, we anticipate user-based revenue will start in 2024 and grow year-on-year thereafter.

In 2022, the Company expanded its key customer base to include a relationship with FIS, which was focused on implementing our Orchestration Layer and underlying technologies in FIS’ Global KYC product offering.

The Orchestration Layer is a low-code platform designed to be a one-stop shop for Trust Stamp services and provides easy integration to our products, which are chargeable on a per-user basis. The Orchestration Layer utilizes the Company’s next-generation identity package, offering rapid deployment across devices and platforms, with custom workflows that seamlessly orchestrate trust across the identity lifecycle for a consistent user experience in processes for onboarding and KYC/AML, multi-factor authentication, account recovery, fraud prevention, compliance, and more. The Orchestration Layer facilitates no-code and low-code implementations of the Company’s technology, making adoption and updating faster and more cost-effective for a broader range of potential customers.

In the third quarter of 2022, the Company acquired its first 2 new customers on the Orchestration Layer through its partnership with FIS, and in the fourth quarter of 2022, 4 additional FIS customers onboarded. As of June 30, 2024, a total of 54 financial institutions with over $345 billion in assets have been onboarded via FIS, bringing the total number of (FIS and non-FIS) customers either fully implemented or are currently implementing the Orchestration Layer to 62. The first (non-FIS) client onboarded to the Orchestration Layer in the third quarter of 2022 has generated $343 thousand of revenue for the Company to date including $110 thousand during the six months ended June 30, 2024. Although each institution onboarded via FIS pays a small onboarding fee, given the typical time a financial institution takes to test, implement, and roll out any new technology, the Company does not anticipate significant revenue from the new FIS customers until late 2024.

Reinforced by the product-market fit indicated by the FIS rollout, the Company is building an internal direct sales force to offer the Orchestration Layer to non-FIS institutions. This expansion into direct sales is a work in progress, and the Company is dynamically adapting its approach based on progress toward acceptable success metrics.

In Management's opinion, while the unanticipated loss of any one of our current customers, including our channel partnership with FIS, could adversely affect the Company’s financial position, it would not prevent us from continuing our operations.

### Key Business Measures

In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following key non-GAAP business measures to help us evaluate our business, identify trends affecting our business, formulate business plans and financial projections, and make strategic decisions.

### Adjusted EBITDA

This discussion includes information about Adjusted EBITDA that is not prepared in accordance with U.S. GAAP. Adjusted EBITDA is not based on any standardized methodology prescribed by U.S. GAAP and is not necessarily comparable to similar measures presented by other companies. A reconciliation of this non-GAAP measure is included below.

Adjusted EBITDA is a non-GAAP financial measure that represents U.S. GAAP net income (loss) adjusted to exclude (1) other expense, (2) other income, (3) gain on sale of mobile hardware, (4) interest expense, (5) interest income, (6) stock-based compensation, (7) change in fair value of warrant liabilities (8) impairment of assets, (9) non-cash expenses for in-kind services, (10) depreciation, and (11) certain other items management believes affect the comparability of operating results.

Management believes that Adjusted EBITDA, when viewed with our results under U.S. GAAP and the accompanying reconciliations, provides useful information about our period-over-period results. Adjusted EBITDA is presented because management believes it provides additional information with respect to the performance of our fundamental business activities and is also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess the operating performance of our Company and our management, and it will be a focus as we invest in and grow the business.

Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. Some of these limitations are:

- Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments.
- Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs.
- Although Depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.
- Adjusted EBITDA does not include the impact of certain charges or gains resulting from matters we consider not to be indicative of our ongoing operations.

Due to these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only as a supplement to our U.S. GAAP results.

