MultiSensor AI (NASDAQ: MSAI) grows Q1 revenue and narrows quarterly loss
MultiSensor AI Holdings, Inc. reported higher revenue but continued losses for the quarter ended March 31, 2026. Revenue rose to $1.6 million from $1.2 million, driven by strong growth in software sales of the MSAI Connect platform and higher hardware revenue, partially offset by lower services revenue after discontinuing inspection and training services.
Operating loss narrowed to $2.6 million from $4.6 million, as selling, general and administrative costs and share-based compensation declined, while depreciation increased with continued software investment. Net loss improved to $2.5 million, compared with $4.4 million a year earlier, and Adjusted EBITDA was a loss of $2.1 million.
The company ended the quarter with $22.6 million in cash, cash equivalents and restricted cash and used $1.7 million in operating cash flow. Management believes current liquidity and projected operating cash flows are sufficient for at least the next 12 months. During the period, MultiSensor AI completed a 1-for-40 reverse stock split, adjusted multiple warrant series and established a new at-the-market program allowing up to $60 million of future common stock sales.
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Key Figures
Key Terms
Reverse Stock Split financial
at market issuance sales agreement financial
Adjusted EBITDA financial
Equity Line of Credit financial
emerging growth company financial
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission File Number:
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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☒ | Smaller reporting company | ||
| Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
As of May 6, 2026, there were
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TABLE OF CONTENTS
| Page | |
| | |
FORWARD-LOOKING STATEMENTS | 1 | |
PART I – FINANCIAL INFORMATION | 2 | |
| ITEM 1. FINANCIAL STATEMENTS. | 2 |
| ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. | 14 |
| ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. | 22 |
| ITEM 4. CONTROLS AND PROCEDURES. | 22 |
PART II – OTHER INFORMATION | 23 | |
| ITEM 1. LEGAL PROCEEDINGS | 23 |
| ITEM 1A. RISK FACTORS | 23 |
| ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 23 |
| ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 23 |
| ITEM 4. MINE SAFETY DISCLOSURES | 23 |
| ITEM 5. OTHER INFORMATION | 23 |
| ITEM 6. EXHIBITS | 24 |
SIGNATURES | 26 | |
Unless otherwise indicated or the context otherwise requires, references to the “Company,” “we,” “us,” or “our” refer to MultiSensor AI Holdings, Inc. and its consolidated subsidiaries.
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report may be forward-looking statements. Words such as “anticipates,” “believes,” “contemplates,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “targets,” or “will” or the negative of these terms or other similar expressions are intended to identify such forward-looking statements. Statements regarding our future results of operations and financial position, business strategy, and plans and objectives of management for future operations, our expected incurrence of significant expenses and continuing losses in the future, expansion of our Software as a Service (“SaaS”) capabilities and offerings, our expectations concerning the earning of subscription revenue, our expected future research and development costs and expected growth are forward-looking statements.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Such forward-looking statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including, without limitation, the following:
| ● | continued low income, net losses, negative cash flows from operations and negative net working capital; |
| ● | failure to maintain competitive sales prices or reduce costs; |
| ● | failure to successfully manage the expansion of our SaaS capabilities and offerings; |
| ● | incurrence of substantial research and development costs; |
| ● | product recalls, product liability claims and any resultant impact on our reputation; |
| ● | certain of our subscriptions are subject to cancellation without advance notice; |
| ● | cost and availability of capital; |
| ● | the loss of large customers; and |
| ● | the inability to effectively grow our sales, network of distributors, or business prospects. |
For a more detailed discussion of these and other factors that may affect our business and that could cause the actual results to differ materially from those anticipated in these forward-looking statements, see Part I. Item 1A, “Risk Factors” and Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the consolidated financial statements for the fiscal year ended December 31, 2025 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“2025 Annual Report”).
These forward-looking statements speak only as of the date of this Quarterly Report. You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report completely and with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we have no obligation and do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
MultiSensor AI Holdings, Inc.
Index to the Condensed Consolidated Financial Statements
| Pages | |
Condensed Consolidated Balance Sheets (unaudited) | | 3 |
Condensed Consolidated Statements of Operations (unaudited) | | 4 |
Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) | | 5 |
Condensed Consolidated Statements of Cash Flows (unaudited) | | 6 |
Notes to Condensed Consolidated Financial Statements (unaudited) | | 7 |
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MultiSensor AI Holdings, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(Amounts in thousands of U.S. dollars, except share and per share data)
| | | | | | |
| | March 31, 2026 | | December 31, 2025 | ||
Assets | | | | | | |
Current assets | | | |
| | |
Cash and cash equivalents | | $ | | | $ | |
Trade accounts receivable, net of allowance for credit losses of $ | |
| | |
| |
Inventories, current | |
| | |
| |
Other current assets | |
| | |
| |
Total current assets | | $ | | | $ | |
Property, plant and equipment, net | |
| | |
| |
Inventories, noncurrent | |
| | |
| |
Other noncurrent assets | |
| | |
| |
Total assets | | $ | | | $ | |
Liabilities and shareholders’ equity | |
| | |
| |
Current liabilities | |
| | |
| |
Accounts payable | | $ | | | $ | |
Income taxes payable | |
| | |
| — |
Accrued expense | |
| | |
| |
Contract liabilities | |
| | |
| |
Other current liabilities | |
| | |
| |
Total current liabilities | | $ | | | | |
Contract liabilities, noncurrent | |
| | |
| |
Warrants | | | | | | |
Deferred tax liabilities, net | |
| | |
| |
Total liabilities | | $ | | | $ | |
Commitments and contingencies (Note 13) | |
| | |
| |
Shareholders’ equity | |
| | |
| |
Common stock, $ | |
| — | |
| — |
Preferred stock, $ | | | — | | | — |
Additional paid-in capital | |
| | |
| |
Accumulated deficit | |
| ( | |
| ( |
Total shareholders’ equity | | $ | | | | |
