MultiSensor AI Holdings, Inc.
For the period ended Sep 30, 2025. Filed Nov 13, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 13, 2025
MSAI$3.08+0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-13.
0001558370-25-011382
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-13.
0001104659-25-111303
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 70 previous paragraphs and 82 current paragraphs.
37 unchanged; 25 reworded; 18 added; 7 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
In the manufacturing market, our go-to market strategy centers on our early threat detection solution. We continue to work closely with two of the Big 3 automakers on our ongoing pilot programs for lithium ion battery pack monitoring and the application of dual vision hardware sensors, and remain engaged in identifying additional applications for our solutions.
Current report
In the data center market, we have narrowed our focus to the infrastructure surrounding and supporting a data center. This includes using MSAI Connect solutions to monitor power and cooling control systems. During the quarter, we began discussions to pilot these solutions with several large data center owners and operators.
Current report
Loss (gain) on asset disposal: The decrease in Loss (gain) on asset disposal was primarily the result of the Company disposing of certain aged or inoperable assets in the third quarter of 2024, primarily in the machinery, equipment, and demo category, which did not occur in 2025.
Current report
Other loss: The decrease in Other loss was primarily due to the write-down of a deposit of $930 which was recorded in the third quarter of 2024 which did not occur in 2025.
Current report
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024
Current report
Inventory Impairment: There was no recorded inventory impairment for the nine months ended September 30, 2025, compared to a recorded inventory impairment of $2.3 million for the months ended September 30, 2024. The decrease is due to a non-cash charge in the nine-month period ended September 30, 2024 related to thermal cameras specifically designed for medical applications that were unable to be converted to alternative applications for which there is customer demand.
Current report
Loss (gain) on asset disposal: The decrease in Loss (gain) on asset disposal was primarily the result of the Company disposing of certain aged or inoperable assets in the third quarter of 2024, primarily in the machinery, equipment, and demo category, which did not occur in 2025.
Current report
Other loss: The decrease in Other loss was primarily due to the write-down of a deposit of $930 which was recorded in the third quarter of 2024 which did not occur in 2025.
Current report
2025 Private Placement
Current report
On October 24, 2025, the Company entered into a placement agency agreement (the “Placement Agreement”) with Roth Capital Partners, LLC (“Roth”),pursuant to which the Company engaged Roth to act as the exclusive placement agent in connection with a private placement of (i) an aggregate of 34,229,826 shares (the “2025 Private Placement Shares”) of the Company’s Common Stock, and (ii) warrants (the “Warrants”) to purchase up to 68,459,652 shares of Common Stock (collectively, the “2025 Private Placement”). Pursuant to the Placement Agreement, the Company agreed to pay Roth a cash fee equal to 5.0% of the gross proceeds received by the Company from the 2025 Private Placement.
Current report
On October 24, 2025 (the “Subscription Date”), the Company entered into a securities purchase agreement (the “Purchase Agreement”) with 325 Capital, LLC (“325 Capital”) and certain other accredited investors signatory thereto (collectively with 325 Capital, the “Investors”), pursuant to which it agreed to sell to the Investors (i) the 2025 Private Placement Shares at a purchase price of $0.409 per share and (ii) the Warrants, with an exercise price of $0.409 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.
Current report
The Purchase Agreement and the Warrants provide that each Investor’s beneficial ownership of Common Stock, including after taking into account the full exercise of such Investor’s 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 Warrant is not exercisable for shares of Common Stock due to the beneficial ownership of such Investor exceeding the Maximum Ownership Limitation, the applicable 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 Warrant is exercisable. The Warrants will expire seven years from the date of issuance.
