IDAI · Read the filing

Item 1A. Risk Factors

The SEC requires the Company to identify risks that are specific to its business and its financial condition. The Company is still subject to all the same risks as companies in its business, and all companies in the economy. These include risks relating to economic downturns, political and economic events, and technological developments (such as cyber-attacks and the ability to prevent such attacks). Additionally, early-stage companies are inherently riskier than more developed companies, and the risk of business failure and complete loss of your investment capital is present. You should consider general risks as well as specific risks when deciding whether to invest.

Below is a summary of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:

•We are a comparatively early-stage company that has incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability.

•Our technology continues to be developed, and there is no guarantee that we will ever successfully develop the technology that is essential to our business to a point at which no further development is needed.

•We may be subject to numerous data protection requirements and regulations.

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•We operate in a highly competitive industry that is dominated by a number of exceptionally large, well-capitalized market leaders and the size and resources of some of our competitors may allow them to compete more effectively than we can.

•We rely on third parties to provide services essential to the success of our business.

•We currently have three customers that account for substantially all of our revenues.

•We expect to raise additional capital through equity and/or debt offerings to support our working capital requirements and operating losses.

•Our auditor has included an “Emphasis of Matter Regarding Liquidity” note in its report on our consolidated financial statements for the year ended December 31, 2024. Our consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

•As the vast majority of our revenue is US Dollar denominated and a significant percentage of our expenses are incurred in other currencies, we are subject to risks relating to foreign currency fluctuations.

Risks Related to Our Company

We have a limited operating history upon which you can evaluate our performance and have not yet generated profits. Accordingly, our prospects must be considered in light of the risks that any new company encounters. Our Company was incorporated under the laws of the State of Delaware on April 11, 2016, and we have not yet generated profits. The likelihood of our creation of a viable business must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the growth of a business, operation in a competitive industry, and the continued development of our technology and products. We anticipate that our operating expenses will increase for the near future, and there is no assurance that we will be profitable in the near future. You should consider our business, operations, and prospects in light of the risks, expenses and challenges faced as an emerging growth company.

We have historically operated at a loss, which has resulted in an accumulated deficit. For the fiscal year ended December 31, 2024, we incurred a net loss of $12.54 million, compared to a net loss of $7.64 million for the fiscal year ended December 31, 2023. There can be no assurance that we will ever achieve profitability. Even if we do, there can be no assurance that we will be able to maintain or increase profitability on a quarterly or annual basis. Failure to do so would continue to have a material adverse effect on our accumulated deficit, would affect our cash flows, would affect our efforts to raise capital and is likely to result in a decline in our Class A Common Stock price.

Our consolidated financial statements for the fiscal year ended December 31, 2024 have been prepared on a going concern basis. We have not yet generated profits and have an accumulated deficit of $61.46 million as of December 31, 2024. We may not have enough funds to sustain the business until it becomes profitable. Even if we raise additional funding through future financing efforts, we may not accurately anticipate how quickly we may use such funds and whether such funds would be sufficient to bring the business to profitability. The Company’s ability to continue as a going concern in the next twelve months following the date of the consolidated financial statements 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.

Our cash could be adversely affected if the financial institutions in which we hold our cash fail. The Company maintains domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks. The domestic bank deposit balances may exceed the FDIC insurance limits. In addition, given the foreign markets we serve, we maintain cash deposits in foreign banks, some of which are not insured or partially insured by the FDIC or other similar agency. These balances could be impacted if one or more of the financial institutions in which we deposit monies fails or is subject to other adverse conditions in the financial or credit markets.

Our technology continues to be developed, and it is unlikely that we will ever develop our technology to a point at which no further development is required. Trust Stamp is developing complex technology that requires significant technical and regulatory expertise to develop, commercialize and update to meet evolving market and regulatory requirements. While we constantly monitor and adapt our products and technology as criminal methods of breaching cybersecurity advance, there is no guarantee we will consistently be able to develop technology that can effectively counteract such criminal efforts. If we are unable to successfully develop and commercialize our technology and products, it will significantly affect our viability as a company.

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If our security measures are breached or unauthorized access to individually identifiable biometric or other personally identifiable information is otherwise obtained, our reputation may be harmed, and we may incur significant liabilities. In the ordinary course of our business, we may collect and store sensitive data, including protected health information (“PHI”) and personally identifiable information (“PII”), that is owned or controlled by ourselves or our customers, and other parties. We communicate sensitive data, including patient data, electronically, and through relationships with multiple third-party vendors and their subcontractors. These applications and data encompass a wide variety of business-critical information, including research and development information, patient data, commercial information, and business and financial information. We face a number of risks relative to protecting this critical information, including loss of access risk, inappropriate use or disclosure, inappropriate modification, and the risk of our being unable to adequately monitor, audit, and modify our controls over our critical information. This risk extends to the third-party vendors and subcontractors we use to manage this sensitive data. As a custodian of this data, Trust Stamp therefore inherits responsibilities related to this data, exposing itself to potential threats. Data breaches occur at all levels of corporate sophistication (including at companies with significantly greater resources and security measures than our own) and the resulting fallout stemming from these breaches can be costly, time-consuming, and damaging to a company’s reputation. Further, data breaches need not occur from malicious attack or phishing only. Often, employee carelessness can result in sharing PII with a much wider audience than intended. Consequences of such data breaches could result in fines, litigation expenses, costs of implementing better systems, and the damage of negative publicity, all of which could have a material adverse effect on our business operations and financial condition.

We are subject to substantial governmental regulation relating to our technology and will continue to be for the lifetime of our Company. By virtue of handling sensitive PII and biometric data, we are subject to numerous statutes related to data privacy and additional legislation and regulation should be anticipated in every jurisdiction in which we operate. Examples of federal (US) and European statutes we could be subject to are:

•Health Insurance Portability and Accountability Act (HIPAA)

•Health Information Technology for Economic and Clinical Health Act (HITECH)

Any such access, breach, or other loss of information could result in legal claims or proceedings, liability under federal or state laws that protect the privacy of personal information under HIPAA and/or “HITECH”. Notice of breaches must be made to affected individuals, the Secretary of the Department of Health and Human Services (“HHS”), and for extensive breaches, notice may need to be made to the media or state attorneys general. Penalties for violations of these laws vary. For instance, penalties for failure to comply with a requirement of HIPAA and HITECH vary significantly, and include significant civil monetary penalties and, in certain circumstances, criminal penalties with fines up to $250,000 per violation and/or imprisonment. A person who knowingly obtains or discloses individually identifiable health information in violation of HIPAA may face a criminal penalty of up to $50,000 and up to one-year imprisonment. The criminal penalties increase if the wrongful conduct involves false pretenses or the intent to sell, transfer or use identifiable health information for commercial advantage, personal gain, or malicious harm.

Further, various states, such as California, have implemented similar privacy laws and regulations, such as the California Confidentiality of Medical Information Act, that impose restrictive requirements regulating the use and disclosure of health information and other personally identifiable information. Where state laws are more protective, we have to comply with the stricter provisions. In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their personal information has been misused. California’s patient privacy laws, for example, provide for penalties of up to $250,000 and permit injured parties to sue for damages. The interplay of federal and state laws may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and data we receive, use and share, potentially exposing us to additional expense, adverse publicity, and liability. Further, as regulatory focus on privacy issues continues to increase and laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business could intensify. Changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as PII or PHI, along with increased customer demands for enhanced data security infrastructure, could greatly increase our cost of providing our services, decrease demand for our services, reduce our revenues and/or subject us to additional liabilities.

Compliance with U.S. and international data protection laws and regulations could cause us to incur substantial costs or require us to change our business practices and compliance procedures in a manner adverse to our business. Moreover, complying with these various laws could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions. We rely on our customers to obtain valid and appropriate consents from data subjects whose biometric samples and data we process on

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such customers’ behalf. Given that we do not obtain direct consent from such data subjects and we do not audit our customers to ensure that they have obtained the necessary consents required by law, the failure of our customers to obtain consents that are in compliance with applicable law could result in our own non-compliance with privacy laws. Such failure to comply with U.S. and international data protection laws and regulations could result in government enforcement actions (which could include civil or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business. Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws, or breached our contractual obligations, even if we are not found liable, could be expensive and time consuming to defend, could result in adverse publicity and could have a material adverse effect on our business, financial condition and results of operations.

We anticipate sustaining operating losses for the foreseeable future. It is anticipated that we will sustain operating losses into 2025 as we continue with research and development, and strive to gain new customers for our technology and market share in our industry. Our ability to become profitable depends on our ability to expand our customer base, consisting of companies willing to license our technology. There can be no assurance that this will occur. Unanticipated problems and expenses are often encountered in offering new products which may impact whether the Company is successful. Furthermore, we may encounter substantial delays and unexpected expenses related to development, technological changes, marketing, regulatory requirements, and changes to such requirements or other unforeseen difficulties. There can be no assurance that we will ever become profitable. If the Company sustains losses over an extended period of time, it may be unable to continue in business.

If our products do not achieve broad acceptance both domestically and internationally, we will not be able to achieve our anticipated level of growth. Our revenues are derived from licensing our identity authentication solutions. We cannot accurately predict the future growth rate or the size of the market for our technology. The expansion of the market for our solutions depends on a number of factors, such as

•the cost, performance and reliability of our solutions and the products and services offered by our competitors;

•customers’ perceptions regarding the benefits of biometrics and other authentication solutions;

•public perceptions regarding the intrusiveness of these solutions and the manner in which organizations use biometric and other identity information collected;

•public perceptions regarding the confidentiality of private information;

•proposed or enacted legislation related to privacy of information;

•customers’ satisfaction with biometrics solutions; and

•marketing efforts and publicity regarding biometrics solutions.

Even if our technology gains wide market acceptance, our solutions may not adequately address market requirements and may not continue to gain market acceptance. If authentication solutions generally or our solutions specifically do not gain wide market acceptance, we may not be able to achieve our anticipated level of growth and our revenues and results of operations would suffer.

We operate in a highly competitive industry that is dominated by multiple very large, well-capitalized market leaders and is constantly evolving. New entrants to the market, existing competitor actions, or other changes in market dynamics could adversely impact us. The level of competition in the identity authentication industry is high, with multiple exceptionally large, well-capitalized competitors holding a majority share of the market. Currently, we are not aware of any direct competitors of the Company able to offer our main technological offering. Nonetheless, many of the companies in the identity authentication market have longer operating histories, larger customer bases, significantly greater financial, technological, sales, marketing, and other resources than we do. At any point, these companies may decide to devote their resources to creating a competing technology solution which will impact our ability to maintain or gain market share in this industry. Further, such companies will be able to respond more quickly than we can to new or changing opportunities, technologies, standards, or client requirements, more quickly develop new products or devote greater resources to the promotion and sale of their products and services than we can. Likewise, their greater capabilities in these areas may enable them to better withstand periodic downturns in the identity management solutions industry and compete more effectively on the basis of price and production. In addition, new companies may enter the markets in which we compete, further increasing competition in the identity management solutions industry.