### Reconciliation of Net Loss to Adjusted EBITDA

|  | For the three months ended June 30, 2024 | 2023 | For the six months ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net loss before taxes | (2,598,361) | (2,170,368) | (5,276,930) | (4,717,818) |
| Add: Other expense | (369) | (2,726) | 6,704 | 3,144 |
| Less: Other income | (41,739) | (4,723) | (234,852) | (48,665) |
| Less: Gain on sale of mobile hardware | — | (212,882) | — | (212,882) |
| Add: Interest expense, net | 16,773 | 9,793 | 35,322 | 19,994 |
| Add: Stock-based compensation | 307,125 | 97,737 | 605,011 | 157,311 |
| Add: Change in fair value of warrant liability | 2,408 | 6,955 | 4,868 | 5,615 |
| Add: Impairment loss of assets | 1,112 | 16,819 | 1,112 | 16,819 |
| Add: Non-cash expenses for in-kind services | — | — | — | 18,547 |
| Add: Depreciation and amortization | 181,195 | 187,272 | 365,996 | 406,454 |
| Adjusted EBITDA loss (non-GAAP) | $(2,131,118) | $(2,072,123) | $(4,492,769) | $(4,351,481) |

Adjusted EBITDA loss (non-GAAP) for the three months ended June 30, 2024, increased by 2.85%, to $2.13 million from $2.07 million for the three months ended June 30, 2023. The overall increase in Adjusted EBITDA loss (non-GAAP) was driven primarily by the increase in Selling, general, and administrative expenses for the three months ended June 30, 2024 when compared to the three months ended June 30, 2023. See “Results of Operations” below for further discussion on the drivers behind the increase in Adjusted EBITDA loss (non-GAAP) during the three months ended June 30, 2024.

Adjusted EBITDA loss (non-GAAP) for the six months ended June 30, 2024, increased by 3.25%, to $4.49 million from $4.35 million for the six months ended June 30, 2023. The overall increase in Adjusted EBITDA loss (non-GAAP) was driven primarily by the increase in Selling, general, and administrative expenses for the six months ended June 30, 2024 when compared to the six months ended June 30, 2023. See “Results of Operations” below for further discussion on the drivers behind the increase in Adjusted EBITDA loss (non-GAAP) during the six months ended June 30, 2024.

### Results of Operations

The following table summarizes our consolidated statements of operations for the three and six months ended June 30, 2024 and 2023:

|  | For the three months ended June 30, 2024 | 2023 | For the six months ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net revenue | $500,395 | $460,804 | $1,074,071 | $919,438 |
| Operating Expenses: |  |  |  |  |
| Cost of services (exclusive of depreciation and amortization shown separately below) | 247,435 | 203,928 | 542,033 | 420,887 |
| Research and development | 564,736 | 574,397 | 1,016,578 | 1,206,766 |
| Selling, general, and administrative | 2,132,395 | 1,877,616 | 4,624,088 | 3,847,173 |
| Depreciation and amortization | 181,195 | 187,272 | 365,996 | 406,454 |
| Total Operating Expenses | 3,125,761 | 2,843,213 | 6,548,695 | 5,881,280 |
| Operating Loss | (2,625,366) | (2,382,409) | (5,474,624) | (4,961,842) |
| Non-Operating Income (Expense): |  |  |  |  |
| Interest expense, net | (16,773) | (9,793) | (35,322) | (19,994) |
| Change in fair value of warrant liability | 2,408 | 6,955 | 4,868 | 5,615 |
| Other income | 41,739 | 217,605 | 234,852 | 261,547 |
| Other expense | (369) | (2,726) | (6,704) | (3,144) |
| Total Other Income (Expense), Net | 27,005 | 212,041 | 197,694 | 244,024 |
| Net Loss before Taxes | (2,598,361) | (2,170,368) | (5,276,930) | (4,717,818) |
| Income tax expense | — | — | — | — |
| Net loss before non-controlling interest | (2,598,361) | (2,170,368) | (5,276,930) | (4,717,818) |
| Net loss attributable to non-controlling interest | — | — | — | — |
| Net loss attributable to T Stamp Inc. | $(2,598,361) | $(2,170,368) | $(5,276,930) | $(4,717,818) |
| Basic and diluted net loss per share attributable to T Stamp Inc. | $(0.21) | $(0.32) | $(0.47) | $(0.80) |
| Weighted-average shares used to compute basic and diluted net loss per share | 12,227,476 | 6,757,320 | 11,169,735 | 5,897,089 |

