MultiSensor AI Holdings, Inc.
For the period ended Mar 31, 2025. Filed May 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.
Mar 31, 2025 · Filed May 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 2024-09-30; filed 2024-11-12.
0001410578-24-001892
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0001558370-25-007573
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 105 previous paragraphs and 62 current paragraphs.
25 unchanged; 19 reworded; 16 added; 57 removed; 4 previous and 2 current paragraphs rearranged.
Tables are not compared: 8 previous and 4 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 (16)
Current report
We are focused on growing our position as a Software as a Service (SaaS) leader in predictive maintenance. As of March 31, 2025, the Company has approximately 550 active sensors connected to our MSAI Connect platform as compared to approximately 460 as of December 31, 2024, and 90 as of March 31, 2024. This represents a 19% increase quarter over quarter and a greater than 500% increase year over year. We anticipate significant opportunities to drive increased recurring revenues with our solutions.
Current report
In the Distribution and Logistics market, we believe our solutions, through enhanced predictive maintenance, provide value by minimizing unplanned downtime and reducing process waste. Our largest customer in the Distribution and Logistics market has achieved a greater than four times return on investment as of March 31, 2025 and a payback period of less than one year. We believe these results were a catalyst driving their subscription renewals, approximating $2.1 million, which unless canceled, are expected to be recognized over the twelve-month subscription period commencing in June 2025. Payment for the subscription renewals is expected to be received upfront in the second quarter of 2025 for the one-year subscription term.
Current report
In the Manufacturing market, our go-to market strategy centers on our early fire detection solution. A leading automaker and pilot customer has renewed its subscriptions, and another leading automaker has issued orders to pilot our early fire detection solution for electric vehicle batteries. Our insights from our early fire detection pilot program for electric vehicle batteries have facilitated the launch of additional early fire detection pilots with other leading manufacturers in the metals and mining, food and beverage, pulp and paper, and waste and recycling industries.
Current report
Recent Developments
Current report
On March 28, 2025, the Company entered into an at market issuance sales agreement with B. Riley Securities, Inc., as sales agent or principal, pursuant to which the Company may offer and sell shares of the Company’s common stock, par value $0.0001 per share having an aggregate market value of up to $8.625 million from time to time through B. Riley Securities.
Current report
Revenue: Revenue for the three months ended March 31, 2025 was $1.2 million, compared to $2.3 million for the three months ended March 31, 2024. The decrease in revenue was primarily attributable to a decrease in the quantity of sensor hardware sold. During the three months ended March 31, 2024, the Company sold approximately 450 thermal sensors to one of the Company’s launch customers. Software and Services revenue grew 26% and 213% to $0.2 million and $0.2 million, respectively as the Company continues to focus on growing our SaaS and related services businesses. Revenue streams from each of our products and services are summarized below for the three months ended March 31, 2025 and 2024.
Current report
Inventory Impairment: The decrease in inventory impairment was due to no impairment recognized during the three months ended March 31, 2025.
Current report
Selling, General and Administrative Expense: Selling, general and administrative expense for the three months ended March 31, 2025 was $4.1 million, compared to $3.2 million for the three months ended March 31, 2024. The increase in selling, general and administrative expenses was primarily related to increased payroll expenses of $0.7 million, increased professional fees of $0.6 million incurred primarily to facilitate the Company’s shelf registration statement in January 2025 and Sales Agreement in March 2025, which was offset by a reduction of $0.4 million in Other selling, general, and administrative expenses.
Current report
Loss on financing transaction: There was no recorded loss on financing transaction for the three months ended March 31, 2025. The decrease in Loss on financing transaction was the result of the Financing Notes being converted to equity in fiscal year 2024.
Current report
Other Income, net: There was no recorded Other income, net for the three months ended March 31, 2024 as compared to $0.2 million for the three months ended March 31, 2025. Other income, net increased due to the notification by B.Riley on January 8, 2025 that the ELOC make-whole obligation was resolved.
Current report
EBITDA and Adjusted EBITDA
Current report
EBITDA and Adjusted EBITDA
Current report
Equity Line of Credit
Current report
At the Market Sales Agreement
Current report
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 will be 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 March 31, 2025, we sold no shares under the Sales Agreement.
