What changed in this filing

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Item 1. Financial Statements

2026-05-13 compared with 2025-11-13 · 112 added, 249 removed, 207 unchanged (64% of the section changed)

11 unchanged sentences

dollars, except share and per share data)

September 30, 2025

March 31, 2026

December 31, 2025

1 unchanged sentence

Cash and cash equivalents

Trade accounts receivable, net of allowances of $ 5 and $ 35 , respectively

Trade accounts receivable, net of allowance for credit losses of $ 28 and $ 17 , respectively

Inventories, current

2 unchanged sentences

Property, plant and equipment, net

Right-of-use assets, net

Inventories, noncurrent

6 unchanged sentences

Contract liabilities

Legacy SMAP promissory notes

Right-of-use liabilities, current

Other current liabilities

6 unchanged sentences

Common stock, $ 0.0001 par value;

300,000,000 shares authorized as of September 30, 2025 and December 31, 2024, and 34,711,465 and 30,526,052 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

300,000,000 shares authorized as of March 31, 2026 and December 31, 2025, and 2,012,293 and 2,007,613 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized as of March 31, 2026 and December 31, 2025, respectively and no shares issued or outstanding as of March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital

7 unchanged sentences

dollars, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three months ended March 31,

Cost of goods sold (exclusive of depreciation)

Inventory impairment

Operating expenses:

5 unchanged sentences

Interest expense (income), net

Change in fair value of convertible notes

Change in fair value of warrants liabilities

Loss on financing transaction

Other expense (income), net

10 unchanged sentences

Balance at January 1, 2025

Financing transaction shares

Conversion of convertible debt

Conversion of Legacy SMAP promissory note

Balance at March 31, 2024

Equity-based compensation transactions, net

Equity line of credit commitment fee

Issuance of common stock

Inducement shares from conversion of debt

Conversion of convertible debt

Balance at June 30, 2024

Equity-based compensation transactions, net

Issuance of common stock

Issuance of Pre-funded warrants

Conversion of Pre-funded warrants

Balance at September 30, 2024

Balance at March 31, 2025

Balance at January 1, 2026

Equity-based compensation transactions, net

Issuance of common stock

Balance at March 31, 2026

Equity-based compensation transactions, net

Issuance of common stock

Balance at June 30, 2025

Equity-based compensation transactions, net

Issuance of common stock

Settlement of vendor liability

Balance at September 30, 2025

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands of U.S.

Nine months ended

September 30,

Three months ended March 31,

Operating Activities:

Adjustments to reconcile net loss to net cash:

provided by (used in) operating activities

Inventories impairment

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Non-cash lease activity

3 unchanged sentences

Loss (gain) on disposal of equipment

Loss on financing transaction

Change in fair value of warrants liabilities

Non-cash equity line of credit commitment fee

Change in fair value of convertible notes

Increase (decrease) in cash resulting from changes in:

4 unchanged sentences

Income taxes payable

Income tax receivable

Contract liabilities

10 unchanged sentences

Proceeds from issuances of common stock

Repayment of promissory notes

Tax payments associated with share-based compensation transactions

Repayments of lines of credit

Tax payments associated with equity-based compensation transactions

Repayment of Legacy SMAP promissory note

Net cash provided by (used in) financing activities

9 unchanged sentences

Income tax paid, net of refunds received

Non-cash investing and financing transactions

Settlement of vendor liability with share issuance

Conversion of convertible notes

Conversion of Legacy SMAP promissory loan into common stock

Shares issued for Equity Line of Credit commitment fee

Inducement shares from Financing Transaction

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5 unchanged sentences

MultiSensor AI Holdings, Inc.

(“MSAI,” “the Company,” “we” or “our”) 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, data centers, and oil & gas.

In tandem with these solutions, we provide various services for our customers including training, calibration, and repair.

The Company is domiciled in Delaware and is a C corporation for tax purposes.

(“MSAI,” “the Company,” “we” or “our”) together with its wholly owned subsidiaries build and deploy integrated condition monitoring and early threat detection solutions that connect multiple sensor types through a unified edge-to-cloud software architecture.

Our condition intelligence platform integrates multiple sensing modalities such as thermal, visual and acoustic, among others.

Customers deploy the MSAI Connect platform to continuously monitor critical assets and identify early degradation patterns (such as elevated operating temperatures) across electrical, mechanical, and environmental systems.

This allows teams to intervene early and convert potential failures into planned maintenance before downtime, safety incidents, or operational disruption occur.

We focus on commercial environments where operational continuity is vital and automation intensity is high, including distribution and parcel logistics networks, data centers, and select manufacturing and industrial facilities.

