MultiSensor AI Holdings, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations provides information that our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in our unaudited condensed consolidated financial statements and notes thereto, included elsewhere in this Quarterly Report (collectively, the “consolidated financial statements”). References to “MSAI,” the “Company,” “we,” “us,” or “our” refer to MultiSensor AI Holdings, Inc. This Quarterly Report includes forward-looking statements based on the Company’s current assumptions, expectations and projections about future events that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or in other parts of this Quarterly Report. For more information on these and other factors, see “Forward-Looking Statements” herein. Overview The Company and 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. Unlike traditional inspection or single-sensor monitoring solutions, MSAI combines multiple sensing technologies into a unified software platform that provides a single operational view of asset health. Our strategy is to become the software platform that connects multiple sensing technologies into a unified operational intelligence layer across critical infrastructure. We are pursuing expansion of our position as a Software as a Service (“SaaS”) provider in predictive maintenance and believe there are significant opportunities to increase recurring revenue from our solutions. 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. In June 2026, we expanded the vibration coverage of our MSAI Connect solution through a new collaboration with Broadsens, which integrates Broadsens’ wireless vibration sensors into our unified platform. The combined offering, which we showcased at Maintec 2026, allows customers to evaluate thermal and vibration data for the same asset within a single workflow. We also presented at The Reliability Conference 2026 and SupplyChainPoint 2026 during the quarter, demonstrating multi-camera thermal monitoring within MSAI Connect. In the distribution and logistics market, we believe our solutions deliver meaningful operational value by enabling enhanced predictive maintenance capabilities that help minimize unplanned downtime, lower labor and maintenance costs, and improve facility throughput and operational continuity. During the second quarter of 2026, we received positive customer feedback on the initial launch of our solution at Manchester Airport, including the addition of vibration monitoring, further validating the applicability of our solutions across complex, mission-critical operations. In addition, during the second quarter of 2026, a large global distributor renewed its subscriptions with us and issued purchase orders for our first rollout at 10 sites in North America, with installations expected to begin 15 ​ during the second half of fiscal year 2026. This customer has also advised that additional projects focused on monitoring rooftop solar infrastructure and distribution facilities have been approved, with installations expected to begin during the second half of 2026. In the data center market, our focus is on the critical infrastructure systems that support data center reliability, uptime, and operational resilience. Through our MSAI Connect solutions, we help customers identify early signs of electrical and cooling system degradation before conventional alarms are triggered across applications such as chillers, cooling towers, automatic transfer switches, backup generators, power panels, and transformers. The two pilot projects we deployed within the data center sector during the first quarter of 2026 are ongoing, and we continue to generate learnings from these deployments. Initial customer feedback has been encouraging, and we are actively engaged in discussions to expand these deployments and pursue additional opportunities across other data center facilities. In the manufacturing market, our go-to-market strategy is centered on delivering early threat detection and operational reliability solutions designed to enhance safety, reduce operational risk, and improve asset visibility. We continue to work closely with two of the “Big 3” automakers on our ongoing pilot programs focused on lithium-ion battery pack monitoring and the deployment of dual-vision hardware sensors. During the second quarter of 2026, one of these “Big 3” automakers renewed its subscriptions with us. In parallel, we remain actively engaged with these customers in identifying additional high-value applications for our solutions across broader manufacturing and production environments. Recent Developments