Total liabilities and shareholders’ equity | | $ | | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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MultiSensor AI Holdings, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(Amounts in thousands of U.S. dollars, except share and per share data)
| | | | | | |
| | Three months ended March 31, | ||||
| | 2026 | | 2025 | ||
Revenue, net | | $ | | | $ | |
Cost of goods sold (exclusive of depreciation) | | | | | | |
Operating expenses: | |
| | |
| |
Selling, general and administrative | |
| | |
| |
Share-based compensation expense | | | | | | |
Depreciation | |
| | |
| |
Loss (gain) on asset disposal | | | ( | | | ( |
Total operating expenses | | | | | | |
Operating loss | | | ( | | | ( |
Interest expense (income), net | |
| ( | |
| ( |
Other expense (income), net | |
| ( | |
| ( |
Loss before income taxes | | | ( | | | ( |
Income tax expense (benefit) | | | | | | |
Net loss | | $ | ( | | $ | ( |
Weighted-average shares outstanding, basic and diluted | |
| | |
| |
Basic | |
| | |
| |
Diluted | |
| | |
| |
Net loss per share, basic and diluted | |
| | |
| |
Basic | | $ | ( | | $ | ( |
Diluted | |
| ( | |
| ( |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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MultiSensor AI Holdings, Inc.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(unaudited)
(Amounts in thousands of U.S. dollars, except share data)
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | ||
| | | | | | | Additional | | | | Total | |||
| | Common Stock | | Paid- In | | Accumulated | | Shareholders' | ||||||
| | Shares | | Amount | | Capital | | Deficit | | Equity | ||||
Balance at January 1, 2025 |
| | | $ | — | | $ | | $ | ( | | $ | | |
Net loss |
| — | |
| — | |
| — | |
| ( | |
| ( |
Equity-based compensation transactions, net |
| | |
| — | |
| |
| — | |
| | |
Issuance of common stock | | | | | — | | | | | — | | | | |
Balance at March 31, 2025 |
| | | $ | — | | $ | | | $ | ( | | $ | |
| | | | | | | | | | | | | | |
Balance at January 1, 2026 |
| | | $ | — | | $ | | $ | ( | | $ | | |
Net loss |
| — | |
| — | |
| — | |
| ( | |
| ( |
Equity-based compensation transactions, net | | | | | — | | | | | | — | | | |
Balance at March 31, 2026 |
| | | $ | — | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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MultiSensor AI Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(Amounts in thousands of U.S. dollars)
| | | | | | |
| | Three months ended March 31, | ||||
| | 2026 | | 2025 | ||
Operating Activities: | | | | | | |
Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |
| | |
| |
Depreciation | |
| | |
| |
Non-cash lease activity | |
| — | |
| |
Bad debt expenses (recoveries) | | | | | | — |
Deferred income tax (income) expense | |
| | |
| |
Share-based compensation | |
| | |
| |
Loss (gain) on disposal of equipment | | | ( | | | ( |
Increase (decrease) in cash resulting from changes in: | |
| | |
| |
Trade accounts receivable | |
| | |
| ( |
Inventories | |
| | |
| ( |
Other current assets | |
| ( | |
| |
Other noncurrent assets | | | ( | | | ( |
Trade accounts payable | |
| | |
| |
Income taxes payable | |
| | |
| ( |
Contract liabilities | |
| ( | |
| ( |
Other current liabilities | |
| ( | |
| ( |
Right of use liabilities | |
| — | |
| ( |
Accrued expenses | |
| ( | |
| |
Contract liabilities, noncurrent | | | | | | ( |
Net cash provided by (used in) operating activities | | $ | ( | | $ | ( |
Investing Activities: | |
| | |
| |
Capital expenditures | |
| ( | |
| ( |
Proceeds from sale of equipment | | | | | | |
Net cash provided by (used in) investing activities | | $ | ( | | $ | ( |
Financing Activities: | |
| | |
| |
Proceeds from issuances of common stock | | | — | | | |
Tax payments associated with equity-based compensation transactions | | | ( | | | ( |
Repayment of Legacy SMAP promissory note | | | — | | | ( |
Net cash provided by (used in) financing activities | | $ | ( | | $ | |
Net increase/(decrease) in cash, cash equivalents, and restricted cash equivalents | |
| ( | |
| |
Cash, cash equivalents, and restricted cash equivalents beginning of period | |
| | |
| |
Cash, cash equivalents, and restricted cash equivalents end of the period | | $ | | | $ | |
| | | | | | |
Reconciliation of cash, cash equivalents and restricted cash equivalents at end of period: | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Restricted cash equivalents included in other current assets | | | | | | |
Cash, cash equivalents, and restricted cash equivalents end of the period | | $ | | | $ | |
| | | | | | |
Supplemental cash flow information: | |
| | |
| |
Interest paid | | $ | — | | $ | — |
Income tax paid, net of refunds received | |
| | |
| |
| | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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MultiSensor AI Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited; Amounts in thousands of U.S. dollars, except share data)
Note 1 — Organization and Business Operations
MultiSensor AI Holdings, Inc. (“MSAI,” “the Company,” “we” or “our”) together with its wholly owned subsidiaries build and deploy integrated condition monitoring and early threat detection solutions that connect multiple sensor types through a unified edge-to-cloud software architecture. Our condition intelligence platform integrates multiple sensing modalities such as thermal, visual and acoustic, among others. Customers deploy the MSAI Connect platform to continuously monitor critical assets and identify early degradation patterns (such as elevated operating temperatures) across electrical, mechanical, and environmental systems. This allows teams to intervene early and convert potential failures into planned maintenance before downtime, safety incidents, or operational disruption occur.
We focus on commercial environments where operational continuity is vital and automation intensity is high, including distribution and parcel logistics networks, data centers, and select manufacturing and industrial facilities. We believe our solutions offer a compelling combination of performance, scalability, and cost efficiency relative to traditional inspection and monitoring approaches. Our digital, multi-sensor software platform is designed to support the transition from intermittent, manual asset inspections towards continuous intelligent condition monitoring. By streaming and analyzing radiometric thermal data in combination with other deployed sensor inputs, our MSAI Connect software platform can surface early anomaly signals that may not be visible or detected during periodic inspections. Our system architecture is intentionally modular and extensible, allowing for the integration of additional sensing modalities and analytics capabilities over time. While our current commercial deployments are centered primarily on thermal-based monitoring enhanced by software-driven analytics and expert review, we believe MSAI Connect’s multi-sensor foundation positions us to expand into broader predictive and prescriptive use cases.