We believe our solutions offer a compelling combination of performance, scalability, and cost efficiency relative to traditional inspection and monitoring approaches.

Our digital, multi-sensor software platform is designed to support the transition from intermittent, manual asset inspections towards continuous intelligent condition monitoring.

By streaming and analyzing radiometric thermal data in combination with other deployed sensor inputs, our MSAI Connect software platform can surface early anomaly signals that may not be visible or detected during periodic inspections.

Our system architecture is intentionally modular and extensible, allowing for the integration of additional sensing modalities and analytics capabilities over time.

While our current commercial deployments are centered primarily on thermal-based monitoring enhanced by software-driven analytics and expert review, we believe MSAI Connect’s multi-sensor foundation positions us to expand into broader predictive and prescriptive use cases.

Through collaboration with several blue-chip multinational customers during development and deployment, we have validated high-value, mission-critical use cases across our target markets:

distribution and logistics, manufacturing and data centers.

These engagements have informed our product evolution and reinforced our belief that integrated, AI-enabled multi-sensor monitoring represents a structural shift in how industrial reliability and asset protection are managed.

Note 2 — Reverse Stock Split

On April 13, 2026, we effected a 1 -for-40 reverse stock split (the “Reverse Stock Split”) of our common stock, par value $ 0.0001 per share (the “common stock”).

As a result of the Reverse Stock Split, our outstanding common stock was reduced from 80,491,720 shares to 2,012,293 shares, and proportionate adjustments were made to the number of shares underlying our outstanding equity awards and equity incentive plans, including corresponding adjustments to exercise prices and performance thresholds, as applicable.

The total number of authorized shares, the par value per share and other terms of our common stock were not affected by the Reverse Stock Split.

Pursuant to the terms of the Warrant Agreement, dated October 18, 2021, by and between us and Continental Stock Transfer & Trust Company, and as a result of the Reverse Stock Split, the exercise price of our public warrants to purchase 8,625,000 shares of common stock at an exercise price of $ 11.50 per share (the “Public Warrants”), and private placement warrants to purchase up to 506,250 shares of common stock at an exercise price of $ 11.50 per share (the “Private Placement Warrants” and together with the Public Warrants, the “SPAC Warrants”), each issued in connection with our initial public offering, was adjusted from $ 11.50 to $ 460.00 .

Additionally, the number of shares of common stock issuable upon exercise of the Public Warrants and Private Placement Warrants was proportionally reduced to 215,625 shares and 12,657 shares, respectively.

Except as provided herein, all other terms and provisions of the SPAC Warrants remain in full force and effect.

Pursuant to the terms of the Subscription Agreement, dated December 1, 2023, by and among us and certain investors signatory thereto, we issued warrants to purchase 340,250 shares of common stock at an exercise price of $ 11.50 per share (the “Financing Warrants”), in connection with our business combination.

Under the terms of the Financing Warrants, and as a result of the Reverse Stock Split, the exercise price of the Financing Warrants was adjusted from $ 11.50 to $ 460.00 and the number of shares of common

stock issuable upon exercise of the Financing Warrants was proportionally reduced to 8,507 shares.

Except as provided herein, all other terms and provisions of the Financing Warrants remain in full force and effect.

On October 24, 2025, we entered into that certain Securities Purchase Agreement with 325 Capital, LLC (“325 Capital”) and certain other accredited investors signatory thereto (collectively with 325 Capital, the “Investors”) , pursuant to which we sold to the Investors warrants to purchase up to 68,459,652 shares of common stock (the “2025 Warrants”).

Pursuant to the terms of the 2025 Warrants, and as a result of the Reverse Stock Split, the exercise price of the 2025 Warrants was adjusted from $ 0.409 to $ 5.98 per share, and the number of shares of common stock issuable upon exercise of the 2025 Warrants was proportionately increased to 4,682,273.85 shares.

Except as provided herein, all other terms and provisions of the 2025 Warrants remain in full force and effect.

All share and per share amounts, including exercise prices and aggregate par values, conversion rates, and conversion prices presented herein that relate to periods prior to the Reverse Stock Split have been adjusted retroactively to reflect the Reverse Stock Split.

Note 3 — Summary of Significant Accounting Policies

2 unchanged sentences

The interim financial information is unaudited but reflects all normal adjustments that are necessary to provide a fair statement of results for the interim periods presented.

This interim information should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

The Condensed Consolidated Balance Sheet as of December 31, 2024 was derived from our audited consolidated financial statements.

Reclassifications

The Company has reclassified certain prior-year amounts to conform to the current-year presentation.

This interim information should be read in conjunction with the consolidated financial statements for the fiscal year ended December 31, 2025 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

The condensed consolidated balance sheet as of December 31, 2025 was derived from our audited financial statements.