Reverse Stock Split On April 13, 2026, we effected a 1-for-40 reverse stock split (the “Reverse Stock Split”) of our common stock, par value $0.0001 per share (the “Common Stock”). As a result of the Reverse Stock Split, our outstanding Common Stock was reduced from 80,491,720 shares to 2,012,293 shares, and proportionate adjustments were made to the number of shares underlying our outstanding equity awards and equity incentive plans, including corresponding adjustments to exercise prices and performance thresholds, as applicable. The total number of authorized shares, the par value per share and other terms of our Common Stock were not affected by the Reverse Stock Split. Warrants Pursuant to the terms of the Warrant Agreement, dated October 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company, and as a result of the Reverse Stock Split, the exercise price of the Company’s 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 the Company and certain investors signatory thereto, and as a result of the Reverse Stock Split, the exercise price of the Company’s warrants to purchase 340,250 shares of Common Stock at an exercise price of $11.50 per share (the “Financing Warrants”), issued in connection with our business combination, was adjusted from $11.50 to $460.00. Additionally, 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 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 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 adjusted 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. During the three months ended June 30, 2026, certain Investors exercised 2025 Warrants for 175,000 shares of Common Stock at $5.98 per share, resulting in proceeds of $1.0 million. 16 ​ Results of Operations Three months ended June 30, 2026 compared to three months ended June 30, 2025 The following table presents summary results of operations for the periods indicated in thousands: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ ​ ​ Amount ​ ​ ​ % ​ ​ 2026 ​ ​ ​ 2025 ​ Change ​ Change ​ Revenue, net ​ $ 1,695 ​ $ 1,419 ​ $ 276 19 % Cost of goods sold (exclusive of depreciation) ​ ​ 919 ​ ​ 1,084 ​ ​ (165) (15) % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ ​ 2,833 ​ ​ 2,909 ​ ​ (76) (3) % Share-based compensation expense ​ ​ 187 ​ ​ 423 ​ ​ (236) ​ (56) % Depreciation ​ ​ 360 ​ ​ 330 ​ ​ 30 9 % Loss (gain) on asset disposal ​ ​ (3) ​ ​ (9) ​ ​ 6 ​ (67) % Total operating expenses ​ ​ 3,377 ​ ​ 3,653 ​ ​ (276) (8) % Operating loss ​ ​ (2,601) ​ ​ (3,318) ​ ​ 717 (22) % Interest expense (income), net ​ ​ (142) ​ ​ (11) ​ ​ (131) 1,191 % Other expense (income), net ​ ​ 15 ​ ​ 5 ​ ​ 10 200 % Loss before income taxes ​ ​ (2,474) ​ ​ (3,312) ​ ​ 838 (25) % Income tax expense (benefit) ​ ​ (14) ​ ​ 10 ​ ​ (24) (240) % Net loss ​ $ (2,460) ​ $ (3,322) ​ $ 862 (26) % ​ Revenue: Revenue for the three months ended June 30, 2026 was $1.7 million, compared to $1.4 million for the three months ended June 30, 2025. Revenue streams from each of our products and services are summarized below for the three months ended June 30, 2026 and 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ ​ 2026 ​ ​ ​ 2025 Hardware ​ $ 930 ​ $ 874 Software ​ 739 ​ 400 Services ​ 26 ​ 145 Total revenue ​ $ 1,695 ​ $ 1,419 ​ The increase in revenue was primarily attributable to an increase in software revenues of $0.3 million, or 85%, in line with our strategic initiative of transitioning away from being a hardware provider to being a solutions provider by focusing on growing our SaaS business. This increase in revenue was partially offset by a decrease in services revenue of $0.1 million, or 82%, primarily related to the discontinuation of inspection and training services in August 2025. Cost of Goods Sold: Cost of goods sold for the three months ended June 30, 2026 was $0.9 million, compared to $1.1 million for the three months ended June 30, 2025. The decrease in cost of goods sold was attributable to a change in product mix. Selling, General and Administrative Expense: Selling, general and administrative expense for the three months ended June 30, 2026 was $2.8 million, compared to $2.9 million for the three months ended June 30, 2025. The decrease in selling, general and administrative expenses was primarily driven by a $0.3 million decrease in professional fees due to the Company’s continued strategic cost optimization initiatives, partially offset by a $0.1 million increase in payroll costs and other costs. Share-Based Compensation Expense: Share-based compensation expense for the three months ended June 30, 2026 was $0.2 million, compared to $0.4 million for the three months