Through collaboration with several blue-chip multinational customers during development and deployment, we have validated high-value, mission-critical use cases across our target markets: distribution and logistics, manufacturing and data centers. These engagements have informed our product evolution and reinforced our belief that integrated, AI-enabled multi-sensor monitoring represents a structural shift in how industrial reliability and asset protection are managed.
Note 2 — Reverse Stock Split
On April 13, 2026, we effected a 1-for-40 reverse stock split (the “Reverse Stock Split”) of our common stock, par value $
Warrants
Pursuant to the terms of the Warrant Agreement, dated October 18, 2021, by and between us and Continental Stock Transfer & Trust Company, and as a result of the Reverse Stock Split, the exercise price of our public warrants to purchase
Pursuant to the terms of the Subscription Agreement, dated December 1, 2023, by and among us and certain investors signatory thereto, we issued warrants to purchase
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stock issuable upon exercise of the Financing Warrants was proportionally reduced to
On October 24, 2025, we entered into that certain Securities Purchase Agreement with 325 Capital, LLC (“325 Capital”) and certain other accredited investors signatory thereto (collectively with 325 Capital, the “Investors”), pursuant to which we sold to the Investors warrants to purchase up to
All share and per share amounts, including exercise prices and aggregate par values, conversion rates, and conversion prices presented herein that relate to periods prior to the Reverse Stock Split have been adjusted retroactively to reflect the Reverse Stock Split.
Note 3 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements of the Company and its wholly owned subsidiaries are prepared in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”). The interim financial information is unaudited but reflects all normal adjustments that are necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the consolidated financial statements for the fiscal year ended December 31, 2025 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The condensed consolidated balance sheet as of December 31, 2025 was derived from our audited financial statements.
Principles of Consolidation
The Company’s condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Actual results may differ materially from those estimates.
Customer Concentration
For the three months ended March 31, 2026,
New Accounting Pronouncements
Recently Issued Accounting Standards Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 which requires disaggregation of specific expense categories in disclosures within the footnotes to the consolidated financial statements on an annual and interim basis. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Prospective or retrospective application is allowed, and early adoption is permitted. We are currently evaluating the potential effect that the updated standard may have on our consolidated financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The new standard is effective for annual reporting periods and interim reporting periods beginning
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after December 15, 2027. Early adoption is permitted. The new standard may be applied prospectively, retrospectively, or via a modified prospective transition method. We are currently evaluating the impact of this new standard on our consolidated financial statements and related disclosures.
Note 4 — Revenue
The following tables summarize the Company’s revenue, net disaggregated by type of product and service:
| | | | | | |
| | Three months ended March 31, | ||||
| | 2026 | | 2025 | ||
Hardware | | $ | | | $ | |
Software | |
| | |
| |
Services | |
| | |
| |
Total revenue, net | | $ | | | $ | |
The Company’s sales policy is not to accept returns of hardware once sold. As a result, there was
Contract Liabilities
Contract liabilities consist of sales of software subscriptions, where in most cases, the Company receives up-front payment and recognizes revenue over the term of
Note 5— Property, Plant and Equipment
The following table summarizes our property, plant and equipment, net:
| | | | | | |
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
Machinery, equipment and demo | | $ | | | $ | |
Internal-use software | |
| | |
| |
Property, plant and equipment, gross | | $ | | | $ | |
Less: accumulated depreciation | |
| ( | |
| ( |
Property, plant and equipment, net | | $ | | | $ | |
Depreciation expense was $
Note 6 — Other Current Assets
The following table summarizes other current assets:
| | | | | | |
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
Prepaid expenses | | $ | | | $ | |
Restricted cash equivalents | | | | | | |
Prepaid inventory purchases and deposits | | | | | | — |
Other receivables | |
| | |
| |
Total other current assets | | $ | | | $ | |
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Note 7 — Inventories
The following table summarizes inventories:
| | | | | | |
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
Hardware | | $ | | | $ | |
Parts and supplies | |
| | |
| |
Inventories, current | | $ | | | $ | |
Hardware | | | | | | |
Parts and supplies | |
| | |
| |
Inventories, noncurrent | | $ | | | $ | |
Total inventories | | $ | | | $ | |
Note 8 — Accrued Expense
The following table summarizes accrued expenses:
| | | | | | |
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
Salaries, wages, and payroll taxes payable | | $ | | | $ | |
Professional fees | | | | | | |
Other | |
| | |
| |
Total accrued expense | | $ | | | $ | |
Note 9 — Share-Based Compensation
Stock Options
During the three months ended March 31, 2026,
Restricted Stock Units
During the three months ended March 31, 2026, the Company granted
The RSUs granted in the three months ended March 31, 2025 primarily vested one-fourth of the award value on the date of grant, with the remaining restricted shares vesting in equal installments on January 1, 2026, January 1, 2027, and January 1, 2028.