Current report
At the initial closing of the Private Placement on October 30, 2025 (the “Initial Closing”), the Company issued to the Investors a number of 2025 Private Placement Shares equal to 19.99% of the number of shares of Common Stock issued and outstanding immediately prior to the Subscription Date, or 6,970,890 shares of Common Stock (the “Initial Shares”), and Warrants to purchase up to 13,941,780 shares of Common Stock (the “Initial Warrant Shares”), for gross proceeds of $2.85 million before deducting placement agent fees and offering expenses. The gross proceeds from the sale of the remaining 27,258,936 shares of Common Stock (the “Additional Shares”) and Warrants to purchase up to 54,517,872 shares of Common Stock (the “Additional Warrants”) was funded by the Investors into a third-party escrow account.. The Additional Shares and Additional Warrants will be issued upon the Company’s receipt of stockholder approval of the 2025 Private Placement.
Current report
2025 Registered Direct Offering
Current report
On November 4, 2025, the Company entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) with a single institutional investor, pursuant to which the Company agreed to issue and sell (i) 4,595,000 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 6,100,000 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 $1.35 per share of Common Stock and $1.3499 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.
Current report
The 2025 Registered Direct Offering closed on November 5, 2025, and resulted in net proceeds to the Company of approximately $13.6 million, after deducting advisory fees and other estimated 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.
Current report
The Company currently intends to use the net proceeds from the 2025 Registered Direct Offering for working capital and other general corporate purposes, including driving strategic growth initiatives and continuing to advance the development of the MSAI Connect platform.
Current report
Nine months ended September 30, 2025, compared to nine months ended September 30, 2024
Removed paragraphs (7)
Previous report
In the Manufacturing market, our go-to market strategy centers on our early fire detection solution. During the quarter, we completed our first pilot implementation at a second Big-3 automaker to monitor lithium-ion battery packs for thermal runaway. We also partnered with our first Big-3 automaker to launch a pilot of dual-vision hardware sensors (both visual and infrared sensors) with the goal to further reduce false alarms from our early fire detection solution.
Previous report
During the quarter, we added data centers to our target applications leveraging our existing solutions. Previous pilots completed in this space have demonstrated the value of our solutions in cooling management and server load-balancing. We plan to target this industry heavily in the second half of 2025.
Previous report
Regarding sensor hardware, we continue to de-prioritize stand-alone hardware sales, as we transition the Company away from a legacy in-house branded hardware provider to a manufacture-agnostic solutions partner.
Previous report
Six months ended June 30, 2025 compared to six months ended June 30, 2024
Previous report
Inventory Impairment: The decrease in inventory impairment was due to no impairment recognized during the six months ended June 30, 2025.
Previous report
Six months ended June 30, 2025, compared to six months ended June 30, 2024
Previous report
Net cash used in operating activities was $4.0 million for the six months ended June 30, 2025, an increase of $4.2 million as compared to $0.2 million of net cash provided by operating activities for the six months ended June 30, 2024. The increase in net cash used in operating activities was primarily related to timing of payments for outstanding liabilities and changes in the timing of collections from customers.
Reworded paragraphs (25)
Previous wording
The Company and its wholly owned subsidiaries provide turn-key predictive maintenance and process control solutions, which combine cutting edge imaging and sensing technologies with AI-powered enterprise software. Our software leverages a continuous stream of data from thermal imaging, visible imaging, acoustic imaging, vibration sensing, and laser sensing devices to provide comprehensive, real-time condition monitoring for a customer’s critical assets, processes, and manufactured outputs. Our cloud and edge solutions are deployed by organizations to protect critical assets across a wide range of industries.
Current wording
The Company and its wholly owned subsidiaries provide turn-key predictive maintenance and process control solutions, which combine cutting edge imaging and sensing technologies with AI-powered enterprise software. Our software leverages a continuous stream of data from thermal imaging, visible imaging, acoustic imaging, vibration sensing, and laser sensing devices to provide comprehensive, real-time condition monitoring for a customer’s critical assets, processes, and manufactured outputs. Our cloud and edge solutions are deployed by organizations to protect critical assets across a wide range of industries. Our mission is to deliver monitoring, expertise, and reliability engineering that help our customers detect problems early, prevent failures, and extend the life of critical assets.