Principles of Consolidation

1 unchanged sentence

All intercompany balances and transactions have been eliminated.

Going Concern

These condensed consolidated financial statements have been prepared in accordance with U.S.

GAAP assuming the Company will continue as a going concern.

The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company is still developing its customer base and has not completed its efforts to establish a stabilized source of revenue sufficient to cover its expenses.

The Company has suffered net losses, negative cash flows from operations, and negative net working capital.

The Company expects to continue to incur losses or limited income in the future.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions, the Company will continue to pursue obtaining additional liquidity which may include raising additional funds from investors and reducing operating expenses.

Specifically, subsequent to September 30, 2025, the Company completed a private placement and registered direct offering of our common stock to raise and aggregate gross amount of $ 28,400 (see Note 17).

Of the $ 28,400 raised, $ 11,150 is held in escrow and subject to approval by our shareholders.

Considering the shareholder vote represents a condition that is not within the Company’s control, we cannot deem the receipt of those additional funds as probable.

As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Use of Estimates

3 unchanged sentences

Customer Concentration

For the three months ended September 30, 2025, two customers accounted for 36 % and 12 % or $ 570 and $ 188 of total net revenue which, is recorded under the entity’s one operating segment.

For the nine months ended September 30, 2025, one customer accounted for 28 % or $ 1,147 of total net revenue, which is recorded under the entity’s one operating segment.

For the three months ended March 31, 2026, three customers accounted for an aggregate of 77 % of total net revenue, or $ 1,250 , within our single operating segment.

These customers individually represented 43 % or $ 702 , 23 % or $ 373 and 11 % or $ 175 of total net revenue, respectively.

New Accounting Pronouncements

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 “Income Taxes (Topics 740):

Improvements to Income Tax Disclosures” 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.

We are currently evaluating the potential effect that the updated standard may have on our financial statement disclosures.

In November 2024, the FASB issued guidance that requires disaggregation of specific expense categories in disclosures within the footnotes to the 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 within annual reporting periods beginning after December 15, 2027.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 which requires disaggregation of specific expense categories in disclosures within the footnotes to the consolidated financial statements on an annual and interim basis.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Prospective or retrospective application is allowed, and early adoption is permitted.

We are currently evaluating the potential effect that the updated standard may have on our financial statement disclosures.

In September 2025, the FASB issued ASU No.

2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software, which 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.

We are currently evaluating the potential effect that the updated standard may have on our consolidated financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40.

The new standard is effective for annual reporting periods and interim reporting periods beginning

after December 15, 2027.

Early adoption is permitted.

The new standard may be applied prospectively, retrospectively, or via a modified prospective transition method.

The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

We are currently evaluating the impact of this new standard on our consolidated financial statements and related disclosures.

Note 4 — Revenue

The following tables summarize the Company’s revenue, net disaggregated by type of product and service:

Three Months Ended September 30,

Nine Months Ended September 30,

Three months ended March 31,

Total revenue, net

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 our cloud-based software, (“MSAI Connect”).

There is no sales return reserve as of September 30, 2025 and December 31, 2024.

The Company’s sales policy is not to accept returns of hardware once sold.

As a result, there was no sales return reserve as of March 31, 2026 and December 31, 2025.

Contract Liabilities

Contract liabilities consist of sales of software subscriptions and related services, as well as repair and service agreements, where in most cases, the Company receives up-front payment and recognizes revenue over the term of 12 - 60 months.

Contract liabilities consist of sales of software subscriptions, where in most cases, the Company receives up-front payment and recognizes revenue over the term of 12 - 48 months.

The Company classifies these contract liabilities as either current or non-current liabilities based on the expected timing of recognition of related revenue.

Contract liabilities were $ 1,675 and $ 483 and non-current contract liabilities were $ 130 and $ 83 as of September 30, 2025 and December 31, 2024, respectively.

Current contract liabilities were $ 893 and $ 1,255 and non-current contract liabilities were $ 854 and $ 751 as of March 31, 2026 and December 31, 2025, respectively.

Note 5— Property, Plant and Equipment

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

September 30,

Machinery, equipment and demo

3 unchanged sentences

Property, plant and equipment, net

Depreciation expense was $ 342 and $ 307 for the three months ended September 30, 2025, and 2024, respectively.

Depreciation expense was $ 952 and $ 878 for the nine months ended September 30, 2025, and 2024, respectively.

During the three months ended September 30, 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 $ 342 .

The related loss is recorded under Loss (gain) on asset disposal within the Condensed Consolidated Statements of Operations.

