MultiSensor AI Holdings, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. Table of Contents ​ ​ ​ Report of Independent Registered Public Accounting Firm (PCAOB ID: No. 410 ) 59 Report of Independent Registered Public Accounting Firm (PCAOB ID: No. 34 ) 60 Consolidated Balance Sheets 61 Consolidated Statements of Operations 62 Consolidated Statements of Changes in Shareholders’ Equity 63 Consolidated Statements of Cash Flows 64 Notes to the Consolidated Financial Statements 65 - 82 ​ ​ 58 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of MultiSensor AI Holdings, Inc. ​ Opinion on the Consolidated Financial Statements ​ We have audited the accompanying consolidated balance sheet of MultiSensor AI Holdings, Inc. (the "Company") as of December 31, 2025, and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of MultiSensor AI Holdings, Inc. as of December 31, 2025, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion ​ These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on the entity’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. ​ We have served as the Company's auditor since 2025. ​ /s/ WEAVER AND TIDWELL, L.L.P. ​ Austin, TX March 19, 2026 ​ 59 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ To the shareholders and the Board of Directors of MultiSensor AI Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of MultiSensor AI Holdings, Inc. (the "Company") as of December 31, 2024, the related consolidated statement of operations, statement of changes in shareholders' equity, and statement of cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Going Concern The 2024 financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the 2024 financial statements, the Company was developing its customer base and had not completed its efforts to establish a stabilized source of revenue sufficient to cover its expenses. The Company suffered net losses, negative cash flows from operations, and negative net working capital; which raised substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters were also described in the 2024 financial statements. The financial statements did not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Deloitte & Touche LLP ​ Houston, TX March 28, 2025 ​ We began serving as the Company’s auditor in 2021. In 2025 we became the predecessor auditor. ​ ​ ​ 60 Table of Contents MultiSensor AI Holdings, Inc. Consolidated Balance Sheets ( Amounts in thousands of U.S. dollars, except share and per share data ) ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2025 ​ 2024 Assets ​ ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 24,365 ​ $ 4,358 Trade accounts receivable, net of allowance for credit losses of $ 17 and $ 35 , respectively ​ 1,670 ​ 838 Inventories, current ​ 4,020 ​ 4,180 Other current assets ​ 826 ​ 1,140 Total current assets ​ $ 30,881 ​ $ 10,516 Property, plant and equipment, net ​ 4,085 ​ 3,963 Right-of-use assets, net ​ — ​ 134 Inventories, noncurrent ​ 379 ​ 865 Other noncurrent assets ​ 129 ​ — Total assets ​ $ 35,474 ​ $ 15,478 Liabilities and shareholders’ equity ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ Accounts payable ​ $ 291 ​ $ 825 Income taxes payable ​ — ​ 59 Accrued expense ​ 981 ​ 1,095 Contract liabilities ​ 1,255 ​ 483 Legacy SMAP promissory notes ​ — ​ 172 Right-of-use liabilities, current ​ — ​ 138 Other current liabilities ​ 121 ​ 245 Total current liabilities ​ ​ 2,648 ​ ​ 3,017 Contract liabilities, noncurrent ​ 751 ​ 83 Warrants ​ ​ 10 ​ ​ 10 Deferred tax liabilities, net ​ 33 ​ 80 Total liabilities ​ $ 3,442 ​ $ 3,190 Commitments and contingencies (Note 14) ​ ​ ​ ​ Shareholders’ equity ​ ​ ​ ​ Common stock, $ 0.0001 par value; 300,000,000 shares authorized as of December 31, 2025 and December 31, 2024, and 80,304,531 and 30,526,052 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively ​ 8 ​ 3 Additional paid-in capital ​ 98,363 ​ 66,911 Accumulated deficit ​ ( 66,339 ) ​ ( 54,626 ) Total shareholders’ equity ​ ​ 32,032 ​ ​ 12,288 Total liabilities and shareholders’ equity ​ $ 35,474 ​ $ 15,478 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 61 Table of Contents MultiSensor AI Holdings, Inc. Consolidated Statements of Operations ( Amounts in thousands of U.S. dollars, except share and per share data ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2025 ​ 2024 Revenue, net ​ ​ ​ $ 5,551 ​ ​ ​ $ 7,402 Cost of goods sold (exclusive of depreciation) ​ ​ 2,638 ​ ​ 2,582 Inventory impairment ​ 511 ​ 2,272 Operating expenses: ​ ​ ​ ​ Selling, general and administrative ​ 11,482 ​ 15,655 Share-based compensation expense ​ ​ 1,665 ​ ​ 3,382 Depreciation ​ 1,299 ​ 1,140 Loss (gain) on asset disposal ​ ​ ( 33 ) ​ ​ 322 Other loss ​ ​ — ​ ​ 930 Total operating expenses ​ ​ 14,413 ​ ​ 21,429 Operating loss ​ ​ ( 12,011 ) ​ ​ ( 18,881 ) Interest expense (income), net ​ ( 77 ) ​ 63 Change in fair value of convertible notes ​ — ​ 475 Change in fair value of warrants liabilities ​ ​ — ​ ​ ( 39 ) Loss on financing transaction ​ ​ — ​ ​ 1,553 Other expense (income), net ​ ( 189 ) ​ 1,027 Loss before income taxes ​ ​ ( 11,745 ) ​ ​ ( 21,960 ) Income tax expense (benefit) ​ ​ ( 32 ) ​ ​ ( 465 ) Net loss ​ $ ( 11,713 ) ​ $ ( 21,495 ) Weighted-average shares outstanding, basic and diluted ​ ​ ​ ​ Basic ​ 37,348,581 ​ 20,119,161 Diluted ​ 37,348,581 ​ 20,119,161 Net loss per share, basic and diluted ​ ​ ​ ​ Basic ​ $ ( 0.31 ) ​ $ ( 1.07 ) Diluted ​ ( 0.31 ) ​ ( 1.07 ) ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 62 Table of Contents MultiSensor AI Holdings, Inc. Consolidated Statements of Changes in Shareholders’ Equity ( Amounts in thousands of U.S. dollars, except share data ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ Additional ​ Retained ​ Shareholders’ ​ ​ Common Stock ​ Paid- In ​ Earnings ​ Equity ​ ​ ​ ​ Shares ​ ​ ​ Amount ​ ​ ​ Capital ​ ​ ​ (Deficit) ​ ​ ​ (Deficit) Balance at January 1, 2024 11,956,823 ​ $ 1 ​ $ 32,862 ​ $ ( 33,131 ) ​ $ ( 268 ) Net loss — ​ — ​ — ​ ( 21,495 ) ​ ( 21,495 ) Conversion of debt 1,442,163 ​ — ​ 7,751 ​ — ​ 7,751 Equity-based compensation transactions, net ​ 186,408 ​ ​ — ​ ​ 3,015 ​ ​ — ​ ​ 3,015 Equity Line of Credit commitment fee ​ 171,821 ​ ​ — ​ ​ 500 ​ ​ — ​ ​ 500 Issuance of common stock ​ 10,166,398 ​ ​ 1 ​ ​ 13,891 ​ ​ — ​ ​ 13,892 Issuance of Pre-funded warrants ​ — ​ ​ — ​ ​ 8,892 ​ ​ — ​ ​ 8,892 Conversion of Pre-funded warrants ​ 6,602,439 ​ ​ 1 ​ ​ — ​ ​ — ​ ​ 1 Balance at December 31, 2024 30,526,052 ​ $ 3 ​ $ 66,911 ​ $ ( 54,626 ) ​ $ 12,288 Net loss — ​ — ​ — ​ ( 11,713 ) ​ ( 11,713 ) Equity-based compensation transactions, net ​ 2,866,893 ​ ​ — ​ ​ 549 ​ ​ — ​ ​ 549 Issuance of common stock 40,767,630 ​ 4 ​ 23,158 ​ — ​ 23,162 Issuance of Pre-funded warrants ​ — ​ ​ — ​ ​ 7,709 ​ ​ — ​ ​ 7,709 Conversion of Pre-funded warrants ​ 6,100,000 ​ ​ 1 ​ ​ — ​ ​ — ​ ​ 1 Settlement of vendor liability 43,956 ​ — ​ 36 ​ — ​ 36 Balance at December 31, 2025 80,304,531 ​ $ 8 ​ $ 98,363 ​ $ ( 66,339 ) ​ $ 32,032 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 63 Table of Contents MultiSensor AI Holdings, Inc. Consolidated Statements of Cash Flows ( Amounts in thousands of U.S. dollars ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2025 ​ 2024 Operating Activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 11,713 ) ​ $ ( 21,495 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: ​ ​ ​ ​ Depreciation ​ 1,299 ​ 1,140 Inventory impairment ​ ​ 511 ​ ​ 2,272 Non-cash lease activity ​ 134 ​ 154 Bad debt expenses (recoveries) ​ ​ 15 ​ ​ 41 Deferred income tax (income) expense ​ ( 47 ) ​ 62 Share-based compensation ​ 1,665 ​ 3,382 Loss (gain) on disposal of equipment ​ ​ ( 33 ) ​ ​ 322 Loss on financing transaction ​ — ​ 1,553 Change in fair value of