### Comparison of the Three Months Ended June 30, 2024 and 2023

### Net revenue

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net revenue | $500,395 | $460,804 | $39,591 | 8.59% |

During the three months ended June 30, 2024, Net revenue increased to $500 thousand, or an 8.59% increase from the Net revenue of $461 thousand for the three months ended June 30, 2023. During the three months ended June 30, 2024, the $500 thousand in Net revenue consisted of $331 thousand from an S&P 500 bank, $84 thousand from Mastercard, and various other customers for the remaining $85 thousand. The majority of the increase in net revenue during the three months ended June 30, 2024 compared to the prior period is the result of an S&P 500 bank adopting the Orchestration Layer, which increased gross revenues earned during the three months ended June 30, 2024 by $189 thousand.

During the three months ended June 30, 2024, the Company generated $317 thousand total revenue from customers using the Orchestration Layer. This includes implementing the Orchestration Layer platform for 6 new enterprise customers through FIS on the Software-as-a-Service (SaaS) platform during the three months ended June 30, 2024. In comparison, during the three months ended June 30, 2023, the Company generated $112 thousand total revenue from Orchestration

Layer customers. Since its launch in the third quarter of 2022, there have been 62 enterprise customers on the Orchestration Layer platform, including 54 financial institutions, as of June 30, 2024. Additionally, revenue from the Orchestration Layer's flagship enterprise customer grew 20.47% between the comparative periods as a result of transitioning and launching the customer on the Orchestration Layer platform. Orchestration Layer's flagship enterprise customer is already in full production and generating monthly recurring revenue with gross margins in excess of 83.15%. Finally, the Company S&P 500 bank customer complete its transition to an augmented version of the SaaS platform during the three months ended June 30, 2024.

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

### Cost of services

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Cost of services | $247,435 | $203,928 | $43,507 | 21.33% |

Cost of services (“COS”) increased by $44 thousand or 21.33% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase during this period was primarily driven by costs of $40 thousand for the expansion of our proof of identity solutions using a third-party as required for proof of identity contracts. The solution was not considered a cost of sale until the third quarter of 2023, thus, there were no expenses for this solution during the three months ended June 30, 2023.

### Research and development

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $564,736 | $574,397 | $(9,661) | (1.68)% |

Research and development (“R&D”) expenses decreased by $10 thousand, or 1.68% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease in R&D expense during the three months ended June 30, 2024 was primarily driven by the decrease in outsourced software development as the Company continued to transition this work internally which results in cost savings as internal work is more cost effective. Comparatively, outsourced software development costs decreased by 97.19% when comparing the three months ended June 30, 2024 to the three months ended June 30, 2023. In both periods, R&D expenses mainly were related to R&D payroll and other R&D compensation expenses.

### Selling, general, and administrative

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Selling, general, and administrative | $2,132,395 | $1,877,616 | $254,779 | 13.57% |

Selling, general, and administrative expense (“SG&A”) increased by $255 thousand, or 13.57%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in SG&A expense was driven by a $468 thousand increase in salaries, stock-based compensation, payroll costs, and sales commissions during the three months ended June 30, 2024. Headcount increased by 3.75%, from 80 full-time employees ("FTE") as of June 30, 2023, compared to 83 FTE as of June 30, 2024 due to reinforcing our sales resources and bringing in-house technical positions that were previously outsourced. Included in the $468 thousand was an increase of $216 thousand during the three months ended June 30, 2024 due to the timing of stock-based compensation awards.

The increases in SG&A were offset by notable reductions in SG&A for the three months ended June 30, 2024 including a total reduction of $302 thousand in professional fees, marketing, office rent, and other operating costs.

In both periods, SG&A expenses were primarily comprised of payroll and other compensation expenses to our Company's workforce.