ended June 30, 2025. The decrease in share-based compensation expense was primarily related to forfeitures of unvested awards previously granted predominantly as a result of the reduction in workforce, which occurred in July 2025. Depreciation: Depreciation expense was $0.4 million for the three months ended June 30, 2026, compared to $0.3 million for the three months ended June 30, 2025. The increase in depreciation expense was primarily driven by additions, predominantly in the 17 ​ internal-use software category, associated with our development of MSAI Connect, partially offset by lower depreciation expense related to machinery, equipment, and demo assets due to disposals and sales completed during fiscal year 2025. Interest expense (income), net: Interest income was $0.1 million for the three months ended June 30, 2026, compared to insignificant interest income for the three months ended June 30, 2025. The increase in interest income was primarily due to higher average cash balances invested in interest-bearing accounts. ​ Six months ended June 30, 2026 compared to six months ended June 30, 2025 The following table presents summary results of operations for the periods indicated in thousands: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ ​ Amount ​ ​ ​ % ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ Change ​ Change ​ Revenue, net ​ $ 3,309 ​ $ 2,589 ​ $ 720 28 % Cost of goods sold (exclusive of depreciation) ​ ​ 1,619 ​ ​ 1,560 ​ ​ 59 4 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ ​ 5,822 ​ ​ 7,048 ​ ​ (1,226) (17) % Share-based compensation expense ​ ​ 369 ​ ​ 1,330 ​ ​ (961) ​ (72) % Depreciation ​ ​ 712 ​ ​ 610 ​ ​ 102 17 % Loss (gain) on asset disposal ​ ​ (18) ​ ​ (24) ​ ​ 6 ​ (25) % Total operating expenses ​ ​ 6,885 ​ ​ 8,964 ​ ​ (2,079) (23) % Operating loss ​ ​ (5,195) ​ ​ (7,935) ​ ​ 2,740 (35) % Interest expense (income), net ​ ​ (297) ​ ​ (15) ​ ​ (282) 1,880 % Other expense (income), net ​ ​ 14 ​ ​ (180) ​ ​ 194 (108) % Loss before income taxes ​ ​ (4,912) ​ ​ (7,740) ​ ​ 2,828 (37) % Income tax expense (benefit) ​ ​ 19 ​ ​ 18 ​ ​ 1 6 % Net loss ​ $ (4,931) ​ $ (7,758) ​ $ 2,827 (36) % ​ Revenue: Revenue for the six months ended June 30, 2026 was $3.3 million, compared to $2.6 million for the six months ended June 30, 2025. Revenue streams from each of our products and services are summarized below for the six months ended June 30, 2026 and 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ 2026 ​ ​ ​ 2025 Hardware ​ $ 1,843 ​ $ 1,627 Software ​ 1,414 ​ 651 Services ​ 52 ​ 311 Total revenue ​ $ 3,309 ​ $ 2,589 ​ The increase in revenue was primarily attributable to growth in software revenue, in line with our strategic initiative of transitioning away from being a hardware provider to being a solutions provider. Software revenue grew 117% to $1.4 million as the Company continues to focus on growing our SaaS business. This increase in revenue was partially offset by a decrease in services revenue of $0.2 million, or 83%, primarily related to the discontinuation of inspection and training services in August 2025. Cost of Goods Sold: Cost of goods sold for the six months ended June 30, 2026 and 2025 was $1.6 million. Selling, General and Administrative Expense: Selling, general and administrative expense for the six months ended June 30, 2026 was $5.8 million, compared to $7.0 million for the six months ended June 30, 2025. The decrease in selling, general and administrative expenses was primarily driven by a $1.1 million decrease in professional fees due to the Company’s continued strategic cost optimization initiatives. 18 ​ Share-Based Compensation Expense: Share-based compensation expense for the six months ended June 30, 2026 was $0.4 million, compared to $1.3 million for the six months ended June 30, 2025. The decrease in share-based compensation expense was primarily attributable to restricted stock units granted during the first quarter of 2025, which included a provision for immediate vesting of 25% of the total award, resulting in higher expense recognized in the prior-year period and forfeitures of unvested awards previously granted predominantly as a result of the reduction in our workforce which occurred in July 2025. Depreciation: Depreciation expense was $0.7 million for the six months ended June 30, 2026, compared to $0.6 million for the six months ended June 30, 2025. The increase in depreciation expense was primarily driven by additions, predominantly in the internal-use software category, associated with our development of MSAI Connect, partially offset by lower depreciation expense related to