Current report
Net cash used in investing activities was $0.4 million for the three months ended March 31, 2025, a decrease of $0.2 million as compared to $0.6 million of net cash used in investing activities for the three months ended March 31, 2024. The decrease is primarily related to a decrease in cash paid for capital expenditures.
Removed paragraphs (57)
Previous report
(Amounts in thousands of U.S. dollars, except share data)
Previous report
Financing Transaction
Previous report
As part of our financing efforts in connection with the Business Combination, a number of purchasers (each, a “Financing Investor”) purchased from us an aggregate of $6,800 in convertible promissory notes in connection with the Closing (the “Financing Notes”). Of the $6,800 in Financing Notes, $1,300 were issued in exchange for cancellation of an equal amount of existing promissory notes of Legacy SMAP (rather than having such notes repaid at the Closing), $1,000 were rolled over from an existing related party promissory note of Legacy ICI (rather than having such note repaid at Closing), and $4,500 were cash proceeds to us.
Previous report
Each Financing Note will mature on the third anniversary of the closing of the Business Combination (the “Maturity Date”) and is convertible at any time at the Financing Investors’ option at a conversion price of $10.00 per share, subject to certain customary adjustments (such shares issuable upon conversion of Financing Notes, the “Conversion Shares”). Except with the consent of the holder of the applicable Financing Note (the “Holder”), we may not repay any principal amount of any Financing Note prior to the Maturity Date.
Previous report
We will pay interest on the aggregate unconverted and then outstanding principal amount of such notes at the rate of 9% per annum, payable (i) quarterly on January 1, April 1, July 1 and October 1, beginning April 1, 2024, (ii) on each date on which a Holder elects to convert any amount of Financing Notes and (iii) on the Maturity Date (each such date, an “Interest Payment Date”), in cash or, if the Holder elects to receive interest on the Financing Note in the form of shares of our Common Stock. If the Holder elects to receive interest in shares of our Common Stock, such interest shall be payable at a rate of 11% per annum in duly authorized, validly issued, fully paid and non-assessable shares of our Common Stock at a volume-weighted average price for the 30 consecutive trading days ending on the trading day immediately prior to the applicable Interest Payment Date (which shall not be less than $1.00) (such shares payable in lieu of cash interest, the “Interest Shares”). Failure to pay interest is deemed an event of default and the interest rate shall increase automatically to 15% per annum until repaid.
Previous report
As part of the Financing Transaction, Legacy SMAP also issued warrants (the “Financing Warrants”) to the Financing Investors to purchase an aggregate of 340,250 shares of our Common Stock (such shares issuable upon exercise of the Financing Warrants, the “Financing Warrant Shares”), at an exercise price of $11.50 per Financing Warrant Share. The Financing Warrants were allocated ratably among the Financing Investors in accordance with their respective investment amounts. The Financing Warrants are exercisable at any time before the fifth anniversary of the Closing. The Financing Warrants are not subject to any redemption provision and can be exercised for cash or on a cashless basis at the discretion of the holder. In addition, in order to induce the Financing Investors’ investments, certain holders of Legacy SMAP’s founder shares and stockholders of Legacy ICI transferred, and Legacy ICI issued prior to the Closing for exchange at the Exchange Ratio at Closing, an aggregate of 680,500 shares of our Common Stock to the Financing Investors at the Closing.
Previous report
During the nine months ended September 30, 2024, all of the $6,200 of the Financing Notes and $200 of the SMAP Related Party Promissory Notes were converted to equity, which resulted in a loss of $1,400 recorded under Loss on Financing Transaction within the Condensed Consolidated Statements of Operations.