warrants liabilities ​ ​ — ​ ​ ( 39 ) Other (income) expense, net ​ ​ — ​ 1,430 Change in fair value of convertible notes ​ — ​ 475 Increase (decrease) in cash resulting from changes in: ​ ​ ​ ​ Trade accounts receivable ​ ( 847 ) ​ 1,561 Inventories ​ 135 ​ 256 Other current assets ​ 264 ​ 68 Other noncurrent assets ​ ​ ( 129 ) ​ ​ 3 Trade accounts payable ​ ( 263 ) ​ ( 1,479 ) Income taxes payable ​ ( 59 ) ​ ( 932 ) Contract liabilities ​ 772 ​ ( 1,461 ) Other current liabilities ​ ( 124 ) ​ 131 Right of use liabilities ​ ( 138 ) ​ ( 159 ) Accrued expenses ​ ( 130 ) ​ ( 2,814 ) Contract liabilities, noncurrent ​ ​ 668 ​ ​ ( 38 ) Net cash provided by (used in) operating activities ​ $ ( 8,020 ) ​ $ ( 15,567 ) Investing Activities: ​ ​ ​ ​ Capital expenditures ​ ( 1,631 ) ​ ( 2,667 ) Proceeds from sale of equipment ​ ​ 24 ​ ​ — Net cash provided by (used in) investing activities ​ $ ( 1,607 ) ​ $ ( 2,667 ) Financing Activities: ​ ​ ​ ​ Proceeds from issuances of common stock and Pre-funded warrants ​ ​ 30,872 ​ ​ 22,784 Tax payments associated with equity-based compensation transactions ​ ​ ( 1,116 ) ​ ​ — Repayments of promissory notes ​ ​ ( 172 ) ​ ​ ( 575 ) Repayments of lines of credit ​ ​ — ​ ​ ( 622 ) Net cash provided by (used in) financing activities ​ $ 29,584 ​ $ 21,587 Net increase/(decrease) in cash, cash equivalents, and restricted cash equivalents ​ 19,957 ​ 3,353 Cash, cash equivalents, and restricted cash equivalents beginning of period ​ 4,508 ​ 1,155 Cash, cash equivalents, and restricted cash equivalents end of the period ​ $ 24,465 ​ $ 4,508 ​ ​ ​ ​ ​ ​ ​ Reconciliation of cash, cash equivalents and restricted cash equivalents at end of period: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 24,365 ​ $ 4,358 Restricted cash equivalents included in other current assets ​ ​ 100 ​ ​ 150 Cash, cash equivalents, and restricted cash equivalents end of the period ​ $ 24,465 ​ $ 4,508 ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information: ​ ​ ​ ​ Interest paid ​ $ — ​ $ 63 Income tax paid, net of refunds received ​ 73 ​ 2,331 ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ Settlement of vendor liability with share issuance ​ $ 36 ​ $ — Sale of equipment ​ ​ 11 ​ ​ — Conversion of convertible notes ​ ​ — ​ ​ 6,170 Conversion of Legacy SMAP promissory loan into common stock ​ ​ — ​ ​ 200 Shares issued for Equity Line of Credit commitment fee ​ ​ — ​ ​ 500 Inducement shares from Financing Transaction ​ ​ — ​ ​ 1,381 ​ The accompanying notes are an integral part of these consolidated financial statements. 64 Table of Contents MultiSensor AI Holdings, Inc. Notes to Consolidated Financial Statements ( Dollars in thousands except per share amounts ) Note 1 — Organization and Business Operations MultiSensor AI Holdings, Inc. (“MSAI,” “the Company,” “we” or “our”) and its wholly owned subsidiaries builds and deploys integrated condition monitoring and early threat detection solutions through a unified edge-to-cloud software architecture, delivering AI-powered connected intelligence and analytics for asset reliability and performance. The Company’s platform integrates multiple sensing modalities such as thermal, visual and vibration to detect mechanical, electrical and other modes of asset failure, enabling organizations operating high-throughput, automation-rich and power-dense facilities to protect uptime, enhance safety and extend the useful life of their most critical assets. The Company is domiciled in Delaware and is a C corporation for tax purposes. Business Prior to the Business Combination Prior to the Business Combination, the Company, as a corporate entity, was SportsMap Tech Acquisition Corp. (“Legacy SMAP”), and the Company’s sponsor was SportsMap, LLC (the “Sponsor”). The registration statement for Legacy SMAP’s initial public offering (“IPO”) was declared effective on October 18, 2021 (the “Effective Date”). On October 21, 2021, Legacy SMAP consummated the IPO. Business Combination Agreement and Related Financing On December 19, 2023, Legacy SMAP, through its subsidiary ICH Merger Sub Inc. (“Merger Sub”), and Infrared Cameras Holdings Inc (“Legacy ICI”), all of them Delaware corporations, 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 Merger 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.”. In February 2024, Infrared Cameras Holdings, Inc changed its name to MultiSensor AI Holdings, Inc.” ​ Note 2 — Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying 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”) and regulations of the U.S. Securities and Exchange Commission (“SEC”). All intercompany transactions and balances have been eliminated upon consolidation. Reclassifications The Company has reclassified certain prior-year amounts to conform to the current-year presentation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results may differ materially from those estimates. Significant estimates reflected in the consolidated financial statements include, but are not limited to revenue recognition, inventory classification, useful life of fixed assets, allowance for credit losses, warranty reserves, amortization of internal-use software, share-based compensation, contingencies and income taxes. ​ ​ 65 Table of Contents Fair Value The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. A three-tiered hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value. This hierarchy requires that the Company use observable market data, when available, and minimize the use of unobservable inputs when determining fair value: ​ Level 1: observable inputs such as quoted prices in active markets; Level 2: inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3: unobservable inputs in which there is little or no market data, which requires that the Company develop its own assumptions. ​ Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The carrying values of cash and cash equivalents approximate their fair values due to the short-term nature of these instruments. Cash in the Company’s bank accounts may exceed federally insured limits. Restricted cash represents amounts that the Company is unable to access for operational purposes. ​ Hardware Warranties The Company provides a warranty for the repair or replacement of any defective hardware within one year of purchase. Estimated future warranty costs are accrued and charged to cost of goods sold in the period that the related revenue is recognized. These estimates are derived from historical data and trends of product reliability and costs of repairing and replacing defective products. ​ Accounts Receivable Accounts receivables are stated at net realizable value. The allowance for credit losses is determined through an evaluation of the aging of the Company’s accounts receivable balances, and considers such factors as the customer’s creditworthiness, the customer’s payment history and current economic conditions. A provision is recognized to bad debt expense and the allowance for credit losses for accounts determined to be uncollectible. Bad debt written-off and any recovery of bad debt write-off is applied to the allowance for credit losses. ​ Inventory The cost of inventory is determined using the weighted-average cost method and includes costs incurred to purchase and distribute inventory. Inventory is stated at the lower of cost and net realizable value (“NRV”). NRV is based upon an estimated average selling price reduced by the estimated costs of disposal. The determination of net realizable value involves certain judgments including estimating average selling prices based on recent sales. The Company reduces the value of its inventory for estimated obsolescence or lack of marketability by the difference between the