Previous wording
We are focused on growing our position as a Software as a Service (SaaS) leader in predictive maintenance. As of June 30, 2025, the Company has approximately 610 active sensors connected to our MSAI Connect platform as compared to approximately 550 as of March 31, 2025, and 109 as of June 30, 2024. This represents an 11% increase quarter over quarter and a 460% increase year over year. We anticipate significant opportunities to drive increased recurring revenues with our solutions.
Current wording
We are focused on growing our position as a Software as a Service (“SaaS”) leader in predictive maintenance. As of September 30, 2025, the Company has approximately 665 active sensors connected to our cloud-based software platform, MSAI Connect (“MSAI Connect”), as compared to approximately 610 as of June 30, 2025, and 249 as of September 30, 2024. This represents an 9.2% increase quarter over quarter and a 167% increase year over year. We anticipate significant opportunities to drive increased recurring revenues with our solutions.
Previous wording
In the Distribution and Logistics market, we believe our solutions, through enhanced predictive maintenance, provide value by minimizing unplanned downtime to reduce labor and maintenance costs and increase throughput. During the quarter, subscription renewals for our global distributor launch customer commenced in June 2025 and cash was received for the subscriptions up-front for the 12-month subscription term. We have also expanded our applications with the global distributor customer during the quarter, launching pilot programs to monitor rooftop solar installations and critical power within a facility. As the global distributor’s operations become more automated, we have offered solutions to utilize continuous monitoring to multiply the impact of reliability and maintenance engineers, culminating in the launch of a pilot program in the global distributor’s last mile facilities, which are more numerous but more thinly staffed compared to the global distributor’s other facilities. During the quarter, we have also continued to refine our solutions and associated hardware with the global distributor to maximize the ROI realized, including utilizing less costly sensors with narrower field-of-view, where the application allows. Overall, we believe the relationship with our global distributor launch customer remains healthy and we made significant strides during the quarter to broaden the relationship and demonstrate the value of our solutions across a variety of applications. Our learnings from this launch customer are serving as a roadmap for additional customers in the Distribution and Logistics market.
Current wording
In the distribution and logistics market, we believe our solutions, through enhanced predictive maintenance, provide value by minimizing unplanned downtime to reduce labor and maintenance costs and increase throughput. During the quarter, we have also continued to refine our solutions and associated hardware with the global distributor to maximize the return on investment realized, including utilizing less costly sensors with narrower field-of-view, where the application allows. Overall, we believe the relationship with our global distributor launch customer remains healthy. We successfully implemented MSAI solutions in the United States with a global distribution leader, marking the first wave of North American deployments following multiple successful programs across Europe and the United Kingdom:
Previous wording
We have executed strategic cost optimization initiatives to align our expense base with current operations to enhance long-term profitability, preserve agility, and position MSAI for scalable and efficient growth. These initiatives include a reduction in employee headcount and professional fees, a consolidation of real estate, employee benefits realignment and vendor renegotiations.
Current wording
We have executed and continue to execute strategic cost optimization initiatives to align our expense base with current operations to enhance long-term profitability, preserve agility, and position MSAI for scalable and efficient growth. These initiatives include a reduction in employee headcount and professional fees, a consolidation of real estate, employee benefits realignment and vendor renegotiations. Specifically, in July 2025, the Company implemented a reduction in force impacting 10 employees across various departments. The Company incurred approximately $65 thousand of expense, primarily related to severance payments recorded in Sales, general and administrative on the Condensed Consolidated Statements of Operations for the three month period ended September 30, 2025.
Previous wording
Revenue: Revenue for the three months ended June 30, 2025 was $1.4 million, compared to $2.1 million for the three months ended June 30, 2024. The decrease in revenue is primarily attributable to reduced stand-alone hardware sales, in line with our strategic initiative of transitioning away from a hardware provider to a solutions provider. Software revenue grew 37% to $0.4 million as we continued to focus on growing our SaaS business. Revenue streams from each of our products and services are summarized below for the three months ended June 30, 2025 and 2024.