Previous report
Financing Note Conversion Inducement and Notice of Conversion
Previous report
On March 27, 2024, and March 28, 2024, we entered into certain letter agreements effective June 30, 2024 (“Inducement Letters”) to induce certain holders of the Financing Notes with an aggregate principal balance of $3,300 to elect to convert their Financing Notes into shares of our Common Stock at a price of $5 per share pursuant to the terms of the Financing Notes. Pursuant to the letter agreement, the Company agreed to issue an additional share of Common Stock (each an “Inducement Share”) for each share of Common Stock to be issued pursuant to the converted principal balance of the Financing Notes. Pursuant to the terms of the Financing Notes and the Inducement Letters, we issued 335,818 shares of Common Stock related to the principal balance and accrued interest of the Financing Notes and 327,500 Inducement Shares for an aggregate of 663,318 shares of Common Stock.
Previous report
Amendment of Financing Notes
Previous report
On April 5, 2024, April 30, 2024, and May 10, 2024, we modified the terms of the remaining $3,530 in principal amount of the Financing Notes that were not the subject of the Inducement Letters described above (the “Remaining Notes”), among other things, to reduce the conversion price of the principal and interest to $5.00 per share of Common Stock. Two of those Remaining Notes (which hereafter are referred to as the “Related Party Notes”) are owned by David Gow, a director of the Company, and the Jill A Blashack Strahan Trust, which is deemed to be beneficially owned by Gary Strahan, Chief Executive Officer and a director of the Company. The aggregate principal balance of such Related Party Notes was $1,200. As an incentive to induce the holders of the Remaining Notes to convert such notes, and with the objective of meeting Nasdaq’s listing requirements specific to stockholders’ equity, we approved the reduction of the conversion price of the principal and interest to $5.00 per share of Common Stock and entered into Note Amendments with David Gow and the Jill A Blashack Strahan Trust (the “Note Amendments”). Thereafter David Gow and the Jill A Blashack Strahan Trust elected to convert the Remaining Notes into shares of Common Stock. We issued 243,048 shares of Common Stock pursuant to David Gow’s and the Jill A Blashack Strahan Trust’s respective elections to convert their Remaining Notes. The Note Amendments contain prohibitions against the direct or indirect transfer, pledge, sale or other disposal of the shares of Common Stock issued as a result of the conversion for a period of six months.
Previous report
Conversion of Loan Obligation
Previous report
As previously disclosed, we previously issued a $200 promissory note (the “Loan”) to David Gow, a director of the Company, in exchange for a $200 loan from David Gow to us. The Loan was non-interest bearing. On March 30, 2024, we entered into a subscription agreement (the “Subscription Agreement”) whereby we agreed to issue 60,060 shares of Common Stock to David Gow in exchange for the cancellation of such Loan obligation (at an effective price per share of $3.33). The Subscription Agreement contains prohibitions against the direct or indirect transfer, pledge, sale or other disposal of the shares of Common Stock issued as a result of the conversion for a period of six months.
Previous report
Note Conversions
Previous report
On April 5, 2024, we entered into letter agreements (“Conversion Agreements”), effective April 5, 2024, with certain holders of our outstanding Financing Notes having an aggregate principal balance of $1,650 pursuant to which the holders of such Financing Notes elected to convert their Financing Notes into shares of our Common Stock at a price of $10 per share pursuant to the terms of the Financing Notes. Pursuant to the Conversion Agreements, we agreed to issue an additional share of Common Stock (each an “Additional Share”) for each share of Common Stock to be issued pursuant to the converted principal balance of the Financing Notes. Pursuant to the terms of the Financing Notes and the Conversion Agreements, we issued 165,000 shares of Common Stock related to the principal balance of the Financing Notes, 165,000 Additional Shares, and 4,397 shares of Common Stock related to accrued interest on the Notes, for an aggregate of 334,397 shares of Common Stock.
Previous report
On April 30, 2024, we entered into additional Conversion Agreements, with certain holders of Financing Notes with an aggregate principal balance of $430 in order to amend the conversion price of the principal amount of the amended notes to $5.00 per share of Common Stock for each share of Common Stock. In connection with the note amendments, the holders of the amended notes elected to convert the amended notes into shares of Common Stock effective as of April 30, 2024. On April 30, 2024, we issued 87,411 shares of Common Stock pursuant to conversion of the amended notes.