machinery, equipment, and demo assets due to disposals and sales completed during fiscal year 2025. Interest expense (income), net: Interest income was $0.3 million for the six months ended June 30, 2026, compared to insignificant interest income for the six months ended June 30, 2025. The increase in interest income was primarily due to higher average cash balances invested in interest-bearing accounts. ​ Other expense (income), net: Other expense (income), net for the six months ended June 30, 2026 was insignificant compared to $0.2 million of income for the six months ended June 30, 2025 primarily due to the resolution of the ELOC make-whole obligation, as notified by B. Riley on January 8, 2025, which resulted in a one-time benefit recorded in the prior-year period. Non-GAAP Financial Measures EBITDA and Adjusted EBITDA Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are supplemental non-GAAP financial measures used by management. We define EBITDA as net income (loss) before (i) interest expense (net interest income), (ii) depreciation and (iii) taxes. We define “Adjusted EBITDA” as EBITDA before share-based compensation expenses, change in fair value of convertible notes and warrant liabilities, inventory impairment, loss on financing transaction, other expense (income) and loss (gain) on disposal of assets, as each are applicable to the periods presented. We believe EBITDA and Adjusted EBITDA are useful performance measures because they facilitate comparison of our results of operations from period to period without regard to our financing methods or capital structure or other items that impact comparability of financial results from period to period such as fluctuations in interest expense or effective tax rates, levels of depreciation, non-cash charges such as share based compensation expenses or unusual items that are not considered an indicator of ongoing performance of our operations. In addition, we believe that such non-GAAP financial measures are used by analysts and others in the investment community to analyze our historical results and to provide estimates of future performance. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income (loss) or any other measure as determined in accordance with GAAP. Our computations of EBITDA and Adjusted EBITDA may not be comparable to EBITDA or Adjusted EBITDA of other companies. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business. We believe EBITDA and Adjusted EBITDA, when viewed in a reconciliation to respective GAAP measures, provide an additional way of viewing the Company’s results of operations and factors and trends affecting the Company’s business. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the respective financial results presented in accordance with GAAP. The following tables present a reconciliation of EBITDA and Adjusted EBITDA to the GAAP financial measure of net income (loss) (unaudited) for each of the periods indicated, in thousands: 19 ​ EBITDA and Adjusted EBITDA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, Six Months Ended June 30, Adjusted EBITDA ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 Net loss ​ $ (2,460) ​ $ (3,322) ​ $ (4,931) ​ $ (7,758) Interest expense (income), net ​ ​ (142) ​ ​ (11) ​ ​ (297) ​ ​ (15) Income tax expense (benefit) ​ ​ (14) ​ ​ 10 ​ ​ 19 ​ ​ 18 Depreciation ​ ​ 360 ​ ​ 330 ​ ​ 712 ​ ​ 610 EBITDA ​ $ (2,256) ​ $ (2,993) ​ $ (4,497) ​ $ (7,145) Share-based compensation expense ​ 187 ​ 423 ​ 369 ​ 1,330 Other expense (income), net ​ 15 ​ 5 ​ 14 ​ (180) Loss (gain) on asset disposal ​ ​ (3) ​ ​ (9) ​ ​ (18) ​ ​ (24) Adjusted EBITDA ​ $ (2,057) ​ $ (2,574) ​ $ (4,132) ​ $ (6,019) ​ Liquidity and Capital Resources We incurred losses for the three and six months ended June 30, 2026. We have historically funded our operations with internally generated cash flows, equity financings, debt, convertible notes, and promissory notes with shareholders and related parties. As of June 30, 2026, we had $21.0 million of cash and cash equivalents. We expect that our current sources of liquidity, together with our projection of cash flows from operating activities, will provide us with adequate liquidity for at least the next 12 months. We may require additional capital in order to execute on our business plan and may require capital to fund our operations or to respond to technological advancements, competitive dynamics, technologies, customer demands, business opportunities, challenges, acquisitions, or unforeseen circumstances, and we may determine to raise capital through equity or debt financings or enter into credit facilities for other