### Depreciation and amortization

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Depreciation and amortization | $181,195 | $187,272 | $(6,077) | (3.25)% |

Depreciation and amortization (“D&A”) decreased by $6 thousand, or 3.25% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The primary driver for the decrease in D&A is due to fully depreciating the Pixelpin (a company we acquired in March 2021) intangible asset during the three months ended March 31, 2024. There was $0 of Pixelpin amortization expense during the three months ended June 30, 2024 compared to $6 thousand during the three months ended June 30, 2023.

### Operating loss

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Operating loss | $(2,625,366) | $(2,382,409) | $(242,957) | 10.20% |

The Company’s Operating loss increased by $243 thousand or 10.20% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in Operating loss was mostly related to the increase of $283 thousand or 9.94% rise in operating expenses as a result of bolstering our sales resources and bringing in-house technical positions that outpaced Net revenue growth.

### Interest expense, net

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest expense, net | $(16,773) | $(9,793) | $(6,980) | 71.28% |

Interest expense, net increased by $7 thousand, or 71.28% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.The increase in interest expense is primarily due to an increase of $5 thousand as a result of the Malta loan interest rate increasing from 4.5% for the three months ended June 30, 2023 to 6.5% for the three months ended June 30, 2024. Interest earned decreased by $105 to $50 for the three months ended June 30, 2024 from $155 for the three months ended June 30, 2023.

### Change in fair value of warrant liability

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Change in fair value of warrant liability | $2,408 | $6,955 | $(4,547) | (65.38)% |

The Company recognized a gain in Change in fair value of warrant liability during the three months ended June 30, 2024 of $2 thousand compared to a gain of $7 thousand during the three months ended June 30, 2023. This change is based on the fair value assessment and adjustment for one warrant liability as described in Note 3 to the unaudited condensed consolidated financial statements provided under Item 1 of this report.

### Other income

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Other income | $41,739 | $217,605 | $(175,866) | (80.82)% |

34

Other income decreased by $176 thousand for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease was primarily due to a $213 thousand gain on the sale of certain mobile hardware assets that occurred during the three months ended June 30, 2023, which was a one-time event and did not recur during the three months ended June 30, 2024. Likewise, during the three months ended June 30, 2024 Trust Stamp received $41 thousand from the University of Malta for a grant program, "Fusion; Technology Development Programme", aiming to provide state financing in the form of grants for research, development and innovation in science and technology. The Company received 50% of the applicable grant in May 2024. The Company expects to receive and recognize the remaining funds once the project is completed.

### Other expense

|  | For the three months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Other expense | $(369) | $(2,726) | $2,357 | (86.46)% |

Other expense decreased by $2 thousand for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The Company incurred $0 and $3 thousand in unrealized loss on foreign currency translation expense for the three months ended June 30, 2024 and three months ended June 30, 2023, respectively, for intercompany transactions between the parent company, T Stamp Inc., and its subsidiaries, Trust Stamp Rwanda Limited with currencies denominated in United States Dollars and Rwandan Franc. Likewise, the Company incurred a $369 loss for fixed asset disposal for the three months ended June 30, 2024.

### Comparison of the Six Months Ended June 30, 2024 and 2023

### Net revenue

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net revenue | $1,074,071 | $919,438 | $154,633 | 16.82% |

During the six months ended June 30, 2024, Net revenue increased by $155 thousand, or a 16.82% increase from the Net revenue of $919 thousand for the six months ended June 30, 2023. During the six months ended June 30, 2024, the $1.07 million in Net revenue consisted of $658 thousand from an S&P 500 bank, $238 thousand from Mastercard, and various other customers for the remaining $178 thousand. The majority of the increase in net revenue during the six months ended June 30, 2024 compared to the prior period is the result of an S&P 500 bank adopting the Orchestration Layer, which increased gross revenue by $405 thousand during the six months ended June 30, 2024.

