T Stamp (US:IDAI)2025-05-15 21:04PART I FINANCIAL INFORMATION Financial Statements This section presents T Stamp Inc.'s unaudited condensed consolidated financial statements for Q1 2025, detailing financial position, performance, and cash flows, with a net loss of $2.16 million and significant going concern doubt Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $6,626,032 | $8,599,824 | | Total Current Assets | $2,540,170 | $4,667,300 | | Total Liabilities | $2,381,414 | $5,410,980 | | Total Current Liabilities | $1,096,823 | $4,165,845 | | Total Stockholders' Equity | $4,244,618 | $3,188,844 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net Revenue | $545,471 | $573,676 | | Total Operating Expenses | $2,708,457 | $3,422,934 | | Operating Loss | $(2,162,986) | $(2,849,258) | | Net Loss | $(2,157,387) | $(2,678,569) | | Basic and Diluted Net Loss Per Share | $(0.89) | $(3.97) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash flows used in operating activities | $(1,540,477) | $(2,157,635) | | Net cash flows used in investing activities | $(230,298) | $(155,962) | | Net cash flows from financing activities | $125,833 | $(22,498) | | Net change in cash and cash equivalents | $(1,645,669) | $(2,324,055) | | Cash and cash equivalents, end of period | $1,137,652 | $816,692 | - The company's financial statements have been prepared on a going concern basis, but its history of net losses ($2.16 million for Q1 2025), net operating cash outflows ($1.54 million for Q1 2025), and a significant accumulated deficit ($63.62 million) raise substantial doubt about its ability to continue as a going concern for the next twelve months3031 - Customer concentration risk is high, with two customers accounting for 79.69% of total net revenue for the three months ended March 31, 202541 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strategic shifts, including a new equity distribution agreement and a $3.5 million capital raise, alongside a 4.9% revenue decrease and a 28.3% SG&A reduction, while highlighting critical liquidity and going concern risks - The company has undertaken a strategic shift to reduce overhead, refocus go-to-market strategies on joint ventures, and expand its IP portfolio, including technologies for cryptographic asset verification and deepfake countermeasures137 - In January 2025, the company raised gross proceeds of approximately $3.5 million through a securities purchase agreement involving shares and warrants138152157 - In February 2025, it entered an Equity Distribution Agreement with Maxim Group LLC to potentially sell up to $6.2 million of its common stock157 Results of Operations Comparison (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $545,471 | $573,676 | $(28,205) | (4.92)% | | SG&A Expense | $1,787,590 | $2,491,693 | $(704,103) | (28.26)% | | Operating Loss | $(2,162,986) | $(2,849,258) | $686,272 | (24.09)% | - The decrease in SG&A was primarily driven by a $664 thousand reduction in salaries, stock-based compensation, and payroll costs, resulting from reductions in the sales team and executive departures193 - The company's liquidity is critical, with $1.14 million in cash as of March 31, 2025203205 - Management anticipates needing to raise additional capital within the next six months to fund operations, highlighting a significant going concern risk206 Reconciliation of Net Loss to Adjusted EBITDA (Non-GAAP) | | For the three months ended March 31, | | :--- | :--- | :--- | | | 2025 | 2024 | | Net loss | $(2,157,387) | $(2,678,569) | | Add: Other expense | 1,726 | 6,336 | | Less: Other income | (26,361) | (193,114) | | Add: Interest expense, net | 23,595 | 18,549 | | Add: Stock-based compensation | 60,556 | 297,886 | | Add: Change in fair value of warrant liability | (4,559) | (2,460) | | Add: Depreciation and amortization | 182,922 | 184,801 | | Adjusted EBITDA loss (non-GAAP) | $(1,919,508) | $(2,366,571) | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, T Stamp Inc. is exempt from providing quantitative and qualitative disclosures about market risk - T Stamp Inc. is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is therefore not required to provide quantitative and qualitative disclosures about market risk216 Controls and Procedures Management concluded that disclosure controls were ineffective as of March 31, 2025, due to a material weakness in accounting for complex equity transactions, despite ongoing remediation efforts - The CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025218 - The ineffectiveness is due to a previously identified material weakness in internal controls over the accounting and recording of complex equity transactions220 - Management has implemented changes to remediate the material weakness, but these controls have not operated for a sufficient period to conclude that the weakness has been fully remediated221224 - Despite the material weakness, management has concluded that the unaudited condensed consolidated financial statements are fairly presented in all material respects219 PART II OTHER INFORMATION Legal Proceedings The company is not currently involved in any litigation and is unaware of any pending or threatened legal actions - The Company is not currently involved in any litigation and is not aware of any pending or threatened legal actions226 Risk Factors This item is not applicable for the current quarterly report - Not applicable227 Unregistered Sales of Equity Securities and Use of Proceeds This section discloses the unregistered sale of equity securities, detailing a January 6, 2025 securities purchase agreement and private placement of warrants, exempt from registration - On January 6, 2025, the company entered into a securities purchase agreement that included a private placement of common stock purchase warrants (Series A and Series B) to an institutional investor228 - These warrants were offered pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D, raising gross proceeds of approximately $3.50 million228 Defaults Upon Senior Securities The company reports no defaults upon its senior securities during the reporting period - None229 Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable230 Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended March 31, 2025231 Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, financing agreements, and Sarbanes-Oxley Act certifications - The filing includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act238 - Numerous agreements related to recent financing activities are included as exhibits, such as the January 2025 Securities Purchase Agreement and related warrant forms233238