reasons. In order to maintain our anticipated growth trajectory and to further business relationships with current or potential customers or partners, or for other reasons, we may issue equity or equity-linked securities to such current or potential customers or partners. We may not be able to timely secure additional debt or equity financing on favorable terms, or at all, as these plans are subject to market conditions and are not within our control. There is no assurance that we will be successful in implementing our plans. If we raise additional funds through the issuance of equity or convertible debt or other equity-linked securities, or if we issue equity or equity-linked securities to current or potential customers to further business relationships, our existing shareholders could experience significant dilution. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited and our business could be materially and adversely affected. Equity Line of Credit (“ELOC”) ​ On April 16, 2024, we entered into a common stock purchase agreement (the “Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”). Pursuant to the Purchase Agreement, we had the right, but not the obligation, to sell to B. Riley up to $25.0 million worth of the Company’s Common Stock (such shares when issued, the “Purchase Shares”) over the term of the Purchase Agreement, beginning only after certain conditions set forth in the Purchase Agreement have been satisfied, including that an amendment to the registration statement registering the Purchase Shares for resale shall have been declared effective under the Securities Act of 1933, as amended. During the three and six months ended June 30, 2026, the Company did not utilize the ELOC to sell shares and terminated the Purchase Agreement effective February 2, 2026. During the three months ended June 30, 2025, the Company did not utilize the ELOC to sell shares. During the six months ended June 30, 2025, the Company utilized the ELOC to sell a total of 44,793 shares of Common Stock for cash proceeds totaling $4.7 million, all of which occurred during the first quarter. At the Market Sales Agreements On March 13, 2026, the Company entered into an at market sales agreement (the “2026 Sales Agreement”) with Roth Capital Partners, LLC and H.C. Wainwright & Co., LLC, as sales agents or principals, under which the Company may offer and sell shares of its Common Stock having an aggregate market value of up to $60.0 million from time to time. During the three and six months ended 20 ​ June 30, 2026, the Company did not sell any shares under the 2026 Sales Agreement. We intend to use the net proceeds from sales of Common Stock under the 2026 Sales Agreement, if any, for working capital and general corporate purposes. 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, having an aggregate market value of up to $8.6 million. The Company terminated the 2025 Sales Agreement effective February 2, 2026, and did not sell any shares under the 2025 Sales Agreement during the three or six months ended June 30, 2026. During the three and six months ended June 30, 2025, the Company sold 2,735 shares of Common Stock under the 2025 Sales Agreement for cash proceeds totaling $0.1 million. 2025 Private Placement ​ On October 24, 2025, the Company entered into the 2025 Purchase Agreement with the Investors, pursuant to which it agreed to sell to the Investors (i) 855,745 shares of Common Stock at a purchase price of $16.36 per share and (ii) the 2025 Warrants (collectively, the “2025 Private Placement”), with an exercise price of $5.98 per share, for an aggregate purchase price of $14 million 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 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 2025 Private Placement on October 30, 2025, the Company issued to the Investors 174,272 shares of Common Stock, and 2025 Warrants to purchase up to 953,543.13 shares of Common Stock (as adjusted for the Reverse Stock Split), for gross proceeds of $2.85 million before deducting placement agent fees and offering expenses. On December 23, 2025, the final closing occurred and the Company issued 681,474 shares of Common Stock and 2025 Warrants to purchase up to 3,728,730.72 shares of Common Stock (as adjusted for the Reverse Stock Split) to the Investors for gross proceeds of $11.15 million before deducting placement agent fees and offering expenses. During the three and six months ended June 30, 2026, certain Investors exercised 2025 Warrants for 175,000 shares of Common Stock at an exercise price of $5.98 per share, resulting in proceeds to the Company of $1.0 million. As of June 30, 2026, 2025 Warrants to purchase up to 4,507,273.85 shares of Common Stock (as adjusted for the Reverse Stock Split) remained outstanding. 