During the six months ended June 30, 2024, the Company generated $614 thousand total revenue from customers using the Orchestration Layer including implementing the Orchestration Layer platform for 14 new enterprise customers added during the six months ended June 30, 2024 through FIS on the Software-as-a-Service (SaaS) platform. In comparison, during the six months ended June 30, 2023, the Company generated $219 thousand total revenue from Orchestration Layer customers. Since its launch in the third quarter of 2022, there have been 62 enterprise customers on the Orchestration Layer platform, including 54 financial institutions, as of June 30, 2024. Additionally, revenue from the Orchestration Layer's flagship enterprise customer grew 23.16% between the comparative periods as a result of transitioning and launching the customer on the Orchestration Layer platform. Orchestration Layer's flagship enterprise customer is already in full production and generating monthly recurring revenue with gross margins in excess of 83.30%. Finally, the Company's S&P 500 bank customer completed its transition to an augmented version of the SaaS platform during the six months ended June 30, 2024.

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

### Cost of services

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Cost of services | $542,033 | $420,887 | $121,146 | 28.78% |

Cost of services (“COS”) increased by $121 thousand or 28.78% for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase during this period was primarily driven by costs of $100 thousand for the expansion of our proof of identity solutions using a third-party as required for proof of identity contracts. The solution was not considered a cost of sale until the third quarter of 2023, thus, there were no expenses for this solution during the six months ended June 30, 2023.

In addition, the Company saw an increase in service requests during the six months ended June 30, 2024 resulting in an increase of $22 thousand when compared to the six months ended June 30, 2023. Apart from an increase in service requests, more development hours were charged directly to cost of sales for the six months ended June 30, 2024 when compared to the six months ended June 30, 2023.This increase was mainly due to a specific request made, by one of our main customers, for our development team to work on a specific project during the six months ended June 30, 2024.

### Research and development

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $1,016,578 | $1,206,766 | $(190,188) | (15.76)% |

Research and development (“R&D”) expenses decreased by $190 thousand, or 15.76% for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The decrease in R&D expense during the six months ended June 30, 2024 was primarily driven by the decrease in outsourced software development as the Company continued to transition this work internally which results in cost savings as internal work is more cost effective. Comparatively, outsourced software development costs decreased by 79.34% when comparing the six months ended June 30, 2024 to the six months ended June 30, 2023. In both periods, R&D expenses mainly were related to R&D payroll and other R&D compensation expenses.

### Selling, general, and administrative

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Selling, general, and administrative | $4,624,088 | $3,847,173 | $776,915 | 20.19% |

Selling, general, and administrative expense (“SG&A”) increased by $777 thousand, or 20.19%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase in SG&A expense was driven by a $1.07 million increase in salaries, stock-based compensation, payroll costs, and sales commissions during the six months ended June 30, 2024. Headcount increased by 3.75%, from 80 FTE for the six months ended June 30, 2023, compared to 83 FTE for the six months ended June 30, 2024 due to reinforcing our sales resources and bringing in-house technical positions that were previously outsourced. Included in the $1.07 million increase is an increase of $466 thousand in SG&A during the six months ended June 30, 2024 due to the timing of stock-based compensation awards. In addition, the Company had an increase in dues and subscriptions, due to continued business development and growth, of $84 thousand during the six months ended June 30, 2024 when compared to the six months ended June 30, 2023. Furthermore, there was a $109 thousand increase in SG&A when comparing the six months ended June 30, 2024 to the six months ended June 30, 2023 resulting from the reversal of out-of-period costs incurred during the six months ended June 30, 2023 associated with carrying mobile hardware assets, reversed due to the cancellation of the related mobile hardware subscription.

The increases in SG&A were offset by notable reductions in SG&A for the six months ended June 30, 2024 including a total reduction of $540 thousand in professional fees, management consulting and training, and office rent as direct result of the Company's recent non-personnel cost cutting initiative.

In both periods, SG&A expenses were primarily comprised of payroll and other compensation expenses to our Company's workforce.