Current wording
Revenue: Revenue for the three months ended September 30, 2025 was $1.6 million, compared to $1.6 million for the three months ended September 30, 2024. The decrease in revenue is primarily attributable to reduced stand-alone hardware sales, which was offset by an increase in software revenues of $0.3 million, or 114% of software revenue in line with our strategic initiative of transitioning away from a hardware provider to a solutions provider by focusing on growing our SaaS business. Revenue streams from each of our products and services are summarized below for the three months ended September 30, 2025 and 2024.
Previous wording
*Cost of Goods Sold:*Cost of goods sold for the six months ended June 30, 2025 was $1.5 million, compared to $1.7 million for the six months ended June 30, 2024. The decrease in cost of goods sold was attributable to a decrease in the quantity of sensor hardware sold as well as a change in product mix.
Current wording
Cost of Goods Sold: Cost of goods sold for the three months ended September 30, 2025 was $0.6 million, compared to $0.5 million for the three months ended September 30, 2024. The decrease in cost of goods sold was attributable to a decrease in the quantity of sensor hardware sold as well as a change in product mix.
Previous wording
Selling, General and Administrative Expense: Selling, general and administrative expense for the six months ended June 30, 2025 was $7.0 million, compared to $6.0 million for the six months ended June 30, 2024. The increase in selling, general and administrative expenses was primarily related to increased payroll expenses of $1.2 million and increased professional fees of $0.1 million, which were partially offset by a reduction of $0.3 million in other selling, general, and administrative expenses.
Current wording
Selling, General and Administrative Expense: Selling, general and administrative expense for the three months ended September 30, 2025 was $2.2 million, compared to $6.1 million for the three months ended September 30, 2024. The decrease in selling, general and administrative expenses was primarily due to a reduction of professional fees of $2.7 million driven by the company reevaluating its professional services vendor relationships and scope of outsourced work, as well as a reduction in payroll expenses of $0.6 million primarily driven by a reduction of force in July 2025.
Previous wording
*Share-Based Compensation Expense:*Share-based compensation expense for the three months ended June 30, 2025 was $0.4 million, compared to $3.3 million for the three months ended June 30, 2024. The decrease in share-based compensation expense is primarily related to 1,382,909 vested restricted stock units granted during the three months ended June 30, 2024 to certain employees upon the effectiveness of the Form S-8 related to the Business Combination.
Current wording
*Share-Based Compensation Expense:*Share-based compensation expense for the three months ended September 30, 2025 was $0.2 million, compared to $0.0 million for the three months ended September 30, 2024. The increase in share-based compensation expense is primarily related to the recognition of expense over the requisite service period related to awards granted throughout 2025.
Previous wording
Other expense (income), net: Other expense (income), net for the three months ended June 30, 2025 was $0.0 million as compared to $1.0 million for the three months ended June 30, 2024. The decrease was primarily associated with the Company’s ELOC. During the three months ended June 30, 2024, the Company incurred a fee to enter into the ELOC arrangement of $0.5 million along with a make-whole obligation which was subsequently remeasured based on the stock price as of June 30, 2024, incurring a $0.2 million loss.
Current wording
Other expense (income), net: Other expense (income), net for the three months ended September 30, 2025 was $0.0 million as compared to ($0.1) million for the three months ended September 30, 2024. The decrease was primarily associated with the Company’s ELOC. During the three months ended September 30, 2024 the Company’s make-whole obligation under the ELOC was remeasured, resulting in a $0.1 gain.
Previous wording
*Revenue:*Revenue for the six months ended June 30, 2025 was $2.6 million, compared to $4.4 million for the six months ended June 30, 2024. The decrease in revenue is primarily attributable to reduced stand-alone hardware sales, in line with our strategic initiative of transitioning away from a hardware provider to a solutions provider. Software revenue grew 32% to $0.7 million as the Company continues to focus on growing our SaaS business. Revenue streams from each of our products and services are summarized below for the six months ended June 30, 2025 and 2024.