cost of the affected inventory and the NRV. The valuation of inventory requires the Company to evaluate whether inventory held is in excess of future estimated market demand or has become technologically obsolete. The Company believes the risk of technological obsolescence of hardware is not significant, as device technology and functionality is stable and the devices that the Company has in its inventory are deployable with the Company’s integrated solutions offerings. The Company’s excess and obsolescence analysis is therefore focused on assessing the extent to which inventory is in excess of future estimated market demand. The determination of excess inventory is estimated based on a comparison of the quantity and cost of inventory on hand to the Company’s forecast of customer demand, which is dependent on various internal and external factors requiring the use of judgment. The Company evaluates the short-term and long-term classification of hardware and component inventory quarterly using the Company’s forecast of customer demand, which is dependent on various internal and external factors requiring the use of judgment. The Company classifies as short-term inventory as hardware or components that are expected to be sold in the subsequent twelve months. The Company classifies as long-term inventory as hardware or components that are not expected to be sold in the following twelve months but for which ones there is an active market and the Company has not identified any indicator of impairment. ​ 66 Table of Contents Property, Plant and Equipment Property, plant, and equipment is recorded at cost and is depreciated on the straight-line basis over its estimated useful life. Upon retirement or sale, the cost of assets disposed, and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operating income (loss). Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. All property, plant, and equipment is depreciated (to the extent of estimated salvage values) on the straight-line method based on estimated useful lives of the assets as follows: ​ ​ ​ ​ Assets ​ ​ ​ Estimated Useful Life Vehicles 5 years Machinery, equipment and demo 4 - 7 years Internal-use software ​ 5 years ​ Revenue Recognition Revenue is recognized net of any sales taxes collected from customers. Revenue is accounted for under ASC 606, Revenue from Contracts with Customers through the following steps: ● Identify the contract with a customer; ● Identify the performance obligations in the contract; ● Determine the transaction price; ● Allocate the transaction price to performance obligations in the contract; and ● Recognize revenue when or as the Company satisfies a performance obligation. ​ Hardware The Company’s sensor hardware covers a large range of the electromagnetic and mechanical spectrums, encompassing visible-light imagers, shortwave, midwave, and longwave infrared imagers, ultraviolet imagers, acoustic imagers, and tunable diode laser emitter-detector pairs for laser absorption spectrometry. The Company's infrared cameras are available in multiple configurations, from lower resolution models suitable for basic equipment monitoring to high-resolution cameras that provide detailed thermal images crucial for detecting subtle anomalies in complex machinery. Each camera model also offers different field of view options, enabling precise targeting and comprehensive coverage, essential for effective predictive maintenance. Revenue is recognized when control of the hardware is transferred to the customer. In accordance with the Company’s sales policy, the Company does not accept returns of hardware once sold after a ten day return window. Software MSAI Connect is an innovative platform that enables predictive asset reliability and process control in industrial environments, available both as cloud-based subscription service and as an on-premises deployment. MSAI Connect, when deployed and connected to the cloud, is a subscription service and is contracted for a period of 12 to 48 months . Subscription payments are generally collected in advance and revenue is recognized ratably over the subscription period. MSAI Connect, when deployed on-premises, is sold as both a term-based software license, which generally provides access to the software for a period of 12 months and as a perpetual license. Revenue for the software licenses are recognized upfront upon delivery of the software license. Services The Company offers installation services that cover on-site hardware mounting, sensor commissioning, and connectivity into the MSAI Connect platform. MSAI Solution Architects configure camera views, assists with establishing initial alerting thresholds and defining regions of interest so customers can quickly realize the full benefits of the MSAI Connect platform. The Company also performs 67 Table of Contents calibrations and maintenance on hardware. The Company previously performed training through August 2025 and inspections through September 2025. Services are recognized at the point in time when service is completed. Costs to Obtain Contracts The Company’s costs to obtain contracts, primarily commissions to its salesforce, are capitalized when the period of benefit is longer than a year. These costs are amortized over the requisite period of benefit. When the period of benefit is less than one year, the costs are expensed as incurred. Contracts with Multiple Performance Obligations Contracts with our customers may include various combinations of hardware, subscriptions and services. Our hardware has significant standalone functionalities and capabilities. Accordingly, hardware is distinct from our subscriptions and services as the customer can benefit from the product without these subscriptions or services and such subscriptions and services are separately identifiable within the contract. The amount of consideration we expect to receive in exchange for delivering on the order is allocated to each performance obligation based on its relative standalone selling price. We establish standalone selling price using the prices charged for a deliverable when sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price based on our pricing model. As our business offerings evolve over time, we may be required to modify our estimated standalone selling prices, and as a result the timing and classification of our revenue could be affected. Contract Liabilities Contract liabilities include advances from customers related to hardware, subscriptions, and services for which the Company has not yet recognized revenue. Software Development Costs Internal-use software includes software developed to deliver our cloud-based subscription offerings to our end-customers. These capitalized costs consist of internal compensation-related costs and external direct costs incurred during the application development stage. Capitalized software development costs is included in property, plant and equipment and is amortized on the straight-line method once development is complete. Impairment of Long-Lived Assets The Company reviews the carrying value of property, plant and equipment and other long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimate future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value. ​ Leases Leases are accounted under ASC 842, Leases . Some leases have the option to extend or terminate the lease and the Company recognizes these terms when it is reasonably certain that the option will be exercised. As a lessee, the Company determines if an arrangement is a lease at commencement. The Right-of-Use (“ROU”) lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments related to the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use incremental borrowing rates