Previous report
On May 10, 2024, we entered into an additional Conversion Agreement with a certain Financing Note holder with an aggregate principal balance of $250 in order to amend the conversion price of the principal amount of the amended note to $5.00 per share of Common Stock, and to amend the conversion price of the interest amount of such amended note to $10.00 per share of Common Stock. In connection with the note amendment, the holder of the amended Financing Note elected to convert the amended Financing Note into shares of Common Stock effective as of May 10, 2024. On May 10, 2024, we issued 50,882 shares of Common Stock pursuant to conversion of the amended note.
Previous report
In April 2024, we entered into a purchase agreement with B. Riley (the “Purchase Agreement”) pursuant to which we have the right, but not the obligation, to sell to B. Riley up to $25,000 of Common Stock (the “Purchase Shares”) and issued 171,821 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”). See “— Liquidity and Capital Resources — Equity Line of Credit.”
Previous report
Public Equity Offering
Previous report
On July 1, 2024, we consummated a public offering (the “Public Offering”) of 6,250,000 shares of Common Stock. In connection with the Public Offering, the underwriters were granted a 45-day option from the date of the prospectus to purchase up to 937,500 additional shares of Common Stock at the public offering price, less the underwriting discount, and on June 28, 2024, the underwriters fully exercised the over-allotment option. See “— Liquidity and Capital Resources —Public Equity Offering.”
Previous report
Private Placement Equity Offering
Previous report
On July 1, 2024, we issued and sold in a private placement (the “2024 Private Placement”) (i) 2,772,561 shares (the “Placement Shares”) and (ii) pre-funded warrants to purchase 6,602,439 shares of Common Stock (the “Pre-Funded Warrants”). See “— Liquidity and Capital Resources —Private Placement Equity Offering.”
Previous report
Revenue: The increase in revenue was attributable to an increase in units sold and a favorable shift in product mix.
Previous report
Inventory Impairment: The increase in inventory impairment was primarily related to thermal cameras specifically designed for medical applications that have been unable to be converted to alternative applications for which there is customer demand.
Previous report
Selling, General and Administrative Expense: The increase in selling, general and administrative expenses was attributable to an increase in professional and legal expenses associated with the cost of compliance as a public company.
Previous report
Loss (gain) on asset disposal: The increase in Loss (gain) on asset disposal, was primarily the result of the Company disposing of certain aged or inoperable assets, primarily in the Machinery and equipment category, resulting in a loss on disposal of $342 during the three-month period ended September 30, 2024.
Previous report
Other loss: Other loss increased due to the write-down of a deposit of $930.
Previous report
*Interest Expense and Interest Expense, related parties:*The decrease in interest expense was due to the settlement of all debt in prior quarters.
Previous report
Other (Income) Expenses, net: Other (Income) Expenses, net decreased due to a decrease in the fair value of the ELOC make-whole obligation.
Previous report
Income tax expense (benefit): Income tax expense (benefit) decreased due to a $354 tax benefit primarily driven by a tax refund due to the Company from the filing of the Legacy SMAP short period 2023 federal income tax return recorded during the three-month period ended September 30, 2024.
Previous report
Nine months ended September 30, 2024, Compared to Nine months ended September 30, 2023
Previous report
Revenue: Revenue increased due to an increase in units sold and a favorable shift in product mix, as we sold a higher proportion of higher-priced sensors which was partially offset by $2,880 in sales returns for the nine months ended September 30, 2024. The sales returns are related to a transaction with a long-standing customer who also is a launch customer for the MSAI Cloud suite of products. Under the terms of this transaction, certain biorisk-related devices sold to this customer in prior years were exchanged for devices appropriate for industrial use, when combined with the MSAI Edge and MSAI Cloud software. The customer paid cash as well as receiving credit for the returned devices. There were no sales returns for the nine months ended September 30, 2023.
Previous report
Inventory Impairment: The increase in inventory impairment was primarily related to a non-cash charge in the nine-month period ended September 30, 2024 related to thermal cameras specifically designed for medical applications that have been unable to be converted to alternative applications for which there is customer demand.
Previous report
Selling, General and Administrative Expense: The increase in selling, general and administrative expenses was attributable to an increase in professional and legal expenses associated with the cost of compliance as a public company.