The Company recognized share-based compensation expense related to RSUs of $
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Note 10 — Shareholders’ Equity
Total authorized capital stock of the Company as of March 31, 2026, was
Equity Line of Credit (“ELOC”)
On April 16, 2024, we entered into that certain common stock purchase agreement (the “Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”). Pursuant to the Purchase Agreement, we had the right, but not the obligation, to sell to B. Riley up to $
During the three months ended March 31, 2026, the Company did not utilize the B. Riley ELOC, and the Company terminated the Purchase Agreement effective February 2, 2026. During the three months ended March 31, 2025, the Company utilized the ELOC to sell
At the Market Sales Agreements
On March 13, 2026, the Company entered into an at market issuance sales agreement (the “2026 Sales Agreement”) with Roth Capital Partners, LLC and H.C. Wainwright & Co., LLC as sales agents or principals (the “Agents”), under which the Company may offer and sell shares of the Company’s common stock having an aggregate market value of up to $
On March 28, 2025, the Company entered into an at market issuance sales agreement (the “2025 Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley Securities”), as sales agent or principal, pursuant to which the Company could offer and sell shares of its common stock, having an aggregate offering price of up to $
Note 11 — Earnings per Share
The following table summarizes the computation of basic and diluted earnings per share:
| | | | | | |
| | Three months ended March 31, | ||||
| | 2026 | | 2025 | ||
Numerator: | | | |
| | |
Basic and diluted net loss attributable to common shareholders | | $ | ( | | $ | ( |
Denominator: | | | | | | |
Weighted average number of shares: | |
| | |
| |
Basic - common stock | |
| | |
| |
Diluted - common stock | |
| | |
| |
Basic net loss per share attributable to common shareholders | | $ | ( | | $ | ( |
Diluted net loss per share attributable to common shareholders | | $ | ( | | $ | ( |
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The table above does not include the following potential anti-dilutive shares: (i) up to
Note 12— Related Party Transactions
Leases
The Company previously leased our corporate office and currently leases our production facility from a former related party. As of July 29, 2025, the lessor no longer qualified as a related party under the applicable accounting guidance, and payments made after that date did not constitute related party transactions. Total cash payments to the related party for the leases were $
Note 13 — Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
In the ordinary course of the business, the Company is subject to periodic legal or administrative proceedings. As of March 31, 2026, the Company is not involved in any material claims or legal actions which, in the opinion of management, the ultimate disposition would have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or liquidity.
Note 14 — Income Taxes
The Company has determined that a discrete year-to-date method of reporting would provide more reliable results for the three months ended March 31, 2026 and March 31, 2025, due to the difficulty in projecting future results. The Company recorded income tax expense of $
For the three months ended March 31, 2026 and March 31, 2025, the Company’s effective income tax rates were (
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Note 15 — Segments and Geographical Information
The Company has
| | | | | | |
| | Three months ended March 31, | ||||
| | 2026 | | 2025 | ||
United States | | $ | | | $ | |
International | |
| | |
| |
Total revenue, net | | $ | | | $ | |
The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM uses consolidated net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the segment or into other parts of the entity, such as for acquisitions. Net income is used to monitor budget versus actual results and to perform competitive analysis through benchmarking to competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.
The table below summarizes the significant expense categories regularly reviewed by the CODM for the three-month periods ended March 31, 2026, and 2025:
| | | | | |
| | Three months ended March 31, | |||
| | 2026 | | 2025 | |
Revenue, net | $ | |
| $ | |
Cost of goods sold (exclusive of depreciation) | | |
| | |
Operating expenses: | | |
| | |
Selling, general and administrative | | | | | |
Payroll Expenses (including bonus) | | |
| | |
Professional Fees | | |
| | |
Other selling, general and administrative | | |
| | |
Other operating expenses | | |
| | |
Non-operating (income) expenses, net | | ( |
| | ( |
Provision for income taxes | | |
| | |
Net loss | $ | ( |
| $ | ( |
See the condensed consolidated financial statements for other financial information regarding the Company’s operating segment.
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Item 2. 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 provides information that our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in our unaudited condensed consolidated financial statements and notes thereto, included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”).
This Quarterly Report includes forward-looking statements based on our current assumptions, expectations and projections about future events that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or in other parts of this Quarterly Report. For more information on these and other factors, see “Forward-Looking Statements” herein.
Overview
The Company and its wholly owned subsidiaries build and deploy integrated condition monitoring and early threat detection solutions that connect multiple sensor types through a unified edge-to-cloud software architecture. Our condition intelligence platform integrates multiple sensing modalities such as thermal, visual and acoustic, among others. Customers deploy the MSAI Connect platform to continuously monitor critical assets and identify early degradation patterns (such as elevated operating temperatures) across electrical, mechanical, and environmental systems. This allows teams to intervene early and convert potential failures into planned maintenance before downtime, safety incidents, or operational disruption occur.
We are pursuing expansion of our position as a Software as a Service (“SaaS”) provider in predictive maintenance and believe there are significant opportunities to increase recurring revenue from our solutions. As deployment of multiple sensor modalities within our solutions becomes more pervasive, we have determined that disclosure of an aggregate active sensor count is no longer a meaningful operating metric because each sensor modality has different economic characteristics. For example, vibration sensors may be deployed in larger volumes at lower per-sensor subscription prices, whereas thermal sensors may be deployed in lower volumes at higher per-sensor subscription prices.
We focus on commercial environments where operational continuity is vital and automation intensity is high, including distribution and parcel logistics networks, data centers, and select manufacturing and industrial facilities. We believe our solutions offer a compelling combination of performance, scalability, and cost efficiency relative to traditional inspection and monitoring approaches. Our digital, multi-sensor software platform is designed to support the transition from intermittent, manual asset inspections towards continuous intelligent condition monitoring. By streaming and analyzing radiometric thermal data in combination with other deployed sensor inputs, our MSAI Connect software platform can surface early anomaly signals that may not be visible or detected during periodic inspections. Our system architecture is intentionally modular and extensible, allowing for the integration of additional sensing modalities and analytics capabilities over time. While our current commercial deployments are centered primarily on thermal-based monitoring enhanced by software-driven analytics and expert review, we believe MSAI Connect’s multi-sensor foundation positions us to expand into broader predictive and prescriptive use cases.
Through collaboration with several blue-chip multinational customers during development and deployment, we have validated high-value, mission-critical use cases across our target markets: distribution and logistics, manufacturing and data centers. These engagements have informed our product evolution and reinforced our belief that integrated, AI-enabled multi-sensor monitoring represents a structural shift in how industrial reliability and asset protection are managed.
In the distribution and logistics market, we believe our solutions deliver meaningful operational value by enabling enhanced predictive maintenance capabilities that help minimize unplanned downtime, lower labor and maintenance costs, and improve facility throughput and operational continuity. During the first quarter of 2026, we completed initial deployments at Manchester Airport and a global direct-to-consumer food solutions provider, further validating the applicability of our solutions across complex, mission-critical operations. In addition, we continue to expand our relationship with a large global distribution customer, which has advised that additional projects focused on monitoring rooftop solar infrastructure and distribution facilities have been approved, with installations expected to occur throughout fiscal year 2026.