based on information available at the commencement date to determine the present value of our lease payments. We elected the practical expedient to exclude leases with terms of 12 months or less in which we are not reasonably certain that our renewal option will be exercised from the balance sheet and recognize expense on a straight-line basis over the lease term. ​ 68 Table of Contents Share-Based Compensation Compensation expense related to share-based transactions is measured at fair value on the grant date. The Company recognizes share-based compensation expense for awards with only service conditions on a straight-line basis over the requisite service period. The Company recognizes share-based compensation expense for awards with market conditions and awards with performance conditions on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company recognizes share-based compensation expense for awards with performance conditions when it is probable that the performance condition will be achieved. The Company accounts for forfeitures of all share-based payment awards when they occur. Income Taxes The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes (“ASC 740”). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company recognizes a net deferred tax asset or liability based on the tax effects of the differences between the book and tax basis of assets and liabilities. Enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from the change in the net deferred tax asset or liability between periods. The deferred tax asset is reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not some portion or all of a deferred tax asset will not be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. The Company does not have any uncertain tax positions that require recognition or measurement in the Company’s consolidated financial statements. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheets. ASC 740 requires the Company to reduce its deferred tax assets by a valuation allowance if, based on the weight of the available evidence, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of appropriate character during the periods in which those temporary differences become deductible. Management considers the weight of available evidence, both positive and negative, including the scheduled reversal of deferred tax assets and liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax planning strategies in making this assessment. To the extent the Company believes that it does not meet the test that recovery is more likely than not, it establishes a valuation allowance. To the extent that the Company establishes a valuation allowance or changes this allowance in a period, it adjusts the tax provision or tax benefit in the consolidated statement of operations. Management uses its best judgment in determining provisions or benefits for income taxes, and any valuation allowance recorded against previously established deferred tax assets. Loss Contingencies The Company accrues costs relating to litigation claims and other contingent matters when such liabilities become probable and reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Revisions to contingent liabilities are reflected in the consolidated statements of operations in the period in which different facts or information become known or circumstances change that affect the Company’s previous judgments with respect to the likelihood or amount of loss. Amounts paid upon the ultimate resolution of contingent liabilities may be materially different from previous estimates and could require adjustments to the estimated reserves to be recognized in the period such new information becomes known. In circumstances where the most likely outcome of a contingency can be reasonably estimated, the Company accrues a liability for that amount. Where the most likely outcome cannot be estimated, a range of potential losses is established and if no one amount in that range is more likely than others, the low end of the range is accrued. ​ 69 Table of Contents New Accounting Pronouncements Recently Adopted Accounting Standards In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The Company adopted ASU 2023-09 for the year ended December 31, 2025 on a prospective basis and accordingly, the Company’s income tax disclosures for the year 2024 have not been recast under this guidance. Recently Issued Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU 2024-03 that 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. 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 No. 2025-06 that amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The new standard is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The new standard may be applied prospectively, retrospectively, or via a modified prospective transition method. The Company is currently evaluating the impact of this new standard on our consolidated financial statements and related disclosures. Note 3 — Reverse Recapitalization On December 19, 2023, the Merger was accounted for as a reverse recapitalization under U.S. GAAP. Legacy ICI was the accounting acquirer and Legacy SMAP was the accounting acquiree for financial reporting purposes. Accordingly, for accounting purposes, the consolidated financial statements of the Company represent a continuation of the financial statements of Legacy ICI with the Merger being treated as the equivalent of ICI issuing stock for the net assets of Legacy SMAP, accompanied by a recapitalization. The net assets of Legacy SMAP are stated at historical cost, with no goodwill or other intangible assets recorded. Note 4 — Revenue The following table summarizes the Company’s revenue disaggregated by type of product and service: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Hardware ​ $ 3,214 ​ $ 5,694 Software ​ 1,884 ​ 1,003 Services ​ 453 ​ 705 Total revenue, net ​ $ 5,551 ​ $ 7,402 ​ The Company’s sales policy is not to accept returns of hardware once sold after a ten day return window. However, in the first quarter of 2024, the Company recorded a sales return of $ 2,880 , which was a reduction against revenue. This sales return was related to a transaction with a long-standing customer who also was a launch customer for the Company’s MSAI Connect platform. There is no sales return reserve as of December 31, 2025 and December 31, 2024. ​ Customer Concentration For the year ended December 31, 2025, one customer accounted for 36 %, or $ 2,008 of total net revenue, which is recorded under the entity’s one operating segment. For the year ended December 31, 2024, three customers accounted for 25 %, 11 % and 11 % or $ 1,840 , $ 817 and $ 799 of total net revenue, which is recorded under the entity’s one operating segment. ​ 70 Table of Contents 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 subscription term. 