### Depreciation and amortization

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Depreciation and amortization | $365,996 | $406,454 | $(40,458) | (9.95)% |

Depreciation and amortization (“D&A”) decreased by $40 thousand, or 9.95% for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The primary driver for the decrease in D&A relates to the Company selling mobile hardware in April 2023. As a result of the sale, there is $0 expense for mobile hardware depreciation during the six months ended June 30, 2024 and $30 thousand of expense for mobile hardware depreciation during the six months ended June 30, 2023.

### Operating loss

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Operating loss | $(5,474,624) | $(4,961,842) | $(512,782) | 10.33% |

The Company’s Operating loss increased by $513 thousand or 10.33% for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase in Operating loss was mostly related to the increase of $667 thousand or 11.35% rise in operating expenses as a result of bolstering our sales resources and bringing in-house technical positions which led to increases in our SG&A expenses that outpaced Net revenue growth.

### Interest expense, net

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest expense, net | $(35,322) | $(19,994) | $(15,328) | 76.66% |

Interest expense, net increased by $15 thousand, or 76.66% for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.The increase in interest expense is primarily due to an increase of $9 thousand as a result of the Malta loan interest rate increasing from 4.5% for the six months ended June 30, 2023 to 6.5% for the six months ended June 30, 2024. Additionally, the Company recorded $4 thousand in interest expense during the six months ended June 30, 2024 for interest accrued on Malta's tax obligations. Interest earned decreased by $148 to $167 for the six months ended June 30, 2024 from $315 for the six months ended June 30, 2023.

### Change in fair value of warrant liability

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Change in fair value of warrant liability | $4,868 | $5,615 | $(747) | (13.30)% |

The Company recognized a gain in Change in fair value of warrant liability during the six months ended June 30, 2024 of $5 thousand compared to a gain of $6 thousand during the six months ended June 30, 2023. This change is based on the fair value assessment and adjustment for one warrant liability as described in Note 3 to the unaudited condensed consolidated financial statements provided under Item 1 of this report.

### Other income

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Other income | $229,102 | $261,547 | $(32,445) | (12.41)% |

Other income decreased by $32 thousand for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The decrease is primarily due to a $213 thousand gain on the sale of certain mobile hardware assets during the six months ended June 30, 2023, which was a one-time event and did not recur during the six months ended June 30, 2024. This decrease was offset by a $187 thousand gain from a settlement of a mobile hardware bill that was outstanding as of June 30, 2023, which we negotiated for a lower payment, and paid during the six months ended June 30, 2024.

### Other expense

|  | For the six months ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Other expense | $(6,704) | $(3,144) | $(3,560) | 113.23% |

Other expense decreased by $4 thousand for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The Company incurred $6 thousand in unrealized loss on foreign currency translation expense for the six months ended June 30, 2024, for intercompany transactions between the parent company, T Stamp Inc., and its subsidiaries, Trust Stamp Rwanda Limited with currencies denominated in United States Dollars and Rwandan Franc, respectively.

### Liquidity and Capital Resources

As of June 30, 2024, the Company had approximately $660 thousand cash in its banking accounts. The Company is generating revenues, but has not yet generated profits, with a net loss for the six months ended June 30, 2024 of $5.28 million, Net operating cash outflows of $3.76 million for the same period, and an accumulated deficit of $56.13 million as of June 30, 2024. The Company is not currently generating sufficient amounts of cash to meet its requirements for the next 12 months. The Company anticipates that it will need to raise capital from equity and/or debt financings within the next six (6) months in order to fund its operations.