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

Note 6 — Other Current Assets

The following table summarizes other current assets:

September 30,

Prepaid expenses

Deferred transaction costs

Restricted cash equivalents

2 unchanged sentences

Total other current assets

During the three months ended September 30, 2025, the Company renegotiated its contract with the Company’s corporate credit card provider.

As a result of this renegotiation, as of September 30, 2025, the Company is required to maintain $ 100 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 Condensed Consolidated Balance Sheets.

Note 7 — Inventories

The following table summarizes inventories:

September 30,

Parts and supplies

3 unchanged sentences

Total inventories

The Company recorded an inventory impairment of $ 0 and $ 2,038 for the three months ended September 30, 2025 and 2024, respectively.

The Company recorded an inventory impairment of $ 0 and $ 2,272 for the nine months ended September 30, 2025 and 2024, respectively.

Note 8 — Accrued Expense

The following table summarizes accrued expenses:

September 30,

Salaries, wages, and payroll taxes payable

1 unchanged sentence

Total accrued expense

Note 8 — Debt

Line of Credit

In December 2023, the Company entered into a line of credit agreement with First Insurance Funding.

During the nine months ended September 30, 2024, the Company fully paid off and closed the line of credit.

There was no outstanding balance as of September 30, 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 nine months ended September 30, 2024, the Company repaid the promissory note in full.

There was no outstanding balance as of September 30, 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.

There was no outstanding balance as of September 30, 2025 and December 31, 2024.

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 nine months ended September 30, 2024, the promissory note was converted into shares of the Company’s common stock, par value $ .0001 per share (the “Common Stock”), at a price of $ 3.33 per share.

There was no outstanding balance as of September 30, 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 nine months ended September 30, 2025.

There was no outstanding balance as of September 30, 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 , including $ 2,324 of which were issued in exchange for other debt instruments as part of the Business Combination.

During the three months ending March 31, 2024, $ 4,475 of the Financing Notes were converted into shares of Common Stock at a price of $ 5 per share, which resulted in a loss of $ 740 being recorded under Loss on Financing Transaction within the Condensed Consolidated Statements of Operations.

During the three months ending June 30, 2024, the remaining $ 1,695 of the Financing Notes were converted into shares of Common Stock at a price of $ 5 per share, which resulted in a loss of $ 505 recorded under Loss on Financing Transaction within the Condensed Consolidated Statements of Operations.

Note 9 — Share-Based Compensation

Stock Options

During the three months ended September 30, 2025, no option awards were granted and 57,020 option awards were forfeited.

During the nine months ended September 30, 2025, no option awards were granted and 225,038 option awards were forfeited.

As of September 30, 2025, 713,141 option awards remained outstanding with a weighted average exercise price of $ 6.52 .

During the three months ended March 31, 2026, no option awards were granted and no options were forfeited.

As of March 31, 2026, 7,634 option awards remained outstanding with a weighted average exercise price of $ 266.67 .

During the three-months ended March 31, 2025, no option awards were granted and 720 option awards were forfeited.

As of March 31, 2025, 22,735 option awards remained outstanding with a weighted average exercise price of $ 265.60 .

Restricted Stock Units

During the three months ended September 30, 2025 and 2024, the Company granted 439,031 and 150,000 restricted stock units (“RSUs”) at a weighted average price of $ 0.72 and $ 2.17 , respectively.

During the nine months ended September 30, 2025 and 2024, the Company granted 2,214,062 and 1,532,909 at a weighted average price of $ 1.41 and $ 2.25 , respectively.

The grant price for all RSU awards was based on the fair value of the Company’s Common Stock on the day immediately prior to the grant.

RSUs 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 and third quarters vest in equal installments annually on January 1 st of each year beginning January 1, 2027.

The Company recognized share-based compensation expense related to RSUs of $ 126 and $ 9 for the three-month periods ended September 30, 2025 and 2024, respectively, and $ 1,174 and $ 3,134 for the nine-month periods ended September 30, 2025 and 2024, respectively under Share-based compensation expense on the Condensed Consolidated Statements of Operations.

During the three-month period ended September 30, 2025, 378,185 unvested RSUs were forfeited, resulting in reversal of $ 125 of share-based compensation expense previously recognized on the Condensed Consolidated Statements of Operations.

During the nine-month period ended September 30, 2025, 519,615 unvested RSUs were forfeited, resulting in reversal of $ 149 of share-based compensation expense previously recognized on the Condensed Consolidated Statements of Operations.

During the three-month periods ended September 30, 2025 and 2024, the Company’s non-employee directors earned $ 70 and $ 20 , respectively, in compensation for their service on the board, which was paid in the form of RSUs.

During the nine-month periods ended September 30, 2025 and 2024, the Company’s non-employee directors earned $ 240 and $ 221 , respectively, in compensation for their service on the board, which was paid in the form of RSUs.