Previous report
Share-Based Compensation Expense: The increase in share-based compensation was mainly attributable to the vesting and granting of restricted stock units during the nine months ended September 30, 2024.
Previous report
Loss (gain) on asset disposal: The increase in Loss (gain) on asset disposal, was primarily the result of the Company disposing of certain aged or inoperable assets, primarily in the Machinery and equipment category, resulting in a loss on disposal of $342 during the three-month period ended September 30, 2024.
Previous report
Other loss: Other loss increased due to the write-down of a deposit of $930 in the three-month period ended September 30, 2024.
Previous report
Interest Expense: The decrease in interest expense was due to the payoff of the B1 line of credit in December 2023.
Previous report
Loss (gain) in fair value of convertible notes: Loss (gain) in fair value of convertible notes includes the loss (gain) related to the fair value of the convertible notes issued in December 2022, January 2023, June 2023, July 2023, August 2023, September 2023 and Financing Notes in December 2023 in prior quarters.
Previous report
Gain in fair value of warrants liabilities: Gain in fair value of warrants liabilities includes the gain related to the fair value of the warrants issued in December 2023 as part of the Financing Transaction.
Showing the first 40 of 57 passages. Open the source sections for the rest.
Reworded paragraphs (19)
Previous wording
Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us” or “our” refer to Legacy ICI prior to the consummation of the Business Combination and the business of MultiSensor AI Holdings, Inc. after the consummation of the Business Combination.
Current wording
Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us” or “our” refer to Legacy ICI prior to the consummation of the Business Combination and the business of MSAI after the consummation of the Business Combination.
Previous wording
The following discussion and analysis of our financial condition and results of operations provides information that ICI’s 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, 2023 and in our unaudited condensed consolidated financial statements and notes thereto, included elsewhere in this Quarterly Report (collectively, the “consolidated financial statements”).
Current wording
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, 2024 and in our unaudited condensed consolidated financial statements and notes thereto, included elsewhere in this Quarterly Report (collectively, the “consolidated financial statements”).
Previous wording
The Company and its wholly owned subsidiaries provide turnkey 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 including distribution & logistics, manufacturing, utilities, and oil & gas. In tandem with these solutions, we provide various services for our customers including training, calibration, and repair.
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. In tandem with these solutions, we provide various services for our customers including training, calibration, and repair.
Previous wording
On December 19, 2023, SportsMap Tech Acquisition Corp. (“Legacy SMAP”), through its Merger Sub, and Infrared Cameras Holdings Inc (“Legacy ICI”) consummated the closing of the transactions contemplated by the Business Combination Agreement initially entered on December 5, 2022, by and among Legacy SMAP, Legacy ICI, and Merger Sub (the “Business Combination”). Pursuant to the terms of the Business Combination Agreement, a merger of Legacy SMAP and Legacy ICI was effected by the merger of Merger Sub with and into Legacy ICI, with Legacy ICI surviving the Business Combination as a wholly-owned subsidiary of Legacy SMAP. As a result of the consummation of the Business Combination, Legacy SMAP changed its name from “SportsMap Tech Acquisition Corp.” to “Infrared Cameras Holdings, Inc.” (“ICI”). In February 2024, ICI changed its name to “MultiSensor AI Holdings, Inc.” (“MSAI”).
Current wording
On December 19, 2023, SportsMap Tech Acquisition Corp. (“Legacy SMAP”), through its subsidiary (“Merger Sub”), and Infrared Cameras Holdings Inc (“Legacy ICI”) consummated the closing of the transactions contemplated by the Business Combination Agreement initially entered on December 5, 2022, by and among Legacy SMAP, Legacy ICI, and Merger Sub (the “Business Combination”). Pursuant to the terms of the Business Combination Agreement, a merger of Legacy SMAP and Legacy ICI was effected by the merger of Merger Sub with and into Legacy ICI, with Legacy ICI surviving the Business Combination as a wholly-owned subsidiary of Legacy SMAP. As a result of the consummation of the Business Combination, Legacy SMAP changed its name from “SportsMap Tech Acquisition Corp.” to “Infrared Cameras Holdings, Inc.” (“ICI”). In February 2024, ICI changed its name to “MultiSensor AI Holdings, Inc.” (“MSAI”).