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In the data center market, our focus is on the critical infrastructure systems that support data center reliability, uptime, and operational resilience. Through our MSAI Connect solutions, we help customers identify early signs of electrical and cooling system degradation before conventional alarms are triggered across applications such as chillers, cooling towers, automatic transfer switches, backup generators, power panels, and transformers. During the first quarter of 2026, we successfully deployed two pilot projects within the data center sector. Initial customer feedback has been encouraging, and we are actively engaged in discussions to expand these deployments and pursue additional opportunities across other data center facilities.
In the manufacturing market, our go-to-market strategy is centered on delivering early threat detection and operational reliability solutions designed to enhance safety, reduce operational risk, and improve asset visibility. We continue to work closely with two of the “Big 3” automakers on our ongoing pilot programs focused on lithium-ion battery pack monitoring and the deployment of dual-vision hardware sensors. In parallel, we remain actively engaged with these customers in identifying additional high-value applications for our solutions across broader manufacturing and production environments.
Recent Developments
Reverse Stock Split
On April 13, 2026, we effected a 1-for-40 reverse stock split (the “Reverse Stock Split”) of our common stock. As a result of the Reverse Stock Split, our outstanding common stock was reduced from 80,491,720 shares to 2,012,293 shares, and proportionate adjustments were made to the number of shares underlying our outstanding equity awards and equity incentive plans, including corresponding adjustments to exercise prices and performance thresholds, as applicable. The total number of authorized shares, the par value and other terms of our common stock were not affected by the Reverse Stock Split.
Warrants
Pursuant to the terms of the Warrant Agreement, dated October 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company, and as a result of the Reverse Stock Split, the exercise price of the Company’s public warrants to purchase 8,625,000 shares of common stock at an exercise price of $11.50 per share (the “Public Warrants”), and private placement warrants to purchase up to 506,250 shares of common stock at an exercise price of $11.50 per share (the “Private Placement Warrants” and together with the Public Warrants, the “SPAC Warrants”), each issued in connection with our initial public offering, was adjusted from $11.50 to $460.00. Additionally, the number of shares of common stock issuable upon exercise of the Public Warrants and Private Placement Warrants was proportionally reduced to 215,625 shares and 12,657 shares, respectively. Except as provided herein, all other terms and provisions of the SPAC Warrants remain in full force and effect.
Pursuant to the terms of the Subscription Agreement, dated December 1, 2023, by and among the Company and certain investors signatory thereto, and as a result of the Reverse Stock Split, the exercise price of the Company’s warrants to purchase 340,250 shares of common stock at an exercise price of $11.50 per share (the “Financing Warrants”), issued in connection with our business combination, was adjusted from $11.50 to $460.00. Additionally, the number of shares of common stock issuable upon exercise of the Financing Warrants was proportionally reduced to 8,507 shares. Except as provided herein, all other terms and provisions of the Financing Warrants remain in full force and effect.
On October 24, 2025, we entered into that certain Securities Purchase Agreement (the “2025 Purchase Agreement”) with 325 Capital, LLC (“325 Capital”) and certain other accredited investors signatory thereto (collectively with 325 Capital, the “Investors”), pursuant to which we sold to the investors warrants to purchase up to 68,459,652 shares of common stock (the “2025 Warrants”). Pursuant to the terms of 2025 Warrants, and as a result of the Reverse Stock Split, the exercise price of the 2025 Warrants was adjusted from $0.409 to $5.98 per share. The number of shares of common stock issuable upon exercise of the 2025 Warrants was proportionately increased to 4,682,273.85 shares. Except as provided herein, all other terms and provisions of the 2025 Warrants remain in full force and effect.
2026 Sales Agreement
On March 13, 2026, we entered into an at market issuance sales agreement (the “2026 Sales Agreement”) with Roth Capital Partners, LLC and H.C. Wainwright & Co., LLC as sales agents or principals (the “Agents”), under which we may offer and sell shares
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of our common stock having an aggregate market value of up to $60 million from time to time through the Agents. We intend to use the net proceeds from sales of common stock under the 2026 Sales Agreement, if any, for working capital and general corporate purposes.
Results of Operations
Three months ended March 31, 2026 compared to three months ended March 31, 2025
The following table presents summary results of operations for the periods indicated in thousands:
| | | | | | | | | | | | |
| | Three months ended March 31, | | Amount | | % |
| |||||
| | 2026 | | 2025 | | Change | | Change | | |||
Revenue, net | | $ | 1,614 | | $ | 1,170 | | $ | 444 |
| 38 | % |
Cost of goods sold (exclusive of depreciation) | | | 700 | | | 476 | | | 224 |
| 47 | % |
Operating expenses: | | | | | | | | | |
| | |
Selling, general and administrative | | | 2,989 | | | 4,139 | | | (1,150) |
| (28) | % |
Share-based compensation expense | | | 182 | | | 907 | | | (725) | | (80) | % |
Depreciation | | | 352 | | | 280 | | | 72 |
| 26 | % |
Loss (gain) on asset disposal | | | (15) | | | (15) | | | — | | — | % |
Total operating expenses | | | 3,508 | | | 5,311 | | | (1,803) |
| (34) | % |
Operating loss | | | (2,594) | | | (4,617) | | | 2,023 |
| (44) | % |
Interest expense (income), net | | | (155) | | | (4) | | | (151) |
| 3,775 | % |
Other expense (income), net | | | (1) | | | (185) | | | 184 |
| (99) | % |
Loss before income taxes | | | (2,438) | | | (4,428) | | | 1,990 |
| (45) | % |
Income tax expense (benefit) | | | 33 | | | 8 | | | 25 |
| 313 | % |
Net loss | | $ | (2,471) | | $ | (4,436) | | $ | 1,965 |
| (44) | % |
Revenue: Revenue for the three months ended March 31, 2026 was $1.6 million, compared to $1.2 million for the three months ended March 31, 2025. Revenue streams from each of our products and services are summarized below for the three months ended March 31, 2026 and 2025.
| | | | | | |
| | Three months ended March 31, | ||||
| | 2026 | | 2025 | ||
Hardware | | $ | 913 | | $ | 753 |
Software | |
| 675 | |
| 251 |
Services | |
| 26 | |
| 166 |
Total revenue, net | | $ | 1,614 | | $ | 1,170 |
The increase in revenue was primarily attributable to a $0.4 million or 169% increase in software revenue from sales of MSAI Connect, our condition intelligence platform, and a $0.2 million or 21% increase from sensor sales connected with new deployments of our platform and standalone hardware sales. These increases in revenue were offset by a decrease in services revenue of $0.1 million or 84%, primarily related to the discontinuation of inspection and training services in August 2025.