These grants are recognized as share-based compensation expense on the Condensed Consolidated Statements of Operations.

During the three-month period ended September 30, 2025, the Company agreed to settle sales commissions owed for second quarter performance in RSUs.

As a result of this, the Company incurred an additional $ 8 of stock based compensation expense related to the change in fair value of our stock.

These grants are recognized as share-based compensation expense on the Condensed Consolidated Statement of Operations.

Incentive Award Plan Reserve

At our annual shareholders meeting held on June 4, 2025, our shareholders approved an amendment to the Infrared Cameras Holdings, Inc.

2023 Incentive Award Plan (the “2023 Incentive Award Plan”) to increase the number of shares of Common Stock by 3,400,000 , to a total of 6,440,486 shares of Common Stock issuable pursuant to the 2023 Incentive Award Plan.

During the three months ended March 31, 2026, the Company granted no restricted stock units (“RSUs”).

The Company’s RSUs are based on the fair value of the Company’s common stock on the dates of grant.

During the three months ended March 31, 2025, 40,016 RSUs were granted at a weighted average price of $ 68.00 .

The RSUs granted in the three months ended March 31, 2025 primarily vested one -fourth of the award value on the date of grant, with the remaining restricted shares vesting in equal installments on January 1, 2026, January 1, 2027, and January 1, 2028.

The Company recognized share-based compensation expense related to RSUs of $ 122 and $ 827 for the three months ended March 31, 2026 and March 31, 2025, respectively, under Share-based compensation expense on the Condensed Consolidated Statements of Operations.

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

Note 10 — Shareholders’ Equity

Total authorized capital stock of the Company as of September 30, 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 September 30, 2025 and December 31, 2024, there were 34,711,465 and 30,526,052 shares of common stock issued and outstanding and no shares of preferred stock issued or outstanding, respectively.

Equity Line of Credit

On April 16, 2024, the Company entered into a common stock purchase agreement (the “Purchase Agreement”) with B.

Total authorized capital stock of the Company as of March 31, 2026, was 300,000,000 shares of common stock and 10,000,000 shares of preferred stock.

As of March 31, 2026 and December 31, 2025, there were 2,012,293 and 2,007,613 shares of common stock issued and outstanding, respectively, and no shares of preferred stock issued or outstanding.

Equity Line of Credit (“ELOC”)

On April 16, 2024, we entered into that certain common stock purchase agreement (the “Purchase Agreement”) with B.

Riley Principal Capital II, LLC (“B.

Riley”), pursuant to which, upon the terms and subject to the satisfaction of the conditions contained in the Purchase Agreement, we have the right, in our sole discretion, to sell to B.

Riley up to $ 25,000 of shares of the Common Stock (subject to certain limitations contained in the Purchase Agreement), from time to time during the term of the Purchase Agreement through a Market Open Purchase or an Intraday Purchase on any Purchase Date (each term as defined in the Purchase Agreement) (such equity line of credit, the “ELOC”).

Sales of Common Stock pursuant to the Purchase Agreement, and the timing of any sales, are solely at our option, and we are under no obligation to sell any securities to B.

Riley under the Purchase Agreement.

The Company evaluated the Purchase Agreement to determine whether they should be accounted for considering the guidance in ASC 815-40, “Derivatives and Hedging - Contracts on an Entity’s Own Equity” and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting as a derivative.

The Company has analyzed the terms of the freestanding purchased put right and has concluded that it had insignificant value as of September 30, 2025.

At the time the Purchase Agreement was signed, the Company issued 171,821 shares of Common Stock, to B.Riley as consideration for its commitment to purchase shares of the Company’s Common Stock under the Purchase Agreement (the “Commitment Shares”).

The cost of this on the effective date of the ELOC was $ 500 .

Under the terms of the Purchase Agreement, if the aggregate proceeds received by B.

Riley from its resale of the Commitment Shares is less than $ 500 then, upon notice by B.

Riley, the Company must pay the difference between $ 500 , and the aggregate proceeds received by B.

Riley from its resale of the Commitment Shares.

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 income, net in the Condensed Consolidated Statements of Operations for the nine-month period ended September 30, 2025.

During the three months ended September 30, 2025 and 2024, the Company did not utilize the ELOC to sell shares of Common Stock.

During the nine months ended September 30, 2025 and 2024, the Company utilized the ELOC to sell a total of 1,791,732 and 23,999 shares of Common Stock for cash proceeds totaling $ 4,657 and $ 58 , respectively.

At the Market Sales Agreement

Pursuant to the Purchase Agreement, we had the right, but not the obligation, to sell to B.

Riley up to $ 25,000 worth of common stock (the “Purchase Shares”) over the term of the Purchase Agreement.