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successfully against current or future competitors, and increased competition may result in price reductions, reduced profit margins, loss of market share and an inability to generate cash flows that are sufficient to maintain or expand the development and marketing of new products, any of which would adversely impact our results of operations and financial condition.

We face competition from companies with greater financial, technical, sales, marketing, and other resources, and, if we are unable to compete effectively with these competitors, our market share may decline, and our business could be harmed. We face competition from well established companies. Many of our competitors have longer operating histories, larger customer bases, significantly greater financial, technological, sales, marketing, and other resources than we do. As a result, our competitors may be able to respond more quickly than we can to new or changing opportunities, technologies, standards, or client requirements, more quickly develop new products or devote greater resources to the promotion and sale of their products and services than we can. Likewise, their greater capabilities in these areas may enable them to better withstand periodic downturns in the identity management solutions industry and compete more effectively on the basis of price and production. In addition, new companies may enter the markets in which we compete, further increasing competition in the identity management solutions industry.

We believe that our ability to compete successfully depends on a number of factors, including the type and quality of our products and the strength of our brand names, as well as many factors beyond our control. We may not be able to compete successfully against current or future competitors, and increased competition may result in price reductions, reduced profit margins, loss of market share and an inability to generate cash flows that are sufficient to maintain or expand the development and marketing of new products, any of which would adversely impact our results of operations and financial condition.

The Company may be unable to effectively protect its intellectual property. The Company has many issued patents related to its products and technology, and many pending patent applications as of the date of this report. There is no guarantee that the Company will ever be issued patents on the applications it has submitted. In addition, in order to control costs, we have filed patent applications only in the United States. This may result in our having limited or no protection in other jurisdictions. Our success depends to a significant degree upon the protection of our products and technology. If we are unable to secure patents for our products and technology, or are otherwise unsuccessful at protecting our technology, other companies with greater resources may copy our technology and/or products, or improve upon them, putting us at a disadvantage to our competitors.

Successful infringement claims against us could result in significant monetary liability or prevent us from selling some of our products. We believe our products and technology may be highly disruptive to a very large and growing market. Our competitors are well capitalized with significant intellectual property protection and resources and they (and/or patent trolls) may initiate infringement lawsuits against our Company. Such litigation could be expensive and could also prevent us from selling our products, which would significantly harm our ability to grow our business as planned.

Our failure to attract and retain highly qualified personnel in the future could harm our business. As the Company grows, it will be required to attract and retain additional qualified professionals, staff for research and development, regulatory professionals, sales and marketing professionals, accounting professionals, legal professionals, and finance experts. The Company may not be able to attract and retain qualified individuals for such positions, which will affect the Company’s ability to grow and expand its business.

We rely on third party service providers. Our third-party partners provide a variety of essential business functions, including hosting, contract labor, and others. It is possible that some of these third parties will fail to perform their services or will perform them in an unacceptable manner. If we encounter problems with one or more of these parties and they fail to perform to expectations, it could have a material adverse impact on the Company.

We currently have three customers that account for substantially all of our current revenues. During the Company’s technology stack development, we have focused on strong relationships with a number of significant partners and customers to guide the customer and product discovery process. As such, our historical financial results identify that for a number of years we generated substantially all of our revenue from those three customers.

In the opinion of our management, we would be able to continue operations without our current customers. However, the unanticipated loss of the Company’s current customers could have an adverse effect on the company’s financial position.

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We face risks related to distributing our products and services through channel partnerships, such as our partnership with FIS. When selling our products and services through indirect sales channels, such as through FIS, we are reliant on the efforts of those channel partners to successfully market and sell our products to end-customers. To the extent that FIS is unsuccessful at selling our products and services, our results of operations may suffer. Further, as of the date of this report, our only channel partnership is with FIS, which may increase the risk of harm to our Company if FIS is unsuccessful in selling our products and services. While we may seek to attract and retain additional indirect channel partners that will be able to market our products effectively and provide timely and cost-effective customer support and services, we may not succeed in doing so, and this could limit our ability to grow revenues and achieve profitability. Selling through channel partnerships is also a relatively new endeavor for us. Historically, we have generated a majority of sales through direct sales. Managing indirect sales channels may require more management attention than managing our direct sales force. If the indirect sales channels grow, management attention may be diverted, impairing our ability to execute other parts of our strategy.

We face risks related to our target customers. The majority of the customers that we are targeting are large organizations with complex and expansive operations. These kinds of companies often have long and often unpredictable enterprise sales cycles, which can result in significant time and effort to close a deal with those companies (and there is no guarantee that a deal will occur). This can make sales forecasting difficult for our Company, which can lead to operational challenges. For example, we often need to hire staff ahead of closing on a new client contract to be ready to perform if and when the contract closes. If we are unable to effectively forecast sales, we may incur unnecessary or avoidable expenses, or exhaust our cash reserves, which could have a material negative impact on our Company’s financial condition and results of operations.

Our future success is dependent on the continued service of our small management team. Seven directors and four executive officers provide leadership to Trust Stamp. Three of the directors are also executive officers. Our success is dependent on their ability to manage all aspects of our business effectively. Because we are relying on our small management team, we lack certain business development resources that may hurt our ability to grow our business. Any loss of key members of our executive team could have a negative impact on our ability to manage and grow our business effectively. We do not maintain a key person life insurance policy on any of the members of our senior management team. As a result, we would have no way to cover the financial loss if we were to lose the services of our directors or officers.

We expect to raise additional capital through equity and/or debt offerings to support our working capital requirements and operating losses. In order to fund future growth and development, the Company will likely need to raise additional funds in the future by offering shares of its Common or Preferred Stock and/or other classes of equity, or debt that convert into shares of Common or Preferred Stock, any of which offerings would dilute the ownership percentage of investors in this offering. In order to issue sufficient shares in this regard, we may be required to amend our certificate of incorporation to increase our authorized capital stock, which would require us to obtain consent of a majority of our shareholders. Furthermore, if the Company raises capital through debt, the holders of our debt would have priority over holders of Common and Preferred Stock and the Company may be required to accept terms that restrict its ability to incur more debt. We cannot assure you that the necessary funds will be available on a timely basis, on favorable terms, or at all, or that such funds if raised, would be sufficient. The level and timing of future expenditure will depend on a number of factors, many of which are outside our control. If we are not able to obtain additional capital on acceptable terms, or at all, we may be forced to curtail or abandon our growth plans, which could adversely impact the Company, its business, development, financial condition, operating results, or prospects.

We are subject to risks related to foreign currency exchange rates. We operate on a global basis. We have operations (through our subsidiaries and/or directly) in many foreign countries and territories, including, but not limited to, United Kingdom, Poland, Rwanda, Denmark, and the Republic of Malta. The translation from any currencies to United States Dollars for financial statement presentation resulted in a foreign currency loss of $5 thousand for the year ended December 31, 2024, and $0 loss for the year ended December 31, 2023. As of June 30, 2022, the Company determined that there was currently no intention to settle intercompany accounts in the foreseeable future; therefore, beginning in June 30, 2022, future fluctuations in foreign currencies between the Company and its subsidiaries are recorded to Accumulated other comprehensive income on the balance sheet instead of Other expense. The translation from any currencies to United States Dollars for financial statement presentation resulted in Accumulated other comprehensive income of $181 thousand as of December 31, 2024, and $140 thousand as of December 31, 2023. Foreign currency translation losses, coupled with varying inflation rates across the countries we operate in, could have a material adverse effect on our business.

We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies could make our Class A Common Stock less attractive to investors. We are an emerging growth company, as

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defined in the Jumpstart Our Business Startups Act (the "JOBS Act"). For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding non-binding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved, and an exemption from compliance with the requirement of the PCAOB regarding the communication of critical audit matters in the auditor’s report on the consolidated financial statements. We could be an emerging growth company for up to five years following the year in which we completed our IPO, although circumstances could cause us to lose that status earlier. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the closing of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our common stock that are held by non-affiliates to exceed $700.00 million as of the prior June 30th, and (2) the date on which we have issued more than $1.00 billion in non-convertible debt during the prior three-year period.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We cannot predict if investors will find our Class A Common Stock less attractive because we may rely on the reporting exemptions and the extended transition period for complying with new or revised accounting standards. If some investors find our Class A Common Stock less attractive as a result, there may be a less active trading market for our Class A Common Stock and our share price may be more volatile.

Our internal controls over financial reporting and our disclosure controls and procedures may not prevent all possible errors that could occur. Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Ensuring that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Failure on our part to have effective internal financial and accounting controls would cause our financial reporting to be unreliable, could have a material adverse effect on our business, operating results, and financial condition, and could cause the trading price of our common stock to fall dramatically.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be satisfied. Internal control over financial reporting and disclosure controls and procedures are designed to give a reasonable assurance that they are effective to achieve their objectives. We cannot provide absolute assurance that all of our possible future control issues will be detected. These inherent limitations include the possibility that judgments in our decision making can be faulty, and that isolated breakdowns can occur because of simple human error or mistake. The design of our system of controls is based in part upon assumptions about the likelihood of future events, and there can be no assurance that any design will succeed absolutely in achieving our stated goals under all potential future or unforeseeable conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error could occur and not be detected. This and any future failures could cause investors to lose confidence in our reported financial information, which could have a negative impact on our financial condition and stock price.

In future periods, if the process required by Section 404 of the Sarbanes-Oxley Act reveals any material weaknesses or significant deficiencies, the correction of any such material weaknesses or significant deficiencies could require remedial measures which could be costly and time-consuming. In addition, in such a case, we may be unable to produce accurate financial statements on a timely basis. Any associated accounting restatement could create a significant strain on our internal resources and cause delays in our release of quarterly or annual financial results and the filing of related reports, increase our costs and cause management distraction. Any of the foregoing could cause investors to lose confidence in the

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reliability of our financial statements, which could cause the market price of our common stock to decline and make it more difficult for us to finance our operations and growth.