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) 114,875 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 152,500 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 $54.00 per share of Common Stock and $53.9999 per 2025 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 $14.4 million, before deducting advisory fees and 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. 21 ​ Cash Flows Six months ended June 30, 2026, compared to six months ended June 30, 2025 The following table summarizes our cash flows for the periods indicated, in thousands: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Net cash provided by (used in) operating activities ​ $ (4,080) ​ $ (3,980) Net cash provided by (used in) investing activities ​ (352) ​ (905) Net cash provided by (used in) financing activities ​ 1,022 ​ 3,719 Net increase/(decrease) in cash, cash equivalents, and restricted cash equivalents ​ $ (3,410) ​ $ (1,166) ​ Operating Activities Net cash used in operating activities was $4.1 million for the six months ended June 30, 2026, an increase of $0.1 million as compared to $4.0 million of net cash used in operating activities for the six months ended June 30, 2025. The increase in net cash used in operating activities was primarily driven by changes in working capital, including the timing of customer receipts. Investing Activities Net cash used in investing activities was $0.4 million for the six months ended June 30, 2026, a decrease of $0.5 million as compared to $0.9 million of net cash used in investing activities for the six months ended June 30, 2025. The decrease was primarily related to a decrease in cash paid for capital expenditures. Financing Activities Net cash provided by financing activities was $1.0 million for the six months ended June 30, 2026, a decrease of $2.7 million as compared to $3.7 million of net cash provided by financing activities for the six months ended June 30, 2025. The decrease in net cash provided by financing activities was primarily attributable to $1.0 million of proceeds from the exercise of 2025 Warrants during the six months ended June 30, 2026, as compared to $3.7 million of net proceeds from equity financings, primarily sales under the ELOC, during the six months ended June 30, 2025. ​ Contractual Obligations As of June 30, 2026, we did not have any material contractual obligations. Off-Balance Sheet Arrangements As of June 30, 2026, we did not have any off-balance sheet arrangements. Critical Accounting Policies and Estimates Our condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in our 2025 Annual Report. There have been no significant and material changes in our Critical Accounting Policies and Estimates since the 2025 Annual Report. Recently Issued Accounting Standards See Note 2 of the notes to our annual consolidated financial statements in the 2025 Annual Report for our assessment of recently issued and adopted accounting standards. 22 ​ Emerging Growth Company and Smaller Reporting Company Status We are an emerging growth company under the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act provides that an emerging growth company can delay adopting new or revised accounting standards until such a time as those standards apply to private companies. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation or (v) comply with any new or revised financial accounting standards that have different effective dates for public and private companies until those standards would otherwise apply to private companies. However, we have elected to opt out of this extended exemption period discussed in (v) and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards is required for non-emerging growth companies. We may take advantage of these other exemptions until we cease to be an emerging growth company which will occur no later than December 31, 2026, which marks the last day of the fiscal year following the fifth anniversary of the date of our initial public offering of common equity securities. We will cease to be an emerging growth company prior to the end of such five-year period if we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or we issue more than $1.0 billion of non-convertible debt in any three-year period. Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will be able to take advantage of these scaled disclosures for so long as our voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. Item 3. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.