Cost of Goods Sold: Cost of goods sold for the three months ended March 31, 2026 was $0.7 million, compared to $0.5 million for the three months ended March 31, 2025. The increase in cost of goods sold was attributable to an increase in the quantity of sensor hardware sold as well as a change in product mix.
Selling, General and Administrative Expense: Selling, general and administrative expense for the three months ended March 31, 2026 was $3.0 million, compared to $4.1 million for the three months ended March 31, 2025. The decrease in selling, general and administrative expense was primarily driven by a $0.7 million reduction in professional fees and $0.2 million reduction in payroll expenses compared to the prior year period.
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Share-Based Compensation Expense: Share-based compensation expense for the three months ended March 31, 2026 was $0.2 million, compared to $0.9 million for the three months ended March 31, 2025. The decrease in share-based compensation expense was primarily attributable to restricted stock units granted during the first quarter of 2025, which included a provision for immediate vesting of 25% of the total award, resulting in higher expense recognized in the prior-year period.
Depreciation: Depreciation expense was $0.4 million for the three months ended March 31, 2026, compared to $0.3 million for the three months ended March 31, 2025. The increase in depreciation expense was primarily driven by additions to property, plant, and equipment, predominately software associated with our development of MSAI Connect, partially offset by lower depreciation expense related to machinery, equipment, and demo assets due to disposals and sales completed during fiscal year 2025.
Interest expense (income), net: Interest income was $0.2 million for the three months ended March 31, 2026, compared to insignificant interest income for the three months ended March 31, 2025. The increase in interest income was primarily due to higher average cash balances invested in interest-bearing accounts.
Other expense (income), net: Other income, net was insignificant for the three months ended March 31, 2026, compared to $0.2 million for the three months ended March 31,2025. The decrease in other income was primarily due to the resolution of the ELOC make-whole obligation, as notified by B. Riley on January 8, 2025 (as discussed below), which resulted in a one-time benefit recorded in the prior-year period.
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are supplemental non-GAAP financial measures used by management. We define EBITDA as net income (loss) before (i) interest expense (net interest income), (ii) depreciation and (iii) taxes. We define “Adjusted EBITDA” as EBITDA before share-based compensation expenses, change in fair value of convertible notes and warrant liabilities, inventory impairment, loss on financing transaction, other expense (income) and loss (gain) on disposal of assets, as each are applicable to the periods presented.
We believe EBITDA and Adjusted EBITDA are useful performance measures because they facilitate comparison of our results of operations from period to period without regard to our financing methods or capital structure or other items that impact comparability of financial results from period to period such as fluctuations in interest expense or effective tax rates, levels of depreciation, non-cash charges such as share based compensation expenses or unusual items that are not considered an indicator of ongoing performance of our operations. In addition, we believe that such non-GAAP financial measures are used by analysts and others in the investment community to analyze our historical results and to provide estimates of future performance. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income (loss) or any other measure as determined in accordance with GAAP. Our computations of EBITDA and Adjusted EBITDA may not be comparable to EBITDA or Adjusted EBITDA of other companies. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business.
EBITDA and Adjusted EBITDA, when viewed in a reconciliation to respective GAAP measures, provide an additional way of viewing the Company’s results of operations and factors and trends affecting the Company’s business. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the respective financial results presented in accordance with GAAP. The following tables present a reconciliation of EBITDA and Adjusted EBITDA to the GAAP financial measure of net income (loss) (unaudited) for each of the periods indicated, in thousands:
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| | | | | |
| Three months ended March 31, | ||||
Adjusted EBITDA | 2026 | | 2025 | ||
Net loss | $ | (2,471) | | $ | (4,436) |
Interest expense (income), net | | (155) | | | (4) |
Income tax expense (benefit) | | 33 | | | 8 |
Depreciation | | 352 | | | 280 |
EBITDA | $ | (2,241) | | $ | (4,152) |
Share-based compensation expense |
| 182 | |
| 907 |
Other expense (income), net |
| (1) | |
| (185) |
Loss (gain) on asset disposal | | (15) | | | (15) |
Adjusted EBITDA | $ | (2,075) | | $ | (3,445) |
Liquidity and Capital Resources
We incurred losses for the three months ended March 31, 2026 and 2025. We have historically funded our operations with internally generated cash flows, equity financings, debt, convertible notes, and promissory notes with shareholders and related parties. As of March 31, 2026, we had $22.6 million of cash and cash equivalents. We expect that our current sources of liquidity, together with our projection of cash flows from operating activities, will provide us with adequate liquidity for at least the next 12 months.
We may require additional capital in order to execute on our business plan and may require capital to fund our operations or to respond to technological advancements, competitive dynamics, technologies, customer demands, business opportunities, challenges, acquisitions, or unforeseen circumstances, and we may determine to raise capital through equity or debt financings or enter into credit facilities for other reasons. In order to maintain our anticipated growth trajectory and to further business relationships with current or potential customers or partners, or for other reasons, we may issue equity or equity-linked securities to such current or potential customers or partners. We may not be able to timely secure additional debt or equity financing on favorable terms, or at all, as these plans are subject to market conditions and are not within our control. There is no assurance that we will be successful in implementing our plans. If we raise additional funds through the issuance of equity or convertible debt or other equity-linked securities, or if we issue equity or equity-linked securities to current or potential customers to further business relationships, our existing stockholders could experience significant dilution. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited and our business could be materially and adversely affected.