Current wording
*Revenue:*Revenue for the nine months ended September 30, 2025 was $4.1 million, compared to $6.0 million for the nine months ended September 30, 2024. The decrease in revenue is primarily attributable to reduced stand-alone hardware sales, in line with our strategic initiative of transitioning away from a hardware provider to a solutions provider. Software revenue grew 50% to $1.2 million as the Company continues to focus on growing our SaaS business. Revenue streams from each of our products and services are summarized below for the nine months ended September 30, 2025 and 2024.
Previous wording
*Cost of Goods Sold:*Cost of goods sold for the three months ended June 30, 2025 was $1.1 million, compared to $0.5 million for the three months ended June 30, 2024. The increase in the cost of goods sold was primarily attributable to a shift in product-mix along with the wholesale clearance of certain legacy hand-held sensors during the three months ended June 30, 2025, resulting in a net loss of $0.2 million on the transactions.
Current wording
*Cost of Goods Sold:*Cost of goods sold for the nine months ended September 30, 2025 was $2.1 million, compared to $2.2 million for the nine months ended September 30, 2024. The decrease in cost of goods sold was attributable to a decrease in the quantity of sensor hardware sold as well as a change in product mix.
Previous wording
Selling, General and Administrative Expense: Selling, general and administrative expense for the three months ended June 30, 2025 was $2.9 million, compared to $2.8 million for the three months ended June 30, 2024. The increase in selling, general and administrative expenses was primarily related to an increase of $0.5 million of payroll expense, partially offset by a decrease in professional fees of $0.5 million.
Current wording
Selling, General and Administrative Expense: Selling, general and administrative expense for the nine months ended September 30, 2025 was $9.2 million, compared to $12.1 million for the nine months ended September 30, 2024. The decrease in selling, general and administrative expenses was primarily related to decreased professional services fees of $2.5 million driven by the Company reevaluating its professional services vendor relationships and scope of outsourced work.
Previous wording
*Share-Based Compensation Expense:*Share-based compensation expense for the six months ended June 30, 2025 was $1.3 million, compared to $3.3 million for the six months ended June 30, 2024. The decrease in share-based compensation expense was primarily related to 1,382,909 vested restricted stock units granted during the six months ended June 30, 2024 to certain employees upon the effectiveness of the Form S-8 related to the Business Combination.
Current wording
*Share-Based Compensation Expense:*Share-based compensation expense for the nine months ended September 30, 2025 was $1.5 million, compared to $3.4 million for the nine months ended September 30, 2024. The decrease in share-based compensation expense was primarily related to 1,382,909 vested restricted stock units granted during the nine months ended September 30, 2024 to certain employees. Awards granted throughout 2025 recognize expense over the requisite service period related to awards.
Previous wording
*Change in fair value of convertible notes:*There was no recorded loss (gain) in fair value of convertible notes for the six months ended June 30, 2025. The decrease in loss (gain) in fair value of convertible notes was the result of these notes being converted in fiscal year 2024.
Current wording
*Change in fair value of convertible notes:*There was no recorded loss (gain) in fair value of convertible notes for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The decrease in loss (gain) in fair value of convertible notes was the result of these notes being converted in fiscal year 2024.
Previous wording
Loss on financing transaction: There was no recorded loss on financing transaction for the three months ended June 30, 2025. The decrease in loss on financing transaction was the result of the Financing Notes being converted to equity in fiscal year 2024.
Current wording
Loss on financing transaction: There was no recorded loss on financing transaction for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The decrease in loss on financing transaction was the result of the Financing Notes being converted to equity in fiscal year 2024.
Previous wording
Other expense (income), net: Other expense (income), net for the six months ended June 30, 2025 was ($0.2) million as compared to $1.0 million for the six months ended June 30, 2024. The change is primarily associated with the Company’s ELOC. During the six months ended June 30, 2025, the Company was notified by B.Riley that the ELOC make-whole obligation was resolved resulting in a gain of $0.2 million. During the six months ended June 30, 2024, the Company incurred a fee to enter into the ELOC arrangement of $0.5 million along with a make-whole obligation which was remeasured resulting in a $0.2 million loss based on the stock price as of June 30, 2024.