Previous wording
The Business Combination was accounted for as a reverse acquisition. Under this method of accounting, Legacy SMAP is treated as the “acquired” company for accounting purposes. The net assets of Legacy SMAP were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination were those of Legacy ICI. Under this method of accounting, Legacy ICI has been determined to be the accounting acquirer, as it held the majority composition of the executive management and was greater in overall asset, revenue and employee size following the Business Combination. Legacy ICI will be the successor for financial reporting purposes, meaning that Legacy ICI’s financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC.
Current wording
The Business Combination was accounted for as a reverse acquisition. Under this method of accounting, Legacy SMAP is treated as the “acquired” company for accounting purposes. The net assets of Legacy SMAP were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination were those of Legacy ICI. Under this method of accounting, Legacy ICI has been determined to be the accounting acquirer, as it held the majority composition of the executive management and was greater in overall asset, revenue and employee size following the Business Combination.
Previous wording
*Cost of Goods Sold:*The increase in cost of goods sold was attributable to increased sales as well as a change in product mix.
Current wording
*Cost of Goods Sold:*Cost of goods sold for the three months ended March 31, 2025 was $0.5 million, compared to $1.2 million for the three months ended March 31, 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
*Share-Based Compensation Expense:*The decrease in share-based compensation was mainly attributable to a decrease in the granting of restricted stock units to our employees during the three months ended September 30, 2024.
Current wording
*Share-Based Compensation Expense:Share-based compensation expense for the three months ended March 31, 2025 was $1.0 million, compared to no recorded share-based compensation expense for the three months ended March 31, 2024. *The increase in share-based compensation was attributable to the granting of restricted stock units to our employees during the three months ended March 31, 2025.
Previous wording
Depreciation Expense: The increase in depreciation expense was primarily due to additions to property, plant, and equipment (primarily software).
Current wording
Depreciation: The increase in depreciation expense was mostly flat in March 31, 2025 compared to March 31, 2024. The slight increase in depreciation expense was primarily due to additions to property, plant, and equipment (primarily software), offset by lower depreciation expense from machinery, equipment, and demo due to disposals and sales which occurred during fiscal year 2024.
Previous wording
*Loss (gain) in fair value of convertible notes:*The decrease in Loss (gain) in fair value of convertible notes is the result of these notes being converted in prior quarters and as such there was no loss or gain for the three months ended September 30, 2024.
Current wording
*Change in fair value of convertible notes:*There was no recorded loss (gain) in fair value of convertible notes for the three months ended March 31, 2025. 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
Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin are supplemental non-GAAP financial measures used by management. We define EBITDA as net (loss) income before (i) interest expense (net interest income), (ii) depreciation and (iii) taxes. We define Adjusted EBITDA as EBITDA before share-based compensation expenses and other non-operating income or expenses or other non-cash items. We define EBITDA Margin as EBITDA divided by revenue and Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.
Current wording
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 (loss) income before (i) interest expense (net interest income), (ii) depreciation and (iii) taxes. We define Adjusted EBITDA as EBITDA before share-based compensation expenses, inventory impairment, loss on financing transaction, other income, net and loss (gain) on disposal of assets.
Previous wording
We believe EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin 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. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income 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.
Current wording
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. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income or any other measure as determined in accordance with GAAP. Our computations of EBITDA and Adjusted EBITDA may not be comparable
Previous wording
The following tables present a reconciliation of EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin to the GAAP financial measure of net income for each of the periods indicated (unaudited), in thousands:
Current wording
The following tables present a reconciliation of EBITDA and Adjusted EBITDA to the GAAP financial measure of net income for each of the periods indicated (unaudited), in thousands:
Previous wording
We incurred losses for the three and nine months ended September 30, 2024, in both cases due to negative net working capital excluding deferred transaction costs and other current assets that are not settled in cash, and an increase in investment in technology innovation and commercial capabilities compared to the prior year periods. We have historically funded our operations with internally generated cash flows, lines of credit with banks, convertible notes, and promissory notes with stockholders and related parties.