Equity Line of Credit (“ELOC”)
On April 16, 2024, we entered into that certain common stock purchase agreement (the “Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”). Pursuant to the Purchase Agreement, we had the right, but not the obligation, to sell to B. Riley up to $25 million worth of common stock (the “Purchase Shares”) over the term of the Purchase Agreement. In accordance with the Purchase Agreement, on April 16, 2024, we issued 4,296 shares of our common stock to B. Riley as consideration for its commitment to purchase the Purchase Shares under the Purchase Agreement (the “Commitment Shares”). Under the terms of the Purchase Agreement, if the aggregate amount of cash proceeds, if any, received by B. Riley from the resale of the Commitment Shares was less than $500, then, upon notice by B. Riley, the Company was required to pay the difference between $500 and the aggregate cash proceeds received by B. Riley from its resale. On January 8, 2025, B. Riley notified the Company that it had sold the Commitment Shares, which resolved the liability. Accordingly, $0.2 million was recorded in Other expense (income), net in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2025.
During the three months ended March 31, 2026, the Company did not utilize the B. Riley ELOC and terminated the Purchase Agreement effective February 2, 2026. During the three months ended March 31, 2025, the Company utilized the ELOC to sell 44,793 shares of common stock for cash proceeds totaling $4.7 million.
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At the Market Sales Agreements
On March 13, 2026, the Company entered into the 2026 Sales Agreement with the Agents, under which the Company may offer and sell shares of the Company’s common stock having an aggregate market value of up to $60 million from time to time through the Agents. The Agents are entitled to compensation at a fixed commission rate based on the gross sales price of shares sold pursuant to the 2026 Sales Agreement. During the three months ended March 31, 2026, the Company did not sell any shares under the 2026 Sales Agreement.
On March 28, 2025, the Company entered into an at market issuance sales agreement (the “2025 Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley Securities”) as sales agent or principal, pursuant to which the Company could offer and sell shares of its common stock, having an aggregate offering price of up to $8.6 million from time to time through B. Riley Securities. B. Riley Securities was entitled to compensation at a fixed commission rate based on the gross sales price of shares sold pursuant to the 2025 Sales Agreement. During the three months ended March 31, 2026 and 2025, the Company did not sell any shares under the 2025 Sales Agreement. The Company terminated the 2025 Sales Agreement effective February 2, 2026.
2025 Private Placement
As previously discussed, on October 24, 2025, the Company entered into the 2025 Purchase Agreement with the Investors, pursuant to which it agreed to sell to the Investors (i) 855,745 shares of common stock at a purchase price of $16.36 per share and (ii) the 2025 Warrants (collectively, the “2025 Private Placement”), with an exercise price of $5.98 per share, for an aggregate purchase price of $14 million before deducting placement agent fees and offering expenses. 325 Capital and its affiliates beneficially own more than 5.0% of the outstanding common stock. In addition, Daniel M. Friedberg, who is a Managing Member of 325 Capital, serves on the Company’s board of directors.
The 2025 Purchase Agreement and the 2025 Warrants provide that each Investor’s beneficial ownership of common stock, including after taking into account the full exercise of such Investor’s 2025 Warrant, shall in no event exceed 49.5% of the issued and outstanding common stock (the “Maximum Ownership Limitation”). In the event that an Investor’s 2025 Warrant is not exercisable for shares of common stock due to the beneficial ownership of such Investor exceeding the Maximum Ownership Limitation, the applicable 2025 Warrant will be exercisable for shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), that are convertible into an equivalent number of shares of common stock for which the 2025 Warrant is exercisable. The 2025 Warrants will expire seven years from the date of issuance.
At the initial closing of the Private Placement on October 30, 2025, the Company issued to the Investors 174,272 shares of common stock and 2025 Warrants to purchase up to 953,543.13 shares of common stock (as adjusted for the Reverse Stock Split), for gross proceeds of $2.85 million before deducting placement agent fees and offering expenses.
On December 23, 2025, the final closing occurred and the Company issued 681,474 shares of common stock and 2025 Warrants to purchase up to 3,728,730.72 shares of common stock (as adjusted for the Reverse Stock Split) to the Investors for gross proceeds of $11.15 million before deducting placement agent fees and offering expenses.
2025 Registered Direct Offering
On November 4, 2025, the Company entered into a common stock purchase agreement with a single institutional investor, pursuant to which the Company agreed to issue and sell (i) 114,875 shares (the “2025 Registered Direct Shares”) of the Company’s common stock and (ii) pre-funded warrants (the “2025 Pre-Funded Warrants”) to purchase up to 152,500 shares of common stock (the “2025 Pre-Funded Warrant Shares”) in a registered direct offering (the “2025 Registered Direct Offering”). The 2025 Registered Direct Shares, 2025 Pre-Funded Warrants and 2025 Pre-Funded Warrant Shares are registered pursuant to an effective shelf registration statement on Form S-3 (File No. 333-284437), and a base prospectus and prospectus supplement relating to the 2025 Registered Direct Offering, in each case filed with the SEC. The offering price was $54.00 per share of common stock and $53.9999 per Pre-Funded Warrant, which is the price of each share of common stock sold in the 2025 Registered Direct Offering, minus the $0.0001 exercise price per 2025 Pre-Funded Warrant.
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The 2025 Registered Direct Offering closed on November 5, 2025, and resulted in gross proceeds to the Company of approximately $14.4 million, before deducting advisory fees and offering expenses payable by the Company. Following the delivery of exercise notices to the Company on November 5, 2025 and November 6, 2025, the 2025 Pre-Funded Warrants were exercised in full.
Cash Flows
Three months ended March 31, 2026 compared to three months ended March 31, 2025
The following table summarizes our cash flows for the periods indicated, in thousands:
| | | | | | |
| | Three months ended March 31, | ||||
| | 2026 | | 2025 | ||
Net cash provided by (used in) operating activities | | $ | (1,688) | | $ | (3,176) |
Net cash provided by (used in) investing activities | |
| (101) | |
| (420) |
Net cash provided by (used in) financing activities | |
| (24) | |
| 3,985 |
Net increase/(decrease) in cash, cash equivalents, and restricted cash equivalents | | $ | (1,813) | | $ | 389 |
Operating Activities
Net cash used in operating activities was $1.7 million for the three months ended March 31, 2026, a decrease of $1.5 million compared to $3.2 million for the three months ended March 31, 2025. The decrease in net cash used in operating activities was primarily driven by a lower net loss during the current period, as well as changes in working capital, including the timing of customer receipts.
