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| FORWARD-LOOKING STATEMENTS | 3 | |
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| RISK FACTOR SUMMARY | 4 | |
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| PART I – FINANCIAL INFORMATION | 5 | |
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| | Item 1. Financial Statements. | 5 |
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| | Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 23 |
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| | Item 3. Quantitative and Qualitative Disclosures About Market Risk. | 34 |
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| | Item 4. Controls and Procedures. | 34 |
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| PART II – OTHER INFORMATION | 36 | |
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| | Item 1. Legal Proceedings | 36 |
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| | Item 1A. Risk Factors | 36 |
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| | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 68 |
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| | Item 3. Defaults Upon Senior Securities | 68 |
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| | Item 4. Mine Safety Disclosures | 68 |
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| | Item 5. Other Information | 68 |
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| | Item 6. Exhibits | 69 |
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| SIGNATURES | 71 | |
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i
SELECTED DEFINITIONS
As used in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024 (the “Quarterly Report”), unless the context otherwise requires, references to:
| ● | “Business Combination” means the transactions completed pursuant to the Business Combination Agreement, including the Merger. |
| ● | “Business Combination Agreement” means the Business Combination Agreement, dated as of December 5, 2022, as amended by Amendment No. 1, dated June 27, 2023, and Amendment No. 2, dated September 17, 2023, by and among Legacy SMAP, Merger Sub and Legacy ICI. |
| ● | “Closing” means the consummation of the Business Combination. |
| ● | “Financing” means the issuance and sale of the Financing Notes and Financing Warrants pursuant to the Subscription Agreement, dated December 1, 2023 between Legacy SMAP and the investors thereto. |
| ● | “Financing Notes” means the $6,805,000 in convertible promissory notes sold in the Financing in connection with the consummation of the Business Combination. |
| ● | “Financing Warrants” means the warrants to purchase 340,250 shares of Common Stock at an exercise price of $11.50 per share issued in the Financing in connection with the consummation of the Business Combination. |
| ● | “ICI Class A Common Stock” means shares of common stock, par value $0.001 per share, of ICI designated as “Class A Voting Common Stock” pursuant to ICI’s certificate of incorporation, as amended. For the avoidance of doubt, “ICI Class A Common Stock” includes the ICI Class A Common Stock issued in connection with the conversion of the ICI Convertible Notes immediately prior to the Closing. |
| ● | “ICI Class B Common Stocks” means shares of common stock, par value $0.001 per share, of ICI designated as “Class B Non-Voting Common Stock” pursuant to ICI’s certificate of incorporation, as amended, prior to the Business Combination. |
| ● | “ICI Common Stock” means, collectively, the ICI Class A Common Stock and the ICI Class B Common Stock prior to the Business Combination. |
| ● | “ICI Convertible Notes” means the convertible promissory notes issued by ICI on or after the date of the Business Combination Agreement and prior to the Closing, which had an aggregate principal amount of $2.925 million. |
| ● | “IPO” means Legacy SMAP’s initial public offering of SportsMap Units, consummated on October 21, 2021. |
| ● | “Legacy ICI” means MSAI Operating, Inc. (known as “Infrared Cameras Holdings, Inc.” prior to the Business Combination), a Delaware corporation, and, if the context requires, its consolidated subsidiaries. |
| ● | “Legacy SMAP” means SportsMap Tech Acquisition Corp., a Delaware corporation. |
| ● | “Merger” means the merger of Merger Sub with and into ICI, with ICI surviving as a wholly-owned subsidiary of Legacy SMAP. |
| ● | “Merger Sub” means ICH Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Legacy SMAP. |
| ● | “MSAI” means Legacy SMAP following the consummation of the Business Combination, who’s operations following the Business Combination are those of Legacy ICI. |
| ● | “MSAI Common Stock” or “Common Stock” means the common stock of MSAI, par value $0.0001 per share. |
| ● | “Private Placement” means issuance and sale of the Private Placement Units concurrently with the closing of the IPO. |
| ● | “Private Placement Units” means the 675,000 units sold in the Private Placement concurrently with the closing of the IPO, at $10.00 per unit. Each unit consisted of one share of SportsMap Common Stock and three-quarters of one Private Placement Warrant. |
| ● | “Private Placement Warrants” means the 506,250 private warrants originally included as part of the Private Placement Units. |
| ● | “Public Warrants” means the SportsMap Warrants originally included as part of the SportsMap Units. |
| ● | “SPAC Warrants” means the Public Warrants together with the Private Placement Warrants, and does not include the Financing Warrants. |
| ● | “SportsMap Common Stock” means the common stock of Legacy SMAP, par value $0.001 per share, prior to Closing. |
| ● | “SportsMap Units” means the 11,500,000 units issued in the IPO, each of which consisted of one share of SportsMap Common Stock and three-quarters of one Public Warrant. |
| ● | “Warrant Agreement” means the existing Warrant Agreement, dated October 18, 2021, between Continental Stock Transfer & Trust Company, as warrant agent, and Legacy SMAP, pursuant to which the SPAC Warrants were issued. |
Additionally, unless otherwise noted or the context otherwise requires, references to the “Company,” “we,” “us,” or “our” refer to the business of Legacy ICI prior to the consummation of the Business Combination and the business of MultiSensor AI Holdings, Inc. and its subsidiaries following the consummation of the Business Combination.