Current wording
We incurred losses for the three months ended March 31, 2025, due to negative net working capital excluding deferred transaction costs and other current assets that are not settled in cash, and investment in technology innovation and commercial capabilities. We have historically funded our operations with internally generated cash flows, equity financings, lines of credit with banks, 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. 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 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.
Current 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.
Previous wording
On April 16, 2024, we entered into a Purchase Agreement with B. Riley Principal Capital II. Pursuant to the Purchase Agreement, we have the right, but not the obligation, to sell to B. Riley Principal Capital II up to $25,000 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 the registration statement registering the Purchase Shares for resale (the “Registration Statement”) shall have been declared effective under the Securities Act of 1933, as amended. In accordance with the Purchase Agreement, on April 16, 2024, we issued shares of our Common Stock to B. Riley Principal Capital II as consideration for its commitment to purchase the Purchase Shares under the Purchase Agreement (the “Commitment Shares”). Under the terms of the Purchase Agreement, in certain circumstances, we may be required to pay B. Riley Principal Capital II up to $500,000 (or 2.0% of the total commitment value under the Purchase Agreement), in cash, as a “make-whole” payment to the extent the aggregate amount of cash proceeds, if any, received by B. Riley Principal Capital II from the resale of the Commitment Shares prior to certain times set forth in the Purchase Agreement, is less than $500,000, in exchange for B. Riley Principal Capital II returning to us for cancelation all of the Commitment Shares we originally issued to B. Riley Principal Capital II upon execution of the Purchase Agreement that were not previously resold.
Current 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 March 31, 2025, the Company utilized the B. Riley Committed Equity Facility to sell 1,791,732 shares of Common Stock for cash proceeds totaling $4.7 million.
Previous wording
Net cash used in operating activities was $12,510 for the nine months ended September 30, 2024, an increase of $10,990 in net cash used in operating activities as compared to $1,520 of net cash used in operating activities for the nine months ended September 30, 2023. The increase in net cash used in operating activities was primarily attributable to payments made to reduce our liabilities during the quarter, in an effort to improve our capital structure.
Current wording
Net cash used in operating activities was $3.2 million for the three months ended March 31, 2025, an increase of $3.7 million as compared to $0.5 million of net cash provided by operating activities for the three months ended March 31, 2024. The increase in net cash used in operating activities was primarily related to decreased customer receipts during the three months ended March 31, 2025.
Previous wording
Net cash provided by financing activities was $21,588 for the nine months ended September 30, 2024, an increase of $18,813 as compared to $2,775 of net cash provided by financing activities for the nine months ended September 30, 2023. The increase in net cash provided by financing activities is primarily attributable to $22,727 in equity proceeds from stock sales, offset by repayments of $622 and $575 of borrowings on the line of credit and related party promissory note.
Current wording
Net cash provided by financing activities was $4.0 million for the three months ended March 31, 2025, an increase of $4.6 million as compared to $0.6 million of net cash used in financing activities for the three months ended March 31, 2024. The increase in net cash provided by financing activities is primarily attributable to $4.7 million in proceeds from stock sales during the three months ended March 31, 2025.
Previous wording
The net present value of operating lease liabilities as of September 30, 2024, is $173. The net present value of operating lease liabilities for the years ended December 31, 2023 is $138.
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 March 31, 2025 is $0.1 million. The net present value of operating lease liabilities for the year ended December 31, 2024 is $0.1 million.
Previous wording
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), or (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. 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.
Current wording
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.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Three months ended March 31, 2025, Compared to Three months ended March 31, 2024
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The following table presents summary results of operations for the periods indicated, in thousands:
Previous report — wording carried elsewhere
Cost of Goods Sold: The increase in Cost of Goods sold was attributable to increased sales as well as a change in product mix.
Previous report — wording carried elsewhere
Depreciation Expense: The increase in depreciation expense was primarily due to additions to property, plant, and equipment (primarily software).
Previous report — wording carried elsewhere
Our principal commitments consist of lease obligations for our corporate office and production facility.