Investment Activities
Net cash used in investing activities was $0.1 million for the three months ended March 31, 2026, a decrease of $0.3 million as compared to $0.4 million of net cash used in investing activities for the three months ended March 31, 2025. The decrease is primarily related to a decrease in cash paid for capital expenditures.
Financing Activities
Net cash used in financing activities was insignificant for the three months ended March 31, 2026, compared to $4.0 million of net cash provided by financing activities for the three months ended March 31, 2025. The decrease was primarily attributable to $4.7 million of proceeds from the issuance of common stock during the three months ended March 31, 2025, with no comparable financing activity in the current period.
Contractual Obligations
As of March 31, 2026, we did not have any material contractual obligations.
Off-Balance Sheet Arrangements
As of March 31, 2026, we did not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in our 2025 Annual Report. There have been no significant and material changes in our Critical Accounting Policies and Estimates since the 2025 Annual Report.
Recently Issued Accounting Standards
See Note 2 of the notes to our annual consolidated financial statements in the 2025 Annual Report for our assessment of recently issued and adopted accounting standards.
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Emerging Growth Company and Smaller Reporting Company Status
We are an emerging growth company under the Jumpstart Our Business Act of 2012 (the “JOBS Act”). The JOBS Act provides that an emerging growth company can delay adopting new or revised accounting standards until such a time as those standards apply to private companies.
Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation or (v) comply with any new or revised financial accounting standards that have different effective dates for public and private companies until those standards would otherwise apply to private companies. However, we have elected to opt out of this extended exemption period discussed (v) and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards are required for non-emerging growth companies. We may take advantage of these exemptions until December 31, 2026, or until we are no longer an emerging growth company, whichever is earlier. We will cease to be an emerging growth company prior to the end of such five-year period if certain earlier events occur, including if we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, our annual gross revenues exceed $1.235 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2026 (“Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective as of March 31, 2026.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in actions, claims, suits and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to intellectual property infringement, breaches of contract or warranties or employment-related matters. We are not currently a party to any actions, claims, suits or other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, and results of operations.
Item 1A. Risk Factors
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our 2025 Annual Report on Form 10-K, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. There have been no material changes in our risk factors since our 2025 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
During the three months ended March 31, 2026, no director or “officer” (as defined in Rule 16a-1(f) of the Exchange Act) of the Company
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Item 6. Exhibits
| | | | | | | | | | ||
| | | | Incorporated by Reference | |||||||
| | | | | | | | | | Filed / | |
| | | | | | | | | | Furnished | |
Exhibit | | Description | | Form | | Exhibit | | Filing Date | | Herewith | |
2.1† | | Business Combination Agreement, dated as of December 5. 2022, by and among SportsMap Tech Acquisition Corp., Infrared Cameras Holdings, Inc., and ICH Merger Sub Inc. | | 8-K | | 2.1 | | 12/6/2022 | | | |
2.2 | | Amendment No. 1 to Business Combination Agreement, dated as of June 27, 2023, by and among SportsMap Tech Acquisition Corp., Infrared Cameras Holdings, Inc., and ICH Merger Sub Inc. | | 8-K | | 2.2 | | 6/28/2023 | | | |
2.3 | | Amendment No. 2 to Business Combination Agreement, dated September 17, 2023, by and among SportsMap Tech Acquisition Corp., Infrared Cameras Holdings, Inc., and ICH Merger Sub Inc. | | 8-K | | 2.2 | | 9/20/2023 | | | |
3.1 | | Second Amended and Restated Certificate of Incorporation MultiSensor AI Holdings, Inc., as amended through April 8, 2026. | | | | | * | ||||
3.2 | | Second Amended and Restated Bylaws of MultiSensor AI Holdings, Inc. | | 10-K | | 3.2 | | 3/28/2025 | | ||
3.3 | | Certificate of Designations of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of Series A Convertible Preferred Stock. | | 8-K | | 3.1 | | 10/30/2025 | | | |
4.1 | | Warrant Agreement, dated as of October 18, 2021, by and between the Registrant and Continental Stock Transfer & Trust Company, as warrant agent. | | 8-K | | 4.1 | | 10/21/2021 | | | |
4.2 | | Form of Financing Warrant | | 8-K | | 10.3 | | 12/01/2023 | | | |
4.3 | | Form of PIPE Warrant. | | 8-K | | 4.1 | | 10/30/2025 | | | |
10.1 | | At Market Issuance Sales Agreement, dated March 13, 2026, by and between MultiSensor AI Holdings, Inc. and Roth Capital Partners, LLC and H.C. Wainwright & Co., LLC. | | 8-K | | 1.1 | | 3/13/2026 | | | |
10.2 | | Form of Amendment No. 2 to Securities Purchase Agreement, dated March 12, 2026. | | 8-K | | 10.1 | | 3/13/2026 | | | |
31.1 | | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | | | | | | | | * | |
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31.2 | | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | | | | | | | | * | |
32.1 | | Section 1350 Certification of Chief Executive Officer | | | | | | | | ** | |
32.2 | | Section 1350 Certification of Chief Financial Officer | | | | | | | | ** | |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document | | | | | | | | | |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | | |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | | |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | | |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase | | | | | | | | | |
104 | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | | | | | | | | | |
* | Filed herewith |
** | Furnished herewith |
† | Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC. |
| | | | | | | | | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MultiSensor AI Holdings, Inc. | |
Date: May 13, 2026 | | |
| By: | /s/ Asim Akram |
| | Asim Akram |
| | Chief Executive Officer and President |
| | (Principal Executive Officer) |
Date: May 13, 2026 | | |
| By: | /s/ Robert Nadolny |
| | Robert Nadolny |
| | Chief Financial Officer and Secretary |
| | (Principal Financial Officer and |
| | Principal Accounting Officer) |
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