### Subsequent Investment and Pro Forma Balance Sheet

On July 13, 2024, T Stamp Inc. entered into a Securities Purchase Agreement (the “SPA”) with a certain investor (the “Purchaser”). Pursuant to the terms of the SPA, the Purchaser agreed, at the closing of the SPA (the “Closing”) and upon the terms and subject to the conditions set forth in the SPA, to purchase from the Company 4,597,701 shares of Class A Common Stock, par value $0.01 of the Company (the “Class A Common Stock”) at $0.435 per share, which was equal to the closing price of the Company’s Class A Common Stock on the Nasdaq Stock Market on July 11, 2024. The total purchase price for the shares was agreed to be paid pursuant to three promissory notes issued by the Purchaser to the Company comprised of (i) a $500,000 promissory note payable on July 31, 2024, which was paid on July 25, 2024; (ii) a $500,000 promissory note payable on August 31, 2024; and (iii) a $1,000,000 promissory note payable within three (3) trading days of an effective resale registration statement as contemplated by the Registration Rights Agreement. The Company filed a resale registration statement on Form S-3 for this purpose on July 18, 2024 (File No.: 333-280884), which is currently under review by the Commission. As of the date of this Quarterly Report on Form 10-Q, the resale registration statement is not yet effective. None of the promissory notes accrue interest, and each may be repaid before their respective due dates.

On July 13, 2024 (the “Closing Date”), the Closing of the SPA occurred, and the Company issued 4,597,701 shares of Class A Common Stock to the Purchaser at $0.435 in exchange for the three promissory notes described above, totaling $2,000,000 in combined principal. The Closing of the SPA was subject to a number of customary closing conditions, including, but not limited to, the Company’s entry into a Registration Rights Agreement, the execution of which were conditions to the Closing of the SPA. Additionally, as part of the Closing of the SPA, the Purchaser executed a Voting Limitation Agreement.

The following table sets forth our consolidated cash and cash equivalents and capitalization as of June 30, 2024 on an actual basis and as adjusted basis to reflect (i) cash received on July 25, 2024 upon the repayment of the first $500,000 promissory note; and (ii) receivable for the second and third promissory notes totaling $1,500,000.

| ASSETS | June 30, 2024 | June 30, 2024 (Pro Forma As Adjusted, Reflecting Cash received on July 25, 2024 from repayment of the first $500,000 promissory note, and receivables for the second and third promissory notes totaling $1,500,000) |
| --- | ---: | ---: |
| Cash and cash equivalents | $659,533 | $1,159,533 |
| Accounts receivable (includes unbilled receivables of $4,440 and $143,219 as of June 30, 2024 and December 31, 2023, respectively) | 517,380 | 517,380 |
| Related party receivables | 24,921 | 24,921 |
| Prepaid expenses and other current assets | 726,612 | 726,612 |
| Promissory Note Receivable | — | 1,500,000 |
| **Total Long-term Assets** | 3,264,912 | 3,264,912 |
| **Total Assets** | **5,193,358** | **7,193,358** |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY** |  |  |
| **Total Current Liabilities** | 3,002,534 | 3,002,534 |
| Warrant liabilities | 251,668 | 251,668 |
| Non-convertible notes payable, plus accrued interest | 953,799 | 953,799 |
| Long-term operating lease liabilities | 73,520 | 73,520 |
| **Total Liabilities** | **4,281,521** | **4,281,521** |
| Stockholders’ Equity: |  |  |
| Common stock | 113,841 | 159,818 |
| Additional paid-in capital | 56,591,713 | 58,545,736 |
| Accumulated other comprehensive income | 175,059 | 175,059 |
| Accumulated deficit | (56,130,215) | (56,130,215) |
| **Total T Stamp Inc. Stockholders’ Equity** | **750,398** | **2,750,398** |
| Non-controlling interest | 161,439 | 161,439 |
| **Total Stockholders’ Equity** | **911,837** | **2,911,837** |
| **Total Liabilities and Stockholders’ Equity** | **$5,193,358** | **$7,193,358** |

### 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 Net loss for the six months ended June 30, 2024 of $5.28 million, Net operating cash outflows of $3.76 million for the same period, and an Accumulated deficit of $56.13 million as of June 30, 2024.