In accordance with the Purchase Agreement, on April 16, 2024, we issued 4,296 shares of our common stock to B.

Riley as consideration for its commitment to purchase the Purchase Shares under the Purchase Agreement (the “Commitment Shares”).

Under the terms of the Purchase Agreement, if the aggregate amount of cash proceeds received by B.

Riley from the resale of the Commitment Shares was less than $ 500 , then, upon notice by B.

Riley, the Company was required to pay the difference between $ 500 and the aggregate cash proceeds received by B.

Riley from its resale.

On January 8, 2025, B.

Riley notified the Company that it had sold the Commitment Shares, which resolved the liability.

Accordingly, $ 185 was recorded in “Other expense (income), net” in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2025.

During the three months ended March 31, 2026, the Company did not utilize the B.

Riley ELOC, and the Company terminated the Purchase Agreement effective February 2, 2026.

During the three months ended March 31, 2025, the Company utilized the ELOC to sell 44,793 shares of common stock for cash proceeds totaling $ 4,657 .

At the Market Sales Agreements

On March 13, 2026, the Company entered into an at market issuance sales agreement (the “2026 Sales Agreement”) with Roth Capital Partners, LLC and H.C.

Wainwright & Co., LLC as sales agents or principals (the “Agents”), under which the Company may offer and sell shares of the Company’s common stock having an aggregate market value of up to $ 60,000 from time to time through the Agents.

The Agents are entitled to compensation at a fixed commission rate based on the gross sales price of shares sold pursuant to the 2026 Sales Agreement.

During the three months ended March 31, 2026, the Company did not sell any shares under the 2026 Sales Agreement.

On March 28, 2025, the Company entered into an at market issuance sales agreement (the “2025 Sales Agreement”) with B.

Riley Securities, Inc., as sales agent or principal (“B.Riley Securities”), pursuant to which the Company could offer and sell shares of the Company’s Common Stock, having an aggregate market value of up to $ 8,625 from time to time through B.

Riley Securities, Inc.

Riley Securities”), as sales agent or principal, pursuant to which the Company could offer and sell shares of its common stock, having an aggregate offering price of up to $ 8,625 from time to time through B.

Riley Securities.

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 September 30, 2025, the Company sold 41,683 shares under the Sales Agreement for cash proceeds totaling $ 33 .

During the nine months ended September 30, 2025, the Company sold 151,072 shares under

the Sales Agreement for cash proceeds totaling $ 116 .

On November 4, 2025, the Company filed a prospectus supplement to reduce the amount available under the Sales Agreement to an aggregate market value of up to $ 50 .

Riley Securities was entitled to compensation at a fixed commission rate based on the gross sales price of shares sold pursuant to the 2025 Sales Agreement.

During the three months ended March 31, 2026 and 2025, the Company did not sell any shares under the 2025 Sales Agreement.

The Company terminated the 2025 Sales Agreement effective February 2, 2026.

Note 11 — Earnings per Share

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three months ended March 31,

Basic and diluted net loss attributable to common shareholders

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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) 471,537 shares of Common Stock underlying the Company’s RSU awards that were vested at January 1, 2024 but not issued as of September 30, 2025 (vi) 345,722 shares of Common Stock underlying the Company’s RSU awards that were vested at April 1, 2024 but not issued as of September 30, 2025, (vii) 1,387,079 RSU awards issued under the 2023 Incentive Award Plan which are unvested as of September 30, 2025, (viii) 224,000 RSUs committed via employment agreements but unissued as of September 30, 2025, and (ix) 1,795,200 performance stock units committed via employment agreements but unissued as of September 30, 2025.

The Company’s RSU awards described above, which vested on January 1, 2024 and April 1, 2024, will continue being settled in shares of Common Stock in 12 equal monthly installments, with the first installment having settled on December 20, 2024.

(i) up to 215,625 shares of common stock upon exercise of the Company’s outstanding public warrants at an exercise price of $ 460.00 per share for cash, (ii) up to 12,657 shares of common stock issuable upon exercise of the Company’s outstanding private placement warrants at an exercise price of $ 460.00 per share, (iii) up to 8,507 shares of common stock upon exercise of the financing warrants at an exercise price of $ 460.00 per share for cash, (iv) up to 7,634 shares of common stock upon the exercise of Company’s options, (v) 25,580 RSU awards issued yet unvested under the 2023 Incentive Award Plan as of March 31, 2026, (vi) up to 4,682,273.85 shares of common stock issuable upon exercise of the Company’s outstanding 2025 Warrants at an exercise price of $ 5.98 , and (vii) up to 44,800 performance stock units committed via employment agreements but unissued as of March 31, 2026.