Management identified certain material weaknesses relating to corporate finance and accounting, resulting in the Company not maintaining effective internal controls over financial reporting as of the year ended December 31, 2024. Management identified certain material weaknesses relating to corporate finance and accounting, resulting in the Company not maintaining effective internal controls over financial reporting as of the year ended December 31, 2024. As a result, the Company has not maintained effective internal controls over financial reporting as required for a public company. The resulting material weakness relates to proper design and implementation of controls over management’s review of the Company’s accounting for and recording of complex equity transactions. The failure to establish effective internal controls left us without the ability to properly account for important transactions accurately, to reliably compile our financial information, and significantly impaired our ability to prevent error and detect fraud. In response to these identified material weaknesses, in the fourth quarter of 2024 and first quarter of 2025, the Company has established additional operational processes to prevent the incorrect recording of stock-based awards. Such additional operational processes that have been established relating to recording of complex equity transactions include, but are not limited to:

•Enhanced review with multiple layers for all equity transactions to ensure that the calculations are correct and match the terms in corresponding agreement.

•Augmented our existing resources with additional consultants to assist in the analysis and recording of complex accounting transactions.

•Implemented multiple tiers of checks and reviews between data entry in our internal records and the use of such data to calculate complex equity transaction entries for our financial statements.

The Company’s management recently implemented internal control processes adopted in response to the identified material weaknesses specifically related to complex equity transactions and believe the procedures will address the identified material weakness. However, the implemented and enhanced controls have not operated for a sufficient period of time to demonstrate that the material weakness was remediated as of the date of this report.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

Risk Management and Strategy

We review cybersecurity risk as part of our overall enterprise risk management program with a goal of ensuring that cybersecurity risk management remains a top priority in our business strategy and operations.

Our risk management strategy includes, among other elements:

•Identification: We aim to proactively identify sources of risk, areas of impact, and relevant events that could give rise to cybersecurity risks, such as changes to our infrastructure, service providers, or personnel.

•Assessment: We conduct periodic risk assessments to identify cybersecurity threats. We also conduct likelihood and impact assessments with the goal of identifying reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.

•Management: Following our risk assessments, we design and implement reasonable safeguards to address any identified gaps in our existing processes and procedures.

We engage third parties, including consultants and auditors, to evaluate the effectiveness of our risk management program, control environment, and cybersecurity practices through security audits, penetration testing, and other engagements.

The Company's cybersecurity policies and procedures are fully integrated into its broader risk management framework, reflecting a holistic approach to cybersecurity risk management. Regular cybersecurity risk assessments are conducted to identify potential threats and vulnerabilities, with detailed mitigation strategies developed and implemented accordingly.

Trust Stamp has adopted an Information Security Incident Response Plan that establishes policy and protocol to follow in response to an information security incident or event impacting Trust Stamp. This policy applies to all Trust Stamp

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employees holding management responsibilities. Incidents are reported by users via various methods including verbally, email, or other methods. The Development Operations team via the Chief Technology Officer or Executive Vice President is the main point of contact for technical support issues. It is to be expected that potential security incidents will be raised through this channel.

The Company engages third-party cybersecurity assessments to ensure an objective evaluation of its cybersecurity stance, including the effectiveness of its risk management strategies.Oversight of cybersecurity risks posed by third-party service providers is systematically managed, ensuring that all external risks are identified and mitigated.

The Company did not have any material cybersecurity breaches during the year ended December 31, 2024.

Board of Director's Governance

The Board of Directors (the "Board") includes members with substantial cybersecurity expertise, ensuring informed oversight of cybersecurity risks.Documentation of the Board's involvement in cybersecurity oversight is maintained, highlighting the frequency and topics of discussions related to cybersecurity risks and incident response. The Board is regularly updated on cybersecurity risks and incidents through established reporting mechanisms, ensuring they are well-informed to make strategic decisions regarding the Company's cybersecurity posture.

Management's Governance

Management's roles and responsibilities in cybersecurity oversight are clearly defined, with specific committees or positions designated for managing cybersecurity risks. The day-to-day management of cybersecurity is the responsibility of the Chief Technology Officer who oversees our technology team. These include procedures for incident response and regular reporting of cybersecurity information to the Board of Directors (the "Board"), ensuring effective communication and oversight. Cybersecurity risk management is seamlessly integrated into the Company's overall business strategy and decision-making processes, demonstrating a proactive approach to managing cybersecurity risks.

The Company has established clear criteria for determining the materiality of cybersecurity incidents, which include assessing potential or actual financial impacts, reputational damage, and operational disruptions. Documented incidents are meticulously recorded, detailing their nature, scope, and financial implications, ensuring transparency and accountability. The timeliness of Form 8-K filings following material cybersecurity incidents is strictly adhered to, with a thorough process in place for documenting any reasons for delayed disclosures. This ensures compliance with SEC requirements and maintains stakeholder confidence in the Company's cybersecurity posture.

Item 2. Properties

The Company contracts for use of office space at 3017 Bolling Way NE, Floor 2, Atlanta, Georgia, 30305, United States of America, which serves as its corporate headquarters and primary operational hub. The Company also leases office space (through a subsidiary) in Malta, which primarily serves as a research and development space. The Company contracts for coworking arrangements in other office spaces (either directly or through its subsidiaries) in North Carolina, Denmark and Rwanda to support its dispersed workforce. Minimum lease commitments related to these agreements are described in Note 13 to the consolidated financial statements provided under Item 8 of this report. We believe our existing properties are in good condition and are sufficient and suitable for the conduct of our business.

Item 3. Legal Proceedings

From time to time, the Company may be involved in a variety of legal matters that arise in the normal course of business. The Company is not currently involved in any litigation, and its management is not aware of any pending or threatened legal actions relating to its intellectual property, conduct of its business activities, or otherwise. See “Risk Factors” for a summary of risks our Company may face in relation to litigation against our Company.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Common Stock

As of December 31, 2024 and 2023, our Class A Common Stock is traded on the Nasdaq Capital Market ("Nasdaq") under the symbol “IDAI”. Trust Stamp received approval from Nasdaq to have our Class A Common Stock listed on the Nasdaq Capital Market under the symbol “IDAI” with trading commencing on January 31, 2022.

Holders

As of March 28, 2025, there were approximately 2,746 registered holders of record of our Class A Common Stock and the last reported sale price of our Class A Common Stock on the Nasdaq was $1.98 per share on March 28, 2025.

The number of shares of our Class A Common Stock that are freely tradable as of March 28, 2025 was 1,819,690.

Performance Graph

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

Dividend Policy

To date, we have not paid any dividends on our Class A Common Stock and do not anticipate paying any dividends in the foreseeable future. The declaration and payment of dividends on the Class A Common Stock is at the discretion of the Board and will depend on, among other things, our operating results, financial condition, capital requirements, contractual restrictions, or such other factors as the Board may deem relevant. We currently expect to use all available funds to finance the future development and expansion of our business.

Securities Authorized for Issuance Under Equity Compensation Plans

On April 9, 2019, management created a new entity, Tstamp Incentive Holdings (“TSIH”) to which the Company issued 21,368 shares of Class A Common Stock that the Board of Directors of TSIH could use for employee stock awards in the future. The purpose of the entity was to provide an analogous structure to a traditional stock incentive plan. As of December 31, 2024 and the date of this report, no shares of Class A Common Stock are held by TSIH as all shares have been issued pursuant to employee Restricted Stock Units. The Company has completed the process of administratively dissolving TSIH with the dissolution was effective February 13, 2025.

Executive Compensation Philosophy

The Board of Directors determines the compensation given to our executive officers in their sole discretion. The Board reserves the right to pay our executives or any future executives a salary, and/or issue them shares of Class A Common Stock issued in consideration for services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer’s performance. This package may also include long-term stock-based compensation to certain executives, which is intended to align the performance of our executives with our long-term business strategies. Additionally, the Board of Directors has granted and reserves the right to grant performance-based equity awards in the future, if the Board of Directors in its sole determination believes such grants would be in our best interests.

Incentive Bonus

The Board of Directors may grant incentive bonuses to our executive officers and/or future executive officers in its sole discretion, if the Board believes such bonuses are in our best interest, after analyzing our current business objectives and growth, if any, and the amount of revenue we are able to generate each month, as revenue is a direct result of the actions and ability of such executives.

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Long-Term, Stock Based Compensation

In order to attract, retain and motivate executive talent necessary to support the Company's long-term business strategy we may award our executives and any future executives with long-term, stock-based compensation in the future, at the sole discretion of the Board.

Recent Sales of Unregistered Securities:

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*The share numbers in the table above reflect the shares issued after giving effect to both Reverse Splits, described in Note 1 to the consolidated financial statements provided under Item 8 of this report.

(1) On December 21, 2023, the 104,889 common stock purchase warrants to purchase shares of Class A Common Stock of the Company at a price of $20.10 per warrant were exercised for total proceeds of $2,108,262.

(2) On December 21, 2023, the 85,314 common stock purchase warrants to purchase shares of Class A Common Stock of the Company at a price of $20.10 per warrant were exercised for total proceeds of $1,714,798.

(3) On September 3, 2024, the 240,000 common stock purchase warrants to purchase shares of Class A Common Stock of the Company at a price of $4.8345 per warrant were exercised for total proceeds of $1,160,280.

(4) The warrants to purchase the 190,987 shares of the Company’s Class A Common Stock remain outstanding as of the date of this report.

(5) The warrants to purchase the 370,370 and 277,778 shares of Class A Common Stock remain outstanding as of the date of this report.

(6) The warrants to purchase the 414,202 and 207,101 shares of Class A Common Stock remain outstanding as of the date of this report.

Item 6. Reserved

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K. 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. You should review the section titled “Statement Regarding Forward-Looking Statements” for a discussion of forward-looking statements and the section titled “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Annual Report on Form 10-K. 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 primarily develops proprietary artificial intelligence-powered solutions, researching and leveraging machine learning artificial intelligence, including computer vision, cryptography, and data mining, to process and protect data and deliver insightful outputs that identify and defend against fraud, protect sensitive user information, facilitate automated processes, 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 historically possible to deliver results at a disruptively low cost for usage across multiple industries.

Our team has substantial expertise in the creation and development of AI-enabled software products. We license our technology and expertise in numerous fields, with an increasing emphasis on addressing diverse markets through established partners who will integrate our technology into field-specific applications.

Over the last 12 months, while maintaining our strong emphasis on identity authentication for financial services, the Company has undertaken a multi-pronged process to position itself better to leverage the growing opportunities offered by the expanded capabilities, use, and acceptance of AI technologies. This process has included:

• Reducing the size of the non-production-focused executive and consulting teams to reduce overhead.

•Releasing sales staff that did not meet their targets.

•Negotiating a services contract to offset the cost of the technical team members while maintaining significant R&D and product development capabilities.