The Company’s ability to continue as a going concern in the next twelve months, following the date the unaudited condensed consolidated financial statements were available to be issued, is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and plans to generate revenue and raise capital as needed to satisfy its capital needs. While the negotiation of significant additional revenue is well advanced, it has not reached a stage that allows it to be factored into a going concern evaluation. In addition, although the Company has previously been successful in raising capital as needed and has already made plans to do so as well as restructuring expenses to meet the Company’s cash needs, no assurance can be given that the Company will be successful in its capital raising efforts. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period.

### Cash Flows

The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023:

|  | For the six months ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash flows from operating activities | $(3,756,928) | $(3,581,369) |
| Net cash flows from investing activities | $(363,086) | $(17,249) |
| Net cash flows from financing activities | $1,633,487 | $7,415,347 |

### Operating Activities

Net cash flows from operating activities increased by 4.90% from $3.58 million during the six months ended June 30, 2023, compared to $3.76 million during the six months ended June 30, 2024. Of the $5.28 million net loss for the six months ended June 30, 2024, there were various cash and non-cash adjustments that were added back to the Net loss to arrive at $3.76 million cash used for operating activities for the six months ended June 30, 2024.

Those adjustments included the add back of $605 thousand related to stock-based compensation mainly due to the timing of stock-based compensation awards. There was a $466 thousand increase in stock-based compensation during the six months ended June 30, 2024 when compared to the six months ended June 30, 2023 due to the timing of stock-based compensation awards. Additionally, there is an add back of $171 thousand in Deferred revenue mainly comprised of an annual license fee billing of $345 thousand that will be recognized over the current year in alignment with the service period. Cash and noncash add backs also included $366 thousand for non-cash Depreciation and amortization, $169 thousand for cash received on Accounts receivable, $100 thousand for Prepaid expenses, and $239 thousand from the pay down of accruals.

The add backs were offset by reductions in certain cash and noncash adjustments including $162 thousand for the noncash settlement of mobile hardware liabilities.

### Investing Activities

Net cash used in investing activities during the six months ended June 30, 2024 was $363 thousand, compared to net cash of $17 thousand used in the six months ended June 30, 2023. Cash used in investing activities during the six months ended June 30, 2024 related primarily to continued investments in technologies intended to be capitalized and monetized over time. In addition, the Company continued to prioritize intellectual property, which produced three (3) new pending patent applications and five (5) issued patents with the United States Patent and Trademark Office during the six months ended June 30, 2024.

### Financing Activities

During the six months ended June 30, 2024, Net cash flows from financing activities was $1.63 million, compared to Net cash flows from financing activities of $7.42 million for the six months ended June 30, 2023. During the six months ended June 30, 2024, the Company raised $1.69 million in net proceeds from a securities purchase agreement with an institutional investor for the issuance of Class A Common Stock, pre-funded warrants, and common stock warrants. See Note 3 to the unaudited condensed consolidated financial statements provided under Item 1 of this report for more details. In addition, there was a $57 thousand in tax withholding payments for net issuances on employee equity compensation issued during the six months ended June 30, 2024.

### Critical Accounting Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. There have been no material changes in the critical accounting estimates policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

## Market risk

As filed, 186 characters.

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

## Controls and procedures

As filed, 2,871 characters.

### Evaluation of Disclosure Controls and Procedures

We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding our control objectives.

As of June 30, 2024, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer along with the Chief Financial Officer, of the effectiveness, design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon the foregoing, the Chief Executive Officer along with the Chief Financial Officer concluded that our disclosure controls and procedures were effective. In addition, based on such evaluation we have identified no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Management’s Report on Internal Controls Over Financial Reporting

As a publicly traded company, we are required to comply with the SEC’s rules implementing Section 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.

Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f). Management conducted an assessment of our internal control over financial reporting based on the framework established in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

Based on our evaluation, management concluded that our internal control over financial reporting was effective as of June 30, 2024.

### Change in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the six months ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Filed Aug 13, 2024.
Source: SEC EDGAR, the filing index for accession 0001718939-24-000135. Last ingested by Listed: Nov 3, 2026, 08:25 ET. No prices; not investment advice.