Trust Stamp Announces Pricing of $3.5 Million Registered Direct Offering Priced At-The-Market Under Nasdaq Rules

Rhea-AI Summary

Trust Stamp (Nasdaq: IDAI), a global provider of AI-powered technologies, has announced a securities purchase agreement with a single institutional investor to purchase 414,202 shares of common stock (or pre-funded warrants) in a registered direct offering priced at-the-market under Nasdaq rules. Concurrently, the company will issue unregistered Series A and Series B Warrants to purchase up to 414,202 and 207,101 shares of common stock, respectively, in a private placement. The combined effective offering price is $8.45 per share or warrant, with gross proceeds estimated at approximately $3.5 million before fees and expenses. Each warrant will be immediately exercisable, expiring five years from the initial exercise date, with an exercise price of $8.45 per share.

The offering is expected to close on or about January 8, 2025, subject to customary closing conditions. Maxim Group is acting as the sole placement agent. The shares are being offered pursuant to a shelf registration statement on Form S-3, declared effective by the SEC on April 12, 2023. A prospectus supplement related to the offering will be filed with the SEC.

Positive

• Trust Stamp is raising approximately $3.5 million in gross proceeds.
• The offering is priced at-the-market, potentially minimizing dilution.

Negative

• Issuance of new shares and warrants may lead to shareholder dilution.
• Potential dilution from 414,202 shares and additional 621,303 shares from Series A and B Warrants.

Insights

Financial Analyst

This $3.5 million registered direct offering represents a significant capital raise for Trust Stamp, but comes with notable dilutive effects. The pricing at $8.45 per share and the issuance of multiple warrant tranches suggests a complex financing structure. The offering includes 414,202 common shares plus warrants that could lead to additional dilution of up to 621,303 shares if fully exercised.

The deal structure, combining registered shares with unregistered warrants in a private placement, indicates a strategic approach to minimize immediate dilution while providing upside potential for the institutional investor. However, the warrant exercise price at $8.45 doesn't offer a premium to the current offering price, which could create selling pressure if the stock rises above this level.

For a company with a market cap of approximately $14.2 million, this financing represents about 24.6% of the current market value, which is a substantial capital injection but comes at the cost of significant potential dilution to existing shareholders. The use of pre-funded warrants also suggests potential price protection mechanisms for the institutional investor.

Legal Expert

The structured offering demonstrates careful regulatory compliance through a dual-track approach: a registered direct offering under an existing S-3 shelf registration and a concurrent private placement under Section 4(a)(2) and Regulation D.

The involvement of Maxim Group as sole placement agent and the at-market pricing under Nasdaq rules indicates adherence to regulatory requirements for public offerings. The split between registered and unregistered securities suggests a strategic legal framework to expedite the capital raise while managing registration requirements.

The company's explicit disclaimers regarding jurisdictional limitations and the clear separation between registered and unregistered components reflect proper securities law compliance. The filing of an upcoming prospectus supplement provides necessary transparency for investors, though the unregistered warrants will have resale restrictions under applicable securities laws.

Atlanta, GA, Jan. 07, 2025 (GLOBE NEWSWIRE) -- Trust Stamp (Nasdaq: IDAI), a global provider of AI-powered technologies, today announced that it has entered into a securities purchase agreement with a single institutional investor to purchase 414,202 shares of common stock (or pre-funded warrants in lieu thereof) in a registered direct offering, priced at-the-market under Nasdaq rules. In a concurrent private placement, the Company also agreed to issue and sell unregistered Series A Warrants to purchase up to an aggregate of 414,202 shares of common stock, and unregistered Series B Warrants to purchase up to an aggregate of 207,101 shares of common stock. The combined effective offering price for each share of common stock (or pre-funded warrant in lieu thereof) and the accompanying Series A Warrants and Series B Warrants is $8.45. Each private placement warrant will be immediately exercisable, will expire five years from the initial exercise date and will have an exercise price of $8.45 per share.

The combined gross proceeds to the Company from the registered direct offering and concurrent private placement are estimated to be approximately $3.5 million before deducting the placement agent’s fees and other estimated offering expenses payable by the Company. The offering is expected to close on or about January 8, 2025, subject to the satisfaction of customary closing conditions.

Maxim Group LLC is acting as the sole placement agent in connection with the offering.

The shares of common stock (or pre-funded warrants in lieu thereof) are being offered pursuant to a shelf registration statement on Form S-3 (File No. 333-271091), which was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on April 12, 2023. The offering of shares of common stock (or pre-funded warrants in lieu thereof) will be made only by means of a prospectus supplement that forms a part of such registration statement. A prospectus supplement relating to the shares of common stock and prefunded warrants offered in the registered direct offering will be filed by the Company with the SEC. When available, copies of the prospectus supplement relating to the registered direct offering, together with the accompanying prospectus, can be obtained at the SEC's website at www.sec.gov or from Maxim Group LLC, 300 Park Avenue, New York, NY 10022, Attention: Syndicate Department, or via email at syndicate@maximgrp.com or telephone at (212) 895-3500.

The Series A Warrants and Series B Warrants to be issued in the concurrent private placement and the shares issuable upon exercise of such warrants were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”), and Regulation D promulgated thereunder and have not been registered under the Act or applicable state securities laws.

This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sales of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

About Trust Stamp

Trust Stamp, the Privacy-First Identity Company ™, is a global provider of AI-powered software and data transformation services for use in multiple sectors, including banking and finance, regulatory compliance, government, real estate, communications, and humanitarian services. Trust Stamp is located across North America, Europe, Asia, and Africa and trades on the Nasdaq Capital Market (Nasdaq: IDAI).

Forward-Looking Statements

All statements in this release that are not based on historical fact are “forward-looking statements,” including within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The information in this announcement may contain forward-looking statements and information related to, among other things, the company, its business plan and strategy, and its industry. These statements reflect management’s current views with respect to future events-based information currently available and are subject to risks and uncertainties that could cause the company’s actual results to differ materially from those contained in the forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company does not undertake any obligation to revise or update these forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events.

Trust Stamp                                                                      
Email: Shareholders@truststamp.ai

FAQ

What does the IDAI $3.5 million offering mean for shareholders?

Trust Stamp is raising $3.5 million through a direct offering and private placement, which may lead to dilution but provides capital for growth.

When is the IDAI direct offering expected to close?

The offering is expected to close on or about January 8, 2025, subject to customary closing conditions.

What is the combined effective offering price for IDAI shares?

The combined effective offering price is $8.45 per share or pre-funded warrant.

How many shares will be issued in the IDAI offering?

Trust Stamp will issue 414,202 shares of common stock or pre-funded warrants, along with Series A and B Warrants for additional 621,303 shares.

What are the exercise terms for IDAI's Series A and B Warrants?

The Series A and B Warrants are immediately exercisable, expire five years from the initial exercise date, and have an exercise price of $8.45 per share.

Who is the placement agent for the IDAI offering?

Maxim Group is acting as the sole placement agent for the offering.

Where can I find the prospectus supplement for the IDAI offering?

The prospectus supplement will be filed with the SEC and can be accessed at www.sec.gov.