•Refocusing go-to-market strategies on joint ventures with proven industry partners with access to target markets

•Expanding our IP portfolio to strengthen our existing position related to presentation attack detection and tokenization and include implementations such as:

i.Embedded ownership verification for cryptographic assets, a technology that we believe to have significant potential with the expansion in the ownership of crypto-assets including potential deregulation (or loosening or clarification of regulation) in the United States together with the global growth of stable coins including Central Government Digital Currencies.

ii.A simple user interaction utility called “Shape Overlay” that augments biometric verification and combats deepfakes and injection attacks by having the user interact in real-time with their captured image.

iii.Stable Key (or “Stable IT2”) which is an innovative technology that generates a “key” directly from the biometric of the user which key has a mathematical correlation to all of the user's passwords, PINS, and other “secrets” for every account and use case meaning that those secrets never need to be stored in their entirety.

iv.A patent for “Interoperable Biometric Representations” that potentially breaks vendor lock-in by allowing users of biometric technologies to compare like-modality templates from different sources.

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•Strengthening our international 3rd party cybersecurity and data handling certifications by adding SOC2 certification to our NCSC Cyberessentials Plus certification and obtaining a renewed D-Seal certification (the world’s first certification that includes not just data security but also the ethical and responsible use of data).

•Opening an office in Tokyo (with funding from the City of Tokyo and the Japanese government) to pursue opportunities in the APAC region.

•Retaining an investment bank to explore strategic partnership and M&A opportunities across multiple sectors.

Recent Developments

Equity Distribution Agreement with Maxim

On February 25, 2025, the Company entered into an Equity Distribution Agreement (the “Agreement”), with Maxim Group LLC (“Maxim”), pursuant to which the Company may offer and sell, from time to time, through Maxim, as sales agent or principal, shares of its common stock, $0.01 par value per share (the “Common Stock”).

Subject to the terms and conditions of the Agreement, Maxim will use commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations and the rules of the Nasdaq Capital Market to sell shares of the Company’s Common Stock from time to time based upon the Company’s instructions, including any minimum price, time or size limits specified by the Company. Under the Agreement, Maxim may sell shares by any method deemed to be an “at the market” offering as defined in Rule 415 under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any other method permitted by law, including in privately negotiated transactions. Maxim’s obligations to sell shares under the Agreement are subject to satisfaction of certain conditions, including customary closing conditions for transactions of this nature. The Company will pay Maxim a commission of 3.0% of the aggregate gross proceeds from each sale of shares and has agreed to reimburse Maxim for certain specified expenses of up to $40,000, aggregate, in addition to up to $3,000 quarterly for the Maxim’s counsel’s fees and any incidental expenses to be reimbursed by us. We have agreed to provide indemnification and contribution to Maxim against certain civil liabilities, including liabilities under the Securities Act.

The Company is not obligated to make any sales of its Common Stock under the Agreement and no assurance can be given that the Company will sell any shares under the Agreement, or, if it does, as to the price or amount of shares that the Company will sell, or the dates on which any such sales will take place. The Agreement will terminate upon the earlier of (i) the sale of all shares having an aggregate offering price of $6,196,000 pursuant to the Agreement, (ii) twelve (12) months from the date of the Agreement, (iii) mutual termination by both Maxim and the Company upon the provision of fifteen (15) days written notice, and (iv) termination of the Agreement as otherwise permitted therein.

Sales of shares of Common Stock under the Agreement will be made pursuant to the Company’s effective registration statement on Form S-3 (Registration No. 333-271091) (the “Registration Statement”) which was declared effective April 12, 2023 and a related prospectus supplement which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 25, 2025 (the “ATM Prospectus”). The ATM Prospectus relates to the offering of up to $6,196,000 worth of shares of the Company’s Common Stock from time to time. The issuance and sale, if any, of Common Stock under the Agreement is subject to the effectiveness of the Registration Statement and “baby shelf” limitations under General Instruction I.B.6. of Form S-3.

The foregoing summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, which was filed as Exhibit 1.1 to the Company's Current Report on Form 8-K filed with the SEC on February 26, 2025.

Appointment of New Chief Financial Officer

On January 17, 2025, the Board of Directors of the Company appointed Lance Wilson as the Company’s new Chief Financial Officer ("CFO"), to fill the vacancy in the position left after Alex Valdes’s resignation as Chief Financial Officer effective January 2, 2025.

Lance Wilson, a licensed Certified Public Accountant in Georgia, first joined the Company in 2021, serving in various financial capacities, most recently as the Senior Vice President of Accounting & Finance at Trust Stamp from July 2024 until being appointed to his role as CFO. Lance leads all external financial reporting, including SEC filings and technical

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accounting research and implementation. Lance has played a key role in multiple initiatives, including a successful public fundraising campaign that resulted in Trust Stamp’s NASDAQ listing in January 2022.

Prior to joining Trust Stamp, Lance served as the Financial Reporting Manager at Cousins Properties (NYSE: CUZ) from July 2020 to July 2021, where he managed all SEC filings, technical accounting projects, and audit engagements. Prior to that, he served in various accounting roles at The North Highland Company, Change Healthcare (formerly McKesson Technology Solutions), and BDO-USA, LLC. Lance holds a Master of Accountancy degree and a Bachelor of Science in Commerce and Business Administration from The University of Alabama.

Lance Wilson has no family relationships with any other director, executive officer, or person nominated or chosen by the Company to become a director or executive officer.

Lance Wilson and the Company entered into an Executive Employment Agreement (the “Agreement”), with an effective date of January 1, 2025, for his role as Chief Financial Officer (CFO) of the Company. The Agreement outlines Mr. Wilson’s ongoing responsibilities, including oversight of the Company’s financial integrity, regulatory compliance, and multicurrency financial reporting. It also details his leadership in investor relations and compliance with applicable SEC, Nasdaq, and Sarbanes-Oxley requirements.

Under the Agreement, Mr. Wilson will receive an annual base salary of $182,250, subject to periodic review, and will be eligible for an annual equity bonus of at least 10% of his base salary in the form of restricted stock units. The Agreement also includes provisions for reimbursement of business expenses, participation in Company benefit plans, and relocation assistance if applicable.

The Agreement has an open-ended term, continuing until either party provides 120 days’ written notice of termination. It also specifies termination provisions, including compensation and benefits in the event of termination by the Company without cause or by Mr. Wilson for good reason, such as severance equal to up to 36 months of base salary and accelerated vesting of equity awards in certain circumstances, including a change in control. Termination for cause or voluntary resignation without good reason would result in payment of only accrued compensation and benefits through the termination date.

The Agreement contains customary confidentiality and non-disclosure provisions related to the Company’s trade secrets and other sensitive information.

The foregoing description of the Agreement is intended to be a summary, and is qualified in its entirety by reference to the Agreement itself, a copy of which was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on January 21, 2025.

Securities Purchase Agreement dated January 6, 2025

On January 6, 2025, the Company entered into a securities purchase agreement (the “January 2025 SPA”) with an institutional investor (the “Selling Stockholder”), pursuant to which the Company agreed to issue and sell to the Selling Stockholder (i) in a registered direct offering, (a) 175,000 shares of Class A Common Stock (the “January 2025 Shares”); and (b) Pre-Funded Warrants (the "January 2025 Pre-Funded Warrants") to purchase 239,202 shares of the Company’s Class A Common Stock at an exercise price of $0.001 per share and (ii) in a concurrent private placement, common stock purchase warrants consisting of Series A common warrants exercisable for up to 414,202 shares of Class A Common Stock at an exercise price of $8.45 per share of Class A Common Stock (the “January 2025 Series A Warrants”), and Series B common warrants exercisable for up to 207,101 shares of Class A Common Stock at an exercise price of $8.45 per share (the “January 2025 Series B Warrants”, and collectively with the January 2025 Series A Warrants, the “January 2025 Private Placement Warrants”). The offering price per January 2025 Share and respective January 2025 Private Placement Warrants was $8.45, and the offering price per Pre-Funded Warrant was $8.449.

The securities to be issued in the registered direct offering were offered pursuant to the Company’s shelf registration statement on Form S-3 (File 333-271091) (the “Shelf Registration Statement”), initially filed by the Company with the SEC under the Securities Act on April 3, 2023 and declared effective on April 12, 2023. The January 2025 Pre-Funded Warrants are immediately exercisable upon issuance and will remain exercisable until all of the January 2025 Pre-Funded Warrants are exercised in full.

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The January 2025 Private Placement Warrants (and the shares of Class A Common Stock issuable upon the exercise of the January 2025 Private Placement Warrants) were not registered under the Securities Act, and were offered pursuant to an exemption from the registration requirements of the Securities Act provided under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.

The terms of the Series A and January 2025 Series B Warrants that comprise the January 2025 Private Placement Warrants are identical, except that the January 2025 Series A Warrants provide for additional protections for the Selling Stockholder in the event of a “Fundamental Transaction” while the January 2025 Series A Warrants are outstanding (which includes, but is not limited to, merger transactions or a sale of substantially all of the Company’s assets). In such an event, then if holders of the Company’s Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Selling Stockholder will be given the same choice as to the consideration it receives upon any exercise of either the Series A or January 2025 Series B Warrants following such Fundamental Transaction. Notwithstanding anything to the contrary, for the January 2025 Series A Warrants, in the event of a Fundamental Transaction, the Selling Stockholder may require the Company or its successor to repurchase the January 2025 Series A Warrants for its Black-Scholes Value (as defined in the Series A Warrant) in cash. This right can be exercised concurrently with, or within 30 days following, the consummation or public announcement of the transaction. If the Fundamental Transaction occurs outside the Company’s control, such as in a hostile takeover or an unapproved transaction, the holder is entitled to receive consideration equivalent in type and proportion to that offered to common stockholders, also calculated based on the Black-Scholes model. Additionally, if no consideration is offered to the Company’s stockholders in the transaction, the holder is deemed to receive common stock of the successor entity, preserving the January 2025 Series A Warrants’ value.

The January 2025 Private Placement Warrants are immediately exercisable upon issuance, and will expire five years thereafter, and in certain circumstances may be exercised on a cashless basis. If we fail for any reason to deliver shares of Class A Common Stock upon the valid exercise of the January 2025 Private Placement Warrants, subject to our receipt of a valid exercise notice and the aggregate exercise price, by the time period set forth in the January 2025 Private Placement Warrants, we are required to pay the applicable holder, in cash, as liquidated damages as set forth in the January 2025 Private Placement Warrants. The January 2025 Pre-Funded Warrants and January 2025 Private Placement Warrants also include customary buy-in rights in the event we fail to deliver shares of common stock upon exercise thereof within the time periods set forth in the January 2025 Pre-Funded Warrants and January 2025 Private Placement Warrants.