Current wording
Other expense (income), net: Other expense (income), net for the nine months ended September 30, 2025 was $0.9 million as compared to ($0.2) million for the nine months ended September 30, 2024. The change is primarily associated with the Company’s ELOC. During the nine months ended September 30, 2025, the Company was notified by B.Riley that the ELOC make-whole obligation was resolved resulting in a gain of $0.2 million. During the nine months ended September 30, 2024, the Company incurred a fee to enter into the ELOC arrangement of $0.5 million along with a make-whole obligation which was remeasured resulting in a $0.3 million loss based on the stock price as of September 30, 2024.
Previous wording
We incurred losses for the three and six months ended June 30, 2025. We have historically funded our operations with internally generated cash flows, equity financings, lines of credit, debt, convertible notes, and promissory notes with shareholders and related parties.
Current wording
We incurred losses for the three and nine months ended September 30, 2025. We have historically funded our operations with internally generated cash flows, equity financings, lines of credit, debt, convertible notes, and promissory notes with shareholders and related parties.
Previous wording
We will 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 or 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, including the Sales Agreement and the Purchase Agreement. In order to stay on 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 the Company’s control. There is no assurance that the Company will be successful in implementing their 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 shareholders 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.
Current wording
We may require additional capital in order to execute on our business plan and to fund our operations or to respond to technological advancements, competitive dynamics or 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, including the Sales Agreement (as defined below) and the Purchase Agreement (as defined below). In order to stay on 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 the Company’s control. There is no assurance that the Company will be successful in implementing its 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 shareholders 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.
Previous wording
As noted in the Company’s condensed consolidated financial statements, there is substantial doubt as to our ability to fund our planned operations for the next twelve months and to continue to operate as a going concern. We have assessed our ability to continue as a going concern, and, based on our need to raise additional capital to finance our future operations, recurring losses from operations incurred since inception, and expectation of continuing operating losses for the foreseeable future, we have concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that these condensed consolidated financial statements are issued.
Current wording
As noted in the Company’s condensed consolidated financial statements, there is substantial doubt as to our ability to fund our planned operations for the next twelve months and to continue to operate as a going concern. We have assessed our ability to continue as a going concern, and, based on uncertainty related to obtaining shareholder approval of the Purchase Agreement (as defined below) to finance our future operations, recurring losses from operations incurred since inception, and expectation of continuing operating losses for the foreseeable future, we have concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that these condensed consolidated financial statements are issued.
Previous wording
On April 16, 2024, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B Riley”). Pursuant to the Purchase Agreement, we have the right, but not the obligation, to sell to B. Riley up to $25.0 million worth of Common Stock over the term of the Purchase Agreement, beginning only after certain conditions set forth in the Purchase Agreement have been satisfied, including that an amendment to the registration statement registering the Purchase Shares for resale shall have been declared effective under the Securities Act of 1933, as amended. During the three months ended June 30, 2025 and 2024, the Company utilized the B. Riley Committed Equity Facility to sell a total of 0 and 23,999 shares of Common Stock for cash proceeds totaling $0 and $58 thousand, respectively. During the six months ended June 30, 2025 and 2024, the Company utilized the B. Riley Committed Equity Facility to sell a total of 1,791,732 and 23,999 shares of Common Stock for cash proceeds totaling $4.7 million and $58 thousand respectively.
Current wording
On April 16, 2024, we entered into a common stock purchase agreement (the “Purchase Agreement”) with B. Riley. Pursuant to the Purchase Agreement, we have the right, but not the obligation, to sell to B. Riley up to $25.0 million worth of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) (such shares when issued, the “Purchase Shares”) over the term of the Purchase Agreement, beginning only after certain conditions set forth in the Purchase Agreement have been satisfied, including that an amendment to the registration statement registering the Purchase Shares for resale shall have been declared effective under the Securities Act of 1933, as amended. During the three months ended September 30, 2025 and 2024, the Company did not utilize the ELOC to sell shares. During the nine months ended September 30, 2025 and 2024, the Company utilized the ELOC to sell a total of 1,791,732 and 23,999 shares of Common Stock for cash proceeds totaling $4.7 million and $58 thousand, respectively.
Previous wording
On March 28, 2025, we entered into the Sales Agreement with B. Riley Securities providing for the sale of up to $8.6 million as set forth in the Sales Agreement. B. Riley Securities is entitled to compensation at a fixed commission rate of the gross sales price of the shares of Common Stock sold pursuant to the Sales Agreement. During the three and six months ended June 30, 2025, we sold 109,389 shares under the Sales Agreement for cash proceeds totaling $82 thousand.
Current wording
On March 28, 2025, we entered into an at market issuance sales agreement (the “Sales Agreement”) with B. Riley Securities, Inc., as sales agent or principal (“B. Riley Securities”), pursuant to which the Company could offer and sell shares of the Company’s Common Stock, having an aggregate market value of up to $8,6 million from time to time through B. Riley Securities. B. Riley Securities is entitled to compensation at a fixed commission rate of the gross sales price of the shares of Common Stock sold pursuant to the Sales Agreement. During the three months ended September 30, 2025, we sold 41,683 shares under the Sales Agreement for cash proceeds totaling $33. During the nine months ended September 30, 2025, we sold 151,072 shares under the Sales Agreement for cash proceeds totaling $116. On November 4, 2025, the Company filed a prospectus supplement to reduce the amount available under the Sales Agreement to an aggregate market value of up to $50.
Previous wording
Net cash used in investing activities was $0.9 million for the six months ended June 30, 2025, a decrease of $0.2 million as compared to $1.1 million of net cash used in investing activities for the six months ended June 30, 2024. The decrease is primarily related to a decrease in cash paid for capital expenditures.
Current wording
Net cash used in investing activities was $1.2 million for the nine months ended September 30, 2025, a decrease of $0.4 million as compared to $1.6 million of net cash used in investing activities for the nine months ended September 30, 2024. The decrease is primarily related to a decrease in cash paid for capital expenditures.
Previous wording
Net cash provided by financing activities was $3.7 million for the six months ended June 30, 2025, an increase of $3.7 million as compared to $0.0 million of net cash provided by financing activities for the three months ended June 30, 2024. The increase in net cash provided by financing activities is primarily attributable to $4.8 million in proceeds from stock sales during the six months ended June 30, 2025, offset by $0.8 million of tax payments associated with share-based compensation transactions.
Current wording
Net cash provided by financing activities was $3.7 million for the nine months ended September 30, 2025, a decrease of $17.9 million as compared to $21.6 million of net cash provided by financing activities for the nine months ended September 30, 2024. The decrease in net cash provided by financing activities is primarily attributable to $22.8 million in net proceeds from stock sales during the nine months ended September 30, 2024, as compared to $4.8 million in proceeds from stock sales during the nine months ended September 30, 2025.
Previous wording
Our principal commitments consist of lease obligations for our corporate office and production facility. The net present value of operating lease liabilities as of June 30, 2025 is $0.1 million. The net present value of operating lease liabilities as of December 31, 2024 is $0.1 million.
Current wording
Our principal commitments consist of lease obligations for our corporate office and production facility. The net present value of operating lease liabilities as of September 30, 2025 is $0.0 million. The net present value of operating lease liabilities as of December 31, 2024 is $0.1 million.
Previous wording
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.
Current wording
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
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Net cash used in operating activities was $5.8 million for the nine months ended September 30, 2025, a decrease of $6.7 million as compared to $12.5 million of net cash used by operating activities for the nine months ended September 30, 2024. The decrease in net cash used in operating activities was primarily related to our strategic cost optimization initiatives to align our expense base with current operations to enhance long-term profitability, preserve agility, and position MSAI for scalable and efficient growth. These initiatives have included a reduction in employee headcount and professional fees, a consolidation of real estate, employee benefits realignment and vendor renegotiations.
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Loss on financing transaction: There was no recorded loss on financing transaction for the six months ended June 30, 2025. The decrease in loss on financing transaction was the result of the Financing Notes being converted to equity in fiscal year 2024.