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$0.0001 per share (the “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 per share 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 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 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 us and certain investors signatory thereto, we issued warrants to purchase 340,250 shares of common stock at an exercise price of $11.50 per share (the “Financing Warrants”), in connection with our business combination. Under the terms of the Financing Warrants, and as a result of the Reverse Stock Split, the exercise price of the Financing Warrants was adjusted from $11.50 to $460.00 and 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 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 the 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, and 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.

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, three customers accounted for an aggregate of 77% of total net revenue, or $1,250, within oursingle operating segment. These customers individually represented 43% or $702,23% or $373 and 11% or $175 of total net revenue, respectively.

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

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:

The Company’s sales policy is not to accept returns of hardware once sold. As a result, there wasno sales return reserve as of March 31, 2026 and December 31, 2025.

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 12-48 months. The Company classifies these contract liabilities as either current or non-current liabilities based on the expected timing of recognition of related revenue. Current contract liabilities were $893 and $1,255 and non-current contract liabilities were $854 and $751 as of March 31, 2026 and December 31, 2025, respectively.

Note 5— Property, Plant and Equipment

The following table summarizes our property, plant and equipment, net:

Depreciation expense was $352 and $280 for the three months ended March 31, 2026, and 2025, respectively.

Note 6 — Other Current Assets

The following table summarizes other current assets:

Note 7 — Inventories

The following table summarizes inventories:

Note 8 — Accrued Expense

The following table summarizes accrued expenses:

Note 9 — Share-Based Compensation

Stock Options

During the three months ended March 31, 2026, no option awards were granted andno options were forfeited. As of March 31, 2026,7,634 option awards remained outstanding with a weighted average exercise price of $266.67. During the three-months ended March 31, 2025, no option awards were granted and 720 option awards were forfeited. As of March 31, 2025,22,735 option awards remained outstanding with a weighted average exercise price of $265.60.

Restricted Stock Units

During the three months ended March 31, 2026, the Company grantedno restricted stock units (“RSUs”). The Company’s RSUs are based on the fair value of the Company’s common stock on the dates of grant. During the three months ended March 31, 2025,40,016 RSUs were granted at a weighted average price of $68.00.

The RSUs granted in the three months ended March 31, 2025 primarily vestedone-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 $122 and $827 for the three months ended March 31, 2026 and March 31, 2025, respectively, under Share-based compensation expense on the Condensed Consolidated Statements of Operations. During the three months ended March 31, 2026 and March 31, 2025, the Company’s non-employee directors earned $60 and $80, respectively, in compensation for their service on the Company’s board of directors, which was recognized under Share-based compensation expense on the Condensed Consolidated Statements of Operations.

Note 10 — Shareholders’ Equity

Total authorized capital stock of the Company as of March 31, 2026, was 300,000,000 shares of common stock and 10,000,000 shares of preferred stock. As of March 31, 2026 and December 31, 2025, there were 2,012,293 and 2,007,613 shares of common stock issued and outstanding, respectively, andno shares of preferred stock issued or outstanding.

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 $25,000 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 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, $185 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 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 44,793 shares of common stock for cash proceeds totaling $4,657.

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 $60,000 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 $8,625 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.

Note 11 — Earnings per Share

The following table summarizes the computation of basic and diluted earnings per share:

The table above does not include the following potential anti-dilutive shares: (i) up to 215,625 shares of common stock upon exercise of the Company’s outstanding public warrants at an exercise price of $460.00 per share for cash, (ii) up to 12,657 shares of common stock issuable upon exercise of the Company’s outstanding private placement warrants at an exercise price of $460.00 per share, (iii) up to 8,507 shares of common stock upon exercise of the financing warrants at an exercise price of $460.00 per share for cash, (iv) up to 7,634 shares of common stock upon the exercise of Company’s options, (v)25,580 RSU awards issued yet unvested under the 2023 Incentive Award Plan as of March 31, 2026, (vi) up to 4,682,273.85 shares of common stock issuable upon exercise of the Company’s outstanding 2025 Warrants at an exercise price of $5.98, and (vii) up to 44,800 performance stock units committed via employment agreements but unissued as of March 31, 2026.

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 $27 for the three-month period ended March 31, 2025.

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 $33 and $8 for the three months ended March 31, 2026 and 2025, respectively. The Company maintains a valuation allowance on its deferred tax assets and intends to do so until there is sufficient evidence to support the reversal of all or some portion of this allowance.

For the three months ended March 31, 2026 and March 31, 2025, the Company’s effective income tax rates were (1.35)% and (0.17)%, respectively. The effective tax rates for the three months ended March 31, 2026 and March 31, 2025 are below the U.S. statutory tax rate of 21% primarily due to losses generated by the Company and the Company's valuation allowance. During 2024 and 2025, the Company determined that it experienced an ownership change as defined under Internal Revenue Code Section 382. The result of the ownership change is subjecting tax attributes to an annual limitation which includes the utilization of the Company’s net operating losses. The Company will continue to monitor ownership changes throughout future periods.

Note 15 — Segments and Geographical Information

The Company hasone reportable and operating segment, the manufacturing and distribution of sensor-based systems, software, and services. The Company holds 99% of its assets within the United States. The Company derives revenue primarily in the United States, Canada, European Union member states and the United Kingdom and manages the business activities on a consolidated basis. The following table summarizes revenue based upon the customers’ shipping addresses:

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:

See the condensed consolidated financial statements for other financial information regarding the Company’s operating segment.