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 $ 1,255 and $ 483 and non-current contract liabilities were $ 751 and $ 83 as of December 31, 2025 and December 31, 2024, respectively. The change in contract liabilities is primarily related to additional subscription sales, offset by revenue recognition over the subscription term, which is generally 12 to 48 months. Accounts Receivables Allowance The following table summarizes the change in the accounts receivables allowance: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2025 ​ 2024 Beginning balance ​ ​ ​ $ 35 ​ ​ ​ $ 180 Write-off of accounts receivable ​ ( 33 ) ​ ( 186 ) Bad debt expense ​ 15 ​ 41 Ending balance ​ $ 17 ​ $ 35 ​ ​ Note 5 — Property, Plant and Equipment The following table summarizes the Company’s property, plant and equipment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2025 ​ 2024 Vehicles ​ ​ ​ $ — ​ ​ ​ $ 292 Machinery, equipment and demo ​ 306 ​ 342 Internal-use software ​ 6,800 ​ 5,422 Property, plant and equipment, gross ​ $ 7,106 ​ $ 6,056 Less: accumulated depreciation ​ ( 3,021 ) ​ ( 2,093 ) Property, plant and equipment, net ​ $ 4,085 ​ $ 3,963 ​ Depreciation expense was $ 1,299 and $ 1,140 for the years ended December 31, 2025, and 2024, respectively. During the year ended December 31, 2024, the Company disposed of certain aged or inoperable assets, primarily in the Machinery, equipment and demo category, resulting in a loss on disposal of $ 322 . The related loss is recorded under Loss (gain) on asset disposal within the Consolidated Statements of Operations. ​ Note 6 — Other Current Assets The following table summarizes the Company’s other current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2025 ​ 2024 Prepaid expenses ​ $ 399 ​ $ 158 Restricted cash equivalents ​ ​ 100 ​ ​ 150 Prepaid inventory purchases and deposits ​ ​ ​ ​ — ​ ​ ​ ​ 116 Other receivables ​ 327 ​ 716 Total other current assets ​ $ 826 ​ $ 1,140 ​ During the year ended December 31, 2025, the Company renegotiated its contract with the Company’s corporate credit card provider. As a result of this renegotiation, as of December 31, 2025, the Company is required to maintain $ 100 , a decrease of $ 50 from December 31, 2024, to collateralize the Company's corporate credit cards. These funds are held in a money market fund invested in government-backed securities. Although the investment qualifies as a cash equivalent, the funds are not available for general use. As a result, these funds are classified as restricted cash equivalents under the caption Other current assets on the Consolidated Balance Sheets. ​ 71 Table of Contents During the year ended December 31, 2024, the Company recorded a write-down of a deposit of $ 930 with a vendor. In the third quarter of 2024, the Company determined specific events, including the reorganization of the vendor, which indicated that the carrying amount of the deposit might not be recoverable or provide future economic benefit to the Company. The related loss is recorded under Other loss within the Consolidated Statements of Operations. ​ Note 7 — Inventories The following table summarizes inventories: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2025 ​ ​ ​ 2024 Hardware ​ $ 2,846 ​ $ 2,553 Parts and supplies ​ 1,174 ​ 1,627 Inventories, current ​ $ 4,020 ​ $ 4,180 Hardware ​ ​ 32 ​ ​ 248 Parts and supplies ​ 347 ​ 617 Inventories, noncurrent ​ $ 379 ​ $ 865 Total inventories ​ $ 4,399 ​ $ 5,045 ​ The Company recorded an inventory impairment of $ 511 and $ 2,272 for the year ended December 31, 2025 and 2024, respectively. The impairment recorded during the year ended December 31, 2025, was primarily related to drone-related sensor payloads and accessories. In November 2025, the Company’s management made the strategic decision to cease marketing, development, and sale of drone related product offerings. The impairment recorded during the year ended December 31, 2024 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. These impairments were recorded under Inventory impairment within the Consolidated Statements of Operations. ​ Note 8 — Accrued Expense The following table summarizes accrued expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Salaries, wages, and payroll taxes payable ​ $ 683 ​ $ 906 Professional fees ​ ​ 181 ​ ​ — Other ​ 117 ​ 189 Total accrued expense ​ $ 981 ​ $ 1,095 ​ ​ Note 9 — Debt Line of Credit In December 2023, the Company entered into a line of credit agreement with First Insurance Funding. During the year ended December 31, 2024, the Company fully paid off and closed the line of credit. There was no outstanding balance on the line of credit as of December 31, 2025 and December 31, 2024. Promissory Notes In 2022, the Company borrowed $ 200 under an unsecured promissory note with a related party to fund short-term working capital needs. In the year ended December 31, 2024, the Company repaid the promissory note in full. As a result, there was no outstanding balance as of December 31, 2025 and December 31, 2024. In June 2023, the Company borrowed $ 375 under an unsecured promissory note to fund short-term working capital needs, which was fully repaid in July 2024. As a result, there was no outstanding balance as of December 31, 2025 and December 31, 2024. 72 Table of Contents In December 2023, the Company borrowed $ 200 under an unsecured non-interest-bearing promissory note with Legacy SMAP to fund short-term working capital needs. In the year ended December 31, 2024, the promissory note was converted into shares of the Company’s Common Stock, at a price of $ 3.33 per share. As a result, there was no outstanding balance as of December 31, 2025 and December 31, 2024. In April, May and November 2023, Legacy SMAP secured operational working capital of $ 1,524 . The promissory notes were not interest bearing and were not convertible into any securities of the Company. The promissory notes were to be payable upon consummation of an initial business combination; provided that the Company has the right to extend the repayment date for up to 12 months thereafter in the event that the minimum cash transaction is not met or would not be met but for such extension. The minimum cash transaction proceeds were not met at the closing of the Business Combination, and as such, the Company elected to extend repayment of the promissory notes beyond closing. On December 19, 2023, in connection with the Business Combination, $ 1,324 of the promissory notes were exchanged for an equal amount of financing notes (the “Financing Notes”). As of December 31, 2024, the balance outstanding was $ 172 , which was repaid during the year ended December 31, 2025. As a result, there was no outstanding balance as of December 31, 2025. Financing Notes On December 19, 2023, in connection with the Business Combination, the Company issued the Financing Notes to several accredited private investors in an aggregate principal amount of $ 6,805 . During the year ended December 31, 2024, the Financing Notes were converted into shares of Common Stock The converted principal balance of the Financing Notes resulted in a loss of $ 1,381 recorded under Loss on Financing Transaction within the Consolidated Statements of Operations. ​ ​ Note 10 — Share-Based Compensation In October 2020, the Company implemented the 2020 Equity Incentive Plan, pursuant to which the Company may grant stock options to employees and non-employees. On December 19, 2023, the Business Combination triggered accelerated vesting of all outstanding stock options. In December 2023, the Company implemented the 2023 Incentive Award Plan, pursuant to which the Company may grant stock options, stock appreciation rights, and restricted stock to employees and non-employees. In June 2025, our shareholders approved an amendment to the Company’s 2023 Incentive Award Plan to increase the number of shares of Common Stock by 3,400,000 shares reserved for issuance pursuant to awards. Stock Options There was no expense related to stock options for the years ended December 31, 2025 and December 31, 2024. During the year ended December 31, 2025, no option awards were granted and 632,832 option awards were forfeited. As of December 31, 2025, 305,348 option awards remained outstanding with a weighted average exercise price of $ 6.67 . During the year ended December 31, 2024, no option awards were granted and 182,006 option awards were forfeited. As of December 31, 2024, 938,180 option awards remained outstanding with a weighted average exercise price of $ 6.62 . 73 Table of Contents Restricted Stock Units The following table summarizes the Company’s RSU activity during the year ended December 31, 2025 and 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Number ​ Average Grant ​ of shares Date Fair Value Non-vested at January 1, 2024 1,886,166 ​ $ — Granted 1,634,468 ​ 2.25 Vested ( 3,370,634 ) ​ 4.81 Forfeited — ​ — Expired — ​ — Non-vested at December 31, 2024 150,000 ​ $ 2.17 Granted ​ 2,875,400 ​ 1.23 Vested ​ ( 1,118,706 ) ​ 1.06 Forfeited ​ ( 619,615 ) ​ 1.58 Expired ​ — ​ — Non-vested at December 31, 2025 ​ 1,287,079 ​ $ 1.41 ​ During the years ended December 31, 2025 and 2024, the Company granted to employees 2,214,062 and 150,000 restricted stock units (“RSUs”) at a weighted average price of $ 1.41 and $ 2.17 , respectively. The grant price for RSU awards was the closing price of our Common Stock on the day immediately prior to the grant, consistent with the Company’s policies. RSUs to employees granted in the first quarter of 2025 primarily vested one -fourth of the award value on the date of grant, with the remaining restricted shares vesting in equal installments annually, while those granted in the second, third, and fourth quarters vest in equal installments annually on January 1st of each year beginning January 1, 2027. The Company recognized share-based compensation expense related to RSUs of $ 1,234 and $ 3,161 for the year ended December 31, 2025 and 2024, respectively under Share-based compensation expense on the Consolidated Statements of Operations. During the year ended December 31, 2025, 619,615 unvested RSUs were forfeited, resulting in reversal of $ 149 of Share-based compensation expense previously recognized on the Consolidated Statements of Operations. As of December 31, 2025, total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock units was $ 1,291 , which is expected to be recognized over the remaining weighted-average vesting period of 2.5 years . During the years ended December 31, 2025 and 2024, the Company’s non-employee directors earned $ 310 and $ 221 , respectively, in compensation for their service on the board, which resulted in the issuance of 542,882 shares granted under the 2023 Incentive Award Plan. These grants are recognized as Share-based compensation expense on the Consolidated Statements of Operations. During the year ended December 31, 2025, the Company agreed to settle sales commissions owed to certain members of our salesforce in RSUs, which resulted in the issuance of 118,456 shares granted under the 2023 Incentive Award Plan. The Company recorded $ 121 for these commissions recognized as Share-based compensation expense in the Consolidated Statements of Operations. In December 2023, the Company granted 1,886,166 Transaction RSU Awards to certain employees. These RSUs were assigned a fair value of $ 6.82 , which is based on the fair value of the Company’s common stock on the date of the grant. In April 2024, the Company granted 1,382,909 Transaction RSU Awards to certain employees upon the effectiveness of the Form S-8. These RSUs were assigned a fair value of $ 2.26 , which is based on the fair value of the Company’s common stock on the date of the grant. Each Transaction RSU Award was to be settled in twelve substantially equal monthly installments starting on the date following the first anniversary of the closing of the Business Combination. In December 2024, the Company settled 100,433 shares and withheld 171,990 shares to cover taxes. During the year ended December 31, 2025, the Company completed the remaining eleven monthly installments, settling 1,819,203 shares and withholding 1,177,449 shares to cover taxes. 74 Table of Contents Note 11 — Shareholders’ Equity Total authorized capital stock of the Company as of December 31, 2025, is 300,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value of $ 0.0001 per share. As of December 31, 2025, there were 80,304,531 shares of common stock issued and outstanding and no shares of preferred stock issued or outstanding. Equity Line of Credit On April 16, 2024, we entered into that certain 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 $ 25,000 worth of Common Stock (the “Purchase Shares”) over the term of the Purchase Agreement, beginning only after certain conditions set forth in the Purchase Agreement have been satisfied. In accordance with the Purchase Agreement, on April 16, 2024, we issued 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, in certain circumstances, we may be required to pay B. Riley up to $ 500 (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 from the resale of the Commitment Shares prior to certain times set forth in the Purchase Agreement, is less than $ 500 , in exchange for B. Riley returning to us for cancelation all of the Commitment Shares we originally issued to B. Riley upon execution of the Purchase Agreement that were not previously resold. 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 Consolidated Statements of Operations for the year ended December 31, 2025. Through December 31, 2025 and 2024, the Company utilized the B. Riley Committed Equity Facility to sell 1,791,732 and 23,999 shares of Common Stock for cash proceeds totaling $ 4,657 and $ 58 , respectively. Effective February 2, 2026, the Company terminated the Purchase Agreement. ​ At the Market Sales Agreement On March 28, 2025, we entered into an at market issuance sales agreement (the “2025 Sales Agreement”) with B. Riley Securities, Inc., as sales agent or principal (“B. Riley Securities”), as sales agent or principal, pursuant to which the Company could offer and sell shares of the Company’s Common Stock, having an aggregate market value of up to $ 8,625 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 2025 Sales Agreement. Through December 31, 2025, 151,072 shares were sold under the 2025 Sales Agreement for cash proceeds totaling $ 116 . Effective February 2, 2026, the Company terminated the 2025 Sales Agreement. ​ 2025 Private Placement ​ On October 24, 2025, the Company entered into a securities purchase agreement (the “2025 Purchase Agreement”) with 325 Capital, LLC (“325 Capital”) and certain other accredited investors signatory thereto (collectively with 325 Capital, the “Investors”), pursuant to which it agreed to sell to the Investors (i) 34,229,826 shares of Common Stock at a purchase price of $ 0.409 per share and (ii) the warrants (the “2025 Warrants”) to purchase up to 68,459,652 shares of Common Stock (collectively, the “2025 Private Placement”), with an exercise price of $ 0.409 per share, for an aggregate purchase price of $ 14,000 before deducting placement agent fees and offering expenses. ​ The 2025 Purchase Agreement and the 2025 Warrants provide that each Investor’s beneficial ownership of Common Stock, including after taking into account the full exercise of such Investor’s 2025 Warrant, shall in no event exceed 49.5 % of the issued and outstanding Common Stock (the “Maximum Ownership Limitation”). In the event that an Investor’s 2025 Warrant is not exercisable for shares of Common Stock due to the beneficial ownership of such Investor exceeding the Maximum Ownership Limitation, the applicable 2025 Warrant will be exercisable for shares of the Company’s Series A Convertible Preferred Stock, par value $ 0.0001 per share, that are convertible into an equivalent number of shares of Common Stock for which the 2025 Warrant is exercisable. The 2025 Warrants will expire seven years from the date of issuance. ​ At the initial closing of the Private Placement on October 30, 2025, the Company issued to the Investors 6,970,890 shares of Common Stock, and 2025 Warrants to purchase up to 13,941,780 shares of Common Stock, for gross proceeds of $ 2,851 before deducting placement agent fees and offering expenses. ​ 75 Table of Contents On December 23, 2025, the final closing occurred and the Company issued 27,258,936 shares of Common Stock and 2025 Warrants to purchase up to 54,517,872 shares of Common Stock to the Investors and the remaining $ 11,149 in gross proceeds before deducting placement agent fees and offering expenses. Total transaction costs paid to advisors, professional services, and other vendors related to the 2025 Private Placement were $ 1,418 and were recorded as a reduction of additional paid in capital. ​ 2025 Registered Direct Offering ​ On November 4, 2025, the Company entered into a common stock purchase agreement with a single institutional investor, pursuant to which the Company agreed to issue and sell (i) 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. The 2025 Registered Direct Offering closed on November 5, 2025, and resulted in gross proceeds to the Company of approximately $ 14,400 , before deducting advisory fees and other 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. Total transaction costs paid to advisors, professional services, and other vendors related to the Registered Direct Offering were $ 921 and were recorded as a reduction of additional paid in capital. ​ 2024 Public Equity Offering On July 1, 2024, we consummated a public offering (the “2024 Public Offering”) of 6,250,000 shares of Common Stock, which was sold at a public offering price of $ 1.60 per share. In connection with the 2024 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. Gross proceeds from the Public Offering were $ 11,500 before deducting underwriting discounts, commissions and offering expenses of $ 1,853 . 2024 Private Placement 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”) for aggregate gross proceeds of $ 15,000 before deducting placement agent fees and offering expenses. The purchase price of the Placement Shares was $ 1.60 per share, and the purchase price of each Pre-Funded Warrant was $ 1.5999 . The exercise price for each share of Common Stock issuable upon exercise of the Pre-Funded Warrants is $ 0.0001 per share. The Pre-Funded Warrants were not exercisable unless or until approved by the Company’s stockholders, are not subject to any redemption provision and, once exercisable, can be exercised for cash or on a cashless basis at the discretion of the holder. The Pre-Funded Warrants do not have any voting rights but have the right to participate in any dividends or distributions made by the Company. On June 27, 2024, we also entered into a securities purchase agreement (the “Securities Purchase Agreement”) with 325 Capital (collectively with its affiliates, the “Purchaser”), pursuant to which the Purchaser agreed to purchase all of the Placement Shares and Pre-Funded Warrants offered in the 2024 Private Placement. Pursuant to the Securities Purchase Agreement, we have made the following corporate governance changes, which are to remain in effect for so long as the Purchaser beneficially owns at least 10.0 % of the then-outstanding shares of Common Stock: ● our board of directors (the “Board”) appointed a representative of the Purchaser as a member of the Board and as a member of the Board’s compensation and nominating and corporate governance committees; ● the Board established a new finance committee consisting of four independent directors, with the purpose of improving the Company’s operational and financial performance, including evaluating the Company’s budgets, capital allocation practices and policies and review of strategic alternatives, and making recommendations to the Board on the foregoing matters; and ● the Board amended the Amended and Restated Bylaws of the Company to permit any single director to be able to call a special meeting of the Board and bring forward business at any regular or special meeting of the Board. 76 Table of Contents On September 24, 2024, the holders of the Pre-Funded Warrants exercised their warrants in exchange for Common Stock. ​ ​ Note 12 — Earnings (loss) per Share Basic earnings (loss) per share is computed in accordance with ASC 260, Earnings Per Share, by dividing the net loss attributable to holders of common stock by the weighted average shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income by the weighted average shares of common stock outstanding, including the dilutive effects of stock options. Since the Company was in a net loss position for the years ended 2025 and 2024, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been antidilutive. The following table summarizes the computation of basic and diluted earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Numerator: ​ ​ ​ ​ ​ Basic and diluted net loss attributable to common shareholders ​ $ ( 11,713 ) ​ $ ( 21,495 ) Denominator: ​ ​ ​ ​ ​ ​ Weighted average number of shares: ​ ​ ​ ​ Basic - common Stock ​ 37,348,581 ​ 20,119,161 Diluted - common Stock ​ 37,348,581 ​ 20,119,161 Basic net loss per share attributable to common shareholders ​ $ ( 0.31 ) ​ $ ( 1.07 ) Diluted net loss per share attributable to common shareholders ​ $ ( 0.31 ) ​ $ ( 1.07 ) ​ ​ The table above does not include the following potential anti-dilutive shares: (i) up to 8,625,000 shares of Common Stock that will be issuable upon exercise of the Company’s outstanding public warrants at an exercise price of $ 11.50 per share for cash, (ii) up to 506,250 shares of Common Stock that will be issuable upon exercise of the Company’s outstanding private warrants at an exercise price of $ 11.50 per share, (iii) up to 340,250 shares of Common Stock that will be issuable upon exercise of the financing warrants at an exercise price of $ 11.50 per share for cash, (iv) shares of Common Stock that will be issuable upon the exercise of Company’s outstanding stock options, (v) 1,795,200 performance stock units committed via employment agreements but unissued as of December 31, 2025, (vi) up to 68,459,652 shares of Common Stock that will be issuable upon the exercise of the 2025 Warrants at an exercise price of 0.409 per share for cash. ​ Note 13 — Related Party Transactions 2025 Private Placement Please refer to the discussion in Note 11 regarding 325 Capital’s participation in the 2025 Private Placement. 325 Capital and its affiliates beneficially own more than 5.0 % of the Company’s outstanding Common Stock. In addition, Daniel M. Friedberg, who is a Managing Member of 325 Capital, serves on the Company’s board of directors. ​ Related Party Promissory Notes Please refer to the discussion in Note 9 regarding promissory notes with related parties. Leases The Company leases its corporate office and production facility from a related party. As of July 29, 2025, the lessor no longer qualifies as a related party under the applicable accounting guidance, and payments made after that date do not constitute related party transactions. Total related party cash payments for the leases were $ 54 and $ 105 for the year ended December 31, 2025 and 2024, respectively. ​ 77 Table of Contents Note 14 — Commitments and Contingencies Contingencies Liabilities for loss contingencies arising from claims, earn-outs, 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 December 31, 2025, and 2024, the Company was not involved in any material claims or legal actions. ​ Note 15 — Income taxes Income (loss) before provision for or (benefit from) income taxes for the years ended December 31, 2025 and December 31, 2024 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Domestic ​ $ ( 11,745 ) ​ $ ( 21,960 ) Foreign ​ ​ — ​ — Total income (or loss) before income tax expense (or benefit) ​ $ ( 11,745 ) ​ $ ( 21,960 ) ​ The components of the provision (benefit) for income taxes for the years ended December 31, 2025 and 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Current: ​ ​ ​ ​ ​ ​ Federal ​ $ — ​ $ ( 446 ) State ​ 15 ​ ( 80 ) Total current ​ 15 ​ ( 526 ) Deferred: ​ ​ ​ ​ Federal ​ ( 47 ) ​ 61 State ​ — ​ — Total deferred ​ ( 47 ) ​ 61 Total income tax provision ​ $ ( 32 ) ​ $ ( 465 ) ​ 78 Table of Contents Significant deferred tax assets (liabilities) follow: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Deferred tax assets: ​ ​ ​ ​ ​ ​ Inventory impairment ​ $ 1,724 ​ $ 1,612 Accruals, other ​ 91 ​ 46 Reserves ​ 32 ​ 15 Interest carryforward ​ ​ — ​ ​ 30 Net operating losses ​ ​ 10,133 ​ ​ 7,109 Other ​ ​ 20 ​ ​ 255 Lease asset ​ — ​ 31 Financial instruments ​ 108 ​ 367 Intangibles & start-up costs ​ 245 ​ 265 UNICAP & inventoriable costs ​ ​ — ​ ​ 272 Book tax depreciation ​ ​ 305 ​ ​ — Valuation allowance ​ ​ ( 11,985 ) ​ ​ ( 9,350 ) Total deferred tax assets ​ $ 673 ​ 652 ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Prepaid expense ​ $ ( 106 ) ​ ( 62 ) Other (leases) ​ — ​ ( 30 ) Method change ​ ​ ( 600 ) ​ ​ — Book tax depreciation ​ — ​ ( 640 ) Total deferred tax liabilities ​ ( 706 ) ​ ( 732 ) ​ ​ ​ ​ ​ ​ ​ Deferred tax (liabilities) assets, net ​ $ ( 33 ) ​ $ ( 80 ) ​ The total provision (benefit) for income taxes for the years ended December 31, 2025 varies from the federal statutory rate as a result of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ Amount ​ Percent U.S. Federal statutory tax rate ​ $ ( 2,464 ) ​ 21.00 % State and local income taxes, net of federal income tax effect 1 ​ ​ 11 ​ ( 0.09 )% Changes in valuation allowances ​ ​ 2,513 ​ ( 21.42 )% Nontaxable or nondeductible items ​ ​ - ​ ​ Share-based payment awards ​ ​ ( 201 ) ​ 1.71 % Loss on transaction ​ ​ - ​ 0.00 % Other ​ ​ 109 ​ ( 0.93 )% Other adjustments ​ ​ - ​ ​ Amended return benefit ​ ​ - ​ 0.00 % Prior year deferred true-up ​ ​ - ​ 0.00 % Other adjustments ​ ​ - ​ 0.00 % Effective tax rate ​ $ ( 32 ) ​ 0.27 % 1 Texas is the state that contributes to the majority of the tax effect in this category. ​ 79 Table of Contents The total provision (benefit) for income taxes for the years ended December 31, 2024 varies from the federal statutory rate as a result of the following: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ 2024 Loss before income tax expense ​ $ ( 21,960 ) ​ Statutory tax rate ​ 21 % Income tax expense (benefit) ​ ( 4,612 ) ​ Increase (decrease) resulting from: ​ ​ ​ Permanent Differences ​ 1,681 ​ State Income Tax, net of FBOS ​ — ​ Movement in receivables ​ ​ ( 619 ) ​ Valuation Allowance ​ ​ 2,338 ​ Deferred Adjustment ​ 665 ​ Other, net ​ 82 ​ Income tax expense (benefit) ​ ( 465 ) ​ Current income tax expense (benefit) ​ ( 526 ) ​ Deferred income tax (benefit) ​ 61 ​ Total ​ $ ( 465 ) ​ ​ Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. As a result of the Company’s evaluation of both the positive and negative evidence, the Company determined it does not believe it is more likely than not that its deferred tax assets will be utilized in the foreseeable future and has recorded a valuation allowance. For the year ended December 31, 2025, the Company recognized an income tax benefit primarily driven by the change in valuation allowance. For the year ended December 31, 2024, the Company recognized an income tax benefit primarily driven by federal tax refunds. ​ On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and business interest expense limitation. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. As a result, the Company evaluated the legislation and determined it did not have a material effect on the provision for income taxes for the year ended December 31, 2025. ​ During 2025 and 2024, 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. In addition, as a result of the merger with Legacy SMAP, the Company acquired a federal net operating loss tax attribute. These net operating losses are fully limited under section 382. The Company will continue to monitor ownership changes throughout future periods. ​ Changes in the valuation allowance were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Balance, beginning of the year ​ $ 9,350 ​ $ 7,011 Additions to valuation allowance ​ ​ 2,635 ​ 2,339 Balance, end of the year ​ $ 11,985 ​ $ 9,350 ​ 80 Table of Contents The Company intends to continue maintaining a valuation allowance on its deferred tax assets until there is sufficient evidence to support reversal of all or some portion of these allowances. The Company reported gross U.S net operating loss carryforwards of $ 44,875 and state net operating loss carryforward of $ 57,333 . For federal income tax purposes the $ 44,875 of net operating losses will not expire. For state income tax purposes, the Company has $ 51,294 of net operating losses which are subject to expiration. The carryforward life for the state net operating losses is dependent on the rules for each jurisdiction and therefore the state losses are subject to expiration with the earliest year being 2032 and the latest year being 2045. The Company experienced an ownership change on July 1, 2024 and believes an ownership change occurred in 2025, however, the exact date of such ownership change has not yet been determined. As a result both federal and state net operating losses before that date are subject to 382 limitations. The following table summarizes cash for income taxes paid: ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ 2025 Federal ​ $ 36 State ​ ​ ​ California ​ ​ 7 Pennsylvania ​ ​ 2 Tennessee ​ ​ 12 Texas ​ ​ 10 All other state ​ ​ 6 Income taxes, net of amounts refunded ​ $ 73 ​ The Company recognizes interest and penalties related to unrecognized tax benefits within Income tax expense (benefit) in the Consolidated Statement of Operations. There were no unrecognized tax benefits or activity for the years ended December 31, 2025 and 2024. The Company files income tax returns in the U.S. as well as in various states and notes that the earliest year open to examination is 2021. The Company is not currently under examination by any major tax jurisdiction. ​ ​ Note 16 — Segments and geographical information The Company has one reportable and operating segment. The Company holds 99 % of its assets within the United States. The Company derives revenue primarily in North America and manages the business activities on a consolidated basis. The following table summarizes revenue based upon the customers’ shipping addresses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 United States ​ $ 3,754 ​ $ 5,825 International ​ 1,797 ​ 1,577 Total revenue, net ​ $ 5,551 ​ $ 7,402 ​ 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. 81 Table of Contents The table below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2025, and 2024: ​ See the consolidated financial statements for other financial information regarding the Company’s operating segment. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2025 ​ 2024 Revenue, net $ 5,551 $ 7,402 Cost of goods sold (exclusive of depreciation) ​ 2,638 ​ 2,582 Inventory Impairment ​ 511 ​ 2,272 Operating expenses: ​ ​ ​ ​ Selling, general and administrative ​ 11,482 ​ ​ 15,655 Payroll Expenses (including bonus) ​ 5,565 ​ 6,563 Professional Fees ​ 3,512 ​ 6,160 Other selling, general and administrative ​ 2,405 ​ 2,932 Other operating expenses ​ 2,931 ​ 5,774 Non-operating (income) expenses, net ​ ( 266 ) ​ 3,079 Provision for income taxes ​ ( 32 ) ​ ( 465 ) Net loss $ ( 11,713 ) $ ( 21,495 ) ​ ​ ​ Note 17 — Subsequent Events 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 Company intends to use the net proceeds from sales of Common Stock under the 2026 Sales Agreement, if any, for working capital and general corporate purposes. 82 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.