On January 8, 2025, the Company closed the registered direct offering and the private placement offering (collectively, the “January 2025 Offering”), raising gross proceeds of approximately $3.50 million before deducting placement agent fees and other offering expenses payable by the Company. In the event that all January 2025 Private Placement Warrants are exercised for cash, the Company will receive additional gross proceeds of approximately $5,250,250. The Company’s primary use of the net proceeds will be for working capital, capital expenditures and other general corporate purposes.

Pursuant to the terms of the January 2025 SPA, the Company is required within 30 days of January 6, 2025 to file a registration statement on Form S-1 or other appropriate form if the Company is not then S-1 eligible registering the resale of the shares of Class A Common Stock issued and issuable upon the exercise of the January 2025 Private Placement Warrants. The Company is required to use commercially reasonable efforts to cause such registration to become effective within 91 days of the closing of the January 2025 Offering, and to keep the registration statement effective at all times until no investor owns any January 2025 Private Placement Warrants or shares issuable upon exercise thereof.

Pursuant to the terms of the January 2025 SPA, from January 6, 2025 until 30 days after closing, subject to certain exceptions, we may not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents, or file any registration statement or any amendment or supplement thereto, other than a prospectus supplement for the Shelf Registration Statement. In addition, from January 6, 2025 until 45 days after closing, we are prohibited from effecting or entering into an agreement to effect any issuance of common stock or common stock equivalents involving a variable rate transaction (as defined in the January 2025 SPA).

The foregoing description of the January 2025 SPA, January 2025 Pre-Funded Warrants, January 2025 Series A Warrants, and January 2025 Series B Warrants is intended to be a summary, and is qualified by reference to the full text of each of these documents, which were filed as exhibits 10.1, 4.1, 4.2, and 4.3, respectively to the Company's Current Report on Form 8-K filed with the SEC on January 10, 2025.

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Securities Purchase Agreement dated December 5, 2024

On December 5, 2024, the Company entered into a securities purchase agreement (the “December 2024 SPA”) with an investor, pursuant to which the Company agreed to issue and sell to the Selling Stockholder (i) in a registered direct offering, (a) 139,000 shares of Class A Common Stock (the “December 2024 Shares”); and (b) Pre-Funded Warrants (the "December 2024 Pre-Funded Warrants") to purchase 231,370 shares of the Company’s Class A Common Stock at an exercise price of $0.015 per share and (ii) in a concurrent private placement, common stock purchase warrants consisting of Series A common warrants exercisable for up to 370,370 shares of Class A Common Stock at an exercise price of $8.10 per share of Class A Common Stock (the “December 2024 Series A Warrants”), and Series B common warrants exercisable for up to 277,778 shares of Class A Common Stock at an exercise price of $8.10 per share (the “December 2024 Series B Warrants”, and collectively with the December 2024 Series A Warrants, the “December 2024 Private Placement Warrants”). The offering price per December 2024 Share and respective December 2024 Private Placement Warrants was $8.10 and the offering price per December 2024 Pre-Funded Warrant was $8.09.

Pursuant to the December 2024 SPA, the Company agreed to hold an annual or special meeting of its stockholders within sixty (60) days following the closing date of the December 2024 SPA for the purpose of obtaining shareholder approval of (i) an increase in the number of authorized shares of the Company; and (ii) the December 2024 SPA and transactions contemplated thereunder (including, but not limited to, the issuance of the December 2024 Private Placement Warrants, and shares issuable upon the exercise of the December 2024 Private Placement Warrants) as may be required by the applicable rules and regulations of the Nasdaq Stock Market (“Shareholder Approval”). If the Company does not obtain Shareholder Approval at the first meeting, the Company must call a meeting every ninety (90) days thereafter to seek Shareholder Approval until the earlier of the date on which Shareholder Approval is obtained or the warrants are no longer outstanding.

The terms of the December 2024 Series A and Series B Warrants that comprise the December 2024 Private Placement Warrants are identical, except that the December 2024 Series A Warrants provide for additional protections for the Selling Stockholder in the event of a “Fundamental Transaction” while the December 2024 Series A Warrants are outstanding (which includes, but is not limited to, merger transactions or a sale of substantially all of the Company’s assets). In such an event, then if holders of the Company’s Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Selling Stockholder will be given the same choice as to the consideration it receives upon any exercise of either the December 2024 Series A or Series B Warrants following such Fundamental Transaction. Notwithstanding anything to the contrary, for the December 2024 Series A Warrants, in the event of a Fundamental Transaction, the Selling Stockholder may require the Company or its successor to repurchase the December 2024 Series A Warrants for its Black-Scholes Value (as defined in the Series A Warrant) in cash. This right can be exercised concurrently with, or within 30 days following, the consummation or public announcement of the transaction. If the Fundamental Transaction occurs outside the Company’s control, such as in a hostile takeover or an unapproved transaction, the holder is entitled to receive consideration equivalent in type and proportion to that offered to common stockholders, also calculated based on the Black-Scholes model. Additionally, if no consideration is offered to the Company’s stockholders in the transaction, the holder is deemed to receive common stock of the successor entity, preserving the December 2024 Series A Warrants’ value.

The December 2024 Private Placement Warrants are immediately exercisable upon the date December 2024 Shareholder Approval is received, and will expire five years thereafter, and in certain circumstances may be exercised on a cashless basis. If we fail for any reason to deliver shares of Class A Common Stock upon the valid exercise of the December 2024 Private Placement Warrants, subject to our receipt of a valid exercise notice and the aggregate exercise price, by the time period set forth in the December 2024 Private Placement Warrants, we are required to pay the applicable holder, in cash, as liquidated damages as set forth in the December 2024 Private Placement Warrants. The December 2024 Pre-Funded Warrants and December 2024 Private Placement Warrants also include customary buy-in rights in the event we fail to deliver shares of common stock upon exercise thereof within the time periods set forth in the December 2024 Pre-Funded Warrants and December 2024 Private Placement Warrants.

The foregoing description of the December 2024 SPA, December 2024 Pre-Funded Warrants, December 2024 Series A Warrants, and December 2024 Series B Warrants is intended to be a summary, and is qualified by reference to the full text of each of these documents, which were filed as exhibits 10.1, 4.1, 4.2, and 4.3, respectively, to the Company's Current Report on Form 8-K filed with the SEC on December 6, 2024.

Amendment to Third Amended and Restated Certificate of Incorporation of the Company (Reverse Stock Split)

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On December 30, 2024, the Company filed a Certificate of Amendment to the Company’s Third Amended and Restated Certificate of Incorporation, which was previously approved by the Company’s stockholders at the special meeting held on November 18, 2024 and described in the Company’s definitive proxy statement filed with the SEC on September 30, 2024 to effectuate a reverse stock split at a ratio of one (1) share of Common Stock for every fifteen (15) shares of Common Stock (the “Reverse Stock Split”) which became effective as of the opening of business on January 6, 2024 (the “Effective Time”).

As a result, at the Effective Time, each fifteen (15) pre-split shares of Common Stock outstanding automatically combined into one (1) new share of Common Stock, and the number of outstanding shares of Common Stock were reduced from 28,984,426 to 1,933,990. Proportional adjustments have also been made to the number of shares of Common Stock issuable upon exercise or conversion of the Company’s outstanding equity awards, stock options, and warrants in existence as of the Effective Time, as well as the applicable exercise price(s) of such instruments.

The number of authorized shares of Common Stock and the par value of each share of Common Stock remain unchanged. No fractional shares were issued as a result of the Reverse Stock Split, and any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up.

For more information regarding the Reverse Stock Split, see the definitive proxy statement filed by the Company with the Securities and Exchange Commission on September 30, 2024 and Form 8-K filed on November 21, 2024announcing the result of the stockholder vote, the relevant portions of which are incorporated herein by reference. The description of the Certificate of Amendment and the Reverse Stock Split is qualified in its entirety by reference to the full text of the Certificate of Amendment, a copy of which is included as Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on January 2, 2025.

Results of Stockholder Special Meeting

On November 18, 2024, the Company held a Special Meeting of Stockholders (the “Special Meeting”) to consider and vote upon:

•Proposal 1: Ratification of the approval of that certain Securities Purchase Agreement dated July 13, 2024 between our Company and DQI Holdings, Inc. (the “July DQI SPA”) and all transactions contemplated thereunder, including, but not limited to, the sale of 306,514 shares of our Class A Common Stock, par value $0.01 per share to DQI as required by and in accordance with Nasdaq Listing Rule 5635(d)); and

•Proposal 2: Ratification of the approval of the issuance of certain warrants issued to the Selling Stockholder pursuant to a securities purchase agreement dated September 3, 2024 as required by and in accordance with Nasdaq Listing Rule 5635(d));

•Proposal 3: Approval of the issuance of certain warrants issued to the Selling Stockholder pursuant to a warrant exercise agreement also dated September 3, 2024 as required by and in accordance with Nasdaq Listing Rule 5635(d)); and

•Proposal 4: Approval a reverse stock split of our Common Stock at a ratio of not less than 1-for-5 and not more than 1-for-50, with such ratio to be determined by the Board of Directors on or prior to December 31, 2024, in its sole discretion, and which would be effected by filing a Certificate of Amendment to the Company’s Third Amended and Restated Certificate of Incorporation with the State of Delaware

At the Special Meeting, 44% of our Common Stock entitled to vote at the Special Meeting were represented in person or by proxy at the Special Meeting. Based on the results of the vote, the stockholders voted to approve Proposals 1, 2, 3 and 4. The number of votes cast for or withheld from the approval is also set forth below. The voting results disclosed below are final.

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For more information regarding the Reverse Stock Split, see the definitive proxy statement filed by the Company with the Securities and Exchange Commission on September 30, 2024 and Form 8-K filed on November 21, 2024 announcing the result of the stockholder vote, the relevant portions of which are incorporated herein by reference. The description of the Certificate of Amendment and the Reverse Stock Split is qualified in its entirety by reference to the full text of the Certificate of Amendment, a copy of which was filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on January 2, 2025.

Election of New Board Member

On November 2, 2024, the Board of Directors of the Company elected Andrew Scott Francis, the current Chief Technology Officer of the Company, to the Board of Directors, effective immediately, to fill a vacancy on the Board of Directors left from the resignation of Joshua Allen from the Company’s Board of Directors on September 26, 2024. Andrew Scott Francis will be a member of the “Class III” directors of the Company.

Key Business Measures

In addition to the measures presented in our 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

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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 year ended December 31,

Less: Gain on sale of mobile hardware — (216,189)

Add: Change in fair value of warrant liability (1,497) (5,033)

Add: Non-cash expenses for in-kind services — 18,547

Adjusted EBITDA loss (non-GAAP) for the year ended December 31, 2024, increased by 12.17%, to $7.29 million from $6.50 million for the year ended December 31, 2023. During the year ended December 31, 2024, the Company signed a license agreement with Boumarang in exchange for 5,000,000 prepaid warrants from Boumarang that were valued at $1.00 per warrant or $5.00 million and accounted for by recording as an investment and other income. Subsequently, the Company recorded a $4.38 million impairment to other income for the Boumarang prepaid warrants as a result of a change in fair value identified by an observable market transaction. The net impact to other income, $705 thousand, was deducted from the Net income to arrive at the Adjusted EBITDA loss (non-GAAP) and is the primary driver for the significant change in Adjusted EBITDA loss (non-GAAP) for the year ended December 31, 2024 compared to the prior period. Additionally, the Company recorded a $1.17 million loss to other expense due to the Company entering into a Termination and Release Agreement between the Company and an institutional investor that terminated the remaining stock purchase warrants in exchange for the Company making a $1,650,000 payment to the institutional investor. The Company also recorded a loss of $360 thousand to other expense related to the difference in the cash paid for the warrants and the fair market value of the warrants issued on September 10, 2024.

During the year ended December 31, 2023, the Company recognized non-refundable license revenue advances from Interactive Global Solutions (“IGS”) for the provision of software of $2.51 million. This was a one-time occurrence which significantly improved our net revenues during the year ended December 31, 2023. As there was no similar transaction during the year ended December 31, 2024, this contributes to the significant change in Adjusted EBITDA loss (non-

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GAAP) for the year ended December 31, 2024. See “Results of Operations” below for further discussion on the drivers behind the decrease in stock-based compensation during the year ended December 31, 2024.

Components of Results of Operations

Net revenue

We derive our revenue primarily from professional services though our business model is transitioning to focus on recurring Software-as-a-Service (SaaS) revenue.

In addition to revenue from Mastercard and our S&P 500 bank customer, the Company also continued to expand the Orchestration Layer platform, which is being utilized by several customers including FIS’ new global identity authentication system. The Orchestration Layer platform is a SaaS platform that includes the Company’s proprietary tokenization technology, and facilitates no-code, and low-code implementations, making adoption faster and even more cost-effective for a broader range of potential customers. The Company expects this platform to accelerate its evolution, from being exclusively a custom solutions provider, to also offering a modular and highly scalable SaaS model with low-code implementation.

Furthermore, on November 12, 2024, the Company entered into a business arrangement with Qenta. Under the arrangement, Qenta spun its Goldstar KYC technology off into a newly formed subsidiary, QID Technologies LLC (“QID”). In parallel, the Company entered into a license and assignment agreement with QID, in which the Company provided a non-exclusive license of its AI-powered identity technologies to QID in exchange for (I) a $1.0 million license fee in the form of a promissory note, which is due and payable in three equal tranches on December 31, 2024; February 1, 2025, and March 1, 2025; and (ii) the transfer of 10% of QID to the Company by Qenta. The Company has received no payments pursuant to this note during the year ended December 31, 2024. The Company has received $600 thousand in payments pursuant to this note as of the date of this report.

In addition, the Company (through its subsidiary, Trust Stamp Malta Ltd.) and QID agreed to enter into a Master Technology Services Agreement, under which QID will contract with the Company for business development, product development, and product operations for identity and privacy services and solutions in return for monthly service fees starting January 1, 2025, and capped at $3.6 million annually.

On January 1, 2025, pursuant and adhering to the Master Technology Services Agreement terms and conditions, a Statement of Work was signed which the Company will provide certain product development and product operations and commercial business development and related services on behalf of QID. During the first six months of this agreement, the service fee shall be a minimum $100 thousand per month. Thereafter, the service fee payable shall be up to $300 thousand per month.

Cost of services provided

Cost of services provided generally consists of the cost of hosting fees and cost of labor associated with professional services rendered. Depreciation and amortization expense is not included in cost of services provided.

During the year ended December 31, 2023, we expected that cost of services provided will continue to decrease in absolute dollars until the transition to primarily SaaS revenue is complete. After the transition is complete, we expect cost of services to increase in absolute dollars as the volume of usage revenue increases, but the margin will continue to improve until they stabilize over time. This was evident during the year ended December 31, 2024.

Research and development

Research and development expenses (“R&D”) consist primarily of personnel costs, including salaries and benefits. Personnel costs are allocated to R&D for time spent working on the preliminary project stage and post-implementation maintenance as well as time spent on bug fixes associated with internal-use software activities, front-end application development in which technological feasibility has not been established, and services rendered to customers under funded software-development arrangements.

During the year ended December 31, 2023 we planned to continue to invest in personnel to support our research and development efforts. As a result, research and development expenses increased in absolute dollars. During the year ended

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December 31, 2024 research and development expenses decreased, primarily driven by a decrease in outsourced software development during the year ended December 31, 2024 as the Company continued to transition this work internally.

Selling, general, and administrative

Selling, general, and administrative (“SG&A”) expenses were generally composed of payroll, legal, and professional fees.

We expect that the sales and marketing expenses within the SG&A expenses will increase in absolute dollars as we continue to invest in our potential and current customers, in growing our business, and enhancing our brand awareness.

Depreciation and amortization

The increase in depreciation and amortization is primarily due to a continued investment in internally developed software and patent registrations which will be used for future productization.

Interest expense, net

Interest expense, net consists primarily of interest expense accrued on a promissory note payable. The Company earned interest income in the form of interest on employee stock loans.

Other income

Other income is mainly driven by miscellaneous income earned that is unrelated to the main focus of the Company’s business including the gain or loss on sale of assets.

Other expense

Other expense is mainly driven by miscellaneous expenses unrelated to the main focus of the Company’s business.

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Results of Operations

The following table summarizes our consolidated statements of operations for the Years Ended December 31, 2024 and 2023

For the years ended December 31,

Operating Expenses:

Non-Operating Income (Expense):

Change in fair value of warrant liability 1,497 5,033

Net loss attributable to non-controlling interest — —

Comparison of the Years Ended December 31, 2024 and 2023

Net revenue

For the years ended December 31,

During the year ended December 31, 2024, Net revenue decreased to $3.08 million from Net revenue of $4.56 million for the year ended December 31, 2023, with $1,497,195 coming in the fourth quarter of 2024. During the year ended December 31, 2024, the $3.08 million in Net revenue consisted of $1.35 million from an S&P bank, $1.00 million license fee from QID under the license and assignment agreement between the Company and QID, $424 thousand from Mastercard, $193 thousand from Triton, $89 thousand from FIS and various other customers for the remaining $22 thousand.

The majority of the decrease in Net revenue during the year ended December 31, 2024 compared to the year ended December 31, 2023 was due to the termination of the September 15, 2022 Master Services Agreement with IGS ("IGS Contract"), which caused Company to recognize non-refundable license revenue advances from IGS under the IGS Contract for the provision of software of $2.51 million. This was a one-time occurrence which significantly improved our net revenues during the year ended December 31, 2023, and therefore is the primary reason for the stark decrease in net

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revenues of the Company during the year ended December 31, 2024. This decrease from the IGS contract was partially offset by the $1.00 million in revenue recognized for a non-exclusive software license issued to QID during the year ended December 31, 2024.

During the year ended December 31, 2024, the Company generated $1.25 million total revenue from customers using the Orchestration Layer compared to $310 thousand during the year ended December 31, 2023. 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.

Since its launch in the third quarter of 2022, there have been 79 enterprise customers on the Orchestration Layer platform, including 66 financial institutions, as of December 31, 2024. Additionally, revenue from the Orchestration Layer's flagship enterprise customer grew 176% 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 80.54%. Finally, the Company's S&P 500 bank customer began its transition to an augmented version of the SaaS platform during the year ended December 31, 2024.

Cost of services

For the years ended December 31,

Cost of services (“COS”) increased by $153 thousand or 16.77% for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase during the year ended December 31, 2024 was primarily driven by a $243 thousand increase in costs for the expansion of our proof of identity solutions using a third-party as required for proof of identity contracts. The solution was not considered a cost of sale until the fourth quarter of 2023, thus, the total expense for this solution during the year ended December 31, 2023 was $21 thousand and increased to $264 thousand during the year ended December 31, 2024. The Company also incurred $42 thousand for compliance services due to a specific customer requirement during the year ended December 31, 2024 and this expense was not incurred during the year ended December 31, 2023. Furthermore, the Company saw a slight increase in service requests by our main customers, during the year ended December 31, 2024 resulting in an increase of $10 thousand when compared to the year ended December 31, 2023.

On the other hand, less development hours were charged directly to cost of sales for the year ended December 31, 2024 when compared to the year ended December 31, 2023 resulting in a decrease of $133 thousand in cost of services. This was mainly due to less work being requested from one of our major customers.

Research and development

For the years ended December 31,

Research and development (“R&D”) expenses decreased by $211 thousand, or 8.97% for the year ended December 31, 2024, compared to the year ended December 31, 2023. The decrease in R&D expense during the year ended December 31, 2024 was primarily driven by a decrease in outsourced software development during the year ended December 31, 2024 as the Company continued to transition this work internally, as well as, a decrease in salaries related to R&D from the Malta office, together resulting in a decrease of $140 thousand collectively. Comparatively, outsourced software development costs decreased by 86% when comparing the year ended December 31, 2024 to the year ended December 31, 2023. In both periods, R&D expenses mainly were related to R&D payroll and other R&D compensation expenses.

Additionally, the Company recognized an impairment loss on Capitalized internal-use software of $25 thousand during the year ended December 31, 2024. There was $19 thousand impairment loss on Capitalized internal-use software for the year ended December 31, 2023. Capitalized internal-use software are considered long-lived assets under applicable accounting guidance. 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

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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.

Furthermore, stock-based compensation decreased to $61 thousand during the year ended December 31, 2024, from $123 thousand during the year ended December 31, 2023. This was mainly due to the decrease in employee Restricted Stock Unit award grant date values as a result of the decrease in share price on the grant dates.

Selling, general, and administrative

For the years ended December 31,

Selling, general, and administrative expense (“SG&A”) increased by $118 thousand, or 1.40%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase in SG&A expense was driven by a $840 thousand increase in salaries and stock-based compensation ("SBC") during the year ended December 31, 2024. Included in the $840 thousand increase in salaries and stock-based compensation is an increase of $630 thousandin SBC during the year ended December 31, 2024 due to the timing of stock-based compensation awards.

Furthermore, there was a $109 thousand increase in SG&A when comparing the year ended December 31, 2024 to the year ended December 31, 2023 resulting from the reversal of out-of-period costs incurred during the year ended December 31, 2024 associated with carrying mobile hardware assets, reversed due to the cancellation of the related mobile hardware subscription. In addition, the Company had an increase in dues and subscriptions, due to continued business development and growth, of $50 thousand during the year ended December 31, 2024 when compared to the year ended December 31, 2023. Other notable increases in SG&A for the year ended December 31, 2024 included a total increase of $215 thousand in travel costs and accounting, audit fees and taxes.

The increases in SG&A were substantially offset by notable reductions for the year ended December 31, 2024 including a total reduction of $1.10 million in professional fees, management consulting, training, and office and IT services as a 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 years ended December 31,

Depreciation and amortization (“D&A”) decreased by $60 thousand, or 7.62% for the year ended December 31, 2024, compared to the year ended December 31, 2023. The primary driver for the decrease in D&A relates to the Company selling mobile hardware in April 2023. As a result of the sale, there is no expense for mobile hardware depreciation during the year ended December 31, 2024 and $30 thousand of expense for mobile hardware depreciation during the year ended December 31, 2023. Additionally, there was a decrease in D&A during the year ended December 31, 2024 due to fully depreciating the Pixelpin (a company we acquired in March 2021) intangible asset. There was amortization expense of $23 thousand during the year ended December 31, 2023 compared to $2 thousand during the year ended December 31, 2024.

Operating loss

For the years ended December 31,

The Company’s Operating loss increased by $1.48 million or 18.73% for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase in Operating loss was mostly related to the termination of the September

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15, 2022 Master Services Agreement with IGS ("IGS Contract") which resulted in $2.51 million decrease in Net revenue when comparing the year ended December 31, 2024 with the year ended December 31, 2023 and the release from future contractual obligations for maintenance and upgrades as a result of the termination of the IGS Contract.

This was partially offset by the Software Revenue recognized in November 2024 by QID amounting to $1.00 million for the year ended December 31, 2024. No such revenue was recognized for the year ended December 31, 2023.

Interest expense, net

For the years ended December 31,

Interest expense, net increased by $437 thousand, or 595.73% for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase in interest expense is primarily due to an increase of $429 thousand as a result of TSI entering into two subordinated business loans and security agreements during the year ended December 31, 2024.

Furthermore, interest expense was also increased by a further $22 thousand as a result of the Malta loan interest rate increasing from 4.5% for the year ended December 31, 2023 to 6.5% for the year ended December 31, 2024.

Additionally, the Company recorded $12 thousand in interest expense during the year ended December 31, 2024 for interest accrued on payroll tax obligations imposed under the laws of the Republic of Malta. This figure decreased from $34 thousand as the Company caught up with its tax obligations to Malta in 2024, hence incurring less interest than it did in 2023 when the Company had balances owed to Malta for prior fiscal years' tax obligations that were accruing interest during 2023.

Change in fair value of warrant liability

For the years ended December 31,

The Company recognized a gain in Change in fair value of warrant liability during the year ended December 31, 2024 of $1 thousand compared to a gain of $5 thousand during the year ended December 31, 2023. This change is based on the fair value assessment and adjustment for one warrant liability as described in Note 3 to the consolidated financial statements provided under Item 1 of this report.

Other income

For the years ended December 31,

Other income increased by $0.50 million for the year ended December 31, 2024, compared to the year ended December 31, 2023. During the year ended December 31, 2024, the Company signed a license agreement with Boumarang in exchange for 5,000,000 prepaid warrants from Boumarang that were valued at $1.00 per warrant or $5.00 million and accounted for by recording as an investment and other income. Subsequently, the Company recorded a $4.38 million impairment to other income for the Boumarang prepaid warrants as a result of a change in fair value identified by an observable market transaction. The net impact to other income, $705 thousand,.

In addition, there was an increase of $187 thousand for the gain from a settlement of a mobile hardware bill that was outstanding as of December 31, 2023, which we negotiated for a lower payment, and paid during the year ended December 31, 2024.

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Other expense

For the years ended December 31,

Other expense increased by $1.52 million for the year ended December 31, 2024, compared to the year ended December 31, 2023. During the year ended December 31, 2024, the Company incurred a $1.17 million loss during the year ended December 31, 2024 due to the Company entering into a Termination and Release Agreement between the Company and an institutional investor that terminated the remaining stock purchase warrants in exchange for the Company making a $1,650,000 payment to the institutional investor. In addition, the Company recorded a $360 thousand inducement expense as a result of the Company entering into a securities purchase agreement on September 10, 2024 as an inducement to a previously executed securities purchase agreement dated July 13, 2024.

Liquidity and Capital Resources

As of December 31, 2024, the Company had approximately $2.78 million cash in its banking accounts. The Company is generating revenues, but has not yet generated profits, with a net loss for the year ended December 31, 2024 of $10.61 million, Net operating cash outflows of $8.92 million for the same period, and an accumulated deficit of $61.46 million as of December 31, 2024. During the year ended December 31, 2024, the Company entered into a number of financing arrangements with institutional investors pursuant to which it raised capital from the (registered and unregistered) sale of its Class A Common Stock, as well as warrants convertible into shares of its Class A Common Stock, to help support its operations.

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.

As of December 31, 2024, the Company had a balance of $3.06 million in Current portion of loans payable. The entire balance was repaid subsequent to December 31, 2024. For more information see Note 2 to the consolidated financial statements provided under Item 1 of this report.

Our future capital requirements will depend on many factors, including, but not limited to, the rate of our growth, our ability to attract and retain customers and their willingness and ability to pay for our products and services, and the timing and extent of spending to support our efforts to market and develop our products. Further, we may enter into future arrangements to acquire or invest in businesses, products, services, strategic partnerships, and technologies as such we may seek additional equity or debt financing on an as needed or opportunistic basis. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If additional funds are not available to us on acceptable terms, or at all, our business, financial condition, and results of operations could be adversely affected.

Going Concern

The accompanying 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 in the year ended December 31, 2024 of $12.54 million, Net operating cash outflows of $8.92 million for the same period, and an Accumulated deficit of $61.46 million as of December 31, 2024.

The Company’s ability to continue as a going concern in the next twelve months, following the date the consolidated financial statements were available to be issued, is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and 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 12 months since issuance date.

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Cash Flows

The following table summarizes our cash flows for the years ended December 31, 2024 and 2023:

For the years ended December 31,

Net cash flows from investing activities $ (906,671) $ (401,680)

Operating Activities

Net cash flows used in operating activities increased by 13.59% from $7.85 million during the year ended December 31, 2023, compared to $8.92 million during the year ended December 31, 2024. Of the $10.61 million net loss for the year ended December 31, 2024, there were various cash and non-cash adjustments that were added back or deducted to the Net loss to arrive at $8.92 million cash used for operating activities for the year ended December 31, 2024.

Those adjustments included the $619 thousand increase from the refundable license fee under the license agreement with Boumarang which was added back to the net loss, since it was a non-cash investment gain. Other cash reductions included $1.58 million from the timing of accruals, accounts payable, and related party payables and $353 thousand the timing of the accounts receivable. Cash and noncash reductions also included $162 thousand for the gain on the sale of property and equipment resulting from the sale of mobile hardware assets.

The reductions to the Net loss were partly offset by adding back certain cash and noncash adjustments including the loss on termination of a warrant agreement, and certain other transaction documents with a previous institutional investor in the Company amounting to $1.17 million, stock-based compensation expense totaling $1.32 million, $729 thousand for non-cash depreciation and amortization, loss on inducement agreement amounting to $360 thousand, amongst others.

Investing Activities

Net cash used in investing activities during the year ended December 31, 2024 was $907 thousand, compared to net cash of $402 thousand used in the year ended December 31, 2023. Cash used in investing activities during the year ended December 31, 2024 related primarily to new and continued investments in technologies that we intend to capitalize and monetize over time totaling $792 thousand for capitalized software, patents, and trademarks. The Company continued to prioritize intellectual property, which produced eight (8) new pending patent applications and six (6) issued patents with the United States Patent and Trademark Office during the year ended December 31, 2024.

Furthermore, on August 6, 2024, the Company made an investment in Boumarang, purchasing 100,000 shares of Boumarang’s common stock at a price per share of $1.00 for a total investment amount of $100 thousand.

Financing Activities

During the year ended December 31, 2024, Net cash flows from financing activities was $9.49 million, compared to Net cash flows from financing activities of $10.21 million for the year ended December 31, 2023. The Company raised $8.57 million in net proceeds from multiple security purchase agreements with institutional investors for the issuance of Class A Common Stock, pre-funded warrants, and common stock warrants. The Company took out $3.85 million in loans payable and repaid $1.22 million in principal and interest during the year ended December 31, 2024.

The increase to financing activities were offset by $1.65 million due the termination of a warrant agreement and there was a $57 thousand in tax withholding payments for net issuances on employee equity compensation issued during the year ended December 31, 2024.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these 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. Our significant accounting policies are disclosed in Note 1 to our

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consolidated financial statements in this Annual Report on Form 10-K. Management believes that there are no critical accounting estimates in these financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

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.

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Item 8. Financial Statements and Supplementary Data

T STAMP INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3

Notes to Consolidated Financial Statements F-9

F-1

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

T Stamp Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidatedbalance sheets of T Stamp Inc.(the “Company”) as ofDecember 31, 2024 and 2023, the related consolidated statements ofoperations,comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period endedDecember 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Emphasis of Matter

As discussed in Note 1, the accompanying consolidated financial statements reflect retrospective application of the reverse stock split.

/s/ Marcum LLP

Marcum LLP

We have served as the Company’s auditor since 2022.

Marlton, New Jersey

March 31, 2025

F-2

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T STAMP INC.

CONSOLIDATED BALANCE SHEETS

As of December 31,

ASSETS

Current Assets:

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Current portion of loans payable 3,056,384 —

Short-term operating lease liabilities 84,549 81,236

Short-term financial liabilities — 162,130

Long-term operating lease liabilities 38,369 53,771

Commitments, Note 13

Stockholders’ Equity:

The accompanying notes to the consolidated financial statements are an integral part of these statements.

F-3

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T STAMP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31,

Operating Expenses:

Non-Operating Income (Expense):

Change in fair value of warrant liability 1,497 5,033

Net loss attributable to non-controlling interest — —

The accompanying notes to the consolidated financial statements are an integral part of these statements.

F-4

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T STAMP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the years ended December 31,

Other Comprehensive Income (Loss):

Foreign currency translation adjustments 41,478 (97,582)

Total Other Comprehensive Income (Loss) 41,478 (97,582)

Comprehensive loss attributable to non-controlling interest — —

Comprehensive loss attributable to T Stamp Inc. $ (12,503,115) $ (7,735,224)

The accompanying notes to the consolidated financial statements are an integral part of these statements.

F-5

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T STAMP INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Shares Amount Shares Amount

Exercise of options to common stock 116 1 1,999 — — — — — — 2,000

Issuance of common stock 1,403 14 (14) (1) — — — — — —

Issuance of common stock warrants — — 3,915,917 — — — — (3,915,917) — —

Reverse stock split rounding 316 3 (3) — — — — — — —

Currency translation adjustment — — — — — — (97,582) — — (97,582)

Net loss attributable to T Stamp Inc. — — — — — — — (7,637,642) — (7,637,642)

Currency translation adjustment — — — — — — 41,478 — — 41,478

The accompanying notes to the consolidated financial statements are an integral part of these statements.

F-6

T STAMP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,

Cash flows from operating activities:

Net loss attributable to non-controlling interest — —

Adjustments to reconcile net loss to cash flows used in operating activities:

Change in fair value of warrant liability (1,497) (5,033)

Repayment of shareholder loan through in-kind services — 18,547

Gain on sale of property and equipment — (216,189)

Non-cash write off of mobile hardware (162,130) (15,775)

Loss on inducement agreements 360,307 —

Loss on termination of warrant agreement 1,166,440 —

Non-cash investment gain (619,212) —

Changes in assets and liabilities:

Cash flows from investing activities:

Proceeds from sale of property, plant and equipment — 377,360

Capitalized internally developed software costs (662,265) (630,111)

Purchases of property and equipment (14,666) (4,710)

Net cash flows used in investing activities (906,671) (401,680)

Cash flows from financing activities:

Proceeds from exercise of options to common stock — 2,000

Payment to terminate common stock warrant agreement (1,650,000) —

Forfeited common stock shares to satisfy taxes (56,993) (78,901)

Principal payments on loans (1,216,800) —

Principal payments on financial liabilities — (29,715)

Effect of foreign currency translation on cash (23,355) (72,931)

F-7

T STAMP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Supplemental disclosure of cash flow information:

Cash paid during the period for interest $ 180,562 $ 580

Supplemental disclosure of non-cash activities:

Equity issued for professional services $ 150,000 $ —

Prepaid rent expense reclassified upon termination of leases $ — $ 7,674

Adjustment to prepaid rent upon commencement of new lease $ — $ 5,462

The accompanying notes to the consolidated financial statements are an integral part of these statements.

F-8

T STAMP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Summary of Significant Accounting Policies and Going Concern

Description of Business — T Stamp Inc. was incorporated in the State of Delaware on April 11, 2016. T Stamp Inc. and its subsidiaries (“Trust Stamp,” “we,” “us,” “our,” or the “Company”) develop and market artificial intelligence-powered or enabled software solutions for enterprise and government partners and peer-to-peer markets.

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 have been updated to reflect the Reverse Split in these consolidated financial statements. 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.

Reverse Split — On December 30, 2024, the Company filed a Certificate of Amendment to the Company’s Third Amended and Restated Certificate of Incorporation, which was previously approved by the Company’s stockholders at the special meeting held on November 18, 2024 and described in the Company’s definitive proxy statement filed with the SEC on September 30, 2024, to effectuate a reverse stock split at a ratio of one (1) share of Common Stock for every fifteen (15) shares of Common Stock (the “Reverse Stock Split”) which became effective as of the opening of business on January 6, 2025 (the “Effective Time”). Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split.

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 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 in the year ended December 31, 2024 of $10.61 million, negative Net operating cash outflows of $8.92 million for the same period, negative working capital of $501 thousand and an Accumulated deficit of $61.46 million as of December 31, 2024.

F-9

The Company’s ability to continue as a going concern in the next twelve months following the date the consolidated financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and 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 twelve months since issuance date.

Basis of Presentation—The accompanying 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 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.

Basis of Consolidation— The accompanying consolidated financial statements reflect the activity of the Company and its subsidiaries, Trust Stamp Malta Limited (“Trust Stamp Malta”), Biometric Innovations Limited (“Biometrics”), Trust Stamp Rwanda Limited, Trust Stamp Denmark ApS, Trust Stamp Nigeria Limited, Quantum Foundation, Trusted Mail Inc. (“Trusted Mail”), and Finnovation LLC (“Finnovation”). All significant intercompany transactions and accounts have been eliminated.

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, Tstamp Incentive Holdings (“TSIH”) to which the Company issued 21,368 shares of Class A Common Stock that the Board of Directors of TSIH could use for employee stock awards in the future. The purpose of the entity was to provide an analogous structure to a traditional stock incentive plan. As of December 31, 2024 and the date of this report, no shares of Class A Common Stock are held by TSIH as all shares have been issued pursuant to employee Restricted Stock Units. The Company has completed the process of administratively dissolving TSIH with the dissolution effective as of February 13, 2025.

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 consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates their estimates that include, but are not limited to, measuring satisfaction of a performance obligation over time, related to revenue contracts that are not fully complete at the end of a fiscal year, capitalization and estimated useful life of internal-use software, the allowance for doubtful accounts, the fair value of financial assets and liabilities, the recoverability of Goodwill, stock-based compensation, 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.

F-10

Major Customers and Concentration of Risks — Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of Cash and 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 December 31, 2024 and 2023, the Company had $2.16 million and $2.62 million 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.

One customer represented 78.50%, of the balance of total Accounts receivable as of December 31, 2024 and three customers represented 91.11% or 53.55%, 30.43%, and 7.13%, of the balance of total Accounts receivable as of December 31, 2023. 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 December 31, 2024 and 2023, the Company had not experienced any significant losses on its Accounts receivable.

During the year ended December 31, 2024, the Company sold to primarily three customers which made up approximately 90.14% of total Net revenue, and consisted of 43.94%, 32.44%, and13.76% from an S&P 500 Bank, QID, and Mastercard respectively.

Additionally, during the year ended December 31, 2023, the Company sold to primarily three customers which made up approximately 89.75% of total Net revenue, and consisted of 55.04%,17.77%, and 16.94% from IGS, an S&P 500 Bank, and Mastercard, respectively.

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 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 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 a 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 December 31, 2024, the Company had gross receivables (including unbilled receivables) of $344 thousand and an allowance for credit losses of $11 thousand. As of December 31, 2023, the Company had gross receivables of $694 thousand and $8 thousand allowance for credit losses.

F-11

As of December 31, 2024, Accounts receivable includes no unbilled receivables and as of December 31, 2023, Accounts receivable includes unbilled receivables of $143 thousand.

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 consolidated balance sheet and any resulting gain or loss is recorded in the consolidated statements of operations in the period realized.

Capitalized Internal-Use Software, Net—Capitalized Internal-Use Software, Net is a combination of costs related to software developed, modified, or acquired solely to meet Trust Stamp's internal requirements, with no substantive plans to market such software at the time of development or acquisition are capitalized, and costs related to the development of software-as-a-service ("SaaS") based solutions. The Company capitalizes eligible costs to develop Capitalized Internal-Use Software and SaaS solutions that are incurred subsequent to the preliminary project stage throughout the development stage. These costs consist of personnel costs (including salaries, related benefits, and stock-based compensation) and certain third-party costs that are incurred during the application development stage. We also capitalize the costs incurred to upgrade and enhance that result in additional functionality. Costs incurred during the preliminary project stage, the post-implementation operational stage, and for maintenance 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, net, Capitalized internal-use software, Operating lease right-of-use assets, and Intangible assets, net 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.

As of December 31, 2024, the Company determined that $25 thousand of Capitalized internal-use software and $2 thousand of Intangible assets were impaired. The impaired Capitalized internal-use software was expensed to Research and development during the year ended December 31, 2024. As of December 31, 2023, the Company determined that $19 thousand of Capitalized internal-use software and $12 thousand of Intangible assets was impaired. The impaired Capitalized internal-use software was expensed to Research and development during the year ended December 31, 2023.

Investment— Cost method investments are accounted for in accordance with ASC 321, Investments – Equity Securities (“ASC 321”). Under this guidance, investments in equity securities in privately-held companies without readily determinable fair values are generally recorded at cost, plus or minus subsequent observable price changes in identical or similar investments, less impairments. The Company elected the practical expedient permitted by ASC 321 and recorded the above investment on a cost basis. As a part of the assessment for impairment indicators, the Company considers significant deterioration in the earnings performance and overall business prospects of the investee as well as significant adverse changes in the external environment the investment operate. If qualitative assessment indicates the investment is impaired, the fair value of the investments would be estimated, which would involve a significant degree of judgement and subjectivity.

The Company evaluates the investment on a quarterly basis for indicators of impairment or observable price changes in orderly transactions for the same or similar investments.

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, net, 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

F-12

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 year ended December 31, 2024.

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 and cash equivalents, 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 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. The components of these revenues include but are not limited to:

•Software License and Subscription

•Software Usage (Orchestration Layer)

•Web Hosting Fees

•Software Development.

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 allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled for transferring the promised goods or services to the customer. The best evidence of a standalone selling price is the observable price of a good or service when the Company sells that good or service separately in similar circumstances and to similar customers. If a standalone selling price is not directly observable, the Company the Company estimates the standalone selling price at an amount that results in the allocation of the

F-13

transaction price meeting the allocation objectives by considering all information (including market conditions, entity-specific factors, and information about the customer or class of customer) reasonably available.

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. For performance obligations that the Company satisfies over time, The Company recognizes revenue over time using an output method based on the passage of time, as our customers simultaneously receive and consume the benefits of our services throughout the contract term. This method provides a faithful depiction of the transfer of services because our customers have continuous access to the platform and its features during the contract period, and the benefits of the service are consumed over time.

Remaining Performance Obligations — The Company’s arrangements with its customers often have terms that span over multiple years. 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 December 31, 2024 and 2023, the Company did not have any related performance obligations for contracts with terms exceeding twelve months.

Disaggregation of Revenue

For the years ended December 31,

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

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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.

T Stamp Inc IDAI US Equity

IDAI · 10-K · period ended 2024-12-31

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 1C. Cybersecurity

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6. Reserved

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

T Stamp Inc IDAI US Equity☆

IDAI · 10-K · period ended 2024-12-31

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 1C. Cybersecurity

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6. Reserved

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

T Stamp Inc IDAI US Equity