Note 12— Related Party Transactions

Related Party Promissory Note

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 $ 79 for the nine-month periods ended September 30, 2025 and 2024, respectively.

The Company previously leased our corporate office and currently leases our production facility from a former related party.

As of July 29, 2025, the lessor no longer qualified as a related party under the applicable accounting guidance, and payments made after that date did not constitute related party transactions.

Total cash payments to the related party for the leases were $ 27 for the three-month period ended March 31, 2025.

Note 13 — Commitments and Contingencies

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In the ordinary course of the business, the Company is subject to periodic legal or administrative proceedings.

As of September 30, 2025, the Company is not involved in any material claims or legal actions which, in the opinion of management, the ultimate disposition would have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or liquidity.

Note 14 — Fair value measurements

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, and accounts payable where the carrying value approximates fair value due to the short-term nature of each instrument.

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:

observable inputs such as quoted prices in active markets;

inputs other than the quoted prices in active markets that are observable either directly or indirectly;

unobservable inputs in which there is little or no market data, which requires that the Company develop its own assumptions.

The fair value of the Company’s outstanding warrants as of September 30, 2025, and December 31, 2024, was $ 10 and $ 10 , respectively, and was classified as Level 3 within the fair value hierarchy.

As of March 31, 2026, the Company is not involved in any material claims or legal actions which, in the opinion of management, the ultimate disposition would have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or liquidity.

Note 14 — Income Taxes

The Company has determined that a discrete year-to-date method of reporting would provide more reliable results for the nine months ended September 30, 2025, and September 30, 2024, due to the difficulty in projecting future results.

The Company recorded income tax benefit of $ 11 and $ 395 for the three months ended September 30, 2025 and 2024, respectively.

The Company recorded income tax expense for the nine months ended September 30, 2025 of $ 7 and income tax benefit for the nine months ended September 30, 2024 of $ 351 .

For the three months ended September 30, 2025, and 2024, the Company’s effective income tax rates were 0.67 % and ( 4.60 )%, respectively.

For the nine months ended September 30, 2025, and 2024, the Company’s effective income tax rates were ( 0.08 )% and ( 1.86 )%, respectively.

The effective tax rates for the three and nine months ended September 30, 2025 and September 30, 2024 are below the U.S.

The Company has determined that a discrete year-to-date method of reporting would provide more reliable results for the three months ended March 31, 2026 and March 31, 2025, due to the difficulty in projecting future results.

The Company recorded income tax expense of $ 33 and $ 8 for the three months ended March 31, 2026 and 2025, respectively.

The Company maintains a valuation allowance on its deferred tax assets and intends to do so until there is sufficient evidence to support the reversal of all or some portion of this allowance.

For the three months ended March 31, 2026 and March 31, 2025, the Company’s effective income tax rates were ( 1.35 )% and ( 0.17 )%, respectively.

The effective tax rates for the three months ended March 31, 2026 and March 31, 2025 are below the U.S.

statutory tax rate of 21 % primarily due to losses generated by the Company and the Company's valuation allowance.

During 2024, the Company determined that it experienced an ownership change as defined under Internal Revenue Code Section 382.

During 2024 and 2025, the Company determined that it experienced an ownership change as defined under Internal Revenue Code Section 382.

The result of the ownership change is subjecting tax attributes to an annual limitation which includes the utilization of the Company’s net operating losses.

The Company will continue to monitor ownership changes throughout future periods.

On July 4th, 2025, Congress passed the One Big Beautiful Bill Act (“OBBA”), which takes effect in tax year 2025.

The Company is still analyzing the impact of the OBBA, but does not expect it to have a material impact on the Company’s consolidated financial statements.

Note 15 — Segments and Geographical Information

The Company has one reportable and operating segment, the manufacturing and distributing of sensor-based systems, software, and services.

The Company has one reportable and operating segment, the manufacturing and distribution of sensor-based systems, software, and services.

The Company holds 99 % of its assets within the United States.

The Company derives revenue primarily in North America and manages the business activities on a consolidated basis.

The following table summarizes revenue based upon the customers’ country of origin:

Three Months Ended September 30,

Nine Months Ended September 30,

The Company derives revenue primarily in the United States, Canada, European Union member states and the United Kingdom and manages the business activities on a consolidated basis.

The following table summarizes revenue based upon the customers’ shipping addresses:

Three months ended March 31,

United States

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The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.

The table below summarizes the significant expense categories regularly reviewed by the CODM for the three-and nine-month periods ended September 30, 2025, and 2024:

Three Months Ended September 30,

Nine Months Ended September 30,

The table below summarizes the significant expense categories regularly reviewed by the CODM for the three-month periods ended March 31, 2026, and 2025:

Three months ended March 31,

Cost of goods sold (exclusive of depreciation)

Inventory Impairment

Operating expenses:

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

Note 17 — Subsequent Events

The Company has evaluated its financial statements for subsequent events.

Based upon this review, other than as described below, the Company did not identify any additional subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

2025 Private Placement

On October 24, 2025, the Company entered into a placement agency agreement (the “Placement Agreement”) with Roth Capital Partners, LLC (“Roth”), pursuant to which the Company engaged Roth to act as the exclusive placement agent in connection with a private placement of (i) an aggregate of 34,229,826 shares (the “2025 Private Placement Shares”) of the Company’s Common Stock, and (ii) warrants (the “Warrants”) to purchase up to 68,459,652 shares of Common Stock (collectively, the “2025 Private Placement”).

Pursuant to the Placement Agreement, the Company agreed to pay Roth a cash fee equal to 5.0 % of the gross proceeds received by the Company from the 2025 Private Placement.

On October 24, 2025 (the “Subscription Date”), the Company entered into a securities purchase agreement (the “Purchase Agreement”) with 325 Capital, LLC (“325 Capital”) and certain other accredited investors signatory thereto (collectively with 325 Capital, the “Investors”), pursuant to which it agreed to sell to the Investors (i) the 2025 Private Placement Shares at a purchase price of $ 0.409 per share and (ii) the Warrants, with an exercise price of $ 0.409 per share, for an aggregate purchase price of $ 14,000 before deducting placement agent fees and offering expenses.

325 Capital and its affiliates beneficially own more than 5.0 % of the outstanding Common Stock.

In addition, Daniel M.

Friedberg, who is a Managing Member of 325 Capital, serves on the Company’s board of directors.

The Purchase Agreement and the Warrants provide that each Investor’s beneficial ownership of Common Stock, including after taking into account the full exercise of such Investor’s Warrant, shall in no event exceed 49.5 % of the issued and outstanding Common Stock (the “Maximum Ownership Limitation”).

Pursuant to the Warrants, in the event that an Investor’s Warrant is not exercisable for shares of Common Stock due to the beneficial ownership of such Investor exceeding the Maximum Ownership Limitation, the applicable Warrant will be exercisable for shares of the Company’s Series A Convertible Preferred Stock, par value $ 0.0001 per share (the “Preferred Stock”), that are convertible into an equivalent number of shares of Common Stock for which the Warrant is exercisable.

The Warrants will expire seven years from the date of issuance.

On October 27, 2025, the Company filed a Certificate of Designations for the Preferred Stock with the Secretary of State of the State of Delaware (the “Certificate of Designation”), which became effective upon filing.

The Preferred Stock is pari passu with the Common Stock, having the same dividend and liquidation rights (on an as-converted basis) as the Common Stock.

The shares of the Preferred Stock are convertible on a one -for-1,000 basis (adjustable for certain recapitalizations and similar events) into shares of Common Stock (i) at the holder’s request as long as the conversion does not cause such holder’s beneficial ownership of Common Stock to exceed the Maximum Ownership Limitation, and (ii) automatically upon transfer as long as such transfer does not cause the transferee’s beneficial ownership of Common Stock to exceed the Maximum Ownership Limitation.

Except as otherwise required by law, the Preferred Stock has no voting rights.

At the initial closing of the Private Placement on October 30, 2025 (the “Initial Closing”), the Company issued to the Investors a number of 2025 Private Placement Shares equal to 19.99 % of the number of shares of Common Stock issued and outstanding immediately prior to the Subscription Date, or 6,970,890 shares of Common Stock (the “Initial Shares”), and Warrants to purchase up to 13,941,780 shares of Common Stock (the “Initial Warrant Shares”), for gross proceeds of $ 2.85 million before deducting placement agent fees and offering expenses.

The gross proceeds from the sale of the remaining 27,258,936 shares of Common Stock (the “Additional Shares”) and Warrants to purchase up to 54,517,872 shares of Common Stock (the “Additional Warrants”) was funded by the Investors into a third-party escrow account.

The Additional Shares and Additional Warrants will be issued upon the Company’s receipt of stockholder approval of the 2025 Private Placement (the “Stockholder Approval”).

2025 Registered Direct Offering

On November 4, 2025, the Company entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) with a single institutional investor, pursuant to which the Company agreed to issue and sell (i) 4,595,000 shares (the “2025 Registered Direct Shares”) of 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 net proceeds to the Company of approximately $ 13.6 million, after deducting advisory fees and other estimated offering expenses payable by the Company.

Following the delivery of exercise notices to the Company on November 5, 2025 and November 6, 2025, the 2025 Pre-Funded Warrants were exercised in full.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements